ANNUAL REPORT 2023
34 Consolidated Statement of Financial Position 35 Consolidated Statement of Changes in Equity 36 Consolidated Statement of Cash Flows 37 Notes to the Consolidated Financial Statements 60 Directors’ Declaration 61 Independent Auditor’s Report 65 Shareholder Information 67 Tenement Schedule 68 Corporate Directory 1 Sheffield Resources Limited Annual Report 2023 CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION Sheffield Resources is focused on the development of the flagship Thunderbird Mineral Sands Project, one of the world’s largest, undeveloped zircon-rich mineral sands deposits. Contents 2 Chair’s Letter 4 Review of Operations 10 Board of Directors and Company Secretary 13 Ore Reserves and Mineral Resources 16 Directors’ Report 20 Remuneration Report (audited) 31 Auditor’s Independence Declaration 33 Consolidated Statement of Profit or Loss and Other Comprehensive Income
2 Sheffield Resources Limited Annual Report 2023 Chair’s Letter “ I am pleased to present to you the 2023 Annual Report for Sheffield Resources. It has been an exciting and successful year for your Company.” Dear Shareholders, The 2023 financial year was company defining, with several major milestones achieved at the Thunderbird Mineral Sands Project. We were delighted to make a final investment decision (FID) on Thunderbird Mineral Sands Project, an outstanding, world class mineral sands project, and see construction substantially completed during the year. At FID, Thunderbird Project economics demonstrated the significant value that will be created from the development of one of the world’s largest zircon reserves. With a total after-tax NPV of $1.39 billion and an IRR of 27% for Stage 1 & 2 of Thunderbird, the project was fully funded during the financial year and is set to deliver $695m in NPV to Sheffield’s shareholders over its 36 year life. Development of Thunderbird commenced in mid-2021 utilising equity proceeds provided by Yansteel following inception of the 50/50 Kimberley Mineral Sands joint venture. With Thunderbird construction now entering the commissioning phase, the project remains on track for first customer shipment in the March 2024 quarter, enabling the delivery of strong cashflows and benefits to all stakeholders across the mine life. A total of $484 million was secured to fund Thunderbird into first production during the year. A $160 million facility, including a $40 million cost overrun facility from the Northern Australia Infrastructure Facility (NAIF), combined with a US$110 million facility from Orion Resource Partners (Orion) contributed $315 million in project financing. The NAIF and Orion project finance package was complimented by $169 million of equity contributed since the inception of the joint venture in 2021 from Kimberley Mineral Sands shareholders, with Yansteel contributing $135m and Sheffield $34 million. Construction activities at Thunderbird continued to advance rapidly and in line with schedule and budget throughout the year. With construction activities substantively complete, commissioning activities commenced in July 2023 with first production scheduled in the December 2023 quarter. First delivery of product to customers is expected in the March 2024 quarter. Given the backdrop of inflationary pressures and economic headwinds globally experienced throughout this financial year, delivery of the Thunderbird project into production within our original $484 million funding envelope is a tremendous achievement. Bruce Griffin | Executive Chair
3 Sheffield Resources Limited Annual Report 2023 CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION The Kimberley Mineral Sands team has been preparing for the start-up of operations throughout the year. Maintaining our commitment to employ as many local people as possible and maintaining a large proportion of the permanent residential workforce and their families based in the West Kimberley is a core focus for Kimberley Mineral Sands. This approach ensures that as much economic benefit as possible is retained in the region, through increased spend and population growth which contribute to both economic and social benefits. To date, over 80% of the Kimberley Mineral Sands workforce are resident in the Kimberley region, with more than half of them recruited from the Kimberley and the remainder relocating to the region. Kimberley Mineral Sands has also been very successful in recruiting a diverse workforce with 25% of employees identifying as indigenous and female employees accounting for nearly 30% of the workforce recruited to date. In addition to our investment in Kimberley Mineral Sands, we were able to add to our portfolio of mineral sands interests during the financial year with the execution of a binding investment agreement with Mineração Santa Elina Indústria e Comércio S/A. and Kromus Xi Fundo De Investimento Em Participações, current owners of Rio Grande Mineração S/A (RGM), providing Sheffield with an option to acquire a 20% interest in RGM, the 100% owner of the South Atlantic Project in Brazil, via an initial option contribution of US$2.5m, with further staged payments totalling US$12.5m based upon the achievement of key milestones. The South Atlantic Project consists of four main deposits, Retiro, Estreito, Capao do Meio and Bujuru with Exploration Targets developed for the Retiro and Bujuru deposits. RGM is planning a drilling program of up to 10,000m in late 2023, with milestones for the project scheduled during the first half of 2024 prior to the proposed option exercise date in the 2024 September quarter. Your company has $24m in cash, following a successful $23m equity raising during the year, and is fully funded for expected activities at South Atlantic including exercise of the option and corporate costs through to late 2025 when we anticipate initial cash distributions from Kimberley Mineral Sands. I appreciate the support of existing and new shareholders demonstrated by their participation in the equity raise. With Thunderbird commissioning activity underway, the next year will see your Company move to transition from developer to mineral sands producer. This is a great achievement, and I would like to thank my fellow Directors, our employees, the Kimberley Mineral Sands team and their contractors, our joint venture partner Yansteel, along with our financiers NAIF and Orion for their efforts in achieving these key milestones for your Company this year. In closing, I sincerely thank Sheffield’s shareholders for your support as we look forward to commencing production at Thunderbird, ahead of customer shipments in early 2024. Bruce Griffin Executive Chair
4 Sheffield Resources Limited Annual Report 2023 Kimberley Mineral Sands (KMS) During the reporting period, through its 50% interest in Kimberley Mineral Sands Pty Ltd (KMS), Sheffield Resources Limited (Sheffield, the Company or the Group) advanced construction of the flagship Thunderbird Mineral Sands Project (Thunderbird) in the Kimberley region of Western Australia following a Final Investment Decision in October 2022. Kimberley Mineral Sands Pty Ltd is a 50/50 joint venture between Sheffield and YGH Australia Investment Pty Ltd (Yansteel). Yansteel is a wholly-owned subsidiary of Tangshan Yanshan Iron & Steel Co. Ltd, a privately owned steel manufacturer headquartered in Hebei, China producing approximately 10mt per annum of steel products. The following key achievements took place during the reporting period, supporting the future operation of the Thunderbird Mineral Sands Project: – Final Investment Decision (FID) secured for the Thunderbird Mineral Sands Project in the Kimberley region of Western Australia. – FID followed financial close of a A$160m loan facility from the Northern Australia Infrastructure Facility (NAIF) and US$110m production linked facility with Orion Resource Partners (Orion). – Award of major commercial agreements, including a $179m fixed price engineering, procurement and construction (EPC) contract with GR Engineering Services Limited and the award of gas supply, power generation, mining services and port lease agreements. – Construction of Thunderbird advanced rapidly and in line with schedule throughout the reporting period, with commissioning activities having commenced in July 2023 and first production expected during the December 2023 quarter. Review of Operations Figure 1: Construction in progress at the Thunderbird Mineral Sands Project
5 Sheffield Resources Limited Annual Report 2023 CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION Table 1: Key Metrics – Final Investment Decision – Thunderbird Mineral Sands Project Figure 2: Forecast Timeline to First Customer Shipment Sheffield announced that the Northern Australia Infrastructure Facility (NAIF) had ratified and executed binding documentation for a A$160 million loan facility comprising a 12-year tenor to support the development of Thunderbird. In addition to the NAIF loan facility, KMS and OMRF (Th) LLC, a related entity of the Orion Mineral Royalty Fund (Orion), executed binding and definitive documentation for a US$110 million Production Linked Facility. The A$315m debt financing package from NAIF and Orion, combined with $169 million of equity from Kimberley Mineral Sands shareholders (with Yansteel contributing $135m and Sheffield $34 million) completed the project financing requirements for Thunderbird, enabling KMS to achieve financial close in October 2022. A forecast timeline to first production is shown below. Construction activities will be largely complete during the September 2023 quarter with commissioning activities having commenced. Commencement of ore mining and sequential commissioning of the Dry Mining Unit (DMU) and process plant is expected to occur during the December 2023 quarter with first customer shipment remaining on track for the March 2024 quarter. FIRST PRODUCTS SHIPPED IN Q1 2024 Sheffield Resources Limited I ASX: SFX I Assembling a portfolio of global mineral sands development and production assets to generate cash returns and growth 1 Q3 2022 Q4 2022 2023 2024 Q2 2022 WCP Start-up EPC Contract Award (Limited Notice to Proceed) Pre FID Construction FINAL INVESTMENT DECISION Construction Commission Production FIRST PRODUCT SHIPMENT Secure NAIF and Orion Debt Facilities Document and CP’s Major Contracts underway (Full Notice to Proceed) Mining Mobilisation Current Progress: Construction >90% Complete Thunderbird - Economics Stage 1 only Stage 1 & 2 NPV8 post-tax A$842m A$1.39B IRR post-tax 26.6% 26.6% Total Funding Requirement (Stage 1) A$484m A$484m Life of Mine EBITDA A$4.8B A$8.7B Process Rate (tonnes p/hour) 1,085 2,170 Product sales (avg kt pa; all products) 913 1,365 Mine Life 33 years 36 years Long Term Average FX Rate (A$/US$) 0.75 0.75 Long Term Zircon Price - FOB (TZMI) US$1,607 US$1,607
6 Sheffield Resources Limited Annual Report 2023 Thunderbird Construction Activities Process plant construction and installation activities continued to advance toward completion during the reporting period in line with planned schedules. As at the end of the reporting period the Wet Concentrate Plant (WCP) and Concentrate Upgrade Plant (CUP) areas, tailing storage facility, stormwater storage pond and bore fields were substantially complete ahead of scheduled commissioning. Final sealing of the 30km mine access road was completed during the September 2023 quarter. Electricity supply systems, including installation of the first of the gas engines was completed. Planning for first fills of LNG gas supply for scheduled commissioning activities during the second half of 2023 commenced. Fabrication of the DMU by Piacentini & Son was underway with planned transport to site scheduled during the September 2023 quarter. Review of Operations Figure 3: Progressive installation of power generation units Thunderbird Operations Activities Preparations for the commencement of operations commenced during the reporting period. Recruitment of key leadership roles and progressive onboarding of senior operational personnel was completed. To date, over 80% of the Kimberley Mineral Sands workforce are resident in the Kimberley region, with more than half of them recruited from the Kimberley and the remainder relocating to the region. Kimberley Mineral Sands has also been very successful in recruiting a diverse workforce with 25% of employees identifying as indigenous and female employees accounting for nearly 30% of the workforce recruited to date.
7 Sheffield Resources Limited Annual Report 2023 CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION Figure 4: Thunderbird mine site overview Waste mining contractor, Carey Mining, mobilised excavation and trucking fleet to site, commencing clearing and grubbing activities, with commenced waste mining to enable mining contractor Piacentini & Son to access the starter pit location in the September 2023 quarter. During the reporting period the preferred product logistics path from site to port was concluded. Rotainers will be loaded at the Thunderbird site and transported by road train to a storage yard near the Port of Broome. Upon vessel arrival for loading, rotainers will be transferred to the Broome jetty for loading onto vessels using the existing crane. A rotainer supply agreement is in place with rotainers to be delivered to Broome during the December 2023 quarter. Markets Premium zircon from major producers moved from c.US$1,350 per tonne in mid-2019 through to a peak of c.US$2,200 per tonne in 2022 and then softening to c.US$2,100 per tonne in late 2022. Global zircon supply remains balanced, and inventory levels remain low, with some new supply coming online during 2023. Major producer prices are expected to remain above US$2,000 per tonne through 2023, well above long term price forecasts. The medium to long term supply outlook for zircon continues to indicate an emerging supply deficit with supply from the three leading producers representing c. 55% of current supply, primarily from mature operations with flat or declining forecast production. Global sulfate ilmenite prices were essentially flat in 2022 and have weakened during 2023 but remain very high relative to long term forecasts at around US$330 per tonne FOB. Sulfate ilmenite prices are expected to soften further. Longerterm, high-grade pigment feedstock demand for production of chloride grade pigment is forecast to grow, and chloride slag (produced from sulfate ilmenite) is the most likely source of new supply. The trend towards China importing and processing concentrates to supply zircon and titanium feedstocks continued throughout 2023 and is expected to continue into the future.
8 Sheffield Resources Limited Annual Report 2023 Aboriginal and Community Engagement The Kimberley Mineral Sands team continued community engagement and consultation processes throughout the reporting period, providing community, government representatives and traditional owners with opportunities for engagement on Thunderbird activities. Kimberley Mineral Sands maintains a policy to employ as many local people as possible and have a large proportion of the permanent residential workforce and their families based in the West Kimberley. This ensures that as much economic benefit as possible is retained in the region, through increased spend and population growth which contribute to both economic and social benefits. To date, over 80% of the Kimberley Mineral Sands workforce are residents of the Kimberley region, with 25% identifying as indigenous. Female employees of KMS account for nearly 30% of the workforce. Review of Operations
9 Sheffield Resources Limited Annual Report 2023 CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION Figure 5: South Atlantic Project – prospects, including Retiro and Bujuru Exploration Targets South Atlantic Project During the reporting period, Sheffield executed a binding investment agreement (RGM Option Agreement) with Mineração Santa Elina Indústria e Comércio S/A. and Kromus Xi Fundo De Investimento Em Participações, current owners of Rio Grande Mineração S/A (RGM), providing Sheffield with an option to acquire a 20% interest in RGM, the 100% owner of the South Atlantic Project in Brazil, via an initial option contribution of US$2.5m, with further staged payments totalling US$12.5m based upon the achievement of key milestones. Should Sheffield elect to exercise the option, subject to various conditions being satisfied, including project financing being obtained and all funds required for project construction being secured, Sheffield may exercise a further option to increase its interest in RGM up to 80% (refer ASX announcement dated 28 February 2023 for further details). An initial part contribution of US$1.0m was remitted to RGM during the reporting period. The South Atlantic Project is located within the Rio Grande do Sul Coastal Plain, a region located in the southernmost state of Brazil, Rio Grande do Sul, along the coast of the Atlantic Ocean. The tenements are held by RGM. Four main deposits have been identified within the project area: Retiro, Estreito, Capao do Meio and Bujuru with Exploration Targets developed for the Retiro and Bujuru deposits. RGM intends to commence a drilling program of up to 10,000m in late 2023.
10 Sheffield Resources Limited Annual Report 2023 Ian Macliver Non-Executive Director BCom, FCA, SF Fin, FAICD Appointed 1 August 2019 Experience Ian Macliver is the Chairman of Grange Consulting Group Pty Ltd & Grange Capital Partners. Prior to establishing Grange, he held positions in various listed and corporate advisory companies. His experience covers all areas of corporate activity including capital raisings, acquisitions, divestments, takeovers, business and strategic planning, debt and equity reconstructions. Mr Macliver is the Non-Executive Chair of MMA Offshore Limited, and an Alternate Director of Wright Prospecting Pty Ltd. Responsibilities Member of the Board, Chair of the Audit & Risk Committee, Member of the Remuneration & Nomination Committee Interest in shares, options and rights 107,142 ordinary shares 480,000 options Other current directorships MMA Offshore Limited (appointed January 2020) Wright Prospecting Pty ltd (appointed Alternate Director December 2022) Past directorships last 3 years Western Areas Limited (appointed October 2011, resigned June 2022) John Richards Lead Independent Director B. Econ (Hons) Appointed 1 August 2019 (Previously Non-Executive Chair, appointed Lead Independent Director 13 April 2021) Experience Mr Richards is an economist with more than 35 years’ experience in the resources industry; holding various positions within mining companies, investment banks and private equity groups. He has been involved in a wide range of mining M&A transaction in multiple jurisdictions. Mr Richards is an Independent NonExecutive Director; holding previous positions at Normandy Mining Ltd, Standard Bank, Buka Minerals and Global Natural Resource Investments; he is a Non-Executive Director of Northern Star Resources Limited and Non-Executive Chair of Sandfire Resources Limited. Responsibilities Member of the Board, Chair of the Remuneration & Nomination Committee, Member of the Audit & Risk Committee Interest in shares, options and rights 400,000 ordinary shares 480,000 options Other current directorships Northern Star Resources Limited (appointed 12 February 2021) Sandfire Resources Limited (appointed 1 January 2021) Past directorships last 3 years Saracen Mineral Holdings Ltd (appointed May 2019, resigned February 2021) Adriatic Metals PLC (appointed November 2019, resigned July 2020) Bruce Griffin Executive Chair B.Ch.Eng, B.A.Econ, MBA Appointed 10 June 2020 (Previously Commercial Director, appointed Executive Chair 13 April 2021) Experience Mr Griffin most recently held the position of Senior Vice President Strategic Development of Lomon Billions Group, the world’s third largest producer of high-quality titanium dioxide pigments. Bruce previously held executive management positions in several resource companies, including acting as the Chief Executive Officer and a director of TZ Minerals International Pty. Ltd. (TZMI), the leading independent consultant on the global mineral sands industry, Chief Executive Officer and a director of World Titanium Resources Ltd, a development stage titanium project in Africa and as Vice President Titanium for BHP Billiton. Responsibilities Member of the Board Interest in shares, options and rights 514,558 ordinary shares 587,365 options 1,636,364 performance rights Other current directorships CVW CleanTech Inc. (since 2019) Mawson Gold Limited (appointed 13 February 2023) Savannah Resources Plc (appointed 12 September 2023) Past directorships last 3 years None Board of Directors and Company Secretary The Directors and Company Secretary of the Company during and until the date of this report are:
11 Sheffield Resources Limited Annual Report 2023 CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION Mark Di Silvio Company Secretary B.Bus, CPA, MBA, GAICD Appointed 15 February 2016 Experience Mark Di Silvio is a CPA and MBA qualified finance professional with over 30 years’ resources industry experience. Mr Di Silvio’s professional career includes operations and project development experience both in Australia and overseas, including senior finance roles with Woodside Petroleum Limited in Australia and Africa prior to joining Central Petroleum Limited and Centamin Plc as CFO. Mr Di Silvio has significant commercial and financial management experience including project financing, commercial agreement structuring and product offtake agreements. Gordon Cowe Non-Executive Director BSc (Hons) Mechanical Engineering, GAICD Appointed 12 March 2021 Experience Gordon Cowe is a qualified mechanical engineer with over 30 years’ experience, Mr Cowe has had significant involvement in leading business start-up, planning and delivery of multiple complex projects including Mining & Mineral Processing, Oil & Gas and Resources based infrastructure projects globally. He has enjoyed an extensive career with leading contractors (including Bechtel and Worley Parsons) and project owners on a wide range of projects. Responsibilities Member of the Board, member of the Audit & Risk Committee Interest in shares, options and rights 480,000 options Other current directorships None Past directorships last 3 years None Vanessa Kickett Non-Executive Director Appointed 1 January 2022 Experience Vanessa Kickett has extensive experience and involvement with Aboriginal engagement, native title and heritage matters throughout Western Australia. A member of the Whadjuk Noongar community, Mrs Kickett is currently Deputy Chief Executive Officer of the South West Aboriginal Land and Sea Council, responsible for the recent implementation and operation of the South West (Western Australia) native title settlement. Mrs Kickett has also held a variety of roles in the public sector, leading the development of heritage and native title policy and frameworks on behalf of Water Corporation in Western Australia. Responsibilities Member of the Board, Member of the Remuneration & Nomination Committee Interest in shares, options and rights 480,000 options Other current directorships None Past directorships last 3 years None
12 Sheffield Resources Limited Annual Report 2023
CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION Ore Reserve for Dampier Project held by Kimberley Mineral Sands Pty Ltd (Sheffield interest – 50%) as at 30 June 2023 Dampier Project Ore Reserve1,2,3,4,5,6,7 Valuable HM Grade (In-situ)5 Deposit Ore Reserve Category Ore Tonnes (millions) In-situ HM Tonnes7 (millions) HM Grade (%) Zircon (%) HiTi Leuc (%) Leuc (%) Ilmenite (%) Slimes (%) Oversize (%) Thunderbird Proved 239 31 12.9 0.96 0.29 0.28 3.4 16 14 Probable 514 52 10.1 0.79 0.26 0.27 2.9 15 11 Total 754 83 11.0 0.84 0.27 0.27 3.1 15 12 Mineral Assemblage6 Deposit Ore Reserve Category Ore Tonnes (millions) In-situ HM Tonnes7 (millions) HM Grade (%) Zircon (%) HiTi Leuc (%) Leuc (%) Ilmenite (%) Slimes (%) Oversize (%) Thunderbird Proved 239 31 12.9 7.5 2.2 2.2 27 16 14 Probable 514 52 10.1 7.8 2.6 2.6 28 15 11 Total 754 83 11.0 7.7 2.4 2.5 28 15 12 Note 1: The Ore Reserve estimate was prepared by Entech Pty Ltd and first disclosed under the JORC Code (2012). Ore Reserve is reported to a design overburden surface with appropriate consideration of modifying factors, costs, mineral assemblage, process recoveries and product pricing. Note 2: Ore Reserve is a sub-set of Mineral Resource. Note 3: HM is within the 38µm to 1mm size fraction and reported as a percentage of the total material, slimes is the -38µm fraction and oversize is the +1mm fraction. Note 4: Tonnes and grades have been rounded to reflect the relative accuracy and confidence level of the estimate, thus the sum of columns may not equal. Note 5: The in-situ assemblage grade is determined by multiplying the percentage of HM by the percentage of each valuable heavy mineral within the heavy mineral assemblage at the Resource block model scale. Note 6: Mineral assemblage as a percentage of HM Grade, it is derived by dividing the in-situ grade by the HM grade. Note 7: The contained in-situ tonnes are derived from HM and material tonnes from information in the Ore Reserve tables. The Ore Reserve estimate was prepared by Entech Pty Ltd, an experienced and prominent mining engineering consultancy with appropriate mineral sands experience in accordance with the JORC Code (2012 Edition). The Ore Reserve is estimated using all available geological and relevant drill hole and assay data, including mineralogical sampling and test work on mineral recoveries and final product qualities. Measured and Indicated Mineral Resources were converted to Proved and Probable Ore Reserves respectively, subject to mine design, modifying factors and economic evaluation. The Company is not aware of any new information or data that materially affects the information included in the Ore Reserve estimate and confirms that all material assumptions and technical parameters underpinning the estimate continue to apply and have not materially changed. Ore Reserve changes 30 June 2022 to 30 June 2023 Both the 2022 and 2023 Ore Reserve estimates were prepared by Entech Pty Ltd. There has been no change between 2022 and 2023 Ore Reserve and no new information that materially affects the Ore Reserve has been received. Ore Reserves and Mineral Resources 13 Sheffield Resources Limited Annual Report 2023
Mineral Resources for Dampier Project held by Kimberley Mineral Sands Pty Ltd (Sheffield interest - 50%) as at 30 June 2023 Dampier Project Mineral Resources1,2,3,4,5,6,7 Mineral Assemblage Deposit (cut-off) Mineral Resource Category Cut-off (THM%) Material Tonnes (millions) In-situ HM Tonnes7 (millions) HM Grade (%) Zircon (%) HiTi Leuc6 (%) Leuc (%) Ilmenite (%) Slimes (%) Oversize (%) Thunderbird4 (low-grade) Measured 3.0 510 45 8.9 8.0 2.3 2.2 27 18 12 Indicated 3.0 2,120 140 6.6 8.4 2.7 3.1 28 16 9 Inferred 3.0 600 38 6.3 8.4 2.6 3.2 28 15 8 Total 3.0 3,230 223 6.9 8.3 2.6 2.9 28 16 9 Night Train5 (low-grade) Inferred 1.2 130 4.2 3.3 14 5.4 46 22 8.7 2.2 Total 1.2 130 4.2 3.3 14 5.4 46 22 8.7 2.2 All Dampier (low-grade) Measured 3.0 510 45 8.9 8.0 2.3 2.2 27 18 12 Indicated 3.0 2,120 140 6.6 8.4 2.7 3.1 28 16 9 Inferred Various 730 42 5.8 8.9 2.9 7.5 27 13 7.2 Total Various 3,360 227 6.8 8.4 2.7 3.7 28 15 8.7 Thunderbird4 (high-grade) Measured 7.5 220 32 14.5 7.4 2.1 1.9 27 16 15 Indicated 7.5 640 76 11.8 7.6 2.4 2.1 28 14 11 Inferred 7.5 180 20 10.8 8.0 2.5 2.4 28 13 9 Total 7.5 1,050 127 12.2 7.6 2.3 2.1 27 15 11 Night Train5 (high-grade) Inferred 2.0 50 3.0 5.9 14 5.6 49 18 10 2.2 Total 2.0 50 3.0 5.9 14 5.6 49 18 10 2.2 All Dampier (high-grade) Measured 7.5 220 32 14.5 7.4 2.1 1.9 27 16 15 Indicated 7.5 640 76 11.8 7.6 2.4 2.1 28 14 11 Inferred Various 230 23 9.7 8.8 2.9 8.6 27 12 7.2 Total Various 1,090 130 11.9 7.8 2.4 3.2 27 14 11 Note 1: Night Train: The Mineral Resources estimate was prepared by Optiro Pty Ltd and first disclosed under the JORC Code (2012). Thunderbird: The Mineral Resource estimate was prepared by Optiro Pty Ltd and first disclosed under the JORC Code (2012). The Dampier Project Mineral Resources are reported inclusive of (not additional to) Ore Reserves. Note 2: HM is within the 38µm to 1mm size fraction and reported as a percentage of the total material, slimes is the -38µm fraction and oversize is the +1mm fraction. Note 3: Tonnes and grades have been rounded to reflect the relative accuracy and confidence level of the estimate, thus the sum of columns may not equal. Note 4: Thunderbird: Estimates of Mineral Assemblage are presented as percentages of the Heavy Mineral (HM) component of the deposit, as determined by magnetic separation, QEMSCANTM and XRF. Magnetic fractions were analysed by QEMSCANTM for mineral determination as follows: Ilmenite: 40-70% TiO2 >90% Liberation; Leucoxene: 70-94% TiO2 >90% Liberation; High Titanium Leucoxene (HiTi Leucoxene): >94% TiO2 >90% Liberation; and Zircon: 66.7% ZrO2+HfO2 >90% Liberation. The non-magnetic fraction was submitted for XRF analysis and minerals determined as follows: Zircon: ZrO2+HfO2/0.667 and High Titanium Leucoxene (HiTi Leucoxene): TiO2/0.94. Note 5: Night Train: Estimates of Mineral Assemblage are presented as percentages of the Heavy Mineral (HM) component of the deposit, as determined by magnetic separation, QEMSCANTM and XRF for one of 12 composite samples. Magnetic fractions were analysed by QEMSCANTM for mineral determination as follows: Ilmenite: 40-70% TiO 2 >90% Liberation; Leucoxene: 70-90% TiO2 >90% Liberation; High Titanium Leucoxene (HiTi Leucoxene) and Rutile 90% TiO2 >90% Liberation, and Zircon: 66.7% ZrO2+HfO2 >90% Liberation. The non-magnetic fraction was submitted for XRF analysis and minerals determined as follows: Zircon: ZrO2+HfO2/0.667 and High Titanium Leucoxene (HiTi Leucoxene): TiO2/0.94. HM assemblage determination- was by the QEMSCANTM process for 11 of 12 composite samples which uses observed mass and chemistry to classify particles according to their average chemistry, and then report mineral abundance by dominant % mass in particle. For the TiO2 minerals the following breakpoints were used to distinguish between Ilmenite 40% to 70% TiO2, Leucoxene 70% to 90% TiO2, High Titanium Leucoxene and Rutile > 90%, Screening of the heavy mineral was not required. Note 6: HiTi Leucoxene and Rutile (%) combined for Night Train at a >90% TiO2 (as one assemblage sample utilised=> 90% rutile and HiTi Leucoxene), HiTi Leucoxene for Thunderbird > 94% TiO2 Note 7: The contained in-situ HM tonnes were derived from the HM Grade and material tonnes in the Mineral Resource table. Ore Reserves and Mineral Resources continued 14 Sheffield Resources Limited Annual Report 2023
CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION Changes to Mineral Resources between 30 June 2022 and 30 June 2023 Both the 2022 and 2023 Mineral Resources were prepared by Snowden Optiro, or their predecessors. There has been no change between the 2022 and 2023 Mineral Resource Estimates and no new information that materially affects the Mineral Resources has been received. Governance and internal controls Mineral Resource and Ore Reserve are compiled by qualified Kimberley Mineral Sands personnel and/or independent consultants following industry standard methodology and techniques. The underlying data, methodology, techniques and assumptions on which estimates are prepared are subject to internal peer review by senior Company personnel, as is JORC compliance. Where deemed necessary or appropriate, estimates are reviewed by independent consultants. Competent Persons named by the Company are members of the Australasian Institute of Mining and Metallurgy and/or the Australian Institute of Geoscientists and qualify as Competent Persons as defined in the JORC Code 2012. Competent persons and compliance statements The Company’s Ore Reserves and Mineral Resources Statement is based on information first reported in previous ASX announcements by the Company. These announcements are listed below and are available to view on Sheffield’s website www.sheffieldresources.com.au. Mineral Resources and Ore Reserves reported for the Dampier Project are prepared and disclosed under the JORC Code 2012. The Company confirms that it is not aware of any new information or data that materially affects the information included in the relevant original market announcements and that all material assumptions and technical parameters underpinning the estimates in the relevant original market announcement continue to apply and have not materially changed. The information in this report that relates to the estimation of the Ore Reserve is based on information compiled by Mr Per Scrimshaw, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Scrimshaw is employed by Entech Pty Ltd and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Scrimshaw consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report that relates to the estimation of the Mineral Resources is based on information compiled by Mrs Christine Standing, a Competent Person who is a Member of the Australian Institute of Geoscientists (AIG) and the Australasian Institute of Mining and Metallurgy (AusIMM). Mrs Standing is a full-time employee of Optiro Pty Ltd (Snowden Optiro) and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mrs Standing consents to the inclusion in this report of the matters based on her information in the form and context in which it appears. The information in this report that relates to the Thunderbird Mineral Resource is based on information compiled under the guidance of Mr Mark Teakle, a Competent Person who is a Member of the Australian Institute of Geoscientists (AIG) and the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Teakle is an employee of Thunderbird Operations Pty Ltd and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Teakle consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The Competent Persons for reporting of Mineral Resources and Ore Reserves in the relevant original market announcements are listed below. The Company confirms that the form and context in which the Competent Persons’ findings are presented have not been materially modified from the relevant original market announcement. Supporting information required under ASX listing rules, chapter 5 The supporting information below is required, under Chapter 5 of the ASX Listing Rules, to be included in market announcements reporting estimates of Mineral Resources and Ore Reserves. 15 Sheffield Resources Limited Annual Report 2023
Previously reported information This report includes information that relates to Exploration Results, Mineral Resources and Ore Reserves prepared and first disclosed under the JORC Code 2012 and a Bankable Feasibility Study. The information was extracted from the Company’s previous ASX announcements as follows: – Mineral Resource and Ore Reserve Statement: “MINERAL RESOURCE AND ORE RESERVE STATEMENT” 24 September 2019 – Thunderbird Ore Reserve Update: “THUNDERBIRD ORE RESERVE UPDATE” 24 March 2022 – Thunderbird BFS Update: “THUNDERBIRD BFS, FINANCING AND PROJECT UPDATE”, 24 March 2022 – Night Train Inferred Resource and Mineral Assemblage results “HIGH GRADE MAIDEN MINERAL RESOURCE AT NIGHT TRAIN” 31 January 2019 – Thunderbird Mineral Resource: “SHEFFIELD DOUBLES MEASURED MINERAL RESOURCE AT THUNDERBIRD” 5 July 2016 – Thunderbird drilling: “EXCEPTIONALLY HIGH GRADES FROM INFILL DRILLING AT THUNDERBIRD MINERAL SANDS PROJECT” 9 February 2015 These announcements are available to view on Sheffield’s website at www.sheffieldresources.com.au. The Company confirms that it is not aware of any new information or data that materially affects the information included in the relevant market announcements and, in the case of estimates of Mineral Resources, Ore Reserves and the Bankable Feasibility Study Update, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Persons’ findings are presented have not been materially modified from the relevant original market announcements. Ore Reserves and Mineral Resources prepared and first disclosed under the JORC Code (2012): Item Report title Report Date Competent Person(s) Mineral Resource Reporting Thunderbird Ore Reserve Update 24 March 2022 P. Scrimshaw Mineral Resource Estimation Sheffield Doubles Measured Mineral Resource at Thunderbird 5 July 2016 M. Teakle, C. Standing Ore Reserve High Grade Maiden Mineral Resource at Night Train 31 January 2019 C. Standing Item Name Company Professional Affiliation Mineral Resource Reporting Mr Mark Teakle Thunderbird Operations MAIG, MAusIMM Mineral Resource Estimation Mrs Christine Standing Optiro MAIG, MAusIMM Ore Reserve Mr Per Scrimshaw Entech MAusIMM Forward looking, cautionary statements and risk factors The contents of this report reflect various technical and economic conditions at the time of writing. Given the nature of the resources industry, these conditions can change significantly over relatively short periods of time. Consequently, actual results may vary from those contained in this report. Some statements in this report regarding estimates or future events are forward-looking statements. They include indications of, and guidance on, future earnings, cash flow, costs and financial performance. Forward-looking statements include, but are not limited to, statements preceded by words such as “planned”, “expected”, “projected”, “estimated”, “may”, “scheduled”, “intends”, “anticipates”, “believes”, “potential”, “predict”, “foresee”, “proposed”, “aim”, “target”, “opportunity”, “could”, “nominal”, “conceptual” and similar expressions. Forward-looking statements, opinions and estimates included in this report are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements are provided as a general guide only and should not be relied on as a guarantee of future performance. Forward-looking statements may be affected by a range of variables that could cause actual results to differ from estimated results and may cause the Company’s actual performance and financial results in future periods to materially differ from any projections of future performance or results expressed or implied by such forward-looking statements. So there can be no assurance that actual outcomes will not materially differ from these forward-looking statements. Ore Reserves and Mineral Resources continued 16 Sheffield Resources Limited Annual Report 2023
CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION The Directors present their report on Sheffield Resources Limited (Sheffield, parent entity or the Company) and its controlled entities (collectively known as the Group or consolidated entity) for the year ended 30 June 2023. Principal activities The principal activities during the year were mineral sands evaluation and development in Australia and mineral sands evaluation in Brazil. Directors and Company Secretary Please refer to pages 10 to 11. Directors’ meetings The number of meetings held and attended by each Director during the year are as follows: Directors’ Meetings Audit & Risk Committee Remuneration & Nomination Committee Held Attended Held Attended Held Attended B Griffin 10 10 - - - - J Richards 10 10 2 2 4 4 I Macliver 10 10 2 2 4 4 G Cowe1 10 10 2 2 1 1 V Kickett2 10 10 - - 2 2 Note 1: Mr Cowe retired as member of Remuneration & Nomination Committee on 14 September 2022. Note 2: Mrs Kickett appointed member of Remuneration & Nomination Committee on 14 September 2022. Options Total unlisted options on issue at the date of this report are as follows: Date of expiry Grant date Exercise price Number under options 30 November 2023 19 November 2019 $0.65 960,000 30 November 2025 25 November 2021 $0.65 480,000 30 October 2026 25 November 2021 $0.33 700,000 30 November 2026 22 November 2022 $0.84 480,000 1 December 2027 22 November 2022 $0.59 421,271 3,041,271 Performance rights Total unlisted performance rights on issue at the date of this report are as follows: Date of expiry Grant date Exercise price Number under rights 26 October 2025 6 November 2018 Nil 32,257 1 December 2025 22 December 2018 Nil 750,999 30 October 2026 25 November 2021 Nil 67,273 30 October 2026 25 November 2021 Nil 3,318,182 1 December 2027 22 November 2022 Nil 119,023 4,287,734 Directors’ Report 17 Sheffield Resources Limited Annual Report 2023
Operating and financial review The Group’s operations during the year ended 30 June 2023 are set out in the Review of Operations and Ore Reserves and Mineral Resources sections. The Group recorded a net loss after tax for the year ended 30 June 2023 of $8.6m (2022: net profit after tax of $26.1m). At 30 June 2023, the Group had $24.4m in cash and cash equivalents (2022: $40.2m) and the Group’s net assets were $169.6m (2022: $155.6m). COVID-19 impact COVID-19 impacts have not been significant to the Group during the period. The Company does not expect any negative impacts to the financial statements or triggers for any significant uncertainties with respect to events or conditions that may adversely impact the Group. Dividends No dividends were paid or declared during the year ended 30 June 2023. Corporate Governance Statement The Corporate Governance Statement is available on the Company’s website at www.sheffieldresources.com.au. Likely developments and expected results Through its 50% investment in Kimberley Mineral Sands Pty Ltd, Sheffield is on track to deliver mineral sands products to markets across the globe, through the successful construction and operation of the Thunderbird Mineral Sands Project in Western Australia. Sheffield continued to assess and consider growth opportunities within the mineral sands sector during the year, executing an investment agreement with Mineração Santa Elina Indústria e Comércio S/A. and Kromus Xi Fundo De Investimento Em Participações, owners of Rio Grande Mineração S/A (RGM), providing Sheffield with an option to acquire a 20% interest in RGM. Environmental regulation The Group’s exploration and mining activities are governed by environmental regulation. To the best of the Directors’ knowledge the Group believes it has adequate systems in place to ensure the compliance with applicable environmental legislation and is not aware of any material breach of those requirements during the year and up to the date of the Directors’ Report. Indemnification and insurance of Directors and Officers The Company agreed to indemnify all the Directors and key management personnel of the Company for any liabilities to another person (other than the company or related body corporate) that may arise from their designated position of the Company, except where the liability arises out of conduct involving a lack of good faith. During the year the Company paid a premium in respect of a contract insuring the Directors and Officers of the Company against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001. Indemnification of insurance of Auditor The Company has not, during or since the end of the year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor. During the year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity. Non-audit services During the year the Company has not used its auditors, HLB Mann Judd, to complete any non-audit related work (2022: nil). Directors’ Report continued 18 Sheffield Resources Limited Annual Report 2023
CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. Rounding The amounts contained in the financial report have been rounded to the nearest $1,000 (unless otherwise stated) pursuant to the option available to the Company under ASIC Class Order 2016/191. The Company is an entity to which the class order applies. Auditor’s Independence This Auditor’s Independence Declaration is set out on page 31 and forms part of the Directors’ report for the year ended 30 June 2023. Events subsequent to reporting period There has been no matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods. 19 Sheffield Resources Limited Annual Report 2023
This report sets out the remuneration strategy and arrangements for Key Management Personnel (KMP) of Sheffield Resources Limited for year ended 30 June 2023. This Remuneration Report forms part of the Directors’ Report and has been audited in accordance with the Corporations Act 2001. Key management personnel (KMP) For the purposes of this report, KMP are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any Director (whether Executive or otherwise) of the Company and are detailed in the table below. The Executive Chair and other executive management listed in the table below are collectively defined as the Senior Executives for the purposes of this report. Name Position Non-Executive Directors John Richards Lead Independent Director Ian Macliver Non-Executive Director Gordon Cowe Non-Executive Director Vanessa Kickett Non-Executive Director Senior Executives Bruce Griffin Executive Chair Mark Di Silvio Chief Financial Officer and Company Secretary Board policy The Board is responsible for the nomination and appointment of Directors and the remuneration of its Directors, Managing Director and Senior Executives. To assist the Board in meeting its obligations and to address all matters pertaining to Board nomination and executive remuneration, the Board has set in place a Nomination & Remuneration Committee during the reporting period. Role of the Remuneration & Nomination Committee Acting on behalf of the Board, the Remuneration & Nomination Committee is responsible for oversight of the remuneration policies, evaluating and monitoring the performance of the Senior Executives. The Board, following recommendation of the Remuneration & Nomination Committee, determines the remuneration of Senior Executives. The objective of the Remuneration & Nomination Committee is to ensure that the Company’s remuneration policies and practices attract and retain executives and directors who will create long term value for shareholders. Use of external remuneration consultants The Remuneration & Nomination Committee engaged The Reward Practice to provide benchmarking and market data analysis in relation to the remuneration of Senior Executives and Non-Executive Directors during the year ended 30 June 2023. Engagement of The Reward Practice sought to assist the Committee and the Board in assessing the competitiveness of remuneration and compensation arrangements. The Reward Practice was engaged by the Remuneration & Nomination Committee Chair and reported to the Committee and the Board. The Committee and the Board considered the information provided by The Reward Practice, along with other factors, in making their respective ultimate remuneration decisions. The Board is satisfied that the interactions between The Reward Practice and the Senior Executives were negligible, involving provision of remuneration data and related payroll information for consideration. The Reward Practice has relevant procedures in place to minimise potential opportunities for collaboration or undue influence from Senior Executives. The Board is therefore satisfied that the market data provided was free from undue influence from Senior Executives. Total fees paid to The Reward Practice for services during the year ended 30 June 2023 were $12,650. Remuneration Report (audited) 20 Sheffield Resources Limited Annual Report 2023
CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION Remuneration structure - Non-Executive Directors The structure of Non-Executive Director and Senior Executive remuneration is separate and distinct. Shareholders approve the aggregate or total fees payable to Non-Executive Directors, with the current approved limit being $600,000 (excluding share-based payments). The fees paid to Non-Executive Directors are set at levels that reflect both the responsibilities of, and the time commitments required from, each Non-Executive Director to discharge their duties and are not linked to the performance of the Company. All Non-Executive Directors have their indemnity insurance paid by the Company. Non-Executive Directors receive fixed remuneration consisting of a base fee and statutory superannuation contributions as set out below: 2023 $ 2022 $ Base fees excluding statutory superannuation Lead Independent Non-Executive Director 100,000 100,000 Other Non-Executive Directors 80,000 80,000 Share options grants 480,000 share options (with an exercise price of $0.84 per share) were granted to a non-executive director (Mrs Vanessa Kickett) during the year. Share options vested 480,000 share options (with an exercise price of $0.84 per share) vested in favour of a non-executive director (Mrs Vanessa Kickett) during the year. Share options expired No share options awarded to non-executive directors expired during the year. Measurement of share options There are no participating rights or entitlements inherent in the options and the holders will not be entitled to participate in new issues of capital offered to shareholders during the currency of the options. All shares allotted upon the exercise of options will rank pari passu in respect with other shares. Remuneration structure - Senior Executives Sheffield is committed to aligning Senior Executive remuneration to long term shareholder return. To this end, the Company’s remuneration practices are designed to attract and retain employees by identifying and rewarding high performers and recognising their contribution to the continued growth and success of the organisation. Key objectives of Sheffield’s remuneration policy and practices is to: – provide total remuneration and employment conditions which will enable the Company to attract and retain high quality senior executives to the business; – align remuneration with the creation and maximisation of shareholder value and the achievement of Company strategy, business objectives and core values; – ensure the structure and quantum of remuneration is competitive and reflective of the external market in which the Company operates; – provide a mix of fixed and variable, performance-based remuneration to drive superior performance; – reward the achievement of individual and Company objectives thus promoting a balance of individual performance and teamwork across the executive management team; – provide a fair, equitable and scalable system that allows for sustainable business growth and is regularly reviewed for relevance and reliability; and – is transparent, easily understood and is acceptable to shareholders. The Board’s specific remuneration aims for the year ending 30 June 2023 were to: – retain a core group of Senior Executives at the early stage in the Company’s development; – ensure cash preservation measures were set in place across the Company; – maintain a Long Term Incentive (LTI) scheme designed to create alignment with the Kimberley Mineral Sands objectives and maximise overall shareholder value; – ensure effective benchmarking of fixed and variable remuneration for Senior Executives for a clearly defined peer group of similar companies to ensure remuneration is fair and competitive; and – retain total remuneration at or around the 50th percentile of market. 21 Sheffield Resources Limited Annual Report 2023
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