260054 Sunrise Resources plc – Annual Report 2020 Cover.qxp 17/12/2020 11:33 Page 1
Company No. 05363956
Annual Report and Accounts
For the year ended 30 September 2020
260054 Sunrise Resources plc – Annual Report 2020 Cover.qxp 17/12/2020 11:33 Page 2
Contents
Sunrise Resources plc
Our Aim is for the Company to be self-funding
through the development of profitable mining
projects.
Our Performance
3
4
Chairman’s Statement
Strategic Report
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
joint venture, sale or other
exploration,
arrangements.
The Strategic Plan is on track and we are aiming
for first commercial production in 2021.
4
4
6
10
12
Organisation Overview
Financial & Performance Review
Operating Review
Risks & Uncertainties
Section 172 (1) Statement
Our Responsibilities
14 Directors’ Responsibilities
15 Directors’ Report
17
Board of Directors
18 Corporate Governance
18 Chairman’s Overview
19 Corporate Governance Statement
21
22
Audit Committee Report
Remuneration Committee Report
22 Nomination Committee Report
Our Financials
23
Independent Auditor’s Report
27 Consolidated Income Statement
27 Consolidated Statement of Comprehensive Income
28 Consolidated and Company Statements of Financial
Position
29 Consolidated Statement of Changes in Equity
30 Company Statement of Changes in Equity
31 Consolidated and Company Statements of Cash Flows
32 Notes to the Financial Statements
Annual General Meeting
50 Notice of Annual General Meeting
51
52
Annual General Meeting – Explanatory Notes
Voting at the Meeting, Electronic Voting, Proxy Notes
and Instructions
IBC Company Information
2
Sunrise Resources plc Annual Report & Accounts 2020
Chairman’s Statement
It has been a year of
considerable challenges
but ultimately a rewarding
year with
the major
milestone being the mine
permitting of our CS
Pozzolan-Perlite Project in
Nevada, USA. After many
delays and frustrations, the
Environmental Assessment
for
project was
completed in July 2020
and,
public
comment period, a Finding
of No Significant Impact was handed down by the chief
regulator, the US Bureau of Land Management. This paved
the way for the issue of the mine permit Decision of Record
and the mine Reclamation Permit, and the process plant Air
Quality Control Permit was awarded shortly thereafter.
after
the
a
These permits are the result of over two years of relentless
hard work by our small management team who must be
commended for this achievement. The mine is now permitted
for the production of an average of 100,000 tons per year of
perlite and 500,000 tons per year of natural pozzolan
although initial production will be lower as we work our way
into the markets.
The grant of the mine permit has cleared the way for the
Company to extract larger samples for market testing and
since the financial year end we have processed a 100 ton
sample of perlite and sent sized horticultural grades of raw
perlite for market testing by five potential customers.
Feedback is awaited. Progress is also being made towards
large scale testing of our natural pozzolan. We aim that these
tests will lead to offtake agreements and/or initial orders which
will then allow for commercial production to start in 2021.
We are currently undertaking further mine engineering and
financial studies to better define the start-up costs and based
on feedback from the potential customers we should be in a
position to provide financial projections in due course.
the
to see
We are pleased
further encouraging market
developments for our two key mine products this year. The
outlook for natural pozzolan demand is bright as the supplies
of the fly ash we seek to replace continue to decline with the
continuing closure of coal-fired power stations across the USA
and
increasing reliance on cheaper and greener
renewables and natural gas. We expect this will accelerate
under the “Green New Deal” supported by President-elect
Biden and as many large institutional investors turn their backs
on further investment in the coal mining industry. The market for
horticultural perlite, although mature, has reportedly been very
strong in 2020 helped not least by an increase in gardening
activities during COVID-19 lockdowns and restrictions.
Turning to other projects, we made the decision in the
summer of 2020 to dedicate some of our budgets to drill
testing our portfolio of drill ready precious metal projects with
a view to giving our shareholders exposure to the buoyant
market for precious metals. Our first drill programme was at
the Clayton Silver-Gold Project in Nevada where despite
difficult drilling conditions we intersected the target zone and
eagerly await the assays’ results. Drilling is planned for the
Newark Gold Project, also in Nevada, and at the Baker’s Gold
Project in Western Australia where an Aboriginal heritage drill
clearance survey is scheduled this month.
I am pleased to report that we have been able to continue
business as usual during the COVID-19 pandemic and hope
this can continue in 2021. The signs for this look favourable
with a least one vaccine now approved for use in the UK.
Despite the COVID-19 epidemic, stock markets have been
surprisingly resilient, and we have seen a considerable
turnaround in investor sentiment in 2020 both generally and in
your Company and this has enabled us to raise funds following
the permitting of our CS Project, to continue our progress.
Our Annual General Meeting for the year ended 30 September
2020 will be held in our offices in Macclesfield, at 12.00 noon
on Thursday 28 January 2021. The Notice of AGM is set out on
page 50. Further detailed instructions on proxy voting are on
pages 52 and 53. In order to observe ongoing government
restrictions on social distancing and public gatherings only the
Chairman and one other nominated Shareholder will attend the
meeting to ensure that the meeting is quorate. Other
Shareholders and third parties will not be permitted to attend
the Meeting and will be refused entry. Shareholders are
therefore encouraged to appoint the Chairman as their proxy
(online at www.signalshares.com or by requesting and
submitting a hard copy Form of Proxy) as soon as possible. In
line with corporate governance best practice and in order that
any proxy votes of those shareholders who are not allowed to
attend and to vote in person are fully reflected in the voting on
the resolutions, the Chairman of the meeting will direct that
voting on the Resolutions set out in the Notice of Meeting will
take place by way of a poll. The final poll vote on the
Resolutions will be published after the General Meeting on the
Company’s website.
I think that we have reasons to be cheerful this Christmas and
as we move into 2021 and I look forward to updating
shareholders on a regular basis.
Patrick Cheetham
Executive Chairman
11 December 2020
Sunrise Resources plc Annual Report & Accounts 2020
3
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 2020.
Our Aim is for the Company to self-fund its growth through the
development of profitable mining projects.
Our Strategy is to develop the CS Project through to production
and to unlock the value inherent in our other mineral projects
through further exploration, joint venture, sale or other
arrangements.
The Strategic Plan is on track although delays to the permitting
process have meant that we did not meet our objective to be in
production in 2020. Nevertheless, our CS Project is now fully
permitted, and we are aiming for first commercial production
in 2021.
Further details of our progress on the CS Project are given in
the Operating Review set out on pages 6 to 9.
The Company’s Business Model is to acquire 100% ownership
of mineral assets at minimal expense. This usually involves
staking claims as was the case for the CS Project, or applying
for exploration licences from the relevant authority, as was the
case for our Baker’s Gold Project in Australia. In other cases,
rights are negotiated with existing project owners for initially low
periodic payments that rise over time as confidence in the
project value increases and this was the case for the Bay State
Silver Project.
The Group currently operates with a low-cost base to maximise
the funds that can be spent on value adding exploration and
development activities. The Company’s administration costs are
reduced via a cost sharing Management Services Agreement
with Tertiary Minerals plc which was formerly a significant
shareholder in the Company.
The Company’s activities are financed by periodic capital
raisings, through private share placings. For more advanced
projects such as the CS Project the Board will seek to secure
additional funding from a range of sources, for example debt
funding, pre-financing through off-take agreements and other
joint arrangements.
Over the past few years, the Company has established a
valuable portfolio of drill-ready precious metal, base metal and
industrial mineral projects. Our strategy remains 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 our ongoing
royalty interest in the Junction Project now held by VRR.
However, recognising the increased investor interest in, and
higher prices for, precious metals, a decision was made in 2020
to undertake initial drilling programmes on certain of the
Company’s projects in order to add further value prior to
offering these projects for joint venture or sale. This process
was initiated with a drill programme at the Clayton Silver-Gold
Project at the end of the year.
technical services,
Organisation Overview
The Group’s business is directed by the Board and is managed
by the Executive Chairman. The Company has a Management
Services Agreement with Tertiary Minerals plc (“Tertiary”) which
was the original parent of the Company. Under this cost sharing
agreement Tertiary provides all of the Company’s administration
and
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. During the
current COVID-19 pandemic all staff and directors have worked
largely from home without disruption to the Company’s business.
including
the
The Group’s exploration activity in Nevada, USA, is undertaken
through two local subsidiaries, SR Minerals Inc. and Westgold Inc.
In Australia the Company operates through an Australian
subsidiary, Sunrise Minerals Australia Pty Ltd.
independent
The Board of Directors comprises
non-executive directors and the Executive Chairman. Their
profiles are provided on page 17. The Executive Chairman is
also Executive Chairman of Tertiary Minerals plc, but otherwise
the Board is independent of Tertiary. Tertiary is not a significant
shareholder in the Company (as defined under the AIM Rules).
two
Financial & Performance Review
The Group is not yet producing minerals and so has no income
other than a small amount of bank interest. Consequently, the
Group is not expected to report profits until it disposes of or is
able to profitably develop or otherwise turn to account its
exploration and development projects.
The financial statements for the Group are set out in detail on
pages 27 to 49. The Group reports a loss of £302,902 for the
year (2019: £301,738) after administration costs of £298,980
(2019: £297,261) and after crediting interest receivable of £261
(2019: £234). The loss includes expensed pre-licence and
reconnaissance exploration costs of £4,183 (2019: £4,711).
Administration costs
include an amount of £18,932
(2019: £2,149) as non-cash costs for the value of certain share
warrants held by employees of both Tertiary and Sunrise,
calculated in accordance with IFRS 2. Cash administration
costs are therefore £280,048 (2019: £295,112).
4
Sunrise Resources plc Annual Report & Accounts 2020
The Financial Statements show that, at 30 September 2020, the
Group had net current assets of £1,048,356 (2019: £7,821).
This represents the cash position and receivables, less trade
and other payables. These amounts are shown in the
Consolidated and Company Statements of Financial Position
on page 28 and are also components of the Net Assets of the
Group. Net assets also include various “intangible” assets of
the Company. As the name suggests, these intangible assets
are not cash assets but include some of this year’s and
previous years’ expenditure on mineral projects where that
expenditure meets the criteria in Note 1(d) of the accounting
policies. The intangible assets total £1,867,218 (2019:
£1,753,050) and a breakdown by project is shown in Note 2 to
the financial statements on page 37.
Details of intangible assets, property, plant and equipment,
investments and right of use assets are also set out in Notes 8,
9, 10 and 17 of the financial statements.
Impairment
Expenditures which do not meet the criteria in Note 1(d), such
as pre-licence and reconnaissance costs, are expensed and
add to the Company’s loss. The loss reported in any year can
also include expenditure for specific projects carried forward
in previous reporting periods as an intangible asset but which
the Board determines is “impaired” in this reporting period.
It is a consequence of the Company’s business model that
there will be impairments of unsuccessful exploration projects,
from time to time. The extent to which expenditure is carried
forward as intangible assets is a measure of the extent to which
the value of the Company’s expenditure is preserved.
Biannual reviews are carried out by the Directors as to whether
there are any indications of impairment of the Group’s assets.
At the year-end an impairment review was undertaken by the
Directors to ascertain whether the carrying value of its
exploration and development projects and the associated
intercompany loans should be impaired under IFRS 6 and IAS
36. It was judged that none of the projects or intercompany
loans should be impaired.
The intangible asset value of a project, shown at cost, should
not be confused with the realisable or market value of a
particular project which will, in the Directors’ opinion, be at least
equal in value and often considerably higher. Hence the
Company’s market capitalisation on the AIM Market is usually
in excess of the net asset value of the Group.
The Company finances its activities through periodic capital
raisings, via share placings and asset sales. As the Company’s
projects become more advanced there may be strategic
opportunities to obtain funding for some projects through joint
venture, production sharing, royalty and other marketing
arrangements. The Company’s agreement with VR Resources
Ltd is such an example.
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 a 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 £1,550,000 before
expenses through share placings in the
reporting period and issued equity to the
value of £30,724 in settlement of outstanding
fees payable to Directors and £17,550 in
settlement of fees payable to the Company’s
broker, Peterhouse Capital Limited.
Fundraising
In exploring for valuable mineral deposits, we accept that not
all our exploration will be successful but also that the rewards
for success can be high. We therefore expect that our
shareholders will be invested for the potential for capital growth
taking a long-term view of management’s track record in
mineral discovery and development.
Fundraising
The Directors prepare annual budgets and cash flow
projections that extend beyond 12 months from the date of this
report. Given the Group’s cash position at year end
(£1,089,417), 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. Prior to year-end, in August 2020, the
Company completed a
fundraising of £1,000,000
before expenses.
Sunrise Resources plc Annual Report & Accounts 2020
5
Strategic Report continued
Operating Review
In 2020 the Group continued its focus on advancing its CS
Project in Nevada, USA, towards production and realised its main
objective for the reporting period – the completion of mine
permitting. The Company has also initiated exploration on a
number of its precious metals projects.
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 in three
separate zones – the Main Zone, the Tuff Zone and the
Northeast Exploration Area. Further details of the market and
market developments for these two commodities are set out
starting on page 8.
Much of the period under review has been concerned with
mine permitting activities and in particular the finalisation of the
combined Mine Plan of Operations and Reclamation Permit
Application and an Environmental Assessment (EA) of the
project. This has required considerable time spent in liaison
with the principal regulatory authorities – the Federal Bureau of
Land Management
the Nevada Division of
Environmental Protection (“NDEP”) and Nevada Bureau of
Mining Regulation and Reclamation (“BMRR”). The CS Project
is located on federally owned and administered land and the
lead agency for permitting is the BLM.
(“BLM”),
Environmental Assessment
The project Environmental Assessment and the fourteen
accompanying Supplemental Environmental Reports (“SERs”)
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.
The BLM reviewed the EA and its associated SERs as required
under the National Environmental Policy Act (“NEPA”) and, in
July 2020 following a period of public comment and minor
amendments, delivered a Finding of No Significant Impact
(“FONSI”) and has accordingly determined
that an
Environmental Impact Statement is not required for the project.
The FONSI recognises the positive contributions that the use of
natural pozzolan can make to a reduction in CO2 emissions in
the USA.
The Company has an approved Eagle Conservation Plan (ECP)
to mitigate the impact of the project on the Golden Eagle
population should eagles’ nests in proximity to the Project
become occupied for breeding. Under the ECP mining
activities will be suspended each year from the start of the
breeding season, 1 January, until it is determined that any such
nests are unoccupied or no longer occupied. This is not
expected to materially impact the Project in the early years of
the Project and the Company can apply for unoccupied nests
to be removed should this become a limiting factor for the
Project in the future.
Permits Issued
Following the issue of the FONSI, the Company has now
received the three key permits that it requires to operate the CS
Project. These permits are the BLM Decision of Record
approving and authorising the Company’s Mine Plan of
Operations, the Air Quality Operation Permit (“AQOP”) and the
Reclamation Permit. During the public comment phases of
these permit applications, no appeals or objections
were received.
The BLM Decision of Record authorises the extraction of perlite
and natural pozzolan under the regulations application to
locatable minerals governed by the 1872 Mining Act which,
importantly, means that no Federal Royalties are payable on the
production of either perlite or pozzolan.
The Class II AQOP, renewable every five years, authorises the
operation of mobile crushing and screening plant to produce
a coarse horticultural grade perlite and a finer perlite suitable
for grinding and sale as a natural pozzolan. This permit allows
24-hour, year-round, on site mineral processing operations. A
Class II AQOP specifically applies to projects like the CS Project
that have generally low levels of emissions.
The Reclamation Permit from the NDEP and BMRR is valid for
the life of the project.
The Company has leased water rights from Liberty Moly LLC
and a temporary permit has been granted by the Nevada
Division of Water Resources to enable extraction of water at the
Company’s designated well-site. A long-term permit has also
been submitted and is awaiting approval. The construction of
the groundwater well for use in connection with the project,
along with access over BLM administered land, requires Right
of Way permits which have been granted by the BLM.
Several additional minor permits may be required from other
regulatory bodies. These additional permits have generally
short approval lead times and are not expected to delay the
development of the project.
Mine Plan of Operations
The BLM approved mine Plan of Operations covers four phases
of mining operations. Phase I is the production rate ramp up
phase with perlite and pozzolan being mined from the Main
Zone and processed using mobile plant. In Phase II, mining
would continue in the Main Zone and a fixed perlite processing
6
Sunrise Resources plc Annual Report & Accounts 2020
plant would be constructed to enable production of a wider
range of products. Phase III would be an expansion of Phase II
operations in the Main Zone of the project and Phase IV would
begin once the Main Zone resource has been depleted, with
production and processing of ore moving to the Tuff Zone.
The Company is permitted to produce up to 1,656,000 tons of
perlite and 14,523,000 tons of natural pozzolan at rates
averaging 100,000 tons per year (over 15 years) and 500,000
tons per year (over 27 years) respectively.
The Plan of Operations also includes programmes of infill
drilling along with exploration drilling for perlite in unexplored
parts of the property and for natural pozzolan in the extensive
and largely unexplored Northeast Zone.
Production Options
Following the grant of the required permits the Company has
begun the transition towards production and has been working
on the following options for production of natural pozzolan
and perlite.
Perlite
●
●
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 Company is aiming to initiate production on the first of
these two options in 2021 as production can start quickly at a
relatively low capital cost as the mobile plant is available from
the quarry industry and can be bought, rented or leased,
subject to availability. Estimates of capital and rental costs have
been obtained and will be factored into the Company’s financial
planning and forecasting. The Company’s Class II AQOP, which
primarily applies to an on-site process plant, is based on the
first of these options.
The Company has permission to construct the onsite fixed
perlite processing plant set out in the second option and, as
referenced in Phase II of the Plan of Operations, this has
already been designed and costed, however it may be
preferable to construct this at a more suitable, rail-linked site
elsewhere in Nevada. A number of locations are under review.
Natural Pozzolan
The use of natural pozzolan in cement and concrete mixes
requires that the pozzolan be ground to a fine size before use.
The production options being evaluated by the Company are:
●
Direct sale to cement companies of crushed ore and by-
product perlite for grinding in their facilities.
●
Construction of a fixed process plant to grind the crushed
natural pozzolan for sale to cement companies and
ready-mix concrete companies.
Pozzolan can be crushed using the same mobile plant used for
perlite crushing and so the first of these options has the lowest
capital and operating cost but a fewer number of potential
customers who would need to have their own pozzolan grinding
capacity. Different grinding technologies and plant capital and
operating costs are being evaluated for the second option of a
stand-alone perlite grinding plant.
Customer Trials
Until recently, surface disturbance restrictions have limited the
ability of the Company to provide larger scale bulk samples to
potential customers. However, with the grant of the key mine
permits this constraint has been removed. This will allow for
larger scale trials with the view that this will lead to sales
contracts and offtake agreements.
Following the grant of the mine permit, the Company recently
completed processing of a 100-ton sample of perlite using a
mobile crushing and screening plant to process bulk samples
of raw perlite. The plant comprises a crusher, high frequency
screens and associated conveyors and was a basic version of
the plant that is proposed for the initial production facility and
for which the Company recently received its AQOP.
The perlite bulk sample was processed into two separate
size-grades of horticultural raw perlite and has been sent to five
potential customers who will expand the raw perlite in their
commercial facilities.
for end-use
Different customers who expand perlite
horticultural markets do so in different types of furnaces and
consequently will achieve different production rates and yields
of expanded perlite using the same ore source and so must
test the material prior to committing to offtake agreements.
A by-product of the raw perlite production test will be
approximately 60 tons of fine-grained perlite some of which will
be ground for use as natural pozzolan and for a test
concrete pour.
Plans are also being advanced for a large-scale commercial
test of the Company’s natural pozzolan.
Mine Planning & Preparation
In parallel with customer testing the Company is now moving
forward with site engineering and costing for mine infrastructure
and the well site to allow it to better define the start-up costs.
Based on feedback from the potential customers we should be
in a position to provide additional financial projections for the
project in due course.
Sunrise Resources plc Annual Report & Accounts 2020
7
Strategic Report continued
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
transport
infrastructure regulators mandating the use of SCMs in
concrete used in public works.
in many State
SCMs also have strong “green” credentials as the production
of Portland cement is responsible for 7-8% 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, coal fly ash supplies continue to decline,
accompanied by price increases due to increasing scarcity of
supply, and this problem 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. This has
continued to be exacerbated by the closure of and reduction
of output from coal-fired power stations in the US. Of particular
significance was the closure of the Navajo coal-fired power
station in Arizona at the end of 2019. This was a major supplier
of fly ash and as result of closure approximately 500,000 tons
per year of fly ash was removed from western US markets.
looking
Established fly ash distributors are looking to supplement or
replace their SCM offerings with natural pozzolan and, similarly,
their customers, cement and ready-mix concrete companies,
are
to source supplies of natural pozzolan
independently of their fly ash suppliers. These are our potential
customers. The price of natural pozzolan varies from market to
market and is fixed by negotiation but is expected to follow the
price of fly ash for now, typically $95-100/ton delivered.
During the COVID-19 pandemic, the cement and concrete
industries world-wide have experienced lower demand for their
products. However, in parallel with this, there has been an
increased awareness of environmental issues and pressure is
continuing to grow for these industries to raise their environment
standards, with a view to reaching carbon neutrality. This
provides a perfect opportunity for the increased use of natural
pozzolans, such as those found at the CS Project, in cement
and concrete mixes. The markets for cement products are
expected to recover as countries reopen, fuelled by economic
recovery and growth, and urbanisation. This recovery is
reflected in the US cement industry, driven by the resumption
of activity and growth in the infrastructure sector.
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 steadily increasing.
For more information on natural pozzolan see:
https://pozzolan.org/
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:
●
●
●
●
Various industrial and household applications such as
insulation, paint texturing, plaster and concrete fillers,
field
building materials
fillers,
conditioners (soil porosity enhancement) and
fire
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”),
520,000 tons of raw perlite was mined in the USA in 2019 with
most material used internally, and some material imported,
primarily from Greece. USGS reports showed an 8% annual rise
in US consumption in 2019. 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 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.
The perlite market has proven to be resilient during the
COVID-19 pandemic, with many people in lockdown turning to
gardening and so fuelling further demand for perlite.
8
Sunrise Resources plc Annual Report & Accounts 2020
It is therefore significant that the Company’s recent commercial
trials confirmed that the coarse grades produced from the
processed bulk sample produced the expanded product that
is of interest to the cannabis industry as well as other more
traditional horticultural buyers.
USGS reports show that perlite typically sells for US$72 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 PERLITE PROJECT, NEVADA
This project is located approximately 85km from the CS Project
in Nevada, USA.
The NewPerl Project contains two key targets where surface
samples have shown excellent expandability results for
horticultural grades of perlite. Subject to further testing, this
could be suitable for feed into the CS Project in the future.
In one of the areas within the project perlite has been found
along a 200m wide flank of a 1km long ridge with up to 80m
vertical relief A second target is the Knoll Prospect where high
quality horticultural grade perlite protrudes
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 and this
requires further investigation.
from
The Company has a drill permit in place and will start drilling
as soon as a drill rig becomes available.
JACKSON WASH PERLITE PROJECT, NEVADA
The Jackson Wash Project is located 16km from the NewPerl
Project in Nevada.
This project is also a target for horticultural grade perlite and
may be suitable as a future feed for the CS Project. 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
immediate
surroundings. Other perlite flows within this northern claim
block have yet to be sampled.
to 10m
from
its
Due to the focus on the CS Project, no work was carried out
on this project during the reporting period.
RIDGE LIMESTONE PROJECT, NEVADA
This project covers a large surface area of high purity limestone
which has potential for higher value industrial applications. The
limestone deposit forms a prominent ridge and lends itself to
low-cost open-cast mining with potentially large tonnages
evidenced by a large exposed surface area.
The claims also cover small scale mine workings with grab
samples of up to 15.8% zinc. A mapping and sampling
programme was carried out at this project during the year and
further exploration is being planned with a focus on base metals.
JUNCTION COPPER-SILVER-GOLD PROJECT, NEVADA
The Company holds a 3% net smelter royalty interest in the
Junction Project which is currently owned by TSX-V listed VR
Resources Ltd (“VRR”).
The royalty interest covers part of a Cretaceous-age porphyry
copper mineralised system with a 6km mineralised trend
defined by earlier exploration. Within the Company’s royalty
area VRR has so far focused exploration on the Denio Summit
target which lies at the western end of the mineralised trend.
VRR has not carried out any work on this project during the
reporting period.
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 INC. PROJECTS
During the year on the Bay State Silver Project, the County
Line Diatomite Project and the Garfield Gold-Silver-Copper
Project in Nevada, USA, no work was carried out 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. The
diatomite deposit on the Company’s County Line Project has
synergy with
is also a
natural pozzolan.
the CS Project as diatomite
WESTGOLD INC.
The Company’s Westgold subsidiary holds three projects in
Nevada – Clayton, Newark and Stonewall – that were
acquired with the specific objective that they be held at minimal
cost and offered as being available for joint venture, with low
cost exploration carried out where funds permit.
CLAYTON SILVER-GOLD PROJECT, NEVADA
The Clayton Silver-Gold Project is located in the Walker Lane
Mineral Belt, which includes a large number of epithermal gold
and silver deposits and porphyry copper and molybdenum and
copper skarn deposits, including the famous and productive
Comstock gold and silver deposits and Yerington porphyry
copper deposits. The property also lies 40 miles southwest of
the famous silver deposits at Tonopah which produced over
138 million ounces of silver and 1.5 million ounces of gold from
1900-1921.
Sunrise Resources plc Annual Report & Accounts 2020
9
Strategic Report continued
Twenty-one holes were drilled at the Clayton project in the
1980s and whilst a number of these holes intersected
significant silver mineralisation, some did not reach the target
depth. Silver grades were reported as likely understated due
to loss of fine silver-bearing sulphide minerals as a result of the
percussion drilling method used at that time.
During the year the Company completed a core drill hole,
20CLDD001, to a depth of 104.7m to twin and deepen a
historic drill hole CL-15 which intersected 7.6m grading
165 grammes/tonne silver (4.8 ounces/ton) and 0.4 g/t gold
from 82.3m depth to the base of hole at 89.9m depth.
STONEWALL GOLD PROJECT, NEVADA
Due to commitments on the CS Project, no work has been
carried out this year, however the Company has received
outside interest in the project.
SUNRISE MINERALS AUSTRALIA PTY LTD
Plans are also being advanced to drill test the Baker’s Gold
Project in Western Australia where the Company has defined
a significant gold-in-soil anomaly which will be tested alongside
the Dickie Lee open pit area where metal detectorists have
recovered specimen quality gold-quartz nuggets both at
surface and in-situ.
Drilling conditions were extremely difficult, and progress was
slow due to heavy faulting and extensive zones of swelling clays
in fractured and hydrothermally altered rock. Whilst these
geological conditions can be favourable indications for
mineralisation, core recovery was very poor as a result.
The Company’s Programme of Work has been approved by the
Western Australia Department of Mines, Industry Regulation
and Safety and an Aboriginal heritage clearance survey is
scheduled for December 2020 and drilling will follow once a
drill rig is available.
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 on page 11 together with risk mitigation strategies
employed by the Board.
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.
Despite the difficult drilling conditions, hole 20CLDD001
intersected a massive quartz vein and quartz breccia in the
target zone between 83.52m and 91.44m downhole (true
thickness unknown) containing fine grained disseminated
sulphides including mineral logged as the silver sulphide
mineral acanthite. Assay and analytical results are awaited.
NEWARK GOLD PROJECT, NEVADA
The Newark Gold Project is located at the southern end of the
Battle Mountain-Eureka (Cortez) gold trend. It lies 40 km south
of, and along the same structural zone as, the past-producing
Alligator Ridge Mine, 13 km southwest of the past producing
Illipah Gold Mine and 20 km east of the Pan Gold Mine.
The Newark Project was originally targeted for Carlin-style gold
mineralisation by Freeport-McMoRan Gold Co. in the 1980s
following the discovery of gold anomalous values in silicified
rocks in a favourable structural and stratigraphic setting. Carlin-
style deposits can be both large (e.g. Goldstrike which contains
39 million ounces gold at a grade of 3.3 g/t) and high-grade
(e.g. Barrick’s recent Goldrush discovery which contains
8.6 million ounces gold at a grade of 10.6 g/t).
Freeport drilled a total of 16 holes. Significantly, hole NWK8
intersected 47m of low-level gold (average 0.14 ppm gold) in
jasperoid from 75m to the end of the hole at 122m. The
Company is planning to drill test this gold bearing jasperoid
and to deepen the hole through to about 400m depth to test the
underlying Joana Limestone which can be a significant host for
Carlin-style gold mineralisation.
The Company has submitted a notice of intent to drill at Newark
and is awaiting approval.
10
Sunrise Resources plc Annual Report & Accounts 2020
RISK
MITIGATION STRATEGIES
Exploration Risk
The Group’s business
is mineral exploration and
development which are speculative activities. There is no
certainty that the Group will be successful in the definition
of economic mineral deposits, or that it will proceed to the
development of any of its projects or otherwise realise
their value.
Resource Risk
All mineral projects have risk associated with defined grade
and continuity. Mineral Reserves are always subject to
uncertainties in the underlying assumptions which include
geological projection and price assumptions.
Development and Marketing Risk
Delays in permitting, financing, mine commissioning and
marketing a project and its products may result in delays
to the Group meeting production targets.
Commodity Price 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.
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
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 the directors will ensure that its
permitting, financial evaluation and financing and market
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 executive
management and the Board with additional technical and
financial skills as
from
exploration to production.
the Company
transitions
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.
Sunrise Resources plc Annual Report & Accounts 2020
11
Strategic Report continued
RISK
MITIGATION STRATEGIES
Political Risk
All countries carry political risk that can lead to
interruption of activity. Politically stable countries can have
enhanced environmental and social permitting risks, risks
of strikes and changes to taxation, whereas less
developed countries can have,
in addition, risks
associated with changes to the legal framework, civil
unrest and government expropriation of assets.
Partner Risk
Whilst there has been no past evidence of this, the Group
can be adversely affected if joint venture partners are
unable or unwilling to perform their obligations or fund
their share of future developments.
Financing & Liquidity Risk
The Company has an ongoing requirement to fund its
activities through the equity markets and in future to
obtain finance for project development. There is no
certainty such funds will be available when needed.
Financial Instruments
Details of risks associated with the Group’s Financial
Instruments are given in Note 18 to the financial
statements on page 48.
The Company’s strategy restricts its activities to stable,
democratic and mining friendly jurisdictions.
The Company has adopted a strong Anti-corruption Policy
and a Code of Conduct and these are 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
that such payments and
expenditures are met.
legislate
The Company maintains a good network of contacts in
the capital markets that has historically met its financing
requirements. The Company’s low overheads and cost-
effective exploration strategies help reduce its funding
requirements and currently the outstanding directors’ fees
are settled in shares. Nevertheless, further equity issues
will be required over the next 12 months.
The directors are responsible for the Group’s systems of
internal financial control. Although no systems of internal
financial control can provide absolute assurance against
material misstatement or loss, the Group’s systems are
designed to provide reasonable assurance that problems
are identified on a timely basis and dealt with appropriately.
In carrying out their responsibilities, the directors have put
in place a framework of controls to ensure as far as possible
that ongoing financial performance is monitored in a timely
manner, that corrective action is taken and that risk is
identified as early as practically possible, and they have
reviewed the effectiveness of internal financial control.
The Board, subject
to delegated authority, reviews
capital investment, property sales and purchases, additional
borrowing facilities, guarantees and insurance arrangements.
Section 172 (1) Statement
Section 172 of the Companies Act 2006 requires a director of a company to act in the way he or she considers, in good faith,
would be most likely to promote the success of the company for the benefit of its members as a whole. This requires a director
to have regard, among other matters, to: the likely consequences of any decision in the long term; the interests of the Company’s
employees; the need to foster the Company’s business relationships with suppliers, clients, joint arrangement partners and others;
the impact of the Company’s operations on the community and the environment; the desirability of the Company maintaining a
reputation for high standards of business conduct; and the need to act fairly with members of the Company.
12
Sunrise Resources plc Annual Report & Accounts 2020
The directors give careful consideration to these factors in discharging their duties. The stakeholders we consider are our
shareholders, employees, suppliers (including consultants and contractors), our joint arrangement partners, the regulatory bodies
that we engage with and those that live in the societies and geographical areas in which we operate. The directors recognise that
building strong, responsible and sustainable relationships with our stakeholders will help us to deliver our strategy in line with our
long-term objectives.
Having regard to:
The likely consequences of any decision in the long-term:
The Company’s Aims and Business Model are set out at the head of this Strategic Report on page 4 and in the Chairman’s
Statement on page 3. The Company’s mineral exploration and development business is, by its very nature, long-term and so the
decisions of the Board always consider the likely long-term consequences and take into consideration, for example, trends in
metal and minerals supply and demand, the long-term political stability of the countries in which the Company operate and the
potential impact of its decisions on its stakeholders and the environment. As the Company aims to transition the CS Project into
production other projects also become important to the long-term future of the Company and this has framed the Board’s decision
to allocate a portion of capital to testing of some of the Company’s precious metal projects in 2020. The Board’s approach to
general strategy and long-term risk management are set out in the Corporate Governance Statement (Principle 1) on page 19
and the section on Risks and Uncertainties starting on page 10.
The interests of the Company’s employees:
The Company has no employees. It relies on the employees of Tertiary Minerals plc through a services agreement with Tertiary
Minerals plc, but all of these employees have daily access to the Executive Chairman and their views are considered in the Board’s
decision making. Further details on the Board’s employment policies, health and safety policy and employee engagement are
given in the Corporate Governance Statement (Principle 8) on page 20.
The need to foster the Company’s business relationships with its stakeholders:
The sustainability of the Company’s business long-term is dependent on maintaining strong relationships with its stakeholders.
The factors governing the Company’s decision making and the details of stakeholder engagement are set out in the Corporate
Governance Statement (Principles 2, 3, 8 and 10) starting on page 19.
Having regard to the impact of the Company’s operations on the community and the environment:
The Company requires a “social licence” to operate sustainably in the mining industry and so the Board makes careful
consideration of any potential impacts of its activities on the local community and the environment. The Board strives to maintain
good relations with the local communities in which it operates and with local businesses. For example, in 2020 the Board has
carried our extensive work and consultation with regulators and the local community representatives to evaluate the benefits and
impacts of its CS Project as part of the mine permitting process. Further discussion of these activities and Board considerations
can be found in the Operating Review starting on page 6 and in the Corporate Governance Statement (Principle 3) on page 19.
The desirability of the Company maintaining a reputation for high standards of business contact:
The Board recognises that its reputation is key to its long-term success and depends on maintaining high standards of corporate
governance. It has adopted the QCA Code of Corporate Governance and sets out in detail how it has complied with the 10 key
principles of the QCA Code in the Corporate Governance Statement starting on page 19. This contains details of various Company
policies designed to maintain high standards of business conduct such as the Share Dealing Policy, Health and Safety Policy and
Anti-Bribery Policy and Code of Conduct.
The need to act fairly between Members of the Company:
The Board ensures that it takes decisions in the interests of the members (shareholders) as a whole and aims to keep shareholders
fully informed of significant developments, ensuring that all shareholders receive Company news at the same time. The Executive
Chairman devotes time to answering genuine shareholder queries, no individual or group of shareholders is given preferential
treatment. Further information is provided in the Corporate Governance Statement (Principles 2 and 10).
This Strategic Report was approved by the Board of Directors on 11 December 2020 and signed on its behalf.
Patrick Cheetham
Executive Chairman
Sunrise Resources plc Annual Report & Accounts 2020
13
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 directors to prepare financial statements
for a company 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
the financial statements in accordance with the AIM Rules of
the London Stock Exchange for companies trading securities
on the AIM market.
In preparing these financial statements, the directors are
required to:
●
●
●
●
select suitable accounting policies and then apply them
consistently;
make judgements and accounting estimates that are
reasonable and prudent;
state whether they have been prepared in accordance
with IFRSs as adopted by the European Union, subject to
any material departures disclosed and explained in the
financial statements; and
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company and the Group will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to
ensure
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.
14
Sunrise Resources plc Annual Report & Accounts 2020
Directors’ Report
The directors are pleased to submit their Annual Report
the year ended
and audited
30 September 2020.
financial statements
for
The Strategic Report starting on page 4 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
financial year end.
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 of
£1,089,417 (2019: £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,
there is no assurance that it will obtain adequate finance in the
future. This represents a material uncertainty related to events
or conditions which may cast significant doubt on the Group
and Company’s ability to continue as going concerns and,
therefore, that they may be unable to realise their assets and
discharge their liabilities in the normal course of business.
However, the directors have a reasonable expectation that they
will secure additional funding when required to continue
meeting corporate overheads and exploration costs for the
foreseeable future and therefore believe that the going
concern basis is appropriate for the preparation of the
financial statements.
Dividend
The directors do not recommend the payment of any 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 19 to
the financial statements.
Details of risks and uncertainties that affect the Group’s
business are given in the Strategic Report on pages 10 to 12.
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
14
14
14
14
1
1
1
1
2
2
2
2
2
3
3
3
The directors’ shareholdings are shown in Note 16 to the financial statements.
Post Reporting Period Event
On 30 October 2020, 6,772,459 0.1p ordinary shares were issued at 0.24p per share to three directors, for a total consideration of
£16,254, in satisfaction of their net fees, for the six-month period ending 30 October 2020.
Sunrise Resources plc Annual Report & Accounts 2020
15
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 11 December 2020
Interactive Investor Services Nominees Limited SMKTISAS
Euroclear Nominees Limited EOC01
Hargreaves Lansdown (Nominees) Limited 15942
Hargreaves Lansdown (Nominees) Limited VRA
Interactive Investor Services Nominees Limited SMKTNOMS
Share Nominees Ltd
Pershing Nominees Limited BICLT
Barclays Direct Investing Nominees Limited CLIENT1
HSDL Nominees Limited MAXI
Wealth Nominees Limited NOMINEE
Hargreaves Lansdown (Nominees) Limited HLNOM
Hargreaves Lansdown (Nominees) Limited VRADDOWN
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
forthcoming
Annual General Meeting.
the
Charitable and Political Donations
During
the year,
political donations.
the Group made no charitable or
Annual General Meeting
Notice of the Company’s Annual General Meeting convened for
Thursday 28 January 2021 at 12:00 noon is set out on page 50
of this report. Explanatory Notes giving further information
about the proposed resolutions are set out on page 51.
Number % of share
capital
of shares
322,427,354
313,937,999
249,399,108
218,833,000
209,067,345
209,017,288
208,779,545
188,003,237
165,109,620
135,171,749
115,203,338
110,943,424
8.75
8.52
6.77
5.94
5.67
5.67
5.67
5.10
4.48
3.67
3.13
3.01
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 11 December 2020 and signed on
its behalf.
Patrick Cheetham
Executive Chairman
16
Sunrise Resources plc Annual Report & Accounts 2020
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:
●
●
●
Founding director
Mining geologist with 39 years’ experience in mineral
exploration
34 years in public company management
●
●
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 both
Central Asia Metals plc and Tigers Realm Coal Limited.
Roger Murphy
Non-Executive Director
Rod Venables
Company Secretary
Key Strengths:
Key Strengths:
●
●
●
Career focus in capital raising for mining and oil & gas
companies
Former MD, Investment Banking, of Dundee Securities
Europe Ltd
Geologist
●
●
●
Qualified company/commercial solicitor
Director and Head of Company Secretarial Services at
City Group PLC
Experienced in both Corporate Finance and Corporate
Broking
Appointed: May 2016
Appointed: July 2019
Committee Memberships: Chairman of the Remuneration
Committee and Member of Audit and Nomination Committees
External Commitments: Company Secretary for Tertiary
Minerals plc and other clients of City Group PLC
External Commitments: Partner and non-executive Director
of Madini Minerals, Executive Director of Zamare Minerals Ltd
and Executive Director of West Wales Gold Limited.
Sunrise Resources plc Annual Report & Accounts 2020
17
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 to be the most suitable code
for the Company. Accordingly, the Company has adopted the
principles set out in the QCA Corporate Governance Code (the
“QCA Code”) and applies these principles wherever possible,
and where appropriate given its size and available resources.
The Company’s Corporate Governance Statement was
reviewed and amended by the Board on 30 October 2020. The
Company has set out on its website and in its Corporate
Governance Statement, set out on pages 19 to 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 Company’s 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 long-term
value for shareholders.
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.
the benefits
The Board recognises
that social media
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 Statements of Financial Position in respect of trade
payables at the end of the financial year represents 5 days of
average daily purchases (2019: 20 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
18
Sunrise Resources plc Annual Report & Accounts 2020
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 4. Details of the challenges
to the execution of the Company’s strategy and business model
and how those will be addressed can be found in Risks and
Uncertainties in the Strategic Report set out on pages 10 to 12.
Principle Two: Seek to understand and meet shareholder
needs and expectations.
The Board is committed to maintaining good communication
with its shareholders and investors. The Chairman and
members of the Board from time to time meet with shareholders
and investors directly or through arrangements with the
Company’s brokers
investment
requirements and expectations and to address their enquiries
and concerns.
to understand
their
All shareholders are normally 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
info@sunriseresourcesplc.com with any
via email at
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, suppliers and other 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 Risks and Uncertainties in the
Strategic Report set out on pages 10 to 12, 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 regular and timely reports
for consideration on all significant strategic, operational and
financial matters. Relevant information for consideration by the
Board is circulated in advance of its meetings.
The Board met fourteen times during the year to consider such
matters. Further details are provided in the Directors’ Report on
page 15. The Board is supported by the Audit, Remuneration
and Nomination Committees, details of which, together with
attendance records, can also be found on page 15.
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. Patrick Cheetham is
currently the Chairman and Chief Executive. Patrick 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 Patrick Cheetham dedicates
over 66% 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.
Sunrise Resources plc Annual Report & Accounts 2020
19
Corporate Governance continued
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 15.
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 of its directors are
relevant to the Company’s business and are appropriate for the
current size and stage of development of the Company and
the Board considers that it has the skills and experience
necessary to execute the Company’s strategy and business
plan and discharge its duties effectively.
The directors maintain their skills through membership of
various professional bodies, attendance at mining conferences
and through their various external appointments. Details of the
current Board of Directors’ biographies are set out on page 17.
All Directors have access to the advice and services of the
Company Secretary who is responsible for ensuring that Board
procedures and applicable rules and regulations are observed.
All directors are able to take independent professional advice, if
required,
the
Company’s expense.
their duties and at
relation
to
in
Principle Seven: Evaluate board performance based on
clear and relevant objectives, seeking continuous
improvement.
The ultimate measure of the effectiveness of the Board is the
Company’s progress against the long-term strategy and aims
of the business. This progress is reviewed in Board meetings
held at least four times a year. The Executive Chairman’s
performance is reviewed once a year by the rest of the Board.
The Nomination Committee, currently consisting of the
Executive Chairman and the two non-executive directors, meets
once a year to lead the formal process of rigorous and
transparent procedures for Board appointments. During this
meeting the Nomination Committee reviews the structure, size
and composition of
the Board; succession planning;
leadership; key strategic and commercial issues; conflicts of
interest; time required from non-executive directors to execute
their duties effectively; overall effectiveness of the Board and
its own terms of reference.
No new Board appointments were considered necessary
during the year.
Under the Articles of Association, new directors appointed to
the Board must stand for election at the first Annual General
Meeting of the Company following their appointment. Under the
Articles of Association, existing directors retire by rotation and
may offer themselves for re-election.
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 is currently
managed via a service agreement with Tertiary Minerals plc
(“Tertiary”). It has no employees but encourages Tertiary’s
employees to understand all aspects of the Group’s business
and Tertiary seeks to remunerate its employees fairly, being
flexible where practicable. In future, the Group will give full and
fair consideration to applications for employment received
regardless of age, gender, colour, ethnicity, disability, nationality,
religious beliefs, transgender status or sexual orientation. The
Board takes account of Tertiary’s employees’ interests when
making decisions, and suggestions from those employees
aimed at improving the Group’s performance are welcomed.
The corporate culture of the Company is promoted to Tertiary’s
employees, suppliers and contractors and is underpinned by
the implementation and regular review, enforcement and
documentation of various policies: Health and Safety Policy;
Environmental Policy; Share Dealing Policy; Anti-Corruption
Policy & Code of Conduct; Privacy and Cookies Policy and
Social Media Policy. These procedures enable the Board to
determine that ethical values are recognised and respected.
The Board recognises that its principal activity, mineral
exploration and development, has potential to impact on local
environments and consequently has adopted an Environmental
Policy to ensure that, wherever they take place, 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.
Principle Nine: Maintain governance structures and
processes that are fit for purpose and support good
decision-making by the Board.
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 Board’s decision-making, and that the 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
20
Sunrise Resources plc Annual Report & Accounts 2020
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, Remuneration and Nomination
Committees with formally delegated duties and responsibilities.
David Swan currently chairs the Audit Committee, Roger
Murphy chairs the Remuneration Committee and Patrick
Cheetham chairs the Nomination Committee.
This Corporate Governance statement will be reviewed at least
annually to ensure that the Company’s corporate governance
framework evolves in line with the Company’s strategy and
business plan.
Principle Ten: Communicate how the Company is governed
and
is performing by maintaining a dialogue with
shareholders and other relevant stakeholders.
The Company regularly communicates with, and encourages
feedback from, its shareholders who are its key stakeholder
group. The Company’s website is regularly updated and users,
including all stakeholders, can register to be alerted via email
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 financial reports for at least the past five years can
be found here: https://www.sunriseresourcesplc.com/financial-
reports and contains past Notices of Annual General Meetings.
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, comprised
of independent 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.
David 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.
(b)
(c)
ensure that the Board of Directors has adequate
knowledge of issues discussed with external auditors.
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
Committee may consult
it
considers necessary to perform it duties.
independent experts where
The Audit Committee reviews the financial controls of the
Company on a regular basis and is satisfied that the Group’s
financial controls and reporting procedures are robust and
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, on
18 February and 29 May 2020. 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 34. 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 pages 34 and 35.
2. Going Concern
The Committee also considered the Going Concern basis on
which the accounts have been prepared (see Note 1(b) on
page 32). The directors are satisfied that the Going Concern basis
is appropriate for the preparation of the financial statements.
David Swan
Chair – Audit Committee
Sunrise Resources plc Annual Report & Accounts 2020
21
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. Patrick Cheetham is Chair of the
Nomination Committee.
The primary objective of the Committee is to review the
performance of the executive directors and review the basis of
their service agreements and make recommendations to the
Board regarding the scale and structure of their remuneration.
However, the Company does not currently remunerate any of
the directors other than in their capacity as directors. Whilst the
Chairman of the Board, Patrick Cheetham, does have an
executive role, his technical and managerial services are
provided under a general service agreement with Tertiary
Minerals plc and his remuneration is fixed by Tertiary Minerals
plc. 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 three times during the period
under review. It met on 27 February 2020 and 1 May 2020 to
consider the Executive Chairman’s Incentive Plan and
recommended to the Board an issue of warrants to the
Executive Chairman. These warrants were issued on 6 August
2020 (see Note 15). The Remuneration Committee also met 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 24 July 2020.
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
22
Sunrise Resources plc Annual Report & Accounts 2020
Independent Auditor’s Report
to the Members of Sunrise Resources plc for the year ended 30 September 2020
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 2020, which comprise:
●
●
●
●
●
income statement and statement of
the Group
comprehensive income for the year ended 30 September
2020;
the Group and Parent Company statements of financial
position as at 30 September 2020;
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:
●
●
●
●
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 2020 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
£67,000, 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.
Sunrise Resources plc Annual Report & Accounts 2020
23
Independent Auditor’s Report continued
to the Members of Sunrise Resources plc for the year ended 30 September 2020
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:
●
●
●
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 Project, Bay State and County Line projects
within SR Minerals Inc. and Bakers project held in Sunrise
Minerals Australia Pty Ltd.
Together, the CS Project, 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.
24
Sunrise Resources plc Annual Report & Accounts 2020
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.
●
●
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:
●
●
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 2020
25
Independent Auditor’s Report continued
to the Members of Sunrise Resources plc for the year ended 30 September 2020
●
●
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 14, 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.
Ian Weekes
(Senior Statutory Auditor)
For and on behalf of Crowe U.K. LLP
Statutory Auditor
Manchester, United Kingdom
11 December 2020
26
Sunrise Resources plc Annual Report & Accounts 2020
Consolidated Income Statement
for the year ended 30 September 2020
Pre-licence exploration costs
Administration costs
Operating loss
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
3
7
6
2020
£
4,183
2019
£
4,711
298,980
297,261
(303,163)
(301,972)
261
234
(302,902)
(301,738)
–
–
(302,902)
(301,738)
(0.009)
(0.01)
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2020
Loss for the year
Items that could be reclassified subsequently to the income statement:
Foreign exchange translation differences on foreign currency net investments in subsidiaries
Items that will not be reclassified to the income statement:
Changes in the fair value of equity investments
2020
£
2019
£
(302,902)
(301,738)
(75,659)
(75,659)
93,692
93,692
(1,660)
44,625
(77,319)
138,317
Total comprehensive loss for the year attributable to equity holders of the parent
(380,221)
(163,421)
Sunrise Resources plc Annual Report & Accounts 2020
27
Consolidated and Company Statements of Financial Position
at 30 September 2020
Company Registration Number: 05363956
Non-current assets
Intangible assets
Right of use assets
Investment in subsidiaries
Other investments
Current assets
Receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Lease liabilities
Net current assets
Non current liabilities
Lease liabilities
Net assets
Equity
Called up share capital
Share premium account
Share warrant reserve
Fair value reserve
Foreign currency reserve
Accumulated losses
Notes
9
17
8
8
11
12
13
17
Group
2020
£
1,867,218
18,431
Company
2020
Group
2019
Company
2019
££
–
–
£
1,753,050
–
–
–
–
1,976,381
–
2,269,548
19,765
–
22,078
–
1,905,414
2,269,548
1,775,128
1,976,361
51,980
26,670
1,089,417
1,065,480
1,141,397
1,092,150
53,740
27,069
80,809
21,288
20,941
42,229
(90,677)
(80,786)
(72,988)
(47,804)
(2,364)
–
–
–
1,048,356
1,011,364
7,821
(5,575)
17
(7,336)
–
–
–
2,946,434
3,280,912
1,782,949
1,970,806
14
3,677,997
3,677,997
2,749,760
2,749,760
5,655,781
5,655,781
5,059,244
5,059,244
14
14
33,893
42,753
49,439
33,893
36,987
1,319
24,476
44,413
125,098
24,476
36,987
1,321
(6,513,429)
(6,125,065)
(6,220,042)
(5,900,982)
Equity attributable to owners of the parent
2,946,434
3,280,912
1,782,949
1,970,806
The Company reported a loss for the year ended 30 September 2020 of £233,598 (2019: £241,148).
These financial statements were approved and authorised for issue by the Board on 11 December 2020 and were signed on its
behalf.
P L Cheetham
Executive Chairman
D J Swan
Director
28
Sunrise Resources plc Annual Report & Accounts 2020
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 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)
–
–
–
31,406
–
–
93,692
93,692
–
–
–
(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
Loss for the year
Change in fair value
Exchange differences
Total comprehensive loss for the year
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,660)
–
–
–
(75,659)
(302,902)
–
–
(302,902)
(1,660)
(75,659)
(1,660)
(75,659)
(302,902)
(380,221)
Share issue
Share-based payments expense
Transfer of expired warrants
928,237
–
–
596,537
–
–
–
18,932
(9,515)
–
–
–
–
–
–
–
–
9,515
1,524,774
18,932
–
At 30 September 2020
3,677,997
5,655,781
33,893
42,753
49,439
(6,513,429)
2,946,434
Sunrise Resources plc Annual Report & Accounts 2020
29
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 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
1,321
(5,900,982)
1,970,806
Loss for the year
Change in fair value
Exchange differences
Total comprehensive loss for the year
–
–
–
–
–
–
–
–
–
–
–
–
Share issue
Share-based payments expense
Transfer of expired warrants
928,237
–
–
596,537
–
–
–
18,932
(9,515)
–
–
–
–
–
–
–
–
–
(2)
(2)
–
–
–
(233,598)
–
–
(233,598)
–
(2)
(233,598)
(233,600)
–
–
9,515
1,524,774
18,932
–
At 30 September 2020
3,677,997
5,655,781
33,893
36,987
1,319
(6,125,065)
3,280,912
30
Sunrise Resources plc Annual Report & Accounts 2020
Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2020
Operating activity
Total (loss)/profit after tax excluding interest received
(303,163)
(270,642)
(301,972)
(272,309)
Group
2020
£
Company
2020
Group
2019
Company
2019
££
£
Notes
Depreciation/interest charge
Share-based payment charge
Shares issued in lieu of net wages
Shares issued in settlement of invoices
(Increase)/decrease in receivables
Decrease in trade and other payables
Net cash outflow from operating activity
Investing activity
Interest received
Disposal of other investments
Acquisition of other investments
Lease payments
Development expenditures
Loans to subsidiaries
17
11
13
8
8
17
9
3,700
18,932
30,724
17,550
1,761
17,690
–
18,932
30,724
17,550
(5,382)
32,981
–
2,149
26,068
–
–
2,149
26,068
–
22,479
17,214
(33,358)
(46,500)
(212,806)
(175,837)
(284,634)
(273,378)
261
37,173
–
–
(12,431)
(188,587)
–
–
–
–
234
48,649
(5,792)
–
(313,258)
31,075
48,649
–
–
–
–
(293,167)
–
(349,875)
Net cash outflow from investing activity
(200,757)
(255,994)
(270,167)
(270,151)
Financing activity
Issue of share capital (net of expenses)
1,476,500
1,476,500
329,500
329,500
Net cash inflow from financing activity
1,476,500
1,476,500
329,500
329,500
Net increase/(decrease) in cash and cash equivalents
1,062,937
1,044,669
(225,301)
(214,029)
Cash and cash equivalents at start of year
Exchange differences
27,069
(589)
Cash and cash equivalents at 30 September
12
1,089,417
1,065,480
20,941
235,722
234,972
(130)
16,648
27,069
(2)
20,941
Sunrise Resources plc Annual Report & Accounts 2020
31
Notes to the Financial Statements
for the year ended 30 September 2020
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.
(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 (£1,089,417), 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 £233,598 (2019: £241,148). There were no provisions for impairments in 2020.
32
Sunrise Resources plc Annual Report & Accounts 2020
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 2020 and October 2020.
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) Leases
The Group adopted IFRS 16 and this requires the recognition of operating lease commitments on the Group’s statement of financial
position as assets and the recognition of a corresponding liability. Lease costs are recognised in the income statement in the
form of depreciation of the right of use asset over the lease term and interest charges representing the unwind of the discount
on the lease liability. The adoption of IFRS 16 did 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).
Short term leases, which meet the requirements to not be accounted for by recognising a right of use asset and a lease liability,
having a duration of 12 months or less and without reasonable certainty about their renewal, are charged to the income statement
on straight line basis.
(h) 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.
Sunrise Resources plc Annual Report & Accounts 2020
33
Notes to the Financial Statements continued
for the year ended 30 September 2020
Foreign currencies
(i)
The Group’s consolidated financial statements are presented in Pounds Sterling (£), being the functional currency of the Company,
and the currency of the primary economic environment in which the Company operates. Monetary assets and liabilities
denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date.
For consolidation purposes, the net investment in foreign operations and the assets and liabilities of overseas subsidiaries,
associated undertakings and joint arrangements, that have a functional currency different from the Group’s presentation currency,
are translated at the closing exchange rates. Income statements of overseas subsidiaries, that have a functional currency different
from the Group’s presentation currency, are translated at exchange rates at the date of transaction. Exchange differences arising
on opening reserves are taken to the foreign currency reserve in equity.
Share warrants and share-based payments
(j)
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
(k)
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 an 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.
34
Sunrise Resources plc Annual Report & Accounts 2020
(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 £1,067,000. In the judgement of the directors, this
is the focus because there is perceived to be good production potential. Following the successful grant of various mining and
production permits, the focus is on the mine start up and production.
Further exploration at the Bay State Project (carrying value £411,000) is budgeted and 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 2020 on the County Line Project (carrying value £139,000), in the judgement 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 £70,000, further exploration has been budgeted and 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 further exploration and/or drilling is budgeted
therefore 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
(l)
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.
(m) Standards, amendments and interpretations not yet effective
A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and, in
some cases, have not yet been adopted by the EU.
(a) New standards, interpretations and amendments effective from 1 January 2019
The following new standards were effective and did not impact the Group:
●
●
IFRS 16 Leases (IFRS 16)
IFRIC 23 Uncertainty over Income Tax Treatments (IFRIC 23)
Sunrise Resources plc Annual Report & Accounts 2020
35
Notes to the Financial Statements continued
for the year ended 30 September 2020
(b) New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are
effective in future accounting periods. The following amendments are effective for the periods beginning on or after 1 January
2020:
●
●
IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment – Definition of Material)
IFRS 3 Business Combinations (Amendment – Definition of Business)
Revised Conceptual Framework for Financial Reporting
In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified
as current or non-current based upon whether an entity has a right at the end of the reporting period to defer settlement of the
liability. The amendments are effective for annual reporting periods beginning on or after 1 January 2022.
Amendments as part of the 2015-2018 Annual Improvements Cycle were as follows;
●
●
●
●
●
IFRS 3/ IFRS 11: Measuring interests in Joint operations.
IAS 12: Accounting for income tax consequences of dividend payments.
IAS 23: Treatment of borrowings originally made to develop a specific asset.
IAS 1:125 Disclose significant key assumptions concerning the future, and other key sources of estimation uncertainty.
IAS 1:122 Disclose significant judgements management has made in applying the entity's accounting policies.
Sunrise Resources Plc is currently assessing the impact of these new accounting standards and amendments. The Group does
not believe that the amendments to IAS 1 will have a significant impact on the classification of its liabilities.
36
Sunrise Resources plc Annual Report & Accounts 2020
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.
2020
Consolidated Income Statement
Pre-licence exploration costs
Share-based payments
Other expenses
Operating loss
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
Right of use assets
Other investments
Current assets
Receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Lease liabilities
Net current assets
Non-current liabilities
Lease liabilities
Net assets
Other data
Deferred exploration additions
Exchange rate adjustments to deferred exploration costs
Exploration
projects
£
Head
office
£
4,183
–
–
(4,183)
–
(4,183)
–
(4,183)
–
18,932
280,048
(298,980)
261
(298,719)
–
(298,719)
Total
£
4,183
18,932
280,048
(303,163)
261
(302,902)
–
(302,902)
70,451
139,396
28,158
410,965
62,160
25,378
1,066,685
20,087
29,768
14,170
1,867,218
18,431
–
1,885,649
–
–
–
–
–
–
–
–
–
–
–
–
19,765
19,765
70,451
139,396
28,158
410,965
62,160
25,378
1,066,685
20,087
29,768
14,170
1,867,218
18,431
19,765
1,905,414
22,909
–
22,909
29,071
1,089,417
1,118,488
51,980
1,089,417
1,141,397
(20,541)
(2,364)
4
(70,136)
–
1,048,352
(90,677)
(2,364)
1,048,356
(7,336)
1,878,317
–
1,068,117
(7,336)
2,946,434
188,587
(74,419)
–
–
188,587
(74,419)
Sunrise Resources plc Annual Report & Accounts 2020
37
Notes to the Financial Statements continued
for the year ended 30 September 2020
2019
Consolidated Income Statement
Pre-licence exploration costs
Share-based payments
Other expenses
Operating loss
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)
(48,710)
(72,988)
4,234
1,757,284
3,587
25,665
7,821
1,782,949
313,258
76,432
–
–
313,258
76,432
38
Sunrise Resources plc Annual Report & Accounts 2020
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
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)
2020
£
2019
£
7,619
7,072
1,020
740
–
2020
£
16,000
16,000
16,000
48,000
1,000
700
2,700
2019
£
16,000
16,000
16,000
48,000
In the year ended 30 September 2020 the cost of Employer’s National Insurance Contributions for directors was £50.34 (2019: £Nil).
In the year ended 30 September 2020 the value of non-cash share-based payments in respect of share warrants issued to the
directors was £3,600 (2019: £630).
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 £80,121, including Employers National Insurance Contributions, was charged to the Company for his services
during the year (2019: £76,773). 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 £51,995 (2019: £48,630).
5.
Staff costs
Staff costs for the Group and the Company, including directors, were as follows:
Wages and salaries
Social security costs
Pension
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
2020
£
2019
£
48,000
51,197
50
345
3,733
52,128
–
–
1,003
52,200
2020
Number
2019
Number
3
0
3
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).
Sunrise Resources plc Annual Report & Accounts 2020
39
Notes to the Financial Statements continued
for the year ended 30 September 2020
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 £729 (2019: £1,145).
The previous 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)
2020
2019
(302,902)
(301,738)
3,237,733,688 2,661,216,018
(0.009)
(0.011)
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 (2019: £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% (2019: 19%). The differences are explained below.
Tax reconciliation
Loss before income tax
Tax at 19% (2019: 19%)
Pre-trading expenditure no longer deductible for tax purposes
Administration expenditure not deductible for tax purposes
Tax effect at 19% (2019: 19%)
Tax credit for the period
Tax recognised on loss
Total losses carried forward for tax purposes
2020
£
2019
£
(302,902)
(301,738)
(57,551)
(57,330)
44,764
19,372
12,186
20,473
2,149
4,298
(45,365)
(53,032)
–
–
(3,509,429)
(3,294,662)
Factors that may affect future tax charges
The Group has total losses carried forward of £3,509,429 (2019: £3,294,662). This amount would be charged to tax, thereby
reducing tax liability, if sufficient profits were made in the future capped to £5m per annum allowance. The deferred tax asset has
not been recognised as the future recovery is uncertain given the exploration status of the Group. The carried forward tax loss is
adjusted each year for amounts that can no longer be carried forward.
The difference of £23,999 between 2019 and 2020 total losses carried forward balance is chargeable gain and additional
expenditure non-deductible for tax purposes relating to 2019.
40
Sunrise Resources plc Annual Report & Accounts 2020
8.
Investments
Subsidiary undertakings
Company
Country of
incorporation
/registration
Date of
incorporation
/registration
Type and percentage
of shares held at
30 September 2020
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
2020
£
Company
2019
£
61
61
759,530
740,584
(546,541)
(546,541)
1
1
1,937,253
1,676,913
1
1
119,243
105,362
2,269,548
1,976,381
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 £2,269,548 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
VR Resources Ltd
Country of
incorporation
/registration
Type and percentage
of shares held at
30 September 2020
Principal activity
Canada
0.14% of ordinary shares
Mineral exploration
Sunrise Resources plc Annual Report & Accounts 2020
41
Notes to the Financial Statements continued
for the year ended 30 September 2020
Investment designated at fair value through OCI
Value at start of year
Additions
Disposals
Movement in valuation
At 30 September
Group
2020
£
22,078
–
–
(2,313)
19,765
Company
2020
£
–
–
–
–
–
Group
2019
£
19,697
5,792
Company
2019
£
14,344
–
(48,649)
(48,649)
45,238
22,078
34,305
–
The fair value of each investment is equal to the market value of its shares at 30 September 2020, 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
Foreign currency exchange adjustments
At 30 September
Carrying amounts
At 30 September
At start of year
Group
2020
£
Company
2020
£
Group
2019
£
Company
2019
£
4,377,086
2,203,594
4,063,828
2,203,594
188,587
–
313,258
–
4,565,673
2,203,594
4,377,086
2,203,594
(2,624,036)
(2,203,594)
(2,700,468)
(2,203,594)
(74,419)
–
76,432
–
(2,698,455)
(2,203,594)
(2,624,036)
(2,203,594)
1,867,218
1,753,050
–
–
1,753,050
1,363,360
–
–
During the year the directors carried out an impairment review with reference to IFRS 6.20 (a) which resulted in no impairment
being required. 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.
42
Sunrise Resources plc Annual Report & Accounts 2020
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
2020
£
18,350
–
33,630
51,980
Company
2020
£
Group
2019
£
Company
2019
£
16,272
15,367
11,712
–
10,398
26,670
–
38,373
53,740
–
9,576
21,288
Group
2020
£
Company
2020
£
Group
2019
£
Company
2019
£
1,089,417
1,065,480
27,069
20,941
Group
2020
£
43,717
3,753
19,404
16,254
7,549
90,677
Company
2020
£
43,717
2,647
10,619
16,254
7,549
80,786
Group
2019
£
10,495
22,980
15,513
16,734
7,266
72,988
Company
2019
£
10,495
2,939
10,370
16,734
7,266
47,804
2020
Number
2020
£
2019
Number
2019
£
2,749,760,308
2,749,760 2,436,910,064
2,436,910
928,236,562
928,237
312,850,244
312,850
3,677,996,870
3,677,997 2,749,760,308
2,749,760
During the year to 30 September 2020 the following share issues took place:
An issue of 350,000,000 0.1p ordinary shares at 0.1p per share, by way of placing, for a total consideration of £336,500 net of
expenses including P Cheetham’s subscription to 1,000,000,000 0.1p ordinary shares (4 November 2019).
An issue of 14,551,565 0.1p ordinary shares at 0.115p per share to three directors, for a total consideration of £16,734, in
satisfaction of directors’ fees (22 November 2019).
An issue of 181,818,182 0.1p ordinary shares at 0.11p per share, by way of placing, for a total consideration of £190,000 net of
expenses (14 February 2020).
An issue of 17,550,000 0.1p ordinary shares at 0.1p per share, as a settlement of broker fees, for a total of £17,550 (15 April 2020).
Sunrise Resources plc Annual Report & Accounts 2020
43
Notes to the Financial Statements continued
for the year ended 30 September 2020
An issue of 7,173,959 0.1p ordinary shares at 0.195p per share to three directors, for a total consideration of £13,989, in
satisfaction of directors’ fees (6 August 2020).
An issue of 357,142,856 0.1p ordinary shares at 0.28p per share, by way of placing and broker option, for a total consideration
of £950,000 net of expenses (24 August 2020).
During the year to 30 September 2019 a total of 312,850,244 0.1p ordinary shares were issued, at an average price of 0.12p per
share, for a total consideration of £355,568 net of expenses.
Nature and purpose of reserves
Foreign currency reserve
Exchange differences relating to the translation of the net assets of the Group’s foreign operations, which relate to subsidiaries
only, from their functional currency into the Parent’s functional currency, being Sterling, are recognised directly in the foreign
currency reserve.
Share warrant reserve
The share warrant reserve is used to recognise the value of equity-settled share warrants provided to employees, including key
management personnel, as part of their remuneration, and to third parties in connection with fundraising. Refer to Note 15 for
further details.
15. Share warrants granted
Warrants not exercised or expired at 30 September 2020
Issue date
Exercise price
18/02/16
01/02/17
31/01/18
21/02/19
21/02/19
01/11/19
19/02/20
06/08/20
24/08/20
Total
0.160p
0.135p
0.160p
0.160p
0.110p
0.100p
0.110p
0.195p
0.280p
Number
3,250,000
3,250,000
3,250,000
4,000,000
4,750,000
12,500,000
9,090,909
35,000,000
17,857,143
92,948,052
Exercisable
Expiry dates
Any time before expiry
Any time before expiry
Any time before expiry
Any time before expiry
Any time before expiry
Any time before expiry
Any time before expiry
*Any time from 05/08/21
Any time before expiry
18/02/21
01/02/22
31/01/23
21/02/24
21/02/24
01/11/20
19/02/21
05/08/25
24/08/21
*Of these 15,000,000 warrants cannot be exercised before the Company makes the first sustainable sales of perlite/pozzolan
product from the CS Project.
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.
44
Sunrise Resources plc Annual Report & Accounts 2020
Share warrant movements:
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
2020
––––––––––––––––––––––
Weighted
average
exercise
price
(Pence)
Number of
share
warrants
2019
––––––––––––––––––––––
Weighted
average
exercise
price
(Pence)
Number of
share
warrants
27,875,000
74,448,052
0.18 274,875,000
0.19
8,750,000
–
–
–
–
–
–
(9,375,000)
0.28 (255,750,000)
92,948,052
57,948,052
0.18
27,875,000
0.17
19,125,000
0.245
0.13
–
–
0.25
0.18
0.21
The share warrants outstanding at 30 September 2020 had a weighted average exercise price of 0.18p (2019: 0.18p), a weighted
average fair value of 0.056p (2019: 0.078p) and a weighted average remaining contractual life of 2.51 years.
In the year ended 30 September 2020 warrants were granted as follows:
On 1 November 2019: 12,500,000 warrants at an exercise price of 0.1p, as part of fundraising, to Peterhouse Capital Limited.
On 19 February 2020: 9,090,909 warrants at an exercise price of 0.11p, as part of fundraising, to Peterhouse Capital Limited.
On 6 August 2020:
●
●
●
30,000,000 warrants at an exercise price of 0.195p to the Executive Chairman, Mr. Patrick Cheetham as part of a
management incentive scheme.
3,000,000 warrants at an exercise price of 0.195p to employees of Tertiary Minerals plc as a management incentive.
2,000,000 warrants at an exercise price of 0.195p to non-executive Director Mr Roger Murphy as part of his remuneration.
On 24 August 2020: 17,857,143 warrants at an exercise price of 0.28p, as part of fundraising, to Peterhouse Capital Limited.
The warrants issued to Peterhouse Capital Limited had an aggregate estimated fair value of £14,469.
The warrants issued to Mr. Cheetham, Mr. Murphy and employees of Tertiary Minerals plc had an aggregate estimated fair value
of £23,153. Note 5 explains the value recognised in the reporting period in respect of Tertiary Minerals plc.
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.
In the year to 30 September 2020 the Company recognised expenses of £18,932 (2019: £2,149) related to issuing of share
warrants in connection with equity-settled share-based payment transactions. The fair value is charged to administrative expenses
and where there is a vesting period it is charged on a straight-line basis over the vesting period, together with a corresponding
increase in equity, based on the management’s estimate of shares that will eventually vest.
The fair values of warrants are estimated using a Black-Scholes-Merton Pricing Model and 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.
Sunrise Resources plc Annual Report & Accounts 2020
45
Notes to the Financial Statements continued
for the year ended 30 September 2020
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
2020
0.20p
0.19p
70%
2.4 years
0.12%
0%
2019
0.11p
0.13p
62.5%
4 years
0.83%
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.
In the year ended 30 September 2020 no share warrants were exercised.
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 2020
Warrant
exercise
price
Share
warrants
number
Warrant
expiry
date
At 30 September 2019
Share
warrants
number
Shares
number
Shares
number
231,047,657
30,000,000
29,281,338
2,000,000
48,949,823
2,000,000
2,000,000
0.195p
0.160p
0.160p
0.195p
05/08/25 125,593,683
3,000,000
21/02/24
23,257,510
3,500,000
21/02/24
38,702,101
2,000,000
05/08/25
*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 0.6% of the
issued share capital on 30 September 2020 (2019: 2.71%).
Tertiary Minerals plc provides management services to Sunrise Resources plc and consequently during the year the Group
incurred costs of £175,750 (2019: £189,742) recharged at cost from Tertiary Minerals being overheads of £20,369 (2019: £27,025),
costs paid on behalf of the Group of £1,175 (2019: £6,554), Tertiary staff salary costs of £74,085 (2019: £78,590) and Tertiary
directors’ salary costs of £80,121 (2019: £77,574).
At the balance sheet date an amount of £43,717 (2019: £10,496) was due to Tertiary Minerals plc.
Patrick Cheetham, the Executive Chairman of the Company, is also a director of Tertiary Minerals plc.
At 30 September 2020 and at the date of this report Donald McAlister, a director of Tertiary Minerals plc, held 550,000 shares in
the Company.
46
Sunrise Resources plc Annual Report & Accounts 2020
17. Leases
Right of use assets
Cost
At start of year
Additions
Disposals
At 30 September
Depreciation
At start of year
Charge for the year
Disposals
At 30 September
Carrying amounts
At 30 September
At start of year
Lease liabilities
Cost
At start of year
Additions
Lease payments
Interest charge
At 30 September
No later than one year
Later than one year and no later than 5 years
Later than five years
Total lease liabilities
Current liabilities
Non-current liabilities
Group
2020
£
Company
2020
£
Group
2019
£
Company
2019
£
–
21,970
–
21,970
–
(3,539)
–
(3,539)
18,431
–
Group
2020
£
–
21,970
(12,431)
161
9,700
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Company
2020
£
Group
2019
£
Company
2019
£
–
–
–
–
–
Minimum
lease
payments
£
2,486
7,459
–
–
–
–
–
–
–
–
–
Interest
£
(122)
(123)
–
–
–
–
–
–
–
–
–
Present
value
£
2,364
7,336
–
9,700
2,364
7,336
The right of use assets and related lease liabilities are for the lease of water rights for use in conjunction with the CS Project in
Nevada, USA. Total cash flow outflow amount is £3,700.
Sunrise Resources plc Annual Report & Accounts 2020
47
Notes to the Financial Statements continued
for the year ended 30 September 2020
18. 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.
19. Financial instruments
At 30 September 2020, 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 2020, 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
2020
£
Company
2020
Group
2019
Company
2019
££
£
1,123,277
1,065,480
19,765
76,574
–
56,983
65,443
22,078
48,987
30,517
–
23,805
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.
48
Sunrise Resources plc Annual Report & Accounts 2020
Bank balances were held in the following denominations:
United Kingdom Sterling
Australian Dollar
Canadian Dollar
United States Dollar
Euro
Group
2020
£
Company
2020
Group
2019
Company
2019
££
£
1,064,927
1,064,927
9,588
43
14,823
36
369
43
105
36
8,873
1,262
43
8,873
30
43
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.
20. Events after the report date
An issue of 6,772,459 0.1p ordinary shares at 0.24p per share to three directors, for a total consideration of £16,254, in satisfaction
of net directors’ fees (30 October 2020).
Sunrise Resources plc Annual Report & Accounts 2020
49
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 28 January 2021 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 2020.
2.
3.
To re-elect Mr P L Cheetham 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 “2006 Act”), 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 52 regarding attendance restrictions.
By order of the Board
R G Venables
Company Secretary
11 December 2020
Registered Office:
Sunrise House
Hulley Road
Macclesfield
Cheshire
SK10 2LP
United Kingdom
50
Sunrise Resources plc Annual Report & Accounts 2020
Annual General Meeting – Explanatory Notes
The Annual General Meeting of Sunrise Resources plc will be held on Thursday 28 January 2021 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 2020 which can be found on pages 4 to 31.
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 P L Cheetham is retiring in accordance with the Articles of Association and the Board proposes that he be re-elected.
Mr P L Cheetham’s biographical details can be found on page 17.
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 19 March 2020, 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.
As the Annual General Meeting is a closed Meeting, Shareholders who wish to raise any queries regarding the Resolutions to be
put to the Meeting may do so by email to agmsunrise@sunriseresourcesplc.com at any time before 12:00 noon on
Friday 15 January 2021 and any relevant questions along with the answers will be published on the Company's website by
12:00 noon on Tuesday 19 January 2021.
In line with corporate governance best practice and in order that any proxy votes of those shareholders who are not allowed to
attend and to vote in person are fully reflected in the voting on the resolutions, the Chairman of the meeting will direct that voting
on the resolutions set out in the notice of meeting will take place by way of a poll. The final poll vote on the resolutions will be
published after the General Meeting on the Company’s website.
Sunrise Resources plc Annual Report & Accounts 2020
51
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.
Due to the restrictions imposed by the Government in connection with the COVID-19 pandemic, the Meeting will be held as
a closed meeting, with only the minimum number of shareholders and directors in attendance as will be required to ensure
that the Meeting is quorate. This being the case, shareholders are advised not to travel to attend the Meeting as they will
not be admitted. Shareholders are therefore urged to register a proxy vote appointing the Chairman to vote in accordance
with their instructions.
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 26 January 2021. 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. Please note that on this occasion the Meeting
will be held as a closed meeting and therefore Shareholders will not be able to attend in person.
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. Shareholders are advised that as the Meeting will be a
closed meeting they should appoint the Chairman of the Meeting as their proxy, in order to guarantee their proxy is
in attendance. Appointment of a proxy who is unable to attend the Meeting will mean that your vote will not
be counted.
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:
●
●
●
by logging on to www.signalshares.com and following the instructions to appoint one or more and direct your votes.
by hard copy Form of 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.
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 26 January 2021.
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.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do
so for the Meeting (and any adjournment of the Meeting) by using the procedures described in the CREST Manual (available
from www.euroclear.com/site/public/EUI). CREST Personal Members or other CREST sponsored members, and those CREST
members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who
will be able to take the appropriate action on their behalf.
Sunrise Resources plc Annual Report & Accounts 2020
7.
8.
52
9.
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 26 January
2021. 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.
10. 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.
11. 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.
12. 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.
Sunrise Resources plc Annual Report & Accounts 2020
53
Shareholder Notes
54
Sunrise Resources plc Annual Report & Accounts 2020
260054 Sunrise Resources plc – Annual Report 2020 Cover.qxp 17/12/2020 11:33 Page 3
Company Information
Sunrise Resources plc (AIM – EPIC: SRES)
Company No. 05363956
Head Office
Silk Point
Queens Avenue
Macclesfield
Cheshire
SK10 2BB
United Kingdom
Tel: +44 (0)1625 838884
Fax: +44 (0)1625 838559
Nominated Adviser
Beaumont Cornish Limited
Building 3, Chiswick Park
566 Chiswick High Road
London
W4 5YA
United Kingdom
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
United Kingdom
Auditor
Crowe U.K. LLP
3rd Floor
The Lexicon
Mount Street
Manchester
M2 5NT
United Kingdom
Registered Office
Sunrise House
Hulley Road
Macclesfield
Cheshire
SK10 2LP
United Kingdom
Company Website
www.sunriseresourcesplc.com
Broker
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 2020
260054 Sunrise Resources plc – Annual Report 2020 Cover.qxp 17/12/2020 11:33 Page 1
Sunrise Resources plc
Silk Point
Queens Avenue
Macclesfield
Cheshire
SK10 2BB
United Kingdom
Tel: +44 (0)1625 838884
Fax: +44 (0)1625 838559
Perivan 260054