2023
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.
Panoramic Resources Limited
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 2023 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
25 Five Largest Holdings Review
27
Investment Manager and Team
GOVERNANCE
29 Directors
30 Report of the Directors
34 Corporate Governance Statement
FINANCIAL STATEMENTS
36
Independent Auditor’s Report
40 Auditor’s Independence Declaration
41 Financial Statements
45 Notes to the Financial Statements
65 SHAREHOLDER INFORMATION
67 COMPANY INFORMATION
FINANCIAL CALENDAR
Year End
30 June
Annual General Meeting
28 November 2023
Half Year
31 December
Image above – Hudbay Minerals -
Copper Mountain
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
Zeta’s deleveraging has positioned the company
to consider new opportunities for investment, to
support existing investee companies and to step
up activity in its on-market buyback program.
The past year was one of
transitions, in several ways.
The global community
completed its transition out
of the acute phase of the
covid-19 pandemic and,
following a sustained period
of ultra low and even negative
interest rates, entered into a
world of inflation, significantly
higher interest rates, and
consequent facing up to
recessionary concerns.
PETER SULLIVAN
Chairman
The resource sector was heavily impacted by these
developments. While the return to international travel
and normalised migration relieved some employment
pressure points, the rapid increase in economic
demand against a backdrop of limited supply and
challenging logistics led to cost inflation that hampered
profits of existing resource operators and negatively
impacted the economics of new developments. In
addition to rising costs, increased difficulty in sourcing
materials, contracting employees and generating
timely assay results became significant hurdles to both
development and the expansion of resource projects.
Likewise, the substantial rise in interest rates added to
debt servicing costs and made financing for developers
more difficult to secure. Meanwhile, recessionary
fears and lower than expected economic activity
out of China, the largest user of resource material,
dampened commodity price expectations, with most
commodities either trading down over the course of
the year or at best prices holding relatively flat.
Similarly, it was a year of transitions for Zeta. Zeta’s
top two holdings at the start of the financial year were
subject to successful transactions during the period.
In exchange for its 37% interest in Alliance Mining
Commodities Ltd (“AMC”), Zeta received a 39% interest
in Koumbia Bauxite Investments Ltd (“KBI”). KBI is party
to a commercialisation deed which contemplates
future fees based on the grade and the prevailing
aluminium price at the time, on the first 180,000,000
dry tonnes of bauxite ore shipped from the Koumbia
bauxite project. This restructure transaction has paved
the way for AMC to develop this project and release
value to KBI without further capital contribution. AMC
has begun construction efforts and expects to reach
commercial production as early as 2024.
Prior to the end of the financial year, Copper Mountain
Mining Corporation, which was Zeta’s second largest
investment at the beginning of the year, was purchased
in an all-share transaction by fellow Canadian Hudbay
Minerals Inc. (“Hudbay”), a larger, more diversified
copper-gold producer. Zeta publicly supported the
transaction and became a Hudbay shareholder. Post
year end the Hudbay holding has been sold down,
giving a significant liquidity boost to Zeta.
There was also positive activity amongst Zeta’s other
Top 5 investments. GME Resources Limited, adopted a
new name, Alliance Nickel Limited, and made exciting
progress at its Ni-West battery-grade nickel project
in Western Australia, including securing an offtake
agreement and significant investment at an 80%
premium to the then current share price by Stellantis,
which owns 14 automotive brands and two mobility
brands, being one of the world’s largest automakers.
Advanced gold explorer Horizon Gold Limited added
significantly to its overall gold resources following its
second major drill program since Zeta acquired control
and now has a total resource base of over two million
ounces at its Gum Creek gold project.
Liquidity from the sale of Hudbay shares has enabled
Zeta itself to further transition with increased flexibility
in its capital allocation decisions. This has led to it
deleveraging significantly with its debt balance reduced
to less than $3 million as at 30 June 2023. It has also
positioned the company to consider new opportunities
for investment, to support existing investee companies
and given Zeta continues to trade at a significant
discount to its net tangible asset backing, to step up
activity in its on-market buyback program.
Thank you for your ongoing support. We look forward
to continuing our mission to find and realise value in the
resource sector, with a focus on long-term value creation.
Peter Sullivan
Chairman
18 September 2023
3
Annual Report for the year to 30 June 2023 GROUP PERFORMANCE SUMMARY
Total return(1) (annual) (%)
Net tangible asset per ordinary share(2) (Australian cents)
Ordinary share price (Australian cents)
Discount (%)
Profit/(loss) per ordinary share (US dollars)
Dividends per ordinary share
Equity holders' funds (US$m)
Gross assets(3) (US$m)
Cash (US$m)
Other debt (US$m)
Net debt (US$m)
Net debt to equity (%)
30 June
2023
30 June
2022
% change
2023/22
1.0
39.1
30.5
(22.0)
(0.01)
Nil
146.8
149.6
1.8
(2.9)
(1.1)
0.8
(25.3)
(104.0)
38.7
33.0
(14.8)
(0.12)
Nil
151.5
178.9
0.1
(27.5)
(27.4)
18.1
1.0
(7.6)
48.2
(93.6)
n/a
(3.1)
(16.4)
n/a
(89.5)
(95.9)
(95.8)
(1)
Total return is calculated based on NTA per share return plus dividends reinvested from the payment date.
(2) The NTA is calculated based on 563,524,256 shares on issue as at 30 June 2023, and 565,512,224 shares on issue as at
30 June 2022.
(3) Gross assets less liabilities excluding loans.
n/a = not applicable
Alliance Nickel Limited
4
Zeta Resources Limited
CURRENT YEAR PERFORMANCE
NAV TOTAL RETURN
PER ORDINARY SHARE
SHARE PRICE RETURN
PER SHARE
NAV DISCOUNT
AS AT 30 JUNE 2023
GEARING
1.0%
7.6%
22.0%
0.8%
EARNINGS PER SHARE
ORDINARY SHARES
BOUGHT BACK
AVERAGE PRICE OF
ORDINARY SHARE
BOUGHT BACK
ONGOING CHARGES
(EXCLUDING
PERFORMANCE FEE)
(US$0.01) 1,832,756 A$0.28
1.4%
NTA PER SHARE VERSUS SHARE PRICE
from 30 June 2022 to 30 June 2023
s
r
a
l
l
o
D
n
a
i
l
a
r
t
s
u
A
0.500
0.400
0.300
0.200
Jun 22
Aug 22
Oct 22
NTA
Dec 22
Feb 23
Apr 23
Jun 23
Closing Share Price
Source: ICM
5
Annual Report for the year to 30 June 2023
GEOGRAPHICAL INVESTMENT EXPOSURE
AS AT 30 JUNE 2023
Canada
9.5%
(23.8%)
USA
3.3%
Peru
7.8%
Figures relate to percentage of total investments
Figures in brackets as at 30 June 2022
Guinea
29.7%
(29.8%)
Other
2.8%
(3.9%)
Singapore
5.3%
Australia
41.6%
(42.5%)
Source: ICM
Zeta’s top two holdings at the start of the
financial year (Alliance Mining & Copper
Mountain) were subject to successful
transactions during the period.
6
Zeta Resources Limited INVESTMENT MANAGER’S REPORT
Horizon Gold Limited
The 12 months under review
were a challenging period
for most of the commodities
that Zeta invests in, with
all but one key commodity
either holding flat or declining
during the period. The
exception was gold which
experienced a modest
price gain, despite a rising
interest rate environment,
amidst global inflation and
recessionary fears.
TRISTAN KINGCOTT, CFA
Investment Manager
Nickel staged a brief recovery prior to the turn of
the calendar year but has since drifted back down,
while aluminium continued its decline that began in
the prior fiscal year, in part driven by a slowdown in
Chinese economic activity. The copper price fared
somewhat better, managing to stay nearly flat year-
over-year. Finally, following two consecutive years of
tremendous price gains, oil and gas prices contracted
considerably as supply deficits tightened and US LNG
supply compensated for the squeeze on Russian gas
imports into the European market.
Zeta’s portfolio saw significant swings in two of its
largest investments, as the share price in Panoramic
Resources Limited (“Panoramic”) fell considerably
and the share price in Copper Mountain Mining
Corporation (“Copper Mountain”) realised a large
gain, culminating in the purchase of the company by
Hudbay in June.
Zeta’s net assets per share ended the year essentially
where it started, at A$0.39, as gains in its copper and
gold investments were largely offset by losses in certain
nickel and aluminium investments. For comparison,
the S&P/ASX 200 Energy index rose 8% over the same
period, and the S&P/ASX 300 Metals & Mining index,
which includes gold mining stocks, rose 16%. Zeta’s
share price fell 8% from A$0.330 to A$0.305. At the start
of the period the share price was at a 15% discount to
net assets; at the end of the period the share price was
at a 22% discount to net assets.
At the beginning of the year, Zeta had 29.8% of its
gross assets in bauxite, 24.3% copper, 21.3% nickel,
and 12.2% gold. By the end of the year, the top
commodity exposures were 29.7% bauxite, 19.7%
gold, 17.9% nickel, and 17.2% copper. The reduction
in Zeta’s copper exposure came as a result of
realising profits from the Copper Mountain/Hudbay
transaction, the funds of which were primarily
used to complete Zeta’s debt reduction efforts that
started in the prior year. Zeta’s debt has essentially
been eliminated, falling from US$52.8 million in June
2021 to US$39.2 million in June 2022 and finally to
US$2.9m as at 30 June 2023, and post year end the
company is now in a net cash position.
7
Annual Report for the year to 30 June 2023
INVESTMENT MANAGER’S REPORT
(continued)
IN THE YEAR TO 30 JUNE 2023
AUSTRALIA IS ZETA’S LARGEST
COUNTRY EXPOSURE AT 41.6%
GUINEA IS ZETA’S SECOND
LARGEST COUNTRY EXPOSURE
AT 29.7%
CANADA IS ZETA’S THIRD LARGEST
COUNTRY EXPOSURE AT 9.5%
0.8%
0.1%
14.3%
Note: decreases/increases refer to the movement in the portfolio percentage of the relevant country
SECTOR SPLIT OF INVESTMENTS
13
AI
29
Cu
Bauxite
Gold
Nickel
29.7%
(29.8%)
79
Au
19.7%
(12.2%)
28
Ni
17.9%
(21.3%)
Copper
Graphite
Cobalt
17.2%
(24.3%)
Oil & Gas
0.1%
(0.2%)
6
C
2.5%
(3.7%)
27
Co
2.0%
(4.1%)
Other
Cash
2.9%
(3.2%)
7.9%
(1.2%)
Figures in brackets as at 30 June 2022
8
Zeta Resources Limited
COMMODITY MARKETS
As mentioned earlier, the price of most commodities
fell during the year under review, including nickel,
aluminium, oil, and natural gas. Copper was down
slightly as well and gold was the lone bright spot, up
5.2% year-over-year in US dollar terms. Zeta’s largest
geographical exposure is to Australia, with 41.6% of
the portfolio invested at year end. Guinea is second,
with just under 30% of the portfolio; and Canada third,
with 8.5% of the portfolio.
Aluminium
Aluminium entered the year under review with
downward momentum, having peaked at US$1.81
per pound in March 2022 before steadily falling due
to softening demand and sliding coal prices (easing
supply concerns in China where coal-fired power is
a key component in the metal’s production process),
to a low of US$0.94 per pound on 28 September
2022. Prices rebounded somewhat in December
2022 but hovered around US$1.05 per pound for
the bulk of the next several months, before sinking
back down to US$0.95 per pound at 30 June 2023, a
12.5% reduction year-over-year. Two primary factors
influencing the pessimistic near-term outlook for
aluminium are weak global demand, including in China,
and supply increases in China (the world’s largest
aluminium producer). Nonetheless, the aluminium
market remains in deficit, and longer-term forecasts
beyond 2025 are more bullish as aluminium demand
will be supported by the green energy transition. This
timeline aligns well with the expected ramp up of the
Koumbia bauxite project, detailed below.
During the year, Zeta exchanged its 37% interest in
AMC for cash and a 39% interest in KBI, an unlisted
investment company based in Bermuda. KBI has the
right to a future revenue stream from AMC’s Koumbia
bauxite project in the north-west of the Republic of
Guinea, on the first 180 million dry tonnes of bauxite
ore produced. The AMC-KBI transaction allowed for
an existing Guinea-based shareholder in AMC to
take direct ownership of the company and expedite
development, with initial production now expected as
early as 2024.
ALUMINIUM PRICE
from June 2021 to June 2023
2.60
2.30
2.00
1.70
1.40
1.10
0.80
0.50
Jun 21
Dec 21
Jun 22
Dec 22
Jun 23
US$/lb
A$/lb
Source: LME
The aluminium market remains in deficit, and
longer-term forecasts beyond 2025 are more
bullish as aluminium demand will be supported
by the green energy transition.
9
Annual Report for the year to 30 June 2023 INVESTMENT MANAGER’S REPORT
(continued)
Alliance Nickel Limited
Copper
Following a soft start to the year, the copper price
trended in an upward direction from late July 2022,
peaking for the year under review in January 2023. As
central banks continued to tackle stubborn inflation with
increasingly aggressive quantitative tightening, concern
over the economic impact of higher interest rates and
risk of a global recession heightened. This, combined with
increasing concern over an economic slowdown in China,
impacted by prolonged covid-19 restrictions and supply
chain near-shoring in the western hemisphere, has led to
a decline in the near-term demand for copper, causing a
slight drop in prices through the last several months of
the Zeta financial year. The downward trend continued
through July and into August. At the end of June 2023,
the copper price was US$3.72 per pound, 0.4% below
the price at 30 June 2022 and 12% below the recent peak
reached in January 2023.
Over the medium term, demand growth for copper
continues to be underpinned by increasing production of
electric vehicles, its associated infrastructure, and further
investments in new renewable energy capacity, all of
which require the use of additional copper.
Zeta’s largest investment in the copper sector at year
end was Canadian firm Hudbay Minerals Inc., which
produces copper in Peru and Canada, and has a
development project in Arizona, USA. On 21 June 2023,
Hudbay completed the acquisition of Copper Mountain,
exchanging each Copper Mountain share for 0.381
Hudbay shares and creating the third largest copper
producer in Canada. Zeta was the largest shareholder in
Copper Mountain and publicly supported the transaction.
Copper Mountain’s share price through 21 June, followed
by Hudbay’s share price for the last 9 days of the month,
performed well, up 43.8% for the year under review.
COPPER PRICE
from June 2021 to June 2023
7.00
6.00
5.00
4.00
3.00
2.00
Jun 21
Dec 21
Jun 22
Dec 22
Jun 23
US$/lb
A$/lb
Source: LME
10
Zeta Resources Limited Gold
Nickel
Gold outperformed most other commodities over
Zeta’s financial year, amidst global inflation, monetary
policy tightening and challenges in the financial sector
in the first half of 2023. At the end of June 2022, the
price of gold was US$1,817 per ounce; at the end of
June 2023 the gold price was US$1,912 per ounce,
an increase of 5.2%. In Australian dollars, the rise
was more pronounced, from A$2,642 per ounce to
A$2,873, an increase of 8.7%.
The gold price response to the rapid increase in
interest rates and continued strengthening of the US
dollar would generally be bearish; however, competing
drivers such as geopolitical tension, a 40-year high
in inflation, recessionary concerns, and a short-lived
falter in the US banking sector have created a relatively
strong gold market over the last 12 months.
Zeta’s largest investment in the gold sector is in
Western Australian gold exploration company Horizon
Gold. During the year, Zeta added to its Horizon
Gold holdings, purchasing from the market. Horizon
Gold continues to work through an extensive drilling
campaign across multiple prospects, its third campaign
in three years. The company recently issued a revised
mineral resource estimate following results of its
second drilling campaign, with mineral resources up
19% on the previous estimate.
GOLD PRICE
from June 2021 to June 2023
The nickel price started the year under review by
continuing its slide downwards that began in April 2022,
briefly falling below US$9.00 per pound in mid-July. The
price then began to trend upward in October, in part on
account of China easing its restrictive covid-19 policies.
However, after peaking in January 2023 the price has
since returned to a downward trend as concerns over
a slower-than-expected Chinese economy, and overall
uncertainty in the global economic outlook, heighten.
The nickel price was US$9.13 per pound on 30 June
2023, down 12.9% compared to the same time last
year. Nonetheless, the nickel price remains elevated
relative to its long-term average, in part due to forecasts
of increased demand for lithium-ion batteries and
electric vehicles.
Nickel is Zeta’s third largest commodity exposure, with
Alliance Nickel Limited (“Alliance Nickel”) and Panoramic
both significant holdings in Zeta’s portfolio. Alliance
Nickel, which re-branded from GME Resources earlier in
the year, continues to advance its NiWest nickel-cobalt
project in Western Australia. The company signed an
offtake and investment agreement with Stellantis NV
in May 2023 and is on track to release an updated
prefeasibility study before the end of the calendar
year. Alliance Nickel performed well during the year
under review, up 6.8% despite the softening of the
nickel market. In contrast, Panoramic’s share price fell
54.0% during the year, as the impact of the weaker
nickel price was compounded by a period of low-grade
ore and a mechanical failure that temporarily halted
production, causing a liquidity squeeze at the end of the
financial year. Panoramic has since resolved its liquidity
constraint with a fully underwritten placement, which
was led by a significant commitment from Zeta.
NICKEL PRICE
from June 2021 to June 2023
3,100
2,800
2,500
2,200
1,900
1,600
1,300
Jun 21
Dec 21
Jun 22
Dec 22
Jun 23
Spot Price US$
Spot Price A$
Source: Kitco - London PM Fix
24
20
16
12
8
4
Jun 21
Dec 21
Jun 22
Dec 22
Jun 23
US$/lb
A$/lb
Source: LME
11
Annual Report for the year to 30 June 2023 INVESTMENT MANAGER’S REPORT
(continued)
Oil & Gas
Following the dramatic price increases realised in the
two years prior, both oil and natural gas prices faced
steep declines during the year under review, ending at
or below where they started two years ago. Brent Crude
Oil was US$74.51 per barrel at the end of June 2023,
down 37.8% vs the start of the year, while Henry Hub
Natural Gas was down 62.1% to US$2.48 per MMBtu.
Demand for oil continues to grow, albeit at a slower
pace, with the post-covid rebound having largely run
its course; however, oil pricing appears to be taking its
cue from bearish macroeconomic indicators influenced
by unprecedented monetary policy tightening, and
recessionary concerns which have curtailed future
demand expectations. The collapse in natural gas prices
are in part a result of lower consumption in China and
stabilisation in European markets following the 2022
supply shock caused by Russia’s invasion of Ukraine.
Zeta does not currently have any significant investments
in the oil and gas sector.
BRENT CRUDE OIL PRICE
from June 2021 to June 2023
190
160
130
100
70
40
Jun 21
Dec 21
Jun 22
Dec 22
Jun 23
US$/bbl
A$/bbl
Source: US Energy Information Administration
Panoramic Resources Limited
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 Somers Limited, a related party entity, was assigned to UIL Limited and repaid in full.
As at 30 June 2023, Zeta had total assets of US$151.2 million (2022: US$182.2 million). Of this figure, US$44.9 million
(2022: US$54.3 million) was invested in the bauxite sector; US$29.8 million (2022: US$23.9 million) was invested in
the gold sector; US$27.1 million (2022: US$38.9 million) was invested in the nickel sector; and US$26.0 million (2022:
US$44.3 million) was invested in the copper sector.
TOTAL RETURN COMPARATIVE PERFORMANCE*
since inception on 12 June 2013 to 30 June 2023
240.0
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 15
Jun 17
Jun 19
Jun 21
Jun 23
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$4,344,791 against a loss of US$68,542,960 in the year ended June 2022. The
net loss was comprised largely of unrealised losses from investments.
13
Annual Report for the year to 30 June 2023 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 2023:
RESERVES
Proved & Probable
RESOURCES
Measured & Indicated
5.8 m t
63.5 m t
0.39 m t
0.32 m t
0.23 m t
0.11 m t
1.19 m oz
1.05 m oz
0.02 m t
0.01 m t
—
0.14 m t
Alumina
Copper
Nickel
Gold
Cobalt
Graphite
13
AI
29
Cu
28
Ni
79
Au
27
Co
6
C
14
Zeta Resources Limited ASSOCIATES
As at 30 June 2023, the following three entities were determined to be associates of Zeta:
Koumbia Bauxite
Investments Limited
Unlisted company with the right to a future revenue stream from Alliance
Mining Commodities Limited, operators of the Koumbia bauxite project
in Guinea, West Africa
% owned
38.5
Alliance Nickel Limited ASX-listed junior nickel and gold explorer with substantial nickel resources
36.4
in Western Australia
Margosa Graphite
Limited
Unlisted graphite explorer focused on high-grade vein graphite in Sri Lanka
31.9
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 electric
vehicles. In the year under review Margosa submitted
its application for a mining license to the Sri Lankan
government and has demonstrated significant progress
towards securing the license.
Star Royalties
Star Royalties Ltd. is a Canadian company focused on
investing in royalties and streams in carbon credits
and precious metals. In addition to its precious metal
streaming agreements, the company pioneered the
first forest carbon credit royalty in Canada and in
2022 formed Green Star Royalties, a Joint Venture with
Agnico Eagle Mines, to accelerate its ability to pursue
and fund larger carbon negative opportunities. Green
Star is pursuing a pipeline of carbon negative projects,
which would generate carbon offset credits in both the
voluntary and compliance markets.
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 52,100 ounces and is prospective for base
metals in the form VMS style copper zinc mineralisation.
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
18 September 2023
15
Annual Report for the year to 30 June 2023 MACRO TRENDS AFFECTING RESOURCES
GLOBAL DEBT, INFLATION AND RECESSION RISK
• Record high government debt, quantitative tightening across many jurisdictions, and
ongoing supply chain issues continue to impact the economy, adding to uncertainty
• Continued quantitative tightening in response to persistent inflationary pressure
• Weak consumer confidence and prolonged yield curve inversion shows signs of increased
recession, or stagflation, risk
• Risk to global economy, and thus demand for industrial commodities
• Market volatility due to recessionary concerns
GLOBAL TRADE
• Covid-19 and recent geopolitical pressures, have increased focus on diversifying supply
chains, nearshoring, and priortising trade with allies
• Global trade growth has modestly slowed down, primarily driven by a pullback from China
and India, however, remains at an all-time high
• Public attitude toward global trade may influence long-term trade relations
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, initially as it relates to natural gas in much of Europe, with potential for further
sanctions to impact critical minerals such as nickel
ELECTRIC VEHICLES
• Nearing tipping point where all factors for growth are in place
• Electric vehicles use more commodities such as nickel and copper than traditional
combustion-engine 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
• 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
• Growing focus on ESG reporting and fulsome accounting of carbon footprint required for
many businesses; potential for producers’ carbon intensity to impact demand and pricing
for their products – benefitting lower carbon intensive producers
16
Zeta Resources Limited SECTOR SUMMARIES
BAUXITE
13
AIAluminium
NICKEL
28
NiNickel
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 are down greater than 12% since June 2022, however, remain slightly
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
• 39% of Koumbia Bauxite Investments (unlisted) – investment company with the right to a
revenue stream on a world-class bauxite resource in Guinea
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 somewhat over the
past two quarters
• Industrial demand still heavily influenced by the Chinese economy
Exposure
• 36% of Alliance Nickel (ASX:AXN) – owns development project in Western Australia
• 12% of Panoramic Resources (ASX:PAN) – nickel producer in Western Australia
17
Annual Report for the year to 30 June 2023 SECTOR SUMMARIES (continued)
Overview
• Industrial metal used primarily in electrical wiring
• Other uses include 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 electric vehicles, but price still generally tied to the global
economy and industrial demand
• Copper price cooled slightly in the March quarter of 2023 amidst concerns of weaker
Chinese copper demand, following three quarters of steady gains
• Longer-term outlook on copper price remains positive with the anticipated ramp up of
electric vehicle 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
• 2% of Hudbay Minerals (TSX: HBM) – a copper and gold mining company with producing
mines in Canada and Peru, and significant development opportunities in Canada, Peru,
and the United States
• 100% of Kumarina (unlisted) – junior copper-gold exploration firm 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, 35% investment, 15% industrial
• Diversified sources of production
• Largest producers China, Australia, Russia, Canada, United States
Macro trends
• Hedge to US dollar which has declined long term against gold
• Price of gold has been volatile and peaking above $2,050 per oz in May 2023, and remains
near 10-year highs, as monetary tightening and persistent inflation compete
• 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
COPPER
29
CuCopper
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
• Demand has climbed alongside increased adoption of electric vehicles and other electronics
• Some manufacturers, including Tesla, have developed cobalt-free lithium-ion batteries
and many others have developed batteries that require relatively less cobalt, but industry
consensus is that the metal will continue to be required in future electric vehicle batteries
over the next 10 years, albeit likely at lower volumes per unit
• After two years of strong pricing, on the back of increased demand for batteries and
other industrial processes, cobalt prices have weakened amidst lower long-term demand
expectations and recessionary concerns
Exposure
• 36% of Alliance Nickel (ASX: AXN) – Australian nickel developer with cobalt resources of
55,400 tonnes
• 12% of Panoramic Resources (ASX:PAN) – Australian nickel producer with cobalt reserves
of 7,000 tonnes
GRAPHITE
6
CCarbon
Overview
• 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 and electrical motors are driving a rapid
increase in demand for graphite
Exposure
• 32% 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 2023 SECTOR SUMMARIES (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, peaking in mid-2022 having recovered to prices not seen
since 2014 in response to the supply concerns caused by the Russian invasion of Ukraine
and muted post pandemic supply recovery, however, have now cooled to near 10-year
average
• 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, however prices have
returned to near 2020 level
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 below spotlights a recent initative undertaken
by one of Zeta’s investments.
Green Star partners with First
Nations, Indigenous communities,
and North American farmers on
bespoke and mutually beneficial
carbon reduction projects that
share returns with stakeholder
communities.
ESG ANALYSIS:
Star Royalties pioneered the world’s first carbon credit
royalty (to the best of its knowledge) in 2020 and
formed Green Star Royalties (“Green Star”) in October
2021 as a vehicle for funding projects focused on global
decarbonization efforts. In March 2022, Star Royalties,
Agnico Eagle Mines (a Canadian gold mining company,
recognised globally for its leading ESG practices), and
Star Royalties management formed a joint venture
(61.9%, 35%, & 3.1%, respectively) to accelerate its
ability to pursue larger carbon offset opportunities.
Green Star prioritises North American investments
into nature-based carbon offset projects (regenerative
agriculture & improved forest management), renewable
energies (solar & wind), and other green technologies.
Green Star’s portfolio is expected to begin generating
carbon offset credits in 2024, ramping up to over
570,000 carbon offset credits per annum by 2025.
Green Star’s strategy provides both its shareholders
and stakeholders exposure to projects expected to
generate high-quality carbon credits, through the
origination of carbon credit royalties and streams.
From a project-level perspective, Green Star partners
with First Nations, Indigenous communities, and North
American farmers on bespoke and mutually beneficial
carbon reduction projects that share returns with
stakeholder communities.
Green Star joined the International Emissions Trading
Association in February 2023 and in April, Green
Star’s Chief Commercial Officer, Rina Cerrato, was
appointed Co-Chair of the International Emissions
Trading Association working group on Voluntary
Carbon Markets. The company is actively growing
its involvement as a stakeholder in developing and
participating in high-quality, transparent, and resilient
carbon offset markets.
ICM ESG CONCLUSION:
Star Royalties’ Green Star JV not only demonstrates
a commitment to funding carbon reduction
initiatives but has been structured to advance social
stewardship. Green Star’s unique portfolio of royalties
enable counterparties such as the Lac Seul First
Nation, Elizabeth Metis Settlement, and farmers across
North America to participate in the economic upside of
the projects that Green Star helps finance. This upside
participation creates aligned, mutually beneficial
partnerships that incentivise all stakeholders. Further,
Star Royalties is dedicated to ensuring excellent
governance and its board is majority independent of
management and highlights diversity. As at July 2023,
green investments account for approximately 70%
of Star Royalties’ net asset value, and management
remains committed to supporting further ESG-aligned
investments that generate attractive returns to
shareholders and stakeholders alike.
21
Annual Report for the year to 30 June 2023 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 1.8bn of assets directly
under management and is responsible indirectly for a
further USD 22.9bn 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, nickel, gold, copper,
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 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
Operational Cash Generative
Bottom Up Approach
ACTIVE
INVESTORS
Investee Relationships
Detailed Company Knowledge
Extensive Industry Experience
Resources 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
P
P
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&
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B
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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 16.5m to
not-for-profit and community organisations.
23
Annual Report for the year to 30 June 2023 LARGEST HOLDINGS OVERVIEW
Hudbay Minerals – Manitoba operation
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
89.8%
(2022: 92.8%) OF
TOTAL INVESTMENTS
94.2%
(2022: 99.5%) OF
TOTAL INVESTMENTS
41.6%
(2022: 42.4%) OF
TOTAL INVESTMENTS
30
(2022: 30)
24
Zeta Resources Limited
FIVE LARGEST HOLDINGS REVIEW
1
2
3
KOUMBIA BAUXITE INVESTMENTS LIMITED owns the right to a
future revenue stream from Alliance Mining Commodities Limited,
the operators 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 mining 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.
HUDBAY MINERALS INC is a Canadian copper-focused mining company
headquartered in Toronto, Canada. Hudbay’s operating portfolio includes
the Constancia mine in Cusco (Peru), the Snow Lake operations in
Manitoba (Canada) and the Copper Mountain mine in British Columbia
(Canada). Copper is the primary metal produced by the company.
However, it has meaningful gold production, forecasting production of
more than 150 thousand tonnes of copper and 300 thousand ounces of
gold in 2023. Hudbay’s growth pipeline includes the Copper World project
in Arizona, the Mason project in Nevada (United States), the Llaguen
project in La Libertad (Peru) and several expansion and exploration
opportunities near its existing operations.
Country
Bermuda
Sector
Bauxite
Fair Value
US$000
% of total
investments
% owned
44,900
29.7%
38.5%
Countries
Peru, Canada, and
the United States
of America
Sector
Copper and gold
Fair Value
US$000
% of total
investments
% owned
26,355
17.5%
2.1%
HORIZON GOLD LIMITED is focused on exploration and development
activities at its 100%-owned Gum Creek Project in Western Australia.
Gum Creek covers approximately 660 square kilometres and has
historically produced over one million ounces of gold. Gum Creek hosts
JORC 2012 Resources of 44.5 million tonnes averaging 1.5g/t gold for
2.14 million ounces of gold. The company was spun off from nickel
company Panoramic Resources 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 entitlement issues to raise new equity.
Horizon Gold has been working through an extensive drilling campaign
across multiple prospects with positive results.
Country
Australia
Sector
Gold
Fair Value
US$000
21,627
% of total
investments
14.3%
% owned
72.0%
25
Annual Report for the year to 30 June 2023 Country
Australia
Sector
Nickel and cobalt
Fair Value
US$000
16,781
% of total
investments
11.1%
% owned
36.4%
ALLIANCE NICKEL 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
mining 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 a substantial increase to
the projected economic returns and the company is now working on
a Definitive Feasibility Study for the NiWest project. In May 2023, the
company signed a binding offtake agreement with Stellantis NV for
approximately 40% of future annual production over an initial term of
5 years. NiWest has a mineral resource estimate of 85.2 million tonnes
at 1.03% nickel and 0.065% cobalt for 878,000 tonnes contained nickel
and 55,400 tonnes contained cobalt.
PANORAMIC RESOURCES LIMITED is a Western Australian based 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.
Panoramic continues to accelerate mining operations at Savannah and
expects to ramp up to full nameplate capacity in FY 2024. The company
released a life of mine update in March 2023, which extended the mine
life to FY 2035, supported by an updated mineral resource estimate with
ore reserves of 8.5 million tonnes at 1.21% nickel, 0.58% copper, and
0.09% cobalt for 101,800 tonnes nickel, 48,500 tonnes copper, and 7,000
tonnes cobalt contained metal.
Country
Australia
Sector
Nickel, copper
and cobalt
Fair Value
US$000
% of total
investments
% owned
15,568
10.3%
12.4%
4
5
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
USD$1.8 billion
IN FUNDS DIRECTLY AND IS RESPONSIBLE INDIRECTLY FOR A FURTHER USD 22.9BN 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 utility, investment, mining and technology sectors.
He is currently a non-executive director of Resimac Group Limited (ASX:RMC). His
Fellowships include the Institute of Chartered Accountants Australia and New Zealand,
the Australian Institute of Company Directors, 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 Limited. 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 Somers Limited, Carebook Technologies Inc 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 2023 INVESTMENT MANAGER AND TEAM
(continued)
TRISTAN KINGCOTT
Tristan Kingcott joined ICM in 2018 and is based in Vancouver, Canada. He is the portfolio
manager for Zeta Resources Limited and responsible for ICM’s Canadian office. He is
focused on the resources sector worldwide, and on the technology and financial services
sectors in North America. Prior to joining ICM, Tristan 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, and several unlisted companies. Tristan holds a
Bachelor of Commerce degree in Finance from the University of Alberta, Canada, is a CFA
Charterholder and a 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 the commodities and resources sector worldwide. He has over
seven 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 based in Wellington, New Zealand. 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 responsible
for both the Australian and New Zealand ICM offices, and he leads the team responsible
for the ICM Mobility Group. Dugald is a director of a number of companies, including
Snapper Services Limited and 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
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 Alliance Nickel Limited (ASX:AXN) and Horizon Gold Limited
(ASX:HRN); and non-executive director of Panoramic Resources Limited (ASX:PAN)
Mr Sullivan retired as a director of Resolute Mining Limited (ASX:RSG) effective 27 May 2021
after over 20 years’ involvement with the company. He was a non-executive director of
Copper Mountain Mining Corporation (TSX:CMMC) until 20 June 2023 when the company
was acquired by Hudbay Minerals Inc.
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 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 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. She 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
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 2023 REPORT OF THE DIRECTORS
Panoramic 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 2023.
OPERATING AND FINANCIAL REVIEW
Operating results
The net loss attributable to the Company for the year
to 30 June 2023 amounted to US$4,344,791.
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$6,157,691. Sales during the year resulted
in a realised gain of US$30,272,053. A decrease in the
fair value of the portfolio resulted in an unrealised
loss recognised in profit or loss at year end of
US$32,981,019.
During the year the Company exchanged its interest in
Alliance Mining Commodities Limited for an interest in
Koumbia Bauxite Investment Limited. In exchange for
its interest in AMC, KBI entered into a commercialisation
deed where KBI will receive future payments based on
the first 180,000,000 dry tonnes of bauxite shipped
from the Koumbia project.
30
Zeta Resources Limited Financial position
LIKELY DEVELOPMENTS
At the end of the year, the Company had US$1,759,952
in cash and cash equivalents. Investments at fair value
totalled US$111,381,126, loans to subsidiaries of
US$10,224,103 and the investment in subsidiaries was
valued at US$27,857,738.
As at the year end, the Company had a US$2.5 million
loan facility with Bermuda Commercial Bank expiring
on 30 September 2024.
GOING CONCERN
The financial statements have been prepared on a
going concern basis. The majority of the Company’s
assets consist of equity shares in listed companies
which in most circumstances are realisable within a
short timescale. 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 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.
REMUNERATION REPORT
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.
Hudbay Minerals Inc.
Details of remuneration for directors
Since 30 June 2023, the Company has sold its holding
in Hudbay Minerals Inc. for a total consideration of
C$41.7 million.
The Company paid a total of $200,000 to directors for
the year ended 30 June 2023.
The Company had no employees as at 30 June 2023.
Panoramic Resources Limited rights issue
In September 2023, the Company took up 200,000,000
rights in Panoramic Resources Limited’s tranche 2
institutional placement, for a total consideration of
A$10 million.
31
Annual Report for the year to 30 June 2023 REPORT OF THE DIRECTORS
(continued)
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.
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.
Directors’ interests
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 five Board, and two Audit & Risk Committee
meetings held during the year ended 30 June 2023.
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
5
5
5
5
4
2
1
2
2
2
LOANS TO DIRECTORS
There were no loans entered into with directors during
the year under review.
AUDIT & RISK COMMITTEE
The Company has established a separately chaired
Audit & Risk Committee.
The Audit & Risk Committee (“committee”) 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.
Board of Directors and Audit & Risk Committee
meetings require that any two directors or members
be present to form a quorum.
During the year ended 30 June 2023, the committee
consisted of all the independent directors of the
Company.
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
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
32
Zeta Resources Limited 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.
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.
NON-AUDIT SERVICES
No non-audit services were performed by the auditors
of the Company during the year.
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.
On 8 September 2022 the Company announced that
the buy-back programme was to be extended from
15 September 2022 to 14 September 2023. 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.
Since the commencement of the on-market buy-
back scheme on 15 September 2018, Zeta Resources
has repurchased and cancelled 3,766,868 fully paid
ordinary shares.
On 28 August 2023 the Company announced a new
on-market buy back for up to 54,400,000 shares, being
the remaining allowable shares under the 10/12 limit.
The buy-back commenced on 6 September 2023.
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$764,812 in management fees
during the reporting year.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration is
included in the Independent Auditor’s Report.
This report is signed in accordance with a resolution of
directors.
André Liebenberg
Director and Chair of the Audit & Risk Committee
18 September 2023
33
Annual Report for the year to 30 June 2023 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
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
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; and
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 2023 INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report
Independent Auditor’s Report
30 June 2023
Independent Auditor’s Report
Independent Auditor’s Report
30 June 2023
To the Shareholders of Zeta Resources Limited
30 June 2023
30 June 2023
To the Shareholders of Zeta Resources Limited
Report on the Audit of the Financial Statements
To the Shareholders of Zeta Resources Limited
To the Shareholders of Zeta Resources Limited
Report on the Audit of the Financial Statements
Opinion
Report on the Audit of the Financial Statements
Report on the Audit of the Financial Statements
Opinion
We have audited the separate financial statements of Zeta Resources Limited set out on pages 41 to
Opinion
64, which comprise the separate statement of financial position as at 30 June 2023, and the separate
Opinion
We have audited the separate financial statements of Zeta Resources Limited set out on pages 41 to
statement of profit or loss and other comprehensive income, the separate statement of changes in
64, which comprise the separate statement of financial position as at 30 June 2023, and the separate
We have audited the separate financial statements of Zeta Resources Limited set out on pages 41 to
equity and the separate statement of cash flows for the year then ended, and notes to the separate
We have audited the separate financial statements of Zeta Resources Limited set out on pages 41 to
statement of profit or loss and other comprehensive income, the separate statement of changes in
64, which comprise the separate statement of financial position as at 30 June 2023, and the separate
financial statements, including a summary of significant accounting policies.
64, which comprise the separate statement of financial position as at 30 June 2023, and the separate
equity and the separate statement of cash flows for the year then ended, and notes to the separate
statement of profit or loss and other comprehensive income, the separate statement of changes in
statement of profit or loss and other comprehensive income, the separate statement of changes in
financial statements, including a summary of significant accounting policies.
equity and the separate statement of cash flows for the year then ended, and notes to the separate
In our opinion, the separate financial statements present fairly, in all material respects, the separate
equity and the separate statement of cash flows for the year then ended, and notes to the separate
financial statements, including a summary of significant accounting policies.
financial position of Zeta Resources Limited as at 30 June 2023, and its separate financial performance
financial statements, including a summary of significant accounting policies.
In our opinion, the separate financial statements present fairly, in all material respects, the separate
and separate cash flows for the year then ended in accordance with International Financial Reporting
financial position of Zeta Resources Limited as at 30 June 2023, and its separate financial performance
In our opinion, the separate financial statements present fairly, in all material respects, the separate
Standards.
In our opinion, the separate financial statements present fairly, in all material respects, the separate
and separate cash flows for the year then ended in accordance with International Financial Reporting
financial position of Zeta Resources Limited as at 30 June 2023, and its separate financial performance
financial position of Zeta Resources Limited as at 30 June 2023, and its separate financial performance
Standards.
and separate cash flows for the year then ended in accordance with International Financial Reporting
and separate cash flows for the year then ended in accordance with International Financial Reporting
Basis for Opinion
Standards.
Standards.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
Basis for Opinion
Basis for Opinion
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
Audit of the Financial Statements section of our report. We are independent of the company in
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
Audit of the Financial Statements section of our report. We are independent of the company in
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for
Audit of the Financial Statements section of our report. We are independent of the company in
of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance
Audit of the Financial Statements section of our report. We are independent of the company in
Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits
accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for
with the IRBA Code and in accordance with other ethical requirements applicable to performing audits
accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for
of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance
Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits
in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics
Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits
with the IRBA Code and in accordance with other ethical requirements applicable to performing audits
of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance
Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance
in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics
with the IRBA Code and in accordance with other ethical requirements applicable to performing audits
International Independence Standards). We believe that the audit evidence we have obtained is
with the IRBA Code and in accordance with other ethical requirements applicable to performing audits
Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics
sufficient and appropriate to provide a basis for our opinion.
in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics
International Independence Standards). We believe that the audit evidence we have obtained is
Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
sufficient and appropriate to provide a basis for our opinion.
International Independence Standards). We believe that the audit evidence we have obtained is
International Independence Standards). We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
sufficient and appropriate to provide a basis for our opinion.
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 separate financial statements of the current period. These matters were addressed in
the context of our audit of the separate financial statements as a whole and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Matter
Audit response
Valuation of Unlisted investments (notes 5 and
20.4 )
Our approach to address the valuation assertion
for unlisted investment involved a substantive
approach. Our key audit procedures included:
The company’s accounting policy in note 3.6 of
the Annual Financial Statements states that
investments are
the
transaction cost and subsequently measured at
fair value with any change in the fair value
recognised in profit or loss.
initially measured at
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
determining the fair value of the investments.
in
A relatively small percentage change in the
in
valuations
aggregate, could result in a significant impact to
the financial statements.
investments,
individual
of
• agreeing the valuation of the unlisted
investments to the valuation reports
prepared by managements expert to
determine the valuation of the unlisted
investments;
• assessing the competence, capabilities
and objectivity of the appointed experts;
• evaluating key assumptions used in the
valuation and valuation method and
inputs used to ensure the valuations are
reasonable;
• assessing and validating the inputs used
•
•
•
in the valuations;
recalculating key valuation workings;
reviewing that the valuation techniques
used are appropriate for the accounting
standards and industry;
comparing the assumptions used in the
to
company’s
previous periods for consistency and to
consider management bias; and
valuation methods
• evaluating whether the disclosures in the
notes are appropriate and meet the
requirements of IFRS 7 and IFRS 13.
Based on the above the valuation of unlisted
investments has been identified as a Key audit
matter.
37
Annual Report for the year to 30 June 2023
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 for the year ended 30 June 2023, 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 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 separate financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
separate financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.
Responsibilities of the Directors for the Financial statements
The directors are responsible for the preparation and fair presentation of the 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 separate financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the separate 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 separate 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 separate 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 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 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 financial statements, including
the disclosures, and whether the 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 separate 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 4 years.
Mazars
Partner: Nico Jansen
Registered Auditor
Date: 19 September 2023
Cape Town
39
Annual Report for the year to 30 June 2023 AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence Declaration
In relation to our audit of the financial statements of Zeta Resources Limited for the year ended
30 June 2023, to the best of my knowledge and belief, there have been no contraventions of
the auditor independence requirements of the international standards on auditing (ISA) or any
other applicable code of professional conduct.
Auditor’s Independence Declaration
Auditor’s Independence Declaration
Mazars
Partner: Nico Jansen
In relation to our audit of the financial statements of Zeta Resources Limited for the year ended
Registered Auditor
30 June 2023, to the best of my knowledge and belief, there have been no contraventions of
19 September 2023
the auditor independence requirements of the international standards on auditing (ISA) or any
Cape Town
other applicable code of professional conduct.
In relation to our audit of the financial statements of Zeta Resources Limited for the year ended
30 June 2023, to the best of my knowledge and belief, there have been no contraventions of
the auditor independence requirements of the international standards on auditing (ISA) or any
other applicable code of professional conduct.
Mazars
Mazars
Partner: Nico Jansen
Partner: Nico Jansen
Registered Auditor
Registered Auditor
19 September 2023
19 September 2023
Cape Town
Cape Town
40
Zeta Resources Limited STATEMENT OF FINANCIAL POSITION
Notes at 30 June 2023
Non-current assets
4 Investment in subsidiaries
5 Investments
6 Loans to subsidiaries
Current assets
7 Cash and cash equivalents
Other receivable
Total assets
Non-current liabilities
9 Other loans
Current liabilities
8 Loan from subsidiary
10 Trade and other payables
16 Tax payable
Total liabilities
Net assets
Equity
11 Share capital
11 Share premium
Treasury shares
Accumulated losses
Total equity
June 2023
US$
June 2022
US$
27,857,738
111,381,126
10,224,103
16,003,881
164,135,993
1,957,423
1,759,952
21,321
106,963
–
151,244,240
182,204,260
(2,877,903)
(23,742,404)
–
(637,862)
(963,266)
(4,479,031)
146,765,209
(3,743,623)
(414,610)
(2,840,186)
(30,740,823)
151,463,437
5,535
5,555
176,234,914
176,624,753
–
(29,475,240)
146,765,209
(36,422)
(25,130,449)
151,463,437
41
Annual Report for the year to 30 June 2023 STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
Notes for the year ended 30 June 2023
Income and investment returns
12 Revenue
12 Investment losses
13 Other income
Expenses
Directors fees
Interest expense
14 Management and consulting fees
15 Operating and administration expenses
Loss before tax
16 Taxation expense reversal
Loss for the year
Total comprehensive loss for the year
Loss per share
17 Basic and diluted loss per share
June 2023
US$
21,490
(2,708,966)
592,740
(200,000)
(864,198)
(805,364)
(725,958)
June 2022
US$
35,557
(66,373,764)
2,501,304
(200,000)
(2,589,664)
(1,344,513)
(571,880)
(4,690,256)
(68,542,960)
345,465
(4,344,791)
(4,344,791)
–
(68,542,960)
(68,542,960)
(0.01)
(0.12)
42
Zeta Resources Limited STATEMENT OF CHANGES IN EQUITY
Notes for the year ended 30 June 2023
Share
capital
US$
Share
premium
US$
Treasury
Shares
US$
Accumulated
income/(losses)
US$
Total
US$
Balance at 1 July 2021
5,560
176,763,050
–
43,412,511
220,181,121
Purchase of treasury shares
11 Cancellation of treasury shares
Total comprehensive income 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
Purchase of treasury shares
11 Cancellation of treasury shares
Total comprehensive loss for the year
–
(20)
–
–
–
(353,437)
(389,839)
389,859
–
–
(353,437)
–
Balance at 30 June 2023
5,535
176,234,914
–
–
(4,344,791)
(4,344,791)
(29,475,240)
146,765,209
43
Annual Report for the year to 30 June 2023 STATEMENT OF CASH FLOWS
Notes for the year ended 30 June 2023
Cash flows from operating activities
18.1 Cash utilised by operations
12 Interest received
Interest paid
Taxation paid
12 Dividends received
Net cash flows from operating activities
Cash flows from investing activities
Investments purchased
Investments sold
Increase in loan to subsidiaries from additional funding
Decrease in loan to subsidiaries from repayments
June 2023
US$
June 2022
US$
(1,635,216)
(7,089,982)
17,666
(510,007)
(1,425,630)
3,824
(3,549,363)
(6,157,691)
44,496,392
(8,877,593)
543,326
16,493
(404,167)
–
19,064
(7,458,592)
(7,587,419)
26,655,955
(894,224)
–
Net cash flows from investing activities
30,004,434
18,174,312
Cash flows from financing activities
11 Purchase of treasury shares
18.2 Increase in loan from parent from additional funding
(353,437)
242,583
(174,724)
5,570,571
18.2 Decrease in loan from parent from repayments
(14,540,761)
(23,343,020)
18.2 Increase in loan from subsidiary from additional funding
18.2 Decrease in loan from subsidiary from repayments
18.2 Increase in other loans from additional funding
18.2 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
–
(3,695,143)
13,473,982
(19,998,110)
(24,870,886)
1,584,185
106,963
68,804
1,759,952
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
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 2023 comprise the Company only.
1.2 Basis of preparation
The financial statements for the year ended 30 June 2023
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 18 September 2023.
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 20
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 16.
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 2023 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 2023 that have not been adopted
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
International Tax Reform - Pillar Two Model Rules
(Amendments to IAS 12) – effective 1 January 2023
IFRS S1 General Requirements for Disclosure of Sustainability-
related Financial Information and IFRS S2 Climate-related
Disclosures – effective 1 January 2024
Classification of Long-term Debt Affected by Covenants
(Amendments to IAS 1) – effective 1 January 2024
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.
The Company considers that the amendments to IAS12 will
not have a material impact on the Company as the Company’s
revenue per its financial statements does not exceed €750
million (in at least two of the four preceding fiscal years).
Therefore it is unlikely that Zeta will fall within the scope of
the Pillar Two Model.
45
Annual Report for the year to 30 June 2023
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 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 16.
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 2023 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 2023
US$
4,530,826
1,700,000
1
1
21,626,910
27,857,738
June 2022
US$
1
1
1
1
16,003,877
16,003,881
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. Kumarina is
measured using a detailed cash flow forecast based on the Murrin Murrin mining plan; in the prior year a resource multiple was
used as a detailed cash flow forecast was not available. Zeta Energy is measured using its net asset value. See note 20.4.
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.
The Company had the following direct subsidiaries as at 30 June 2023:
30 June 2023
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 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
The Company had the following indirect subsidiaries as at 30 June 2023:
30 June 2023
Pan Pacific Petroleum Pty Limited incorporated in Australia
30 June 2022
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
90,161,986
100%
100%
100%
100%
72%
Number of
ordinary shares
Percentage of
ordinary shares held
26,245,610
1,000
6,185,998
100
89,055,422
100%
100%
100%
100%
72%
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, owned by Zeta Energy.
48
Zeta Resources Limited
5.
INVESTMENTS
Financial assets at fair value through profit or loss
111,381,126
164,135,993
June 2023
US$
June 2022
US$
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
62,475,446
48,905,680
111,381,126
101,648,751
48,851,853
150,500,604
102,367,010
61,768,983
164,135,993
107,750,033
54,470,869
162,220,902
The investments fair value has declined below cost, caused mainly by Panoramic Resources Limited.
Investments held by the Company at the reporting date
Listed
Hudbay Minerals Inc
Copper Mountain Mining Corporation
Alliance Nickel Limited (previously GME Resources Limited)
Panoramic Resources Limited
Star Royalties Limited
Other investments*
*Other investments comprise of less than 5% of the Company’s gross assets
Unlisted
Margosa Graphite Limited
Koumbia Bauxite Investments Ltd
Seacrest L.P
Other rights
June 2023
Number of shares
June 2022
Number of shares
5,506,952
–
259,638,451
253,969,532
10,651,300
134,391,394
27,861,844
32,932,658
32,221,800
–
35,899,745
257,674,106
245,437,562
10,151,300
128,070,268
27,861,844
–
32,221,800
–
28,520,525
During the reporting period the Company completed a total of 245 transactions (2022: 121 transactions) in securities. See note
20.4 for disclosure of fair value determination of level 3 investments.
The Company had the following associate undertakings at as at 30 June 2023:
30 June 2023
Koumbia Bauxite Investments Ltd incorporated in Bermuda
Alliance Nickel Limited incorporated in Australia
Margosa Graphite Limited incorporated in Australia
30 June 2022
Alliance Mining Commodities Limited incorporated in Bermuda
Alliance Nickel Limited incorporated in Australia
Margosa Graphite Limited incorporated in Australia
Number of
ordinary shares
Percentage of
ordinary shares held
32,932,659
259,638,451
27,861,844
39%
36%
32%
Number of
ordinary shares
Percentage of
ordinary shares held
32,932,659
257,674,106
27,861,844
37%
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 2023
NOTES TO THE FINANCIAL STATEMENTS
(continued)
6.
LOANS TO SUBSIDIARIES
Loan to Kumarina
Loan to Zeta Energy
June 2023
US$
2,224,103
8,000,000
June 2022
US$
1,957,423
–
10,224,103
1,957,423
The loan to Kumarina, used for working capital, is denominated in Australian dollars to the value of A$3.3 million (30 June 2022:
A$2.8 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 is denominated in United States dollars 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 Zeta Energy is sufficient to cover all the
liabilities. During June 2022, a loan to Zeta Energy of US$6,185,997, which was fully impaired, was converted to equity.
7.
CASH AND CASH EQUIVALENTS
Cash balance comprises:
Cash at bank
8.
LOAN FROM SUBSIDIARY
Loan from Horizon Gold
June 2023
US$
June 2022
US$
1,759,952
106,963
June 2023
US$
–
June 2022
US$
3,743,623
The Horizon Gold loan was repaid during the year. The loan was denominated in Australian dollars (2022: A$5.4 million) and
attracted interest at 5% per annum.
9. OTHER LOANS
Loan from General Provincial Limited Pension Fund (“GPLPF”)
Loan from Somers Limited (“Somers”)
Loan from Pan Pacific Petroleum Pty Ltd ("PPP")
Loan from Bermuda Commercial Bank Limited
June 2023
US$
–
–
377,903
2,500,000
2,877,903
June 2022
US$
5,850,762
14,999,626
392,016
2,500,000
23,742,404
The GPLPF loan was repaid during the year. The loan was denominated in Australian dollars (2022: A$8.5 million) and attracted
interest at 7.5% per annum.
The Somers loan was repaid during the year. The loan was denominated in Australian dollars (2022: A$2.2 million) and Canadian
dollars (2022: CA$17.4 million) and attracted interet at 7.5% per annum on the Australian dollar loan and 7.25% on the Canadian
dollar loan.
The PPP loan is denominated in Australian dollars to the value of A$567,169 (30 June 2022: A$567,169) and is interest free. There
are no fixed repayment terms except that no repayment is due before 30 June 2024.
The Bermuda Commercial Bank loan is denominated in United States dollars and currently attracts interest at Bermuda
Commercial Bank’s commercial base rate + 2.75% per annum (30 June 2022: Bermuda Commercial Bank’s commercial base rate
+ 2.75%). At 30 June 2023 the Bermuda Commercial Bank’s commercial base rate was 3%. The remaining balance is payable on
30 September 2024.
50
Zeta Resources Limited
10. TRADE AND OTHER PAYABLES
Other liabilities
Amount owed to brokers
Accruals
June 2023
US$
251,329
85,402
301,131
637,862
June 2022
US$
25,607
–
389,003
414,610
The accruals are for audit, management, directors and administration fees payable.
11. 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 2021
566,004,068
5,560
176,763,050
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
(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
Share cancellation - share buy-backs July 2022
Share cancellation - share buy-backs September 2022
Share cancellation - share buy-backs October 2022
Share cancellation - share buy-backs December 2022
Share cancellation - share buy-backs January 2023
Share cancellation - share buy-backs February 2023
Share cancellation - share buy-backs March 2023
Share cancellation - share buy-backs April 2023
Share cancellation - share buy-backs May 2023
(155,212)
(425,254)
(205,113)
(70,000)
(62,000)
(4,000)
(13,593)
(571,947)
(480,849)
(1)
(4)
(2)
(1)
(1)
–
–
(6)
(5)
(36,420)
(88,488)
(40,225)
(13,085)
(11,351)
(746)
(2,640)
(109,431)
(87,453)
Balance as at 30 June 2023
563,524,256
5,535
176,234,914
At 30 June 2023 the Company held nil (2022: 155,212) treasury shares.
51
Annual Report for the year to 30 June 2023
NOTES TO THE FINANCIAL STATEMENTS
(continued)
12.
INVESTMENT RETURNS
Revenue
Dividend income
Interest income
Investment losses
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
13. OTHER INCOME
Foreign exchange gains
14. MANAGEMENT AND CONSULTING FEES
Management and consulting fees
June 2023
US$
June 2022
US$
3,824
17,666
21,490
34,430,478
(4,158,425)
11,953,595
(44,934,614)
(2,708,966)
(2,687,476)
June 2023
US$
592,740
June 2023
US$
805,364
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
June 2022
US$
1,344,513
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 2023 was nil (2022: nil).
Either party may terminate the agreement with six months’ notice.
15. 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
52
June 2023
US$
June 2022
US$
183,815
9,257
68,523
260,216
204,147
725,958
303,268
17,293
88,899
77,286
85,134
571,880
Zeta Resources Limited
16.
INCOME TAX
Taxation regarding the sale of Bligh Resources Limited
June 2023
US$
345,465
June 2022
US$
–
Australian taxation was accrued in full with regards to the sale of the investment in Bligh Resources Limited in July 2019,
following an assesment from the Australian Tax Authority, a reversal of US$345,465 was made to the tax liability. At 30 June 2023
US$963,266 was outstanding on the Bligh Resources Limited sale. This was paid in August 2023.
The Company has not raised deferred tax assets of US$8,813,354 on potential unrealised Australian capital losses (at year-end
amounting to US$29,377,846) where there are insufficient capital gains of the same nature against which to utilise those losses.
There is no expiration date on losses.
The Company is domiciled in Bermuda and has elected to be tax exempt in terms of local legislation. As such no tax is payable.
17. EARNINGS PER SHARE
Basic and diluted loss per share
June 2023
US$
(0.01)
June 2022
US$
(0.12)
Loss used in calculation of basic and diluted earnings per share
(4,344,791)
(68,542,960)
Weighted average number of ordinary shares outstanding during the year
used in calculation of basic and diluted earnings per share
564,563,216
565,730,980
18. NOTES TO THE CASH FLOW STATEMENT
18.1 Cash utilised by operations
Loss for the year
Adjustments for:
Realised gains on investments
Fair value loss on revaluation of investments
Foreign exchange gains
Dividend income
Interest income
Interest expense
Operating loss before working capital changes
Increase in trade and other receivables
Decrease in trade and other payables
June 2023
US$
(4,344,791)
(30,272,053)
32,981,019
(592,740)
(3,824)
(17,666)
864,198
(1,385,857)
(21,321)
(228,038)
(1,635,216)
June 2022
US$
(68,542,960)
(455,764)
66,829,528
(2,501,304)
(19,064)
(16,493)
2,589,664
(2,116,393)
–
(4,973,589)
(7,089,982)
53
Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS
(continued)
18. NOTES TO THE CASH FLOW STATEMENT (continued)
18.2 Liabilities from financing activities
Loan from
parent
US$
Loan from
subsidiary
US$
Other loan
US$
Total
US$
Balance as at 30 June 2021
32,576,107
3,377,965
3,832,610
39,786,682
Changes from financing cash flows
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 non-cash movements
Exchange rate fluctuations
Loan repaid to parent
Loan received from Somers Limited
Interest capitalised
Balance as at 30 June 2022
Changes from financing cash flow
Repayment of loans
Advances of loans received
Other non-cash movements
Exchange rate fluctuations
(1,856,680)
(180,535)
(522,290)
(2,559,505)
(14,830,503)
–
–
–
-
(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
(14,540,761)
(3,695,143)
(19,998,110)
(38,234,014)
242,583
–
13,473,982
13,716,565
(900,680)
(110,010)
565,824
(444,866)
Loan assigned from Somers Limited to parent
15,003,715
–
(15,003,715)
–
Interest capitalised
Balance as at 30 June 2023
195,143
61,530
97,518
354,191
–
–
2,877,903
2,877,903
19. GOING CONCERN
The financial statements have been prepared on a going concern basis. The majority of the Company’s assets consist of equity
shares in listed companies which in most circumstances are realisable within a short timescale. 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.
54
Zeta Resources Limited 20. 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:
30 June 2023
Assets
Investments in subsidiaries
Investments
Loans to subsidiaries
Cash and cash equivalents
Other receivable
Liabilities
Trade and other payables
Other loans
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
Financial assets
mandatorily measured
at fair value through
profit or loss
US$
27,857,738
111,381,126
–
–
–
139,238,864
–
–
–
Financial assets
mandatorily measured
at fair value through
profit or loss
US$
16,003,881
164,135,993
–
–
180,139,874
–
–
–
–
Financial
assets/liabilities
measured at
amortised cost
US$
–
–
10,224,103
1,759,952
21,321
12,005,376
336,731
2,877,903
3,214,634
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
Total
carrying value
US$
27,857,738
111,381,126
10,224,103
1,759,952
21,321
151,244,240
336,731
2,877,903
3,214,634
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
55
Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS
(continued)
20. FINANCIAL RISK MANAGEMENT (continued)
20.1 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 and Canadian Dollar. The exchange rates
applying against the United States dollar at 30 June 2023 and the average rates for the year were as follows:
AUD – Australian dollar
CAD – Canadian dollar
June 2023
Average 2023
June 2022
Average 2022
0.6663
0.7549
0.6727
0.7432
0.6912
0.7768
0.7256
0.7901
The Company’s monetary assets and liabilities at 30 June 2023, 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 2023
Investments in subsidiaries
Investments
Cash and cash equivalents
Loans to subsidiaries
Other loans
Net monetary assets
30 June 2022
Investments in subsidiaries
Investments
Cash and cash equivalents
Loans to subsidiaries
Loan from subsidiary
Other loans
Net monetary assets
56
AUD
36,758,315
51,995,374
184.484
3,338,000
(567,169)
CAD
–
38,891,539
1,854,928
–
–
91,709,004
40,746,467
AUD
23,754,410
90,395,627
150,445
2,832,000
(5,400,000)
(11,210,197)
100,522,285
CAD
–
60,259,534
–
–
–
(17,382,428)
42,877,106
Zeta Resources Limited 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 2023
6,169,265
3,028,277
9,197,542
Increase in total comprehensive income for the year ended 30 June 2022
7,293,897
3,387,720
10,681,617
AUD
CAD
Total
Weakening of the United States dollar
Decrease in total comprehensive income for the year ended 30 June 2023
(6,169,265)
(3,028,277)
(9,197,542)
Decrease in total comprehensive income for the year ended 30 June 2022
(7,293,897)
(3,387,720)
(10,681,617)
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 2023 and at 30 June 2022 is shown below:
30 June 2023
Exposure to floating rates:
Cash
Other loans
Within
one year
US$
1,759,952
–
1,759,952
Greater than
one year
US$
–
(2,500,000)
(2,500,000)
Total
US$
1,759,952
(2,500,000)
(740,048)
The Company is exposed to the bank’s commercial rates changes. Impact of floating rate exposures are considered insignificant.
30 June 2022
Exposure to floating rates:
Cash
Other loans
Exposure to fixed rates:
Loan from subsidiary
Other loan liabilities
Within
one year
US$
106,963
–
106,963
(3,743,623)
–
(3,743,623)
Greater than
one year
US$
–
(2,500,000)
(2,500,000)
–
(21,242,404)
(21,242,404)
Total
US$
106,963
(2,500,000)
(2,393,037)
(3,743,623)
(21,242,404)
(24,986,027)
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$84,102,356 at 30 June 2023 (30 June 2022: US$118,370,887) 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 22.
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$8,410,235.
A 10% appreciation in the market price would have the opposite effect. See note 20.4 for unlisted investment sensitivity analyses.
57
Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS
(continued)
20. FINANCIAL RISK MANAGEMENT (continued)
20.2 Liquidity risk exposure
The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Company’s reputation. The Investment Manager reviews liquidity at the time of making each investment decision.
The risk of the Company having insufficient liquidity is not considered by the board to be significant, given the amount of quoted
investments held in the Company’s portfolio.
The contractual maturities of the financial liabilities, based on the earliest date on which payment can be required, were as follows:
30 June 2023
Trade and other payables
Other loans
30 June 2022
Trade and other payables
Loan from subsidiary
Other loans
Three months
or less
US$
Three months
to one year
US$
637,862
50,000
687,862
Three months
or less
US$
414,610
–
430,589
845,199
–
527,903
527,903
Three months
to one year
US$
–
3,930,247
7,965,134
11,895,381
More than
one year
US$
–
2,550,000
2,550,000
More than
one year
US$
–
–
17,499,626
17,499,626
Total
US$
637,862
3,127,903
3,765,765
Total
US$
414,610
3,930,247
25,895,349
30,240,206
20.3 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$10,224,103 (2022: US$1,957,423) and bank balances totalling US$1,759,952 (2022:
US$106,963) 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 BB+) and the Company’s principal custodian is JP Morgan Chase Bank (rated by Fitch as AA-).
58
Zeta Resources Limited
20.4 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
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$0.21 per share (2022: A$0.35 per share). At
year end the fair value of the investment was US$3.8
million (2022: US$6.7 million).
Sensitivities: The fair value of Margosa is considered
sensitive to price of precedent transactions. Possible
alternative prices represent an increase of $0.04 per
share, which can cause an increase of US$1 million in the
fair value of Zeta Resources’ equity interest in Margosa.
Koumbia Bauxite Investments Ltd (“KBI”) - Bermuda
incorporated
The unlisted investment comprises an equity interest
in a privately-owned company that will receive
commercialisation fees, from Alliance Mining Commodities
Limited, over the bauxite produced and shipped from the
mine (part of the Koumbia Bauxite project) located in the
Republic of Guinea, West Africa.
Valuation methodology: A discounted cash flow technique
was used, with the expectation that production will
start in July 2024, a long-term forecast aluminium price
of US$2,080 per tonne and a discount rate of 13%.
Commercialisation fees are expected to be received for
approximately 10 years from production, according to the
expected production timetable. At year end the fair value
of the investment was US$44.9 million.
Sensitivities: The fair value of Zeta’s equity interest in KBI
is sensitive to the long-term forecast aluminium price,
a change of 10% in the price, can cause a change of
US$6.3 million in the value. The value is also sensitive to
the discount rate used, a change of 2% in the discount rate
can cause a change of US$6.3 million in the value of Zeta’s
equity interest.
(b)
Investments in subsidiaries
Kumarina Resources Pty (“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 this project, which is located 50 km east
of Leonora in the north-eastern Goldfields. Kumarina is
negotiating with Pan Pacific Petroleum Pty Limited (“PPP”)
to provide funding for the project.
59
Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS
(continued)
20. FINANCIAL RISK MANAGEMENT (continued)
20.4 Fair values of financial assets and liabilities (continued)
Valuation methodology: A discounted cash flow has been
prepared using the following assumptions: a long-term
forecast gold price of A$2,800 per ounce and discount
rate of 12%. The forecast was done over a 15 month
period, according to the expected production timetable.
At year end the fair value of the project was determined
to be US$8 million, with US$6.7 million attributable to
Kumarina and US$1.3 million attributable to PPP.
As the loan owed to Zeta Resources is US$2.2 million,
the investment value at 30 June 2023 was determined
to be US$4.5 million (2022: nil).
Sensitivities: The fair value of Zeta’s equity interest in
Kumarina is sensitive to the discount rate. A 2% change
in the discount rate would cause a movement of
US$200,000. The fair value is also sensitive to the gold
price, a 10% change in the long-term forecast gold price
could cause a US$3.3 million movement in value.
Zeta Energy Pte Limited
Valuation inputs: Zeta Energy is an investment holding
entity located in Singapore. Its key assets are loans
receivable and an investment in Pan Pacific Petroleum Pty
Limited (see note 4).
Valuation methodology: Zeta Resources has used a fair
value valuation of net assets held by Zeta Energy to
determine the value as at 30 June 2023. Zeta Energy’s
value is derived from its investment in PPP. PPP holds
a loan receivable from Zeta Resources (see note 9) and
an interest in the Murrin Murrin project (developed by
Kumarina). See Kumarina’s valuation methodology. At year
end the fair value of Zeta Energy’s net assets at 30 June
2023 was determined to be $1.7 million (2022: nil).
Sensitivities: Zeta Energy’s asset value is sensitive to the
fair value of the investment in PPP. A possible alternative
to the fair value of PPP could cause an increase of
US$200,000.
(c) Other unlisted investments
Panoramic Resources Limited Options
In the prior year Zeta Resources held 28,520,525 options
with an exercise price of A$0.16. The options expired on
30 June 2023.
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.
Zeta Resources has further investments at fair value
totalling US$200,000 (2022: nil).
30 June 2023
Financial assets
Investments
Investment in subsidiaries
Level 1
US$
62,475,446
21,626,910
Level 2
US$
–
–
Level 3
US$
48,905,680
6,230,828
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 2022
Acquisitions at cost
Expiration of Options
Capital return
Total (losses)/gains recognised in fair value through profit or loss
Balance at 30 June 2023
Level 3
investments
US$
61,768,983
200,000
(689,949)
(2,604,973)
(9,768,381)
48,905,680
Level 3
investments
in subsidiaries
US$
4
–
–
–
6,230,824
6,230,828
60
Zeta Resources Limited 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
20.5 Capital risk management
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
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.
21. RELATED PARTIES
21.1 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 2023. 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.
Associate companies
Associates include Koumbia Bauxite Investment Ltd, Alliance Nickel Limited and Margosa Graphite Limited.
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.
61
Annual Report for the year to 30 June 2023
NOTES TO THE FINANCIAL STATEMENTS
(continued)
21. RELATED PARTIES (continued)
21.2 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
Zeta Energy
Loans from related parties:
Somers Limited
Horizon Gold
PPP
ICM Limited
Trade and other payables:
ICM Limited
Directors
ICM Corporate Services (Pty) Ltd
Koumbia Bauxite Investment Ltd
Nature of transactions
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
June 2023
US$
4,530,826
1
1,700,000
100
21,626,910
2,224,103
8,000,000
–
–
377,903
–
181,767
50,000
43,576
226,644
June 2022
US$
1
1
1
100
16,003,877
1,957,423
–
14,999,626
3,743,623
392,016
5,850,762
231,753
50,000
55,654
–
June 2023
US$
June 2022
US$
61,530
195,143
84,010
449,186
127,209
1,883,525
20,894
331,311
Capital return from Koumbia Bauxite Investment Ltd
2,604,973
–
Management fees paid to ICM Limited
Accounting fees paid to ICM Corporate Services (Pty) Ltd
764,812
183,815
1,263,154
303,268
Fees paid to the directors
Xi Xi
M Botha
P Sullivan
A Liebenberg
All fees paid to directors are deemed short term remuneration payments.
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
62
Zeta Resources Limited
22. 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.
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 2023
Gold
US$
Nickel
US$
Copper
US$
Mineral
exploration
US$
Admin
US$
Total
US$
External investment returns
11,373,887
(15,740,636)
12,977,822
(11,300,131)
1,582
(2,687,476)
Interest revenue
Interest expense
Reportable segment (loss)/profit
before tax
–
–
–
–
–
–
–
–
17,666
17,666
(864,198)
(864,198)
11,301,390
(15,761,616)
12,749,282
(11,301,231)
(1,678,081)
(4,690,256)
Reportable segment assets
29,754,333
27,063,856
25,957,813
66,708,286
1,759,952
151,244,240
Reportable segment liabilities
–
–
–
(85,402)
(4,393,629)
(4,479,031)
Management fee expenses and foreign exchange losses arising from loans are attributed to the admin segment.
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.
During the year there were no transactions between segments which resulted in income or expenditure.
63
Annual Report for the year to 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS
(continued)
22. SEGMENTAL REPORTING (continued)
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
Peru
USA
Sri Lanka
Other countries
Investment returns
June 2023
US$
(49,999)
11,861,870
(6,833,912)
(466,340)
(196,899)
(4,883,905)
(2,118,291)
(2,687,476)
June 2022
US$
13,400,599
(60,547,197)
(9,253,698)
–
–
(7,962,849)
(1,975,062)
(66,338,207)
The investment gain recognised in the Canadian segment is due primarily to the increase in value of the Company’s investment in
Copper Mountain Mining Corporation during the year.
Assets
Australia
Canada
Guinea
Singapore
Peru
USA
Sri Lanka
Other Countries
Assets
June 2023
US$
62,897,619
14,393,774
44,900,000
8,021,321
11,750,609
4,970,233
3,805,680
505,004
June 2022
US$
77,184,818
43,382,929
54,338,886
–
–
–
6,740,148
557,479
151,244,240
182,204,260
23. EVENTS AFTER REPORTING DATE
Hudbay Minerals Inc.
Since 30 June 2023, the Company has sold its holding in Hudbay Minerals Inc. for a total consideration of CA$41.7 million.
Panoramic Resources Limited rights issue
In September 2023, the Company took up 200,000,000 rights in Panoramic Resources Limited’s tranche 2 institutional placement,
for a total consideration of A$10 million.
64
Zeta Resources Limited SHAREHOLDER INFORMATION
SUBSTANTIAL SHAREHOLDERS
As at 4 September 2023 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
61.23
33.33
94.57
TOP 20 HOLDINGS OF FULLY PAID ORDINARY SHARES AS AT 4 SEPTEMBER 2023
NAME
SHARES
% OF ISSUED CAPITAL
J P Morgan Nominees Australia Pty Limited
General Provincial Life Pension Fund Limited
General Provincial Life Pension Fund Limited
Peter Ross Sullivan
Mr Peter Ross Sullivan
HSBC Custody Nominees (Australia) Limited
Mr James Noel Sullivan
Hardrock Capital Pty Ltd – CGLW No 2 Super Fund A/C
Ingot Capital Investments Pty Ltd
Hardrock Capital Pty Ltd
Cherryburn Pty Ltd – Burrows Super Fund A/C
ACS (NSW) Pty Limited - ACS Family Super Fund A/C
Mrs Alexandra Maree Giles
Mr Stephen Alan McCabe & Mrs Janet Backhouse
Nalmor Pty Ltd John Chappell Super Fund A/C
Calimo Pty Ltd
Rossdale Superannuation Pty Ltd – Rossdale SF A/C
Citicorp Nominees Pty Limited
Mr Sean Dennehy
Willyama Asset Management Pty Ltd
Mr Ianaki Semerdziev
Total for top 20
344,973,832
180,289,790
7,282,606
4,528,132
4,528,132
1,839,058
1,765,959
1,500,000
1,409,795
900,000
752,320
593,000
483,556
474,439
324,000
246,017
225,406
218,596
210,000
200,000
193,200
61.31
32.04
1.29
0.80
0.80
0.33
0.31
0.27
0.25
0.16
0.13
0.11
0.09
0.08
0.06
0.04
0.04
0.04
0.04
0.04
0.03
552,937,838
98.26
65
Annual Report for the year to 30 June 2023 SHAREHOLDER INFORMATION (continued)
DISTRIBUTION SCHEDULE OF ORDINARY SHARES HELD AT 4 SEPTEMBER 2023
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
SHARES
NO. OF ORDINARY
SHAREHOLDERS
OF ISSUED
CAPITAL
43
840
163
176
30
1,252
13,517
2,219,480
1,220,112
5,126,960
554,131,053
562,711,122
0.00
0.39
0.22
0.91
98.48
100.00
The number of shareholders holding less than a marketable parcel of ordinary shares at 4 September 2023 is 180
and they hold 217,676 securities.
VOTING RIGHTS
All ordinary shares carry one vote per share without restriction.
66
Zeta Resources Limited COMPANY INFORMATION
Zeta Resources Limited
Company ARBN: 162 902 481
www.zetaresources.limited
DIRECTORS (NON-EXECUTIVE)
Peter Sullivan
Marthinus (Martin) Botha
André Liebenberg
Xi Xi
REGISTERED OFFICE
C/- Conyers Corporate Services (Bermuda) Limited
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Company Registration Number: 46795
AUSTRALIAN REGISTERED OFFICE
Level 9, 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
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
SECRETARY
ICM Limited
34 Bermudiana Road
PO Box HM 1748
Hamilton HM GX
Bermuda
GENERAL ADMINISTRATION
ICM Corporate Services (Pty) Ltd
Alphen Estate
The Great Cellar
Peter Cloete Avenue
Constantia, 7806
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
67
Annual Report for the year to 30 June 2023
SIGNIFICANT STAKES IN A SELECT RANGE OF KEY COMMODITY COMPANIES
www.zetaresources.limited