Notes to the Consolidated Financial Statements for the year ended 30 June 2023 7. Subsidiaries Subsidiaries are entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Ownership interest % Country of incorporation 2023 2022 Sheffield Resources Limited Sheffield Brazil Holdings Pty Ltd (formerly Ironbridge Resources Pty Ltd) Australia 100% 100% Sheffield Exploration (WA) Pty Ltd Australia 100% 100% Sheffield Brazil Holdings Pty Ltd Sheffield Brazil Investments Pty Ltd (formerly Moora Talc Pty Ltd) Australia 100% 100% 8. Investment in joint venture A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exist only when the decisions about relevant activities require the unanimous consent of the parties sharing control. The Group’s investment in joint venture is accounted for using the equity method. Under the equity method, the investment in a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the joint venture since the acquisition date. The statement of profit or loss reflects the Group’s share of the results of operations of the joint venture. The aggregate of the Group’s share of profit or loss of a joint venture is shown on the face of the statement of profit or loss. Kimberley Mineral Sands Pty Ltd Joint Venture YGH Australia Investment Pty Ltd (Yansteel) entered into a 50:50 joint venture with Sheffield to own and develop the Thunderbird Mineral Sands project (Thunderbird project) in 2021. The ownership of the Thunderbird project was previously held by Sheffield through its 100% owned subsidiary Kimberley Mineral Sands Pty Ltd (KMS) prior to the formation of the joint venture. The project is located in north-west Western Australia. As per the terms of the agreement, Yansteel subscribed for a 50% interest in KMS and provided $130.1 million in project equity funding. KMS became jointly owned by Sheffield and Yansteel as at 12 March 2021 following completion of the joint venture transaction. Since that date, Sheffield’s interest in KMS is accounted for using the equity method in the consolidated financial statements. KMS made a Final Investment Decision (FID) to construct and develop the Thunderbird project on 7 October 2022. KMS reached financial close on a combined $315m senior loan facilities provided by Northern Australia Infrastructure Facility (NAIF) and OMRF (Th) LLC, a related entity of Orion Mineral Royalty Fund (Orion). The additional project equity of $169m is funded from a combination of $111m in historical Yansteel equity funding, $24m in new equity funding from Yansteel and $34m of equity from Sheffield. The Sheffield new equity of $34m includes the $10m due in accordance with the KMS Joint Venture agreement. The Thunderbird project is fully funded through to first production and remains on track for first product shipment in Q1 2024. Site construction activities at Thunderbird project continued to advance during the year and were over 92% complete as of 30 June 2023. Preparations for the commencement of operations has commenced with ongoing recruitment of key leadership roles. KMS is governed by a four-person Board of Directors with Sheffield and Yansteel each nominating, and being represented by, two directors. Key decisions require unanimous approval of both shareholders. 42 Sheffield Resources Limited Annual Report 2023
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