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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sunrise Resources Plc | AQSE:SRES.GB | Aquis Stock Exchange | Ordinary Share | GB00B075Z681 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.0375 | 0.025 | 0.05 | 0.046 | 0.0375 | 0.0375 | 700,000 | 15:29:31 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSRES
RNS Number : 8317R
Sunrise Resources Plc
14 December 2016
SUNRISE RESOURCES PLC
("Sunrise" or "the Group" or "the Company")
14 December 2016
Audited Results for the year to 30 September 2016
The Board of Sunrise Resources plc, the AIM-quoted diversified mineral exploration and development company, is pleased to announce audited results for the year ended 30 September 2016.
Operational Highlights for 2016
Ø Operations have focused on the Company's projects in Nevada, USA.
Ø Phase 2 drilling at Bay State Silver Project, demonstrated continuity of Chihuahua Vein system at 300m below surface. Further drilling scheduled for spring 2017.
Ø Trenching of discovery outcrop at Garfield Copper-Gold Project: 22m grading 0.33% copper inc. 2 metres grading 2.18% copper and 0.48 g/t gold from 16m-18m and 2 metres grading 1.2 g/t gold and 0.07% copper from 8m-10m.
Ø Incorporation of new subsidiary Westgold Inc. as a wholly owned project generator for gold and silver projects in the western USA. Three new projects have been staked to date.
Ø Lease agreement with EP Minerals, LLC (a world leading producer of diatomite) continuing at County line Diatomite Project. EP Minerals, LLC permitted programme of drilling and trenching, work in progress. Potential for revenue based royalty stream starting in June 2017.
Ø Expansion of Pozz Project with staking of CS pumiceous rhyolite deposit in Nevada. Testwork in progress as demand for natural pozzolan grows as a "green" cement replacement.
Commenting on today's results, Patrick Cheetham, Executive Chairman, said: "I am pleased to report on the progress being made under our strategic plan to seek cash flow from industrial minerals projects whilst continuing our more speculative exploration for precious metal deposits. In 2016 we we have continued the development of our business in anticipation of a continuing recovery in the commodities sector and I look forward to reporting further progress in 2017 and to meeting shareholders at our upcoming AGM."
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.
Further information:
Sunrise Resources plc Patrick Cheetham, Executive +44 (0)1625 Chairman Tel: 838 884 Northland Capital Partners Limited Edward Hutton/David Hignell (Nominated Adviser) +44 (0)203 861 John Howes/Rob Rees (Broking) Tel: 6625 Beaufort Securities Limited Joint Broker +44 (0)207 Jon Belliss Tel: 382 8300
About Sunrise Resources plc
Sunrise Resources plc is an AIM-traded diversified mineral exploration and development company. The Company's objective is to develop profitable mining operations to sustain the Company's wider exploration efforts and create value for shareholders through the discovery of world-class deposits.
The Company is exploring a number of precious metal, base metal and industrial mineral projects in Nevada, USA. The Company holds a royalty interest from EP Minerals in a diatomite project in Nevada and holds a white barite project in South-West Ireland. The Company also holds diamond and gold exploration interests in Western Australia.
Shares in the Company trade on AIM. EPIC: "SRES"
Chairman's Statement
I am pleased to present the Company's Annual Report and Financial Statements for the year ended 30 September 2016 and to report on the progress being made under our strategic plan; to seek cash flow from industrial minerals projects whilst continuing our more speculative exploration for precious metal deposits.
This past year has undoubtedly seen the beginning of a recovery in the commodity sector and in 2016 we have continued the development of our business in anticipation of this continuing recovery. Our priority has been to advance our Nevada projects, in particular the Bay State Silver Project, where we have achieved significant progress this year on a limited budget. We have initiated our drill testing of the Chihuahua and Lincoln vein systems where surface and underground sampling on the Chihuahua Vein has demonstrated high silver grades over a strike length of around 500m and has confirmed the occurrence of the bonanza grades that supported historical production of direct smelter feed grades in the past.
Of the five holes now drilled on the Chihuahua Vein, three have hit high-grade silver mineralisation and one has demonstrated continuity of the vein system at a depth of 300m below surface. Follow-up drilling is provisionally scheduled for next spring and our key objective remains to demonstrate continuity of mineralisation along strike and to justify a substantial resource definition drilling programme.
A major initiative this year has been the incorporation of a new Nevada subsidiary, Westgold Inc., focused exclusively on low-cost acquisition of precious metal projects in the western USA with the objective to sell, lease or joint venture these projects. This will increase our exposure to the resurgent gold and silver sectors in Nevada, one of the major precious metal producing areas of the world. Three projects have been staked so far. The Clayton and Stonewall Projects are epithermal silver-gold targets in the Walker Lane Mineral Belt and significant past drill results have been reported from Clayton. The Newark Project is a Carlin-style gold project in the famous Battle Mountain Gold Trend.
Our industrial minerals project portfolio is headed by the County Line Diatomite Project and we are pleased to see an active work programme being advanced by lessor EP Minerals, LLC at their cost. Should EP Minerals continue the lease, we have the potential to start earning from this project next year by way of advance royalty payments.
Climate change agreements and legislation are driving the substitution of ordinary (Portland) cement with alternative "green" cementitious materials (pozzolans) and there is increasing interest in natural pozzolans which have been used in concrete for millennia. Our Pozz Project is an initiative to search for and acquire, at low-cost, mineral deposits having potential for the production of natural pozzolan. As announced on 14 November 2016, the newly staked CS Deposit now sits within this "umbrella" project, together with the Company's original Pozz Ash Deposit where testwork is in progress. We have also staked claims over a deposit of high purity limestone in Nevada and look forward to evaluating these opportunities further in 2017.
Our activities have been funded through two share issues during the year raising a total of GBP420,000 before expenses and I am pleased to have supported this fundraising together with our newly appointed Non-Executive Director, Roger Murphy. Tertiary Minerals plc, our largest shareholder, continues to provide management services at cost and to take shares in lieu of payment from time to time. This allows us to reduce the cash impact of administration costs and the directors are also paid their modest fees in shares. I would like to take this opportunity to thank the Non-Executive Directors and our Company Secretary for their contributions.
We believe that company websites are taking over from the Annual Report as a company's main investor relations tool and so we will save costs this year by publishing our Annual Report in plain back and white text.
Our Annual General Meeting for the year ended 30 September 2016 will be held in London on Tuesday 31 January 2017 and I encourage shareholders to attend.
Patrick Cheetham
Executive Chairman
14 December 2016
STRATEGIC PLAN ON TRACK
KEY POINTS from our STRATEGY & BUSINESS PLAN are summarised here and reviewed against our progress in the calendar year 2016 and our targets for 2017:
Hot Features
Premium
PROGRESS IN 2016 TARGETS FOR 2017
------------------------------------------------------------ ------------------------------------------------------------------ ---------------------------------------------------------------------
* To acquire, explore and develop mineral projects in * Project activities restricted to Nevada, USA and * Continue the focus on Nevada, USA.
stable, democratic and mining friendly jurisdictions Australia.
.
* Additional industrial minerals projects under
* New subsidiary, Westgold Inc., incorporated in Nevada consideration.
,
on project generator model. Three new projects in
2016:
- Newark Gold Project
- Clayton Silver-Gold
Project
- Stonewall Gold
Project
* SR Minerals Inc. - New projects:
- Ridge Limestone
Project
- CS Pumiceous
Rhyolite Project
------------------------------------------------------------ ------------------------------------------------------------------ ---------------------------------------------------------------------
* Target advanced projects which have the potential to * Lease agreement continues with leading diatomite * Continue evaluation of industrial mineral deposits
generate a sustaining cash flow. producer EP Minerals, LLC - future cash flow and seek industrial partners.
potential at no future cost or risk to Sunrise.
------------------------------------------------------------ ------------------------------------------------------------------ ---------------------------------------------------------------------
* Target near-drill stage projects where there is * Phase 2 first drill testing of the Bay State Silver * Follow up drilling of Bay State Silver Project
potential for significant mineral discovery. Project. towards Mineral Resource definition.
------------------------------------------------------------ ------------------------------------------------------------------ ---------------------------------------------------------------------
* Acquire 100% of a project through research and by * New projects acquired 100% by prospecting and staking * Consider further strategic acquisitions in Nevada,
staking or licencing of "open ground" from the open ground e.g. USA and Australia.
relevant authority. This allows the Company to
acquire 100% ownership of valuable assets.
- Newark Gold
Project
- Clayton Silver-Gold
Project
- Stonewall Gold
Project
- Ridge Limestone
Project
- CS Pumiceous
Rhyolite Project
------------------------------------------------------------ ------------------------------------------------------------------ ---------------------------------------------------------------------
* To run the Company with low overheads and be a low * Corporate overheads shared with Tertiary Minerals * Continue cost sharing and strive for exploration cost
cost explorer. plc. efficiencies.
* Directors' fees continue to be taken in shares. * Seek partners for certain projects to reduce
exploration costs.
* Tertiary Minerals plc has taken part payment of
shares in lieu of cash for management charges.
------------------------------------------------------------ ------------------------------------------------------------------ ---------------------------------------------------------------------
Strategic Report
The Directors of the Company and its subsidiary undertakings (which together comprise "the Group") present their Strategic Report for the year ended 30 September 2016.
Principal Activities
The principal activity of the Group is the identification, acquisition, exploration and development of mineral projects. The main areas of activity are the USA and Australia. The Group also has a project in Ireland.
Organisation Overview
The Group's business is directed by the Board and is managed by the Executive Chairman. The Company has a Management Services Agreement with Tertiary Minerals plc ("Tertiary") which is a substantial shareholder in the Company (as defined under the AIM Rules). Under this cost sharing agreement Tertiary provides all of the Company's administration and technical services, including the services of the Executive Chairman, at cost. Day-to-day activities are managed from Tertiary's offices in Macclesfield in the United Kingdom, but the Group operates in three other countries. The corporate structure of the Group reflects the historical pattern of acquisition by the Group and the need, where appropriate, for fiscal and other reasons, to have incorporated entities in particular territories.
The Group's exploration activity in Finland is undertaken through a registered branch in Finland. In Australia the Company operates through an Australian subsidiary, Sunrise Minerals Australia Pty Ltd. In Nevada, USA, the Company operates through two local subsidiaries, SR Minerals Inc. and Westgold Inc.
The Board of Directors comprises two non-executive directors and the Executive Chairman. The Executive Chairman of the Company is also Chairman of Tertiary Minerals plc, but otherwise the Board is independent of Tertiary.
Financial & Performance Review
The Group is not yet producing minerals and so has no income other than a small amount of bank interest. Consequently the Group is not expected to report profits until it disposes of or is able to profitably develop or otherwise turn to account its exploration and development projects.
The Group reports a loss of GBP369,587 for the year (2015: GBP301,271) after administration costs of GBP285,092 (2015: GBP256,957) and after crediting interest of GBP532 (2015: GBP1,348). The loss includes expensed pre-licence and reconnaissance exploration costs of GBP45,316 (2015: GBP35,276) and impairment of deferred costs of GBP39,711 (2015: GBP10,386). Administration costs include an amount of GBP4,323 (2015: GBP10,829) as non-cash costs for the value of certain share warrants held by employees, as required by IFRS 2. Cash administration costs are therefore GBP280,769 (2015: GBP246,128).
The Financial Statements show that, at 30 September 2016, the Group had net current assets of GBP94,748 (2015: GBP67,911). 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 some of this year's and previous years' expenditure on mineral projects where that expenditure meets the criteria in Note 1(d) of the accounting policies. The intangible assets total GBP1,072,571 (2015: GBP753,738) and a breakdown by project is shown in Note 2 to the financial statements.
Details of intangible assets, property, plant and equipment and investments are also set out in Notes 8, 9 and 10 of the financial statements.
Expenditures which do 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 for specific projects carried forward in previous reporting periods as an intangible asset but which the Board determines is "impaired" in the reporting period.
It is a consequence of the Company's business model that there will be regular impairments of unsuccessful exploration projects. 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, an amount of GBP32,930 was impaired in respect of costs incurred in the year for the Corona Gold Project in Australia and GBP6,781 in respect of the Strike Copper-Gold Project in Nevada.
The intangible asset value of a project should not be confused with 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 the AIM Market is usually in excess of the net asset value of the Group.
The Company finances its activities through periodic capital raisings, via share placings and through other innovative equity based financial instruments. As the Company's projects become more advanced there may be strategic opportunities to obtain funding for some projects from future customers, via production sharing, royalty and other marketing arrangements. The Company's agreement with EP Minerals, LLC, is such an example.
Key Performance Indicators
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.
The usual financial key performance indicators ("KPIs") are neither applicable nor appropriate to measurement of the value creation of a company with is 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.
In addition the Directors highlight the following KPIs and expect that further KPIs will be reported as the Company progresses through development:
Health & The Group has not lost any man-days through
Safety injury and there have been no Health and
Safety incidents or reportable 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.
Fundraising The Company raised GBP420,000 before expenses
through the Placing and Subscription of
shares in the reporting period and issued
equity to the value of GBP19,720 in consideration
of fees payable to Directors and to the
value of GBP86,272 to Tertiary Minerals
plc in consideration of at-cost management
fees. In addition, shares to the value of
GBP10,000 were issued to Beaufort Securities
Limited in consideration of the joint broker
fee.
------------ ------------------------------------------------------
In exploring for valuable mineral deposits, we accept that not all our exploration will be successful but also that the rewards for success can be high. We therefore expect that our shareholders will be invested for the potential for capital growth taking a long-term view of management's good track record in mineral discovery and development.
Operating Review
During 2016 our operations have continued to focus on the Company's projects in Nevada, USA, and we have maintained our project interests in Australia and Ireland.
The State of Nevada is one of the most attractive mining jurisdictions in the world. It is the fourth largest gold producing area in the world, a large silver producer, a re-emerging copper producer and a significant producer of industrial minerals.
Currently the Company's Nevada projects are held through two subsidiaries, SR Minerals Inc. and Westgold Inc. The Company's Australian projects are held through an Australian subsidiary Sunrise Minerals Australia Pty Ltd. The Company's Derryginagh Barite Project is held directly in the name of Sunrise Resources plc.
SR MINERALS INC., NEVADA, USA
Bay State Silver Project
Ø Historical production (1860s-1920s) focused on Chihuahua Vein - significant historical production including direct shipping ore up to 7,200 g/t (210 oz/t) silver.
Ø Surface samples of vein material left behind by old miners average 387 grammes/tonne silver (11.3 oz/t) silver along a 280 metre strike length of the Chihuahua Vein system.
Ø Underground sampling returned:
Ø bonanza values up to 4kg/tonne silver (4,020g/t or 0.4% or 117oz/t) within replacement style mineralisation at end of adit over 61cm (2ft).
Ø over 1kg/tonne silver (1,123g/t or 33oz/t) average for 18 samples along 230m strike length to end of adit.
Ø Surface and underground sampling together suggest c.500m minimum strike length for drill targeting.
Ø Five holes drilled to date on Chihuahua Vein system. Three holes north of Mining Canyon hit high-grade silver mineralisation:
Ø 1,460 g/t silver (42.6 oz/ton) over 0.2m from 164.13m in Hole 15SRDD002.
Ø 566 g/t silver (16.5 oz/ton) over 0.5m from 70.71m in Hole 15SRDD001.
Ø 503 g/t silver (14.7 oz/ton) over 1.4m from 185.32m in Hole 15SRDD003.
Ø Fourth hole demonstrated continuity of Chihuahua Vein system at 300m below surface.
Ø Further drilling provisionally scheduled for spring 2017.
In 2016 the Company carried out a second phase of drilling at Bay State designed to follow up the positive results from Phase 1 drilling where high-grade silver mineralisation was intersected in all three holes drilled north of Mining Canyon.
Phase 2 drilling was completed using the reverse circulation drilling method. It included two holes to test the Chihuahua Vein system along strike and to the south of Mining Canyon, beneath the deepest levels of the historical mine workings. A third hole was designed as a relatively shallow test of the parallel Lincoln Vein system. It was preceded by a small programme of underground sampling south of Mining Canyon, in old mine workings developed on the Chihuahua Vein up-dip and on section of the first two drill holes.
Three chip samples of material taken across the exposed mineralisation at places along an accessible 30m long (approx.) section of the vein system returned:
Ø 0.33m grading 85 grammes/tonne silver (2.48 ounces/ton).
Ø 0.76m grading 399 grammes/tonne silver (11.64 ounces/ton).
Ø 0.91m grading 480 grammes/tonne silver (14.00 ounces/ton).
The first hole, 16SRRC004, targeted the Chihuahua Vein at a downhole depth of 175m. It was located in the footwall of the vein but deviated (steepened) significantly away from the vein. The Company's interpretation of the data is that the hole did not penetrate the vein system but skimmed the edge before dipping away from it towards the end of the hole. Narrow selvedges of vein material were recovered in the hole and the best analytical result was 0.76m grading 52 grammes/tonne silver (1.49 ounces/ton) from 333m down hole.
This grade cannot be considered as representative of the vein as a whole and typically the highest grades of silver are contained within sharply defined zones in the central parts of the vein which do not appear to have been cut in this hole. The hole was significant, however, in demonstrating that the vein is silver bearing in a much deeper intersection of the vein than was originally envisaged.
The second hole in the programme, 16SRRC005, was drilled from the same position as 16SRRC004 and on the same azimuth but at a shallower angle in order to get a complete intersection of the vein in between the shallow high-grade underground samples described above and the deeper occurrence demonstrated in hole 16SRRC004. No significant analytical results were obtained and the vein system does not appear to have been intersected. As the vein was projected to this position both from above and below it seems likely that the vein is displaced at this point by faulting and that the hole did not reach the vein.
The third hole, 16SRRC006, was drilled as a first test of the Lincoln Vein which runs semi-parallel to the Chihuahua Vein on its SW side, and which had been interpreted to dip at about 75 degrees toward the Chihuahua Vein. The Lincoln Vein system has only been worked from outcrop and in shallow workings. No significant analytical results were obtained. Further mapping and sampling of the Lincoln Vein system is required before further drilling on this target can be considered.
The Bay State Silver Project is permitted for sufficient drilling to define a maiden mineral resource. The Company's plan is to drill-demonstrate tonnage potential, carry out economic modelling and seek a JV partner for delineation drilling under existing permits.
County Line Diatomite Project
Ø Large area (>8sq. km.) of claims underlain by diatomite.
Ø Currently leased to diatomite producer EP Minerals, LLC.
Ø Exploration costs being met by lessor.
Ø Advanced royalty payments to commence June 2017 (subject to lease continuing).
Diatomite is an industrial raw material mainly used in the filtration of beer, wine, fats, biofuels and fruit juices, etc. It is also used as an industrial filler and in various agricultural and horticultural applications.
The County Line Diatomite Project is located some 200km south west of Reno, Nevada, USA. The 109 project claims are currently leased to existing diatomite producer EP Minerals, LLC. Should EP Minerals proceed to develop the leased claims, Sunrise is entitled to receive a significant revenue based royalty and by 2 June 2017 it must make an initial payment to the Company of US$450,000 as an advance royalty payment and further advanced royalty payments on a scheduled basis. EP Minerals has the right to withdraw from the Lease at any time.
Earlier this year EP Minerals, LLC applied for, and was granted, a permit for a programme of drilling and trenching and it has paid the advance claim fees for the year 1 September 2016-30 August 2017 in the amount of $16,895.
The Company benefits from the potential to receive royalty income at no further cost through its agreement with EP Minerals.
The Pozz Project
Ø Demand for natural pozzolan growing as a "green" cement replacement.
Ø Expansion of Pozz Project with staking of CS pumiceous rhyolite deposit in Nevada.
Ø Testwork in progress.
The Company's Pozz Project is an initiative to search for and acquire, at low-cost, deposits having potential for the production of natural pozzolan.
Natural pozzolan has been used in concrete for millennia and many of the Roman structures built with pozzolan concrete, such as the Pantheon and the Colosseum, are still standing. Today it is considered a "green" alternative to ordinary Portland cement which is responsible for 5% of the global man-made carbon dioxide emissions with nearly one tonne of CO(2) generated for each tonne of cement produced. In addition to reducing greenhouse gasses, the use of pozzolan can provide benefits in terms of long-term strength and stability in cement and concrete and can replace the use of fly-ash in cement which is diminishing in quantity and quality of supply.
The Company's first acquisition under this initiative was the staking of the Pozz Ash Deposit in Nevada and most recently the Company has staked a set of claims over a separate deposit in Nevada called the CS Deposit. Samples from both deposits meet the ASTM chemical specifications for natural pozzolan.
Two bench tests have been carried out by an existing concrete producer using raw Pozz Ash as a replacement for ordinary Portland cement. Based on these results it is predicted that the Pozz Ash has good commercial potential if the clay content can be removed or, alternatively, if the raw material is calcined. Calcination is a heating process by which the crystal structure of the contained clay minerals is favourably altered.
A follow up programme of testwork is now in progress at SGS Lakefield in Canada to determine if the clay minerals can be separated from the glass particles within the volcanic ash or if calcination may be required.
The CS Deposit is a deposit of glassy pumiceous rhyolite. Similar materials are already being successfully marketed in the western USA as natural pozzolan but each deposit will require extensive testing to determine its physical characteristics. Natural pozzolans must demonstrate high pozzolanic activity. A significant factor in determining this activity is the mineralogical make-up of the material with amorphous or glassy material being preferred.
Samples from the CS Deposit are comprised of 97.1%-99.1% amorphous (glass), 0.9-2.9% quartz. This is a positive indication and shows a higher glass content than samples from the Company's Pozz Ash Deposit which average around 80% glass and 20% clay minerals.
Samples from the CS Deposit have been submitted for physical testing.
Other Nevada Projects
The Garfield Gold, Silver & Copper Project emerged from the Company's own internal prospecting programme. In 2016 a trench was dug to evaluate high-grade surface mineralisation. Sampling of this trench gave 22m grading 0.33% copper mineralisation, including:
Ø 2 metres grading 2.18% copper and 0.48 g/t gold from 16m-18m;
Ø 2 metres grading 1.2 g/t gold and 0.07% copper from 8m-10m.
The Company intends to continue low-cost trenching activities along strike from the initial discovery outcrop where the early trenching was undertaken. The Garfield Gold Project offers the potential for a new copper discovery and subject to continuing exploration success the Company will seek a strategic farm-out of the project.
No work was carried out in 2016 on the Junction Gold Project. This is another internally generated prospecting discovery with assays up to 16 g/t gold. The next phase of work includes soil sampling to define targets for trenching and drilling to determine the full potential of this new discovery, although the results to date are favourable.
The Company has recently announced the staking of the Ridge Limestone Deposit. It is located adjacent to a sealed highway and 55 miles from sidings on the Union Pacific Railroad. There is no public record that this limestone occurrence has previously been targeted for industrial evaluation.
The limestone deposit forms a prominent ridge and lends itself to low-cost open-cast mining with potentially large tonnages evidenced by a large exposed surface area (5.4 sq. km).
High purity limestones may have a higher value than those used in construction aggregates and are used, for example, in the chemical industries, in glass manufacturing, flue gas desulphurisation and in various fillers and extenders in the rubber, sealants, plastic and paper industries. It is also used in the manufacture of lime (calcium oxide, CaO) which is used extensively in the mining industry.
Preliminary samples include limestone low in iron and silica suggesting that the limestone could meet the specifications of a wide range of higher value industrial applications if these surface samples prove to be representative of sufficiently large areas of the deposit.
The first stage in the evaluation of the Ridge Limestone Project will include more systematic mapping and surface sampling and brightness testing to evaluate the suitability of the limestone for higher value industrial applications. We will also evaluate the significance of the high zinc values found in reconnaissance samples.
The Company's interest in the Strike Copper Project was allowed to lapse in 2016.
WESTGOLD INC.
Westgold Inc. was incorporated in Nevada in 2016 as a wholly owned subsidiary of Sunrise Resources plc and as a project generator for gold and silver projects in the western USA. The incorporation of a separate subsidiary increases the Company's flexibility to valorise its projects as a package in future.
Westgold Inc. will capitalise on opportunities for staking projects that have lapsed in recent years and during the prolonged downturn in the mining industry. It is targeting projects where drilling or other sampling methods have confirmed the presence of gold and silver and indicate the potential to define a resource with further work or where there is geological potential for multi-million ounce discoveries. The Company will seek to farm-out these projects or to complete limited drilling to substantiate historical results prior to farm-out. New projects are being acquired primarily through staking claims on open ground, although Westgold will also consider low-cost lease arrangements where appropriate.
The Clayton Silver-Gold Project is an epithermal gold project located in the Walker Lane Mineral Belt. It lies 30km southeast of the producing Mineral Ridge Gold Mine and 30km southwest of the major historic mining centre of Goldfield where a number of large gold-silver deposits are currently under development. The project was last explored in the 1980s and drilling has recorded a number of significant silver-gold intersections, for example Hole CL-15 which intersected 7.6m grading 4.8 ounces/ton (165 grammes/tonne) silver from 82.3m, ending in mineralisation.
The Newark Gold Project is targeting sediment hosted "Carlin-style" gold mineralisation. It is located at the south end of the famous Battle Mountain-Eureka gold trend at its intersection with the Alligator Ridge gold trend. Many of Nevada's largest gold mines, which include some of the largest gold mines in the world, are based on Carlin-style deposits. The Newark Project lies 40km south of and along the same structural zone as the past-producing Alligator Ridge Mine, 12km north of the Mt. Hamilton gold project and 20km east of the Pan Gold Mine. Limited drilling at Newark in the late 1980s identified gold anomalous jasperoids in a favourable structural and stratigraphic setting with a typical Carlin-style geochemical signature.
Westgold has staked 15 claims (SW1-15) at the Stonewall Gold Project in Nevada to cover a large vein structure showing epithermal vein textures commonly associated with gold and silver mineralisation. The next phase of exploration is expert mapping and analysis leading to additional on the ground exploration or potential farm-out.
SUNRISE MINERALS AUSTRALIA PTY LTD
Fieldwork planned at the Cue Diamond Project in Australia was deferred in 2016 but limited further work targeting the source of Target 5 diamondiferous kimberlite float and additional kimberlite geophysical anomalies is budgeted for 2017. The project licence was renewed in April 2016 for a further five year period.
Similarly drilling on the Company's Baker's Gold Project in Australia was rescheduled for 2017.
OTHER PROJECTS
Derryginagh Barite Project
The Company holds a prospecting licence for base metals, barite, silver, gold and platinum group elements near Bantry, County Cork, in the south west of the Irish Republic. The licence is current until November 2017 when it can be renewed subject to the Company meeting certain expenditure obligations.
The Company continues to monitor developments in the barite market and is seeking to secure value from this project at the earliest opportunity.
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 Group's business is The directors bring over many
mineral exploration and years of combined mining and
evaluation which are speculative exploration experience and
activities. There is no an established track record
certainty that the Group in mineral discovery.
will be successful in
the definition of economic The Company targets advanced
mineral deposits, or that and drill ready exploration
it will proceed to the projects in order to avoid
development of any of higher risk grass roots exploration.
its projects or otherwise
realise their value.
----------------------------------- ----------------------------------------
Resource Risk
All mineral projects have Resources and reserves are
risk associated with defined estimated by independent specialists
grade and continuity. on behalf of the Group in accordance
Mineral Reserves are always with accepted industry standards
subject to uncertainties and codes. The directors are
in the underlying assumptions realistic in the use of metal
which include geological and mineral price forecasts
projection and metal price and impose rigorous practices
assumptions. in the QA/QC programmes that
support its independent estimates.
----------------------------------- ----------------------------------------
Development Risk
Delays in permitting, The Company's permitting requirements
financing and commissioning are limited at this stage to
a project may result in its exploration activities
delays to the Group meeting but to reduce development risk
production targets. Changes in future the directors will
in commodity prices can ensure that its permit and
affect the economic viability financing applications are
of mining projects and robust and thorough and will
affect decisions on continuing seek to position the Company
exploration activity. as a low quartile cost producer.
----------------------------------- ----------------------------------------
Mining and Processing
Technical Risk From the earliest stages of
Notwithstanding the completion exploration the directors look
of metallurgical testwork, to use consultants and contractors
test mining and pilot who are leaders in their field
studies indicating the and in future will seek to
technical viability of strengthen the executive and
a mining operation, variations the Board with additional technical
in mineralogy, mineral and financial skills as the
continuity, ground stability, Company transitions from exploration
groundwater conditions to production.
and other geological conditions
may still render a mining
and processing operation
economically or technically
non-viable.
---------------------------------- ------------------------------------------
Environmental Risk
Exploration and development Mineral exploration carries
of a project can be adversely a lower level of environmental
affected by environmental liability than mining. The
legislation and the unforeseen Company has adopted an Environmental
results of environmental Policy 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 restricts
risk that can lead to its activities to stable, democratic
interruption of activity. and mining friendly jurisdictions.
Politically stable countries
can have enhanced environmental The Company has adopted a strong
and social permitting Anti-corruption Policy and
risks, risks of strikes Code of Conduct and this is
and changes to taxation, strictly enforced.
whereas less developed
countries can have, in
addition, risks associated
with changes to the legal
framework, civil unrest
and government expropriation
of assets.
---------------------------------- ------------------------------------------
Partner Risk
Whilst there has been The Board's policy is to maintain
no past evidence of this, control of certain key projects
the Group can be adversely so that it can control the
affected if joint venture pace of exploration and reduce
partners are unable or partner risk.
unwilling to perform their
obligations or fund their For projects where other parties
share of future developments. 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 good
The Company has an ongoing network of contacts in the
requirement to fund its capital markets that has historically
activities through the met its financing requirements.
equity markets and in The Company's low overheads
future to obtain finance and cost effective exploration
for project development. strategies help reduce its
There is no certainty funding requirements and currently
such funds will be available the directors take their fees
when needed. in shares. Nevertheless further
equity issues will be required
from time to time.
---------------------------------- ------------------------------------------
Financial Instruments
Details of risks associated The directors are responsible
with the Group's Financial for the Group's systems of
Instruments are given internal financial control.
in Note 18 to the financial Although no systems of internal
statements. financial control can provide
absolute assurance 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 contains certain forward looking statements that have been made by the directors in good faith based on the information available at the time of the approval of the Annual Report. By their nature, such forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements.
This Strategic Report was approved by the Board of Directors on 14 December 2016 and signed on its behalf.
Patrick Cheetham
Executive Chairman
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 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.
Shareholders
The Board seeks to protect shareholders' interests by following, where appropriate, the guidelines in the UK Corporate Governance 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 potential to impact on the local environment and consequently has adopted an Environmental Policy to ensure that the Group's activities have minimal environmental impact. Where appropriate the Group's contracts with suppliers and contractors legally bind those suppliers and contractors to do the same.
The Group's activities carried out in accordance with 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 affected parties.
Employees
The Group engages its employees to understand all aspects of the Group's business and seeks to remunerate its employees fairly, being flexible where practicable. The Group gives full and fair consideration to applications for employment received regardless of age, gender, colour, ethnicity, disability, nationality, religious beliefs, transgender status or sexual orientation. The Board takes account of employees' interests when making decisions and suggestions from employees aimed at improving the Group's performance are welcomed.
The Company has adopted an Anti-corruption Policy and Code of Conduct.
Suppliers and Contractors
The Group recognises that the goodwill of its contractors, consultants and suppliers is important to its business success and seeks to build and maintain this goodwill through fair dealings. The Group has a prompt payment policy and seeks to settle all agreed liabilities within the terms agreed with suppliers. The amount shown in the Consolidated and Company Statement of Financial Position in respect of trade payables at the end of the financial year represents 71 days of average daily purchases (2015: 8 days). This amount is calculated by dividing the creditor balance at year end by the average daily Group spend in the year. The figure of 71 days for the 2016 year end appears high because of an unusually large creditor balance at year end relating to the SR Minerals Inc. drilling programme which took place in September 2016. This balance was settled within the creditor's normal payment terms.
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 a Health and Safety Policy to clearly define roles and responsibilities and in order to identify and manage risk.
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 Sunrise Resources plc website is the responsibility of the directors; the work carried out by the auditors does not involve the consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred in the accounts since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the other information included in annual reports may differ from legislation in other jurisdictions.
Information from Directors' Report
The directors are pleased to submit their Annual Report and audited accounts for the year ended 30 September 2016.
The Strategic Report contains details of the principal activities of the Company and includes the Operating Review which provides detailed information on the development of the Group's business during the year and indications of likely future developments and events that have occurred after the Balance Sheet date.
Going Concern
In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches. Further funding is raised as and when required. When any of the Group's projects move to the development stage, specific project financing will be required.
The directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report. These projections include the proceeds of future fundraising necessary within the next 12 months to meet the Company's and Group's overheads and planned discretionary project expenditures and to maintain the Company and Group as going concerns. Although the Company has been successful in raising finance in the past, there is no assurance that it will obtain adequate finance in the future. This represents a material uncertainty related to events or conditions which may cast significant doubt on the Group and Company's ability to continue as going concerns and, therefore, that they may be unable to realise their assets and discharge their liabilities in the normal course of business. However, the directors have a reasonable expectation that they will secure additional funding when required to continue meeting corporate overheads and exploration costs for the foreseeable future and therefore believe that the going concern basis is appropriate for the preparation of the financial statements.
Dividend
The directors are currently unable to recommend the payment of any ordinary dividend.
Financial Instruments and Other Risks
The business of mineral exploration and evaluation has inherent 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 are given in Note 18 to the financial statements.
Details of risks and uncertainties that affect the Group's business are given in the Strategic Report.
Directors
The directors holding office in the period were:
Mr P L Cheetham
Mr F P H Johnstone (Retired May 2016)
Mr D J Swan
Mr R D Murphy (Appointed May 2016)
The directors' shareholdings are shown in Note 16 to the financial statements.
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
of shares share
As at 14 December 2016 capital
----------------------------------------------- ----------- --------
Tertiary Minerals plc 114,122,557 10.08
----------------------------------------------- ----------- --------
Pershing Nominees Limited MDCLT 105,189,545 9.29
----------------------------------------------- ----------- --------
Barclayshare Nominees Limited 87,388,945 7.72
----------------------------------------------- ----------- --------
TD Direct Investing Nominees (Europe) Limited
SMKTNOMS 74,867,782 6.61
----------------------------------------------- ----------- --------
Share Nominees Limited 50,479,946 4.46
----------------------------------------------- ----------- --------
HSDL Nominees Limited 50,036,926 4.42
----------------------------------------------- ----------- --------
Beaufort Nominees Limited SSLNOMS 48,016,160 4.24
----------------------------------------------- ----------- --------
JIM Nominees Limited JARVIS 45,649,686 4.03
----------------------------------------------- ----------- --------
Hargreaves Lansdown (Nominees) Limited
15942 43,243,606 3.82
----------------------------------------------- ----------- --------
SVS (Nominees) Limited POOL 42,837,917 3.78
----------------------------------------------- ----------- --------
HSBC Client Holdings Nominee (UK) Limited
731504 41,618,359 3.68
----------------------------------------------- ----------- --------
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 reappoint Crowe Clark Whitehill LLP as Auditor of the Company will be proposed at the forthcoming Annual General Meeting.
Charitable and Political Donations
During the year, the Group made no charitable or political donations.
Annual General Meeting
Notice of the Company's Annual General Meeting will be sent to shareholders with the 2016 Annual Report.
Board of Directors
The Directors and Officers of the Company are:
Patrick Cheetham
Executive Chairman
Key Strengths:
-- Founding director -- Mining geologist with 35 years' experience in mineral exploration -- 30 years in public company management
Appointed: March 2005
Committee Memberships: Chairman of Nomination Committee
External Commitments: Executive Chairman of Tertiary Minerals plc
David Swan
Non-Executive Director
Key Strengths:
-- Chartered Accountant with career focus in natural resources industry
-- Past executive director of several public listed mining companies including Oriel Resources plc
Appointed: May 2012
Committee Memberships: Chairman of the Audit Committee, Member of the Remuneration and Nomination Committees
External Commitments: Non-Executive director of Central Asia Metals plc, Non-Executive director of Oriel Resources) and CFO (part-time) Scotgold Resources Limited (AIM listed).
Roger Murphy
Non-Executive Director
Key Strengths:
-- Career focus in capital raising for mining and oil & gas companies -- Former MD, Investment Banking, of Dundee Securities Europe Ltd -- Geologist
Appointed: May 2016
Committee Memberships: Chairman of the Remuneration Committee and Member of Audit and Nomination Committees
External Commitments: CEO of Sula Iron & Gold Plc.
Colin Fitch LLM, FCIS
Company Secretary
Key Strengths:
-- Barrister-at-Law -- Previously Corporate Finance Director of Kleinwort Benson
-- Previously held a number of non-executive directorships of public and private companies, including Merrydown Plc, African Lakes plc and Manders plc
Appointed: October 2006
External Commitments: Company Secretary for Tertiary Minerals plc
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 will attempt to comply wherever possible, given both the size and resources available to the Company.
The Board of Directors currently comprises the combined role of chairman and chief executive 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. However, it is the intention of the Board to separate these roles in future and to strengthen the executive Board as projects are developed and financial resources permit.
The Board is aware of the need to refresh its membership from time to time and will consider appointing additional independent non-executive directors in the future.
Role of the Board
The Board's role is to agree the Group's long-term direction and strategy and to monitor the achievement of its business objectives. The Board meets four times a year for these purposes and holds additional meetings when necessary to transact other business. The Board receives reports for consideration on all significant strategic and operational matters.
The non-executive directors are not considered under the terms of the Code to be independent directors by virtue of their holding of warrants to subscribe for shares in the Company. However, they are considered by the Board to be free from any other business or relationship which could materially interfere with the exercise of their independent judgement. Directors have the facility to take external independent advice in furtherance of their duties at the Group's expense and have access to the services of the Company Secretary.
The Board delegates certain of its responsibilities to the Audit, Remuneration and Nomination Committees of the Board. These Committees operate within clearly defined terms of reference.
Audit Committee
The Audit Committee, composed entirely of non-executive directors, 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. Mr Swan is Chairman of the Audit Committee.
Remuneration Committee
The Remuneration Committee also comprises the non-executive directors. Mr Murphy is Chairman of the Remuneration Committee. The Company does not currently remunerate any of the directors other than in a non-executive capacity. Whilst the Chairman of the Board, Patrick Cheetham, does have an executive role, his services are provided under a general service agreement with Tertiary Minerals plc.
The Company issues share warrants to directors and to the staff of Tertiary Minerals plc who are engaged in the management of the activities of the Company. The Company's policy on the issue of such warrants is that outstanding warrants should not in aggregate exceed 10% of the issued capital of the Company from time to time. Details of directors' warrants are disclosed in Note 16.
Nomination Committee
The Nomination Committee comprises the Chairman and the non-executive directors. Mr Cheetham is Chairman of the Nomination Committee. 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, where the Articles of Association contain a provision to this effect. The Company's Articles contain such a provision. Procedures are in place in order to avoid any conflict of interest between the Company and Tertiary Minerals plc, which held 9.13% of the Company's issued share capital at 30 September 2016. Tertiary Minerals provides management services to Sunrise Resources in the search, evaluation and acquisition of new projects.
Publication of Statutory Accounts
The financial information set out in this announcement does not constitute the Company's Statutory Accounts for the period ended 30 September 2016 or 2015. The financial information for 2015 is derived from the Statutory Accounts for 2015. Full audited accounts in respect of that financial period have been delivered to the Registrar of Companies. The Statutory Accounts for 2016 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have reported on the 2016 and 2015 accounts. Neither set of accounts contain a statement under section 498(2) or (3) the Companies Act 2006 and both received an unqualified audit opinion. However there was an emphasis of matter in relation to a requirement that the Company raise funds in the future to continue as a going concern.
Consolidated Income Statement
for the year ended 30 September 2016
2016 2015
Notes GBP GBP
------------------------------------ ------ ------------------ ----------------
Pre-licence exploration costs 45,316 35,276
Impairment of deferred exploration
cost 9 39,711 10,386
Administrative expenses 285,092 256,957
------------------------------------ ------ ------------------ ----------------
Operating loss (370,119) (302,619)
Interest receivable 532 1,348
------------------------------------ ------ ------------------ ----------------
Loss before income tax 3 (369,587) (301,271)
Income tax 7 - -
------------------------------------ ------ ------------------ ----------------
Loss on ordinary activities after
tax (369,587) (301,271)
------------------------------------ ------ ------------------ ----------------
Loss for the year attributable
to equity holders of the parent (369,587) (301,271)
------------------------------------ ------ ------------------ ----------------
Loss per share - basic and diluted
(pence) 6 (0.04) (0.05)
------------------------------------ ------ ------------------ ----------------
All amounts relate to continuing activities.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2016
2016 2015
GBP GBP
----------------------------------------------- --------- ---------
Loss for the year (369,587) (301,271)
----------------------------------------------- --------- ---------
Items that could be reclassified subsequently
to the income statement:
Foreign exchange translation differences
on foreign currency net investments
in subsidiaries 193,942 (65,272)
----------------------------------------------- --------- ---------
Fair value movement on available for
sale investment (1,676) -
----------------------------------------------- --------- ---------
Total comprehensive loss for the year
attributable to equity holders of the
parent (177,321) (366,543)
----------------------------------------------- --------- ---------
Consolidated and Company Statements of Financial Position
at 30 September 2016
Company Registration Number: 05363956
Group Company Group Company
2016 2016 2015 2015
Notes GBP GBP GBP GBP
------------------------------- ----- ----------- ----------- ----------- -----------
Non-current assets
Intangible assets 9 1,072,571 - 753,738 -
Investment in subsidiaries 8 - 1,311,874 - 1,055,406
Available for sale investment 8 23,324 23,324 25,000 25,000
------------------------------- ----- ----------- ----------- ----------- -----------
1,095,895 1,335,198 778,738 1,080,406
Current assets
Receivables 11 43,606 27,081 34,483 21,379
Cash and cash equivalents 12 223,268 102,865 142,079 105,349
------------------------------- ----- ----------- ----------- ----------- -----------
266,874 129,946 176,562 126,728
Current liabilities
Trade and other payables 13 (172,126) (98,468) (108,651) (84,122)
------------------------------- ----- ----------- ----------- ----------- -----------
Net current assets 94,748 31,478 67,911 42,606
------------------------------- ----- ----------- ----------- ----------- -----------
Net assets 1,190,643 1,366,676 846,649 1,123,012
------------------------------- ----- ----------- ----------- ----------- -----------
Equity
Called up share capital 14 1,119,910 1,119,910 691,149 691,149
Share premium account 4,818,998 4,818,998 4,761,776 4,761,776
Share warrant reserve 14 119,899 119,899 322,820 322,820
Available for sale investment
reserve (1,676) (1,676) - -
Foreign currency reserve 14 54,918 1,176 (139,024) -
Accumulated losses (4,921,406) (4,691,631) (4,790,072) (4,652,733)
------------------------------- ----- ----------- ----------- ----------- -----------
Equity attributable to
owners of the parent 1,190,643 1,366,676 846,649 1,123,012
------------------------------- ----- ----------- ----------- ----------- -----------
These financial statements were approved and authorised for issue by the Board of Directors on 14 December 2016 and were signed on its behalf.
P L Cheetham D J Swan
Executive Chairman Director
Consolidated Statement of Changes in Equity
Share Share Available Foreign
Share premium warrant for sale currency Accumulated
capital account reserve reserve reserve losses Total
Group GBP GBP GBP GBP GBP GBP GBP
---------------------- --------- --------- --------- --------- --------- ----------- ---------
At 30 September
2014 503,326 4,520,686 404,979 - (73,752) (4,581,789) 773,450
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Loss for the
year - - - - - (301,271) (301,271)
Exchange differences - - - - (65,272) - (65,272)
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Total comprehensive
loss for the
year - - - - (65,272) (301,271) (366,543)
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Share issue 187,823 241,090 - - - - 428,913
Share based
payments expense - - 10,829 - - - 10,829
Transfer of
expired warrants - - (92,988) - - 92,988 -
---------------------- --------- --------- --------- --------- --------- ----------- ---------
At 30 September
2015 691,149 4,761,776 322,820 - (139,024) (4,790,072) 846,649
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Loss for the
year - - - - (369,587) (369,587)
Change in fair
value (1,676) (1,676)
Exchange differences - - - - 193,942 - 193,942
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Total comprehensive
loss for the
year - - - (1,676) 193,942 (369,587) (177,321)
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Share issue 428,761 57,222 31,009 - - - 516,992
Share based
payments expense - - 4,323 - - - 4,323
Transfer of
expired warrants - - (238,253) - - 238,253 -
---------------------- --------- --------- --------- --------- --------- ----------- ---------
At 30 September
2016 1,119,910 4,818,998 119,899 (1,676) 54,918 (4,921,406) 1,190,643
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Company Statement of Changes in Equity
Share Share Available Foreign
Share premium warrant for sale currency Accumulated
capital account reserve reserve reserve losses Total
Company GBP GBP GBP GBP GBP GBP GBP
---------------------- --------- --------- --------- --------- --------- ----------- ---------
At 30 September
2014 503,326 4,520,686 404,979 - - (4,495,101) 933,890
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Loss for the
year and total
comprehensive
loss for the
year - - - - - (250,620) (250,620)
Share issue 187,823 241,090 - - - - 428,913
Share based
payments expense - - 10,829 - - - 10,829
Transfer of
expired warrants - - (92,988) - - 92,988 -
---------------------- --------- --------- --------- --------- --------- ----------- ---------
At 30 September
2015 691,149 4,761,776 322,820 - - (4,652,733) 1,123,012
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Loss for the
year - - - - - (277,151) (277,151)
Change in fair
value - - - (1,676) - - (1,676)
Exchange differences - - - - 1,176 - 1,176
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Total comprehensive
loss for the
year - - - (1,676) 1,176 (277,151) (277,651)
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Share issue 428,761 57,222 31,009 - - - 516,992
Share based
payments expense - - 4,323 - - - 4,323
Transfer of
expired warrants - - (238,253) - - 238,253 -
At 30 September
2016 1,119,910 4,818,998 119,899 (1,676) 1,176 (4,691,631) 1,366,676
---------------------- --------- --------- --------- --------- --------- ----------- ---------
Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2016
Group Company Group Company
2016 2016 2015 2015
Notes GBP GBP GBP GBP
--------------------------------- ----- --------- --------- --------- ---------
Operating activity
Total loss after tax (370,119) (279,805) (302,619) (252,326)
Share based payment charge 4,323 4,323 10,829 10,829
Shares issued in lieu of
net wages 19,720 19,720 19,215 19,215
Impairment charge - exploration 39,711 - 10,386 10,386
(Increase)/decrease in
receivables 11 (9,123) (5,702) (10,800) 103
Increase/(decrease) in
trade and other payables 13 63,475 14,346 (9,363) (440)
--------------------------------- ----- --------- --------- --------- ---------
Net cash outflow from operating
activity (252,013) (247,118) (282,352) (212,233)
--------------------------------- ----- --------- --------- --------- ---------
Investing activity
Interest received 532 2,654 1,348 1,706
Purchase of available for
sale investment - - (25,000) (25,000)
Development expenditures 9 (183,767) - (308,933) (10,386)
Loans to subsidiaries - (256,468) - (350,359)
Net cash outflow from investing
activity (183,235) (253,814) (332,585) (384,039)
--------------------------------- ----- --------- --------- --------- ---------
Financing activity
Issue of share capital
(net of expenses) 497,272 497,272 409,698 409,698
--------------------------------- ----- --------- --------- --------- ---------
Net cash inflow from financing
activity 497,272 497,272 409,698 409,698
--------------------------------- ----- --------- --------- --------- ---------
Net increase/(decrease)
in cash and cash equivalents 62,024 (3,660) (205,239) (186,574)
Cash and cash equivalents
at start of year 142,079 105,349 354,350 291,923
Exchange differences 19,165 1,176 (7,032) -
--------------------------------- ----- --------- --------- --------- ---------
Cash and cash equivalents
at 30 September 12 223,268 102,865 142,079 105,349
--------------------------------- ----- --------- --------- --------- ---------
Notes to the Financial Statements
for the year ended 30 September 2016
Background
Sunrise Resources plc is a public company incorporated and domiciled in England. It is traded on the AIM Market of the London Stock Exchange - EPIC: SRES.
The Company is a holding company (together, "the Group") for one company incorporated in Australia, and two companies incorporated in Nevada, in the United States of America. The Group's financial statements are presented in Pounds Sterling (GBP) which is also the functional currency of the Company.
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Group's financial statements.
1. Accounting policies
(a) Basis of preparation
The financial statements have been prepared on the basis of the recognition and measurement requirements of International Financial Reporting Standards (IFRS), as adopted by the European Union. They have also been prepared in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
(b) Going concern
In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches. Further funding is raised as and when required. When any of the Group's projects move to the development stage, specific project financing will be required.
The directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report. These projections include the proceeds of future fundraising necessary within the next 12 months to meet the Company's and Group's overheads and planned discretionary project expenditures and to maintain the Company and Group as going concerns. Although the Company has been successful in raising finance in the past, there is no assurance that it will obtain adequate finance in the future. This represents a material uncertainty related to events or conditions which may cast significant doubt on the Group's and Company's ability to continue as going concerns and, therefore, that they may be unable to realise their assets and discharge their liabilities in the normal course of business. However, the directors have a reasonable expectation that they will secure additional funding when required to continue meeting corporate overheads and exploration costs for the foreseeable future and therefore believe that the going concern basis is appropriate for the preparation of the financial statements.
(c) Basis of consolidation
Investments, including long-term loans, in the 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 Sunrise Resources 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, Sunrise Resources 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 Sunrise Resources plc is GBP277,151 (2015: GBP250,620).
(d) Intangible assets
Exploration and evaluation
Accumulated exploration and evaluation costs incurred in relation to separate areas of interest (which may comprise more than one exploration licence or exploration licence applications) are capitalised and carried forward where:
(1) such costs are expected to be recouped through successful exploration and development of the area, or alternatively by its sale; or
(2) exploration and/or evaluation activities in the area have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to the areas are continuing.
A bi-annual review is carried out by the directors to consider whether any exploration and development costs have suffered impairment in value and, if necessary, provisions are made according to this criteria. The bi-annual impairment reviews were conducted in March 2016 and September 2016.
Accumulated costs, where the Group does not yet have an exclusive exploration licence and in respect of areas of interest which have been abandoned, are written off to the income statement in the year in which the pre-licence expense was incurred or in which the area was abandoned.
Development
Exploration, evaluation and development costs are carried at the lower of cost and expected net recoverable amount. On reaching a mining development decision, exploration and evaluation costs are reclassified as development costs and all development costs on a specific area of interest will be amortised over the useful economic life of the projects, once they become income generating and the costs can be recouped.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) Share warrants and share based payments
The Company issues warrants to employees and third parties. For all warrants issued after 7 November 2002 the fair value of the warrants is recognised as a charge measured at fair value on the date of grant and determined in accordance with IFRS 2 or IAS 39, adopting the Black-Scholes-Merton model. The fair value is recognised on a straight-line basis over the vesting period, with a corresponding adjustment to equity, based on the management's estimate of shares that will eventually vest. The expected life of the warrants is adjusted based on management's best estimates, for the effects of non-transferability, exercise restrictions and behavioural considerations. The details are shown in Note 15.
The Company also issues shares in order to settle certain liabilities, including payment of fees to directors. The fair value of shares issued is based on the closing mid-market price of the shares on the AIM Market on the day prior to the date of settlement and it is expensed on the date of settlement with a corresponding increase in equity.
(j) Judgements and estimations in applying accounting policies
In the process of applying the Group's accounting policies above, management 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 look to evidence produced by its exploration activities to indicate whether the carrying value is impaired. Assessment of the impairment of assets is a judgement based on analysis of the future likely 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 has expired during the period or will expire in the near future, and is not expected to be renewed.
(b) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned.
(c) exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area.
(d) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.
Impairment reviews for investments are carried out on an individual basis. The Group will look to performance indicators of the investment, such as market share price, to indicate whether the carrying value is impaired.
Going concern
The preparation of financial statements requires an assessment of the validity of the going concern assumption. The validity of the going concern assumption is 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
The estimates of costs recognised in connection with the fair value of share warrants requires that management selects an appropriate valuation model and make decisions on various inputs into the model including the volatility of its own share price, the probable life of the warrants before exercise, and behavioural consideration of warrant holders.
(k) 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.
(l) 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, IFRS 15 will not have any significant impact on revenue recognition and related disclosures. Finally, the adoption of IFRS 16 will not have any impact on the financial statements of the Group as all lease contracts are for periods of less than one year.
2. Segmental analysis
The Chief Operating Decision Maker is the Board of Directors. The Board considers the business has one reportable segment, the management of exploration projects, which is supported by a Head Office function. For the purpose of measuring segmental profits and losses the exploration segment bears only those direct costs incurred by or on behalf of those projects, no Head Office cost allocations are made to this segment. The Head Office function recognises all other costs.
Exploration Head
projects office Total
2016 GBP GBP GBP
--------------------------------------- ----------- --------- ---------
Consolidated Income Statement
Impairment of deferred exploration
costs :
Corona Gold Project, Australia (32,930) - (32,930)
Strike Copper-Gold Project,
USA (6,781) - (6,781)
--------------------------------------- ----------- --------- ---------
(39,711) - (39,711)
Pre-licence exploration costs (45,316) - (45,316)
Share based payments - (4,323) (4,323)
Other expenses - (280,769) (280,769)
--------------------------------------- ----------- --------- ---------
Operating loss (85,027) (285,092) (370,119)
Bank interest received - 532 532
--------------------------------------- ----------- --------- ---------
Loss before income tax (85,027) (284,560) (369,587)
Income tax - - -
--------------------------------------- ----------- --------- ---------
Loss for the year attributable
to equity holders (85,027) (284,560) (369,587)
--------------------------------------- ----------- --------- ---------
Non-current assets
Intangible assets:
Deferred exploration costs:
Cue Diamond Project, Australia 478,348 - 478,348
Baker's Gold Project, Australia 49,040 - 49,040
County Line Diatomite Project,
USA 102,888 - 102,888
Garfield Silver-Gold-Copper
Project, USA 24,691 - 24,691
Bay State Silver Project, USA 362,961 - 362,961
Junction Gold Project, USA 14,189 - 14,189
Pozz Ash Project, USA 12,113 - 12,113
Clayton Gold Project, USA 8,645 - 8,645
Newark Silver-Gold Project,
USA 13,427 - 13,427
Stonewall Gold Project, USA 6,269 - 6,269
--------------------------------------- ----------- --------- ---------
1,072,571 - 1,072,571
Available for sale investment - 23,324 23,324
--------------------------------------- ----------- --------- ---------
1,072,571 23,324 1,095,895
--------------------------------------- ----------- --------- ---------
Current assets
Receivables 15,122 28,484 43,606
Cash and cash equivalents - 223,268 223,268
--------------------------------------- ----------- --------- ---------
15,122 251,752 266,874
--------------------------------------- ----------- --------- ---------
Current liabilities
Trade and other payables (82,062) (90,064) (172,126)
--------------------------------------- ----------- --------- ---------
Net current assets/(liabilities) (66,940) 161,688 94,748
--------------------------------------- ----------- --------- ---------
Net assets 1,005,631 185,012 1,190,643
--------------------------------------- ----------- --------- ---------
Other data
Deferred exploration additions 183,767 - 183,767
Exchange rate adjustments to
deferred exploration costs - 174,777 174,777
--------------------------------------- ----------- --------- ---------
Exploration Head
projects office Total
2015 GBP GBP GBP
--------------------------------------- ----------- --------- ---------
Consolidated Income Statement
Impairment of deferred exploration
costs :
Derryginagh Barite Project,
Ireland (279) - (279)
Kuusamo Diamond Project, Finland (9,589) - (9,589)
Other Diamond Projects, Finland (518) - (518)
--------------------------------------- ----------- --------- ---------
(10,386) - (10,386)
Pre-licence exploration costs (35,276) - (35,276)
Share based payments - (10,829) (10,829)
Other expenses - (246,128) (246,128)
--------------------------------------- ----------- --------- ---------
Operating loss (45,662) (256,957) (302,619)
Bank interest received - 1,348 1,348
--------------------------------------- ----------- --------- ---------
Loss before income tax (45,662) (255,609) (301,271)
Income tax - - -
--------------------------------------- ----------- --------- ---------
Loss for the year attributable
to equity holders (45,662) (255,609) (301,271)
--------------------------------------- ----------- --------- ---------
Non-current assets
Intangible assets:
Deferred exploration costs:
Cue Diamond Project, Australia 367,330 - 367,330
Corona Gold Project, Australia 25,085 - 25,085
Baker's Gold Project, Australia 35,791 - 35,791
County Line Diatomite Project,
USA 78,741 - 78,741
Strike Copper-Gold Project,
USA 5,606 - 5,606
Garfield Silver-Gold-Copper
Project, USA 17,053 - 17,053
Bay State Silver Project, USA 213,943 - 213,943
Junction Gold Project, USA 10,189 - 10,189
--------------------------------------- ----------- --------- ---------
753,738 - 753,738
Available for sale investment - 25,000 25,000
--------------------------------------- ----------- --------- ---------
753,738 25,000 778,738
--------------------------------------- ----------- --------- ---------
Current assets
Receivables 12,893 21,590 34,483
Cash and cash equivalents - 142,079 142,079
--------------------------------------- ----------- --------- ---------
12,893 163,669 176,562
--------------------------------------- ----------- --------- ---------
Current liabilities
Trade and other payables (37,619) (71,032) (108,651)
--------------------------------------- ----------- --------- ---------
Net current assets/(liabilities) (24,726) 92,637 67,911
--------------------------------------- ----------- --------- ---------
Net assets 729,012 117,637 846,649
--------------------------------------- ----------- --------- ---------
Other data
Deferred exploration additions 308,933 - 308,933
Exchange rate adjustments to
deferred exploration costs - (58,240) (58,240)
--------------------------------------- ----------- --------- ---------
3. Loss before income tax
The operating loss is stated after charging: 2016 2015
GBP GBP
---------------------------------------------- ----- -----
Fees payable to the Company's auditor
for:
The audit of the Company's annual accounts 6,000 6,000
Other services 1,000 1,000
---------------------------------------------- ----- -----
4. Directors' emoluments
Remuneration in respect of directors 2016 2015
was as follows: GBP GBP
-------------------------------------- ------ ------
P L Cheetham (salary) 12,000 12,000
F P H Johnstone (salary) 7,295 12,000
D J Swan (salary) 12,000 12,000
R Murphy (salary) 4,710 -
-------------------------------------- ------ ------
36,005 36,000
-------------------------------------- ------ ------
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 GBP2,223 (2015: GBP7,213) or Employer's National Insurance Contributions of GBPNil (2015: GBPNil).
Patrick Cheetham is also a director of Tertiary Minerals plc and under the terms of the Management Services Agreement (see Note 5) a total of GBP99,775 was charged to the Company for his services during the year (2015: GBP96,971). These services are provided at cost.
The directors are also the key management personnel. If all benefits are taken into account, the total key management personnel compensation would be GBP38,228 (2015: GBP43,213).
5. Staff costs
2016 2015
GBP GBP
---------------------------------------- ------ ------
Staff costs for the Group and Company,
including directors, were as follows:
Wages and salaries 39,078 36,000
Social security costs - -
Share based payments 2,756 7,213
---------------------------------------- ------ ------
41,834 43,213
---------------------------------------- ------ ------
The average monthly number of employees employed by the Group and Company during the year was as follows:
2016 2015
Number Number
---------------- ------- -------
Directors 3 3
Other Officers 1 -
---------------- ------- -------
4 3
---------------- ------- -------
The increase in the number of employees for 2016 is due to the inclusion of the Company Secretary onto the payroll which was not included in prior years.
The Company does not employ any staff directly apart from the directors and a company secretary. The services of technical and administrative staff are provided by Tertiary Minerals plc as part of the Management Services Agreement between the two companies (see Note 16). The Company issues share warrants to Tertiary Minerals plc staff from time to time and these non-cash share based payments resulted in a charge within the financial statements of GBP1,567 (2015: GBP2,714).
6. Loss per share
Loss per share has been calculated using the loss for the year attributable to equity holders of the Parent and the weighted average number of shares in issue during the year.
2016 2015
---------------------------------- ----------- -----------
Loss (GBP) (369,587) (301,271)
Weighted average shares in issue
(No.) 869,068,238 606,342,995
Basic and diluted loss per share
(pence) (0.04) (0.05)
---------------------------------- ----------- -----------
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 would have the effect of reducing the loss per ordinary share and is therefore anti-dilutive.
7. Income tax
No liability to corporation tax arises for the year due to the Group recording a taxable loss (2015: GBPNil).
The tax credit for the period is lower than the credit resulting from the loss before tax at the standard rate of corporation tax in the UK - 20% (2015: 20%). The differences are explained below.
2016 2015
GBP GBP
---------------------------------------------- ----------- -----------
Tax reconciliation
Loss before income tax (369,587) (301,271)
---------------------------------------------- ----------- -----------
Tax at hybrid rate 20% (2015: 20.5%) (73,917) (61,761)
---------------------------------------------- ----------- -----------
Pre-trading expenditure no longer deductible
for tax purposes 214,830 227,564
Tax effect at 20% (2015: 20.5%) 42,966 46,651
---------------------------------------------- ----------- -----------
Unrelieved tax losses carried forward 30,951 15,110
---------------------------------------------- ----------- -----------
Tax recognised on loss - -
---------------------------------------------- ----------- -----------
Tax losses carried forward - -
---------------------------------------------- ----------- -----------
Total losses carried forward for tax
purposes (3,722,605) (3,567,848)
---------------------------------------------- ----------- -----------
Factors that may affect future tax charges
The Group has total losses carried forward of GBP3,722,605 (2015: GBP3,567,848). 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. Investments
Subsidiary undertakings
Type and percentage
Country of shares held
of at
incorporation/ 30 September Principal
Company registration 2016 activity
--------------------------- --------------- ------------------- -------------------
Sunrise Minerals Australia 100% of ordinary
Pty Ltd Australia shares Mineral exploration
100% of ordinary
SR Minerals Inc. USA shares Mineral exploration
100% of ordinary
Westgold Inc. USA shares Mineral exploration
Company Company
2016 2015
Investment in subsidiary undertakings GBP GBP
---------------------------------------------- --------- ---------
Ordinary Shares - Sunrise Minerals Australia
Pty Ltd 61 61
Loan - Sunrise Minerals Australia Pty
Ltd 705,676 698,380
Ordinary Shares - SR Minerals Inc. 1 1
Loan - SR Minerals Inc. 558,392 356,964
Ordinary Shares - Westgold Inc. 1 -
Loan - Westgold Inc. 47,743 -
---------------------------------------------- --------- ---------
At 30 September 1,311,874 1,055,406
---------------------------------------------- --------- ---------
Sunrise Minerals Australia Pty Ltd was incorporated in Australia on 7 October 2009 to facilitate the application for exploration licences in Western Australia.
SR Minerals Inc. was incorporated in Nevada, USA on 12 January 2014 to facilitate the application for mining claims in the USA.
Westgold Inc. was incorporated in Nevada, USA on 13 April 2016 to facilitate the application for mining claims in the USA with an emphasis on gold and silver projects.
Available for sale investment
Type and percentage
of shares held
Country of at
incorporation/ 30 September Principal
Company registration 2016 activity
-------------------- --------------- ------------------- -------------------
Goldcrest Resources 5.57% of ordinary
Plc England & Wales shares Mineral exploration
On 3 March 2016 Taoudeni Resources Limited was acquired by Goldcrest Resources Plc in a share for share exchange.
Group Company Group Company
2016 2016 2015 2015
Available for sale investment GBP GBP GBP GBP
-------------------------------- ------- ------- ------ -------
Value at start of year 25,000 25,000 - -
Additions to available
for sale investment - - 25,000 25,000
Movement in valuation of
available for sale investment (1,676) (1,676) - -
-------------------------------- ------- ------- ------ -------
At 30 September 23,324 23,324 25,000 25,000
-------------------------------- ------- ------- ------ -------
The fair value of the available for sale investment is equal to the market value of the shares in Goldcrest Resources plc at 30 September 2016, based on the closing mid-market price of shares on the ISDX market. These are level one inputs for the purpose of the IFRS 13 fair value hierarchy.
9. Intangible assets
Group Company Group Company
2016 2016 2015 2015
Deferred exploration expenditure GBP GBP GBP GBP
Cost
At start of year 3,056,115 2,203,594 2,747,182 2,193,208
Additions 183,767 - 308,933 10,386
---------------------------------- ----------- ----------- ----------- -----------
At 30 September 3,239,882 2,203,594 3,056,115 2,203,594
---------------------------------- ----------- ----------- ----------- -----------
Impairment losses
At start of year (2,302,377) (2,203,594) (2,233,751) (2,193,208)
Change during year (39,711) - (10,386) (10,386)
Foreign exchange difference 174,777 - (58,240) -
---------------------------------- ----------- ----------- ----------- -----------
At 30 September (2,167,311) (2,203,594) (2,302,377) 2,203,594
---------------------------------- ----------- ----------- ----------- -----------
Carrying amounts
At 30 September 1,072,571 - 753,738 -
---------------------------------- ----------- ----------- ----------- -----------
At start of year 753,738 - 513,431 -
---------------------------------- ----------- ----------- ----------- -----------
During the year the Group carried out an impairment review which resulted in an impairment charge being recognised in the Consolidated Income Statement as part of operating expenses. Refer to accounting policy 1(j) for a description of the assumptions used in the impairment review.
10. Property, plant and equipment
The Group has the use of tangible assets held by Tertiary Minerals plc as part of the Management Services Agreement between the two companies.
11. Receivables
Group Company Group Company
2016 2016 2015 2015
GBP GBP GBP GBP
------------------- ------ ------- ------ -------
Other receivables 27,762 12,915 23,129 10,937
Prepayments 15,844 14,166 11,354 10,442
------------------- ------ ------- ------ -------
43,606 27,081 34,483 21,379
------------------- ------ ------- ------ -------
12. Cash and cash equivalents
Group Company Group Company
2016 2016 2015 2015
GBP GBP GBP GBP
-------------------------- ------- ------- ------- -------
Cash at bank and in hand 223,268 102,865 142,079 105,349
223,268 102,865 142,079 105,349
-------------------------- ------- ------- ------- -------
13. Trade and other payables
Group Company Group Company
2016 2016 2015 2015
GBP GBP GBP GBP
-------------------------- ------- ------- ------- -------
Amounts owed to Tertiary
Minerals plc 64,724 64,724 53,888 53,888
Trade creditors 63,045 8,227 10,816 7,349
Accruals 44,357 25,517 43,947 22,885
-------------------------- ------- ------- ------- -------
172,126 98,468 108,651 84,122
-------------------------- ------- ------- ------- -------
14. Issued capital and reserves
2016 2016 2015 2015
Number GBP Number GBP
--------------------------- ------------- --------- ----------- -------
Allotted, called up and
fully paid
Ordinary shares of 0.1p
each
Balance at start of year 691,148,682 691,149 503,325,932 503,326
Shares issued in the year 428,761,697 428,761 187,822,750 187,823
Balance at 30 September 1,119,910,379 1,119,910 691,148,682 691,149
--------------------------- ------------- --------- ----------- -------
During the year to 30 September 2016 the following share issues took place:
An issue of 5,734,754 0.1p ordinary shares at 0.160p per share to three directors, for a total consideration of GBP9,176, in satisfaction of directors' fees (18 February 2016).
An issue of 49,298,406 0.1p ordinary shares at 0.175p per share to Tertiary Minerals plc, for a total consideration of GBP86,272, by way of settlement of an invoice issued to Sunrise Resources plc for management fees (7 March 2016).
An issue of 109,090,908 0.1p ordinary shares at 0.110p per share, by way of placing and subscription, for a total consideration of GBP115,000 net of expenses (4 April 2016).
An issue of 9,090,909 0.1p ordinary shares at 0.110p per share to Beaufort Securities, for a total consideration of GBP10,000, by way of settlement of an invoice issued to Sunrise Resources plc for Joint Broker fees (4 April 2016).
An issue of 1,840,771 0.1p ordinary shares at 0.140p per share to a director, for a total consideration of GBP2,577, in satisfaction of directors' fees (11 May 2016).
An issue of 250,000,000 0.1p ordinary shares at 0.120p per share, by way of placing and subscription, for a total consideration of GBP286,000 net of expenses (25 May 2016).
An issue of 3,705,949 0.1p ordinary shares at 0.215p per share to three directors, for a total consideration of GBP7,968, in satisfaction of directors' fees (5 August 2016).
During the year to 30 September 2015 a total of 187,822,750 0.1p ordinary shares were issued, at an average price of 0.23p per share, for a total consideration of GBP428,913 net of expenses.
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 warrant reserve
The share warrant reserve is used to recognise the value of equity-settled share warrants provided to employees, including key management personnel, as part of their remuneration, and to third parties in connection with fundraising. Refer to Note 15 for further details.
15. Share warrants granted
Warrants not exercised at 30 September 2016
Issue Exercise Exercisable Expiry
date price Number dates
---------- -------- ----------- --------------- --------
Any time before
24/02/12 1.25p 5,500,000 expiry 24/02/17
Any time before
19/12/12 0.85p 5,750,000 expiry 19/03/18
Any time before
14/01/14 0.55p 5,750,000 expiry 14/01/19
Any time before
05/02/15 0.275p 6,750,000 expiry 05/02/20
Any time before
05/02/15 0.275p 2,625,000 expiry 05/02/20
Any time from
18/02/16 0.16p 750,000 18/02/17 18/02/21
Any time from
18/02/16 0.16p 2,500,000 18/02/17 18/02/21
Any time before
10/06/16 0.24p 16,666,667 expiry 10/12/18
Any time before
10/06/16 0.24p 233,333,333 expiry 10/12/18
---------- -------- ----------- --------------- --------
Share 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 of 0.1p at the exercise price on the date of conversion.
On 10 June 2016 the Company issued 250,000,000 share warrants in connection with a placing and subscription of shares. The estimated fair value of these warrants was GBP31,009, which has been credited to equity.
Share warrant transactions
The Company issues share warrants on varying terms and conditions.
Details of the share warrants outstanding during the year are as follows:
2016 2015
Weighted Weighted
average average
Number exercise Number exercise
of share price of share price
warrants (Pence) warrants (Pence)
---------------------------- ------------ --------- ------------ ---------
Outstanding at start of
year 98,708,332 0.79 103,833,332 0.83
Granted during the year 253,250,000 0.239 9,375,000 0.275
Forfeited during the year - - - -
Exercised during the year - - - -
Expired during the year (72,333,332) 0.84 (14,500,000) 0.71
---------------------------- ------------ --------- ------------ ---------
Outstanding at end of year 279,625,000 0.28 98,708,332 0.79
---------------------------- ------------ --------- ------------ ---------
Exercisable at end of year 276,375,000 0.28 89,333,332 0.85
---------------------------- ------------ --------- ------------ ---------
The share warrants outstanding at 30 September 2016 had a weighted average exercise price of 0.28p (2015: 0.79p), a weighted average fair value of 0.05p (2015: 0.36p) and a weighted average remaining contractual life of 2.21 years.
In the year ended 30 September 2016 warrants were granted on 18 February 2016 to an officer of the Company and employees of Tertiary Minerals plc with an aggregate estimated fair value of GBP1,599.
On 10 June 2016 warrants were granted to a director of the Company in connection with a placing and subscription of shares with an estimated fair value of GBP2,067.
In the year ended 30 September 2015 warrants were granted on 5 February 2015 to directors and officer of the Company and employees of Tertiary Minerals plc with an aggregate estimated fair value of GBP9,515.
In the year to 30 September 2016 the Company recognised expenses of GBP4,323 (2015: GBP10,829) related to issuing of share warrants in connection with equity-settled share based payment transactions. 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.
In the year ended 30 September 2016 no share warrants were exercised.
The inputs into the Black-Scholes-Merton Pricing Model were as follows:
2016 2015
--------------------------------- ------- -------
Weighted average share price 0.12p 0.275p
Weighted average exercise price 0.24p 0.275p
Expected volatility 70.0% 77.5%
Expected life 2 years 4 years
Risk-free rate 0.36% 1.09%
Expected dividend yield 0% 0%
--------------------------------- ------- -------
Expected volatility was determined by calculating the historical volatility of the Company's share price over the previous 4 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.
16. Related party transactions
Key management personnel
The directors holding office at the year end and their warrants held in the share capital of the Company are:
At 30 September 2016 At 30 September
2015
Share Warrants
---------- ----------------------------------- ---------- ----------
Shares Exercise Expiry Shares Warrants
number Number price date number number
--------------- ---------- ---------- -------- ------------- ---------- ----------
P L Cheetham* 75,776,599 2,000,000 1.250p 24/02/17 22,725,951 13,222,222
2,000,000 0.85p 19/03/18
2,000,000 0.55p 14/01/19
3,000,000 0.275p 05/02/20
D J Swan 8,710,863 1,000,000 0.85p 19/03/18 5,081,944 3,500,000
1,000,000 0.55p 14/01/19
1,500,000 0.275p 05/02/20
R Murphy 17,302,848 16,666,667 0.24p 10/12/18 - -
*Includes 5,500,000 shares held by K E Cheetham, wife of P L Cheetham.
Tertiary Minerals plc
Sunrise Resources plc is treated as an investment in the consolidated accounts of Tertiary Minerals plc, which held 9.13% of the issued share capital on 30 September 2016 (2015: 7.66%).
Tertiary Minerals plc provides management services to Sunrise Resources plc and consequently during the year the Group incurred costs of GBP190,124 (2015: GBP181,598) recharged at cost from Tertiary Minerals being overheads of GBP23,488 (2015: GBP22,809), costs paid on behalf of the Group of GBP4,288 (2015: GBP6,312), Tertiary staff salary costs of GBP61,866 (2015: GBP55,454) and Tertiary directors' salary costs of GBP100,482 (2015: GBP97,023).
At the balance sheet date an amount of GBP64,724 (2015: GBP53,888) was due to Tertiary Minerals plc.
Patrick Cheetham, the Executive Chairman of the Company, is also a director of Tertiary Minerals plc. At 30 September 2016 and at the date of this report, Donald McAlister, a director of Tertiary Minerals plc, holds 550,000 shares in the Company, and David Whitehead, a director of Tertiary Minerals plc, holds 250,000 shares in the Company.
17. 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.
18. Financial instruments
At 30 September 2016, the Group's and Company's financial assets consisted of receivables due within one year, available for sale investments 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's and Company's financial assets and liabilities.
The carrying amounts for each category of financial instrument held at 30 September 2016, as defined in IAS 39, are as follows:
Group Company Group Company
2016 2016 2015 2015
GBP GBP GBP GBP
-------------------------------- ------- ------- ------- -------
Loans & receivables 251,030 115,780 165,208 116,286
Available for sale investments 23,324 23,324 25,000 25,000
Financial Liabilities at
amortised cost 162,990 89,331 98,681 74,151
-------------------------------- ------- ------- ------- -------
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 the risks are assessed not to have changed.
Liquidity risk
The Group holds cash balances in Sterling, US Dollars, Australian Dollars, Canadian Dollars and the Euro to provide funding for exploration and evaluation activity, whilst the Company holds cash balances in Sterling, US Dollars, Canadian Dollars and Euros.
The Company is 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 or interest rate risks. The Group is exposed to transactional foreign exchange risk and takes profits and losses as they arise as, in the opinion of the directors, the cost of hedging against fluctuations would be greater than the related benefit from doing so. Fluctuations in the exchange rate are not expected to have a material effect on reported loss or equity.
Group Company Group Company
Bank balances were held 2016 2016 2015 2015
in the following denominations: GBP GBP GBP GBP
---------------------------------- ------ ------- ------ -------
United Kingdom Sterling 93,749 93,749 78,747 78,747
Australian Dollar 25,871 - 33,646 -
Canadian Dollar 5,874 5,874 4,928 4,928
United States Dollar 96,448 1,916 23,083 19,999
Euro 1,326 1,326 1,675 1,675
---------------------------------- ------ ------- ------ -------
Interest rate risk
The Company finances operations through equity fundraising and therefore does 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 risk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR TIBMTMBMBBJF
(END) Dow Jones Newswires
December 14, 2016 05:17 ET (10:17 GMT)
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