More annual reports from Stoneridge:
2023 ReportPeers and competitors of Stoneridge:
Kirkland Lake Gold Inc.Sipa Resources Limited
Annual Report 2019
b
Sipa Resources Limited
Sipa Resources Limited 2019 Annual Report
Sipa Resources Limited
ABN 26 009 448 980
Contents
1 Highlights
2 Chairman’s Letter
4 Review of Operations
13 Social Responsibility
13 Competent Person Statement
14 Board of Directors
17 Directors’ Report
22 Remuneration Report (Audited)
28 Auditor’s Independence Declaration
29 Consolidated Statement of Comprehensive Income
30 Consolidated Statement of Financial Position
31 Consolidated Statement of Cash Flows
32 Consolidated Statement of Changes in Equity
33 Notes to the Financial Statements
57 Directors’ Declaration
58
Independent Auditor’s Report
63 Additional Statutory Information
65 Corporate Directory
Sipa Resources Limited 2019 Annual Report
1
Highlights
Year in Review
Copper-gold – Western Australia
Base metals – Uganda
– The exploration potential of the Paterson Province
received a major boost, with Rio Tinto announcing
the discovery of a significant copper-gold-silver
deposit at Winu, 10km west of Sipa’s land-holdings,
in February 2019.
– The Winu discovery has sparked strong interest
in the Paterson North district, with exploration
tenements now pegged all the way to the coast
from Sipa’s tenements, with Rio Tinto and FMG
the largest holders.
– Sipa’s 80% equity interest in the Paterson North
Project was achieved in August 2018, with the
Company’s joint venture partner, Ming Gold,
electing to dilute its position.
– Further strong copper anomalism was identified at
Obelisk with data compilation showing an extensive
5km by 1km mineralised footprint at Obelisk
coincident with a gravity anomaly and broad zones
of bedrock copper which remain open at depth.
– An extensive 2km long copper anomaly was identified
– Exploration activities commenced in August 2018
under the US$59M Earn-in and Joint Venture
Agreement with Rio Tinto (Sipa as manager).
– An extensive gravity survey, soil and lithogeochemical
sampling program was completed across the project
and 4,083m of diamond drilling was completed
at three prospects, with assay results confirming
extensions to the Akelikongo Main western body of
mineralisation and delineating an emerging Eastern
zone towards the base of the intrusive complex.
– Mineralisation in both zones remains open down-
plunge and together with partially tested and untested
geophysical anomalies, provides clear targets for
follow-up exploration.
Project generation
– New projects were secured in NW Queensland (gold)
and northern WA (copper, zinc) consistent with Sipa’s
strategy of generating high-potential base metal and
gold projects in under-explored terrains in Australia.
at Aranea (19km north-west of Obelisk) further
highlighting the potential of Sipa’s ground position.
Corporate
– A 1,200 line kilometre SkyTEM airborne EM survey
was completed over key prospects in June with data
showing multiple untested conductivity anomalies,
several of which are spatially related to the Obelisk
and Aranea copper prospects. EM is believed to have
played a key role in the Winu discovery.
– An innovative surface soil sampling technique being
trialled by Sipa has highlighted copper anomalism
extending south of the area previously drilled at
Obelisk, with further sampling underway at the end
of the reporting period over the greater Obelisk
geophysical complex and also at Aranea.
– A 4,000m aircore and RC drilling program
commenced in early September 2019 to test
key targets, co-funded by a WA Government
EIS grant of up to $150,000.
– A $3M capital raising comprising an oversubscribed
Share Purchase Plan and Share Placement was
completed for exploration in the Paterson Province
as well as for generative activities and working capital.
– Sipa’s major shareholder, Rodiv (NSW) Pty Limited, a
company controlled by prominent Sydney businessman
Mr Ervin Vidor AM, increased its holding to 17.6%
after investing $1.27M in Sipa during 2019.
– A 1-for-12 share consolidation was completed,
reducing the number of shares on issue to
142,276,581.
2
Sipa Resources Limited 2019 Annual Report
Chairman’s Letter
Dear Shareholder,
I am pleased to report
on what has been a
very exciting year for
Sipa Resources, with
confirmation of a
potentially world-class
greenfields copper-gold-
silver discovery right
on our doorstep in the
North Paterson region of
Western Australia, and
the commencement of
a major new exploration
program at the Kitgum-
Pader base metals
project in Uganda under
a US$59 million Joint
Venture agreement
with Rio Tinto.
Sipa has long prided itself on using advanced
technical analysis to secure first-mover
advantage in emerging exploration hotspots.
Our aim is not to follow the crowd, but rather
to use our skills and expertise to seek out
step-change value adding opportunities.
It was this philosophy that led us
to the remote Paterson Province of
Western Australia in 2016. When
we first farmed-in to the Paterson
North Project, our Managing Director
Lynda Burnett commented that the
project “sits in the heart of one of the
world’s most exciting new exploration
frontiers”.
Over the past year, this statement has
been well and truly vindicated, with Rio
Tinto confirming a major new copper-
gold-silver discovery at its Winu Project
in February this year.
This discovery has made the Paterson
Province a highly sought-after locale
for exploration. Rio Tinto has since
pegged an extraordinary 10,000km2
of tenements within the Paterson
Province, with additional land acquired
by FMG, Newcrest and others –
demonstrating that Winu represents
an important find, even to one of the
world’s biggest mining companies.
Sipa’s western tenement boundary
sits just 10km east of Winu, with our
Obelisk prospect demonstrating several
striking similarities to Winu. Both Winu
and Obelisk have a distinct polymetallic
signature; both prospects are
associated with quartz sulphide veins
with dominant sulphides, chalcopyrite,
pyrite and pyrrhotite; and vein-hosted
mineralisation with multiple mineralising
events identified at both locations.
These similarities provide strong
confirmation of the exploration
potential of Sipa’s North Paterson
ground.
To capitalise on this opportunity, the
Company has modified its exploration
program to utilise some of the key
technologies that helped uncover Winu,
whilst developing some of its own
Airborne electro-magnetic (AEM)
surveys were a key factor in the
Winu discovery, and Sipa has recently
completed its own 1,200 line kilometre
AEM survey. Data from this survey
has indicated the presence of multiple
EM targets, several of which broadly
correspond with the Obelisk gravity
and magnetic complex and the Aranea
copper prospect. At Obelisk, the EM
targets are offset from the existing
drilled copper anomaly and remain
completely untested.
As I write this report, Sipa has just
commenced a 4,000m combined air-
core and Reverse Circulation drilling
program to test a series of high-
priority targets developed through 3D
modelling of our combined geophysical
data, including EM.
This is a landmark exploration program
for Sipa, and we are very much looking
forward to gaining a clearer insight into
the discovery opportunities within our
highly-strategic landholding.
In Northern Uganda, Sipa commenced
a major exploration program at the
Kitgum-Pader base metals project in
October 2018 under the landmark
US$59 million Earn-in and Joint Venture
Agreement secured with Rio Tinto. This
exploration program is being managed
by Sipa on behalf of Rio Tinto.
Sipa Resources Limited 2019 Annual Report
3
I would like to sincerely thank Lynda
and the team for their outstanding
efforts over the course of the year.
I would also like to acknowledge you,
our shareholders, for your continued
support.
The coming financial year is set to be
an important period for Sipa Resources
as we work to unlock the compelling
exploration opportunities within our
tenements, and I look forward to
sharing this exciting period with you all.
Yours faithfully,
Tim Kennedy
Chairman
Exploration activities have included an
extensive gravity survey, soil sampling
and 4,083m of diamond drilling over
the Akelikongo discovery and the Goma
and Lawiye Adul regional targets.
our ongoing exploration initiatives.
I would like to sincerely thank all
shareholders who participated in this
capital raising, and also welcome new
shareholders to the register.
I would also like to acknowledge the
strong long-term support of our major
shareholder, Ervin Vidor, who invested
over $1.27 million in Sipa over the
course of the year through his company
Rodiv NSW Pty Ltd Pension Fund.
Sipa’s robust capital base puts us in
a very strong position to continue to
pursue new discoveries within our
Australian exploration portfolio, while
our exploration activities in Uganda
are fully-funded by Rio Tinto under the
terms of our joint venture agreement.
The very exciting position from which
we start FY2020 is thanks to the
technical prowess and persistence of
the small but dedicated Sipa team,
led by our Managing Director, Lynda
Burnett. It takes great courage to be a
first-mover into new exploration
frontiers, but the potential
rewards are great.
Assay results have confirmed
extensions to the Akelikongo Main
western body of mineralisation, as well
as delineating an emerging Eastern
zone towards the base of the intrusive
complex, approximately 200m east
of the Akelinkongo Main zone. The
mineralisation in both zones remain
open down-plunge, providing a clear
target for follow-up exploration.
Down-hole electromagnetic (DHEM)
and Audio Magneto Telluric (AMT)
surveys are now complete and will
be used to define targets for the next
round of drilling, likely to take place in
the later part of 2019.
In addition to its ongoing exploration
initiatives at Paterson North and
Kitgum-Pader, Sipa also maintained
an active project generation program,
acquiring the, the Barbwire Terrace
and Bohemia Zinc-Lead Projects in
the Canning Basin region of Western
Australia, and the Clara Gold Project in
North-West Queensland.
Each of these acquisitions is consistent
with Sipa’s strategy of generating high-
potential base metal and gold projects
in under-explored terrains in Australia.
Systematic historical data reviews
and geological modelling are being
undertaken on these projects prior to
a decision to commit funds on first-pass
exploration programs.
As we look to the coming year, I am
pleased to report that the Company
is in a strong financial position, with
$3.9 million in cash at the end of
FY2019 and a strengthened capital
base following the completion
of a 1-for-12 share consolidation
in early FY2020.
The Company completed a
strongly-supported, oversubscribed
share placement and Share
Purchase Plan during the 2019
Financial Year, which raised $3
million before costs to support
4
Sipa Resources Limited 2019 Annual Report
Kitgum Pader Base Metal Project
(Nickel-Copper) – Uganda
100% owned – Rio Tinto earning 51% under JV farm-in
and plunges shallowly to the north-
west for a distance of at almost 1km
and remains open to the north-west.
Both Akelikongo and Akelikongo
West are conduit-style intrusions
that host well developed, continuous
disseminated sulphide mineralisation,
and lenticular to elongate bodies of
semi-massive and massive sulphide
adjacent to the intrusion margins and
internal contacts. These observations
indicate a dynamic, possibly long-lived
intrusion history including multiple
intrusive pulses of mafic to ultramafic
magmas.
In August 2018, exploration under the
terms of the US$59M Earn-in and Joint
Venture Agreement with Rio Tinto
commenced. Under the terms of the
agreement Rio Tinto has the right to
earn up to 75% interest in the project
by incurring expenditure of US$57M
and cash payments of US$2M in three
stages over the 11 year period. The
program is being managed by
Sipa on behalf of Rio
Tinto for the first
18 months.
South Sudan
KITGUM
KITGUM PADER
PROJECT
Uganda
DRC
KAMPALA
Kenya
Tanzania
The Kitgum-Pader
Base Metals Project
is a large tenement
holding prospective
for intrusive hosted
nickel copper sulphide
deposits. Located in
Northern Uganda, the
100%-owned project
contains an intrusive-
hosted nickel-copper
sulphide discovery at
Akelikongo, one of
the most significant
recent nickel sulphide
discoveries globally,
discovered by Sipa
in 2015.
The project was generated by Sipa
with systematic field exploration
commencing in early 2013. Since that
time more than 70,000 geochemical
soil samples have been collected
leading to the discovery of a number
sulphide-derived base and precious
metal prospects, the most significant
being Akelikongo
The discovery is located on the north-
eastern margin of the Congo super-
craton and has strong similarities to
globally significant, intrusive-related
magmatic nickel copper sulphide
systems such as Nova-Bollinger
(14Mt @ 2.3% Ni and 0.9% Cu),
Voisey’s Bay (141Mt @ 1.6% Ni
and 0.8% Cu) and Raglan (30Mt
@ 3.4% Ni and 0.9% Cu).
Diamond drilling at Akelikongo
and nearby Akelikongo West
has been ongoing since 2015
and has delineated nickel and
copper sulphide mineralised
intrusive bodies. At Akelikongo,
the mineralisation is outcropping
Sipa Resources Limited 2019 Annual Report
5
Kitgum Pader Base Metal Project
(Nickel-Copper) – Uganda
continued
In the period to the end of June $3.5m
had been expended by Rio on behalf of
the joint venture.
During the year the program comprised
detailed ground gravity surveys,
ground magnetic surveys, soil sampling,
geological mapping and rock chip
sampling over a number of regional
nickel prospects followed by drilling
of two regional targets Figure 1. In
addition, further drilling and geophysics
was also undertaken at and around
Akelikongo.
The results from the regional work
show that all the intrusions are magma
conduits that display significant
internal complexity.
The extensive geochemical studies
on the intrusions sampled, show
similar metallogenic characteristics
to Akelikongo. The Akelikongo
intrusions however, show a greater
degree of crustal contamination
and show sulphide saturation.
Figure 1: Tenement Location Showing Exploration Activity
6
Sipa Resources Limited 2019 Annual Report
Kitgum Pader Base Metal Project
(Nickel-Copper) – Uganda
continued
Figure 2: Plan of current drilling at Akelikongo, showing results from AKD018-22 and new eastern mineralised zone (schematic) shown in yellow.
The data confirm that the region is
fertile and prospective for multiple
economic nickel sulphide mineral
deposits.
Diamond drilling of 10 holes was
completed this year for a total of
4,083m. 5 holes were drilled at
Akelikongo and 5 on regional targets
at Lawyie Adul and Goma.
At Akelikongo, assays confirm near
surface extensions of the Akelikongo
Main mineralisation from AKD019 and
the delineation of an emerging Eastern
zone towards the drilled base of the
intrusive complex, ~200m of Akelikongo
main intersected in holes AKD020,
021 and 22. The mineralisation in both
zones remains open, and provides a
clear target for follow-up exploration.
Notable drilling results from
Akelikongo include:
Akelikongo Main
AKD019: a mixed oxide and sulphide
intercept of 10m @ 0.49% Ni and
0.16% Cu from 29m (oxide) plus 10m @
0.43% Ni and 0.13% Cu from 39-49m
and 4m @ 0.37% Ni and 0.12% Cu from
53m, extending the near-surface Main
mineralised zone further east (ASX
Release 1 May 2019);
Akelikongo Eastern Zone
AKD020: 16.4m @ 0.44% Ni, 0.12%
Cu and 0.03% Co from 274.3m (ASX
Release 1 May 2019);
AKD021: the mineralised zone assayed
0.41% Ni and 0.12% Cu over 10.20m
from 298.70m (calculated using 0.25%
Ni cut-off). An internal zone of semi-
massive sulphide within this interval
assayed 1.2% Ni and 0.14% Cu over
0.40m (ASX Release 20 June 2019);
AKD022: intersected two zones of
disseminated, vein and semi-massive
sulphide mineralisation located
towards the base of the intrusion.
The upper zone assayed 0.29% Ni and
0.07% Cu over 11.7m from 290.80m.
The lower zone assayed 0.31% Ni and
0.08% Cu over 17.6m from 304.60m
(ASX Release 20 June 2019).
The Akelikongo intrusion, including
the depiction of the new eastern
mineralized zone and results for the
current year program as modelled
using Leapfrog software are shown
in Figure 2.
Further diamond drilling is now
planned to follow up these results
and the results of down hole EM and
additional AMT surveys and will be
conducted in the December quarter.
The regional holes did not encounter
significant sulphide.
Sipa Resources Limited 2019 Annual Report
7
Paterson North
(Copper-Gold) – Western Australia
The Paterson North
Copper-Gold Project is
located in the Paterson
Province, Western
Australia, one of the
most highly endowed yet
under-explored copper-
gold mineral provinces in
Australia and recently the
subject of a pegging rush
by companies including
Rio Tinto Exploration,
Fortescue Metals Group
and Red Metals Limited,
following the discovery
by Rio Tinto of the Winu
Copper-gold deposit,
a very large low grade
deposit covering over
2km of strike and located
only 40m below the
post mineral Permian
and sand cover located
approximately 10km to
the south west of Sipa’s
landholding.
Sipa’s project consists of the Great
Sandy JV which hosts the Obelisk
copper gold discovery, where Sipa has
now earned an 87% interest under
a Farm-in and JV agreement with
privately owned Ming Gold Limited
(Ming) diluting. Other additional
tenements are held 100% by Sipa.
Since 2016, when Sipa first started
exploring in the Paterson, the company
has managed to lever significant
funding through the Western Australian
State Government Exploration
Incentive Scheme which co-funds
drilling initiatives aimed at making new
and significant mineral discoveries for
BROOME
Indian Ocean
PORT HEADLAND
Western Australia
KARRATHA
MARBLE BAR
PATERSON NORTH
PROJECT
TELFER
the state. Sipa has now received four
of these grants totaling over $450,000.
A fifth grant, of up to $150,000, will
be utilized in the upcoming aircore/RC
drilling program in the September 2019
quarter.
During the year, further diamond
drilling was completed at Obelisk,
in addition to a pole-dipole
IP survey, soil sampling
and a regional SkyTEM
1200 line km airborne
EM survey. Airborne
EM was reported to
be a key factor in the
identification of the
anomaly that Rio
Tinto first drilled in
late 2017 that led
to the Winu copper
discovery.
8
Sipa Resources Limited 2019 Annual Report
Paterson North
(Copper-Gold) – Western Australia
continued
A 510m diamond drill hole (PND005)
was drilled to test a chargeability
anomaly identified in a single line
pole-dipole IP survey. The anomaly was
located east of the main IP gradient
anomaly which has been the subject
of previous drilling and is associated
with copper mineralisation Figure 3
(ASX 5 December 2018).
Figure 4 shows the chargeability
section of the pole-dipole survey with
drillholes. It contains two anomalous
zones: a deeper, stronger chargeable
zone in the north-east (about 400m
below surface) with a chargeable
response of 30mV/V (now drilled by
PND005) and a shallower zone in the
south-west (about 140m below surface)
with a slightly weaker chargeable zone
(21mV/V).
Figure 3: Chargeability section of the pole-dipole survey with drillholes.
Figure 4: Pole-Dipole chargeability model section showing north-eastern deeper (about 400m below surface), stronger chargeable zone (30mV/V) drilled
by PND005 and a south-western shallower (about 140m below surface) and slightly weaker chargeable zone (21mV/V).
The drillhole did not identify the source
of the IP pole-dipole chargeability
anomaly at Obelisk, however, the
EM data collected subsequent to the
drilling indicates the IP target occurs
just off the drilled section and hence
has not been intersected.
The hole intersected oxidised alteration
which has not previously been
observed at the Obelisk Prospect. The
alteration is similar in style to IOCG
(iron-oxide-copper-gold) systems, is
structurally controlled and spatially
associated with altered intrusions
and quartz epidote veining, with peak
assays of 84ppb gold and 1630 ppm
copper from character sampling within
this zone.
A zone of intensely altered granitic
dykes and grey quartz veins was
intersected between 390m and 404m
at the edge of the IP anomaly. The red
granitic dykes are locally brecciated
with red granitic clasts and a dark
grey quartz matrix which contains fine
chalcopyrite grains adjacent to the red
granitic clasts (Figure 5).
Sipa Resources Limited 2019 Annual Report
9
Paterson North
(Copper-Gold) – Western Australia
continued
Figure 5: Close up of a zone of intensely altered, red oxidized granitic
dykes and grey quartz veins. Chalcopyrite is located in the quartz
adjacent to the red dyke fragments.
Project Generation
In addition to its advancing existing
active projects, Sipa continues to
position itself as a greenfields project
generator and discoverer. During
the year the company has identified
and secured first mover positions
in new mineral frontiers mainly in
northern Australia and are actively
evaluating the best pathway to unlock
the value of these new projects for
our shareholders.
Regional Paterson – Gold and
Base Metals – Applications,
100% Sipa
The Wallal tenement covers the
western faulted margin of the northern
Paterson Province. The tenement is
considered prospective as it represents
a similar structural setting to the newly
discovered Winu copper and gold
deposit on the eastern faulted margin
of the Waucarlycarly basin.
This style of alteration, contrasts
with the more ductile dolerite hosted
mineralisation intersected in earlier
drilling which is associated with
biotite, quartz, pyrite, pyrrhotite
and chalcopyrite.
The two distinct styles of alteration
and associated mineralisation drilled
so far at Obelisk suggests that Obelisk
is a complex zoned system. Complexity
and zonation of oxidized and reduced
mineralisation is regarded as an
indicator of enhanced prospectivity
as change in oxidation state often leads
to precipitation of mineralisation.
A 1200 line kilometre SkyTEM airborne
EM survey conducted in June 2019
has resulted in further understanding
and modelling of 3D geology and
structure. The integration of the EM
data with other geophysical data and
soil geochemistry has resulted in a
refocussing of the upcoming drilling
program to the broader Obelisk
geophysical complex.
A review of surface ionic leach sampling
at Obelisk and Andromeda showed
the technique is detecting anomalous
metals which appear spatially related
to known mineralisation beneath
70-100m of cover. Further soil
sampling shows metal anomalism
both north and south of the known
main copper in bedrock anomaly
and is the currently the subject of
further research and drilling.
10
Sipa Resources Limited 2019 Annual Report
Barbwire Terrace
(Zinc Lead Silver) – Applications, 100% Sipa – Western Australia
hosts mined deposits totalling +40Mt
Zn-Pb. These high grade deposits when
mined produced clean highly sought
after quality concentrates.
The Barbwire Terrace region has only
been tested by 33 mineral exploration
drillholes (less than 1 drillhole per
100km2). The historical drilling
results indicate broad zones of Zn_Pb
anomalism in Devonian carbonate
rocks, demonstrating that MVT type
Zn-Pb metals were transported south
to into the Barbwire Terrace as well as
the Lennard Shelf region to the north.
No base metal exploration has been
completed in the region for nearly
30 years.
The Barbwire project tenements cover
the targeted Devonian carbonate
sequences adjacent to the Fitzroy
Trough which was the fluid source for
the Lennard Shelf MVT deposits on
the North East margin of the Trough.
There are multiple lines of evidence
indicating that Zn-Pb rich fluids also
flowed to the carbonates of the
Barbwire Terrace forming the SW
margin of the Trough. Two significant
NW trending fault corridors and the
adjacent stratigraphy are prime target
areas for mineralisation.
Indian Ocean
BROOME
Western Australia
HALLS CREEK
BARBWIRE TERRACE
PROJECT
WOLFE BASIN
PROJECT
The Lennard Shelf and the Barbwire
Terrace comprise the northern and
southern margins respectively of the
Fitzroy Trough. The project is 100%
owned by Sipa and covers some
1,900km of Barbwire Terrace within
the Canning Basin (Figure 6). The
Barbwire Terrace (BWT) has many
similarities to the Lennard
Shelf region which
The Barbwire Terrace
Project was generated
by Sipa during the year
following the recognition
that the Barbwire Terrace
region contains similar
carbonate sequences
to those of the highly
mineralised Lennard
Shelf, a premier global
MVT zinc-lead province
and in places shows
anomalous zinc
mineralisation as
demonstrated
by previous
drilling.
Sipa Resources Limited 2019 Annual Report
11
The target Devonian carbonate units
are overlain in the Barbwire Project by
Permian and younger siltstones and
sandstones. The range of depth to
target stratigraphy based on existing
drilling ranges from 85m to ~480m with
a mean of 250m. This is significantly
shallower than the +1200m overlying
the 170Mt Admiral Bay Zn-Pb deposit
270km to the west of Barbwire in the
Canning Basin.
Synthesis of high-quality datasets
generated for petroleum exploration
(airborne gravity data, seismic reflection
surveys, petroleum wells) presents an
opportunity for detailed definition of
geology and targeting of mineralisation,
which was not previously available.
Figure 6: Location and Geology of Devonian Carbonate hosted zinc-lead mineralisation,
Lennard Shelf deposits with prospective tenements on the Barbwire Terrace.
Wolfe Basin
(Sediment hosted Copper) – New Application, 100% Sipa – Western Australia
The Wolfe Basin
tenement application
covers 500km2 located
on the western margin
of the Neoproterozoic
Wolfe Basin of Western
Australia.
It is located about 80km south of Halls
Creek, to the east of the East Kimberley
Mobile Zone. The Wolfe Basin is of
analogous age and contains the same
super sequence cycle at the base to
the highly mineralised Yeneena Basin,
which hosts the Nifty Cu deposit and
numerous other sediment-hosted Cu
deposits and occurrences. Anomalous
mineralisation at the base of the
targeted Eliot Range Dolomite has been
previously discovered about 30-80km
north of Wolfe Basin.
Figure 7: Location of Wolfe Basin tenement and prospective dolomite stratigraphy.
12
Sipa Resources Limited 2019 Annual Report
Clara Project
(Gold and Base Metals) – Applications, 100% Sipa – Queensland
Coral Sea
CAIRNS
Queensland
CLARA PROJECT
TOWNSVILLE
Gulf of
Carpentaria
MOUNT ISA
Croydon Volcanics. The mid-1550Ma
age and geological setting is similar to
the Hilltaba suite granites and felsic
volcanics in South Australia, which are
interpreted to have formed in an intra-
cratonic setting and are hosts to large
mineral deposits including Olympic Dam.
In recent months, an area further north
along the same structure was drilled by
ASX-listed company Moho Resources,
returning widespread alteration and
gold anomalism including an intercept of
10m at just over 1g/t in Mid Proterozoic
bedrock (see Moho Resources ASX
announcement 7 Feb 2019).
The project tenements have previously
been subject to minimal exploration.
Sipa intends to trial its experimental in
field fine fraction soil sampling program
and review recent regional airborne EM
lines over this land-holding to determine
prospectivity in the coming months
following the grant of the tenements.
The Clara Project,
located in the Croydon
Province of North-West
Queensland covers a
total area of 995km2, and
was generated following
a review of prospectivity
and exploration activity
in the region.
The land-holding contains over 60
kilometres of strike of a deep crustal
structure detectable from gravity
data and also interpreted from recent
Government seismic data that runs
across the terrain just to the north
of Sipa’s tenements (Figure 8).
The Croydon Province has a history
of discovery of gold and polymetallic
deposits with historical mining dating
back to 1885 and more recent shallow
open pit mining in the 1980s. In recent
years base metal mineralisation and
graphite has also been discovered in
exploration drilling in the district.
The Province consists of Proterozoic
Esmeralda Supersuite granites, dated
around 1550Ma, and the coeval felsic
Figure 8: Location of Clara tenements and known prospects in the Croydon Province
Sipa Resources Limited 2019 Annual Report
13
Since early
2015 Sipa
has visited over
49 schools in the
Lamwo and Pader
districts and distributed
over 4200 re-usable sanitary
protection kits. The Days for Girls
Program aims to keep girls in school
post puberty which is the time when
school participation by girls drops
drastically. This is achieved through
classroom education and distribution
of re-usable sanitary protection. The
regional district education officers have
voiced their sincere appreciation to Sipa
for assisting the girls stay in school and
give them a chance to break the cycle
of poverty.
In addition this year a number
of mother and baby educational
workshops were held in Kitgum and in
the field reaching over 100 mothers
who were very appreciative.
A new program developed during
the year involves the repair of
dysfunctional water bores. This is being
undertaken in collaboration with the
District Water Office with three bores
repaired at the Ngomoromo health
centre and Lorunya and Orii primary
schools and a further 6 in the planning
stage in the Pader district.
Social
Responsibility
Sipa’s long-term success
depends on our ability to
build relationships with
our employees, business
partners, governments,
non-government
organisations, host
communities and
other stakeholders.
Our good reputation with the
community is paramount and Sipa
remains very proud of our record of co-
operation with the traditional owners
of lands under exploration both in
Australia and Uganda. Our greenfields
programs are regional by nature and
as such we aim to provide casual
employment where possible to local
people in the areas in which we work.
Our work in the Lamwo and Pader
districts in northern Uganda has
historically consisted of soil sampling
using local labour. This year we were
also able to use local labour to support
our extensive ground geophysics,
mapping and rock chip sampling.
We remain committed to the training
and development of employees
to improve the skill base of these
employees.
In Uganda, Sipa’s involvement with
the Days for Girls program continues
to deliver results for the district by
improving female attendance at school.
Competent Person Statement
The information in this report that relates to Exploration Results was previously reported in the ASX announcements
dated 20 June 2019, 1 May 2019, and 5 December 2018. The Company is not aware of any new information or data that
materially affects the information included in that relevant market announcement.
14
Sipa Resources Limited 2019 Annual Report
Board of Directors
Tim Kennedy
CHAIRMAN
Lynda Margaret Burnett
MANAGING DIRECTOR
Tim Kennedy
Chairman 28 August 2018 to present; Independent
Non-Executive Director (Appointed 13 December
2016)
Lynda Margaret Burnett
Managing Director since 24 July 2014
Qualifications
BSc (Hons) GAICD, MAusIMM, MSEG
Mrs Burnett is a geologist with over 30 years’
experience in the mineral exploration industry.
Prior to joining Sipa she was most recently Director
– Exploration Australia for Newmont Asia Pacific.
During her nine year tenure with Newmont,
Lynda was responsible for the strategic planning,
management and oversight of all Newmont’s
generative exploration projects, as well as business
development, in the Asia Pacific region including
the discovery of the plus 3Moz McPhillamy’s Gold
Deposit in NSW. Prior to her roles at Newmont,
Lynda worked for a number of mining and exploration
companies including, Normandy, Newcrest and
Plutonic Resources and as an executive director of
Summit Resources Ltd. Lynda is currently the Chair
of the advisory board of the Centre for Exploration
Targeting based at the University of WA.
During the past three years Mrs Burnett has not
been a director of any other listed company.
Mrs Burnett has an interest in 457,571 fully paid
ordinary shares and 648,000 options. Options were
issued pursuant to the Sipa Resources Employee
Share Option Plan. Further details are found
in Note 15.
Qualifications
B.App Sc (Geology), MBA,
MAusIMM, MGSA
Mr Kennedy is a geologist with a successful 30-year
career in the mining industry, including extensive
involvement in the exploration, feasibility and
development of gold, nickel, platinum group elements,
base metals and uranium projects throughout
Australia. Previously he was exploration manager
with Independence Group NL (IGO) for 11 years,
during which it grew from being a junior explorer
and producer to a multi-commodity, multi-operation
mining company. In particular Mr Kennedy played
a key role as part of the team that represented
IGO on the exploration steering committee during
the multi-million ounce Tropicana, Havana and
Boston Shaker discoveries, the discovery of the
Rosie magmatic nickel sulphide deposit; and the
discovery of the Bibra orogenic gold deposit.
Prior to that Mr Kennedy held a number of senior
positions with global miner Anglo American,
including as Exploration manager - Australia,
Principal Geologist/Team Leader - Australia and
Principal Geologist. He also held positions with
Resolute Limited, Hunter Resources Limited and
PNC Exploration Pty Ltd.
During the past three years Mr Kennedy has also
served as a director of Millennium Minerals Limited
(director since 2 May 2016) and Helix Resources
Limited (director since 16 February 2018).
Mr Kennedy is a member of the Nomination and
Compensation Committee since 25 September 2018.
Mr Kennedy has an interest in 249,863 fully paid
ordinary shares and nil options.
Sipa Resources Limited 2019 Annual Report
15
Craig Ian McGown
NON-EXECUTIVE DIRECTOR
Karen Lesley Field
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Tara Robson
COMPANY SECRETARY
In addition Mrs Field has served on the
boards of a number of community based
organisations and is currently the Chair
of the Perth College Foundation Inc (as
part of Perth College Anglican School
for Girls) and Committee Member of
UWA’s Centenary Trust for Women.
During the past three years Mrs Field
has also served as a director of Aurizon
Holdings Limited (Director from 19 April
2012 – 18 October 2018)
Mrs Field is also Chair of the Nomination
and Compensation Committee.
Mrs Field has an interest in 374,238 fully
paid ordinary shares and nil options.
COMPANY SECRETARY
The company secretary is Ms Tara
Robson, FGIA, B.A. Accounting. Ms
Robson was appointed company
secretary on 8 April 2004. Before
joining Sipa Resources Limited, she
served as consultant to the Company.
She has held a similar role with other
listed entities since 1997, including Anvil
Mining Limited and Brockman Resources
Limited. Prior to that Ms Robson was
a senior audit manager with a major
accounting practice.
Craig Ian McGown
Non-Executive Director (11 March
2015 – present); (Chairman 11 March
2015- 28 August 2018)
Qualifications
BComm, FCA, ASIA
Mr McGown is an investment banker
with over 40 years of experience
consulting to companies in Australia
and internationally, particularly in
relation to fund raising and mergers
and acquisitions in the natural
resources sector. He holds a Bachelor
of Commerce degree, was admitted as
a Fellow of the Institute of Chartered
Accountants and an Affiliate of
the Financial Services Institute of
Australasia in 1984. Mr McGown
has been an executive director of
the corporate advisory business
New Holland Capital Pty Ltd (New
Holland) since 2008 and prior to that
appointment was the chairman of DJ
Carmichael Pty Limited.
During the past three years Mr McGown
has also served as the Non-Executive
Chairman for Pioneer Resources Limited
(13 June 2008 – present), a Non-
Executive Director of QMetco Limited
(formerly Realm Resources Limited
(31 May 2018 – present) and is the
Chairman of the Harry Perkins Institute
for Respiratory Health.
Mr McGown is a member of the
Nomination and Compensation
Committee since his appointment
on 11 March 2015.
Mr McGown has an interest in 374,239
fully paid ordinary shares and nil options.
Karen Lesley Field
Independent Non-Executive Director
(Appointed 16 September 2004)
Qualifications
BEc, (UWA) FAICD
Mrs Field has over three decades of
experience in the mining industry
throughout Australia and overseas
specializing in strategy, project
management and human resources
before moving into general management
roles. Mrs Field’s last executive position
was as President of Minera Alumbrera,
the Argentine based management
company established to develop and
operate the Bajo de Alumbrera Copper/
Gold project located in the north
western region of Argentina. Prior to
that Mrs Field held executive positions
in a range of mining organisations
including MIM Holdings Limited,
Normandy Mining Limited, Australian
Consolidated Minerals Limited (Mt Keith
Joint Venture), Bond Gold Australia and
Robe River Iron Associates.
On returning to Australia from
Argentina, Mrs Field assumed a
professional directorship role and
over nearly two decades has served
as a non-executive director on a
variety of company boards including
MACA Limited, Perilya Limited,
Water Corporation (Deputy Chair),
Sungrid Limited, Electricity Networks
Corporation (Western Power) and
the CRC for Sustainable Resource
Processing.
16
Sipa Resources Limited 2019 Annual Report
Financial Report
for the year ended 30 June 2019
Contents
17 Directors’ Report
22 Remuneration Report (Audited)
28 Auditor’s Independence Declaration
29 Consolidated Statement of Comprehensive Income
30 Consolidated Statement of Financial Position
31 Consolidated Statement of Cash Flows
32 Consolidated Statement of Changes in Equity
33 Notes to the Financial Statements
57 Directors’ Declaration
58
Independent Auditor’s Report
Directors’ Report
for the year ended 30 June 2019
Your Directors submit their report on the consolidated
entity consisting of Sipa Resources Limited and the entities
it controlled at the end of, or during, the year ended
30 June 2019. Throughout the report, the consolidated
entity is referred to as the group.
DIRECTORS – NAMES, QUALIFICATIONS,
EXPERIENCE AND SPECIAL RESPONSIBILITIES
The names and details of the Company’s directors in office
during the financial year and up to the date of this report
including details of director’s share and option holdings are
as follows. Directors were in office for this entire period
unless otherwise stated.
Tim Kennedy, B.App Sc (Geology), MBA, MAusIMM,
MGSA – Independent Non-Executive Director
(Appointed 13 December 2016); (Chairman 28 August
2018 to present)
Mr Kennedy is a geologist with a successful 30-year career
in the mining industry, including extensive involvement in
the exploration, feasibility and development of gold, nickel,
platinum group elements, base metals and uranium projects
throughout Australia. Previously he was exploration manager
with Independence Group NL (IGO) for 11 years, during
which it grew from being a junior explorer and producer
to a multi-commodity, multi-operation mining company. In
particular, Mr Kennedy played a key role as part of the team
that represented IGO on the exploration steering committee
during the multi-million ounce Tropicana, Havana and Boston
Shaker discoveries, the discovery of the Rosie magmatic
nickel sulphide deposit; and the discovery of the Bibra
orogenic gold deposit.
Prior to that Mr Kennedy held a number of senior positions
with global miner Anglo American, including as Exploration
manager - Australia, Principal Geologist/Team Leader -
Australia and Principal Geologist. He also held positions
with Resolute Limited, Hunter Resources Limited and PNC
Exploration Pty Ltd.
During the past three years Mr Kennedy has also served
as a director of Millennium Minerals Limited (director since
2 May 2016) and Helix Resources Limited (director since
16 February 2018).
Mr Kennedy is a member of the Nomination and
Compensation Committee since 25 September 2018.
Mr Kennedy has an interest in 249,863 fully paid ordinary
shares and nil options.
Sipa Resources Limited 2019 Annual Report
17
Craig Ian McGown, BComm, FCA, ASIA –Non-Executive
Director (11 March 2015 – present); (Chairman
11 March 2015- 28 August 2018)
Mr McGown is an investment banker with over 40 years
of experience consulting to companies in Australia and
internationally, particularly in relation to fund raising and
mergers and acquisitions in the natural resources sector.
He holds a Bachelor of Commerce degree, was admitted as
a Fellow of the Institute of Chartered Accountants and an
Affiliate of the Financial Services Institute of Australasia in
1984. Mr McGown has been an executive director of the
corporate advisory business New Holland Capital Pty Ltd
(New Holland) since 2008 and prior to that appointment was
the chairman of DJ Carmichael Pty Limited.
During the past three years Mr McGown has also served as
the Non-Executive Chairman for Pioneer Resources Limited
(13 June 2008 – present), a Non-Executive Director of
QMetco Limited (formerly Realm Resources Limited (31 May
2018 – present) and is the Chairman of the Harry Perkins
Institute for Respiratory Health.
Mr McGown is a member of the Nomination and
Compensation Committee since his appointment on
11 March 2015.
Mr McGown has an interest in 374,239 fully paid ordinary
shares and nil options.
Lynda Margaret Burnett, BSc (Hons) GAICD,
MAusIMM, MSEG (Managing Director since 24 July
2014)
Mrs Burnett is a geologist with over 30 years’ experience
in the mineral exploration industry. Prior to joining Sipa
she was most recently Director – Exploration Australia for
Newmont Asia Pacific. During her nine year tenure with
Newmont, Lynda was responsible for the strategic planning,
management and oversight of all Newmont’s generative
exploration projects, as well as business development, in
the Asia Pacific region including the discovery of the plus
3Moz McPhillamy’s Gold Deposit in NSW. Prior to her roles
at Newmont, Lynda worked for a number of mining and
exploration companies including, Normandy, Newcrest and
Plutonic Resources and as an executive director of Summit
Resources Ltd. Lynda is currently the Chair of the advisory
board of the Centre for Exploration Targeting based at the
University of WA.
During the past three years Mrs Burnett has not been a
director of any other listed company.
Mrs Burnett has an interest in 457,571 fully paid ordinary
shares and 648,000 options. Options were issued pursuant
to the Sipa Resources Employee Share Option Plan. Further
details are found in Note 16.
18
Sipa Resources Limited 2019 Annual Report
Directors’ Report
Karen Lesley Field, BEc, (UWA) FAICD – Independent Non-Executive Director (Appointed 16 September 2004)
Mrs Field has over three decades of experience in the mining industry throughout Australia and overseas specializing in strategy,
project management and human resources before moving into general management roles. Mrs Field’s last executive position was
as President of Minera Alumbrera, the Argentine based management company established to develop and operate the Bajo de
Alumbrera Copper/Gold project located in the north western region of Argentina. Prior to that Mrs Field held executive positions
in a range of mining organisations including MIM Holdings Limited, Normandy Mining Limited, Australian Consolidated Minerals
Limited (Mt Keith Joint Venture), Bond Gold Australia and Robe River Iron Associates.
On returning to Australia from Argentina, Mrs Field assumed a professional directorship role and over nearly two decades has
served as a NED on a variety of company boards including MACA Limited, Perilya Limited, Water Corporation (Deputy Chair),
Sungrid Limited, Electricity Networks Corporation (Western Power) and the CRC for Sustainable Resource Processing.
In addition Mrs Field has served on the boards of a number of community based organisations and is currently the Chair of the
Perth College Foundation Inc (as part of Perth College Anglican School for Girls) and Committee Member of UWA’s Centenary
Trust for Women.
During the past three years Mrs Field has also served as a director of Aurizon Holdings Limited (Director from 19 April 2012 –
18 October 2018).
Mrs Field is also Chair of the Nomination and Compensation Committee.
Mrs Field has an interest in 374,238 fully paid ordinary shares and nil options.
COMPANY SECRETARY
The company secretary is Ms Tara Robson, FGIA, B.A. Accounting. Ms Robson was appointed company secretary on 8 April 2004.
Before joining Sipa Resources Limited, she served as consultant to the Company. She has held a similar role with other listed entities
since 1997, including Anvil Mining Limited and Brockman Resources Limited. Prior to that Ms Robson was a senior audit manager
with a major accounting practice.
Directors’ Attendance at Meetings
Number of meetings held
Number of meetings attended
T Kennedy
C McGown
L Burnett
K Field
Eligible to
Attend
Directors’
Meetings
Nomination
and
Compensation
Committee
11
11
11
11
11
4
4
4
N/A
4
11
11
11
11
PRINCIPAL ACTIVITIES
Sipa is an Australian-based exploration company targeting the discovery of significant new gold-copper and base metal deposits
in established and emerging mineral provinces with world-class potential. The principal exploration activities of the Group during
the period were focused on the Kitgum Pader Base Metals Project in Northern Uganda in Joint Venture with Rio Tinto Mining
& Exploration, the Paterson North Copper-Gold Project in Western Australia and other generative activities. There were no
changes to those activities during the year.
DIVIDENDS
No dividend has been paid or declared by the Group in respect of the financial year ended 30 June 2019 (30 June 2018: nil) and
the directors do not recommend the payment of a dividend in respect of the financial year.
REVIEW OF OPERATIONS
The consolidated entity’s loss after tax for the financial year ended 30 June 2019 was $2,833,062 (2018: Loss $3,075,066).
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
19
Continuing Operations
Finance income
Revenue
Other income
Exploration expenditure
Administrative expenses
Net loss for the year
Exchange differences arising on translation of foreign operations
Total comprehensive loss for the year
3
3
3
3
Consolidated
2019
$
42,753
353,471
243,947
2018
$
34,596
–
364,744
(2,105,351)
(2,155,153)
(1,367,882)
(1,319,253)
(2,833,062)
(3,075,066)
5,709
143
(2,827,353)
(3,074,923)
At 30 June 2019 the Group’s cash and cash equivalents balance was $3,911,912 and there was no debt.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
During the financial year there was no significant change in the state of affairs of the consolidated entity other than as follows:
In May 2018 Sipa announced a Landmark Earn-in and Joint Venture Agreement (JVA) with Rio Tinto Mining & Exploration
Limited (Rio Tinto) to acquire an interest in Sipa’s Kitgum Pader Base Metals Project (the Project). The JVA became effective
8 August 2018 with Sipa operating the Project for the first 18 months.
Under the terms of the agreement, Rio Tinto has the option to earn up to a 75% interest in the project by incurring US$57M
of exploration expenditure in the following stages and amounts:
– US$12M of exploration expenditure within 5 years including a minimum commitment of US$2.0M to earn 51% (Stage 1);
– Additional US$15M of exploration expenditure within a further 3-year period to earn a 65% interest (Stage 2); and
– Additional US$30M of exploration expenditure or declaration of a JORC resource containing at least 250,000 tonnes of
contained nickel or nickel equivalents within a further 3-year period to earn a 75% interest (Stage 3).
In addition Rio Tinto will make cash payments totalling US$2M to Sipa as follows:
– US$0.25M (received in June 2018);
– US$0.25M due in February 2020 and
– US$1.5M if it elects to start Stage 2 (earn-in to 65%).
During the period Rio Tinto contributed funds in advance of $4,212,789 to Sipa as part of their initial contribution and satisfied
their minimum commitment. As at 30 June 2019, $323,031 is held as restricted cash being monies received in advance from Rio
Tinto and restricted for use on the Kitgum-Pader project (See Notes 5 and 13).
On 13 November 2018 Sipa issued 165,439,718 Shares at $0.0091 per share to raise proceeds of $1,505,500 pursuant to a
Share Purchase Plan (SPP). The SPP was underwritten by Patersons Securities Limited (Patersons) but they received no shortfall.
Later that month Patersons exercised their right under the terms of the underwriting agreement to facilitate a placement of a
further 166,835,170 Shares at the same issue price of $0.0091 per Share to the investors. Together the SPP and the Placement
raised a combined total of $3,023,701.
On 11 February 2019, the Company issued 52,400,000 Shares at an issue price of $0.0086 per Share to its major shareholder,
Rodiv (NSW) Pty Limited (Rodiv) to raise $450,640.
On 2 May 2019, the Company issued a further 122,000,000 Shares at an issue price of $0.00672 per Share to Rodiv to raise
$819,840
The funds raised from all placements are being used to pursue the Company’s copper exploration campaign in the Paterson
Province of WA’s Pilbara, as well as for generative activities and general working capital purposes.
20
Sipa Resources Limited 2019 Annual Report
Directors’ Report
EVENTS SUBSEQUENT TO BALANCE DATE
There has not been any matter or circumstance, other than that referred to in the financial statements or notes thereto, that
has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the
consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years,
except as follows:
On 23 July 2019 shareholders of the Company approved the consolidation of the Company’s issued capital by consolidating
(ie converting) every 12 existing Shares into one New Share (Consolidation). As a result the issued capital of the Company is
as follows:
Shares
Pre Consolidation
1,707,295,911
Post Consolidation
142,276,581
Options (expiring 31 Aug 2021)
4,659,000 exercise price $0.11
388,250 exercise price $1.32
Options (expiring 18 Dec 2021)
12,090,000 exercise price $0.06
1,007,501 exercise price $0.72
At the same meeting shareholders also approved 3 resolutions relating to the ratification of the three placements during the year.
The effect of the ratification is to restore the Company’s maximum discretionary power to issue further Shares up to 15% of the
issued capital of the Company without requiring Shareholder approval (Listing Rule 7.1) and to restore the Company’s maximum
discretionary power to issue further Shares up to 10% of the issued capital of the Company without requiring Shareholder
approval (Listing Rule 7.1A).
FUTURE DEVELOPMENTS
The Company’s 2019 exploration field season is now well underway at the Paterson North Copper Gold Project in WA with
a 4,000m combined air-core / RC (Reverse Circulation) drilling program which commenced subsequent to year end. The drill
targets incorporate data acquired from the 1,200 line kilometre SkyTEM airborne EM survey completed in June over priority
areas of the project. The drilling program will test newly identified conductivity features, which are spatially related to the
Obelisk geophysical complex and copper prospect and the Aranea copper prospect, as well as number of surface soil copper
anomalies extending south and north-east of the area previously drilled at Obelisk.
Exploration work is continuing under the Farm-in and Joint Venture Agreement with Rio Tinto, over the Company’s Kitgum
Pader Base Metals Project located in Northern Uganda. Exploration is being managed by Sipa on behalf of its joint venture
partner, Rio Tinto, which is currently earning a 51% interest in the project. Down-hole EM and Audio Magneto Telluric surveys
were completed subsequent to year end. The aim of the surveys is to further drill targeting of down plunge mineralisation at
Akelikongo. Review of regional geological, geochemical and geophysical programs is continuing.
The consolidated entity intends to continue its current operations of tenement acquisition and mineral exploration with a view
to commercial development. Likely developments that are included elsewhere in this report or the financial statements will,
amongst other things, depend upon the success of the exploration and development programs.
SAFETY AND ENVIRONMENTAL REGULATIONS
The entity has a responsibility to provide a safe and healthy environment for all of our sites which should exceed expectation
of regulations. In the course of its normal mining and exploration activities the consolidated entity promotes an environmentally
responsible culture and adheres to environmental regulations of the Department of Minerals and Petroleum for Australian
operations and to the Department of Geological Survey and Minerals for Ugandan operations, particularly those regulations
relating to ground disturbance and the protection of rare and endangered flora and fauna. The consolidated entity has
complied with all material environmental requirements up to the date of this report.
SHARE OPTIONS
Unissued shares
As at the date of this report, there were 1,395,751 (16,749,000 pre-consolidation) unissued ordinary shares under options
(16,749,000 pre-consolidation at reporting date). Refer to the remuneration report for further details of the options outstanding
for Key Management Personnel (KMP).
Option holders do not have any right, by virtue of the option, to participate in any share issue of the company or any related
body corporate.
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
21
Shares issued as a result of the exercise of options
There were nil fully paid ordinary shares issued pursuant to the exercise of listed options during the year and nil since the end of
the financial year.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
By way of Deed, the Company has agreed to indemnify each of the directors and executive officers from liabilities incurred while
acting as a director and to grant certain rights and privileges to the director and executive officers to the extent permitted by law.
The Company has not, during or since the end of the financial year, in respect of any person who is or has been an officer of the
Company or a related body corporate incurred any expense in relation to the indemnification.
The Company has also paid premiums to insure each of the directors and officers against liabilities for costs and expenses incurred
by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or officer of the
Company or a controlled entity in the consolidated entity, other than conduct involving a wilful breach of duty in relation to the
consolidated entity. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, PwC, as part of the terms of its audit
engagement agreement, against claims by third parties arising from the audit (for an unspecified amount). No payment has been
made to indemnify PwC during or since the financial year.
AUDITOR INDEPENDENCE
We have obtained an independence declaration from our auditors PwC. The Auditor’s Independence Declaration forms part of
this report and is set out on page 28.
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the company and/or the group are important.
Details of the amounts paid or payable to the auditor (PwC Australia) for audit and non-audit services provided during the year
are set out below.
The board of directors has considered the position and is satisfied that the provision of the non-audit services is compatible
with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied, and
accordingly have resolved, that the provision of non-audit services by the auditor, as set out below, did not compromise the
auditor independence requirements of the Corporations Act 2001 for the following reasons:
– all non-audit services have been reviewed by the board to ensure they do not impact the impartiality and objectivity of the
auditor
– none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants.
During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
Pwc Australia
Audit and review of financial statements
Other assurance services
Taxation services
Other firms
Audit and review of financial statements
Total Auditors’ remuneration
Consolidated
2019
$
52,200
10,200
–
2018
$
42,000
–
–
62,400
42,000
9,979
9,979
6,754
6,754
72,379
48,945
22
Sipa Resources Limited 2019 Annual Report
Remuneration Report (Audited)
The information in this section of the Directors’ Report has been audited.
This report outlines the remuneration arrangements in place for Key Management Personnel (KMP) of Sipa Resources Limited
(the Company) in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of
this report KMP of the Group includes Non-Executive Directors and those Executives having authority and responsibility for
planning, directing and controlling the major activities of the Company and the Group.
The details of the KMP during the year are as follows:
Name
Position
T Kennedy
L Burnett
K Field
C McGown
T Robson
Non-Executive Chairman since 28 August 2018
Managing Director
Non-Executive Director
Term as KMP
Full financial year
Full financial year
Full financial year
Non-Executive Director (Chairman until 28 August 2018)
Full financial year
Chief Financial Officer and Company Secretary
Full financial year
Overview of the approach to Executive Remuneration
The Board has determined that remuneration at Sipa should achieve the following objectives:
– Align and contribute to delivering strategic projects on time and on budget;
– Assist Sipa in attracting and retaining the right people to execute the business strategy;
– Align the interests of executives with the interest of shareholders;
– Be contingent on both individual and Company performance; and
– Be simple and easy to administer.
There are two components to Remuneration Policy: Fixed Remuneration and Long Term Incentives. There are no short term
incentives paid to KMP.
Fixed Remuneration
Benchmarking of the Fixed Remuneration component of Executive salaries was conducted during the period by comparing
against a custom peer group of similar size (by market capitalisation), and ASX-listed mineral exploration companies with overseas
projects at a similar stage, in order to ensure that the remuneration levels set meet the objectives of enabling the Company to
attract and retain key talent and are aligned to broader market trends in the minerals industry. Fixed Remuneration typically
includes base salary, (structured as a total employment cost package which may be delivered as a mix of cash and other benefits
at the Executives’ discretion), and superannuation at the prescribed legislative rates. Fixed Remuneration of employees is to
be reviewed annually by the Managing Director, within parameters established by the Board, or in the case of the Managing
Director and Company Secretary, by the Board based on the recommendation of the Nomination and Compensation Committee.
The review conducted during the current year did not result in an increase to fixed remuneration.
Long Term Incentive Plan
Historically, Long Term Incentive (LTI) grants are made to executives on an annual basis to align with typical market practice, and
to align executives’ interests with those of shareholders and the generation of long-term sustainable value. There were no long
term incentives issued during the current year, or the year ended 30 June 2018, as the Board has determined the LTI grants
currently issued are sufficient. There were however long term incentives that were issued in 2017 and continue to be expensed
during the vesting period.
The LTI grants are delivered through participation in the Sipa Resources Employee Share Option Plan (ESOP), as approved by
shareholders at the Annual General Meeting held 15 November 2018. The number of the options granted under the plan is
calculated with reference to a set percentage of Base Salary with Executives’ performance assessed against pre-determined
performance hurdles and the value of each proposed LTI grant using appropriate valuation methods. The performance hurdles
are a combination of market (share price based) and non-market (internal) hurdles to optimise share performance against
exploration targets, the annual operating budget, corporate and social responsibility targets, successful communication with
stakeholders, improved access to capital markets, stock liquidity and register profile. The threshold levels are suitably stretched
to be consistent with the objectives of the LTI plan.
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
23
The LTI as a percentage of Base Salary historically has been 75% for the Managing Director and 30-50% for other participating
personnel. Performance hurdles are measured at the end of the financial year in which the incentives were grantedwith vesting
occurring at the end of 3 years and expiry of the grants at the end of 5 years. Non-Executive Directors do not participate in the
LTI. There were no additional grants made during the current period, or the year ended 30 June 2018.
The plan rules do not provide for automatic vesting in the event of a change of control. The board may in its discretion determine
the manner in which the unvested incentives will be dealt with in the event of a change of control. The holder of an Option does
not have any rights to dividends, rights to vote or rights to the capital of the Company as a shareholder as a result of holding an
Option.
At the Annual General Meeting in November 2018, the Company received 89.27% of the total voted shares in favour of the
Remuneration Report.
Nomination and Compensation Committee
The Nomination and Compensation Committee of the Board of Directors of the Company is responsible for reviewing
remuneration arrangements for the Directors, the Managing Director (CEO) and the Company Secretary. The Nomination and
Compensation Committee assesses the appropriateness of the nature and amount of remuneration of Directors and Senior
Executives on an annual basis by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high quality Board and Executive team.
Non-executive director compensation
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors
and have the objective of ensuring maximum benefit for Sipa by the retention of a high quality Board with the relevant skills mix
to optimise overall performance. Non-executive directors’ fees and payments are determined within an aggregate Directors’ fee
pool limit, which is periodically recommended by the Nomination and Compensation Committee for approval by shareholders.
The pool limit maximum currently stands at $300,000, as approved by shareholders in November 2014. It is at the discretion of
the Board to distribute this pool amongst the Non-executive Directors based on the responsibilities assumed. During the year
$168,716 of the pool was utilised.
No performance based fees are paid to Non-Executive Directors, nor are Non-Executive Directors entitled to participate in the
Sipa Resources Employee Share Option Plan. Retirement benefits are limited to statutory superannuation at the rate prescribed
under the Superannuation Guarantee legislation and entitlements earned under the Directors Retirement Scheme prior to 30
June 2008.
Base fees
(inclusive of Superannuation)
Chair
Non-Executive Director
From 1 July
2018 to
30 June 2019
From 1 July
2019
76,650
43,800
76,650
47,500
The compensation of Non-executive Directors for the period ending 30 June 2019 is detailed in Table 1 of this report.
Remuneration of KMP for the year ended 30 June 2019 and 30 June 2018
The remuneration earned by KMP during the year is set out below in Table 1.
Performance against LTI measures year ended 30 June 2019 and 30 June 2018
There were no LTI’s issued during the year, or the year ended 30 June 2018 as the Board considered the quantum of unvested
LTIs on issue was sufficient in the current circumstances. Those remaining LTI’s on issue relate to previous periods and as such
no performance measures were undertaken during the current year.
24
Sipa Resources Limited 2019 Annual Report
Remuneration Report (Audited)
The following information is provided with respect to LTI’s issued in previous periods for which expense has been incurred in the
current period as the LTI’s are still vesting.
Burnett
Robson
Burnett
Robson
Grant Date
1 September 2016 1 September 2016 17 November 2016 19 December 2016
Base Salary at grant date
Percentage of Base Salary
LTI Base Pool
Option exercise price
Fair value of each Option at grant date –
market conditions
Fair value of each Option at grant date –
non-market performance conditions
$300,000
$188,000
$300,000
$188,000
75%
$225,000
$0.11
50%
$94,000
$0.11
75%
$225,000
$0.06
50%
$94,000
$0.06
–
–
$0.0074
$0.005
$0.035
$0.0091
$0.0104
$0.0089
Maximum number of Options
6,300,000
2,080,000
11,700,000
4,900,000
Percentage achieved against strategic
objectives
25%
75%
53%
53%
Number of LTI’s allocated
1,575,000(2)
1,560,000(2)
6,201,000(1)
2,597,000(1)
(1) Allocated describes the LTI’s earned for the year ended 30 June 2017. They are not exercisable until 19 December 2019 and expire
18 December 2021.
(2) LTI’s granted during the year ended 30 June 2017 but related to KPIs achieved in the prior year. They are not exercisable until 1
September 2019 and expire 31 August 2021.
In considering the relationship between the consolidated entity’s performance and the benefits for shareholder wealth, the
Board believes that, at this stage of development, there is no relevant direct link between revenue and profitability and the
advancement of shareholder wealth as demonstrated in the table below which shows the share price is not directly linked to the
Net Loss for the year, but moves independently of it.
As at 30 June
2019
2018
2017
2016
2015
Share price (cents per share)
Net loss per year ended
$0.007
$0.010
$0.011
$0.019
$0.069
$2,833,062
$3,075,066
$3,905,791
$4,597,538
$3,526,807
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
25
Remuneration of KMP for the year ended 30 June 2019 and 30 June 2018 (Table 1)
Name
Non-executive directors
T Kennedy
C McGown
K Field
P Kiley (Resigned
16 November 2017)
Executive director
L Burnett
Other KMP
T Robson
Totals
Short-term
benefits
Post-
employment
Other
long-term
benefits
Share-
based
payment
Cash Salary
and Fees
Super-
annuation
Long
Service
Leave
Options
Total
%
Performance
Related
%
Options
2019
2018(1)
2019
2018(1)
2019
2018(1)
2019
2018
69,078
60,667
45,000
68,333
40,000
36,667
–
15,000
6,562
5,763
4,275
6,492
3,800
3,483
–
1,425
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
75,640
66,430
49,275
74,825
43,800
40,150
–
16,425
0%
0%
0%
0%
0%
0%
0%
0%
2019
2018
306,005
306,000
29,070
29,070
7,654
14,284
27,464
42,804
370,193
392,158
7.4%
10.9%
2019
2018
2019
2018
191,760
191,760
651,838
18,217
18,217
61,924
2,994
7,188
14,028
14,561
226,999
231,726
6.2%
6.3%
10,648
41,492
765,902
678,427
64,450
21,472
57,365
821,714
0%
0%
0%
0%
0%
0%
0%
0%
7.4%
5.7%
6.2%
3.4%
(1) The Non-Executive Directors resolved to voluntarily and temporarily reduce their fees by 25% in response to market conditions for
the period 1 March 2018-30 June 2018.
Options granted, vested and lapsed during the year
Long term incentives are administered through participation in the Sipa Resources Employee Share Option Plan (the ESOP).
The ESOP meets the conditions of the ASIC class order for an eligible scheme and was last approved by members at the
19 November 2018 AGM for the purposes of Listing Rule 7.1.
No Options were allocated to KMP during the period (2018: NIL). No Options were forfeited during the year for not achieving
maximum key performance indicators. (2018: 7,802,000). No options vested or expired during the period. There were no
alterations to the terms and conditions of options awarded as remuneration since their award date.
Shares issued on exercise of options
There were no shares issued on exercise of remuneration options during the financial year ended 30 June 2019.
Other
The Company prohibits KMP from entering into any arrangement which has the effect of limiting their exposure in relation to
the risk inherent in issued options. The Company’s Share Trading Policy governs when Sipa employees, directors, contractors,
and consultants may deal in the Company’s securities and the procedures that must be followed for such dealings. A copy of the
policy is located at www.sipa.com.au.
Service Agreements with executive KMPs
Employment terms for the Managing Director and other KMP are formalised in service agreements. Each of these agreements
provide for the provision of cash salary and participation, when eligible, in the Sipa Resources Limited Employee Option Plan.
Other major provisions are set out below.
26
Sipa Resources Limited 2019 Annual Report
Remuneration Report (Audited)
L M Burnett, Managing Director
– Term of agreement is continuing.
– Base salary of $306,000 and $29,070 superannuation per annum based on a comparative industry review conducted during the
period in conjunction with the annual performance review.
– Termination notice of 6 months by the company or 3 months by the Managing Director.
– Payment of termination benefit on early termination by the employer other than for gross misconduct equal to 6 months the
annual remuneration package.
– Mrs Burnett may terminate the agreement by 1 months’ notice in the event she is demoted from her position without good
cause, or is requested, without good cause to assume responsibilities or perform tasks not reasonably consistent with her
position. In this instance, she will, subject to shareholder approval if necessary, be entitled to a payout equivalent to 1 year base
salary.
T A Robson, Chief Financial Officer and Company Secretary
– Term of agreement is continuing and is based on 0.8 of a full time equivalent employee.
– Base salary of $191,760 and $18,217 superannuation per annum for 0.8 of a full time equivalent.
– Termination notice of 3 months by either the company or Ms Robson.
– Ms Robson may terminate the agreement by 1 months’ notice in the event she is demoted from her position without good
cause, or is requested, without good cause to assume responsibilities or perform tasks not reasonably consistent with her
position. In this instance, she will, subject to shareholder approval if necessary, be entitled to a payout equivalent to 6 months
base salary.
Shareholdings of KMP
The numbers of shares in the company held during the financial year by each director of Sipa Resources Limited and other KMP
of the Group, including their personally related parties, are set out below. There were no shares granted during the reporting
period as compensation. Subsequent to year end, shareholders approved the consolidation of the Company’s issued capital by
consolidating (ie converting) every 12 existing Shares into one New Share. The amounts below are pre-consolidation.
2019
Directors
C McGown
K Field
L Burnett
T Kennedy
KMP
T Robson
Balance at the
start of the
year
Received
during the
year on
exercise of
options
Acquisition
pursuant to
SPP^
Net Other
Change
Balance at
the end of the
year
2,842,500
2,842,500
3,842,500
1,350,000
3,096,118
–
–
–
–
–
1,648,352
1,648,352
1,648,352
1,648,352
–
–
–
–
4,490,852
4,490,852
5,490,852
2,998,352
–
3,096,118
^ Relates to shares purchased by Directors at fair value through the Share Purchase Plan issued on 13 November 2018 in their capacity
as shareholders.
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
27
Option holdings of KMP
Subsequent to year end, shareholders approved the consolidation of the Company’s issued capital by consolidating
(ie converting) every 12 existing Shares into one New Share. The amounts below are pre-consolidation.
Balance at start
of the year
Granted as
remuneration
Options
exercised
Lapsed/
cancelled
without
exercise
Balance at the
end of the year
Vested
(Exercisable)
2018
Directors
C McGown
L Burnett
K Field
T Kennedy
P Kiley
KMP
–
7,776,000
–
–
–
T Robson
4,157,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,776,000
–
–
–
4,157,000
–
–
–
–
–
–
Unvested
(Non-
exercisable)
–
7,776,000
–
–
–
4,157,000
Other transactions with KMP
No transactions occurred between the Company and key management personnel during the year, aside from that disclosed in
the remuneration of key management personnel above (2018: nil).
This is the end of the Remuneration Report
Signed in accordance with a resolution of the directors.
L M Burnett
Managing Director
DATED 26 September 2019
28
Sipa Resources Limited 2019 Annual Report
Auditor’s Independence Declaration
for the year ended 30 June 2019 Consolidated Statement
of Comprehensive Income
for the year ended 30 June 2019
Finance income
Revenue
Other income
Exploration expenditure
Administrative and other expenses
Loss before income tax
Income tax expense
Net loss for the year
Other comprehensive profit/(loss)
Items that may subsequently be classified through profit and loss
Exchange differences arising on translation of foreign operations
Other comprehensive profit/(loss) for the year, net of tax
Total comprehensive loss for the year
Loss per share (cents per share)
– Basic loss per share for the year
– Diluted loss per share for the year
Sipa Resources Limited 2019 Annual Report
29
Note
3
3
3
3
4
Consolidated
2019
$
2018
$
42,753
34,596
353,471
–
243,947
364,744
(2,105,351)
(2,155,153)
(1,367,882)
(1,319,253)
(2,833,062)
(3,075,066)
–
–
(2,833,062)
(3,075,066)
5,709
5,709
143
143
(2,827,353)
(3,074,923)
17
17
(0.20)
(0.20)
(0.28)
(0.28)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
30
Sipa Resources Limited 2019 Annual Report
Consolidated Statement of Financial Position
as at 30 June 2019
ASSETS
Current Assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Prepayments
Total Current Assets
Non-Current Assets
Financial assets at fair value through profit or loss
Other financial assets
Property, plant and equipment
Exploration and evaluation
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Deferred joint venture contributions
Provisions
Total Current Liabilities
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Equity benefits reserve
Foreign currency translation reserve
Accumulated losses
TOTAL EQUITY
Note
Consolidated
2019
$
2018
$
5
6
7
8
9
10
11
12
13
14
14
3,911,912
2,195,905
30,000
42,488
45,624
30,000
34,236
52,290
4,030,024
2,312,431
1,700
21,770
148,895
581,037
3,000
21,770
195,746
581,037
753,402
801,553
4,783,426
3,113,984
350,707
292,511
323,031
–
220,181
202,841
893,919
495,352
33,304
33,304
26,390
26,390
927,223
521,742
3,856,203
2,592,242
15
111,004,480 106,972,855
1,397,609
1,337,920
(2,715)
(8,424)
(108,543,171)
(105,710,109)
3,856,203
2,592,242
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Sipa Resources Limited 2019 Annual Report
31
Consolidated Statement of Cash Flows
for the year ended 30 June 2019
Cash Flows used in Operating Activities
Payments to suppliers and employees
Expenditure on exploration interests
Funding from Rio Tinto for joint venture
Interest received
Receipt from WA State Government Exploration Incentive Scheme
Receipt from Research & Development Tax Incentive
Receipt from Rio Tinto Earn In and JV Agreement
Receipts from miscellaneous income
Net Cash used in operating activities
Cash Flows used in Investing Activities
Payment for purchases of property, plant and equipment
Cash invested in security deposits
Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from issuance of shares
Share issue expenses
Net cash from financing activities
Net Increase/(Decrease) In Cash And Cash Equivalents
Cash and Cash Equivalents at beginning of year
Effect of foreign exchange movement on opening cash balance
Note
Consolidated
2019
$
2018
$
(1,268,494)
(1,110,115)
(5,550,920)
(2,630,878)
3,859,318
–
45,559
32,321
188,388
118,431
–
205,317
353,471
337,064
55,559
40,996
18
(2,317,120)
(3,006,864)
(28,786)
(7,052)
–
(12,200)
(28,786)
(19,252)
4,294,180
3,040,000
(262,555)
(140,874)
4,031,625
2,899,126
1,685,719
(126,990)
2,195,905
2,322,895
30,287
–
Cash and Cash Equivalents at the end of the year
5
3,911,912
2,195,905
The above Consolidated Statement of Cash Flow should be read in conjunction with the accompanying notes.
32
Sipa Resources Limited 2019 Annual Report
Consolidated Statement of Changes in Equity
CONSOLIDATED
At 30 June 2017
Loss for the year
Other comprehensive profit/(loss)
Total comprehensive loss for the year
Shares issued
Cost of issuing shares
Share Based Payments
At 30 June 2018
Loss for the year
Other comprehensive profit/(loss)
Total comprehensive loss for the year
Shares issued
Cost of issuing shares
Share Based Payments
At 30 June 2019
Note
Issued
capital
$
Accumulated
losses
$
Equity
benefits
reserve
$
Foreign
Currency
Translation
Reserve
$
Total
$
104,073,729 (102,635,043)
1,260,852
(8,567)
2,690,971
–
–
–
(3,075,066)
–
(3,075,066)
3,040,000
(140,874)
–
–
–
–
–
–
–
–
–
77,068
–
(3,075,066)
143
143
–
–
–
143
(3,074,923)
3,040,000
(140,874)
77,068
106,972,855 (105,710,109)
1,337,920
(8,424)
2,592,242
–
–
–
(2,833,062)
–
(2,833,062)
4,294,181
(262,556)
–
–
–
–
–
–
–
–
–
59,689
–
(2,833,062)
5,709
5,709
5,709
(2,827,353)
–
–
–
4,294,181
(262,556)
59,689
111,004,480 (108,543,171)
1,397,609
(2,715)
3,856,203
15
15
15
15
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
33
Notes to the Financial Statements
for the year ended 30 June 2019
1. Corporate Information
The consolidated financial report of Sipa Resources Limited
(the Company or the parent) and its subsidiaries (collectively,
the Group) for the year ended 30 June 2019 was authorised
for issue in accordance with a resolution of the directors on
26 September 2019. The Company is a for profit company
limited by shares incorporated and domiciled in Australia
whose shares are publicly traded on the Australian Securities
Exchange. The nature of the operations and principal
activities of the company are described in the Directors’
report. The presentation currency of the Group is the
Australian dollar ($).
2. Basis of Preparation
The financial report is a general-purpose financial report,
which has been prepared in accordance with the requirements
of the Corporations Act 2001, Australian Accounting Standards
and other authoritative pronouncements of the Australian
Accounting Standards Board. The financial report also
complies with IFRS as issued by the International Accounting
Standards Board.
The financial report has been prepared on a historical cost
basis, except for financial assets that have been measured at
fair value.
The accounting policies adopted are consistent with those of
the previous financial year, except for the adoption of the new
and amended accounting standards and interpretations which
became mandatory for the first time this reporting period
commencing 1 July 2018.
New and amended accounting standards and
interpretations
The Group has adopted all Australian Accounting Standards
and Interpretations effective from 1 July 2018.
AASB 9 Financial Instruments – Impacts on adoption
AASB 9 replaces the provisions of AASB 139 that relate
to the recognition, classification and measurement of
financial assets and financial liabilities, derecognition of
financial instruments, impairment of financial assets and
hedge accounting. The retrospective adoption of AASB 9
Financial Instruments from 1 July 2018 resulted in changes
in accounting policies. The new accounting policies are set
out below. Given that the Group does not have any complex
financial instruments and it does not follow hedge accounting,
the adoption of this standard and its retrospective application
did not result in any adjustments to the comparative amounts
recognised in the consolidated financial statements.
AASB 15 Revenue from Contracts with Customers – Impact
on adoption
The Group has adopted AASB 15 Revenue from Contracts
with Customers from 1 July 2018 which resulted in changes
in accounting policies. The new accounting policies are set out
below. Given that the Group is still in the exploration phase,
the adoption of this standard and its retrospective application
did not result in any adjustments to the comparative amounts
recognised in the consolidated financial statements as the
entity has no revenue arising from Contracts with Customers.
The adoption of these standards and amendments did not
result in a material adjustment to the amounts or disclosures
in the current or prior year. The Group has not early adopted
any other new or amended standards and interpretations that
have been issued but are not yet effective.
New standards and interpretations not yet adopted
Australian Accounting Standards and Interpretations that
have been issued or amended but are not yet effective and
have not been adopted by the Group for the annual reporting
period ended 30 June 2019 are outlined below.
AASB16 Leases
The key features of AASB 16 are as follows.
Lessee accounting
– Lessees are required to recognise assets and liabilities for
all leases with a term of more than 12 months, unless the
underlying asset is of low value.
– A lessee measures right-of-use assets similarly to other
non-financial assets and lease liabilities similarly to other
financial liabilities.
– Assets and liabilities arising from a lease are initially
measured on a present value basis. The measurement
includes non-cancellable lease payments (including
inflation-linked payments), and also includes payments
to be made in optional periods if the lessee is reasonably
certain to exercise an option to extend the lease, or not to
exercise an option to terminate the lease.
– AASB 16 contains disclosure requirements for lessees.
AASB 16 supersedes:
a. AASB 117 Leases;
b. AASB Interpretation 4 Determining whether an
c.
Arrangement contains a Lease;
AASB Interpretation115 Operating Leases—Incentives;
and
d. AASB Interpretation 127 Evaluating the Substance of
Transactions Involving the Legal Form of a Lease.
Transition
The new standard will be effective for annual periods
beginning on or after 1 January 2019. Early application is
permitted, provided the new revenue standard, AASB 15
Revenue from Contracts with Customers, has been applied,
or is applied at the same date as AASB 16.
34
Sipa Resources Limited 2019 Annual Report
Notes to the Financial Statements
2. Basis of Preparation (continued)
The impact of the application of AASB 16 is still being
calculated but is not expected to have a material impact on
the net assets of the Group given that leases are limited to
rental on office space. Preliminary calculations indicate that if
the standard were applied on 1 July 2019 that Property, Plant
and Equipment would increase by approximately $70,870
with a resulting increase in liabilities of a similar amount.
There are currently no contracts which may be deemed to
contain a lease.
2.1. Going concern
The Group incurred a net loss for the year ended 30 June
2019 of $2,833,062 (2018: $3,075,066) and a net cash
outflow from operating activities of $2,317,120 (2018:
$3,006,864). As at 30 June 2019 the Group had cash and
cash equivalents of $3,911,912 (2018: $2,195,905) and a
working capital surplus of $3,136,107 (2018: $1,817,079).
Based on the Group’s cash flow forecast the Group may
require additional funding in the next 12 months to enable
the Group to pursue its exploration strategy, continue its
normal business activities and to ensure the realisation of
assets and extinguishment of liabilities as and when they
fall due, including progression of its exploration and project
development activities and meeting its annual minimum
tenement expenditure commitment.
As a result of the above, there is a material uncertainty that
may cast significant doubt on the Group’s ability to continue
as a going concern and, therefore, that the Group may be
unable to realise its assets and discharge its liabilities in the
normal course of business.
The directors are satisfied that at the date of signing of the
financial report, there are reasonable grounds to believe that
the Group will be able to continue to meet its debts as and
when they fall due and that it is appropriate for the financial
statements to be prepared on a going concern basis. The
directors have based this on the following pertinent matters:
– The Directors believe that future funding will be available
to meet the Group’s objectives and debts as and when they
fall due, including through engaging with parties interested
in joint venture arrangements and/or raising additional
capital through equity placements to existing or new
investors. The Group has a demonstrated history of success
in this regard.
– The Group has the capacity, if necessary, to reduce its
operating cost structure in order to minimise its working
capital requirements;
The financial report does not include adjustments relating
to the recoverability or classification of the recorded assets
nor to the amounts or classification of liabilities that might
be necessary should the Group not be able to continue as
a going concern.
2.2. Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its subsidiaries as at 30 June
each year.
Control is achieved when the Group is exposed, or has rights,
to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over
the investee. Specifically, the Group controls an investee if
and only if the Group has:
– Power over the investee (i.e. existing rights that give it
the current ability to direct the relevant activities of the
investee)
– Exposure, or rights, to variable returns from its involvement
with the investee, and
– The ability to use its power over the investee to affect
its returns
When the Group has less than a majority of the voting or
similar rights of an investee, the Group considers all relevant
facts and circumstances in assessing whether it has power
over an investee, including:
– The contractual arrangement with the other vote holders
of the investee
– Rights arising from other contractual arrangements
– The Consolidated Entity’s voting rights and potential
voting rights
The Group re-assesses whether or not it controls an investee
if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation
of a subsidiary begins when the Group obtains control over
the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses
of a subsidiary acquired or disposed of during the year are
included in the statement of comprehensive income from the
date the Group gains control until the date the Group ceases
to control the subsidiary.
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies
into line with the Group’s accounting policies. All intra-Group
assets and liabilities, equity, income, expenses and cash flows
relating to transactions between members of the Group are
eliminated in full on consolidation.
2.3. Accounting for farmouts
The Group may enter into transactions whereby a third party
(“Farmee”) may earn a right to acquire an interest in assets
owned by the Group by meeting certain obligations agreed
to by both parties. As the terms of farm-outs are not generic
management assess each agreement on a transaction by
transaction basis and determines the appropriate accounting
treatment based on the terms of the agreement.
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
35
2. Basis of Preparation (continued)
2.4. Significant accounting judgements, estimates
Rio Tinto Earn In Agreement
On 8 May 2018, Sipa and Rio Tinto Mining and Exploration
Limited (Rio Tinto) executed an earn-in agreement pursuant
to which Rio Tinto will have the right to earn up to 75%
in the Kitgum Pader project, by incurring expenditure of
US$59 million, and in turn Rio Tinto will exercise control
over the project, with Sipa initially acting as manager of the
unincorporated joint venture.
Based on the terms of the agreement it has been determined
that Sipa does not have control, nor joint control of the
unincorporated JV. As such, the project is not accounted for
as a subsidiary or a joint operation. It has been determined,
however, that Sipa does have significant influence over the
project and therefore the investment in the unincorporated
joint venture shall be accounted for using the equity method.
Under the equity method, the investment in a joint venture
is initially recognised at cost. The carrying amount of
the investment is adjusted to recognise changes in the
Group’s share of net assets of the joint venture since the
acquisition date.
The statement of profit or loss reflects the Group’s share of
the results of operations of the joint venture. The aggregate
of the Group’s share of profit or loss of a joint venture is
shown on the face of the statement of profit or loss outside
operating profit and represents profit or loss after tax.
After application of the equity method, the Group determines
whether it is necessary to recognise an impairment loss on
its investment in its joint venture. At each reporting date, the
Group determines whether there is objective evidence that
the investment in the joint venture is impaired. If there is such
evidence, the Group calculates the amount of impairment as
the difference between the recoverable amount of the joint
venture and its carrying value, then recognises the loss as
‘Share of profit of a joint venture’ in the statement of profit
or loss.
Sipa on behalf of the unincorporated joint venture incurred
expenses in relation to the farm in and Rio contributed to
these expenses and also paid a management fee of 10% of
expenditure. Cash received from Rio Tinto pertaining to the
farm-In agreement is received in advance. Upon receipt of
the funds a liability is recognised for deferred exploration
contributions. As expenditure is incurred, the liability is
decreased. The cash received in advance by Rio Tinto is held
by the Company in the capacity as operator, and is shown
separately as restricted cash.
As at the 30 June 2019 nil profit has been recognised from
Sipa’s participation in the JV.
and assumptions
The preparation of the Group’s consolidated financial
statement requires management to make judgments in the
process of applying the Group’s accounting policies and
estimates that effect the reported amounts of revenue,
expenses, assets and liabilities. Judgements and estimates
which are material to the financial report are as follows:
Share-based payment transactions
The Group measures the cost of these equity-settled
transactions with participants by reference to the fair value
of the equity instruments at the date at which they are
granted using an appropriate valuation model, further details
of which are given in Note 16.
Impairment of acquired exploration and evaluation assets
The ultimate recoupment of the value of exploration and
evaluation assets which is acquired upon acquisition is
dependent on the successful development and commercial
exploitation, or alternatively, sale, of the exploration and
evaluation assets.
Impairment tests are carried out on a regular basis to identify
whether the asset carrying values exceed their recoverable
amounts. There is significant estimation and judgement in
determining the inputs and assumptions used in determining
the recoverable amounts.
The key areas of judgement and estimation include:
– Recent exploration and evaluation results and resource
estimates;
– Environmental issues that may impact on the underlying
tenements;
– Fundamental economic factors that have an impact on the
operations and carrying values of assets and liabilities.
2.5. Revenue and Other Income
Revenue from contracts with customers is recognised
when a customer obtains control of the promised assets
and the Group satisfies its performance obligations under
the contract. Revenue is allocated to each performance
obligation. The Group considers the terms of the contract in
determining the transaction price. The transaction price is
based upon the amount the entity expects to be entitled to in
exchange for the transferring of promised goods.
Management fee income
Sipa is paid a management fee of 10% of expenditure incurred
on behalf of the Kitgum-Pader JV from Rio Tinto. Revenue
from providing services is recognised in the period in which
the services are rendered.
36
Sipa Resources Limited 2019 Annual Report
Notes to the Financial Statements
2. Basis of Preparation (continued)
Interest income
Interest income is recognised as the interest accrues (using
the effective interest method, which is the method that
exactly discounts estimated future cash receipts through the
life of the financial asset) to the net carrying amount of the
financial asset.
2.6. Leases
The determination of whether an arrangement is or contains
a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the
arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the asset.
Group as a lessee
Finance leases, which transfer to the Group substantially all
the risks and benefits incidental to ownership of the leased
item, are capitalised at the inception of the lease at the
fair value of the leased property or, if lower, at the present
value of the minimum lease payments. Lease payments are
apportioned between the finance charges and reduction of
the lease liability so as to achieve a constant rate of interest
on the remaining balance of the liability. Finance charges are
recognised as an expense in the income statement.
Capitalised leased assets are depreciated over the shorter
of the estimated useful life of the asset or the lease term, if
there is no reasonable certainty that the Group will obtain
ownership by the end of the lease term.
Operating lease payments are recognised as an expense in the
income statement on a straight-line basis over the lease term.
Lease incentives are recognised in the income statement as an
integral part of total lease expense.
2.7. Cash and cash equivalents
Cash and cash equivalents in the Consolidated Statement
of Financial Position comprise cash at bank and in hand and
short-term deposits with an original maturity of three months
or less.
For purposes of the Cash Flow Statement, cash and cash
equivalents consist of cash and cash equivalents as defined
above.
2.8. Term deposits provided as security
Term deposits provided as security are classified as other
receivables with an original maturity of three to twelve
months or less.
2.9. Trade and other receivables
Trade receivables are recognised initially at fair value
and subsequently measured at amortised cost using the
effective interest method, less provision for doubtful debts.
Trade receivables are generally due for settlement within
30 – 90 days. They are presented as current assets unless
collection is not expected for more than 12 months after the
reporting date.
Collectability of trade receivables is reviewed on an ongoing
basis. The accounting policy for impairment of trade
receivables is explained in Note 2.17.
2.10. Derecognition of financial instruments
The derecognition of a financial instrument takes place when
the Group no longer controls the contractual rights that
comprise the financial instrument, which is normally the case
when the instrument is sold, or all the cash flows attributable
to the instrument are passed through to an independent
third party.
2.11. Impairment of non-financial assets
The Group assesses at each reporting date whether there is
an indication that a non-financial asset may be impaired. If
any such indication exists, or when annual impairment testing
for an asset is required, the Group makes an estimate of the
asset’s recoverable amount. An asset’s recoverable amount is
the higher of its fair value less costs to dispose and its value in
use and is determined for an individual asset, unless that asset
does not generate cash inflows that are largely independent
of those from other assets or groups of assets and the asset’s
value in use cannot be estimated to be close to its fair value.
In such cases the asset is tested for impairment as part of the
cash-generating unit (CGU) to which it belongs. When the
carrying amount of an asset or cash-generating unit exceeds
its recoverable amount, the asset or cash generating unit is
considered impaired and is written down to its recoverable
amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time
value of money and the risks specific to the asset or CGU. 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 or
other available fair value indicators.
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
37
2. Basis of Preparation (continued)
An assessment is also made at each reporting date as to
whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased.
If such indication exists, the recoverable amount is estimated.
A previously recognised impairment loss is reversed only if
there has been a change in the estimates used to determine
the asset’s recoverable amount since the last impairment
loss was recognised. If that is the case the carrying amount
of the asset is increased to its recoverable amount. That
increased amount cannot exceed the carrying amount that
would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years.
Such reversal is recognised in profit or loss unless the asset
is carried at revalued amount, in which case the reversal is
treated as a revaluation increase. After such a reversal the
depreciation charge is adjusted in future periods to allocate
the asset’s revised carrying amount, less any residual value,
on a systematic basis over its remaining useful life.
2.12. Foreign currency translation
The Group’s consolidated financial report is presented
in Australian Dollars, which is also the parent company’s
functional currency. Each entity in the Group determines its
own functional currency and items included in the financial
statements of each entity is measured using that functional
currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by the
Group’s entities at their respective functional currency spot
rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates
of exchange at the reporting date.
Differences arising on settlement or translation of monetary
items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions.
Foreign operations
The assets and liabilities of foreign operations are translated
into Australian Dollars at the rate of exchange prevailing
at the reporting date and their income statements are
translated at exchange rates prevailing at the dates of the
transactions. The exchange differences arising on translation
for consolidation are recognised in other comprehensive
income. On disposal of a foreign operation, the component of
other comprehensive income relating to that particular foreign
operation is recognised in the income statement.
2.13. Income tax
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax
rates and tax laws used to compute the amount are those that
are enacted or substantively enacted by the reporting date.
Deferred income tax is provided on all temporary differences
at the reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes.
Deferred income tax liabilities are recognised for all taxable
temporary differences except:
– when the deferred income tax liability arises from the
initial recognition of goodwill or of an asset or liability in
a transaction that is not a business combination and, at
the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or
– when the taxable temporary difference is associated with
investments in subsidiaries, or interest in joint ventures
and the timing of the reversal of the temporary difference
can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible
temporary differences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that
taxable profit will be available against which the deductible
temporary differences and the carry-forward of unused tax
assets and unused tax losses can be utilised except:
– when the deferred income tax asset relating to the
deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not
a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or
loss; or
– when the deductible temporary difference is associated
with investments in subsidiaries or interest in joint venture,
in which case a deferred tax asset is only recognised to the
extent that it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit will be
available against which the temporary differences can be
utilised.
Unrecognised deferred income tax assets are reassessed at
each reporting date and are recognised to the extent that it
has become probable that future taxable profit will allow the
deferred tax asset to be recovered.
The carrying amount of deferred income tax assets is
reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred income tax
asset to be utilised.
38
Sipa Resources Limited 2019 Annual Report
Notes to the Financial Statements
2. Basis of Preparation (continued)
Deferred income tax assets and liabilities are measured at
the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax
rates (and tax laws) that have been enacted or substantively
enacted at the reporting date.
2.16. Exploration and Evaluation
Exploration and evaluation expenditure incurred by or on
behalf of the consolidated entity is accumulated separately
for each prospect area. Acquired exploration and evaluation
expenditure is carried forward at cost where rights to tenure
of the area of interest are current and;
Income taxes relating to items recognised directly in equity
are recognised in equity and not in the income statement.
Deferred tax assets and deferred tax liabilities are offset only
if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred tax liabilities
relate to the same taxable entity and the same taxation
authority.
2.14. GST
Revenues, expenses and assets are recognised net of the
amount of GST except:
– when the GST incurred on a purchase of goods and
services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost
of acquisition of the asset or as part of the expense item
as applicable; and
– receivables and payables are stated with the amount
of GST included.
– it is expected that expenditure will be recouped through
successful development and exploitation of the area of
interest or alternatively by its sale and/or;
– exploration and evaluation activities are continuing in
an area of interest but at reporting date have not yet
reached a stage which permits a reasonable assessment
of the existence or otherwise of economically recoverable
reserves.
The consolidated entity has a policy of writing off all
exploration expenditure in the financial year in which it is
incurred, unless its recoupment out of revenue to be derived
from the successful development of the prospect, or from
sale of that prospect, is assured beyond reasonable doubt.
2.17. Investments and other financial assets
Classification
From 1 July 2018, the group classifies its financial assets
in the following measurement categories:
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the Consolidated Statement of Financial Position.
– Those to be measured subsequently at fair value (either
through other comprehensive income or through profit
or loss); and
Cash flows are included in the Cash Flow Statement on a
gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from,
or payable to, the taxation authority are classified as operating
cash flows. Commitments and contingencies are disclosed net
of the amount of GST recoverable from, or payable to, the
taxation authority.
2.15. Plant and Equipment
Plant and equipment is carried at cost less accumulated
depreciation and any accumulated impairment losses.
Depreciation is calculated on a straight-line basis over the
estimated useful life of the asset which is 2-15 years for
plant and equipment. The assets residual values, useful lives
and depreciation methods are reviewed, and adjusted if
appropriate, at each financial year end.
Derecognition
An item of plant and equipment is derecognised upon disposal
or when no future economic benefits are expected to arise
from the continued use of the asset.
Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the item) is included in
the income statement in the period the item is derecognised.
– Those to be measured at amortised cost.
The classification depends on the entity’s business model for
managing the financial assets and the contractual terms of
the cash flows.
For assets measured at fair value, gains and losses will either
be recorded in profit or loss or other comprehensive income.
For investments in equity instruments that are not held for
trading, this will depend on whether the group has made
an irrevocable election at the time of initial recognition to
account for the equity investment at fair value through other
comprehensive income.
Recognition and derecognition
Regular way purchases and sales of financial assets are
recognised on trade-date, the date on which the group
commits to purchase or sell the asset. Financial assets are
derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred
and the group has transferred substantially all the risks and
rewards of ownership.
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
39
2. Basis of Preparation (continued)
Measurement
At initial recognition, the group measures a financial asset at
its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are
expensed in profit or loss.
Financial assets with embedded derivatives are considered in
their entirety when determining whether their cash flows are
solely payment of principal and interest.
Measurement - Equity instruments
The group subsequently measures all equity investments at
fair value. Where the group’s management has elected to
present fair value gains and losses on equity investments in
OCI, there is no subsequent reclassification of fair value gains
and losses to profit or loss following the derecognition of the
investment. Dividends from such investments continue to be
recognised in profit or loss as other income when the group’s
right to receive payments is established.
Changes in the fair value of financial assets at FVPL are
recognised in other gains/(losses) in the statement of profit
or loss as applicable. Impairment losses (and reversal of
impairment losses) on equity investments measured at FVOCI
are not reported separately from other changes in fair value.
Impairment
From 1 January 2018, the group assesses on a forward
looking basis the expected credit losses associated with
trade receivables. The group applies the simplified approach
permitted by AASB 9, which requires expected lifetime losses
to be recognised from initial recognition of the receivables.
See Note 23 for further details.
2.18. Trade and Other Payables
Trade payables and other payables are carried at amortised
costs and represent liabilities for goods and services provided
to the Group prior to the end of the financial year that are
unpaid and arise when the Group becomes obliged to make
future payments in respect of the purchase of these goods
and services.
2.19. Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions
are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risks
specific to the liability. When discounting is used, the increase
in the provision due to the passage of time is recognised as
a finance cost.
2.20. Employee Benefits
Provision is made for amounts expected to be paid to
employees of the Group in respect of their entitlement to
annual leave and long service leave arising from services
rendered by employees to the reporting date. Employee
benefits due to be settled within one year arising from wage
and salaries and annual leave have been measured at the
amounts due to be paid when the liabilities are expected
to be settled and included in provisions. Long service leave
entitlements payable later than one year have been measured
at the present value of the estimated future cash outflows
to be made in respect of services provided by employees
up to the reporting date. Under the terms of the Directors’
Retirement Scheme (applicable to non-executive directors
only), approved by a meeting of shareholders, provision has
been made for the retirement or loss of office of eligible non-
executive Directors of Sipa Resources Limited.
2.21. Share-based payment transactions
The Group provides benefits to employees (including
directors) of the Group in the form of share-based payments,
whereby employees render services in exchange for shares
or rights over shares (‘equity-settled transactions’). Equity-
settled transactions with employees and directors are
administered through the Sipa Resources Employee Share
Option Plan which was approved by shareholders.
The cost of these equity-settled transactions with
participants is measured by reference to the fair value of the
equity instruments at the date at which they are granted using
an appropriate valuation model, further details of which are
given in Note 16.
40
Sipa Resources Limited 2019 Annual Report
Notes to the Financial Statements
2. Basis of Preparation (continued)
The cost of equity-settled transactions is recognised, together
with a corresponding increase in equity, over the period in
which the performance conditions are fulfilled, ending on the
date on which the relevant employees become fully entitled
to the award (‘vesting date’).
The cumulative expense recognised for equity-settled
transactions at each reporting date until vesting date reflects
(i) the extent to which the vesting period has expired and
(ii) the Group’s best estimate of the number of equity
instruments that will ultimately vest. The income statement
charge or credit for a period represents the movement in
cumulative expense recognised at the beginning and end of
that period.
No expense is recognised for awards that do not ultimately
vest, except for awards where vesting is only conditional upon
a market condition.
If the terms of an equity-settled award are modified, as a
minimum an expense is recognised as if the terms had not
been modified. In addition, an expense is recognised for any
modification that increases the total fair value of the share-
based payment arrangement or is otherwise beneficial to the
employee, as measured at the date of modification.
If an equity-settled award is cancelled (other than for reason
of forfeiture), it is treated as if it had vested on the date of
cancellation, and any expense not yet recognised for the
award is recognised immediately. However, if a new award
is substituted for the cancelled award, and designated
as a replacement award on the date that it is granted,
the cancelled and new award are treated as if they were
a modification of the original award, as described in the
previous paragraph.
The dilutive effect, if any, of outstanding options is reflected
as additional share dilution in the computation of loss per
share.
2.22. Contributed Equity
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.23. Loss Per Share
Basic EPS is calculated as net profit/loss attributable to
members, adjusted to exclude costs of servicing equity (other
than dividends), divided by the weighted average number of
ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit/loss attributable to
members, adjusted for:
– costs of servicing equity (other than dividends);
– the after tax effect of dividends and interest associated
with dilutive potential ordinary shares that have been
recognised as expenses; and
– other non-discretionary changes in revenues or expenses
during the period that would result from the dilution of
potential ordinary shares;
– divided by the weighted average number of ordinary shares
and dilutive potential ordinary shares, adjusted for any
bonus element.
2.24. Government Grants
Government grants are recognised only where it is reasonably
certain that the Group will comply with conditions attached to
the grant. Grants are recognised as income over the periods
necessary to match them with the related costs which they
are intended to compensate, on a systematic basis.
for the year ended 30 June 2019
Sipa Resources Limited 2019 Annual Report
41
Consolidated
2019
$
2018
$
42,753
42,753
34,596
34,596
353,471
353,471
188,388
–
55,559
–
–
118,431
205,317
40,996
243,947
364,744
3,536,288
337,064
(3,536,288)
(337,064)
2,105,351
2,155,153
2,105,351
2,155,153
1,067,762
1,180,035
90,221
68,788
14,663
59,689
2,391
106,393
72,768
28,460
77,068
2,255
1,303,514
1,466,979
669,533
633,981
952,071
514,908
1,303,514
1,466,979
77,572
88,595
61,264
79,779
3. Revenues and Expenses
Revenue and Expenses
(a) Finance income
Interest income
(b) Revenue
Management fee income
(c) Other income
WA State Exploration Incentive grant
Research & Development Tax Incentive
Other
(d) Other expenses
Exploration expenditure
Exploration expenditure incurred on behalf of Kitgum Pader JV
Less: exploration expenditure funded by Rio Tinto
Exploration expenditure – other projects
Employee benefits expense
Wages and salaries
Superannuation
Provision for annual leave
Provision for long service leave
Share based payments
Workers compensation insurance
Employee benefits expense included in:
Exploration expenditure
Administrative expenses
Depreciation of plant and equipment
Rental expenses on operating lease
42
Sipa Resources Limited 2019 Annual Report
Notes to the Financial Statements
4. Income Tax
(a) Major components of income tax expense for the years ended 30 June 2019 and 2018 are:
Income Statement
Current income tax
Current income tax benefit
Deferred income tax
Relating to origination and reversal of temporary differences
Income tax expense reported in income statement
(b) A reconciliation of income tax expense applicable to accounting loss before income tax at
the statutory income tax rate to income tax expense at the Group’s effective income tax
rate for the years ended 30 June 2019 and 2018 is as follows:
Accounting loss before tax
At statutory income tax rate of 27.5%
Adjustment for difference in foreign tax rate
Non-deductible items
Under/(overprovision) in prior year
Unrecognised deferred tax assets
Income tax expense reported in income statement
(c) Deferred income tax
Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Plant and equipment
Other
Deferred tax assets
Consolidated
2019
$
2018
$
–
–
–
–
–
–
(2,833,062)
(3,075,066)
(779,092)
(845,643)
2,254
16,947
(152,391)
(16,747)
49,410
12,323
912,282
800,657
–
–
Statement of Financial Position
2018
$
2019
$
Profit or Loss
2019
$
2018
$
(20,670)
(20,593)
(77)
17,620
(8,735)
(1,177)
(7,558)
(605)
(29,405)
(21,770)
Provision for employee entitlements
69,708
63,039
6,669
13,132
Superannuation provision
Accruals
Carried forward losses
3,641
7,854
3,086
7,854
555
–
(554)
159
15,123,460
14,210,767
912,693
2,343,816
15,204,663
14,284,746
Unrecognised deferred tax assets
(15,175,258)
(14,262,976)
(912,282)
(2,373,567)
Net deferred tax asset
Deferred tax expense
29,405
21,770
–
–
–
–
–
–
–
–
–
–
for the year ended 30 June 2019
Sipa Resources Limited 2019 Annual Report
43
4. Income Tax (continued)
Deferred tax assets on temporary differences and tax losses not recognised
15,175,258
14,262,976
Directors do not believe it is appropriate to regard realisation of the deferred tax asset as probable as at 30 June 2019. These
benefits will only be obtained if:
Consolidated
2019
$
2018
$
i.
the Consolidated Entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from
the deduction for the loss to be realised;
the Consolidated Entity continues to comply with the conditions for the deductibility imposed by law; and
ii.
iii. no changes in tax legislation adversely affect the Consolidated Entity in realising the benefit from the deduction for the loss.
(d) Tax Consolidation
The Company and its 100% owned Australian subsidiaries formed a tax consolidated group effective 1 July 2003. The head
entity of the tax consolidated group is Sipa Resources Limited. The Sipa group currently does not intend to enter into a Tax
Sharing or Tax Funding Agreement. The group allocation method is used to allocate any tax expense incurred.
5. Cash and Cash Equivalents
Cash at bank and in hand
Short-term deposits
Cash reserved for JV expenditure
1,388,881
495,905
2,200,000
1,700,000
323,031
–
3,911,912
2,195,905
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods
of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the
respective short-term deposit rates. The carrying value approximates fair value.
As at 30 June 2019, $323,031 is held as restricted cash being monies received in advance from Rio Tinto for use on the Kitgum-
Pader project.
6. Term Deposits
Term deposits provided for security
Represents amounts provided to secure the company’s credit card facility.
7. Trade and Other Receivables
Interest receivable(1)
Other receivables(2)
30,000
30,000
30,000
30,000
1,476
41,012
42,488
4,282
29,954
34,236
(1) Interest receivable represents interest due on the Group’s term deposits.
(2) Other receivables are non-interest bearing and generally due in 30 days. They are neither past due or impaired. The amount is fully
collectible. Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value.
44
Sipa Resources Limited 2019 Annual Report
Notes to the Financial Statements
8. Financial Assets at Fair Value Through Profit or Loss
At fair value
Shares in listed entities
Consolidated
2019
$
2018
$
1,700
1,700
3,000
3,000
The fair value of listed available for sale investments has been determined directly by reference to published price quotations
in an active market and classified as Level 1. During the current year, $1,300 was recognised in the profit and loss due to a
decrease in share price.
9. Other Financial Assets
Security deposits
21,770
21,770
21,770
21,770
The terms and conditions of the security deposits are non-interest bearing and refundable upon completion of performance
obligations associated with completion of the lease term.
10. Plant and equipment
At beginning of the year, net of accumulated depreciation
Additions
Disposals
Depreciation expense
Exchange differences
At end of the year, net of accumulated depreciation
At end of year
Gross carrying amount – at cost
Accumulated depreciation
Net book value at end of year
11. Exploration and Evaluation
Exploration and evaluation acquired
195,746
251,256
28,786
(80)
7,051
–
(77,572)
(61,264)
2,015
(1,297)
148,895
195,746
1,089,656
1,057,168
(940,761)
(861,422)
148,895
195,746
581,037
581,037
581,037
581,037
In January 2015, a wholly owned subsidiary of Sipa completed the acquisition of the remaining 20% of shares in SiGe East Africa
Pty Ltd, from Geocrust Pty Ltd to become the 100% holder of the Kitgum-Pader base and precious metals project in Uganda,
East Africa. The exploration and evaluation acquired represents the value of the acquisition at that date.
The ultimate recoupment of costs carried forward for exploration and evaluation expenditure is dependent upon the successful
development and commercial exploitation or sale of the respective areas of interest.
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
45
12. Trade and Other Payables (Current)
Trade payables – unsecured
Accrued expenses
Trade payables and accrued expenses are non-interest bearing and are usually settled in 30 days.
13. Deferred Joint Venture Contributions
Opening balance
Contributions received from Rio Tinto
JV Expenditure
Consolidated
2019
$
2018
$
241,714
165,483
108,993
350,707
127,028
292,511
–
3,859,319
(3,536,288)
323,031
–
–
–
–
In May 2018 Sipa announced a Landmark Farm-in and JV Agreement with Rio Tinto to underpin accelerated nickel-copper
exploration at the Kitgum Pader Base Metals Project in Northern Uganda in which Rio Tinto can fund up to US$57M of
exploration expenditure for a staged earn-in to earn up to a 75% interest the project.
In accordance with the agreement, Sipa will be the operator for the project for the first 18 months. During the period Rio Tinto
contributed funds in advance of $3,859,319 to Sipa as part of their initial contribution. As at 30 June 2019, $323,031 is held as
restricted cash being monies received in advance from Rio Tinto and restricted for use on the Kitgum-Pader project (See Note 5).
14. Provisions
Consolidated
At 1 July 2018
Arising during the year
Utilised during the year
Balance at 30 June 2019
Current 2019
Non-Current 2019
Current 2018
Non-Current 2018
Annual Leave
Long Service
Leave
Directors
Retirement
Benefit(a)
Total
104,589
67,611
89,642
14,662
(46,719)
(11,300)
35,000
229,231
–
–
82,273
(58,019)
125,481
93,004
35,000
253,485
125,481
-
125,481
104,589
–
104,589
59,700
33,304
93,004
63,252
26,390
89,642
35,000
220,181
–
33,304
35,000
253,485
35,000
202,841
–
26,390
35,000
229,231
Under the terms of the Directors’ Retirement Scheme, approved by a meeting of shareholders, provision has been made for the
retirement or loss of office of eligible non-executive Directors of Sipa Resources Limited. The Directors resolved to freeze the scheme
with no further provisions being made, in the financial year ended 30 June 2008, or subsequently. There is currently no anticipated date
for payment of the remaining provision but a constructive obligation exists.
46
Sipa Resources Limited 2019 Annual Report
Notes to the Financial Statements
15. Contributed Equity and Reserves
(a) Ordinary shares
Issued and fully paid shares
Movements in shares on issue
Balance at beginning of year
Share purchase plan(1)(2)
Placement to exempt investors(2)(3)
Placement to exempt investors(4)(5)
Less transaction costs
Consolidated
2019
$
2018
$
111,004,480 106,972,855
2019
No
$
2018
No
$
1,200,621,023 106,972,855
929,954,296 104,073,729
165,439,718
1,505,501
159,750,060
1,917,000
166,835,170
1,518,200
6,916,667
83,000
174,400,000
1,270,480
104,000,000
1,040,000
–
(262,556)
–
(140,874)
Balance at end of financial year
1,707,295,911 111,004,480
1,200,621,023 106,972,855
(1) In November 2018, Sipa raised $1.5m pursuant to an underwritten Share Purchase Plan at a price of $0.0091 per share.
(2) In November 2017, Sipa raised $2m pursuant to an underwritten Share Purchase Plan and placement to exempt investors at a price
of $0.012 per share.
(3) In November 2018, Sipa raised $1.5m pursuant to a placement to exempt investors at a price of $0.0091 per share.
(4) In February 2019 and May 2019 Sipa raised $450k and $820k respectively pursuant to placements to Rodiv (NSW) Pty Ltd, a
substantial shareholder of the Company. The price per share was $0.0086 and $0.0067 respectively.
(5) In May 2018 Sipa raised $1.04m pursuant to a placement to exempt investors at a price of $0.01 per share.
Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up of the company, to participate
in the proceeds from the sale of all surplus assets in proportion to the number and amounts paid up on shares held. On a show
of hands one vote for every registered shareholder and on a poll, one vote for each share held by a registered shareholder.
Share Options
There were no options issued during the year ended 30 June 2019 or the year ended 30 June 2018.
Dividends
There were no dividends paid or proposed during the year ended 30 June 2019 (2018: Nil). The amount of franking credits
available to the Company at 30 June 2019 is Nil (2018: Nil).
(b) Equity benefits reserve
This reserve is used to record the value of equity benefits provided to employees and directors as part of their remuneration.
Refer to Note 16 for further detail of the plan.
(c) Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of financial
statements of foreign controlled entities.
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
47
15. Contributed Equity and Reserves (continued)
Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so as to
maintain a strong capital base sufficient to maintain future exploration and development of its projects. In order to maintain or
adjust the capital structure, the Group may return capital to shareholders, issue new shares or sell assets to increase cash. The
Group’s focus has been to raise sufficient funds through equity to fund exploration and evaluation activities. The Group monitors
capital on the basis of the net working capital. There are no external borrowings as at balance date.
The Group manages shareholder equity of $3,856,203 (2018: $2,592,242) as capital in light of changes in economic conditions
and the requirements of the business with respect to exploration commitments, approved programs, and net working capital
There were no changes in the Group’s approach to capital management during the year. Risk management policies and
procedures are established with regular monitoring and reporting.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
16. Share Based Payment Plans
Sipa Resources Employee Share Option Plan
The LTI grants are delivered through participation in the Sipa Resources Employee Share Option Plan 2015, as approved by
shareholders at the Annual General Meeting held 15 November 2018. The value of the LTI grants made under the plan will
be made with reference to a set percentage of Base Salary with Executives’ performance assessed against pre-determined
performance hurdles. The performance hurdles are a combination of market (share price based) and non-market (internal)
hurdles to optimise share performance against exploration targets, the annual operating budget, successful communication with
stakeholders, improved access to capital markets, stock liquidity and register profile. The threshold levels are suitably stretched
to be consistent with the objectives of the LTI plan.
Subsequent to year end, shareholders approved the consolidation of the Company’s issued capital by consolidating (ie
converting) every 12 existing Shares into one New Share. The amounts below are pre-consolidation.
(i) Options outstanding and movements in share options during the year
2019
Grant date
Expiry date
Exercise
price
Balance at start
of year
Issued
during year
Exercised
during year
Lapsed/
cancelled
during year
Balance at
end of year
Exercisable at
end of year
1/9/16
1/9/16
31/8/21
11 cents
1,575,000
31/8/21
11 cents
3,084,000
19/12/16 18/12/21
6 cents
19/12/16 18/12/21
6 cents
6,201,000
5,889,000
16,749,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,575,000
3,084,000
6,201,000
5,889,000
16,749,000
–
–
–
–
–
The share based payments expense recognised for the above options during the period was $59,689. There were no options
issued during the year ended 30 June 2019.
2018
Grant date
Expiry date
Exercise
price
Balance
at start of year
Issued
during year
Exercised
during year
Lapsed/
cancelled
during year
Balance at
end of year
Exercisable at
end of year
1/9/16
1/9/16
31/8/21
11 cents
1,575,000
31/8/21
11 cents
3,084,000
19/12/16 18/12/21
6 cents
11,700,000
19/12/16 18/12/21
6 cents
10,800,000
27,159,000
–
–
–
–
–
–
–
–
–
–
–
–
1,575,000
3,084,000
5,499,000
6,201,000
4,911,000
5,889,000
10,410,000
16,749,000
–
–
–
–
–
The share based payments expense recognised for the above options during the period was $77,068. There were no options
issued during the year ended 30 June 2018.
48
Sipa Resources Limited 2019 Annual Report
Notes to the Financial Statements
16. Share Based Payment Plans (continued)
(ii) Options exercised
No options were exercised during the financial years ended 30 June 2019 and 30 June 2018.
(iii) Weighted average remaining contractual life
The weighted average remaining contractual life for the share options outstanding as at 30 June 2019 is 2.4 years
(2018: 3.5 years).
17. Loss Per Share
Basic loss per share amounts are calculated by dividing the net loss for the year attributable to ordinary equity holders of the
Company by the weighted average number of ordinary shares outstanding during the year.
Diluted loss per share amounts are calculated by dividing the net loss attributable to ordinary equity holders of the Company
adjusted for the weighted average number of ordinary shares outstanding during the year plus the weighted average number
of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted loss per share computations:
Consolidated
2019
2018
Net loss attributable to the ordinary equity holders of the Company
(2,833,062)
(3,075,066)
Weighted average number of ordinary shares before the Placement
1,200,621,023
929,954,296
Adjustment for dilutive effects of Placement and SPP
Share Options exercised
Weighted average number of ordinary shares on issue
244,944,392
158,438,624
–
–
1,445,565,415 1,088,392,920
The Nil options (2018: Nil) are considered to be potential ordinary shares and have not been included in the determination
of diluted earnings per share as they are anti- dilutive for the periods presented. Details relating to the options are set out in
Notes 15 and 16.
18. Reconciliation of Loss to Net Cash Flows from Operations
Net Loss
Depreciation of plant and equipment
Loss/(gain) on revaluation of available for sale financial assets
Foreign exchange (gain)/loss
Share based payments
Changes in assets and liabilities
(Increase)/Decrease in trade and other receivables
Decrease in prepayments
Increase in provisions
Increase in deferred joint venture contributions
Increase/(Decrease) in trade and other payables
Net cash flow used in operating activities
(2,833,062)
(3,075,066)
77,572
1,300
(26,514)
59,689
(8,252)
6,666
24,254
323,031
61,264
(1,500)
1,442
77,068
33,051
888
54,118
–
58,196
(158,129)
(2,317,120)
(3,006,864)
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
49
19. Related Party Disclosure
The consolidated financial statements include the financial statements of Sipa Resources Limited and the subsidiaries listed in the
following table:
Name
Sipa Gold Limited
Sipa Copper Pty Ltd
Sipa Resources (1987) Limited
Sipa Exploration NL
Sipa Management Pty Ltd
Sipa – Gaia NL
Ashling Resources NL
Topjest Pty Limited
Sipa –Wysol Pty Ltd
Sipa East Africa Pty Ltd
SiGe East Africa Pty Ltd#
Sipa Exploration Uganda Limited
Sipa Resources Tanzania Limited#
# Application for winding up is pending.
20. Key Management Personnel Disclosures
Equity Interest
Country of
Incorporation
2019
%
2018
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Uganda
Tanzania
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Name
T Kennedy
L Burnett
K Field
C McGown
T Robson
Position
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Term as KMP
Full financial year
Full financial year
Full financial year
Full financial year
Chief Financial Officer and Company Secretary
Full financial year
Compensation by Category: KMP
Short-term employee benefits
Post employment benefits
Share based payments
Other long term benefits
Other transactions with KMP
There were no other transactions with KMP during the current year.
Consolidated
2019
$
2018
$
651,838
678,427
61,924
41,492
10,648
64,450
57,365
21,472
765,902
821,714
50
Sipa Resources Limited 2019 Annual Report
Notes to the Financial Statements
21. Commitments for Expenditure
(a) Operating Lease – Group as Lessee
The Company has obligations under the terms of the lease of its office premises for a term of 2 years from 1 May 2018. Lease
payments are payable in advance by 12 equal monthly instalments due on the 1st day of each month. Under the lease agreement
the lessee provides for a rent review based on CPI each anniversary date.
Due not later than one year
Due later than one year and not later than five years
Consolidated
2019
$
70,870
–
2018
$
83,440
71,263
70,870
154,703
(b) Exploration Expenditure Commitments
The consolidated entity has minimum statutory commitments as conditions of tenure of certain mining tenements. In addition
it has commitments to perform and expend funds towards retaining an interest in formalised agreements with partners. If
all existing areas of interest were maintained on the terms in place at 30 June 2019, the Directors estimate the minimum
expenditure commitment for the ensuing twelve months to be $1,340,045 (2018: $1,161,721). However the Directors consider
that the actual commitment is likely to be less as these commitments are reduced continuously for such items as exemption
applications to the Department of Geological Survey and Mines, Uganda and the Department of Mines and Petroleum, Western
Australia, withdrawal from tenements, and other farm-out transactions. In any event these expenditures do not represent
genuine commitments as the ground can always be surrendered in lieu of payment of commitments. This estimate may be varied
as a result of the granting of applications for exemption.
(c) Commitment to Controlled Entities
The Company has advised its controlled entities that it will continue to provide funds to meet those entities’ working capital
requirements for at least the next twelve months.
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
51
22. Segment Information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Managing Director.
All of Sipa Resources Limited’s subsidiaries are wholly owned. The Group has two reportable segments, as described below,
which are the Group’s strategic business units. The business units are managed separately as they require differing processes and
skills. The Managing Director reviews internal management reports on a monthly basis.
Segment Financial Information for the year ended 30 June 2019 is presented below:
Revenue from continuing operations
353,471
–
42,753
396,224
Year to
30 June 2019
Uganda
$
Year to
30 June 2019
Australia
$
Year to
30 June 2019
Unallocated
$
Year to
30 June 2019
Consolidated
$
Other income
Exploration expenditure
Administrative and other expenses
Segment profit/(loss) before tax
Current assets
Non-current assets
Exploration and evaluation
Available for sale financial assets
Other financial assets
Property, plant and equipment
TOTAL ASSETS
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Capital expenditure
–
238,547
5,400
243,947
99,367
(2,204,718)
–
(2,105,351)
–
–
(1,367,882)
(1,367,882)
452,838
(1,966,171)
(1,319,729)
(2,833,062)
480,533
581,037
–
–
17,621
1,079,191
391,913
–
391,913
687,278
8,155
–
–
–
–
–
–
–
–
–
–
–
3,549,491
4,030,024
–
581,037
1,700
21,770
1,700
21,770
131,274
148,895
3,704,235
4,783,426
502,006
893,919
33,304
33,304
535,310
927,223
3,168,925
3,856,203
20,631
28,786
52
Sipa Resources Limited 2019 Annual Report
Notes to the Financial Statements
22. Segment Information (continued)
Segment Financial Information for the year ended 30 June 2018 is presented below:
Revenue from continuing operations
Other income
Exploration expenditure
Year to
30 June 2018
Uganda
$
Year to
30 June 2018
Australia
$
Year to
30 June 2018
Unallocated
$
Year to
30 June 2018
Consolidated
$
–
–
–
323,748
34,596
40,996
34,596
364,744
(609,748)
(1,545,405)
–
(2,155,153)
Administrative and other expenses
–
–
(1,319,253)
(1,319,253)
Segment loss before tax
Current assets
Non-current assets
Exploration and evaluation
Available for sale financial assets
Other financial assets
Property, plant and equipment
TOTAL ASSETS
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Capital expenditure
23. Financial Risk Management
(609,748)
(1,221,657)
(1,243,661)
(3,075,066)
111,578
581,037
–
–
16,737
709,352
90,670
–
90,670
618,682
–
–
–
–
–
–
–
–
–
–
–
–
2,200,853
2,312,431
–
581,037
3,000
21,770
3,000
21,770
179,009
195,746
2,404,632
3,113,984
404,682
495,352
26,390
26,390
431,072
521,742
1,973,560
2,592,242
7,051
7,051
Overview
This note presents information about the Company’s and Group’s exposure to credit, liquidity and market risks, their objectives,
policies and processes for measuring and managing risk, and the management of capital.
The Company and the Group does not use any form of derivatives as it is not at a level of exposure that requires the use of
derivatives to hedge its exposure. Exposure limits are reviewed by management on a continuous basis. The group does not enter
into or trade financial instruments, including derivative financial instruments, for speculative purposes.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
Management monitors and manages the financial risks relating to the operations of the group through regular reviews of the
risks.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s cash and cash equivalents and trade and other receivables.
Cash and cash equivalents
The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have an
acceptable credit rating. Cash is held with recognised financial institutions with AA long term credit rating for Australian
banks and B+ for Uganda.
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
53
23. Financial Risk Management (continued)
Trade and other receivables
As the Group operates primarily in exploration activities, its trade receivables are limited to interest receivable and other minor
advances therefore reduces the exposure to credit risk in relation to trade receivables. At the reporting date there were no
significant concentrations of credit risk.
Other receivables consist primarily of GST refundable from the ATO and interest due on the Group’s term deposits. Given the
acceptable credit ratings of both parties, management does not expect any either party to fail to meet its obligations.
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure
to credit risk at the reporting date was:
Cash and cash equivalents
Term deposits secured
Trade and other receivables
Other financial assets
Consolidated
2019
$
2018
$
3,911,912
2,195,905
30,000
42,488
21,770
30,000
34,236
21,770
4,006,170
2,281,911
Impairment losses
None of the Group’s other receivables have expected credit losses (2018: nil).
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate cash reserves from funds raised in the market and by continuously
monitoring forecast and actual cash flows. The Group does not have any external borrowings.
The following are the contractual maturities of financial liabilities, including estimated interest payments (undiscounted) and
excluding the impact of netting agreements:
Consolidated
30 June 2019
Trade and other payables
30 June 2018
Trade and other payables
Carrying
amount
Contractual
cash flows
6 mths
or less
350,707
350,707
350,707
350,707
350,707
350,707
292,511
292,511
292,511
292,511
292,511
292,511
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.
54
Sipa Resources Limited 2019 Annual Report
Notes to the Financial Statements
23. Financial Risk Management (continued)
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in
foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s
exploration activities (when exploration and administration expense is denominated in a foreign currency, namely US Dollars and
Ugandan Shillings) and the Group’s net investments in foreign subsidiaries.
Surplus funds are held primarily in Australian Dollars with the Group ensuring that its net exposure is kept to an acceptable level
by buying or selling foreign currencies at spot rates when necessary to address short-term requirements. As such the exposure
to foreign exchange rate changes is not considered material for the group.
Interest rate risk
The Group is exposed to interest rate risk (primarily on its cash and cash equivalents), which is the risk that a financial
instrument’s value will fluctuate as a result of changes in the market interest rates on interest-bearing financial instruments.
The Group does not use derivatives to mitigate these exposures.
The Group adopts a policy of ensuring that as far as possible it maintains excess cash and cash equivalents in short term deposit
at interest rates maturing over 90 day rolling periods.
Profile
At the reporting date the Group had the following mix of financial assets held at Australian Fixed and Floating interest rates.
There were no financial liabilities exposed to interest rate risk.
Floating rate instruments
Cash and cash equivalents
Fixed rate instruments – No interest rate risk
Term deposits secured
Consolidated
2019
$
2018
$
3,911,912
2,195,905
3,911,912
2,195,905
30,000
30,000
30,000
30,000
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, Therefore a
change in interest rates for financial instruments with short term maturity at the reporting date would not affect the carrying
amount or profit or loss.
Cash flow sensitivity analysis for variable rate instruments
The Group’s exposure to variable rate instruments is in cash and cash equivalents. A 100 basis point favourable and unfavourable
change in interest rates will affect comprehensive income by $39,119 and $(39,119) (2018 $21,595 and $(21,595)) respectively.
Fair values
Fair values versus carrying amounts
Due to their short term nature, the carrying amounts of receivables, including security deposits, and payables approximate fair
value. Refer Note 8 for fair value disclosures relating to available for sale investments.
Commodity Price Risk
The Group operates primarily in the exploration and evaluation phase and accordingly the Group’s financial assets and liabilities
are not subject to commodity price risk.
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
55
24. Auditors’ Remuneration
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
PwC Australia
Audit and review of financial statements
Other assurance services
Taxation services
Other firms
Audit and review of financial statements
Total Auditors’ remuneration
Consolidated
2019
$
2018
$
52,200
10,200
–
42,000
–
–
62,400
42,000
9,979
9,979
6,754
6,754
72,379
48,945
25. Contingent Assets and Liabilities
In February 2015, the Company completed the sale of the Thaduna project to Sandfire Resources Ltd (Sandfire) for $2 million
worth of Sandfire shares and a 1% Net Smelter Royalty. Under the terms of the Agreement, Sandfire acquired the entire legal
and beneficial interest in E52/1673, E52/1674, E52/1858, E52/2356, E52/2357, and E52/2405 including the rights and benefits
which Sipa is entitled to under heritage agreements and native title contracts, and all mining information which is relevant to the
Tenements. No asset (related to the royalty) has been recognised as it is not probable at 30 June 2019 that economic benefits
will be received by the company.
During the year ended 30 June 2013 the Panorama Exploration Project Joint Operation partners (Sipa 40% - CBH Resources
Limited 60%) sold the Kangaroo Caves Mining Lease (ML45/587) and regional exploration tenements (P45/2607, P45/2609-
2614, and P45/2616) to Venturex Resources Limited (Venturex), for the consideration of $2 per dry tonne of all ore mined and
treated by Venturex. No asset has been recognised as it is not probable at 30 June 2019 that economic benefits will be received
by the company.
During the year ended 30 June 2011, Sipa sold its 100% interest in the Ashburton Gold Project to Northern Star Resources
Limited. Under the terms of the agreement, Northern Star will pay Sipa a 1.75% gross royalty on all gold production from
the tenements, except the Merlin tenements, which will earn a 0.75% gross royalty on all gold production from the Merlin
tenements. No asset has been recognised as it is not probable at 30 June 2019 that economic benefits will be received by the
company.
During the year ended 30 June 2005, Sipa sold its interest in the Sulphur Springs Tenements (M45/0494, M45/0653,
M45/1000) to CBH Sulphur Springs Pty Ltd. Under the terms of the agreement, Sulphur Springs Pty Ltd will pay Sipa
$2 per tonne of ore processed from the Sulphur Springs Tenements. CBH Sulphur Springs was sold in 2011 to Venturex
Resources Limited and changed its name to Venturex Sulphur Springs Pty Ltd. No asset has been recognised as it is not probable
at 30 June 2019 that economic benefits will be received by the company.
There are no contingent liabilities of which the Company is aware.
56
Sipa Resources Limited 2019 Annual Report
Notes to the Financial Statements
26. Information Relating to Sipa Resources Limited
Current assets
Total assets
Current liabilities
Total liabilities
Retained earnings
Total equity
Loss of the parent entity
Total comprehensive loss of the parent entity
Details of any contingent liabilities of the parent entity
Details of any contractual commitments by the parent entity for the acquisition of property, plant
or equipment
2019
$
2018
$
3,556,641
1,987,944
3,558,352
1,990,956
(381,432)
(381,432)
–
–
(109,225,169)
(106,319,820)
3,176,921
1,990,956
2,568,286
2,688,675
2,568,286
2,688,675
NIL
NIL
NIL
NIL
The Company has advised its controlled entities that it will continue to provide funds to meet those entities’ working capital
requirements for at least the next twelve months.
27. Events Subsequent to Balance Date
There has not been any matter or circumstance, other than that referred to in the financial statements or notes thereto, that
has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the
consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years
except as follows:
On 23 July 2019 shareholders of the Company approved the consolidation of the Company’s issued capital by consolidating
(ie converting) every 12 existing Shares into one New Share (Consolidation). As a result the issued capital of the Company is
as follows:
Shares
Options (expiring 31 Aug 2021)
Options (expiring 18 Dec 2021)
Pre Consolidation
Post Consolidation
1,707,295,911
142,276,581
4,659,000 exercise price $0.11
388,250 exercise price $1.32
12,090,000 exercise price $0.06
1,007,501 exercise price $0.72
At the same meeting shareholders also approved 3 resolutions relating to the ratification of the three placements during the year.
The effect of the ratification is to restore the Company’s maximum discretionary power to issue further Shares up to 15% of the
issued capital of the Company without requiring Shareholder approval (Listing Rule 7.1) and to restore the Company’s maximum
discretionary power to issue further Shares up to 10% of the issued capital of the Company without requiring Shareholder
approval (Listing Rule 7.1A).
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
57
Directors’ Declaration
for the year ended 30 June 2019
In accordance with a resolution of the directors of Sipa Resources Limited, I state that:
In the opinion of the directors:
a. the financial statements and notes of the consolidated entity for the financial year ended 30 June 2019 are in accordance
with the Corporations Act 2001, including:
i. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019 and of its performance for the
year ended on that date; and
ii. complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001;
b. the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2; and
c. subject to the matters set out in Note 2.1, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
d. this declaration has been made after receiving the declarations required to be made to the Directors in accordance with
section 295A of the Corporations Act 2001 for the financial year ending 30 June 2019
On behalf of the Board
L M Burnett
Managing Director
PERTH, WESTERN AUSTRALIA
DATED: 26 September 2019
58
Sipa Resources Limited 2019 Annual Report
Independent Auditor’s Report
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
59
60
Sipa Resources Limited 2019 Annual Report
Independent Auditor’s Report
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
61
62
Sipa Resources Limited 2019 Annual Report
Independent Auditor’s Report
pwc
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/an.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 22 to 27 of the directors' report for the
year ended 30 June 2019.
In our opinion, the remuneration report of Sipa Resources Limited for the year ended 30 June 2019
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Helen Bathurst
Partner
Perth
26 September 2019
for the year ended 30 June 2019 Sipa Resources Limited 2019 Annual Report
63
Additional Statutory Information
as at 25 September 2019
The following information is provided in accordance with the listing requirements of the ASX Limited. All information is current as
of 25 September 2019 unless otherwise noted.
1. Substantial holders
The names of substantial shareholders who have notified the company in accordance with section 671B of the Corporations Act
2001 are:
Name
Rodiv NSW P/L
Continue reading text version or see original annual report in PDF format above