TIDMSVML
RNS Number : 8771S
Sovereign Metals Limited
14 March 2023
SOVEREIGN METALS LIMITED
ABN 71 120 833 427
INTERIM FINANCIAL REPORT FOR THE HALF YEARED 31 DECEMBER
2022
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 Director United Kingdom
Mr Nigel Jones Non-Executive Director T: +44 20 3753 3132
Optiva Securities Limited
Company Secretary 49 Berkeley Square
Mr Dylan Browne Mayfair
London W1J 5AZ
London Office United Kingdom
Unit 3C, 38 Jermyn Street, London
SW1Y 6DN, United Kingdom Share Register
Telephone: +44 207 478 3900 Australia
Computershare Investor Services
Registered and Principal Office Pty Ltd
Level 9, 28 The Esplanade Level 5
Perth WA 6000 191 St Georges Terrace
Telephone: +61 8 9322 6322 Perth WA 6000
Facsimile: +61 8 9322 6558
Telephone: 1300 850 505
Operations Office International: +61 8 9323 2000
Area 9 Facsimile: +61 8 9323 2033
Lilongwe
Malawi United Kingdom
Computershare Investor Services
Stock Exchange Listings PLC
Australia The Pavilions,
Australian Securities Exchange Bridgewater Road,
ASX Code: SVM - Ordinary Shares Bristol BS99 6ZZ
Telephone: +44 370 702 0000
United Kingdom Solicitors
London Stock Exchange (AIM) Thomson Geer
AIM Code: SVML - Depository Interests
Auditor
Nominated Advisor Ernst & Young
RFC Ambrian Limited
Octagon Point Bankers
5 Cheapside National Australia Bank
London EC2V 6AA Standard Bank - Malawi
United Kingdom
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 2022 (Consolidated Entity or Group).
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
All Directors were in office from 1 July 2022 until the date of
this report, unless otherwise noted.
REVIEW AND RESULTS OF OPERATIONS
Highlights during and subsequent to period end
Kasiya Rutile Project PFS continues to progress on schedule
-- Sovereign is well advanced with the Pre-Feasibility Study
(PFS) for the Kasiya Rutile Project (Kasiya), an industry-leading
major source of critical raw materials from Malawi.
-- The PFS will build on the Expanded Scoping Study (ESS) which
confirmed Kasiya as potentially one of the world's largest and
potentially lowest cost producers of natural rutile and natural
graphite with a carbon-footprint substantially lower than other
current and planned producers.
-- The PFS is on track to be completed in H1 2023 with all major
works packages well progressed.
Resource infill drilling completed
-- The Company completed a 4,660 metre, 191-hole deeper air-core
(AC) and 2,206 metre, 247-hole push tube (PT) mineral resource
infill drilling program to upgrade the Kasiya Mineral Resource
Estimate (MRE), with the update targeted for late Q1 2023.
-- The drilling program confirmed consistency of high-grade
rutile and graphite mineralisation laterally and at depth.
-- Infill core PT drilling of numerous Inferred category pits
and potential pit extensions is expected to add new blocks of
Indicated material.
Offtake MoU and Market Alliance with major Japanese trader
-- In July 2022, Memorandum of Understanding ( MoU )
(non-binding) was signed with Mitsui & Co Ltd (Mitsui), one of
the largest global trading and investment companies in Japan.
-- The MoU establishes a marketing alliance and offtake for
30,000 tonnes of natural rutile per annum. The alliance will allow
Sovereign to leverage Mitsui's extensive network and their
market-leading understanding of the titanium industry and global
logistics.
Offtake MoU with Chemours, one of the world's largest' s
producers of high-quality titanium dioxide pigment
-- In November 2022, a MoU (non-binding) was signed for supply
of 20,000 tonnes of natural rutile per annum from Kasiya to the
US-based Chemours Company (Chemours), one of the world's largest
producers of high-quality titanium dioxide pigments.
Sovereign to Demerge Standalone Graphite Projects
-- Sovereign to demerge its standalone Graphite Projects (being
the Nanzeka, Malingunde, Duwi and Mabuwa Projects) into a
100%-owned subsidiary, NGX Limited, via an in-specie
distribution.
-- The Demerger seeks to unlock the value of the Graphite
Projects for Sovereign shareholders and separate Kasiya and its
standalone Graphite Projects into two distinct companies.
-- General Meeting for Demerger to take place on 17 March 2023.
Sovereign Metals Limited (ASX: SVM & AIM: SVML) is an ASX
and AIM-listed company focussed on the development of its Kasiya
rutile project (Kasiya) in Malawi.
Kasiya, located in central Malawi, is the largest natural rutile
deposit and one of the largest flake graphite deposits in the
world. Sovereign is aiming to develop an environmentally and
sustainable operation to supply highly sought-after natural rutile
and graphite to global markets.
Sovereign is completing a PFS which will build on the ESS,
released in June 2022, with targeted completion in H1 2023.
The ESS confirmed Kasiya as potentially one of the world's
largest and lowest cost producers of natural rutile and natural
graphite with a carbon-footprint substantially lower than current
alternatives. The ESS showed outstanding results including:
-- a two-stage development (stage 2 self-funded) with full
production at 24Mtpa throughput producing 265kt rutile and 170kt
graphite per annum over a 25 year mine life
-- exceptional economics including a post-tax NPV(8) of US$1,537m and post-tax IRR of 36%
-- a large-scale operation with a low-cost profile resulting
from the deposit's near surface nature, high-grade, conventional
processing flowsheet, and excellent existing infrastructure
PRE-FEASIBILITY STUDY
The Company commenced a PFS which will build on the ESS which
confirmed Kasiya as one of the world's largest and potentially
lowest cost producers of natural rutile and natural graphite with a
carbon-footprint substantially lower than other current and planned
producers.
The PFS is advancing well under the guidance of globally
recognised consultants and is on schedule to be completed by its
target date of H1 2023.
KASIYA RESOURCE INFILL DRILLING
During the period, the Company completed a 4,660 metre, 191-hole
AC and 2,206 metre, 247-hole PT drilling program at Kasiya.
Drilling was conducted on a nominal 200m x 200m grid spacing
targeting upgrading of mineralisation into the Indicated category
which could convert to Probable Reserves as part of the forthcoming
PFS. The AC results confirmed that rutile mineralisation is
continuous in many pit areas from surface down to the top of
saprock, normally between 20m and 30m from surface.
PRODUCT MARKETING & OFF-TAKE
Mitsui
In July 2022, Sovereign entered into a non-binding MoU with
Mitsui, one of the largest global trading and investment companies
in Japan. The MoU establishes a marketing alliance and offtake for
30,000 tonnes of natural rutile per annum from the Company's
world-class Kasiya project.
This MoU creates a marketing alliance between the two parties to
jointly market Sovereign's rutile across Asia and other markets.
The alliance will allow Sovereign to leverage off Mitsui's
extensive network and their market-leading understanding of the
titanium industry and global logistics.
Mitsui has shared samples of rutile product from Kasiya with
Asian end-users that have confirmed its premium chemical
specifications should be suitable for use in their titanium sponge
and pigment processes, as a precursor for high-grade,
high-specification titanium metal and pigment production.
Chemours
In November 2022, Sovereign entered into a non-binding MOU with
Chemours for the potential supply of 20,000 tonnes per annum of
natural rutile from Kasiya.
The MOU covers the potential supply of 20,000 tonnes per annum
of natural rutile at Stage 1 nameplate capacity and an option to
take additional product (tonnage to be agreed) when Kasiya reaches
Stage 2 nameplate capacity. Further, volumes may be varied up or
down by mutual agreement and pricing will reference market prices
of the day (both to be included in the definitive agreement).
The MOU is non-exclusive and non-binding and remains subject to
negotiation and execution of the definitive agreement. The MOU will
expire two years from the execution date but can be extended by
agreement by both parties should a definitive agreement not have
been reached by that time.
Chemours is a leading provider of performance chemicals that are
key inputs in end-products and processes across a variety of
industries. Chemours operates 29 manufacturing sites serving
approximately 3,200 customers in approximately 120 countries.
Its Titanium Technologies segment is one of the world's largest
producers of high-quality titanium dioxide (TiO(2) ) pigment and
aspires to be the most sustainable TiO(2) enterprise in the world.
Using its proprietary chloride technology-pioneered in 1931 and
improving ever since-Chemours provides innovative TiO(2) solutions
for coatings, plastics, and laminates.
It operates four TiO(2) pigment production facilities: two in
the United States, one in Mexico, and one in Taiwan totalling TiO2
pigment nameplate capacity of 1.25 million tonnes per year. In the
year ended 31 December 2021, Chemours' Titanium Technologies
segment reported net sales of US$3.4 Billion.
The Company is continuing product marketing with further offtake
MOUs expected to be executed in the near-term.
DEMERGER OF STANDALONE GRAPHITE PROJECTS
In December 2022, Sovereign announced that it intends to
undertake a demerger (Demerger) whereby Sovereign's Malawian
graphite projects, being the Nanzeka Project, Malingunde Project,
Duwi Project and Mabuwa Project (Graphite Projects), are to be
demerged through NGX Limited (NGX), a wholly owned subsidiary of
the Company. This will allow Sovereign to focus on the development
of the Kasiya while unlocking value in its Graphite Projects for
shareholders.
The Demerger allows Sovereign and the existing management team
to focus on its flagship Kasiya Rutile Project, the largest natural
rutile deposit in the world, with Sovereign retaining all graphite
co-product from Kasiya.
Sovereign proposes, subject to shareholder approval, to demerge
the Graphite Projects via a spin-out of NGX and in-specie
distribution of NGX fully paid ordinary shares (NGX Shares) to
Sovereign shareholders by issuing one (1) NGX Share for every
eleven (11) Sovereign shares (SVM Shares) held (Distribution),
allowing Sovereign shareholders to retain exposure to the value and
upside of the Graphite Projects.
Upon completion of the Demerger, NGX intends to seek admission
to the official list of the ASX. NGX will undertake a capital
raising to satisfy the ASX admission requirements.
Sovereign shareholders will have the opportunity to retain
further exposure to the value and upside of the Graphite Projects
as the NGX IPO is expected to comprise a priority offer to existing
shareholders on the basis of one (1) new NGX Share for every one
(1) NGX Share received pursuant to the Demerger to raise
approximately $8,600,000 and a general offer of $1,000,000 to
assist with satisfying ASX spread requirements. This will ensure
there is no cash outflow from Sovereign to NGX as part of the
Demerger, other than applicable Sovereign expenses to effect the
Demerger. The terms of the NGX IPO are yet to be finalised
however.
The General Meeting for the Demerger is to take place on 17
March 2023.
OPERATING RESULTS
The net operating loss after tax for the half year ended 31
December 2022 was $8,486,503 (2021: $7,716,384) which is
attributable to:
(i) exploration and evaluation expenditure of $5,792,042 (2021:
$ 4,188,770 ), 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 on-going PFS at
its Kasiya in Malawi and associated MRE drilling;
(ii) business development expenses of $1,130,083 (2021: $
894,214 ) which are attributable to the Group's costs in relation
to its listing on the AIM Market of the London Stock Exchange and
investor and shareholder relations including public relations,
marketing and digital marketing, conference fees and travel
costs;
(iii) one off upfront costs in relation to the demerger of NGX of $121,839 (2021: nil); and
(iv) non-cash share based payments expenses of $1,061,657 (2021:
$ 2,210,324 ) which is attributable to the Group's accounting
policy of expensing the value of shares, 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
Other than the above, there are no matters or circumstances
which have arisen since 31 December 2022 that have significantly
affected or may significantly affect:
-- the operations, in periods subsequent to 31 December 2022, of the Group;
-- the results of those operations, in periods subsequent to 31
December 2022, of the Group; or
-- the state of affairs, in periods subsequent to 31 December 2022, of the Group.
AUDITOR'S INDEPENCE DECLARATION
Section 307C of the Corporations Act 2001 requires our auditors,
Ernst & Young, 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 15 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
13 March 2023
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE HALF YEARED 31 DECEMBER 2022
Half Year Ended Half Year Ended
31 December 2022 31 December 2021
Note $ $
-------------------------------------------------------------------- ------ ------------------- -------------------
Interest income 138,366 10,187
Other income/(expenses) (45,234) 30,000
Exploration and evaluation expenses (5,792,042) (4,188,770)
Corporate and administrative expenses (474,014) (463,263)
Business development expenses (1,130,083) (894,214)
Share based payments expense 4(d) (1,061,657) (2,210,324)
Upfront demerger expenses (121,839) -
-------------------------------------------------------------------- ------ ------------------- -------------------
Loss before income tax (8,486,503) (7,716,384)
Income tax expense - -
-------------------------------------------------------------------- ------ ------------------- -------------------
Loss for the period (8,486,503) (7,716,384)
-------------------------------------------------------------------- ------ ------------------- -------------------
Other comprehensive income, net of income tax:
Items that may be reclassified subsequently to profit or loss
Exchange differences on foreign entities (38,018) (7,096)
-------------------------------------------------------------------- ------ ------------------- -------------------
Other comprehensive income for the period, net of income tax (38,018) (7,096)
-------------------------------------------------------------------- ------ ------------------- -------------------
Total comprehensive loss for the period (8,524,521) (7,723,480)
==================================================================== ====== =================== ===================
Loss attributable to members of Sovereign Metals Limited (8,524,521) (7,723,480)
==================================================================== ====== =================== ===================
Total comprehensive loss attributable to members of Sovereign
Metals Limited (8,524,521) (7,723,480)
==================================================================== ====== =================== ===================
Loss per share
Basic and Diluted loss per share (cents per share) 5 (1.8) (1.8)
==================================================================== ====== =================== ===================
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 2022
31 December 2022 30 June 2022
Note $ $
----------------------------------- ------ ------------------ --------------
ASSETS
Current Assets
Cash and cash equivalents 11,109,198 18,892,741
Other receivables 395,423 302,424
Other financial assets 150,000 200,000
Total Current Assets 11,654,621 19,395,165
----------------------------------- ------ ------------------ --------------
Non-current Assets
Property, plant and equipment 541,457 537,238
Exploration and evaluation assets 3 7,170,282 7,170,282
Total Non-current Assets 7,711,739 7,707,520
----------------------------------- ------ ------------------ --------------
TOTAL ASSETS 19,366,360 27,102,685
----------------------------------- ------ ------------------ --------------
LIABILITIES
Current Liabilities
Trade and other payables 1,589,812 1,845,954
Provisions 139,704 95,593
Total Current Liabilities 1,729,516 1,941,547
----------------------------------- ------ ------------------ --------------
TOTAL LIABILITIES 1,729,516 1,941,547
----------------------------------- ------ ------------------ --------------
NET ASSETS 17,636,844 25,161,138
=================================== ====== ================== ==============
EQUITY
Issued capital 4(a) 78,810,865 78,860,187
Reserves 4(b) 3,008,302 1,996,771
Accumulated losses (64,182,323) (55,695,820)
----------------------------------- ------ ------------------ --------------
TOTAL EQUITY 17,636,844 25,161,138
=================================== ====== ================== ==============
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 2022
Share Based Foreign Currency
Issued Capital Payments Reserve Translation Reserve Accumulated Losses Total Equity
$ $ $ $ $
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Balance at 1 July
2022 78,860,187 2,084,466 (87,695) (55,695,820) 25,161,138
Net loss for the
period - - - ( 8,486,503) ( 8,486,503)
Other comprehensive
income - - (38,018) - (38,018)
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Total comprehensive
income/(loss) for
the period - - (38,018) ( 8,486,503) ( 8,524,521)
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Transactions with
owners, recorded
directly in equity
Issue of shares upon
exercise of options 27,000 - - - 27,000
Transfer from SBP
reserve upon
exercise of options 12,108 (12,108) - - -
Share based payments
expense - 1,061,657 - - 1,061,657
Share issue costs (88,430) - - - (88,430)
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Total transactions
with owners recorded
directly in equity (49,322) 1,049,549 - - 1,000,227
---------------------- --------------- ------------------ --------------------- ------------------- -------------
Balance at 31
December 2022 78,810,865 3,134,015 (125,713) (64,182,323) 17,636,844
====================== =============== ================== ===================== =================== =============
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
====================== =============== ================== ===================== =================== =============
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 2022
Half Year Ended Half Year Ended
31 December 31 December
2022 2021
$ $
--------------------------------------- ----------------- -----------------
Cash flows from operating activities
Payments to suppliers and employees (7,314,907) (4,849,726)
Interest received 150,791 10,187
--------------------------------------- ----------------- -----------------
Net cash used in operating activities (7,164,116) (4,839,539)
--------------------------------------- ----------------- -----------------
Cash flows from investing activities
Payments for purchase of plant
and equipment (23,970) (211,804)
Net cash used in investing activities (23,970) (211,804)
--------------------------------------- ----------------- -----------------
Cash flows from financing activities
Proceeds from issue of shares upon
exercise of options - 840,250
Payments for share issue costs (600,221) -
Net cash (used in)/from financing
activities (600,221) 840,250
--------------------------------------- ----------------- -----------------
Net decrease in cash and cash
equivalents (7,788,307) (4,211,093)
Net foreign exchange differences 4,764 -
Cash and cash equivalents at the
beginning of the period 18,892,741 7,957,660
--------------------------------------- ----------------- -----------------
Cash and cash equivalents at the
end of the period 11,109,198 3,746,567
======================================= ================= =================
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 2022
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 and the AIM
Market of the London Stock Exchange. The consolidated interim
financial statements of the Company as at and for the period from 1
July 2022 to 31 December 2022 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 8 March 2023.
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 2022 (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 2022.
(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 2022, except for new standards,
amendments to standards and interpretations effective 1 July 2022.
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.
(d) Issued standards and interpretations not early adopted
Standard/Interpretation Application Date of Standard Application Date for Group
AASB 2020-1 Amendments to Australian Accounting Standards 1 January 2024 1 July 2024
- Classification of Liabilities
as Current or Non-Current
----------------------------- ---------------------------
AASB 2022-6 Amendments to Australian Accounting 1 January 2024 1 July 2024
Standards - Classification of Liabilities
as Current or Non-Current - Deferral of Effective Date
----------------------------- ---------------------------
AASB 2021-2 Amendments to Australian Accounting Standards 1 January 2024 1 July 2024
- Disclosure of Accounting Policies
and Definition of Accounting Estimates
----------------------------- ---------------------------
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 2022. 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:
(e) Going Concern
The Group has no sources of operating cash inflows other than
interest income and funds sourced through capital raising
activities. At 31 December 2022, the Group has cash and cash
equivalents totalling $11,109,198 (30 June 2022: $18,892,741) and
net working capital of $9,925,105 (30 June 2022: $17,453,618). The
Directors believe that the Group has sufficient cash resources to
continue its activities to advance the Group's Kasiya project,
allow it to meet its minimum expenditure commitments on existing
tenements and operate corporately for at least the next 12 months
from the date of approval of these interim consolidated financial
statements. For this reason these interim consolidated financial
statements have been prepared on a going concern basis.
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 2022 30 June 2022
$ $
---------------------------------------------------- ------------------ --------------
(a) Movement in Exploration and Evaluation Assets
Malawi Project:
Carrying amount as at 1 July 7,170,282 7,170,282
Closing balance(i) 7,170,282 7,170,282
==================================================== ================== ==============
Note:
(i) The ultimate recoupment of costs carried forward for
exploration and evaluation is dependent on the successful
development and commercial exploitation or sale of the respective
areas of interest.
4. EQUITY SECURITIES ISSUED
31 December 2022 30 June 2022
$ $
--------------------------------------------------------------------------- ------------------ -----------------
(a) Issued Capital
470,875,023 (30 June 2022: 470,725,023 ) fully paid ordinary shares
(Note 4(c)) 78,810,865 78,860,187
=========================================================================== ================== =================
(b) Reserves
Share Based Payment Reserve
Nil (30 June 2022: 2,500,000) unlisted $0.18 options - 12,108
5,360,000 (30 June 2022: 5,120,000) tranche 2 performance rights 1,758,515 1,101,931
7,440,000 (30 June 2022: 7,320,000) tranche 3 performance rights 1,375,500 970,427
Total Share Based Payments Reserve (Note 4(d)) 3,134,015 2,084,466
--------------------------------------------------------------------------- ------------------ -----------------
Foreign Currency Translation Reserve (FCTR)
Exchange differences (125,713) (87,695)
--------------------------------------------------------------------------- ------------------ -----------------
Total Foreign Currency Translation Reserve (FCTR) (125,713) (87,695)
--------------------------------------------------------------------------- ------------------ -----------------
Total Reserves 3,008,302 1,996,771
=========================================================================== ================== =================
(c) Movements in Ordinary Share Capital were as follows:
Date Details No. of Shares Issue Price
$ $
1 Jul 2022 Opening balance 470,725,023 - 78,860,187
7 Jul 2022 Issue of shares upon exercise of options 150,000 $0.14 27,000
7 Jul 2022 Transfer from SBP reserve upon exercise of options - - 12,108
31 Dec 2022 Share issue costs - - (88,430)
31 Dec 2022 Closing balance 470,875,023 - 78,810,865
============== ========================================================== ============== ============ ============
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 9,717,500 0.50 4,858,750
23 Dec 2021 Issue of shares upon conversion of performance rights 4,585,000 - -
19 Jan 2022 Share placement 3,571,428 0.52 1,857,142
13 May 2022 Share placement 22,210,268 0.67 14,880,880
23 Jun 2022 Exercise of $0.14 incentive options 250,000 0.14 35,000
23 Jun 2022 Exercise of $0.14 incentive options (cashless) 4,410,000 - -
23 Jun 2022 Exercise of $0.18 incentive options (cashless) 1,184,000 - -
23 Jun 2022 Exercise of $0.18 incentive options (cashless) 1,600,000 - -
Transfer from SBP reserve upon exercise of options and
30 Jun 2022 conversion of performance rights - - 2,657,786
30 Jun 2022 Share issue costs - - (1,005,781)
-------------- ---------------------------------------------------------- -------------- ------------ ------------
30 Jun 2022 Closing Balance 470,725,023 78,860,187
============== ========================================================== ============== ============ ============
(d) Movements in Options and Performance Rights were as follows:
Number of Unlisted No. of Performance Rights
Date Details Incentive Options $(i)
-------------- --------------------------------------- ------------------- -------------------------- ------------
1 Jul 2022 Opening balance - 12,440,000 2,084,466
Transfer from SBP reserve upon
7 Jul 2022 exercise of options - - (12,108)
23 Nov 2022 Issue of performance rights - 360,000 -
31 Dec 2022 Share based payment expense - - 1,061,657
-------------- --------------------------------------- ------------------- -------------------------- ------------
31 Dec 2022 Closing balance - 12,800,000 3,134,015
============== ======================================= =================== ========================== ============
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) - (78,764)
Various Issue of performance rights - 3,975,000 808,774
23 Dec 2021 Conversion of performance rights - (4,585,000) (2,091,000)
1 Apr 2022 Lapse of performance rights - (1,050,000) -
23 Jun 2022 Exercise of $0.14 incentive options (4,350,000) - (281,735)
23 Jun 2022 Exercise of $0.18 incentive options (6,525,000) - (206,287)
30 Jun 2022 Share-based payment expense - - 2,133,211
-------------- --------------------------------------- ------------------- -------------------------- ------------
30 Jun 2022 Closing Balance - 12,440,000 2,084,466
============== ======================================= =================== ========================== ============
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, 240,000 "Pre-Feasibility Study Milestone" and
120,000 "Definitive Feasibility Study Milestone" performance rights
were issued, the terms of which are consistent with what is
disclosed in the Group's Annual Report for 30 June 2022. Since 31
December 2022, a further 740,000 "Pre-Feasibility Study Milestone"
and 820,000 "Definitive Feasibility Study Milestone" performance
rights were issued. In accordance with AASB 2, these performance
rights were deemed to be granted prior to 31 December 2022 and as
such, have been partially expensed to 31 December 2022.
5. LOSS PER SHARE
Half Year Ended Half Year Ended
31 December 2022 31 December 2021
Cents per Share Cents per Share
---------------------------------------------- ------------------ ------------------
Basic and diluted loss per share
From continuing operations (1.8) (1.8)
Total basic and diluted loss per share (1.8) (1.8)
============================================== ================== ==================
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 2022 31 December 2021
$ $
---------------------------------------------------------------------------- ------------------- -------------------
Net loss used in calculating basic and diluted earnings per share (8,486,503) (7,716,384)
============================================================================ =================== ===================
Half Year Ended Half Year Ended
31 December 2022 31 December 2021
No. of Shares No. of Shares
Weighted average number of ordinary shares used in calculating basic
earnings per share 470,870,105 423,284,871
Adjusted weighted average number of ordinary shares and potential
ordinary shares used in
calculating basic and diluted earnings per share 470,870,105 423,284,871
============================================================================ =================== ===================
Non-dilutive securities
As at 31 December 2022, 11,105,125 unlisted Options and
12,800,000 unlisted Performance Rights (which represent 23,905,125
potential Ordinary Shares) were non-dilutive as they would decrease
the loss per share. As at 31 December 2021, 10,875,000 unlisted
Incentive 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.
Conversions, calls, subscriptions or issues after 31 December
2022
Since 31 December 2022, 1,560,000 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. COMMITMENTS AND CONTINGENCIES
(a) Commitments
31 December 2022 30 June 2022
$ $
--------------------------------------------------- ------------------ --------------
Exploration Commitments - Malawi Project:
Within one year 153,593 92,151
After one year but not more than five years 402,653 135,053
556,246 277,204
=================================================== ================== ==============
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.
7. DIVIDS PAID OR PROVIDED FOR
No dividend has been paid or provided for during the half year
(2021: nil).
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The net fair value of financial assets and financial liabilities
approximates their carrying value.
9. SUBSEQUENT EVENTS AFTER BALANCE DATE
Other than the above, there are no matters or circumstances
which have arisen since 31 December 2022 that have significantly
affected or may significantly affect:
-- the operations, in periods subsequent to 31 December 2022, of the Group;
-- the results of those operations, in periods subsequent to 31
December 2022, of the Group; or
-- the state of affairs, in periods subsequent to 31 December 2022, 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 2022 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
13 March 2023
COMPETENT PERSON STATEMENT
Competent Person Statement
The information in this report that relates to the Mineral
Resource Estimate is extracted from the announcement dated 5 April
2022. 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.
Table 1: Kasiya Mineral Resource Estimate at 0.7% Rutile Cut-off
Mineral Resource Category Material Tonnes (millions) Rutile Rutile Tonnes (millions) Total Contained Graphite (TGC) TGC Tonnes (millions) RutEq.
Grade*
(%) (%) (%)
Indicated 662 1.05% 6.9 1.43% 9.5 1.76%
============================ ============================ ======== ========================== ================================ ======================= ========
Inferred 1,113 0.99% 11.0 1.26% 14.0 1.61%
============================ ============================ ======== ========================== ================================ ======================= ========
Total 1,775 1.01% 18.0 1.32% 23.4 1.67%
============================ ============================ ======== ========================== ================================ ======================= ========
* RutEq. Formula: Rutile Grade x Recovery (98%) x Rutile Price
(US$1,308/t) + Graphite Grade x Recovery (62%) x Graphite Price
(US$1,085/t) / Rutile Price (US$1,308/t). All assumptions are taken
from this Study ** Any minor summation inconsistencies are due to
rounding
The information in this report that relates to Production
Targets, Processing, Infrastructure and Capital and Operating
Costs, is extracted from the announcement dated 16 June 2022
entitled 'Kasiya Expanded Scoping Study Results'. 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 report 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.
The information in this report that relates to the Exploration
Results is extracted from the announcement dated 8 September 2022,
26 October 2022 and 30 January 2023. The announcements are
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
announcements; b) all material assumptions included in the
announcements 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 announcements.
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.
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR GLGDXGBBDGXS
(END) Dow Jones Newswires
March 14, 2023 03:00 ET (07:00 GMT)
Sovereign Metals (LSE:SVML)
Historical Stock Chart
From Jun 2024 to Jul 2024
Sovereign Metals (LSE:SVML)
Historical Stock Chart
From Jul 2023 to Jul 2024
