2022
ANNUAL REPORT
SIGNIFICANT STAKES IN A SELECT RANGE OF KEY COMMODITY COMPANIES
Zeta Resources Limited is a resource-focused
investment holding company whose aim is to
maximise total returns for shareholders by
identifying and investing in resource assets and
companies where the underlying value is not
reflected in the market price.
NATURE OF THE COMPANY
Zeta Resources Limited (“Zeta”, “Zeta Resources”, or the “Company”) is a closed-end investment company, whose
ordinary shares are listed on the Australian Securities Exchange (“ASX”). The business of Zeta consists of investing the
pooled funds of its shareholders in accordance with its investment objective and policy, with the aim of generating a
return for shareholders with an acceptable level of risk.
The Company has contracted with an external investment manager, ICM Limited (the “Investment Manager” or “ICM”),
to manage its investments and undertake the company secretarial function.
WHY ZETA RESOURCES LIMITED?
Zeta is a patient, long term investor, seeking and
finding compelling value in the resources sector.
Copper Mountain Mining Corporation
Zeta’s investment aim is to maximise total returns for
shareholders by identifying and investing in resource
assets and companies in diverse commodity sectors
where the underlying value is not reflected in the
market price.
Zeta has a select range of concentrated investments,
where the Company has a meaningful influence on
its investment. Rather than take a passive approach,
Zeta is an active manager of its investments, working
alongside investee management teams to ensure
rational decision making, particularly in respect of
capital allocation.
In addition, Zeta often participates at a corporate
governance level, and assists investee companies
with its network of contacts and experience.
Zeta utilises ICM as its Investment Manager. ICM
has a global network of offices, including a specialist
team devoted to research and analysis of resource
companies.
1
Annual Report for the year to 30 June 2022 CONTENTS
1 Why Zeta Resources Limited?
PERFORMANCE
3
4
5
6
Chairman’s Statement
Group Performance Summary
Current Year Performance
Geographical Investment Exposure
INVESTMENTS
7
Investment Manager’s Report
16 Macro Trends Affecting Resources
17 Sector Summaries
21 ESG Spotlight
22 Our Investment Approach
24 Largest Holdings Overview
27
Investment Manager and Team
GOVERNANCE
29 Directors
30 Report of the Directors
34 Corporate Governance Statement
FINANCIAL STATEMENTS
Independent Auditor’s Report
36
40 Auditor’s Independence Declaration
41 Financial Statements
45 Notes to the Financial Statements
66 SHAREHOLDER INFORMATION
68 COMPANY INFORMATION
FINANCIAL CALENDAR
Year End
30 June
Annual General Meeting
29 November 2022
Half Year
31 December
Half Year Announcement
February
Image above – Alliance Mining
Commodities Limited
Front Cover image – Panoramic
Resources Limited
FORWARD–LOOKING STATEMENTS
This annual report may contain “forward-looking statements” with respect to the financial condition, results of operations and business of the
Company. Such statements involve risk and uncertainty because they relate to future events and circumstances that could cause actual results
to differ materially from those expressed or implied by forward-looking statements. The forward-looking statements are based on the directors’
current view and on information known to them at the date of this report. Nothing in this publication should be construed as a profit forecast.
Potential investors are reminded that the value of investments and the income from them may go down as well as up and investors may not receive
back the full amount invested.
2
Zeta Resources Limited
CHAIRMAN’S STATEMENT
Our portfolio and focus on metals will benefit
from decarbonisation and the gradual
proliferation of electric vehicles.
As both a leveraged
investment fund and
an investor in operating
companies rather than directly
in commodities (providing
operating leverage), the
impact of commodity price
movements are exacerbated
for Zeta in both directions, this
year being a prime example.
After last year’s record profit of
US$114.7 million Zeta realised
a net loss this year of US$68.5
PETER SULLIVAN
Chairman
million, primarily due to the fall in the price of copper
and in Zeta’s key copper investment, Copper Mountain
Mining Corporation.
It was a mixed and volatile year for commodities, with
nickel being the standout example of this heightened
volatility. The price of nickel began to climb in late
2021 but went nearly vertical on March 7 and 8, rising
66% to US$48,078 per tonne on 7 March and then,
in early morning trading on 8 March, briefly leaping
above US$100,000 per tonne before trading was
halted by the London Metal Exchange (“LME”). The
market collapse was triggered by the combination of
supply concerns related to the Russia-Ukraine war
and a massive short squeeze centred on nickel giant
Tsingshan Holding Group. Days later, the LME made
the near unprecedented, and controversial, decision
to cancel all trades that took place on the morning
of 8 March. The price of nickel gradually returned to
normalcy, but still ended the year up 25.2%. Zeta’s
nickel assets performed well, with Panoramic Resources
up 33.3% and GME Resources up 94.1%. During the
year, Panoramic Resources successfully restarted its
Savannah nickel mine in Western Australia, and GME
Resources advanced development work on its large
nickel-cobalt project, also in Western Australia.
Copper also peaked in early March, but after two years
of strong price performance, began to fall off (along
with most industrial commodities) late in the year
amidst elevated global recession concerns, finishing
the year down 12.1%. Following a 485% increase
in the year prior, Copper Mountain’s share price
faced pressure as the copper price declined and the
Copper Mountain Mine dealt with several operational
challenges, ending the year down 53.3%.
While the current macro environment adds short-
term uncertainty to global industrial demand, and
therefore commodity pricing, we remain pleased with
our portfolio and focus on metals that will benefit
from decarbonisation and the gradual proliferation
of electric vehicles (“EVs”), as Zeta’s three largest
sector exposures remain bauxite (aluminium), copper,
and nickel. Zeta’s investment in Alliance Mining
Commodities, which owns a world-class bauxite
resource in Guinea that it continues to work towards
development, is now Zeta’s largest investment.
Gold is Zeta’s fourth largest sector, and while the price
was roughly flat this year (up 3.1%), gold remains a
useful hedge against recession and inflation. Zeta’s
chief gold investment, Horizon Gold, continued its active
exploration program increasing its mineral resource
estimate this year by 32% to nearly 1.8 million ounces.
We continue to see our shares trading at a discount
to the underlying net tangible asset backing. During
the year, in addition to maintaining our regular
buy-back programme, Zeta also utilised some of the
prior year’s returns to support its investments with
capital, including Horizon Gold and Alliance Mining
Commodities, and to de-leverage the balance sheet,
reducing its debt by 26%.
Finally, I note that this is the tenth annual report
produced by Zeta since the Company was listed on
the Australian Securities Exchange in 2013, and I
thank you for your ongoing support. We look forward
to continuing our mission to find and realise value in
the resource space, with a focus on long term value
creation.
Peter Sullivan
Chairman
19 September 2022
3
Annual Report for the year to 30 June 2022 GROUP PERFORMANCE SUMMARY
Total return(1) (annual) (%)
Net tangible asset per ordinary share(2) (Australian cents)
Ordinary share price (Australian cents)
Discount (%)
Profit/(loss) per ordinary share(3) (US dollars)
Dividends per ordinary share
Equity holders' funds (US$m)
Gross assets(4) (US$m)
Cash (US$m)
Other debt (US$m)
Net debt (US$m)
Net debt to equity (%)
30 June
2022
30 June
2021
% change
2022/21
(25.3)
102.7
(124.7)
38.7
33.0
(14.8)
(0.12)
Nil
151.5
178.9
0.1
(27.5)
(27.4)
18.1
51.9
43.0
(17.1)
0.33
Nil
220.2
260.0
1.4
(39.8)
(38.4)
17.4
(25.3)
(23.3)
(13.5)
(136.8)
n/a
(31.2)
(31.2)
n/a
(30.9)
(28.7)
3.6
(1)
(2)
Total return is calculated based on NTA per share return plus dividends reinvested from the payment date.
The NTA is calculated based on 565,512,224 shares on issue as at 30 June 2022, and 566,004,068 shares on issue as at
30 June 2021.
(3)
Earnings per share is based on the weighted average number of shares in issue during the year adjusted for the
bonus element of options exercised in 2021.
(4) Gross assets less liabilities excluding loans.
n/a = not applicable
Copper Mountain Mining Corporation
4
Zeta Resources Limited
CURRENT YEAR PERFORMANCE
NAV TOTAL RETURN
PER ORDINARY SHARE
SHARE PRICE RETURN
PER SHARE
NAV DISCOUNT
AS AT 30 JUNE 2022
GEARING
25.3%
23.3%
14.8%
18.1%
EARNINGS PER SHARE
ORDINARY SHARES
BOUGHT BACK
AVERAGE PRICE OF
ORDINARY SHARE
BOUGHT BACK
ONGOING CHARGES
(EXCLUDING
PERFORMANCE FEE)
(US$0.12)
647,056
A$0.38
1.1%
NTA PER SHARE VERSUS SHARE PRICE
from 30 June 2021 to 30 June 2022
s
r
a
l
l
o
D
n
a
i
l
a
r
t
s
u
A
0.700
0.600
0.500
0.400
0.300
0.200
Jun 21
Jul 21
Aug 21
Sep 21
Oct 21
Nov 21
Dec 21
Jan 22
Feb 22 Mar 22
Apr 22 May 22
Jun 22
NTA
Closing Share Price
Note: Historic figures adjusted for the February 2014 entitlement issue
and diluted for the September 2020 bonus option issue
Source: ICM
5
Annual Report for the year to 30 June 2022
GEOGRAPHICAL INVESTMENT EXPOSURE
(% OF TOTAL INVESTMENTS)
Canada
23.8%
(37..2%)
Other
0.2%
(1.6%)
Sri Lanka
3.7%
(5.3%)
Guinea
29.8%
(22.9%)
Australia
42.5%
(33.0%)
Source: ICM
Figures relate to percentage of total investments
Figures in brackets as at 30 June 2021
THREE LARGEST GEOGRAPHIES:
THREE LARGEST SECTORS:
42.5% Australia
29.8% Guinea
23.8% Canada
3.9% Other
6
Zeta Resources Limited
29.8% Bauxite
24.3% Copper
21.3% Nickel
24.7% Other
INVESTMENT MANAGER’S REPORT
Horizon Gold Limited
The year under review was
a mixed and volatile year for
commodity prices. Oil and gas
saw tremendous price gains
for the second consecutive
year amidst a strong return
in demand and a challenged
supply recovery, while gold
and aluminium traded nearly
flat over the last 12 months
albeit in different directions,
with gold slightly up and
aluminium slightly down.
TRISTAN KINGCOTT, CFA
Investment Manager
After realising strong price growth in the prior year,
copper traded in a relatively elevated range before
beginning a significant price decline in April, as
increased recession concerns impacted the markets.
Nickel prices, following a period of extreme volatility
in March spurred on by the Russia/Ukraine conflict
and a massive short squeeze, saw a steep decline
in the last few months of the year under review,
although prices remain elevated on a year-over-year
basis.
Turning to Zeta’s commodity exposures, the most
significant change was a substantial drop in the
share price of Copper Mountain Mining Corporation
(“Copper Mountain”) (discussed below). At the start of
the year, Zeta had 38.5% of gross assets in copper,
22.9% bauxite, 14.4% gold, and 12.3% nickel. By the
end of the year, the top commodity exposures were
29.8% bauxite, 24.3% copper, 21.3% nickel, and
12.2% gold.
Zeta’s net assets per share fell 25% from A$0.52
at the start of the year under review to A$0.39,
returning some of the gains from last year’s strong
asset growth. For comparison, the S&P/ASX 200
Energy index rose 25% over the same period, and the
S&P/ASX 300 Metals & Mining index, which includes
gold mining stocks, fell 9%. Zeta’s share price fell 23%
from A$0.43 to A$0.33. At the start of the period the
share price was at a 20.3% discount to net assets; at
the end of the period the share price was at an 18.1%
discount to net assets.
During the year under review, Zeta realised some
profits from the prior year’s strong performance,
selling modest portions of its positions in both
Copper Mountain and Panoramic Resources
Limited (“Panoramic”). Funds were used primarily to
support other major investments, including Horizon
Gold Limited (“Horizon Gold”) and Alliance Mining
Commodities Limited (“AMC”), and to further reduce
debt from A$52.8m at the start of the financial year
to A$39.2m at 30 June 2022.
7
Annual Report for the year to 30 June 2022
INVESTMENT MANAGER’S REPORT
(continued)
IN THE YEAR TO 30 JUNE 2022
AUSTRALIA IS ZETA’S LARGEST
COUNTRY EXPOSURE AT 42.4%
GUINEA IS ZETA’S SECOND
LARGEST COUNTRY EXPOSURE
AT 29.8%
CANADA IS ZETA’S THIRD LARGEST
COUNTRY EXPOSURE AT 23.8%
9.4%
6.9%
13.4%
Note: decreases/increases refer to the movement in the portfolio percentage of the relevant country
SECTOR SPLIT OF INVESTMENTS
Bauxite
Copper
Nickel
13
AI
79
Au
29.8%
(22.9%)
29
Cu
24.3%
(38.5%)
Gold
Cobalt
27
Co
4.1%
(2.0%)
28
Ni
6
C
21.3%
(12.3%)
Graphite
3.7%
(5.3%)
Other
Cash
3.2%
(2.9%)
1.2%
(1.1%)
12.2%
(14.4%)
Oil & Gas
0.2%
(0.6%)
Figures in brackets as at 30 June 2021
8
Zeta Resources Limited
Panoramic Resources Limited
COMMODITY MARKETS
As noted, during the year under review the price
of several commodities such as oil, gas, and nickel
increased significantly while the price of copper and
aluminium fell. Gold was up slightly. Zeta’s largest
geographical exposure is to Australia, with 42.5% of
the portfolio invested at year end. Guinea is second,
with just under 30% of the portfolio; and Canada third,
with just less than a quarter of the portfolio.
Aluminium
Similar to several other commodities, it was a volatile
year for the price of aluminium. Following steady
growth since the start of the calendar year, peaking
at US$1.44 per pound in October 2021, the price
rapidly dropped 20% in two weeks amidst softening
demand and sliding coal prices that eased concerns
over supplies in China, where coal-fired power is a
key component in the metal’s production process. In
December 2021, aluminium prices again began to rise,
escalating quickly to a peak of US$1.81 per pound
in early March 2022 before sinking to US$1.09 per
pound at 30 June 2022, a 5% reduction year-over-year.
The two primary factors influencing the pessimistic
near-term demand outlook for aluminium are demand
reduction in China due to covid-19 lockdowns and
recession concerns associated with rising interest
rates. Nonetheless, the aluminium market remains in
deficit and tight smelter margins (due to high energy
costs) are likely to keep a limit on supply.
Zeta increased its investment during the year in the
unlisted bauxite developer AMC through support of
multiple modest capital raises. AMC is progressing the
development of its world-class bauxite deposit
in Guinea.
ALUMINIUM PRICE
from June 2020 to June 2022
2.60
2.30
2.00
1.70
1.40
1.10
0.80
0.50
Jun 20
Dec 20
Jun 21
Dec 21
Jun 22
US$/lb
A$/lb
Source: LME
9
Annual Report for the year to 30 June 2022 INVESTMENT MANAGER’S REPORT
(continued)
As escalating global inflation came to the forefront
and central banks began aggressively raising
interest rates, concerns over the economic impact
of higher rates and heightened risk of recession
impacted the copper price.
Copper
Following the strong rebound in copper prices which
began in March 2020, prices continued to climb, albeit
at a slower pace, until peaking in March 2022. As
escalating global inflation came to the forefront and
central banks began aggressively raising interest rates,
concerns over the economic impact of higher rates
and heightened risk of recession impacted the copper
price. This, combined with muted economic activity out
of China due to covid-19 lockdowns, led to a decline
in the near-term copper demand forecast and a steep
drop in prices through the last several months of the
Zeta financial year. The downward trend continued
through the month of July. At the end of June 2022,
the copper price was US$3.74 per pound, 12.1% below
the price at the end of June 2021 and 23.2% below the
recent peak reached in early March 2022.
Over the medium term, demand growth for copper
continues to be underpinned by increasing production
of EVs, which require greater use of copper wiring than
traditional internal combustion engine vehicles. The
additional infrastructure required to charge EVs also
requires the use of additional copper.
Zeta’s largest investment in the copper sector is
Canadian firm Copper Mountain, which produces copper
in British Columbia and has a development project in
Queensland, Australia. The decrease in the share price of
Copper Mountain was the largest factor in the decrease
in the value of Zeta’s gross assets during the year, as the
company’s share price was impacted by the lower copper
price and weaker than expected production results in the
first quarter of 2022 stemming from both damage to the
main shaft of its secondary crusher in December 2021
(since repaired in April) and the mining of a lower grade
section of the pit.
COPPER PRICE
from June 2020 to June 2022
7.00
6.00
5.00
4.00
3.00
2.00
Jun 20
Dec 20
Jun 21
Dec 21
Jun 22
US$/lb
A$/lb
Source: LME
Nickel
From 30 June 2021 through the end of 2021, the
price of nickel traded in a range between US$8.07
per pound and US$9.59 per pound. The price began
climbing in late 2021 and, following the Russian
invasion of Ukraine, concerns about supply shortages
led to extreme volatility and a short squeeze that
saw the nickel price jump 250% in a little more than
24 hours, leading the London Metal Exchange to
suspend trading in nickel for one week. The price
later settled to c. US$15 per pound through the rest
of March and April, before trading down in May and
June amidst heightened recession risk, ending the year
under review at US$10.48 per pound. Demand for
nickel continues to be supported in part by increasing
demand for EVs.
10
Zeta Resources Limited Zeta’s chief investment in the nickel sector remains
Panoramic Resources Limited and has a smaller, but
still significant investment in GME Resources Limited
(“GME Resources”). Both investments performed
well during the year under review, with Panoramic’s
share price up 33.3% and GME Resources’ up 94.1%.
Panoramic commenced underground development
and restarted ore production at its Savannah mine
in July 2021, completing its first shipment of nickel-
copper-cobalt concentrate from Savannah on
26 December 2021, followed by three more shipments
in the first half of 2022. GME Resources continues to
advance its NiWest nickel-cobalt project in Western
Australia and has commenced work on an updated
prefeasibility study.
NICKEL PRICE
from June 2020 to June 2022
24
20
16
12
8
4
the rapid increase in interest rates and commitments
from most central banks to continue aggressively
raising rates until inflation is resolved would generally
be bearish for gold yet has also had a somewhat
muted impact. The price of gold is down from the
highs in March but remains relatively high on a
historical basis. This is despite a strong performing US
dollar, which also tends to push gold prices lower.
There are competing forces impacting the gold market;
on the downside, higher interest rates and a strong
US currency put downward pressure on the price,
while the threat of recession and an expected return
of demand for physical gold in China as it gradually
comes out of lockdowns bolster the forecast for gold.
Zeta’s largest investment in the gold sector is in
Western Australian gold exploration company Horizon
Gold. During the year, Zeta supported the company
through an entitlement issue to raise capital for
development and exploration. Horizon Gold continues
to work through an extensive drilling campaign across
multiple prospects, its second campaign in two
years. The company recently issued a revised mineral
resources estimate following results of its first drilling
campaign, with mineral resources up 32% on the
previous estimate.
Jun 20
Dec 20
Jun 21
Dec 21
Jun 22
US$/lb
A$/lb
Source: LME
GOLD PRICE
from June 2020 to June 2022
3,100
2,800
2,500
2,200
1,900
1,600
1,300
Gold
Unlike the other commodities under review, the gold
price traded in a relatively tight range through Zeta’s
financial year, ranging between c. US$1,750 and
US$1,900 per ounce for most of the year, excluding
March and April 2022 when it traded between
c. US$1,900 and US$2,000 per ounce. At the end of
June 2021 the price of gold was US$1,763 per ounce;
at the end of June 2022 the gold price was US$1,817
per ounce, an increase of 3.1%. In Australian dollars,
the rise was more pronounced, from A$2,349 per
ounce to A$2,642, an increase of 12.5%.
As noted in last year’s annual report, the gold price
response from the past several years’ stimulatory
monetary policies was somewhat muted; likewise,
Jun 20
Dec 20
Jun 21
Dec 21
Jun 22
Spot Price US$
Spot Price A$
Source: Kitco - London PM Fix
11
Annual Report for the year to 30 June 2022 INVESTMENT MANAGER’S REPORT
(continued)
Oil & Gas
Oil and gas outperformed most other commodities
for the second consecutive year, as both commodities
followed last year’s price increases with large, albeit
smaller on a percentage basis than the 12 months’
prior, price increases during the year under review.
Brent Crude Oil was US$120 per barrel at the end
of June 2022, up 56% vs the start of the year, while
Henry Hub Natural Gas was up 73% to US$6.54 per
MMBtu. Demand for oil has recovered strongly since
the reduction in covid-19 disruptions and return of
international travel but supply growth has lagged; North
American producers (typically a source of marginal
supply that responds to prices) have been hesitant
to ramp up production and instead focused on debt
reduction and returning cash to shareholders, and
OPEC+ has struggled to meet full targets as it unwinds
covid-19 related supply cuts. Natural gas prices have
soared, particularly in Europe, due primarily to supply
uncertainty related to Russian exports.
Zeta does not currently have any significant
investments in the oil & gas sector.
BRENT CRUDE OIL PRICE
from June 2020 to June 2022
200
170
140
110
80
50
20
Jun 20
Dec 20
Jun 21
Dec 21
Jun 22
US$/bbl
A$/bbl
Source: US Energy Information Administration
Kumarina Resources Pty Ltd
12
Zeta Resources Limited CAPITAL STRUCTURE
Zeta is a closed-end investment company, listed on the ASX, and incorporated in Bermuda.
During the year the loan from parent company, UIL Limited, was repaid in full. Somers Limited, a related party entity,
provided working capital support which, at 30 June, was US$15 million, drawn in Australian and Canadian dollars.
As at 30 June 2022, Zeta had total assets of US$182.2 million (2021: US$268.2 million). Of this figure, US$54.3 million
(2021: US$61.4 million) was invested in the bauxite sector; US$23.9 million (2021: US$38.7 million) was invested in
the gold sector; US$38.9 million (2021: US$45.3 million) was invested in the nickel sector; and US$44.3 million (2021:
US$117.5 million) was invested in the copper sector.
TOTAL RETURN COMPARATIVE PERFORMANCE*
since inception on 12 June 2013 to 30 June 2022
220.0
200.0
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
Jun 13
Jun 14
Jun 15
Jun 16
Jun 17
Jun 18
Jun 19
Jun 20
Jun 21
Jun 22
Zeta Share Price
S&P/ASX 200 Energy
S&P/ASX 300 Metals & Mining
*AUD, rebased to 100 as at 12 June 2013. Zeta share price adjusted for February
2014 entitlement issue and diluted for the September 2020 bonus option issue
Source: ICM and S&P Dow Jones Indices
FINANCIAL RESULTS
The net loss after tax for the year was US$68,542,960 against a profit of US$114,670,080 in the year ended June 2021.
The net loss was comprised largely of unrealised losses from investments.
13
Annual Report for the year to 30 June 2022 INVESTMENT MANAGER’S REPORT
(continued)
LOOK-THROUGH RESERVES & RESOURCES
Zeta’s investment portfolio includes exposure to the following commodities, weighted by the percentage ownership of
investee declared Reserves and Resources as follows as at the end of June 2022:
RESERVES
Proved & Probable
RESOURCES
Measured & Indicated
14.42 m t
140.35 m t
0.33 m t
0.44 m t
0.27 m t
0.33 m t
0.31 m oz
1.14 m oz
0.02 m t
0.02 m t
—
0.15 m t
1.71 m oz
2.32 m oz
Alumina
Copper
Nickel
Gold
Cobalt
Graphite
Silver
13
AI
29
Cu
28
Ni
79
Au
27
Co
6
C
47
Ag
14
Zeta Resources Limited ASSOCIATES
As at 30 June 2022, the following three entities were determined to be associates of Zeta:
GME Resources Limited
ASX-listed junior nickel and gold explorer with substantial nickel
resources in Western Australia
Alliance Mining
Commodities Limited
Unlisted bauxite development company with a world class asset in
Guinea, West Africa
Margosa Graphite Limited
Unlisted graphite explorer focused on high-grade vein graphite in
Sri Lanka
% owned
43.4
37.2
33.4
SIGNIFICANT INVESTMENTS
Kumarina
The five largest investments held by Zeta are considered in
greater detail in their own section later in this annual report.
The remaining significant investments are as follows.
Margosa Graphite
Margosa Graphite Limited (“Margosa”) is an unlisted
Australian company targeting development of a JORC-
compliant high grade crystalline vein graphite deposit
in Sri Lanka. Sri Lanka has a long history of graphite
production since the mid-1800s and is home to some
of the purest grade graphite in the world. Sri Lankan
high quality graphite has varied applications, including
in anodes for lithium-ion batteries used in EVs. In the
year under review Margosa increased its executive and
in-country staff and continued its progress towards
securing a mining license.
Star Royalties
Star Royalties Ltd. is a Canadian company focused on
investing via royalties and streams in precious metals
and carbon credits. In addition to its precious metal
streaming agreements, the company pioneered the
first forest carbon credit royalty in Canada and during
the year under review created a subsidiary company
called Green Star Royalties, which is pursuing a
pipeline of additional green investments.
Kumarina Resources Pty Limited (“Kumarina”) is a
100%-owned subsidiary of Zeta. The company is focused
on the Murrin Murrin copper-gold project in Western
Australia. The Murrin Murrin project has a gold resource
(JORC 2012) of 36,000 ounces and is prospective for base
metals in the form VMS style copper zinc mineralisation.
Project area
Eulaminna
Murrin Murrin
Tenement ID
Ownership
M39/0371
M39/0372
M39/0397
M39/0398
M39/0399
M39/0400
M39/1068
0%*
0%*
100%
100%
100%
100%
100%
*Gold and Base Metal Rights
Tristan Kingcott, CFA
ICM Limited
Investment Manager
19 September 2022
15
Annual Report for the year to 30 June 2022 MACRO TRENDS AFFECTING RESOURCES
GLOBAL DEBT, INFLATION AND RECESSION RISK
• Record high government debt, unprecedented pandemic stimulus, and supply chain issues
have increased inflationary pressure on many currencies
• Central banks rapidly raising interest rates in response to inflationary environment
• Downward pressure on asset values due to pull back of quantitative easing
• Weak consumer confidence and yield curve inversion shows signs of increased recession,
or stagflation, risk
•
•
Risk to global economy, and thus demand for industrial commodities
Chinese real estate crisis adds additional uncertainty and risk to global economy
COVID-19 DISRUPTION
• China’s Covid-Zero policy is causing disruptions to both production and demand, increasing
volatility for several commodities globally
• Supply chain and logistics disruptions persist despite many countries relaxing pandemic
restrictions
• Uncertainty remains high amidst new covid-19 strains and varying government responses
RUSSIA - UKRAINE CONFLICT
• Russia – Ukraine conflict impacting global markets and the supply of several commodities
• Food security concerns in many developing countries likely to persist from supply disruption
of grain, wheat, corn, and fertiliser products
• Sanctions placed on Russia and uncertainty regarding exports causing energy security
concerns, primarily as it relates to natural gas, in much of Europe
ELECTRIC VEHICLES
• Nearing tipping point where all factors for growth are in place
• EVs use more commodities such as nickel and copper than traditional vehicles
• Potential spike in demand for several metals, including lithium, cobalt, and manganese
•
Increased demand for flake and vein graphite
• New battery technologies may limit demand for certain battery commodities
CLIMATE CHANGE AND DECARBONISATION
• Heightened consumer pull and government push to reduce carbon emissions across
every sector of the economy globally
• Use of renewables, including solar, wind, and biofuels increasing quickly but still a relatively
small component of total energy mix
• Growing focus on ESG reporting and fulsome accounting of carbon footprint required
for many businesses
• Likely to be a drag on long term demand for certain commodities such as thermal coal
and oil and a tailwind for several others, including nickel, copper, lithium, graphite,
and potentially uranium
16
Zeta Resources Limited SECTOR SUMMARIES AS AT 30 JUNE 2022
BAUXITE
13
AIAluminium
COPPER
29
CuCopper
Overview
• Aluminium is the most widely used metal after iron; its primary usage is in alloys where
its light weight is preferred
• Bauxite is the primary ore from which aluminium is extracted; the ore must first be
chemically processed to produce alumina (aluminium oxide); alumina is then smelted
using an electrolysis process to produce pure aluminium metal
• Diversified sources of production, albeit less than other commodities invested in by Zeta
• Largest bauxite producer Australia, followed by China, with Guinea third
• Largest bauxite reserves are in Australia and Guinea; Vietnam is a distant third
Macro trends
• Alumina production has been in increasing trend since early 1980s
• Australia a big producer of bauxite and alumina, but relatively little smelting is conducted there
• Aluminium prices have cooled since peaking in March 2022, however, remain elevated
versus the previous ten years
• Aluminium being used by some manufacturers to replace steel in car frames to compensate
for the additional weight of lithium-ion batteries vs internal combustion engines
Exposure
• 37% of Alliance Mining Commodities (unlisted) – owner and developer of a world-class
bauxite resource in Guinea
Overview
• Industrial metal used primarily in electrical wiring
• Other uses are roofing and plumbing; industrial machinery; and in alloys
• Occurs naturally in a form that requires relatively little refining
• Diversified production, but Chile by far the largest producer with Peru and China distant
second and third
Macro trends
• Annual production has been increasing for over fifty years, but with a sharp uptick in late 1990s
• Increasing demand for wiring for EVs, but price still generally tied to the global economy and
industrial demand
• Copper price is down greater than 30% since March 2022 peak amidst inflation driven
recessionary concern
• Longer term outlook on copper price remains positive with the anticipated ramp up of EV
sales over the next decade
• Fluctuating demand from China and risk of supply disruptions in South America also
influence prices, particularly in the short term
Exposure
• 17% of Copper Mountain (TSX:CMMC, ASX:C6C) – producing copper in Canada,
and developing a copper asset in Australia
• 100% of Kumarina (unlisted) – junior copper-gold exploration firm in Western Australia
17
Annual Report for the year to 30 June 2022 SECTOR SUMMARIES AS AT 30 JUNE 2022
(continued)
Overview
• Industrial metal used primarily in stainless steel
• Other uses include electroplating, alloy steel, and in cathodes for electric batteries
• Diversified sources of production
• Largest producers Indonesia, Philippines, Russia, New Caledonia, Australia, Canada
Macro trends
• Demand for nickel for lithium-ion batteries increasing quickly, but still relatively small
component of global nickel demand
• Nickel is currently trading relatively high compared to the previous 10 years amidst
strong demand forecasts related to electric vehicle sales, however has cooled from
recent peak pricing
• Industrial demand still heavily influenced by the Chinese economy
Exposure
• 12% of Panoramic Resources (ASX:PAN) – nickel producer in Western Australia
• 43% of GME Resources (ASX:GME) – owns development project in Western Australia
Overview
• Precious metal, prized for its rarity and relative lack of chemical reactivity
• Gold occurs naturally in only a single isotope
• Historic demand has been 50% jewellery; 40% investment; 10% industrial
• Diversified sources of production
• Largest producers China, Australia, Russia, United States
Macro trends
• Hedge to US dollar which has declined long term against gold
• Price of gold has been volatile and trending down since peaking above $2,000 per oz in
March 2022, but nonetheless remains near 10-year highs, as monetary tightening competes
with inflation
• Gold production has been in a long-term downtrend since record-keeping commenced
• Demand for jewellery dominated by China and India; US a distant third
Exposure
• 72% of Horizon Gold (ASX:HRN) – exploration and development in Western Australia
• 100% of Kumarina (unlisted) – junior copper-gold exploration firm in Western Australia
NICKEL
28
NiNickel
GOLD
79
AuGold
18
Zeta Resources Limited
COBALT
27
CoCobalt
Overview
• Industrial metal used primarily in rechargeable batteries such as lithium-ion
• Other uses include superalloys, integrated circuits and other industrial processes
• Vast majority is produced as a by-product of copper or nickel mining
• Roughly 60% of cobalt ore is produced in the Democratic Republic of the Congo,
and more than 60% of smelting capacity is in China
Macro trends
• Cobalt demand has climbed alongside increased adoption of EVs and other electronics
• After two years of weak pricing, cobalt prices rebounded in Q1 2021 on the back of
increased demand for batteries and other industrial processes, however, have fallen slightly
in recent months amidst recessionary concerns
• Some manufacturers, including Tesla, have developed lithium-ion batteries that require
relatively less cobalt (also developing cobalt-free batteries), but industry consensus is that
the metal will continue to be required in future EV batteries for the next 10+ years, albeit
likely at lower volumes per unit
Exposure
• 12% of Panoramic Resources (ASX:PAN) – Australian nickel producer with cobalt reserves
of 7,000 tonnes
• 43% of GME Resources (ASX:GME) – Australian nickel developer with cobalt resources of
55,400 tonnes
GRAPHITE
6
CCarbon
Overview
• Graphite is the most stable form of carbon under standard conditions, and is a form of coal
• Found in three natural forms: amorphous; flake (or crystalline); and vein (or lump)
• Flake and vein graphite have application in anodes in lithium-ion batteries
• Graphite can be produced synthetically, although current production methods yield a
purer graphite from natural ores
• With modern chemical purification processes and thermal treatment, natural graphite
achieves a purity of 99.9 percent compared to 99.0 percent for the synthetic equivalent
• Largest producer of graphite is China; biggest graphite reserves are in Turkey
Macro trends
• Main uses of graphite are brake linings, foundry operations, lubricants, refractory
applications, and steelmaking
• Growth of production of lithium-ion batteries is causing a rapid increase in demand for
graphite
• Prices have increased steadily since late 2017 amidst climbing demand for batteries and
supply disruptions in China related to tighter environmental restrictions
Exposure
• 33% of Margosa Graphite (unlisted) – Sri Lankan brownfield explorer of vein graphite, the
purest naturally occurring graphite
19
Annual Report for the year to 30 June 2022 SECTOR SUMMARIES AS AT 30 JUNE 2022
(continued)
OIL & GAS
Overview
• Oil is a fossil petroleum liquid whose primary use is fuel; around 80% of oil is refined
into gasoline, diesel, and jet fuel, with the remaining 20% supplying various products
including lubricants, asphalt, and petrochemicals
• Natural gas is a petroleum gas whose primary uses are heating, electricity generation,
and feedstock for petrochemicals
• Globally diverse sources of production and demand
• Largest producers of oil are US, Saudi Arabia, and Russia; largest producers of gas are
the US and Russia, with Iran a distant third
Macro trends
• Annual growth in oil demand has generally followed a linear trend in line with world
population growth
• Oil prices have been volatile, but by mid-2022 had recovered to prices not seen since
2014 in response to the supply concerns caused by the Russia/Ukraine war and muted
supply recovery following pandemic supply shock
• The global market remains in deficit as depressed pricing between 2014 and 2021 led to
reduced global expenditures on oil & gas exploration, but technological improvements led
to increased supply (prior to covid-19), especially in the US
• After a 4% drop in 2020, global natural gas and LNG demand recovered in 2021 and is
expected to continue increasing over the next 10-15 years, or longer
• Much of Europe is facing a significant natural gas shortage due to diminished Russian
exports and supply uncertainty
Exposure
• No significant investments in this sector
20
Zeta Resources Limited ESG SPOTLIGHT
The Board believes that it is in the shareholders’ interests to consider ESG factors when selecting and retaining
investments and has asked the Investment Manager to take these into account when investing. Where companies
in the portfolio are assessed as having a relatively low ESG score ICM’s approach is to engage with the companies
directly with the objective of seeing improvements over time. The comments below, spotlight a recent initative
undertaken by one of Zeta’s investments.
Copper Mountain has undertaken
several ESG initiatives at its
Copper Mountain Mine, including
the recent commissioning of
its electric trolley assist project,
aimed at cutting carbon emissions
at the mine by at least 30%.
ESG ANALYSIS:
In April 2022, Copper Mountain announced the
commissioning of its trolley assist project, which
consists of an approximately one-kilometer trolley-
assist haul ramp and seven pantograph-equipped
electric haul trucks. This project is in partnership
with SMS Equipment, Komatsu, ABB, Clean BC, and
BC Hydro, and is aimed at cutting carbon emissions
at the Copper Mountain Mine by at least 30%, paving
a solid foundation to achieve the company’s goal of
net zero carbon emissions by 2035. It is the first open
pit copper mine to have successfully commissioned
electric trolley assist haulage in North America.
Through electrification and capacity increases, the
company is targeting to reduce its carbon intensity by
50 to 70% in the next five to seven years and is actively
testing and researching renewable diesel, hydrogen,
battery, and fuel-cell technology to achieve its goal of
net-zero carbon emissions by 2035.
In addition, Copper Mountain has adopted the Mining
Association of Canada’s Towards Sustainable Mining
(“TSM”) standards in 2020, receiving an “A” or “Yes”
rating in five of the TSM protocols, “AA” in two, and
“AAA” in one in 2021, exceeding its target of “A” or “Yes”
in each of the eight protocols.
Finally, Copper Mountain has committed to returning
its lands to productive traditional use after mining
has ceased, stating its guiding philosophy is to build
progressive reclamation into its mine designs, rather
than completing reclamation at the end of the mine
life. Copper Mountain has committed to rehabilitating
25 hectares per year over the next five years, and
the target is to continue this for the remainder of the
mine life.
ICM ESG CONCLUSION:
Copper Mountain has made significant improvement
toward meeting its environmental and emissions
targets and is focused on implementing innovate
solutions on its path to decarbonisation. Continued
focused on social and corporate governance policies
will also be integral to the progression of Copper
Mountain’s ESG journey.
21
Annual Report for the year to 30 June 2022 OUR INVESTMENT APPROACH
ICM is a long-term investor and typically operates focused
portfolios with narrow investment remits. ICM has several
dedicated research teams who have deep knowledge and
understanding in their specific sectors, which improves
the ability to source and make compelling investments.
ICM has approximately USD 2.1bn of assets directly under
management and is responsible indirectly for a further
USD 22.1bn of assets in subsidiary investments.
Zeta seeks to leverage ICM’s investment abilities in order
to maximise total returns for shareholders by identifying
and investing in resource assets and companies where
the underlying value is not reflected in the market price.
The Company invests in a range of resources entities,
including those focused on bauxite, copper, nickel, gold,
cobalt, graphite, oil & gas and base metals exploration
and production.
ICM looks to exploit market and pricing opportunities and
concentrates on absolute performance. The investments
are not market index driven and the investment portfolio
comprises a series of bottom-up decisions. ICM typically
does not participate in either an IPO or an auction unless
there is compelling value.
When reviewing investment opportunities, as part of
the investment process ICM will look to understand the
material ESG factors.
ICM incorporates ESG factors into the investment process in three key ways:
01
02
UNDERSTANDING
INTEGRATION
In-depth analysis of the key issues that
face potential and current holdings, as
well as a deep understanding of the
industry in which they operate.
Incorporate the output of the
‘Understanding’ component detailed
above into the full company analysis to
ensure a clear and complete picture of
the investment opportunity is obtained.
03
ENGAGEMENT
Engage with investee companies on
the key issues on a regular basis, both
virtually and on location, where possible,
to discuss and identify any gaps in
their ESG policy to further develop
and improve their ESG disclosure
and implementation.
We seek out and make compelling investments
SUPERIOR, CONSISTENT PERFORMANCE
Long Term
Deep Value
Cash Generative
Bottom Up Approach
ACTIVE
INVESTORS
Investee Relationships
Detailed Company Knowledge
Extensive Industry Experience
Sector Focused
DEEP SECTOR KNOWLEDGE
I
N
D
E
P
E
N
D
E
N
C
E
&
I
N
T
E
G
R
I
T
Y
K
R
O
W
E
M
A
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F
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V
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R
O
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&
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22
Zeta Resources Limited
VALUES
ICM’s origins date back to 1988 and our organisation has evolved with
offices now spanning the globe. We are focused on our values of:
• Independence and Integrity
• Creativity and Innovation
• Excellence
• Accountability
TEAM
We are proud of our diverse and inclusive environment for
our teams to work in, which reflects the diversity of our
communities.
ICM works to create
value by harnessing
our experience and
expertise to generate
and grow strong
relationships with
our stakeholders
We are focused
on creating
sustainable
long-term
value for our
shareholders,
team and
the broader
community
through our:
INVESTMENT PRACTICES
Our deep and extensive research and
understanding of the companies, sectors and
markets we invest in moderates our risk and
creates value for our investors. Our status as
a signatory of the United Nations-supported
Principles of Responsible Investment emphasises
our commitment to integrating ESG factors into
our investment decision making process.
FINANCIAL
Strong balance sheet and disciplined
capital allocation to drive sustainable
growth and shareholder value.
PLATFORMS
Technology, and digital and analytics enable our
investment platforms to deliver growth for our
shareholders.
COMMUNITIES
ICM supports the ICM Foundation, which has identified
sustainable, effective and focused education where
the biggest impact can be made on individuals and in
communities. Over the past decade ICM and its
stakeholders have contributed over USD 15.0m to
not-for-profit and community organisations.
23
Annual Report for the year to 30 June 2022 LARGEST HOLDINGS OVERVIEW
Panoramic Resources Limited
THE VALUE OF THE FIVE
LARGEST HOLDINGS
REPRESENTS
THE VALUE OF THE TEN
LARGEST HOLDINGS
REPRESENTS
AUSTRALIA IS ZETA’S
LARGEST COUNTRY
EXPOSURE AT
THE TOTAL NUMBER
OF COMPANIES
INCLUDED IN THE
PORTFOLIO IS
92.8%
(2021: 91.8%) OF
TOTAL INVESTMENTS
99.5%
(2021: 98.1%) OF
TOTAL INVESTMENTS
42.4%
(2021: 33.0%) OF
TOTAL INVESTMENTS
30
(2021: 30)
24
Zeta Resources Limited
FIVE LARGEST HOLDINGS REVIEW
1
2
3
ALLIANCE MINING COMMODITIES LIMITED is an unlisted Australian
company that has been granted a mining concession for the
development of the Koumbia Bauxite Project in the north-west of the
Republic of Guinea. The Government of Guinea holds a 10% free-
carried interest in AMC’s Guinea subsidiary which holds the concession.
The Koumbia Bauxite Project is a world class bauxite development,
with a JORC 2012-compliant mineral resource in excess of 1.5 billion
tonnes. The Koumbia ore, high in alumina and low in reactive silica and
boehmite, makes it particularly attractive for use in a low temperature,
low cost, refining process.
Country
Guinea
Sector
Bauxite developer
Fair Value
US$000
% of total
investments
% owned
54,339
29.8%
37.2%
COPPER MOUNTAIN MINING CORPORATION is a Canadian copper
mining company headquartered in Vancouver, British Columbia. Its chief
asset is 75% of the Copper Mountain mine located about 20 km south
of Princeton, British Columbia and 300 km east of the port of Vancouver.
Mitsubishi Materials Corporation owns the remaining 25%. The mine has
a reserve life of over 30 years and produces 90-100 million pounds of
copper equivalent per year, including significant gold and silver credits, all
of which are shipped to Japan for smelting in one of Mitsubishi’s copper
smelters. Copper Mountain also owns the Eva Copper Project, which
is located 75 kilometres from the town of Cloncurry and 95 kilometres
north-east of Mt Isa in north-west Queensland, Australia. The project
comprises one of Australia’s largest undeveloped copper resources,
containing 1.9 million tonnes of copper and 590,000 ounces of gold.
Countries
Sector
Canada and
Australia
Copper exploration
and mining
Fair Value
US$000
% of total
investments
% owned
47,191
25.8%
17.1%
PANORAMIC RESOURCES LIMITED is a Western Australian mining
company that owns 100% of the Savannah underground nickel sulphide
mine, located in the East Kimberley in Western Australia. Following a
period of the mine being on care & maintenance, Panoramic restarted
underground development and ore production at Savannah in July
2021. It has since completed five shipments of nickel-copper-cobalt
concentrate to its offtake partner, Jinchuan Group. Panoramic continues
to accelerate mining operations at Savannah and expects to ramp up to
full nameplate capacity by 2024. In addition, the company is undergoing
an exploration program intended to add to its existing ore reserve of 8.3
million tonnes at 1.23% Ni, 0.59% Cu, and 0.08% Co for 102,000 tonnes
nickel, 48,500 tonnes copper, and 7,000 tonnes cobalt contained metal.
Country
Australia
Sector
Nickel exploration
and mining
Fair Value
US$000
% of total
investments
% owned
33,770
18.5%
12.0%
25
Annual Report for the year to 30 June 2022
4
5
Country
Australia
Sector
Nickel and gold
exploration and
mining
Fair Value
US$000
16,563
% of total
investments
9.1%
% owned
43.4%
GME RESOURCES LIMITED is a Western Australian exploration and
development company whose principal asset is its 100%-owned NiWest
nickel-cobalt project situated adjacent to Glencore’s Murrin Murrin
operation. The NiWest project is regarded as one of the largest and
highest quality undeveloped nickel/cobalt resources in Australia. In July
2021, the company completed an updated Pre-Feasibility Study into
the technical and economic viability of a heap leach and direct solvent
extraction operation, which incorporated higher nickel and cobalt prices
and cost escalation impacts since the original study was published
in mid-2018. The updated study delivered substantial increases to
the projected economic returns and the company now intends to
proceed to a Definitive Feasibility Study on the NiWest project. NiWest
has mineral resource estimate of 85.2 million tonnes at 1.03% Ni and
0.065% Co for 878,000 tonnes contained nickel and 55,400 tonnes
contained cobalt.
HORIZON GOLD LIMITED is focused on exploration and development
activities at its 100%-owned Gum Creek Project in Western Australia.
Gum Creek covers approximately 620 square kilometres and has
historically produced over one million ounces of gold. Gum Creek hosts
JORC 2012 Resources of 15.9 million tonnes averaging 2.7g/t gold for
1.39 million ounces of gold. The company was spun off from nickel
company Panoramic in 2016 and Zeta participated in the IPO. In 2020
Zeta acquired Panoramic’s majority holding in Horizon Gold and has
subsequently supported the company through providing working capital
and participating in an entitlement issue to raise new equity. Horizon
Gold has been working through an extensive drilling campaign across
multiple prospects.
Country
Australia
Sector
Gold
Fair Value
US$000
16,004
% of total
investments
8.8%
% owned
72.0%
26
Zeta Resources Limited
INVESTMENT MANAGER AND TEAM
The directors are responsible for Zeta’s investment
policy and have overall responsibility for the Company’s
day-to-day activities. Zeta has, however, entered into an
Investment Management Agreement with ICM Limited
under which ICM provides investment management
services to Zeta, including investment analysis, portfolio
monitoring, research and corporate finance.
ICM is an international Fund Manager and Corporate
Finance Adviser headquartered in Bermuda, with
10 offices globally. ICM has expertise in listed
equity, private equity, and fixed income bonds, and
specialises in the following investment sectors: utility &
infrastructure, financial services, mining and resources,
technology, and fixed income.
ICM focuses on identifying investments at valuations
that do not reflect their true long-term value and
then assisting management to add value where
appropriate. Their investment approach is to have a
deep understanding of the business fundamentals of
each investment and its environment versus its intrinsic
value. ICM are long term investors and see markets as a
place to exchange assets.
ICM MANAGES OVER
US$2.1 billion
IN FUNDS DIRECTLY AND IS RESPONSIBLE INDIRECTLY FOR A FURTHER US$22.1BN OF ASSETS IN SUBSIDIARY
INVESTMENTS. ICM HAS OVER 80 STAFF BASED IN OFFICES IN BERMUDA, CAPE TOWN, DUBLIN, LONDON, SEOUL,
SINGAPORE, SYDNEY, VANCOUVER AND WELLINGTON.
DUNCAN SAVILLE
Duncan Saville is a director and chairman of ICM Limited who founded the ICM Group
and its predecessor companies and has been employed by the Group since 1988.
Duncan is a chartered accountant with experience in corporate finance and asset
management. He is an experienced non-executive director having previously been a
director in multiple companies in the financial services, utility, mining and technology
sectors. Duncan is currently a non-executive director of Resimac Group Limited. His
Fellowships include the Institute of Chartered Accountants Australia and New Zealand,
the Australian Institute of Company Directors and the Financial Services Institute of
Australasia, and he is a Member of the Singapore Institute of Directors.
ALASDAIR YOUNIE
Alasdair Younie joined the ICM Group in 2010, is a director of ICM Limited and is based
in Bermuda. Mr Younie has extensive experience in financial markets and corporate
finance, and he is responsible for the day-to-day running of the Somers Group. He
qualified as a chartered accountant with PricewaterhouseCoopers and subsequently
worked for six years in the corporate finance division of Arbuthnot Securities Limited
in London. Alasdair is a director of Allectus Capital Limited, Somers Limited and West
Hamilton Holdings Limited. Alasdair graduated from Bristol University with a BSc in
Economics and Economic History in 1998 and is a Member of the Institute of Chartered
Accountants in England and Wales.
27
Annual Report for the year to 30 June 2022 INVESTMENT MANAGER AND TEAM
(continued)
TRISTAN KINGCOTT
Tristan Kingcott joined ICM in 2018 and is responsible for ICM Canada, based in
Vancouver, British Columbia. He is focused on the resource sector worldwide and
on technology and financial services in North America. Tristan has over twelve years’
experience in financial and commercial analysis, and prior to joining ICM, has performed
various roles in the energy and finance sectors in Canada and New Zealand. He is
currently a non-executive director of Terra Firma Capital Corp (TSX-V:TII) and several
unlisted companies in Canada. Tristan holds a Bachelor of Commerce degree in Finance
from the University of Alberta, Canada and is a CFA Charterholder and Member of the
CFA Society in Vancouver.
FRASER DANIELS
Fraser Daniels joined ICM as an analyst in 2021 and is based in Vancouver, Canada. He
is focused primarily on commodities and resources with an emphasis on North America.
He has six years’ experience in financial and commercial analysis, and prior to joining
ICM he performed in various roles, including business and corporate development roles
at Kinder Morgan and BluEarth renewables, and most recently as National Account
Manager at Canadian Pacific Rail. Fraser holds a Bachelor of Arts degree in Economics
from Queen’s University at Kingston, Canada.
EDUARDO GRECA
Eduardo Greca joined ICM London in 2010 as the Latam Investment Strategist before
moving to Brazil in 2012 where he is now based. He has over thirteen years of investment
research experience, and prior to joining ICM he worked for the commodities risk
management team at Kraft Foods. Eduardo covers the Latin American equity and fixed
income investments and is responsible for the Stock Exchange sector worldwide with an
emphasis on Emerging Markets. Eduardo obtained a Bachelor’s degree in Economics at
the Federal University of Parana (UFPR) in 2009, is a CFA Charterholder, and a Member of
the CFA Society in Brazil.
DUGALD MORRISON
Dugald Morrison has been involved with ICM and its predecessor companies since
1994 and is responsible for ICM NZ Limited, based in Wellington. He is an experienced
investment analyst, having worked in stockbroking, investment banking and investment
management firms in New Zealand, the United Kingdom, and the United States since
1987. Dugald is a director of a number of companies, including Horizon Gold Limited
(ASX:HRN). Dugald graduated from Victoria University of Wellington in 1991 with BCA
(Hons) and is a Member of the New Zealand Institute of Directors.
28
Zeta Resources Limited DIRECTORS
PETER SULLIVAN (CHAIRMAN)
Mr Sullivan is an engineer and has been involved in the management and strategic
development of resource companies and projects for more than 25 years, including
experience in project engineering, corporate finance, investment banking, corporate and
operational management, and public company directorships. He specialised in providing
strategic corporate, financial and investment advice to companies principally in the
resource sector. He has served as a director for numerous listed and unlisted companies
and been closely involved with their development. Mr Sullivan holds a Bachelor of
Engineering and a Master of Business Administration.
Directorships of other listed companies in the last 3 years
Mr Sullivan is chairman of GME Resources Limited (ASX:GME) and Horizon Gold Limited
(ASX:HRN); and non-executive director of Panoramic Resources Limited (ASX:PAN) and
Copper Mountain Mining Corporation (TSX:CMMC). Mr Sullivan retired as a director of
Resolute Mining Limited (ASX:RSG) effective 27 May 2021 after over 20 years’ involvement
with the company.
MARTHINUS (MARTIN) BOTHA
Mr Botha has over 30 years’ experience in banking, with the last 27 years spent in
leadership roles building Standard Bank Group’s international operations. Mr Botha’s
primary responsibilities at Standard Bank Plc included establishing and leading the
development of the core global natural resources trading and financing franchises, as well
as various geographic strategies. He is currently a member of the investment advisory
board for the Sustainable Resources strategy of ARCH Emerging Markets Partners.
Mr Botha holds a Bachelor of Engineering degree in Survey.
Directorships of other listed companies in the last 3 years
Mr Botha is non-executive chairman of Resolute Mining Limited (ASX:RSG).
ANDRÉ LIEBENBERG
Mr Liebenberg is an experienced mining industry professional and has extensive investor
marketing, finance, business development and leadership experience. He was appointed
CEO and Executive Director of Yellow Cake plc on 1 June 2018, just prior to the company’s
IPO on the AIM market of the London Stock Exchange. Mr Liebenberg has over 25 years’
experience in the resources industry across private equity, investment banking, senior
roles within BHP, and prior to joining Yellow Cake he was Chief Financial Officer at QKR
Corporation. Mr Liebenberg holds a Bachelor of Science in Electrical Electrical Engineering
from the University of Cape Town and a Master of Business Administration from the
University of Cape Town.
Directorships of other listed companies in the last 3 years
Mr Liebenberg is an executive director of Yellow Cake plc (LSE:YCA) and was a non-
executive director of Danakali Limited (ASX:DNK) until 3 August 2020.
XI XI
Xi is a financial analyst with more than 20 years’ experience in the mining, energy and
natural resource industry, ranging from managing companies focused on international
exploration and development of mining projects to restructuring and overseeing a
portfolio of private and public companies. Ms Xi holds dual Bachelor of Science degrees in
Chemical Engineering and Economics from the Colorado School of Mines and a Master of
Arts in International Relations and China Studies from Johns Hopkins School of Advanced
International Studies.
Directorships of other listed companies in the last 3 years
Ms Xi Xi is currently non-executive director of Mineral Resources Limited (ASX:MIN).
All Directors are Non-Executive Directors and were appointed to the board of the Company on 7 June 2013, other than Mr Liebenberg,
who was appointed on 30 December 2019.
29
Annual Report for the year to 30 June 2022 REPORT OF THE DIRECTORS
GME Resources Limited
Directors present their report for Zeta Resources
Limited, including its subsidiaries Kumarina Resources
Pty Limited, Zeta Energy Pte. Ltd, Zeta Investments
Limited, Zeta Minerals Ltd and Horizon Gold Limited,
for the year ended 30 June 2022.
OPERATING AND FINANCIAL REVIEW
Operating results
The net loss attributable to the Company for the year
to 30 June 2022 amounted to US$68,542,960.
DIRECTORS
Zeta Resources Limited has a Board of four
non-executive, independent directors.
The names of directors in office at any time during
or since the end of the year are:
Peter Ross Sullivan
Marthinus (Martin) Botha
André Liebenberg
Xi Xi
PRINCIPAL ACTIVITIES
The principal activities of the Company are investing in
listed and unlisted resource focused investments.
No significant change in the nature of these activities
occurred during the year.
Overview of operating activity
The company listed on the ASX on 12 June 2013.
During the year the Company has continued to build its
portfolio of resource investments by investing a further
US$7,587,419. An decrease in the fair value of the
portfolio resulted in an unrealised loss recognised in
profit or loss at year end of US$66,829,528.
Financial position
At the end of the year, the Company had US$106,963
in cash and cash equivalents. Investments at fair value
totalled US$164,135,993, loans to subsidiaries of
US$1,957,423 and the investment in subsidiaries was
valued at US$16,003,881.
The Company has a loan owing to Somers Limited of
US$14,999,626 at year end.
As at the year end, the Company had a US$2.5 million
loan facility with Bermuda Commercial Bank expiring
on 30 September 2024.
30
Zeta Resources Limited GOING CONCERN
REMUNERATION REPORT
The financial statements have been prepared on
a going concern basis. We draw attention to the
fact that at 30 June 2022, the Company’s current
liabilities exceed its current assets by US$6,891,456
(2021: US$12,727,647). The Company has undrawn
capacity under its debt facilities and the majority
of the Company’s assets consist of equity shares in
listed companies which in most circumstances are
realisable within a short timescale. Based on this, the
directors believe the Company will be able to cover the
commitments arising in the period 12 months from the
date of approval of these financial statements. The use
of the going concern basis of accounting is appropriate
because there are no material uncertainties related to
events or conditions that may cast significant doubt
about the ability of the Company to continue as a
going concern. After making enquiries, the directors
have a reasonable expectation that the Company
has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, the
directors continue to adopt the going concern basis in
preparing the accounts.
DIVIDENDS
No dividends have been paid or declared since the start
of the year. No recommendation is made as to dividends.
AFTER BALANCE SHEET DATE EVENTS
The Company performed a review of events after the
reporting date and determined that there were no
such events requiring recognition or disclosure in the
financial statements.
The remuneration report is set out in the following
manner:
• Policies used to determine the nature and amount
of remuneration
• Details of remuneration
• Share based compensation
• Directors’ interests
Remuneration policy
The board of directors is responsible for remuneration
policies and the packages applicable to the directors
of the Company. The board remuneration policy is to
ensure that packages offered properly reflect a person’s
duties and responsibilities and that remuneration is
competitive and attracts, retains, and motivates people
of the highest quality.
The directors are remunerated for the services they
render to the Company and such services are carried
out under normal commercial terms and conditions.
Engagement and payment for such services are
approved by the other directors who have no interest in
the engagement of services.
At the date of this report the Company had not
entered into any packages with directors which include
performance-based components.
Details of remuneration for directors
The Company paid a total of $200,000 to directors for
the year ended 30 June 2022.
The Company had no employees as at 30 June 2022.
LIKELY DEVELOPMENTS
The Company intends to continue to seek to maximise
total returns for shareholders by identifying and
investing in assets and companies where the underlying
value is not reflected in the market price.
Share based compensation
There is currently no provision in the policies of
the Company for the provision of share-based
compensation to directors. The interest of directors in
shares and options is set out elsewhere in this report.
31
Annual Report for the year to 30 June 2022 REPORT OF THE DIRECTORS
(continued)
Directors’ interests
LOANS TO DIRECTORS
The relevant interests of directors either directly or
through entities controlled by the directors in the share
capital of the Company and related body corporates as
at the date of this report are:
Ordinary
shares
opening
balance
Net
change
Director
Peter R Sullivan
11,506,264
Martin Botha
775,000
André Liebenberg
Xi Xi
–
–
MEETINGS OF DIRECTORS
–
–
–
–
Ordinary
shares
closing
balance
11,506,264
775,000
–
–
There were eight Board and two Audit & Risk Committee
meetings held during the year ended 30 June 2022.
The attendance by the directors was as follows:
Board
Audit & Risk
Committee
Number of meetings held
during the year
Peter Sullivan
Martin Botha
André Liebenberg
Xi Xi
8
8
8
8
8
2
2
2
2
2
Board of Directors and Audit Risk Committee
meetings require that any two directors or members
be present to form a quorum.
Due to the size of the board and the nature of
the Company’s operations, it does not have a
separate Remuneration Committee or a Nomination
Committee. Matters normally considered by these
committees are addressed by the full board. This
includes addressing succession issues and ensuring
the board has the appropriate balance of skills,
experience, independence, and knowledge of
the entity to enable it to discharge its duties and
responsibilities effectively.
There were no loans entered into with directors during
the year under review.
AUDIT & RISK COMMITTEE
The Company has established an Audit & Risk
Committee (“committee”) which comprises all the
independent directors of the Company and is chaired
by André Liebenberg. Its duties include considering
and recommending to the board for approval the
contents of the half yearly and annual financial
statements. The committee also provides an opinion
as to whether the annual report and accounts, taken
as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders
to assess the Company’s performance, business
model and strategy.
The committee also reviews the external auditors’
report on the annual financial statements and is
responsible for reviewing and forming an opinion
on the effectiveness of the external audit process
and audit quality. Other duties include reviewing the
appropriateness of the Company’s accounting policies
and ensuring the adequacy of the internal control
systems and standards.
The committee meets at least twice a year. The
planned meetings are held prior to the board
meetings to approve the half yearly and annual
results. Representatives of the Investment Managers
attend all meetings.
During the year ended 30 June 2022, the committee
consisted of all the independent directors of the
Company.
INDEMNIFYING OFFICERS OR AUDITORS
The Company has not, during or since the year ended,
in respect of any person who is or has been an
officer or the auditor of the Company or of a related
body corporate indemnified or made any relative
agreement for indemnifying against a liability incurred
as an officer or auditor, including costs and expenses
in defending legal proceedings.
32
Zeta Resources Limited ENVIRONMENTAL REGULATION
Both Horizon Gold Limited and Kumarina Resources
Pty Limited’s operations are subject to the Western
Australian Mining Act 1978 and the Environmental
Protection Act 1986 and the Environmental Protection
Amendment Act 2020 (WA).
The directors are not aware of any significant
breaches and no actions were initiated for breaches
under the Environmental Protection Act and the
Western Australian Mining Act during the year
covered by this report.
APPLICATION OF CHAPTERS 6, 6A, 6B AND 6C OF
THE CORPORATIONS ACT 2001
The Company is not subject to Chapters 6, 6A, 6B and
6C of the Corporations Act dealing with the acquisition
of its shares. In addition, neither the Bermuda
Companies Act nor the company’s Bye Laws prescribe
a regime for the conduct of takeovers or contain a
general prohibition on acquisitions of interests in
Bermuda companies beyond a certain threshold in the
same way as the Australian Corporations Act 2001.
Since the commencement of the on-market buy-
back scheme on 15 September 2018, Zeta Resources
has repurchased and cancelled 2,359,366 fully paid
ordinary shares.
INVESTMENT MANAGEMENT AGREEMENT
The Company entered into an Investment Management
Agreement with ICM Limited on 3 June 2018.
Management fees are payable at a rate of 0.125%
of funds managed on the calculation date, payable
quarterly in arrears and pro-rated for any period less
than three months.
Performance fees are payable annually at year end
on the difference between adjusted equity funds
(adjusted for any dividends paid or accrued) on
calculation date less adjusted base equity funds
(highwater mark) previously used in the performance
fee calculation multiplied by 15%.
Either party may terminate the agreement with six
months’ notice.
The Company paid US$1,263,154 in management fees
during the reporting year.
NON-AUDIT SERVICES
AUDITOR’S INDEPENDENCE DECLARATION
No non-audit services were performed by the auditors
of the Company during the year.
A copy of the auditor’s independence declaration is
included in the Independent Auditor’s Report.
ON-MARKET BUY-BACK SCHEME
As part of its ongoing capital management strategy,
Zeta implemented an on-market buy-back programme
for up to 10 million ordinary shares during the period
15 September 2018 to 14 September 2021.
On 6 September 2021 the Company announced that
the buy-back programme was to be extended from
15 September 2021 to 14 September 2022. The buy-
back will only be effective should the share price of
the company be at a discount to NTA exceeding 10%.
The timing and quantity of purchases will depend on
current market conditions and other future events.
Pursuant to section 257B(4) of the Corporations
Act 2001 (Cth), the share buy-back does not require
shareholder approval as it falls under the 10/12 limit.
This report is signed in accordance with a resolution of
directors.
Peter R Sullivan
Chairman
Perth, Western Australia
19 September 2022
33
Annual Report for the year to 30 June 2022 CORPORATE GOVERNANCE STATEMENT
THE COMPANY‘S CORPORATE GOVERNANCE FRAMEWORK
Corporate Governance is the process by which the board of directors of a company protects shareholders’
interests and by which it seeks to enhance shareholder value. Shareholders hold the directors responsible for
the stewardship of a company’s affairs, delegating authority and responsibility to the directors to manage the
company on their behalf and holding them accountable for its performance. Responsibility for good governance
lies with the board. The board considers the practice of good governance to be an integral part of the way it
manages the Company and is committed to maintaining high standards of financial reporting, transparency and
business integrity.
The governance framework of the Company reflects the fact that, as an investment company, it has no full-time
employees and outsources its activities to third party service providers.
THE BOARD
Four non-executive directors
CHAIRMAN:
Peter Sullivan
KEY OBJECTIVES:
• to provide leadership within
a framework of prudent
and effective controls which
enable risk to be assessed and
managed; and
• to constructively challenge
and scrutinise performance
of all outsourced activities.
• to set strategy, values and
standards;
AUDIT & RISK
COMMITTEE
MANAGEMENT
OVERSIGHT
NOMINATION
COMMITTEE
REMUNERATION
COMMITTEE
All independent NEDs
CHAIRMAN:
André Liebenberg
The board as a
whole performs
this function
The board as a
whole performs
this function
The board as a
whole performs
this function
KEY OBJECTIVE:
KEY OBJECTIVE:
KEY OBJECTIVES:
KEY OBJECTIVE:
• to oversee the
• to review the
• to regularly review
• to set the
financial reporting
and control
environment.
performance of
the Investment
Manager.
the board’s structure
and composition;
and
remuneration policy
for the directors of
the Company.
• to review the
• to consider any new
performance of
other service
providers
appointments.
34
Zeta Resources Limited As an ASX-listed company, the board’s principal
governance reporting objective is in relation to
the ASX Corporate Governance Principles and
Recommendations (“Recommendations”) developed by
the ASX Corporate Governance Council.
In accordance with ASX Listing Rules 4.10.3 and
4.7.4, the Corporate Governance Statement, and
accompanying Appendix 4G, will be available for review
on the Company’s website and will be lodged with ASX
concurrently with the Annual Report.
The Appendix 4G details each Recommendation that
needs to be reported against by the Company and will
provide shareholders with information as to where
relevant governance disclosures can be found.
The Company’s corporate governance policies and
charters are all available on the Company’s website.
The Company’s directors and management are
committed to conducting the group’s business in an
ethical manner and in accordance with the highest
standards of corporate governance. The Company
has adopted and substantially complies with the
Recommendations to the extent appropriate to the
size and nature of the group’s operations.
The Company has prepared a Corporate Governance
Statement based on the fourth Edition of the
Recommendations. It sets out the corporate
governance practices that were in operation
throughout the financial year for the Company,
identifies any Recommendations that have not been
followed, and provides reasons for not following such
Recommendations.
Details about the Company’s corporate governance policies and charges are
available in the corporate governance section of our website at:
https://www.zetaresources.limited/investor-relations/corporate-governance/
35
Annual Report for the year to 30 June 2022 INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report
30 June 2022
Mazars House, Rialto Road
Grand Moorings Precinct
Century City, 7441
PO Box 134, Century City 7446
Docex 9 Century City
Tel: +27 21 818 5000
Mazars House, Rialto Road
Fax: +27 21 818 5001
Grand Moorings Precinct
Email: cpt@mazars.co.za
Century City, 7441
www.mazars.co.za
PO Box 134, Century City 7446
Docex 9 Century City
Tel: +27 21 818 5000
Fax: +27 21 818 5001
Email: cpt@mazars.co.za
www.mazars.co.za
To the Shareholders of Zeta Resources Limited
Independent Auditor’s Report
Report on the Audit of the Annual Financial Statements
30 June 2022
To the Shareholders of Zeta Resources Limited
Opinion
Report on the Audit of the Annual Financial Statements
We have audited the annual financial statements of Zeta Resources Limited set out on pages 41 to 65,
which comprise the statement of financial position as at 30 June 2022, and the statement of profit or
loss and other comprehensive income, the statement of changes in equity and the statement of cash
Opinion
flows for the year then ended, and notes to the financial statements, including a summary of significant
accounting policies.
We have audited the annual financial statements of Zeta Resources Limited set out on pages 41 to 65,
which comprise the statement of financial position as at 30 June 2022, and the statement of profit or
In our opinion, the annual financial statements present fairly, in all material respects, the financial
loss and other comprehensive income, the statement of changes in equity and the statement of cash
position of Zeta Resources Limited as at 30 June 2022, and its financial performance and cash flows
flows for the year then ended, and notes to the financial statements, including a summary of significant
for the year then ended in accordance with International Financial Reporting Standards.
accounting policies.
Basis for Opinion
In our opinion, the annual financial statements present fairly, in all material respects, the financial
position of Zeta Resources Limited as at 30 June 2022, and its financial performance and cash flows
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
for the year then ended in accordance with International Financial Reporting Standards.
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the company in
Basis for Opinion
accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for
Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
with the IRBA Code and in accordance with other ethical requirements applicable to performing audits
Audit of the Financial Statements section of our report. We are independent of the company in
in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics
accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for
Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits
International Independence Standards). We believe that the audit evidence we have obtained is
of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance
sufficient and appropriate to provide a basis for our opinion.
with the IRBA Code and in accordance with other ethical requirements applicable to performing audits
in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics
Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards). We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Registered Auditor – A firm of Chartered Accountants (SA) • IRBA Registration Number 900222
Partners: MV Ninan (CEO), MC Olckers (Managing Partner), C Abrahamse, JM Barnard, AK Batt, T Beukes,
DS Dollman, M Edelberg, Y Ferreira, T Gangen, R Groenewald, AK Hoosain, MY Ismail, N Jansen, J Marais, B Mbunge,
FN Miller, G Molyneux, A Moruck, S Naidoo, MG Odendaal, W Olivier, M Pieterse, W Rabe, D Resnick, BG Sacks,
MA Salee, N Silbowitz, SM Solomon, HH Swanepoel, AL Swartz, MJA Teuchert, N Thelander, JC Van Tubbergh,
N Volschenk, J Watkins-Baker
A full list of national partners is available on request or at www.mazars.co.za
Registered Auditor – A firm of Chartered Accountants (SA) • IRBA Registration Number 900222
Partners: MV Ninan (CEO), MC Olckers (Managing Partner), C Abrahamse, JM Barnard, AK Batt, T Beukes,
DS Dollman, M Edelberg, Y Ferreira, T Gangen, R Groenewald, AK Hoosain, MY Ismail, N Jansen, J Marais, B Mbunge,
FN Miller, G Molyneux, A Moruck, S Naidoo, MG Odendaal, W Olivier, M Pieterse, W Rabe, D Resnick, BG Sacks,
MA Salee, N Silbowitz, SM Solomon, HH Swanepoel, AL Swartz, MJA Teuchert, N Thelander, JC Van Tubbergh,
N Volschenk, J Watkins-Baker
A full list of national partners is available on request or at www.mazars.co.za
36
Zeta Resources Limited
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the annual financial statements of the current period. These matters were addressed in the
context of our audit of the annual financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
The key audit matters relate to the Annual Financial Statements.
Matter
Audit response
Valuation of Unlisted investments (notes 5 and
22.4 )
The company’s accounting policy in note 3.6 of the
Annual Financial Statements
that
investments are initially recognised at the fair value
and subsequently measured at fair value through
profit or loss in accordance with IFRS 9.
states
The company’s unlisted investments amount to
$61,768,983.
The lack of readily available objective evidence
such as quoted prices, increases the degree of
estimation used in determining the fair value of
unlisted investments.
The valuation methods are subject to a high degree
of judgement and are complex, especially for
investments where there are limited to no equity
transactions during the year. Areas of judgement
include estimating the expected future income from
operations that are still in the exploration phase
and other external risk factors.
Various valuation methods are used in determining
the fair value of the investments.
A relatively small percentage change in the
valuations of individual investments, in aggregate,
could result in a material impact to the financial
statements.
Given the significance of the judgements and
complexity of the valuation techniques used by
management in the valuation of the unlisted
investments, we have assessed that the valuation
of unlisted investments warrants significant audit
focus.
Our overall approach to address the valuation
assertion for unlisted investments involved
performing substantive tests of detail to confirm
the reasonableness of the valuation of the
unlisted investment carrying value at year end.
Our key audit procedures included:
• agreeing the valuation of the unlisted
investments to the valuation reports
prepared by managements expert to
determine the valuation of the unlisted
investments
the
requirements of IFRS 13;
terms
of
in
• assessing
the
capabilities and objectivity of
appointed experts;
competence,
the
• evaluating key assumptions used in
the valuation and valuation method
and
the
inputs used
valuations are reasonable;
to ensure
• assessing and validating the inputs
•
for
are
•
•
appropriate
used in the valuations;
recalculating key valuation workings;
reviewing that the valuation techniques
the
used
accounting standards and industry;
comparing the assumptions used in
the company’s valuation methods to
previous periods for consistency and to
consider management bias; and
• evaluating whether the presentation
the notes are
in
and disclosure
appropriate and meet the requirements
of IFRS 7 and IFRS 13.
37
Annual Report for the year to 30 June 2022
INDEPENDENT AUDITOR’S REPORT
(continued)
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the document titled “Zeta Resources Limited Annual Financial Statements for the year ended
30 June 2022”, which includes the Directors’ Report, the Corporate Governance Statement and the
Integrated Annual Report, which we obtained prior to the date of this report. The other information does
not include the annual financial statements and our auditor’s reports thereon.
Our opinion on the annual financial statements does not cover the other information and we do not
express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the annual financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
annual financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If, based on the work we have performed on the other information obtained prior
to the date of this auditor’s report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Annual Financial Statements
The directors are responsible for the preparation and fair presentation of the annual financial statements
in accordance with International Financial Reporting Standards, and for such internal control as the
directors determine is necessary to enable the preparation of annual financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the annual financial statements, the directors are responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Company
or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the annual financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the annual financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
38
Zeta Resources Limited
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the annual financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the company to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the annual financial statements,
including the disclosures, and whether the annual financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015,
we report that Mazars has been the auditor of Zeta Resources Limited for 3 years.
Mazars
Partner: Nico Jansen
Registered Auditor
20 September 2022
Cape Town
39
Annual Report for the year to 30 June 2022 AUDITOR’S INDEPENDENCE DECLARATION
Independent Auditor’s Report
30 June 2022
Independent Reviewer’s Report
To the Shareholders of Zeta Resources Limited
Mazars House, Rialto Road
Grand Moorings Precinct
Century City, 7441
PO Box 134, Century City 7446
Docex 9 Century City
Tel: +27 21 818 5000
Fax: +27 21 818 5001
Mazars House, Rialto Road
Email: cpt@mazars.co.za
Grand Moorings Precinct
www.mazars.co.za
Century City, 7441
PO Box 134, Century City 7446
Docex 9 Century City
Tel: +27 21 818 5000
Fax: +27 21 818 5001
Email: cpt@mazars.co.za
www.mazars.co.za
30 June 2022
Report on the Audit of the Annual Financial Statements
To the Shareholders of Zeta Resources Limited
Opinion
We have audited the annual financial statements of Zeta Resources Limited set out on pages 41 to 65,
Report on the Review of the Interim Financial Statements
which comprise the statement of financial position as at 30 June 2022, and the statement of profit or
loss and other comprehensive income, the statement of changes in equity and the statement of cash
flows for the year then ended, and notes to the financial statements, including a summary of significant
Auditor’s Independence Declaration
accounting policies.
In relation to our review of the condensed interim financial report of Zeta Resources Limited for the
In our opinion, the annual financial statements present fairly, in all material respects, the financial
financial year ended 30 June 2022, to the best of my knowledge and belief, there have been no
position of Zeta Resources Limited as at 30 June 2022, and its financial performance and cash flows
contraventions of the auditor independence requirements of the International Standards on Auditing
for the year then ended in accordance with International Financial Reporting Standards.
(ISA) or any other applicable code of professional conduct.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the company in
Mazars
accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for
Partner: Nico Jansen
Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits
Registered Auditor
of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance
20 September 2022
with the IRBA Code and in accordance with other ethical requirements applicable to performing audits
Cape Town
in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics
Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards). We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Registered Auditor – A firm of Chartered Accountants (SA) • IRBA Registration Number 900222
Partners: MV Ninan (CEO), MC Olckers (Managing Partner), C Abrahamse, JM Barnard, AK Batt, T Beukes,
DS Dollman, M Edelberg, Y Ferreira, T Gangen, R Groenewald, AK Hoosain, MY Ismail, N Jansen, J Marais, B Mbunge,
FN Miller, G Molyneux, A Moruck, S Naidoo, MG Odendaal, W Olivier, M Pieterse, W Rabe, D Resnick, BG Sacks,
MA Salee, N Silbowitz, SM Solomon, HH Swanepoel, AL Swartz, MJA Teuchert, N Thelander, JC Van Tubbergh,
N Volschenk, J Watkins-Baker
A full list of national partners is available on request or at www.mazars.co.za
40
Registered Auditor – A firm of Chartered Accountants (SA) • IRBA Registration Number 900222
Partners: MV Ninan (CEO), MC Olckers (Managing Partner), C Abrahamse, JM Barnard, AK Batt, T Beukes,
DS Dollman, M Edelberg, Y Ferreira, T Gangen, R Groenewald, AK Hoosain, MY Ismail, N Jansen, J Marais, B Mbunge,
FN Miller, G Molyneux, A Moruck, S Naidoo, MG Odendaal, W Olivier, M Pieterse, W Rabe, D Resnick, BG Sacks,
MA Salee, N Silbowitz, SM Solomon, HH Swanepoel, AL Swartz, MJA Teuchert, N Thelander, JC Van Tubbergh,
N Volschenk, J Watkins-Baker
A full list of national partners is available on request or at www.mazars.co.za
Zeta Resources Limited
STATEMENT OF FINANCIAL POSITION
Notes at 30 June 2022
Non-current assets
4 Investment in subsidiaries
5 Investments
6 Loans to subsidiaries
Current assets
7 Cash and cash equivalents
Total assets
Non-current liabilities
9 Loan from parent
10 Other loans
Current liabilities
8 Loan from subsidiary
11 Other loans
12 Trade and other payables
18 Tax payable
Total liabilities
Net assets
Equity
13 Share capital
13 Share premium
Treasury shares
Accumulated (losses)/income
Total equity
June 2022
US$
June 2021
US$
16,003,881
164,135,993
1,957,423
22,114,602
243,477,995
1,224,888
106,963
1,378,703
182,204,260
268,196,188
–
(23,742,404)
(32,576,107)
(1,332,610)
(3,743,623)
–
(414,610)
(2,840,186)
(30,740,823)
151,463,437
(3,377,965)
(2,500,000)
(5,148,039)
(3,080,346)
(48,015,067)
220,181,121
5,555
5,560
176,624,753
176,763,050
(36,422)
(25,130,449)
151,463,437
–
43,412,511
220,181,121
41
Annual Report for the year to 30 June 2022 STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
Notes for the year ended 30 June 2022
Income and investment returns
14 Revenue
14 Investment (losses)/gains
6 Impairment of loan to subsidiary
15 Other income/(losses)
Expenses
Directors fees
Interest expense
16 Management and consulting fees
17 Operating and administration expenses
(Loss)/profit before tax
18 Taxation expense
(Loss)/profit for the year
Total comprehensive (loss)/income for the year
(Loss)/profit per share
June 2022
US$
June 2021
US$
35,557
53,985
(66,373,764)
136,938,205
–
2,501,304
(1,394,034)
(8,271,609)
(200,000)
(2,589,664)
(1,344,513)
(571,880)
(200,000)
(6,393,063)
(5,491,044)
(572,360)
(68,542,960)
114,670,080
–
(68,542,960)
(68,542,960)
–
114,670,080
114,670,080
19 Basic and diluted (loss)/profit per share
(0.12)
0.33
42
Zeta Resources Limited STATEMENT OF CHANGES IN EQUITY
Notes for the year ended 30 June 2022
Share
capital
US$
Share
premium
US$
Treasury
Shares
US$
Accumulated
income/(losses)
US$
Total
US$
Balance at 1 July 2020
2,777
122,874,923
–
(71,257,569)
51,620,131
Purchase of treasury shares
13 Cancellation of treasury shares
–
(5)
–
(110,013)
(110,008)
110,013
Options exercised
2,788
53,998,135
Total comprehensive income for the year
–
–
Balance at 30 June 2021
5,560
176,763,050
–
–
–
–
–
–
(110,013)
–
54,000,923
114,670,080
114,670,080
43,412,511
220,181,121
Purchase of treasury shares
13 Cancellation of treasury shares
Total comprehensive loss for the year
–
(5)
–
–
(174,724)
(138,297)
138,302
–
–
(174,724)
–
–
–
(68,542,960)
(68,542,960)
Balance at 30 June 2022
5,555
176,624,753
(36,422)
(25,130,449)
151,463,437
43
Annual Report for the year to 30 June 2022 STATEMENT OF CASH FLOWS
Notes for the year ended 30 June 2022
Cash flows from operating activities
20.1 Cash utilised by operations
14 Interest received
Interest paid
14 Dividend received
June 2022
US$
June 2021
US$
(7,089,982)
(3,762,954)
16,493
(404,167)
19,064
37,853
(428,466)
16,132
Net cash flows from operating activities
(7,458,592)
(4,137,435)
Cash flows from investing activities
Investments purchased
Investments sold
Increase in loan to subsidiaries from additional funding
Decrease in loan to subsidiaries from repayments
(7,587,419)
26,655,955
(894,224)
–
(18,759,245)
21,347,424
(568,843)
360,529
Net cash flows from investing activities
18,174,312
2,379,865
Cash flows from financing activities
13 Purchase of treasury shares
13 Options exercised
20.2 Increase in loan from parent from additional funding
20.2 Decrease in loan from parent from repayments
20.2 Increase in loan from subsidiary from additional funding
20.2 Decrease in loan from subsidiary from repayments
20.2 Increase in other loans from additional funding
20.2 Decrease in other loans from repayments
Net cash flows from financing activities
Net movement in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
7 Cash and cash equivalents at end of the year
(174,724)
–
5,570,571
(23,343,020)
8,401,474
(7,877,976)
14,572,100
(9,249,796)
(12,101,371)
(1,385,651)
1,378,703
113,911
106,963
(110,013)
14,826,385
18,446,626
(34,223,214)
3,420,043
–
14,301,379
(13,461,727)
3,199,479
1,441,909
12,082
(75,288)
1,378,703
44
Zeta Resources Limited NOTES TO THE FINANCIAL STATEMENTS
1.
BASIS OF PREPARATION
1.1 Corporate information
Zeta Resources Limited (“Zeta Resources” or “the Company”)
is an investment company incorporated on 13 August 2012,
listed on the Australian Securities Exchange and domiciled in
Bermuda. The financial statements of the Company as at and
for the year ended 30 June 2022 comprise the Company only.
1.2 Basis of preparation
The financial statements for the year ended 30 June 2022
have been prepared in accordance with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standard Board (IASB). The Company
carries on the business of an investment holding company,
in accordance with IFRS 10. The purpose of the Company is
to earn returns through capital appreciation or investment
income. The Company obtains funds from more than one
investor and provides investment management services. The
Company is accordingly applying the consolidation exemption
for investments in subsidiaries and they will be recognised at
fair value through profit and loss.
The financial statements were authorised for issue by the
board of directors on the 19 September 2022.
1.3 Basis of measurement
The financial statements provide information about the financial
position, results of operations and changes in financial position
of the Company. They have been prepared on the historic
cost basis except for those financial instruments at fair value
through profit or loss, which are measured at fair value. The
financial statements are prepared on a going concern basis.
1.4 Functional and presentation currency
The Company’s functional and presentation currency is
United States dollars.
The board has determined by having regard to the currency
of the Company’s share capital and that Zeta invests in
mining entities whose resources are valued in United States
dollars, that United States dollars is the functional and
reporting currency.
1.5 Use of estimates and judgements
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and
assumptions that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions are recognised in the period in which
the estimate is revised and in any future periods affected.
The key assumptions concerning the future and other key
sources of estimation uncertainty that have a significant risk of
causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year relate to the valuation
of unquoted investments, details of which are set out in note 22
and the classification of the subsidiaries as investment entities.
Details of the subsidiaries are set out in note 4. Subsidiaries that
carry on business as investment entities are designated as being
at fair value through profit and loss on initial recognition.
Loans to subsidiaries are classified as financial assets carried at
amortised cost. The loans are subject to impairment testing as
debt instruments (refer note 3.7). The impairments on
the loans are determined separately to the fair value of the
investments in the subsidiaries as disclosed in note 4.
The judgement over the tax treatment of profits generated
from the sale of Bligh Resources is disclosed in note 18.
2.
ADOPTION OF NEW AND REVISED STANDARDS
2.1 Standards and interpretations adopted during
the year
All new standards and interpretations that became effective
during the 2022 financial year were adopted on their effective
dates. These standards did not have a material impact on the
financial statements.
2.2 New standards, amendments and interpretations
effective for annual periods beginning after
1 January 2022 that have not been adopted
At the date of authorisation of these financial statements, the
following standards affecting the Company were in issue, but
not yet effective:
Subsidiary as a first-time adopter (Amendments to IFRS 1) –
effective 1 January 2022
Reference to the Conceptual Framework (Amendments to
IFRS 3) – effective 1 January 2022
Fees for derecognition of financial liabilities (Amendments to
IFRS 9) – effective 1 January 2022
Classification of Liabilities as Current or Non-current
(Amendments to IAS 1) – effective 1 January 2023
Disclosure of accounting policies (Amendments to IAS 1) –
effective 1 January 2023
Definition of accounting estimates (Amendments to IAS 8) –
effective 1 January 2023
Deferred tax related to asset and liabilities arising from a
single transaction (Amendments to IAS 12) – effective
1 January 2023
The Company has chosen not to early adopt the new and
revised standards affecting presentation and disclosure which
have been published and are mandatory for the Company’s
accounting records beginning on the dates mentioned above.
Based on initial assessment, these standards are not
expected to have a material impact on the Company.
45
Annual Report for the year to 30 June 2022
NOTES TO THE FINANCIAL STATEMENTS
(continued)
3.
SIGNIFICANT ACCOUNTING POLICIES
3.5 Earnings per share (“EPS”)
The accounting policies detailed below have been consistently
applied by the Company.
3.1
Investment income
Dividend income is recognised when the Company’s right
to receive payment is established and is presented gross of
withholding taxes.
Gains or losses on the sale of investments are recorded on
the trade date.
Investment income also comprises of unrealised gains on
changes in the fair value of financial assets at fair value
through profit or loss.
Interest income is recognised using the effective interest rate
method.
3.2 Borrowing costs
Borrowing costs are recognised as an expense when incurred.
3.3
Income tax
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax
rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the Statement of
Financial Position date.
The Company invests in various jurisdictions and is subject
to typical source taxation such as withholding tax on passive
income (dividends, interest and royalties where applicable)
and capital gains on immovable property.
The Company measures uncertainty by using the most likely
amount and not the expected value method. The detail of the
judgements relating to the uncertain tax position is disclosed
in note 18.
The Company has elected to be tax exempt in terms of local
Bermudian legislation.
3.4 Foreign currency
Foreign currency transactions and balances
Transactions in foreign currencies are translated into the
respective functional currency of the Company at exchange
rates at the dates of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the reporting
date are translated to the functional currency at the prevalent
exchange rate at that date. The foreign currency gain or loss on
monetary items is the difference between the amortised cost in
the functional currency at the beginning of the period, adjusted
for effective interest and principal payments during the period,
and the amortised cost in foreign currency translated at the
prevalent exchange rate at the end of the period. The foreign
currency gains or losses are recognised as part of other
income/(losses) in the Statement of Profit and Loss and Other
Comprehensive Income. Foreign currency changes are taken
into account when fair valuing the equity instruments.
Basic EPS is calculated as the net resulting earnings
attributable to members, adjusted to exclude costs of
servicing equity (other than dividends) and preference
share dividends, divided by the weighted average number of
ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as the net resulting earnings
attributable to members, adjusted for:
•
•
costs of servicing equity (other than dividends) and
preference share dividends;
the after tax effect of dividends and interest associated
with potential dilutive ordinary shares that have been
recognised as expenses; and
• other non-discretionary changes in revenues or expenses
during the period that would result from the dilution of
potential ordinary shares divided by the weighted average
number of ordinary shares and potential dilutive ordinary
shares, adjusted for any bonus element.
3.6 Financial instruments
Recognition and initial measurement
Trade receivables and debt securities issued are initially
recognised when they are originated. All other financial assets
and financial liabilities are initially recognised when the entity
becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a
significant financing component) or financial liability is initially
measured at fair value plus, for an item not at fair value
through profit and loss (“FVTPL”), transaction costs that
are directly attributable to its acquisition or issue. A trade
receivable without a significant financing component is initially
measured at the transaction price.
Classification and subsequent measurement
Financial assets
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at FVTPL:
•
•
it is held within a business model whose objective is to
hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on
the principal amount outstanding.
Financial assets at FVTPL
All investments are mandatorily measured at FVTPL.
Investments are subsequently measured at fair value. Net
gains and losses include foreign exchange gains and losses.
Interest or dividend income are recognised in profit or loss
separately.
Financial assets at amortised cost
Cash and cash equivalents, loans to subsidiaries and other
loans meet the criteria for measurement at amortised cost.
46
Zeta Resources Limited These assets are subsequently measured at amortised cost
using the effective interest method. The amortised cost is
reduced by impairment losses. Foreign exchange gains and
losses, impairments and any gains or losses on derecognition
are recognised in profit or loss.
Financial assets are not reclassified subsequent to their initial
recognition unless the entity changes its business model for
managing financial assets, in which case all affected financial
assets are reclassified on the first day of the first reporting
period following the change in the business model.
Financial liabilities
The Company has adopted the following classifications for
financial liabilities:
Financial liabilities are measured at amortised cost and
subsequent to initial recognition, financial liabilities are
measured at amortised cost using the effective interest method.
Derecognition
The Company derecognises a financial asset when the
contractual rights to the cash flows from the financial
asset expire, or when they transfer the financial asset in a
transaction in which substantially all the risks and rewards of
ownership of the financial asset are transferred or in which
the Company neither transfers nor retains substantially all the
risks and rewards of ownership and does not retain control of
the financial asset.
The Company derecognises a financial liability when its
contractual obligations are discharged, cancelled or expire.
Offsetting
Financial assets and liabilities are offset and the net amount
presented in the statement of financial position when, and
only when, the Company currently has a legally enforceable
right to set off the recognised amounts and it intends either
to settle on a net basis or to realise the asset and settle the
liability simultaneously.
3.7
Impairment of assets
The Company recognises loss allowances for Expected Credit
Losses (“ECLs”) on financial assets measured at amortised cost.
The Company measures loss allowances at an amount equal to
lifetime ECLs, except for the following, which are measured at
12-month ECLs:
• debt securities that are determined to have low credit risk
at the reporting date; and
• other debt securities and bank balances for which credit
risk (i.e. the risk of default occurring over the expected life
of the financial instrument) has not increased significantly
since initial recognition.
Loss allowances for trade receivables are always measured at
an amount equal to lifetime ECLs.
Lifetime ECLs are the ECLs that result from all possible default
events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from
default events that are possible within the 12 months after
the reporting date (or a shorter period if the expected life of
the instrument is less than 12 months).
The maximum period considered when estimating ECLs is
the maximum contractual period over which the Company is
exposed to credit risk.
The Company considers a financial asset to be performing when
there is a low risk of default and no amounts are past due.
The Company considers a financial asset to be underperforming
when contractual payments are 30 days past due or there
has been a significant increase in credit risk since initial
recognition. A significant increase in credit risk is indicated by a
significant decrease in the future prospects of the borrower’s
operations, changes in the scope of business or changes in the
organisational structure that result in a significant change in the
borrower’s ability to meet its debt obligations.
The Company considers a financial asset in default when
contractual payments are 90 days past due. However, in
certain cases, the Company may also consider a financial
asset to be in default when internal or external information
indicates that the Company is unlikely to receive the
outstanding contractual amounts in full before taking into
account any credit enhancements held by the Company.
A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
Presentation
ECLs are a probability-weighted estimate of credit losses. Credit
losses are measured as the present value of all cash shortfalls
(i.e. the difference between the cash flows due to the entity
in accordance with the contract and the cash flows that the
Company expects to receive).
Measurement of ECLs
Loss allowances for financial assets measured at amortised cost
are deducted from the gross carrying amount of the assets.
3.8 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of ordinary shares and share
options are recognised as a deduction from equity.
3.9 Provisions and accruals
Provisions are recognised when the Company has a present
legal or constructive obligation as a result of past events, for
which it is probable that an outflow of economic benefits
will occur, and where a reliable estimate can be made of
the amount of the obligation. The expense relating to any
provision is presented in the statement of comprehensive
income net of any reimbursement. If the effect of discounting
is material, provisions are discounted. The discount rate used
is a pre-tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risks
specific to the liability.
47
Annual Report for the year to 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS
(continued)
4.
INVESTMENT IN SUBSIDIARIES
At fair value
Investment in Kumarina Resources Pty Limited ("Kumarina")
Investment in Zeta Energy Pte. Ltd. ("Zeta Energy")
Investment in Zeta Investments Limited ("Zeta Investments")
Investment in Zeta Minerals Ltd ("Zeta Minerals")
Investment in Horizon Gold Limited ("Horizon Gold")
June 2022
US$
1
1
1
1
16,003,877
16,003,881
June 2021
US$
449,775
1
1
1
21,664,824
22,114,602
Investments in subsidiaries are held as part of the investment portfolio and consequently, in accordance with IFRS 10 are not
consolidated but rather shown at fair value through profit and loss. Horizon Gold is measured using market price. The Company
participated in the rights issue offered by Horizon Gold during the year. Kumarina is valued using a resource multiple to value
Kumarina’s main project, with further consideration to the remaining assets and liabilities held by Kumarina. The investment in
Kumarina is currently deemed to have a nominal value due to the value being reflected in the loan receivable by Zeta Resources.
See note 22.4.
The remaining investments in subsidiaries are fair valued by the directors at a nominal value due to the fact that they hold no significant
assets, nor do they have any significant value. A loan to Zeta Energy was capitalised on 22 June 2022. See note 6.
The Company had the following subsidiaries as at 30 June 2022:
30 June 2022
Kumarina incorporated in Australia
Zeta Investments incorporated in Bermuda
Zeta Energy incorporated in Singapore
Zeta Minerals incorporated in United Kingdom
Horizon Gold incorporated in Australia
30 June 2021
Kumarina incorporated in Australia
Zeta Investments incorporated in Bermuda
Zeta Energy incorporated in Singapore
Zeta Minerals incorporated in United Kingdom
Horizon Gold incorporated in Australia
The Company had the following Indirect subsidiary as at 30 June 2022:
30 June 2022
Pan Pacific Petroleum Pty Limited incorporated in Australia
30 June 2021
Pan Pacific Petroleum Pty Limited incorporated in Australia
Number of
ordinary shares
Percentage of
ordinary shares held
26,245,610
1,000
6,185,998
100
89,055,422
Number of
ordinary shares
26,245,610
1,000
1
100
74,104,807
100%
100%
100%
100%
72%
Percentage of
ordinary shares held
100%
100%
100%
100%
69%
Number of
ordinary shares
581,942,846
Percentage of
ordinary shares held
100%
Number of
ordinary shares
581,942,846
Percentage of
ordinary shares held
100%
Pan Pacific Petroleum Pty Limited is an Australian oil and gas exploration and production company.
48
Zeta Resources Limited 5.
INVESTMENTS
Financial assets at fair value through profit or loss
Equity securities at fair value
Listed ordinary shares, subscription and other rights
Unlisted ordinary shares, subscription and other rights
Cost of equity securities at fair value
Listed ordinary shares, subscription and other rights
Unlisted ordinary shares, subscription and other rights
June 2022
US$
164,135,993
102,367,010
61,768,983
164,135,993
107,750,033
54,470,869
162,220,902
Investments held by the Company at the reporting date
Listed
Copper Mountain Mining Corporation
Panoramic Resources Limited
GME Resources Limited
Star Royalties Limited
Other investments*
*Other investments comprise of less than 5% of the Company’s gross assets
Unlisted
Other investments
Other rights
June 2021
US$
243,477,995
166,678,842
76,799,153
243,477,995
131,669,242
52,359,524
184,028,766
Number of
shares
35,899,745
245,437,562
257,674,106
10,151,300
128,070,268
87,040,112
28,520,525
During the reporting period the Company completed a total of 121 transactions (2021: 94 transactions) in securities. See note
22.4 for disclosure of fair value determination of level 3 investments.
The Company had the following associate undertakings at as at 30 June 2022:
30 June 2022
Alliance Mining Commodities Limited incorporated in Bermuda
GME Resources Limited incorporated in Australia
Margosa Graphite Limited incorporated in Australia
30 June 2021
Alliance Mining Commodities Limited incorporated in Bermuda
GME Resources Limited incorporated in Australia
Margosa Graphite Limited incorporated in Australia
Number of
ordinary shares
Percentage of
ordinary shares held
32,932,659
257,674,106
27,861,844
Number of
ordinary shares
29,215,520
240,563,538
27,861,844
37%
43%
33%
Percentage of
ordinary shares held
36%
43%
33%
The associate undertakings are held as part of the investment portfolio and consequently are carried at fair value through profit
or loss.
49
Annual Report for the year to 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS
(continued)
6.
LOANS TO SUBSIDIARIES
Loan to Kumarina
June 2022
US$
1,957,423
June 2021
US$
1,224,888
The loan to Kumarina, used for working capital is denominated in Australian dollars to the value of A$2.8 million (30 June 2021:
A$1.6 million) and is interest free. There are no fixed repayment terms. The loan is still performing as no contractual breaches
have occurred and the value of the assets in Kumarina is sufficient to cover all the liabilities.
The loan to Zeta Energy was denominated in Australian dollars to the value of A$2,594,249 (2021: A$2,594,249) and United States
dollars to the value of US$4,394,636 (2021: US$4,373,278), with the total loan being US$6,185,997 (2021: US$6,317,993). The loan
to Zeta Energy was classified as credit impaired in the year ended 30 June 2021. At 30 June 2022 the full loan to Zeta Energy was
converted to equity.
A reconciliation of the impairment movement on the Zeta Energy loan can be seen below:
Credit impaired loan impairment
Opening balance of impairment
Transfer from underperforming
Impairment
Reversed due to loan being converted to equity
Closing impairment
7.
CASH AND CASH EQUIVALENTS
Cash balance comprises:
Cash at bank
8.
LOAN FROM SUBSIDIARY
Loan from Horizon Gold
June 2022
US$
6,317,993
–
–
(6,317,993)
–
June 2021
US$
–
4,923,959
1,394,034
–
6,317,993
June 2022
US$
June 2021
US$
106,963
1,378,703
June 2022
US$
3,743,623
June 2021
US$
3,377,965
The Horizon Gold loan is denominated in Australian dollars to the value of A$5,400,000, attracts interest at 5% per annum and is
repayable before 30 June 2023.
9.
LOAN FROM PARENT
Loan from UIL Limited (“UIL”)
The loan from UIL was repaid in full during the year.
June 2022
US$
–
June 2021
US$
32,576,107
50
Zeta Resources Limited 10. OTHER LOANS
Loan from General Provincial Limited Pension Fund (“GPLPF”)
Loan from Somers Limited (“Somers”)
Loan from Pan Pacific Petroleum Pty Ltd ("PPP")
Loan from Leveraged Equities
Loan from Bermuda Commercial Bank Limited
June 2022
US$
5,850,762
14,999,626
392,016
–
2,500,000
23,742,404
June 2021
US$
–
–
237,758
1,094,852
–
1,332,610
The GPLPF loan is denominated in Australian dollars to the value of A$8.5 million (30 June 2021: Nil) and attracts interest at 7.5%.
There are no fixed repayment terms except that no repayment is due before 30 June 2023.
The Somers loan is denominated in Australian dollars to the value of A$2.16 million (30 June 2021: Nil) and in Canadian dollars to
the value of CA$17.38 million (30 June 2021: Nil), and currently attracts interest at 7.5% per annum on the Australian dollar loan
and 7.25% on the Canadian dollar loan. The loan is repayable on not less than 12 months’ notice and no repayment is due before
30 June 2023.
The PPP loan is denominated in Australian dollars to the value of A$567,169 (30 June 2021: A$317,169) and is interest free. There
are no fixed repayment terms except that no repayment is due before 30 June 2022.
The loan from Leveraged Equities was repaid in full during the year.
The Bermuda Commercial Bank loan is denominated in United States dollars and currently attracts interest at Bermuda
Commercial Bank’s commercial base rate +1.275% per annum (30 June 2021: Bermuda Commercial Bank’s commercial base rate
+1.25%). At 30 June 2022 the Bermuda Commercial Bank’s commercial base rate was 3%. The remaining balance is payable on
30 September 2024.
11. OTHER LOANS – CURRENT
Loan from Bermuda Commercial Bank Limited
12. TRADE AND OTHER PAYABLES
Other liabilities
Amount owed to brokers
Accruals
The accruals are for audit, management, directors and administration fees payable..
June 2022
US$
–
June 2022
US$
25,607
–
389,003
414,610
June 2021
US$
2,500,000
June 2021
US$
28,111
570,047
4,549,881
5,148,039
51
Annual Report for the year to 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS
(continued)
13. SHARE CAPITAL AND SHARE PREMIUM
Authorised
5,000,000,000 ordinary shares of par value US$0.00001
Issued
Ordinary shares
Number of
shares
Share
capital
US$
Share
premium
US$
Balance as at 30 June 2020
287,643,076
2,777
122,874,923
Share cancellation - share buy-backs May 2021
Share cancellation - share buy-backs June 2021
Issued in consideration of exercise of options over the period
10 September 2020 to 15 June 2021
Balance as at 30 June 2021
Share cancellation - share buy-backs August 2021
Share cancellation - share buy-backs September 2021
Share cancellation - share buy-backs October 2021
Share cancellation - share buy-backs November 2021
Share cancellation - share buy-backs February 2022
Share cancellation - share buy-backs May 2022
(74,666)
(334,442)
(1)
(4)
(20,266)
(89,742)
278,770,100
2788
53,998,135
566,004,068
5,560
176,763,050
(45,000)
(207,310)
(27,459)
(27,541)
(35,000)
(149,534)
(1)
(2)
–
–
–
(2)
(11,992)
(58,051)
(8,405)
(8,251)
(11,388)
(40,210)
Balance as at 30 June 2022
565,512,224
5,555
176,624,753
At 30 June 2022 the Company held 155,212 (2021: nil) treasury shares bought back in June 2022. These shares were cancelled in
July 2022.
Options
On 10 September 2020 the Company offered a bonus issue of Options to its shareholders. Eligible Shareholders who held Shares
on the Record Date were offered one Option (Bonus Option) for every one Share held on the Record Date. The Bonus Options
had no issue price, were exercisable at A$0.25 each and expired on 15 June 2021.
Balance as at 30 June 2020
Options issued on 29 September 2020
Options exercised
Options expired on 15 June 2021
Balance as at 30 June 2021
Balance as at 30 June 2022
–
287,567,921
(278,770,100)
(8,797,821)
–
–
52
Zeta Resources Limited 14.
INVESTMENT RETURNS
Revenue
Dividend income
Interest income
Investment (losses)/gains
Derived from financial instruments measured at fair value
Realised gains
Realised losses
Unrealised fair value gains on revaluation of investments
Unrealised fair value losses on revaluation of investments
15. OTHER INCOME
Foreign exchange gains/(losses)
Other income
16. MANAGEMENT AND CONSULTING FEES
Management and consulting fees
June 2022
US$
June 2021
US$
19,064
16,493
35,557
4,541,992
(4,086,228)
30,581,550
(97,411,078)
(66,373,764)
(66,338,207)
June 2022
US$
2,501,304
–
2,501,304
June 2022
US$
1,344,513
16,132
37,853
53,985
14,814,489
(719,378)
127,925,486
(5,082,392)
136,938,205
136,992,190
June 2021
US$
(8,280,401)
8,792
(8,271,609)
June 2021
US$
5,491,044
The Company entered into an investment management agreement with ICM Limited on 3 June 2018. Management fees are payable
at a rate of 0.5% per annum, of the net tangible assets managed on calculation date (last day of quarter), payable quarterly in arrears.
Performance fees are payable annually at year end on the difference between adjusted equity funds (adjusted for any dividends
paid or accrued) on calculation date less adjusted base equity funds (used in the performance fee calculation when it was last
payable) multiplied by 15%. Performance fee for the year ended 30 June 2022 was nil (2021: $4,223,318).
Either party may terminate the agreement with six months’ notice.
17. OPERATING AND ADMINISTRATION EXPENSES
Operating and administration expenses consist of:
Accounting fees
Audit fees
Australian Securities Exchange listing fees and regulatory costs
Brokerage
Other expenses
June 2022
US$
June 2021
US$
303,268
17,293
88,899
77,286
85,134
571,880
265,293
19,293
116,679
95,651
75,444
572,360
53
Annual Report for the year to 30 June 2022
NOTES TO THE FINANCIAL STATEMENTS
(continued)
18.
INCOME TAX
Taxation regarding the sale of Bligh Resources Limited
June 2022
US$
–
June 2021
US$
–
Australian taxation has been accrued in full with regards to the sale of the investment in Bligh Resources Limited in July 2019. At
30 June 2022 there is uncertainty over the tax treatment of gains arising from the sale of the investment by the Australian tax
authority on whether the transaction is taxable Australian property (“TAP”) or non-TAP. Management has argued that the sale
pertains to non-TAP, and alternatively not Australian source income (and therefore not taxable either) and external taxation advice
confirms both these viewpoints. Of this taxation amount accrued, US$3,358,213 has already been paid as a withholding tax.
The Company has not raised deferred tax assets of US$7 million on potential unrealised Australian capital losses (at year-end
amounting to US$25 million) where there are insufficient capital gains of the same nature against which to utilise those losses.
There is no expiration date on losses.
The Company is domiciled in Bermuda and has elected to be tax exempt in terms of local legislation. As such no tax is payable.
19. EARNINGS PER SHARE
Basic (loss)/profit per share
Diluted (loss)/profit per share
June 2022
US$
(0.12)
(0.12)
June 2021
US$
0.33
0.33
(Loss)/profit used in calculation of basic and diluted earnings per share
(68,542,960)
114,670,080
Weighted average number of ordinary shares outstanding during the year used
in calculation of basic earnings per share
Adjustment for unexercised options during the period
565,730,980
348,193,810
–
149,080
Weighted average number of ordinary shares outstanding during the year used
in calculation of diluted earnings per share
565,730,980
348,342,890
The weighted average number of ordinary shares outstanding during the prior year was adjusted for the bonus element of
options exercised in 2021.
20. NOTES TO THE CASH FLOW STATEMENT
20.1 Cash utilised by operations
(Loss)/profit for the year
Adjustments for:
Realised gains on investments
Fair value loss/(gains) on revaluation of investments
Impairment of loan to Zeta Energy
Foreign exchange (gains)/losses
Dividend income
Interest income
Interest expense
Operating loss before working capital changes
(Decrease)/increase in trade and other payables
54
June 2022
US$
June 2021
US$
(68,542,960)
114,670,080
(455,764)
(14,095,111)
66,829,528
(122,843,094)
–
(2,501,304)
(19,064)
(16,493)
2,589,664
(2,116,393)
(4,973,589)
(7,089,982)
1,394,034
8,280,401
(16,132)
(37,853)
6,393,063
(6,254,612)
2,491,658
(3,762,954)
Zeta Resources Limited 20.2 Liabilities from financing activities
Balance as at 30 June 2020
Changes from financing cash flow
Repayment of loans
Advances of loans received
Other Changes
Options exercised
Exchange rate fluctuations
Interest capitalised
Loan from
parent
US$
68,312,746
(34,223,214)
18,446,626
(33,410,740)
7,765,976
5,684,713
Loan from
subsidiary
US$
Other loan
US$
Total
US$
–
7,562,255
75,875,001
–
(13,461,727)
(47,684,941)
3,420,043
14,301,379
36,168,048
–
(5,763,798)
(39,174,538)
(46,730)
4,652
919,269
275,232
8,638,515
5,964,597
Balance as at 30 June 2021
32,576,107
3,377,965
3,832,610
39,786,682
Changes from financing cash flow
Repayment of loans
(23,343,020)
(7,877,976)
(9,249,796)
(40,470,792)
Advances of loans received
5,570,571
8,401,474
14,572,100
28,544,145
Other Changes
Exchange rate fluctuations
Loan repaid to parent
Loan received from Somers Limited
Interest capitalised
Balance as at 30 June 2022
21. GOING CONCERN
(1,856,680)
(14,830,503)
–
(180,535)
(522,290)
(2,559,505)
–
–
–
(14,830,503)
14,830,503
14,830,503
1,883,525
22,695
279,277
2,185,497
–
3,743,623
23,742,404
27,486,027
The financial statements have been prepared on a going concern basis. We draw attention to the fact that at 30 June 2022, the
Company’s current liabilities exceed its current assets by US$6,891,456 (2021: US$12,727,647). The Company has undrawn
capacity under its debt facilities and the majority of the Company’s assets consist of equity shares in listed companies which in
most circumstances are realisable within a short timescale. Based on this, the directors believe the Company will be able to cover
the commitments arising in the period 12 months from the date of approval of these financial statements. The use of the going
concern basis of accounting is appropriate because there are no material uncertainties related to events or conditions that may
cast significant doubt about the ability of the Company to continue as a going concern. After making enquiries, the directors have
a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable
future. Accordingly, the directors continue to adopt the going concern basis in preparing the accounts.
55
Annual Report for the year to 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS
(continued)
22. FINANCIAL RISK MANAGEMENT
The board of directors, together with the Investment Manager, is responsible for the Company’s risk management. The directors’
policies and processes for managing the financial risks are set out below. These financial risks are principally related to the market
(currency movements, interest rate changes and security price movements), liquidity and credit and counterparty risk.
The accounting policies which govern the reported statement of financial position carrying values of the underlying financial assets and
liabilities, as well as the related income and expenditure, are set out in note 3 to the financial statements. The policies are in compliance
with IFRS and best practice and include the valuation of certain financial assets and liabilities at fair value through profit and loss.
Categories of financial instruments
IFRS 9 contains three principal classification and measurement categories for financial assets: at amortised cost, fair value through
other comprehensive income, and fair value through profit and loss. The analysis of assets into their categories as defined in IFRS
9 is set out in the following table.
The table below sets out the Company classification of each class of financial assets and liabilities. All assets and liabilities
approximate their fair values:
Financial assets
mandatorily measured
at fair value through
profit or loss
US$
16,003,881
164,135,993
–
–
180,139,874
–
–
–
–
Financial assets
mandatorily measured
at fair value through
profit or loss
US$
22,114,602
243,477,995
–
–
265,592,597
–
–
–
–
–
Financial
assets/liabilities
measured at
amortised cost
US$
–
–
1,957,423
106,963
2,064,386
3,743,623
25,607
23,742,404
27,511,634
Financial
assets/liabilities
measured at
amortised cost
US$
–
–
1,224,888
1,378,703
2,603,591
3,377,965
598,158
32,576,107
3,832,610
40,384,840
Total
carrying value
US$
16,003,881
164,135,993
1,957,423
106,963
182,204,260
3,743,623
25,607
23,742,404
27,511,634
Total
carrying value
US$
22,114,602
243,477,995
1,224,888
1,378,703
268,196,188
3,377,965
598,158
32,576,107
3,832,610
40,384,840
30 June 2022
Assets
Investments in subsidiaries
Investments
Loans to subsidiaries
Cash and cash equivalents
Liabilities
Loans from subsidiary
Trade and other payables
Other loans
30 June 2021
Assets
Investments in subsidiaries
Investments
Loans to subsidiaries
Cash and cash equivalents
Liabilities
Loans from subsidiary
Trade and other payables
Loan from parent
Other loans
56
Zeta Resources Limited
22.1 Market risks
The fair value of equity and other financial securities held in the Company’s portfolio fluctuate with changes in market prices.
Prices are themselves affected by movements in currencies, commodity prices, interest rates and by other financial issues,
including the market perception of future risks. The board of directors sets policies for managing these risks within the Company’s
objective and meets regularly to review full, timely and relevant information on investment performance and financial results. The
Investment Manager assesses exposure to market risks when making each investment decision and monitors ongoing market risk
within the portfolio.
The Company’s other assets and liabilities may be denominated in currencies other than United States dollars and may also be
exposed to interest rate risks. The Investment Manager and the board of directors regularly monitor these risks. The Company
does not normally hold significant cash balances. Borrowings are limited to amounts and currencies commensurate with the
portfolio’s exposure to those currencies, thereby limiting the Company’s exposure to future changes in exchange rates.
Gearing may be short- or long-term, in United States dollars and foreign currencies, and enables the Company to take a long-
term view of the countries and markets in which it is invested without having to be concerned about short-term volatility. Income
earned in foreign currencies is converted to United States dollars on receipt. The board of directors regularly monitors the effects
on net revenue of interest earned on deposits and paid on gearing.
Currency exposure
The principal currencies to which the Company was exposed were the Australian dollar, Canadian Dollar and New Zealand dollar.
The exchange rates applying against the United States dollar at 30 June 2022 and the average rates for the year were as follows:
AUD – Australian dollar
CAD – Canadian dollar
June 2022
Average 2022
June 2021
Average 2021
0.6912
0.7768
0.7256
0.7901
0.7496
0.8059
0.7474
0.7807
The Company’s monetary assets and liabilities at 30 June 2022, by currency based on the currency of denomination for loans and
cash and cash equivalents, and on the currency of the primary trading market for equities, are shown below:
30 June 2022
Investments in subsidiaries
Investments
Cash and cash equivalents
Loans to subsidiaries
Loan from subsidiary
Other loans
Net monetary liabilities
30 June 2021
Investments in subsidiaries
Investments
Cash and cash equivalents
Loans to subsidiaries
Loan from parent
Other loans
Net monetary assets/(liabilities)
AUD
23,754,410
90,395,627
150,445
2,832,000
(5,400,000)
CAD
–
60,259,534
–
–
–
(11,210,197)
(17,382,428)
100,522,285
42,877,106
AUD
29,500,875
97,944,214
1,812,002
4,228,249
CAD
–
134,005,760
–
–
(23,472,807)
(18,587,776)
(5,274,662)
–
104,737,871
115,417,984
57
Annual Report for the year to 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS
(continued)
22. FINANCIAL RISK MANAGEMENT (continued)
22.1 Market risks (continued)
Based on the financial assets and liabilities held, and exchange rates applying, at the reporting date, a weakening or strengthening
of the United States dollar against each of these currencies by 10% would have had the following approximate effect on income
after tax and on net asset value (NAV):
Strengthening of the United States dollar
Increase in total comprehensive income for the year
ended 30 June 2022
Increase/(decrease) in total comprehensive income for the year
ended 30 June 2021
Weakening of the United States dollar
Decrease in total comprehensive income for the year
ended 30 June 2022
(Decrease)/increase in total comprehensive income for the year
ended 30 June 2021
AUD
CAD
Total
7,293,897
3,387,720
10,681,617
7,828,108
9,010,682
16,838,790
(7,293,897)
(3,387,720)
(10,681,617)
(7,828,108)
(9,010,682)
(16,838,790)
These analyses are broadly representative of the Company’s activities during the current year as a whole, although the level of the
Company’s exposure to currencies fluctuates in accordance with the investment and risk management processes.
Interest rate exposure
The exposure of the financial assets and liabilities to interest rate risks at 30 June 2022 and at 30 June 2021 is shown below:
30 June 2022
Exposure to floating rates:
Cash
Other loans
Impact of floating rate exposures are considered insignificant.
Exposure to fixed rates:
Loan from subsidiary
Other loan liabilities
30 June 2021
Exposure to floating rates:
Cash
Other loans
Exposure to fixed rates:
Loan from parent
Loan from subsidiary
Other loan liabilities
58
Within
one year
US$
106,963
–
106,963
(3,743,623)
–
(3,743,623)
Within
one year
US$
1,378,703
(2,500,000)
(1,121,297)
Greater than
one year
US$
–
(2,500,000)
(2,500,000)
–
(21,242,404)
(21,242,404)
Greater than
one year
US$
–
–
–
Total
US$
106,963
(2,500,000)
(2,393,037)
(3,743,623)
(21,242,404)
(24,986,027)
Total
US$
1,378,703
(2,500,000)
(1,121,297)
–
(32,576,107)
(32,576,107)
(3,377,965)
–
(3,377,965)
–
(1,094,852)
(33,670,959)
(3,377,965)
(1,094,852)
(37,048,924)
Zeta Resources Limited Exposures vary throughout the year as a consequence of changes in the make-up of the net assets of the Company arising out of the
investment and risk management processes. The Company tends to limit its cash reserves and interest earned is insignificant and
therefore not sensitive to interest rate changes. The majority of borrowings are at a fixed rate and not sensitive to interest rate risk.
Other market risk exposures
The portfolio of listed investments valued at US$118,370,887 at 30 June 2022 (30 June 2021: US$188,343,666) is exposed to
market price changes. The Investment manager assesses these exposures at the time of making each investment decision. An
analysis of the portfolio by country is set out on note 24.
Price sensitivity risk analysis
A 10% decline in the market price of the listed investments held by the Company would result in an unrealised loss of
US$11,837,088. A 10% appreciation in the market price would have the opposite effect. See note 22.4 for unlisted investment
sensitivity analyses..
22.2 Liquidity risk exposure
The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Company’s reputation. The Investment Manager reviews liquidity at the time of making each investment decision.
The risk of the Company having insufficient liquidity is not considered by the board to be significant, given the amount of quoted
investments held in the Company’s portfolio and the existence of an ongoing loan facility agreement.
The contractual maturities of the financial liabilities, based on the earliest date on which payment can be required, were as follows:
30 June 2022
Trade and other payables
Loan from subsidiary
Other loans
30 June 2021
Trade and other payables
Loans from parent
Loan from subsidiary
Other loans
Three months
or less
US$
Three months
to one year
US$
More than
one year
US$
–
–
Total
US$
414,610
3,930,247
17,499,626
25,895,348
–
3,930,247
7,965,134
11,895,381
17,499,626
30,240,205
Three months
to one year
US$
More than
one year
US$
Total
US$
–
–
3,533,013
1,386,189
4,919,202
–
598,158
34,779,063
34,779,063
–
–
3,533,013
3,926,814
34,779,063
42,837,047
414,610
–
430,589
845,199
Three months
or less
US$
598,158
–
–
2,540,625
5,970,553
22.3 Credit risk and counterparty exposure
The Company is exposed to potential failure by counterparties to deliver securities for which the Company has paid, or to pay for
securities which the Company has delivered. To mitigate against credit and counterparty risk broker counterparties are selected
based on a combination of criteria, including credit rating, balance sheet strength and membership of a relevant regulatory body.
Cash and deposits are held with reputable banks. The Company has an ongoing contract with its custodians for the provision of
custody services. The contracts are reviewed regularly. Details of securities held in custody on behalf of the Company are received
and reconciled monthly.
Maximum exposure to credit risk
The Company has loan assets totalling US$1,957,423 (2021: US$1,224,888) and bank balances totalling US$106,963 (2021:
US$1,378,703) that are exposed to credit risk.
None of the Company’s financial assets are past due. The Company’s principal banker is Bermuda Commercial Bank (rated by Fitch
as BBB-) and the Company’s principal custodian is JP Morgan Chase Bank (rated by Fitch as AA-). The subsidiary Kumarina holds a
bank account with National Australia Bank (rated by Fitch as AA-).
59
Annual Report for the year to 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS
(continued)
package of highly prospective tenements. The most
advanced project area is the Pathakada Graphite Project
(“Pathakada Project”) for which Margosa completed
a JORC-2012 resource estimate in April 2020 of 1.72
million tonnes (“Mt”) at a grade of 76.32%, implying a total
graphitic content of 1.32 Mt.
Valuation methodology: The market approach has
been used for the valuation of Margosa in the form of
precedent transactions involving Margosa shares at a
price of A$0.35 per share (2021: A$0.5 per share). At year
end the fair value of the investment was US$6.7 million
(2021: US$14.2 million).
Sensitivities: The fair value of Margosa is considered
sensitive to price of precedent transactions. Possible
alternative prices represent an increase of $0.15 per
share, which can cause an increase of US$2.9 million
in the fair value of Zeta Resources’ equity interest in
Margosa.
Alliance Mining Commodities Limited (“AMC”) - Australia
incorporated
The unlisted investment comprises an equity interest in a
privately-owned company that has been granted a mining
concession for the development of the Koumbia Bauxite
Project in the Republic of Guinea. AMC aims to develop
the Koumbia Project into an operation with steady-state
production of approximately 11 million wet tonnes of
aluminium per annum from surface mining operations.
Valuation methodology: As a result of the nature of AMC’s
assets, the nature of financial information available and
the relevant market participants, a comparable market
valuation based on resource multiples from six broadly
comparable bauxite projects was used. The resource
of available aluminium of 711 Mt (2021: 711 Mt) was used
at a value of A$0.325 per tonne (2021: A$0.35 per tonne).
The methodology is supported by a discounted cash flow
analysis. At year end the fair value of the investment was
US$54.3 million (2021: US$61.4 million).
Sensitivities: The fair value of Zeta’s equity interest in
AMC is sensitive to the available resource multiples for
comparable bauxite transactions observed in the market.
An increase in the multiple used could significantly
increase the fair value determined. A possible alternative
multiple represents a change of 0.075 A$/t to the multiple
which can cause a change of US$12.4 million in the fair
value of Zeta Resources’ equity interest in AMC.
22. FINANCIAL RISK MANAGEMENT (continued)
22.4 Fair values of financial assets and liabilities
The assets and liabilities of the Company are, in the opinion of
the directors, reflected in the statement of financial position
at fair value. Borrowings under loan facilities do not have a
value materially different from their capital repayment amount.
Borrowings in foreign currencies are converted into United
States dollars at exchanges rates ruling at each valuation date.
Unquoted investments are valued based on professional
assumptions and advice that is not wholly supported by prices
from current market transactions or by observable market data.
Valuation of financial instruments
The table below analyses financial assets measured at fair
value at the end of the year by the level in the fair value
hierarchy into which the fair value measurement is categorised:
Level 1 The fair values are measured using quoted prices in
active markets.
Level 2 The fair values are measured using inputs, other than
quoted prices, that are included within level 1, that
are observable for the asset.
Level 3 The fair values are measured using inputs for the
asset or liability that are not based on observable
market data. The directors make use of recognised
valuation techniques and may take account of recent
arms’ length transactions in the same or similar
investments.
The directors regularly review the principles applied by the
Investment Manager to those valuations to ensure they comply
with the Company’s accounting policies and with fair value
principles.
Level 3 financial instruments
Valuation methodology
The board of directors have satisfied themselves as to the
methodology used, the discount rates and key assumptions
applied in the valuation of level 3 assets. The level 3 assets have
each been assessed based on its industry, location and business
cycle. Where sensible, the directors have taken into account
observable data and events to underpin the valuations.
The level 3 investments are split between (a) unlisted
companies, (b) investments in subsidiaries and (c)
investments in other rights.
(a) Unlisted companies
Margosa Graphite Limited (“Margosa”) - Australia
incorporated
The unlisted investment comprises an equity interest
in Margosa, a mineral exploration and development
company focused on high grade vein graphite
opportunities in Sri Lanka with granted licenses to a
60
Zeta Resources Limited (b)
Investments in subsidiaries
Kumarina Resources Pty Limited (“Kumarina”) - Australia
incorporated
Kumarina is a mineral exploration company with a gold
project located at Murrin Murrin in Western Australia.
Kumarina’s primary focus has been the exploration and
development of the Murrin Murrin Gold Project, which
is located 50 km east of Leonora in the north-eastern
Goldfields.
Valuation methodology: The market approach for the
valuation of Kumarina has been used in the form of
resource multiples from comparable transactions. The
most recent mineral resource estimate for the Murrin
Murrin Gold project and twenty four comparable
transactions were used in the analysis. The Murrin Murrin
project has a resource estimate of 51,200 oz (2021:
52,100 oz) and a value of A$55 per oz (2021: A$43 per oz)
was used. At year end the fair value of the Murrin Murrin
project was determined to be A$2.8 million. As the loan
owed to Zeta Resources is A$2.8 million, the investment
value at 30 June 2022 was determined to be a nominal
amount (2021: US$449,775), due to the value being
reflected in the loan receivable.
Sensitivities: The methodology used is sensitive to
the chosen resource multiples for comparable gold
transactions observed on the market. The magnitude
of these multiples are primarily driven by commodity
prices and market conditions. A change in the resource
multiples will result in a change in the value of the
project. Possible alternative multiples represent a change
in the resources multiple of 5 A$/oz which can cause a
change of US$180,000 in the fair value of Zeta Resources’
equity interest in Kumarina.
(c)
Investments in other rights
Panoramic Resources Limited Options
Zeta Resources hold 28,520,525 options with an exercise
price of A$0.16. The options expire on 30 June 2023.
There are no vesting conditions linked to these options.
Valuation methodology: The intrinsic value of the options
was used. The share price of Panoramic Resources
Limited at 30 June 2022 was A$0.195. At year end the fair
value of the investment was US$689,949. In the prior year
the Black-Scholes option pricing model was used to value
the options, in the current year the intrinsic value of the
options was used to be in line with internal management
processes. The change in methodology did not result in
a material change in value, due to the options expiring in
the short-term.
Sensitivities: As the options are valued using intrinsic
value, the fair value of the options is considered to be
less sensitive to changes in inputs and assumptions.
30 June 2022
Financial assets
Investments
Investment in subsidiaries
Level 1
US$
102,367,010
16,003,877
Level 2
US$
–
–
Level 3
US$
61,768,983
4
There have been no movements between the level 1 and level 3 categories.
The following table shows a reconciliation from opening balances to closing balances for fair value measurements in level 3
investments of the fair value hierarchy:
Balance at 1 July 2021
Acquisitions at cost
Total gains/(losses) recognised in fair value through profit or loss
Balance at 30 June 2022
Level 3
investments
US$
76,799,153
2,189,845
(17,220,015)
61,768,983
Level 3
investments
in subsidiaries
US$
449,778
-
(449,774)
4
61
Annual Report for the year to 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS
(continued)
22. FINANCIAL RISK MANAGEMENT (continued)
22.4 Fair values of financial assets and liabilities (continued)
30 June 2021
Financial assets
Investments
Investment in subsidiaries
Level 1
US$
166,678,842
21,664,824
Level 2
US$
–
–
Level 3
US$
76,799,153
449,778
There have been no movements between the level 1 and level 3 categories.
The following table shows a reconciliation from opening balances to closing balances for fair value measurements in level 3
investments of the fair value hierarchy:
Balance at 1 July 2020
Acquisitions at cost
Total gains recognised in fair value through profit or loss
Balance at 30 June 2021
22.5 Capital risk management
Level 3
investments
US$
64,715,095
2,182,428
9,901,630
76,799,153
Level 3
investments
in subsidiaries
US$
1,309,354
–
(859,576)
449,778
The objective of the Company is stated as being to maximise shareholder returns by identifying and investing in investments
where the underlying value is not reflected in the market price. In pursuing this long-term objective, the board of directors has
a responsibility for ensuring the Company’s ability to continue as a going concern. It must therefore maintain an optimal capital
structure through varying market conditions. This involves the ability to issue and buy back share capital within limits set by the
shareholders in general meeting; borrow monies in the short- or long-term; and pay dividends to shareholders out of current year
earnings as well as out of brought forward reserves.
23. RELATED PARTIES
23.1 Material related parties
Holding company
The company’s holding company is UIL which held 60.9% of the company’s issued share capital on 30 June 2022. UIL is 65.4%
owned by General Provincial Life Pension Fund Limited. Somers Isles Private Trust Company Limited holds 100% of General
Provincial Life Pension Fund Limited.
Entities controlled by these entities are considered related parties of the Company. Somers Limited is controlled by Somers Isles
Private Trust Company Limited.
Subsidiary companies
Wholly owned subsidiaries include Kumarina, Zeta Energy, Zeta Minerals and Zeta Investments. Zeta Resources holds 72% of
Horizon Gold’s issued share capital. Pan Pacific Petroleum Pty Limited is a subsidiary of Zeta Energy.
Key management personnel
Key management personnel and their close family members and entities which they control, jointly or over which they exercise
significant influence are considered related parties of the Company. The Company’s directors, as listed in the director’s report are
considered to be key management personnel of the Company.
62
Zeta Resources Limited
23.2 Material related parties transactions
Nature of balances
Investments in related parties:
Kumarina
Zeta Investments
Zeta Energy
Zeta Minerals
Horizon Gold
Loans to related parties:
Kumarina
Loans from related parties:
UIL Limited
Somers Limited
Horizon Gold
PPP
ICM Limited
Trade and other payables:
ICM Limited
Directors
ICM Corporate Services (Pty) Ltd
Nature of transactions
Impairment of loan to subsidiary
Interest relates to loans measured at amortised cost:
Interest charged by subsidiaries
Interest charged by the parent company
Interest charged by Somers Limited
Interest charged by GPLPF
Interest charged by ICM Limited
Interest charged by Permanent Investment Limited
Interest charged to investee entity
Management fees paid to ICM Limited
Performance fee accrued to ICM Limited
Accounting fees paid to ICM Corporate Services (Pty) Ltd
Fees paid to the directors
Xi Xi
M Botha
P Sullivan
A Liebenberg
All fees paid to directors are deemed short term remuneration payments.
June 2022
US$
1
1
1
100
June 2021
US$
449,775
1
1
100
16,003,877
21,664,824
1,957,423
1,224,888
–
32,576,107
14,999,626
3,743,623
392,016
5,850,762
231,753
50,000
55,654
June 2022
US$
–
127,209
1,883,525
20,894
331,311
–
–
–
1,263,154
–
303,268
50,000
50,000
50,000
50,000
–
3,377,965
237,758
–
3,276,643
50,000
78,229
June 2021
US$
(1,394,034)
4,652
5,684,713
–
–
54,435
109,233
3,803
1,103,229
4,223,318
265,293
50,000
50,000
50,000
50,000
63
Annual Report for the year to 30 June 2022
NOTES TO THE FINANCIAL STATEMENTS
(continued)
24. SEGMENTAL REPORTING
The Company has five reportable segments, as described below, which are considered to be the Company’s strategic investment areas.
For each investment area, the Company’s chief operating decision maker (“CODM”) (ICM Limited - investment manager) reviews internal
management reports on at least a monthly basis. The following summary describes each of the Company’s reportable segments:
Gold: investments in companies which explore or mine for gold
Nickel: investments in companies which explore or mine for nickel
Copper: investments in companies which explore or mine for copper. The copper segment has been added due to the increased
value of investments in these companies. The prior period segment information has been updated accordingly
Mineral exploration: investments in companies which explore or mine for other minerals
Administration: activities relating to financing received which does not specifically relate to any one segment as well as
administrative activities
Information regarding the results of each reportable segment is included below. Performance is measured based on segment
profit before tax, as included in the internal management reports that are reviewed by the Company’s CODM. Segment profit is
used to measure performance as management believes that such information is the most relevant in evaluating the performance
of certain segments relative to other entities that operate within these industries.
Information about reportable segments
30 June 2022
Gold
US$
Nickel
US$
Copper
US$
Mineral
exploration
US$
Admin
US$
Total
US$
External investment returns
(11,398,646)
23,741,269
(61,017,720)
(17,669,665)
6,555
(66,338,207)
Interest revenue
Interest expense
9,938
–
–
–
–
–
–
–
6,555
16,493
(2,589,664)
(2,589,664)
Reportable segment (loss)/profit
before tax
(11,405,787)
23,728,252
(61,052,649)
(17,685,308)
(2,127,468)
(68,542,960)
Reportable segment assets
23,878,842
38,927,525
44,271,964
75,018,966
106,963
182,204,260
Reportable segment liabilities
–
–
–
–
(30,740,823)
(30,740,823)
Management fee expenses and foreign exchange losses arising from loans are attributed to the admin segment.
30 June 2021
Gold
US$
Nickel
US$
Copper
US$
Mineral
exploration
US$
Admin
US$
Total
US$
External investment returns
(3,912,718)
20,236,987
102,538,191
16,709,137
26,559
135,598,156
Interest revenue
Interest expense
Reportable segment profit/(loss)
before tax
–
–
–
–
–
–
–
–
37,853
37,853
(6,393,063)
(6,393,063)
(3,914,036)
20,232,953
102,486,845
17,338,792
(21,474,474)
114,670,080
Reportable segment assets
39,887,307
33,110,117
112,329,081
81,490,980
1,378,703
268,196,188
Reportable segment liabilities
–
–
–
(570,047)
(47,445,020)
(48,015,067)
Management fee expenses and foreign exchange losses arising from loans are attributed to the admin segment.
During the year there were no transactions between segments which resulted in income or expenditure.
64
Zeta Resources Limited Geographic information
In presenting information on the basis of geography, segment investment returns and segment assets are based on the
geographical location of the operating assets of the investment held by the Company.
Investment returns
Australia
Canada
Guinea
Mali
Namibia
Singapore
Sri Lanka
Other countries
Investment returns
June 2022
US$
13,400,599
(60,547,197)
(9,253,698)
(1,313,307)
–
–
(7,962,849)
(661,755)
June 2021
US$
19,254,259
106,026,848
5,406,128
(1,930,230)
3,542,107
(1,394,034)
4,417,763
275,315
(66,338,207)
135,598,156
The investment loss recognised in the Canadian segment is due primarily to the decrease in value of the Company’s investment in
Copper Mountain Mining Corporation.
Assets
Australia
Guinea
Canada
Sri Lanka
Mali
Namibia
Other countries
Assets
June 2022
US$
77,184,818
54,338,886
43,382,929
6,740,148
82,053
4,350
364,113
June 2021
US$
88,420,285
61,402,739
99,769,569
14,160,667
1,870,911
16,478
2,555,540
182,097,297
268,196,188
25. EVENTS AFTER REPORTING DATE
The Company performed a review of events after the reporting date and determined that there were no such events requiring
recognition or disclosure in the financial statements.
65
Annual Report for the year to 30 June 2022 SHAREHOLDER INFORMATION
SUBSTANTIAL SHAREHOLDERS
As at 5 September 2022 the Company had received notification of the following substantial shareholdings:
NAME
UIL Limited
General Provincial Life Pension Fund Limited
UIL Limited (and associates)
SHARES
% OF ISSUED CAPITAL
344,573,832
187,572,396
532,146,228
61.02
33.21
94.23
TOP 20 HOLDINGS OF FULLY PAID ORDINARY SHARES AS AT 5 SEPTEMBER 2022
NAME
SHARES
% OF ISSUED CAPITAL
J P Morgan Nominees Australia Pty Limited
General Provincial Life Pension Fund Limited
Mr Peter Ross Sullivan
Peter Ross Sullivan
HSBC Custody Nominees (Australia) Limited
Mr James Noel Sullivan
Hardrock Capital Pty Ltd – CGLW No 2 Super Fund A/C
Hardrock Capital Pty Ltd
Cherryburn Pty Ltd – Burrows Super Fund A/C
Ingot Capital Investments Pty Ltd
VCM Investments Pty Ltd
ACS (NSW) Pty Limited - ACS Family Super Fund A/C
Mrs Alexandra Maree Giles
Burnal Pty Ltd
Mr Sean Dennehy
Mr Stephen Alan McCabe & Mrs Janet Backhouse
Mr Richard Hamilton Bartlett
Mr James Noel Sullivan & Mrs Gail Sullivan – Sullivans Garage S/F A/C
Blessed Investments Pty Limited – Green Family S/F A/C
Nalmor Pty Ltd John Chappell Super Fund A/C
Citicorp Nominees Pty Limited
Calimo Pty Ltd
Total for top 20
352,273,938
180,289,790
4,528,132
4,528,132
1,837,991
1,765,959
1,200,000
1,200,000
752,320
681,780
598,773
590,000
483,556
450,000
416,471
413,024
406,873
400,000
335,000
324,000
258,130
246,017
62.38
31.93
0.80
0.80
0.33
0.31
0.21
0.21
0.13
0.12
0.11
0.10
0.09
0.08
0.07
0.07
0.07
0.07
0.06
0.06
0.05
0.04
553,979,886
98.10
66
Zeta Resources Limited DISTRIBUTION SCHEDULE OF ORDINARY SHARES HELD AT 5 SEPTEMBER 2022
HOLDING RANGES
Above 0 up to and including 1,000
Above 1,000 up to and including 5,000
Above 5,000 up to and including 10,000
Above 10,000 up to and including 100,000
Above 100,000
Total
NO. OF ORDINARY
SHAREHOLDERS
41
876
170
185
34
1,306
NO. OF
SHARES
12,874
2,330,719
1,279,776
5,357,479
555,745,797
564,726,645
% OF ISSUED
CAPITAL
0.00
0.41
0.23
0.95
98.41
100.00
The number of shareholders holding less than a marketable parcel of ordinary shares at 5 September 2022 is 211
and they hold 271,332 securities.
VOTING RIGHTS
All ordinary shares carry one vote per share without restriction.
67
Annual Report for the year to 30 June 2022 COMPANY INFORMATION
Zeta Resources Limited
Company ARBN: 162 902 481
www.zetaresources.limited
DIRECTORS (NON-EXECUTIVE)
Peter Sullivan (Chairman)
Marthinus (Martin) Botha
André Liebenberg (Chairman of the
Audit & Risk Committee)
Xi Xi
REGISTERED OFFICE
C/- Trinity Corporate Services Ltd
Trinity Hall
43 Cedar Avenue
Hamilton HM 12
Bermuda
Company Registration Number: 46795
AUSTRALIAN REGISTERED OFFICE
Level 11, 1 York Street
Sydney NSW 2000
Australia
Telephone: +61 414 224 494
CANADIAN OFFICE
ICM CA Research Limited
1800-510 West Georgia Street
Vancouver BC V6B 0M3
Canada
Telephone: +1 604 227 0458
Email: contactca@icm.limited
NEW ZEALAND OFFICE
ICM NZ Limited
PO Box 25437
Wellington 6140
New Zealand
Telephone: +64 4 901 7600
Email: contact@icmnz.co.nz
INVESTMENT MANAGER
ICM Limited
34 Bermudiana Road
Hamilton HM 11
Bermuda
Telephone: +1 441 542 9242
Email: contact@icm.limited
68
SECRETARY
ICM Limited
34 Bermudiana Road
PO Box HM 1748
Hamilton HM GX
Bermuda
GENERAL ADMINISTRATION
ICM Corporate Services (Pty) Ltd
1 Knutsford Road
Wynberg 7800
Cape Town
South Africa
AUDITOR
Mazars
Mazars House
Grand Moorings Precinct
Century City 7441
Cape Town
South Africa
DEPOSITORY
JP Morgan Chase Bank NA
London Branch
25 Bank Street
Canary Wharf
London E14 5JP
United Kingdom
REGISTRAR
Automic Pty Ltd
GPO Box 5193
Sydney NSW 2001
Australia
Telephone: +61 2 9698 5414
STOCK EXCHANGE LISTING
The Company’s shares are quoted on the Official List
of the Australian Securities Exchange. Ticker code: ZER
Zeta Resources Limited SIGNIFICANT STAKES IN A SELECT RANGE OF KEY COMMODITY COMPANIES
www.zetaresources.limited