TIDMTYM
RNS Number : 6175R
Tertiary Minerals PLC
13 December 2016
13 December 2016
Tertiary Minerals plc ("Tertiary" or "Company")
Audited Results for the year to 30 September 2016
Tertiary Minerals plc, the AIM traded company building a
strategic position in the fluorspar sector, is pleased to announce
audited results for the year ended 30 September 2016.
Operational Highlights for 2016:
-- Storuman Exploitation (Mine) Permit approved by the Swedish Mining Inspectorate
-- Phase 4 drilling programme completed on the MB Project in Nevada
-- Significant lateral and depth extensions to fluorspar
mineralisation proven in the Western Area on the MB Project
-- Modelling, economic evaluation and metallurgical testwork progressing for the MB Project
-- Sale of the two non-core gold assets potentially providing
the Company with future cash-flow through its retained royalty
interest
-- Entered into a non-binding Heads of Terms with global
aluminium company, Hydro, to purchase land and old mine workings on
the Lassedalen fluorspar project
Commenting today, Managing Director, Richard Clemmey said:
"Against a backdrop of very tough market conditions for fluorspar I
am pleased to report continued progress on our core fluorspar
projects. Receiving the Mining Permit for the Storuman project was
a significant achievement for the Company and whilst the delays in
processing the appeals is frustrating we remain positive that the
original decision will be upheld."
"We continue to work through the MB project modelling, test work
and economic evaluation, a process which takes time in order to
systematically address the challenges and opportunities associated
with the project. Following successful completion of this work we
are targeting the completion of a Scoping Study in the first half
of 2017."
"Maintaining the interest in our two non-core gold projects has
finally paid off and the sale of these assets potentially provides
the Company with future cash-flow through a retained royalty
interest."
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Enquiries
Tertiary Minerals plc
Richard Clemmey, Managing
Director
Patrick Cheetham, Executive
Chairman +44 (0) 1625 838 679
SP Angel Corporate Finance
LLP
Nominated Adviser & Joint
Broker
Ewan Leggat/Lindsay Mair +44 (0) 20 3470 0470
Beaufort Securities Ltd
Joint Broker
Elliot Hance +44 (0)20 7382 8300
Notes to Editors
Tertiary Minerals plc (ticker symbol 'TYM') is an AIM-traded
mineral exploration and development company building a significant
strategic position in the fluorspar sector. Fluorspar is an
essential raw material in the chemical, steel and aluminium
industries. Tertiary controls two significant Scandinavian projects
(Storuman in Sweden and Lassedalen in Norway) and a large deposit
of strategic significance in Nevada, USA (MB Project).
CAUTIONARY NOTICE
The news release may contain certain statements and expressions
of belief, expectation or opinion which are forward looking
statements, and which relate, inter alia, to the Company's proposed
strategy, plans and objectives or to the expectations or intentions
of the Company's directors. Such forward-looking statements involve
known and unknown risks, uncertainties and other important factors
beyond the control of the Company that could cause the actual
performance or achievements of the Company to be materially
different from such forward-looking statements. Accordingly, you
should not rely on any forward-looking statements and save as
required by the AIM Rules for Companies or by law, the Company does
not accept any obligation to disseminate any updates or revisions
to such forward-looking statements.
CHAIRMAN'S STATEMENT
I am pleased to present the Company's Annual Report and
Financial Statements for the year ended 30 September 2016.
It has been a rather frustrating year for our Storuman Fluorspar
Project in Sweden. Our long-awaited Mining Concession for the
Storuman Project was granted by the Mining Inspectorate in February
but the grant was then appealed to the Swedish Government by two
separate groups. At the same time new case law established by the
Supreme Court on a distant and unrelated project has caused the
Mining Inspectorate to re-examine the basis on which Mining
Concessions have recently been granted. Further information is
given in our Operating Review. We remain positive that the original
decision to grant the Mining Concession will be upheld and that the
circumstances affecting of the Supreme Court decision were not
applicable to our Mining Concession application. There are no
time-frame constraints on the appeals process so it is important
that we achieve a satisfactory resolution before proceeding with
the next stages of project evaluation and development.
In contrast, progress continues to be made in Nevada with our MB
Fluorspar Project where a further round of drilling has
demonstrated significant extensions of possibly higher grade
mineralisation to the north-west of our 86 million tonne Mineral
Resource Estimate. The Company is currently working towards
completion of an economic and technical scoping study in the first
half of 2017. This will include consideration of various
value-adding optimisations and may include another phase of
drilling.
In Norway, we continue to maintain our interest in the
Lassedalen fluorspar deposit and have recently reached a heads of
terms agreement with Hydro, a global producer of aluminium and a
major consumer of aluminium fluoride (a downstream product of
fluorspar) to acquire outright ownership of key land and mineral
rights at Lassedalen. Currently we have exploration rights over
these Hydro holdings through an expropriation granted by the
Norwegian Government but this agreement, if completed, will cement
our hold on this important fluorspar resource. Given the permitting
delays being experienced in Sweden this project may assume a higher
priority within our European strategy in 2017.
Fluorspar prices in 2016 have continued a five year decline and
a number of fluorspar mines closed in recent times. Structurally
the fluorochemical industry, which dominates consumption of
fluorspar, is in transition. Fluorine based HFC refrigerant
chemicals are being phased out under various global climate change
agreements and legislation, but are being replaced by new zero
ozone-depleting and very low global warming potential HFO fluorine
based chemicals that should help see a return to more buoyant
market conditions in the medium-term.
Outside of our fluorspar business we have recently announced the
sale of our Kaaresselkå and Kiekerömaa gold projects in Finland to
Aurion Resources Ltd. On completion we will receive an initial
payment in cash and Aurion shares. Further variable payments will
be linked to the definition and size of 43-101 compliant Mineral
Resources and, on definition, paid as an advance against a 2% Net
Smelter Return Royalty on gold and other mineral production. Our
own historical work has demonstrated the potential for such Mineral
Resources on both project areas and so we look forward to the
prospect of a future cash flow from these projects.
In 2016 we have been successful in lowering our administration
costs which we believe are amongst the lowest of all AIM traded
companies. Our activities in 2016 have been funded by share
placings with GBP1,150,000 raised before expenses during the
financial year. Further information is given in the Annual Report
which will be published in plain black and white text this year.
The Company's website has replaced the Annual Report as the main
investor relations tool and, whilst the information being provided
to shareholders in our Annual Report is no less comprehensive than
last year, we feel that the money previously spent on colour and
glossy colour printing is better spent on our projects.
We look forward to reporting further progress in 2017 and to
meeting shareholders again at our next
Annual General Meeting to be held on Tuesday 31 January
2017.
Patrick Cheetham
Executive Chairman
12 December 2016
STRATEGIC REPORT
Group Overview
Company's Aims
-- To become a reliable long-term and competitive supplier of
high quality fluorspar to world markets.
-- To add value to the Group's mineral projects.
-- The discovery, acquisition and development of mineral resources.
Company's Strategy
-- To acquire and develop large fluorspar deposits located close
to established infrastructure and key markets in stable, democratic
and mining friendly jurisdictions.
Principal Activities
-- The principal activities of the Group are the identification,
acquisition, exploration and development of mineral projects with
primary focus on fluorspar, the main raw material source of
fluorine for the chemical, steel and aluminium industries.
The head office is based in Macclesfield in the United Kingdom
with core operating locations in Storuman in Sweden, Lassedalen in
Norway and the MB Project in Nevada, USA.
Company's Business Model
-- Successful, efficient and low costs explorer.
The Group prefers to acquire 100% ownership of mineral assets at
minimal expense. This usually involves applying for exploration
licences from the relevant authority, as was the case for the
Storuman and Lassedalen projects. In other cases, rights are
negotiated with existing project owners for initially low periodic
payments that rise over time as confidence in the project value
increases and this was the case for the MB Project.
The Group seeks to operate with a low cost base in order to
maximise the funds that can be spent on exploration and development
- value adding activities. The Company has six full time employees
including the two executive directors (Managing Director and
Chairman) who work with and oversee carefully selected and
experienced consultants and contractors. The Board of Directors
comprises two independent Non-Executive Directors, the Managing
Director and the Executive Chairman.
Administration costs are reduced via an arrangement governed by
a Management Services Agreement with Sunrise Resources plc, whereby
Sunrise Resources pays a portion of Tertiary's office costs. As at
the date of this report Tertiary is a substantial shareholder (as
defined under the AIM Rules) of Sunrise Resources plc, holding
10.08%.
The Company's activities are financed through periodic capital
raisings, through private share placements and other innovative
equity based financial instruments. As projects become more
advanced the Board will seek to secure additional funding from
potential end users. This kind of arrangement can take many forms,
for example through off-take agreements or through joint venture
partnerships.
Operating Review & Performance
Fluorspar Projects
Storuman Fluorspar Project, Sweden
2016 Highlights
-- Exploitation (Mine) Permit application approved by the Swedish Mining Inspectorate
The Company's 100% owned Storuman project is located in north
central Sweden and is linked by the E12 highway to the port city of
Mo-i-Rana in Norway and by road and rail to the port of Umeå on the
Gulf of Bothnia. A bulk rail terminal, constructed in 2012, 25km
from the project site is likely to become an important factor in
the cost-effective delivery of fluorspar to the key European
fluorspar market.
JORC Compliant Mineral Resource
Classification Million Tonnes Fluorspar (CaF(2)
(Mt) %)
---------------- --------------- ------------------
Indicated 25.0 10.28
---------------- --------------- ------------------
Inferred 2.7 9.57
---------------- --------------- ------------------
Total 27.7 10.21
---------------- --------------- ------------------
Exploitation (Mine) Permit Application
The Company submitted its Exploitation (Mine) Permit application
in July 2014 to the Swedish Mining Inspectorate and following an
extensive consultation process the Exploitation (Mine) Permit
("Permit") was approved on 18 February 2016. Key elements of the
Permit:
-- The Permit is valid for 25 years
-- Name of the mining concession area: Kyrkberget K nr.1
-- The Permit has been granted to extract fluorspar under the
Swedish Minerals Act (1991:45) and, with regards to the question of
localisation, the Swedish Environmental Code (1998:808)
-- The Permit covers 184.13 hectares
-- 500,000 Swedish Krona must be paid to the Mining Inspectorate
prior to the commencement of mining operations as economic security
for rehabilitation measures after the mine is closed
-- An application for land allocation must be made according to
the Minerals Act before any land can be used for the mine according
to the Permit
-- The concession area is predominantly limited to the area of the proposed open pit
-- The Swedish Mining Inspectorate has granted the Permit by
giving precedence to the national interest of minerals over the
national interest of reindeer herding
Subsequent to the award of the Permit in February this year, two
appeals have been lodged against the Permit. The appeals have been
submitted by the Sami Reindeer Husbandry Community affected and
Urbergsgruppen, a Swedish environmental action group which oppose
all mining activities throughout Sweden. The appeals will be
decided by the Swedish Government following their review of
information from the original Permit application made by the
Company, the Permit approval, the appeal documents and all key
stakeholder groups.
As part of this process the Government has asked the Company for
its opinion on a ruling earlier this year by the Swedish Supreme
Administrative Court ("SAC") regarding appeals made against the
Exploitation (Mine) Permit over the Norra Karr rare earth element
deposit owned by Leading Edge Materials (formerly Tasman Metals).
Appeals may be considered by SAC following the government appeal
process. The appeals were successful in this case and the SAC
revoked the Norra Karr Exploitation (Mine) Permit and referred the
case back to the Swedish Government. The basis on which the SAC
revoked the Norra Karr Exploitation (Mine) Permit was that the
Environment Impact Assessment (EIA) for the Mining Concession Area,
relating to the Mineral Deposit Area only, did not sufficiently
take into account the impact that mining activity may have on its
surroundings (the "wider area"), including a Natura 2000 area.
Following the ruling the case has now been referred back to the
Swedish Mining Inspectorate (Bergsstaten) for re-assessment. Prior
to this case the wider area impact has usually been addressed
through the Environmental Permit process leading on from the
Exploitation (Mine) Permit approval.
The Company provided a written opinion to the Government in
September 2016 stating that the EIA prepared by Tertiary provides a
sufficient description of the expected environmental impact on the
wider area. The EIA was prepared based on the extensive and
detailed baseline environmental studies and reindeer husbandry
impact analysis completed by the Company.
When making the original decision to approve the Exploitation
(Mine) Permit, the Mining Inspectorate maintained the view that
continued sustainable reindeer husbandry can co-exist alongside the
mining operation providing that the Company implements appropriate
protective measures/precautions, the details of which will be set
by the Swedish Land and Environmental Court.
The Company continues to reiterate to the Swedish Government
that time is of the essence, ultimately the timing of this process
and decision by the Swedish Government cannot be influenced
further.
The Next Step
Whilst substantial progress has been made on the Preliminary
Feasibility Study (PFS) level metallurgical testwork, following the
Exploitation (Mine) Permit appeal the Company decided to place all
metallurgical testwork and outstanding phases of the Preliminary
Feasibility Study on hold until the appeal process has been brought
to a conclusion.
Following successful resolution of the Exploitation Concession
appeal process and before mine construction can commence the
detailed conditions of the processing plant, tailings facility and
associated infrastructure must be set through the Environmental
Permit process. The process is handled in the Swedish Land and
Environmental Court and is governed by the Swedish Environmental
Code (1998:808).
Technical and economic information from the Preliminary
Feasibility Study will be used to prepare the Environmental Permit
application.
MB Fluorspar Project, Nevada, USA
2016 Highlights
-- Phase 4 Drilling programme completed
-- Significant lateral and depth extension of fluorspar
mineralisation proven in the Western Area
-- Deposit field appraisal by world renowned geologist - Dr Richard Sillitoe
-- Modelling and economic evaluation of the project progressing
The MB Property comprises 146 contiguous mining claims covering
an area more than 2,800 acres and is located 19km south-west of the
town of Eureka in central Nevada, USA. The state of Nevada is
widely and justifiably recognised to be one of the most attractive
mining jurisdictions in the world. Eureka is located on US Highway
50 and the main railroad is located 165km to the north of the
deposit providing bulk freight distribution to the East and West of
the USA. The USA, like Europe, is a key fluorspar market currently
importing the majority of its fluorspar requirements. Rail access
to the west coast provides access to Asian markets, which may be a
target market in the future.
JORC Compliant Mineral Resource
Classification Million Tonnes Fluorspar (CaF(2)
(Mt) %)
---------------- --------------- ------------------
Indicated 6.1 10.8
---------------- --------------- ------------------
Inferred 80.3 10.7
---------------- --------------- ------------------
Total 86.4 10.7
---------------- --------------- ------------------
Phase 4 Drilling
Following the JORC 2012 compliant Mineral Resource Estimate
upgrade for the MB Project to 86.4 million tonnes grading 10.7%
fluorspar (CaF(2) ) in June 2015, the Company completed a further
phase of drilling, Phase 4, with the key objective being:
-- To test the lateral and depth extent of higher grade mineralisation in the Western Area
Four holes were drilled totalling 1,553 metres using the reverse
circulation method, key highlights being:
-- Hole 15TMBRC036 located west of the Western Area:
-- 89.91m grading 12.02% CaF2 from 120.40m depth (total of 8
significant fluorspar intersections
-- Including 31.99m grading 16.74% CaF2 from 150.88m (total of 6
higher grade intersections above 15% CaF2)
-- Hole 15TMBRC038 located to the north of the Western Area:
-- 22.86m grading 11.47% CaF2 from 74.68m depth
-- Hole 15TMBRC039 located to the north of the Western Area:
-- 137.16m grading 11.54% CaF2 from 53.34m depth (total of 16
significant fluorspar intersections)
-- Including 32.00m grading 15.81% CaF2 from 185.93m (total of 5
higher grade intersections above 15% CaF2)
-- Ore-grade molybdenum (Mo) encountered in the base of hole 15TMBRC036
Field Appraisal - Dr Richard Sillitoe
During the summer of 2016 the Company employed the services of
world renowned economic geologist Dr Richard Sillitoe to complete
an appraisal of the MB Deposit with particular focus on improved
understanding of the geology/mineralogy/paragenesis for the deposit
and potential association with a porphyry molybdenum-copper system.
The key conclusions from the field visit and appraisal:
-- There is a reasonable possibility that the fluorspar grades
could increase on approach to the inferred sub-surface intrusion in
the north west region of the deposit
-- 1 or 2 northwest-directed core holes could easily test the
possibility of increased fluorspar grades on approach to the
inferred intrusion
-- It is unlikely that the MB deposit is associated with a porphyry molybdenum-copper system
Modelling, Economic Evaluation and Metallurgical Testwork
Following the appraisal by Dr Richard Sillitoe, the Company has
started the process of modelling, optimisation, and associated
economic evaluation of various production scenarios alongside early
stage bench scale metallurgical testwork in order to provide a
focus for a technical and economic Scoping Study. The early stage
modelling and metallurgical testwork has highlighted some key
opportunities and challenges:
-- Modelling the potential higher grade fluorspar in the north
west into the production scenarios has a significant effect on the
project economics
-- Potential for economic production of commercial grade mica as
a secondary product provides valuable upside for the project
-- The project is particularly sensitive to transport distance/cost to USA market and port
-- The mineralogy of the deposit is highly variable
Based on these key findings the Company is systematically
working through the following work programmes:
-- Bench scale metallurgical testwork to ascertain the potential
for producing acid grade fluorspar from the different areas of the
deposit
-- Metallurgical testwork to assess the potential of producing
commercial grade mica as a secondary product
-- Optimisation of the transport method and cost from mine to USA market and port
Following successful completion of these work programmes the
Company will work towards completion of a Scoping Study for the
project in the first half of 2017, this may include another phase
of drilling on the MB project in line with Dr Sillitoe's
recommendations.
Lassedalen Fluorspar Project, Norway
The Lassedalen Fluorspar Project is favourably located near
Kongsberg, 80km to the south-west of Oslo in Norway. It is less
than 1km from highway E134 and approximately 50km from the nearest
Norwegian port. The Company views this resource as strategically
important alongside its Storuman Project for the European
market.
JORC Compliant Mineral Resource
Classification Million Tonnes Fluorspar (CaF(2)
(Mt) %)
---------------- --------------- ------------------
Inferred 4.0 24.60
---------------- --------------- ------------------
Due to financial and fluorspar market conditions in 2015/2016
and given the commitments on its other fluorspar projects and in
the absence of expenditure obligations, further exploration at the
Lassedalen Project has been a lower priority.
A key landowner for the Company's Lassedalen fluorspar project
is the global aluminium company, Hydro. Tertiary and Hydro have
recently entered into a heads of terms whereby Tertiary will
acquire the land and historic mine workings from Hydro following
successful due diligence and purchase agreement completion (within
14 months). The agreed purchase price is 1 Norwegian Krone. The
acquisition provides an important value adding step for the project
as well as strengthening the long-term security of tenure.
Once development work re-commences for the project, the
immediate objective will be further drilling aimed at increasing
the size of the current JORC compliant Mineral Resource
Estimate.
Non-Core Projects
Kaaresselkä and Kiekerömaa Gold Projects, Finland
The Company has successfully negotiated the sale of the two
legacy gold assets in Finland to TSX-V listed Aurion Resources Ltd.
Following the initial consideration for the sale, the Company will
retain a royalty interest in the projects and therefore providing
the opportunity for potential income in the future. Summary of the
transaction:
-- Aurion is a Canadian listed (TSX-V: AU) precious metals
exploration company primarily focusing on the development of its
Finnish gold projects, several of which are under a joint venture
with B2Gold, a main listed (TSX:BTO,NYSE MKT:BTG) gold producer and
developer
-- GBP100,000 initial consideration to be paid by Aurion:
GBP15,000 in cash and GBP85,000 in Aurion shares
-- Tertiary will retain royalty interest in the projects:
-- Pre-Production Royalty of US$1.00/ounce gold following the
definition of a NI 43-101 (or equivalent) Code compliant Inferred
Mineral Resource Estimate on either project
-- Pre-Production Royalty of US$2.00/ounce gold following the
definition of a NI 43-101 (or equivalent) Code compliant Indicated
Mineral Resource Estimate on either project
-- Pre-Production Royalty of US$3.00/ounce gold following the
definition of a NI 43-101 (or equivalent) Code compliant Measured
Mineral Resource Estimate on either project
-- Net Smelter Returns Royalty (NSR) of 2% on all future gold
production from either property
-- Aurion can purchase 50% of the NSR from Tertiary for
USD$1,000,000 at any time prior to commencement of commercial
production on either project
The sale is conditional upon successful transfer of the
Exploration Licences for each project from Tertiary to Aurion (to
be handled by the mining division of the Finnish Safety and
Chemical Agency (Tukes)) and stock exchange approval by the
TSX-V.
Rosendal Tantalum Project, Finland
The Exploration Licence for the project expired in October 2015
and the Company has applied for a renewal of the Licence. If the
Company is unsuccessful in finding a suitable partner or buyer to
progress the project it is unlikely the renewal will be
granted.
Ghurayyah Tantalum-Niobium-Rare-Earth Project, Saudi Arabia
The project continues to be on hold pending the issue of a new
exploration licence
Health and Safety
The Group has maintained strict compliance with its Health and
Safety Policy and is pleased to report there have been no lost time
accidents during the course of the year.
Environment
No Group company has had or been notified of any instance of
non-compliance with environmental legislation in any of the
countries in which they work.
Fluorspar Market and Strategic Opportunity(*)
Fluorspar - Principal Uses
There are two principal commercial grades of fluorspar:
-- Metallurgical-spar (60-96% CaF(2) )
-- Acid-spar (+97% CaF(2) )
Metallurgical-spar accounts for approximately 40% of the total
fluorspar production with the principal applications being:
-- Steel production - used as a flux to lower the melting
temperature and increase the chemical reactivity to help the
absorption and removal of sulphur, phosphorus, carbon and other
impurities in the slag
-- Cement - used as a flux to speed up the calcination process
and enables the kiln to operate at lower temperatures
Acid-spar, the grade of fluorspar which the Company is planning
to produce, accounts for approximately 60% of total fluorspar
production with the principal applications being:
-- Aluminium production - used to produce aluminium fluoride
(ALF(3) ) which acts as a flux to lower the bath temperature in the
manufacture of aluminium
-- Manufacture of hydrofluoric acid (HF) - the primary source of
all fluorochemicals (the single largest consumer of fluorspar),
with a wide range of applications including:
-- Fluorocarbons, e.g. refrigerant gases, propellants, etc.
-- Electrical and electronic appliances
-- Metallurgical industry (extraction, manufacture and
processing)
-- Lithium batteries
-- Pharmaceuticals, polymers and agrochemicals
-- Petrochemical catalysts
Fluorspar - Production and Consumption
The current global production of fluorspar is approximately
5.8-6.0 million tonnes per year:
-- Major producing regions: China (>50% of the world's
production); Mexico; Mongolia/CIS; South Africa
-- Major Consuming regions (highest to lowest): China; North America; Europe; Mexico; Russia
Fluorspar - Pricing
-- The global supply and demand for fluorspar has seen steady
growth over the decade 1998 to 2008 - reflected in the long-term
upward trend in price
-- In 2009 the global financial crisis contributed to a
contraction in acid-spar supply and demand followed by a short-term
recovery in 2011
-- Demand for acid-spar has softened in the last 5 years
resulting in oversupply and a downward trend in the price
-- The China export price for acid-spar (FOB China) is a
traditional benchmark price and is currently published as
US$250-270/tonne (Industrial Minerals Magazine). The equivalent
price delivered into Europe (CIF Rotterdam) is published as
US$250-270/tonne.
The current price weakness does not impact the Company's
long-term strategy as it is not yet in production and the positive
macroeconomic drivers for future prices remain essentially
unchanged.
Fluorspar - Tertiary Minerals Strategic Opportunity
-- Industry view (producers, end users, analysts) is that demand
and price will increase in the medium to long-term, the key drivers
being:
-- No large scale commercial alternative or recycling
-- Refrigeration - new generation of zero ozone depleting
potential (ODP) and very low global warming potential (GWP)
refrigerants, hydrofluoroolefins (HFO's)
-- Driven by environmental legislation, most recently the Kigali
Amendment which was signed in October 2016, where over 170 nations
agreed to phase down low ODP, high GWP Hydrofluorocarbons
(HFCs).
-- Energy reduction in the steel and aluminium industry
-- Emerging uses - fluoropolymers in lithium batteries for
example
-- Chinese supply-demand dynamics
-- China Produces >50% world's fluorspar
-- China fluorspar exports have continued to decline since 2000
driven by increasing internal demand and production/export
restrictions - potentially a future net importer
-- Western Europe and North America are the largest acid-spar
consuming regions outside of China, importing more than 900,000
tonnes per year
-- USA imports 100% of its fluorspar
-- North America and Europe face the potential risk of security of supply
-- Fluorspar is classified as a critical raw material by the
European Commission - high risk of supply shortage and consequent
impact on the economy
-- USA considers fluorspar as a strategic mineral
Based on macroeconomic drivers the Company continues to be
strategically placed to capitalise on this position in the future
by developing its 100% owned large fluorspar assets, containing
fluorspar resources of 13.1 million tonnes, located in the USA and
Europe.
*The information in this Fluorspar Market Summary is drawn from
various sources, including Industrial Minerals Magazine, United
States Geological Survey, Roskill, UN Comtrade and CRU.
Financial Review & Performance
The Group is currently in the earlier stages of the typical
mining development cycle and so has no income other than cost
recovery from the management contract with Sunrise Resources plc
and a small amount of bank interest. Consequently the Group is not
expected to report profits until it is able to profitably develop,
dispose of, or otherwise commercialise its exploration and
development projects.
The Group reports a loss of GBP473,506 for the year (2015:
GBP674,991) after administration costs of GBP558,857 (2015:
GBP569,515) and after crediting interest of GBP1,712 (2015:
GBP2,314). The loss includes expensed pre-licence and
reconnaissance exploration costs of GBP25,343 (2015: GBP23,869),
impairment of deferred exploration costs of GBPNil (2015: GBP4,522)
and impairment of available for sale investment (the Company's
share in Sunrise Resources plc) of GBP81,142 (2015: GBP260,997).
Administration costs include GBP25,785 (2015: GBP63,278) as
non-cash costs for the value of certain share warrants held by
employees as required by IFRS 2.
Management and service charge revenue of GBP190,124 (2015:
GBP181,598) arises from the provision of management, administration
and office services to Sunrise Resources plc, to the benefit of
both companies through efficient utilisation of services.
The financial statements show that, at 30 September 2016, the
Group had net current assets of GBP461,018 (2015: GBP297,344). This
represents the cash position after allowing for receivables and
trade and other payables. These amounts are shown in the
Consolidated and Company Statements of Financial Position and are
also components of the Net Assets of the Group. Net assets also
include various "intangible" assets of the Company. As the name
suggests, these intangible assets are not cash assets but include
this year's and previous years' accrued expenditure on minerals
projects where that expenditure meets the criteria in Note 1(d)
accounting policies. The intangible assets total GBP4,429,261
(2015: GBP3,536,609) and the breakdown by project is shown in Note
2 to the Financial Statements.
Expenditure which does not meet the criteria in Note 1(d), such
as pre-licence and reconnaissance costs, are expensed and add to
the Company's loss. The loss reported in any year can also include
expenditure that was carried forward in previous reporting periods
as an intangible asset but which the Board determines is "impaired"
in the reporting period.
The extent to which expenditure is carried forward as intangible
assets is a measure of the extent to which the value of the
Company's expenditure is preserved. In the current reporting period
no costs were impaired.
The intangible asset value of a project does not equate to the
realisable or market value of a particular project which will, in
the Directors' opinion, be at least equal in value and often
considerably higher. Hence the Company's market capitalisation on
AIM can be in excess of or less than the net asset value of the
Group.
Details of intangible assets, property, plant and equipment and
investments are set out in Notes 8, 9 and 10 of the financial
statements.
In the reporting period an impairment review was undertaken by
the Directors on the carried amount in the Available for Sale
Investment Revaluation reserve, to ascertain whether the decline in
fair value of the investment in Sunrise Resources plc could be
considered to be significant or prolonged, as required under IAS
39.
The nature of the activity of Sunrise Resources plc is similar
to that of Tertiary Minerals plc in that it is involved in
long-term mineral development and exploration. The projects within
the Company will typically take over 5 years to develop before they
can be commercially exploited and until the end of a project it is
expected that there will be volatility in the share price of the
Company.
Whilst the overall Available for Sale Revaluation has been
negative since 5 November 2012, in the context of this entity, this
is not considered prolonged given the timescales of the associated
projects. Furthermore, due to the inherent volatility in the nature
of the investment during the life cycle of the projects, and taking
into account the Directors detailed knowledge of the business of
Sunrise Resources plc, the decline in fair value is not considered
of significance to the underlying business nor its share price.
However, for Interim Accounts for the six month period to 31
March 2016, it was decided that the decline in fair value was
likely to be deemed significant under the requirements of IAS 39;
therefore the carried value of GBP81,142 in the Available for Sale
Investment Reserve was impaired and reclassified to the
Consolidated Income Statement, thereby increasing the loss for that
period. An increase in fair value, due to an increase in share
price, for the subsequent period to 30 September 2016, has been
recognised in the Available for Sale Investment Reserve in equity
(see note 1(f) in the Notes to the Financial Statements).
The Financial Statements of a mineral exploration company can
provide a moment in time snapshot of the financial health of the
Company but do not provide a reliable guide to the performance of
the Company or its Board and its long-term potential to create
value.
Key Performance Indicators
The usual financial key performance indicators ("KPIs") are
neither applicable nor appropriate to measurement of the value
creation of a company involved in mineral exploration and which
currently has no turnover. The Directors consider that the detailed
information in the Operating Review is the best guide to the
Group's progress and performance during the year.
The Company does seek to reduce overhead costs, where
practicable, and is reporting reduced administration costs this
financial year.
Fundraising
During the 2016 financial year the Company raised a total of
GBP1,150,000 before expenses from institutional investors as shown
in Note 14 of the Financial Statements.
Risks & Uncertainties
The Board regularly reviews the risks to which the Group is
exposed and ensures through its meetings and regular reporting that
these risks are minimised as far as possible.
The principal risks and uncertainties facing the Group at this
stage in its development and in the foreseeable future are detailed
below together with risk mitigation strategies employed by the
Board.
RISK MITIGATION STRATEGIES
---------------------------------- -----------------------------------------
Exploration Risk
The directors bring over
The Group's business is many years of combined
mineral exploration and mining and exploration
evaluation which are speculative experience and an established
activities. There is no track record in mineral
certainty that the Group discovery.
will be successful in The Company currently targets
the definition of economic advanced and drill ready
mineral deposits, or that exploration projects in
it will proceed to the order to avoid higher risk
development of any of grass roots exploration.
its projects or otherwise
realise their value.
---------------------------------- -----------------------------------------
Resource Risk
Resources and reserves
All mineral projects have are estimated by independent
risk associated with defined specialists on behalf of
grade and continuity. the Group in accordance
Mineral Reserves are always with accepted industry
subject to uncertainties standards and codes. The
in the underlying assumptions directors are realistic
which include geological in the use of mineral price
projection and metal price forecasts and impose rigorous
assumptions. practices in the QA/QC
programmes that support
its independent estimates.
---------------------------------- -----------------------------------------
Development Risk
Delays in permitting, The Company's permitting
or changes in permit legislation requirements are limited
and/or regulation, financing at this stage to its exploration
and commissioning a project activities but to reduce
may result in delays to development risk in future
the Group meeting production the directors will ensure
targets or even in extreme that its permit and financing
cases loss of title. applications are robust
and thorough and will seek
to position the Company
as a low quartile cost
producer.
---------------------------------- -----------------------------------------
Commodity Risk
Changes in commodity prices The company consistently
can affect the economic reviews commodity prices
viability of mining projects and trends for its key
and affect decisions on projects throughout the
continuing exploration development cycle.
activity.
---------------------------------- -----------------------------------------
Mining and Processing
Technical Risk From the earliest stages
of exploration the directors
Notwithstanding the completion look to use consultants
of metallurgical testwork, and contractors who are
test mining and pilot leaders in their field
studies indicating the and in future will seek
technical viability of to strengthen the executive
a mining operation, variations and the Board with additional
in mineralogy, mineral technical and financial
continuity, ground stability, skills as the Company transitions
groundwater conditions from exploration to production.
and other geological conditions
may still render a mining
and processing operation
economically or technically
non-viable.
---------------------------------- -----------------------------------------
Environmental Risk
Mineral exploration carries
Exploration and development a lower level of environmental
of a project can be adversely liability than mining.
affected by environmental The Company has adopted
legislation and the unforeseen an Environmental Policy
results of environmental and the directors avoid
studies carried out during the acquisition of projects
evaluation of a project. where liability for legacy
Once a project is in production environmental issues might
unforeseen events can fall upon the Company.
give rise to environmental
liabilities.
---------------------------------- -----------------------------------------
Political Risk
The Company's strategy
All countries carry political restricts its activities
risk that can lead to to stable, democratic and
interruption of activity. mining friendly jurisdictions.
Politically stable countries The Company has adopted
can have enhanced environmental a strong Anti-corruption
and social permitting Policy and Code of Conduct
risks, risks of strikes and this is strictly enforced.
and changes to taxation,
whereas less developed
countries can have, in
addition, risks associated
with changes to the legal
framework, civil unrest
and government expropriation
of assets.
---------------------------------- -----------------------------------------
Partner Risk
Whilst there has been The Board's current policy
no past evidence of this, is to maintain control
the Group can be adversely of certain key projects
affected if joint venture so that it can control
partners are unable or the pace of exploration
unwilling to perform their and reduce partner risk.
obligations or fund their For projects where other
share of future developments. parties are responsible
for critical payments and
expenditures the Company's
agreements legislate that
such payments and expenditures
are met.
---------------------------------- -----------------------------------------
Financing & Liquidity
Risk
The Company maintains a
Liquidity risk is the good network of contacts
risk that the Company in the capital markets
will not be able to raise that has historically met
working capital for its its financing requirements.
ongoing activities. The Company's low overheads
The Group's goal is to and cost effective exploration
finance its exploration strategies help reduce
and evaluation activities its funding requirements
from future cash flows, and currently the directors
but until that point is take part of their fees
reached the Company is in shares. Nevertheless
reliant on raising working further equity issues will
capital from equity markets be required from time to
or from industry sources. time.
There is no certainty
such funds will be available
when needed.
---------------------------------- -----------------------------------------
Financial Instruments The directors are responsible
for the Group's systems
Details of risks associated of internal financial control.
with the Group's Financial Although no systems of
Instruments are given internal financial control
in Note 19 to the financial can provide absolute assurance
statements. against material misstatement
or loss, the Group's systems
are designed to provide
reasonable assurance that
problems are identified
on a timely basis and dealt
with appropriately.
In carrying out their responsibilities,
the directors have put
in place a framework of
controls to ensure as far
as possible that ongoing
financial performance is
monitored in a timely manner,
that corrective action
is taken and that risk
is identified as early
as practically possible,
and they have reviewed
the effectiveness of internal
financial control.
The Board, subject to delegated
authority, reviews capital
investment, property sales
and purchases, additional
borrowing facilities, guarantees
and insurance arrangements.
---------------------------------- -----------------------------------------
Internal Controls & Risk Management
The Directors are responsible for the Group's system of internal
financial control. Although no system of internal financial control
can provide absolute assurance against material misstatement or
loss, the Group's system is designed to provide reasonable
assurance that problems are identified on a timely basis and dealt
with appropriately and expeditiously.
In carrying out their responsibilities, the Directors have put
in place a framework of controls to ensure as far as possible that
ongoing financial performance is monitored in a timely manner, that
corrective action is taken and that risk is identified as early as
practically possible, and they have reviewed the effectiveness of
internal financial control.
The Board, subject to delegated authority, reviews capital
investment, property sales and purchases, additional borrowing
facilities, guarantees and insurance arrangements.
Forward-Looking Statements
This Annual Report may contain certain statements and
expressions of belief, expectation or opinion which are
forward-looking statements, and which relate, inter alia, to the
Company's proposed strategy, plans and objectives or to the
expectations or intentions of the Company's directors. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors beyond the control of the
Company that could cause the actual performance or achievements of
the Company to be materially different from such forward-looking
statements.
This Strategic Report was approved by the Board of Directors on
12 December 2016 and signed on its behalf.
Richard Clemmey
Managing Director
OUR GOVERNANCE
Corporate Governance
Although the rules of AIM do not require the Company to comply
with the UK Corporate Governance Code ("the Code"), the Company
fully supports the principles set out in the Code and attempts to
comply wherever possible, given both the small size and limited
resources available to the Company.
The Board of Directors currently comprises the Executive
Chairman, Managing Director and two Non-Executive Directors. The
Board considers that this structure is suitable for the Company
having regard to the fact that it is not yet revenue-earning.
The two Non-Executive Directors have both served in excess of
nine years and under the terms of the Code would not now be
formally regarded as independent. However, it is proposed that they
should continue to seek annual re-election rather than every third
year as per the Articles of Association. The Company has been
fortunate to secure the services of Donald McAlister and David
Whitehead during that time and both continue to provide valuable
advice based on their long experience of the mining industry.
The Board can be strengthened by the appointment of independent
Non-Executive Directors but is satisfied that its composition is
currently suitable for an AIM-listed company.
Role of the Board
The Board's role is to agree the Group's long-term direction and
strategy and monitor achievement of its business objectives. The
Board meets four times a year for these purposes and holds
additional meetings when necessary to transact other business. The
Board receives reports for consideration on all significant
strategic and operational matters.
Notwithstanding that the Non-Executive Directors are not
considered to be independent under the terms of the Code, they are
considered by the Board to be independent of management and free
from any business or other relationship which could materially
interfere with the exercise of their independent judgement.
Directors have the facility to take external independent advice in
furtherance of their duties at the Group's expense and have access
to the services of the Company Secretary.
The Board delegates certain of its responsibilities to the
Audit, Remuneration and Nomination Committees of the Board. These
Committees operate within clearly defined, written terms of
reference.
Audit Committee
The Audit Committee, composed entirely of Non-Executive
Directors, meets at least twice a year and assists the Board in
meeting responsibilities in respect of external financial reporting
and internal controls. The Audit Committee also keeps under review
the scope and results of the audit. It also considers the
cost-effectiveness, independence and objectivity of the Auditor
taking account of any non-audit services provided by them.
Remuneration Committee
The Remuneration Committee also comprises the Non-Executive
Directors. The Remuneration Committee meets at least once a year to
determine the appropriate remuneration for the Company's executive
directors, ensuring that this reflects their performance and that
of the Group, and to demonstrate to shareholders that executive
remuneration is set by Board members who have no personal interest
in the outcome of their decisions.
The Company has initiated a long-term bonus and incentive scheme
for the Managing Director. The objective of adopting the scheme is
to provide reward for successfully achieving performance targets
set by the Board of Directors in line with the Company's Aims and
Strategy. The Company has in place an Inland Revenue approved share
option scheme and also issues warrants to subscribe for shares to
executive directors and employees. Directors' emoluments are
disclosed in Note 4 to the financial statements and details of
Directors' warrants are disclosed in Note 17.
The Board is aware that Non-Executive Directors are not
considered to be independent under the terms of the Code if they
hold warrants to buy shares in the Company and so they no longer
participate in the issue of warrants.
Nomination Committee
The Nomination Committee comprises the Chairman, Managing
Director and the Non-Executive Directors. The Nomination Committee
meets at least once per year to lead the formal process of rigorous
and transparent procedures for Board appointments and to make
recommendations to the Board in accordance with best practice and
other applicable rules and regulations, insofar as they are
appropriate to the Group at this stage in its development.
Conflicts of Interest
The Companies Act 2006 permits directors of public companies to
authorise directors' conflicts and potential conflicts, where
appropriate, and the Articles of Association contain a provision to
this effect.
At 30 September 2016, Tertiary Minerals plc held 9.13% of the
issued share capital of Sunrise Resources plc and the Chairman of
Tertiary Minerals plc is also Chairman of Sunrise Resources plc.
Tertiary Minerals plc also provides management services to Sunrise
Resources plc, in the search, evaluation and acquisition of new
projects.
Procedures are in place in order to avoid any conflict of
interest between the Company and Sunrise Resources plc.
Corporate Responsibility
The Board takes regular account of the significance of social,
environmental and ethical matters affecting the business of the
Group. At this stage in the Group's development the Board has not
adopted a specific written policy on Corporate Social
Responsibility as it has a limited pool of stakeholders other than
its shareholders. Rather, the Board seeks to protect the interests
of the Group's stakeholders through individual policies and through
ethical and transparent actions.
The Company engages positively with local communities and
stakeholders in its project locations.
Shareholders
The Board seeks to protect shareholders' interests by following,
where appropriate, the guidelines in the Code and the Directors are
always prepared, where practicable, to enter into a dialogue with
shareholders to promote a mutual understanding of objectives. The
Annual General Meeting provides the Board with an opportunity to
informally meet and communicate directly with investors.
Environment
The Board recognises that its principal activity, mineral
exploration, has the potential to impact on the local environment
and consequently has adopted an Environmental Policy to ensure that
the Group's activities have minimal harmful environmental impact.
Contractors are carefully selected on the basis that they have
their own acceptable environmental policy, resources and training
in order to carry out field activities in line with the Company's
high standards.
The Group's activities, carried out in accordance with the
Environmental Policy, have had only minimal environmental impact
and this policy is regularly reviewed. Where appropriate, all work
is carried out after advance consultation with all potentially
affected parties.
Employees
The Group encourages its employees to understand all aspects of
the Group's business and seeks to remunerate its employees fairly,
being flexible where practicable. The Group gives full and fair
consideration to applications for employment received regardless of
age, gender, colour, ethnicity, disability, nationality, religious
beliefs, transgender status or sexual orientation. The Board takes
account of employees' interests when making decisions, and
suggestions from employees aimed at improving the Group's
performance are welcomed.
The Company has adopted and implements an Anti-corruption Policy
and Code of Conduct.
Suppliers and Contractors
The Group recognises that the goodwill of its contractors,
consultants and suppliers is important to its business success and
seeks to build and maintain this goodwill through fair dealings.
The Group has a prompt payment policy and seeks to settle all
agreed liabilities within the terms agreed with suppliers. The
amount shown in the Consolidated and Company Statements of
Financial Position in respect of trade payables at the end of the
financial year represents 14 days of average daily purchases (2015:
14 days).
Health and Safety
The Board recognises it has a responsibility to provide
strategic leadership and direction in the development of the
Group's health and safety strategy in order to protect all of its
stakeholders. The Company has developed and implements a Health and
Safety Policy to clearly define roles and responsibilities and in
order to identify and manage risk.
Board of Directors
The Directors and Officers of the Company are:
Patrick Cheetham (56)
Executive Chairman
Key Strengths and Experience
-- Geologist.
-- 35 years experience in mineral exploration.
-- 30 years experience in public company management.
-- Founder of the Company, Dragon Mining Ltd, Archaean Gold NL and Sunrise Resources plc.
External Appointments:
Chairman and founder of Sunrise Resources plc.
Richard Clemmey (44)
Managing Director
Key Strengths and Experience
-- Chartered Engineer.
-- 23 years experience in developing and managing
mining/quarrying projects worldwide for Derwent Mining, Lafarge,
Hargreaves (GB) Ltd, Marshalls plc and CFE.
-- Board Director since May 2012.
External Appointments:
None.
David Whitehead (74)
Non-Executive Director
Key Strengths and Experience
-- Mining geologist.
-- 43 years experience in all aspects of mineral exploration,
mine development and operations management including senior
Executive Management experience in major mining companies: Billiton
plc and BHP Billiton Plc.
-- Board Director since 2002.
External Appointments
Currently a director of Consolidated Mines & Investments Ltd
and Chairman of its subsidiary Consolidated Nickel Mines Ltd. Both
companies are unlisted.
Donald McAlister (57)
Non-Executive Director*
Key Strengths and Experience
-- Accountant.
-- Previously Finance Director at Mwana Africa plc, Ridge Mining plc and Reunion Mining.
-- 22 years experience in all financial aspects of the resource
industry, including metal hedging, tax planning, economic
modelling/evaluation, project finance and IPOs.
-- Founding director of the Company.
External Appointments
Financial Director of Moxico Resources plc and of Finance
Director of ZincOx Resources plc.
Colin Fitch LLM, FCIS
Company Secretary
Key Strengths and Experience
-- Barrister-at-Law.
-- Previously Corporate Finance Director of Kleinwort Benson,
Partner and Head of Corporate Finance at Rowe & Pitman (SG
Warburg Securities) and Assistant Company Secretary at the London
Stock Exchange.
-- Held a number of non-executive directorships including
Merrydown plc, African Lakes plc and Manders plc.
External Appointments
Company Secretary for Sunrise Resources plc.
* Chairman of the Audit Committee and member of the Remuneration
Committee.
Chairman of the Remuneration Committee and member of the Audit
Committee.
Directors' Responsibilities
The Directors are responsible for preparing the Strategic
Report, the Directors' Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the Group and Company financial statements
in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union and applicable law. Under
company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and Company and of the profit or
loss of the Group for that period. The Directors are also required
to prepare financial statements in accordance with the AIM Rules of
the London Stock Exchange for companies trading securities on the
AIM Market.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
IFRSs as adopted by the European Union, subject to any material
departures disclosed and explained in the financial statements;
and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company and the
Group will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
They are further responsible for ensuring that the Strategic
Report and the Report of the Directors and other information
included in the Annual Report and Financial Statements is prepared
in accordance with applicable law in the United Kingdom.
Website Publication
The maintenance and integrity of the Tertiary Minerals plc
website is the responsibility of the Directors; the work carried
out by the Auditors does not involve the consideration of these
matters and, accordingly, the Auditors accept no responsibility for
any changes that may have occurred in the accounts since they were
initially presented on the website. Legislation in the United
Kingdom governing the preparation and dissemination of the accounts
and the other information included in annual reports may differ
from legislation in other jurisdictions.
Information from Directors' Report
The Directors are pleased to submit their Annual Report and
audited accounts for the year ended 30 September 2016.
The Strategic Report details of the principal activities of the
Company and includes the Operating Review and Performance which
provides detailed information on the development of the Group's
business during the year and indications of likely future
developments.
Going Concern
In common with many exploration companies, the Company raises
finance for its exploration and appraisal activities in discrete
tranches. Further funding is raised as and when required. When any
of the Group's projects move to the development stage, specific
project financing will be required.
The Directors prepare annual budgets and cash flow projections
that extend beyond 12 months from the date of this report. These
projections include the proceeds of future fundraising necessary
within the next 12 months to meet the Company's and Group's
overheads and planned discretionary project expenditures and to
maintain the Company and Group as going concerns. Although the
Company has been successful in raising finance in the past, there
is no assurance that it will obtain adequate finance in the future.
This represents a material uncertainty related to events or
conditions which may cast significant doubt on the Group and
Company's ability to continue as going concerns and, therefore,
that they may be unable to realise their assets and discharge their
liabilities in the normal course of business. However, the
Directors have a reasonable expectation that they will secure
additional funding when required to continue meeting corporate
overheads and exploration costs for the foreseeable future and
therefore believe that the going concern basis is appropriate for
the preparation of the financial statements.
Events After The Balance Sheet Date
Kaaresselkä and Kiekerömaa Gold Projects, Finland
On 5 December 2016 the Company announced the sale of the two
legacy gold assets in Finland to TSX-V listed Aurion Resources Ltd.
GBP100,000 initial consideration to be paid by Aurion: GBP15,000 in
cash and GBP85,000 in Aurion shares. The Company will retain a
royalty interest in the projects. The sale is conditional upon
successful transfer of the Exploration Licences for each project
from Tertiary to Aurion and exchange approval by the TSX-V.
Lassedalen Project, Norway
On 7 December 2016 the Company announced it has entered into a
non-binding Heads of Terms to acquire land and historic mine
workings on its Lassedalen Fluorspar Project in Norway from global
aluminium company, Hydro. The Company has been granted exclusivity
for 14-months to complete due-diligence and agree and finalise a
purchase agreement.
For further detail please refer to the Operating Review.
Dividend
The Directors are unable to recommend the payment of a
dividend.
Financial Instruments & Other Risks
Details of the Group's Financial Instruments and risk management
objectives and of the Group's exposure to risk associated with its
Financial Instruments is given in Note 19 to the financial
statements.
The business of mineral exploration and evaluation has inherent
risks. Details of risks and uncertainties that affect the Group's
business are given in Risks and Uncertainties.
Directors
The Directors holding office in the period were:
Mr P L Cheetham
Mr R H Clemmey
Mr D A R McAlister
Mr D Whitehead
Shareholders
As at the date of this report the following interests of 3% or
more in the issued share capital of the Company appeared in the
share register:
Number % of
As at 12 December 2016 of shares share
capital
---------------------------------------- ---------- --------
SVS (Nominees) Limited POOL 35,483,607 13.29
---------------------------------------- ---------- --------
TD Direct Investing Nominees (Europe)
Limited SMKTNOMS 26,339,920 9.87
---------------------------------------- ---------- --------
Barclayshare Nominees Limited 23,981,067 8.98
---------------------------------------- ---------- --------
Hargreaves Lansdown (Nominees)
Limited 15942 11,218,121 4.20
---------------------------------------- ---------- --------
HSDL Nominees Limited 10,290,883 3.86
---------------------------------------- ---------- --------
Hargreaves Lansdown (Nominees)
Limited VRA 10,282,817 3.85
---------------------------------------- ---------- --------
Ronald Bruce Rowan 8,000,000 3.00
---------------------------------------- ---------- --------
Disclosure of Audit Information
Each of the Directors has confirmed that so far as he is aware,
there is no relevant audit information of which the Company's
Auditor is unaware, and that he has taken all the steps that he
ought to have taken as a director in order to make himself aware of
any relevant audit information and to establish that the Company's
Auditor is aware of that information.
Auditor
A resolution to re-appoint Crowe Clark Whitehill LLP as Auditor
of the Company and the Group will be proposed at the forthcoming
Annual General Meeting.
Charitable and Political Donations
During the year, the Group made no charitable or political
donations.
Annual General Meeting
Notice of the Company's Annual General Meeting convened for
Tuesday 31 January 2017 will be sent to shareholders with the 2016
Annual Report
Publication of Statutory Accounts
The financial information set out in this announcement does not
constitute the Company's Statutory Accounts for the period ended 30
September 2016 or 2015. The financial information for 2015 is
derived from the Statutory Accounts for 2015. Full audited accounts
in respect of that financial period have been delivered to the
Registrar of Companies. The Statutory Accounts for 2016 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting. The auditors have reported on the 2016 and
2015 accounts. Neither set of accounts contain a statement under
section 498(2) or (3) the Companies Act 2006 and both received an
unqualified audit opinion. However there was an emphasis of matter
in relation to a requirement that the Company raise funds in the
future to continue as a going concern.
Consolidated Income Statement
for the year ended 30 September 2016
2016 2015
Notes GBP GBP
------------------------------------ ----- --------- ---------
Revenue 2,17 190,124 181,598
Administration costs (558,857) (569,515)
Pre-licence exploration costs (25,343) (23,869)
Impairment of deferred exploration
costs 8 - (4,522)
Operating loss (394,076) (416,308)
Impairment of available for sale
investment (81,142) (260,997)
Interest receivable 1,712 2,314
------------------------------------ ----- --------- ---------
Loss before income tax 3 (473,506) (674,991)
Income tax 7 - -
Loss for the year attributable to
equity holders of the parent (473,506) (674,991)
------------------------------------ ----- --------- ---------
Loss per share - basic and diluted
(pence) 6 (0.20) (0.37)
------------------------------------ ----- --------- ---------
All amounts relate to continuing activities.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2016
2016 2015
GBP GBP
------------------------------------------------ --------- ----------
Loss for the year (473,506) (674,991)
------------------------------------------------ --------- ----------
Items that could be reclassified subsequently
to the income statement:
Foreign exchange translation differences
on foreign currency net investments
in subsidiaries 466,534 (59,439)
------------------------------------------------ --------- ----------
(6,972) (734,430)
------------------------------------------------ --------- ----------
Items that have been reclassified subsequently
to the Income Statement:
Fair value movement on available for
sale investment 51,117 (112,702)
Transfer from available for sale investment
reserve on impairment of available for
sale investment - 260,997
------------------------------------------------ --------- ----------
51,117 148,295
------------------------------------------------ --------- ----------
Total comprehensive loss for the year
attributable to equity holders of the
parent 44,145 (586,135)
------------------------------------------------ --------- ----------
Consolidated and Company Statements of Financial Position
at 30 September 2016
Company Number 03821411
Group Company Group Company
2016 2016 2015 2015
Notes GBP GBP GBP GBP
------------------------------- ----- ----------- ----------- ----------- -----------
Non-current assets
Intangible assets 8 4,429,261 - 3,536,609 -
Property, plant & equipment 9 9,785 9,636 7,296 6,961
Investment in subsidiaries 10 - 6,834,155 - 6,391,555
Available for sale investment 10 204,470 204,470 148,222 148,222
------------------------------- ----- ----------- ----------- ----------- -----------
4,643,516 7,048,261 3,692,127 6,546,738
------------------------------- ----- ----------- ----------- ----------- -----------
Current assets
Receivables 11 105,032 81,377 90,309 74,757
Cash and cash equivalents 12 448,474 421,292 309,815 245,140
553,506 502,669 400,124 319,897
------------------------------- ----- ----------- ----------- ----------- -----------
Current liabilities
Trade and other payables 13 (92,488) (53,424) (102,780) (49,573)
------------------------------- ----- ----------- ----------- ----------- -----------
Net current assets 461,018 449,245 297,344 270,324
------------------------------- ----- ----------- ----------- ----------- -----------
Net assets 5,104,534 7,497,506 3,989,471 6,817,062
------------------------------- ----- ----------- ----------- ----------- -----------
Equity
Called up share capital 14 2,669,442 2,669,442 1,878,592 1,878,592
Share premium account 9,066,735 9,066,735 8,812,452 8,812,452
Merger reserve 131,096 131,096 131,096 131,096
Share option reserve 14 343,486 343,486 443,813 443,813
Available for sale investment
reserve 51,117 51,117 - -
Foreign currency reserve 14 382,354 - (84,180) -
Accumulated losses (7,539,696) (4,764,370) (7,192,302) (4,448,891)
------------------------------- ----- ----------- ----------- ----------- -----------
Equity attributable to
the owners of the parent 5,104,534 7,497,506 3,989,471 6,817,062
------------------------------- ----- ----------- ----------- ----------- -----------
These financial statements were approved and authorised for
issue by the Board of Directors on 12 December 2016 and were signed
on its behalf.
R H Clemmey D A R McAlister
Director Director
Consolidated Statement of Changes in Equity
Available
Share Share for Foreign
Share premium Merger option sale currency Accumulated
capital account reserve reserve reserve reserve losses Total
Group GBP GBP GBP GBP GBP GBP GBP GBP
---------------------- --------- --------- -------- --------- --------- --------- ----------- ---------
At 30 September
2014 1,743,020 8,622,974 131,096 426,721 (148,295) (24,741) (6,563,497) 4,187,278
---------------------- --------- --------- -------- --------- --------- --------- ----------- ---------
Loss for the
period - - - - - - (413,994) (413,994)
Change in
fair value - - - - (112,702) - - (112,702)
Transfer of
impairment
to income
statement - - - - 260,997 - (260,997) -
Exchange differences - - - - - (59,439) - (59,439)
---------------------- --------- --------- -------- --------- --------- --------- ----------- ---------
Total comprehensive
loss for the
year - - - - 148,295 (59,439) (674,991) (586,135)
---------------------- --------- --------- -------- --------- --------- --------- ----------- ---------
Share issue 135,572 189,478 - - - - - 325,050
Share based
payments expense - - - 63,278 - - - 63,278
Transfer of
expired options
and warrants - - - (46,186) - - 46,186 -
---------------------- --------- --------- -------- --------- --------- --------- ----------- ---------
At 30 September
2015 1,878,592 8,812,452 131,096 443,813 - (84,180) (7,192,302) 3,989,471
---------------------- --------- --------- -------- --------- --------- --------- ----------- ---------
Loss for the
period - - - - - - (473,506) (473,506)
Change in
fair value - - - - 51,117 - - 51,117
Exchange differences - - - - - 466,534 - 466,534
---------------------- --------- --------- -------- --------- --------- --------- ----------- ---------
Total comprehensive
loss for the
year - - - - 51,117 466,534 (473,506) 44,145
---------------------- --------- --------- -------- --------- --------- --------- ----------- ---------
Share issue 790,850 254,283 - - - - - 1,045,133
Share based
payments expense - - - 25,785 - - - 25,785
Transfer of
expired warrants - - - (126,112) - - 126,112 -
---------------------- --------- --------- -------- --------- --------- --------- ----------- ---------
At 30 September
2016 2,669,442 9,066,735 131,096 343,486 51,117 382,354 (7,539,696) 5,104,534
---------------------- --------- --------- -------- --------- --------- --------- ----------- ---------
Company Statement of Changes in Equity
Available
Share Share for
Share premium Merger option sale Accumulated
capital account reserve reserve reserve losses Total
Company GBP GBP GBP GBP GBP GBP GBP
---------------------- --------- --------- -------- --------- --------- ----------- ---------
At 30 September
2014 1,743,020 8,622,974 131,096 426,721 (105,770) (3,901,584) 6,916,457
---------------------- --------- --------- -------- --------- --------- ----------- ---------
Loss for the
period - - - - - (375,021) (375,021)
Change in fair
value - - - - (112,702) - (112,702)
Transfer of
impairment
to income statement - - - - 218,472 (218,472) -
---------------------- --------- --------- -------- --------- --------- ----------- ---------
Total comprehensive
loss for the
year - - - - 105,770 (593,493) (487,723)
---------------------- --------- --------- -------- --------- --------- ----------- ---------
Share issue 135,572 189,478 - - - - 325,050
Share based
payments expense - - - 63,278 - - 63,278
Transfer of
expired options
and warrants - - - (46,186) - 46,186 -
---------------------- --------- --------- -------- --------- --------- ----------- ---------
At 30 September
2015 1,878,592 8,812,452 131,096 443,813 - (4,448,891) 6,817,062
---------------------- --------- --------- -------- --------- --------- ----------- ---------
Loss for the
period - - - - - (441,591) (441,591)
Change in fair
value - - - - 51,117 - 51,117
Total comprehensive
loss for the
year - - - - 51,117 (441,591) (390,474)
---------------------- --------- --------- -------- --------- --------- ----------- ---------
Share issue 790,850 254,283 - - - - 1,045,133
Share based
payments expense - - - 25,785 - - 25,785
Transfer of
expired warrants - - - (126,112) - 126,112 -
---------------------- --------- --------- -------- --------- --------- ----------- ---------
At 30 September
2016 2,669,442 9,066,735 131,096 343,486 51,117 (4,764,370) 7,497,506
---------------------- --------- --------- -------- --------- --------- ----------- ---------
Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2016
Group Company Group Company
2016 2016 2015 2015
Notes GBP GBP GBP GBP
---------------------------------- ----- --------- --------- --------- ---------
Operating activity
Total loss after tax (475,218) (449,650) (677,305) (600,316)
Depreciation charge 6,833 6,647 4,600 3,883
Impairment charge - exploration - - 4,522 -
Impairment charge - available
for sale investment 81,142 81,142 260,997 218,472
Share based payment charge 25,784 25,784 63,278 63,278
Non-cash additions to
available for sale investment (86,272) (86,272) (21,298) (21,298)
Increase in provision
for impairment of loans
to subsidiaries - 1,071 - 2,166
(Increase)/decrease in
receivables 11 (14,723) (6,620) 25,423 21,261
Increase/(decrease) in
payables 13 (10,292) 3,851 (68,770) (49,647)
---------------------------------- ----- --------- --------- --------- ---------
Net cash outflow from
operating activity (472,746) (424,047) (408,553) (362,201)
---------------------------------- ----- --------- --------- --------- ---------
Investing activity
Interest received 1,712 8,059 2,314 6,823
Development expenditures 8 (473,527) - (560,250) -
Purchase of property,
plant & equipment 9 (9,322) (9,322) (3,040) (3,040)
Additional loans to subsidiaries - (443,671) - (594,818)
Net cash outflow from
investing activity (481,137) (444,934) (560,976) (591,035)
---------------------------------- ----- --------- --------- --------- ---------
Financing activity
Issue of share capital
(net of expenses) 1,045,133 1,045,133 325,050 325,050
Net cash inflow from
financing activity 1,045,133 1,045,133 325,050 325,050
---------------------------------- ----- --------- --------- --------- ---------
Net decrease in cash
and cash equivalents 91,250 176,152 (644,479) (628,186)
---------------------------------- ----- --------- --------- --------- ---------
Cash and cash equivalents
at start of year 309,815 245,140 942,890 873,326
Exchange differences 47,409 - 11,404 -
---------------------------------- ----- --------- --------- --------- ---------
Cash and cash equivalents
at 30 September 12 448,474 421,292 309,815 245,140
---------------------------------- ----- --------- --------- --------- ---------
Notes to the Financial Statements
for the year ended 30 September 2016
Background
Tertiary Minerals plc is a public company incorporated and
domiciled in England. It is traded on the AIM market of the London
Stock Exchange - EPIC: TYM.
The Company is a holding company for a number of companies
(together, "the Group"). The Group's financial statements are
presented in Pounds Sterling (GBP) which is also the functional
currency of the Company.
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to
the Group's financial statements.
1. Accounting policies
(a) Basis of preparation
The Financial Statements have been prepared on the basis of the
recognition and measurement requirements of International Financial
Reporting Standards (IFRS), as adopted by the European Union. They
have also been prepared in accordance with those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
(b) Going concern
In common with many exploration companies, the Company raises
finance for its exploration and appraisal activities in discrete
tranches. Further funding is raised as and when required. When any
of the Group's projects move to the development stage, specific
project financing will be required.
The Directors prepare annual budgets and cash flow projections
that extend beyond 12 months from the date of this report. These
projections include the proceeds of future fundraising necessary
within the next 12 months to meet the Company's and Group's
overheads and planned discretionary project expenditures and to
maintain the Company and Group as going concerns. Although the
Company has been successful in raising finance in the past, there
is no assurance that it will obtain adequate finance in the future.
This represents a material uncertainty related to events or
conditions which may cast significant doubt on the Group and
Company's ability to continue as going concerns and, therefore,
that they may be unable to realise their assets and discharge their
liabilities in the normal course of business. However, the
Directors have a reasonable expectation that they will secure
additional funding when required to continue meeting corporate
overheads and exploration costs for the foreseeable future and
therefore believe that the going concern basis is appropriate for
the preparation of the financial statements.
(c) Basis of consolidation
Investments, including long-term loans, in subsidiaries are
valued at the lower of cost or recoverable amount, with an ongoing
review for impairment.
The Group's financial statements consolidate the financial
statements of Tertiary Minerals plc and its subsidiary undertakings
using the acquisition method and eliminate intercompany balances
and transactions.
In accordance with section 408 of the Companies Act 2006,
Tertiary Minerals plc is exempt from the requirement to present its
own Statement of Comprehensive Income. The amount of the loss for
the financial year recorded within the financial statements of
Tertiary Minerals plc is GBP441,591 (2015: GBP593,493).
(d) Intangible assets
Exploration and evaluation
Accumulated exploration and evaluation costs incurred in
relation to separate areas of interest (which may comprise more
than one exploration licence or exploration licence applications)
are capitalised and carried forward where:
(1) such costs are expected to be recouped through successful
exploration and development of the area, or alternatively by its
sale; or
(2) exploration and/or evaluation activities in the area have
not yet reached a stage which permits a reasonable assessment of
the existence or otherwise of economically recoverable reserves,
and active and significant operations in, or in relation to the
areas are continuing.
A bi-annual review is carried out by the Directors to consider
whether any exploration and development costs have suffered
impairment in value and, if necessary, provisions are made
according to these criteria. The bi-annual impairment reviews were
conducted in March 2016 and September 2016.
Accumulated costs, where the Group does not yet have an
exclusive exploration licence and in respect of areas of interest
which have been abandoned, are written off to the income statement
in the year in which the pre-licence expense was incurred or in
which the area was abandoned.
Development
Exploration, evaluation and development costs are carried at the
lower of cost and expected net recoverable amount. On reaching a
mining development decision, exploration and evaluation costs are
reclassified as development costs and all development costs on a
specific area of interest will be amortised over the useful
economic life of the projects, once they become income generating
and the costs can be recouped.
(e) Property, plant & equipment
All property, plant and equipment assets are stated at cost less
accumulated depreciation. Depreciation is provided by the Group on
all property, plant and equipment, at rates calculated to write off
the cost, less estimated residual value, of each asset evenly over
its expected useful life, as follows:
Fixtures and fittings 20% to 33% per annum Straight line
basis
Computer equipment 33% per annum Straight line basis
Useful life and residual value are reassessed annually.
(f) Available for sale investments
Available for sale financial assets include non-derivative
financial assets that are either designated as such or do not
qualify for inclusion in any of the other categories of financial
assets. Available for sale investments are initially measured at
cost and subsequently at fair value, being the equivalent of market
value, with changes in value recognised in equity. Gains and losses
arising from available for sale investments are recognised in the
income statement when they are sold or impaired.
(g) Trade and other receivables and payables
Trade and other receivables and payables are measured at initial
recognition at fair value and subsequently measured at amortised
cost.
(h) Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand
and short-term bank deposits with a maturity of three months or
less.
(i) Deferred taxation
Deferred taxation, if applicable, is provided in full in respect
of taxation deferred by temporary differences between the treatment
of certain items for taxation and accounting purposes.
Deferred tax assets are recognised to the extent that they are
regarded as recoverable.
(j) Revenue
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
services provided to Sunrise Resources plc net of discounts, VAT
and other sales-related taxes.
(k) Foreign currencies
The Group's consolidated financial statements are presented in
Pounds Sterling (GBP), being the functional currency of the
Company, and the currency of the primary economic environment in
which the Company operates. Monetary assets and liabilities
denominated in foreign currencies are translated at the rate of
exchange ruling at the balance sheet date.
For consolidation purposes, the net investment in foreign
operations and the assets and liabilities of overseas subsidiaries,
associated undertakings and joint arrangements, that have a
functional currency different from the Group's presentation
currency, are translated at the closing exchange rates. Income
statements of overseas subsidiaries, that have a functional
currency different from the Group's presentation currency, are
translated at exchange rates at the date of transaction. Exchange
differences arising on opening reserves are taken to the foreign
currency reserve.
(l) Leasing and hire purchase commitments
Rentals applicable to operating leases where substantially all
the benefits and risks of ownership remain with the lessor are
charged to the income statement on a straight-line basis.
(m) Share warrants and share based payments
The Company issues warrants and options to employees (including
directors) and third parties. For all options and warrants issued
after 7 November 2002 the fair value of the services received is
recognised as a charge measured at fair value on the date of grant
and determined in accordance with IFRS 2, IAS 32 and IAS 39,
adopting the Black-Scholes-Merton model. The fair value is charged
to administrative expenses on a straight-line basis over the
vesting period, together with a corresponding increase in equity,
based on the management's estimate of shares that will eventually
vest. The expected life of the options and warrants is adjusted
based on management's best estimates, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The details of the calculation are shown in Note
15.
(n) Judgements and estimations in applying accounting
policies
In the process of applying the Group's accounting policies
above, the Group has identified the judgemental areas that have the
most significant effect on the amounts recognised in the financial
statements:
Intangible assets - exploration and evaluation
Capitalisation of exploration and evaluation costs requires that
costs be assessed against the likelihood that such costs will be
recoverable against future exploitation or sale or alternatively,
where activities have not reached a stage which permits a
reasonable estimate of the existence of mineral reserves, a
judgement that future exploration or evaluation should continue.
This requires management to make estimates and judgements and to
make certain assumptions, often of a geological nature, and most
particularly in relation to whether or not an economically viable
mining operation can be established in future. Such estimates,
judgements and assumptions are likely to change as new information
becomes available. When it becomes apparent that recovery of
expenditure is unlikely the relevant capitalised amount is written
off to the income statement.
Impairment
Impairment reviews for deferred exploration and evaluation costs
are carried out on a project by project basis, with each project
representing a potential single cash generating unit. The Group
will review information produced by its exploration activities and
consider whether the carrying value is impaired. Assessment of the
impairment of assets is a judgement based on analysis of the
probability of future cash flows from the relevant project,
including consideration of:
(a) The period for which the entity has the right to explore in
the specific area and whether this right will expire in the near
future, and whether the right is expected to be renewed.
(b) The availability of funds for expenditure on further
exploration for and evaluation of mineral resources on the specific
project.
(c) Exploration for and evaluation of mineral resources on the
specific project has not led to the discovery of commercially
viable quantities of mineral resources and the entity has decided
to discontinue such activities on the project.
(d) Sufficient data exist to indicate that, although a
development on the specific project is likely to proceed, the
carrying amount of the exploration and evaluation asset is unlikely
to be recovered in full from successful development of a mine or by
the sale of the project.
Impairment reviews for investments in subsidiaries and available
for sale assets are carried out on an individual basis. The Group
reviews performance indicators of the investment, such as market
share price, to indicate whether the carrying value is
impaired.
Available for sale assets represent a holding in Sunrise
Resources plc as described in Note 10. In the Interim Financial
Statements for the six month period to 31 March 2016 a reduction in
share price from cost was considered significant in terms of value
and as a result the asset was treated as impaired in line with the
requirements of IAS 39. This treatment is despite the fact that
directors do not believe that the underlying business of Sunrise
Resources plc is impaired either economically or commercially. A
subsequent increase in share price in the period to 30 September
2016 has been recognised in equity (see note 1(f)).
Going concern
The preparation of financial statements requires an assessment
of the validity of the going concern assumption. The validity of
the going concern assumption is dependent on finance being
available for the continuing working capital requirements of the
Group. Based on the assumption that such finance will become
available, the Directors believe that the going concern basis is
appropriate for these accounts.
Share warrants, share options and share based payments
The estimates of costs recognised in connection with the fair
value of share options and share warrants require that management
selects an appropriate valuation model and make decisions on
various inputs into the model, including the volatility of its own
share price, the probable life of the warrants and options before
exercise, and behavioural considerations of warrant holders.
(p) Standards, amendments and interpretations not yet
effective
A number of new standards and amendments to standards and
interpretations have been issued but are not yet effective and in
some cases have not yet been adopted by the EU.
The directors do not expect that the adoption of these standards
will have a material impact on the financial statements of the
Group in future periods. Specifically, the adoption of IFRS 9 will
have minimal impact for both the measurement and disclosures of
existing financial instruments. As the Group does not have any
turnover other than recharge of expenses, IFRS 15 will not have any
significant impact on revenue recognition and related disclosures.
Finally, the adoption of IFRS 16 will not have any impact on the
financial statements of the Group as all lease contracts are for
periods of less than one year.
2. Segmental analysis
The Chief Operating Decision Maker is the Board of Directors.
The Board considers the business has one reportable segment, the
management of exploration projects, which is supported by a Head
Office function. For the purpose of measuring segmental profits and
losses the exploration segment bears only those direct costs
incurred by or on behalf of those projects. No Head Office cost
allocations are made to this segment. The Head Office function
recognises all other costs.
Exploration Head
projects office Total
2016 GBP GBP GBP
--------------------------------------- ----------- --------- ---------
Consolidated Income Statement
Revenue (all UK) - 190,124 190,124
--------------------------------------- ----------- --------- ---------
Impairment of deferred exploration
costs - - -
Pre-licence exploration costs (25,343) - (25,343)
Impairment of available for sale
investment - (81,142) (81,142)
Share based payments - (25,785) (25,785)
Administration costs and other
expenses - (533,072) (533,072)
--------------------------------------- ----------- --------- ---------
Operating Loss (25,343) (449,875) (475,218)
Bank interest received - 1,712 1,712
--------------------------------------- ----------- --------- ---------
Loss before income tax (25,343) (448,163) (473,506)
Income tax - - -
--------------------------------------- ----------- --------- ---------
Loss for the year attributable
to equity holders (25,343) (448,163) (473,506)
--------------------------------------- ----------- --------- ---------
Non-current assets
Intangible assets:
Deferred exploration costs:
Kaaresselkä Gold Project,
Finland 303,432 - 303,432
Kiekerömaa Gold Project,
Finland 141,190 - 141,190
Lassedalen Fluorspar Project,
Norway 376,921 - 376,921
Storuman Fluorspar Project,
Sweden 1,931,150 - 1,931,150
MB Fluorspar Project, USA 1,676,568 - 1,676,568
--------------------------------------- ----------- --------- ---------
4,429,261 - 4,429,261
Property, plant & equipment - 9,785 9,785
Available for sale investment - 204,470 204,470
--------------------------------------- ----------- --------- ---------
4,429,261 214,255 4,643,516
--------------------------------------- ----------- --------- ---------
Current assets
Receivables 23,603 81,429 105,032
Cash and cash equivalents - 448,474 448,474
23,603 529,903 553,506
--------------------------------------- ----------- --------- ---------
Current liabilities
Trade and other payables (35,051) (57,437) (92,488)
Net current assets (11,448) 472,466 461,018
--------------------------------------- ----------- --------- ---------
Net assets 4,417,813 686,721 5,104,534
--------------------------------------- ----------- --------- ---------
Other data
Deferred exploration additions 473,527 - 473,527
Exchange rate adjustments to
deferred exploration costs - 419,125 419,125
--------------------------------------- ----------- --------- ---------
Exploration Head
projects office Total
2015 GBP GBP GBP
----------------------------------------------------- ----------- --------- ---------
Consolidated Income Statement
Revenue (all UK) - 181,598 181,598
----------------------------------------------------- ----------- --------- ---------
Impairment of deferred exploration costs (4,522) - (4,522)
Pre-licence exploration costs (23,869) - (23,869)
Transfer from available for sale investment reserve
on impairment of available for sale investment - (260,997) (260,997)
Share based payments - (63,278) (63,278)
Administration costs and other expenses - (506,237) (506,237)
----------------------------------------------------- ----------- --------- ---------
Operating Loss (28,391) (648,914) (667,305)
Bank interest received - 2,314 2,314
----------------------------------------------------- ----------- --------- ---------
Loss before income tax (28,391) (646,600) (674,991)
Income tax - - -
----------------------------------------------------- ----------- --------- ---------
Loss for the year attributable to equity holders (28,391) (646,600) (674,991)
----------------------------------------------------- ----------- --------- ---------
Non-current assets
Intangible assets:
Deferred exploration costs:
Kaaresselkä Gold Project, Finland 289,421 - 289,421
Kiekerömaa Gold Project, Finland 132,467 - 132,467
Lassedalen Fluorspar Project, Norway 360,585 - 360,585
Storuman Fluorspar Project, Sweden 1,656,135 - 1,656,135
MB Fluorspar Project, USA 1,098,001 - 1,098,001
----------------------------------------------------- ----------- --------- ---------
3,536,609 - 3,536,609
Property, plant & equipment - 7,296 7,296
Available for sale investment - 148,222 148,222
----------------------------------------------------- ----------- --------- ---------
3,536,609 155,518 3,692,127
----------------------------------------------------- ----------- --------- ---------
Current assets
Receivables 15,106 75,203 90,309
Cash and cash equivalents - 309,815 309,815
15,106 385,018 400,124
----------------------------------------------------- ----------- --------- ---------
Current liabilities
Trade and other payables (46,743) (56,037) (102,780)
Net current assets (31,637) 328,981 297,344
----------------------------------------------------- ----------- --------- ---------
Net assets 3,504,972 484,499 3,989,471
----------------------------------------------------- ----------- --------- ---------
Other data
Deferred exploration additions 560,250 - 560,250
Exchange rate adjustments to deferred exploration
costs - 70,843 70,843
----------------------------------------------------- ----------- --------- ---------
3. Loss before income tax
2016 2015
GBP GBP
--------------------------------------------- ------ ------
The operating loss is stated after
charging
Operating lease rentals - land and
buildings 19,727 19,290
Fees payable to the Group's Auditor
for:
The audit of the Group's annual accounts 6,000 6,000
Fees payable to the Group's Auditor
and its associates for other services:
The audit of the Group's subsidiaries,
pursuant to legislation 3,000 3,000
Other services 1,000 1,000
Depreciation - owned assets 6,833 4,600
--------------------------------------------- ------ ------
4. Directors' emoluments
Remuneration in respect of Directors was as follows:
Income from
Net cost recharge
to Group to Total Total
2016 Sunrise Resources 2016 2015
GBP 2016 GBP GBP
GBP
----------------------- ---------- ------------------ ------- -------
P L Cheetham (salary) 20,815 88,427 109,242 108,706
R H Clemmey (salary) 97,280 628 97,908 81,530
D A R McAlister
(salary) 16,000 - 16,000 16,000
D Whitehead (salary) 15,000 - 15,000 15,519
149,095 89,055 238,150 221,755
----------------------- ---------- ------------------ ------- -------
The above remuneration amounts does not include non-cash share
based payments charged in these financial statements in respect of
share warrants issued to the Directors in the year amounting to
GBP19,308 (2015: GBP48,949) or Employer's National Insurance
contributions of GBP27,530 (2015: GBP25,076).
The above remuneration amount for R H Clemmey includes a bonus
of GBP15,977 (2015: GBPNil).
There were no pension contributions made during the year on
behalf of Directors (2015: GBPNil).
The Directors are also the key management personnel. If all
benefits are taken into account, the total key management personnel
compensation would be GBP257,458 (2015: GBP270,704).
5. Staff costs
Total staff costs for the Group and Company,
including directors, were as follows:
Income from
Net cost recharge
to Group to Total Total
2016 Sunrise Resources 2016 2015
GBP 2016 GBP GBP
GBP
---------------------- ---------- ------------------ ------- -------
Wages and salaries 214,286 145,298 359,584 329,801
Social security
costs 19,336 17,050 36,386 34,757
Share based payments 25,785 - 25,785 58,730
---------------------- ---------- ------------------ ------- -------
259,407 162,348 421,755 423,288
---------------------- ---------- ------------------ ------- -------
The average monthly number of employees, 2016 2015
including directors, employed by Number Number
the Group and Company during the year
was as follows:
----------------------------------------- ------- -------
Technical employees 3 3
Administration employees (including
Non-Executive Directors) 6 5
----------------------------------------- ------- -------
9 8
----------------------------------------- ------- -------
An increase in the number of administration employees for 2016
is due to inclusion of the part-time company secretary onto the
payroll, which was not included in prior years.
6. Loss per share
Loss per share has been calculated using the loss
for the year attributable to equity holders of
the parent and the weighted average number of
shares in issue during the year.
2016 2015
---------------------------------- ----------- -----------
Loss (GBP) (473,506) (674,991)
Weighted average shares in issue
(No.) 233,830,700 181,090,346
Basic and diluted loss per share
(pence) (0.20) (0.37)
---------------------------------- ----------- -----------
The loss attributable to ordinary shareholders and weighted
average number of ordinary shares for the purpose of calculating
the diluted earnings per ordinary share are identical to those used
for the basic earnings per ordinary share. This is because the
exercise of share warrants and options would have the effect of
reducing the loss per ordinary share and is therefore
anti-dilutive.
7. Income tax
No liability to corporation tax arises for the year due to the
Group recording a taxable loss (2015: GBPNil).
The tax credit for the period is lower than the credit resulting
from the loss before tax at the standard rate of corporation tax in
the UK - 20% (2015: 20%). The differences are explained below.
2016 2015
GBP GBP
---------------------------------------- ----------- -----------
Tax reconciliation
Loss before income tax (473,506) (674,991)
---------------------------------------- ----------- -----------
Tax at hybrid rate 20% (2015: 20.5%) (94,701) (138,373)
---------------------------------------- ----------- -----------
Differences between capital allowances
and depreciation (4,218) (549)
Pre-trading expenditure no longer
deductible for tax purposes 125,770 85,476
---------------------------------------- ----------- -----------
Tax effect at 20% (2015: 20.5%) 24,310 17,410
---------------------------------------- ----------- -----------
Unrelieved tax losses carried forward (70,391) (120,963)
---------------------------------------- ----------- -----------
Tax recognised on loss - -
---------------------------------------- ----------- -----------
Total losses carried forward for tax
purposes (5,351,834) (4,999,880)
---------------------------------------- ----------- -----------
Factors that may affect future tax charges
The Group has total losses carried forward of GBP5,351,834
(2015: GBP4,999,880). This amount would be charged to tax, thereby
reducing tax liability, if sufficient profits were made in the
future. The deferred tax asset has not been recognised as the
future recovery is uncertain given the exploration status of the
Group. The carried tax loss is adjusted each year for amounts that
can no longer be carried forward.
8. Intangible assets
Deferred Deferred
exploration exploration
expenditure expenditure
2016 2015
Group GBP GBP
---------------------- ------------ ------------
Cost
At start of year 4,799,087 4,309,680
Additions 473,527 560,250
Exchange adjustments 419,125 (70,843)
---------------------- ------------ ------------
At 30 September 5,691,739 4,799,087
---------------------- ------------ ------------
Impairment losses
At start of year (1,262,478) (1,257,956)
Charge during year - (4,522)
---------------------- ------------ ------------
At 30 September (1,262,478) (1,262,478)
---------------------- ------------ ------------
Carrying amounts
At 30 September 4,429,261 3,536,609
---------------------- ------------ ------------
At start of year 3,536,609 3,051,724
---------------------- ------------ ------------
9. Property, plant & equipment
Group Company Group Company
Fixtures fixtures Fixtures fixtures
and fittings and fittings and fittings and fittings
2016 2016 2015 2015
GBP GBP GBP GBP
--------------------- ------------- ------------- ------------- -------------
Cost
At start of year 53,422 36,046 50,544 33,006
Additions 9,322 9,322 3,040 3,040
Disposals (11,224) (11,224) (162) -
--------------------- ------------- ------------- ------------- -------------
At 30 September 51,520 34,144 53,422 36,046
--------------------- ------------- ------------- ------------- -------------
Depreciation
At start of year (46,126) (29,085) (41,688) (25,202)
Charge for the year (6,833) (6,647) (4,600) (3,883)
Disposals 11,224 11,224 162 -
At 30 September (41,735) (24,508) (46,126) (29,085)
--------------------- ------------- ------------- ------------- -------------
Net Book Value
At 30 September 9,785 9,636 7,296 6,961
--------------------- ------------- ------------- ------------- -------------
At start of year 7,296 6,961 8,856 7,804
--------------------- ------------- ------------- ------------- -------------
10. Investments
Subsidiary undertakings
Country of Type and percentage
incorporation/ of shares held at Principal
Company registration 30 September 2016 activity
------------------ --------------- ----------------------- -------------------
Tertiary Gold England &
Limited Wales 100% of ordinary shares Mineral exploration
Tertiary (Middle England &
East) Limited Wales 100% of ordinary shares Mineral exploration
Tertiary Minerals
US Inc. Nevada, USA 100% of ordinary shares Mineral exploration
Company Company
2016 2015
Investment in subsidiary undertakings GBP GBP
--------------------------------------- --------- ---------
Ordinary shares - Tertiary (Middle
East) Limited 1 1
Ordinary shares - Tertiary Gold
Limited 224,888 224,888
Ordinary shares - Tertiary Minerals
US Inc. 1 1
Loan - Tertiary (Middle East) Limited 683,586 682,301
Less - Provision for impairment (683,372) (682,301)
Loan - Tertiary Gold Limited 5,158,075 5,045,884
Loan - Tertiary Minerals US Inc. 1,450,976 1,120,781
--------------------------------------- --------- ---------
At 30 September 6,834,155 6,391,555
--------------------------------------- --------- ---------
Available for sale investment
Country of Type and percentage
incorporation/ of shares held at Principal
Company registration 30 September 2016 activity
------------------ --------------- ------------------- -------------------
Sunrise Resources 9.13% of ordinary
plc England & Wales shares Mineral exploration
Group Company Group Company
2016 2016 2015 2015
Available for sale investment GBP GBP GBP GBP
-------------------------------- -------- -------- --------- ---------
Value at start of year 148,222 148,222 239,626 239,626
Additions to available
for sale investment 86,273 86,273 21,298 21,298
Movement in valuation of
available for sale investment (30,025) (30,025) (112,702) (112,702)
-------------------------------- -------- -------- --------- ---------
At 30 September 204,470 204,470 148,222 148,222
-------------------------------- -------- -------- --------- ---------
The additions to available for sale investment are shares issued
in lieu of a cash payment for settlement of outstanding invoices
for management fees.
The fair value of the available for sale investment is equal to
the market value of the shares in Sunrise Resources plc at 30
September 2016, based on the closing mid-market price of shares on
the AIM Market.
These are level one inputs for the purpose of the IFRS 13 fair
value hierarchy.
11. Receivables
Group Company Group Company
2016 2016 2015 2015
GBP GBP GBP GBP
------------------- ------- ------- ------ -------
Trade receivables 64,902 64,902 53,906 53,906
Other receivables 22,683 676 15,102 524
Prepayments 17,447 15,799 21,301 20,327
------------------- ------- ------- ------ -------
At 30 September 105,032 81,377 90,309 74,757
------------------- ------- ------- ------ -------
The Group aged analysis of trade receivables is as follows:
Not 30 days Over Total
impaired or less 30 days carrying
amount
GBP GBP GBP GBP
------------------------ --------- -------- -------- ---------
2016 Trade receivables 64,902 64,902 - 64,902
2015 Trade receivables 53,906 53,906 - 53,906
------------------------ --------- -------- -------- ---------
12. Cash and cash equivalents
Group Company Group Company
2016 2016 2015 2015
GBP GBP GBP GBP
-------------------------- ------- ------- ------- -------
Cash at bank and in hand 43,756 16,574 91,227 26,552
Short-term bank deposits 404,718 404,718 218,588 218,588
-------------------------- ------- ------- ------- -------
At 30 September 448,474 421,292 309,815 245,140
-------------------------- ------- ------- ------- -------
13. Trade and other payables
Group Company Group Company
2016 2016 2015 2015
GBP GBP GBP GBP
------------------------ ------ ------- ------- -------
Trade payables 33,471 16,214 32,027 13,042
Other taxes and social
security costs 10,358 10,358 5,684 5,684
Accruals 38,324 16,517 59,866 25,644
Other payables 10,335 10,335 5,203 5,203
------------------------ ------ ------- ------- -------
At 30 September 92,488 53,424 102,780 49,573
------------------------ ------ ------- ------- -------
14. Issued capital and reserves
2016 2016 2015 2015
No. GBP No. GBP
-------------------------- ----------- --------- ----------- ---------
Allotted, called up and
fully paid
Ordinary shares of 1p
each
Balance at start of year 187,859,217 1,878,592 174,302,034 1,743,020
Shares issued in the
year 79,084,996 790,850 13,557,183 135,572
-------------------------- ----------- --------- ----------- ---------
Balance at 30 September 266,944,213 2,669,442 187,859,217 1,878,592
-------------------------- ----------- --------- ----------- ---------
During the year to 30 September 2016 the following share issues
took place:
An issue of 28,888,889 1.0p ordinary shares at 2.25p per share,
by way of placing, for a total consideration of GBP592,412 net of
expenses (6 October 2015).
An issue of 97,170 1.0p ordinary shares at 1.40p per share to a
director, in satisfaction of directors fees, for a total
consideration of GBP1,360 (11 March 2016).
An issue of 50,000,000 1.0p ordinary shares at 1.00p per share,
by way of placing, for a total consideration of GBP450,000 net of
expenses (25 May 2016).
An issue of 98,937 1.0p ordinary shares at 1.375p per share to a
director, in satisfaction of directors fees, for a total
consideration of GBP1,361 (2 August 2016).
During the year to 30 September 2015 a total of 13,557,183 1.0p
ordinary shares were issued, at an average price of 2.654p, for a
total consideration of GBP324,795 net of expenses.
The total amount of transaction fees debited to the Share
Premium account in the year was GBP107,588 (2015: GBP34,745).
Nature and purpose of reserves
Foreign currency reserve
Exchange differences relating to the translation of the net
assets of the Group's foreign operations, which relate to
subsidiaries only, from their functional currency into the Parent's
functional currency, being Sterling, are recognised directly in the
foreign currency reserve.
Share option reserve
The share option reserve is used to recognise the fair value of
share based payments provided to employees, including key
management personnel, by means of share options and share warrants
issued as part of their remuneration. Refer to Note 15 for further
details.
15. Warrants and options granted
Warrants not exercised at 30 September 2016
Exercise Expiry
Issue date price Number Exercisable dates
------------ -------- --------- --------------- ----------
Any time before
26/01/2012 9.75p 2,300,000 expiry 26/01/2017
Any time before
26/01/2012 9.75p 200,000 expiry 26/01/2017
Any time before
10/01/2013 7.63p 1,700,000 expiry 10/01/2018
Any time before
10/01/2013 7.63p 300,000 expiry 10/01/2018
Any time before
14/01/2014 11.25p 1,050,000 expiry 14/01/2019
Any time before
14/01/2014 11.25p 300,000 expiry 14/01/2019
Any time before
01/10/2014 9.00p 600,000 expiry 30/09/2019
Any time from
01/10/2014 12.00p 600,000 01/10/2016 30/09/2019
Any time from
01/10/2014 15.00p 600,000 01/10/2017 30/09/2019
Any time from
01/10/2014 18.00p 600,000 01/10/2018 30/09/2019
Any time from
01/10/2014 21.00p 600,000 01/10/2018 30/09/2019
Any time before
20/02/2015 4.00p 1,200,000 expiry 20/02/2020
Any time before
20/02/2015 4.00p 500,000 expiry 20/02/2020
Any time from
11/03/2016 1.40p 200,000 11/03/2017 11/03/2021
Any time from
11/03/2016 1.40p 800,000 11/03/2017 11/03/2021
------------ -------- --------- --------------- ----------
Warrants and options are issued for nil consideration and are
exercisable as disclosed above. They are exchangeable on a one for
one basis for each ordinary share of 1.0p at the exercise price on
the date of conversion.
Share based payments
The Company has an Inland Revenue approved share option scheme
for all employees. Options are exercisable at a price equal to the
market price of the Company's shares on the date of grant. The
vesting period is three years. If the options remain unexercised
after a period of ten years from the date of grant the options
expire. Options may be forfeited if the employee leaves the
Company.
In addition, the Company issues warrants to directors and
employees, outside of the approved scheme, on varying terms and
conditions.
Details of the share warrants outstanding during
the year are as follows:
2016 2015
Number
Weighted of Weighted
Number average share average
of exercise warrants exercise
share price and share price
warrants Pence options Pence
----------------------------- ----------- --------- ----------- ---------
Outstanding at start of
year 15,050,000 9.259 13,700,000 7.422
Granted during the year 1,000,000 1.400 4,700,000 11.02
Exercised during the year - - (200,000) 2.375
Forfeited during the year - - - -
Expired during the year (4,500,000) 7.272 (3,150,000) 4.337
----------------------------- ----------- --------- ----------- ---------
Outstanding at 30 September 11,550,000 9.353 15,050,000 9.259
----------------------------- ----------- --------- ----------- ---------
Exercisable at 30 September 8,150,000 8.224 10,350,000 8.459
The warrants outstanding at 30 September 2016 had a weighted
average exercise price of GBP0.08 (2015: GBP0.09), a weighted
average fair value of GBP0.03 (2015: GBP0.03) and a weighted
average remaining contractual life of 2.22 years.
There were no warrants exercised in the year ended 30 September
2016. Warrants exercised in the year ended 30 September 2015 had a
weighted average exercise price of GBP0.02.
In the year ended 30 September 2016, warrants were granted on 11
March 2016. The aggregate of the estimated fair values of the
warrants granted on this date is GBP4,603. In the year ended 30
September 2015, warrants were granted on 1 October 2014 and 20
February 2015. The aggregate of the estimated fair values of the
warrants granted on these dates is GBP76,354.
No share options were outstanding at 30 September 2016.
No share options were granted in the year ended 30 September
2016 or the year ended 30 September 2015.
The inputs into the Black-Scholes-Merton Pricing Model were as
follows:
2016 2015
--------------------------------- ------- -------
Weighted average share price 1.40p 5.43p
Weighted average exercise price 1.40p 11.02p
Expected volatility 75% 80%
Expected life 4 years 4 years
Risk-free rate 0.80% 1.75%
Expected dividend yield 0% 0%
--------------------------------- ------- -------
Expected volatility was determined by calculating the historical
volatility of the Company's share price over the previous four
years. The expected life used in the model has been adjusted based
on management's best estimate for the effects of
non-transferability, exercise restrictions and behavioural
considerations.
The Company recognised total expenses of GBP25,785 and GBP63,278
related to equity-settled share based payment transactions in 2016
and 2015 respectively.
16. Operating lease commitments
The Company rents office premises under an operating lease
agreement. The current lease term is for one year expiring on 30
November 2016. No contingent rent is payable. The lease is eligible
for renewal on expiry.
Future minimum lease payments under non-cancellable operating
leases are:
2016 2015
Land & Land & buildings
buildings GBP
GBP
----------------------- ---------- -----------------
Office accommodation:
Within one year 3,299 3,234
----------------------- ---------- -----------------
The Company does not sub-lease any of its leased premises.
Lease payments recognised in loss for the period amounted to
GBP19,727 (2015: GBP19,290).
17. Related party transactions
Key management personnel
The Directors holding office in the period and their warrants
held in the share capital of the Company are:
At 30 September 2016 At 30 September 2015
Warrants
-------------------------------
Shares Exercise Expiry Shares Warrants
number Number price date number number
----------------- ---------- --------- -------- ---------- ----------- ---------
P L Cheetham* 11,876,913 1,500,000 9.750p 26/01/2017 11,876,913 5,000,000
500,000 7.630p 10/01/2018
500,000 11.250p 14/01/2019
1,000,000 4.000p 20/02/2020
D A R McAlister 453,894 300,000 9.750p 26/01/2017 257,787 600,000
D Whitehead 414,900 300,000 9.750p 26/01/2017 414,900 600,000
R H Clemmey 504,037 1,000,000 7.630p 10/01/2018 6,333 5,350,000
350,000 11.250p 14/01/2019
600,000 9.000p 30/09/2019
600,000 12.000p 30/09/2019
600,000 15.000p 30/09/2019
600,000 18.000p 30/09/2019
600,000 21.000p 30/09/2019
* Includes 2,843,625 shares held by K E Cheetham, wife of P L
Cheetham.
The Directors have no beneficial interests in the shares of the
Company's subsidiary undertakings as at 30 September 2016. The
Directors of the Company are the Directors of all Group
companies.
Details of the Parent Company's investment in subsidiary
undertakings are shown in Note 10.
Sunrise Resources plc
During the year the Company charged costs of GBP190,124 (2015:
GBP181,598) to Sunrise Resources plc being shared overheads of
GBP23,488 (2015: GBP22,809), costs paid on behalf of Sunrise
Resources plc of GBP4,288 (2015: GBP6,312), staff salary costs of
GBP61,866 (2015: GBP55,454) and directors' salary costs of
GBP100,482 (2015: GBP97,023), comprising P L Cheetham GBP99,775
(2015: GBP96,972) and R H Clemmey GBP707 (2015: GBP51). The salary
costs in Notes 4 and 5 include these charges.
At the balance sheet date an amount of GBP64,724 (2015:
GBP53,888) was due from Sunrise Resources plc.
P L Cheetham, a director of Tertiary Minerals plc, is also a
director of Sunrise Resources plc.
Shares and warrants held in Sunrise Resources plc by the
Tertiary Minerals plc Directors are as follows:
At 30 September 2016 At 30 September 2015
Warrants
-------------------------------
Shares Exercise Expiry Shares Warrants
number Number price date number number
----------------- ---------- --------- -------- ---------- ---------- ----------
P L Cheetham* 75,776,599 2,000,000 1.250p 24/02/2017 22,725,951 13,222,222
2,000,000 0.850p 19/03/2018
2,000,000 0.550p 14/01/2019
3,000,000 0.275p 05/02/2020
D A R McAlister 550,000 - - - 550,000 -
D Whitehead 250,000 - - - 250,000 -
R H Clemmey - 500,000 1.250p 24/02/2017 - 2,250,000
500,000 0.850p 19/03/2018
500,000 0.550p 14/01/2019
750,000 0.275p 05/02/2020
500,000 0.160p 18/02/2021
* Includes 5,500,000 shares held by K E Cheetham, wife of P L
Cheetham.
18. Capital management
The Group's capital requirements are dictated by its project and
overhead funding requirements from time to time. Capital
requirements are reviewed by the Board on a regular basis.
The Group manages its capital to ensure that entities within the
Group will be able to continue as going concerns, to increase the
value of the assets of the business and to provide an adequate
return to shareholders in the future when exploration assets are
taken into production.
The Group manages the capital structure and makes adjustments to
it in the light of changes in economic conditions and the risk
characteristics of its assets. In order to maintain or adjust the
capital structure the possibilities open to the Group in future
include issuing new shares, consolidating shares, returning capital
to shareholders, taking on debt, selling assets and adjusting the
amount of dividends paid to the shareholders.
19. Financial instruments
At 30 September 2016, the Group's and Company's financial assets
consisted of available for sale investments, trade receivables and
cash and cash equivalents. At the same date, the Group and Company
had no financial liabilities other than trade and other payables
due within one year and had no agreed borrowing facilities as at
this date. There is no material difference between the carrying and
fair values of the Group and Company's financial assets and
liabilities.
The carrying amounts for each category of financial instruments
held at 30 September 2016, as defined in IAS 39, are as
follows:
Group Company Group Company
2016 2016 2015 2015
GBP GBP GBP GBP
-------------------------------- ------- ------- ------- -------
Loans & receivables 536,846 487,652 379,845 300,510
Available for sale investments 204,470 204,470 148,222 148,222
Financial liabilities
at amortised cost 81,449 42,385 96,416 43,209
-------------------------------- ------- ------- ------- -------
Risk management
The principal risks faced by the Group and Company resulting
from financial instruments are liquidity risk, foreign currency
risk and, to a lesser extent, interest rate risk and credit risk.
The Directors review and agree policies for managing each of these
risks as summarised below. The policies have remained unchanged
from previous periods as these risks remain unchanged.
Liquidity risk
The Group holds cash balances in Sterling, US Dollars, Swedish
Kronor, Euros and Saudi Riyals to provide funding for exploration
and evaluation activity, whilst the Company holds cash balances in
Sterling, US Dollars and Euros. The Group and Company are dependent
on equity fundraising through private placings which the Directors
regard as the most cost-effective method of fundraising. The
Directors monitor cash flow in the context of their expectations
for the business to ensure sufficient liquidity is available to
meet foreseeable needs.
Currency risk
The Group's financial risk management objective is broadly to
seek to make neither profit nor loss from exposure to currency
risk. The Group is exposed to transactional foreign exchange risk
and takes profits and losses as they arise as, in the opinion of
the Directors, the cost of hedging against fluctuations would be
greater than the related benefit from doing so.
Bank and cash balances were held in the following
denominations:
Group Company
2016 2015 2016 2015
GBP GBP GBP GBP
------------------------- ------- ------- ------- -------
United Kingdom Sterling 415,860 225,795 409,535 221,972
United States Dollar 19,240 71,543 11,641 23,140
Swedish Krona 553 2,373 - -
European Euro 12,777 9,200 116 28
Canadian Dollar - 866 - -
Saudi Riyal 44 38 - -
448,474 309,815 421,292 245,140
------------------------- ------- ------- ------- -------
Surplus Sterling funds are placed with NatWest bank on
short-term treasury deposits at variable rates of interest.
The Company and the Group are exposed to changes in the US
Dollar/UK Sterling exchange rate mainly in the Sterling value of US
Dollar denominated financial assets.
Sensitivity analysis shows that the Sterling value of its US
Dollar denominated financial assets at
30 September 2016 would increase or decrease by GBP962 for each
5% increase or decrease in the value of Sterling against the
Dollar.
Neither the Company nor the Group is exposed to material
transactional currency risk.
Interest rate risk
The Group and Company finance their operations through equity
fundraising and therefore do not carry borrowings.
Fluctuating interest rates have the potential to affect the loss
and equity of the Group and the Company insofar as they affect the
interest paid on financial instruments held for the benefit of the
Group. The Directors do not consider the effects to be material to
the reported loss or equity of the Group or the Company presented
in the financial statements.
Credit risk
The Company has exposure to credit risk through receivables such
as VAT refunds, invoices issued to related parties and its joint
arrangements for management charges. The amounts outstanding from
time to time are not material other than for VAT refunds which are
considered by the Directors to be low risk.
The Company has exposure to credit risk in respect of its cash
deposits with NatWest bank and this exposure is considered by the
Directors to be low.
20. Event after the Balance Sheet date
Kaaresselkä and Kiekerömaa Gold Projects, Finland
On 5 December 2016 the Company announced the sale of the two
legacy gold assets in Finland to TSX-V listed Aurion Resources Ltd.
GBP100,000 initial consideration to be paid by Aurion: GBP15,000 in
cash and GBP85,000 in Aurion shares. The Company will retain a
royalty interest in the projects. The sale is conditional upon
successful transfer of the Exploration Licences for each project
from Tertiary to Aurion and exchange approval by the TSX-V. For
further detail please refer to the Non-Core Projects section of the
Operating Review
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BLBDDDXBBGLD
(END) Dow Jones Newswires
December 13, 2016 02:00 ET (07:00 GMT)
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