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2023 ReportSUNRISE RESOURCES PLC D E I F I S R E V D A I L A R E N M I I T N E M P O L E V E D & N O T A R O L P X E Annual Report and Accounts FOR THE YEAR ENDED 30 SEPTEMBER 2015 Sunrise Resourses Annual Report 2015.indd 2 24601.04 - 6 January 2016 10:54 AM - Proof 6 06/01/2016 13:23:10 sunrise resources plc Sunrise Resources plc is a diversified mineral exploration and development Company. our Aim is to develop profitable mining operations to sustain the Company’s wider exploration efforts and create value for shareholders though the discovery of world- class mineral deposits. our strAteGY includes the targeting of advanced projects which have the potential to generate a sustaining cash flow as well as near-drill stage projects where there is potential for significant mineral discovery. We only operate in stable, democratic and mining friendly jurisdictions having low levels of corruption and political risk. our performance Chairman’s Statement Strategic Plan on Track Strategic Report Principal Activities Organisation Overview Financial & Performance Review Operating Review Risks & Uncertainties 1 2 3 3 3 3 5 9 Corporate Responsibility 11 our responsibilities Directors’ Responsibilities Directors’ Report Board of Directors Corporate Governance our financials Independent Auditor’s Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated and Company Statements of Financial Position Consolidated and Company Statements of Changes in Equity Consolidated and Company Statements of Cash Flows 13 14 16 17 19 20 20 21 22 23 Notes to the Financial Statements 24 Annual General meeting Notice of Annual General Meeting 37 Annual General Meeting Explanatory Notes 38 Form of Proxy Proxy Form Notes and Instructions 40 Company Information 39 iBc s t n e t n o c Visit our website for further information at www.sunriseresourcesplc.com 24601.04 - 7 January 2016 10:28 AM - Proof 6 cHAirmAn’s stAtement “I am pleased to present the Company’s Annual Report and Financial Statements for the year ended 30 September 2015.” Our Strategic Plan has two main objectives. To generate cash flow from more advanced projects, and to add value through mineral discovery by drill testing more speculative exploration targets. I am pleased to report that excellent progress has been made with both objectives in 2015. We believe that industrial minerals projects have the greatest potential to achieve an early cash flow as these typically have fewer permitting issues, enabling them to be advanced to production more quickly than base or precious metal projects. This was our objective when acquiring the County Line Diatomite Project and I am therefore delighted to have recently reported a lease agreement with North America’s largest diatomite producer, EP Minerals, LLC that could see development of the project at no further cost or risk to our Company. Under the terms of the Lease, EP Minerals will fund all future evaluation and development and pay a revenue based royalty to Sunrise Resources. Should EP Minerals, LLC maintain its interest in the project we can look forward to a schedule of minimum royalty payments, starting in less than 18 months’ time. With a similar objective in mind, we have also recently reported the acquisition of a second industrial minerals project in Nevada, the Pozz Ash Project, where we have discovered a potential new source of natural pozzolan, a “green” alternative to cement in cement and concrete mixes. The deposit outcrops favourably over a wide area with minimal overburden, characteristics shared with the County Line Diatomite Project. Pozzolan samples are currently undergoing industrial testing. Our Junction Gold Project and our Garfield Copper-Gold-Silver Project have also been readied for drill testing and trenching in 2015 but we have been cautious with all expenditures, with the result that some of the targets set out for drilling in our last Annual Report were not met, most notably in Australia where we have not yet drill tested our new kimberlite discoveries on the Cue Diamond Project or the interesting gold targets on our Baker’s and Corona Projects. These remain targets for 2016. We have renewed our licence over the Derryginagh Barite Project in Ireland for a further two years and additional industrial minerals projects are under consideration with a growing emphasis on Nevada, USA. In 2015 our drilling activities focused on the Bay State Silver project after receiving exciting silver results from surface sampling and bonanza results from underground sampling along the Chihuahua vein system. Whilst only three drill holes were completed in the first phase of drilling, all three holes hit high-grade silver mineralisation and further drilling is now warranted. A further 14 drill holes have already been permitted which the Company believes should be sufficient for an initial Mineral Resource Estimate should the drilling continue to be successful. In the current depressed commodity and mining share markets it is our goal to achieve a balance between sufficient fundraising to advance our Strategic Plan and minimising shareholder dilution. Nevertheless I believe our achievements in 2015 are notable given that we have limited our fundraising during the year to just £420,000. I would also like to highlight the contributions made by my fellow directors who, for another year, have taken their fees in shares in order to reduce cash outflows, a point not always recognised by shareholders. Our Annual General Meeting will be held on 18th February 2016, as set out on page 37 and I encourage shareholders to attend. Patrick Cheetham Executive Chairman 11 December 2015 Stock Code: SRES www.sunriseresourcesplc.com 1 24601.04 - 7 January 2016 10:28 AM - Proof 6 Our Performance 2 strAteGic plAn on trAck KEy POINTS from our STRATEGy & BUSINESS PLAN are summarised here and reviewed against our progress in the calendar year 2015 and our targets for 2016: KEy POINTS PROGRESS IN 2015 TARGETS FOR 2016 To acquire, explore and develop mineral projects in stable, democratic and mining friendly jurisdictions. Project activities restricted to Nevada, USA and Australia. Continue the focus on Australia and Nevada, USA. New projects in Nevada in 2015 – Additional industrial minerals projects Junction Gold Project and Pozz Ash Project. under consideration. Target advanced projects which have the potential to generate a sustaining cash flow as well. Lease agreement signed with leading diatomite producer EP Minerals – future cash flow potential at no future cost or risk to Sunrise. Evaluate Pozz Ash Project and seek industrial partner. Target near-drill stage projects where Successful first drill test of the Bay there is potential for significant mineral discovery. State Silver Project. Follow up drilling of Bay State Silver Project towards Mineral Resource definition. Acquire 100% of a project through research and by staking or licencing of “open ground” from the relevant authority. This allows the Company to acquire 100% ownership of valuable assets. To run the Company with low overheads and be a low cost explorer. New Projects acquired 100% by prospecting and staking open ground e.g. Consider further strategic acquisitions in Australia and Nevada, USA. — Junction Gold Project — Pozz Ash Project Corporate overheads shared with Continue cost sharing and strive for Tertiary Minerals plc. exploration cost efficiencies. Directors’ fees continue to be taken Seek partners for certain other in shares. projects to reduce exploration costs. Tertiary Minerals plc has taken part payment of shares in lieu of cash for management charges. Project expenditure reduced following agreement with EP Minerals. 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 strAteGic report Sunrise Resources plc UK SR Minerals Inc. Nevada Republic of Ireland Sunrise Minerals Australia Pty Ltd The Directors of the Company and its subsidiary undertakings (which together comprise “the Group”) present their Strategic Report for the year ended 30 September 2015. principAl Activities The principal activity of the Group is the identification, acquisition, exploration and development of mineral projects. The main areas of activity are Australia and the USA. The Group also has a project in Ireland. orGAnisAtion overview The Group’s business is directed by the Board and is managed by the Executive Chairman. The Company has a Management Services Agreement with Tertiary Minerals plc (“Tertiary”) which is a significant shareholder in the Company (as defined under the AIM Rules). Under this cost sharing agreement Tertiary provides all of the Company’s administration and technical services, including the services of the Executive Chairman, at cost. Day-to-day activities are managed from Tertiary’s offices in Macclesfield in the United Kingdom, but the Group operates in three other countries. The corporate structure of the Group reflects the historical pattern of acquisition by the Group and the need, where appropriate, for fiscal and other reasons, to have incorporated entities in particular territories. The Group’s exploration activity in Finland is undertaken through a registered branch in Finland. In Australia the Company operates through an Australian subsidiary, Sunrise Minerals Australia Pty Ltd. In Nevada, USA, the Company operates through a local subsidiary, SR Minerals Inc. exploration costs of £35,276 (2014: £52,351) and impairment of deferred costs of £10,386 (2014: £281,282). Administration costs include an amount of £10,829 (2014: £128,725) as non- cash costs for the value of certain options and warrants held by employees and others as required by IFRS 2. The Board of Directors comprises two non-executive directors and the Executive Chairman. Their profiles are provided on page 16. The Executive Chairman of the Company is also Chairman of Tertiary Minerals plc, but otherwise the Board is independent of Tertiary. finAnciAl & performAnce review The Group is not yet producing minerals and so has no income other than a small amount of bank interest. Consequently the Group is not expected to report profits until it disposes of or is able to profitably develop or otherwise turn to account its exploration and development projects. The results for the Group are set out in detail on pages 20 to 23. The Group reports a loss of £301,271 for the year (2014: £700,295) after administration costs of £256,957 (2014: £368,517) and after crediting interest of £1,348 (2014: £1,855). The loss includes expensed pre-licence and reconnaissance The Financial Statements show that, at 30 September 2015, the Group had net current assets of £67,911 (2014: £260,019). This represents the cash position after allowing for receivables and trade and other payables. These amounts are shown in the Consolidated and Company Statement of Financial Position on page 21 and are also components of the Net Assets of the Group. Net assets also include various “intangible” assets of the Company. As the name suggests, these intangible assets are not cash assets but include some of this year’s and previous years’ expenditure on mineral projects where that expenditure meets the criteria in Note 1(d) of the accounting policies. The intangible assets total £753,738 (2014: £513,431) and a breakdown by project is shown in Note 2 to the financial statements on page 27. Details of intangible assets, property, plant and equipment and investments are also set out in Notes 8, 9 and 10 of the financial statements. 24601.04 - 7 January 2016 10:28 AM - Proof 6 3 Our PerformanceStock Code: SRESwww.sunriseresourcesplc.com 4 strAteGic report CONTINUED “Our strategic plan has two main objectives. To generate cash flow from more advanced projects, and to add value through mineral discovery.” Expenditures which do not meet the criteria in Note 1(d), such as pre- licence and reconnaissance costs, are expensed and add to the Company’s loss. The loss reported in any year can also include expenditure for specific projects carried forward in previous reporting periods as an intangible asset but which the Board determines is “impaired” in the reporting period. It is a consequence of the Company’s business model that there will be regular impairments of unsuccessful exploration projects. The extent to which expenditure is carried forward as intangible assets is a measure of the extent to which the value of the Company’s expenditure is preserved. In the current reporting period, an additional amount of £279 was impaired in respect of costs incurred in the year for the Derryginagh Project in Ireland, £9,589 in respect of the Kuusamo Project in Finland and £518 in respect of other diamond projects in Finland. The intangible asset value of a project should not be confused with the realisable or market value of a particular project which will, in the Directors’ opinion, be at least equal in value and often considerably higher. Hence the Company’s market capitalisation on the AIM Market is usually in excess of the net asset value of the Group. The Company finances its activities through periodic capital raisings, as share placings and through other innovative equity based financial instruments. As the Company’s projects become more advanced there may be strategic opportunities to obtain funding for some projects from future customers via production sharing, royalty and other marketing arrangements. The recently announced agreement with EP Minerals, LLC, which was announced in December 2015, is such an example. Key Performance IndIcators The financial statements of a mineral exploration company can provide a moment in time snapshot of the financial health of the Company but do not provide a reliable guide to the performance of the Company or its Board. 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 The usual financial key performance indicators (“KPIs”) cannot be applied to a company with no turnover and so the Directors consider that the detailed information in the Operating Review is the best guide to the Group’s progress and performance during the year. In addition the Directors highlight the following KPIs and expect that further KPIs will be reported as the Company progresses through development: Health & Safety The Group has not lost any man-days through injury and there have been no Health and Safety incidents or reportable accidents during the year. Environment Fundraising No Group company has had or been notified of any instance of non-compliance with environmental legislation in any of the countries in which they work. The Company raised £420,000 before expenses through the placing of shares in the reporting period and issued equity to the value of £19,215 in consideration of fees payable to Directors and to the value of £21,298 to Tertiary Minerals plc in consideration of at-cost management fees. In exploring for world-class mineral deposits, we accept that not all our exploration will be successful but also that the rewards for success can be high. We therefore expect that our shareholders will be invested for the potential for capital growth taking a long-term view of management’s good track record in mineral discovery and development. operAtinG review During 2015 operations have been focused on the Company’s projects in Nevada, USA and consequently only limited exploration work was carried out elsewhere. The Company’s Derryginagh project licence in Ireland has been renewed for a further two year period and the Company’s residual interests in two diamond exploration licences in Finland were surrendered following the end of the financial year. sr mIneraLs Inc., neVada, Usa The State of Nevada is considered to be one of the most attractive mining jurisdictions in the world. It is the fourth largest gold producing area in the world, a large silver producer, a re-emerging copper producer and a significant producer of industrial minerals. The Company controls several mineral projects all of which have been acquired in the past two years. The County Line Diatomite and Bay State Silver Projects are currently the highest priority. COUNTy LINE DIATOMITE PROjECT Diatomite is an industrial raw material comprised of the hollow and lattice- like silica skeletons of aquatic algae (diatoms). It is mainly used, after heat treatment (calcination) with or without flux addition, in the filtration of beer, wine, fats, biofuels and fruit juices, etc. It is also used as an industrial filler and in various agricultural and horticultural applications. For use in high value filtration applications the physical and chemical properties of the calcined and flux calcined diatomite are critical. The Company holds 109 claims on the border of Mineral and Nye counties in Nevada, 200km south-east of the city of Reno. The claims cover an occurrence of diatomite which underlies most of the 8 sq. km. area of the claims. Whilst there is currently no code- compliant Mineral Resource defined for the project, the extensive exposures of diatomite suggest that a large resource could be defined by shallow drilling. In 2015, two programmes of surface sampling and sample testing have been carried out by an independent company. Testing has included calcination and flux calcination processing of raw diatomite and evaluation of the calcined and flux calcined products. This testwork builds on the Company’s preliminary testwork which was considered promising but was not optimised. The latest testwork was successful in producing calcined and flux calcined diatomite with key physical and chemical properties that meet the commercial requirements for use in filtration. In early December 2015 a lease agreement was signed with EP Minerals, LLC. The Agreement allows EP Minerals to continue its evaluation of the Company’s 109 claims for an 18 month period. Before the expiry of this period, should EP Minerals wish to continue the Lease, it must nominate no more than 60 contiguous claims to which the Lease will then apply and make an initial payment to the Company of US$450,000. The remaining 49 claims will not then be subject to the Lease Agreement. 24601.04 - 7 January 2016 10:28 AM - Proof 6 5 Our PerformanceStock Code: SRESwww.sunriseresourcesplc.com 6 strAteGic report CONTINUED neVada, Usa where the average grade of 18 samples along 230m strike length to end of adit was over 1kg/tonne silver (1,123g/t or 33oz/ton). These results were followed up with a three-hole diamond drill programme. The programme was completed successfully in September 2015, despite the challenges of the steep topography. High grade silver mineralisation was intersected in all three drill holes i.e.: 1,460g/t silver (42.6oz/ton) over 0.2m from 164.13m in Hole 15SRDD002 566g/t silver (16.5oz/ton) over 0.5m from 70.71m in Hole 15SRDD001, and 503g/t silver (14.7 oz/ton) over 1.4m from 185.32m in Hole 15SRDD003 Follow up drilling is now warranted and drill permits are already in place to allow for drilling of at least a further 14 holes. The Company believes this should be sufficient to allow for definition of a JORC compliant Mineral Resource Estimate should drilling continue to be successful. Should EP Minerals proceed to develop the leased claims, Sunrise will be entitled to receive a revenue based royalty. In order to ensure that any production is advanced in a timely manner EP Minerals must, three years after the initial payment, make further minimum royalty payments to Sunrise in the amount of US$75,000 at the start of Year 4 and US$150,000 at the start of Year 5 and each subsequent year for the duration of the Lease. EP Minerals has the right to withdraw from the Lease at any time. The initial and the minimum annual royalty payments to Sunrise will be offset against actual royalty entitlements but any excess Sunrise royalty entitlement will be paid to Sunrise on a six monthly basis from the start of production. The term of the Lease is 25 years and it is renewable for two further 25 year periods. Sunrise will be free to continue its own exploration on those 49 or more claims that do not form part of any ongoing lease agreement with EP Minerals. This will allow the Company to consider future diatomite developments outside the leased area, whether or not competitive with EP Minerals. EP Minerals, LLC is a worldwide leader in diatomaceous earth (DE), clay and perlite. This agreement validates the Company’s strategy in the industrial minerals business and could lead to development of the project at no further costs or risk to the Company. BAy STATE SILvER PROjECT In late 2014, the Company secured a lease agreement and option to acquire a group of patented mining claims covering the historic Bay State Silver Mine in the Newark Mining District of White Pine County, Nevada. The Company has also located 24 unpatented mining claims surrounding the patents and in 2015 acquired rights to two further mining patents that cover additional veins previously excised from the Company’s claim area. The mine was worked for silver in the 1870s and again in the 1900s when mining focused on two main NW- SE striking vein zones hosted within limestone. The largest workings are on the Chihuahua vein system over a strike length of some 900m and occur on both sides of a steep-walled canyon. The Company has moved quickly to make an initial evaluation of the project and in 2015 continued its sampling programmes both at the surface and underground in the Chihuahua adit. Bonanza silver values up to 4kg/tonne silver (4,020g/t or 0.4% or 117oz/t) were returned within replacement style mineralisation at end of adit over 61cm 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 ThE POzz ASh PROjECT In December 2015 the Company staked claims over an extensive deposit of volcanic ash in Nevada having potential as a source of pozzolan (see inset box) for use in cement and concrete mixes. The production of cement is responsible for 5% of the global anthropogenic carbon dioxide emissions with nearly one tonne of CO2 generated for each tonne of cement produced. Cement manufacturers are therefore under strong pressure to minimise their carbon footprint and the use of pozzolan as a partial replacement for Portland cement in cement mixes is one way in which this is being achieved. Samples taken from as far apart as 2km have a uniform chemical composition which meets the ASTM Standard requirements for Class N natural pozzolans and the mineralogy and particle morphology of the ash suggest the ash will have a high pozzolanic activity. The Company is now testing the ash for industrial use as a Supplementary Cementitious Material. jUNCTION GOLD PROjECT The Junction Gold Project is a new project in 2015 and is located far from any modern-era gold mine or deposit. It has, however, previously been prospected for copper with old bulldozer trenches and shallow excavations scattered over the 1.2 sq. km. area targeting copper mineralisation in quartz veins in granite in a north-east trending zone. The copper mineralisation is spotty in nature and contains only low gold values (generally less than 0.5 grams/tonne (g/t) gold). However, parallel to, and to the north- west of the main copper zone, the Company has discovered a north-east ABout poZZolAn Pozzolan is defined (ASTM C125) as a siliceous or siliceous and aluminous material, which in itself possesses little or no cementitious value but will, in finely divided form and in the presence of moisture, chemically react with calcium hydroxide at ordinary temperatures to form compounds possessing cementitious properties. Natural pozzolans include some volcanic ashes such as those found around Pozzuoli near to Mount Vesuvius (hence the name). The Romans perfected the use in natural pozzolan/lime mixtures over 2,000 years ago and “Roman” cement was the main cement used until the early 1900s when Portland cement became popular and is now the main hydraulic cement used today. A number of artificial materials also have pozzolanic properties including the ash produced by coal-burning power stations (so called fly-ash), some iron furnace slags, pumice, silica fume and some organic materials such as rice husks. The use of fly-ash in cement mixtures (as an alternative to disposal in landfill) grew from the 1960s in response to landfill issues but the availability of fly-ash is now declining in areas where coal-fired stations are being phased out, and the quality is becoming more variable as emission controls are imposed by new environmental legislation. Natural pozzolans are therefore seeing a resurgence based on their strong “green” credentials and, today, pozzolans are used as a direct additive to concrete mixes and as a partial replacement for cement in amounts replacing up to 35% of the cementing material. striking gold zone where grab samples taken from exposures of the quartz vein over a strike length of 240m all contain gold with assays ranging from 1.3 to 12.9 g/t gold, averaging 5.6 g/t gold. Two samples of altered granite wall rock from near the reef assayed 1.6 and 3.8 g/t gold suggesting potential for more significant widths of gold mineralisation. The significance of this new gold find remains to be determined but initial sampling results are very favourable. An orientation soil sampling line completed over the gold line suggests that soil sampling will be a useful means to delineate targets for drilling. 24601.04 - 7 January 2016 10:28 AM - Proof 6 7 Our PerformanceStock Code: SRESwww.sunriseresourcesplc.com 8 strAteGic report CONTINUED CUE BAKER’S aUstraLIa CORONA CORONA & BAkER’S GOLD PROjECTS The Company’s Corona & Baker’s Gold Projects are located 150km east of the Cue Diamond Project within the Meekatharra Greenstone Belt. This belt has yielded over 5.5 million ounces of gold and hosts a number of currently producing gold mines including the Andy Well high grade gold deposit which provides an exploration model for the Company. Drill testing of gold-in-soil anomalies defined by the Company is budgeted for 2016, once Aboriginal heritage clearance has been obtained. other Projects DERRyGINAGh BARITE PROjECT No work was carried out on the Derryginagh Barite Project in Ireland during 2015, however the Company was recently offered and accepted a renewal of the Derryginagh Prospecting Licence for a further two year period. FINLAND DIAMOND PROjECTS Following the end of the accounting period the Company applied to surrender its two remaining exploration licences in Finland (Kattaisenvaara and Kaletto Projects, Kuusamo Region) due to their low priority and as a cost saving measure. sUnrIse mIneraLs aUstraLIa Pty Ltd CUE DIAMOND PROjECT The 100% owned Cue Diamond Project is located in the Murchison Mining District 80km north-west of the town of Cue in Western Australia. The project area hosts a number of diamondiferous kimberlite dykes and areas of diamondiferous kimberlite float. In 2015 the Company commissioned a re-interpretation of regional airborne magnetic data from Southern Geoscience Consultants. The objective was to gain a better understanding of the regional structural controls on kimberlite emplacement. Numerous additional targets were identified for field follow up in 2016. Drill testing of kimberlites discovered last year at Area 6 and Soapy Bore Northwest, and work to discover the source of a large area of diamondiferous kimberlite float at Target 5, was postponed in 2015 due to budget constraints but remains an objective to 2016. OThER NEvADA PROjECTS The Company holds two projects in the prolific Walker Lane Mineral Belt known for its economic porphyry, skarn and IOCG type copper-gold deposits. The Garfield Gold, Silver & Copper Project comprises twenty-four lode claims covering an area of 2 sq. km. some 10km west of the town of Hawthorne in southern Nevada. The claims centre on a small outcrop of gossan found by the Company during a reconnaissance sampling programme, a sample of which assayed 6% copper, 3.5 grams/tonne gold and 4 ounces/ton silver. During 2015, the Company carried out a limited soil sampling programme which resulted in the definition of a discrete copper-gold soil anomaly associated with the mineralised outcrop. A permit has been received for a trenching programme to better expose the mineralisation for sampling purposes prior to drill testing. This work is planned for 2016. No work was carried out on the Strike Copper Project which lies approximately 225km south-east of Reno, Nevada and comprises six claims covering an area of outcropping oxide- copper mineralisation. 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 risks & uncertAinties The Board regularly reviews the risks to which the Group is exposed and ensures through its meetings and regular reporting that these risks are minimised as far as possible. The principal risks and uncertainties facing the Group at this stage in its development and in the foreseeable future are detailed below together with risk mitigation strategies employed by the Board. risk mitiGAtion strAteGies exPLoratIon rIsK The Group’s business is mineral exploration and evaluation which are speculative activities. There is no certainty that the Group will be successful in the definition of economic mineral deposits, or that it will proceed to the development of any of its projects or otherwise realise their value. RESOURCE RISK All mineral projects have risk associated with defined grade and continuity. Mineral Reserves are always subject to uncertainties in the underlying assumptions which include geological projection and metal price assumptions. DEVELOPMENT RISK Delays in permitting, financing and commissioning a project may result in delays to the Group meeting production targets. Changes in commodity prices can affect the economic viability of mining projects and affect decisions on continuing exploration activity. MINING AND PROCESSING TECHNICAL RISK Notwithstanding the completion of metallurgical testwork, test mining and pilot studies indicating the technical viability of a mining operation, variations in mineralogy, mineral continuity, ground stability, groundwater conditions and other geological conditions may still render a mining and processing operation economically or technically non-viable. ENVIRONMENTAL RISK Exploration and development of a project can be adversely affected by environmental legislation and the unforeseen results of environmental studies carried out during evaluation of a project. Once a project is in production unforeseen events can give rise to environmental liabilities. The directors bring over 80 years of combined mining and exploration experience and an established track record in mineral discovery. The Company targets advanced and drill ready exploration projects in order to avoid higher risk grass roots exploration. Resources and reserves are estimated by independent specialists on behalf of the Group in accordance with accepted industry standards and codes. The directors are realistic in the use of metal and mineral price forecasts and impose rigorous practices in the QA/QC programmes that support its independent estimates. The Company’s permitting requirements are limited at this stage to its exploration activities but to reduce development risk in future the directors will ensure that its permit and financing applications are robust and thorough and will seek to position the Company as a low quartile cost producer. From the earliest stages of exploration the directors look to use consultants and contractors who are leaders in their field and in future will seek to strengthen the executive and the Board with additional technical and financial skills as the Company transitions from exploration to production. Mineral exploration carries a lower level of environmental liability than mining. The Company has adopted an Environmental Policy and the directors avoid the acquisition of projects where liability for legacy environmental issues might fall upon the Company. 24601.04 - 7 January 2016 10:28 AM - Proof 6 9 Our PerformanceStock Code: SRESwww.sunriseresourcesplc.com 10 strAteGic report CONTINUED risk mitiGAtion strAteGies POLITICAL RISK All countries carry political risk that can lead to interruption of activity. Politically stable countries can have enhanced environmental and social permitting risks, risks of strikes and changes to taxation, whereas less developed countries can have, in addition, risks associated with changes to the legal framework, civil unrest and government expropriation of assets. PARTNER RISK Whilst there has been no past evidence of this, the Group can be adversely affected if joint venture partners are unable or unwilling to perform their obligations or fund their share of future developments. FINANCING & LIQUIDITy RISK The Company has an ongoing requirement to fund its activities through the equity markets and in future to obtain finance for project development. There is no certainty such funds will be available when needed. FINANCIAL INSTRUMENTS Details of risks associated with the Group’s Financial Instruments are given in Note 18 to the financial statements on page 34. The Company’s strategy restricts its activities to stable, democratic and mining friendly jurisdictions. The Company has adopted a strong Anti-corruption Policy and Code of Conduct and this is strictly enforced. The Board’s policy is to maintain control of certain key projects so that it can control the pace of exploration and reduce partner risk. For projects where other parties are responsible for critical payments and expenditures the Company’s agreements legislate that such payments and expenditures are met. The Company maintains a good network of stockbroking contacts that has historically met its financing requirements. The Company’s low overheads and cost effective exploration strategies help reduce its funding requirements and currently the directors take their fees in shares. Nevertheless further equity issues will be required from time to time. The directors are responsible for the Group’s systems of internal financial control. Although no systems of internal financial control can provide absolute assurance against material misstatement or loss, the Group’s systems are designed to provide reasonable assurance that problems are identified on a timely basis and dealt with appropriately. In carrying out their responsibilities, the directors have put in place a framework of controls to ensure as far as possible that ongoing financial performance is monitored in a timely manner, that corrective action is taken and that risk is identified as early as practically possible, and they have reviewed the effectiveness of internal financial control. The Board, subject to delegated authority, reviews capital investment, property sales and purchases, additional borrowing facilities, guarantees and insurance arrangements. forward LooKIng statements This Annual Report contains certain forward looking statements that have been made by the directors in good faith based on the information available at the time of the approval of the Annual Report. By their nature, such forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements. 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 The amount shown in the Consolidated and Company Statement of Financial Position in respect of trade payables at the end of the financial year represents 8 days of average daily purchases (2014: 8 days). heaLth and safety The Board recognises it has a responsibility to provide strategic leadership and direction in the development of the Group’s health and safety strategy in order to protect all of its stakeholders. The Company has developed a Health and Safety Policy to clearly define roles and responsibilities and in order to identify and manage risk. This Strategic Report was approved by the Board of Directors on 11 December 2015 and signed on its behalf. Patrick Cheetham Executive Chairman The Group’s activities carried out in accordance with the Environmental Policy have had only minimal environmental impact and this policy is regularly reviewed. Where appropriate, all work is carried out after advance consultation with affected parties. emPLoyees The Group engages its employees to understand all aspects of the Group’s business and seeks to remunerate its employees fairly, being flexible where practicable. The Group gives full and fair consideration to applications for employment received regardless of age, gender, colour, ethnicity, disability, nationality, religious beliefs, transgender status or sexual orientation. The Board takes account of employees’ interests when making decisions and suggestions from employees aimed at improving the Group’s performance are welcomed. The Company has adopted an Anti- corruption Policy and Code of Conduct. sUPPLIers and contractors The Group recognises that the goodwill of its contractors, consultants and suppliers is important to its business success and seeks to build and maintain this goodwill through fair dealings. The Group has a prompt payment policy and seeks to settle all agreed liabilities within the terms agreed with suppliers. corporAte responsiBilitY The Board takes regular account of the significance of social, environmental and ethical matters affecting the business of the Group. At this stage in the Group’s development the Board has not adopted a specific policy on Corporate Social Responsibility as it has a limited pool of stakeholders other than its shareholders. Rather, the Board seeks to protect the interests of the Group’s stakeholders through individual policies and through ethical and transparent actions. sharehoLders The Board seeks to protect shareholders’ interests by following, where appropriate, the guidelines in the UK Corporate Governance Code and the directors are always prepared, where practicable, to enter into a dialogue with shareholders to promote a mutual understanding of objectives. The Annual General Meeting provides the Board with an opportunity to informally meet and communicate directly with investors. enVIronment The Board recognises that its principal activity, mineral exploration, has potential to impact on the local environment and consequently has adopted an Environmental Policy to ensure that the Group’s activities have minimal environmental impact. Where appropriate the Group’s contracts with suppliers and contractors legally bind those suppliers and contractors to do the same. 24601.04 - 7 January 2016 10:28 AM - Proof 6 www.sunriseresourcesplc.com 11 Stock Code: SRES Our Performance 12 Sunrise Resources plc Annual Report and Accounts 2015 s e i t i l i b i s n o p s e r r u o Directors’ Responsibilities Directors’ Report Board of Directors Corporate Governance 13 14 16 17 24601.04 - 7 January 2016 10:28 AM - Proof 6 directors’ responsiBilities The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and applicable law. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. The directors are also required to prepare financial statements in accordance with the AIM Rules of the London Stock Exchange for companies trading securities on the AIM Market. In preparing these financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. They are further responsible for ensuring that the Strategic Report and the Report of the Directors and other information included in the Annual Report and Financial Statements is prepared in accordance with applicable law in the United Kingdom. weBsite puBlicAtion The maintenance and integrity of the Sunrise Resources plc website is the responsibility of the directors; the work carried out by the auditors does not involve the consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred in the accounts since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the other information included in annual reports may differ from legislation in other jurisdictions. 24601.04 - 7 January 2016 10:28 AM - Proof 6 Stock Code: SRES www.sunriseresourcesplc.com 13 Our Responsibilities 14 directors’ report The directors are pleased to submit their Annual Report and audited accounts for the year ended 30 September 2015. The Strategic Report starting on page 3 contains details of the principal activities of the Company and includes the Operating Review which provides detailed information on the development of the Group’s business during the year and indications of likely future developments and events that have occurred after the Balance Sheet date. GoinG concern In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches. Further funding is raised as and when required. When any of the Group’s projects move to the development stage, specific project financing will be required. The directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report. These projections include the proceeds of future fundraising necessary within the next 12 months to meet the Company’s and Group’s overheads and planned discretionary project expenditures and to maintain the Company and Group as going concerns. Although the Company has been successful in raising finance in the past, there is no assurance that it will obtain adequate finance in the future. This represents a material uncertainty related to events or conditions which may cast significant doubt on the Group and Company’s ability to continue as going concerns and, therefore, that they may be unable to realise their assets and discharge their liabilities in the normal course of business. However, the directors have a reasonable expectation that they will secure additional funding when required to continue meeting corporate overheads and exploration costs for the foreseeable future and therefore believe that the going concern basis is appropriate for the preparation of the financial statements. dividend The directors are currently unable to recommend the payment of any ordinary dividend. finAnciAl instruments And otHer risks The business of mineral exploration and evaluation has inherent risks. Details of the Group’s financial instruments and risk management objectives and of the Group’s exposure to risk associated with its financial instruments are given in Note 18 to the financial statements. Details of risks and uncertainties that affect the Group’s business are given in the Strategic Report on page 9. directors The directors holding office in the period were: Mr P L Cheetham Mr F P H Johnstone Mr D J Swan The directors’ shareholdings are shown in Note 16 to the financial statements. 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 sHAreHolders As at the date of this report the following interests of 3% or more in the issued share capital of the Company appeared in the share register. as at 11 december 2015 SVS (Nominees) Limited POOL Barclayshare Nominees Limited Pershing Nominees Limited MDCLT Tertiary Minerals plc TD Direct Investing Nominees (Europe) Limited SMKTNOMS HSBC Client Holdings Nominees (UK) Limited 731504 HSDL Nominees Limited Mr Ronald Bruce Rowan SVS Securities (Nominees) ISA Ltd ISA Share Nominees Ltd disclosure of Audit informAtion Each of the directors has confirmed that so far as he is aware, there is no relevant audit information of which the Company’s Auditor is unaware, and that he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the Company’s Auditor is aware of that information. number of shares % of share capital 93,715,146 70,893,499 58,127,500 52,936,593 35,996,451 30,615,453 30,349,440 25,000,000 23,170,910 21,436,708 13.56 10.26 8.41 7.66 5.21 4.43 4.39 3.62 3.35 3.10 Auditor A resolution to reappoint Crowe Clark Whitehill LLP as Auditor of the Company will be proposed at the forthcoming Annual General Meeting. cHAritABle And politicAl donAtions During the year, the Group made no charitable or political donations. AnnuAl GenerAl meetinG Notice of the Company’s Annual General Meeting convened for Thursday 18 February 2016 at 10.30 a.m. is set out on page 37 of this report. Explanatory Notes giving further information about the proposed resolutions are set out on page 38. Approved by the Board of Directors on 11 December 2015 and signed on its behalf. Patrick Cheetham Executive Chairman 24601.04 - 7 January 2016 10:28 AM - Proof 6 Stock Code: SRES www.sunriseresourcesplc.com 15 Our Responsibilities 16 BoArd of directors The Directors and Officers of the Company are: “The Board’s role is to agree the Group’s long-term direction and strategy and to monitor the achievement of its business objectives.” Visit our website for further information at www.sunriseresourcesplc.com patrick cheetham executive chairman Francis Johnstone senior non-executive director KEy STRENGTHS: Founding director KEy STRENGTHS: Founding director Mining geologist with 34 years’ experience in mineral exploration 29 years in public company management Appointed: March 2005 Committee Memberships: Chairman of Nomination Committee External Commitments: Executive Chairman of Tertiary Minerals plc 21 years commercial experience in mining Past director of several public listed mining companies including Commercial Director of Ridge Mining plc Appointed: March 2005 Committee Memberships: Chairman of the Remuneration Committee, Member of the Audit and Nomination Committees External Commitments: Adviser to Baker Steel Resources Trust Limited and Director of Mysterybelle Ltd David swan non-executive director colin Fitch llM, Fcis company secretary KEy STRENGTHS: Chartered Accountant with career focus in natural resources industry Past executive director of several public listed mining companies including Oriel Resources plc Appointed: May 2012 Committee Memberships: Chairman of the Audit Committee, Member of the Remuneration and Nomination Committees External Commitments: Non-executive director of Central Asia Metals plc KEy STRENGTHS: Barrister-at-Law Previously Corporate Finance Director of Kleinwort Benson Previously held a number of non- executive directorships of public and private companies, including Merrydown Plc, African Lakes plc and Manders plc Appointed: October 2006 External Commitments: Company Secretary for Tertiary Minerals plc 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 corporAte GovernAnce Although the rules of AIM do not require the Company to comply with the UK Corporate Governance Code (“the Code”), the Company fully supports the principles set out in the Code and will attempt to comply wherever possible, given both the size and resources available to the Company. The Board of Directors currently comprises the combined role of chairman and chief executive and two non-executive directors. The Board considers that this structure is suitable for the Company having regard to the fact that it is not yet revenue-earning. However, it is the intention of the Board to separate these roles in future and to strengthen the executive Board as projects are developed and financial resources permit. Mr F P H Johnstone has served the Company for more than nine years and under the terms of the Code would not now be regarded as independent. However, it is proposed that he now seeks annual re-election rather than re-election every third year, as stated in the Articles of Association. The Company has been fortunate enough to secure the services of Mr Johnstone during that time and he continues to provide valuable advice based on his long experience of the mining industry. The Board is aware of the need to refresh its membership from time to time and will consider appointing additional independent non-executive directors in the future. role of tHe BoArd The Board’s role is to agree the Group’s long-term direction and strategy and to monitor the achievement of its business objectives. The Board meets four times a year for these purposes and holds additional meetings when necessary to transact other business. The Board receives reports for consideration on all significant strategic and operational matters. The non-executive directors are not considered under the terms of the Code to be independent directors by virtue of their long service or their holding of warrants to subscribe for shares in the Company. However, they are considered by the Board to be free from any other business or relationship which could materially interfere with the exercise of their independent judgement. Directors have the facility to take external independent advice in furtherance of their duties at the Group’s expense and have access to the services of the Company Secretary. The Board delegates certain of its responsibilities to the Audit, Remuneration and Nomination Committees of the Board. These Committees operate within clearly defined terms of reference. Audit committee The Audit Committee, composed entirely of non-executive directors, assists the Board in meeting responsibilities in respect of external financial reporting and internal controls. The Audit Committee also keeps under review the scope and results of the audit. It also considers the cost-effectiveness, independence and objectivity of the auditor taking account of any non-audit services provided by them. Mr Swan is Chairman of the Audit Committee. remunerAtion committee The Remuneration Committee also comprises the non-executive directors. Mr Johnstone is Chairman of the Remuneration Committee. The Company does not currently remunerate any of the directors other than in a non- executive capacity. Whilst the Chairman of the Board, Patrick Cheetham, does have an executive role, his services are provided under a general service agreement with Tertiary Minerals plc. The Company issues share warrants to directors and to the staff of Tertiary Minerals plc who are engaged in the management of the activities of the Company. The Company’s policy on the issue of such warrants is that outstanding warrants should not in aggregate exceed 10% of the issued capital of the Company from time to time. Details of directors’ warrants are disclosed in Note 16. nominAtion committee The Nomination Committee comprises the Chairman and the non-executive directors. Mr Cheetham is Chairman of the Nomination Committee. The Nomination Committee meets at least once per year to lead the formal process of rigorous and transparent procedures for Board appointments and to make recommendations to the Board in accordance with best practice and other applicable rules and regulations, insofar as they are appropriate to the Group at this stage in its development. conflicts of interest The Companies Act 2006 permits directors of public companies to authorise directors’ conflicts and potential conflicts, where appropriate, where the Articles of Association contain a provision to this effect. The Company’s Articles contain such a provision. Procedures are in place in order to avoid any conflict of interest between the Company and Tertiary Minerals plc, which held 7.66% of the Company’s issued share capital at 30 September 2015. Tertiary Minerals provides management services to Sunrise Resources in the search, evaluation and acquisition of new projects. 24601.04 - 7 January 2016 10:28 AM - Proof 6 17 Stock Code: SRESwww.sunriseresourcesplc.comOur Responsibilities 1818 Sunrise Resources plc Annual Report and Accounts 2015 i s l a c n a n f r u o i Independent Auditor’s Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated and Company Statements of Financial Position Consolidated and Company Statements of Changes in Equity Consolidated and Company Statements of Cash Flows Notes to the Financial Statements 19 20 20 21 22 23 24 24601.04 - 7 January 2016 10:28 AM - Proof 6 independent Auditor’s report to the Members of Sunrise Resources plc for the year ended 30 September 2015 We have audited the financial statements of Sunrise Resources plc for the year ended 30 September 2015 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated and company statements of financial position, the consolidated and company statements of changes in equity, the consolidated and company statements of cash flows and the related Notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. respective responsiBilities of directors And Auditors As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors. scope of tHe Audit of tHe finAnciAl stAtements A description of the scope of an audit of financial statements is provided on the FRC’s website at www.frc.org.uk/auditscopeukprivate. opinion on finAnciAl stAtements In our opinion: the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs as at 30 September 2015 and of the group’s loss for the year then ended; the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. empHAsis of mAtter – GoinG concern In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in Note 1(b) to the financial statements concerning the group’s and the company’s ability to continue as going concerns. As explained in Note 1(b) to the financial statements, the group’s projections include the proceeds of future fundraising necessary within the next 12 months in order to cover the company’s and group’s overheads and carry out the company’s and group’s planned discretionary project expenditure. As there is no assurance that adequate funds will be obtained, these conditions, along with the other matters explained in Note 1(b) to the financial statements, indicates the existence of a material uncertainty which may cast significant doubt about the group’s and the company’s ability to continue as going concerns. The financial statements do not include the adjustments that would result if the group and company were unable to continue as going concerns. opinion on otHer mAtters prescriBed BY tHe compAnies Act 2006 In our opinion the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements. mAtters on wHicH we Are required to report BY exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Michael Jayson (Senior Statutory Auditor) For and on behalf of Crowe Clark Whitehill LLP Statutory Auditor Manchester, United Kingdom 11 December 2015 Crowe Clark Whitehill LLP is a limited liability partnership registered in England and Wales (with registered number OC307043). 24601.04 - 7 January 2016 10:28 AM - Proof 6 19 Stock Code: SRESwww.sunriseresourcesplc.comOur Financials 20 consolidAted income stAtement for the year ended 30 September 2015 Pre-licence exploration costs Impairment of deferred exploration cost Administrative expenses Operating loss Interest receivable Loss before income tax Income tax Loss on ordinary activities after tax Loss for the year attributable to equity holders of the parent Loss per share – basic and diluted (pence) All amounts relate to continuing activities. notes 9 3 7 6 2015 £ 35,276 10,386 256,957 2014 £ 52,351 281,282 368,517 (302,619) (702,150) 1,348 1,855 (301,271) (700,295) – (301,271) (301,271) (0.05) – (700,295) (700,295) (0.17) consolidAted stAtement of compreHensive income for the year ended 30 September 2015 Loss for the year Items that could be reclassified subsequently to the income statement: Foreign exchange translation differences on foreign currency net investments in subsidiaries Total comprehensive loss for the year attributable to equity holders of the parent 2015 £ 2014 £ (301,271) (700,295) (65,272) (366,543) (28,949) (729,244) 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 consolidAted And compAnY stAtements of finAnciAl position at 30 September 2015 Company Registration Number: 05363956 notes Group 2015 £ Company 2015 £ group 2014 £ company 2014 £ Non-current assets Intangible assets Investment in subsidiaries Available for sale investment Current assets Receivables Cash and cash equivalents Current liabilities Trade and other payables Net current assets Net assets Equity Called up share capital Share premium account Share option reserve Foreign currency reserve Accumulated losses Equity attributable to owners of the parent 9 8 8 11 12 753,738 – 513,431 – 1,055,406 25,000 778,738 25,000 1,080,406 – 705,047 – – – 513,431 705,047 34,483 142,079 176,562 13 (108,651) 67,911 846,649 21,379 105,349 126,728 (84,122) 42,606 1,123,012 23,683 354,350 378,033 (118,014) 260,019 773,450 21,482 291,923 313,405 (84,562) 228,843 933,890 14 14 14 691,149 691,149 503,326 503,326 4,761,776 4,761,776 4,520,686 4,520,686 322,820 (139,024) 322,820 – 404,979 (73,752) 404,979 – (4,790,072) (4,652,733) (4,581,789) (4,495,101) 846,649 1,123,012 773,450 933,890 These financial statements were approved and authorised for issue by the Board of Directors on 11 December 2015 and were signed on its behalf. P L Cheetham Executive Chairman D J Swan Director 24601.04 - 7 January 2016 10:28 AM - Proof 6 21 Stock Code: SRESwww.sunriseresourcesplc.comOur Financials 22 consolidAted And compAnY stAtements of cHAnGes in equitY Group At 30 September 2013 Loss for the year Exchange differences Total comprehensive loss for the year Share issue Share based payments expense Transfer of expired options At 30 September 2014 Loss for the year Exchange differences Total comprehensive loss for the year Share issue Share based payments expense Transfer of expired options At 30 September 2015 Share capital £ 375,996 – – – Share premium account £ 4,107,417 – – – 127,330 413,269 – – – – 503,326 4,520,686 – – – – – – 187,823 241,090 – – – – 691,149 4,761,776 Company At 30 September 2013 Loss for the year/Total comprehensive loss for the year Share issue Share based payments expense Transfer of expired options At 30 September 2014 Loss for the year/Total comprehensive loss for the year Share issue Share based payments expense Transfer of expired options At 30 September 2015 Share capital £ 375,996 – 127,330 413,269 – – – – 503,326 4,520,686 – – 187,823 241,090 – – – – Share option reserve £ 378,106 – – – – 128,725 (101,852) 404,979 – – – – 10,829 (92,988) 322,820 Share premium account £ 4,107,417 – Foreign currency reserve £ Accumulated losses £ (44,803) (3,983,346) – (700,295) (28,949) (28,949) – (700,295) – – – – – 101,852 (73,752) (4,581,789) – (301,271) (65,272) (65,272) – (301,271) – – – – – 92,988 Total £ 833,370 (700,295) (28,949) (729,244) 540,599 128,725 – 773,450 (301,271) (65,272) (366,543) 428,913 10,829 – (139,024) (4,790,072) 846,649 Share option reserve £ 378,106 – – 128,725 (101,852) 404,979 – – 10,829 (92,988) Accumulated losses £ (3,941,421) (655,532) – – 101,852 (4,495,101) (250,620) – – 92,988 Total £ 920,098 (655,532) 540,599 128,725 – 933,890 (250,620) 428,913 10,829 – 691,149 4,761,776 322,820 (4,652,733) 1,123,012 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 consolidAted And compAnY stAtements of cAsH flows for the year ended 30 September 2015 Operating activity Total loss after tax Share based payment charge Shares issued in lieu of net wages Impairment charge (Increase)/decrease in receivables Increase/(decrease) in trade and other payables Net cash outflow from operating activity Investing activity Interest received Purchase of available for sale investment Purchase of intangible assets Loans to subsidiaries Net cash outflow from investing activity Financing activity Issue of share capital (net of expenses) Net cash inflow from financing activity Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at start of year Exchange differences Cash and cash equivalents at 30 September notes Group 2015 £ Company 2015 £ group 2014 £ company 2014 £ (302,619) (252,326) (702,150) (657,316) 10,829 19,215 10,386 (10,800) (9,363) 10,829 19,215 10,386 103 (440) 128,725 16,612 281,282 2,046 39,338 128,725 16,612 281,282 2,660 7,286 (282,352) (212,233) (234,147) (220,751) 1,348 (25,000) (308,933) – (332,585) 409,698 409,698 (205,239) 354,350 (7,032) 142,079 1,706 (25,000) (10,386) (350,359) (384,039) 409,698 409,698 (186,574) 291,923 – 105,349 1,855 – (248,943) – (247,088) 523,987 523,987 42,752 320,353 (8,755) 354,350 1,784 – (4,945) (308,132) (311,293) 523,987 523,987 (8,057) 299,980 – 291,923 11 13 9 12 24601.04 - 7 January 2016 10:28 AM - Proof 6 23 Stock Code: SRESwww.sunriseresourcesplc.comOur Financials 24 notes to tHe finAnciAl stAtements for the year ended 30 September 2015 BAckGround Sunrise Resources plc is a public company incorporated and domiciled in England. It is traded on the AIM Market of the London Stock Exchange – EPIC: SRES. The Company is a holding company (together, “the Group”) for one company incorporated in Australia, and one company incorporated in Nevada, in the United States of America. The Group’s financial statements are presented in Pounds Sterling (£) which is also the functional currency of the Company. The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Group’s financial statements. 1. Accounting policies (a) Basis of preparation The financial statements have been prepared on the basis of the recognition and measurement requirements of International Financial Reporting Standards (IFRS), as adopted by the European Union. They have also been prepared in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. (b) Going concern In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches. Further funding is raised as and when required. When any of the Group’s projects move to the development stage, specific project financing will be required. The directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report. These projections include the proceeds of future fundraising necessary within the next 12 months to meet the Company’s and Group’s overheads and planned discretionary project expenditures and to maintain the Company and Group as going concerns. Although the Company has been successful in raising finance in the past, there is no assurance that it will obtain adequate finance in the future. This represents a material uncertainty related to events or conditions which may cast significant doubt on the Group’s and Company’s ability to continue as going concerns and, therefore, that they may be unable to realise their assets and discharge their liabilities in the normal course of business. However, the directors have a reasonable expectation that they will secure additional funding when required to continue meeting corporate overheads and exploration costs for the foreseeable future and therefore believe that the going concern basis is appropriate for the preparation of the financial statements. (c) Basis of consolidation Investments, including long-term loans, in the subsidiaries are valued at the lower of cost or recoverable amount, with an ongoing review for impairment. The Group’s financial statements consolidate the financial statements of Sunrise Resources plc and its subsidiary undertakings using the acquisition method and eliminate intercompany balances and transactions. In accordance with section 408 of the Companies Act 2006, Sunrise Resources plc is exempt from the requirement to present its own statement of comprehensive income. The amount of the loss for the financial year recorded within the financial statements of Sunrise Resources plc is £250,620 (2014: £655,532). (d) Intangible assets Exploration and Evaluation Accumulated exploration and evaluation costs incurred in relation to separate areas of interest (which may comprise more than one exploration licence or exploration licence applications) are capitalised and carried forward where: (1) such costs are expected to be recouped through successful exploration and development of the area, or alternatively by its sale; or (2) exploration and/or evaluation activities in the area have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to the areas are continuing. 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 1. Accounting policies continued A bi-annual review is carried out by the directors to consider whether any exploration and development costs have suffered impairment in value and, if necessary, provisions are made according to this criteria. The bi-annual impairment review was conducted in March 2015 and September 2015. Accumulated costs where the Group does not yet have an exclusive exploration licence and in respect of areas of interest which have been abandoned, are written off to the income statement in the year in which the pre-licence expense was incurred or in which the area was abandoned. Development Exploration, evaluation and development costs are carried at the lower of cost and expected net recoverable amount. On reaching a mining development decision, exploration and evaluation costs are reclassified as development costs and all development costs on a specific area of interest will be amortised over the useful economic life of the projects, once they become income generating, and the costs can be recouped. (e) Trade and other receivables and payables Trade and other receivables and payables are measured at initial recognition at fair value and subsequently measured at amortised cost. (f) Cash and cash equivalents Cash and cash equivalents consist of cash at bank and in hand and short-term bank deposits with a maturity of three months or less. (g) Deferred taxation Deferred taxation, if applicable, is provided in full in respect of taxation deferred by temporary differences between the treatment of certain items for taxation and accounting purposes. Deferred tax assets are recognised to the extent that they are regarded as recoverable. (h) Foreign currencies The Group’s consolidated financial statements are presented in Pounds Sterling (£), being the functional currency of the Company, and the currency of the primary economic environment in which the Company operates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. For consolidation purposes, the net investment in foreign operations and the assets and liabilities of overseas subsidiaries, associated undertakings and joint arrangements, that have a functional currency different from the Group’s presentation currency, are translated at the closing exchange rates. Income statements of overseas subsidiaries, that have a functional currency different from the Group’s presentation currency, are translated at exchange rates at the date of transaction. Exchange differences arising on opening reserves are taken to the foreign currency reserve. (i) Share based payments The Company issues warrants and options to employees (including directors) and suppliers. For all options and warrants issued after 7 November 2002 the fair value of the services received is recognised as a charge measured at fair value on the date of grant and determined in accordance with IFRS 2, adopting the Black–Scholes–Merton model. The fair value is charged to administrative expenses on a straight-line basis over the vesting period, together with a corresponding increase in equity, based on the management’s estimate of shares that will eventually vest. The expected life of the options and warrants is adjusted based on management’s best estimates, for the effects of non-transferability, exercise restrictions and behavioural considerations. The details of the calculation are shown in Note 15. The Company also issues shares in order to settle certain liabilities, including payment of fees to directors. The fair value of shares issued is based on the closing mid-market price of the shares on the AIM Market on the day prior to the date of settlement and it is expensed on the date of settlement with a corresponding increase in equity. (j) Judgements and estimations in applying accounting policies In the process of applying the Group’s accounting policies above, management has identified the judgemental areas that have the most significant effect on the amounts recognised in the financial statements: 24601.04 - 7 January 2016 10:28 AM - Proof 6 25 Stock Code: SRESwww.sunriseresourcesplc.comOur Financials 26 notes to tHe finAnciAl stAtements CONTINUED for the year ended 30 September 2015 1. Accounting policies continued Intangible Fixed Assets – Exploration and Evaluation Capitalisation of exploration and evaluation costs requires that costs be assessed against the likelihood that such costs will be recoverable against future exploitation or sale or alternatively, where activities have not reached a stage which permits a reasonable estimate of the existence of mineral reserves, a judgement that future exploration or evaluation should continue. This requires management to make estimates and judgements and to make certain assumptions, often of a geological nature, and most particularly in relation to whether or not an economically viable mining operation can be established in future. Such estimates, judgements and assumptions are likely to change as new information becomes available. When it becomes apparent that recovery of expenditure is unlikely the relevant capitalised amount is written off to the income statement. Impairment Impairment reviews for deferred exploration and evaluation costs are carried out on a project by project basis, with each project representing a potential single cash generating unit. The Group will look to evidence produced by its exploration activities to indicate whether the carrying value is impaired. Assessment of the impairment of assets is a judgement based on analysis of the future likely cash flows from the relevant project, including consideration of: (a) the period for which the entity has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed. (b) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned. (c) exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area. (d) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. Impairment reviews for investments are carried out on an individual basis. The Group will look to performance indicators of the investment, such as market share price, to indicate whether the carrying value is impaired. Going Concern The preparation of financial statements requires an assessment of the validity of the going concern assumption. The validity of the going concern assumption is dependent on finance being available for the continuing working capital requirements of the Group. Based on the assumption that such finance will become available, the directors believe that the going concern basis is appropriate for these accounts. Share Based Payments The estimates of share based payments costs requires that management selects an appropriate valuation model and make decisions on various inputs into the model including the volatility of its own share price, the probable life of the options before exercise, and behavioural consideration of employees. (k) Available for sale investments Available for sale financial assets include non-derivative financial assets that are either designated as such or do not qualify for inclusion in any of the other categories of financial assets. Available for sale investments are initially measured at cost and subsequently at fair value, being the equivalent of market value, with changes in value recognised in equity. Gains and losses arising from available for sale investments are recognised in the income statement when they are sold or impaired. (l) Standards, amendments and interpretations not yet effective A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and in some cases have not yet been adopted by the EU. The directors do not expect that the adoption of these standards will have a material impact on the financial statements of the Group in future periods, except that IFRS 9 will impact both the measurement and disclosures of financial instruments and IFRS 15 may have an impact on revenue recognition and related disclosures. At this point it is not practicable for the directors to provide a reasonable estimate of the effect of IFRS 9 and IFRS 15 as their detailed review of these standards is still ongoing. 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 2. segmental analysis The Chief Operating Decision Maker is the Board of Directors. The Board considers the business has one reportable segment, the management of exploration projects, which is supported by a Head Office function. For the purpose of measuring segmental profits and losses the exploration segment bears only those direct costs incurred by or on behalf of those projects, no Head Office cost allocations are made to this segment. The Head Office function recognises all other costs. 2015 Consolidated Income Statement Impairment of deferred exploration costs: Derryginagh Barite Project, Ireland Kuusamo Diamond Project, Finland Other Diamond Projects, Finland Pre-licence exploration costs Share based payments Other expenses Operating loss Bank interest received Loss before income tax Income tax Loss for the year attributable to equity holders Non-current assets Intangible assets: Deferred exploration costs: Cue Diamond Project, Australia Corona Gold Project, Australia Baker’s Gold Project, Australia County Line Diatomite Project, USA Strike Copper-Gold Project, USA Garfield Silver-Gold-Copper Project, USA Bay State Silver Project, USA Junction Gold Project, USA Available for sale investment Current assets Receivables Cash and cash equivalents Current liabilities Trade and other payables Net current assets/(liabilities) Net assets Other data Deferred exploration additions Exchange rate adjustments to deferred exploration costs Exploration projects £ Head office £ Total £ (279) (9,589) (518) (10,386) (35,276) – – (45,662) – – – – – – (10,829) (246,128) (256,957) 1,348 (279) (9,589) (518) (10,386) (35,276) (10,829) (246,128) (302,619) 1,348 (45,662) (255,609) (301,271) – – – (45,662) (255,609) (301,271) 367,330 25,085 35,791 78,741 5,606 17,053 213,943 10,189 753,738 – 753,738 12,893 – 12,893 (37,619) (24,726) 729,012 – – – – – – – – – 25,000 25,000 21,590 142,079 163,669 (71,032) 92,637 117,637 308,933 – – (58,240) 367,330 25,085 35,791 78,741 5,606 17,053 213,943 10,189 753,738 25,000 778,738 34,483 142,079 176,562 (108,651) 67,911 846,649 (248,943) (20,194) 24601.04 - 7 January 2016 10:28 AM - Proof 6 27 Stock Code: SRESwww.sunriseresourcesplc.comOur Financials 28 notes to tHe finAnciAl stAtements CONTINUED for the year ended 30 September 2015 2. segmental analysis continued 2014 Consolidated Income Statement Impairment of deferred exploration costs: Derryginagh Barite Project, Ireland Kuusamo Diamond Project, Finland Other Diamond Projects, Finland Pre-licence exploration costs Share based payments Other expenses Operating loss Bank interest received Loss before income tax Income tax Loss for the year attributable to equity holders Non-current assets Intangible assets: Deferred exploration costs: Cue Diamond Project, Australia Corona Gold Project, Australia Baker’s Gold Project, Australia County Line Diatomite Project, USA Strike Copper-Gold Project, USA Garfield Silver-Gold-Copper Project, USA Bay State Silver Project, USA Current assets Receivables Cash and cash equivalents Current liabilities Trade and other payables Net current assets/(liabilities) Net assets Other data Deferred exploration additions Exchange rate adjustments to deferred exploration costs 3. loss before income tax The operating loss is stated after charging: Fees payable to the Company’s auditor for: The audit of the Company’s annual accounts Other services exploration projects £ head office £ total £ (278,112) (1,256) (1,914) (281,282) (52,351) – – (333,633) – – – – – – (128,725) (239,792) (368,517) 1,855 (278,112) (1,256) (1,914) (281,282) (52,351) (128,725) (239,792) (702,150) 1,855 (333,633) (366,662) (700,295) – – – (333,633) (366,662) (700,295) 415,360 13,945 11,574 46,170 4,405 7,064 14,913 513,431 – – – (41,651) (41,651) 471,780 – – – – – – – – 23,683 354,350 378,033 (76,363) 301,670 301,670 248,943 – – (20,194) 2015 £ 6,000 1,000 415,360 13,945 11,574 46,170 4,405 7,064 14,913 513,431 23,683 354,350 378,033 (118,014) 260,019 773,450 (248,943) (20,194) 2014 £ 6,750 1,250 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 4. directors’ emoluments Remuneration in respect of directors was as follows: P L Cheetham (salary) F P H Johnstone (salary) D J Swan (salary) 2015 £ 12,000 12,000 12,000 36,000 2014 £ 12,000 12,000 12,000 36,000 The above remuneration amounts do not include non-cash share based payments charged in these financial statements in respect of warrants issued to the directors amounting to £7,213 (2014: £15,419) or Employer’s National Insurance Contributions of £Nil (2014: £3,671). Patrick Cheetham is also a director of Tertiary Minerals plc and under the terms of the Management Services Agreement (see Note 5) a total of £96,971 was charged to the Company for his services during the year (2014: £82,918). These services are provided at cost. The directors are also the key management personnel. If all benefits are taken into account, the total key management personnel compensation would be £43,213 (2014: £51,419). 5. staff costs The Company does not employ any staff directly apart from the directors, as shown in Note 4. The services of technical and administrative staff are provided by Tertiary Minerals plc as part of the Management Services Agreement between the two companies (see Note 16). The Company issues warrants to Tertiary Minerals plc staff from time to time and these non-cash share based payments resulted in a charge within the financial statements of £2,714 (2014: £4,196). 6. loss per share Loss per share has been calculated using the loss for the year attributable to equity holders of the parent and the weighted average number of shares in issue during the year. Loss (£) Weighted average shares in issue (No.) Basic and diluted loss per share (pence) 2015 2014 (301,271) (700,295) 606,342,995 405,273,899 (0.05) (0.17) The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for the basic earnings per ordinary share. This is because the exercise of share warrants would have the effect of reducing the loss per ordinary share and is therefore anti-dilutive. 7. income tax No liability to corporation tax arises for the year due to the Group recording a taxable loss (2014: £Nil). The tax credit for the period is lower than the credit resulting from the loss before tax at the standard rate of corporation tax in the UK – 20% (2014: 21%). The differences are explained below. Tax reconciliation Loss before income tax Tax at hybrid rate 20.5% (2014: 22%) Pre-trading expenditure no longer deductible for tax purposes Tax effect at 20.5% (2014: 22%) Unrelieved tax losses carried forward Tax recognised on loss Tax losses carried forward Total losses carried forward for tax purposes 2015 £ 2014 £ (301,271) (61,761) 227,564 46,651 15,110 – – (700,295) (154,065) 634,880 139,674 14,391 – – (3,567,848) (3,494,141) Factors that may affect future tax charges The Group has total losses carried forward of £3,567,848 (2014: £3,494,141). This amount would be charged to tax, thereby reducing tax liability, if sufficient profits were made in the future. The deferred tax asset has not been recognised as the future recovery is uncertain given the exploration status of the Group. The carried tax loss is adjusted each year for amounts that can no longer be carried forward. 24601.04 - 7 January 2016 10:28 AM - Proof 6 29 Stock Code: SRESwww.sunriseresourcesplc.comOur Financials 30 notes to tHe finAnciAl stAtements CONTINUED for the year ended 30 September 2015 8. investments Subsidiary undertakings Company Sunrise Minerals Australia Pty. Ltd. SR Minerals Inc. Investment in subsidiary undertakings Ordinary Shares – Sunrise Minerals Australia Pty. Ltd. Loan – Sunrise Minerals Australia Pty. Ltd Ordinary Shares – SR Minerals Inc. Loan – SR Minerals Inc. At 30 September country of incorporation/ registration type and percentage of shares held at 30 september 2015 Principal activity Australia 100% of ordinary shares Mineral exploration USA 100% of ordinary shares Mineral exploration Company 2015 £ 61 698,380 1 356,964 1,055,406 company 2014 £ 61 607,531 1 97,454 705,047 Sunrise Minerals Australia Pty. Ltd. was incorporated in Australia on 7 October 2009 to facilitate the application for exploration licences in Western Australia. SR Minerals Inc. was incorporated in Nevada, USA on 12 January 2014 to facilitate the application for mining claims in the USA. Available for sale investment Company Taoudeni Resources Limited Available for sale investment Value at start of year Additions to available for sale investment Movement in valuation of available for sale investment At 30 September country of incorporation/ registration type and percentage of shares held at 30 september 2015 Principal activity England & Wales 10.0% of ordinary shares Mineral exploration Group 2015 £ – 25,000 – 25,000 Company 2015 £ – 25,000 – 25,000 group 2014 £ company 2014 £ – – – – – – – – The available for sale investment consists of ordinary shares held in a private limited company. As the company is still at a formational stage, the fair value is considered to be the cost of acquisition during the year. This represents a level three input for the purpose of the IFRS 13 fair value hierarchy. 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 9. intangible assets Deferred exploration expenditure Cost At start of year Additions At 30 September Impairment losses At start of year Change during year Foreign exchange difference At 30 September Carrying amounts At 30 September At start of year Group 2015 £ Company 2015 £ group 2014 £ company 2014 £ 2,747,182 2,193,208 2,498,239 2,188,263 308,933 10,386 248,943 4,945 3,056,115 2,203,594 2,747,182 2,193,208 (2,233,751) (2,193,208) (1,932,275) (1,911,926) (10,386) (58,240) (10,386) – (281,282) (20,194) (281,282) – (2,302,377) 2,203,594 (2,233,751) 2,193,208 753,738 513,431 – – 513,431 565,964 – 276,337 During the year the Group carried out an impairment review which resulted in an impairment charge being recognised in the Consolidated Income Statement as part of other operating expenses. Refer to accounting policy 1(j) for a description of the assumptions used in the impairment review. 10. property, plant and equipment The Group has the use of tangible assets held by Tertiary Minerals plc as part of the Management Services Agreement between the two companies. 11. receivables Other receivables Prepayments 12. cash and cash equivalents Cash at bank and in hand 13. trade and other payables Amounts owed to Tertiary Minerals plc Trade creditors Accruals Group 2015 £ 23,129 11,354 34,483 Group 2015 £ 142,079 142,079 Group 2015 £ 53,888 10,816 43,947 108,651 Company 2015 £ 10,937 10,442 21,379 Company 2015 £ 105,349 105,349 Company 2015 £ 53,888 7,349 22,885 84,122 group 2014 £ 11,436 12,247 23,683 group 2014 £ 354,350 354,350 group 2014 £ 50,050 8,311 59,653 118,014 company 2014 £ 10,456 11,026 21,482 company 2014 £ 291,923 291,923 company 2014 £ 50,050 7,214 27,298 84,562 24601.04 - 7 January 2016 10:28 AM - Proof 6 31 Stock Code: SRESwww.sunriseresourcesplc.comOur Financials 32 notes to tHe finAnciAl stAtements CONTINUED for the year ended 30 September 2015 14. issued capital and reserves Allotted, called up and fully paid Ordinary shares of 0.1p each Balance at start of year Shares issued in the year Balance at 30 September 2015 Number 2015 £ 2014 number 2014 £ 503,325,932 187,822,750 691,148,682 503,326 375,996,307 187,823 127,329,625 691,149 503,325,932 375,996 127,330 503,326 During the year to 30 September 2015 the following share issues took place: An issue of 5,011,388 0.1p ordinary shares at 0.425p per share to Tertiary Minerals plc, for a total consideration of £21,298 (6 November 2014), by way of settlement of an invoice issued to Sunrise Resources plc for management fees. An issue of 70,000,000 0.1p ordinary shares at 0.3p per share, by way of placing, for a total consideration of £188,900 net of expenses (19 January 2015). An issue of 3,278,029 0.1p ordinary shares at 0.275p per share to the three directors, for a total consideration of £9,015 (5 February 2015), in satisfaction of directors’ fees. An issue of 105,000,000 0.1p ordinary shares at 0.2p per share, by way of placing, for a total consideration of £199,500 net of expenses (20 April 2015). An issue of 4,533,333 0.1p ordinary shares at 0.225p per share to the three directors, for a total consideration of £10,200 (29 July 2015), in satisfaction of directors’ fees. During the year to 30 September 2014 a total of 127,329,625 0.1p ordinary shares were issued, at an average price of 0.45p per share, for a total consideration of £540,599. Nature and purpose of reserves Foreign currency reserve Exchange differences relating to the translation of the net assets of the Group’s foreign operations, which relate to subsidiaries only, from their functional currency into the parent’s functional currency, being Sterling, are recognised directly in the foreign currency reserve. Share option reserve The share option reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration. Refer to Note 15 for further details of these plans. 15. warrants and options granted Warrants not exercised at 30 September 2015 Issue date 07/12/10 07/12/10 25/10/12 24/02/12 24/02/12 19/12/12 19/12/12 14/01/14 14/01/14 31/03/14 05/02/15 05/02/15 exercise price 2.50p 2.50p 1.46p 1.25p 1.25p 0.85p 0.85p 0.55p 0.55p 0.60p 0.275p 0.275p number 5,500,000 500,000 6,500,000 5,500,000 500,000 5,750,000 500,000 5,750,000 500,000 58,333,332 6,750,000 2,625,000 exercisable Any time before expiry Any time before expiry Any time before expiry Any time before expiry Any time before expiry Any time before expiry Any time before expiry Any time before expiry Any time before expiry Any time before expiry Any time from 05/02/16 Any time from 05/02/16 expiry dates 07/03/16 31/12/15 23/10/15 24/02/17 31/12/15 19/03/18 31/12/15 14/01/19 31/12/15 31/03/16 05/02/20 05/02/20 Warrants and Options are issued for nil consideration and are exercisable as disclosed above. They are exchangeable on a one for one basis for each ordinary share of 0.1p at the exercise price on the date of conversion. 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 15. warrants and options granted continued Share based payments The Company issues warrants and options on varying terms and conditions. Details of the share warrants and options outstanding during the year are as follows: Outstanding at start of year Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at end of year Exercisable at end of year 2015 2014 Number of warrants and share options 103,833,332 9,375,000 – – (14,500,000) 98,708,332 89,333,332 Weighted average exercise price (Pence) 0.83 0.275 – – 0.71 0.79 0.85 number of warrants and share options 80,388,889 64,583,332 – – (41,138,889) 103,833,332 97,583,332 weighted average exercise price (Pence) 1.11 0.60 – – 0.64 0.83 0.85 The warrants and options outstanding at 30 September 2015 had a weighted average exercise price of 0.79p (2014: 0.83p), a weighted average fair value of 0.36p (2014: 0.41p) and a weighted average remaining contractual life of 1.16 years. In the year ended 30 September 2015 warrants were granted on 5 February 2015 to directors of the Company and employees of Tertiary Minerals plc with an aggregate estimated fair value of £9,515. In the year ended 30 September 2014 warrants were granted on 14 January 2014 to directors of the Company and employees of Tertiary Minerals plc with an estimated fair value of £16,014, and on 31 March 2014 in connection with a placing of shares with an estimated fair value of £111,981. The aggregate of the estimated values of the warrants granted on these dates is £127,995. In the year to 30 September 2015 the Company recognised total expenses of £10,829 (2014: £128,725) related to equity- settled share based payment transactions, being the aggregate of the estimated fair values of warrants granted. No options were granted in the year ended 30 September 2015 or the year ended 30 September 2014. In the year ended 30 September 2015 no warrants were exercised. The inputs into the Black–Scholes–Merton Option Pricing Model were as follows: Weighted average share price Weighted average exercise price Expected volatility Expected life Risk-free rate Expected dividend yield 2015 0.275p 0.275p 77.5% 4 years 1.09% 0% 2014 0.57p 0.60p 100% 2 years 0.80% 0% Expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous 4 years. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. 24601.04 - 7 January 2016 10:28 AM - Proof 6 33 Stock Code: SRESwww.sunriseresourcesplc.comOur Financials 34 notes to tHe finAnciAl stAtements CONTINUED for the year ended 30 September 2015 16. related party transactions Key management personnel The directors holding office at the year end and their warrants held in the share capital of the Company are: P L Cheetham* Shares number 22,725,951 F P H Johnstone 8,226,412 D J Swan 5,081,944 At 30 September 2015 Warrants Number 2,000,000 2,000,000 2,000,000 2,000,000 2,222,222 3,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,500,000 1,000,000 1,000,000 1,500,000 Exercise price 2.500p 1.250p 0.85p 0.55p 0.60p 0.275p 2.500p 1.250p 0.85p 0.55p 0.275p 0.85p 0.55p 0.275p Expiry date 07/03/16 24/02/17 19/03/18 14/01/19 31/03/16 05/02/20 07/03/16 24/02/17 19/03/18 14/01/19 05/02/20 19/03/18 14/01/19 05/02/20 at 30 september 2014 shares number warrants number 19,355,675 14,222,222 5,943,748 6,000,000 2,423,522 2,000,000 * Includes 5,500,000 shares held by K E Cheetham, wife of P L Cheetham. Tertiary Minerals plc Sunrise Resources plc is treated as an investment in the consolidated accounts of Tertiary Minerals plc, which held 7.66% of the issued share capital on 30 September 2015 (2014: 9.52%). Tertiary Minerals plc provides management services to Sunrise Resources plc and consequently during the year the Group incurred costs of £181,598 (2014: £163,136) recharged at cost from Tertiary Minerals being overheads of £22,809 (2014: £23,671), costs paid on behalf of the Group of £6,312 (2014: £11,816), Tertiary staff salary costs of £55,454 (2014: £44,207) and Tertiary directors’ salary costs of £97,023 (2014: £83,442). At the balance sheet date an amount of £53,888 (2014: £50,050) was due to Tertiary Minerals plc. Patrick Cheetham, the Chairman of the Company, is also a director of Tertiary Minerals plc. At 30 September 2015 and at the date of this report, Donald McAlister, a director of Tertiary Minerals plc, holds 550,000 shares in the Company, and David Whitehead, a director of Tertiary Minerals plc, holds 250,000 shares in the Company. 17. capital management The Group’s capital requirements are dictated by its project and overhead funding requirements from time to time. Capital requirements are reviewed by the Board on a regular basis. The Group manages its capital to ensure that entities within the Group will be able to continue as going concerns, to increase the value of the assets of the business and to provide an adequate return to shareholders in the future when exploration assets are taken into production. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its assets. In order to maintain or adjust the capital structure the possibilities open to the Group in future include issuing new shares, consolidating shares, returning capital to shareholders, taking on debt, selling assets and adjusting the amount of dividends paid to the shareholders. 18. financial instruments At 30 September 2015, the Group’s and Company’s financial assets consisted of receivables due within one year, available for sale investments and cash and cash equivalents. At the same date, the Group and Company had no financial liabilities 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 18. financial instruments continued other than trade and other payables due within one year and had no agreed borrowing facilities as at this date. There is no material difference between the carrying and fair values of the Group’s and Company’s financial assets and liabilities. The carrying amounts for each category of financial instrument held at 30 September 2015, as defined in IAS 39, are as follows: Loans & receivables Available for sale investments Financial Liabilities at amortised cost Group 2015 £ 165,208 25,000 98,681 Company 2015 £ 116,286 25,000 74,151 group 2014 £ 365,786 – 118,014 company 2014 £ 295,693 – 82,798 Risk management The principal risks faced by the Group and Company resulting from financial instruments are liquidity risk, foreign currency risk and, to a lesser extent, interest rate risk and credit risk. The directors review and agree policies for managing each of these risks as summarised below. The policies have remained unchanged from previous periods as the risks are assessed not to have changed. Liquidity risk The Group currently holds cash balances in Sterling, US Dollars, Australian Dollars, Canadian Dollars and the Euro to provide funding for exploration and evaluation activity, whilst the Company holds cash balances in Sterling, US Dollars, Canadian Dollars and Euros. The Company is dependent on equity fundraising through private placings which the directors regard as the most cost- effective method of fundraising. The directors monitor cash flow in the context of their expectations for the business to ensure sufficient liquidity is available to meet foreseeable needs. Currency risk The Group’s financial risk management objective is broadly to seek to make neither profit nor loss from exposure to currency or interest rate risks. The Group is exposed to transactional foreign exchange risk and takes profits and losses as they arise as, in the opinion of the directors, the cost of hedging against fluctuations would be greater than the related benefit from doing so. Fluctuations in the exchange rate are not expected to have a material effect on reported loss or equity. Bank balances were held in the following denominations: United Kingdom Sterling Australian Dollar Canadian Dollar United States Dollar Euro Group 2015 £ 78,747 33,646 4,928 23,083 1,675 Company 2015 £ group and company 2014 £ 78,747 277,208 – 4,928 19,999 1,675 31,581 5,991 39,061 509 Interest rate risk The Company finances operations through equity fundraising and therefore does not carry borrowings. Fluctuating interest rates have the potential to affect the loss and equity of the Group and the Company insofar as they affect the interest paid on financial instruments held for the benefit of the Group. The directors do not consider the effects to be material to the reported loss or equity of the Group or the Company presented in the financial statements. Credit risk The Company has exposure to credit risk through receivables such as VAT refunds, invoices issued to related parties and its joint arrangements for management charges. The amounts outstanding from time to time are not material other than for VAT refunds which are considered by the directors to be low risk. The Company has exposure to credit risk in respect of its cash deposits with NatWest bank and this exposure is considered by the directors to be low risk. 19. events after the Balance sheet date SR Minerals Inc., a wholly owned subsidiary of Sunrise Resources plc, incorporated in Nevada, USA, has reached an agreement to lease its County Line mining claims in Nevada to EP Minerals, LLC for 25 years (renewable for a further two 25 year periods, subject to EP Minerals’ right to withdraw at any time). The Company will retain a revenue based royalty payable six monthly from the start of production. The Company applied to surrender its two remaining exploration licences in Finland (Kattaisenvaara and Kalettomanpuro Projects, Kuusamo Region) due to their low priority and as a cost saving measure. 24601.04 - 7 January 2016 10:28 AM - Proof 6 35 Stock Code: SRESwww.sunriseresourcesplc.comOur Financials 36 Sunrise Resources plc Annual Report and Accounts 2015 g n i t e e m a r e n e G l l a u n n A Notice of Annual General Meeting Annual General Meeting Explanatory Notes Form of Proxy Proxy Form Notes and Instructions Company Information 37 38 39 40 iBc 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 notice of AnnuAl GenerAl meetinG Sunrise Resources plc Company No. 05363956 Notice is hereby given that the Annual General Meeting of Sunrise Resources plc will be held in the Fourth Floor Council Room at Arundel House, 13–15 Arundel Street, Temple Place, London WC2R 3DX on Thursday 18th February 2016 at 10.30 a.m. for the following purposes: ordinArY Business 1. To receive the Accounts and Reports of the Directors and of the Auditor for the year ended 30 September 2015. 2. To re-elect Mr P L Cheetham who is retiring under the Articles of Association as a director of the Company. 3. To re-elect Mr D J Swan who is retiring under the Articles of Association as a director of the Company. 4. To re-elect Mr F P H Johnstone who is retiring as a director of the Company. 5. To reappoint Crowe Clark Whitehill LLP as Auditor of the Company and to authorise the directors to fix their remuneration. speciAl Business Ordinary Resolution 6. That, in accordance with section 551 of the Companies Act 2006, the directors be generally and unconditionally authorised to allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company (“Rights”) up to an aggregate nominal amount of £750,000 (consisting of 750,000,000 ordinary shares of 0.1p each) provided that this authority shall, unless renewed, varied or revoked by the Company, expire at the end of the next Annual General Meeting of the Company to be held after the date on which this resolution is passed, save that the Company may, before such expiry, make an offer or agreement which would or might require shares to be allotted or Rights to be granted and the directors may allot shares or grant Rights in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired. This authority is in substitution for all previous authorities conferred on the directors in accordance with section 551 of the 2006 Act. Special Resolution 7. That subject to the passing of resolution 6, the directors be given the general power to allot equity securities (as defined by section 560 of the 2006 Act) for cash, either pursuant to the authority conferred by resolution 6 or by way of a sale of treasury shares, as if section 561(1) of the 2006 Act did not apply to any such allotment, provided that this power shall be limited to: a) the allotment of equity securities in connection with an offer by way of a rights issue to the holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings but subject to such exclusions or other arrangements as the Board may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange; and b) the allotment (otherwise than pursuant to paragraph (a) above) of equity securities up to an aggregate nominal amount of £750,000 (consisting of 750,000,000 ordinary shares of 0.1 pence each). The power granted by this resolution will expire on the conclusion of the Company’s next Annual General Meeting (unless renewed, varied or revoked by the Company prior to or on such date) save that the Company may, before such expiry, make offers or agreements which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired. This resolution revokes and replaces all unexercised powers previously granted to the directors to allot equity securities as if section 561(1) of the 2006 Act did not apply but without prejudice to any allotment of equity securities already made or agreed to be made pursuant to such authorities. As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at a general meeting of the Company. Please refer to Notes on page 40. By order of the Board CDT Fitch Company Secretary 11 December 2015 Registered Office: Sunrise House, Hulley Road Macclesfield, Cheshire SK10 2LP United Kingdom 37 24601.04 - 7 January 2016 10:28 AM - Proof 6 Stock Code: SRESwww.sunriseresourcesplc.comAnnual General Meeting 38 AnnuAl GenerAl meetinG – explAnAtorY notes The Annual General Meeting of Sunrise Resources plc will be held on Thursday 18th February 2016 in the Fourth Floor Council Room at Arundel House, 13–15 Arundel Street, Temple Place, London, WC2R 3DX at 10.30 a.m. The business of the meeting is as follows: ordinArY Business Resolution 1 The Board is required to present to the meeting for approval the Accounts and the Reports of Directors and the Auditor for the year ended 30 September 2015 which can be found on pages 3 to 23. Resolutions 2 and 3 The Company’s Articles of Association require that directors retire at least once every three years and offer themselves for re-election if they and the Board so wish. This year, both Mr P L Cheetham and Mr D J Swan are retiring under the Articles of Association and the Board proposes that they be re-elected. Biographical details of the directors can be found on page 16. Resolution 4 Mr F P H Johnstone has served the Company for more than nine years and under the terms of the UK Corporate Governance Code (“the Code”) would not now be regarded as independent. However, it is proposed that he seeks annual re-election rather than re-election every third year, as stated in the Articles of Association. The Company has been fortunate enough to secure Mr Johnstone’s services as a non-executive director during his period of office and he continues to provide valuable advice based on his long experience of the mining industry. Biographical details of the directors can be found on page 16. Resolution 5 The Company’s Auditor Crowe Clark Whitehill LLP, is offering itself for reappointment and if elected will hold office until the conclusion of the next Annual General Meeting at which accounts are laid before shareholders. This resolution will also allow the directors to fix the remuneration of the Auditor. speciAl Business Resolution 6 This resolution is to give the directors authority to issue shares. The last such authority was put in place by a meeting of shareholders held on 5th February 2015 but it will expire at the coming Annual General Meeting. Section 551 of the Companies Act 2006 requires that directors be authorised by shareholders before any share capital can be issued. At this stage in its development the Company relies on raising funds through the issue of shares from the equity markets from time to time and unless this resolution is put in place the Company will not be in a position to continue to raise funds to continue its activities. If given, this authority will expire at the conclusion of the Annual General Meeting in 2017. Resolution 7 This resolution will be proposed as a Special Resolution in the event that Resolution 6 is passed by shareholders. Resolution 7 is proposed to give the directors authority to exclude certain categories of shareholders in a rights issue where their inclusion would be impractical or illegal and also to issue shares other than by way of rights issues which are, for regulatory reasons, complex, expensive, time consuming and impractical for a company the size of Sunrise Resources plc. A similar authority granted at last year’s Annual General Meeting is due to expire at the coming Annual General Meeting. The resolution will, if passed, authorise directors to allot shares or grant rights over shares of the Company where they propose to do so for cash and otherwise than to existing shareholders pro rata to their holdings – for example through a placement of shares. If given, this authority will expire at the conclusion of the Annual General Meeting in 2017. 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 form of proxY sunrise resources plc Company No. 05363956 I/We (Block capitals please)............................................................................................................................................................... being a member/members of Sunrise Resources plc hereby appoint the Chairman of the Meeting (see Note 3 on page 40) or the proxy named below as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held on Thursday 18th February 2016 in the Fourth Floor Council Room at Arundel House, 13–15 Arundel Street, Temple Place, London, WC2R 3DX at 10.30 a.m. and at any adjournment thereof. I/We wish this proxy to be used in connection with those of the Resolutions to be proposed at the Annual General Meeting which are listed below, in the manner set out below, and in connection with any other ordinary business transacted at the meeting. name of proxy number of shares appointed over I wish to appoint multiple proxies (see note 4 overleaf) Please tick Signed or sealed (see Notes)...............................................................................................................Dated..................................... Please indicate with an “X” in the spaces below how you wish the proxy to vote. Unless otherwise instructed the proxy will at his discretion vote as he thinks fit or abstain from voting in relation to all business of the meeting. Ordinary Business For Against Vote Withheld 1. Ordinary Resolution to receive the Accounts and Reports of the directors and of the Auditor for the year ended 30 September 2015. 2. Ordinary Resolution to re-elect Mr P L Cheetham who is retiring under the Articles of Association. 3. Ordinary Resolution to re-elect Mr D J Swan who is retiring under the Articles of Association. 4. Ordinary Resolution to re-elect Mr F P H Johnstone who is retiring as a director of the Company. 5. Ordinary Resolution to reappoint Crowe Clark Whitehill LLP as Auditor of the Company and authorise the directors to fix their remuneration. Special Business 6. Ordinary Resolution to authorise the directors to allot shares. 7. Special Resolution to empower the directors to disapply the pre-emption rights for certain allotments of shares. Please see Notes on page 40. Please return this Proxy Form in the envelope provided, or in accordance with Note 6 overleaf. 24601.04 - 7 January 2016 10:28 AM - Proof 6 39 Stock Code: SRESwww.sunriseresourcesplc.comAnnual General Meeting 40 proxY form notes And instructions 1. As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at a general meeting of the Company. You can only appoint a proxy using the procedures set out in these notes. 2. Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy and attend the meeting in person, your proxy appointment will automatically be terminated. 3. A proxy does not need to be a member of the Company but must attend the meeting to represent you. To appoint as your proxy a person other than the Chairman of the meeting, insert their full name in the relevant box on the Proxy Form. If you sign and return the Proxy Form with no name inserted in the box, the Chairman of the meeting will be deemed to be your proxy. Where you appoint as the proxy someone other than the Chairman, you are responsible for ensuring that they attend the meeting and are aware of your voting intentions. If you wish your proxy to make any comments on your behalf, you will need to appoint someone other than the Chairman and give them the relevant instructions directly. 4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, you may photocopy the Proxy Form. Please indicate the proxy holder’s name and the number of shares in relation to which they are authorised to act as your proxy, which in aggregate should not exceed the number of shares held by you. Please also tick the box to indicate that there are multiple proxies. All forms must be signed and should be returned as set out in Note 6. 5. To direct your proxy how to vote on the resolutions mark the appropriate box with an ‘X’. To abstain from voting on a resolution, select the relevant “Vote Withheld” box. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting. 6. To appoint a proxy, the Proxy Form must be: completed and signed; sent or delivered to Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU; and received by Capita Registrars no later than 10.30 a.m. on Tuesday 16th February 2016. 7. In the case of a member which is a company, the Proxy Form or any notice of revocation of a proxy must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. 8. Any power of attorney or any other authority under which the Proxy Form is signed (or a duly certified copy of such power or authority) must be included with the Proxy Form. 9. In the case of joint holders, where more than one of the joint holders purports to appoint or revoke a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior). 10. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence. 11. If you wish to change your proxy instructions simply submit a new proxy appointment according to these instructions. If you need another hard-copy Proxy Form please contact the Company. The last date for receipt of a new proxy instruction is set out in Note 6 above. 12. To revoke a proxy instruction you will need to send notice clearly stating your intention to revoke your proxy appointment to: Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU. 13. Entitlement to attend and vote at the meeting and the number of votes which may be cast thereat will be determined by reference to the Register of Members of the Company at 6.00 p.m. on Tuesday 16th February 2016. Changes to entries on the Register of Members after that time shall be disregarded in determining the rights of any person to attend and vote at the meeting. 24601.04 - 7 January 2016 10:28 AM - Proof 6 Sunrise Resources plcAnnual Report and Accounts 2015 compAnY informAtion sunrise resources plc (Aim – epic: sres) Company No. 05363956 HeAd office Silk Point Queens Avenue Macclesfield Cheshire SK10 2BB United Kingdom Tel: +44 (0)845 868 4590 Fax: +44 (0)1625 838 559 Auditor Crowe Clark Whitehill LLP 3rd Floor The Lexicon Mount Street Manchester M2 5NT United Kingdom reGistered office Sunrise House Hulley Road Macclesfield Cheshire SK10 2LP United Kingdom Company Website www.sunriseresourcesplc.com BAnkers National Westminster Bank plc 2 Spring Gardens Buxton Derbyshire SK17 6DG United Kingdom nominAted Adviser And Broker Northland Capital Partners Limited 131 Finsbury Pavement London EC2A 1NT United Kingdom solicitors Gowling WLG 4 More London Riverside London SE1 2AU United Kingdom reGistrArs Capita Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU United Kingdom iBc Other InformationStock Code: SRESwww.sunriseresourcesplc.com SUNRISE RESOURCES PLC SILK POINT QUEENS AVENUE MACCLESFIELD CHESHIRE SK10 2BB UNITED KINGDOM TEL: +44 (0)845 868 4590 FAX: +44 (0)1625 838 559 www.sunriseresourcesplc.com 24601.04 - 7 January 2016 10:28 AM - Proof 6
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