BUILDING A
NET ZERO FUTURE
WITH COPPER
2022
ANNUAL REPORT
SOLGOLD BUILDING A NET
ZERO FUTURE WITH COPPER
MATERIAL DISCOVERIES*
12.6Mt
COPPER
26.7Moz
GOLD
92.2Moz
SILVER
* Total consolidated Alpala deposit, Tandayama-America deposit and Cacharposa deposit.
RESPONSIBLE BUSINESS
4.33
TRIFR
US$820,256
Socioeconomic investments
Zero
Environmental
incidents
PROJECT DELIVERY
PRE-FEASIBILITY STUDY (“PFS”) FOR CASCABEL CONFIRMS WORLD CLASS PROJECT
2
1
PROJECT: CASCABEL
Mineral reserve of 558 Mt at 0.58%
Cu 0.52g/t Au and 1.65 g/t Ag
After-Tax NPV: US$2.9Bn
After-Tax IRR: 19.3%
Initial Project LOM: 26 years
Initial Mineral Reserve: 558 Mt
Average CuEq Production: > 200 ktpa
AISC: -US$0.06/lb Cu
Total FCF: US$14.4Bn
After-Tax Capital Payback: 4.7 years
1 ACCESS DECLINE
2 INITIAL CAVE
SOLGOLD IS AN EMERGING MULTI-ASSET
MAJOR AND LEADING EXPLORATION
COMPANY FOCUSED ON THE DISCOVERY,
DEFINITION, AND DEVELOPMENT OF WORLD-
CLASS COPPER AND GOLD DEPOSITS
COMPANY OVERVIEW
02 About Us
03
2022 Highlights
04 The Story of SolGold
CORPORATE GOVERNANCE
76 Chair's Introduction
77 Overview
FINANCIAL STATEMENTS
78 Corporate Governance Statement
123
Independent Auditors' Report
STRATEGIC REPORT
06
Investment Case
08 Chair's Review
10
14
Chief Executive's Review
Business Model
16 Our Strategy
19
Key Performance Indicators
22 Market Overview
24 Operations Overview
38
Financial Review
40 Risk Management
47 Viability Statement
48
Engaging with our Stakeholders
Section 172
52
Sustainability Report
75 Non-Financial Information Statement
82 Board of Directors
85
87
Executive Management Team
Board Leadership and
Company Purpose
90 Stakeholder Engagement
91 Division of Responsibilities
94
Composition, Succession
and Evaluation
96 Audit, Risk and Internal Control
97 Nomination Committee Report
98 Audit and Risk Committee Report
101
Health, Safety, Environment and
Community Committee Report
102 Strategy Committee Report
103 Directors' Remuneration Report
105 Annual Report on Remuneration
114 Remuneration at-a-glance
115 Directors' Remuneration Policy
118 Directors' Report
122 Directors' Responsibility Statement
133
134
135
136
138
Consolidated Statement
of Profit or Loss and Other
Comprehensive Income
Consolidated Statement
of Financial Position
Company Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Company Statement
of Changes in Equity
140
Consolidated and Company
Statements of Cash Flows
141 Notes to the Financial Statements
ADDITIONAL INFORMATION
182 GRI Content Index
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
01
A B O U T U S
SolGold is a mineral exploration and development company headquartered
in Brisbane, Australia. The Company is a UK incorporated public limited
company, dual LSE and TSX-listed (SOLG on both exchanges) and has a leading
exploration and project team focused on copper-gold exploration and mine
development with assets in Ecuador, Solomon Islands and Australia. SolGold
is a large and active concession holder in Ecuador and is actively exploring
the length and breadth of this highly prospective and gold-rich section of the
Andean Copper Belt. SolGold’s primary objective is to discover, define and
develop world-class copper-gold deposits.
FOUR 100% OWNED ECUADORIAN SUBSIDIARIES
FOR THE REGIONAL EXPLORATION PROGRAMME
SolGold Corporate Structure*
SolGold plc is a mineral exploration and development company headquartered in Brisbane, Australia and manages
operations in Ecuador, Australia and the Solomon Islands.
100%
100%
100%
100%
SOLGOLD
FINANCE AG
(SWITZERLAND)
SOLOMON
OPERATIONS
LTD
85%
100%
EXPLORACIONES
NOVOMINING
S.A.
SOLGOLD
ECUADOR
S.A.
GREEN ROCK
RESOURCES S.A.
VALLE RICO
RESOURCES S.A.
CARNEGIE RIDGE
RESOURCES S.A.
CRUZ DEL SOL S.A.
SOLOMON ISLANDS
US$0.6m
ECUADOR
US$355.15m
* United States Dollar amounts denote the total expenditure capitalised on 30 June 2022.
AUSTRALIAN RESOURCE
MANAGEMENT
("ARM") PTY LTD
HONIARA HOLDINGS P/L
GUADALCANAL
EXPLORATION P/L
ACAPULCO MINING P/L
CENTRAL MINERALS P/L
AUSTRALIA
US$9.8m
@SolGold_plc
SolGold Plc
SolGold Plc
Corporate
video
Sustainability
video
Cascabel Project
3D video
02
2 0 2 2 H I G H L I G H T S
C
O
M
P
A
N
Y
O
V
E
R
V
I
E
W
Investment protection
SIGNED AN INVESTMENT
PROTECTION AGREEMENT
("IPA") WITH THE STATE
OF ECUADOR SEEN AS
CRITICAL TO SUPPORTING
LARGE INVESTMENTS
Leadership
APPOINTED NEW KEY EXECUTIVES
INCLUDING CHIEF EXECUTIVE
OFFICER, CHIEF PEOPLE OFFICER,
PRESIDENT OF SOLGOLD IN
ECUADOR, VICE PRESIDENT
PROJECTS AND, GENERAL
COUNSEL TO HELP TAKE
SOLGOLD THROUGH TO THE
NEXT PHASE OF GROWTH
AND DEVELOPMENT
Project delivery
CASCABEL PFS:
AFTER-TAX NPV $US2.9
BILLION AND IRR 19.3%
AT US$ 3.60/LB COPPER
Material discoveries
ADDED > 3.6 Mt OF
CONTAINED CuEq FROM
THE CACHARPOSA AND
TANDAYAMA-AMERICA
DEPOSITS
Environmental
incidents
ZERO – 2022
ZERO – 2021
GHG intensity MtCO2e per
metre drilled in Ecuador
2022
2021
0.08 MtCO2e
0.09 MtCO2e
Socioeconomic
investments
2022
2021
US$820,256
US$574,994
Health and safety
2022 4.33 TRIFR
2021
9.60 TRIFR
with zero fatalities
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
03
T H E S T O R Y O F S O L G O L D
TEN YEARS OF
GROWTH IN ECUADOR
2012
SolGold enters Ecuador and
signs earn-in agreement
for ENSA ("Exploraciones
Novomining S.A.") which holds
100% of the Cascabel concession
2016
SolGold approves
US$22.8 million
share deal with
Newcrest / Ecuador
mining cadastre
opened
2014
SolGold gains unencumbered
85% ownership of ENSA
2013
Environmental licence received
from Ministry of Environment for
drilling at Cascabel concession /
Discovery hole at Alpala deposit
2017
SolGold moves from AIM to
Main market on the London
Stock Exchange / SolGold
commences trading on TSX /
Newcrest announce a further
investment of US$40 million
in SolGold / SolGold awarded
circa 60 concessions
2015
Ecuador and Australia
sign MOU on cooperative
ties in the mining sector
04
2018
BHP declared a major shareholder
in SolGold / Maiden Mineral
Resource for Alpala Deposit at
Cascabel announced / SolGold
reaches a total of 76 concessions
in Ecuador / Cascabel bakery
opened and run by only women
2020
Completion of Franco-Nevada US$100 million
Royalty Financing / Discovery of Cacharposa
deposit at Porvenir / Completion of MRE3
for Alpala deposit / SolGold becomes a UN
Global Compact signatory
C
O
M
P
A
N
Y
O
V
E
R
V
I
E
W
2022
Cascabel project PFS published
confirming world-class Tier 1
potential / Progress towards full
compliance with UK Corporate
Governance Code / 320,553
tree saplings grown for 1 Million
Trees project
2019
Completion of PEA for the
Cascabel project / Start
of 1 Million Trees project
2021
Guillermo Lasso elected
President of Ecuador / Darryl
Cuzzubbo appointed CEO /
Maiden Mineral Resource
announced at Tandayama-
America deposit at Cascabel
and Cacharposa deposit at
Porvenir / Appointment of
four new Independent NEDs
/ SolGold reach US$4.5
million spend on socio-
economic development
Positioning for the future
Building a sustainable future for SolGold will require the continued development
and maintenance of strong foundations:
• Completion of Cascabel Definitive Feasibility Study ("DFS")
• Social and Environmental Impact Assessments
• Security from Investment Protection Agreement in place
• Construction permit
• Construction of Cascabel project
• Transition to developer and producer
• Apply Cascabel project blueprint throughout Ecuador
• Continued progress towards full compliance with UK Corporate Governance Code
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
05
I N V E S T M E N T C A S E
ONE OF THE WORLD’S
HIGHEST QUALITY, MOST
VALUABLE UNDEVELOPED
COPPER-GOLD PROJECTS
NO ORGANISATION IS BETTER POSITIONED TO SUPPORT ECUADOR BECOMING
THE NEXT COPPER FRONTIER THAT THE WORLD NEEDS FOR A NET ZERO FUTURE.
Copper is essential for the
Global Energy Transition
resulting in a fundamental
shift in copper demand...
...while copper supply
is under pressure and
new discoveries rate
at a multi-year low
Leading to a significant
and growing copper
deficit from the second
half of this decade
A Key
Enabler of a
Net Zero Future
Cu
A tier-one asset owner
Management Team
• Excellent in-country relations with
government and local communities
• Proven track record of project
construction, operations, finance
and governance
• Experienced local management team
• Long-life project with 26-year initial
mine life extracting only 21% of M&I
("Measured and Indicated") resource
• First decile costs and negative AISC
of -US$1.38/lb Cu (first 5 years post
ramp-up)
• Post Tax US$2.9bn NPV and 19.3%
IRR (at US$3.60 /lb Cu)
•
In a commodity that has a strong
outlook given global electrification
and green energy agenda
• We have clear roadmap to becoming
one of the world’s first net zero
copper concentrate mines to be built
06
Ecuador is the most
underexplored section of
the Andean copper belt
which accounts for ~40%
of global copper production
The Next
Copper
Frontier
Government actively
attracting responsible mining
investment – Ecuador’s next
economic growth engine
Building an industry
together to unlock
substantial “nation building”
opportunities throughout
regional centres
Potential for further discovery
Attractive future returns
• One of the largest exploration
property owners in Ecuador
• A proven exploration team
• Several discoveries already under
the belt
• Foothold on vast, unexplored
regions of the Andean copper belt
• Average annual free cash flow
of US$1.35 billion in the first five
years post ramp-up
• Potential to add further upside
to project economics
• Exploration potential to deliver
additional projects in future
• Wood Mackenzie Accelerated Energy
Transition ("AET") 2 degrees long-term
copper price forecast of US$4.20/lb
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
07
STRATEGIC REPORT C H A I R ’ S R E V I E W
LIAM
TWIGGER
Chair
POSITIONED
TO BECOME A MULTI-ASSET DEVELOPER
Dear Shareholders,
It is my pleasure as your Chair, to present to you on behalf of the Board, our 2022 Annual Report and Accounts.
At the time of writing this review, the
world remains in uncharted territory
as the lingering effects of the Covid-19
pandemic continue to be felt around
the world. The socioeconomic
disruptions and challenges have been
further compounded by Russia’s
invasion of Ukraine in February 2022.
Perhaps the most concerning
consequence of both is that inflation,
an economic term that perhaps fell off
the radar during a moribund decade
for the global economy, has surfaced
once again.
While SolGold is currently a non-
producer and is therefore less affected
than other miners by these trends, it
is our duty to ensure we monitor the
situation and are prepared for all
outcomes as we move ever closer
to construction of one of the highest
quality copper mines in the global
pipeline. We are not, however,
completely immune to increased costs.
As an exploration company, a large
portion of our drilling expenditure
includes inputs such as fuel and other
raw materials, and so we remain
focused on cost control, both in
Ecuador and at our global locations.
To hone our focus on costs, risks and
corporate governance, a Group Internal
Audit function was established in
early 2021, reporting to the Audit and
Risk Committee (“ARC”). Part of the
function’s mandate is an annual audit
plan focusing on enterprise risks.
Increased scrutiny and analysis in
February 2022 led to cost reductions
in Ecuador. However, the increased
scrutiny also led to the discovery of the
misappropriation of funds in Ecuador
in late 2021, details of which were
announced in May of this year. Our
corporate culture is designed to
encourage transparency and
professionalism, protect our
shareholders’ funds and inspire
confidence in our workforce. SolGold
will continue to take steps to improve
its control, governance and risk
management environment and
processes. The strengthening of
our financial controls illustrates the
transformative journey SolGold has
undergone in recent years to ensure
our business is transparent and ethical
and is focused on achieving compliance
with all provisions of the U.K. Corporate
Governance Code (the “Code”).
As Chair, it is my responsibility to
oversee the Corporate Governance
of the Company and I am pleased
to report that, over the course of the
financial year, various initiatives have
been undertaken as part of our
continued drive towards compliance
with the Code. One such initiative was
the drafting of a new remuneration
policy, which was put to our
shareholders at the Extraordinary
General Meeting (“EGM”) held on 30
June 2022. I am pleased to report that
all resolutions put to the shareholders
were passed at the EGM. In November
2021, following a competitive audit
tender process in line with good
corporate governance practice,
PricewaterhouseCoopers LLP was
selected as the Company's Auditor
with effect from 11 November 2021.
Despite the global uncertainty, we
remained focused on our key deliverable
of the year and released the Cascabel
Pre-Feasibility Study (“PFS”) in April
2022. Of course, while the more
detailed numbers are highlighted in this
report, it is important to remember the
factors, beyond the robust economics
displayed in the PFS study, that will
ensure we secure our social licence
to operate in Ecuador for decades to
08
Fortunately, we are developing this
asset and exploring for new projects,
at possibly the greatest moment of
economic transition in the last fifty
years. In fact, the need is so great for
new copper supply that S&P recently
projected demand will reach 50 million
tonnes in 2035 in order to deploy the
technologies critical to achieving net
zero by 2050 goals, compared with
the annual demand of 25 million
tonnes today.
As we move to decarbonise the world
there is a massive opportunity for
SolGold. The world needs more copper
and there is a shortage of copper, and
we have arguably the best undeveloped
copper project in the world today.
Importantly, this also provides Ecuador
with the opportunity to be at the
forefront of this transition.
Finally, I would like to thank each and
every one of our employees and advisors
for their loyalty and hard work over the
past year, your passion and dedication
is what continues to enable us to
progress Cascabel towards production
and continue to make progress on new
discoveries in this remarkable
jurisdiction.
Thank you for your continued support
of SolGold.
LIAM TWIGGER
Chair
28 September 2022
come. These factors include the creation
of new employment opportunities in the
country, bringing significant royalty and
tax revenue benefiting all Ecuadorians
while creating value for shareholders
with an after-tax NPV of US$2.9 billion
and an IRR of 19.3% at US$3.60/lb
copper and a 4.7 year payback period
from the start of processing based on
mining 21% of the resource as described
in the PFS.
Essential to the development of a world
class mining project, especially one as
significant as Cascabel to the people
of Ecuador, is having world class people
in place to develop it, and ones that
can leverage our IP and go out and find
more Cascabel type deposits within our
vast portfolio. I am pleased to say, that
in the financial year under review, we
made great strides in ensuring that we
have the right skills and experience at
all levels of the business to achieve
these goals. In December 2021, Darryl
Cuzzubbo joined us as Managing
Director and Chief Executive Officer,
which put us in a strong position to
deliver on our collective objective. With
his deep commercial, operations and
project delivery experience, I have no
doubt, he is the best person to lead this
organisation forward in order to realise
SolGold’s best potential.
We have had a few changes at Board
level as well, with Brian Moller not
re-elected as a Non-Executive Director
in December 2021. We are grateful for
his dedication, wise counsel and
commitment over the last 16 years and
wish him every success in the future.
Jason Ward resigned as a member of
the Board in May 2022 and as Head
of Exploration. Jason has been with
SolGold since its inception in 2006
and has played an instrumental role in
developing the Company's outstanding
presence in Ecuador. Jason will remain
as an advisor to the Company to
continue to help drive SolGold's
exploration strategy. He will work
closely with management to appoint
his successor. The Board wishes to
acknowledge his tireless efforts, both at
Cascabel and throughout the extensive
exploration portfolio. Keith Marshall also
resigned as a Non-Executive Director
in August 2022 but will remain as an
advisor to the Company's technical
committee to oversee the Cascabel
project and to ensure a smooth
transition to the new Vice President
Projects in Ecuador. I would like to
especially thank Keith who chaired
the project technical committee and
oversaw the updated mine plan for
the Cascabel project PFS. He acted
as Interim Chief Executive Officer at a
globally challenging time and steered
SolGold successfully through an
oversubscribed placing of new ordinary
shares that raised approximately
US$73.8 million for the Company
in the last financial year.
Our operations, as well as our
sustainability programmes, can only
be successful if they are governed by
the right framework. A best-in-class
approach to important sustainable
development matters forms a
fundamental part of our licence to
operate which is why, this year, we
marked our 10th anniversary in Ecuador
with a new milestone in our reporting
journey by reporting in-line with the
Global Reporting Initiative (“GRI”).
This not only demonstrates our
serious commitment to contributing
to a sustainable future but also our
efforts to enhance transparency.
Since day one, SolGold has ensured we
support and understand the needs of
the very communities whose lives our
business will most affect and benefit
in the decades ahead. This year we
have invested over US$820,000 in
socioeconomic projects in partnership
with local government authorities and
almost US$5 million over the last 10
years. Companies with exploration
roots such as ours are best placed to
achieve positive relationships with the
community given the clean slate we are
afforded with greenfield deposits. This,
however, also comes with the immense
responsibility of getting things right
from the start. By understanding the
needs and key development drivers of
a population that has accepted us as
a cohabitant, we can work together to
create an environment that is multiple
times better than before we arrived. It
then becomes our job to do what we
say, all the way from construction to
development to production, in order
to retain the trust that SolGold is the
right corporate citizen to take this
project forward.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
09
STRATEGIC REPORT C H I E F E X E C U T I V E ’ S R E V I E W
DARRYL
CUZZUBBO
Managing Director and
Chief Executive Officer
COMMITTED
TO THE COMMUNITY
Dear Shareholders,
There is no question that SolGold presents an incredible opportunity to position
Ecuador as the next copper frontier at a time when the world is expected to face
a significant copper deficit in the transition towards a net zero future.
Ecuador is a highly prospective
underexplored terrain along the Andean
copper belt and SolGold is one of the
largest concession holders in the
country. The Alpala deposit discovered
at Cascabel was the second largest
copper discovery in a decade with
20% of the world’s total copper and
16% of the world’s total gold discovered.
Furthermore, Cascabel will be one of
the lowest carbon intensity copper
concentrate mines ever built with a
clear pathway to net zero emissions
for scope 1 and 2 emissions. My hope
is that all Ecuadorians can be proud
that through Cascabel and subsequent
projects, they, as a country, are enabling
the world to transition to a net zero
future at a time when the world needs
copper the most and doing it in a way
that sets a new standard for what is
possible by way of carbon intensity.
To take SolGold forward towards its
full potential, we have established a
leadership team that firstly believes
in the full potential of the organisation
and secondly have the conviction and
capability to take the organisation
through its different phases of
development. In January of 2022 we
appointed Ms. Tania Cashman as Chief
People Officer to implement a culture
and capability strategy essential for the
transition from explorer to developer,
builder and operator. In the post-
reporting period, in July 2022, we
announced further key appointments.
Mr. Steven Botts was appointed to
the position of President of SolGold
Ecuador. Steven has over 40 years'
international mining experience and
is a deeply experienced leader in cross
cultural and international business
relations with a proven ability to
develop partnerships and deliver
projects. Mr. Harold 'Bernie' Loyer
was appointed to the position of Vice
President Projects of Ecuador. Bernie
has over 35 years of international
mining experience including over 20
years in Latin America with a proven
track record delivering large scale
mining projects. We are focused on
building capability in Ecuador which
is not only the right operating model
but also further de-risks the Company.
We recently hired Luis Mario Sanchez
as Finance Director in Ecuador and
Luz Castellanos as Human Resources
Director in Ecuador. Mr. Rufus Gandhi
was appointed to the position of
General Counsel and Company
Secretary. Rufus has over twenty
This has been a milestone
year for SolGold with
significant progress
made across our
project portfolio.
10
I
S
T
R
A
T
E
G
C
R
E
P
O
R
T
COPPER
Key metal to support the
global energy transition
THE TOP SIX USES:
• Electrical Networks
• Construction
•
Industrial Machinery
• Home Appliance
• Transport
• Consumer Electronics
GOLD
THE TOP SIX USES:
• Jewellery
• Finance
• Electronics/Computers
• Dentistry/Medicine
• Aerospace
• Medals/Awards
SILVER
FIVE COMMON USES:
• Coins, Rounds, Bullion
• Anti-bacterial
• Electronics
• X-ray and Photography
• Silverware and Jewellery
years of legal, company secretarial
and corporate governance experience
working in multiple jurisdictions
including in Australia, the U.K.,
Singapore and the U.S. We also
appointed Mr. Keith Pollocks as the
Interim Group Chief Financial Officer
following the resignation of the prior
Group Chief Financial Officer in August
2022. Keith has extensive international
experience leading global finance
functions for a range of public and
private multinational companies
predominantly across banking,
infrastructure, resources, and mining.
I am pleased to report that 2022 has
been a milestone year for SolGold with
significant progress made across our
project portfolio. The Pre-Feasibility
Study (“PFS”) for the Cascabel project
was published in April 2022 and
confirmed it as a Tier 1 world-class
asset where it will be one of the top
producers in Latin America at very
low cost, low carbon footprint, with
an initial project life of 26 years
expandable to a Life-Of-Mine of greater
than 50 years. With the initial mine plan
covering just 21% of the Measured &
Indicated resource it is estimated to
return an NPV of US$2.9 billion
producing a free cashflow of
approximately US$1.4 billion per annum
once ramped up. The publication of the
PFS has generated increased interest in
the Cascabel project. Upon completion
Cascabel will be a significant, multi-
decade and very low-cost producer of
copper that can help enable Ecuador's
emergence as the next copper frontier
at a time when the world needs copper
the most as we transition to a net zero
emissions future. This has been a year
of making difficult but rewarding
decisions in our journey to achieving
significant milestones. We are very
excited by the prospect of building the
mine at the Cascabel project, not least
because it has all the hallmarks of
becoming one of the world’s lowest
carbon footprint mines with an All-In-
Sustaining-Cost of -US$1.38/lb copper
on average for the first five years post
ramp up.
The progress recorded across our
portfolio has illustrated SolGold’s rapid
evolution from frontier explorer into
positioning the Company to become
a multi-asset developer, builder and
operator of world class assets whilst
making sure that we make the most of
the incredible exploration expertise that
has got us to where we are today and
is essential for finding future projects
across our extensive concessions.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
11
C H I E F E X E C U T I V E ’ S R E V I E W
C O N T I N U E D
SolGold is actively evaluating several
options as part of the Definitive
Feasibility Study (“DFS”) to manage
and minimise the Cascabel project's
overall carbon footprint. These
include maximising power from
hydro-generation sources, further
investigations on electrification,
assessing process integration to
optimise operational efficiency, and
developing an achievable roadmap
to completely eliminating scope 1
and scope 2 emissions, among
other initiatives.
As such, the Company progressed its
pan-Ecuadorian exploration strategy
with the announcement of two Mineral
Resource Estimates (“MREs”) which
have added > 3.6Mt of contained CuEq
from the Cacharposa deposit at the
Porvenir concession and Tandayama-
America deposit at the Cascabel
concession. We now have a combined
Mineral Resource portfolio containing
12.6Mt of copper, 26.7 Moz of gold and
92.2 Moz of silver. Porvenir is the
Company's second priority based upon
the Cacharposa deposit. SolGold has
engaged M3 to progress the Porvenir
project Pre-Economic Assessment
("PEA") that is on track for completion
by the end of calendar year 2022.
Additionally, field programmes are
continuing at numerous satellite
targets to the Cacharposa deposit
that comprises a Mineral Resource of
397Mt at 0.44% CuEq in the Indicated
category and contained metal content
of 1.40Mt copper and 1.80Moz gold
(1.75Mt CuEq). Cacharposa is the
second resource to be defined by
SolGold as part of its strategy to define
a multi-asset portfolio over the length
of Ecuador. Exploration activity has
also identified the Helipuerto project
as the next most important target for
the Company. SolGold is expediting the
delivery of drilling and environmental
permits to drill test extensions to the
mineralised system. An initial focus
at Helipuerto is on the delineation of
the size and tenor of the Tinkimints
copper prospect.
In January 2022, it was a pleasure to
meet with the President of Ecuador,
Guillermo Lasso Mendoza and senior
Ministers, to discuss the socioeconomic
benefits of the Cascabel project and
it was clear that President Lasso is
committed to developing the mining
sector as a major economic force for
Ecuador. In November 2021, SolGold
signed the first Investment Protection
Agreement ("IPA") with the Government
of Ecuador for all historical and proposed
investment for the Cascabel project
with a specific benefit of agreeing the
potential for international arbitration
in the U.K. should there be a need.
Another significant milestone recorded
this year was SolGold’s 10th anniversary
in Ecuador. Right from our entry into
the country, we have made a conscious
effort to operate mindfully alongside
our host communities and to have a
minimal impact on the environment.
Since our arrival in Ecuador, more
people have moved back into the
rural towns surrounding the Cascabel
project in the belief that Cascabel will
be developed with substantial gains
that this will bring to them, their
children and grandchildren. In terms
of long-term economic benefits, the
Cascabel project is estimated to create
over 6,000 indirect and direct jobs, and
once constructed, is expected be a top
20 South American copper and gold
mine. Our concerted effort to ensure
strong relationships with the
communities in which we operate
has also been illustrated this year
as only nine grievances from all host
communities were recorded, all of
which were satisfactorily resolved.
We continue to strengthen our
governance that is fit for purpose for an
organisation of our size with room for
growth. It is of fundamental importance
that we are trusted by our shareholders
and stakeholders where strong
relationships, good governance and
transparency are essential. Whilst we
have made a lot of progress, we still
have some way to go.
Following the PFS for the Cascabel
project, SolGold has continued to
progress the development path in the
form of delivering the PFS Addendum
(targeting CY Q4 2022) and the DFS
(targeting CY Q4 2023). The objective
is to further de-risk the project and
realise its world class, Tier 1 potential.
The Company is targeting total potential
pre-tax NPV uplift of approximately
US$1-1.8 billion at the Cascabel project
from the continued evaluation of
optimisations and other upside
opportunities to be incorporated
within the upcoming studies.
Further to SolGold’s cash position of
US$26.1 million as at 30 June 2022, we
are investigating a number of strategic
initiatives to provide the Company with
funding options for the development
of Cascabel and the progression of
regional projects. SolGold continues
to develop the funding path to achieve
the Company’s next milestones.
I am confident the decisions we are
making to build our Company for the
future, together with a clear strategic
outlook, new leadership team, and
exposure to a sought-after future facing
commodity, will see us continue to
grow SolGold and create value for
our shareholders and our broader
stakeholders for decades to come.
I would like to thank shareholders and
our local communities for their support
as we take SolGold forward and would
like to recognise the dedication and
conviction of all our employees who
see and believe in the incredible
opportunity before us.
Thank you for your ongoing support.
DARRYL CUZZUBBO
Managing Director and
Chief Executive Officer
28 September 2022
12
THE CASCABEL PROJECT WILL
BENEFIT ITS COMMUNITY FOR
GENERATIONS TO COME
50+ years
Since our arrival in Ecuador, more
people have moved back into
the rural towns surrounding the
Cascabel project in the belief that
Cascabel will be developed with
substantial gains to them, their
children and grandchildren. The
Cascabel project is estimated to
create over 6,000 indirect and
direct jobs with an initial project
life of 26 years expandable to
a Life-Of-Mine of greater than
50 years.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
13
STRATEGIC REPORT B U S I N E S S M O D E L
DELIVERING COPPER AT A TIME
WHEN SUPPLIES ARE DECLINING
AND THE WORLD IS DEMANDING
MORE COPPER FOR A TRANSITION
TO A NET ZERO FUTURE
OUR CAPITAL INPUTS
HOW WE CREATE VALUE
NATURAL
Mineral Resource. We use energy, fuel and
water to operate our activities. We use these
resources as efficiently as possible to minimise
our environmental footprint
HUMAN
We invest in our workforce, ensuring they have
the right skills, capabilities and career prospects
to match our growth ambitions
SOCIAL
We have established a strong social licence
to operate in our host countries and local
communities which supports our current
operations and exploration activities
MANUFACTURED
We rely on drill rigs, plant and site infrastructure
FINANCIAL
Track record of disciplined capital allocation to
enable us to invest in our business and deliver
strong shareholder returns
We generate value by discovering, defining
and developing world-class mineral deposits.
We maximise funds using an established
systematic and disciplined approach to
exploration, targeting grassroots opportunities
to ensure low-cost entry into projects
COST CONTROL
LAND
PURCHASES
MATERIAL
DISCOVERIES
PROJECT
DELIVERY
SHARE PRICE
PERFORMANCE
14
SHARING THE VALUE WE CREATE
SKILLED
WORKFORCE
• 99% Ecuadorian employees
• US$27,161,319 wages, salaries and benefits
• 10.4 hours of average training per employee
HOST
COMMUNITIES
• US$820,256 invested in socioeconomic projects
delivered in partnership with Local Authorities
of the communities where we operate (FY2022)
• 17% of procurement budget spent locally in the
communities where we operate (FY2022)
TRUSTED
PARTNER
US$900,000 investment in partnership with
Franco-Nevada to deliver a waste and recycling
infrastructure for the local parishes of Lita and
La Carolina in the Imbabura province of
Northern Ecuador
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
15
STRATEGIC REPORT O U R S T R A T E G Y
THE EXPLORATION FOR
COPPER AND GOLD IS CORE
TO OUR BUSINESS MODEL
Corporate
Development
e
e titiv
g
p
d in
m
n
o
u
u r e C
F
c
e
S
p
e
o
T
e
a
w
h
m
ple th
at’s p
orie
nte
at re
ssible
e
d
o
d
fi
n
e
G
C
l
o
o
p
b
p
a
l
e
L
r
e
D
a
i
s
d
c
e
o
r
s
v
e
i
n
r
y
Supporting
Ecuador to be
the next copper
frontier when
the world needs
it most
Net positive impact
and carbon neutral
ext Tier 1
g
pin
evelo
Asset
e N
D
th
Portfolio
Development
Sustainable
Development
We generate value by discovering,
defining and developing world-class
mineral deposits. We maximise funds
using an established systematic and
disciplined approach to exploration,
targeting grassroots opportunities
to ensure low-cost entry into projects.
Our vision is to become a leading
copper and gold miner underpinned
by our exceptional portfolio of
project options.
SolGold’s ambition is to become a
major copper and gold mining company
in Ecuador, and with the Government’s
more open policy to foreign investment,
is leading the way in opening the country
up for future mining. Specifically, the
Cascabel project presents an incredible
opportunity for Ecuador and its people.
Cascabel is one of the most significant
copper-gold discoveries in recent times.
Not only will the build and operation of
Cascabel provide significant local job
opportunities but will also promote
mining investment further in Ecuador,
leading to even greater benefit longer
term. Ultimately SolGold will play a
vital role in enabling the transition to
a sustainable net zero emissions future,
with our clear roadmap to building a
net zero mine, it can be one of the first
large scale copper concentrate mines
ever built that is carbon neutral.
SolGold intends to
build the world's
first large scale
carbon neutral
copper mine.
16
Key Strategic Themes
Team orientated people that
redefine what’s possible
Developing the capabilities and
culture that enables the world’s
most sustainable copper mine
Global Leaders in
Copper Discovery
Developing the
Next Tier 1 Asset
Net positive impact
and carbon neutral
Secure Competitive
Funding
Leveraging our first mover
country advantage to identify
pipeline of economic projects
Advancing the world’s most
commercially attractive copper
development
Communities are strong advocates
of Cascabel, the Environment overall
benefits and Cascabel is first large
scale carbon neutral mine
Securing funding that rivals
the majors' cost of capital
and rewards shareholders
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
17
STRATEGIC REPORT 18
K E Y P E R F O R M A N C E I N D I C A T O R S
THE BOARD HAS DEFINED
THE FOLLOWING EIGHT KPIs
IN ORDER TO MONITOR AND
ASSESS THE PERFORMANCE
OF THE COMPANY AS IT
ADVANCES FROM A PURE
EXPLORATION COMPANY INTO
A DEVELOPER AND EXPLORER
Corporate
governance
Health and safety
performance
Environmental
performance
Cost control
Social and
community
engagement
Cascabel project
delivery
Share price
performance
Material discoveries
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
19
STRATEGIC REPORT K E Y P E R F O R M A N C E I N D I C A T O R S
C O N T I N U E D
AND SAFETY
PERFORMANCE
1 HEALTH
CONTROL
2 COST
PROJECT
DELIVERY
3 CASCABEL
DISCOVERIES
4 MATERIAL
SolGold achieved its goal
of maintaining a safe
workplace for all and
will strive to ensure this
achievement is carried out
every year. The Company
achieved a TRIFR of 4.33in
the 2022 financial year
(2021: 9.60). TRIFR stands
for Total Recordable Injury
Frequency Rate and is the
number of fatalities, lost
time injuries, alternate
work and other injuries
requiring medical treatment
per million hours worked.
The Company produces
an annual budget and
a forecast at least every
quarter. Detailed variance
analysis (including
commentary) is produced
monthly, comparing actual
costs to budgeted costs.
These are presented at
Board meetings and at
monthly EXCO meetings.
In addition, our subsidiaries
in Ecuador are funded via
monthly cash calls and any
deviations from budget
are discussed with the
CFO before sign-off by
the CFO.
The Company successfully
published the PFS for the
Cascabel project in early
April 2022 confirming
Tier 1 potential.
The Company successfully
progressed its pan-
Ecuadorian exploration
strategy with the
announcement of two
Mineral Resources
Estimates ("MREs") adding
> 3.6Mt of contained CuEq
from the Cacharposa
deposit at the Porvenir
project and the
Tandayama-America
deposit at the Cascabel
project.
KPIs
4.33
TRIFR
(2021: 9.60)
20
PERFORMANCE
5 SHARE PRICE
The performance of
SolGold’s share price is
the ultimate gauge of
the Company’s ability
to generate market
recognition and value
from its exploration and
development activities.
This market recognition
and valuation also
facilitates the Company’s
ability to raise capital from
new and existing investors.
The share price
performance was a target
within the Short-Term
Incentive Plan of several
members of the Company’s
executive management
team and several other
employees in corporate
finance in FY2022.
50
40
30
20
10
0
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
COMMUNITY
6 SOCIAL AND
ENGAGEMENT 7 ENVIRONMENTAL
PERFORMANCE 8 CORPORATE
GOVERNANCE
Darryl Cuzzubbo was
appointed CEO and
Executive Director to the
Board. The Company has
made significant progress
towards full compliance
with the UK Corporate
Governance Code
following shareholder
approval of the new
Remuneration Policy in
June 2022 and decision
to put all Board Directors
up for re-election at the
2022 AGM.
Protecting the environment
is central to our
sustainability approach.
Our environmental
stewardship programme
is focused on five areas:
1) Water management
2) Waste management
3) Land Rehabilitation
4) Environmental
monitoring &
biodiversity
5) Reforestation.
SolGold strives for zero
severe environmental
incidents and we had
nil in 2022 (2021: nil).
We are committed to
building and maintaining
strong relationships
underpinned by open and
constructive dialogue with
our communities. In the
2022 financial year our
teams held more than 1,660
meetings and received
9 claims and complaints
(2021: 2,545 and 8).
All complaints were
satisfactorily resolved.
We are committed to
improving the lives of the
people in the communities
surrounding our operations.
Our social investment
strategy, agreed with the
local parishes of Lita and
La Carolina, is centred
around five key areas:
1) Education
2) Community healthcare
3) Road and community
infrastructure
4) Socioeconomic
projects and
5) Social, cultural and
sporting activities.
Total socioeconomic
investments in
2022: US$820,256
(2021: US$573,994).
KPIs
KPIs
US$820,256
socioeconomic
investment, 1,660
meetings and 9 claims
and complaints. (2021:
US$573,994, 2,545, 8)
Zero
Environmental
incidents
(2021: nil)
21
STRATEGIC REPORT M A R K E T O V E R V I E W
Copper market outlook
A fundamental driver of copper
demand over the past twenty years
has been the urbanisation, digitisation,
and industrialisation of developing
economies. A major driving force
behind this process was globalisation
which saw companies from the world’s
developed economies seeking to
reduce labour costs, improve margins
and flexibility by investing in new
capacity in countries such as China.
Refined copper consumption in China
has more than doubled over this period
from approximately 5Mt in 2000 to
more than 12Mt in 2021, and today
accounts for more than half of global
copper consumption. Over the last
couple of years, the slow-down in the
Chinese economy has led to more
modest growth in copper consumption.
Large-scale stimulus packages, the
vaccine rollout, pent up demand and
low interest rates stimulated economic
activity in 2021, with demand increasing
4.2% to 24.4 Mt, surpassing 2019 levels.
The rapid rebound in Chinese economic
activity supported copper demand
in 2020, but in 2021 increased
manufacturing activity in Europe
and North America resulted in
demand growth.
There has been significant volatility
in the copper price and across the
commodities complex in recent months.
Energy prices have continued to rise
while most industrial metals have fallen.
The instability across these markets was
initially as a result of the war in Ukraine
and China’s Covid-19 restrictions’
impact on demand. Recently, inflation
and growing recessionary fears are key
concerns contributing to the ongoing
copper market instability. Low visible
inventories and ongoing copper mine
supply disruptions should however
provide some support to prices. Global
refined copper consumption is forecast
to grow by 1.6% in 2022 and strengthen
to 3.2% in 2023 (according to Wood
Mackenzie’s June 2022 Outlook).
Over the medium to long-term, copper
will benefit from an economic recovery
focused on green end-use sectors,
which is expected to support above
average annual global refined
consumption growth of 2.3% over
the 10-year period 2022-2031 to 31Mt
according to Wood Mackenzie. Average
annual growth is expected to average
1.7% annually over the subsequent
period to 2050 reaching nearly 42Mt
of refined copper demand.
On the supply side, global copper
mine production in 2021 was 21.4 Mt,
up 2.1% from production levels seen
in each 2019 and 2020. Global copper
production capability from mines and
already committed projects is forecast
to increase in the near term to peak at
an adjusted 24.7Mt in 2024. Looking
further ahead, without additional mine
supply from new projects, base case
mine production is expected to steadily
decline to approximately 14Mt by
2040. New mines will be required
to meet demand.
To limit global warming to 2 degrees
vs. pre-industrial levels, as per the Paris
agreement, an Accelerated Energy
Transition (“AET”) is required according
to Wood Mackenzie. In turn, the AET
would increase demand for primary
copper, which is expected to grow at
a 0.3% higher annual rate. This would
translate to an upside copper demand
that is more than 2.5Mt higher than
the base case in 2040 and a cumulative
difference of nearly 50Mt in copper
demand between 2022 and 2040.
Wood Mackenzie forecasts that under
an AET-2 degree scenario, a long-term
incentive price of US$9,259/t (US$4.20/
lb) in constant 2021 US dollars should
be sufficient to close the supply gap,
maintain market equilibrium and retain
a reasonable market balance over the
next decade.
The Alpala deposit at Cascabel, which
contains 9.9 million tonnes of copper in
the Measured plus Indicated resource
category, is perfectly placed to take
advantage of this structural shift and
long-term demand for copper.
Gold market outlook
Gold prices remain supported in
the current environment reflecting
geopolitical and growth risks, and
the potential for continued elevated
inflation. The gold price is being pulled
in multiple directions with the negative
impact of rising bond yields offset by
concerns of sticky inflation and rising
recession fears, the latter supporting
gold’s safe haven demand and
supporting ETF inflows.
SolGold’s Alpala deposit contains 21.7
million ounces of gold in the Measured
plus Indicated resource category,
positioning it as a strong supply of gold
production over the decades ahead.
22
Ecuador’s untapped mineral wealth
Ecuador hosts significant, untapped geological potential at the northern end of the prolific Andean Copper Belt, home
to some of the world’s largest copper mines. SolGold’s teams of experienced Ecuadorian explorationists and geologists
are deploying advanced exploration techniques to uncover this mineral wealth. Such methodologies led to the discovery
of the Company’s Alpala deposit at the flagship Cascabel project, one of the world’s most significant mineral discoveries
of the last decade.
Top Copper Discoveries in 2012-21
Source: S&P Global Market Intelligence
Stage
PEA
DFS
PFS
PEA
FS
EXP
EXP
PEA
EXP
EXP
FS
Top Copper Discoveries 2012-21
Cu (Mt)
Au (Mt Cu eq)
Ag (kt Cu eq)
Mo (Mt Cu eq)
Ni (Mt Cu eq)
Co (Mt Cu eq)
Pd (Mt Cu eq)
Pt (Mt Cu eq)
e
c
r
u
o
s
e
R
n
i
l
a
t
e
M
.
q
e
u
C
t
M
25
20
15
10
5
0
Onto
Cascabel
West
Musgrave
Tatogga
(Saddle)
Caravel
Winu
La Huifa
Porvenir
Jebel Ohier
Copa Sur Marimaca
While there are a number of early-stage, prospective exploration projects across Ecuador, just two large-scale mines are
currently in production, namely the Mirador copper mine (owned by EcuaCorriente); and the Fruta del Norte gold mine
(owned by Lundin Gold). In addition to this, there are several high-profile development projects that are currently being
advanced through feasibility studies. In the coming years, this number is likely to increase as additional capital is invested
and these development projects are brought into production.
The development of Ecuador’s mining sector has been made possible with the support from all levels of the Government,
with whom SolGold continues to maintain strong relationships. In addition, SolGold continues to work in close partnership
with the communities in which it operates, as a key part of the Company’s strong social licence to operate.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
23
STRATEGIC REPORT
O P E R A T I O N S O V E R V I E W
THE ALPALA DEPOSIT IS THE
MAIN TARGET IN THE CASCABEL
CONCESSION, SOLGOLD'S
FLAGSHIP PROJECT
Highlights of the Cascabel PFS include:
• After-tax NPV and IRR of US$2.9bn and
19.3%, respectively
• Payback of 4.7 years from start of operations
•
Initial 26-year operating life and 25Mtpa
process plant throughput with an expandable
Life-of-Mine potential to greater than 50 years
• Total ore production of 558Mt, containing
3.3Mt Cu, 9.4Moz Au and 30Moz Ag
• Process plant producing 2.8Mt Cu, 7.6Moz
Au and 21.7Moz Ag over the initial 26-year
life of the project
• Average annual production for initial cave of
132ktpa Cu, 358kozpa Au and 1.0Mozpa Ag
• All In Sustaining Cost (“AISC”) of
– US$0.06 /lb Cu over the initial 26-year
mine project
• Average annual production in the five
years following initial cave ramp up of
approximately 190ktpa Cu, 680kozpa Au
and 1.3Mozpa Ag (330ktpa CuEq) at a
negative AISC of – US$1.38/lb Cu
• Total after-tax free cash flow generation
of US$14.4bn and averaging over US$1.3bn
per year in the first five years post ramp-up
• Estimated initial capital expenditure of
US$2.7bn for the initial cave development,
first process plant module and infrastructure
with first ore production expected in mid-2029
The PFS underpins the Mineral Reserve estimate
and further optimisations of the mine and
process plant are expected to deliver
additional value.
The availability of low-cost hydropower, on
site water resources, the use of low energy
intensive block cave mining methodology,
process plant configuration, the potential use
of a fully electric mining fleet, concentrate
transport via a pipeline will deliver a lower
carbon footprint compared to projects
which do not have these benefits.
Additional optimisations are currently being
progressed for a PFS Addendum planned for
completion in Q4 of CY 2022.
The Cascabel project Definitive Feasibility Study
(“DFS”) is then planned for completion in Q4
of CY 2023.
FLAGSHIP PROJECT: CASCABEL
Location:
Imbabura province, Northern Ecuador
Ownership:
85% Subsidiary: Exploraciones Novomining S.A.
Tenement Area:
1 concession, 50 km2
Primary Targets:
Copper-gold porphyry
CASCABEL PRE-FEASIBILITY STUDY
The results of the Cascabel project PFS were announced in April 2022,
confirming the Cascabel project’s world class, Tier 1 potential to be
a large, low-cost, and long-life mining operation that is based on
achievable, proven, and tested mining and processing assumptions.
Once constructed, Cascabel is expected to be a top 20 South American
copper and gold mine benefiting from a high-grade core, advantageous
infrastructure and an increasingly investor friendly government.
The PFS investigated multiple scenarios in order to identify an initial
base case to take forward, with additional resources and upside to be
investigated, supporting the next phase optimisations, and confirming
the application of block cave mining to the Alpala underground resource.
24
I
S
T
R
A
T
E
G
C
R
E
P
O
R
T
Cascabel Mineral Resource and Mineral Reserve Estimates
Alpala Mineral Resource Estimate ("MRE#3")
The Alpala porphyry copper-gold-silver deposit, at a cut-off grade of 0.21% CuEq, comprises 2,663 Mt at 0.53% CuEq in the
Measured plus Indicated categories, which includes 1,192 Mt at 0.72% CuEq in the Measured category and 1,470 Mt at 0.37%
CuEq in the Indicated category. The Inferred category contains an additional 544 Mt at 0.31% CuEq.
The estimate comprises a contained metal content of 9.9 Mt Cu and 21.7 Moz Au in the Measured plus Indicated categories,
which includes 5.7 Mt Cu and 15 Moz Au in the Measured category, and 4.2 Mt Cu and 6.6 Moz Au in the Indicated category.
The Inferred category contains an additional 1.3 Mt Cu and 1.9 Moz Au.
CUT-OFF
GRADE
MINERAL RESOURCE
CATEGORY
Measured
Indicated
Measured +
Indicated
Inferred
Planned dilution
0.21%
Notes:
GRADE
CONTAINED METAL
Mt
1,192
1,470
2,663
544
5
CuEq
(%)
0.72
0.37
0.53
0.31
0.00
Cu
(%)
0.48
0.28
0.37
0.24
0.00
Au
(g/t)
0.39
0.14
0.25
0.11
0.00
Ag
(g/t)
1.37
0.84
1.08
0.61
0.00
CuEq
(Mt)
8.6
5.5
14.0
1.7
0.0
Cu
(Mt)
5.7
4.2
9.9
1.3
0.0
Au
(Moz)
15.0
6.6
21.7
1.9
0.0
Ag
(Moz)
52.4
39.8
92.2
10.6
0.0
1. Mrs. Cecilia Artica, SME Registered Member, Principal Geology Consultant of Mining Plus, is responsible for this Mineral Resource statement and
is an "independent Qualified Person" as such term is defined in NI 43-101.
2. The Mineral Resource is reported using a cut-off grade of 0.21% CuEq calculated using [copper grade (%)] + [gold grade (g/t) x 0.613].
3. The Mineral Resource is considered to have reasonable prospects for eventual economic extraction by underground mass mining such as block caving.
4. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
5. The statement uses the terminology, definitions and guidelines given in the CIM Standards on Mineral Resources and Mineral Reserves (May 2014)
as required by NI 43-101.
6. MRE is reported on 100 percent basis within an optimised shape.
7. Figures may not compute due to rounding.
Alpala Mineral Reserve Estimate
As part of the PFS, the Company announced for the first time a Mineral Reserve for the Alpala deposit, which has been
estimated using block caving as the sole underground mining method, taking into account the effect of dilution of
indicated material with lower grade or barren material originating from within the caved zone and the overlying cave
backs, representing the economically mineable part of the measured and indicative resource, based on achievable
mine plan and production schedule. The initial Mineral Reserve represents 21% of Measured and Indicated Resources
tonnes and approximately 38% of contained metal in dollar terms.
MINERAL RESERVE CATEGORY
Probable
Total
Notes:
GRADE
CONTAINED METAL
Mt
558
558
Cu
(%)
0.58
0.58
Au
(g/t)
0.52
0.52
Ag
(g/t)
1.65
1.65
Cu
(Mt)
3.26
3.26
Au
(Moz)
9.37
9.37
Ag
(Moz)
30
30
1. Effective date of the Mineral Reserves is 31 March 2022.
2. Only Measured and Indicated Mineral Resources were used to report Probable Mineral Reserves.
3. Mineral Reserves reported above were not additive to the Mineral Resource and are quoted on a 100% project basis.
4. The Mineral Reserve is based on the 18 March 2020 Mineral Resource.
5. Totals may not match due to rounding.
6. The statement uses the terminology, definitions and guidelines given in the CIM Standards on Mineral Resources
and Mineral Reserves (May 2014) as required by NI 43-101.
7. The Mineral Reserve Estimate as of 31 March 2022 for Alpala was independently verified by Aaron Spong
FAusIMM CP (Min) who is a full-time employee of Mining Plus. Mr Spong fulfils the requirements to be
a “Qualified Person” for the purposes of NI 43-101 and is the Qualified Person under NI 43-101 for the
Mineral Reserve.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
25
O P E R A T I O N S O V E R V I E W
C O N T I N U E D
Tandayama-America Mineral Resource Estimate
The TAM MRE#2 dataset with a 30 March 2022 data cut-off comprised 30,892m of diamond drilling from holes 1-41, 458m
of surface rock-saw channel sampling from 72 outcrops, and 29,631.6m of final assay results from holes 1-40. The TAM
deposit lies approximately 3km north of the Alpala deposit.
The TAM porphyry copper-gold deposit contains a total Mineral Resource of 528.5Mt @ 0.36% CuEq for 1.27Mt Cu, and
3.16Moz Au in the Measured plus Indicated categories containing 1.27 Mt Cu and 3.16 Moz Au, plus 105.1Mt @ 0.36% CuEq
for 0.26Mt Cu, and 0.62Moz Au in the Inferred category.
POTENTIAL
MINING METHOD
CUT-OFF
GRADE
(CuEq %)
RESOURCE CATEGORY
TONNAGE
(Mt)
Measured
Indicated
Inferred
Indicated
Inferred
Open Pit
0.16
Underground
0.28
Total Measured + Indicated
Total Inferred
Notes:
17.8
338.7
35.7
172.0
69.4
528.5
105.1
GRADE
CONTAINED METAL
Cu
(%)
0.20
0.23
0.22
0.26
0.26
0.24
0.24
Au
(g/t)
CuEq
(%)
Cu
(Mt)
Au
(Moz)
CuEq
(Mt)
0.16
0.21
0.23
0.14
0.16
0.19
0.18
0.30
0.36
0.36
0.35
0.36
0.36
0.36
0.04
0.78
0.08
0.45
0.18
1.27
0.26
0.09
2.28
0.26
0.78
0.36
3.16
0.62
0.05
1.23
0.13
0.60
0.25
1.89
0.38
1. Dr Andrew Fowler, MAusIMM CP(Geo), Principal Geology Consultant of Mining Plus, is responsible for this Mineral Resource statement and is an
"independent Qualified Person" as such term is defined in NI 43-101.
2. The Mineral Resource is reported using cut-off grades that are applied according to the mining method where 0.16 % CuEq applies to potentially
open-pittable material and 0.28 % CuEq applies to material potentially mineable by underground bulk mining methods. Copper equivalency is
discussed in detail in "Reasonable Prospects for Eventual Economic Extraction".
3. The Mineral Resource is considered to have reasonable prospects for eventual economic extraction by open pit or underground bulk mining such
as block caving as described below.
4. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
5. The statement uses the terminology, definitions and guidelines given in the CIM Standards on Mineral Resources and Mineral Reserves (May 2014)
as required by NI 43-101.
6. The underground portion of the Mineral Resource is reported on 100 percent basis within an optimized shape as described below.
7. Figures may not compute due to rounding.
26
EXPLORATION PROGRAMME
– ECUADOR
Cascabel
Colombia
Chical
Rio Amarillo
SolGold continues to pursue its strategy
as an integrated explorer and developer,
aiming to create maximum value for all
shareholders. The Company is applying
its exploration blueprint of systematically
evaluating its exploration assets across
Ecuador, which are held by four wholly
owned subsidiaries, and has identified
several high priority copper and gold
resource targets.
Early-stage results from the Company’s
regional exploration programmes are
testament to this approach following
the discovery of significant copper-gold
mineralisation at surface at the
Cacharposa porphyry copper-gold
target at Porvenir as well as the
discovery of significant geochemical
and geophysical hallmarks of large
porphyry systems identified at several
project areas, including the Rio
Amarillo and Cisne Loja projects.
SolGold’s regional exploration
programme in Ecuador coordinates
multiple highly skilled field teams
systematically exploring its concessions
throughout the country. The Company’s
regional concessions are located along
the prolific Andean Copper Belt which
is renowned as the production base
for a significant portion of the world’s
copper and gold resources.
Cisne Loja
The regional exploration programme
is focused on several high priority
targets with extensive and systematic
exploration field programmes underway
ranking priority drill targets. The
ongoing exploration programme on
these projects continues to focus on:
• Drill testing targets
• Collection and interpretation
of geophysical data
• Mapping and geochemical
sampling of new areas.
Activities conducted on the priority
projects are described in further
detail on the following pages.
Ecuador
Salinas
Chillanes
Cisne Victoria
Coangos
Helipuerto
Timbara
Porvenir
Peru
Pacific
Ocean
PRIORITY EXPLORATION PROJECTS
Project: Chical
Concessions: 4
Size: 166 km2
Target: Cu Au
Project: Rio Amarillo
Concessions: 3
Size: 123 km2
Target: Cu Au
Project: Salinas
Concessions: 4
Size: 188 km2
Target: Cu Au Ag
Carnegie Ridge Resources S.A.
Valle Rico Resources S.A.
Project: Cisne Victoria
Concessions: 4
Size: 170 km2
Target: Cu Au
Project: Coangos
Concessions: 7
Size: 305 km2
Target: Cu Au
Project: Helipuerto
Concessions: 4
Size: 184 km2
Target: Cu Au
Cruz del Sol S.A.
Project: Chillanes
Concessions: 1
Size: 48 km2
Target: Cu Au
Project: Cisne Loja
Concessions: 3
Size: 147 km2
Target: Cu Au Ag
Project: Porvenir
Concessions: 7
Size: 244 km2
Target: Cu Au
Project: Timbara
Concessions: 4
Size: 152 km2
Target: Cu Au
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
Green Rock Resources S.A.
27
STRATEGIC REPORT O P E R A T I O N S O V E R V I E W
C O N T I N U E D
MANABÍ
San Lorenzo
Cascabel
Chical
CARCHI
ESMERALDAS
Llurimagua
IMBABURA
Ibarra
SANTO DOMINGO
DE LOS TSCACHILAS
PROJECT OVERVIEW: CHICAL
Location: Carchi province, Northern Ecuador
PICHINCHA
Ownership: 100% Subsidiary: Carnegie Ridge
Resources S.A.
Tenement Area: 4 concessions, 166 km2
Primary Targets: Epithermal copper-gold
NAPO
COTOPAXI
BOLIVAR
Salinas
PROJECT OVERVIEW: SALINAS
Location: Bolivar province, Southwest Ecuador
Ownership: 100% Subsidiary: Valle Rico
Resources S.A.
Tenement Area: 4 concessions, 188 km2
Primary Targets: Gold-silver-copper epithermal
28
The Chical Project is located 25 km
NE of Alpala, 20 km NE of the Blanca
project epithermal veins of Au-Ag
intermediate sulphidation, 10 km SW
of Río Nulpe Cu porphyry prospect of
Royal Road Minerals, Nariño Colombia,
and 40 km SW of the Piedrancha mine
from intermediate sulphidation Au-Ag
epithermal veins owned by Miranda
Gold, Nariño Colombia. Tectonically,
the Chical mineralisation is found within
a wide area where structures cross NE
and NW between the Naranjal Fault
("FN") to the north-western end of the
concessions and the Toachi Fault ("FT")
to the southeast.
Multiple targets have been identified at
the Chical project including Espinosa,
a 1.5km x 1.0km soil anomaly, which has
been defined with rock chip samples
returning up to 7 g/t Au. At the Pascal
and La Esperanza prospects, large
copper-gold anomalies have been
defined with rock chips returning up
to 1% Cu, 0.4 g/t Au and 886 ppm Mo.
A six-hole drilling programme totalling
5,000m has been planned to test
targets at Espinosa, Pascal and La
Esperanza. Social teams obtained
land access permissions in readiness
for the drill programme which can
commence when water permits are
received – the final approval required
for drilling. The team continues
geological mapping and interpretation
over La Esperanza and Pascal targets.
The Salinas concessions are located
21km north of Guaranda and 150km
southwest of Quito in the centre of
the Western Cordillera.
The Salinas project is prospective for
both Ag-Au-Cu epithermal and Cu-Au
porphyry systems. Previous drilling by
Rio Tinto returned 74.5m at 2.0 g/t Au
and 137 g/t Ag, including 39.5m at 3.3
g/t Au and 168 g/t Ag. Mineralisation
is hosted in structurally controlled
hydrothermal volcanic breccias. A
hypogene covellite-enargite-chalcocite
arsenopyrite paragenesis of phases
suggests a nearby larger Cu-Au
porphyry system.
Social teams have successfully
negotiated access to the Salinas 3 and
4 concessions. Work to gain access
to the Salinas 1 and 2 concessions is
ongoing with access expected to be
granted in the coming months. Initial
exploration is planned to commence at
Salinas 3 and 4 in the coming months,
and at Salinas 1 and 2 when access
permissions are finalised.
I
S
T
R
A
T
E
G
C
R
E
P
O
R
T
CARCHI
The Rio Amarillo project is located in
northern Ecuador approximately 30km
southeast of the Cascabel concession.
San Lorenzo
Blanca
Cascabel
ESMERALDAS
The main target areas at Varela, Florida,
Palomar and Chalanes exhibit porphyry
style surface mineralisation and
alteration covering a vertical extent
of up to 1,500m over a 12km-long by
3km-wide northeast-trending, highly
magnetic, porphyry belt. The major
northeast trending magnetic belt is
intersected by a secondary northwest-
trending magnetic feature, likely to
represent the intersection of two
deep-seated crustal-scale fracture
zones, which are filled by intrusive
bodies with magnetic characteristics
indicative of strongly differentiated
and mineralised systems. This structural
regime has strong similarities to that
encountered at the nearby Alpala
deposit.
Llurimagua
IMBABURA
Rio Amarillo
Ibarra
PICHINCHA
PROJECT OVERVIEW:
RIO AMARILLO
MANABÍ
SANTO DOMINGO
3D geochemical modelling of the Varela
DE LOS TSCACHILAS
target highlights similarities between
the Varela and Alpala lithocap
footprints and geochemical signatures.
The models have proven highly
predictive when used at both the
Cascabel and Porvenir projects for
targeting porphyry mineralisation.
Varela Target
COTOPAXI
The Varela target exhibits a well-
preserved metalliferous lithocap and
hydrothermal alteration system with
a full complement of porphyry plume
elements, which are inferred to be
consistent with large and strongly
mineralised porphyry copper-gold
(-molybdenum) systems.
A total of 3,743m of drilling from
three holes at the Varela target was
BOLIVAR
completed in a campaign conducted
from August 2021 to January 2022 at
the Varela copper. Assays from Hole 1
returned an interval of 72m @ 2.16 g/t
Au from 640m depth, including 24.0m
@ 5.77 g/t Au. No further significant
gold or copper intervals were intersected.
Salinas
Location: Imbabura province, Northern Ecuador
Ownership: 100% Subsidiary: Carnegie Ridge
Resources S.A.
Tenement Area: 3 concessions, 123 km2
Primary Targets: Copper-gold porphyry
NAPO
A new geological mapping campaign continues in prospects surrounding
the Varela target including:
• Chahuarpungo: Copper-gold porphyry prospect located 2km south
of the Varela target comprising diorite and sediments with phyllic
alteration. A significant gold-copper rock chip anomaly representing
a 1.4km x 1.2km area with 1.6g/t Au and 0.1% Cu results and relationship
of quartz stockwork of five veinlets per meter and a chalcopyrite/pyrite
ratio of 1/5
• Sigsal: Gold epithermal prospect located to the east of the Varela
Target. The prospect consists of a clast supported hydrothermal
breccia that exhibits strong oxidization and leaching, some clasts
sericite and secondary biotite alteration. The rock saw channel
sampling includes values of 0.5g/t Au, over 500 ppm As and
332ppm Mo
• El Domo: Gold epithermal prospect located to the west of the Varela
Target. The prospect contains hydrothermal breccias with silica, alunite
and pyrophyllite alteration. High gold values returned 2.95-23.7g/t Au
from rock chip sampling
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
29
Located in south-eastern Ecuador,
north of the Warintza and San Carlos-
Panantza porphyry deposits, the Cisne
Victoria project is hosted in Jurassic
volcanic and intrusive rocks. Stream
sediments, rock chip geochemistry
and mineralisation style, combined with
an initial interpretation of the heli-mag
over the Cisne Victoria project indicate
the presence of a Cu-Au porphyry
target.
Geochemical sampling (including
streams sediments, rock chip and
soils) and regional geological mapping
programmes were completed in
mid-2021 covering the southern part
of the Victoria concession. Rock
sampling results in diorite outcrops
have returned up to 2.3% Cu, 0.7 g/t
Au and 8.8 g/t Ag.
The exploration team plans to complete
detailed mapping in the second half
of 2022 and continue to work with the
La Victoria and San Jorge communities
to gain access to other areas of the
project.
O P E R A T I O N S O V E R V I E W
C O N T I N U E D
Peru
PROJECT OVERVIEW:
CISNE VICTORIA
Location: Morana Santiago province,
South-eastern Ecuador
Ownership: 100% Subsidiary: Cruz del Sol S.A.
Tenement Area: 4 concessions, 170 km2
Primary Targets: Copper-gold porphyry
SolGold's regional
exploration programme
in Ecuador coordinates
multiple highly skilled
field teams systematically
exploring its concessions
throughout the country.
30
The Chillanes project is located in the
central Miocene belt that is host to
several large epithermal and porphyry
deposits including Loma Larga and
Llurimagua.
Stream sediment geochemical sampling
has returned the highest copper results
from any SolGold project in Ecuador
with best results including 1,140 ppm
Cu and 1,110 ppm Cu.
Social teams have been working with
communities to gain access to the
project concessions and will resume
discussions in the financial year ending
June 2023.
PROJECT OVERVIEW: CHILLANES
Location: Bolivar/Chimborazo province,
Central Ecuador
Ownership: 100% Subsidiary: Green Rock
Resources S.A.
Tenement Area: 1 concession, 48 km2
Primary Targets: Copper-gold porphyry
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
31
STRATEGIC REPORT
The Coangos project is located in
southern Ecuador in a large unexplored
area of the Jurassic metallogenic
belt. Mineralised outcrops have been
discovered in “red-bed” sedimentary
and volcanic rocks.
The copper-silver anomalies, located
to the southwest of the Coangos 2
concession, contain secondary copper
carbonates and oxides, chrysocolla,
malachite, and tenorite with primary
bornite, chalcocite and chalcopyrite.
Rock chip sampling in near-source
stream boulders and structurally
controlled outcrops have returned
up to 4.13% Cu and 15.7 g/t Ag.
Geological field mapping identified fault
breccia outcrops (1.5m wide) containing
quartz veins up to 8mm thick, sugary
quartz clasts, rhodochrosite, barite and
calcite in a zone of chlorite-sericite
alteration. Rock chip sampling of this
structure has returned very high grades
of up to 27.98% Cu and 100 g/t Ag. The
breccia is exposed along strike in two
separate streams, located 200m apart.
The structure has not been closed
off and mapping continues in streams
along strike. Soil grid sampling covering
this area, defined a 1.5km by 0.6km Cu
anomaly (>200 ppm) that is open to
the west.
The Cruz del Sol team expects to resume
exploration activities in the last quarter
of CY2022.
O P E R A T I O N S O V E R V I E W
C O N T I N U E D
Peru
PROJECT OVERVIEW: COANGOS
Location: Morana Santiago province,
South-eastern Ecuador
Ownership: 100% Subsidiary: Cruz del Sol S.A.
Tenement Area: 7 concessions, 305 km2
Primary Targets: Porphyry and epithermal
copper-gold
The regional exploration
programme is focused
on several high priority
targets with extensive and
systematic exploration
field programmes underway.
32
The Helipuerto project concessions lie
within one of the most prolific portions
of the Andean Jurassic Porphyry Belt,
which hosts globally significant copper
and gold deposits in Ecuador, several of
which have been developed into mines,
such as the nearby Fruta del Norte and
Mirador mines, the Santa Barbara,
Panantza and Warintza deposits, and
SolGold’s newly discovered Cacharposa
deposit at Porvenir.
The Tinkimints prospect is located
adjacent to Solaris Resources’ Warintza
copper deposit that has an in-pit
Mineral Resource of 579Mt at 0.59%
CuEq in the Indicated category. The
Tinkimints prospect is characterised by
highly anomalous copper and copper/
zinc in soil over a 1.5km by 1km area.
High values of copper in soil are
observed, including 0.71% Cu and
0.16% Cu.
Extensive geochemical programmes
including stream sediment, soil, rock
chip sampling and field geological
mapping have been carried out since
July 2021 in the Helipuerto concessions.
Detailed geological and structural
mapping identified an NNW trending,
mineralised hydrothermal breccia
hosted in Jurassic volcanic rocks. Rock
chip and rock saw sampling returned
13.3 g/t Au; 1.4 % Cu; 12 g/t Ag; and
0.6 % Zn.
Just south of Solaris Resources’
Warintza Sur target (606m at 0.41%
CuEq from surface reported by Solaris
Resources) SolGold’s soil grid sampling
defined an 800x200m Cu-Mo anomaly.
Detailed anaconda mapping identified
quartz-diorite dykes hosted in Jurassic
volcanic rocks affected by sericite+
chlorite±biotite alteration and quartz+
pyrite±chalcopyrite± molybdenite veins.
Rock chip sampling has returned
anomalous Mo values.
Ongoing exploration is focused on the
extension of the soil grid sampling to
the east of Helipuerto 2 concession and
south of Solaris’ Warintza Sur target.
Peru
PROJECT OVERVIEW: HELIPUERTO
Location: Morona Santiago province,
South-eastern Ecuador
Ownership: 100% Subsidiary: Cruz del Sol S.A.
Tenement Area: 4 concessions, 184 km2
Primary Targets: Porphyry and epithermal
copper-gold
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
33
STRATEGIC REPORT
O P E R A T I O N S O V E R V I E W
C O N T I N U E D
The Cisne Loja project is located in
southern Ecuador where SolGold has
identified two high-priority prospects,
Cuenca Loma and Celen. At Cuenca
Loma, epithermal quartz veins grade up
to 15 g/t Au and outcrop over an area
of 2km x 1km. At Celen, a 2km x 1km
copper-gold-molybdenum soil anomaly
has been discovered with rock chips
grading up to 4.3% Cu and 4.5 g/t Au.
Field geological, structural and alteration
mapping in combination with soil and
rock geochemical sampling have
identified a 1,000m x 750m zone of
coincident Cu-Au-Mo soil geochemical
anomalism centred upon an RTP
magnetic high with an annular magnetic
low. Field mapping has identified zones
of magnetite-chalcopyrite porphyry
veining and diagnostic secondary
copper minerals, neotocite, malachite
and azurite within the target area. An
initial drilling programme to test the
Celen target is planned to commence
when the drilling permit is approved.
The Timbara project is located in
Ecuador’s eastern Jurassic Belt which
hosts the Fruta del Norte epithermal
gold deposit, the Mirador copper
porphyry deposit and the Santa Barbara
copper-gold porphyry deposit. Results
from reconnaissance mapping and
sampling have identified outcropping
porphyry style mineralisation.
Two main styles of mineralisation have
been recognised at the Timbara project
to date. An epithermal vein-hosted
gold and polymetallic system was
identified on the Timbara 2 concession
with mineralisation strikes over 1 km,
hosted in a sulphidic quartz vein. A
porphyry-style prospect has also been
identified on the Timbara 1 concession.
A geochemical soils grid programme
returned geochemical anomalies
characteristic of porphyry copper-gold
mineralised systems and is open for
further target definition.
The target on the Timbara 2 concession
is awaiting prior permitting for future
drilling tests.
PROJECT OVERVIEW: CISNE LOJA
Location: Loja province, Southern Ecuador
Ownership: 100% Subsidiary: Green Rock
Resources S.A.
Tenement Area: 3 concessions, 147 km2
Primary Targets: Epithermal gold and silver,
Porphyry copper gold
PROJECT OVERVIEW: TIMBARA
Location: Zamora Chinchipe province,
Southern Ecuador
Ownership: 100% Subsidiary: Green Rock
Resources S.A.
Tenement Area: 4 concessions, 152 km2
Primary Targets: Copper-gold porphyry
34
Located in southern Ecuador
approximately 100km north of
the Peruvian border, the Porvenir
project has been the focus of intense
systematic exploration activity that
includes sampling of fluvial sediments,
heavy sediments, soils and rock
fragments, as well as Anaconda-style
geological mapping; this work helped
to identify several areas of interest.
Aerial magnetometry geophysics
was also carried out throughout the
project and on land at the Cacharposa
deposit, a 3D geochemical model was
developed based on the results of the
soil samples. With these products
and geological interpretations, eight
objectives were defined: Cacharposa,
Mula Muerta, Eudis, Balmore, Diablo,
Palmal, Bartolo and Merino.
Cacharposa deposit
A Mineral Resource Estimate (“MRE”)
has been completed for the Cacharposa
deposit totalling 396.8Mt @ 0.44%
CuEq for 1.40 Mt Cu, and 1.80 Moz Au
in the Indicated category, plus 96.9 Mt
@ 0.37% CuEq for 0.28 Mt Cu, and 0.38
Moz Au in the Inferred category, using
a cut-off grade of 0.16% CuEq.
The Cacharposa maiden MRE dataset
comprised 18,635.7m of diamond drilling
from holes 1-23, 439.6m of surface
rock-saw channel sampling from 23
outcrops, and 16,982.4m of final assay
results from holes 1-20. The data cut-off
(the effective date) for the MRE was
26th October 2021. A 27-hole drilling
programme, totalling 21,245.30m, was
completed at the Cacharposa deposit.
PROJECT OVERVIEW: PORVENIR
Location: Zamora Chinchipe province,
Southern Ecuador
Ownership: 100% Subsidiary: Green Rock
Resources S.A.
Tenement Area: 7 concessions, 244km2
Primary Targets: Copper-gold porphyry
Mula Muerta and Viño Targets
A drilling programme was carried out at the Mula Muerta and Viño targets,
in which 4 holes were drilled totalling 2,117.54m. Drilling did not encounter
significant mineralisation in these boreholes. The technical team continues
with detailed mapping and surface geochemical sampling at the
prospective targets to outline future drill tests.
MINERAL RESOURCE STATEMENT (EFFECTIVE DATE 26 OCTOBER 2021)
GRADE
CONTAINED METAL
RESOURCE
CATEGORY
Indicated
Inferred
TONNAGE
(Mt)
396.8
96.9
Cu
(%)
0.35
0.29
Au
(g/t)
0.14
0.12
CuEq
(%)
0.44
0.37
Cu
(Mt)
1.40
0.28
Au
(Moz)
1.80
0.38
CuEq
(Mt)
1.75
0.36
POTENTIAL
MINING
METHOD
CUT-OFF
GRADE
(CuEq %)
Open Pit
0.16
Notes:
1. Dr Andrew Fowler, MAusIMM CP(Geo), Principal Geology Consultant of Mining Plus, is responsible for this Mineral Resource statement and is an
"independent Qualified Person" as such term is defined in NI 43-101.
2. The Mineral Resource is reported using a cut-off grade calculated for the open pit mining method.
3. Copper equivalency factor of 0.632 (whereby CuEq = Cu + Au x 0.632) is based on third party metal price research, forecasting of Cu and Au prices, and
a cost structure from mining study data available from a similar deposit. Costs include mining, processing and general and administration ("G&A"). Net
Smelter Return ("NSR") includes off-site realisation ("TC/RC") including royalties, metallurgical recoveries (84% for Cu and 65% for Au) and metal prices
of Cu at US$3.30/lb and Au at US$1,700/oz. The Mineral Resource is considered to have reasonable prospects for eventual economic extraction by open
pit mining methods.
4. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
5. The statement uses the terminology, definitions and guidelines given in the CIM Standards on Mineral Resources and Mineral Reserves (May 2014) as required
by NI 43-101.
6. Figures may not compute due to rounding.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
35
STRATEGIC REPORT O P E R A T I O N S O V E R V I E W
C O N T I N U E D
Mount Pring
Normanby
Westwood
Rannes
Cracow West
Mount Perry
EXPLORATION
PROGRAMME –
AUSTRALIA
SolGold holds tenements across
central and southeast Queensland,
through its wholly owned subsidiaries,
Central Minerals Pty. Ltd. and
Acapulco Mining Pty. Ltd. Exploration
programmes were reduced to a
minimum in order to focus on Ecuador
based opportunities. Central Minerals
Pty. Ltd. currently holds exploration
permits at the following projects:
1. Rannes
2. Mount Perry
3. Normanby
4. Mount Pring
5. Westwood
6. Cracow West
36
EXPLORATION
PROGRAMME –
SOLOMON ISLANDS
I
S
T
R
A
T
E
G
C
R
E
P
O
R
T
The Kuma tenement in the Solomon
Islands (Southwest Pacific) is
considered by SolGold to be highly
prospective for porphyry copper-gold
and epithermal gold deposits.
SolGold continued its support of the
local communities during the reporting
period; however, no further exploration
activities were completed at the Kuma
project. The Company had been actively
pursuing the renewal of the concession
and at the date of this report was
awaiting a final decision from the
Ministry of Mines in Solomon Islands.
QUALIFIED PERSON
Information in this report relating to the exploration results
is based on data reviewed by Mr Jason Ward ((CP) B.Sc.
Geol.), Exploration Advisor to SolGold and former Head
of Exploration for the Group. Mr Ward is a Fellow of the
Australasian Institute of Mining and Metallurgy, holds the
designation FAusIMM (CP), and has in excess of 20 years’
experience in mineral exploration and is a Qualified Person
for the purposes of the relevant LSE and TSX Rules. Mr Ward
consents to the inclusion of the information in the form and
context in which it appears.
OUTLOOK
The focus of the Group during the financial year ending
30 June 2023 will be on the delivery of the PFS Addendum
and advancement of the Definitive Feasibility Study at
Cascabel as well as the completion of a Preliminary
Economic Assessment for the Porvenir project.
Exploration activity will continue at the Company’s priority
projects during the next reporting period. Extensive and
systematic geological and geochemical field programmes
are underway and priority drill targets are expected to be
ranked and drill ready. The Company will also continue the
process to identify potential JV/earn-in partners over select
100%-owned early-stage exploration projects.
The Company is focused on the creation of a copper-gold
major production company in Ecuador, substantially covering
one of the world’s most under explored and prolifically
mineralised porphyry copper-gold provinces in the
northern Andean Copper Belt.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
37
F I N A N C I A L R E V I E W
Highlights
The Group achieved several milestones
during the financial year ended 30 June
2022. These have helped to progress
the development of SolGold, in particular
the development of the Cascabel
project and the exploration of the
surrounding licence areas, and have
included:
Employee benefits expenses increased
by US$1,930,187 as a result of the
employment of additional senior
management in Australia and London.
Additionally, the exploration costs
written off increased by US$2,973,693,
foreign exchange losses increased by
US$2,755,619, and revaluation on the
BHP derivative increased by
US$1,152,476.
deposits and payments for land
purchases are classified as other
receivables until such time as the land
processes in Ecuador are finalised and
titles deeds re issued, whereupon they
are capitalised. Loans receivable and
other current assets decreased by
US$2,942,639, mainly as a result of
certain employees repaying their
Company Funded Loan Plans.
• Exploration and evaluation
expenditure of US$66,294,083 for
the year (2021: US$77,508,612 net
of impairment) (refer Note 13)
• Continued acquisition of
US$3,836,561 (2021: US$927,957) in
landholdings in the Cascabel project
area in anticipation of infrastructure
requirements for project
development, with another
US$561,293 (2021: US$4,653,433)
spent on advance payments for
critical land parcels
• Operating loss after tax of
US$1,701,565 (2021 restated:
US$23,772,089 restated)
representing a decrease of
US$22,070,524 over the prior
year. The decrease in the loss is
attributable to the remeasurement
of the NSR financial liability and
then offset by the tax expense,
refer to Note 21. Refer to Note 1
for further details on the prior
year restatements.
• US$26,102,133 cash balance
(2021: US$109,562,103).
Results
The Group incurred a loss after tax of
US$1,701,565 for the year (2021: loss
US$23,772,089 restated). The decrease
in the loss after tax is due to the
remeasurement of the NSR financial
liability, which represents a gain of
US$35,003,704 for the year ended
30 June 2022. The remeasurement was
triggered by Board approval in April
2022 of the Preliminary Feasibility
Study (“PFS”) resulting in amendments
to anticipated cash flows of the NSR
agreement due to changes in the timing
of construction and the mine life and
updated production volumes. This
remeasurement (Note 21) is a non-cash
flow book entry accounting for the
financial liability at amortised cost.
This remeasurement is offset by the
associated deferred tax liability which
in turn increased the income tax
expense (refer Note 7 and 15). Overall
administrative expenses remained
consistent from 2021, although there
are some noteworthy costs.
An income tax expense of US$4,540,103
(2021: US$151,173) was recognised. This
amount is offset by an income tax
benefit of US$11,111 recognised directly
in equity associated with capital raising
costs, and an income tax benefit of
US$267,087 recognised in other
comprehensive income relating to the
fair value movement of the Company’s
investment in Cornerstone Capital
Resources Inc. The balance of the tax
expense is associated with the deferred
tax liability on the remeasurement of
the NSR liability (Note 7 and 15).
The Group recognised a total other
comprehensive loss of US$1,742,845
(2021: gain US$1,818,657) for the
financial year ended 30 June 2022.
A loss of US$1,205,636 (2021: gain
of US$1,198,986) was recognised
representing the mark-to-market
adjustment on the Company’s
investment in Cornerstone Capital
Resources Inc. For the financial year
ended 30 June 2022 the Group
recognised a loss of US$702,938
(2021: gain of US$670,049) on
translation of foreign operations. The
average exchange rate used to convert
Australian dollars to United States
dollars was 0.7256 for the financial
year ended 30 June 2022 compared
to 0.7470 for the financial year
ended 30 June 2021. The Group
also recognised a decrease in the
Ecuadorian post-employment
benefits of US$165,729.
Statement of financial position
Total assets at 30 June 2022 were
US$429,162,611 compared to
US$452,553,338 at 30 June 2021
representing a decrease of
US$23,392,727.
Current assets overall decreased by
US$87,212,401, which was primarily
cash used to fund the Group’s flagship
Cascabel project and related overheads,
the Group’s regional exploration
programme and general overhead
expenses. Other receivables and
prepayments decreased by US$809,792
as a result of land deposits being
capitalised during the year. Initial
Non-current assets increased by
US$63,819,674 mainly due to increases
in exploration and evaluation assets,
classified as intangible assets. Exploration
assets increased by US$61,739,591
(net of written off expenditure)
predominantly due to the exploration
expenditure incurred at the Alpala
project (US$35.03 million net of
written off expenditure) and the various
regional projects (US$27.14 million net
of written off expenditure) in Ecuador
as identified in this report, during the
twelve months ended 30 June 2022.
Exploration assets decreased by
US$4.6 million, reflecting the written
off misappropriation of funds (refer
note 1(b)(i) for the restatement details).
Financial assets held at fair value
through other comprehensive income
(“OCI”) decreased by US$1,473,198
representing the mark to market
adjustments that the Company makes
on its investment in Cornerstone Capital
Resources Inc. Property, plant and
equipment increased by US$3,261,392
primarily due to strategic land
purchases at the Alpala project.
Total liabilities at 30 June 2022
were US$97,914,105 compared to
US$118,290,836 at 30 June 2021
representing a decrease of US$20,376,731
largely as a result of the remeasurement
of the NSR royalty, accounted for at
amortised cost.
Current liabilities at 30 June 2022
were US$6,924,204 compared to
US$8,183,405 at 30 June 2021
representing a decrease of US$1,259,201.
Trade and other payables decreased by
US$1,338,584.
Non-current liabilities decreased by
US$19,117,536 mainly due to the
remeasurement of the NSR financial
liability and the associated deferred tax
liability, which was offset by accrued
interest and by a decrease in the value
of the derivative liability associated
with the BHP options issued in
December 2019.
38
Given that the Company will need to
secure further funding to meet the
Group’s 18-month future exploration
and working capital commitments,
the situation gives rise to a material
uncertainty as there can be no
assurance the Company will be able
to raise the required financing in the
future. Notwithstanding this material
uncertainty, the Directors consider it
appropriate to adopt the going concern
basis of accounting in the preparation
of the financial statements and prepare
the financial statements on a going
concern basis given the Company’s
proven ability to raise necessary
funding. See more details in Note 1.
Cash flow
Cash expenditure (before financing
activities) for the year ended 30
June 2022 was US$82,658,324
(2021: US$95,812,231). Most of this cash
spend relates to cash expenditure on
the Group’s exploration expenditure in
Ecuador (US$69,455,961) and property,
plant and equipment and strategic land
purchases, that are currently still in
negotiating stages (US$2,195,892).
During the financial year ended 30 June
2022, nil cash was received from the
issue of shares via private placements
or the exercise of share options (2021:
US$76,113,126). Accordingly, the net
cash outflow of the Group for the year
ended 30 June 2022 was US$83,143,710
(2021: inflow of US$61,589,969).
As mentioned above, cash of
US$69,455,961 (2021: US$75,611,280)
was invested by the Group on
exploration expenditure during the year.
Post-reporting date events
On 5 July 2022 SolGold announced the
grant of a total of 10,000,000 long term
incentive employee options and the
allotment and issue of 1,336,182 new
ordinary shares to Mr Darryl Cuzzubbo,
Chief Executive Officer and Managing
Director. The Incentives were triggered
by requirements within the Executive
Remuneration Contract executed in
January 2022, and in accordance with
the Company's Directors' Remuneration
Policy and Long-Term Incentive Plan
Rules, which were approved by
shareholders on 30 June 2022. The
Options will vest in three separate
tranches, each with a thirty-six (36)
month expiry date.
On 11 August 2022 SolGold announced
that Ayten Saridas, Group CFO,
resigned. The Company appointed
Keith Pollocks as Interim Group CFO.
The Company also announced that
Jason Ward informed the Board of
his decision to step down as Head of
Exploration. Mr Ward will remain as an
advisor to the Company to continue
to help drive SolGold's exploration
strategy.
Keith Marshall, independent Non-
Executive Director, resigned from the
Board effective from 12 August 2022.
He will remain as an advisor to the
Company's technical committee to
oversee the Cascabel Project and to
ensure a smooth transition to the new
Vice President Projects, Bernie Loyer.
On 24 August it was proposed to
extend the CFLP for 3 individuals whom
due to their positions in the Company
had additional restrictions from trading
during the year ended 30 June 2022.
This extension will see their payments
terms extend until 31 December 2022.
On 30 August 2022 SolGold announced
the issue of 599,257 new ordinary
shares to Mr Steve Botts, President,
SolGold Ecuador and the issue of
299,629 new ordinary shares to
Mr Harold 'Bernie' Loyer, Vice President
Projects. These incentives were
triggered by requirements within the
Executive Remuneration Contracts
executed in July 2022 for recruitment
inducement purposes.
Cost management and performance
against budget
To ensure the business’s continued
success, SolGold must be adequately
funded at all times in order to retain
employees, meet expenditure
requirements and keep operations
running across all projects. As part of
the Group’s cost management strategy
the Group has implemented several cost
reduction initiatives to preserve cash.
These include, but are not limited to,
ongoing reviews of budgets and regular
forecasts to ensure effective use of
cash in core activities, reductions of
corporate overheads where possible
and active working capital management.
Refer to the Directors’ Report and Note
1(b)(ii) for further discussions around
the Group’s going concern status.
Financial controls and risk
management
The Board regularly reviews the risks
to which the Group is exposed and
ensures through Board Committees
and regular reporting that these risks
are managed across all sectors of the
Company. The Audit and Risk Committee
is responsible for the implementation
and review of the Group’s internal
financial controls and financial risk
management systems. Refer to page 40
for detailed information on the principal
risks and uncertainties and for further
detailed information on the financial
risks refer to Note 24. Following the
discovery of the misappropriation of
funds in Ecuador, the Audit and Risk
Committee will oversee the steps
required to improve the control,
governance and risk management
environment.
Equity
Since the date of the last Annual Report,
the Company has issued the following
equities:
On 5 July 2022, the Company issued
1,336,182 new ordinary shares to
Mr Darryl Cuzzubbo, Chief Executive
Officer and Managing Director of
SolGold plc.
On 5 July 2022, the Company issued
a total of 10,000,000 unlisted share
options over ordinary shares of the
Company to Mr Darryl Cuzzubbo.
4,000,000 options are exercisable at
£0.29 and expire on 1 December 2025,
3,000,000 options are exercisable at
£0.35 and expire on 1 December 2026,
3,000,000 options are exercisable at
£0.50 and expire on 1 December 2027.
On 30 August 2022, the Company
issued 599,257 new ordinary shares
to Mr Steve Botts, President, SolGold
Ecuador and 299,629 new ordinary
shares to Mr Harold 'Bernie' Loyer,
Vice President Projects.
At year end the Company had a total
of 2,293,816,433 fully paid ordinary
shares and 32,250,000 options on issue.
At the date of this report the Company
had a total of 2,296,051,501 fully paid
ordinary shares and 42,250,000
options on issue.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
39
STRATEGIC REPORT R I S K M A N A G E M E N T
WE RECOGNISE THAT RISKS CAN
HAVE A SAFETY, ENVIRONMENTAL,
FINANCIAL, OPERATIONAL OR
REPUTATIONAL IMPACT
Our approach
SolGold recognises that effective risk
management is key to how we do
business and forms a key part of our
strategy to safely deliver sustainable
value to all our stakeholders.
We recognise that risks can have
a safety, environmental, financial,
operational or reputational impact.
An understanding of risk guides our
requirements to anticipate, design,
plan and adequately respond to internal
and external events. This ensures that
proper incident response and effective
monitoring can be implemented to
minimise anticipated risks and reduce
harm and disruption to people, the
environment and the viability of the
SolGold business model.
The health and safety of our people
and the communities where we work
has been a SolGold priority since we
started operations. It remains a critical
consideration along with government
requirements, community concerns
and health advice for planning for
the recommencement of operations
following the gradual easing of
restrictions in all areas following
the Covid-19 pandemic. The
recommencement plan incorporated
identification, assessment and
minimisation of risks and addresses
concerns and requirements that were
identified through consultations
between the SolGold management
team and key stakeholders from
communities where we operate or
traverse and other affected groups,
local and state government, health
advisors, employees and contractors.
Enterprise risk management
The Company has invested significant
resources during the financial year
to implement a Company-wide risk
management system, including a risk
policy and risk standard. As part of its
risk management system, SolGold’s
leadership team maintains a
comprehensive corporate, operational
and project risk register. The Group’s
risk registers are updated on a quarterly
basis and are reviewed by the Audit and
Risk Committee (“ARC”). The Company
appointed an Independent Internal
Auditor in April 2021 following a
competitive recruitment process.
The Independent Internal Auditor
maintains an enterprise level risk
management matrix based on the
corporate, operational and project
risk registers. The annual Internal Audit
work programme is based on key risks
identified in the enterprise level risk
management matrix and is proposed to
the ARC for endorsement. The findings
arising from Internal Audit work
are shared with the ARC and those
members of the senior executive team
who are subject to actions arising.
Project risk management
The PFS for our Cascabel project
was published in April 2022 including
consideration of environmental, social
and economic impacts. Work on a PFS
Addendum is underway evaluating
further upsides and optimisations
that will be completed by the end
of CY2022. The PFS study team has
conducted an integrated risk workshop
to identify, record and discuss known
and anticipated risks, which has
considered and will be included in
future phases of the project and formed
the basis of the creation of the project
risk register. A further review of
these risks will be conducted prior
to completion of upcoming studies
– closing those that have been
effectively treated or managed
and communicating recommended
actions for enduring high-rated risks.
Risk appetite of the group
Resource exploration, evaluation and
development is a high-risk business.
There is no certainty that the
investments made by the Company in
the exploration of properties will result
in discoveries of commercial quantities
of minerals. Exploration for mineral
deposits involves risks which even a
combination of professional evaluation
and management experience may not
eliminate. Significant expenditures are
required to locate and estimate ore
reserves, and further the development
of a property with commercial potential.
There is no assurance the Group has, or
will have, further commercially viable
ore bodies. Capital expenditures to
bring a property to a commercial
production stage are significant and
require special skills and long-term
planning. There is no assurance that
the Company will be able to arrange
sufficient financing to bring ore bodies
into production. Permitting is seen by
the Group to have the highest risk as
obtaining the necessary permits for
exploration and development can be a
complex and time-consuming process,
and the duration and success of the
Group’s efforts to obtain permits are
contingent upon many variables not
within its control.
Risk appetite reflects the nature and
extent of risk that is acceptable to
SolGold whilst still able to achieve
goals and objectives. This appetite is
considered based on the consequences
of these risks materialising and takes
into account all internal and external
factors. SolGold will take strong
strategic corporate action if any risk
exceeds its established appetite. The
following are some of the additional
risks to which the Group and Company
may be exposed from time to time:
40
RISK
DESCRIPTION
KEY MITIGATORS
The executive management team and onsite
managers adhere to the highest safety protocols
and place priority on ensuring all employees,
contractors and suppliers are always safe.
The Transport Plan that incorporates safe
travel for people and a site safety system
that incorporates hazard recognition, training,
monitoring and continuous improvement will
alleviate proposed safety risks and limit
unnecessary accidents.
This risk remained constant during the current
year.
Health &
Safety Risks
Safety risks are inherent in exploration and mining activities and
include both internal and external factors requiring consideration
to reduce the likelihood of negative impacts. The current highest
risk, due to the geographical spread of exploration activities, is
associated with transportation of people to and from the project
areas. This includes transit vehicle accidents with a potential for
fatalities due to vehicle impacts or rollovers. In addition, the remote
locations of drilling activities increase the risk of delays in gaining
access to effective emergency medical assistance resulting in
delayed treatment in the event of incident or accident. The
expansion of the Group’s footprint in Ecuador also potentially
increases safety risk.
Health and safety reviews, inspections, audits and hazard
assessments are completed on a regular basis to ensure effective
procedures and controls are in place. Any incident resulting in
serious injury or death may result in litigation and/or regulatory
action (including, but not limited to suspension of development
activities and/or fines and penalties), or otherwise adversely
affect the Group’s reputation and ability to meet its objectives.
The Group’s exploration and business activities were impacted
by the Covid-19 pandemic. The Group has adapted the way it
conducts its business in response to the pandemic and follows
mandates of various and relevant governments as well as
responding to the concerns of local communities in Ecuador.
Social Licence
to Operate Risk
Strong community relations are fundamental to creating safe,
sustainable and successful operations. Losing the support from
any individual community would be a risk for activities in that
area and to the Company's broader reputation.
The Group's concessions are near and, in limited areas, overlap
with local communities, and local approvals are often needed
in order to access and operate in these areas.
SolGold has ongoing community engagement
and socialisation programmes in place in
order to best understand the needs of local
communities. The possible risks associated
with the relocation of communities during the
development stage will be managed with the
community members’ best interests at the core
of all decisions.
The Group often enters into agreements with local communities,
groups or individuals that address surface access, road or trail
usage, local employment, social investment and other key issues.
Every local stakeholder relationship, however, requires ongoing
dialogue and relationship management.
• The development of a relocation and
resettlement plan will be developed with
close consultation and involvement with
the community, governments and other
stakeholders
Events do not always unfold as intended or according to plan,
however, and the status of relations can deteriorate for any
number of reasons, including, but not limited to:
•
Influences of local or external political or social
representatives or organisations
• Shifts in the agendas or interests of individuals or the
community as a whole
• The Group's inability to deliver on community expectations
or its commitments
• Concerns stemming from communities’ historic or recent
experiences with legal and/or illegal miners.
However, if under extreme circumstances the Group were to lose
its social licence with one or more communities and be unable
to regain it, this could impact the viability of the project. By
the same token, if the Group is unable to obtain social licences
from some communities, initial exploration could be prevented.
• The development of a transport plan in
conjunction with government, community
and other stakeholders
• Employment, training and development plan
that continues to give preference to local
communities
• Maintaining a robust grievance and
obligations register that promotes
transparency and trust
• Maintain independent community monitoring
of water and continue water recycling and
minimisation of river water extraction
• Work closely with the community to identify
safe and acceptable alternative access.
This risk remained constant during the current
year.
KEY:
Decrease
Increase
Same
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
41
STRATEGIC REPORT R I S K M A N A G E M E N T
C O N T I N U E D
RISK
DESCRIPTION
KEY MITIGATORS
People and
Leadership Risk
Establishing an effective composition of the Board, succession
processes and evaluation methods is critical to the success of
the Group. The Group is dependent on recruiting and retaining
high performing leaders focused on managing the Group’s
interests, requiring a large number of persons skilled in the
project development, engineering, financing, operations and
management of mining properties.
SolGold actively minimises this risk through
its HR function by ensuring there is a proper
feedback and grievance process in place across
the Group for all staff, supporting and growing
employees’ careers and ensuring they are
properly equipped and receive support at
all times.
Competition for such persons is high in the current commodity
price environment. The inability of the Group to successfully
attract and retain highly skilled and experienced executives
and personnel could have a material adverse effect on
SolGold’s business, its ability to attract financing and the
results of operations. In-country industrial relations risk, and
the potential increase in politicisation of the country, places
a risk on the Group and the country’s focus on the
development of a mining industry.
Geopolitical,
Regulatory and
Sovereign Risk
SolGold’s exploration tenements are located in Ecuador, Australia
and the Solomon Islands and are subject to the risks associated
with operating both in domestic and foreign jurisdictions.
Operating in any country involves some risk of political and
regulatory instability, which may include changes in government,
negative policy shifts, changes to the tax and royalty regime
and civil unrest. In addition, there is a risk that due to the
deterioration of the macroeconomic situation, governments
may consider imposing currency controls and limitations on
capital flows. Specifically, under Ecuadorean law, citizens have
a constitutional right pursuant to a judicial process, to apply to
the Constitutional Court for approval for a public referendum
on any subject matter. In 2019, an application was made to the
Ecuadorean Constitutional Court to request to have a referendum
held, the effect of which was to seek to stop mining activities at
the Cascabel concession. The Constitutional Court unanimously
rejected the application. However, despite the Constitutional
Court ruling on that particular occasion, no assurance can be
given that at some future time a similar application designed
to seek to stop mining at Cascabel or in any other location of
interest to the Group, will not be made. Anti-mining activism
involving protests or blockage of access is a risk for
operational areas.
The availability and rights to explore and mine, as well as industry
profitability generally, can be affected by changes in government
policy that are beyond the control of SolGold. These factors may
have a negative impact on the ability of the Group to secure
external financing and an adverse effect on the Group’s market
value and the going concern of the business as whole.
Decrease
Increase
Same
KEY:
42
Building and maintaining an Industrial Relations
Strategy for Ecuador through in-country
specialist expertise, designing recruitment
plans to include local and indigenous people
and engaging skilled front-line workers will help
mitigate this risk. SolGold has during the Financial
Year increased the members of its Community
Engagement team and invested in training.
The Company has a number of committees in
place (Nomination, Remuneration and Audit and
Risk Committee) to develop and implement the
most appropriate criteria and succession tools to
hire and retain the right people in the workforce.
A key focus during the year was the review and
roll-out of workforce related policies and better
performance management.
This risk remained constant during the current
year.
SolGold has a successful track record of operating
in Ecuador, Australia and the Solomon Islands and
the Group actively monitors political developments
on an ongoing basis. The management team aims
to maintain open working relationships with local
authorities in the countries where the Group
operates.
The election of centre-right president Guillermo
Lasso in 2021 averted the risk of an abrupt shift
in macroeconomic policies and in SolGold’s view
reduced political uncertainty and raised the
prospects of a market-friendly macro policy
agenda. On the other hand, this risk has increased
during the current year considering the national
unrest in Ecuador triggered by increasing fuel
and food prices that was initiated by Indigenous
groups in June 2022 that led to a rise in the
country’s perceived sovereign risk and bond yields.
Ensuring the Company maintains strong
relationships with regional and national
government agencies, as well as community
members from our area of influence is a key
mitigator for minimising disruptions.
The Company to date has not had any security
threats, due to the implementation of our
extensive safety management and security
protocols in place. SolGold will continue to work
closely with government agencies to support
regional security efforts as well as continuously
advance and update security measures as
operations and activities increase. The current
security plan in place is highly effective and
tailored to the Company’s needs and is reviewed
regularly and in light of changing circumstances.
This risk has increased during the current year.
RISK
Title Risk
DESCRIPTION
KEY MITIGATORS
SolGold’s concessions and interest in concessions are subject
to the various conditions, obligations and regulations which
apply in the relevant jurisdictions including Ecuador, Australia
(Queensland) and the Solomon Islands. If applications for title or
renewal are required, this can be at the discretion of the relevant
government minister or officials. If approval is refused, SolGold
will suffer a loss of the opportunity to undertake further
exploration, or development, of the tenement.
Successful relationships with governments,
senior in-country officials and other key external
stakeholders are built and maintained. This
includes delivering on and adhering to the
conditions attached to the tenement grant
documents. SolGold currently knows of no
reason to believe that current applications
will not be approved, granted or renewed.
Environmental
Risk
Some of the properties may be subject to prior unregistered
agreements or transfers of native or indigenous peoples’ land
claims and title may be affected by undetected defects or
governmental actions. No assurance can be given that title
defects do not exist. If a title defect does exist, it is possible
that SolGold may lose all or a portion of the property to
which the title defects relate.
The Group’s exploration activities are required to adhere to
both international best practice and local environmental laws
and regulations. Any failure to adhere to globally recognised
environmental regulations could adversely affect the Group’s
ability to explore under its exploration rights. Significant liability
could be imposed on SolGold for damages, clean-up costs, or
penalties in the event of certain discharges into the environment,
environmental damage caused by previous owners of property
acquired by SolGold or its subsidiaries, or non-compliance with
environmental laws or regulations.
SolGold proposes to minimise these risks by conducting
its activities in an environmentally responsible manner, in
accordance with applicable laws and regulations. Nevertheless,
residual risks inherent in SolGold’s activities could lead to
financial liabilities.
During 2020, the Ecuadorian Government
clarified the timing surrounding the four-year
investment period which resulted in extensions
for a number of licences. The Company
continues to assess its ability to meet the
investment criteria on its Ecuadorian licences
and is working closely with the Government
in communicating the needs of the industry.
This risk has reduced during the current year.
In line with all Ecuadorian mining companies, the
management of this risk is based on compliance
with the Environmental Management Plan.
SolGold will maintain effective environmental
compliance registers and reporting protocols
and ensure effective emergency preparedness
planning, and resources to contain and manage
spills.
In order to ensure compliance, the Group provides
adequate resources to this area including the
employment of personal and the utilisation of
third-party consultants to audit the compliance
with the Environmental Management Plan.
To date, the Group has been fully compliant.
This risk remained constant during the current
year.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
43
STRATEGIC REPORT R I S K M A N A G E M E N T
C O N T I N U E D
RISK
DESCRIPTION
KEY MITIGATORS
Land Access,
Permitting and
Surface Rights Risk
The Group is required to obtain governmental permits to conduct
different phases of exploration and evaluation on its concessions.
Obtaining the necessary permits can be a complex and
time-consuming process, which at times may involve several
different government agencies. The duration and success of
the Group’s efforts to obtain permits are contingent upon many
variables not within its control, including the interpretation of
applicable requirements implemented by permitting authorities,
the expertise and diligence of civil servants, and the timeframes
for agency decisions.
The Group may not be able to obtain permits in a timeframe
that might be reasonably expected. Any unexpected delays
associated with the permitting processes could slow exploration
and development activities and could adversely impact the
Group’s operations.
There is a risk of permits that are needed for ongoing operations
being denied regarding tenure and other development related
infrastructure. Land access is critical for exploration and
evaluation to succeed. In all cases the acquisition of prospective
concessions is a competitive business, in which proprietary
knowledge or information is critical and the ability to negotiate
satisfactory commercial arrangements with other parties is
often essential. Access to land for exploration purposes can be
affected by land ownership, including private (freehold) land,
pastoral lease and native title land or indigenous claims.
Immediate access to land in the areas of activities cannot in all
cases be guaranteed. SolGold may be required to seek consent
of land holders or other persons or groups with an interest in real
property encompassed by, or adjacent to, SolGold’s tenements.
Compensation may be required to be paid by SolGold to land
holders so that SolGold may carry out exploration and/or
mining activities.
Where applicable, agreements with indigenous groups must be
in place before a mineral tenement can be granted. In the long
run SolGold will be required to acquire large areas of land for its
surface operations, posing a risk of delays and increasing prices
the longer the process takes.
Where the Group discovers a potential economic resource
or reserve, there is no assurance that the Group will be able to
develop a mine thereon, or otherwise commercially exploit such
resource or reserve. Any failure to manage effectively the Group’s
growth and development could have a material adverse effect
on the Group’s business, financial condition and results of
operations. There is no certainty that all or, indeed, any of
the elements of the Group’s current strategy will develop
as anticipated.
Project
Development
Risks
Attention is focused on maintaining sound
relations with local communities and working
with these groups to enhance these relationships.
The Group’s social team, under the supervision
of the country manager, continues to address
any such issues. Furthermore, there is regular
dialogue with the affected communities by
senior executives.
The possible risks associated with the relocation
of communities during the development stage
will be managed with the community members’
best interests at the core of all decisions. The
development of a relocation and resettlement
plan will be developed with close consultation
and involvement with the community,
governments and other stakeholders.
SolGold ensures it follows protocols put in
place by local and national government bodies
in a timely manner when applying for permits.
The Company regularly meets with government
officials to discuss ongoing permitting
applications in a transparent and professional
manner and is compliant with a stakeholder
engagement plan for land access.
This risk remained constant during the current
year.
The Company is following sound project
management processes for taking a discovery
into mineral resource and reserve by using
established methods of evaluation including
economic analysis. This is carried out using
several different levels of studies to evaluate
various options and assess the best option
for SolGold to take into development and
production. This is carried out by using a
dedicated team and recognised consultants
including subject matter experts.
This risk remained constant during the current
year.
Decrease
Increase
Same
KEY:
44
RISK
DESCRIPTION
KEY MITIGATORS
Funding Risks
Financial Reporting
and Control Risk
The exploration, evaluation and development of the Group’s
projects will require substantial additional financing above and
beyond the Group’s current liquid funds. Current global capital
market conditions have been subject to significant volatility, and
access to equity and debt financing, particularly for resource
companies, has been negatively impacted in recent years.
The war in Ukraine, the increasingly hawkish tilt of Western
central banks and the arrival of inflation more generally have
injected additional risk into the global capital markets, with
most indices lower for the year.
These factors may impact the Group’s ability to obtain equity
or debt financing in the future. Additional financing may not
be available, or if available, the terms of such financing may
be unfavourable compared to earlier capital raises. Failure to
obtain sufficient financing may result in the delay or indefinite
postponement of exploration activities and the development
of the Group’s projects.
SolGold’s aspiration is to have a corporate culture that is
designed to encourage transparency and professionalism,
protect our shareholders’ funds and inspire confidence in our
workforce. It is crucial that the Group maintains high ethical
standards and there is no tolerance of fraud, bribery, any form
of corruption or unethical activity. Internal control over financial
reporting may not always prevent or detect misstatements.
SolGold started to strengthen its internal financial capabilities
and internal control framework following a special audit by
KPMG LLP in early 2021. A Group Internal Audit function was
established, reporting to the ARC. The ARC agreed on an
annual audit plan focusing on enterprise risks.
Increased scrutiny and analysis by the Group finance team
throughout 2021 led to cost reductions, but also to the discovery
of the misappropriation of funds in Ecuador in late 2021. This
misappropriation resulted in the overstatement of our exploration
assets by US$4.6 million during the years 2017 to 2021.
The executive management team regularly
meets with shareholders, financiers and other
capital market stakeholders to discuss the
availability and costs of various types of
financing with the aim of gauging their
support. It is management’s view that high
quality exploration projects should always
be capable of being financed.
This risk increased during the current year.
Please refer to Note 1.
SolGold’s immediate response to the discovery
of the misappropriation of funds includes:
• Commissioning of a forensic audit by
Ernst & Young Ecuador
• Supervision of the investigation by
the SolGold Internal Audit function
and supported by our General Counsel
and reporting to the ARC
• Hiring of three new employees into
the Ecuador Finance function since
1st January 2022.
SolGold will continue to take steps to improve
its control, governance and risk management
environment and processes. These steps include
increasing the resources and improving the
capabilities of senior management and the
Finance function. Ongoing actions include:
• Restructuring the Finance organisation in
Quito and hiring several roles locally that
will help us strengthen our processes and
improve our control culture
• Recruitment of an in-house lawyer and a
procurement manager in Ecuador
•
•
Improvement and tightening of payment
controls, enhancing controls and improving
procure-to-pay processes
Internal Audit analysing further specific
processes in relation to the Ecuadorian entity.
This risk has reduced during the current period
reflecting the Group’s strengthened internal
financial capabilities and internal control
framework.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
45
STRATEGIC REPORT R I S K M A N A G E M E N T
C O N T I N U E D
RISK
DESCRIPTION
KEY MITIGATORS
Mineral Reserve
and Resource
Estimates Risk
Mineral Reserve and Mineral Resource figures are estimates, and
there is a risk that the estimated Mineral Resources and Mineral
Reserves will not be realised. The quantity of Mineral Resources
and Mineral Reserves may vary depending on, among other
things, metal prices. Any material changes in the quantity of
Mineral Resources, Mineral Reserves or the amount of the
Mineral Reserves that are mined, and metal recoveries achieved
in production may affect the economic viability of any project.
Mineral Resources that are not Mineral Reserves have not
demonstrated economic viability, and there is a risk that they
will never be mined or processed profitably. Further, there is
a risk that Inferred Mineral Resources will not be upgraded to
proven and probable Mineral Reserves as a result of continued
exploration.
Fluctuations in gold prices, results of drilling, metallurgical testing
and preparation and the evaluation of studies, reports and plans
subsequent to the date of any estimate may require revision of
such estimate. Any material reductions in estimates of Mineral
Reserves could have a material adverse effect on SolGold’s
results of operations and financial condition.
General Exploration
and Extraction Risks
Exploration activities are speculative, time-consuming and
can be unproductive. In addition, these activities often require
substantial expenditure to establish Reserves and Resources
through drilling and metallurgical and other testing, determine
appropriate recovery processes to extract copper and gold
from the ore and construct mining and processing facilities.
Once deposits are discovered it can take several years to
determine whether Reserves and Resources exist. During this
time, the economic viability of production may change. As a
result of these uncertainties, the exploration programmes in
which the Group is engaged may not result in new Reserves.
Key elements that mitigate the impact to the
Company and investors are experienced and
qualified personnel and advisors, applying
industry standards, conducting independent
review and continuous disclosure (including
sensitivity analysis of key factors).
SolGold employs experienced and qualified
personnel to manage exploration programmes
using practices and techniques that are
accepted in industry or substantiated with
appropriate analyses to validate new techniques.
Quality checks and validation of results occurs
across the data collection, interpretation,
modelling, estimation and classification process.
Results are reported progressively in-line with
continuous disclosure obligations to ensure
the market is informed of how projects advance.
Further, qualified persons (independent qualified
persons in the case of NI 43-101 Technical
Reports) validate the information, processes
and conclusions as part of the reporting process.
This risk remained constant during the current
year.
The Group uses modern geophysical and
geochemical exploration and surveying
techniques. The Group employs a world-class
team of geologists with considerable regional
expertise and experience. They are supported
by a network of fully accredited laboratories
capable of performing a range of assay work
to high standards. Group Mineral Resource and
Ore Reserve estimates are prepared by a team
of qualified specialists following guidelines of
NI 43-101, which is one of the most recognised
reporting codes for Latin America and TSX-listed
companies. Mineral Resource and Ore Reserve
estimates are prepared by independent
consultants.
This risk remained constant during the current
year.
Decrease
Increase
Same
KEY:
46
V I A B I L I T Y S T A T E M E N T
To address the requirements of
provision 31 of the 2018 UK Corporate
Governance Code, the Directors have
assessed the prospects of the Group
over a minimum of two years. This
period aligns with the Group’s expected
timeline for a final investment decision,
completing project early works, securing
project funding, execution of an
Investment Protection Agreement and
the gaining of all necessary licences and
permits associated with the Cascabel
project, as further outlined below.
The Group will consider extending
the assessment period as the Cascabel
project advances to its construction
decision, to cover the full construction
and ramp-up period, considering
specific challenges arising from
long-lead projects.
Mining is a long-term business and
timescales can run into decades as
demonstrated by the Cascabel PFS
initial life of mine estimated at 26 years.
When taking account of the impact
of the Group’s current position on
this viability assessment, the Board
considers:
• material political events globally,
particularly in Ecuador
• the Group’s financial forecast and
resulting cash positions
• the potential state of equity and
debt capital markets in light of
available sources of funding and
scenarios that impact these
funding solutions
• macro-economic developments
and possible impacts on relevant
commodity prices
• a prolonged downturn in the price
of copper and gold
• the labour market relevant for a
successful project execution, in
particular factors that could prevent
the Group from attracting and/or
retaining executive leadership talent
• actions at the Group’s disposal to
mitigate the adverse impacts of
any of the above.
The Group’s viability assessment is
focused on SolGold’s existing asset
base and factors in the most likely
development projects. This is
considered appropriate for an
assessment of SolGold’s ability to fund
its activities and manage the potential
impact of the factors above. As a result
of given uncertainties, the Group
regularly assesses its strategy, updates
its financial rolling forecasts, monitors
the state of relevant capital markets
and runs various financial scenarios
for the period over which the Group
assesses its prospects and viability.
Management regularly produces
cash flow forecast and manage its
liquidity risk.
As outlined in Note 1 to the financial
statements, in assessing going concern,
management has prepared a base case
and a severe but plausible scenario
based on future cash flow forecasts.
Under the base case scenario, the
Group would have sufficient funds
until December 2022 without applying
any of the mitigating actions that are
included within the severe but plausible
scenario outlined below. SolGold’s
severe but plausible scenario considers
a collapse of financial markets, caused
by a continued inflationary environment
and ensuing recession that is not
conducive to further capital raises
when necessary. In such a situation the
Company would cease all exploration
activities, terminate all technical
services and dramatically reduce
overheads to reduce costs. Under its
worst-case scenario, the Group would
have sufficient funds at least until
January 2023. As disclosed in Note 1(b)
the Directors determined that this is a
material uncertainty regarding going
concern; however, this is not the
Group’s strategic plan, and, as
described below, the Directors are
exploring available funding options,
which underly the basis for this
viability assessment.
The Group had cash on hand of
US$26.1 million and net current assets
of US$27.4 million as at 30 June 2022
(2021: US$109.6 million, US$116.3
million). The Group continuously
monitors capital markets and the
Board regularly considers various
forms of financing available to SolGold
as the Group will need to secure further
funding to meet its exploration and
working capital commitments through
to completion of the Cascabel DFS in
Q4 CY 2023. The Group has a proven
ability to successfully execute equity
and other financings as demonstrated
by the equity placings and royalty
agreement completed in the 2020-21
financial years totalling approximately
US$240 million in gross proceeds.
Accordingly, the Directors have a
reasonable expectation that the
Group will be able to raise funds
when necessary.
As SolGold progresses through the
transition from explorer to developer
with the advancement of the Cascabel
project, the Directors will consider
appropriate funding options available
to the Group through the phases of
development. Namely: (1) securing
funding through to the end of the
DFS in late 2023; (2) funding through
to project investment decision and
early works in 2024; and (3) project
execution from 2025. The progress
towards delivery of key project
milestones including the Investment
Protection Agreement and permitting
will de-risk the Cascabel project and
expand SolGold’s potential funding
options across the three phases of
development. These would include
copper concentrate offtakes, potential
opportunities with strategic partners,
project finance and Export Credit
Agencies (“ECA”), streaming, and
equity raises, among other options.
The Group has no debt due in the
coming three years and has strongly
focused its viability assessment on
potential sources of funding and
on-going cost savings to support
the Group’s strategy to progress the
development of the Cascabel project
and advance its exploration programme
towards additional potential mineral
discoveries. Based on their assessment
of the Group’s prospects and viability,
the Directors confirm that they have a
reasonable expectation that the Group
will be able to continue in operation
over the two-year period of their
assessment.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
47
STRATEGIC REPORT E N G A G I N G W I T H O U R S T A K E H O L D E R S
Section 172 statement
In accordance with the requirements of
section 172 of the Companies Act 2006
(the "Act”), when making decisions, the
Board of Directors takes into account
the interests of all of its stakeholders
when determining the Group’s strategy
and objectives. A good understanding
of our stakeholders enables the Board
to factor the potential long-term impact
of strategic decisions on our various
stakeholders.
The Board of Directors of SolGold plc
are aware of their duty to act in good
faith and to promote the success of
the Company for the benefit of its
shareholders and with regard to
the interests of wider stakeholders.
We are conscious that the decisions
we make have long-term consequences
and are aware of the need to foster
close relationships with all our
stakeholders and employees; and to
consider the impact of our business on
local communities and the environment.
Minimising our environmental footprint
is a key priority in everything we do.
In the Strategic Report section of this
Annual Report, the Company has set
out the short to long-term strategic
priorities and described the plans to
support their achievement. Throughout
the Annual Report we have illustrated
how s.172 factors have been considered
during the year and how we have
engaged with key stakeholder groups.
As part of the Company’s decision-
making process, the Board and its
Committees consider the potential
impact of decisions on relevant
stakeholders. The Company continuously
interacts with a variety of stakeholders
important to its success including
equity investors, debt and alternative
finance providers, employees,
government bodies, the local
community, and suppliers. The
Company strives to strike the right
balance between engagement and
communication. Furthermore, the
Company works within the limitations
of what can be disclosed to the various
stakeholders with regard to maintaining
confidentiality of market and/or
commercially sensitive information.
We have outlined here our key
stakeholder groups and how we
have engaged with them.
WHY THEY MATTER TO US
HOW WE HAVE ENGAGED WITH THEM
Investors
• As a developing business, we are in the investment phase of
unlocking our projects, and our shareholders play an important
role in supporting our Company in achieving its strategic goals
• While we are establishing the foundations for a long-term,
sustainable mining business we are building and maintaining an
investor base that will support our objectives before we generate
any revenues
• Our focus for the year has been on progressing the Alpala project
through to the development phase and engaging with existing
and new investors to enable greater options for the business
• Aligned to our long-term view on value creation for a range
of investors, we have maintained a pipeline of other significant
projects, including a further 75 concessions in Ecuador as a
highly prospective and undeveloped mining country
• Our shareholders expect sustainable value creation which requires
us to ensure good governance and risk management alongside
operational performance
• We regularly engage on topics of strategy, governance, project
updates and performance. The CEO, CFO and other members
of the senior management team presented to over 350 investors
at conferences, roadshows and other one-to-one meetings in the
financial year ended 30 June 2022, up from over 330 in the
prior year
• These meetings are often arranged by our brokers and banks
working closely with us or are part of periodic calls with key
shareholders, who request updates
• The Company seeks active feedback post these meetings,
which are being passionately discussed at Board meetings
• The Board has consulted with a range of the Company’s corporate
and institutional shareholders during the year in relation to a wide
range of issues, including during a proxy consultation roadshow
ahead of the 2021 AGM
• As a result of these consultations the Board has addressed several
concerns previously held by certain shareholders which resulted in
the votes cast “against” at the 2021 AGM
• Our commitment to and progress towards full compliance with
the UK Corporate Governance Code is a result of this engagement
• As illustrated in our Strategic Report, we see the critical nature of
copper in the energy transition and the long-term counter-cyclical
nature of gold as a store of wealth and educate investors on a
one-to-one basis about the attractiveness of our future copper-
gold concentrate
• We hold an Annual General Meeting and plan to make this
important event more interactive, based on investor feedback
• We regularly update the Company presentation and website
to keep investors up to date on information
• We issue regular news and project updates and post material
on social media accounts e.g., LinkedIn and Twitter @SolGold
48
WHY THEY MATTER TO US
Employees
HOW WE HAVE ENGAGED WITH THEM
• Our employees are our most important asset and are critical to
• We have an open line of communication between employees,
our long-term success. We believe that their involvement depends
on ensuring a positive and rewarding environment where they feel
respected and safe
•
In the financial year ended 30 June 2022 the Group employed
an average of 894 people across Australia, Ecuador, the Solomon
Islands and the United Kingdom and employed 796 people at
the end of the financial year. 99% of our employees are based in
Ecuador and the Directors consider workforce issues holistically
for the Group as a whole
senior management and the Board of Directors
• We hold weekly meetings with staff to provide updates on
the projects and ongoing business objectives
• Most employees are covered by yearly performance reviews
and, where relevant, have KPIs linked to their short-term
incentive scheme
• The physical and mental health of our employees is a key focus
for us. We provide psychological support to our employees with a
professional available at our camps. In addition, throughout FY 22
we implemented a number of Covid-19 prevention controls including;
I
S
T
R
A
T
E
G
C
R
E
P
O
R
T
• Education and awareness programme for our health
professionals and team members
• Vaccination campaigns for our technical and community
population – 97% of the population vaccinated
• Protecting our at-risk population by offering teleworking
options when possible
• Temperature screening for employees and contractors
when entering our offices and camps
• Adapting our protocols in the field with quarantines,
extending rosters, between others
• We have a dedicated Ecuador HR function and in the last year
have ensured that there is a feedback and grievance process in
place across Ecuador for our staff, supported by various Group
policies
• We undertook a Group-wide cultural survey to assess which
areas need most improvements in the eyes of our staff members
• Supporting our growing employee development programme,
we hold monthly induction courses for all new staff and, following
the Covid-19 pandemic, this has extended to incorporate new
health and safety protocols for all employees. SolGold employees
continue working remotely when it is possible and appropriate
for their role
• Support through grievance mechanisms and a whistle-blowing
policy which provides our employees, suppliers and contractors
the opportunity to anonymously report any incidents that they
feel have violated the Code of Conduct, internal policies or the law
• We are working towards a more diverse workforce, As at 30 June
2022, 15% of the workforce in Ecuador was female. Tied to our
ambition for greater local empowerment, it is important to note
that this also varies by role, where 18% of our 57 geologists as at
30 June 2022 were women. Equally, at a leadership level we are
also working towards improving diversity with 29% of Board
members being women as at 30 June 2022
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
49
E N G A G I N G W I T H O U R S T A K E H O L D E R S
C O N T I N U E D
WHY THEY MATTER TO US
Government
HOW WE HAVE ENGAGED WITH THEM
• Our vision is to create a lasting business for all Ecuadorians and
to develop a sustainable mining industry for the country that
benefits all stakeholders
•
In the period 2021-2022 there has been a remarkable increase in
Government contact due to President Lasso’s pro-mining position.
Engagement across Cabinet has been very welcome and the
Decree 151 for Mining issued by the President was a significant
plan of action for both industry and government to firmly
establish mining as a pillar of the economy
• SolGold continues to develop its relations with President Lasso’s
elected administration and is in regular dialogue with multiple
relevant Government bodies and in particular with the newly
appointed Minister of Energy and Mines, Xavier Vera Grunauer
and Minister of Water, Environment and Ecological Transition,
Gustavo Manrique
•
•
In November 2021 SolGold signed the first Investment Protection
Agreement with the Government for all historical and proposed
investment related to the formal phase of Exploration for the
Cascabel project, a first in history with a specific benefit of
agreeing the potential for international arbitration in the U.K.
In January 2022 senior Company executives had a positive meeting
with President Lasso and his advisors on the project and general
discussion on the related economic model
• The Company managers have regular dialogue with Government
at all levels in Quito as well as with agencies of the Imbabura and
other provinces
• The Company engages with the relevant departments of the
Ecuadorian Government in order to progress the operational
licences it requires to advance each of its concessions
• We are engaged in regular discussion and negotiation with
the Ecuadorian Government on high level issues related to the
Cascabel project and the infrastructure proposed in the PFS
required for its development. These Government Ministries have
expressed full cooperation with the project. The next major activity
starting in September 2022, will be negotiations for the terms of
reference for a production licence for the project
• After some years of delay, in late 2021, the Ministry of Environment
approved a Complementary Study for further advanced
exploration in the Cascabel concession and has recently signed
a letter approving the incorporation of works to initiate an
Exploration Decline and Shaft at Alpala under the existing
Advanced Exploration Environmental Licence
•
In March 2022 the Company initiated environmental studies related
to the obtaining of the various Environmental Licences for the
Cascabel project infrastructure
• The Company continues to seek local level permissions for water,
forestry and archaeological certificates and for drilling activity for
its multiple regional concessions
• Managing our licence to operate within Ecuador around our key
projects means we consider the lifecycle of our projects from
discovery and permitting, through development and operation
to any closure and rehabilitation implications
• As a country seeking both socio-economic development and
enhanced governance around its natural resources – such as
through the Extractive Industries Transparency Initiative (“EITI”)
– we recognise our ability to bring international expertise that
can greatly support the country ambitions of accountability
and transparency in resource development
50
WHY THEY MATTER TO US
Communities
• Building trust and a sense of partnership with communities is key
to our business and local impact. We have a team of 24 people
employed full-time to engage in face-to-face community meetings
across all our projects
• Community engagement informs better decision making and
ensures all SolGold stakeholders benefit from the Company’s
decisions. Having the community’s trust will mean it is more likely
that any potential concerns the community has can be mitigated
and our plans and strategies are more likely to be aligned to their
expectations
• The focus of our development has been in Ecuador and realising
the opportunity for a national mining industry meaning we are
keen to support this emerging industry
• Around our flagship Cascabel Project, the communities in the
areas of influence provide employees to the project and will
be a key part of our supply chain
• As a long-term partner for Ecuador we are closely engaged
with local and indigenous peoples in and around all our project
affected areas and ensure that our discussions on permitting
and developments across our portfolio are conducted within
international treaties and Ecuadorian law
I
S
T
R
A
T
E
G
C
R
E
P
O
R
T
HOW WE HAVE ENGAGED WITH THEM
• We have at least weekly engagements with the local community
as part of the development of our sustainability initiatives. In the
context of the Cascabel project, we have regular open dialogue
with the Provincial Government, the Municipal Government of
Ibarra, the Parish Governments of Lita and La Carolina and
community leaders regarding the development of the project
• The ongoing programme of information sessions delivered
to communities in the direct area of influence provides an
opportunity to coordinate local activities and is a means to
strengthen the social presence of the Company, providing an
opportunity to identify emerging issues and ultimately builds
trust. We have mapped out the communities within our direct
zone of influence and indirect zone of influence as well as all
external interest groups
•
In Ecuador, we have several partnerships with local and national
universities to support education and development across the
regions we operate in, including education and training of best
practices to foster a culture of environmental stewardship and
responsible mining
• Throughout the year we have ensured that a strong engagement
has taken place with local communities through local businesses
(including, for example, the local bakery, coffee plantation, chicken
farm, plant nurseries and hardware stores, amongst others), to
ensure we understand the ambition for greater local economic
activity. We have a well publicised local grievance mechanism
to respond to claims and complaints from the communities.
All claims and complaints are logged and resolved formally
in writing in accordance with both parties
Suppliers
• We have established long-term partnerships that complement
our in-house expertise and as our business grows, we recognise
the further opportunities and potential from trusted partnerships
with our suppliers
• Moving from an exploration business to one that is also developing
projects means that our supplier partners are key to ensuring we
develop a high standard, sustainable business and critical new
resources will be required to construct and power these projects
• We are committed to developing our local communities and have
engaged smaller local vendors to manage Company initiatives
and services needed
• The management team continues to work closely with consultants
to complete deliverables associated with the Cascabel project
studies
•
Implementing procedures and practices to ensure the efficient use
of water, energy and other resources and regular training sessions
to ensure Company standards are met
• We have an Anti-Bribery policy in place which is currently under
review and will be publicly available on the Company’s website.
when work is complete. Anti-Bribery and Corruption are discussed
at induction and training session conducted for employees and site
visitors. Going forward, SolGold will continue to promote the
importance of this policy with suppliers
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
51
S U S T A I N A B I L I T Y R E P O R T
DARRYL
CUZZUBBO
Chief Executive Officer
CONTINUED
COMMITMENT
TO SUSTAINABILTY
SolGold will play a vital role
in resourcing the transition
to a net zero emissions
future and is committed to
following a sustainable and
transparent approach to
exploration, development
and mining.
This sustainability report is aligned
to the requirements of the GRI
Principles, a best practice framework
for sustainability reporting. SolGold’s
mission is to deliver the highest
level of transparency for our
stakeholders on environmental
management, community
engagement, and the health
and safety of our people. This
sustainability report represents
a significant step towards
embedding and achieving our
overall sustainability objectives.
The core pillars of our sustainability
activities are:
Our business model is centred
around the exploration, development
and mining of copper and gold.
SolGold’s purpose is to serve the
energy transition and continue
supplying these essential elements
that facilitate the transition to a
net zero future.
We take pride in placing the
environment at the heart of our
strategy. Ecuador is the only
government in the world in which
the environment is recognised as a
stakeholder and has been awarded
its own rights.
The Environment
Our People
Health and Safety
Our Communities
52
This year, SolGold marks
ten years as a trusted partner
in Ecuador. SolGold has not
only invested in its local
communities through various
socioeconomic development
initiatives and partnerships but
has also worked hard to build
a robust relationship with all
the Company’s stakeholders,
earning us a solid social licence
to operate in Ecuador.
Darryl Cuzzubbo
Chief Executive Officer
Sustainability Highlights 2022:
• SOLGOLD IS ONE OF THE FIRST 100 COMPANIES TO
JOIN THE ZERO CARBON ECUADOR PROGRAMME
("PECC")
• REFORESTED 135 HECTARES OF LAND WITH SAPLINGS
GROWN IN OUR OWN NURSERIES
•
INCREASED SOCIOECONOMIC INVESTMENT BY 43%
FROM 2021
• ZERO ENVIRONMENTAL INCIDENTS REPORTED
• TRIFR: 4.33 (TOTAL RECORDABLE INJURY FREQUENCY
RATE PER ONE MILLION HOURS WORKED) (2021: 9.60)
• 1,660 STAKEHOLDER MEETINGS HELD WITH
COMMUNITY MEMBERS
• 9 GRIEVANCES LODGED BY HOST COMMUNITIES IN
2022 AND ALL SATISFACTORILY RESOLVED IN THE
SAME YEAR
• 99% ECUADOREAN EMPLOYEES
• 17% OF PROCUREMENT SPEND IN LOCAL COMMUNITIES
• 15% WOMEN EMPLOYED IN ECUADOR OPERATIONS
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
53
STRATEGIC REPORT S U S T A I N A B I L I T Y R E P O R T
C O N T I N U E D
SOLGOLD AIMS TO BUILD
ONE OF THE LOWEST
CARBON FOOTPRINT COPPER
MINES ON THE PLANET. OUR
SUSTAINABILITY GOALS ARE
DRIVEN AND MOTIVATED
BY THE UN’s SUSTAINABLE
DEVELOPMENT GOALS, AS
WELL AS OUR COMMITMENT
TO THE UN’s GLOBAL
COMPACT
•
54
We support
Sustainable development goals
A recent special report published by the International Energy Agency titled
“The Role of Critical Minerals in Clean Energy Transitions” identifies risks
to key minerals and metals that – left unaddressed – could make global
progress towards a clean energy future slower or more costly, and therefore
hamper international efforts to tackle climate change. There is no shortage
of resources worldwide, and there are sizeable opportunities for those who
can produce minerals in a sustainable and responsible manner. SolGold is
fully aligned with resolution 4/19 on mineral resource governance adopted
by the United Nations Environment Assembly on 15 March 2019 that
states “Awareness of how the extractive industries can contribute to
the sustainable development of countries and the well-being of their
populations, as well as of the possible negative impacts on human health
and the environment when these activities are not properly managed”.
SolGold is committed to mining responsibly and supporting the United
Nations Sustainable Development Goals (“SDGs”). The SDGs are linked
throughout this report to demonstrate our input toward these goals.
Our sustainability performance
THEME
OBJECTIVES
UN SDG
Climate
change
Reduce Scope 1 and 2
carbon emissions from
managed operations
Climate
change
Reduce amount of energy
used from fossil fuels
Environmental
stewardship
Responsible
consumption
Responsible
consumption
Environmental
opportunities
Rehabilitate all land in
former drilling platform
areas
Reduce water usage in
our managed operations
Reduce waste in our
managed operations
Increase environmental
management activities
(US$)
Human
capital
Zero harm
Increase percentage of
women as part of the
workforce in Ecuador
Zero work-related
fatalities
Social
opportunities
Increase total spend
socioeconomic initiatives
(US$)
Corporate
governance
Increase Board
representation by women
UN global compact
2022
2,180
mtCO2e
8,522
MW
0.34
Ha
10.30 per
1,000m3
50.54t
2021
2020
2019
2018
5,276
mtCO2e
2,044
mtCO2e
(excl. regions)
4,811
mtCO2e
(excl. regions)
4,594
mtCO2e
(excl. regions)
18,877
MW
7,906
MW
(excl. regions)
18,844
MW
(excl. regions)
0.37
Ha
17.14 per
1,000m3
163.24t
0.24
Ha
5.29 per
1,000m3
23.72t
0.33
Ha
21.97 per
1,000m3
26.90t
2,056,587
1,412,256
1,190,352
1,044,112
15%
nil
21%
nil
21%
nil
19%
nil
820,256
573,994
283,465
225,852
127,349
29%
22%
14%
12.5%
0%
n/a
0.29
Ha
7.53 per
1,000m3
26.14t
459,962
(excl. 1 Jul-31
Dec 2017 as
records were
unavailable)
15%
nil
SolGold is a signatory to the UN Global Compact and is committed to making its 10 principles part
of our strategy, culture and day-to-day operations. Our commitment to the UNGC also underpins
our engagement in collaborative projects which advances the broader development goals of the
United Nations.
SolGold’s latest UNGC submission can be read here:
https://ungc-production.s3.us-west-2.amazonaws.com/
commitment_letters/139825/original/20200512_SolGold
_letter_of_Commitment_to_UNGC.pdf?1589384132
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
55
STRATEGIC REPORT
S U S T A I N A B I L I T Y R E P O R T
C O N T I N U E D
Our environment
SolGold is committed to minimising the impact of its operations on the environment through the responsible management
of all of our projects often by using a closed loop management system of reduce, reuse and recycle. SolGold operates
in some of the world’s most beautiful jurisdictions, and we recognise our responsibility to protect our planet so that it
remains healthy and vibrant for future generations.
SolGold’s Environmental Policy is
driven by our commitment to minimise
adverse environmental impacts as
a result of the Company’s operating
activities. Not only does this ensure
environmental regulations are met,
but our strategy is also focused on
providing a safe work environment
for SolGold’s employees, as well as
working in a responsible manner
through comprehensive protection
of the environment.
Click Here to view SolGold's
Environmental Policy.
Environmental supervision is carried out
by a team that includes field workers,
environmental supervisors, and the
senior management. This ensures the
activities of the Company are aligned
with sustainable development. As part
of the Pre-Feasibility Study completed
in April for the Cascabel project,
SolGold followed international
environmental standards such as the
International Finance Corporation
(“IFC”) principles to ensure
environmental compliance is met.
As a measure of our commitment
to ensuring good stewardship of the
environment, we have increased
our total environmental spend in
the reporting period under review.
The environmental spend includes
all expenses generated by the
environmental department, including
(but not limited to) grey water
treatment, plant nurseries, waste
management & inspections,
rehabilitation, emergency response,
environmental monitoring, audit
reports, and other miscellaneous
expenses. This year’s environmental
spend represents an all-time high for
SolGold’s total environmental spend
as we move closer to becoming a
development company.
Total environmental spend (US$)
2500000
2000000
1500000
1000000
500000
0
2022
2021
2020
2019
2018*
*
FY18 excludes July – December 2017 as data
was not captured during that period.
SolGold’s decarbonisation strategy
In October 2021, SolGold was one of
the first 100 pioneering companies to
join the Zero Carbon Ecuador Program
("PECC"). This is an initiative promoted
by the Ministry of the Environment,
Water and Ecological Transition,
which seeks the active participation
of industry to achieve the climate goals
and objectives established in the first
Nationally Determined Contribution
of Ecuador to a carbon emissions
reduction target of 22.5% by 2025
for the country.
There are three stages to our strategy
to reduce our carbon emissions:
Overall, SolGold’s objectives in relation
to the management and care of the
environment are to:
Decarbonisation
policy stages
1. Quantification
2. Reduction
3. Achieving the target
In the reporting period under review,
SolGold has made significant strides
to measure the necessary metrics to
disclose our verified and validated
emissions.
• Ensure the protection of the
environment as an integral part
of its operations
•
Implement objectives and goals to
support the Environmental Policy
• Understand environmental impacts
and manage these of our work
practices on the environment
• Continually educate and train staff
members on environmental issues,
standards and practice
• Ensure compliance with all applicable
environmental laws and regulations
• Communicate the Environmental
Policy to all employees, subcontractors
and the community in general
•
Implement measures to avoid or
minimise pollution, waste and other
impacts on the environment
• Expect a high environmental
standard from all our suppliers,
consultants and contractors as
we do from ourselves
56
Greenhouse gas ("GHG") emissions
SolGold has carried out the measurement of greenhouse gases ("GHG") as detailed in the Carbon Reporting section
of the Corporate Governance report. GHG emissions were measured from the operation of the Cascabel project and
main exploration projects in Ecuador that can vary from year to year. There is a small margin of error in 2022 given
the emissions produced from exploration activity in Sharug was not included.
CARBON EMISSIONS
MEASURE
Scope 1: Cascabel
Scope 2: Cascabel
Total: Cascabel
Scope 1: Regional
Scope 2: Regional
Total: Regional
Scope 1
Scope 2
TOTAL
mtCO2e
mtCO2e
mtCO2e
mtCO2e
mtCO2e
mtCO2e
mtCO2e
mtCO2e
mtCO2e
GHG Emissions
Intensity: Cascabel mtCO2e/metre drilled
GHG Emissions
Intensity: Regional
projects
mtCO2e/metre drilled
2022
1,304
42
1,346
824
10
834
2,128
52
2,180
2021
4,271
16
4,287
987
2
989
5,258
18
5,276
2020
1,998
46
2,044
n/a
n/a
n/a
1,998
46
2,044
2019
4,767
44
4,811
n/a
n/a
n/a
4,767
44
4,811
2018
4,569
25
4,594
n/a
n/a
n/a
4,569
25
4,594
0.06
0.10
0.18
0.05
0.05
0.17
0.55
n/a
n/a
n/a
While we recognise as a Company that reporting according to the GHG Protocol would include all seven greenhouse gases:
carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons ("HFCs"), perfluorocarbons ("PCFs"), sulphur
hexafluoride (SF6) and nitrogen trifluoride (NF3), as we are still in exploration and early development stage, we produce
negligible (N2O), and no ("HFCs"), ("PFCs"), (SF6) and (NF3), thus only report on Scope 1 and Scope 2 GHG emissions of
carbon dioxide.
Toxic emissions
Similarly, there are no values of emissions of SO2, NOx or excess dust to report, because in the current phase of advanced
exploration, no significant fixed sources of combustion are used that exceed what is established in Ecuadorian Environmental
Legislation (TULSMA-AM-097-A). The Company has carried out environmental air quality monitoring at specific points
located in the host of the project and camp, but it is not directly related to fixed combustion sources for the mining
activity that is authorised.
Energy use1
ENERGY CONSUMPTION
MEASURE
Total energy consumed: Cascabel
Energy from fossil fuels: Cascabel
Energy from renewable sources: Cascabel
Total energy consumed: Regional projects
Energy from fossil fuels: Regional projects
Energy from renewable sources: Regional
projects
Total Energy from Fossil Fuels
Total Energy from Renewable Sources
Total Energy Consumed
Percentage of Renewable Power/
Total Energy Consumed
1. Data available from FY2019.
MW
MW
MW
MW
MW
MW
MW
MW
MW
%
2022
5,379
5,158
221
3,391
3,364
27
8,522
248
8,770
2021
17,146
16,922
224
1,848
1,824
24
18,746
248
18,994
2020
8,068
7,906
162
n/a
n/a
n/a
7,906
162
8,068
2019
18,999
18,844
154
n/a
n/a
n/a
18,844
154
18,998
2.8
1.3
2.0
0.8
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
57
STRATEGIC REPORT S U S T A I N A B I L I T Y R E P O R T
S U S T A I N A B I L I T Y R E P O R T
C O N T I N U E D
C O N T I N U E D
PROMOTING ENTREPRENEURSHIP
IN THE PRODUCTION OF COFFEE
113 producers
The objective of the Café
Cascabel initiative is to promote
entrepreneurship in the production
of coffee that can be
commercialised as a product of
quality. The beneficiaries of this
project include 113 producers living
in the local parish governments of
Lita, La Carolina and Jacinto Jijon.
58
Environmental monitoring
SolGold’s environmental procedures
and guidelines are reviewed every six
months, or earlier if required, to include
control parameters implemented by
updates to various different authorities
including our Environmental
Management Plan, Environmental
Audit Processes, and national or
international environmental regulations.
We also engage with the community
on environmental monitoring to
address their concerns.
For the Cascabel project, environmental
monitoring is carried out for: surface
water, sediments, discharge water
(residual and drilling), drinking water,
drilling mud, soil, air quality (particulate
matter and gases), noise, vibrations
and biotics (flora and fauna).
For the SolGold exploration projects
(Porvenir, La Hueca, Sharug, Rio Amarillo
and Blanca) environmental monitoring
is carried out specifically on: discharge
water, drilling mud, soil and
environmental noise.
SolGold’s environmental compliance
audits are carried out every two years.
The Company has complied with the
presentation of all the Environmental
Audits according to the scheduled
times established by the
Environmental Control Authority:
• On August 6, 2021, the Environmental
Audit was approved by the Ministry
of the Environment, Water and
Ecological Transition (“MAATE”)
meaning that the Advanced
Exploration phase of the Cascabel
Concession was approved for the
period August 2016-August 2018
• The last Environmental Audit
presented to the MAATE concerned
the Advanced Exploration of the
Cascabel Concession period August
2018-August 2020 and is currently
in the process of approval
• The MAATE has been presented with
the performance of the Environmental
Compliance Audit for the Advanced
Exploration phase of the Cascabel
Concession for the period August
2020-August 2022, which is in the
process of revision and approval
of the MAATE.
SolGold is pleased to disclose that there were nil incidents of environmental
non-compliance for the reporting period that were reported to the Ministry
of the Environment, Water and Ecological Transition. We would be required
to report on incidents classified as medium and high risk, in which the alteration
of the natural environmental conditions of a medium incident would entail
considerable costs and time but where the damage is reversible and a serious
incident where the remediation measures entail high costs and time and the
damage may be irreversible.
MEASURE
Number
2022
nil
2021
nil
2020
nil
2019
nil
2018
nil
ENVIRONMENTAL
INCIDENTS
Reportable
environmental
incidents
Water management
SolGold’s approach to water management is to make efficient use of the resource,
complying with the provisions of the Company’s Environmental Policy and current
environmental regulations in Ecuador. The following guidelines have been set to
fulfil these requirements:
• Use of environmentally friendly products both for the preparation of drilling
fluids and cleaning activities in camps
• Treatment of drilling fluids and wastewater in camps before their discharge
• Reuse of drilling water that returns to the surface
• Superficial and discharge water quality monitoring
• Training programmes for the communities on the Cascabel project's water
management
•
•
Implementation of flow control devices at authorised collection points to
verify actual consumption and flow
Implementation of water reservoirs for better use of water resources and
return of clean water from drilling (recirculation of clean water).
WATER USE
MEASURE
2022
2021
2020
2019
2018
Water withdrawals by source
Total water used
for primary
activities
Potable water
from external
sources
Non-potable
water from
external sources
Surface water
used
Groundwater
used
1,000m3
10.30
17.14
5.29
21.97
7.53
1,000m3
0.152
0.152
0.107
0.064
n/a
1,000m3
20.39
25.73
15.15
18.02
17.79
1,000m3
30.69
42.87
20.44
39.99
25.32
1,000m3
n/a
n/a
n/a
n/a
n/a
Water discharge
Surface water
Groundwater
1,000m3
1,000m3
17.42
n/a
21.84
10.70
13.54
n/a
n/a
4.46
n/a
Water recycled
1,000m3
0.054
0.024
0.045
0.084
n/a
n/a
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
59
STRATEGIC REPORT S U S T A I N A B I L I T Y R E P O R T
C O N T I N U E D
Water sourcing
SolGold carries out hydrological studies of the water sources where the Company
intends to collect water, both for industrial use and for private use. This is to
obtain the necessary permits for the use and exploitation of water, granted by
the Environmental Control Authority, which we also communicate and verify with
our host communities, to ensure their supply of water is not affected. With all
these compliance parameters, the Environmental Authority grants the respective
use and exploitation permit to SolGold, demonstrating that the community intake
of water is not affected by both the consumption and for their agricultural or
livestock activities.
USE AUTHORISATION NO.
AND USE OF WATER
NO.
NAME OF THE
WATER SOURCE
AUTHORISED
FLOW L/S
USE
1
2
3
4
5
6
7
8
9
1
2
3
4
5
Quebrada
Parambas
Quebrada
América
Río Parambas
Quebrada
Chinambicito
Quebrada
El Carmen
Quebrada
El Carmen
Río Cristal
Quebrada Malte
Quebrada Apalá
TOTAL
Quebrada
Tandayama
Quebrada
Aguinaga
Quebrada Morán
Quebrada
Arellano
Quebrada Alpala
TOTAL
1.5
Industrial
Industrial
Industrial
Industrial
Domestic
Industrial
Domestic
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
Industrial
1.5
1.5
0.5
0.5
1.5
1.0
1.5
1.5
1.5
12.5
1.5
1.5
1.5
1.5
1.5
7.5
PROCESS 1
DHM-001-2013
In summary, the water from several sources is shared with the surrounding
communities, but these do not affect shortage of supplies for the communities.
The order of precedence established in the Law of Water Resources, Uses and Use
of Water is respected prior to obtaining water use permit. The order is as follows:
a) Human consumption
b) Irrigation that secures food sovereignty
c) Ecological flow
d) Productive activities
• Use of technologies that help us
reuse water in drilling (for example,
the use of solid removal units).
PROCESS 2
DHM-AP-002-2017
Due to the Covid-19 pandemic, all
personnel working in drilling activities
and operational personnel had to camp
on site, which accounts for the increase
in water consumption in 2021. The
total water consumption for primary
activities dropped by 40% in 2022.
In order to limit SolGold’s impact on
water quality, the Company is carrying
out the following activities:
• All discharge waters, both from
drilling and from camps, must be
treated in compliance with the
maximum permissible limits
established in national
environmental legislation
• Use of environmentally friendly
products for both drilling and
camp activities
In the reporting period, SolGold noted
the following achievements in relation
to water management:
• Catchment permits authorised
for 1.5 l/s
• About 90% of the water in our
industrial processes (drilling)
was reused
• Water consumption per drill
of 0.041 l/s / approximately
• State-of-the-art technology
(solids removal unit) is used for
removing drill sludge from water
• Environmentally safe products
are used in all drilling activities
• 100% of wastewater is treated and
discharged into the environment
in compliance with the standards
of Ecuadorian law.
The focus moving forward into 2023
is to maintain the controls that have
allowed SolGold to make efficient
use of water resources, and that has
enabled the Company to minimise the
impacts that water discharge may
cause, as well as remaining within
the authorised flow rate of 1.5l/s.
60
Waste management
SolGold’s approach to waste management is to distinguish between hazardous
and non-hazardous waste and to follow a compliant waste management
procedure, including characterisation, use, and final disposal. SolGold continuously
promotes recycling, as evident in the number of schemes and initiatives the
Company has organised in this area of waste management. The Company is also
committed to reducing the generation of hazardous and non-hazardous waste
through reducing, reusing and recycling, which are established techniques within
the Waste Minimisation Plan presented to the Environmental Control Authority
on an annual basis.
Key highlights for waste management:
• No recyclables managed by SolGold are sent to waste dump zones
• 100% organic waste is processed for compositing
• 100% of hazardous waste (greases, used oil, engine fillers, etc.)
is processed externally.
Non Hazardous Landfill Waste vs
Non Hazardous recycle waste
200
150
100
50
0
2022
2021
2019
Non Hazardous Landfill Waste
2020
2018
WASTE GENERATED (TONNES)
2022
2021
2020
2019
2018
General waste to landfill
50.54
163.24
23.72
26.90
Hazardous waste to landfill
zero
zero
zero
zero
26.14
zero
Hazardous Waste vs
Recycled Hazardous Waste
Non Hazardous recycle waste
General and hazardous
waste incinerated
General waste recycled,
reused and refurbished
Hazardous waste recycled,
reused and treated
Total mineral waste
30.59
31.65
22.27
44.88
37.46
5.83
9.85
5.06
9.14
12.03
0.48
n/a
1.60
n/a
1.16
n/a
0.78
n/a
1.00
n/a
As visible from the below table, SolGold has significantly reduced overall
material usage for timber, lime, cement, and grease. The increase in lubricating
and hydraulic oil can be explained by an increase in operations since Covid-19
the year before however remains lower than pre-pandemic levels.
MATERIALS USED
MEASURE
Timber
Cyanide
Explosives
Tonnes
Tonnes
Tonnes
Hydrochloric acid Tonnes
Caustic soda
Lime
Cement
Tonnes
Tonnes
Tonnes
2022
83.9
2021
239.7
2020
117.1
2019
118.2
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
12.4
35.2
13.8
43.2
7.5
63.2
22.9
62.9
2018
0
0
0
0
0
15
0
Petrol and diesel kL
461.5
1,555.8
719.2
1,741.3
1,687.7
Lubricating and
hydraulic oil
kL
Grease
Tonnes
0.9
0
0.4
0.2
3.1
0.2
2.5
0.6
2.1
1.5
SolGold’s 2023 strategy is to maintain the level of training the Company has
provided to all staff at all levels about the importance of waste reduction and
best practice. The Company is also driven to educate staff on how best practice
can generate income and the significant contributions for agricultural activities
and rehabilitation with the addition of nutrients in the case of composting.
Operationally, SolGold is committed to obtaining a minimum of 15% of recycled
material from the total non-hazardous waste generated at the Cascabel project,
and to reduce the generation of hazardous waste at the source to ensure
that 100% of the total waste is treated by qualified Environmental Control
Authority managers.
2.0
1.5
1.0
0.5
0.0
2022
Hazardous Waste
2021
2020
2019
2018
Recycled Hazardous Waste
Tailings design
In the Company’s PFS for the Cascabel
project released in April 2022, SolGold
identified areas in which the tailings
could be installed and would be
decided in close consultation with the
communities. The technical information
of the tailings design is in the process
of being prepared and will comply
with international standards and legal
compliance prior to its construction.
SolGold is evaluating the tailings
management options due to be
finalised in the Definitive Feasibility
Study ("DFS") due to be published
at the end of 2023.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
61
STRATEGIC REPORT S U S T A I N A B I L I T Y R E P O R T
S U S T A I N A B I L I T Y R E P O R T
C O N T I N U E D
C O N T I N U E D
INTEGRATING WOMEN INTO
THE LOCAL ECONOMY
8 jobs created
The Cascabel Bakery initiative in the
community of Santa Cecilia was
created to integrate women in the
economy of their local communities.
This project was developed in
collaboration with the Mayor’s Office
of Ibarra who provided the necessary
breadmaking skills initially to eight
women. Prior to this bakery, people
from the village of Santa Cecilia had
to travel two hours to buy bread.
Today it is a thriving business that
serves the local communities around
the Cascabel project.
62
Rehabilitation
We are committed to rehabilitating all the intervened land from drilling
operations. To date we have rehabilitated a total of 1.57 ha in drilling
platform areas. We currently have 35 drilling platform areas that are
due to be rehabilitated measuring 0.42 Hectares.
LAND UNDER
MANAGEMENT
Company-managed
land (ha)
MEASURE
2022
2021
2020
2019
2018
Hectares
4,979
4,979
4,979
4,979
4,979
Land rehabilitated
or vegetated (ha) Hectares
0.34
0.37
0.24
0.33
0.29
Biodiversity
Ecuador is one of the most megadiverse countries in the world and host to
beautifully diverse flora and fauna which needs to be protected from negative
impacts posed by our operations in the country. In FY2022, SolGold has carried
out a survey of biotic information in seven areas of biodiversity to understand
the richness of species, as well as the size and structure of their populations:
COMPONENT
# OF SPECIES REGISTER IN BIOTIC
STUDIES AND MONITORING
# OF SPECIES IN IUCN
VULNERABILITY CATEGORIES
Flora
Mammals
Birds
Amphibians
Reptiles
Fish
223
92
328
55
51
31
Almost threatened
Vulnerable
Endangered
Critically Endangered
Almost threatened
Vulnerable
Endangered
Critically Endangered
Almost threatened
Vulnerable
Endangered
Critically Endangered
Almost threatened
Vulnerable
Endangered
Critically Endangered
Almost threatened
Vulnerable
Endangered
Critically Endangered
Almost threatened
Vulnerable
Endangered
Critically Endangered
11
10
6
2
11
12
7
0
26
15
3
0
6
16
18
3
15
5
4
0
1
0
0
1
SolGold uses the International Union for Nature Conservation ("IUCN") to identify
any Red List species in areas affected by its operations. All the species registered
from the biotic monitoring carried out since 2014 have been revised and updated
in their taxonomy and input into a database that has been created in which each
species has its information on the threat categories according to the IUCN Red
List and the National Red Lists (latest updates) together with the geographic
coordinates ("UTM") where they were registered. To date there have been 18 biotic
monitoring observations with the most recent one having occurred in Q3 FY2022
and Q1 FY2023.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
63
STRATEGIC REPORT S U S T A I N A B I L I T Y R E P O R T
C O N T I N U E D
One million trees programme
SolGold recognises that Ecuador is one of the most biodiverse countries in
the world with relatively low CO2 emissions per capita compared to other
industrialised countries. Their key climate change commitment is to reduce
deforestation and enhance reforestation, in accordance with the United
Nations REDD+ National Action Plan. As a result, the Company is continuously
implementing new programmes to further conserve the environment and
inaugurated the One Million Trees project in 2019 to restore the deforested
land with native trees.
The One Million Trees Programme is SolGold’s environmental team’s flagship
conservation initiative, the purpose of which is to reforest and rehabilitate areas
that have been impacted by historic agricultural activities and form ecological
corridors between remnants of forest that have remained isolated. The restoration
and subsequent connectivity will allow a greater number of fauna species to find
resources and refuge for their development.
To date we have planted 184,707 saplings covering an area of 135 hectares with
53 native tree species.
METRIC
2022
2021
DIFFERENCE
Number of native forest species
planted by SolGold nursery
52,128
83,196
37%
In FY2022 there was a 37% reduction in trees planted as we search for areas that
can be reforested without obstructing areas where the Cascabel mine will be
developed. Agreements have been reached to allow the One Million Trees
programme to cover areas outside the Cascabel concession.
64
Our people
The importance of supporting our employees, implementing stringent health and safety policies, and promoting
a culture of equity across the value chain is core to our values.
Ecuadorian workforce profile highlights:
• 99% Ecuadorian employees recruited locally
• 15% female employees
• 81% of all employees live in neighbouring communities
• 2.7% employees registered as disabled
• 57 Ecuadorian employees have a science degree in geology, giving SolGold a significant advantage exploring
the highly prospective and gold-rich section of the Andean Copper Belt.
WORKFORCE*
MEASURE
2022
2021
2020
2019
2018
Permanent
Eventual
Contractors
Total Employees
Number
Number
Number
Number
Percentage of foreign nationals
Percentage recruited locally
%
%
Female Directors
Male Directors
Female Senior Managers
Male Senior Managers
Female Employees
Male Employees
Number
Number
Number
Number
Number
Number
Workforce profile
254
377
0
875
0.31
99.7
2
5
2
13
127
652
251
449
n/a
802
0.57
99.4
2
7
2
13
139
720
219
295
n/a
700
0.78
99.2
1
6
2
10
112
488
181
137
n/a
498
0.63
99.4
1
7
1
8
93
553
Employee wages and benefits paid US$
19,790,007
20,831,812
17,186,099
13,884,556
Average wage per employee
US$
31,363
29,760
33,436
43,662
Employee remuneration
Ratio of lowest wage to average
wage paid
New hires
Employee turnover
Redundancies
Dismissals
Ratio
1:6
1:6
Number
New hires and turnover
0
186
%
%
%
2%
56%
14%
2%
28%
1%
1:7
196
4%
45%
1%
1:9
45
3%
63%
0%
* Data on employees supplied in the sustainability report is based on average per year for Ecuador only.
167
106
n/a
404
n/a
1.10%
0
5
0
8
54
435
11,179,191
40,949
1:9
n/a
1%
14%
n/a
Click Here for SolGold’s
Bullying, Harassment &
Discrimination Policy.
Diversity and inclusion
We aim to recruit and retain the best people ensuring we deliver our strategy and run our operations safely and productively.
DIVERSITY AND INCLUSION
MEASURE
Women as a % of total workforce
Women in management
Women as technical staff
%
%
%
Ratio of basic salary men to women %
Employees with disabilities
%
2022
15%
23%
23%
111.0%
2.7%
2021
21%
14%
20%
99.7%
2.4%
2020
21%
15%
21%
88.7%
2.9%
2019
19%
8%
20%
83.4%
4.1%
Incidents of discrimination
and corrective actions taken
Number
0
0
0
0
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
2018
15%
13%
17%
98.7%
2.6%
0
65
STRATEGIC REPORT
S U S T A I N A B I L I T Y R E P O R T
C O N T I N U E D
Human rights
SolGold is committed to conducting its activities in a manner that respects
individual and collective human rights, as set out in the United Nations’ Universal
Declaration of Human Rights, and the core conventions of the International Labour
Organisation. We are also mindful of the international and InterAmerican Human
Rights Conventions that Ecuador is part of, including the Escazú Agreement,
an international treaty signed by 25 Latin American and Caribbean nations
concerning the rights of access to information about the environment, public
participation in environmental decision-making, environmental justice, and a
healthy and sustainable environment for current and future generations. SolGold
aims to operate in a way that is consistent with the UN Guiding Principles for
Business and Human Rights. We aim to integrate human rights into our risk
management processes of all our operating jurisdictions, and we are constantly
reassessing these to ensure safety and respect for human rights are met.
Skills training and development
SolGold recognises that the development, retention and wellness of our
employees is a fundamental pillar to SolGold’s success, sustainability as a business
and growth of Ecuador’s mining industry. Our people are incredibly important to
us, and we strive to consistently and fairly provide mentorship, empowerment and
encouragement in each role for each employee to reach their full potential. We
believe constant growth, internal opportunities and development programmes
improve employee morale, productivity and career satisfaction which ultimately
contributes to the Company’s overall success.
KEY PERFORMANCE
INDICATOR
MEASURE
2022
2021
2020
2019
2018
Total number of
individuals trained Number
286
109
324
423
175
Average hours of
training per year
per employee
Number
10.40*
25.64
22.53
24.49
11.01
*
The training hours in FY2022 dropped significantly due to disruptions caused by the global pandemic,
national strikes, management restructure, redundancy of employees in Ecuador, and budget constraints.
In the reporting period, there were 0
new hires, 56% redundancies and 14%
dismissals in Ecuador. This was a result
of the reduction of activities in the
Cascabel project and the subsequent
reduced need for the number of
employees compared to FY2021.
Click Here to view SolGold's
Equity, Diversity & Inclusion
Policy.
Gender equality
SolGold is committed to continuing to
provide an inclusive work environment
which is supportive of differences and
encourages full participation of all
employees. This is demonstrated in
our performance over the last four
years, including our significant
performance in FY2022.
SolGold can disclose that the ratio of
basic salary between men and women
favoured male workers in FY 2022.
However, we recognise that the pay
should be equal between men and
women and we are working to balance
the ratio of basic salary between men
and women.
Other highlights include:
• 23% female management,
a four-year high
• 23% female technical staff,
a four-year high.
In the reporting period, we are proud
that almost every metric that SolGold
measures regarding female employment
throughout the business in Ecuador
increased and continues to progress.
66
Health and safety
At SolGold, we take a holistic approach to the management of health and safety, with legal compliance at the forefront.
We endeavour to promptly report all safety-related incidents to ensure lessons are learnt and equipment and procedures
are adapted if required. We facilitate regular safety briefings in order to keep our employees up to date on protocols and
practices we have in place, whilst maintaining constant communication on any new risks that may arise in certain situations.
SolGold is committed to achieving an injury and incident free workplace. We achieve this through the following activities:
• Education of health and safety risks
•
Implementation of health and safety procedures
• Training and crisis management training
• Provision of health and safety equipment and appropriately trained personnel
• Prompt reporting of any injuries and incidents to ensure lessons are learnt and equipment and procedures are adapted
if required
• Regular review of compliance with health and safety policies to avoid complacency.
In the reporting period, there were a total of four (4) Lost Time Incidents (“LTI”) and only minor accidents that did not
generate any extensive harm. These accidents were taken care of with first aid and medical treatment.
SAFETY STATISTICS
MEASURE
2022
2021
2020
2019
2018*
Total hours worked
Hours
Number of fatalities
Number
Fatal injury
frequency rate
Number of fatalities
per 1,000,000 hours
worked
Lost-Time Incident
("LTIs")
Number
Lost-Time Injury
Frequency Rate
("LTIFR")
Number of lost time
incidents in the year
per million hours
worked
Medical Treatment
Incident ("MTIs")
Total recordable cases
(fatal injuries + LTIs
+MTIs)
Number
Number
Total Recordable
Injury Frequency
Rate ("TRIFR")
Number of
recordable injuries
or illness per one
million hours worked
1,615,430
1,458,115
1,252,753
781,198
354,972
0
0
4
0
0
2
0
0
2
0
0
2
0
0
1
2.48**
1.37
1.60
2.56
2.82
3
7
12
14
3
5
4
6
7
8
4.33
9.60
3.99
7.68
25.35
*
Total Hours Worked reported for FY2018 includes data from Cascabel from 1 July 2017-30 June 2018 and for the exploration projects from
1 January 2018 – 30 June 2018 only. Data was not recorded prior to January 2018 for exploration projects.
** LTIFR increased in FY2012 due to incidents requiring employees to take days off from work.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
67
STRATEGIC REPORT S U S T A I N A B I L I T Y R E P O R T
C O N T I N U E D
The reported incidence of occupational illness for employees in 2022 was 0, demonstrating our strong commitment to
protecting employee health.
OCCUPATIONAL HEALTH
MEASURE
Number of health examinations
conducted
Number
Percentage of employees covered
by health insurance
Rate of absenteeism
(Regional only)**
%
%
2022
732
100
2.01
2021
2020*
2019*
2018*
1,177
100
0.45
523
100
0.04
197
100
0
6
100
0
Inhalable hazards and carcinogens
121
131
381
370
Total number of workers at risk
of exposure to inhalable hazards
and carcinogens
Workers potentially exposed
to inhalable hazards above
the exposure limit
Workers potentially exposed to
carcinogens above the exposure
limit
Number
%
%
Total number of workers at risk
of exposure to noise
Number
Workers potentially exposed
to noise above 85 dB(A)
61
0
0
Noise
214
0
0
0
107
0
Diseases related to inhalable hazard
and carcinogen exposure
Illness related to noise exposure
Diseases related to other health
hazard exposure
* Regional Project in Ecuador only.
New cases of occupational diseases
0
0
0
0
0
0
0
0
0
0
117
62
0
0
0
0
0
0
0
0
0
0
51
0
0
0
0
** Absenteeism appeared higher in FY2022 as previously total absenteeism was not registered. As of FY2022 and going forward, total absenteeism will
be registered.
68
Our communities
SolGold is committed to the well-being of our host communities. We actively engage with our communities to establish
solid and constructive relationship management of the environmental and social impacts.
SolGold has always placed the highest importance in creating and maintaining open, respectful, proactive and productive
relations with all the communities living in the areas within which SolGold operates. We are committed to making a positive
impact on all our stakeholder groups, especially our communities, indigenous groups, and local authorities. This is achieved
by:
• Generating positive community relations
• Understanding that the positive relationship is based on SolGold knowing and recognising the social environment in
which it is going to carry out its activities
• Delivering transparent information to the communities about the Company’s developments so that the community can
participate in making decisions that may affect their environment.
During the reporting period, SolGold has not had the need to relocate individuals or communities to carry out advanced
exploration and economic evaluation of the deposit.
SolGold is governed by strict compliance with Ecuadorian laws. Therefore, classifying a host community is based on the
area of influence given in the Complementary Environmental Impact Study for the advanced exploration phase of metallic
minerals of the Cascabel Mining area, which was most recently approved by the MAATE dated May 29, 2022.
PARISH
AREA INFLUENCE
COMMUNITIES
PEOPLE
FAMILIES
Direct influence
LITA
Parambas
Getzemani
Santa Cecilia
y el Carmen
Santa Rita
La Esperanza
del Rio Verde
Sub total
Without influence Other
Direct influence
LA
CAROLINA
Total parish
San Pedro
Rocafuerte
Collapi
Urbina
Sub total
Without influence Other
Total parish
325
322
259
141
73
1,120
2,754
3,874
528
294
131
108
1,061
2,339
3,400
98
88
79
41
48
354
810
1,164
688
103
46
29
866
1,021
1,887
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
69
STRATEGIC REPORT
S U S T A I N A B I L I T Y R E P O R T
C O N T I N U E D
Community safety
SolGold is committed to protecting host
communities and going beyond what
is expected from a company to protect
local residents and create a safety
culture for citizens within our areas
of influence. We are focused on the
following areas of community
protection:
• Risk prevention: Prevention
campaigns are developed to alert the
community to the risks of landslides,
river floods, and construction
• Community Environmental
Observatory: Groups made up of
members of the communities to
monitor water and soil quality and
share results with the members of
their communities
• Activities COPAE: Chaired by the
Presidents of the Local Authorities
in Lita and La Carolina, support
technical groups to work on road
risk prevention, geological faults,
and health emergency
• Domestic violence workshops: With
the support of professionals from
the Imbabura Provincial Government,
workshops have been held in the
communities of Lita and La Carolina
• Alcohol consumption campaign:
Together with the Health Centres
of Lita and La Carolina, prevention
workshops were held in the campaign:
“I say NO to Alcohol, Take Control”
• Culture and sports activities: Sports
cooperation agreements, with the
collaboration of a soccer coach and
cooperation with sports supplies for
the Lita and La Carolina communities.
Promotion of local dance groups
and cooperation with traditional
costumes and a dancing coach
Click Here for SolGold's
Grievance, Complaints &
Disputes Policy.
70
DEVELOPING COMMUNITIES
THROUGH BEEKEEPING
12 families
The objective of this honey
initiative is to promote the
development of communities
through beekeeping. The
beneficiaries include 12 families
of the local parish governments
of Lita and La Carolina.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
71
S U S T A I N A B I L I T Y R E P O R T
C O N T I N U E D
Local job creation
Our communities are a very important factor to the long-term success of each
project, and we recognise that, in order to contribute to a sustainable social and
economic environment, employing and empowering local people is vital. Our job
creation opportunity goals are focused on:
•
Improving geological, project and community-based opportunities for women
• Further inclusiveness of vulnerable groups as well as the LGBTQ+ community
• Creating opportunities for community members for sustainability initiatives
• Reliable, long-term provider of thousands of jobs across exploration,
development and production and throughout the life of our mine(s)
• Equal opportunity employer, harnessing and developing local talent.
OPERATIONS WITH
COMMUNITY PARTICIPATION
Local Employment
Local Supervisors
2022
395
56
2021
409
73
2020
363
60
2019
479
66
2018
354
67
Socioeconomic development
SolGold understands that socioeconomic development is a key driver of growth to
improve the wellbeing of the local population through economic and social means.
Economic and social development are two out of the three pillars of sustainable
development, that are at the heart of all our operations. The third pillar being
responsible stewardship of the environment:
• Economically, these include the generation of local employment, skills building
and promotion of microenterprises. In the case of mining, the Ecuadorian legal
regime provides for the local governments and communities to benefit from
the mining royalties directly to enhance their development
• Socially, these include improvements in access to education, security, health,
respect for culture, and promotion of human rights.
SolGold aims to contribute to each of these important drivers with respect for the
laws of the Ecuadorian state and local government agencies responsible for the
social and economic development of the communities.
SolGold has guidelines for the socioeconomic development programmes in local
communities. These guidelines require the initiative to:
• Align with Ecuadorian legal regulations, in accordance with the Environmental
Management Plan approved by the MAATE, and in accordance with the Local
and Community Development Plans
• Focus primarily on the towns in the areas of influence of the Project (Lita and
La Carolina), with special attention to the 10 communities in the area of direct
influence of the project, without affecting the rights of the others
• Ensure a community or institutional counterpart exists
• Always respect the customs and traditions of the host communities
• Obtain written authorisation of the participants
• Contemplate the follow-up and monitoring phase
• Consider a three-year plan whereby after that period it must function
on its own, independently of the mining activity.
72
COMMUNITY DEVELOPMENT
MEASURE
2022
2021
2020
2019
2018
Total spending on
socioeconomic development
Spend on corporate social
investment initiatives
Total Procurement Spend
in Ecuador
Total Procurement Spend
in the Community
US$
US$
US$
820,256
573,994
283,465
225,853
127,349
560,145
498,297
285,351
319,864
179,444
6,403,285
37,696,510
21,319,022
36,788,246
38,887,000
Number
1,082,186
3,599,375
2,464,334
3,047,254
2,531,221
Share of Procurement Spend
in Local Community
%
17%
10%
12%
8%
7%
As the data suggests, there has been a significant increase in social investment from 2020. This can be linked to the
following:
• Actions carried out by SolGold, through its subsidiary ENSA, to cooperate with government health areas to control the
spread of Covid-19 (US$74,000)
•
Implementation of community info-centres as part of the Connect Ibarra programme, the first of the three existing ones
was inaugurated as a pilot centre in the community of Santa Cecilia. These centres facilitate the access of students to the
educational platforms implemented by the Ministry of Education (US$37,745)
• Creation of an internal communication area in order to generate transparent and timely communication content adapted
to the various moments of the project (pre-feasibility stage) and groups of stakeholders who have an influence on the
Cascabel project
• Execution of cooperation agreements with the autonomous decentralised rural parish governments of Lita and
La Carolina, to act in the fields of Community Health, Education, Implementation of Productive Projects, Road and
Community Infrastructure and Social, Cultural and Sports Promotion as of the year 2021, with annual cooperation
(US$330,000).
Education and training
As SolGold continues to progress with the Cascabel Mining Project, the Company plans to continue its commitment to
maximise job opportunities for local people living in communities close to the project site. The work the Company is doing
to plan for future resource and skills forms a significant part of our People & Culture Strategy with several initiatives planned
as part of our broader People & Culture roadmap.
Given the ambitions for Cascabel, in addition to ongoing exploration and other projects, there is a practical need to plan and
prepare for the workforce of the future. This will involve the identification and analysis of what experience and knowledge
we need to achieve our objectives. SolGold is committed to continuing to provide an inclusive work environment which is
supportive of differences and encourages full participation of all employees. The Company recognises that the differences
our people bring to the workplace add to its strength. SolGold believes that strong community relations are fundamental
to creating a safe, sustainable, and successful operation.
We envisage a well-structured and creative education and training programme that shapes individuals from the start.
A state-of-the-art operating procedure will be developed and through a type of academy or centre of learning, we will
transition the skills and behaviours needed to successfully build and operate the mine. Considerable work will be needed
to structure the approach to training including alignment with local schools and universities. This includes analysis of
strategies to increase participation of historically under-represented groups, such as women and indigenous peoples.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
73
STRATEGIC REPORT S U S T A I N A B I L I T Y R E P O R T
C O N T I N U E D
FARMERS BENEFITTED
Agromujeres 2019
Coffee Cascabel 2010 – 2022
MAG Convention 2018 – 2021
Agroforestry Farms 2013 – 2022
Value added
Bakery Cascabel 2018 – 2022
Gardening Group Parambas/San Pedro 2021
Golden Miel 2019
Restaurant Rocafuerte 2019 – 2021
Chicken Raising 2019 – 2021
Total
Adaptation of Educational Centres
Community Computer Centres
Adaptation of Child Care Centres
Training
University Scholarships
Total
SOCIOECONOMIC
INVESTMENT
EDUCATION
AND TRAINING
BENEFICIARIES
8
36
378
1,320
8
20
11
10
212
2,003
1,790
700
225
94
4
2,813
GROUP
Women
Farmer
Farmer
Farmer
Women
Farmer
Women
Women
Farmer
Students
Students
Children
Workers
Students
The projects and programmes established during the year ended 30 June 2022 will be maintained in the following period
as long as the Cascabel project continues receiving strong support from the host communities.
Healthcare in the community
SolGold is committed to exploring
initiatives that positively impact the
local communities’ access to healthcare,
as well as initiatives that will aid the
communities in times of health crises.
These include:
• SOCIAL IMPACT: Emotional impact
on communities, return of families
and migrants from the city to the
countryside
• HEALTH IMPACT: The insufficient
health coverage that the Lita and
La Carolina parishes have, both with
supplies, equipment and medical
personnel, became more evident
• ECONOMIC IMPACT: The pandemic
has caused many members of the
communities to lose their jobs, local
businesses have been experiencing
losses, payment for the agricultural
products of the sector does not
allow the farmer to generate profit
• EDUCATIONAL IMPACT: The
mechanism of teaching classes
virtually in the rural sector has
caused an irreparable delay in
a large percentage of the student
population. Children and young
people do not have adequate
technological equipment to
receive these classes.
SolGold, through its subsidiary
ENSA, has actively intervened in the
communities, with the permission of
the Cantonal Government of Ibarra,
Ministry of Health, together with the
local government authorities through
co-operation agreements to help
combat these issues identified. SolGold
has positively contributed US$74,000
in the last reporting period with:
•
Informative-educational campaigns
• Vaccination campaigns and medical
brigades in communities
• Provision of medical supplies
•
Installation of disinfection areas
for hand washing
• Delivery of food kits to older adults
and people with special disabilities in
the parishes of Lita and La Carolina.
communities as long as they are framed
in the law and are environmentally and
socially acceptable. To this end, the
grievance mechanism for complaints,
claims and requests for information has
been developed, among others, which is
available through various means for our
communities and other stakeholders.
"SolGold wants Ecuadorians to be
proud of what we are doing and
how we are doing it. We want to help
Ecuador to become the next copper
frontier enabling the world to transition
to a net zero future by building the
lowest carbon footprint copper mines
on the planet. We want to do this in
a way where all stakeholders benefit
and can contribute recognising that
transparency is key to building
long-term trusting relationships.”
Community engagement
The key to acquiring and maintaining
a social licence to operate is through
communication, engagement,
consultation, and education with local
stakeholders. SolGold is continuously
engaging with communities to resolve
conflict and improve external
relationships. Dialogue is a constant
learning process through which the
Company reports on developments
and welcomes suggestions of the
Darryl Cuzzubbo
Chief Executive Officer
This report has been produced in line
with GRI Principles to enable effective
disclosures regarding SolGold’s
sustainable practices, promoting
informed decisions and understanding
of carbon-related assets within our
systems.
74
N O N - F I N A N C I A L I N F O R M A T I O N S T A T E M E N T
This section constitutes the Company’s Non-Financial Information Statement, which was produced in compliance
with Sections 414CA (1) and 414CB (1) of the Companies Act 2006. Information incorporated by cross reference.
REQUIREMENT
RELEVANT POLICIES AND STANDARDS
OUTCOMES AND ADDITIONAL INFORMATION
PAGE
Environmental
Matters
Environmental Policy
Protecting our natural environment
Code of Conduct
Bullying, Harassment &
Discrimination Policy
Employees
Equity, Diversity & Inclusion Policy
Grievance, Complaints & Disputes
Social
Matters
Procurement Policy (currently in draft)
This policy outlines the governance of the conduct
of our employees, contractors and suppliers
This policy highlights our commitment to maintaining
a work environment which ensures the respect for
all individuals, regardless of their age, race, gender,
religion
This policy recognises that a diverse and talented
workforce is a competitive advantage and to consider
highly qualified individuals at all stages of employment,
while considering criteria to promote diversity
including race, sex, religion, ethnic origin, and disability
Procedure for dealing with complaints, claims and
requests for information by employees and host
communities
Page 56
Page 89
Page 65
Page 66
Page 70
Code of Conduct
Grievance, Complaints & Disputes
This policy outlines the governance of the conduct
of our employees, contractors and suppliers
Page 89
Procedure for dealing with complaints, claims and
requests for information by employees and host
communities
Page 70
Human
Rights
Human Rights Policy
(currently in draft)
Modern Slavery Statement
(currently in draft)
Supplier Code of Conduct
(currently in draft)
Anti-Bribery and Anti-Corruption
Policy
This policy highlights our zero-tolerance approach
to bribery and corruption
Page 89
Anti-Bribery
and Anti-
Corruption
Whistle-blower Policy
Code of Conduct
Supplier Code of Conduct
(currently in draft)
This policy emphasises our commitment to compliance
with laws, regulations, and the Company's own
business and ethics policies
Page 89
This policy outlines the governance of the conduct
of our employees, contractors and suppliers
Page 89
Description of principal risks relating to matters above
Risk management
Description of business model
Description of non-financial KPIs
Business model
Key performance indicators
Pages 40-46
Pages 14-15
Pages 19-21
We are committed to introducing a comprehensive list of policies to protect our environment, our people and our communities,
as evident in the list of policies above. We are also developing policies that focus on Human Rights, Indigenous People, and
Procurement and look forward to implementing these across our business in 2023 as well as preparing our TCFD Statement
(Task Force on Climate-Related Financial Disclosures) which is a requirement for all UK companies to disclose the impact of
climate change on their business.
The Strategic Report was authorised for issue and signed on behalf of the Directors by:
LIAM TWIGGER
Chair
28 September 2022
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
75
STRATEGIC REPORT C H A I R ’ S I N T R O D U C T I O N
LIAM
TWIGGER
Chair
Dear Shareholders,
I am pleased to present the Corporate Governance Report for the financial year
ending 30 June 2022.
In my Chair Review, I have commented
on the Company’s overall business
performance. As Chair, I take
responsibility for overseeing SolGold’s
corporate governance in earnest. In this
letter, I want to highlight the Board’s
commitment to strong governance
and the work of the Board and its
committees (“Board Committees”) and
more specifically, I want to draw your
attention to our sustained commitment
to becoming fully compliant with the
U.K. Corporate Governance Code
(the “Code”).
UK Corporate Governance Code
Since my last review in the 2021 Annual
Report, SolGold has complied with all
the provisions of the Code except in
those areas outlined on pages 78-79.
We have comprehensively reviewed,
updated, and implemented several
policies and procedures in identified
areas, in addition to our sub-committee
terms of reference, on our pathway to
voluntary compliance with the Code.
It is also important to note that the
Company is also subject to various
corporate laws and regulations in
Canada and Australia due to being
an issuer on the TSX, and a registered
foreign corporation and tax resident
in Australia.
Board Membership
As you would have read, the end
of 2021 brought the successful
appointment of Darryl Cuzzubbo as
Executive Director to the Board and
Chief Executive Officer and Managing
Director to the Company. This was a
result of an externally led search,
which was overseen by the Nomination
Committee who faced the difficult task
of identifying a leader to facilitate the
delivery of our strategic plan.
Darryl has taken the helm at a critical
time, with the release of the PFS in April
of this year, and brings a valuable skill
set in project development, construction
and management. I would like to, again,
thank Keith Marshall who took on the
role as Interim CEO and gave the
Company stability during the
recruitment process.
Effective Committees
I am grateful to the Chairs of the
Board Committees for the work
they have done in carrying out their
responsibilities and the commitment
they have made to delivering SolGold’s
strategy in good governance: Kevin
O’Kane for the Nomination and
Remuneration Committees and Elodie
Grant Goodey for the Audit and Risk
Committee and Health, Safety,
Environment, and Community
Committee. I am grateful to Elodie
for her work as Senior Independent
Director.
Conclusion
I have had the privilege to meet several
of our investors in my annual AGM
roadshow, at industry conferences
and on calls. My thanks go to all our
shareholders for their ongoing support
and to the members of the Board for
their continued commitment to SolGold
and ensuring the future success of
the Company for the benefit of all
our stakeholders and shareholders.
LIAM TWIGGER
Chair
28 September 2022
“In a pivotal year for
SolGold, the Board has
continued its focus on
the formulation and
implementation of our
strategy through good
corporate governance.”
76
O V E R V I E W
Shareholders
Board of Directors
Audit & Risk
Committee
Remuneration
Committee
Nomination
Committee
Strategy
Committee
Health, Safety,
Environment
& Community
Committee
Executive Management
The Board of Directors
The Board is responsible for ensuring
SolGold’s long-term success and
making critical decisions.
The matters reserved for the Board
are available on the Company’s website,
in the Corporate Governance Charter
(https://www.solgold.com.au/investors-
center/#gov).
The Board has a schedule of matters
and responsibilities specifically
reserved to itself, the main items
of which include:
• CEO appointment and determination
of the terms of the appointment
• Strategy, annual budget, balance
sheet management and funding
strategy
• Approval of the published financial
results and other external and
regulatory reporting
• Performance assessment of
Executive Directors against its
strategic goals and financial plans
• Establishment / approval /
maintenance of corporate policies,
including Corporate Governance
• A lead role in the function of
various Board Committees
• Determination of commitments,
acquisitions, and divestments
within specified limits
• Overview of risk management
initiatives and reporting protocols
• Consideration of material contracts
and transactions not in the ordinary
course of business
• Health and safety of our employees
through monthly reporting of KPIs
to the Health, Safety, Community
and Environment Committee
• Monitoring investor sentiment
regularly and engaging frequently
with the Group’s major shareholders
• Approval of treasury policy and
significant financing arrangements
• Approval off the allotment of
equities and other financial
instruments.
Outside the formal schedule of matters
reserved for the Board, the Chair and
Non-Executive Directors make
themselves available for consultation
with the executive team as often
as necessary.
Major Board Decisions
• Appointment of new CEO,
Darryl Cuzzubbo
• Approval to release the PFS
for the Cascabel project
• Review of the appropriateness of
incentive calculations and awards
to employees
• Establishing a strategy committee
• Determining the remuneration
framework and incentive policies
for Directors, Executives and
Management
• Application of the principles and
provisions of the UK Corporate
Governance Code
• Company restructure with the
majority of Executives based
in the Brisbane Head Office.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
77
CORPORATE GOVERNANCE C O R P O R A T E G O V E R N A N C E S T A T E M E N T
SolGold is subject to the Canadian National Policy 58-201 – Corporate Governance Guidelines as a requirement of listing
on the Toronto Stock Exchange (“TSX”) and the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority as a requirement of listing on the London Stock Exchange (“LSE”). We voluntarily
make a commitment to meet the standards required under the UK Corporate Governance Code 2018.
As SolGold is a standard listing on the LSE, we are not required to comply with the Code, as per the Financial Conduct
Authority’s (“FCA”) Listing Rules. However, the Board has made a commitment to voluntarily meet the principles of the
Code expected of a premium listing to continue the acceleration of SolGold’s corporate governance and strategic goals.
The Code is available to view on the Financial Reporting Council’s website (www.frc.org.uk).
The Code gives SolGold a chance to report against a list of principles and provisions to our stakeholders to illustrate our
improvements and compliance within our governance structures and implementation. SolGold is eligible for exemption
from the FCA’s requirements relating to corporate governance disclosures, however the Directors have decided to provide
such disclosures which are set out below.
Compliance with the UK Corporate Governance Code 2018
As a Company with a standard listing on the London Stock Exchange, SolGold plc is not required under the FCA
Listing Rules to apply the Principles and comply with the Provisions of the Code, which is available on the FCA website
(www.fca.org.uk). However, the Company decided to voluntarily adopt the UK Code in FY2021 to adhere to the highest
standards of corporate governance. Prior to reporting according to the UK Code, SolGold plc reported according to the
Quoted Company Alliance Corporate Governance Code (“QCA Code”) which is recognised as being suitable for growth
companies. The Company is however subject to Canadian National Policy 58-201 – Corporate Governance Guidelines
through the financial period to 30 June 2022 by virtue of its listing on the TSX and is in compliance with the guidelines.
For the period up to 30 June 2022, the Company was compliant with the UK Code with the following exceptions:
PROVISION OF THE CODE
(INCLUDING REFERENCE NUMBER)
Provision 5: Engagement with
workforce using one of the
prescribed methods.
The Board has currently not
specified one of the three
methods of engagement
with the workforce set
out in the UK Code.
NON-COMPLIANCE
REASON FOR NON-COMPLIANCE
COMPLIANCE OR
PROGRESS TOWARDS
COMPLIANCE
Relationship dynamics
between the Board
and stakeholders are
considered during
decision-making at
Board and Committee
levels. The Board intends
to formalise one of the
recommended schemes
during FY2023.
The Board will review
the balance of the
Nomination Committee
in FY2023.
All Directors will
offer themselves
for re-election at the
Company’s 2022 AGM.
The Company will
then comply with this
provision of the Code.
The Company will review
a succession plan for the
Board in FY2023.
The Board does however already
engage with the workforce in
a number of ways. In FY2022
a Chief People Officer was
appointed, and a Culture Review
was conducted by an external
independent organisation.
Following the result of the
review we will make progress
towards finding the best method
of further engaging with the
workforce. Key stakeholder
interests and matters set out
in s172 of the Companies Act
2006 are considered in Board
discussions and decision
making. Our s172 disclosure
can be found on page 48.
Following the dissent vote
against Mr. Mather at the AGM in
2020 as CEO, and in order not
to destabilise the central
management of the Company,
the Board determined not to
recommend that all of the
Directors retire and offer
themselves for re-election
in FY2021 as noted in the
Chair’s statement in the
2021 Annual Report.
Consideration around Board
succession is underway but is
not as detailed nor structured
as the Executive Committee
critical role succession plan
in place at the moment.
Provision 17: A majority of members
of the Nomination Committee should
be independent Non-Executive
Directors. The Chair of the Board
should not chair the committee
when it is dealing with the
appointment of their successor.
Provision 18: All Directors should be
subject to annual re-election.
During FY2022 only half of the
Nomination Committee were
independent Non-Executive
Directors, including the Chair.
The Company departed from
the Code at the 2021 AGM up
until 31 December 2021 as the
Board members were elected
on a three-year rotation.
Provision 23: The process used
in relation to appointments, its
approach to succession planning
and how both support developing
a diverse pipeline.
The Company does not currently
have a succession plan process
for the Board.
78
PROVISION OF THE CODE
(INCLUDING REFERENCE NUMBER)
Provision 29: The Board should
monitor the company’s risk
management and internal control
systems and, at least annually, carry
out a review of their effectiveness
and report on that review in the
annual report. The monitoring
and review should cover all
material controls, including
financial, operational and
compliance controls.
NON-COMPLIANCE
REASON FOR NON-COMPLIANCE
The Board has not been involved
in a review of operational and
compliance controls but has
been involved in a review of
financial controls.
Provision 32: Before appointment
as chair of the Remuneration
Committee, the appointee should
have served on a remuneration
committee for at least 12 months.
Kevin O’Kane is the Chair of the
Remuneration Committee but
did not serve at least 12 months
prior to his appointment on
a Remuneration Committee.
At the start of 2021 Keith
Marshall assumed the acting
CEO role and stepped down
as Chair of the Remuneration
Committee at which point Kevin
O’Kane assumed the Chair role.
COMPLIANCE OR
PROGRESS TOWARDS
COMPLIANCE
The Company will
undertake a review
of the effectiveness of
all material controls in
FY2023 and monitor
these as well as the risk
management framework
on an ongoing basis. The
Company will report on
this monitoring and
review in the 2023
Annual Report.
The Company will review
the structure of the
Remuneration
Committee in FY2023.
Provision 36: Remuneration
schemes should promote long-term
shareholdings by executive directors
that support alignment with long-
term shareholder interests. Share
awards granted for this purpose
should be released for sale on a
phased basis and be subject to a
total vesting and holding period of
five years or more. The remuneration
committee should develop a formal
policy for post-employment
shareholding requirements
encompassing both unvested
and vested shares.
SolGold were only partly
compliant with Provision 36.
Whilst the Company promotes
an LTIP for Executive Directors
to create long term value for
shareholders with a holding
period of no less than 5 years,
a formal policy for post-
employment shareholding
requirements only came into
effect in FY2023 following
the successful vote of the
Remuneration Policy by
shareholders on 30 June 2022.
The Company drafted a new
Remuneration policy in
FY2022 that was accepted
by shareholder vote at year
end on 30 June 2022.
The Long-term
Incentive Plan rules
that came into effect
on 1 July 2022 make
the Company compliant
with Provision 36.
Provision 41: There should be a
description of the work of the
Remuneration Committee in the
annual report, including: reasons why
the remuneration is appropriate using
internal and external measures,
including pay ratios and pay gaps.
Diversity and Inclusion Targets
SolGold currently does not
have pay ratios nor grading
completed.
We have secured an external
consultant, Korn Ferry, in
Ecuador to support the review
and grading of our roles and
train us in grading methodology
so we can continue to maintain
the process on an ongoing basis.
The Board will provide
an update on its actions
to address this Provision
in FY2023.
In accordance with the new disclosure requirements under FCA Listing Rules 14.3.33, as at 30 June 2022, 29% of the
individuals on the Board are women, Elodie Grant Goodey and Maria Amparo Albán. The senior position of Senior
Independent Director is also held by Elodie Grant Goodey. Further information regarding the application of the
Company’s diversity policies can be found in the Board sub-committee reports, found on pages 65-66 and 79-80.
Board gender split
Women
29%
Men
71%
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
79
CORPORATE GOVERNANCE C O R P O R A T E G O V E R N A N C E S T A T E M E N T
C O N T I N U E D
Gender identity reporting (at 28 September 2022)
Men
Women
NUMBER OF
BOARD
MEMBERS
PERCENTAGE OF
THE BOARD
NUMBER OF
SENIOR
POSITIONS ON
THE BOARD
(CEO, SID
AND CHAIR)
NUMBER IN
EXECUTIVE
MANAGEMENT
PERCENTAGE OF
EXECUTIVE
MANAGEMENT
5
2
71%
29%
2
1
5
1
80%
20%
Ethnic background reporting (at 28 September 2022)
White British or other White
(including minority-white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified/prefer not to say
NUMBER OF
BOARD
MEMBERS
PERCENTAGE OF
THE BOARD
NUMBER OF
SENIOR
POSITIONS ON
THE BOARD
(CEO, SID
AND CHAIR)
NUMBER IN
EXECUTIVE
MANAGEMENT
PERCENTAGE OF
EXECUTIVE
MANAGEMENT
6
1
–
–
–
–
86%
14%
–
–
–
–
3
–
–
–
–
–
4
–
2
–
–
–
67%
–
33%
–
–
–
80
Further details of the way the Code has been applied can be found in the following pages;
Promoting the long-term sustainable success of the Company
Purpose, values, strategy and culture – we have conducted
an extensive analysis of the Company in FY2021/22
Board Leadership and
Company Purpose
Resource availability to meet Company objectives and measure
performance, including the assessment and management of risk
Pages 87-89
Responsibilities to shareholders and stakeholders
Policies and procedures are consistent with Company values,
demonstrate the right to speak up
Leadership responsibilities from the Chair and effectiveness
Board Composition – the Board maintains the appropriate balance of
Executive and Non-Executives and demonstrates diversity amongst
skills, experience and abilities
Time management for Non-Executives to ensure the Board is offered
analysis, expert opinion, strategic guidance and to hold management
to account
Board is provided with sufficient resources to manage the Company
effectively and efficiently
Board appointments and succession plan to ensure diversity of
gender, social and ethnic backgrounds and personal strengths
Board has a sufficient combination of skills, experience and
knowledge
Evaluation of the Board to ensure strategic objectives met
Internal and external audit functions are independent and effective
Pages 91-93
Pages 94-95
Division of Responsibilities
Composition, Succession
and Evaluation
Audit, Risk and
Internal Control
Ability to present a fair, balanced and understandable assessment
of the Company’s position and prospects
Page 96
Efficient procedures to mitigate risk, manage internal control
framework and determine the extent of the Company’s risk appetite
Remuneration is designed to support strategy and promote
long-term sustainable success that is aligned with the Company’s
purpose and values
Remuneration
Formal and transparent remuneration procedures, to ensure no
Director decided their own remuneration outcome
Pages 103-117
Directors apply independent judgement and discretion when
considering performance objectives and remuneration outcomes
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
81
CORPORATE GOVERNANCE B O A R D O F D I R E C T O R S
LIAM
TWIGGER
Grad Dip Bus, BEc, CPA
DARRYL
CUZZUBBO
BEng (Mech)(Hons), MSc
(Total Quality Management),
MBA, FAICD, Wharton (AMP)
C
Chair
Appointment: June 2019
Australian
Age: 59
Career
Mr Twigger has over 30 years of experience in
the fields of investment banking and corporate
finance. He has extensive experience in
providing strategic corporate advice and in the
execution of M&A across the resource sector.
Mr Twigger is Deputy Chairperson and an
Executive Director of Argonaut Limited, a
licensed and independent, Australian based
investment banking, funds management and
stockbroking firm.
Mr Twigger was the founding principal of PCF
Capital Group which merged into Argonaut in
2021 and was central to the establishment of
Macquarie Bank’s Bullion and Commodities
division in Perth in 1995.
Mr Twigger was also formerly a Non-Executive
Director of Gold Corporation (the Perth Mint),
a position he held for 6 years.
Skills and Expertise
Strategy & Leadership, Capital Raising,
Corporate Strategy, Corporate Finance
External Appointments
Lunnon Metals Ltd
Argonaut
Executive Director CEO/MD
Appointment: November 2021
Australian
Age: 53
Career
Mr Cuzzubbo has over 30 years of experience
in roles across a variety of commodities and
geographies in both the resources and
manufacturing sectors. He has extensive
executive leadership experience in the global
resources section. His experience includes being
responsible for significant business turnarounds,
enterprise-wide transformational change
programmes and delivering major projects.
These positions also saw him lead the
development and execution of significant
breakthrough strategies by successfully
gaining the support of internal and external
stakeholders including customer organisations,
Politicians, NGOs and Community groups.
Darryl has previously held positions at Orica
and BHP.
Skills and Expertise
Strategy & Leadership, Metals & Mining,
Operations & Explorations, Corporate
Governance, Minerals Explorations,
Sustainability/ESG, Risk, Project Development
External Appointments
Arafura Resources Ltd
The Board of SolGold
leads the strategic
objectives of the Group
and is responsible for
its long- term growth.
The members of the Board have
extensive and diverse experience
in Corporate Governance, geology,
mining, strategic planning,
accounting, finance and diplomatic
relations. The Board currently
consists of seven (7) Directors,
three (3) of which are considered
independent, excluding the
Chair, and six (6) of which are
Non-Executive under the Code.
COMMITTEE MEMBERSHIP
Audit and Risk Committee
HSEC Committee
Nomination Committee
Remuneration Committee
Strategy Committee
C
Chair of Committee
82
ELODIE
GRANT GOODEY
BA (History & Politics)
NICHOLAS
MATHER
BSc (Geology)(Hons)
KEVIN
O’KANE
BsC (Applied Science)
(Mining Engineering), Cert
(Competent Boards)
C C
CC
Independent Non-Executive Director
Appointment: October 2020
Canadian
Age: 62
Career
Mr O’Kane is a mining engineer with more
than 40 years’ experience in the global mining
industry. Kevin has worked extensively for BHP
in South America and has significant executive
level operation leadership skills which he gained
from large scale copper mines, including more
than ten years at Minera Escondida.
He is fluent in Spanish and brings a wealth
of technical, operational and HSCE leadership
combined with South American knowledge
to the SolGold Board.
Mr O’Kane also currently acts as a Non-
Executive Director of NorthIsle Copper and
Gold Inc, IAMGold Corporation, Almaden
Minerals and IntelliSense.io.
Skills and Expertise
Minerals Exploration, Corporate Strategy,
Leadership, Contract Management,
Corporate M&A, Risk, Project Development
External Appointments
IntelliSense.io
NorthIsle Copper and Gold Inc
Almaden Minerals Ltd (AMM on TSX)
IAMGold Corporation (MG on TSX)
Senior Independent Non-Executive Director
Appointment: July 2020
British
Age: 49
Non-Executive Director
Appointment: May 2005
Australian
Age: 65
Career
Mrs Grant Goodey is a social performance
professional with 25 years’ experience in
societal risk assessment, social performance,
human rights, government and civil society
relations. She has a valuable track record of
managing key stakeholders at executive and
frontline levels in a FTSE100 company.
Mrs Grant Goodey was formerly Head of
Societal Issues and Relationships at BP,
leading social policy management, social
risk assessment, advocacy and stakeholder
engagement. In this role, she was responsible
for the company’s position on societal issues
such as human rights, transparency and
accountability and led the cross-functional
team that drafted business and human rights
policy, impacting communities and supply
chains in more than 100 countries.
Previously, she was a member of the board
of directors of Amerisur Resources and a
member of the FTSE’s ESG Advisory Group.
Earlier in her career, Mrs. Grant Goodey held
roles with Monitor Deloitte (formerly known
as Monitor Group) and BBC World Service
and has volunteered for a number of human
rights non-profit organisations.
Mrs Grant Goodey is fluent in English,
French and Spanish.
Skills and Expertise
Strategy & Leadership, Financial and Contract
Management, Sustainability/ESG, Risk,
Corporate Governance
External Appointments
RCF Acquisition Corp
Saltus Consulting
Career
Mr Mather has 35 years’ experience
in exploration and resource company
management in a variety of countries. His
career has taken him to numerous countries
exploring for precious and base metals and
fossil fuels. Mr Mather has focused his attention
on the identification of and investment in large
resource exploration projects. He has, during his
career, been instrumental in capital raisings of
over A$500 million and the return of A$5.7
billion to shareholders via takeovers.
Mr Mather is Founder and Managing Director
of DGR Global. He was Managing Director of
BeMax Resources NL and was instrumental in
the discovery of the world class Ginkgo mineral
sand deposit in the Murray Basin in 1998. As
an Executive Director of Arrow Energy NL until
his resignation in 2004. Mr Mather drove the
acquisition and business development of
Arrow’s large Surat Basin Coal Bed Methane
project in south-east Queensland. He was
Managing Director of Auralla Resources NL,
a junior gold explorer, before its US$23 million
merger with Ross Mining NL in 1995. He was
a non-executive director of Ballarat Goldfields
NL until 2004, having assisted that company
in its recapitalisation and requotation on the
ASX in 2003. He was also founder and Chair
of TSX-V listed Waratah Coal Inc until its
AUD$130 million takeover by Minerology
Pty Ltd in December 2008.
Skills and Expertise
Strategy & Leadership, Minerals Exploration,
Capital Raising, Corporate Strategy,
Financial and Contract Management,
International Business
External Appointments
DGR Global (ASX), Armour Engergy (ASX)
New Peak Metals (ASX)
Aus Tin Mining (ASX)
Lakes Blue Energy (ASX)
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
83
CORPORATE GOVERNANCE Board changes during FY2022
Mr Darryl Cuzzubbo was appointed
Executive Director on 16 November
2021 and CEO/Managing Director
of the Company on 1 December 2022.
Mr Brian Moller was not re-elected
to the Board on 15 December 2021.
Mr Jason Ward resigned from the
Board on 13 May 2022.
Mr Keith Marshall stepped down from
his Interim CEO Role on 1 December
2021 and resigned from the Board
on 12 August 2022 (FY2023).
B O A R D O F D I R E C T O R S
C O N T I N U E D
MARÍA
AMPARO ALBÁN
JD, MEcLaw, SIPA, Cert.
Business Excellence
JAMES
CLARE
BA(Hons), LLB
Independent Non-Executive Director
Appointment: October 2020
Ecuadorian
Age: 53
Non-Executive Director
Appointment: May 2018
Canadian
Age: 46
Career
Mr Clare is a partner at Bennett Jones LLP,
one of Canada’s leading corporate law firms.
He is a corporate and securities lawyer with
extensive experience in the mining sector both
domestically and internationally. Mr Clare is
recognised by Lexpert as a leading mining
lawyer in Canada, and repeatedly recommended
for his experience in mining, corporate finance
and securities law by the Canadian Legal
Lexpert Directory.
Mr Clare also currently acts as a Non-Executive
Director of PJX Resources Inc, Riverside
Resources Inc and Canstar Resources Inc.
Mr Clare was involved with SolGold’s TSX
listing process and provides ongoing legal and
corporate advice to the Company in relation to
its Canadian regulatory and business matters.
Skills and Expertise
Legal, Capital Raising, Strategy & Leadership,
Corporate Strategy, Contract Management,
Corporate M&A
External Appointments
PJX Resources Inc
Riverside Resources Inc
Canstar Resources Inc
Career
Mrs Albán was appointed Non-Executive
Director on 21 October 2020 and has more
than 25 years’ experience in international trade
and sustainable development, particularly
environmental compliance. María has worked
in a number of countries and was instrumental
in the Free Trade Agreement negotiation
between Ecuador and the United States
on environmental matters.
María has served as an advisor to Ecuador’s
Trade Ministers, Ministry of Environment, United
Nations Environmental Programme (among
others) and was the founding partner of the
Inter-American Institute for Justice and
Sustainability (“IIJS”). She is a lawyer by
background and has taught international
trade negotiation, sustainable development and
environmental law for over a period of ten years.
María’s Ecuadorian experience and knowledge
will provide exceptional value to the SolGold
Board during permitting and fiscal agreement
negotiations in Ecuador.
Skills and Expertise
Strategy & Leadership, Financial Management,
Contract Management, Sustainability/ESG,
Legal, Risk, Corporate Governance
External Appointments
ACD Consulting Cia. Ltda
COMMITTEE MEMBERSHIP
Audit and Risk Committee
HSEC Committee
Nomination Committee
Remuneration Committee
Strategy Committee
C
Chair of Committee
84
E X E C U T I V E M A N A G E M E N T T E A M
DARRYL
CUZZUBBO
BEng (Mech)(Hons), MSc
(Total Quality Management),
MBA, FAICD, Wharton (AMP)
KEITH
POLLOCKS
Chartered Treasurer (MCT),
CPA, CFTP, M(Comm), B(Bus)
TANIA
CASHMAN
MBA, GradDip HR/IR, BA
Managing Director / Chief Executive Officer
Group Chief Financial Officer (Interim)
Chief People Officer
Career
See page 82 for information.
Career
Mr Pollocks has extensive international
experience leading global finance functions
for a range of public and private multinational
companies predominantly across banking,
infrastructure, resources, and mining.
Career
Ms Cashman became SolGold’s Chief People
Officer and member of the Executive
Committee on 10 January 2022 with
responsibility for the Company’s People
& Culture Strategy and Function.
Throughout his career he has held various
senior finance and commercial management
roles in Australia, Europe, US and Asia and
specialised in capital raising, mergers and
acquisitions, financial risk management,
investor relations and strategic transformation.
As a Senior Executive with over 25 years’
experience in global resources, Ms Cashman
has expertise in Human Resources,
Organisation Design, Process Design, Business
Transformation, Change Management, and
Program Delivery.
Keith started his career with Shell International
and has recently held CFO roles at Victory
Offices (ASX: VOL), Kasbah Resources
Limited (ASX: KAS) and Newcastle Coal
Infrastructure Group.
Starting her career in Human Resources,
Ms Cashman has most recently held executive
level roles as VP HR Excellence and VP
Transformation at Orica and previously
as VP Program Delivery at BHP.
He is a Chartered Corporate Treasurer
and Certified Practicing Accountant.
At BHP, Ms Cashman developed and led
multi-disciplinary project teams (500+) and
managing significant budgets (250m+) to
successfully delivery large scale business and
technology change.
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85
CORPORATE GOVERNANCE E X E C U T I V E M A N A G E M E N T T E A M
C O N T I N U E D
STEVEN
BOTTS
BGS, MEPM
RUFUS
GANDHI
LLB, AICD
HAROLD
'BERNIE' LOYER
BGS, MEPM
BEng(Mech), BusM
President, SolGold Ecuador
Group General Counsel and
Company Secretary
Vice President Projects
Career
Mr Gandhi is a lawyer with over 20+ years
of legal, company secretarial and corporate
governance experience working in multiple
jurisdictions including Australia, UK,
Singapore and the UK.
Prior to joining SolGold plc, Mr Gandhi
previously worked at Gladstone Ports
Corporation, as the first General Counsel and
Company Secretary. In addition to several years
as a private practice lawyer with leading law
firms, King & Wood Mallesons, O'Melveny &
Myers LLP and Slaughter and May LLP, Mr
Gandhi has previously been Senior Legal
Counsel at APA Group and ConocoPhillips
(U.K.) Limited.
Career
Mr Botts is a Senior Mining Executive, Director,
and Consultant with over 40 years of
international mining experience in the
development of mining projects, socio-
environmental management, and sustainable
development. Mr. Botts has extensive Latin
America experience, having worked in
Argentina, Brazil, Colombia, Ecuador, Mexico,
Panama and Peru. He is fluent in English
and Spanish.
Mr. Botts is a deeply experienced leader in cross
cultural and international business relations with
a proven ability at developing partnerships
and delivering projects. Notable achievements
include his leadership in the successful
permitting of the Antamina project, formation
of the Mina Justa project team and taking the
project through to a viable Feasibility Study,
and the turnaround of Tahoe Peru to a more
efficient and value-oriented organisation that
achieved safety and production goals under
very challenging circumstances.
Career
Mr. Loyer is a Project Mining Executive with
over 35 years of international mining experience
including over 20 years' in LATAM, having
worked in Peru, Mexico, Chile and Argentina.
A mechanical engineer, fluent in English and
Spanish, Mr. Loyer holds multiple patents for
the design of process and material handling
equipment.
Mr. Loyer has a proven track record delivering
large scale mining projects including Goldcorp's
Penasquito Project in Zacatecas, Mexico,
Goldcorp´s Cerro Negro Project in Santa Cruz,
Argentina and Torex Gold´s Morelos Project
in Guerrero, Mexico.
Mr. Loyer spent five years at FLSmidth Minerals
based in Copenhagen serving as Vice President,
Minerals Technology and Chief Product Officer
where he was responsible for all global
process technology, manufacturing and material
handling. Prior to that he served 15 years with
BHP Billiton, spending the last 10 years in Peru
and Chile where he held operational leadership
positions.
86
B O A R D L E A D E R S H I P A N D C O M P A N Y P U R P O S E
•
Implementing and educating the
workforce on the Code of Conduct,
in both English and Spanish
• Empowering employees to speak
out when they witness (or believe
they have witnessed) misconduct
• Encouragement and education
of the Whistle-blower Policy
• Culture review planning and
interviews
• Additional initiatives in relation to
compliance, ethical behaviour and
anti-corruption training.
The Board along with the support of
management are further committed to
assessing and monitoring the culture of
the Company in the next financial year,
with the assistance of an external
consultant.
Board activity during the year
SolGold over the past year witnessed
substantial change to the business,
being the culmination of the strategy
undertaken by the Nomination
Committee to appoint a new Chief
Executive in November 2021. Those
changes are reflected in the level
of Board activity and intensity of
committee meetings and overall
strategic direction of the Company.
The Board has been heavily focused on
the demands of the PFS, to ensure this
study was a sufficient representation
and explanation of the strategic
purpose to become a global leader
in copper discovery and development
of world class mineral deposits.
Performance in some areas, such as
the delay of the PFS, was a direct result
of the Board’s cautionary approach to
ensuring information released to the
market was completed with best
practice in mind. A summary of the
Board’s activities is available in the
table on page 88.
Board's role
The Board’s role is to provide the
necessary oversight of the Company’s
purpose, values, direction and strategic
plans through acts of leadership that
support the senior management team
to promote and achieve long-term
sustainable added value for shareholders
and stakeholders. The Board recognises
that to achieve its obligations, it
requires sound and continuously
improved Corporate Governance
practices. Over the past year, the
Board has paid particular focus on
dramatically improving and replacing
the systems of policies and procedures
that control the Company’s current
practices and providing support to
management to implement their
expectations.
The Directors’ diverse range of skills,
experience and industry knowledge,
and the ability to exercise objective and
independent judgement, are the driving
factors behind bolstering the future
success of the Company. SolGold’s
business model and strategy are set out
on pages 14-15 in the Strategic Report
and outline the basis upon which the
Company intends to generate and
preserve value over the long-term.
Purpose, culture and strategy
The Board has the goal, through
improved corporate governance
responsibility, to foster and continue
a culture of integrity to ensure that
SolGold provides a sustainable
and enduring economic, social and
environmental benefit over the long-
term to generate value for shareholders
and benefit the wider society. The
Board regularly receives feedback and
assurance from the CEO and Executive
Management that corrective action is
taken as required to align with the
Company’s purpose.
The Board is responsible for setting
the tone from the top, encompassing
the Company’s purpose and values as
a factor during any decision making.
The CEO is the agent, delegated by the
Board, to communicate this message
throughout the Company. By way of
example, the CEO and relevant Executive
Management have communicated with
all employees on a number of matters
including:
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CORPORATE GOVERNANCE B O A R D L E A D E R S H I P A N D C O M P A N Y P U R P O S E
C O N T I N U E D
BOARD RESPONSIBILITIES
ACTIVITIES
Strategic
Approve the Group’s strategy and
objectives, setting the purpose and values
of the Group, reviewing and approving
material agreements, exploration
tenements and overseeing the Group’s
operations and risk appetite statements.
Governance
Supervising the Group’s corporate policies
and procedures, including receiving
regular reports and updates from Board
Committees, reviewing and approving the
organisational structure and monitoring
compliance with the Code and Canadian
National Policy 58-201 – Corporate
Governance Guidelines.
Financial
Scrutiny and overall responsibility for
the financial affairs and controls of
the Company.
Employee and Stakeholder Engagement
Engagement with both our workforce
and local communities.
Risk
To ensure the Group acts within the
boundaries set by the Risk Appetite
Statement.
• Released the long awaited PFS of the Cascabel project to demonstrate
SolGold’s position to supporting Ecuador becoming the next
copper frontier
• Reviewed and approved the key strategic priorities for the Group
for the current Financial Year
• Received presentations from the CEO and Head of Exploration at
every scheduled Board Meeting, updating the Board on progress
against the Group’s strategic goals
• Approved the appointment of Executive Director Darryl Cuzzubbo
in November 2021
• Adoption of amendments to equity, diversity and inclusion policy,
bullying, harassment & discrimination policy, whistle-blower policy,
securities trading policy, grievance, complaints & disputes policy
• Adoption of amendments to Code of Conduct
• Voluntary compliance with the UK Corporate Governance Code 2018
• Annual reviews of Directors’ conflicts of interest and independence
of Non-Executive Directors
• Approve amendments to Directors’ Remuneration Policy
• Considered recommendations from the Audit and Risk Committee
to adopt the 2021 Annual Report and Accounts and the 2022
Half-Yearly Report and MD&A
• Review the Group’s ongoing financial position
• Review and approval of planned capital expenditure
• Review and approval of the 2022-23 budget
• Oversight of the external forensic investigation following the
identification of the misappropriation of funds in Ecuador
• Received regular updates from the HSEC Committee regarding
the work carried out for local communities and environments
• Approved employee performance incentive plans
• Invited members of the executive team and their direct reports
to attend and present at Board meetings
• Continued development and review of risk management processes
• Review of updates from the Audit and Risk Committee on internal
control and assurance functions
• The Group’s Risk Register detailing the significant and emerging
risks faced by the Group and their corresponding mitigation plans,
as reported in the Audit and Risk Committee Report (see pages
98-100 for further details)
88
In addition, the Group has cascaded a
range of policies throughout its global
operations including, but not limited to:
• Corporate & Social Responsibility
• Anti-Bribery & Corruption Policy
• Environmental Management
• Bullying, Harassment &
Discrimination Policy
• Grievances, Complaints & Disputes
Policy
• Equity, Diversity & Inclusion Policy
• Whistle-blower Policy
• Worksite Health & Safety
• Alcohol & Drugs Policy.
Go to www.solgold.com.au for
Click Here for SolGold's
Whistle-blower Policy.
SolGold's Whistle-blower Policy.
Click Here for SolGold's
Anti-bribery & Corruption Policy.
Click Here for SolGold's
Code of Conduct.
Resources and controls
The Board ensures that the necessary
resources and controls are in place to
ensure the Company is in the best
position to meet its objectives. The
Board approved the amendments to
the Ministry of the Environment
Whistle-blower Policy, including the
introduction of utilising the services
of a third party, Safecall, to provide for
any concerns to be raised in confidence,
or anonymously. This system is in place
and reports are provided to the Board
through the Audit and Risk Committee
Reports.
The Group has a comprehensive range
of policies and procedures, including a
full Corporate Governance Charter and
a Whistle-blower Policy, both available
on the Company’s website.
The Group’s Corporate Governance
Charter contains specific clauses
dealing with the Company’s:
• Code of Conduct
• Board and Management commitment
to the Code of Conduct
• Responsibilities to shareholders and
the broader financial community
• Responsibilities to clients, customers,
consumers and the broader
community
• Environmental practices
• Employment practices
• Obligations relative to fair trading.
Workforce policies and practices
All Directors have access to the advice
and support of the Company Secretary
and have the right to raise any concerns
without prejudice at Board meetings,
and additionally have these concerns
appropriately recorded in the meeting
minutes. The Board has adopted the
procedure in accordance with the UK
FRC’s Guidance on Board Effectiveness,
which permits Directors, in appropriate
circumstances, to obtain independent
professional advice at the Company’s
expense. Any firms associated with
Directors that provide professional
services will only assist where those
firms have the requisite experience or
expertise, and all fees are charged on
an arm’s length basis. Alternatively,
the Company may engage other
professional services firms to act for it
where greater expertise or expedience
may be garnered from elsewhere within
the industry.
Where a particular transaction or matter
to be resolved by the Board may involve
a potential conflict of interest of one
or more of the Directors, those parties
recuse themselves from deliberation
and voting on the matter. In some
instances, the disinterested Directors
may consent to the attendance of
the interested Director(s), and their
participation in any discussion of the
matter to be resolved, in order to
have all views considered ahead of
the matter being separately resolved
by the disinterested Directors.
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89
CORPORATE GOVERNANCE S T A K E H O L D E R E N G A G E M E N T
The Company publishes numerous
internal and external contact points at
the end of each of its market releases to
facilitate contact from all shareholders.
Conference and investor presentations,
including videos where applicable, are
made available on the Company’s
website and via its newsletter service.
The Company operates a LinkedIn
and Twitter account and has a free
newsletter subscription page available
to all interested parties on its website.
The Company’s website contains
information available to all shareholders,
potential investors and interested
stakeholders, including Key
Securityholder Information, the
Company’s Constitutional documents,
a range of its Corporate Policies and
Meeting Materials for the Company’s
last five Annual General Meetings.
The results of each shareholder meeting
are released to the market following the
conduct of the meeting, and include
in tabular form, all the proxy votes
received in relation to each resolution
put to the meeting.
The Board recognises that at the
2021 AGM a meaningful proportion
of shareholders did not support
certain resolutions relating to Director
re-election, the allotment of shares and
the disapplication of pre-emptive rights.
The Board, via Chair Mr Twigger
and Managing Director and CEO,
Mr Cuzzubbo, has consulted with a
range of the Company’s corporate
and institutional shareholders in relation
to the 2021 AGM to understand and
discuss their concerns with respect
to these resolutions. SolGold’s Board
adheres to Provision 11 of the Code
that at least half the Board, excluding
the Chair, should be Non-Executive
Directors whom the Board considers
to be independent. The Board is
committed to complying with the
Code from mid-2022, including to
Provision 18 that all Directors be subject
to annual re-election commencing from
the Company’s 2022 AGM. The Company
also intends to respect the principles
of pre-emption as far as practicable
to protect shareholders’ pre-emption
rights.
The Board also engages with and
considers wider stakeholder groups,
including the workforce, in its decision
making. More information is set out in
Section 172 on page 48.
Annual General Meeting
The AGM is the annual opportunity
for all shareholders to meet with the
Directors and to discuss with them
the Company’s business and strategy.
Shareholders can ask questions ahead
of the AGM via email or telephone.
For 2022, it is intended that the
AGM will be held as a hybrid meeting.
The notice of AGM will be posted to
all shareholders at least 21 working
days before the meeting. Separate
resolutions are proposed on all
substantive issues and voting is
conducted by a poll. The Board
believes this method of voting is more
democratic than voting via a show
of hands since all shares voted at
the meeting, including proxy votes
submitted in advance of the meeting,
are counted. For each resolution,
shareholders will have the opportunity
to vote for or against or to withhold
their vote. Following the meeting,
the results of votes lodged will be
announced to the London Stock
Exchange and displayed on the
Company’s website.
The Board aims to ensure an avenue
of communication is available and
maintained with shareholders and
stakeholders, to ensure that their
views are understood and considered.
Workforce engagement
The Board recognises that employee
engagement is the responsibility of
the whole Board. To comply with the
UK Code it is intended that in 2023 a
designated Non-Executive Director will
be given responsibility for ensuring that
the Board successfully engages with
our workforce. At present, the Board
engages with employees via site visits
and inviting key employees to attend
Board meetings. The Board also gains
insight into social dynamics affecting
the Company under the ESG mandate
of the Board. The Board monitors the
culture of the Group and its workforce
through on-going engagement,
involving site visits or participation
in quarterly townhalls with Senior
Management. In addition, the Board
reviews the results of employee surveys
which are undertaken periodically
to gauge employee sentiment and
workplace culture. In 2022, a culture
review was performed by an external
third party to appraise the Company’s
culture to ensure the values of the
Board and positive ethos is developed
further and sustained.
Shareholder engagement
SolGold regularly engages with its
major corporate and institutional
shareholders through attendance
at resource conventions and similar
industry functions. Furthermore, it
undertakes non-deal roadshows to
engage with institutional shareholders,
brokers, analysts, and potential
investors. Feedback garnered from
these processes is discussed at
Executive and Board level to ensure
investor expectations are consistently
understood. The Company also
engages in investor events and
webinars, providing the opportunity
to engage with and answer the
questions of private investors. The
Investor Relations team is contactable
by all investors and is open and
available to answer any queries.
90
D I V I S I O N O F R E S P O N S I B I L I T I E S
Chair
Liam Twigger, our Non-Executive Chair,
is responsible for leadership of the
Board, for efficient organisation and
conduct of the Board’s function and
the briefing of all Directors in the case
that they were not present at a Board
meeting. Mr Twigger leads the Board
ensuring its effectiveness, and his
role and responsibilities are clearly
delineated from the Chief Executive
Officer. Mr Twigger was first elected
to the Board on 17 June 2019 and was
considered to be independent on his
appointment as Chair in August 2020.
Chief Executive Officer
Darryl Cuzzubbo, our Executive
Director, CEO and Managing Director
reports to the Chair and to the Board
directly and is responsible for all
Executive Management matters of the
Group. Mr Cuzzubbo is also responsible
for the Company’s operational
performance and resource
management, incorporating its
operational, financial, health & safety,
and environmental conduct and
performance, as well as the
maintenance of relationships with the
Company’s broad range of stakeholders
and shareholders. Mr Cuzzubbo is
tasked with ensuring that the Company’s
organisational structure and processes
can implement the strategic and
cultural aims established by the Board.
As CEO, Mr Cuzzubbo is responsible
for the daily running of the affairs of
the Company under delegated authority
from the Board and to implement the
policies and strategies set by the Board.
In carrying out his responsibilities, he
must report to the Board in a timely
manner and ensure all reports to the
Board present a true and fair view of
the Company’s financial position and
operating results.
In the first half of the year, Keith Marshall
acted as Interim CEO until 1 December
2021. During his role as Interim CEO, he
was no longer considered independent.
However, following the appointment of
Darryl Cuzzubbo as CEO, Keith Marshall
returned to being a Non-Executive
Director. The Board heavily scrutinised
the independence of Keith Marshall as
Non-Executive Director and deemed
that following 9 months in his position
as Interim CEO his judgement was
not impaired as an independent
Non-Executive Director. Mr. Marshall has
since resigned from the Board effective
12 August 2022.
Board composition, independence,
and division of responsibilities
The composition of the Board is set
out on pages 94-95. The Board
composition is currently comprised of
seven (7) directors, of whom three (3),
excluding the Chair, are considered,
by the Board, to be of independent
judgement and character. The Board
considers that there is an appropriate
combination of Executive and
Non-Executive Directors to advocate
shareholder interests and oversee
Executive Management practices. On
16 November 2021, Mr Darryl Cuzzubbo
was appointed to the Board by
shareholders as an Executive Director.
Mr Brian Moller was not re-elected to
the Board on 15 December 2021 and
Mr Jason Ward subsequently stepped
down from the Board on 13 May 2022
and Mr. Keith Marshall returned to his
role as Non-Executive Director.
Throughout the period of Mr. Marshall’s
role as Interim CEO and subsequently,
Mr. Cuzzubbo as CEO, at least half
the Board, excluding the Chair, were
Non-Executive Directors whom the
Board considered to be independent
in compliance with Provision 10 of
the Code. The Board will continue
to regularly review and monitor
its composition and performance
having responsibility for the evolving
complexity of the Company’s activities
and operations and make changes
as appropriate. Further information
regarding the division of responsibilities
can be found on the SolGold website
in Matters for the Board (https://
www.solgold.com.au/investors-center/).
Director independence
The Board currently comprises of
three (3) independent Non-Executive
Directors, excluding the Chair, (2)
two non-independent Non-Executive
Directors and (1) one Executive Director.
Over half of the Board is considered
to be independent. The Board has
determined that the Non-Executive
Directors previously declared as
independent remain independent,
in line with the definition set out in
the Code.
The Board has heavily scrutinised
the independence of Non-Executive
Directors, Liam Twigger and Keith
Marshall. Under the Code, Mr Twigger
as Chair and Mr Marshall as interim
CEO for 9 months are all in positions
that could impair a Non-Executive
Director’s independence.
INDEPENDENT
DIRECTORS
Elodie Grant
Goodey
Maria Alban
Amparo
NON-INDEPENDENT
Liam Twigger
(Chair)
Darryl Cuzzubbo
Kevin O’Kane
Nicholas Mather
Keith Marshall*
James Clare
*
Was only independent from 1 December
2021-30 June 2022. Mr. Marshall resigned
from the Board on 12 August 2022).
The Board reviews the independence
of its Non-Executive Directors on an
annual basis and has determined that
the independent Non-Executive
Directors continue to demonstrate
ongoing objectivity of Board matters.
The Board has also concluded that
the Chair continues to demonstrate
objective judgement and to provide
constructive challenge.
After a rigorous and robust review of
each Director’s individual approach
and contribution to Board discussions,
the Board has concluded that both
Non-Executive Directors continuously
demonstrate ongoing objectivity
which, at times, included appropriate
challenges of matters under
deliberation at Board meetings as well
as constructive criticism of Executive
Management. These behaviours and
characteristics illustrate that Mr Twigger
and Mr Marshall have the requisite
integrity to hold the Executive
Management to account for managing
the delivery of the business in addition
to a breadth of experience that allows
them to provide advice on a range of
commercial issues pertinent to SolGold.
As a result, the Board has determined
that Mr Twigger and Mr Marshall are
capable of acting in the best interests
of the Company and shareholders and
are capable of exercising independent
judgement. The Board will continue to
review the independence of its Non-
Executive Directors on an annual basis.
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91
CORPORATE GOVERNANCE D I V I S I O N O F R E S P O N S I B I L I T I E S
C O N T I N U E D
Mr Nicholas Mather is not considered
independent for the purposes of the
Code having served as the CEO of
SolGold from 2005 until March 2021 as
well as having a personal shareholding
in SolGold of 3.94% and a shareholding
of 8.9% through DGR Global Limited
where Mr Mather is the Founder and
Managing Director. Mr James Clare
is not considered independent as he
is a partner in the Canadian law firm
Bennett Jones LLP that provides
legal services to the Company. These
professional services are provided
on standard arms-length commercial
terms and conditions.
According to the Code, at least half the
Board, excluding the Chair, should be
Non-Executive Directors whom the
Board consider to be independent.
At all times in FY2022 we have been
compliant with this requirement. In
the first half of the financial year until
1 December Keith Marshall was Interim
CEO, Maria Amparo Alban, Elodie
Grant Goodey and Kevin O’Kane were
independent Non-Executive Directors,
James Clare, Nicholas Mather and
Keith Marshall were non-independent
Non-Executive Directors, the Chair
is excluded. From 1 December 2022,
Keith Marshall stepped back into his
role as Non-Executive Director and
his judgement was scrutinised by the
Board and deemed independent.
Hence, there were four independent
Non-Executive Directors and three
non-independent Non-Executive
Directors and one Chair who is excluded
as per the Code. Please see Division
of Responsibilities section for more
information. Whilst the Board
considered the Chair to be independent
on appointment in compliance with the
Code, due to the Chair’s responsibilities
the FRC do not consider the Chair’s
role as independent in any other
circumstance.
Conflicts of interest
The Company’s Directors are bound by
the Articles of Association and subject
to a statutory duty to avoid a situation
where they have, or can have, a direct
or indirect interest that conflicts, or
may conflict, with the Company. The
Directors are required to notify the
Company of any conflict or potential
conflict of interest before every Board
Meeting. Any conflicts or potential
conflicts are retained in the Company’s
conflict register, maintained by the
Company Secretary.
Board committees
The Company’s Board has Committees
established in the following areas:
• Audit and Risk
• Remuneration
• Nomination
• Health, Safety, Environment
and Community
• Strategy.
The Terms of Reference for each of these Committees are set out within the Company’s Corporate Governance Charter and
are all available on the Company’s website. During the period 1 July 2021 to 30 June 2022, there were 17 Board meetings.
Directors’ attendance at Board and Committee meetings which they were eligible to attend during this period was as follows:
Liam Twigger
Darryl Cuzzubbo1
Keith Marshall2
Nicholas Mather
James Clare
Brian Moller3
Elodie Grant
Goodey
María Amparo
Albán
Kevin O’Kane
Jason Ward4
BOARD
(17)
17/17
10/10
16/17
17/17
15/17
8/8
17/17
17/17
17/17
13/14
AUDIT AND
RISK COMMITTEE
(8)
REMUNERATION
COMMITTEE
(5)
NOMINATION
COMMITTEE
(1)
HSEC
COMMITTEE
(3)
STRATEGY
COMMITTEE
(7)
3/3
3/3
8/8
8/8
5/5
5/5
5/5
1/1
1/1
1/1
1/1
7/7
7/7
6/7
6/7
7/7
2/2
3/3
3/3
3/3
2/2
1
Darryl Cuzzubbo was appointed as an Executive Director on 16 November 2021. Mr. Cuzzubbo is not a member of the ARC Committee but is invited to
attend meetings.
2 Keith Marshall became a member of the ARC Committee on 15 December 2021 and resigned from the Board on 12 August 2022. (FY2023). Kevin O’Kane
is an Interim member of the ARC since Keith Marshall’s resignation.
3 Brian Moller was not re-elected to the Board on 15 December 2021.
4 Jason Ward resigned from the Board 13 May 2022.
92
Senior independent director
Elodie Grant Goodey is the Senior
Independent Director (“SID”). Mrs Grant
Goodey acts as a sounding board for
the Chair and serves as an intermediary
for the other Directors when necessary.
In addition, the SID meets at least
annually with the Company’s Non-
Executive Directors independently of
the Chair and the Executive Directors
to appraise the Chair’s performance.
The SID is also available to the
Company’s shareholders, who may
wish to approach the Company to
discuss concerns that may not have
been addressed through other
available channels. Mrs Grant Goodey
has engaged with several major
investors during the year under review.
Company secretary
Rufus Gandhi joined the Company on
1 August 2022 as both General Counsel
and Company Secretary, replacing
Dennis Wilkins as Company Secretary
under the Company restructure.
Mr Gandhi is available as a resource to
all Directors, but particularly the Chair,
and is responsible for all matters to
do with the proper functioning of the
Board, and the maintenance of its
materials and records and certain
regulatory filings. Each Director is
entitled to access the advice and
services of the Company Secretary
as required. The Company Secretary
is responsible for the recording of
the minutes of a Board or Committee
Meeting and ensures any unresolved
concerns at a meeting are sufficiently
recorded in the Minutes. The Board
considers that it has the relevant
information, resources and time it needs
to function effectively and efficiently.
Further information about the Company
Secretary is available on page 86
(bio page).
Non-executive directors’ role
and time commitment
The Company’s Non-Executive Directors
hold, or have held, senior positions
within the corporate and/or resources
sector. The Non-Executive Directors
must exercise objective judgement
when decision making and hold
management to account. Responsible
Corporate Governance requires the
Board to critically review and monitor
the activities of Executive Management.
The Non-Executive Directors of the
Company consistently demonstrate
the attributes of sufficient time,
knowledge and skill to undertake
the responsibilities expected of a
Non-Executive Director. Non-Executive
Director performance is assessed
annually as part of the Board’s
performance evaluation.
The Non-Executive Directors have held
separate meetings throughout the year,
either before, or directly after a Board
Meeting, where the Executive Directors
were purposely excluded. These sessions
are used to raise issues and concerns
and to seek clarification without the
presence or potential influence of
management.
When making new appointments of
Non-Executive and Executive Directors,
significant commitments are disclosed
with an indication of the time involved.
Where a Non-Executive Director
contemplates taking up another
appointment, they must consult with
the Chair and seek approval from the
Board to ensure there is no detrimental
impact on their time commitment to
SolGold. Subject to Board approval,
Directors may accept external
appointments as directors of other
companies and retain any related
fees paid to them. Full-time Executive
Directors do not take on more than
one Non-Executive directorship in a
FTSE 100 company or other significant
appointment. There were no new
Non-Executive Directors appointed
to the Board in the last year, and
accordingly no external third-party
recruitment agents were engaged
to seek potential candidates.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
93
CORPORATE GOVERNANCE C O M P O S I T I O N , S U C C E S S I O N A N D E V A L U A T I O N
Board appointments and succession
The Nomination Committee, and
where appropriate the full Board,
is charged with regularly reviewing
the composition of the Board and
recommends nominations to the Board.
Appointments to the Board are subject
to a formal, rigorous and transparent
procedure, and an effective succession
plan has been approved and is in place
for Board and Executive Committee
Members.
The Nomination Committee recognises
the importance of diversity when
considering potential appointments.
The report of the Nomination Committee
is available on page 97. The Company
has a succession plan in place for the
Executive Management Team and a
detailed diversity plan (and targets)
is due to be included in the Company
Scorecard in FY2023.
Click Here to view the
Nomination Committee
Terms of Reference.
Click Here to view the Equity,
Diversity & Inclusion Policy.
Annual re-election of directors
Pursuant to Clause 18.9 of the Articles
of Association, one third of Directors
are subject to retirement and
nomination for re-election by rotation.
All Directors will be subject to
re-election at the 2022 AGM in line
with the UK Code. The Notice of
AGM will provide further details on
those Directors seeking election or
re-election.
Under the terms of the Share
Subscription Agreement ("SSA") with
Newcrest executed on 30 August 2016
and BHP executed on 15 October 2018,
the significant shareholder has the right
(but no obligation) to appoint up to one
Non-Executive Director to the Board for
so long as the Significant Shareholder
holds an interest of 10% or more in the
Company. Neither Newcrest nor BHP
have exercised the right to appoint
Directors onto the Board in FY2022.
Board skills, experience and
knowledge
Maintaining a balance of experience
and skills is an important factor in
the Company’s Board composition.
The Board is currently comprised of
seasoned industry professionals with
combined qualifications, skills and
experience as outlined in the
Nomination Committee Report.
The Nomination Committee uses the
skills matrix to record the skills and
experience of the current Board
members and conducts a gap analysis
against the skills and experience
necessary to support the Company’s
overall business and strategic needs.
A key role of the Nomination
Committee is to perform regular
evaluation on the composition of the
Board including skill-set matrices and
analysis with regards to the length of
service of the Board as a whole and the
need to refresh membership over time.
The Nomination Committee is mindful
of the tenure of the Chair and notes
that Mr Twigger has only been in the
position of Chair for just over 2 years.
Skills matrix
The Board skills matrix identifies the
skills and experience the Board needs
for the next period of SolGold’s
development, considering SolGold’s
circumstances and the changing
environment. The Board collectively
possesses all the skills and experience
set out in the skills matrix and each
Director satisfies the Board
requirements and attributes discussed
above. For more information on the
individual skills and attributes of the
Directors, refer to Board biographies
on pages 82-84. Following Keith
Marshall’s resignation from the Board
on 12 August 2022, the Board does not
have block cave mining expertise in its
skills matrix, however Keith will remain
as an external Technical Advisor to
provide block cave mining expertise
to SolGold.
94
SKILL
Executive Leadership
Strategic Planning
Mergers & Acquisitions
Communications & Investor Relations
Accounting & Audit
Corporate Financing
HR Management & Compensation
Legal, Compliance & Regulatory
Corporate Governance
Project Development
Mineral Exploration
Mining Operations
Block Cave Mining
Sustainability / ESG
Risk Oversight
Digital (including Cyber security)
LIAM
TWIGGER
DARRYL
CUZZUBBO
KEITH
MARSHALL*
NICHOLAS
MATHER
KEVIN
O’KANE
ELODIE
GRANT
GOODEY
MARIA
AMPARO-
ALBAN
JAMES
CLARE
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
* Keith Marshall resigned from the Board on 12 August 2022 (FY2023).
Board evaluation
The Company encourages and recommends each of its Directors to attend relevant external seminars, conferences, and
educational programmes for expanding their knowledge base and professional skills. The Chair conducted an internal Board
Performance evaluation this past year, as an external evaluation was conducted in the previous year. Individual Director
evaluations included one-to-one discussions on their performance, contributions and any training or concerns they may
have or need. The Senior Independent Director, Elodie Grant Goodey, held a one-to-one discussion with Liam Twigger as
Chair to provide feedback on his performance over the past year.
The internal review concluded that the Board is well-balanced in terms of dynamics and led by a fully engaged Chair.
Although many Board meetings were held via video conferencing, this still allowed for appropriate challenges and debate
amongst the Directors, without an individual controlling discussions and decision-making.
The Board will continue to focus on areas of succession planning and enhanced workforce engagement and ensuring that
it strengthens its internal audit department as well as the overall control and governance environment with a specific focus
on developing its corporate culture.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
95
CORPORATE GOVERNANCE A U D I T , R I S K A N D I N T E R N A L C O N T R O L
Internal and external audit
Risk management
While still maintaining overall
responsibility, the Board delegates
oversight of the internal and external
audit functions to the Audit and
Risk Committee. The Audit and Risk
Committee is responsible for reviewing
the relationship and independence of
our newly appointed external Auditors,
PricewaterhouseCoopers LLP (“PwC”),
and additionally is responsible for
scrutinising the integrity of the financial
statements prepared by Executive
Management to ensure the assessment
of SolGold’s position is accurately
reflected.
The Company’s Audit and Risk
Committee meets with the Company’s
external auditors, PwC, at least four
times a year. In addition, the Company
has an independent internal auditor
who provides regular reports to the
Audit and Risk Committee.
Fair, balanced and understandable
assessment
The Board and Audit and Risk
Committee are responsible for carefully
reviewing the Company’s quarterly
financial, half year and annual results
and consider that the Annual Report
and Accounts, taken as a whole, is fair,
balanced and understandable, and
provides the information necessary for
shareholders to assess the Company’s
position, performance, business model
and strategy.
The Board is responsible for the
Company’s risk management system
and internal controls, and their
effectiveness. The Board delegates
some responsibilities for risk
management oversight to the Audit
and Risk Committee, where risk is
monitored continually and formally
reviewed annually. This enables
Executive Management to review the
risk, mitigate it and implement controls
to ensure the boundaries of the
Company’s risk appetite are maintained.
Key internal control procedures,
which form part of the review of the
effectiveness of risk management
and internal control, includes:
• The Code of Conduct supported by
Company policies and procedures,
including delegations of authority
and divisions of responsibility
• Training of staff on current policies
and procedures relevant to their
position, in both Spanish and English
• Constant monitoring of business
performance, including Key
Performance Indicators
• A formal whistle-blowing policy,
with an external third-party
whistle-blowing hotline and web
submission, the results of which
are reported to the Board
• Defined controls and quality
assurance over, but not limited to,
financial reporting, and health and
safety procedures.
The Audit and Risk Committee
carried out a robust assessment of the
Company’s principal and emerging risks
and this comprehensive report of the
principal and emerging risks and how
these are managed and/or mitigated
can be found on pages 40-46.
96
N O M I N A T I O N C O M M I T T E E R E P O R T
KEVIN
O'KANE
Chair – Nomination Committee
Key objectives for 2023
The enhanced skills matrix will be
utilised to evaluate the current Board
makeup and identify gaps against
future needs, as the Company
transitions from an exploration only
focus to project development and
ultimately operations. A medium to
longer term roadmap will be developed
that lays out the path to further
diversity of skills and other attributes
of the Board. The upskilling will be
achieved through education of existing
Directors and potentially the addition
of new independent directors. This
upskilling will enhance the financial
literacy of the Board in general and
the Audit and Finance Committee
in particular. Consideration of
increasing gender and other diversity
considerations will be a key part of
this process.
KEVIN O’KANE
Chair – Nomination Committee
28 September 2022
Nomination committee membership*
The members of the Nomination
Committee are set out below:
MEMBER
ATTENDANCE
Kevin O’Kane: Chair
Nicholas Mather
María Amparo Albán
Liam Twigger
1/1
1/1
1/1
1/1
*
Please refer to pages 78-79 on compliance with
the Code.
A statement to shareholders from the
Chair of the Nomination Committee.
Dear Shareholders,
I am pleased to present the Nomination
Committee Report for 2022.
The primary function of the Nomination
Committee is to evaluate the Board with
reference to composition, competencies,
and diversity and to recommend
succession planning, appointment,
re-elections, and terminations of
Directors. The Committee is also
responsible for assisting the Board in
relation to the appointment of members
of Management (including, without
limitation, the Chief Executive Officer,
Chief Financial Officer, Chief People
Officer, and Chief Operating Officer)
to the extent that the Company has or
requires such positions. The Committee
Terms of Reference were updated during
the past year, in March 2022, and a copy
is available on the Company’s website.
Objectives and achievements in 2022
An improved skills matrix was developed
to reflect the present and future needs
of the Board more adequately in
preparation for the challenges during
the next 5 years. For example, ESG
competencies are now more specifically
identified, and cyber security has been
added as an important skills requirement
for the Board.
Leadership succession – CEO and
Senior Executive search
As reported previously, in January of
2021 Mr Nicholas Mather advised the
Board of his intention to retire from the
role of Chief Executive Officer (“CEO”)
after 13 years at the helm of SolGold.
Mr Mather stepped down effective 31
March 2021, at which point Independent
Non-Executive Director Keith Marshall
commenced as interim CEO and the
search for a new CEO was initiated.
The CEO search process was completed
near the end of the CY2021 with the
appointment on 16 November 2021
of Mr Darryl Cuzzubbo. Given the
importance of the CEO appointment,
the Nomination Committee initially
met once, and then made the decision
that all discussions regarding the CEO
appointment should be held during
Board Meetings to allow all Directors to
discuss and review potential applicants
to determine their suitability.
Board and management change
Effective 11 May 2022, Executive
Director Mr Jason Ward resigned as a
Director of SolGold and subsequently
stepped down as the Head of Ecuador.
The Company has since appointed Mr
Steve Botts as the President of Ecuador,
more information regarding Mr Botts is
available on page 86. Mr Keith Marshall
tended his resignation to the Board on
12 August 2022, bringing the Board of
Directors down to a total of seven (7).
Compliance with the code
According to the Code, a majority of
members of the Nomination Committee
should be independent Non-Executive
Directors. The Chair of the Board should
not chair the committee when it is
dealing with the appointment of their
successor. During the year under review
only half of the Nomination Committee
were independent Non-Executive
Directors, including the Chair. The
Company will be seeking action to
comply with this requirement.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
97
CORPORATE GOVERNANCE A U D I T A N D R I S K C O M M I T T E E R E P O R T
ELODIE
GRANT GOODEY
Chair – Audit and Risk
Committee
objectivity and the effectiveness
of the audit process, taking into
consideration relevant professional
and regulatory requirements.
Risk related:
• Ensuring the development of an
appropriate risk management policy
framework that will provide guidance
to Management in implementing
appropriate risk management
practices throughout the Company’s
operations, practices and systems
• Determining the amount and nature
of risk that the Company wishes
to take in pursuit of its strategy
• Reviewing methods of identifying
broad areas of risk in line with the
principal risks outlined in this
document
• Setting parameters or guidelines
for business risk reviews
• Reviewing and assessing the
effectiveness of the Company’s
internal control and risk management
systems and making informed
decisions in respect of the same
Implementing and reviewing
arrangements by which Directors,
Management, employees and
contractors may, in confidence,
raise concerns about possible
improprieties in matters of financial
reporting or other matters.
Committee discussions in 2022
The Committee met 8 times during the
year ended 30 June 2022. All meetings
were held using video conferencing.
The ARC paid particular attention to
internal controls, fraud and bribery
prevention, financial planning, reporting
and controls and the Group’s liquidity
position. In addition, there were
in-depth discussions on ad hoc topics
as requested by the ARC. The key
topics discussed by the Committee
are set out on the following pages.
We have complied with Provision 25
of the UK Corporate Governance.
Audit and risk committee membership
The members of the ARC are set
out below:
MEMBER
ATTENDANCE
Elodie Grant Goodey:
Chair
María Amparo Albán
Keith Marshall*
8/8
8/8
3/3
*
Resigned August 2022. Keith was not a member
of ARC during his tenure as Interim CEO.
With the resignation of Keith Marshall
from the Board, Mr Kevin O’Kane was
appointed as an interim member of the
Audit and Risk Committee by the Board
in August 2022. Mr O’Kane will remain a
member of the ARC until a permanent
replacement is found.
Role and responsibilities
The ARC’s primary function is to
assist the Board in discharging its
responsibility to exercise due care,
diligence and skill in relation to the
Company by:
A statement to shareholders from the
Chair of the Audit and Risk Committee.
Audit related:
Dear Shareholders,
I am pleased to present the Audit and
Risk Committee (“ARC”) Report for
2022.
The ARC is responsible for ensuring that
the financial performance, position and
prospects of the Group are properly
monitored as well as liaising with the
Company’s auditors to discuss the audit
of the financial statements and the
Group’s internal controls. The ARC has
a permanent external advisor on audit
and financial matters.
In the year under review, management
was specifically challenged on driving
the misappropriation investigation and
its resulting consequences, drafting and
implementing the Code of Conduct,
managing costs, driving forward
Corporate Governance, monitoring
the actions from the Special Audit and
from the various internal audit reports.
The CEO, CFO, Group Finance Manager,
Group Financial Controller, General
Counsel & Company Secretary,
independent internal auditor and
external auditor also participate in
meetings of the Committee by invitation
from the Chair of the ARC. The
Committee’s Terms of Reference were
updated in March 2022 and are available
to view on the Company’s website,
which includes a list of responsibilities.
98
• Monitoring the integrity of the
financial statements of the Company
and any formal announcements
relating to the Company’s financial
performance and reviewing
significant financial reporting
judgements contained in them
prior to their approval by the Board
• Assessing the Company’s internal
financial controls
• Reviewing the appointment, scope
and performance results of both
external and internal audits
•
• Monitoring corporate conduct
and business ethics and ongoing
compliance with laws and regulations
• Maintaining open lines of
communication between the Board,
Management and the external
auditors, thus enabling information
and points of view to be freely
exchanged
• Ensuring that systems of accounting
and reporting of financial information
to shareholders, regulators and the
general public are adequate
• Considering the appointment,
reappointment, removal, remuneration
and terms of engagement of the
external auditor and making
recommendations to the Board
in respect of the same
• Monitoring and reviewing the
external auditor’s independence,
System of internal control
Review of internal controls
Reviewing the Company’s internal
financial controls
Ethical business conduct
Monitoring corporate conduct
and business ethics
Risk assurance
Risk management
Assessing the Group’s risk profile and
the process by which risks are identified
and assessed
The Committee oversaw a forensic investigation into alleged money
misappropriation. The investigation revealed that during the years 2017
to 2021 US$4.6 million was misappropriated. A programme of corrective
actions is underway, the implementation of which is being monitored
by the Committee. This is part of the increased focus on developing and
strengthening the overall control environment across the Group, which
is an area of specific focus for the Committee.
The Committee reviewed and approved the updated Code of Conduct
and associated policies.
The Committee assessed the Group’s risk management policy and
standard. The Committee discussed the key risks, the mitigation plans
in place and the appropriate executive management responsibilities.
The Committee also considered the process by which the risk profile
is generated, the changes in risk definitions and how the risks aligned
with the Group’s risk appetite.
Internal audit work
Reviewing the results of internal audit work
and the 2022 plan
The ARC agreed on an annual audit plan focusing on enterprise risks.
The Chair of the Committee held regular one-to-one meetings with the
internal auditor, which enabled further evaluation of the work performed.
External audit
Reviewing the results of the external audit
work, evaluating the quality of the external
audit and consideration of management
letter recommendations
The Committee has assessed the appointment of the new external auditors
in a competitive tender.
PwC were onboarded as SolGold’s new external auditors, which included
a visit to Ecuador to meet local staff.
The Committee reviewed and approved the 2022 Audit Plan.
Significant accounting issues considered by the audit and risk committee in relation to the group’s financial statements
Financial statements
Monitoring the integrity of the financial
statements of the Company
Going concern basis of accounting in
preparing the financial statements
Determining the ability of the Company to
continue as a going concern depends upon
continued access to sufficient financing
facilities
The Committee reviewed the presentation of the Group’s audited results
for the year ended 30 June 2022 and the unaudited results for the six
months ended 31 December 2021 as well as the quarterly financial
statements (Q1 and Q2) to ensure they were fair, balanced and
understandable, when taken as a whole. The results were assessed to
ensure they provide sufficient information for shareholders and other
users of the accounts to assess the Group’s position and performance,
business model and strategy. In conducting this review, particular focus
was given to the disclosures included in the basis of preparation in Note 1
in the Notes to the Group Financial Statements in relation to the Group’s
funding position and the suitability of the going concern assumption.
The Committee reviewed the significant judgements associated with the
2021 financial statements, including “key audit matters”, and also reviewed
the supporting evidence for the Group being a going concern. The
Committee is comfortable that the overall disclosures in the Annual
Report are fair, balanced and understandable, when taken as a whole.
The Committee reviewed papers prepared by the finance team and the
findings from the external auditors in relation to the above matters.
The Committee assessed the proposed budget and cash flow forecast for
this financial year and coming periods and worked with the Finance team
on scenario planning and the long-term strategic plan. The Committee notes
that the ability of the Group to continue as a going concern depends on its
ability to secure additional financing and that this situation gives rise to a
material uncertainty. However, the Committee has considered the various
funding options being explored by management, as well as the Group’s
historical ability to raise necessary funding, and considers it appropriate
that the financial statements are prepared on a going concern basis.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
99
CORPORATE GOVERNANCE A U D I T A N D R I S K C O M M I T T E E R E P O R T
C O N T I N U E D
Ecuadorian business internal
investigation
What we found
In early 2021 SolGold’s Board of
Directors commissioned a special
internal controls review by KPMG LLP
to help identify where the control
environment needed enhancing as part
of the Board’s focus on strengthening
internal controls and good corporate
governance. As a consequence, the
Company started to strengthen its
internal financial capabilities and
internal control framework. Immediate
needs identified were the recruitment of
a Group Financial Controller in Brisbane
and a Group General Counsel in London,
who were appointed in February and
March 2021 respectively. A Group
Internal Audit function was also
established, reporting to the Audit
and Risk Committee (“ARC”). The ARC
agreed on an annual internal audit plan
focusing on enterprise risks. Increased
scrutiny and analysis by the Group
finance team throughout 2021 led to
cost reductions, but also the discovery
of the misappropriation of funds in
Ecuador in late 2021.
In December 2021, in immediate
response to the discovery, the Company
instructed EY Ecuador to commence a
forensic investigation into the alleged
misappropriation of funds. SolGold’s
Internal Audit function was engaged
to provide independent oversight of
the investigation.
The forensic investigation revealed that
during the calendar years 2017 to 2021
US$4.6 million was misappropriated.
The investigation brought to light the
material misstatement of exploration
assets as a result of false expenses
being capitalised. The investigation
also brought to light weak and missing
controls and failures in the risk
management framework, which needed
further investigation. The individual
responsible for the misappropriation
of the funds is no longer with the
Group and management are currently
pursuing options to recover the funds.
This misappropriation resulted in
the cumulative overstatement of our
exploration assets by US$4.6 million,
with the associated false expenses
having been capitalised in-line with
SolGold’s accounting policy. SolGold
concluded that it was appropriate to
write-down the value of these assets
accordingly and restate our accounts.
The profit and loss impact for the year
ended 30 June 2022 amounted to
US$228k, reflecting the fact that most
losses were incurred in prior years and
that increased diligence by the Group
100
finance function had had an impact.
Though the misstatements are material
to the quantum of exploration assets,
the Company does not consider the
misstatements to be material to the
financial statements as a whole, either
on an individual or cumulative basis.
The overstatement of the exploration
assets is cumulative and is made up of
smaller annual misstatements that were
not material in their respective years
(refer to note 1 and note 13).
How we responded
This behaviour is an extremely serious
matter, and it has no place in SolGold.
SolGold management has enhanced
its risk, governance and controls
environment and acted on both the
recommendations of KPMG (special
audit) and EY (forensic audit) and
our own internal observations.
We are working towards our corporate
culture being one to encourage
transparency and professionalism,
protect our shareholders’ funds and
inspire confidence in our workforce.
The Company has taken steps to
improve its control, governance and
risk management environment and
processes. These steps include
increasing the resources, sourcing
suitably qualified and experienced
people, and improving the capabilities
of senior management and the Finance
function. This is an ongoing process
and it will be an area of continuing
focus for the Board and Management.
We have appointed a new President
of the Ecuadorian SolGold subsidiaries,
based full time in Ecuador, along with
a Vice President of Projects, also to
be based in Ecuador full time. The
Ecuadorian Finance team was
restructured with a new Finance
Director appointed in January 2022,
along with a Senior Accountant
(March 2022), Treasury Analyst (June
2022), Tax Specialist (June 2022) and
2 new Finance Assistants (July 2022
and August 2022, respectively). Within
Ecuador, a Human Resource Director
was appointed in March 2022, a
Procurement Director in August 2022,
in addition to an in-house Legal Counsel
that started in September 2022.
In early June 2022, the SolGold
Directors commissioned a Cultural
Review, with a focus on exploring our
strengths and areas for improvement,
assisting us to identify what is required
to continue to build a strong culture,
based on shared values, as we transition
from explorer to developer to operator.
The results were presented to the Board.
The Executive Committee will be
meeting in October in Quito for a 3-day
workshop with a key deliverable being
an overall roadmap or execution plan
that links all goals and associated
initiatives that ultimately lead to the
enablement of our Business Strategy.
Where relevant, actions needed to
address the key findings from this
review will be discussed and integrated
into this plan. This will be monitored
for completion at the Board with
“deep-dives” taken on specific topics
at suitable future Board meetings.
There are several planned initiatives
that already form part of the People
and Culture Strategy.
What we will do moving forward
While SolGold management has taken
appropriate steps to strengthen its risk,
governance and controls environment
we recognise this is ongoing. We will
seek to continuously improve our internal
controls and policies and procedures,
ensuring these are reviewed and
updated accordingly and that they are
applicable and relevant to our business
and ensuring we comply with best
practice corporate governance.
With this we are also enhancing the
awareness of the standards we expect,
the capabilities of our people, and to
reinforce to the Group as a whole the
importance of ethical business practices.
External auditor independence
A key factor that may impair an
auditor’s independence is a lack
of control over non-audit services
provided by the external auditor.
Non-audit work is only undertaken
where there is commercial sense in
using the auditor without jeopardising
auditor independence; for example,
where the service is related to the
assurance provided by the auditor
or benefits from the knowledge
the auditor has of the business.
The ARC has satisfied itself that the
external auditors’ independence was
not impaired.
The ARC held meetings with the external
auditor and the Chair of the ARC held
regular meetings with the lead audit
engagement partner during the year.
ELODIE GRANT
GOODEY
Chair – Audit and Risk Committee
28 September 2022
H E A L T H , S A F E T Y, E N V I R O N M E N T
A N D C O M M U N I T Y C O M M I T T E E R E P O R T
ELODIE
GRANT GOODEY
Chair – Health, Safety,
Environment and Community
Committee
Health, safety, environment and
community committee membership
The members of the HSEC Committee
are set out below:
MEMBER
ATTENDANCE
Elodie Grant Goodey:
Chair
María Amparo Albán
Kevin O’Kane
Darryl Cuzzubbo
Jason Ward*
* Resigned May 2022.
3/3
3/3
3/3
2/2
2/2
A statement to shareholders from
the Chair of the Health, Safety,
Environment and Community
Committee.
The CEO, Vice-President Ecuador, the
Environment Manager, the Health &
Safety Manager and the Community
Relations Manager have also
participated in meetings of the HSEC
Committee by invitation. The HSEC
Committee’s Terms of Reference were
reviewed and updated in March 2022
and are available to view on the
Company’s website.
Committee discussions in 2022
The Committee met 3 times during
the year ended 30 June 2022. All
the meetings were held using
videoconferencing. The following
matters were discussed:
• Health and safety management
systems, including metrics, internal
reporting and improved HSEC
dashboard
Dear Shareholders,
• Emergency preparedness and
I am pleased to present the Health,
Safety, Environment, and Community
Committee (“HSEC”) Report for 2022.
As the Company continues to face
the biggest global health challenge
of our lifetime, the HSEC continued
its commitment to play a role in
supporting the efforts to combat
and reduce the risks of Covid-19 in
the workplace.
The HSEC Committee is responsible
for shaping the Company’s policies,
objectives, and guidelines on
environmental, health, safety, and
community relations matters and for
analysing and reporting to the Board
of Directors on the expectations of
the Company’s various stakeholders.
response
• Community relations management,
including reviewing material issues,
investigations and complaints
• Land acquisition and potential
resettlement
• Climate change risks, including a
Request for Proposal for work on
preparing SolGold for their TCFD
Statement in FY2023.
The HSEC Committee encourages
employees and stakeholders to speak
up on all matters, especially concerning
matters of safety.
ELODIE GRANT
GOODEY
Chair – HSEC Committee
28 September 2022
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
101
CORPORATE GOVERNANCE S T R A T E G Y C O M M I T T E E R E P O R T
LIAM TWIGGER
Chair – Strategy Committee
Strategy committee membership*
Role and responsibilities
Recommendations and outcomes
The members of the Strategy
Committee are set out below:
MEMBER
ATTENDANCE
Liam Twigger: Chair
Darryl Cuzzubbo
Nicholas Mather
Kevin O’Kane
James Clare
7/7
7/7
7/7
7/7
7/7
*
Strategy Committee was adopted in
February 2022 and 7 meetings were
held from 11 March 2022.
Dear Shareholders,
I pleased to present the Strategy
Committee Report. The primary
function of the Strategy Committee
is to assist the Board to fulfil its overall
responsibilities relating to the strategic
direction and development of the
Company. As a Committee, we have
met seven (7) times this year to discuss
potential corporate transactions that
would benefit the Company as a whole
and the short to medium term funding
structure and strategic direction,
necessary to ensure the growth
and continued success of the Group.
As outlined in my Chair review,
the Company, and in particular, the
Committee, has monitored the current
economic situation regarding inflation
and the Company’s ability to access
the necessary capital required to
achieve the Company’s full potential.
The Committee has reviewed and
considered several opportunities to
accelerate institutional and corporate
funding and has built an expansive
network of investors and strategic
partnerships. The Committee plays an
essential role in addressing uncertainty
within the current economic climate
whilst factoring in the continued
impacts of Covid-19. The Committee has
continued to evaluate plausible future
scenarios to provide written and verbal
reports to the Board, enabling decisions
to be made regarding the way forward.
I look forward to the continued
implementation of the agreed
strategic direction of the Group.
LIAM TWIGGER
Chair – Strategy Committee
28 September 2022
The Committee is responsible for
assessing the corporate and strategic
performance of the Company in its
broadest sense and form a wide view
on the adequacy of progress made
in achieving strategic objectives
and outcomes, and of the systems to
measure, monitor and deliver on them.
In addition, the Committee shall:
• Support the Board and Senior
Management in formulating the
overall strategy for the Company,
with particular emphasis on horizon
scanning, priorities, activities and
outcomes
• Make recommendations to the Board
to optimise the allocation and
adequacy of the Company’s reserves
and resources, as well as its
exploration and development assets
• Consider the strategic development
opportunities for the Company,
including by way of acquisitions,
disposals, joint ventures, commercial
co-operations or otherwise
• Make recommendations to the Board
for proposed M&A transactions,
including the strategic rationale for
such proposals and proposed
financing structures
• Consider whether existing and/or
proposed funding is adequate and
properly and effectively allocated
across the Group’s operations
• Make recommendations to the Board
as to financing or refinancing
proposals for the Group, whether
by way of equity, debt or otherwise
• Make recommendations to the Chair
of the Board as to whether any
shareholder-nominated Director may
have an actual or potential conflict
of interest
102
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T
KEVIN O’KANE
Chair – Remuneration
Committee
Remuneration committee
membership
The members of the Remuneration
Committee are set out below:
MEMBER
ATTENDANCE
Kevin O’Kane: Chair
Liam Twigger
Elodie Grant Goodey
5/5
5/5
5/5
A statement to shareholders from the
Chair of the Remuneration Committee.
Dear Shareholders,
I am pleased to present the Annual
Remuneration Report for the
financial year ending 30 June 2022.
The Report has been prepared by the
Remuneration Committee on behalf
of the Board in accordance with the
requirements of the Listing Rules of
the FCA, Schedule 8 of the Large and
Medium-sized Companies and Groups
(Accounts and Reports) Regulations
2008 (as amended in 2013, 2018
and 2019) and the UK Corporate
Governance Code. The elements subject
to audit are highlighted throughout.
Application of the remuneration
policy
The Committee operated under its
terms of reference without conflicts
of interest and was pleased that
shareholders approved the Directors’
Remuneration Policy put forward for
consideration at the EGM held on
30 June 2022. However, the Committee
recognised that a meaningful
proportion of shareholders did not
support one of the resolutions on the
Directors’ Policy Remuneration that
received 69.2% of votes in favour.
Together with the Chair, Liam Twigger,
and the CEO, Mr Darryl Cuzzubbo
we sought shareholders’ feedback.
In accordance with Provision 4 of
2018 UK Corporate Governance Code,
the Board is providing an update
in response to the Directors’
Remuneration Policy resolution put
to the EGM that received less than
80% of votes in favour. Feedback was
received that the votes received against
the resolution were influenced by
certain investors objecting to the CEO
remuneration framework in comparison
to peer companies. The Remuneration
Committee conducted a thorough
benchmarking exercise against peer
companies to set a CEO remuneration
package that would be competitive and
attract a high calibre individual to lead
the Company through the challenging
transition from explorer to developer
and ultimately producer. This
benchmarking was shared with
certain investors that voted against
the resolution.
In line with its commitment to good
corporate governance, the Committee
will continue to receive shareholder
feedback and monitor developments
in best practices and market trends on
executive remuneration. The Board is
committed to long-term, sustainable
value creation for our shareholders.
SolGold’s remuneration approach is
focused on ensuring we can continue
to attract, motivate and retain
exceptional people across the global
markets in which we operate. SolGold’s
remuneration framework aims to:
• Attract, retain and motivate the right
calibre of talent for the Company
• Facilitate the achievement of the
Company’s short- and long-term
objectives without rewarding
conduct that is contrary to the
Company’s values or risk appetite
• Provide appropriate incentives for
delivery against agreed-upon
measurable objectives
• Reflect good corporate governance
and creates value for shareholders
• Be robust, transparent and simple
to understand and administer.
Members of the Remuneration
Committee are independent Non-
Executive Directors compromising:
Myself (as Chair), Mr Liam Twigger
and Mrs Elodie Grant Goodey. The
Remuneration Committee’s composition
provides a proper balance with different
views, both from a geographical and
historical perspective.
The Committee has a mandate in
the area of remuneration to analyse,
formulate and periodically review
the remuneration policy has operated
as intended in terms of company
performance and quantum. The
Committee is also responsible for
designing new remuneration plans that
enable the Company to attract, retain
and motivate the most outstanding
professionals, bringing their interests
into line with the strategic objectives
of the Company. For this purpose,
the Remuneration Committee meets
periodically, as convened by its Chair.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
103
CORPORATE GOVERNANCE D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T
C O N T I N U E D
The Committee welcomes all input on
remuneration matters, and if you have
any comments or questions on any
element of the Remuneration Report,
please do not hesitate to contact me
at info@solgold.com.au.
KEVIN O’KANE
Chair – Remuneration Committee
28 September 2022
Key activities of the committee
Appointment of new CEO
The Committee’s overall objective
this year has been to ensure that the
remuneration structure supports the
delivery of the Company’s long-term
strategy, alignment with the interests
of shareholders while delivering
market competitive remuneration to
employees, enabling SolGold to attract,
incentivise and retain the best talents.
Specific activities have included:
• Providing recommendations to
the Board regarding the new
CEO’s remuneration
• Review and alignment of
remuneration for newly appointed
Executive Committee members
• Review and update to SolGold’s
Directors’ Remuneration Policy,
as approved by Shareholders at
the EGM on 30 June 2022
• Review and update to SolGold’s
employee incentive schemes, as
approved by Shareholders at the
EGM on 30 June 2022
•
•
Inclusion of a “Malus and Clawback”
clause in Executive Director
Employment Agreements
Improved disclosure of executive
remuneration in the integrated
annual report, in a bid for greater
transparency
• Reviewing and updating the
Committee’s Terms of Reference
• Ongoing monitoring of market
developments to ensure our
remuneration structure allows
us to compete globally for talent,
and that our offering is compelling,
fair and responsible.
Mr Keith Marshall returned to his role
as a Non-Executive Director, effective
from 1 December 2021, after leading the
business as interim-CEO. Keith resigned
as a member of the Board on 12 August
2022. Following an extensive search,
Mr Darryl Cuzzubbo was appointed to
CEO/Managing Director on 1 December
2021 and was elected to the Board by
shareholders at the 2021 AGM. The
Committee carefully considered the
terms of our new CEO’s remuneration
arrangements and exercised their
discretion to award Mr Cuzzubbo
a market-competitive base salary.
A remuneration consultant was not
appointed to assist in the matter of
the CEO’s salary.
In designing a competitive remuneration
package, the Committee focused on
current market benchmarks, and took
into account long-term incentive and
performance bonus opportunities
subject to performance objectives
to ensure that it was appropriate to
motivate and incentivise Mr Cuzzubbo
with the Company’s purpose and
values as well as the interests of
the shareholders.
Conclusion
Shareholders will be asked to approve
the Annual Remuneration Report as
an ordinary resolution at the AGM in
December 2022. The resolution of the
general meeting on the Remuneration
report is advisory. I hope that you find
this report to be informative and our
shareholders remain supportive of our
approach to executive and director
pay at SolGold and vote in favour of
the resolution.
104
A N N U A L R E P O R T O N R E M U N E R A T I O N
This report outlines how the SolGold Director’s Remuneration Policy will be implemented over the next financial year
and provides details regarding remuneration paid to the Executive Director during FY2022. A copy of the Remuneration
Policy can be found on the Company’s website.
The current Directors’ Remuneration Policy was part of the meeting materials at the EGM in held on 30 June 2022. This
Policy was approved with 69.2% support. The Policy shall be presented to the general meeting every three years unless
a revised policy is presented to the general meeting before that. The Board’s Remuneration Committee shall review the
appropriateness of the Policy at least annually.
The Remuneration Committee met 5 times during the year with all required Directors attending.
Remuneration policy alignment with the UK code
When developing the Director’s Remuneration Policy, the Committee includes the following principles during their
decision-making process:
UK CODE PRINCIPLE
APPLICATION
Clarity
Simplicity
Risk
Predictability
Proportionality
Alignment to Culture
Targets for incentives that are aligned with the implementation of the strategy
are monitored through corporate and individual scorecards, which include a
list of KPIs specific to each participant. This provides clarity to stakeholders
and shareholders on the association between the successful delivery of the
Company’s strategy and remuneration paid.
The structure of incentive is clear to both participants and shareholders through
simple and straightforward language, so all stakeholders are clear on the
underlying award principles and the way award outcomes are determined.
Malus and clawback provisions apply to all awards to ensure that
inappropriate risk-taking is not encouraged and will not be rewarded
through employee incentives.
Employee incentive plans are subject to performance objectives as listed in
the participants’ individual and corporate scorecard. All Executive Management
and Executive Directors are invited to participate in the incentive plans at the
beginning of each financial year with their scorecard KPIs.
The Committee takes care to exercise its discretion to ensure that remuneration
outcomes are aligned with Company performance.
The Committee reviews overall pay and conditions for employees across the
Company when determining performance objectives and award outcomes.
The individual and corporate scorecards will include non-financial KPIs linked
to the Company’s overall culture.
AUDITED INFORMATION – DIRECTORS’ REMUNERATION
Single Total Figure of Remuneration
The detailed emoluments received by the Executive and Non-Executive Directors during the financial years ended
30 June 2022 and 30 June 2021 are detailed below:
TOTAL SALARY
AND FEES
US$
TAXABLE
BENEFITS
US$
BONUS
US$
PENSIONS
US$
TOTAL FIXED
REMUNERATION
US$
TOTAL VARIABLE
REMUNERATION
US$
TOTAL
US$
Chairperson
Liam Twigger
2022
2021
118,931
93,075
Non-Executive Directors
Keith Marshall1
2022
2021
Nicholas Mather2
2022
2021
46,617
16,080
72,205
19,218
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
–
–
–
–
–
–
–
–
–
–
–
–
11,893
8,972
130,824
102,047
–
–
–
–
46,617
16,080
72,205
19,218
–
–
–
–
–
–
130,824
102,047
46,617
16,080
72,205
19,218
105
CORPORATE GOVERNANCE A N N U A L R E P O R T O N R E M U N E R A T I O N
C O N T I N U E D
TOTAL SALARY
AND FEES
US$
TAXABLE
BENEFITS
US$
BONUS
US$
PENSIONS
US$
TOTAL FIXED
REMUNERATION
US$
TOTAL VARIABLE
REMUNERATION
US$
Brian Moller4
2022
2021
James Clare
2022
2021
Elodie Grant Goodey
2022
2021
Kevin O’Kane
2022
2021
María Amparo Albán
2022
2021
Robert Weinberg5
2022
2021
Executive Director
Jason Ward3
2022
2021
Total
2022
2021
33,255
64,628
72,305
61,824
85,965
71,756
79,331
51,202
72,423
47,326
–
23,506
334,653
304,352
915,685
752,967
Chief Executive Officer
Darryl Cuzzubbo6
2022
2021
Keith Marshall1
2022
2021
Nicholas Mather
2022
2021
Grand Total
2022
2021
514,261
–
211,932
196,065
–
330,292
1,641,878
1,279,324
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
33,255
64,628
72,305
61,824
85,965
71,756
79,331
51,202
72,423
47,326
–
23,506
334,653
304,352
11,893
8,972
927 668
761,939
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
TOTAL
US$
33,255
64,628
72,305
61,824
85,965
71,756
79,331
51,202
72,423
47,326
–
23,506
334,653
304,352
927 668
761,939
638,528
10,951
525,212
638,528
1,163,740
–
117 982
–
–
–
–
–
–
–
–
–
–
–
211,932
196,065
–
330,292
117,982
–
–
–
329,914
196,065
–
330,292
756,510
22,844
1 664 812
756,510
2,421,322
–
8,972
1,288,296
–
1,288,296
1
Keith Marshall salary and fees split between his role as interim CEO and Non-Executive Director.
2 Nicholas Mather salary and fees for 2021 split between his role as CEO and Non-Executive Director. Variable remuneration in 2021 relates to a loss of
office payment.
3 Jason Ward resigned as Executive Director on 13 May 2022 and salary and fees includes total remuneration paid for the year.
4 Brian Moller was not re-elected to the Board on 15 December 2021.
5 Robert Weinberg resigned as Non-Executive Director on 17 December 2020.
6 Darryl Cuzzubbo’s sign on bonus of restricted stock units in the Company vested on 1 July 2022, refer to Remuneration Structure for the Current CEO.
Whilst Darryl’s scorecard has been assessed no bonuses have been paid for the year ended 30 June 2022. These numbers have been translated with
the average exchange rate detailed in Note 1 (d).
106
Share option schemes – Audited
The Employee Share Option Plan (the "ESOP") of the Company was adopted by the Board in July 2017 and approved by
shareholders at the Annual General Meeting held on 28 July 2017. The ESOP is no longer available and has been replaced
with the Long-Term Incentive Plan Rules ("LTIP") and the Performance Bonus Plan ("PBP"). All options awarded under
the ESOP will continue to be governed by this scheme unless exercised or become expired.
As of 30 June 2022, the following options previously issued to Directors under the ESOP (no performance conditions)
which are fully vested have now all lapsed and been cancelled:
BALANCE AT
30 JUNE 2021
GRANTED AS
REMUNERATION
EXERCISED
FORFEITED /
LAPSED
BALANCE AT
30 JUNE 2022
EXERCISE
PRICE
EXERCISE
PERIOD
Nicholas Mather
5,000,000
Jason Ward
5,000,000
Total
10,000,000
–
–
–
–
–
(5,000,000)
(5,000,000)
– (10,000,000)
–
–
–
60p 20/12/18-20/12/21
60p
06/11/18-06/11/21
–
–
Payments to past directors – Audited
No payments were made to past Directors in the year ended 30 June 2022.
Payments for loss of office – Audited
No payments were made for loss of office in the year ended 30 June 2022 (2021: Nick Mather received a severance pay-out
of US$477,871 upon retiring from the position of CEO).
Statement of Directors’ shareholding and share interest – Audited
Directors’ interests
The interests of the Directors in the shares of the Company, including family and trustee holdings where appropriate,
at 30 June 2022 were as follows:
Chair
Liam Twigger
Non-Executive Directors
Keith Marshall
Nicholas Mather
Elodie Grant Goodey
María Amparo Albán
James Clare
Kevin O’Kane
Former Directors
Brian Moller
Jason Ward
Total
Chief Executive Officer
Darryl Cuzzubbo
Grand total
BENEFICIAL
NON-BENEFICIAL*
30 JUNE 2022
30 JUNE 2021
30 JUNE 2022
30 JUNE 2021
392,156
392,156
98,039
98,039
–
–
–
–
84,266,052
84,266,052
6,060,658
6,460,658
19,607
51,676
143,137
392,156
19,607
51,676
143,137
392,156
5,267,552
5,267,552
10,094,860
10,094,860
–
–
–
–
–
–
–
–
–
–
–
–
100,725,235 100,725,235
6,060,658
6,460,658
–
–
–
–
100,725,235 100,725,235
6,060,658
6,460,658
* The Non-Beneficial holding of Nicholas Mather are the shares held in the “Mather Foundation” a trust established for the purpose of providing donations to
charitable organisations.
The Mather Foundation, an organisation associated with Nicholas Mather, sold 400,000 shares in June 2022.
There are no requirements or restrictions on Non-Executive Directors to hold shares in the Company. The Directors’
Remuneration Policy does outline guidelines that each Executive Director is to maintain a shareholding the Company
equivalent to 200% of base salary to drive a long-term focus and alignment with shareholders.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
107
CORPORATE GOVERNANCE A N N U A L R E P O R T O N R E M U N E R A T I O N
C O N T I N U E D
Relationship between remuneration and Company performance – Non-audited information
During the financial year, the Company has generated losses as its principal activity was mineral exploration.
The following table show the share price at the end of the financial year for the Company for the past five years:
Share price at year end
Loss per share (cents)
30 JUNE 2018
30 JUNE 2019
30 JUNE 2020
30 JUNE 2021
30 JUNE 2022
£0.2280
£0.3200
£0.2100
£0.2850
£0.2920
(0.9)
(1.8)
(0.7)
(1.1)
(1.4)
There were no dividends paid during the year ended 30 June 2022, and the previous five years.
10-year Total Shareholder Return ("TSR")
The graph below shows SolGold’s TSR against the performance of the FTSE All Share Industrial Metals and Mining Index
("FAMETL") over the same 10-year period. The indices shown in the graph were chosen as they include Companies within
the mining sector.
Value of £100 invested over the 10-year period to 30 June 2022
1,000
800
600
400
200
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
SOLG
FAMETL
Years ended 30 June
108
CEO total remuneration
EXECUTIVE OFFICER
Darryl Cuzzubbo
Keith Marshall
(Interim)
Nicholas Mather
Alan Martin
Malcolm Norris
SINGLE TOTAL
FIGURE OF
REMUNERATION,
US$
ANNUAL
BONUS (STI)
(% OF
MAXIMUM)
FINANCIAL
YEAR
LTIP (% OF
MAXIMUM)
2022
2022
2021
2021
2020
2019
2018
2017
2016
2015
2015
2014
2013
2013
2012
1,163,740
376,531
212,145
330 292
400,162
539,422
307,480
314,3821
109,2521
15,7161
268,7561
312,3701
37,1681
338,0901
258,8711
40%
90%
–
–
–
100%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Annual average historical rates from Reserve Bank of Australia (“RBA”) were used to convert AUD to USD.
Remuneration of the executive director
The Company aims to reward the CEO with a level and mix of remuneration commensurate with their position and
responsibilities within the Company, and to:
• Demonstrate a clear relationship between individual performance and remuneration
• Ability to attract, engage and retain talented executives and directors
• Link rewards to the creation of value to shareholders
• Comply with all relevant local, legal requirements.
More information can be found in the Directors’ Remuneration Policy.
Remuneration structure for the current CEO – Audited
Fixed Salary: Darryl Cuzzubbo receives an annual base salary of AUD$1,200,000, payable fortnightly, for the performance
of executive duties at the Company.
Short-Term Incentive: 100/150% (Target/Stretch respectively of base salary AUD$1,200,000). Payable in 1/3 cash and
2/3 shares in Company.
Long-Term Incentive: 10,000,000 options over shares in the share capital of the Company, subsequently granted and issued
1 July 2022, which will vest under the following terms:
i) The exercise price of the first tranche of 4,000,000 options granted at £0.292, being the closing price of an ordinary
share on 30 June 2022. Options will vest on 1 December 2022 and expire on 1 December 2025.
ii) The exercise price of the second tranche of 3,000,000 options granted at £0.35, which was above the closing price
of an ordinary share on 30 June 2022. Options will vest on 1 December 2023 and expire on 1 December 2026.
iii) The exercise price of the third tranche of 3,000,000 options granted at £0.50, which was above the closing price
of an ordinary share on 30 June 2022. Options will vest on 1 December 2024 and expire on 1 December 2027.
These options creates a direct alignment with Shareholder interests, and acts as incentive to place value on increasing
the Company’s share price.
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109
CORPORATE GOVERNANCE A N N U A L R E P O R T O N R E M U N E R A T I O N
C O N T I N U E D
Recruitment Inducement (Sign-on Bonus): Sign-on bonuses are payable based on Remuneration Committee discretion
and recommendations to the Board to a maximum of 100% of base salary. A Sign-on Bonus of Restricted Stock Units in
the Company were issued to Darryl Cuzzubbo to the value of AU$600,000, priced as per the share price at the time of the
Employment Commencement Date on 1 December 2021 (at £0.241 per share) and vesting over a two-year period in 8 equal
tranches. The Exchange rate on 7 December 2021 was 1 AUD: 0.5367 GBP. A total of 1,336,182 Restricted Stock Units are
subject to time condition vesting. 334,046 shares vested on 1 July 2022, with the remaining shares vesting in instalments
of 167,023 shares each quarter until 1 December 2024. The Restricted Stock Units were issued on 1 July 2022.
CEO performance and outcomes – Audited
The performance assessment of Darryl Cuzzubbo considers overall company performance against a scorecard with a further
qualitative assessment and final determination by the Remuneration Committee and the Board.
The Board assessed Mr. Cuzzubbo’s performance for year ended 30 June 2022 against the key performance indicators in the
following table, and thanks him for his leadership since he joined SolGold in December 2021. The 2022 Short-Term Incentive
is pro-rated based on the days of service provided for the year ended 30 June 2022.
The table below shows the key performance measures for Mr. Cuzzubbo’s and the Board's assessment of his performance
against those measures. The measures were selected to best reflect and support the Group strategy. The 2022 Company
Scorecard consisted of three categories of measures, health and safety, value creation, and ESG.
The Board considers that the CEO, and senior executives of the Company have performed well and are building momentum.
Achieving target for all of the metrics would result in 100% and achieving stretch for all of the metrics would result in 150%.
The outcome for the CEO’s scorecard, from the table below, was 80%.
Upon further review by the Committee and the Board, considering company performance and market conditions, the
outcome of the CEO’s performance was modified by 50%, to a 40% result.
The Committee and Board will consider the possibility of recovery of this reduction during FY2023, should performance and
conditions warrant.
MEASURE
WEIGHTING
PERFORMANCE AGAINST TARGET
MEASURE
OUTCOME
Achieved
target
(17%)
Partly
Achieved
(48%)
Achieved
(15%)
There were no fatalities and
no major events. Recordable
injuries have reduced, and fatal
risks complete in the Corporate
Risk Register.
Actual spend significantly under
budget. Cascabel optimised PFS
delivered April 2022. Exploration
Programme complete to Board
approved plan. Share price
slightly improved but not to
full expectation.
ESG Programmes complete
to Board approved plan.
No recordable community
or environment incidents.
Substantial progress towards
compliance with UK code and
full compliance planned with
new CEO.
Darryl Cuzzubbo
Health & Safety
Value Creation
No major health and safety
events (including no fatalities).
Reduction in reportable injuries
during the year. Completion
of fatal risks assessment in
the Corporate Risk Register.
Priority activities that drive value
creation including, Cost Control,
Cascabel Project Delivery, and
Exploration Programme delivery
Share price improvement.
15%
70%
ESG
Successful delivery of targeted
ESG Board approved
programmes:
15%
• Social and Community
• Environment.
Also includes compliance
with the UK Governance
Code by June 2022.
110
Remuneration structure for the interim CEO
Mr Keith Marshall took the role as Interim CEO when co-founder Nicholas Mather stood down as CEO in early 2021.
The remuneration figures for the interim CEO are listed in the table above, Single Total Figure of Remuneration.
Mr Marshall was paid a base salary and included a short-term incentive of an annual maximum bonus of £100,000.
The table below shows the key performance measures for Mr Marshall and the Board's assessment of his performance
against those measures. The Board agreed that Mr Marshall achieved 90% of his STI targets and was awarded £90,000.
Keith Marshall (Interim CEO)
MEASURE
WEIGHTING
PERFORMANCE AGAINST TARGET
Health & Safety
Value Creation
No major health and safety
events (including no fatalities).
Reduction in reportable injuries
during the year.
Priority activities that drive value
creation including, Cost Control/
Land Sales/Material Discovery/
Cascabel Project Delivery/Share
Price/Fund Raising.
15%
70%
ESG
Successful delivery of targeted
ESG Board approved Social,
Community and Environment
programmes:
15%
Also includes compliance with
the UK Governance Code.
There were no fatalities and
no major events. Recordable
injuries were reduced.
Actual spend at budget. Land
sales proceeded to plan. Material
discovery exceeded expectation.
Cascabel PFS was partly
delivered with further work
planned to align the Board.
Share Price had slight
improvement. Fund raising
exceeded expectation.
ESG Programmes complete
to Board approved plan.
No recordable community
or environment incidents.
Compliance to UK code
planned with new CEO.
MEASURE
OUTCOME
Achieved
target
(15%)
Partly
Achieved
(65%)
Partly
Achieved
(10%)
Non-executive director fees
The Remuneration Committee conducts a regular benchmarking exercise to ascertain whether the fees for Non-Executive
Directors (“NEDs”) are competitive, fair and reasonable. The committee is informed by the external market when reviewing
the fee structure and levels for our Non-Executive Directors.
The Articles of Association state at clause 21 that Directors are entitled to receive a fee for their services. This aggregate
of fees cannot exceed £600,000 per annum, unless the shareholders pass a resolution at the Annual General Meeting to
amend this. An individual Director may not be involved in determining their own remuneration but may, in their capacity
as a member of the Remuneration Committee, be involved in setting as a ‘benchmark’ the appropriate level of remuneration
for Directors generally.
Effective 1 January 2021, the Director’s fee was modified to AUD$100,000 (from AUD$70,000), in line with similar companies.
The Chair receives an additional fee of AUD$80,000 for the additional time commitment needed. Annual fees of AUD$10,000
are also paid to Directors who Chair the following committees:
• Audit & Risk Committee
• Health, Safety, Environment Community Committee
• Remuneration Committee.
Other payments may include (and as outlined in the Articles of Association):
• Travel expenses in accordance with the Company’s travel policy
• Reimbursement of any taxable or other expenses incurred in performing their role as well as any related tax cost on
such reimbursement.
The Company will reimburse the Director for all reasonable expenses properly, wholly, and necessarily incurred in the
performance of their duties on production of all relevant receipts.
Non-Executive Directors are not eligible to participate in the Company’s incentive programme(s).
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
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CORPORATE GOVERNANCE A N N U A L R E P O R T O N R E M U N E R A T I O N
C O N T I N U E D
Changes in director’s remuneration
The table below sets out the percentage change in remuneration for the CEO’s and Non-Executive Directors:
2022
2021
2020
BENEFITS
% CHANGE
STI %
CHANGE
BASE
SALARY/
FEES %
CHANGE
BENEFITS
% CHANGE
STI %
CHANGE
CEO
Darryl Cuzzubbo
Keith Marshall3
Nicholas Mather4
Non-Executive Directors
Liam Twigger
Keith Marshall
Nicholas Mather
Elodie Grant Goodey
María Amparo Albán
James Clare
Kevin O’Kane
Brian Moller1
Jason Ward2
Robert Weinberg
BASE
SALARY/
FEES %
CHANGE
–
68%
(91%)
28%
190%5
276%5
20%
53%6
17%
55%6
(49%)
10%
(100%)
BENEFITS
% CHANGE
STI %
CHANGE
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100%
–
–
–
–
–
–
–
–
–
–
–
BASE
SALARY/
FEES %
CHANGE
–
–
102%
–
–
–
117% (100%)
–
–
–
–
32%
–
(12%)
(6%)
(50%)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(6%)
(100%)
(100%)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(6%)
(100%)
–
–
–
–
–
–
–
–
24% (100%)
(100%)
(6%)
(100%)
–
1 Brian Moller was not re-elected to the Board on 15 December 2021.
2 Jason Ward resigned as an Executive Director on 13 May 2022.
3 Keith Marshall was remunerated as an Interim CEO for 9 months and the remaining period as a Non-Executive Director.
4 Nicholas Mather resigned as CEO in 2021.
5 Keith Marshall and Nicholas Mather are distorted as these individuals had executive roles, as well as non-executive roles, within this period, with different
remuneration packages attached. As disclosed in the ‘Single total figure remuneration’ table above.
6 María Amparo Albán and Kevin O’Kane are distorted as theses individuals were not elected until October 2021, and therefore this was their first full year
as Non-Executive Directors.
* Note – None of the above percentages are presented on an annualized basis.
Pay ratios table
We have not included a CEO pay ratio in this report, as the Company has only five employees based in the UK, and any
resulting ratios would not be meaningful.
Relative importance of spend on pay
The table below shows the remuneration paid to all employees in the Group, including the Executive Director (refer Note 4).
The figures have been calculated in accordance with the Group Accounting Policies and drawn from either the Company’s
Consolidated Statement of Comprehensive Income on page 133, or its Consolidated Statement of Cash Flows on page 140.
Total employee remuneration
27,161,319
24,073,170
3,088,149
Expenditure of exploration and evaluation
66,294,083
77,508,612
11,214,529
12.828%
14.468%
Included within total staff costs is US$21,844,082 (2021: US$20,176,654) which has been capitalised as part of deferred
exploration costs. In accordance with Group Accounting Policies all costs associated with the concessions are capitalised.
2022
2021
DIFFERENCE IN
SPEND
BETWEEN
YEARS
DIFFERENCE IN
SPEND
BETWEEN
YEARS %
112
Shareholder support for the remuneration policy and 2021 directors’ remuneration committee report
The Company received shareholder approval of its Directors' Remuneration Policy at the 2022 EGM on 30 June 2022 to
cover a period of three years. The Policy applied from the date of approval. The Directors’ annual Remuneration Committee
Report was put to an advisory shareholder vote at the 2021 AGM of the Company on 15 December 2021. The table below
shows full details of the voting outcomes.
Remuneration Policy (at the 2022 EGM)
Remuneration report for the year ended 30 June 2021 (at the 2021 AGM)
VOTES FOR VOTES AGAINST
1,122,761,146
(69.24%)
498,769,699
(30.76%)
1,291,897,411
(82.66%)
271,079,992
(17.34%)
VOTES
WITHHELD
1,924,635
3,648,273
The Board notes that the Directors' Remuneration Policy Resolution at the 2022 EGM received more than 20% of the vote
against the policy and has engaged with shareholders to address their concerns that resulted in this outcome. See above
in the Remuneration Report on page 103 for details regarding shareholder feedback and responses.
Summary of directors’ terms
NON-EXECUTIVE DIRECTOR
APPOINTMENT DATE
Liam Twigger
17 June 2019
Nicholas Mather
Elodie Grant Goodey
Kevin O’Kane
Keith Marshall
Maria Amparo Alban
James Clare
EXECUTIVE DIRECTOR
Darryl Cuzzubbo
Chair from 5 August 2020
11 May 2005
17 July 2020
21 October 2020
21 October 2020
21 October 2020
1 May 2018
APPOINTMENT DATE
16 November 2021
NOTICE PERIOD
3 months’ notice
3 months’ notice
3 months’ notice
3 months’ notice
3 months’ notice
3 months’ notice
3 months’ notice
NOTICE PERIOD
12 months’ notice
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
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CORPORATE GOVERNANCE R E M U N E R A T I O N - A T - A - G L A N C E
Remuneration policies and practices
The responsibility for determining remuneration arrangements for the CEO, Executive and Non-Executive Directors, as well
as oversight over all aspects of workforce remuneration, has been delegated to the Remuneration Committee.
The Directors' Remuneration Policy was amended and approved by shareholders at the recent June 2022 EGM. The details
of the Directors' Remuneration Policy and all Directors’ remuneration are detailed in the report on remuneration on pages
103-113. No Director is involved in deciding their own remuneration outcomes.
Developing directors' remuneration policy
Five meetings of the Remuneration Committee took place up until 30 June 2022 where reviews of Executive KPIs were
conducted to ensure remuneration is aligned with the Company’s purpose and values. The Directors' Remuneration Policy
links executive pay to the underlying strength and performance of the Company through performance objectives. Financial
and Non-Financial KPIs in the form of an individual and corporate scorecard are established with stretching targets to
measure performance against our strategy.
Remuneration outcomes and independent judgement
The Remuneration Committee is chaired by an Independent Non-Executive Director and all members are Independent
Non-Executive Directors. To ensure independent judgement is applied during any decision making or review, the
Remuneration Committee considers a variety of internal and external data and consults with other Board Committees to
ensure performance objectives are beyond what is normally expected within the role and are genuine stretching targets.
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D I R E C T O R S ' R E M U N E R A T I O N P O L I C Y
IMPLEMENTATION OF NEW DIRECTORS’ REMUNERATION POLICY
The Directors’ Remuneration Policy approved by Shareholders on 20 December 2018 did not provide sufficient framework
to support and incentivise Executive Directors to achieve the Company’s strategy and required changes to the performance
measures. There were very limited performance objectives and was subsequently replaced by the new Directors’
Remuneration Policy (“2022 Remuneration Policy”) approved by Shareholders on 30 June 2022. The new Directors’
Remuneration Policy is available on the Company’s website under the Notice of Meetings 30 June 2022
(https://www.solgold.com.au/notice-of-meetings/)
The 2022 Directors' Remuneration Policy supports the long-term development and strategy of the Company, while aiming
to fulfil all stakeholders’ requirements and maintaining an acceptable risk profile. It also incorporates good corporate
governance and adheres to the UK Code with the introduction of malus and clawback provisions.
The 2022 Directors' Remuneration Policy formed part of the meeting materials at the EGM in June 2022. The Policy took
effect from 1 July 2022 and will remain in place, with voting to approve its continuation taking place by 30 June 2025,
with other changes brought up in a timely manner, as deemed necessary by the Remuneration Committee.
The Directors' 2022 Remuneration Policy is designed to enable SolGold to attract, motivate and retain qualified industry
professionals in order to define and achieve our strategic goals. The Policy acknowledges the internal and external context
as well as our business needs and long-term strategy. The Policy encourages behaviour that is focused on long-term value
creation and the long-term interests and sustainability of SolGold, while adopting the highest standards of good corporate
governance.
Directors' remuneration policy table
The 2022 Directors' Remuneration Policy for the Executive Director is based on the following key principles:
• A significant proportion of remuneration should be tied to the achievement of specific performance conditions that
align remuneration with the creation of shareholder value and the delivery of the Company’s strategic plans
• There should be a focus on sustained long-term performance, with performance measured over clearly specified
timescales, encouraging executives to take action in line with the Company’s strategic plan, using good business
management principles and taking well considered risks
• Executive remuneration should support the values and culture of the Group. Pay should be simple and easy
to understand, with all aspects clear and openly communicated to stakeholders and with alignment with pay
philosophies across the Group.
The Directors' Remuneration Policy table below is an extract of the Group’s 2022 Directors' Remuneration Policy and sets
out the principles for Executive Directors’ remuneration. The 2022 Directors' Remuneration Policy is also used as a guideline
for the remuneration of the Executive Management. Following the approval by shareholders of the Directors' Remuneration
Policy on 30 June 2022, the Remuneration Committee will engage with the workforce to explain how executive remuneration
aligns with wider Company pay policy.
Further detail on the variable remuneration elements – Short and Long-Term Incentives can be found below the table.
COMPONENT
LINK TO COMPANY STRATEGY
POLICY SUMMARY
Base Salary
To attract, retain and motivate
the Company’s Executive Director(s),
and reward the position-holder’s
ability to carry out the
responsibilities of the role.
Benefits
Benefits are offered to complement
base salary to attract and retain
Executive Directors.
Base salary and statutory required superannuation/
pension obligations.
Paid in cash or a portion of base salary in shares of the
Company. The share price value is determined by the
average of the closing prices for a number of dealing
days within a period not exceeding 30 days immediately
before that date, as determined by the Remuneration
Committee.
There is no supplementary pension or retirement plan.
Only basic salary is pensionable.
Certain allowances, which may include a lump sum
relocation allowance, medical insurance, the use
of a Company car, personal security, and legal fees
(subject to restrictions).
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CORPORATE GOVERNANCE D I R E C T O R S ' R E M U N E R A T I O N P O L I C Y
C O N T I N U E D
COMPONENT
LINK TO COMPANY STRATEGY
POLICY SUMMARY
Annual Bonus /
Short-Term
Incentive ("STI")
To incentivise participants to focus
on outcomes that are a strategic
target for the Company in the
financial year and commitment
to operating responsibly.
The STI reflects performance during
the financial year, the STI measures
outcomes that are within Director’s
control.
Long-Term
Incentive Plan
("LTI")
To directly incentivise sustained
shareholder value through delivery
of long-term performance objectives
and to retain high calibre Executive
Directors by providing an attractive
equity-based incentive that builds
an ownership mindset.
The amount of STI payable will be based upon the
percentage STI opportunity indicated in the employee’s
contract of employment (and not exceeding the
percentage stated in this table). STI will be paid as
a lump sum, in cash, or as an allocation of shares
at the discretion of the Remuneration Committee
(shares immediately vest).
The Remuneration Committee reviews metrics annually
to ensure they remain appropriate and reflect the future
strategic direction of the Company. Targets for each
performance measure are set by the Remuneration
Committee with reference to internal plans and
external expectations.
Offers to join a LTI are made annually, in the form of
shares, options, or in exceptional circumstances, cash.
LTI payments have a performance and vesting period
of at least 3 years, subject to the meeting of objective
performance conditions and continued employment.
At a holding period on no less than 2 years, save that
Directors may sell sufficient shares to pay taxes due
related to the LTIs if required, during this period.
Specific targets are not disclosed considering they are commercially sensitive.
Short-term incentive plan ("STI") implementation
The Remuneration Committee believes that a simple and transparent scheme for the annual bonus/STI, with sufficiently
stretching targets, ensures that the Executive Directors and Executive Management are focused on the delivery of
sustainable business performance. The Performance Bonus Plan (“PBP”) was approved by Shareholders on 30 June 2022.
The PBP is a discretionary plan that provides for the grant of performance bonus awards to both Executive Directors and
Executive Management of the Group in order to retain and motivate them. Awards can be paid in the form of cash or shares,
or a combination of both where performance objectives in both the individual and corporate scorecards are reached.
The Corporate and Individual Scorecard (“Scorecard”), as recommended by management, endorsed by the Remuneration
Committee, and approved by the Board, determines the specific Key Performance Indicators (“KPI”) that the participant
must achieve over a period of 12 months to receive an award. The annual performance cycle is 1 July to 30 June. The
Scorecards include a balanced range of measures that consider both financial and non-financial KPIs within the Health
& Safety, Value Creation and ESG categories. The Board is provided with the discretion to modify the STI outcomes in
extenuating circumstances.
The Scorecards are based on three pillars within SolGold:
1) Health, Safety and People
2) Value Creation
3) Environment, Social and Governance ("ESG").
Each Pillar contains a list of KPIs, specific to the participant and within their executive control, with various performance
levels to measure the level of performance and ultimate award outcome (if any).
116
Achievement and performance against each participants Scorecard is assessed annually as part of the Company’s broader
performance review process. As soon as practicable after the Company’s financial results becoming available following the
end of each Performance Period, the Board shall:
1) review the Group’s, and, if applicable, any relevant Group Company’s performance and the Participant’s performance
during the Performance Period and determine whether and to what extent the Performance Conditions have been satisfied
2) determine the total value of the Bonus Award payable to each Participant
3) if any proportion of the total value of the Bonus Award is to be paid in cash, determine the amount of the Cash Award
4) if any proportion of the total value of the Bonus Award is to be settled in Bonus Shares, determine the number of Bonus
Shares by reference to the Market Value on the date of determination.
Long-term incentive plan ("LTIP") implementation
The Remuneration Committee believes in setting demanding objectives, which reward progressive growth, in order to
incentivise and encourage long-term growth and enhance shareholder value.
The Long-Term Incentive Plan ("LTIP") is operated in conjunction with the Long-Term Incentive Plan Rules ("LTIP Rules")
approved by Shareholders on 30 June 2022 and will be implemented in the 2023 financial year. Performance conditions,
including non-financial metrics, are relevant, stretching and designed to promote the long-term success of the Company.
The LTIP’s purpose is to encourage employee retention and to incentivise the creation of long-term value for shareholders
by the Executive Director and Executive Management.
The LTIP rules includes if a participant: (i) ceases to be a Director of the Company and of the designated affiliates of the
Company (and is not or does not continue to be an employee thereof) for any reason (other than death); or (ii) ceases
to be employed by, or provide services to, the Company or the designated affiliates of the Company (and is not or does
not continue to be a Director or officer thereof), or any corporation engaged to provide services to the Company or the
designated affiliates of the Company, for any reason (other than death) or receives notice from the Company or any
designated affiliate of the Company of the termination of his or her employment contract, except as otherwise provided
in any employment contract or the terms and conditions of any Option, in situations of termination not for cause, such
participant will have 90 days (unless extended by the Board) following termination to exercise his or her Options to the
extent that such participant was entitled to exercise such Options at the date of termination, and, in situations other than
a termination not for cause, any Options held by such participant on the date of such termination shall be forfeited and
cancelled as of that date. Notwithstanding the foregoing or any employment contract, in no event may such right extend
beyond the Option period.
The LTIP opportunity level reflects the capacity of the participant to influence long-term sustainable growth and performance.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
117
CORPORATE GOVERNANCE D I R E C T O R S ’ R E P O R T
The Directors present the Annual
Report of SolGold plc together with
the audited financial statements for
the year ended 30 June 2022.
In accordance with section 415 of the
Companies Act 2006, the Directors
present their report which incorporates
the management report required
under the Disclosure Guidance and
Transparency Rules sourcebook
(“DTRs”) of the United Kingdom's
Financial Conduct Authority, for listed
companies and the audited accounts
for the year ended 30 June 2022 as
set out on pages 133-140.
Principal activities
SolGold plc (SolGold or the Company) is
a mineral exploration and development
company headquartered in Brisbane,
Australia. The Company is a UK
incorporated public limited company
with the registration number 5449516
and registered address 1 King Street,
London, EC2V 8AU. SolGold is dual
LSE and TSX-listed (SOLG on both
exchanges) and has a leading
exploration and project team focused
on copper-gold exploration and mine
development with assets in Ecuador,
Solomon Islands and Australia.
Review of business
A review of the current and future
development of the Group’s business
is given in the Strategic Report on
pages 6-75 which forms part of, and
by reference is incorporated in, this
Directors’ Report. The Board is very
pleased to confirm the successful
release of the PFS of the Cascabel
project with more information regarding
this found on pages 24-26 and the
appointment of new CEO and Managing
Director, Darryl Cuzzubbo, who has
extensive experience in both the
resources and manufacturing sectors.
Financial risk management has been
assessed within Note 24 to the
financial statements.
Results and dividends
The Directors do not recommend
the payment of a dividend (2021: nil).
The results for the year are set out in
the consolidated financial statements
for the year ended 30 June 2022.
Share capital
Details of the issued share capital of the
Company, including details of ordinary
shares issued during the year, is set out
in Note 18 of the financial statements.
As at the date of this report the
Company’s issued share capital
consisted of 2,296,051,501 ordinary
shares of 1p each. The Company does
not hold any shares in Treasury. The
Company has one class of ordinary
share, with the rights set out in the
Articles of Association. All issued shares
are fully paid, and each share has the
right to one vote at the Company’s
general meeting. There are no specific
restrictions either on the size of a
holding or on the transfer of shares,
which are both governed by our Articles
of Association. There are no special
rights attached to the control of the
Company or special rights attached
to shares under any employee share
scheme.
The Directors may only issue shares
to the extent authorised by the
shareholders in a general meeting,
unless an exemption applies, such as
Section 613(c) of the TSX Company
Manual (an exemption for remuneration
for recruitment inducement purposes)
or under a shareholder approval
Employee Incentive Plan.
Details of the Company’s Employee
Incentive Plans, including the
Incentive Plans recently approved by
shareholders at the EGM on 30 June
2022 are set out in Note 23. No votes
are cast in respect of the options under
the Incentive Plans until such time the
options are converted to shares. No
person has any special rights of control
over the Company’s share capital and
all issued shares are fully paid. At
30 June 2022, there were 13,000,000
unlisted options outstanding for the
issue of ordinary shares under the
superseded Employee Incentive Plan
approved in 2017.
The current power to allot shares
was granted by shareholder resolution
at the 2021 AGM and a new authority
is being sought at the 2022 AGM
within the limits set out in the notice
of meeting.
Directors and directors’ interests
The Directors of the Company who held office during the year were as follows:
APPOINTED
RESIGNED
NOT RE-ELECTED
Liam Twigger
Darryl Cuzzubbo
Elodie Grant Goodey
Maria Alban Amparo
Kevin O’Kane
Keith Marshall
Nicholas Mather
James Clare
Jason Ward
Brian Moller
118
17 June 2019
Chair: 5 August 2020
CEO: 1 December 2021
Director: 16 November 2021
17 July 2020
21 October 2020
21 October 2020
21 October 2020
Interim CEO:
1 Apr 2021 – 1 Dec 2021
11 May 2005
CEO: May 05 – Mar 2021
1 May 2018
17 June 2019
11 May 2005
12 August 2022
13 May 2022
15 December 2021
Further details about the current
Directors and their roles within the
Company are available in the Directors’
biographies on pages 82-84. Details
of the remuneration of the Directors,
and their interests in the shares of the
Company are contained in the Annual
Report on Remuneration on pages
105-113.
The Board has the power at any time
to elect any person to be a Director,
but the number of Directors must
not exceed the maximum number
determined by the Articles of
Association. The Board will continue
to regularly review and monitor its
composition and performance having
regard to the evolving complexity of
the Company’s activities and operations
and make changes as appropriate.
Under the Company’s Articles of
Association, each Director submits
himself or herself for re-election by
shareholders at least every three (3)
years. However, all Directors intend to
stand for re-election at the 2022 AGM
to be held later this year in accordance
with The Boards’ decision to voluntary
comply with the Code.
Directors’ interests
Before each Board meeting, all
Directors are to disclose whether they
hold any interests in any matters to
be reviewed at the Board meeting. The
Company Secretary is notified promptly
of any changes to those reported
interests. Information on Directors’
interests in shares of the Company
is set out in the Annual Report on
Remuneration on page 120.
Directors’ indemnity
The Company has maintained Directors’
and Officers’ insurance during the year.
Such provisions remain in force at the
date of this report.
The Company has entered into deeds
of indemnity with each of the Directors
and which were in force as at the date
of this Directors’ Report.
Substantial shareholding
At 30 June 2022, the Company has been notified or is aware of the following
interests in the Shares of the Company of 3% or more of the Company’s total
issued share capital.
BHP Group PLC
Newcrest International Pty Ltd
DGR Global Ltd
Cornerstone Capital Resources
Black Rock Inc.
Tenstar Trading Limited
NBIM
Nicholas Mather1
NO. OF SHARES
310,965,736
309,309,996
204,151,800
157,141,000
126,702,684
107,877,393
90,608,173
90,326,710
% OF VOTING
RIGHTS
13.55
13.48
8.90
6.85
5.52
4.70
3.95
3.94
1 Includes Mr Mather’s beneficial and non-beneficial holdings.
Corporate governance
The Governance Report can be found
on pages 77-79 for a description of
the Company’s Corporate Governance
structure and policies. The Board has
made a concerted effort to ensure the
Company’s governance practices and
policies are current and implemented
within the business of the Company.
The Governance Report forms part
of this Directors’ Report and is
incorporated by cross reference.
Whistle-blower reports
Up to 30 June 2022, we received
five (5) reports to our dedicated
confidential whistle-blower hotline:
1 report is still under investigation,
while all others, after substantial
internal investigation were determined
to be unrelated to business ethics and
instead were resolved under the
Grievance, Disputes and Complaints
Policy. The Whistle-blowing Policy is
available on the Company’s website and
all reports are individually investigated
both internally and, in some instances,
completing an external third party
investigation. The introduction of the
whistle-blower hotline allows both
employees and stakeholders to raise
concerns with a guarantee that the
matter will be investigated.
Equal opportunities/employees
with disabilities
SolGold values diversity and aims to
make the best use of everyone’s skills
and abilities. We have given full and
fair consideration to applications for
employment by the Company made
by disabled persons, having regard to
their particular aptitudes and abilities.
If any employees of the Company
become disabled while they work
for us, where possible, we will retrain
employees who become disabled and
adjust their working environment, so
they can maximise their potential.
Employees
Employees receive regular briefings
and updates via periodic internal
communications concerning specific
events, and announcements and
presentations by the CEO and
Executive Management to inform
them of the performance of the
business and issues affecting the
business. All communications are
written in both English and Spanish.
Branches
For purposes of Chapter 3 of the
Companies House 2006, the Company
is headquartered in Australia.
Financial instruments
The Company does not undertake
financial instrument transactions that
are speculative or unrelated to the
Company’s or Group’s activities. The
Group’s financial instruments consist of
deposits with banks, accounts payable,
other financial liabilities in the form of
the Franco-Nevada NSR Financing
Agreement, and derivative liabilities
associated with the option issued to
BHP in December 2019. The loans
provided to employees under the
Company Funded Loan Plan (“CFLP”)
will expire on 31 December 2022 if not
repaid earlier, see Note 14. In addition
to the Group’s financial instruments,
the Company’s financial instruments
also include its loans to subsidiaries.
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119
CORPORATE GOVERNANCE D I R E C T O R S ’ R E P O R T
C O N T I N U E D
Methodology
Intensity ratio
The methodology used for the
calculation of emissions was the
Greenhouse Gas (“GHG”) Protocol
Corporate Accounting and Reporting
Standard (revised edition to 2015).
The standard covers the accounting
and reporting of seven greenhouse
gases: carbon dioxide (CO2),
methane (CH4), nitrous oxide
(N2O), hydrofluorocarbons ("HFCs"),
perfluorocarbons ("PCFs"), sulphur
hexafluoride (SF6) and nitrogen
trifluoride (NF3), and it covers the
Company’s operational boundaries.
Scope 1 emissions from direct activities
of the operation, included: 1) the use
of vehicles owned by the Company for
transportation of machinery, material
and personnel, operation of machinery
for perforation, the use of generators
for electricity in the camps, Liquefied
Petroleum Gas (“LPG”) in camps,
composting activities and the
treatment of wastewater from the
camps and water used for drilling
operations. Methane calculations were
made separately for both wastewater
sources, and N2O generation was only
calculated for wastewater from camps.
These calculations were made using
GHG Protocol for Cities (“GPC”)
methodology.
Scope 2 emissions from activities
of the operation associated with
the consumption and purchase of
electricity from the grid for the camps.
Reported annual emissions are
presented in tons of carbon dioxide
equivalent CO2eq. Regarding the
emissions factors, for energy and fuel,
the updated emissions factors provided
by the Government of Ecuador were
used and the IPCC emissions factors
were used for the waste sector.
Third party consultant Samana
produced SolGold’s emission reports.
The Company reported on all of the
emission sources required under the
Companies Act 2006 (Strategic Report
and Directors’ Reports). The Company
does not have responsibility for any
emission sources that are not included
in its consolidated statements.
In order to express the GHG emissions
in relation to a quantifiable factor
associated with the Company’s
activities, drilling metres were chosen
as a normalisation factor. This will
allow comparison of the Company’s
performance over time, as well as
with other companies in the sector.
For the year ended 30 June 2022,
the intensity ratio for the Cascabel
and regional exploration operations
was 0.08mtCO2e/metre drilled
(2021: 0.09mtCO2e/metre drilled).
For further details on the Company’s
emissions report and details refer to
page 57.
Currency
The functional currency of the
subsidiaries in Australia is considered
to be Australian Dollars ("AUD$"). The
functional currency of the subsidiaries
in Solomon Islands is considered to be
Solomon Islands Dollars ("SBD$"). The
functional currency of the subsidiaries
in Ecuador is considered to be United
States Dollars ("US$"). The presentational
currency of the Company and the
Group is United States Dollars and all
amounts presented in the Directors’
Report and financial statements are
presented in United States Dollars
unless otherwise indicated.
Takeover
There are no significant agreements
that take effect, alter or terminate on
change of control of the Company
following a takeover. Certain employees
may receive compensation on a change
of control of the Company following a
takeover, subject to the discretion of
the Board regarding their Employee
Share Incentive Plans.
Furthermore, under the Directors'
Remuneration Policy approved on 30
June 2022, Directors are not provided
with compensation for loss of office or
employment that occurs because of a
takeover bid.
Further details of financial risk
management objectives and policies,
and exposure of the Company to
financial risks are provided in
Note 24 in the financial statements.
Political donations
No political donations were made
during the year.
Going concern
Information on the business
environment in which SolGold operates
is included in the Strategic Report.
The financial statements have been
prepared on a going concern basis
which contemplates the continuity
of normal business activities and the
realisation of assets and discharge
of liabilities in the ordinary course
of business. The Company has not
generated revenues from operations,
and in common with many exploration
companies, the Company raises capital
for its exploration and appraisal
activities in discrete tranches. As such,
the ability of the Group to continue as
a going concern depends on its ability
to secure additional financing. While
this situation gives rise to a material
uncertainty and there can be no
assurance the Company will be able
to raise required financing in the future,
the Directors consider it appropriate to
prepare the financial statements on a
going concern basis given the Group’s
historical ability to raise necessary
funding (refer Note 1(b)(ii).
Further details of the Company’s cash
balances and borrowings are included
in Notes 17 and 21 in the Financial
Statements from page 133.
Performance in relation to
environmental regulation
Carbon reporting
Streamlined Energy and Carbon
Reporting (“SECR”) regulations
came into effect on 1 April 2019.
The Company must report energy
consumption and resultant carbon
emissions as well as a suitable
intensity ratio in its Directors’ Report.
The Company applies the practice
of “reduce, reuse and recycle” and is
considerate of the resources used as
well as the direct and indirect impact
our operations may have. Furthermore,
the Company now has a roadmap to
build the world’s first large scale carbon
neutral copper mine at Cascabel.
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Related party transactions
Website publication
Details of related party transactions
for the Group and Company are given
in Note 26. Key management personnel
remuneration disclosures are given in
Note 5.
Auditors
PricewaterhouseCoopers LLP ("PwC")
were successful in the audit tender
process held during the year and
have audited the 30 June 2022.
Subsequent events
Details of significant events since the
balance sheet date are contained in
Note 28 to the financial statements.
The Directors are not aware of any
other significant changes in the state
of affairs of the Group or events after
the reporting date that would have a
material impact on the consolidated
or Company financial statements.
Section 172 statement
A statement of how the Board has
performed in its duties under section
172 of the Companies Act 2006 (the
“Act”) can be found on page 48 of
the Strategic Report.
In accordance with the Companies Act
2006 ("Companies Act"), the following
items have been reported in other
sections of the Annual Report and are
included in this Directors’ Report by
reference in the Details of stakeholder
engagement (page 90).
A separate communication will be sent
to shareholders and published on the
Company’s website regarding the
Company’s 2022 AGM, which is likely
to be held by December.
The Directors are responsible for
ensuring the Annual Report and the
financial statements are made available
on the Company’s website. Financial
statements are published on the
Company’s website in accordance
with legislation in the United Kingdom
governing the preparation and
dissemination of financial statements,
which may vary from legislation in other
jurisdictions. The maintenance and
integrity of the Company’s website is
the responsibility of the Directors. The
Directors’ responsibility also extends to
the ongoing integrity of the financial
statements contained therein.
Articles of association
The Company’s amended Articles
of Association were adopted by
shareholders at the Company’s EGM
held on 30 June 2022. Any amendment
to the Articles requires the approval of
shareholders by a special resolution at
a general meeting of the Company.
Disclosure of audit information
In the case of each person who is a
Director of the Company at the date
when this report is approved confirms
that, so far as they are individually
aware, there is no relevant audit
information of which the Company’s
auditors are unaware, and that each
Director has taken all the steps that
they ought to have taken as a Director
to make themselves aware of any
relevant audit information and to
establish that the Company’s
auditors are aware of the information.
On behalf of the Board,
RUFUS GANDHI
Company Secretary and
Group General Counsel
Registered Number 5449516
SolGold plc
Level 27, 111 Eagle Street
Brisbane QLD 4000
Australia
28 September 2022
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CORPORATE GOVERNANCE D I R E C T O R S ' R E S P O N S I B I L I T Y S T A T E M E N T
The Directors are responsible for
preparing the Annual Report and the
financial statements in accordance
with applicable law and regulation.
Company law requires the Directors
to prepare financial statements for
each financial year. Under that law the
Directors have prepared the Group
and the Company financial statements
in accordance with UK-adopted
international accounting standards.
In preparing the Group and Company
financial statements, the Directors
have also elected to comply with
International Financial Reporting
Standards issued by the International
Accounting Standards Board ("IFRSs
as issued by IASB").
Under company law, Directors must not
approve the financial statements unless
they are satisfied that they give a true
and fair view of the state of affairs of
the Group and Company and of the
profit or loss of the Group for that
period. In preparing the financial
statements, the Directors are
required to:
• select suitable accounting policies
and then apply them consistently
• state whether applicable UK-adopted
international accounting standards
and IFRSs issued by IASB have been
followed, subject to any material
departures disclosed and explained
in the financial statements
• make judgements and accounting
estimates that are reasonable and
prudent
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and Company will continue
in business.
The Directors are responsible for
safeguarding the assets of the Group
and Company and hence for taking
reasonable steps for the prevention
and detection of fraud and other
irregularities.
The Directors are also responsible for
keeping adequate accounting records
that are sufficient to show and explain
the Group’s and Company’s transactions
and disclose with reasonable accuracy
at any time the financial position of the
Group and Company and enable them
to ensure that the financial statements
and the Directors’ Remuneration Report
comply with the Companies Act 2006.
The Directors are responsible for
the maintenance and integrity of the
Company’s website. Legislation in
the United Kingdom governing the
preparation and dissemination of
financial statements may differ
from legislation in other jurisdictions.
Directors’ confirmations
Each of the Directors, whose names and
functions are listed in Annual Report
and the financial statements confirm
that, to the best of their knowledge:
• the Group and Company financial
statements, which have been
prepared in accordance with
UK-adopted international accounting
standards and IFRSs issued by
IASB, give a true and fair view of
the assets, liabilities and financial
position of the Group and Company,
and of the loss of the Group
• the Annual Report and the financial
statements include a fair review of
the development and performance
of the business and the position of
the Group and Company, together
with a description of the principal
risks and uncertainties that it faces.
Board Approval 21 September 2022.
By order of the Board,
LIAM TWIGGER
Chair
SolGold plc
28 September 2022
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I N D E P E N D E N T A U D I T O R S ’ R E P O R T
T O T H E M E M B E R S O F S O L G O L D P L C
Report on the audit of the financial statements
Opinion
In our opinion, SolGold plc’s Group financial statements and Company financial statements (the “financial statements”):
• give a true and fair view of the state of the Group’s and of the Company’s affairs as at 30 June 2022 and of the Group’s
profit and the Group’s and Company’s cash flows for the year then ended;
• have been properly prepared in accordance with UK-adopted international accounting standards; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report, which comprise: the Consolidated and
Company Statements of Financial Position as at 30 June 2022; the Consolidated Statement of Profit and Loss and Other
Comprehensive Income, the Consolidated and Company Statements of Changes in Equity and the Consolidated and
Company Statements of Cash Flows for the year then ended; and the notes to the financial statements, which include
a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit and Risk Committee.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in note 1 to the financial statements, the Group, in addition to applying UK-adopted international accounting
standards, has also applied international financial reporting standards ("IFRSs") as issued by the International Accounting
Standards Board ("IASB").
In our opinion, the Group financial statements have been properly prepared in accordance with IFRSs as issued by the IASB.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were
not provided.
We have provided no non-audit services to the Company or its controlled undertakings in the period under audit.
Material uncertainty related to going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure
made in note 1 to the financial statements concerning the Group’s and the Company’s ability to continue as a going concern.
The Group has not generated revenues from operations and management’s cashflow forecasts show that the Group and
the Company need to secure additional funding to continue their exploration and development programme and in order to
continue to meet their obligations and liabilities as they fall due. Management are currently exploring options for obtaining
this additional funding, as outlined in note 1, but no firm commitments have been received at the date of approval of these
financial statements. These conditions, along with the other matters explained in note 1 to the financial statements, indicate
the existence of a material uncertainty which may cast significant doubt about the Group’s and the Company's ability to
continue as a going concern. The financial statements do not include the adjustments that would result if the Group and
the Company were unable to continue as a going concern.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
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FINANCIAL STATEMENTS I N D E P E N D E N T A U D I T O R S ’ R E P O R T
T O T H E M E M B E R S O F S O L G O L D P L C
C O N T I N U E D
Our evaluation of the Directors’ assessment of the Group's and the Company’s ability to continue to adopt the going
concern basis of accounting included:
• Obtaining and reviewing the Group's board-approved cashflow forecasts for the going concern period covering
18 months to 31 March 2024, including both the base case and severe but plausible downside scenarios, challenging
and evaluating management’s assumptions used and verifying that these assumptions are consistent with our
knowledge and understanding of the business;
• Assessing management’s ability to take mitigating actions, including securing additional funding, delaying capital
expenditure and reducing costs, and verifying that the Group is able to meet its exploration and working capital
commitments within the going concern period under the scenario where it is able to secure additional funding;
• Discussions with management, and their advisers, around their plans for securing the additional funding;
• Testing the cashflow forecast model for mathematical accuracy; and
• Assessing the completeness and adequacy of management’s going concern disclosures provided in note 1 to the
financial statements.
In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, other than the material
uncertainty identified in note 1 to the financial statements, we have nothing material to add or draw attention to in relation
to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the
going concern basis of accounting, or in respect of the Directors’ identification in the financial statements of any other
material uncertainties to the Group's and the Company’s ability to continue to do so over a period of at least twelve
months from the date of approval of the financial statements.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
Our audit approach
Context
This is our first year as external auditors of the Group. As part of our audit transition, together with our component audit
teams, we performed specific procedures over opening balances by reviewing the predecessor auditors’ working papers
in the UK, Ecuador and Switzerland, and re-evaluating the predecessor auditors’ conclusions in respect of key accounting
judgements in the opening balance sheet at 1 July 2021. We performed audit procedures in advance of the year-end,
together with our component audit team in Ecuador, the objective of which was to enable early consideration of as many
key accounting judgements as possible and to identify any specific areas where additional audit attention might be required
at the year-end. The audit transition and early audit procedures were important in determining our final 2022 Group audit
scope and areas of focus. As we undertook each phase of this first year audit, we regularly updated our risk assessment
to reflect audit findings, including our assessment of the Group’s control environment and the impact on our planned
audit approach. Our response to management’s discovery of the misappropriation of funds in Ecuador also influenced
the determination of our final 2022 Group audit scope and areas of focus.
Overview
Audit scope
• The Group’s assets and operations are primarily located in Ecuador. We conducted a full scope audit over three
components of the Group, namely Exploraciones Novomining S.A (“ENSA”), SolGold Ecuador S.A and the Company,
SolGold plc. In addition, we performed specified procedures over other components: SolGold Finance AG, Green Rock
S.A., Carnegie S.A. and Cruz del Sol S.A.
• Financial reporting is undertaken for the consolidated Group at the head office in Brisbane, Australia and in London, UK.
Our scope enabled us to obtain 97% coverage of the Group’s consolidated total assets and 92% coverage of the Group’s
consolidated profit before tax.
Key audit matters
• Material uncertainty related to going concern (Group) – refer to Material uncertainty related to going concern
section above
• Misappropriation of funds (Group)
• Carrying value of intangible assets (Group)
• Carrying value of Investments in subsidiaries and Intercompany Loans with Subsidiaries (Company).
Materiality
• Overall Group materiality: US$4.3million based on 1% of Total Assets
• Overall Company materiality: US$3.7million based on 1% of Total Assets
• Performance materiality: US$2.1million (Group) and US$1.9million (Company).
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The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit
of the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to going concern, described in the Material uncertainty related to going concern section above, we determined
the matters described below to be the key audit matters to be communicated in our report. This is not a complete list of all
risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Misappropriation of funds (Group)
In late 2021, management discovered a misappropriation
of funds in Ecuador. As a result of this discovery, the Board
commissioned a forensic investigation by third party forensic
investigators into the misappropriation of funds, reporting to
the Chair of the Audit and Risk Committee, as described in
the Audit and Risk Committee’s Report and in notes 1 and 13.
The forensic investigation revealed that during the calendar
years 2017 to 2021, US$4.6 million was misappropriated,
resulting in the overstatement of the Group’s deferred
exploration assets.
Management concluded that it was appropriate to restate
the financial statements by writing-down the value of the
deferred exploration assets by US$4.6 million.
Management's response to the findings of the investigation,
including the associated control deficiencies that were
identified, is set out in the Audit and Risk Committee’s
Report.
The forensic investigation, and its results and
findings, was a key area of focus for us.
Our audit focused on understanding and reviewing the
findings of the external forensic investigation and on
evaluating the impact on the financial statements.
In particular, we assessed where additional audit
procedures were required to be performed, including
in Ecuador specifically. We instructed our component
team in Ecuador to perform additional procedures to
respond to the risk of fraud, including increasing the
sample sizes for our substantive audit procedures over
certain financial statement lines items, such as capitalised
deferred exploration costs and operating expenses.
We also considered the impact of the investigation on
management’s internal control environment both in Ecuador
and in other locations, and evaluated the risk of further
misappropriation having been committed. Consistent with
our original audit plan, we instructed our component audit
team in Ecuador to perform a full scope audit on ENSA’s
complete financial information, incorporating the additional
procedures referred to above. We also requested them
to perform specified procedures over additional entities
(Green Rock S.A., Carnegie S.A. and Cruz del Sol S.A.). We
evaluated the component team’s work, including performing
a significant level of oversight, with senior members of the
Group audit team spending time in Ecuador during the
interim and year end phases of the component audit.
We engaged our internal forensic experts to support the
audit team in evaluating the scope and findings of the
investigation. This included a review of the scope, reading
the final report and findings, assessing and challenging the
evidence identified to support the transactions underlying
the misappropriation, such as the email searches and
transcripts of interviews, and challenging whether further
procedures needed to be undertaken. We also assessed the
competence, capabilities and objectivity of the third party
forensic investigators used by management.
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FINANCIAL STATEMENTS I N D E P E N D E N T A U D I T O R S ’ R E P O R T
T O T H E M E M B E R S O F S O L G O L D P L C
C O N T I N U E D
How our audit addressed the key audit matter
As a result of our work, we satisfied ourselves that the
adjustments posted by management in relation to the
misappropriation of funds, including to the opening
balance sheet, following the investigation, are
materially appropriate.
We also considered the appropriateness of the disclosures
made by management in note 1 to the financial statements
and in the Audit and Risk Committee’s Report and
determined that they provided an adequate explanation
of the issue and the results of management’s investigation.
We evaluated management’s assessment of potential
indicators of impairment of the intangible assets, being
the deferred exploration costs.
We undertook the following procedures in our evaluation
of management’s impairment indicator assessment:
• Understood and evaluated management’s accounting
policies for exploration assets;
• Obtained management’s exploration expenditure
forecasts, supporting their assessment of indicators of
impairment, along with their plans for future expenditure
to meet minimum licence requirements;
• Assessed whether the Group has retained the right of
tenure for all its exploration licence areas by obtaining
licence status records from relevant state government
online databases, verification of licence status to
supporting documentation and through discussion
with external lawyers, in order to confirm legal title;
• Discussed the results of the recently-published
Pre-Feasibility Study relating to the Alpala project
and understood management’s plans for the next
stage of this development; and
• Reviewed the adequacy of the disclosures in the
financial statements.
As a result of our work, we determined that the impairment
charges recorded are appropriate, that no other indicators
of impairment were identified for the remaining intangible
assets and that adequate disclosures have been made in
the financial statements.
Key audit matter
Misappropriation of funds (Group)
continued
Carrying value of intangible assets (Group)
Refer to Note 13 (intangible assets).
As at 30 June 2022, the Group has intangible assets of
US$365.6 million, relating to deferred exploration costs.
Under IAS 36, ‘Impairment of Assets’, management is
required to undertake an impairment assessment of
the carrying value of the Group’s intangible assets and
other non-financial assets where there are indicators of
impairment. It is important to note that although IAS 36
applies to the accounting for the impairment of Exploration
and Evaluation assets (“E&E”), IFRS 6 “Exploration for and
Evaluation of Mineral Resources” modifies the requirements
in IAS 36 with respect to:
• the indications of impairment; and
• the level at which impairment is tested.
Impairment assessments require significant judgement
and there is a risk that the carrying value of the assets
may not be supported by their recoverable amount.
As such this was a key area of focus for our audit due
to the material nature of intangible assets, the significant
judgement involved and the fact that this was our first
year as auditors.
At 30 June 2022, management’s impairment trigger
assessment considered factors such as:
• whether the period for which the entity has the right
to explore in the specific area has expired during
the period or will expire in the near future and is
not expected to be renewed;
• whether substantive expenditure on further exploration
for, and evaluation of, mineral resources in the specific
area is neither budgeted nor planned;
• whether exploration for, and evaluation of, mineral
resources in the specific area have not led to the discovery
of commercially viable quantities of mineral resources and
the entity has decided to discontinue such activities in the
specific area; and
126
Key audit matter
How our audit addressed the key audit matter
Carrying value of intangible assets (Group)
continued
• whether sufficient data exists to indicate that, although
a development in the specific area is likely to proceed,
the carrying amount of the E&E asset is unlikely to be
recovered in full by successful development or by sale.
As a result of their impairment assessment, management
has recognised an impairment of US$3.6 million, relating to
concessions in Ecuador that the board decided to relinquish.
Management did not identify any other impairments relating
to the other intangible assets.
Carrying value of Investments in subsidiaries and
Intercompany Loans with Subsidiaries (Company)
Refer to Note 9 (Investment in subsidiaries),
Note 10 (Intercompany Loans with Subsidiaries).
As at 30 June 2022, the Company holds Investments
in subsidiaries amounting to US$153 million, as well
as Loans with Subsidiaries of US$186 million.
In assessing the carrying value of these assets, management
considered whether the underlying net assets of the
investments support the carrying amount, the nature
of the underlying assets and whether other facts and
circumstances could also be indicative of impairment.
Management also performed an assessment of the
expected credit losses on the loans with subsidiaries.
Management concluded that no impairment is required in
relation to the carrying value of investments in subsidiaries
and loans with subsidiaries and concluded that no expected
credit losses against the loans with subsidiaries are required.
The carrying value of investments in subsidiaries and loans
with subsidiaries was included as a key audit matter given
that this is an area of focus for the audit of the Company
due to the size of the balances.
In respect of the Company’s investments in subsidiaries
and loans with subsidiaries, we evaluated and challenged
management’s assessment of the carrying values.
We independently performed an assessment of internal
and external factors, including considering the market
capitalisation of the Group with reference to the carrying
value of the Company’s investments in subsidiaries and
loans with subsidiaries to identify other possible
impairment indicators.
As a result of our work, we are satisfied that the carrying
value of the Company’s investments in subsidiaries and
loans with subsidiaries are appropriate at 30 June 2022.
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FINANCIAL STATEMENTS I N D E P E N D E N T A U D I T O R S ’ R E P O R T
T O T H E M E M B E R S O F S O L G O L D P L C
C O N T I N U E D
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and
controls, and the industry in which they operate.
The Group’s assets and operations are primarily located in Ecuador. In establishing the overall approach to the Group
audit, we determined the type of work required to be performed for the consolidated financial statements by the Group
audit team, or through involvement of our component auditors in Ecuador and Switzerland. We identified three significant
components which, in our view, required an audit of their complete financial information, either due to their size or risk
characteristics. This included the two main operating subsidiaries in Ecuador, namely Exploraciones Novomining S.A
(“ENSA”) and SolGold Ecuador S.A, and the Parent Company, SolGold plc. In addition, we performed specified procedures
over other components: SolGold Finance AG., Green Rock S.A., Carnegie S.A. and Cruz del Sol S.A..
Our component audit teams, under the Group team’s direction and supervision, performed walkthroughs to understand and
evaluate the key financial processes and controls across the Group. Where work was performed by our component auditors
in Ecuador and Switzerland, we determined the level of our involvement in the audit work for the consolidated Group in
order to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion
on the Group financial statements as a whole.
As part of our year end audit, we spent time with our component audit team in Quito, Ecuador, during the interim and year
end phases of the audit. In addition to these site visits, we conducted oversight of our component audit teams through
regular dialogue via conference calls, video conferencing and email communication as considered necessary. We performed
remote and in-person working paper reviews to satisfy ourselves as to the appropriateness of audit work performed by
our component audit teams. We also attended key meetings virtually and in person with Group and local management.
Further specific audit procedures over the Group consolidation and review procedures over the Annual Report and audit
of the financial information disclosures were directly performed by the Group audit team. These procedures gave us the
evidence we needed for our opinion on the Group financial statements as a whole.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect
of misstatements, both individually and in aggregate, on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for benchmark applied
Financial statements – Group
Financial statements – Company
US$4.3million
1% of Total Assets
US$3.7million
1% of Total Assets
We considered total assets to be an
appropriate benchmark for the Group,
given the Group’s current focus on the
exploration of its assets. In addition,
the Directors use this measure as a key
performance indicator for the Group.
We have assessed that the most
appropriate benchmark for the
Company, which is primarily a holding
company, and holds material investments
in subsidiary undertakings, is total assets.
For each component in the scope of our Group audit, we allocated a materiality that was less than our overall Group
materiality. The range of materiality allocated across components was US$0.5million to US$3.7million. Certain components
were audited to a local statutory audit materiality that was also less than our overall Group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the
scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for
example in determining sample sizes. Our performance materiality was 50% of overall materiality, amounting to US$2.1million
for the Group financial statements and US$1.9million for the Company financial statements.
In determining the performance materiality, we considered a number of factors – the fact that this was our first year as
auditors and our risk assessment and aggregation risk – and concluded that an amount at the lower end of our normal
range was appropriate.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit
above US$214,000 (Group audit) and US$185,000 (Company audit) as well as misstatements below those amounts that,
in our view, warranted reporting for qualitative reasons.
128
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. 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
based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and
Directors’ Report for the year ended 30 June 2022 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and the Company and their environment obtained in the course
of the audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance
with the Companies Act 2006.
Corporate governance statement
ISAs (UK) require us to review the Directors’ statements in relation to going concern, longer-term viability and that part
of the corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate
Governance Code, which the Listing Rules of the Financial Conduct Authority specify for review by auditors of premium
listed companies. Our additional responsibilities with respect to the corporate governance statement as other information
are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit,
and, except for the matters reported in the section headed ‘Material uncertainty related to going concern’, we have nothing
material to add or draw attention to in relation to:
• The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
• The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their identification of any material uncertainties to the Group’s and
Company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial
statements;
• The Directors’ explanation as to their assessment of the Group's and Company’s prospects, the period this assessment
covers and why the period is appropriate; and
• The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue
in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
129
FINANCIAL STATEMENTS I N D E P E N D E N T A U D I T O R S ’ R E P O R T
T O T H E M E M B E R S O F S O L G O L D P L C
C O N T I N U E D
Our review of the Directors’ statement regarding the longer-term viability of the Group was substantially less in scope than
an audit and only consisted of making inquiries and considering the Directors’ process supporting their statement; checking
that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering
whether the statement is consistent with the financial statements and our knowledge and understanding of the Group
and the Company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the financial statements and our knowledge obtained during
the audit:
• The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable,
and provides the information necessary for the members to assess the Group’s and the Company's position, performance,
business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems; and
• The section of the Annual Report describing the work of the Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the
Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Directors’ Responsibility Statement, the Directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability 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 the Company or to cease operations, or have no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ 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 ISAs (UK) 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
these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
130
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws
and regulations related to the failure to comply with the London Stock Exchange and TSX Listing Rules, environmental
regulations, health and safety regulations, and anti-bribery and corruption laws, and we considered the extent to which
non-compliance might have a material effect on the financial statements. We also considered those laws and regulations
that have a direct impact on the financial statements such as the Companies Act 2006 and applicable tax legislation in
the jurisdictions in which the Group has material operations. We evaluated management’s incentives and opportunities for
fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the
principal risks were related to posting inappropriate journal entries and management bias in accounting estimates. The
Group engagement team shared this risk assessment with the component auditors so that they could include appropriate
audit procedures in response to such risks in their work. Audit procedures performed by the Group engagement team
and/or component auditors included:
• Enquiries of Directors, management and the Group’s legal counsel, including consideration of known or suspected
instances of non-compliance with laws and regulations and fraud;
• Examination of management’s responses to whistle-blowing allegations made during the year;
• Understanding and evaluating the design and implementation of controls designed to prevent and detect irregularities
and fraud;
•
Identifying and testing journal entries based on our risk assessment, in particular any journal entries posted with unusual
account combinations that could be used to manipulate the results;
• Responding to the discovery by management of the misappropriation of funds in Ecuador, as explained in the key audit
matter above;
• Challenging assumptions and judgements made by management in respect of critical accounting judgements and
significant accounting estimates, and assessing these judgements and estimates for management bias; and
• Review of related work performed by the component audit teams, including their responses to risks related to
management override of controls.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,
or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular items for testing based on their size or risk characteristics.
In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample
is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent in writing.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
131
FINANCIAL STATEMENTS I N D E P E N D E N T A U D I T O R S ’ R E P O R T
T O T H E M E M B E R S O F S O L G O L D P L C
C O N T I N U E D
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit and Risk Committee, we were appointed by the members on 11 November 2021
to audit the financial statements for the year ended 30 June 2022 and subsequent financial periods. This is therefore our first
year of uninterrupted engagement.
Other matter
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial
statements form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial
Conduct Authority in accordance with the ESEF Regulatory Technical Standard ("ESEF RTS"). This auditors’ report provides
no assurance over whether the annual financial report has been prepared using the single electronic format specified in the
ESEF RTS.
Timothy McAllister (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
28 September 2022
132
C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S
A N D O T H E R C O M P R E H E N S I V E I N C O M E
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
Expenses
Exploration costs written-off
Administrative expenses
Operating loss
Other income
Finance income
Finance costs
Movement in fair value of derivative liability
Remeasurement of amortised cost of financial liability
Profit / (loss) before tax
Tax expense
Loss for the year
Other comprehensive (loss)/profit
Items that may be reclassified to profit or loss
NOTES
13
3
3
6
6
22
21
GROUP
2022
US$
GROUP
2021
US$
RESTATED1
(3,858,024)
(884,330)
(17,569,179)
(12,860,193)
(21,427,203)
(13,744,523)
454,077
839,140
344,565
454,575
(12,570,180)
(10,061,787)
539,000
(613,746)
35,003,704
–
2,838,538
(23,620,916)
7
(4,540,103)
(151,173)
(1,701,565)
(23,772,089)
Exchange differences on translation of foreign operations
(702,938)
670,049
Items that will not be reclassified to profit or loss
Remeasurement of post-employment benefits
165,729
(50,378)
Change in fair value of financial assets, net of tax
11a/15/7
(1,205,636)
1,198,986
Other comprehensive (loss)/profit, net of tax
Total comprehensive loss for the year
Loss for the year attributable to:
Owners of the parent company
Non-controlling interest
Total comprehensive loss for the year attributable to:
Owners of the parent company
Non-controlling interest
Loss per share
Basic loss per share
Diluted loss per share
(1,742,845)
1,818,657
(3,444,410)
(21,953,432)
(1,587,497)
(23,558,390)
(114,068)
(213,699)
(1,701,565)
(23,772,089)
(3,330,342)
(21,739,733)
(114,068)
(213,699)
(3,444,410)
(21,953,432)
CENTS PER SHARE
CENTS PER SHARE
8
8
(0.1)
(0.1)
(1.1)
(1.1)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with
the accompanying notes.
1 Refer Note 1(b)(i).
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
133
FINANCIAL STATEMENTS C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N
A S A T 3 0 J U N E 2 0 2 2
SOLGOLD PLC
REGISTERED NUMBER 5449516
Assets
Intangible assets
Property, plant and equipment
Financial assets held at fair value through OCI
Financial assets at amortised cost
Total non-current assets
Other receivables and prepayments
Loans receivable and other current assets
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Share premium
Other reserves
Accumulated loss
Foreign currency translation reserve
Equity attributable to owners of the parent company
Non-controlling interest
Total equity
Liabilities
Trade and other payables
Lease liability
Total current liabilities
Lease liability
Other financial liabilities
Deferred tax liabilities
Borrowings
Total non-current liabilities
Total liabilities
Total equity and liabilities
GROUP
2022
US$
GROUP
2021
US$
RESTATED1
NOTES
13
12
11(a)
14
365,579,484
303,839,893
22,084,490
18,823,098
5,351,844
6,825,042
1,749,213
1,457,324
16
14
17
18
18
18
19
20
20
22
15
21
394,765,031
330,945,357
4,742,156
3,553,291
5,551,948
6,495,930
26,102,133
109,562,103
34,397,580
121,609,981
429,162,611
452,555,338
32,350,699
32,350,699
426,793,240
426,819,162
10,931,758
19,412,591
(132,587,252)
(138,895,017)
(5,048,767)
(4,345,829)
332,439,678
335,341,606
(1,191,172)
(1,077,104)
331,248,506
334,264,502
6,509,078
7,847,656
415,132
335,749
6,924,210
8,183,405
326,374
607,214
2,387,000
2,926,000
4,200,444
–
84,076,077
106,574,217
90,989,895
110,107,431
97,914,105
118,290,836
429,162,611
452,555,338
The above Consolidated Statements of Financial Position should be read in conjunction with the accompanying notes.
1 Refer Note 1(b)(i).
The financial statements were approved and authorised for issue by the Board and were signed on its behalf on
28 September 2022.
DARRYL CUZZUBBO
Chief Executive Officer
134
C O M P A N Y S T A T E M E N T O F F I N A N C I A L P O S I T I O N
A S A T 3 0 J U N E 2 0 2 2
SOLGOLD PLC
REGISTERED NUMBER 5449516
Assets
Property, plant and equipment
Investment in subsidiaries
Loans with subsidiaries
Financial assets held at fair value through OCI
Financial assets at amortised cost
Total non-current assets
Other receivables and prepayments
Loans receivable and other current assets
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Share premium
Other reserves
Accumulated loss
Foreign currency translation reserve
Equity attributable to owners of the parent company
Total equity
Liabilities
Trade and other payables
Lease liability
Total current liabilities
Lease liability
Other financial liabilities
Total non-current liabilities
Total liabilities
Total equity and liabilities
NOTES
COMPANY
2022
US$
COMPANY
2021
US$
RESTATED1
12
9
10
11(a)
14
598,919
958,850
152,964,303
120,045,844
185,599,916
167,399,767
5,346,323
6,819,046
756,332
756,332
16
14
17
18
18
18
19
20
20
22
345,265,793
295,979,839
1,061,583
3,553,291
21,032,524
1,938,616
6,495,930
72,918,016
25,647,398
81,352,562
370,913,191
377,332,401
32,350,699
32,350,699
426,793,240
426,819,162
11,398,063
20,044,625
(99,567,549)
(102,203,496)
(5,006,473)
(5,006,473)
365,967,980
372,004,517
365,967,980
372,004,517
1,944,970
309,668
1,475,395
319,275
2,254,638
1,794,670
303,573
607,214
2,387,000
2,926,000
2,690,573
3,533,214
4,945,211
5,327,884
370,913,191
377,332,401
The above Company Statements of Financial Position should be read in conjunction with the accompanying notes.
1 Refer Note 1(b)(i).
A separate statement of comprehensive income for the parent company has not been presented as permitted by section
408 of the Companies Act 2006. The Company’s loss for the year was US$5,259,315 (2021: US$4,147,229).
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
135
FINANCIAL STATEMENTS C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
Balance at 30 June 2020
Adjustment to retained earnings (Note 1)
Balance 1 July 2020 restated
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
New share capital subscribed
Options exercised
Share issue costs (net of deferred tax)
Options expired
Value of shares and options issued to Directors,
employees and consultants
Other
NOTES
SHARE CAPITAL
US$
SHARE PREMIUM
US$
FINANCIAL
ASSETS HELD
AT FAIR VALUE
THROUGH OTHER
COMPREHENSIVE
INCOME
US$
29,281,511
353,220,481
2,054,043
–
–
–
29,281,511
353,220,481
2,054,043
–
–
–
–
–
–
–
1,198,986
1,198,986
3,048,487
75,695,147
20,701
496,834
–
–
–
–
(2,593,300)
–
–
–
–
–
–
–
–
–
Balance at 30 June 2021 restated
32,350,699
426,819,162
3,253,029
16,791,596
(632,034)
(138,895,017)
(4,345,829)
335,341,606
(1,077,104)
334,264,502
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
New share capital subscribed
Options exercised
Share issue costs (net of deferred tax)
Options expired
Value of shares and options issued to Directors,
employees and consultants
–
–
–
–
–
–
–
–
–
–
–
–
–
(25,922)
–
–
–
(1,205,636)
(1,205,636)
–
–
–
–
–
18
18
18
23
Balance at 30 June 2022
32,350,699
426,793,240
2,047,393
9,350,670
(466,305)
(132,587,252)
(5,048,767)
332,439,678
(1,191,172)
331,248,506
The above statement of changes in equity should be read in conjunction with the accompanying notes.
SHARE BASED
FOREIGN CURRENCY
TRANSLATION
NON-
CONTROLLING
PAYMENT RESERVE
OTHER RESERVES
ACCUMULATED LOSS
US$
US$
US$
RESERVE
US$
TOTAL
US$
INTERESTS
TOTAL EQUITY
US$
US$
36,859,263
(581,656)
(133,331,591)
(5,015,878)
282,486,173
(498,139)
281,988,034
(7,213,338)
4,099,833
(3,113,505)
(365,612)
(3,479,117)
29,645,925
(581,656)
(129,231,758)
(5,015,878)
279,372,668
(863,751)
278,508,917
(23,558,390)
(23,558,390)
(213,699)
(23,772,089)
(50,378)
670,049
1,818,657
1,818,657
(50,378)
(23,558,390)
670,049
(21,739,733)
(213,699)
(21,953,432)
78,743,634
517,535
(2,593,300)
78,743,634
517,535
(2,593,300)
(13,169,765)
13,169,765
315,436
725,366
315,436
725,366
346
315,436
725,712
165,729
165,729
(1,587,497)
(1,587,497)
(114,068)
(1,701,565)
(702,938)
(1,742,845)
(1,742,845)
(1,587,497)
(702,938)
(3,330,342)
(114,068)
(3,444,410)
(7,895,262)
454,336
7,895,262
(25,922)
(25,922)
454,336
454,336
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
136
Balance at 30 June 2020
Adjustment to retained earnings (Note 1)
Balance 1 July 2020 restated
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
New share capital subscribed
Options exercised
Share issue costs (net of deferred tax)
Options expired
Value of shares and options issued to Directors,
employees and consultants
Other
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
New share capital subscribed
Options exercised
Share issue costs (net of deferred tax)
Options expired
Value of shares and options issued to Directors,
employees and consultants
Balance at 30 June 2022
3,048,487
75,695,147
20,701
496,834
(2,593,300)
FINANCIAL
ASSETS HELD
AT FAIR VALUE
THROUGH OTHER
COMPREHENSIVE
INCOME
US$
1,198,986
1,198,986
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,205,636)
(1,205,636)
(25,922)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
18
18
18
23
SHARE CAPITAL
SHARE PREMIUM
NOTES
US$
US$
SHARE BASED
PAYMENT RESERVE
US$
OTHER RESERVES
US$
ACCUMULATED LOSS
US$
FOREIGN CURRENCY
TRANSLATION
RESERVE
US$
NON-
CONTROLLING
INTERESTS
US$
TOTAL
US$
TOTAL EQUITY
US$
29,281,511
353,220,481
2,054,043
36,859,263
(581,656)
(133,331,591)
(5,015,878)
282,486,173
(498,139)
281,988,034
(7,213,338)
–
4,099,833
–
(3,113,505)
(365,612)
(3,479,117)
29,281,511
353,220,481
2,054,043
29,645,925
(581,656)
(129,231,758)
(5,015,878)
279,372,668
(863,751)
278,508,917
–
–
–
–
–
–
(13,169,765)
315,436
–
–
(23,558,390)
–
(23,558,390)
(213,699)
(23,772,089)
(50,378)
–
670,049
1,818,657
–
1,818,657
(50,378)
(23,558,390)
670,049
(21,739,733)
(213,699)
(21,953,432)
–
–
–
–
–
–
–
–
–
13,169,765
–
725,366
–
–
–
–
–
–
78,743,634
517,535
(2,593,300)
–
315,436
725,366
–
–
–
–
–
346
78,743,634
517,535
(2,593,300)
–
315,436
725,712
Balance at 30 June 2021 restated
32,350,699
426,819,162
3,253,029
16,791,596
(632,034)
(138,895,017)
(4,345,829)
335,341,606
(1,077,104)
334,264,502
–
–
–
–
–
–
(7,895,262)
454,336
–
(1,587,497)
–
(1,587,497)
(114,068)
(1,701,565)
165,729
165,729
–
–
–
–
–
–
(702,938)
(1,742,845)
–
(1,742,845)
(1,587,497)
(702,938)
(3,330,342)
(114,068)
(3,444,410)
–
–
–
7,895,262
–
–
–
–
–
–
–
–
(25,922)
–
454,336
–
–
–
–
–
–
–
(25,922)
–
454,336
The above statement of changes in equity should be read in conjunction with the accompanying notes.
32,350,699
426,793,240
2,047,393
9,350,670
(466,305)
(132,587,252)
(5,048,767)
332,439,678
(1,191,172)
331,248,506
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
137
FINANCIAL STATEMENTS C O M P A N Y S T A T E M E N T O F C H A N G E S I N E Q U I T Y
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
Balance at 1 July 2020
Adjustment to retained earnings (Note 1)
Balance at 1 July 2020 restated
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
New share capital subscribed
Options exercised
Share issue costs (net of deferred tax)
Options expired
NOTES
SHARE CAPITAL
SHARE PREMIUM
US$
US$
INCOME
PAYMENT RESERVE
US$
US$
LOSS
US$
TOTAL
US$
SHARE-BASED
ACCUMULATED
TRANSLATION
FOREIGN
CURRENCY
RESERVE
US$
29,281,511
353,220,481
2,054,043
36,859,263
(119,164,736)
(5,006,473) 297,244,089
(7,213,338)
7,213,338
29,281,511
353,220,481
2,054,043
29,645,925
(111,951,398)
(5,006,473) 297,244,089
FINANCIAL ASSETS
HELD AT FAIR VALUE
THROUGH OTHER
COMPREHENSIVE
1,198,986
1,198,986
Value of shares and options issued to Directors, employees and consultants
Adjustment to retained earnings
Balance at 30 June 2021 restated
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
New share capital subscribed
Options exercised
Share issue costs (net of deferred tax)
Options expired
Value of shares and options issued to Directors, employees and consultants
Balance at 30 June 2022
The above statement of changes in equity should be read in conjunction with the accompanying notes.
18
18
18
23
3,048,487
75,695,147
20,701
496,834
(2,593,300)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,205,636)
(1,205,636)
(25,922)
–
–
–
–
–
–
–
–
–
–
–
–
(13,169,765)
13,169,765
315,436
–
–
–
–
–
–
–
–
–
–
–
–
–
(4,147,229)
(4,147,229)
725,366
(5,259,315)
(5,259,315)
–
–
–
–
–
–
–
–
–
–
(7,895,262)
7,895,262
454,336
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(4,147,229)
1,198,986
(2,948,243)
78,743,634
517,535
(2,593,300)
315,436
725,366
(5,259,315)
(1,205,636)
(6,464,951)
(25,922)
454,336
32,350,699
426,819,162
3,253,029
16,791,596 (102,203,496)
(5,006,473)
372,004,517
32,350,699
426,793,240
2,047,393
9,350,670
(99,567,549)
(5,006,473) 365,967,980
138
Balance at 1 July 2020
Adjustment to retained earnings (Note 1)
Balance at 1 July 2020 restated
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
New share capital subscribed
Options exercised
Share issue costs (net of deferred tax)
Options expired
Adjustment to retained earnings
Balance at 30 June 2021 restated
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
New share capital subscribed
Options exercised
Share issue costs (net of deferred tax)
Options expired
Value of shares and options issued to Directors, employees and consultants
Value of shares and options issued to Directors, employees and consultants
Balance at 30 June 2022
The above statement of changes in equity should be read in conjunction with the accompanying notes.
18
18
18
23
NOTES
SHARE CAPITAL
US$
SHARE PREMIUM
US$
FINANCIAL ASSETS
HELD AT FAIR VALUE
THROUGH OTHER
COMPREHENSIVE
INCOME
US$
SHARE-BASED
PAYMENT RESERVE
US$
ACCUMULATED
LOSS
US$
FOREIGN
CURRENCY
TRANSLATION
RESERVE
US$
TOTAL
US$
29,281,511
353,220,481
2,054,043
36,859,263
(119,164,736)
(5,006,473) 297,244,089
–
–
–
(7,213,338)
7,213,338
–
–
29,281,511
353,220,481
2,054,043
29,645,925
(111,951,398)
(5,006,473) 297,244,089
–
–
–
–
–
–
–
1,198,986
1,198,986
3,048,487
75,695,147
20,701
496,834
–
–
–
–
(2,593,300)
–
–
–
–
–
–
–
–
–
–
–
–
–
(4,147,229)
–
(4,147,229)
–
–
–
(13,169,765)
13,169,765
315,436
–
–
725,366
–
–
–
–
–
–
–
–
–
(4,147,229)
1,198,986
(2,948,243)
78,743,634
517,535
(2,593,300)
–
315,436
725,366
32,350,699
426,819,162
3,253,029
16,791,596 (102,203,496)
(5,006,473)
372,004,517
–
–
–
–
–
–
–
–
–
–
–
–
–
(25,922)
–
–
–
(1,205,636)
(1,205,636)
–
–
–
–
–
–
–
–
–
–
–
(5,259,315)
–
(5,259,315)
–
–
–
(7,895,262)
7,895,262
454,336
–
–
–
–
–
–
–
–
–
(5,259,315)
(1,205,636)
(6,464,951)
–
–
(25,922)
–
454,336
32,350,699
426,793,240
2,047,393
9,350,670
(99,567,549)
(5,006,473) 365,967,980
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
139
FINANCIAL STATEMENTS C O N S O L I D A T E D A N D C O M P A N Y S T A T E M E N T S O F C A S H F L O W S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
Cash flows from operating activities
Loss for the year
Depreciation
Interest on lease liability
Interest on bridging loan
Interest on NSR
Interest on loan to SolGold Finance AG
GROUP
2022
US$
GROUP
2021
US$
RESTATED
COMPANY
2022
US$
COMPANY
2021
US$
(1,701,565) (23,772,089)
(5,259,315)
(4,147,229)
619,048
64,325
–
582,026
67,730
371,275
12,505,564
9,619,242
314,071
57,907
–
–
341,626
62,787
371,275
–
–
–
(5,694,637)
(4,519,889)
NOTES
12
20
21
21
10
Share based payment expense
5 / 23
454,336
315,436
454,336
315,436
Write-off of exploration expenditure
13
3,858,024
884,330
–
–
Foreign exchange loss / (gain)
965,386
(1,790,028)
938,423
(1,797,341)
Movement in fair value of derivative liability
22
(539,000)
613,746
(539,000)
613,746
Remeasurement of amortised cost of financial
liability
Tax expense
Non-cash employee benefit expense – company
funded loan plan
Accretion of interest – company funded loan plan
21
7
14
14
(35,003,704)
–
–
–
4,540,103
151,173
278,198
64,375
669,211
–
669,211
–
(789,946)
(449,613)
(789,946)
(449,613)
Decrease in other receivables and prepayments
2,978,509
175,544
3,449,370
1,211,109
Increase / (decrease) in trade and other payables
373,238
124,682
469,369
(1,028,881)
Net cash outflow from operating activities
(11,006,471) (13,106,546)
(5,652,013)
(8,962,599)
Cash flows from investing activities
Exercise of Cornerstone Capital Resources warrants
11(a)
–
(813,927)
–
(813,927)
Acquisition of property, plant and equipment
(2,195,892)
(6,280,482)
(13,726)
(18,255)
Acquisition of exploration and evaluation assets
(69,455,961)
(75,611,280)
–
–
Loans advanced to subsidiaries
Advances in investment in subsidiaries
–
–
–
–
(12,505,512)
(5,001,463)
(33,082,285)
(34,155,941)
Net cash outflow from investing activities
(71,651,853) (82,705,689) (45,601,523) (39,989,586)
Cash flows from financing activities
Proceeds from the issue of ordinary share capital
Payment of issue costs
Net proceeds from NSR financing
Payment of NSR costs
Repayments of lease liability
Net cash (outflow)/inflow from financing
activities
Net (decrease)/increase in cash and
cash equivalents
18
21
20
–
76,113,126
–
76,113,126
(37,033)
(333,629)
(37,033)
(333,629)
–
–
84,380,422
(2,318,598)
–
–
–
–
(448,353)
(439,116)
(310,503)
(348,912)
(485,386) 157,402,205
(347,536) 75,430,585
(83,143,710) 61,589,970 (51,601,072) 26,478,400
Cash and cash equivalents at beginning of year
17
109,562,103
46,895,243
72,918,016
45,356,423
Effect of foreign exchange on cash and cash
equivalents
(316,260)
1,076,890
(284,420)
1,083,193
Cash and cash equivalents at end of year
17
26,102,133 109,562,103
21,032,524
72,918,016
The above statements of cash flows should be read in conjunction with the accompanying notes.
140
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 1 ACCOUNTING POLICIES
SolGold Plc (“the Company” or “SolGold”) and its subsidiaries (the “Group”) is a mineral exploration and development company
headquartered in Brisbane, Australia. The Company is a UK incorporated (on 11 May 2005), public company limited by shares,
with the company registration number 05449516. SolGold is dual listed on the London Stock Exchange and the Toronto Stock
Exchange. The address of the Company’s registered office is 1 King Street, London EC2V 8AU, United Kingdom.
(a) Statement of compliance
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-
adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement
Board. SolGold plc transitioned to UK-adopted International Accounting Standards in its consolidated financial statements
on 1 July 2021. This change constitutes a change in accounting framework. However, there is no impact on recognition,
measurement or disclosure in the year reported as a result of the change in framework.
The consolidated financial statements and company financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) and their interpretations issued by the International Accounting
Standards Board (“IASB”), in accordance with UK adopted International Accounting Standards and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
They have also been prepared in accordance with those parts of the Companies Act 2006 applicable to companies reporting
under IFRS. The consolidated financial statements also comply with IFRS as issued by the IASB, as is required as a result
of the Company’s listing on the TSX in Canada. The accounting policies set out below have been applied consistently
throughout these consolidated financial statements.
The preparation of the Group Financial Statements in compliance with IFRS requires management to make estimates and
exercise judgement in applying the Group’s accounting policies. In preparing the Group Financial Statements, the significant
judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty
are disclosed in Note 1(v).
(b) Basis of preparation of financial statements and going concern
The consolidated and company financial statements are presented in United States dollars (“US$”), rounded to the nearest
dollar. Refer to Note 1 (d) for further details relating to the foreign exchange translation.
The Company was incorporated on 11 May 2005. From incorporation the Group has prepared the annual consolidated
financial statements in accordance with IFRS.
(I) PRIOR YEAR RESTATEMENTS AND RECLASSIFICATIONS
INVESTIGATION INTO ECUADORIAN BUSINESS
During the year the investigation into the Ecuadorian business identified a misappropriation of funds. The effect of the prior
years' misappropriation on the balance sheet is set out in note 13. The Company instructed EY Ecuador to commence a
forensic investigation into the alleged misappropriation of funds. SolGold’s Internal Audit function was engaged to provide
independent oversight of the investigation, and the ARC oversaw the entire process. In total the forensic investigation
identified a misappropriation that amounted to US$4.6 million during the years 2017 to 2021.
This misappropriation resulted in the overstatement of our exploration assets by US$4.6 million, with the associated false
expenses having been capitalised in line with SolGold’s accounting policy. SolGold concluded that it was appropriate to
write down the value of these assets accordingly and restate our financial statements. The profit and loss impact for the
year ended 30 June 2022 amounted to US$227,846 (2021: US$879,977, 2017-2020: US$3,479,117), reflecting the fact that
most losses were incurred in prior years. Though the misstatements are material to the quantum of exploration assets, the
Company does not consider the misstatements to be material to the financial statements as a whole, either on an individual or
cumulative basis. The overstatement of the exploration assets is cumulative and is made up of smaller annual misstatements
that were not material in the respective years.
RECLASSIFICATION OF LAND DEPOSITS
During the 2022 audit, it was identified that US$3.1 million of land deposits had been booked as of 30 June 2021 in 'Other
receivables and prepayments', when these should have been considered as Land and disclosed as part of Property, plant
and equipment. Management concluded that it was appropriate to reclassify this figure and have restated the balance
accordingly, impacting these two financial statement line items.
RECLASSIFICATION OF SHARE BASED PAYMENT RESERVE
During the 2022 audit, it was identified that US$7.2 million of options which had expired prior to 30 June 2020, had not
been transferred to Accumulated Losses from the Share-based payment reserve in line with the Group’s accounting policies.
The opening balance of the Share-based payment reserve has been reduced by US$7.2 million.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
141
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 1 ACCOUNTING POLICIES CONTINUED
(b) Basis of preparation of financial statements and going concern continued
(I) PRIOR YEAR REVISIONS AND RECLASSIFICATIONS CONTINUED
RECLASSIFICATION OF SHARE BASED PAYMENT RESERVE CONTINUED
Detail of adjustments and impact in the comparative periods:
BALANCE SHEET (EXTRACT)
30 JUNE 2020
US$
INCREASE/
(DECREASE)
US$
30 JUNE 2020
US$
RESTATED
30 JUNE 2021
US$
INCREASE/
(DECREASE)
US$
30 JUNE 2021
US$
RESTATED
Intangible assets
230,256,153
(3,479,117) 226,777,036 308,432,012
(4,592,119) 303,839,893
Property, plant and equipment
–
–
–
15,682,120
3,140,978
18,823,098
Total non-current assets
257,019,289
(3,479,117) 253,540,172 332,396,498
(1,451,141) 330,945,357
–
–
–
–
–
–
8,458,494
(2,906,546)
5,551,948
124,516,527
(2,906,546)
121,609,981
306,798,448
(3,479,117) 303,319,331 456,913,025
(4,357,687) 452,555,338
281,988,034
(3, 479,117) 278,508,917
338,622,195
(4,357,693) 334,264,502
Other receivables and
prepayments
Total current assets
Total assets
Net assets
PROFIT AND LOSS (EXTRACT)
Exploration costs written-off
Administration expenses
Operating loss
Loss before tax
Loss for the year
CASHFLOW (EXTRACT)
Cashflows from operating activities
Loss for the year
Exploration costs written-off
Decrease / (increase) in other receivables
Net cash outflow from operating activities
Cashflows from investing activities
Security deposits (payments)/refunds
30 JUNE 2021
US$
INCREASE/
(DECREASE)
US$
30 JUNE 2021
US$
RESTATED
(4,353)
(879,977)
(884,330)
(12,861,248)
(12,865,601
(22,741,994)
(22,893,167)
1,055
(12,860,193)
(878,922)
(13,744,523)
(878,922)
(23,620,916)
(878,922)
(23,772,089)
30 JUNE 2021
US$
INCREASES /
(DECREASE)
US$
30 JUNE 2021
US$
RESTATED
(22,893,167)
(878,922)
(23,772,089)
4,353
(765,607)
(14,048,752)
879,977
941,151
942,206
884,330
175,544
(13,106,546)
(126,407)
126,407
–
Acquisition of exploration and evaluation assets
(75,607,912)
(3,368)
(75,611,280)
Proceeds from payment of company funded loan plan
1,065,245
(1,065,245)
–
Net cash outflow from investing activities
(81,763,483)
(942,206)
(82,705,689)
(II) GOING CONCERN
At the year end, the Group has cash on hand of US$26.1 million and net current assets of US$27.47 million. The Directors have
reviewed the cash position of the Group and the Company for the period to 31 December 2023 and consider it appropriate
that the Group and the Company financial statements are prepared on the going concern basis, which contemplates the
continuity of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of
business, for the reasons set out below.
The Group has not generated revenues from operations in its history and, in common with many exploration companies,
the Group raises finance for its exploration and appraisal activities in discrete tranches. As such, the ability of the Group
to continue as a going concern depends on its ability to secure this additional financing.
Management continues to monitor and manage its liquidity risks closely and regularly produces cash flow forecasts. Under
the base case scenario, the Group would have sufficient funds until December 2022 without applying any of the mitigating
actions that have included within the severe but plausible scenario outlined below. SolGold’s severe but plausible scenario
considers no access to financial markets, caused by a continued inflationary environment and ensuing recession that is not
142
NOTE 1 ACCOUNTING POLICIES CONTINUED
(b) Basis of preparation of financial statements and going concern continued
(II) GOING CONCERN CONTINUED
conducive to further capital raises when necessary. In such a situation the Company would cease all exploration activities,
terminate most technical services and dramatically reduce overheads to reduce costs. Under its severe but plausible
scenario, the Group would have sufficient funds at least until January 2023, although there would be a significant impact
on the Group’s operations.
Together with their brokers and financial advisers, the Directors and Management continuously monitor the conditions
in the relevant capital markets and regularly consider various forms of financing available to SolGold. The Directors and
Management are in regular touch with equity investors and actively participate in investor conferences and other forms
of investor engagements as there is a need to secure further funding to meet their exploration and working capital
commitments.
The Company has a proven ability to execute equity and other financings successfully as demonstrated by the equity
placings and royalty agreement completed in the 2020-21 financial years, totalling approximately US$240 million in
gross proceeds. Accordingly, the Directors have a reasonable expectation that the Group will be able to raise funds when
necessary and, as has been the case previously, the Directors expect that future funding will likely be provided by equity
investors, debt funding or via other strategic arrangements.
In the event that the Company is unable to secure sufficient funding, it may not be able to fully develop its projects, and this
may have a consequential impact on the carrying value of the related exploration assets and the investment of the parent
company in its subsidiaries as well as the going concern status of the Group and the Company. Given the nature of the
Group’s current activities, it will remain dependent on equity and/or debt funding or other strategic arrangements until such
time as the Group becomes self-financing from the commercial production of its mineral resources. Should raising additional
finance prove challenging, the Company has alternative options such as the acceleration of cost reductions, farm-outs or
the relinquishment of licences across Ecuador, Australia and the Solomon Islands.
Given that the Company will need to secure further funding to meet the Group’s future exploration and working capital
commitments, and no firm funding commitments have been received at the date of approval of these financial statements,
the situation gives rise to a material uncertainty as there can be no assurance the Company will be able to raise the required
financing in the future. This material uncertainty may cast significant doubt upon the Group’s and the Company’s ability to
continue as a going concern. Notwithstanding this material uncertainty, the Directors consider it appropriate to adopt the
going concern basis of accounting in the preparation of the financial statements given the Company’s proven ability to raise
necessary funding. The financial statements do not include the adjustments that would result if the Group and Company
were unable to continue as a going concern.
(III) HISTORICAL COST CONVENTION
The consolidated financial statements have been prepared on a historical cost base modified by revaluation of financial
assets held at fair value through OCI and financial liabilities at fair value through profit or loss.
(c) Basis of consolidation
(I) SUBSIDIARIES
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 30 June each year.
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three
of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability
of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed
a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the
statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised
at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of
profit or loss from the date on which control is obtained. They are deconsolidated from the date on which control ceases.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit or loss
from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are
made to the financial statements of subsidiaries to bring the accounting policies in line with those used by the Group.
Non-controlling interests are allocated their share of net profit after tax and share of other comprehensive income in the
statement of profit or loss and comprehensive income and presented within equity in the consolidated statement of financial
position, separately from the equity of the owners of the parent.
(II) TRANSACTIONS ELIMINATED ON CONSOLIDATION
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
143
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 1 ACCOUNTING POLICIES CONTINUED
(d) Foreign currency
TRANSLATION INTO THE FUNCTIONAL CURRENCY
Transactions entered into by Group entities in a currency other than the currencies of the primary economic environment
in which they operate (the “functional currency”) are translated at the foreign exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies at the year-end are translated into the
functional currency at the foreign exchange rate ruling as of that date. Non-monetary assets and liabilities denominated in
foreign currencies are translated at the historical foreign exchange rate. Any resultant foreign exchange currency translation
amount is taken to the profit and loss.
Management reconsiders the functional currency where there is a change in events or conditions used in initial determination.
Where the assessment indicates that a change in functional currency is required, the change is applied prospectively from
the date it is deemed to have occurred.
The functional currency of the Company and subsidiaries of the Group are detailed in the table below:
FUNCTIONAL
CURRENCY
2022
FUNCTIONAL
CURRENCY
2021
EXCHANGE RATE
AT 30 JUNE
2022 USED IN
PREPARATION
OF FINANCIALS
EXCHANGE RATE
AT 30 JUNE
2021 USED IN
PREPARATION
OF FINANCIALS
AVERAGE
EXCHANGE RATE
FOR THE YEAR
ENDED 30 JUNE
2022
AVERAGE
EXCHANGE RATE
FOR THE YEAR
ENDED 30 JUNE
2021
SolGold Plc
US$
US$
n/a
n/a
n/a
n/a
Australian Resource
Management ("ARM") Pty Ltd
Acapulco Mining Pty Ltd
Central Minerals Pty Ltd
A$
A$
A$
A$
A$
A$
Solomon Operations Ltd
SBD$
SBD$
Honiara Holdings Pty Ltd
Guadalcanal Exploration Pty Ltd
SolGold Finance AG
SolGold Canadian Callco Corp.
SolGold Canadian Exchangeco
Corp.
Exploraciones Novomining S.A.
Carnegie Ridge Resources S.A.
Green Rock Resources S.A.
Valle Rico Resources S.A.
Cruz del Sol S.A.
SolGold Ecuador S.A.
Novoproyectos-Sustentables S.A.
0.6902
0.6902
0.6902
0.1785
0.6902
0.6902
n/a
0.7495
0.7495
0.7495
0.1245
0.7495
0.7495
n/a
0.7256
0.7256
0.7256
0.1709
0.7256
0.7256
n/a
0.7470
0.7470
0.7470
0.1245
0.7470
0.7470
n/a
0.7768
0.8067
0.7902
0.7804
A$
A$
US$
CAD$
A$
A$
US$
CAD$
CAD$
CAD$
0.7768
0.8067
0.7902
0.7804
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
TRANSLATION INTO PRESENTATION CURRENCY
The assets and liabilities of the entities are translated into the Group presentation currency being the US$ at rates of exchange
ruling at the reporting date. Income and expense items are translated at average rates for the period. Any resultant foreign
exchange currency translation amount is taken to other comprehensive income. On disposal of an entity, cumulative exchange
differences are recognised in the income statement as part of the profit or loss on sale. Exchange differences recognised
in profit or loss in Group entities' separate financial statements, on the translation of long-term monetary items forming
part of the Group's net investment in the overseas operation concerned, are reclassified to other comprehensive income and
accumulated in the foreign exchange reserve on consolidation. Considering that these relate to loans and receivables that are
not expected to be settled in the foreseeable future they have been included as Investments in Subsidiaries in the Company,
see section (v).
(e) Property, plant and equipment
(I) OWNED ASSETS
Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses
(see accounting policy (h) on page 145).
(II) LEASED ASSETS
Items of property, plant and equipment that are accounted for under IFRS 16 Leases are recognised when contracts are
entered into at an amount equal to the corresponding lease liability (see accounting policy (q) on page 148).
144
NOTE 1 ACCOUNTING POLICIES CONTINUED
(e) Property, plant and equipment continued
(III) SUBSEQUENT COSTS
The Group recognises in the carrying amount of property, plant and equipment the cost of replacing part of such an item
when that cost is incurred if it is probable that the 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 derecognised when replaced. All other costs are recognised in the statement of profit or loss as an expense as incurred.
(IV) DEPRECIATION
Depreciation is charged to the statement of profit or loss on a straight-line basis over the estimated useful lives of each item
of property, plant and equipment used in corporate and administrative operations. Depreciation is capitalised to exploration
on a straight-line basis over the estimated useful lives of each item of property, plant and equipment used in exploration
operations included within Intangible Assets. The estimated useful lives of all categories of assets are:
Office Equipment
Furniture and Fittings
Motor Vehicles
Plant and Equipment
Buildings
Land
3 years
5 years
5 years
5 years
12 years
Not depreciated
Depreciation charged on leased assets is charged to the statement of profit or loss on a straight-line basis over the term
of the lease where it relates to corporate leases and capitalised to exploration when used in exploration operations.
The residual values and useful lives are assessed annually. Gains and losses on disposal are determined by comparing
proceeds with carrying amounts and are included in the statement of profit or loss.
(f) Intangible assets (as per IFRS 6 – Exploration for and Evaluation of Mineral Resources)
Costs incurred in relation to the acquisition of, or application for, a tenement area are capitalised where there is a reasonable
expectation that the tenement will be acquired or granted. Where the Group is unsuccessful in acquiring or being granted
a tenement area, any such costs are immediately expensed.
All other costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are
written-off as incurred.
Exploration and evaluation costs arising following the acquisition of an exploration licence are capitalised on a project-by-
project basis as exploration and evaluation assets, pending determination of the technical feasibility and commercial viability
of the project. Costs incurred include appropriate technical and administrative overheads. Exploration and evaluation assets
are carried at historical cost less any impairment losses recognised.
Once the work completed to date on an area of interest is sufficient such that the technical feasibility and commercial viability
of extracting the mineral resource has been determined, the property is considered to be an evaluated mineral property.
Following determination of the technical feasibility and commercial viability of a mineral resource, the relevant expenditure
is transferred from exploration and evaluation assets to evaluated mineral property.
Further development costs are capitalised to evaluated mineral properties, if and only if, it is probable that future economic
benefits associated with the item will flow to the entity; and the cost can be measured reliably. Cost is defined as the
purchase price and directly attributable costs. Once the asset is considered to be capable of operating in a manner intended
by management, commercial production is declared, and the relevant costs are amortised. Evaluated mineral property is
carried at cost less accumulated amortisation and accumulated impairment losses.
(g) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments
with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current
liabilities on the statement of financial position.
(h) Impairment of non-financial assets
Whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable the
asset is reviewed for impairment. An asset’s carrying value is written down to its estimated recoverable amount (being
the higher of the fair value less costs to sell and value in use) if that is less than the asset’s carrying 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. In determining fair value less
costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate
valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded
companies or other available fair value indicators.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
145
FINANCIAL STATEMENTS
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 1 ACCOUNTING POLICIES CONTINUED
(h) Impairment of non-financial assets continued
Impairment reviews for deferred exploration costs are carried out on a project-by-project basis, with each project
representing a potential single cash generating unit. As the material value of the Group’s property, plant and equipment
is associated with the exploration and evaluation these are also considered within the impairment review. An impairment
review is undertaken when indicators of impairment arise, typically when one of the following circumstances apply:
• The period for which the entity has the right to explore in the specific area has expired during the period or will expire
in the near future, and is not expected to be renewed;
• Substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither
budgeted nor planned;
• Exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially
viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; and
• Sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.
(i) Share capital
(I) ORDINARY SHARE CAPITAL
The Company’s ordinary shares are classified as equity.
(II) SHARES ISSUED TO SETTLE LIABILITIES
The Group from time to time settles financial liabilities by issuing shares. The Group considers these equity instruments
as 'consideration paid' and accordingly derecognises the financial liability.
The equity instruments issued are measured at fair value, with the difference being taken to the statement of profit or loss,
unless the creditor is also a direct or indirect shareholder and is acting in their capacity as direct or indirect shareholder.
When the creditor is acting in their capacity as a direct or indirect shareholder the value of shares issued is deemed to
be the carrying value of the liability.
(j) Employee benefits
(I) 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. Non-vesting conditions and market vesting conditions are factored into
the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of
whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market
vesting condition or where a non-vesting condition is not satisfied. Share based payments to non-employees are measured
at the fair value of goods or services rendered or the fair value of the equity instrument issued, if it is determined the fair
value of the goods or services cannot be reliably measured. Estimating fair value for share based payment transactions
requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant.
This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of
the share option, volatility and dividend yield and making assumptions about them. The assumptions and model used for
estimating fair value for share based payment transactions are disclosed in Note 23.
(II) RETIREMENT BENEFITS
For the employees of subsidiaries in Ecuador, the Group operates a long-term benefit for years of service plan which
represents the accrued benefits to be paid to employees (in accordance with the Ecuadorian labour code), that have
completed twenty-five years of service. This is paid in the form of a special remuneration equivalent to the monthly salary
in the month that the year of service conditions are met.
The cost of providing this benefit is recognised as a liability and an expense over the period in which the employee's services
are received. The cost is determined using the projected unit credit method and is based on actuarial advice.
The change in the net defined benefit liability arising from employee service during the year is recognised as an employee
cost. The cost of plan introductions, benefit changes, settlements and curtailments are recognised as an expense in
measuring profit or loss in the period in which they arise.
Remeasurement changes comprise actuarial gains and losses, and are recognised immediately in other comprehensive
income in the period in which they occur.
(III) COMPANY FUNDED LOAN PLAN
The Group has put in place a Company Funded Loan Plan (“CFLP”) to provide financial assistance to employees in exercising
share options. The financial assistance provided to employees is by way of a full recourse interest free loan. The CFLP is secured
by the SolGold shares issued upon the exercise of share options under the CFLP to that employee. These shares are held in
custody by the Company’s broker.
146
NOTE 1 ACCOUNTING POLICIES CONTINUED
(j) Employee benefits continued
(III) COMPANY FUNDED LOAN PLAN CONTINUED
CFLP loans to employees are initially recognised at fair value, which is determined by discounting loans to their net present
value using the risk-free interest rate at the time the loan is granted and an estimated repayment schedule. Following initial
recognition, they are carried at amortised cost using the effective interest rate method. Changes in the carrying value of the CFLP
loans are recognised within interest income in the profit or loss. The cost of providing the benefit to employees is recognised as
an employee expense in the statement of profit or loss on a straight-line basis over the expected life of the CFLP loan.
Further details on the CFLP are disclosed in Note 14.
(IV) DERIVATIVE FINANCIAL INSTRUMENTS
The options issued to BHP as part of the share subscription on 2 December 2019 fall outside the scope of IFRS 2. As such
these options are treated as derivative liabilities which are measured initially at fair value and gains or losses on subsequent
remeasurement are recorded in the profit or loss. This subsequent remeasurement is valued using the Monte Carlo method.
(k) Provisions
Provisions are recognised when the Group has a legal or constructive obligation as a result of past events, it is more likely
than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.
Contingent liabilities are possible obligations whose existence will be confirmed by uncertain future events that are not
wholly within the control of the entity. Contingent liabilities also include obligations that are not recognised because their
amount cannot be measured reliably or because settlement is not probable. Contingent liabilities do not include provisions
for which it is certain that the entity has a present obligation that is more likely than not to lead to an outflow of cash or
other economic resources, even though the amount or timing is uncertain. A contingent liability is not recognised in the
statement of financial position. However, unless the possibility of an outflow of economic resources is remote, a contingent
liability is disclosed in the notes.
Contingent assets are possible assets whose existence will be confirmed by the occurrence or non-occurrence of uncertain
future events that are not wholly within the control of the entity. Contingent assets are not recognised, but they are disclosed
when it is more likely than not that an inflow of benefits will occur. However, when the inflow of benefits is virtually certain an
asset is recognised in the statement of financial position, because that asset is no longer considered to be contingent.
(l) Trade and other payables
Trade and other payables are not interest bearing and are stated at amortised cost, unless settled with shares as per (i)
above. The effect of discounting is immaterial.
(m) Financing costs and income
(I) FINANCING COSTS
Financing costs comprise interest payable on borrowings calculated using the effective interest rate method.
(II) FINANCE INCOME
Interest income is recognised in the statement of profit or loss as it accrues, using the effective interest method.
(n) Taxation
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the reporting date. A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent
that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available
against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred
tax that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax
planning strategies.
The Group has US$69,682,242 (2021: US$73,362,323 restated) of tax losses carried forward. These losses relate to subsidiaries
that have a history of losses and may not be used to offset taxable income elsewhere in the Group. The subsidiaries neither
have any taxable temporary difference nor any tax planning opportunities available that could partly support the recognition
of these losses as deferred tax assets. On this basis, the Group has determined that it cannot recognise deferred tax assets
on the tax losses carried forward.
Further details on taxes are disclosed in Note 7.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
147
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 1 ACCOUNTING POLICIES CONTINUED
(o) Segment reporting
The Group determines and presents operating segments based on information that is internally provided to the Board
of Directors, which is the Group’s chief operating decision maker.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components.
An operating segment’s operating results and asset position are reviewed regularly by the Board to make decisions about
resources to be allocated to the segment and assess its performance, for which discrete financial information is available.
Segment results that are reported to the Board include items directly attributable to a segment, as well as those that can
be allocated on a reasonable basis. Unallocated items comprise mainly corporate office assets, head office expenses, and
income tax assets and liabilities.
(p) Project Financing
The Group, from time to time, enters into funding arrangements with third parties in order to progress specific projects.
The Group financial statements accounted for the related exploration costs in line with the terms of the specific agreement.
Costs incurred by SolGold plc are recognised as intangible assets within the financial statements. Costs incurred by third
parties are not recognised by SolGold plc.
(q) Leases
For any contracts entered into, the Group considers whether the contract is or contains a lease. For those contracts that fall
within the exemptions of IFRS 16 and are classified as short term, these are charged as expenses on a straight-line basis over
the period of the lease. For all other leases, the Group recognises a right-of-use asset (“ROUA”) and a lease liability on the
balance sheet.
The ROUA is measured at cost at an amount equal to the lease liability. The process to adopt this approach can be
summarised as follows:
• Calculate the lease liability at commencement date of the lease. At the initial adoption of the standard this was calculated
as at the date on initial application of IFRS 16.
• Set the ROUA as an amount equal to the lease liability in line with the above dates.
At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that
date, discounted using the implicit interest rate in the lease. Where the implicit rate cannot be easily determined the Group’s
incremental borrowing rate is used instead. As there is no implicit rate in the leases the Group has chosen to use 8% per the
discount rate used in the historic economic project studies. For new leases entered into this rate will be reassessed to reflect
the current economic project studies.
The Group depreciates the ROUA on a straight-line basis from the lease commencement date to the earlier of the end of the
useful life of the ROUA or the end of the lease term.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. The liability
is remeasured to reflect any reassessment or modification. Where the lease liability is remeasured, the corresponding
adjustment is reflected in the profit and loss if the ROUA is already reduced to zero.
In the statement of financial position, ROUA have been included in property, plant and equipment and lease liabilities have
been included in both current and non-current liabilities, under Lease Liability.
(r) Financial Instruments
RECOGNITION AND INITIAL MEASUREMENT
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
Financial assets and financial liabilities are recognised in the Group statement of financial position when the Group becomes
a party to the contractual provisions of the instrument. Financial assets and financial liabilities are only offset and the net
amount reported in the consolidated statement of financial position and consolidated statement of profit or loss when there
is a currently enforceable legal right to offset the recognised amounts and the Group intends to settle on a net basis or
realise the asset and liability simultaneously.
148
NOTE 1 ACCOUNTING POLICIES CONTINUED
(r) Financial Instruments continued
RECOGNITION AND INITIAL MEASUREMENT CONTINUED
Financial instruments are generally measured at initial recognition at fair value and adjusted for transaction costs where the
instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair
value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as
set out below.
The classification of financial assets at initial recognition depends on the purpose for which the financial asset was issued
and its characteristics. All purchases and/or sales of financial assets are recorded on trade date, being the date on which
the Group becomes party to the contractual requirements of the financial asset. Unless otherwise indicated the carrying
amounts of the Group’s financial assets approximate to their fair values.
FINANCIAL ASSETS AT AMORTISED COST
Financial assets are measured at amortised cost if both of the following conditions are met:
• The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual
cash flows; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets at amortised costs are subsequently measured using the effective interest ("EIR") method and are subject to an
impairment assessment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH OCI WITH NO RECYCLING OF CUMULATIVE GAINS AND LOSSES UPON
DERECOGNITION (EQUITY INSTRUMENTS)
Upon initial recognition SolGold can elect to classify irrevocably its equity investments as equity instruments designated at
fair value through OCI when they meet the definition of equity under IAS 32 Financial Instruments: Presentation and are not
held for trading. The classification is determined on an instrument-by-instrument basis. Gains and losses on these financial
assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when
the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the
cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through
OCI are not subject to impairment assessment.
SolGold elected to classify irrevocably ‘Investments in equity excluding subsidiaries’ under this category.
IMPAIRMENT OF FINANCIAL ASSETS
The Group recognises a loss allowance for expected credit losses on financial assets which are measured at amortised cost
or fair value through other comprehensive income (when these are not equity instruments). The measurement of the loss
allowance depends upon the Group’s assessment at the end of each reporting period as to whether the financial instrument’s
credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is
available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a twelve-month expected
credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable
to a default event that is possible within the next twelve months. Where a financial asset has become credit impaired or
where it is determined that credit risk has increased significantly, the loss allowance is based on the asset’s lifetime expected
credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present
value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. Please
refer to Note 14 for the CFLP.
FINANCIAL LIABILITIES
The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was
issued and its characteristics. All purchases of financial liabilities are recorded on trade date, being the date on which the
Group becomes party to the contractual requirements of the financial liability. Unless otherwise indicated the carrying
amounts of the Group’s financial liabilities approximate to their fair values.
FINANCIAL LIABILITIES MEASURED SUBSEQUENTLY AT AMORTISED COST
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held for trading,
or (iii) designated at FVTPL, are measured subsequently at amortised cost. The Group’s financial liabilities comprise of trade
and other payables, current and non-current lease liabilities and borrowings (Franco-Nevada NSR Financing Agreement,
refer Note 21) which are measured at amortised cost.
FINANCIAL LIABILITIES MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial liabilities that are (i) held for trading, or (ii) designated by the entity as being at FVTPL are measured at fair value
through profit or loss. The Group’s financial liabilities at FVTPL comprise of the Derivative Liability associated with the share
issuance to BHP in December 2019.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
149
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 1 ACCOUNTING POLICIES CONTINUED
(r) Financial Instruments continued
FINANCIAL LIABILITIES CONTINUED
DERECOGNITION
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
derecognised when:
• The rights to receive cash flows from the asset have expired; or
• SolGold has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a "pass-through" arrangement; and either (a) SolGold
has transferred substantially all the risks and rewards of the asset, or (b) SolGold has neither transferred nor retained
substantially all the risks and rewards of the asset; but has transferred control of the asset.
A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual obligations,
it expires or is cancelled. Any gain or loss on derecognition is taken to the statement of profit or loss.
(s) Accounting policies for the Company
The accounting policies applied to the Company are consistent with those adopted by the Group with the exception
of the following:
(I) SUBSIDIARY INVESTMENTS
Investments in subsidiary undertakings are stated at cost less impairment losses. Expenditure incurred by the Company
on behalf of a subsidiary, and where the subsidiary does not reimburse the Company for assets that could be capitalised in
accordance with IFRS 6, is recorded within investments in subsidiary undertakings. Where investments are passed down into
the underlying operating subsidiaries where no reimbursement is expected this is recorded as an investment in subsidiary
undertakings. Within Investments in subsidiaries we also include Loans with subsidiaries where settlement is neither planned
nor likely to occur in the foreseeable future.
(II) INTERCOMPANY LOANS
Intercompany loans with its subsidiary undertakings are measured in line with the Group’s policy mentioned in (r) Financial
instruments above. That is at amortised cost, with all subsequent measures using the effective interest method and subject
to an impairment assessment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or
impaired. Refer Note 1(v).
(t) Nature and purpose of reserves
(I) FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE RESERVE
Changes in the fair value and exchange differences arising on translation of investments, such as equities, classified as
financial assets at fair value through OCI, are recognised in other comprehensive income and accumulated in a separate
reserve within equity.
(II) SHARE-BASED PAYMENT RESERVE
The share-based payment reserve is used to recognise:
• the grant date fair value of options issued to employees that have vested but not been exercised; and
• the grant date fair value of shares issued to employees.
(III) FOREIGN CURRENCY TRANSLATION RESERVE
Exchange differences arising on translation of foreign controlled entities where the functional currency differs from the
presentational currency are recognised in other comprehensive income and accumulated in a separate reserve within equity.
The cumulative amount is reclassified to profit or loss when the net investment is disposed of.
At a Company level the foreign currency translation reserve relates to the change in presentational currency performed in
previous periods.
(IV) OTHER RESERVES
This reserve is used to both adjust the actuarial assessed fair value for the defined benefit pension obligation linked to the
Group’s employees in Ecuador and to record the differences which may arise as a result of transactions with non-controlling
interests that do not result in a loss of control.
150
NOTE 1 ACCOUNTING POLICIES CONTINUED
(u) Changes in accounting policies
NEW STANDARDS AND AMENDMENTS IN THE YEAR
The Group has adopted the following revised and amended standards. The list below includes only standards and
interpretations that could have an impact on the Consolidated Financial Statements of the Group.
EFFECTIVE PERIOD COMMENCING ON OR AFTER
IFRS 9, IAS 39, IFRS 7, IFRS 4 & IFRS 16
Interest Rate Benchmark Reform Phase 2
1 Jan 2021
Details of the impact that these standards had is detailed below. Other new and amended standards and interpretations
issued by the IASB do not impact the Group or Company as they are either not relevant to the Group’s activities or require
accounting which is consistent with the Group’s current accounting policies. Details of the impact that these standards had
is detailed below. Other new and amended standards and Interpretations issued by the IASB do not impact the Group or
Company as they are either not relevant to the Group’s activities or require accounting which is consistent with the Group’s
current accounting policies.
IFRS 9, IAS 39, IFRS 7, IFRS 4 & IFRS 16: INTEREST RATE BENCHMARK REFORM PHASE 2
In September 2020, the International Accounting Standards Board (“IASB”) published Interest Rate Benchmark Reform
Phase 2 (amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) finalising its response to the ongoing reform of
interest rate benchmarks around the world. The amendments aim to assist reporting entities to provide investors with
useful information about the effects of the reform on their financial statements.
Many IBORs are expected to be replaced by new benchmark Risk-Free-Rates in future reporting periods. This second set of
amendments focuses on issues arising post replacement, ie, when the existing interest rate benchmark is actually replaced
with alternative benchmark rates. The main amendments in this second stage are as follows:
• Highly probable requirement and prospective assessments of hedge effectiveness
• Designating a component of an item as the hedged item
The amendment is effective for periods beginning on or after 1 January 2021 with early application permitted. Management
has assessed the effects of applying the amendment on the Group’s financial statements and has determined that there is
no material impact.
As at year end, the following amendments to the standards that could be applicable to the Group had been issued but
were not mandatory for the reporting period ended 30 June 2022:
IAS 16: Property, Plant and Equipment – proceeds before intended use: The proposed amends the standard to prohibit
deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing
the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.
The amendment is effective for periods beginning on or after 1 January 2022 with early application permitted.
Management has made a preliminary assessment to not apply this change early considering the stage of the projects.
(v) Critical Accounting Estimates and Judgements
In application of the Group's accounting policies, described in Note 1, the Directors have made the following judgements and
estimates which may have a significant effect on the amounts recognised in the Group and Company Financial Statements.
The Directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge
and best available current information. Estimates assume a reasonable expectation of future events and are based on current
trends and economic data, obtained both externally and within the Group.
ACCOUNTING ESTIMATES
NSR ROYALTY INTEREST – GROUP
The NSR royalty has been valued using the amortised cost basis. IFRS 9 requires that amortised cost is calculated using the
effective interest method, which allocates interest expense at a constant rate over the term of the instrument. The effective
interest rate of a financial liability is calculated at initial recognition and is the rate that exactly discounts the estimated future
cash flows through the expected life of the financial liability, based on the then current mine plan and project development
study assumptions.
In the case of the Franco Nevada NSR royalty, the Company arrived at an effective interest rate (“EIR”) of 11.84%. Total interest
for the financial year is estimated at US$12,505,564 (2021: US$9,619,242), see Note 6. Should there be a 2% increase in the
EIR this would have an impact on the accounts and increase the finance expenses by US$2,372,846.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
151
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 1 ACCOUNTING POLICIES CONTINUED
(v) Critical Accounting Estimates and Judgements continued
ACCOUNTING JUDGEMENTS
EXPLORATION AND EVALUATION EXPENDITURE – GROUP
The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable
or where the activities have not reached a stage that permits a reasonable assessment of the existence of reserves.
The carrying values of exploration and evaluation expenditure were assessed for indicators of impairment based on an
estimation of the recoverability from expected future development and production. In forming this assessment, the Group
considered the external Mineral Resources Estimate, the status of its permits and internal economic models and financing
which supported the carrying value of the project.
The Directors have carried out an assessment of the carrying values of exploration and evaluation expenditure and
indicators of impairment. No triggers of impairment were identified at 30 June 2022, apart from the decision to relinquish
10 concessions as detailed in Note 13.
INTERCOMPANY LOAN – COMPANY
Management has made a judgement relating to those loans with subsidiaries where settlement is neither planned nor likely
to occur in the foreseeable future and it has considered those loans as Investments in subsidiaries.
The carrying values of exploration and evaluation expenditure were assessed for indicators of impairment based on an
estimation of the recoverability from expected future development and production. In forming this assessment, the Company
considered the external Mineral Resources Estimate, the status of its permits and internal economic models and financing
which supported the carrying value of the project.
No triggers of impairment were identified at 30 June 2022 on the carrying values of the Cascabel exploration and evaluation
asset, which is directly linked to the repayment of the loan from SolGold Finance AG. All recovery strategies indicate that the
loan will be fully recovered, therefore no loss allowances have been made.
NOTE 2 SEGMENT REPORTING
The Group determines and separately reports operating segments based on information that is internally provided to the
Board of Directors, which is the Group’s chief operating decision maker. The Group’s operating segments are aligned to those
business units that are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in
assessing performance. Operating segments with similar economic characteristics are aggregated into reportable segments.
The Group has outlined below the separately reportable operating segments, having regard to the quantitative threshold
tests provided in IFRS 8, namely that the relative asset or profit / (loss) position of the operating segment equates to 10% or
more of the Group’s respective total. The Group reports information to the Board of Directors along these project category
lines. The financial information of the other projects that do not exceed the thresholds outlined above, and is therefore not
reported separately, is aggregated as Other Projects.
30 JUNE 2022
FINANCE
INCOME
US$
DEPRECIATION
US$
IMPAIRMENT
OF E&E
US$
LOSS FOR
THE YEAR
US$
ASSETS
US$
LIABILITIES
US$
SHARE BASED
PAYMENTS
US$
NON-
CURRENT
ASSET
ADDITIONS
US$
Cascabel project*
–
140,989
227,847
(1,014,326) 270,791,351
2,411,948
– 35,308,857
Other Ecuadorian
projects
48,581
163,834 3,466,350
(5,272,198) 114,262,932
1,793,313
Other projects
30
24
–
(20,273)
10,463,708
390
– 33,907,523
–
259,717
Corporate
Total
790,529
839,140
314,201
163,827
4,605,232
33,644,619 93,708,453
454,336
8,174
619,048 3,858,0241
(1,701,565) 429,162,611
97,914,105
454,336 69,484,271
152
Cascabel project*
Other Ecuadorian
projects
–
–
NOTE 2 SEGMENT REPORTING CONTINUED
30 JUNE 2021
RESTATED
FINANCE
INCOME
US$
DEPRECIATION
US$
IMPAIRMENT
OF E&E
US$
LOSS FOR
THE YEAR
US$
ASSETS
US$
LIABILITIES
US$
SHARE BASED
PAYMENTS
US$
NON-
CURRENT
ASSET
ADDITIONS
US$
104,200
879,608 (1,423,604) 233,169,906
3,153,211
– 43,129,562
Other projects
246
25
–
(16,907)
10,502,442
20,513
136,175
4,722
(1,525,682)
89,212,722
1,968,707
– 29,245,227
–
255,325
Corporate
454,329
341,626
– (20,805,896)
119,670,268
113,148,405
315,436
–
Total
454,575
582,026
884,3301 (23,772,089) 452,555,338 118,290,836
315,436 72,630,114
*
The Cascabel project is held by the subsidiary Exploraciones Novomining S.A. which is 15% owned by a non-controlling interest. See further details of the
subsidiary in Note 9.
1 Includes written-off exploration expenditure due to the misappropriation of funds. Please refer note 13.
Geographical information
NON-CURRENT ASSETS
Switzerland
Australia
Solomon Islands
Ecuador
The Group had no revenue during the current and prior year.
NOTE 3 OPERATING LOSS
The operating loss is stated after charging (crediting)
Auditors’ remuneration:
Amounts received or due and receivable by Group auditors for the audit
of the Company and Group’s annual accounts1
Amounts received or due and receivable by Group auditors for the audit
of the Company and Group’s annual accounts BDO
Other non-audit services
– Agreed upon procedures on quarterly and half year financial statements
– Translation services
– Incorporation of SolGold Finance AG
– Tax compliance – Ecuador
Employee expenses
Insurance (largely political risk)
Director fees
Consultancy fees
Legal fees
Regulatory and compliance
Depreciation
Foreign exchange losses /(gains)
Share based payments (Note 23)
1 PricewaterhouseCoopers LLP were appointed as auditors on 11 November 2021.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
2022
US$
8,174
2021
US$
RESTATED
–
12,540,078
16,285,847
599,559
433,708
381,617,220 314,225,802
394,765,031 330,945,357
GROUP
2022
US$
GROUP
2021
US$
773,363
–
80,987
347,165
–
–
–
–
5,112,716
3,215,136
1,373,471
1,369,647
765,599
612,459
619,048
965,591
454,336
103,686
27,585
18,130
5,000
3,182,529
3,464,139
1,490,282
1,059,336
746,590
637,808
582,026
(1,790,028)
315,436
153
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 4 STAFF NUMBERS AND COSTS (MONTHLY AVERAGES FOR THE YEAR)
Finance and administration
Technical – permanent
Technical – temporary
The aggregate payroll costs of employees were:
Wages and salaries
Contributions to superannuation
Share based payments
Total staff costs
GROUP
2022
33
497
364
894
GROUP
2021
COMPANY
2022
COMPANY
2021
37
456
329
822
11
8
–
19
14
7
–
21
GROUP
2022
US$
GROUP
2021
US$
COMPANY
2022
US$
COMPANY
2021
US$
26,464,580 23,566,670
5,758,733
5,020,454
242,403
454,336
191,064
315,436
242,403
454,336
191,064
315,436
27,161,319 24,073,170
6,455,472
5,526,954
Included within total staff costs is US$21,844,082 (2021: US$20,176,654) which has been capitalised as part of deferred
exploration costs.
NOTE 5 REMUNERATION OF KEY MANAGEMENT PERSONNEL
BASIC ANNUAL
SALARY
US$
BONUS
US$
OTHER
BENEFITS1
US$
PENSIONS
US$
TOTAL
REMUNERATION
US$
2022
Directors
Darryl Cuzzubbo2
Keith Marshall3
Nicholas Mather
Jason Ward4
Brian Moller5
James Clare
Liam Twigger
Elodie Grant Goodey
Kevin O’Kane
Maria Amparo Alban
260,301
258,549
72,205
334,653
33,255
72,305
118,931
85,965
79,331
72,423
–
117,982
–
–
–
–
–
–
–
–
Other key management personnel6
1,694,266
336,436
Total paid to key management personnel
3,082,184
Other staff and contractors
22,578,392
454,418
349,587
–
–
–
–
–
–
–
–
–
–
–
–
454,336
10,951
–
–
–
–
–
11,893
–
–
–
80,335
103,179
139,225
271,252
376,531
72,205
334,653
33,255
72,305
130,824
85,965
79,331
72,423
2,111,037
3,639,781
23,521,540
Total
25,660,576
804,005
454,336
242,404
27,161,321
1 Other Benefits represents the fair value of the share options granted during the year based on the Black-Scholes model considering the effects of the
vesting conditions.
2 Darryl Cuzzubbo was appointed as CEO and Managing Director effective 1 December 2021.
3 Keith Marshall acted as interim CEO until 1 December 2021.
4 Jason Ward’s Basic Annual Consultancy Fees includes total remuneration paid for the year including payments post his resignation as an Executive Director
on 13 May 2022. Payments post resignation were US$33,352.
5 Brian Moller was not re-elected to the Board on 15 December 2021.
6 Other key management personnel consist of the aggregated remuneration of Dennis Wilkins (Company Secretary), Ayten Saridas (Chief Financial Officer,
appointed May 2022, resigned July 2022), Benn Whistler (Technical Services Manager-resigned), Chris Connell (Regional Exploration Manager, resigned
February 2022), Peter Holmes (Director of Studies-resigned), Ingo Hofmaier (Interim Chief Financial Officer to May 2022, Executive General Manager Projects
and Corporate Finance-resigned) Tania Cashman (Chief Human Resources Officer, appointed January 2022), and Geoff Woodcroft (Chief Human Resources
Officer, resigned 29 October 2021).
154
NOTE 5 REMUNERATION OF KEY MANAGEMENT PERSONNEL CONTINUED
BASIC ANNUAL
SALARY
US$
BONUS
US$
OTHER
BENEFITS1
US$
PENSIONS
US$
TOTAL
REMUNERATION
US$
2021
Directors
Keith Marshall4
Nicholas Mather (highest paid director)6
Brian Moller
Robert Weinberg2
James Clare
Jason Ward3
Liam Twigger
Elodie Grant Goodey4
Kevin O’Kane4
Maria Amparo Alban4
212,145
827,381
64,628
23,506
61,824
304,352
93,075
71,756
51,202
47,326
–
–
–
–
–
–
–
–
–
–
Other key management personnel5
Total paid to key management personnel
Other staff and contractors
1,745,060
3,502,255
19,778,314
193,739
193,739
92,363
–
–
–
–
–
–
–
–
–
–
–
–
315,436
–
–
–
–
–
–
8,972
–
–
–
212,145
827,381
64,628
23,506
61,824
304,352
102,047
71,756
51,202
47,326
111,021
2,049,820
119,993
71,071
3,815,987
20,257,184
Total
23,280,569
286,102
315,436
191,064
24,073,171
1
Other Benefits represents the fair value of the share options granted during the year based on the Black-Scholes model considering the effects of the
vesting conditions.
2 Robert Weinberg resigned as a Director effective 17 December 2020.
3 Jason Ward’s Basic Annual Consultancy Fees includes total remuneration paid for the year including payments prior to Director appointment.
4 Elodie Grant Goodey was appointed as a non-executive Director on 17 July 2020. Keith Marshall, Kevin O’Kane and Maria Amparo Alban were all appointed
as non-executive Directors on 21 October 2020.
5 Other key management personnel consist of the aggregated remuneration of Karl Schlobohm (Company Secretary, retired in June 2021), Priy Jayasuriya
(Chief Financial Officer, resigned in November 2020), Benn Whistler (Technical Services Manager), Chris Connell (Regional Exploration Manager), Peter
Holmes (Director of Studies), Ingo Hofmaier (Interim Chief Financial Officer, Executive General Manager Projects and Corporate Finance), Nadine Dennison
(Chief Human Resources Officer, resigned in March 2021), Peter Holmes (Director of Studies), Steve Belohlawek (General Manager Underground Development
and Mining, resigned in October 2020) and Eduardo Valenzuela (Executive General Manager of Studies, deceased).
6 Nick Mather received a severance pay-out during the year ended 30 June 2021 upon retiring from the position of CEO, of US$477,871 (AUD$600,000).
NOTE 6 FINANCE INCOME AND COSTS
Interest income
Accretion of Interest on company funded loan plan (Note 14)
Finance income
General interest
Interest on lease liability
Interest on bridging loan
Interest on NSR (Note 21)
Finance costs
GROUP
2022
US$
49,194
GROUP
2021
US$
4,962
789,946
449,613
839,140
454,575
GROUP
2022
US$
291
64,325
–
GROUP
2021
US$
3,540
67,730
371,275
12,505,564
9,619,242
12,570,180 10,061,787
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
155
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 7 TAX EXPENSE
Factors affecting the tax charge for the current year
SolGold’s headquarters is in Australia and as the Company has its central management and control in Australia, the
applicable tax rates are Australian. The tax profit for the year is higher than the credit resulting from the application of the
standard rate of corporation tax in Australia of 30% (2021: 30%) being applied to the profit before tax arising during the year.
The differences are explained below.
Tax reconciliation
Profit / (loss) before tax1
Tax at 30% (2021: 30%)
Add / (less) tax effect of:
Permanent differences
Derecognise current year tax losses
(Recognise) / derecognise prior year losses
Prior year tax expense attributable to Ecuador
Current year tax expense attributable to Ecuador
Prior period adjustments to true-up tax return
Other
Impact of tax rate differences
Temporary differences not recognised
Income tax expense on loss
GROUP
2022
US$
GROUP
2021
US$
RESTATED
2,838,538 (23,620,916)
851,561
(7,086,275)
917,878
737,930
–
4,483,039
(215,502)
7,879,110
–
61,460
2,921
19,600
6,504
80,294
10,979
7,448
(3,417,092)
2,500,519
6,319,277
(8,468,375)
4,540,103
151,173
Components of tax (expense) / benefit on other comprehensive income comprise of:
Tax on valuation (loss) / gain on investments held at fair value through OCI (see note 15)
(267,087)
692,474
Income tax (expense) / benefit on other comprehensive income
(267,087)
692,474
Amounts recognised directly in equity
Attributable to prior periods
Net deferred tax credited directly to equity
Income tax (expense) recognised directly in equity
1
Impacted by the restatement as detailed in Note 1.
–
11,695
(11,111)
(768,544)
(11,111)
(756,849)
Deferred tax assets are recognised only to the extent of deferred tax liabilities. Where deferred tax assets exceed deferred tax
liabilities, deferred tax assets on carried forward tax losses are derecognised in the first instance considering their recoverability.
Factors that may affect future tax charges
The Group has carried forward gross tax losses of approximately US$100.0 million (2021: US$88.8 million restated).
These losses may be deductible against future taxable income dependent upon the ongoing satisfaction by the relevant
Group Company of various tax integrity measures applicable in the jurisdiction in which the tax loss has been incurred.
The jurisdictions in which tax losses have been incurred include Australia, Ecuador, Switzerland and the Solomon Islands.
Tax losses in Australia (US$69.68 million) can be carried forward indefinitely while in Ecuador (US$30.39 million), tax losses
may be carried forward and offset against profits in the following five years, provided that the amount offset does not
exceed 25% of the year’s profits.
156
NOTE 8 LOSS PER SHARE
Basic loss per share
Diluted loss per share
(a) Loss
2022
CENTS PER SHARE
2021
CENTS PER SHARE
RESTATED
(0.1)
(0.1)
2022
US$
(1.1)
(1.1)
2021
US$
RESTATED
Loss used to calculate basic and diluted loss per share
(1,701,565)
(23,772,089)
(b) Weighted average number of shares
Used in calculating basic LPS
Weighted average number of dilutive options
NUMBER OF
SHARES
NUMBER OF
SHARES
2,293,816,433 2,115,829,663
–
–
Weighted average number of ordinary shares and potential ordinary shares
used in calculating dilutive LPS
2,293,816,433 2,115,829,663
Options granted are not included in the determination of diluted earnings per share as they are considered to be anti-dilutive.
These out-of-the-money options may become dilutive in the future.
NOTE 9 INVESTMENT IN SUBSIDIARIES
REPORTING DATE IS
31 DECEMBER1
Australian Resource
Management
("ARM") Pty Ltd
Acapulco Mining
Pty Ltd
COUNTRY OF
INCORPORATION
AND OPERATION
Australia
Australia
Central Minerals
Pty Ltd
Australia
Solomon Operations
Ltd
Solomon
Islands
Honiara Holdings
Pty Ltd
Australia
Guadalcanal
Exploration Pty Ltd
Australia
Exploraciones
Novomining S.A.1
Ecuador
Carnegie Ridge
Resources S.A.1
Ecuador
REGISTERED ADDRESS
Level 27, 111 Eagle Street
Brisbane, QLD, 4000
Australia
Level 27, 111 Eagle Street
Brisbane, QLD, 4000
Australia
Level 27, 111 Eagle Street
Brisbane, QLD, 4000
Australia
c/- Morris & Sojnocki Chartered Accountants
1st Floor
City Centre Building, Mendana Avenue,
Honiara
Solomon Islands
Level 27, 111 Eagle Street
Brisbane, QLD, 4000
Australia
Level 27, 111 Eagle Street
Brisbane, QLD, 4000
Australia
Avenida La Coruña E25-58 y San Ignacio,
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
Avenida La Coruña E25-58 y San Ignacio,
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
SOLGOLD PLC’S
EFFECTIVE INTEREST
PRINCIPAL ACTIVITY
Exploration
2022
2021
100% 100%
Exploration
100% 100%
Exploration
100% 100%
Exploration
100% 100%
Exploration
100% 100%
Exploration
100% 100%
Exploration
85%
85%
Exploration
100% 100%
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
157
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 9 INVESTMENT IN SUBSIDIARIES CONTINUED
REPORTING DATE IS
31 DECEMBER1
Green Rock
Resources S.A.1
COUNTRY OF
INCORPORATION
AND OPERATION
Ecuador
Valle Rico
Resources S.A.1
Ecuador
Cruz del Sol S.A.1
Ecuador
SolGold Ecuador S.A.1 Ecuador
Novoproyectos-
Sustentables S.A.1
Ecuador
SolGold Canadian
Callco Corp.1
Canada
SolGold Canadian
Exchangeco Corp.
SolGold Finance AG Switzerland
Canada
REGISTERED ADDRESS
Avenida La Coruña E25-58 y San Ignacio,
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
Avenida La Coruña E25-58 y San Ignacio,
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
Avenida La Coruña E25-58 y San Ignacio,
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
Avenida La Coruña E25-58 y San Ignacio,
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
Avenida La Coruña E25-58 y San Ignacio,
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
4500, 855 – 2nd Street S.W,
Calgary, Alberta T2P 4K7
4500, 855 – 2nd Street S.W,
Calgary, Alberta T2P 4K7
Baarerstrasse 21,
6300 Zug
SOLGOLD PLC’S
EFFECTIVE INTEREST
PRINCIPAL ACTIVITY
Exploration
2022
2021
100% 100%
Exploration
100% 100%
Exploration
100% 100%
Services
Management
100% 100%
Project
development
100% 100%
Investment
100% 100%
Investment
100% 100%
Investment
100% 100%
Cost
Balance at 30 June 2020
Acquisitions and advances in the year1
Reallocation to SolGold Finance AG
Balance at 30 June 2021
Acquisitions and advances in the year
Balance at 30 June 2022
Amortisation and impairment losses
Balance at 30 June 2020
Balance at 30 June 2021
Balance at 30 June 2022
Carrying amounts
Balance at 30 June 2020
Balance at 30 June 2021
Balance at 30 June 2022
INVESTMENT
IN SUBSIDIARY
UNDERTAKINGS
INVESTMENT
US$
295,129,525
33,592,422
(173,497,993)
155,223,954
32,918,459
188,142,413
(35,178,110)
(35,178,110)
(35,178,110)
259,951,415
120,045,844
152,964,303
1
During the year ended 30 June 2021, the intercompany loans between SolGold plc and Exploraciones Novomining S.A./SolGold Ecuador S.A. were
reallocated to a newly established intermediary company (SolGold Finance AG).
Included in Investments with subsidiaries there are US$126,545,135 (2021: US$94,536,862) from Loans with related parties.
158
NOTE 10 INTERCOMPANY LOANS WITH SUBSIDIARIES
Cost
Balance at 30 June 2020
Reallocation of loans
BLA Offset
Advances in the year
Interest accrued in the year
Balance at 30 June 2021
Advances in the year
Interest accrued in the year
Balance at 30 June 2022
Amortisation and impairment losses
Balance at 30 June 2020
Balance at 30 June 2021
Balance at 30 June 2022
Carrying amounts
Balance at 30 June 2020
Balance at 30 June 2021
Balance at 30 June 2022
INTERCOMPANY
LOANS WITH
SUBSIDIARIES
LOAN
US$
–
173,497,993
(15,619,579)
5,001,463
4,519,890
167,399,767
12,505,512
5,694,637
185,599,916
–
–
–
–
167,399,767
185,599,916
In September 2020 SolGold plc transferred its investments and associated intercompany loans in ENSA (85%) and SolGold
Ecuador S.A. (100%) to a newly established wholly-owned subsidiary called SolGold Finance AG.
Upon the transfer of the investments and associated intercompany loans from ENSA and SolGold Ecuador S.A. to SolGold
Finance AG, a new back-to-back loan agreement was implemented between SolGold plc and SolGold Finance AG. The key
terms of this new back-to-back loan agreement include:
• 10 year loan maturity period
• 3.5% annual interest rate, calculated daily
•
Interest accrues and is due on or before 10 years, or thereafter by agreement between the parties
• SolGold plc has the ability to call the loan for repayment at any point on or before 10 years from the date of issue
• SolGold Finance AG may prepay the whole or any part of the advances made by SolGold plc at any point without
notice, penalty or bonus.
The Company has assessed the receivable and no loss allowances have been made, refer Note 1(v).
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
159
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 11 INVESTMENTS
(a) Investments accounted for as financial assets held at fair value through OCI
Movements in financial assets
Opening balance at 1 July
Additions
GROUP
2022
US$
2021
US$
COMPANY
2022
US$
2021
US$
6,825,042
4,119,179
6,819,046
4,113,660
–
813,927
–
813,927
Fair value adjustment through OCI
(1,473,198)
1,891,936
(1,472,723)
1,891,459
Balance at 30 June
5,351,844
6,825,042
5,346,323
6,819,046
Financial assets comprise an investment in the ordinary issued capital of Cornerstone Capital Resources Inc., listed on the
TSX Venture Exchange and an investment in the ordinary issued capital of Aus Tin Mining Ltd, a company listed on the
Australian Securities Exchange.
(b) Fair value
FAIR VALUE HIERARCHY
The following table details the Group’s assets, measured or disclosed at fair value, using a three-level hierarchy, based on
the lowest level of input that is significant to the entire fair value measurement being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly.
Level 3: Unobservable inputs for the asset or liability.
The fair values of financial assets approximate their carrying amounts principally due to their short-term nature or the fact
that they are measured and recognised at fair value.
The following table represents the Group’s financial assets measured and recognised at fair value.
2022
Financial assets held at fair value through OCI
5,351,844
2021
Financial assets held at fair value through OCI
6,825,042
–
–
–
–
5,351,844
6,825,042
The financial assets are measured based on the quoted market prices at 30 June and therefore are classified as Level 1.
US$
LEVEL 1
US$
LEVEL 2
US$
LEVEL 3
US$
TOTAL
160
NOTE 12 PROPERTY, PLANT AND EQUIPMENT
GROUP
COMPANY
TOTAL1
PROPERTY,
PLANT AND
EQUIPMENT
US$
LAND2
US$
MOTOR
VEHICLES
US$
OFFICE
EQUIPMENT
US$
FURNITURE &
FITTINGS
US$
TOTAL
US$
TOTAL
US$
Cost
Balance 1 July 2020
12,399,525 2,904,105
1,104,237
729,314
264,914 17,402,095
1,644,111
Effect of foreign exchange
on opening balance
–
124,554
4,596
2,776
877
132,803
Additions (restated)
4,113,935
457,182
(12,645)
–
–
–
(35,155)
–
–
187,496
9,400
4,768,013
–
–
–
–
(12,645)
(35,155)
119,635
19,304
–
–
IFRS 16 transition additions
Disposals
Balance 30 June 2021
(restated)
Effect of foreign exchange
on opening balance
Additions
Disposals
16,513,460 3,473,196 1,073,678
919,586
275,191 22,255,111
1,783,050
–
(123,985)
(4,578)
(2,767)
(873)
(132,203)
(119,085)
3,836,561
406,964
–
80,751
5,719 4,329,995
14,772
–
–
(38,490)
–
–
(38,490)
–
Balance 30 June 2022
20,350,024 3,756,175 1,030,610
997,570
280,037 26,414,413
1,678,737
Depreciation and impairment losses
Balance 1 July 2020
Effect of foreign exchange
on opening balance
Depreciation charge for the year
Depreciation capitalised to
exploration
Disposals
Balance 30 June 2021
Effect of foreign exchange
on opening balance
Depreciation charge for the year
Depreciation capitalised to
exploration
Disposals
–
–
–
–
–
(995,434)
(712,955)
(577,497)
(175,221) (2,461,107)
(456,920)
(29,513)
(4,595)
(2,858)
(877)
(37,843)
(24,606)
(482,064)
–
(93,615)
(6,347)
(582,026)
(341,626)
(123,839)
(188,182)
(37,907)
(36,264)
(386,192)
(1,048)
–
35,155
–
–
35,155
–
– (1,630,850)
(870,577)
(711,877)
(218,709) (3,432,013) (824,200)
–
–
–
–
64,391
4,577
2,766
873
72,607
59,500
(490,621)
–
(121,419)
(7,008)
(619,048)
(314,071)
(194,668)
(166,686)
(5,313)
(18,185)
(384,851)
(1,047)
–
33,379
–
–
33,379
–
Balance 30 June 2022
– (2,251,748)
(999,307)
(835,843)
(243,029) (4,329,927) (1,079,818)
1 Company assets include fixture and fittings and office equipment.
2 Includes restatement of $3,140,978 for land. See restatement in Note 1.
Carrying amounts
At 30 June 2020
At 30 June 2021
At 30 June 2022
12,399,525
1,908,671
391,282
151,817
89,693 14,940,988
1,187,191
16,513,460 1,842,346
203,101
207,709
56,482 18,823,098
958,850
20,350,024 1,504,427
31,303
161,727
37,008 22,084,490 598,919
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
161
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 13 INTANGIBLE ASSETS
Cost
Balance at 30 June 2020
Incorrect capitalised costs
Balance at 30 June 2020 restated1
Effect of foreign exchange on opening balances
Additions – expenditure
Incorrect capitalised costs
Balance at 30 June 2021 restated1
Effect of foreign exchange on opening balances
Additions – expenditure
Incorrect capitalised costs2
Balance at 30 June 2022
Impairment losses
Balance at 30 June 2020
Impairment charge
Balance at 30 June 2021
Impairment charge
Balance at 30 June 2022
Carrying amounts
At 30 June 2020 – restated
At 30 June 2021 – restated
At 30 June 2022
GROUP
DEFERRED
EXPLORATION
COSTS
(RESTATED)1
US$
267,852,937
(3,479,117)
264,373,820
434,222
77,512,965
(879,977)
341,441,030
(696,468)
66,294,083
(227,846)
406,810,799
(37,596,784)
(4,353)
(37,601,137)
(3,630,178)
(41,231,315)
226,777,036
303,839,893
365,579,484
1 As of 30 June 2022, the Group has restated its intangible assets for the year end 30 June 2021 and 2020 as detailed in Note 1.
2 These costs were previously reported as of 31 December 2022 as additions.
Recoverability of the carrying amount of exploration assets is dependent on the successful development and commercial
exploitation of areas of interest, and the sale of minerals or the sale of the respective areas of interest. An impairment
charge of US$3,630,178 (2021: US$4,353) was recognised in the year for exploration expenditure associated with
concessions in Ecuador that the Board decided to relinquish, as per the announcement on 7 September 2021. In addition
to this, US$227,846 (2021: US$879,977) was recognised in association with the misappropriation of funds (refer Note 3).
In December 2021, the Company commissioned EY Ecuador to conduct a forensic investigation into alleged misappropriation
of funds. SolGold’s Internal Audit function was engaged to provide independent oversight of the investigation, reporting
directly to the Chair of the Audit & Risk Committee. The forensic investigation revealed that during the years 2017 to 2021
US$4.6 million was misappropriated.
This misappropriation resulted in the overstatement of our exploration assets by US$4.6 million, with the associated false
expenses having been capitalised in line with SolGold’s accounting policy. SolGold concluded that it was appropriate to
write down the value of these assets accordingly and restate our financial statements. The profit and loss impact for the
year ended 30 June 2022 amounted to US$227,846, reflecting the fact that most losses were incurred in prior years.
An assessment of the carrying values of deferred exploration costs is provided below.
Cascabel project (85% Ownership)
The Alpala deposit, discovered at Cascabel, is in northern Ecuador, lying upon the gold rich section of the northern section
of the prolific Andean Copper belt, renowned as the base for nearly half of the world’s copper production. The project area
hosts mineralisation from the Eocene age, the same age as numerous Tier 1 deposits along the Andean Copper Belt in Chile
and Peru to the south. The project is a three-hour drive north of Quito, close to water, power supply and Pacific ports.
162
NOTE 13 INTANGIBLE ASSETS CONTINUED
Cascabel project (85% Ownership) continued
The Alpala Porphyry Copper-Gold-Silver Deposit, at a cut-off grade of 0.21% CuEq, comprises 2,663 Mt at 0.53% CuEq
in the Measured plus Indicated categories, which includes 1,192 Mt at 0.72% CuEq in the Measured category and 1,470 Mt
at 0.37% CuEq in the Indicated category. The Inferred category contains an additional 544 Mt at 0.31% CuEq.
The estimate comprises a contained metal content of 9.9 Mt Cu and 21.7 Moz Au in the Measured plus Indicated categories,
which includes 5.7 Mt Cu and 15 Moz Au in the Measured category, and 4.2 Mt Cu and 6.6 Moz Au in the Indicated category.
The Inferred category contains an additional 1.3 Mt Cu and 1.9 Moz Au.
Based on the exploration work conducted to date at the Cascabel project, the Company:
• continues to have the right to explore in the area
• has met its expenditure commitments
• remains positive around the prospectivity of the project area, with encouraging geological results encountered to date
•
is not aware of any data that would require or demand to abandon or relinquish the project.
Accordingly, management is of the opinion that the exploration and evaluation assets capitalised at 30 June 2022 are
recoverable and fairly stated and that no impairment provision is required.
Accordingly, management have assessed that there are no indicators of impairment for the aggregate carrying value of
US$259.9 million.
SolGold 100% owned projects
REGIONAL CONCESSIONS GRANTED FOR 100% SOLGOLD ECUADOR SUBSIDIARIES
The four 100% owned subsidiary companies in Ecuador: Carnegie Ridge Resources S.A., Green Rock Resources S.A., Cruz del
Sol S.A. and Valle Rico Resources S.A. hold 72 mining concessions in Ecuador for which the companies were successful in
bidding as part of the auction process in 2016 and 2017.
The Company has carried out initial exploration work programmes on these concessions and delineated 10 priority projects.
The ongoing exploration programme on these projects continues to focus on:
• Drill testing targets
• Collection and interpretation of geophysical data
• Mapping and geochemical sampling of new areas.
At 30 June 2022, the capitalised exploration and evaluation costs for the Other Ecuadorian projects totalled US$95.25
million. The high priority projects consist of 41 concessions and total capitalised expenditure is US$67.86 million. The other
31 regional concessions total capitalised costs are US$27.40 million.
Based on the exploration work conducted to date at the Other Ecuadorian projects, the Company:
• continues to have the right to explore in the area
• has not lost access to any areas and is working proactively with communities to build a strong licence ahead of major
field work
• has met its expenditure commitments
• remains positive around the prospectivity of the project area, with encouraging geological results encountered to date
•
is of the opinion that insufficient data exists to abandon or relinquish any of these projects.
Accordingly, management have assessed that there are no indicators of impairment for the aggregate carrying value of
US$95.25 million.
ACAPULCO MINING PROJECTS
The main exploration project of Acapulco Mining Pty Ltd is the Mt Perry project. A comprehensive assessment of the project
has identified the Upper Chinaman’s Creek prospects as the highest priority high-grade opportunity.
Based on the exploration work conducted to date, the Company:
• continues to have the right to explore in the area
• has met its expenditure commitments and is now actively seeking a joint venture partner to pursue further exploration on
the projects
• remains positive around the prospectivity of the project areas, with encouraging exploration results encountered to date
•
is of the opinion that insufficient data exists to abandon or relinquish the project.
Accordingly, management have assessed that there are no indicators of impairment for the aggregate carrying value of
US$6.50 million.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
163
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 13 INTANGIBLE ASSETS CONTINUED
SolGold 100% owned projects continued
CENTRAL MINERALS PROJECTS
Central Minerals Pty Ltd holds the Rannes project where recently completed exploration activities include:
• Work on the Rannes Project focused on plate modelling of VTEM data and commencement of the integration of 3DIP,
VTEM and magnetic inversion model data
• Air-photo based litho-structural geological review and interpretation.
Based on the exploration work conducted to date, the Company:
• continues to have the right to explore in the area
• has met its expenditure commitments and is now actively seeking a joint venture partner to pursue further exploration
on the projects
• remains positive around the prospectivity of the project areas, with encouraging exploration results encountered to date
•
is of the opinion that insufficient data exists to abandon or relinquish the project.
Accordingly, management have assessed that there are no indicators of impairment for the aggregate carrying value
of US$3.30 million.
NOTE 14 LOAN RECEIVABLES AND OTHER ASSETS
Loan receivables and other current assets
Company Funded Loan Plan Receivable
3,553,291
6,495,930
3,553,291
6,495,930
Closing balance at the end of the reporting period
3,553,291
6,495,930
3,553,291
6,495,930
GROUP
2022
US$
GROUP
2021
US$
COMPANY
2022
US$
COMPANY
2021
US$
GROUP
2022
US$
GROUP
2021
US$
COMPANY
2022
US$
COMPANY
2021
US$
Loan receivables and other non-current assets
Security bonds
1,749,213
1,457,324
756,332
756,332
Closing balance at the end of the reporting period
1,749,213
1,457,324
756,332
756,332
Company funded loan plan receivable
Balance at beginning of reporting period
6,495,930
6,373,398
6,495,930
6,373,398
Proceeds received from repayment of the loans during the period
(2,408,511)
(1,065,245)
(2,408,511)
(1,065,245)
Fair value adjustment recognised as an employee benefit
expense
Accretion of interest
Effect of foreign exchange
(669,211)
–
(669,211)
789,946
449,613
789,946
(654,863)
738,164
(654,863)
–
449,613
738,164
Balance at end of reporting period
3,553,291
6,495,930
3,553,291
6,495,930
The CFLP is a plan established by the Company to assist employees in exercising share options. On 29 October 2018, the
Company assisted employees to exercise 19,950,000 options previously issued to employees of the Company in 2016 via the
CFLP. Since inception and until 30 June 2022 repayments of US$3,473,756 have been received against the loans provided.
As at 30 June 2022, 4 employees remain beneficiaries of the Plan, with 1 employee having repaid their loan in early July 2022.
The key terms of this CFLP on the date the loans were granted were as follows:
• The employee may only use a loan under the Plan to pay for the exercise of Employee Options granted by the Company
• The loan will be granted for a maximum period of 2 years (extended in the meantime)
• No interest will be charged on the loan
• The loan is secured by the shares granted on the exercise of the Employee Options
• The loans provided are full recourse.
164
NOTE 14 LOAN RECEIVABLES AND OTHER ASSETS CONTINUED
As the loan provided by the Company was at a favourable rate of interest for the employees, the loan receivable under the
Plan was fair valued at the date of grant. The fair value of the loan was estimated based on the future cash flow and a market
rate of 7%. In future reporting periods, post inception, the loan has been measured at amortised cost. The loans provided
are full recourse loans. If the sale of shares does not cover the outstanding loan balance in full, repayment of the balance
will be recovered from the employees. This transaction was a non-cash transaction with employees. Management have
considered the likelihood of default is low and the expected credit losses under the loans will be immaterial and accordingly,
no impairment has been recognised at 30 June 2022. The Company has the ability to sell the shares, and accordingly the
exposure to credit risk is low.
On 24 February 2020 the maturity date for the CFLP was extended by 12 months to 29 October 2021. All other terms of the
CFLP remained consistent. The 12-month extension of the loan resulted in an overall increase of US$402,082 in employee benefits
expense. This fair value adjustment is represented in the above table and was recognised as an employee benefit expense.
The Board of Directors in June 2021 resolved to extend the CFLP until 31 December 2021. During the October 2021 board
meeting, the Board of Directors resolved to extend the CFLP again, this time for a further six months, to 30 June 2022. This
extension of the loan resulted in an overall increase of US$669,211 in employee benefits expense. This fair value adjustment
is represented in the above table and was recognised as an employee benefit expense.
On 24 August 2022, it was proposed to extend the CFLP for 3 individuals whom due to their positions in the Company had
additional restrictions from trading during the year ended 30 June 2022. This extension will see their loan repayment terms
extended until 31 December 2022.
Security bonds relate to cash security held against office premises (Level 27, 111 Eagle St, Brisbane, Queensland, Australia;
1 King Street, St Paul’s, London, United Kingdom; Baarerstrasse 21, 6300 Zug, Switzerland), cash security held by the Queensland
Department of Natural Resources and Mines against Queensland exploration tenements held by the Group and on cash
backed bank guarantees held by the Ecuadorian Ministry of Environment against Ecuadorian exploration tenements held
by the Group.
NOTE 15 DEFERRED TAXATION
Recognised deferred tax assets and liabilities
GROUP
2022
NET
(CHARGED)/
CREDITED TO
INCOME
US$
NET (CHARGED)
/ CREDITED
TO OTHER
COMPREHENSIVE
INCOME
US$
OPENING
BALANCE
US$
NET (CHARGED)
/ CREDITED TO
EQUITY
US$
NET MOVEMENT
ON UNWIND /
TRANSFER
US$
Recognised deferred tax assets
Carried forward tax losses
Accruals / provisions
Potential benefit
–
1,517,126
1,517,126
6,295,129
(443,509)
5,851,620
–
–
–
–
11,111
11,111
Recognised deferred tax
liabilities
Financial assets held at fair value
through other comprehensive
income
Derivative liabilities
NSR Liability (borrowings)
Exploration and evaluation assets
Foreign exchange gains/losses
Property, plant and equipment
IFRS 16 right of use asset
Potential benefit
(1,201,733)
43,314
–
(2,599,253)
2,518,843
–
102,643
(90,424)
(4,200,444)
146,911
(6,361,967)
(1,069)
74,088
(278,297)
(1,517,126) (10,330,262)
267,087
–
–
–
–
–
–
267,087
–
–
–
–
–
–
–
–
CLOSING
BALANCE
US$
6,295,129
1,084,728
7,379,857
(832,003)
(47,110)
(4,200,444)
(2,452,342)
(3,843,124)
(1,069)
–
–
–
–
–
–
–
–
–
(204,209)
–
– (11,580,301)
Net deferred taxes
–
(4,478,642)
267,087
11,111
– (4,200,444)
Deferred tax assets not
recognised
Unused tax losses
Temporary differences1
Tax benefit
25,423,063
9,341,592
34,764,655
(4,126,551)
6,319,277
2,192,726
–
–
–
–
–
–
–
–
–
21,296,512
15,660,869
36,957,381
1
Exploration expenditure incurred in the Solomon Islands that has been expensed. This expenditure is deductible over 5 years from when production commences.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
165
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 15 DEFERRED TAXATION CONTINUED
Recognised deferred tax assets and liabilities continued
GROUP
2021
OPENING
BALANCE
US$
NET (CHARGED)
/ CREDITED TO
INCOME
US$
NET (CHARGED)
/ CREDITED
TO OTHER
COMPREHENSIVE
INCOME
US$
NET (CHARGED)
/ CREDITED TO
EQUITY
US$
NET MOVEMENT
ON UNWIND /
TRANSFER
US$
CLOSING
BALANCE
US$
Recognised deferred tax assets
Carried forward tax losses
7,184,409
(7,184,409)
Accruals / provisions
Derivative liabilities
1,431,263
(670,986)
(67,340)
110,654
Foreign exchange gains/losses
(5,317,434)
7,836,277
Potential benefit
3,230,898
91,536
–
–
–
–
–
–
756,849
–
–
756,849
Recognised deferred tax
liabilities
Financial assets held at fair value
through other comprehensive
income
(569,295)
60,036
(692,474)
Exploration and evaluation assets
(2,302,332)
(296,921)
IFRS 16 right of use asset
(359,271)
80,974
–
–
Potential benefit
(3,230,898)
(155,911)
(692,474)
–
–
–
–
Net deferred tax liabilities
–
(64,375)
(692,474)
756,849
Deferred tax assets not
recognised
Unused tax losses
5,369,347
20,053,716
Temporary differences1
8,962,905
378,687
Tax benefit
14,332,252 20,432,403
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,517,126
43,314
2,518,843
4,079,283
(1,201,733)
(2,599,253)
(278,297)
(4,079,283)
–
25,423,063
9,341,592
– 34,764,655
1
Exploration expenditure incurred in the Solomon Islands that has been expensed. This expenditure is deductible over 5 years from when production commences.
166
NOTE 15 DEFERRED TAXATION CONTINUED
Recognised deferred tax assets and liabilities continued
COMPANY
2022
Recognised deferred tax assets
Carried forward tax losses
Accruals / provisions
Capital raising costs
Other temporary differences
OPENING
BALANCE
US$
NET (CHARGED)
/ CREDITED TO
INCOME
US$
NET (CHARGED)
/ CREDITED
TO OTHER
COMPREHENSIVE
INCOME
US$
NET (CHARGED)
/ CREDITED TO
EQUITY
US$
CLOSING
BALANCE
US$
–
3,847,148
303,013
1,119,475
11,039
38,433
(468,570)
38,161
–
–
–
–
–
–
–
11,111
–
3,847,148
341,446
662,016
49,200
11,111
4,899,810
Potential benefit
1,433,527
3,455,172
Recognised deferred tax liabilities
Financial assets held at fair value through
other comprehensive income
Derivative liabilities
Foreign exchange gains / (losses)
Property, plant and equipment
IFRS 16 right of use asset
Potential benefit
(1,201,733)
102,642
267,087
43,313
(90,424)
–
–
(3,848,385)
(1,069)
(275,107)
103,866
–
–
–
–
(1,433,527)
(3,733,370)
267,087
–
–
–
–
–
–
(832,004)
(47,111)
(3,848,385)
(1,069)
(171,241)
(4,899,810)
Net deferred tax liabilities
–
(278,198)
267,087
11,111
–
Deferred tax assets not recognised
Unused tax losses
Unused capital losses
Temporary differences
Tax benefit
22,008,697
(7,145,119)
–
–
2,973,922
(2,973,922)
24,982,619
(10,119,041)
–
–
–
–
–
–
–
–
14,863,578
–
–
14,863,578
The deferred tax asset in respect of these items has not been recognised as future taxable profit is not anticipated within the
foreseeable future.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
167
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 15 DEFERRED TAXATION CONTINUED
Recognised deferred tax assets and liabilities continued
COMPANY
2021
Recognised deferred tax assets
Carried forward tax losses
Accruals / provisions
Capital raising costs
Other temporary differences
Potential benefit
OPENING
BALANCE
US$
NET (CHARGED)
/ CREDITED TO
INCOME
US$
NET (CHARGED)
/ CREDITED TO
OTHER
COMPREHENSIVE
INCOME
US$
NET (CHARGED)
/ CREDITED TO
EQUITY
US$
4,860,353
(4,860,353)
363,929
977,865
20,083
(60,916)
(615,239)
(9,044)
6,222,230 (5,545,552)
–
–
–
–
–
–
–
756,849
–
756,849
1,433,527
CLOSING
BALANCE
US$
–
303,013
1,119,475
11,039
Recognised deferred tax liabilities
Financial assets held at fair value through other
comprehensive income
Derivative liabilities
Foreign exchange gains / (losses)
IFRS 16 right of use asset
Potential benefit
Net deferred taxes
Deferred tax assets not recognised
Unused tax losses
Unused capital losses
Temporary differences
Tax benefit
(569,295)
–
60,036
43,313
(5,317,434)
5,317,434
(335,501)
60,394
(692,474)
–
–
–
(6,222,230)
5,481,177
(692,474)
–
–
–
–
–
(1,201,733)
43,313
–
(275,107)
(1,433,527)
–
(64,375)
(692,474)
756,849
–
5,347,495
16,661,202
–
–
–
2,973,922
5,347,495
19,635,124
–
–
–
–
– 22,008,697
–
–
–
2,973,922
– 24,982,619
The deferred tax asset in respect of these items has not been recognised as future taxable profit is not anticipated within the
foreseeable future.
NOTE 16 OTHER RECEIVABLES AND PREPAYMENTS
Other receivables
Taxes receivable
Prepayments
GROUP
2022
US$
GROUP
2021
(RESTATED)1
US$
COMPANY
2022
US$
COMPANY
2021
US$
1,807,935
3,666,760
623,282
1,341,539
2,592,334
665,533
341,887
1,219,655
128,258
310,043
206,001
391,076
Other receivables and prepayments
4,742,156
5,551,948
1,061,583
1,938,616
1 See Note 1.
Other receivables represent Australian Goods and Services Tax receivable and deposits made to landowners in Ecuador for
land purchases. Management have considered the expected credit loss on the deposits to landowners as immaterial and
accordingly, no impairment has been recognised at 30 June 2022. As these land deposits are dependent on the Cascabel
project, they are not impaired. There is no indication the Cascabel project will not go ahead.
NOTE 17 CASH AND CASH EQUIVALENTS
Cash at bank
GROUP
2022
US$
GROUP
2021
US$
COMPANY
2022
US$
COMPANY
2021
US$
26,102,133 109,562,103
21,032,524
72,918,016
Cash and cash equivalents in the statement of cash flows
26,102,133 109,562,103 21,032,524 72,918,016
168
NOTE 18 ALLOTTED, CALLED-UP AND FULLY PAID SHARE CAPITAL AND RESERVES
(a) Authorised Share Capital
At 1 July 2020 – Ordinary shares
Previous year's increase in authorised capital having expired
Previous year's increase in authorised capital having expired
Increase in authorised share capital of two-thirds of issued capital
on 17 December 2020
At 30 June 2021 – Ordinary shares
At 1 July 2021 – Ordinary shares
Previous year's increase in authorised capital having expired
Increase in authorised share capital of two-thirds of issued capital
on 15 December 2021
At 30 June 2022 – Ordinary shares
2021
NO. OF SHARES
2021
NOMINAL VALUE £
2,905,511,333
29,055,113
(443,750,000)
(4,437,500)
(615,440,300)
(6,154,403)
1,230,880,689
12,308,807
3,077,201,722
30,772,017
2022
NO. OF SHARES
2022
NOMINAL VALUE £
3,077,201,722
30,772,017
(1,230,880,689)
(12,308,807)
1,529,211,000
15,282,110
3,375,532,033
33,745,320
Ordinary shares participate in dividends and the proceeds on winding up the Company in proportion to the number of
shares held. At shareholder meetings each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has one vote on show of hands.
(b) Changes in Allotted, Called-up and Fully Paid Share Capital and Share Premium
NO. OF SHARES
NOMINAL
VALUE
US$
SHARE
PREMIUM
US$
TOTAL
US$
Ordinary shares of 1p each at 1 July 2020
2,072,213,494
29,281,511 353,220,481 382,501,992
Shares issued at $0.42 – Valuestone 12 November 2020
11,900,000
156,579
4,843,421
5,000,000
Shares issued at £0.255 – Placing share issue 28 April 2021
204,922,643
2,846,328 69,735,022
72,581,350
Shares issued at £0.255 – Directors' share issue 28 April 2021
1,543,858
Shares issued at £0.255 – Retail Offer share issue 28 April 2021
1,736,437
21,440
24,140
525,276
591,428
546,716
615,568
Shares issued at £0.25 – Exercise of employee options
15 June 2021
1,500,000
20,701
496,834
517,535
Share issue costs charge to share premium account
–
–
(2,593,300)
(2,593,300)
Ordinary shares of 1p at 30 June 2021
2,293,816,432 32,350,699 426,819,162 459,169,861
Ordinary shares of 1p each at 1 July 2021
2,293,816,432 32,350,699 426,819,162 459,169,861
Share issue costs charge to share premium account
–
–
(25,922)
(25,922)
Ordinary shares of 1p at 30 June 2022
2,293,816,432 32,350,699 426,793,240 459,143,939
NO. OF SHARES
NOMINAL
VALUE
US$
SHARE
PREMIUM
US$
TOTAL
US$
(c) Other Reserves
Financial assets held at fair value through other
comprehensive income
Share based payment reserve
Other reserves
Total Other reserves
GROUP 2022
US$
GROUP 2021
US$
COMPANY 2022
US$
COMPANY 2021
US$
2,047,393
3,253,029
2,047,393
3,253,029
9,356,670
16,791,596
9,356,670
16,791,596
(466,305)
(632,034)
–
–
10,931,758
19,412,591
11,404,063 20,044,625
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
169
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 18 ALLOTTED, CALLED-UP AND FULLY PAID SHARE CAPITAL AND RESERVES CONTINUED
(c) Other Reserves continued
CAPITAL MANAGEMENT
Management controls the capital of the Group in order to generate long-term shareholder value and ensure that the Group
can fund operations and continue as a going concern. Management effectively manages the Group’s capital by assessing
the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These
responses include share issues and debt considerations. Given the nature of the Group’s current activities the entity will
remain dependant on equity funding in the short to medium term until such time as the Group becomes self-financing
from the commercial production of mineral resources.
NOTE 19 TRADE AND OTHER CURRENT PAYABLES
Current
Trade payables
Other payables1
Accrued expenses
GROUP
2022
US$
GROUP
2021
US$
COMPANY
2022
US$
COMPANY
2021
US$
1,294,293
838,753
4,046,719
3,834,339
1,168,066
3,174,564
885,985
298,327
760,658
744,927
229,316
501,152
Trade and other current payables
6,509,078
7,847,656
1,944,970
1,475,395
1
Includes employee benefits amounting to US$1,292,407 (2021: US$1,009,212).
Trade and other payables are measured at amortised cost.
The decrease in accrued expenses for the Group mainly relates to the decrease in drilling costs for the year ended 30 June 2022.
NOTE 20 LEASES
Current liability
Lease liability
Balance at the end of the reporting period
Non-current liability
Lease liability
GROUP
2022
US$
GROUP
2021
US$
COMPANY
2022
US$
COMPANY
2021
US$
415,132
335,749
309,668
415,132
335,749
309,668
319,275
319,275
326,374
607,214
303,573
607,214
Balance at the end of the reporting period
326,374
607,214
303,573
607,214
(a) Right-of-Use assets
At 1 July 2021
Additions
Depreciation
Foreign exchange movements
At 30 June 2022
170
GROUP
PROPERTY,
PLANT &
EQUIPMENT
US$
931,527
260,019
COMPANY
PROPERTY,
PLANT &
EQUIPMENT
US$
917,026
–
(429,280)
(286,634)
(59,585)
(59,585)
702,681
570,807
NOTE 20 LEASES CONTINUED
(b) Lease liabilities
At 1 July 2021
Additions
Interest expense included in statement of profit and loss (note 6)
Interest expense capitalised
Lease payments
Foreign exchange movements
At 30 June 2022
NOTE 21 BORROWINGS
Current liability
Bridging loan
Accrued interest
Balance at the end of the reporting period
Bridging loan
Balance at beginning of reporting period
Accrued interest
Repayment of loan
Balance at end of reporting period
GROUP
US$
942,963
233,566
64,325
9,657
COMPANY
US$
926,489
–
57,907
–
(448,353)
(310,503)
(60,652)
(60,651)
741,506
613,242
GROUP
2022
US$
GROUP
2021
US$
COMPANY
2022
US$
COMPANY
2021
US$
–
–
–
–
–
–
–
–
–
–
15,248,303
371,275
(15,619,578)
–
–
–
–
–
–
–
–
–
–
–
15,248,303
371,275
(15,619,578)
–
GROUP
2022
US$
GROUP
2021
US$
COMPANY
2022
US$
COMPANY
2021
US$
Non-current liability
Net Smelter Royalty
Balance at the end of the reporting period
NSR Financing
84,076,077 106,574,217
84,076,077 106,574,217
Balance at beginning of reporting period
106,574,217
–
Additions – funds received under the loan
Additions – funds utilised in repaying Bridging Loan
Transaction costs adjusted through retained earnings
Transaction costs at recognition
Accrued interest
Remeasurement of amortised cost
Balance at end of reporting period
– 84,380,422
–
–
–
15,619,578
(726,427)
(2,318,598)
12,505,564
9,619,242
(35,003,704)
–
84,076,077 106,574,217
–
–
–
–
–
–
–
–
–
–
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
–
–
–
–
–
–
–
–
–
–
171
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 21 BORROWINGS CONTINUED
On 11 September 2020, Franco-Nevada advanced to SolGold US$100 million, the Royalty Purchase Price under the NSR
Financing Agreement, less the amount of outstanding principal and interest under the US$15 million secured bridging loan
pursuant to the Bridge Loan Agreement (“BLA”) with Franco-Nevada announced on 11 May 2020. The aggregate amount
owing under the BLA was repaid out of the proceeds of the NSR financing. This financing arrangement is classified as a
financial liability at amortised cost and was recognised at the amount received adjusted for transaction costs paid.
The accounting policy disclosed within the 30 September 2020 interim financial statements noted that the NSR was
classified as fair value through profit or loss (“FVTPL”). Following further analysis, Management elected not to measure the
hybrid instrument at FVTPL but rather to measure the host debt at amortised cost and the embedded derivative at FVTPL.
Management also notes that US$726,427 of transaction costs were expensed in the 30 June 2020 income statement, as it
was not sufficiently certain due to Covid-19 that the transaction would close. Management has recognised an adjustment
to restate the prior year retained earnings to reflect this in the 30 June 2021 Consolidated Financial Statements.
In return for the royalty purchase price, Franco-Nevada has been granted a perpetual 1% royalty interest to be calculated
by reference to net smelter returns from the Cascabel concession area in accordance with the terms and conditions set out
in the NSR financing agreement. Financial liabilities classified at amortised costs are calculated using the effective interest
method, which allocates expenses at a constant rate over the term of the investment. The effective interest rate is the
internal rate of return of the liability at initial recognition through the expected life of the financial liability, which in this
case is the time from the recognition until the end of the mine life of the Alpala mine.
Key terms to the financing include:
• Funding amount: US$100 million with upscale option to US$150 million
• Royalty terms: 1.0% NSR for $100 million
• Buy-back option: A 50% buy-back option exercisable at SolGold’s election for six years from closing at a price delivering
Franco-Nevada a 12% IRR
• Gold conversion: option in favour of Franco-Nevada to convert the NSR interest into a gold-only NSR interest (six years from
year two of operations). The amount of the gold net smelter return will be calculated on a net present value neutral basis
• Proceeds to fund the costs to complete the feasibility study, with any surplus to be used for SolGold’s share of the
development of Alpala.
The NSR financing agreement included an upscale option at the Group’s control. The option expired during the financial year.
Key inputs for the estimation of future cash flows of the effective interest rate are:
• All operating assumptions are based on the latest available development plan
• The NSR top-up and minimum annual payment are assessed based on the latest operating assumptions
• Gold price of $1,300 per ounce
• Copper price of $7,268 per tonne
• Silver price of $16 per ounce.
The EIR was calculated using the available development plan at the time of recognising the NSR and results in a discount
rate of 11.84% (real).
Management has reviewed its assessment and considers that the buy-back option is not an embedded derivative which
needs to be separately accounted for as it is closely related. As such, it is not required to be accounted for as a separate
instrument in accordance with IFRS 9.
In previous periods Management assessed that the fair value of this embedded derivative was nil or immaterial, as there is
no expectation or likelihood that the buy-back option will be exercised by SolGold.
172
NOTE 22 OTHER FINANCIAL LIABILITIES
Movements in financial liabilities
Balance at 1 July
Additions
GROUP
COMPANY
2022
US$
2021
US$
2022
US$
2021
US$
2,926,000
2,312,254
2,926,000
2,312,254
–
–
–
–
Fair value adjustment through profit or loss
(539,000)
613,746
(539,000)
613,746
Balance at 30 June
2,387,000 2,926,000
2,387,000 2,926,000
The fair values of these financial liabilities approximate their carrying amounts principally due to their short-term nature or
the fact that they are measured and recognised at fair value.
The following table represents the Group’s financial liabilities measured and recognised at fair value.
2022
Derivative liability at fair value through profit or loss
2021
Derivative liability at fair value through profit or loss
US$
LEVEL 1
US$
LEVEL 2
US$
LEVEL 3
US$
TOTAL
–
–
–
–
2,387,000
2,387,000
2,926,000
2,926,000
The derivative liability at fair value through profit or loss has been valued using the Monte Carlo Simulation method.
FAIR VALUE OF SHARE OPTIONS AND ASSUMPTIONS
Number of options (Note 23)
Share price at issue date
Exercise price
Expected volatility
Time to expiry
Expected dividends
Risk-free interest rate (short-term)
Fair value
Valuation methodology
2022
£0.37 OPTIONS
30 JUNE 2022
19,250,000
£0.2920
£0.370
65.700%
2021
£0.37 OPTIONS
30 JUNE 2021
19,250,000
£0.2920
£0.370
63.879%
2.43 years
3.43 years
0.00%
1.91%
$0.124
0.00%
(0.16%)
$0.152
Monte Carlo Value Monte Carlo Value
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2022/2021
2022
US$
Derivative liability recognised in statement of comprehensive income loss
(539,000)
2021
US$
613,746
NOTE 23 SHARE OPTIONS
At 30 June 2022 the Company had 32,250,000 options outstanding for the issue of ordinary shares (2021: 106,875,000).
Options
Share options are granted to employees under the Company’s Employee Share Option Plan (“ESOP”). The employee share
option plan is designed to align participants’ interests with those of shareholders.
Unless otherwise documented with the Company, when a participant ceases employment prior to the vesting of their
share options, the share options are forfeited after 90 days unless cessation of employment is due to termination for
cause, whereupon they are forfeited immediately. The Company prohibits key management personnel from entering
into arrangements to protect the value of unvested ESOP awards.
The contractual life of each option granted is generally two to three years. There are no cash settlement alternatives.
Each option can be exercised from vesting date to expiry date for one share with the exercise price payable in cash.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
173
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 23 SHARE OPTIONS CONTINUED
Share options issued
There were 3,000,000 options granted during the year ended 30 June 2022 (2021: 3,000,000).
On 24 February 2022, the Company issued 3,000,000 unlisted share options over ordinary shares of the Company to an
employee in line with an executive service agreement. The options are exercisable at £0.26 and expire on 15 June 2024.
DATE OF GRANT
EXERCISABLE FROM
EXERCISABLE TO
PRICE NUMBER GRANTED
EXERCISE
NUMBER AT
30 JUNE 2022
2 December 20191 The options vested immediately and
2 December 2024
£0.37
19,250,000 19,250,000
27 April 2020
2 March 2021
exercisable through to 2 December 2024
The options vested immediately and
exercisable through to 26 April 2023
The options vested immediately and
exercisable through to 2 March 2024
24 February 2022 The options vested immediately and
exercisable through to 15 June 2024
26 April 2023
£0.25
7,000,000
7,000,000
2 March 2024
£0.36
3,000,000 3,000,000
15 June 2024
£0.26
3,000,000 3,000,000
32,250,000 32,250,000
1
Options issued to BHP as part of the share subscriptions on 2 December 2019 and exercisable at £0.37 within 5 years. These options fall outside the scope
of IFRS 2 and are classified as a derivative financial liability as they do not meet the fixed for fixed test.
DATE OF GRANT
EXERCISABLE FROM
EXERCISABLE TO
PRICES NUMBER GRANTED
EXERCISE
NUMBER AT
30 JUNE 2021
5 July 2018
The options vested immediately, and
exercisable through to 4 July 2021
4 July 2021
£0.60
250,000
250,000
6 November 2018 The options vested immediately, and
6 November 2021
£0.60
82,875,000 72,375,000
exercisable through to 6 November 2021
20 December 2018 The options vested immediately, and
20 December 2021 £0.60
11,375,000 5,000,000
exercisable through to 20 December 2021
2 December 2019 The options vested immediately and
2 December 2024
£0.37
19,250,000 19,250,000
27 April 2020
2 March 2021
exercisable through to 2 December 2024
The options vested immediately and
exercisable through to 26 April 2023
The options vested immediately and
exercisable through to 2 March 2024
26 April 2023
£0.25
7,000,000
7,000,000
2 March 2024
£0.36
3,000,000 3,000,000
123,750,000 106,875,000
Share-based payments
The number and weighted average exercise price of share options are as follows:
WEIGHTED
AVERAGE
EXERCISE PRICE
2022
NUMBER OF
OPTIONS
2022
WEIGHTED
AVERAGE
EXERCISE PRICE
2021
NUMBER OF
OPTIONS
2021
Outstanding at the beginning of the year
£0.53 106,875,000
£0.54 185,162,000
Exercised during the year
Expired/lapsed during the year
Forfeited during the year
Granted during the year
Outstanding at the end of the year
Exercisable at the end of the year
–
–
£0.25
1,500,000
£0.60 77,625,000
£0.60 72,062,000
–
–
£0.60
7,725,000
£0.26
3,000,000
£0.36
3,000,000
£0.32 32,250,000
£0.53 106,875,000
£0.32 32,250,000
£0.53 106,875,000
174
NOTE 23 SHARE OPTIONS CONTINUED
Share-based payments continued
The options outstanding at 30 June 2022 have an exercise price of £0.25, £0.26, £0.36 and £0.37 (2021: £0.25, £0.36,
£0.37, £0.40 and £0.60) and a weighted average contractual life of 1.97 years (2021: 1.03 years).
Share options held by Directors are as follows:
SHARE OPTIONS HELD
Nicholas Mather
Jason Ward
AT 30 JUNE 2022
AT 30 JUNE 2021
OPTION PRICE
EXERCISE PERIOD
–
–
5,000,000
5,000,000
60p 20/12/18 – 20/12/21
60p 06/11/18 – 06/11/21
The total number of options outstanding at year end is as follows:
SHARE OPTIONS
HELD AT
30 JUNE 2022
–
–
–
19,250,000
7,000,000
3,000,000
3,000,000
SHARE OPTIONS
HELD AT
30 JUNE 2021
OPTION PRICE
EXERCISE PERIODS
250,000
72,375,000
5,000,000
19,250,000
7,000,000
3,000,000
£0.60 Exercisable through to 04/07/2021
£0.60 Exercisable through to 06/11/2021
£0.60 Exercisable through to 20/12/2021
£0.37 Exercisable through to 02/12/2024
£0.25 Exercisable through to 26/04/2023
£0.36 Exercisable through to 02/03/2024
–
£0.26 Exercisable through to 15/06/2024
32,250,000
106,875,000
The fair value of services received in return for share options granted is measured by reference to the fair value of share
options granted. This estimate is based on the Black-Scholes model considering the effects of the vesting conditions,
expected exercise period and the dividend policy of the Company.
FAIR VALUE OF SHARE OPTIONS AND ASSUMPTIONS
Number of options
Share price at issue date
Exercise price
Expected volatility
Option life
Expected dividends
Risk-free interest rate (short-term)
Fair value
Valuation methodology
2022
£0.26 OPTIONS
24 FEBRUARY 2022
3,000,000
£0.275
£0.26
66.369%
2.31 years
0.00%
1.22%
£0.113
Black-Scholes
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2022
Share based payments expense recognised in statement
of comprehensive income
2022
US$
2021
US$
454,336
315,436
The calculation of the volatility of the share price on the above options was based on the Company’s daily closing share
price over the option life period, dependent on the exercise period attributable to the tranche of options, prior to the date
the options were issued.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
175
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 23 SHARE OPTIONS CONTINUED
Share-based payments continued
FAIR VALUE OF SHARE OPTIONS AND ASSUMPTIONS
Number of options
Share price at issue date
Exercise price
Expected volatility
Option life
Expected dividends
Risk-free interest rate (short-term)
Fair value
Valuation methodology
2021
£0.25 OPTIONS
27 APRIL 20201
£0.36 OPTIONS
2 MARCH 2021
1,500,000
3,000,000
£0.26
£0.25
£0.223
£0.36
60.548%
64.407%
3.00 years
3.00 years
0.00%
0.14%
£0.107
0.00%
0.10%
£0.065
Black-Scholes Black-Scholes
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021
US$
US$
TOTAL US$
Share based payments expense recognised in statement
of comprehensive income
47,377
268,059
315,436
The calculation of the volatility of the share price on the above options was based on the Company’s daily closing share
price over the two or three-year period, dependent on the exercise period attributable to the tranche of options, prior to
the date the options were issued.
NOTE 24 FINANCIAL INSTRUMENTS (GROUP AND COMPANY)
Financial instruments by category (Group)
FINANCIAL ASSETS
Cash and cash equivalents
Other receivables
Loans receivable and other non-current assets
Loans receivable and other current assets
Equity investments
Total financial assets
FINANCIAL LIABILITIES
Trade and other payables
Derivative liability
NSR
Bridging Loan
Lease liabilities
FINANCIAL ASSETS AT
AMORTISED COST
FINANCIAL ASSETS HELD AT FAIR
VALUE THROUGH OCI
2022
2021
2022
2021
26,102,133 109,562,103
1,807,935
3,666,760
1,749,213
1,457,324
3,553,291
6,495,930
–
–
–
–
–
–
–
–
–
–
5,351,844
6,825,042
33,212,572
121,182,117
5,351,844
6,825,042
FINANCIAL LIABILITIES AT
AMORTISED COST
FINANCIAL LIABILITIES AT FAIR
VALUE THROUGH PROFIT OR LOSS
2022
2021
6,509,078
7,847,656
2022
–
2021
–
–
–
2,387,000
2,926,000
84,076,077 106,574,217
–
–
741,506
942,967
–
–
–
–
–
–
Total financial liabilities
91,326,661 115,364,846
2,387,000 2,926,000
176
NOTE 24 FINANCIAL INSTRUMENTS (GROUP AND COMPANY) CONTINUED
Financial instruments by category (Company)
FINANCIAL ASSETS
Cash and cash equivalents
Other receivables
Loans receivable and other non-current assets
Loans receivable and other current assets
Loans with subsidiaries
Equity investments
Total financial assets
FINANCIAL LIABILITIES
Trade and other payables
Derivative liability
Lease liabilities
Total financial liabilities
FINANCIAL ASSETS AT
AMORTISED COST
FINANCIAL ASSETS HELD AT FAIR
VALUE THROUGH OCI
2022
2021
2022
2021
21,032,524
72,918,016
623,282
756,332
1,341,539
756,332
3,553,291
6,495,930
185,599,916 167,399,767
–
–
–
–
–
–
–
–
–
–
–
–
5,346,323
6,819,046
211,565,345 248,911,584
5,346,323
6,819,046
FINANCIAL LIABILITIES AT
AMORTISED COST
FINANCIAL LIABILITIES AT FAIR
VALUE THROUGH PROFIT OR LOSS
2022
2021
1,646,644
1,246,080
2022
–
2021
–
–
–
2,387,000
2,926,000
613,241
926,489
–
–
2,259,885
2,172,569
2,387,000 2,926,000
If required, the Board of Directors determines the degree to which it is appropriate to use financial instruments, commodity
contracts or other hedging contracts or techniques to mitigate risks. The main risks for which such instruments may be
appropriate are foreign currency risk and liquidity risk, each of which is discussed below. The main credit risk is the non-
collection of loans and other receivables which include refunds and tenement security deposits. There were no overdue
receivables at year end, apart from the amounts owing for the CFLP (Note 14).
For the Company, the main credit risk is the non-collection of loans made to its subsidiaries. The Directors expect to collect
the loans through the successful exploration and subsequent exploitation of the subsidiaries’ tenements.
There have been no changes in financial risks from the previous year. During the years ended 30 June 2022 and 2021 no
trading in commodity contracts was undertaken.
Market risk
INTEREST RATE RISKS
The Group’s and Company’s policy is to retain its surplus funds on the most advantageous term of deposit available up to
twelve months’ maximum duration. The increase/decrease of 2% in interest rates will impact the Group’s income statement
by a gain/loss of US$522,043 and the Company’s income statement by US$420,650. The Group considers that a +/- 2%
movement in interest rates represents reasonable possible changes.
FOREIGN CURRENCY RISK
The Group has potential currency exposures in respect of items denominated in foreign currencies comprising:
• Transactional exposure in respect of operating costs, capital expenditures and, to a lesser extent, in currencies other
than the functional currency of operations which require funds to be maintained in currencies other than the functional
currency of operation; and
• Translation exposures in respect of investments in overseas operations which have functional currencies other than
United States dollars.
Currency risk in respect of non-functional currency expenditure is reviewed by the Board.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
177
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 24 FINANCIAL INSTRUMENTS (GROUP AND COMPANY) CONTINUED
Market Risk continued
FOREIGN CURRENCY RISK CONTINUED
The table below shows the extent to which Group companies have monetary assets and liabilities in different
currencies. Foreign exchange differences on retranslation of such assets and liabilities are taken to the statement
of comprehensive income.
GROUP
NET FINANCIAL ASSETS / (LIABILITIES)
2022
Australian dollar (AUD)
Solomon Island dollar (SBD)
Canadian dollar (CAD)
Great British pound (GBP)
Swiss franc (CHF)
GROUP
NET FINANCIAL ASSETS / (LIABILITIES)
2021
Australian dollar (AUD)
Solomon Island dollar (SBD)
Canadian dollar (CAD)
Great British pound (GBP)
Swiss franc (CHF)
COMPANY
NET FINANCIAL ASSETS / (LIABILITIES)
2022
Australian dollar (AUD)
Canadian dollar (CAD)
Great British pound (GBP)
COMPANY
NET FINANCIAL ASSETS / (LIABILITIES)
2021
Australian dollar (AUD)
Canadian dollar (CAD)
Great British pound (GBP)
FUNCTIONAL CURRENCY OF ENTITY
AUD
USD
TOTAL
35,890
4,477,773
4,513,663
23
–
–
–
–
23
1,155,292
1,155,292
2,097,138
2,097,138
162,691
162,691
35,913
7,892,894
7,928,807
FUNCTIONAL CURRENCY OF ENTITY
AUD
USD
TOTAL
67,499
2,052,268
2,119,767
6,302
–
6,302
–
–
–
1,771,005
1,771,005
3,129,986
3,129,986
13,988
13,988
73,801
6,967,247
7,041,048
FUNCTIONAL CURRENCY OF ENTITY
AUD
USD
TOTAL
–
–
–
–
4,347,334
4,347,334
1,147,090
1,147,090
2,097,138
2,097,138
7,591,562
7,591,562
FUNCTIONAL CURRENCY OF ENTITY
AUD
USD
TOTAL
–
–
–
–
1,960,513
1,960,513
1,762,803
1,762,803
3,129,986
3,129,986
6,853,302
6,853,302
The main currency exposure relates to the effect of retranslation of the Group’s assets and liabilities in Australian dollar
("AUD") and the Great British Pound ("GBP"). A 10% increase in the A$/US$ and GBP/US$ exchange rates would give rise to
a change of approximately US$734,533 (2021: US$583,305) in the Group net assets and reported earnings. A 10% decrease
in the A$/US$ and GBP/US$ exchange rates would give rise to a change of approximately US$600,981 (2021: US$477,250).
The Group does not hedge foreign currency exposures and manages net exposures by buying and selling foreign currencies
at spot rates where necessary. In respect of other monetary assets and liabilities held in currencies other than United States
dollars, the Group ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot
rates where necessary to address short-term imbalances.
178
NOTE 24 FINANCIAL INSTRUMENTS (GROUP AND COMPANY) CONTINUED
Credit risk
The Group is exposed to credit risk primarily from the financial institutions with which it holds cash and cash deposits
and loans receivable under the CFLP.
The banks and their credit ratings with which the Group had cash accounts at 30 June 2022 were US$766,083 in cash
accounts with Macquarie Bank Limited (BBB) in Australia, US$20,827,794 in cash accounts with Westpac Bank (AA-)
in Australia, US$3,207,398 in cash accounts with Banco Guayaquil (AAA-) in Ecuador, US$79,651 in cash accounts with
Produbanco (B) in Ecuador, US$36,446 in cash accounts with Lloyds Bank (A+), US$1,171,729 in cash accounts with Credit
Suisse (A-) in Switzerland, and US$13,009 in petty cash. Including other receivables, the maximum exposure to credit risk
at the reporting date is the carrying value of these assets and was US$30,844,289 (2021: US$118,020,597).
The Company is also exposed to credit risk due to the cash balance it holds directly. It is also exposed to credit risk on the
CFLP receivable. At 30 June 2022, the Company had US$21,032,524 in cash and cash equivalents (2021: US$72,918,016) and
US$3,553,291 of CFLP receivable (2021: US$6,495,930). The maximum exposure to credit risk at the reporting date was
US$24,585,815 (2021: US$79,413,946).
Credit risk is managed by dealing with banks with high credit ratings assigned by international credit rating agencies.
Furthermore, funds are deposited with banks of high standing in order to obtain market interest rates. Credit risk over
the Company funded loan plan is reduced due to the loan being secured by shares and the Company has full recourse
to recover the loans from the employees in the event that there is a shortfall when the shares are exercised.
Liquidity risks
The Group and Company raises funds as required on the basis of budgeted expenditure for the next 12 to 24 months,
dependent on a number of prevailing factors. Funds are generally raised in capital markets from a variety of eligible
private, corporate and fund investors, or from interested third parties (including other exploration and mining companies)
which may be interested in earning an interest in the Group’s projects. The success or otherwise of such capital raisings
is dependent upon a variety of factors including general equities and metals market sentiment, macro-economic outlook,
project prospectivity, operational risks and other factors from time to time. When funds are sought, the Group balances the
costs and benefits of equity financing versus alternate financing options. Funds are provided to local sites monthly, based
on the sites’ forecast expenditure.
All liabilities held by the Group and Company are contractually due and payable within 1 year, excluding the non-current lease
liability payments, NSR financing agreement and derivative liabilities which are greater than 12 months as set in the table below:
CONTRACTUAL MATURITIES
OF FINANCIAL LIABILITIES
As at 30 June 2022
Trade payables
Borrowings
Lease liabilities
Derivative liabilities
Total
CONTRACTUAL MATURITIES
OF FINANCIAL LIABILITIES
As at 30 June 2021
Trade payables
Borrowings
Lease liabilities
Derivative liabilities
Total
LESS THAN 6
MONTHS
6 – 12 MONTHS
BETWEEN 1
AND 2 YEARS
BETWEEN 2
AND 5 YEARS
OVER 5 YEARS
TOTAL
CONTRACTUAL
CASH FLOWS
6,509,078
–
–
–
–
–
–
–
6,509,078
– 84,076,077 84,076,077
207,566
207,566
326,374
–
–
–
–
2,387,000
–
–
741,506
2,387,000
6,716,644
207,566
326,374
2,387,000 84,076,077
93,713,661
LESS THAN 6
MONTHS
6 – 12 MONTHS
BETWEEN 1
AND 2 YEARS
BETWEEN 2
AND 5 YEARS
OVER 5 YEARS
TOTAL
CONTRACTUAL
CASH FLOWS
7,847,656
–
–
–
–
–
–
–
–
7,847,656
106,574,217 106,574,217
176,111
159,638
291,463
315,751
–
–
–
2,926,000
–
–
942,963
2,926,000
8,023,767
159,638
291,463
3,241,751 106,574,217 118,290,836
FAIR VALUES
In the Directors’ opinion, there is no material difference between the book value and fair value of any of the Group’s and
Company’s financial instruments. The classes of financial instruments are the same as the line items included on the face
of the statement of financial position and have been analysed in more detail in the notes to the financial statements.
All the Group’s financial assets, with the exception of investments held at fair value through other comprehensive income
are categorised as other financial assets at amortised cost.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
179
FINANCIAL STATEMENTS N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2
NOTE 25 COMMITMENTS
The Group also has certain obligations to expend minimum amounts on exploration in tenement areas. These obligations
may be varied from time to time and are expected to be fulfilled in the normal course of operations of the Group.
The combined commitments of the Group related to its granted tenement interests are as follows:
LOCATION
Ecuador
Solomon Islands
Queensland
UP TO 12 MONTHS
13 MONTHS TO
5 YEARS
LATER THAN
5 YEARS
3,065,430
9,196,290
100,000
243,599
100,000
109,024
3,409,029
9,405,314
–
–
–
–
To keep tenements in good standing, work programmes should meet certain minimum expenditure requirements. If
the minimum expenditure requirements are not met, the Group has the option to negotiate new terms or relinquish the
tenements. The Group also has the ability to meet expenditure requirements by joint venture or farm-in agreements.
NOTE 26 RELATED PARTIES
(a) Group
Transactions between related parties are on normal commercial terms and conditions and are no more favourable than those
available to other parties unless otherwise stated.
a) Transactions with Directors and Director-Related Entities
(i)
The Company had a commercial agreement with Samuel Capital Pty Ltd (“Samuel”) for the engagement of Nicholas
Mather as Non-Executive Director of the Company. For the year ended 30 June 2022, US$72,205 was paid or payable
to Samuel (2021: US$827,381). These amounts are included in Note 5 (Remuneration of Key Management Personnel).
The total amount outstanding at year end is US$6,330 (2021: US$nil).
(ii) Mr Brian Moller (a Director until 15th December 2021), is a partner in the Australian firm HopgoodGanim lawyers. For
the year ended 30 June 2022, HopgoodGanim were paid or payable US$8,899 (2021: US$72,456) for the provision
of legal services to the Company. The services were based on normal commercial terms and conditions. The total
amount outstanding at year end was US$997 (2021: US$nil).
(iii) Mr James Clare (a Director), is a partner in the Canadian firm Bennett Jones lawyers. For the year ended 30 June
2022, Bennett Jones were paid or payable US$301,730 (2021: US$486,246) for the provision of legal services to the
Company. The services were based on normal commercial terms and conditions. The total amount outstanding at
year end was US$nil (2021: US$nil).
(iv) The Company had a commercial agreement with Bayview PMF Pty Ltd (“Bayview”) for the engagement of Jason Ward
(Director to May 2022) and his wife (until January 2022) for managerial and administrative services. For the year ended
30 June 2022, US$369,634 was paid or payable to Bayview. The total amount outstanding at year end was US$nil.
Share and Option transactions of Directors are shown under Notes 5 and 22.
(b) Company
The Company has related party relationships with its subsidiaries (see Notes 9 and 10), Directors and other key personnel
(see Notes 5 and 20).
SUBSIDIARIES
The Company has an investment in subsidiaries balance of US$152,964,303 (2021: US$120,045,844). The transactions during
the year have been included in Note 9.
The Company also has an intercompany loan with SolGold Finance AG with a balance of US$185,599,916 (2021: US$167,399,767).
The transactions during the year have been included in Note 10.
(c) Controlling party
In the Directors’ opinion there is no ultimate controlling party.
180
NOTE 27 CONTINGENT ASSETS AND LIABILITIES
A 2% NSR is payable to Santa Barbara Resources Limited, who were the previous owners of the Cascabel tenements.
These royalties can be bought out by paying a total of US$4 million. Fifty percent (50%) of the royalty can be purchased
for US$1 million 90 days following the completion of a feasibility study and the remaining 50% of the royalty can be
purchased for US$3 million 90 days following a production decision. The smelter royalty is considered to be a contingent
liability as the Group has not yet completed the feasibility study at 30 June 2022, and as such there is significant
uncertainty over the timing of any payments that may fall due.
SolGold elected to undertake the Optional Subscription under the terms of the Term Sheet (“Term Sheet”) signed between
SolGold plc and Cornerstone Capital Resources Inc. (“CGP”), CGP’s subsidiary Cornerstone Ecuador S.A. (“CESA”), and
Exploraciones Novomining S.A. (“ENSA”), and holds an aggregate registered and beneficial equity position in ENSA of 85%
under the terms of the Term Sheet. CGP and CESA elected to obtain the benefit of the Financing Option whereby SolGold
will solely fund all operations and activities of ENSA until the completion of a Feasibility Study, including CESA’s contribution
as the registered and beneficial holder of an aggregate equity position in ENSA of 15%. After completion and delivery of
the Feasibility Study, SolGold and CESA shall jointly fund the operations and activities of ENSA based on their respective
equity positions in ENSA on a proportionate basis. Furthermore, the Term Sheet allows for SolGold to be fully repaid for the
financing provided, including interest at LIBOR plus 2% for the expenditures incurred by SolGold from the time CGP and
CESA elected to obtain the benefit of the Financing Option and the completion of the first phase drill programme. SolGold
is to be repaid out of 90% of CESA's distribution of earnings or dividends from ENSA or the Cascabel Tenement to which
CESA would otherwise be entitled. If CESA does not elect to contribute and its equity stake in ENSA is diluted to below 10%,
its equity stake in ENSA will be converted to a 0.5% interest in the Net Smelter Return and SolGold may acquire this interest
for US$3.5 million at any time. At 30 June 2022, Cornerstone’s equity interest in ENSA had not been diluted below 10%.
The amount receivable from CESA at 30 June 2022 was US$48,184,491 (2021: US$40,603,042). This has been considered
as a contingent asset, as there is uncertainty as to whether ENSA will be able to distribute earnings or dividends.
There are no other material contingent assets and liabilities at 30 June 2022 (2021: nil).
NOTE 28 SUBSEQUENT EVENTS
On 5 July 2022 SolGold announced the grant of a total of 10,000,000 long term incentive employee options and the
allotment and issue of 1,336,182 new ordinary shares to Mr Darryl Cuzzubbo, Chief Executive Officer and Managing Director.
The Incentives were triggered by requirements within the Executive Remuneration Contract executed in January 2022, and in
accordance with the Company's Directors' Remuneration Policy and Long Term Incentive Plan Rules, which were approved by
shareholders on 30 June 2022. The Options will vest in three separate tranches, each with a thirty-six (36) month expiry date.
On 11 August 2022 SolGold announced that Ayten Saridas, Group CFO, resigned. The Company appointed Keith Pollocks as
Interim Group CFO. The Company also announced that Jason Ward informed the Board of his decision to step down as Head
of Exploration. Mr Ward will remain as an advisor to the Company to continue to help drive SolGold's exploration strategy.
Keith Marshall, independent Non-Executive Director, resigned from the Board effective from 12th August 2022. He will remain
as an advisor to the Company's technical committee to oversee the Cascabel Project and to ensure a smooth transition to
the new Vice President Projects, Bernie Loyer.
On 24 August it was proposed to extend the CFLP for 3 individuals whom due to their positions in the Company had additional
restrictions from trading during the year ended 30 June 2022. This extension will see their payment terms extend until
31 December 2022.
On 30 August 2022 SolGold announced the issue of 599,257 new ordinary shares to Mr Steve Botts, President, SolGold
Ecuador and the issue of 299,629 new ordinary shares to Mr Harold 'Bernie' Loyer, Vice President Projects. SolGold
announced the appointments of Mr Botts and Mr Loyer on 14 July 2022 and they assumed their roles on 1 August 2022 and
27 July 2022, respectively. These Incentives were triggered by requirements within the Executive Remuneration Contracts
executed in July 2022 for recruitment inducement purposes.
The Directors are not aware of any other significant changes in the state of affairs of the Group or events after the reporting
date that would have a material impact on the consolidated or Company financial statements.
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
181
FINANCIAL STATEMENTS G R I C O N T E N T I N D E X
DISCLOSURE
GRI 2: General disclosures
2-1
Organisational details
2-2
2-3
Entities included in the organisation’s
sustainability reporting
Reporting period, frequency and
contact point
2-4
Restatements of information
2-5
External assurance
2-6
Activities, value chain and other
business relationships
2-7
Employees
2-8 Workers who are not employees
2-9
Governance structure and composition
2-10
Nomination and selection of the highest
governance body
COMMENTARY / SECTION AND PAGE NUMBER
REFERENCES FOR THE FY2022 ANNUAL REPORT
EXTERNAL
ASSURANCE
The Story of SolGold: Pages 4-5
Throughout this Annual Report 2022
SolGold corporate structure: Page 2
Chair's review: Pages 8-9
Chief Executive's review: Pages 10-12
Directors' report: Pages 118-121
SolGold has not made any restatements
of information in the reporting period
Independent auditors’ report to the
Members of SolGold Plc: Pages 123-132
Business model: Pages 14-15
Engaging with our stakeholders:
Pages 48-51
Sustainability report: Pages 52-74
Corporate Governance statement:
Pages 78-81
Stakeholder engagement: Page 90
Engaging with our stakeholders: Page 49
Sustainability report: Pages 65-68
Engaging with our stakeholders: Page 49
Corporate Governance statement:
Pages 78-81
Executive Management team: Pages 85-86
Board leadership and Company purpose:
Pages 87-89
Risk management: Page 42
Nomination Committee Report: Page 97
Composition, succession and evaluation:
Pages 94-95
2-11
Chair of the highest governance body
Chair's review: Pages 8-9
Corporate Governance statement:
Pages 78-81
Board leadership and Company purpose:
Pages 87-89
182
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
DISCLOSURE
COMMENTARY / SECTION AND PAGE NUMBER
REFERENCES FOR THE FY2022 ANNUAL REPORT
EXTERNAL
ASSURANCE
2-12
Role of the highest governance body in
overseeing the management of impacts
Corporate Governance statement:
Pages 78-81
Executive Management team: Pages 85-86
Board leadership and Company purpose:
Pages 87-89
Division of responsibilities: Pages 91-93
Directors' Report: Pages 118-121
Directors’ Responsibility Statement:
Page 122
Executive Management team: Pages 85-86
Division of responsibilities: 91-93
2-13
Delegation of responsibility for
managing impacts
2-14
Role of the highest governance body
in sustainability reporting
Health, Safety, Environment and Community
Committee Report: Page 101
2-15 Conflicts of interest
2-16 Communication of critical concerns
Division of responsibilities: Pages 91-93
Engaging with our stakeholders:
Pages 48-51
Corporate Governance statement:
Pages 78-81
Stakeholder engagement: Page 90
2-17
Collective knowledge of the highest
governance body
Board leadership and Company purpose:
Pages 87-89
2-18
Evaluation of the performance of the
highest governance body
Corporate Governance statement:
Pages 78-81
Composition, succession and evaluation:
Pages 94-95
2-19 Remuneration policies
2-20 Process to determine remuneration
2-21 Annual total compensation ratio
Stakeholder engagement: Page 90
Directors' Remuneration Policy:
Pages 115-117
Directors' Remuneration Report:
Pages 103-104
Annual Report on Remuneration:
Pages 105-113
Remuneration at-a-glance: Page 114
Directors' Remuneration Report:
Pages 103-104
Annual Report on Remuneration:
Pages 105-113
Remuneration at-a-glance: Page 114
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
183
G R I C O N T E N T I N D E X
C O N T I N U E D
DISCLOSURE
2-22
Statement on sustainable
development strategy
2-23 Policy commitments
2-24 Embedding policy commitments
2-25 Processes to remediate negative impacts
2-26
Mechanisms for seeking advice and
raising concerns
COMMENTARY / SECTION AND PAGE NUMBER
REFERENCES FOR THE FY2022 ANNUAL REPORT
EXTERNAL
ASSURANCE
Sustainability report: Page 52
Non-financial information statement:
Page 75
Corporate Governance statement:
Pages 78-81
Executive Management team: Pages 85-86
Board leadership and Company purpose:
Pages 87-89
Division of responsibilities: 91-93
Sustainability report: Page 70
Corporate Governance Whistle-blower
policy: Page 89
2-27 Compliance with laws and regulations
Sustainability report: Pages 52-74
2-28 Membership associations
2-29 Approach to stakeholder engagement
2-30 Collective bargaining agreements
GRI 3: Material topics
3-1
3-2
3-3 Management of material topics
List of material topics
Process to determine material topics
Corporate Governance statement:
Pages 78-81
Sustainability report: Page 55
Engaging with our stakeholders:
Pages 48-51
Stakeholder engagement: Page 90
Not stated
Not stated
Not stated
Not stated
GRI 201: Economic performance
201-1
Direct economic value generated
and distributed
Business model: Page 15
Sustainability report: Pages 65 and 73-74
201-2 Financial implications and other risks and
opportunities due to climate change
Not stated
201-3 Defined benefit plan obligations and other
retirement plans
201-4 Financial assistance received from
government
Notes to the financial statements:
Pages 146-147
SolGold did not receive any financial
assistance from any government in
the reporting period.
GRI 202: Market presence
202-1
Ratios of standard entry level wage by
gender compared to local minimum wage
Sustainability report: Page 65
202-2 Proportion of senior management hired
Not stated
from the local community
184
DISCLOSURE
GRI 203: Indirect Economic Impacts
203-1
Infrastructure investments and services
supported
COMMENTARY / SECTION AND PAGE NUMBER
REFERENCES FOR THE FY2022 ANNUAL REPORT
EXTERNAL
ASSURANCE
Sustainability report: Pages 72-73
203-2 Significant indirect economic impacts
Business model: Page 15
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
GRI 204: Procurement Practices
204-1 Proportion of spending on local suppliers
GRI 205: Anti-corruption
205-1 Operations assessed for risks related
to corruption
Sustainability report: Page 53, 58, 62, 64,
66 and 69-74
Sustainability report: Page 73
Risk management: Page 45
Engaging with our stakeholders: Page 51
Audit and risk committee report: Page 98
205-2 Communication and training about
Audit and risk committee report: Page 100
anti-corruption policies and procedures
Board leadership and Company purpose:
Pages 87-89
205-3 Confirmed incidents of corruption and
Directors' report: Page 119
actions taken
GRI 206: Anti-competitive behaviour
206-1 Legal actions for anti-competitive
behaviour, anti-trust, and
monopoly practices
GRI 207: Tax
207-1 Approach to tax
Independent Auditors’ Report to the
Members of SolGold Plc: Pages 125-126
No legal action for anti-competitive
behaviour, anti-trust, or monopoly
practices were taken against SolGold
in the reporting period
Notes to the Financial Statements:
Pages 147 and 155
207-2 Tax governance, control, and risk
Not stated
management
207-3 Stakeholder engagement and management
Not stated
of concerns related to tax
207-4 Country-by-country reporting
Not stated
GRI 301: Materials
301-1 Materials used by weight or volume
301-2 Recycled input materials used
301-3 Reclaimed products and their
packaging materials
GRI 302: Energy
302-1
Energy consumption within the
organisation
Sustainability report: Page 61
Sustainability report: Page 61
Not stated
Sustainability report: Page 57
302-2 Energy consumption outside of
Not stated
the organisation
302-3 Energy intensity
302-4 Reduction of energy consumption
302-5 Reductions in energy requirements
of products and services
Sustainability report: Page 57
Sustainability report: Page 57
Not stated
Samana (third-
party consultant)
Samana (third-
party consultant)
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
185
G R I C O N T E N T I N D E X
C O N T I N U E D
DISCLOSURE
GRI 303: Water and effluents
303-1
Interactions with water as a shared
resource
COMMENTARY / SECTION AND PAGE NUMBER
REFERENCES FOR THE FY2022 ANNUAL REPORT
EXTERNAL
ASSURANCE
Sustainability report: Page 59
303-2 Management of water discharge-related
Sustainability report: Page 59
impacts
303-3 Water withdrawal
303-4 Water discharge
303-5 Water consumption
GRI 304: Biodiversity
304-1 Operational sites owned, leased, managed
in, or adjacent to, protected areas and
areas of high biodiversity value outside
protected areas
Sustainability report: Pages 59-60
Sustainability report: Page 59
Sustainability report: Pages 59-60
Sustainability report: Page 63
304-2 Significant impacts of activities, products
Sustainability report: Page 63
and services on biodiversity
304-3 Habitats protected or restored
304-4 IUCN Red List species and national
Sustainability report: Page 64
Sustainability report: Page 63
conservation list species with habitats
in areas affected by operations
GRI 305: Emissions
305-1 Direct (Scope 1) GHG emissions
Sustainability report: Page 57
305-2 Energy indirect (Scope 2) GHG emissions
Sustainability report: Page 57
305-3 Other indirect (Scope 3) GHG emissions
305-4 GHG emissions intensity
Not stated
Sustainability report: Page 57
305-5 Reduction of GHG emissions
Sustainability report: Page 56
305-6 Emissions of ozone-depleting
Not stated
substances ("ODS")
305-7 Nitrogen oxides (NOx), sulphur oxides
Sustainability report: Page 57
(SOx), and other significant air emissions
GRI 306: Waste
306-1 Waste generation and significant
waste-related impacts
Sustainability report: Page 61
306-2 Management of significant waste-related
Sustainability report: Page 61
impacts
306-3 Waste generated
306-4 Waste diverted from disposal
306-5 Waste directed to disposal
Sustainability report: Page 61
Sustainability report: Page 61
Sustainability report: Page 61
GRI 308: Supplier environmental assessment
308-1 New suppliers that were screened using
environmental criteria
308-2 Negative environmental impacts in the
supply chain and actions taken
Not stated
Not stated
186
Samana (third-
party consultant)
Samana (third-
party consultant)
Samana (third-
party consultant)
Samana (third-
party consultant)
A
D
D
I
T
I
O
N
A
L
I
N
F
O
R
M
A
T
I
O
N
DISCLOSURE
GRI 401: Employment
401-1
New employee hires and employee
turnover
401-2 Benefits provided to full-time employees
that are not provided to temporary or
part-time employees
401-3 Parental leave
GRI 402: Labour/Management relations
402-1 Minimum notice periods regarding
operational changes
GRI 403: Occupational health and safety
403-1 Occupational health and safety
management system
COMMENTARY / SECTION AND PAGE NUMBER
REFERENCES FOR THE FY2022 ANNUAL REPORT
EXTERNAL
ASSURANCE
Sustainability report: Page 65
Notes to the Financial Statements:
Pages 146-147
Not stated
Not stated
Sustainability report: Page 67
403-2 Hazard identification, risk assessment,
Not stated
and incident investigation
403-3 Occupational health services
403-4 Worker participation, consultation, and
communication on occupational health
and safety
Not stated
Sustainability report: Page 67
403-5 Worker training on occupational health
Sustainability report: Page 67
and safety
403-6 Promotion of worker health
403-7 Prevention and mitigation of occupational
health and safety impacts directly linked
by business relationships
Sustainability report: Page 67
Risk management: Page 41
403-8 Workers covered by an occupational health
Not stated
and safety management system
403-9 Work-related injuries
403-10 Work-related ill health
GRI 404: Training and education
404-1 Average hours of training per year
per employee
Sustainability report: Page 67
Sustainability report: Page 68
Sustainability report: Page 66
404-2 Programmes for upgrading employee skills
and transition assistance programmes
Not stated
404-3 Percentage of employees receiving regular
Not stated
performance and career development
reviews
GRI 405: Diversity and equal opportunity
405-1 Diversity of governance bodies and
employees
Engaging with our stakeholders: Page 49
Sustainability report: Pages: 65, 66 and 79
405-2 Ratio of basic salary and remuneration
Sustainability report: Page 65
of women to men
GRI 406: Non-discrimination
406-1 Incidents of discrimination and corrective
actions taken
GRI 407: Freedom of association and collective
bargaining
407-1 Operations and suppliers in which the right
to freedom of association and collective
bargaining may be at risk
Sustainability report: Page 65
Not stated
SOLGOL D A NNUAL R EPORT AND ACCO UNTS 2 022
187
G R I C O N T E N T I N D E X
C O N T I N U E D
DISCLOSURE
GRI 408: Child labour
408-1 Operations and suppliers at significant
risk for incidents of child labour
GRI 409: Forced or compulsory labour
409-1 Operations and suppliers at significant
risk for incidents of forced or
compulsory labour
GRI 410: Security practices
410-1
Security personnel trained in human
rights policies or procedures
GRI 411: Rights of indigenous peoples
411-1
Incidents of violations involving rights
of indigenous peoples
GRI 413: Local communities
413-1
Operations with local community
engagement, impact assessments,
and development programmes
413-2
Operations with significant actual and
potential negative impacts on local
communities
GRI 414: Supplier social assessment
414-1
New suppliers that were screened using
social criteria
COMMENTARY / SECTION AND PAGE NUMBER
REFERENCES FOR THE FY2022 ANNUAL REPORT
EXTERNAL
ASSURANCE
Not stated
Not stated
Not stated
Not stated
Sustainability report: Pages 69-74
Risk management: Page 41
Engaging with our stakeholders: Page 51
Not stated
414-2 Negative social impacts in the supply
Not stated
chain and actions taken
GRI 415: Public policy
415-1 Political contributions
Directors' Report: Page 120
GRI 416: Customer health and safety
416-1
Assessment of the health and safety
impacts of product and service categories
Not applicable
416-2 Incidents of non-compliance concerning
Not applicable
the health and safety impacts of products
and services
GRI 417: Marketing and labelling
417-1
Requirements for product and service
information and labelling
417-2
Incidents of non-compliance concerning
product and service information and
labelling
Not applicable
Not applicable
417-3
Incidents of non-compliance concerning
marketing communications
Not applicable
GRI 418: Customer privacy
418-1
Substantiated complaints concerning
breaches of customer privacy and
losses of customer data
Not applicable
188
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BRISBANE HEAD OFFICE:
Level 27, 111 Eagle Street,
Brisbane, Queensland,
Australia 4000
LONDON CORPORATE OFFICE:
1 King Street,
London, United Kingdom,
EC2V 8AU
QUITO CORPORATE OFFICE:
Avenida Coruña E2558 y San
Ignacio, Edificio Altana Plaza,
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Ecuador
www.solgold.com.au