TIDMSOLG
RNS Number : 2970N
SolGold PLC
29 September 2021
28 September 2021
SolGold plc
("SolGold" or the "Company")
Annual Report, Full Year Results & Management Discussion and
Analysis
The Board of Directors of SolGold (LSE & TSX code: SOLG) is
pleased to announce the release of its Full Year Results for the
year ended 30 June 2021. The Board advises all shareholders and
interested investors that the Company's website www.solgold.com.au
contains access to a copy of the Full Year Results for the year
ended 30 June 2021. An abridged version of the Full Year Results is
included below.
For Canadian purposes, the Company has filed its audited
financial statements and Management Discussion and Analysis
("MD&A") for the year ended 30 June 2021 on SEDAR.
The Company's annual report, including the audited full year
results for the year ended 30 June 2021, together with the MD&A
is available on the Company's website: www.solgold.com.au .
By order of the Board
Dennis Wilkins
Company Secretary
FINANCIAL STATEMENTS
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the year ended 30 June 2021
Group Group
2021 2020
Notes US$ US$
Expenses
Exploration costs written-off 13 (4,353) (218,163)
Administrative expenses (12,545,812) (12,411,630)
Share based payments
expenses 23 (315,436) (1,156,832)
Operating loss 3 (12,865,601) (13,786,625)
Other income 344,565 398,472
Finance income 6 454,575 513,336
Finance costs 6 (10,061,787) (425,440)
Movement in fair value
of derivative liability 22 (613,746) 279,913
Loss before tax (22,741,994) (13,020,344)
Tax (expense) benefit 7 (151,173) (1,103,409)
------------------------------------ ------ ---------------- ----------------
Loss for the year (22,893,167) (14,123,753)
------------------------------------ ------ ---------------- ----------------
Other comprehensive loss
Items that may be reclassified
to profit or loss
Exchange differences
on translation of foreign
operations 670,049 (139,285)
Items that will not be
reclassified to profit
or loss
Change in Ecuador pension (50,378) (475,763)
Change in fair value
of financial assets, 11a
net of tax / 15 1,198,986 (1,320,370)
------------------------------------ ------ ---------------- ----------------
Other comprehensive profit/(loss),
net of tax 1,818,657 (1,935,418)
------------------------------------ ------ ---------------- ----------------
Total comprehensive loss
for the year (21,074,510) (16,059,171)
------------------------------------ ------ ---------------- ----------------
Loss for the year attributable
to:
Owners of the parent
company (22,811,409) (14,067,978)
Non-controlling interest (81,758) (55,775)
------------------------------------ ------ ---------------- ----------------
(22,893,167) (14,123,753)
------------------------------------ ------ ---------------- ----------------
Total comprehensive loss
for the year attributable
to:
Owners of the parent
company (20,992,752) (16,003,396)
Non-controlling interest (81,758) (55,775)
------------------------------------ ------ ---------------- ----------------
(21,074,510) (16,059,171)
------------------------------------ ------ ---------------- ----------------
Loss per share Cents per share Cents per share
Basic loss per share 8 (1.1) (0.7)
Diluted loss per share 8 (1.1) (0.7)
The above consolidated statement of comprehensive income should
be read in conjunction with the accompanying notes.
Consolidated Statement of Financial Position
As at 30 June 2021
Registered Number 5449516
Notes Group Group
2021 2020
US$ US$
Assets
---------------------------------------- ------ -------------- --------------
Property, plant and equipment 12 15,682,120 14,940,988
---------------------------------------- ------ -------------- --------------
Intangible assets 13 308,432,012 230,256,153
---------------------------------------- ------ -------------- --------------
Financial assets held at fair
value through OCI 11(a) 6,825,042 4,119,179
---------------------------------------- ------ -------------- --------------
Loans receivable and other non-current
assets 14 1,457,324 7,702,969
---------------------------------------- ------ -------------- --------------
Total non-current assets 332,396,498 257,019,289
---------------------------------------- ------ -------------- --------------
Other receivables and prepayments 16 8,458,494 2,883,916
---------------------------------------- ------ -------------- --------------
Loans receivable and other current
assets 14 6,495,930 -
---------------------------------------- ------ -------------- --------------
Cash and cash equivalents 17 109,562,103 46,895,243
---------------------------------------- ------ -------------- --------------
Total current assets 124,516,527 49,779,159
---------------------------------------- ------ -------------- --------------
Total assets 456,913,025 306,798,448
---------------------------------------- ------ -------------- --------------
Equity
---------------------------------------- ------ -------------- --------------
Share capital 18 32,350,699 29,281,511
---------------------------------------- ------ -------------- --------------
Share premium 18 426,819,162 353,220,481
---------------------------------------- ------ -------------- --------------
Other reserves 18 26,625,929 38,331,650
---------------------------------------- ------ -------------- --------------
Accumulated loss (142,247,869) (133,331,591)
---------------------------------------- ------ -------------- --------------
Foreign currency translation
reserve (4,345,829) (5,015,878)
---------------------------------------- ------ -------------- --------------
Equity attributable to owners
of the parent company 339,202,092 282,486,173
---------------------------------------- ------ -------------- --------------
Non-controlling interest (579,897) (498,139)
---------------------------------------- ------ -------------- --------------
Total equity 338,622,195 281,988,034
---------------------------------------- ------ -------------- --------------
Liabilities
---------------------------------------- ------ -------------- --------------
Trade and other payables 19 7,847,650 6,060,193
---------------------------------------- ------ -------------- --------------
Lease liability 20 335,749 314,524
---------------------------------------- ------ -------------- --------------
Borrowings 21 - 15,248,302
---------------------------------------- ------ -------------- --------------
Total current liabilities 8,183,399 21,623,019
---------------------------------------- ------ -------------- --------------
Lease liability 20 607,214 875,141
---------------------------------------- ------ -------------- --------------
Other financial liabilities 22 2,926,000 2,312,254
---------------------------------------- ------ -------------- --------------
Borrowings 21 106,574,217 -
---------------------------------------- ------ -------------- --------------
Total non-current liabilities 110,107,431 3,187,395
---------------------------------------- ------ -------------- --------------
Total liabilities 118,290,830 24,810,414
---------------------------------------- ------ -------------- --------------
Total equity and liabilities 456,913,025 306,798,448
---------------------------------------- ------ -------------- --------------
The above consolidated statements of financial position should
be read in conjunction with the accompanying notes.
Company Statement of Financial Position
As at 30 June 2021
Registered Number 5449516
Notes Company Company
2021 2020
US$ US$
Assets
---------------------------------------- ------ -------------- --------------
Property, plant and equipment 12 958,850 1,187,191
---------------------------------------- ------ -------------- --------------
Investment in subsidiaries 9 120,045,844 259,951,415
---------------------------------------- ------ -------------- --------------
Loans with subsidiaries 10 167,399,767 -
---------------------------------------- ------ -------------- --------------
Financial assets held at fair
value through OCI 11(a) 6,819,046 4,113,660
---------------------------------------- ------ -------------- --------------
Loans receivable and other non-current
assets 14 756,332 7,173,984
---------------------------------------- ------ -------------- --------------
Total non-current assets 295,979,839 272,426,250
---------------------------------------- ------ -------------- --------------
Other receivables and prepayments 16 1,938,616 714,197
---------------------------------------- ------ -------------- --------------
Loans receivable and other current
assets 14 6,495,930 -
---------------------------------------- ------ -------------- --------------
Cash and cash equivalents 17 72,918,016 45,356,423
---------------------------------------- ------ -------------- --------------
Total current assets 81,352,562 46,070,620
---------------------------------------- ------ -------------- --------------
Total assets 377,332,401 318,496,870
---------------------------------------- ------ -------------- --------------
Equity
---------------------------------------- ------ -------------- --------------
Share capital 18 32,350,699 29,281,511
---------------------------------------- ------ -------------- --------------
Share premium 18 426,819,162 353,220,481
---------------------------------------- ------ -------------- --------------
Other reserves 18 27,257,963 38,913,306
---------------------------------------- ------ -------------- --------------
Accumulated loss (109,416,834) (119,164,736)
---------------------------------------- ------ -------------- --------------
Foreign currency translation reserve (5,006,473) (5,006,473)
---------------------------------------- ------ -------------- --------------
Equity attributable to owners
of the parent company 372,004,517 297,244,089
---------------------------------------- ------ -------------- --------------
Non-controlling interest - -
---------------------------------------- ------ -------------- --------------
Total equity 372,004,517 297,244,089
---------------------------------------- ------ -------------- --------------
Liabilities
---------------------------------------- ------ -------------- --------------
Trade and other payables 19 1,475,395 2,616,941
---------------------------------------- ------ -------------- --------------
Lease liability 20 319,275 222,109
---------------------------------------- ------ -------------- --------------
Borrowings 21 - 15,248,302
---------------------------------------- ------ -------------- --------------
Total current liabilities 1,794,670 18,087,352
---------------------------------------- ------ -------------- --------------
Lease liability 20 607,214 853,175
---------------------------------------- ------ -------------- --------------
Other financial liabilities 22 2,926,000 2,312,254
---------------------------------------- ------ -------------- --------------
Total non-current liabilities 3,533,214 3,165,429
---------------------------------------- ------ -------------- --------------
Total liabilities 5,327,884 21,252,781
---------------------------------------- ------ -------------- --------------
Total equity and liabilities 377,332,401 318,496,870
---------------------------------------- ------ -------------- --------------
The above company statements of financial position should be
read in conjunction with the accompanying notes.
A separate statement of comprehensive income for the parent
company has not been presented as permitted by section 408 of the
Companies Act 2006. The Company's loss for the year was
US$4,147,229 (2020: US$12,653,965).
The financial statements were approved and authorised for issue
by the Board and were signed on its behalf on 28 September
2021.
Liam Twigger
Chairman
Consolidated Statement of Changes in Equity
For the year ended 30 June 2021
Notes Share Share Financial Share Other Accumulated Foreign Total Non-controlling Total
capital premium assets held based reserves loss currency interests Equity
at fair payment translation
value through reserve reserve
other US$
US$ US$ comprehensive US$ US$ US$
income US$ US$
US$ US$
Balance at 1
July 2019 26,402,424 297,375,959 3,374,413 36,816,313 (105,893) (120,342,688) (4,876,593) 238,643,935 (442,364) 238,201,571
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Loss for the
year - - - - - (14,067,978) - (14,067,978) (55,775) (14,123,753)
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Other
comprehensive
income - - (1,320,370) - (475,763) - (139,285) (1,935,418) - (1,935,418)
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Total
comprehensive
income
for the year - - (1,320,370) - (475,763) (14,067,978) (139,285) (16,003,396) (55,775) (16,059,171)
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
SolGold
Ecuador
employee
profit share - - - - - (34,807) - (34,807) - (34,807)
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
New share
capital
subscribed 2,879,087 57,228,934 - - - - - 60,108,021 - 60,108,021
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Share issue
costs (net
of deferred
tax) - (1,384,412) - - - - - (1,384,412) - (1,384,412)
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Options
forfeited - - - (1,113,882) - 1,113,882 - - - -
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Value of
shares and
options
issued to
Directors,
employees
and
consultants - - - 1,156,832 - - - 1,156,832 - 1,156,832
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Balance at 30
June 2020 29,281,511 353,220,481 2,054,043 36,859,263 (581,656) (133,331,591) (5,015,878) 282,486,173 (498,139) 281,988,034
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Loss for the
year - - - - - (22,811,409) - (22,811,409) (81,758) (22,893,167)
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Other
comprehensive
income - - 1,198,986 - (50,378) - 670,049 1,818,657 - 1,818,657
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Total
comprehensive
income
for the year - - 1,198,986 - (50,378) (22,811,409) 670,049 (20,992,752) (81,758) (21,074,510)
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
New share
capital
subscribed 18 3,048,487 75,695,147 - - - - - 78,743,634 - 78,743,634
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Options
exercised 18 20,701 496,834 - - - - - 517,535 - 517,535
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Share issue
costs (net
of deferred
tax) 18 - (2,593,300) - - - - - (2,593,300) - (2,593,300)
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Options
forfeited - - - (13,169,765) - 13,169,765 - - - -
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Value of share
and options
issued to
Directors,
employees
and
consultants 23 - - - 315,436 - - - 315,436 - 315,436
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Adjustment to
retained
earnings - - - - - 725,366 - 725,366 - 725,366
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
Balance at 30
June 2021 32,350,699 426,819,162 3,253,029 24,004,934 (632,034) (142,247,869) (4,345,829) 339,202,092 (579,897) 338,622,195
--------------- ------ ----------- ------------ -------------- ------------- ---------- -------------- ------------ ------------- ---------------- -------------
The above statement of changes in equity should be read in
conjunction with the accompanying notes.
Company Statement of Changes in Equity
For the year ended 30 June 2021
Notes Share Share Assets Share-based Accumulated Foreign Total
capital premium held at payment loss currency
fair value reserve translation
through reserve
other
US$ US$ comprehensive US$ US$ US$ US$
income
US$
Balance at 1 July
2019 26,402,424 297,375,959 3,374,413 36,816,313 (107,624,653) (5,006,473) 251,337,983
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Loss for the year - - - - (12,653,965) - (12,653,965)
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Other
comprehensive
income - - (1,320,370) - - - (1,320,370)
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Total
comprehensive
income for the
year - - (1,320,370) - (12,653,965) - (13,974,335)
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
New share capital
subscribed 2,879,087 57,228,934 - - - - 60,108,021
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Share issue costs
(net of deferred
tax) - (1,384,412) - - - - (1,384,412)
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Options forfeited - - - (1,113,882) 1,113,882 - -
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Value of shares
and
options issued
to
Directors,
employees
and consultants - - 1,156,832 - - 1,156,832
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Balance at 30
June
2020 29,281,511 353,220,481 2,054,043 36,859,263 (119,164,736) (5,006,473) 297,244,089
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Loss for the year - - - - (4,147,229) - (4,147,229)
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Other
comprehensive
income for the
year - - 1,198,986 - - - 1,198,986
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Total
comprehensive
income for the
year - - 1,198,986 - (4,147,229) - (2,948,243)
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
New share capital
subscribed 18 3,048,487 75,695,147 - - - - 78,743,634
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Options exercised 18 20,701 496,834 - - - - 517,535
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Share issue costs
(net of deferred
tax) 18 - (2,593,300) - - - - (2,593,300)
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Options forfeited - - - (13,169,765) 13,169,765 - -
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Value of shares
and
options issued
to
Directors,
employees
and consultants 23 - - - 315,436 - - 315,436
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Adjustment to
retained
earnings - - - - 725,366 - 725,366
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
Balance at 30
June
2021 32,350,699 426,819,162 3,253,029 24,004,934 (109,416,834) (5,006,473) 372,004,517
------------------ ------ ----------- ------------ -------------- ------------- -------------- ------------ -------------
The above statement of changes in equity should be read in
conjunction with the accompanying notes.
Consolidated and Company Statements of Cash Flows
For the year ended 30 June 2021
Notes Group Group Company Company
2021 2020 2021 2020
US$ US$ US$ US$
Cash flows from operating
activities
------------------------------------ ------ ------------- ------------- ------------- -------------
Loss for the year (22,893,167) (14,123,755) (4,147,229) (12,653,965)
------------------------------------ ------ ------------- ------------- ------------- -------------
Depreciation 12 582,026 685,332 341,626 525,467
------------------------------------ ------ ------------- ------------- ------------- -------------
Interest on lease liability 20 67,730 173,679 62,787 161,410
------------------------------------ ------ ------------- ------------- ------------- -------------
Interest on bridging loan 21 371,275 248,303 371,275 248,303
------------------------------------ ------ ------------- ------------- ------------- -------------
Interest on NSR 21 9,619,242 -
------------------------------------ ------ ------------- ------------- ------------- -------------
Interest on loan to Solgold
Finance AG - - (4,519,889) -
------------------------------------ ------ ------------- ------------- ------------- -------------
Effect of modification of
lease terms - (70,693) - (70,693)
------------------------------------ ------ ------------- ------------- ------------- -------------
5 /
Share based payment expense 23 315,436 1,156,832 315,436 1,156,832
------------------------------------ ------ ------------- ------------- ------------- -------------
Write-off of exploration
expenditure 13 4,353 218,163 - -
------------------------------------ ------ ------------- ------------- ------------- -------------
Foreign exchange (gain) /
loss (1,790,028) 1,679,382 (1,797,341) 1,673,710
------------------------------------ ------ ------------- ------------- ------------- -------------
Movement in fair value of
derivative liability 22 613,746 (279,913) 613,746 (279,913)
------------------------------------ ------ ------------- ------------- ------------- -------------
Deferred taxes 15 151,173 1,103,409 64,375 1,103,409
------------------------------------ ------ ------------- ------------- ------------- -------------
Non cash employee benefit
expense - company funded
loan plan 14 - 402,082 - 402,082
------------------------------------ ------ ------------- ------------- ------------- -------------
Accretion of interest - company
funded loan plan 14 (449,613) (439,246) (449,613) (439,246)
------------------------------------ ------ ------------- ------------- ------------- -------------
Decrease / (increase) in
other receivables and prepayments (765,607) (337,096) 103,035 (187,987)
------------------------------------ ------ ------------- ------------- ------------- -------------
(Decrease) / increase in
trade and other payables 124,682 485,306 (1,028,881) 973,643
------------------------------------ ------ ------------- ------------- ------------- -------------
Net cash outflow from operating
activities (14,048,752) (9,098,215) (10,070,673) (7,386,948)
------------------------------------ ------ ------------- ------------- ------------- -------------
Cash flows from investing
activities
------------------------------------ ------ ------------- ------------- ------------- -------------
Security deposit (payments)
/ refunds (126,407) (29,950) 42,829 (36,779)
------------------------------------ ------ ------------- ------------- ------------- -------------
Exercise of Cornerstone Capital
Resources warrants 11(a) (813,927) - (813,927) -
------------------------------------ ------ ------------- ------------- ------------- -------------
Acquisition of property,
plant and equipment (6,280,482) (4,899,387) (18,255) (27,039)
------------------------------------ ------ ------------- ------------- ------------- -------------
Acquisition of exploration
and evaluation assets (75,607,912) (54,444,043) - -
------------------------------------ ------ ------------- ------------- ------------- -------------
Proceeds from payment to
company funded loan plan 14 1,065,245 - 1,065,245 -
------------------------------------ ------ ------------- ------------- ------------- -------------
Loans advanced to subsidiaries - - (5,001,463) -
------------------------------------ ------ ------------- ------------- ------------- -------------
Advances in investment in
subsidiaries - - (34,155,941) (59,255,734)
------------------------------------ ------ ------------- ------------- ------------- -------------
Net cash outflow from investing
activities (81,763,483) (59,373,380) (38,881,512) (59,319,552)
------------------------------------ ------ ------------- ------------- ------------- -------------
Cash flows from financing
activities
------------------------------------ ------ ------------- ------------- ------------- -------------
Proceeds from the issue of
ordinary share capital 18 76,113,126 62,700,190 76,113,126 62,700,190
------------------------------------ ------ ------------- ------------- ------------- -------------
Payment of issue costs (333,629) (1,718,672) (333,629) (1,718,672)
------------------------------------ ------ ------------- ------------- ------------- -------------
Net proceeds from NSR financing 21 84,380,422 - - -
------------------------------------ ------ ------------- ------------- ------------- -------------
Payment of NSR costs 21 (2,318,598) - - -
------------------------------------ ------ ------------- ------------- ------------- -------------
Proceeds from bridging loan 21 - 14,815,000 - 14,815,000
------------------------------------ ------ ------------- ------------- ------------- -------------
Repayments of lease liability (439,116) (712,429) (348,912) (569,843)
------------------------------------ ------ ------------- ------------- ------------- -------------
Net cash inflow from financing
activities 157,402,205 75,084,089 75,430,585 75,226,675
------------------------------------ ------ ------------- ------------- ------------- -------------
Net increase / (decrease)
in cash and cash equivalents 61,589,970 6,612,494 26,478,400 8,520,175
------------------------------------ ------ ------------- ------------- ------------- -------------
Cash and cash equivalents
at the beginning of year 17 46,895,243 41,746,200 45,356,423 38,290,929
------------------------------------ ------ ------------- ------------- ------------- -------------
Effect of foreign exchange
on cash and cash equivalents 1,076,890 (1,463,451) 1,083,193 (1,454,681)
------------------------------------ ------ ------------- ------------- ------------- -------------
Cash and cash equivalents
at end of year 17 109,562,103 46,895,243 72,918,016 45,356,423
------------------------------------ ------ ------------- ------------- ------------- -------------
The above statements of cash flows should be read in conjunction
with the accompanying notes.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies
SolGold Plc ("the Company" or "SolGold") is a mineral
exploration and development company headquartered in Brisbane,
Australia. The Company is a UK incorporated (on 11 May 2005),
public limited company with company registration number 05449516.
SolGold is dual listed on the London Stock Exchange and the Toronto
Stock Exchange. The address of the Company's registered office is 1
King Street, London EC2V 8AU, United Kingdom.
(a) Statement of compliance
The consolidated financial statements and company financial
statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") and their interpretations
issued by the International Accounting Standards Board ("IASB"), in
accordance with international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union. They have also been prepared in accordance with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The consolidated financial statements also
comply with IFRS as issued by the IASB, as is required as a result
of the company's listing on the TSX in Canada. The accounting
policies set out below have been applied consistently throughout
these consolidated financial statements.
(b) Basis of preparation of financial statements and going
concern
The consolidated financial statements are presented in United
States dollars ("US$"), rounded to the nearest dollar. Prior to
2019 consolidated financials have been previously in Australian
dollars ("A$"). Refer to Note 1 (d) for further details relating to
the foreign exchange translation.
The Company was incorporated on 11 May 2005. From incorporation
the Group has prepared the annual consolidated financial statements
in accordance with IFRS.
As at the year end the Company has cash on hand of US$109.6
million and net current assets of US$116.3 million. The financial
statements have been prepared on a going concern basis which
contemplates the continuity of normal business activities and the
realisation of assets and discharge of liabilities in the ordinary
course of business. The Company has not generated revenues from
operations in its history and, in common with many exploration
companies, the Company raises finance for its exploration and
appraisal activities in discrete tranches. Based on the latest
forecast, including all activities at both Cascabel and the
regional Ecuadorian projects, approved by the Directors, funding
will likely be raised within the next 12 months from the date of
approving these financial statements. As such, the ability of the
Group to continue as a going concern depends on its ability to
secure this additional financing. While this situation gives rise
to a material uncertainty and there can be no assurance the Company
will be able to raise required financing in the future, the
Directors consider it appropriate to prepare the financial
statements on a going concern basis given the Group's proven
ability to raise necessary funding. The financial statements do not
include the adjustments that would result if the Company was unable
to continue as a going concern.
During the period the Company completed two successful equity
raisings totalling US$78.8 million (Valuestone in November 2020
& Institutional and private investors in April 2021) and closed
the Net Smelter Returns Financing ("NSR Financing") Agreement with
Franco-Nevada Corporation ("Franco-Nevada") in September 2020. As
part of the latter, the Group has received net funds of US$85
million following the repayment of the US$15 million Bridge Loan
Agreement ("BLA"). The funds raised from the NSR Financing are ring
fenced for the continued exploration and development work on the
Cascabel licence area. This demonstrates the ability for the
Company to raise funds when required.
Alongside these factors, given the level of uncertainty in
various markets and economies around the world, the Company is
factoring into its forecasts that COVID-19 could potentially be an
issue for the foreseeable future. As a result, financial planning
is increasingly focusing on fixed cost reductions and scenario
planning.
SolGold's worst-case scenario considers a melt-down of financial
markets, caused by a resurgence of the pandemic or other factors
like unsustainable global debt levels or social unrest, followed by
a prolonged economic crisis that is not conducive of further
capital raises when necessary.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies (continued)
(b) Basis of preparation of financial statements and going
concern
In such a situation the Company would cease all exploration
activities, terminate all technical services and dramatically
reduce overheads in order to reduce costs. Even under this
worst-case scenario, the Company aims to continue to employ all
local employees, or as many employees as possible linked to its
direct zone of influence to maintain its hard-earned, and
well-respected social licence to operate. Under this worst-case
scenario, the company would have funds sufficient at least until
September 2023. As this is not the intention of the Directors a
material uncertainty is recognised in relation to raising the
additional funding and pursuing the current plan outlined in the
latest forecast.
These factors indicate the existence of material uncertainties
which may cast significant doubt on the Group's and Company's
ability to continue as a going concern.
(c) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 30 June each year.
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the
company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the
statement of financial position, the acquiree's identifiable
assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date. The
results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is
obtained. They are deconsolidated from the date on which control
ceases.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate. Where necessary,
adjustments are made to the financial statements of subsidiaries to
bring the accounting policies in line with those used by the
Group.
Non-controlling interests are allocated their share of net
profit after tax and share of other comprehensive income in the
statement of profit or loss and comprehensive income and presented
within equity in the consolidated statement of financial position,
separately from the equity of the owners of the parent.
(ii) Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or
income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies (continued)
(d) Foreign currency
Translation into the functional currency
Transactions entered into by Group entities in a currency other
than the currencies of the primary economic environment in which
they operate (the "functional currency") are translated at the
foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
at the year-end are translated into the functional currency at the
foreign exchange rate ruling as of that date. Non-monetary assets
and liabilities denominated in foreign currencies are translated at
the historical foreign exchange rate. Any resultant foreign
exchange currency translation amount is taken to the profit and
loss.
Management reconsiders the functional currency where there is a
change in events or conditions used in initial determination. Where
the assessment indicates that a change in functional currency is
required, the change is applied prospectively from the date it is
deemed to have occurred.
The functional currency of the parent entity and subsidiaries of
the group are detailed in the table below:
Functional Functional Exchange Exchange Average Average
Currency Currency rate at rate at exchange exchange
30 June 30 June rate for rate for
2021 used 2020 used the year the year
in preparation in preparation ended 30 ended 30
of Financials of Financials June 2021 June 2020
2021 2020
SolGold Plc US$ US$ n/a n/a n/a n/a
Australian Resource
Management (ARM)
Pty Ltd A$ A$ 0.7495 0.6899 0.7470 0.6710
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
Acapulco Mining
Pty Ltd A$ A$ 0.7495 0.6899 0.7470 0.6710
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
Central Minerals
Pty Ltd A$ A$ 0.7495 0.6899 0.7470 0.6710
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
Solomon Operations
Ltd SBD$ SBD$ 0.1245 0.1716 0.1245 0.1298
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
Honiara Holdings
Pty Ltd A$ A$ 0.7495 0.6899 0.7470 0.6710
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
Guadalcanal Exploration
Pty Ltd A$ A$ 0.7495 0.6899 0.7470 0.6710
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
SolGold Finance
AG US$ - n/a - n/a -
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
SolGold Canadian
Callco Corp. CAD$ CAD$ 0.8067 0.7362 0.7804 0.7454
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
SolGold Canadian
Exchangeco Corp. CAD$ CAD$ 0.8067 0.7362 0.7804 0.7454
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
Exploraciones Novomining
S.A. US$ US$ n/a n/a n/a n/a
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
Carnegie Ridge
Resources S.A. US$ US$ n/a n/a n/a n/a
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
Green Rock Resources
S.A. US$ US$ n/a n/a n/a n/a
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
Valle Rico Resources
S.A. US$ US$ n/a n/a n/a n/a
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
Cruz del Sol S.A. US$ US$ n/a n/a n/a n/a
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
SolGold Ecuador
S.A. US$ US$ n/a n/a n/a n/a
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
Novoproyectos-Sustentables
S.A. US$ US$ n/a n/a n/a n/a
---------------------------- ------------ ------------ ---------------- ---------------- ----------- -----------
Translation into presentation currency
The assets and liabilities of the entities are translated to the
Group presentation currency being the US$ at rates of exchange
ruling at the reporting date. Income and expense items are
translated at average rates for the period. Any resultant foreign
exchange currency translation amount is taken to other
comprehensive income. On disposal of an entity, cumulative exchange
difference are recognised in the income statement as part of the
profit or loss on sale. Exchange differences recognised in profit
or loss in Group entities' separate financial statements on the
translation of long-term monetary items forming part of the Group's
net investment in the overseas operation concerned are reclassified
to other comprehensive income and accumulated in the foreign
exchange reserve on consolidation .
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies (continued)
(e) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost less
accumulated depreciation (see below) and impairment losses (see
accounting policy (h) below).
(ii) Leased assets
Items of property, plant and equipment that are accounted for
under IFRS 16 Leases are recognised when contracts are entered into
at an amount equal to the corresponding lease liability (see
accounting policy (s) below).
(iii) Subsequent costs
The Group recognises in the carrying amount of property, plant
and equipment the cost of replacing part of such an item when that
cost is incurred if it is probable that the future economic
benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other costs are
recognised in the statement of comprehensive income as an expense
as incurred.
(iv) Depreciation
Depreciation is charged to the statement of comprehensive income
on a straight-line basis over the estimated useful lives of each
item of property, plant and equipment used in corporate and
administrative operations. Depreciation is capitalised to
exploration on a straight-line basis over the estimated useful
lives of each item of property, plant and equipment used in
exploration operations. The estimated useful lives of all
categories of assets are:
Office Equipment 3 years
Furniture and Fittings 5 years
Motor Vehicles 5 years
Plant and Equipment 5 years
Buildings 12 years
Land Not depreciated
Depreciation charged on leased assets is charged to the
statement of comprehensive income on a straight-line basis over the
term of the lease.
The residual values and useful lives are assessed annually.
Gains and losses on disposal are determined by comparing proceeds
with carrying amounts and are included in the statement of
comprehensive income.
(f) Intangible assets (as per IFRS 6 - Exploration for and
Evaluation of Mineral Resources)
Costs incurred in relation to the acquisition of, or application
for, a tenement area are capitalised where there is a reasonable
expectation that the tenement will be acquired or granted. Where
the Group is unsuccessful in acquiring or being granted a tenement
area, any such costs are immediately expensed.
All other costs incurred prior to obtaining the legal right to
undertake exploration and evaluation activities on a project are
written-off as incurred.
Exploration and evaluation costs arising following the
acquisition of an exploration licence are capitalised on a
project-by-project basis as exploration and evaluation assets,
pending determination of the technical feasibility and commercial
viability of the project. Costs incurred include appropriate
technical and administrative overheads. Exploration and evaluation
assets are carried at historical cost less any impairment losses
recognised.
Once the work completed to date on an area of interest is
sufficient such that the technical feasibility and commercial
viability of extracting the mineral resource has been determined,
the property is considered to be an evaluated mineral property.
Following determination of the technical feasibility and
commercial viability of a mineral resource, the relevant
expenditure is transferred from exploration and evaluation assets
to evaluated mineral property.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies (continued)
(f) Intangible assets (continued)
Further development costs are capitalised to evaluated mineral
properties, if and only if, it is probable that future economic
benefits associated with the item will flow to the entity; and the
cost can be measured reliably. Cost is defined as the purchase
price and directly attributable costs. Once the asset is considered
to be capable of operating in a manner intended by management,
commercial production is declared, and the relevant costs are
depreciated. Evaluated mineral property is carried at cost less
accumulated depreciation and accumulated impairment losses.
(g) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks, other short-term highly liquid investments with
original maturities of three months or less, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities
on the statement of financial position.
(h) Impairment of non-financial assets
Whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable the asset is
reviewed for impairment. An asset's carrying value is written down
to its estimated recoverable amount (being the higher of the fair
value less costs to sell and value in use) if that is less than the
asset's carrying amount. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset. In
determining fair value less costs of disposal, recent market
transactions are taken into account. If no such transactions can be
identified, an appropriate valuation model is used. These
calculations are corroborated by valuation multiples, quoted share
prices for publicly traded companies or other available fair value
indicators.
Impairment reviews for deferred exploration costs are carried
out on a project-by-project basis, with each project representing a
potential single cash generating unit. As the material value of the
Group's property, plant and equipment is associated with the
exploration and evaluation these are also considered within the
impairment review. An impairment review is undertaken when
indicators of impairment arise, typically when one of the following
circumstances apply:
-- The period for which the entity has the right to explore in
the specific area has expired during the period or will expire in
the near future, and is not expected to be renewed;
-- Substantive expenditure on further exploration for and
evaluation of mineral resources in the specific area is neither
budgeted nor planned ;
-- Exploration for and evaluation of mineral resources in the
specific area have not led to the discovery of commercially viable
quantities of mineral resources and the entity has decided to
discontinue such activities in the specific area; and
-- Sufficient data exists to indicate that, although a
development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be
recovered in full from successful development or by sale.
(i) Share capital
(i) Ordinary share capital
The Company's ordinary shares are classified as equity.
(ii) Shares issued to settle liabilities
The Group from time to time settles financial liabilities by
issuing shares. The Group considers these equity instruments as
'consideration paid' and accordingly derecognises the financial
liability.
The equity instruments issued are measured at fair value, with
the difference being taken to the income statement, unless the
creditor is also a direct or indirect shareholder and is acting in
its capacity as direct or indirect shareholder. When the creditor
is acting in capacity as a direct or indirect shareholder the value
of shares issued is deemed to be the carrying value of the
liability.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies (continued)
(j) Employee benefits
(i) Share based payment transactions
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. Non-vesting conditions and
market vesting conditions are factored into the fair value of the
options granted. As long as all other vesting conditions are
satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition or where
a non-vesting condition is not satisfied. Share based payments to
non-employees are measured at the fair value of goods or services
rendered or the fair value of the equity instrument issued, if it
is determined the fair value of the goods or services cannot be
reliably measured. Estimating fair value for share based payment
transactions requires determining the most appropriate valuation
model, which is dependent on the terms and conditions of the grant.
This estimate also requires determining the most appropriate inputs
to the valuation model including the expected life of the share
option, volatility and dividend yield and making assumptions about
them. The assumptions and model used for estimating fair value for
share based payment transactions are disclosed in Note 22.
(ii) Retirement benefits
The Group accounts for its defined benefit obligations in
Ecuador in accordance with the Ecuadorian labour code. Whilst this
is not payable until an employee has rendered a minimum of 25 years
served, the Ecuadorian subsidiaries accrue for this on a monthly
basis. The balance of these contributions are valued through an
actuary process every 6 months and contributions payable are
charged to the statement of comprehensive income.
(iii) Company Funded Loan Plan
The Group has put in place a Company Funded Loan Plan ("CFLP")
to provide financial assistance to employees in exercising share
options. The financial assistance provided to employees is by way
of a full recourse interest free loan. The CFLP is secured by the
SolGold shares issued upon the exercise of share options under the
CFLP to that employee.
CFLP loans to employees are initially recognised at fair value,
which is determined by discounting loans to their net present value
using the risk-free interest rate at the time the loan is granted
and an estimated repayment schedule. Following initial recognition,
they are carried at amortised cost using the effective interest
rate method. Changes in the carrying value of the CFLP loans are
recognised within interest income in the profit or loss. The cost
of providing the benefit to employees is recognised as an employee
expense in the profit or loss on a straight-line basis over the
expected life of the CFLP loan.
Further details on the CFLP are disclosed in Note 14.
(iv) Derivative Financial Instruments
The Company has issued options that are exercisable in a
currency other than the functional currency of the entity issuing.
As such these options are treated as derivative liabilities which
are measured initially at fair value and gains or losses on
subsequent re-measurement are recorded in the profit or loss. This
subsequent remeasurement is valued using the Monte Carlo
method.
(k) Provisions
Provisions are recognised when the Group has a legal or
constructive obligation as a result of past events, it is more
likely than not that an outflow of resources will be required to
settle the obligation, and the amount can be reliably
estimated.
A contingent asset or liability is disclosed in the notes to the
financial statements when an uncertainty exists and the amount of
the asset or liability cannot be reliably measured.
(l) Trade and other payables
Trade and other payables are not interest bearing and are stated
at amortised cost, unless settled with shares as per (i) above. The
effect of discounting is immaterial.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies (continued)
(m) Financing costs and income
(i) Financing costs
Financing costs comprise interest payable on borrowings
calculated using the effective interest rate method.
(ii) Finance income
Interest income is recognised in the statement of comprehensive
income as it accrues, using the effective interest method.
(n) Taxation
Deferred tax is provided using the balance sheet liability
method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary
differences are not provided for: goodwill not deductible for tax
purposes, the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit, and differences
relating to investments in subsidiaries to the extent that they
will probably not reverse in the foreseeable future. The amount of
deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the reporting date. A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax
assets are reduced to the extent that it is no longer probable that
the related tax benefit will be realised.
Deferred tax assets are recognised for unused tax losses to the
extent that it is probable that taxable profit will be available
against which the losses can be utilised. Significant management
judgement is required to determine the amount of deferred tax that
can be recognised, based upon the likely timing and the level of
future taxable profits, together with future tax planning
strategies.
The Group has US$73,685,405 (2020: US$68,507,193) of tax losses
carried forward. These losses relate to subsidiaries that have a
history of losses and may not be used to offset taxable income
elsewhere in the Group. The subsidiaries neither have any taxable
temporary difference nor any tax planning opportunities available
that could partly support the recognition of these losses as
deferred tax assets. On this basis, the Group has determined that
it cannot recognise deferred tax assets on the tax losses carried
forward.
Further details on taxes are disclosed in Note 7.
(o) Segment reporting
The Group determines and presents operating segments based on
information that is internally provided to the Board of Directors,
who are the Group's chief operating decision makers.
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Group's other components. An operating
segment's operating results and asset position are reviewed
regularly by the Board to make decisions about resources to be
allocated to the segment and assess its performance, for which
discrete financial information is available.
Segment results that are reported to the Board include items
directly attributable to a segment, as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly
corporate office assets, head office expenses, and income tax
assets and liabilities.
(p) Project Financing / Farm-outs
The Group, from time to time, enters into funding arrangements
with third parties in order to progress specific projects. The
Group accounts for the related exploration costs in line with the
terms of the specific agreement. Costs incurred by SolGold plc are
recognised as intangible assets within the financial statements.
Costs incurred by third parties are not recognised by SolGold
plc.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies (continued)
(q) Leases
For any contracts entered into, the Group considers whether the
contract is or contains a lease. For those contracts that fall
within the exemptions of IFRS 16 and are classified as short term,
these are charged as expenses on a straight-line basis over the
period of the lease. For all other leases, the Group recognises a
right-of-use asset ("ROUA") and a lease liability on the balance
sheet.
The ROUA is measured at cost at an amount equal to the lease
liability. The process to adopt this approach can be summarised as
follows:
-- Calculate the lease liability at commencement date of the
lease. At the initial adoption of the standard this was calculated
as at the date on initial application of IFRS 16.
-- Set the ROUA as an amount equal to the lease liability in line with the above dates.
At the commencement date, the Group measures the lease liability
at the present value of the lease payments unpaid at that date,
discounted using the implicit interest rate in the lease. Where the
implicit rate cannot be easily determined the Groups incremental
borrowing rate is used instead. As there is no implicit rate in the
leases the Group has chosen to use 8% per the discount rate used in
the recent economic project studies.
The Group depreciates the ROUA on a straight-line basis form the
lease commencement date to the earlier of the end of the useful
life of the ROUA or the end of the lease term.
Subsequent to initial measurement, the liability will be reduced
for payments made and increased for interest. The liability is
remeasured to reflect any reassessment or modification. Where the
lease liability is remeasured, the corresponding adjustment is
reflected in the, or profit and loss if the ROUA is already reduced
to zero.
On the statement of financial position, ROUA have been included
in property, plant and equipment and lease liabilities have been
included in both current and non-current liabilities, under Lease
Liability.
(r) Financial Instruments
Recognition and Initial Measurement
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.
Financial assets and financial liabilities are recognised in the
Group statement of financial position when the Group becomes a
party to the contractual provisions of the instrument. Financial
assets and financial liabilities are only offset and the net amount
reported in the consolidated statement of financial position and
statement of comprehensive income when there is a currently
enforceable legal right to offset the recognised amounts and the
Group intends to settle on a net basis or realise the asset and
liability simultaneously.
Financial instruments are generally measured at initial
recognition fair value and adjusted for transactions costs where
the instrument is not classified as at fair value through profit or
loss. Transaction costs related to instruments classified as at
fair value through profit or loss are expensed to profit or loss
immediately. Financial instruments are classified and measured as
set out below.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies (continued)
(r) Financial Instruments (continued)
Financial assets
(i) Financial assets at amortised cost
Financial assets are measured at amortised cost if both of the
following conditions are met:
o The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows; and
o The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principle amount outstanding.
Financial assets at amortised costs are subsequently measured
using the effective interest (EIR) method and are subject to an
impairment assessment. Gains and losses are recognised in profit or
loss when the asset is derecognised, modified or impaired.
(ii) Financial assets designated at fair value through OCI with
no recycling of cumulative gains and losses upon derecognition
(equity instruments)
Upon initial recognition SolGold can elect to classify
irrevocably its equity investments as equity instruments designated
a fair value through OCI when they meet the definition of equity
under IAS 32 Financial Instruments: Presentation and are not held
for trading. The classification is determined on an
instrument-by-instrument basis. Gains and losses on these financial
assets are never recycled to profit or loss. Dividends are
recognised as other income in the statement of profit or loss when
the right of payment has been established, except when the Group
benefits from such proceeds as a recovery of part of the cost of
the financial asset, in which case, such gains are recorded in OCI.
Equity instruments designated at fair value through OCI are not
subject to impairment assessment.
SolGold elected to classify irrevocably 'Investments in equity
excluding subsidiaries' under this category.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses
on financial assets which are measured at amortised cost or fair
value through other comprehensive income. The measurement of the
loss allowance depends upon the Group's assessment at the end of
each reporting period as to whether the financial instrument's
credit risk has increased significantly since initial recognition,
based on reasonable and supportable information that is available,
without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to
credit risk since initial recognition, a twelve-month expected
credit loss allowance is estimated. This represents a portion of
the asset's lifetime expected credit losses that is attributable to
a default event that is possible within the next twelve months.
Where a financial asset has become credit impaired or where it is
determined that credit risk has increased significantly, the loss
allowance is based on the asset's lifetime expected credit losses.
The amount of expected credit loss recognised is measured on the
basis of the probability weighted present value of anticipated cash
shortfalls over the life of the instrument discounted at the
original effective interest rate. Please refer to Note 14 for the
CFLP.
Financial liabilities
The classification of financial liabilities at initial
recognition depends on the purpose for which the financial
liability was issued and its characteristics. All purchases of
financial liabilities are recorded on trade date, being the date on
which the Group becomes party to the contractual requirements of
the financial liability. Unless otherwise indicated the carrying
amounts of the Group's financial liabilities approximate to their
fair values.
Financial liabilities measured subsequently at amortised
cost
Financial liabilities that are not (i) contingent consideration
of an acquirer in a business combination, (ii) held-for-trading, or
(iii) designated at FVTPL, are measured subsequently at amortised
cost. The Group's financial liabilities comprise of trade and other
payables, current and non-current lease liabilities and other
financial liabilities (Franco-Nevada NSR Financing Agreement refer
Note 21) which are measured at amortised cost.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies (continued)
(r) Financial Instruments (continued)
Financial liabilities measured at fair value through profit or
loss
Financial liabilities that are (i) held for trading, or (ii)
designated by the entity as being at FVTPL are measured at fair
value through profit or loss. The Group's financial liabilities at
FVTPL comprise of the Derivative Liability associated with the
share issuance to BHP in December 2019.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is primarily
derecognised when:
-- The rights to receive cash flows from the asset have expired: or
-- SolGold has transferred its right to receive cash flows from
the asset or has assumed an obligation to pay the received cash
flows in full without material delay to a third party under a
"pass-through' arrangement; and either (a) SolGold has transferred
substantially all the risks and rewards of the asset, or (b)
SolGold has neither transferred nor retained substantially all the
risks and rewards of the asset; but has transferred control of the
asset.
A financial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
statement of comprehensive income.
(s) Accounting policies for the Company
The accounting policies applied to the Company are consistent
with those adopted by the Group with the exception of the
following:
(i) Subsidiary investments
Investments in subsidiary undertakings are stated at cost less
impairment losses. Expenditure incurred by plc on behalf of a
subsidiary, and where the subsidiary does not reimburse the Company
for assets that could be capitalised in accordance with IFRS 6, is
recorded within investments in subsidiary undertakings. Where
investments are passed down into the underlying operating
subsidiaries where no reimbursement is expected this is recorded as
investment in subsidiary undertakings.
(ii) Intercompany loans
Intercompany loans with its subsidiary (SolGold Finance AG)
undertakings are measured in line with the Group's policy mentioned
in (r) Financial instruments above. That is at amortised cost, with
all subsequent measures using the effective interest method and are
subject to an impairment assessment. Gains and losses are
recognised in profit or loss when the asset is derecognised,
modified or impaired. Refer Note 1(v).
(t) Nature and purpose of reserves
(i) Financial assets at fair value through other comprehensive
reserve
Changes in the fair value and exchange differences arising on
translation of investments, such as equities, classified as
financial assets at fair value through OCI, are recognised in other
comprehensive income and accumulated in a separate reserve within
equity.
(ii) Share-based payment reserve
The share-based payment reserve is used to recognise:
-- the grant date fair value of options issued to employees that
have vested but not been exercised; and
-- the grant date fair value of shares issued to employees.
(iii) Foreign currency translation reserve
Exchange differences arising on translation of foreign
controlled entities where the functional currency differs from the
presentational currency and are recognised in other comprehensive
income and accumulated in a separate reserve within equity. The
cumulative amount is reclassified to profit or loss when the net
investment is disposed of.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies (continued)
(t) Nature and purpose of reserves (continued)
(iv) Other reserves
This reserve is used to both adjust the actuarial assessed fair
value for the defined benefit pension obligation linked to the
Group's employees in Ecuador and to record the differences which
may arise as a result of transactions with non--controlling
interests that do not result in a loss of control.
(u) Changes in accounting policies
New standards and amendments in the year
The Group has adopted the following revised and amended
standards. The list below includes only standards and
interpretations that could have an impact on the Consolidated
Financial Statements of the Group.
-- IFRS 3 Business Combinations: Definition of a Business
-- IFRS 9, IAS 39 & IFRS 7 Interest Rate Benchmark
Reform
-- IAS 1 & IAS 8 Definition of Material
-- IFRS 16 Leases: COVID-19 Related Rent Concessions
Details of the impact that these standards had is detailed
below. Other new and amended standards and Interpretations issued
by the IASB do not impact the Group or Company as they are either
not relevant to the Group's activities or require accounting which
is consistent with the Group's current accounting policies.
IFRS 3: Business Combinations
In October 2018, the IASB issued Definition of a Business
(Amendments to IFRS 3) to make it easier for companies to decide
whether activities and assets they acquire are a business or merely
a group of assets. The amendments:
-- confirmed that a business must include inputs and a process, and clarified that:
- the process must be substantive; and
- the inputs and process must together significantly contribute to creating outputs.
-- narrowed the definitions of a business by focusing the
definition of outputs on goods and services provided to customers
and other income from ordinary activities, rather than on providing
dividends or other economic benefits directly to investors or
lowering costs; and
-- added a test that makes it easier to conclude that a company
has acquired a group of assets, rather than a business, if the
value of the assets acquired is substantially all concentrated in a
single asset or group of similar assets.
The amendment is effective for periods beginning on or after 1
January 2020.
Management has made an assessment of the effects of applying the
updated definition on the Group's financial statements and has
determined that there will be no material impact.
IFRS 9, IAS 39 & IFRS 7: Interest Rate Benchmark Reform
In September 2019, the IASB amended IFRS 9, IAS 39 and IFRS 7 in
response to uncertainty arising from the phasing out of
interest-rate benchmarks such as interbank offered rates
(IBORs).
The amendments modify the requirements relating to hedge
accounting in order to provide relief from potential consequences
of IBOR reform. Additionally, the standards were amended to require
additional disclosures explaining how an entity's hedging
relationships are affected by the uncertainties involving IBOR
reform. The amendment is effective for periods beginning on or
after 1 January 2020 with early application permitted.
Management has made an assessment of the effects of applying the
amendment on the Group's financial statements and has determined
that there is no material impact.
IAS 1 & IAS 8: Definition of Material
In October 2018, the IASB issued 'Definition of Material
(Amendments to IAS 1 and IAS 8)' to clarify the definition of
'material' and to align the definition used in the Conceptual
Framework and the standards themselves.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies (continued)
(u) Changes in accounting policies (continued)
There are three new aspects of the proposed new definition that
should be noted:
-- The proposed definition now makes reference to 'obscuring'
information that may influence the decisions of primary users of
general purpose financial statements;
-- The existing definition made reference to 'could influence'
whereas the proposed definition makes reference to 'could
reasonably be expected to influence'; and
-- The existing definition referred to 'users' of the financial
statements whereas the proposed definition refers to 'primary
users' of the financial statements
The amendment is effective for periods beginning on or after 1
January 2020.
Management has made an assessment of the effects of applying the
updated definition on the Group's financial statements and has
determined that there will be no material impact.
IFRS 16: Leases and COVID-19
On 28 May 2020, the IASB issued final amendments to IFRS 16
related to COVID-19 rent concessions for lessees.
The amendments modify the requirements of IFRS 16 to permit
lessees to not apply modification accounting to certain leases
where the contractual terms have been affected due to COVID-19. For
example, where landlords have offered rent relief or rent
concessions. The amendments are effective for periods beginning on
or after 1 June 2020, with earlier application permitted.
Management has made an assessment of the effects of applying the
amendment to IFRS 16 on the Group's financial statements and has
determined that there is no material impact.
Other new and amended standards and Interpretations issued by
the IASB that will apply for the first time in the next annual
financial statements are not expected to impact the Group as they
are either not relevant to the Group's activities or require
accounting which is consistent with the Group's current accounting
policies.
(v) Critical Accounting Estimates and Judgements
The Directors evaluate estimates and judgements incorporated
into the financial statements based on historical knowledge and
best available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and
economic data, obtained both externally and within the Group.
Accounting Estimates
NSR royalty interest
The NSR royalty has been valued using the amortised cost basis.
IFRS 9 requires that amortised cost is calculated using the
effective interest method, which allocates interest expense at a
constant rate over the term of the instrument. The effective
interest rate of a financial liability is calculated at initial
recognition and is the rate that exactly discounts the estimated
future cash flows through the expected life of the financial
liability, based on the then current mine plan and project
development study assumptions.
In the case of the Franco Nevada NSR royalty, the Company
arrived at an effective interest rate ("EIR") of 11.84%. Total
interest for the financial year is estimated at US$9,619,242, see
Note 6. Should there be a 2% increase in the EIR this would have an
impact on the accounts and increase the finance expenses by
US$1,588,532.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 1 Accounting Policies (continued)
(v) Critical Accounting Estimates and Judgements (continued)
Accounting Judgements
Exploration and evaluation expenditure
The Group capitalises expenditure relating to exploration and
evaluation where it is considered likely to be recoverable or where
the activities have not reached a stage that permits a reasonable
assessment of the existence of reserves.
The carrying values of exploration and evaluation expenditure
were assessed for indicators of impairment based on an estimation
of the recoverability from expected future development and
production. In forming this assessment, the Group considered the
external Mineral Resources Estimate, the status of its permits and
internal economic models and financing which supported the carrying
value of the project. No triggers of impairment were identified at
30 June 2021. The Directors have carried out an assessment of the
carrying values of deferred exploration and evaluation expenditure
and any required impairment and is included in Note 13.
Intercompany loan
The Company has an intercompany loan with one of its
Subsidiaries - SolGold Finance AG - that is the shareholder of the
Group's main project at Cascabel and strategic land purchases in
Ecuador.
The carrying values of exploration and evaluation expenditure
for Cascabel were assessed for indicators of impairment based on an
estimation of the recoverability from expected future development
and production. In forming this assessment, the Company considered
the external Mineral Resources Estimate, the status of its permits
and internal economic models and financing which supported the
carrying value of the project. No triggers of impairment were
identified at 30 June 2021 on the carrying values of the Cascabel
exploration and evaluation asset, which is directly linked to the
repayment of the loans from SolGold Finance AG. All recovery
strategies indicate that the loans will be fully recovered,
therefore no loss allowances have been made.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 2 Segment Reporting
The Group determines and separately reports operating segments
based on information that is internally provided to the Board of
Directors, who are the Group's chief operating decision makers.
The Group has outlined below the separately reportable operating
segments, having regard to the quantitative threshold tests
provided in IFRS 8, namely that the relative revenue, asset or
profit / (loss) position of the operating segment equates to 10% or
more of the Group's respective total. The Group reports information
to the Board of Directors along company lines. That is, the
financial position of SolGold and each of its subsidiary companies
is reported discretely, together with an aggregated Group total.
Accordingly, each company within the Group that meets or exceeds
the threshold tests outlined above is separately disclosed below.
The financial information of the subsidiaries that do not exceed
the thresholds outlined above, and is therefore not reported
separately, is aggregated as Other Subsidiaries.
30 June Finance Depreciation Impairment Loss Assets Liabilities Share Non-current
2021 Income of E&E for the Based asset
year Payments additions
------------
US$ US$ US$ US$ US$ US$ US$ US$
------------ -------- ------------- ----------- ------------- ------------ ------------ --------- ------------
Cascabel
project
* - 104,200 - (545,050) 237,525,826 3,153,210 - 46,446,578
------------ -------- ------------- ----------- ------------- ------------ ------------ --------- ------------
Other
Ecuadorian
projects - 136,175 4,353 (1,525,313) 89,212,722 1,968,707 - 29,288,209
------------ -------- ------------- ----------- ------------- ------------ ------------ --------- ------------
Other
projects 246 25 - (16,907) 10,502,441 20,513 - 255,325
------------ -------- ------------- ----------- ------------- ------------ ------------ --------- ------------
Corporate 454,329 341,626 - (20,805,897) 119,372,036 113,148,400 315,436 (42,829)
------------ -------- ------------- ----------- ------------- ------------ ------------ --------- ------------
Total 454,575 582,026 4,353 (22,893,167) 456,913,025 118,290,830 315,436 75,947,283
------------ -------- ------------- ----------- ------------- ------------ ------------ --------- ------------
30 June Finance Depreciation Impairment Loss Assets Liabilities Share Non-current
2020 Income of E&E for the Based asset
year Payments additions
------------
US$ US$ US$ US$ US$ US$ US$ US$
------------ -------- ------------- ----------- ------------- ------------ ------------ ---------- ------------
Cascabel
project
* - 52,093 - (371,834) 186,326,970 1,899,646 - 34,592,783
------------ -------- ------------- ----------- ------------- ------------ ------------ ---------- ------------
Other
Ecuadorian
projects - 107,750 220,257 (1,081,818) 51,907,905 1,643,133 - 22,091,570
------------ -------- ------------- ----------- ------------- ------------ ------------ ---------- ------------
Other
projects 253 22 (2,094) (16,136) 10,018,121 14,854 - 405,131
------------ -------- ------------- ----------- ------------- ------------ ------------ ---------- ------------
Corporate 513,083 525,467 - (12,653,965) 58,545,452 21,252,781 1,156,832 36,779
------------ -------- ------------- ----------- ------------- ------------ ------------ ---------- ------------
Total 513,336 685,332 218,163 (14,123,753) 306,798,448 24,810,414 1,156,832 57,126,263
------------ -------- ------------- ----------- ------------- ------------ ------------ ---------- ------------
* The Cascabel project is held by the subsidiary Exploraciones
Novomining S.A. which is 15% owned by a non-controlling interest.
See further details of the subsidiary in Note 9.
Geographical information
Non-current assets 2021 2020
US$ US$
Australia 16,285,847 20,299,052
Solomon Islands 433,708 231,744
Ecuador 315,676,943 236,488,493
-------------------- ------------ ------------
332,396,498 257,019,289
-------------------- ------------ ------------
The Group had no revenue during the current and prior year.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 3 Operating Loss
Group Group
2021 2020
US$ US$
The operating loss is stated after charging
(crediting)
Auditors' remuneration:
Amounts received or due and receivable
by BDO (UK) for audit of the Company
and Group's annual accounts 270,116 212,382
Amounts received or due and receivable
by BDO (Ecuador) for the audit of the
subsidiaries 77,049 72,157
Other non-audit services
* Agreed upon procedures on quarterly and half year
financial statements 103,686 97,864
* Translation services 27,585 64,661
18,130 -
* Incorporation of SolGold Finance AG
5,000 -
* Tax Compliance - Ecuador
Employee Expenses 3,304,006 1,906,627
Insurance (largely political risk) 3,464,139 1,884,388
Legal fees 746,590 681,781
Depreciation 582,026 685,332
Foreign exchange (gains)/losses (1,790,028) 1,679,382
Share based payments (Note 22) 315,436 1,156,832
---------------------------------------------------------- ------------ ----------
Note 4 Staff Numbers and Costs (averages for the year)
Group Group Company Company
2021 2020 2021 2020
Finance and administration 37 39 14 19
Technical - permanent 456 424 7 8
Technical - temporary 329 164 - -
---------------------------- ------ ------ -------- --------
822 627 21 27
---------------------------- ------ ------ -------- --------
The aggregate payroll costs of employees were:
Group Group Company Company
2021 2020 2021 2020
US$ US$ US$ US$
Wages and salaries 23,566,670 18,435,276 5,020,454 2,952,026
Contributions to superannuation 191,064 103,384 191,064 103,384
Share based payments 315,436 1,156,832 315,436 1,156,832
--------------------------------- ----------- ----------- ---------- ----------
Total staff costs 24,073,170 19,695,492 5,526,954 4,212,242
--------------------------------- ----------- ----------- ---------- ----------
Included within total staff costs is US$20,176,654 (2020:
US$16,466,874) which has been capitalised as part of deferred
exploration costs.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 5 Remuneration of Key Management Personnel
Basic Annual Bonus
Salary Other Benefits(1) Pensions Total Remuneration
US$ US$ US$ US$ US$
2021
------------------------------ ------------- -------- ------------------ --------- -------------------
Directors
------------------------------ ------------- -------- ------------------ --------- -------------------
Keith Marshall(4) 212,145 - - - 212,145
------------------------------ ------------- -------- ------------------ --------- -------------------
Nicholas Mather (highest
paid director)(6) 827,381 - - - 827,381
------------------------------ ------------- -------- ------------------ --------- -------------------
Brian Moller 64,628 - - - 64,628
------------------------------ ------------- -------- ------------------ --------- -------------------
Robert Weinberg(2) 23,506 - - - 23,506
------------------------------ ------------- -------- ------------------ --------- -------------------
James Clare 61,824 - - - 61,824
------------------------------ ------------- -------- ------------------ --------- -------------------
Jason Ward(3) 304,352 - - - 304,352
------------------------------ ------------- -------- ------------------ --------- -------------------
Liam Twigger 93,075 - - 8,972 102,047
------------------------------ ------------- -------- ------------------ --------- -------------------
Elodie Grant Goodey(4) 71,756 - - - 71,756
------------------------------ ------------- -------- ------------------ --------- -------------------
Kevin O'Kane(4) 51,202 - - - 51,202
------------------------------ ------------- -------- ------------------ --------- -------------------
Maria Amparo Alban(4) 47,326 - - - 47,326
------------------------------ ------------- -------- ------------------ --------- -------------------
Other key management
personnel(5) 1,798,374 193,739 - 115,207 2,107,320
------------------------------ ------------- -------- ------------------ --------- -------------------
Total paid to key management
personnel 3,555,569 193,739 - 124,179 3,873,487
------------------------------ ------------- -------- ------------------ --------- -------------------
Other staff and contractors 19,725,000 92,363 315,436 66,885 20,199,684
------------------------------ ------------- -------- ------------------ --------- -------------------
Total 23,280,569 286,102 315,436 191,064 24,073,171
------------------------------ ------------- -------- ------------------ --------- -------------------
(1) Other Benefits represents the fair value of the share
options granted during the year based on the Black-Scholes model
considering the effects of the vesting conditions.
(2) Robert Weinberg resigned as a Director effective 17 December
2020.
(3) Jason Ward's Basic Annual Consultancy Fees includes total
remuneration paid for the year including payments prior to Director
appointment.
(4) Elodie Grant Goodey was appointed as a non-executive
Director on 17 July 2020. Keith Marshall, Kevin O'Kane and Maria
Amparo Alban were all appointed as non-executive Directors on 21
October 2020.
(5) Other key management personnel consist of the aggregated
remuneration of Karl Schlobohm (Company Secretary, retired in June
2021), Priy Jayasuriya (Chief Financial Officer, resigned in
November 2020), Benn Whistler (Technical Services Manager), Chris
Connell (Regional Exploration Manager), Peter Holmes (Director of
Studies), Ingo Hofmaier (Interim Chief Financial Officer, Executive
General Manager Projects and Corporate Finance), Nadine Dennison
(Chief Human Resources Officer, resigned in March 2021), Peter
Holmes (Director of Studies), Lisa Park (Metallurgy Manager, joined
in March 2021), Steve Belohlawek (General Manager Underground
Development and Mining, resigned in October 2020) and Eduardo
Valenzuela (Executive General Manager of Studies, deceased).
(6) Nick Mather received a severance pay-out during 2021 upon
retiring from the position of CEO.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 5 Remuneration of Key Management Personnel (continued)
Basic Annual Bonus
Salary Other Benefits(1) Pensions Total Remuneration
US$ US$ US$ US$ US$
2020
------------------------------ ------------- ------- ------------------ --------- -------------------
Directors
------------------------------ ------------- ------- ------------------ --------- -------------------
Nicholas Mather (highest
paid director) 400,162 - - - 400,162
------------------------------ ------------- ------- ------------------ --------- -------------------
Brian Moller 73,211 - - - 73,211
------------------------------ ------------- ------- ------------------ --------- -------------------
Robert Weinberg 46,755 - - - 46,755
------------------------------ ------------- ------- ------------------ --------- -------------------
Craig Jones(3) 46,331 - - - 46,331
------------------------------ ------------- ------- ------------------ --------- -------------------
James Clare 47,002 - - - 47,002
------------------------------ ------------- ------- ------------------ --------- -------------------
Jason Ward(4) 322,892 - - - 322,892
------------------------------ ------------- ------- ------------------ --------- -------------------
Liam Twigger 42,908 - 76,625 4,127 123,660
------------------------------ ------------- ------- ------------------ --------- -------------------
Anna Legge(2) 84,187 - - 447 84,634
------------------------------ ------------- ------- ------------------ --------- -------------------
Other key management
personnel(5) 1,067,381 38,595 928,599 77,185 2,111,760
------------------------------ ------------- ------- ------------------ --------- -------------------
Total paid to key management
personnel 2,130,829 38,595 1,005,224 81,759 3,256,407
------------------------------ ------------- ------- ------------------ --------- -------------------
Other staff and contractors 16,265,851 - 151,608 21,625 16,439,084
------------------------------ ------------- ------- ------------------ --------- -------------------
Total 18,396,680 38,595 1,156,832 103,384 19,695,491
------------------------------ ------------- ------- ------------------ --------- -------------------
(1) Other Benefits represents the fair value of the share
options granted during the year based on the Black-Scholes model
considering the effects of the vesting conditions.
(2) Anna Legge resigned as a Director effective 13 November
2019.
(3) Craig Jones resigned as Director effective 25 June 2020.
(4) Jason Ward's Basic Annual Consultancy Fees includes total
remuneration paid for the year including payments prior to Director
appointment.
(5) Other key management personnel consist of the aggregated
remuneration of Karl Schlobohm (Company Secretary), Priy Jayasuriya
(Chief Financial Officer,), Benn Whistler (Technical Services
Manager), Chris Connell (Regional Exploration Manager), Peter
Holmes (Director of Studies), Ingo Hofmaier (Executive General
Manager, Projects and Corporate Finance), Nadine Dennison (Chief
Human Resources Officer) and Eduardo Valenzuela (Executive General
Manager of Studies).
Note 6 Finance Income and Costs
Group Group
2021 2020
US$ US$
----------------------------------------- -------- --------
Interest income 4,962 74,090
----------------------------------------- -------- --------
Accretion of Interest on company funded
loan plan (Note 14) 449,613 439,246
----------------------------------------- -------- --------
Finance income 454,575 513,336
----------------------------------------- -------- --------
Group Group
2021 2020
US$ US$
----------------------------- ----------- --------
General interest 3,540 3,458
----------------------------- ----------- --------
Interest on lease liability 67,730 173,679
----------------------------- ----------- --------
Interest on bridging loan 371,275 248,303
----------------------------- ----------- --------
Interest on NSR 9,619,242 -
----------------------------- ----------- --------
Finance costs 10,061,787 425,440
----------------------------- ----------- --------
Notes to the Financial Statements
For the year ended 30 June 2021
Note 7 Tax Expense
Factors affecting the tax charge for the current year
SolGold's headquarters is in Australia and as the Company has
its central management and control in Australia, the applicable tax
rates are Australian. The tax credit for the period is lower than
the credit resulting from the application of the standard rate of
corporation tax in Australia of 30% (2020: 30%) being applied to
the loss before tax arising during the year. The differences are
explained below.
Group Group
2021 2020
US$ US$
Tax reconciliation
Loss before tax (22,741,994) (13,020,344)
------------------------------------------- ------------- -------------
Tax at 30% (2020: 30%) (6,822,598) (3,906,103)
Add / (less) tax effect of:
Permanent differences 474,253 654,558
Derecognise (Recognise) current year 4,483,039 -
tax losses
Derecognise (Recognise) prior year losses 7,879,110 2,668,255
Derecognition of temporary differences 378,687 -
Prior year tax expense attributable 6,504 -
to Ecuador
Current year tax expense attributable
to Ecuador 80,294
Prior period adjustments to true-up
tax return 10,979 (16,180)
Other 7,448 (13,390)
Impact of tax rate differences 2,500,519 116,269
Impact of exchange rate differences (8,847,062) 1,600,000
------------------------------------------- ------------- -------------
Income tax (benefit) expense on loss 151,173 1,103,409
------------------------------------------- ------------- -------------
Components of tax (expense) / benefit on
other comprehensive income comprise of:
Valuation gains on investments held at
fair value through OCI (see note 14) 692,474 (512,783)
------------------------------------------ -------- ----------
Income tax benefit / (expense) on other
comprehensive income 692,474 (512,783)
------------------------------------------ -------- ----------
Amounts recognised directly in equity
Attributable to prior periods 11,695 -
Net deferred tax credited directly to equity (768,544) (590,626)
---------------------------------------------- ---------- ----------
Income tax benefit recognised directly
in equity (756,849) (590,626)
---------------------------------------------- ---------- ----------
Deferred tax assets are recognised only to the extent of
deferred tax liabilities. Where deferred tax assets exceed deferred
tax liabilities, deferred tax assets on carried forward tax losses
are derecognised in the first instance.
Factors that may affect future tax charges
The Group has carried forward gross tax losses of approximately
US$88.88 million (2020: US$68.5 million). These losses may be
deductible against future taxable income dependent upon the
on-going satisfaction by the relevant Group Company of various tax
integrity measures applicable in the jurisdiction where the tax
loss has been incurred. The jurisdictions in which tax losses have
been incurred include Australia, Ecuador and the Solomon Islands.
Tax losses in Australia (US$73.3 million) can be carried forward
indefinitely while in Ecuador (US$15.51 million), tax losses may be
carried forward and offset against profits in the following five
years, provided that the amount offset does not exceed 25% of the
year's profits.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 8 Loss Per Share
2021 2020
Cents per Cents per
share share
Basic loss per share (1.1) (0.7)
Diluted loss per share (1.1) (0.7)
------------------------ ----------- -----------
2021 2020
US$ US$
------------------------------------------ -------------- -----------------
(a) Loss
------------------------------------------ -------------- -----------------
Loss used to calculate basic and diluted
loss per share (22,811,409) (14,067,978)
Number of Number of shares
shares
------------------------------------------ -------------- -----------------
(b) Weighted average number of shares
------------------------------------------ -------------- -----------------
Used in calculating basic LPS 2,115,829,663 1,900,597,102
------------------------------------------ -------------- -----------------
Weighted average number of dilutive - -
options
------------------------------------------ -------------- -----------------
Weighted average number of ordinary
shares and potential ordinary shares
used in calculating dilutive LPS 2,115,829,663 1,900,597,102
------------------------------------------ -------------- -----------------
Options granted are not included in the determination of diluted
earnings per share as they are considered to be anti-dilutive.
These out of the money options may become dilutive in the
future.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 9 Investments in Subsidiary Undertakings
(1) Reporting Country of Registered Address Principal SolGold plc's
date is 31 December incorporation activity effective
and operation interest
2021 2020
Australian Resource Level 27, 111 Eagle Street
Management (ARM) Brisbane, QLD, 4000
Pty Ltd Australia Australia Exploration 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
Level 27, 111 Eagle Street
Acapulco Mining Brisbane, QLD, 4000
Pty Ltd Australia Australia Exploration 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
Level 27, 111 Eagle Street
Central Minerals Brisbane, QLD, 4000
Pty Ltd Australia Australia Exploration 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
c/- Morris & Sojnocki
Chartered Accountants
1st Floor City Centre
Solomon Operations Solomon Building, Mendana Avenue,
Ltd Islands Honiara, Solomon Islands Exploration 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
Level 27, 111 Eagle Street
Honiara Holdings Brisbane, QLD, 4000
Pty Ltd Australia Australia Exploration 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
Level 27, 111 Eagle Street
Guadalcanal Exploration Brisbane, QLD, 4000
Pty Ltd Australia Australia Exploration 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
Avenida La Coruña
E25-58 y San Ignacio,
Edificio Altana Plaza
Exploraciones piso 4, oficina 406
Novomining S.A.(1) Ecuador Quito, Ecuador Exploration 85% 85%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
Avenida La Coruña
E25-58 y San Ignacio,
Edificio Altana Plaza
Carnegie Ridge piso 4, oficina 406
Resources S.A.(1) Ecuador Quito, Ecuador Exploration 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
Avenida La Coruña
E25-58 y San Ignacio,
Edificio Altana Plaza
Green Rock Resources piso 4, oficina 406
S.A.(1) Ecuador Quito, Ecuador Exploration 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
Avenida La Coruña
E25-58 y San Ignacio,
Edificio Altana Plaza
Valle Rico Resources piso 4, oficina 406
S.A.(1) Ecuador Quito, Ecuador Exploration 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
Avenida La Coruña
E25-58 y San Ignacio,
Edificio Altana Plaza
piso 4, oficina 406
Cruz del Sol S.A.(1) Ecuador Quito, Ecuador Exploration 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
Avenida La Coruña
E25-58 y San Ignacio,
Edificio Altana Plaza
SolGold Ecuador piso 4, oficina 406 Services
S.A.(1) Ecuador Quito, Ecuador Management 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
Novoproyectos-Sustentables Ecuador Avenida La Coruña Project 100% -
S.A.(1) E25-58 y San Ignacio, development
Edificio Altana Plaza
piso 4, oficina 406
Quito, Ecuador
---------------------------- ---------------- ---------------------------- -------------- ------- -------
4500, 855 - 2nd Street
SolGold Canadian S.W,
Callco Corp.(1) Canada Calgary, Alberta T2P 4K7 Investment 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
4500, 855 - 2nd Street
SolGold Canadian S.W,
Exchangeco Corp. Canada Calgary, Alberta T2P 4K7 Investment 100% 100%
---------------------------- ---------------- ---------------------------- -------------- ------- -------
SolGold Finance Switzerland Baarerstrasse 21, Investment 100% -
AG
6300 Zug
-------------------------------------------- -------------------------------------------- ------- -------
Notes to the Financial Statements
For the year ended 30 June 2021
Note 9 Investments in Subsidiary Undertakings (continued)
Investment
in subsidiary
undertakings
Investment
US$
Cost
----------------------------- ---------------
Balance at 30 June 2019 235,685,568
----------------------------- ---------------
Acquisitions and advances
in the year 59,443,957
----------------------------- ---------------
Balance at 30 June 2020 295,129,525
----------------------------- ---------------
Acquisitions and advances
in the year(1) 33,592,422
----------------------------- ---------------
Reallocation to SolGold
Finance AG (173,497,993)
----------------------------- ---------------
Balance at 30 June 2021 155,223,954
----------------------------- ---------------
Amortisation and impairment
losses
----------------------------- ---------------
Balance at 30 June 2019 (35,178,110)
----------------------------- ---------------
Change in currency variance -
----------------------------- ---------------
Balance at 30 June 2020 (35,178,110)
----------------------------- ---------------
Change in currency variance -
----------------------------- ---------------
Balance at 30 June 2021 (35,178,110)
----------------------------- ---------------
Carrying amounts
Balance at 30 June 2019 200,507,458
----------------------------- ---------------
Balance at 30 June 2020 259,951,415
----------------------------- ---------------
Balance at 30 June 2021 120,045,844
----------------------------- ---------------
(1) During the year ended 30 June 2021, the intercompany loans
between SolGold plc and Exploraciones Novomining S.A./SolGold
Ecuador S.A. were reallocated to a newly established intermediary
company (SolGold Finance AG).
Note 10 Intercompany Loans with Subsidiaries
Intercompany
Loans with
Subsidiaries
Loan
US$
Cost
----------------------------- --------------
Balance at 30 June 2019 -
----------------------------- --------------
Advances in the year -
----------------------------- --------------
Balance at 30 June 2020 -
----------------------------- --------------
Reallocation of loans 173,497,993
----------------------------- --------------
BLA Offset (15,619,579)
----------------------------- --------------
Advances in the year 5,001,463
----------------------------- --------------
Interest accrued in the
year 4,519,890
----------------------------- --------------
Balance at 30 June 2021 167,399,767
----------------------------- --------------
Amortisation and impairment
losses
----------------------------- --------------
Balance at 30 June 2019 -
----------------------------- --------------
Additions -
----------------------------- --------------
Balance at 30 June 2020 -
----------------------------- --------------
Additions -
----------------------------- --------------
Balance at 30 June 2021 -
----------------------------- --------------
Carrying amounts
Balance at 30 June 2019 -
----------------------------- --------------
Balance at 30 June 2020 -
----------------------------- --------------
Balance at 30 June 2021 167,399,767
----------------------------- --------------
Notes to the Financial Statements
For the year ended 30 June 2021
Note 10 Intercompany Loans with Subsidiaries (continued)
In September 2020 SolGold plc transferred its investments and
associated intercompany loans in ENSA (85%) and SolGold Ecuador
S.A. (100%) to a newly established wholly-owned subsidiary called
SolGold Finance AG.
Upon the transfer of the investments and associated intercompany
loans from ENSA and SolGold Ecuador S.A. to SolGold Finance AG, a
new back-to-back loan agreement was implemented between SolGold plc
and SolGold Finance AG. The key terms of this new back-to-back loan
agreement include:
-- 10 year loan maturity period
-- 3.5% annual interest rate, calculated daily
-- Interest accrues and is due on or before 10 years, or
thereafter by agreement between the parties
-- SolGold plc has the ability to call the loan for repayment at
any point on or before 10 years from the date of issue
-- SolGold Finance AG may prepay the whole or any part of the
advances made by SolGold plc at any point without notice, penalty
or bonus
The Company has assessed the receivable and no loss allowances
have been made, refer Note 1(v).
Note 11 Investments
(a) Investments accounted for as financial assets held at fair value through OCI
Group Company
2021 2020 2021 2020
US$ US$ US$ US$
Movements in financial
assets
Opening balance at
1 July 4,119,179 5,952,439 4,113,660 5,946,815
Additions 813,927 - 813,927 -
Fair value adjustment
through OCI 1,891,936 (1,833,260) 1,891,459 (1,833,155)
Balance at 30 June 6,825,042 4,119,179 6,819,046 4,113,660
---------- ------------ ---------- ------------
Financial assets comprise an investment in the ordinary issued
capital of Cornerstone Capital Resources Inc., listed on the TSX
Venture Exchange and an investment in the ordinary issued capital
of Aus Tin Mining Ltd, a company listed on the Australian
Securities Exchange.
(b) Fair value
Fair value hierarchy
The following table details the consolidated entity's assets and
liabilities, measured or disclosed at fair value, using a
three-level hierarchy, based on the lowest level of input that is
significant to the entire fair value measurement being:
Level 1 : Quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the
measurement date.
Level 2 : Inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
or indirectly.
Level 3 : Unobservable inputs for the asset or liability.
The fair values of financial assets approximate their carrying
amounts principally due to their short-term nature or the fact that
they are measured and recognised at fair value.
The following table represents the Group's financial assets
measured and recognised at fair value.
US$ US$ US$ US$
Level Level 2 Level 3 Total
1
2021
Financial assets held at
fair value through OCI 6,825,042 - - 6,825,042
2020
Financial assets held at
fair value through OCI 4,119,179 - - 4,119,179
The financial assets are measured based on the quoted market
prices at 30 June and therefore are classified as Level 1.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 12 Property, Plant and Equipment
Group Company
Land and Property, Motor Office Furniture Total Total
Buildings Plant and Vehicles Equipment & Fittings
Equipment
US$ US$ US$ US$ US$ US$ US$
Cost
Balance 30
June 2019 7,245,043 1,056,889 1,105,265 646,113 262,360 10,315,670 223,937
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Effect of
foreign exchange
on opening
balance - 17,528 (1,028) (617) (196) 15,687 18,626
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Additions 5,154,482 219,381 - 83,818 2,750 5,460,431 27,956
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
IFRS 16 transition
additions - 2,125,847 - - - 2,125,847 1,889,132
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Disposals - (515,540) - - - (515,540) (515,540)
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Balance 30
June 2020 12,399,525 2,904,105 1,104,237 729,314 264,914 17,402,095 1,644,111
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Effect of
foreign exchange
on opening
balance - 124,554 4,596 2,776 877 132,803 119,635
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Additions 972,957 457,182 - 187,496 9,400 1,627,035 19,304
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
IFRS 16 modifications - (12,645) - - - (12,645) -
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Disposals - - (35,155) - - (35,155) -
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Balance 30
June 2021 13,372,482 3,473,196 1,073,678 919,586 275,191 19,114,133 1,783,050
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Depreciation
and impairment
losses
Balance 30
June 2019 - (422,065) (518,690) (398,020) (129,110) (1,467,885) (140,027)
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Effect of
foreign exchange
on opening
balance - (47,832) 1,025 642 196 (45,967) (8,358)
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Depreciation
charge for
the year - (615,222) - (60,191) (9,919) (685,332) (525,467)
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Depreciation
capitalised
to exploration - (127,247) (195,290) (119,928) (36,388) (478,853) -
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Disposals - 216,932 - - - 216,932 216,932
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Balance 30
June 2020 - (995,434) (712,955) (577,497) (175,221) (2,461,107) (456,920)
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Effect of
foreign exchange
on opening
balance - (29,513) (4,595) (2,858) (877) (37,843) (24,606)
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Depreciation
charge for
the year - (482,064) - (93,615) (6,347) (582,026) (341,626)
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Depreciation
capitalised
to exploration - (123,839) (188,182) (37,907) (36,264) (386,192) (1,048)
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Disposals - - 35,155 - - 35,155 -
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Balance 30
June 2021 - (1,630,850) (870,577) (711,877) (218,709) (3,423,013) (824,200)
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Carrying
amounts
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
At 30 June
2019 7,245,043 634,824 586,575 248,093 133,250 8,847,785 83,910
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
At 30 June
2020 12,399,525 1,908,671 391,282 151,817 89,693 14,940,988 1,187,191
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
At 30 June
2021 13,372,482 1,842,346 203,101 207,709 56,482 15,682,120 958,850
----------------------- ----------- ------------ ---------- ----------- ------------ ------------ ----------
Notes to the Financial Statements
For the year ended 30 June 2021
Note 13 Intangible Assets
Group deferred
exploration
costs
US$
Cost
Balance at 30 June 2019 214,860,493
--------------------------------------- ---------------
Effect of foreign exchange on opening
balances (129,525)
--------------------------------------- ---------------
Additions - expenditure 53,121,969
--------------------------------------- ---------------
Balance at 30 June 2020 267,852,937
--------------------------------------- ---------------
Effect of foreign exchange on opening
balances 667,247
--------------------------------------- ---------------
Additions - expenditure 77,512,965
Balance at 30 June 2021 346,033,149
--------------------------------------- ---------------
Impairment losses
Balance at 30 June 2019 (37,378,621)
Impairment Charge (218,163)
--------------------------------------- ---------------
Balance at 30 June 2020 (37,596,784)
Impairment Charge (4,353)
--------------------------------------- ---------------
Balance at 30 June 2021 (37,601,137)
--------------------------------------- ---------------
Carrying amounts
--------------------------------------- ---------------
At 30 June 2019 177,481,872
--------------------------------------- ---------------
At 30 June 2020 230,256,153
--------------------------------------- ---------------
At 30 June 2021 308,432,012
--------------------------------------- ---------------
Impairment loss
A decision was made to expense US$4,353 (2020: US$218,163) of
exploration expenditure associated with other tenements that were
surrendered or lapsed during the year. An assessment of the
carrying values of deferred exploration costs is provided
below.
Alpala project (85% Ownership)
The Alpala project is located in Northern Ecuador, lying upon
the gold rich section of the northern section of the prolific
Andean Copper belt, renowned as the base for nearly half of the
world's copper production. The project area hosts mineralisation of
Eocene age, the same age as numerous Tier 1 deposits along the
Andean Copper Belt in Chile and Peru to the south. The project is a
three-hour drive north of Quito, close to water, power supply and
Pacific ports.
The Alpala Porphyry Copper-Gold-Silver Deposit, at a cut-off
grade of 0.21% CuEq, comprises 2,663 Mt at 0.53% CuEq in the
Measured plus Indicated categories, which includes 1,192 Mt at
0.72% CuEq in the Measured category and 1,470 Mt at 0.37% CuEq in
the Indicated category. The Inferred category contains an
additional 544 Mt at 0.31% CuEq.
The estimate comprises a contained metal content of 9.9 Mt Cu
and 21.7 Moz Au in the Measured plus Indicated categories, which
includes 5.7 Mt Cu and 15 Moz Au in the Measured category, and 4.2
Mt Cu and 6.6 Moz Au in the Indicated category. The Inferred
category contains an additional 1.3 Mt Cu and 1.9 Moz Au.
Based on the above management have assessed that there are no
indicators of impairment for the aggregate carrying value of
US$228.41 million.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 13 Intangible Assets (continued)
SolGold 100% owned projects
Regional concessions granted for 100% SolGold Ecuador
subsidiaries
The four 100% owned subsidiary companies in Ecuador: Carnegie
Ridge Resources S.A., Green Rock Resources S.A., Cruz del Sol S.A.
and Valle Rico Resources S.A. hold 72 mining concessions in Ecuador
that the companies were successful in bidding as part of the
auction process in 2016 and 2017.
The Company has carried out initial exploration work programs on
these concessions and delineated 13 priority projects, five of
which have been elevated to drill ready status.
Based on the above management have assessed that there are no
indicators of impairment for the aggregate carrying value of
US$69.16 million.
Acapulco Mining projects
The main exploration project of Acapulco Mining Pty Ltd is the
Mt Perry project. A comprehensive assessment of the project has
identified the Upper Chinaman's Creek prospects as the highest
priority high-grade opportunity. Ground access negotiations were
initiated with the main landowner and preliminary access was
granted in the 2020/21 financial year.
Based on the above management have assessed that there are no
indicators of impairment for the aggregate carrying value of
US$6.88 million.
Central Minerals projects
Central Minerals hold the Rannes project where recently
completed exploration activities include:
-- Work on the Rannes Project focused on plate modelling of VTEM
data and commencement of the integration of 3DIP, VTEM and magnetic
inversion model data
-- Air-photo based litho-structural geological review and interpretation
Based on the above management have assessed that there are no
indicators of impairment for the aggregate carrying value of
US$3.55 million.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 14 Loan Receivables and Other Assets
Group Group Company Company
2021 2020 2021 2020
US$ US$ US$ US$
Loan receivable and other
current assets
---------------------------- ---------- ------ ---------- --------
Company Funded Loan Plan
Receivable 6,495,930 - 6,495,930 -
---------------------------- ---------- ------ ---------- --------
Closing balance at the end
of the reporting period 6,495,930 - 6,495,930 -
---------------------------- ---------- ------ ---------- --------
Group Group Company Company
2021 2020 2021 2020
US$ US$ US$ US$
Loan receivable and other
non-current assets
---------------------------- ---------- ---------- -------- ----------
Security bonds 1,457,324 1,329,571 756,332 800,586
---------------------------- ---------- ---------- -------- ----------
Company funded loan plan
receivable - 6,373,398 - 6,373,398
---------------------------- ---------- ---------- -------- ----------
Closing balance at the end
of the reporting period 1,457,324 7,702,969 756,332 7,173,984
---------------------------- ---------- ---------- -------- ----------
Company funded loan plan
receivable
---------------------------------- ------------ ---------- ------------ ----------
Balance at beginning of
reporting period 6,373,398 6,496,407 6,373,398 6,496,407
---------------------------------- ------------ ---------- ------------ ----------
Additions - funds loaned
under the plan - - - -
---------------------------------- ------------ ---------- ------------ ----------
Proceeds received for payment
of the loans during the
period (1,065,245) - (1,065,245) -
---------------------------------- ------------ ---------- ------------ ----------
Fair value adjustment recognised
as an employee benefit expense - (402,082) - (402,082)
---------------------------------- ------------ ---------- ------------ ----------
Accretion of interest 449,613 439,246 449,613 439,246
---------------------------------- ------------ ---------- ------------ ----------
Effect of foreign exchange 738,164 (160,173) 738,164 (160,173)
---------------------------------- ------------ ---------- ------------ ----------
Balance at end of reporting
period 6,495,930 6,373,398 6,495,930 6,373,398
---------------------------------- ------------ ---------- ------------ ----------
The CFLP is a plan established by the Company to assist
employees in exercising share options. On 29 October 2018, the
Company assisted employees to exercise 19,950,000 options
previously issued to employees of the Company in 2016 via the CFLP.
As at 30 June 2021 total repayments of US$1,065,245 have been
received against the loans provided.
The key terms of this CFLP on the date the loans were granted
were as follows:
-- The employee may only use a loan under the Plan to pay for
the exercise of Employee Options granted by the Company.
-- The loan will be granted for a maximum period of 2 years (extended in the meantime).
-- No interest will be charged on the loan.
-- The loan is secured by the shares granted on the exercise of the Employee Options.
-- The loans provided are full recourse.
As the loan provided by the Company was at a favourable rate of
interest for the employees, the loan receivable under the Plan was
fair valued at the date of grant. The fair value of the loan was
estimated based on the future cash flow and a market rate of 7%. In
future reporting periods, the loan will be measured at amortised
cost. The loans provided are full recourse loans. If the sale of
shares does not cover full repayment the balance will be recovered
from employees. This transaction was a non-cash transaction with
employees. Management have considered the likelihood of default is
low and the expected credit losses under the loans will be
immaterial and accordingly, no impairment has been recognised at 30
June 2021. The loan is a non-cash transaction, and accordingly the
exposure to credit risk is low.
On 24 February 2020 the maturity date for the CFLP was extended
by 12 months to 29 October 2021. All other terms of the CFLP
remained consistent. The 12-month extension of the loan resulted in
an overall increase of US$402,082 in employee benefits expense.
This fair value adjustment is represented in the above table and
was recognised as an employee benefit expense.
At 30 June 2021 the loan has been reclassified as a current
asset as there is less than 12 months for all payments to be made
in full.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 14 Loan Receivables and Other Assets (continued)
The Board of Directors in June 2021 resolved to extend the CFLP
until the 31 December 2021.
Security bonds relate to cash security held against office
premises, Level 27, 111 Eagle St, Brisbane, Queensland Australia, 1
King Street, St Paul's London United Kingdom, Baarerstrasse 21,
6300 Zug, cash security held by Queensland Department of Natural
Resources and Mines against Queensland exploration tenements held
by the Group and on cash backed bank guarantees held by the
Ecuadorian Ministry of Environment against Ecuadorian exploration
tenements held by the Group.
Note 15 Deferred Taxation
Recognised deferred tax assets and liabilities
Group Opening Net charged Net charged Net charged Net movement Closing
balance to income to other to equity on unwind balance
comprehensive / transfer
income US$
2021 US$ US$ US$ US$ US$
Recognised deferred
tax assets
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Carried forward tax
losses 7,184,409 (7,184,409) - - - -
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Accruals / provisions 1,431,263 (670,986) - 756,849 - 1,517,126
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Potential benefit 8,615,672 (7,855,395) - 756,849 - 1,517,126
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Recognised deferred
tax liabilities
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Financial assets
held at fair value
through other comprehensive
income (569,295) 60,036 (692,474) - - (1,201,733)
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Derivative liabilities (67,340) 110,654 - - - 43,314
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Exploration and evaluation
assets (2,302,332) (296,921) - - - (2,599,253)
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Foreign exchange
gains/losses (5,317,434) 7,836,277 - - - 2,518,843
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
IFRS 16 right of
use asset (359,271) 80,974 - - - (278,297)
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Potential benefit (8,615,672) 7,791,020 (692,474) - - (1,517,126)
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Net deferred taxes - (64,375) (692,474) 756,849 -
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Deferred tax assets
not recognised
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Unused tax losses 5,369,347 20,150,640 - - - 25,519,987
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Temporary differences(1) 8,962,905 378,687 - - - 9,341,592
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
Tax benefit 14,332,252 20,529,327 - - - 34,861,579
------------------------------ ------------ ------------ --------------- ------------ ------------- ------------
(1) Exploration expenditure incurred in the Solomon Islands that
has been expensed. This expenditure is deductible over 5 years from
when production commences.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 15 Deferred Taxation (continued)
Recognised deferred tax assets and liabilities (continued)
Group Opening Net charged Net charged Net charged Net movement Closing
balance to income to other to equity on unwind balance
comprehensive / transfer
income US$
2020 US$ US$ US$ US$ US$
Recognised deferred
tax assets
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Carried forward tax
losses 10,029,422 (2,845,013) - - - 7,184,409
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Accruals / provisions 956,757 (116,120) - 590,626 - 1,431,263
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Potential benefit 10,986,179 (2,961,133) - 590,626 - 8,615,672
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Recognised deferred
tax liabilities
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Financial assets
held at fair value
through other comprehensive
income (1,224,062) 141,984 512,783 - - (569,295)
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Derivative liabilities - (67,340) - - - (67,340)
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Exploration and evaluation
assets (2,223,619) (78,713) - - - (2,302,332)
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Foreign exchange
gains/losses (7,538,499) 2,221,065 - - - (5,317,434)
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
IFRS 16 right of
use asset - (359,272) - - - (359,272)
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Potential benefit (10,986,179) 1,857,724 512,783 - - (8,615,673)
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Net deferred taxes - (1,103,409) 512,783 590,626 - -
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Deferred tax assets
not recognised
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Unused tax losses 5,369,347 7,354,701 - - - 12,724,048
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Temporary differences(1) 8,962,905 - - - - 8,962,905
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
Tax benefit 14,332,252 7,354,701 - - - 21,686,953
----------------------------- ------------- ------------ --------------- ------------ ------------- ------------
(1) Exploration expenditure incurred in the Solomon Islands that
has been expensed. This expenditure is deductible over 5 years from
when production commences.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 15 Deferred Taxation (continued)
Recognised deferred tax assets and liabilities (continued)
Company Opening Net charged Net charged Net charged Closing
balance to income to other to equity balance
comprehensive
income
2021 US$ US$ US$ US$
Recognised deferred
tax assets
------------------------------ ------------ ------------ --------------- ------------ ------------
Carried forward tax
losses 4,860,353 (4,860,353) - - -
------------------------------ ------------ ------------ --------------- ------------ ------------
Accruals / provisions 363,929 (60,916) - - 303,013
------------------------------ ------------ ------------ --------------- ------------ ------------
Capital raising costs 977,865 (615,239) - 756,849 1,119,475
------------------------------ ------------ ------------ --------------- ------------ ------------
Other temporary differences 20,083 (9,044) - - 11,039
------------------------------ ------------ ------------ --------------- ------------ ------------
Potential benefit 6,222,230 (5,545,552) - 756,849 1,433,527
------------------------------ ------------ ------------ --------------- ------------ ------------
Recognised deferred
tax liabilities
------------------------------ ------------ ------------ --------------- ------------ ------------
Financial assets
held at fair value
through other comprehensive
income (569,295) 60,036 (692,474) - (1,201,733)
------------------------------ ------------ ------------ --------------- ------------ ------------
Derivative liabilities - 43,313 43,313
------------------------------ ------------ ------------ --------------- ------------ ------------
Foreign exchange
gains / (losses) (5,317,434) 5,317,434 - - -
------------------------------ ------------ ------------ --------------- ------------ ------------
IFRS 16 right of
use asset (335,501) 60,394 - - (275,107)
------------------------------ ------------ ------------ --------------- ------------ ------------
Potential benefit (6,222,230) 5,481,177 (692,474) - (1,433,527)
------------------------------ ------------ ------------ --------------- ------------ ------------
Net deferred taxes - (64,375) (692,474) 756,849 -
------------------------------ ------------ ------------ --------------- ------------ ------------
Deferred tax assets
not recognised
------------------------------ ------------ ------------ --------------- ------------ ------------
Unused tax losses 5,347,495 16,758,127 - - 22,105,622
------------------------------ ------------ ------------ --------------- ------------ ------------
Unused capital losses - - - - -
------------------------------ ------------ ------------ --------------- ------------ ------------
Temporary differences - 2,973,922 - - 2,973,922
------------------------------ ------------ ------------ --------------- ------------ ------------
Tax benefit 5,347,495 19,732,049 - - 25,079,544
------------------------------ ------------ ------------ --------------- ------------ ------------
Notes to the Financial Statements
For the year ended 30 June 2021
Note 15 Deferred Taxation (continued)
Recognised deferred tax assets and liabilities (continued)
Company Opening Net charged Net charged Net charged Closing
balance to income to other to equity balance
comprehensive
income
2020 US$ US$ US$ US$ US$
Recognised deferred
tax assets
------------------------------ ------------ ------------ --------------- ------------ ------------
Carried forward tax
losses 7,805,802 (2,945,449) - - 4,860,353
------------------------------ ------------ ------------ --------------- ------------ ------------
Accruals / provisions 30,994 332,935 - - 363,929
------------------------------ ------------ ------------ --------------- ------------ ------------
Capital raising costs 894,532 (507,293) - 590,626 977,865
------------------------------ ------------ ------------ --------------- ------------ ------------
Other temporary differences 31,232 (11,149) - - 20,083
------------------------------ ------------ ------------ --------------- ------------ ------------
Potential benefit 8,762,560 (3,130,957) - 590,626 6,222,230
------------------------------ ------------ ------------ --------------- ------------ ------------
Recognised deferred
tax liabilities
------------------------------ ------------ ------------ --------------- ------------ ------------
Financial assets
held at fair value
through other comprehensive
income (1,224,062) 141,984 512,783 - (569,295)
------------------------------ ------------ ------------ --------------- ------------ ------------
Foreign exchange
gains / (losses) (7,538,499) 2,221,065 - - (5,317,434)
------------------------------ ------------ ------------ --------------- ------------ ------------
IFRS 16 right of
use asset - (335,501) (335,501)
------------------------------ ------------ ------------ --------------- ------------ ------------
Potential benefit (8,762,561) 2,027,548 512,783 - (6,222,230)
------------------------------ ------------ ------------ --------------- ------------ ------------
Net deferred taxes - (1,103,409) 512,783 590,626 -
------------------------------ ------------ ------------ --------------- ------------ ------------
Deferred tax assets
not recognised
------------------------------ ------------ ------------ --------------- ------------ ------------
Unused tax losses 5,347,495 5,418,935 - - 10,766,430
------------------------------ ------------ ------------ --------------- ------------ ------------
Unused capital losses - - - - -
------------------------------ ------------ ------------ --------------- ------------ ------------
Temporary differences - - - - -
------------------------------ ------------ ------------ --------------- ------------ ------------
Tax benefit 5,347,495 5,418,935 - - 10,766,430
------------------------------ ------------ ------------ --------------- ------------ ------------
The deferred tax asset in respect of these items has not been
recognised as future taxable profit is not anticipated within the
foreseeable future.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 16 Other Receivables and Prepayments
Group Group Company Company
2021 2020 2021 2020
US$ US$ US$ US$
Trade and other receivables 6,807,738 2,110,654 1,341,539 70,139
Taxes receivable 431,101 245,565 206,001 117,071
Prepayments 1,219,655 527,697 391,076 526,987
Other receivables and prepayments 8,458,494 2,883,916 1,938,616 714,197
------------------------------------ ---------- ---------- ---------- --------
Other receivables represent Australian Goods and Services Tax
receivable and deposits made to landowners in Ecuador for land
purchases. Management have considered the expected credit loss on
the deposits to landowners as immaterial and accordingly, no
impairment has been recognised at 30 June 2021. As these land
deposits are dependent on the Cascabel project, they are not
impaired. There is no indication the Cascabel project will not go
ahead.
Note 17 Cash and Cash Equivalents
Group Group Company Company
2021 2020 2021 2020
US$ US$ US$ US$
Cash at bank 109,562,103 46,895,243 72,918,016 45,356,423
Cash and cash equivalents
in the statement of cash
flows 109,562,103 46,895,243 72,918,016 45,356,423
--------------------------- ------------ ----------- ----------- -----------
Note 18 Allotted, Called-up and Fully Paid Share Capital and Reserves
(a) Authorised Share Capital
2020 2020
No. of Shares Nominal Value
GBP
--------------------------------------- ---------------- ---------------
At 1 July 2019 - Ordinary shares 3,368,228,400 33,682,284
--------------------------------------- ---------------- ---------------
Previous years increase in authorised
capital having expired (1,521,907,367) (15,219,074)
--------------------------------------- ---------------- ---------------
Increase in authorised share capital
of GBP0.01 each on 20 September
2019 443,750,000 4,437,500
--------------------------------------- ---------------- ---------------
Increase in authorised share capital
of GBP0.01 each on 20 September
2019 615,440,300 6,154,403
--------------------------------------- ---------------- ---------------
At 30 June 2020 - Ordinary shares 2,905,511,333 29,055,113
--------------------------------------- ---------------- ---------------
2021 2021
No. of Shares Nominal Value
GBP
----------------------------------------------- --------------- ---------------
At 1 July 2020 - Ordinary shares 2,905,511,333 29,055,113
----------------------------------------------- --------------- ---------------
Previous years increase in authorised capital
having expired (443,750,000) (4,437,500)
----------------------------------------------- --------------- ---------------
Previous years increase in authorised capital
having expired (615,440,300) (6,154,403)
----------------------------------------------- --------------- ---------------
Increase in authorised share capital of
two-thirds of issued capital on 17 December
2020 1,230,880,689 12,308,807
----------------------------------------------- --------------- ---------------
At 30 June 2021 - Ordinary shares 3,077,201,722 30,772,017
----------------------------------------------- --------------- ---------------
Ordinary shares participate in dividends and the proceeds on
winding up the Company in proportion to the number of shares held.
At shareholder meetings each ordinary share is entitled to one vote
when a poll is called, otherwise each shareholder has one vote on
show of hands.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 18 Allotted, Called-up and Fully Paid Share Capital and Reserves (continued)
(b) Changes in Allotted, Called-up and Fully Paid Share Capital
and Share Premium
No. of Nominal Share Total
Shares Value Premium
US$ US$ US$
Ordinary shares of 1p each at 1
July 2019 1,846,321,033 26,402,424 297,375,959 323,778,383
Shares issued at GBP0.2215 - BHP
share issue 2 December 2019 77,000,000 995,225 18,456,842 19,452,067
Shares issued at GBP0.215 - Placing
share issue 5 June 2020 121,359,680 1,537,627 31,679,823 33,217,450
Shares issued at GBP0.215 - PrimaryBid
share issue 5 June 2020 4,813,526 60,987 1,241,838 1,302,825
Shares issued at GBP0.215 - Directors
share issue 9 June 2020 162,790 2,063 42,428 44,491
Shares issued at GBP0.215 - Private
Investor share issue 12 June 2020 21,440,186 269,041 5,516,387 5,785,428
Shares issued at GBP0.215 - Additional
Subscription share issue 12 June
2020 1,116,279 14,144 291,616 305,760
Share issue costs charge to share
premium account - - (1,384,412) (1,384,412)
Ordinary shares of 1p at 30 June
2020 2,072,213,494 29,281,511 353,220,481 382,501,992
---------------------------------------- -------------- ----------- ------------ ------------
*Both Newcrest and BHP had anti-dilution rights under their
respective share subscription agreements to subscribe for further
shares to maintain their relevant interests of the share capital of
SolGold.
No. of Nominal Share Total
Shares Value Premium
US$ US$ US$
Ordinary shares of 1p each at 1
July 2020 2,072,213,494 29,281,511 353,220,481 382,501,992
Shares issued at $0.42 - Valuestone
12 November 2020 11,900,000 156,579 4,843,421 5,000,000
Shares issued at GBP0.255 - Placing
share issue 28 April 2021 204,922,643 2,846,328 69,735,022 72,581,350
Shares issued at GBP0. 255 - Directors
share issue 28 April 2021 1,543,858 21,440 525,276 546,716
Shares issued at GBP0. 255 - Retail
Offer share issue 28 April 2021 1,736,437 24,140 591,428 615,568
Shares issued at GBP0.25 - Exercise
of employee options 15 June 2021 1,500,000 20,701 496,834 517,535
Share issue costs charge to share
premium account - - (2,593,300) (2,593,300)
Ordinary shares of 1p at 30 June
2021 2,293,816,433 32,350,699 426,819,162 459,169,861
---------------------------------------- -------------- ----------- ------------ ------------
(c) Other Reserves
Group Group Company Company
2021 2020 2021 2020
US$ US$ US$ US$
Financial assets held at
fair value through other
comprehensive income 3,253,029 2,054,043 3,253,029 2,054,043
Share based payment reserve 37,174,699 36,859,263 37,174,699 36,859,263
Other reserves (632,034) (581,656) - -
Total Other reserves 39,795,694 38,331,650 40,427,728 38,913,306
----------------------------- ----------- ----------- ----------- -----------
------------------------------------------------------------------------------------
Capital management
Management controls the capital of the Group in order to
generate long-term shareholder value and ensure that the Group can
fund operations and continue as a going concern. Management
effectively manages the Group's capital by assessing the Group's
financial risks and adjusting its capital structure in response to
changes in these risks and in the market. These responses include
share issues and debt considerations. Given the nature of the
Group's current activities the entity will remain dependant on
equity funding in the short to medium term until such time as the
Group becomes self-financing from the commercial production of
mineral resources.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 19 Trade and Other Current Payables
Group Group Company Company
2021 2020 2021 2020
US$ US$ US$ US$
Current
Trade payables 838,753 1,953,358 744,927 1,502,250
Other payables 3,834,338 2,859,642 229,315 251,161
Accrued expenses 3,174,559 1,247,868 501,152 863,530
Trade and other current
payables 7,847,650 6,060,193 1,475,394 2,616,941
------------------------- ---------- ---------- ---------- ----------
Trade and other payables are measured at amortised cost. The
decrease in trade payables is mainly due to the decrease in
corporate administration costs associated with legal, accounting
and consultancy fees in relation to the Franco-Nevada Bridging Loan
and NSR Financing Agreement, and the unsuccessful CGP takeover
offer incurred during the year ended 30 June 2020.
The increase in accrued expenses for the Group mainly relates to
the increase in Drilling costs for the year ended 30 June 2021, as
the COVID-19 restrictions eased and additional drilling commenced
on the Regional projects.
Note 20 Lease Liabilities
Group Group Company Company
2020 2019 2020 2019
US$ US$ US$ US$
Current liability
Lease liability 335,749 314,524 319,275 222,109
------------------------ -------- -------- -------- --------
Balance at the
end of the reporting
period 335,749 314,524 319,275 222,109
------------------------ -------- -------- -------- --------
Non current liability
Lease liability 607,214 875,141 607,214 853,175
------------------------ -------- -------- -------- --------
Balance at the
end of the reporting
period 607,214 875,141 607,214 853,175
------------------------ -------- -------- -------- --------
Right-of-Use assets
Group Company
Property, Plant Property, Plant
& Equipment & Equipment
US$ US$
At 1 July 2020 1,226,384 1,118,339
Additions - -
Depreciation (377,241) (296,342)
Disposals / effect of modification (12,645) -
to lease terms(1)
Foreign exchange movements 95,029 95,029
------------------------------------ ---------------- ----------------
At 30 June 2021 931,527 917,026
------------------------------------ ---------------- ----------------
Lease liabilities
Group Company
Property, Plant Property, Plant
& Equipment & Equipment
US$ US$
At 1 July 2020 1,189,665 1,075,284
Additions
Interest expense 67,730 62,787
Non-cash movement / Effect of (12,645) -
modification to lease terms(1)
Lease payments (394,337) (304,132)
Foreign exchange movements 92,550 92,550
--------------------------------- ---------------- ----------------
At 30 June 2021 942,963 926,489
--------------------------------- ---------------- ----------------
(1) Non-cash movements include the modification to the Quito
office lease monthly rent charge.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 21 - Borrowings
Group Group Company Company
2021 2020 2021 2020
US$ US$ US$ US$
Current liability
Bridging loan - 15,000,000 - 15,000,000
------------------------ ------ ----------- -------- -----------
Capitalised interest - 248,303 - 248,303
------------------------ ------ ----------- -------- -----------
Balance at the
end of the reporting
period - 15,248,303 - 15,248,303
------------------------ ------ ----------- -------- -----------
Bridging loan
----------------------------- ------------- ----------- ------------- -----------
Balance at beginning of
reporting period 15,248,303 - 15,248,303 -
----------------------------- ------------- ----------- ------------- -----------
Additions - funds received
under the loan - 14,815,000 - 14,815,000
----------------------------- ------------- ----------- ------------- -----------
Legal fees reimbursed to
Franco Nevada on receipt
of loan funds 185,000 185,000
----------------------------- ------------- ----------- ------------- -----------
Capitalised interest 371,275 248,303 371,275 248,303
----------------------------- ------------- ----------- ------------- -----------
Repayment of loan (15,619,578) - (15,619,578) -
----------------------------- ------------- ----------- ------------- -----------
Balance at end of reporting
period - 15,248,303 - 15,248,303
----------------------------- ------------- ----------- ------------- -----------
Group Group Company Company
2021 2020 2021 2020
US$ US$ US$ US$
Non-current liability
Net Smelter Royalty 106,574,217 - - -
---------------------- ------------ -------- ---------- --------
Balance at the
end of the reporting
period 106,574,217 - - -
---------------------- ------------ -------- ---------- --------
NSR Financing
--------------------------------- ------------
Balance at beginning of
reporting period - - - -
--------------------------------- ------------
Additions - funds received
under the loan 84,380,422 - - -
--------------------------------- ------------
Additions - funds utilised
in repaying Bridging Loan 15,619,578 - - -
--------------------------------- ------------
Transaction costs adjusted
through retained earnings (726,427) - - -
--------------------------------- ------------
Transaction costs at recognition (2,318,598) - - -
--------------------------------- ------------
Capitalised interest 9,619,242 - - -
--------------------------------- ------------
Balance at end of reporting 106,574,217 - - -
period
--------------------------------- ------------
Notes to the Financial Statements
For the year ended 30 June 2021
Note 21 - Borrowings (continued)
On 11 September 2020, Franco-Nevada advanced to SolGold US$100
million, the Royalty Purchase Price under the NSR Financing
Agreement, less the amount of outstanding principal and interest
under the US$15 million secured bridge loan pursuant to the Bridge
Loan Agreement ("BLA") with Franco-Nevada announced on 11 May 2020.
The aggregate amount owing under the BLA was repaid out of the
proceeds of the NSR financing. This financing arrangement is
classified as a financial liability at amortised cost and was
recognised at the amount received adjusted for transaction costs
paid.
The accounting policy disclosed within the 30 September 2020
interim financial statements noted that the NSR was classified as
fair value through profit or loss ("FVTPL"). Following further
analysis, Management has elected not to measure the hybrid
instrument at FVTPL but rather to measure the host debt at
amortised cost and the embedded derivative at FVTPL.
Management also notes that US$726,427 of transaction costs were
expensed in the 30 June 2020 income statement, as it was not
sufficiently certain due to COVID-19 that the transaction would
close. Management has recognised an adjustment to restate the prior
year retained earnings to reflect this in the 30 June 2021
Consolidated Financial Statements.
In return for the royalty purchase price, Franco-Nevada has been
granted a perpetual 1% royalty interest to be calculated by
reference to net smelter returns from the Cascabel concession area
in accordance with the terms and conditions set out in the NSR
financing agreement. Financial liabilities classified at amortised
costs are calculated using the effective interest method, which
allocates expenses at a constant rate over the term of the
investment. The effective interest rate is the internal rate of
return of the liability at initial recognition through the expected
life of the financial liability, which in this case is the time
from the recognition until the end of the mine life of the Alpala
mine.
Key terms to the financing include:
-- Funding amount: US$100 million with upscale option to US$150 million
-- Royalty terms: 1.0% NSR for $100 million
-- Buy-back option: A 50% buy-back option exercisable at
SolGold's election for six years from closing at a price delivering
Franco-Nevada a 12% IRR
-- Gold conversion: option in favour of Franco-Nevada to convert
the NSR interest into a gold-only NSR interest (six years from year
two of operations). The amount of the gold net smelter return will
be calculated on a net present value neutral basis
-- Proceeds to fund the costs to complete the feasibility study,
with any surplus to be used for SolGold's share of the development
of Alpala
The NSR financing agreement included an upscale option at the
Group's control. The option expired during the financial year.
Key inputs for the estimation of future cash flows of the
effective interest rate are:
-- All operating assumptions are based on the latest available development plan
-- The NSR top-Up and minimum annual payment are assessed based
on the latest operating assumptions
-- Gold price of $1,300 per ounce
-- Copper price of $7,268 per tonne
-- Silver price of $16 per ounce
The EIR was calculated using the available development plan at
the time of recognising the NSR and results in a discount rate of
11.84% (real).
The buy-back option is considered an embedded derivative which
needs to be separately accounted for as it is not closely related
due to the variability associated with the arrangement arising from
movements in commodity pricing and/or changes in the mine plan and
other technical assumptions, which are not otherwise compensated in
the option pricing. As such, it would be required to be accounted
for as a separate instrument in accordance with IFRS 9. However, it
would only have value to the extent that it would be likely that
the option is in the money and hence a derivative asset will only
be recognised when it has value and is considered material.
Management have assessed that the fair value of this embedded
derivative is currently expected to be nil or immaterial, as there
is no expectation or likelihood that the buy-back option will be
exercised by SolGold. Given that long term commodity prices
(contrary to recent increases in spot commodity prices) have seen
minimal movements and the underlying mine plan and operation
assumptions are unchanged in the absence of a new economic project
study, the option is not in the money.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 22 - Financial liabilities
Group Company
2021 2020 2021 2020
US$ US$ US$ US$
Movements in financial liabilities
Balance at 1 July 2,312,254 - 2,312,254 -
Additions - 2,592,167 - 2,592,167
Fair value adjustment through
profit or loss 613,746 (279,913) 613,746 (279,913)
Balance at 30 June 2,926,000 2,312,254 2,926,000 2,312,254
---------- ---------- ---------- ----------
The fair values of financial liabilities approximate their
carrying amounts principally due to their short-term nature or the
fact that they are measured and recognised at fair value.
The following table represents the Group's financial liabilities
measured and recognised at fair value.
US$ US$ US$ US$
Level 1 Level 2 Level 3 Total
2021
Derivative liability
at fair value through
profit or loss - - 2,926,000 2,926,000
2020
Derivative liability
at fair value through
profit or loss - - 2,312,254 2,312,254
------------------------ --------- --------- ---------- ----------
The derivative liability at fair value through profit or loss
has been valued using the Monte Carlo Simulation method.
2021
Fair value of share options GBP0.37 Options
and assumptions 30 June 2021
Number of options 19,250,000
Share price at issue date GBP0.285
Exercise price GBP0.370
Expected volatility 63.879%
Time to expiry 3.43 years
Expected dividends 0.00%
Risk-free interest rate
(short-term) (0.16%)
Fair value $0.152
Valuation methodology Monte Carlo Value
-------------------------------- ------------------
For the financial year
ended 30 June 2021 US$
-------------------------------- ------------------
Derivative liability valuation
recognised in statement
of comprehensive income 613,746
-------------------------------- ------------------
Notes to the Financial Statements
For the year ended 30 June 2021
Note 23 Share Options
At 30 June 2021 the Company had 106,875,000 options outstanding
for the issue of ordinary shares (2020: 185,162,000).
Options
Share options are granted to employees under the company's
Employee Share Option Plan ("ESOP"). The employee share option plan
is designed to align participants' interests with those of
shareholders.
Unless otherwise documented with the Company, when a participant
ceases employment prior to the vesting of their share options, the
share options are forfeited after 90 days unless cessation of
employment is due to termination for cause, whereupon they are
forfeited immediately. The Company prohibits key management
personnel from entering into arrangements to protect the value of
unvested ESOP awards.
The contractual life of each option granted is generally two to
three years. There are no cash settlement alternatives.
Each option can be exercised from vesting date to expiry date
for one share with the exercise price payable in cash.
Share options issued
There were 3,000,000 options granted during the year ended 30
June 2021 (2020: 30,900,000).
On 2 March 2021, the Company issued 3,000,000 unlisted share
options over ordinary shares of the Company to an employee in line
with an executive service agreement. The options are exercisable at
GBP0.36 and expire on 2 March 2024.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 23 Share Options (continued)
Date of grant Exercisable from Exercisable Exercise Number granted Number at
to prices 30 June 2021
The options vested
immediately,
and exercisable
through to 4
5 July 2018 July 2021 4 July 2021 GBP0.60 250,000 250,000
--------------- ---------------------- -------------- ---------- --------------- --------------
The options vested
immediately,
and exercisable
6 November through to 6 6 November
2018 November 2021 2021 GBP0.60 82,875,000 72,375,000(1)
--------------- ---------------------- -------------- ---------- --------------- --------------
The options vested
immediately,
and exercisable
20 December through to 20 20 December
2018 December 2021 2021 GBP0.60 11,375,000 5,000,000(2)
--------------- ---------------------- -------------- ---------- --------------- --------------
The options vested
immediately and
exercisable through
2 December to 2 December 2 December
2019(3) 2024 2024 GBP0.37 19,250,000 19,250,000
--------------- ---------------------- -------------- ---------- --------------- --------------
The options vested
immediately and
exercisable through 26 April
27 April 2020 to 26 April 2023 2023 GBP0.25 7,000,000 7,000,000
--------------- ---------------------- -------------- ---------- --------------- --------------
The options vested
immediately and
exercisable through
2 March 2021 to 2 March 2024 2 March 2024 GBP0.36 3,000,000 3,000,000
--------------- ---------------------- -------------- ---------- --------------- --------------
123,750,000 106,875,000
---------------------------------------------------------------- --------------- --------------
(1) 3,000,000 options previously issued to Anna Legge were
forfeited during the year ended 30 June 2020 as a result of her
resignation. Furthermore 7,500,000 additional options expired due
to employees' resignations.
(2) On 14 September 2020 it was announced that Mr Brian Moller
and Mr James Clare would surrender their options, 4,575,000.
Previous options issued to Mr Craig Jones and Mr Robert Weinberg
were forfeited due to their resignations.
(3) Options issued to BHP as part of the share subscriptions on
2 December 2019 and exercisable at GBP0.37 within 5 years. These
options fall outside the scope of IFRS 2 and is classified as a
derivative financial liability as it does not meet the fixed for
fixed test.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 23 Share Options (continued)
Date of grant Exercisable from Exercisable Exercise Number Number
to prices granted at 30 June
2020
The options vest
on the earlier of:
(a) 18 months, or
(b) a Change of
9 August 2017 Control Transaction 8 August 2020 GBP0.60 46,750,000 44,500,000
-------------------- ---------------------- --------------- ---------- ------------ ------------
The options vested
immediately and
exercisable through
9 August 2017 to 8 August 2020 8 August 2020 GBP0.60 12,000 12,000
-------------------- ---------------------- --------------- ---------- ------------ ------------
The options vested
immediately, and
exercisable through
5 July 2018 to 4 July 2020 4 July 2020 GBP0.40 21,250,000 18,250,000
-------------------- ---------------------- --------------- ---------- ------------ ------------
The options vested
immediately, and
exercisable through
5 July 2018 to 4 July 2021 4 July 2021 GBP0.60 250,000 250,000
-------------------- ---------------------- --------------- ---------- ------------ ------------
The options vested
immediately, and
exercisable through 6 November
6 November 2018 to 6 November 2021 2021 GBP0.60 82,875,000 79,875,000
-------------------- ---------------------- --------------- ---------- ------------ ------------
The options vested
immediately, and
20 December exercisable through 20 December
2018 to 20 December 2021 2021 GBP0.60 11,375,000 11,375,000
-------------------- ---------------------- --------------- ---------- ------------ ------------
The options vested
immediately and
20 September exercisable through 20 December
2019 to 20 December 2021 2021 GBP0.60 3,150,000 3,150,000
-------------------- ---------------------- --------------- ---------- ------------ ------------
The options vested
immediately and
exercisable through 2 December
2 December 2019(3) to 2 December 2024 2024 GBP0.37 19,250,000 19,250,000
-------------------- ---------------------- --------------- ---------- ------------ ------------
The options vested
immediately and
exercisable through
27 April 2020 to 26 April 2023 26 April 2023 GBP0.25 7,000,000 7,000,000
-------------------- ---------------------- --------------- ---------- ------------ ------------
The options vest
over four months
and are exercisable
through to 26 April
27 April 2020 2023 26 April 2023 GBP0.25 1,500,000 1,500,000
-------------------- ---------------------- --------------- ---------- ------------ ------------
193,412,000 185,162,000
---------------------------------------------------------------------- ------------ ------------
Share-based payments
The number and weighted average exercise price of share options
are as follows:
Weighted Weighted
average average
exercise Number exercise Number
price of options price of options
2021 2021 2020 2020
Outstanding at the beginning
of the year GBP0.54 185,162,000 GBP0.57 160,262,000
Exercised during the year GBP0.25 1,500,000 - -
Lapsed during the year GBP0.60 72,062,000 - -
Forfeited during the year GBP0.60 7,725,000 GBP0.50 (6,000,000)
Granted during the year GBP0.36 3,000,000 GBP0.36 30,900,000
------------------------------ ----------- ------------ ---------- ------------
Outstanding at the end
of the year GBP0.53 106,875,000 GBP0.54 185,162,000
------------------------------ ----------- ------------ ---------- ------------
Exercisable at the end
of the year GBP0.53 106,875,000 GBP0.54 183,662,000
------------------------------ ----------- ------------ ---------- ------------
The options outstanding at 30 June 2021 have an exercise price
of GBP0.25, GBP0.36, GBP0.37, GBP0.40 and GBP0.60 (2020: GBP0.25,
GBP0.37, GBP0.40 and GBP0.60) and a weighted average contractual
life of 1.03 years (2020: 1.32 years).
Notes to the Financial Statements
For the year ended 30 June 2021
Note 23 Share Options (continued)
Share-based payments (continued)
Share options held by Directors are as follows:
Share options held At 30 June At 30 June Option Price Exercise Period
2021 2020
-------------------- ----------- ----------- ------------- ----------------
28/01/19 -
Nicholas Mather - 26,250,000 60p 08/08/20
-------------------- ----------- ----------- ------------- ----------------
20/12/18 -
5,000,000 5,000,000 60p 20/12/21
-------------------- ----------- ----------- ------------- ----------------
28/01/19 -
Brian Moller - 3,750,000 60p 08/08/20
-------------------- ----------- ----------- ------------- ----------------
20/12/18 -
- 1,425,000 60p 20/12/21
-------------------- ----------- ----------- ------------- ----------------
28/01/19 -
Robert Weinberg - 2,250,000 60p 08/08/20
-------------------- ----------- ----------- ------------- ----------------
20/12/18 -
- 900,000 60p 20/12/21
-------------------- ----------- ----------- ------------- ----------------
28/01/19 -
Craig Jones - 2,250,000 60p 08/08/20
==================== =========== =========== ============= ================
20/12/18 -
- 900,000 60p 20/12/21
-------------------- ----------- ----------- ------------- ----------------
20/12/18 -
James Clare - 3,150,000 60p 20/12/21
-------------------- ----------- ----------- ------------- ----------------
28/07/17 -
Jason Ward - 5,000,000 60p 08/08/20
-------------------- ----------- ----------- ------------- ----------------
06/11/18 -
5,000,000 5,000,000 60p 06/11/21
-------------------- ----------- ----------- ------------- ----------------
20/09/19 -
Liam Twigger - 3,150,000 60p 20/12/21
-------------------- ----------- ----------- ------------- ----------------
The total number of options outstanding at year end is as
follows:
Share options Share options Option price Exercise periods
held held
at 30 June at 30 June
2021 2020
- 34,500,000 GBP0.60 Vests on the earlier of 18 months
from date of grant or a Change
of Control Transaction, as defined
under the Company's ESOP Rules.
- 10,012,000 GBP0.60 Vests on the earlier of 18 months
from date of grant or a Change
of Control Transaction, as defined
under the Company's ESOP Rules.
- 18,250,000 GBP0.40 Exercisable through to 04/07/2020
250,000 250,000 GBP0.60 Exercisable through to 04/07/2021
72,375,000 79,875,000 GBP0.60 Exercisable through to 06/11/2021
5,000,000 11,375,000 GBP0.60 Exercisable through to 20/12/2021
- 3,150,000 GBP0.60 Exercisable through to 20/12/2021
19,250,000 19,250,000 GBP0.37 Exercisable through to 02/12/2024
7,000,000 7,000,000 GBP0.25 Exercisable through to 26/04/2023
- 1,500,000, GBP0.25 Exercisable through to 26/04/2023
3,000,000 - GBP0.36 Exercisable through to 02/03/2024
106,875,000 185,162,000
-------------- --------------
Notes to the Financial Statements
For the year ended 30 June 2021
Note 23 Share Options (continued)
Share-based payments (continued)
The fair value of services received in return for share options
granted is measured by reference to the fair value of share options
granted. This estimate is based on the Black-Scholes model
considering the effects of the vesting conditions, expected
exercise period and the dividend policy of the Company.
2021
Fair value of share GBP0.25 Options GBP0.36 options
options and assumptions 27 April 2020(1) 2 March 2021
Number of options 1,500,000 3,000,000
Share price at issue GBP0.26 GBP0.223
date
Exercise price GBP0.25 GBP0.36
Expected volatility 60.548% 64.407%
Option life 3.00 years 3.00 years
Expected dividends 0.00% 0.00%
Risk-free interest
rate (short-term) 0.14% 0.10%
Fair value GBP0.107 GBP0.065
Valuation methodology Black-Scholes Black-Scholes
-------------------------- ------------------ ----------------
For the financial
year ended 30 June
2021 US$ US$ Total US$
-------------------------- ------------------ ---------------- ----------
Share based payments
expense recognised
in statement of
comprehensive income 47,377 268,059 315,436
-------------------------- ------------------ ---------------- ----------
(1) These options were initially granted on 27 April 2020 and
vested over a 4-month period, which spread over 2 financial
years
The calculation of the volatility of the share price on the
above options was based on the Company's daily closing share price
over the two or three-year period, dependant on the exercise period
attributable to the tranche of options, prior to the date the
options were issued.
Notes to the Financial Statements
For the year ended 30 June 2020
Note 23 Share Options (continued)
Share-based payments (continued)
2020
Fair value of share GBP0.25 GBP0.25 Options GBP0.60 Options
options and assumptions Options 27 April 20 September
27 April 2020 2019
2020
Number of options 1,500,000 7,000,000 3,150,000
Share price at GBP0.26 GBP0.26 GBP0.2315
issue date
Exercise price GBP0.25 GBP0.25 GBP0.60
Expected volatility 60.548% 60.548% 56.112%
Option life 3.00 years 3.00 years 2.25 years
Expected dividends 0.00% 0.00% 0.00%
Risk-free interest
rate (short-term) 0.14% 0.14% 0.51%
Fair value GBP0.107 GBP0.107 GBP0.0195
Valuation methodology Black-Scholes Black-Scholes Black-Scholes
--------------------------- -------------- ---------------- ----------------
For the financial
year ended 30 June
2020 US$ US$ US$ Total US$
--------------------------- -------------- ---------------- ---------------- ----------
Share based payments
expense recognised
in statement of
comprehensive income 151,608 928,599 76,625 1,156,832
--------------------------- -------------- ---------------- ---------------- ----------
Share based payments
expense to be recognised
in future periods 47,377 - - 47,377
--------------------------- -------------- ---------------- ---------------- ----------
The calculation of the volatility of the share price on the
above options was based on the Company's daily closing share price
over the two or three-year period, dependant on the exercise period
attributable to the tranche of options, prior to the date the
options were issued.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 24 Financial Instruments (Group and Company)
Financial instruments by category (Group)
Financial assets Loans and receivables Financial assets
held at fair
value through
OCI
2021 2020 2021 2020
Cash and cash equivalents 109,562,103 46,895,243 - -
Loans receivable and
other non-current assets 1,457,324 7,702,969 - -
Loans receivable and
other current assets 6,495,930 - - -
Equity investments - - 6,825,042 4,119,179
--------------------------- ------------ ----------- ---------- ----------
Total financial assets 117,515,357 54,598,212 6,825,042 4,119,179
--------------------------- ------------ ----------- ---------- ----------
Financial liabilities Financial liabilities Financial liabilities
at amortised cost at fair value
through profit
or loss
2021 2020 2021 2020
Trade and other payables 7,847,650 6,060,193 - -
Derivative liability - - 2,926,000 2,312,254
NSR 106,574,217 - - -
Bridging Loan - 15,248,302 - -
Lease liabilities 942,963 1,189,665 - -
----------------------------- ------------ ----------- ----------- -----------
Total financial liabilities 115,364,830 22,498,160 2,926,000 2,312,254
----------------------------- ------------ ----------- ----------- -----------
Financial instruments by category (Company)
Financial assets Loans and receivables Financial assets
held at fair value
through OCI
2021 2020 2021 2020
Cash and cash equivalents 72,918,016 45,356,423 - -
Loans receivable and other
non-current assets 756,332 7,173,984 - -
Loans receivable and other
current assets 6,495,930 - - -
Investment in subsidiaries 120,045,844 259,951,415 -
Loans with subsidiaries 167,399,767
Equity investments - - 6,819,046 4,113,660
---------------------------- ------------ ------------ -------------------- ----------
Total financial assets 367,615,889 312,481,822 6,819,046 4,113,660
---------------------------- ------------ ------------ -------------------- ----------
Financial liabilities Financial liabilities Financial liabilities
at amortised cost at fair value
through profit
or loss
2021 2020 2021 2020
Trade and other payables 1,475,395 2,616,941 - -
Derivative liability - - 2,926,000 2,312,254
Bridging loan - 15,248,303 - -
Lease liabilities 926,489 1,075,284 - -
----------------------------- ----------- ----------- ----------- -----------
Total financial liabilities 2,401,884 18,940,528 2,926,000 2,312,254
----------------------------- ----------- ----------- ----------- -----------
If required, the Board of Directors determines the degree to
which it is appropriate to use financial instruments, commodity
contracts or other hedging contracts or techniques to mitigate
risks. The main risks for which such instruments may be appropriate
are foreign currency risk and liquidity risk, each of which is
discussed below. The main credit risk is the non-collection of
loans and other receivables which include refunds and tenement
security deposits. There were no overdue receivables at year
end.
For the Company, the main credit risk is the non-collection of
loans made to its subsidiaries. The Directors expect to collect the
loans through the successful exploration and subsequent
exploitation of the subsidiaries' tenements.
There have been no changes in financial risks from the previous
year.During the years ended 30 June 2021 and 2020 no trading in
commodity contracts was undertaken.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 24 Financial Instruments (Group and Company) (continued)
Market risk
Interest rate risks
The Group's and Company's policy is to retain its surplus funds
on the most advantageous term of deposit available up to twelve
months' maximum duration. The increase/decrease of 2% in interest
rates will impact the Group's income statement by a gain/loss of
US$2,191,242 and the Company's income statement by US$1,458,360.
The Group considers that a +/- 2% movement in interest rates
represents reasonable possible changes.
Foreign currency risk
The Group has potential currency exposures in respect of items
denominated in foreign currencies comprising:
-- Transactional exposure in respect of operating costs, capital
expenditures and, to a lesser extent, sales incurred in currencies
other than the functional currency of operations which require
funds to be maintained in currencies other than the functional
currency of operation; and
-- Translation exposures in respect of investments in overseas
operations which have functional currencies other than United
States dollars.
Currency risk in respect of non-functional currency expenditure
is reviewed by the Board.
The table below shows the extent to which Group companies have
monetary assets and liabilities in different currencies. Foreign
exchange differences on retranslation of such assets and
liabilities are taken to the statement of comprehensive income.
Group Functional currency of entity
Net financial assets AUD USD SBD TOTAL
/ (liabilities)
2021
Australian dollar
(AUD) 67,499 2,052,268 - 2,119,767
Solomon Island dollar
(SBD) 6,302 - - 6,302
Canadian dollar
(CAD) - 1,771,005 - 1,771,005
Great British pound
(GBP) - 3,129,986 - 3,129,986
Swiss franc (CHF) - 13,988 - 13,988
----------------------- ------- ---------- ---- ----------
73,801 6,967,247 - 7,410,148
----------------------- ------- ---------- ---- ----------
Group Functional currency of entity
Net financial assets AUD USD SBD TOTAL
/ (liabilities)
2020
Australian dollar
(AUD) 64,837 195,588 - 260,425
Solomon Island dollar
(SBD) 10,164 - - 10,164
Canadian dollar
(CAD) - 6,338 - 6,338
Great British pound
(GBP) - 37,372,191 - 37,372,191
----------------------- ------- ----------- ---- -----------
75,001 37,574,117 - 37,649,118
----------------------- ------- ----------- ---- -----------
Notes to the Financial Statements
For the year ended 30 June 2021
Note 24 Financial Instruments (Group and Company) (continued)
Company Functional currency of entity
Net financial assets AUD USD SBD TOTAL
/ (liabilities)
2021
Australian dollar
(AUD) - 1,960,513 - 1,960,513
Canadian dollar
(CAD) - 1,762,803 - 1,762,803
Great British pound
(GBP) - 3,129,986 - 3,129,986
---------------------- ------ ----------- ---- ----------
- 6,853,302 - 6,853,302
----------------------------- ----------- ---- ----------
Company Functional currency of entity
Net financial assets AUD USD SBD TOTAL
/ (liabilities)
2020
Australian dollar
(AUD) - 195,588 - 195,588
Canadian dollar
(CAD) - 6,338 - 6,338
Great British pound
(GBP) - 37,372,191 - 37,372,191
---------------------- ----- ----------- ---- -----------
- 37,574,117 - 37,574,117
---------------------------- ----------- ---- -----------
The main currency exposure relates to the effect of
re-translation of the Group's assets and liabilities in Australian
dollar (AUD) and the Great British Pound (GBP). A 10% increase in
the A$/US$ and GBP/US$ exchange rates would give rise to a change
of approximately US$583,306 (2020: US$4,181,402) in the Group net
assets and reported earnings. A 10% decrease in the A$/US$ and
GBP/US$ exchange rates would give rise to a change of approximately
US$477,250 (2020: US$3,421,147). The Group does not hedge foreign
currency exposures and manages net exposures by buying and selling
foreign currencies at spot rates where necessary. In respect of
other monetary assets and liabilities held in currencies other than
United States dollars, the Group ensures that the net exposure is
kept to an acceptable level, by buying or selling foreign
currencies at spot rates where necessary to address short-term
imbalances.
Credit risk
The Group is exposed to credit risk primarily from the financial
institutions with which it holds cash and cash deposits and loans
receivable under the CFLP.
The banks and their credit ratings the Group had cash accounts
with at 30 June 2021 were US$311,081 in cash accounts with
Macquarie Bank Limited (BBB) in Australia, US$15,430 in cash
accounts with the ANZ Bank (AA-) in Australia, US$103,222,860 in
cash accounts with Westpac Bank (AA-) in Australia, US$6,302 in
cash accounts with ANZ Bank (AA-) in Honiara, Solomon Islands,
US$5,584,646 in cash accounts with Banco Guayaquil (AAA-) in
Ecuador, US$342,206 in cash accounts with Produbanco (B) in
Ecuador, US$52,378 in cash accounts with Lloyds Bank (A+),
US$13,988 in cash accounts with Credit Suisse (A-) in Switzerland,
and US$13,215 in petty cash. Including other receivables, the
maximum exposure to credit risk at the reporting date is the
carrying value of these assets and was US$118,020,597 (2020:
US$50,497,702).
The Company is also exposed to credit risk due to the cash
balance it holds directly. It is also exposed to credit risk on the
CFLP receivable. At 30 June 2021, the company had US$72,918,016 in
cash and cash equivalents (2020: US$45,356,423) and US$6,495,930 of
CFLP receivable (2020: US$6,373,398). The maximum exposure to
credit risk at the reporting date was US$79,413,946 (2020:
US$51,729,821).
Credit risk is managed by dealing with banks with high credit
ratings assigned by international credit rating agencies.
Furthermore, funds are deposited with banks of high standing in
order to obtain market interest rates. Credit risk over the Company
funded loan plan is reduced due to the loan being secured by
shares.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 24 Financial Instruments (Group and Company) (continued)
Liquidity risks
The Group and Company raises funds as required on the basis of
budgeted expenditure for the next 12 to 24 months, dependent on a
number of prevailing factors. Funds are generally raised in capital
markets from a variety of eligible private, corporate and fund
investors, or from interested third parties (including other
exploration and mining companies) which may be interested in
earning an interest in the project. The success or otherwise of
such capital raisings is dependent upon a variety of factors
including general equities and metals market sentiment,
macro-economic outlook, project prospectivity, operational risks
and other factors from time to time. When funds are sought, the
Group balances the costs and benefits of equity financing versus
alternate financing options. Funds are provided to local sites
bi-monthly, based on the sites' forecast expenditure.
All liabilities held by the Group and Company are contractually
due and payable within 1 year, excluding the non-current lease
liability payments and NSR financing agreement which are greater
than 12 months.
Fair values
In the Directors' opinion, there is no material difference
between the book value and fair value of any of the Group's and
Company's financial instruments. The classes of financial
instruments are the same as the line items included on the face of
the statement of financial position and have been analysed in more
detail in notes to the accounts.
All the Group's financial assets, with the exception of
investments held at fair value through other comprehensive income
are categorised as other financial assets at amortised cost.
Note 25 Commitments
The Group also has certain obligations to expend minimum amounts
on exploration in tenement areas. These obligations may be varied
from time to time and are expected to be fulfilled in the normal
course of operations of the Group.
The combined commitments of the Group related to its granted
tenement interests are as follows:
Location Up to 12 Months 13 Months to Later than 5 Years
5 Years
Ecuador 3,065,430 12,261,720 -
Solomon Islands 3,320,000 - -
Queensland 285,225 379,216 -
----------------- ---------------- ------------- -------------------
6,670,655 12,640,936 -
----------------- ---------------- ------------- -------------------
To keep tenements in good standing, work programs should meet
certain minimum expenditure requirements. If the minimum
expenditure requirements are not met, the Group has the option to
negotiate new terms or relinquish the tenements. The Group also has
the ability to meet expenditure requirements by joint venture or
farm in agreements.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 26 Related Parties
(a) Group
Transactions between related parties are on normal commercial
terms and conditions and are no more favourable than those
available to other parties unless otherwise stated.
a) Transactions with Directors and Director-Related Entities
(i) The Company had a commercial agreement with Samuel Capital
Pty Ltd ("Samuel") for the engagement of Nicholas Mather as
director of the Company. For the year ended 30 June 2021 US$827,381
was paid or payable to Samuel (2020: US$400,162). These amounts are
included in Note 5 (Remuneration of Key Management Personnel). The
total amount outstanding at year end is US$nil (2020:
US$37,765).
(ii) The Company has a long-standing commercial arrangement with
DGR Global Ltd, an entity associated with Nicholas Mather
(Director) and Brian Moller (Director), for the provision of
various services, whereby DGR Global provides resources and
services including the provision of administrative services, IT
infrastructure, its premises (for the purposes of conducting the
Company's business operations), use of existing office furniture,
equipment and certain stationery, together with general telephone,
reception and other office facilities ("Services"). In
consideration for the provision of the Services, the Company shall
reimburse DGR Global for any expenses incurred by it in providing
the Services. DGR Global shall also invoice the Company from time
to time for the provision of in-house legal counsel services. For
the year ended 30 June 2021 US$223,400 was paid or payable to DGR
Global (2020: US$239,820). The total amount outstanding at year end
was US$15,464 (2020: US$30,941). The agreement between DGR Global
and SolGold was not extended in March 2021 and only very limited
services are on-charged by DGR Global to SolGold after that
date.
(iii) Mr Brian Moller (a Director), is a partner in the
Australian firm HopgoodGanim lawyers. For the year ended 30 June
2021, HopgoodGanim were paid or payable US$72,456 (2020:
US$160,217) for the provision of legal services to the Company. The
services were based on normal commercial terms and conditions. The
total amount outstanding at year end was US$nil (2020:
US$47,657).
(iv) Mr James Clare (a Director), is a partner in the Canadian
firm Bennett Jones lawyers. For the year ended 30 June 2021,
Bennett Jones were paid or payable US$486,246 (2020: US$537,453)
for the provision of legal services to the Company. The services
were based on normal commercial terms and conditions. The total
amount outstanding at year end was US$nil (2020: US$202,128)
Share and Option transactions of Directors are shown under Notes
5 and 22.
(b) Company
The Company has related party relationships with its
subsidiaries (see Note 9 and Note 10), Directors and other key
personnel (see Notes 5 and 20).
Subsidiaries
The Company has an investment in subsidiaries balance of
US$120,045,844 (2020: US$251,739,663). The transactions during the
year have been included in Note 9.
The Company also has an intercompany loan with SolGold Finance
AG with a balance of US$167,399,767 (2020: US $nil). The
transactions during the year have been included at Note 10.
(c) Controlling party
In the Directors' opinion there is no ultimate controlling
party.
Notes to the Financial Statements
For the year ended 30 June 2021
Note 27 Contingent Assets and Liabilities
A 2% NSR is payable to Santa Barbara Resources Limited, who were
the previous owners of the Cascabel tenements. These royalties can
be bought out by paying a total of US$4 million. Fifty percent
(50%) of the royalty can be purchased for US$1 million 90 days
following the completion of a feasibility study and the remaining
50% of the royalty can be purchased for US$3 million 90 days
following a production decision. The smelter royalty is considered
to be a contingent liability as the Group has not yet completed a
pre-feasibility study at 30 June 2021 as such there is significant
uncertainty over the timing of any payments that may fall due.
SolGold elected to undertake the Optional Subscription under the
terms of the Term Sheet ("Term Sheet") signed between SolGold plc
and Cornerstone Capital Resources Inc. ("CGP"), CGP's subsidiary
Cornerstone Ecuador S.A. ("CESA"), and Exploraciones Novomining
S.A. ("ENSA"), and holds an aggregate registered and beneficial
equity position in ENSA of 85% under the terms of the Term Sheet.
CGP and CESA elected to obtain the benefit of the Financing Option
whereby SolGold will solely fund all operations and activities of
ENSA until the completion of a Feasibility Study, including CESA's
contribution as the registered and beneficial holder of an
aggregate equity position in ENSA of 15%. After completion and
delivery of the Feasibility Study, SolGold and CESA shall jointly
fund the operations and activities of ENSA based on their
respective equity positions in ENSA on a proportionate basis.
Furthermore, the Term Sheet allows for SolGold to be fully repaid
for the financing provided, including interest at LIBOR plus 2% for
the expenditures incurred by SolGold from the time CGP and CESA
elected the Financing Option and the completion of the first phase
drill program . SolGold is to be repaid out of 90% of CESA's
distribution of earnings or dividends from ENSA or the Cascabel
Tenement to which CESA would otherwise be entitled. If CESA does
not elect to contribute and its equity stake in ENSA is diluted to
below 10%, its equity stake in ENSA will be converted to a 0.5%
interest in the Net Smelter Return and SolGold may acquire this
interest for US$3.5 million at any time. At 30 June 2021,
Cornerstone's equity interest in ENSA had not been diluted below
10%.
The amount receivable from CESA at 30 June 2021 was $40,603,042
(2020: $31,034,075). As there is uncertainty as to whether ENSA
will be able to distribute earnings or dividends, a provision for
impairment has been recognised on the entire amount receivable from
CESA.
There are no other contingent assets and liabilities at 30 June
2021 (2020: nil).
Note 28 Subsequent Events
On 7 September 2021 the Company announced its intention to
relinquish 10 of the 72 concessions held within the Company's four
100% owned subsidiaries in Ecuador. The company is required to
impair these 10 concessions in-line with International Financial
Reporting Standards (IAS 36). The impairment charges of US$3.1
million are immaterial compared to the asset base of the
Company.
The Directors are not aware of any other significant changes in
the state of affairs of the Group or events after the reporting
date that would have a material impact on the consolidated or
Company financial statements.
CONTACTS
Dennis Wilkins
SolGold Plc (Company Secretary) Tel: +61 (0) 7 3303 0660
dwilkins@solgold.com.au
Ingo Hofmaier
SolGold Plc (GM - Project & Corporate Tel: +44 (0) 20 3823 2130
Finance) ihofmaier@solgold.com.au
Fawzi Hanano
SolGold Plc (Investors / Media) Tel: +44 (0) 20 3823 2130
fhanano@solgold.com.au
Follow us on twitter @SolGold_plc
Certain information contained in this announcement would have
been deemed inside information.
ABOUT SOLGOLD
SolGold is a leading resources company focussed on the
discovery, definition and development of world-class copper and
gold deposits. In 2018, SolGold's management team was recognised by
the "Mines and Money" Forum as an example of excellence in the
industry and continues to strive to deliver objectives efficiently
and in the interests of shareholders. SolGold is aggressively
exploring the length and breadth of this highly prospective and
gold-rich section of the Andean Copper Belt which is currently
responsible for c40% of global mined copper production.
The Company operates with transparency and in accordance with
international best practices. SolGold is committed to delivering
value to its shareholders, while simultaneously providing economic
and social benefits to impacted communities, fostering a healthy
and safe workplace and minimizing the environmental impact.
Dedicated stakeholders
SolGold employs a staff of over 800 employees of whom 98% are
Ecuadorean. This is expected to grow as the operations expand at
Alpala, and in Ecuador generally. SolGold focusses its operations
to be safe, reliable and environmentally responsible and maintains
close relationships with its local communities. SolGold has engaged
an increasingly skilled, refined and experienced team of
geoscientists using state of the art geophysical and geochemical
modelling applied to an extensive database to enable the delivery
of ore grade intersections from nearly every drill hole at Alpala.
SolGold has over 80 geologists on the ground in Ecuador exploring
for economic copper and gold deposits.
About Cascabel and Alpala
The Alpala deposit is the main target in the Cascabel
concession, located on the northern section of the heavily endowed
Andean Copper Belt, the entirety of which is renowned as the base
for nearly half of the world's copper production. The project area
hosts mineralisation of Eocene age, the same age as numerous Tier 1
deposits along the Andean Copper Belt in Chile and Peru to the
south. The project base is located at Rocafuerte within the
Cascabel concession in northern Ecuador, an approximately
three-hour drive on sealed highway north of the capital Quito,
close to water, power supply and Pacific ports.
Having fulfilled its earn-in requirements, SolGold is a
registered shareholder with an unencumbered legal and beneficial
85% interest in ENSA (Exploraciones Novomining S.A.) which holds
100% of the Cascabel concession covering approximately 50km(2) .
The junior equity owner in ENSA is required to repay 15% of costs
since SolGold's earn in was completed, from 90% of its share of
distribution of earnings or dividends from ENSA or the Cascabel
concession. It is also required to contribute to development or be
diluted, and if its interest falls below 10%, it shall reduce to a
0.5% NSR royalty which SolGold may acquire for US$3.5million.
SolGold's Regional Exploration Drive
SolGold is using its successful and cost-efficient blueprint
established at Alpala, and Cascabel generally, to explore for
additional world class copper and gold projects across Ecuador.
SolGold is the largest and most active concessionaire in
Ecuador.
The Company wholly owns four other subsidiaries active
throughout the country that are now focussed on thirteen high
priority gold and copper resource targets, several of which the
Company believes have the potential, subject to resource definition
and feasibility, to be developed in close succession or even on a
more accelerated basis compared to Alpala.
SolGold is listed on the London Stock Exchange and Toronto Stock
Exchange (LSE/TSX: SOLG). The Company has on issue a total of
2,293,816,433 fully paid ordinary shares and 105,125,000 share
options.
Quality Assurance / Quality Control on Sample Collection,
Security and Assaying
SolGold operates according to its rigorous Quality Assurance and
Quality Control (QA/QC) protocol, which is consistent with industry
best practices.
Primary sample collection involves secure transport from
SolGold's concessions in Ecuador, to the ALS certified sample
preparation facility in Quito, Ecuador. Samples are then air
freighted from Quito to the ALS certified laboratory in Lima, Peru
where the assaying of drill core, channel samples, rock chips and
soil samples is undertaken. SolGold utilises ALS certified
laboratories in Canada and Australia for the analysis of
metallurgical samples.
Samples are prepared and analysed using 100g 4-Acid digest ICP
with MS finish for 48 elements on a 0.25g aliquot (ME-MS61).
Laboratory performance is routinely monitored using umpire assays,
check batches and inter-laboratory comparisons between ALS
certified laboratory in Lima and the ACME certified laboratory in
Cuenca, Ecuador.
In order to monitor the ongoing quality of its analytical
database, SolGold's QA/QC protocol encompasses standard sampling
methodologies, including the insertion of certified powder blanks,
coarse chip blanks, standards, pulp duplicates and field
duplicates. The blanks and standards are Certified Reference
Materials supplied by Ore Research and Exploration, Australia.
SolGold's QA/QC protocol also monitors the ongoing quality of
its analytical database. The Company's protocol involves
Independent data validation of the digital analytical database
including search for sample overlaps, duplicate or absent samples
as well as anomalous assay and survey results. These are routinely
performed ahead of Mineral Resource Estimates and Feasibility
Studies. No material QA/QC issues have been identified with respect
to sample collection, security and assaying.
Reviews of the sample preparation, chain of custody, data
security procedures and assaying methods used by SolGold confirm
that they are consistent with industry best practices and all
results stated in this announcement have passed SolGold's QA/QC
protocol.
The data aggregation method for calculating Copper Equivalent
(CuEq) for down-hole drilling intercepts and rock-saw channel
sampling intervals are reported using copper equivalent (CuEq)
cut-off grades with up to 10m internal dilution, excluding bridging
to a single sample and with minimum intersection length of 50m.
Copper Equivalent is currently calculated (assuming 100%
recovery of copper and gold) using a Gold Conversion Factor of
0.751 (CuEq = Cu + Au x 0.751), calculated from a current nominal
copper price of US$3.30/lb and a gold price of US$1,700/oz.
See www.solgold.com.au for more information. Follow us on
twitter @SolGold plc
CAUTIONARY NOTICE
News releases, presentations and public commentary made by
SolGold plc (the "Company") and its Officers may contain certain
statements and expressions of belief, expectation or opinion which
are forward looking statements, and which relate, inter alia, to
interpretations of exploration results to date and the Company's
proposed strategy, plans and objectives or to the expectations or
intentions of the Company's Directors, including the plan for
developing the Project currently being studied as well as the
expectations of the Company as to the forward price of copper. Such
forward-looking and interpretative statements involve known and
unknown risks, uncertainties and other important factors beyond the
control of the Company that could cause the actual performance or
achievements of the Company to be materially different from such
interpretations and forward-looking statements.
Accordingly, the reader should not rely on any interpretations
or forward-looking statements; and save as required by the exchange
rules of the TSX and LSE or by applicable laws, the Company does
not accept any obligation to disseminate any updates or revisions
to such interpretations or forward-looking statements. The Company
may reinterpret results to date as the status of its assets and
projects changes with time expenditure, metals prices and other
affecting circumstances.
This release may contain "forward--looking information" within
the meaning of applicable Canadian securities legislation.
Forward--looking information includes, but is not limited to,
statements regarding the Company's plans for developing its
properties. Generally, forward--looking information can be
identified by the use of forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words
and phrases or state that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur" or "be
achieved".
Forward--looking information is subject to known and unknown
risks, uncertainties and other factors that may cause the actual
results, level of activity, performance or achievements of the
Company to be materially different from those expressed or implied
by such forward--looking information, including but not limited to:
transaction risks; general business, economic, competitive,
political and social uncertainties; future prices of mineral
prices; accidents, labour disputes and shortages and other risks of
the mining industry. Although the Company has attempted to identify
important factors that could cause actual results to differ
materially from those contained in forward-looking information,
there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that
such information will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such statements. Factors that could cause actual results to differ
materially from such forward-looking information include, but are
not limited to, risks relating to the ability of exploration
activities (including assay results) to accurately predict
mineralization; errors in management's geological modelling and/or
mine development plan; capital and operating costs varying
significantly from estimates; the preliminary nature of visual
assessments; delays in obtaining or failures to obtain required
governmental, environmental or other required approvals;
uncertainties relating to the availability and costs of financing
needed in the future; changes in equity markets; inflation; the
global economic climate; fluctuations in commodity prices; the
ability of the Company to complete further exploration activities,
including drilling; delays in the development of projects;
environmental risks; community and non-governmental actions; other
risks involved in the mineral exploration and development industry;
the ability of the Company to retain its key management employees
and skilled and experienced personnel; and those risks set out in
the Company's public documents filed on SEDAR at www.sedar.com .
Accordingly, readers should not place undue reliance on
forward--looking information. The Company does not undertake to
update any forward-looking information, except in accordance with
applicable securities laws.
The Company and its officers do not endorse, or reject or
otherwise comment on the conclusions, interpretations or views
expressed in press articles or third-party analysis, and where
possible aims to circulate all available material on its
website.
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
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END
FR DKFBNKBKBDCB
(END) Dow Jones Newswires
September 29, 2021 01:59 ET (05:59 GMT)
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