TIDMTTAU
TECTONIC GOLD PLC
Company Registration No. 05173250
Annual Report and Financial Statements
for the year ended 30 June 2020
CONTENTS
Page
3 Company information
4 Chairman's Statement
5 Managing Director's Statement
6 Strategic report
8 Directors' report
13 Report of the independent auditor
17 Consolidated Statement of Profit or Loss and Other
Comprehensive Income
18 Statements of Financial Position
19 Group Statement of Changes in Equity
20 Company Statement of Changes in Equity
21 Statements of cash flows
23 Notes forming part of the financial statements
COMPANY INFORMATION
DIRECTORS: Bruce Fulton (Chairman)
Brett Boynton (Managing Director)
Sam Quinn (Executive Director)
Dennis Edmonds (Non-Executive
Director - appointed 28 April 2020)
SECRETARY: Sam Quinn
REGISTERED OFFICE: 25 Bilton Road
Rugby
CV22 7AG
United Kingdom
T: +61 2 9241 7665
COMPANY REGISTRATION NUMBER: 05173250
REGISTRAR AND TRANSFER OFFICE: Link Market Services Limited
6th Floor, 65 Gresham Street,
London
EC2V 7NQ
SOLICITORS: Mildwaters Consulting LLP
Walton House, 25 Bilton Road, Rugby,
Warwickshire,
CV22 7AG
INDEPENT AUDITOR: PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
London
E14 4HD
AQUIS STOCK EXCHANGE CORPORATE VSA Capital
ADVISER AND BROKER 15 Eldon Street
London
EC2M 7LD
BANKERS: Barclays Bank plc
1 Churchill Place
London
E14 5HP
CHAIRMAN'S STATEMENT
Dear Shareholders,
I am pleased to present the results for Tectonic Gold Plc for the 12 months to
30 June 2020. This marks the second year of your Company and one that presented
enormous challenges and opportunities for us. From bushfires to COVID-19 and
trade wars we have had to navigate a very tricky market environment. Gold has
once again provided investors safe harbour and with the arrival of Rio Tinto on
our northern fence line earlier in the year we find ourselves in an enviably
good position with a fully funded drilling program underway, successful
exploration to follow up on and new discoveries to pursue. Further, our joint
venture in South Africa is in production and we are expecting first diamond
sales shortly.
Following a successful maiden exploration season in 2018/19 which extended the
mineralisation at the Specimen Hill discovery in Queensland with a 10 hole
drilling program, widespread bushfires in Australia prevented immediate follow
up. The team switched focus to advancing the South African diamond and Mineral
Sands projects instead. The diamond project held in our South African
subsidiary, Deep Blue Minerals Pty Ltd, was successfully taken through an
independent expert review, on the back of which we struck a farm-out deal with
a London listed investment company (Kazera Global Investments Plc). This has
funded the project into production. We have retained a non-diluting 10%
interest in the project that has come along very nicely and we now have first
diamond sales expected before Christmas.
At the time of writing, Tectonic's 100% owned South African subsidiary, Whale
Head Minerals Pty Ltd, has the first tenement application under review in South
Africa for a mineral sands mining permit on the South African Government's
diamond leases. These are coincident with our current diamond joint venture and
will enable us to cost effectively mine heavy mineral sands at the same time as
we are extracting the diamond gravels. The geological process that eroded
diamonds from the kimberlitic pipes and took them down the Orange River to the
Atlantic Ocean also brought a range of other valuable minerals downriver to be
washed up and deposited along the beach on the South African North West Coast.
Due to the necessity for extremely tight security over the diamond mining
operations, there has been no commercial prosecution of the heavy minerals in
the diamond mine until now. Tectonic's testing has confirmed high grades of
heavy minerals coincident with the diamonds and we are hoping to be the first
producer of mineral sands concentrate from this diamond mine.
With the strengthened gold price on the back of COVID-19 and trade wars between
the USA and China, we were able to successfully raise the funds required to get
back into the field and follow up on our success at Specimen Hill. Despite
stringent cross border travel restrictions due to the pandemic, we have
benefitted from having a strong technical presence in Queensland and have
mobilised a team that is currently running a 10 hole drilling program. In
addition to following up on the 2019 drilling, we are testing a new copper
discovery adjacent to Specimen Hill. This is an important opportunity with the
arrival of Rio Tinto in the belt. We are also putting the first holes into
Mount Cassidy which is our second portfolio project and a very promising
Intrusive Related Gold System discovery.
On 11 March 2020, the World Health Organisation ("WHO") declared the
Coronavirus disease 2019 (COVID-19) a pandemic. The pandemic has adversely
affected the global economy, including an increase in unemployment, decrease in
consumer demand, interruptions in supply chains, and tight liquidity and credit
conditions. Consequently, governments around the world have announced monetary
and fiscal stimulus packages to minimise the adverse economic impact. However,
the COVID-19 situation is still evolving, and its full economic impact remains
uncertain.
The Company has several assets where the value may be impacted by COVID-19. At
the date these financial statements were approved by the Directors the extent
of the impact COVID-19 on the Company's assets cannot be reasonably estimated
at this time.
The pandemic has impacted the Company's operations with Government mandated
bans on mass gatherings and social distancing measures resulting in disruption
to the Company's operations; this disruption is expected to negatively impact
the ability for the Company to conduct drilling and its parent entity's ability
to raise capital, refer Going Concern Note 2.
The Directors and management are continually monitoring and managing the
Company's operations closely in response to COVID-19 however the extent of the
impact COVID-19 may have on the Company's future liquidity, financial
performance and position and operations is uncertain and cannot be reasonably
estimated at the date these financial statements were issued.
Thank you to all of our supportive shareholders and stakeholders who have
worked with us, as we move forward with both our gold projects and our exciting
South African project.
Yours sincerely
Bruce Fulton
Chairman
MANAGING DIRECTOR'S STATEMENT
During the year to June 2020 the Company focused primarily on advancing its
South African projects. This was due to site access difficulties on the
Queensland gold projects with bush fires and COVID-19. Following the June year
end, the company successfully raised GBP402,800 and is, at the time of writing
this report, executing a follow up drilling program at Specimen Hill and
testing initial targets at Mount Cassidy. The delays in site access, whilst
frustrating, enabled management to focus on other opportunities which have
generated significant value for shareholders.
On the 25th of May, Silverstream SECZ, who purchased Tectonic's legacy graphite
royalty from the sale of our historic Malagasy graphite interests, listed on
the Toronto Stock Exchange and rebranded as VOX Royalty Corp. ("VOX"). This
triggered a conversion of the convertible note we held in Silverstream as part
consideration for the purchase of the royalty and as a result Tectonic was
issued 98,039 shares in VOX.
On the 4th of June we announced a deal with a London listed investment company,
Kazera Global Investments Plc ('Kazera"), to fund the South African diamond
project into production via a farm-out. Tectonic has retained a non-diluting
10% interest in the project company, Deep Blue Minerals Pty Ltd ("Deep Blue")
alongside our Black Empowerment partners and Kazera. In addition, in August,
Tectonic purchased 20 million shares in Kazera at 0.5p, the price of the raise
conducted to fund the project into production. Following the deal, Deep Blue
was quickly transformed into an operating entity with the acquisition of a
mining fleet and on boarding of an experienced local team which Tectonic had
been working with for some time. Tectonic director Dennis Edmonds has taken a
Board seat with Kazera and is actively involved with the on-going development
of Deep Blue. At the time of writing of this report, Deep Blue is in production
and first diamond sales are expected prior to year-end.
In addition to the diamond project, Tectonic pioneered the exploration for
heavy mineral sands within the same government owned diamond mining lease that
Deep Blue operations are in. This project is housed in 100% owned subsidiary,
Whale Head Minerals Pty Ltd ("Whale Head"). Whale Head has lodged the first
Heavy Mineral Sands ("HMS") mining permit application within the overlapping
diamond lease area and we expect to be the first HMS producer from the area.
This has been a restricted site to date due to security considerations at the
diamond mine, however as an existing operator and local employer we have been
able to negotiate access to the site and demonstrate the benefits to the local
community of running a dual diamond and HMS extraction and processing
operation. There have been significant delays on this permit application due to
travel restrictions preventing the requisite environmental and regulatory site
visits, however we are hopeful that with things normalising in South Africa we
will have the permit prior to year-end. At this stage we are the registered
applicant over key areas and have security of first rights to those areas until
the application review is completed.
On the 9th of September we announced a capital raise to fund a ten hole
drilling program in Queensland. This program is currently underway with initial
assays expected prior to year-end and final analysis and interpretation of the
program with independent external review in the first quarter of next year. The
program is targeting key features confirmed by the 2019 campaign with
additional drilling density to provide resource calculation inputs.
In addition, the program will include two holes into our new copper discovery
adjacent to the Specimen Hill gold system. This is important for us as Rio
Tinto applied for a large tenement along our northern boundary at Specimen Hill
in February, which we expect is the start of renewed interest in copper gold
opportunities in Queensland given that many traditional copper mining countries
will likely be struggling with COVID for years to come.
We will also be drilling the first holes into our Mt Cassidy project. This is a
very exciting Intrusive Related Gold System to the north of Specimen Hill and
along the same structure as the famous Mt Morgan copper-gold mine that produced
over 8 million ounces of gold and 387 thousand tonnes of copper in its 100-year
mine life.
It is an exciting time to be in the field again and very rewarding to see
projects we put so much effort into beginning to shine. I thank my fellow
directors, our talented management team and advisers for their effort during
this challenging year that has seen us turnaround shareholder value and
position our company for a highly prospective 2021.
Brett Boynton, CFA
Managing Director
STRATEGIC REPORT
For the year ended 30 June 2020
The Directors present their strategic report for Tectonic Gold Plc ("Tectonic
Gold" and/or "the Company") and its controlled entities ("the Group") for the
year ended 30 June 2020 ("the reporting period").
REVIEW OF THE BUSINESS
Following the successful 2018/19 drilling campaign in Queensland on the
Specimen Hill project, the Company faced bushfires and COVID-19 related
restrictions in access to Queensland, and as a result switched its attention to
the development of its South African interests.
The Company farmed out a majority interest in its subsidiary, Deep Blue
Minerals Pty Ltd, to London listed investment company Kazera Global Investments
Plc and has retained a non-diluting 10% interest. Kazera has initiated mining
under a contract to mine diamonds on the South African Government's Alexkor
diamond mine. First diamond sales from this project are expected prior to
year-end.
The Company's 100% owned subsidiary, Whale Head Minerals Pty Ltd, has made an
application for a mining permit to mine (and process) heavy mineral sands
coincident with the diamonds at the Alexkor diamond mining operation.
For further details see the Managing Director's Statement on Page 5.
RESULTS AND COMPARATIVE INFORMATION
The Group reports a profit after tax for the reporting period of GBP356,682 from
continuing operations (2019: GBP824,874 loss) and a loss after tax of GBP73,934
from discontinued operations (2019: GBP31,721).
On 17 April 2019, the Company established Deep Blue Minerals Pty Ltd and as
announced on 4 June 2020, the Company sold a majority interest in Deep Blue
Minerals Pty Ltd effective on 17 June 2020. The financial information for the
reporting period includes that of Tectonic Gold Plc and its controlled entities
for the whole reporting period and that of Deep Blue Minerals Pty Ltd for the
reporting period to 17 June 2020.
On 14 February 2020, the Company established Whale Head Minerals Pty Ltd. For
accounting and reporting purposes, this Company has remained dormant since the
date of incorporation to the end of the reporting period.
DIVIDS
The Directors do not recommend the payment of a dividend and no amount has been
paid or declared by way of a dividend to the date of this report (2019: GBPnil).
KEY PERFORMANCE INDICATORS
The key performance indicators are set out below:
STATISTICS 30 June 2020 30 June 2019
Net asset value GBP2,809,873 GBP2,509,709
Net asset value per share 0.0040p 0.0036p
Closing share price at the end of the reporting 0.32p 0.6p
period
Market capitalisation GBP2.232m GBP4.185m
KEY RISKS AND UNCERTAINTIES
Currently the principal risk lies in securing additional funding as and when
necessary to continue with the core research and exploration business. The
Company's projects are in the exploration phase of development and do not
generate revenue. If the Company is unsuccessful in monetising its research
developments or its exploration projects by attracting development partners or
divesting assets it may need to raise additional capital as other junior
exploration companies do from time to time. This risk is mitigated through the
Company's corporate development efforts and active engagement with a number of
gold mining companies, project funders and other investors for the purpose of
attracting investment in one or more of the Company's projects or acquisition
of one of the assets in line with the business plan.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Details of the Company's financial risk management objectives and policies are
set out in Note 25 to these financial statements.
STRATEGIC REPORT (continued)
For the year ended 30 June 2020
PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A WHOLE
The Director's believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members as a whole, as required
by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
- Consider the likely consequences of any decision in the long term,
- Act fairly between the members of the Company,
- Maintain a reputation for high standards of business conduct,
- Consider the interests of the Company's employees,
- Foster the Company's relationships with suppliers, customers and
others, and
- Consider the impact of the Company's operations on the community and
the environment.
The Company is quoted on the AQUIS Stock Exchange (formerly NEX) and its
members will be fully aware, through detailed announcements, shareholder
meetings and financial communications, of the Board's broad and specific
intentions and the rationale for its decisions.
When selecting investments, issues such as the impact on the community and the
environment have actively been taken into consideration.
The Company pays its employees and creditors promptly and keeps its costs to a
minimum to protect shareholders funds.
This report was approved by the Board of Directors on 27 December 2020 and
signed on its behalf by:
Brett Boynton
Director
DIRECTORS' REPORT
For the year ended 30 June 2020
The Directors present their report and the audited consolidated financial
statements of Tectonic Gold plc ("Tectonic Gold" or the "Company") and its
controlled entities ("Consolidated Entity" or "Group") for the year ended 30
June 2020.
DIRECTORS
The Board comprised the following directors who served throughout the year and
up to the date of this report save where disclosed otherwise:
Name Position Date Appointed/Resignation
Bruce Fulton Non-Executive Appointed 25 June 2018
Chairman
Brett Boynton Managing Director Managing Director and Chief Executive
Officer appointed 26 May 2015
Sam Quinn Executive Director Appointed 20 February 2017
Dennis Edmonds Non-Executive Appointed 28 April 2020
Director
Zeg Choudhry Non-Executive Appointed 19 September 2016 / Resigned 1
Director December 2019
DIRECTORS' INTERESTS
The Directors' interests in the share capital of the Company at 30 June 2020,
held either directly or through related parties, were as follows:
Name of director Number of % of ordinary share
ordinary shares capital and voting
rights
Bruce Fulton 6,467,358 0.77
Brett Boynton 137,139,590 16.28
Sam Quinn 2,512,000 0.29
Dennis Edmonds - -
146,118,948 22.33
Details of the options granted to or held by the Directors or former Directors
are as follows:
Name of Balance Options Options Balance Number Grant Average Average
director or 30 June 2019 granted lapsed 30 June 2020* vested** date exercise date of
former price expiry
director
B Fulton 10,000,000 - 10,000,000 3,333,333 25-Jun-18 2p 25-Jun-22
B Boynton 12,000,000 - - 12,000,000 4,000,000 25-Jun-18 2p 25-Jun-22
S Quinn 12,000,000 - - 12,000,000 4,000,000 25-Jun-18 2p 25-Jun-22
D Edmonds - - - - - - - -
*or at date of cessation if earlier.
** The options vest in three tranches as follows:
- 1/3 of the Options vested on 25 June 2018;
- 1/3 of the Options vest on 25 December 2018 provided that on or after such
date, certain performance conditions have been satisfied; and
- 1/3 of the Options vest on 25 June 2019 provided that on or after such date
certain performance condition have been satisfied.
The Company has made qualifying third-party indemnity provisions for the
benefit of the Directors in the form of Directors' and Officers' Liability
insurance during the year which remain in force at the date of this report.
DIRECTORS' REPORT (continued)
For the year ended 30 June 2020
DONATIONS
The Company did not make any political or charitable donations during the
reporting period (30 June 2019: nil).
EMPLOYEE CONSULTATION
The Company places considerable value on the involvement of its employees and
has continued to keep them informed on matters affecting them as employees and
on various factors affecting the performance of the Company. This is achieved
through formal and informal meetings. Equal opportunity is given to all
employees regardless of their sex, age, religion or ethnic origin.
POST YEAR EVENTS
A list of post year events has been included in Note 29.
GOING CONCERN
The adoption of the going concern basis by the Directors is following a review
of the current position of the Company and Group and the forecasts for at least
the next 12 months. The cash and tradable securities together with the funds
receivable and funding support received from the Drilling Warrants (See Note
29) are sufficient to enable to Company to meet its obligations and continue to
operate for the foreseeable future. Thus, the Directors continue to adopt the
going concern basis in preparing the financial statements. It is beyond the
scope of the Directors to predict any future impact of COVID-19 on any of these
funding sources however and if for any reason it is not possible to sell any
tradeable securities or State Government funding is not secured, this may
impact the ability of the Company to meet its obligations and continue to
operate as envisaged. Further details regarding the adoption of the going
concern basis and uncertainty surrounding it can be found in Note 2 of these
financial statements.
On 11 March 2020, the World Health Organisation ("WHO") declared the
Coronavirus disease 2019 (COVID-19) a pandemic. The pandemic has adversely
affected the global economy, including an increase in unemployment, decrease in
consumer demand, interruptions in supply chains, and tight liquidity and credit
conditions. Consequently, governments around the world have announced monetary
and fiscal stimulus packages to minimise the adverse economic impact. However,
the COVID-19 situation is still evolving, and its full economic impact remains
uncertain.
The Directors and management are continually monitoring and managing the
Company's operations closely in response to COVID-19.
DIRECTORS' REPORT (continued)
For the year ended 30 June 2020
DISCLOSURE OF INFORMATION TO THE AUDITORS
In the case of each of the persons who are directors of the Company at the date
when this report is approved:
· So far as each director is aware, there is no relevant audit information
of which the Company's auditors are unaware; and
· Each of the directors has taken all steps that they ought to have taken
as a director to make themselves aware of any relevant audit information and to
establish that the auditors are aware of the information.
This information is given and should be interpreted in accordance with the
provisions of Section 418 of the Companies Act 2006.
AUDITOR
PKF Littlejohn LLP have expressed their willingness to continue in office as
auditor and it is expected that a resolution to reappoint them will be proposed
at the next annual general meeting.
The Board as a whole considers the appointment of external auditors, including
their independence, specifically including the nature and scope of non-audit
services provided.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors have prepared the Group and
Company financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union, and as regards
the Company financial statements, as applied in accordance with the provisions
of the Companies Act 2006. Under company law, the directors must not approve
the financial statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and Company and of the profit or
loss of the Group and Company for that period. In preparing these financial
statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· state whether applicable IFRSs have been followed, subject to any
material departures disclosed and explained in the financial statements;
· make judgements and accounting estimates that are reasonable and
prudent; and
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and Company will continue in business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group and Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the financial statements
comply with the Companies Act 2006.
The directors are also responsible for safeguarding the assets of the Group and
Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
CORPORATE GOVERNANCE
The requirements of the 2016 UK Corporate Governance Code ("the Code"), as
issued by the Financial Reporting Council, are not mandatory for companies
traded on AQUIS Stock Exchange. The Directors recognise the value of the Code
and apply the recommendations in so far as it is appropriate for a Company of
its size.
DIRECTORS' REPORT (continued)
For the year ended 30 June 2020
BOARD OF DIRECTORS
The Company supports the concept of an effective Board leading and controlling
the Company. The Board of Directors is responsible for approving Company
policy and strategy. It meets regularly and has a schedule of matters
specifically reserved to it for decision. All Directors have access to advice
from independent professionals at the Company's expense. Training is available
for new and existing Directors, as necessary.
The Board consists of the Non-Executive Chairman, Bruce Fulton, Managing
Director, Brett Boynton, Executive Director, Sam Quinn and Non-Executive
director, Dennis Edmonds.
Since Admission to the AQUIS Stock Exchange on 25 June 2018, the Board has
established properly constituted audit, remuneration and AQUIS Stock Exchange
compliance committees with formally delegated duties and responsibilities, a
summary of which is set out below.
AUDIT COMMITTEE
The Audit Committee comprises Bruce Fulton (Chairman), Sam Quinn and the Chief
Financial Officer, Anne Adaley. The Committee meets at least twice a year and
is responsible for ensuring the financial performance of the Company is
properly reported on and monitored. It liaises with the auditor and reviews the
reports from the auditor relating to the financial statements.
REMUNERATION COMMITTEE
The Remuneration Committee comprises Bruce Fulton (Chairman) and Sam Quinn. The
Committee meets at least twice a year and is responsible for reviewing the
performance of Executive Directors and sets the scale and structure of their
remuneration on the basis of their service agreements, with due regard to the
interests of the shareholders and the performance of the Company.
AQUIS STOCK EXCHANGE COMPLIANCE COMMITTEE
The role of the AQUIS Stock Exchange compliance committee is to ensure that the
Company has in place sufficient procedures, resources and controls to enable it
to comply with the AQUIS Stock Exchange Rules. The AQUIS Stock Exchange
compliance committee make recommendations to the Board and proactively liaise
with the Company's AQUIS Stock Exchange Corporate Adviser on compliance with
the AQUIS Stock Exchange Rules. The AQUIS Stock Exchange compliance committee
also monitors the Company's procedures to approve any share dealings by
directors or employees in accordance with the Company's share dealing code. The
members of the AQUIS Stock Exchange compliance committee are Brett Boynton
(Chairman), Sam Quinn and Dennis Edmonds.
SHARE DEALING CODE
The Company has adopted a share dealing code for dealings in securities of the
Company by directors and certain employees which is appropriate for a company
whose shares are traded on the AQUIS Stock Exchange. This will constitute the
Company's share dealing policy for the purpose of compliance with UK
legislation including the Market Abuse Regulation and the relevant part of the
AQUIS Stock Exchange Rules. It should be noted that the insider dealing
legislation set out in the UK Criminal Justice Act 1993, as well as provisions
relating to market abuse, also apply to the Company and dealings in Ordinary
Shares.
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority by the management.
In addition to the publication of an annual report and an interim report, there
is regular dialogue with shareholders and analysts. The Annual General Meeting
is viewed as a forum for communicating with shareholders, particularly private
investors. Shareholders may question the Managing Director and other members
of the Board at the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Company's system of
internal control and for reviewing the effectiveness of these systems. The risk
management process and systems of internal control are designed to manage
rather than eliminate the risk of the Company failing to achieve its strategic
objectives. It should be recognised that such systems can only provide
reasonable and not absolute assurance against material misstatement or loss.
The Company has well established procedures which are considered adequate given
the size of the business.
DIRECTORS' REPORT (continued)
For the year ended 30 June 2020
REMUNERATION
The remuneration of the directors has been fixed by the Board as a whole. The
Board seeks to provide appropriate reward for the skill and time commitment
required so as to retain the right calibre of director at a cost to the Company
which reflects current market rates.
Details of directors' fees and of payments made to directors for professional
services rendered are set out in Note 8 to the financial statements and details
of the directors' share options are set out in the Directors' Report.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE ANNUAL FINANCIAL
REPORT
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
· the Directors' report includes a fair review of the development and
performance of the business and the position of the issuer and the undertakings
included in the consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face.
This report was approved by the Board of Directors on 27 December 2020 and
signed on its behalf by:
Brett Boynton
Director
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF TECTONIC GOLD PLC
For the year ended 30 June 2020
Opinion
We have audited the financial statements of Tectonic Gold Plc (the 'parent
company') and its subsidiaries (the 'group') for the year ended 30 June 2020
which comprise the Consolidated Statement of Profit or Loss and Other
Comprehensive Income, the Group and Company Statements of Financial Position,
the Consolidated and Company Statements of Changes in Equity, the Consolidated
and Company Statements of Cash Flows and notes to the financial statements,
including a summary of significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European
Union and as regards the parent company financial statements, as applied in
accordance with the provision of the Companies Act 2006.
In our opinion:
· the financial statements give a true and fair view of the state of the
group's and of the parent company's affairs as at 30 June 2020 and of the
group's and parent company's profit for the year then ended;
· the group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
· the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards
are further described in the Auditor's responsibilities for the audit of the
financial statements section of our report. We are independent of the group and
parent company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to
which the ISAs (UK) require us to report to you where:
· the directors' use of the going concern basis of accounting in the
preparation of the financial statements is not appropriate; or
· the directors have not disclosed in the financial statements any
identified material uncertainties that may cast significant doubt about the
group's or the parent company's ability to continue to adopt the going concern
basis of accounting for a period of at least twelve months from the date when
the financial statements are authorised for issue.
Our application of materiality
Materiality for the group financial statements as a whole was set at GBP101,000.
This was calculated based on a benchmark of 3% of gross assets which, based on
our professional judgment, we determined to be the main driver of the business
as the group is still in the exploration stage and therefore no revenues are
currently being generated. Current and potential investors will therefore be
most interested in the recoverability of the exploration and evaluation assets.
Group performance materiality was set at GBP80,800.
Materiality for the parent company financial statements was set at GBP59,500,
determined with reference to a benchmark of 3% of gross assets. We assessed
this as the key benchmark on the basis that the parent is a holding company
whose value is derived from the underlying subsidiary. Company performance
materiality was set at GBP47,600.
Materiality for the remaining significant component of the group was set at GBP
92,000 based on 3% of gross assets. Performance materiality for the significant
component was set at GBP73,600 and all other components.
We reported to the Audit Committee all corrected and uncorrected misstatements
we identified throughout our audit with a value in excess of GBP5,050, in
addition to other audit misstatements below that threshold that we believed
warranted reporting on qualitative grounds.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF TECTONIC GOLD PLC (CONTINUED)
For the year ended 30 June 2020
An overview of the scope of our audit
The scope of our audit was influenced by our evaluation of materiality and our
assessment of the risks of material misstatement in the group and parent
company financial statements. In particular, we assessed the areas involving
significant accounting estimates and judgement by the directors as risks for
our audit. This included the carrying value of exploration assets and
investments as well as future events that are inherently uncertain and could
have an impact on the group and parent company's ability to continue as a going
concern. These were judged to be the most significant assessed risks of
material misstatement and therefore reported as key audit matters below.
The significant component based in Australia was audited by a component
auditor. We had oversight of, and regular communication with, the component
auditor who was operating under our instructions. The component auditor
supplied their working papers for our review. This, along with further
discussions with the component auditor, gave us sufficient appropriate evidence
for our audit opinion on the Group financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of
most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key audit matter How the scope of our audit responded to
the key audit matter
Going concern (group and parent company) We performed the following procedures
Note 2 of the financial statements sets to address this risk:
out the directors assessment of the · Critically assessed cash flow
appropriateness of the going concern forecasts and budgets;
basis of preparation. This explains that · Undertook sensitivity analysis
the group and parent company expect to on management's forecasts;
receive future funding and support to · Discussed the matters with
enable their obligations to be met and management;
ensure they continue to operate in the · Reviewed the group's assessment
foreseeable future. of the impact of COVID-19 using our
There is a risk that the group and parent knowledge of the business and the
company are unable to access that further industry that the group and parent
funding and support, especially in light company operates in;
of the ongoing uncertainties arising from · Evaluated the adequacy of
the COVID-19 pandemic. disclosures made in the financial
statements.
We have nothing material to add or draw
attention to in respect of the
conclusions in relation to going
concern section of our audit report.
Carrying value of mining exploration and Our work in this area included:
evaluation expenditure (group)
As disclosed in note 15 of the financial · Confirmation that the group has
statements, exploration and evaluation good title to the applicable
expenditure as at 30 June 2020 was GBP exploration licences, and has fulfilled
2,695,681. any specific conditions therein
The recoverability of this asset is particularly having regard to minimum
highly judgmental due to the early stage expenditure requirements;
of the projects and the contingent nature · Review and substantive testing
of obtaining a mining permit. The of capitalised costs including
COVID-19 pandemic impact on the current consideration of appropriateness for
economic climate means there is also a capitalisation under IFRS 6;
greater risk that the carrying value of · Assessment of progress at the
exploration and evaluation assets are not individual projects during the year and
recoverable and thus require impairment. post year-end; and
· Consideration of management's
impairment reviews in light of
impairment indicators identified in
accordance with IFRS 6, including
corroboration and challenge thereof.
Recoverability of investments and We performed the following procedures
subsidiary loans (parent company) to address this risk:
The parent company has significant · Reviewed the loan agreement and
investments in its subsidiary entities repayment terms;
which is supported by the underlying · Reviewed the net assets of the
projects. As at 30 June 2020, and as underlying subsidiaries and the
shown in note 16, this investment was GBP exploration projects therein;
3,605,259. · Reviewed and challenged the
Note 12 also reports a loan of GBP1,344,409 impairment considerations by
provided by the parent company to its management;
subsidiary, Signature Gold, as at 30 June · Verified the carrying value of
2020. the investments; and
There is a risk that the investment in · Assessed Signature Gold's
the subsidiaries, along with the loan, ability to repay the outstanding loan
are impaired as the subsidiaries have not amount.
started to produce revenues. Therefore,
it is necessary to assess the fair value We consider that management's judgement
of the holdings at year end. in respect of the recoverability of the
There is also a risk of material parent company investments and loan to
misstatement around the recoverability of one of its subsidiaries is materially
the significant loan balance with reasonable.
Signature Gold.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF TECTONIC GOLD PLC (CONTINUED)
For the year ended 30 June 2020
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information. Our opinion on the group
and parent company financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon. In connection with our audit
of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial
statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors' report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
· the strategic report and the directors' report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent
company and their environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not visited
by us; or
· the parent company financial statements are not in agreement with the
accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are not
made; or
· we have not received all the information and explanations we require for
our audit.
Responsibilities of directors
As explained more fully in the statement of directors' responsibilities, the
directors are responsible for the preparation of the group and parent company
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors
are responsible for assessing the group's and the parent company's ability to
continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF TECTONIC GOLD PLC (CONTINUED)
For the year ended 30 June 2020
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at: https:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Eric Hindson (Senior Statutory Auditor)
15
Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Statutory
Auditor
London E14 4HD
27 December 2020
NOTE 2020 2019
GBP GBP
Revenue from continuing operations 5 294,866 24,471
Expenses from continuing operations:
Accounting and audit fees (59,715) (88,526)
Administration and office costs (10,496) (26,865)
Corporate costs (71,492) (96,729)
Amortisation and depreciation (1,515) (1,338)
Employee benefits, management fees and on 8 5,682 (76,742)
costs
Exploration and tenement costs (10,231) (29,747)
Insurance (2,429) (17,233)
Legal expenses - 396
Impairment of exploration costs - (703,936)
Bad debt expense - (64,173)
Business development costs (9,257) -
Other expenses (5,578) (38,945)
Net fair value gain on financial assets at 77,750 -
fair value through profit and loss
Profit/ (loss) from continuing operations 207,585 (1,119,367)
before income tax
Income tax benefit 9 149,097 326,214
Profit/ (loss) for the year from continuing 356,682 (793,153)
operations
Discontinued operations
(Loss) for the year from discontinued 13 (73,934) (31,721)
operations
Profit/ (loss) for the year attributable to 282,748 (824,874)
the owners of the Company
Other comprehensive income:
Items that may be subsequently reclassified
to profit and loss:
Exchange differences on translation of 17,416 (34,430)
foreign subsidiaries
Total comprehensive profit/ (loss) for the 300,162 (859,304)
year
Earnings per share attributable to owners of
the company
Basic and diluted (pence per share) 10 0.04 (0.120)
The accompanying notes form part of these financial statements.
NOTE 30-Jun-20 30-Jun-19 30-Jun-20 30-Jun-19
GROUP GROUP COMPANY COMPANY
GBP GBP GBP GBP
ASSETS
NON-CURRENT ASSETS
Trade and other receivables 12 1,344,409 1,341,710
- -
Plant and equipment 14 5,075 6,603
- -
Exploration and evaluation 15 2,695,681 2,663,707
expenditure - -
Investments in controlled 17 3,605,254 3,605,259
entities - -
Financial assets at fair 16 224,407 - 224,407 -
value through profit and
loss
TOTAL NON-CURRENT ASSETS 2,925,163 2,670,310 5,174,070 4,946,969
CURRENT ASSETS
Cash and cash equivalents 11 52,734 34,875 26,415 22,846
Trade and other receivables 12 1,865 7,913 - -
Financial assets at fair 16 - 40,122 - 40,122
value through profit and
loss
Other assets 19 357,792 360,412 5,100 5,100
TOTAL CURRENT ASSETS 412,391 443,322 31,515 68,068
TOTAL ASSETS 3,337,554 3,113,632 5,205,585 5,015,037
EQUITY
Share capital 23 6,100,615 6,100,615 6,100,615 6,100,616
Share premium account 60,146,216 60,146,216 60,146,216 60,146,216
RTO Reserve 24 (57,976,182) (57,976,182)
- -
Warrant reserves 24 95,098 95,098 95,098 95,098
Foreign exchange translation 24 (75,265) (92,681)
reserves - -
Accumulated losses (5,480,609) (5,763,357) (61,261,233) (61,439,800)
TOTAL EQUITY 2,809,873 2,509,709 5,080,696 4,902,130
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 20 16,060 15,913 - -
Borrowings 21 226,908 236,793 56.685 -
Employee benefits 22 - 11,363 - -
TOTAL NON-CURRENT LIABILITES 242,968 264,069 56,685 -
CURRENT LIABILITIES
Trade and other payables 20 284,712 275,680 68,204 62,907
Borrowings 21 - 50,000 - 50,000
Employee benefits 22 - 14,174 - -
TOTAL CURRENT LIABILITES 284,714 339,854 68,204 112,907
TOTAL LIABILITIES 527,682 603,923 124,889 112,907
TOTAL EQUITY AND LIBAILITIES 3,337,554 3,113,632 5,205,585 5,015,037
As permitted by s408 Companies Act 2006, the Company has not presented its own
profit and loss account and related notes. The Company's profit for the year
was GBP178,567 (2019: loss of GBP247,215).
These financial statements were approved by the Board of Directors on 27
December 2020 and signed on their behalf by:
Brett Boynton
Director
Company number: 05173250
The accompanying notes form part of these financial statements.
GROUP ISSUED SHARE WARRANT RTO FOREIGN ACCUMULATED TOTAL
FOR THE YEARED 30 CAPITAL PREMIUM RESERVE RESERVE CURRENCY LOSSES
JUNE 2019 RESERVE
GBP GBP GBP GBP GBP GBP GBP
Balance at 1 July 2018 6,099,615 60,117,216 95,098 (57,976,182) (58,251) (4,938,483) 3,339,013
Total comprehensive - - - - (34,430) (859,304)
loss for the period (824,874)
Transactions with
owners, recorded
directly in equity:
Shares Issued - 1 June 1,000 - - - 30,000
2019 29,000 -
Balance as at 30 June 6,100,615 60,146,216 95,098 (57,976,182) (92,681) (5,763,357) 2,509,709
2019
GROUP ISSUED SHARE WARRANT RTO FOREIGN ACCUMULATED TOTAL
FOR THE YEARED 30 CAPITAL PREMIUM RESERVE RESERVE CURRENCY LOSSES
JUNE 2020 RESERVE
GBP GBP GBP GBP GBP GBP GBP
Balance at 1 July 2019 6,100,615 60,146,216 95,098 (57,976,182) (92,681) (5,763,357) 2,509,709
Total comprehensive 282,748 282,748
income for the period
Transactions with
owners, recorded
directly in equity:
Foreign Currency - - - - 17,416 - 17,416
Translation Reserve
Fair value of warrants - - - - - - -
issued
Balance as at 30 June 6,100,615 60,146,216 95,098 (57,976,182) (75,265) (5,480,609) 2,809,873
2020
The accompanying notes form part of these financial statements
COMPANY SHARE SHARE WARRANT RESERVES ACCUMULATED LOSSES TOTAL
FOR THE YEARED 30 JUNE 2019 CAPITAL PREMIUM EQUITY
GBP GBP GBP GBP GBP
Balance at 1 July 2018 6,099,615 60,117,216 95,098 (61,192,585) 5,119,344
Total comprehensive loss for the (247,215) (247,215)
period - - -
Transactions with owners, recorded
directly in equity:
Issue of shares and warrants:
Shares issued -1 June 2019 1,000 29,000
- - 30,000
Balance at 30 June 2019 6,100,615 60,146,216 95,098 (61,439,800) 4,902,129
COMPANY SHARE SHARE WARRANT RESERVES ACCUMULATED TOTAL
FOR THE YEARED 30 JUNE 2020 CAPITAL PREMIUM LOSSES EQUITY
GBP GBP GBP GBP GBP
Balance at 1 July 2019 6,100,615 60,146,216 95,098 (61,439,800) 4,902,129
Total comprehensive income for the 178.567
period - - - 178,567
Balance at 30 June 2020 6,100,615 60,146,216 95,098 (61,261,233) 5,080,696
The accompanying notes form part of these financial statements
30-Jun-20 30-Jun-19
NOTE GROUP GROUP
GBP GBP
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts in the course of 20,136 62,832
operations
Cash payments in the course of (242,654) (586,464)
operations
Research and Development Tax Incentive 149,097 326,214
Claim
Interest received 5,541 -
Net cash used in operating activities 25 (67,880) (197,418)
CASH FLOWS USED IN INVESTING ACTIVITIES
Payments for exploration and evaluation (58,777) (279,351)
expenditure
Proceeds from new owner of Deep Blue 56 -
Minerals Pty Ltd
Payments for property, plant and - (6,911)
equipment
Payment for security deposit (266) (276)
Refund of security deposit 2,665 -
Proceeds from sale of investments 86,844 -
Net cash used in investing activities 30,522 (286,538)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares - 280,000
Proceeds from borrowings 66,048 89,418
Loans to Tectonic SA (10,830) -
Net cash provided by financing 55,218 369,418
activities
Net (decrease)/increase in cash held 17,858 (114,539)
and cash equivalents
Cash and cash equivalents at the 34,875 149,397
beginning of the period
Effects of exchange rate changes on - 17
cash and cash equivalents
Cash and cash equivalents at the end of 52,734 34,875
the period
The accompanying notes form part of these financial statements.
30-Jun-20 30-Jun-19
NOTE COMPANY COMPANY
GBP GBP
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts in the course of 20,136 40,380
operations
Cash payments in the course of (87,884) (246,664)
operations
Loan to Signature Gold Pty Ltd (17,500) -
Interest received 5,179 -
Net cash used in operating activities 25 (80,069) (206,284)
CASH FLOWS USED IN INVESTING ACTIVITIES
Proceeds from the sale of investments 86,844 -
Loan to Deep Blue Minerals Pty Ltd (53,206) (15,000)
Loan to Signature Gold Pty Ltd - (47,000)
Net cash used in investing activities 33,638 (62,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 50,000 -
Proceeds from issue of shares - 280,000
Net cash provided by financing 50,000 280,000
activities
Net (decrease)/increase in cash held 3,569 11,716
and cash equivalents
Cash and cash equivalents at the 22,846 11,130
beginning of the period
Cash and cash equivalents at the end of 26,415 22,846
the period
The accompanying notes form part of these financial statements.
1. GENERAL INFORMATION
Tectonic Gold Plc is a company incorporated in the United Kingdom under the
Companies Act 2006. The nature of the Company's operations and its principal
activities are set out in the Strategic Report and the Directors' Report on
pages 6 and 8.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The consolidated and parent company financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted
for use in the European Union ("EU") applied in accordance with the provisions
of the Companies Act 2006.
The consolidated and parent company financial statements have been prepared
under the historical cost convention, as modified by the revaluation of
financial assets and financial liabilities at fair value through profit or
loss.
IFRS is subject to amendment and interpretation by the International Accounting
Standards Board ("IASB") and the International Financial Standards
Interpretations Committee ("IFRS IC") and there is an ongoing process of review
and endorsement by the European Commission. The accounts have been prepared on
the basis of the recognition and measurement principles of IFRS that were
applicable at 30 June 2020.
This financial report includes the consolidated financial statement and notes
of Tectonic Gold Plc ("the Company") and its controlled entities ("Consolidated
Entity" or "Group").
The principal accounting policies adopted and applied in the preparation of the
Group's Financial statements are set out below. These have been consistently
applied to all the years presented unless otherwise stated:
GOING CONCERN
Any consideration of the foreseeable future involves making a judgement, at a
particular point in time, about future events which are inherently uncertain.
The ability of the Group and Company to carry out their planned business
objectives is dependent on the continuing ability to raise adequate financing
from equity investors and/or the achievement of profitable operations.
The adoption of the going concern basis by the Directors is following a review
of the current position of the Company and the forecasts for the next 12
months. The cash and tradable securities together with the funds receivable and
funding support expected from the Queensland State Government are forecast to
enable the Group and Company to meet their obligations and continue to operate
for the foreseeable future. Thus, the directors continue to adopt the going
concern basis in preparing the financial statements. It is beyond the scope of
the Directors to predict any future impact of COVID-19 on any of these funding
sources however and if for any reason it is not possible to sell any tradeable
securities or State Government funding is not secured, this may impact the
ability of the Group and Company to meet their obligations and continue to
operate as envisaged..
CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
New standards, amendments and interpretations adopted by the Group and Company
The group and company have applied the following standards and amendments for
the first time for its annual reporting period commencing 1 July 2019:
IFRS 16, 'Leases';
* Prepayment Features with Negative Compensation - Amendments to IFRS 9;
* Long-term Interests in Associates and Joint Ventures - Amendments to IAS
28;
* Annual Improvements to IFRS Standards 2015-2017 Cycle;
* Plan Amendments, Curtailment or Settlement - Amendments to IAS 19;
* Interpretation 23 'Uncertainty over Income Tax Treatments'; and
Definition of Material - Amendments to IAS 1 and IAS 8.
The adoption of the above has not had a material impact on the Group or
Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)
New standards, amendments and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are
effective for annual periods beginning after 1 July 2019 and have not been
applied in preparing these consolidated and company financial statements:
* Annual Improvements to IFRS Standards 2018-2020 (effective 1 January
2022)
* IFRS 3 (amendments) to clarify the definition of a business (effective 1
January 2020)
* IFRS 3 (amendments) updating a reference to the Conceptual Framework
(effective 1 January 2022)
* IFRS 7, IFRS 9 & IAS 39 (amendments) regarding pre-replacement issues in
the context of the IBOR reform (effective 1 January 2020)
* IFRS 7, IFRS 9 & IAS 39 (amendments) regarding replacement issues in the
context of the IBOR reform (effective 1 January 2021)
* IFRS 9 (amendments) resulting from Annual Improvements to IFRS Standards
2018-2020 (fees in the '10 per cent' test for derecognition of financial
liabilities) (effective 1 January 2022)
* IAS 1 & IAS 8 (amendments) Definition of Material (effective 1 January
2020)
* IAS 1 (amendments) regarding the classification of liabilities
(effective 1 January 2023)
* IAS 1 (amendments) to defer the effective date of the January 2020
amendments (effective 1 January 2023)
* IAS 16 (amendments) prohibiting a company from deducting from the cost
of property, plant and equipment amounts received from selling items produced
while the company is preparing the asset for its intended use (effective 1
January 2022)
* IAS 37 (amendments) regarding the costs to include when assessing
whether a contract is onerous (effective 1 January 2022)
None of these is expected to have a significant effect on the consolidated
financial statements of the Group or Company.
BASIS OF CONSOLIDATION
Where the Group has control over an investee, it is classified as a subsidiary.
The Group 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 comprise the financial statements of the
Company and its subsidiaries as at the end of the reporting period. The
financial statements of the subsidiaries used in the preparation of the
consolidated financial statements are prepared for the same reporting date as
for the Company. Consistent accounting policies are applied to like
transactions and events in similar circumstances. All intra-group balances,
balances and unrealised gains and losses resulting from intra-group
transactions and dividends are eliminated in full.
Subsidiaries are consolidated from the date of acquisition, being the date on
which the Group obtains control, and continue to be consolidated until the date
that such control ceases.
On 25 June 2018, Tectonic Gold (the legal parent) acquired Signature Gold Ltd
(Signature Gold). Although the transaction was not a business combination, the
acquisition has been accounted for as an asset acquisition with reference to
the guidance for reverse acquisition in IFRS 3 Business Combinations and IFRS 2
Share-based Payment.
On 14 February 2020, the Company established Whale Head Minerals Pty Ltd. This
Company has remained dormant since the date of incorporation to the end of the
reporting period.
The financial information for the reporting period includes that of Tectonic
Gold Plc and its controlled entities for the whole reporting period and that of
Whale Head Minerals Pty Ltd for the reporting period since 14 February 2020.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
Investments are initially measured at fair value plus directly attributable
incidental acquisition costs. Subsequently, they are measured at fair value in
accordance with IFRS 9. This is either the bid price or the last traded price,
depending on the convention of the exchange on which the investment is quoted.
Investments are recognised as financial assets at fair value through the profit
or loss. Gains and losses on measurement are recognised in other comprehensive
income except for impairment losses and foreign exchange gains and losses on
monetary items denominated in a foreign currency, until the assets are
derecognised, at which time the cumulative gains and losses previously
recognised in other comprehensive income are recognised in the income
statement.
The Company assesses at each year-end date whether there is any objective
evidence that a financial asset or group of financial assets classified as
available-for-sale has been impaired. An impairment loss is recognised if there
is objective evidence that an event or events since initial recognition of the
asset have adversely affected the amount or timing of future cash flows from
the asset. A significant or prolonged decline in the fair value of a security
below its cost shall be considered in determining whether the asset is
impaired.
INVESTMENTS
In the Company's separate financial statements, investments in subsidiaries are
accounted for at cost less impairment losses.
FOREIGN CURRENCIES
The Group and Company's financial statements are presented in the currency of
the primary economic environment in which it operates (its functional
currency). For the purpose of these financial statements, the results and
financial position are expressed in Pounds Sterling, which is the presentation
currency of the Group and Company.
Each entity in the Group determines its own functional currency and items
included in the financial statements of each entity are measured using that
functional currency.
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in the income statement.
Exchange differences arising on the retranslation of non-monetary items carried
at fair value are included in profit or loss for the period, except for
differences arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss is also
recognised directly in equity.
When a decline in the fair value of a financial asset classified as
available-for-sale has been previously recognised in other comprehensive income
and there is objective evidence that the asset is impaired, the cumulative loss
is removed from other comprehensive income and recognised in the income
statement. The loss is measured as the difference between the cost of the
financial asset and its current fair value less any previous impairment.
For the purpose of presenting the Group and Company financial statements, the
assets and liabilities of any of the Group and Company's operations that are
overseas are translated at exchange rates prevailing on the year-end date.
Income and expense items are translated at the average exchange rates for the
period.
Any translation differences on consolidation are recognised in Other
Comprehensive Income.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
TAXATION
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Company's liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the year end date.
The research and development tax incentive claim is recognised as income tax
revenue in the period in which it is received.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of
taxable profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable
profits will be available against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Company is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and where they relate to income taxes levied by the same taxation authority and
the Company intends to settle its current tax assets and liabilities on a net
basis.
EXPLORATION AND EVALUATION EXPITURE
Exploration expenditure incurred is accumulated in respect of each identifiable
area of interest, net of any related grant income received. These costs are
only carried forward to the extent that they are expected to be recovered
through the successful development or sale of the area or where activities in
the area have not yet reached a stage which permits reasonable assessment of
the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full
against profit or loss in the year in which the decision to abandon the area is
made. When production commences, the accumulated costs for the relevant area of
interest are amortised over the life of the area according to the rate of
depletion of the economically recoverable reserves. A regular review is
undertaken of each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to the area of interest.
Exploration and evaluation assets are assessed for impairment annually or when
facts and circumstances suggest that the carrying amount of an asset may exceed
its recoverable amount in accordance with IFRS 6.
PROPERTY, PLANT AND EQUIPMENT
Items of property, plant and equipment are recorded at cost and depreciated as
outlined below:
Depreciation of Property, Plant and Equipment
Depreciation is calculated on a straight-line basis to write off the net cost
of each item of property, plant and equipment over its expected useful life for
the entity. Estimates of remaining useful lives are made on a regular basis for
all assets with annual reassessments for major items. The expected useful lives
are as follows:
Plant and equipment 5 years
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
IMPAIRMENT OF PROPERTY, PLANT & EQUIPMENT
At each financial year end date, the Company reviews the carrying amounts of
its tangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss, if any. Where the asset does not generate cash flows
that are independent from other assets, the Company estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
If the recoverable amount of an asset or cash-generating unit is estimated to
be less than its carrying amount, the carrying amount of the asset or
cash-generating unit is reduced to its recoverable amount and the impairment
loss is recognised as an expense immediately.
When an impairment loss subsequently reverses, the carrying amount of the asset
or cash-generating unit is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised
for the asset or cash-generating unit in prior years. A reversal of an
impairment loss is recognised as income immediately, unless the relevant asset
is carried at a revalued amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.
NON-CURRENT ASSETS (OR DISPOSAL GROUPS) HELD-FOR-SALE AND DISCONTINUED
OPERATIONS
Non-current assets (or disposal groups) are classified as assets held for sale
when their carrying amount is to be recovered principally through a sale
transaction and a sale is considered highly probable. They are stated at the
lower of carrying amount and fair value less costs to sell. A discontinued
operation is a component of the Group that is classified as held for sale and
that represents a separate line of business or geographical area of operations.
The results of discontinued operations are presented separately in the
Consolidated Income Statement.
TRADE RECEIVABLES, LOANS AND OTHER RECEIVABLES
Trade receivables, loans and other receivables that have fixed or determinable
payments that are not quoted in an active market are classified under 'loans
and receivables. Loans and receivables are measured at amortised cost using the
effective interest method, less any impairment. Interest income is recognised
by applying the effective interest rate, except for short term receivables when
the recognition of interest would be immaterial.
Other receivables, that do not carry any interest, are measured at their
nominal value as reduced by any appropriate allowances for irrecoverable
amounts.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and other short-term bank
deposits.
FINANCIAL LIABILITIES
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. Financial liabilities
are classified as either financial liabilities 'at FVTPL' or 'other financial
liabilities'.
All financial liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly attributable
transaction costs. Subsequent measurement is at amortised cost using the
effective interest method. The Group's financial liabilities include trade and
other payables.
A financial liability is held for trading if it meets one of the following
conditions:
* It is incurred principally for the purpose of repurchasing it in the
near term
* On initial recognition it is part of a portfolio of identified financial
instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking, or
* It is a derivative (except for a derivative that is a financial
guarantee contract or a designated and effective hedging instrument).
There were no financial liabilities 'at FVTPL' during the current, or
preceding, period.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
OTHER FINANCIAL LIABILTIES AND SHORT-TERM BORROWINGS
Interest-bearing loans and overdrafts are recorded at the proceeds received,
net of direct issue costs. Finance charges are accounted for on an accruals
basis in profit or loss using the effective interest rate method and are added
to the carrying amount of the instrument to the extent that they are not
settled in the period in which they arise. Other short-term borrowings being
intercompany loans and unsecured convertible loan notes issued in the year are
recognised at amortised cost net of any financing or arrangement fees.
TRADE PAYABLES
Trade payables are initially measured at fair value and subsequently measured
at amortised cost using the effective interest method, less provision for
impairment.
SHARE-BASED PAYMENTS
The Company has applied the requirements of IFRS 2 Share-based payments.
The Company operates an equity-settled share-based payment scheme under which
share options are issued to certain employees. Equity-settled share-based
payments are measured at fair value (excluding the effect of non-market-based
vesting conditions) at the date of grant. The fair value determined at the
grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Company's estimate of
shares that will eventually vest and adjusted for the effect of
non-market-based vesting conditions.
Fair value is measured by use of the Black Scholes model. The expected life
used in the model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions, and behavioural
considerations.
EQUITY INSTRUMENTS INCLUDING SHARE CAPITAL
Equity instruments issued by the Company are recorded at the proceeds received,
net of incremental costs attributable to the issue of new shares.
An equity instrument is any contract that evidences a residual interest in the
assets of a company after deducting all of its liabilities. Equity instruments
issued by the Company are recorded at the proceeds received net of direct issue
costs.
Share capital represents the amount subscribed for shares at nominal value.
The share premium account represents premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax benefits.
Any bonus issues are also deducted from share premium.
The reverse takeover reserve represents the adjustment needed to reflect the
reverse takeover of Signature Gold in the previous year.
The foreign currency translation reserve is used to record exchange differences
arising from the translation of the financial statements of foreign
subsidiaries.
The warrant reserve represents the fair value of warrants granted to employees
and suppliers for services provided to the Group. The fair value of warrants is
expensed over the vesting period or during the period in which the services are
received.
Accumulated losses include all current and prior period results as disclosed in
the statement of comprehensive income.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS
In the application of the Company's accounting policies, which are described in
note 2, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period. Judgements and
estimates that may affect future periods are as follows:
SHARE BASED PAYMENTS
The calculation of the fair value of equity-settled share-based awards and the
resulting charge to the statement of comprehensive income requires assumptions
to be made regarding future events and market conditions. These assumptions
include the future volatility of the Company's share price. These assumptions
are then applied to a recognised valuation model in order to calculate the fair
value of the awards.
TREATMENT OF EXPLORATION AND EVALUATION COSTS
Exploration expenditure incurred is accumulated in respect of each identifiable
area of interest, net of any related grant income received. These costs are
only carried forward to the extent that they are expected to be recovered
through the successful development or sale of the area or where activities in
the area have not yet reached a stage which permits reasonable assessment of
the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full
against profit in the year in which the decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of
interest are amortised over the life of the area according to the rate of
depletion of the economically recoverable reserves. A regular review is
undertaken of each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to the area of interest.
The value of the Group's exploration and evaluation expenditure will be
dependent upon the success of the Group in discovering economic and recoverable
mineral resources. It is also dependent on the Group successfully renewing its
licences.
The future revenue flows relating to these assets is uncertain and will also be
affected by competition, relative exchange rates and potential new legislation
and related environmental requirements.
4. SEGMENTAL INFORMATION
The Chief Operating Decision Maker of the Group is the Board of Directors. The
Group operates in one industry segment being mineral exploration. Information
is therefore shown for geographical segments.
2020 AUSTRALIA SOUTH UNALLOCATED TOTAL
AFRICA
GBP GBP GBP GBP
Revenue
Interest - - 5,180 5,180
Net fair value gain on - - 77,750 77,750
financial assets at fair
value through profit and loss
Gain on sale of investment - - 46,722 46,722
Gain on sale of Deep Blue - - 76,171 76,171
Minerals
Other fees - - 166,793 166,793
Total segment revenue - - 372,616 372,616
Segment net profit/(loss) (59,924) - 269,024 209,100
before tax and other items
Depreciation and amortisation (1,515) - - (1,515)
Net profit/(loss) before (61,439) - 269,024 207,585
income tax
Income tax benefit 149,097 - - 149,097
Net profit/(loss) after 87,658 - 269,024 356,682
income tax
Segment assets at 30 June 3,081,631 - 255,923 3,337,554
2020
Segment liabilities at 30 402,794 - 124,888 527,682
June 2020
All additions to intangible assets occurred in the Australian reporting
segment.
2019 AUSTRALIA SOUTH UNALLOCATED TOTAL
AFRICA
GBP GBP GBP GBP
Revenue
Interest - 59 - 59
Consulting fees 24,471 - - 24,471
Other fees - 7,332 - 7,332
Total segment revenue 24,471 7,391 - 31.862
Segment net (loss) before tax (123,431) (31,721) (290,662) (445,814)
and other items
Impairment of exploration (703,936) - - (703,936)
costs
Depreciation and amortisation (1,338) - - (1,338)
Net (loss) before income tax (828,705) (31,721) (290,662) (1,151,088)
Income tax benefit 326,214 - - 326,214
Net (loss) after income tax (502,491) (31,721) (290,662) (824,874)
Segment assets at 30 June 2,998,503 47,060 68,069 3,113,632
2019
Segment liabilities at 30 424,802 66,214 112,907 603,923
June 2019
All additions to intangible assets occurred in the Australian reporting
segment.
5. REVENUE
CONSOLIDATED
2020 2019
GBP GBP
Consulting services - 24,471
Interest income 5,180 59
Gain on sale of royalty 146,657 -
Gain on sale of investment 46,722 -
Gain on sale of Deep Blue Minerals Plc 76,171 -
Other fees - 7,332
Option fee 20,136
-
Total revenue from continuing operations 294,866 31,862
6. OPERATING LOSS
CONSOLIDATED
2020 2019
GBP GBP
Operating (loss) is stated after
charging:
Staff costs as per Note 8 below (34,155) (89,777)
Impairment of exploration costs - (703,936)
Fair value of warrants issued and - (68,900)
vested
Depreciation of property plant and (1,515) (1,338)
equipment
Net Foreign exchange gain (7,093) (28,549)
7. AUDITORS' REMUNERATION
CONSOLIDATED
2020 2019
GBP GBP
The analysis of auditors'
remuneration is as follows:
Fees paid or payable to Signature 10,714 30,699
Gold's auditors in that geographical
location for the audit of the
Company's annual accounts and other
services
Fees payable to the Group's auditor 30,500 25,500
for the audit of the Company' annual
accounts.
Fees paid to the Company's former 5,329 11,799
auditor for the audit of the Company
annual accounts, taxation, due
diligence and other services
46,543 67,998
8. STAFF COSTS
CONSOLIDATED
2020 2019
GBP GBP
The average monthly number of
employees (including executive
directors) for the continuing
operations was:
Company total staff 2 2
Wages and salaries 70,922 153,751
Provision for annual leave 3,295 329
Provision for long service leave (10,940) 1,419
Superannuation 4,168 14,124
Staff training costs and other 748 4,888
costs
68,193 174,511
Less: staff costs allocated to (34,038) (84,734)
exploration projects costs
34,155 89,777
COMPANY
2020 2019
GBP GBP
The average monthly number of
employees (including executive
directors) for the continuing
operations was:
Company total staff 2 2
Wages and salaries 63,333 63,333
Superannuation 6,772 6,772
70,105 70,105
During the reporting period, consulting fees totalling GBP 14,428 was paid to
Zeg Choudhry, former Director of Tectonic Gold Plc. There were no other fees
paid to directors during the reporting period nor in the comparative reporting
period.
9. TAXATION
There is no UK tax charge/credit during the reporting periods.
Reconciliation of tax charge:
CONSOLIDATED
2020 2019
GBP GBP
Numerical reconciliation of income tax expense to prima facie tax payable
Tax at the Australian corporation tax rate of 27.5% (2019: 30%) (22,093) (247,462)
Effects of:
- S.40-800 'Black hole' deductions (21,071) -
- Tax effect of tax losses not recognized as benefits including tax effect of 43,164 247,622
differences in the standard rate of tax in different jurisdictions
- Research and Development Tax Incentive claim (149,097) 326,214
Tax benefit for the period 149,097 326,214
No deferred tax asset has been recognised in respect of the losses. At the end
of the reporting period the Group had unused tax losses of GBP2,235,596 (2019: GBP
2,059,715).
Where it is anticipated that future taxable profits will be available against
which these losses will be utilised, a deferred tax asset is recognised. The
total taxation charge in future periods will be affected by any changes to the
corporation tax rates in force in the countries in which the Company operates
10. EARNINGS PER SHARE
The basic earnings per share is based on the profit for the year divided by
the weighted average number of shares in issue during the reporting period.
The weighted average number of ordinary shares for the reporting period
assumes that all shares have been included in the computation based on the
weighted average number of days since issue.
2020 2019
GBP GBP
Profit/ (loss) for the year 282,748 (824,874)
attributable to owners of the
Company
Weighted average number of ordinary shares in 697,562,746 688,357,267
issue for basic earnings
Weighted average number of ordinary shares in 710,562,746 688,357,267
issue for fully diluted earnings
Gain/ (loss) per share (pence per
share)
Basic 0.04 (0.12)
Diluted 0.04 (0.12)
11. CASH AND CASH EQUIVALENTS
CONSOLIDATED COMPANY
2020 2019 2020 2019
GBP GBP GBP GBP
Cash and cash equivalents 52,734 34,875 26,415 22,846
The Directors consider the carrying amount of cash and cash equivalents
approximates to their fair value.
12. TRADE AND OTHER RECEIVABLES
CONSOLIDATED COMPANY
2020 2019 2020 2019
GBP GBP GBP GBP
Current
Other debtors - 7,913 - -
GST receivable 1,865 - - -
1,865 7,913 - -
Non-current
Loan to controlled entity - - 1,344,409 1,341.710
- - 1,344,409 1,341,710
No receivables were past due or provided for at the year-end or at the previous
year end. The Directors consider the carrying amount of trade and other
receivables approximates to their fair value.
13. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
On 17 June 2020, the Company sold 90% of the investment in Deep Blue Minerals
(Pty) Ltd to Align Capital via a write- off of the loan from Align of
GBP100,000.
The results of the discontinued operations which have been included in the
consolidated income statement, were as follows:
2020 2019
GBP GBP
Other income 130,953 7,391
Expenses (202,672) (39,112)
(Loss) before tax of discontinued (71,719) (31,721)
operations
Tax - -
(Loss) of discontinued operations attributable to (71,719) (31,721)
the owners of the Company
During the year, Deep Blue Minerals (Pty) Ltd contributed to the Group's cash
flows as follows:
2020 2019
GBP GBP
Operating cash flows (46,936) (44,057)
Investing cash flows 56 -
Financing cash flows 36,439 54,418
Total cash flows (10,441) 10,361
14. PLANT AND EQUIPMENT
CONSOLIDATED
GBP GBP
2020 2019
Plant and equipment
- At cost 16,453 16,303
- Less accumulated (11,378) (9,700)
depreciation
5,075 6,603
PLANT AND PLANT AND
EQUIPMENT EQUIPMENT
GBP GBP
2020 2019
Carrying amount at the 6,603 2,152
beginning of the period
Additions - 6,912
Disposals - (1,091)
Depreciation (1,558) (1,338)
Foreign exchange 30 (32)
Carrying amount at the end of 5,075 6,603
the period
15. EXPLORATION AND EVALUATION EXPITURE
CONSOLIDATED
2020 2019
GBP GBP
Non-producing properties
Balance at the beginning of 2,663,707 2,830,470
the period
Exploration and evaluation 36,402 587,111
expenditure
Impairment of exploration and - (703,936)
evaluation expenditure
Foreign exchange (4,428) (49,938)
Balance at the end of the 2,695,681 2,663,707
reporting period
The ultimate recoupment of balances carried forward in relation to areas of
interest still in the exploration or valuation phase is dependent on successful
development, and commercial exploitation, or alternatively sale of the
respective areas.
16. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
CONSOLIDATED COMPANY
2020 2019 2020 2019
GBP GBP GBP GBP
Investment in VOX Royalty Corp 224,407 - 224,407 -
Plc
Investment in Tirupati Graphite - 40,122 - 40,122
Plc
224,407 40,122 224,407 40,122
The investment in Tirupati Graphite Plc ("TRM") relates to the joint venture
holding company of a joint venture agreement between Tectonic Gold and Tirupati
Carbons and Chemicals Pvt. Ltd ("Tirupati"). US$50,000 was invested by way of a
subscription for 1.48% of the enlarged issued share capital of TRM. TRM is the
98% owner of Tirupati Madagascar Ventures SARL ("TMV"), the owner of the
Vatomaina licence, Exploitation Permit (PE) No. 38321.
On the 2nd of September 2019, the Company announced the sales of its 2.5%
royalty interest in Bass Metals' Graphmada graphite mine to Silverstream SEZC
for a consideration of up to A$550,000 in cash and convertible notes. The
Company received a CAD$250,000 one year 5% unsecured convertible note maturing
on 27 August 2020 with the balance of the consideration due in cash subject to
performance milestones.
Convertible Note of CAD$250,000 was settled on 25 May 2020 with the issue of
98,039 shares in VOX Royalty Corp (VOX) (formerly Silverstream SEZC) at a price
of CAD$3.00 per share less 15% discount which amounts to CAD 2.55 per share.
The closing price as at 30 June 2020 was CAD $3.85.
Measurement of fair value of financial instruments
The management team of Tectonic Gold perform valuations of financial items for
financial reporting purposes, with everything being a Level 1 listed
investment. Valuation techniques are selected based on the characteristics of
each instrument, with the overall objective of maximising the use of
market-based information.
17. CONTROLLED ENTITIES
Details of controlled entities are as follows:
PARENT ENTITY COUNTRY OF
INCORPORATION
Tectonic Gold Plc United Kingdom
25 Bilton Road, Rugby, England, CV22
7AG
CONTROLLED ENTITIES PRINCIPAL COUNTRY OF PERCENTAGE OF EQUITY INVESTMENT INVESTMENT
ACTIVITIES INCORPORATION HELD BY THE COMPANY HELD BY HELD BY
THE THE
COMPANY COMPANY
2020 2019 2020 2019
% % GBP GBP
Signature Gold Pty Ltd Mineral Australia 100 100
13/20 Bridge Street, exploration 3,605,254 3,605,254
Sydney NSW, Australia
2001
Deep Blue Minerals Pty Mineral South Africa 10 100 0.5 5
Ltd Exploration
6 Reier Avenue,
Alexander Bay,
Northern Cape
Republic of South
Africa, 8290
Whale Head Minerals Pty Mineral South Africa 100 - - -
Ltd Exploration
6 Reier Avenue,
Alexander Bay,
Northern Cape
Republic of South
Africa, 8290
(i) Signature Gold Limited was converted from a Public Limited Company to a
Private Limited Company on 3 June 2019.
(ii) Deep Blue Minerals Pty Ltd was incorporated on 17 April 2019 and 90% of
the Company's interest in Deep Blue Minerals Pty Ltd was sold on 17 June 2020.
(iii) Whale Head Minerals Pty Ltd was incorporated on 14 February 2020.
18. OTHER ASSETS
CONSOLIDATED COMPANY
2020 2019 2020 2019
GBP GBP GBP GBP
Prepayments (i) 349,341 346,151 - -
Other prepayments 5,100 6,440 5,100 5,100
Security deposits 3,351 7,821 - -
357,792 360,412 5,100 5,100
(i) In 2018 the Company paid Titeline Drilling Pty Ltd ACN 096 640 201
(Titeline) for future drilling services in accordance with the heads of
agreement dated 28 March 2018 between Titeline, Signature and StratMin.
(ii) Titeline has been engaged to complete 10,000 meters of diamond drilling
to produce core samples for analysis, assay and metallogenic studies from the
Company's Biloela Project site. A review to be completed after 2,500 metres of
drilling has been completed and the completion program for the remaining 7,500
metres to be mutually agreed.
As at 30 June 2018, the prepayment of GBP 633,825 (A$1,125,000) to Titeline was
comprised of:
* GBP 126,765 (A$225,000 excluding GST) paid in cash; and
* pre-paid technical services amounting to GBP 507,060 ($A90,000) settled
with the issue of 5,544,484 fully paid ordinary shares issued in the Company at
an issue price of A$0.162 per share.
As at 30 June 2020, the balance of the prepayment to Titeline is GBP 349,341
(A$625,386) (2019: GBP346,151 A$625,386).
19. TRADE AND OTHER PAYABLES
CONSOLIDATED COMPANY
2020 2019 2020 2019
GBP GBP GBP GBP
Current
Trade payables 233,667 195,024 18,870 24,074
Other payables 3,962 11,104 - -
Accrued expenses 47,083 69,552 49,333 38,833
284,712 275,680 68,203 62,907
Non-Current
Other payables 16,060 15,913 - -
16,060 15,913 - -
The Directors consider the carrying amount of trade payables approximates to
their fair value.
20. BORROWINGS
CONSOLIDATED COMPANY
2020 2019 2020 2019
GBP GBP GBP GBP
Current
Loan from Shareholder(iii) - 50,000 - 50,000
- 50,000 - 50,000
Non-Current
Loan payable to director related 70,650 81,961 56,685 -
entities(i)
Loan payable to Consolidated 156,258 154,832 - -
Minerals Pte Ltd(i)(ii)
226,908 236,793 56,685 -
(i) The loans outstanding at the end of the reporting period and comparative
periods do not accrue interest and are not due to be repaid on or before 12
months after the end of each reporting period.
(ii) Signature Gold and shareholder Consolidated Minerals Pte Ltd, a
resources and infrastructure investment fund based in Singapore, are evaluating
international IRGS assets as cooperative opportunities. The parties expect to
settle the loan as part of an agreement on one or more of these projects either
in equity via an acquisition or merger or as a joint venture interest via a
farm in. This is not expected to complete prior to 30 June 2021.
(iii) During the reporting period the Company borrowed an additional GBP
50,000 and as at 17 June 2020 the Company owed GBP 100,000 to Align Research
Limited. On 16 December 2019 the Company entered into an option agreement with
the owner of Align Research Limited to acquire a 90% interest in Tectonic South
Africa Pty Ltd (renamed Deep Blue Minerals Pty Ltd) for GBP 100,000.
Consideration is to be met by offsetting the GBP 100,000 loan from Align
Research Limited to Tectonic Gold Plc. This loan was settled on 17 June 2020.
The Directors consider the carrying amount of short-term borrowings
approximates to their fair value.
21. EMPLOYEE BENEFITS
CONSOLIDATED COMPANY
2020 2019 2020 2019
GBP GBP GBP GBP
Current
Annual Leave - 14,174 - -
Non-Current
Long Service Leave - 11,363 - -
22. ISSUED CAPITAL
Jun-20
GBP
697,562,746 fully paid 0.001p ordinary shares (2019: 697,562,746 fully 6,100,615
paid ordinary shares)
Fully Paid Ordinary Shares
Reconciliation of share issued during the reporting period is set out below:
2020 ISSUE 2020 2019 ISSUE 2019
PRICE PRICE
NUMBER GBP GBP NUMBER GBP GBP
Balance at the beginning of the 697,562,746 6,100,615 687,562,746 6,099,615
period
01 June 2019: Issue of shares 10,000,000 0.0001 1,000
Balance at the end of the 697,562,746 6,100,615 16,124,161 697,562,746 6,100,615
period
Each ordinary share carries the right to be one vote at shareholders' meetings
and is entitled to participate in any dividends or other distributions of the
Company.
23.
RESERVES
CONSOLIDATED COMPANY
2020 2019 2020 2019
GBP GBP GBP GBP
Foreign Currency Translation
Reserve
Opening balance (92,681) (58,251) - -
Foreign currency translation 17,416 (34,430) - -
Closing balance (75,265) (92,681) - -
Warrant Reserve
Opening balance 95,098 95,098 95,098 95,098
Additions - - - -
Closing balance 95,098 95,098 95,098 95,098
Reverse Takeover Reserve
Opening balance (57,976,182) (57,976,182) - -
Additions - - - -
Closing balance (57,976,182) (57,976,182) - -
The Foreign Currency Translation Reserve is used to record exchange differences
arising from the translation of the financial statements of foreign
subsidiaries.
The Option Reserve represents the fair value of options granted to employees
and suppliers for services provided to the Group. The fair value of options is
expensed over the vesting period or during the period in which the services are
received.
The Reverse Takeover Reserve represents the adjustment needed to reflect the
reverse takeover of Signature Gold which was completed on 25 June 2018.
24. CASH FLOW INFORMATION
For the purpose of presentation in the statement of cash flows, cash and cash
equivalents includes cash on hand, deposits held at call with financial
institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in
value.
Cash and cash equivalents at the end of the financial year as shown in the
statement of cash flows is reconciled to the related items in the statement of
financial position as follows:
CONSOLIDATED COMPANY
2020 2019 2020 2019
GBP GBP GBP GBP
Profit/(Loss) for the reporting 282,747 (824,874) 178,567 (292,465)
period before taxation
Add/(deduct): Non-cash items
Depreciation and amortisation 1,515 1,338 - -
Gain on sale of Deep Blue (76,171) - (99,996) -
Minerals Plc
Impairment of exploration and - 703,936 - -
evaluation expenditure
Impairment of loan to Tectonic - - 117,606 -
Gold S.A
Royalty settled in equity (224,407) - (224,407) -
Share based payment - 30,000 - 30,000
Foreign exchange (8,368) 24,296 (10,414) 23,654
Gain on sale of Tirupati (46,722) - (46,722) -
Non-cash profit on disposal of - 1,091 - -
property, plant and equipment
Change in assets and liabilities
net of the effect of acquisitions
and disposals associated with
business combinations:
Increase in trade and other 6,048 71,879 - 77
receivables
Increase/(Decrease) in other 2,260 (399) - 5,354
assets
(Decrease)/Increase in trade (5,142) (206,010) 5,297 27,096
creditors and accruals
Increase in provisions - 1,325 - -
Net cash used in operating (67,880) (197,418) (80,069) (206,284)
activities
Non-cash financing and investing activities
There were no non-cash financing and investing activities during the year.
25. FINANCIAL INSTRUMENTS
Financial assets by category
The IFRS 9 categories of financial assets included in the Statement of
financial position and the headings in which they are included are as follows:
COMPANY
CONSOLIDATED
2020 2019 2020 2019
GBP GBP GBP GBP
Financial assets at fair value 224,407 40,122 224,407 40,122
through profit and loss
Financial assets at amortised
cost:
Cash and cash equivalents 52,734 34,875 26,415 22,846
Trade and other receivables 1,865 7,913 - -
279,006 82,910 250,822 62,968
Financial liabilities by category
The IFRS 9 categories of financial liability included in the Statement of
financial position and the headings in which they are included are as follows:
CONSOLIDATED COMPANY
2020 2019 2020 2019
GBP GBP GBP GBP
Financial liabilities at
amortised cost:
Trade and other payables 300,772 291,593 68,203 62,907
Borrowings 226,908 286,793 - 50,000
527,680 578,386 68,203 112,907
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a
going concern while maximising the return to stakeholders through the
optimisation of the debt and equity balance. The capital structure of the Group
consists of debt, (previously includes the borrowings) cash and cash
equivalents and equity attributable to equity holders of the Company,
comprising issued capital, reserves and accumulated losses, all as disclosed in
the Statement of Financial Position.
Financial risk management objectives
The Group is exposed to a variety of financial risks which result from both its
operating and investing activities. The Group's risk management is coordinated
by the board of directors and focuses on actively securing the Group's short to
medium term cash flows by minimising the exposure to financial markets.
The main risks the Group is exposed to through its financial instruments are
credit risk, liquidity risk and market price risk.
Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies. Hence,
exposures to exchange rate fluctuations arise. Since 25 June 2018. the
Company's major activity is now investment in Australia through its subsidiary
Signature Gold, bringing exposure to the exchange rate fluctuations of GBP/GBP
Sterling with both Australian Dollars.
Exchange rate exposures are managed within approved policy parameters. The
Company does not enter into forward exchange contracts to mitigate the exposure
to foreign currency risk as amounts paid and received in specific currencies
are expected to largely offset one another and the currencies most widely
traded are relatively stable.
26. FINANCIAL INSTRUMENTS (continued)
The Directors consider the balances most susceptible to foreign currency
movements to be the net assets of Signature Gold for the Group and the
Investment Available for Sale for the Company.
CONSOLIDATED 2020 2019
AUD AUD
Net Assets of Signature Gold 2,388,881 2,252,911
COMPANY GBP GBP
2020 2019
Financial assets at fair value 224,407 40,122
through profit and loss
The following table illustrates the sensitivity of the value of the foreign
currency denominated assets in regard to the change in AUD exchange rates.
It assumes a +/- 15% change in the AUD/GBP exchange rate for the year ended 30
June 2020 (2019:15%).
Impact of exchange rate fluctuations
AUD AUD
IMPACT IMPACT
2020 2019
GBP GBP
Average movement in exchange rate 15% 15%
Change in equity
Increase in GBP value 200,164 187,048
Decrease in GBP value 200,164 187,048
Result for the period
Increase in GBP value 10,868 75,374
Decrease in GBP value 10,868 75,374
Exposure to foreign exchange rates varies during the year depending on the
volume and nature of foreign transactions. Nonetheless, the analysis above is
considered to be representative of the Group's exposure to currency risk.
Interest rate risk management
The Group's exposure to interest rates on financial assets and financial
liabilities is detailed in the liquidity risk management section of this note.
There are no long-term loans or short-term loans that carry any interest and
thus sensitivity analyses have not been provided on the exposure to interest
rates for both derivatives and non-derivative instruments during the year.
There would have been no effect on amounts recognised directly in equity.
Credit risk management
The Group's financial instruments, which are subject to credit risk, are
considered to be cash and cash equivalents and trade and other receivables, and
its exposure to credit risk is not material. The credit risk for cash and cash
equivalents is considered negligible since the counterparties are reputable
banks.
The Group's maximum exposure to credit risk is GBP54,599 (2019: GBP82,910)
comprising other receivables, investments and cash.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of
Directors, which monitors the Company's short, medium and long-term funding and
liquidity management requirements on an appropriate basis. The Company manages
liquidity risk by maintaining adequate reserves, banking facilities and reserve
borrowing facilities. The Company's liquidity risk arises in supporting the
trading operations in the subsidiaries, which hopefully will start to generate
profits and positive cash-flows in the short term. However, as referred to in
Note 3 the Company is currently exposed to significant liquidity risk and needs
to obtain external funding to support the Company going forwards.
27. RELATED PARTY DISCLOSURES
Company
The remuneration of the Directors, who are the key management personnel of the
Group, is set out in Note 8.
Loans from the related parties are disclosed in Note 20.
During the reporting period, consulting fees totalling GBP 14,428 was paid to
Zeg Choudhry, former Director of Tectonic Gold Plc.
Group
During the reporting period,
(i) On 17 June 2020, the balance owing to Brett Boynton from Deep Blue
Minerals Pty Ltd was GBP 56,685 (2019: GBP68,124). On the date of sale of Deep
Blue Minerals Pty Ltd being 17 June 2020, this loan was assigned to Tectonic
Gold Plc. This loan is unsecured, interest free and not required to be repaid
on or before 30 June 2021.
(ii) As at 30 June 2020, Mr Boynton had advanced A$25,000 (2019: $25,000) to
Signature Gold. This loan is interest free and is not required to be repaid on
or before 30 June 2021.
28. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
Exploration Lease Expenditure Commitments
In order to maintain the Company's tenements in good standing with Queensland
Mines and Energy, the Company will be required to incur exploration expenditure
under the terms of each licence. It is likely that the granting of new licences
and changes in the terms of each licence will change the expenditure commitment
from a to time.
2020 2019
GBP GBP
Payable:
- within one year 280,374 312,652
- later than one year but not later than five 679,507 937,204
years
959,881 1,249,856
29. EVENTS AFTER THE REPORTING PERIOD
(i) On 31 August 2020, the Company paid for 20 million shares in Kazera
Global Investment Plc priced at 0.5p per share, under the terms of the
transaction for the sale of Deep Blue Minerals Plc announced on 4 June 2020.
Funds for the share purchase were provided by way of a Director's Loan from B
Boynton. The loan does not accrue interest.
(ii) On 9 September 2020 the Company raised GBP402,800 via the issuance of
146,472,721 shares at 0.275p per share. Following the raise, Tectonic has a
total of 844,035,467shares on issue.
In addition, subscribers to the raise were granted warrants on a one for one
basis whereby each warrant entitles the holder to subscribe for a new Ordinary
share at 0.7p per share at any time prior to the expiry of 30 days after the
Company publishes the results of its drilling program.
At the same time as the raise, The Company's directors and executive elected to
forgo cash payment of fees and instead took 65.5 million options with a strike
price of 0.275p and having a notional face value of GBP180,000. Vesting of the
options was subject to the share price remaining above 1p for 30 consecutive
days.
Other than as stated elsewhere in this report, Directors are not aware of any
other matters or circumstances at the date of this report that have
significantly affected or may significantly affect the operations, the results
of the operations or the state of affairs of the Company in subsequent
financial years.
END
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