More annual reports from Sheffield Resources:
2023 ReportANNUAL
REPORT
2019
info@sheffieldresources.com.au T +61 8 6555 8777 F +61 8 6555 8787 Level 2, 41-47 Colin Street, West Perth WA 6005 PO Box 205, West Perth WA 6872 Sheffield Resources Limited ACN 125 811 083
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Table of Contents
Corporate Directory
Chairman’s Letter
Review of Operations
Ore Reserves & Mineral Resources
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Interests in Mining Tenements
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2
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Corporate Directory
Directors
Mr Will Burbury, Non-Executive Chairman
Mr Bruce McFadzean, Managing Director
Mr Bruce McQuitty, Non-Executive Director
Mr David Archer, Technical Director
Mr Ian Macliver, Non-Executive Director
Mr John Richards, Non-Executive Director
Company Secretary
Mr Mark Di Silvio
Registered Office
Level 2, 41-47 Colin Street
West Perth WA 6005
T: +61 8 6555 8777
F: +61 8 6555 8787
E: info@sheffieldresources.com.au
Share Register
Link Market Services
178 St Georges Terrace
Perth WA 6000
+61 8 9211 6670
Solicitors
Ashurst
Level 32, Exchange Plaza
The Esplanade
Perth WA 6000
Bankers
Australia and New Zealand Banking Corporation
Auditors
HLB Mann Judd
Level 4, 130 Stirling Street
Perth WA 6000
Securities Exchange
Australian Securities Exchange (ASX: SFX)
Website
www.sheffieldresources.com.au
Australian Business Number (ABN)
29 125 811 083
3
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Chairman’s Letter
Dear Shareholders,
This has been an important year for Sheffield Resources with your Company securing all key permits, licences, debt
facility and engineering agreements required to commence the construction of the Thunderbird Mineral Sands Project.
The conclusion of the Bankable Feasibility Study Update post the end of the financial year, has demonstrated outstanding
outcomes and places our Company in a strong position to deliver the Thunderbird Project and drive shareholder value.
The first half of the year saw the focus of the Company directed toward achieving the signing of the Native Title Co-
existence Agreement with the Traditional Owners, execution of the Engineering, Procurement and Construction
agreement and the US$175 million debt facility agreement with Taurus and a terms sheet for A$95 million debt facility
with the Northern Australia Infrastructure Fund (NAIF). The Company also received all required environmental and
regulatory approvals resulting in the grant of the mining lease. The Thunderbird Mineral Sands Project is now fully
permitted.
A new Ore Reserve of 748 million tonnes at 11.2% HM was completed during the June 19 quarter. This represents an
increase of 68 million tonnes on the previous Ore Reserve of 680.5 million tonnes at 11.3% HM. The updated Ore
Reserve includes a substantial increase in contained zircon of 500,000 tonnes to 6.4 million tonnes which further
highlights the significant scale of the Thunderbird deposit.
In the second half of the year, the Company in conjunction with GR Engineering Services, undertook a six month, detailed
technical assessment culminating in a Bankable Feasibility Study Update which was released subsequent to the end of
the financial year. The study update has removed the ilmenite processing circuit and increased zircon production to
materially reduce the equity funding requirements for the Project by A$101 million. The outcomes of the Bankable
Feasibility Study Update demonstrate that Thunderbird is well placed to deliver long term benefits to all stakeholders.
Subsequent to the end of the year, the Company signed a binding cornerstone offtake agreement for the sale of 100%
of the stage 1 unroasted primary ilmenite production with Bengbu Zhongheng New Materials S&T Co., Ltd. Bengbu is
the world’s largest producer of fused zirconia, supplying state-of-the-art products globally and has targeted chloride
pigment production in its future growth plans. The sale of the ilmenite enhances Thunderbird’s economics by generating
additional revenue from primary ilmenite sales and complements the strategy identified in the Bankable Feasibility Study
Update. In addition, a further binding offtake agreement has been negotiated with Hainan Wensheng High-Tech
Materials Company increasing the contracted volume of the previous agreement from 27,000 tonnes of zircon
concentrate to 52,000 tonnes. This means that 100% of all stage 1 zircon and ilmenite production volumes at
Thunderbird are subject to binding offtake agreements.
The mineral sands industry is forecasting a structural supply deficit in the mid to long term for both zircon and titanium-
based minerals. This deficit places Sheffield in an excellent position as we expect to supply the market products at a
time when there is strong demand in parallel with a depleting supply base.
Your Company is focussed on the next steps required to bridge the funding gap and commence construction of the
Thunderbird Mineral Sands Project. As a result of the Bankable Feasibility Study Update the equity gap has been reduced
to a level of A$143 million. Engagement with strategic partners who have expressed interest in the Project, remains
ongoing and is expected to conclude during the second half of 2019. Subject to a Final Investment Decision,
construction works and mobilisation will commence shortly thereafter.
Our achievements this year were only made possible by the dedicated, engaged and highly capable team at all levels of
our organisation. I’d like to thank my fellow Directors, our people, business partners and stakeholders for their support
and commitment. I’d also like to welcome Ian Macliver and John Richards as Non-Executive Directors’ and look forward
to drawing on their extensive knowledge and experience as we move forward in developing the Thunderbird Mineral
Sands Mine. Finally, thank you to you, our shareholders, for your continued support as we move forward into this next
phase, and what I am sure will be an increasingly bright future for Sheffield Resources.
Will Burbury
Chairman
4
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Review of Operations
OVERVIEW
During the reporting period, Sheffield Resources Limited (Group, Company or Sheffield) continued the progression of its
world class Thunderbird Mineral Sands Project (Thunderbird or Project), located near Derby in the Canning Basin region
of Western Australia, culminating with the decision to commence a strategic partner process to support the development
of the Thunderbird Project.
Key Highlights for the Financial Year
Granted State and Federal environmental approval
Executed Native Title Agreement
Granted Thunderbird mining lease
Executed US$175 million project finance facility with Taurus Mining Finance
A$95m Northern Australia Infrastructure Fund term sheet approved
Executed EPC contract with GR Engineering Services
Executed Thunderbird LNG supply agreement
Signed binding primary ilmenite offtake agreement
Maiden Inferred Mineral Resource at Night Train of 130 million tonnes @ 3.3% HM
Maiden Inferred Mineral Resource at Mindarra Springs of 2,200 million tonnes @ 1.6% HM
Thunderbird Mineral Sands Project
During the year, the Company advanced its world class Thunderbird Mineral Sands Project. Several key milestones for
approvals, financing and construction readiness were delivered, and are described below.
In November 2018, the Traditional Owners for the Mt Jowlaenga Polygon #2 Native Title Claimant Application authorised
the Named Applicants to sign the Co-existence Agreement for Thunderbird. The signing of the agreement by the Named
Applicants makes the agreement binding on both the Company and the Traditional Owners.
Following the granting of the mining lease by Western Australia’s Department of Mines, Industry, Regulation and Safety
in September 2018, the Project received Federal environmental approval under the Environmental Protection and
Biodiversity Conservation Act 1999. The Federal approval followed the Western Australian Minister for Environment
issuing a Ministerial Statement consenting to the development and operation of Thunderbird. Federal environmental
approval represented the final key permit required to develop Thunderbird.
Financing arrangements to support the development of the Project progressed during the year with Sheffield executing
a US$175 million debt financing agreement with Taurus Mining Finance Fund. In addition, the Northern Australia
Infrastructure Fund (NAIF) Board made an investment decision to offer financial assistance via the provision of long-term
debt facilities totalling A$95 million.
In January 2019, the Company secured a 15-year agreement with Woodside Energy Limited (Woodside) and Energy
Developments Pty Ltd (EDL) for the supply and delivery of 1,950 terajoules per annum of liquified natural gas (LNG) to
Thunderbird.
LNG will be supplied from Woodside’s Pluto LNG Truck Loading Facility near Karratha in Western Australia and
transported to Thunderbird’s LNG storage facility by a newly formed joint venture between Woodside and EDL. The joint
venture will own and operate a purpose-built road tanker fleet to safely and reliably deliver the LNG to Thunderbird, as
is customary with other gas logistic arrangements in place for the towns of Broome, Derby and other communities in the
Kimberley.
Construction readiness activities continued during the year, with the signing of an A$366 million fixed price, lump sum
engineering, procurement and construction (EPC) contract with GR Engineering Services Limited (GRES) for the design
and construction of the Thunderbird mineral processing plant, supporting infrastructure and associated facilities.
Bankable Feasibility Study Update
Subsequent to the end of year, Sheffield concluded an update to the Bankable Feasibility Study originally published in
March 2017. The Bankable Feasibility Study Update (BFSU) has produced outstanding results for the Project.
The BFSU estimates a material reduction in Project capital requirements and execution risk, increases zircon production
and Project revenue by more than 30%, substantially enhancing the Project financial metrics. The Low Temperature
Roast (LTR) ilmenite circuit has been removed from the Project and unroasted primary ilmenite is forecast to be sold
5
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Review of Operations
under a 7 year binding offtake agreement, significantly de-risking project execution. The mining and processing feed
rate has increased by 38% to 1,085 dry tph to the Wet Concentrate Plant (WCP), targeting an average annual zircon
production of 202ktpa over the 37 year LOM, which would elevate Thunderbird into the top tier of global zircon producers.
The strong demand for Thunderbird products has resulted in 100% of the BFSU stage 1 revenues being under binding
offtake agreements, substantially reducing market and revenue risk.
The BFSU set out to materially improve the Project financial metrics by re-scoping the Project to reduce capital
expenditure, increase zircon production to meet strong demand from consumers globally as the structural supply deficit
widens and to supply primary ilmenite into the high growth chloride slag market. In particular, the growth in the chloride
pigment sector and the projected supply shortages of high-grade titanium feedstocks have created a new market
dynamic whereby chloride slag production and demand has continued to grow strongly. The changed market conditions
have enabled Sheffield to remove the LTR ilmenite circuit from the Project scope and sell the Primary Ilmenite into the
chloride slag sector.
Upscaling of the zircon circuit increases zircon production by 34% over the first 10 years of operations and almost 40%
over the life of the Project. This additional zircon production, in conjunction with the sale of the primary ilmenite, has
had a transformational impact on Thunderbird economics.
BFS Update - Key Comparatives to Previous Disclosures
Metric
2019 BFSU
Previous Disclosures
Change
Total Funding Requirement (million)
Equity Requirement (million)
Project Capital (million)
Project Revenue (billion)
Project Operating Costs (billion)
NPV10 pre-tax (billion)
NPV8 post-tax (billion)
IRR pre-tax (%)
Average Zircon Production ‘000tpa)
Offtake
LTR & Ilmenite Process Circuit
Process Rate (t/hr)
Mine Life (years)
Long Term FX Rate (A$/US$)
TZMI Long Term Zircon Price
A$478
A$143
A$392
A$15.1
A$7.21
A$1.13
A$0.98
30.1
202
~100%
Not Required
1,085
37
0.75
US$1,469
A$579
A$251
A$463
A$13.6
A$7.63
A$0.67
A$0.62
24.9
145
>75%
Included in Stage 1
788
42
0.75
US$1,387
A$101 (17%)
A$108 (43%)
A$71 (15%)
A$1.57 (11%)
A$0.42 (6%)
A$0.46 (69%)
A$0.36 (58%)
5.2 (21%)
57 (39%)
Full
Removed
297 (38%)
5 years (12%)
No change
US$82 (6%)
Thunderbird Project Key Financial Metrics (A$m)
A$ million, Real 2019 Prices
Stage 1
FY 2022 – 2025
Stage 1 and 2
FY 2026 – 2031
Revenue
Royalties
Net Revenue
Opex: Mining
Opex: Processing
Opex: Logistics
Opex: Site G&A
Total Opex
EBITDA
Site costs / tonne ore mined
Revenue / tonne ore mined
Revenue to C1 Cost Ratio
1,082
(73)
1,009
(137)
(186)
(102)
(60)
(485)
524
11.34
25.31
2.2
2,979
(218)
2,760
(405)
(497)
(258)
(103)
(1,262)
1,498
9.28
21.91
2.4
LOM
15,129
(1,089)
14,040
(2,522)
(2,764)
(1,266)
(619)
(7,170)
6,869
9.58
20.21
2.1
6
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Review of Operations
The BFSU estimates a new Ore Reserve of 748 million tonnes at 11.2% Heavy Mineral (HM), an increase of 68 million
tonnes or approximately 10%. This reflects changes in market product pricing and increased certainty in costs and
revenue for Thunderbird. The Ore Reserve increases the period of mining higher grade ore from 7 years to 10 years and
removes lower grade ore from the process plant feed during this period, increasing the in-situ zircon grade in the Proved
Category to 1.02% zircon.
The staged development strategy has been implemented to materially reduce pre-development capital, lower
construction risk and increase revenues by focusing on a substantial increase in zircon production:
•
•
Stage 1: Single Mining Unit Plant (MUP) and processing plant underpinning a 10.4Mtpa mining operation
Stage 2: Duplication in year 5 of Stage 1 mining and processing circuits underpinning a 20.8Mtpa mining operation
The BFSU delivers a pre-finance and pre-tax IRR of 30.1% and an NPV10 of A$1.13 billion over the 37 year LOM. This
approach targets negligible variation to current debt carrying capacity levels, reduces construction and commissioning
risk and materially lowers equity funding requirements to A$143 million.
Thunderbird Project Key Financial Metrics (A$m)
A$ million, Real 2019 Prices
Stage 1
FY 2022 – 2025
Stage 1 and 2
FY 2026 – 2031
1,082
(485)
524
392
3.25
2,979
(1,262)
1,498
237
Revenue
C1 Operating Costs
EBITDA
Direct Capital Expenditure
Payback Period (Stage 1, years)
Project NPV (10% WACC, Pre-Tax)
Project IRR (%, Pre-Tax)
Project NPV (8% WACC, Post-Tax)
Project IRR (% Post-Tax)
Project Construction Readiness
LOM
15,129
(7,170)
6,869
725
1,129
30.1%
982
24.0%
In November 2018 the Company signed a A$366 million EPC contract with GRES. Under the EPC contract, GRES would
have designed and constructed a 788 dry tph Stage 1 mineral processing plant and supporting infrastructure.
The EPC contract provided for the turnkey delivery of the Project’s processing infrastructure, including process design
engineering, procurement, construction, commissioning and performance testing of the facilities over a construction and
commissioning period of approximately two years. The 2018 EPC contract included the following items:
Plant area civils and process water
Concentrate upgrade plant
Zircon processing plant
Ilmenite processing plant
Low temperature roast plant (ilmenite upgrade)
•
• Wet concentrator plant
•
•
•
•
• Hot acid leach
•
•
•
•
Site administration complex, stores and process workshops
Bore field headworks and high voltage (HV) distribution
Internal roads, hardstand and other infrastructure to support the processing operations
Operational support during the first six months of ramp-up
As part of the BFSU, the LTR circuit has been removed from stage 1 of construction and the process plant throughput
has been increased to 1,085 dry tph. This will result in a change to the scope and the fixed price EPC contract, and the
Company expects to negotiate a revised contract with GRES on similar terms and conditions.
7
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Review of Operations
Early Works Program
Site access and infrastructure for Thunderbird was completed during the year in accordance with the State Government
approved Minor or Preliminary works (MoPW). The installation of 52 accommodation units and associated ancillary
buildings was completed by local Kimberley businesses. The potable and waste water treatment equipment was
installed and commissioned in preparation for occupancy of the accommodation village upon the completion of the
funding process.
Installation of communications infrastructure for the Project was completed with the communication towers and
equipment at Jillian Ridge and Thunderbird commissioned and operational. The communication infrastructure provides
coverage over the village accommodation and EPC construction sites which is key to the commencement of construction.
Eighteen kilometres of pastoral access road were upgraded by the pastoral lessee, enabling improved access to site.
Asset protection activities were completed prior to the wet season and included the lock down of key infrastructure and
the setup of a care and maintenance program.
First stages of Project accommodation and associated facilities, communications and site access roads have been
progressed to a level to ensure Thunderbird is construction ready.
Aboriginal Engagement
In November 2018, Sheffield recognised its inaugural Indigenous graduate trainees. Having successfully completed the
Thunderbird six month construction Work Ready Program in 2017, the trainees were offered positions in the Thunderbird
Group Training Program. Following 14 months of intensive training, five trainees graduated with a Certificate 3 in Civil
Construction and the opportunity for an employment position with the Thunderbird construction workforce.
Sustainability
The Group achieved significant milestones during the year in relation to Native Title and Government approvals.
Following a favourable National Native Title Tribunal (NNTT) decision, the Western Australian Department of Mines,
Industry, Regulation and Safety granted the Mining Lease for Thunderbird in September 2018.
The State environmental approval process was concluded with the Western Australian Minister for Environment issuing
a Ministerial Consent for the development and operation of Thunderbird, following four years of environmental studies,
consultation and assessment. The completion of the State environmental approval process enabled the Australian
Government’s Department of Environment and Energy to grant the Federal environmental approval for Thunderbird,
delivering the final key approval required for the Project.
The Company negotiated a Co-existence Agreement with the Traditional Owner Negotiation Committee (TONC) that
represents the Traditional Owners, allowing the Kimberley Land Council (KLC) to proceed with an Authorisation Meeting.
The Authorisation Meeting of Traditional Owners was held in late October 2018 where the Named Applicants were
authorised to execute the Thunderbird Project Co-existence Agreement. The Agreement establishes a framework by
which the Company will work with the Traditional Owners to protect Aboriginal heritage and the environment and deliver
sustainable employment and business outcomes for Traditional Owners and the wider Aboriginal community.
Marketing and Offtake
Subsequent to 30 June 2019, the Company announced an additional binding offtake agreement for zircon concentrate.
This means that the Company has now secured offtake for 100% of all Stage 1 zircon and ilmenite production volumes
at Thunderbird. This has significantly reduced market and revenue risk.
Within the mineral sands industry there are two major product streams, the zircon based (ZrO2) material and the titanium
(TiO2) based material. The Company is forecast to supply the market with Premium Zircon, Zircon Concentrate and
Primary Ilmenite.
Zircon prices have significantly increased over the past 12 months and are expected to show steady incremental growth
over the next 3-4 years. The price increases and steady market have been driven by the larger, more sophisticated
producers who are managing the market supply balance. Forecast pricing is underpinned by a significant supply gap
expected to emerge for zircon, and the consensus view supports the need for additional supply from 2020 onwards.
8
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Review of Operations
Project Financing
In November 2018, the Debt Facility Agreement (Facility) with Taurus Mining Fund and Taurus Mining Finance Annex
Fund (Taurus) was executed based on the 2017 Bankable Feasibility Study development strategy. Under the terms of
the Facility, Taurus provided a US$175 million senior loan facility, which would have partially funded the construction of
Thunderbird. Execution of the Facility followed thorough technical due diligence by Taurus of process design criteria and
commercial, operational and construction agreements. The third party due diligence process significantly de-risks the
delivery of Thunderbird for Sheffield shareholders. Drawdown of the facility would have been subject to the completion
of conditions precedent.
In September 2018, the NAIF Board made an investment decision to offer financial assistance to support the
development of the Thunderbird Mineral Sands Project via the provision of long term debt facilities totalling A$95 million.
The NAIF facilities enable the Company to construct on-site LNG power generation and storage facilities at Thunderbird,
in addition to enabling the upgrading of mine site roads, in-sourcing of mine site accommodation and facilitate the
construction and revitalisation of ship loading and logistics assets within the Port of Derby in Western Australia.
As part of the BFSU, the Company is targeting to establish the existing debt capacity levels under similar terms and
conditions with Taurus and NAIF. The NAIF facilities are subject to definitive written agreements entered into between
the Company and the State of Western Australia. The Company continues to work towards the execution of these
agreements.
Corporate
In December 2018 the Company concluded an institutional placement which raised approximately A$16 million with a
Share Purchase Plan (SPP) raising an additional $0.7 million in January 2019. The funds raised were allocated to fund
detailed engineering and design, key early works, working capital and corporate costs including costs relating to debt
and equity.
In January 2019 the Company announced the appointment of UBS AG, Australia Branch (UBS), a leading global
investment bank, to act as corporate adviser to the Company. UBS has been engaged to assist the Company in
identifying whether the introduction of a strategic party would assist the Company in achieving its objective of funding
Thunderbird into operations. The introduction of a strategic party to Thunderbird via this process could have the effect
of reducing the equity funding requirement attributable to Sheffield, as the strategic partner would likely be responsible
for their proportionate share of residual capital requirements in the case of a project level investment. UBS is managing
a structured, formal process to evaluate and progress this interest.
In June 2019 the Company advised that it had mandated Taurus to provide a US$10 million bridging finance facility.
The provision of this 18 month facility enables the strategic partner process to run its course in parallel with the update
to the Bankable Feasibility Study for Thunderbird.
Exploration
During the year, Sheffield undertook an extensive regional air core drill campaign at its Dampier Project. This drilling
identified numerous new high-value, zircon rich mineral assemblage targets across multiple domains with variable TiO2
mineral components. These new targets with variable thickness of mineralised horizons include six new mineral sands
discoveries at Bohemia, Buckfast, Cisco, Cold Duck, Concorde and Porphyry Pearl. Sheffield also produced a maiden
Inferred Resource at its Night Train Heavy Mineral (HM) Prospect of 130Mt @ 3.3% HM containing 3.6Mt of Valuable
Heavy Mineral (VHM) at a 1.2% HM cut-off.
Sheffield’s current portfolio of heavy mineral sands exploration projects comprise of the Dampier Project located in the
Canning Basin of Western Australia, the Eneabba and McCalls Projects located in the North Perth Basin of Western
Australia and the Barton Project located in the Eucla Basin of South Australia. Sheffield’s exploration strategy is to target
additional large, high value, zircon rich deposits suitable for downstream processing at the Thunderbird Mineral
Separation Plant. Sheffield will continue to actively pursue and evaluate new mineral sands opportunities in Australia
and overseas, with a focus on zircon rich deposits.
Dampier Project
Sheffield completed a regional aircore drill program identifying multiple new mineral sands prospects along a 160km
highly prospective mineralised trend, confirming high-value zircon rich mineral assemblages are widespread around the
Thunderbird Mineral Sands Project. New targets identified during the program include Bohemia, Buckfast, Cisco, Cold
Duck, Concorde and Porphyry Pearl that have mineralised horizons of variable thickness and are characterised by
coarser grained zircon, high VHM and high leucoxene content. The aircore drill program has identified that multiple
9
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Review of Operations
broad stacked mineralised horizons are present emphasizing the strategic value of Sheffield’s tenements at the Dampier
Project.
A maiden Inferred Mineral Resource at Night Train was completed during the reporting period. In total a coherent 130Mt
@ 3.3% HM containing 3.6 million tonnes of VHM at 1.2% HM cut-off was estimated at Night Train, which includes a high
grade component of 50 million tonnes @ 5.9% HM containing 2.6 million tonnes of VHM at a 2.0% HM cut-off. Within
the high grade component in-situ grade of 0.82% zircon, 0.33% HiTi leucoxene and rutile, 2.9% leucoxene, 1.06%
ilmenite comprise of 87% VHM. Mineralisation at Night Train is zircon and leucoxene rich, clean and free of coatings,
has a high valuable heavy mineral component and contains low levels of trash minerals, oversize and slimes.
Derby East Project
Sheffield is investigating the potential of the Derby East Project tenements, located 25km east of Derby, to yield
commercial quantities of sand for construction purposes. Sheffield carried out nine aircore drill holes for 416 metres,
with a maximum depth of 66 metres. Eight of the nine holes intersected clean, sub-angular to sub-rounded medium to
coarse sands beneath cover of 4.5 metres to 12 metres.
Samples from the drilling will be assessed for suitability for commercial end-use requirements.
Barton Project
Exploration Licence Application (ELA) 2018/00046 (lodged in March 2018) covers an area of 983.8 km2 in the north-
eastern Eucla Basin of central South Australia. The tenement application covers parts of the Eocene to Miocene
sequence in the north-eastern Eucla Basin. Within this sequence the sand units of the Ooldea and Hampton Formations
have the potential to host significant concentrations of heavy minerals with shallow marine or share face sand units.
The tenement remains in application and no work has been carried out.
Eneabba Project
Mineral Resource JORC 2012 updates were produced for the Eneabba Project prospects of Drummond Crossing, Durack,
Ellengail, West Mine North and Yandanooka, within Sheffield’s 100% owned Eneabba Project located about 110km north
of Perth in Western Australia’s Midwest region.
The total combined Mineral Resources for Sheffield’s Eneabba Project is 193 million tonnes @ 3.0% HM (Measured,
Indicated and Inferred) containing 4.8 million tonnes of VHM, across seven deposits. This includes insitu Total Heavy
Mineral (THM) of 5,723kt at various cut-offs containing 705kt zircon, 392kt rutile, 242kt leucoxene, 3,423kt ilmenite
(Measured, Indicated and Inferred) totalling 4,762kt of VHM (see ASX 3 October 2018).
McCall’s Project
A maiden JORC 2012 Inferred Mineral Resource was produced for the Mindarra Springs prospect totalling 2,200 million
tonnes @ 1.6% HM (applying a 1.1% cut-off). An update to the McCalls Mineral Resource was completed to include
Exploration Licence E70/4922 and exclude a relinquished area of high slimes content.
The McCalls Project containing the prospects of McCalls and Mindarra Springs has a total combined Indicated and
Inferred Mineral Resource of 5,800Mt @ 1.4% HM (applying a cut-off of 1.1% HM). This includes insitu THM of 84.0Mt
at 1.1% HM cut-off with 3,950kt zircon, 2,020kt rutile, 2,570lt leucoxene, 66,180kt ilmenite totalling 75,340kt of VHM.
10
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Ore Reserves and Mineral Resources
Ore Reserve
Sheffield announced an updated Ore Reserve totalling 748 million tonnes @ 11.2% HM for the Thunderbird deposit, in
the Kimberley Region of Western Australia, on 31 July 2019, and has completed an updated Bankable Feasibility Study
for development of the Thunderbird Mineral Sands Project, on 31 July 2019. The Ore Reserve estimate is based on the
current, July 2016 Thunderbird Mineral Resource estimate, announced to the ASX on 5 July 2016. Measured and
Indicated Mineral Resources were converted to Proved and Probable Ore Reserves respectively, subject to mine design,
modifying factors and economic evaluation.
Ore Reserve for Dampier Project at 30 June 2019
Dampier Project Ore Reserve 1,2,3,4
Deposit
Ore Reserve
Category
Ore
Tonnes
(millions)
In-situ HM
Tonnes
(millions)
HM
Grade
(%)
Valuable HM Grade (In-situ)5
Zircon
(%)
HiTi
Leuc
(%)
Leuc
(%)
Ilmenite
(%)
Slimes
(%)
Osize
(%)
Proved
Thunderbird
Probable
Total
219
529
748
30.0
53.4
83.8
13.7
1.02
0.30
0.28
3.68
16.1
14.0
10.1
0.79
0.26
0.27
2.87
14.5
10.5
11.2
0.86
0.27
0.27
3.11
15.0
11.6
Deposit
Ore Reserve
Category
Ore
Tonnes
(millions)
In-situ HM
Tonnes
(millions)
HM
Grade
(%)
Mineral Assemblage6
Zircon
(%)
HiTi
Leuc
(%)
Leuc
(%)
Ilmenite
(%)
Slimes
(%)
Osize
(%)
Proved
Thunderbird
Probable
Total
219
529
748
30.0
53.4
83.8
13.7
7.4
2.2
2.0
26.9
16.1
14.0
10.1
7.8
2.6
2.7
28.4
14.5
10.5
11.2
7.7
2.4
2.4
27.8
15.0
11.6
1) The Ore Reserve estimate was prepared by Entech Pty Ltd and first disclosed under the JORC Code (2012), refer to ASX announcement 31 July
2019 for further details including Table 1. Ore Reserve is reported to a design overburden surface with appropriate consideration of modifying factors,
costs, mineral assemblage, process recoveries and product pricing.
2) Ore Reserve is a sub-set of Mineral Resource
3) HM is within the 38µm to 1mm size fraction and reported as a percentage of the total material, slimes is the -38µm fraction and oversize is the
+1mm fraction.
4) Tonnes and grades have been rounded to reflect the relative accuracy and confidence level of the estimate, thus the sum of columns may not equal.
5) The in-situ assemblage grade is determined by multiplying the percentage of HM by the percentage of each valuable heavy mineral within the heavy
mineral assemblage at the Resource block model scale.
6) Mineral assemblage as a percentage of HM Grade, it is derived by dividing the in-situ grade by the HM grade.
11
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Ore Reserves and Mineral Resources
The Ore Reserve estimate was prepared by Entech Pty Ltd, an experienced and prominent mining engineering
consultancy with appropriate mineral sands experience in accordance with the JORC Code (2012 Edition). The Ore
Reserve is estimated using all available geological and relevant drill hole and assay data, including mineralogical
sampling and test work on mineral recoveries and final product qualities.
The Company is not aware of any new information or data that materially affects the information included in the Ore
Reserve estimate and confirms that all material assumptions and technical parameters underpinning the estimate
continue to apply and have not materially changed.
Mineral Resource
The Company’s Mineral Resources are detailed below:
Mineral Resources for Dampier Project at 31 January 2019
Dampier Project Mineral Resources 1,2,3
Deposit
(cut-off)
Mineral
Resource
Category
Cut-off
(THM%)
Material
Tonnes
(millions)
In-situ
HM
Tonnes7
(millions)
HM
Grade
(%)
Mineral Assemblage
Zircon
(%)
HiTi
Leuc6
(%)
Leuc
(%)
Ilmenite
(%)
Slimes
(%)
Osize
(%)
Thunderbird4
low-grade
Night Train5
low-grade
Thunderbird4
high -grade
Night Train5
high-grade
Measured
Indicated
Inferred
Total
Inferred
Total
Measured
Indicated
Inferred
Total
Inferred
Total
3.0
3.0
3.0
3.0
1.2
1.2
7.5
7.5
7.5
7.5
2.0
2.0
510
2,120
600
3,230
130
130
220
640
180
1,050
50
50
45
140
38
223
4.2
4.2
32
76
20
127
3.0
3.0
8.9
6.6
6.3
6.9
3.3
3.3
14.5
11.8
10.8
12.2
5.9
5.9
8.0
8.4
8.4
8.3
14
14
7.4
7.6
8.0
7.6
14
14
2.3
2.7
2.6
2.6
5.4
5.4
2.1
2.4
2.5
2.3
5.6
5.6
2.2
3.1
3.2
2.9
46
46
1.9
2.1
2.4
2.1
49
49
27
28
28
28
22
22
27
28
28
27
18
18
18
16
15
16
8.7
8.7
16
14
13
15
10.2
10.2
12
9
8
9
2.2
2.2
15
11
9
11
2.2
2.2
1) Night Train: The Mineral Resources estimate was prepared by Optiro Pty Ltd and first disclosed under the JORC Code (2012) refer to ASX
announcement 31 January 2019 for further details including Table 1. The Mineral Resource reported above 1.2% HM cut-off is inclusive of (not
additional to) the Mineral Resource reported above 2.0% HM cut-off. Thunderbird: The Mineral Resource estimate was prepared by Optiro Pty Ltd
and first disclosed under the JORC Code (2012) refer to ASX announcement5 July 2016 fur further details including Table 1. The Dampier Project
Mineral Resources are reported inclusive of (not additional to) Ore Reserves. Thunderbird: The Mineral Resource reported above 3% HM cut-off is
inclusive of (not additional to) the Mineral Resource reported above 7.5% HM cut-off. Night Train: The Mineral Resource reported above 1.2% HM
cut-off is inclusive of (not additional to) the Mineral Resource reported above 2.0% HM cut-off.
2) HM is within the 38µm to 1mm size fraction and reported as a percentage of the total material, slimes is the -38µm fraction and oversize is the
+1mm fraction.
3) Tonnes and grades have been rounded to reflect the relative accuracy and confidence level of the estimate, thus the sum of columns may not equal.
4) Thunderbird: Estimates of Mineral Assemblage are presented as percentages of the Heavy Mineral (HM) component of the deposit, as determined
by magnetic separation, QEMSCANTM and XRF. Magnetic fractions were analysed by QEMSCANTM for mineral determination as follows: Ilmenite: 40-
70% TiO2 >90% Liberation; Leucoxene: 70-94% TiO2 >90% Liberation; High Titanium Leucoxene (HiTi Leucoxene): >94% TiO2 >90% Liberation; and
Zircon: 66.7% ZrO2+HfO2 >90% Liberation. The non-magnetic fraction was submitted for XRF analysis and minerals determined as follows: Zircon:
ZrO2+HfO2/0.667 and High Titanium Leucoxene (HiTi Leucoxene): TiO2/0.94.
5) Night Train: Estimates of Mineral Assemblage are presented as percentages of the Heavy Mineral (HM) component of the deposit, as determined
by magnetic separation, QEMSCANTM and XRF for one of 12 composite samples. Magnetic fractions were analysed by QEMSCANTM for mineral
determination as follows: Ilmenite: 40-70% TiO2 >90% Liberation; Leucoxene: 70-90% TiO2 >90% Liberation; High Titanium Leucoxene (HiTi
Leucoxene) and Rutile 90% TiO2 >90% Liberation, and Zircon: 66.7% ZrO2+HfO2 >90% Liberation. The non-magnetic fraction was submitted for XRF
analysis and minerals determined as follows: Zircon: ZrO2+HfO2/0.667 and High Titanium Leucoxene (HiTi Leucoxene): TiO2/0.94. HM assemblage
determination- was by the QEMSCANTM process for 11 of 12 composite samples which uses observed mass and chemistry to classify particles
according to their average chemistry, and then report mineral abundance by dominant % mass in particle. For the TiO2 minerals the following
breakpoints were used to distinguish between Ilmenite 40% to 70% TiO2, Leucoxene 70% to 90% TiO2, High Titanium Leucoxene and Rutile > 90%,
Screening of the heavy mineral was not required.
6) HiTi Leucoxene and Rutile (%) combined for Night Train at a >90% TiO2 (as one assemblage sample utilised=> 90% rutile and HiTi Leucoxene), HiTi
Leucoxene for Thunderbird > 94% TiO2
7) The contained in-situ tonnes for the valuable heavy minerals were derived from information from the Mineral Resource tables. The in-situ
assemblage grade is determined by multiplying the percentage of HM by the percentage of each valuable heavy mineral within the heavy mineral
assemblage at the Resource block model scale.
12
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Ore Reserves and Mineral Resources
Mineral Resources for Eneabba Project at 03 October 2018
Eneabba Project Mineral Resources 1,2
Deposit
(cut-off)
Mineral
Resource
Category
Cut-off
(THM%)
Material
Tonnes
(millions)
In-situ HM
Tonnes11
(thousands)
HM
Grade
(%)
Mineral Assemblage
Zircon
(%)
Rutile
(%)
Leuc
(%)
Ilmenite
(%)
Slimes
(%)
Osize
(%)
Yandanooka4,6,8
Durack4,6,7,8
Drummond
Crossing3,4,6,8
Robbs Cross5,6,8
Thomson5,8
West Mine
North3,4,6,9
Ellengail3,4,9,10
All Eneabba
Project
(various)
Measured
Indicated
Inferred
Total
Indicated
Inferred
Total
Indicated
Inferred
Total
Indicated
Inferred
Total
Inferred
Total
Indicated
Inferred
Total
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1.4
2.0
2.0
2.0
2.0
2.0
2.0
1.4
Various
Various
Various
2.6
57.7
0.4
60.8
20.7
5.6
26.3
35.5
3.3
38.8
14.0
3.8
17.8
26
26
10.2
1.8
12.0
6.5
5.3
11.8
2.6
144.6
46.0
193.3
112
1,726
7
1,845
600
148
748
838
77
915
261
77
338
516
516
748
48
796
346
218
565
112
4,519
1,091
5,723
4.3
3.0
1.5
3.0
2.9
2.6
2.8
2.4
2.3
2.4
1.9
2.0
1.9
2.0
2.0
7.3
2.7
6.6
5.3
4.1
4.8
4.3
3.1
2.4
3.0
10
12
11
12
14
14
14
14
11
14
15
14
15
19
19
6
9
6
10
10
10
10
12
15
12
2.1
3.6
3.0
3.5
2.9
2.6
2.9
10.3
9.0
10.2
12.7
10.9
12.3
13.8
13.8
6.5
8.6
6.6
8.0
8.2
8.1
2.1
6.1
10.3
6.8
2.3
3.7
4.4
3.6
3.7
7.4
4.4
3.4
2.7
3.4
5.0
4.1
4.8
5.4
5.4
1.8
2.1
1.8
10.4
8.4
9.6
2.3
3.9
5.8
4.2
72
69
68
70
71
64
70
53
56
54
47
50
48
42
42
48
50
48
66
62
64
72
62
51
60
15
15
20
15
14
16
14
14
12
14
6
6
6
18
18
11
17
12
15
15
15
15
14
16
14
11.3
11.4
21.9
11.5
14.7
18.3
15.5
7.7
7.2
7.7
6.2
8.1
6.6
6.9
6.9
2.3
3.0
2.4
3.2
2.5
2.9
11
9
8
9
1) The Mineral Resource estimates were prepared by Optiro Pty Ltd and first disclosed under the JORC Code (2012). Refer to ASX announcement 03
October 2018 for Yandanooka, Durack, Drummond Crossing, West Mine North, Ellengail for further details and table 1. Refer to December 2017
Quarterly Activities Report for Robbs Cross and Thomson deposits for further details and table 1.
2) All tonnages and grades have been rounded to reflect the relative uncertainty of the estimate, thus the sums of columns may not equal.
3) HM %: Samples from 1989 and 1996 (Drummond Crossing, Ellengail and West Mine North) were analysed using a -75 µm slimes / +2 mm oversize
screen. Separation of HM% was by heavy liquid TBE (density 2.84 g/ml) from the -710µm+75µm fraction.
4) HM %: RGC samples from 1998 and Iluka samples (Drummond Crossing, Durack, Ellengail, West Mine North and Yandanooka) were analysed using
a -53 µm slimes / +2 mm oversize screen. Separation of total HM% was by heavy liquid TBE (density 2.90 g/ml) from the -710µm+53µm fraction.
5) HM %: Samples from Robbs Cross and Thomson analysed by Diamantina Laboratories in Perth using a -45 µm slimes / +1 mm oversize screen
(method DIA_HLS_45µm_1mm). Separation of total HM% was by heavy liquid TBE (density 2.96g/ml) from the -45 µm+1mm fraction.
6) HM %: Samples from Drummond Crossing, Durack, West Mine North and Yandanooka were analysed by Western Geolabs in Perth using a -53 µm
slimes / +1 mm oversize screen. Separation of total HM% was by heavy liquid TBE (density 2.96 g/ml) from the +53µm-1mm fraction.
7) Reported below an upper cut-off grade of 35% slimes.
8) Estimates of mineral assemblage are presented as percentages of the total heavy mineral (THM) component of the deposit, as determined by
QEMSCAN analysis. For the TiO2 minerals specific breakpoints are used to distinguish between rutile (>95% TiO2), leucoxene (85-95% TiO2) and
ilmenite (<55-85% TiO2).
9) At West Mine North and Ellengail mineral assemblage data determined by Iluka using Method 4 (HMC is separated into magnetics and non-
magnetics) was used with the Sheffield QEMSCANTM data.
10) At Ellengail mineral assemblage data determined by Iluka using Method 3 (magnetic separation and XRF analysis) was used with the Sheffield
QEMSCAN data and Iluka Method 4 data.
11) The contained in-situ tonnes for the valuable heavy minerals were derived from information from the Mineral Resource tables. The in-situ
assemblage grade is determined by multiplying the percentage of HM by the percentage of each valuable heavy mineral within the heavy mineral
assemblage at the Resource block model scale.
13
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Ore Reserves and Mineral Resources
Mineral Resources for McCalls Project at 03 October 2018
McCalls Project Mineral Resources 1,2,3,4,7
Deposit
(cut-off)
Mineral
Resource
Category
Cut-off
(THM%)
Material
Tonnes
(millions)
In-situ
HM
Tonnes6
(millions)
HM
Grade
(%)
Zircon
(%)
Rutile
(%)
Leuc
(%)
Ilmenite
(%)
Slimes
(%)
Osize
(%)
Mineral Assemblage5
McCalls
Mindarra
Springs
All
McCalls
Project
Indicated
Inferred
Total
Inferred
Total
Indicated
Inferred
Total
1.1
1.1
1.1
1.1
1.1
1.1
1.1
1.1
1,630
1,980
3,600
2,200
2,200
1,630
4,180
5,800
23.3
24.4
47.7
36.3
36.3
2.3
60.7
84.0
1.4
1.2
1.3
1.6
1.6
1.4
1.5
1.4
5.2
5.0
5.1
4.2
4.2
5.2
4.5
4.7
3.3
3.8
3.6
0.9
0.9
3.3
2.1
2.4
2.8
3.2
3.0
3.1
3.1
2.8
3.2
3.1
77
81
79
80
80
77
81
79
21
26
24
20
20
21
23
22
1.1
1.1
1.1
5.1
5.1
1.1
3.2
2.6
1) The Mineral Resource estimates were prepared by Optiro Pty Ltd and first disclosed under the JORC Code (2012) refer to ASX announcement 03
October 2018 for McCalls and Mindarra Spring details and table 1.
2) All tonnages and grades have been rounded to reflect the relative uncertainty of the estimate, thus the sums of columns may not equal.
3) HM is within the 45µm to 1mm size fraction and reported as a percentage of the total material, slimes is the -45µm fraction and oversize is the
+1mm fraction.
4) Reported below an upper cut-off grade of 35% slimes.
5) Estimates of mineral assemblage (Sheffield) are presented as percentages of the total heavy mineral (HM) component of the deposit, as determined
by QEMSCAN analysis. For the TiO2 minerals specific breakpoints are used to distinguish between rutile (>95% TiO2), leucoxene (85-95% TiO2) and
ilmenite (<55-85% TiO2). Estimates of mineral assemblage (BHP) HM assemblage determination was by magnetic separation and observation (grain-
counting)
6) The contained in-situ tonnes for the valuable heavy minerals were derived from information from the Mineral Resource tables. The in-situ
assemblage grade is determined by multiplying the percentage of HM by the percentage of each valuable heavy mineral within the heavy mineral
assemblage at the Resource block model scale.
7) Excludes Mineral Resources within the Mogumber Nature Reserve
GOVERNANCE AND INTERNAL CONTROLS
Mineral Resource and Ore Reserve are compiled by qualified Sheffield personnel and / or independent consultants
following industry standard methodology and techniques. The underlying data, methodology, techniques and
assumptions on which estimates are prepared are subject to internal peer review by senior Company personnel, as is
JORC compliance. Where deemed necessary or appropriate, estimates are reviewed by independent consultants.
Competent Persons named by the Company are members of the Australasian Institute of Mining and Metallurgy and /
or the Australian Institute of Geoscientists and qualify as Competent Persons as defined in the JORC Code 2012.
COMPETENT PERSONS AND COMPLIANCE STATEMENTS
The information in this report that relates to Exploration Results is based on information compiled by Mr Seb Gray, a
Competent Person who is a Member of Australian Institute of Geoscientists (AIG). Mr Gray is a full-time employee of
Sheffield Resources Ltd and has sufficient experience that is relevant to the style of mineralisation and type of deposit
under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition
of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Gray consents
to the inclusion in the report of the matters based on his information in the form and context in which it appears.
The Company’s Ore Reserves and Mineral Resources Statement is based on information first reported in previous ASX
announcements by the Company. These announcements are listed below and are available to view on Sheffield’s website
www.sheffieldresources.com.au. Mineral Resources and Ore Reserves reported for the Dampier Project and Mineral
Resources reported for the Eneabba and McCalls Projects, are prepared and disclosed under the JORC Code 2012. The
Company confirms that it is not aware of any new information or data that materially affects the information included in
the relevant original market announcements and that all material assumptions and technical parameters underpinning
the estimates in the relevant original market announcement continue to apply and have not materially changed.
14
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Ore Reserves and Mineral Resources
The information in this report that relates to the estimation of the Ore Reserve is based on information compiled by Mr
Per Scrimshaw, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mr
Scrimshaw is employed by Entech Pty Ltd and has sufficient experience that is relevant to the style of mineralisation and
type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in
the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.
Mr Scrimshaw consents to the inclusion in the report of the matters based on his information in the form and context in
which it appears.
The information in this report that relates to the estimation of the Mineral Resources is based on information compiled
by Mrs Christine Standing, a Competent Person who is a Member of the Australian Institute of Geoscientists (AIG) and
the Australasian Institute of Mining and Metallurgy (AusIMM). Mrs Standing is a full-time employee of Optiro Pty Ltd and
has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to
the activity which she is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mrs Standing consents to the inclusion
in this report of the matters based on her information in the form and context in which it appears.
The information in this report that relates to the Thunderbird Mineral Resource is based on information compiled under
the guidance of Mr Mark Teakle, a Competent Person who is a Member of the Australian Institute of Geoscientists (AIG)
and the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Teakle is a full-time employee of Sheffield
Resources Ltd and has sufficient experience that is relevant to the style of mineralisation and type of deposit under
consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of
the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Teakle consents
to the inclusion in the report of the matters based on his information in the form and context in which it appears.
The Competent Persons for reporting of Mineral Resources and Ore Reserves in the relevant original market
announcements are listed below. The Company confirms that the form and context in which the Competent Persons’
findings are presented have not been materially modified from the relevant original market announcement.
Ore Reserves and Mineral Resources prepared and first disclosed under the JORC Code 2012:
Item
Report title
Thunderbird Ore Reserve
Thunderbird Mineral Resource
Night Train Mineral Resource
Robbs Cross Mineral Resource
Thomson Mineral Resource
Yandanooka Mineral Resource
Durack Mineral Resource
Doubles Measured
Thunderbird 10% Ore Reserve
Increase
Sheffield
Mineral Resource at Thunderbird
High Grade Maiden Mineral
Resource at Night Train
Quarterly Activities Report for The
Period Ended 31 December 2017
Quarterly Activities Report for the
Period Ended 31 December 2017
Mineral Resource and Ore Reserve
Statement
Mineral Resource and Ore Reserve
Statement
Mineral Resource and Ore Reserve
Statement
Crossing Mineral
Drummond
Resource
West Mine North Mineral Resource Mineral Resource and Ore Reserve
Ellengail Mineral Resource
McCalls Mineral Resource
Statement
Mineral Resource and Ore Reserve
Statement
Mineral Resource and Ore Reserve
Statement
Report date
31 July 2019
05 July 2016
31 January 2019
Competent
person(s)
P. Scrimshaw
M. Teakle
C. Standing
C. Standing
25 January 2017
C. Standing
25 January 2017
C. Standing
03 October 2018
C. Standing
03 October 2018
C. Standing
03 October 2018
C. Standing
03 October 2018
C. Standing
03 October 2018
C. Standing
03 October 2018
C. Standing
Mindarra Springs Mineral Resource Mineral Resource and Ore Reserve
03 October 2018
C. Standing
Statement
15
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Ore Reserves and Mineral Resources
Item
Name
Company
Exploration Results
Mineral Resource Reporting
Mineral Resource Estimation
Ore Reserve
Mr Seb Gray
Mr Mark Teakle
Mrs Christine Standing
Mr Per Scrimshaw
Sheffield Resources
Sheffield Resources
Optiro
Entech
Professional
Affiliation
MAIG
MAIG, MAusIMM
MIAG, MAusIMM
MAusIMM
SUPPORTING INFORMATION REQUIRED UNDER ASX LISTING RULES, CHAPTER 5
The supporting information below is required, under Chapter 5 of the ASX Listing Rules, to be included in market
announcements reporting estimates of Mineral Resources and Ore Reserves.
PREVIOUSLY REPORTED INFORMATION
This report includes information that relates to Exploration Results, Mineral Resources and Ore Reserves prepared and
first disclosed under the JORC Code (2012) and a Bankable Feasibility Study. The information was extracted from the
Company’s previous ASX announcements as follows:
Thunderbird Ore Reserve: “THUNDERBIRD ORE RESERVE UPDATE” 31 July 2019
Thunderbird BFS Update: “BFS UPDATE MATERIALLY REDUCES CAPITAL”, 31 July 2019
•
•
• Quarterly activities “QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 30 JUNE 2019” 31 July, 2018
• Regional aircore mineral assemblage results “QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 31
MARCH 2019” 30 April, 2018
• Night Train Inferred Resource and Mineral Assemblage results “HIGH GRADE MAIDEN MINERAL RESOURCE AT
NIGHT TRAIN” 31 January 2019
• Regional aircore mineral assemblage results “QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 31
•
DECEMBER 2019” 30 January, 2018
Aircore results at Bohemia, Concorde and Buckfast: “NEW LARGE HIGH GRADE DISCOVERY SOUTH OF
THUNDERBIRD” 13 November 2018
• Quarterly report September 30 2018 “QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 30
•
SEPTEMBER 2018” 31 October, 2018
Aircore results at Cold Duck, Cisco, Porphyry Pearl and Nomad “THREE NEWMINERAL SAND DISCOVERIES NEAR
THUNDERBIRD” 17 October 2018
• Night Train aircore results: “EXCEPTIONAL RESULTS CONFIRM MAJOR DISCOVERY AT NIGHT TRAIN” 9 October
2018
• Drilling commences: “SHEFFIELD COMMENCES 8,000m REGIONAL DRILLING PROGRAM AT THUNDERBIRD”,
•
•
•
•
•
•
01 August 2018
Yandanooka, Durack, Drummond Crossing, West Mine North, Ellengail, McCalls and Mindarra Springs Resource
Estimates and including Mineral Resource and Ore Statement “MINERAL RESOURCE AND RESERVE
STATEMENT” 03 October, 2018
Thomson and Robbs Cross Mineral Resources: “QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 31
DECEMBER 2017” 30 January, 2018
Thunderbird Ore Reserve: “THUNDERBIRD ORE RESERVE UPDATE” 16 March, 2017
Thunderbird Bankable Feasibility Study: “THUNDERBIRD BFS DELIVERS OUTSTANDING RESULTS” 24 March,
2017
McCalls Mineral Resource: “QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 30 JUNE 2016” 25 July
2016.
Thunderbird Mineral Resource: “SHEFFIELD DOUBLES MEASURED MINERAL RESOURCE AT THUNDERBIRD” 5
July, 2016
These announcements are available to view on Sheffield’s website www.sheffieldresources.com.au
16
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Ore Reserves and Mineral Resources
The Company confirms that it is not aware of any new information or data that materially affects the information included
in the relevant market announcements and, in the case of estimates of Mineral Resources, Ore Reserves and the
Bankable Feasibility Study, that all material assumptions and technical parameters underpinning the estimates in the
relevant market announcement continue to apply and have not materially changed. The Company confirms that the form
and context in which the Competent Person’s findings are presented have not been materially modified from the relevant
original market announcements.
FORWARD LOOKING, CAUTIONARY STATEMENTS AND RISK FACTORS
The contents of this report reflect various technical and economic conditions at the time of writing. Given the nature of
the resources industry, these conditions can change significantly over relatively short periods of time. Consequently,
actual results may vary from those contained in this report.
Some statements in this report regarding estimates or future events are forward-looking statements. They include
indications of, and guidance on, future earnings, cash flow, costs and financial performance. Forward-looking statements
include, but are not limited to, statements preceded by words such as “planned”, “expected”, “projected”, “estimated”,
“may”, “scheduled”, “intends”, “anticipates”, “believes”, “potential”, "predict", "foresee", "proposed", "aim", "target",
"opportunity", “could”, “nominal”, “conceptual” and similar expressions. Forward-looking statements, opinions and
estimates included in this report are based on assumptions and contingencies which are subject to change without
notice, as are statements about market and industry trends, which are based on interpretations of current market
conditions. Forward-looking statements are provided as a general guide only and should not be relied on as a guarantee
of future performance. Forward-looking statements may be affected by a range of variables that could cause actual
results to differ from estimated results and may cause the Company’s actual performance and financial results in future
periods to materially differ from any projections of future performance or results expressed or implied by such forward-
looking statements. So there can be no assurance that actual outcomes will not materially differ from these forward-
looking statements.
17
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
The Directors present their report together with the financial statements of the consolidated entity consisting of Sheffield
Resources Limited and the entities it controlled for the year ended 30 June 2019. Sheffield Resources Limited
(‘Sheffield’ or ‘parent entity’ or ‘Company’) and its controlled entities (collectively known as the ‘Group’ or ‘consolidated
entity’) are domiciled in Australia.
DIRECTORS
The names of the directors in office at any time during or since the end of year are:
Mr Will Burbury
Mr Bruce McFadzean
Mr Bruce McQuitty
Mr David Archer
Mr John Richards (appointed 1 August 2019)
Mr Ian Macliver (appointed 1 August 2019)
With the exception of Mr John Richards and Mr Ian Macliver, all Directors have been in office since the start of the
financial year to the date of this report.
COMPANY SECRETARY
Mr Mark Di Silvio held the position of Company Secretary at the end of the financial year.
PRINCIPAL ACTIVITIES AND SIGNIFICANT CHANGES IN NATURE OF ACTIVITIES
The principal activities of the Group during the course of the financial year were mineral sands exploration and
development within Australia. There have been no significant changes to the state of affairs of the Group to the date of
this report.
DIVIDENDS
No dividends have been paid or declared during the financial year ended 30 June 2019 and the Directors do not
recommend the payment of a dividend in respect of the financial year.
REVIEW OF OPERATIONS
Refer to pages 5-10 for the Review of Operations and pages 11-17 for Ore Reserves and Mineral Resources.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Disclosure of information regarding likely developments in the operations of the Company in future financial years and
the expected results of those operations is likely to result in unreasonable prejudice to the Company. Therefore, this
information has not been presented in this report.
CORPORATE GOVERNANCE STATEMENT
The Board of Sheffield Resources has adopted the spirit and intent of the 3rd Edition of the Corporate Governance
Principles and Recommendations of the ASX Corporate Governance Council.
The Company’s Corporate Governance Statement may be accessed from the Governance section of the Company’s
website, www.sheffieldresources.com.au. This document is regularly reviewed to address any changes in governance
practices and the law.
ENVIRONMENTAL REGULATION
The Group’s exploration activities are governed by environmental regulation. To the best of the Directors’ knowledge the
Group believes it has adequate systems in place to ensure the compliance with the requirements of applicable
environmental legislation and is not aware of any material breach of those requirements during the financial year and
up to the date of the Directors’ Report.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has agreed to indemnify all the Directors and key management personnel of the Company for any liabilities
to another person (other than the company or related body corporate) that may arise from their designated position of
the Company, except where the liability arises out of conduct involving a lack of good faith.
During the financial year the Company paid a premium in respect of a contract insuring the Directors and Officers of the
Company against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001.
The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
18
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
INDEMNITY AND INSURANCE OF AUDITOR
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
the Company or any related entity against a liability incurred by the auditor. During the financial year, the Company has
not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.
NON-AUDIT SERVICES
During the year the Company has not used its auditors, HLB Mann Judd, to complete any non-audit related work (2018:
$15,000).
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
AFTER BALANCE DATE EVENTS
On 9 September 2019, the Company announced it had received commitments toward an equity raising of up to A$18
million before costs, by way of a placement of fully paid ordinary shares to professional, sophisticated and other
institutional investors. Under the terms of the Placement, the Company will issue approximately 46.2 million new shares
at A$0.39 per Share. The shares to be issued under the Placement will exceed the Company’s existing placement
capacity under ASX Listing Rule 7.1 and 7.1A, with shareholder approval required for the portion exceeding the
Company’s share placement capacity. Once issued, the Placement shares will rank equally with existing shares on issue.
ROUNDING
The amounts contained in the financial report have been rounded to the nearest $1,000 (unless otherwise stated)
pursuant to the option available to the Company under ASIC Class Order 2016/191. The Company is an entity to which
the class order applies.
INFORMATION ON DIRECTORS
Mr Will Burbury
Non-Executive Chairman
Qualifications:
B.Comm, LLB
Experience:
Mr Burbury practised as a corporate lawyer with a leading Australian law firm prior
to entering the mining and exploration industry in 2003. During this time, he has
been actively involved in the identification and financing of many resources’
projects in Australia and overseas and has held senior management positions and
served on boards of several private and publicly listed companies.
Special responsibilities:
Chairman of the Board
Interest in Shares, Options and
Rights at the date of this report:
8,205,483 Ordinary Shares
Other current public company
directorships:
Carawine Resources Limited (since 2017)
Past public company
directorships held over the last
three years:
None
19
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
Mr Bruce McFadzean
Managing Director
Qualifications:
Dip. Mining, FAusIMM
Experience:
A qualified mining engineer with more than 40 years’ experience in the global
resources industry. Mr McFadzean has led the financing, development and
operation of several new mines around the world. Mr McFadzean’s technical,
operating and corporate experience includes gold, silver, nickel, diamonds, iron
ore and mineral sands.
Mr McFadzean’s professional career includes 15 years with BHP Billiton and Rio
Tinto in a variety of positions and four years as Managing Director of successful
ASX gold miner Catalpa Resources Limited. Under his management, Catalpa’s
market capitalisation grew from $10 million to $1.2 billion following the merger
to create Evolution Mining Limited.
Special responsibilities:
Managing Director
Interest in Shares, Options and
Rights at the date of this report:
1,666,445 Ordinary Shares
2,500,000 Performance Options
2,060,701 Performance Rights
Other current public company
directorships:
None
Past public company
directorships held over the last
three years:
Indiana Resources Limited (resigned January 2019)
Blackstone Minerals Limited (resigned May 2017)
Venture Minerals Limited (resigned October 2016)
Gryphon Minerals Limited (resigned October 2016)
Mr Bruce McQuitty
Non-Executive Director
Qualifications:
B.Sc, MEconGeol
Experience:
Mr McQuitty has more than 35 years’ experience in the mining and civil
construction industries and was previously Managing Director of Warwick
Resources Limited prior to its merger with Atlas Iron Limited in 2009. Prior to that
he held senior positions with Consolidated Minerals Limited, Renison Goldfields
Consolidated Limited and Gympie Gold Limited. Mr McQuitty has significant
technical expertise in exploration, project generation, feasibility, underground
mining and engineering geology and has managed exploration teams in Australia
and overseas.
Interest in Shares, Options and
Rights at the date of this report:
8,069,583 Ordinary Shares
Other current public company
directorships:
Carawine Resources Limited (since 2017)
Past public company
directorships held over the last
three years:
None
20
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
Mr John Richards
Non-Executive Director
Qualifications:
B. Econ (Hons)
Experience:
Mr Richards is an economist with more than 35 years’ experience in the resources
industry. During this time, he has held strategy and business development
positions within mining companies as well as in investment banks and private
equity groups. He has been involved in a wide range of mining M&A transactions
in multiple jurisdictions.
Previous positions include Group Executive – Strategy and Business Development
at Normandy Mining Ltd, Head of Mining and Metals Advisory (Australia) at
Standard Bank, Managing Director at Buka Minerals Ltd and Operating Partner at
GNRI.
Special responsibilities:
Non-Executive Director
Interest in Shares, Options and
Rights at the date of this report:
Nil
Other current public company
directorships:
Saracen Mineral Holdings Ltd (appointed May 2019)
Past pubic company
directorships held over the last
three years:
None
Mr Ian Macliver
Non-Executive Director
Qualifications:
BCom, FCA, SF Fin, FAICD
Experience:
Mr Macliver is a highly experienced listed company director and Chartered
Accountant with significant experience as a senior executive and director of both
resource and industrial companies, with particular responsibility for company
strategy development, capital raising and all other forms of corporate
development initiatives. Mr Macliver is Executive Chairman of Grange Consulting
Group Pty Ltd which provides specialist corporate advisory services to both listed
and unlisted companies.
Special responsibilities:
Non-Executive Director
Interest in Shares, Options and
Rights at the date of this report:
Nil
Other current public company
directorships:
Western Areas Limited – Chairman (since October 2011)
Otto Energy Limited (since January 2004)
Past pubic company
directorships held over the last
three years:
None
21
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
Mr David Archer
Technical Director
Qualifications:
B.Sc (Hons)
Experience:
Mr Archer is a geologist with over 30 years’ experience in exploration and mining
in Australia. He has held senior positions with major Australian mining
companies, including Renison Goldfields Consolidated Ltd and ten years as a
Director of Archer Geological Consulting specialising in project generation,
geological mapping and project evaluation.
Mr Archer was a consultant to ASX listed Atlas Iron Limited and Warwick
Resources Limited and was responsible for significant iron ore discoveries for
both companies in the Pilbara. Other major West Australian discoveries include
the Raleigh and Paradigm gold mines and the Magellan lead mine.
Special responsibilities:
Technical Director
Interest in Shares, Options and
Rights at the date of this report:
8,373,117 Ordinary Shares
550,000 Performance Options
1,066,189 Performance Rights
Other current public company
directorships:
Carawine Resources Limited (since 2017)
Past public company
directorships held over the last
three years:
None
Mr Mark Di Silvio
Company Secretary
Qualifications:
B.Bus, CPA, MBA
Experience:
Mr. Di Silvio is a CPA qualified accountant with over 27 years’ experience in the
resources sector. Mr Di Silvio held a variety of finance-based roles within the gold
mining sector early in his career, before gaining oilfield experience with Woodside
Energy Limited through the financial management of joint ventures and the
financial management of Woodside’s Mauritanian oilfield assets. Mr Di Silvio has
held executive positions including Central Petroleum Limited, Centamin Plc,
Ausgold Limited and Mawson West Limited.
DIRECTOR’S MEETINGS
The number of meetings of Directors (including meetings of committees of Directors) held during the year and the
number of meetings attended by each Director is shown in the table below:
Director
Mr W Burbury
Mr B McFadzean
Mr B McQuitty
Mr D Archer
Held
Attended
11
11
11
11
11
10
11
8
22
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
OPTIONS
At the date of this report, the unissued ordinary shares of Sheffield Resources Limited under option are as follows:
Date of expiry
Exercise price A$
Series
Number under option
19 March 2021
8 February 2020
24 November 2020
24 November 2020
24 November 2020
RIGHTS
1.16
0.001
0.001
0.001
0.84
4
5
6,8,9
10
11
1,600,000
3,000,000
1,300,000
700,000
235,000
6,835,000
At the date of this report, the unissued ordinary shares of Sheffield Resources Limited under right are as follows:
Date of expiry
Exercise price A$
Number under right
30 November 2021
1 March 2022
26 October 2025
1 December 2025
Nil
Nil
Nil
Nil
1,700,000
312,500
1,541,516
5,784,343
9,338,359
SHARES ISSUED SINCE THE END OF THE FINANCIAL YEAR
On 1 August 2019, the Company issued 1,369,838 fully paid ordinary shares to Taurus Mining Finance L.P. and 880,162
shares to Taurus Mining Finance Annex Fund L.P. in partial satisfaction of a front end fee associated with the bridge
facility mandate between the Company, Taurus Mining Finance L.P. and Taurus Mining Finance Annex Fund L.P. dated
25 June 2019.
23
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
REMUNERATION REPORT (AUDITED)
This report sets out the remuneration strategy and arrangements for Key Management Personnel (KMP) of Sheffield
Resources Limited for year ended 30 June 2019. This report forms part of the Directors’ Report and has been audited
in accordance with the requirements of the Corporations Act 2001 and its regulations.
KEY MANAGEMENT PERSONNEL
For the purposes of this report KMP of the Group are defined as those persons having authority and responsibility for
planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any
Director (whether Executive or otherwise) of the Company and are detailed in the table below:
Name
Position
Non-Executive Directors
W Burbury
B McQuitty
Senior Executives
Chairman
Director
B McFadzean
Managing Director
D Archer
M Di Silvio
S Pether
Technical Director
Chief Financial Officer and Company Secretary
Chief Operating Officer
BOARD POLICY ON KEY MANAGEMENT PERSONNEL REMUNERATION
The Board is responsible for the nomination and appointment of Directors and the remuneration of its Directors,
Managing Director and Senior Executives. To assist the Board in meeting its obligations and to address all matters
pertaining to Board nomination and executive remuneration, the Board has adopted a Nomination and Remuneration
Committee Charter.
NON-EXECUTIVE DIRECTOR REMUNERATION
In accordance with best practice corporate governance, the structure of Non-Executive Director and Senior Executive
remuneration is separate and distinct. Shareholders approve the aggregate or total fees payable to Non-Executive
Directors, with the current approved limit being $250,000 (excluding share-based payments). The fees paid to Non-
Executive Directors are set at levels that reflect both the responsibilities of, and the time commitments required from,
each Non-Executive Director to discharge their duties and are not linked to the performance of the Company.
Shareholders approve the issue of options to Non-Executive Directors.
No share-based payments were made to Non-Executive Directors in 2019.
All Non-Executive Directors have their indemnity insurance paid by the Group.
Non-Executive Directors receive a fixed fee remuneration consisting of a base fee and statutory superannuation
contributions made by the Group as set out below:
Base fees
Chairman
Other Non-Executive Directors
2019
A$
75,000
50,000
2018
A$
75,000
50,000
24
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
SENIOR EXECUTIVE REMUNERATION
External and independent executive remuneration advice may be sought by the Board in determining remuneration
strategy.
In determining the level and composition of Senior Executive remuneration year on year, the Board takes into
consideration the operational and economic circumstances the Company is facing and likely to face in the medium term
together with the complexity and responsibility associated with each role.
The Policy of the Board in determining Senior Executive remuneration levels is to:
•
•
•
•
•
•
•
•
provide total remuneration and employment conditions which will enable the Company to attract and retain high
quality senior executives to the business;
align remuneration with the creation and maximisation of shareholder value and the achievement of Company
strategy, business objectives and core values;
ensure the structure and quantum of remuneration is competitive and reflective of the external market in which the
Company operates;
target positioning of total remuneration against market at generally between the 50th and 75th percentile;
provide a mix of fixed and variable, performance-based remuneration to drive superior performance;
reward the achievement of individual and Company objectives thus promoting a balance of individual performance
and teamwork across the executive management team;
provide a fair, equitable and scalable system that allows for sustainable business growth and is regularly reviewed
for relevance and reliability; and
is transparent, easily understood and is acceptable to Shareholders.
The Board’s specific remuneration aims for the year ending 30 June 2019 were to:
•
•
•
•
•
•
retain Senior Executives at an important stage in the Company’s development;
implement a new Long Term Incentive (LTI) scheme measured over a four-year period and designed to create
alignment with the Thunderbird project objectives, sustainability aims and maximise overall shareholder value;
ensure effective benchmarking of fixed and variable remuneration for Senior Executives for a clearly defined peer
group of similar companies to ensure remuneration is fair and competitive;
cease the policy of sacrificing a portion of cash remuneration for share options;
discontinue making future offers under the Employee Share Option Plan (ESOP); and
retain total remuneration at or around the 50th percentile of market.
Use of External Remuneration Consultants in year ending 30 June 2019
During the financial year, the Company engaged Mr Chris Ryan, an experienced and independent executive remuneration
and HR specialist in the resources sector, to review and benchmark executive remuneration (both structure and
quantum) and the Company’s long-term incentives. Mr Ryan assisted in the development of performance hurdles
relevant to the executive grant of Performance Rights in 2018. The total fees paid to Mr Ryan for services during the
year were $25,630.
Remuneration Mix
Senior Executive remuneration consists of the following key elements:
•
•
fixed annual remuneration (FAR); and
variable remuneration (LTI).
25
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
Fixed Annual Remuneration
The level of FAR is set to provide a base level of remuneration which is both appropriate to the position and is competitive
in the market. FAR includes a base salary, inclusive of superannuation. Allowances and other benefits may be provided,
including leased motor vehicles and additional superannuation, provided that no extra cost is incurred by the Group.
FAR is reviewed annually. Any adjustments to FAR for Senior Executives must be approved by the Board. The Managing
Director determines the FAR of other Senior Executives within specific guidelines approved by the Board
In November 2015 the Group implemented a remuneration strategy for Senior Executives that provided a balance
between the preservation of cash proceeds and an equitable remuneration structure. To obtain that balance Senior
Executives agreed to sacrifice a portion of their cash remuneration in lieu of share options, subject to market disclosure
requirements upon appointment and the approval of shareholders on an annual basis. The value of the cash sacrificed
ranged from 25% - 50%. The strategy was set for a period of three years, concluding in November 2018.
In October 2018 the Board completed the annual review of Senior Executive remuneration. As a result of this review
and in conjunction with the previous remuneration strategy concluding, the cash component of the Senior Executive’s
FAR was adjusted accordingly.
Long Term Incentive Plan
The LTI program comprises of the Employee Share Option Plan and Performance Rights Plan (PRP). In November 2018,
the 2014 Employee Share Option Plan three-year shareholder approval period ended and following approval by
Shareholders, the 2017 Performance Rights Plan commenced. Each plan contains performance hurdles that need to
be achieved prior to award.
The objective of the LTI program is to:
•
•
•
align the interest of Senior Executives more closely with the interests of Shareholders by providing an opportunity to
earn shares in the Company;
provide Senior Executives with the opportunity to share in any future growth in value of the Company; and
provide greater incentive for Senior Executives to focus on the Company’s longer-term goals.
Employee Share Option Plan
The ESOP is an equity component of at-risk remuneration. The Board determined the quantum of options to be issued
to the relevant Senior Executive dependent on FAR and seniority of position in the Company.
Performance Criteria
Share options have certain non-market-based performance conditions. These non-market-based performance
conditions include:
Completion of feasibility study
Financing complete
•
•
• Offtake agreements – ilmenite
• Offtake agreements – zircon
•
First product shipped
Performance Options on Change of Control
In the event of a change of control event occurring, options that are not exercisable, will become exercisable on and from
the date of the change of control event occurring.
Grants Made in 2019
There were no share options granted during 2019.
Share Options Vested in 2019
275,000 share options vested during 2019. These options relate to the performance conditions on completion of off-
take agreements for zircon.
Measurement of Share Options
Under the terms and conditions of the options issued to employees, each option gives the holder the right to subscribe
to one fully paid ordinary share. Any option not exercised before the expiry date will lapse on the expiry date.
26
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
Options have been valued using the Black-Scholes option valuation method. The following table lists the inputs to the
model for options outstanding to Senior Executives during the period:
Series 5
Series 6
Series 9
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
Expected life of options (years)
Exercise price ($)
Grant date share price ($)
Fair value at grant date ($)
Grant date
Expiry date
Number issued
Number outstanding
-
40
2.00
3.27
0.001
0.56
0.559
-
40
2.00
3.23
0.001
0.51
0.509
-
87
2.00
3.02
0.001
0.53
0.529
2 Nov 2015
16 Nov 2015
17 Nov 2016
2 Feb 2020
2 Feb 2020
24 Nov 2020
3,000,000
2,500,000
700,000
500,000
2,100,000
1,300,000
There are no participating rights or entitlements inherent in the options and the holders will not be entitled to participate
in new issues of capital offered to shareholders during the currency of the options. All shares allotted upon the exercise
of options will rank pari passu in respect with other shares.
During the year ending 30 June 2019, the Group revised the target vesting date relating to options with performance
measures. The following table describes the change in vesting date:
Measure
Original vesting date
Revised vesting date
Series
Condition vesting date related to
1
2
2
3
4
5
5
Vested
-
5,6,9
Completion of feasibility study
30 Jun 2017
2 Feb 2020
30 Jun 2017
24 Nov 2020
Vested
Vested
-
-
31 Mar 2019
2 Feb 2020
31 Mar 2019
24 Nov 2020
5,6
9,10
9
9
5,6
9,10
Financing complete
Financing complete
Offtake agreements ilmenite
Offtake agreements zircon
First product shipped
First product shipped
27
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
Performance Rights Plan
The PRP is a long term (4 year), performance centred, at risk scheme based on the issue of performance rights. An
amount calculated as a percentage of the Senior Executive’s FAR is used to calculate the number of performance rights
to be granted. The percentage can range from 50% to 100% of FAR based on the seniority of position in the Company.
A performance right is a right which, upon the satisfaction or waiver of the relevant vesting conditions entitles its holder
to receive fully paid ordinary shares for nil consideration.
Performance Hurdles
The Group uses two performance hurdle measures to determine the proportion of performance rights which vest, if at
all, as follows:
• 80% of the performance rights are subject to an Absolute Total Shareholder Return (ATSR); and
• 20% of the performance rights are subject to a Sustainability Performance hurdle.
Absolute TSR Performance Hurdle
The Board considers that ATSR is an appropriate performance hurdle because it ensures that a proportion of each
participant’s remuneration is explicitly linked to shareholder value and ensures that participants only receive a benefit
where there is a corresponding direct benefit to shareholders.
TSR measures the return received by shareholders from holding shares in the Company over a particular period. TSR is
calculated by taking into account the growth in a Company’s share price over the period as well as the capital returns
and dividends received during that period.
ATSR refers to the setting of threshold, target and stretch levels of TSR for the Company at the beginning of the
performance period. Thus, they are determined in advance having regard to expectations of the Company’s
performance. The ATSR performance rights are separated into two tranches, each with equal weighting of 50%.
The Tranche 1 ATSR performance rights were calculated by reference to the 30-day VWAP for the period ended 31 August
2018. The Tranche 2 ATSR performance rights will be calculated by reference to the 30-day VWAP for the period ending
30 November 2020. The Board may, in its absolute discretion, set a different reference price for the Tranche 2 ATSR
performance rights where it could potentially be unfair or unjust to the Senior Executive or the Group.
To the extent that the performance hurdles are not satisfied by the applicable testing dates, the performance rights will
automatically lapse.
The proportion of the Tranche 1 ATSR performance rights and Tranche 2 ATSR performance rights that will vest will be
determined on the basis of the following scale.
Weighting
Measure
ATSR (%)
Performance
vested (%)
Rights
Performance Period
Tranche 1:
Tranche 1:
Less than 16%
50%
in Sheffield
Increase
share price between 31
Aug 2018 and 30 Nov
2020
16%
(lower threshold)
0%
25%
Tranche 2:
Tranche 2:
50%
Increase
share price between
in Sheffield
Between 16% to 26%
(being
upper
the
threshold)
Pro rata between 25%
and 50%
Between 26% to 40%
(being the target)
Pro rata between 50%
and 75%
Tranche 1:
31 Aug 2018 to
30 Nov 2020
Tranche 2:
30 Nov 2020 to
30 Nov 2022
30 Nov 2020 and 30
Nov 2022
Between 40% to 50%
(being the stretch)
Pro rata between 75%
and 100%
50% or above
100%
28
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
Sustainability Performance Hurdles
The Company aims to optimise shared value and develop long term trusting relationships with the communities in which
we operate.
The Board therefore considers that sustainability measures are important inclusions as performance hurdles due to the
Thunderbird projects success being central to an effective Social Licence to Operate in the Kimberley region, particularly
in relation to local and Aboriginal economic, social and cultural advancement.
The Sustainability Performance Rights are subject to up to three separate hurdles, allocated and weighted to the Senior
Executive by the Board, according to the individual’s role. These hurdles are as follows;
• Meet Aboriginal Employment Targets
• Meet Local Content Employment Targets
• Develop and Implement Succession Planning system
The Aboriginal and Local Employment targets relate to the make-up of the Company’s employee base for the Thunderbird
Project (Employment Hurdle), particularly in relation to developing a locally based workforce, employed on a Drive in and
Drive out (DIDO) basis rather than a Fly in and Fly out (FIFO) basis, with high rates of Aboriginal employment.
Specifically, the Employment Hurdles are as follows:
Aboriginal Employment
Threshold: a minimum of 3% Aboriginal employment by end calendar Year 1 of Thunderbird operations (in production)
and a minimum of 8% by end Year 2 of operations.
Target: a minimum of 5% Aboriginal employment by end calendar Year 2 of Thunderbird operations (in production) and
a minimum of 10% by end Year 2 of operations.
Local Content Employment
Threshold: ensure 40% Thunderbird employees (excluding EPC contractor) are employed on a DIDO basis by end
calendar Year 1 of Thunderbird operations (in production) and 60% by end Year 2 of operations.
Target: ensure 60% Thunderbird employees (excluding EPC contractor) are employed on a DIDO basis by end calendar
Year 1 of Thunderbird operations (in production) and 75% by end Year 2 of operations.
For the performance rights subject to the Employment Hurdles:
(a) 50% of those performance rights will vest if relevant Threshold is achieved;
(b) 100% of those performance rights will vest if relevant Target is achieved;
(c) pro rata vesting of those performance rights will occur for achievements between the relevant Threshold and Target
and;
(d) none of those performance rights will vest if the relevant Threshold is not achieved.
Succession Plan
The Board considers an effective Succession Plan as an important tool in both talent management and risk management
for the Company. The hurdle involves the development and implementation of the Succession Plan for specified Senior
Executive roles across the four-year measurement period until 30 November 2022 (Succession Plan Hurdle).
For the performance rights subject to the Succession Plan Hurdle:
(e) 100% of those performance rights will vest if the Succession Plan Hurdle is achieved; and
(f) None of those performance rights will best if the Succession Plan Hurdle is not achieved.
The performance period for both the Employment Hurdles and the Succession Plan Hurdle is 30 November 2022, but it
is noted that the Thresholds and Target for the Employment Hurdles will be measured as at the end of calendar years 1
and 2 after the Thunderbird Project is in operation.
Performance Rights Grants Made in 2019
Performance rights were granted to eligible participants in October and November 2018. The number of performance
rights granted for each Senior Executive was calculated based on a percentage of the Senior Executive’s FAR and by
reference to the 30-day VWAP for the period ended and including 31 August 2018, being A$0.8929.
Performance Rights on Cessation of Employment
Employment cessation on or before 30 November 2020
Unless performance rights held by a Senior Executive who ceases to hold a position of employment, office, or
engagement with the Company on or before 30 November 2020 have vested and become capable of exercise before
the Senior Executive leaves or vested and become capable or exercise as a result of the Senior Executive leaving, those
29
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
performance rights will not be exercisable by the Senior Executive and will lapse, unless otherwise determined at the
Board’s discretion.
Employment cessation after 30 November 2020 but prior to 1 January 2023
Vested performance rights held by a Senior Executive who ceases to, or has ceased to, hold a position of employment,
office, or engagement with the Company after 30 November 2020 but before 1 January 2023 will be exercisable by the
Senior Executive unless the Board has determined that the Senior Executive’s position of employment, office or
engagement was terminated for cause.
Performance Rights on Change of Control
All vesting conditions attached to performance rights will be deemed to be automatically waived on a change of control
event occurring. Accordingly, in the case of a change of control event occurring, all performance rights will be deemed
to have vested and will be eligible for exercise.
Hedging of At-Risk Remuneration
A participant in the PRP must not enter into an arrangement if the arrangement would have the effect of limiting the
exposure of the participant to risk relating to performance rights that have not vested.
Performance Rights Vested in 2019
No performance rights have vested during 2019.
REMUNERATION OF KEY MANAGEMENT PERSONNEL
The table below shows the fixed and variable remuneration for key management personnel.
Short-term employee benefits
Post -
employment
benefits
Long term
employee
benefits
Share based
payments
Salary & fees
Cash
bonus
Non-
monetary2
Super-
annuation
Long service
leave
Options &
rights1
Total
2019
$
$
$
$
$
$
$
Non-Executive Directors
W Burbury3
B McQuitty4
Senior Executives
75,000
50,000
B McFadzean5
292,768
D Archer6
242,830
M Di Silvio7
312,494
S Pether8
290,541
1,263,633
-
-
-
-
-
-
-
9,196
7,125
12,873
4,750
13,541
24,850
-
-
-
-
-
91,321
67,623
523,029
854,188
15,101
21,431
37,523
211,060
527,945
14,433
24,159
13,207
24,373
-
-
210,072
561,158
704,957
1,033,078
78,351
106,688
37,523
1,649,118
3,135,313
Note 1: The fair value of the options is calculated at the date of grant using a Black-Scholes valuation model and allocated to each reporting period starting from grant date to
vesting date.
Note 2: Other fees include, where applicable, the cost to the Company of providing fringe benefits and the fringe benefits and the fringe benefits tax on those benefits and the
attributable non-cash benefit applied by virtue of the Company’s Directors and Officer Liability policy.
Note 3: During the financial year, Mr Burbury entered into an agreement with the Company to defer a portion of his salary and superannuation. As at 30 June 2019, $8,555 of Mr
Burbury’s fees and superannuation described has been deferred.
Note 4: During the financial year, Mr McQuitty entered into an agreement with the Company to defer a portion of his salary and superannuation. As at 30 June 2019, $5,703 of
Mr McQuitty’s fees and superannuation described has been deferred
Note 5: During the financial year, Mr McFadzean entered into an agreement with the Company to defer a portion of his salary and superannuation. As at 30 June 2019, $39,922
of Mr McFadzean’s salary and superannuation described has been deferred.
Note 6: During the financial year, Mr Archer entered into an agreement with the Company to defer a portion of his salary and superannuation. As at 30 June 2019, $28,516 of Mr
Archer’s salary and superannuation described has been deferred.
Note 7: During the financial year, Mr Di Silvio entered into an agreement with the Company to defer a portion of his salary and superannuation. As at 30 June 2019, $34,219 of
Mr Di Silvio’s salary and superannuation described has been deferred.
Note 8: During the financial year, Mr Pether entered into an agreement with the Company to defer a portion of his salary and superannuation. As at 30 June 2019, $34,219 of Mr
Pether’s salary and superannuation described has been deferred.
30
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
Short-term employee benefits
Post -
employment
benefits
Long term
employee
benefits
Share based
payments
Salary &
fees
Cash bonus
Non-
monetary
Superannuat
ion
Long service
leave
Options &
rights
Total1
2018
$
$
$
$
$
$
$
Non-Executive Directors
W Burbury
75,000
B McQuitty
50,000
Senior Executives
B McFadzean
175,000
D Archer
175,000
M Di Silvio
175,000
S Pether
225,000
875,000
-
-
-
-
-
-
-
4,583
7,125
4,583
4,750
10,549
16,625
4,583
16,625
4,583
16,625
4,583
21,375
33,464
83,125
-
-
-
-
-
-
-
-
-
86,708
59,333
350,910
553,084
115,459
311,667
106,484
302,692
531,854
782,812
1,104,707
2,096,296
Note 1: The total for 2018 of $2,116,540 in this table is less than the total for 2018 in the Remuneration Report for the year ended 30 June 2018 of $2,716,988 as it does not
include 660,448 for the following personnel who were included in the remuneration report for the year ended 30 June 2018. As they are no longer classified as key management
personnel, they have not been included in the remuneration report for the year ended 30 June 2019 above:
•
•
Mr Jim Netterfield – BFS Study Manager
Mr Neil Patten-Williams – Marketing Manager
The relative proportions of those elements of remuneration of key management personnel that are linked to
performance:
Fixed remuneration
Remuneration linked to performance1
2019
2018
2019
2018
Non-Executive Directors
W Burbury
B McQuitty
Senior Executives
B McFadzean
D Archer
M Di Silvio
S Pether
100%
100%
39%
60%
63%
32%
100%
100%
70%
87%
89%
47%
-
-
61%
40%
37%
68%
Note 1: During the 2018 period, KMP’s holding executive positions sacrificed a portion of salary (20%-50%) in lieu of a share-based payment, incentivising performance.
-
-
30%
13%
11%
53%
31
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
EQUITY INSTRUMENTS
Options
No Employee Share Options were issued during 2019. The table below outlines the movement of the options held by Senior Executives during the year:
2019
Grant date
Opening
balance vested
& exercisable
Opening
balance
unvested
Granted as
compensation
Vested
Vested %
Exercised
Forfeited
Closing
balance vested
and
exercisable
Closing
balance
unvested
B McFadzean
Performance
2 Nov 2015
Remuneration
22 Nov 2017
D Archer
Performance
1 May 2016
Remuneration
22 Nov 2017
M Di Silvio
Performance
15 Feb 2016
Remuneration
22 Nov 2017
Stuart Pether
Performance
n/a
Remuneration
22 Nov 2017
-
-
-
-
-
-
-
-
2,500,000
130,409
550,000
55,890
575,000
55,890
-
55,890
-
-
-
-
-
-
-
-
-
-
-
130,409
100%
130,409
-
-
-
55,890
100%
55,890
75,000
13%
75,000
55,890
100%
55,890
-
-
-
55,890
100%
55,890
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,500,000
-
550,000
-
500,000
-
-
-
32
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
2018
Grant date
Opening
balance vested
& exercisable
Opening
balance
unvested
Granted as
compensation
Vested
Vested %
Exercised
Forfeited
Closing
balance vested
and
exercisable
Closing
balance
unvested
B McFadzean
Performance
2 Nov 2015
Remuneration
22 Nov 2017
D Archer
Performance
1 May 2016
Remuneration
22 Nov 2017
M Di Silvio
Performance
15 Feb 2016
Remuneration
22 Nov 2017
Stuart Pether
Performance
n/a
Remuneration
22 Nov 2017
-
-
-
-
-
-
-
-
3,000,000
-
500,000
142,741
260,817
273,149
700,000
-
150,000
61,175
111,779
117,064
700,000
-
125,000
61,175
111,779
117,064
17%
68%
21%
68%
18%
68%
475,000
25,000
273,149
-
142,500
7,500
117,064
-
122,500
2,500
117,064
-
-
-
-
-
-
177,009
121,119
68%
121,119
-
-
-
-
-
-
-
-
-
-
-
2,500,000
130,409
550,000
55,890
575,000
55,890
-
55,890
33
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
Exercised
Options granted as compensation in the prior year and exercised during the current year are detailed below:
Number granted
Grant date
Value at exercise date1
B McFadzean
D Archer
M Di Silvio
M Di Silvio
S Pether
130,409
55,890
75,000
55,890
55,890
22/11/2017
22/11/2017
15/02/2016
22/11/2017
22/11/2017
$
115,282
49,407
89,175
49,407
49,407
Note1: The value at the date of exercise of options that were granted as part of remuneration and exercised during the year has been determined at the intrinsic value of the
options at the exercise date.
34
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
EQUITY INSTRUMENTS
Rights
7,325,859 performance rights were issued to eligible participants of the Performance Rights plan. The table below outlines the movement of the rights held by Senior Executives
during the year:
Grant date
Opening
balance
unvested
Granted
Issue Price $
Vested
Vested %
Exercised
Forfeited
29 Nov 2018
-
29 Nov 2018
-
29 Nov 2018
-
-
-
-
-
-
-
n/a
1,700,000
2,060,701
$0.77
-
-
1,066,189
$0.77
-
-
1,097,547
$0.77
-
-
-
-
22 Nov 2017
-
1,700,000
$0.74
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
B McFadzean
2019
2018
D Archer
2019
2018
M Di Silvio
2019
2018
S Pether
2019
2018
Exercised
No performance rights granted as compensation in the current and/or prior year were exercised.
Closing
balance
unvested
Fair value $
2,060,701
$1,586,740
-
-
1,066,189
$820,966
-
-
1,097,547
$845,111
-
-
1,700,000
n/a
1,700,000
$1,258,000
35
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
KEY MANAGEMENT PERSONNEL SHAREHOLDINGS
The relevant interest of each key management personnel in the share capital (held directly or indirectly of the Company
at 30 June 2019 were:
2019
Balance at 1 July
2018
Granted as
remuneration
Received on
exercise of options
Other changes
Balance at 30
June 2019
Non-Executive Directors
W Burbury
B McQuitty
Senior Executives
8,182,407
8,046,507
B McFadzean
1,512,960
D Archer
M Di Silvio
S Pether
8,269,151
437,891
246,119
-
-
-
-
-
-
-
-
23,076
8,205,483
23,076
8,069,583
130,409
23,076
1,666,445
55,890
48,076
8,373,117
130,890
23,073
591,854
55,890
-
302,009
2018
Balance at 1 July
2017
Granted as
remuneration
Received on
exercise of options
Other changes
Balance at 30
June 2018
Non-Executive Directors
W Burbury
B McQuitty
Senior Executives
8,170,000
8,034,100
B McFadzean
676,684
D Archer
M Di Silvio
S Pether
7,939,180
198,327
75,000
-
-
-
-
-
-
-
-
12,407
8,182,407
12,407
8,046,507
748,149
88,127
1,512,960
259,564
70,407
8,269,151
239,564
-
437,891
121,119
50,000
246,119
36
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Report
SENIOR EXECUTIVE EMPLOYMENT AGREEMENTS
Remuneration and other terms of employment for the following key management personnel are formalised in
employment agreements. All contracts with Senior Executives may be terminated early by either party with notice, per
individual agreement, and subject to the termination payments as detailed below:
Name
Position
Commencement date
Base salary (including
superannuation)
Termination benefit
B McFadzean
Managing Director
2 Nov 2015
$383,250
3 months’ notice
D Archer
Technical Director
1 Apr 2010
$273,750
4 months’ notice
M Di Silvio
CFO & Company
Secretary
15 Feb 2016
$328,500
4 months’ notice
S Pether
Chief Operating Officer
1 Apr 2017
$328,500
4 months’ notice
OTHER TRANSACTIONS WITH KMP AND THEIR RELATED PARTIES
There were no other transactions with KMP or their related parties.
END OF AUDITED REMUNERATION REPORT
AUDITOR INDEPENDENCE
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the Directors of the
Company with an Independence Declaration in relation to the audit of the annual report.
This Independence Declaration is set out on page 38 and forms part of this Directors’ report for the year ended 30 June
2019.
Signed in accordance with a resolution of the Directors.
Bruce McFadzean
Managing Director
Perth, 10 September 2019
37
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Sheffield Resources Limited for
the year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
10 September 2019
D I Buckley
Partner
38
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2019
Continuing operations
Other income
Employee benefits expense
Corporate expenses
Other expenses
Gain on demerger
Results from operating activities
Net financing income
Net loss before income tax
Income tax benefit
Loss for the year
Other comprehensive income
Other comprehensive income for the year, net
of tax
Notes
2019
2018
2017
Restated
Restated
$’000
$’000
$’000
6
6
6
6
6
6
7
138
(6,365)
(4,051)
(47)
-
71
(3,560)
(2,293)
(208)
1,325
12
(4,968)
(2,331)
(3,311)
-
(10,325)
(4,665)
(10,598)
75
360
260
(10,250)
(4,305)
(10,338)
-
-
-
(10,250)
(4,305)
(10,338)
-
-
-
Total comprehensive loss for the year
(10,250)
(4,305)
(10,338)
Basic and diluted loss per share
8
(4.18)
(2.02)
(5.95)
The Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes
39
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Consolidated Statement of Financial Position
As at 30 June 2019
Notes
2019
2018
2017
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Inventories
Total current assets
Non-current assets
Other non-current assets
Plant and equipment
Right of use asset
Mine development
Exploration and evaluation expenditure
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing liabilities
Employee benefits
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
11
12
13
14
14
14
15
16
17
9
17
18
Restated
Restated
$’000
$’000
$’000
2,698
324
-
11
23,142
503
107
18
8,335
289
-
-
3,033
23,770
8,624
6,624
4,232
2,058
53,952
9,641
76,507
-
228
282
36,838
7,256
44,604
-
107
-
-
31,673
31,780
79,540
68,374
40,404
4,334
164
364
4,862
1,975
63
2,038
6,110
153
278
6,541
148
-
148
1,279
-
270
1,549
-
-
6,900
6,689
1,549
72,640
61,685
38,855
99,469
9,663
(36,492)
72,640
80,602
7,325
54,722
6,070
(26,242)
(21,937)
61,685
38,855
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes
40
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Consolidated Statement of Changes in Equity
As at 30 June 2019
Notes
Issued
Capital
Accumulated
losses
$’000
$’000
Share-based
payment
reserve
$’000
4
54,722
-
54,722
-
-
32,002
(4,000)
(2,122)
-
(15,085)
(6,852)
(21,937)
(4,305)
(4,305)
-
-
-
-
6,070
-
6,070
-
-
-
-
-
1,255
Total
$’000
45,707
(6,852)
38,855
(4,305)
(4,305)
32,002
(4,000)
(2,122)
1,255
80,602
(26,242)
7,325
61,685
-
-
(10,250)
(10,250)
-
-
(10,250)
(10,250)
19,843
(976)
-
-
-
-
-
-
2,338
19,843
(976)
2,338
99,469
(36,492)
9,663
72,640
Balance at 1 July 2017
Change in accounting policy
Restated balance as at 1 July
2017
Restated loss for the year
Total comprehensive loss for the
year
Shares issued during the year
Return of capital for demerger
Share issue costs
Recognition of share-based
payments
Restated balance as at 30 June
2018
Loss for the year
Total comprehensive loss for the
year
Shares issued during the year
Share issue costs
Recognition of share-based
payments
Balance as at 30 June 2019
The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
41
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2019
Notes
Cash flows from operating activities
Payments to supplier and employees
Interest received
Interest paid
Net cash used in operating activities
11
Cash flows from investing activities
Research and development tax refund
Payments for exploration and evaluation expenditure
Payments for plant and equipment
Proceeds from disposal of financial assets
Payments for development expenditure
Payments for financial liability
Net cash (used in) investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payments for share issue costs
Payments for lease liability
Net cash provided by financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the
year
2019
$’000
(6,265)
262
(157)
(6,160)
1,046
(2,453)
(102)
-
(24,503)
(4,580)
(30,592)
17,448
(1,127)
(13)
16,308
(20,444)
23,142
2018
Restated
$’000
(5,311)
364
(26)
(4,973)
2,728
(2,044)
(184)
30
(10,534)
-
(10,004)
32,002
(2,122)
(96)
29,784
14,807
8,335
Cash and cash equivalents at the end of the year
11
2,698
23,142
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
42
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
BASIS OF PREPARATION
Note 1: Corporate information
Note 2: Reporting entity
Note 3: Basis of preparation
PERFORMANCE FOR THE YEAR
Note 4: Changes in significant accounting policies
Note 5: Segment reporting
Note 6: Revenue and expenses
Note 7: Income tax
Note 8: Loss per share
EMPLOYEE BENEFITS
Note 9: Employee benefits
Note 10: Share-based payments
ASSETS
Note 11: Cash and cash equivalents
Note 12: Trade and other receivables
Note 13: Other non-current assets
Note 14: Property, plant and equipment
Note 15: Exploration and evaluation expenditure
EQUITY AND LIABILITIES
Note 16: Trade and other payables
Note 17: Interest bearing liabilities
Note 18: Capital and capital management
FINANCIAL INSTRUMENTS
Note 19: Financial instruments – fair value and risk management
GROUP COMPOSITION
Note 20: List of subsidiaries
Note 21: Parent entity information
OTHER INFORMATION
Note 22: Contingent liabilities
Note 23: Remuneration of auditors
Note 24: Commitments
Note 25: Related party transactions
Note 26: Key management personnel disclosures
Note 27: Events occurring after the reporting period
ACCOUNTING POLICIES
Note 28: Critical accounting estimates and assumptions
Note 29: New and revised standards and interpretations
43
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
BASIS OF PREPARATION
This section of the financial report sets out the Group’s (being Sheffield Resources Limited and its controlled entities)
accounting policies that relate to the Financial Statements as a whole. Where an accounting policy is specific to one
Note, the policy is described in the Note to which it relates.
The Notes include information which is required to understand the Financial Statements and is material and relevant to
the operations and the financial position and performance of the Group. Information is considered relevant and material
if:
•
•
•
•
•
the amount is significant due to its size or nature
the amount is important in understanding the results of the Group
it helps to explain the impact of significant changes in the Group’s business
it relates to an aspect of the Group’s operations that is important to its future performance
accounting policies have been consistently applied to all of the years presented unless otherwise stated
NOTE 1: CORPORATE INFORMATION
The consolidated financial report of Sheffield Resources Limited for the year ended 30 June 2019 was authorised for
issue in accordance with a resolution of the Directors on 5 September 2019. The Board of Directors has the power to
amend the Consolidated Financial Statements after issue.
Sheffield Resources Limited (the Company or Sheffield) is a for-profit company limited by shares whose shares are
publicly traded on the Australian Securities Exchange. The Company and its subsidiaries were incorporated and
domiciled in Australia. The registered office and principal place of business of the Company is Level 2, 41-47 Colin
Street, West Perth, WA 6005.
The nature of the operations and principal activities of the Company are disclosed in the Directors’ Report.
The amounts contained in the financial report have been rounded to the nearest $1,000 (unless otherwise stated)
pursuant to the option available to the Company under ASIC Class Order 2016/191. The Company is an entity to which
this class order applies.
NOTE 2: REPORTING ENTITY
The Financial Statements are for the Group consisting of Sheffield Resources Limited and its subsidiaries. A list of the
Group’s subsidiaries is provided in Note 20.
NOTE 3: BASIS OF PREPARATION
These general purpose Financial Statements have been prepared in accordance with Australia Accounting Standards
and Interpretations issued by the Australia Accounting Standards Board (AASB) and the Corporations Act 2001. The
consolidated Financial Statements of Sheffield Resources Limited also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
These Financial Statements have been prepared under the historical cost convention except for certain financial assets
and liabilities which are required to be measured at fair value.
a)
Going Concern
•
Notwithstanding the fact that the Group incurred an operating loss of $10.250m for the year ended 30 June 2019, had
net cash outflow from operating activities of $6.160m and investing activities of $30.592m and has a current working
capital deficit of $1.829m, the Directors’ are of the opinion that the Group is a going concern for the following reasons:
The Company has engaged third party advisors to solicit and source a strategic equity partner to progress the
development of the Thunderbird Mineral Sands Project in the near term;
The Company is taking measures to minimize cash burn whilst the funding process for Thunderbird continues;
The Company has a signed mandate with Taurus Mining Finance for the provision of a US$10m bridge finance
facility;
The Company has agreements with certain creditors to defer settlement until project finance is secured; and
Subsequent to year end, the Company announced it was raising up to $18 million via a share placement. Refer
to Note 27.
•
•
•
•
Given the early stage life cycle of the Company’s primary asset, The Thunderbird Mineral Sands Project, the Directors
anticipate that further equity raisings will be required in the forthcoming year to meet ongoing working capital and
expenditure commitments.
44
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 3: BASIS OF PREPARATION (continued)
Basis of consolidation
b)
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred
asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of
profit or loss, statement of comprehensive income, statement of changes in equity and balance sheet respectively.
c)
Foreign currency translation
Functional and Presentation Currency
Both the functional and presentation currency of Sheffield is Australian Dollars. Each entity in the Group determines its
own functional currency and items included in the Financial Statements of each entity are measured using that currency.
Foreign Currency Translation
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the
rate of exchange at balance date.
All translation differences relating to transactions and balances denominated in foreign currency are taken to the
Consolidated Statement of Comprehensive Income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rate at the date when the fair value was determined.
Goods and services tax (‘GST’)
d)
Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which
case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable;
and
receivables and payables, which are stated with the amount of GST included.
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising
from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as
operating cash flows. Commitments and contingencies are disclosed net of amount of GST recoverable from, or payable
to, the taxation authority.
e)
Comparatives
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.
f)
Early adoption of Australian Accounting Standards
The Group has early adopted AASB 16 Leases with a date of initial application of 1 July 2017. As a result, the Group’s
policies were amended to comply with AASB 16 as issued in this Financial Report.
45
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 3: BASIS OF PREPARATION (continued)
AASB 16 replaces AASB 117 Leases and results in almost all leases being recognised on the balance sheet, as the
distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the
leased item) and a financial liability to pay rentals are recognised. The lease liability is measured at the present value
of the lease payments that are not paid at the balance date and is unwound over time using the interest rate implicit in
the lease repayments. The right-to-use asset comprises the initial lease liability amount, initial direct costs incurred
when entering into the lease less any lease incentives received. The asset is depreciated over the term of the lease.
The new standard replaces the Group’s operating lease expense with an interest and depreciation expense.
The weighted average incremental borrowing rate at the date of initial application was 7.62%. This has been applied to
the liabilities recognised at transition date. The Group has elected to apply the “Modified Retrospective Approach” when
transitioning to the new standard.
Under this approach, the Group was not required to restate the comparative information for its operating leases and the
cumulative effect of the initial application is adjusted against opening retained earnings. The Group has elected to
measure the carrying amounts of the right of use assets as though the standard had applied from the commencement
date of the leases. Due to the commencement date of the lease being May 2017, the opening balance adjustment to
retained earnings was immaterial. The Group leased office premises in Perth at the time of initial application.
The Group has also early adopted AASB 15 Revenue from Contracts with Customers. The adoption did not have an
impact on the results on initial application.
PERFORMANCE FOR THE YEAR
The section provides additional information about those individual line items in the Statement of Comprehensive Income
that the Directors consider most relevant in the context on the operations of the entity.
NOTE 4: CHANGES IN SIGNIFICANT ACCOUNTING POLICIES
During the year the Group amended its accounting policy with respect to the treatment of rebates received for eligible
Research and Development (R&D) activities. The Group now deducts the value of the grant received for eligible R&D
activities and offsets it against the area where the costs were initially incurred. Prior to this change in policy the Group
recognised the grant in the profit or loss.
The Group believes the new policy is preferable as it more closely aligns the accounting treatment with the carrying value
of the asset.
The impact of this voluntary change in accounting policy on the consolidated financial statements is primarily a reduction
in mine development expenditure and increase in accumulated losses by the value of the grants received as described
below:
Financial Year
2013
2014
2015
2016
2017
2018
Grant Value
$’000
802
1,417
1,818
1,691
1,124
2,579
9,431
The value transferred is determined by the grant received for eligible R&D activities offset by the costs of preparing the
R&D returns.
NOTE 5: SEGMENT REPORTING
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker (CODM). The CODM is responsible for allocating resources and assessing performance of the operating
segments and has been identified as the Board of Sheffield Resources Limited.
46
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 5: SEGMENT REPORTING (continued)
Description of Projects
i.
Thunderbird Project
This project consists of mineral sands tenements located in the Canning Basin that form part of the potential
Thunderbird mineral sand mining operation.
ii.
Sheffield Project
This project consists of mineral sand exploration tenements located in Western Australia.
iii.
Unallocated items
Part of the following items and associated assets and liabilities are not allocated to operating segments as they
are not considered part of the core operations of any segment:
•
•
corporate expenses; and
share-based payment expense
2019
Other income
Employees benefit expense
Corporate expenses
Depreciation - non-mine site assets
Depreciation – right of use assets
Other income/(expenses)
Impairment of deferred exploration and
evaluation
Share-based payments
Net financing income
Segment results
Tax benefit
Net loss after tax
Segment assets
Segment liabilities
Capital expenditure
Sheffield
project
$’000
Thunderbird
project
$’000
-
-
-
-
-
-
(47)
-
-
(47)
-
-
-
(216)
(81)
-
-
-
(140)
(437)
Other
$’000
138
(4,027)
(3,501)
(102)
(151)
-
-
(2,338)
215
(9,766)
Total
$’000
138
(4,027)
(3,501)
(318)
(232)
-
(47)
(2,338)
75
-
(10,250)
6,604
69,132
3,804
79,540
-
4,960
1,940
6,900
585
1,847
2,615
5,047
47
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 5: SEGMENT REPORTING (continued)
2018
Other income
Employees benefit expense
Corporate expenses
Depreciation - non-mine site assets
Depreciation – right of use assets
Other income/(expenses)
Impairment of deferred exploration and
evaluation
Share-based payments
Gain on demerger
Net financing income
Segment results
Tax benefit
Net loss after tax
Segment assets
Segment liabilities
Capital expenditure
NOTE 6: REVENUE AND EXPENSES
Other income
Other
Sheffield
project
$’000
Thunderbird
project
$’000
-
-
-
-
-
-
(238)
-
-
-
(238)
-
-
-
(3)
-
-
-
-
-
-
(3)
Other
$’000
71
(2,305)
(2,089)
(60)
(141)
30
-
(1,255)
1,325
360
(4,064)
Total
Restated
$’000
71
(2,305)
(2,089)
(63)
(141)
30
(238)
(1,255)
1,325
360
-
(4,305)
6,021
38,429
23,924
68,374
-
5,560
1,129
6,689
485
17,109
925
18,519
2019
$’000
138
138
2018
$’000
71
71
Revenue is measured at fair value of the consideration received or receivable. Amounts disclosed as revenue are net
of returns, trade allowances, rebates and amounts collected on behalf of third parties. Revenue is recognised to the
extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.
48
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 6: REVENUE AND EXPENSES (continued)
Employee benefits expense
Wages and salary
Superannuation
Share-based payments – employee benefits
Other
Corporate expenses
Accounting fees
Legal fees
Conferences and seminars
Operating lease variable outgoings
Consultancy fees
Depreciation – non-mine site assets
Depreciation – right of use assets
Other
Other expenses
Impairment of deferred exploration and evaluation expenditure
Profit on disposal of asset
2019
$’000
3,198
280
2,338
549
6,365
2019
$’000
-
586
26
120
2,690
318
232
79
2018
$’000
1,835
275
1,255
195
3,560
2018
$’000
54
1
44
160
983
63
141
847
4,051
2,293
2019
$’000
47
-
47
2018
$’000
238
(30)
208
49
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 6: REVENUE AND EXPENSES (continued)
Gain on demerger of subsidiary
Exploration and evaluation at disposal date
Share capital reduction
Gain on demerger of Carawine Resources Ltd
2019
$’000
-
-
-
2018
$’000
(2,675)
4,000
1,325
Derecognition of the carrying amount of deferred exploration expenditure on the in-specie distribution of Carawine shares
(return of capital) to Sheffield shareholders. The resulting transaction had no net cash impact on the Group. The
20,000,000 shares held by Sheffield Resources Limited were distributed to Sheffield shareholders via the in-specie
distribution of Carawine shares.
Net financing income
Interest income
Interest expense on lease liability
2019
$’000
233
(158)
75
2018
$’000
386
(26)
360
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial
asset.
NOTE 7: INCOME TAX
The prima facie income tax expense on pre-tax accounting loss from operations reconciles to the income tax expense in
the financial statements as follows:
Accounting loss before income tax
Income tax benefit calculated at 27.5%
Tax effect of amounts which are not deductible/(taxable) in calculating
taxable income:
Share-based payments
Capital gain on Carawine demerger
Accounting gain on Carawine demerger
Accruals
Other non-deductible expenses
Other deductible items
Share issue costs
Immediate deduction for exploration
Unrecognised tax losses
Research & development tax offset
2019
$’000
(10,250)
(2,819)
643
-
-
17
199
(557)
(333)
(669)
3,519
-
-
2018
Restated
$’000
(4,305)
(1,184)
345
1,076
(364)
(12)
2
-
(279)
(563)
983
-
-
50
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 7: INCOME TAX (continued)
The tax rate used in the above reconciliation is the corporate tax rate of 27.5% payable by Australian corporate entities
on taxable profits under Australian tax law.
The Company has tax losses arising in Australia. The tax benefit of these losses of $16.519m (2018: $13.588m) is
available indefinitely for offset against future taxable profits of the companies in which the losses arose, subject to
ongoing conditions for deductibility being met.
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary difference and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of
the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted by the balance date.
Unrecognised deferred tax assets and liabilities
Deferred tax assets have not been recognised in respect of the following items:
Deductible temporary differences
Tax losses
Exploration and evaluation
Development expenditure
2019
$’000
(336)
16,519
(2,651)
(5,438)
8,094
2018
$’000
1,039
13,588
(1,995)
(8,360)
4,272
The deductible temporary difference and tax losses do not expire under current tax legislation. Deferred tax assets have
not been recognised in respect of these items because it is not probably that future taxable profit will be available against
which the Company can utilise the benefits thereof.
Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint
ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition
of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in
joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary
difference will reverse in the foreseeable future and taxable profit will be available against which the temporary
difference can be utilised.
51
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 7: INCOME TAX (continued)
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to
be utilised. Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the
extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the
same taxation authority.
Tax consolidation legislation
Sheffield Resources Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of
these entities are set off in the consolidated financial statements.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income, directly in equity or as a result of a business combination. In this case, the tax is also recognised
in other comprehensive income or directly in equity, respectively.
NOTE 8: LOSS PER SHARE
Loss used in calculating basic and diluted loss per share
Loss used in calculating basic and diluted loss per share from continuing
operations
Weighted average number of ordinary shares used in the calculation of
basic and diluted loss per share
2019
$’000
(10,250)
(10,250)
2018
Restated
$’000
(4,305)
(4,305)
Number
Number
245,390,657
212,611,162
As the Group is in a loss position the conversion of options to shares is not considered dilutive because conversion would
cause the loss position to decrease.
Basic earnings per share is determined by dividing the operating loss after income tax by the weighted average number
of ordinary shares outstanding during the financial year.
Diluted earnings per share adjusted the figures used in the determination of basic earnings per share by taking into
account amounts unpaid on ordinary shares and any reduction in earnings per share that will probably arise from the
exercise of partly paid shares or options outstanding during the financial year.
52
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
EMPLOYEE BENEFITS
This section of the Notes includes information that must be disclosed to comply with accounting standards and other
pronouncements relating to the remuneration of employees and consultants of the Group, but that is not immediately
related to individual line items in the Financial Statements.
NOTE 9: EMPLOYEE BENEFITS
Employee benefits
2019
$’000
364
2018
$’000
278
The provision for employee benefits represents annual leave and long service leave payable.
Provisions for legal claims are recognised when the Group has a legal or constructive obligation as a result of past events.
It is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably
estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of managements’ 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 due to the
passage of time is recognised as interest expense.
Wages, salaries, annual leave and sick leave
Liabilities accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave
expected to be settled within 12 months of the balance date are recognised as current liabilities in respect of employees’
services up to the balance date. They are measured at the amounts expected to be paid when the liabilities are settled.
Liabilities for non-accumulated sick leave are recognised when the leave is taken and are measured at the rates paid or
payable.
Liabilities accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave not
expected to be settled within 12 months of the balance date are recognised in non-current liabilities in respect of
employees’ services up to the balance date. They are measured as the present value of the estimated future outflows
to be made by the Group.
Long service leave
The liability for long service leave 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 balance date.
Consideration is given to expect future wage and salary levels, experience of employee departures, and period of service.
Expected future payments are discounted using market yields at the balance date on national government bonds with
terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.
NOTE 10: SHARE-BASED PAYMENTS
The Company provides benefits to employees (including Directors) in the form of share-based payments whereby
employees render services in exchange for shares or rights over shares (‘share-based payments’).
The cost of these share-based payments with employees is measured by reference to the fair value at the date they are
granted. The value is determined using an appropriate valuation model. In valuing share-based payments, no account
is taken of any performance conditions, other than conditions linked to the price of the shares of Sheffield (‘market
conditions’) if applicable.
The cumulative expense is recognised for share-based payments at each reporting date until vesting date and reflects
the extent to which the vesting period has expired and the number of awards, that will ultimately vest.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a
market condition.
Where the terms of a share-based payment are modified, as a minimum an expense is recognised as if the terms had
not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of
the modification as measured at the date of modification.
53
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 10: SHARE-BASED PAYMENTS (continued)
Where a share-based payment is cancelled (other than cancellation when a vesting condition has not been satisfied), it
is treated as if it had vested on the date of cancellation and any expense not yet recognised for the award is recognised
immediately. However, if a new award is submitted for the cancelled award and designated as a replacement award on
the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award,
as described in the previous paragraph.
The dilutive effect, if any, of the outstanding options is reflected as additional share dilution in the computation of
earnings per share.
Employee Share Option Plan
Employees of the Group (including Directors) may be issued with options over ordinary shares of Sheffield. Options are
issued for nil consideration and are subject to performance criteria established by the Directors of Sheffield.
Employees do not possess any rights to participate in the Employee Share Options Plan as participation is determined
by the Directors of Sheffield. Options may be exercised at any time from the date of vesting to the date of expiry. The
exercise price for employee options granted under the Employee Share Option Plan will be fixed by the Directors prior to
the grant of the option. Each employee share option converts to one fully paid ordinary share of Sheffield. The options
do not provide any dividend or voting rights. The options are not quoted on the ASX.
The objective of the grant of options to employees is to assist in the recruitment, retention, reward and motivation of the
employees of the Group.
A total of 6,835,000 options over ordinary shares under the Employee Share Option Plan were in place at the end of
year. As at 30 June 2019, 1,717,500 have vested and 5,117,500 remain unvested at year end. During the year ended
30 June 2019, 1,147,599 (2018: 1,916,980) options over ordinary shares were exercised over the period at a weighted
average share price on the date of exercise of 0.995 (2018: 0.7438).
The options over ordinary shares were in place during the year and as at 30 June 2019.
Certain performance options on issue during the year have non-market-based performance conditions. As at 30 June
2019, these performance options have not yet vested.
The non-market-based performance conditions include:
•
•
2,000,000 performance options on the completion of financing for the construction of the Thunderbird project; and
3,000,000 performance options on the delivery of the first shipment to market of mineral sands product from the
Thunderbird project.
Options issued in consideration for services
On 31 August 2016, the Company granted 4,000,000 options to consultants in consideration for ongoing market advisory
services (Series 7). The options have a 3-year term and an exercise price of $0.676. The options may be exercised at
any time on or before 31 August 2019. During the year 333,333 options were exercised.
The fair value of these options has been disclosed as consultant costs in a prior year.
These options were in place during the year and as at 30 June 2019.
Options on issue – amendment to estimated amortisation period
During the year ending 30 June 2019, the Group revised the estimated amortisation period relating to options with
performance measures.
The following table describes the change in vesting date:
Measure
Original
amortisation
end date
Revised
amortisation
end
date @ 30 June
2018
Revised
amortisation
end
date @ 30 June
2019
Series Applicable vesting condition
1
2
2
3
4
5
5
Vested
-
30 Jun 17
31 Dec 18
30 Jun 17
31 Dec 18
Vested
Vested
-
-
-
2 Feb 20
24 Nov 20
-
-
5,6,9
Completion of feasibility study
5,6
Financing complete
9,10
Financing complete
9
9
Offtake agreements ilmenite
Offtake agreements zircon
30 Mar 19
2 Feb 20
31 Mar 19
31 Mar 20
2 Feb 20
24 Nov 20
5,6
First product shipped
9,10
First product shipped
The change in accounting estimate has resulted in a reduction to the share-based payments expense of $0.04m.
54
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 10: SHARE-BASED PAYMENTS (continued)
Movement in options
The table illustrates the number and weighted average exercise prices of and movements in unlisted options issued
during the year:
2019
2018
Options
Number
Weighted
average
exercise
price
Options
Number
Outstanding at the beginning of the year
13,382,599
0.470
14,581,657
Granted during the year
-
-
810,422
Exercised during the year
(1,480,932)
0.375
(1,916,980)
Expired during the year
(1,400,000)
0.660
(92,500)
Outstanding at the end of the year
10,501,667
0.465
13,382,599
Exercisable at the end of the year
1,717,500
1.139
2,352,500
Weighted
average
exercise
price
0.43
0.001
0.001
0.001
0.47
0.84
The weighted average contractual remaining life of the share options outstanding as at 30 June 2019 is 0.795 years
(2018: 1.74 years).
The range of exercise prices for options outstanding as at 30 June 2019 is $0.001 - $1.16 (2018: $0.001 - $1.16).
The fair value of the options is measured at grant date using the Black-Scholes option valuation method taking into
account the terms and conditions upon which the instrument was granted. The services received and liabilities to pay
for those services are recognised over the vesting period.
Performance rights issued under the Employee Incentive Plan
The Employee Incentive Plan was established to enable employees of the Group to be issued with performance rights
entitling each participant to a fully paid ordinary share. The performance rights issued for nil consideration are issued in
accordance with the terms and conditions approved at a General Meeting by shareholders and in accordance with
performance criteria established by the Directors.
Employees do not possess any rights to participate in the Employee Incentive Plan as participation is solely determined
by the Directors. Performance rights convert to one fully paid ordinary share in Sheffield at an exercise price of nil upon
meeting certain non-market-based performance conditions. The performance rights do not provide any dividend or voting
rights. The performance rights are not quoted on the ASX. If an employee ceases to be employed by the Group within
the period, the unvested performance rights will be forfeited.
The objective of the Employee Incentive Plan is to assist in the recruitment, reward, retention and motivation of employees
of the Group.
During the year ended 30 June 2019, 7,325,859 performance rights were issued with certain market and non-market-
based performance conditions. As at 30 June 2019, these performance rights have not yet vested.
55
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 10: SHARE-BASED PAYMENTS (continued)
The following performance rights were issued during the year to employees and were subject to the Company
Performance Rights plan:
Number
1,541,5161
5,784,3432
Grant date
06/11/2018
30/11/2018
Expiry date
Share price at grant date
26/10/2025
01/12/2025
0.89
0.78
1The Company granted 1,541,516 performance rights to senior employees’ subject to specific performance conditions.
The vesting period for these rights occurs over 4 years with the following conditions attached:
I.
II.
III.
IV.
V.
388,137 Rights: Upon an increase in absolute shareholder return between 31/08/18 and 30/11/20;
388,137 Rights: Upon an increase in absolute shareholder return between 30/11/20 and 30/11/22;
346,382 Rights: Upon meeting specific sustainability performance targets;
152,313 Rights: Upon successful completion of Thunderbird Project construction on time and within
budget;
266,547 Rights: Upon successful transition from the construction phase to operations phase.
2The Company granted 5,874,343 performance rights to members of the executive subject to specific performance
conditions. The vesting period for these rights occurs over 2 and 4 years with the following conditions attached:
I.
II.
III.
2,313,737 Rights: Upon an increase in absolute shareholder return between 31/08/18 and 30/11/20;
2,313,737 Rights: Upon an increase in absolute shareholder return between 30/11/20 and 30/11/22;
1,156,869 Rights: Upon meeting specific sustainability performance targets.
The following performance rights were in place in the current period and were subject to the Company Performance Rights
plan:
Number
1,700,000
312,500
1,541,516
5,784,343
Grant date
22/11/2017
21/02/2018
06/11/2018
30/11/2018
Expiry date
Share price at grant date
30/01/2021
01/03/2022
26/10/2025
01/12/2025
0.74
0.71
0.89
0.78
Movement in performance rights
The table illustrates the number and weighted average grant prices of and movements in unlisted rights issued during
the year:
2019
2018
Rights
Number
Weighted
average
grant price
Rights
Number
Weighted
average
grant price
Outstanding at the beginning of the year
2,012,500
0.74
-
Granted during the year
Vested during the year
Expired during the year
7,325,859
0.80
2,012,500
-
-
-
-
-
-
Outstanding at the end of the year
9,338,359
0.78
2,012,500
Exercisable at the end of the year
-
-
-
-
0.74
-
-
0.74
-
The fair value of the performance rights is measured at grant date was estimated by taking the market price of the
Company’s shares on that date less the present value of expected dividends that will not be received on the performance
rights during the vesting period.
The weighted average remaining contractual life of the performance rights as at 30 June 2019 is 5.56 years (2018: 4.02
years).
56
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
ASSETS
This section provides additional information about those individual line items in the Statement of Financial Position that
the Directors consider most relevant in the context of the operations of the entity.
NOTE 11: CASH AND CASH EQUIVALENT
Cash at bank and on hand
Short-term deposits
2019
$’000
2,698
-
2,698
2018
$’000
139
23,003
23,142
Cash comprises cash at bank and in hand. Cash equivalents are 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.
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods of between one day and three months, depending on the immediate
cash requirements of the Group, and earn interest at the respective short-term deposit rates.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as
defined above, net of outstanding bank overdrafts.
Reconciliation of loss after tax for the year to net cash flows from operations is as follows:
Loss after tax for the year
Share-based payments
Settlement of creditors in shares
Depreciation
Impairment of exploration and evaluation expenditure
Profit on sale of assets
Gain on demerger
Other
Movements in operating assets and liabilities
(Increase)/decrease in receivables
(Decrease) in trade and other payables
(Decrease)/increase in provisions
Net cash used in operating activities
2019
$’000
(10,250)
2018
Restated
$’000
(4,305)
2,338
1,255
960
550
47
-
-
18
(2)
241
107
-
204
238
(30)
(1,325)
25
(58)
(865)
(86)
(5,991)
(4,947)
57
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 12: TRADE AND OTHER RECEIVABLES
Other receivables
Bank guarantees 1
2019
$’000
212
112
324
2018
$’000
516
94
610
1Bank guarantees include $0.0624m (2018: $0.06m) held as security for the office lease and bears 2.1% per annum interest and
$0.050m (2018: $0.03m) held as security for the credit card facilities and bears 2.1% per annum interest.
There are no balances within trade and other receivables that contain amounts that are past due but not impaired. It
is expected the balances will be received when due as there is no recent history of default or expectation that they will
default. On this basis no expected credit loss has been provided for.
The Group applies the AASB 9 simplified model of recognising lifetime expected credit losses for all trade receivables as
these items do not have a significant financing component.
In determining the recoverability of a trade receivable, the Company considers any changes in the credit quality of the
trade receivable from the date credit was initially granted up to the balance date. The directors believe that there is no
allowance for impairment required.
Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost
using the effective interest rate method, less any allowance for impairment. Trade receivables are generally due for
settlement within periods ranging from 15 days to 30 days.
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off
by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Group
will not be able to collect all amounts due according to the original contractual terms.
Factors considered by the Group in making this determination include known significant financial difficulties of the
debtor, review of financial information and significant delinquency in making contractual payments to the Group. The
impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value
of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term,
discounting is not applied in determining the allowance.
The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses.
When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent
period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are
credited against other expenses in the statement of comprehensive income.
NOTE 13: OTHER NON-CURRENT ASSETS
Transaction costs1
2019
$’000
6,624
6,624
2018
$’000
-
-
1The amount relates to transaction costs that are directly attributable to the establishment and commitment costs that are directly
attributable to the establishment of the funding facilities negotiated for the Thunderbird Project. These amounts will be reclassified to
borrowings upon drawdown of the facilities.
58
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 14: PROPERTY, PLANT AND EQUIPMENT
Plant &
Equipment
Right of Use Assets
Mine Property &
Development
As at 30 June 2019
At cost
Accumulated depreciation
Closing carrying amount
Reconciliation of carrying
amounts:
Balance at 1 July 2018
Additions
Transfers between asset
classes
Capitalisation of research
& development grant
Additions
rehabilitation asset
to
mine
Depreciation expense
Balance at 30 June 2019
$’000
4,928
(696)
4,232
228
102
4,2201
-
-
(318)
4,232
$’000
2,431
(373)
2,058
282
2,008
-
-
-
(232)
2,058
$’000
53,952
-
53,952
36,838
22,254
(4,220)
(983)
63
-
53,952
Total
$’000
61,311
(1,069)
60,242
37,348
24,364
-
(983)
63
(550)
60,242
1During the year the Group completed the installation of 52 rooms and associated support buildings and infrastructure for the
permanent village. These rooms are now ready for use and the associated costs have been transferred from mine property and
development.
Plant &
Equipment
Right of Use Assets
Mine Property &
Development
Restated
As at 30 June 2018
At cost
Accumulated depreciation
Closing carrying amount
Reconciliation of carrying
amounts:
Balance at 1 July 2017
Additions
Transfers from exploration
& evaluation
Capitalisation of research
& development grant
Depreciation expense
Balance at 30 June 2018
$’000
606
(378)
228
107
184
-
-
(63)
228
$’000
423
(141)
282
-
423
-
-
(141)
282
Total
$’000
37,867
(519)
37,348
107
16,475
23,549
$’000
36,838
-
36,838
-
15,868
23,549
(2,579)
(2,579)
-
36,838
(204)
37,348
59
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 14: PROPERTY, PLANT AND EQUIPMENT (continued)
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probably that future economic benefits associated with the item will flow to the group and the cost of the item
can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized
when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they
are incurred.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:
Motor vehicles
Plant and equipment
Buildings
Impairment
4 years
2-10 years
10 years
The carrying values of plant and equipment are reviewed for impairment at each balance date, with recoverable amount
being estimated when events or changes in circumstances indicate that the carrying value may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount it determined for the cash-
generating unit to which the asset belongs, unless the asset’s value in use can be estimated to approximate fair value.
An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable
amount. The asset or cash-generating unit is then written down to its recoverable amount.
For plant and equipment, the impairment losses are recognised in the statement of comprehensive income in the cost
of sales line item.
Revaluations
Fair value is determined by reference to market-based evidence, which is the amount for which the assets could be
exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as
at the valuation date.
Any revaluation increment is credited to the asset revaluation reserve included in the equity section of the statement of
financial position, except to the extent that its reverses a revaluation decrease of the same asset previously recognised
in profit or loss, in which case the increase is recognised in profit or loss.
Any revaluation decrease is recognised in profit or loss, except that a decrease offsetting a previous revaluation increase
for the same asset is debited directly to the asset revaluation reserve to the extent of the credit balance existing in the
revaluation reserve for that asset.
An annual transfer from the asset revaluation reserve to retained earnings is made for the difference between
depreciation based on the revalued carrying amounts of the assets and depreciation based on the assets’ original costs.
Additionally, any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amounts
of the assets and the net amounts are restated to the revalued amounts of the assets.
Under disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.
Independent valuations are performed with sufficient regularity to ensure that the carrying amounts do not differ
materially from the assets’ fair values at the balance date.
Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits
are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
Right of use leased assets
Leased assets are capitalised at the commencement date of the lease and comprise the initial lease liability amount,
initial direct costs incurred when entering into the lease less any lease incentives received.
60
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 14: PROPERTY, PLANT AND EQUIPMENT (continued)
On initial adoption of AASB 16 the Group has adjusted the right-of-use assets at the date of initial application by the
amount of any provision for onerous leases recognised immediately before the date of initial application. Following initial
application, an impairment review is undertaken for any right of use lease asset and shows indicators of impairment and
an impairment loss is recognised against any right of use lease assets that is impaired. The right of use asset is
depreciated over the lease term.
Mine development costs are derived from expenditure associated with developing and progressing the Thunderbird
project.
The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s
recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use
and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent
of those from other assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases
the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of
an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered
impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment
losses relating to continuing operations are recognised in those expense categories consistent with the function of the
impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a
revaluation decrease).
An assessment is also made at each balance date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying
amount of the asset is increased to its recoverable amount unless the asset is carried at revalued amount, in which case
the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods
to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful
life.
NOTE 15: EXPLORATION AND EVALUATION EXPENDITURE
As a result of the Group amending its accounting policy with respect to the treatment of rebates received for eligible R&D
activities (detailed in note 4), the opening balance of exploration and evaluation expenditure at 1 July 2017 has been
restated and is detailed in the table below:
Exploration and evaluation phase – at cost
Opening balance as at 1 July 2017
Change in accounting policy
Restated balance as at 1 July 2017
$’000
38,525
(6,852)
31,673
61
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 15: EXPLORATION AND EVALUATION EXPENDITURE (continued)
Exploration and evaluation phase – at cost
Balance as at 1 July 2018
Expenditure incurred
Transfer to mine development 1
Demerger of subsidiary 2
Impairment of exploration expenditure
2019
$’000
7,256
2,432
-
-
(47)
2018
Restated
$’000
31,673
2,045
(23,549)
(2,675)
(238)
Balance as at 30 June 2019
7,256
1 During the year ended 30 June 2018, the decision to commence development at the Thunderbird Mineral Sands Project was made.
Costs associated with the Thunderbird Project, previously capitalised to exploration and evaluation have been transferred to mine
development.
2 On 7 December 2017, the subsidiary Carawine Resources Limited was demerged from the Group via an in-specie distribution.
Assets held by the subsidiary were transferred at cost to the demerged entity.
9,641
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phases is
dependent on the successful development and commercial exploitation or sale of the respective areas.
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration
and evaluation asset in the year in which they are incurred where the following conditions are satisfied:
a)
b)
-
-
the rights to tenure of the area of interest are current; and
at least one of the following conditions is also met:
the exploration and evaluation expenditures are expected to be recouped through successful development and
exploitation of the area of interest, or alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not at the balance date reached a stage which
permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and
active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies,
exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of
assets used in exploration and evaluation activities. General and administrative costs are only included in the
measurement of exploration and evaluation costs where they are related directly to operational activities in a particular
area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying
amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the
exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the
relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss
subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount,
but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset in previous years.
62
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
EQUITY AND LIABILITIES
This section provides additional information about those individual line items in the Statement of Financial Position that
the Directors consider most relevant in the context of the operations of the entity.
NOTE 16: TRADE AND OTHER PAYABLES
Trade payables
Other payables
2019
$’000
3,230
1,104
4,334
2018
$’000
4,166
1,944
6,110
Trade payables are non-interest bearing and are normally settled on 30-day terms.
Trade and other payables represent liabilities for goods and services provided to the Group prior to the year end and
which are unpaid. These amounts are unsecured and have 30-60-day payment terms. They are recognised initially at
fair value and subsequently at amortised cost.
NOTE 17: INTEREST BEARING LIABILITIES
Current
Lease liability
Non-current
Lease liability
2019
$’000
164
1,975
2,139
2018
$’000
153
148
301
The Group has a commercial lease to rent office space. The lease has a fixed term of 1 year with an option to renew for
the next 3 years.
In July 2018 the Group entered into a lease for the use of land and wharf facilities at the port in Derby. The lease has a
term of 20 years.
Leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item,
are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of
the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in short-term
and long-term payables. Lease payments are apportioned between the finance charges and reduction of the lease
liability to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged
directly against Statement of Comprehensive Income.
Reconciliation of movements in interest bearing liabilities to cash flows arising from financing activities:
Balance as at 1 July 2018
Lease inception
Payments for lease liability
Balance as at 30 June 2019
2019
$’000
301
2,008
(170)
2,139
63
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 18: CAPITAL AND CAPITAL MANAGEMENT
2019
$’000
2018
$’000
260,555,374 (2018: 228,990,124) fully paid ordinary shares
99,469
80,602
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company 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.
Ordinary shares have no par value and the company does not have a limited amount of authorised capital.
2019
2018
Number
$’000
Number
$’000
Balance as at 1 July
228,990,124
80,602 181,358,784
54,722
Issue of fully paid ordinary shares 1
25,986,945
16,891
45,714,360
32,000
Issued on exercise of share options 2
Issued in payment for services3
1,480,932
1,565,570
556
960
Issued pursuant to a Facility Agreement4
2,531,803
1,436
Return on capital for demerger
Share issue costs
-
-
-
(976)
1,916,980
-
-
-
-
2
-
-
(4,000)
(2,122)
Balance as at 30 June
260,555,374
99,469 228,990,124
80,602
1 On 13 December 2018, the Company issued 24,970,812 fully paid ordinary shares for $0.65 per share to sophisticated
and professional investors. On 1 February 2019, the Company issued 1,016,133 fully paid ordinary shares for $0.65
per share under a share purchase plan.
2 On 19 September 2018, the Company issued 370,000 fully paid ordinary shares for $0.660 per share on the exercise
of share options. On 20 September 2018, the Company issued 80,000 fully paid ordinary shares for $0.660 per share
on the exercise of share options. On 25 September 2018, the Company issued 50,000 fully paid ordinary shares for
$0.660 per share and 275,000 fully paid ordinary shares for $0.001 per share on the exercise of share options. On 3
October 2018, the Company issued 333,333 fully paid ordinary shares for $0.676 per share on the exercise of share
options. On 6 November 2018, the Company issued 372,599 fully paid ordinary shares for $0.001 per share on the
exercise of share options.
3On 15 February 2019, the Company issued 1,565,570 fully paid ordinary shares for $0.6132 per share for the payment
of corporate advisory services. The shares were valued using the 5-day VWAP up to and including 12 February 2019.
4On 20 March 2019, the Company issued 2,531,803 fully paid ordinary shares for $0.567 in partial satisfaction of
commitment fees associated with the Taurus Facility Agreement. The shares issued relate to 50% of the commitment
fee payable for the March 2019 and June 2019 quarters. The shares were valued using the 5-day VWAP up to and
including 8 March 2019.
64
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 18: CAPITAL AND CAPITAL MANAGEMENT (continued)
Capital Management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s overall
strategy remains unchanged from 2018.
The capital structure of the Group consists of cash and cash equivalents, debt and equity attributable to equity holders
of the Group, comprising issued capital, reserves and retained earnings. None of the Group’s entities are subject to
externally imposed capital requirements.
Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax,
dividends and general administrative outgoings.
Gearing levels are reviewed by the Board on a regular basis in line with its target gearing ratio, the cost of capital and
the risks associated with each class of capital.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
FINANCIAL INSTRUMENTS
This section of the Notes discusses the Group’s exposure to various risks and shows how these could affect the Group’s
financial position and performance.
FAIR VALUE AND RISK MANAGEMENT
The Group’s principal financial instruments comprise cash, receivables and payables.
The Group monitors and manages its exposure to key financial risks in accordance with the Group’s financial
management policy. The objective of the policy is to support the delivery of the Group’s financial targets whilst protecting
future financial security.
The main risks arising from the Group’s financial instruments are interest risk, credit risk and liquidity risk. The Group
does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
65
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 19: FINANCIAL INSTRUMENTS – FAIR VALUE AND RISK MANAGEMENT (continued)
Interest rate risk management
The Group is exposed to interest rate risk as the Group holds cash and interest-bearing liabilities at both fixed and
floating interest rates. The Group constantly analyses its interest rate exposure. Within this analysis consideration is
given to the potential renewals of existing positions, alternative financing, and the mix of fixed and variable interest rates.
The Groups exposure to interest rate risk is limited to the amount of interest income it can potentially earn on surplus
cash deposits and the discount rate used to determine the present value of lease payments for the interest bearing
liabilities, and as such interest rate risk is considered immaterial.
2019
Floating
interest
rate
< 1 year
1 to 5
years
> 5
years
Non-
interest
bearing
Total Weighted average
interest rate
$’000
$’000
$’000
$’000
$’000
$’000 Fixed
%
Floating
%
Financial assets
Cash and cash equivalents
2,507
-
Trade and other receivables
-
112
Total financial assets
2,507
112
Financial liabilities
Trade and other payables
Interest bearing liabilities
Total financial liabilities
-
-
-
191
2,698
-
1.40
-
-
-
-
-
-
-
-
212
324
2.03
403
3,022
4,334
4,334
-
-
-
-
148
574
1,417
-
2,139
7.81
148
574
1,417
4,334
6,473
2018
Floating
interest
rate
< 1 year
1 to 5
years
> 5
years
Non-
interest
bearing
Total Weighted average
interest rate
$’000
$’000
$’000
$’000
$’000
$’000 Fixed
%
Floating
%
Financial assets
Cash and cash equivalents
12
23,003
Trade and other receivables
-
94
Total financial assets
12
23,097
Financial liabilities
Trade and other payables
Interest bearing liabilities
Total financial liabilities
-
-
-
153
148
153
148
-
-
-
-
-
-
-
-
-
127
23,142
516
610
643
23,752
1.8
2.2
6,110
6,110
-
-
301
7.62
6,110
6,411
1.7
-
-
-
66
-
-
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 19: FINANCIAL INSTRUMENTS – FAIR VALUE AND RISK MANAGEMENT (continued)
Interest rate risk sensitivity analysis
Exposure arises predominantly from assets and liabilities bearing variable interest rates as the Group intends to hold
fixed rate assets and liabilities to maturity. Interest rate risk is considered immaterial.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral
where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with
entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating
agencies where available and, if not available, the Group uses publicly available financial information and its own trading
record to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are continuously
monitored, and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit
exposure is controlled by counterparty limits that are reviewed and approved by the Board of Directors periodically.
The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties
having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the
counterparties are banks with high credit ratings assigned by international credit rating agencies.
The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents
the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long-term funding and
liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking
facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the
maturity profiles of financial assets and liabilities.
The following table details the Group’s expected contractual outflows and maturities of financial liabilities, including
estimated interest payments and excluding the impact of netting agreements:
2019
Current
Non-Current
Within 6 months
6 – 12 months
1 – 5 years
5+ years
$’000
$’000
$’000
$’000
Trade and other payables
Finance lease obligations
3,334
72
3,406
1,000
92
1,092
-
558
558
-
1,417
1,417
2018
Current
Non-Current
Within 6 months
6 – 12 months
1 – 5 years
5+ years
$’000
$’000
$’000
$’000
Trade and other payables
Finance lease obligations
6,110
79
6,189
-
74
74
-
148
148
-
-
-
67
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 19: FINANCIAL INSTRUMENTS – FAIR VALUE AND RISK MANAGEMENT (continued)
Fair values
The fair values of financial assets and liabilities approximate the carrying amounts shown in the Consolidated Statement
of Financial Position.
GROUP COMPOSITION
This section of the Notes includes information that must be disclosed to comply with accounting standards and other
pronouncements relating to the structure of the Group, but that is not immediately related to individual line items in the
Financial Statements.
NOTE 20: LIST OF SUBSIDIARIES
Subsidiary Entities
The consolidated financial statements include the financial statements of Sheffield Resources Limited and the
subsidiaries listed in the followings table.
Name
Moora Talc Pty Ltd
Ironbridge Resources Pty Ltd
Thunderbird Operations Pty Ltd
Thunderbird Finance Pty Ltd1
Country of
Incorporation
Australia
Australia
Australia
Australia
Thunderbird Infraco Holdings Pty Ltd1
Australia
Thunderbird Infraco Pty Ltd1
Sheffield Exploration (WA) Pty Ltd1
Australia
Australia
Equity Interest %
Investment %
2019
2018
2019
2018
100
100
100
100
100
100
100
100
100
100
-
-
-
-
100
100
100
100
100
100
100
100
100
100
-
-
-
-
1The Company’s were incorporated during the year and are dormant
68
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 21: PARENT ENTITY INFORMATION
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive income
Total comprehensive income
2019
$’000
2,868
71,564
74,432
1,329
463
1,792
99,469
9,662
(36,491)
72,640
2018
$’000
23,430
39,385
62,815
982
148
1,130
80,602
7,325
(26,242)
61,685
(10,249)
(4,305)
-
-
(10,249)
(4,305)
The Company had no contingent liabilities or contractual commitments as at 30 June 2019 (2018: nil). The Company
has bank guarantees as noted in Note 11.
OTHER INFORMATION
This section of the Notes includes other information that must be disclosed to comply with accounting standards and
other pronouncements, but that is not immediately related to individual line items in the Financial Statements.
NOTE 22: CONTINGENT LIABILITIES
The Group has no contingent liabilities as at 30 June 2019 (2018: nil).
NOTE 23: REMUNERATION OF AUDITORS
The auditor of Sheffield Resources Limited is HLB Mann Judd.
Amounts received or due and receivable by HLB Mann Judd for the audit or
review of the financial report of the entity
2019
$
62,370
2018
$
52,500
69
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 24: COMMITMENTS
Exploration commitments
To maintain current rights of tenure to exploration tenements, the Group is required to meet the minimum expenditure
requirements specified by various State and Territory Governments. These obligations are subject to renegotiation when
application for a mining lease is made and at other times. These obligations are not provided for in this financial report.
The minimum amounts required to retain tenure in 2020 is $2.08m (2019: $1.767m). These obligations are expected
to be fulfilled in the normal course of operations. Commitments beyond 2019 are dependent upon whether existing
rights of tenure are renewed or new rights of tenure are acquired.
Capital commitments
The Group has no capital commitments due within one year as at 30 June 2019 (2018: $3.663m).
Facility commitments
Under the Taurus Facility Agreement commitment fees of 2% p.a are payable on undrawn amounts quarterly in arrears.
The maximum commitment fee payable within one year is US$3.5m (2018: Nil).
NOTE 25: RELATED PARTIES TRANSACTIONS
Loans to subsidiaries
Loans made by Sheffield Resources Limited to wholly-owned subsidiaries are contributed to meet required expenditure
payable on demand and are not interest bearing.
Transactions with other Related Parties
There were no other transactions entered into with related parties for the financial year.
NOTE 26: KEY MANAGEMENT PERSONNEL DISCLOSURES
The following persons acted as Directors of the Company during the financial year:
• Mr Will Burbury (Non-Executive Chairman)
• Mr Bruce McFadzean (Managing Director)
• Mr David Archer (Technical Director)
• Mr Bruce McQuitty (Non-Executive Director)
The following persons are the key management personnel of the Company during the financial year:
• Mr Mark Di Silvio (Company Secretary & Chief Financial Officer)
• Mr Stuart Pether (Chief Operating Officer)
The aggregate compensation made to directors and other key management personnel of the Group is set out below:
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Share-based payments
2019
$
2018
$
1,341,984
908,464
37,523
106,688
-
83,125
1,649,118
1,104,707
3,135,313
2,096,2961
Note 1: The total for 2018 of $2,116,540 in this table is less than the total for 2018 in the Remuneration Report for the year ended
30 June 2018 of 2,716,988 as it does not include 660,448 for the following personnel who were included in the remuneration report
for the year ended 30 June 2018. As they are no longer classified as key management personnel, they have not been included in the
remuneration report for the year ended 30 June 2019 above:
Mr Jim Netterfield – BFS Study Manager
Mr Neil Patten-Williams – Marketing Manager
•
•
70
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 27: EVENTS OCCURRING AFTER THE REPORTING PERIOD
On 9 September 2019, the Company announced it had received commitments toward an equity raising of up to A$18
million before costs, by way of a placement of fully paid ordinary shares to professional, sophisticated and other
institutional investors. Under the terms of the Placement, the Company will issue approximately 46.2 million new shares
at A$0.39 per Share. The shares to be issued under the Placement will exceed the Company’s existing placement
capacity under ASX Listing Rule 7.1 and 7.1A, with shareholder approval required for the portion exceeding the
Company’s share placement capacity. Once issued, the Placement shares will rank equally with existing shares on issue.
OTHER INFORMATION
This section of the notes includes information that must be disclosed to comply with accounting standards and other
pronouncements, but that is not immediately related to individual line items in the Financial Statements.
NOTE 28: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates
and assumptions that affect the reporting amounts of assets and liabilities at the date of the consolidated financial
statements, and the reported amounts of revenues and expenses during the reporting period. Estimates and
assumptions are continuously evaluated and are based on management’s experience and other factors, including
expectations of future events, which are believed to be reasonable under the circumstances. However, actual outcomes
would differ from these estimates if different assumptions were used and different conditions existed.
The Group has identified the following areas where significant judgements, estimates and assumptions are required,
and where actual results were to differ, may materially affect the financial position or financial results reported in future
periods.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined using a Black-Scholes model, using the
assumptions detailed in Note 10.
As a performance incentive, senior employees were granted options and performance rights during the financial year
ended 30 June 2019 which contain assumptions of a real risk of forfeiture where performance targets are not achieved.
Management has ascribed various probabilities based upon stretch criteria and operations factors toward the
achievement of nominated performance targets. Accordingly, the said probability was taken into account when
calculating the share-based payment expense of the options and in the formulation of the resultant expense to profit or
loss.
During the year ended 30 June 2019, as a result of the changes in the timeline for the development of the Thunderbird
mineral sands project, the Group has revised vesting target dates relating to its share-based payments. This revision in
timeline has resulted in a change to share-based payments expense and corresponding reserve. The change in vesting
conditions is described in Note 10.
Impairment of Exploration and Evaluation Expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related area of interest itself or, if not, whether it successfully recovers
the related exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the level or reserves and resources, future technological
changes which could impact the cost of mining, future legal changes (including changes to environmental obligations)
and changes to commodity prices. To the extent that capitalised exploration and evaluation expenditure is determined
not to be recoverable in the future, this will reduce profits and net assets in the period in which this determination is
made.
In addition, exploration and evaluation expenditure is capitalised if rights to tenure of the area of interest are current
and activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves.
Impairment of Mine Development Expenditure
The future recoverability of capitalised mine development expenditure is dependent on a number of factors, including
the level of proved and probable reserves and measured, indicated and inferred mineral resources, future technological
changes which could impact the cost of mining, future legal changes (including changes to environmental obligations)
and changes to commodity prices.
To the extent that capitalised mine development expenditure is determined not to be recoverable in the future, this will
reduce profits and net assets in the period in which this determination is made.
71
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 28: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Determination of Mineral Resources and Ore Reserves
The determination of reserves impacts the accounting asset carrying values, depreciation and amortisation rates, and
provision for decommissioning and restoration. The information in this report as it relates to ore reserves, mineral
resources or mineralisation is reported in accordance with the AusIMM “Australasian Code for Reporting of Identified
Mineral Resources and Ore Reserves 2012”. The information has been prepared by or under supervision of competent
persons as identified by the Code.
There are numerous uncertainties inherent in estimating mineral resources and ore reserves and assumptions that are
valid at the time of estimation may change significantly when new information becomes available. Changes in the
forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of
reserves and may ultimately result in the reserves being restated.
NOTE 29: NEW AND REVISED STANDARDS AND INTERPRETATIONS
In the year ended 30 June 2019, the directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Company and effective for the current annual reporting period.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective
and have not been adopted by the Group and that are relevant to the Group, for the year ended 30 June 2019 are
outlined below:
AASB Interpretation 23 Uncertainty over Income Tax Treatments (effective from 1 July 2019)
This Interpretation clarifies the application of the recognition and measurement criteria in AASB 112 Income Taxes when
there is uncertainty over income tax treatments. The Interpretation specifically addresses the following:
Whether an entity considers uncertain tax treatments separately;
The assumptions an entity makes about the examination of tax treatments by taxation authorities;
How an entity determines taxable profit, tax bases, unused tax losses, unused tax credits and tax rates;
•
•
•
•
The Group has considered the impact on its consolidated Financial Statements and assessed that the effect of the new
standard will be minimal. The Group has early adopted AASB 16 Leases and AASB 15 Revenue from Contracts with
Customers, refer to Note 3(f) for further details.
How an entity considers changes in facts and circumstances.
72
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
Directors’ Declaration
1.
In the opinion of the directors of Sheffield Resources Limited (the ‘Company’):
a.
the accompanying financial statements and notes are in accordance with the Corporations Act 2001 including:
i.
ii.
giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for
the year then ended; and
complying with Australian Accounting Standards, the Corporations Regulations 2001, professional
reporting requirements and other mandatory requirements.
b.
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
c. the financial statements and notes thereto are in accordance with International Financial Reporting Standards
issued by the International Accounting Standards Board.
2.
This declaration has been made after receiving the declarations required to be made to the directors in accordance with
Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2019.
This declaration is signed in accordance with a resolution of the Board of Directors.
Mr Bruce McFadzean
Managing Director
10 September 2019
73
INDEPENDENT AUDITOR’S REPORT
To the members of Sheffield Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Sheffield Resources Limited (“the Company”) and its
controlled entities (“the Group”), which comprises the consolidated statement of financial position
as at 30 June 2019, the consolidated statement of 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 statements, 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:
a) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year then ended; and
b) 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
auditor independence requirements of 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 (“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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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. We have determined the matters described below to
be the key audit matters to be communicated in our report.
74
Key Audit Matter
How our audit addressed the key audit matter
Carrying amount of exploration and evaluation expenditure
Note 15 of the financial report
The carrying amount of exploration and evaluation
expenditure as at 30 June 2019 was $9.641
million.
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group
capitalises all exploration and evaluation
including acquisition costs and
expenditure,
subsequently applies
the cost model after
recognition.
Our audit focussed on the Group’s assessment of
the carrying amount of the capitalised exploration
and evaluation asset, as this is one of the most
significant assets of the Group.
We planned our work to address the audit risk that
the capitalised expenditure may no longer meet
the recognition criteria of the standard. In addition,
we considered it necessary to assess whether
facts and circumstances existed to suggest that
the carrying amount of an exploration and
evaluation asset may exceed its recoverable
amount.
Our procedures included but were not limited
to the following:
• Obtained an understanding of the key
processes
with
management’s review of the carrying
values of each area of interest;
associated
• Considered the Directors’ assessment of
potential indicators of impairment;
• Obtained evidence that the Group has
current rights to tenure of its areas of
interest;
• Examined the exploration budget for the
year ending 30 June 2019 and
discussed with management the nature
of planned ongoing activities;
• Enquired with management, reviewed
ASX announcements and
reviewed
minutes of Directors’ meetings to ensure
that the Group had not resolved to
discontinue exploration and evaluation
at any of its areas of interest;
• Substantiated a sample of expenditure
supporting
agreeing
to
by
documentation; and
• Examined the disclosures made in the
financial report.
Carrying amount of mine property and development
Note 14 of the financial report
The carrying amount of the Thunderbird Mineral
Sands Project mine property and development
assets as at 30 June 2019 was $53.952 million.
Our audit focussed on the Group’s assessment of
the carrying amount of the mine property and
development assets, as this is one of the most
significant assets of the Group.
We planned our work to address the audit risk that
the capitalised expenditure may no longer meet
the recognition criteria of the standard. In addition,
we considered it necessary to assess whether
facts and circumstances existed to suggest that
the carrying amount of the mine property and
development assets may exceed their recoverable
amount.
Our audit procedures included but were not
limited to:
•
considered
• Considered the Directors’ assessment of
potential indicators of impairment;
any
if
Independently
indicators of impairment under AASB
136 Impairment of Assets in relation to
the Thunderbird Mineral Sands Project;
• Substantiated a sample of expenditure
supporting
to
by
documentation; and
agreeing
• Examined the disclosures made in the
financial report.
75
Going concern
Note 3(a) of the financial report
The Group recorded a consolidated loss of
$10.250 million and had cash outflows from
operating and investing activities of $6.160
million and $30.592 million respectively. As at
30 June 2019 the Group had cash and cash
equivalents of $2.698 million.
If the going concern basis of preparation of the
financial statements was inappropriate, the
carrying amount of certain assets and liabilities
may have significantly differed.
The going concern basis of accounting was a
key audit matter due to the significance to users
of the financial report and the significant
judgement
forecasting cash
flows.
involved with
Our procedures included but were not limited
to the following:
evaluating
• We considered the appropriateness of
the going concern basis of accounting
by
underlying
assumptions in cash flow projections
prepared by
including
sensitivity analysis and subsequent
events;
the Group
the
• Our responsibilities in respect of the
going concern basis of accounting are
under Auditor’s
included
responsibilities for the audit of the
financial report; and
below
• We examined the disclosures made in
the financial report.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2019, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
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 have no realistic alternative but to do so.
76
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 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
-
-
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
-
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
77
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year ended
30 June 2019.
In our opinion, the Remuneration Report of Sheffield Resources Limited for the year ended 30 June
2019 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
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
10 September 2019
D I Buckley
Partner
78
SHEFFIELD RESOURCES LIMITED
ACN 125 811 083
ASX Additional Information
As at 31 July 2019
The Company was admitted to the official list of ASX on 15 December 2010. Since listing, the Company has used its
cash (and assets in a form readily convertible to cash) in a manner consistent with its business objectives.
In accordance with the ASX Listing Rules, the Company is required to disclose the following information which was
prepared based on share registry information processed up to 31 July 2019.
Ordinary Share Capital
As at 31 July 2019, 260,555,374 fully paid ordinary shares are held by 2,337 individual shareholders.
Spread of Holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Number of Holders/Shares
Total Holders
Ordinary Shares
200
469
352
108,762
1,431,768
2,825,059
1,018
37,434,251
298
218,755,534
2,337
260,555,374
Unmarketable parcels as at 31 July 2019 amount
to 29,946 shares held by 116 shareholders.
Substantial Shareholders
Ordinary Shareholders
Fully Paid Ordinary Shares
Number
Percentage
BlackRock Group
23,565,451
Mr Walter Mick George Yovich & Mrs Jeanette Julia Yovich
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