CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION 11. Trade and other receivables Trade and other receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less any allowance for impairment. Impairment of trade and other receivables is continually reviewed and those that are considered uncollectable are written off by reducing the carrying amount directly. Security deposits are non-derivative financial assets with various fixed or determinable payments and maturities. They are included in current assets, except for those with maturities greater than 12 months which are then classified as non-current assets. The Group’s trade and other receivables are as follows: 2023 $’000 2022 $’000 Current assets Trade receivables 34 12 Other receivables – security deposits 30 30 64 42 12. Convertible loan – South Atlantic Project Loan provided is recognised at the fair value of the consideration, net of transaction costs. The component of the convertible loan that exhibits characteristics of a receivable is therefore recognised as a financial asset in the statement of financial position. Loans are classified as non-current financial assets when there are unconditional rights to defer settlement for at least 12 months after the reporting period. The Group considers a financial asset to be in default when contractual payments are 90 days overdue. The Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full. A financial asset will be written off when there is no reasonable expectation of recovering the contractual cash flow. South Atlantic Project On 28 February 2023, 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, owners of Rio Grande Mineração S/A (RGM). Sheffield was to provide US$2.5m to fund project related activities over an 18-month period and earn an option to acquire up to 20% of RGM with the payment of a further US$12.5m (US$15.0m in total) to acquire a 20% interest. 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%. Please refer to ASX announcement on 28 February 2023 for further details. 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. The combined Exploration Target for Retiro and Bojuru is estimated between 500 and 720 Mt of material at an average grade of 4.0% to 3.2% HM. The tenements are held by RGM. An initial part contribution of US$1.0m (A$1.5m equivalent) was remitted to RGM during the year. The Group’s convertible loan to RGM is as follows: 2023 $’000 2022 $’000 Non-current assets Convertible loan – US$1m 1,508 – 1,508 – 51 Sheffield Resources Limited Annual Report 2023
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