2019
A N N U A L R E P O R T
Saudi Arabia
Oman
With our first copper mining
licence in hand, the Company
is officially advancing from
mineral exploration, to mine
development and copper
concentrate production.
Alara Resources Annual Report 2019
1
Alara Resources Limited
Mission Statement
Our mission is to increase shareholder value as a leading developer
of mineral deposits and a mineral producer in the Middle East region.
Core Values
Contents
2 Managing Director’s Letter
4 Projects Overview
20 Board of Directors
22 Management Support Team
24 Directors’ Report
40 Auditor’s Independence Declaration
41
Consolidated Statement of Profit of Loss
and Other Comprehensive Income
42 Consolidated Statement of Financial Position
43 Consolidated Statement of Changes in Equity
44 Consolidated Statement of Cash Flows
45 Notes to the Financial Statements
66 Directors’ Declaration
67 Independent Auditor’s Report
74 Securities Information
75 Corporate Directory
Excellence
We continue to strive for
improvement and in all aspects
of our business and ensure
our employees and business
partners share this commitment.
Respect
Alara shows consideration for its
employees, business partners,
service providers, governments,
communities, and the physical
environment in which it
operates.
Integrity
Alara operates with
transparency, honesty and
accountability across all levels
of business.
2
Alara Resources Annual Report 2019
Managing Director’s Letter
Alara has a diverse range of shareholders, some of us became shareholders after
recognising the largely untapped mineral wealth within the Kingdom of Saudi
Arabia and Alara’s unique position to unlock great value there1. Others joined
the Company after Alara secured a mining licence in the Sultanate of Oman
and focused on re-igniting Oman’s copper industry with a new ore reserve and
processing plant to produce copper concentrate2.
The Company has continued to build upon these key milestones over the last twelve months.
In January, we welcomed Tasnim3 into our flagship Washihi Majazza Copper Project and as shareholders in Al
Hadeetha Resources LLC4. Engineering work on the copper processing plant commenced after a thorough bid
process conducted through project management consultant Progesys. Project finance options were secured while
preliminary and ancillary works were funded from loans provided to Al Hadeetha Resources5 by Alara. These works
include site fencing, STP water pipeline approval and surveying, upgrade to storage yard, establishment of project
office and geotechnical testing.
In March this year, Oman’s long-awaited new mining law passed royal decree, with the objective of attracting
further investment and revitalizing Oman’s rich history of mining. The Public Authority for Mining announced new
mining projects and related investment initiatives valued at US$2B. The new law established a legal framework
for the mining sector aimed at providing more incentives, transparency and certainty to investors. Further mining
regulations are set to follow by March next year.
We recognize this new and improved regulatory framework is also experiencing some teething problems. As the
recipient of the first copper mining licence since 2014, the Company is working closely with the Implementation
Support and Follow Unit (ISFU), the Public Authority for and other government bodies as the project advances
toward production now scheduled for early 2021.
ISFU was established in Oman in 2016 by Royal Decree and is focused on economic diversification projects that
came out the National Economic Diversification Program (Tanfeedh) which Alara and Al Hadeetha were invited to
participate in.
Saudi Arabia has also made major changes as it seeks to establish a US$ 1.3 trillion mining sector as the third pillar
of the Saudi economy. The new Ministry for Industry and Mineral Resources has been separated from the Ministry
of Energy. These changes in region reflect a push toward greater economic diversification, with mining becoming
a key growth sector for both Oman and Saudi Arabia.
1 Refer Alara’s ASX Announcement dated 30 April 2013 “Positive DFS – Khnaiguiyah Zinc-Copper Project”. Note: this announcement was made
prior to the cancellation of the mining licence and at a time when the “market price” was USD$1 = AUD$1. Accordingly, any future financial
projections would be subject to Alara securing an interest the reissued mining licence and revenues would be adjusted to reflect current market
conditions, including USD$1 = ~AUD $1.48 (as at 23 September 2019).
2 Refer to ASX announcement on 3 July 2018 “Al Hadeetha Resources - First International JV to receive copper mining licence in Oman”.
3 The Tasnim Group are a leading construction and infrastructure enterprise employing over 30,000 staff in Oman. Al Tasnim Infrastructure
purchased a 19% shareholding in Al Hadeetha Resources from Alara Oman Operations Pty Ltd for OMR 3,000,000 (~AUD$11.5m).
4 Al Hadeetha Resources holds three exploration licences and one mining licence in Oman, its shareholders are Alara Oman Operations Pty Ltd
(51%), Al Hadeetha Investments LLC (30%) and Al Tasnim Infrastructure LLC (19%).
5 Alara’s total loan to Al Hadeetha Resources is currently ~AUD$18m. This loan (and Alara’s loan to Daris Resources) do not appear on
consolidated balance sheet because they classified as intercompany loans.
Alara Resources Annual Report 2019
3
Managing Director’s Letter
continued
Despite the conflict between neighbors, Oman continues to rank as one of the safest countries on the planet, on par
with Australia6.
Alara’s experience over the past eight years in the Middle East sees the Company uniquely positioned to capitalise
on these developments in the ecopolitical environment, especially as they relate to mining and foreign investment.
In light of this increased focus on mineral projects and the Company’s own project requirements, Alara Resources
LLC7 has imported two drill rigs into Oman and is becoming equipped to provide exploration and mining services
throughout the region.
In July this year, China’s imports of copper concentrate reached a record high exceeding 2,000,000 tons for the
first time in a month. On average, demand for copper over the past 20 years has grown ~3% per annum and is
much more stable than the perception given by shorter term copper price fluctuations8. Increased electrification,
renewable energy, electric vehicles and increasing urbanization in developing countries9 support a case for
continuing growth in the demand for copper. Successful explorers, developers and producers of copper are set
to become an important element of more astute investor portfolios.
Amidst all this change, the Company continues to grow from strength to strength10 and is set to continue.
I look forward to sharing more key updates and milestones throughout the coming year.
Justin Richard
Managing Director
6 Refer world risk map produced by medical and security specialists International SOS and Control Risks. See also the Global Terrorism Index
reports where Oman received a score of zero (10 being high risk) compared to U.K. and U.S. which scored ~5.
7 Alara Resources LLC is an Omani company with three shareholders, namely Alara Oman Operations, Southwest Pinnacle and Al Tasnim
Infrastructure.
8 Trade war between US and China has been reported as a reason for the Copper prices dropping in September.
9 On average, each person on the planet consumes 3kg of copper per year. In some developed countries the rate of consumption is more than
double this amount.
10 For example, the Company’s net asset position increased over 100% in the last year. The Tasnim share sale provides an indicative value of
AUD$60.5m ($11.5/0.19%) for Al Hadeetha Resources alone. This indicative valuation is below the Al Hadeetha Project NPV of US$90m
(which also excludes sale of crushed waste rock for construction material, inferred gold resources that sit outside the reserve and value of
nearby Mullaq and Al Ajal licences) and was agreed to on the basis of the added value Tasnim can bring to the company as strategic partner.
Alara’s ASX Announcements dated 24 January 2017 and 28 June 2018 contain the information required by ASX Listing Rule (LR) 5.17 regarding
the stated forecast financial information. All material assumptions underpinning the production target as announced on 24 January 2017,
except to the extent that those assumptions were updated in the announcement of 28 June 2018, have not materially changed. The updated
assumptions in the announcement of 28 June 2018 have not materially changed.
4
Alara Resources Annual Report 2019
Projects Overview
Oman
Sultanate of Oman & Copper
Since its discovery c. 8000 years
ago, copper has remained a key
element in the development of
communities, cities and countries.
As world population grow, so
does the demand for copper
metal. Global copper consumption
has been constantly increasing
over last century and has grown
an average of 3% p.a. over the
past twenty years. This growth
is set to continue with increasing
electricity infrastructure, digital
communications, renewable energy
and other technologies on the rise.
A consensus of supply and
demand forecasts demonstrate
solid support for copper prices
through to 2030. Electric vehicles,
increasing urbanization and
electrification are further expanding
market demand for copper.
The Sultanate of Oman contains
some of the most exciting geology
anywhere on Earth, yet it remains
largely underexplored. The majority
of country is covered by vast
dessert, while the northern Oman
mountains expose some of best
preserved opholitic rocks in the
world. Oman’s mining history dates
back millennia, to a time when
copper was mined there and traded
throughout the known world. The
country was then known as Majan
or the land of copper. The country
restarted producing the base metal
in recent decades but stopped in
2014 after a temporary halt on new
mining licences had occurred. With
the government now focused on
economic diversification, the Public
Authority for Mining has begun
issuing new mining licences with
Al Hadeeetha Resources being
the first company (since 2004) to
receive a copper mining licence and
plans to reignite the copper sector
in Oman with more copper projects
to follow.
Currently, Oman’s main actively mined minerals include chromite, dolomite, limestone, gypsum, silicon and iron.
Gold and Copper will soon be added to this list, along with downstream industrial projects to further boost the
mineral sector’s contribution to the nation’s GDP.
Recognizing the huge mineral wealth potential, the Sultanate is now actively promoting the development of its
mining industry as one of the top four revenue sectors. Key developments include the reorganization of the Public
Authority for Mining (PAM) in 2014; establishment of Mineral Development of Oman (MDO) in 2016; inclusion of
mining under ISFU (Implementation Support & Follow-up Unit) of Tanfeedh in 2017; and announcement of new
Mining Law in 2018 demonstrate the country’s commitment to help the mining sector become one of the major non-
oil source of revenues for the nation.
Alara Resources Annual Report 2019
5
Projects overview
continued
Oman
Al Hadeetha Resources LLC, a joint venture between Alara Resources, Al Hadeetha and Al Tasnim is the first
international JV company to be awarded a mining license for copper in Oman.
Alara has joint venture interests in a total of five (copper-gold) exploration licenses in Oman extending over 1186km2.
In addition, Alara has a 51% interest in the Al Hadeetha Mining License at Washihi Majaza covering 3km2 (within
Washihi Exploration License) and four other mining license applications pending for grant totaling 7km2. Figure 1
shows the locations of exploration licenses.
Figure 1: Alara JV Exploration Licenses in Oman
Alara also has another 10 (base and precious metals) exploration license applications pending grant totaling
2,677km2 in Oman.
Beyond the Wahihi-Majaza copper reserve, the Company’s strategic vision is to develop a pipeline of copper-gold
projects in Oman, including those described on pages to follow. The copper concentration plant at Washihi-Majaza
will be only the second processing plant in Oman. The other plant (owned by Mawarid Mining) is located near Sohar
and currently under care and maintenance. Each of these plants have potential to service copper deposits from
surrounding areas. Potential for consolidating copper assets in Oman has been a topic of discussion for some time.
One obvious benefit from combining assets is the ability to centrally process ore from surrounding sites which might
be uneconomic as stand alone projects.
The Company has previously announced MOU’s and other agreements with key players in the Oman mining sector
with reference to this proposed “hub and spoke” processing model.
Such discussions are ongoing, but progressing only slowly. Management recognise shareholder’s interest in the
potential consolidation strategy in Oman and other developments in Saudi Arabia. However, until agreements are
finalised or other material developments occur, ASX advisers have been clear the Company should not release
additional information unless it is required to do so.
6
Alara Resources Annual Report 2019
Projects overview
continued
Oman
Alara Oman Copper Portfolio
Al Hadeetha Resources LLC Projects
Al Hadeetha Resources LLC (‘AHRL’) is a Joint Venture (JV), between Alara Oman Operations Pty Ltd (51%), a
wholly owned subsidiary of Alara Resources Limited (‘Alara’), Al Hadeetha Investment Services LLC (30%) and Al
Tasnim Infrastructure LLC (19%). Al Hadeetha Investment Services is related to the well-known Al Naba Services
group, owned by Sayyid Khalid bin Hamed Al Busaidi and his family. The owners of Al Tasnim Infrastructure
represent Al Turki group, one of the largest construction and infrastructure companies in Oman. The JV between
Alara and Al Hadeetha was formed in 2011 for the purpose of exploring and developing the Washihi, Mullaq and Al
Ajal copper-gold concessions and the surrounding regions. Al Tasnim joined the JV in 2018.
Since 2011, Alara-led exploration in these areas has identified copper resources and mining license applications have
been submitted within each exploration license area. Table 1 provides the status of all Al Hadeetha JV licenses.
Table 1: Al Hadeetha JV licenses
License
owner
Alara JV
interests Area
Date of
Grant
Date of
Expiry
Application
for
renewal
Status
Area
Date of
Application
Status
Exploration Licenses
Mining License within ELs
Al Hadeetha
Resources
LLC Oman
Al Hadeetha
Resources
LLC Oman
Al Hadeetha
Resources
LLC Oman
51%
39km2 Jan 2008 Jan 2016 May 2018
51%
41km2 Oct 2009 Oct 2016 April 2018
51%
25km2 Jan 2008 Jan 2016 April 2018
deemed
granted as
per law
deemed
granted as
per law
deemed
granted as
per law
Granted
in 2018
3km2 April 2013
Active
1km2
Jan 2013
1.5km2
Jan 2013
In
process
In
process
Block/
License
Name
Wadi
Andam
Mullaq
Al Ajal
The above projects together form the Washihi Majaza Copper Project (previously known as the Washihi Project).
The Washihi Majaza copper deposit
lies within Washihi Exploration
License, approximately 160
kilometers south-east of Muscat via
sealed road. It can be reached either
from the Muscat-Nizwa highway,
40km to the northwest, or from the
Muscat-Ibra highway, 45km north
along the Wadi Andam valley. This
project is 5km north of Washihi
village and 2 kilometres west of
Wadi Andam and is distinguished
by its gossan which forms a whitish,
isolated but conspicuous hill in the
centre of a gravel plain which is
easily seen from a distance. The site
is located near the village of Khadra
Bin Daffa, on the road between
Izki and Sinaw and access to the
prospect can be gained by four-
wheel-drive, by crossing the Wadi
Andam after turning south at the
Natural park sign immediately west
of Khadra Bin Daffa.
Figure 2: Location of Washihi Exploration License and granted Washihi
Majazza Mining License
Alara Resources Annual Report 2019
7
Projects overview
continued
Oman
A picture showing the Washihi Majaza project site is provided below.
Al Hadeetha Resources conducted extensive copper-gold exploration programs in the license area resulting in the
discovery of a large copper deposit at Washihi Majaza. A subsequent feasibility study supported development of
an open mine pit and construction of a 1MTPA copper concentration plant11. In June 2018 Al Hadeetha Resources
secured its first Mining License and proceeded to mine development. JORC resource and reserve statements are
provided in Table 2 and 3 below.
Table 2: Washihi JORC Mineral Resources
Cu %
Cut off
Tonnes
(Million)
0.20
0.25
0.30
0.40
0.50
12.40
12.40
12.40
12.20
11.40
Indicated Resource
Inferred Resource
Copper
(Cu)
%
0.89
0.89
0.89
0.90
0.93
Gold
(Au)
g/t
0.22
0.22
0.22
0.22
0.23
Tonnes
(Million)
Copper
(Cu)
%
3.70
3.70
3.70
3.50
3.00
0.78
0.79
0.79
0.81
0.88
Gold
(Au)
g/t
0.23
0.23
0.23
0.24
0.25
Table 3: JORC Ore Reserve Statement (As of 18 November 2016)
Ore Reserve
Classification
Probable
Tonnes
(Mt)
9.7
Cu Grade
(%)
Au Grade
(g/t)
0.88
0.22
In addition to above mention resources, a shallow gold mineralisation in Gossan was also identified (JORC Inferred
Resource of 0.31MT @ 0.51g/t Au) outside the main ore body.
11 Alara’s ASX Announcement dated 24 January 2017 contains the information required by ASX Listing Rule (LR) 5.16 regarding the stated
production target. All material assumptions underpinning the production target as announced on that date continue to apply and have not
materially changed.
8
Alara Resources Annual Report 2019
Projects overview
continued
Oman
Project Development
With the grant of the mining license, preparatory work began for construction of a copper concentrator plant and
mine, including:
Boundary fence
The mining license boundary was secured by constructing a fence.
Picture: Northern ML boundary and gate to Washihi Majaza Project.
Project Engineering
In order to meet the country’s Omanisation regulation,
it was decided to split the EPC tender proposals
into EP and C contracts where project engineering
and procurement would be done by a specialist
engineering firm and the construction contract
awarded to a local reputed company.
McNally Bharat Engineering Company Limited (MBE),
India was appointed as preferred EP contractor and
limited notice to proceed followed by a Purchase Order
were issued to commence basic and detailed design
and engineering (including plant drawings, plant
layout, process flow diagram, single line diagram, etc.)
for a 1MPTA copper concentration plant12.
During the reporting period, the following progress
had been achieved:
Total progress of engineering was 50.4%, with
basic engineering and process engineering being
substantially complete.
Table 4: Status of Progress on preparation
of Engineering Drawings
DISCIPLINE
MHD
PROCESS
ELECTRICAL
INSTRUMENTATION
STRUCTURAL
CIVIL
TOTAL
Total as
per DCI
Code 1
(Approved)
Code 2
(Proceed
with
comments)
42
114
78
54
69
152
509
10
57
30
5
5
0
27
42
32
37
13
2
107
153
Total Code 1 (Approved) is 21.02% and Code 2
(Approved with Comments to resubmit) is 30.05%.
12 The return of the footnote text, that goes at the bottom of the page, should be: “Alara’s ASX Announcement dated 24 January 2017 contains
the information required by ASX Listing Rule (LR) 5.16 regarding the stated production target. All material assumptions underpinning the
production target as announced on that date continue to apply and have not materially changed.
Alara Resources Annual Report 2019
9
Projects overview
continued
Oman
295 drawings remained outstanding as per the document control index file submission dates agreed by Al
Hadeetha and MBE.
Finalized project site layout is shown in Figure 3 below.
Figure 3: Overall project Plot Plan
Project Procurement: Preparatory work progressed during the last quarter prior to placement of a major
equipment order. Despite the equipment order being prepared in accordance with FIDIC general conditions,
particular conditions of supply are still being negotiated which may delay delivery of some equipment.
Project Construction: Detailed project documents (including BOQ’s and engineering) were sent to selected
construction companies prior to award of the final construction contract.
Mining Contractor: Preliminary commercial agreement achieved between Al Hadeetha Resources LLC and Alara
Resources LLC (‘ARL’) with issuance of letter of intent to ARL for the mining contract with final contract award
expected to follow shortly.
Project Water Supply: A local survey company was engaged to identify most efficient pipeline route between
project site and the Sewage Treatment Plant proposed in partnership with Haya Water, Oman. Three possible
routes were submitted to Ministry of Housing as depicted in Figure 4 on the following page and the first approval
was granted.
Project Power supply: A local electrical consultant was engaged to conduct the survey and finalise the route
of power lines between project site and Mazoon feeder stations located about 5 kilometres away. Project power
requirement have been revised during the project engineering process. The specific location of the power station
at the site has also been determined. The route identified for power supply lines is shown in Figure 5 on the
following page.
10
Alara Resources Annual Report 2019
Projects overview
continued
Oman
Figure 4: Water supply pipe line route from STP
Figure 5: 33 kV Feeder route plan
to project site
Next Steps
1.
Completion of project engineering and finalise plant and equipment procurement.
2.
Appointment of construction contractor.
3.
Obtain related regulatory approvals, including: Industrial Licence for the plant operation; Ministry of Housing
approval for infrastructure located outside the mining licence, but within the exploration licence boundary;
municipality clearance of detailed building designs; ancillary approvals for water and power supply lines.
Note: Tanfeedh’s implementation support and follow up unit are working closely with Al Hadeetha and
relevant government departments to help streamline these approvals.
Alara Resources Annual Report 2019
11
Projects overview
continued
Oman
Future Growth Opportunities
The Washihi Exploration License has significant potential for discovery of additional copper deposits. Most of
the area around Washihi Majaza is covered by ancient and recent alluvial fans. Based on the premise that sulfide
mineralization in the area is coincident with distinct reduction in the magnetic susceptibility values of basaltic rocks,
four other targets have been identified for further follow up, as shown in Figure 6. It is proposed to follow-up these
areas with electrical geophysical methods (EM or IP) to confirm the target potential followed by drilling.
Figure 6: Potential regional exploration targets at Washihi License areas, based on RTP magnetics
Exploration Targets - Resources
Exploration targets are estimated purely based on size, geological perception and structural interpretation of the
geophysical target, and without any other obvious geochemical or lithological support or geo-statistical support.
Anticipated copper and gold mineralization targets in Washihi license area, in addition to already reported JORC
resources at Washihi, can be categorized as per Table 5.
Table 5: Washihi Exploration Targets
License area
Target Number
Type of target
Extension of existing
JORC resources
Estimated
Tonnages in
ranges
3 - 4 MT
Washihi
39km2
WHT-1
WHT-2
WHT-3
Grade Cu%
Grade Au (g/t)
0.9 -1.1
0.9 -1.1
0.1 – 0.3
0.1-0.3
Untested geophysical targets
2.5 – 7.5 MT
Unseen high grade classic
mound type “conglomeratic
ores,” typical of Cyprus-type
deposits
0.5-1 MT
1.0 – 3.0
0.1-1.0
The potential quantity and grade of an exploration target are conceptual in nature, there has been insufficient exploration
to determine a mineral resource and there is no certainty that further exploration work will result in the determination of
mineral resource or that the production target itself will be realised (ASX Listing Rule 5.16.5).
12
Alara Resources Annual Report 2019
Projects overview
continued
Oman
Mullaq Exploration License
The Mullaq Exploration License area is adjacent to Washihi Exploration License Area. The Mullaq prospect lies within
the Oman Mountains, approximately 160 kilometres south-east of Muscat via sealed road. It can be reached either
from the Muscat-Nizwa highway, 40km to the northwest, or from the Muscat-Ibra highway, 45km north along the
Wadi Andam valley. Mullaq is located 5.5km east of the Wadi Andam. Access to the site is via approximately 7km
of unsealed track 4km south of Khadra Bin Daffa.
Figure 7: Location of Mullaq EL and Applied Mining License
Previous explorers in the Mullaq License area discovered copper mineralization in layered gabbro sequence, yet a
large part of the tenement still remains unexplored. There is a historical estimate of copper mineralisation at Mullaq,
which requires further investigation.
So far no resource modeling has been conducted at Mullaq, however geophysical surveys and initial drilling
campaigns by Alara have identified the presence of potential mineral deposits in the area.
Next Steps
With grant of mining license and proposed construction of copper concentrator at nearby Washihi Majaza, high-
grade Mullaq deposit could be developed on a hub and spoke basis. To achieve this Al Hadeetha Resources has
plans to delineate the existing resource at Mullaq followed by a mining feasibility study.
Alara Resources Annual Report 2019
13
Projects overview
continued
Oman
Future Growth Opportunities
The ground magnetics survey conducted at Mullaq demarcated anomalies consistent with the known VMS
signatures in this geological environment. A total of nine targets were identified for further follow-up, with
the majority being manifested by RTP magnetic lows, similar to the Washihi magnetic signature. All identified
exploration targets based on ground magnetics in Mullaq (except MQ001) remain untested. Also the existing
mineralization remains open for further potential extensions.
Figure 8: Potential regional exploration targets in Mullaq License areas, based on RTP magnetics
Exploration Targets - Resources
Resources at Mullaq based on exploration targets are estimated purely based on its size, geological perception
and structural interpretation of the geophysical target, and without any other obvious geochemical or lithological
or geo-statistical support. Anticipated copper and gold mineralization targets in Mullaq license area can be
categorized as follows:
Table 6: Mullaq additional resource estimated based on Exploration Targets
License area
Target Number
Type of target
Estimated
Tonnages in
ranges
Grade Cu%
Grade Au (g/t)
Mullaq 41km2
MQT-1
MQT-2
Extensions of non JORC
resources at Daris 3A5
0.25 – 1 MT
1 – 3%
0.09 – 1.2
Untested geophysical targets
3 – 4 MT
0.9 – 2%
0.09 – 0.3
The potential quantity and grade of an exploration target is conceptual in nature, there has been insufficient exploration
to determine a mineral resource and there is no certainty that further exploration work will result in the determination
of mineral resources or that the production target itself will be realised (per ASX Listing Rule 5.16.5).
14
Alara Resources Annual Report 2019
Projects overview
continued
Oman
Conspicuously large spreads of slag with malachite stains have been located in the area indicating ancient copper
oxide mining. A copper slag sample from Mullaq was tested at the Australian Minerals Research Centre in Perth. The
tests showed potential for economic extraction by long-term heap leaching methods. Further evaluation is required
to determine the most economic options for copper recovery.
Mining License: A mining license application at Mullaq submitted in 2013 has progressed through various ministries
in Oman. An Environmental Impact Assessment was also completed previously. Al Hadeetha considers Mining
Licence clearance a key to further exploration work in the area.
Al Ajal Exploration License
The Al Ajal Prospect is located near the village of Al Ajal in Taww area, about 20km south of Barka, which lies on the
northern coast of the Sultanate of Oman and about 65km west of Muscat. Please refer to Figure 9.
Figure 9: Location of Applied Al Ajal Mining License
Alara Resources Annual Report 2019
15
Projects overview
continued
Oman
Alara carried out ground geophysical surveys over limited areas to confirm the geophysical signatures of exiting
mineralization. See Figure 10 below.
Chargeability Slice modeled
at 100m depth
Figure 10: Geological map showing prospective areas within Al Ajal
Exploration License
Exploration Potential –
Future growth opportunities
Preliminary exploration confirmed
the presence of two more areas
of potential positivity in similar
geological trends. Al Ajal prospect
is unique in itself as it is considered
to be the only known mineral
occurrence in Oman Mountains that
is considered not to be associated
with the ophiolite volcanics of
Oman. Despite its small size and
difficult terrain, in view of the high
gold grades detected by previous
explorers, this prospect warrants
further exploration for copper and
gold bearing deposits.
Mining License: Grant of mining
license application at Al Ajal
submitted in 2013 has progressed
through various ministries in Oman.
Al Hadeetha considers clearance for
a mining licence as key to further
exploration work in the area.
16
Alara Resources Annual Report 2019
Projects overview
continued
Oman
Daris Resources LLC
Copper-Gold Project
Daris Resource LLC is currently
a 50-50 joint venture between
Alara and Al Tamman Trading
Establishment LLC.
The Daris Project comprises one
exploration licence (Block 7) of
~587km2 located ~150km west of
the capital city Muscat in Oman.
Two Mining Licence applications
filed over Daris East and Daris 3A-5
prospects within the exploration
licence remain currently pending.
Figure 11 and Table 7 provide details
of licenses at Daris.
By conducting extensive exploration
programs in Block 7, the Daris
JV has defined resources at
Daris East Prospect to measured
category under JORC, identified
mineralisation at Daris 3A5 prospect
and several exploration targets.
Two Mining License applications
were submitted over both of the
prospects and recent site visits
conducted by ministry officials
gave positive indications for these
applications advancing towards
issuance.
Table 7: Details of Licenses
Figure 11: Location of Block 7 Exploration License and two Mining License
application areas
Block
Name
License
owner
Alara JV
interests
Area
Date of
Grant
Date of
Expiry
Application
for
renewal
Status
Area
Date of
Application
Status
Exploration License
Mining License within EL
Al
Tamman
Trading
and Est.
LLC,
Oman
Block 7
50%
587km2 Nov 2009 Nov 2012 May 2018
Daris
East
3.2km2
Daris
3A5
1.3km2
Deemed
renewed
as per
law
Dec 2012
Dec 2012
in
process
in
process
Alara Resources Annual Report 2019
17
Projects overview
continued
Oman
Daris East Prospect
The current JORC Copper Resource for the Daris-East Prospect is outlined below:
Table 8: JORC Mineral Resources
Ore type
Sulphides
Oxides
Cut-off
grade
Cu%
0.5
0.5
Measured
Indicated
Measured and
Indicated
Inferred
Tonnes
Cu%
Tonnes
Cu%
Tonnes
Cu%
Tonnes
Cu%
130,000
2.48
111,000
2.24
241,000
2.37
30,000
2.25
97,000
0.77
87,000
0.66
184,000
0.72
2,000
0.61
* Based on JORC Code, 2004 edition
Note:
– A total of 21 rotary (624m) and 41 diamond core (4,654m) holes totalling 5,278m have been drilled by Alara to
test shallow oxide mineralisation and to locate massive sulphide and stringer zones beneath the oxide cap at the
Daris-East prospect and to test geophysical targets in the vicinity.
– In addition historic drilling data from 44 holes totalling 4,353m have been included in the resource database.
Daris 3A5 Prospect
Preliminary drilling at Daris 3A5 has intersected high-grade copper mineralisation and the Company plans to
conduct further drilling before resource estimations.
On 20 September 2012, Alara announced drilling results for Daris 3A-5. The drill hole location map and intersection
table are given below:
Figure 12: Daris 3A5 Drillhole Location Map
18
Alara Resources Annual Report 2019
Projects overview
continued
Oman
Table 9: Significant Intersections from Alara Core Drilling
MINERALISED ZONE - SIGNIFICANT INTERSECTIONS – DARIS 3A5 PROSPECT
Significant Mineralisation
Mineralised Zone
Drill Hole
Intersections
From (m)
To (m)
Length (m)
Cu (%)
Au (g/t)
Ag (g/t)
D3DC001
D3DC002
D3DC003
D3DC008
D3DC009
D3DC010
Primary
Inclusion
Primary
Inclusion
Primary
Inclusion
Primary
Inclusion
Primary
Inclusion
Primary
Inclusion
Primary
Primary
Inclusion
15
30
28.4
34.35
50.6
50.6
41
51.5
23
33.5
21
23
36
57
37.65
37.65
46.25
46.25
59
54.05
71.75
68.7
35.8
35.8
31
25
39
67
22.65
7.65
17.85
11.9
8.4
3.45
30.75
17.2
12.8
2.3
10
2
3
10
59.35
65.7
6.35
1.61
4.69
3.85
5.74
4.45
10.28
4.69
8.05
0.74
3.92
0.07
0.06
0.85
5.62
8.58
3.39
3.71
2.61
2.06
1.36
3.10
1.56
2.67
6.62
5.20
3.34
7.13
0.01
1.16
1.78
50.68
77.95
22.51
24.07
20.34
46.79
16.75
28.95
31.11
106.37
5.41
23.67
1.23
17.82
27.48
Awtad Resources LLC - Copper Project
The Awtad Project is located immediately adjacent to the Licence Area
No. 7 (Block 7) comprising the Daris Copper-Gold Project and comprises a
mineral exploration licence (Block 8) of ~497km.
The Company has signed a binding Heads of Agreement granting Alara
an initial 10% interest in the Project and a right to increase to a 70%
shareholding in Awtad Copper LLC.
Significant Intersection from Daris 3A5
Notes:
– The cut-off grade is 0.2% Cu in
respect of intersections within
the copper-rich zone.
– The drill intercepts are reported
as drilled. True thickness will be
calculated at the interpretation
and resource modelling stage.
Next Steps
The recent grant of a Mining License
at Washihi Majaza of Al Hadeetha
Project has provided the Company
with a basis to further develop
copper exploration programs at
Daris
Optional analysis study and
advanced scoping study conducted
in 2014 identified multiple options
for Daris East resources to underpin
further work in Block 7.
The Daris JV has collaborated with
Mineral Development of Oman in
developing further exploration
programs for Blocks 7 and 8.
Figure 13: Location of Block 8 Exploration License
Alara Resources Annual Report 2019
19
Projects overview
continued
Oman
Alara has previously undertaken some exploration activity on Block 8. Rock chip samples returned multi-elemental
enrichment of up to 2.68% Copper, 2.4ppm Silver, and 0.1% Zinc indicating potential base metal deposit below.
Alara Resources LLC
Alara Resources LLC (‘ARL’) is a Joint Venture (JV) between Alara Oman Operations Pty Ltd (35%), a wholly owned
subsidiary of Alara Resources Limited (‘Alara’), South West Pinnacle Exploration Ltd (‘SWPE”) an established Indian
exploration and mining company listed on the National Stock Exchange India (35%) and Al Tasnim Infrastructure
LLC (30%), a privately owned Omani company belonging to Al Turki group, one of the largest construction
companies in Oman.
Exploration and Mining Services: With a new mining law in Oman PAM plans to award 110 new multi-commodity
exploration and mining licences. Encouraged by potential of increased future demand for professional drilling
services in Oman, ARL has positioned itself to provide drilling services to Oman’s mining industry. Two KORES-1200
drill rigs and associated drilling accessories have been procured by the company and delivered to the storage yard
near the Al Hadeetha Project site.
ARL was issued a letter of intent for a ten-year mining contract at Al Hadeetha’s Washihi-Majaza project.
Copper Exploration:
ARL previously submitted ten exploration license applications for copper exploration licenses which remain pending.
Lithium Exploration:
A large interior drainage area in Oman is known for deposition of evaporates. ARL plans to explore potential
concentrations of alkali salts and alkaline earths (including lithium) within this interior basin.
An ARL Exploration License application for 10km2 is currently pending.
Saudi Arabia
The Company refers to its previous announcements regarding the Khnaiguiyah Zinc Copper Project.
Management recently met with the Australian Ambassador to Saudi Arabia and Oman, Mr Ridwaan Jadwat, along with
key mining players in Saudi Arabia to discuss strengthening ties between Australian and Saudi Arabian mining sectors.
The meeting was held at the Ambassador’s residence in Riyadh and came on the back of recent development in the
Saudi mining sector, most significantly the establishment of an independent Ministry of Industry and Mineral Resources
(previously part of the Ministry of Energy), along with the appointment of a new Minister from the private sector.
The Company is monitoring these changes as they relate to the Khnaiguiyah Project and is positioned to capitalise on
its investment once a licence is reissued. ARL is also pursuing leads for drilling contracts in Saudi Arabia.
Figure 13: Location of Block 8 Exploration License
20
Alara Resources Annual Report 2019
Board of Directors
James D Phipps
Non-Executive Chairman
Justin Richard
Managing Director
& CEO
Justin J Richard
Managing Director & CEO
MBA, LLB, FGIA, FCIS
Justin Richard is a corporate
lawyer and accomplished business
manager. He joined Alara in 2011,
and for the past eight years has
been working in the Middle East as
CEO of Alara’s international joint
venture companies Al Hadeetha
Resources, Daris Resources and
Alara Resources.
Since Mr Richard’s appointment
as Managing Director, Alara has
completed a feasibility study,
announced a maiden ore reserve
statement, and secured a mining
licence for the Al Hadeetha
Copper Gold project in Oman.
He has established key business
relationships for the Company as
it moves to expand its business
beyond mineral exploration to
mine development and production
of copper concentrate. Prior to
joining Alara, Mr Richard worked
with UGL Limited (Resources
Division), Bateman Engineering and
Minter Ellison Lawyers (Insurance &
Corporate Risk, and Construction,
Engineering and Infrastructure). He
has an MBA from London Business
School, a law degree from the
University of Western Australia
and is a Fellow of the Governance
Institute of Australia and the
Australasian Institute of Mining
and Metallurgy.
James D Phipps
Non-Executive Chairman of the
Board
B.A. (Philosophy), J.D. (Law)
James D. Phipps is a strategic
advisor, entrepreneur, angel
investor and people person.
Jim practiced law (international
commercial matters involving
more than 67 countries) in a big
law firm environment (Jones Day
Reavis & Pogue and Wiley Rein
LLP) for 10 years and then moved
over to the business side of the
house, where his work has involved
business leadership, governance,
entrepreneurship and strategic
consulting. Jim has served on the
boards of numerous publicly traded
and closely held companies across
a number of industries, including
mining/mining exploration (copper,
zinc, gold and silver), heavy industry
(paper), consumer goods (paper,
aluminum foil), infrastructure
development and O&M (drinking
water, waste water, storm water,
etc.), technology (gaming and
social media), sports entertainment
(English football, gaming, fantasy
football, sports talk radio), fitness
(establishment of the largest MMA
gym in the Middle East) and film
making (“Dave Made a Maze”).
Jim has headed up various board
committees including executive,
nomination and remuneration, audit
and risk. Jim currently serves on
the board of MMA Global, Inc. (US
OTC: Pink Sheets: LUSI), having
been appointed in October 2018.
Jim has conducted business on
four continents and has over 30
years of experience involving the
Middle East. Jim is fluent in Arabic
and lived full-time in the Arab
world for about 18 years (15 years
in Saudi Arabia and 3 years in Iraq).
Jim is a combat veteran of the U.S.
Army, having served in Operations
Desert Shield and Desert Storm
from 1990-1991, on the front line
with the Brave Rifles of the 3rd
Armoured Cavalry Regiment. Jim
also served three years as a civilian
in harm’s way in Baghdad, Iraq from
2008-2010. Jim holds a Bachelor of
Arts in Philosophy (1992) and Juris
Doctorate (1996) both from Brigham
Young University. In 1994 and 1995,
Jim studied Islamic shariah as a
Fulbright Fellow at the King Faisal
Centre for Research and Islamic
Studies in Riyadh, Saudi Arabia.
Alara Resources Annual Report 2019
21
Board of Directors
continued
Atmavireshwar Sthapak
Executive Director
BASc, MTech (Applied Geology)
Atmavireshwar Sthapak is a
geologist specializing in mineral
resource exploration and evaluation
studies. He joined Alara in 2011,
making valuable contributions to
the Company as an Exploration
Manager and a Study Manager
based in Muscat; including discovery
of large VMS copper mineralisation
extensions at the Washihi project in
Oman and recent resource upgrade
at Washihi. Prior to Alara, his career
spanned 10 years with ACC / ACC-
CRA Ltd and 10 years with Rio Tinto
(Australasia) where he was awarded
a Rio Tinto Discovery Award in
2009. He has worked on world-
class deposits; including Mt. Isa type
copper deposits in Australia, and
copper, gold and diamond mines
on four continents.
Vikas Jain
Non-Executive Director
MBA
Vikas Jain holds an MBA obtained in
the USA and has a vast experience
of around 19 years in the field of
mineral exploration, mining, oil-field
exploration and allied activities.
He is currently Managing Director
and CEO of the Indian Company
South West Pinnacle Exploration
Limited (SWPE), founded by
him in 2006 and also listed on
the National Stock Exchange,
India. Under his leadership and
able guidance, this company has
grown manifold and at present is
a premier exploration company
in India. The company started
primarily as a mineral exploration
company and progressively added
coal bed methane exploration and
production, aquifer mapping, HDD,
geophysical logging, transportation
and other geological activities
into its domain. This year SWPE
has also ventured into 3D seismic
acquisition and processing for oil
field exploration services. He also
has wide experience in open cast
mining of various minerals and allied
activities through his earlier stint
with other companies as well as his
current involvement in other family
run businesses and interests.
Avi Sthapak
Non-Executive Director
B.Tech CSE
(Infrastructure Management)
Avi is a graduate with a degree in
Computer Science Engineering
with a focus on infrastructure
management. He is currently
enrolled in a Master of Business
Administration at Curtain University
with the key areas of study including
strategy development, accounting,
global mobility and talent
acquisition, marketing, leadership
and finance. He has experience as
a Business Development Consultant
and a Junior Management
Consultant.
Stephen Gethin
Company Secretary and Alternate
Director
Stephen Gethin is a highly regarded
Director and Company Secretary
with over 23 years’ experience in
the provision of corporate legal
advice and documentation and
over 14 years’ experience in the
provision of ASX-listed secretarial
services in a range of industries,
including resources, technology
and investment. Prior to founding
a private legal practice in 2013,
he served as General Counsel
and Company Secretary of Strike
Resources Limited (ASX:SRK) and
before that held the same roles at
ERG Limited (ASX:ERG). Mr Gethin
also provides legal advice for a
number of other ASX listed and
private companies.
Atmavireshwar Sthapak
Executive Director
Vikas Jain
Non-Executive Director
Avi Sthapak
Non-Executive Director
Stephen Gethin
Company Secretary and
Alternate Director
22
Alara Resources Annual Report 2019
Management Support Team
Dinesh Aggarwal
Chief Financial Officer
Don Welty
Senior Commercial
Officer
Don Welty
Senior Commercial Officer
B.Bus Admin, Masters in Management
R. Don Welty’s career has taken
him around the globe focusing on
foundational mining investments
which have a triple bottom line:
good for the country, shareholders
and the local community.
He is comfortable interacting at
the highest levels in the private
sector and government: focusing on
mining investment programs, with
the ability to convene, communicate
with and be the catalyst for change
to influence and advocate for new
mining opportunities. He believes
in creating Mining Public-Private
Partnerships and developing new
financial economic models and
investments that meet the needs of
the countries where the programs
are being created.
He has extensive experience as
an investment advisor, with more
than twenty years of professional
investment work experience in
the Middle East. Most recently he
helped establish the Investment
Commissions of Iraq and
Afghanistan.
Mr. Welty received a B.S. in
Management (with a focus on
finance) from Brigham Young
University and has a Masters in
Management from Westminster
College. He has been Adjunct
Professor at Brigham Young
University, Westminster College
and University of Tennessee
MBA Programs.
Dinesh Aggarwal
Chief Financial Officer
FCPA, CA, CMA, FTI, DipFS
(Advanced)
Mr Aggarwal has over 20
years of experience in
Accounting, Finance and
Business Management in top
corporate positions, both in
Australia and overseas, and
is the Managing Director of
Fortuna Advisory Group.
Fortuna is an award-winning,
multi-disciplinary practice
with specialised divisions in
Tax & Business Advisory, Legal
Services, Mortgage Broking and
Financial Planning.
Mr Aggarwal advises clients in
Australia and overseas on tax
matters and business services,
and advises the Australian
operations of several multi-
nationals. He also handles
tax disputes with the ATO
including appeals to the AAT.
He is the former Chairman of
the Public Practice Committee
of CPA Western Australia
and is currently a member of
the National Public Practice
Advisory Committee of
CPA Australia.
Named as one of Australia’s
top three SME Tax Advisers
in 2015 by the Tax Institute,
Mr Aggarwal has also won
the prestigious CPA Australia
40 Under 40 Young Business
Leaders Award for 2012 and
2013. In 2016, he was awarded
the ISWA Personal Excellence
Award. In 2018 Fortuna was a
national finalist in the Australian
Accounting Awards for Best
Business Advisory Firm. The
Fortuna Group also has a
philanthropic arm - Fortuna
Foundation.
Alara Resources Annual Report 2019
23
Management Support Team
continued
Tina Newbon
Office Manager
Adv. Dip. Accounting, Adv. Dip.
Business Administration
Mrs Newbon joined Alara in 2011
as Executive Assistant to the
CEO and has since been involved
in many aspects of the business
including office administration,
human resources, corporate affairs,
finance, leasing/relocation, ASX
requirements and IT management.
Mrs Newbon is a highly experienced
administrator with over 15 years of
administration, finance and project
experience including BGC Blokpave,
Shell Australia, WA Gas Networks
and BHP Billiton.
Rexin Kamilas
Finance and Administrative Manager
BACS, M.Com, Tally
Mr. Rexin Kamilas is a business
administration officer having more
than 11 years of administration
and accounts experience in
Oman. He joined Alara in 2011 as
an administrative and accounting
assistant and was involved in
various business operations
related to administration, finance,
procurements and logistics.
Mr. Kamilas has utilized his
experiences and skills in improving
the administrative and finance
system in the organization and
providing his full support to the
team to build a robust management
system which will be the solid
foundation to the future corporate
developments.
Venkatesan Ganesan
Corporate Financial Adviser
(MBA, CPA, ACA, ACS, CBV)
Contractor, joined Alara in
September 2017 Based in Dubai.
Mr Ganesan runs a boutique
advisory services firm in Dubai
and India. He has spent over 15
years in a Big-4 financial advisory
practice and has advised a variety
of industry clients on transaction
matters. He also spent six years
in an upstream E&P business
at the start of his career. Mr
Ganesan is currently assisting
Alara in optimising development
stage capital.
Fadi Zenaty
Operations Manager
B.Sc. IMS and Business Administration
Mr. Zenaty has over 15 years of
professional experience in Saudi
Arabia in mining and construction
projects in the Middle East.
He brings a vast knowledge of
corporate operations and economic
evaluation in building projects from
the ground up.
Fadi was a key person in obtaining
the exploration and mining licenses
for Al Khnaiguiyah Zinc & Copper
and other key mining projects. He
has a wide and solid knowledge
of the governmental processes
in the Middle East. He brings a
strong track record achievement
of being able to navigate the
governmental rules and techno
mining information requirements
to ensure project success.
He has significant experience in
day to day corporate operations
related to management,
finance and engineering
requirements for the projects
that he leads. His background
also includes specialized
roles in organization systems
analysis and IT development in
improving the overall operations
of the corporations which he is
engaged in improving.
Lakshman R. Muthyam
Administrative Officer
(B. Sc. Information Technology)
Lakshman is an experienced
Administration and Information
Technology professional who
has a key role in developing and
improving corporate information
management systems and
infrastructure.
He brings a wide range of
administrative support experience
related to office management
and document control systems.
He understands the importance
of IT back-up systems and
has knowledge in information
technology systems planning and
project implementation.
Lakshman continues to build on his
professional IT certifications which
are enhancing our multi-company
Cloud-Based Office Administration
Information Systems.
Tina Newbon
Office Manager
Rexin Kamilas
Finance and Administrative
Manager
Venkatesan Ganesan
Corporate Financial
Adviser
Fadi Zenaty
Operations Manager
Lakshman R. Muthyam
Administrative Officer
24
Alara Resources Annual Report 2019
Directors’ Report
The Directors present their report on Alara Resources Limited (Company or Alara or AUQ) and the entities it controlled at the end of or during the financial
year ended 30 June 2019 (the Consolidated Entity).
REVIEW OF OPERATIONS
Al Hadeetha Copper-Gold Project
Oman
(Alara - 70%: Al Hadeetha Investments LLC – 30%, of Al Hadeetha Resources LLC (AHR))
In May 2018 a Mining License was granted for the Company’s Al Hadeetha Copper-Gold Project in Oman.
The Al Hadeetha feasibility study financial modelling was revised in June 2018 to take account of the fact that copper prices have increased >$1,000/t since the
feasibility study and more rapidly than previously forecast. The revised World Bank forecasts shows further rises as supply deficits open up. The Base Case
financial modelling shows robust returns as follows (figures in US dollars):
Forecast Revenue over 10.4 years:
Forecast EBITDA over 10.4 years:
Forecast Free Cash Flow over 10.4 years:
Project NPV:
Forecast IRR:
$561 million
$252 million
$155 million
$90 million
34%
The Base Case used a flat copper price over life-of-mine of US$7,000/t, the LME average Cash Settlement Price for February 2018. The gold price is assumed
as US$1300/oz (real).
A summary of case scenarios and associated financial returns are summarised in Tables 1 and 2 below.
Table 1. Copper and Gold prices used for Base Case, Market Case and High Case
Case Scenario
Base Case
Market Case
High Case
Based on flat Cu price equal to LME average Cash Settlement Price for
February 2018
Based on World Bank price forecast for 2018 to 20251 (excluding forecast
increase post 2025 to 7,000)
Based on investment bank projections and copper futures pricing2
Table 2. Financial Summary of Base Case, Market Case and High Case.
Cu
US$/t
7,000 for Life of Mine
Minimum 6,800
Maximum 6,900
7,050 rising to 8000
Total Revenue
US$ millions
Total Op. Ex.
US$ millions
EBITDA
US$ millions
NPV*
US$ millions
Case Scenario
Base Case
Market Case
561
553
275
275
252
244
High Case
*NPV is based on a discount rate of 6% calculated from indicative WACC and 80:20 debt to equity ratio%
309
275
622
90
85
120
Au
US$/oz
1,300
1,300
1,300
IRR %
34
32
40
Project Finance
The Company entered into a 60 million Euro Investment Agreement with SAMA Global Investments (SAMA), headquartered in Doha, Qatar.3
SAMA entered an MOU with a co-investor based in China4. SAMA also expressed interest in taking an equity stake in Alara and in Al Hadeetha Resources
LLC5. No further agreement has yet been executed with SAMA.
Other than those disclosed above and the ARL drilling finance, discussed below, neither the Company nor its related entities have entered any material financing
arrangements during the Reporting Period.
Project Contracts
McNally Bharat Engineering Company Limited (MBE) was appointed to perform the engineering work for a 1Mtpa copper concentration plant6 and associated
infrastructure. The engineering work has progressed including designing the plant layout, process flow diagrams, single line diagram and piping and
instrumentation diagram. The site layout has now been completed with key facilities demarcated. MBE appointed local contractors to commence foundation
geotechnical investigations.
Progesys appointed a full-time Muscat-based Project Manager to oversee project progress and delivery and engaged engineering and administrative support
personnel to manage the increasing workload.
1
2
3
4
5
6
Released 24 April 2018: http://pubdocs.worldbank.org/en/458391524495555669/CMO-April-2018-Forecasts.pdf
www.metalbulletin.com/Article/3785039/FORECAST-Copper-price-to-hit-8000-per-tonne-in-2018-Goldman.html. Copper contracts traded on the Shanghai Futures Exchange at approximately
51,860 yuan ($8,003) per tonne as at 20 June 2018.
See the Company’s ASX announcement “Al Hadeetha Resources executes EUR 60M Investment Agreement” dated 15 March 2019.
See the Company’s ASX announcement “Project Updates” dated 19 July 2019.
See the Company’s ASX announcement “Investment Agreement Update” dated 29 March 2019.
Alara’s ASX Announcement dated 24 January 2017 contains the information required by ASX Listing Rule 5.16 regarding the stated production target. All material assumptions underpinning the
production target as announced on that date continue to apply and have not materially changed.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 2
Alara Resources Annual Report 2019
25
Mining Contractor
Several proposals were received from local and international contract mining companies for the long-term mining contract, two of which, including Alara
Resources LLC, were shortlisted. A preliminary commercial agreement was achieved between Alara Resources LLC (ARL) and Al Hadeetha Resources LLC
with the issue of a letter of intent to award ARL the mining contract.
Project Water Supply
A local survey company was engaged to identify the most efficient pipeline route between the Project site and the sewage treatment plant proposed in partnership
with Haya Water, Oman. Three possible pipeline routes have been submitted to the Ministry of Housing.
Project Power Supply
A local electrical consultant has been engaged to conduct a survey and finalise the route of power lines between the project site and Mazoon feeder stations
located about 5km away. The specific location of the power station at the site has been determined.
Alara Resources LLC
On 26 September 2018, the Group sold a 35% interest in Alara Resources LLC (ARL) to South West Pinnacle Exploration Limited (SWPE) for OMR 60,000
(AUD $214,442). The Group retains a 35% shareholding in ARL. As a result of this transaction the accounts of ARL were de-consolidated from the accounts of
the Group. The Company’s investment in ARL is now recognised as an investment in an associate.
SWPE is a Related Party of the Company as it is controlled by Mr Vikas Jain, a Director of Alara Resources Limited. Shareholder approval of the sale pursuant
to Chapter 2E of the Corporations Act (2001) was not required as the transaction fell within an exception to the requirement to obtain approval. The Company
nevertheless decided to seek, and obtained, shareholders’ approval to this transaction on 28 November 2018 at its Annual General Meeting.
On 24 January 2019, Al Tasnim Infrastructure Services LLC (Al Tasnim) became a 30% shareholder in ARL7. ARL is now backed by three, actively engaged
shareholders with complimentary experience and a common vision for the future of Oman’s mining sector.
ARL secured a financing facility of up to OMR249,000 (~AUD$921,000) in connection with the purchase of two KORES-1200 drill rigs and associated
accessories. The drilling rigs were delivered to the Al Hadeetha Project site in September 2019, after the Reporting Period.
With a new mining law now in effect, the Omani Public Authority to cut mining (PAM) has ambitious plans to award 110 new multi-commodity exploration and
mining licences in the country.8 The procurement of the drill rigs and the provision of professional drilling services in Oman is aligned with these development
plans.
ARL was also issued with a letter of intent for a ten-year mining contract at Al Hadeetha’s Washihi-Mazzaza project site.
Mineral Tenements
The current status of all mineral tenements and applications for this Project is presented in the table below.
Licence Name
Licence Owner
Alara JV
Interest
Exploration Licence
Mining Licence within EL
Area
Date of Grant
Date of Expiry
Status
Area
Date of
Application
Status
Washihi-Mazzaza
ML 10003075.
Al Hadeetha
Resources LLC
Mullaq
Al Ajal
Al Hadeetha
Resources LLC
Al Hadeetha
Resources LLC
51%
39km2
Jan 2008
Nov 2016
Active*
3km2
2019
Active
51%
41km2
Oct 2009
Nov 2016
Active*
1km2
Jan 2013
Pending
51%
25km2
Jan 2008
Nov 2016
Active*
1.5km2
Jan 2013
Pending
*Pursuant to Ministerial decree (38/2013) which declares that the exploration licence ends when its duration ends, unless the licensee has submitted an application for a mining
licence, in which case the duration for the exploration licence extends until the date that a determination is made on the mining application.
Daris Copper-Gold Project
Oman
(Alara - 50% with option to increase to 70%: Al Tamman Trading Establishment LLC – 50%, of Daris Resources LLC (DRL))
The Daris project comprises two high grade deposits within the 587km² exploration licence, which includes two mining licence applications covering 4.5km².
The project fits well with a ‘hub and spoke’ model, which provides for processing of Daris ore at the Al Hadeetha copper concentration plant to be built 100km
to the south. However, new leach processing methods are also being investigated which could allow Daris to operate as a stand-alone project. The processing
method has been tested on deposits in Australia and South America and yielded very high recoveries of metal from both low-grade copper oxide and sulphide
ores.
The Daris East Mining Licence application, which covers an area that includes measured, indicated and inferred JORC copper resources9 was opposed by the
Ministry of Housing due to its proximity to recently allotted land. Review of a petition supporting the application lodged by Daris is underway at the Public
Authority for Mining (PAM).
7
8
9
See Alara’s ASX Announcement "Al Tasnim Acquires 30% stake in Alara JV Company" dated 24 January 2019.
See for example http://www.tradearabia.com/news/IND_351573.html
The Company has disclosed full details of these resources to investors on various occasions in a form which complies with the 2012 edition of the JORC Code. See, for example, the Company’s 2018
Annual Report to shareholders, pp 14-45 and 72-73.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 3
Directors’ Report continued 26
Alara Resources Annual Report 2019
Directors’ Report continued
The Daris 3A5 application for a Mining Licence is progressing well with the Government. Alara has been invited by the Ministry of Housing to discuss the
proposed size of the mining area.
Discussions for a joint exploration program to discover new mineralisation in Block 7 with Mineral Developments of Oman (MDO) progressed after MDO
conducted a detailed due diligence on Alara’s completed exploration programs over Block 7 and identified exploration targets for further work. While collaborative
efforts continue, no binding agreement between the parties has been reached.
Awtad Copper-Gold Project
Oman
(Alara right to subscribe for 10% initially with subsequent earn in up to 70% +, existing local shareholders = balance of shareholding of Awtad Copper LLC)
The Awtad Project comprises an area of ~497 km² (Block 8) and is located immediately adjacent to the Block 7 (Daris Copper-Gold Project). Alara has a right
to an initial 10% interest (increasing to 50-70%+) in the concession owner, Awtad Copper LLC.
Exploration previously undertaken at this project includes:
86 line kilometres of airborne VTEM, 14 line kilometres of ground IP, 169 line kilometres of ground magnetics and 202 line kilometres of high-resolution
ground magnetics.
76 RAB drill holes totalling 1,747m and 11 core drill holes totalling 299m.
Drilling results (including over the Al Mansur Prospect) were low grade in general and inconclusive.
Previous exploration identified anomalies worthy of further exploration. The fact that prospective geological formations within the licence area are under cover
of alluvial and aeolian deposits enhances the chances of further copper mineralisation.
Detailed work plans were submitted to PAM for renewal of the exploration licence, which remains pending. Meetings were held with the Company’s JV partners
in this project to register Alara’s interest in Awtad Resources LLC with the Ministry of Commerce.
Mineral Tenements
The current status of all mineral tenements and applications for this Project is presented in the table below.
Block
Name
Block 7
Block 8
Licence Owner
Alara JV
Interest
Al Tamman Trading
and Est. LLC
50% (earn in
to 70%)
Awtad Resources
LLC
10% (earn in
to 70%)
Exploration Licence
Mining Licences within EL
Area
Date of
Grant
Date of
Expiry
Status
Area
Date of
Application
587km2
Nov 2009
Feb 2016
Active*
Daris 3A5 &
East
Resubmitted
2018
Status
Pending
597km2
Nov 2009
Oct 2013
Renewal pending
NA
NA
NA
*Pursuant to Ministerial decree (38/2013) which declares that the exploration licence ends when its duration ends, unless the licensee has submitted an application for a mining
licence, in which case the duration for the exploration licence extends until the date that a determination is made on the mining application.
Khnaiguiyah Zinc-Copper Project
Saudi Arabia
The Khnaiguiyah Project includes the development and operation of an open-cut zinc-copper mine and associated infrastructure over an approximate 13-year
mine life.
Alara has invested over $30m into this Project, including:
over $3 million in payments to its former joint venture partners for transfer of the Mining Licence to the joint venture company; and
over $23 million to produce a definitive feasibility study with Proved and Probable JORC Reserves of 26.1Mt at 3.3% Zn and 0.24% Cu and a Base Case
Project NPV of $172 million at a zinc price of US$2,315/t10.
The project reached an impasse after the former licence holder, United Arabian Mining Company LLC, wrote to the Deputy Minister for Mineral Resources
asking to halt transfer of the mining licence to the JV company, as required under the JV agreement.
In December 2015, Alara announced it had been advised of the cancellation of the Khnaiguiyah Mining Licence. The cancellation became the subject of a legal
appeal by Manajem, a former JV partner of the Company. The appeal was dismissed, creating the potential for the licence to be reissued. Alara is working with
relevant parties in both the private and public sectors to prepare for a reissue of the licence. Alara funded and is now in the unique position of holding the only
bankable feasibility study for the project. Alara remains open to any reasonable solution for advancing the Project into production.
The Company has communicated with the Council of Economic Development Affairs’ Priority Project Office (PPO) in respect to this Project. These
communications were later extended to include representatives from United Arabian Mining Company and Metals Corners Holdings. The PPO is a government
initiative empowered by HRH Mohammed Bin Salman, Crown Prince of Saudi Arabia in his capacity as President of Council for Economic and Development
Affairs. The PPO was established to assist selected private sector projects that face implementation difficulties and provide them with needed support, as an
authorised escalation entity, to obtain fast-track government approvals.
South West Pinnacle JV
Oman
At the Company’s AGM on 28 November 2018 shareholders approved Alara entering into a joint venture with South West Pinnacle Exploration Limited (SWPE),
a related party, to provide drilling and mineral exploration services in Oman. SWPE is a Related Party of the Company as it is controlled by Mr Vikas Jain, a
Director of Alara Resources Limited.
10 Compared to the LME price of >$3,000/t as at 28 August 2018 and the High Case of US$2,373/t (see page 21 of the Company's 2013 Annual Report).
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 4
Directors’ Report continued Alara Resources Annual Report 2019
27
Directors’ Report continued
Under the JV agreement:
Alara Resources LLC (ARL) serves as a joint-venture vehicle. Alara holds 35% of ARL. SWPE acquired another 35% of ARL previously held by Alara.
SWPE paid an Alara Subsidiary OMR 60,000 for the transfer of the ARL shares. Alara contributed the amount of OMR 60,000 that it received from SWPE,
plus a further OMR 60,000 from its own funds to ARL, less a credit of OMR 8000 for prior expenditure.
ARL is engaged in drilling, exploration and mine development activities and offers these services to other mining and exploration companies in Oman.
ARL has already begun submitting work proposals.
AOOPL held 70% interest of which 35% was sold to SWPE.
Al Tasnim Joins Alara JV Companies
Oman
In December 2018 Alara executed a share sale agreement with Al Tasnim Infrastructure Services LLC (Al Tasnim) a member of the Al Tasnim Group, a leading
Omani construction and infrastructure business11. The Company, through its subsidiary Alara Oman Operations Pty Ltd (Alara Oman) sold a 19% shareholding
in joint venture company Al Hadeetha Resources LLC (AHR)12 to Al Tasnim for OMR 3 million (~AUD 11.028 million). The transaction was completed with the
sale price received approximately two weeks later.
Due diligence and joint venture negotiations extended over several months13 to ensure the parties were a good fit, with shared values and vision for AHR’s
current and future projects.
On 26 September 2018, the Group sold a 35% interest in Alara Resources LLC (“ARL”) to South West Pinnacle Exploration Limited (“SWPE”) for a consideration
of OMR 60,000 (AUD $214,442). The Group retains a 35% shareholding in ARL and as a result has been de-consolidated and reflected as an investment in
associate.
On 24 January 2019 Al Tasnim also became a 30% shareholder in another Alara joint venture, Alara Resources LLC (ARL), replacing the previous 30% local
shareholder in that company. ARL is the vehicle through which the Company conducts its mineral exploration services JV business with South West Pinnacle
Exploration Limited (SW Pinnacle) - see further above. Alara’s 35% shareholding in ARL remained unchanged, as did that of ARL’s other shareholder, SW
Pinnacle, which also holds 35% of ARL.
Corporate Information
Alara is a company limited by shares incorporated in Western Australia.
Cash Position
The Company’s cash position at 30 June 2019 was A$7.56 million (30 June 2018: A$3.3 million).
Company Officer Changes
On 9 January 2019 Avi Sthapak was appointed alternate Director to Mr. Atmavireshwar Sthapak. On 11 January 2019 Stephen Gethin (who was until that time
an alternate Director for Managing Director Mr Justin Richard) and Avi Sthapak were appointed Non-Executive Directors.
Principal Activities
The principal activities of entities within the Consolidated Entity during the year were the exploration, evaluation and development of mineral exploration licenses
in Oman.
Significant Changes in the State of Affairs
There have been no significant changes in the state of affairs of the Consolidated Entity save as otherwise disclosed in this Directors’ Report or the financial
statements and notes thereto.
Dividends
No dividends have been paid or declared during the financial year.
[The remainder of this page is intentionally blank]
11
12
The buyer, Al Tasnim Infrastructure, is part of the Al Tasnim Group, a leading Omani construction conglomerate with a diversified investment portfolio across multiple industry sectors, including a
600-person mining and quarrying division. Al Tasnim completed due diligence on Al Hadeetha in the third quarter of this year. Due to the size and reputation of Al Tasnim, Alara did not conduct due
diligence on the counterparty.
AHR is the vehicle through which the Company holds its interest in the Al Hadeetha Copper Project (Al Hadeetha Project).
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 5
Directors’ Report continued 28
Alara Resources Annual Report 2019
Operating Results
Consolidated
Total revenue
Total expenses
Profit/Loss before tax
Income tax benefit
Profit/Loss after tax
Loss per Share
Consolidated
Basic and Diluted profit/(loss) per share (cents)
Weighted average number of ordinary shares outstanding during the year used in the
calculation of basic loss per share
Cash Flows
Consolidated
Net cash flow used in operating activities
Net cash flow from investing activities
Net cash flow provided by financing activities
Net change in cash held
Cash held at year end
Financial Position
Outlined below is the Consolidated Entity’s Financial Position and prior year comparison.
Consolidated Entity
Cash
Trade and other receivables
Exploration and evaluation
Mine properties & Development assets
Investment in Associate
Term deposits
Other current assets
Non-Current assets
Total assets
Trade and other payables
Unearned Income
Financial liabilities
Provisions
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Parent interest
Non-controlling interest
Total equity
2019
$
263,249
(582,368)
(319,119)
-
(319,119)
2019
(0.07)
2018
$
26,817
(750,603)
(723,786)
-
(723,786)
2018
(0.011)
629,017,589
614,087,452
2019
$
(776,556)
5,138,340
(157,155)
4,204,629
7,562,407
2019
$
7,562,407
87,823
4,919,660
6,534,088
162,415
4,696,887
129,479
657,161
24,749,920
624,424
1,624,382
644,232
44,654
2,937,692
2018
$
1,294,000
(1,139,922)
1,296,159
1,450,237
3,346,943
2018
$
3,346,943
12,896
9,415,666
-
-
-
70,418
-
12,845,923
66,850
1,624,382
583,756
73,265
2,348,253
21,812,228
10,497,670
66,107,405
10,241,067
(54,714,409)
21,634,063
178,165
66,107,405
906,345
(54,259,832)
12,753,918
(2,256,248)
21,812,228
10,497,670
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 6
Directors’ Report continued Alara Resources Annual Report 2019
29
Securities in the Company
Issued Capital
Fully paid ordinary shares, listed options and unlisted options on issue in the Company as at the date of this report are as follows:
Fully paid ordinary shares
quoted on ASX
629,017,589
629,017,589
Listed
options
-
-
Unlisted
options
3,000,000
3,000,000
Total
632,017,589
632,017,589
Total
Unlisted Options
During and subsequent to the end of the financial year, no unlisted options were issued.
Likely Developments and Expected Results
The Consolidated Entity intends to construct mining infrastructure for its Al Hadeetha Copper Gold Project, with the expected construction period being 15
months. Thereafter the Company intends to commence production and sale of copper and gold from the Al Hadeetha mine. Financial projections for the Al
Hadeetha Project are set out on page 2 of this Report. The Company intends to continue exploration, evaluation and development activities in relation to its
other mineral exploration licences in Oman in future years. The results of these activities depend on a range of technical and economic factors and also industry,
geographic and company specific issues.
Environmental Regulation and Performance
The Consolidated Entity holds licences and abides by Acts and Regulations issued by the relevant mining and environmental protection authorities of the
countries in which the Consolidated Entity operates. These licences, Acts and Regulations specify limits and regulate the management of discharges to the air,
surface waters and groundwater associated with exploration and mining operations as well as the storage and use of hazardous materials. There have been
no significant breaches of the Consolidated Entity’s licence conditions.
[The remainder of this page is intentionally blank]
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 7
Directors’ Report continued 30
Alara Resources Annual Report 2019
Board of Directors
The names and details of the directors of the Company in office during the financial year and until the date of this report are as follows.
James D. Phipps
BA (Philosophy), JD (Law)
Experience
Non-Executive Chairman
Appointed Chairman 31 July 2015; Appointed Director 1 November 2014
Previously Alternate Director to HRH Prince Abdullah (28 October 2013 to 1 November 2014)
James D. Phipps is a strategic advisor, entrepreneur, angel investor and people person. Jim practiced law (international commercial matters involving more
than 67 countries) in a big law firm environment (Jones Day Reavis & Pogue and Wiley Rein LLP) for 10 years and then moved over to the business side of the
house, where his work has involved business leadership, governance, entrepreneurship and strategic consulting. Jim has served on the boards of numerous
publicly traded and closely held companies across a number of industries, including mining/mining exploration (copper, zinc, gold and silver), heavy industry
(paper), consumer goods (paper, aluminum foil), infrastructure development and O&M (drinking water, waste water, storm water, etc.), technology (gaming and
social media), sports entertainment (English football, gaming, fantasy football, sports talk radio), fitness (establishment of the largest MMA gym in the Middle
East) and film making ("Dave Made a Maze"). Jim has headed up various board committees including executive, nomination and remuneration, audit and risk.
Jim currently serves on the board of MMA Global, Inc. (US OTC: Pink Sheets: LUSI), having been appointed in October 2018. Jim has conducted business on
four continents and has over 30 years of experience involving the Middle East. Jim is fluent in Arabic and lived full-time in the Arab world for about 18 years (15
years in Saudi Arabia and 3 years in Iraq). Jim is a combat veteran of the U.S. Army, having served in Operations Desert Shield and Desert Storm from 1990-
1991, on the front line with the Brave Rifles of the 3rd Armoured Cavalry Regiment. Jim also served three years as a civilian in harm’s way in Baghdad, Iraq
from 2008-2010. Jim holds a Bachelor of Arts in Philosophy (1992) and Juris Doctorate (1996) both from Brigham Young University. In 1994 and 1995, Jim
studied Islamic shariah as a Fulbright Fellow at the King Faisal Centre for Research and Islamic Studies in Riyadh, Saudi Arabia.
Special Responsibilities
Chairman of the Remuneration and Nomination Committee and Member of the Audit Committee.
Other Directorships in Listed Companies in Past 3 Years
Saudi Paper Manufacturing Company (Saudi Stock Exchange - “Tadawul”: Code 2300) – November 2011 to June 2016.
Justin J Richard
MBA, LLB, Grad Dip ACG, FGIA, FCIS, FAusIMM
Experience
Managing Director
Appointed 16 June 2015
Justin Richard is a corporate lawyer and accomplished business manager. He joined Alara in 2011, and for the past eight years has been working in the Middle
East as CEO of Alara’s international joint venture companies Al Hadeetha Resources, Daris Resources and Alara Resources.
Since Mr Richard’s appointment as Managing Director, Alara has completed a feasibility study, announced a maiden ore reserve statement, and secured a
mining licence for the Al Hadeetha Copper Gold project in Oman. He has established key business relationships for the Company as it moves to expand its
business beyond mineral exploration to mine development and production of copper concentrate. Prior to joining Alara, Mr Richard worked with UGL Limited
(Resources Division), Bateman Engineering and Minter Ellison Lawyers (Insurance & Corporate Risk, and Construction, Engineering and Infrastructure). He
has an MBA from London Business School, a law degree from the University of Western Australia and is a Fellow of the Governance Institute of Australia and
the Australasian Institute of Mining and Metallurgy.
Alternate Director
On 1 May 2018, Justin Richard appointed Stephen Gethin as his Alternate Director14. Mr Gethin’s experience and qualifications are set out below.
Other Directorships in Listed Companies in Past 3 Years
Nil
Atmavireshwar Sthapak
Bachelor of Applied Science and Master of Technology, Applied Geology
Experience
Executive Director
Appointed Executive Director
Previously Non-Executive Director (22 September 2015 to 3 February 2016)
Atmavireshwar Sthapak is a geologist specializing in mineral resource exploration and evaluation studies. He joined Alara in 2011, making valuable contributions
to the Company as an Exploration Manager and a Study Manager based in Muscat; including discovery of large VMS copper mineralisation extensions at the
Washihi project in Oman and recent resource upgrade at Washihi. Prior to Alara, his career spanned 10 years with ACC / ACC-CRA Ltd and 10 years with Rio
Tinto (Australasia) where he was awarded a Rio Tinto Discovery Award in 2009. He has worked on world-class deposits; including Mt. Isa type copper deposits
in Australia, and copper, gold and diamond mines on four continents.
Special Responsibilities
Member of the Audit Committee and Remuneration and Nomination Committee.
Other Directorships in Listed Companies in Past 3 Years
Nil
14 Pursuant to Clause 10.1 of the Company’s Constitution.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 8
Directors’ Report continued Alara Resources Annual Report 2019
31
Vikas Jain
MBA
Non-Executive Director
Appointed 6 April 2016
Experience
Vikas Jain holds an MBA obtained in the USA and has a vast experience of around 19 years in the field of mineral exploration, mining, oil-field exploration and
allied activities. He is currently Managing Director and CEO of the Indian Company South West Pinnacle Exploration Limited (SWPE), founded by him in 2006
and also listed on the National Stock Exchange, India. Under his leadership and able guidance, this company has grown manifold and at present is a premier
exploration company in India. The company started primarily as a mineral exploration company and progressively added coal bed methane exploration and
production, aquifer mapping, HDD, geophysical logging, transportation and other geological activities into its domain. This year SWPE has also ventured into
3D seismic acquisition and processing for oil field exploration services. He also has wide experience in open cast mining of various minerals and allied activities
through his earlier stint with other companies as well as his current involvement in other family run businesses and interests.
Special Responsibilities
Chairman of the Audit Committee and Member of the Remuneration and Nomination Committee.
Other Directorships in Listed Companies in Past 3 Years
South West Pinnacle Exploration Limited, listed on the National Stock Exchange, Emerge Platform in February 2018, India.
Stephen Gethin
Barrister and Solicitor of the Supreme Court of Western Australia and of the High Court of Australia
Alternate Director to Justin Richard
Appointed 1 May 2018
Experience
Stephen Gethin is a highly regarded Director and Company Secretary with over 23 years’ experience in the provision of corporate legal advice and
documentation and over 14 years’ experience in the provision of ASX-listed secretarial services in a range of industries, including resources, technology and
investment. Prior to founding a private legal practice in 2013, he served as General Counsel and Company Secretary of Strike Resources Limited (ASX:SRK)
and before that held the same roles at ERG Limited (ASX:ERG). Mr Gethin also provides legal advice for a number of other ASX listed and private companies.
Other Directorships in Listed Companies in Past 3 Years
Nil
Avi Sthapak
Non-Executive Director
Appointed 11 January 2019
Experience
Avi is a graduate with a degree in Computer Science Engineering with a focus on infrastructure management. He is currently enrolled in a Master of Business
Administration with the key areas of study including strategy development, accounting, global mobility and talent acquisition, marketing, leadership and finance.
He has experience as a Business Development Consultant and a Junior Management Consultant.
Other Directorships in Listed Companies in Past 3 Years
Nil
Retired Directors
All the directors held office during the year and up to the date of this report.
Company Secretary
Stephen Gethin
Barrister and Solicitor of the Supreme Court of Western Australia and of the High Court of Australia
Experience
Refer to Mr Gethin’s details above.
Directors’ Interests in Shares and Options
Company Secretary
Appointed 1 May 2018
As at the date of this report, the relevant interests of the Directors in shares and options held in the Company are:
James Phipps
Justin Richard
Atmavireshwar Sthapak
Vikas Jain
Stephen Gethin
Fully Paid Ordinary Shares
-
34,119,52615
2,544,83816
37,745,93017
-
Options
-
-
-
-
-
15 Includes shares held/acquired by Mr Richard’s spouse.
16 Refer Alara’s 3 December 2018 ASX Announcement: Appendix 3Y.
17 Refer Alara’s 29 March 2019 ASX Announcement: Appendix 3Y.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 9
Directors’ Report continued 32
Alara Resources Annual Report 2019
Directors’ Meetings
The number of meetings and resolutions of directors (including meetings of committees of directors) held during the year and the number of meetings (or
resolutions) attended by each director were as follows:
Name of Director
Appointment / Resignation
James Phipps
Justin Richard
Atmavireshwar
Sthapak
Vikas Jain
Avi Sthapak
Stephen Gethin18
Audit Committee
Appointed 1 November 2014;
appointed member of
Audit Committee and
Remuneration Committee
30 June 2016
Appointed 16 June 2015
Appointed 22 September 2015
Appointed 6 April 2016
Appointed 11 January 2019
Appointed 1 May 2018
Board
Audit Committee
Meetings
Attended
Maximum
Possible
Meetings
Meetings
Attended
Maximum
Possible
Meetings
Remuneration and
Nomination Committee
Maximum
Possible
Meetings
Meetings
Attended
11
12
10
12
2
6
12
12
12
12
6
6
4
3
3
-
4
4
4
-
2
2
2
2
-
2
2
2
2
-
The Audit Committee currently comprises Non-Executive Directors, Vikas Jain (as Chairman) (since 6 April 2016), Non-Executive Director and Chairman of the
Board James Phipps (since 30 June 2015) and Executive Director Atmavireshwar Sthapak (since 28 September 2016).
The Audit Committee has a formal charter to prescribe its objectives, duties and responsibilities, access and authority, composition, membership requirements
of the Committee and other administrative matters. Its function includes reviewing and approving the audited annual and reviewed half-yearly financial reports,
ensuring a risk management framework is in place, reviewing and monitoring compliance issues, reviewing reports from management and matters related to
the external auditor. The Audit Committee Charter may be viewed and downloaded from the Company’s website.
[The remainder of this page is intentionally blank]
18 Mr Gethin attended all 12 Board meetings in the Reporting Period in his capacity as Company Secretary. He also attended all Board meetings since his appointment
as Non-Executive Director in January 2016 in his capacity as such. Before his transition from Alternate Director to Non-Executive Director he did not attend any
Board meetings in his capacity as Alternate Director.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 10
Directors’ Report continued Alara Resources Annual Report 2019
33
REMUNERATION REPORT
The following information in the Remuneration Report has been audited. This Remuneration Report details the nature and amount of remuneration for each
Director and Company Executive (being a company secretary or senior managers with authority and responsibility for planning, directing and controlling the
major activities of the Company or Consolidated entity, directly or indirectly) (Key Management Personnel or KMP) of the Consolidated Entity in respect of the
financial year ended 30 June 2019.
Key Management Personnel
Directors
James Phipps
Justin Richard
Atmavireshwar Sthapak
Vikas Jain
Stephen Gethin
Avi Sthapak
Executives
Stephen Gethin
Non-Executive Director (appointed 1 November 2014); Non-Executive Chairman (from 31 July 2015);
Alternate Director to HRH Prince Abdullah (until 1 November 2014)
Managing Director (appointed 16 June 2015); Country Manager, Saudi Arabia and Oman
Executive Director (first appointed 22 September 2015)
Non-Executive Director (appointed 31 March 2016)
Non-Executive Director (appointed 11 January 2019)
Non-Executive Director (appointed 11 January 2019)
Company Secretary (appointed 1 May 2018)
Remuneration and Nomination Committee
The Remuneration and Nomination Committee currently comprises Non-Executive Chairman, James Phipps (member since 30 June 2015 and Chairman since
31 July 2015) and Non-Executive Director Vikas Jain (since 6 April 2016) and Executive Director Atmavireshwar Sthapak (since 28 June 2016).
The Remuneration and Nomination Committee has a formal charter to prescribe its purpose, key responsibilities, composition, membership requirements,
powers and other administrative matters. The Committee has a remuneration function (with key responsibilities to make recommendations to the Board on
policy governing the remuneration benefits of the Managing Director and Executive Directors, including equity-based remuneration and assist the Managing
Director to determine the remuneration benefits of senior management and advise on those determinations) and a nomination function (with key responsibilities
to make recommendations to the Board as to various Board matters including the necessary and desirable qualifications, experience and competencies of
Directors and the extent to which these are reflected in the Board, the appointment of the Chairman and Managing Director, the development and review of
Board succession plans and addressing Board diversity). The Remuneration and Nomination Committee Charter may be viewed and downloaded from the
Company’s website.
Remuneration Policy
The Board (with guidance from the Remuneration and Nomination Committee) determines the remuneration structure of all Key Management Personnel having
regard to the Consolidated Entity’s strategic objectives, scale and scope of operations and other relevant factors, including experience and qualifications, length
of service, market practice, the duties and accountability of Key Management Personnel and the objective of maintaining a balanced Board which has appropriate
expertise and experience, at a reasonable cost to the Company. The Board recognises that the performance of the Company depends upon the quality of its
Directors and Executives. To achieve its financial and operating objectives, the Company must attract, motivate and retain highly skilled Directors and
Executives.
The Company embodies the following principles in its remuneration framework:
Provide competitive rewards to attract and retain high calibre Executives.
Structure remuneration at a level that reflects the Executive’s duties and accountabilities and is competitive.
Remuneration Structure
The structure of Non-Executive Director and Executive Director remuneration is separate and distinct.
Director Remuneration
Objective
The Board seeks to set aggregate remuneration (for directors) at a level which provides the Company with the ability to attract and retain directors of the highest
calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
The Company’s constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to
time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The latest determination was at
the General Meeting held on 26 May 2011 where shareholders approved an aggregate remuneration of $275,000 per year. The amount of aggregate
remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually. The Board considers
fees paid to non-executive directors of comparable companies when undertaking the annual review process. Each Non-Executive Director receives a fee for
being a director of the Company and for sitting on relevant board committees. The fee size is commensurate with the workload and responsibilities undertaken.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 11
Directors’ Report continued 34
Alara Resources Annual Report 2019
Managing Director and Senior Executive Remuneration
Objective
The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and
so as to ensure total remuneration is competitive by market standards. Formal employment contracts are entered into with the Managing Director and senior
executives. Details of these contracts are outlined later in this report.
Consequences of Company Performance on Shareholder Wealth
In considering the Company’s performance and benefits for shareholder wealth, the Board have regard to the following information in relation to the current
financial year and the previous four financial years:
–Total Equity
Basic earnings/(loss) per share – cents
$21.8m
(0.07)
$10.4m
(0.11)
$9.5m
(0.04)
$8.4m
(7.42)
$37.7m
(0.67)
Net Profit/(Loss) attributable to members
(454,577)
(691,512)
(258,526)
(30,595,088)
(1,661,238)
2019
2018
2017
2016
2015
Market Capitalisation
Fixed Remuneration
$15.1m
$18.2m
$8.4m
$14m
$4m
During the financial year, the Key Management Personnel of the Company are paid a fixed base salary/fee per annum plus applicable employer superannuation
contributions, as detailed below (Details of Remuneration Provided to Key Management Personnel).
Performance Related Benefits/Variable Remuneration
Performance related benefits/variable remuneration payable to Key Management Personnel is disclosed in the table Details of Remuneration Provided to Key
Management Personnel. Justin Richard was paid expat allowances, including house, school, travel and medical insurance and Atmavireshwar Sthapak was
paid allowances including house, travel and medical insurance.
Special Exertions and Reimbursements
Pursuant to the Company’s Constitution, each Director is entitled to receive:
Payment for the performance of extra services or the undertaking of special exertions at the request of the Board and for the purposes of the Company.
Payment for reimbursement of all reasonable expenses (including traveling and accommodation expenses) incurred by a Director for the purpose of
attending meetings of the Company or the Board, on the business of the Company, or in carrying out duties as a Director.
Post-Employment Benefits
Other than employer contributions to nominated complying superannuation funds or gratuity of Key Management Personnel (where applicable) and entitlements
to accrued unused annual and long service leave (where applicable), the Company does not presently provide retirement benefits to Key Management
Personnel.
The Company notes that shareholder approval is required where a Company proposes to make a “termination payment” (for example, a payment in lieu of
notice, a payment for a post-employment restraint and payments made as a result of the automatic or accelerated vesting of share based payments) in excess
of one year’s “base salary” (defined as the average base salary over the previous 3 years) to a director or any person who holds a managerial or executive
office.
Long-Term Benefits
Other than early termination benefits disclosed in ‘Employment Contracts’ below, Key Management Personnel have no right to termination payments save for
payment of accrued unused annual and long service and/or end of service leave (where applicable).
[The remainder of this page is intentionally blank]
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 12
Directors’ Report continued Alara Resources Annual Report 2019
35
Details of Remuneration Provided to Key Management Personnel
Short-term benefits
Cash payments
Post-employment
benefits
Other long-
term benefits
Equity
based
benefits
Key Management
Person
Perfor-
mance
based
At risk
STI
Options
related
Salary,
and fees
Allo-
wances(i)
Cash
Bonus
Non-
cash(ii)
Fixed
Other(iii)
Super-
annuation
Termi-
nation
2019
%
%
%
%
$
$
$
$
Executive Directors:
Justin Richard
Atmavireshwar
Sthapak
-
-
100%
100%
Non-Executive Directors:
James Phipps
Vikas Jain
Stephen Gethin
Avi Sthapak
-
-
-
-
100%
100%
-
-
Company Secretary:
Stephen Gethin(iv)
-
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
374,101
160,307
249,508
28,305
75,000
50,000
-
-
39,105
-
-
-
-
-
-
-
-
-
-
-
-
23,440
1,400
-
-
-
-
-
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
Other Options
Total
$
$
$
12,486
10,320
-
-
-
-
-
-
-
-
-
-
-
-
570,334
289,533
75,000
50,000
-
-
39,105
Notes:
(i)
Allowances is based on the executive agreement and may include company car allowance,
rent allowance and security bond, and school allowance received from subsidiaries and
related joint venture entities.
(iii) Other short-term benefits consist of exchange gain/(loss) due to foreign currency translation
from Oman Riyal to Australia Dollars to Australian Dollars on Mr Richard’s salary.
(iv) Appointed 1 May 2018. Remuneration, in his capacity as Company Secretary, paid to Fortuna
(ii) Non-cash benefits include net leave and/or end of service gratuity accrued or paid pursuant to
Advisory Group.
relevant labour laws.
Short-term benefits
Cash payments
Post-employment
benefits
Other
long-
term
benefits
Equity
based
benefits
Total
End of
Servic
e(iv) /
Termi-
nation
Other Options
Perfor-
mance
based
%
Fixed
%
Option
s
related
At risk
STI
Salary,
and fees
Allo-
wances(i)
Cash
Bonus
Non-
cash(ii) Other(iii)
Super-
annuation
%
%
$
$
$
$
$
$
$
$
$
$
Executive Directors:
-
-
100%
100%
Non-Executive Directors:
-
-
-
100%
100%
100%
Company Secretary:
-
-
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
282,150
151,104
168,797
25,908
75,000
50,000
-
110,220
7,110
-
-
-
-
-
-
-
-
-
-
-
-
22,652
12,035
64,102
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
537,701
189,047
75,000
50,000
-
110,220
7,110
Key Management Person
2018
Justin Richard
Atmavireshwar Sthapak(v)
James Phipps
Vikas Jain(vi)
Stephen Gethin
Ian Gregory(vii)
Stephen Gethin
Notes:
(i)
Allowances are based on the executive agreement and may include company car allowance,
rent allowance and security bond, and school allowance received from subsidiaries and
related joint venture entities.
(ii) Non-cash benefits include net annual leave expensed but not paid during the year.
(iii) Other short-term benefits consist of exchange gain/(loss) due to foreign
currency translation from Oman Riyal to Australia Dollars and Saudi Riyal
to Australian Dollars on Mr Richard’s salary.
Equity Based Benefits
(iv) Under Omani labour law, an End of Service Gratuity is payable upon termination of employment.
(v) Appointed 2 September 2015 with remuneration and allowances commencing January 2016.
(vi) Appointed 6 April 2016
(vii) Appointed 30 June 2015, remuneration paid to Corporate Board Services.
The Company has not provided any equity based benefits (e.g. grant of shares or options) to Key Management Personnel during the financial year. No shares
were issued as a result of the exercise of options held by Key Management Personnel during the financial year.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 13
Directors’ Report continued 36
Alara Resources Annual Report 2019
Options Lapsed During the Year
During and subsequent to the end of the financial year, no listed or unlisted options lapsed without being exercised.
Details of Shares Held by Key Management Personnel
2019
Name of Director/KMP
Justin Richard
Atmavireshwar Sthapak(ii)
James Phipps
Vikas Jain
Avi Sthapak)
Stephen Gethin(iv)
Ordinary Fully Paid Shares
Balance at
1 July 2018
Balance at
appointment
33,369,526
1,951,451
-
34,285,230
Net change
750,000
593,387
-
3,460,700
-
-
Ordinary Fully Paid Shares
Balance at
cessation
Balance at
30 June 2019
34,119,526(i)
2,544,838
-
37,745,930
-
Balance at
1 July 2017
Balance at
appointment
2018
Name of Director/KMP
Justin Richard
Atmavireshwar Sthapak(ii)
James Phipps
Vikas Jain
Ian Gregory(iii)
Stephen Gethin(iv)
Notes:
(i) Includes shares held / acquired by Mr Richard’s spouse. Mr Richard submitted a request for trading approval to the Company on 2 occasions during the period.
(ii) Mr Sthapak submitted a request for trading approval to the Company on 1 occasion during the relevant period.
2,612,489
1,051,451
-
-
-
-
30,757,037
900,000
-
34,285,230
-
Balance at
cessation
(iii) Resigned 30 April 2018.
Net change
-
-
Balance at
30 June 2018
33,369,526(i)
1,951,451
-
34,285,230
-
(iv) Appointed 1 May 2018.
[The remainder of this page is intentionally blank]
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 14
Directors’ Report continued Alara Resources Annual Report 2019
37
Details of Options Held by Key Management Personnel
2019
Name of
Director/KMP
Justin Richard
Atmavireshwar
Sthapak
James Phipps
Vikas Jain
Stephen Gethin(i)
Avi Sthapak
2018
Name of
Director/KMP
Justin Richard
Atmavireshwar
Sthapak
James Phipps
Vikas Jain
Stephen Gethin(i)
Ian Gregory(ii)
Balance at
1 July 2018
-
-
Granted
-
-
Exercised
-
-
Acquired
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
1 July 2017
-
-
Granted
-
-
Exercised
-
-
Acquired
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
Commencement
/
Cessation
-
-
Balance at
Commencement
/
Cessation
-
-
Balance at
30 June
2019
-
-
-
-
-
Balance at
30 June
2018
-
-
-
-
-
Lapsed /
Cancelled
-
-
-
-
-
-
Lapsed /
Cancelled
-
-
-
-
-
-
Granted
and
vested
during
year
-
-
Vested and
exercisable
at 30 June
2019
-
-
-
-
-
-
-
-
-
-
Granted
and
vested
during
year
-
-
Vested and
exercisable
at 30 June
2018
-
-
-
-
-
-
-
-
-
-
Notes: (ii) Appointed 1 May 2018. (ii) Resigned 30 April 2018.
Employment Contracts
(a)
Managing Director/CEO – Justin Richard
Justin Richard was the Company’s Legal & Commercial Manager since August 2011 and Alara’s Country Manager for Saudi Arabia since November 2012 and
Oman since December 2013. He was appointed Managing Director on 16 June 2015. The terms of his employment contract were carried over from his previous
agreement contract with no increase in salary or allowance, the material terms of which are as follows:
One-year term with annual base salary of A$374,101 (subject to adjustments for exchange rate variations* for salary paid in Omani Rials). His employment
contract was subsequently extended on the same terms indefinitely;
Expatriate allowances (including housing, school and travel) totalling approximately A$175,000 per annum (subject to adjustments for exchange rate
variations*);
Provision of medical insurance cover;
Standard annual leave (20 days) and personal/sick leave (10 days paid) entitlements plus any additional entitlements prescribed under relevant Labour
Law;
Compulsory statutory ‘end of service’ payments due under Omani Law; and
One month’s notice of termination within first six months, subject to repatriation provisions which total approximately three months remuneration.
*Exchange rate variations based on rates prevailing at the time the expatriate assignments commenced.
(b)
Technical Director – Atmavireshwar Sthapak
Atmavireshwar Sthapak was appointed Non-Executive Director on 22 September 2015 and subsequently appointed as Executive Director on 3 February 2016.
The material terms of his contract are as follows19:
An annual base salary of OMR 67,200 per annum;
Use of a company car;
Provision of medical insurance cover;
Allowances totalling up to OMR 10,200 per annum;
Compulsory statutory ‘end of service’ payments due under Oman Labour Law;
Standard annual leave (20 days) and personal/sick leave (10 days paid) entitlements plus any additional entitlements prescribed under Oman Labour
Law; and
Either party may terminate the agreement by providing three months’ notice.
19 Refer Alara’s 3 February 2016 ASX Announcement: "Appointment of Executive Director".
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 15
Directors’ Report continued 38
Alara Resources Annual Report 2019
(c)
Other Executives
Details of the material terms of formal employment/consultancy agreements (as the case may be) between the Company and other Key Management Personnel
during the period are as follows:
Key Management
Personnel and
Position(s) Held
Stephen Gethin
Director and Company
Secretary
Relevant Date(s)
Base Salary/Fees per annum
Other Terms
1 May 2018
(commencement date)
$39,105 plus GST per annum. (The Company pays
Fortuna Advisory group $110,400 as a combined
amount for Company Secretarial and Chief Financial
Officer services. Mr Gethin is a consultant to Fortuna
Advisory Group through Fortuna Legal Pty Ltd, of which
he is a director. Of the annual fee received by Fortuna
Advisory Group, it pays Fortuna Legal $39,105).
Initially appointed under a one year
fixed-term contract expiring on 30
April 2019, reviewable at the end of
the year, extended on the same terms
for an additional year expiring on 30
April 2020.
Other Benefits Provided to Key Management Personnel
No Key Management Personnel has during or since the end of the financial year, received or become entitled to receive a benefit, other than a remuneration
benefit as disclosed above, by reason of a contract made by the Company or a related entity with the Director or with a firm of which he is a member, or with a
Company in which he has a substantial interest. There were no loans to directors or executives during the reporting period.
On 26 September 2018, the Group sold a 35% interest in Alara Resources LLC (ARL) to South West Pinnacle Exploration Limited (SWPE) for a consideration
of OMR 60,000 (AUD $214,442). The Group retains a 35% shareholding in ARL and as a result has been de-consolidated and reflected as an investment in
associate.
SWPE is a Related Party of the Company as it is controlled by Mr Vikas Jain, a Director of Alara Resources Limited. Shareholder approval of the sale pursuant
to Chapter 2E of the Corporations Act (2001) was not required as the transaction fell within an exception to the requirement to obtain approval. The Company
nevertheless decided to seek, and obtained, shareholders’ approval on 28 November 2018 at the Annual General Meeting.
Employee Share Option Plan
The Company has an Employee Share Option Plan (the ESOP) which was most recently approved by shareholders at the 2014 Annual General Meeting held
on 19 November 2014. The ESOP was developed to assist in the recruitment, reward, retention and motivation of employees (excluding Directors) of Alara.
Under the ESOP, the Board will nominate personnel to participate and will offer options to subscribe for shares to those personnel. A summary of the terms of
ESOP is set out in Annexure A to Alara’s Notice of Annual General Meeting and Explanatory Statement dated 2 October 2014. No securities were issued to
KMP under the ESOP during the financial year (2018: Nil).
Director Loan Agreement
There were no loan agreements with the Directors during the year.
Securities Trading Policy
The Company has a Securities Trading Policy, a copy of which is available for viewing and downloading from the Company’s website.
Voting and Comments on the Remuneration Report at the 2018 Annual General Meeting
At the Company’s most recent (2018) Annual General Meeting (AGM), a resolution to adopt the 2018 Remuneration Report was put to a vote and passed
unanimously on a show of hands with the proxies received also indicating majority (95.74%) support in favour of adopting the Remuneration Report.20 No
comments were made on the Remuneration Report at the AGM.
Engagement of Remuneration Consultants
The Company engaged a remuneration consultant Godfrey Remuneration Group Pty Limited to provide remuneration recommendations in relation to the
remuneration of the Managing Director and the Non-Executive Directors during the year.
The Board has established a policy for engaging external remuneration consultants which includes, inter alia, that the Remuneration and Nomination Committee
be responsible for approving all engagements of and executing contracts to engage remuneration consultants and for receiving remuneration recommendations
from remuneration consultants regarding Key Management Personnel and to ensure that the making of remuneration recommendations would be free from
undue influence by the member or members of the key management personnel to whom the recommendation relates.
The policy was complied with in relation to the above appointment. In the case of the appointment of this remuneration consultant all communications between
the Company and the consultant were handled on the Company’s part by the Chairman of the Remuneration and Nomination Committee (Committee
Chairman) who is also the Chairman of the Board. The Committee Chairman is satisfied that there was no undue influence on the remuneration consultant by
any member of key management personnel to whom the remuneration consultant’s recommendations related. The remuneration consultant included with its
remuneration recommendation a declaration that its recommendation was made free from undue influence by the members of the key management personnel
to whom the recommendation related. The remuneration consultant is a leading and highly respected consultant within the Australian listed company
remuneration advisory field.
20 Refer Alara’s 17 November 2017 ASX Announcement: Results of Meeting.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 16
Directors’ Report continued Alara Resources Annual Report 2019
39
For the reasons specified above the Board is satisfied that the remuneration recommendations were made free from undue influence by the members of key
management personnel to whom they relate. The remuneration consultant did not provide any other kind of advice to the Company. The Company paid the
remuneration consultant $16,000 plus GST for its remuneration recommendation.
This concludes the audited Remuneration Report.
Directors’ and Officers’ Insurance
The Company had a policy of Directors’ and Officers’ Insurance until the policy expired during the period (Former D&O Policy). The Company’s insurer withdrew
from the Directors’ and Officers’ Insurance market and did not offer terms for renewing the that Policy. The Company engaged two brokers to endeavour to
source alternative Directors’ and Officers’ Insurance. Quotes for replacement insurance were obtained, however these were significantly higher than the premium
payable under the Former D&O Policy. The Company took advice from its brokers about the reason for the level of the quotes. The Directors were satisfied that
despite the Company’s reduced risk profile, the cost of obtaining Directors’ and Officers’ Insurance had increased due to a hardening in the market for insurance
of the relevant kind.
The Directors are keeping the market for Directors’ and Officers’ Insurance under review and will periodically consider whether the Company should take out a
new policy of Directors’ and Officers’ Insurance.
Directors’ Deeds
In addition to the rights of indemnity provided under the Company’s Constitution (to the extent permitted by the Corporations Act), the Company has also entered
into a deed with each of the Directors (Officers) to regulate certain matters between the Company and each Officer, both during the time the Officer holds office
and after the Officer ceases to be an officer of the Company, including the following matters:
The Company’s obligation to indemnify an Officer for liabilities or legal costs incurred as an officer of the Company (to the extent permitted by the
Corporations Act).
Subject to the terms of the deed and the Corporations Act, the Company may advance monies to Officers to meet any costs or expenses of the Officer
incurred in circumstances relating to the indemnities provided under the deed and before the outcome of legal proceedings brought against the Officer.
Legal Proceedings on Behalf of Consolidated Entity (Derivative Actions)
Except for the legal proceedings in Saudi Arabia as noted above, no person has applied for leave of a court to bring proceedings on behalf of the Consolidated
Entity or intervene in any proceedings to which the Consolidated Entity is a party for the purpose of taking responsibility on behalf of the Consolidated Entity for
all or any part of such proceedings and the Consolidated Entity was not a party to any such proceedings during and since the financial year.
Auditor
Details of the amounts paid or payable to the Company’s auditors (Bentleys Audit & Corporate (WA) Pty Ltd for 30 June 2019 and RSM Chartered Accountants
for the Oman entity audits) for audit and non-audit services (paid to a related party of Bentleys Audit and Corporate (WA) Pty Ltd) provided during the financial
year are set out below (refer to Note 5):
Audit and Review Fees
$
36,072
Fees for Other Non-Audit Services
$
–
Total
$
36,072
The Board is satisfied that the provision of non-audit services by the auditors during the year is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The Board is satisfied that the nature of the non-audit services disclosed above did not compromise the general
principles relating to auditor independence as set out in the Institute of Chartered Accountants in Australia and APES 110 Code of Ethics for Professional
Accountants, including reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as advocate
for the Company or jointly sharing economic risk and rewards.
Bentleys Audit & Corporate (WA) Pty Ltd continue in office in accordance with section 327B of the Corporations Act 2001.
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 forms part of this Directors Report and is set
out on page 21. This relates to the Audit Report, where the Auditors state that they have issued an Independence Declaration.
Events Subsequent to Reporting Date
The Directors are not aware of any matters or circumstances at the date of this Directors’ Report, other than those referred to in this Directors’ Report or the
financial statements or notes thereto, that have significantly affected or may significantly affect the operations, the results of operations or the state of affairs of
the Company and Consolidated Entity in subsequent financial years.
Signed for and on behalf of the Directors in accordance with a resolution of the Board:
Justin Richard
Managing Director
27 September 2019
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 17
Directors’ Report continued 40
Alara Resources Annual Report 2019
Auditor’s Independence Declaration
To the Board of Directors
Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001
As lead audit partner for the audit of the financial statements of Alara Resources Limited
for the financial year ended 30 June 2019, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
−
−
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
any applicable code of professional conduct in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
DOUG BELL CA
Partner
Dated at Perth this 27th day of September 2019
Alara Resources Annual Report 2019
41
Consolidated Statement of Profit of Loss and Other Comprehensive Income
For the year ended 30 June 2019
Revenue
Other income
Personnel
Occupancy costs
Finance expenses
Corporate expenses
Gain on disposal of subsidiaries
Administration expenses
Share of profit/(losses) of associates
PROFIT/(LOSS) BEFORE INCOME TAX
Income tax benefit
PROFIT/(LOSS) FOR THE YEAR
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Total other comprehensive income/(loss)
Note
3
3
11
12
2019
$
97,401
165,848
(426,714)
(38,356)
(142,311)
(69,115)
425,895
(279,740)
(52,027)
(319,119)
-
(319,119)
2018
$
26,817
-
(345,462)
(59,631)
(9,048)
(49,899)
-
(286,563)
-
(723,786)
-
(723,786)
740,869
740,869
697,619
697,619
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
421,750
(26,167)
Profit/(loss) attributable to:
Owners of Alara Resources Limited
Non-controlling interest
Total comprehensive income/(loss) for the year attributable to:
Owners of Alara Resources Limited
Non-controlling interest
(454,577)
135,458
(319,119)
286,292
135,458
421,750
(691,512)
(32,274)
(723,786)
6,107
(32,274)
(26,167)
Earnings/Loss per share:
Basic earnings/(loss) per share cents
Diluted earnings/(loss) per share cents
6
6
(0.07)
(0.07)
(0.11)
(0.11)
The accompanying notes form part of this consolidated financial statement.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 19
42
Alara Resources Annual Report 2019
Consolidated Statement of Financial Position
As at June 2019
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
Financial assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Financial assets
Investment in Associate
Property, plant and equipment
Mine properties & Development assets
Exploration and evaluation
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Unearned income
Provisions
TOTAL CURRENT LIABILITIES
NON CURRENT LIABILITIES
Financial liabilities
Unearned Income
Provisions
TOTAL NON CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Parent interest
Non-controlling interest
TOTAL EQUITY
Note
7
8
9
10
10
12
13
13
14
15
16
17
18
19
17
20
21
2019
$
7,562,407
87,823
129,479
4,696,887
12,476,596
617,667
162,415
39,494
6,534,088
4,919,660
12,273,324
2018
$
3,346,943
12,896
26,615
-
3,386,454
-
-
43,803
-
9,415,666
9,459,469
24,749,920
12,845,923
624,424
1,624,382
8,390
2,257,196
644,232
-
36,264
680,496
66,850
-
37,001
103,851
583,756
1,624,382
36,264
2,244,402
2,937,692
2,348,253
21,812,228
10,497,670
66,107,405
10,241,067
(54,714,409)
21,634,063
178,165
21,812,228
66,107,405
906,345
(54,259,832)
12,753,918
(2,256,248)
10,497,670
The accompanying notes form part of this consolidated financial statement.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 20
Alara Resources Annual Report 2019
43
Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
l
a
t
o
T
$
9
1
6
,
7
9
6
4
2
4
,
6
8
5
,
9
9
1
6
,
7
9
6
)
6
8
7
,
3
2
7
(
)
7
6
1
,
6
2
(
-
0
0
0
,
5
4
9
)
7
8
5
,
7
(
-
-
)
4
7
2
,
2
3
(
)
4
7
2
,
2
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44
Alara Resources Annual Report 2019
Consolidated Statement of Cash Flows
For the year ended 30 June 2019
Note
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customer
Payments to suppliers and employees (inclusive of GST)
Interest received
Income tax refunded/(paid)
NET CASHFLOWS USED IN OPERATING ACTIVITIES
7b
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of plant and equipment
Payments for plant and equipment
Payments for exploration and evaluation activities
Payments for development expenditure
Payment towards Term deposit
Proceeds from disposal of investments
NET CASHFLOWS USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuing ordinary shares
Loans to other entities
Proceeds from borrowings
NET CASHFLOWS PROVIDED BY FINANCING ACTIVITIES
2019
$
-
(790,802)
14,246
-
(776,556)
1,277
(4,505)
(1,176,094)
(227,893)
(4,696,887)
11,242,442
5,138,340
-
(157,155)
-
(157,155)
2018
$
1,624,382
(410,926)
24,581
55,963
1,294,000
-
(5,255)
(1,134,667)
-
-
-
(1,139,922)
937,413
-
358,746
1,296,159
NET INCREASE IN CASH AND CASH EQUIVALENTS HELD
4,204,629
1,450,237
Cash and cash equivalents at beginning of the financial year
Effect of exchange rate changes on cash
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
7
3,346,943
10,835
7,562,407
1,885,556
11,150
3,346,943
The accompanying notes form part of this consolidated financial statement.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 22
Alara Resources Annual Report 2019
45
Notes to the Financial Statements
For the year ended 30 June 2019
1.
SUMMARY OF ACCOUNTING POLICIES
Statement of Significant Accounting Policies
The principal accounting policies adopted in the preparation of these financial statements are set out below.
The financial report includes the financial statements for the Consolidated Entity consisting of Alara Resources Limited and its controlled and jointly
controlled entities. Alara Resources Limited is a company limited by shares, incorporated in Western Australia, Australia and whose shares are
publicly traded on the Australian Securities Exchange (ASX).
1.1.
Basis of preparation
These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards, Australian Accounting
Interpretation, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Alara Resources
Limited is a for-profit entity for the purposes of preparing the financial statements.
Compliance with IFRS
The consolidated financial statements of the Consolidated Entity, Alara Resources Limited, also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Reporting Basis and Conventions
The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current
assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied.
Going Concern Assumption
The financial statements have been prepared on the going concern basis of accounting which assumes the continuity of normal business activities
and realisation of assets and settlement of liabilities in the ordinary course of business.
The Group has incurred a loss for the year ended 30 June 2019 of $319,119 (2018: $723,786) and cash inflows from operating and investing activities
of $4,361,784 (2018: $154,078). As at 30 June 2019 the Group has a cash at bank balance of $7,562,407 (2018: $3,346,943) and bank deposits of
$4,696,887 (2018: nil) and working capital of $10,219,400 (2018: $3,282,603).
The directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows to meet all commitments and working
capital requirements for the 12-month period from the date of signing this financial report. Based on the cash flow forecast, the directors are satisfied
that the going concern basis of preparation is appropriate.
1.2.
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of the subsidiaries of Alara Resources Limited as at 30 June 2019 and
the results of its subsidiaries for the year then ended. Alara Resources Limited and its subsidiaries are referred to in this financial report as the
Consolidated Entity. All transactions and balances between Consolidated Entity companies are eliminated on consolidation, including unrealised
gains and losses on transactions between Consolidated Entity companies. Where unrealised losses on intra-group asset sales are reversed on
consolidation, the underlying asset is also tested for impairment from a Consolidated Entity perspective. Amounts reported in the financial statements
of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Consolidated Entity. Profit or
loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition,
or up to the effective date of disposal, as applicable. Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s
profit or loss and net assets that is not held by the Consolidated Entity. The Consolidated Entity attributes total comprehensive income or loss of
subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests.
1.3.
Foreign Currency Translation and Balances
Functional and presentation currency
The functional currency of each entity within the Consolidated Entity is measured using the currency of the primary economic environment in which
that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation
currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign
currency monetary items are translated at the year-end exchange rate. Exchange differences arising on the translation of monetary items are
recognised in profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the
translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the
exchange difference is recognised in profit or loss.
Consolidated entity
The financial results and position of foreign operations whose functional currency is different from the Consolidated Entity’s presentation currency
are translated as follows:
(a) assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
(b)
income and expenses are translated at average exchange rates for the period; and
(c)
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 23
46
Alara Resources Annual Report 2019
1
SUMMARY OF ACCOUNTING POLICIES (Continued)
Exchange differences arising on translation of foreign operations are transferred directly to the Consolidated Entity’s foreign currency translation
reserve in the statement of financial position. These differences are recognised in profit or loss in the period in which the operation is disposed.
1.4.
Joint Arrangements
Joint arrangements exist when two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement,
which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control, in the event the Company
does not share control the financials are consolidated (or deconsolidated in the event of loss of control) (refer to 1.2 for further information). The
Consolidated Entity’s joint arrangements are currently of one type:
Joint operations
Joint operations are joint arrangements in which the parties with joint control have rights to the assets and obligations for the liabilities relating to the
arrangement. The activities of a joint operation are primarily designed for the provision of output to the parties to the arrangement, indicating that:
the parties have the rights to substantially all the economic benefits of the assets of the arrangement; and
all liabilities are satisfied by the joint participants through their purchases of that output. This indicates that, in substance, the joint participants
have an obligation for the liabilities of the arrangement.
1.5.
Leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Consolidated Entity as lessee are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit or loss on a
straight-line basis over the period of the lease.
1.6.
Comparative Figures
Certain comparative figures have been adjusted to conform to changes in presentation for the current financial year.
1.7.
Critical Accounting Judgements and Estimates
The preparation of the Consolidated Financial Statements requires Directors to make judgements and estimates and form assumptions that affect
how certain assets, liabilities, revenue, expenses and equity are reported. At each reporting period, the Directors evaluate their judgements and
estimates based on historical experience and on other various factors they believe to be reasonable under the circumstances, the results of which
form the basis of the carrying values of assets and liabilities (that are not readily apparent from other sources, such as independent valuations).
Actual results may differ from these estimates under different assumptions and conditions.
Exploration and evaluation expenditure
The Consolidated Entity’s accounting policy for exploration and evaluation expenditure being capitalised include the Daris Project where these costs
are expected to be recoverable through the successful development of the area or where activities in the area have not yet reached a stage that
permits reasonable assessment of the existence or otherwise of economically recoverable reserves. In the case of the Al Hadeetha project, a maiden
reserve announcement was issued in December 2016. This policy requires management
to make certain estimates to future events and
circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may
change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made that recovery of the
expenditure is not possible, the relevant capitalised amount will be written off to the statement of profit or loss and other comprehensive income.
Impairment of Mine Development Expenditure
The future recoverability of capitalised mine development expenditure is dependent on a number of factors, including the level of proved and probable
reserves and measured, indicated and inferred mineral resources, future technological changes which could impact the cost of mining, future legal
changes and changes to commodity prices.
To the extent that capitalised mine development expenditure is determined not to be recoverable in the future, this will reduce profits and net assets
in the period in which this determination is made.
Share-based payments transactions
The Consolidated Entity measures the cost of equity-settled transactions with Directors and employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined using a Black-Scholes options valuation model, taking into account
the terms and conditions upon which the instruments were granted. The related assumptions are detailed in Note 22. The accounting estimates have
no impact on the carrying amounts of assets and liabilities but will impact expenses and equity.
1.8.
New, Revised or Amending Accounting Standards and Interpretations Adopted
The Consolidated Entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (AASB) that are mandatory for the current reporting period. The adoption of these Accounting Standards and
Interpretations did not have any significant impact on the financial performance or position of the Consolidated Entity during the financial year.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The adoption of
AASB 9 and AASB 15 did not have a material impact on the Group.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 24
Notes to the Financial StatementsFor the year ended 30 June 2019 Alara Resources Annual Report 2019
47
1
SUMMARY OF ACCOUNTING POLICIES (Continued)
1.9.
New Accounting Standards and Interpretations not yet Mandatory or Early Adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early
adopted by the Consolidated Entity for the annual reporting period ended 30 June 2019. The Consolidated Entity’s assessment of the impact of these
new or amended Accounting Standards and Interpretations, most relevant to the Consolidated Entity, are set out below.
AASB 16 Leases
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations.
AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases.
The main changes introduced by the new Standard are as follows:
recognition of a right-of-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and leases relating
to low-value assets);
depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal
and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease liability using the index or rate
at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead account for all components
as a lease; and
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise
the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application. The group is currently continuing
to assess the impact of these changes, however based on the operating leases currently held (refer note 25) it is not expected to have a material
impact.
2.
PARENT ENTITY INFORMATION
The following information provided relates to the Company, Alara Resources Limited, as at 30 June 2019.
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Options Reserve
Accumulated losses
Total equity
Profit/(loss) for the year
Other comprehensive income for the year
Total comprehensive income /(loss) for the year
3.
LOSS FOR THE YEAR
The operating loss before income tax includes the following items of revenue and expense:
Revenue
Interest
Other income
2019
$
1,041,564
8,889,397
9,930,961
88,568
36,264
124,832
9,806,129
66,107,404
20,000
(56,321,275)
9,806,129
(342,271)
-
(342,271)
2019
$
97,401
165,848
263,249
2018
$
1,244,273
8,991,745
10,236,018
51,354
36,264
87,618
10,148,400
66,107,404
20,000
(55,979,004)
10,148,400
(375,436)
-
(375,436)
2018
$
26,817
-
26,817
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 25
Notes to the Financial StatementsFor the year ended 30 June 2019 48
Alara Resources Annual Report 2019
3
LOSS FOR THE YEAR (Continued)
ACCOUNTING POLICY NOTE
Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Consolidated Entity and the revenue can be reliably
measured. All revenue is stated net of the amount of goods and services tax (GST) except where the amount of GST incurred is not recoverable from
the Australian Tax Office. The following specific recognition criteria must also be met before revenue is recognised:
Interest Revenue – Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial
assets.
4.
Other Revenues – Other revenues are recognised on a receipts basis.
INCOME TAX EXPENSE
2019
$
2018
$
The major components of tax expense and the reconciliation of the expected tax
expense based on the domestic effective tax rate of 2019 at 27.5% (2018: 27.5%)
and the reported tax expense in profit or loss are as follows:
Tax expense comprises:
(a) Current tax
Deferred income tax relating to origination and reversal of temporary differences
- Origination and reversal of temporary differences
- Utilisation of unused tax losses previously unrecognised
Under/(Over) provision in respect of prior years
Tax expense
Deferred Tax Expense (income), recognised directly in other comprehensive income
(b) Accounting profit before tax
Income Tax Expense to Accounting Profit
Tax at the Australian tax rate of 27.5% (2018: 27.5%)
Assessable amounts
Deductible amounts
Non-assessable income
Non-deductible items
Utilisation of unused tax losses previously unrecognised
Deferred tax assets recognised/ (not recognised)
Tax rate difference
Income tax expenses (benefit)
(c) Recognised Deferred Tax Balances
Deferred tax asset
Deferred tax asset (losses)
Set-off deferred tax liabilities
(d) Deductible temporary differences, unused tax losses and unused tax credits
for which no deferred tax assets have been recognised are attributable to the
following:
Unrecognised deferred tax asset losses
Unrecognised deferred tax asset losses (capital)
Unrecognised deferred tax asset Oman losses
-
-
-
-
-
(319,119)
-
(87,758)
-
-
(20,165)
23,996
(83,178)
78,122
88,983
-
17,349
82,885
(100,234)
1,630,322
450,990
362,008
2,443,320
-
-
-
-
-
(723,786)
-
(199,041)
179,048
(90,981)
-
104,560
-
(35,198)
41,612
-
1,757
97,506
(99,263)
1,698,879
450,990
592,855
2,742,724
The benefit of the deferred tax assets not recognised will only be obtained if:
(i)
The Consolidated Entity derives future income that is assessable for Australian income tax purposes and is of a type and an amount sufficient
to enable the benefit of them to be realised;
The Consolidated Entity continues to comply with the conditions for deductibility imposed by tax legislation in Australia; and
There are no changes in tax law which will adversely affect the Consolidated Entity in realising the benefit of them.
(ii)
(iii)
The Consolidated Entity has elected to consolidate for taxation purposes and has entered into a tax sharing and funding agreement in respect of
such arrangements.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 26
Notes to the Financial StatementsFor the year ended 30 June 2019 Alara Resources Annual Report 2019
49
4
INCOME TAX EXPENSE (Continued)
ACCOUNTING POLICY NOTE
Income Tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the notional income tax rate
for each taxing jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of
assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses (if applicable). Deferred tax assets and liabilities
are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those
tax rates which are enacted or substantively enacted for each taxing jurisdiction. The relevant tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences
arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if
they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable
profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses. The amount of deferred tax assets benefits brought to account or which
may be realised in the future, is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that
the Consolidated Entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of
deductibility imposed by the law. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
tax bases of investments in controlled entities where the Company is able to control the timing of the reversal of the temporary differences and it is
probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable
right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in other comprehensive income or
equity are also recognised directly in other comprehensive income or equity.
Tax consolidation legislation
The Consolidated Entity implemented the tax consolidation legislation. The head entity, Alara Resources Limited, and the controlled entities in the
tax consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the
tax consolidated group continues to be a stand-alone taxpayer in its own right. In addition to its own current and deferred tax amounts, the Company
also recognises the current tax liabilities (or assets) and the deferred tax assets (as appropriate) arising from unused tax losses and unused tax
credits assumed from controlled entities in the tax consolidated group. Assets or liabilities arising under tax funding agreements within the tax
consolidated entities are recognised as amounts receivable from or payable to other entities in the Consolidated Entity. Any differences between the
amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from)
wholly-owned tax consolidated entities.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the
Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the cash flow statement on
a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.
5.
AUDITOR’S REMUNERATION
During the year the following fees were paid or payable for services provided by the auditors to the Consolidated Entity, their related practices and
non-audit related firms:
Bentleys Audit and Corporate (WA) Pty Ltd – Auditors of the Consolidated Entity
(Audit and review of financial reports)
RSM Chartered Accountants – Auditors of Oman-controlled entities
(Audit and review of financial reports)
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2019
$
31,000
5,072
36,072
2018
$
31,908
2,674
34,582
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 27
Notes to the Financial StatementsFor the year ended 30 June 2019 50
Alara Resources Annual Report 2019
6.
EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share cents
Diluted earnings/(loss) per share cents
Profit/(loss) $ used to calculate earnings/(loss) per share
Weighted average number of ordinary shares during the period used in calculation of
basic earnings/(loss) per share
Weighted average number of ordinary shares during the period used in calculation of
diluted earnings/(loss) per share
2019
$
(0.07)
(0.07)
(454,577)
2018
$
(0.11)
(0.11)
(691,512)
629,017,589
614,087,452
629,017,589
614,087,452
Under AASB 133 "Earnings per share", potential ordinary shares such as options will only be treated as dilutive when their conversion to ordinary
shares would increase loss per share from continuing operations.
ACCOUNTING POLICY NOTE
Basic Earnings per share is determined by dividing the operating result after income tax by the weighted average number of ordinary shares on issue
during the financial period. Diluted Earnings per share adjusts the figures used in the determination of basic earnings per share by taking into account
amounts unpaid on ordinary shares and any reduction in earnings per share that will probably arise from the exercise of options outstanding during
the financial period.
7.
CASH AND CASH EQUIVALENTS
Cash in hand
Cash at bank
Term deposits
2019
$
31
7,050,778
511,598
7,562,407
2018
$
1,480
2,130,209
1,215,254
3,346,943
The Consolidated Entity has granted numerous term deposit security bonds to the value of $ Nil (2018: $108,000) which has not been called up as
at the reporting date. The Parent Entity also has a bank guarantee for the sublease of the former office to the value of $ Nil (2018: $ 64,943).
The effective interest rate on short-term bank deposits was 2.35% (2018: 2.45%) with an average maturity of 76 days.
(a) Risk exposure
The Consolidated Entity’s exposure to interest rate and foreign exchange risk is discussed in Note 24. The maximum exposure to credit risk at the
end of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above.
ACCOUNTING POLICY NOTE
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments and bank overdrafts.
Bank overdrafts (if any) are shown within short-term borrowings in current liabilities on the statement of financial position.
(b) Reconciliation of Net Profit/(Loss) after Tax to Net Cash Flow
From Operations
Profit/(Loss) after income tax
Loan extinguishment
Profit on sale of asset
Gain/(loss) on disposal of Subsidiary
Share of profits/(losses) of associates and joint ventures
Foreign exchange movement
Depreciation
(Increase)/Decrease in Assets:
Trade and other receivables
Other current assets
Increase/(Decrease) in Liabilities:
Advance received from customers
Trade and other payables
Provisions
Net cashflows from/ (used in) operating activities
2019
$
(319,119)
(207)
(425,895)
52,027
12,038
10,118
(74,927)
(102,864)
-
-
100,884
(28,611)
(776,556)
2018
$
(723,786)
-
-
-
-
415,446
11,369
59,403
(16,887)
-
1,624,382
(48,518)
(27,409)
1,294,000
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 28
Notes to the Financial StatementsFor the year ended 30 June 2019 Alara Resources Annual Report 2019
51
7.
CASH AND CASH EQUIVALENTS (Continued)
(c) Financial liabilities
Opening balance
Add: Drawdown during the year
Less: Repaid to AHI
Add: Interest
Add: Foreign exchange differences
Closing balance
8.
TRADE AND OTHER RECEIVABLES
Current
Amounts receivable from:
Sundry debtors
Goods and services tax recoverable
Cash advances
2019
$
583,756
-
-
30,184
30,292
644,232
2019
$
79,877
4,998
2,948
87,823
2018
$
215,939
409,596
(70,158)
19,309
9,070
583,756
2018
$
5,797
7,099
-
12,896
(a) Risk exposure
Information about the Consolidated Entity's exposure to credit risk, foreign exchange risk and interest rate risk is in Note 24.
(b) Impaired receivables
None of the above receivables are impaired or past due.
ACCOUNTING POLICY NOTE
Trade and other receivables are recorded at amounts due less any provision for doubtful debts. An estimate for doubtful debts is made when collection
of the full amount is no longer probable. Bad debts are written off when considered non-recoverable.
9.
OTHER CURRENT ASSETS
Prepayments
Accrued interest
2019
$
58,753
70,726
129,479
2018
$
26,615
-
26,615
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ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 29
Notes to the Financial StatementsFor the year ended 30 June 2019 52
Alara Resources Annual Report 2019
10.
FINANCIAL ASSETS
Current
Bank deposits
Non-Current
Interest free loan to Alara Resources LLC
2019
$
4,696,887
617,667
5,314,554
2018
$
-
-
-
11.
(I)
DISPOSALS OF SUBSIDIARIES
Disposal of Interest in Al Hadeetha Resources LLC
On 24 December 2018, the Group disposed of a 19% interest of its interest in Al Hadeetha Resources LLC (AHRL) to Al Tasnim Infrastructure
Services LLC, reducing its continuing interest to 51%. The proceeds on disposal of OMR 3 million (~AUD $11,028,000) were received in cash. AHRL
is the vehicle through which the Company holds its interest in the Al Hadeetha Copper Project.
The net liabilities on disposal were $12,811,306. The difference between the disposal proceeds and the amount transferred to non-controlling interests
of $8,593,852 has been directly recognised in equity as a transaction with minority interests.
Consideration received
Net assets on disposal
Transactions with Non-Controlling Interest
Increase in non-controlling interest (19%)
(II)
Disposal of Interest in Alara Resources LLC
2019
$
11,028,000
(12,811,306)
8,593,852
(2,434,147)
2018
$
-
-
-
-
On 26 September 2018, the Group sold a 35% interest in Alara Resources LLC (“ARL”) to South West Pinnacle Exploration Limited (“SWPE”) for a
consideration of OMR 60,000 (AUD $214,442). The Group retains a 35% shareholding in ARL and as a result has been de-consolidated and reflected
as an investment in associate.
SWPE is a Related Party of the Company as it is controlled by Mr Vikas Jain, a Director of Alara Resources Limited. Shareholder approval of the sale
pursuant to Chapter 2E of the Corporations Act (2001) was not required as the transaction fell within an exception to the requirement to obtain
approval. The Company nevertheless decided to seek, and obtained, shareholders’ approval on 28 November 2018 at the Annual General Meeting.
Consideration received
Investment in associate
NCI derecognised on disposal
Subtotal
Net assets on disposal
Gain on disposal
12.
INVESTMENT IN ASSOCIATES
The movement for the year in the Group’s investments accounted for using the equity method is as follows:
Opening balance
Investment in Alara Resources LLC (Refer to Note 11(ii))
(Loss) from equity accounted investments
Subtotal
2019
$
214,442
214,442
135,193
564,077
138,182
425,895
2019
$
-
214,442
(52,027)
162,415
2018
$
2018
$
-
-
-
-
-
-
-
-
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 30
Notes to the Financial StatementsFor the year ended 30 June 2019 Alara Resources Annual Report 2019
53
13.
PROPERTY, PLANT AND EQUIPMENT
Motor
Vehicles
$
Office
Equipment
Plant and
Equipment
$
$
Mine Properties
& Development
assets
$
Year ended 30 June 2018
Carrying amount at beginning
Additions
Write-offs
Depreciation expense
Exchange Difference
Closing amount at reporting date
Year ended 30 June 2018
Cost or fair value
Accumulated depreciation
Net carrying amount
Year ended 30 June 2019
Carrying amount at beginning
Reclassified from Exploration Expenditure
(Note 14)
Additions
Disposal
Write-offs
Depreciation expense
Exchange Difference
Closing amount at reporting date
Year ended 30 June 2019
Cost or fair value
Accumulated depreciation
Net carrying amount
21,505
-
-
(3,207)
745
19,043
28,063
(9,020)
19,043
19,043
-
-
-
(2,951)
913
17,005
29,483
(12,478)
17,005
30,171
-
-
(7,349)
237
23,059
191,07
5
(168,016)
23,059
23,059
-
5,805
(1,070)
(6,582)
85
21,297
170,27
8
(148,981)
21,297
Total
$
54,126
-
-
(11,368)
1,045
43,803
241,07
9
(197,276)
43,803
43,803
5,672,100
574,356
(1,070)
-
(10,118)
294,511
6,573,582
2,450
-
-
(812)
63
1,701
21,941
(20,240)
1,701
1,701
-
-
-
-
(585)
76
1,192
-
-
-
-
-
-
-
-
-
-
5,672,100
568,551
-
-
-
293,437
6,534,088
23,051
(21,859)
1,192
6,534,088
-
6,534,088
6,576,900
(183,318)
6,573,582
ACCOUNTING POLICY NOTE
All plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that
is directly attributable to the acquisition of the items. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not
in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be
received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present value in
determining recoverable amount. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Consolidated Entity and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. The
depreciable amount of all fixed assets is depreciated on a diminishing value basis over the asset's useful life to the Consolidated Entity commencing
from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Office Equipment
Motor Vehicles
Plant and Equipment
Depreciation Rate
15 – 37.5%
33.3%
15 – 33.3%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written
down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on
disposals are determined by comparing proceeds with carrying amount. These are included in the statement of profit or loss and other comprehensive
income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.
Mine properties and development assets
Mine property and development assets include costs incurred in accessing the ore body and costs to develop the mine to the production phase, once
the technical feasibility and commercial viability of a mining operation has been established. At this stage, exploration and evaluation assets are
reclassified to mine properties. Mine property and development assets are stated at historical cost less accumulated amortisation and any
accumulated impairment losses recognised. The initial cost of an asset comprises its purchase price or construction cost and any costs directly
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 31
Notes to the Financial StatementsFor the year ended 30 June 2019 54
Alara Resources Annual Report 2019
13.
PROPERTY, PLANT AND EQUIPMENT (Continued)
attributable to bringing the asset into operation. Any ongoing costs associated with mining which are considered to benefit mining operations in future
periods are capitalised.
14.
EXPLORATION AND EVALUATION
Opening balance
- Exploration and evaluation expenditure
- Exchange differences
Reclassification of Al Hadeetha Project to Development Expenditure (Note 13)
Closing balance
2019
$
9,415,666
943,723
232,311
(5,672,100)
4,919,660
2018
$
7,996,698
1,036,170
382,798
-
9,415,666
During the year, the Al Hadeetha Copper-Gold Project in Oman has been reclassified to Development Expenditure upon demonstrating commercial
viability and commencement of development activities.
On 21 October 2010, Alara Saudi Operations Pty Limited, a wholly owned subsidiary of the Company, entered into a shareholders’ agreement with
mineral licences holder, United Arabian Mining LLC (Manajem). Pursuant to the shareholders’ agreement a joint venture entity, Khnaiguiyah Mining
Company LLC (KMC) (in which the Consolidated Entity has a 50% shareholding interest) was established and Manajem are required to transfer legal
title to the mining licence and exploration licences over the Khnaiguiyah Project to KMC. The Consolidated Entity has obtained independent advice
confirming that valid and legally enforceable rights existed for KMC to commercially exploit the Khnaiguiyah Project. The financial statements of
previous Annual Reports were prepared on this basis with the asset carried at $33,190,221 as at 30 June 2015. Following cancellation of the
Khnaiguiyah Mining Licence, a provision for impairment of the carrying value of exploration and evaluation attributable to the Khnaiguiyah Project
was made. This provision for impairment may be reversed in the future(see accounting policy note on mineral exploration and evaluation expenditure
below).
Alara Oman Operations Pty Limited (a wholly owned Australian subsidiary) gained a 70% shareholding interest in a jointly controlled company, Al
Hadeetha Resource LLC (Oman), on 23 November 2011. Further on 24 December 2018 the Group disposed of a 19% interest in Al Hadeetha
Resources LLC to Al Tasnim Infrastructure Services LLC, reducing its continuing interest to 51%. The principal activity of the company is exploration,
evaluation and development of mineral licences in Oman.
Alara Oman Operations Pty Limited (a wholly owned Australian subsidiary) gained a 50% shareholding interest in a jointly controlled company, Daris
Resources LLC (Oman), on 1 December 2010. The principal activity of this company is exploration, evaluation and development of mineral licences
in Oman. The Consolidated Entity has a valid and legally enforceable contractual right to commercially exploit the Daris Project held by Daris
Resources LLC (in which the Consolidated Entity has a 50% shareholding interest) and does not hold the legal title to the mineral exploration licence
(which is held by the other 50% shareholder of Daris Resources LLC). The financial statements have been prepared on this basis (refer Note 23 for
further disclosures). Should these legal rights not be enforceable, the carrying value of Exploration and Evaluation Expenditure attributable to the
Daris Project would be impaired.
The Consolidated Group has entered in to a Heads of Agreement with Copper LLC, under which wholly owned subsidiary Alara Oman Operations
Pty Ltd would become a 10% shareholder in the Awtad Block 8 Project. As part of the Heads of Agreement, Awtad acknowledges OMR 246,215
(AUD 812,316) previously spent on the project by Alara as the basis for Alara’s interest in that project.
The Consolidated Entity has granted security bonds to the value of $Nil (2018: $108,000) which have not been called up as at reporting date.
ACCOUNTING POLICY NOTE
Mineral Exploration and Evaluation Expenditure
Exploration, evaluation and development expenditure incurred is accumulated (i.e. capitalised) in respect of each identifiable area of interest. These
costs are only carried forward where they are expected to be recoverable through the successful development of the area or where activities in the
area and includes areas that have not yet reached a stage that permits reasonable assessment of the existence or otherwise 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. Exploration and evaluation expenditure is written-off when it fails to meet at least one of the conditions outlined above or
an area of interest is abandoned. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the
carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and circumstances suggest that the carrying
amount exceeds the recoverable amount, the impairment loss will be measured in accordance with the Consolidated Entity’s impairment policy (Note
1.7). This policy requires management to make certain estimates to future events and circumstances, in particular whether an economically viable
extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having
capitalised the expenditure under the policy, a judgement is made that recovery of the expenditure is not possible, the relevant capitalised amount
will be written off to the statement of profit or loss and other comprehensive income.
Impairment of Non-Financial Assets
At each reporting date, the Consolidated Entity reviews the carrying values of its tangible and intangible assets to determine whether there is any
indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair
value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable
amount is expensed to the profit or loss. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. During the
period, the Company received a contingent offer of US$11.5m to acquire rights to the Khnaiguiyah Feasibility Study, however there is currently no
agreement in place with respect to the Study and it was determined that no change to the carrying value was required.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 32
Notes to the Financial StatementsFor the year ended 30 June 2019 Alara Resources Annual Report 2019
55
15.
TRADE AND OTHER PAYABLES
Current
Trade payables
Other payables
2019
$
508,225
116,199
624,424
Due to the short-term nature of the trade and other payables, their carrying value is assumed to approximate their fair value.
16.
UNEARNED INCOME
Current
Unearned income
2019
$
1,624,382
1,624,382
2018
$
39,110
27,740
66,850
2018
$
-
-
On 15 March 2017 Alara Oman Operations Pty Ltd (a wholly owned subsidiary of the Company) entered into an off-take agreement for the supply of
copper concentrate from the Al Hadeetha Project to Statdrome Pte Ltd (Offtake Agreement). Under the Offtake Agreement, concentrate production
from the Al Hadeetha Copper Project (Washihi Mazzaza site) will be shipped from the Sohar port (unless a smelter is operating in Oman). In June
2018 Statdrome made a pre-payment under the Offtake Agreement. The Statdrome advance bears interest at LIBOR plus four percent per annum.
This amount represents unearned income. The amount of this liability in AUD is shown in the table above. Al Hadeetha shareholders (including Alara
Oman Operations Pty Ltd) has provided guarantees as disclosed in note 29(g).
(a) Risk exposure
Details of the Consolidated Entity's exposure to risks arising from current payables are set out in Note 24.
ACCOUNTING POLICY NOTE
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of financial year which are unpaid.
The amounts are unsecured and are usually paid within 30 days of recognition.
17.
PROVISIONS
Current
Employee benefits – annual leave
Non-Current
Employee benefits – long service leave
2019
$
8,390
36,264
44,654
2018
$
37,001
36,264
73,265
Amounts not expected to be settled within the next 12 months
The entire annual leave obligation is presented as current as the Consolidated Entity does not have an unconditional right to defer settlement. The
non-current provision for long service leave is a provision towards the future entitlements of employees who will have completed the required period
of long service and that is not expected to be taken or paid within the next 12 months.
ACCOUNTING POLICY NOTE
Employee Benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months after the end of the
period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and
are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in other payables and
accruals together with other employee benefit obligations.
(ii) Other long-term employee benefit obligations
The liability for long service leave and annual leave which is expected to be settled within 12 months after the end of the period in which the employee
renders the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to
be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is
given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted
using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows. The obligations are presented as current liabilities in the balance sheet if the entity does not have an
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 33
Notes to the Financial StatementsFor the year ended 30 June 2019 56
Alara Resources Annual Report 2019
PROVISIONS (Continued)
17.
unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to
occur.
18.
FINANCIAL LIABILITIES
Non-Current
Loan with unrelated third party (i)
2019
$
644,232
644,232
2018
$
583,756
583,756
(i)
On 16 April 2017, Al Hadeetha Resources LLC (AHR) (the joint venture company which conducts the Al Hadeetha Copper-Gold Project
(Project), in which the Company is a 70% shareholder) entered into an unsecured loan agreement as borrower with Al Hadeetha Investments
LLC (Lender) (an un-related company, which holds the remaining 30% of the shares in AHR). Under the agreement, AHR may draw down
a maximum of USD 2 million (AUD 2,663,800; OMR 735,247) to assist with working capital for the Project (AHI to AHR Loan). The AHI to
AHR Loan bears interest at LIBOR plus two percent per annum. The Loan will be in effect for the duration of the Project joint venture
agreement, at which time AHR must repay any outstanding balance. AHR must make interim repayments equal to its available net cash
profit (if any) at the end of each financial year. During the year AHR has not made any drawdowns under the Loan. The total amount drawn
down (being the total amount owing by AHR under the Loan to the end of the year is OMR 174,802 (USD 483,694; AUD 644,232). If AHR
determines at the end of any quarter or other period that it has a working capital shortfall it may draw down the whole or part of the shortfall,
until the entire Loan amount is drawn down. The remaining, un-drawn balance of the Loan is OMR 560,445 (USD 1,516,306; AUD 2,019,568).
Although the AHI to AHR Loan is shown as a liability in the consolidated financial statements, loans by entities within the Alara Consolidated
Entity to AHR, which is also within that Consolidated Entity (Consolidated Entity AHR Loans) are not shown in the consolidated financial
statements. The Consolidated Entity AHR Loans total $A17.3 million and are subject to the same loan terms as the AHI to AHR Loan. The
Consolidated Entity AHR Loans are repayable on the same basis as the AHI to AHR Loan. Therefore, if AHR makes a loan repayment to
AHI, AHR will also be required to make a loan repayment to its lenders within the Alara Consolidated Group on a pro-rata basis.
19.
UNEARNED INCOME
Non-Current
Unearned income
Refer to note no.16
2019
$
-
-
2018
$
1,624,382
1,624,382
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ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 34
Notes to the Financial StatementsFor the year ended 30 June 2019 Alara Resources Annual Report 2019
57
20.
ISSUED CAPITAL
Fully paid ordinary shares
2019
№
629,017,589
2018
№
629,017,589
2019
$
2018
$
66,107,405
66,107,405
2018
Balance as at 1 July 2017
- Share movement during the 2018 financial year
- Share issue costs during the 2018 financial year
Balance as at 30 June 2018
2019
Balance as at 1 July 2018
- Share movement during the 2019 financial year
- Share issue costs during the 2019 financial year
Balance as at 30 June 2019
№
597,517,589
31,500,000
-
629,017,589
№
629,017,589
-
-
629,017,589
$
65,169,992
945,000
(7,587)
66,107,405
$
66,107,405
-
-
66,107,405
Each fully paid ordinary share carries one vote per share and the right to participate in dividends. Ordinary shares have no par value and the Company
does not have a limit on the amount of its capital.
Capital risk management
The Consolidated Entity's objective when managing its capital is to safeguard its ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits for other stakeholders and to maintain a capital structure balancing the interests of all shareholders.
The Board will consider capital management initiatives as is appropriate and in the best interests of the Consolidated Entity and shareholders from
time to time. The Consolidated Entity had no external borrowings as at 30 June 2019, other than as disclosed in Note 18. The Consolidated Entity's
non-cash investments can be realised to meet accounts payable arising in the normal course of business.
Accounting Policy Note
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a
business, are included in the cost of the acquisition as part of the purchase consideration.
21.
RESERVES
Foreign currency translation reserve
Options reserve
Transactions with minority interests
2019
$
1,627,215
20,000
8,593,852
10,241,067
2018
$
886,345
20,000
-
906,345
Foreign currency translation reserve
Exchange differences arising on translation of a foreign controlled entity's financial results and position are taken to the foreign currency translation
reserve. The reserve is de-recognised when the investment is disposed of.
Options reserve
The number of unlisted options outstanding over unissued ordinary shares at the reporting date is as follows:
Employees’ Options
Unlisted options exercisable at $0.04; expiring 9 March 2020
Grant date
9 Mar 2017
Number of
options
3,000,000
3,000,000
2019
$
20,000
20,000
2018
$
20,000
20,000
The Option Reserve records the consideration (net of expenses) received by the Company on the issue of listed options and the fair value of unlisted
Employees' options that were issued for nil consideration.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 35
Notes to the Financial StatementsFor the year ended 30 June 2019 58
Alara Resources Annual Report 2019
22.
SHARE-BASED PAYMENTS
There were no shares issued as a result of the exercise of any options during the year (2019: NIL).
The fair value of these options are expensed, from their date of grant, over their vesting period; fair values are determined as at date of grant using
the Black-Scholes options valuation model that takes into account the exercise price, the term of the option, the underlying share price as at date of
grant, the expected price volatility of the underlying shares and the risk-free interest rate for the term of the option. The Company is required to
expense the fair value of options granted, on the basis that the fair value cost at date of grant is apportioned over the vesting period applicable to
each option. The model inputs for assessing the fair value of options granted during the period are as follows:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
Options are granted for no consideration and vest as detailed in the table below;
Exercise price is as detailed in the table above;
Grant or issue date is as detailed in the table above;
Expiry date is as detailed in the table above;
Share price is based on the last bid price on ASX as at date of grant, as detailed in the table below;
Expected price volatility of the Company’s shares has been assessed independently as described in the table below;
Expected dividend yield is nil; and
Risk-free interest rate is based on the 3/5 year Commonwealth bond yield, as detailed in the table below.
Date of issue Description of unlisted options
Vesting criteria
9 Mar 2017
$0.04 (9 Mar 2020) Options
Vested at the date of the issue of the options
Share price at
grant date
$0.022
Risk free
rate
2.08%
Price
volatility
100%
ACCOUNTING POLICY NOTE
Director/Employee Options
The fair value of options granted by the Company to directors and employees is recognised as an employee benefit expense with a corresponding
increase in equity. The fair value is measured as at grant date and is expensed in full as at their date of issue where they are 100% vested on grant
and otherwise over their vesting period (where applicable). The fair value at grant date is determined using the Black-Scholes valuation model that
takes into account the exercise price, the term of the option, the vesting criteria, the unlisted nature of the option, the share price at grant date and
the expected price volatility of the underlying shares in the Company, and the risk-free interest rate for the term of the option. Upon the exercise of
options, the balance of the reserve relating to those options is transferred to share capital.
23.
SEGMENT INFORMATION
The Board has considered the activities/operations and geographical perspective within the operating results and have determined that the
Consolidated Entity operates in the resource exploration, evaluation and development sector within geographic segments - Australia, Saudi Arabia
and Oman.
2019
Total segment revenues
Total segment loss/(profit)before tax
Total segment assets
Total segment liabilities
2018
Total segment revenues
Total segment loss before tax
Total segment assets
Total segment liabilities
Australia
$
193,722
132,680
2,827,297
(124,901)
26,817
(390,888)
3,372,604
(1,712,000)
Oman
$
69,527
(462,789)
21,922,623
(2,812,791)
-
(342,876)
9,473,319
(636,253)
Saudi Arabia
$
-
10,990
-
-
-
9,978
-
-
Total
$
263,249
(319,119)
24,749,920
(2,937,692)
26,817
(723,786)
12,845,923
(2,348,253)
(a) Reconciliation of segment information
(i) Total Segment Assets
Total Assets as per Statement of Financial Position
(ii) Total Segment Revenues
Total Revenue as per Statement of Profit or Loss
and Other Comprehensive Income
(iii) Total Segment profit/(loss) before tax
Total Consolidated Entity profit/(loss) before tax
2019
$
2018
$
24,749,920
12,845,923
263,249
26,817
(319,119)
(723,786)
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 36
Notes to the Financial StatementsFor the year ended 30 June 2019 Alara Resources Annual Report 2019
59
23.
SEGMENT INFORMATION (Continued)
ACCOUNTING POLICY NOTE
Operating Segments
The Consolidated Entity has applied AASB 8: Operating Segments which requires that segment information be presented on the same basis as that
used for internal reporting purposes. An operating segment is a component of the Consolidated Entity that engages in business activities from which
it may earn revenues and incur expenses. An operating segment's operating results are reviewed regularly by the management to make decisions
on allocation of resources to the relevant segments and assess performance. Unallocated items comprise mainly share investments, corporate and
office expenses.
24.
FINANCIAL RISK MANAGEMENT
The Consolidated Entity's financial instruments mainly consist of deposits with banks, accounts receivable and payable, and investments in a listed
security. The principal activity of the Consolidated Entity is resource exploration, evaluation and development. The main risks arising from the
Consolidated Entity's financial instruments are market (which includes price, interest rate and foreign exchange risks), credit and liquidity risks. Risk
management is carried out by the Board of Directors. The Board evaluates, monitors and manages the Consolidated Entity's financial risk in close
co-operation with its operating units. The financial receivables and payables of the Consolidated Entity in the table below are due or payable within
30 days. The financial investments are held for trading and are realised at the discretion of the Board.
The Consolidated Entity holds the following financial instruments:
Financial assets
Cash and cash equivalents
Financial instruments (term deposits)
Trade and other receivables
Financial asset
Financial liabilities at amortised cost
Trade and other payables
Financial liabilities
Net Financial Assets
(a) Market Risk
2019
$
7,562,407
4,696,887
87,823
617,667
12,964,784
(624,424)
(644,232)
(1,268,656)
2018
$
3,346,943
-
12,896
-
3,359,839
(66,850)
(583,756)
(650,606)
11,696,128
2,709,233
(i) Price risk
The Consolidated Entity is exposed to equity securities price risk. This arises from investments held by the Consolidated Entity and classified in
the statement of financial position at fair value through profit or loss. The Consolidated Entity is not directly exposed to commodity price risk. The
value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the
individual instrument or its issuer or factors affecting all instruments in the market. The Consolidated Entity does not manage this risk through
entering into derivative contracts, futures, options or swaps. Market risk is minimised through ensuring that investment activities are undertaken
in accordance with Board established mandate limits and investment strategies.
interest rate risk
(ii)
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Consolidated Entity's
exposure to market risk for changes in interest rates relate primarily to investments held in interest bearing instruments and its loan from third
parties. The average interest rate applicable to funds held on deposit during the year was 2.35 % (2018: 2.45%).
Cash at bank
Term deposits
Term deposits more than 90 days
Loan with unrelated third parties
2019
$
7,050,778
511,598
4,696,887
(644,232)
11,615,031
2018
$
2,130,209
1,215,254
-
(583,756)
2,761,707
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 37
Notes to the Financial StatementsFor the year ended 30 June 2019 60
Alara Resources Annual Report 2019
24.
FINANCIAL RISK MANAGEMENT (Continued)
The Consolidated Entity has borrowings subject to interest rate risk. The possible impact on profit or loss or total equity on this exposure is
displayed below:
Loan with unrelated third party
Change in profit
Increase by 1%
Decrease by 1%
Change in equity
Increase by 1%
Decrease by 1%
Revenue
Change in profit
Increase by 3%
Decrease by 3%
Change in equity
Increase by 3%
Decrease by 3%
2019
$
(6,442)
6,442
(6,442)
6,442
2019
$
226,872
(226,872)
226,872
(226,872)
2018
$
(5,838)
5,838
(5,838)
5,838
2018
$
100,408
(100,408)
100,408
(100,408)
(iii) Foreign exchange risk
The Consolidated Entity is exposed to foreign currency risk in cash held in Omani Riyals (OMR) by the Consolidated Entity's foreign controlled
entity, foreign resource project investment commitments and exploration and evaluation expenditure on foreign exploration and evaluation. The
primary currency giving rise to this risk is Omani Riyals (OMR). The Consolidated Entity has not entered into any forward exchange contracts as
at reporting date and is currently fully exposed to foreign exchange risk. The Consolidated Entity's exposure to foreign currency risk at reporting
date was as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Non-current financial liabilities
2019
OMR
1,820,884
1,146,836
(590,204)
(194,802)
2,182,714
2018
OMR
141,441
5,429
(5,644)
(186,412)
(45,186)
The Consolidated Entity's exposure to foreign exchange risk is mitigated by having comparable asset and liability balances in US dollars.
Therefore, a sensitivity analysis has not been performed. The Consolidated Entity enters into forward exchange contracts with its Australian bank
from time to time to hedge against foreign exchange risk.
(b) Credit risk
Credit risk refers to the risk that a counterparty under a financial instrument will default (in whole or in part) on its contractual obligations resulting in
financial loss to the Consolidated Entity. Concentrations of credit risk are minimised primarily by undertaking appropriate due diligence on potential
investments, carrying out all market transactions through approved brokers, settling non-market transactions with the involvement of suitably qualified
legal and accounting personnel (both internal and external), and obtaining sufficient collateral or other security (where appropriate) as a means of
mitigating the risk of financial loss from defaults. This financial year there was no necessity to obtain collateral.
The credit quality of the financial assets are neither past due nor impaired and can be assessed by reference to external credit ratings (if available
with Standard & Poor's) or to historical information about counterparty default rates. The maximum exposure to credit risk at reporting date is the
carrying amount of the financial assets as summarised below:
Cash and cash equivalents
AA-
No external credit rating available
Trade and other receivables (due within 30 days)
No external credit rating available
2019
$
7,562,376
31
7,562,407
87,823
2018
$
3,345,463
1,480
3,346,943
12,896
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 38
Notes to the Financial StatementsFor the year ended 30 June 2019 Alara Resources Annual Report 2019
61
The Consolidated Entity measures credit risk on a fair value basis. The carrying amount of financial assets recorded in the financial statements, net
of any provision for losses, represents the Consolidated Entity’s maximum exposure to credit risk. All receivables noted above are due within 30 days.
None of the above receivables are past due.
(c) Liquidity risk
Liquidity risk is the risk that the Consolidated Entity will encounter difficulty in meeting obligations associated with financial liabilities. There is sufficient
cash and cash equivalents and the non-cash investments can be realised to meet accounts payable arising in the normal course of business. The
financial liabilities maturity obligation is disclosed below:
2019
Financial assets
Cash and cash equivalents
Financial instruments (Term deposits)
Interest free loan to Alara Resources LLC
Trade and other receivables
Financial liabilities
Trade and other payables
Other financial liabilities
Net inflow/(outflow)
2018
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Other Financial Liabilities
Net inflow/(outflow)
Less than
6 months
$
7,562,407
-
87,823
7,650,230
(624,424)
-
(624,424)
7,025,806
3,346,943
12,896
3,359,839
(66,850)
-
3,292,989
6-12
months
$
-
4,696,887
-
-
4,696,887
-
-
-
4,696,887
-
-
-
--
-
-
1-5
years
$
-
-
617,667
-
617,667
-
(644,232)
(644,232)
(26,565)
-
-
-
-
(583,756)
(583,756)
Total
$
7,562,407
4,696,887
617,667
87,823
12,964,784
(624,424)
(644,232)
(1,268,656)
11,696,128
3,346,943
12,896
3,359,839
(66,850)
(583,756)
2,709,233
(d) Fair Value of Financial Assets and Liabilities
The carrying amount of financial instruments recorded in the financial statements represents their fair value determined in accordance with the
accounting policies disclosed in Note 1. The aggregate fair value and carrying amount of financial assets at reporting date are set out in Notes 7,8
and 10. The financial liabilities at reporting date are set out in Note 15 and 18.
(e) Fair value measurements
The fair value of financial assets and financial
Consolidated Entity’s financial assets and liabilities approximate their fair values.
liabilities must be estimated for recognition and measurement or for disclosure purposes. The
ACCOUNTING POLICY NOTE
Financial Instruments
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial
assets, this is equivalent to the date that the entity commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).
24.
FINANCIAL RISK MANAGEMENT (Continued)
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value through profit
or loss’, in which case transaction costs are expensed to profit or loss immediately. Subsequent to initial recognition, these instruments are
measured as set out below:
Financial assets at fair value through profit or loss - A financial asset is classified in this category if acquired principally for the purpose of
selling in the short term or if so designated by management and within the requirements of AASB 139: Recognition and Measurement of Financial
Instruments. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the profit or loss in
the period in which they arise.
Loans and receivables - Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market and are stated at amortised cost using the effective interest rate method.
Financial liabilities - Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and
amortisation.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 39
Notes to the Financial StatementsFor the year ended 30 June 2019 62
Alara Resources Annual Report 2019
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all
unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. At each reporting date, the
Consolidated Entity assesses whether there is objective evidence that a financial instrument has been impaired. Impairment losses are recognised
in the profit or loss. The Consolidated Entity’s investment portfolio (comprising listed and unlisted securities) is accounted for as “financial assets at
fair value through profit or loss”.
Fair Value Estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value
of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted
market prices at the reporting date. The quoted market price used for financial assets held by the Consolidated Entity is the current bid price; the
appropriate quoted market price for financial liabilities is the current ask price. The fair value of financial instruments that are not traded in an active
market (for example over-the-counter derivatives) is determined using valuation techniques, including but not limited to recent arm’s length
transactions, reference to similar instruments and option pricing models. The Consolidated Entity may use a variety of methods and makes
assumptions that are based on market conditions existing at each reporting date. Other techniques, such as estimated discounted cash flows, are
used to determine fair value for other financial instruments.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value
of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is
available to the Consolidated Entity for similar financial instruments. The Consolidated Entity’s investment portfolio (comprising listed and unlisted
securities) is accounted for as a “financial assets at fair value through profit or loss” and is carried at fair value based on the quoted last bid prices at
reporting date.
25.
COMMITMENTS
(a) Lease Commitments
Non-cancellable operating lease commitments:
Within 1 year
1-5 years
After 5 years
Total
2019
$
28,014
21,434
-
49,448
2018
$
10,889
-
-
10,889
The Group leases office space under a non-cancellable operating lease. On renewal, the terms of the lease are renegotiated. The Group does not
have an option to purchase the leased asset at the expiry of the lease period.
(b) Capital Commitments
Non-cancellable capital commitments:
Within 1 year
1-5 years
After 5 years
Total
26.
CONTROLLED ENTITIES
Investment in Controlled Entities
Alara Resources Limited (AUQ)
Alara Peru Operations Pty Ltd (APO)
Alara Saudi Operations Pty Ltd (ASO)
Saudi Investments Pty Limited (SIV)
Alara Oman Operations Pty Limited (AOO)
Alara Kingdom Operations Pty Limited (AKO)
Alara Saudi Holdings Pty Limited (ASH)
Al Hadeetha Resources LLC
Alara Resource Ghana Limited
Alara Peru S.A.C
2019
$
2,502,279
234,747
-
2,777,026
Controlled
entity
Parent
AUQ
Principal Activity
Exploration
Inactive
Country of
Incorporation
Australia
Australia
Date of
Incorporation
6-Dec-06
9-Mar-07
AUQ
AUQ
AUQ
AUQ
AUQ
AOO
AUQ
APO
Management
Australia
4-Aug-10
Development
Management
Management
Inactive
Exploration /
Development
Inactive
Inactive
Australia
Australia
Australia
Australia
Oman
Ghana
Peru
14-Feb-11
28-Jun-10
5-Sep-11
5-Jun-13
6-Feb-07
8-Dec-09
1-Mar-07
Jun-19
100%
100%
100%
100%
100%
100%
100%
51%
100%
100%
2018
$
-
-
-
-
Jun-18
100%
100%
100%
100%
100%
100%
100%
70%
100%
100%
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 40
Notes to the Financial StatementsFor the year ended 30 June 2019 Alara Resources Annual Report 2019
63
27.
JOINTLY CONTROLLED ENTITIES & INVESTMENTS IN ASSOCIATES
Investment in Jointly Controlled Entities
Daris Resources LLC
Alara Resources LLC
28.
RELATED PARTY TRANSACTIONS
Controlled
entity
AOO
AOO
Principal Activity
Exploration
Mining Services
Country of
Incorporation
Oman
Oman
Date of
Incorporation
1-Dec-10
2-Oct-10
Jun-19
50%
35%
Jun-18
50%
70%
(a) Controlled and Jointly Controlled Entities
Details of the interest in controlled entities and jointly controlled entities are set out in Notes 26 and 27.
(b) Transactions with other related parties
The following transactions occurred with related parties during the year ending 30 June 2019:
(i) SW Pinnacle Mineral Exploration Services JV Approved
On 26 September 2018, the Group sold a 35% interest in Alara Resources LLC (ARL) to South West Pinnacle Exploration Limited (SWPE) for
a consideration of OMR 60,000 (AUD $214,442). The Group retains a 35% shareholding in ARL and as a result has been de-consolidated and
reflected as an investment in associate.
SWPE is a Related Party of the Company as it is controlled by Mr Vikas Jain, a Director of Alara Resources Limited. Shareholder approval of the
sale pursuant to Chapter 2E of the Corporations Act (2001) was not required as the transaction fell within an exception to the requirement to
obtain approval. The Company nevertheless decided to seek, and obtained, shareholders’ approval on 28 November 2018 at the Annual General
Meeting.
(ii) The group has provided interest free loan of $617,667 to Alara Resources LLC and has amount owing in trade and other payables of
$108,388.
(iii) Director loan agreement
There was no outstanding directors’ loan during the year.
[The remainder of this page is intentionally blank]
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 41
Notes to the Financial StatementsFor the year ended 30 June 2019 64
Alara Resources Annual Report 2019
28.
RELATED-PARTY TRANSACTIONS (Continued)
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Key Management of the Consolidated Entity are each Director and Company Executive being a company secretary or senior managers with authority
and responsibility for planning, directing and controlling the major activities of the Company or Consolidated entity. Details of key management
personnel individual remuneration are disclosed in the remuneration report section of the directors’ report.
Key Management Personnel remuneration includes the following expenses:
Short term employee benefits:
Remuneration including bonuses and allowances
Total short term employee benefits
Long term benefits
Total other long-term benefits
Post-employment benefits:
Defined benefit pension plans
Defined contribution pension plans
Total post-employment benefits
Termination benefits
Share-based payments
Total remuneration
2019
$
1,001,166
1,001,166
22,806
22,806
-
-
-
-
-
2018
$
934,391
934,391
34,687
34,687
-
-
-
-
-
1,023,972
969,078
29.
CONTINGENT ASSETS AND LIABILITIES
Contingent assets and liabilities exist in relation to certain exploration and evaluation of the Consolidated Entity subject to the continued development
and advancement of the same, as described below.
(a)
(b)
(c)
Shareholders’ Agreement – Daris Resources LLC – Daris Copper-Gold Project (Oman) – On 28 August 2010, Alara Oman Operations
Pty Limited, a wholly owned subsidiary of the Company, entered into a shareholders’ agreement with Daris Copper Project concession
holder, Al Tamman Trading Establishment LLC (ATTE) pursuant to which Alara will invest up to a total of US$7 million into a new joint
venture company (“Daris Resources LLC” (DarisCo)) to gain up to a 70% shareholding. DarisCo was incorporated in Oman on 1 December
2010 (Alara 50%: ATTE 50%). To the extent that further funding is required, Alara is entitled to advance up to US$4 million to DarisCo as a
loan (on commercial terms and repayable as a priority before distribution of dividends) - convertible into equity in DarisCo to take Alara’s
interest to 70%. DarisCo has exclusive rights (to be further formalised under a management agreement with ATTE) to manage, operate and
commercially exploit the concession. DarisCo is governed by a 6-member board of directors with 3 nominees (including the Chairman) from
Alara and 3 nominees from ATTE.
Shareholders’ Agreement – Alara Resources LLC (Oman) – On 8 August 2010, Alara Oman Operations Pty Limited, a wholly owned
subsidiary of the Company, entered into a shareholders’ agreement with Sur United International Co. LLC (SUR) pursuant to which a new
joint venture company (“Alara Resources LLC” (AlaraCo)) was established to identify, secure and commercially exploit other exploration and
evaluation in Oman introduced to AlaraCo by SUR. AlaraCo was incorporated in Oman on 2 October 2010. Alara contributed 100% of the
initial capital of 150,000 Omani Rials (RO) (equivalent to ~A$425,000 at that time) for its 70% shareholding interest in AlaraCo with SUR
then holding the balance of 30%. Alara transferred a 35% shareholding in AlaraCo to South West Pinnacle Exploration Ltd in 2018. In
January 2019 SUR transferred its 30% shareholding in AlaraCo to Al Tasnim Infrastructure Services LLC. AlaraCo now conducts the
business of drilling and exploration services under a joint venture agreement between its shareholders.
Shareholders’ Agreement – Al Hadeetha Copper-Gold Project (Oman) – On 23 November 2011, Alara Oman Operations Pty Limited (a
wholly owned subsidiary of the Company) (AOOPL) entered into a shareholders’ agreement with the concession holder, Al Hadeetha
Resources LLC (AHR) and the then shareholders of AHR. An Amendment Agreement between Alara and Al Hadeetha Investments LLC
(AHI) dated 3 August 2013 acknowledged that Alara then held a 70% shareholding in AHR and AHI held 30%. Post completion of a definitive
feasibility study, the AHR Board may issue shareholders with payment notices requiring them to contribute equity funding in proportion to
their shareholding. If AHI declines to make the required capital contribution to develop the Project’s first mine, then Alara may elect to pay
AHI the amount which AHI were required to contribute under their payment notice and (subject to Omani law) Alara may increase its economic
interest in AHR to 75%. This payment shall be treated as a loan and Alara shall be entitled to 60% of all dividends in favour of AHI until such
time that 25% of the total amount required under the payment notices is repaid to Alara. If an AHR shareholder’s interest falls below 10%,
that party shall (subject to Omani law) assign its dividend and voting rights to the other shareholder(s) in exchange for a 2% net smelter
return on production payable by AHR. On 18 November 2018 AOOPL sold a 19% interest in AHR to Al Tasnim Infrastructure Services LLC
(Al Tasnim). AHR is governed by a 4-member Board of directors with two nominees appointed by Alara (including the Chairman) one nominee
appointed by AHI (30% shareholder) provided that it continues to own at least 21% of the shares of AHRL and one nominee appointed by
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 42
Notes to the Financial StatementsFor the year ended 30 June 2019 Alara Resources Annual Report 2019
65
(d)
29.
(e)
(f)
(g)
Al Tasnim (19% shareholder) provided that it continues to own at least 19% of the shares of AHRL. Al Tasnim is not required to contribute
any additional funds to AHI in respect of the first mine to be constructed and operated by AHR - the Al Washihi mine.
Directors' Deeds – The Company has entered into deeds of indemnity with each of its Directors indemnifying them against liability incurred
in discharging their duties as directors/officers of the Consolidated Entity. As at the reporting date, no claims have been made under any
such indemnities and accordingly, it is not possible to quantify the potential financial obligation of the Consolidated Entity under these
indemnities.
CONTINGENT ASSETS AND LIABILITIES (Continued)
Bayan Mining LLC JV Agreement – On 16 July 2015 Saudi Investments Pty Ltd (a wholly owned subsidiary of the Company) entered into
a JV agreement with Bayan Mining LLC. 40,000,000 shares are to be issued upon satisfaction of all of the conditions precedent, which
includes the granting of the Khnaiguiyah mining licence to Bayan or the JV.
Off-take agreement – Al Hadeetha Copper Gold Project – On 15 March 2017 Alara Oman Operations Pty Ltd (a wholly owned subsidiary
of the Company) (Seller) entered into an off-take agreement for the supply of copper concentrate from the Al Hadeetha Copper Project
(Offtake Agreement) to Statdrome Pte Ltd (Buyer). Under the Offtake Agreement, annual concentrate production of approximately 35,000
wmt will be shipped at regular intervals from the Sohar port. There also exists the possibility of supplying the material to the Omani smelter
in case it restarts. However, the project financial model allows for sea freight and other charges associated with the sale of concentrate from
the port at Sohar. The Offtake Agreement also includes a pre-payment by the Buyer of US$6 million to assist in funding project construction
costs and mine start-up and will be drawn down in instalments during the project construction phase, starting once the mining licence is
issued. In June 2018 the Buyer made the first pre-payment of US$1.2 million under the Offtake Agreement.
The prepayment is to be repaid to the Buyer by it deducting US$0.5 million plus interest from each amount due to the Seller under provisional
If the Seller does not deliver copper concentrate to the Buyer, the Buyer may call
invoices for the sale of copper concentrate to the Buyer.
upon a guarantee provided by the Seller and Al Hadeetha Investment LLC for the performance of the Seller’s obligations under the Offtake
Agreement.
Loan to unrelated party (AHI) (Oman) - On 26 October 2017 AHI gave a bank guarantee of OMR 30,000 to the Omani Ministry of the
Environment as security for performance of the environmental obligations of AHR in connection with the Al Hadeetha Project mining licence.
AHI was required to deposit the amount of the face value of the bank guarantee with its bank as security in the event that the bank guarantee
is called upon. Pursuant to an agreement between the Consolidated Entity and AHI, the Consolidated Entity paid OMR 20,000 to AHI on or
about that date, representing an approximation of its share of liability to contribute to the costs of remediating any unmet environmental
obligations of AHR. This amount will be returned to the Consolidated Entity in the event that AHR performs its environmental obligations in
relation to that mining licence.
30.
SUBSEQUENT EVENTS
The Directors are not aware of any matters or circumstances at the date of this Directors’ Report, other than those referred to in this Directors’ Report
or the financial statements or notes thereto, that have significantly affected or may significantly affect the operations, the results of operations or the
state of affairs of the Company and Consolidated Entity in subsequent financial years.
[The remainder of this page is intentionally blank]
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 43
Notes to the Financial StatementsFor the year ended 30 June 2019 66
Alara Resources Annual Report 2019
Directors’ Declaration
The Directors of the Company declare that:
1.
2.
3.
4.
5.
The Financial Statements, comprising the Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated
Statement of Financial Position, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows and
accompanying notes as set out on pages 24 to 45, are in accordance with the Corporations Act 2001 and:
(a)
(b)
Comply with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001; and
Give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2019 and of its performance for the year ended
on that date;
In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable;
The Remuneration Report disclosures set out (within the Directors’ Report) on pages 11 to 17 (as the audited Remuneration Report) comply
with section 300A of the Corporations Act 2001;
The Company has included in the notes to the Financial Statements an explicit and unreserved statement of compliance with the International
Financial Reporting Standards.
The Directors have received the declarations required to be made to the Directors by the Managing Director (the person who performs the
chief executive officer function) and Chief Financial Officer in accordance with section 295A of the Corporations Act 2001 for the financial
year ended 30 June 2019.
This declaration is made in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001.
Justin Richard
Managing Director
27 September 2019
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 44
Alara Resources Annual Report 2019
67
Independent Auditor’s Report
Independent Auditor's Report
To the Members of Alara Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Alara Resources Limited (“the Company”) and its
subsidiaries (“the Consolidated Entity”), which comprises the consolidated statement of
financial position as at 30 June 2019, the consolidated statement of profit or loss and
other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion:
a.
the accompanying financial report of the Consolidated Entity is in accordance with
the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Consolidated Entity’s financial position as
at 30 June 2019 and of its financial performance for the year then ended;
and
complying with Australian Accounting Standards and the Corporations
Regulations 2001.
b.
the financial report also complies with International Financial Reporting Standards
as disclosed in Note 1.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those
standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance about
whether the financial report is free from material misstatement. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Consolidated Entity in
accordance with the auditor independence requirements of the Corporations Act 2001
and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
68
Alara Resources Annual Report 2019
Independent Auditor’s Report
To the Members of Alara Resources Limited (Continued)
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report of the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key audit matter
How our audit addressed the key audit matter
Exploration and Evaluation $4,919,660
Our procedures included, amongst others:
(Refer to Note 14)
Exploration and evaluation is a key audit matter due
to:
− The significance of the balance to the
Consolidated Entity’s financial position.
− The level of judgement required in evaluating
management’s application of the requirements of
AASB 6 Exploration for and Evaluation of
Mineral Resources (“AASB 6”). AASB 6 is an
industry specific accounting standard requiring
the application of significant judgements,
estimates and industry knowledge. This includes
specific requirements for expenditure to be
capitalised as an asset and subsequent
requirements which must be complied with for
capitalised expenditure to continue to be carried
as an asset.
− The assessment of impairment of exploration
and evaluation expenditure being inherently
difficult.
− Assessed management’s determination of its
areas of interest for consistency with the
definition in AASB 6. This involved analysing the
tenements in which the consolidated entity holds
an interest and the exploration programmes
planned for those tenements;
− For each area of interest, we assessed the
Consolidated Entity’s rights to tenure by
corroborating to government registries and
evaluating agreements in place with other parties
as applicable;
− We tested the additions to capitalised
expenditure for the year by evaluating a sample
of recorded expenditure for consistency to
underlying records, the capitalisation
requirements of the Consolidated Entity’s
accounting policy and the requirements of AASB
6;
− We considered the activities in each area of
interest to date and assessed the planned future
activities for each area of interest by evaluating
budgets for each area of interest.
− We assessed each area of interest for one or
more of the following circumstances that may
indicate impairment of the capitalised
expenditure:
− the licenses for the right to explore expiring in
the near future or are not expected to be
renewed;
− substantive expenditure for further
exploration in the specific area is neither
budgeted or planned
Independent Auditor’s Report continued Alara Resources Annual Report 2019
69
Independent Auditor’s Report
To the Members of Alara Resources Limited (Continued)
Key audit matter
How our audit addressed the key audit matter
− decision or intent by the Consolidated Entity
to discontinue activities in the specific area of
interest due to lack of commercially viable
quantities of resources; and
− data indicating that, although a development
in the specific area is likely to proceed, the
carrying amount of the exploration asset is
unlikely to be recovered in full from
successful development or sale.
Development Assets $6,534,088
Our procedures included, amongst others:
− Reviewed the Feasibility Study and evaluated
management’s methodology in the model and
the basis for key assumptions;
− Considered the appropriateness of the discount
rate used in the model;
− Considered whether the assets comprising the
cash-generating unit had been correctly
allocated;
− Substantiated a sample of expenditure by
agreeing to supporting documentation;
− We assessed the Consolidated Entity’s rights to
tenure by corroborating to the mining license;
and
− We assessed the adequacy of disclosures
included in Notes 1.7, 13 and 14 in the financial
report.
(Refer to Note 13)
During the year the Consolidated Entity transferred
$5,672,100 from exploration and evaluation assets
to development assets following the commencement
of development activities at the Al Hadeetha
Copper-Gold Project.
Subsequent to the transfer an additional $568,551
development was incurred and capitalised. The
carrying amount of development assets as at 30
June 2019 was $6,534,088.
The impairment assessment conducted under AASB
136 Impairment of Assets as at the date of transfer
involved a comparison of the recoverable amount of
the Al Hadeetha Copper-Gold Project assets with
their carrying amounts in the financial statements.
The evaluation of the recoverable amount of these
assets at transfer is considered a key audit matter
as it was based upon a model which required
significant judgement in verifying the key
assumptions supporting the expected discounted
future cash flows from the Al Hadeetha Copper-Gold
Project.
In addition, our audit focussed on the Consolidated
Entity’s assessment of the carrying amount of the
capitalised development assets, as this is one of the
most significant assets of the Consolidated Entity.
Independent Auditor’s Report continued 70
Alara Resources Annual Report 2019
Independent Auditor’s Report
To the Members of Alara Resources Limited (Continued)
Key audit matter
How our audit addressed the key audit matter
Disposal of subsidiaries
Our procedures included, amongst others:
(Refer to Note 11)
− Assessed the terms of the contractual
During the year the Consolidated Entity disposed of
a 19% interest in Al Hadeetha Resources LLC
(“AHRL”), reducing its continuing interest to 51%.
Consideration received for the disposal was
$11,028,000.
As a result, the Consolidated Entity’s ownership
interest has reduced but has not resulted in losing
control of AHRL pursuant to AASB 10 Consolidated
Financial Statements.
In a separate transaction, the Consolidated Entity
sold a 35% interest in Alara Resources LLC (“ARL”),
reducing its continuing interest to 35%.
Consideration received for the disposal was
$214,442.
As a result, the Consolidated Entity has lost control
of ARL which is now accounted for as an investment
in an associate pursuant to AASB 128 Investments
in Associates and Joint Ventures.
The above transactions are considered key audit
matters as they are material to the Consolidated
Entity as well as the complexity in accounting for the
disposals.
agreements;
− Substantiated the disposal date balance sheet
for the transactions to supporting documentation;
− Assessed whether the gain on disposal for the
transactions has been correctly calculated in
accordance with the relevant accounting
standards;
− With respect to the ARL transaction, we
assessed whether the Consolidated Entity
exercises significant influence for the investment
in ARL is to be classified as an investment in
associate;
− With respect to the AHRL transaction, we
assessed whether the Consolidated Entity
retained control over AHRL, and as a result it
constituted a transaction with non-controlling
interests; and
− Assessed the adequacy of disclosures included
in Note 11 and 21 in the financial report.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Consolidated Entity’s annual report for the year ended 30 June 2019, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
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.
Independent Auditor’s Report continued Alara Resources Annual Report 2019
71
Independent Auditor’s Report
To the Members of Alara Resources Limited (Continued)
SAUDI ARABIA
Khnaiguiyah Zinc-Copper Project
Responsibilities of the Directors for the Financial Report
The Khnaiguiyah Zinc-Copper Project1 is located approximately 170km south-west of the capital city Riyadh and 35km north-west of Al-Quwayiyah,
which is a regional centre located around the Riyadh to Jeddah Expressway.
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial
The Khnaiguiyah Project previously comprised one mining licence, 2 exploration licences and 5 exploration licence applications, totalling
approximately 380km2 held or applied for by United Arabian Mining Company (“Manajem”). The two exploration licences expired and are considered
by Alara to be non-core to the Khnaiguiyah Project. The mining licence that was issued in December 2010, was cancelled in or about December
2015, and is currently the subject of a legal appeal by Manajem.
Statements, that the financial report complies with International Financial Reporting Standards.
As at the date of this report, a final appeal decision had not been made, nor had the mining licence been reissued.
Project
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a
Location/ Property
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
Name
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
TBC
Grant/ Application
Date
Licence
Owner
Tenement
5.462km2
Status
Area
2010
Cancelled – appeal
decision pending
Mining Lease No 2.
Qaaf
~170km west of
Riyadh
Khnaiguiyah Zinc-Copper
Project
Country
Saudi
Arabia
Auditor’s Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are to
obtain reasonable assurance about whether the financial report as a whole is 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 the Australian
Auditing Standards 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 this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
−
−
−
−
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
1 Refer to 18 April 2013 ASX Announcement: Maiden JORC Ore Reserves – Khnaiguiyah Zinc-Copper Project
Independent Auditor’s Report continued
72
Alara Resources Annual Report 2019
Independent Auditor’s Report
To the Members of Alara Resources Limited (Continued)
−
−
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible for
the direction, supervision and performance of the Group audit. We remain solely responsible for our
audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2019.
The directors of the Company are responsible for the preparation and presentation of the remuneration report
in accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion, the Remuneration Report of Alara Resources Limited, for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
DOUG BELL CA
Partner
Dated at Perth this 27th day of September 2019
Independent Auditor’s Report continued
Alara Resources Annual Report 2019
73
Forward Looking Statements
Forward Looking Statements
This report contains “forward-looking statements” and “forward-looking information”, including statements and forecasts which include without
limitation, expectations regarding future performance, costs, production levels or rates, mineral reserves and resources, the financial position of Alara,
industry growth and other trend projections. Often, but not always, forward-looking information can be identified by the use of words such as “plans”,
“expects”, “is expected”, “is expecting”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes”, or variations (including
negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might”, or “will” be taken,
occur or be achieved. Such information is based on assumptions and judgements of management regarding future events and results. The purpose
of forward-looking information is to provide the audience with information about management’s expectations and plans. Readers are cautioned that
forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or
achievements of Alara and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by
the forward-looking information. Such factors include, among others, changes in market conditions, future prices of gold and silver, the actual results
of current production, development and/or exploration activities, changes in project parameters as plans continue to be refined, variations in grade or
recovery rates, plant and/or equipment failure and the possibility of cost overruns.
Forward-looking information and statements are based on the reasonable assumptions, estimates, analysis and opinions of management made in
light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes
to be relevant and reasonable in the circumstances at the date such statements are made, but which may prove to be incorrect. Alara believes that
the assumptions and expectations reflected in such forward-looking statements and information are reasonable. Readers are cautioned that the
foregoing list is not exhaustive of all factors and assumptions which may have been used. Alara does not undertake to update any forward-looking
information or statements, except in accordance with applicable securities laws.
JORC Competent Persons Statements
The information in this report that relates to the feasibility study of the Al Hadeetha Copper-Gold project is based on information compiled by Mr
Atmavireshwar Sthapak, who is a Member of the Australasian Institute of Mining and Metallurgy and is an executive director of Alara Resources. Mr
Sthapak has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is
undertaking to qualify as a Competent Person as defined in the JORC Code, 2012 edition. Mr Sthapak 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 announcement that relates to Ore Reserve of the Al Hadeetha Project was compiled by Mr Harry Warries, who is a Fellow of the
Australasian Institute of Mining and Metallurgy, and a consultant to Alara Resources. Mr Warries has sufficient experience which is relevant to the style
of mineralisation and type of deposit under consideration, and to the activity which he is undertaking to qualify as a Competent Person as defined in the
2012 Edition of the ‘Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ In assessing the appropriateness of the
Ore Reserve estimate, Mr Warries has relied on various reports, from both internal and external sources, in either draft or final version, which form part of
or contribute to the Al Hadeetha Project Feasibility Study. These reports are understood to be compiled by persons considered by Alara to be competent
in the field on which they have reported. Mr Warries consents to the inclusion in the report of the information in the form and context in which it appears.
The information in this announcement that relates to JORC Resources of the Daris Copper Gold Project and the Al Hadeetha Copper-Gold Project
(Oman) are based on, and fairly represents, information and supporting documentation prepared by Mr Ravi Sharma, who is a Chartered Member of The
Australasian Institute of Mining and Metallurgy, Registered Member of The Society for Mining, Metallurgy and Exploration. Mr Sharma was a principal
consultant to Alara Resources and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration, and
to the activity he is undertaking to qualify as a Competent Person as defined in the JORC Code, 2012 edition. Mr Sharma approves and consents to the
inclusion in the report of the matters based on his information in the form and context in which it appears.
Annual JORC Resource and Reserves Review
The Company conducted an annual review of its Mineral Resources and Ore Reserves with effect at 30 September 2019. The effective date of each
Mineral Resource and Ore Reserves statement in this report is 30 September 2019. There have been no material changes to any previously reported
Mineral Resources or Ore Reserves between the previous annual review, 30 September 2018 and the effective date of the latest annual review.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 50
74
Alara Resources Annual Report 2019
Securities Information
(Current as at 14 October 2019)
Current as at 14 October 2019
Issued Securities
Fully paid ordinary shares
Total
At a general meeting of shareholders:
Quoted on ASX
629,017,589
Unlisted
–
629,017,589
on a show of hands, each person who is a member or sole proxy has one vote; and
(a)
(b) on a poll, each shareholder is entitled to one vote for each fully paid share.
–
Total
629,017,589
629,017,589
Summary of Directors’ and Employees’ Unlisted Options
Exercise Price
Date of Issue
Description of Options
Expiry Date
Vesting Criteria1
No. of Options
9 March 2017
$0.04 (9 Mar 2020) Options
$0.04
9 March 2020
None
3,000,000
Distribution of Listed Ordinary Fully Paid Shares
Spread of Holdings
Number of Holders
Number of Units
296,116
624,401
1,070,885
12,611,178
614,415,009
629,017,589
% of Total Issued Capital
0.047%
0.099%
0.170%
2.005%
97.679%
100%
1 – 1000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
TOTAL
877
269
128
333
251
1,858
Unmarketable parcels
Minimum $500.00 parcel at $0.02 per unit
Minimum parcel size
24,999
Holders
1,402
Units
4,042,552
Top 20 Listed Ordinary Fully Paid Shareholders
Rank
Shareholder
Shares Held
% Issued Capital
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12..
13.
14.
15.
16.
17.
18.
19.
20.
Total
Mr Vikas Malu
Ms Meng Meng
Citicorp Nominees Pty Ltd
Mr Vikas Jain
Mr Justin Richard
Al Hadeetha Investment Services LLC
Metals Corners Holding Co
Mr Piyush Jain
Whitechurch Developments Pty Ltd
Mr Tyrone James Giese
BNP Paribas Nominees Pty Ltd
Mr Jay Hughes + Mrs Linda Hughes
Mr Mohammed Saleh Alalshaikh
Ferguson Superannuation
Mr Brian Joseph Flannery + Mrs Peggy Ann Flannery
Mr Peter Kelvin Rodwell
Mr. Anthony Cullen + Mrs Sue Cullen
Mr Warren William Brown + Mrs Marilyn Helena Brown
Mr Vikas Malu
Mr Pradeep Kumar Goyal
On-Market Buy Back
There is no current on-market buy back.
1 Options which have vested may be exercised at any time thereafter, up to their expiry date.
57,142,050
40,454,437
38,238,924
37,745,930
34,119,526
31,500,000
31,012,217
24,199,437
20,575,550
17,456,189
16,528,066
15,650,000
11,347,387
10,000,000
9,555,785
9,422,858
8,848,381
8,664,286
7,000,000
6,794,426
436,255,449
9.08%
6.43%
6.08%
6.00%
5.42%
5.01%
4.93%
3.85%
3.27%
2.78%
2.63%
2.49%
1.80%
1.60%
1.52%
1.50%
1.40%
1.38%
1.11%
1.08%
69.36%
Alara Resources Annual Report 2019
75
Corporate Directory
Directors
James Phipps
Justin Richard
Atmavireshwar Sthapak
Vikas Jain
Stephen Gethin
Avi Sthapak
Company Secretary
Stephen Gethin
Non-Executive Chairman
Managing Director
Executive Director
Non-Executive Director
Alternate Director
Non-Executive Director
Share Registry
Advanced Share Registry Ltd
110 Stirling Highway
Nedlands, Western Australia 6009
Telephone:
Facsimile:
+61 8 9389 8033
+61 8 9262 3723
Level 6, 225 Clarence Street
Sydney, New South Wales 2000
Telephone:
E-mail:
Website:
+61 2 8096 3502
admin@advancedshare.com.au
www.advancedshare.com.au
Registered Office and Business Address
Suite 1.02,110 Erindale Road
Balcatta Western Australia 6021
PO Box 963
Balcatta, Western Australia 6914
Telephone:
E-mail:
+ 61 8 9240 4211
info@alararesources.com
Australian Securities Exchange
ASX Limited
Level 40, Central Park
152-158 St Georges Terrace
Perth, Western Australia 6000
ASX Code: AUQ
Auditors
Bentleys Audit & Corporate (WA) Pty Ltd
Level 3, London House
216 St Georges Terrace
Perth, Western Australia 6000
Telephone:
Facsimile:
Website:
ABN: 27 122 892 719
Corporate Governance Statement
The Company’s Corporate Governance Statement is available on the
Company’s Website:
www.alararesources.com
+61 8 9226 4500
+61 8 9226 4300
www.bentleys.com.au
Website: www.alararesources.com
Investors wishing to receive email alerts of all Company ASX Announcements can register their interest here:
http://www.alararesources.com/irm/UserEdit.aspx?masterpage=7&title=Email%20Alerts&RID=317
or by emailing info@alararesources.com.
ALARA RESOURCES LIMITED
2019 FULL YEAR REPORT | 1
Alara Resources Limited
Suite 1.02, 110 Erindale Road, Balcatta, Western Australia 6021
T +61 8 9240 4211 | E info@alararesources.com
www.alararesources.com