Note 13. Contributed equity (continued) (f) Capital management The objective is to ensure the Group continues as a going concern as well as to maintain an optimal structure to reduce the cost of capital. Sunstone is a junior exploration company and it is dependent from time to time on its ability to raise capital from the issue of new shares and its ability to realise value from its exploration and evaluation assets. The Board is responsible for capital management. This involves the use of cash flow forecasts to determine future capital requirements. Capital management is undertaken to ensure a secure, cost-effective and flexible supply of funds is available to meet the Group’s operating and capital expenditure requirements. The Company does not have any debt facilities and is not subject to any external capital requirements. Surplus funds are invested in a cash management account and are available as required. Financial liabilities of the Group at balance date are trade and other payables. Trade and other payables are unsecured and usually paid within 30 days of recognition. The ability to raise equity in the future to fund the Group’s operations, investigations and exploration activities is a risk that could influence the activities of the Company. The Group has historically raised sufficient capital to fund its operations, however, it recognises that it is at risk of financial markets which dictate its ability to fund operations beyond exhaustion of the current cash funds and monetisation of investments held such as shares in listed entities. 2023 $ 2022 $ Current assets 10,675,454 25,830,656 Current liabilities 1,568,445 2,128,967 Liquidity ratio 6.8 : 1 12.1 : 1 The Company intends to raise funds in the medium term to fund its exploration, investigating and evaluation activities. Note 14. Reserves 2023 $ 2022 $ Share based payments reserve 4,275,443 5,438,254 Foreign currency translation reserve 2,768,563 1,152,640 Total reserves 7,044,006 6,590,894 Movements in reserves were as follows: Share based payments reserve Opening balance 5,438,254 3,946,319 Share based payments - employees 691,667 1,801,415 Shares Issued on vesting (1,854,478) (309,480) Closing balance 4,275,443 5,438,254 Foreign currency translation reserve Opening balance 1,152,640 (1,624,504) Foreign exchange gains/(losses) on translation 1,615,923 2,777,144 Closing balance 2,768,563 1,152,640 Nature and purpose of reserves Share-based payments reserve The share based payments reserve is used to record the fair value of share based payments provided to Directors, employees, including key management personnel, and contractors as payment for services. Foreign currency translation reserve The foreign currency translation reserve is used to recognise foreign exchange gains or losses arising on the translation of the financial report of foreign subsidiary companies. The functional currency of Sunstone is the Australian Dollar and that of its foreign operations is primarily the US Dollar plus Swedish Krona and Euro. Notes to the Financial Statements for the year ended 30 June 2023 50 Sunstone Metals Limited Annual Report 2023
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