257725 Sunrise Resources plc – Annual Report 2019 pp01-pp28.qxp 21/02/2020 11:14 Page 1
Company No. 05363956
Annual Report and Accounts
For the year ended 30 September 2019
257725 Sunrise Resources plc – Annual Report 2019 pp01-pp28.qxp 21/02/2020 11:14 Page 2
Contents
Sunrise Resources plc
The Company is focused on the development of
its CS Pozzolan-Perlite Project in Nevada, USA.
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.
is
to develop
The Company’s objective
the CS
profitable mining operations at
Pozzolan-Perlite Project in Nevada, USA and
unlock the value inherent in our diverse portfolio of
industrial minerals, precious metals and base
metal projects.
Shares in the Company trade on AIM under the
symbol “SRES” and also on the NEX Exchange
(Secondary Market).
Our Performance
3
5
6
Chairman’s Statement
Strategic Plan on Track
Strategic Report
6
6
8
Organisation Overview
Financial & Performance Review
Operating Review
13
Risks & Uncertainties
Our Responsibilities
16 Directors’ Responsibilities
17 Directors’ Report
19
Board of Directors
20 Corporate Governance
20 Chairman’s Overview
21 Corporate Governance Statement
23
24
Audit Committee Report
Remuneration Committee Report
24 Nomination Committee Report
Our Financials
25
Independent Auditor’s Report
29 Consolidated Income Statement
29 Consolidated Statement of Comprehensive Income
30 Consolidated and Company Statements of Financial
Position
31 Consolidated Statement of Changes in Equity
32 Company Statement of Changes in Equity
33 Consolidated and Company Statements of Cash Flows
34 Notes to the Financial Statements
Annual General Meeting
49 Notice of Annual General Meeting
50
51
Annual General Meeting – Explanatory Notes
Voting at the Meeting, Electronic Voting, Proxy Notes
and Instructions
IBC Company Information
2
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Chairman’s Statement
I am pleased to present the
Company’s Annual Report
and Financial Statements
for
the year ended 30
September 2019, a year in
which we made significant
our CS
progress
at
Pozzolan-Perlite
Project
with several key permitting
steps now completed.
Recent market developments have resulted in increased
demand for both products. The demand for natural pozzolan
comes from its potential to replace coal-fired power station fly
ash pozzolan where supplies are declining as coal-fired power
plants continue to close at a rapid rate and new coal mine
investments are shunned. The economics of power generation
have also swung against coal in favour of natural gas and
renewables and this was a factor in the closure of the Navajo
Generating Station in 2019 which took 500,000 tons/year of fly
ash from the western US markets that we are targeting.
Whilst our activities have
been constrained by limited
funds in 2019, we have
ensured that the permitting
of our CS Project has progressed as quickly as possible. To this
end, the Company has made substantial progress with the
submission of its 27-year mine Plan of Operations/Reclamation
Permit Application and its Air Quality Permit Application to the
regulatory authorities. The Environmental Assessment for the
project is at an advanced stage. Despite our best efforts the
original timetable for mine permitting has extended during the
year due
information
requirements from the lead regulator but we are now in the final
stages of mine permitting.
introduction of new
late
the
to
On the commercial side we have continued to develop our
industry relationships with end users for our future perlite and
natural pozzolan products, with a number of customers
continuing their testing programmes successfully alongside our
own testing programmes. Separate concrete trials using CS
natural pozzolan by two large cement/ready-mix companies
were benchmarked against existing commercial sources of
pozzolan with very positive results and whilst gaining market
acceptance is a long process for industrial minerals such as
perlite and pozzolan I am pleased with our progress this year.
We are currently evaluating possibilities for the grinding of the
natural pozzolan and recently entered into a due diligence
agreement that may lead to the lease of a local mothballed
grinding plant.
Processing of a bulk sample of perlite generated engineering
data for process plant design and produced a horticultural
grade perlite for commercial scale expansion testing in the
plant of a second potential customer with good results. As a
result, we have developed designs and costings for our
preferred perlite processing option to use rental fleet mobile
quarry crushing and screening equipment to produce a
horticultural grade perlite. A larger 100-ton bulk sample was
also extracted and is awaiting processing to provide samples
to a wider range of perlite customers.
In 2019 we presented at the inaugural meeting of the Natural
Pozzolan Association which has created an increased level of
awareness and interest in our CS Project. Moreover, the meeting
has reinforced our belief that we will see the continuing
resurgence of natural pozzolan as a major component in
concrete. We are well placed to participate in this resurgence
in a part of the US that is particularly badly affected by the
shortage of fly ash and to pursue this scalable business
opportunity in future on a wider basis.
Our CS Project also generated further strong interest amongst
the attendees of the Perlite Institute Annual Meeting held in late
2019 and customer discussions continue to reinforce the
opportunity for a new supplier of raw perlite. The latest United
States Geological Survey commodity summary shows a
growing market for perlite with a 12% annual rise in US
consumption in 2018 and a 22% rise since 2015, driven in part
by increased use of perlite in the expanding cannabis market
in North America.
Turning to our other projects, we announced during the year the
discovery of extensive areas of perlite on our NewPerl Project.
This new discovery is proof of concept of the targeting method
that originally led us to the discovery of the perlite and pozzolan
deposits at our CS Project and which we now know can be
successfully applied elsewhere. We have now found and
claimed extensive areas of perlite at NewPerl, at multiple
separate locations, including a new northern area now named
as the Jackson Wash Project.
This testwork has confirmed that large areas of perlite at both
localities are suitable to produce horticultural grade perlite and
potentially to produce super-coarse grades of perlite and could
provide future feed to the CS Project. An initial drilling and bulk
sampling programme has been permitted and will take place
when funds allow.
During the year VR Resources Ltd (“VRR”) carried out a first
pass drill programme at the Junction Copper-Silver-Gold
Project where we hold a royalty interest and consequently, we
were issued with a further 50,000 shares in VRR bringing our
holding to 100,000 shares. As a result of drilling on our royalty
Sunrise Resources plc Annual Report & Accounts 2019
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Chairman’s Statement continued
claims and adjoining claims VRR announced the drill discovery
of a Cretaceous-age porphyry copper mineralised system
within the 6km mineralised trend defined by earlier exploration.
It is reported that further work is planned.
Our progress in 2019 was made against a very difficult financial
background for most junior exploration companies with many
traditional funding sources all but closed for business. Sunrise
replaced its advisers during the year due to the merger of its
Nomad with another company and the insolvency of its
corporate broker. We managed to raise funds in 2019 and in
February 2020 and avoided the very deep placing price
discounts required of most fundraisings for junior mining
companies and I was pleased to have personally supported the
November 2019 fundraise with a £100,000 investment.
Our Annual General Meeting for the year ended 30 September
2019 will be held in Macclesfield at 12:00 noon on Thursday
19 March 2020 as set out on page 49. Further detailed
instructions on proxy voting are on pages 51 and 52 but we
hope that shareholders will choose to attend the meeting in
person where possible.
I would like to take this opportunity to thank shareholders for
their support this past year but also to highlight the hard work
and dedication of those working with me to make CS Project a
reality. As we go forward in 2020, I think we can justifiably say
that our flagship CS Project is still on track, if a little behind the
original schedule, due to factors beyond our control, and we
look forward to progressing the project further in 2020.
Patrick Cheetham
Executive Chairman
18 February 2020
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Strategic Plan on Track
KEY AIMS from our STRATEGY & BUSINESS PLAN for 2019 are summarised here to show how our strategy has progressed.
Our targets for 2020 are also set out below:
AIMS IN 2019 &
PROGRESS MADE
TARGETS FOR 2020
Continue advancing CS Project towards production:
Continue advancing CS Project towards production:
l Mine permitting passed through a number of key
milestones with completion of the Plan of Operations
and various environmental and permit submissions.
l Complete mine permitting.
l Conclude customer Offtake Agreements.
l Further
lab
successfully completed.
and
commercial-scale
testwork
l Commence first production.
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 a number for projects.
l Complete the sale or joint venture of non-core projects.
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 2019
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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 2019.
A review of the AIMS and STRATEGY set out in our 2018
Annual Report highlights our progress in delivery of our
strategic plan in 2019.
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 although behind on our original
schedule. Our CS Project, targeting the production of natural
pozzolan and perlite, is now at an advanced stage in the mine
permitting process.
Further details of our progress on the CS Project and other
projects 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 NewPerl and Jackson
Wash Perlite Projects during the year, or applying for exploration
licences from the relevant authority, as was previously 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 as a result of a cost sharing Management Services
Agreement with Tertiary Minerals plc (”Tertiary”).
The Company’s activities are financed by periodic capital
raisings, through share placings. When projects become more
advanced, the Board will seek to secure additional funding from
a range of various sources, for example debt funding, pre-
financing
joint
arrangements.
through off-take agreements and other
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. An example of this is our
shareholding in VR Resources Ltd (“VRR”) and the ongoing
royalty interest in the Junction Project being explored by VRR.
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 which was the original parent
of the Company. Under this cost sharing agreement Tertiary
provides all 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 in Nevada, USA, is undertaken
through
Inc. and
two
Westgold Inc.
local subsidiaries, SR Minerals
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 19. The Executive Chairman is also Chairman of Tertiary,
but otherwise the Board is independent of that company.
Tertiary is not a significant shareholder in the Company (as
defined under the AIM Rules).
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 29 to 33.
The Group reports a loss of £301,738 for the year (2018:
£786,672) after administration costs of £297,261 (2018:
£290,023) and after crediting interest receivable of £234 (2018:
£105). The
includes expensed pre-licence and
reconnaissance exploration costs of £4,711 (2018: £10,473),
impairment of deferred exploration asset of £Nil (2018:
£483,169) and impairment of other investments of £Nil (2018:
£Nil). Administration costs include an amount of £2,149 (2018:
£1,741) 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
£295,112 (2018: £288,282).
The Financial Statements show that, at 30 September 2019, the
Group had net current assets of £7,821 (2018: £205,596). 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
6
Sunrise Resources plc Annual Report & Accounts 2019
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on page 30 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 set out in Note 1(d) of the
accounting policies. The intangible assets total £1,753,050
(2018: £1,363,360) and a breakdown by project is shown in
Note 2 to the financial statements on page 38.
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 set out in Note 1(d),
such as pre-licence and reconnaissance costs, are expensed
and added 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
this
reporting period.
the Board determines
“impaired”
in
is
It is a consequence of the Company’s business model that
there will be periodic 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.
A review of the recoverability of loans to subsidiary
undertakings has been carried out in accordance with IFRS 9.
As a result, the directors have concluded that no potential credit
losses arose in the year. The assessment has been based upon
a review of the underlying exploration assets held by the
subsidiary undertakings.
The intangible asset value of a project should not be confused
with the realisable or market value of a project which will, in the
directors’ opinion, be at least equal in value and often
the Company’s market
considerably higher. Hence
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, through 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 VRR
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 £350,000 before
expenses through a share placing in the
reporting period and issued equity to the
value of £26,068
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 the management’s track record in
mineral discovery and development.
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 the year end
(£27,069), 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. Subsequent to the year end, the Company
completed a fundraising of £350,000 before expenses in
November 2019 and a conditional fundraising of £200,000 in
February 2020.
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Strategic Report continued
Operating Review
In 2019
the
CS Pozzolan-Perlite Project in Nevada, USA, towards production.
the Group has continued
to advance
The CS Project is held in the Company’s 100% owned
subsidiary, SR Minerals Inc. The Group’s other Nevada projects
are held through SR Minerals Inc. and Westgold Inc. and its
remaining Australian project is held through an Australian
subsidiary, Sunrise Minerals Australia Pty Ltd.
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 market and market developments for these two
commodities are set out starting on page 10.
The Company’s operations at the CS Project have focused on
mine planning and environmental permitting but bulk sampling,
testing, process plant design and customer trials have
continued throughout the year as resources allowed.
Mine Planning and Environmental Permitting
The CS Project is located on federally owned and administered
land and 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’s Bureau
of Mining Regulation and Reclamation (“NDEP” and “BMRR”).
An air quality permit, renewable every five years, is also
required for the project from NDEP’s Bureau of Air Pollution
Control before processing operations can commence on site.
The Company has applied for a Class II Air Quality Permit which
is applicable to projects having generally low levels of
emissions. Several additional minor permits are required from
other regulatory bodies. These additional permits have
generally short approval lead times.
Mine permitting in Nevada is a procedure involving many
individual steps and processes leading up to an environmental
assessment by the BLM as required under the National
Environmental Policy Act (“NEPA”). Many of these processes
were completed in 2019.
In May 2019, SR Minerals Inc. submitted its combined Mine
Plan of Operations/Nevada Reclamation Permit Application
(“Plan of Operations”) to the BLM and the NDEP and BMRR.
This combined document sets out in detail how the mine will be
developed over time and how the mine will be reclaimed over
its lifetime and on closure.
The current mine plan contained in the Plan of Operations
replaces that reported in the 2018 Annual Report where a
three-phase 15-year mine plan was outlined providing the
option to mine pozzolan from either the Main Zone pit or the Tuff
Zone pit, or both with separate alternative mine plans
developed for pozzolan in each zone. The Plan of Operations
now submitted includes both alternatives and envisages a
longer, 27-year mine life where both perlite and natural pozzolan
are mined from the Main Zone in Phases 1-3 (years 1-15) with
pozzolan continuing to be mined in the Tuff Zone in a new
Phase 4 (years 16-27).
The Plan of Operations also includes programmes of drilling
and bulk sampling to run concurrently with mining. These
exploration programmes will test for extensions of perlite and
natural pozzolan which are open ended and project beyond the
current pit limits. This includes evaluation of the extensive
Northeast Zone which so far has been tested by a single drill
hole which intersected 40m of high quality natural pozzolan
from surface. Previous exploration suggests that the Northeast
Zone target extends over an area at least as large as the Main
Zone and is an exciting target for further evaluation.
The Company’s Plan of Operations was accepted by the BLM
in July 2019 allowing the Company to progress through the
NEPA process and to prepare its Environmental Assessment
(“EA”) in accordance with a streamlined process mandated by
an Executive Order of President Trump. A series of
Supplemental Environmental Reports (“SERs”) have been
prepared to support the EA which set out the impact of the
project on various resources (e.g. water, air quality, wildlife, soils
and vegetation etc.) on a cumulative basis taken with other
existing or proposed developments in the project’s wider area.
These impacts are considered by the Company’s environmental
consultants to be minor or negligible in most cases, except in
respect of the mine area itself where there is a moderate but
localised impact on soils and geology as would be expected
for any mining operation.
The completion of the SERs has been delayed due to requests
for further information resulting in the requirement to carry out
a hydrological baseline report and SER and an expanded air
quality SER. The Company has also been required to provide
an Eagle Management Plan to mitigate the impact of the project
on the eagle population should recently unoccupied eagles’
nests in proximity to the project become occupied in future. This
plan has been reviewed by BLM and the US Fish and Wildlife
Service which is a co-operating agency with BLM for
this purpose.
Following the completion of permitting the Company is required
to submit a reclamation bond before mining can start. The
Company’s Plan of Operations is phased, allowing the amount
of the initial bond to be minimised.
Processing Options, Plant Design and Customer Trials
The Company is considering the following mineral processing
options for its natural pozzolan and perlite production.
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Natural Pozzolan
l
l
Direct sale of as-mined ore to cement companies; and
Construction of a fixed process plant to crush and grind
natural pozzolan for sale to cement companies and
ready-mix concrete companies.
term sheet
incorporating a detailed
The first of these options has the lowest capital and operating
cost but a fewer number of potential customers. The second
option would require construction of a grinding plant, most
likely off-site. With this in mind the Company signed an
agreement
(“the
Agreement”) allowing the Company to evaluate and, if
appropriate, to lease a mothballed grinding and mineral
processing plant located at Millers, 15 miles by road from the
CS Project, adjacent to Highway 6 and some 13 miles west of
the town of Tonopah. This plant operated successfully until the
1980s re-grinding historic silver mine tailings. It will require
significant modification to be used for grinding pozzolan. The
Agreement provides for a 9-month period during which the
Company can carry out due diligence to evaluate the
adaptability of the plant for grinding pozzolan. If the plant is
unsuitable the plant area could be leased as a favourable site
for a completely new pozzolan grinding plant. Should the
Company’s due diligence prove positive the Agreement allows
Sunrise to elect that all parties use their best endeavours to
negotiate in good faith and enter into a further agreement
whereby Sunrise will lease a 5.5-acre area containing and
surrounding the plant.
Perlite
l
l
Production of coarse horticultural grade perlite using
mobile crushing and screening equipment and use of
undersized perlite as natural pozzolan; and
Construction of a fixed perlite processing plant to
produce a range of raw perlite products in coarse,
medium and fine grades.
The mobile plant for the first of these perlite production options
is available from the quarry industry and can be bought, rented
or leased and, subject to availability, production could start
quickly at a relatively low capital cost. The Company has been
working with equipment suppliers to cost and source the
required process plant and has received cost proposals for the
rental of the various plant items in line with the Company’s
objective to develop the project at minimal capital cost.
A preliminary plant design has also been completed for a more
sophisticated fixed processing plant to be built either on site,
or preferably at a rail-linked site elsewhere in Nevada.
The Company’s Plan of Operations allows for both of these
possible processing options to take place on site to give the
Company maximum flexibility for initial production and future
processing to additional and/or higher value products.
The Company’s Class II Air Quality Permit application, which
primarily applies to an on-site process plant, is based on the
first of these options.
Sampling, Testing and Customer Trials
Natural Pozzolan
In 2019 the Company was actively engaged in ongoing testing
programmes with a number of companies that have large
operations in the western United States, and which are potential
customers and partners for our future production of natural
pozzolan and perlite from the CS Project.
Previously, all the Company’s natural pozzolan testwork has
involved mortar blocks in accordance with standard testing
procedures (ASTM C618) where the Company’s natural
pozzolan is mixed with cement and sand and the resulting
mortar blocks tested for strength.
In 2019, successful tests have been completed by two major
international cement/ready-mix companies to evaluate the
behaviour of concrete made with the Company’s natural
pozzolan replacing 20% of the cement in the concrete mix. The
test was benchmarked in one case against an identical test
using a commercially available pozzolan, and in the other, fly
ash. The Company’s natural pozzolan performed well with good
strength, low shrinkage and good setting times comparing
favourably with the benchmark commercial pozzolan and fly
ash samples. These tests have been important in demonstrating
the value of the Company’s natural pozzolan as competitive
with other commercially available high quality natural pozzolan
and as a replacement for fly ash in the large end-use ready-mix
concrete market, fly ash currently being the most commonly
used but declining form of supplementary cementitious
material (“SCM”).
In order to meet customer demand for additional testwork 18
tons of pozzolan were submitted to a commercial custom
grinding facility but the process technology proved unsuitable
and could not achieve the required grind size and further
processing will be required using more appropriate grinding
technology.
Perlite
Process development testwork has moved onto the bulk
sampling scale in 2019 and so only limited laboratory scale
testwork was carried out aimed at the production and
expansion of super-coarse horticultural grades of perlite.
These very coarse grades of raw perlite are only available in
restricted tonnages and command a premium price. This
testwork has produced a coarse expanded perlite with
acceptable yields indicating promising potential to produce
these premium grades.
In order to provide potential customers with additional samples
for testwork the Company has recently completed a second
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Strategic Report continued
round of bulk sampling at the CS Project. One hundred tons of
perlite was extracted for further testwork. The bulk sample
mining exercise has confirmed that the perlite targeted for first
production can be mined mechanically by excavator or
bulldozer, without the need for more costly drilling and blasting.
Seven tons of perlite were crushed and screened through
production scale mobile processing equipment to simulate the
low capital cost processing option that is being planned for first
production of horticultural grade perlite. The primary objective
of this work – funded by the equipment suppliers – was to
provide operating data for refinement of the process flowsheet
and information on operating cost parameters. This test
produced enough horticultural grade raw perlite to justify a
second commercial perlite expansion by a potential customer.
This test was successful.
Following these successful plant trials, the Company is now
working with its equipment suppliers to assemble an integrated
crushing and screening plant close to the CS Project in order
to process the remaining 100-ton sample of perlite. This pilot
scale work will allow for additional tonnages of horticultural
grade raw perlite to be produced and sent to a wider range of
customers.
Following the reporting of further successful commercial scale
perlite expansion tests the Company has received encouraging
off-take enquiries from potential customers. Consideration is
also being given to processing a bulk sample from the
Company’s NewPerl Project at the same time, for which a permit
has already been granted (see page 12).
Water Supply
Water will be required by the CS Project, primarily for dust
suppression in and around the Company’s proposed mining
and mineral processing operations.
A disused well has been identified close to the proposed
operations and has been pump tested and found sufficient to
supply the Company’s needs. An application submitted for new
water rights to be used in conjunction with the well and the
Project was rejected because it would lead to an overall
increase in total water rights. The Company has since signed
an agreement with Liberty Moly LLC (“Liberty Moly”) providing
the Company with a lease of existing water rights to be used in
the development of its CS Pozzolan-Perlite Project.
The lease covers an initial 5-year period renewable for a further
five one-year periods and covers enough water for the Project’s
annual projected requirements at full production rates.
The leased water rights are currently attached to the
past-producing Liberty molybdenum mine some 18 miles west
of, and in the same water basin as, the Project. Liberty Moly is
a subsidiary of General Moly, Inc. An application has been
made to the Nevada Division of Water Resources for permits to
enable extraction of water at the Company’s designated well-
site using the water rights leased from Liberty Moly.
An application for a Right of Way for the well and access over
BLM administered land has been submitted alongside the
Company’s Plan of Operations and Reclamation Permit
application.
Market Developments
Natural Pozzolan
Natural pozzolan is one of a range of materials that can
partially replace cement in cement and concrete mixes
(usually up to 35%) and which collectively are known as
Supplementary Cementitious Materials (“SCMs”). SCMs both
improve the long-term strength and resistance of concrete
compared to concrete made using only Portland cement.
These performance characteristics have resulted in many State
transport infrastructure regulators mandating the use of SCMs
in concrete used in public works.
SCMs also 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 to replace cement can
therefore reduce a consumer’s carbon footprint.
Natural pozzolans include some glassy volcanic tuffs, tephra
and perlite such as those of interest on the CS Project and were
widely used in major dam construction projects in the western
USA. However, for more than 40 years coal-fired power station
fly ash has been the most widely used SCM but supplies of fly
ash are now constrained and declining rapidly. This is due to a
number of socio-economic factors that have resulted in the
closure of a large number of coal-fired power stations with
many more closures planned. In the US power generation
economics favour cleaner and cheaper natural gas and, more
recently, renewable energy options.
In the western USA the coal ash supply problem – and hence
our marketing opportunity for natural pozzolan – is most acute
as western States are literally at the end of the line when it
comes to rail supplies of coal fly ash produced in the
continental interior. As predicted, this was exacerbated in 2019
by the closure of the West’s largest coal-fired power station in
Arizona taking 500,000 tonnes per year of high-quality fly ash
off the market and which previously serviced the markets we
are targeting in Nevada and California.
The rate of decline in the supply of fly ash is faster than many
within the industry expected due to the accelerating closure of
coal-fired power stations across the USA. This represents a
significant threat to the concrete companies that have come to
rely on a ready supply of fly ash. Established fly ash distributors
are looking to supplement or replace their SCM offerings with
10
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natural pozzolan and, similarly, their customers, cement and
ready-mix concrete companies, are looking to source supplies
of natural pozzolan independently of their fly ash suppliers.
These are our potential customers.
This was highlighted at the inaugural meeting of the Natural
Pozzolan Association in 2019 where many of the large cement
and concrete companies were attendees. The meeting was
very well attended with over 70 delegates, mainly from the USA,
but with several other countries also represented. Several large
multi-national cement and concrete producers and fly ash
distribution companies were represented including some
already engaged
testwork programmes and
marketing/off-take discussions with the Company.
joint
in
The country-wide closure of coal-fired power stations is not
restricted to the USA. France, Sweden, Britain, Ireland, Austria,
Portugal Denmark and Germany all plan to have closed all their
coal-fired power stations by the end of this decade.
These macro-economic
factors create a permissive
environment for natural pozzolan and have recently been
highlighted by two separate reports.
A report issued in March this year by Energy Innovation LLC1
(The Coal Cost Crossover: Economic Viability Of Existing Coal
Compared To New Local Wind And Solar Resources) reported
that “America has officially entered
the “coal cost
crossover” – where existing coal is increasingly more
expensive than cleaner alternatives. Today, local wind and solar
could replace approximately 74 percent of the U.S. coal fleet
at an immediate savings to customers. By 2025, this number
grows to 86 percent.”
A report recently commissioned by the Sierra Club2 and
submitted to the California Legislature highlights the potential
for SCMs such as natural pozzolan to replace cement in cement
and concrete mixes and reduce the carbon outputs of the
California cement industry.
“In addition, the CO2 emissions intensity (tCO2/t cement) of
California’s cement industry was the second highest among
countries/regions studied, and 57 percent higher than that of
China’s cement industry.”
The Company believes that the high quality of its natural
pozzolan material puts it in a favourable market position and
that its leverage in the markets is increasing rapidly. We
understand that fly ash pozzolan is selling for up to
approximately US$95 per ton delivered to customers in the
western USA and this currently sets a benchmark for pricing
pozzolan. We expect pozzolan prices to increase over time.
For more information on natural pozzolan see:
https://pozzolan.org/
References:
1.
The Coal Cost Crossover: Economic Viability Of Existing
Coal Compared To New Local Wind And Solar Resources.
Eric Gimon And Mike O’boyle, Energy Innovation &
Christopher T.M. Clack And Sarah Mckee, Vibrant Clean
Energy. March 2019.
https://energyinnovation.org/wp-
content/uploads/2019/03/Coal-Cost-Crossover_Energy-
Innovation_VCE_FINAL.pdf
2.
Hasanbeigi, A. and Springer, C. 2019. California’s Cement
Industry: Failing the Climate Challenge. Global Efficiency
Intelligence. San Francisco, CA.
https://www.globalefficiencyintel.com/new-
blog/2019/californias-cement-climate-challenge
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,
field
building materials
fillers,
fire
conditioners (soil porosity enhancement) and
proofing.
insulation,
formed
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 (“USGS”),
560,000 tonnes of raw perlite was mined in the USA in 2018
with most material used internally and some material imported,
primarily from Greece. USGS reports show a 12% annual rise
in US consumption in 2018 and a 22% rise over 2015. 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.
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
Sunrise Resources plc Annual Report & Accounts 2019
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Strategic Report continued
processed bulk sample produced the expanded product that
is of interest to the cannabis industry as well as other more
traditional horticultural buyers.
Raw sized perlite typically sells for US$70 per ton at the mine
gate but coarse and super-coarse horticultural grades can
command a higher price.
Perlite can also have pozzolanic properties and be suitable for
use as a natural pozzolan.
For more information on perlite see:
https://www.perlite.org/library/
NEWPERL & JACKSON WASH PERLITE PROJECTS,
NEVADA
These perlite projects are located approximately 85km from the
CS Project in Nevada, USA.
During the year the Company discovered and staked extensive
outcrops of perlite at a new location about 16km northwest of
the original NewPerl claims and extended its perlite discoveries
at NewPerl to the southwest. For permitting reasons the new
location target/claim group was split out from the NewPerl
Project and referred to as the Jackson Wash Project whilst the
original southern target/claim group will retain the NewPerl
Project name.
NewPerl Project
The current claims contain two key targets where surface
samples have shown excellent expandability results for
horticultural grades of perlite. In one of these areas perlite has
been found along a 200m wide flank of a 1km long ridge with
up to 80m vertical relief.
The second target area is a small knoll (the Knoll Prospect)
where high quality horticultural grade perlite protrudes from the
surrounding alluvial plain over an area 150m by 150m. Whilst
small in area, similar material occurs as float over a wide
surrounding area suggesting that similar material is found
under shallow cover in the area surrounding this knoll.
The Company now has a bonded work programme approved
by BLM to allow for an initial drilling and bulk sampling
programme at the Knoll Prospect.
Jackson Wash Project
Testwork on several reconnaissance samples highlight this as
a significant new perlite target for horticultural grade perlite.
The best samples come from a perlite flow that outcrops
continuously over a length of 1.6km with a width averaging
150m and a vertical projection of up to 10m from its immediate
surroundings. Other perlite flows within this northern claim
block have yet to be sampled.
These projects are being evaluated as a future source of feed
for the CS Project and, resources permitting, it is likely that the
Company will move to commercial-scale testing of samples
from NewPerl and Jackson Wash at a much earlier stage than
was possible for the CS Project.
JUNCTION COPPER-SILVER-GOLD PROJECT,
NEVADA, USA
The Company holds a 3% net smelter royalty interest in the
Junction Project and shares in the holding Company, TSX-V
listed VR Resources Ltd (“VRR”).
Early in the year VRR announced the drill discovery of a
Cretaceous-age porphyry copper mineralised system within the
6km mineralised trend defined by earlier exploration. Two
reconnaissance drill holes were completed by VRR, one at each
of the Denio Summit and Granite Mountain targets which lie at
either end of the mineralised trend. VRR has stated that it will
now be focusing on three key targets, Denio Summit, Lone
Mountain and Granite Mountain. The Denio Summit target is
within the area where Sunrise holds a 3% net smelter royalty
(the “Sunrise Royalty Area”) and the Lone Mountain target is on
the edge of this area. The Granite Mountain target is outside of
the Sunrise Royalty Area. The Junction property is hosted within
a polyphase, middle Cretaceous batholith that has the same
age as the Robinson porphyry copper deposit at Ely, Nevada,
which has a history going back to 1876 and which is still in
production today, operated as a large open-pit mine by KGHM
Polska Miedz S.A. VRR considers this a proven analogue for
further exploration at the Junction Project.
In addition to its royalty interest, Sunrise holds 100,000 shares
in VRR and will be issued with a further 250,000 shares should
VRR’s exploration in the Sunrise Royalty Area result in the
definition of a Mineral Resource.
OTHER SR MINERALS PROJECTS
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. A number of joint venture enquiries
have been received.
WESTGOLD INC.
The Company’s Westgold subsidiary holds three projects in
Nevada – Stonewall, Clayton and Newark – that were
acquired with the specific objective that they be held at minimal
costs and offered as being 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.
12
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SUNRISE MINERALS AUSTRALIA PTY LTD
The Company intends to maintain its interest in the Baker’s Gold Project where mapping and chip sampling of gold bearing
quartz-stockwork veins has developed drill targets at the Dicky Lee open pit, which was developed in the 1980s for production of
specimen gold-quartz nuggets, and a 500m long gold-in-soil anomaly. The Company’s proposed drill programme has approval
from the Department of Mines & Petroleum of Western Australia but requires an Aboriginal Heritage Clearance survey prior
to drilling.
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 mine
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
and
the
its key projects
trends
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
Sunrise Resources plc Annual Report & Accounts 2019
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Strategic Report continued
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 47.
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
may 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.
14
Sunrise Resources plc Annual Report & Accounts 2019
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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 on 18 February 2020 and signed on its behalf.
Patrick Cheetham
Executive Chairman
Sunrise Resources plc Annual Report & Accounts 2019
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Website Publication
The maintenance and integrity of the Sunrise Resources plc
website is the responsibility of the directors. 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.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare the Group and Company financial
statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union and
applicable law. Under company law the directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group
and Company and of the profit or loss of the Group for that
period. The directors are also required to prepare financial
statements in accordance with the AIM Rules of the London
Stock Exchange for companies trading securities on the AIM
market.
In preparing these financial statements, the directors are
required to:
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 Directors’ Report and other information included
in the Annual Report and Financial Statements are prepared in
accordance with applicable law in the United Kingdom.
16
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Directors’ Report
The directors are pleased to submit their Annual Report and
audited accounts for the year ended 30 September 2019.
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 (£27,069),
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 and raised £350,000 before
expenses subsequent to the year end in November 2019, 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
funding when required
additional
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 13.
Directors
The directors holding office in the period were:
Mr P L Cheetham – Chairman of the Board and Chairman of
the Nomination Committee.
Mr D J Swan – Chair of the Audit Committee and member of
the Nomination and Remuneration Committees.
Mr R D Murphy – Chair of the Remuneration Committee and a
member of the Nomination and Audit 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
10
10
10
10
1
1
1
1
2
2
2
2
1
1
1
1
The directors’ shareholdings are shown in Note 16 to the financial statements.
Post Balance Sheet Events
In November 2019, the Company raised £350,000 before expenses through a placing of 350,000,000 ordinary shares at a price of
0.1 pence per ordinary share. In addition, 12,500,000 warrants were issued, each warrant entitling the holder to apply for one
ordinary share at the price of 0.1 pence per ordinary share at any time within twelve months from the date of issue.
In February 2020, the Company raised £200,000 before expenses through a placing of 181,818,182 ordinary shares at a price of
0.11 pence per ordinary share, conditional on admission of the shares to trading on AIM. In addition, 9,090,909 warrants will be
issued, each warrant entitling the holder to apply for one ordinary share at the price of 0.11 pence per ordinary share at any time
within twelve months from the date of issue.
There were no other post balance sheet events which affect the financial position of the Company at the balance sheet date.
Sunrise Resources plc Annual Report & Accounts 2019
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Directors’ Report continued
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 18 February 2020
Interactive Investor Services Nominees Limited SMKTISAS
Pershing Nominees Limited BICLT
Hargreaves Lansdown (Nominees) Limited 15942
Share Nominees Ltd
Barclays Direct Investing Nominees Limited CLIENT1
Interactive Investor Services Nominees Limited SMKTNOMS
HSDL Nominees Limited MAXI
Thomas Grant and Company Nominees Limited TGNOMS
Hargreaves Lansdown (Nominees) Limited VRA
Wealth Nominees Limited NOMINEE
Hargreaves Lansdown (Nominees) Limited VRADDOWN
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 19 March 2020 at 12:00 noon is set out on page 49
of this report. Explanatory Notes giving further information
about the proposed resolutions are set out on page 50.
Number % of share
capital
of shares
215,925,016
201,779,545
198,173,066
193,074,678
168,557,683
166,976,472
149,548,729
140,750,000
115,979,283
111,163,229
109,667,763
96,980,715
6.93
6.48
6.36
6.20
5.41
5.36
4.80
4.52
3.72
3.57
3.52
3.11
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. Tertiary provides corporate and project
management services to Sunrise.
Approved by the Board on 18 February 2020 and signed on its
behalf.
Patrick Cheetham
Executive Chairman
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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 38 years’ experience in mineral
exploration
33 years in public company management
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Chartered Accountant with career focus in natural
resources industry
Past executive director of several public listed mining
companies
Appointed: March 2005
Appointed: May 2012
Committee Memberships: Chairman of the Nomination
Committee
External Commitments: Executive Chairman of Tertiary
Minerals plc
Committee Memberships: Chairman of the Audit Committee
and a Member of
the Remuneration and Nomination
Committees
External Commitments: Non-Executive Director of Central
Asia Metals plc
Roger Murphy
Non-Executive Director
Rod Venables
Company Secretary
Key Strengths:
Key Strengths:
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Career focus in capital raising for mining and oil & gas
companies
Former MD, Investment Banking, of Dundee Securities
Europe Ltd
Geologist
Appointed: May 2016
Committee Memberships: Chairman of the Remuneration
Committee and Member of Audit and Nomination Committees
External Commitments: Madini Minerals and West Wales
Gold Limited
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Qualified company/commercial solicitor
Director and Head of Company Secretarial Services at
City Group PLC
Experienced in both Corporate Finance and Corporate
Broking
Company Secretary for Sunrise Resources plc.
Appointed: July 2019
External Commitments: Company Secretary for Tertiary
Minerals plc and other clients of City Group PLC
Sunrise Resources plc Annual Report & Accounts 2019
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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 reviewed
and adopted by the Board on 18 February 2020. The Company
has set out on its website and in its Corporate Governance
Statement, starting on page 21, 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
which came into effect on 25 May 2018 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 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 20 days of
average daily purchases (2018: 13 days). This amount is
calculated by dividing the creditor balance at the 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 by the Board to be
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
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Corporate Governance Statement
The QCA Code sets out ten principles which should be applied.
The principles are set out 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
13 and 14 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 ten times during the year to consider these
matters. Further details are provided in the Directors’ Report on
page 17. The Board is supported by the Audit, Remuneration
and Nomination Committees, details of which, together with
attendance records, can also be found on page 17.
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 also
employed as Chairman. Currently Mr. Cheetham dedicates
over 79% 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 17.
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
Sunrise Resources plc Annual Report & Accounts 2019
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Corporate Governance continued
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.
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 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 19.
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 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
with
the Environmental Policy have had only minimal
environmental impact and this policy is regularly reviewed.
Where appropriate, all work is carried out after advance
consultation with affected parties.
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
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,
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including all stakeholders, can register to be alerted via email
when material announcements are made. The Company’s
contact details are on the website should stakeholders wish to
make enquiries of management.
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 general meetings are
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 Chair 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.
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
sufficient to ordinarily 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 the IFRS 6 criteria set out in Note 1(j) on page 36. Loans
to Group undertakings are assessed for impairment under
IFRS 9.
As a result of the year-end review it was judged that none of
the Group’s projects or inter-company loans should be
impaired. 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 34. The directors are satisfied that the going
concern basis is appropriate for the preparation of the financial
statements.
(b) ensure that the Board of Directors has adequate
David Swan
knowledge of issues discussed with external auditors.
Chair – Audit Committee
(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
Sunrise Resources plc Annual Report & Accounts 2019
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Corporate Governance continued
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 Chair of the
Nomination Committee.
The primary objective of the Committee is to review the
performance of the executive director and review the basis of
his service agreement and make recommendations to the
Board regarding the scale and structure of his 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. Nonetheless, it is the role of the Remuneration Committee
to ensure
is appropriately
the executive director
incentivised and rewarded for his services to the Company and
this will be considered as part of the Committee’s review of any
Long Term Incentive Plan.
that
The Remuneration Committee met once during the period
under review and also held a meeting on 4 November 2019 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
Chair – 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 29 July 2019.
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
Chair – Nomination Committee
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Independent Auditor’s Report
to the Members of Sunrise Resources plc for the year ended 30 September 2019
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 2019, which comprise:
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income statement and statement of
the Group
comprehensive income for the year ended 30 September
2019;
the Group and Parent Company statements of financial
position as at 30 September 2019;
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 (IFRSs) as adopted by the European
Union.
In our opinion:
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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 2019 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.
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.
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 necessary to realise the value inherent in these
projects. As stated in Note 1(b), these events or conditions,
along with the other matters as set forth in Note 1(b) (taking into
account the projects set out in Note 1(j), indicate that a material
uncertainty exists that may cast significant doubt on the
Company’s ability to continue as a going concern. In
considering the longer term financial outlook of the group, the
continued viability of the most significant exploration and
evaluation assets is critical to this assessment and the risks and
audit responses are detailed in the Key Audit Matters below.
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
£40,000, based on 2% of the Group’s total assets, with a lower
level of materiality used for the Consolidated Income Statement.
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.
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Independent Auditor’s Report continued
to the Members of Sunrise Resources plc for the year ended 30 September 2019
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 and Risk Committee to report to it all
identified errors in excess of £1,000. 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.
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.
We determined that going concern should be considered a key
audit matter and this is described above in the section “Material
uncertainty relating to going concern.”
The other key matters and responses are summarised below.
This is not a complete list of all risks identified by our audit.
How the scope of our audit addressed the key
audit matter
In respect of all material intangible assets our audit work
included, but was not restricted to:
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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
Review and challenge of the directors’ assessment
of whether there are any indicators of impairment
to capitalised costs and discussion around any key
judgemental areas.
Key audit matter
Potential impairment of capitalised exploration and
evaluation costs.
The group has intangible assets, comprising exploration
and evaluation project costs, the most significant of which
are the CS Pozzolan, Bay State and County Line projects
within SR Minerals Inc. and Bakers project held in Sunrise
Minerals Australia Pty Ltd.
Together, the CS, Bay State and County Line projects
constitute a significant proportion (87%) of the capitalised
exploration costs in Sunrise Group. Both Bay State and
County Line projects have seen minimal expenditure
during the year as the Group focuses on the CS Project.
There is a risk that accounting criteria associated with the
capitalisation of exploration and evaluation expenditure
may no longer be appropriate and that capitalised costs
to date exceed the recoverable amount for the sites.
The directors are required to assess whether there are
any indicators of impairment of these assets. Any
assessment of value in use requires that accumulated
costs be assessed against the likelihood that such costs
will be recoverable against future exploitation or sale. This
requires management to use their sector experience,
apply their specialist expertise and form a conclusive
judgement as whether or not, on the balance of evidence,
further exploration is justified to determine if an
economically viable mining operation can be established
in future.
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How the scope of our audit addressed the key
audit matter
In conjunction with our work associated with the potential
impairment of the exploration and evaluation assets held
within subsidiaries, critical review of the directors’
assessment of potential impairment of investments in
subsidiaries and recoverability of loans to subsidiaries in
the accounts of Sunrise Resources Plc (the Company).
Key audit matter
Potential impairment of investments in subsidiaries
and recoverability of loans to subsidiaries in the
Company financial statements.
The carrying values of investments in and recoverability
of loans to subsidiaries, SR Minerals Inc., Sunrise
Minerals Australia Pty Ltd and Westgold Inc., are
dependent upon the future cash flows associated with the
recovery of the exploration and evaluation assets held by
the subsidiaries.
In the event of impairment in the underlying exploration
and evaluation assets, there is a potential impact upon
the realisation of investments and recoverability of loans
in the accounts of Sunrise Resources Plc (the Company)
and this assessment would also be required by the
directors.
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.
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion based on the work undertaken in the course of
our audit
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.
l
l
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
the directors’ report and strategic report have been
prepared
legal
requirements.
in accordance with applicable
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.
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
identified material
course of
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
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
Sunrise Resources plc Annual Report & Accounts 2019
27
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Independent Auditor’s Report continued
to the Members of Sunrise Resources plc for the year ended 30 September 2019
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.
Ian Weekes
(Senior Statutory Auditor)
For and on behalf of Crowe U.K. LLP
Statutory Auditor
Manchester, United Kingdom
18 February 2020
l
l
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 16, 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.
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.
28
Sunrise Resources plc Annual Report & Accounts 2019
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Consolidated Income Statement
for the year ended 30 September 2019
Pre-licence exploration costs
Impairment of deferred exploration asset
Administration costs
Operating loss
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
Loss per share - basic and diluted (pence)
All amounts relate to continuing activities.
Notes
9
3
7
6
2019
£
4,711
–
297,261
2018
£
10,473
483,169
290,023
(301,972)
(783,665)
–
234
(3,112)
105
(301,738)
(786,672)
–
–
(301,738)
(786,672)
(0.01)
(0.04)
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2019
Loss for the year
Items that could be reclassified subsequently to the income statement:
2019
£
2018
£
(301,738)
(786,672)
Foreign exchange translation differences on foreign currency net investments in subsidiaries
93,692
11,657
Fair value movement on other investments
Items that will not be reclassified to the income statement:
Changes in the fair value of equity investments
–
(11,007)
93,692
650
44,625
138,317
–
650
Total comprehensive loss for the year attributable to equity holders of the parent
(163,421)
(786,022)
Sunrise Resources plc Annual Report & Accounts 2019
29
257725 Sunrise Resources plc – Annual Report 2019 pp29-pp33.qxp 21/02/2020 11:14 Page 30
Consolidated and Company Statements of Financial Position
at 30 September 2019
Company Registration Number: 05363956
Non-current assets
Intangible assets
Investment in subsidiaries
Other investments
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
Fair value reserve
Foreign currency reserve
Accumulated losses
Group
2019
£
Company
2019
£
Group
2018
£
Company
2018
£
Notes
9
8
8
11
12
1,753,050
–
1,363,360
–
–
1,976,381
–
1,626,506
22,078
–
19,697
14,344
1,775,128
1,976,381
1,383,057
1,640,850
53,740
27,069
80,809
21,288
20,941
76,220
38,502
235,722
234,972
42,229
311,942
273,474
13
(72,988)
(47,804)
(106,346)
(94,305)
7,821
(5,575)
205,596
179,169
1,782,949
1,970,806
1,588,653
1,820,019
14
2,749,760
2,749,760
2,436,910
2,436,910
5,059,244
5,059,244
5,016,526
5,016,526
14
14
24,476
44,413
125,098
24,476
36,987
1,321
68,204
68,204
(212)
31,406
2,682
1,408
(6,220,042)
(5,900,982)
(5,964,181)
(5,705,711)
Equity attributable to owners of the parent
1,782,949
1,970,806
1,588,653
1,820,019
The Company reported a loss for the year ended 30 September 2019 of £241,148 (2018: £797,908).
These financial statements were approved and authorised for issue by the Board on 18 February 2020 and were signed on its
behalf.
P L Cheetham
Executive Chairman
D J Swan
Director
30
Sunrise Resources plc Annual Report & Accounts 2019
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Consolidated Statement of Changes in Equity
Group
Share
capital
£
Share
Share
premium warrant
reserve
account
£
£
Fair
value
reserve
£
Foreign
currency Accumulated
losses
£
reserve
£
Total
£
At 30 September 2017
1,804,016
4,792,790
89,248
10,795
Loss for the year
Change in fair value
Exchange differences
Total comprehensive loss for the year
–
–
–
–
–
–
–
–
–
–
–
–
–
(11,007)
–
(11,007)
Share issue
Share-based payments expense
Transfer of expired warrants
632,894
–
–
223,736
–
–
–
1,741
(22,785)
–
–
–
At 30 September 2018
2,436,910
5,016,526
68,204
(212)
Loss for the year
Change in fair value
Exchange differences
Total comprehensive loss for the year
–
–
–
–
–
–
–
–
–
–
–
–
–
44,625
–
44,625
Share issue
Share-based payments expense
Transfer of expired warrants
312,850
–
–
42,718
–
–
–
2,149
(45,877)
–
–
–
19,749
–
–
11,657
11,657
–
–
–
31,406
–
–
93,692
93,692
–
–
–
(5,200,294)
1,516,304
(786,672)
–
–
(786,672)
(11,007)
11,657
(786,672)
(786,022)
–
–
22,785
856,630
1,741
–
(5,964,181)
1,588,653
(301,738)
–
–
(301,738)
44,625
93,692
(301,738)
(163,421)
–
–
45,877
355,568
2,149
–
At 30 September 2019
2,749,760
5,059,244
24,476
44,413
125,098
(6,220,042)
1,782,949
Sunrise Resources plc Annual Report & Accounts 2019
31
257725 Sunrise Resources plc – Annual Report 2019 pp29-pp33.qxp 21/02/2020 11:14 Page 32
Company Statement of Changes in Equity
Company
Share
capital
£
Share
Share
premium warrant
reserve
account
£
£
Fair
value
reserve
£
Foreign
currency Accumulated
losses
£
reserve
£
Total
£
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
–
–
–
–
–
–
–
–
–
–
–
–
–
(8,280)
–
(8,280)
Share issue
Share-based payments expense
Transfer of expired warrants
632,894
–
–
223,736
–
–
–
1,741
(22,785)
–
–
–
–
–
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
Loss for the year
Change in fair value
Exchange differences
Total comprehensive loss for the year
–
–
–
–
–
–
–
–
–
–
–
–
–
34,305
–
34,305
Share issue
Share-based payments expense
Transfer of expired warrants
312,850
–
–
42,718
–
–
–
2,149
(45,877)
–
–
–
–
–
(87)
(87)
–
–
–
(241,148)
–
–
(241,148)
34,305
(87)
(241,148)
(206,930)
–
–
45,877
355,568
2,149
–
At 30 September 2019
2,749,760
5,059,244
24,476
36,987
1,324
(5,900,982)
1,970,806
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Sunrise Resources plc Annual Report & Accounts 2019
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Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2019
Operating activity
Operating loss
Share-based payment charge
Shares issued in lieu of net wages
Impairment charge – deferred exploration asset
(Decrease)/increase in accrued income
(Increase)/decrease in receivables
Decrease in trade and other payables
Net cash outflow from operating activity
Investing activity
Interest received
Disposal of development asset
Disposal of other investments
Acquisition of other investments
Development expenditures
Loans to subsidiaries
Group
2019
£
Company
2019
£
Group
2018
£
Company
2018
£
Notes
(301,972)
(272,309)
(783,665)
(263,531)
2,149
26,068
–
–
2,149
26,068
–
–
1,741
22,131
483,169
(2,501)
1,741
22,131
–
–
22,479
17,214
(14,078)
(13,423)
(33,358)
(46,500)
(6,555)
(2,524)
(284,634)
(273,378)
(299,758)
(255,606)
234
–
48,649
(5,792)
(313,258)
31,075
–
48,649
–
–
105
(390)
–
–
(550,132)
12,164
–
–
–
–
–
(349,875)
–
(571,472)
11
13
8
8
9
Net cash outflow from investing activity
(270,167)
(270,151)
(550,417)
(559,308)
Financing activity
Issue of share capital (net of expenses)
329,500
329,500
834,500
834,500
Net cash inflow from financing activity
329,500
329,500
834,500
834,500
Net increase/(decrease) in cash and cash equivalents
(225,301)
(214,029)
(15,675)
19,586
Cash and cash equivalents at start of year
235,722
234,972
234,181
215,339
Exchange differences
Cash and cash equivalents at 30 September
12
16,648
27,069
(2)
17,216
47
20,941
235,722
234,972
Sunrise Resources plc Annual Report & Accounts 2019
33
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Notes to the Financial Statements
for the year ended 30 September 2019
Background
Sunrise Resources plc (the “Company”) 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.
The Group has adopted IFRS 9 from 1 October 2018. The directors reviewed the Group’s existing financial assets as at 1 October
2018 and reclassified the investments previously held as available for sale into at fair value through other comprehensive income
(OCI) category. The adoption of IFRS 9 did not result in adjustments to the amounts recognised in the financial statements. The
new accounting policy is set out in Note 1(k).
(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 (£27,069), these projections include the proceeds of future fundraising necessary within
the next 12 months to meet the Company’s and Group’s overheads and planned discretionary project expenditures and to maintain
the Company and Group as going concerns. Although the Company has been successful in raising finance in the past, there is
no assurance that it will obtain adequate finance in the future. This represents a material uncertainty related to events or conditions
which may cast significant doubt on the Group’s and Company’s ability to continue as going concerns and, therefore, that they
may be unable to realise their assets and discharge their liabilities in the normal course of business. However, the directors have
a reasonable expectation that they will secure additional funding when required to continue meeting corporate overheads and
exploration costs for the foreseeable future and therefore believe that the going concern basis is appropriate for the preparation
of the financial statements.
(c) Basis of consolidation
Investments, including long-term loans, in the subsidiaries are valued at the lower of cost or recoverable amount, with an ongoing
review for impairment.
The Group’s financial statements consolidate the financial statements of Company and its subsidiary undertakings using the
acquisition method and eliminate intercompany balances and transactions.
In accordance with section 408 of the Companies Act 2006, the Company 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 the
Company is £241,148 (2018: £797,908). The loss for 2018 includes provision for impairment of its investment in subsidiary
undertakings in the amount of £546,541 (Note 8). There were no provisions for impairments in 2019.
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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 2019 and November 2019.
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.
Sunrise Resources plc Annual Report & Accounts 2019
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Notes to the Financial Statements continued
for the year ended 30 September 2019
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 payment of fees to directors. The fair value of shares
issued is based on the closing mid-market price of the shares traded 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
IFRS 6 “Exploration for and Evaluation of Mineral Resources” requires that exploration and evaluation assets shall be assessed
for impairment when facts and circumstances suggest that the carrying amount may exceed recoverable amount.
In practical terms, this requires that project carrying values are regularly monitored and assessed for recoverability whether from
future exploitation of resources or realised by sale to a third party.
Where activities have not reached a stage which permits reasonable confirmation of the existence of mineral reserves, the directors
must form a judgement whether future exploration and evaluation should continue. This requires management to use their sector
experience, apply their specialist expertise and form a conclusive judgement whether or not, on the balance of evidence that
further exploration is justified to determine if a economically viable mining operation can be established in future. Such estimates,
judgements and assumptions are likely to change as new information and evidence becomes available. If it becomes apparent,
in the judgement of the directors, that recovery of capitalised expenditure is unlikely, the carrying value should be considered as
impaired and treated as detailed below.
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 directors are required to continually monitor and review the carrying
values by reference to new developments, stages in the exploration process and new circumstances. Assessment of the potential
impairment of assets requires an updated judgement of the probability of adequate future cash flows from the relevant project.
It includes 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.
The judgements in respect of key projects are as follows;
The CS Project in Nevada is the Group’s lead project with a carrying value of £960,000. In the judgment of the directors, this is
the focus because there is perceived to be good production potential. Delays in the process of obtaining mining permits are not
considered to be a significant issue and follow further information requests from the regulatory authorities.
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Further exploration at the Bay State Project (carrying value £416,000) has been deferred, however project leases and claims are
being maintained. In the judgement of the directors further exploration is justified. Drilling problems encountered in early
exploration can be overcome and the longer term objective remains to continue exploration of the project. In the opinion of the
directors this asset is not impaired.
Although there has been no exploration during 2019 on the County Line Project (carrying value £142,000), in the judgment of the
directors further evaluation of the production potential is justified and the project is not impaired.
In relation to the Bakers Project (Australia) at a carrying value of £66,000, in the judgment of the directors exploration results
to-date justify further exploration and in the opinion of the directors the project is not impaired.
Also, in relation to other projects, the exploration rights are being maintained and the directors have reached the conclusion that
no impairments are required.
Going concern
The preparation of financial statements requires an assessment of the validity of the going concern assumption. This in turn 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.
Financial assets designated at fair value through OCI
(k)
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair
value through OCI when they meet the definition of equity under IAS 32 Financial Instruments: Presentation and are not held for
trading. The classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the
statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds
as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments
designated at fair value through OCI are not subject to impairment assessment.
The Group elected to classify irrevocably its listed equity investments under this category.
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. Specifically the adoption of IFRS 16 leases will change the accounting treatment
by lessees of leases currently classified as operating leases. Lease agreements will give rise to the recognition by the lessee of
an asset, representing the right to use the leased item and a related liability for future lease payments. Lease costs will be
recognised in the income statement in the form of depreciation of the right of use asset over the lease term and finance charges
representing the unwind of the discount on the lease liability. The adoption of IFRS 16 will not have material impact on the financial
statements of the Group as it has negligible leasing exposure and exploration project leases are exempt as exploration assets
under IFRS 16.3(b).
Sunrise Resources plc Annual Report & Accounts 2019
37
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Notes to the Financial Statements continued
for the year ended 30 September 2019
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.
2019
Consolidated Income Statement
Impairment of deferred exploration cost
Pre-licence exploration costs
Share-based payments
Other expenses
Operating loss
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/Jackson Wash Project, USA
Ridge Limestone Project, USA
CS Pozzolan-Perlite Project, USA
Clayton Gold Project, USA
Newark Silver-Gold Project, USA
Stonewall Gold Project, USA
Other investments
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
£
–
4,711
–
–
(4,711)
–
–
(4,711)
–
(4,711)
–
–
2,149
295,112
(297,261)
–
234
(297,027)
–
(297,027)
66,300
142,513
29,033
416,507
59,069
20,341
959,904
17,608
28,789
12,986
1,753,050
–
1,753,050
28,512
–
28,512
–
–
–
–
–
–
–
–
–
–
–
22,078
22,078
25,228
27,069
52,297
Total
£
–
4,711
2,149
295,112
(301,972)
–
234
(301,738)
–
(301,738)
66,300
142,513
29,033
416,507
59,069
20,341
959,904
17,608
28,789
12,986
1,753,050
22,078
1,775,128
53,740
27,069
80,809
(24,278)
4,234
1,757,284
(48,710)
3,587
25,665
(72,988)
7,821
1,782,949
313,258
76,432
–
–
313,258
76,432
38
Sunrise Resources plc Annual Report & Accounts 2019
257725 Sunrise Resources plc – Annual Report 2019 pp34-pp48.qxp 21/02/2020 11:14 Page 39
2018
Consolidated Income Statement
Impairment of deferred exploration cost
Pre-licence exploration costs
Share-based payments
Other expenses
Operating loss
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/Jackson Wash Project, USA
Ridge Limestone Project, USA
CS Pozzolan-Perlite Project, USA
Clayton Gold Project, USA
Newark Silver-Gold Project, USA
Stonewall Gold Project, USA
Other investments
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)
(75,486)
(106,346)
1,412
1,364,772
204,184
223,881
205,596
1,588,653
550,132
(6,007)
–
–
550,132
(6,007)
Sunrise Resources plc Annual Report & Accounts 2019
39
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Notes to the Financial Statements continued
for the year ended 30 September 2019
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
Corporation tax review fees
4.
Directors’ emoluments
Remuneration in respect of directors was as follows:
P L Cheetham (salary)
D J Swan (salary)
R D Murphy (salary)
2019
£
2018
£
7,072
6,175
1,000
–
700
2,700
2019
£
16,000
16,000
16,000
48,000
1,000
2,250
700
–
2018
£
12,000
12,000
12,000
36,000
In the year ended 30 September 2019 the cost of Employer’s National Insurance Contributions for directors was £Nil (2018: £Nil)
In the year ended 30 September 2019 the value of non-cash share based payments in respect of share warrants issued to the
directors was £630 (2018: £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 £76,773, including Employers National Insurance Contributions, was charged to the Company for his services
during the year (2018: £110,790). 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 £48,630 (2018: £36,000).
5.
Staff costs
Staff costs for the Group and the Company, including directors, were as follows:
Wages and salaries
Social security costs
Share-based payments
The average monthly number of employees employed by
the Group and the Company during the year was as follows:
Directors
Other Officers
2019
£
2018
£
51,197
40,232
–
1,003
–
450
52,200
40,682
2019
Number
2018
Number
3
1
4
3
1
4
The Company does not employ any staff directly apart from the directors. 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).
40
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The Company issues share warrants to employees of Tertiary Minerals plc from time to time and these non-cash share-based
payments resulted in a charge within the financial statements of £1,145 (2018: £1,291).
The Company Secretary, Colin Fitch, retired in June 2019 and since July 2019 the company secretarial services have been
provided by Rod Venables through City Group plc.
Loss per share
6.
Loss per share has been calculated using the loss for the year attributable to equity holders of the Company 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)
2019
2018
(301,738)
(786,672)
2,661,216,018 2,136,387,359
(0.011)
(0.04)
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 (2018: £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% (2018: 19%). The differences are explained below.
Tax reconciliation
Loss before income tax
Tax at hybrid rate 19% (2018: 19%)
Pre-trading expenditure no longer deductible for tax purposes
Administration expenditure not deductible for tax purposes
Tax effect at hybrid rate 19% (2018: 19%)
Unrelieved tax losses carried forward
Tax recognised on loss
Total losses carried forward for tax purposes
2019
£
2018
£
(301,738)
(786,672)
(57,330)
(149,468)
20,473
886,846
2,149
4,298
17,021
171,735
(53,032)
(22,267)
–
–
(3,294,662)
(3,376,297)
Factors that may affect future tax charges
The Group has total losses carried forward of £3,294,662 (2018: £3,376,297). 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.
Following a review of the 2017 and 2018 tax returns there was a change in treatment of pre trade expenditure and treatment of
carried forward losses as excess management expenses of the Company. This change resulted in the difference of £360,752
between the 2018 and 2019 carried forward balances.
Sunrise Resources plc Annual Report & Accounts 2019
41
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Notes to the Financial Statements continued
for the year ended 30 September 2019
8.
Investments
Subsidiary undertakings
Company
Country of
incorporation
/registration
Date of
incorporation
/registration
Type and percentage
of shares held at
30 September 2019
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.
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
2019
£
Company
2018
£
61
61
740,584
726,816
(546,541)
(546,541)
1
1
1,676,913
1,353,145
1
1
105,362
93,023
1,976,381
1,626,506
Investments in share capital of subsidiary undertakings
The directors consider that the carrying value of the Company’s investments in shares of subsidiary undertakings totalling £63 is
not material and therefore does not require an impairment review.
Loans to Group undertakings
Amounts owed by subsidiary undertakings are unsecured and payable in cash. Loan interest is charged to US subsidiaries on
intercompany loans with Parent Company.
A review of the recoverability of loans to subsidiary undertakings, totalling £1,976,318 has been carried out in accordance with
IFRS 9. As a result, the directors have concluded that no potential credit losses arose in the year. The assessment has been based
upon a review of the underlying exploration assets held by the subsidiary undertakings.
Other investments – listed investments
Company
Block Energy plc
VR Resources Ltd
Country of
incorporation
/registration
Type and percentage
of shares held at
30 September 2019
England & Wales
0% of ordinary shares
Canada
0.18% of ordinary shares
Principal activity
Mineral exploration
Mineral exploration
42
Sunrise Resources plc Annual Report & Accounts 2019
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Investment designated at fair value through OCI
Value at start of year
Additions
Disposals
Movement in valuation
At 30 September
Group
2019
£
19,697
5,792
Company
2019
£
Group
2018
£
Company
2018
£
14,344
30,478
22,624
–
(48,649)
(48,649)
–
–
–
–
45,238
22,078
34,305
(10,781)
(8,280)
–
19,697
14,344
The fair value of each investment is equal to the market value of its shares at 30 September 2019, 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.
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
2019
£
Company
2019
£
Group
2018
£
Company
2018
£
4,063,828
2,203,594
3,513,696
2,203,594
313,258
–
550,132
–
4,377,086
2,203,594
4,063,828
2,203,594
(2,700,468)
(2,203,594)
(2,211,292)
(2,203,594)
–
–
76,432
–
–
–
(483,169)
–
(6,007)
–
–
–
(2,624,036)
(2,203,594)
(2,700,468)
(2,203,594)
1,753,050
1,363,360
–
–
1,363,360
1,302,404
–
–
During the year the directors carried out an impairment review with reference to IFRS 6.20 (a) which resulted in no impairment
being required. In 2018 an impairment charge relating to the Cue Diamond project was recognised in the Consolidated Income
Statement as part of operating expenses. 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.
Sunrise Resources plc Annual Report & Accounts 2019
43
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Notes to the Financial Statements continued
for the year ended 30 September 2019
11. Receivables
Prepayments
Accrued income
Other receivables
At 30 September
12. Cash and cash equivalents
Cash at bank and in hand
At 30 September
13. Trade and other payables
Amounts owed to Tertiary Minerals plc
Trade creditors
Accruals
Net pay due in shares
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
2019
£
15,367
–
38,373
53,740
Group
2019
£
27,069
Group
2019
£
10,495
22,980
15,513
16,734
7,266
72,988
Company
2019
£
11,712
–
9,576
21,288
Group
2018
£
20,191
5,353
50,676
76,220
Company
2018
£
14,876
–
23,626
38,502
Company
2019
£
Group
2018
£
Company
2018
£
20,941
235,722
234,972
Company
2019
£
10,495
2,939
10,370
16,734
7,266
47,804
Group
2018
£
59,690
5,747
22,767
11,394
6,748
106,346
Company
2018
£
59,690
1,981
14,492
11,394
6,748
94,305
2019
Number
2019
£
2018
Number
2018
£
2,436,910,064
2,436,910 1,804,015,667
1,804,016
312,850,244
312,850
632,894,397
632,894
2,749,760,308
2,749,760 2,436,910,064
2,436,910
During the year to 30 September 2019 the following share issues took place:
An issue of 7,650,968 0.1p ordinary shares at 0.155p per share to three directors, for a total consideration of £11,859, in
satisfaction of directors’ fees (6 November 2018).
An issue of 291,666,666 0.1p ordinary shares at 0.12p per share, by way of placing, for a total consideration of £329,500 net of
expenses (8 January 2019).
An issue of 13,532,610 0.1p ordinary shares at 0.105p per share to three directors, for a total consideration of £14,209, in
satisfaction of directors’ fees (30 April 2019).
During the year to 30 September 2018 a total of 632,894,397 0.1p ordinary shares were issued, at an average price of 0.14p per
share, for a total consideration of £856,631 net of expenses.
44
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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.
15. Share warrants granted
Warrants not exercised at 30 September 2019
Issue date
Exercise price
05/02/15
05/02/15
18/02/16
18/02/16
01/02/17
01/02/17
31/01/18
31/01/18
21/02/19
21/02/19
21/02/19
0.275p
0.275p
0.160p
0.160p
0.135p
0.135p
0.160p
0.160p
0.160p
0.110p
0.110p
Number
6,750,000
2,625,000
750,000
2,500,000
750,000
2,500,000
750,000
2,500,000
4,000,000
1,000,000
3,750,000
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 from 01/02/19
Any time from 01/02/19
Any time from 21/02/20
Any time from 21/02/20
Any time from 21/02/20
05/02/20
05/02/20
18/02/21
18/02/21
01/02/22
01/02/22
31/01/23
31/01/23
21/02/24
21/02/24
21/02/24
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
2019
––––––––––––––––––––––
Weighted
average
exercise
price
(Pence)
Number of
share
warrants
2018
––––––––––––––––––––––
Weighted
average
exercise
price
(Pence)
Number of
share
warrants
274,875,000
0.245 277,375,000
8,750,000
0.13
3,250,000
–
–
–
–
–
–
(255,750,000)
0.25
(5,750,000)
27,875,000
0.18 274,875,000
19,125,000
0.21 271,625,000
0.26
0.16
–
–
0.85
0.245
0.246
Sunrise Resources plc Annual Report & Accounts 2019
45
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Notes to the Financial Statements continued
for the year ended 30 September 2019
The share warrants outstanding at 30 September 2019 had a weighted average exercise price of 0.18p (2018: 0.245p), a weighted
average fair value of 0.078p (2018: 0.025p) and a weighted average remaining contractual life of 2.32 years.
In the year ended 30 September 2019 warrants were granted on 21 February 2019 to an officer and non-executive directors of
the Company, and a director and employees of Tertiary Minerals plc with an aggregate estimated fair value of £2,468. Note 5
explains the value recognised in the reporting period in respect of Tertiary Minerals plc.
In the year ended 30 September 2018 warrants were granted on 31 January 2018 to an officer of the Company, and a director
and employees of Tertiary Minerals plc with an aggregate estimated fair value of £1,941.
In the year to 30 September 2019 the Company recognised expenses of £2,149 (2018: £1,741) 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 2019 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
2019
0.11p
0.13p
62.5%
4 years
0.83%
0%
2018
0.16p
0.16p
85.0%
4 years
1.06%
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 2019
Warrant
exercise
price
Share
warrants
number
Warrant
expiry
date
At 30 September 2018
Share
warrants
number
Shares
number
Shares
number
125,593,683
3,000,000
23,257,510
1,500,000
2,000,000
38,702,101
2,000,000
0.275p
0.275p
0.160p
0.160p
05/02/20
83,454,885
5,000,000
05/02/20
17,000,757
2,500,000
21/02/24
21/02/24
29,414,074
16,666,667
*Includes 5,500,000 shares held by K E Cheetham, wife of P L Cheetham.
Tertiary Minerals plc
Sunrise Resources plc is treated as an investment in the consolidated accounts of Tertiary Minerals plc, which held 2.71% of the
issued share capital on 30 September 2019 (2018: 5.19%).
Tertiary Minerals plc provides management services to Sunrise Resources plc and consequently during the year the Group
incurred costs of £189,742 (2018: £218,841) recharged at cost from Tertiary Minerals being overheads of £27,025 (2018: £24,607),
costs paid on behalf of the Group of £6,554 (2018: £5,421), Tertiary staff salary costs of £78,590 (2018: £77,597) and Tertiary
directors’ salary costs of £77,574 (2018: £111,216).
At the balance sheet date an amount of £10,496 (2018: £59,690) was due to Tertiary Minerals plc.
46
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Patrick Cheetham, the Executive Chairman of the Company, is also a director of Tertiary Minerals plc.
At 30 September 2019 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 and selling assets.
18. Financial instruments
At 30 September 2019, the Group’s and Company’s financial assets consisted of receivables due within one year, other 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 2019, as defined in IAS 39, are as
follows:
Financial assets at amortised cost
Financial assets at fair value through other comprehensive income
Financial Liabilities at amortised cost
Group
2019
£
65,443
22,078
48,987
Company
2019
£
Group
2018
£
Company
2018
£
30,517
291,751
258,598
–
23,805
19,697
88,204
14,344
76,163
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 2019
47
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Notes to the Financial Statements continued
for the year ended 30 September 2019
Bank balances were held in the following denominations:
United Kingdom Sterling
Australian Dollar
Canadian Dollar
United States Dollar
Euro
Group
2019
£
8,873
1,262
43
Company
2019
£
Group
2018
£
Company
2018
£
8,873
234,380
234,380
30
43
110
32
1,053
147
–
32
413
147
16,887
11,991
4
4
Interest rate risk
The Company finances operations through equity fundraising and therefore does not carry borrowings.
Fluctuating interest rates have the potential to affect the loss and equity of the Group and the Company insofar as they affect the
interest paid on financial instruments held for the benefit of the Group. The directors do not consider the effects to be material to
the reported loss or equity of the Group or the Company presented in the financial statements.
Credit risk
The Company has exposure to credit risk through receivables such as VAT refunds, invoices issued to related parties and its joint
arrangements for management charges. The amounts outstanding from time to time are not material other than for VAT refunds
which are considered by the directors to be low risk.
The Company has exposure to credit risk in respect of its cash deposits with NatWest bank and this exposure is considered by
the directors to be low risk.
19. Events after the report date
In November 2019, the Company raised £350,000 before expenses through a placing of 350,000,000 ordinary shares at a price
of 0.1 pence per ordinary share. In addition,12,500,000 warrants were issued, each warrant entitling the holder to apply for one
ordinary share at the placing price at any time within twelve months from the date of issue.
In February 2020, the Company raised £200,000 before expenses through a placing of 181,818,182 ordinary shares at a price
of 0.11 pence per ordinary share, conditional on admission of the shares to trading on AIM. In addition, 9,090,909 warrants will
be issued, each warrant entitling the holder to apply for one ordinary share at the price of 0.11 pence per ordinary share at any
time within twelve months from the date of issue.
There were no other post balance sheet events which affect the financial position of the Company at balance date.
48
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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 at Silk Point, Queens Avenue,
Macclesfield, Cheshire SK10 2BB on Thursday 19 March 2020 at 12:00 noon 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 2019.
2.
3.
To re-elect Mr R D Murphy 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 51.
By order of the Board
R G Venables
Company Secretary
18 February 2020
Registered Office:
Sunrise House
Hulley Road
Macclesfield
Cheshire
SK10 2LP
United Kingdom
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Annual General Meeting – Explanatory Notes
The Annual General Meeting of Sunrise Resources plc will be held on Thursday 19 March 2020 at Silk Point, Queens Avenue,
Macclesfield, Cheshire SK10 2BB at 12:00 noon. 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 2019 which can be found on pages 6 to 33.
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 R D Murphy is retiring in accordance with the Articles of Association and the Board proposes that he be re-elected.
Mr R D Murphy’s biographical details can be found on page 19.
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 give the directors authority
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 21 February 2019, 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 2021.
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 share placing.
If given, this authority will expire at the conclusion of the Annual General Meeting in 2021.
50
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Voting at the Meeting, 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 17 March 2020. 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 12:00 noon (UK time) on Thursday 19 March 2020
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:
l
l
l
l
by attending the meeting and voting in person.
by logging on to www.signalshares.com and following the instructions.
by proxy. You may request a hard copy form of proxy directly from the registrars, Link Asset Services, on
Tel: 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. 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.
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 the Registrars, Link Asset Services, at 34 Beckenham Road, Beckenham, Kent, BR3 4TU by 12:00 noon on
Tuesday 17 March 2020.
If you return more than one proxy appointment, either by paper or electronic communication, the appointment received last
by the Registrars 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.
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Voting at the Meeting, 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 12:00 noon on Tuesday 17 March
2020. 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.
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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 & Broker
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
Joint Broker
Peterhouse Capital Limited
3rd Floor
80 Cheapside
London
EC2V 6EE
United Kingdom
Solicitors
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
United Kingdom
Bankers
National Westminster Bank plc
2 Spring Gardens
Buxton
Derbyshire
SK17 6DJ
United Kingdom
Sunrise Resources plc Annual Report & Accounts 2019
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Sunrise Resources plc
Silk Point
Queens Avenue
Macclesfield
Cheshire
SK10 2BB
United Kingdom
Tel: +44 (0)1625 838884
Fax: +44 (0)1625 838559
Perivan 257725