TIDMSVML
RNS Number : 8014E
Sovereign Metals Limited
15 March 2022
SOVEREIGN METALS LIMITED
INTERIM FINANCIAL REPORT FOR THE HALF YEARED 31 DECEMBER
2021
abn 71 120 833 427
CORPORATE DIRECTORY
Directors Brokers
Mr Benjamin Stoikovich - Chairman Berenberg, Gossler & Co, KG, London
Dr Julian Stephens - Managing Director Branch
Mr Ian Middlemas - Non-Executive 60 Threadneedle Street
Director London EC2R 8HP
Mr Mark Pearce - Non-Executive United Kingdom
Director T: +44 20 3753 3132
Mr Nigel Jones - Non-Executive Optiva Securities Limited
Director 49 Berkeley Square
Mayfair
Company Secretary London W1J 5AZ
Mr Dylan Browne United Kingdom
Registered and Principal Office Share Register
Level 9, 28 The Esplanade Australia
Perth WA 6000 Computershare Investor Services
Telephone: +61 8 9322 6322 Pty Ltd
Facsimile: +61 8 9322 6558 Level 5
191 St Georges Terrace
Operations Office Perth WA 6000
Area 9
Lilongwe Telephone: 1300 850 505
Malawi International: +61 8 9323 2000
Facsimile: +61 8 9323 2033
Stock Exchange Listings
Australia United Kingdom
Australian Securities Exchange Computershare Investor Services
ASX Code: SVM - Ordinary Shares PLC
The Pavilions,
Bridgewater Road,
United Kingdom Bristol BS99 6ZZ
London Stock Exchange (AIM) Telephone: +44 370 702 0000
AIM Code: SVML - Depository Interests
Solicitors
Nominated Advisor Thomson Geer
RFC Ambrian Limited
Octagon Point Auditor
5 Cheapside Deloitte Touche Tohmatsu
London EC2V 6AA
United Kingdom Bankers
Australia and New Zealand Banking
Group Limited
National Australia Bank
Standard Bank - Malawi
CONTENTS
Directors' Report
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive
Income
Condensed Consolidated Statement of Financial Position
Condensed Consolidated Statement of Changes in Equity
Condensed Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Competent Person Statement
To view the following sections plus all figures and illustrations,
please refer to the full version of the Interim Financial Report
on our website at www.sovereignmetals.com.au
Auditor's Independence Declaration
Independent Auditor's Review Report
The Directors of Sovereign Metals Limited present their report
on Sovereign Metals Limited ("Sovereign" or "the Company" or
"Parent") and the entities it controlled at the end of, or during,
the half year ended 31 December 2021 ("Consolidated Entity" or
"Group").
DIRECTORS REPORT
DIRECTORS
The names of Directors in office at any time during the
financial period or since the end of the financial period are:
Current Directors
Mr Benjamin Stoikovich (Chairman)
Dr Julian Stephens (Managing Director)
Mr Ian Middlemas (Non-Executive Director)
Mr Mark Pearce (Non-Executive Director)
Mr Nigel Jones (Non-Executive Director) - appointed 10 February
2022.
All Directors were in office from 1 July 2021 until the date of
this report, unless otherwise noted.
REVIEW AND RESULTS OF OPERATIONS
Sovereign Metals Limited (ASX: SVM & AIM: SVML) is an ASX
and AIM-listed company focussed on the exploration and development
of its Kasiya rutile project (Kasiya) in Malawi.
Kasiya is a strategic and globally significant natural rutile
deposit with substantial additional resource growth expected.
Kasiya's Mineral Resource Estimate is 605Mt at 0.98% rutile (0.7%
cut-off, indicated + inferred).
Sovereign is aiming to develop an environmentally and socially
sustainable large-scale operation to supply highly sought-after
natural rutile and graphite to global markets. Kasiya has excellent
surrounding infrastructure including bitumen roads, a high-quality
rail line connecting to the deep-water port of Nacala on the Indian
Ocean and hydro-sourced grid power.
Natural rutile is the purest, highest-grade natural form of
titanium dioxide (TiO(2) ) and is the preferred feedstock in
manufacturing titanium pigment and producing titanium metal. The
rutile market fundamentals are robust with current and forecast
pricing remaining very strong. In 2021, the market has rebounded
strongly with pigment plant utilisation rates returning to
pre-pandemic levels. Major producers have noted that very strong
demand in the welding market is outstripping supply.
Natural rutile supply is tight with limited new projects coming
online in the short to medium term. A resurgence in demand for
titanium pigment and from the welding sector combined with
concurrent supply shortages has led the CIF China spot prices
sharply upwards to over US$2,100 per tonne (Ruidow).
Highlights
Initial Scoping Study confirms Kasiya as a globally significant
natural rutile project
-- The initial Scoping Study confirmed a multi-decade operation
providing a stable supply of highly sought-after rutile (TiO(2) )
and graphite whilst contributing significantly to the economy of
Malawi
-- Kasiya is the largest undeveloped rutile deposit in the world
and is highly strategic in a market characterised by extreme supply
deficit. The Scoping Study demonstrated outstanding results
including:
o a 12Mtpa operation producing 122kt rutile and 80kt graphite per annum over a 25 year mine life
o exceptional economics including a post-tax NPV(8) of US$861m and post-tax IRR of 36%
o a large-scale operation with a low-cost profile resulting from
the deposit's near surface nature, grade and excellent existing
infrastructure
o a low carbon operation with the project to be powered by 100% renewables (hydro and solar)
-- The Project is positioned for substantial growth with the
current life-of-mine inventory covering only 38% of the
drill-defined mineralised footprint. Substantial additional
resource growth is expected in early 2022 to enable the Study to be
enhanced
-- Sovereign is aiming to develop an environmentally and
socially sustainable operation to supply natural rutile that can
displace carbon, energy & waste intensive alternatives like
synthetic rutile and titania slag
Offtake MOU For Premium Priced Rutile Sales to the Welding
Sector
-- Subsequent to the end of the period, the Company signed an
MOU for supply of 25,000 tonnes of natural rutile per annum to
Hascor, a market leading global processor and distributor of rutile
products for the welding industry
-- Pricing of rutile for welding generally attracts significant
premiums to bulk rutile prices in the titanium pigment sector
Mineral Resource Estimate (MRE) upgrade to support Scoping
Study
-- The Company reported a MRE upgrade with over 50% now in the
higher confidence Indicated category
-- The MRE upgrade was underpinned by results from core
drilling, which confirmed the thick, continuous and high-grade
nature of the deposit
-- The upgraded MRE contains 3.1Mt of rutile in the Indicated
category and 2.8Mt of rutile in the Inferred category
Outstanding metallurgy
-- Bulk scale metallurgy test-work demonstrated very high
recoveries of premium quality rutile products and a high-grade,
coarse flake graphite by-product
-- World-class specification rutile products ranging from 95.0%
to 97.2% TiO(2) with low impurities and stand-out recoveries
ranging from 100% to 94%
SCOPING STUDY
Sovereign reported the initial Scoping Study which confirmed
Kasiya as a globally significant natural rutile project. Kasiya is
the largest undeveloped rutile deposit in the world and is highly
strategic in a market characterised by extreme current and forecast
supply deficit.
The Study developed the concept for a multi-decade mine
providing a stable supply of a highly sought-after TiO(2) and
graphite whilst contributing significantly to the economy of
Malawi.
Exceptional Economics
-- Initial Scoping Study demonstrates globally significant &
strategic project with low capital costs & high returns
-- Positioned as one of the world's best undeveloped titanium minerals projects
Positioned for growth
-- The life-of-mine inventory covers just 38% of the drill defined mineralised footprint
-- Substantial additional resource growth expected in early 2022
to enable the Study to be enhanced
Sustainable and ESG Driven
-- Significant contribution to Malawi via fiscal returns,
employment, training & social development
-- Low carbon footprint operation - hydro & solar power supply
Critical raw materials reducing carbon emissions
-- Low carbon - natural rutile can displace carbon, energy & waste intensive alternatives
-- Graphite is a major mineral required for lithium-ion
batteries for electric vehicles which are key components required
for the clean energy transition
Rutile market in structural supply deficit
-- Current supply declining with very limited additional production in the pipeline
-- The current severe structural supply deficit in natural
rutile is forecast to continue to widen in the medium & long
term
Strong relationships
-- Significant support from the government of Malawi for the development of Kasiya
-- Highly supportive community to benefit from project development
-- Establishing relationships with off-takers with significant interest already received
Exceptional Economics
The Scoping Study demonstrates Kasiya as a globally significant
natural rutile project with exceptional economics, including low
capital and operating costs, resulting in a high margin
operation.
NPV(8) IRR EBITDA
(after-tax) (after-tax) (Annual average LoM)
US$861m 36% US$161m
CAPITAL COST ANNUAL OPERATING COST
THROUGHPUT (per tonne mined)
US$332m 12Mt US$5.96/t
MINE LIFE NPV(8) /CAPEX OPERATING COST
(per tonne mined)
25 years 2.6 US$352/t
Overview
Sovereign is aiming to develop an environmentally and socially
sustainable operation to supply highly sought-after natural rutile
and graphite to global markets.
The proposed large-scale operation will process soft, friable
mineralisation mined from surface. The Project has excellent
surrounding infrastructure including bitumen roads, a high-quality
rail line connecting to the deep-water of Nacala on the Indian
Ocean and hydro-sourced grid power.
The operation will primarily employ conventional hydro-mining to
produce a slurry that is pumped to a Wet Concentration Plant (WCP)
where the material is sized. A Heavy Mineral Concentrate (HMC) is
produced via processing the sand fraction through a series of
gravity spirals. The HMC is transferred to the dry Mineral
Separation Plant (MSP) where premium quality rutile is produced via
electrostatic and magnetic separation.
Graphite rich concentrate is collected from the gravity spirals
and processed in a separate graphite flotation plant, producing a
coarse-flake graphite product.
The rutile and graphite products will be trucked a short
distance via existing bitumen roads to the Kanengo rail terminal
from where they will be railed via the Nacala Logistics Corridor
(NLC) to the deep-water port of Nacala on the eastern seaboard of
Mozambique.
Low-Cost Operation
Kasiya's low costs are achieved through deposit size and grade,
location and infrastructure. Central Malawi boasts excellent
existing infrastructure including hydropower and an extensive
sealed road network. The Kasiya Rutile Project is strategically
located in close proximity to the capital city of Lilongwe,
providing access to a skilled workforce and industrial
services.
The existing quality logistics route to the Indian Ocean
deep-water port of Nacala, via the NLC, for the export of products
to global markets provides significant capital cost savings
compared to many other undeveloped projects.
The soft, friable and high-grade mineralisation occurring from
surface results in no waste stripping requirement and the
amenability to hydro-mining means the mining cost component is kept
relatively low.
Capital Costs
Capital estimates for the Project have been prepared by DRA
Global Ltd, together with input from the Company, using a
combination of cost estimates from suppliers, historical data,
benchmarks and other independent sources. The intended accuracy of
the capital cost estimate for the Project is +/-30%. A summary of
the capital cost breakdown is presented in Table 1 below.
Table 1: Capital Cost Estimate
Description US$m
Direct
================================ =======
Mining $2.4
================================ =======
Plant - Rutile $93.5
================================ =======
Plant - Graphite $34.1
================================ =======
Infrastructure $88.5
================================ =======
Total Directs $218.4
================================ =======
Indirects
================================ =======
EPCM $26.7
================================ =======
Owners Cost $16.1
================================ =======
Miscellaneous $12.9
================================ =======
Contingency $57.6
================================ =======
Total Indirects $113.3
================================ =======
Total Start-up Capital $331.7
================================ =======
Operating Costs
The operating costs for the production of rutile and graphite at
Kasiya over the life-of-mine is presented in Table 2 below.
Table 2: Operating Estimate
Description US$ US$
Mined Tonne Product
Mining $1.77 $104
============================= ============ ========
Processing - Rutile $2.00 $119
============================= ============ ========
Processing - Graphite $0.69 $40
============================= ============ ========
General & Administration $0.64 $38
============================= ============ ========
Total Mine Gate $5.10 $301
============================= ============ ========
Logistics $0.86 $51
============================= ============ ========
Total Operating Costs $5.96 $352
============================= ============ ========
The revenue-to-cash cost ratio of 2.8x and the average annual
revenue to capital cost ratio positions Kasiya in the first
quartile compared to other undeveloped mineral sands
operations.
Positioned For Growth
The current mineral resource for the Scoping Study covers only
49km(2) or 38% of the total drill-defined area of high-grade rutile
mineralisation of 129km(2) . The Company expects to be able to
materially increase the overall MRE tonnage in early 2022 which
will enable the Study options to be reviewed in terms of potential
for scale ups or mine life extensions beyond the current 25
years.
The objective of this Study was to provide an initial
technically validated concept that will be scalable in future.
Through the Study process, a number of opportunities and options
were identified to enable potential increases in production rates
via additional mining units, plant modifications or modular
additions.
Key Scoping Study Outcomes
The Scoping Study demonstrates an economically robust natural
rutile project with the following key metrics:
Table 3: Key Scoping Study Outcomes
Outcome Unit Kasiya Rutile Project
NPV(8) (real post-tax) US$ $861m
===================================== ====================== ======================
NPV(10) (real post-tax) US$ $684m
===================================== ====================== ======================
IRR (post-tax) % 36%
===================================== ====================== ======================
Capital Costs US$ $332m
===================================== ====================== ======================
Operating Costs US$ per tonne mined $5.96
===================================== ====================== ======================
Operating Costs US$ per product $352
===================================== ====================== ======================
Revenue to Cost Ratio 2.8
============================================================= ======================
NPV(8) / Capital Costs 2.6
============================================================= ======================
Annual Throughput Tonnes 12,000,000
===================================== ====================== ======================
Life of Mine 25 years
===================================== ===================== ======================
Annual Production - rutile Tonnes 122,000
===================================== ====================== ======================
Annual Production - graphite Tonnes 80,000
===================================== ====================== ======================
Total Revenue (LoM) US$ $6,266m
===================================== ====================== ======================
Revenue - annual (average LoM) US$ $251m
===================================== ====================== ======================
EBITDA - annual US$ $161m
===================================== ====================== ======================
EBITDA - annual (first 5 years) US$ $192m
===================================== ====================== ======================
Payback 2.5 years
===================================== ===================== ======================
Government Royalties (LoM) US$ $313m
===================================== ====================== ======================
Corporate Taxes (LoM) US$ $1,074m
===================================== ====================== ======================
MRE UPGRADE
The Company reported an upgrade of over 50% of the MRE into the
higher confidence Indicated category (Table 4.). The MRE upgrade
was underpinned by the results from core drilling, with the results
from the program confirming the thick, continuous and high-grade
nature of the deposit.
The MRE has broad zones of very high-grade rutile which occur
contiguously across large areas. Rutile mineralisation lies in
laterally extensive, near surface, flat "blanket" style bodies in
areas where the weathering profile is preserved and not
significantly eroded. At Kasiya, high-grade mineralisation commonly
grading 1.2% to 2.0% rutile occurs in the top 3-5m from surface.
Moderate grade mineralisation generally grading 0.5% to 1.2% rutile
commonly extends from 5m to end of hole where it remains open at
depths >10m in numerous drill-defined, NE-striking zones.
Table 4: Kasiya Mineral Resource Estimate at 0.7% Rutile Cut-off
Mineral Resource Material Tonnes Rutile (%) Rutile Tonnes TGC (%) TGC Tonnes
Category (millions) (millions) (millions)
Indicated 304 1.02 3.1 1.31 4.0
================== ================ =========== ============== ======== ============
Inferred 301 0.93 2.8 1.16 3.5
================== ================ =========== ============== ======== ============
Total 605 0.98 5.9 1.24 7.5
================== ================ =========== ============== ======== ============
Cut-off: 0.7% rutile, TGC = total graphitic carbon
BULK METALLURGY
The Company completed further bulk scale metallurgy testwork.
The testwork confirmed the previous outstanding metallurgical
results with minor modifications to the process flowsheet resulting
in very high recoveries of premium quality rutile products and a
high-grade, coarse flake graphite by-product.
Premium grade rutile can be produced via a simple and
conventional process flow sheet. World-class product chemical
specifications are reported at 95.0% to 97.2% TiO(2) with low
impurities and stand-out metallurgical recoveries ranging from 94%
to 100%.
The testwork program was conducted at globally recognised Allied
Mineral Laboratories (AML) in Perth, Australia. A 1.6 tonne
mineralised sample was produced from a composite of multiple drill
holes across the core areas of the Kasiya Rutile Deposit. The
sample was selected to be representative of run-of-mine material
and had a head grade of 1.19% rutile and 1.07% graphite.
A graphite gravity pre-concentrate taken from rutile spiral
tails is upgraded into a coarse flake graphite by-product via a
conventional flotation flowsheet.
This was confirmed with a testwork program at SGS Lakefield in
Canada, with a very coarse-flake and high-grade graphite product at
96% TGC produced. This product has over 60% in the large to
super-jumbo fractions (+180<MU>m) with overall graphite
recovery from the raw sample to product of 62%.
The rutile and graphite mineralisation at Kasiya is amenable to
processing via conventional metallurgical flowsheets using "off the
shelf" processing equipment. Overall, the superior metallurgical
performance at Kasiya is interpreted to be due to;
-- Coarse, highly crystalline rutile grains that are naturally
well-liberated and largely free of inclusions or attachments
-- Low chemical impurities in the rutile crystal lattices
-- Simple HMC mineralogy with very little difficult-to-separate
or near-density gangue minerals present
-- Graphite is well liberated and pre-concentrates easily in the
spiral gravity separation process
The premium chemical parameters and particle sizing (d(50)
118<MU>m, 8.3% <75<MU>m for 97.2% TiO(2) product) of
the rutile produced indicates the products should be suitable for
all major natural end-use markets including TiO(2) pigment
feedstock, titanium metal and welding sectors.
Table 5: Rutile Specifications
Kasiya Products Peer Comparisons
Constituent 100% Recovery 94% Recovery Sierra Rutile Base Resources
(Iluka) (Kwale)
TiO(2) % 95.0 97.2 96.3 96.2
================ ===== ============== ============= ============== ===============
ZrO(2) +HfO(2) % 0.20 0.21 0.78 0.72
================ ===== ============== ============= ============== ===============
SiO(2) % 0.67 0.61 0.62 0.94
================ ===== ============== ============= ============== ===============
Fe(2) O(3) % 0.99 0.42 0.38 1.25
================ ===== ============== ============= ============== ===============
Al(2) O(3) % 0.45 0.38 0.31 0.23
================ ===== ============== ============= ============== ===============
Cr(2) O(3) % 0.13 0.13 0.19 0.17
================ ===== ============== ============= ============== ===============
V(2) O(5) % 0.67 0.70 0.58 0.52
================ ===== ============== ============= ============== ===============
Nb(2) O(5) % 0.37 0.39 0.15 -
================ ===== ============== ============= ============== ===============
P(2) O(5) % 0.01 0.001 0.01 0.00
================ ===== ============== ============= ============== ===============
MnO % 0.02 0.01 0.01 0.03
================ ===== ============== ============= ============== ===============
MgO % 0.003 b/d 0.01 0.10
================ ===== ============== ============= ============== ===============
CaO % 0.003 0.001 0.01 0.04
================ ===== ============== ============= ============== ===============
S % 0.01 0.01 <0.01 -
================ ===== ============== ============= ============== ===============
U+Th ppm 31 23 26 53
================ ===== ============== ============= ============== ===============
"Iluka" is Iluka Resources Limited; "Base Resources" is Base
Resources Limited. ,"-" is not disclosed.
Sources: BGR Assessment Manual titled "Heavy Minerals of
Economic Importance" 2010.
The specifications for the graphite product produced during the
test-work are also considered to be premium with the product
naturally grading over 96% TGC and with over 60% in the large to
super-jumbo fractions (+180<MU>m). The TGC and sizing
distribution are shown in Table 6 below.
Table 6: Graphite Specifications
Particle Size Carbon Weight Distribution Flake Category
Tyler Mesh Micron (<MU>) (%) (% w/w)
+32 +500 96.0 5.4 Super Jumbo
=========== ============== ======= ==================== ===============
-32 +48 -500 +300 96.6 25.1 Jumbo
=========== ============== ======= ==================== ===============
-48 +80 -300 +180 96.7 30.9 Large
=========== ============== ======= ==================== ===============
-80 +100 -180 +150 96.8 10.9 Medium
=========== ============== ======= ==================== ===============
-100 +150 -150 +106 96.11 14.4 Small/Medium
=========== ============== ======= ==================== ===============
-150 +200 -106 +75 95.8 7.5 Small
=========== ============== ======= ==================== ===============
-200 -75 93.8 5.8 Amorphous
=========== ============== ======= ==================== ===============
Total 96.3 100
=========================== ======= ==================== ===============
PRODUCT MARKETING & OFF-TAKE
The premium chemical parameters of the rutile produced indicate
the product should be suitable for all major natural end-use
markets including TiO(2) pigment feedstock, titanium metal and
welding sectors. Demand and pricing for natural rutile are both
very strong as the global structural deficit in supply continues to
widen.
The Company is ramping up product marketing with significant
interest received from tier 1 off-takers across all three market
sectors.
NEXT STEPS
The Company is targeting a number of significant milestones
which include;
-- Updated MRE with substantial growth of the Indicated and
Inferred JORC MRE base expected including addition of the Nsaru
deposit
-- Revised Life Cycle Assessment (LCA) based on the Scoping
Study results to quantify the environmental impacts with a specific
focus on the low carbon footprint
-- Scoping Study update based on the expected new resource base planned for mid-2022
-- Continued product marketing and discussions with potential off-take partners
-- Commencement of ESIA field data collection and commencement
of community engagement activities
In parallel to the technical study developments on the Company's
projects, significant exploration will continue, with programs
including;
-- Infill drilling at Kasiya-Nsaru to increase MRE confidence and upgrade MRE categories
-- Deeper air-core drilling at Kasiya-Nsaru targeting the
NE-striking, higher-grade zones to depths of 25m below surface
-- Regional reconnaissance drilling targeting additional Kasiya-like saprolite-hosted rutile mineralisation.
COVID-19 IMPACT AND RESPONSE
The Company continues to proactively manage the potential impact
of Covid-19 with the health and safety of our employees,
contractors, local communities and other stakeholders being the
highest priority.
Sovereign is continuously reviewing the situation and actively
amending operations to comply with Government guidelines and
restrictions ensuring the health and safety of all members.
Currently, there is no material impact on our Malawi operations
with minor delays only continued to be experienced in the
international transportation of samples.
SUMMARY OF MINING TENEMENTS
As at the date of this report, the Company via its wholly-owned
Malawian subsidiary, had an interest in the following
tenements:
Licence Interest Status Licence Area (km(2) )
EL0372 100% Exploration(1) 729.2
========= ========= =============== ======================
EL0492 100% Exploration 935.4
========= ========= =============== ======================
EL0528 100% Exploration 16.2
========= ========= =============== ======================
EL0545 100% Exploration 53.2
========= ========= =============== ======================
EL0561 100% Exploration 124.0
========= ========= =============== ======================
EL0574 100% Exploration 292.0
========= ========= =============== ======================
EL0582 100% Exploration 285.0
========= ========= =============== ======================
EL0609 100% Exploration 440.5
========= ========= =============== ======================
RL0012 100% Exploration 6.0
========= ========= =============== ======================
(1) Mining Licence application submitted subsequent to the end of the half year.
CORPORATE
On 10 February 2022, the Company announced the appointment of
highly experienced mining industry executive, Mr Nigel Jones as a
Non-Executive Director of the Company. Mr Jones was previously
Managing Director of Rio Tinto Group's (Rio Tinto) very large
Simandou iron ore project in Guinea, west Africa. In this role, he
was accountable for all aspects of the project's development,
including its complex environmental, social and governance (ESG)
strategy. Such aspects included impacts on natural ecosystems,
biodiversity, and community and government relations. Mr Jones was
also a member of the senior leadership team of the Energy and
Minerals product group, which incorporated Rio Tinto's titanium
dioxide feedstock businesses in Canada and southern Africa. Prior
roles in Rio Tinto included Head of Business Development, Head of
Business Evaluation and Managing Director of the group's Marine
operations.
In December 2021, the Company was successfully admitted to the
AIM market of the London Stock Exchange which further raises the
Company's profile in the north hemisphere and facilitates the
participation of UK and other European investors. In conjunction
with the listing, the Company completed, subsequent to half year
end, a placement of GBP1,000,000 (before costs) to UK based
investors via the issue of 3,571,428 new fully paid ordinary
shares.
The Company issued a further 3,080,500 fully paid ordinary
shares upon the exercise of options, raising $840,250.
OPERATING RESULTS
The net operating loss after tax for the half year ended 31
December 2021 was $7,716,384 (2020: $1,975,621) which is
attributable to:
(i) exploration and evaluation expenditure of $ 4,188,770 (2020:
$ 1,287,846), which is attributable to the Group's accounting
policy of expensing exploration and evaluation expenditure (other
than expenditures incurred in the acquisition of the rights to
explore) incurred by the Group in the period subsequent to the
acquisition of the rights to explore up to the successful
completion of definitive feasibility studies for each separate area
of interest. The exploration and evaluation expenditure in the
current period predominately relates to the Group's completion of a
Scoping Study at its Kasiya Rutile Project in Malawi and the
delineation and update of the mineral resource at the Project;
(ii) business development expenses of $ 894,214 (2020: $ 279,467
) which are attributable to the Group's costs in relation to its
initial dual listing on the AIM Market of the London Stock
Exchange, investor and shareholder relations including public
relations, marketing and digital marketing, conference fees and
travel costs; and
(iii) non-cash share based payments expenses of $ 2,210,324
(2020: $ 184,090 ) which is attributable to the Group's accounting
policy of expensing the value of shares and incentive options and
rights (estimated using an appropriate pricing model) granted to
key employees, consultants and advisors. The value of incentive
options and rights is measured at grant date and recognised over
the period during which the option and rights holders become
unconditionally entitled to the incentive securities.
SIGNIFICANT POST BALANCE DATE EVENTS
(i) In January 2022, the Group completed its previously
announced placement of GBP1,000,000 to UK based investors as part
of the Group's recent listing on the AIM market of the London Stock
Exchange via the issue of 3,571,428 new fully paid ordinary shares;
and
(ii) On 10 February 2022, the Group announced the appointment of
highly experienced mining industry executive Mr Nigel Jones as a
Non-Executive Director. As part of his appointment, Mr Jones has
been issued the following securities under the Company's
shareholder approved long-term equity incentive plan:
-- 225,000 performance rights subject to the "Feasibility Study
Milestone" expiring on or before 31 December 2023; and
-- 300,000 performance rights subject to the "Decision to Mine
Milestone" expiring on or before 31 October 2025.
Other than the above, there are no matters or circumstances
which have arisen since 31 December 2021 that have significantly
affected or may significantly affect:
-- the operations, in periods subsequent to 31 December 2021, of the Group;
-- the results of those operations, in periods subsequent to 31
December 2021, of the Group; or
-- the state of affairs, in periods subsequent to 31 December 2021, of the Group.
AUDITOR'S INDEPENCE DECLARATION
Section 307C of the Corporations Act 2001 requires our auditors,
Deloitte Touche Tohmatsu, to provide the directors of Sovereign
Metals Limited with an Independence Declaration in relation to the
review of the half year financial report. This Independence
Declaration is on page 30 and forms part of this Directors'
Report.
This report is made in accordance with a resolution of the
directors made pursuant to section 306(3) of the Corporations Act
2001.
For and on behalf of the Directors
Julian Stephens
Managing Director
15 March 2022
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE HALF YEARED 31 DECEMBER 2021
Half Year Ended Half Year Ended
31 December 2021 31 December 2020
Note $ $
--------------------------------------------------------------------- ----- ------------------- -------------------
Income
Interest income 10,187 9,471
Other income 30,000 144,834
Total income 40,187 154,305
Expenses
Exploration and evaluation expenses (4,188,770) (1,287,846)
Corporate and administrative expenses (463,263) (378,523)
Business development and investor relations expenses (894,214) (279,467)
Share based payments expense 4 (2,210,324) (184,090)
--------------------------------------------------------------------- ----- ------------------- -------------------
Loss before income tax (7,716,384) (1,975,621)
Income tax expense - -
--------------------------------------------------------------------- ----- ------------------- -------------------
Loss for the period (7,716,384) (1,975,621)
--------------------------------------------------------------------- ----- ------------------- -------------------
Other comprehensive income, net of income tax:
Items that may be reclassified subsequently to profit or loss
Exchange differences on foreign entities (7,096) (24,031)
--------------------------------------------------------------------- ----- ------------------- -------------------
Other comprehensive income for the period, net of income tax (7,096) (24,031)
--------------------------------------------------------------------- ----- ------------------- -------------------
Total comprehensive loss for the period (7,723,480) (1,999,652)
===================================================================== ===== =================== ===================
Loss attributable to members of Sovereign Metals Limited (7,723,480) (1,999,652)
===================================================================== ===== =================== ===================
Total comprehensive loss attributable to members of Sovereign Metals
Limited (7,723,480) (1,999,652)
===================================================================== ===== =================== ===================
Loss per share
Basic and Diluted loss per share (cents per share) 5 (1.8) (0.5)
===================================================================== ===== =================== ===================
The above Condensed Consolidated Statement of Profit or Loss and
Other Comprehensive Income should be read in conjunction with the
accompanying notes.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
31 December 2021 30 June 2021
Note $ $
------------------------------------------------------------- ----- ----------------- -------------
ASSETS
Current Assets
Cash and cash equivalents 3,746,567 7,957,660
Other receivables 203,827 149,404
Other financial assets at fair value through profit or loss 120,000 90,000
Total Current Assets 4,070,394 8,197,064
------------------------------------------------------------- ----- ----------------- -------------
Non-current Assets
Other receivables 150,000 150,000
Property, plant and equipment 483,684 315,583
Exploration and evaluation assets 3 7,170,282 7,170,282
Total Non-current Assets 7,803,966 7,635,865
------------------------------------------------------------- ----- ----------------- -------------
TOTAL ASSETS 11,874,360 15,832,929
------------------------------------------------------------- ----- ----------------- -------------
LIABILITIES
Current Liabilities
Trade and other payables 1,380,780 690,676
Provisions 90,231 65,998
Total Current Liabilities 1,471,011 756,674
------------------------------------------------------------- ----- ----------------- -------------
TOTAL LIABILITIES 1,471,011 756,674
------------------------------------------------------------- ----- ----------------- -------------
NET ASSETS 10,403,349 15,076,255
============================================================= ===== ================= =============
EQUITY
Issued capital 4 58,286,423 55,276,410
Reserves 4 1,809,399 1,775,934
Accumulated losses (49,692,473) (41,976,089)
------------------------------------------------------------- ----- ----------------- -------------
TOTAL EQUITY 10,403,349 15,076,255
============================================================= ===== ================= =============
The above Condensed Consolidated Statement of Financial Position
should be read in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEARED 31 DECEMBER 2021
Share Based Foreign Currency
Issued Capital Payments Reserve Translation Reserve Accumulated Losses Total Equity
$ $ $ $ $
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Balance at 1 July
2021 55,276,410 1,800,267 (24,333) (41,976,089) 15,076,255
Net loss for the
period - - - (7,716,384) (7,716,384)
Other comprehensive
income - - (7,096) - (7,096)
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Total comprehensive
income/(loss) for
the period - - (7,096) (7,716,384) (7,723,480)
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Transactions with
owners, recorded
directly in equity
Issue of shares upon
exercise of options 840,250 - - - 840,250
Transfer from SBP
reserve upon
exercise of options 2,169,763 (2,169,763) - - -
Share based payments
expense - 2,210,324 - - 2,210,324
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Total transactions
with owners recorded
directly in equity 3,010,013 40,561 - - 3,050,574
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Balance at 31
December 2021 58,286,423 1,840,828 (31,429) (49,692,473) 10,403,349
====================== =============== ================== ===================== =================== =============
Balance at 1 July
2020 44,883,777 1,273,963 49,187 (36,908,789) 9,298,138
Net loss for the
period - - - (1,975,621) (1,975,621)
Other comprehensive
income - - (24,031) - (24,031)
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Total comprehensive
income/(loss) for
the period - - (24,031) (1,975,621) (1,999,652)
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Transactions with
owners, recorded
directly in equity
Issue of shares upon
exercise of options 1,596,000 - - - 1,596,000
Transfer from SBP
reserve upon
exercise of options 453,257 (453,257) - - -
Share based payments
expense - 184,090 - - 184,090
----------------------
Total transactions
with owners recorded
directly in equity 2,049,257 (269,167) - - 1,780,090
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Balance at 31
December 2020 46,933,034 1,004,796 25,156 (38,884,410) 9,078,576
====================== =============== ================== ===================== =================== =============
The above Condensed Consolidated Statement of Changes in Equity
should be read in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF YEARED 31 DECEMBER 2021
Half Year Ended Half Year Ended
31 December 31 December
2021 2020
$ $
------------------------------------------- ---------------- ----------------
Cash flows from operating activities
Payments to suppliers and employees (4,849,726) (1,802,084)
Other income - 50,000
R&D rebate received - 107,334
Interest received 10,187 10,290
------------------------------------------- ---------------- ----------------
Net cash used in operating activities (4,839,539) (1,634,460)
------------------------------------------- ---------------- ----------------
Cash flows from investing activities
Payments for purchase of plant
and equipment (211,804) (17,686)
Net cash used in investing activities (211,804) (17,686)
------------------------------------------- ---------------- ----------------
Cash flows from financing activities
Proceeds from issue of shares upon
exercise of options 840,250 1,596,000
Payments for share issue costs - (7,074)
Net cash from financing activities 840,250 1,588,926
------------------------------------------- ---------------- ----------------
Net decrease in cash and cash equivalents (4,211,093) (63,220)
Cash and cash equivalents at the
beginning of the period 7,957,660 2,364,525
------------------------------------------- ---------------- ----------------
Cash and cash equivalents at the
end of the period 3,746,567 2,301,305
=========================================== ================ ================
The above Condensed Consolidated Statement of Cash Flows should
be read in conjunction with the accompanying notes.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE HALF YEARED 31 DECEMBER 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Sovereign Metals Limited (the "Company") is a for profit company
limited by shares and incorporated in Australia, whose shares are
publicly traded on the Australian Securities Exchange. The
consolidated interim financial statements of the Company as at and
for the period from 1 July 2021 to 31 December 2021 comprise the
Company and its subsidiaries (together referred to as the "Group").
The nature of the operations and principal activities of the Group
are as described in the Directors' Report. The interim consolidated
financial statements of the Group were authorised for issue in
accordance with the resolution of the directors on 9 March
2022.
This interim financial report does not include all the notes of
the type normally included in an annual financial report.
Accordingly, this report is to be read in conjunction with the
audited annual report of Sovereign for the year ended 30 June 2021
(where comparative amounts have been extracted from) and any public
announcements made by the Group during the interim reporting period
in accordance with the continuous disclosure requirements of the
Corporations Act 2001.
(a) Basis of Preparation of Half Year Financial Report
The consolidated financial statements have been prepared on the
basis of historical cost, except for the revaluation of certain
financial instruments. Cost is based on the fair values of the
consideration given in exchange for assets. All amounts are
presented in Australian dollars. There have been no changes in the
critical accounting judgements or key sources of estimation since
30 June 2021.
(b) Statement of Compliance
The consolidated interim financial report complies with
Australian Accounting Standards, including AASB 134 which ensures
compliance with International Financial Reporting Standard ("IFRS")
IAS 34 "Interim Financial Reporting" as issued by the International
Accounting Standards Board. The accounting policies adopted in the
preparation of the half-year financial report are consistent with
those applied in the preparation of the Group's annual financial
report for the year ended 30 June 2021, except for new standards,
amendments to standards and interpretations effective 1 January
2021. In the current half year, the Group has adopted all of the
new and revised Standards and Interpretations issued by the AASB
that are relevant to its operations and effective for the current
annual reporting period.
(c) Going Concern
This consolidated interim financial report has been prepared on
the going concern basis, which assumes continuity of normal
business activities and the realisation of assets and the
settlement of liabilities in the ordinary course of business.
The Group has incurred a loss after tax of $7,716,384 (20 20 :
$1,975,621) of which $2,210,324 (2020: $184,090) related to
non-cash share based payments expense and had net cash outflows
from operations of $4,839,539 and investing of $211,804 (20 20 : $
1,634,460 and $17,686 respectively). The Group has no source of
operating cash inflows other than interest income and funds sourced
through capital raising activities. At 31 December 202 1 , the
Group has cash and cash equivalents totalling $ 3,746,567 (30 June
202 1 : $7,957,660 ) and net working capital (current assets less
current liabilities) of $2,599,383 (30 June 202 1 : $7,440,390 ).
The Group continued to actively manage its operating and overhead
expenditure by successfully completing a capital raising of GBP
1,000,000 (before costs) via a placement to United Kingdom based
investors subsequent to half year end and $840,250 from the
exercise of unlisted options in the 6 months to 31 December
2021.
The Group's cashflow forecast for the period ending 31 March
2023 reflects that the Group will be required to raise additional
working capital during the 15-month period. The Directors consider
the Group a going concern and acknowledge that discretionary
expenditure will be monitored and managed in line with available
funds until such time as additional capital raising activities are
completed. The Directors believe that such additional funding, as
the Group has successfully accessed previously, can be derived from
raising additional capital to fund the Group's ongoing operational
and working capital requirements, as and when required.
Accordingly, the Directors believe that the Group will be able to
obtain sufficient funding to enable it to continue as a going
concern and that it is appropriate to adopt that basis in the
preparation of the financial report.
In the longer term, the development of economically recoverable
mineral deposits found on the Group's existing exploration
properties or future exploration properties depends on the ability
of the Group to obtain financing through equity financing, debt
financing or other means. If the Group's exploration programs are
ultimately successful, additional funds will be required to develop
the Group's properties and place them into commercial production.
The main source of future funds presently available to the Group is
the raising of equity capital by the Group. The ability to arrange
such funding in the future will depend in part upon the prevailing
capital market conditions as well as the business performance of
the Group and its exploration results. The global economic outlook
is facing uncertainty due to COVID-19 pandemic, which has created
volatility in capital markets and share prices. This may adversely
affect the Group's ability to arrange additional funding in the
future. Should the Group be unable to obtain sufficient funding as
outlined above, there is a material uncertainty that may cast
significant doubt whether it will be able to continue as going
concern and therefore, whether it will realise its assets and
extinguish its liabilities in the normal course of business and at
the amounts stated in the consolidated interim financial
report.
The consolidated interim financial report does not include any
adjustments relating to the recoverability and classification of
recorded asset amounts or to the amounts and classifications of
liabilities that might be necessary should the Group not continue
as a going concern.
(d) Issued standards and interpretations not early adopted
Australian Accounting Standards and Interpretations that have
recently been issued or amended but are not yet effective have not
been adopted by the Group for the reporting period ended 31
December 202 1 . Those which may be relevant to the Group are set
out in the table below, but these are not expected to have any
significant impact on the Group's financial statements:
Standard/Interpretation Application Date of Standard Application Date for Group
AASB 2020-3 Amendments to Australian Accounting Standards 1 January 2022 1 July 2022
- Annual Improvements 2018-2020
and Other Amendments
----------------------------- ---------------------------
AASB 2020-1 Amendments to Australian Accounting Standards 1 January 2023 1 July 2023
- Classification of Liabilities
as Current or Non-Current
----------------------------- ---------------------------
AASB 2020-6 Amendments to Australian Accounting 1 January 2023 1 July 2023
Standards - Classification of Liabilities
as Current or Non-Current - Deferral of Effective Date
----------------------------- ---------------------------
AASB 2021-2 Amendments to Australian Accounting Standards 1 January 2023 1 July 2023
- Disclosure of Accounting Policies
and Definition of Accounting Estimates
----------------------------- ---------------------------
2. SEGMENT INFORMATION
AASB 8 requires operating segments to be identified on the basis
of internal reports about components of the Consolidated Entity
that are regularly reviewed by the chief operating decision maker
in order to allocate resources to the segment and to assess its
performance.
The Consolidated Entity has one operating segment, being
exploration in Malawi.
3. EXPLORATION AND EVALUATION ASSETS
31 December 2021 30 June 2021
$ $
---------------------------------------------------- ----------------- -------------
(a) Movement in Exploration and Evaluation Assets
Malawi Project:
Carrying amount as at 1 July 7,170,282 7,170,282
* Additions - -
7,170,282 7,170,282
==================================================== ================= =============
4. EQUITY SECURITIES ISSUED
31 December 2021 30 June 2021
$ $
--------------------------------------------------------------------------- ----------------- ---------------
(a) Issued Capital
428,862,327 (30 June 2021: 421,196,827 ) fully paid ordinary shares 58,286,423 55,276,410
=========================================================================== ================= ===============
(b) Reserves
Share Based Payment Reserve
Nil (30 June 2021: 2,000,000) unlisted $0.15 options - 78,763
2,500,000 (30 June 2021: 2,500,000) unlisted $0.18 options 110,845 110,845
6,375,000 (30 June 2021: 6,375,000) unlisted $0.14 options 281,737 281,737
2,000,000 (30 June 2021: 2,000,000) unlisted $0.18 options 107,550 101,818
Nil (30 June 2021: 3,910,000) tranche 1 performance rights - 749,423
5,295,000 (30 June 2021: 4,220,000) tranche 2 performance rights 712,341 257,360
7,670,000 (30 June 2021: 5,970,000) tranche 3 performance rights 628,355 220,321
Total Share Based Payments Reserve 1,840,828 1,800,267
--------------------------------------------------------------------------- ----------------- ---------------
Foreign Currency Translation Reserve (FCTR)
Exchange differences (31,429) (24,333)
--------------------------------------------------------------------------- ----------------- ---------------
Total Foreign Currency Translation Reserve (FCTR) (31,429) (24,333)
--------------------------------------------------------------------------- ----------------- ---------------
Total Reserves 1,809,399 1,775,934
=========================================================================== ================= ===============
(c) Movements in Ordinary Share Capital were as follows:
Date Details No. of Shares Issue Price
$ $
1 Jul 2021 Opening balance 421,196,827 - 55,276,410
30 July 2021 Issue of shares upon exercise of options 2,000,000 0.15 300,000
Various Issue of shares upon exercise of options 1,080,500 0.50 540,250
23 Dec 2021 Issue of shares upon conversion of performance rights 4,585,000 - -
Transfer from SBP reserve upon exercise of options and
31 Dec 2021 conversion of rights - - 2,169,763
31 Dec 2021 Closing balance 428,862,327 58,286,423
============== =========================================================== ============== ============ ===========
(d) Movements in Options and Performance Rights were as follows:
Number of Incentive Options Number of Performance
Date Details Rights $
-------------- ---------------------------- ---------------------------- ---------------------------- ------------
1 Jul 2021 Opening balance 12,875,000 14,100,000 1,800,267
30 July 2021 Exercise of $0.15 options (2,000,000) - (78,763)
Various Issue of performance rights - 3,450,000 419,199(i)
Conversion of performance
23 Dec 2021 rights - (4,585,000) (2,091,000)
31 Dec 2021 Share based payment expense - - 1,791,125
-------------- ---------------------------- ---------------------------- ---------------------------- ------------
31 Dec 2021 Closing balance 10,875,000 12,965,000 1,840,828
============== ============================ ============================ ============================ ============
Notes
(i) The value of performance rights granted during the period is
estimated as at the date of grant based on the underlying share
price (recognised over the vesting period (if applicable) in
accordance with Australian Accounting Standards.
During the period, 675,000 "Scoping Study Milestone", 1,075,000
"Feasibility Study Milestone" and 1,700,000 "Decision to Mine
Milestone" performance rights were issued, the terms of which are
consistent with what is disclosed in the Group's Annual Report for
30 June 2021. The performance condition relating to the "Scoping
Study Milestone" was met, as such 4,585,000 performance rights
converted into 4,585,000 ordinary shares.
5. LOSS PER SHARE
Half Year Ended Half Year Ended
31 December 2021 31 December 2020
Cents per Share Cents per Share
---------------------------------------------- ------------------ ------------------
Basic and diluted loss per share
From continuing operations (1.8) (0.5)
Total basic and diluted loss per share (1.8) (0.5)
============================================== ================== ==================
The following reflects the loss and share data used in the
calculations of basic and diluted loss per share:
Half Year Ended Half Year Ended
31 December 2021 31 December 2020
$ $
---------------------------------------------------------------------------- ------------------- -------------------
Net loss used in calculating basic and diluted earnings per share (7,716,384) (1,975,621)
============================================================================ =================== ===================
Half Year Ended Half Year Ended
31 December 2021 31 December 2020
No. of Shares No. of Shares
Weighted average number of ordinary shares used in calculating basic
earnings per share 423,284,871 392,747,944
Adjusted weighted average number of ordinary shares and potential
ordinary shares used in
calculating basic and diluted earnings per share 423,284,871 392,747,944
============================================================================ =================== ===================
Non-dilutive securities
As at 31 December 2021, 10,875,000 unlisted Options and
12,965,000 unlisted Performance Rights (which represent 23,840,000
potential Ordinary Shares) were non-dilutive as they would decrease
the loss per share. As at 31 December 2020, 20,025,000 unlisted
Incentive Options (which represent 20,025,000 potential Ordinary
Shares) were non-dilutive as they would decrease the loss per
share.
Conversions, calls, subscriptions or issues after 31 December
2021
Since 31 December 2021, 3,571,428 Ordinary Shares and 525,000
Performance Rights were issued. Other than the above, there have
been no conversions to, calls of, or subscriptions for ordinary
shares or issues of potential ordinary shares since the reporting
date and before the completion of this financial report.
6. RELATED PARTIES
(a) Details of KMP
The KMP of the Group during or as at the end of the half year is
as follows:
Directors
Mr Benjamin Stoikovich Chairman
Dr Julian Stephens Managing Director
Mr Ian Middlemas Non-Executive Director
Mr Mark Pearce Non-Executive Director
Mr Nigel Jones Non-Executive Director (appointed 10 February
2022)
Other KMP
Mr Paul Marcos Head of Development (KMP effective 1 July 2021)
Mr Sam Cordin Business Development Manager
Unless otherwise disclosed, the KMP held their position from 1
July 2021 until the date of this report.
(b) KMP Compensation
Half Year Ended
31 December 2021
$
-------------------------------- -------------------
Short-term benefits 414,142
Post-employment benefits 37,708
Share-based payments 868,331
-------------------------------- -------------------
1,320,182
================================ ===================
(c) Other Transactions
Selwyn Capital Limited ("Selwyn"), a company associated with Mr
Stoikovich is engaged under an agreement to provide consulting
services to the Company. Selwyn receives a daily rate of GBP800
under the consulting agreement. These services provided during the
half year amounted to AUD$47,834.
Apollo Group Pty Ltd, a company of which Mr Mark Pearce is a
Director and beneficial shareholder, was paid, or is payable,
$150,000 during the half year for the provision of serviced office
facilities, administration services, company secretarial services
and additional consulting services provided during the year. The
amount is based on a monthly retainer due and payable in advance
and able to be terminated by either party with one month's notice.
The monthly fee is $25,000.
7. COMMITMENTS AND CONTINGENCIES
(a) Commitments
31 December 2021 30 June 2021
$ $
--------------------------------------------------- ----------------- -------------
Exploration Commitments - Malawi Project:
Within one year 338,359 555,909
After one year but not more than five years 82,720 316,439
421,079 872,348
=================================================== ================= =============
As a condition of retaining the current rights to tenure to
exploration tenements, the Group is required to pay an annual
rental charge and meet minimum expenditure requirements for each
tenement. These obligations are not provided for in the financial
statements and are at the sole discretion of the Group. The
majority of the remaining exploration commitments relate to
licences with a term greater than one year. For the purposes of
disclosure, the Group has apportioned the remaining commitments on
an equal monthly basis over the remaining term of the exploration
licences.
(b) Contingencies
At the last annual reporting date, the Consolidated Entity did
not have any material contingent liabilities. There has been no
material change in contingent assets and liabilities of the
Consolidated Entity during the half year.
8. DIVIDS PAID OR PROVIDED FOR
No dividend has been paid or provided for during the half year
(2020: nil).
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The net fair value of financial assets and financial liabilities
approximates their carrying value.
10. SUBSEQUENT EVENTS AFTER BALANCE DATE
(i) In January 2022, the Group completed its previously
announced placement of GBP1,000,000 (before costs) to UK based
investors as part of the Group's recent listing on the AIM market
of the London Stock Exchange via the issue of 3,571,428 new fully
paid ordinary shares;
(ii) On 10 February 2022, the Group announced the appointment of
highly experienced mining industry executive Mr Nigel Jones as a
Non-Executive Director. As part of his appointment, Mr Jones has
been issued the following securities under the Company's
shareholder approved long-term equity incentive plan:
-- 225,000 performance rights subject to the "Feasibility Study
Milestone" expiring on or before 31 December 2023; and
-- 300,000 performance rights subject to the "Decision to Mine
Milestone" expiring on or before 31 October 2025.
Other than the above, there are no matters or circumstances
which have arisen since 31 December 2021 that have significantly
affected or may significantly affect:
-- the operations, in periods subsequent to 31 December 2021, of the Group;
-- the results of those operations, in periods subsequent to 31
December 2021, of the Group; or
-- the state of affairs, in periods subsequent to 31 December 2021, of the Group.
DIRECTORS' DECLARATION
In accordance with a resolution of the Directors of Sovereign
Metals Limited, I state that:
In the opinion of the Directors:
(a) the financial statements and notes thereto are in accordance
with the Corporations Act 2001, including:
(i) complying with Accounting Standard AASB 134: Interim
Financial Reporting and the Corporations Regulations 2001; and
(ii) giving a true and fair view of the consolidated entity's
financial position as at 31 December 2021 and of its performance
for the half year ended on that date.
(b) there are reasonable grounds to believe that the Company
will be able to pay its debts as and when they become due and
payable.
This declaration is signed in accordance with a resolution of
the Board of Directors made pursuant to section 303(5) of the
Corporations Act 2001.
On behalf of the Board
Julian Stephens
Managing Director
15 March 2022
COMPETENT PERSON STATEMENT
Competent Person Statement
The information in this announcement that relates to the Scoping
Study (Production Targets, Processing, Infrastructure and Capital
and Operating Costs,) is extracted from the announcement dated 16
December 2021 entitled 'Kasiya Scoping Study Confirms Globally
Significant Natural Rutile Project' (Announcement). Sovereign
confirms that: a) it is not aware of any new information or data
that materially affects the information included in the
announcement; b) all material assumptions and technical parameters
underpinning the Production Target, and related forecast financial
information derived from the Production Target included in the
Announcement continue to apply and have not materially changed; and
c) the form and context in which the relevant Competent Persons'
findings are presented in this presentation have not been
materially modified from the Announcement.
The information in this announcement that relates to the Mineral
Resource Estimate is extracted from the announcement dated 16
December 2021. The announcement is available to view on
www.sovereignmetals.com.au . Sovereign confirms that a) it is not
aware of any new information or data that materially affects the
information included in the announcement; b) all material
assumptions included in the announcement continue to apply and have
not materially changed; and c) the form and context in which the
relevant Competent Persons' findings are presented in this report
have not been materially changed from the announcement.
The information in this announcement that relates to the
Metallurgy is extracted from the announcement dated 7 December
2021. The announcement is available to view on
www.sovereignmetals.com.au . Sovereign confirms that a) it is not
aware of any new information or data that materially affects the
information included in the announcement; b) all material
assumptions included in the announcement continue to apply and have
not materially changed; and c) the form and context in which the
relevant Competent Persons' findings are presented in this report
have not been materially changed from the announcement.
Forward Looking Statement
This release may include forward-looking statements, which may
be identified by words such as "expects", "anticipates",
"believes", "projects", "plans", and similar expressions. These
forward-looking statements are based on Sovereign's expectations
and beliefs concerning future events. Forward looking statements
are necessarily subject to risks, uncertainties and other factors,
many of which are outside the control of Sovereign, which could
cause actual results to differ materially from such statements.
There can be no assurance that forward-looking statements will
prove to be correct. Sovereign makes no undertaking to subsequently
update or revise the forward-looking statements made in this
release, to reflect the circumstances or events after the date of
that release.
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END
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