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Alan Green talks to Patrick Cheetham, Executive Chairman at Tertiary Minerals #TYM

Alan Green talks to Patrick Cheetham, Executive Chairman at Tertiary Minerals #TYM. Patrick discusses the latest developments at the Pyramid Gold and Silver projects, plus the Mount Tobin Silver project & the latest exploration results from the Lucky Copper project.

On the latest results from Lucky Copper, Patrick made the following comment on the TYM RNS announcement. “This maiden drill hole has confirmed the occurrence of copper mineralisation in magnetic gossan zones at shallow depth. The geological setting of the mineralisation is not yet defined but trace element geochemistry suggests the gossans are developed from skarn-style mineralisation,  a class of deposit containing a number of large economic copper deposits in Nevada and the adjoining States. Detailed evaluation of the drill samples is underway to define the host rock stratigraphy and a magnetic survey is planned to define additional drill targets.”

We also discuss the newly acquired Brunton Pass copper project, the Kaaresselkä Gold royalty agreements Finland, and the strong group cash position following the recent placing.

Tertiary Minerals #TYM – Audited Results for the year ended 30 September 2020

The Board of Tertiary Minerals plc is pleased to announce audited results for the year ended 30 September 2020.

Operational Summary for the Year ended 30th September 2020

Continuing to build and explore its project portfolio in Nevada, USA:

Ø Pyramid Gold Project

o  Maiden drill hole confirms target zone is gold mineralised.

o  Property wide soil sampling programme completed – results awaited.

Ø Paymaster Polymetallic Project

o  Valley Prospect – Samples from outcropping skarn zone up to 7.5% zinc, 4.3% lead and 180 g/t silver. Drone magnetic survey completed to define drill target.

o  East Slope Prospect – 650m long zinc soil anomaly defined by initial soil sampling, infill soil sampling and drone magnetic survey completed, Results awaited.

New Projects include:

Ø Mt Tobin Silver Prospect

o  Reconnaissance samples up to 101 grammes/tonne (g/t) silver (3.12 ounces/ton) over a 450m strike length sampled to date. Open to north and south.

o  Drone magnetic survey and a soil sampling programme have now been completed. Results awaited.

 

Ø Peg Leg Polymetallic Prospect

o  Trenching programme tested outcropping skarn zone. Analytical Results disappoint but drone magnetic survey identified untested targets.

 

Ø Lucky Copper Project

o  Targeting disseminated, sediment hosted, intrusion-related copper deposit.

o  Drill permit received to re-test historical intersection of 20.4m cumulative thickness of grading 0.65% copper to end of hole at 77.7m depth.

Fluorspar Projects:

o  Storuman mine permit (Sweden) – appeal process continues, no progress during the year

o  MB Project (Nevada, USA) terminated. Metallurgical test work failed to define a viable processing method.

 

Kaaresselkä Gold Project Royalty, Finland

o  Encouraging results reported by TSX listed Aurion Resources Ltd where Tertiary holds a number of royalty interests.

o  Vanha Gold Zone extended to 200 m depth and 600 m along strike.

For more information please contact:

Tertiary Minerals plc:
Patrick Cheetham, Executive Chairman +44 (0) 1625 838 679
SP Angel Corporate Finance LLP

Nominated Adviser and Broker

Richard Morrison +44 (0) 203 470 0470
Caroline Rowe
Peterhouse Capital Limited

Joint Broker

Lucy Williams + 44 (0) 207 469 0930
Duncan Vasey

 

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 

Chairman’s Statement

I am pleased to present the Company’s Annual Report and Financial Statements for the year ended 30 September 2020, a year of transition as we continue to build our project portfolio. We now have five attractive precious metal and base metal projects in Nevada, USA, one of the most prospective exploration terrains on Earth. These include precious metal targets as well as a number of targets for copper mineralisation, an under explored commodity in Nevada which is, of course, more famous for its gold and silver deposits.

We have been active in exploring and adding to our Nevada projects throughout the year with results still awaited for our autumn exploration programmes. This has included combinations of soil sampling, geophysics and trenching on our Paymaster, Pyramid, Mt Tobin and Peg Leg Projects and it is anticipated that drilling will be the next step on a number of these exciting prospects.  These projects and the work carried out in 2020 are discussed in my Operating Review.

We have seen some developments on our royalty interests in 2020, most notably with the completion of a drilling programme by Aurion Resources Ltd on the Kaaresselkä Gold project in Finland where 12 holes were drilled to follow up on our previous exploration. Results announced recently were described as encouraging and extend the gold mineralized zone to c.200 m depth and to c.600 m strike length at the Vanha target.

At the end of the reporting period we made the difficult decision to terminate our interest in the large MB Fluorspar Project in Nevada after years of effort to find a viable processing route. The combination of fine-grained mineral intergrowths, poor recovery and low grade combined to make production of a saleable concentrate unviable.

There is no news to report on our Storuman Fluorspar Project as we have had no response yet to our appeal against the decision by the Swedish Mining Inspectorate to reject Tertiary’s Exploitation (Mine) Permit in its current form after having previously granted this. Many projects in Sweden are in the same unfortunate situation and there is no legislated timeframe for the Government to respond.

Fluorspar, as a source of fluorine, is one of the least known of the battery commodities.  Fluoride ion batteries provide an interesting alternative to lithium ion batteries, in particular because of their larger theoretical energy densities and the increasing use of fluoropolymers in lithium batteries is an opportunity for the market in the coming years. We have acquired significant expertise in fluorspar and remain interested in identifying and acquiring new fluorspar projects.

In June this year we saw the resignation of our Managing Director, Richard Clemmey, who was originally recruited to take our Storuman Fluorspar Project into production. Since Mr. Clemmey’s departure I have temporarily taken on a more involved executive role until a new MD is found and have overseen our recent high level of exploration activity. For some time we have been looking for a new non-executive director and an excellent candidate has now been identified and we expect to make a new Board appointment in the very near future.

Our Annual General Meeting for the year ended 30 September 2020 will be held in our offices in Macclesfield, on Thursday 28 January 2021. In order to observe ongoing government restrictions on social distancing and public gatherings, only the Chairman and one other nominated Shareholder will attend the meeting to ensure that the meeting is quorate. Other Shareholders and third parties will not be permitted to attend the Meeting and will be refused entry. Shareholders are therefore encouraged to appoint the Chairman as their proxy (online at www.signalshares.com or by requesting and submitting a hard copy Form of Proxy) as soon as possible. In line with corporate governance best practice and in order that any proxy votes of those shareholders who are not allowed to attend and to vote in person are fully reflected in the voting on the resolutions, the Chairman of the meeting will direct that voting on the resolutions set out in the notice of meeting will take place by way of a poll. The final poll vote on the resolutions will be published after the General Meeting on the Company’s website.

As anticipated in my 2019 Statement, 2020 has been a better year for stock markets and junior mining companies in particular, and, despite the COVID-19 pandemic, this has enabled us to raise funds to continue to explore our project portfolio. A consequence of the higher availability of funding across the mining markets is increased competition for drilling and geological contractors. This may delay progress on our projects but we are pleased that the COVID-19 pandemic has not held up our project work so far and mining is currently exempt from business restrictions in Nevada. However, the rate of infection is continuing to rise over much of the USA and we are starting to see this further affect the availability of contract staff. On the positive side these shortages are likely to be alleviated by the roll-out of new vaccines.

On that note I think there is reason for cautious optimism in looking forward to 2021 and I look forward to delivering further news of developments on our exciting project portfolio.

Patrick Cheetham

Executive Chairman

11 December 2020
Strategic Report

Group Overview

Our AIM is to increase shareholder value through the discovery and development of valuable mineral deposits.

Our Strategy is to build, explore and develop a multi-commodity project portfolio.

Our Principal Activities involve the identification, acquisition, exploration and development of mineral deposits including precious metals, base metals and industrial minerals in Nevada, USA and northern Europe.

 

The head office is based in Macclesfield in the United Kingdom with operating locations in Nevada, USA, Sweden and Norway.

Company’s Business Model

For exploration projects, the Group prefers to acquire 100% ownership of mineral assets at minimal cost. This involves either applying for exploration licences from the relevant authority or negotiating rights with existing project owners for initially low periodic payments that rise over time as confidence in the project value increases.

The Group currently operates with a low-cost base to maximise the funds that can be spent on exploration and development – value adding activities. The Company currently has five full-time employees including the Executive Chairman who work with and oversee carefully selected and experienced consultants and contractors. Following the departure of the Managing Director in June 2020 the Board of Directors now comprises one independent Non-Executive Director and the Chairman.

Administration costs are further reduced via an arrangement governed by a Management Services Agreement with Sunrise Resources plc, whereby Sunrise Resources pays a share of the cost of head office overheads (£20,369 in the reporting period). As at the 30 September 2020, Tertiary holds 0.6% of the issued ordinary share capital of Sunrise Resources plc.

The Company’s activities are financed by periodic capital raisings, through share placings or share related financial instruments. When projects become more advanced, or as acquisition opportunities advance, the Board will seek to secure additional funding from a range of various sources, for example debt funding, pre-financing through off-take agreements and joint venture partnerships.

Operating Review & Performance

Precious Metal & Base Metal Projects, Nevada, USA

Pyramid Gold Project (100% owned by Tertiary by lease agreement)

The Pyramid Project is located 25 miles northwest of Reno in the Pyramid Mining District and is secured by a 20-year lease on 9 patented claims with options to purchase (subject to underlying royalties) and an additional 25 mining claims staked to cover additional targets along strike.

Geology, Mineralisation and Past Exploration

The Pyramid Mining District lies at the northwest end of the Walker Lane mineral belt, a major northwest trending structural deformation zone and a highly productive gold, silver and copper producing region which is host to numerous past and currently producing multi-million ounce epithermal gold deposits as well as porphyry copper and porphyry molybdenum deposits.

In the main part of the Pyramid District, precious metals were mined from 1866 on a small scale from three moderately to steeply dipping, northwest-striking vein systems within the Perry Canyon. The only documented field exploration within the area of the Company’s claims was carried out by Battle Mountain Gold Mining (“Battle Mountain”) who leased the project from our current lessors in the period 1988‑89.

Soil sampling by Battle Mountain identified a significant open-ended gold-in-soil anomaly which they then tested with two drill holes. Drill hole PYR 9 intersected high-grade gold mineralisation and visible gold within a sample thickness of 1.52m grading 17.8 g/t Au from 94.5m downhole. A broad zone of low-grade mineralisation continued to the end of the hole at 115.8m where the last 1.52m sample graded 2.6 g/t Au.

The second hole, PYR 10, targeted the same western line soil anomaly some 150m to the southwest but was interpreted to have been drilled in the wrong direction and made no significant gold intersections.

Battle Mountain did not carry out any follow up exploration.

Company Exploration

In 2020 the Company completed drill hole TPYR1 to twin and deepen percussion hole PYR9. TPYR1 was drilled to a depth of 137m down hole at the same 45-degree angle and azimuth and from the same general location as PYR9.  Gold assay results showed a best intersection of 0.55m grading 2.01 g/t Au from 82.6m down hole. Whilst lower than those from the historic drill hole PYR9, the results have confirmed that the target zone is gold mineralised.

Most recently in autumn 2020 a programme of soil sampling was completed to confirm and determine the extent of an open-ended gold and multi-element soil anomaly originally defined by Battle Mountain and to test the broader potential of the vein systems on the Project area which is highlighted by the results of 43 surface chip samples taken by Battle Mountain which assayed up to 7.27 g/t Au and averaged 1.3 g/t Au.

A total of 370 soil samples have been collected by the Company on a 30m by 120m grid. Results are not yet available but drilling and/or trenching is provisionally planned to test any strong soil anomalies.

Paymaster Polymetallic Project (100% owned by Tertiary)

The Paymaster Project is located approximately 30km southwest of Tonopah in Nevada, USA, and is held by mining claims covering an area of more than 390 acres.

Geology, Mineralisation and Past Exploration

The primary target at the Paymaster Project is a skarn hosted zinc-silver deposit in Cambrian age limestone in contact with shale and is located one mile south of the limestone contact with the Cretaceous age Lone Mountain granite pluton.

Zinc skarns are important, not only as a source of zinc, lead, copper, silver and other associated metals, but also as indicators of buried porphyry copper and molybdenum deposits. As a class of mineral deposit, they include a number of world class zinc-silver deposits such as Antamina in Peru. The Company’s consultant geologist has also drawn analogies to the Taylor Zinc-Silver Deposit owned by South 32 at Hermosa, in the neighbouring state of Arizona (reported resource of 155mt grading 3.4% zinc, 3.7% lead and 69g/t silver).

The skarn mineralisation at Paymaster is exposed in a number of prospector scale workings but has seen no systematic company exploration until now.

Company Exploration

In 2019 the Company sampled outcropping skarn mineralisation over a total distance of 1.7km in a number of wide spaced and very shallow prospector pits. Seven grab samples of the skarn mineralisation exposed in or excavated from the pits average 10.1% zinc (maximum 20.9%), 1.5% lead (max. 6.5%) 134 g/t silver (max 253 g/t or 7.3 ounces/ton) and 0.68% copper (maximum 3.4%). The skarn samples also contain up to 0.11% cobalt (average of 419ppm or 0.045%) and up to 58ppm tellurium (average 31ppm) and 782ppm bismuth (average 315ppm).

An initial soil sampling programme was completed by the Company in 2019 and defined significantly elevated levels of Ag, Cu, Zn, Co and Pb over a strike length of over 2,000 metres and work has now focused on two areas of mineralisation:

Valley Prospect

  • New thick skarn zone observed in the field: Approximately 350m long and up to 8m thick.
  • Rock sample taken from historic shaft spoil dump assayed 7.5% zinc, 4.3% lead and 180 g/t silver.

East Slope Prospect

  • 650m long zinc soil anomaly (100-250 ppm Zinc) surrounding previously sampled outcrop of zinc-silver-cobalt bearing skarn mineralisation, including 175m long 250-500 ppm zinc soil anomaly.
  • Previous rock sample assays up to 20.9% zinc, 0.11% cobalt and 198 ppm silver within the prospect.

In 2020 a detailed magnetic survey was carried out by drone to cover these two main prospects. In addition, an infill soil sampling programme was competed to cover the East Slope Prospect where previous wide spaced soil sampling defined a coherent zinc anomaly over 500m long (+100ppm zinc) and where samples from prospecting pits have assayed up to 21% zinc.

134 infill soil samples were collected on a 10m by 20m grid and results are awaited. A programme of drone photogrammetry has been completed for topographic control.

Peg Leg Copper-Silver-Lead-Zinc Project (100% owned by Tertiary)

The Peg Leg Project claims are located 11km north of Tonopah in the San Antone Mineral Field. Historical workings comprise shallow shafts, trenches and bulldozer scrapes exploring contact metasomatic (skarn) deposits associated with the Frazier’s Well granodiorite.

The project was originally prospected for tungsten which occurs in grey marble. The Company’s reconnaissance sampling has confirmed the tungsten content in one skarn layer within the limestone where sampling across 11m width in an old shallow trench returned 11m at 0.22% tungsten.

However, the principal target is a zone of base-precious metal skarn mineralisation along the granite/limestone contact where an outcrop of mineralisation exposed adjacent to the granite contact assayed 59 grammes/tonne (g/t) silver 1.4% copper, 2.4% lead and 1.8% zinc. The waste pile from a nearby shallow mine shaft contains material assaying up to 181 g/t silver, 3.9% copper, 10.1% lead and 1.2% zinc.

The Company has completed four exploration trenches along a granite/limestone contact zone targeting skarn-style mineralisation over a strike length of approximately 230m. The objective of the trenching was to test the thickness of the outcropping mineralisation which is largely obscured by scree and old mine waste.

The trenches explored zones of oxidised skarn mineralisation adjacent to the granite contact but analytical results were disappointing. However, a drone magnetic survey has also been completed and this has identified additional and as-yet-untested skarn targets beyond the area so far investigated.

Mt Tobin Silver Prospect (100% owned by Tertiary)

Mt Tobin is located 73km south of Winnemucca in north-central Nevada, The Company’s mining claims cover a zone of stratiform mineralisation in chert and silicified sediments 45-60m thick over a strike length of 1,200m. This is coincident with a significant silver-lead-zinc soil anomaly reported by previous explorer Queenstake Resources.

In 2020 the Company carried out field reconnaissance work and rock samples returned silver values of up to 101 grammes/tonne (g/t) silver (3.12 ounces/ton) over a 450m strike length sampled to date, Mineralisation is open to north and south, structurally controlled and spatially related to dyke intrusion.

A drone magnetic survey and a soil sampling programme have now been completed. This survey comprised 23.6-line km of flying on traverses 50m apart. 304 soil samples were collected on a 40m by 100m grid. Results are awaited.

Lucky Copper Prospect (100% owned by Tertiary)

The Lucky Project comprises 13 claims on the east side of the old Aurum mining centre, 96km northeast of the major porphyry copper mining town of Ely in north-east Nevada.

The target is a disseminated sediment hosted, intrusion-related copper deposit based on a 1951 shallow churn (percussion) drill hole which intersected copper mineralised limestone and porphyry beneath alluvium on the range front pediment slope. A 20.4m cumulative thickness of this sequence assayed 0.65% copper to the bottom of the hole at 77.7m depth. The hole ended in mineralisation.

A preliminary field evaluation and sampling programme has been carried out in 2020 and drill testing is proposed as soon as a drill rig contract can be secured.

The aim of the drill programme will be to confirm and extend at depth the copper mineralised drill intersection made in 1951.

Fluorspar Projects

Storuman Fluorspar Project, Sweden

The Company’s 100% owned Storuman Project is located in north central Sweden and is linked by the E12 highway to the port city of Mo-i-Rana in Norway and by road and rail to the port of Umeå on the Gulf of Bothnia.

JORC Compliant Mineral Resource

Classification Million Tonnes (Mt) Fluorspar (CaF2 %)
Indicated 25.0 10.28
Inferred 2.7 9.57
Total 27.7 10.21

Exploitation (Mine) Permit

No work was carried out in 2020 and the Company continues to wait for feedback from the Swedish Government in response to its appeal against the decision by the Swedish Mining Inspectorate to reject Tertiary’s Exploitation (Mine) Permit in its current form.

The appeal was lodged on 3 May 2019 and still no timeline for a response has been given by the Swedish Government.

MB Fluorspar Project, Nevada, USA

The Company’s interest in the MB Fluorspar Project was terminated during the year.

This follows extensive project work over a number of years and which continued during the year. Despite a large resource of low-grade fluorspar having been defined, metallurgical test work has failed to achieve target concentrate grades or recovery.

The fluorspar in the deposit is finely intergrown with other minerals, in particular calcite, and the Company concluded, after extensive testwork, that a viable processing route cannot be achieved for the MB Project using currently available technologies.

In addition to this, the leasing costs and expenditure commitments under the Company’s lease agreement with the underlying claim holder were set to increase substantially from 30 September 2020 and holding costs could no longer be justified.

Lassedalen Fluorspar Project, Norway

The Lassedalen Fluorspar Project is favourably located near Kongsberg, 80km to the south-west of Oslo in Norway. It is less than 1km from highway E134 and approximately 50km from the nearest Norwegian port.

JORC Compliant Mineral Resource

Classification Million Tonnes (Mt) Fluorspar (CaF2 %)
Inferred 4.0 24.6

The resource defined at Lassedalen is currently too small to justify development at present but it is open to expansion along strike and at depth. Given the commitments on its other projects and available funding, further exploration at the Lassedalen Project has continued to be a lower priority in 2019/2020 and consideration is being given to the future of the project.

Royalty Interests

Kaaresselkä and Kiekerömaa Gold Projects, Finland

The Company retains a royalty interest in the Kaaresselkä and Kiekerömaa gold projects which were sold in 2016 to TSX‑V listed Aurion Resources Ltd (“Aurion”). These projects are located in the Central Lapland Greenstone Belt of the Fennoscandian Shield where there are a number of existing gold mines and a number of potential new mine developments.

Since acquiring the Kaaresselkä Project, Aurion’s work on the project has included re-logging of all drill holes, oriented core measurements, a detailed ground magnetic survey, whole rock geochemistry, GIS compilation and integration of historical data into 3D modelling software. This work has allowed for a reinterpretation of the geology and a better understanding of the property’s potential. The main host lithology is strongly altered and sheared mafic volcanics, which is a classic setting for major orogenic gold deposits.

In the reporting period Aurion completed its maiden drill programme at Kaaresselkä. The programme comprised 12 holes for a total of 2,400m testing four targets (Vanha, Lampi South, Lampi North, Tienvarsi) with the aim of confirming historical drilling and testing the mineralised structure at depth and along strike. The results were described by Aurion as encouraging and include drill intercepts of 1.52 g/t Au over 2.85 m (KS20001 from 306.50 m down hole) and 1.85 g/t Au over 5.40 m (KS20002 from 199.00 m down hole). The drilling has extended the gold mineralized zone to ~200 m depth and to ~600 m strike length at Vanha target.

Non-Core Projects

Rosendal Tantalum Project, Finland

The Exploration Licence for the project expired in October 2015 and the Company has applied for a renewal of the Licence. If the Company is unsuccessful in finding a suitable partner or buyer to progress the project, it is unlikely the renewal will be granted.

Health and Safety

The Group has maintained strict compliance with its Health and Safety Policy and is pleased to report there have been no lost timeaccidents 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.

Financial Review & Performance

The Group is currently in the earlier stages of the typical mining development cycle and so has no income other than cost recovery from the management contract with Sunrise Resources plc and a small amount of bank interest. Consequently, the Group is not expected to report profits until it is able to profitably develop, dispose of, or otherwise commercialise its exploration and development projects.

The Group reports a loss of £2,498,167 for the year (2019: £831,507) after administration costs of £597,994 (2019: £502,788) and after crediting interest receivable of £437 (2019: £234). The loss includes impairment of the MB Project of £2,027,000, expensed pre-licence and reconnaissance exploration costs of £49,360 (2019: £75,778). Administration costs include £30,290 (2019: £8,021) as non-cash costs for the value of certain share warrants held by employees as required by IFRS 2.

Revenue includes £175,750 (2019: £189,742) from the provision of management, administration and office services provided to Sunrise Resources plc, to the benefit of both companies through efficient utilisation of services.

The financial statements show that, at 30 September 2020, the Group had net current assets of £628,365 (2019: £21,499). This represents the cash position after allowing for receivables and trade and other payables. These amounts are shown in the Consolidated and Company Statements of Financial Position and are also components of the Net Assets of the Group. Net assets also include various “intangible” assets of the Company. As the name suggests, these intangible assets are not cash assets but include this year’s and previous years’ accrued expenditure on minerals projects where that expenditure meets the criteria set out in Note 1(d) (accounting policies) to the Financial Statements. The intangible assets total £541,958 (2019: £2,461,972) and the breakdown by project is shown in Note 2 to the Financial Statements.

Expenditure which does not meet the criteria set out in Notes 1(d) and 1(n), such as pre-licence and reconnaissance costs, are expensed and add to the Company’s loss. The loss reported in any year can also include expenditure that was carried forward in previous reporting periods as an intangible asset but which the Board determines is “impaired” in the reporting period.

The extent to which expenditure is carried forward as intangible assets is a measure of the extent to which the value of the Company’s expenditure is preserved.

The intangible asset value of a project does not equate to the realisable or market value of a particular project which will, in the Directors’ opinion, be at least equal in value and often considerably higher. Hence the Company’s market capitalisation on AIM can be in excess of or less than the net asset value of the Group.

Details of intangible assets, property, plant and equipment and investments are set out in Notes 8, 9 and 10 of the financial statements.

The financial statements of a mineral exploration company can provide a moment in time snapshot of the financial health of a company but do not provide a reliable guide to the performance of the Company or its Board and its long-term potential to create value.

Key Performance Indicators

The usual financial key performance indicators (“KPIs”) are neither applicable nor appropriate to measurement of the value creation of a company involved in mineral exploration and which currently has no turnover other than cost recovery. The directors consider that the detailed information in the Operating Review is the best guide to the Group’s progress and performance during the year.

The Company does seek to reduce overhead costs, where practicable, and is reporting administration costs this financial year of £597,994 (2019: £502,788).

Fundraising

During the 2020 financial year the Company raised a total of £1,135,800, before expenses, as shown in Note 14 to the Financial Statements.

These funds were raised through:

  • the issue on 19 November 2019 of zero coupon convertible securities to Bergen Global Opportunity Fund, LP (the “Investor”), a US based institutional investment fund as detailed in Notes 14 and 20 of the Financial Statements; and
  • a placing of shares on 25 February 2020 to clients of the Company’s joint broker, Peterhouse Securities Ltd, as detailed in Notes 14 of the Financial Statements; and
  • a share subscription deed on 2 April 2020 with Precious Metals Capital Group LLC, a U.S. based institutional specialist investor, as detailed in Notes 14 and 21 of the Financial Statements.

The directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report. Given the Group’s cash position at the year-end (£622,859), these projections include the proceeds of future fundraising necessary within the next 12 months to meet the Group’s overheads and planned discretionary project expenditures and to maintain the Company and its subsidiaries as going concerns.

Impairment

A biannual review is carried out by the directors to assess whether there are any indications of impairment of the Group’s assets.

Investments in Group undertakings:

The directors have reviewed the carrying value of the Company’s investments in shares of subsidiary undertakings totalling £224,890, by reference to estimated recoverable amounts. In turn, this requires an assessment of the recoverability of underlying exploration assets in those subsidiaries in accordance with IFRS 6.

Loans to Group undertakings:

A review of the recoverability of loans to subsidiary undertakings, totalling £2,275,735 has been carried out. This indicated a potential credit loss arising in the year of £1,899,212 relating to Tertiary Minerals US Inc. The assessment and provision arises from the fact that there has been an impairment of the underlying exploration assets held by Tertiary Minerals US Inc., leading to doubt over recoverability of the loan. The provision made against the receivables has reduced it to the value of the underlying development assets.

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 mineral exploration and evaluation which are speculative activities. There is no certainty that the Group will be successful in the definition of economic mineral deposits, or that it will proceed to the development of any of its projects or otherwise realise their value.

 

The directors bring many years of combined mining and exploration experience and an established track record in mineral discovery.

The Company mainly targets advanced and drill ready exploration projects in order to avoid higher risk grass roots exploration.

Resource Risk

 

All mineral projects have risk associated with defined grade and continuity. Mineral Reserves are always subject to uncertainties in the underlying assumptions which include geological projections and metal/mineral assumptions.

 

Resources and reserves are estimated by independent specialists on behalf of the Group in accordance with accepted industry standards and codes. The Directors are realistic in the use of mineral price forecasts and impose rigorous practices in the QA/QC programmes that support its independent estimates.

Development Risk

 

Delays in permitting, or changes in permit legislation and/or regulation, financing and commissioning a project may result in delays to the Group meeting production targets or even the Company ultimately not receiving the required permits and in extreme cases loss of title.

 

 

 

In order to reduce development risk in future, the directors will ensure that its permit application processes and financing applications are robust and thorough.

Commodity Risk

 

Changes in commodity prices can affect the economic viability of mining projects and affect decisions on continuing exploration activity.

 

 

 

The Company consistently reviews commodity prices and trends for its key projects throughout the development cycle.

Mining and Processing Technical Risk

 

Notwithstanding the completion of metallurgical testwork, test mining and pilot studies indicating the technical viability of a mining operation, variations in mineralogy, mineral continuity, ground stability, groundwater conditions and other geological conditions may still render a mining and processing operation economically or technically non-viable.

 

From the earliest stages of exploration the directors look to use consultants and contractors who are leaders in their field and in future will seek to strengthen the executive management and the Board with additional technical and financial skills as the Company transitions from exploration to production.

Environmental Risk

 

Exploration and development of a project can be adversely affected by environmental legislation and the unforeseen results of environmental studies carried out during evaluation of a project. Once a project is in production unforeseen events can give rise to environmental liabilities.

 

Mineral exploration carries a lower level of environmental liability than mining. The Company has adopted an Environmental Policy and the directors avoid the acquisition of projects where liability for legacy environmental issues might fall upon the Company.

Political Risk

 

All countries carry political risk that can lead to interruption of activity. Politically stable countries can have enhanced environmental and social permitting risks, risks of strikes and changes to taxation, whereas less developed countries can have, in addition, risks associated with changes to the legal framework, civil unrest and government expropriation of assets.

 

 

 

The Company’s strategy currently restricts its activities to stable, democratic and mining friendly jurisdictions.

 

The Company has adopted a strong Anti-corruption Policy and a Code of Conduct and these are strictly enforced.

Partner Risk

 

Whilst there has been no past evidence of this, the Group can be adversely affected if joint venture partners are unable or unwilling to perform their obligations or fund their share of future developments.

 

 

The Company currently maintains control of certain key projects so that it can control the pace of exploration and reduce partner risk.

 

For projects where other parties are responsible for critical payments and expenditures the Company’s agreements legislate that such payments and expenditures are met.

 

Financing & Liquidity Risk

 

Liquidity risk is the risk that the Company will not be able to raise working capital for its ongoing activities.

The Group’s goal is to finance its exploration and evaluation activities from future cash flows, but until that point is reached the Company is reliant on raising working capital from equity markets or from industry sources. There is no certainty such funds will be available when needed.

 

 

The Company maintains a good network of contacts in the capital markets that has historically met its financing requirements.

The Company’s low overheads and cost-effective exploration strategies help reduce its funding requirements. Nevertheless, further equity issues will be required over the next 12 months.

Financial Instruments

 

Details of risks associated with the Group’s Financial Instruments are given in Note 19 to the financial statements.

 

 

The directors are responsible for the Group’s systems of internal financial control. Although no systems of internal 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 may contain certain statements and expressions of belief, expectation or opinion which are forward-looking statements, and which relate, inter alia, to the Company’s proposed strategy, plans and objectives or to the expectations or intentions of the Company’s directors. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from such forward-looking statements.

Section 172 (1) Statement

Section 172 of the Companies Act 2006 requires a director of a company to act in the way he or she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. This requires a director to have regard, among other matters, to: the likely consequences of any decision in the long term; the interests of the Company’s employees; the need to foster the company’s business relationships with suppliers, clients, joint arrangement partners and others; the impact of the Company’s operations on the community and the environment; the desirability of the company maintaining a reputation for high standards of business conduct; and the need to act fairly with members of the company.

The directors give careful consideration to these factors in discharging their duties. The stakeholders we consider are our shareholders, employees, suppliers (including consultants and contractors), our joint arrangement partners, the regulatory bodies that we engage with and those that live in the societies and geographical areas in which we operate. The directors recognise that building strong, responsible and sustainable relationships with our stakeholders will help us to deliver our strategy in line with our long-term objectives.

Having regard to:

The likely consequences of any decision in the long term:

The Company’s Aims and Business Model are set out at the head of this Strategic Report and in the Chairman’s Statement. The Company’s mineral exploration and development business is, by its very nature, long-term and so the decisions of the Board always consider the likely long-term consequences and take into consideration, for example, trends in metal and minerals supply and demand, the long-term political stability of the countries in which the Company operate and the potential impact of its decisions on its stakeholders and the environment. The Board’s approach to general strategy and long-term risk management are set out in the Corporate Governance Statement (Principle 1) and the section on Risks and Uncertainties.

The interests of the Company’s employees:

All of the Company’s employees have daily access to the Executive Chairman and to the non-executive directors and there is a continuous and transparent dialogue on all employment matters. Further details on the Board’s employment policies, health and safety policy and employee engagement are given in the Corporate Governance Statement (Principle 8).

The need to foster the Company’s business relationships with its stakeholders:

The sustainability of the Company’s business long-term is dependent on maintaining strong relationships with its stakeholders. The factors governing the Company’s decision making and the details of stakeholder engagement are set out in the Corporate Governance Statement (Principles 2, 3, 8 and 10).

Having regard to the impact of the Company’s operations on the community and the environment:

The Company requires a “social licence” to operate sustainably in the mining industry and so the Board makes careful consideration of any potential impacts of its activities on the local community and the environment.  The Board strives to maintain good relations with the local communities in which it operates and with local businesses. The Executive Chairman meets with regulators and community representatives when promulgating the Company’s plans for exploration and development and takes their comments into consideration wherever possible. Further discussion of these activities can be found in the Operating Review and in the Corporate Governance Statement (Principle 3).

The desirability of the Company maintaining a reputation for high standards of business contact:

The Board recognises that its reputation is key to its long-term success and depends on maintaining high standards of corporate governance. It has adopted the QCA Code of Corporate Governance and sets out in detail how it has complied with the 10 key principles of the QCA Code in the Corporate Governance Statement starting. This contains details of various Company policies designed to maintain high standards of business conduct such as the Share Dealing Policy, Health and Safety Policy and Anti-Bribery Policy and Code of Conduct.

The need to act fairly between Members of the Company:

The Board ensures that it takes decisions in the interests of the members (shareholders) as a whole and aims to keep shareholders fully informed of significant developments, ensuring that all shareholders receive Company news at the same time. The Executive Chairman devotes time to answering genuine shareholder queries, no individual or group of shareholders is given preferential treatment. Further information is provided in the Corporate Governance Statement (Principles 2 and 10).

This Strategic Report was approved by the Board on 11 December 2020 and signed on its behalf.

Patrick Cheetham

Executive Chairman

 

Our Governance

Corporate Governance Statement

There is no prescribed corporate governance code for AIM companies and London Stock Exchange prefers to give companies the flexibility to choose from a range of codes which suit their specific stage of development, sector and size.

The Board considers the corporate governance code published by the Quoted Companies Alliance for small and mid-sized quoted companies to be the most suitable code for the Company. Accordingly the Company has adopted the principles set out in the QCA Corporate Governance Code (the “QCA Code”) and applies these principles wherever possible, and where appropriate to its size and available resources.

The Chairman, Patrick Cheetham, has overall responsibility for the Corporate Governance of the Company. This Corporate Governance Statement was reviewed and amended by the Board on 30 October 2020.

The QCA Code sets out ten principles which should be applied. The principles are listed below with an explanation of how the Company applies each principle and/or the reasons for any aspect of non-compliance.

Principle One: Establish a strategy and business model which promotes long-term value for shareholders.

The Company has a clearly defined strategy and business model that has been adopted by the Board. Details of the key challenges to the execution of the Company’s strategy and business model and how these challenges are addressed can be found in Risks and Uncertainties in the Strategic Report.

Principle Two: Seek to understand and meet shareholder needs and expectations.

The Board is committed to maintaining good communication with its shareholders and investors. The Chairman and members of the Board from time to time meet with shareholders and investors directly or through arrangements with the Company’s brokers to understand their investment requirements and expectations and to address their enquiries and concerns.

Where feasible all shareholders are encouraged to attend the Annual General Meeting where they can meet and directly communicate with the Board. Shareholders are welcome to contact the Company via email at info@tertiaryminerals.com with any specific queries.

The Company also provides regulatory, financial and business news updates through the Regulatory News Service (RNS) and various media channels such as Twitter. Shareholders also have access to information through the Company’s website, www.tertiaryminerals.com, which is updated on a regular basis.

Principle Three: Take into account wider stakeholder and social responsibilities and their implications for long-term success.

The Board takes regular account of the significance of social, environmental and ethical matters affecting the business of the Group. At this stage in the Group’s development, the Board has not adopted a specific written policy on Corporate Social Responsibility as it has a limited pool of stakeholders other than its shareholders. Rather, the Board seeks to protect the interests of the Group’s stakeholders (both internal and external to the Group) through individual policies and through ethical and transparent actions. The Company engages positively with suppliers, stakeholders and with local communities through open meetings and meetings with community representatives in its project locations and encourages feedback through this engagement.

Principle Four: Embed effective risk management, considering both opportunities and threats, throughout the organisation.

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 whilst recognising that its business opportunities carry an inherently high level of risk. The principal risks and uncertainties facing the Group at this stage in its development and in the foreseeable future together with risk mitigation strategies employed by the Board are detailed in Risks and Uncertainties in the Strategic Report.

Principle Five: Maintain the board as a well-functioning, balanced team led by the chair.

The Board’s role is to agree the Group’s long-term direction and strategy and monitor achievement of its business objectives. The Board meets formally four times a year for these purposes and holds additional meetings when necessary to transact other business. The Board receives regular and timely reports for consideration on all significant strategic, operational and financial matters. Relevant information for consideration by the Board is circulated in advance of its meetings.

The Board is supported by the Audit, Remuneration and Nomination Committees.

The Board currently consists of the Executive Chairman and one independent Non-Executive Director. The current Board’s preference is that there is a minimum of two independent Non-Executive Directors. However, this is not currently the case and the Company intends that an additional independent Non-Executive Director will be appointed shortly. When there are two independent Non-Executive Directors in post, the Board considers that the Board structure will be acceptable having regard to the fact that it is not yet revenue-earning.

Despite serving as a Non-Executive Director for more than nine years, Donald McAlister is considered independent of management and free from any business or other relationship which could materially interfere with the exercise of his independent judgement. In compliance with good practice, he will continue to seek annual re-election rather than every third year as per the Articles of Association.

Attendance at Board and Committee Meetings

The Board retains full control of the Group with day-to-day operational control delegated to the Executive Directors. The full Board meets formally four times a year and on any other occasions it considers necessary. During the period under review there were sixteen Board meetings, two Remuneration Committee meetings, two Audit Committee meetings and one Nomination Committee meeting. All meetings were attended by their constituent directors.

Principle Six: Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.

The Board considers the current balance of sector, financial and public market skills and experience of the directors is relevant to the Company’s business and is appropriate given the current size and stage of development of the Company. The Board is satisfied that it has the skills and experience necessary to execute the Company’s strategy and business plan and discharge its duties effectively.

The directors maintain their skills through membership of various professional bodies, attendance at mining conferences and through their various external appointments.

All directors have access to the advice and services of the Company Secretary who is responsible for ensuring that Board procedures and applicable rules and regulations are observed. All directors are able to take independent professional advice, if required, in relation to their duties and at the Company’s expense.

The Board and its committees will also seek external expertise and advice where required.

Principle Seven: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement.

The ultimate measure of the effectiveness of the Board is the Company’s progress against the long-term strategy and aims of the business. This progress is reviewed in Board meetings held at least four times a year. The performance of the Executive Directors is reviewed once a year by the rest of the Board, and measured against a definitive list of short, medium and long-term strategic targets set by the Board.

The Nomination Committee, currently consisting of the Chairman and the Non-Executive Director, meets once a year to lead the formal process of rigorous and transparent procedures for Board appointments. During this meeting, the Nomination Committee reviews the structure, size and composition of the Board; succession planning; leadership; key strategic and commercial issues; conflicts of interest; time required from Non-Executive Directors to execute their duties effectively; overall effectiveness of the Board and its own terms of reference.

Principle Eight: Promote a corporate culture that is based on ethical values and behaviours.

The Board recognises and strives to promote a corporate culture based on strong ethical and moral values. The corporate culture of the Company is promoted throughout its workforce, suppliers and contractors and is underpinned by the implementation and regular review, enforcement and documentation of various policies: Health and Safety Policy; Environmental Policy; Share Dealing Policy; Anti-Corruption Policy and Code of Conduct; Privacy and Cookies Policy and Social Media Policy.

Employees

The Group encourages its employees to understand all aspects of the Group’s business and seeks to remunerate its employees fairly, being flexible where practicable. The Group gives full and fair consideration to applications for employment received regardless of age, gender, colour, ethnicity, disability, nationality, religious beliefs, transgender status or sexual orientation. The Board takes account of employees’ interests when making decisions, and suggestions from employees aimed at improving the Group’s performance are welcomed.

Suppliers and Contractors

The Group recognises that the goodwill of its contractors, consultants and suppliers is important to its business success and seeks to build and maintain this goodwill through fair dealings. The Group has a prompt payment policy and seeks to settle all agreed liabilities within the terms agreed with suppliers. The amount shown in the Consolidated and Company Statements of Financial Position in respect of trade payables at the end of the financial year represents 13 days of average daily purchases (2019: 11 days).

Anti-Corruption Policy and Code of Conduct

The Company has adopted and implements an Anti-Corruption Policy and a Code of Conduct.

Health and Safety

The Board recognises it has a responsibility to provide strategic leadership and direction in the development of the Group’s health and safety strategy in order to protect all of its stakeholders. The Company has developed and implemented a Health and Safety Policy to clearly define roles and responsibilities and in order to identify and manage risk.

Principle Nine: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board.

The Board has overall responsibility for all aspects of the business. The Chairman is responsible for overseeing the running of the Board, ensuring that no individual or group dominates the Board’s decision-making and ensuring the Non-Executive Directors are properly briefed on all operational and financial matters. The Chairman has overall responsibility for corporate governance matters in the Group and chairs the Nomination Committee. The Executive Chairman has the responsibility for implementing the strategy of the Board and managing the day-to-day business activities of the Group. The Company Secretary is responsible for ensuring that Board procedures are followed and applicable rules and regulations are complied with.

Non-Executive Director, Donald McAlister, is responsible for bringing independent and objective judgment to Board decisions. The Board has established Audit, Remuneration and Nomination Committees with formally delegated duties and responsibilities. Donald McAlister currently chairs the Audit and Remuneration Committees and Patrick Cheetham chairs the Nomination Committee.

Audit Committee

The Audit Committee, currently composed entirely of the Non-Executive Director, assists the Board in meeting responsibilities in respect of external financial reporting and internal controls. The Audit Committee also keeps under review the scope and results of the audit. It also considers the cost-effectiveness, independence and objectivity of the Auditor taking account of any non-audit services provided by them.

Remuneration Committee

The Remuneration Committee also comprises the Non-Executive Director. The Remuneration Committee determines the appropriate remuneration for the Company’s executive directors, ensuring that this reflects their performance and that of the Group, and to demonstrate to shareholders that executive remuneration is set by Board members who have no personal interest in the outcome of their decisions.

The Company has previously operated a long-term bonus and incentive scheme for the position of Managing Director. The objective of adopting the scheme was to provide reward for successfully achieving performance targets set by the Board in line with the Company’s Aims and Strategy. The Company has in place an Inland Revenue approved share option scheme and also issues warrants to subscribe for shares to executive directors and employees. Directors’ emoluments are disclosed in Note 4 to the financial statements and details of directors’ warrants are disclosed in Note 17.

As noted above, the Company intends that an additional independent Non-Executive Director will be appointed shortly. The audit and remuneration committees will then comprise two independent Non-Executive Directors.

Conflicts of Interest

The Companies Act 2006 permits directors of public companies to authorise directors’ conflicts and potential conflicts, where appropriate, and the Articles of Association contain a provision to this effect.

At 30 September 2020, Tertiary Minerals plc held 0.6% of the issued share capital of Sunrise Resources plc and the Chairman of Tertiary Minerals plc is also Chairman of Sunrise Resources plc. Tertiary Minerals plc also provides management services to Sunrise Resources plc, in the search, evaluation and acquisition of new projects.

Procedures are in place in order to avoid any conflict of interest between the Company and Sunrise Resources plc.

Principle Ten: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.

The Company regularly communicates with, and encourages feedback from, its various stakeholder groups. The Company’s website is regularly updated and users can register to be alerted via email when certain announcements are made.

The Group’s financial reports can be found here: www.tertiaryminerals.com/investor-media/financial-reports

Notices of General Meetings held for at least the past five years can be found here: www.tertiaryminerals.com/news-releases

The results of voting on all resolutions in general meetings will be posted to the Company’s website, including any actions to be taken as a result of resolutions for which votes against have been received from at least 20 per cent of independent votes.

This Corporate Governance statement will be reviewed at least annually to ensure that the Company’s corporate governance framework evolves in line with the Company’s strategy and business plan.

Patrick Cheetham

Executive Chairman

11 December 2020

 

Board of Directors

The directors and officers of the Company during the financial year were:

Patrick Cheetham (60)

Chairman

Key Strengths and Experience

  • Geologist.
  • 38 years’ experience in mineral exploration.
  • 33 years’ experience in public company management.
  • Founder of the Company, Dragon Mining Ltd, Archaean Gold NL and Sunrise Resources plc.

External Appointments

Chairman and founder of Sunrise Resources plc.

Richard Clemmey (47) (Resigned 30 June 2020)

Previously Managing Director

Key Strengths and Experience

  • Chartered Engineer.
  • 26 years’ experience in developing and managing mining/quarrying projects worldwide for Derwent Mining, Lafarge, Hargreaves (GB) Ltd, Marshalls plc and CFE.
  • Board Director since May 2012.

External Appointments

Gritstone Ltd.

Donald McAlister (61)

Non-Executive Director*

Key Strengths and Experience

  • Accountant.
  • Previously Finance Director at Mwana Africa plc, Ridge Mining plc, Reunion Mining and Moxico Resources plc.
  • 25 years’ experience in all financial aspects of the resource industry, including metal hedging, tax planning, economic modelling/evaluation, project finance and IPOs.
  • Founding director of the Company.

External Appointments

Financial Director of ZincOx Resources plc.

* Currently Chair of the Audit Committee and the Remuneration Committee.

Rod Venables – City Group PLC

Company Secretary

Key Strengths and Experience

  • Qualified company/commercial solicitor
  • Director and Head of Company Secretarial Services at City Group PLC
  • Experienced in both Corporate Finance and Corporate Broking

External Appointments

Company Secretary for Sunrise Resources plc and other corporate clients of City Group PLC.

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 a company 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 Directors’ Report and other information included in the Annual Report and Financial Statements are prepared in accordance with applicable law in the United Kingdom.

Website Publication

The maintenance and integrity of the Tertiary Minerals plc website is the responsibility of the directors. 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 the Directors’ Report

The directors are pleased to submit their Annual Report and audited financial statements for the year ended 30 September 2020.

The Strategic Report contains details of the principal activities of the Company and includes the Operating Review and Performance which provides detailed information on the development of the Group’s business during the year and indications of likely future developments.

Going Concern

In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches. Further funding is raised as and when required. When any of the Group’s projects move to the development stage, specific project financing will be required.

The directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report.  Given the Group’s cash position at year end (£622,859), 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 unable to recommend the payment of a dividend.

Financial Instruments & Other Risks

Details of the Group’s financial instruments and risk management objectives and of the Group’s exposure to risk associated with its financial instruments is given in Note 19 to the Financial Statements.

The business of mineral exploration and evaluation has inherent risks. Details of risks and uncertainties that affect the Group’s business are given in Risks and Uncertainties.

Directors

The directors holding office during the year were:

Mr P L Cheetham

Mr R H Clemmey  (Resigned 30 June 2020)

Mr D A R McAlister

Attendance at Board and Committee Meetings

The Board retains control of the Group with day-to-day operational control delegated to the Executive Chairman. The full Board meets four times a year and on any other occasions it considers necessary.

The directors’ shareholdings are shown in Note 17 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:

 

 

As at 11 December 2020

Number of shares % of share capital
Interactive Investor Services Nominees Limited SMKTNOMS 86,851,224 10.44
Hargreaves Lansdown (Nominees) Limited 15942 63,269,726 7.61
Interactive Investor Services Nominees Limited SMKTISAS 59,999,436 7.21
Aurora Nominees Limited 2288700 50,786,187 6.11
Barclays Direct Investing Nominees Limited CLIENT1 46,521,466 5.59
Euroclear Nominees Limited EOC01 44,136,845 5.31
Hargreaves Lansdown (Nominees) Limited HLNOM 39,688,700 4.77
Hargreaves Lansdown (Nominees) Limited VRA 32,662,960 3.93
HSDL Nominees Limited 30,882,097 3.71

Cancellation of Deferred Shares

At a General Meeting held on 10 September 2020 the shareholders approved a buy-back of deferred shares in accordance with the Company’s Articles of Association for an aggregate consideration of £1.00. After the buy-back the deferred shares were cancelled.

The deferred shares effectively carried no value and were created as a result of a capital restructuring in April 2017 whereby each existing ordinary share with a nominal value of 1p was subdivided into 1 new ordinary share of 0.01p and 1 deferred share of 0.99p each. Further details are provided in Note 14.

Disclosure of Audit Information

Each of the directors has confirmed that so far as he is aware, there is no relevant audit information of which the Company’s Auditor is unaware, and that he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the Company’s Auditor is aware of that information.

Auditor

A resolution to re-appoint Crowe U.K. LLP as Auditor of the Company and the Group will be proposed at the forthcoming Annual General Meeting.

Charitable and Political Donations

During the year, the Group made no charitable or political donations.

Annual General Meeting

The Company’s Annual General Meeting will be held on Thursday 28 January 2021 at 2.00 p.m., in Macclesfield.

Approved by the Board on 11 December 2020 and signed on its behalf.

Patrick Cheetham

Executive Chairman

Publication of Statutory Accounts

The financial information set out in this announcement does not constitute the Company’s Annual Accounts for the period ended 30 September 2020 or 2019. The financial information for 2019 is derived from the Statutory Accounts for 2019. Full audited accounts in respect of that financial period have been delivered to the Registrar of Companies. The Statutory Accounts for 2020 will be delivered to the Registrar of Companies following the Company’s Annual General Meeting. The Auditors have reported on the 2020 and 2019 accounts. Neither set of accounts contain a statement under section 498(2) of (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.

Availability of Financial Statements

The Annual Report containing the full financial statements for the year to 30 September 2020 will be posted to shareholders on or around 23 December 2020, a soft copy of which will then be available to download from the company’s website:

https://www.tertiaryminerals.com

Consolidated Income Statement

for the year ended 30 September 2020

Notes 2020

£

2019

£

Revenue 2,17 175,750 189,742
Administration costs (597,994) (502,788)
Pre-licence exploration costs (49,360) (75,778)
Impairment of deferred exploration asset 8 (2,027,000) (442,917)
Operating loss (2,498,604) (831,741)
Interest receivable 437 234
Loss before income tax 3 (2,498,167) (831,507)
Income tax 7
Loss for the year attributable to equity holders of the parent (2,498,167) (831,507)
Loss per share – basic and diluted (pence) 6 (0.38) (0.19)

All amounts relate to continuing activities.

Consolidated Statement of Comprehensive Income
for the year ended 30 September 2020

2020

£

2019

£

Loss for the year (2,498,167) (831,507)
Items that could be reclassified subsequently to the income statement:
Foreign exchange translation differences on foreign currency net investments in subsidiaries  

(94,278)

 

115,415

(94,278) 115,415
Items that will not be reclassified to the income statement:
Changes in the fair value of other investments 23,263 (71,670)
23,263 (71,670)
Total comprehensive income/(loss) for the year attributable to

equity holders of the parent

 

(2,569,182)

 

(787,762)

 

 

 

Consolidated and Company Statements of Financial Position

at 30 September 2020

Company Number 03821411

 

Notes Group

2020

£

Company

2020

£

Group

2019

£

Company

2019

£

Non-current assets
Intangible assets 8 541,958 2,461,972
Property, plant & equipment 9 3,369 3,369 4,182 4,182
Investment in subsidiaries 10 541,958 2,196,297
Other investments 10 55,985 55,985 89,775 89,775
601,312 601,312 2,555,929 2,290,254
Current assets
Receivables 11 71,695 52,634 41,568 19,347
Cash and cash equivalents 12 622,859 587,139 50,617 29,445
694,554 639,773 92,185 48,792
Current liabilities
Trade and other payables 13 (66,189) (37,038) (70,686) (29,717)
Share subscription loan 21 (420,000) (420,000)
(486,189) (457,038) (70,686) (29,717)
Net current assets 208,365 182,735 21,499 19,075
Net assets 809,677 784,047 2,577,428 2,309,329
Equity
Called up Ordinary Shares 14 83,164 83,164 44,307 44,307
Deferred Shares 14 2,644,062 2,644,062
Share premium account 10,740,972 10,740,972 10,008,687 10,008,687
Capital redemption reserve 14 2,644,061 2,644,061
Merger reserve 131,096 131,096 131,096 131,096
Share option reserve 14 71,897 71,897 67,468 67,468
Fair value reserve 14,819 14,819 (8,444) (8,444)
Foreign currency reserve 14 325,474 419,752
Accumulated losses (13,201,806) (12,901,962) (10,729,500) (10,577,847)
Equity attributable to the owners of the parent 809,677 784,047 2,577,428 2,309,329

The Company reported a loss for the year ended 30 September 2020 of £2,349,976 (2019: -£779,821).

These financial statements were approved and authorised for issue by the Board on 11 December 2020 and were signed on its behalf.

P L Cheetham  D A R McAlister

Executive Chairman  Director

Consolidated Statement of Changes in Equity

 

Group Ordinary share

capital

£

 

Deferred shares

£

Share

premium

account

£

Capital redemption reserve

£

Merger

reserve

£

Share

option

reserve

£

Fair value

reserve

£

Foreign

currency

reserve

£

Accumulated

losses

£

Total

£

At 30 September 2018 35,932 2,644,062 9,785,702 131,096 168,923 63,226 304,337 (10,007,469) 3,125,809
Loss for the period (831,507) (831,507)
Change in fair value (71,670) (71,670)
Exchange differences 115,415 115,415
Total comprehensive loss for the year (71,670) 115,415 (831,507) (787,762)
Share issue 8,375 222,985 231,360
Share based payments expense 8,021 8,021
Transfer of expired warrants (109,476) 109,476
At 30 September 2019 44,307 2,644,062 10,008,687 131,096 67,468 (8,444) 419,752 (10,729,500) 2,577,428
Loss for the period (2,498,167) (2,498,167)
Change in fair value 23,263 23,263
Exchange differences (94,278) (94,278)
Total comprehensive loss for the year 23,263 (94,278) (2,498,167) (2,569,182)
Share issue 38,857 732,284 771,141
Cancellation of deferred shares (2,644,062) 1 2,644,061
Share based payments expense 30,290 30,290
Transfer of expired warrants (25,861) 25,861
At 30 September 2020 83,164 10,740,972 2,644,061 131,096 71,897 14,819 325,474 (13,201,806) 809,677

Company Statement of Changes in Equity

Company Ordinary share

capital

£

 

Deferred shares

£

Share

premium

account

£

Capital redemption reserve

£

Merger

reserve

£

Share

option

reserve

£

Fair value

reserve

£

Accumulated

losses

£

Total

£

At 30 September 2018 35,932  

2,644,062

9,785,702 131,096 168,923 63,226 (9,907,502) 2,921,439
Loss for the period (779,821) (779,821)
Change in fair value (71,670) (71,670)
Total comprehensive

loss for the year

 

 

 

 

(71,670) (779,821) (851,491)
Share issue 8,375 222,985 231,360
Share based payments expense 8,021 8,021
Transfer of expired warrants (109,476) 109,476
At 30 September 2019 44,307  

2,644,062

10,008,687 131,096 67,468 (8,444) (10,577,847) 2,309,329
Loss for the period (2,349,976) (2,349,976)
Change in fair value 23,263 23,263
Total comprehensive

loss for the year

 

 

 

 

23,263 (2,349,976) (2,326,713)
Share issue 38,857 732,284 771,141
Cancellation of deferred shares (2,644,062) 1 2,644,061
Share based payments expense 30,290 30,290
Transfer of expired warrants (25,861) 25,861
At 30 September 2020 83,164 10,740,972 2,644,061 131,096 71,897 14,819 (12,901,962) 784,047

 

Consolidated and Company Statements of Cash Flows

for the year ended 30 September 2020

 

Notes Group

2020

£

Company

2020

£

Group

2019

£

Company

2019

£

Operating activity
Total (loss)/profit after tax excluding interest received (2,498,604) (2,381,116) (831,741) (810,097)
Depreciation charge 9 1,850 1,850 1,635 1,635
Shares issued in lieu of net wages 4,090 4,090 1,360 1,360
Share based payment charge 30,290 30,290 8,021 8,021
Impairment charge – deferred exploration asset 8 2,027,000 442,917
Increase/(decrease) in provision for impairment of loans to subsidiaries 10 1,958,667 487,610
(Increase)/decrease in receivables 11 (30,127) (33,287) 55,084 53,401
Increase/(decrease) in payables 13 (4,497) 7,321 5,523 (8,885)
Net cash outflow from operating activity (469,998) (412,185) (317,201) (266,955)
Investing activity
Interest received 437 41,140 234 30,279
Exploration and development expenditures 8 (200,071) (121,967)
Disposal of other investments 10 57,053 57,053 40,883 40,883
Purchase of property, plant & equipment 9 (1,037) (1,037) (2,509) (2,509)
Additional loans to subsidiaries 10 (304,328) (204,985)
Net cash outflow from investing activity (143,618) (207,172) (83,359) (136,332)
Financing activity
Issue of share capital (net of expenses) 767,051 767,051 230,000 230,000
Share subscription loan 21 420,000 420,000
Net cash inflow from financing activity 1,187,051 1,187,051 230,000 230,000
Net increase/(decrease) in cash

and cash equivalents

573,435 567,694 (170,560) (173,287)
Cash and cash equivalents at start of year 50,617 29,445 218,297 202,732
Exchange differences (1,193) 2,880
Cash and cash equivalents at 30 September 12 622,859 597,139 50,617 29,445

Notes to the Financial Statements

for the year ended 30 September 2020

Background

Tertiary Minerals plc is a public company incorporated and domiciled in England. It is traded on the AIM market of the London Stock Exchange – EPIC: TYM.

The Company is a holding company for a number of companies (together, “the Group”). The Group’s financial statements are presented in Pounds Sterling (£) which is also the functional currency of the Company.

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Group’s financial statements.

1.  Accounting policies

(a) Basis of preparation

The financial statements have been prepared on the basis of the recognition and measurement requirements of International Financial Reporting Standards (IFRS), as adopted by the European Union. They have also been prepared in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

(b) Going concern

In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches. Further funding is raised as and when required. When any of the Group’s projects move to the development stage, specific project financing will be required.

The directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report. Given the Group’s cash position at year end (£622,859), these projections include the proceeds of future fundraising necessary within the next 12 months to meet the Company’s and Group’s overheads and planned discretionary project expenditures and to maintain the Company and Group as going concerns. Although the Company has been successful in raising finance in the past, there is no assurance that it will obtain adequate finance in the future. This represents a material uncertainty related to events or conditions which may cast significant doubt on the Group and Company’s ability to continue as going concerns and, therefore, that they may be unable to realise their assets and discharge their liabilities in the normal course of business. However, the directors have a reasonable expectation that they will secure additional funding when required to continue meeting corporate overheads and exploration costs for the foreseeable future and therefore believe that the going concern basis is appropriate for the preparation of the financial statements.

(c) Basis of consolidation

Investments, including long-term loans, in subsidiaries are valued at the lower of cost or recoverable amount, with an ongoing review for impairment.

The Group’s financial statements consolidate the financial statements of Tertiary Minerals plc and its subsidiary undertakings using the acquisition method and eliminate intercompany balances and transactions.

In accordance with section 408 of the Companies Act 2006, Tertiary Minerals plc is exempt from the requirement to present its own Statement of Comprehensive Income. The amount of the loss for the financial year recorded within the financial statements of Tertiary Minerals plc is £2,349,976 (2019: £779,821). The loss for 2020 includes provision for impairment of its investment in subsidiary undertakings in the amount of £1,958,667 (Note 10).

(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 biannual review is carried out by the directors to consider whether there are any indications of impairment in capitalised exploration and development costs. The biannual impairment reviews were conducted in April 2020 and October 2020.

Where an indication of impairment is identified, the relevant value is written off to the income statement in the period for which the impairment was identified. An impairment of exploration and development costs may be subsequently reversed in later periods should conditions allow.

Accumulated costs, where the Group does not yet have an exclusive exploration licence and in respect of areas of interest which have been abandoned, are written off to the income statement in the year in which the pre-licence expense was incurred or in which the area was abandoned.

Development

Exploration, evaluation and development costs are carried at the lower of cost and expected net recoverable amount. On reaching a mining development decision, exploration and evaluation costs are reclassified as development costs and all development costs on a specific area of interest will be amortised over the useful economic life of the projects, once they become income generating and the costs can be recouped.

(e) Property, plant & equipment

All property, plant and equipment assets are stated at cost less accumulated depreciation. Depreciation is provided by the Group on all property, plant and equipment, at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its expected useful life, as follows:

Fixtures and fittings  20% to 33% per annum  Straight-line basis

Computer equipment  33% per annum  Straight-line basis

Useful life and residual value are reassessed annually.

(f) Financial assets designated at fair value through OCI

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.

The Group elected to classify irrevocably its listed equity investments under this category.

(g) Trade and other receivables and payables

Trade and other receivables and payables are measured at initial recognition at fair value and subsequently measured at amortised cost.

(h) Cash and cash equivalents

Cash and cash equivalents consist of cash at bank and in hand and short-term bank deposits with a maturity of three months or less.

(i) Deferred taxation

Deferred taxation, if applicable, is provided in full in respect of taxation deferred by temporary differences between the treatment of certain items for taxation and accounting purposes.

Deferred tax assets are recognised to the extent that they are regarded as recoverable.

(j) Revenue

Revenue is recognised as the fair value of management services provided to Sunrise Resources plc and relates to expenditure incurred and recharged. The company recognises revenue as contractual performance obligations are satisfied. Revenue is net of discounts, VAT and other sales-related taxes.

Other income

Other income includes amounts received from Sunrise Resources plc under the management services agreement. Other income is recognised in the period the management services are provided based on the expenditure incurred.

(k) Foreign currencies

The Group’s consolidated financial statements are presented in Pounds Sterling (£), being the functional currency of the Company, and the currency of the primary economic environment in which the Company operates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date.

For consolidation purposes, the net investment in foreign operations and the assets and liabilities of overseas subsidiaries, associated undertakings and joint arrangements, that have a functional currency different from the Group’s presentation currency, are translated at the closing exchange rates. Income statements of overseas subsidiaries, that have a functional currency different from the Group’s presentation currency, are translated at exchange rates at the date of transaction. Exchange differences arising on opening reserves are taken to the foreign currency reserve in equity.

(l) Leases

The Group adopted IFRS 16 from 1 January 2019 and this requires the recognition of operating lease commitments on the Group’s statement of financial position as assets and the recognition of a corresponding liability. Lease costs are recognised in the income statement in the form of depreciation of the right of use asset over the lease term and interest charges representing the unwind of the discount on the lease liability. The adoption of IFRS 16 did not have material impact on the financial statements of the Group as it has negligible leasing exposure and exploration project leases are exempt as exploration assets under IFRS 16.3(b).

Short term leases, which meet the requirements to not be accounted for by recognising a right of use asset and a lease liability, having a duration of 12 months or less and without reasonable certainty about their renewal, are charged to the income statement on straight line basis.

(m) Share warrants and share based payments

The Company issues warrants and options to employees (including directors) and third parties. The fair value of the warrants and options is recognised as a charge measured at fair value on the date of grant and determined in accordance with IFRS 2, IAS 32 and IAS 39, adopting the Black-Scholes-Merton model. The fair value is charged to administrative expenses on a straight-line basis over the vesting period, together with a corresponding increase in equity, based on the management’s estimate of shares that will eventually vest. The expected life of the options and warrants is adjusted based on management’s best estimates, for the effects of non-transferability, exercise restrictions and behavioural considerations. The details of the calculation are shown in Note 15.

The Company also issues shares and/or warrants in order to settle certain liabilities, including partial 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.

(n) Judgements and estimations in applying accounting policies

In the process of applying the Group’s accounting policies above, the Group has identified the judgemental areas that have the most significant effect on the amounts recognised in the financial statements:

Intangible assets – exploration and evaluation

IFRS 6 “Exploration for and Evaluation of Mineral Resources” requires that exploration and evaluation assets shall be assessed for impairment when facts and circumstances suggest that the carrying amount may exceed recoverable amount.

In practical terms, this requires that project carrying values are regularly monitored and assessed for recoverability whether from future exploitation of resources or realised by sale to a third party.

Where activities have not reached a stage which permits reasonable confirmation of the existence of mineral reserves, the directors must form a judgement whether future exploration and evaluation should continue. This requires management to use their sector experience, apply their specialist expertise and form a conclusive judgement as whether or not, on the balance of evidence that further exploration is justified to determine if an economically viable mining operation can be established in future. Such estimates, judgements and assumptions are likely to change as new information and evidence becomes available. If it becomes apparent, in the judgement of the directors, that recovery of capitalised expenditure is unlikely the carrying value should be considered as impaired as detailed below.

Royalty assets

Royalty assets representing the Company’s rights to future royalties based upon the extraction of mineral resources by a third party are amortised based upon units of production.  The directors consider bi-annually whether there are any indications of impairment of royalty assets. If such indications exist a full impairment review is undertaken and any impairment arising is charged 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 directors are required to continually monitor and review the carrying values by reference to new developments, stages in the exploration process and new circumstances.  Assessment of the potential impairment of assets requires an updated judgement of the probability of adequate future cash flows from the relevant project. It includes consideration of:

(a)  The period for which the entity has the right to explore in the specific area and whether this right will expire in the near future, and whether the right is expected to be renewed.

(b)  Whether substantive expenditure on further exploration for and evaluation of mineral resources for the specific project is either budgeted or planned.

(c)  Whether exploration for and evaluation of mineral resources on the specific project has led to the discovery of commercially viable quantities of mineral resources and whether the entity has decided to discontinue such activities on the project.

(d)  Whether sufficient data exist to indicate that, although a development on the specific project is likely to proceed, the carrying amount of the exploration and evaluation asset is likely to be recovered in full from successful development of a mine or by the sale of the project.

The judgments in respect of key projects are;

The MB Fluorspar project costs were fully impaired in the amount of £2,027,000 after metallurgical test work was unsuccessful and the Group’s lease agreement on the project was terminated.

Two gold projects Kaaresselkä and Kiekerömaa with a total carrying value of £359,584 were sold to a third party Aurion Resources Limited (Aurion) in 2016. Tertiary has the right to future royalties, but only if these projects proceed to the definition of mineral resources and reserves and successful exploration and production. Aurion has recently completed a drilling programme at Kaaresselkä. Based upon this and their confidence regarding the likely outcome of exploration, the directors have concluded that the carrying value is not impaired.

Going concern

The preparation of financial statements requires an assessment of the validity of the going concern assumption. This in turn is dependent on finance being available for the continuing working capital requirements of the Group. Based on the assumption that such finance will become available, the directors believe that the going concern basis is appropriate for these accounts.

Share warrants, share options and share based payments

The estimates of costs recognised in connection with the fair value of share options and share warrants require that management selects an appropriate valuation model and make decisions on various inputs into the model, including the volatility of its own share price, the probable life of the warrants and options before exercise, and behavioural considerations of warrant holders.

(o) 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.

(a)  New standards, interpretations and amendments effective from 1 January 2019

The following new standards were effective and did not impact the Group:

  • IFRS 16 Leases (IFRS 16)
  • IFRIC 23 Uncertainty over Income Tax Treatments (IFRIC 23)

(b)  New standards, interpretations and amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods. The following amendments are effective for the periods beginning on or after 1 January 2020:

  • IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment – Definition of Material)
  • IFRS 3 Business Combinations (Amendment – Definition of Business)

Revised Conceptual Framework for Financial Reporting

In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current or non-current based upon whether an entity has a right at the end of the reporting period to defer settlement of the liability. The amendments are effective for annual reporting periods beginning on or after 1 January 2022.

Amendments as part of the 2015-2018 Annual Improvements Cycle were as follows;

  • IFRS 3/ IFRS 11: Measuring interests in Joint operations.
  • IAS 12: Accounting for income tax consequences of dividend payments.
  • IAS 23: Treatment of borrowings originally made to develop a specific asset.
  • IAS 1:125 Disclose significant key assumptions concerning the future, and other key sources of estimation uncertainty.
  • IAS 1:122 Disclose significant judgements management has made in applying the entity’s accounting policies.

Tertiary Minerals Plc is currently assessing the impact of these new accounting standards and amendments. The Group does not believe that the amendments to IAS 1 will have a significant impact on the classification of its liabilities.

2.  Segmental analysis

The Chief Operating Decision Maker is the Board. 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.

2020 Exploration

projects

£

Head

office

£

Total

£

Consolidated Income Statement
Revenue 175,750 175,750
Pre-licence exploration costs (49,360) (49,360)
Impairment of deferred exploration asset (2,027,000) (2,027,000)
Share-based payments (30,290) (30,290)
Administration costs and other expenses (567,704) (567,704)
Operating Loss (2,076,360) (422,244) (2,498,604)
Bank interest received 437 437
Loss before income tax (2,076,360) (421,807) (2,498,167)
Income tax
Loss for the year attributable to equity holders (2,076,360) (421,807) (2,498,167)
Non-current assets
Intangible assets:
  Royalty assets:
  Kaaresselkä Gold Project, Finland 261,329 261,329
  Kiekerömaa Gold Project, Finland 98,255 98,255
359,584 359,584
  Deferred exploration costs:
  Paymaster, USA 39,055 39,055
  Pyramid, USA 108,227 108,227
  Pegleg, USA 11,964 11,964
  Mt Tobin, USA 12,565 12,565
  Lucky, USA 10,563 10,563
182,374 182,374
Property, plant & equipment 3,369 3,369
Other investments 55,985 55,985
541,958 59,354 601,312
Current assets
Receivables 16,640 55,055 71,695
Cash and cash equivalents 622,859 622,859
16,640 677,914 694,554
Current liabilities
Trade and other payables (22,275) (43,914) (66,189)
Share subscription loan (420,000) (420,000)
(22,275) (463,914) (486,189)
Net current assets (5,635) 214,000 208,365
Net assets 536,323 273,354 809,677
Other data
Deferred exploration additions 200,071 200,071
Exchange rate adjustments to deferred exploration costs (93,903) (93,903)
Exchange rate adjustments to royalty assets 818 818

 

  1.   Segmental analysis (continued)
2019 Exploration

projects

£

Head

office

£

Total

£

Consolidated Income Statement
Revenue 189,742 189,742
Pre-licence exploration costs (75,778) (75,778)
Impairment of deferred exploration asset (442,917) (442,917)
Share-based payments (8,021) (8,021)
Administration costs and other expenses (494,767) (494,767)
Operating Loss (518,695) (313,046) (831,741)
Disposal of other investments
Bank interest received 234 234
Loss before income tax (518,695) (312,812) (831,507)
Income tax
Loss for the year attributable to equity holders (518,695) (312,812) (831,507)
Non-current assets
Intangible assets:
  Deferred exploration costs:
  Kaaresselkä Gold Project, Finland 260,938 260,938
  Kiekerömaa Gold Project, Finland 97,828 97,828
  MB Fluorspar Project, USA 2,056,419 2,056,419
  Paymaster, USA 17,395 17,395
  Pyramid, USA 29,392 29,392
2,461,972 2,461,972
Property, plant & equipment 4,182 4,182
Other investments 89,775 89,775
2,461,972 93,957 2,555,929
Current assets
Receivables 22,154 19,414 41,568
Cash and cash equivalents 50,617 50,617
22,154 70,031 92,185
Current liabilities
Trade and other payables (9,183) (61,503) (70,686)
Net current assets 12,971 8,528 21,499
Net assets 2,474,943 102,485 2,577,428
Other data
Deferred exploration additions 121,967 121,967
Exchange rate adjustments to deferred exploration costs 112,536 112,536

3.  Loss before income tax

2020

£

2019

£

The operating loss is stated after charging
Operating lease rentals – land and buildings 18,560 21,081
Depreciation – owned assets 1,850 1,635
Fees payable to the Group’s Auditor for:
  The audit of the Group’s annual accounts 6,363 6,125
  The audit of the Group’s subsidiaries, pursuant to legislation 4,671 3,105
Fees payable to the Group’s Auditor and its associates for other services:
  Interim review of accounts 1,020 1,000
  Corporation tax fees 1,460 1,300
  Corporation tax review fees 3,300

4.  Directors’ emoluments

  Remuneration in respect of directors was as follows:
Net cost

to Group

2020

£

Income from recharge to

Sunrise Resources plc

2020

£

 

Total

2020

£

 

Total

2019

£

P L Cheetham (salary) 37,237 71,305 108,542 86,888
R H Clemmey (salary) 66,340 66,340 86,889
D A R McAlister (salary) 18,365 18,365 16,833
121,942 71,305 193,247 190,610

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 £7,831 (2019: £4,677) or Employer’s National Insurance contributions of £23,067 (2019: £23,072).

There was no bonus in the year 2020. Bonus remuneration is applicable to performance in the previous financial year.

Pension contributions made during the year on behalf of Directors amounted to £987 (2019: £1,061).

The directors are also the key management personnel.  If all benefits are taken into account, the total key management personnel compensation would be £201,078 (2019: £195,287).

After recharge to Sunrise Resources plc, if all benefits are taken into account, the key management personnel net compensation cost to the Group would be £129,773 (2019: £126,514).

5.  Staff costs

Total staff costs for the Group and Company, including directors, were as follows:
Net cost

to Group

2020

£

Income from recharge to

Sunrise Resources plc

2020

£

 

Total

2020

£

 

Total

2019

£

Wages and salaries 175,775 137,366 313,141 318,804
Social security costs 17,845 16,840 34,685 36,093
Share-based payments 9,921 9,921 8,021
203,541 154,206 357,747 362,918

 

The average monthly number of part-time and full-time employees, including directors, employed by the Group and Company during the year was as follows: 2020

Number

2019

Number

Technical employees 3 3
Administration employees (including non-executive directors) 4 5
7 8

Managing Director, Richard Clemmey, ceased to be an employee and director in June 2020. The Company Secretary, Colin Fitch, retired in June 2019 and since July 2019 the company secretarial services have been provided by Rod Venables through City Group PLC.

6.  Loss per share

Loss per share has been calculated using the loss for the year attributable to equity holders of the parent and the weighted average number of ordinary shares in issue during the year.
2020 2019
Loss (£) (2,498,167) (831,507)
Weighted average ordinary shares in issue (No.) 661,815,154 416,198,199
Basic and diluted loss per ordinary share (pence) (0.38) (0.19)

The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for the basic earnings per ordinary share. This is because the exercise of share warrants and options would have the effect of reducing the loss per ordinary share and is therefore anti-dilutive. Deferred shares are excluded from the loss per share calculation as they have no attributable earnings.

7.  Income tax

No liability to corporation tax arises for the year due to the Group recording a taxable loss (2019: £Nil).

2020

£

2019

£

Tax reconciliation
Loss before income tax (2,498,167) (831,507)
Tax at 19% (2019: 19%) (474,652) (157,986)
Differences between capital allowances and depreciation 31 (1,828)
Expenditure disallowed for tax purposes 127,909 29,902
Pre-trading expenditure no longer deductible for tax purposes 27,346 43,625
Tax effect at 19% (2019: 19%) 29,504 13,623
Unrelieved tax losses carried forward (445,148) (144,363)
Tax recognised on loss
Total losses carried forward for tax purposes 11,028,887 8,689,670

Factors that may affect future tax charges

The Group has total losses carried forward of £11,028,887 (2019: £8,689,670).  This amount would be charged to tax, thereby reducing tax liability, if sufficient profits were made in the future capped to £5m per annum allowance. 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.

The difference of £3,664 between 2019 and 2020 total losses carried forward balance is additional expenditure non-deductible for tax purposes relating to 2019.

8.  Intangible assets

Group Deferred

exploration

expenditure

2020

£

Royalty

assets

2020

£

Deferred

exploration

expenditure

2019

£

Cost

At start of year

5,885,219 358,766 6,009,482
Additions 200,071 121,967
Exchange adjustments (93,903) 818 112,536
At 30 September 5,991,387 359,584 6,243,985
Disposals

At start of year

(3,782,013) (3,339,096)
Impairment losses during year (2,027,000) (442,917)
Disposals during year
At 30 September (5,809,013) (3,782,013)
Carrying amounts
At 30 September 182,374 359,584 2,461,972
At start of year 2,103,206 358,766 2,670,386

Two gold projects, Kaaresselkä and Kiekerömaa, with a total carrying value of £359,584 have been re-classified in the financial statements as Royalty Assets. The exploration rights were sold to a third party, Aurion Resources Limited (“Aurion”) in 2016 and Tertiary has the right to future royalties, but only if these projects proceed to the definition of mineral resources and reserves and successful exploration and production. The re-classification in the financial statements therefore reflects the distinct nature of these projects within intangible fixed assets.

The directors carried out an impairment review which, with reference to IFRS6.20(b), resulted in an impairment charge, relating to the Tertiary Minerals US Inc MB Fluorspar project, being recognised in the Consolidated Income Statement as part of operating expenses. Refer to accounting policy 1(d) and 1(n) for a description of the considerations used in the impairment review.

9.  Property, plant & equipment

Group

fixtures

and fittings

2020

£

Company

fixtures

and fittings

2020

£

Group

fixtures

and fittings

2019

£

Company

fixtures

and fittings

2019

£

Cost

At start of year

48,152 33,394 49,543 34,785
Additions 1,037 1,037 2,509 2,509
Disposals 0 0 (3,900) (3,900)
At 30 September 49,189 34,431 48,152 33,394
Depreciation

At start of year

(43,970) (29,212) (46,235) (31,477)
Charge for the year (1,850) (1,850) (1,635) (1,635)
Disposals 0 0 3,900 3,900
At 30 September (45,820) (31,062) (43,970) (29,212)
Net Book Value
At 30 September 3,369 3,369 4,182 4,182
At start of year 4,182 4,182 3,308 3,308

10.  Investments

Subsidiary undertakings

Company Country of

incorporation/

registration

Type and percentage

of shares held at

30 September 2020

Principal activity
Tertiary Gold Limited England & Wales 100% of ordinary shares Mineral exploration
Tertiary (Middle East) Limited England & Wales 100% of ordinary shares Mineral exploration
Tertiary Minerals US Inc. Nevada, USA 100% of ordinary shares Mineral exploration

The registered office of Tertiary Gold Limited and Tertiary (Middle East) Limited is the same as the Parent Company, being Sunrise House, Hulley Road, Macclesfield, Cheshire, SK10 2LP.

The registered office of Tertiary Minerals US Inc. is 241 Ridge Street, Suite 210, Reno, NV 89501, USA.

Investment in subsidiary undertakings Company

2020

£

Company

2019

£

Ordinary shares – Tertiary (Middle East) Limited 1 1
Ordinary shares – Tertiary Gold Limited 224,888 224,888
Ordinary shares – Tertiary Minerals US Inc. 1 1
Loan – Tertiary (Middle East) Limited 685,890 683,947
Less – Provision for impairment (685,890) (683,947)
Loan – Tertiary Gold Limited 5,360,637 5,302,305
Less – Provision for impairment (5,225,942) (5,168,430)
Loan – Tertiary Minerals US Inc. 2,081,585 1,837,532
Less – Provision for impairment (1,899,212)
At 30 September 541,958 2,196,297

Investments in share capital of subsidiary undertakings

The directors have reviewed the carrying value of the Company’s investments in shares of subsidiary undertakings totalling £224,890, by reference to estimated recoverable amounts. In turn, this requires an assessment of the recoverability of underlying exploration assets in those subsidiaries in accordance with IFRS 6.

Loans to Group undertakings

Amounts owed by subsidiary undertakings are unsecured and repayable in cash. Loan interest is charged to US subsidiaries on intercompany loans with Parent Company.

A review of the recoverability of loans to subsidiary undertakings has been carried out. This indicated potential credit losses arising in the year which have been provided for as follows: Tertiary Gold Limited £57,512 (2019: £486,907), Tertiary Middle East Limited £1,943 (2019: £704) and Tertiary Minerals US Inc. £1,899,212, following an impairment of the MB project. The provisions made reflect the differences between the loan carrying amounts and the value of the underlying project assets.

Other investments – listed investments

Company Country of

incorporation/

registration

Type and percentage

of shares held at

30 September 2020

Principal activity
Sunrise Resources plc England & Wales 0.6% of ordinary shares Mineral exploration

 

Investment designated at fair value through OCI Group

2020

£

Company

2020

£

Group

2019

£

Company

2019

£

Value at start of year 89,775 89,775 202,328 202,328
Additions
Disposal (57,053) (57,053) (40,883) (40,883)
Movement in valuation 23,263 23,263 (71,670) (71,670)
At 30 September 55,985 55,985 89,775 89,775

Disposals in the last financial year comprise a disposal of 52,500,000 Sunrise Resources plc shares (2019: 52,000,000) Sunrise Resources plc shares.

The fair value of each investment is equal to the market value of its shares at 30 September 2020, based on the closing mid-market price of shares on its equity exchange market.

These are level one inputs for the purpose of the IFRS 13 fair value hierarchy.

11.  Receivables

Group

2020

£

Company

2020

£

Group

2019

£

Company

2019

£

Trade receivables 43,717 43,717 10,496 10,496
Other receivables 18,412 1,772 20,020 1,725
Prepayments 9,566 7,145 11,052 7,126
At 30 September 71,695 52,634 41,568 19,347

The Group aged analysis of trade receivables is as follows:

Not

impaired

 

£

30 days

or less

 

£

Over

30 days

 

£

Total

carrying

amount

£

2020 Trade receivables 43,717 43,717 43,717
2019 Trade receivables 10,496 10,496 10,496

12.  Cash and cash equivalents

Group

2020

£

Company

2020

£

Group

2019

£

Company

2019

£

Cash at bank and in hand 52,827 27,107 47,787 26,615
Short-term bank deposits 570,032 570,032 2,830 2,830
At 30 September 622,859 597,139  50,617 29,445

13.  Trade and other payables

Group

2020

£

Company

2020

£

Group

2019

£

Company

2019

£

Trade payables 14,735 13,036 11,592 5,737
Other taxes and social security costs 7,106 7,106 6,481 6,481
Accruals 41,716 14,264 48,055 12,941
Other payables 2,632 2,632 4,558 4,558
At 30 September 66,189 37,038 70,686 29,717

14.  Issued capital and reserves

2020

No.

2020

£

2019

No.

2019

£

Allotted, called up and fully paid Ordinary Shares
Balance at start of year 443,075,665 44,307 359,323,754 35,932
Shares issued in the year 388,571,372 38,857 83,751,911 8,375
Balance at 30 September 831,647,037 83,164 443,075,665 44,307

 

2020

No.

2020

£

2019

No.

2019

£

Deferred Shares
Balance at start of year 267,076,933 2,644,062 267,076,933 2,644,062
Cancellation of shares (267,076,933) (2,644,062)
Balance at 30 September 267,076,933 2,644,062

Capital restructure

At a General Meeting on 10 September 2020 the shareholders approved a buy-back of the Company’s deferred shares in accordance with the Company’s Articles of Association for an aggregate consideration of £1.00. The buy-back of the deferred shares was funded from the part-proceeds of a placing of 1,000 new ordinary shares 0.01p each at a price of 0.25p per share to the Company’s Chairman, Patrick Cheetham. The deferred shares were then cancelled and a Capital Redemption Reserve formed to the value of £2,644,061.

The deferred shares resulted from a subdivision of the Company’s ordinary share capital in 2017 whereby each existing Ordinary Share with a nominal value of 1p was subdivided into 1 new Ordinary Share of 0.01p and 1 deferred share of 0.99p each. The deferred shares had no significant rights attached to them and carried no right to vote or to participate in distribution of surplus assets and were not admitted to trading on the AIM market of the London Stock Exchange plc or any other stock exchange. The deferred shares effectively carried no value.

Share issues

During the year to 30 September 2020 the following share issues took place:

An issue of 18,000,000 0.01p Ordinary Shares, to Bergen Global Opportunity Fund, LP (“Bergen”) as collateral shares relating to the convertible securities issuance deed (19 November 2019).

An issue of 17,000,000 0.01p Ordinary Shares, to Bergen for settlement of commencement fee (26 November 2019).

An issue of 651,900 0.01p Ordinary Shares at 0.21p per share, to a director, in satisfaction of directors’ fees, for a total consideration of £1,369 (2 December 2019).

An issue of 154,705,883 0.01p Ordinary Shares at 0.17p per share, by exercise of conversion rights (Bergen convertible loan note), for a total consideration of £263,000 before expenses (18 February 2020).

An issue of 100,000,000 0.01p Ordinary Shares at 0.275p per share, by way of placing, for a total consideration of £275,000 before expenses (25 February 2020).

An issue of 402,644 0.01p Ordinary Shares at 0.34p per share, to a director, in satisfaction of directors’ fees, for a total consideration of £1,369 (27 February 2020).

An issue of 33,333,334 0.01p Ordinary Shares at 0.18p per share to Precious Metal Capital Group LLC (“PMCG”), by way of subscription deed, for a total consideration of £60,000 before expenses (29 April 2020).

An issue of 25,000,000 0.01p Ordinary Shares at 0.2p per share to PMCG, by way of subscription deed, for a total consideration of £50,000 before expenses (14 May 2020).

An issue of 38,888,889 0.01p Ordinary Shares at 0.18p per share to PMCG, by way of subscription deed, for a total consideration of £70,000 before expenses (3 July 2020).

An issue of 587,722 0.01p Ordinary Shares at 0.23p per share, to a director, in satisfaction of directors’ fees, for a total consideration of £1,352 (31 July 2020).

An issue of 1,000 0.01p Ordinary Shares, to P. Cheetham at 0.25p per share to buy back and cancel deferred shares for an aggregate consideration of £1 (24 August 2020).

During the year to 30 September 2019 a total of 83,751,911 0.01p ordinary shares were issued, at an average price of 0.3p, for a total consideration of £231,360 net of expenses.

The total amount of transaction fees debited to the Share Premium account in the year was £13,750 (2019: £20,000).

Nature and purpose of reserves

Capital redemption reserve

Non distributable reserve into which amounts are transferred following the redemption or the purchase of a company’s own shares. The provisions relating to the capital redemption reserve are set out in section 733 of the Companies Act 2006.

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 Company’s functional currency, being Sterling, are recognised directly in the foreign currency reserve.

Share option reserve

The share option reserve is used to recognise the fair value of share-based payments provided to employees, including key management personnel, by means of share options and share warrants issued as part of their remuneration. Refer to Note 15 for further details.

15.  Warrants granted

Warrants not exercised at 30 September 2020
Issue date Exercise

price

Number Exercisable Expiry

dates

11/03/2016 1.40p 1,000,000 Any time before expiry 11/03/2021
31/01/2017 1.025p 1,000,000 Any time before expiry 31/01/2022
31/01/2018 1.875p 1,000,000 Any time before expiry 31/01/2023
21/02/2019 0.50p 3,500,000 Any time before expiry 21/02/2024
21/02/2019 0.35p 5,000,000 Any time before expiry 21/02/2024
26/11/2019 0.335p 22,000,000 Any time before expiry 26/11/2023
02/03/2020 0.275p 5,000,000 Any time before expiry 02/03/2021
27/02/2020 0.34p 8,100,000 Any time from 27/02/2021 27/02/2025
Total 46,600,000

 

Warrants are issued for nil consideration and are exercisable as disclosed above. They are exchangeable on a one for one basis for each ordinary share at the exercise price on the date of conversion.

A grant of 22,000,000 warrants at an exercise price of 0.336p, to Bergen relating to the convertible securities issuance deed (26 November 2019).

A grant of 8,100,000 warrants at an exercise price of 0.34p, to employees and directors of the Company (27 February 2020).

A grant of 5,000,000 warrants at an exercise price of 0.275p, as part of fundraising, to Peterhouse Capital Limited (2 March 2020).

Share-based payments

The Company issues warrants to directors and employees on varying terms and conditions.

Details of the share warrants outstanding during the year are as follows:
2020 2019
Number of

share warrants

Weighted

average

exercise

price

Pence

Number of

share warrants

and share

options

Weighted

average

exercise

price

Pence

Outstanding at start of year 13,200,000 1.106 9,050,000 7.877
Granted during the year 35,100,000 0.328 8,500,000 0.412
Exercised during the year
Forfeited during the year
Expired during the year (1,700,000) 4 (4,350,000) 13.84
Outstanding at 30 September 46,600,000 0.415 13,200,000 1.106
Exercisable at 30 September 38,500,000 0.43 4,700,000 2.362

The warrants outstanding at 30 September 2020 had a weighted average exercise price of 0.415p (2019: 1.1p), a weighted average fair value of 0.13p (2019: 0.43p) and a weighted average remaining contractual life of 3.01 years (2019: 3.42 years).

In the year ended 30 September 2020, warrants were granted on 26 November 2019, 2 March 2020 and 27 February 2020. The aggregate of the estimated fair values of the warrants granted on these dates is £33,125. In the year ended 30 September 2019, warrants were granted on 21 February 2019. The aggregate of the estimated fair values of the warrants granted on this date is £11,173.

There were no warrants exercised in the year ending 30 September 2020.

The inputs into the Black-Scholes-Merton Pricing Model were as follows:

2020 2019
Weighted average share price 0.279p 0.350p
Weighted average exercise price 0.328p 0.388p
Expected volatility 75.0% 75.0%
Expected life 3.57 years 4 years
Risk-free rate 0.408% 0.827%
Expected dividend yield 0% 0%

Expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous three years. The expected life used in the model has been adjusted based on management’s best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations.

The Company recognised total expenses of £30,290 and £8,021 related to equity-settled share-based payment transactions in 2020 and 2019 respectively. The fair value is charged to administrative expenses and where there is a vesting period it is charged 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.

16.  Leases

The Company rents office premises under a short-term operating lease agreement.

Future minimum lease payments under non-cancellable operating leases are:

2020

Land & buildings

£

2019

Land & buildings

£

Office accommodation:
Within one year 15,863 3,525

 

The Company does not sub-let any of its leased premises.

Lease payments recognised in loss for the period amounted to £18,560 (2019: £21,081).

17.  Related party transactions

Key management personnel

The directors holding office in the period and their warrants held in the share capital of the Company are:

At 30 September 2020 At 30 September 2019
Shares number Share warrants

number

Warrants

exercise

price

Warrant expiry

date

Shares

number

Share warrants

number

P L Cheetham* 12,641,471 2,000,000 0.500p 21/02/2024 12,612,113 3,000,000
2,000,000 0.340p 27/02/2025
D A R McAlister 2,937,609 1,500,000 0.500p 21/02/2024 1,295,343 1,500,000
1,500,000 0.340p 27/02/2025
R H Clemmey – resigned** 977,405 3,000,000 0.350p 21/02/2024 977,405 3,000,000
3,000,000 0.340p 27/02/2025

* Includes 2,843,625 shares held by K E Cheetham, wife of P L Cheetham.

* The shareholding reported for the years ended 30 September 2017, 2018 and 2019 were under-reported by  28,358 ordinary shares due to an administrative error.

** R H Clemmey ceased to be an employee and director of the Company on 30 June 2020.

The directors have no beneficial interests in the shares of the Company’s subsidiary undertakings as at 30 September 2020. The directors of the Company are the directors of all Group companies.

Details of the Parent Company’s investment in subsidiary undertakings are shown in Note 10.

Sunrise Resources plc

During the year the Company charged costs of £175,750 (2019: £189,742) to Sunrise Resources plc being shared overheads of £20,369 (2019: £27,025), costs paid on behalf of Sunrise Resources plc of £1,175 (2019: £6,554),  staff salary costs of £74,085 (2019: £78,590) and directors’ salary costs of £80,121 (2019: £77,574), comprising P L Cheetham £80,121 (2019: £76,773) and R H Clemmey £nil (2019: 801).  All salary costs include employer’s National Insurance and Pension contributions.

The salary costs in Notes 4 and 5 include these charges.

At the balance sheet date an amount of £43,717 (2019: £10,496) was due from Sunrise Resources plc.

P L Cheetham, a director of the Company, is also a director of Sunrise Resources plc.

Shares and warrants held in Sunrise Resources plc by the Company’s directors are as follows:

At 30 September 2020 At 30 September 2019
Shares

number

Warrants

number

Warrants

Exercise

price

Warrants

expiry date

Shares

number

Warrants

number

P L Cheetham* 231,047,657 30,000,000 0.195p 05/08/2025 125,593,683 3,000,000
D A R McAlister 550,000 550,000
R H Clemmey – resigned** 500,000 0.160p 18/02/2021 3,000,000
500,000 0.135p 01/02/2022
500,000 0.160p 31/01/2023
750,000 0.110p 21/02/2024

* Includes 5,500,000 shares held by K E Cheetham, wife of P L Cheetham.

** R H Clemmey ceased to be an employee and director of the Company on 30 June 2020.

18.  Capital management

The Group’s capital requirements are dictated by its project and overhead funding requirements from time to time. Capital requirements are reviewed by the Board on a regular basis.

The Group manages its capital to ensure that entities within the Group will be able to continue as going concerns, to increase the value of the assets of the business and to provide an adequate return to shareholders in the future when exploration assets are taken into production.

The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its assets. In order to maintain or adjust the capital structure the possibilities open to the Group in future include issuing new shares, consolidating shares, returning capital to shareholders, taking on debt, selling assets and adjusting the amount of dividends paid to the shareholders.

19.  Financial instruments

At 30 September 2020, the Group’s and Company’s financial assets consisted of listed investments, trade receivables and cash and cash equivalents.  At the same date, the Group and Company had financial liabilities of trade and other payables due within one year and had share subscription outstanding amount with PMCG convertible to shares within 24 months from the issue date of 2 April 2020 as at this date. There is no material difference between the carrying and fair values of the Group and Company’s financial assets and liabilities.

The carrying amounts for each category of financial instruments held at 30 September 2020, as defined in IFRS 9, are as follows:

Group

2020

£

Company

2020

£

Group

2019

£

Company

2019

£

Financial assets at amortised cost 684,527 632,336 81,133 41,670
Financial assets at fair value through other comprehensive income 55,985 55,985 89,775 89,775
Financial liabilities at amortised cost 58,402 29,251 62,156 21,187
Share subscription loan 420,000 420,000 62,156 21,187

Risk management

The principal risks faced by the Group and Company resulting from financial instruments are liquidity risk, foreign currency risk and, to a lesser extent, interest rate risk and credit risk. The Directors review and agree policies for managing each of these risks as summarised below. The policies have remained unchanged from previous periods as these risks remain unchanged.

Liquidity risk

The Group holds cash balances in Sterling, US Dollars, Swedish Krona, Canadian Dollars, Euros and Saudi Riyals to provide funding for exploration and evaluation activity. The Group and the Company are dependent on equity fundraising through share placings which the directors regard as the most cost-effective method of fundraising. The directors monitor cash flow in the context of their expectations for the business to ensure sufficient liquidity is available to meet foreseeable needs.

Currency risk

The Group’s financial risk management objective is broadly to seek to make neither profit nor loss from exposure to currency risk. The Group is exposed to transactional foreign exchange risk and takes profits and losses as they arise as, in the opinion of the directors, the cost of hedging against fluctuations would be greater than the related benefit from doing so.

Bank and cash balances were held in the following denominations:

Group Company
2020

£

2019

£

2020

£

2019

£

United Kingdom Sterling 599,433 23,526 596,509 22,433
United States Dollar 19,804 11,628 290 6,691
Swedish Krona 3,238 5,734
Norwegian Krona 4 4 4 4
European Euro 321 9,664 321 303
Canadian Dollar 15 14 15 14
Saudi Riyal 44 47
622,859 50,617 597,139 29,445

Surplus Sterling funds are placed with NatWest bank on short-term treasury deposits at variable rates of interest.

The Company and the Group are exposed to changes in exchange rates mainly in the Sterling value of US Dollar denominated financial assets.

Sensitivity analysis shows that the Sterling value of its US Dollar denominated financial assets at 30 September 2020 would increase or decrease by £990 for each 5% increase or decrease in the value of Sterling against the Dollar.

Neither the Company nor the Group is exposed to material transactional currency risk.

Interest rate risk

The Group and Company finance their operations through equity fundraising and therefore do not carry borrowings.

Fluctuating interest rates have the potential to affect the loss and equity of the Group and the Company insofar as they affect the interest paid on financial instruments held for the benefit of the Group. The directors do not consider the effects to be material to the reported loss or equity of the Group or the Company presented in the financial statements.

Credit risk

The Company has exposure to credit risk through receivables such as VAT refunds, invoices issued to related parties and its joint arrangements for management charges. The amounts outstanding from time to time are not material other than for VAT refunds which are considered by the directors to be low risk.

The Company has exposure to credit risk in respect of its cash deposits with NatWest bank and this exposure is considered by the directors to be low.

20.  Convertible Loan note

On 19 November 2019, the Company entered into a convertible securities issuance deed (the “Agreement”) with Bergen Global Opportunity Fund, LP (the “Investor”), a US based institutional investment fund, in connection with an issuance by the Company of zero coupon convertible securities having a nominal amount of up to £653,000 (the “Convertible Securities”). Pursuant to the Agreement, on 26 November 2019 the Company issued a convertible security with the nominal value of £263,000 (at the purchase price of £232,000).

In connection with the Agreement:

(a)  the Company issued to the Investor 17,000,000 Shares by way of a commencement fee in relation to the overall funding (“Commencement Fee Shares”);

(b)  the Company issued to the Investor 18,000,000 Shares at par to collateralise the investment (“Collateral Shares”).

(c)  the Company issued 22,000,000 warrants with an exercise period of 48 months from the date of issue (the “Warrants”) to the Investor entitling the Investor (or any subsequent holder of the Warrants) to subscribe for one Share per Warrant at the exercise price equal to 0.33588 pence.

(d)  On 18 February 2020, the Company received a Conversion Notice from the Investor in respect of the Conversion of £263,000 of the Convertible Security as a result of which the Company will issued 154,705,883 new ordinary shares at a Conversion Price of 0.17 pence per share.

(e)  The Company announced that the convertible securities issuance deed (the “Agreement”)

between the Company and Bergen Global Opportunity Fund, LP (“Bergen”), dated 19 November

2019, the details of which were notified on 20 November 2019, has been terminated by the parties

by mutual consent, effective as of 1 April 2020. Following the termination, no further funding will be

provided to the Company under the Agreement.

21.  Share subscription loan

Tertiary Minerals plc entered into a share subscription deed on 2 April 2020 with Precious Metals Capital Group LLC (PMCG), a U.S. based institutional specialist investor. PMCG made an investment of £600,000 by way of a subscription for Company shares.

The placing was made by PMCG by way of prepayment for Company shares to be issued, at the Subscriber’s request, within 24 months of the date of the placing. A further investment may be made by the Subscriber within 12 months after the date of this placement, but only with the consent of the Company, in the amount not exceeding an additional £600,000, by way of prepayment for shares to be issued, at the Subscriber’s request, within 24 months following the date of such subsequent placement.

The number of shares to be issued as a result of the placing is determined by dividing the subscription amount (or that part of the subscription amount in relation to which the shares are being issued) by 95% of the prevailing price, the latter being the average of the five daily volume weighted average prices during a specified period immediately prior to the date of issuance of the shares. Alternatively, the Subscriber may choose for the subscription price to be equal to £0.0042, being an approximately 133% premium to the Company’s share price on 1 April 2020.

As at 30 September 2020 the outstanding amount of prepayment is £420,000 following three issues of shares within the period since 2 April 2020 (Note 14).

 

Tertiary Minerals #TYM – Kaaresselkä Gold Royalty Development

Tertiary Minerals plc is pleased to note the announcement today by TSX listed Aurion Resources Ltd of encouraging results from Aurion’s Maiden Drill Program at the Kaaresselkä Gold project where Tertiary holds a number of royalty interests.

Drill intercepts include:

  • 52 g/t Au over 2.85 m (KS20001 from 306.50 m down hole) and
  • 85 g/t Au over 5.40 m (KS20002 from 199.00 m down hole); and
  • extend the gold mineralized zone to ~200 m depth and to ~600 m strike length at Vanha target.

Details of the drill programme and Tertiary’s royalty interests can be found in Tertiary’s announcements of 3 September 2020 and 6 October 2020 and in the detailed information below.

For more information please contact:

Tertiary Minerals plc:
Patrick Cheetham, Executive Chairman +44 (0) 1625 838 679
SP Angel Corporate Finance LLP

Nominated Adviser and Broker

Richard Morrison +44 (0) 203 470 0470
Caroline Rowe  
Peterhouse Capital Limited

Joint Broker

Lucy Williams + 44 (0) 207 469 0930
Duncan Vasey  

 

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Detailed Information

Aurion completed a maiden 12-hole, 2,401.3 m diamond core drilling program testing four targets (Vanha, Lampi South, Lampi North, Tienvarsi) within the Kaaresselkä prospect area (2.0 km by 1.0 km). The program was designed to test the potential strike and depth extensions of previously identified mineralized zones, which were largely limited to 50-150 m from surface, as well as targets identified from re-interpretation of historic exploration data.

The locations of drill holes can be seen in the following link and a list of results is provided in the following table.

https://aurionresources.com/site/assets/files/1373/nr20-16figure2.pdf

Kaaresselkä Drillhole Highlight Summary Table
Hole ID Azimuth Dip From (m) To (m) Width (m) Au (g/t) Target Area Comments
KS20001 179.8 -50.0 40.70 41.35 0.65 0.93 Vanha 1.08 % Cu
AND     85.85 88.95 3.10 0.26   1.20 % Cu
AND     296.40 297.55 1.15 1.71    
AND     306.50 309.35 2.85 1.52    
incl     307.70 309.35 1.65 2.36    
KS20002 359.9 -49.4 199.00 204.50 5.50 1.85 Vanha  
incl     199.00 199.95 0.95 8.91    
KS20003 180.4 -45.2 45.75 49.75 4.00 1.27 Vanha  
KS20004 335.1 -55.2 101.95 102.90 0.95 1.28 Lampi S  
KS20005 24.7 -50.4       NSV Lampi N  
KS20006 30.3 -45.0       NSV Tienvarsi  
KS20007 30.4 -54.7 81.95 82.80 0.85 3.22 Tienvarsi 0.8 % Cu
KS20008 224.7 -45.2       NSV Lampi N  
KS20009 220.7 -44.8       NSV Lampi N  
KS20010 224.4 -44.7       NSV Tienvarsi  
KS20011 220.9 -44.6       NSV Lampi N  
KS20012 14.2 -48.0       NSV Lampi S  
Intercepts reported at 1 g/t gold or 1 % Cu cut-off. All assay values are uncut.  
All widths are core widths.  True width is not known at this time.  NSV = No Significant Value

 

 

Vanha Target

KS20001 targeted the depth extensions of historic gold intercepts (4.88 g/t Au over 2.0 m, 1.2 g/t Au over 1.0 m and 1.21 g/t Au over 4.0 m) at shallow depths (max 50 m). The drill hole intersected a wide (~200-300 m down hole length) zone of strongly altered (silicification and carbonatization) and sheared mafic volcanic rocks and graphitic sediments returning gold intercepts of 1.71 g/t Au over 1.15 m from 296.40 m down hole, 1.52 g/t Au over 2.85 m, and several intervals with elevated (>0.1 g/t) gold values. The mineralized zone is interpreted to be subvertical and continue to at least 230 m vertical depth. The drill hole also intersected previously unknown parallel zones of alteration and deformation that returned 0.93 g/t Au and 1.08% Cu over 0.65 m from 40.70 m down hole and 0.26 g/t Au and 1.20 % Cu over 3.10 m from 85.85 m down hole.

KS20002 was collared along a profile ~60 m to W from KS20001 and targeted the depth extension of gold mineralized zones identified in historic exploration. The drill hole intersected 1.85 g/t Au over 5.50 m from 199.00 m down hole including 8.91 g/t Au over 0.95 m from 199.00 m down hole within a wider zone of strongly deformed and altered mafic volcanic rocks and graphitic schists.

KS20003 was collared ~300 m to E from KS20001 to test the strike extension of the EW trending structural trend. The drill hole returned an intercept of 1.27 g/t Au over 4.00 m within a wider zone of strongly deformed and altered mafic volcanic rocks and graphitic schists. The gold mineralized trend is open and untested towards east.

The three drill holes extended the gold mineralized zones to 200 m depth and 600 m strike length along the east-west trending structural corridor coinciding with the Sirkka Shear Zone. The mineralization at Vanha is open to depth and towards east.

Lampi South, Lampi North, and Tienvarsi

Drill holes KS20004-KS20012 tested several gold indications in the western part of the Kaaresselkä prospect area. Several drill holes intersected zones of altered and deformed mafic volcanic and sedimentary rock units with varying levels of gold ranging from nil to ~3 g/t Au over narrow widths.

Quality Assurance and Quality Control

All samples were delivered to ALS preparation facility in Sodankylä, Finland where sample preparation work was completed. All analytical work was completed at ALS facility in Loughrea, Ireland and Rosia Montana, Romania. ALS is an internationally accredited lab and are ISO compliant (ISO 9001:2008, ISO/IEC 17025:2005). All samples were analysed for gold using the Au-AA26 procedure (50 g fire assay with AAS finish: Lower Detection Limit (“LDL”) 0.01 g/t gold; Upper Detection Limit (“UDL”) – 100 g/t gold).  Multi-element analysis (ME-ICP61, four-acid digestion, 35 element ICP-AES) was completed on all samples. Certified standards and blanks were inserted every 20 samples. ALS has its own QA/QC protocol using standards, blanks and duplicates.

Note :

The information in this release has been taken from a news release made by Aurion Resources Ltd on 3 December 2020 and has been compiled by Mr. Patrick Cheetham (MIMMM, MAusIMM) who is a qualified person for the purposes of the AIM Note for Mining and Oil & Gas Companies. Mr. Cheetham is a Member of the Institute of Materials, Minerals & Mining and also a member of the Australasian Institute of Mining & Metallurgy.

 

Note to Editors:

 

Tertiary Minerals plc (ticker symbol ‘TYM’) is an AIM-traded mineral exploration and development company building a multi-commodity project portfolio.

Tertiary Minerals #TYM – Maiden Drilling Campaign completed by Aurion Resources at Kaaresselkä Gold Royalty

Tertiary Minerals plc is pleased to note the announcement today by TSX listed Aurion Resources Ltd (“Aurion”) that it has completed its maiden drill programme at the Kaaresselkä Project in Finland where Tertiary holds various royalty interests as set out in its news release dated 3 September 2020.

The programme comprised 12 holes for a total of 2,400 m and targeted the depth and strike extensions of the shallowly defined footprint of gold mineralization over 1 km. Drill core is being processed and submitted for assay.

For more information please contact:

Tertiary Minerals plc:
Patrick Cheetham, Executive Chairman+44 (0) 1625 838 679  
SP Angel Corporate Finance LLPNominated Adviser and Broker 
Richard Morrison+44 (0) 203 470 0470 
Caroline Rowe 
Peterhouse Capital LimitedJoint Broker
Lucy Williams+ 44 (0) 207 469 0930
Duncan Vasey

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Additional Information :

Kaaresselkä is an advanced gold exploration project located approximately 4 km south of Aurion’s bonanza grade Aamurusko Main gold discovery. Kaaresselkä was originally discovered through base-of-till sampling by the Finnish Geological Survey (GTK) in 1987 and was drilled by both GTK and Tertiary with 127 historical drill holes having been completed, mostly to depths less than 100 m. Drilling results included 11.01 g/t Au over 4.90 m. Aurion is a TSX listed company backed by Kinross Gold Corp. and B2 Gold Corp

Note to Editors:

Tertiary Minerals plc (ticker symbol ‘TYM’) is an AIM-traded mineral exploration and development company building a multi-commodity project portfolio.

Tertiary Minerals #TYM – Kaaresselkä Gold Royalty

Tertiary Minerals plc is pleased to note the announcement yesterday, 2 September 2020, by TSX listed Aurion Resources Ltd (“Aurion”) that it has mobilised two drill rigs to test various gold targets in Finland, including the Kaaresselkä Project in Finland where Tertiary holds various royalty interests.

Kaaresselkä is an advanced gold exploration project located approximately 4 km south of Aurion’s bonanza grade Aamurusko Main gold discovery. Kaaresselkä was originally discovered through base-of-till sampling by the Finnish Geological Survey (GTK) in 1987 and was drilled by both GTK and Tertiary with 127 historical drill holes having been completed, mostly to depths less than 100 m. Drilling results included 11.01 g/t Au over 4.90 m. 

Aurion, which is backed by Kinross Gold Corp. and B2 Gold Corp., has announced that it will drill 2,000m at Kaaresselkä to confirm historical drilling and to test the mineralised structure at depth and along strike. Results will be released once assays are available.

Tertiary sold the Kaaresselkä Project, together with the nearby Kiekerömaa Project to Aurion in March 2017 but, importantly, retains a number of royalty interests in the Kaaresselkä and Kiekerömaa Projects as follows:

  • Pre-production royalty of US$1.00/ounce gold following the definition of a NI 43-101 (or equivalent) code compliant Inferred Mineral Resource Estimate on either project;
  • Pre-production royalty of US$2.00/ounce gold following the definition of a NI 43-101 (or equivalent) code compliant Indicated Mineral Resource Estimate on either project;
  • Pre-production royalty of US$3.00/ounce gold following the definition of a NI 43-101 (or equivalent) code compliant Measured Mineral Resource Estimate on either project; and
  • Net smelter returns royalty (NSR) of 2% on all future gold production from either property.

Aurion can purchase 50% of the NSR from Tertiary for USD$1,000,000 at any time prior to commencement of commercial production on either project.

Commenting today, Executive Chairman Patrick Cheetham said:

“I am delighted to see the re-start of drilling at Kaaresselkä after such a long break. The recent high-grade gold discoveries at the nearby Aamurusko deposit and in the wider Risti Project area bode well for the future development of Kaaresselkä and the realisation of our royalty interests which I suspect have been overlooked by the market. We wish Aurion every success with their drilling.”

For more information please contact:

Tertiary Minerals plc:
Patrick Cheetham, Executive Chairman+44 (0) 1625 838 679         
SP Angel Corporate Finance LLPNominated Adviser and Broker 
Richard Morrison+44 (0) 203 470 0470 
Caroline Rowe  
Peterhouse Capital LimitedJoint Broker
Lucy Williams+ 44 (0) 207 469 0930
Duncan Vasey 

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Additional Information :

Since acquiring the Kaaresselkä Project from Tertiary, Aurion’s work on the project has included re-logging of all drill holes, oriented core measurements, a detailed ground magnetic survey, whole rock geochemistry, GIS compilation and integration of historical data into 3D modelling software. This compilation work has allowed for a reinterpretation of the geology and a better understanding of the property’s potential. The main host lithology is strongly altered and sheared mafic volcanics, which is a classic setting for major orogenic gold deposits.

Three individual zones, Vanha, Tienvarsi and Lampi, are found in a 1 km x 0.6 km area. Historical drilling was shallow with gaps along the strike of the zones. Aurion’s additional analysis suggests there is excellent potential along strike and down dip of these gold-bearing structures.

At Vanha, a 500 m long east-west trending mineralized zone was drilled to a depth of 140 m and appears to be open in both directions along strike and at depth.

At Tienvarsi, drilling identified a 400 m long northwest to southeast trending mineralized zone to a depth of 96 m. Mineralization at Tienvarsi appears to be open in all directions.

At Lampi, drilling identified two proximal 200 m long mineralized zones to only 100 m depth. Mineralization at Lampi appears to be open in all directions.

Notes.

  1. The information in this release has been compiled and reviewed by Mr. Patrick Cheetham (MIMMM, MAusIMM) who is a qualified person for the purposes of the AIM Note for Mining and Oil & Gas Companies. Mr. Cheetham is a Member of the Institute of Materials, Minerals & Mining and also a member of the Australasian Institute of Mining & Metallurgy.
  • The news release may contain certain statements and expressions of belief, expectation or opinion which are forward looking statements, and which relate, inter alia, to the Company’s proposed strategy, plans and objectives or to the expectations or intentions of the Company’s directors. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from such forward-looking statements. Accordingly, you should not rely on any forward-looking statements and save as required by the AIM Rules for Companies or by law, the Company does not accept any obligation to disseminate any updates or revisions to such forward-looking statements.

Note to Editors:Tertiary Minerals plc (ticker symbol ‘TYM’) is an AIM

Tertiary Minerals #TYM – Nevada Exploration Project Updates

Tertiary Minerals plc is pleased to provide the following update on the progress of its exploration projects in Nevada, USA.

 

Highlights:

Paymaster Zinc-Silver Project

Ø  Main target – skarn style zinc-silver mineralisation analogous to large Taylor Zinc-Lead-Silver Deposit in Arizona owned by South 32.

Ø  Report and analytical results received for mapping and sampling programme.

Ø  Valley Prospect skarn zone mapped over a 240m strike length with additional samples grading up to 8.45% combined lead-zinc-copper and 200 grammes/tonne (g/t) silver.

Ø  Large alteration area identified with copper up to 2.16% in narrow quartz veins in new target area – presents additional drill target.

Ø  Drone magnetic survey and soil sampling planned to refine drill targets.

Pyramid Gold Project

Ø  Review of drill results ongoing.

Ø  Additional core samples taken; analytical results awaited.

Ø  Soil sampling programme planned.

Peg Leg Copper-Silver-Lead-Zinc Project

Ø  Main target – exposed skarn copper-silver mineralisation in limestone adjacent to granite contact.

Ø  Notice Level Permit approved and bonded for a programme of trenching.

Ø  Trenching scheduled for August to better expose outcropping mineralisation assaying 59 g/t silver 1.4% copper, 2.4% lead and 1.8% zinc.

Mt Tobin Silver Prospect

Ø  Main target – large area of hydrothermal alteration 60m wide x 1,200m long with associated silver geochemical anomaly recorded by previous explorer.

Ø  Preliminary field evaluation and sampling completed; analytical results awaited.

Lucky Copper Prospect

Ø  Main target –  sediment hosted, intrusion related disseminated copper deposit.

Ø  Preliminary field evaluation and sampling completed; analytical results awaited.

Ø  1951 drill hole relocated – ended in mineralisation and intersected 20.4m at 0.65% copper to bottom of the hole at 77.7m depth.

Ø  Soil sampling and drone magnetic survey provisionally planned to define drill targets.

MB Fluorspar Project

Ø  Metallurgical test work programme now completed.

Ø  Results show improved recoveries and grades but failed to produce acid-grade fluorspar concentrate.

Ø  Project review to be carried out to determine the future direction for MB Project.

Commenting today, Executive Chairman Patrick Cheetham said:

“I am pleased to be reporting progress on our base and precious metal project portfolios in Nevada. As we move forward with more substantive and exciting exploration programmes, drilling activities are anticipated on a number of our Nevada projects during this summer and autumn”

For more information please contact:

Tertiary Minerals plc:
Patrick Cheetham, Executive Chairman +44 (0) 1625 838 679
SP Angel Corporate Finance LLP

Nominated Adviser and Broker

Richard Morrison +44 (0) 203 470 0470
Caroline Rowe
Peterhouse Capital Limited

Joint Broker

Lucy Williams + 44 (0) 207 469 0930
Duncan Vasey

 

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Detailed Information

Paymaster Zinc-Silver Project

The target at Paymaster is a skarn hosted zinc-silver deposit .

A mapping and sampling programme has been completed by a specialist consulting geologist, Brian Bond, experienced in the exploration of this style for mineralisation and his report and analytical results have now been received.

Attention focused on the Valley Prospect which has previously returned grab samples up to      11.73% combined lead, zinc and copper and 180 g/t silver. The skarn outcrops intermittently over a 230m strike length and additional samples have assayed up to 4.23% lead, 3.88% zinc and 0.34% zinc and 200g/t silver.

At the East Slope Prospect, the Company’s wide spaced soil sampling defined a coherent  zinc anomaly over 500m long (+100ppm zinc) where samples from prospecting pits have assayed up to 21% zinc. Mapping shows this area to have little outcrop so an infill soil sampling programme will be carried out.

Skarn mineralisation at Paymaster occurs in limestone of the Poleta Formation and in the south-eastern part of the claim block this is structurally overlain by phyllite schist at a thrust fault contact. The phyllite in this area is hydrothermally altered over and large area and contains narrow quartz veins containing up to 2.2% copper. Similar quartz veins are associated with the skarn elsewhere on the project and the consultant geologist has recommended this as a drill target to test for skarn mineralisation below the zone of alteration and pooled beneath an impermeable thrust contact.

The skarn mineralised material at Pyramid is magnetic and so a drone magnetic survey is planned to assist in the siting of drill holes.

The Company’s consultant geologist for Paymaster has drawn analogies to the Taylor Zinc-Silver Deposit owned by South 32 at Hermosa, in the neighbouring state of Arizona (reported resource of 155mt grading 3.5% zinc, 3.67% lead and 69g/t silver).

Pyramid  Gold Project

The Pyramid Gold Project is targeting epithermal gold mineralisation in the prolific past producing Walker Lane Mineral Belt.

Further to the Company’s announcement of 14 May 2020 the Company has now completed a second round of sampling on the drill core from its recent test hole. Analytical results are awaited.

A programme of follow up soil sampling is planned for the project to determine the extent of an open-ended gold and multi-element soil anomaly originally defined in the 1980s and to define additional drill targets.

Peg Leg Copper-Silver-Lead-Zinc Project

The Company holds  4 mining claims 11km north of Tonopah in the San Antone Mineral Field in south central Nevada. The background to this project and the following projects is given in the Company’s news release dated 29 May 2020.

The Company’s Notice level permit application for a programme of trenching has now been accepted and bonded with the Bureau of Land Management.

The permit covers 160m of trenching in four trenches to test various targets including an outcrop of mineralisation exposed adjacent to the granite contact which assayed 59 grammes/tonne (g/t)  silver 1.4% copper, 2.4% lead and 1.8% zinc. The objective of the trenching is to test the thickness of this outcropping mineralisation as it is  largely obscured by scree and old mine waste. The waste pile from a nearby shallow mine shaft contains selected material assaying up to 181 g/t silver, 3.9% copper, 10.1% lead and 1.2% zinc.

The trenching programme is planned to take place in August and is a cheap first alternative to drilling when mineralisation is seen at surface.

Mt Tobin Silver-Gold Prospect

This project comprises 4 newly staked claims located 73km south of Winnemucca in north central Nevada.

A preliminary programme of field evaluation has now been completed by a Nevada based consulting geologist, Ivan Johnston,  targeting a zone of stratiform alteration and mineralisation in chert and silicified sediments over a thickness of 45-60m thick and a strike length of 1,200m. This zone was reportedly defined by outcrops and a significant silver-lead-zinc geochemical anomaly in exploration carried out in the 1980s.

Various rock samples have been collected for analysis and soil samples taken on a pilot traverse.

Analytical results are awaited.

Lucky Copper Prospect

The Company holds 13 claims on the east side of the old Aurum mining centre, 96km northeast of the major porphyry copper mining town of Ely in north-east Nevada.

The target is a disseminated sediment hosted, intrusion-related copper deposit where, in 1951, a shallow churn (percussion) dill hole intersected copper mineralised limestone and porphyry beneath alluvium on the range front pediment slope. The 20.4m thickness of this sequence assayed 0.65% copper to the bottom of the hole at 77.7m depth. The hole ended in mineralisation.

A preliminary field evaluation and sampling programme has been carried out by Alan Morris, a senior consulting geologist. Analytical results are awaited, and the Company is now  planning a follow up soil sampling programme and a drone magnetic survey to help define drill targets. 

MB Fluorspar Project.

The MB Fluorspar Project contains a large resource of low-grade fluorspar mineralisation. As previously reported, the mineralisation presents metallurgical challenges in producing acid grade fluorspar.

A further programme of test work has been carried out over the past few months aimed at improving concentrate grade and recoveries. Whilst improvements were made, this test work has not yet produced acid grade fluorspar or high fluorspar recoveries.

The Company will now undertake a review of the future for this project and the lease agreement under which the project is held.

Notes:

  1. The information in this release has been compiled and reviewed by Mr. Patrick Cheetham (MIMMM, MAusIMM) who is a qualified person for the purposes of the AIM Note for Mining and Oil & Gas Companies. Mr. Cheetham is a Member of the Institute of Materials, Minerals & Mining and also a member of the Australasian Institute of Mining & Metallurgy. 
  2. The news release may contain certain statements and expressions of belief, expectation or opinion which are forward looking statements, and which relate, inter alia, to the Company’s proposed strategy, plans and objectives or to the expectations or intentions of the Company’s directors. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from such forward-looking statements. Accordingly, you should not rely on any forward-looking statements and save as required by the AIM Rules for Companies or by law, the Company does not accept any obligation to disseminate any updates or revisions to such forward-looking statements.

Note to Editors:

Tertiary Minerals plc (ticker symbol ‘TYM’) is an AIM-traded mineral exploration and development company building a multi-commodity project portfolio.

Alan Green talks to Patrick Cheetham, Executive Chairman at Tertiary Minerals #TYM

Alan Green talks to Patrick Cheetham, Executive Chairman at Tertiary Minerals #TYM. Patrick discusses the latest developments at Pyramid Gold and Paymaster Polymetallic projects, plus the newly acquired Peg Leg, Mount Tobin & Lucky Copper ventures. We also discuss Tertiary’s three fluorspar projects, the agreement with commodities giant Possehl, Aurion royalty agreements, and the strong cash position vs. current tiny market cap.

Tertiary Minerals (TYM) – Audited Results for the year to 30 September 2018

Tertiary Minerals plc, the AIM traded company building a strategic position in the fluorspar sector, is pleased to announce audited results for the year ended 30 September 2018.

 

Operational Summary for 2018

Storuman Fluorspar Project, Sweden: Exploitation (Mine) Permit re-assessment process by the Swedish Mining Inspectorate is ongoing. Two key issues resolved.

·     MB Fluorspar Project, Nevada:

  • First phase of Scoping Study level bench scale metallurgical testwork completed at SGS Lakefield, Canada.
  • Second phase of testwork planned for 2019

·      Royalty Interest Gold Projects, Finland: Aurion Resources has re-logged and sampled the Tertiary drill cores with a view to  further drilling in 2019

·      Possehl Erzkontor GmbH & Co. KG: Through the Memorandum of Understanding signed last year, Possehl continue to support the Company with the development of its projects and evaluation of potential acquisition opportunities

·      Fluorspar prices continued to rise in the year due to rising demand and China imposing strict environmental regulations on domestic fluorspar miners. Chinese benchmark acid-spar has recently hit a seven year high of mid US$565/tonne (FOB China)

 

Commenting today, Managing Director, Richard Clemmey said: “It is pleasing to see the recovery in the fluorspar market continue in 2018 but It has been a year of frustratingly slow progress for our Storuman Mine Permit re-assessment process. We have made good progress in establishing that our operations will not affect the nearby Natura 2000 area and that reindeer husbandry is able to co-exist alongside the open pit mine, but we still face objections from the County Administration Board (CAB) regarding the location of the Tailings Storage Facility. We, together with our Swedish consultants and legal team, strongly disagree with the CAB’s position and so remain hopeful for a positive resolution of this matter”.

“Looking forward to 2019, with the continued support from Possehl we look ahead to progressing the Scoping Study on our large MB project as well as continuing our evaluation of potential complimentary acquisition targets”.

“I would like to thank all shareholders for their support in 2018 and hope to be reporting positive news in 2019.”

 

Enquiries

 

Tertiary Minerals plc

Richard Clemmey, Managing Director

Patrick Cheetham, Executive Chairman 

 

 

 

+44 (0) 1625 838 679            

SP Angel Corporate Finance LLP

Nominated Adviser & Broker

Ewan Leggat/Lindsay Mair

 

+44 (0) 20 3470 0470

 
 

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 

Notes to Editors

Tertiary Minerals plc (ticker symbol ‘TYM’) is an AIM-traded mineral exploration and development company building a significant strategic position in the fluorspar sector. Fluorspar is an essential raw material in the chemical, steel and aluminium industries. Tertiary controls two significant Scandinavian projects (Storuman in Sweden and Lassedalen in Norway) and a large deposit of strategic significance in Nevada, USA (MB Project).

 

CAUTIONARY NOTICE

The news release may contain certain statements and expressions of belief, expectation or opinion which are forward looking statements, and which relate, inter alia, to the Company’s proposed strategy, plans and objectives or to the expectations or intentions of the Company’s directors. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from such forward-looking statements. Accordingly, you should not rely on any forward-looking statements and save as required by the AIM Rules for Companies or by law, the Company does not accept any obligation to disseminate any updates or revisions to such forward-looking statements.

 

Chairman’s Statement

I am pleased to present the Company’s Annual Report and Financial Statements for the year ended 30 September 2018. In the period under review we have continued to focus on the Company’s three strategically located fluorspar projects in Europe and the USA.

 

At the Company’s most advanced project, Storuman in Sweden, the repercussions of recent mining case law continue to impact the 2016 grant of our Exploitation (Mine) Permit. The Swedish Mining Inspectorate’s review of the grant of the Exploitation Permit has continued throughout the year and has consumed an inordinate amount of management time. I encourage shareholders to read our Operating Review where we set out where this time has been spent and I would highlight that, despite the lack of headline news, two of the three issues raised by stakeholders have been successfully addressed and resolved by the Company. The remaining issue relates to a perceived conflict between the location of the Tailings Storage Facility and reindeer herding activities. The Company is frustrated in resolving this issue by a refusal on the part of the reindeer herding community to engage directly with the Company and the failure of the County Government to adequately address the Company’s plans for mitigation of this conflict. Despite this remaining issue, the Company is confident that, with political will, this grant of the Exploitation Permit will eventually be confirmed.

 

At our MB Project in Nevada, where we have a significant JORC compliant Mineral Resource, a small programme of metallurgical testwork was carried out earlier this year and we have now formulated a plan to address the metallurgical complexity that characterises the near surface mineralisation that would be mined in the early years of the Company’s preliminary mine plan. Assuming this progresses satisfactorily we intend to progress the economic scoping study for development of the project in 2019. This may include further drilling targeting conceptual higher grade targets in the northern part of the project.

 

Work on our second European project, Lassedalen in Norway, has been a lower priority during the year. However, further development work is justified and drilling is required to increase the size of the current JORC Mineral Resource Estimate which, alongside Storuman, is well located for the large European fluorspar market.

 

The Company’s fluorspar projects contain a total of 13.1 million tonnes of fluorspar in JORC classified Mineral Resources and so we follow developments in the fluorspar market very closely. I can report that the upturn in prices that we reported in 2017 has continued strongly in 2018. The benchmark (FOB China) mid-price of acid-grade fluorspar is now $565/tonne (2017 Annual Report: $410) which compares well to the CIF Rotterdam price of $357.5/tonne used in the positive scoping study for development of the Storuman Project. The increase is, we believe, being driven by environmentally motivated mine closures in China and an increase in the value of downstream value-added products.

 

The general industry view is that fluorspar prices will continue to appreciate on the back of rising demand and this is discussed in more detail in the Strategic Report. Based on macroeconomic drivers the Company continues to be strategically placed to capitalise on the looming supply gap by developing its 100% controlled fluorspar assets which are located in the key markets of Europe and the USA.

 

The Company’s efforts during the year to make a complementary project acquisition with nearer term production potential have not so far been successful despite coming close in one case. The Company is rightly cautious in its assessment of targets and follows the recently well used maxim that “no deal is better than a bad deal”. We continue to assess opportunities and, through the Memorandum of Understanding (“MOU”) signed last year, continue to enjoy the strong support of leading global commodities trading group, Possehl Erzkontor GmbH & Co. KG in this endeavour.

 

In addition to our fluorspar projects we retain a royalty interest in the Kaaresselkä and Kiekerömaa Gold Projects in Finland where, just to the north, the project owner, Aurion Resources, has recently drilled high-grade gold mineralisation on their Aamurusko Prospect. They have had three drill rigs working on this project and have advised that drilling may also be scheduled for our royalty interest projects in 2019.

 

At year end the Audit Committee and the Board are required to carry out an impairment review of the carrying values of the Company’s various project interests and, in light of the current permitting delays surrounding the Storuman Project, it was decided that the carrying value of the Storuman Project and consequently the inter-company loan to the holding subsidiary, Tertiary Gold Limited, should be impaired.  This has the effect of significantly increasing the loss for the year, but this is a non-cash movement and the Board is able to reverse this impairment in future when justified by future project developments.

 

Our Annual General Meeting for the year ended 30 September 2018 will be held in London on Thursday 21 February 2019.

 

Patrick Cheetham

Executive Chairman

11 December 2018

 

Strategic Report

 

Group Overview

 

Company’s Aims

·      To become a reliable long-term and competitive supplier of high quality fluorspar to world markets.

Company’s Strategy

·      To acquire and develop fluorspar deposits located close to established infrastructure and key markets in stable, democratic and mining friendly jurisdictions.

 

·      To be revenue generating in the near term from potential new acquisition targets.

 

Principal Activities

·      The principal activities of the Group are the identification, acquisition, exploration and development of mineral projects with primary focus on fluorspar, the main raw material source of fluorine for the chemical, steel and aluminium industries.

 

The head office is based in Macclesfield in the United Kingdom with core operating locations in Storuman in Sweden, Lassedalen in Norway and the MB Project in Nevada, USA.

 

Company’s Business Model

For exploration projects, the Group prefers to acquire 100% ownership of mineral assets at minimal expense. This usually involves applying for exploration licences from the relevant authority, as was the case for the Storuman and Lassedalen projects. In other cases, rights are negotiated with existing project owners for initially low periodic payments that rise over time as confidence in the project value increases and this was the case for the MB Project. For acquisition targets with the potential to generate revenue in the near-term, the Group is considering a range of targets on a case-by-case basis.

 

The Group currently operates with a low-cost base to maximise the funds that can be spent on exploration and development – value adding activities. The Company has five full-time employees including the Managing Director who work with and oversee carefully selected and experienced consultants and contractors. During the year the Board of Directors comprised one independent Non-Executive Director, the Managing Director and the Chairman.

Administration costs are reduced via an arrangement governed by a Management Services Agreement with Sunrise Resources plc, whereby Sunrise Resources pays a share of the cost of head office overheads. As at the date of this report Tertiary is a significant shareholder (as defined under the AIM Rules) of Sunrise Resources plc, holding 5.17% of the issued ordinary share capital.

 

The Company’s activities are financed by periodic capital raisings, through private share placements. Access to capital through this method continues to be challenging and this is a limiting factor to the speed at which the Company can progress the development of its projects. When projects become more advanced, or as acquisition opportunities advance, the Board will seek to secure additional funding from a range of various sources, for example debt funding, pre-financing through off-take agreements and joint venture partnerships.

 

Operating Review & Performance

 

Fluorspar Projects

 

Storuman Fluorspar Project, Sweden

 

2018 Operational Summary

 

·      Exploitation (Mine) Permit re-assessment process by the Swedish Mining Inspectorate is ongoing

 

The Company’s 100% owned Storuman Project is located in north central Sweden and is linked by the E12 highway to the port city of Mo-i-Rana in Norway and by road and rail to the port of Umeå on the Gulf of Bothnia. A bulk rail terminal, constructed in 2012, 25km from the project site, is likely to become an important factor in the cost-effective delivery of fluorspar to the key European fluorspar market.

 

JORC Compliant Mineral Resource

 

Classification

Million Tonnes (Mt)

Fluorspar (CaF2 %)

Indicated

25.0

10.28

Inferred

2.7

9.57

Total

27.7

10.21

 

Exploitation (Mine) Permit Application

The Company submitted its Exploitation (Mine) Permit application in July 2014 to the Swedish Mining Inspectorate and following an extensive consultation process the 25-year Exploitation (Mine) Permit was granted on 18 February 2016.

 

However, as a consequence of the Supreme Court’s decision to overturn the grant of a third-party mining company’s Mine Permit in the south of Sweden (Norra Karr Mine Permit – rare earth element project, owned by Leading Edge Minerals) the government returned the Storuman Mine Permit case, along with many other cases, back to the Swedish Mining Inspectorate for re-assessment in December 2016. The re-assessment is intended to consider the impact of mining in the concession area on a wider surrounding area.

 

Earlier in 2017 the Swedish Mining Inspectorate requested additional information from the Company relating to the original Environmental Impact Assessment (“EIA”) and the wider area and this information was provided to the Swedish Mining Inspectorate, in the form of an updated EIA, in May 2017. The additional information was accepted by the Mining Inspectorate which subsequently invited all stakeholders to provide comments on the application and additional information. In response to the stakeholder feedback the Swedish Mining Inspectorate requested further detail from the Company in relation to the impact of proposed operations on the Natura 2000 and reindeer herding within the wider surrounding area and were granted a deadline of 16 April 2018 to respond.

 

Given that the level of detail required for the wider area has changed in response to the new case law, the Company engaged, through a series of meetings, with its Swedish consultants, lawyers, the Swedish Mining Inspectorate and The County Administrative Board of Västerbotten (“CAB”) in an effort to establish the requirements prior to the work being executed and submitted. Despite the Company continuing to have a good relationship with the CAB and has fully engaged with its key staff members throughout this process, without which the original Mine Permit would not have been awarded in the first place, the CAB seems unable to provide definitive guidance or opinion regarding the additional information or requirements.

 

Subsequently, comprehensive supplementary reports by the Company’s consultants and a legal statement were prepared and submitted to the Swedish Mining Inspectorate in April 2018, consisting of:

 

·      In-depth analysis of reindeer herding

·      Reindeer herding and reindeer grazing conditions in the area of planned mining operations

·      Description of vegetation and reindeer conditions in the area of the planned tailings storage facility (“TSF”)

·      In-depth analysis of impact on the Natura 2000 area, Kyrkbergstjärnen

 

The reports concluded that the Company’s proposed mining operations at Storuman, with mitigation measures proposed, will have only a minimal impact on reindeer husbandry and that there will be no impact on the Natura 2000 area.

 

Following consultation between the Mining Inspectorate and key stakeholders, in July 2018 the CAB returned the following opinion to the Mining Inspectorate:

 

·      The CAB is satisfied that the reindeer herding can, with mitigation measures, coexist alongside the mine itself

·      Natura 2000 area: The CAB is satisfied with the supplementary in-depth analysis and has concluded that a supplementary Natura 2000 permit is not required

·      Tailings Storage Facility (“TSF”): The CAB is not satisfied that the mitigation measures proposed by the Company enable the coexistence of reindeer husbandry and the TSF operation. The CAB has expressed the view that the proposed TSF location should be protected to secure reindeer husbandry.

 

The CAB has therefore advised against grant of the Mine Permit in its current form.

 

The Company, together with its Swedish consultants and lawyers, strongly disagree with the CAB’s assessment that reindeer herding and the TSF cannot co-exist and maintain the conclusion of the in-depth analysis of reindeer herding that the Company’s proposed mining operations at Storuman, with mitigation measures proposed, will have only a minimal impact on reindeer husbandry. The Company therefore prepared a comprehensive legal statement and submitted this to the Mining Inspectorate, summary as follows:

·      The CAB has not sufficiently assessed the balance of interests between reindeer herding and mining under Chapter 3 of the Swedish Environmental Code

·      The CAB has provided no supporting information as to why they believe the coexistence of reindeer husbandry and the TSF is not possible despite the Company providing in-depth analysis which shows that the proposed mining operations, with the extensive mitigation measures proposed, will have only a minimal impact on reindeer husbandry

·      Socio-Economic factors have not been taken into account in the CAB’s assessment despite the fact that the Storuman mine will result in a significant number of direct and indirect jobs in a sparsely populated area of Sweden containing a low number of inhabitants who are working age and an ageing population compared with the national average

·      The Company has fully satisfied the requirements of Chapters 3, 4 and 6 of the Swedish Environmental Code by providing a comprehensive EIA for the mining location and wider surrounding area

The Company now awaits feedback from the Mining Inspectorate in response to its legal statement. Whilst the process is slow and frustrating, the Company continues to co-operate with the Mining Inspectorate and believes that the original Mine Permit application, EIA and supplementary information are of a very high standard. The Company remains hopeful of a positive resolution to this matter but it is worth noting that the Company has no influence on the speed at which the re-assessment of the grant of the mining permit is being processed by the Authorities. Any ratification of the grant of the mining concession will, however, be open to appeal and the Company will therefore not spend any further money on exploration or development of the Storuman Fluorspar Project until the matter is resolved.

 

 

MB Fluorspar Project, Nevada, USA

2018 Operational Summary

 

·      First phase of Scoping Study level bench scale metallurgical testwork completed at SGS Lakefield in Canada

 

The MB Property comprises 146 contiguous mining claims covering an area more than 2,800 acres and is located 19km south-west of the town of Eureka in central Nevada, USA. The state of Nevada is widely and justifiably recognised to be one of the most attractive mining jurisdictions in the world. Eureka is located on US Highway 50 and the main railroad is located 165km to the north of the deposit providing bulk freight distribution to the East and West of the USA. The USA, like Europe, is a key fluorspar market currently importing the majority of its fluorspar requirements. Rail access to the west coast provides access to Asian markets, which may be a target market in the future.

 

JORC Compliant Mineral Resource

 

Classification

Million Tonnes (Mt)

Fluorspar (CaF2 %)

Indicated

6.1

10.8

Inferred

80.3

10.7

Total

86.4

10.7

 

Metallurgical Testwork

Early metallurgical testwork completed at SGS Lakefield has indicated that the ore in certain areas of the deposit is metallurgically complex, presenting certain processing challenges, and therefore the Company has engaged the services of one of the world’s leading consultant fluorspar metallurgists to assist with the testwork. The Company, consultant metallurgist and SGS Lakefield have scoped the next phase of testwork which is planned with the aim of producing commercial grade acid-spar and a by-product, mica.

 

Following successful completion of the metallurgical testwork, the Company will progress with modelling various production scenarios and optimisation of the transport method/cost from mine to the USA market and ports. Successful completion of these work programmes should enable the Company to work towards completion of a Scoping Study for the project in 2019. Further work required for the completion of the Scoping Study may include an additional phase of drilling to target higher grade mineralisation, in line with the recommendations received from the appraisal of the MB deposit from world renowned economic geologist, Dr Richard Sillitoe.

 

Lassedalen Fluorspar Project, Norway

The Lassedalen Fluorspar Project is favourably located near Kongsberg, 80km to the south-west of Oslo in Norway. It is less than 1km from highway E134 and approximately 50km from the nearest Norwegian port. The Company views this resource as strategically important for the European market alongside its Storuman Project.

 

JORC Compliant Mineral Resource

 

Classification

Million Tonnes (Mt)

Fluorspar (CaF2 %)

Inferred

4.0

24.6

 

Given the commitments on its other fluorspar projects and acquisition targets, further exploration at the Lassedalen Project has been a lower priority in 2017/2018.

 

Once development work re-commences for the project, the immediate objective will be further drilling aimed at increasing the size of the current JORC compliant Mineral Resource Estimate.

 

Acquisition Opportunities

Whilst the Company remains committed to its fluorspar business and the development of its fluorspar assets, throughout 2018 it has been reviewing complementary project acquisition opportunities potentially capable of generating revenue and profits in a shorter timescale. Finding quality projects is not an easy task and the Company has discontinued its review on several shortlisted projects, where either the acquisition breaches any of the class tests pursuant to AIM Rule 14 and therefore would constitute a reverse takeover, or the due diligence process has highlighted certain technical, economic or legal fatal flaws. The Company continues to evaluate numerous potential acquisition opportunities, however there is no guarantee that any deal will be successfully executed at this point.

 

Strategic Relationship with Possehl Erzkontor GmbH & Co. KG

Further to the signing of a MOU in 2017 with leading global commodities trading group, Possehl Erzkontor GmbH & Co. KG (Possehl), a wholly owned subsidiary of CREMER, Possehl continue to support the Company with the development of its projects and evaluation of potential acquisition opportunities through regular dialogue and meetings.

 

 

Non-Core Projects

 

Kaaresselkä and Kiekerömaa Gold Projects, Finland

Following the successful sale of its two legacy gold assets, Kaaresselkä and Kiekerömaa in Finland, to TSX‑V listed Aurion Resources Ltd, the Company sold its Aurion shares for £117,633, in November 2017, resulting in a profit of £31,264 on the value of the shares issued as part consideration for the sale of the project at the time of issue.

 

The Company has been informed that Aurion recently relogged and sampled the Tertiary drill cores and Aurion may drill test some targets in 2019. The Company retains pre-production and net smelter royalty interest in the projects.

 

Rosendal Tantalum Project, Finland

The Exploration Licence for the project expired in October 2015 and the Company has applied for a renewal of the Licence. If the Company is unsuccessful in finding a suitable partner or buyer to progress the project, it is unlikely the renewal will be granted.

 

 

Health and Safety

The Group has maintained strict compliance with its Health and Safety Policy and is pleased to report there have been no lost time accidents during the year.

 

Environment

No Group company has had or been notified of any instance of non-compliance with environmental legislation in any of the countries in which they work. In late 2017 the Company received a prestigious national award for its innovative reclamation and sustainable mineral development work on its MB Project in Nevada, USA.

 

Fluorspar Market and Strategic Opportunity* 

Fluorspar – Principal Uses

There are two principal commercial grades of fluorspar:

·      Metallurgical-spar (60-96% CaF2)

·      Acid-spar (+97% CaF2)

 

Metallurgical-spar accounts for approximately 35% of the total fluorspar production with the principal applications being:

 

·      Steel production – used as a flux to lower the melting temperature and increase the chemical reactivity to help the absorption and removal of sulphur, phosphorus, carbon and other impurities in the slag

·      Cement – used as a flux to speed up the calcination process and enables the kiln to operate at lower temperatures

 

Acid-spar, the grade of fluorspar which the Company is planning to produce, accounts for approximately 65% of total fluorspar production with the principal applications being:

·      Aluminium production – used to produce aluminium fluoride (AlF3) which acts as a flux to lower the bath temperature in the manufacture of aluminium

·      Manufacture of hydrofluoric acid (HF) – the primary source of all fluorochemicals (the single largest consumer of fluorspar), with a wide range of applications including:

 

o  Fluorocarbons, e.g. refrigerant gases, propellants, etc.

o  Electrical and electronic appliances

o  Metallurgical industry (extraction, manufacture and processing)

o  Lithium batteries

o  Pharmaceuticals, polymers and agrochemicals

o  Petrochemical catalysts

 

Fluorspar – Production, Consumption and Price Trend

 

The current global production of fluorspar is approximately 5.7 million tonnes per year:

 

·      Major producing regions: China (>50% of the world’s production); Mexico; Mongolia/CIS; S. Africa

·      Major Consuming regions (highest to lowest): China; North America; Europe; Mexico; Russia

·      The global supply and demand for fluorspar grew over the decade 1998 to 2008

·      Since the global financial crisis in 2009 there was a contraction in acid-spar demand driven by a combination of environmental legislation and demand – fluorspar price followed this downward trend

·      In 2017 prices for acid-spar started to recover and the price recovery has continued through 2018, export price for acid-spar (FOB China) is a traditional benchmark price and is currently published as mid US$565/tonne (Industrial Minerals Magazine)

·      The price increases are believed to be driven by the following key factors:

 

o  Increase in production of downstream value-added fluorspar products

o  As China moves its focus to environmental protection they have implemented strict environmental policies and permitting requirements resulting in a number of fluorspar mines closing – Chinese fluorspar production down 13% year-on-year in 2017

o  Between 2012 and 2016 various fluorspar producers outside China have closed their mining operations

 

·      The equivalent price delivered into Europe (CIF Rotterdam), published as mid US$515/tonne, has now started to recover following the FOB China price recovery

·      Overall long-term upward trend in price

 

 

Fluorspar – Outlook and Strategic Opportunity

 

·      Industry view (producers, end users, analysts) is that demand for acid-spar will increase by >3% per year over the next 5 years and prices are forecast to increase in the medium to long-term, the key drivers being:

 

o  No large scale commercial alternative or recycling

o  Refrigeration demand will continue to grow in emerging economies – new generation of zero ozone depleting potential (“ODP”) and very low global warming potential (“GWP”) refrigerants, hydrofluoroolefins (“HFO’s”)

o  Driven by environmental legislation, most recently the Kigali Amendment, where over 170 nations agreed to phase down low ODP, high GWP Hydrofluorocarbons (“HFCs”)

o  Energy reduction in the steel and aluminium industry

o  Emerging uses – fluoropolymers in lithium batteries for example, demand for automotive Li‑ion batteries forecast to grow CAGR 34%

o  Chinese supply-demand dynamics

 

·      China produces >50% world fluorspar production

·      China fluorspar exports continue to decline with acid-spar exports decreasing >50% since 2011, driven by increasing internal demand and production/export restrictions, China already consumes 90% of its fluorspar domestic production – heading towards becoming a future net importer

·      Western Europe and North America are the largest acid-spar consuming regions outside China, importing more than 900,000 tonnes per year

·      USA imports 100% of its fluorspar

·      North America and Europe face the potential risk of security of supply

·      Fluorspar is classified as a critical raw material by the European Commission – high risk of supply shortage and consequent impact on the economy

·      USA listed fluorspar as a critical mineral in 2018

·      China listed fluorspar as a strategic mineral in 2017

·      Imbalance between production and consumption in China causing supply gap – to be filled by new fluorspar producers outside China

 

Based on macroeconomic drivers the Company continues to be strategically placed to capitalise on the supply gap in the future by developing its 100% owned large fluorspar assets, containing fluorspar resources of 13.1 million tonnes, located in the key markets of the USA and Europe.

*The information in this Fluorspar Market Summary is drawn from various sources, including Industrial Minerals Magazine/Fastmarkets IM, United States Geological Survey, Roskill, IHS, UN Comtrade, industry sources, Xenops and CRU. CAGR – Compound annual growth rate.

Financial Review & Performance

 

The Group is currently in the earlier stages of the typical mining development cycle and so has no income other than cost recovery from the management contract with Sunrise Resources plc and a small amount of bank interest. Consequently the Group is not expected to report profits until it is able to profitably develop, dispose of, or otherwise commercialise its exploration and development projects.

 

The Group reports a loss of £2,267,197 for the year (2017: £395,532) after administration costs of £507,931 (2017: £550,229) and after crediting interest receivable of £142 (2017: £277). The loss includes impairment of the Storuman Project of £1,976,618, expensed pre-licence and reconnaissance exploration costs of £38,725 (2017: £30,617) and impairment of available for sale investment (the Company’s share in Sunrise Resources plc) of £Nil (2017: £55,987). Administration costs include £8,997 (2017: £11,396) as non-cash costs for the value of certain share warrants held by employees as required by IFRS 2. The pre-tax loss is net of gains on disposal of available for sale equity share investments of £37,094.

 

Revenue includes £218,841 (2017: £204,110) from the provision of management, administration and office services provided to Sunrise Resources plc, to the benefit of both companies through efficient utilisation of services.

 

The financial statements show that, at 30 September 2018, the Group had net current assets of £249,787 (2017: £177,723). This represents the cash position after allowing for receivables and trade and other payables. These amounts are shown in the Consolidated and Company Statements of Financial Position and are also components of the Net Assets of the Group. Net assets also include various “intangible” assets of the Company. As the name suggests, these intangible assets are not cash assets but include this year’s and previous years’ accrued expenditure on minerals projects where that expenditure meets the criteria in Note 1(d) accounting policies. The intangible assets total £2,670,386 (2017: £4,508,015) and the breakdown by project is shown in Note 2 to the Financial Statements.

 

Expenditure which does not meet the criteria in Notes 1(d) and 1(n), such as pre-licence and reconnaissance costs, are expensed and add to the Company’s loss. The loss reported in any year can also include expenditure that was carried forward in previous reporting periods as an intangible asset but which the Board determines is “impaired” in the reporting period.

 

The extent to which expenditure is carried forward as intangible assets is a measure of the extent to which the value of the Company’s expenditure is preserved.

 

The intangible asset value of a project does not equate to the realisable or market value of a particular project which will, in the Directors’ opinion, be at least equal in value and often considerably higher. Hence the Company’s market capitalisation on AIM can be in excess of or less than the net asset value of the Group.

 

Details of intangible assets, property, plant and equipment and investments are set out in Notes 89 and 10of the financial statements.

 

The Financial Statements of a mineral exploration company can provide a moment in time snapshot of the financial health of the Company but do not provide a reliable guide to the performance of the Company or its Board and its long-term potential to create value.

 

Key Performance Indicators

The usual financial key performance indicators (“KPIs”) are neither applicable nor appropriate to measurement of the value creation of a company involved in mineral exploration and which currently has no turnover other than cost recovery. The Directors consider that the detailed information in the Operating Review is the best guide to the Group’s progress and performance during the year.

 

The Company does seek to reduce overhead costs, where practicable, and is reporting reduced administration costs this financial year – current year £507,931 (2017: £550,229).

 

Fundraising

During the 2018 financial year the Company raised a total of £500,000, before expenses, as shown in Note 14 of the Financial Statements.

 

The Directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report.  Given the Group’s cash position at year end (£218,297), these projections include the proceeds of future fundraising necessary within the next 12 months to meet the Group’s overheads and planned discretionary project expenditures and to maintain the Company and its subsidiaries as going concerns.

 

Impairment

 

A biannual review is carried out by the directors to assess whether there are any indications of impairment of the Group’s assets.  

 

A review of exploration assets for indication of impairment under IFRS 6 and IAS 36 resulted in an impairment charge in Tertiary Gold Limited, relating to the Storuman Fluorspar Project, being recognised in the Consolidated Income Statement as part of operating expenses, with a commensurate reduction in the carrying value of intangible assets. Consequently, the value of the Company’s investment in and due from its subsidiaries was considered. Being in excess of the market value of the Group at year end, this indicated a potential impairment under IAS 36 12(d). The directors therefore undertook an impairment review of the carrying values of the investments, with particular reference to Tertiary Gold Limited. The result of this review, together with the fact that there had been an impairment of the underlying assets held by Tertiary Gold Limited, indicated that impairment was required in the carrying value of the investment in Tertiary Gold Limited. The investment has been impaired down to the value of the underlying exploration and development assets, i.e. an impairment of £4,681,523 (Note 10).

 

A review of available for sale investment assets for indication of impairment under IAS 39 was carried out by the directors.  Available for sale assets at year end comprised investment in shares of Sunrise Resources plc.

 

The nature of the activity of Sunrise Resources plc is similar to that of Tertiary Minerals plc in that it is involved in long-term mineral development and exploration. The projects within the company will typically take over five years to develop before they can be commercially exploited and until the end of a project it is expected that there will be volatility in the share price of the company.

 

The overall revaluation of Sunrise Resources plc has been negative since 5 November 2012 and at March 2017 the decline was considered, under IAS 39, to be prolonged and significant, resulting in further impairment in addition to that of previous periods.  At the last review the share price had recovered to a level which did not necessitate impairment in the current period.  Under the terms of IAS 39, previous impairment of available for sale assets cannot be reversed.

 

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 overleaf together with risk mitigation strategies employed by the Board.

 

RISK

MITIGATION STRATEGIES

Exploration Risk

 

The Group’s business is mineral exploration and evaluation which are speculative activities. There is no certainty that the Group will be successful in the definition of economic mineral deposits, or that it will proceed to the development of any of its projects or otherwise realise their value.

 

The directors bring many years of combined mining and exploration experience and an established track record in mineral discovery.

The Company currently targets advanced and drill ready exploration projects in order to avoid higher risk grass roots exploration.

Resource Risk

 

All mineral projects have risk associated with defined grade and continuity. Mineral Reserves are always subject to uncertainties in the underlying assumptions which include geological projections and metal/mineral assumptions.

 

Resources and reserves are estimated by independent specialists on behalf of the Group in accordance with accepted industry standards and codes. The Directors are realistic in the use of mineral price forecasts and impose rigorous practices in the QA/QC programmes that support its independent estimates.

Development Risk

 

Delays in permitting, or changes in permit legislation and/or regulation, financing and commissioning a project may result in delays to the Group meeting production targets or even the Company ultimately not receiving the required permits and in extreme cases loss of title.

 

 

 

In order to reduce development risk in future, the directors will ensure that its permit application processes and financing applications are robust and thorough.

Commodity Risk

 

Changes in commodity prices can affect the economic viability of mining projects and affect decisions on continuing exploration activity.

 

 

 

The Company consistently reviews commodity prices and trends for its key projects throughout the development cycle.

Mining and Processing Technical Risk

 

Notwithstanding the completion of metallurgical testwork, test mining and pilot studies indicating the technical viability of a mining operation, variations in mineralogy, mineral continuity, ground stability, groundwater conditions and other geological conditions may still render a mining and processing operation economically or technically non-viable.

 

From the earliest stages of exploration the Directors look to use consultants and contractors who are leaders in their field and in future will seek to strengthen the executive and the Board with additional technical and financial skills as the Company transitions from exploration to production.

Environmental Risk

 

Exploration and development of a project can be adversely affected by environmental legislation and the unforeseen results of environmental studies carried out during evaluation of a project. Once a project is in production unforeseen events can give rise to environmental liabilities.

 

Mineral exploration carries a lower level of environmental liability than mining. The Company has adopted an Environmental Policy and the directors avoid the acquisition of projects where liability for legacy environmental issues might fall upon the Company.

Political Risk

 

All countries carry political risk that can lead to interruption of activity. Politically stable countries can have enhanced environmental and social permitting risks, risks of strikes and changes to taxation, whereas less developed countries can have, in addition, risks associated with changes to the legal framework, civil unrest and government expropriation of assets.

 

 

 

The Company’s strategy currently restricts its activities to stable, democratic and mining friendly jurisdictions.

 

The Company has adopted a strong Anti-corruption Policy and Code of Conduct and this is strictly enforced.

Partner Risk

 

Whilst there has been no past evidence of this, the Group can be adversely affected if joint venture partners are unable or unwilling to perform their obligations or fund their share of future developments.

 

 

The Company currently maintains control of certain key projects so that it can control the pace of exploration and reduce partner risk.

 

For projects where other parties are responsible for critical payments and expenditures the Company’s agreements legislate that such payments and expenditures are met.

Financing & Liquidity Risk

 

Liquidity risk is the risk that the Company will not be able to raise working capital for its ongoing activities. 

The Group’s goal is to finance its exploration and evaluation activities from future cash flows, but until that point is reached the Company is reliant on raising working capital from equity markets or from industry sources.

There is no certainty such funds will be available when needed.

 

 

The Company maintains a good network of contacts in the capital markets that has historically met its financing requirements.

The Company’s low overheads and cost-effective exploration strategies help reduce its funding requirements. Nevertheless further equity issues will be required over the next 12 months.

Financial Instruments

 

Details of risks associated with the Group’s Financial Instruments are given in Note 19 to the financial statements.

 

 

The directors are responsible for the Group’s systems of internal financial control. Although no systems of internal 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 may contain certain statements and expressions of belief, expectation or opinion which are forward-looking statements, and which relate, inter alia, to the Company’s proposed strategy, plans and objectives or to the expectations or intentions of the Company’s directors. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from such forward-looking statements.

 

This Strategic Report was approved by the Board of Directors on 11 December 2018 and signed on its behalf.

 

 

 

 

Richard Clemmey

Managing Director

 

Our Governance

Corporate Governance Statement

 

There is no prescribed corporate governance code for AIM companies and London Stock Exchange prefers to give companies the flexibility to choose from a range of codes which suit their specific stage of development, sector and size.

 

The Board considers the corporate governance code published by Quoted Companies Alliance Corporate Governance Code 2018 (“the QCA Code”) for small and mid-sized quoted companies to be the most suitable code for the Company and has adopted the principles set out in the QCA Code and applies these principles wherever possible, and where appropriate to its size and available resources.

 

The Chairman, Patrick Cheetham, has overall responsibility for the Corporate Governance of the Company. This Corporate Governance Statement was approved by the Board on 17 August 2018.

 

The QCA Code sets out ten principles which should be applied. The principles are listed below with an explanation of how the Company applies each principle and/or the reasons for any aspect of non-compliance.

 

Principle One: Establish a strategy and business model which promote long-term value for shareholders.

 

The Company has a clearly defined strategy and business model that has been adopted by the Board and is set out in the Strategic Report.

 

Principle Two: Seek to understand and meet shareholder needs and expectations.

 

All shareholders are encouraged to attend the Annual General Meeting where they can meet and directly communicate with the Board. Shareholders are welcome to contact the Company via email at info@tertiaryminerals.com with any specific queries.

 

The Company also provides regulatory, financial and business news updates through the Regulatory News Service (RNS) and various media channels such as Twitter. Shareholders also have access to information through the Company’s website, www.tertiaryminerals.com, which is updated on a regular basis.

 

Principle Three: Take into account wider stakeholder and social responsibilities and their implications for long-term success.

 

The Board takes regular account of the significance of social, environmental and ethical matters affecting the business of the Group. At this stage in the Group’s development, the Board has not adopted a specific written policy on Corporate Social Responsibility as it has a limited pool of stakeholders other than its shareholders. Rather, the Board seeks to protect the interests of the Group’s stakeholders (both internal and external to the Group) through individual policies and through ethical and transparent actions. The Company engages positively with local communities and stakeholders in its project locations and encourages feedback through this engagement.

 

Principle Four: Embed effective risk management, considering both opportunities and threats, throughout the organisation.

 

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 whilst recognising that its business opportunities carry an inherently high level of risk. The principal risks and uncertainties facing the Group at this stage in its development and in the foreseeable future together with risk mitigation strategies employed by the Board are detailed in the Strategic Report.

 

Principle Five: Maintain the board as a well-functioning, balanced team led by the chair.

 

The Board’s role is to agree the Group’s long-term direction and strategy and monitor achievement of its business objectives. The Board meets formally 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, operational and financial matters.

 

The Board is supported by the Audit, Remuneration and Nomination Committees.

 

The Board currently consists of the Chairman, Managing Director and one Non-Executive Director. The current Board’s preference is that independent Non-Executive directors are equally represented or comprise the majority of Board members. However, due to the untimely death of the Company’s second Non-Executive Director, David Whitehead, in November 2017 this is not currently the case. However, the Company intends that a replacement will be appointed in due course. When there are two Non-Executive directors in post, the Board considers that the structure is nevertheless acceptable having regard to the fact that it is not yet revenue-earning.

 

Despite serving as a Non-Executive Director for more than nine years, Donald McAlister is considered independent of management and free from any business or other relationship which could materially interfere with the exercise of his independent judgement. In compliance with good practice, he will continue to seek annual re-election rather than every third year as per the Articles of Association.

 

Attendance at Board and Committee Meetings

The Board retains full control of the Group with day-to-day operational control delegated to Executive Directors. The full Board meets four times a year and on any other occasions it considers necessary. During 2018 there were nine Board meetings, two Remuneration Committee meetings, two Audit Committee meetings and one Nomination Committee meeting. All meetings were attended by their constituent directors.

 

Principle Six: Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.

 

The Board considers the current balance of sector, financial and public market skills and experience appropriate given the current size and stage of development of the Company and that the Board has the skills and experience necessary to execute the Company’s strategy and business plan and discharge its duties effectively.

 

The directors maintain their skills through membership of various professional bodies, attendance at mining conferences and through their various external appointments.

 

All Directors have access to the Company Secretary who is responsible for ensuring that Board procedures and applicable rules and regulations are observed.

 

The Board and its committees will also seek external expertise and advice where required.

 

Principle Seven: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement.

 

The ultimate measure of the effectiveness of the Board is the Company’s progress against the long-term strategy and aims of the business. This progress is reviewed in Board meetings held at least four times a year. The Managing Director’s performance is reviewed once a year by the rest of the Board, and measured against a definitive list of short, medium and long-term strategic targets set by the Board.

 

The Nomination Committee, currently consisting of the Chairman, Managing Director and one Non-Executive Director, meets once a year to lead the formal process of rigorous and transparent procedures for Board appointments. During this meeting the Nomination Committee review the structure, size and composition of the Board; succession planning; leadership; key strategic and commercial issues; conflicts of interest; time required from Non-Executive directors to execute their duties effectively; overall effectiveness of the Board and its own terms of reference.

 

Principle Eight: Promote a corporate culture that is based on ethical values and behaviours.

 

The Board recognises and strives to promote a corporate culture based on strong ethical and moral values. The corporate culture of the Company is promoted throughout its workforce, suppliers and contractors and is underpinned by the implementation and regular review, enforcement and documentation of various policies: Health and Safety Policy; Environmental Policy; Share Dealing Policy; Anti-Corruption Policy and Code of Conduct; Privacy and Cookies Policy and Social Media Policy.

 

 

Employees

The Group encourages its employees to understand all aspects of the Group’s business and seeks to remunerate its employees fairly, being flexible where practicable. The Group gives full and fair consideration to applications for employment received regardless of age, gender, colour, ethnicity, disability, nationality, religious beliefs, transgender status or sexual orientation. The Board takes account of employees’ interests when making decisions, and suggestions from employees aimed at improving the Group’s performance are welcomed.

 

Suppliers and Contractors

The Group recognises that the goodwill of its contractors, consultants and suppliers is important to its business success and seeks to build and maintain this goodwill through fair dealings. The Group has a prompt payment policy and seeks to settle all agreed liabilities within the terms agreed with suppliers. The amount shown in the Consolidated and Company Statements of Financial Position in respect of trade payables at the end of the financial year represents 15 days of average daily purchases (2017: 8 days).

 

Anti-Corruption Policy and Code of Conduct

The Company has adopted and implements an Anti-Corruption Policy and Code of Conduct.

 

Health and Safety

The Board recognises it has a responsibility to provide strategic leadership and direction in the development of the Group’s health and safety strategy in order to protect all of its stakeholders. The Company has developed and implements a Health and Safety Policy to clearly define roles and responsibilities and in order to identify and manage risk.

 

Principle Nine: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board.

 

The Board has overall responsibility for all aspects of the business. The Chairman is responsible for overseeing the running of the Board, ensuring that no individual or group dominates the Board’s decision-making and ensuring the Non-Executive Directors are properly briefed on all operational and financial matters. The Chairman has overall responsibility for corporate governance matters in the Group and chairs the Nomination Committee. The Managing Director has the responsibility for implementing the strategy of the Board and managing the day-to-day business activities of the Group. The Company Secretary is responsible for ensuring that Board procedures are followed and applicable rules and regulations are complied with.

 

Non-Executive Director, Donald McAlister, is responsible for bringing independent and objective judgment to Board decisions. The Board has established an Audit and Remuneration Committee with formally delegated duties and responsibilities. Donald McAlister currently chairs the Audit and Remuneration Committee.

 

Audit Committee

The Audit Committee, composed entirely of Non-Executive Directors, meets at least twice a year and assists the Board in meeting responsibilities in respect of external financial reporting and internal controls. The Audit Committee also keeps under review the scope and results of the audit. It also considers the cost-effectiveness, independence and objectivity of the Auditor taking account of any non-audit services provided by them.

 

Remuneration Committee

The Remuneration Committee also comprises the Non-Executive Directors. The Remuneration Committee meets at least once a year to determine the appropriate remuneration for the Company’s executive directors, ensuring that this reflects their performance and that of the Group, and to demonstrate to shareholders that executive remuneration is set by Board members who have no personal interest in the outcome of their decisions.

 

The Company has initiated a long-term bonus and incentive scheme for the Managing Director. The objective of adopting the scheme is to provide reward for successfully achieving performance targets set by the Board of Directors in line with the Company’s Aims and Strategy. The Company has in place an Inland Revenue approved share option scheme and also issues warrants to subscribe for shares to executive directors and employees. Directors’ emoluments are disclosed in Note 4 to the financial statements and details of Directors’ warrants are disclosed in Note 15.

 

Conflicts of Interest

The Companies Act 2006 permits directors of public companies to authorise directors’ conflicts and potential conflicts, where appropriate, and the Articles of Association contain a provision to this effect.

 

At 30 September 2018, Tertiary Minerals plc held 5.19% of the issued share capital of Sunrise Resources plc and the Chairman of Tertiary Minerals plc is also Chairman of Sunrise Resources plc. Tertiary Minerals plc also provides management services to Sunrise Resources plc, in the search, evaluation and acquisition of new projects.

 

Procedures are in place in order to avoid any conflict of interest between the Company and Sunrise Resources plc.

 

Principle Ten: Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.

 

The Company regularly communicates with, and encourages feedback from, its various stakeholder groups. The Company’s website is regularly updated and users can register to be alerted via email when certain announcements are made.

 

The Group’s financial reports can be found here: www.tertiaryminerals.com/investor-media/financial-reports

 

Notices of General Meetings held for at least the past five years can be found here: www.tertiaryminerals.com/news-releases 

 

The results of voting on all resolutions in future general meetings will be posted to the Company’s website, including any actions to be taken as a result of resolutions for which votes against have been received from at least 20 per cent of independent votes.

 

This Corporate Governance statement will be reviewed at least annually to ensure that the Company’s corporate governance framework evolves in line with the Company’s strategy and business plan.

 

 

 

 

Patrick Cheetham

Executive Chairman

11 December 2018

 

Board of Directors

The Directors and Officers of the Company during the financial year were:

Patrick Cheetham (58)

Chairman

 

Key Strengths and Experience

·      Geologist.

·      37 years’ experience in mineral exploration.

·      32 years’ experience in public company management.

·      Founder of the Company, Dragon Mining Ltd, Archaean Gold NL and Sunrise Resources plc.

External Appointments

Chairman and founder of Sunrise Resources plc.

 

 

Richard Clemmey (46)

Managing Director

 

Key Strengths and Experience

·      Chartered Engineer.

·      25 years’ experience in developing and managing mining/quarrying projects worldwide for Derwent Mining, Lafarge, Hargreaves (GB) Ltd, Marshalls plc and CFE.

·      Board Director since May 2012.

External Appointments

None.

 

 

Donald McAlister (59)

Non-Executive Director*

 

Key Strengths and Experience

·      Accountant.

·      Previously Finance Director at Mwana Africa plc, Ridge Mining plc and Reunion Mining.

·      24 years’ experience in all financial aspects of the resource industry, including metal hedging, tax planning, economic modelling/evaluation, project finance and IPOs.

·      Founding director of the Company.

External Appointments

Financial Director of Moxico Resources plc and Finance Director of ZincOx Resources plc.

 

Chairman of the Audit Committee and member of the Remuneration Committee.

 

 

David Whitehead (now deceased)

Non-Executive Director

 

During part of the last financial year David Whitehead operated as a non-executive director but he sadly passed away in November 2017.  The Board will be seeking a replacement in due course.

 

 

Colin Fitch LLM, FCIS

Company Secretary

 

Key Strengths and Experience

·      Barrister-at-Law.

·      Previously Corporate Finance Director of Kleinwort Benson, Partner and Head of Corporate Finance at Rowe & Pitman (SG Warburg Securities) and Assistant Company Secretary at the London Stock Exchange.

·      Held a number of non-executive directorships including Merrydown plc, African Lakes plc and Manders plc.

External Appointments

Company Secretary for Sunrise Resources plc.

 

Directors’ Responsibilities

 

The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the Directors to prepare financial statements for each financial year.  Under that law the Directors have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and applicable law. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial statements in accordance with the AIM Rules of the London Stock Exchange for companies trading securities on the AIM Market.

 

In preparing these financial statements, the Directors are required to:

 

·       select suitable accounting policies and then apply them consistently;

 

·       make judgements and accounting estimates that are reasonable and prudent;

 

·       state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; and

 

·       prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

They are further responsible for ensuring that the Strategic Report and the Report of the Directors and other information included in the Annual Report and Financial Statements is prepared in accordance with applicable law in the United Kingdom.

 

Website Publication

The maintenance and integrity of the Tertiary Minerals plc website is the responsibility of the Directors; the work carried out by the Auditors does not involve the consideration of these matters and, accordingly, the Auditors accept no responsibility for any changes that may have occurred in the accounts since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the other information included in annual reports may differ from legislation in other jurisdictions.

 

Information from the Directors’ Report

 

The Directors are pleased to submit their Annual Report and audited accounts for the year ended 30 September 2018.

 

The Strategic Report contains details of the principal activities of the Company and includes the Operating Review and Performance which provides detailed information on the development of the Group’s business during the year and indications of likely future developments.

 

Going Concern

In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches. Further funding is raised as and when required. When any of the Group’s projects move to the development stage, specific project financing will be required.

 

The Directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report.  Given the Group’s cash position at year end (£218,297), 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 unable to recommend the payment of a dividend.

 

Financial Instruments & Other Risks

Details of the Group’s Financial Instruments and risk management objectives and of the Group’s exposure to risk associated with its Financial Instruments is given in Note 19 to the financial statements.

 

The business of mineral exploration and evaluation has inherent risks. Details of risks and uncertainties that affect the Group’s business are given in Risks and Uncertainties in the Strategic Report.

 

Directors

The Directors currently holding office are:

 

Mr P L Cheetham

Mr R H Clemmey

Mr D A R McAlister

 

In addition, Mr D Whitehead (now deceased) was a non-executive director during part of the financial year.

 

Post Balance Sheet Events

There were no post balance sheet events

 

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:

 

 

As at 11 December 2018

Number of shares

% of share capital

Interactive Investor Services Nominees Limited SMKTNOMS

38,896,483

10.82

Barclays Direct Investing Nominees Limited CLIENT1

32,315,054

8.99

Interactive Investor Services Nominees Limited SMKTISAS

21,022,090

5.85

Hargreaves Lansdown (Nominees) Limited 15942

19,446,657

5.41

Hargreaves Lansdown (Nominees) Limited VRA

17,684,315

4.92

HSDL Nominees Limited MAXI

14,241,816

3.96

HSDL Nominees Limited

13,003,446

3.62

Hargreaves Lansdown (Nominees) Limited HLNOM

12,909,505

3.59

Share Nominees Ltd

12,631,309

3.52

HSBC Client Holdings Nominee (UK) Limited 731504

10,857,913

3.02

 

Disclosure of Audit Information

Each of the Directors has confirmed that so far as he is aware, there is no relevant audit information of which the Company’s Auditor is unaware, and that he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the Company’s Auditor is aware of that information.

 

Auditor

A resolution to re-appoint Crowe U.K. LLP as Auditor of the Company and the Group will be proposed at the forthcoming Annual General Meeting.

 

Charitable and Political Donations

During the year, the Group made no charitable or political donations.

 

Annual General Meeting

The Annual General Meeting will be held on Thursday 21 February 2018 at 2.30 p.m.

 

 

 

Approved by the Board of Directors on 11 December 2018 and signed on its behalf.

 

 

 

 

 

 

Richard Clemmey

Managing Director

 

Publication of Statutory Accounts

 

The financial information set out in this announcement does not constitute the Company’s Annual Accounts for the period ended 30 September 2018 or 2017.  The financial information for 2017 is derived from the Statutory Accounts for 2017.  Full audited accounts in respect of that financial period have been delivered to the Registrar of Companies. The Statutory Accounts for 2018 will be delivered to the Registrar of Companies following the Company’s Annual General Meeting.  The Auditors have reported on the 2018 and 2017 accounts.  Neither set of accounts contain a statement under section 498(2) of (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.

 

Availability of Financial Statements

 

The Annual Report containing the full financial statements for the year to 30 September 2018 will be posted to shareholders on or around 21 December 2018, a soft copy of which will then be available to download from the Company’s website: https://www.tertiaryminerals.com.

 

Consolidated Income Statement

for the year ended 30 September 2018

 

Notes

2018

£

2017

£

Revenue

2,17

218,841

241,024

Administration costs

(507,931)

(550,229)

Pre-licence exploration costs

(38,725)

(30,617)

Impairment of deferred exploration asset

8

(1,976,618)

Operating loss

(2,304,433)

(339,822)

Impairment of available for sale investment 

(55,987)

Gain on disposal of available for sale investment

37,094

Interest receivable

142

277

Loss before income tax

3

(2,267,197)

(395,532)

Income tax

7

Loss for the year attributable to equity holders of the parent

(2,267,197)

(395,532)

Loss per share – basic and diluted (pence)

6

(0.65)

(0.14)

 

All amounts relate to continuing activities.

 

 

 

Consolidated Statement of Comprehensive Income
for the year ended 30 September 2018

 

2018

£

2017

£

Loss for the year

(2,267,197)

(395,532)

Items that could be reclassified subsequently to the income statement:

Foreign exchange translation differences on foreign currency net investments in subsidiaries

 

(62,575)

 

(15,442)

Fair value movement on available for sale investment reserve

(72,010)

122,753

(134,585)

107,311

Items that have been reclassified subsequently to the income statement:

Disposal from available for sale investment reserve

(38,634)

(38,634)

Total comprehensive loss for the year attributable to

equity holders of the parent

 

(2,440,416)

 

(288,221)

 

 

Consolidated and Company Statements of Financial Position

at 30 September 2018

 

Company Number 03821411

 

Notes

Group

2018

£

Company

2018

£

Group

2017

£

Company

2017

£

Non-current assets

Intangible assets

8

2,670,386

4,508,015

Property, plant & equipment

9

3,308

3,308

4,361

4,341

Investment in subsidiaries

10

2,478,924

7,035,229

Available for sale investment

10

202,328

202,328

408,971

266,087

2,876,022

2,684,560

4,921,347

7,305,657

Current assets

Receivables

11

96,653

72,749

94,253

73,390

Cash and cash equivalents

12

218,297

202,732

159,278

140,928

314,950

275,481

253,531

214,318

Current liabilities

Trade and other payables

13

(65,163)

(38,602)

(75,808)

(41,281)

249,787

236,879

177,723

173,037

Net assets

3,125,809

2,921,439

5,099,070

7,478,694

Equity

Called up Ordinary Shares

14

35,932

35,932

31,708

31,708

Deferred Shares

14

2,644,062

2,644,062

2,644,062

2,644,062

Share premium account

9,785,702

9,785,702

9,331,768

9,331,768

Merger reserve

131,096

131,096

131,096

131,096

Share option reserve

14

168,923

168,923

259,690

259,690

Available for sale investment reserve

63,226

63,226

173,870

115,987

Foreign currency reserve

14

304,337

366,912

Accumulated losses

(10,007,469)

(9,907,502)

(7,840,036)

(5,035,617)

Equity attributable to the owners of the parent

3,125,809

2,921,439

5,099,070

7,478,694

 

The Company reported a loss for the year ended 30 September 2018 of £4,971,649 (2017 – £366,439).

 

These financial statements were approved and authorised for issue by the Board of Directors on 11 December 2018 and were signed on its behalf.

 

 

 

R H Clemmey                                                                       D A R McAlister

Director                                                                                  Director

 

Consolidated Statement of Changes in Equity

 

Group

Ordinary share

capital

£

 

Deferred shares

£

Share

premium

account

£

Merger

reserve

£

Share

option

reserve

£

Available

for sale

reserve

£

Foreign

currency

reserve

£

Accumulated

losses

£

Total

£

At 30 September 2016

2,669,442

 

9,066,735

131,096

343,486

51,117

382,354

(7,539,696)

5,104,534

Loss for the period

(395,532)

(395,532)

Change in fair value

122,753

122,753

Exchange differences

(15,442)

(15,442)

Total comprehensive loss for the year

122,753

(15,442)

(395,532)

(288,221)

Share split

(2,644,062)

2,644,062

Share issue

6,328

265,033

271,361

Share based payments expense

11,396

11,396

Transfer of expired warrants

(95,192)

95,192

At 30 September 2017

31,708

 

2,644,062

9,331,768

131,096

259,690

173,870

366,912

(7,840,036)

5,099,070

Loss for the period

(2,305,831)

(2,305,831)

Change in fair value

(72,010)

(72,010)

Transfer of disposals to income statement

(38,634)

38,634

Exchange differences

(62,575)

(62,575)

Total comprehensive loss for the year

(110,644)

(62,575)

(2,267,197)

(2,440,416)

Share issue

4,224

453,934

458,158

Share based payments expense

8,997

8,997

Transfer of expired warrants

(99,764)

99,764

At 30 September 2018

35,932

 

2,644,062

9,785,702

131,096

168,923

63,226

304,337

(10,007,469)

3,125,809

 

Company Statement of Changes in Equity

 

 

Company

Ordinary share

capital

£

 

Deferred shares

£

Share

premium

account

£

Merger

reserve

£

Share

option

reserve

£

Available

for sale

reserve

£

Accumulated

losses

£

Total

£

At 30 September 2016

2,669,442

 

9,066,735

131,096

343,486

51,117

(4,764,370)

7,497,506

Loss for the period

(366,439)

(366,439)

Change in fair value

64,870

64,870

Total comprehensive

loss for the year

 

 

64,870

(366,439)

(301,569)

Share split

(2,644,062)

2,644,062

Share issue

6,328

265,033

271,361

Share based payments expense

11,396

11,396

Transfer of expired warrants

(95,192)

95,192

At 30 September 2017

31,708

 

2,644,062

9,331,768

131,096

259,690

115,987

(5,035,617)

7,478,694

Loss for the period

(4,977,649)

(4,977,649)

Change in fair value

(46,761)

(46,761)

Transfer of disposals to income statement

(6,000)

6,000

Total comprehensive

loss for the year

 

 

(52,761)

(4,971,649)

(5,024,410)

Share issue

4,224

453,934

458,158

Share based payments expense

8,997

8,997

Transfer of expired warrants

(99,764)

99,764

At 30 September 2018

35,932

 

2,644,062

9,785,702

131,096

168,923

63,226

(9,907,502)

2,921,439

 

 

Consolidated and Company Statements of Cash Flows

for the year ended 30 September 2018

 

Notes

Group

2018

£

Company

2018

£

Group

2017

£

Company

2017

£

Operating activity

Total loss after tax excluding interest received

(2,267,339)

(4,985,875)

(395,809)

(374,085)

Depreciation charge

9

4,019

3,999

5,910

5,781

Shares issued in settlement of outstanding wages

8,158

8,158

1,361

1,361

Share based payment charge

8,997

8,997

11,396

11,396

Impairment charge – deferred exploration asset

1,976,618

Impairment charge – available for sale investment

55,987

55,987

Non-cash additions to available for sale investment

(52,735)

(52,735)

Gain on disposal of available for sale investment

(37,094)

(5,830)

Increase/(decrease) in provision for impairment of loans to subsidiaries

10

4,682,590

(1,196)

(Increase)/decrease in receivables

11

(2,400)

641

10,779

7,987

(Decrease) in payables

13

(10,645)

(2,679)

(16,680)

(12,143)

(319,686)

(289,999)

(379,791)

(357,647)

Investing activity

Interest received

142

14,226

277

7,646

Exploration and development expenditures

8

(201,622)

(190,172)

Disposal of development asset

15,000

Disposal of available for sale investment

10

133,094

16,828

Purchase of property, plant & equipment

9

(2,966)

(2,966)

(486)

(486)

Additional loans to subsidiaries

10

(126,285)

(199,877)

Net cash outflow from investing activity

(71,352)

(98,197)

(175,381)

(192,717)

Financing activity

Issue of share capital (net of expenses)

450,000

450,000

270,000

270,000

Net cash inflow from financing activity

450,000

450,000

270,000

270,000

Net increase/(decrease) in cash

and cash equivalents

58,962

61,804

(285,172)

(280,364)

Cash and cash equivalents at start of year

159,278

140,928

448,474

421,292

Exchange differences

57

(4,024)

Cash and cash equivalents at 30 September

12

218,297

202,732

159,278

140,928

Notes to the Financial Statements

for the year ended 30 September 2018

 

Background

Tertiary Minerals plc is a public company incorporated and domiciled in England. It is traded on the AIM market of the London Stock Exchange – EPIC: TYM.

 

The Company is a holding company for a number of companies (together, “the Group”). The Group’s financial statements are presented in Pounds Sterling (£) 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 tranches as and when required. When any of the Group’s projects move to the development stage, specific project financing will be required.

 

The Directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report. Given the Group’s cash position at year end (£218,297), these projections include the proceeds of future fundraising necessary within the next 12 months to meet the Group’s overheads and planned discretionary project expenditure and to maintain the Company and its subsidiaries as going concerns. Although the Company has been successful in raising finance in the past, there is no assurance that it will obtain adequate finance in the future. This represents a material uncertainty related to events or conditions which may cast significant doubt on the Group and Company’s ability to continue as going concerns and, therefore, that they may be unable to realise their assets and discharge their liabilities in the normal course of business. However, the Directors have a reasonable expectation that they will secure additional funding when required to continue meeting corporate overheads and exploration costs for the foreseeable future and therefore believe that the going concern basis is appropriate for the preparation of the financial statements.

 

(c) Basis of consolidation

Investments, including long-term loans, in subsidiaries are valued at the lower of cost or recoverable amount, with a biannual review for impairment.

 

The Group’s financial statements consolidate the financial statements of Tertiary Minerals plc and its subsidiary undertakings  eliminating inter-company balances and transactions.

 

In accordance with section 408 of the Companies Act 2006, Tertiary Minerals plc is exempt from the requirement to present its own Statement of Comprehensive Income. The amount of the loss for the financial year recorded within the financial statements of Tertiary Minerals plc is £4,971,649 (2017: £366,439). The loss for 2018 includes provision for impairment of its investment in subsidiary undertakings in the amount of £4,681,523 (Note 10).

 

(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.

 

An annual review is carried out by the Directors to consider whether there are any indications of impairment in capitalised exploration and development costs. The biannual impairment reviews were conducted in April 2018 and November 2018.

 

Where an indication of impairment is identified, the relevant value is written off to the income statement in the period for which the impairment was identified. An impairment of exploration and development costs may subsequently be reversed in later periods should conditions allow.

Accumulated costs, where the Group does not yet have an exclusive exploration licence and in respect of areas of interest which have been abandoned, are written off to the income statement in the year in which the pre-licence expense was incurred or in which the area was abandoned.

 

      Development

Exploration, evaluation and development costs are carried at the lower of cost and expected net recoverable amount. On reaching a mining development decision, exploration and evaluation costs are reclassified as development costs and all development costs on a specific area of interest will be amortised over the useful economic life of the projects, once they become income generating and the costs can be recouped.

 

(e) Property, plant & equipment

All property, plant and equipment assets are stated at cost less accumulated depreciation. Depreciation is provided by the Group on all property, plant and equipment, at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its expected useful life, as follows:

 

Fixtures and fittings                      20% to 33% per annum                     Straight-line basis

Computer equipment                   33% per annum                                   Straight-line basis

 

Useful life and residual value are reassessed annually.

 

(f) Available for sale investments

Available for sale financial assets include non-derivative financial assets that are either designated as such or do not qualify for inclusion in any of the other categories of financial assets. Available for sale investments are initially measured at cost and subsequently at fair value, being the equivalent of market value, with changes in value recognised in equity. Gains and losses arising from available for sale investments are recognised in the income statement when they are sold or impaired.

 

(g) Trade and other receivables and payables

Trade and other receivables and payables are measured at initial recognition at fair value and subsequently measured at amortised cost.

 

(h) Cash and cash equivalents

Cash and cash equivalents consist of cash at bank and in hand and short-term bank deposits with a maturity of three months or less.

 

(i) Deferred taxation

Deferred taxation, if applicable, is provided in full in respect of taxation deferred by temporary differences between the treatment of certain items for taxation and accounting purposes.

 

Deferred tax assets are recognised to the extent that they are regarded as recoverable.

 

(j) Revenue

Revenue is measured at the fair value of the consideration received or receivable and includes amounts receivable for services provided to Sunrise Resources plc net of discounts, VAT and other sales-related taxes.

 

(k) Foreign currencies

The Group’s consolidated financial statements are presented in Pounds Sterling (£), being the functional currency of the Company, and the currency of the primary economic environment in which the Company operates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date.

 

For consolidation purposes, the net investment in foreign operations and the assets and liabilities of overseas subsidiaries, associated undertakings and joint arrangements, that have a functional currency different from the Group’s presentation currency, are translated at the closing exchange rates. Income statements of overseas subsidiaries, that have a functional currency different from the Group’s presentation currency, are translated at exchange rates at the date of transaction. Exchange differences arising on opening reserves are taken to the foreign currency reserve in equity.

 

(l) Leasing and hire purchase commitments

Rentals applicable to operating leases where substantially all the benefits and risks of ownership remain with the lessor are charged to the income statement on a straight-line basis.

 

(m) Share warrants and share based payments

The Company issues warrants and options to employees (including directors) and third parties. The fair value of the warrants and options is recognised as a charge measured at fair value on the date of grant and determined in accordance with IFRS 2, IAS 32 and IAS 39, adopting the Black-Scholes-Merton model. The fair value is charged to administrative expenses on a straight-line basis over the vesting period, together with a corresponding increase in equity, based on the management’s estimate of shares that will eventually vest. The expected life of the options and warrants is adjusted based on management’s best estimates, for the effects of non-transferability, exercise restrictions and behavioural considerations. The details of the calculation are shown in Note 15.

The Company also issues shares in order to settle certain liabilities, including partial settlement of outstanding directors fees. 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.

 

(n) Judgements and estimations in applying accounting policies

In the process of applying the Group’s accounting policies above, the Group has identified the judgemental areas that have the most significant effect on the amounts recognised in the financial statements:

 

Intangible assets – exploration and evaluation

Capitalisation of exploration and evaluation costs requires that costs be assessed against the likelihood that such costs will be recoverable against future exploitation or sale or alternatively, where activities have not reached a stage which permits a reasonable estimate of the existence of mineral reserves, a judgement that future exploration or evaluation should continue. This requires management to make estimates and judgements and to make certain assumptions, often of a geological nature, and most particularly in relation to whether or not an economically viable mining operation can be established in future. Such estimates, judgements and assumptions are likely to change as new information becomes available. When it becomes apparent that recovery of expenditure is unlikely the relevant capitalised amount is written off to the income statement.

 

Impairment

Impairment reviews for deferred exploration and evaluation costs are carried out on a project by project basis, with each project representing a potential single cash generating unit. The Group will review information produced by its exploration activities and consider whether the carrying value is impaired.  Assessment of the impairment of assets is a judgement based on analysis of the probability of future cash flows from the relevant project, including consideration of:

 

(a) The period for which the entity has the right to explore in the specific area and whether this right will expire in the near future, and whether the right is expected to be renewed.

 

(b) Whether substantive expenditure on further exploration for and evaluation of mineral resources for the specific project is either budgeted or planned.

 

(c)  Whether exploration for and evaluation of mineral resources on the specific project has led to the discovery of commercially viable quantities of mineral resources and whether the entity has decided to discontinue such activities on the project.

 

(d) Whether sufficient data exist to indicate that, although a development on the specific project is likely to proceed, the carrying amount of the exploration and evaluation asset is likely to be recovered in full from successful development of a mine or by the sale of the project.

 

Impairment reviews for investments in subsidiaries and available for sale assets are carried out on an individual basis. The Group reviews performance indicators of the investment, such as market share price, to indicate whether the carrying value is impaired. The results of the impairment review conducted during this year are detailed within Note 8.

 

Available for sale assets include a holding in Sunrise Resources plc as described in Note 10.  In the Interim Financial Statements for the six month period to 31 March 2017 a reduction in share price from cost was considered significant in terms of value and as a result the asset was treated as impaired in line with the requirements of IAS 39. This treatment is despite the fact that directors do not believe that the underlying business of Sunrise Resources plc is impaired either economically or commercially. A subsequent increase in share price in the period to 30 September 2018 has been recognised in equity (see Note 1(f)).

 

Going concern

The preparation of financial statements requires an assessment of the validity of the going concern assumption. The validity of the going concern assumption is dependent on finance being available for the continuing working capital requirements of the Group. Based on the assumption that such finance will become available, the Directors believe that the going concern basis is appropriate for these accounts (see Note 1(b)).

 

Share warrants, share options and share based payments

The estimates of costs recognised in connection with the fair value of share options and share warrants require that management selects an appropriate valuation model and make decisions on various inputs into the model, including the volatility of its own share price, the probable life of the warrants and options before exercise, and behavioural considerations of warrant holders (see Note 1(m)).

 

(p) Standards, amendments and interpretations not yet effective

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and in some cases have not yet been adopted by the EU.

 

The directors do not expect that the adoption of these standards will have a material impact on the financial statements of the Group in future periods. Specifically, the adoption of IFRS 9 will have minimal impact for both the classification and measurement of existing financial instruments. As the Group does not have any turnover other than recharge of expenses, IFRS 15 will not have any significant impact on revenue recognition and related disclosures. Finally, the adoption of IFRS 16 will not have any impact on the financial statements of the Group as all lease contracts are for periods of less than one year.

 

 

2.    Segmental analysis

        The Chief Operating Decision Maker is the Board of Directors. The Board considers the business has one reportable segment, the management of exploration projects, which is supported by a Head Office function. For the purpose of measuring segmental profits and losses the exploration segment bears only those direct costs incurred by or on behalf of those projects. No Head Office cost allocations are made to this segment. The Head Office function recognises all other costs.

2018

Exploration

projects

£

Head

office

£

Total

£

Consolidated Income Statement

Revenue

218,841

218,841

Pre-licence exploration costs

(38,725)

(38,725)

Impairment of deferred exploration asset

(1,976,618)

(1,976,618)

Share-based payments

(8,997)

(8,997)

Administration costs and other expenses

(498,934)

(498,934)

Operating Loss

(2,015,343)

(289,090)

(2,304,433)

Gain on disposal of available for sale investment

37,094

37,094

Bank interest received

142

142

Loss before income tax

(2,015,343)

(251,854)

(2,267,197)

Income tax

Loss for the year attributable to equity holders

(2,015,343)

(251,854)

(2,267,197)

Non-current assets

Intangible assets:

    Deferred exploration costs:

        Kaaresselkä Gold Project, Finland

260,992

260,992

        Kiekerömaa Gold Project, Finland

97,887

97,887

        Lassedalen Fluorspar Project, Norway

430,616

430,616

        MB Fluorspar Project, USA

1,880,891

1,880,891

2,670,386

2,670,386

Property, plant & equipment

3,308

3,308

Available for sale investment

202,328

202,328

2,670,386

205,636

2,876,022

Current assets

Receivables

23,780

72,873

96,653

Cash and cash equivalents

218,297

218,297

23,780

291,170

314,950

Current liabilities

Trade and other payables

(15,299)

(49,864)

(65,163)

Net current assets

8,481

241,306

249,787

Net assets

2,678,867

446,942

3,125,809

Other data

Deferred exploration additions

201,622

201,622

Exchange rate adjustments to deferred exploration costs

(62,633)

(62,633)

 

 

 

 

 

 

 

 

 

2017

Exploration

projects

£

Head

office

£

Total

£

Consolidated Income Statement

Revenue

36,914

204,110

241,024

Pre-licence exploration costs

(30,617)

(30,617)

Share-based payments

(11,396)

(11,396)

Administration costs and other expenses

(538,833)

(538,833)

Operating Loss

6,297

(346,119)

(339,822)

Impairment of available for sale investment

(55,987)

(55,987)

Bank interest received

277

277

Loss before income tax

6,297

(401,829)

(395,532)

Income tax

Loss for the year attributable to equity holders

6,297

(401,829)

(395,532)

Non-current assets

Intangible assets:

    Deferred exploration costs:

        Kaaresselkä Gold Project, Finland

260,823

260,823

        Kiekerömaa Gold Project, Finland

97,705

97,705

        Lassedalen Fluorspar Project, Norway

407,050

407,050

        Storuman Fluorspar Project, Sweden

2,015,865

2,015,865

        MB Fluorspar Project, USA

1,726,572

1,726,572

4,508,015

4,508,015

Property, plant & equipment

4,361

4,361

Available for sale investment

408,971

408,971

4,508,015

413,332

4,921,347

Current assets

Receivables

20,830

73,423

94,253

Cash and cash equivalents

159,278

159,278

20,830

232,701

253,531

Current liabilities

Trade and other payables

(25,080)

(50,728)

(75,808)

Net current assets

(4,250)

181,973

177,723

Net assets

4,503,765

595,305

5,099,070

Other data

Deferred exploration additions

190,172

190,172

Exchange rate adjustments to deferred exploration costs

(11,418)

(11,418)

 



 

 

 

 

3.    Loss before income tax

2018

£

2017

£

The operating loss is stated after charging

Operating lease rentals – land and buildings

20,668

20,239

Depreciation – owned assets

4,019

5,910

Fees payable to the Group’s Auditor for:

    The audit of the Group’s annual accounts

6,175

6,000

    The audit of the Group’s subsidiaries, pursuant to legislation

3,087

3,000

Fees payable to the Group’s Auditor and its associates for other services:

    Interim review of accounts

1,000

1,000

    VAT review

2,250

0

    Corporation tax fees

1,300

1,800

 

 

4.    Directors’ emoluments

  Remuneration in respect of Directors was as follows:

 

Net cost

to Group

2018

£

Income from

recharge to

Sunrise Resources plc

2018

£

 

 

Total

2018

£

 

 

Total

2017

£

P L Cheetham (salary)

16,176

98,296

114,472

110,061

R H Clemmey (salary)

97,978

376

98,354

86,643

D A R McAlister (salary)

16,000

16,000

16,000

D Whitehead (deceased) (salary)

2,500

2,500

15,000

132,654

98,672

231,326

227,704

 

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 £4,224 (2017: £7,509) or Employer’s National Insurance contributions of £28,050 (2017: £25,985). During the year shares were issued to D A R McAlister having a market value of £2,720 at the time of issue in part settlement of outstanding directors fees.

 

The above remuneration amount for R H Clemmey includes a bonus of £12,500 (2017: £4,097). Bonus remuneration is applicable to performance in the previous financial year.

 

Pension contributions made during the year on behalf of Directors amounted to £599 (2017: £258).

 

The Directors are also the key management personnel.  If all benefits are taken into account, the total key management personnel compensation would be £235,550 (2017: £235,213).

 

After recharge to Sunrise Resources plc, if all benefits are taken into account, the key management personnel net compensation cost to the Group would be £136,878 (2017: £142,449).



 

 

5.    Staff costs

  Total staff costs for the Group and Company, including directors, were as follows:

 

Net cost

to Group

2018

£

Income from

 recharge to

Sunrise Resources plc

2018

£

 

 

Total

2018

£

 

 

Total

2017

£

Wages and salaries

189,631

168,464

358,095

350,526

Social security costs

19,116

20,349

39,465

35,752

Share-based payments

8,997

8,997

11,396

217,744

188,813

406,557

397,674

 

 

The average monthly number of part-time and full-time employees, including directors, employed by the Group and Company during the year was as follows:

2018

Number

2017

Number

Technical employees

3

3

Administration employees (including non-executive directors)

5

6

8

9

 

 

6.    Loss per share

Loss per share has been calculated using the loss for the year attributable to equity holders of the parent and the weighted average number of ordinary shares in issue during the year.

2018

2017

Loss (£)

(2,267,197)

(395,532)

Weighted average ordinary shares in issue (No.)

351,361,810

284,429,468

Basic and diluted loss per ordinary share (pence)

(0.65)

(0.14)

       

The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for the basic earnings per ordinary share. This is because the exercise of share warrants and options would have the effect of reducing the loss per ordinary share and is therefore anti-dilutive. Deferred shares are excluded from the loss per share calculation as they have no attributable earnings.

 

7.    Income tax

 

No liability to corporation tax arises for the year due to the Group recording a taxable loss (2017: £Nil).

 

The tax credit for the period is lower than the credit resulting from the loss before tax at the standard rate of corporation tax in the UK – 19% (2017: 19%). The differences are explained below.

 

 

 

 

 

 

 

 

2018

£

2017

£

Tax reconciliation

Loss before income tax

(2,267,197)

(395,532)

Tax at hybrid rate 19% (2017: 19.5%)

(430,767)

(77,129)

Differences between capital allowances and depreciation

(110)

4,006

Expenditure disallowed for tax purposes

79,394

Pre-trading expenditure no longer deductible for tax purposes

42,707

28,934

Tax effect at 19% (2017: 19.5%)

Unrelieved tax losses carried forward

(407,589)

(70,706)

Tax recognised on loss

Total losses carried forward for tax purposes

(7,859,632)

(5,714,426)

 

Factors that may affect future tax charges

The Group has total losses carried forward of £7,859,632 (2017: £5,714,426).  This amount would be charged to tax, thereby reducing tax liability, if sufficient profits were made in the future. The deferred tax asset has not been recognised as the future recovery is uncertain given the exploration status of the Group. The carried tax loss is adjusted each year for amounts that can no longer be carried forward.

 

 

8.   Intangible assets

Group

Deferred

exploration

expenditure

2018

£

Deferred

exploration

expenditure

2017

£

Cost

At start of year

5,870,493

5,691,739

Additions

201,622

190,172

Exchange adjustments

(62,633)

(11,418)

At 30 September

6,009,482

5,870,493

Disposals

At start of year

(1,362,478)

(1,262,478)

Impairment losses during year

(1,976,618)

Disposals during year

(100,000)

At 30 September

(3,339,096)

(1,362,478)

Carrying amounts

At 30 September

2,670,386

4,508,015

At start of year

4,508,015

4,429,261

 

The directors carried out an impairment review which, with reference to IFRS 6.20(b) and IAS 36.12(b), resulted in an impairment charge, relating to the Tertiary Gold Limited Storuman Fluorspar Project, being recognised in the Consolidated Income Statement as part of operating expenses. Refer to accounting policy 1(d) and 1(n) for a description of the considerations used in the impairment review.

 

The key reasons for the impairment of the Storuman Project relate to the fact that the County Administrative Board has advised against the grant of the Mine Permit in its current from and that all further expenditure on exploration or development of the project is currently on hold.

 

 

As a result of the impairment review the directors concluded to impair the carrying value of the project fully.

 

9.             Property, plant & equipment

Group

fixtures

and fittings

2018

£

Company

fixtures

and fittings

2018

£

Group

fixtures

and fittings

2017

£

Company

fixtures

and fittings

2017

£

Cost

At start of year

46,577

31,819

51,520

34,144

Additions

2,966

2,966

486

486

Disposals

(5,429)

(2,811)

At 30 September

49,543

34,785

46,577

31,819

Depreciation

At start of year

(42,216)

(27,478)

(41,735)

(24,508)

Charge for the year

(4,019)

(3,999)

(5,910)

(5,781)

Disposals

5,429

2,811

At 30 September

(46,235)

(31,477)

(42,216)

(27,478)

Net Book Value

At 30 September

3,308

3,308

4,361

4,341

At start of year

4,361

4,341

9,785

9,636

 

10.  Investments

        Subsidiary undertakings

Company

Country of

incorporation/

registration

Type and percentage

of shares held at

30 September 2018

Principal activity

Tertiary Gold Limited

England & Wales

100% of ordinary shares

Mineral exploration

Tertiary (Middle East) Limited

England & Wales

100% of ordinary shares

Mineral exploration

Tertiary Minerals US Inc.

Nevada, USA

100% of ordinary shares

Mineral exploration

 

The registered office of Tertiary Gold Limited and Tertiary (Middle East) Limited is the same as the Parent Company, being Sunrise House, Hulley Road, Macclesfield, Cheshire, SK10 2LP.

 

The registered office of Tertiary Minerals US Inc. is 241 Ridge Street, Suite 210, Reno, NV 89501, USA.

 

Investment in subsidiary undertakings

Company

2018

£

Company

2017

£

Ordinary shares – Tertiary (Middle East) Limited

1

1

Ordinary shares – Tertiary Gold Limited

224,888

224,888

Ordinary shares – Tertiary Minerals US Inc.

1

1

Loan – Tertiary (Middle East) Limited

683,243

682,258

Less – Provision for impairment

(683,243)

(682,176)

Loan – Tertiary Gold Limited

5,246,129

5,251,392

Less – Provision for impairment

(4,681,523)

Loan – Tertiary Minerals US Inc.

1,689,428

1,558,865

At 30 September

2,478,924

7,035,229

 

In relation to indication of impairment of exploration assets under IFRS 6, and with reference to IAS 36.12(b), the value of the Company’s investment in and due from its subsidiaries was considered. Being in excess of the market value of the Group at year end, this indicated a potential impairment under IAS 36.12(d). The directors therefore undertook an impairment review of the carrying values of the investments, with particular reference to Tertiary Gold Limited. The result of this review, together with the fact that there had been an impairment of the underlying assets held by Tertiary Gold Limited, indicated that impairment was required in the carrying value of the investment in Tertiary Gold Limited. The investment has been impaired down to the value of the underlying exploration assets, i.e. an impairment of £4,681,523.

 

Available for sale investment

Company

Country of

incorporation/

registration

Type and percentage

of shares held at

30 September 2018

Principal activity

Sunrise Resources plc

England & Wales

5.19% of ordinary shares

Mineral exploration

Aurion Resources Limited

Canada

Full disposal in period

Mineral exploration

 

Available for sale investment

Group

2018

£

Company

2018

£

Group

2017

£

Company

2017

£

Value at start of year

408,971

266,087

204,470

204,470

Additions to available for sale investment

137,735

52,734

Disposal of available for sale investment

(134,633)

(17,000)

Movement in valuation of available for sale investment

(72,010)

(46,759)

66,766

8,883

At 30 September

202,328

202,328

408,971

266,087

 

Additions to available for sale investments in 2017 are a combination of shares issued in lieu of cash payment for settlement of outstanding invoices to Sunrise Resources plc for management fees, and shares acquired in Aurion Resources Limited for part settlement of consideration on disposal of Finland gold assets.

 

Disposals in the year ended September 2018 comprises disposal of 10,000,000 Sunrise Resources plc shares and full disposal of all Aurion Resources Limited shares.

 

The fair value of each available for sale investment is equal to the market value of its shares at 30 September 2018, based on the closing mid-market price of shares on its equity exchange market.

 

These are level one inputs for the purpose of the IFRS 13 fair value hierarchy.

 

11.  Receivables

Group

2018

£

Company

2018

£

Group

2017

£

Company

2017

£

Trade receivables

59,690

59,690

61,336

61,336

Other receivables

23,229

1,913

19,753

1,463

Prepayments

13,734

11,146

13,164

10,591

At 30 September

96,653

72,749

94,253

73,390

 

The Group aged analysis of trade receivables is as follows:

Not

impaired

 

£

30 days

or less

 

£

Over

30 days

 

£

Total

carrying

 amount

£

2018 Trade receivables

59,690

59,690

61,336

2017 Trade receivables

61,336

61,336

61,336

 

 

12. Cash and cash equivalents

Group

2018

£

Company

 2018

£

Group

2017

£

Company

 2017

£

Cash at bank and in hand

20,944

5,379

45,141

26,791

Short-term bank deposits

197,353

197,353

114,137

114,137

At 30 September

 218,297

202,732

159,278

140,928

 

 

13. Trade and other payables

Group

2018

£

Company

 2018

£

Group

2017

£

Company

 2017

£

Trade payables

18,650

6,337

22,377

7,087

Other taxes and social security costs

14,207

14,207

14,438

14,438

Accruals

30,468

16,220

32,907

13,670

Other payables

1,838

1,838

6,086

6,086

At 30 September

65,163

38,602

75,808

41,281

 

 

14.   Issued capital and reserves

2018

Number of

shares

2018

Nominal

value £

2017

Number of

shares

2017

Nominal

value £

Allotted, called up and fully paid Ordinary Shares

Balance at start of year

317,076,933

31,708

266,944,213

2,669,442

Split to deferred shares

(2,644,062)

Shares issued in the year

42,246,821

4,224

50,132,720

6,328

Balance at 30 September

359,323,754

35,932

317,076,933

31,708

 

2018

Number of

shares

2018

Nominal

value £

2017

Number of

shares

2017

Nominal

value £

Deferred Shares

Balance at start of year

267,076,933

2,644,062

Split from Ordinary Shares

267,076,933

2,644,062

Balance at 30 September

267,076,933

2,644,062

267,076,933

2,644,062

 

Capital restructure

 

At a General Meeting on 13 April 2017 the shareholders approved the subdivision of the Company’s ordinary share capital whereby each existing Ordinary Share with a nominal value of 1p was subdivided into 1 new Ordinary Share of 0.01p and 1 Deferred Share of 0.99p each. The Deferred Shares have no significant rights attached to them and carry no right to vote or to participate in distribution of surplus assets and are not admitted to trading on the AIM market of the London Stock Exchange plc. The Deferred Shares effectively carry no value.

 

Share Issues

 

During the year to 30 September 2018 the following share issues took place:

 

An issue of 41,666,670 0.01p ordinary shares at 1.2p per share, by way of placing, for a total consideration of £450,000 net of expenses (6 December 2017).

 

An issue of 362,554 0.01p ordinary shares at 1.875p per share to two directors, in satisfaction of outstanding directors’ fees, for a total consideration of £6,798 (31 January 2018).

 

An issue of 217,597 0.01p ordinary shares at 0.625p per share to a director, in satisfaction of outstanding director’s fees, for a total consideration of £1,360 (17 August 2018).

 

During the year to 30 September 2017 a total of 50,132,720 1.0p and 0.01p ordinary shares were issued, at an average price of 0.601p, for a total consideration of £271,360 net of expenses.

 

The total amount of transaction fees debited to the Share Premium account in the year was £50,000 (2017: £30,000).

 

Nature and purpose of reserves

 

Foreign currency reserve

Exchange differences relating to the translation of the net assets of the Group’s foreign operations, which relate to subsidiaries only, from their functional currency into the Parent’s functional currency, being Sterling, are recognised directly in the foreign currency reserve.

 

Share option reserve

The share option reserve is used to recognise the fair value of share-based payments provided to employees, including key management personnel, by means of share options and share warrants issued as part of their remuneration. Refer to Note 15 for further details.

 

 

15.  Warrants granted

Warrants not exercised at 30 September 2018

Issue date

Exercise

price

Number

Exercisable

Expiry

dates

14/01/2014

11.25p

1,050,000

Any time before expiry

14/01/2019

14/01/2014

11.25p

300,000

Any time before expiry

14/01/2019

01/10/2014

9.00p

600,000

Any time before expiry

30/09/2019

01/10/2014

12.00p

600,000

Any time before expiry

30/09/2019

01/10/2014

15.00p

600,000

Any time before expiry

30/09/2019

01/10/2014

18.00p

600,000

Any time from 01/10/2018

30/09/2019

01/10/2014

21.00p

600,000

Any time from 01/10/2018

30/09/2019

20/02/2015

4.00p

1,200,000

Any time before expiry

20/02/2020

20/02/2015

4.00p

500,000

Any time before expiry

20/02/2020

11/03/2016

1.40p

200,000

Any time before expiry

11/03/2021

11/03/2016

1.40p

800,000

Any time before expiry

11/03/2021

31/01/2017

1.025p

200,000

Any time before expiry

31/01/2022

31/01/2017

1.025p

800,000

Any time before expiry

31/01/2022

31/01/2018

1.875p

200,000

Any time from 01/02/2019

31/01/2023

31/01/2018

1.875p

800,000

Any time from 01/02/2019

31/01/2023

 

Warrants are issued for nil consideration and are exercisable as disclosed above. They are exchangeable on a one for one basis for each ordinary share at the exercise price on the date of conversion.

 

Share-based payments

The Company issues warrants to directors and employees on varying terms and conditions.

 

Details of the share warrants outstanding during the year are as follows:

2018

2017

Number of

share warrants

Weighted

average

exercise

price

Pence

Number of

share warrants

and share

options

Weighted

average

exercise

price

Pence

Outstanding at start of year

10,050,000

8.425

11,550,000

9.353

Granted during the year

1,000,000

1.875

1,000,000

1.025

Exercised during the year

Forfeited during the year

Expired during the year

(2,000,000)

7.630

(2,500,000)

9.750

Outstanding at 30 September

9,050,000

7.877

10,050,000

8.425

Exercisable at 30 September

6,850,000

6.717

7,250,000

7.427

 

The warrants outstanding at 30 September 2018 had a weighted average exercise price of 7.9p (2017: 8.4p), a weighted average fair value of 1.84p (2017: 2.24p) and a weighted average remaining contractual life of 1.76 years.

 

In the year ended 30 September 2018, warrants were granted on 31 January 2018. The aggregate of the estimated fair values of the warrants granted on this date is £7,082. In the year ended 30 September 2017, warrants were granted on 31 January 2017. The aggregate of the estimated fair values of the warrants granted on this date is £3,404.

 

There were no warrants exercised in the year ending 30 September 2018.

 

The inputs into the Black-Scholes-Merton Pricing Model were as follows:

2018

2017

Weighted average share price

1.875p

1.025p

Weighted average exercise price

1.875p

1.025p

Expected volatility

70.0%

62.5%

Expected life

4 years

4 years

Risk-free rate

1.06%

0.59%

Expected dividend yield

0%

0%

 

        Expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous three years. The expected life used in the model has been adjusted based on management’s best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations.

 

        The Company recognised total expenses of £8,997 and £11,396 related to equity-settled share based payment transactions in 2018 and 2017 respectively.

 

 

16. Operating lease commitments

The Company rents office premises under an operating lease agreement. The lease term is for one year expiring on 30 November each year. No contingent rent is payable. The lease is eligible for renewal on expiry.

 

Future minimum lease payments under non-cancellable operating leases are:

2018

Land & buildings

£

2017

Land & buildings

£

Office accommodation:

Within one year

3,456

3,388

 

        The Company does not sub-let any of its leased premises.

 

        Lease payments recognised in loss for the period amounted to £20,668 (2017: £20,239).

 

 

17.  Related party transactions

Key management personnel

 

The Directors holding office in the period and their warrants held in the share capital of the Company are:

At 30 September 2018

At 30 September 2017

Shares number

Share warrants

number

Warrants

exercise

price

Warrant expiry

 date

Shares

number

Share warrants

number

P L Cheetham*

12,612,113

500,000

11.250p

14/01/2019

12,612,113

2,000,000

1,000,000

4.000p

20/02/2020

D A R McAlister

876,765

586,614

D Whitehead (deceased)

414,900

R H Clemmey

977,405

350,000

11.250p

14/01/2019

687,405

4,350,000

600,000

9.000p

30/09/2019

600,000

12.000p

30/09/2019

600,000

15.000p

30/09/2019

600,000

18.000p

30/09/2019

600,000

21.000p

30/09/2019

       

* Includes 2,843,625 shares held by K E Cheetham, wife of P L Cheetham.

 

The Directors have no beneficial interests in the shares of the Company’s subsidiary undertakings as at 30 September 2018. The Directors of the Company are the Directors of all Group companies.

 

        Details of the Parent Company’s investment in subsidiary undertakings are shown in Note 10.

 

        Sunrise Resources plc

 

During the year the Company charged costs of £218,841 (2017: £204,110) to Sunrise Resources plc being shared overheads of £24,607 (2017: £24,874), costs paid on behalf of Sunrise Resources plc of £5,421 (2017: £4,646),  staff salary costs of £77,597 (2017: £69,957) and directors’ salary costs of £111,216 (2017: £104,633), comprising P L Cheetham £110,790 (2017: £104,324) and R H Clemmey £426 (2017: £309).  All salary costs include employer’s National Insurance and statutory pension contributions.

 

The salary costs in Notes 4 and 5 include these charges.

 

        At the balance sheet date an amount of £59,690 (2017: £61,275) was due from Sunrise Resources plc.

 

        P L Cheetham, a director of Tertiary Minerals plc, is also a director of Sunrise Resources plc.

 

Shares and warrants held in Sunrise Resources plc by the Tertiary Minerals plc Directors are as follows:

 

At 30 September 2018

At 30 September 2017

Shares

number

Number

Warrants

Exercise

price

Warrants

expiry date

Shares

number

Warrants

number

P L Cheetham*

83,454,885

2,000,000

0.550p

14/01/2019

79,741,326

7,000,000

3,000,000

0.275p

05/02/2020

D A R McAlister

550,000

550,000

D Whitehead (deceased)

250,000

R H Clemmey

500,000

0.550p

14/01/2019

2,750,000

750,000

0.275p

05/02/2020

500,000

0.160p

18/02/2021

500,000

0.135p

01/02/2022

500,000

0.160p

31/01/2023

       

* Includes 5,500,000 shares held by K E Cheetham, wife of P L Cheetham.

 

18.  Capital management

       

The Group’s capital requirements are dictated by its project and overhead funding requirements from time to time. Capital requirements are reviewed by the Board on a regular basis.

 

        The Group manages its capital to ensure that entities within the Group will be able to continue as going concerns, to increase the value of the assets of the business and to provide an adequate return to shareholders in the future when exploration assets are taken into production.

       

The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its assets. In order to maintain or adjust the capital structure the possibilities open to the Group in future include issuing new shares, consolidating shares, returning capital to shareholders, taking on debt, selling assets and adjusting the amount of dividends paid to the shareholders.

 

19.  Financial instruments

       

At 30 September 2018, the Group’s and Company’s financial assets consisted of available for sale investments, trade receivables and cash and cash equivalents.  At the same date, the Group and Company had no financial liabilities other than trade and other payables due within one year and had no agreed borrowing facilities as at this date. There is no material difference between the carrying and fair values of the Group and Company’s financial assets and liabilities.

 

        The carrying amounts for each category of financial instruments held at 30 September 2018, as defined in IAS 39, are as follows:

Group

2018

£

Company

 2018

£

Group

2017

£

Company

 2017

£

Loans & receivables

301,215

264,335

240,367

203,727

Available for sale investments

202,328

202,328

408,971

266,087

Financial liabilities at amortised cost

50,276

23,715

60,689

26,163

       

Risk management

        The principal risks faced by the Group and Company resulting from financial instruments are liquidity risk, foreign currency risk and, to a lesser extent, interest rate risk and credit risk. The Directors review and agree policies for managing each of these risks as summarised below. The policies have remained unchanged from previous periods as these risks remain unchanged.

 

        Liquidity risk

        The Group holds cash balances in Sterling, US Dollars, Swedish Kronor, Euros, Canadian Dollars and Saudi Riyals to provide funding for exploration and evaluation activity. The Group and Company are dependent on equity fundraising through private placings which the Directors regard as the most cost-effective method of fundraising. The Directors monitor cash flow in the context of their expectations for the business to ensure sufficient liquidity is available to meet foreseeable needs.

 

        Currency risk

        The Group’s financial risk management objective is broadly to seek to make neither profit nor loss from exposure to currency risk. The Group is exposed to transactional foreign exchange risk and takes profits and losses as they arise as, in the opinion of the Directors, the cost of hedging against fluctuations would be greater than the related benefit from doing so.

 

Bank and cash balances were held in the following denominations:

 Group

Company

2018

£

2017

£

2018

£

2017

£

United Kingdom Sterling

203,098

132,779

202,085

129,533

United States Dollar

4,171

16,113

313

11,122

Swedish Krona

483

94

5

5

European Euro

10,486

10,234

314

253

Canadian Dollar

15

15

15

15

Saudi Riyal

44

43

218,297

159,278

202,732

140,928

 

 

        Surplus Sterling funds are placed with NatWest bank on short-term treasury deposits at variable rates of interest.

 

        The Company and the Group are exposed to changes in exchange rates mainly in the Sterling value of US Dollar denominated financial assets.

 

        Sensitivity analysis shows that the Sterling value of its US Dollar denominated financial assets at

30 September 2018 would increase or decrease by £209 for each 5% increase or decrease in the value of Sterling against the Dollar.

 

        Neither the Company nor the Group is exposed to material transactional currency risk.

 

        Interest rate risk

        The Group and Company finance their operations through equity fundraising and therefore do not carry borrowings.

 

        Fluctuating interest rates have the potential to affect the loss and equity of the Group and the Company insofar as they affect the interest received 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 invoices issued to related parties and its joint arrangements for management charges. The amounts outstanding from time to time are not material and are considered by the Directors to be low risk.

 

        The Company has exposure to credit risk in respect of its cash deposits with NatWest bank and this exposure is considered by the Directors to be low.

 

20.  Contingent liability

 

        Following an audit of the Tertiary Gold Sweden Branch by the Swedish tax office, Skatteverket, an assessment of SEK 288,256 (approximately £24,942) was levied in February 2017 in respect of the tax year 2013/14. The Skatteverket assertion of an incorrect tax return submission has been strongly contested by the Company’s Swedish tax lawyer and the case is currently in appeal with an expectation based on professional advice that the appeal is likely to succeed.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

 

 

Proactive Investors – Tertiary Minerals #TYM focuses attention on single acquisition in second half of financial year

 The AIM-listed miner reported a pre-tax loss for the period of £133,539, narrowing from £211,850 in the same period last year

Tertiary said it was focusing on one fluorspar project that had potential for near term revenue

 

Tertiary Minerals PLC (LON:TYM) said it is focusing its acquisition efforts on one particular project as it provided an update in its half-year report.

The AIM-listed miner reported a pre-tax loss for the period of £133,539, narrowing from £211,850 in the same period last year, while the group ended the period with cash and cash equivalents totalling £474,052, up from £145,212 for the same period a year ago.

READ: Tertiary Minerals in constructive dialogue with authorities in Sweden about mine permit

The group added that following an evaluation of several potential acquisitions, it was now focusing its efforts on one fluorspar project that has the potential to generate revenue in the near term.

Tertiary also said that the Swedish Mining Inspectorate was assessing feedback from key stakeholders regarding its application for an exploitation permit for the Storuman Fluorspar project in Sweden.

In April, the firm had said dialogue between itself and the relevant authorities in Sweden had continued to make constructive progress regarding the potential development of the project.

Meanwhile, scoping study level bench scale metallurgical testwork was progressing at SGS Lakefield in Canada for the company’s MB Fluorspar project in Nevada, USA.

Executive chairman of Tertiary, Patrick Cheetham, said: “The pricing environment for fluorspar has continued to strengthen, particularly for delivery into Europe where, after a period of disconnect, prices are now catching up with Chinese domestic prices which have traditionally set the pricing benchmark. Downstream processors of fluorochemicals have recently reported strong sales and increased prices.”

He added that the company was still entitled to further payments on the definition of ore reserves and mineral resources and a royalty on production in relation to the sale of its Finnish gold projects to Aurion Resources Ltd, in which the company profited £31,264.

Tertiary Minerals (TYM) updates on Acquisition Opportunities, plus other Corporate and Operational Developments

Tertiary Minerals plc, the AIM traded company building a strategic position in the fluorspar sector, is pleased to provide an operational update for its key fluorspar projects, royalty interests and project acquisition activity. The Company is developing its three key fluorspar assets where more than 13 Mt of contained fluorspar (CaF2 %) has been defined – JORC classified Indicated and Inferred.

Commenting today, Managing Director, Richard Clemmey said: “During recent months management has been progressing the Storuman project in Sweden through the Mine permitting process. Metallurgical testwork at the MB project in Nevada is progressing and is aimed at producing a commercial grade mica product alongside commercial grade acid-spar. Management is also focused on acquisition opportunities in the fluorspar and industrial minerals sector. Advanced discussions and technical due diligence are in progress and we look forward to releasing further news in due course”

Highlights:

Storuman Fluorspar Project, Sweden 

  • The re-assessment process of the Exploitation (Mine) Permit by the Swedish Mining Inspectorate is progressing
  • The Swedish Mining Inspectorate requested additional information relating to the original EIA, which the Company provided in May 2017
  • The Mining Inspectorate confirmed the additional information is sufficient and subsequently re-invited all stakeholders to comment on the application – current deadline for responses being 27 October 2017

MB Fluorspar Project, Nevada, USA

  • Scoping Study level bench scale metallurgical testwork progressing at SGS Lakefield in Canada with the aim of producing commercial grade acid-spar
  • Testwork scope includes the production of commercial grade mica as a secondary product – potential valuable upside

Lassedalen Fluorspar Project, Norway

  • The seasonal environmental testwork required as part of the due diligence for the purchase of land and old fluorspar mine workings from Hydro has been completed by Niva and data review now underway
  • Following satisfactory environmental data review, the Company is planning to progress with the required technical and legal due diligence prior to taking ownership of the Hydro land position

Finland Gold Projects – Aurion Resources

  • The 83,072 shares the Company received as part consideration have increased in value from £85,000 to more than £140,000 (based on current mid-market price and exchange rates)
  • Kinross Gold Corporation has recently completed a private placement with Aurion resulting in Kinross owning 9.98% of the issued and outstanding share capital of Aurion
  • Tertiary retain pre-production and production royalty interests in the projects

Potential Acquisition

  • Advanced discussions and technical due diligence are underway for shortlisted fluorspar project
  • Project has the potential to be near-term revenue generating

Customer Engagement

  • The Company continues to engage with key end-users and fluorspar traders, providing regular project updates, technical and commercial co-operation. Further discussions to be held at the upcoming global fluorspar conference on 23-25 October 2017.
 

Enquiries

 

Tertiary Minerals plc

Richard Clemmey, Managing Director

Patrick Cheetham, Executive Chairman

 

 

 

+44 (0) 1625 838 679

SP Angel Corporate Finance LLP

Nominated Adviser & Joint Broker

Ewan Leggat/Lindsay Mair

+44 (0) 20 3470 0470
 

Beaufort Securities Ltd

Joint Broker

Elliot Hance

 

 

+44 (0)20 7382 8300

Further Information

Background

Fluorspar is classified as a critical raw material by the European Commission (high risk of supply shortage and consequent impact on the economy) and the USA also considers fluorspar to be a strategic mineral. Due to its unique chemical properties, lightest of the halogens, it is largely irreplaceable and is used in a wide range of applications. Key uses include:

  • Refrigeration – new generation of zero ozone depleting potential (ODP) and very low global warming potential (GWP) refrigerants, hydrofluoroolefins (HFO’s) – driven by environmental legislation, most recently the Kigali Amendment: 170 nations agreed to phase down low ODP, high GWP Hydrofluorocarbons (HFCs)
  • Flux for Energy reduction in the steel and aluminium industry
  • Emerging uses – e.g. fluoropolymers in lithium batteries

The Company continues in its quest to become a reliable long-term and competitive supplier of high quality fluorspar to world markets through the acquisition and development of fluorspar deposits located close to established infrastructure and key markets in stable, democratic and mining friendly jurisdictions.

Storuman Fluorspar Project, Sweden

The Company’s 100% owned Storuman project is located in north central Sweden where the Company has defined a large near-surface fluorspar JORC compliant Mineral Resource:

Classification Million Tonnes (Mt) Fluorspar (CaF2 %)
Indicated 25.0 10.28
Inferred 2.7 9.57
Total 27.7 10.21

The Company submitted its Exploitation (Mine) Permit application in July 2014 to the Swedish Mining Inspectorate and following an extensive consultation process the 25 year Exploitation (Mine) Permit was granted on 18 February 2016.

However, as a consequence of the Supreme Court’s decision to overturn the grant of a third-party mining company’s mining permit in the south of Sweden (Norra Karr Mine Permit – rare earth element project, owned by Leading Edge Minerals) the government returned the Storuman Mine Permit case, along with many other cases, back to the Swedish Mining Inspectorate for re-assessment in December 2016. The re-assessment is intended to consider the impact of mining in the concession area on a wider surrounding area. Earlier this year the Swedish Mining Inspectorate requested additional information from the Company relating to the original Environmental Impact Assessment (EIA) and the wider area. The Company provided the additional information to the Swedish Mining Inspectorate in the form of an updated EIA in May 2017. The additional information was accepted by the Mining Inspectorate which has subsequently invited all stakeholders to provide comments on the application and additional information, with the current deadline for responses being 27 October 2017. Further updates will be provided as and when available, but it is worth noting that the Company has no influence on the speed at which the re-assessment of the grant of the mining permit is being processed by the Authorities.

Whilst the process is slow and frustrating, the Company continues to co-operate with the Mining Inspectorate and believes that the Mine Permit application and EIA are of a very high standard. The Company also continues to have the support of the majority of key stakeholders at Storuman, with the notable exception of the Sami reindeer herding community, and remains hopeful of a positive resolution to this in 2017.

Any ratification of the grant of the mining concession will, however, be open to appeal and the Company will therefore not spend any further money on exploration or development of Storuman until the matter is resolved.

MB Fluorspar Project, Nevada, USA

The MB Property comprises 146 contiguous mining claims covering an area more than 2,800 acres and is located 19km south-west of the town of Eureka in central Nevada, USA. Four phases of drilling completed by the Company have resulted in the definition of a large fluorspar JORC compliant Mineral Resource:

Classification Million Tonnes (Mt) Fluorspar (CaF2 %)
Indicated 6.1 10.8
Inferred 80.3 10.7
Total 86.4 10.7

The initial metallurgical testwork is now underway at SGS Lakefield to ascertain if commercial grade acid-spar and commercial grade mica can be produced from the ore. This is the first critical step in the preparation of a Scoping Study for the project. The results of the testwork will determine the next steps in the development of the MB fluorspar projects. The ore presents some metallurgical challenges and the Company has therefore engaged the services of one of the world’s leading fluorspar metallurgists to assist with the testwork.

Lassedalen Fluorspar Project, Norway

The Lassedalen Fluorspar Project is located near Kongsberg, 80km to the south-west of Oslo in Norway. The Company has defined a small, higher grade fluorspar JORC compliant Mineral Resource on the property:

Classification Million Tonnes (Mt) Fluorspar (CaF2 %)
Inferred 4.0 24.60

A key landowner for the Company’s Lassedalen fluorspar project is the global aluminium company, Hydro. In November 2016 Tertiary and Hydro entered into heads of terms whereby Tertiary will acquire the land (for 1 Norwegian Krone) and historic mine workings from Hydro following successful due diligence and purchase agreement completion. The seasonal environmental testwork required as part of the due diligence has recently been completed by Niva and data review is underway. Following satisfactory data review the Company is planning to progress with the technical and legal due diligence prior to taking ownership of the Hydro land position.

Finland Gold Projects – Aurion Resources

In March 2017, the Company successfully completed the sale of two legacy gold assets, Kaaresselkä and Kiekerömaa in Finland, to TSX-V listed Aurion Resources Ltd. The Company was paid £100,000 initial consideration for the projects, £15,000 in cash and £85,000 in Aurion Shares. The Company also retains a pre-production and production royalty interest in the projects and therefore providing the opportunity for potential income in the future.

Aurion has recently announced the discovery of a new bonanza gold zone, called Aurora at its 100% owned Risti project. The Kaaresselkä project is located in the same regional deformation zone, to the south of Risti where 133 rock grab samples collected from predominantly large and angular subcropping quartz-tourmaline blocks assayed from nil to 1563.5 g/t Au, including 36 samples which assayed greater than 31 g/t Au (1 ounce per tonne). The average grade of all 133 samples is 74.3 g/t Au. In September this year Kinross Gold Corporation completed a private placement with Aurion resulting in Kinross owning 9.98% of the issued and outstanding share capital of Aurion.

This has resulted in an increase in the value of the Aurion Shares held by Tertiary by more than £55,000, the current value being more than £140,000 (based on current mid-market price and exchange rates). The Company believe that Aurion is in a strong position to develop the Kaaresselkä and Kiekerömaa projects in the future.

Potential Acquisition

In January this year the Company updated the market on its business strategy and, whilst the Company remains committed to its fluorspar business and the development of its fluorspar assets, it has, since then, been reviewing complementary project acquisition opportunities capable of generating revenue and profits in a shorter timescale. Finding quality projects is not an easy task, but following the shortlisting of a number of projects for further evaluation the Company is engaged in detailed discussions with the owners of one such fluorspar project and technical due diligence has started; however there is no guarantee that the deal with be successfully executed at this point.

Notes to Editors

Tertiary Minerals plc (ticker symbol ‘TYM’) is an AIM-traded mineral exploration and development company building a significant strategic position in the fluorspar sector. Fluorspar is an essential raw material in the chemical, steel and aluminium industries. Tertiary controls two significant Scandinavian projects (Storuman in Sweden and Lassedalen in Norway) and a large deposit of strategic significance in Nevada, USA (MB Project).

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement

CAUTIONARY NOTICE

The news release may contain certain statements and expressions of belief, expectation or opinion which are forward looking statements, and which relate, inter alia, to the Company’s proposed strategy, plans and objectives or to the expectations or intentions of the Company’s directors. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from such forward-looking statements. Accordingly, you should not rely on any forward-looking statements and save as required by the AIM Rules for Companies or by law, the Company does not accept any obligation to disseminate any updates or revisions to such forward-looking statements.

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