TIDMTYM
RNS Number : 2807Z
Tertiary Minerals PLC
13 December 2017
13 December 2017
Tertiary Minerals plc ("Tertiary" or "the Company")
Audited Results for the year to 30 September 2017
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 2017.
Highlights for 2017:
-- Engaged in discussions and technical due diligence for
shortlisted potential fluorspar project acquisitions capable of
generating revenue and profits in the near-term with discussions
being reasonably advanced on one particular project
-- Storuman Project, Sweden: Exploitation (Mine) Permit
re-assessment process by the Swedish Mining Inspectorate is
progressing
-- MB Project, Nevada:
-- Scoping Study level bench scale metallurgical testwork
progressing at SGS Lakefield in Canada with the aim of producing
commercial grade acid-spar and mica
-- Received the Bureau of Land Management's (BLM) 2017 Hardrock
Small Operator Award (National award) for outstanding and
innovative reclamation and sustainable mineral development work on
the project
-- Lassedalen Project, Norway: Environmental, technical and
legal due diligence is progressing for the planned purchase of land
and mine workings associated with the Company's fluorspar Mineral
Resource from global aluminium company, Hydro
-- Completed the sale of the two legacy gold assets, Kaaresselkä
and Kiekerömaa, in Finland to TSX-V listed Aurion Resources Ltd for
an initial consideration and retained royalty interest. Shares
issued to Tertiary as part consideration (GBP85,000) for the sale
of the gold assets were sold in November 2017 resulting in net
proceeds of GBP116,264 and a GBP31,264 profit
-- Signed a Memorandum of Understanding (MOU) with leading
global commodities trading group, Possehl Erzkontor GmbH & Co.
KG (wholly owned subsidiary of CREMER). The MOU provides for
Possehl and Tertiary's intention to enter into a definitive
purchase and sales agreement (Offtake Agreement) and associated
partial pre-financing to Tertiary for the development of its
fluorspar projects
-- Recent investor interest in the Company resulted in a
successful placing on 6 December 2017, which raised GBP500,000
before expenses.
Commenting today, Managing Director, Richard Clemmey said:
"Whilst the Storuman Mine Permit re-assessment process continues to
progress slowly, we are really pleased with some notable
developments in the Company this year".
"The sale of our two non-core gold projects to Aurion Resources
Ltd, part owned by Kinross Gold Corporation, has not only provided
the Company with funds from the initial consideration but also
potential future cash-flow through a retained royalty interest in
the projects."
"The signing of a MOU with leading global trading group Possehl
represents a critical building block for the company. This
strategic relationship not only provides us with the opportunity,
and competitive advantage, to secure long-term sales contracts but
also access to pre-financing once the definitive Offtake Agreement
is signed as we move closer to mine development and
production."
"Discussions and due diligence for shortlisted potential
fluorspar project acquisitions capable of generating revenue and
profits in the near-term are progressing and we look forward to
providing further news in due course."
"It is also pleasing to see the fluorspar market and prices
improve during the latter part of 2017 and we look forward to this
trend continuing which will further support our quest to become a
leading supplier of fluorspar."
"I would also like to take this opportunity to sincerely thank
all Tertiary shareholders for their continued support and look
forward to a productive year ahead."
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).
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.
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 2017.
We have continued to advance our three main fluorspar projects
during the year, albeit at a slower pace than in previous years.
Partly this reflects the status of our lead fluorspar project at
Storuman in Sweden, which is experiencing delays in permitting and
partly it reflects a not-unrelated decline in our share price which
has limited our appetite for dilutive fundraising and constrained
our expenditure.
I am pleased, however, to see a significant increase in investor
interest and a sharp increase in our share price and trading
liquidity in recent weeks.
The Swedish Mining Inspectorate's re-assessment of our Storuman
Fluorspar Project Exploitation (Mine) Permit has continued
throughout the year at a frustratingly slow pace and with
constantly changing goal posts. Our fellow mine developers are
having the same experience and we will not be investing further
funds in the project until the situation is favourably resolved.
The project retains the support of key stakeholders with the
exception of the Sami reindeer herding community.
At our MB Project in Nevada, scoping study level metallurgical
testwork is in progress for our 86 million tonnes JORC compliant
Mineral Resource with the aim of producing acid grade fluorspar and
also by-product mica, whilst at our Lassedalen Project in Norway we
have continued the environmental and legal due diligence associated
with the acquisition of land from Norwegian aluminium producer
Hydro which will help secure our mineral rights in the longer
term.
Whilst we have seen falling fluorspar prices over the past 6
years I am pleased to report that there has been a significant
upturn in the benchmark (FOB China) price of fluorspar also in
2017. The price of fluorspar appears to be returning to its
long-term upward trend and demand is now forecast to grow over the
next few years. Whilst there has been a shakeout in the fluorspar
industry with a number of mines closed, new mines that were on the
drawing board for some years are now progressing after finding
financial and offtake support.
This is also our own experience, having just recently announced
the signing of a Memorandum of Understanding with leading global
commodities trading group, Possehl Erzkontor GmbH & Co. KG.
This paves the way for a definitive offtake agreement, subject to
further negotiation and agreement of commercial terms, and partial
pre-financing of project working capital needs and/or capital
investment and is a critical building block in our quest to
becoming a leading supplier of fluorspar to the global markets.
Given the delays being experienced at Storuman, in January this
year we announced that we would be looking at acquisition
opportunities for the Company targeting an earlier cash flow than
is foreseen for our existing projects, whilst maintaining fluorspar
as our principal target. Genuine opportunities are hard to find but
we have evaluated a number during the year, shortlisted a few, and
one is now at a reasonably advanced stage of evaluation. The
arrangement with Possehl will strengthen our hand in considering
such opportunities.
A notable achievement in the year has been the sale of our two
legacy gold projects in Finland to TSX-V listed Aurion Resources
Ltd for cash and a share consideration, which we have now sold at a
profit post year end. We also retain the right to advance royalty
payments when mineral resources are defined and an ongoing
production royalty. The value of our residual interest was boosted
by the recent discovery by Aurion at their Risti Project, in the
same district, of boulders containing free gold and spectacular
gold grades.
I would like to pay tribute to our small management team whose
professionalism was recognised when the Company received the 2017
US Bureau of Land Management's Hardrock Small Operator Award for
outstanding and innovative reclamation of its exploration activity
on the MB Project. This is quite an achievement for a relative
newcomer to the US. I would also like to record the Board's great
sadness in the passing in November 2017 of David Whitehead who, for
15 years as a non-executive director, made a great contribution to
the Company.
As we head into 2018, with rekindled investor interest in the
Company, we have a number of irons in the fire and so look forward
to reporting further progress and encourage shareholders to attend
our next Annual General Meeting to be held on Wednesday 31 January
2018 at 2.30 p.m.
Patrick Cheetham
Executive Chairman
13 December 2017
Strategic Report
Group Overview
Company's Aims
-- To become a reliable long-term and competitive supplier of
high quality fluorspar to world markets.
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.
-- To be revenue generating in the near term.
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
For exploration projects, 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. For acquisition targets with the potential
to generate revenue in the near-term, the Group is considering a
range of terms on a case-by-case basis.
The Group currently operates with a low-cost base to maximise
the funds that can be spent on exploration and development - value
adding activities. The Company has five full time employees
including the Managing Director who work with and oversee carefully
selected and experienced consultants and contractors. During the
year the Board of Directors comprised 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 significant shareholder (as
defined under the AIM Rules) of Sunrise Resources plc, holding
6.88%.
The Company's activities are financed by periodic capital
raisings, through private share placements. Access to capital
through this method continues to be challenging and this is a
limiting factor to the speed at which the Company can progress the
development of its projects. When projects become more advanced, or
as acquisition opportunities advance, the Board will seek to secure
additional funding from a range of various sources, for example
debt funding, pre-financing through off-take agreements and joint
venture partnerships.
Operating Review & Performance
Fluorspar Projects
Storuman Fluorspar Project, Sweden
2017 Highlights
-- Exploitation (Mine) Permit re-assessment process by the
Swedish Mining Inspectorate is progressing
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 25-year Exploitation (Mine)
Permit was granted on 18 February 2016.
However, as a consequence of the Supreme Court's decision to
overturn the grant of a third-party mining company's Mine Permit in
the south of Sweden (Norra Karr Mine Permit - rare earth element
project, owned by Leading Edge Minerals) the government returned
the Storuman Mine Permit case, along with many other cases, back to
the Swedish Mining Inspectorate for re-assessment in December 2016.
The re-assessment is intended to consider the impact of mining in
the concession area on a wider surrounding area. Earlier this year
the Swedish Mining Inspectorate requested additional information
from the Company relating to the original Environmental Impact
Assessment (EIA) and the wider area. The Company provided the
additional information to the Swedish Mining Inspectorate in the
form of an updated EIA in May 2017. The additional information was
accepted by the Mining Inspectorate which subsequently invited all
stakeholders to provide comments on the application and additional
information, with the deadline for responses being 27 October
2017.
In response to stakeholder responses the Swedish Mining
Inspectorate has now requested further detail from the Company in
relation to the impact of proposed operations on the wider
surrounding area. Given that the level of detail now required for
the wider area has changed in response to the new case law, the
Company continues its dialogue with the key stakeholders, Swedish
legal advisors and the Mining Inspectorate to establish the exact
requirements prior to the work being completed and submitted. The
Company has been granted an extension by the Mining Inspectorate
until 16 April 2018 to enable completion of its dialogue and
preparation of data thoroughly and to a high standard.
Whilst the process is slow and frustrating, the Company
continues to co-operate with the Mining Inspectorate and believes
that the Mine Permit application and EIA are of a very high
standard. The Company also continues to have the support from the
majority of key stakeholders at Storuman, with the notable
exception of the Sami reindeer herding community, and remains
hopeful of a positive resolution to this in 2018. It is however
worth noting that the Company has no influence on the speed at
which the re-assessment of the grant of the mining permit is being
processed by the Authorities.
Any ratification of the grant of the mining concession will,
however, be open to appeal and the Company will therefore not spend
any further money on exploration or development of the Storuman
Fluorspar Project until the matter is resolved.
MB Fluorspar Project, Nevada, USA
2017 Highlights
-- Scoping Study level bench scale metallurgical testwork
progressing at SGS Lakefield in Canada with the aim of producing
commercial grade acid-spar and mica
-- Received the Bureau of Land Management's (BLM) 2017 Hardrock
Small Operator Award for outstanding and innovative reclamation and
sustainable mineral development work on the project
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
---------------- --------------- ------------------
Metallurgical Testwork
Bench scale metallurgical testwork is progressing at SGS
Lakefield to ascertain if commercial grade acid-spar and mica can
be produced from the ore. This is the first critical step in the
preparation of a Scoping Study for the project. The results of the
testwork will determine the next steps in the development of the MB
Fluorspar Project. The ore presents some metallurgical challenges
and the Company has therefore engaged the services of one of the
world's leading fluorspar metallurgists to assist with the
testwork.
Following successful completion of the metallurgical testwork,
the Company will progress with modelling various production
scenarios and optimisation of the transport method/cost from mine
to USA market and port. These work programmes should enable the
Company to work towards completion of a Scoping Study for the
project in 2018. Further work required for the completion of the
Scoping Study may include an additional phase of drilling to target
higher grade mineralisation, in line with the recommendations
received from the appraisal of the MB deposit from world renowned
economic geologist, Dr Richard Sillitoe.
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 for the European market alongside its Storuman
Project.
JORC Compliant Mineral Resource
Classification Million Tonnes Fluorspar (CaF(2)
(Mt) %)
---------------- --------------- ------------------
Inferred 4.0 24.60
---------------- --------------- ------------------
Given the commitments on its other fluorspar projects and
acquisition targets, and in the absence of expenditure obligations,
further exploration at the Lassedalen Project has been a lower
priority in 2016/2017.
In 2016 the Company entered into a Heads of Terms with the
global aluminium company, Hydro, to acquire the land and historic
mine workings for the project (purchase price of 1 Norwegian
Krone), subject to successful due diligence. The seasonal
environmental testwork required as part of the due diligence has
recently been completed by Niva and data review is underway.
Following satisfactory data review the Company is planning to
progress with the technical and legal due diligence prior to taking
ownership of the Hydro land position, expected completion in the
first half of 2018.
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.
Fluorspar Acquisition Opportunities
In January this year the Company updated the market on its
business strategy and, whilst the Company remains committed to its
fluorspar business and the development of its fluorspar assets, it
has, since then, been reviewing complementary project acquisition
opportunities capable of generating revenue and profits in a
shorter timescale. Finding quality projects is not an easy task,
but following the shortlisting of a number of projects for further
evaluation the Company is engaged in discussions and technical due
diligence with the owners of such fluorspar projects, with
discussions being reasonably advanced on one particular project.
There is, however, no guarantee that any deal will be successfully
executed at this point.
Strategic Relationship with Possehl Erzkontor GmbH & Co. KG
(Post Year End)
The Company has signed a Memorandum of Understanding ("MOU")
with leading global commodities trading group, Possehl Erzkontor
GmbH & Co. KG ("Possehl"), a wholly owned subsidiary of CREMER,
a global specialist for the trade, processing and transport of
agricultural, raw, basic materials and oleochemical products,
including fluorspar.
Highlights and Key Terms:
-- Possehl and Tertiary intend to enter into a definitive
purchase and sales agreement ("Offtake Agreement") under which
Tertiary will agree to sell to Possehl and Possehl will commit to
purchase a minimum of 70% of commercial grade acid-spar to be
produced at Tertiary's three fluorspar projects
-- As a condition of the Offtake Agreement Possehl will provide
part of the pre-financing to Tertiary, where funds will be advanced
by Possehl to Tertiary to assist the Company in meeting its working
capital needs and/or its capital investment needs for the
development of its fluorspar projects
-- The MOU provides for Possehl and Tertiary to enter into an
Offtake Agreement, and pre-financing to be provided by Possehl to
Tertiary, for any of the near-term revenue generating fluorspar
acquisition targets where the Company is currently carrying out
evaluation, due diligence and discussions
-- Possehl will provide invaluable commercial and logistical
support and advice to Tertiary during the development of its
fluorspar projects as the Company works towards its production
goals and the ultimate signing of the Offtake Agreement
-- Possehl, founded in 1915 with headquarters in Lübeck,
Germany, is owned by CREMER: Founded in 1946; headquarters in
Hamburg; circa 70 branch offices and holdings worldwide; circa 1800
employees; annual revenue of >3 billion Euro; sales volume of
>10.4 million tonnes in 2016
-- The MOU will be effective from the date of execution to a
date which is one year from the commencement of first commercial
production at any of the Company's three fluorspar projects or the
date of execution by both parties of an Offtake Agreement,
whichever shall be the earlier
Non-Core Projects
Kaaresselkä and Kiekerömaa Gold Projects, Finland
In March 2017, the Company successfully completed the sale of
two legacy gold assets, Kaaresselkä and Kiekerömaa in Finland, to
TSX-V listed Aurion Resources Ltd. The Company was paid GBP100,000
initial consideration for the projects, GBP15,000 in cash and
GBP85,000 in Aurion Shares. The Company also retains a
pre-production and production royalty interest in the projects,
therefore providing the opportunity for potential income in the
future.
Aurion has recently announced the discovery of a new bonanza
gold zone, called Aurora, at its 100% owned Risti project. The
Kaaresselkä project is located in the same regional deformation
zone, to the south of Risti, where 133 rock grab samples collected
from predominantly large and angular sub-cropping quartz-tourmaline
blocks assayed from nil to 1,563.5 g/t Au, including 36 samples
which assayed greater than 31 g/t Au (1 ounce per tonne). The
average grade of all 133 samples is 74.3 g/t Au. In September this
year Kinross Gold Corporation completed a private placement with
Aurion resulting in Kinross owning 9.98% of the issued and
outstanding share capital of Aurion.
These developments have resulted in an increase in the value of
the Aurion Shares held by Tertiary. The Company has therefore
capitalised on this increase and the shares were sold in November
2017, resulting in a profit of GBP31,264 on the sale.
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 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. As detailed in the project review,
the Company has received a prestigious award for its innovative
reclamation and sustainable mineral development work on its MB
project in Nevada, USA.
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 35-40% 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 60-65% 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:
o Fluorocarbons, e.g. refrigerant gases, propellants, etc.
o Electrical and electronic appliances
o Metallurgical industry (extraction, manufacture and
processing)
o Lithium batteries
o Pharmaceuticals, polymers and agrochemicals
o Petrochemical catalysts
Fluorspar - Production, Consumption and Price Trend
The current global production of fluorspar is approximately
5.7-6.0 million tonnes per year:
-- Major producing regions: China (>50% of the world's
production); Mexico; Mongolia/CIS; S Africa
-- Major Consuming regions (highest to lowest): China; North America; Europe; Mexico; Russia
-- The global supply and demand for fluorspar grew over the decade 1998 to 2008
-- Since the global financial crisis in 2009 there has been
contraction in acid-spar demand driven by a combination of
environmental legislation and demand - fluorspar price has followed
this downward trend
-- In 2017 prices for acid-spar have started to recover in
China, export price for acid-spar (FOB China) is a traditional
benchmark price and is currently published as US$400-420/tonne
(Industrial Minerals Magazine)
-- The price increases are believed to be driven by two key factors:
o Increase in production of downstream value-added fluorspar
products;
o As China moves its focus to environmental protection they have
implemented strict environmental policies and permitting
requirements resulting in a number of fluorspar mines closing -
Chinese fluorspar production down 13% year on year in 2017
-- The equivalent price delivered into Europe (CIF Rotterdam),
published as US$300-340/tonne, has now started to recover following
the FOB China price recovery
-- Overall long-term upward trend in price
The current fluorspar price does not impact the Company's
long-term strategy as it is not yet in production and the positive
macroeconomic drivers for future price increases remain essentially
unchanged.
Fluorspar - Outlook and Strategic Opportunity
-- Industry view (producers, end users, analysts) is that demand
for acid-spar will increase by 4-5% per year over the next 5 years
and prices are forecast to increase in the medium to long-term, the
key drivers being:
o No large scale commercial alternative or recycling
o Refrigeration - new generation of zero ozone depleting
potential (ODP) and very low global warming potential (GWP)
refrigerants, hydrofluoroolefins (HFO's)
o Driven by environmental legislation, most recently the Kigali
Amendment, where over 170 nations agreed to phase down low ODP,
high GWP Hydrofluorocarbons (HFCs).
o Energy reduction in the steel and aluminium industry
o Emerging uses - fluoropolymers in lithium batteries for
example
o Chinese supply-demand dynamics
o CAGR* growth forecast in key fluorspar consuming market
segments for next 4 years - Steel: >5%; Aluminium: >3.5%;
Fluorinated refrigerants: >4%; Li-ion batteries: >10%
-- China Produces >50% world's fluorspar
-- China fluorspar exports continue to decline with acid-spar
exports decreasing >50% since 2011, 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
-- China listed fluorspar as a strategic mineral in 2017
-- Imbalance between production and consumption in China causing
supply gap - to be filled by new fluorspar producers outside
China
Based on macroeconomic drivers the Company continues to be
strategically placed to capitalise on the supply gap in the future
by developing its 100% owned large fluorspar assets, containing
fluorspar resources of 13.1 million tonnes, located in the key
markets of 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, IHS, UN Comtrade, industry
sources and CRU. CAGR - Compound annual growth rate.
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 GBP395,532 for the year (2016:
GBP473,506) after administration costs of GBP550,229 (2016:
GBP558,857) and after crediting interest receivable of GBP277
(2016: GBP1,712). The loss includes expensed pre-licence and
reconnaissance exploration costs of GBP30,617 (2016: GBP25,343) and
impairment of available for sale investment (the Company's share in
Sunrise Resources plc) of GBP55,987 (2016: GBP81,142).
Administration costs include GBP11,396 (2016: GBP25,785) as
non-cash costs for the value of certain share warrants held by
employees as required by IFRS 2.
Revenue includes GBP204,110 (2016: GBP190,124) from the
provision of management, administration and office services
provided to Sunrise Resources plc, to the benefit of both companies
through efficient utilisation of services, and GBP36,914 arising
from a compensation payment from American Assay Laboratories for
part sample loss.
The financial statements show that, at 30 September 2017, the
Group had net current assets of GBP177,723 (2016: GBP461,018). 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 GBP4,508,015
(2016: GBP4,429,261) 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 impairment reviews have been undertaken
by the Directors 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 five 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 2017, it was decided that the decline in fair value was
likely to be deemed significant under the requirements of IAS 39;
therefore an amount of GBP55,987 was impaired and charged 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 2017, has been
recognised in the Available for Sale Investment Reserve in equity
(see Note 1(f) and Note 10 in the Notes to the Financial
Statements).
An additional Available for Sale Investment was acquired in the
period by way of shares in Aurion Resources Limited, as
consideration for the sale of Finnish exploration licences. The
increase in fair value, due to an increase in the share price of
Aurion Resources Limited shares, has been recognised in the
Available for Sale Investment Reserve in equity at year end.
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 2017 financial year the Company raised a total of
GBP300,000, before expenses, as shown in Note 14 of the Financial
Statements.
The Directors prepare annual budgets and cash flow projections
that extend beyond 12 months from the date of this report. Given
the Group's cash position at year end (GBP159,278), 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.
Following the financial year end, the Company has successfully
raised GBP500,000 before expenses on 6 December 2017.
Impairment
A bi-annual review is carried out by the Directors to whether
there are any indications of impairment. The bi-annual impairment
indication reviews were conducted in March 2017 and October 2017
and the directors do not consider that there are any indications of
impairment in the intangible assets.
Capital Restructure
At a General Meeting on 13 April 2017 the shareholders approved
the subdivision of the Company's ordinary share capital whereby
each existing Ordinary Share with a nominal value of 1p was
subdivided into 1 new Ordinary Share of 0.01p and 1 Deferred Share
of 0.99p each. The Deferred Shares have no significant rights
attached to them and carry no right to vote or to participate in
distribution of surplus assets and are not admitted to trading on
the AIM market of the London Stock Exchange plc. The Deferred
Shares effectively carry no value.
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 many
The Group's business is years of combined mining
mineral exploration and and exploration experience
evaluation which are speculative and an established track
activities. There is no record in mineral discovery.
certainty that the Group The Company currently targets
will be successful in advanced and drill ready
the definition of economic exploration projects in
mineral deposits, or that order to avoid higher risk
it will proceed to the grass roots exploration.
development of any of
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
projections and metal/mineral forecasts and impose rigorous
assumptions. practices in the QA/QC
programmes that support
its independent estimates.
---------------------------------- ------------------------------------
Development Risk
Delays in permitting, In order to reduce development
or changes in permit legislation risk in future, the directors
and/or regulation, financing will ensure that its permit
and commissioning a project application processes and
may result in delays to financing applications
the Group meeting production are robust and thorough.
targets or even the Company
ultimately not receiving
the required permits and
in extreme cases loss
of title.
---------------------------------- ------------------------------------
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
All countries carry political The Company's strategy
risk that can lead to currently restricts its
interruption of activity. activities to stable, democratic
Politically stable countries and mining friendly jurisdictions.
can have enhanced environmental
and social permitting The Company has adopted
risks, risks of strikes a strong Anti-corruption
and changes to taxation, Policy and Code of Conduct
whereas less developed and this is strictly enforced.
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 Company currently maintains
no past evidence of this, control of certain key
the Group can be adversely projects so that it can
affected if joint venture control the pace of exploration
partners are unable or and reduce partner risk.
unwilling to perform their
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, Nevertheless further equity
but until that point is issues will be required
reached the Company is over the next 12 months.
reliant on raising working
capital from equity markets
or from industry sources.
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.
--------------------------------- -----------------------------------------
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
13 December 2017 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.
During the year the Board of Directors comprised 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.
Non-Executive Director, Donald McAlister, has 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 he
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 during that
time and he continues to provide valuable advice based on his long
experience of the mining industry.
Due to the untimely death of Non-Executive Director, David
Whitehead, in November 2017, the Company will seek to appoint a
suitable replacement in due course.
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 Donald McAlister is not considered to be
independent under the terms of the Code, he is 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 his 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
During the year, 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
During the year, the Remuneration Committee also comprised 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 15.
The Board is aware that Donald McAlister is not considered to be
independent under the terms of the Code if he holds warrants to buy
shares in the Company and so he no longer participates in the issue
of warrants.
Nomination Committee
During the year the Nomination Committee comprised 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 2017, Tertiary Minerals plc held 7.56% 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.
The Company received the Bureau of Land Management's (BLM) 2017
Hardrock Small Operator Award (National award) for outstanding and
innovative reclamation and sustainable mineral development work on
the MB Project.
Employees
The Group encourages its employees to understand all aspects of
the Group's business and seeks to remunerate its employees fairly,
being flexible where practicable. The Group gives full and fair
consideration to applications for employment received regardless of
age, gender, colour, ethnicity, disability, nationality, religious
beliefs, transgender status or sexual orientation. The Board takes
account of employees' interests when making decisions, and
suggestions from employees aimed at improving the Group's
performance are welcomed.
Suppliers and Contractors
The Group recognises that the goodwill of its contractors,
consultants and suppliers is important to its business success and
seeks to build and maintain this goodwill through fair dealings.
The Group has a prompt payment policy and seeks to settle all
agreed liabilities within the terms agreed with suppliers. The
amount shown in the Consolidated and Company Statements of
Financial Position in respect of trade payables at the end of the
financial year represents 8 days of average daily purchases (2016:
14 days).
Anti-Corruption Policy and Code of Conduct
The Company has adopted and implements an Anti-corruption Policy
and Code of Conduct.
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 during the financial
year were:
Patrick Cheetham (57)
Executive Chairman
Key Strengths and Experience
-- Geologist.
-- 36 years' experience in mineral exploration.
-- 31 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 (45)
Managing Director
Key Strengths and Experience
-- Chartered Engineer.
-- 24 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.
Donald McAlister (58)
Non-Executive Director*
Key Strengths and Experience
-- Accountant.
-- Previously Finance Director at Mwana Africa plc, Ridge Mining plc and Reunion Mining.
-- 23 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 Finance Director
of ZincOx Resources plc.
David Whitehead (now deceased)
Non-Executive Director
During the last financial year David Whitehead operated as a
non-executive director but he sadly passed away in November
2017.
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.
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 2017.
The Strategic Report contains 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. Given
the Company's cash position at year end (GBP159,278), 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.
This expectation is strengthened by recent investor interest in
the Company, resulting in a successful placing on 6 December 2017,
which raised GBP500,000 before expenses.
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 currently holding office are:
Mr P L Cheetham
Mr R H Clemmey
Mr D A R McAlister
In addition, Mr D Whitehead (now deceased) was a non-executive
director during the financial year.
Events After The Balance Sheet Date
-- Fundraising
Subsequent to the year end, on 6 December 2017, there was an
allotment of 41,666,670 ordinary shares of 0.01p by way of
conditional placing at 1.2p per share for a total consideration of
GBP500,000 before expenses. The issue of the Placing Shares is
conditional, inter alia, on their admission to trading on AIM
("Admission"). Application has been made for the Placing Shares to
be admitted to trading on AIM and Admission is expected to occur on
or around 20 December 2017.
-- Strategic Relationship with Possehl Erzkontor GmbH & Co. KG
On 29 November 2017, the Company announced that it has signed a
Memorandum of Understanding ("MOU") with leading global commodities
trading group, Possehl Erzkontor GmbH & Co. KG ("Possehl"), a
wholly owned subsidiary of CREMER. Possehl and Tertiary intend to
enter into a definitive purchase and sales agreement ("Offtake
Agreement") under which Tertiary will agree to sell to Possehl and
Possehl will commit to purchase a minimum of 70% of commercial
grade acid-spar to be produced at Tertiary's three fluorspar
projects. As a condition of the Offtake Agreement Possehl will
provide part of the pre-financing to Tertiary, where funds will be
advanced by Possehl to Tertiary to assist the Company in meeting
its working capital needs and/or its capital investment needs for
the development of its fluorspar projects.
-- Sale of Aurion Shares
The Aurion shares issued to Tertiary earlier in the year as part
consideration (GBP85,000) for the sale of the two legacy gold
assets in Finland, were sold in November 2017 resulting in net
proceeds of GBP116,264 and a GBP31,264 profit.
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 13 December 2017 of shares share
capital
---------------------------------------- ---------- --------
TD Direct Investing Nominees (Europe)
Limited SMKTNOMS 39,697,148 12.52
---------------------------------------- ---------- --------
Barclays Direct Investing Nominees
Limited CLIENT1 27,890,003 8.80
---------------------------------------- ---------- --------
Hargreaves Lansdown (Nominees)
Limited 15942 16,042,686 5.06
---------------------------------------- ---------- --------
HSDL Nominees Limited 15,988,094 5.04
---------------------------------------- ---------- --------
TD Direct Investing Nominees (Europe)
Limited SMKTISAS 14,646,729 4.62
---------------------------------------- ---------- --------
HSDL Nominees Limited MAXI 12,870,657 4.06
---------------------------------------- ---------- --------
Hargreaves Lansdown (Nominees)
Limited VRA 11,931,577 3.76
---------------------------------------- ---------- --------
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
The Company's Annual General Meeting is convened for Wednesday
31 January 2018 at 2.30 p.m.and we hope shareholders will
attend.
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 2017 or 2016. The financial information for 2016 is
derived from the Statutory Accounts for 2016. Full audited accounts
in respect of that financial period have been delivered to the
Registrar of Companies. The Statutory Accounts for 2017 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting. The auditors have reported on the 2017 and
2016 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 2017
2017 2016
Notes GBP GBP
------------------------------------ ----- --------- ---------
Revenue 2,17 241,024 190,124
Administration costs (550,229) (558,857)
Pre-licence exploration costs (30,617) (25,343)
Operating loss (339,822) (394,076)
Impairment of available for sale
investment (55,987) (81,142)
Interest receivable 277 1,712
------------------------------------ ----- --------- ---------
Loss before income tax 3 (395,532) (473,506)
Income tax 7 - -
------------------------------------ ----- --------- ---------
Loss for the year attributable to
equity holders of the parent (395,532) (473,506)
------------------------------------ ----- --------- ---------
Loss per share - basic and diluted
(pence) 6 (0.14) (0.20)
------------------------------------ ----- --------- ---------
All amounts relate to continuing activities.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2017
2017 2016
GBP GBP
----------------------------------------------- ---------- ---------
Loss for the year (395,532) (473,506)
----------------------------------------------- ---------- ---------
Items that could be reclassified subsequently
to the income statement:
Foreign exchange translation differences
on foreign currency net investments
in subsidiaries (15,442) 466,534
Fair value movement on available for
sale investment 122,753 51,117
----------------------------------------------- ---------- ---------
107,311 517,651
----------------------------------------------- ---------- ---------
Total comprehensive income/(loss) for
the year attributable to equity holders
of the parent (288,221) 44,145
----------------------------------------------- ---------- ---------
Consolidated and Company Statements of Financial Position
at 30 September 2017
Company Number 03821411
Group Company Group Company
2017 2017 2016 2016
Notes GBP GBP GBP GBP
------------------------------- ----- ----------- ----------- ----------- -----------
Non-current assets
Intangible assets 8 4,508,015 - 4,429,261 -
Property, plant & equipment 9 4,361 4,341 9,785 9,636
Investment in subsidiaries 10 - 7,035,229 - 6,834,155
Available for sale investment 10 408,971 266,087 204,470 204,470
------------------------------- ----- ----------- ----------- ----------- -----------
4,921,347 7,305,657 4,643,516 7,048,261
------------------------------- ----- ----------- ----------- ----------- -----------
Current assets
Receivables 11 94,253 73,390 105,032 81,377
Cash and cash equivalents 12 159,278 140,928 448,474 421,292
253,531 214,318 553,506 502,669
------------------------------- ----- ----------- ----------- ----------- -----------
Current liabilities
Trade and other payables 13 (75,808) (41,281) (92,488) (53,424)
------------------------------- ----- ----------- ----------- ----------- -----------
Net current assets 177,723 173,037 461,018 449,245
------------------------------- ----- ----------- ----------- ----------- -----------
Net assets 5,099,070 7,478,694 5,104,534 7,497,506
------------------------------- ----- ----------- ----------- ----------- -----------
Equity
Called up Ordinary Shares 14 31,708 31,708 2,669,442 2,669,442
Deferred Shares 14 2,644,062 2,644,062 - -
Share premium account 9,331,768 9,331,768 9,066,735 9,066,735
Merger reserve 131,096 131,096 131,096 131,096
Share option reserve 14 259,690 259,690 343,486 343,486
Available for sale investment
reserve 173,870 115,987 51,117 51,117
Foreign currency reserve 14 366,912 - 382,354 -
Accumulated losses (7,840,036) (5,035,617) (7,539,696) (4,764,370)
------------------------------- ----- ----------- ----------- ----------- -----------
Equity attributable to
the owners of the parent 5,099,070 7,478,694 5,104,534 7,497,506
------------------------------- ----- ----------- ----------- ----------- -----------
The Company reported a loss for the year ended 30 September 2017
of GBP366,439 (2016 - GBP441,591).
These financial statements were approved and authorised for
issue by the Board of Directors on 13 December 2017 and were signed
on its behalf.
R H Clemmey D A R McAlister
Director Director
Consolidated Statement of Changes in Equity
Available
Ordinary Deferred Share Share for Foreign
share shares premium Merger option sale currency Accumulated
capital GBP account reserve reserve reserve reserve losses Total
Group GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ----------- ----------- ----------- ------- --------- --------- -------- ----------- ---------
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
--------------- ----------- ----------- ----------- ------- --------- --------- -------- ----------- ---------
Loss for
the period - - - - - - - (395,532) (395,532)
Change in
fair value - - - - - 122,753 - - 122,753
Exchange
differences - - - - - - (15,442) - (15,442)
--------------- ----------- ----------- ----------- ------- --------- --------- -------- ----------- ---------
Total
comprehensive
loss for
the year - - - - - 122,753 (15,442) (395,532) (288,221)
--------------- ----------- ----------- ----------- ------- --------- --------- -------- ----------- ---------
Share split (2,644,062) 2,644,062 - - - - - - -
Share issue 6,328 - 265,033 - - - - - 271,361
Share based
payments
expense - - - - 11,396 - - - 11,396
Transfer
of expired
warrants - - - - (95,192) - - 95,192 -
--------------- ----------- ----------- ----------- ------- --------- --------- -------- ----------- ---------
At 30
September
2017 31,708 2,644,062 9,331,768 131,096 259,690 173,870 366,912 (7,840,036) 5,099,070
--------------- ----------- ----------- ----------- ------- --------- --------- -------- ----------- ---------
Company Statement of Changes in Equity
Ordinary Share Share Available
share Deferred premium Merger option for sale Accumulated
capital shares account reserve reserve reserve losses Total
Company GBP GBP GBP GBP GBP GBP GBP GBP
--------------------- ----------- ----------- --------- -------- --------- --------- ----------- ---------
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
--------------------- ----------- ----------- --------- -------- --------- --------- ----------- ---------
Loss for
the period - - - - - - (366,439) (366,439)
Change in
fair value - - - - - 64,870 - 64,870
Total comprehensive
loss for
the year - - - - - 64,870 (366,439) (301,569)
--------------------- ----------- ----------- --------- -------- --------- --------- ----------- ---------
Share split (2,644,062) 2,644,062 - - - - - -
Share issue 6,328 - 265,033 - - - - 271,361
Share based
payments
expense - - - - 11,396 - - 11,396
Transfer
of expired
warrants - - - - (95,192) - 95,192 -
--------------------- ----------- ----------- --------- -------- --------- --------- ----------- ---------
At 30 September
2017 31,708 2,644,062 9,331,768 131,096 259,690 115,987 (5,035,617) 7,478,694
--------------------- ----------- ----------- --------- -------- --------- --------- ----------- ---------
Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2017
Group Company Group Company
2017 2017 2016 2016
Notes GBP GBP GBP GBP
---------------------------------- ----- --------- --------- --------- ---------
Operating activity
Total loss after tax (395,809) (374,085) (475,218) (449,650)
Depreciation charge 5,910 5,781 6,833 6,647
Impairment charge - available
for sale investment 55,987 55,987 81,142 81,142
Share based payment charge 11,396 11,396 25,784 25,784
Non-cash additions to
available for sale investment (52,735) (52,735) (86,272) (86,272)
Increase/(decrease) in
provision for impairment
of loans to subsidiaries - (1,196) - 1,071
(Increase)/decrease in
receivables 11 10,779 7,987 (14,723) (6,620)
Increase/(decrease) in
payables 13 (16,680) (12,143) (10,292) 3,851
---------------------------------- ----- --------- --------- --------- ---------
Net cash outflow from
operating activity (381,152) (359,008) (472,746) (424,047)
---------------------------------- ----- --------- --------- --------- ---------
Investing activity
Interest received 277 7,646 1,712 8,059
Development expenditures 8 (190,172) - (473,527) -
Disposal of development
asset 15,000 - - -
Purchase of property,
plant & equipment 9 (486) (486) (9,322) (9,322)
Additional loans to subsidiaries - (199,877) - (443,671)
Net cash outflow from
investing activity (175,381) (192,717) (481,137) (444,934)
---------------------------------- ----- --------- --------- --------- ---------
Financing activity
Issue of share capital
(net of expenses) 271,361 271,361 1,045,133 1,045,133
Net cash inflow from
financing activity 271,361 271,361 1,045,133 1,045,133
---------------------------------- ----- --------- --------- --------- ---------
Net increase/(decrease)
in cash
and cash equivalents (285,172) (280,364) 91,250 176,152
---------------------------------- ----- --------- --------- --------- ---------
Cash and cash equivalents
at start of year 448,474 421,292 309,815 245,140
Exchange differences (4,024) - 47,409 -
---------------------------------- ----- --------- --------- --------- ---------
Cash and cash equivalents
at 30 September 12 159,278 140,928 448,474 421,292
---------------------------------- ----- --------- --------- --------- ---------
Notes to the Financial Statements
for the year ended 30 September 2017
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. Given
the Group's cash position at year end (GBP159,278), 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.
This expectation is strengthened by recent investor interest in
the Company resulting in a successful placing on 6 December 2017,
which raised GBP500,000 before expenses.
(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 GBP366,439 (2016: GBP441,591).
(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 there are any indications of impairment in capitalised
exploration and development costs. The bi-annual impairment reviews
were conducted in March 2017 and October 2017.
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 includes 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 in equity.
(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 include a holding in Sunrise Resources
plc as described in Note 10. In the Interim Financial Statements
for the six month period to 31 March 2017 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
2017 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
2017 GBP GBP GBP
--------------------------------------- ----------- --------- ---------
Consolidated Income Statement
Revenue 36,914 204,110 241,024
--------------------------------------- ----------- --------- ---------
Pre-licence exploration costs (30,617) - (30,617)
Share-based payments - (11,396) (11,396)
Administration costs and other
expenses - (538,833) (538,833)
--------------------------------------- ----------- --------- ---------
Operating Loss 6,297 (346,119) (339,822)
Impairment of available for sale
investment - (55,987) (55,987)
Bank interest received - 277 277
--------------------------------------- ----------- --------- ---------
Loss before income tax 6,297 (401,829) (395,532)
Income tax - - -
--------------------------------------- ----------- --------- ---------
Loss for the year attributable
to equity holders 6,297 (401,829) (395,532)
--------------------------------------- ----------- --------- ---------
Non-current assets
Intangible assets:
Deferred exploration costs:
Kaaresselkä Gold Project,
Finland 260,823 - 260,823
Kiekerömaa Gold Project,
Finland 97,705 - 97,705
Lassedalen Fluorspar Project,
Norway 407,050 - 407,050
Storuman Fluorspar Project,
Sweden 2,015,865 - 2,015,865
MB Fluorspar Project, USA 1,726,572 - 1,726,572
--------------------------------------- ----------- --------- ---------
4,508,015 - 4,508,015
Property, plant & equipment - 4,361 4,361
Available for sale investment - 408,971 408,971
--------------------------------------- ----------- --------- ---------
4,508,015 413,332 4,921,347
--------------------------------------- ----------- --------- ---------
Current assets
Receivables 20,830 73,423 94,253
Cash and cash equivalents - 159,278 159,278
20,830 232,701 253,531
--------------------------------------- ----------- --------- ---------
Current liabilities
Trade and other payables (25,080) (50,728) (75,808)
Net current assets (4,250) 181,973 177,723
--------------------------------------- ----------- --------- ---------
Net assets 4,503,765 595,305 5,099,070
--------------------------------------- ----------- --------- ---------
Other data
Deferred exploration additions 190,172 - 190,172
Exchange rate adjustments to
deferred exploration costs - (11,418) (11,418)
--------------------------------------- ----------- --------- ---------
Exploration Head
projects office Total
2016 GBP GBP GBP
--------------------------------------- ----------- --------- ---------
Consolidated Income Statement
Revenue - 190,124 190,124
--------------------------------------- ----------- --------- ---------
Pre-licence exploration costs (25,343) - (25,343)
Share-based payments - (25,785) (25,785)
Administration costs and other
expenses - (533,072) (533,072)
--------------------------------------- ----------- --------- ---------
Operating Loss (25,343) (368,733) (394,076)
Impairment of available for sale
investment - (81,142) (81,142)
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
--------------------------------------- ----------- --------- ---------
3. Loss before income tax
2017 2016
GBP GBP
--------------------------------------------- ------ ------
The operating loss is stated after
charging
Operating lease rentals - land and
buildings 20,239 19,727
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 5,910 6,833
--------------------------------------------- ------ ------
4. Directors' emoluments
Remuneration in respect of Directors was as follows:
Income from
Net cost recharge to
to Group Sunrise Resources Total Total
2017 plc 2017 2016
GBP 2017 GBP GBP
GBP
----------------------- ---------- ------------------ ------- -------
P L Cheetham (salary) 17,571 92,490 110,061 109,242
R H Clemmey (salary) 86,369 274 86,643 97,908
D A R McAlister
(salary) 16,000 - 16,000 16,000
D Whitehead (salary) 15,000 - 15,000 15,000
134,940 92,764 227,704 238,150
----------------------- ---------- ------------------ ------- -------
The above remuneration amounts do not include non-cash share
based payments charged in these financial statements in respect of
share warrants issued to the Directors amounting to GBP7,509 (2016:
GBP19,308) or Employer's National Insurance contributions of
GBP25,985 (2016: GBP27,530).
The above remuneration amount for R H Clemmey includes a bonus
of GBP4,097 (2016: GBP15,977).
Pension contributions made during the year on behalf of
Directors amounted to GBP258 (2016: GBPNil).
The Directors are also the key management personnel. If all
benefits are taken into account, the total key management personnel
compensation would be GBP235,213 (2016: GBP257,458).
After recharge to Sunrise Resources plc, if all benefits are
taken into account, the key management personnel net compensation
cost to the Group would be GBP142,449 (2016: GBP168,403).
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
2017 Sunrise Resources 2017 2016
GBP plc GBP GBP
2017
GBP
---------------------- ---------- ------------------ ------- -------
Wages and salaries 194,447 156,079 350,526 359,584
Social security
costs 17,241 18,511 35,752 36,386
Share-based payments 11,396 - 11,396 25,785
---------------------- ---------- ------------------ ------- -------
223,084 174,590 397,674 421,755
---------------------- ---------- ------------------ ------- -------
The average monthly number of part-time 2017 2016
and full time employees, including Number Number
directors, employed by the Group and
Company during the year was as follows:
----------------------------------------- ------- -------
Technical employees 3 3
Administration employees (including
Non-Executive Directors) 6 6
----------------------------------------- ------- -------
9 9
----------------------------------------- ------- -------
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
Ordinary shares in issue during the year.
2017 2016
------------------------------------- ----------- -----------
Loss (GBP) (395,532) (473,506)
Weighted average ordinary shares
in issue (No.) 284,429,468 233,830,700
Basic and diluted loss per ordinary
share (pence) (0.14) (0.20)
------------------------------------- ----------- -----------
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. Deferred shares are excluded from the loss per share
calculation as they have no attributable earnings.
7. Income tax
No liability to corporation tax arises for the year due to the
Group recording a taxable loss (2016: 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 - 19% (2016: 20%). The differences are explained below.
2017 2016
GBP GBP
---------------------------------------- --------- -----------
Tax reconciliation
Loss before income tax (395,532) (473,506)
---------------------------------------- --------- -----------
Tax at hybrid rate 19.5% (2016:
20.0%) (77,129) (94,701)
---------------------------------------- --------- -----------
Differences between capital allowances
and depreciation 4,006 (4,218)
Pre-trading expenditure no longer
deductible for tax purposes 28,934 125,770
---------------------------------------- --------- -----------
Tax effect at 19.5% (2016: 20.0%) 6,423 24,310
---------------------------------------- --------- -----------
Unrelieved tax losses carried forward (70,706) (70,391)
---------------------------------------- --------- -----------
Tax recognised on loss - -
---------------------------------------- --------- -----------
Total losses carried forward for
tax purposes 5,714,426 (5,351,834)
---------------------------------------- --------- -----------
Factors that may affect future tax charges
The Group has total losses carried forward of GBP5,714,426
(2016: GBP5,351,834). 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
2017 2016
Group GBP GBP
----------------------- ------------ ------------
Cost
At start of year 5,691,739 4,799,087
Additions 190,172 473,527
Exchange adjustments (11,418) 419,125
----------------------- ------------ ------------
At 30 September 5,870,493 5,691,739
----------------------- ------------ ------------
Disposals
At start of year (1,262,478) (1,262,478)
Disposals during year (100,000) -
----------------------- ------------ ------------
At 30 September (1,362,478) (1,262,478)
----------------------- ------------ ------------
Carrying amounts
At 30 September 4,508,015 4,429,261
----------------------- ------------ ------------
At start of year 4,429,261 3,536,609
----------------------- ------------ ------------
9. Property, plant & equipment
Group Company Group Company
fixtures fixtures fixtures fixtures
and fittings and fittings and fittings and fittings
2017 2017 2016 2016
GBP GBP GBP GBP
--------------------- ------------- ------------- ------------- -------------
Cost
At start of year 51,520 34,144 53,422 36,046
Additions 486 486 9,322 9,322
Disposals (5,429) (2,811) (11,224) (11,224)
--------------------- ------------- ------------- ------------- -------------
At 30 September 46,577 31,819 51,520 34,144
--------------------- ------------- ------------- ------------- -------------
Depreciation
At start of year (41,735) (24,508) (46,126) (29,085)
Charge for the year (5,910) (5,781) (6,833) (6,647)
Disposals 5,429 2,811 11,224 11,224
At 30 September (42,216) (27,478) (41,735) (24,508)
--------------------- ------------- ------------- ------------- -------------
Net Book Value
At 30 September 4,361 4,341 9,785 9,636
--------------------- ------------- ------------- ------------- -------------
At start of year 9,785 9,636 7,296 6,961
--------------------- ------------- ------------- ------------- -------------
10. Investments
Subsidiary undertakings
Country of Type and percentage
incorporation/ of shares held at Principal
Company registration 30 September 2017 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
The registered office of Tertiary Gold Limited and Tertiary
(Middle East) Limited is the same as the Parent Company, being
Sunrise House, Hulley Road, Macclesfield, Cheshire, SK10 2LP.
The registered office of Tertiary Minerals US Inc., is 241 Ridge
Street, Suite 210, Reno, NV 89501, USA.
Company Company
2017 2016
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 682,258 683,586
Less - Provision for impairment (682,176) (683,372)
Loan - Tertiary Gold Limited 5,251,392 5,158,075
Loan - Tertiary Minerals US Inc. 1,558,865 1,450,976
--------------------------------------- --------- ---------
At 30 September 7,035,229 6,834,155
--------------------------------------- --------- ---------
Although there were no indications of impairment under IFRS 6,
the value of investment in and due from the subsidiary was in
excess of the market value of the group at year end indicating a
potential impairment per IAS 36 12(d). The directors have therefore
prepared an impairment review of the carrying value of the
investment in Tertiary Gold Limited. For the impairment review the
Directors have used previous independent Scoping Study cashflow
analysis as a basis for their assessment. The directors have then
made various assumptions, which they consider reasonable at this
stage, with regard to any material changes to key inputs which may
affect project economics, notably fluorspar price, Mineral Resource
grade and operating costs. The result of this review, together with
the fact that there had been no impairment of the underlying assets
held by Tertiary Gold Limited, indicated that no impairment was
required in the carrying value of the investment in Tertiary Gold
Limited.
Available for sale investment
Country of Type and percentage
incorporation/ of shares held at Principal
Company registration 30 September 2017 activity
------------------ --------------- ------------------- -------------------
Sunrise Resources 7.56% of ordinary
plc England & Wales shares Mineral exploration
------------------ --------------- ------------------- -------------------
Aurion Resources 0.12% of ordinary
Limited Canada shares Mineral exploration
------------------ --------------- ------------------- -------------------
Group Company Group Company
2017 2017 2016 2016
Available for sale investment GBP GBP GBP GBP
-------------------------------- ------- ------- -------- --------
Value at start of year 204,470 204,470 148,222 148,222
Additions to available
for sale investment 137,735 52,734 86,273 86,273
Movement in valuation of
available for sale investment 66,766 8,883 (30,025) (30,025)
-------------------------------- ------- ------- -------- --------
At 30 September 408,971 266,087 204,470 204,470
-------------------------------- ------- ------- -------- --------
Additions to available for sale investments are a combination of
shares issued in lieu of cash payment for settlement of outstanding
invoices to Sunrise Resources plc for management fees, and shares
acquired in Aurion Resources Limited for part settlement of
consideration on disposal of Finland gold assets.
The fair value of each available for sale investment is equal to
the market value of its shares at 30 September 2017, based on the
closing mid-market price of shares on its equity exchange
market.
These are level one inputs for the purpose of the IFRS 13 fair
value hierarchy.
11. Receivables
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
------------------- ------ ------- ------- -------
Trade receivables 61,336 61,336 64,902 64,902
Other receivables 19,753 1,463 22,683 676
Prepayments 13,164 10,591 17,447 15,799
------------------- ------ ------- ------- -------
At 30 September 94,253 73,390 105,032 81,377
------------------- ------ ------- ------- -------
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
------------------------ --------- -------- -------- ---------
2017 Trade receivables 61,336 61,336 - 61,336
2016 Trade receivables 64,902 64,902 - 64,902
------------------------ --------- -------- -------- ---------
12. Cash and cash equivalents
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
-------------------------- ------- ------- ------- -------
Cash at bank and in hand 45,141 26,791 43,756 16,574
Short-term bank deposits 114,137 114,137 404,718 404,718
-------------------------- ------- ------- ------- -------
At 30 September 159,278 140,928 448,474 421,292
-------------------------- ------- ------- ------- -------
13. Trade and other payables
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
------------------------ ------ ------- ------ -------
Trade payables 22,377 7,087 33,471 16,214
Other taxes and social
security costs 14,438 14,438 10,358 10,358
Accruals 32,907 13,670 38,324 16,517
Other payables 6,086 6,086 10,335 10,335
------------------------ ------ ------- ------ -------
At 30 September 75,808 41,281 92,488 53,424
------------------------ ------ ------- ------ -------
14. Issued capital and reserves
2017 2017 2016 2016
No. GBP No. GBP
----------------------------- ----------- ----------- ----------- ---------
Allotted, called up and
fully paid Ordinary Shares
Balance at start of year 266,944,213 2,669,442 187,859,217 1,878,592
Split to deferred shares - (2,644,062) - -
Shares issued in the
year 50,132,720 6,328 79,084,996 790,850
----------------------------- ----------- ----------- ----------- ---------
Balance at 30 September 317,076,933 31,708 266,944,213 2,669,442
----------------------------- ----------- ----------- ----------- ---------
2017 2017 2016 2016
No. GBP No. GBP
---------------------------- ----------- --------- ---- ----
Deferred Shares
Balance at start of year - - - -
Split from Ordinary Shares 267,076,933 2,644,062 - -
---------------------------- ----------- --------- ---- ----
Balance at 30 September 267,076,933 2,644,062 - -
---------------------------- ----------- --------- ---- ----
Capital restructure
At a General Meeting on 13 April 2017 the shareholders approved
the subdivision of the Company's ordinary share capital whereby
each existing Ordinary Share with a nominal value of 1p was
subdivided into 1 new Ordinary Share of 0.01p and 1 Deferred Share
of 0.99p each. The Deferred Shares have no significant rights
attached to them and carry no right to vote or to participate in
distribution of surplus assets and are not admitted to trading on
the AIM market of the London Stock Exchange plc. The Deferred
Shares effectively carry no value.
During the year to 30 September 2017 the following share issues
took place:
An issue of 132,720 1.0p ordinary shares at 1.025p per share to
a director, in satisfaction of directors fees, for a total
consideration of GBP1,360 (31 January 2017).
An issue of 50,000,000 0.01p ordinary shares at 0.6p per share,
by way of placing, for a total consideration of GBP270,000 net of
expenses (26 May 2017).
During the year to 30 September 2016 a total of 79,084,996 1.0p
ordinary shares were issued, at an average price of 1.458p, for a
total consideration of GBP1,045,133 net of expenses.
The total amount of transaction fees debited to the Share
Premium account in the year was GBP30,000 (2016: GBP107,588).
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 granted
Warrants not exercised at 30 September 2017
Exercise Expiry
Issue date price Number Exercisable dates
------------ -------- --------- --------------- ----------
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 before
01/10/2014 12.00p 600,000 expiry 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 before
11/03/2016 1.40p 200,000 expiry 11/03/2021
Any time before
11/03/2016 1.40p 800,000 expiry 11/03/2021
Any time from
31/01/2017 1.025p 200,000 31/01/2018 31/01/2022
Any time from
31/01/2017 1.025p 800,000 31/01/2018 31/01/2022
------------ -------- --------- --------------- ----------
Warrants are issued for nil consideration and are exercisable as
disclosed above. They are exchangeable on a one for one basis for
each ordinary share at the exercise price on the date of
conversion.
Share-based payments
The Company issues warrants to directors and employees on
varying terms and conditions.
Details of the share warrants outstanding during
the year are as follows:
2017 2016
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 11,550,000 9.353 15,050,000 9.259
Granted during the year 1,000,000 1.025 1,000,000 1.400
Exercised during the
year - - - -
Forfeited during the
year - - - -
Expired during the year (2,500,000) 9.750p (4,500,000) 7.272
----------------------------- ----------- --------- ----------- ---------
Outstanding at 30 September 10,050,000 8.425p 11,550,000 9.353
----------------------------- ----------- --------- ----------- ---------
Exercisable at 30 September 7,250,000 7.427p 8,150,000 8.224
----------------------------- ----------- --------- ----------- ---------
The warrants outstanding at 30 September 2017 had a weighted
average exercise price of GBP0.08 (2016: GBP0.09), a weighted
average fair value of GBP0.02 (2016: GBP0.03) and a weighted
average remaining contractual life of 2.01 years.
In the year ended 30 September 2017, warrants were granted on 31
January 2017. The aggregate of the estimated fair values of the
warrants granted on this date is GBP3,404. 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
these dates is GBP4,603.
There were no warrants exercised in the year ending 30 September
2017.
The inputs into the Black-Scholes-Merton Pricing Model were as
follows:
2017 2016
--------------------------------- ------- -------
Weighted average share price 1.025p 1.40p
Weighted average exercise price 1.025p 1.40p
Expected volatility 62.5% 75%
Expected life 4 years 4 years
Risk-free rate 0.59% 0.80%
Expected dividend yield 0% 0%
--------------------------------- ------- -------
Expected volatility was determined by calculating the historical
volatility of the Company's share price over the previous three
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 GBP11,396 and GBP25,785
related to equity-settled share based payment transactions in 2017
and 2016 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 2017. No contingent rent is payable. The lease is eligible
for renewal on expiry.
Future minimum lease payments under non-cancellable operating
leases are:
2017 2016
Land & Land & buildings
buildings GBP
GBP
----------------------- ---------- -----------------
Office accommodation:
Within one year 3,388 3,299
----------------------- ---------- -----------------
The Company does not sub-let any of its leased premises.
Lease payments recognised in loss for the period amounted to
GBP20,239 (2016: GBP19,727).
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 2017 At 30 September 2016
Share Warrants Warrant Share
Shares warrants exercise expiry Shares warrants
number number price date number number
----------------- ---------- --------- --------- ---------- ----------- ---------
P L Cheetham* 12,612,113 500,000 7.630p 10/01/2018 11,876,913 3,500,000
500,000 11.250p 14/01/2019
1,000,000 4.000p 20/02/2020
D A R McAlister 586,614 - - - 453,894 300,000
D Whitehead
(now deceased) 414,900 - - - 414,900 300,000
R H Clemmey 687,405 1,000,000 7.630p 10/01/2018 504,037 4,350,000
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 2017. 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 GBP204,110 (2016:
GBP190,124) to Sunrise Resources plc being shared overheads of
GBP24,874 (2016: GBP23,488), costs paid on behalf of Sunrise
Resources plc of GBP4,646 (2016: GBP4,288), staff salary costs of
GBP69,957 (2016: GBP61,866) and directors' salary costs of
GBP104,633 (2016: GBP100,482), comprising P L Cheetham GBP104,324
(2016: GBP99,775) and R H Clemmey GBP309 (2016: GBP707). All salary
costs include employer's National Insurance and Pension
contributions.
The salary costs in Notes 4 and 5 include these charges.
At the balance sheet date an amount of GBP61,275 (2016:
GBP64,724) 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 2017 At 30 September 2016
Warrants
Shares Exercise Expiry Shares Warrants
number Number price date number number
----------------- ---------- --------- --------- ---------- ----------- ---------
P L Cheetham* 79,741,326 2,000,000 0.850p 19/03/2018 75,776,599 9,000,000
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
(now deceased) 250,000 - - - 250,000 -
R H Clemmey - 500,000 0.850p 19/03/2018 - 2,750,000
500,000 0.550p 14/01/2019
750,000 0.275p 05/02/2020
500,000 0.160p 18/02/2021
500,000 0.135p 01/02/2022
----------------- ---------- --------- --------- ---------- ----------- ---------
* 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 2017, 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 2017, as defined in IAS 39, are as
follows:
Group Company Group Company
2017 2017 2016 2016
GBP GBP GBP GBP
-------------------------------- ------- ------- ------- -------
Loans & receivables 240,367 203,727 536,846 487,652
Available for sale investments 408,971 408,971 204,470 204,470
Financial liabilities
at amortised cost 60,689 26,163 81,449 42,385
-------------------------------- ------- ------- ------- -------
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 and Euros 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
2017 2016 2017 2016
GBP GBP GBP GBP
------------------------- ------- ------- ------- -------
United Kingdom Sterling 132,779 415,860 129,533 409,535
United States Dollar 16,113 19,240 11,122 11,641
Swedish Krona 94 553 5 -
European Euro 10,234 12,777 253 116
Canadian Dollar 15 - 15 -
Saudi Riyal 43 44 - -
159,278 448,474 140,928 421,292
------------------------- ------- ------- ------- -------
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 exchange
rates 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 2017 would increase or decrease by GBP806 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. Contingent Liability
Following an audit of the Tertiary Gold Sweden Branch by the
Swedish tax office, Skatteverket, an assessment of SEK 288,256
(approximately GBP26,467) was levied in February 2017 in respect of
tax year 2013/14. The Skatteverket assertion of an incorrect tax
return submission has been strongly contested by the Company's
Swedish tax lawyer and the case is currently in appeal with an
expectation based on professional advice that the appeal is likely
to succeed.
21. Events after the balance sheet date
Subsequent to the year end, on 6 December 2017, there was an
allotment of 41,666,670 ordinary shares of 0.01p by way of a
conditional placing at 1.2p per share for a total consideration of
GBP500,000 before expenses. The issue of the Placing Shares is
conditional, inter alia, on their admission to trading on AIM
("Admission"). Application has been made for the Placing Shares to
be admitted to trading on AIM and Admission is expected to occur on
or around 20 December 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BLBDDXDBBGRX
(END) Dow Jones Newswires
December 13, 2017 11:25 ET (16:25 GMT)
Tertiary Minerals (LSE:TYM)
Historical Stock Chart
From Aug 2024 to Sep 2024
Tertiary Minerals (LSE:TYM)
Historical Stock Chart
From Sep 2023 to Sep 2024