252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 1
Company No. 05363956
Annual Report and Accounts
For the year ended 30 September 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 2
Contents
Sunrise Resources plc
The Company is focused on the development of
its CS Pozzolan-Perlite Project in Nevada, USA
and is aiming to be in production in 2019.
The Company is seeking to progressively valorise
its diverse portfolio of precious metal and other
industrial minerals projects through joint venture,
sale or other arrangements.
We only operate in stable, democratic and mining
friendly jurisdictions having low levels of corruption
and political risk.
Our Performance
3
5
6
Chairman’s Statement
Strategic Plan on Track
Strategic Report
6
6
8
Organisation Overview
Financial & Performance Review
Operating Review
12
Risks & Uncertainties
Our Responsibilities
15 Directors’ Responsibilities
16 Directors’ Report
18
Board of Directors
19 Corporate Governance
Our Financials
24
Independent Auditor’s Report
28 Consolidated Income Statement
28 Consolidated Statement of Comprehensive Income
29 Consolidated and Company Statements of Financial
Position
30 Consolidated Statement of Changes in Equity
31 Company Statement of Changes in Equity
32 Consolidated and Company Statements of Cash Flows
33 Notes to the Financial Statements
Annual General Meeting
47 Notice of Annual General Meeting
48
49
Annual General Meeting – Explanatory Notes
Electronic Voting, Proxy Notes and Instructions
IBC Company Information
2
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 3
Chairman’s Statement
I am pleased to present the
Company’s Annual Report
and Financial Statements for
the
30
year
September 2018.
ended
to
last
focus
year’s
Following
decision
the
Company’s resources on
development of
the CS
Pozzolan-Perlite Project I
can report good progress
this year
this
objective.
towards
A drill programme in January 2018 delivered everything that
was hoped for and impressive thick and open-ended
intersections of natural pozzolan were made from bedrock
surface in step out holes in the Main Zone and Northeast Zone.
These results add substantially to the known pozzolan deposits
and we are now very confident that the Main and Northeast
Zones are part of one continuous zone with a very long-term
production potential.
In early 2018 we also initiated the mine permitting process
where environmental surveys and assessment are major
components. Baseline biological and cultural surveys have
been completed with favourable results and no impediments to
mining were identified. We expect that this will facilitate a
smooth permitting process which we are advised will be
completed in the third quarter of 2019. We have also completed
a 15-year mine plan, another large component of the permitting
process, and a preliminary plant design for the processing of
perlite. We are evaluating a low capital cost start-up for the
project using contract mining and mineral processing as well
as the construction of more sophisticated process plant to
produce a larger range of higher-value products. Both perlite
and pozzolan can be mined within the same broad open pit
outlines as
in separate adjacent and
overlapping zones.
they occur
The Company has made good progress in seeking sales
contracts for both perlite and pozzolan, but shareholders
should not expect immediate results as pozzolan and perlite
are performance products with
individual customer
requirements requiring tailored testwork. Nevertheless, we have
already signed two memoranda of understanding on perlite
sales sufficient to underpin a production start-up.
Extensive laboratory testwork on drill and surface sampling has
continued during the year and has delivered outstanding results
for production of both perlite and pozzolan. This was followed
up with a bulk sampling programme that has allowed us to
deliver larger samples to several potential customers and
successful commercial-scale trials have now been completed
for both commodities. These customer trials are continuing and
are expected to lead to firm sales contracts in due course.
The bulk sampling and commercial-scale trials have also
allowed us to confirm the scale-up of our laboratory testwork
and pave the way for commercial arrangements with the parties
involved. Tests are also
in progress with other
potential customers.
It is a good time to be entering these markets. Cement
companies and fly ash suppliers are already grappling with a
shortage of fly ash which we are aiming to replace with our high
quality natural pozzolan. This fly ash shortage will be intensified
should the largest supplier to western markets, the coal-fired
Navajo Power Station in Arizona, close as expected in 2019.
Meanwhile the perlite market in the western US continues to be
strong as more US States, and now Canada, continue the
legalisation of cannabis for which perlite provides an ideal
growing medium.
The application of technology that led to the discovery of the
CS Project has now been applied more widely by the Company
and has resulted in the discovery of large areas of perlite
deposits on our NewPerl Project. Earlier testing results from the
initial discovery outcrops tested positive for expansion to
horticultural grade perlite and the additional samples collected
from large new areas during a recent mapping programme
appear to be similar. These samples are now at a laboratory in
Greece for testing. It is too early to say how the NewPerl Project
will fit in with the development of our CS Project, but it adds
value to and has synergy with the business we are developing.
We continue to explore possibilities to valorise our portfolio of
mineral exploration projects and I am pleased with the progress
that VR Resources (“VRR”) has made in exploring the Junction
Copper-Silver-Gold Project which we sold but where we have
ongoing share and royalty interests. Drilling is now in progress
which gives rise to a further VRR share issue to us and we look
forward to seeing the results in due course.
In Australia we completed a modest programme of exploration
during the year at our Baker’s Gold Project to ready the project
for drilling and to enhance its value and marketability as we
continue to seek divestment of non-core assets. However, also
in Australia, a difficult decision has now been made to
surrender the Company’s exploration licence over the Cue
Diamond Project. We can no longer defer the escalating
expenditure commitments for this project and need to
concentrate our financial resources on the CS Project for the
foreseeable future. As a result, we have impaired the carrying
value of the Cue Project and consequently the inter-company
loan from the Group parent company to our Australian
subsidiary. This has the effect of increasing our overall loss for
the financial year, but the loan impairments do not, of course,
affect the Company’s cash position.
Sunrise Resources plc Annual Report & Accounts 2018
3
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 4
Chairman’s Statement continued
During the year Block Energy, where we are a small
shareholder, moved its main listing onto AIM from the NEX
Exchange Growth Market and we continue
follow
this investment.
to
Our Annual General Meeting for the year ended 30 September
2018 will be held in London on Thursday 21 February 2019 as
set out on page 47. You will note that there is no proxy form
accompanying the Notice of Meeting as we are moving to
electronic voting in line with best practice. Further detailed
instructions on proxy voting are given on page 49 but we hope
that shareholders will choose to attend the meeting in person
where possible.
Patrick Cheetham
Executive Chairman
11 December 2018
4
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 5
Strategic Plan on Track
KEY AIMS from our STRATEGY & BUSINESS PLAN for 2017 and 2018 are summarised here to show how our strategy has
progressed in 2018. Our targets for 2019 are also set out below:
AIMS IN 2017
AIMS IN 2018 &
PROGRESS MADE
TARGETS FOR 2019
Develop the CS Project towards
production.
Develop the CS Project towards
production:
Continue advancing CS Project
towards production:
l Second drilling programme
l Complete mine permitting.
completed.
l Lab
and
commercial-scale
testwork successfully completed
for pozzolan and perlite.
l Conclude customer Offtake
Agreements.
l Commence first production.
l MOUs
signed
for perlite
marketing.
l Mine permitting initiated.
l Customer trials underway.
l Environmental baseline studies
completed.
l Mine planning completed.
Seek progressive valorisation of
the Company’s existing precious
metal and other
industrial
minerals projects and unlock the
inherent value in the Company.
Seek progressive valorisation of
the Company’s existing precious
metal and other
industrial
minerals projects and unlock the
inherent value in the Company:
Seek progressive valorisation of
the Company’s existing precious
metal and other
industrial
minerals projects and unlock the
inherent value in the Company:
l Negotiations held for the sale of
l Complete the sale or joint venture
a number for projects.
of non-core projects.
To run the Company with low
overheads and be a low-cost
explorer.
To run the Company with low
overheads and be a low-cost
explorer:
l Corporate overheads shared
with Tertiary Minerals plc.
l Outstanding directors’
fees
continue to be settled in shares.
To run the Company with low
overheads and be a low-cost
exploration, development and
production company:
l Continue
cost
sharing
arrangements.
Sunrise Resources plc Annual Report & Accounts 2018
5
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 6
Strategic Report
The Directors of the Company and
its subsidiary
undertakings (which together comprise “the Group”)
present their Strategic Report for the year ended
30 September 2018.
A review of the AIMS and STRATEGY set out in our 2017
Annual Report highlights the advance and evolution of our
strategic plan in 2018.
Our AIM is for the Company to be self-funding through the
development of profitable mining projects.
Our Strategy is to develop the CS Pozzolan-Perlite Project
through to production and to unlock the value inherent in our
other mineral projects through sale, joint venture or other
arrangements.
The Strategic Plan is on track. Our CS industrial mineral project,
targeting the production of natural pozzolan and perlite, is now
progressing through the mine permitting stage and customer
trials and we are targeting to be mine ready in the third quarter
of 2019.
Further details of our progress on the CS Project are given in
the Operating Review starting on page 8.
The Company’s Business Model is to acquire 100% ownership
of mineral assets at minimal expense. This usually involves
staking claims as was the case for the CS and NewPerl Projects
or applying for exploration licences from the relevant authority,
as was the case in Australia. In other cases, rights are
negotiated with existing project owners for initially low periodic
payments that rise over time as confidence in the project value
increases and this was the case for the Bay State Silver Project.
The Group currently operates with a low-cost base to maximise
the funds that can be spent on value adding exploration and
development activities. The Company’s administration costs are
reduced via a cost sharing Management Services Agreement
with Tertiary Minerals plc. As at the date of this report Tertiary
is a significant shareholder (as defined under the AIM Rules)
of Sunrise Resources plc, holding 5.17% of the ordinary issued
share capital.
The Company’s activities are financed by periodic capital
raisings, through private share placements. When projects
become more advanced, or as acquisition opportunities advance,
the Board will seek to secure additional funding from a range of
various sources, for example debt funding, pre-financing through
off-take agreements and other joint arrangements.
Over the past few years the Company has established a
valuable portfolio of drill-ready precious metal, base metal and
industrial mineral projects and our strategy with respect to
those projects has evolved following a decision to focus on
development of the CS Project. We are seeking to valorise
those projects through sale or other arrangements seeking,
wherever possible, free-carried exposure to increases in value
and production from the projects. Our agreement to sell the
Junction Project to VR Resources Ltd. is an early example of
success in implementing this strategy.
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 technical and management 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 two other countries and
the corporate structure of the Group reflects the historical
pattern of project 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
is
undertaken through two local subsidiaries, SR Minerals Inc.
and Westgold Inc.
in Nevada, USA,
In Australia the Company operates through an Australian
subsidiary, Sunrise Minerals Australia Pty Ltd.
The Board of Directors comprises two non-executive directors
and the Executive Chairman. Their profiles are provided on
page 18. The Executive Chairman 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.
loss
The results for the Group are set out in detail on pages 28 to
32. The Group reports a loss of £786,672 for the year (2017:
£311,046) after administration costs of £290,023 (2017:
£276,568) and after crediting interest receivable of £105 (2017:
£70). The
includes expensed pre-licence and
reconnaissance exploration costs of £10,473 (2017: £21,161),
impairment of deferred exploration asset of £483,169 (2017:
£3,077) and impairment of available for sale investment of £Nil
(2017: £13,338). Administration costs include an amount of
£1,741 (2017: £1,507) as non-cash costs for the value of certain
share warrants held by employees of both Tertiary and Sunrise,
as required by IFRS 2. Cash administration costs are therefore
£288,282 (2017: £275,061).
6
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 7
The Financial Statements show that, at 30 September 2018, the
Group had net current assets of £205,596 (2017: £183,422).
This represents the cash position after allowing for receivables,
trade and other payables. These amounts are shown in the
Consolidated and Company Statements of Financial Position
on page 29 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 £1,363,360 (2017:
£1,302,404) and a breakdown by project is shown in Note 2 to
the financial statements on page 36.
Details of intangible assets, property, plant and equipment and
investments are also set out in Notes 8, 9 and 10 of the
financial statements.
Impairment
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 this 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.
Biannual reviews are carried out by the Directors as to whether
there are any indications of impairment of the Group’s assets.
At the year-end an impairment review was undertaken by the
Directors to ascertain whether the carrying value of its
exploration and development projects and the associated
intercompany loans should be impaired under IFRS 6 and IAS
36. It was judged that the full carrying value of the Cue
Diamond Project in Australia, £463,574, and the Pozz Ash
Project in Nevada, £19,595, should be impaired and charged
to the Consolidated Income Statement, thereby increasing the
loss for that period. As a consequence of the Cue Diamond
Project impairment the directors have determined that the
intercompany loan from Sunrise Resources plc to the Australian
subsidiary, Sunrise Minerals Australia Pty Ltd should be written
down to £180,275 (AU$325,000), the value assessed as the
recoverable value based on the other main asset within the
Australian subsidiary, namely the Baker’s Gold project.
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, via share placings and, in the past, through other
innovative equity based
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 Company’s agreement with VR
Resources Ltd is such an example.
instruments. As
financial
Key Performance Indicators
The financial statements of a mineral exploration and
development 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.
The usual financial key performance indicators (“KPIs”) are
neither applicable nor appropriate to measurement of the value
creation of a company which is involved in mineral exploration
and development which currently has no turnover. 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.
The Directors highlight the following KPIs and expect that
further KPIs will be reported as the Company progresses
through development:
Environment
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.
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 £900,000 before
expenses through the Placing of shares in
the reporting period and issued equity to the
value of £22,131
in settlement of
outstanding fees payable to Directors.
Fundraising
In exploring for valuable 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 track record in
mineral discovery and development.
Sunrise Resources plc Annual Report & Accounts 2018
7
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 8
Strategic Report continued
Fundraising
The Directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report.
Given the Group’s cash position at year end (£235,722), these projections include the proceeds of future fundraising necessary
within the next 12 months to meet the Group’s overheads and planned discretionary project expenditures and to maintain the
Company and its subsidiaries as going concerns.
Operating Review
The Company’s focus during the year has been almost exclusively on advancing the CS Pozzolan-Perlite Project in Nevada, USA,
towards production.
The CS Project is held in the Company’s 100% owned subsidiary, SR Minerals Inc. The Company’s other Nevada projects are
held through SR Minerals Inc. and Westgold Inc. The Company’s Australian projects are held through an Australian subsidiary,
Sunrise Minerals Australia Pty Ltd.
………..and Perlite
Perlite is a glassy raw material which, when heated in a
furnace, pops like popcorn and expands by up to 20 times
in volume into a white or pale coloured low density material.
Expanded perlite is used in:
l
l
l
l
Various industrial and household applications such as
insulation, paint texturing, plaster and concrete fillers,
building materials
field
conditioners (soil porosity enhancement) and fire
proofing.
insulation,
formed
fillers,
Filter aids (in competition with diatomite).
Insulating industrial cryogenic storage vessels.
Potting medium in gardening and horticulture to aid
water retention and aeration of the soil.
According to the United States Geological Survey, 520,000
tonnes of raw perlite was mined in the USA and 590,000
used in 2017 with some material imported, primarily from
Greece. China is the world’s largest producer with most of
its production consumed internally.
The market for perlite is well established but in recent years
the market for horticultural perlite has been invigorated by the
growth in cannabis cultivation following the legalisation of
cannabis in various US States and, most recently, in Canada.
Raw sized perlite typically sells for US$65-85 per ton at the
mine gate but specialist grades can command a higher price.
Perlite can also have pozzolanic properties and be suitable
for use as a natural pozzolan.
The Company has recently joined the Perlite Institute. For
more information on perlite see:
https://www.perlite.org/library/
Our opportunity in Natural Pozzolan………
Pozzolan is a cementitious material that can partially replace
ordinary Portland cement in mortar and concrete mixes in
amounts up to 35%. Natural pozzolans, which include some
glassy volcanic tuffs, tephra and perlite, have strong “green”
credentials as the production of Portland cement is
responsible for 5% of the global man-made carbon dioxide
emissions with nearly one tonne of carbon dioxide (CO2)
generated for each tonne of cement produced. Use of natural
pozzolan can therefore reduce a consumer’s carbon footprint.
Natural pozzolans can also improve the strength and
chemical resistance of concrete and replace industrial
by-product pozzolans in cement such as coal fly ash, a
traditional waste product from coal-fired power stations.
The availability and quality of fly ash is under threat as
coal-fired power stations are phased out in favour of natural
gas plants and fly ash quality becomes more variable due to
increased emission control legislation. Since 2010, 248
power plants, or just under 50% of all coal-fired power
stations in the US, have announced a scheduled retirement
plan. Many of these 248 plants are deciding to close their
doors early, primarily because they cannot compete or
remain competitive with gas-fired power production.
The supply of fly ash to the western US is already precarious
and predicted to become critical should the West’s largest
coal-fired power station in Arizona close, as planned, at the
end of 2019.
Established natural pozzolan producers in the western US
are enjoying rapidly increased sales volumes in cement and
concrete markets.
The Company believes that the high quality of its material
puts it in a favourable market position and that its leverage in
the markets is increasing with the expected further shortage
of fly ash. We anticipate that the price of natural pozzolan
will increase over time.
The price of ground natural pozzolan is approximately
US$65-80 per ton delivered to customers in the western
USA.
The Company has recently joined the Natural Pozzolan
information on perlite see:
For more
Association.
http://pozzolan.org/
8
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 9
SR MINERALS INC.
CS POZZOLAN-PERLITE PROJECT, NEVADA, USA
The CS Project is located near Tonopah, in Nevada, USA, and
contains deposits of both natural pozzolan and perlite. Further
details on the Company’s opportunity in these two commodities
are set out in the box on page 8.
Drilling
In early 2018 the Company completed 25 reverse circulation
percussion drill holes for a total of 838m of drilling to better
define the zones of commercial interest and assist in the
preparation of mine plans for permitting.
Eight of these holes were drilled in the Tuff Zone and sixteen
holes were drilled in the Main Zone. This work confirmed
extensive thick deposits of perlite and tephra-type natural
pozzolan in the Main Zone and similarly extensive and thick
zones of tuff-type natural pozzolan in the Tuff Zone.
The drill programme also included a first step-out hole into the
Northeast Zone which hit a tephra-type pozzolan from bedrock
surface (1.5m deep) to a depth of 40m and confirmed our belief
that the main Zone and Northeast Zones are continuous and that
large areas of natural pozzolan still remain to be explored.
Laboratory Testing
The drill programme provided samples for laboratory testwork
aimed at demonstrating the quality of the Company’s natural
pozzolan and perlite and to provide data for mine planning.
Eighty composite drill samples of perlite and pozzolan were
submitted to Magmatics Inc. in Idaho for 7-day and 28-day
strength testing with selected samples being submitted to a third
party for independent confirmation. Excellent results were also
obtained confirming that large areas of the perlite and tephra in
the Main Zone and tuff in the Tuff Zone have production potential
for high quality natural pozzolan (“HQNP”). Samples from the only
hole in the Northeast Exploration Area also qualified as HQNP.
Forty composite drill samples were submitted to In.Mat-Lab in
Greece for perlite testing, including application specific testing
for use in cryogenic, horticultural, plasters and mortars and
ceiling tile applications.
Results demonstrate potential for different applications for
different parts of the perlite deposits. Testing of the perlite that
caps the tephra deposits earmarked for first mine production
test favourably against commercial reference material for
horticultural applications.
Mine & Environmental Permitting
As the CS Project is located on federally owned and
administered land, the lead agency for permitting is the
(Federal) Bureau of Land Management (“BLM”). A reclamation
permit is required from the Nevada Division of Environmental
Protection and several minor permits are required from other
regulatory bodies.
The BLM has appointed an internal interdisciplinary project
permitting team to address the permitting of the CS Project and
the Company has appointed EM Strategies as its lead consultant.
Mine permitting in Nevada is a procedure involving many
individual steps and processes. A key process is an
environmental assessment by BLM as required under the
National Environmental Policy Act (NEPA). A pre-requisite to the
NEPA process is a requirement that the Company carry out
various baseline surveys to establish the pre-mining biological
and cultural values of the land that may be disturbed in future.
The Company has now completed the season sensitive and key
baseline studies over the project area. These included botanical
surveys, which had to be completed in the peak growing
season (spring or early summer) and wildlife surveys. The
wildlife surveys included bird surveys and golden eagle
surveys which need to be completed in the nesting season by
helicopter and included a 10km buffer zone around the Project
Area.
Baseline cultural surveys have also been completed over the
Project Area and included assessment of archaeological and
architectural values and indirect visual effects. A small number
of archaeological features of significance were identified in the
broader Project Area but these are not within the proposed
mine disturbance areas and can easily be avoided.
The Company’s environmental consultants responsible for the
biological and cultural surveys have concluded that the
proposed mine development will not impact any significant
biological or cultural sites, although the final assessment is
made by the BLM.
The baseline survey reports have been accepted by the BLM
and the Company is now working on submission of its formal
Plan of Operations which sets out the detail of the proposed
mining and mineral processing operation and, together with the
baseline studies, forms the basis on which the environmental
assessment is made under NEPA. This will eventually be made
available for public comment although the Project Area is not
close to any human habitation.
The Company’s expectation is that the CS Project will not require
an extensive Environmental Impact Statement (“EIS”) but rather
a simpler Environmental Assessment (“EA"). This decision is
made by the BLM based on an assessment of the project’s
potential impact on the human and natural environment.
We are on track to be fully permitted and mine ready in the third
quarter of 2019.
Mine Planning
The mine plan is a significant component of the Plan of
Operations and has now been completed by SRK Consulting.
A three-phase 15-year mine plan has been developed. The
objective of a phased approach is to minimise the amount of
the initial reclamation bond.
Sunrise Resources plc Annual Report & Accounts 2018
9
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 10
Strategic Report continued
The Mine Plan does not include the extensive deposits of
pozzolan in the northern part of the Main Zone or Northeast
Zone which have potential to sustain the mine well beyond
15 years. However, all mine designs evolve over time and
require modifications to their mine permits from time to time and
therefore it would not be realistic to plan beyond fifteen years
for permitting purposes.
Whilst the areas of perlite and pozzolan are spatially separate,
they overlap in the Main Zone and can be developed within the
same overall pit outline.
Perlite
Phase 1 perlite production (years 1-3) is scheduled to rise quickly
from an initial rate of 20,000 tonnes per annum (tpa) of perlite to
100,000 tpa at the start of Phase 2 (years 4-8) and continue at
that rate throughout all of Phases 2 and 3 (years 9-15).
Natural Pozzolan Mining
Pozzolan production is scheduled at an initial rate of 100,000
tpa rising to 300,000 tpa at the end of Phase 1, reaching a
steady rate of 500,000 tpa during all of Phases 2 and 3.
Separate, alternative, mine plans have been developed for both
the Main Zone and Tuff Zone pozzolan deposits. The pit design
for the Main Zone pozzolan can supply pozzolan for the full
15-year mine plan on its own. The pit design for the Tuff Zone
only takes in half of the Tuff Zone deposits but can still supply
all of Phase 1 and 2 requirements and over half of Phase 3
requirements on its own.
At this stage the Company is leaving its options open to develop
the Tuff Zone or Main Zone pozzolans separately or together.
The overall waste to ore ratios are very low – 0.25 tons waste per
ton of perlite and pozzolan (combined) in the Main Zone and
0.16 ton waste per ton of pozzolan in the Tuff Zone with most of
the waste not being mined until after Year 8 in each case.
Minerals Processing & Mineral Products
The Company has identified a number of options for processing
and sale of natural pozzolan and perlite. In each case this
includes a low capital cost option and an investment option where
capital investment and time is required for plant construction.
The Company’s current preference is to initiate production via
the low capital costs option in each case and consider the
investment options as markets become more firmly established.
Natural Pozzolan
For the sale of natural pozzolan the low capital costs option is
the direct sale of ‘as-mined’ ore to cement companies who would
then grind down the pozzolan in their facilities to the required fine
size. This option, as tested with the recent bulk sample, would
allow for production to start using contract mining immediately
after permitting is completed and at minimal capital cost.
In due course the Company could consider production of a
require
ground pozzolan. This second option would
construction of a grinding plant, most likely off-site and closer
to the centres of demand but would open the market to
ready-mix companies as well as cement companies and
produce a higher value product.
Perlite
For the sale of perlite, the low capital costs option is the
production of coarse horticultural grade perlite using mobile
crushing and screening equipment. The required mobile
plant is readily available to rent, or lease and production
could start immediately after permitting is completed at
minimal capital cost. The screened product may require
drying prior to sale.
As raw perlite is also a good natural pozzolan, undersized
perlite could be sold as pozzolan. It could also be stockpiled
for later processing in a fixed plant to produce a range of
finer-grained industrial raw perlite products.
The ‘investment option’ for perlite is the construction of the more
sophisticated fixed plant to produce a range of raw perlite
products in coarse, medium and fine grades for a range of
industrial applications. This will achieve a better utilisation of
the raw perlite. A preliminary plant design has been completed
for permitting purposes.
It is intended that the permitting Plan of Operations will allow
for all these possible processing options to give the Company
maximum flexibility for initial production and future processing
to additional and/or higher value products.
Marketing
During the year the Company has both received and actively
solicited interest in the Company’s pozzolan and perlite from
potential customers.
This led to the signing of two Memoranda of Understanding
with two separate perlite expanding companies targeting
the horticultural market. These MOUs established that the
par ties will negotiate a definitive purchase and sales
agreement (“Offtake Agreement”) under which the parties
will commit to sell/buy the minimum annual quantity of raw
perlite specified in the MOU over a specified period,
subject to satisfactory testing results and other commercial
terms. They also establish that the Purchaser will provide
valuable commercial and logistical support and advice to
Sunrise during the development of the perlite deposits on
its perlite projects.
The proposed offtake quantities governed by the two MOUs
will, if converted to sales contracts, underwrite a production
start-up for the perlite.
Marketing efforts are continuing but have already led to
commercial-scale trials of both perlite and natural pozzolan.
10
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 11
Bulk Sampling & Customer Trials
Pozzolan
The Company recently excavated a 100-ton bulk sample of
natural pozzolan. This bulk sample was collected from site by
a cement company for trial grinding and subsequent testing in
a mortar mix. The Company has been advised by the cement
company that the trial was successful and that the bulk sample
met all the tested requirements of ASTM C618, the standard for
natural pozzolan for use in cement and concrete mixes. This is
an extremely positive development and the cement company
concerned has expressed a desire to continue cooperation with
Sunrise, working towards a commercial arrangement.
Sunrise has retained approximately 30 tons of the original bulk
sample and has made test samples of this available to a
number of other cement companies with whom market
discussions are continuing.
Perlite
A bulk sample of raw perlite has also been excavated and
was sent to SGS Lakefield in Canada for crushing and
screening to produce a horticultural grade raw perlite for
expansion
for crushing
characterisation. Approximately 2 tons of the resulting
horticultural grade raw perlite was sent from SGS Lakefield
to one of MOU signatories for expansion trials in a
commercial-scale furnace.
to provide data
testing and
This trial was very successful with the expander reporting
“better-than-could-have-been-hoped-for results”. An expanded
perlite meeting the size requirements for horticultural perlite
was produced with by-product fines meeting the commercial
specification for water filtration grade material. The expander
has confirmed a strong desire to work with the Company as a
new supplier of perlite to its facility.
Customer trials are also being arranged with other potential raw
perlite customers.
Only coarse grades of raw perlite from certain sources can be
expanded to produce the coarse expanded perlite used as a
growing medium for cannabis. Raw perlites from other sources
shatter too much on expansion and are not suitable. It is
therefore significant that the Company’s recent commercial
trials confirmed that the coarse grades produced from the
processed bulk sample produced the expanded product that
is of interest to the cannabis industry as well as other more
traditional horticultural buyers.
NEWPERL PERLITE PROJECT, NEVADA
The NewPerl Project, which is located approximately 85km from
its CS Project in Nevada, USA, was a new discovery this time
last year. As a result of exploration mapping during the year
new and large areas of outcropping perlite have been
discovered and an additional 40 claims have been staked.
Earlier testing results from the initial discovery outcrops tested
positive for expansion to horticultural and other grades of
perlite and the additional samples collected from these new
areas during the latest mapping programme appear to be
similar. These samples are now at the lab in Greece for testing.
JUNCTION COPPER-SILVER-GOLD PROJECT,
NEVADA, USA
The Junction Gold (-Copper) Project is located in Humboldt
County in northern Nevada and is now owned by VR Resources
Ltd (“VRR”), a Canadian TSX listed company, following the sale
of the project in late 2016.
As a result of the sale the Company holds 50,000 shares in VRR
and expects to be issued with a further 50,000 shares in VRR
as a result of the start of drilling. It is also entitled to the issue
of a further 250,000 shares should VRR complete and file a
43-101 compliant report containing a resource estimate for the
project. Sunrise has also retained a royalty equal to 3% of the
Net Smelter Return, subject to VR’s right to buy up to half of
the royalty entitlement (1.5%) for US$500,000 per half-percent.
VRR has carried out systematic exploration throughout the year
and drilling is now in progress at the Denio Summit target to
test large geochemical and geophysical anomalies that are
coincident with a 1.5km trend of surface showings of copper-
silver-gold bearing quartz veins and pegmatites.
OTHER SR MINERALS PROJECTS
The Company’s Pozz Ash Project was not renewed this year
as the quality of its natural pozzolan there is inferior to that at
the CS Project.
No work was carried out during the year on the Bay State
Silver Project, the County Line Diatomite Project, Ridge
Limestone Project or Garfield Gold-Silver-Copper Project in
Nevada, USA, although the Company’s claim position is being
maintained whilst a buyer or joint venture partner is sought for
these projects or until such time as further exploration can be
funded by the Company.
WESTGOLD INC.
The Company’s Westgold subsidiary holds three projects in
Nevada – Stonewall, Clayton and Newark – that were
acquired with the specific objective to hold at minimal costs
and offered as available for joint venture. No work has been
carried out on these projects to date, but all have drill-ready
targets for epithermal gold, silver and Carlin style deposits
respectively.
SUNRISE MINERALS AUSTRALIA PTY LTD
The Cue Diamond Project is held under a mature exploration
licence which now carries
significant expenditure
commitments. We have been able to avoid these commitments
through the grant of exemptions in the past few years but this
is not the case going forward and, in view of the Company’sfirm
focus on the CS Project in Nevada, a decision has been made
to surrender the licence in the near future.
Sunrise Resources plc Annual Report & Accounts 2018
11
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 12
Strategic Report continued
The Company intends to maintain its interest in the Baker’s Gold Project where a small programme of exploration during the
year has enhanced the prospectivity and value of the project. Mapping and chip sampling of gold bearing quartz-stockwork
veins in the Dicky Lee open pit, which was developed in the 1980s for production of specimen gold-quartz nuggets, has returned
gold values to 32.1 grammes/tonne gold (“g/t Au”), averaging 1.7 g/t Au, and infill soil sampling at DRL4 target has confirmed a
500m long gold-in-soil anomaly, increasing its tenor and enhancing its definition as a drill target.
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
development 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 price assumptions.
Development Risk
Delays in permitting, financing and commissioning a
project may result in delays to the Group meeting
production targets.
Commodity Risk
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.
The directors bring many 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.
At the appropriate time 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.
To reduce development risk directors will ensure that its
permitting, financial evaluation and financing mechanisms
are robust and thorough and will seek to position the
Company as a low cost producer.
The Company consistently reviews commodity prices
the
its key projects
trends
and
development cycle.
throughout
for
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
from
exploration to production.
the Company
transitions
12
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 13
RISK
MITIGATION STRATEGIES
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
to
environmental liabilities.
rise
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
in addition, risks
developed countries can have,
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 45.
The development of industrial minerals projects such as
the CS Project carry a lower level of environmental liability
than gold or base metal projects due to low levels of toxic
contaminants in the ore and processing chemicals. 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. The Environmental Policy will be updated in
future to account for planned mining activities.
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
development 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 contacts in
the capital markets 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 outstanding
directors fees are settled in shares. Nevertheless, further
equity issues will be required over the next 12 months.
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.
Sunrise Resources plc Annual Report & Accounts 2018
13
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 14
Strategic Report continued
Forward-Looking Statements
This Annual Report may contain certain statements and expressions of belief, expectation or opinion which are forward-looking
statements, and which relate, inter alia, to the Company’s proposed strategy, plans and objectives or to the expectations or
intentions of the Company’s directors. Such forward-looking statements involve known and unknown risks, uncertainties and other
important factors beyond the control of the Company that could cause the actual performance or achievements of the Company
to be materially different from such forward-looking statements.
This Strategic Report was approved by the Board of Directors on 11 December 2018 and signed on its behalf.
Patrick Cheetham
Executive Chairman
14
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 15
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.
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.
in accordance with
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
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:
l
l
l
l
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
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.
financial statements comply with
that
the
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.
Sunrise Resources plc Annual Report & Accounts 2018
15
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 16
Directors’ Report
The directors are pleased to submit their Annual Report and
audited accounts for the year ended 30 September 2018.
The Strategic Report starting on page 6 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. Given the Group’s cash position at year end (£235,722),
these projections include the proceeds of future fundraising
necessary within the next 12 months to meet the Group’s
overheads and planned discretionary project expenditures and
to maintain the Company and its subsidiaries 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 12.
Directors
The directors holding office in the period were:
Mr P L Cheetham – Chairman of the Board and Chairman of
Nomination Committee.
Mr D J Swan – Chair of Audit Committee and member of
Nomination and Remuneration Committees.
Mr R D Murphy – Chair of Remuneration Committee and
member of Nomination and Remuneration Committees.
Attendance at Board and Committee Meetings
The Board retains control of the Group with day-to-day
operational control delegated to the Executive Chairman. The
full Board meets four times a year and on any other occasions
it considers necessary.
Director
P L Cheetham
D J Swan
R D Murphy
Board
Meetings
Nomination
Committee
Audit
Committee
Remuneration
Committee
Attended
Held
Attended
Held
Attended
Held
Attended
Held
9
9
8
9
1
1
1
1
2
2
2
2
None held
during the
period
The directors’ shareholdings are shown in Note 16 to the financial statements.
Post Balance Sheet Events
There were no post balance sheet events which affect the financial position of the Company at balance date.
16
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 17
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 2018
Hargreaves Lansdown (Nominees) Limited 15942
Interactive Investor Services Nominees Limited SMKTISAS
Barclays Direct Investing Nominees Limited CLIENT1
Share Nominees Ltd
Interactive Investor Services Nominees Limited SMKTNOMS
Tertiary Minerals plc (includes 1,887,558 shares held in Crest)
HSDL Nominees Limited MAXI
HSDL Nominees Limited
Hargreaves Lansdown (Nominees) Limited VRADDOWN
Hargreaves Lansdown (Nominees) Limited VRA
JIM Nominees Limited JARVIS
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.
Auditor
A resolution to reappoint Crowe U.K. 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 21 February 2019 at 10.30 a.m. is set out on page 47
of this report. Explanatory Notes giving further information
about the proposed resolutions are set out on page 48.
Number % of share
capital
of shares
173,539,947
162,494,748
162,200,588
159,441,599
153,554,167
126,454,787
121,281,135
93,552,904
89,351,891
86,365,813
77,746,525
7.10
6.65
6.64
6.52
6.28
5.17
4.96
3.83
3.66
3.53
3.18
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 5.19% of the Company’s issued share
capital at 30 September 2018. Tertiary Minerals provides
corporate and project management services to Sunrise
Resources plc.
Approved by the Board of Directors on 11 December 2018 and
signed on its behalf.
Patrick Cheetham
Executive Chairman
Sunrise Resources plc Annual Report & Accounts 2018
17
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 18
Board of Directors
The Directors and Officers of the Company during the financial year were:
Patrick Cheetham
Executive Chairman
David Swan
Senior Non-Executive Director
Key Strengths:
Key Strengths:
l
l
l
Founding director
Mining geologist with 37 years’ experience in mineral
exploration
32 years in public company management
l
l
Chartered Accountant with career focus in natural
resources industry
Past executive director of several public listed mining
companies including Oriel Resources plc
Appointed: March 2005
Appointed: May 2012
Committee Memberships: Chairman of Nomination
Committee
Committee Memberships: Chairman of the Audit Committee,
Member of the Remuneration and Nomination Committees
External Commitments: Executive Chairman of Tertiary
Minerals plc
External Commitments: Non-Executive Director of Central
Asia Metals plc and CFO (part-time) of Scotgold Resources
Limited
Roger Murphy
Non-Executive Director
Colin Fitch LLM, FCIS
Company Secretary
Key Strengths:
Key Strengths:
l
l
l
Career focus in capital raising for mining and oil & gas
companies
Former MD, Investment Banking, of Dundee Securities
Europe Ltd
Geologist
l
l
l
Appointed: May 2016
Committee Memberships: Chairman of the Remuneration
Committee and Member of Audit and Nomination Committees
External Commitments: CEO of African Battery Metals Plc
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
18
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 19
Corporate Governance
Chairman’s Overview
There is no prescribed corporate governance code for AIM
companies and the London Stock Exchange prefers to give
companies the flexibility to choose from a range of codes which
suit their specific stage of development, sector and size.
The Board considers the corporate governance code published
by the Quoted Companies Alliance Corporate Governance
Code 2018 (“the QCA Code”) is the most suitable code for the
Company and has adopted the principles set out in the QCA
Code and applies these principles wherever possible, and
where appropriate to its size and available resources. The
Company’s Corporate Governance Statement was adopted by
the Board on 7 September 2018. The Company has set out on
its website and in its Corporate Governance Statement, starting
on page 20, the 10 principles of the QCA Code and details of
the Company’s compliance.
Patrick Cheetham, in his capacity as Chairman, has overall
responsibility for the corporate governance of the Company
and the Board is responsible for delivering on our well-defined
business strategy having due regard for the associated risks
and opportunities. The corporate governance arrangements
now in place are designed to deliver a corporate culture that
understands and meets shareholder and stakeholder needs
and expectations whilst delivering
for
shareholders.
long-term value
The Board recognises that its principal activity, mineral
exploration and development, 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. The Group’s activities,
carried out in accordance with the Environmental Policy, have
had only minimal environmental impact at present and this
policy is regularly reviewed. Where appropriate, all work is
carried out after advance consultation with affected parties.
In response to the Data Protection Act 2018 and the
implementation of the General Data Protection Regulation
introduced during the year the Company has carried out
extensive due diligence to ensure compliance and has adopted
a Privacy and Cookies Policy.
the benefits
that social media
The Board recognises
engagement can have in helping the Company reach out to
shareholders and other stakeholders, but it also recognises that
misuse or abuse of social media can bring the Company into
disrepute. To facilitate the responsible use of social media the
Company has adopted a Social Media Policy applicable to all
officers and employees of the Company.
The Board has also adopted a Share Dealing Code of Conduct
for dealings in shares of the Company by directors and
employees and an Anti-corruption Policy and Code of Conduct
applicable to employees, 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. 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 13 days of
average daily purchases (2017: 12 days). This amount is
calculated by dividing the creditor balance at year end by the
average daily Group spend in the year.
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
employees and other stakeholders. The Company has
developed a Health and Safety Policy to clearly define roles and
responsibilities and in order to identify and manage risk.
Your Board currently comprises three directors of which two
are non-executive and considered
independent of
management. We believe that this balance provides an
appropriate level of independent oversight. The Board has the
ability to seek independent advice although none was deemed
necessary in the year under review. The Board is aware of the
need to refresh its membership from time to time and to match
its skill set to those required for the development of its mineral
interests and will consider appointing additional independent
non-executive directors in the future.
Patrick Cheetham
Executive Chairman
Sunrise Resources plc Annual Report & Accounts 2018
19
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 20
Corporate Governance continued
Corporate Governance Statement
The QCA Code sets out ten principles which should be applied.
The principles are listed below with an explanation of how the
Company applies each principle, and the reasons for any
aspect of non-compliance.
Principle One: Establish a strategy and business model
which promote long-term value for shareholders.
The Company has a clearly defined strategy and business
model that has been adopted by the Board and is set out in the
Strategic Report starting on page 6.
Principle Two: Seek to understand and meet shareholder
needs and expectations.
All shareholders are encouraged to attend the Company’s
Annual General Meetings where they can meet and directly
communicate with the Board. After the close of business at the
Annual General Meeting, the Chairman makes an up to date
corporate presentation and opens the floor to questions
from shareholders.
Shareholders are also welcome to contact the Company via
email at info@sunriseresourcesplc.com with any specific queries.
The Company also provides regulatory, financial and business
news updates through the Regulatory News Service (RNS) and
various media channels such as Twitter. Shareholders also have
access to information through the Company’s website,
www.sunriseresourcesplc.com, which is updated on a regular
basis and which includes the latest corporate presentation on
the Group. Contact details are also provided on the website.
Principle Three: Take into account wider stakeholder and
social responsibilities and their implications for long-term
success.
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 written 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. The Company
engages positively with
regulatory
authorities and stakeholders in its project locations and
encourages feedback through this engagement. Through this
process the Company identifies the key resources and fosters
the relationships on which the business relies.
local communities,
Principle Four: Embed effective risk management,
considering both opportunities and threats, throughout the
organisation.
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 whilst
recognising that its business opportunities carry an inherently
high level of risk. The principal risks and uncertainties facing
the Group at this stage in its development and in the
foreseeable future are detailed in the Strategic Report on pages
12 and 13 together with risk mitigation strategies employed by
the Board.
Principle Five: Maintain the board as a well-functioning,
balanced team led by the chair.
The Board’s role is to agree the Group’s long-term direction and
strategy and monitor achievement of its business objectives.
The Board meets formally 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, operational and financial matters.
The Board met nine times during the year to consider these
matters. Further details are provided in the Directors’ Report on
page 16. The Board is supported by the Audit, Remuneration
and Nomination Committees, details of which, together with
attendance records, can be found on page 16.
The Board currently consists of the Executive Chairman (Patrick
Cheetham), a senior non-executive director (David Swan) and
one further non-executive director (Roger Murphy). The current
Board’s preference is that independent non-executive directors
comprise the majority of Board members. Mr Patrick Cheetham
is currently the Chairman and Chief Executive. Mr Cheetham
has a service contract as Chairman of the Company and his
services as Chief Executive are provided to the Company at
cost through a Management Services Agreement with Tertiary
Minerals plc, in which he is a shareholder and where he is
employed as Chairman. Currently Mr. Cheetham dedicates
over 90% of his working time to the Company. The combined
role of Chairman and Chief Executive results in cost savings
and is considered acceptable whilst there is a majority of
independent directors on the Board and having regard to the
fact that the Company is not yet revenue generating.
The non-executive directors have committed the time necessary
to fulfil their roles during the year. The attendance record of the
directors at Board and Board Committee meetings are detailed
in the Directors Report on page 16.
The current non-executive directors are considered
independent of management and free from any business or
other relationship which could materially interfere with the
exercise of their independent judgement.
Principle Six: Ensure that between them the directors have
the necessary up to date experience, skills and capabilities.
The Board considers the current balance of sector, financial
and public market skills and experience which it embodies is
appropriate for the current size and stage of development of
20
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 21
the Company and that the Board has the skills and experience
necessary to execute the Company’s strategy and business
plan and discharge its duties effectively.
The directors maintain their skills through membership of
various professional bodies, attendance at mining conferences
and through their various external appointments. Details of the
current Board of Directors’ biographies are set out on page 18.
All Directors have access to the Company Secretary who is
responsible for ensuring that Board procedures and applicable
rules and regulations are observed.
Principle Seven: Evaluate board performance based on clear
and relevant objectives, seeking continuous improvement.
The ultimate measure of the effectiveness of the Board is the
Company’s progress against the long-term strategy and aims
of the business. This progress is reviewed in Board meetings
held at least four times a year. The Executive Chairman’s
performance is reviewed once a year by the rest of the Board.
The Nomination Committee, currently consisting of the
Executive Chairman and the two non-executive directors, meets
once a year to lead the formal process of rigorous and
transparent procedures for Board appointments. During this
meeting the Nomination Committee reviews the structure, size
and composition of
the Board; succession planning;
leadership; key strategic and commercial issues; conflicts of
interest; time required from non-executive directors to execute
their duties effectively; overall effectiveness of the Board and
its own terms of reference.
No new Board appointments were considered necessary
during the year.
Principle Eight: Promote a corporate culture that is based
on ethical values and behaviours.
The Board recognises and strives to promote a corporate
culture based on strong ethical and moral values. The Group
encourages 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
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.
to applications
The corporate culture of the Company is promoted to its
employees, suppliers and contractors and is underpinned by
the implementation and regular review, enforcement and
documentation of various policies: Health and Safety Policy;
Environmental Policy; Share Dealing Policy; Anti-Corruption
Policy & Code of Conduct; Privacy and Cookies Policy and
Social Media Policy. These procedures enable the Board to
determine that ethical values are recognised and respected.
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. The Group’s activities carried out in accordance
the Environmental Policy have had only minimal
with
environmental impact and this policy is regularly reviewed.
Where appropriate, all work is carried out after advance
consultation with affected parties.
Principle Nine: Maintain governance structures and
processes that are fit for purpose and support good
decision-making by the Board.
that
The Board has overall responsibility for all aspects of the
business. The Chairman is responsible for overseeing the
running of the Board, ensuring that no individual or group
dominates
the
the Board’s decision-making, and
non-executive directors are properly briefed on all operational
and financial matters. The Chairman has overall responsibility
for corporate governance matters in the Group and chairs the
Nomination Committee. The Chairman has the responsibility for
implementing the strategy of the Board and managing the
day-to-day business activities of the Group. The Company
Secretary is responsible for ensuring that Board procedures are
followed, and applicable rules and regulations are complied
with. Key operational and financial decisions are reserved for
the Board through quarterly project reviews, annual budgets,
and quarterly budget and cash-flow forecasts and on an ad
hoc basis where required.
The two non-executive directors are responsible for bringing
independent and objective judgment to Board decisions. The
Board has established Audit and Remuneration Committees
with formally delegated duties and responsibilities. David Swan
currently chairs the Audit Committee; Roger Murphy chairs the
Remuneration Committee.
This Corporate Governance statement will be reviewed at least
annually to ensure that the Company’s corporate governance
framework evolves in line with the Company’s strategy and
business plan.
Principle Ten: Communicate how the Company is governed
and
is performing by maintaining a dialogue with
shareholders and other relevant stakeholders.
The Company regularly communicates with, and encourages
feedback from, its shareholders who are its key stakeholder
group. The Company’s website is regularly updated and users,
including all stakeholders, can register to be alerted via email
Sunrise Resources plc Annual Report & Accounts 2018
21
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 22
Corporate Governance continued
when material announcements are made. The Company’s
contact details are on the website should stakeholders wish to
make enquiries of management.
sufficient to prevent fraud and ensure that senior management,
the Committee and the Board are fully aware of the Company’s
financial position at all times.
The Audit Committee met twice in the last financial year.
Significant reporting issues considered during the year
included the following:
Impairments
1.
The Committee has reviewed the carrying values of the Group
projects and the Group inter-company loans and carried out
impairment reviews. The project carrying values are assessed
against IFRS 6 and with reference to IAS 36 and in particular
the criteria set out in Note 1(j) on page 34.
fully
impaired and
As a result of the year-end review it was judged that the Cue
Diamond Project should be
that,
consequently, the value of the inter-company loan from Sunrise
Resources plc to its wholly owned subsidiary Sunrise Minerals
Australia Pty Ltd, the company holding the Cue Diamond
Project, should be impaired and reduced to a level that might
reasonably be recovered from the Baker’s Gold Project in future
based on evidence available to the Committee. Further details
are provided on page 7.
2. Going Concern
The Committee also considered the Going Concern basis on
which the accounts have been prepared and can refer
shareholders to the Company’s accounting policy set out in
Note 1(b) on page 33. The directors are satisfied that the going
concern basis is appropriate for the preparation of the
financial statements.
David Swan
Chairman – Audit Committee
The Group’s
https://www.sunriseresourcesplc.com/financial-reports.
reports can be
financial
found here:
Notices of General Meetings are posted to shareholders and
copies for at least the past five years are contained within the
Annual Reports, copies of which are available in the Company
Documents section of the AIM Rule 26 page of the website.
The results of voting on all resolutions in future general
meetings will be posted to the Company’s website, including
any actions to be taken as a result of resolutions for which votes
against have been received from at least 20 per cent of
independent votes.
Audit Committee Report
The Audit Committee is a sub-committee of the Board,
composed entirely of non-executive directors and 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
auditors taking account of any non-audit services provided by
them. Mr Swan is Chairman of the Audit Committee.
The specific objectives of the Committee are to:
(a) maintain adequate quality and effective scope of the
external audit of the Group including its branches where
applicable and review the independence and objectivity
of the auditors.
(b) ensure that the Board of Directors has adequate
knowledge of issues discussed with external auditors.
(c)
ensure the financial information and reports issued by the
Company to AIM, shareholders and other recipients are
accurate and contain proper disclosure at all times.
(d) maintain the integrity of the Group’s administrative
operating and accounting controls and internal control
principles.
(e)
ensure proper accounting policies are adhered to by the
Group.
The Committee has unlimited access to the external auditors,
to senior management of the Group and to any external party
deemed necessary for the proper discharge of its duties. The
it
Committee may consult
considers necessary to perform it duties.
independent experts where
The Audit Committee reviews the financial controls of the
Company on a regular basis and is satisfied that the Group’s
financial controls and reporting procedures are robust and
22
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 23
Remuneration Committee Report
The Remuneration Committee is a sub-committee of the Board
and comprises the non-executive directors. Mr Murphy is
Chairman of the Remuneration Committee.
Nomination Committee Report
The Nomination Committee comprises the Chairman and the
non-executive directors. Mr Cheetham is Chairman of the
Nomination Committee.
The primary objective of the Committee is to review the
performance of executive directors and review the basis of
their service agreements and make recommendations to the
Board regarding the scale and structure of their remuneration.
However, the Company does not currently remunerate any of the
directors other than in their capacity as directors. Whilst the
Chairman of the Board, Patrick Cheetham, does have an
executive role, his technical and managerial services are
provided under a general service agreement with Tertiary
Minerals plc and his remuneration is fixed by Tertiary Minerals plc.
The Remuneration Committee has not met during the period
under review, but held a meeting on 6 November 2018 to
consider if any changes were required to the Committee’s
terms of reference. There were no new recommendations made
to the Board.
Roger Murphy
Chairman – Remuneration 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.
The Committee is required to:
(a) Review the structure, size and composition of the Board
and make recommendations to the Board with regard to
any changes.
(b) Give full consideration to succession planning for
directors and other senior executives in the course of its
work,
the challenges and
opportunities facing the Company, and the skills and
expertise needed on the Board in the future.
into account
taking
(c) Keep under review the leadership needs of the
organisation to compete effectively in the marketplace.
(d) Review annually the time required from non-executive
directors.
(e) Arrange periodic reviews of its own performance and, at
least annually, review its constitution and terms of
reference
is operating at maximum
effectiveness and recommend any changes it considers
necessary to the Board for approval.
to ensure
it
The Committee carries out its duties for the Parent Company,
major subsidiary undertakings and the Group as a whole and
met once during the period under review, on 21 August 2018.
The Committee is satisfied that the current Board has a depth
of experience and level and range of skills appropriate to the
Company at this stage in its development. It is however
recognised that the Company is likely to need additional
expertise as it moves forward into commercial production and
so the composition of the Board will be kept under careful
review to ensure that the Board can deliver long term growth in
shareholder value.
Patrick Cheetham
Chairman – Nomination Committee
Sunrise Resources plc Annual Report & Accounts 2018
23
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 24
Independent Auditor’s Report
to the Members of Sunrise Resources plc for the year ended 30 September 2018
Opinion
We have audited the financial statements of Sunrise Resources
plc (the “Parent Company”) and its subsidiaries (the “Group”)
for the year ended 30 September 2018, which comprise:
l
l
l
l
l
Income Statement and Statement of
the Group
Comprehensive Income for the year ended 30 September
2018;
the Group and Parent Company Statements of Financial
Position as at 30 September 2018;
the Group and Parent Company Statements of Cash
Flows for the year then ended;
the Group and Parent Company Statements of Changes
in Equity for the year then ended; and
the Notes to the Financial Statements, including a
summary of significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group and Parent Company financial
statements is applicable law and International Financial
Reporting Standards
the
European Union.
(IFRSs) as adopted by
In our opinion:
l
l
l
l
the financial statements give a true and fair view of the
state of the Group’s and of the Parent Company's affairs
as at 30 September 2018 and of the Group’s loss for the
period 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 as applied in accordance with the
provisions of the Companies Act 2006; and
the
in
financial statements have been prepared
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the ‘Auditor’s responsibilities for the audit of the
financial statements’ section of our report. We are
independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Material uncertainty relating to going concern
We draw attention to Note 1(b) in the financial statements, which
indicates that 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 stated in Note 1(b), these events or conditions,
along with the other matters as set forth in Note 1(b), indicate
that a material uncertainty exists that may cast significant doubt
on the Company’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept
of materiality. An item is considered material if it could
reasonably be expected to change the economic decisions of
a user of the financial statements. We used the concept of
materiality to both focus our testing and to evaluate the impact
of misstatements identified.
Based on our professional judgement, we determined overall
materiality for the Group financial statements as a whole to be
£35,000, based on 2% of the Group’s total assets.
We use a different level of materiality (‘performance materiality’)
to determine the extent of our testing for the audit of the
financial statements. Performance materiality is set based on
the audit materiality as adjusted for the judgements made as to
the entity risk and our evaluation of the specific risk of each
audit area having regard to the internal control environment.
Where considered appropriate performance materiality may be
reduced to a lower level, such as, for related party transactions
and directors’ remuneration.
We agreed with the Audit Committee to report to it all identified
errors in excess of £1,750. Errors below that threshold would
also be reported to it if, in our opinion as auditor, disclosure was
required on qualitative grounds.
Overview of the scope of our audit
The Group and its subsidiaries are accounted for from one
central operating location, the Group’s registered office. Our
audit was conducted from the main operating location and all
group companies were within the scope of our audit testing.
24
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 25
Key audit matter
How the scope of our audit addressed the key
audit matter
Carrying value of capitalised exploration and
evaluation costs
The group has significant intangible assets, comprising
exploration and evaluation project costs.
In respect of all material intangible assets our audit work
included, but was not restricted to:
The directors are required to ensure that only costs which
meet the IFRS criteria of an asset are capitalised within
exploration properties. Additionally, the directors are
required to assess whether there are any indicators of
impairment of these assets.
in use
requires
Any assessment of value
that
accumulated costs be assessed against the likelihood
that such costs will be recoverable against future
exploitation or sale. This requires management to make
estimates 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.
judgements and
The directors concluded that there were indicators of
impairment relating to the Cue Diamond project, as a
result of the decision of the directors to surrender the
exploration licence.
The directors concluded to impair the carrying value of
the Cue Diamond asset fully.
Impairment of the investment in the subsidiaries, Sunrise
Minerals Australia Pty Ltd and SR Minerals Inc., in the
Company financial statements.
The cost of the investment in and loan due from the
subsidiaries, held as an asset of the Company, is
supported by the future cash flows associated with the
recovery of the exploration and evaluation assets held by
those subsidiaries.
the
impairment of
Following
the exploration and
evaluation assets held within Sunrise Minerals Australia
Pty Ltd under IFRS 6, the value of investment in and due
from the subsidiary was in excess of the net asset value
and market value of the group at year end indicating a
potential impairment.
l
l
l
l
Substantive testing on expenditure capitalised in the
year to ensure it was permitted under accounting
standards;
Reviewing progress on exploration and evaluation
activities at each of the licence areas to assess
whether there was evidence which would indicate
a potential impairment trigger;
Reviewing approved budget forecasts and minutes
of board meetings to confirm the intention to
continue exploration work on the licences; and
A review of the directors’ assessment of whether
there are any indicators of impairment to capitalised
costs and discussion around any key judgemental
areas.
In conjunction with our work associated with the potential
impairment of the exploration and evaluation assets held
within Sunrise Minerals Australia Pty Ltd and SR Minerals
Inc., we considered directors’ assessment on whether
there was an indication that the cost of the investments in
and loans due from the subsidiaries required impairment
in the Company.
The directors have prepared an impairment review of the
carrying value of the investment in Sunrise Minerals
Australia Pty Ltd. The result of this review, indicated that
an impairment charge was required in the carrying value
of the investment in Sunrise Minerals Australia Pty Ltd.
Sunrise Resources plc Annual Report & Accounts 2018
25
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 26
Independent Auditor’s Report continued
to the Members of Sunrise Resources plc for the year ended 30 September 2018
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or
not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Our audit procedures in relation to these matters were
designed in the context of our audit opinion as a whole. They
were not designed to enable us to express an opinion on these
matters individually and we express no such opinion.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the
Annual Report, other than the financial statements and our
auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is
a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion based on the work undertaken in the course of
our audit
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; and
l
the Directors’ Report and Strategic Report have been
legal
prepared
requirements.
in accordance with applicable
Matters on which we are required to report by
exception
In light of the knowledge and understanding of the Group and
the Parent Company and their environment obtained in the
course of
identified material
misstatements in the strategic report or the directors’ report.
the audit, we have not
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:
l
l
l
l
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.
Responsibilities of the directors for the financial
statements
As explained more fully in the Directors’ Responsibilities
statement (set out on page 15), the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group’s and Parent Company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Sunrise Resources plc Annual Report & Accounts 2018
l
26
252767 Sunrise Resources plc – Annual Report 2018 pp01-pp27.qxp 14/12/2018 11:33 Page 27
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
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.
Michael Jayson
(Senior Statutory Auditor)
For and on behalf of Crowe U.K. LLP
Statutory Auditor
Manchester, United Kingdom
11 December 2018
Sunrise Resources plc Annual Report & Accounts 2018
27
252767 Sunrise Resources plc – Annual Report 2018 pp28-pp32.qxp 14/12/2018 11:35 Page 28
Consolidated Income Statement
for the year ended 30 September 2018
Pre-licence exploration costs
Impairment of deferred exploration asset
Administration costs
Operating loss
Impairment of available for sale investment
(Loss)/gain on disposal of intangible asset
Interest receivable
Loss before income tax
Income 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
2018
£
10,473
483,169
290,023
2017
£
21,161
3,077
276,568
(783,665)
(300,806)
–
(13,338)
(3,112)
105
3,028
70
(786,672)
(311,046)
–
–
(786,672)
(311,046)
(0.04)
(0.02)
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2018
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
Fair value movement on available for sale investment reserve
2018
£
2017
£
(786,672)
(311,046)
11,657
(11,007)
(35,169)
12,471
650
(22,698)
Total comprehensive loss for the year attributable to equity holders of the parent
(786,022)
(333,744)
28
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp28-pp32.qxp 14/12/2018 11:35 Page 29
Consolidated and Company Statements of Financial Position
at 30 September 2018
Company Registration Number: 05363956
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 warrant reserve
Available for sale investment reserve
Foreign currency reserve
Accumulated losses
Group
2018
£
Company
2018
£
Group
2017
£
Company
2017
£
Notes
9
8
8
11
12
1,363,360
–
1,302,404
–
–
1,626,506
–
1,601,574
19,697
14,344
30,478
22,624
1,383,057
1,640,850
1,332,882
1,624,198
76,220
38,502
62,142
25,079
235,722
234,972
234,181
215,339
311,942
273,474
296,323
240,418
13
(106,346)
(94,305)
(112,901)
(96,829)
205,596
179,169
183,422
143,589
1,588,653
1,820,019
1,516,304
1,767,787
14
2,436,910
2,436,910
1,804,016
1,804,016
5,016,526
5,016,526
4,792,790
4,792,790
14
14
68,204
68,204
(212)
31,406
2,682
1,408
89,248
10,795
19,749
89,248
10,962
1,359
(5,964,181)
(5,705,711)
(5,200,294)
(4,930,588)
Equity attributable to owners of the parent
1,588,653
1,820,019
1,516,304
1,767,787
The Company reported a loss for the year ended 30 September 2018 of £797,908 (2017: 271,115).
These financial statements were approved and authorised for issue by the Board of Directors on 11 December 2018 and were
signed on its behalf.
P L Cheetham
Executive Chairman
D J Swan
Director
Sunrise Resources plc Annual Report & Accounts 2018
29
252767 Sunrise Resources plc – Annual Report 2018 pp28-pp32.qxp 14/12/2018 11:35 Page 30
Consolidated Statement of Changes in Equity
Group
Share
Share Available
Foreign
Share
capital
£
premium warrant
reserve
account
£
£
for sale currency Accumulated
losses
reserve
£
£
reserve
£
Total
£
At 30 September 2016
1,119,910
4,818,998
119,899
(1,676)
54,918
(4,921,406) 1,190,643
Loss for the year
Change in fair value
Exchange differences
Total comprehensive loss for the year
–
–
–
–
–
–
–
–
–
–
–
–
–
12,471
–
–
–
(35,169)
(311,046)
–
–
(311,046)
12,471
(35,169)
12,471
(35,169)
(311,046)
(333,744)
Share issue
Share-based payments expense
Transfer of expired warrants
684,106
–
–
(26,208)
–
–
–
1,507
(32,158)
–
–
–
–
–
–
–
–
32,158
657,898
1,507
–
At 30 September 2017
1,804,016
4,792,790
89,248
10,795
19,749
(5,200,294) 1,516,304
Loss for the year
Change in fair value
Exchange differences
Total comprehensive loss for the year
–
–
–
–
–
–
–
–
–
–
–
–
–
(11,007)
–
–
–
11,657
(786,672)
–
–
(786,672)
(11,007)
11,657
(11,007)
11,657
(786,672)
(786,022)
Share issue
Share-based payments expense
Transfer of expired warrants
632,894
–
–
223,736
–
–
–
1,741
(22,785)
–
–
–
–
–
–
–
–
22,785
856,630
1,741
–
At 30 September 2018
2,436,910
5,016,526
68,204
(212)
31,406
(5,964,181) 1,588,653
30
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp28-pp32.qxp 14/12/2018 11:35 Page 31
Company Statement of Changes in Equity
Company
Share
Share premium warrant
reserve
account
capital
£
£
£
Share Available
Foreign
for sale currency Accumulated
losses
reserve
£
£
reserve
£
Total
£
At 30 September 2016
1,119,910 4,818,998
119,899
(1,676)
1,176
(4,691,631) 1,366,676
Loss for the year
Change in fair value
Exchange differences
Total comprehensive loss for the year
–
–
–
–
–
–
–
–
–
–
–
–
–
12,638
–
12,638
Share issue
Share-based payments expense
Transfer of expired warrants
684,106
–
–
(26,208)
–
–
–
1,507
(32,158)
–
–
–
–
–
183
183
–
–
–
(271,115)
–
–
(271,115)
12,638
183
(271,115)
(258,294)
–
–
32,158
657,898
1,507
–
At 30 September 2017
1,804,016 4,792,790
89,248
10,962
1,359
(4,930,588) 1,767,787
Loss for the year
Change in fair value
Exchange differences
Total comprehensive loss for the year
–
–
–
–
–
–
–
–
–
–
–
–
Share issue
Share-based payments expense
Transfer of expired warrants
632,894
–
–
223,736
–
–
–
1,741
(22,785)
–
(8,280)
–
(8,280)
–
–
–
–
–
49
49
–
–
–
(797,908)
–
–
(797,908)
(8,280)
49
(797,908)
(806,139)
–
–
22,785
856,630
1,741
–
At 30 September 2018
2,436,910 5,016,526
68,204
2,682
1,408
(5,705,711) 1,820,019
Sunrise Resources plc Annual Report & Accounts 2018
31
252767 Sunrise Resources plc – Annual Report 2018 pp28-pp32.qxp 14/12/2018 11:35 Page 32
Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2018
Operating activity
Operating loss
Share-based payment charge
Shares issued in settlement of outstanding wages
Impairment charge – deferred exploration asset
(Decrease)/increase in accrued income
(Increase)/decrease in receivables
Decrease in trade and other payables
Group
2018
£
Company
2018
£
Group
2017
£
Company
2017
£
Notes
(783,665)
(263,531)
(300,806)
(261,797)
1,741
22,131
483,169
(2,501)
1,741
22,131
–
–
11
13
(14,078)
(13,423)
(6,555)
(2,524)
1,507
15,736
3,077
7,854
(18,536)
(59,225)
1,507
15,736
–
–
2,002
(1,639)
Net cash outflow from operating activity
(299,758)
(255,606)
(350,393)
(244,191)
Investing activity
Interest received
Disposal of development asset
Development expenditures
Loans to subsidiaries
105
(390)
9
(550,132)
12,164
–
–
70
7,467
(273,814)
4,020
–
–
–
(571,472)
–
(289,701)
Net cash outflow from investing activity
(550,417)
(559,308)
(266,277)
(285,681)
Financing activity
Issue of share capital (net of expenses)
834,500
834,500
642,162
642,162
Net cash inflow from financing activity
834,500
834,500
642,162
642,162
Net increase/(decrease) in cash and cash equivalents
(15,675)
19,586
25,492
Cash and cash equivalents at start of year
Exchange differences
234,181
215,339
223,268
17,216
47
(14,579)
112,290
102,865
184
Cash and cash equivalents at 30 September
12
235,722
234,972
234,181
215,339
32
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 33
Notes to the Financial Statements
for the year ended 30 September 2018
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 two companies
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. Given the
Group’s cash position at year end (£235,722), these projections include the proceeds of future fundraising necessary within the next
12 months to meet the Group’s overheads and planned discretionary project expenditures and to maintain the Company and its
subsidiaries 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 a biannual
review for impairment.
The Group’s financial statements consolidate the financial statements of Sunrise Resources plc and its subsidiary undertakings
eliminating 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 £797,908 (2017: £271,115). The loss for 2018 includes provision for impairment of its investment in
subsidiary undertakings in the amount of £546,541 (Note 8).
Intangible assets
(d)
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)
(2)
such costs are expected to be recouped through successful exploration and development of the area, or alternatively by its
sale; or
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.
A biannual review is carried out by the directors to consider whether there are any indications of impairment in capitalised
exploration and development costs. The biannual impairment reviews were conducted in April 2018 and November 2018.
Sunrise Resources plc Annual Report & Accounts 2018
33
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 34
Notes to the Financial Statements continued
for the year ended 30 September 2018
Where an indication of impairment is identified, the relevant value is written off to the income statement in the period for which the
impairment was identified. An impairment of exploration and development costs may be subsequently reversed in later periods
should conditions allow.
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.
Trade and other receivables and payables
(e)
Trade and other receivables and payables are measured at initial recognition at fair value and subsequently measured at
amortised cost.
Cash and cash equivalents
(f)
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.
Foreign currencies
(h)
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 in equity.
Share warrants and share-based payments
(i)
The Company issues warrants to employees (including directors) and third parties. The fair value of the warrants is recognised
as a charge measured at fair value on the date of grant and determined in accordance with IFRS 2 or IAS 39, adopting the Black–
Scholes–Merton model. The fair value is recognised on a straight-line basis over the vesting period, with a corresponding
adjustment to equity, based on the management’s estimate of shares that will eventually vest. The expected life of the warrants is
adjusted, based on management’s best estimates, for the effects of non-transferability, exercise restrictions and behavioural
considerations. The details are shown in Note 15.
The Company also issues shares in order to settle certain liabilities, including settlement of outstanding directors fees. 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.
Judgements and estimations in applying accounting policies
(j)
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:
Intangible 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
34
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 35
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 and whether this right will expire in the near future,
and whether the right is expected to be renewed.
(b) Whether substantive expenditure on further exploration for and evaluation of mineral resources for the specific project is
either budgeted or planned.
(c) Whether exploration for and evaluation of mineral resources on the specific project has led to the discovery of commercially
viable quantities of mineral resources and whether the entity has decided to discontinue such activities on the project.
(d) Whether sufficient data exist to indicate that, although a development on the specific project is likely to proceed, the carrying
amount of the exploration and evaluation asset is likely to be recovered in full from successful development of a mine or by
the sale of the project.
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. The results of the impairment review
conducted during the year are detailed within Note 9.
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 warrants and share-based payments
The estimates of costs recognised in connection with the fair value of share warrants 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 warrants before exercise, and behavioural consideration of warrant holders.
(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.
Standards, amendments and interpretations not yet effective
(l)
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. Specifically, the adoption of IFRS 9 will have minimal impact for both the classification and measurement
of existing financial instruments. As the Group does not have any turnover, IFRS 15 will not have any significant impact on revenue
recognition and related disclosures. Finally, the adoption of IFRS 16 will not have any impact on the financial statements of the
Group as all lease contracts are for periods of less than one year.
Sunrise Resources plc Annual Report & Accounts 2018
35
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 36
Notes to the Financial Statements continued
for the year ended 30 September 2018
Segmental analysis
2.
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.
2018
Consolidated Income Statement
Impairment of deferred exploration cost
Pre-licence exploration costs
Share-based payments
Other expenses
Operating loss
Impairment of available for sale investment
Gain/(loss) on disposal of intangible asset
Interest receivable
Loss before income tax
Income tax
Loss for the year attributable to equity holders of the parent
Non-current assets
Intangible assets:
Deferred exploration costs:
Baker’s Gold Project, Australia
County Line Diatomite Project, USA
Garfield Silver-Gold-Copper Project, USA
Bay State Silver Project, USA
NewPerl Project, USA
Ridge Limestone Project, USA
CS Pozzolan-Perlite Project, USA
Clayton Gold Project, USA
Newark Silver-Gold Project, USA
Stonewall Gold Project, USA
Available for sale investment
Current assets
Receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Net current assets
Net assets
Other data
Deferred exploration additions
Exchange rate adjustments to deferred exploration costs
Exploration
projects
£
Head
office
£
483,169
10,473
–
–
(493,642)
–
(3,112)
–
(496,754)
–
(496,754)
–
–
1,741
288,282
(290,023)
–
–
105
(289,918)
–
(289,918)
Total
£
483,169
10,473
1,741
288,282
(783,665)
–
(3,112)
105
(786,672)
–
(786,672)
61,118
129,213
26,963
384,677
29,829
16,576
662,139
15,719
26,025
11,101
1,363,360
–
1,363,360
–
–
–
–
–
–
–
–
–
–
–
19,697
19,697
61,118
129,213
26,963
384,677
29,829
16,576
662,139
15,719
26,025
11,101
1,363,360
19,697
1,383,057
32,272
–
32,272
43,948
235,722
279,670
76,220
235,722
311,942
(30,860)
1,412
1,364,772
(75,486)
204,184
223,881
(106,346)
205,596
1,588,653
550,132
(6,007)
–
–
550,132
(6,007)
36
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 37
2017
Consolidated Income Statement
Impairment of deferred exploration cost
Pre-licence exploration costs
Share-based payments
Other expenses
Operating loss
Impairment of available for sale investment
Disposal of intangible asset
Interest receivable
Loss before income tax
Income tax
Loss for the year attributable to equity holders of the parent
Non-current assets
Intangible assets:
Deferred exploration costs:
Cue Diamond Project, Australia
Baker’s Gold Project, Australia
County Line Diatomite Project, USA
Garfield Silver-Gold-Copper Project, USA
Bay State Silver Project, USA
Pozz Ash Project, USA
Ridge Limestone Project, USA
CS Pozzolan-Perlite Project, USA
Clayton Gold Project, USA
Newark Silver-Gold Project, USA
Stonewall Gold Project, USA
Available for sale investment
Current assets
Receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Net current assets
Net assets
Other data
Deferred exploration additions
Deferred exploration disposal
Exchange rate adjustments to deferred exploration costs
Exploration
projects
£
Head
office
£
3,077
21,161
–
–
(24,238)
–
3,028
–
(21,210)
–
(21,210)
–
–
1,507
275,061
(276,568)
(13,338)
–
70
(289,836)
–
(289,836)
Total
£
3,077
21,161
1,507
275,061
(300,806)
(13,338)
3,028
70
(311,046)
–
(311,046)
480,204
53,558
114,525
25,264
368,205
18,088
14,523
184,926
12,894
21,541
8,676
1,302,404
–
1,302,404
–
–
–
–
–
–
–
–
–
–
–
–
30,478
30,478
480,204
53,558
114,525
25,264
368,205
18,088
14,523
184,926
12,894
21,541
8,676
1,302,404
30,478
1,332,882
26,319
–
26,319
35,823
234,181
270,004
62,142
234,181
296,323
(34,976)
(8,657)
1,293,747
(77,925)
192,079
222,557
(112,901)
183,422
1,516,304
273,814
(20,315)
(20,589)
–
–
–
273,814
(20,315)
(20,589)
Sunrise Resources plc Annual Report & Accounts 2018
37
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 38
Notes to the Financial Statements continued
for the year ended 30 September 2018
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:
Interim review of accounts
VAT review
Corporation tax fees
4.
Directors’ emoluments
Remuneration in respect of directors was as follows:
P L Cheetham (salary)
D J Swan (salary)
R D Murphy (salary)
2018
£
2017
£
6,175
6,000
1,000
2,250
700
1,000
0
700
2018
£
12,000
12,000
12,000
36,000
2017
£
12,000
12,000
12,000
36,000
In the year ended 30 September 2018 the cost of Employer’s National Insurance Contributions for directors was £Nil (2017: £Nil)
In the year ended 30 September 2018 the value of non-cash share based payments in respect of share warrants issued to the
directors was £Nil (2017: £Nil).
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 £110,790, including Employers National Insurance Contributions, was charged to the Company for his services
during the year (2017: £104,324). 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 £36,000 (2017: £36,000).
5.
Staff costs
Staff costs for the Group and Company, including directors, were as follows:
Wages and salaries
Social security costs
Share-based payments
2018
£
2017
£
40,232
40,128
–
450
–
390
40,682
40,518
The average monthly number of employees employed by the Group and Company during the year was as follows:
The average monthly number of employees employed by
the Group and Company during the year was as follows:
Directors
Other Officers
2018
Number
2017
Number
3
1
4
3
1
4
The Company does not employ any staff directly apart from the directors and a company secretary. 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 share 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 £1,291 (2017: £1,117).
38
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 39
Loss per share
6.
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)
2018
2017
(786,672)
(311,046)
2,136,387,359 1,418,016,156
(0.04)
(0.02)
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.
Income tax
7.
No liability to corporation tax arises for the year due to the Group recording a taxable loss (2017: £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 – 19% (2017: 19%). The differences are explained below.
Tax reconciliation
Loss before income tax
Tax at hybrid rate 19% (2017: 19.5%)
Pre-trading expenditure no longer deductible for tax purposes
Administration expenditure not deductible for tax purposes
Tax effect at hybrid rate 19% (2017: 19.5%)
Unrelieved tax losses carried forward
Tax recognised on loss
Total losses carried forward for tax purposes
2018
£
2017
£
(786,672)
(311,046)
(149,468)
(60,654)
886,846
540,158
17,021
–
171,735
105,331
(22,267)
(44,677)
–
–
(3,376,297)
(3,493,492)
Factors that may affect future tax charges
The Group has total losses carried forward of £3,376,297 (2017: £3,493,492). 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.
8.
Investments
Subsidiary undertakings
Company
Country of
incorporation
/registration
Date of
incorporation
/registration
Type and percentage
of shares held at
30 September 2018
Principal activity
Sunrise Minerals Australia Pty Ltd
Australia
7 October 2009
100% of ordinary shares
Mineral exploration
SR Minerals Inc.
Westgold Inc.
Nevada, USA
12 January 2014
100% of ordinary shares
Mineral exploration
Nevada, USA
13 April 2016
100% of ordinary shares
Mineral exploration
The registered office of Sunrise Minerals Australia Pty Ltd is Level 4, 35-37 Havelock Street West, Perth, WA 6005.
The registered office of SR Minerals Inc. and Westgold Inc. is 241 Ridge Street, Suite 210, Reno, NV 89501.
Sunrise Resources plc Annual Report & Accounts 2018
39
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 40
Notes to the Financial Statements continued
for the year ended 30 September 2018
Investment in subsidiary undertakings
Ordinary Shares – Sunrise Minerals Australia Pty Ltd
Loan – Sunrise Minerals Australia Pty Ltd
Less – provision for impairment
Ordinary Shares – SR Minerals Inc.
Loan – SR Minerals Inc.
Ordinary Shares – Westgold Inc.
Loan – Westgold Inc.
At 30 September
Company
2018
£
Company
2017
£
61
61
726,816
710,374
(546,541)
1
–
1
1,353,145
809,053
1
1
93,023
82,084
1,626,506
1,601,574
In relation to indication of impairment of exploration assets under IFRS 6, the value of investment in and due from the subsidiaries
was considered. The directors therefore undertook an impairment review of the carrying values of the investments under IAS 36.
The result of this review, together with the fact that there had been an impairment of the underlying assets held by Sunrise Minerals
Australia Pty Ltd, indicated that impairment was required under IAS 36.12(f) in the carrying value of the investment in Sunrise
Minerals Australia Pty Ltd. The investment has been impaired down to the value of the underlying exploration and development
asset, i.e. an impairment of £546,541.
Available for sale investments
Company
Block Energy plc
VR Resources Ltd
Country of
incorporation
/registration
Type and percentage
of shares held at
30 September 2018
England & Wales
0.18% of ordinary shares
Canada
0.11% of ordinary shares
Principal activity
Mineral exploration
Mineral exploration
Available for sale investments
Value at start of year
Additions to available for sale investment
Group
2018
£
30,478
–
Company
2018
£
22,624
–
Group
2017
£
23,324
8,021
Movement in valuation of available for sale investment
(10,781)
(8,280)
(867)
Company
2017
£
23,324
–
(700)
At 30 September
19,697
14,344
30,478
22,624
The fair value of each available for sale investment is equal to the market value of its shares at 30 September 2018, based on the
closing mid-market price of shares on its equity exchange market.
These are level one inputs for the purpose of the IFRS 13 fair value hierarchy.
40
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 41
9.
Intangible assets
Deferred exploration expenditure
Cost
At start of year
Additions
At 30 September
Disposals
At start of year
Impairment losses during year
Disposal during year
Foreign currency exchange adjustments
At 30 September
Carrying amounts
At 30 September
At start of year
Group
2018
£
Company
2018
£
Group
2017
£
Company
2017
£
3,513,696
2,203,594
3,239,882
2,203,594
550,132
–
273,814
–
4,063,828
2,203,594
3,513,696
2,203,594
(2,211,292)
(2,203,594)
(2,167,311)
(2,203,594)
(483,169)
–
(6,007)
–
–
–
(3,077)
(20,315)
(20,589)
–
–
–
(2,700,468)
(2,203,594)
(2,211,292)
(2,203,594)
1,363,360
1,302,404
–
–
1,302,404
1,072,571
–
–
The directors carried out an impairment review, with reference to IFRS 6.20(a) and IAS 36.12 (f) which resulted in an impairment
charge relating to the Cue Diamond Project being recognised in the Consolidated Income Statement as part of operating expenses
following a decision by the Board to surrender the exploration licence over the Cue Diamond Project. Refer to accounting
policy 1(d) and 1(j) for a description of the considerations 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
Prepayments
Accrued income
Other receivables
At 30 September
12. Cash and cash equivalents
Cash at bank and in hand
At 30 September
Group
2018
£
20,191
5,353
50,676
76,220
Company
2018
£
14,876
–
23,626
38,502
Group
2017
£
14,224
7,854
40,064
62,142
Company
2017
£
11,348
–
13,731
25,079
Group
2018
£
Company
2018
£
Group
2017
£
Company
2017
£
235,722
234,972
234,181
215,339
Sunrise Resources plc Annual Report & Accounts 2018
41
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 42
Notes to the Financial Statements continued
for the year ended 30 September 2018
13. Trade and other payables
Amounts owed to Tertiary Minerals plc
Trade creditors
Accruals
Net pay
Social security and taxes
At 30 September
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
Group
2018
£
59,690
5,747
22,767
11,394
6,748
Company
2018
£
59,690
1,981
14,492
11,394
6,748
Group
2017
£
61,275
13,871
19,617
11,065
7,073
106,346
94,305
112,901
Company
2017
£
61,275
6,247
11,169
11,065
7,073
96,829
2018
Number
2018
£
2017
Number
2017
£
1,804,015,667 1,804,016 1,119,910,379
1,119,910
632,894,397
632,894
684,105,288
684,106
2,436,910,064 2,436,910 1,804,015,667
1,804,016
During the year to 30 September 2018 the following share issues took place:
An issue of 6,802,353 0.1p ordinary shares at 0.17p per share to three directors, for a total consideration of £11,564, in satisfaction
of outstanding directors’ fees (31 October 2017).
An issue of 333,333,333 0.1p ordinary shares at 0.15p per share, by way of placing, for a total consideration of £462,500 net of
expenses (6 December 2017).
An issue of 285,714,285 0.1p ordinary shares at 0.14p per share, by way of placing, for a total consideration of £372,000 net of
expenses (24 July 2018).
An issue of 7,044,426 0.1p ordinary shares at 0.15p per share to three directors, for a total consideration of £10,567, in satisfaction
of outstanding directors’ fees (21 August 2018).
During the year to 30 September 2017 a total of 684,105,288 0.1p ordinary shares were issued, at an average price of 0.103p
per share, for a total consideration of £657,897 net of expenses.
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 warrant reserve
The share warrant reserve is used to recognise the value of equity-settled share warrants provided to employees, including key
management personnel, as part of their remuneration, and to third parties in connection with fundraising. Refer to Note 15 for
further details.
42
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 43
15. Share warrants granted
Warrants not exercised at 30 September 2018
Issue date
Exercise price
14/01/14
05/02/15
05/02/15
18/02/16
18/02/16
10/06/16
10/06/16
01/02/17
01/02/17
31/01/18
31/01/18
0.550p
0.275p
0.275p
0.160p
0.160p
0.240p
0.240p
0.135p
0.135p
0.160p
0.160p
Number
5,750,000
6,750,000
2,625,000
750,000
2,500,000
16,666,667
233,333,333
750,000
2,500,000
750,000
2,500,000
Exercisable
Expiry dates
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 01/02/19
Any time from 01/02/19
14/01/19
05/02/20
05/02/20
18/02/21
18/02/21
10/12/18
10/12/18
01/02/22
01/02/22
31/01/23
31/01/23
Share warrants 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.
Share warrant transactions
The Company issues share warrants on varying terms and conditions.
Details of the share warrants 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
2018
––––––––––––––––––––––
Weighted
average
exercise
price
(Pence)
Number of
share
warrants
2017
––––––––––––––––––––––
Weighted
average
exercise
price
(Pence)
Number of
share
warrants
277,375,000
0.26 279,625,000
3,250,000
0.16
3,250,000
–
–
–
–
–
–
(5,750,000)
0.85
(5,500,000)
274,875,000
0.245 277,375,000
271,625,000
0.246 274,125,000
0.28
0.135
–
–
1.25
0.26
0.26
The share warrants outstanding at 30 September 2018 had a weighted average exercise price of 0.245p (2017: 0.26p), a weighted
average fair value of 0.025p (2017: 0.033p) and a weighted average remaining contractual life of 0.35 years.
In the year ended 30 September 2018 warrants were granted on 31 January 2018 to an officer of the Company and employees
of Tertiary Minerals plc with an aggregate estimated fair value of £1,941. Note 5 explains the value recognised in the reporting
period in respect of Tertiary Minerals plc.
In the year ended 30 September 2017 warrants were granted on 1 February 2017 to an officer of the Company and employees
of Tertiary Minerals plc with an aggregate estimated fair value of £1,348.
Sunrise Resources plc Annual Report & Accounts 2018
43
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 44
Notes to the Financial Statements continued
for the year ended 30 September 2018
In the year to 30 September 2018 the Company recognised expenses of £1,741 (2017: £1,507) related to issuing of share warrants
in connection with equity-settled share-based payment transactions. 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.
In the year ended 30 September 2018 no share warrants were exercised.
The inputs into the Black-Scholes-Merton Pricing Model were as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yield
2018
0.16p
0.16p
85.0%
4 years
1.06%
0%
2017
0.135p
0.135p
70.0%
4 years
0.62%
0%
Expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous 3 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.
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*
D J Swan
R D Murphy
At 30 September 2018
Warrant
exercise
price
Share
warrants
number
Warrant
expiry
date
At 30 September 2017
Share
warrants
number
Shares
number
(restated)
Shares
number
83,454,885
2,000,000
3,000,000
17,000,757
1,000,000
1,500,000
29,414,074
16,666,667
0.55p
0.275p
0.55p
0.275p
0.24p
14/01/19
79,741,326
7,000,000
05/02/20
14/01/19
12,789,990
3,500,000
05/02/20
10/12/18
23,491,621
16,666,667
*Includes 5,500,000 shares held by K E Cheetham, wife of P L Cheetham.
The number of shares held by David Swan at September 2017 has been restated lower, from 12,862,863 down to 12,789,990, a
difference of 72,873. This was due to a previously unrecorded and unintentional disposal of shares in year 2016. The disposal
arose as a result of an ‘on market’ transfer of shares from one nominee account to another at a fixed value but at a marginally
different market price. Consequently, fewer shares were repurchased.
Tertiary Minerals plc
Sunrise Resources plc is treated as an investment in the consolidated accounts of Tertiary Minerals plc, which held 5.19% of the
issued share capital on 30 September 2018 (2017: 7.56%).
Tertiary Minerals plc provides management services to Sunrise Resources plc and consequently during the year the Group
incurred costs of £218,841 (2017: £204,110) recharged at cost from Tertiary Minerals being overheads of £24,607 (2017: £24,874),
costs paid on behalf of the Group of £5,421 (2017: £4,646), Tertiary staff salary costs of £77,597 (2017: £69,957) and Tertiary
directors’ salary costs of £111,216 (2017: £104,633).
At the balance sheet date an amount of £59,690 (2017: £61,275) was due to Tertiary Minerals plc.
Patrick Cheetham, the Executive Chairman of the Company, is also a director of Tertiary Minerals plc.
44
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 45
At 30 September 2018 and at the date of this report Donald McAlister, a director of Tertiary Minerals plc, held 550,000 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 2018, 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 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 2018, as defined in IAS 39, are
as follows:
Loans & receivables
Available for sale investments
Financial Liabilities at amortised cost
Group
2018
£
Company
2018
£
Group
2017
£
Company
2017
£
291,751
258,598
282,099
229,070
19,697
88,204
14,344
76,163
30,478
94,763
22,624
78,691
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 holds cash balances in Sterling, US Dollars, Australian Dollars, Canadian Dollars and Euros 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.
Sunrise Resources plc Annual Report & Accounts 2018
45
252767 Sunrise Resources plc – Annual Report 2018 pp33-pp46.qxp 14/12/2018 11:38 Page 46
Notes to the Financial Statements continued
for the year ended 30 September 2018
Bank balances were held in the following denominations:
United Kingdom Sterling
Australian Dollar
Canadian Dollar
United States Dollar
Euro
Group
2018
£
Company
2018
£
Group
2017
£
Company
2017
£
234,380
234,380
187,946
187,946
110
32
1,053
147
–
32
413
147
10,431
347
34,699
758
–
347
26,288
758
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 received 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 invoices issued to related parties and its joint arrangements
for management charges. The amounts outstanding from time to time are not material and 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.
46
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp47-pp48.qxp 14/12/2018 11:39 Page 47
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, 6 Temple Place, London WC2R 2PG on Thursday 21 February 2019 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 2018.
2.
3.
To re-elect Mr D J Swan who is retiring under the Articles of Association as a director of the Company.
To reappoint Crowe U.K. LLP as Auditor of the Company and to authorise the directors to fix their remuneration.
Special Business
Ordinary Resolution
4.
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 £2,000,000 (consisting of 2,000,000,000 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
5.
That subject to the passing of resolution 4, 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 4 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 £2,000,000 (consisting of 2,000,000,000 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 the notes on page 49.
By order of the Board
CDT Fitch
Company Secretary
11 December 2018
Registered Office:
Sunrise House
Hulley Road
Macclesfield
Cheshire
SK10 2LP
United Kingdom
Sunrise Resources plc Annual Report & Accounts 2018
47
252767 Sunrise Resources plc – Annual Report 2018 pp47-pp48.qxp 14/12/2018 11:39 Page 48
Annual General Meeting – Explanatory Notes
The Annual General Meeting of Sunrise Resources plc will be held on Thursday 21 February 2019 in the Fourth Floor Council
Room at Arundel House, 6 Temple Place, London, WC2R 2PG 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 the Directors and the Auditor for
the year ended 30 September 2018 which can be found on pages 6 to 32.
Resolution 2
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, Mr D J Swan is retiring under the Articles of Association and the Board proposes that he be re-elected.
Biographical details can be found on page 18.
Resolution 3
The Company’s Auditor Crowe U.K. 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 4
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 31 January 2018, 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 2020.
Resolution 5
This resolution will be proposed as a Special Resolution in the event that Resolution 4 is passed by shareholders. Resolution 5 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 2020.
48
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 pp49-pp50.qxp 14/12/2018 11:39 Page 49
Electronic Voting, Proxy Notes and Instructions
The following notes explain your general rights as a shareholder and your right to attend and vote at this Meeting or to appoint
someone else to vote on your behalf.
1.
2.
3.
4.
5.
To be entitled to attend and vote at the Meeting (and for the purpose of the determination by the Company of the number
of votes they may cast), shareholders must be registered in the Register of Members of the Company at close of trading
on Tuesday 19 February 2019. Changes to the Register of Members after the relevant deadline shall be disregarded in
determining the rights of any person to attend and vote at the Meeting.
Shareholders, or their proxies, intending to attend the Meeting in person are requested, if possible, to arrive at the Meeting
venue at least 15 minutes prior to the commencement of the Meeting at 10:30 a.m. (UK time) on Thursday 21 February 2019
so that their shareholding may be checked against the Company’s Register of Members and attendances recorded.
Shareholders are entitled to appoint another person as a proxy to exercise all or part of their rights to attend and to speak
and vote on their behalf at the Meeting. A shareholder may appoint more than one proxy in relation to the Meeting provided
that each proxy is appointed to exercise the rights attached to a different ordinary share or ordinary shares held by that
shareholder. A proxy need not be a shareholder of the Company.
In the case of joint holders, where more than one of the joint holders purports to appoint 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).
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.
You can vote either:
l
l
l
l
by logging on to www.signalshares.com and following the instructions; or
by proxy. You may request a hard copy form of proxy directly from the registrars, Link Asset Services (previously called
Capita), on Tel: 0371 664 0300. Calls cost 12p per minute plus your phone company’s access charge. Calls outside
the United Kingdom will be charged at the applicable international rate. Lines are open between 09:00 – 17:30, Monday
to Friday excluding public holidays in England and Wales.
in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the
procedures set out below.
by attending the meeting and voting in person.
7.
8.
9.
In order for a proxy appointment to be valid a form of proxy must be completed. In each case the form of proxy must
be received by Link Asset Services at 34 Beckenham Road, Beckenham, Kent, BR3 4TU by 10:30 a.m. on Tuesday
19 February 2019.
If you return more than one proxy appointment, either by paper or electronic communication, the appointment received last
by the Registrar before the latest time for the receipt of proxies will take precedence. You are advised to read the terms and
conditions of use carefully. Electronic communication facilities are open to all shareholders and those who use them will not
be disadvantaged.
The return of a completed form of proxy, electronic filing or any CREST Proxy Instruction (as described in note 11 below)
will not prevent a shareholder from attending the Meeting and voting in person if he/she wishes to do so.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do
so for the Meeting (and any adjournment of the Meeting) by using the procedures described in the CREST Manual (available
from www.euroclear.com/site/public/EUI). CREST Personal Members or other CREST sponsored members, and those CREST
members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who
will be able to take the appropriate action on their behalf.
Sunrise Resources plc Annual Report & Accounts 2018
49
252767 Sunrise Resources plc – Annual Report 2018 pp49-pp50.qxp 14/12/2018 11:39 Page 50
Electronic Voting, Proxy Notes and Instructions continued
10.
In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message
(a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s
specifications and must contain the information required for such instructions, as described in the CREST Manual. The
message must be transmitted so as to be received by the issuer’s agent (ID RA10) by 10.30 a.m. on Tuesday 19 February
2019. For this purpose, the time of receipt will be taken to mean the time (as determined by the timestamp applied to the
message by the CREST application host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST
in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should
be communicated to the appointee through other means.
11. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK
& Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings
and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed
a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be
necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection,
CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to
those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may
treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
12. Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf
all of its powers as a shareholder provided that no more than one corporate representative exercises powers in relation to
the same shares.
13. Under Section 527 of the Companies Act 2006, shareholders meeting the threshold requirements set out in that section
have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of
the Company’s financial statements (including the Auditor’s Report and the conduct of the audit) that are to be laid before
the Meeting; or (ii) any circumstances connected with an auditor of the Company ceasing to hold office since the previous
meeting at which annual financial statements and reports were laid in accordance with Section 437 of the Companies Act
2006 (in each case) that the shareholders propose to raise at the relevant meeting. The Company may not require the
shareholders requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the
Companies Act 2006. Where the Company is required to place a statement on a website under Section 527 of the Companies
Act 2006, it must forward the statement to the Company’s auditor not later than the time when it makes the statement available
on the website. The business which may be dealt with at the Meeting for the relevant financial year includes any statement
that the Company has been required under Section 527 of the Companies Act 2006 to publish on a website.
14. Any shareholder attending the Meeting has the right to ask questions. The Company must cause to be answered any such
question following the proceedings relating to the business being dealt with at the Meeting but no such answer need be
given if: (a) to do so would interfere unduly with the preparation for the Meeting or involve the disclosure of confidential
information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable
in the interests of the Company or the good order of the Meeting that the question be answered.
15. You may not use any electronic address (within the meaning of Section 333(4) of the Companies Act 2006) provided in
either this Notice or any related documents (including the form of proxy) to communicate with the Company for any purposes
other than those expressly stated.
50
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 ppIBC-BC imprint .qxp 14/12/2018 11:41 Page 1
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)1625 838884
Fax: +44 (0)1625 838559
Nominated Adviser
Beaumont Cornish Limited
10th Floor
30 Crown Place
London
EC2A 4EB
United Kingdom
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
United Kingdom
Auditor
Crowe U.K. 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
Broker
SVS Securities PLC
20 Ropemaker Street
London
EC2Y 9AR
United Kingdom
Bankers
National Westminster Bank plc
2 Spring Gardens
Buxton
Derbyshire
SK17 6DJ
United Kingdom
Solicitors
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
United Kingdom
Sunrise Resources plc Annual Report & Accounts 2018
252767 Sunrise Resources plc – Annual Report 2018 ppIBC-BC imprint .qxp 14/12/2018 11:41 Page 2
Sunrise Resources plc
Silk Point
Queens Avenue
Macclesfield
Cheshire
SK10 2BB
United Kingdom
Tel: +44 (0)1625 838884
Fax: +44 (0)1625 838559
Perivan Financial Print 252767