A N N UA L
R E P O R T
2 0 2 0
Unit 5, 12-20 Railway Road
Subiaco Western Australia 6008
+ 61 (0)8 9388 1551
Sipa Resources Limited
Sipa Resources Limited
ABN 26 009 448 980
SIPA RESOURCES LIMITED
ABN 26 009 448 980
CORPORATE DIRECTORY
for the year ended 30 June 2020
DIRECTORS
Tim Kennedy B.App Sc (Geology), MBA, MAusIMM, MGSA (Non-Executive Chairman)
Pip Darvall MSc (Geology), MBA (Managing Director since 1 February 2020)
Karen Field B Ec, FAICD (Non-Executive Director)
Craig McGown BComm, FCA, ASIA (Non-Executive Director)
John Forwood B.Sc (Hons) LlB (Hons) (Non-Executive Director) (Appointed 10 July 2020)
COMPANY SECRETARY
Tara Robson BA (Accounting), CPA (USA)
REGISTERED OFFICE
Unit 5, 12-20 Railway Road
SUBIACO WA 6008
Telephone
(08) 9388 1551
AUDITORS
PwC
Level 15 Brookfield Place
125 St Georges Terrace
PERTH WA 6000
SHARE REGISTRY
Computershare
Level 11
172 St Georges Terrace
PERTH WA 6000
Enquiries (within Australia) 1300 850 505
(outside Australia) 61 3 9415 4000
www.investorcentre.com/contact
WEBSITE
www.sipa.com.au
TableTable
of contents
of contents
Chairman’s Letter
Review of Operations
FINANCIAL REPORT
Board of Directors
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information
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Annual Report 2020 – Page 1
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
CHAIRMAN’S LETTER
. . . our emerging 100% owned projects in Western
. . . our emerging 100% owned projects in Western
Australia, the coming year is shaping up to be one of
Australia, the coming year is shaping up to be one of
very active exploration for Sipa . . .
very active exploration for Sipa . . .
Dear Fellow Shareholder
I am pleased to report on what has been
a year of challenge and transformation for
Sipa. The COVID-19 pandemic has tested
us as it has most companies however,
through quick action and judicious use
of resources, the company remains in a
strong position.
Over the year the company made
significant headway on a number of
fronts. Exploration progressed at both
of our most advanced projects being the
Paterson North Cu-Au project adjacent
to Rio Tinto’s recent Winu discovery in
the Pilbara and the Kitgum-Pader Ni-
Cu project in Northern Uganda, and
exploration commenced on the Wolfe
Basin base metal project in the Kimberley
Region. Target generation activities had
an increased focus on gold and resulted
the company securing two new 100%
owned gold projects in Western Australia.
At the Paterson North project the
Company undertook a regional airborne
electromagnetic survey (AEM) to
provide a rapid first pass screen of
areas prospective for Winu style copper-
gold mineralisation. Follow-up drill
testing resulted in a major expansion
of the Obelisk copper footprint, as
well as identifying two new zones of
mineralisation at the Dorado and Donut
Prospects.
Subsequent to year-end, a competitive
process resulted in Rio Tinto entering
the project via a farm-in and joint venture
agreement in order to accelerate
exploration. In addition to having
substantial financial resources, Rio Tinto
have a strong operational presence and
technical expertise in the area which
will be of great benefit in unlocking the
potential of the project.
The first half of the year saw a high level
of activity by joint venture partner Rio
Tinto at the Kitgum Pader Nickel-Copper
project in Uganda. Regional prospect
areas were advanced via detailed gravity
surveys and selective follow-up drilling,
while further drilling at the Akelikongo
Page 2 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited discovery expanded the lateral footprint
and down plunge extent of mineralisation.
Mineralisation now extends over a strike
length of 1.5km and remains open down-
plunge to the north west. Early in 2020
Rio Tinto withdrew from the joint venture
and Sipa retains 100% ownership of this
significant project. The key target area
in this project, namely the down-plunge
extent of the mineralised chonolith at
Akelikongo remains open and requires
further drill testing. Sipa is currently
seeking a new partner to advance the
project to test this and other target areas.
The current COVID-19 travel restrictions
have inhibited interested parties from
undertaking site inspections and in the
meantime the project has been placed
on care and maintenance to minimize
holding costs.
Initial exploration at the Wolf Basin
Project in the Kimberley Region of
Western Australia, where Sipa is
targeting sediment-hosted base
metal mineralisation based on an
African Copper-belt model, has located
extensive gossanous horizons (the
weathered surface remains of sulphide
mineralisation). Our team has completed
a heritage survey to facilitate first pass
drill testing later in 2020.
on our suite of exploration projects
without the need to raise additional
capital in a time of market weakness.
The Barbwire Terrace Zinc project in the
Fitzroy Trough area of Western Australia,
while challenging from a fieldwork
perspective, has very strong potential
for discovery of significant MVT-type
mineralisation similar to the historic Pillara
and Cadjebut mines to the north. The
company has refined the target areas
over the past year and subsequent to year
end entered into a mineral exploration
alliance with Buru Energy Limited, an
oil and gas explorer with interests in
the region. Sipa partnered with Buru
because of their sophisticated basin
models covering the Fitzroy Trough which
have the potential to rapidly define areas
of highest potential for the discovery
of basemetal mineralisation. This
collaboration typifies Sipa’s innovative
approach to exploration.
During the year, our project generation
team undertook a strategic review of the
project portfolio with the focus being
on advancing projects in which Sipa
can cost effectively add value through
innovative exploration. This resulted in the
relinquishment of early stage projects in
Queensland and South Australia due to
access constraints.
New 100% owned projects secured
during the year including the Warralong
gold project in the northern Pilbara
targeting “Hemi-style” intrusive related
gold mineralisation along a largely
unexplored regional shear zone, and
the Skeleton Rocks Project in the
Southern Cross district of WA covering
interpreted shallowly buried greenstone
belts prospective for both gold and
nickel-copper mineralisation. First pass
reconnaissance style exploration has
commenced on both of these projects
and will be accelerated once tenements
are granted.
On the corporate front, this year was
marked by the arrival of our new
Managing Director Pip Darvall. Since
starting with Sipa in a very challenging
period for the industry, Pip has wasted no
time in ensuring our costs are minimized
while our exploration efforts focused on
projects with the greatest potential to
add value to the company. The strategic
sale of our royalty portfolio meant that we
were able to make meaningful progress
Shortly after the end of the financial
year we were very pleased to welcome
John Forwood to the Sipa Board to fill
the vacancy to be left by Karen Field
who has advised her intention to step
down at the 2020 AGM. John’s unique
blend of technical, legal and investment
experience in the junior resources sector
and extensive domestic and international
networks will be a valuable asset to the
Company as we focus on unlocking the
potential of our project portfolio. I would
like to take this opportunity, on behalf of
my fellow directors, to thank our outgoing
director, Karen Field, for tireless efforts
on behalf of the Company. Karen’s wise
counsel provided over many years has
proved invaluable to both myself and the
other directors. Karen will depart with our
gratitude and best wishes.
With the Paterson North Joint Venture
now having significant funding through
joint venture partner Rio Tinto, the
exploration programs planned for our
emerging 100% owned gold projects in
Western Australia and activity planned for
Barbwire Terrace through our collaboration
with Buru Energy, the coming year is
shaping up to be one of very active
exploration for Sipa. We look forward to
reporting our progress.
In closing I would like to thank our
dedicated team lead by Pip Darvall
and the various stakeholders that
have assisted our efforts over the
year including our contractors, the
Western Australian Government, local
communities and of course our loyal
shareholders.
Tim Kennedy
Chairman
Annual Report 2020 – Page 3
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited REVIEW OF OPERATIONS
Introduction
During the year Sipa has continued to take advantage of its strengths in early
stage generative work within Western Australia while focusing on projects that
are able to be cost effectively explored.
Identification and securing of several new projects has been completed and is part of our ongoing project generation efforts.
Identification and securing of several
new projects has been completed
and is part of our ongoing project
generation efforts. Additionally, we have
commenced significant efforts to test
and de-risk the projects where possible
during the application and grant process
which enables Sipa to commence value
adding work as soon as grant occurs.
This process also allows decisions to be
made on whether early stage ideas have
sufficient merit to continue towards grant
or to withdraw applications to conserve
cash resources. By this process the
Company is able to rapidly cycle through
large numbers of projects and move on
if there are no positive indications of
exploration potential.
Page 4 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited Warralong Gold Project
100% Sipa
Sipa’s Warralong project covers more than
50km of the Lalla Rookh Shear Zone in a
‘look-alike’ tectonic and geological setting
to the recent discoveries by De Grey
Mining Limited (‘De Grey’, ASX release 25
March 2020) which lie on the sub-parallel
Tabba Tabba Shear Zone (Figure 1). Since
noticing the similarities in geological
setting Sipa has expanded its ground
position to five tenements covering over
1000 km2 of prospective rocks.
The opportunity at the Warralong project
is discovery of intrusion-hosted gold (and
potentially other deposit styles) along
a significant structure that is relatively
unexplored. The Tabba Tabba Shear Zone
and its extensions form a major crustal
structure that has acted as a conduit for
mineralising fluids and intrusive bodies
resulting in several mineral deposits
along its length. From west to east
these include the Indee Gold Camp, Mt
Dove, an iron deposit mined by Atlas
Iron Limited, the Hemi gold discovery
and others identified by DeGrey, and the
Tabba Tabba lithium-tantalum pegmatites
(Figure 1).
In contrast the sub-parallel Lalla
Rookh Shear Zone and associated
splay structures now covered by Sipa
tenements are largely obscured under
shallow cover and therefore relatively
unexplored, in particular for the new
style of intrusion related mineralisation
identified by DeGrey. The tenements
are progressing through the native title
and granting processes. While grant
is awaited, Sipa has been undertaking
work to progress the project as much as
possible and generate drill targets via a
range of activities.
Field reconnaissance programs to the
project have enabled Sipa to trial different
options for sampling through the shallow
cover blanketing the area. Public domain
geophysical data was also acquired
and reprocessed at nominal cost with
the re-processed magnetics showing
numerous features interpreted as younger
intrusions, and previously unrecognized
greenstone units in basement rocks.
Further work will be undertaken to
test their validity as drill targets using
recently acquired detailed aeromagnetics
in combination with additional stream
sediment samples.
Figure 1:
Sipa’s Warralong project tenure over the Lalla Rookh Shear Zone in comparison to DeGrey Mining Limited’s tenure and key
mineral deposits located along the Tabba Tabba Shear Zone.
Annual Report 2020 – Page 5
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
REVIEW OF OPERATIONS
Wolfe Basin Base Metals Project
100% Sipa
Sipa’s Wolfe Basin project covers
approximately 780km2, and is located
80km south of Halls Creek in the
Kimberley region of Western Australia.
Exploration at Wolfe Basin is primarily
targeting sediment-hosted base metals,
with strong support of the mineralisation
model coming from the identification of
two outcropping ironstone, lead-zinc rich
gossans. The prospective horizon has a
strike length of over 80km within Sipa’s
tenement package (Figure 2), and prior
to Sipa’s work had not been the focus of
any previous documented exploration or
drilling.
During the year, two programs of soil
sampling and field reconnaissance
were undertaken with several areas
of anomalous geochemistry and two
gossans identified. Both gossans
are located in identical structural and
stratigraphic settings along the target
Figure 2:
Sipa’s Wolfe Basin project over the
regional magnetic image, showing
the locations of the identified gossans
along the target horizon.
horizon, highlighting the prospectivity of
the unit across the broader project area.
Both gossans sit immediately above a
thick sandstone unit adjacent to east-
west trending, sub-vertical faults and are
logical targets for drill testing. Drilling
is planned for October, and will be very
cost effective with up to 50% of the
direct drilling costs to be covered by a
successful Exploration Incentive Scheme
‘EIS’ application.
Page 6 – Annual Report 2020
The nearby Wolfe Creek Meteorite Crater (Kandimalal)
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited Paterson North Copper-Gold Project
Rio Tinto Joint Venture
The Paterson North Copper-Gold Project
is located in the Paterson Province of
Western Australia, recently the subject of
significant exploration activity following
the discovery by Rio Tinto of the Winu
copper-gold deposit, approximately 10km
to the south west of Sipa’s landholding,
(Figure 3).
Sipa’s project consists of the Great
Sandy JV where Sipa has now earned
an 89% interest under a Farm-in and
JV agreement with Ming Gold Limited
(Ming), and a further tenement held
100% by Sipa (Figure 3). During the year
Sipa completed 26 aircore holes testing a
series of targets arising from geophysical
modelling of the SkyTEM airborne electro-
magnetic (EM) survey conducted earlier in
2019. Strongly anomalous coper and gold
returned in several drill holes doubled the
size of the known mineralised footprint
at Obelisk, and identified additional zones
of mineralisation at Obelisk Northeast,
Dorado and Donut prospects.
Subsequent to year end Sipa announced
it had entered into a Farm In and
Joint Venture Agreement with Rio
Tinto Exploration (RTX) to fund further
exploration on the tenements. Key terms
of the FJVA with RTX are summarised
below:
• Minimum expenditure commitment
of A$3 million on the Project within
the first 2.5 years, including at
least 4,000m of drilling. The work
programme is expected to principally
comprise a combination of geophysics
and drilling to generate, refine and test
target areas of interest, with several
key target areas already identified.
Details of the programme will be
announced when finalised.
• Following satisfaction of the minimum
expenditure commitment, RTX has the
option to sole fund a three-stage earn-
in comprising:
– A further A$3 million of exploration
expenditure to earn an initial 55%
Figure 3:
Sipa’s Paterson North tenements in
the Paterson region showing other
key landholdings.
interest in the Project, representing
total expenditure, including the
minimum commitment amount,
of A$6 million (Stage 1) required
within 4.5 years. Once Stage 1 is
completed a Joint Venture will be
formed;
– Following completion of Stage 1,
RTX will have the right to earn a
further 15% interest in the Project
(i.e. to 70% total interest), by sole
funding an additional A$6 million
of exploration expenditure within a
further 3-year period, representing
total expenditure of A$12 million
(Stage 2);
– Following completion of Stage
2, RTX will have the right to earn
an additional 10% interest in
the Project (i.e. to an 80% total
interest) by sole funding exploration
expenditure to the earlier of:
Definition of total JORC Mineral
Annual Report 2020 – Page 7
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
REVIEW OF OPERATIONS
Resources on the Project with an
in-situ value equivalent of at least
A$1 billion; or
Completion of an Order of
Magnitude study in respect of
mineral deposit(s) defined on
the tenements, being an initial
study that defines the extent
and critical parameters of a
Mineral deposit and the potential
for development of a mining
operation in relation to such
Mineral deposit (Stage 3).
• After the Joint Venture in relation to
the Project is formed and RTX is no
longer sole funding, the parties will be
responsible for contributing to Joint
Venture expenditure in proportion to
their participating interest or otherwise
be subject to industry standard
dilution of their interest. If a party’s
Joint Venture interest falls below
7.5%, the other party can elect to
buyout the interest at independently
determined fair market value or the
interest otherwise converts to a net
smelter royalty of 0.5% on the first 5
years after first commercial production
(in respect of E45/3599, E45/4697,
E45/5335 and E45/5336) and 1.0% on
the first 10 years after first commercial
production (in respect of E45/5337).
• RTX will also subscribe to A$250,000
worth of Sipa shares @ A$0.10 per
share, representing a 14% premium to
the 10-day volume weighted average
price.
Page 8 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
Barbwire Terrace Zinc-Lead-Silver Project
Buru Energy Joint Venture
The Barbwire Terrace Project was
generated by Sipa in 2019 targeting
base metal deposits in similar carbonate
sequences to those of the highly
mineralised Lennard Shelf, a premier
global MVT zinc-lead province. The
Lennard Shelf and the Barbwire Terrace
comprise the northern and southern
margins respectively of the Fitzroy Trough
(Figure 4).
The vast area of the Barbwire Terrace
region has been tested by only 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 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 northeast 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 southwest
margin of the Trough. Two significant
northwest trending fault corridors and
the adjacent stratigraphy are prime target
areas for mineralisation.
The target Devonian carbonate units
are overlain by younger siltstones and
sandstones, with the depth of cover
based on existing drilling ranging from
85m to ~480m. 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, and
has been enhanced by our recently
announced joint venture with Buru Energy
Limited, an experienced petroleum
explorer in the Canning Basin.
Figure 4:
Location and Geology of
Devonian Carbonate hosted
zinc-lead mineralisation, and
the Lennard Shelf deposits
with Sipa’s Barbwire Terrace
tenements.
Annual Report 2020 – Page 9
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
REVIEW OF OPERATIONS
Uganda Nickel-Copper Project
Sipa 100%
Sipa’s 100% owned Uganda Nickel-
Copper Project is prospective for intrusive
hosted nickel-copper sulphide deposits,
and contains a nickel-copper sulphide
discovery made by Sipa in 2015 at
Akelikongo. Both Akelikongo and the
nearby Akelikongo West prospect 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.
From August 2018 to April 2020
exploration on the project was managed
by Sipa under the terms of an Earn-in
and Joint Venture Agreement (‘JV’) with
Rio Tinto plc (‘Rio’). Rio subsequently
withdrew from the project on April 30
2020, by which time US$4.5M had been
expended by the joint venture.
During the year a range of activities were
managed by Sipa on behalf of the JV. At
the Akelikongo prospects these included
downhole EM and AMT (Audio Magneto
Telluric) surveys subsequently integrated
with existing gravity data sets to provide
new targets. These targets were tested
by an 8-hole diamond drill program, with
5 of the eight holes intersecting new
magmatic sulphide zones.
Significant intercepts from the program
included 31.7m @ 0.29% Ni, 0.1% Cu in
AKD029 with a semi-massive to massive
sulphide zone at the base assaying 5.47m
@ 0.72% Ni, 0.20% Cu. (ASX release
31 January 2020). The AK029 intercept
extends mineralisation a further 150m
down-plunge for a total extent now
identified of 1.5km, In the same program
additional new mineralised zones were
identified within the broader prospect
area at Akellikongo East and Akelikongo
West (Figure 5).
Figure 5:
Summary of significant results received from the 2019 diamond drill program.
Page 10 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
Assay results from AKD028, located a
further 600m along strike from AKD029,
highlight the presence of a new, near-
surface fertile ultramafic intrusion with an
intercept of 0.7m @ 0.49% Ni, 0.05% Cu
and 0.01% Co from 19.8m within massive
sulphides (Figure 5).
These new assay results have several
important implications:
• Mineralisation in the eastern zone at
Akelikongo remains open down-plunge
to the north-west and the footprint of
the known mineralisation now extends
for a strike length of greater than
1.5km (Figure 6).
• The intercept in AKD028 indicates the
presence of a previously unrecognised,
near-surface mineralised intrusion
worthy of follow up work.
• Results from AKD023, AKD024
and AKD025 broaden the overall
mineralised footprint at Akelikongo and
potentially provide additional follow-up
target positions.
• The scale, lithological complexity and
presence of magmatic Ni-Cu sulphides
in most holes drilled continues to
demonstrate the prospectivity of the
Akelikongo intrusive complex.
Subsequent to Rio Tinto’s withdrawal
from the JV, holding costs for the project
have been minimized while an alternative
pathway to fund future exploration is
found. The impact of COVD-19 travel
restrictions and local lockdowns in
Uganda have made the process of finding
funding solutions more difficult.
• Gravity is clearly a very effective
targeting tool at Akelikongo, able to
identify prospective and mineralised
intrusive bodies. The limited coverage
of gravity data around Akelikongo is
therefore something to be addressed
in future, with the major mineralised
gravity anomaly continuing to plunge
to the northwest at the edge of the
survey boundary.
• Down hole EM (DHEM) to potentially
identify further massive sulphides has
yet to be completed on the recently
drilled holes and will be undertaken as
soon as possible.
Figure 6:
3D Long Section view of drilling completed in late 2019 with results, showing the down plunge continuation
of mineralisation at Akelikongo.
Annual Report 2020 – Page 11
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
REVIEW OF OPERATIONS
Social responsibility
Sipa’s long-term success and ability to operate in remote and often challenging environments rely on the relationships we are able to
build with our employees, business partners, governments, non-government organisations, host communities and other stakeholders.
Wherever possible Sipa provides employment opportunities to local people in areas where it operates.
In Uganda, we used local labour to support our extensive ground geophysics, soil sampling, drilling programs and other field activities.
Community meetings and consultations with local leaders and local Government officials are regularly held in all areas where
exploration was about to and taking place. Prior to any field campaign it was explained in public meetings what work was to be
undertaken, what the impacts, if any, would be and the extent of employment opportunities. Parts of the exploration areas are covered
by farms and compensation for any crop damage was paid according to well established local guidelines.
Sipa remains committed to the training and development of employees to improve their
skill base. Local Ugandan nationals were trained and employed as field assistants, and
Ugandan geologists were employed to undertake geological activities including mapping,
sampling, core processing, core logging, supervising geophysical crews and setting up field
operations. The geologists were mentored and trained by Sipa’s senior site personnel and
expert consultants that were engaged from time to time. More experienced staff were
also tasked with managing the field and camp operations when required.
Sipa engaged in a variety of social programs over the years. One long running program is the “Days for Girls” program that continues
to deliver results for the district. The Days for Girls Program aims to keep girls in school post puberty which is the time when girl school
participation drops drastically. By the provision of education and distribution of re-usable sanitary kits the dropout rate was reduced.
The program was recently expanded to include sex education for boys in the same age group. The program has been popular and
supported by the schools, the district education officers and local Government. Since early 2015 Sipa has visited over 50 schools and
distributed over 4500 re-usable sanitary kits.
Mother and baby educational workshops were continued. Several remote villages were targeted and three workshops were also held
in Kitgum together with a local clinic. The workshops were well attended in all cases with 116 young mothers involved.
Access to clean water is an ongoing issue in the district. While many villages do have bores with good quality water, the hand pumps
in many locations fell into disrepair due to pipe corrosion. Together with the district water officers, Sipa embarked on a bore repair
program using a local bore contractor and in-house expertise. Bores needing repair were ranked based on need and those that
supplied or were located near to schools and health centres. Last year 3 bores were repaired and this year a further 6 were completed
in the Pader district. On average, each school bore would provide water to about 1000 children.
Sipa also makes contributions to support community infrastructure and events on a case by case basis. These include the provision of
soccer and netball goal posts, both popular sports that have large community followings.
Royalty Sale
During the year, Sipa sold several Royalty interests and received A$1M in cash and ~A$1.25M in shares in VOX Royalty Corp.
Competent Person Statement
The information in this report that relates to Exploration Results was previously reported in the ASX announcement dated 31 January
2020. The Company is not aware of any new information or data that materially affects the information included in that relevant market
announcement.
Page 12 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited SIPA RESOURCES LIMITED
ABN 26 009 448 980
FINANCIAL REPORT
FOR THE YEAR ENDED
30 JUNE 2020
Annual Report 2020 – Page 13
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited BOARD OF DIRECTORS
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 2020.
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
CHAIRMAN
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 (2 May 2016 – 11
February 2020) and Helix Resources Limited (director since 16
February 2018).
Mr Kennedy was a member of the Nomination and
Compensation Committee from 25 September 2018 – 3 June
2020 at which point it was resolved that the duties of the
Committee shall be undertaken by the entire board.
Mr Kennedy has an interest in 249,863 fully paid ordinary shares
and nil options.
Page 14 – Annual Report 2020
CRAIG McGOWN
NON-EXECUTIVE DIRECTOR
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
(31 May 2018 – present) and is the Chairman of the Harry Perkins
Institute for Respiratory Health.
Mr McGown was a member of the Nomination and
Compensation Committee from 11 March 2015– 3 June 2020
at which point it was resolved that the duties of the Committee
shall be undertaken by the entire board.
Mr McGown has an interest in 374,239 fully paid ordinary shares
and nil options.
PIP DARVALL
MANAGING DIRECTOR
MSc (Geology), MBA, MAIG, MAusIMM
(Managing Director since 1 February 2020)
Mr Darvall most recently served as Managing Director of ASX-
listed explorer Jindalee Resources Limited where he identified,
acquired and defined a significant new lithium resource in the
United States. He was previously the Exploration Manager for
Atlas Iron Limited, where he oversaw the rapid growth in Atlas’
resource base between 2010 and 2014, before starting his own
consultancy company specializing in resource project evaluation
and management.
During the past three years Mr Darvall was a director of Jindalee
Resources Limited from 28 May 2018 to 31 December 2019.
Mr Darvall has an interest in 177,337 fully paid ordinary shares
and 2,000,000 options.
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited KAREN FIELD
INDEPENDENT NON-EXECUTIVE
DIRECTOR
BEc, 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 was the Chair of the Nomination and Compensation
Committee to 3 June 2020 at which point is was resolved that
the duties of the Committee shall be undertaken by the entire
board.
Mrs Field has an interest in 374,238 fully paid ordinary shares
and nil options.
JOHN FORWOOD
INDEPENDENT NON-EXECUTIVE
DIRECTOR
B.Sc (Hons) LlB (Hons)
Independent Non-Executive Director
(Appointed 10 July 2020)
Mr Forwood is a trained geologist and lawyer. He has spent the
past 20 years as specialist resources financier and fund manager,
with Rand Merchant Bank in the UK and Australia, the private
Telluride Fund in Melbourne, and currently as Chief Investment
Officer of the ASX-listed Lowell Resources Fund. He has
extensive knowledge of junior resources equity markets. Prior
to joining RMB Resources in 1998 he worked as an exploration
geologist for North Flinders Mines on IOCG deposits in Tennant
Ck, East African Gold Mines in Tanzania drilling out the North
Mara gold project, and Aberfoyle Limited exploring for porphyry
copper and epithermal gold in Indonesia.
During the past three years Mr Forwood has not served as
a director of any other listed entities. He is a director and
shareholder of the Lowell Resources Funds Management Pty
Ltd, the investment manager for the Lowell Resources Fund, a
listed investment trust.
Mr Forwood has an interest in nil fully paid ordinary shares and
nil options.
LYNDA BURNETT
BSc (Hons) GAICD, MAusIMM, MSEG
Managing Director
(24 July 2014- 31 January 2020)
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.
Mrs Burnett served as a non-executive director of Regis
Resources Limited from 27 November 2019.
At resignation, Mrs Burnett had an interest in 457,571 fully paid
ordinary shares and 648,000 options. The Options were issued
pursuant to the Sipa Resources Employee Share Option Plan and
lapsed on her resignation. Further details are found in Note 16.
COMPANY SECRETARY
TARA ROBSON
COMPANY SECRETARY
FGIA, B.A. Accounting
(Appointed 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.
Annual Report 2020 – Page 15
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited DIRECTORS’ REPORT
DIRECTORS’ ATTENDANCE AT MEETINGS
Eligible to Attend
Directors’ Meetings
Nomination and
Compensation Committee
Number of meetings held
Number of meetings attended
T Kennedy
C McGown
K Field
P Darvall
L Burnett
PRINCIPAL ACTIVITIES
10
10
10
6
5
10
10
10
10
6
5
1
1
1
1
–
1
Sipa is an Australian-based exploration company focused on the discovery of gold and base metal deposits using a combination of
technical excellence, commercial acumen and a structured approach to manage risks.
In Australia, Sipa has an 89% interest in the Paterson North Copper-Gold Project in the Paterson Province of Western Australia, a
strongly endowed and highly prospective mineral belt hosting the world-class Telfer gold and copper deposits, Nifty copper and the
O’Callaghans tungsten deposit. Most recently the Paterson Province has been the focus of intense exploration by Rio Tinto Exploration
at its Winu copper discovery. Subsequent to year end Sipa entered into a Farm-in and Joint Venture Agreement with Rio Tinto
Exploration (RTX) which will provide RTX with the right to earn up to 80% of the Paterson North Project under a staged earn in. The
agreement will enable accelerated exploration activities at the project.
Sipa’s ongoing generation strategy aims to identify and secure first-mover positions in under-explored mineral provinces with potential
to host world class mineral deposits. During the year two projects were acquired: Wolfe Basin (base metals) and Warralong (gold) both
of which are located in Western Australia and are currently being progressed toward drill testing.
The 100%-owned Uganda Base Metals Project contains an intrusive-hosted Ni-Cu sulphide discovery with significant scale potential.
During the year, the project was explored pursuant to an Earn-in and Joint Venture Agreement (JVA) with Rio Tinto Mining & Exploration
Limited (Rio Tinto). The JVA was terminated on 30 April 2020.
DIVIDENDS
No dividend has been paid or declared by the Group in respect of the financial year ended 30 June 2020 (30 June 2019: 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 profit/(loss) after tax for the financial year ended 30 June 2020 was $336,361 (2019: Loss $2,833,062).
Consolidated
Continuing Operations
Finance income
Revenue
Other income
Gain on disposal of royalty
Gain on fair value of listed investments
Exploration expenditure
Administrative expenses
Net loss for the year
Exchange differences arising on translation of foreign operations
Total comprehensive loss for the year
Note
3
3
3
3
2020
$
24,838
456,018
206,582
2,250,000
122,980
(1,622,708)
(1,101,349)
336,361
11,818
348,179
2019
$
42,753
353,471
243,947
–
–
(2,105,351)
(1,367,882)
(2,833,062)
5,709
(2,827,353)
At 30 June 2020 the Group’s cash and cash equivalents balance was $2,378,083 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:
The Earn-in and Joint Venture Agreement (JVA) with Rio Tinto Mining & Exploration Limited (Rio Tinto), over the Ugandan Nickel-
Copper project, was terminated 30 April 2020 with no interest earned by Rio Tinto. Options to advance the project further are being
considered.
Page 16 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited During the year, Sipa sold its interest in its royalty portfolio for total consideration of A$2.25M (Sipa ASX release 9 April 2020).
Consideration was comprised of A$1,000,000 in cash and A$1,250,000 in fully paid Vox Royalty Corp (VOX), a company listed on the
Toronto Stock Exchange (TSX-V: VOX), shares.
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 18 September 2020, Sipa announced it had raised $2.3 million from sophisticated and professional investors (the Placement), with
strong support from existing Sipa shareholders. The placement consisted of 32,361,115 fully paid ordinary shares at A$0.072 cents per
share. Proceeds of the capital raising will be used for the completion of the Company’s planned field programs for the remainder of
the current financial year.
On 3 August 2020 Sipa announced it had entered into a Farm-in and Joint Venture Agreement (FJVA) with Rio Tinto Exploration Pty Ltd
(RTX) for Sipa’s Paterson North Copper-Gold Project in the Paterson province of Western Australia: The FJVA encompasses Sipa’s entire
Paterson North Project tenement package, including the tenements within Sipa’s Great Sandy Joint Venture with Ming Gold Pty Ltd
(Ming Gold) in which Sipa has earned an 89% interest (together, the Project).
Key terms of the FJVA with RTX are summarised below:
•
•
•
$6 million expenditure on the Project, including a minimum commitment of $3 million, including at least 4,000m of drilling to earn
55%
A further A$6 million expenditure on the Project to earn 70%; and
The right to earn an additional 10% interest in the Project (i.e. to an 80% total interest) by sole funding exploration expenditure to
the earlier of:
Definition of total JORC Mineral Resources on the Project with an in-situ value equivalent of at least A$1 billion; or
Completion of an Order of Magnitude study
•
The FJVA is conditional on Ming Gold agreeing to certain matters in relation to the FJVA
In addition, RTX will also subscribe to A$250,000 worth of Sipa shares @ A$0.10 per share.
Sipa has sold 102,400 shares in VOX for total proceeds of $314,819.
FUTURE DEVELOPMENTS
First pass drilling at the Company’s Wolfe Basin project was about to commence at the time of writing. Further work will be based
upon the results of this program. At Warralong a detailed aeromagnetic survey is planned to commence shortly and will assist in future
drill targeting. The recently announced joint venture with Buru Energy will ensure future works at the Barbwire Terrace Project have the
best chance of success.
Exploration work at the Company’s Ugandan Nickel-Copper project is currently on hold until a suitable partner to assist with funding
future exploration programs is found.
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 Mines, Industry Regulation and Safety for Western
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 3,443,751 unissued ordinary shares under options (3,793,751 at reporting date). 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.
Refer to the remuneration report for further details of the options outstanding for Key Management Personnel (KMP).
Annual Report 2020 – Page 17
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
DIRECTORS’ REPORT
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 13.
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:
Consolidated
Pwc Australia
Audit and review of financial statements
Other assurance services
Taxation services
Other firms
Audit and review of financial statements
Total Auditors’ remuneration
Page 18 – Annual Report 2020
2020
$
40,000
–
–
40,000
7,271
7,271
47,271
2019
$
52,200
10,200
–
62,400
9,979
9,979
72,379
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
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
T Kennedy
P Darvall
K Field
C McGown
L Burnett
T Robson
Position
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Managing Director
Term as KMP
Full financial year
Appointed 1 February 2020
Full financial year
Full financial year
Resigned 31 January 2020
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 any KMP.
Fixed Remuneration
Benchmarking of the Fixed Remuneration component of Executive salaries was last conducted in June 2019. The benchmarking
involved comparing Sipa 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 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. The review resulted in an increase to fixed remuneration in line with CPI from 1 July
2019.
Long Term Incentive Plan
Long Term Incentive (LTI) grants are made to executives periodically to align with typical market practice, and to align executives’
interests with those of shareholders and the generation of long-term sustainable value. Non-Executive Directors do not participate in
the LTI.
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 performance hurdles are a combination of internal hurdles to
optimise share performance including exploration discovery and generation, capital management, governance, and strategic objectives.
The threshold levels are suitably stretched to be consistent with the objectives of the LTI plan.
Performance hurdles are measured at the end of the financial year in which the incentives were granted with vesting occurring at the
end of 1 year and expiry of the grants at the end of 4 years.
During the year 750,000 Options exercisable at $0.13 were issued pursuant to the ESOP. The Options vest on 24 November 2020 and
expire on 24 November 2023.
In addition, 2,000,000 Options exercisable at $0.15 were issued to Pip Darvall upon execution of his executive services agreement.
The Options vest on 1 February 2021 and expire on 31 January 2023. There are no performance hurdles attached to these Options
other than continued employment.
Annual Report 2020 – Page 19
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited DIRECTORS’ REPORT
The performance hurdles for KMP in place for the 2019/20 financial year are outlined below.
Strategic objectives
Capital Management
Governance
Performance measure
Company adequately funded to achieve exploration objectives by proactively
managing costs and applying strong fiscal responsibility.
Design and implementation of robust governance systems to support decision
making and reinforce accountability within the company including the effective
assessment, evaluation and mitigation of strategic and operational risks
Strategic development
Implementation of board approved strategy
* T Robson was the only KMP who had performance hurdles during the financial year.
Further details are found in Note 15 to the financial statements.
Weight*
60%
30%
10%
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 2019, the Company received 88.22% 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. In June 2020 the Board resolved that the duties of the Committee shall be
undertaken by the entire Board.
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 $155,248 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)
Year ended 30 June 2020
Chair
Non-Executive Director
76,650*
47,500*
* The non-executive directors voluntarily waived up to 50% of their fees for the period 1 April – 30 June 2020.
The compensation of Non-Executive Directors for the period ending 30 June 2020 is detailed in Table 1 of this report.
Remuneration of KMP for the year ended 30 June 2020 and 30 June 2019
The remuneration earned by KMP during the year is set out below in Table 1
Page 20 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited Performance against LTI measures year ended 30 June 2020 and 30 June 2019
The following information is provided with respect to LTI’s issued during the year.
Grant Date
Base Salary at grant date
Percentage of Base Salary
LTI Base Pool
Option exercise price
Fair value of each Option at grant date – non-market performance conditions
Maximum number of Options
Percentage achieved against strategic objectives
Number of LTI’s allocated
Robson
25 November 2019
$197,513
6.3%
$12,486
$0.13
$0.0166
750,000
75%
562,500
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
Share price (cents per share)*
2020
$0.060
2019
$0.007
2018
$0.010
2017
$0.011
2016
$0.019
Net profit/(loss) per year ended
336,361
($2,833,062)
($3,075,066)
($3,905,791)
($4,597,538)
* The share price for prior years was before the 12 for 1 consolidation.
Remuneration of KMP for the year ended 30 June 2020 and 30 June 2019 (Table 1)
Name
Non-executive directors
T Kennedy
C McGown
K Field
Executive director
P Darvall (Appointed
1 February 2020)
L Burnett (Resigned
31 January 2020)
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
2020(1)
2019
2020(1)
2019
2020(1)
2019
62,483
69,078
37,957
45,000
41,288
40,000
2020(1)
105,071
2019
2020
2019
2020(1)
2019
2020
2019
–
228,915
306,005
190,945
191,760
666,659
651,838
5,974
6,562
3,606
4,275
3,940
3,800
9,982
–
18,409
29,070
18,140
18,217
60,051
61,924
–
–
–
–
–
–
–
–
(22,746)
7,654
3,900
2,994
(18,846)
10,648
–
–
–
–
–
–
68,457
75,640
41,563
49,275
45,228
43,800
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
13,848
128,901
10.7%
10.7%
–
5,867
27,464
–
230,445
370,193
9,415
222,400
14,028
29,130
41,492
226,999
736,994
765,902
–
2.6%
7.4%
4.2%
6.2%
–
2.6%
7.4%
4.2%
6.2%
(1)
The Non-Executive Directors resolved to voluntarily and temporarily reduce their fees by up to 50% in response to market
conditions and the Executives reduced their salaries by 20% for the period 1 April 2020-30 June 2020.
Annual Report 2020 – Page 21
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited DIRECTORS’ REPORT
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.
Pip Darvall, Managing Director
•
•
•
•
Term of agreement is continuing.
Base salary of $290,000 and $27,550 superannuation per annum.
Termination notice of 3 months by either the company or by the Managing Director.
Restraint of trade clause which will prohibit Mr Darvall from, among other things, soliciting various personnel and suppliers during
the term of his employment and for a period of 12 months after his employment with the Company has come to an end.
Tara 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 $197,513 and $18,763 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. In July 2019 shareholders approved the consolidation of the Company’s issued capital by consolidating (i.e. converting)
every 12 existing Shares into one new share. The amounts below are shown post-consolidation.
2020
Directors
T Kennedy
C McGown
K Field
P Darvall
L Burnett
KMP
T Robson
Balance at the start of
the year
Received during the year
on exercise of options
Net Other Change
Balance at the end of
the year
249,863
374,239
374,238
–
457,571
258,010
–
–
–
–
–
–
–
–
177,337^
(457,571)*
249,863
374,239
374,238
177,337
–
258,010
^
*
Relates to acquisition on market.
L Burnett ceased to be a KMP on her resignation 31 January 2020.
Page 22 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited Option holdings of KMP
In July 2019 shareholders approved the consolidation of the Company’s issued capital by consolidating (ie converting) every 12 existing
Options into one New Option. The amounts below are shown pre-consolidation.
2020
Directors
C McGown
K Field
T Kennedy
P Darvall
L Burnett
KMP
T Robson
Balance at
start of the
year
Granted as
remuneration
Options
exercised
–
–
–
–
648,000
–
–
–
2,000,000
–
346,417
750,000
–
–
–
–
–
–
Lapsed/
cancelled
without
exercise
–
–
–
–
(648,000)
Balance at
the end of the
year
Vested
(Exercisable)
Unvested
Non–
exercisable)
–
–
–
2,000,000
–
–
–
–
–
–
–
–
–
2,000,000
–
–
1,096,417#
346,417
750,000
#187,500 options were cancelled subsequent to year end as performance hurdles were not satisfied.
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.
2,750,000 Options were allocated to KMP during the period (2019: NIL). 648,000 Options were forfeited during the year. (2019: Nil).
347,417 Options vested during the period. No options 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 2020.
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.
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 (2019: nil).
This is the end of the Remuneration Report
Signed in accordance with a resolution of the directors.
P Darvall
Managing Director
DATED 22 September 2020
Annual Report 2020 – Page 23
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence Declaration
As lead auditor for the audit of Sipa Resources Limited for the year ended 30 June 2020, I declare that
to the best of my knowledge and belief, there have been:
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Sipa Resources Limited and the ent ities it controlled during the period .
relation to the audit , and
(b)
(a)
Helen Bathurst
Partner
PricewaterhouseCoopers
Perth
22 September 2020
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
PricewaterhouseCoopers, ABN 52 780 433 757
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Page 24 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 30 June 2020
Finance income
Revenue
Other income
Gain on fair value of listed investments
Gain on disposal of royalty portfolio
Exploration expenditure
Administrative and other expenses
Profit/(Loss) before income tax
Income tax expense
Net profit/(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 profit/(loss) for the year
Profit/(Loss) per share (cents per share)
Profit/(Loss) per share (cents per share)
Consolidated
Note
3
3
3
8
3
3
4
2020
$
24,838
456,018
206,582
122,980
2,250,000
(1,622,708)
(1,101,349)
336,361
–
2019
$
42,753
353,471
243,947
–
–
(2,105,351)
(1,367,882)
(2,833,062)
–
336,361
(2,833,062)
11,818
11,818
348,179
5,709
5,709
(2,827,353)
– Basic profit/(loss) per share for the year
– Diluted profit/(loss) per share for the year
17
17
0.24
0.24
(0.20)
(0.20)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Annual Report 2020 – Page 25
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
as at 30 June 2020
ASSETS
Current Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
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
5
8
6
7
8
9
10
11
12
13
14
14
Consolidated
2020
$
2,378,083
1,374,680
30,000
14,404
39,244
2019
$
3,911,912
–
30,000
42,488
45,624
3,836,411
4,030,024
–
21,920
105,954
581,037
708,911
1,700
21,770
148,895
581,037
753,402
4,545,322
4,783,426
118,299
–
168,693
286,992
15,961
15,961
302,953
4,242,369
350,707
323,031
220,181
893,919
33,304
33,304
927,223
3,856,203
15
111,004,480
111,004,480
1,435,596
9,103
1,397,609
(2,715)
(108,206,810)
(108,543,171)
4,242,369
3,856,203
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Page 26 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited CONSOLIDATED STATEMENT OF
CASH FLOWS
for the year ended 30 June 2020
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 of Covid Subsidies
Receipt from Rio Tinto Earn In and JV Agreement
Receipts from miscellaneous income
Consolidated
Note
2020
$
(1,185,044)
(3,891,975)
1,755,508
24,596
119,685
45,306
30,000
456,018
11,591
2019
$
(1,268,494)
(5,550,920)
3,859,318
45,559
188,388
–
–
353,471
55,559
Net Cash used in operating activities
18
(2,634,315)
(2,317,120)
Cash Flows used in Investing Activities
Proceeds from sale of royalties
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
Cash and Cash Equivalents at the end of the year
5
1,000,000
(1,378)
(150)
998,472
–
–
–
(1,635,843)
3,911,912
102,014
2,378,083
–
(28,786)
–
(28,786)
4,294,180
(262,555)
4,031,625
1,685,719
2,195,905
30,287
3,911,912
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Annual Report 2020 – Page 27
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
for the year ended 30 June 2020
Issued
capital
Accumulated
losses
Equity
benefits
reserve
Note
$
$
$
Foreign
Currency
Translation
Reserve
$
Total
$
106,972,855
(105,710,109)
1,337,920
(8,424)
2,592,242
–
–
–
4,294,181
(262,556)
–
(2,833,062)
–
(2,833,062)
–
–
–
–
–
–
–
–
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
–
–
–
–
–
–
336,361
–
336,361
–
–
–
–
–
–
–
–
37,987
–
336,361
11,818
11,818
11,818
348,179
–
–
–
–
–
37,987
15
15
15
15
CONSOLIDATED
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
Profit for the year
Other comprehensive
profit/(loss)
Total comprehensive
profit/(loss) for the year
Shares issued
Cost of issuing shares
Share Based Payments
At 30 June 2020
111,004,480
(108,206,810)
1,435,596
9,103
4,242,369
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
Page 28 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
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 2020 was authorised for issue in accordance with a resolution of the directors on 22
September 2020. 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 2019.
New and amended accounting standards and interpretations
The Group has adopted all Australian Accounting Standards and Interpretations effective from 1 July 2019.
AASB16 Leases – impacts on adoption
The Group has applied AASB 16 from 1 July 2019. On transition no adjustments were required as the group applied the practical
expedient permitted by the standards which exempts any leases with a remaining term of less than 12 months.
New accounting standards and interpretations issued but not yet effective
There are no Australian Accounting Standards and Interpretations that have been issued or amended but are not yet effective
which have an impact on the group for the year ended 30 June 2020.
2.1. Going concern
These financial statements have been prepared on the going concern basis, which contemplates the continuity of normal
business activities and the realisation of assets and settlement of liabilities in the normal course of business.
As disclosed in the financial statements, the Group incurred a net profit of $336,361 and had net cash outflows from
operating activities of $2,634,315 for the year ended 30 June 2020. As at 30 June 2020 the Group had cash and cash
equivalents of $2,378,083 and a working capital surplus of $3,549,419. The ability of the Group to continue as a going
concern is principally dependent upon the ability of the Group to continue to secure funds by raising capital from equity
markets and managing cash flows in line with available funds.
These factors indicate a material uncertainty which may cast significant doubt as to whether the Group will continue as a
going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business
and at amounts stated in the financial report.
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 a consistent history of
success in this regard as demonstrated by the $2.3m raising completed subsequent to year end.
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.
Annual Report 2020 – Page 29
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
2.
BASIS OF PREPARATION (continued)
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.
Rio Tinto Earn In Agreement (Uganda)
On 8 May 2018, Sipa and Rio Tinto Mining and Exploration Limited (Rio Tinto) executed an earn-in agreement pursuant to
which Rio Tinto had 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 was determined that Sipa did not have control, nor joint control of the
unincorporated JV. As such, the project was not accounted for as a subsidiary or a joint operation. It was determined,
however, that Sipa did have significant influence over the project and therefore the investment in the unincorporated joint
venture was 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.
Page 30 – Annual Report 2020
for the year ended 30 June 2020NOTES TO THE FINANCIAL STATEMENTSb Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
2.
BASIS OF PREPARATION (continued)
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. The liability is nil at 30 June 2020.
As at the 30 June 2020 nil profit has been recognised from Sipa’s participation in the JV. The JV was terminated 30 April
2020 with no interest earned by Rio Tinto.
2.4. Significant accounting judgements, estimates 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 was 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.
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 group leases office space and office equipment. Rental contracts can range from a period of month to month or up to-3
years.
Contracts may contain both lease and non-lease components. The group allocates the consideration in the contract to the
lease and non-lease components based on their relative stand-alone prices. However, for leases of real estate for which the
group is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single
lease component.
Annual Report 2020 – Page 31
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
2.
BASIS OF PREPARATION (continued)
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor.
Leased assets may not be used as security for borrowing purposes.
Until the 2019 financial year, leases of property, plant and equipment were classified as either finance leases or operating
leases, see note 21 for details. From 1 July 2019, leases are recognised as a right-of-use asset and a corresponding liability
at the date at which the leased asset is available for use by the group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
•
•
•
•
•
fixed payments (including in-substance fixed payments), less any lease incentives receivable
variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date
amounts expected to be payable by the group under residual value guarantees
the exercise price of a purchase option if the group is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the group, the lessee’s incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment with similar terms, security and conditions.
The group is exposed to potential future increases in variable lease payments based on an index or rate, which are not
included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take
effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
•
•
•
•
the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date less any lease incentives received
any initial direct costs, and
restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-
line basis. If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the
underlying asset’s useful life. While the group revalues its land and buildings that are presented within property, plant and
equipment, it has chosen not to do so for the right-of-use buildings held by the group. The Group did not have any Right of
use assets during the financial year ended 30 June 2020.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised
on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
Low-value assets comprise minor office equipment.
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.
Page 32 – Annual Report 2020
for the year ended 30 June 2020NOTES TO THE FINANCIAL STATEMENTSb Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
2.
BASIS OF PREPARATION (continued)
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.
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.
Annual Report 2020 – Page 33
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
2.
BASIS OF PREPARATION (continued)
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 c.arry-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.
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.
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.
Page 34 – Annual Report 2020
for the year ended 30 June 2020NOTES TO THE FINANCIAL STATEMENTSb Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
2.
BASIS OF PREPARATION (continued)
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.
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.
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;
–
–
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 other 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
The group classifies its financial assets in the following measurement categories:
–
Those to be measured subsequently at fair value (either through other comprehensive income or through profit or
loss); and
–
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.
Annual Report 2020 – Page 35
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
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
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 executive 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.
Page 36 – Annual Report 2020
for the year ended 30 June 2020NOTES TO THE FINANCIAL STATEMENTSb Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
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. Profit/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.
Annual Report 2020 – Page 37
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
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
Covid subsidies
Other
(d) Gain on disposal of royalty portfolios
Consolidated
2019
$
42,753
42,753
353,471
353,471
188,388
–
–
55,559
243,947
2020
$
24,838
24,838
456,018
456,018
19,685
45,306
30,000
11,591
206,582
During the financial year, the Company sold its entire interest in its royalties portfolio it held arising out of previous
exploration projects disposed to third parties. Consideration was comprised of A$1,000,000 in cash and A$1,250,000 in
fully paid Vox Royalty Corp (VOX), a company listed on the Toronto Stock Exchange (TSX-V: VOX) shares.
(e) 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 short-term operating lease
Page 38 – Annual Report 2020
Consolidated
2020
$
2019
$
2,011,481
(2,011,481)
1,622,708
1,622,708
956,242
78,178
56,044
(15,889)
37,987
2,760
3,536,288
(3,536,288)
2,105,351
2,105,351
1,067,762
90,221
68,788
14,663
59,689
2,391
1,115,322
1,303,514
565,785
549,537
1,115,322
44,319
58,380
669,533
633,981
1,303,514
77,572
88,595
for the year ended 30 June 2020NOTES TO THE FINANCIAL STATEMENTSb Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
4
INCOME TAX
(a) Major components of income tax expense for the years ended 30 June 2020
and 2019 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 2020 and 2019 is
as follows:
Accounting profit/(loss) before tax
At statutory income tax rate of 27.5%
Adjustment for difference in foreign tax rate
Non-(assessable)/deductible items
Under/(overprovision) in prior year
(Recognised)/Unrecognised deferred tax assets
Income tax expense reported in income statement
(c) Deferred income tax
Consolidated
2020
$
2019
$
–
–
–
–
–
–
336,361
92,499
(1,520)
(194,399)
545,795
(442,375)
–
(2,833,062)
(779,092)
2,254
16,947
(152,391)
912,282
–
Statement of Financial Position
Profit or Loss
2020
$
2019
$
2020
$
2019
$
Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Plant and equipment
Other
Deferred tax assets
Provision for employee entitlements
Superannuation provision
Accruals
Carried forward losses
(26,097)
(24,804)
(50,901)
50,780
–
7,150
(20,670)
(8,735)
(29,405)
69,708
3,641
7,854
14,725,854
14,783,784
15,123,460
15,204,663
(5,427)
(16,069)
(18,928)
(3,641)
(704)
(397,606)
(77)
(7,558)
6,669
555
–
912,693
Unrecognised deferred tax assets
(14,732,883)
(15,175,258)
442,375
(912,282)
Net deferred tax asset
Deferred tax expense
50,901
29,405
–
–
–
–
–
–
–
–
–
–
Annual Report 2020 – Page 39
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
4
INCOME TAX (continued)
Consolidated
2020
$
2019
$
Deferred tax assets on temporary differences and tax losses not recognised
14,732,883
15,175,258
Directors do not believe it is appropriate to regard realisation of the deferred tax asset as probable as at 30 June 2020.
These benefits will only be obtained if:
(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;
(ii)
the Consolidated Entity continues to comply with the conditions for the deductibility imposed by law; and
(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
Consolidated
2020
$
478,093
1,899,990
–
2,378,083
2019
$
1,388,881
2,200,000
323,031
3,911,912
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 2020, nil (2019: $323,031) is held as restricted cash being monies received in advance from Rio Tinto for use on
the Kitgum-Pader project as the JV ceased 30 April 2020.
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)
Consolidated
2019
$
30,000
30,000
Consolidated
2019
$
1,476
41,012
42,488
2020
$
30,000
30,000
2020
$
1,718
12,686
14,404
(1)
(2)
Interest receivable represents interest due on the Group’s term deposits.
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.
Page 40 – Annual Report 2020
for the year ended 30 June 2020NOTES TO THE FINANCIAL STATEMENTSb Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
8
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
At fair value
Shares in listed entities
Disclosed as:
Current
Non-Current
Consolidated
2020
$
1,374,680
1,374,680
1,374,680
–
1,374,680
2019
$
1,700
1,700
–
1,700
1,700
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, $122,980 was recognised in the profit and loss due to an
increase in share price.
9
OTHER FINANCIAL ASSETS
Security deposits
Consolidated
2020
$
21,920
21,920
2019
$
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
Consolidated
2020
$
148,895
1,380
–
(44,321)
–
105,954
2019
$
195,746
28,786
(80)
(77,572)
2,015
148,895
1,091,036
(985,082)
105,954
1,089,656
(940,761)
148,895
Consolidated
2020
$
581,037
581,037
2019
$
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.
Annual Report 2020 – Page 41
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
12 TRADE AND OTHER PAYABLES (CURRENT)
Trade payables – unsecured
Accrued expenses
Consolidated
2020
$
53,634
64,665
118,299
2019
$
241,714
108,993
350,707
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
2020
$
323,031
1,688,450
(2,011,481)
–
2019
$
–
3,859,319
(3,536,288)
323,031
In May 2018 Sipa announced a Farm-in and JV Agreement with Rio Tinto 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. The agreement was terminated 30 April 2020 with no interest earned by Rio Tino
In accordance with the agreement, Sipa was the operator for the project. During the period Rio Tinto contributed funds in
advance of $1,688,450 (2019: $3,859,319) to Sipa as part of their contribution. As at 30 June 2020, nil (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 2019
Arising during the year
Reversed during the year
Utilised during the year
Balance at 30 June 2020
Current 2020
Non-Current 2020
Current 2019
Non-Current 2019
Annual
Leave
Long Service
Leave
Directors
Retirement
Benefit (a)
125,481
56,044
–
(87,532)
93,993
93,993
–
93,993
125,481
–
125,481
93,004
6,857
(22,746)
(21,454)
55,661
39,700
15,961
55,661
59,700
33,304
93,004
35,000
–
–
–
35,000
35,000
–
35,000
35,000
–
35,000
Total
253,485
62,901
(22,746)
(108,986)
184,654
168,693
15,961
184,654
220,181
33,304
253,485
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.
Page 42 – Annual Report 2020
for the year ended 30 June 2020NOTES TO THE FINANCIAL STATEMENTSb Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
15 CONTRIBUTED EQUITY AND RESERVES
(a) Ordinary shares
Issued and fully paid shares
Movements in shares on issue
Consolidated
2020
$
2019
$
111,004,480
111,004,480
2020
2019
No
$
No
$
Balance at beginning of year
1,707,295,911
111,004,480
1,200,621,023
106,972,855
12:1 share consolidation
(1,565,019,330)
Share purchase plan(2)
Placement to exempt investors(2)
Placement to exempt investors(4)
Less transaction costs
–
–
–
–
–
–
–
–
–
–
165,439,718
166,835,170
174,400,000
–
–
1,505,501
1,518,200
1,270,480
(262,556)
Balance at end of financial year
142,276,581
111,004,480
1,707,295,911
111,004,480
(1)
(2)
In July 2019 shareholders approved the consolidation of the Company’s issued capital by consolidating (ie converting)
every 12 existing Shares into one New Share.
In November 2018, Sipa raised $1.5m pursuant to an underwritten Share Purchase Plan at a price of $0.0091 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.
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
The following options were issued during the year ended 30 June 2020:
Number of Options
Exercise Price
1,300,000
2,000,000
$0.13
$0.15
Vesting Date
25/11/2020
1/2/2021
Expiry Date
24/11/2023
31/1/2023
There were no options issued during the year ended 30 June 2019.
Further details are found in Note 16.
Dividends
There were no dividends paid or proposed during the year ended 30 June 2020 (2019: Nil). The amount of franking credits
available to the Company at 30 June 2020 is Nil (2019: 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.
Annual Report 2020 – Page 43
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
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 $4,242,369 (2019: $3,856,203) 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 performance hurdles are a combination of internal
hurdles to optimise share performance including exploration discovery and generation, capital management, governance, and
strategic objectives. The threshold levels are suitably stretched to be consistent with the objectives of the LTI plan.
(i) Options outstanding and movements in share options during the year
2020
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
19/12/16
25/11/19
25/11/19
31/8/21
18/12/21
24/11/23
31/1/23
$1.32
$0.72
$0.13
$0.15
388,250
1,007,501
–
–
–
–
1,300,000
2,000,000
1,395,751
3,300,000
–
–
–
–
–
(225,750)
162,500
(676,250)
331,251
162,500
331,251
–
–
1,300,000
2,000,000
–
–
(902,000)
3,793,751
493,751
# In July 2019, shareholders approved the consolidation of the Company’s issued capital by consolidating (i.e. converting)
every 12 existing Shares into one New Share. The amounts and exercise price are shown post–consolidation.
The share based payments expense recognised for the above options during the period was $37,987.
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
31/8/21
11 cents
4,659,000
19/12/16
18/12/21
6 cents
12,090,000
16,749,000
–
–
–
–
–
–
–
4,659,000
– 12,090,000
–
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.
Options issued year ended 30 June 2020
On 25 November 2019, 1,300,000 options expiring 24 November 2023 with an exercise price of $0.13 each were issued to
employees pursuant to the Sipa Employee Share Option Plan. On that same date a further 2,000,000 options expiring 31
January 2023 with an exercise price of $0.15 each were issued to Pip Darvall pursuant to the Sipa Employee Share Option
Plan as part of his employment agreement.
Page 44 – Annual Report 2020
for the year ended 30 June 2020NOTES TO THE FINANCIAL STATEMENTSb Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
16 SHARE BASED PAYMENT PLANS (continued)
The fair value of the equity-settled share options (ESOs) was determined at the date of the grant. The number of options
granted was determined by the Board with reference to comparative salary information. The options to the employees are
subject to internal hurdles. There are no hurdles associated with the options issued to Pip Darvall other than continued
employment.
The Black-Scholes Merton model was used to estimate the fair value of the ESOs. The following table sets out the key
assumptions adopted to value the Options.
Valuation method
Valuation date
Closing share price at valuation date
Exercise price
Vesting Date
Expiry
Expected life of option
Dividend yield
Expected volatility
Historical volatility
Risk-free interest rate
Fair value of options issued
Managing Director
Black-Scholes Merton
Other Personnel
Black-Scholes Merton
25/11/2019
$0.081
$0.15
1/02/2021
31/01/2023
1/02/2022
0%
56.03%
56.03%
0.84%
$0.012
25/11/2019
$0.081
$0.13
25/11/2020
24/11/2023
26/05/2022
0%
56.03%
56.03%
0.84%
$0.017
Options issued year ended 30 June 2019
There were no options issued during the year ended 30 June 2019.
(ii) Options exercised
No options were exercised during the financial years ended 30 June 2020 and 30 June 2019.
(iii) Weighted average remaining contractual life
The weighted average remaining contractual life for the share options outstanding as at 30 June 2020 is 2.6 years (2019:
2.4 years).
17 PROFIT/(LOSS) PER SHARE
Basic loss per share amounts are calculated by dividing the net profit/(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:
Net profit/(loss) attributable to the ordinary equity holders
Consolidated
2020
2019
336,361
(2,833,062)
Weighted average number of ordinary shares before the Placement
142,276,581
1,200,621,023
Adjustment for dilutive effects of Placement and SPP
Share Options exercised
244,944,392
-
-
Weighted average number of ordinary shares on issue
142,276,581
1,445,565,415
Nil options (2019: 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.
Annual Report 2020 – Page 45
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
18 RECONCILIATION OF PROFIT/(LOSS) TO NET CASH FLOWS FROM OPERATIONS
Net Profit/(Loss)
Depreciation of plant and equipment
Profit on disposal of royalties
(Gain)/loss 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
19 RELATED PARTY DISCLOSURE
Consolidated
2020
336,361
44,319
(2,250,000)
(122,980)
(90,197)
37,987
28,085
6,380
(68,831)
(323,031)
(232,408)
2019
(2,833,062)
77,572
-
1,300
(26,514)
59,689
(8,252)
6,666
24,254
323,031
58,196
(2,634,315)
(2,317,120)
The consolidated financial statements include the financial statements of Sipa Resources Limited and the subsidiaries listed in
the following table:
Name
Country of
Incorporation
Equity
Interest
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 MANAGAGEMENT PERSONNEL DISCLOSURES
Name
T Kennedy
P Darvall
L Burnett
K Field
C McGown
T Robson
Position
Non-Executive Chairman
Managing Director
Managing Director
Non-Executive Director
Non-Executive Director
Chief Financial Officer and Company Secretary
Page 46 – Annual Report 2020
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Uganda
Tanzania
2020
%
100
100
100
100
100
100
100
100
100
100
100
100
100
2019
%
100
100
100
100
100
100
100
100
100
100
100
100
100
Term as KMP
Full financial year
1 February 2020 - present
1 July 2019 – 31 January 2020
Full financial year
Full financial year
Full financial year
for the year ended 30 June 2020NOTES TO THE FINANCIAL STATEMENTSb Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
20 KEY MANAGAGEMENT PERSONNEL DISCLOSURES (continued)
Compensation by Category: KMP
Short-term employee benefits
Post employment benefits
Share based payments
Other long term benefits
Other transactions with KMP
Consolidated
2020
$
666,659
60,051
29,130
(18,846)
736,994
2019
$
651,838
61,924
41,492
10,648
765,902
There were no other transactions with KMP during the current year.
21 COMMITMENTS FOR EXPENDITURE
(a) Short Term Lease – Group as Lessee
The Company had 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
(b) Exploration Expenditure Commitments
Consolidated
2020
$
–
–
–
2019
$
70,870
–
70,870
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 2020, the Directors estimate
the minimum expenditure commitment for the ensuing twelve months to be $951,000 (2019: $1,340,045). However, the
Directors consider that the actual commitment is likely to be less as these commitments are reduced continuously by
such items as exemption applications to the Department of Geological Survey and Mines, Uganda and the Department of
Mines, Industry and Safety, 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.
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.
Annual Report 2020 – Page 47
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
22 SEGMENT INFORMATION (continue)
Segment Financial Information for the year ended 30 June 2020 is presented below:
Year to
30 June 2020
Uganda
$
Year to
30 June 2020
Australia
$
Year to
30 June 2020
Unallocated
$
Year to
30 June 2020
Consolidated
$
Revenue from continuing operations
456,018
–
24,838
Other income
Gain on sale of royalties
Gain on fair value of listed investments
–
–
206,582
2,250,000
122,980
Exploration expenditure
(53,504)
(1,569,204)
Administrative and other expenses
Segment profit/(loss) before tax
Current assets
Non–current assets
Exploration and evaluation
Other financial assets
Property, plant and equipment
TOTAL ASSETS
Current liabilities
Non–current liabilities
TOTAL LIABILITIES
NET ASSETS
Capital expenditure
–
402,514
54,883
581,037
–
11,057
646,977
10,381
–
10,381
636,596
731
–
1,010,358
3,781,528
–
–
–
3,781,528
15,961
15,961
3,488,956
–
Segment Financial Information for the year ended 30 June 2019 is presented below:
–
–
–
–
(1,101,349)
(1,076,511)
–
–
21,920
94,897
116,817
276,611
–
276,611
116,817
649
480,856
206,582
2,250,000
122,980
(1,622,708)
(1,101,349)
336,361
3,836,411
581,037
21,920
105,954
4,545,322
286,992
15,961
302,953
4,242,369
1,380
Year to
30 June 2019
Uganda
$
353,471
–
99,367
–
452,838
480,533
581,037
–
–
17,621
1,079,191
391,913
–
391,913
687,278
8,155
Year to
30 June 2019
Australia
$
–
238,547
(2,204,718)
–
(1,966,171)
–
–
–
–
–
–
–
–
–
–
–
Year to
30 June 2019
Unallocated
$
Year to
30 June 2019
Consolidated
$
42,753
5,400
–
(1,367,882)
(1,319,729)
3,549,491
–
1,700
21,770
131,274
396,224
243,947
(2,105,351)
(1,367,882)
(2,833,062)
4,030,024
581,037
1,700
21,770
148,895
3,704,235
4,783,426
502,006
33,304
535,310
3,168,925
20,631
893,919
33,304
927,223
3,856,203
28,786
Revenue from continuing operations
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
Page 48 – Annual Report 2020
for the year ended 30 June 2020NOTES TO THE FINANCIAL STATEMENTSb Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
23
FINANCIAL RISK MANAGEMENT
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.
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 reducing 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
Impairment losses
Consolidated
2020
$
2019
$
2,378,083
3,911,912
30,000
14,404
21,920
30,000
42,488
21,770
2,444,407
4,006,170
None of the Group’s other receivables have expected credit losses (2019: 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:
Annual Report 2020 – Page 49
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
23
FINANCIAL RISK MANAGEMENT (continued)
Consolidated
30 June 2020
Trade and other payables
30 June 2019
Trade and other payables
Market Risk
Carrying amount
Contractual cash
flows
6 mths or less
118,299
118,299
350,707
350,707
118,299
118,299
350,707
350,707
118,299
118,299
350,707
350,707
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.
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
2020
$
2,378,083
2,378,083
30,000
30,000
2019
$
3,911,912
3,911,912
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$ 23,780 and $(23,780) (2019 $39,119 and $(39,595)) respectively.
Page 50 – Annual Report 2020
for the year ended 30 June 2020NOTES TO THE FINANCIAL STATEMENTSb Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
23
FINANCIAL RISK MANAGEMENT (continued)
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.
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
25 CONTINGENT ASSETS AND LIABILITIES
There are no contingent assets
There are no contingent liabilities of which the Company is aware.
26
INFORMATION RELATING TO THE PARENT ENTITY
Current assets
Total assets
Current liabilities
Total liabilities
Retained earnings
Total equity
Profit/(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
Consolidated
2020
$
2019
$
40,000
–
–
40,000
7,271
7,271
47,271
52,200
10,200
–
62,400
9,979
9,979
72,379
2020
$
3,410,250
3,974,317
–
(209,375)
2019
$
3,556,641
3,558,352
(381,432)
(381,432)
(108,675,140)
(109,225,169)
3,764,937
550,029
550,029
NIL
NIL
3,176,921
(2,568,286)
(2,568,286)
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.
Annual Report 2020 – Page 51
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
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 18 September 2020, Sipa announced raised $2.3 million from sophisticated and professional investors (the Placement), with
strong support from existing Sipa shareholders. The placement consisted of 32,361,115 fully paid ordinary shares at A$0.072
cents per share. Proceeds of the capital raising will be used for the completion of the Company’s planned field programs for the
remainder of the current financial year.
On 3 August 2020 Sipa announced it had entered into a Farm-in and Joint Venture Agreement (FJVA) with Rio Tinto Exploration
Pty Ltd (RTX) for Sipa’s Paterson North Copper-Gold Project in the Paterson province of Western Australia: The FJVA
encompasses Sipa’s entire Paterson North Project tenement package, including the tenements within Sipa’s Great Sandy Joint
Venture with Ming Gold Pty Ltd (Ming Gold) in which Sipa has earned an 89% interest (together, the Project).
Key terms of the FJVA with RTX are summarised below:
•
•
•
$6 million expenditure on the Project, including a minimum commitment of $3 million, including at least 4,000m of drilling
to earn 55%
A further A$6 million expenditure on the Project to earn 70%; and
The right to earn an additional 10% interest in the Project (i.e. to an 80% total interest) by sole funding exploration
expenditure to the earlier of:
Definition of total JORC Mineral Resources on the Project with an in-situ value equivalent of at least A$1 billion; or
Completion of an Order of Magnitude study
•
The FJVA is conditional on Ming Gold agreeing to certain matters in relation to the FJVA
In addition, RTX will also subscribe to A$250,000 worth of Sipa shares @ A$0.10 per share.
Sipa has sold 102,400 shares in VOX for total proceeds of $314,819.
Page 52 – Annual Report 2020
for the year ended 30 June 2020NOTES TO THE FINANCIAL STATEMENTSb Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
DIRECTORS’ DECLARATION
for the year ended 30 June 2020
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 2020 are in accordance with
the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance for the
year ended on that date; and
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)
(d)
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.
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 2020
On behalf of the Board
_______________________
P Darvall
Managing Director
PERTH, WESTERN AUSTRALIA
DATED 22 September 2020
Annual Report 2020 – Page 53
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
INDEPENDENT AUDITOR’S REPORT
(a)
Our opinion
(b)
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
Basis for opinion
Independent auditor’s report
To the members of Sipa Resources Limited
Report on the audit of the financial report
In our opinion the accompanying financ ial report of Sipa Resources Limited (the Company) and its
controlled entities (together the Group) is in accordance with the Corporations Act 2001, including:
giving a true and fair view of the Group's financial posit ion as at 30 June 2020 and of its
financial performance for the year then ended, and
complying with Australian Accounting Standards and the Co rporations Regulations 2001.
the consolidated statement of financial position as at 30 June 2020
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equ ity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the financ ial statements, which include a summary of significant accounting policies
the directors’ declaration.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibil ities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibil ities in accordance with the Code.
Material uncertainty related to going concern
We draw attention to Note 2.1 in the financ ial report, which ind icates that the Group incurred a net
profit of $336,361 and a cash outflow from operating ac tivities of $2,634,315 during the year ended 30
June 2020 and that the abil ity of the Group to continue as a going concern is princ ipally dependent
upon continu ing to secure funds by raising capital from equ ity markets and managing cash flows to
continue its normal business activities. These conditions, along with other matters set forth in Note
2.1, indicate that a material uncertainty ex ists that may cast significant doubt on the Group’s ab ility to
continue as a go ing concern. Our opinion is not modified in respect of this matter.
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
PricewaterhouseCoopers, ABN 52 780 433 757
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
our opinion.
Independence
report sect ion of our report .
Page 54 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
•
For the purpose of our audit we used overall Group materiality of $95,000, which represents
approximately 5% of the Group’s adjusted profit before tax.
• We applied this threshold , together with qual itative considerations, to determine the scope of our
audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
• We chose Group adjusted profit before tax because, in our view, it is the benchmark against which
misstatements on the financial report as a whole.
the performance of the Group is most commonly measured whilst in the exploration phase given
the Group have a policy of expensing all ongoing exploration costs. We adjusted for the gain on
disposal of royalty portfolio as it is an infrequently occurring item impacting profit and loss.
• We utilised a 5% threshold based on our professional judgement , noting it is within the range of
commonly acceptable thresholds.
• Our audit focused on where the Group made subjective judgements; for example, significant
accounting estimates involving assumptions and inherently uncertain future events.
Key audit matters are those matters that, in our professional judgement , were of most significance in
our audit of the financial report for the current period . The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Key audit matters
Audit Scope
Board of Directors.
Annual Report 2020 – Page 55
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
INDEPENDENT AUDITOR’S REPORT
•
report.
others:
matter
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matter described below to be the key audit matters to be communicated in our
How our audit addressed the key audit
We performed the following procedures, amongst
Evaluated the Group’s assessment that there
had been no indicators of impairment for its
capitalised exploration and evaluation
assets, including inqu iries with management
and directors to develop an understanding of
the current status and future intent ions for
the Group’s exploration activities in Uganda.
Considered the Group’s right to tenure for
its exploration licenses which included
obtaining and assessing supporting
documentation from the relevant
government authority in Uganda.
• Obtained management’s exploration
expend iture forecasts supporting their
assessment and compared these to the
approved budgets and future cash flow
forecasts of the Group.
Considered the consistency of informat ion
provided with other availab le informat ion,
such as press releases made by the Group
about the results of exploration activities.
Key audit matter
Carrying value of acquired exploration
and evaluation assets
(Refer to note 11)
As at 30 June 2020, the Group held capitalised
exploration and evaluation assets of $581,037
relating to their acquisition of the Kitgum-Pader
base metals pro ject in Uganda.
Judgement was required by the Group to assess
whether there were indicators of impairment of
the capitalised exploration and evaluation assets
due to the need to make est imates about future
events and c ircumstances, such as whether the
mineral resources may be economically viable to
mine in the future.
This was a key aud it matter because of the size of
the balance in relation to the statement of
financial position and judgement in considering
the risk of impairment of the exploration and
evaluation assets should the results of exploration
activities not be posit ive.
•
•
Other information
The d irectors are responsib le for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2020, but does not include the
financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other
information we obtained included the Directors’ Report and the Corporate Directory. We expect the
remaining other information to be made available to us after the date of this auditor's report .
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in do ing so , consider whether the other information is materially inconsistent with the financial
report or our knowledge ob tained in the audit , or otherwise appears to be material ly misstated.
Page 56 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
fraud or error.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our
professional judgement to determine the appropriate action to take.
Responsibilities of the directors for the financial report
The d irectors of the Company are responsible for the preparation of the financ ial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Co rporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
In preparing the financ ial report, the directors are responsible for assessing the ab ility of the Group to
continue as a go ing concern, disclosing, as appl icable, matters related to going concern and using the
going concern basis of accounting unless the d irectors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonab ly be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
Auditing and Assurance Standards Board website at:
our auditor's report .
Report on the remuneration report
We have audited the remuneration report included in pages 9 to 14 of the directors’ report for the year
Our opinion on the remuneration report
In our opinion, the remuneration report of Sipa Resources Limited for the year ended 30 June 2020
ended 30 June 2020.
complies with section 300A of the Co rporations Act 2001.
Annual Report 2020 – Page 57
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
INDEPENDENT AUDITOR’S REPORT
Responsibilities
The d irectors of the Company are responsible for the preparation and presentation of the
remunerat ion report in accordance with section 300A of the Corporations Act 2001. Our responsibil ity
is to express an opinion on the remuneration report, b ased on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Helen Bathurst
Partner
Perth
22 September 2020
Page 58 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
ADDITIONAL INFORMATION
as at 8 September 2020
The following information is provided in accordance with the listing requirements of the ASX Limited. All information is current as of 8
September 2020 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
JM Financial Group Limited
Units
25,065,789
8,831,351
% of Units
17.62
6.21
2.
Top 20 Shareholders
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
RODIV NSW P/L
SANDHURST TRUSTEES LTD
MOGGS CREEK PTY LTD
MR GAVIN JEREMY DUNHILL
WIP FUNDS MANAGEMENT PTY LTD
MR JEREMY DOMINIC KALMUND
GUNDRYS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
GECKO RESOURCES PTY LTD
GEOCRUST PTY LTD
CITICORP NOMINEES PTY LIMITED
MICHAEL GLEN DOEPEL
SANCOAST PTY LTD
MRS CHRISTINE EMILY COGHLAN
SHANTANANDA PTY LTD
SPACEFACE PTY LTD
MEGALOCONOMOS PTY LTD
TRAIST PTY LIMITED
MR WILLIAM HENRY HERNSTADT
SUPERFUZE PTY LTD
Units
25,065,789
8,547,709
3,719,144
3,100,000
1,600,000
1,246,120
1,234,294
1,227,291
1,216,042
1,066,954
1,056,730
907,400
883,460
833,334
799,575
770,696
750,000
700,000
666,667
644,170
% Units
17.62
6.01
2.61
2.18
1.12
0.88
0.87
0.86
0.85
0.75
0.74
0.64
0.62
0.59
0.56
0.54
0.53
0.49
0.47
0.45
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
Total Remaining Holders Balance
56,035,375
86,241,206
39.38
60.62
3. Options on issue
As at 8 September 2020 the following unlisted options were on issue:
Date of expiry
31 August 2021
18 December 2021
24 November 2023
31 January 2023
Number
162,500
331,251
950,000
2,000,000
Number of Holders
Exercise Price
2
2
3
1
$1.32
$0.72
$0.13
$0.15
All of the above options were issued pursuant to the Company’s Employee Share Option Plan.
Annual Report 2020 – Page 59
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
ADDITIONAL INFORMATION
as at 8 September 2020
4.
Escrowed securities
There are presently no securities subject to escrow.
5. Distribution of shareholder’s holdings at 8 September 2020.
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
Unmarketable Parcels
Total holders
1,268
1,254
494
1,057
213
4,286
Units
591,014
3,257,025
3,713,685
36,318,070
98,396,787
142,276,581
% Units
0.42
2.29
2.61
25.53
69.16
100.00
Minimum $ 500.00 parcel at $ 0.089 per unit
5,618
2,584
4,177,449
Minimum Parcel
Size
Holders
Units
6.
Stock Exchange listing.
Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the ASX Limited.
7.
Income tax
Sipa Resources Limited is taxed as a public company.
8. Voting rights
On show of hands one vote for every registered shareholder and on a poll, one vote for each share held by a registered
shareholder.
9.
Schedule of tenements as at 8 September 2020
Projects
Kitgum-Pader
Location
Uganda
Tenements
1271
Interest
100%
Paterson North (Great Sandy)
Western Australia
EL45/3599, EL45/4697,
EL45/5335, EL45/5336
89%
(11% Ming Gold-diluting)
Paterson North
Barbwire Terrace
Skeleton Rocks
Wallal
Wolfe Basin
Warralong
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
E45/5337
ELA04/2674, ELA04/2684
ELA77/2705, ELA77/2706,
ELA77/2707, ELA77/2708
ELA45/5390
EL80/5344, ELAE80/5491
ELA45/5674, ELA45/5675,
ELA45/5687, ELA45/5712,
ELA45/5740
100%
100%
100%
100%
100%
100%
Page 60 – Annual Report 2020
b Sipa Resources Limited 2019 Annual Report Sipa Resources LimitedSipa Resources Limited
SIPA RESOURCES LIMITED
ABN 26 009 448 980
CORPORATE DIRECTORY
for the year ended 30 June 2020
DIRECTORS
Tim Kennedy B.App Sc (Geology), MBA, MAusIMM, MGSA (Non-Executive Chairman)
Pip Darvall MSc (Geology), MBA (Managing Director since 1 February 2020)
Karen Field B Ec, FAICD (Non-Executive Director)
Craig McGown BComm, FCA, ASIA (Non-Executive Director)
John Forwood B.Sc (Hons) LlB (Hons) (Non-Executive Director) (Appointed 10 July 2020)
COMPANY SECRETARY
Tara Robson BA (Accounting), CPA (USA)
REGISTERED OFFICE
Unit 5, 12-20 Railway Road
SUBIACO WA 6008
Telephone
(08) 9388 1551
AUDITORS
PwC
Level 15 Brookfield Place
125 St Georges Terrace
PERTH WA 6000
SHARE REGISTRY
Computershare
Level 11
172 St Georges Terrace
PERTH WA 6000
Enquiries (within Australia) 1300 850 505
(outside Australia) 61 3 9415 4000
www.investorcentre.com/contact
WEBSITE
www.sipa.com.au
A N N UA L
R E P O R T
2 0 2 0
Unit 5, 12-20 Railway Road
Subiaco Western Australia 6008
+ 61 (0)8 9388 1551
Sipa Resources Limited
Sipa Resources Limited
ABN 26 009 448 980