Tertiary Minerals plc
Annual Report
for the year ended 30 September 2010
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Welcome to
Tertiary Minerals plc
Tertiary Minerals plc is a diversified mineral
explorer and developer building a significant
strategic position in the fluorspar sector.
Key Objectives
To become a major European supplier of fluorspar, an essential raw material in the
chemical, steel and aluminium industries.
To maintain, explore and valorise its portfolio of gold, iron and other mineral projects.
Opportunity
n Traditional Chinese fluorspar supplies to Europe drying up as domestic demand increases
and China moves from major exporter to net importer.
n A European Commission report recently named fluorspar as one of its 14 ‘critical mineral
raw materials’ for which a possible supply shortage would represent a substantial
economic threat.
n Tertiary controls an estimated four million tonnes of fluorspar across its two
Scandinavian projects (Storuman in Sweden and Lassedalen in Norway).
n The Company also has interests in exploration and development of Gold, Iron, Tantalum,
Niobium and Rare-earths in Finland and Saudi Arabia.
Contents
Chairman’s Statement
Operating Review
Financial & Risk Review
Board of Directors
Directors’ Report
Corporate Governance
Independent Auditors’ Report to the Members
of Tertiary Minerals plc
Consolidated Income Statement
Consolidated and Company Statement of Comprehensive
Income
Consolidated and Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated and Company Statement of Cash Flows
Notes to the Financial Statements
Notice of Annual General Meeting
Explanatory Notes to the Notice of Annual General Meeting
Form of Proxy
Proxy Form Notes & Instructions
Company Information
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39
IBC
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our performance
our Governance
our Financials
Sweden
F i n l a n d
storuman: Fluorspar
Norway
G o l d
K a a r e s s e l k ä a n d K i e k e r ö m a a :
t a n t u l u m
i r o n
:
K o l a r i
:
r o s e n d a l
lassadalen: Fluorspar
Saudi Arabia
Ghurayyah: tantalum, niobium
& rare earths
Key project interests
Year in brief
■ positive scoping study completed for Storuman fluorspar project in Sweden
— 18 year open pit mine envisaged with three year capital payback.
■ preliminary feasibility studies initiated at Storuman with JoRC Resource
definition and extension drilling programme completed — results awaited.
■ Second fluorspar project acquired at lassedalen in norway with estimated
1.2 million tonnes contained fluorspar.
■ Fluorspar market continues post-recession recovery; prices moving up.
Front cover:
purple fluorspar, mineralised
sandstone, storuman, sweden.
tertiary minerals plc
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Chairman’s Statement
patrick Cheetham
“We are evaluating potentially world class fluorspar
assets in europe as chinese supply to europe declines.
tertiary minerals has the opportunity to become a
major supplier of fluorspar to europe.”
It is with great pleasure that I present
your Company’s results for the year ended
30 September 2010, a year when the
Board set out the key objective to position
tertiary Minerals plc as a major supplier of
fluorspar to european markets.
Fluorspar (Calcium fluoride, CaF2) is an
essential raw material and a source of
fluorine for the fluoro-chemical, steel and
aluminium industries. Supply dynamics have
changed markedly over the past several
years as China, once a major exporter
of fluorspar to world markets, builds its
industrial capacity and moves from a major
exporter of fluorspar to a net importer.
During the period under review, fluorspar
prices have been rising in response to
increasing demand for fluoro-chemicals
in refrigeration and auto air conditioning
in the developing world and continuing
tightness of supply from China. prices
are currently quoted at $365 (delivered
Rotterdam) with pricing pressure
reportedly on the upside.
tertiary now controls deposits containing
approximately 4 million tonnes of
fluorspar across two Scandinavian
projects. the importance of these projects
was underlined in June this year when
the european Commission published a
report placing fluorspar on the “critical
list” of 14 minerals considered essential
to european industry and, for which
supply shortages are foreseen.
Storuman Fluorspar Project
It was timely then that we reported, in
July, the completion of an independent
technical and economic scoping study on
our 100% owned Storuman Fluorspar
project in northern Sweden.
area of flat lying sandstone hosted
fluorspar mineralisation containing a
tonnage and grade estimate of 28 to 31
million tonnes grading 11.2–12.3% CaF2
at a cut-off grade of 8% CaF2.
the scoping study suggests a long
life viable project is possible with an
attractive payback and particularly
strong cash flow over the important
first five years of the project. At current
fluorspar prices, an 18 year mine life was
considered generating uS$616 million
in revenues for uS$46 million of initial
capital costs. net pre-tax operating
cash flow of $17 million per annum
is predicted in the first five years of
production with a 2.8 year payback of
capital, pre-production strip, and further
feasibility costs.
the project is located in northern
Sweden in an area with well established
infrastructure and is based on a large
Following receipt of this report the
Company initiated further feasibility
studies, and in october and november
02
tertiary minerals plc
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our performance
our Governance
our Financials
Key Points for Shareholders
tertiary minerals plc is one of
a very limited number of listed
companies offering an exciting
exposure to a looming fluorspar
market shortage.
■ Fluorspar market is going through
a “paradigm shift” — with China
evolving from a large net exporter to
a potential net importer
■ Significantly undervalued relative to
peer group — and against house
broker, Seymour pierce, short term
price target of 13p (August 2010)
■ Recent scoping study on the
Storuman fluorspar project (Sweden)
shows robust economics and gives a
strong indication of the longer term
value in the Company with a pre-tax
npV of between £21m–£67m, highly
levered to rising fluorspar price
■ Drill program completed at Storuman
to upgrade tonnage grade estimate
to at least JoRC Indicated Resource
— a value adding milestone
■ Second fluorspar project at
lassedalen in norway recently
announced adding to fluorspar
project pipeline
■ Risk diversified through gold and
other commodity interests
2010 carried out a 46 hole drill
programme to define JoRC classified
Indicated and Inferred Mineral Resources.
Analytical results are awaited and we
expect to be able to release a Mineral
Resource estimate towards the end of
the first quarter of 2011.
Financials
the Group reported a loss of £321,563
for the year (2009: £270,269). the
audited financial statements are prepared
under International Financial Reporting
Standards (IFRS), as adopted by the
european union.
Conclusions
As I look back on 2010, I am pleased to
see that recent market developments in
fluorspar have vindicated your Board’s
decision two years ago to acquire the
Storuman project. We are evaluating
potentially world class fluorspar assets
in europe as Chinese supply to europe
declines. tertiary Minerals has the
opportunity to become a major supplier
of fluorspar to europe. the two 100%
owned fluorspar projects in Scandinavia
contain an estimated 4.2 million tonnes
of fluorspar and your Company is one of
very few public listed companies offering
investors exposure to this important
commodity.
our Mineral Resource definition drilling
programme at Storuman is now
completed and we look forward to
reporting further progress during 2011.
Patrick Cheetham
executive Chairman
7 December 2010
Lassedalen Fluorspar Project
In July, we announced the acquisition of
a second fluorspar project at lassedalen
near Kongsberg, 80 km to the south-
west of oslo in norway. the area has
excellent infrastructure and a rich mining
history.
Drilling was carried out at lassedalen
in the 1970s and contemporary reports
suggest the deposit contains a potential
1.2 million tonnes of fluorspar. We have
located the 1970s drill core and now plan a
programme of re-sampling which we hope
may allow for the definition of a JoRC
Mineral Resource. Core will also be selected
for preliminary metallurgical testwork.
Other projects
Work on the Group’s other projects during
the year has been limited. there has been
no change to the status of the Ghurayyah
project licence application in Saudi Arabia.
A new licence has been applied for at the
Kolari iron project in Finland, and the gold
exploration projects have also remained
on hold during 2010. However, drilling
programmes have been budgeted for early
2011 on the Kaaresselkä and Kiekerömaa
gold projects.
Sunrise Resources plc
the Company has maintained its
shareholding in Sunrise Resources
plc (formerly Sunrise Diamonds plc),
the AIM-quoted diversified mineral
exploration and development specialist,
and continues to provide management
services to Sunrise Resources. procedures
are in place to avoid conflicts of interest
between the two companies.
I am pleased to report that the value of
this shareholding is now substantially
higher than this time last year.
tertiary minerals plc
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Operating Review
in 2010 the company established its objective to become a major
european supplier of fluorspar with the completion of a positive
scoping study for the development of its storuman fluorspar
project in sweden and the acquisition of the lassedalen
fluorspar project in norway.
Storuman Fluorspar Project, Sweden
the Company’s 100% owned Storuman
project is located in northern Sweden
20 km from the regional town of
Storuman in an area with well established
infrastructure. It is located adjacent to the
e12 highway which connects the project
to the port of umeå on the Gulf of
Bothnia and, in the opposite direction, to
the port city of Mo-i-Rana in norway.
the basis for the Storuman project is a
large area of flat lying sandstone hosted
fluorspar mineralisation that runs along
either side of the valley occupied by the
e12 highway. the mineralisation has so
far been defined (but not closed off) by
49 drill holes; 39 completed by Gränges
International Mining in the 1970s; and 10
by the Company in 2008. A Competent
persons Report (“CpR”) by Scott Wilson
limited (“Scott Wilson”) in 2009 made a
tonnage and grade estimate of 28 to 31
million tonnes grading 11.2–12.3% CaF2
at a cut-off grade of 8% CaF2.
Positive Scoping Study Completed
In July 2010 the Company completed a
multi-disciplinary independent Scoping
Study (“the Study”) on the Storuman
project. the study was compiled by Scott
Wilson who was responsible for mine
planning and scheduling, estimation of
operating and capital costs (to an accuracy
of +/- 35%) and preliminary financial
analysis. the mineral processing flow sheet
and key metallurgical design criteria were
developed by Delta Minerals ltd based on
the results of testwork carried out by SGS
Minerals Services (lakefield, Canada). A
preliminary assessment of mine permitting
was carried out by uRS nordic AB and
a market analysis was carried out by the
Company. Key operating costs were peer
reviewed by SRK Consulting (Sweden) AB.
An open-pit optimisation study captured
a potentially mineable deposit of
17,960,000 tonnes grading 12.3%
fluorspar (CaF2) in a shallow open-pit.
Scheduling of mine production from this
pit provided a Base-Case with high grade
mineralization being targeted in the early
years of the operation. the waste-to-ore
strip ratio is low, averaging 2.2:1 over the
life of Mine, with waste being backfilled
into worked-out areas of the pit on a
progressive basis.
the Study considers as a Base-Case
contract mining of 1 million tonnes per
annum of fluorspar mineralisation and a
crushing, grinding and flotation process
plant producing an average of 103,000
tonnes per year of 97.5% fluorspar
concentrate.
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tertiary minerals plc
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our performance
our Governance
our Financials
Financial analysis by Scott Wilson indicates
that this Base-Case returns a pre-tax net
present Value (npV) of $33 million based
on a discount rate of 8%, and an Internal
Rate of Return (IRR) of 24.1% on an
ungeared, 100% equity basis.
Opportunities
Scott Wilson has reported that, in
its opinion, the available geological
information at this stage of the project
does not fully reflect the potential of
the Storuman fluorite deposit and so
Scott Wilson modelled an extended
Mine life Case to consider the effects
of extending the life of mine by
a further 5 years of open pit
mining at the base case average
fluorspar head
grade and mine strip
ratio.
the Company is targeting the higher
priced acid-grade market which
accounts for 70% of world fluorspar
production. the Study assumes that all
fluorspar produced is sold at current
published mid-prices of $357/tonne
(delivered europe). It was noted that
the process flow sheet results in a
fluorspar concentrate that is finer
grained than traditionally supplied to
the market. However, the Company’s
recent marketing enquiries have not met
resistance to a finer grained concentrate
with a number of consumers interested
to test Storuman fluorspar through their
acid-plants.
Scoping Study Highlights (all US$)
project drilling, prefeasibility and
feasibility studies are estimated to cost
$2.1 million. Initial capital costs for the
project were estimated at $46 million
and pre-strip operating costs of $7.5
million are projected pre-production.
Sustaining capital costs total $19 million
commencing in year 2 at an average
rate of $1.1 million per annum and for
so long as the project is operating. Mine
closure costs are estimated at $10 million.
the average net pre-tax operating cash
flow over the life of mine is $8.9 million
per year in each case.
Sweden
Storuman
Stockholm
Fluorspar
Fluorspar is the commercial name
for the industrial mineral fluorite
(calcium fluoride – chemical
formula caF2). acid- grade
fluorspar (“acid-spar”) is the main
industrial source of fluorine for
the manufacture of hydrofluoric
acid and derivative fluorine
chemicals including refrigerants,
ptFe (teflon™) aluminium fluoride
– a flux used in the reduction of
alumina to aluminium, nuclear
fuel (uranium hexafluoride).
metallurgical grade fluorspar
(“met-spar”) is used as a flux in
steel making. Fluorspar is also
used in the ceramics industry.
Storuman is targeting the higher price,
acid-spar market which accounts
for approximately 70% of fluorspar
production. Demand for fluorspar is
strongly linked to economic activity and
future projected demand for fluorspar
is expected to be driven in particular
by rising demand for refrigerators, air
conditioners, and motor cars in China,
India, Russia and Brazil, as well as overall
global growth.
China has been the dominant supplier of
fluorspar to world markets but exports
have been declining in recent years as
internal demand grows as China builds
its own industrial capacity. China is
likely to become a net importer in time
and european consumers face future
supply shortages. In June 2010. the
european Commission published a report
placing fluorspar on the “critical list”
of 14 minerals considered essential to
european industry and, for which supply
shortages are foreseen.
Fluorspar is sold on contract and traded
globally. the China export price for
acid-spar is a traditional benchmark price
and, at the end of november 2010 was
published as $280-300/tonne and the
equivalent price delivered into europe
was uS$355-370/tonne.
tertiary minerals plc
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Operating Review continued
the company now controls an estimated 4.2 million tonnes of fluorspar
across two projects.
the Company has also re-modelled
the effect of owning and operating
the mining fleet and after allowing for
reduced mining costs and added capital
costs, the npV is further enhanced from
Base Case levels to $47 million.
JORC Minerals Resource Definition
Following receipt of the Scoping Study
the Company carried out a 46 hole
diamond drilling programme in october
and november 2010 to define *JoRC
classified Mineral Resources.
Due to the potential long open-pit mine life
the Study did not consider the development
of an underground mine but the deposit
is known to continue into the valley sides
beyond the limits of economic open-pit
mining and opportunities for underground
mining of higher grade material may exist.
the Base-Case production of over
100,000 tonnes per year of fluorspar
would position Storuman as a medium-
scale producer in world terms and the
largest in europe. the proximity of
Storuman to large fluorspar consumers in
mainland europe coupled with Sweden’s
low political risk, excellent regional
infrastructure, and long history of mining
gives the Storuman project a number of
strategic advantages.
the drill programme included a number
of drill holes at 400m spacing which
will test for extensions to the known
fluorspar mineralisation which has not
been closed off by previous drilling.
Analytical results are awaited.
*JoRC Mineral Resources are those
classified under the JoRC (Joint ore
Reserves Committee) Code, the
Australasian Code for the Reporting
of exploration Results, Minerals
Resources and ore Reserves adopted
by the Australasian Institute of Mining
& Metallurgy and the Australian
Institute of Geoscientists.
For the extended Mine life Case, total
sustaining capital and closure costs
increased from $29.5 million to $34.8
million and npV (8%) increases to $41
million.
Scott Wilson also identified other
opportunities to enhance the project
economics including:
l evaluation of an owner-operator (rather
than contract) scenario for mining as
their early indications showed that may
be more cost effective with a trade-off
between operating costs and capital
costs.
l evaluation of more cost effective
tailings disposal methods as the
tailings Storage Facility is a large capital
expense.
Financial modelling and sensitivity analysis
indicates that the project is most sensitive to
Fluorspar pricing, ore-grade and operating
costs but relatively insensitive to npV
discount rate and capital costs.
the Company’s re-modelling of the
Scott Wilson data using an average
fluorspar price of $413/tonne results in
a substantial increase in the project npV
from $33 million in the Base Case to
$104 million and in the IRR from 24%
(Base Case) to 45%.
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tertiary minerals plc
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our performance
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Lassedalen Fluorspar Project, Norway
the lassedalen Fluorspar Mine is
located near Kongsberg, 80 km to the
south-west of oslo in norway. It is less
than 1 km from highway e134 and
approximately 40 km from the nearest
norwegian port. It is well placed for
european export markets as well as an
important established market within
southern norway where fluorspar is used
to manufacture aluminium fluoride for
use in norway’s large hydro-powered
aluminium smelting and refining industry.
Fluorspar mineralisation at lassedalen
occurs in steeply dipping veins and as
disseminations within an east-west
striking fault breccia that is reportedly
up to 8 km long and generally between
15 and 30m wide, but up to 80m
wide in places. economically important
fluorspar can be followed more or less
continuously for at least 1 km where the
largest veins reach a width of 10–13m
for a distance of 200–250m along
strike. the fluorspar content in these
veins is reportedly rich, varying between
40–80%.
the deposit was mined on a small
scale during World War II when it was
developed to a depth of 40m below
surface and fluorspar was mined from
a 700m long drift for use in aluminium
smelting. the mine was dewatered in
the late 1970s by norsk Hydro A/S when
drilling was carried out from both surface
and underground.
An independent evaluation report
prepared for the Company details a
historical “reserve” estimate made by
norsk Hydro of 4 million tonnes of
mineralisation, containing 1.2 million
tonnes of fluorspar mineral at a grade of
29% fluorspar from 25m to an average
vertical depth of just 200m below
surface. Mineralisation is open at depth.
Whilst based on a significant drilling and
underground exploration programme,
this historical “reserve” estimate is not
compliant with any current resource or
reserve code.
the Company has located nearly 3.5 km
of drill core from 23 of the 28 surface
diamond holes drilled in the 1970s
programme. this core will now be
re-sampled for assay and metallurgical
testwork with the objective to accelerate
at low cost, the definition of a JoRC
compliant Inferred Mineral Resource
which could form the basis for a
technical and economic scoping study.
Norway
oslo
lassedalen
Kolari Iron Project, Finland
the Kolari iron project is located in the
Kolari iron district of northern Finland.
Drilling by the Company and previous
licence holders has indicated the potential
for a large tonnage of open-pit mineable
iron mineralisation and testwork has
suggested a high grade iron concentrate
can be produced.
A decision was made in 2010 to
surrender the existing exploration licence,
which was approaching expiry, in favour
of a new exploration licence application
the grant of which is awaited.
Kolari
Finland
Helsinki
tertiary minerals plc
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Operating Review continued
Ghurayyah Tantalum-Niobium-Rare-
Earth Project, Saudi Arabia
the Ghurayyah deposit is a 385 million
tonne deposit containing tantalum,
niobium and rare earth minerals of
economic interest. A positive scoping
study was completed in 2002 and,
following a denial of the renewal of its
exploration licence, a new exploration
licence application was submitted in 2007.
the grant of this licence is still awaited.
the Ghurayyah project is operated as a
joint venture with two Saudi Companies,
Al nahla trading & Contracting Co
and A.H.Algosaibi Bros. Co. (“the
Consortium”). tertiary holds its interest
through its subsidiary tertiary (Middle
east). the Ghurayyah Joint Venture
Agreement will expire in March 2011 after
which the Company will seek to maintain
the licence application in joint names.
Other Projects
the Company’s Vähäjoki project in
Finland was terminated during the year
following a review of exploration results
received from former joint venture
partner, Inmet Mining Corporation.
the Company holds a number of other
projects in the nordic countries. no work
was carried out on these projects during
2010 although further work is budgeted
on the Kaaresselkä gold project in
Finland to follow up encouraging drill
intersections previously obtained by the
Company in the Vanha zone, where gold
mineralisation is open along strike and at
depth.
Further drilling is also budgeted for
the Kiekerömaa prospect where
previous drilling by outokumpu
returned encouraging gold mineralised
intersections.
A field examination of the Giertsjaure
fluorspar prospect in Sweden did not
substantiate expectations and the
Company’s exploration licence application
was withdrawn.
the Company is still awaiting the grant
of its exploration licence application over
the Rosendal tantalum prospect where
previous exploration by the Company
defined a JoRC compliant Inferred
Mineral Resource of 1.05 million tonnes
grading 255g/t ta2o5.
Kaaresselkä
Kiekerömaa
Finland
Helsinki
Rosendal
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tertiary minerals plc
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our Financials
Financial & Risk Review
Financial Review
the results for the Group are set out in
detail on page 17. the Group reports a
loss of £321,563 during the year (2009:
£270,269) after administration costs of
£220,456 and after crediting interest
of £987. It also includes expensed
pre-licence and reconnaissance
exploration costs of £32,960 and
deferred exploration cost impairments of
£69,134. losses also include non-cash
losses in connection with the application
of IFRS 2, whereby a cost is assigned to
the value of certain options and warrants
held by employees and consultants.
the Group is expected to continue to
make losses until it disposes of or is able
to profitably develop its exploration and
development projects. losses may increase
in future if certain exploration projects are
abandoned or impaired and the associated
deferred exploration costs are written-off.
Intangible assets in the financial
statements total £709,130 at year end.
Administration overhead costs have been
shared with Sunrise Resources plc, to
the benefit of both companies. this cost
sharing is continuing.
Equity Issues
the Group’s exploration activities
continue to be funded from working
capital. During the year 181,579 shares
were issued to directors in lieu of
directors fees.
Non Current Assets
Details of intangible assets, property,
plant & equipment and investments
are set out in notes 8, 9 and 10 of the
financial statements.
Risks
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 are:
Exploration Risk
the Company’s business is mineral
exploration and evaluation which are
speculative activities and whilst the
directors are satisfied that good progress is
being made, 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 deposits have risk associated
with their defined grade and continuity.
Minerals Reserves and Resources are
calculated by the Group in accordance
with accepted industry standards
and codes but are always subject
to uncertainties in the underlying
assumptions which include geological
projection and metal price assumptions.
Development Risk
Delays in permitting, financing and
commissioning a project may result in
delays to the Group meeting future
production targets. Changes in commodity
prices can affect the economic viability of
mining projects and affect decisions on
continuing exploration activity.
Mining and Processing Technical Risk
notwithstanding the completion of
metallurgical testwork, test mining and
pilot studies indicating the technical
viability of a mining operation, variations
in mineralogy, mineral continuity, ground
stability, ground water conditions and
other geological conditions, may still
render a mining and processing operation
economically or technically non viable.
Environmental Risk
exploration and development of a
project can be adversely affected by
environmental legislation and the
unforeseen results of environmental
studies carried out during evaluation of
a project. once a project is in production
unforeseen events can give rise to
environmental liabilities.
Financing & Liquidity Risk
liquidity risk is the risk that the Company
will not be able to raise working capital for
its ongoing activities. the Group’s goal is
to finance its exploration and evaluation
activities from future cash flows but until
that point is reached the Company is
reliant on raising working capital from
equity markets or from industry sources.
there is no certainty such funds will be
available when needed.
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 have
enhanced risks associated with changes
to the legal framework, civil unrest and
government expropriation of assets.
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Financial & Risk Review continued
Forward Looking Statements
this Annual Report contains certain
forward looking statements that have
been made by the directors in good faith
based on the information available at
the time of the approval of the Annual
Report. By their nature, such forward
looking statements involve risks and
uncertainties because they relate to
events and depend on circumstances that
will or may occur in the future. Actual
results may differ from those expressed in
such statements.
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.
Financial Instruments
Details of risks associated with the
Group’s Financial Instruments are given
in note 20 to the financial statements on
pages 32 to 34.
Key Performance Indicators
the Board considers that normal
performance indicators are not
appropriate measures of the progress
of an exploration and development
company and refer shareholders to both
the detailed information in the operating
Review and this Financial & Risk Review
for further information on the Group’s
progress during the year.
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our performance
our Governance
our Financials
Board of Directors
the Directors & officers of the Company are:
Patrick Cheetham, aged 50 Executive Chairman
Mr. Cheetham is the founder of the Company. He is a mining geologist with 29 years experience
in mineral exploration and 23 years in public company management. Mr Cheetham started his
career as an exploration geologist in Australia with Western Mining Corporation and prior to
that worked for Imperial Metals Corporation in British Columbia, Canada. From 1986 to 1993
he was joint managing director of Dragon Mining nl, during which time he was responsible for
the formation of that company, the identification of and acquisition of its exploration projects,
its listing on the Australian Stock exchange and the subsequent development of its exploration
projects. In 1993 patrick co-founded Archaean Gold nl which, in 1996, was the subject of a
successful $50 million takeover bid by lachlan Resources nl. He is currently also Chairman of
Sunrise Resources plc.
Donald McAlister, aged 51 Non-Executive Director*
Mr McAlister is a founding director of the Company and has 19 years experience in all financial
aspects of the resource industry. He was until recently finance director of Ridge Mining plc.
prior to that he was finance director of Reunion Mining in 1994 having worked previously at
enterprise oil plc, texas eastern n Sea Inc and Cluff oil Holdings plc. Donald’s experience includes
the economic evaluation of gold and base metal mines and the arranging of project finance for
feasibility studies and mine developments. He has also been involved in the listing of Reunion
Mining plc on the luxembourg and london Stock exchanges. He is familiar with all financial
aspects of resource companies including metal hedging, tax planning and economic modelling.
In october 2009 he was appointed to the board of Mwana Africa plC, as finance director.
David Whitehead, aged 68 Non-Executive Director†
Mr Whitehead is a mining geologist. He joined tertiary in April 2002 on retiring as Vice president
Integration, exploration and Innovation at BHp Billiton Group plc, having been with the Billiton
Group since 1976. As Chief executive, exploration and Development of Billiton plc from
1997, David created and introduced a market oriented and commercial approach to minerals
exploration, involving the formation of strategic alliances with junior exploration companies and
the leveraging of group capabilities with funding obtained in venture capital markets. Following
the merger of Billiton with BHp, David, among other things, lead the team responsible for the
integration of the two companies’ exploration and development groups. He has a broad range
of exploration and general mining and management skills, including experience of project
development and operating mine management. Mr. Whitehead is also currently Chairman of
european nickel plc.
Colin Fitch llM, FCIS aged 76 Company Secretary
Colin Fitch is a Barrister-at-law, and was previously Corporate Finance Director of Kleinwort
Benson, partner and Head of Corporate Finance at Rowe & pitman (SG Warburg Securities) and
Assistant Secretary at the london Stock exchange. He has also held a number of non-executive
directorships of public and private companies, including Merrydown plc. He is currently Company
Secretary for Sunrise Resources plc.
* Chairman of the Audit Committee and member of the Remuneration Committee
† Chairman of the Remuneration Committee and member of the Audit Committee
tertiary minerals plc
AnnuAl RepoRt 2010
11
20057.04
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Proof 4
Directors’ Report
the directors are pleased to submit their annual report and
audited accounts for the year ended 30 September 2010.
Principal Activities
the principal activity of the Company is that of a holding
company for its subsidiaries. the principal activity of the Group
is the identification, acquisition, exploration and development
of mineral projects. the main areas of activity are Sweden,
Finland and Saudi Arabia.
the Group’s exploration activity in Sweden is undertaken
through a Swedish registered branch, Svensk filial till tertiary
Gold limited, united Kingdom.
Business Review and Future Developments
the Chairman’s Statement together with the operating Review
and the Financial & Risk Review provide detailed information on
the development of the Group’s business during the year and
indications of likely future developments.
Going Concern
In common with many exploration companies, the Company
raises finance for its exploration and appraisal activities in
discrete tranches, as and when required. When any of the
Company’s projects move to the development stage, specific
project financing will be required.
the directors prepare annual budgets and cash flow projections
that extend beyond 12 months from the date of this report.
these projections include the proceeds of future fundraising
and planned discretionary project expenditures necessary
to maintain the Company and Group as a going concern.
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. 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.
Results
the Group’s loss for the year was £321,563 (2009: £270,269).
Dividend
the directors are unable to recommend the payment of any
ordinary dividend.
Financial Instruments & Other 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 is given in note 20 to
the financial statements.
the business of mineral exploration and evaluation has inherent
risks. Details of risks and uncertainties that affect the Group’s
business are given in the Financial & Risk Review on pages
9 to 10.
Directors
the Directors holding office in the period were:
Mr p l Cheetham
Mr D A R McAlister
Mr D Whitehead
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 register:
Ronald Bruce Rowan
Mr patrick lyn Cheetham
lloyds Bank (Branches) nominees ltd ColG01SA
Rock nominees 717858 Account
Goldman Sachs Securities (nominees) ltd CoSeG
Ahmed Hamed Algosaibi and Brothers Company
Barclayshare nominees limited
Mrs Carole Rowan
Mrs Karen elizabeth Cheetham
tD Waterhouse nominees (europe) ltd SMKtnoMS
Number % of share
capital
of shares
9.04
8,000,000
8.51
7,533,288
7.91
7,000,000
5.86
5,186,603
5.77
5,103,095
4.62
4,088,548
4.30
3,802,136
3.34
2,954,499
3.21
2,843,625
3.21
2,843,312
12
tertiary minerals plc
AnnuAl RepoRt 2010
20057.04
17/12/2010
Proof 4
our performance
our Governance
our Financials
Suppliers and Contractors
Details of the Group’s policy and payment of creditors is
disclosed on page 15. this policy will continue unchanged in
the next financial year.
Charitable and Political Donations
During the year, the Group made no charitable or political
donations.
Accounting Policies
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, and their interpretations adopted by the International
Accounting Standards Board (IASB). they have also been
prepared in accordance with those parts of the Companies Act
2006 applicable to companies reporting under IFRS. Further
details of the Group’s accounting policies can be found in note 1
of the financial statements on page 21.
Annual Report
Copies of the tertiary Minerals plc Group financial statements
are available, free of charge, from the Company’s Registered
office or from the offices of Seymour pierce, 20 old Bailey,
london eC4M 7en and also on the Company’s website:
www.tertiaryminerals.com
Statement of Directors’ Responsibilities
the directors are responsible for preparing the directors’ report
and the financial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare financial
statements for each financial year. under that law the directors
have, as required by the AIM Rules of the london Stock exchange,
elected to prepare the group financial statements in accordance
with International Financial Reporting Standards as adopted by
the european union and have also elected to prepare the parent
company financial statements in accordance with those standards.
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 company and the group and of
the profit or loss of the group for that period. In preparing these
financial statements the directors are required to:
l select suitable accounting policies and then apply them
consistently;
l make judgements and estimates that are reasonable and
prudent;
l state whether the financial statements have been prepared
in accordance with IFRSs as adopted by the european union;
and
l 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 the group and
enable them to ensure that the financial statements comply
with the Companies Act 2006. they are also responsible for
safeguarding the assets of the company and the group and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
the directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the company’s website. legislation in the united Kingdom
governing the preparation and dissemination of the financial
statements and other information included in annual reports
may differ from legislation in other jurisdictions.
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
Auditors are 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 Auditors are aware of that information.
Auditors
A resolution to re-appoint pKF (uK) llp as auditors of the
Company and the Group will be proposed at the forthcoming
Annual General Meeting.
Annual General Meeting
notice of the Company’s Annual General Meeting convened for
Monday 31 January 2011 at 2.00 p.m. is set out on page 35 of
this report. explanatory notes giving further information about
the proposed resolutions are set out on page 36.
Approved by the Board of Directors on 7 December 2010 and
signed on its behalf.
Patrick L Cheetham
Chairman
tertiary minerals plc
AnnuAl RepoRt 2010
13
20057.04
17/12/2010
Proof 4
Corporate Governance
Companies whose shares trade on AIM are not required
to make an annual statement to shareholders regarding
compliance with the uK Corporate Governance Code (June
2010). However, the Board seeks to comply with the principles
of the uK Corporate Governance Code, in so far as they are
appropriate to the Group at this stage in its development.
Role of the Board
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 four times a year for these purposes and holds
additional meetings when necessary to transact other business.
the Board receives reports for consideration on all significant
strategic and operational matters.
the non-executive directors are considered by the Board to be
independent of management and free from any business or
other relationship, which could materially interfere with the
exercise of their independent judgement. Directors have the
facility to take external independent advice in furtherance of
their duties at the Group’s expense and have access to the
services of the Company Secretary.
the Board delegates certain of its responsibilities to the Audit
and Remuneration Committees of the Board. these Committees
operate within clearly defined terms of reference.
Audit Committee
the Audit Committee, composed entirely of non-executive
directors, meets at least twice a year 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.
Remuneration Committee
the Remuneration Committee also comprises the non-executive
directors. the Remuneration Committee meets at least once
a year to determine the appropriate remuneration for the
Company’s executive Chairman, ensuring that this reflects
his performance and that of the Group, and to demonstrate
to shareholders that executive remuneration is set by Board
members who have no personal interest in the outcome of their
decisions.
the Company issues share options to employees within the
limits of the Company’s Inland Revenue Approved Share option
Scheme and warrants to employees and to directors outside of
this scheme.
Remuneration of the executive Chairman comprises a basic
salary, target related bonuses (none in 2009 or 2010) and
participation in the issue of warrants. Directors emoluments are
disclosed in note 4 to the financial statements and details of
directors’ warrants are disclosed in note 17.
Conflicts of Interest
the Companies Act 2006 permits directors of public companies
to authorise directors’ conflicts and potential conflicts, where
appropriate and the Articles of Association contain a provision
to this effect.
At 30 September 2010, tertiary Minerals held approximately
10.35% of the issued share capital of Sunrise Resources plc and
the Chairman of tertiary Minerals is also Chairman of Sunrise
Resources. tertiary Minerals also provides management services
to Sunrise Resources, in the search, evaluation and acquisition
of new projects.
procedures are in place in order to avoid any conflict of interest
between the Company and Sunrise Resources plc.
Internal Controls & Risk Management
the directors are responsible for the Group’s system of internal
financial control. Although no system of internal financial
control can provide absolute assurance against material
misstatement or loss, the Group’s system is 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.
Corporate Social Responsibility
the Board takes regular account of the significance of social,
environmental and ethical matters affecting the business
of the Group. At this stage in the Group’s development the
Board has not adopted a specific policy on Corporate Social
Responsibility as it has a limited pool of stakeholders other than
its shareholders. Rather, the Board seeks to protect the interests
of the Group’s stakeholders through individual policies and
through ethical and transparent actions.
14
tertiary minerals plc
AnnuAl RepoRt 2010
20057.04
17/12/2010
Proof 4
our performance
our Governance
our Financials
Shareholders
As set out above, the Board seeks to protect shareholders’
interests by following, where appropriate, the guidelines in the
uK Corporate Governance Code (June 2010) and the directors
are always prepared where practicable, to enter into a dialogue
with shareholders to promote a mutual understanding of
objectives. the AGM provides the Board with an opportunity to
informally meet and communicate directly with investors.
Environment
the Board recognises that its principal activity, mineral
exploration, has potential to impact on the local environment
and consequently has adopted an environmental policy to
ensure that the Group’s activities have minimal environmental
impact. Where appropriate the Group’s contracts with suppliers
and contractors legally bind those suppliers and contractors to
do the same.
the Group’s activities, carried out in accordance with environmental
policy, have had only minimal environmental impact and this policy
is regularly reviewed. Where appropriate, all work is carried out
after advance consultation with affected parties.
Employees
the Group encourages its employees to understand all aspects
of the Group’s business and seeks to remunerate its employees
fairly, being flexible where practicable. the Group gives full
and fair consideration to applications for employment received
regardless of age, gender, colour, ethnicity, disability, nationality,
religious beliefs, transgender status or sexual orientation. the
Board takes account of employees’ interests when making
decisions and suggestions from employees aimed at improving
the Group’s performance are welcomed.
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 balance sheet in respect
of trade payables at the end of the financial year represents 26
days of average daily purchases (2009: 27 days).
tertiary minerals plc
AnnuAl RepoRt 2010
15
20057.04
17/12/2010
Proof 4
Independent Auditors’ Report to the
Members of Tertiary Minerals plc
for the year ended 30 September 2010
l 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
l the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Emphasis of matter — going concern
In forming our opinion on the financial statements, which is not
qualified, we have considered the adequacy of the disclosure
made in note 1(b) to the financial statements concerning the
group’s ability to continue as a going concern. As explained
in note 1(b) to the financial statements, the group will need
to raise further funds within the next 12 months in order to
cover the company’s and group’s overheads and carry out
the company’s and group’s planned discretionary project
expenditure. As there is no assurance that adequate funds will
be obtained, these conditions, along with the other matters
explained in note 1(b) to the financial statements, indicate the
existence of a material uncertainty which may cast significant
doubt about the group’s and company’s ability to continue as
a going concern. the financial statements do not include the
adjustments that would result if the group or company was
unable to continue as a going concern.
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion the information given in the directors’ report
for the financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if,
in our opinion:
l adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
l the parent company financial statements are not in
agreement with the accounting records and returns; or
l certain disclosures of directors’ remuneration specified by law
are not made; or
l we have not received all the information and explanations we
require for our audit.
Donald Bancroft (Senior statutory auditor)
for and on behalf of pKF (uK) llp, Statutory auditors
Manchester, uK
7 December 2010
We have audited the financial statements of tertiary Minerals
plc for the year ended 30 September 2010 which comprise the
consolidated income statement, the consolidated and company
statement of comprehensive income, consolidated and company
statement of financial position, consolidated and company
statement of changes in equity, consolidated and company
statement of cash flows and the related notes. the financial
reporting framework that has been applied in their preparation
is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the european union and, as regards the
parent company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
this report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of part 16 of the Companies
Act 2006. our audit work has been undertaken so that we
might state to the company’s members those matters we are
required to state to them in an auditors’ report and for no
other purpose. to the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the directors’ responsibilities
statement, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give
a true and fair view. our responsibility is to audit the financial
statements in accordance with applicable law and International
Standards on Auditing (uK and Ireland). those standards
require us to comply with the Auditing practices Board’s ethical
Standards for Auditors.
Scope of the audit
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or
error. this includes an assessment of: whether the accounting
policies are appropriate to the group’s and the parent
company’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall
presentation of the financial statements.
Opinion on financial statements
In our opinion;
l the financial statements give a true and fair view of the
state of the group’s and the parent company’s affairs as at
30 September 2010 and of the group’s loss for the year then
ended;
l the group financial statements have been properly prepared
in accordance with IFRSs as adopted by the european union;
16
tertiary minerals plc
AnnuAl RepoRt 2010
20057.04
17/12/2010
Proof 4
our performance
our Governance
our Financials
Consolidated Income Statement
for the year ended 30 September 2010
pre-licence exploration costs
Impairment of deferred exploration costs
Administrative expenses
Operating loss
Interest receivable
loss on ordinary activities before taxation
tax on loss on ordinary activities
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
8
3
7
6
2010
£
32,960
69,134
220,456
(322,550)
987
(321,563)
—
(321,563)
2009
£
38,127
27,673
211,195
(276,995)
6,726
(270,269)
—
(270,269)
(0.36)
(0.36)
Consolidated and Company Statement of
Comprehensive Income
for the year ended 30 September 2010
Loss for the year
Group
2010
£
Company
2010
£
Group
2009
£
Company
2009
£
(321,563)
(1,124,489)
(270,269)
(183,209)
Movement in revaluation of available for sale investment
Foreign exchange translation differences on foreign currency
net investments in subsidiaries
—
8,046
—
—
(90,131)
(90,131)
57,769
—
Comprehensive (loss)/income for the year
(313,517)
(1,124,489)
(302,631)
(273,340)
tertiary minerals plc
AnnuAl RepoRt 2010
17
20057.04
17/12/2010
Proof 4
Company no. 03821411
Consolidated and Company
Statement of Financial Position
at 30 September 2010
Non-current assets
Intangible assets
property, plant & equipment
Investment in subsidiary
Available for sale investment
Current assets
Receivables
Cash and cash equivalents
Current liabilities
trade and other payables
Net current assets
Net assets
Equity
Called up share capital
Share premium account
Merger reserve
Share option reserve
Available for sale revaluation reserve
Foreign currency reserve
Accumulated losses
Group
2010
£
Company
2010
£
Group
2009
£
Company
2009
£
notes
8
9
10
10
11
12
709,130
1,238
—
167,387
—
1,206
3,131,730
167,387
595,269
2,569
—
167,387
—
2,250
3,858,757
167,387
877,755
3,300,323
765,225
4,028,394
42,263
370,334
38,965
75,222
52,096
725,080
412,597
114,187
777,176
48,620
416,946
465,566
13
(95,781)
(43,957)
(76,631)
(41,236)
316,816
70,230
700,545
424,330
1,194,571
3,370,553
1,465,770
4,452,724
14
885,162
5,035,112
131,096
133,096
(115,341)
143,279
(5,017,833)
885,162
5,035,112
131,096
133,096
(72,816)
—
(2,741,097)
883,346
5,031,655
131,096
96,051
(115,341)
135,233
(4,696,270)
883,346
5,031,655
131,096
96,051
(72,816)
—
(1,616,608)
Equity attributable to the owners of the parent
1,194,571
3,370,553
1,465,770
4,452,724
these financial statements were approved and authorised for issue by the Board of Directors on 7 December 2010 and were
signed on its behalf.
P L Cheetham
executive Chairman
D A R McAlister
Director
18
tertiary minerals plc
AnnuAl RepoRt 2010
20057.04
17/12/2010
Proof 4
our performance
our Governance
our Financials
Consolidated Statement of Changes in Equity
Share
Share premium Merger
reserve
capital account
£
£
£
Available
Share
for sale
option revaluation
reserve
reserve
£
£
Foreign
currency Accumulated
losses
£
reserve
£
Total
£
Group
At 30 September 2008
loss for the period
Change in fair value
exchange differences
636,037 4,859,689
—
—
—
—
—
—
131,096
—
—
—
65,619
—
—
—
(25,210)
—
(90,131)
—
77,464
—
—
57,769
(4,426,001) 1,318,694
(270,269)
(90,131)
57,769
(270,269)
—
—
Total comprehensive
loss for the year
—
—
Share issue
Share based payments
247,309
—
171,966
—
—
—
—
—
(90,131)
57,769
(270,269)
(302,631)
—
30,432
—
—
—
—
—
—
419,275
30,432
At 30 September 2009
loss for the period
exchange differences
883,346 5,031,655
—
—
—
—
131,096
—
—
96,051
—
—
(115,341)
—
—
135,233
—
8,046
(4,696,270) 1,465,770
(321,563)
8,046
(321,563)
—
Total comprehensive
loss for the year
Share issue
Share based payments
—
1,816
—
—
3,457
—
—
—
—
—
—
37,045
—
—
—
8,046
(321,563)
(313,517)
—
—
—
—
5,273
37,045
At 30 September 2010
885,162 5,035,112
131,096 133,096
(115,341)
143,279
(5,017,833) 1,194,571
Company Statement of Changes in Equity
Company
At 30 September 2008
loss for the period
Change in fair value
Total comprehensive
loss for the year
Share issue
Share based payments
At 30 September 2009
loss for the period
Total comprehensive
loss for the year
Share issue
Share based payments
Share
Share premium Merger
reserve
account
capital
£
£
£
636,037 4,859,689 131,096
—
—
—
—
—
—
Available
for sale
Share
option revaluation Accumulated
losses
reserve
£
£
reserve
£
Total
£
65,619
—
—
17,315
—
(90,131)
(1,433,399) 4,276,357
(183.209)
(90,131)
(183,209)
—
—
—
247,309
—
171,966
—
—
—
—
—
(90,131)
(183,209)
(273,340)
—
30,432
—
—
—
—
419,275
30,432
883,346 5,031,655 131,096
96,051
(72,816)
(1,616,608) 4.452,724
(1,124,489) (1,124,489)
—
1,816
—
—
3,457
—
—
—
—
—
—
37,045
—
—
—
(1,124,489) (1,124,489)
—
—
5,273
37,045
At 30 September 2010
885,162 5,035,112 131,096
133,096
(115,341)
(2,741,097) 3,370,553
tertiary minerals plc
AnnuAl RepoRt 2010
19
20057.04
17/12/2010
Proof 4
Consolidated and Company
Statement of Cash Flows
for the year ended 30 September 2010
Operating activities
operating loss
Issue of shares in lieu of net wages
Depreciation charge
Impairment charge
Share based payment charge
Decrease/(increase) in receivables
Increase/(decrease) in payables
Group
2010
£
Company
2010
£
Group
2009
£
Company
2009
£
(322,550)
5,273
2,037
69,134
37,045
9,833
19,150
(196,212)
5,273
1,750
—
37,045
9,655
2,721
(276,995)
15,275
3,149
27,673
30,432
1,120
(17,649)
(187,577)
15,275
1,566
—
30,432
(15,372)
(6,973)
Net cash outflow from operating activity
(180,078)
(139,768)
(216,995)
(162,649)
Investing activities
Interest received
purchase of intangible assets
purchase of property, plant & equipment
Additional investment in subsidiaries
987
(169,394)
(706)
—
711
—
(706)
(201,961)
6,726
(99,600)
(270)
—
4,368
—
(270)
(139,406)
Net cash outflow from investing activity
(169,113)
(201,956)
(93,144)
(135,308)
Financing activity
Issue of share capital (net of expenses)
Net cash inflow from financing activity
—
—
—
—
404,000
404,000
404,000
404,000
Net (decrease)/increase in cash and cash equivalents
(349,191)
(341,724)
93,861
106,043
Cash and cash equivalents at start of year
exchange differences
Cash and cash equivalents at 30 September
725,080
(5,555)
416,946
—
591,968
39,251
370,334
75,222
725,080
310,903
—
416,946
20
tertiary minerals plc
AnnuAl RepoRt 2010
20057.04
17/12/2010
Proof 4
our performance
our Governance
our Financials
Notes to the Financial Statements
for the year ended 30 September 2010
Background
tertiary Minerals plc is a public company incorporated and domiciled in england. It is traded on the AIM market of the london Stock
exchange and its shares also trade on plus Markets – code tYM.
the Company is a holding company for a number of companies (“the Group”) incorporated and domiciled in england. the Group’s
financial statements are presented in pounds Sterling (£) which is also the functional currency of the Group.
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, and their interpretations adopted by the International
Accounting Standards Board (IASB). they have also been prepared in accordance with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
IFRS 8 became effective from 1 September 2009 and replaces the segmental reporting requirements of IAS 14. the key change
is to align the determination of segments in the financial statements with that used by management in their resource allocation
decisions.
the Company has not adopted any standards or interpretations in advance of the required implementation dates. It is not
expected that those standards or interpretations which have been issued by the International Accounting Standards Board,
but which have not been adopted, will have a material impact on the financial statements of the Company in the period of
initial application.
(b) Going concern
In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete
tranches. Further funding is raised as and when required. When any of the Group’s projects move to the development stage,
specific project financing will be required.
the directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report.
these projections include the proceeds of future fundraising necessary within the next 12 months to meet the Company’s and
Group’s planned discretionary project expenditures and to maintain the Company and Group as a going concern. 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 entity’s
ability to continue as a going concern and, therefore, that it may be unable to realize its assets and discharge its 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 in 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 tertiary Minerals plc and its subsidiary undertakings using
the acquisition method.
the Group has contractual arrangements with other participants to engage in joint activities that do not create an entity carrying
on a trade or business of its own. the Group includes its share of assets and liabilities in such joint arrangements, measured in
accordance with the terms of each arrangement, which is usually pro-rata to the Group’s interest in the joint arrangement.
In accordance with section 408 of the Companies Act 2006, tertiary Minerals plc is exempt from the requirement to present its
own income statement. the amount of the loss for the financial year recorded within the financial statements of tertiary Minerals
plc is £1,124,489 (2009: £183,209).
tertiary minerals plc
AnnuAl RepoRt 2010
21
20057.04
17/12/2010
Proof 4
Notes to the Financial Statements
for the year ended 30 September 2010
1. Accounting policies — continued
(d) Intangible assets
Exploration and evaluation
Accumulated exploration and evaluation costs incurred in relation to separate areas of interest (which may comprise more than
one exploration licence or exploration licence applications) are capitalised and carried forward where:
(1) such costs are expected to be recouped through successful exploration and development of the area, or alternatively by its
sale; or
(2) exploration and/or evaluation activities in the area have not yet reached a stage which permits a reasonable assessment of
the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to
the areas are continuing.
A bi-annual review is carried out by the directors to consider whether any exploration and development costs have suffered
impairment in value and, if necessary, provisions are made according to this criteria.
Accumulated costs where the Company does not yet have an exclusive exploration licence and in respect of areas of interest
which have been abandoned, are written off to the income statement in the year in which the pre-licence expense was
incurred or in which the area was abandoned.
Development
exploration, evaluation and development costs are carried at the lower of cost and expected net recoverable amount. on
reaching a mining development decision, exploration and evaluation costs are reclassified as development costs and all
development costs on a specific area of interest will be amortised over the useful economic life of the projects, once they
become income generating, and the costs can be recouped.
(e) Property, plant and equipment
All property, plant and equipment assets are stated at cost less accumulated depreciation. Depreciation is provided by the
Group on all property, plant & equipment, at rates calculated to write off the cost, less estimated residual value, of each asset
evenly over its expected useful life, as follows:
Fixtures and fittings
20% to 33% per annum.
(f) Available for sale investments
Available for sale financial assets include non-derivative financial assets that are either designated as such or do not qualify
for inclusion in any of the other categories of financial assets. Available for sale investments are initially measured at cost
and subsequently at fair value, with changes in value recognised in equity. Gains and losses arising from available for sale
investments are recognised in the income statement when they are sold or impaired.
(g) Trade and other receivables and payables
trade and other receivables and payables are measured at initial recognition at fair value and subsequently measured at
amortised cost.
(h) Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand and short term bank deposits with a maturity of three months
or less.
(i) 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.
22
tertiary minerals plc
AnnuAl RepoRt 2010
20057.04
17/12/2010
Proof 4
our performance
our Governance
our Financials
1. Accounting policies — continued
(j) Foreign currencies
the Group’s and the Company’s functional and presentational currency is pounds Sterling (£) and this is the currency of the
primary economic environment in which the Group and Company operate. Monetary assets and liabilities denominated in foreign
currencies are translated at the rate of exchange ruling at the balance sheet date.
transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the
income statement.
For consolidation purposes, the assets and liabilities of overseas subsidiaries, associated undertakings, joint arrangements and the
net investment in foreign operations are translated at the closing exchange rates. Income statements of overseas subsidiaries are
translated at exchange rates at the date of transaction. exchange differences arising on these translations are taken to the foreign
currency reserve.
(k) Leasing and hire purchase commitments
Rentals applicable to operating leases where substantially all the benefits and risks of ownership remain with the lessor are
charged to the income statement on a straight-line basis.
(l) Share based payments
the Company issues warrants and options to employees (including directors) and suppliers. For all options and warrants issued
after 7 november 2002 the fair value of the services received is recognised as a charge measured at fair value on the date
of grant and determined in accordance with IFRS 2, adopting the Black-Scholes-Merton model. the fair value is charged to
administrative expenses on a straight line basis over the vesting period, together with a corresponding increase in equity, based
on the management’s estimate of shares that will eventually vest. the expected life of the options and warrants is adjusted based
on management’s best estimates, for the effects of non-transferability, exercise restrictions and behavioural considerations. the
details of the calculation are shown in note 15.
From time to time the Company also receives shares in settlement of certain trade debts. the fair value of shares received is based
on the closing mid-market price of the shares on the AIM Market on the day prior to the date of settlement and it is receipted
within trade debtors on the date of settlement with a corresponding increase in the available for sale investment.
(m) Judgements and estimations in applying accounting policies
In the process of applying the Group’s accounting policies above, the Group has identified the judgemental areas that have the
most significant effect on the amounts recognised in the financial statements:
Intangible fixed assets — exploration and evaluation
Capitalisation of exploration and evaluation costs requires that costs be assessed against the likelihood that such costs will
be recoverable against future exploitation or sale or alternatively, where activities have not reached a stage which permits a
reasonable estimate of the existence of mineral reserves, a judgement that future exploration or evaluation should continue.
this requires management to make estimates and judgements and to make certain assumptions, often of a geological nature,
and most particularly in relation to whether or not an economically viable mining operation can be established in future. Such
estimates, judgements and assumptions are likely to change as new information becomes available. When it becomes apparent
that recovery of expenditure is unlikely the relevant capitalised amount is written off to the income statement.
Impairment
Impairment reviews for deferred exploration and evaluation costs are carried out on a project by project basis, with each project
representing a potential single cash generating unit. Assessment of the impairment of assets is a judgement based on analysis
of the future likely cash flows from the relevant project. the Group will look to evidence produced by its exploration activities to
indicate whether the carrying value is impaired.
Going concern
the preparation of financial statements requires an assessment of the validity of the going concern assumption. the validity of the
going concern assumption is dependant 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.
tertiary minerals plc
AnnuAl RepoRt 2010
23
20057.04
17/12/2010
Proof 4
Notes to the Financial Statements
for the year ended 30 September 2010
1. Accounting policies — continued
Share based payments
the estimates of share based payments costs requires that management selects an appropriate valuation model and make
decisions on various inputs into the model including the volatility of its own share price, the probable life of the options before
exercise, and behavioural considerations of employees.
2. Segmental analysis
the Chief operating Decision Maker is the Board of Directors. the Board considers the business has one reportable segment,
the management of exploration projects, which is supported by a Head office function. For the purpose of measuring
segmental profits and losses the exploration segment bears only those direct costs incurred by or on behalf of those projects,
no Head office cost allocations are made to this segment. the Head office function recognises all other costs.
2010
Consolidated Income Statement
Impairment of deferred exploration costs:
Kolari Iron project, Finland
pre-licence exploration costs
Share based payments
other expenses
Operating loss
Bank interest received
loss on ordinary activities before taxation
tax on loss on ordinary activities
Exploration
Projects
£
Head
Office
£
Total
£
(69,134)
(69,134)
—
—
—
(69,134)
—
(69,134)
—
(32,960)
(37,045)
(183,411)
(253,416)
987
(252,429)
—
(69,134)
(69,134)
(32,960)
(37,045)
(183,411)
(322,550)
987
(321,563)
—
Loss for the year attributable to equity holders
(69,134)
(252,429)
(321,563)
Non-current assets
Intangible assets:
Deferred exploration costs:
Kaaraselka Gold project, Finland
Kiekeromaa, Gold project, Finland
lassedalen Fluorspar project, norway
Storuman Fluorspar project, Sweden
Ghurayyah tantalum project, Saudi Arabia
property, plant & equipment
Investment in subsidiary
Available for sale investment
Current assets
Receivables
Cash and cash equivalents
Current liabilities
trade and other payables
Net current assets
Net assets
other data
Deferred exploration additions
exchange rate adjustments to deferred exploration costs
24
tertiary minerals plc
AnnuAl RepoRt 2010
20057.04
17/12/2010
Proof 4
247,301
11,491
29,408
420,930
—
709,130
—
—
—
—
—
—
—
—
—
1,238
—
167,387
709,130
168,625
—
—
—
42,263
370,334
412,597
247,301
11,491
29,408
420,930
—
709,130
1,238
—
167,387
877,755
42,263
370,334
412,597
(36,883)
(58,898)
(95,781)
(36,883)
353,699
316,816
672,247
522,324
1,194,571
169,394
—
—
13,601
169,394
13,601
our performance
our Governance
our Financials
2. Segmental analysis — continued
2009
Consolidated Income Statement
Impairment of deferred exploration costs:
Malmberg, Gold project, Finland
Vahajoki Gold project, Finland
Ylojarvi, Gold project, Finland
pre-licence exploration costs
Share based payments
other expenses
Operating loss
Bank interest received
loss on ordinary activities before taxation
tax on loss on ordinary activities
Exploration
Projects
£
Head
Office
£
Total
£
(1,001)
(26,377)
(295)
(27,673)
—
—
—
(27,673)
—
(27,673)
—
—
—
—
—
(38,127)
(30,432)
(180,763)
(249,322)
6,726
(242,596)
—
(1,001)
(26,377)
(295)
(27,673)
(38,127)
(30,432)
(180,763)
(276,995)
6,726
(270,269)
—
Loss for the year attributable to equity holders
(27,673)
(242,596)
(270,269)
Non-current assets
Intangible assets:
Deferred exploration costs:
Kaaraselka Gold project, Finland
Kiekeromaa, Gold project, Finland
Kolari Iron project, Finland
lassedalen Fluorspar project, norway
Storuman Fluorspar project, Sweden
Ghurrayah tantalum project, Saudi Arabia
property, plant & equipment
Investment in subsidiary
Available for sale investment
Current assets
Receivables
Cash and cash equivalents
Current liabilities
trade and other payables
Net current assets
Net assets
other data
Deferred exploration additions
exchange rate adjustments to deferred exploration costs
236,244
9,116
69,134
10,389
270,386
—
595,269
—
—
—
—
—
—
—
—
—
—
2,569
—
167,387
595,269
169,956
—
—
—
52,096
725,080
777,176
236,244
9,116
69,134
10,389
270,386
—
595,269
2,569
—
167,387
765,225
52,096
725,080
777,176
(30,532)
(46,099)
(76,631)
(30,532)
731,077
700,545
564,737
901,033
1,465,770
99,600
—
—
18,519
99,600
18,519
tertiary minerals plc
AnnuAl RepoRt 2010
25
20057.04
17/12/2010
Proof 4
Notes to the Financial Statements
for the year ended 30 September 2010
3. Loss on ordinary activities before taxation
The operating loss is stated after charging
operating lease rentals — land and buildings
Fees payable to the Company’s auditor for:
the audit of the Company’s annual accounts
other Services
Depreciation — owned assets
4. Directors emoluments
Remuneration in respect of directors was as follows:
p l Cheetham (salary)
D A R McAlister (salary)
D Whitehead (fees)
2010
£
2009
£
14,430
13,665
8,555
1,050
2,037
8,555
1,071
3,149
2010
£
37,627
10,000
8,000
55,627
2009
£
37,054
10,000
8,500
55,554
Share based payments charged in these financial statements in respect of the directors amounted to £26,684 (2009: £17,191).
5. Staff costs
Staff costs for Group and Company, including directors, were as follows:
Wages and salaries
Social security costs
Share based payments
2010
£
2009
£
114,419
12,944
33,937
115,518
11,347
27,247
161,300
154,112
the average monthly number of employees, including directors, employed by the Group and Company during the year was as
follows:
technical employees
Administration employees (including non-executive directors)
2010
Number
2009
number
2
4
6
2
4
6
6. Loss per share
loss per share has been calculated on the loss and the weighted average number of shares in issue during the year.
2010
2009
loss (£)
Weighted average shares in issue (no.)
Basic and diluted loss per share (pence)
(321,563)
(270,269)
88,408,966 74,472,135
(0.36)
(0.36)
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 and options would have the effect of reducing the loss per ordinary share and is therefore not
dilutive under the terms of IAS 33.
26
tertiary minerals plc
AnnuAl RepoRt 2010
20057.04
17/12/2010
Proof 4
our performance
our Governance
our Financials
7. Taxation on ordinary activities
no liability to corporation tax arises for the year due to the Group recording a taxable loss (2009: £nil).
the tax credit for the year is lower than the credit resulting from the loss before tax at the standard rate of corporation tax in
the uK – 28% (2009: 28%). the differences are explained below.
Tax reconciliation
loss on ordinary activities before tax
tax at 28% (2009: 28%)
Effects (at 28%) (2009: 28%) of:
Differences between capital allowances and depreciation
pre-trading expenditure no longer deductible for tax purposes
utilisation of losses brought forward
tax losses carried forward
tax on loss from ordinary activities
2010
£
2009
£
(321,563)
(270,269)
(90,037)
(75,675)
1,181
177,535
(88,679)
—
2,241
322,042
(248,608)
—
—
—
Factors that may affect future tax charges
the Group has not recognised a deferred tax asset of £935,134 (2009: £929,772). this amount would be recoverable if
sufficient taxable profits were made in the future.
8.
Intangible assets
Group
Cost
At start of year
Additions
exchange adjustments
At 30 September
Impairment losses
At start of year
Charge during year
At 30 September
Carrying amounts
At 30 September
At start of year
Deferred
Deferred
exploration exploration
expenditure expenditure
2009
£
2010
£
1,773,697
169,394
13,601
1,655,578
99,600
18,519
1,956,692
1,773,697
(1,178,428)
(69,134)
(1,150,755)
(27,673)
(1,247,562)
(1,178,428)
709,130
595,269
595,269
504,823
tertiary minerals plc
AnnuAl RepoRt 2010
27
20057.04
17/12/2010
Proof 4
Notes to the Financial Statements
for the year ended 30 September 2010
9. Property, plant & equipment
Cost
At start of year
Additions
At 30 September
Depreciation
At start of year
Charge for the year
At 30 September
Net Book Value
At 30 September
At start of year
10. Investments
Subsidiary undertakings
Group
Company
fixtures and fixtures and
fittings
2010
£
fittings
2010
£
Group
fixtures and
fittings
2009
£
Company
fixtures and
fittings
2009
£
40,132
706
40,838
13,683
706
14,389
39,862
270
40,132
13,413
270
13,683
(37,563)
(2,037)
(11,433)
(1,750)
(34,414)
(3,149)
(9,868)
(1,565)
(39,600)
(13,183)
(37,563)
(11,433)
1,238
2,569
1,206
2,250
2,569
5,448
2,250
3,545
Company
Country of
incorporation/registration
tertiary Gold limited
tertiary (Middle east) ltd
england & Wales
england & Wales
Type and percentage
of shares held at
30 September 2010
100% of ordinary shares
100% of ordinary shares
Principal activity
Mineral exploration
Mineral exploration
Investment in subsidiary undertakings
ordinary shares — tertiary (Middle east) limited
ordinary shares — tertiary Gold limited
loan — tertiary (Middle east) limited
less — provision for impairment
loan — tertiary Gold limited
At 30 September
Available for sale investment
Company
2010
£
1
93,792
928,988
(928,988)
3,037,937
Company
2009
£
1
93,792
927,788
—
2,837,176
3,131,730
3,858,757
Company
Country of
incorporation/registration
Type and percentage
of shares held at
30 September 2010
Principal activity
Sunrise Resources plc
england & Wales
10.35% of ordinary shares
Mineral exploration
Available for sale investment
Value at start of year
Movement in valuation of available for sale investment
At 30 September
Group
2010
£
167,387
—
Company
2010
£
167,387
—
Group
2009
£
257,519
(90,132)
Company
2009
£
257,519
(90,132)
167,387
167,387
167,387
167,387
the fair value of the available for sale investment is equal to the market value of the shares in Sunrise Resources plc at
30 September 2010, based on the closing mid market price of shares on the AIM Market.
28
tertiary minerals plc
AnnuAl RepoRt 2010
20057.04
17/12/2010
Proof 4
our performance
our Governance
our Financials
11. Receivables
trade receivables
other receivables
prepayments and accrued income
the Group aged analysis of trade receivables is as follows:
2010 Trade receivables
2009 trade receivables
12. Cash and cash equivalents
Cash at bank and in hand
Short-term bank deposits
13. Trade and other payables
trade creditors
other taxes and social security costs
Accruals and deferred income
other payables
14. Share capital
Allotted, called up and fully paid
ordinary shares of 1p each
Group
2010
£
28,090
585
13,588
42,263
Company
2010
£
28,090
—
10,875
38,965
Group
2009
£
37,553
3,274
11,269
52,096
Not
impaired
28,090
37,553
30 days
or less
28,090
37,553
Over
30 days
—
—
Company
2009
£
37,553
—
11,067
48,620
Total
carrying
amount
28,090
37,553
Group
2010
£
295,975
74,359
370,334
Company
2010
£
2,827
72,395
75,222
Group
2009
£
545,080
180,000
Company
2009
£
236,946
180,000
725,080
416,946
Group
2010
£
20,244
12,968
62,021
548
95,781
Company
2010
£
11,256
14,308
17,845
548
43,957
Group
2009
£
13,112
5,698
55,807
2,014
76,631
Company
2009
£
12,575
7,794
18,853
2,014
41,236
2010
No.
2010
£
2009
no.
2009
£
88,516,200
885,162 88,334,641
88,516,200
885,162 88,334,641
883,346
883,346
During the year to 30 September 2010 the following share issues took place:
An issue of 81,131 1.0p ordinary shares at 3.25p per share to a director for a total consideration of £2,637, in satisfaction of
directors fees (29 January 2010).
An issue of 100,448 1.0p ordinary shares at 2.625p per share to a director for a total consideration of £2,636, in satisfaction
of directors fees (19 July 2010).
During the year to 30 September 2009 a total of 24,730,905 1.0p ordinary shares were issued, at an average price of 1.7p, for
a total consideration of £419,275.
tertiary minerals plc
AnnuAl RepoRt 2010
29
20057.04
17/12/2010
Proof 4
Notes to the Financial Statements
for the year ended 30 September 2010
15. Warrants and options granted
Unexercised warrants
Issue date
28/07/06
11/12/06
11/12/06
31/10/07
31/10/07
09/12/08
09/12/08
07/12/09
07/12/09
Unexercised options
Issue date
27/03/01
29/04/02
29/01/04
31/01/05
Exercise price
Number
Exercisable Expiry dates
15.00p
13.00p
13.00p
8.75p
8.75p
2.375p
2.375p
4.375p
4.375p
300,000
100,000
200,000
1,300,000
200,000
2,300,000
600,000
2,300,000
600,000
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 07/12/10
Any time from 07/12/10
28/07/11
11/12/11
11/12/11
31/10/13
31/10/13
09/12/14
09/12/14
07/12/14
07/12/14
Exercise price
Number
Exercisable Expiry dates
16.0p
22.0p
15.0p
10.0p
60,000
45,000
60,000
200,000
Any time before expiry
Any time before expiry
Any time before expiry
Any time before expiry
27/03/11
29/04/12
29/01/14
31/01/15
Warrants and options are issued for nil consideration and are exercisable as disclosed above. they are exchangeable on a one
for one basis for each ordinary share of 1.0p at the exercise price on the date of conversion.
Share-based payments
the Company has an Inland Revenue approved share option scheme for all employees. options are exercisable at a price equal
to the market price of the Company’s shares on the date of grant.
the vesting period is three years. If the options remain unexercised after a period of ten years from the date of grant the
options expire. options may be forfeited if the employee leaves the Company.
In addition, the Company issues warrants to directors and employees, outside of the approved scheme, on varying terms and
conditions.
Details of the share warrants and options outstanding during the year are as follows:
outstanding at start of year
Granted during the year
outstanding at 30 September
exercisable at 30 September
2010
2009
Number of
warrants
and share
options
Weighted
average
exercise
price
Pence
number of
warrants
and share
options
Weighted
average
exercise
price
pence
5,365,000
2,900,000
8,265,000
5,365,000
6.200
4.375
2,465,000
2,900,000
5.560
5,365,000
6.200
2,465,000
10.70
2.38
6.20
10.70
the warrants and options outstanding at 30 September 2010 had a weighted average exercise price of £0.06 and a weighted
average remaining contractual life of 4.1 years.
In the year ended 30 September 2010, warrants were granted on 7 December 2009. the aggregate of the estimated fair
values of the warrants granted on this date is £38,472. In the year ended 30 September 2009, warrants were granted on
9 December 2008. the aggregate of the estimated fair values of the warrants granted on this date is £24,047.
no options were granted in the year ended 30 September 2010 or the year ended 30 September 2009.
30
tertiary minerals plc
AnnuAl RepoRt 2010
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Proof 4
our performance
our Governance
our Financials
15. Warrants and options granted — continued
the inputs into the Black–Scholes–Merton option pricing Model are as follows:
Weighted average share price
Weighted average exercise price
expected volatility
expected life
Risk-free rate
expected dividend yield
2010
3.5p
4.38p
60%
4 years
3.09%
0%
2009
1.90p
2.38p
67%
4 years
3.32%
0%
expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous 7
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.
the Company recognised total expenses of £37,045 and £30,432 related to equity-settled share-based payment transactions
in 2010 and 2009 respectively.
16. Operating lease commitments
Financial commitments under non-cancellable leases are:
office accommodation:
Within one year
17. Related party transactions
2010
Land &
buildings
£
2009
land &
buildings
£
1,200
1,200
Directors and directors’ interests
the directors holding office in the period and their beneficial interests in the share capital of the Company are:
At 30 September 2010
Warrants
Exercise
Number
price Expiry date
Shares
Number
Shares
number
At 30 September 2009
p l Cheetham*
10,376,913
D A R McAlister
457,821
D Whitehead
—
1,000,000
1,500,000
1,500,000
100,000
300,000
300,000
100,000
300,000
300,000
8.750p 31/10/2013 10,376,913
2.375p 09/12/2014
4.375p 07/12/2014
8.750p 31/10/2013
2.375p 09/12/2014
4.375p 07/12/2014
8.750p 31/10/2013
2.375p 09/12/2014
4.375p 07/12/2014
276,242
—
Warrants
number
2,500,000
400,000
400,000
* Includes 2,843,625 shares held by K e Cheetham, wife of p l Cheetham.
the directors have no beneficial interests in the shares of the Company’s subsidiary undertakings as at 30 September 2010.
the directors of the Company are the directors of all Group companies.
Details of the parent Company’s investment in subsidiary undertakings are shown in note 10.
tertiary minerals plc
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Proof 4
Notes to the Financial Statements
for the year ended 30 September 2010
17. Related party transactions — continued
Sunrise Resources plc
During the year the Company recharged costs of £108,256 to Sunrise Resources plc being shared overheads of £14,278, costs
paid on behalf of Sunrise Resources plc of £ 3,761, staff salary costs of £47,820 and directors’ salary costs of £42,397. the
salary costs in notes 4 and 5 are shown net of these recharges.
At the balance sheet date an amount of £28,029 was due from Sunrise Resources plc, which was repaid in november 2010.
p l Cheetham, a director of tertiary Minerals plc, is also a director of Sunrise Resources plc.
Shares and warrants held in Sunrise Resources plc by the tertiary Minerals plc directors are as follows:
p l Cheetham*
10,674,956
Shares
Number
D A R McAlister
D Whitehead
550,000
500,000
At 30 September 2010
Warrants
At 30 September 2009
Number
500,000
500,000
2,000,000
2,000,000
—
—
Exercise
price
Expiry
date
Shares
number
Warrants
number
2.750p
2.000p
0.575p
0.850p
—
—
06/12/11
31/10/13
08/12/14
07/12/15
—
—
9,826,062
3,500,000
550,000
500,000
—
—
* Includes 5,500,000 shares held by K e Cheetham, wife of p l Cheetham.
18. Post-balance sheet events
there were no material post balance sheet events up to the date of this report.
19. Capital management
the Group’s capital requirements are dictated by its project and overhead funding requirements from time to time. Capital
requirements are reviewed by the Board on a regular basis.
the Group manages its capital to ensure that entities within the Group will be able to continue as going concerns, to increase
the value of the assets of the business and to provide an adequate return to shareholders in the future when exploration assets
are taken into production.
the Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the
risk characteristics of its assets. In order to maintain or adjust the capital structure the possibilities open to the Group in future
include issuing new shares, consolidating shares, returning capital to shareholders, taking on debt, selling assets and adjusting
the amount of dividends paid to the shareholders.
20. Financial instruments
At 30 September 2010, the Group’s financial assets consisted of available for sale investments, trade receivables and cash and
cash equivalents. the Company’s financial assets consisted of available for sale investments, trade receivables 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 and Company’s financial assets and liabilities.
32
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our performance
our Governance
our Financials
20. Financial instruments — continued
the carrying amounts for each category of financial instruments held at 30 September 2010, as defined in IAS 39, are as
follows:
loans & receivables
Available for sale investments
Financial liabilities
the fair value is equal to the book value.
Group
2010
£
399,009
167,387
82,813
Company
2010
£
103,312
167,387
29,649
Group
2009
£
766,001
167,387
70,933
Company
2009
£
454,593
167,387
33,442
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 these risks remain unchanged.
Liquidity risk
the Group currently holds cash balances in Sterling, uS Dollars, Canadian Dollars, Saudi Riyals and Swedish Krona to provide
funding for exploration and evaluation activity, whilst the Company holds cash balances in Sterling. the Group and Company
are dependant on equity fundraising through private placing 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
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. Where a
material order is made in a different currency, funds are converted to that currency at prevailing rates and held on short term
treasury deposits at prevailing fixed interest rates pending payment.
Bank and cash balances, including the Group’s share of funds in the Ghurayyah joint arrangement, were held in the following
denominations:
united Kingdom Sterling
united States Dollar
Canadian Dollar
Saudi Riyal
Swedish Krona
Group
Company
2010
£
76,215
291,637
168
21
2,293
2009
£
417,257
304,968
530
58
2,267
370,334
725,080
2010
£
75,210
—
—
—
12
75,222
2009
£
416,946
—
—
—
—
416,946
Surplus funds in all currencies are placed with natWest bank on a number of short-term treasury deposits at varying fixed rates
of interest, but the Group held no treasury deposits at 30 September 2010.
the Company and the Group are exposed to changes in the uS Dollar/uK Sterling exchange rate mainly in the sterling value of
uS dollar denominated financial assets and any profit or loss arising from such changes reports to equity.
Sensitivity analysis shows that the Sterling value of its uS Dollar denominated financial assets at 30 September 2010 would
increase or decrease by £14,582 for each 5% increase or decrease in the value of Sterling against the Dollar.
tertiary minerals plc
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Proof 4
Notes to the Financial Statements
for the year ended 30 September 2010
20. Financial instruments — continued
neither the Company nor the Group is exposed to material transactional currency risk.
Interest rate risk
the Group and Company finance their operations through equity fundraising and therefore do not carry borrowings.
Fluctuating interest rates have the potential to affect the loss and equity of the Group and the Company in-so-far 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.
34
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Proof 4
Notice of Annual General Meeting
notice is hereby given that the Annual General Meeting of Tertiary Minerals plc will be held in the Fourth Floor Council Room
at Arundel House, 13-15 Arundel Street, temple place, london, WC2R 3DX on Monday 31 January 2011, at 2.00 p.m. for the
following purposes:
Ordinary Business
1. to receive the Accounts and Reports of the Directors and of the Auditors for the year ended 30 September 2010.
2. to re-elect Mr D Whitehead who is retiring by rotation under the Articles of Association as a director of the Company.
3. to re-appoint pKF (uK) llp as Auditors of the Company and to authorise the directors to fix their remuneration.
Special Business
Ordinary Resolution
4. that, in accordance with section 551 of the Companies Act 2006, the Directors be generally and unconditionally authorised to
allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company (“Rights”)
up to an aggregate nominal amount of £1,000,000 (consisting of 100,000,000 ordinary shares of 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
£1,000,000 (consisting of 100,000,000 ordinary shares of 1 pence each).
the power granted by this resolution will expire on the conclusion of the Company’s next annual general meeting (unless
renewed, varied or revoked by the Company prior to or on such date) save that the Company may, before such expiry make
offers or agreements which would or might require equity securities to be allotted after such expiry and the Directors may allot
equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has
expired.
this resolution revokes and replaces all unexercised powers previously granted to the Directors to allot equity securities as if
section 561(1) of the 2006 Act did not apply but without prejudice to any allotment of equity securities already made or agreed
to be made pursuant to such authorities.
As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at a
general meeting of the Company. please refer to notes on page 39.
By order of the Board
C D T Fitch
Company Secretary
7 December 2010
Registered office: Sunrise House, Hulley Road, Macclesfield, Cheshire, SK10 2lp
tertiary minerals plc
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Explanatory Notes to the Notice of Annual General
Meeting
the Annual General Meeting of tertiary Minerals plc will be held on Monday 31 January 2011 in the Fourth Floor Council Room at
Arundel House, 13–15 Arundel Street, temple place, london, WC2R 3DX at 2.00 p.m. the business of the meeting is as follows:
ORDINARY BUSINESS
Resolution 1
the Board is required to present to the meeting for approval the accounts and the Report of Directors and the Auditors for the year
ended 30 September 2010 which can be found on pages 17 to 34 .
Resolution 2
the Company’s Articles of Association require that at least one-third of directors retire annually and offer themselves for re-election
if they and the Board so wish. Biographical details of the directors can be found on page 11.
this year Mr. David Whitehead is retiring by rotation and the Board proposes that he be re-elected.
Resolution 3
the Company’s auditor pKF (uK) llp is offering itself for re-appointment and if elected will hold office until the conclusion of the
next annual general meeting at which accounts are laid before shareholders. this resolution will also allow the directors to fix the
remuneration of the auditor.
SPECIAL BUSINESS
Resolution 4
this resolution is to give the directors authority to issue shares. the last such authority was put in place by a meeting of
shareholders held on 29 January 2010 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 2012.
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 tertiary Minerals plc.
A similar authority granted at last year’s Annual General Meeting is due to expire at the coming Annual General Meeting.
the resolution will, if passed, authorise directors to allot shares or grant rights over shares of the Company where they propose to
do so for cash and otherwise than to existing shareholders pro-rata to their holdings – for example through a placement of shares.
If given, this authority will expire at the conclusion of the Annual General Meeting in 2012.
36
tertiary minerals plc
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Proof 4
Proxy Form
Form of Proxy
I/We (Block capitals please)
Tertiary Minerals plc
Company No. 03821411
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
being a member/members of Tertiary Minerals plc hereby appoint the Chairman of the Meeting (see note 3 on page 39) or the
proxy named below as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held
on Monday 31 January 2011 in the Fourth Floor Council Room at Arundel House, 13–15 Arundel Street, temple place, london,
WC2R 3DX at 2.00 p.m. and at any adjournment thereof.
I/we wish this proxy to be used in connection with those of the Resolutions to be proposed at the Annual General Meeting which
are listed below, in the manner set out below, and in connection with any other ordinary business transacted at the meeting.
Name of proxy
Number of shares
appointed over
I wish to appoint
Multiple proxies (see note 4)
Please tick
Signed or sealed (see notes) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
please indicate with an “X” in the spaces below how you wish the proxy to vote. unless otherwise instructed the proxy will at his
discretion vote as he thinks fit or abstain from voting in relation to all business of the meeting.
For
Against
Vote
Withheld
Ordinary Business
1. ordinary Resolution to receive the Accounts and Reports of the
Directors and of the Auditors for the year ended 30 September 2010.
2. ordinary Resolution to re-elect Mr D Whitehead who is retiring by
rotation under the Articles of Association as a director of the Company.
3. ordinary Resolution to re-appoint pKF (uK) llp as Auditors of
the Company and authorise the directors to fix their remuneration.
Special Business
4. ordinary Resolution to authorise the directors to
allot shares.
5.
Special Resolution to empower the directors to disapply
the pre-emption rights for certain allotments of shares.
please see notes on page 39.
tertiary minerals plc
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Proof 4
Please return this Proxy Form to:
PXS
Proxy Department
34 Beckenham Road
Beckenham
BR3 4TU
In the envelope provided
38
tertiary minerals plc
AnnuAl RepoRt 2010
20057.04
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Proof 4
Proxy Form Notes & Instructions
1. As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at
a general meeting of the Company. You can only appoint a proxy using the procedures set out in these notes.
2. Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy
and attend the meeting in person, your proxy appointment will automatically be terminated.
3. A proxy does not need to be a member of the Company but must attend the meeting to represent you. to appoint as your proxy a
person other than the Chairman of the meeting, insert their full name in the relevant box on the proxy Form. If you sign and return
the proxy form with no name inserted in the box, the Chairman of the meeting will be deemed to be your proxy. Where you
appoint as the proxy someone other than the Chairman, you are responsible for ensuring that they attend the meeting and are
aware of your voting intentions. If you wish your proxy to make any comments on your behalf, you will need to appoint someone
other than the Chairman and give them the relevant instructions directly.
4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You
may not appoint more than one proxy to exercise rights attached to any one share. to appoint more than one proxy, you may
photocopy the proxy Form. please indicate the proxy holder’s name and the number of shares in relation to which they are
authorised to act as your proxy, which in aggregate should not exceed the number of shares held by you. please also tick the box
to indicate that there are multiple proxies. All forms must be signed and should be returned as set out in note 6.
5. to direct your proxy how to vote on the resolutions mark the appropriate box with an ‘X’. to abstain from voting on a resolution,
select the relevant “Vote Withheld” box. A vote withheld is not a vote in law, which means that the vote will not be counted in
the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at
his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put
before the meeting.
6. to appoint a proxy, the proxy Form must be:
l completed and signed;
l sent or delivered to Capita Registrars, pXS, 34 Beckenham Road, Beckenham BR3 4tu; and received by Capita Registrars no
later than 2.00 p.m. on thursday 27 January 2011.
7. In the case of a member which is a company, the proxy Form or any notice of revocation of a proxy must be executed under its
common seal or signed on its behalf by an officer of the company or an attorney for the company.
8. Any power of attorney or any other authority under which the proxy Form is signed (or a duly certified copy of such power or
authority) must be included with the proxy form.
9. In the case of joint holders, where more than one of the joint holders purports to appoint or revoke a proxy, only the appointment
submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders
appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior).
10. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of
proxies will take precedence.
11. If you wish to change your proxy instructions simply submit a new proxy appointment according to these instructions. If you need
another hard-copy proxy form please contact the Company. the last date for receipt of a new proxy instruction is set out in note 6
above.
12. to revoke a proxy instruction you will need to send notice clearly stating your intention to revoke your proxy appointment to:
Capita Registrars, pXS, 34 Beckenham Road, Beckenham BR3 4tu.
13. entitlement to attend and vote at the meeting and the number of votes which may be cast thereat will be determined by reference
to the Register of Members of the Company at 6:00pm on thursday 27 January 2011. Changes to entries on the Register of
Members after that time shall be disregarded in determining the rights of any person to attend and vote at the meeting.
tertiary minerals plc
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Shareholder Notes
40
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Proof 4
Company Information
Tertiary Minerals plc (AIM and Plus Markets – Ticker Symbol TYM)
Company No. 03821411
Head and Registered Office
Sunrise House
Hulley Road
Macclesfield
Cheshire
SK10 2LP
United Kingdom
Tel: +44 (0)1625 626203
Fax: +44 (0)1625 626204
Auditors
PKF (UK) LLP
3 Hardman Street
Spinningfields
Manchester
M3 3HF
United Kingdom
Bankers
National Westminster Bank plc
2 Spring Gardens
Buxton
Derbyshire
SK17 6DG
United Kingdom
Broker & Nominated Adviser
Seymour Pierce Limited
20 Old Bailey
London
EC4M 7EN
United Kingdom
Company website
www.tertiaryminerals.com
Solicitors
Cobbetts
58 Mosley Street
Manchester
M2 3HZ
United Kingdom
Registrars
Capita Registrars Limited
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
HD8 0GA
United Kingdom
20057.04
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Proof 4
Tertiary Minerals plc
Sunrise House, Hulley Road
Macclesfield, Cheshire
SK10 2LP United Kingdom
Tel: +44(0) 1625 626203
Fax: +44(0) 1625 626204
www.tertiaryminerals.com
20057.04
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Proof 4