ANNUAL REPORT
2021
Competent Persons
This Mineral Resources and Ore Reserves Statement as a whole has been approved by Mr D Ian Chalmers, FAusIMM, FAIG, (Executive Director of the
Company,) who 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 ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Mr Chalmers has provided his prior written consent to the inclusion in this report of the Mineral Resources and Ore Reserves
Statement in the form and context in which it appears.
The information in this report that relates to the TGO Mineral Resource estimates is based on, and fairly represents, information which has been compiled by
Mr Craig Pridmore, Geology Manager Tomingley Gold Operations, who is a Member of the Australasian Institute of Mining and Metallurgy and an employee
of Alkane Resources Ltd. Mr Pridmore has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to
the activity that is being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves’.
The information in this report that relates to the TGO Open Pit Ore Reserve estimate is based on, and fairly represents, information which has been compiled
by Mr John Millbank (Proactive Mining Solutions), an independent consultant, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr
Millbank has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that is being
undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves’.
The information in this report that relates to the TGO Underground Ore Reserve estimate is based on, and fairly represents, information which has been
compiled by Mr Christopher Hiller (Hiller Enterprises Pty Ltd), an independent consultant, who is a Member of the Australasian Institute of Mining and
Metallurgy. Mr Hiller has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that
is being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’.
The information in this report that relates to Roswell and San Antonio Mineral Resource estimate is based on, and fairly represents, information compiled by
Mr David Meates MAIG, (Alkane Exploration Manager NSW), who 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 Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves.
The information in this report that relates to the Roswell and San Antonio Open Pit Ore Reserve estimate is based on, and fairly represents, information
that has been compiled by Mr John Millbank (Proactive Mining Solutions), an independent consultant, who is a Member of the Australasian Institute of
Mining and Metallurgy. Mr Millbank has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to
the activity that is being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves’. Mr Millbank consents to the inclusion in this report of the matters based on his information in the form and
context in which they appear.
The information in this report that relates to the PHGP Mineral Resource estimate is based on, and fairly represents, information which has been
compiled by Mr Craig Pridmore, Geology Manager Tomingley Gold Operations, who is a Member of the Australasian Institute of Mining and Metallurgy
and an employee of Alkane Resources Ltd. Mr Pridmore has sufficient experience that is relevant to the style of mineralisation and type of deposit under
consideration and to the activity that is being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves’.
Previously reported information
All information in this report that relates to Mineral Resource or Ore Reserve estimates has been extracted from the Company’s ASX announcement dated
7 September 2021. Exploration results (Northern Molong Porphyry Project) are extracted from the Company’s ASX announcements noted in the text of the
report.
The relevant ASX announcements are available to view on the Company’s website. The Company confirms that, other than mining depletion, it is not aware
of any new information or data that materially affects the information included in the relevant market announcement(s); in the case of estimates of Mineral
Resources or Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement
continue to apply and have not materially changed; and that the form and context in which the Competent Person’s findings are presented have not been
materially altered.
Disclaimer
This report contains certain forward-looking statements and forecasts, including possible or assumed reserves and resources, production levels and rates,
costs, prices, future performance or potential growth of Alkane Resources Ltd, industry growth or other trend projections. Such statements are not a
guarantee of future performance and involve unknown risks and uncertainties, as well as other factors which are beyond the control of Alkane Resources
Ltd. Actual results and developments may differ materially from those expressed or implied by these forward-looking statements depending on a variety of
factors. Nothing in this report should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities.
This document has been prepared in accordance with the requirements of Australian securities laws, which may differ from the requirements of United
States and other country securities laws. Unless otherwise indicated, all Ore Reserve and Mineral Resource estimates included or incorporated by reference
in this document have been, and will be, prepared in accordance with the JORC classification system of the Australasian Institute of Mining, and Metallurgy
and Australian Institute of Geosciences.
Contents
Business Review
Chairman’s Message
Group Overview
Tomingley Gold Operations
Projects & Exploration
ESG
Financial Report
Directors’ Report
Auditor’s Independence Declaration
Financial Statements
Consolidated Financial Statements
Notes to the
Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
4
5
6
8
16
24
30
31
51
52
54
58
94
95
Shareholder Information
100
Corporate
Governance Statement
101
Schedule of Mining Tenements
102
Company
Information
ACN 000 689 216
ABN 35 000 689 216
Directors
I J Gandel
N P Earner
D I Chalmers
A D Lethlean
G M Smith
(Non-Executive Chairman)
(Managing Director)
(Technical Director)
(Non-Executive Director)
(Non-Executive Director)
Joint Company Secretaries
D Wilkins
J Carter
Registered office
and principal place of business
Level 4
66 Kings Park Road
West Perth WA 6005
Telephone: 61 8 9227 5677
Share register
Advanced Share Registry Limited
110 Stirling Highway
Nedlands WA 6009
Auditor
PricewaterhouseCoopers
Brookfield Place
125 St Georges Terrace
Perth WA 6000
Securities exchange listings
Ordinary fully paid shares
Australian Securities Exchange (Perth)
ASX code: ALK
Contact
http://www.alkane.com.au
mail@alkane.com.au
BUSINESS
REVIEW
4
| Alkane Resources Annual Report 2021 BUSINESS REVIEW | CHAIRMAN'S MESSAGE
Chairman's Message
On behalf of your Board of Directors, I present
the Alkane Resources Annual Report for 2021.
In the past year, we have made excellent
progress in our quest to become Australia’s
next multi-mine gold producer, advancing
projects at both Tomingley and Boda.
We have come to the end of another strong year for Alkane, a year in which we successfully demerged Australian Strategic
Materials Ltd (ASM) and the Dubbo Project, allowing us to consolidate our focus on gold. ASM has gone from strength to
strength since the demerger and on behalf of the Board and Alkane shareholders I wish them every success in the future.
A key focus of Alkane for the year was progressing the approval process for development of the San Antonio and Roswell
deposits that will prolong the life of the Tomingley gold mine. Updated Mineral Resources were announced and incorporated
into the Tomingley life of mine plan, which now extends until at least 2031.
As required for a NSW State Significant Development, we are currently finalising the all-important Environmental Impact
Statement, which is the culmination of a lot of hard work by a great number of people. On behalf of the Board, I thank our
employees and the many consultants who have undertaken extensive environmental studies and community consultations,
not to mention careful design of the project informed by these studies. I also thank the community and stakeholders for their
positive and willing engagement. We are hoping for approval around the middle of 2022, and look forward to embarking on this
next chapter at Tomingley.
I also extend thanks to our gold mining and production teams at Tomingley, who have continued to perform reliably and
productively in another year of uncertainty due to the pandemic. Our production of 56,958 ounces of gold poured for the year
exceeded guidance, which is testament to their diligence.
Following our major discovery of extensive gold mineralisation at Boda in 2019, our exploration team focused this past year
on a large drilling program to test the dimensions of the system. There is still a long way to go, but the encouraging results
continue to fuel our optimism that there is potential for a large tier-one gold-copper project. We were also delighted for Alkane
to be named the NSW Minerals Council’s 2021 Explorer of the Year in May, on the back of the Boda discovery. I congratulate our
Technical Director, Ian Chalmers, and our NSW exploration team on this achievement.
As we continue to focus on our two major gold projects in the coming year, I once again thank our Managing Director, Nic
Earner, and the entire Alkane team, along with our strategic partners and consultants. I also extend thanks to our many
shareholders and stakeholders for their ongoing support of Alkane.
Ian Gandel
Chairman
Alkane Resources Ltd
5
Alkane Resources Annual Report 2021 |
Group Overview
Alkane has maintained a strong focus on gold exploration, production and
investment, making significant advances towards its vision of becoming a multi-
mine gold producer and successfully demerging Australian Strategic Materials.
About Alkane
Alkane Resources Ltd is the parent entity of the Alkane
Group, and is poised to become Australia’s next multi-mine
gold producer. The Group’s projects and operations are
primarily located in central western New South Wales in
eastern Australia.
The Company is also progressing a drill program in the
Northern Molong Volcanic belt, east of Dubbo, following
the discovery of extensive gold-copper porphyry
mineralisation at Boda in 2019. Alkane believes Boda has
the potential to be a large, tier-one gold-copper project.
Current gold production is from Alkane’s wholly owned
subsidiary, Tomingley Gold Operations, which has been
operating since 2014. The Company is currently expediting
the approval pathway to develop two gold deposits
immediately south of Tomingley to extend the mine’s life to
at least 2031.
Alkane has an enviable exploration track record and
controls several highly prospective gold and copper
tenements. A major focus is the tenement area between
Tomingley and Peak Hill, where a number of large
resources have been defined that have the potential to
provide additional ore for Tomingley’s operations.
Alkane’s gold interests extend throughout Australia,
including holdings of ~19.8% of Genesis Minerals (ASX:
GMD) and ~9.7% of Calidus Resources (ASX: CAI), both
gold exploration and development companies in Western
Australia. The Company continues to evaluate strategic
investments in other gold exploration and aspiring mining
companies, where it can contribute additional capital,
expertise and operating capability, for mutual benefit.
Alkane is listed on the Australian securities exchange
(ASX:ALK).
6
| Alkane Resources Annual Report 2021
BUSINESS REVIEW | GROUP OVERVIEW
ASM demerged
Alkane demerged its former subsidiary, Australian Strategic
Materials (ASM), to realise a very large increase in
combined market value in the following year.
ASM was Alkane’s holding company for the polymetallic
Dubbo Project (rare earths, zirconium, niobium and
hafnium). The Alkane Board judged it time for ASM to
move forward independently, identifying:
• rising but diverging investor interest in gold and
critical metals (particularly rare earths), and
• the need for independent strategic focus for each
company, which have different markets and growth
opportunities.
Highlights of the year
Tomingley mine life extended
Alkane has incorporated the San Antonio and Roswell
resources into the Tomingley life of mine plan, which
has been extended to at least 2031. The plan shows the
production of approximately 745,000 ounces of gold and
relies upon development approval being achieved.
Large-scale Boda system revealed
Alkane’s extensive drill program at Boda and surrounds
continues to reveal the very large scale of the Boda system
and indicates potential repeat systems of significant scale
within the structural corridor.
Strategic investment
With the approval of Genesis shareholders, Alkane invested
$2.2 million to maintain its holding of approximately 19.8
per cent of Genesis Minerals Ltd (ASX:GMD). The Company
also invested another $7.5 million during the year for rights
issues and placement, for a total investment of $9.7 million.
The demerger was announced 20 May 2020 and passed at
an Extraordinary General Meeting on 16 July 2020. ASM
was first listed on the ASX on 30 July 2020. The demerger
has been a resounding success, with Alkane’s market
capitalisation largely unchanged over the financial year,
and ASM’s market capitalisation close to $1 billion as at 30
June 2021.
745,000oz
Tomingley
extended to
2031
Drilled 36 holes
totalling
36,638m
at Boda/Kaiser
Alkane holds
19.8%
Genesis Minerals
Alkane Resources Annual Report 2021 |
7
BUSINESS REVIEW | GROUP OVERVIEW
BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS
Tomingley Gold Operations
While mining and production continued, the Company progressed consultations,
finalised project design and updated Mineral Resource estimates for the
Tomingley Gold Extension Project. These were incorporated into an updated life
of mine plan that extends to at least 2031.
Mining and Production
Tomingley Gold Operations is a wholly owned subsidiary
of Alkane, located near the village of Tomingley,
approximately 50 kilometres southwest of Dubbo in central
western New South Wales. The gold processing plant was
commissioned in January 2014 and has been operating at
the design capacity of 1Mtpa since late May 2014. Mining
is currently based on the Caloma and Wyoming deposits.
Open cut mining occurred in the Wyoming One, Wyoming
Three, Caloma One and Caloma Two pits from late 2013
until early 2019. Upon improved gold prices, development
of a previously approved cutback in the northeast of the
Caloma One open cut commenced in September 2020.
Reconciliations of ore mined compared to resource
estimates show the grade is higher than forecast, resulting
in higher gold production.
Development of the underground mine at the Wyoming
One deposit continued during the year. An additional portal
was established at the base of the Caloma One pit, and
that drive has connected with the underground drive from
Wyoming One and Caloma Two.
The operation processed a mix of underground stope
material and ore extracted from the Caloma cutback, with
low-grade stockpiles processed when capacity permitted.
The processing plant continues to perform very well, with
recovery performing as expected. Production of 56,958
ounces for the financial year exceeded the guidance of
50,000-55,000 ounces (ASX Announcement 8 July 2021).
8
Total gold poured in FY2021:
56,958 ounces
at an All in Sustaining
Cost (AISC)* of
A$1,320
per ounce
Total gold sold in FY2021:
55,929 ounces
at an average of
A$2,286
per ounce
*All in Sustaining Cost (AISC) comprises all site operating
costs, royalties, mine exploration, sustaining capex and
mine development and an allocation of corporate costs,
presented on the basis of ounces sold.
| Alkane Resources Annual Report 2021
Tomingley Gold Extension Project
Alkane plans to extend gold mining operations at Tomingley
to include the recently defined San Antonio and Roswell
deposits immediately south of the existing mine.
The Company commenced the application process for
this NSW State Significant Development at the beginning
of the reporting period. The primary focus of the year
was consultation with regulators, landholders and other
stakeholders, along with detailed on-ground assessments,
environmental studies and project design.
The Scoping Report was submitted to the NSW Department
of Planning, Industry and Environment on 22 June
2021. Alkane plans to submit the Environmental Impact
Statement by September 2021, with public exhibition
expected to follow in Q4 2021. The expected timing for
project approval is mid-2022.
Project overview
Feedback from the consultation and approval process has
directly informed the design of the project, which will
encompass both open cut and underground mining. The
open cut will comprise three pits combining the adjacent
San Antonio and Roswell deposits (the SAR open cut).
Underground mining will initially utilise the exploration
drive originating at the Wyoming One underground
operation and advancing to the north end of Roswell.
A waste rock emplacement will be established in the
vicinity of the SAR open cut. The two Caloma open cuts will
be backfilled, as will a portion of the SAR open cut, in time.
Progressive rehabilitation will ensure all landforms are
stable, productive and reside sympathetically within the
environment.
Since the San Antonio and Roswell deposits are underneath
the current Newell Highway, Alkane will construct a new
8.4km section of highway to bypass the development. The
smaller, local Kyalite Road also needs to be realigned since
it currently runs through the proposed open cut.
BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS
The Tomingley processing plant will undergo some
modifications to achieve the already approved 1.5Mtpa
rate, with production to be increased to 1.75Mtpa for
short periods. A second residue storage facility will be
constructed adjacent to the first. Permission for the first
stages of the new residue storage facility was granted in
May 2021 as the fifth modification to approval.
During the year, Alkane purchased seven properties
(approximately 2700ha) for this project. Some of this
land holds the San Antonio and Roswell deposits or is
earmarked for waste rock emplacements and other
supporting mine infrastructure. A number of properties
are required for construction of the new section of Newell
Highway, as well as biodiversity offsets. The remainder will
be operated as a commercial farm.
The capital cost of approximately $87 million, to be
expended predominantly in FY2023, is expected to be
funded from operating cashflow and debt. The Company
has commenced discussions with potential debt providers.
Alkane Resources Annual Report 2021 |
9
BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS
Indicative site layout for the Tomingley Gold Extension Project
10
| Alkane Resources Annual Report 2021 BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS
San Antonio and Roswell (SAR) resource updates
Continued resource drilling at the San Antonio and Roswell deposits led to updated resource estimates for both deposits.
A Mineral Resource estimation was calculated on the Roswell deposit with a nominal 20 metre drill hole spacing to depths
ranging from 0mLR to -200mRL, and averaging about 350 metres below ground surface (ASX Announcement 4 November
2020). The mineralisation remains open at depth.
A Mineral Resource estimation was calculated on the San Antonio deposit with a nominal 20 metre drill hole spacing to
depths ranging from 30mLR to -200mRL, and averaging about 250 metres below ground surface (ASX Announcement 16
February 2021).
Refer to p13 for the Mineral Resource tables.
3D model of the Roswell
mineralisation
3D model of the San
Antonio mineralisation
11
Alkane Resources Annual Report 2021 |
BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS
Revised Life of Mine Plan
Alkane has incorporated the San Antonio and Roswell
resources into the Tomingley life of mine plan, which has
been extended to at least 2031 (ASX announcement 3 June
2021). The revised life of mine plan relies upon approval
for the Tomingley Gold Extension Project being achieved.
The existing underground development at the Wyoming
and Caloma deposits remains open at depth and strike in
several areas, with the mining schedule currently extending
into 2024. Underground mining of the Roswell deposit
is expected to commence in the 2023 financial year via
an exploration drive starting at the existing operation.
Approval for development of this exploration drive was
granted in May 2020.
Open cut mining will transition from the Caloma
cutback to development of the southern part of the San
Antonio deposit in FY2024 (pending the Newell Highway
realignment). Mining of the San Antonio deposit will occur
from south to north to meet the needs of the pit backfill
and progressive rehabilitation schedule. Open cut mining
of Roswell is scheduled to commence in the second half of
2024.
The plan shows the production of approximately 745,000
ounces of gold for the period, with processing ramping to a
1.5Mtpa feed rate. There is substantial upside potential to
extend the Roswell underground and maintain production
at a rate of at least 100,000 ounces per annum.
Indicative production volume by ore source and year for Tomingley’s updated life of mine plan
120000
100000
80000
60000
40000
20000
0
12
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
Tomingley open cut
Roswell underground
Potential Roswell underground extension
Tomingley underground
SAR open cut
| Alkane Resources Annual Report 2021
BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS
Mineral Resources and Ore Reserves
Alkane reports Ore Reserves and Mineral Resources as at 30 June 2021 in accordance with the Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC 2012). These estimates take into account ore
depleted by mining during the 2021 financial year and were reported to the ASX on 7 September 2021. Any differences to
those tables are corrections to typographical errors; the assumptions and parameters detailed in that report are unchanged.
Mineral Resources are wholly inclusive of Ore Reserves.
Mineral Resources
Tomingley Gold Operations Mineral Resources (as at 30 June 2021)
MEASURED
INDICATED
INFERRED
TOTAL
DEPOSIT
Tonnage
(kt)
Grade
(g/t Au)
Tonnage
(kt)
Grade
(g/t Au)
Tonnage
(kt)
Grade
(g/t Au)
Tonnage
(kt)
Grade
(g/t Au)
TOTAL GOLD
(koz)
Open Pittable Resources (cut-off 0.50g/t Au)
Wyoming One
Wyoming Three
Caloma One
Caloma Two
Sub Total
573
86
801
57
1,517
1.8
2.0
1.6
2.3
1.7
Underground Resources (cut-off 1.3g/t Au)
Wyoming One
Wyoming Three
Caloma One
Caloma Two
Sub Total
TOTAL
1102
46
157
2
1,307
2,824
3.0
2.2
2.6
3.6
2.9
2.3
412
16
1,070
875
2,373
1,050
24
234
699
2,007
4,380
Apparent arithmetic inconsistencies are due to rounding.
SAR Mineral Resources (as at 30 June 2021)
1.2
1.3
1.2
1.9
1.4
2.7
2.0
2.1
2.5
2.6
135
33
579
30
777
86
20
374
153
633
0.7
1.4
1.2
1.8
1.1
2.0
1.9
2.1
2.3
2.1
1.7
1,410
1.8
1,120
135
2,450
962
4,667
2,238
90
765
854
3,947
8,614
1.4
1.7
1.3
1.9
1.5
2.8
2.1
2.2
2.5
2.6
2.0
52
8
105
58
222
201
6
54
67
328
550
MEASURED
INDICATED
INFERRED
TOTAL
DEPOSIT
Tonnage
(kt)
Grade
(g/t Au)
Tonnage
(kt)
Grade
(g/t Au)
Tonnage
(kt)
Grade
(g/t Au)
Tonnage
(kt)
Grade
(g/t Au)
TOTAL GOLD
(koz)
Total Resources (cut-off 0.50g/t Au)
Roswell
San Antonio
TOTAL
7,871
5,930
13,801
2.07
1.82
1.96
2,188
1,389
3,577
1.93
1.32
10,059
7,319
1.69
17,378
2.04
1.73
1.91
660
406
1,066
Apparent arithmetic inconsistencies are due to rounding.
13
Alkane Resources Annual Report 2021 |
BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS
Ore Reserves
Tomingley Gold Operations Ore Reserves (as at 30 June 2021)
DEPOSIT
Tonnage
(kt)
Grade
(g/t Au)
Tonnage
(kt)
Grade
(g/t Au)
Tonnage
(kt)
Grade
(g/t Au)
PROVED
PROBABLE
TOTAL
TOTAL GOLD
(koz)
0
0
398
0
72
470
Open Pittable Reserves (cut-off 0.40g/t Au)
Wyoming One
Wyoming Three
Caloma One
Caloma Two
Stockpiles
Sub Total
Underground Reserves (cut-off 1.3g/t Au)
Wyoming One
Caloma One
Caloma Two
Sub Total
TOTAL
783
1,253
780
3
0.0
0.0
1.7
0.0
1.2
1.6
2.1
1.5
2.1
1.8
0
0
78
0
0
78
410
113
519
1,042
1,120
0.0
0.0
1.2
0.0
0
1.2
2.1
1.5
1.8
1.9
1.9
0
0
476
0
72
548
1,190
116
519
1,825
2,373
0.0
0.0
1.6
0.0
1.2
1.6
2.1
1.5
1.8
2.0
1.9
0
0
25
0
3
28
81
5
31
117
144
Apparent arithmetic inconsistencies are due to rounding.
SAR Ore Reserves (as at 30 June 2021)
DEPOSIT
Tonnage
(kt)
Grade
(g/t Au)
Tonnage
(kt)
Grade
(g/t Au)
Tonnage
(kt)
Grade
(g/t Au)
PROVED
PROBABLE
TOTAL
TOTAL GOLD
(koz)
0
0
0
Open Pittable Reserves (cut-off 0.40g/t Au)
Roswell
San Antonio
Sub Total
Underground Reserves (cut-off 1.3g/t Au)
Roswell
San Antonio*
Sub Total
TOTAL
0
0
0
0
0.0
0.0
0.0
0.0
0.0
0.0
3,679
4,188
7,867
1,575
0
1,575
9,442
1.7
1.6
1.7
2.8
0.0
2.8
1.9
3,679
4,188
7,867
1,575
0
1,575
9,442
1.7
1.6
1.7
2.8
0.0
2.8
1.9
202
218
420
142
142
563
Apparent arithmetic inconsistencies are due to rounding.
* San Antonio Reserves not determined at this time.
Mineral Resource and Ore Reserve Governance and Internal Controls
The Alkane Group has put governance arrangements and internal controls with respect to its estimates of Mineral Resources
and Ore Reserves, including:
• oversight and approval of each annual statement by the Technical Director;
• establishment of internal procedures and controls to meet JORC Code 2012 compliance in all external reporting;
• independent review of new and materially changed estimates;
• annual reconciliation with internal planning to validate reserve estimates for operating mines; and
• Board approval of new and materially changed estimates.
14
| Alkane Resources Annual Report 2021
BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS
Comparative Resources and Reserves
The tables below compare the total Mineral Resources and Ore Reserves as at 30 June 2021 year on year with 30 June 2020.
Tomingley Gold Operations Comparative Mineral Resources (30 June 2020 to 30 June 2021)
DEPOSIT
Open Pit
Wyoming One
Wyoming Three
Caloma One
Caloma Two
Sub Total
Underground
Wyoming One
Wyoming Three
Caloma One
Caloma Two
Sub Total
TOTAL
Tonnage
(kt)
2020
Grade
(g/t Au)
Gold
(koz)
Tonnage
(kt)
2021
Grade
(g/t Au)
Gold
(koz)
1,159
135
2,719
902
4,915
2481
90
752
1211
4534
9,449
1.5
1.7
1.3
2.0
1.5
2.9
2.1
2
2.3
2.6
2.0
57
8
115
58
238
228
6
50
88
372
610
1,120
135
2,450
962
4,667
2238
90
765
854
3947
8,614
1.4
1.7
1.3
1.9
1.5
2.8
2.1
2.2
2.4
2.6
2.0
Apparent arithmetic inconsistencies are due to rounding.
Tomingley Gold Operations Comparative Ore Reserves (30 June 2020 to 30 June 2021)
DEPOSIT
Open Pit
Wyoming One
Wyoming Three
Caloma One
Caloma Two
Stockpiles
Sub Total
Underground
Proven
Probable
Sub Total
TOTAL
Tonnage
(kt)
2020
Grade
(g/t Au)
Gold
(koz)
Tonnage
(kt)
2021
Grade
(g/t Au)
Gold
(koz)
0
0
569
0
207
776
573
1,618
2,191
2,967
0.0
0.0
1.6
0.0
0.8
1.4
1.9
2.0
2.0
1.8
0
0
30
0
6
36
34
106
140
176
476
72
548
783
1,042
1,825
2,373
1.6
1.2
1.6
2.1
1.9
2.0
1.9
Apparent arithmetic inconsistencies are due to rounding.
The primary differences from 2020 to 2021 are:
• Caloma One cut-back placed into the reserves
• Underground reserves depleted through mining at Wyoming One; and
• Addition of Caloma One and Caloma Two reserves.
52
8
105
58
222
201
6
54
67
328
550
24
3
27
54
63
117
144
15
Alkane Resources Annual Report 2021 |
BUSINESS REVIEW | PROJECTS & EXPLORATION
Projects & Exploration
Following the discovery at Boda in 2019-2020, Alkane embarked on a
30,000-metre drilling program at the Northern Molong Porphyry Project to
progress understanding of the extensive mineralised system. The other main
exploration focus was completing resource definition drilling at the San Antonio
and Roswell deposits within the Tomingley Gold Project.
Northern Molong Porphyry Project
(gold-copper)
Alkane Resources Ltd 100%
Encompassing four exploration licences (Bodangora,
Boda South, Kaiser and Finns Crossing), the Northern
Molong Porphyry Project (NMPP) covers an area of 115
square kilometres, centred about 20 kilometres north of
Wellington and about 35 kilometres east of Dubbo.
The project covers a section of the northern Molong
Volcanic Belt, which is highly prospective for large-scale
porphyry gold-copper deposits similar to the Cadia
Valley deposits near Orange. Alkane’s exploration activity
over the past several years has established a geological
and geochemical framework for the project area and
demonstrated the existence of stratigraphic and intrusive
rock sequences very similar to that at Cadia. The work
also shows that gold-copper mineralisation is hosted by
very similar rock types at similar stratigraphic positions
– notably the margins of major magnetic/intrusive
complexes.
Alkane has a number of exploration prospects located
adjacent to five identified magnetic/intrusive complexes
(Kaiser, Boda, Comobella, Driell Creek and Finns Crossing)
within a 15-kilometre northwest trending corridor.
During the 2020 financial year, Alkane discovered a
significant porphyry gold-copper system at the Boda
prospect, positioned at the western margin of the Boda
Intrusive Complex. The Company believes Boda has the
potential to be a large, tier-one gold-copper project.
16
Kaiser-Boda prospective corridor
During 2020-2021, Alkane’s NMPP exploration activities
sought to progress understanding of the large-scale Boda
mineralised system. A major RC and diamond core drilling
program of approximately 30,000 metres commenced
in July 2020. The program is testing the dimensions and
extensions to the large low-grade mineralised envelope as
well as any internal high-grade zones at Boda.
To understand the broader extent of the mineralised
system, the drilling program has been extended beyond
Boda. Of particular interest is the highly prospective four-
kilometre corridor between the Kaiser and Duke systems
(1.5 kilometres northwest of Boda) and Boda Three, which
lies two kilometres to the south. Other known gold-copper
mineralisation occurrences and coincident IP anomalies
within the northwest-trending structural corridor between
Boda and Finns Crossing (including a strong magnetic
anomaly at Murga) are also being explored.
In addition to revealing the very large scale of Boda,
Alkane’s drill program indicates the existence of potential
repeat systems of significant scale within the structural
corridor. Results of the exploration program were reported
in a series of ASX Announcements on 11 November 2020,
18 December 2020, 8 March 2021, 3 May 2021 and 22 July
2021.
| Alkane Resources Annual Report 2021
BUSINESS REVIEW | PROJECTS & EXPLORATION
Map of the Northern Molong Porphyry Project Regional Geology
Boda and Boda Two
Drilling at Boda indicates the high-grade zone (sulphide
cemented breccia) extends at least 100 metres deeper
than indicated by previous drilling. The results also show
extensions to the mineralised system to the south at
Boda Two, approximately one kilometre from the main
Boda target zone. Boda Two drill results have identified
a similar broad zone of low-grade gold-copper porphyry
mineralisation with a gold-enriched pyrite zone on the
eastern margin.
Current results for Boda suggest a large alkalic porphyry
system of 400 metres wide, over 1000 metres north-south
strike length and more than 1100 metres vertically. The
high-grade breccia has now been intersected by drill holes
KSDD007, KSDD011, KSDD012, KSDD028, KSDD031 and
KSRC033D, indicating at this early stage that the breccia
is approximately 50 metres in true width, thickening up
plunge. Further drilling is planned at Boda, Boda Two
and Boda Three to test extensions and continue defining
dimensions of the system.
17
Alkane Resources Annual Report 2021 | BUSINESS REVIEW | PROJECTS & EXPLORATION
Kaiser and Duke
A single diamond core drilled at the Kaiser and Duke
systems (KSDD027) intersected two zones of gold-copper
porphyry mineralisation with grades and alteration similar
to Boda. Based on earlier drilling by Alkane in 2015-2019,
the Duke zone is currently interpreted to be approximately
250 metres wide, striking over 800 metres and open along
strike and at depth. It is understood to run parallel to
the Kaiser zone, which was the site of historic, extensive
shallow drilling.
Murga
As part of the ongoing exploration program of the NMPP,
Alkane conducted reconnaissance shallow air-core drilling
at the Murga prospect (Finns Crossing) approximately 12
kilometres northwest of Boda. Murga is positioned within
the same northwest structural corridor that hosts both the
Kaiser and Boda porphyry discoveries. Targeting a large, lin-
ear magnetic anomaly at the prospect, the drilling program
comprised 75 air-core drill holes totalling 1,354 metres
along a strike length of two kilometres. Results confirmed
the prospectivity of the target, with further exploration
planned (ASX Announcement 22 July 2021).
Cross section of mineralised core from diamond hole KSDD007
drilled at Boda, showing 2cm-thick bornite-chalcopyrite-quartz
vein at 385m downhole.
18 | Alkane Resources Annual Report 2021
Explorer of the year award
Alkane won the NSW Minerals Council’s 2021 Explorer of the Year
award for the Boda discovery.
Pictured (L-R) are Exploration Manager NSW David Meates,
Technical Director Ian Chalmers, Non-Executive Director Tony
Lethlean and Chairman Ian Gandel.
BUSINESS REVIEW | PROJECTS & EXPLORATION
Alkane’s drilling program in the Kaiser-Boda corridor to-date, overlaying regional magnetics
19
Alkane Resources Annual Report 2021 | BUSINESS REVIEW | PROJECTS & EXPLORATION
Tomingley Gold Project (gold)
Alkane Resources Ltd 100%
Alkane’s Tomingley Gold Project covers an area of
approximately 440 square kilometres, stretching
60 kilometres north-south along the Newell Highway in
central western New South Wales. The prospective belt
extends from near the village of Tomingley in the north
(about 50 kilometres southwest of Dubbo), through Peak
Hill and almost to Parkes in the south.
The project incorporates the Company’s currently active
Tomingley Gold Operations, the Tomingley Gold Extension
Project, and the inactive Peak Hill Gold Mine.
Exploration for the year focused on updating the
resources for the San Antonio and Roswell deposits (ASX
Announcements 16 February 2021 and 4 November 2020
respectively), which have been incorporated into the life of
mine plan for Tomingley – refer to the preceding section of
this report.
Alkane also undertook regional exploration at the Macleans
prospect north of Roswell, and the El Paso prospect south
of San Antonio. Other key prospects include Glen Isla,
Myalls United, Smiths, Black Snake, Trewilga and McGregors.
Peak Hill Gold Mine
Located 15 kilometres south of Tomingley, Alkane’s Peak
Hill Gold Mine operated from 1996 to 2005 as an open cut
heap leach. While the site is substantially rehabilitated, it
remains an active Mining Lease.
Based upon a revised gold price, an updated Mineral
Resource estimate (JORC 2012), completed in October
2018, identified an initial Inferred Resource of
108,000 ounces of gold. The following Mineral Resource
estimate is unchanged since 30 June 2020.
Peak Hill Mineral Resource (as at 30 June 2021)
Technological advances and the gold price increases in the
last two decades led Alkane to re-evaluate the economics
of further development. During the reporting period, the
Company completed a metallurgical test program that
explored different recovery methods for the ore, which
is moderately refractory in nature, unlike the Tomingley
deposits. Results showed that recoveries in excess of
95 per cent are possible with bio-oxidation. Further
metallurgical testing and a conceptual mining plan is in
progress.
Alkane retains its Mining Lease and Environment Protection
Licence for Peak Hill Gold Mine, but any further mine
development would require further environmental
assessment and government approval.
Resource
category
Cut-off
Tonnes
(Mt)
Gold grade
g/t
Gold metal
(koz)
Copper Metal
(%)
Inferred
2g/t Au
Inferred
2g/t Au
1.02
1.02
3.29
3.29
108
108
0.15
0.15
Deposit
Proprietary
Underground
TOTAL
20
| Alkane Resources Annual Report 2021
BUSINESS REVIEW | PROJECTS & EXPLORATION
Map of the gold corridor between Tomingley and Peak Hill
21
Alkane Resources Annual Report 2021 | BUSINESS REVIEW | PROJECTS & EXPLORATION
Other Projects
Due to the extensive effort on the Tomingley Gold and
Northern Molong Porphyry Projects, exploration activity on
other projects was largely limited to data review for target
definition.
Alkane’s other exploration projects in central western New
South Wales are: Glen Isla – Gundong (gold); Armstrongs
(gold); Elsienora (gold); Cudal (gold-zinc); Rockley (gold);
Trangie (nickel-copper+); Mt Conqueror (gold). (All Alkane
Resources Ltd 100%)
Alkane’s 100% interest in the Wellington – Galwadgere
project (copper-gold) was purchased by Sky Metals Limited
(ASX:SKY) in early 2021, as per the Option to Purchase
Agreement with Alkane (ASX SKY 24 August 2020).
The rights and liabilities for Alkane’s 19.4% diluting interest
in the Leinster Region Joint Venture (nickel-gold) have been
assigned to Australian Nickel Investments Pty Ltd (ANI)
under an executed deed.
The Dubbo Project is owned by Australian Strategic
Materials Ltd (ASM), which demerged from Alkane in July
2020. For information about ASM and the Dubbo Project,
refer to the ASM Annual Report.
22
| Alkane Resources Annual Report 2021
BUSINESS REVIEW | PROJECTS & EXPLORATION
Alkane’s projects and operations are primarily located in the vicinity of Dubbo in central western New South Wales.
23
Alkane Resources Annual Report 2021 | BUSINESS REVIEW | ESG
ESG
Alkane strives to uphold high environmental, social and governance (ESG)
standards across all its activities. The Company aims to deliver low-impact
operations with openness and integrity, while providing a safe and rewarding
working environment for employees and a positive legacy for local communities.
Environmental stewardship
Alkane’s exploration, mining, processing and rehabilitation
activities are carefully designed with the smallest
practical environmental footprint in mind. Environmental
responsibility is embedded into the Company’s normal
business practice.
Tomingley environmental performance
At Alkane’s existing gold mining operation at Tomingley,
the Company’s approach to environmental management
is documented in a comprehensive Environmental
Management Strategy (EMS), which is underpinned by a
series of site-specific Environmental Management Plans.
These are implemented by a dedicated Environmental
Management team to ensure site compliance with all
project approvals, licenses and permits, and to minimise
potential environmental impacts. Annual reporting
undertaken includes:
• Annual Environmental Review (NSW DPIE)
• Annual Return (NSW EPA)
• National Pollution Inventory Reporting (NPI)
• National Emissions and Energy Report (NGER)
During the 2021 financial year, the site was subject to its
three-yearly independent environmental audit for the
period March 2018 to May 2021. The audit report will be
submitted to the NSW Department of Planning, Industry
and Environment in September 2021.
Alkane undertakes water monitoring as part of its Environmental
Management Strategy.
24
| Alkane Resources Annual Report 2021
BUSINESS REVIEW | ESG
A team of specialist consultants undertook extensive
studies spanning ecology, heritage, soils and land
capability, noise and vibration, air quality, surface and
groundwater, rehabilitation and final landform design, as
well as potential social and economic impacts.
Rehabilitation and landform design
The Company practices progressive landform rehabilitation
to ensure sites are returned to stable and productive
ecosystems once mining is finished.
When designing the Tomingley Gold Extension Project,
Alkane has focused on minimising ecological and
agricultural impacts. Soil experts were engaged to assess
soil ‘erodibility’ and model waste rock emplacement (WRE)
designs based on the volume of waste rock to be moved,
the quality of available topsoil, and local climate.
The new WRE will look more natural in the landscape,
compared with the rehabilitated WREs near the Caloma
and Wyoming deposits. Instead of stepped batters, where
possible it will feature gentler contours to reside more
sympathetically within the environment. It will also be
rehabilitated progressively.
Renewable energy
Alkane is currently investigating renewable energy
solutions to provide a large proportion of the power
requirements for the Tomingley processing plant and other
site infrastructure. Feasibility of a 5MW solar installation
on Alkane’s land around Tomingley is under consideration.
No noise, dust or vibration exceedances were recorded at
Tomingley during the reporting period, and no complaints
were received.
One reportable incident occurred on site during the
period. On 19 May 2021, a bulk diesel tanker operated
by a transport company spilt diesel on site due to a
malfunctioning hose joiner. The spill was fully contained
within Tomingley’s internal water management system
and did not impact any staff or wildlife. The incident was
reported to the NSW EPA hotline and officers from the EPA
attended site to investigate the incident and Tomingley’s
initial response. The EPA officers were pleased with the
actions taken to contain and minimise potential impacts.
The EPA also approved the Remediation Action Plan
prepared by a third party contractor, who coordinated
removal of the contaminated soil and remediation of the
contaminated area on behalf of, and at the cost of, the
transport company. A completion report was submitted to
the EPA and the matter is still with the EPA.
Details of Tomingley’s environmental performance can be
found on the Company’s website. Documents available
include:
• Annual Environmental Review
• Monthly Environmental Monitoring Reports
• Monthly Noise Monitoring Reports
• Annual Noise Compliance Report
• Environmental Management Plans
Environmental impact assessments
A major focus of the 2021 financial year was progressing
environmental impact assessments for the Tomingley
Gold Extension Project, which is undergoing the NSW
State Significant Development approval process. The
Environmental Impact Statement (EIS), which is a key part
of the approval process, is currently being finalised.
Alkane Resources Annual Report 2021 |
25
BUSINESS REVIEW | ESG
Biodiversity
Alkane focuses on protecting, nurturing and enhancing local
biodiversity. Designated biodiversity offset areas around
Tomingley are protected by a binding Conservation Property
Vegetation Plan, signed in agreement with regional
Local Land Services organisations. Activities include
re-vegetation, weed control, feral animal control and
protection of native species from introduced predators.
A biannual fauna monitoring report is prepared by
external ecological consultants with data obtained from
an extensive field assessment program. This report guides
the ongoing management of native fauna around the
Tomingley operations.
In accordance with Tomingley project approval, an
annual rehabilitation and biodiversity monitoring report
is completed and submitted to the NSW DPIE. Data
for this report is obtained from the field assessment
of 17 permanent transects and used to guide ongoing
management of rehabilitated areas.
One of the positive benefits of Alkane’s conservation
activities has been enhancement of habitat for the Grey-
crowned Babbler (Pomatostomus temporalis), a species
listed as vulnerable in NSW. Destocking biodiversity
offset areas has enhanced the habitat value and enabled
the birds that live in families of up 15 to thrive. Each
family requires around 10 hectares of habitat. Ongoing
management of nesting and roosting habitat areas has
helped grow populations.
An interesting immigrant to the mine site has been the
Australian Reed-warbler (Acrocephalus australis). This
locally uncommon species has found its preferred habitat
of dense vegetation alongside water in the drains within 50
metres of the Tomingley site office.
At Peak Hill Gold Mine, the Company’s rehabilitation efforts
have resulted in an increasingly species-rich site, with
several native and woodland bird and mammal species,
not present pre-mining, now thriving. The original tree
plantings from 1996 are now around 20 metres tall. They
have led to natural regeneration of the woodland species
on site.
Alkane has already commenced tree planting outside the
projected disturbance footprint of the extension project.
Members of the Company’s exploration team planted several
hundred Fuzzy Box (Eucalyptus conica) seedings grown by
Narromine Transplants.
Alkane has enhanced habitat for the vulnerable Grey-crowned
Babbler.
Photo credit: Imogen Warren
26
| Alkane Resources Annual Report 2021
People and communities
Alkane practices safe and sustained economic development
for the long-term benefit of its shareholders, employees,
contractors, suppliers and local communities. The Company
is most active in the Narromine Shire, Parkes Shire and
Dubbo Regional Council local government areas in central
western New South Wales.
Workforce
Alkane’s personnel are distributed across several office
locations and operations across central western New South
Wales (Orange, Dubbo, Peak Hill and Tomingley), Sydney
and Perth (head office).
The largest concentration of employees is at the Tomingley
gold mine, southwest of Dubbo. A full-time site supervisor
maintains the Peak Hill Gold Mine leases and infrastructure
during decommissioning. Alkane also maintains exploration
offices in Dubbo and Orange to service the Group’s other
tenements.
Alkane is committed to employing members of the local
community where possible. Since the Company does
not support a ‘fly-in/fly-out’ scheme, the majority of
employees live in the local area.
At financial year end, the Group had 249 personnel on the
payroll (including casual employees), 215 of which were at
Tomingley. These included 22 women (9%), including three
female managers, and 32 employees of Aboriginal and
Torres Strait Islander descent (13%). A total of 23 full-time
equivalent contractors were on site at Tomingley in June
2021.
Achieving a good gender balance in such an historically
male-dominated industry is a challenge essential to
maintaining a culture of equal opportunity. Tomingley
is committed to equal-opportunity recruitment, using
gender-neutral or female-positive language to encourage
women to apply for all roles.
During the reporting period, Tomingley management
organised for all employees to have free access to the
Altius Life health and wellbeing digital platform via an
integrated access point in the Company’s site EAP platform.
BUSINESS REVIEW | ESG
Work Health & Safety
Alkane is committed to providing a safe and rewarding
workplace for all employees and contractors. Workforce
conditions meet international occupational health and
safety standards, with no exploitation or child labour.
Mine Safety Management and Operations Management
systems are in place at Alkane’s main operation at
Tomingley, with both systems subjected to a rigorous
auditing and inspection regime to ensure their integrity.
The site employs a dedicated Work Health and Safety
(WHS) Manager; in the reporting period, the Tomingley
safety team expanded to include a fulltime Safety and
Training Coordinator, a six-month contracted Safety and
Training Coordinator, and an additional operational training
role. The site uses thorough employee safety induction
program to on-board all employees and contractors.
27
Alkane Resources Annual Report 2021 |
BUSINESS REVIEW | ESG
During the reporting period, there were 14 recordable
injuries at the Tomingley site. These consisted of three
Lost Time Injuries, seven Restricted Work Injuries and
four Medical Treated Injuries. For the 2021 financial year,
Tomingley had a total recordable injury frequency rate
(TRIFR) of 5.21 per 1,000,000 hours worked.
During the year, Tomingley Gold Operations developed a
safety action plan based on evidence collected from the
MI-profile Risk Leadership and Cultural Survey Engagement
tool. This supports the ongoing implementation of
the Social Psychology of Risk – Culture and Leadership
program.
Implementation of the action plan began during the 2020-
2021 financial year and will continue into the next year. It
encompasses:
• Improving Communications and Inductions
• Maturing the Safety Management System
• Review of the Safety Management System
• Mental Health and Wellbeing – Creating a
Psychologically Safe Workplace, and
• High Risk Manual Tasks – Participative Ergonomics.
The Tomingley WHS team also progressed projects in
relation to:
• Development of cultural data-gathering tools to
support the implementation of the safety action plan
top 5 priorities
• Development and Implementation of a new
safety software system to assist in the collection and
management of safety-related information and data,
including training information
• Document Usability Mapping, and
• Development of Critical Safety System review
schedule and process to assess the system efficacy.
Communities & stakeholders
Alkane is an active and engaged member of the
communities in which it operates – in particular the
Narromine Shire, Parkes Shire and Dubbo Regional Council
local government areas in central western New South
Wales. The Company aims to support the development
of more resilient regional communities through the
establishment of permanent infrastructure, sponsorship
of local events and organisations, provision of training and
career opportunities to local students and residents, and
the creation of local economic opportunities for service
providers.
Alkane maintains strong relationships with local
communities through clear and regular communications
about its operations and development activities, and
actively participates on the Tomingley Gold Project
Community Consultative Committee. The Company
encourages community engagement and participates
regularly at regional events to discuss the Group’s projects.
Alkane shares knowledge through papers and participation
in selected industry forums. The Company is also an active
member on the NSW Minerals Council Environment and
Community Committee.
Community consultations
During the reporting period, consultants working on behalf
of Alkane consulted extensively with the community and
key stakeholders to gain feedback on the Tomingley Gold
Extension Project. Over a period of several months, the
team talked to many local residents, government agencies
(local, state and federal), non-government organisations,
Newell Highway users and local Aboriginal communities.
The Company strives for continuous improvement of its
standards at the Tomingley gold mine, the Peak Hill gold
mine decommissioning and closure, and for ongoing
exploration and mine development. Details of WHS
performance can be found on Alkane’s website.
These consultations helped inform the final design of the
project – such as final landforms, realigned roads, water
diversions and biodiversity offsets. Of particular note,
Alkane selected the more costly option for the realignment
of Kyalite Road, based on community feedback.
28
| Alkane Resources Annual Report 2021
BUSINESS REVIEW | ESG
Sponsorships and funding
Governance
In September 2020, Alkane established a major new
sponsorship of the Clontarf Foundation’s Narromine
Academy for $300,000 over three years. The sponsorship
represents Alkane’s long-term investment in capacity
building for young Aboriginal and Torres Strait Islander
men, and includes an annual program of student
interaction, celebrations of achievements, employment
pathway support, and visits between the Tomingley gold
mine and the Narromine Academy.
Alkane also supports the Narromine Rotary club with
several forms of sponsorship. This reporting period, the
Company donated $2,000 to enable the club to register
its mobile food caravan and associated truck. Tomingley
management also sponsored staff lunches supplied by the
van on a semi-regular basis. Over the last 12 months, this
equated to approximately $14,000.
The Company also continues to support the Tomingley Gold
Project Community Fund, which funds local community
projects and events on a submissions basis. During the
financial year, approximately $51,000 was awarded to
a number of different projects, including the annual
sponsorship of the Tomingley Picnic Races (traditionally
held near ANZAC Day), new fencing and a shade structure
to support the races event, and a new turf and irrigation
system surrounding Tomingley Hall.
Engaging the next generation
During the year, Alkane nurtured its ties with Narromine
High School, sponsoring the School Science Spectacular
event. Representatives of Tomingley Gold Operations also
attended a Rugby League “Super Training Session” hosted
by Clontarf Narromine Academy at Narromine High School.
The Company also engaged two local teenagers as diesel
fitter apprenticeships during the year.
Alkane employs comprehensive systems of control and
accountability, and administers corporate governance
with openness and integrity based on the principles and
recommendations of the ASX Corporate Governance
Council.
Corporate Governance Statement
The Company’s Corporate Governance Statement is
available on the Alkane website, along with the Board
charter and details of Board sub-committees. Also listed
are key policies and procedures, including those pertaining
to appointment and independence of directors, diversity,
code of conduct, risk management, and anti-bribery and
corruption.
https://www.alkane.com.au/company/governance/
Risk management
Alkane is committed to the active management of risks
to its operations and has a Risk Management Committee
composed of directors and management to assist the
Managing Director to identify, assess, monitor and manage
the Company’s risks.
The Company’s Risk Management Coordinator is tasked
with the responsibility of keeping the risk management
policy, framework and registers updated, subject to formal
approval of policy amendments by the Board. Tomingley
continues to monitor and audit critical controls as part
of its ongoing risk management process. A specialised
software package assists with the management of the
complexities for the high-level risks.
Tomingley Gold Operations sponsors the
Clontarf Narromine Academy, which hosted a
Rugby League “Super Training Session” at
Narromine High School.
Alkane Resources Annual Report 2021 |
29
FINANCIAL
REPORT
30
| Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - DIRECTORS
Directors’ Report
The directors present their report, together with the financial statements, on
the consolidated entity (referred to hereafter as the 'consolidated entity' or
the 'Group') consisting of Alkane Resources Ltd (referred to hereafter as the
'Company' or 'parent entity') and the entities it controlled at the end of, or
during, the year ended 30 June 2021.
Directors
The following persons were directors of Alkane Resources Ltd (Alkane) during the whole of the financial year and up to the
date of this report, unless otherwise stated:
I J Gandel
N P Earner
D I Chalmers
A D Lethlean
G M Smith
The Board continues its efforts to seek to appoint additional independent members who will bring complementary skill sets
and diversity to the Group's leadership.
Information on Directors and Company Secretaries
Ian Jeffrey Gandel – Non-Executive Chairman
LLB, BEc, FCPA, FAICD
Appointed Director 24 July 2006 and Chairman 1 September 2017.
Mr Gandel is a successful Melbourne-based businessman with extensive experience in retail management and retail property.
He has been a director of the Gandel Retail Trust and has had an involvement in the construction and leasing of Gandel
shopping centres. He has previously been involved in the Priceline retail chain and the CEO chain of serviced offices.
Mr Gandel has been an investor in the mining industry since 1994. Mr Gandel is currently a substantial holder in a number
of publicly listed Australian companies and, through his private investment vehicles, now holds and explores tenements in
his own right in Western Australia. Mr Gandel is currently non-executive chairman of Alliance Resources Ltd (appointed as a
director on 15 October 2003 and in June 2016 was appointed non-executive chairman). Mr Gandel is currently non-executive
chairman of Australian Strategic Materials Limited (appointed 18 March 2014). (This company was demerged and admitted
to the Australian Securities Exchange (ASX) on 29 July 2020.) He is also non-executive chairman of Octagonal Resources Ltd
(appointed 10 November 2010). (This company sought delisting from the ASX in February 2016 and converted to Pty Ltd
status in April 2016.)
Mr Gandel is a member of the Audit Committee and a member of the Remuneration and Nomination Committees.
31
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | DIRECTORS' REPORT - DIRECTORS
Nicolas Paul Earner – Managing Director
BEng (hons)
Appointed Managing Director 1 September 2017.
Mr Earner is a chemical engineer and a graduate of the University of Queensland, with over 25 years' experience in technical
and operational optimisation and management, and has held a number of executive roles in mining and processing.
Mr Earner joined Alkane Resources Ltd as Chief Operations Officer in August 2013, with responsibility for the safe and efficient
management of the Company's operations at Tomingley Gold Operations (TGO) and Dubbo (Dubbo Project). Under his
supervision, the successful development of TGO transitioned to profitable and efficient operations. His guidance also drove
the engineering and metallurgical aspects of the Dubbo Project, prior to its transition into the separately listed Australian
Strategic Materials.
Prior to his appointment as the Group's Chief Operations Officer in August 2013, he had roles at Straits Resources Ltd, Rio
Tinto Coal Australia's Mount Thorley Warkworth coal mine, and BHP/WMC Olympic Dam copper-uranium-gold operations.
Mr Earner is currently a non-executive director of Genesis Minerals Limited (appointed 24 October 2019) and Australian
Strategic Materials Limited (appointed 1 September 2017). (This company was demerged and admitted to the ASX on 29 July
2020.)
David Ian Chalmers – Technical Director
MSc, FAusIMM, FAIG, FIMM, FSEG, MSGA, MGSA, FAICD
Appointed Technical Director 1 September 2017. Resigned as Managing Director 31 August 2017.
Mr Chalmers, Alkane Resources Ltd's Technical Director, is a geologist and graduate of the Western Australia Institute of
Technology (Curtin University) and has a Master of Science degree from the University of Leicester in the United Kingdom.
He has worked in the mining and exploration industry for over 50 years, during which time he has had experience in all
facets of exploration and mining through feasibility and development to the production phase. Mr Chalmers was Technical
Director of Alkane until his appointment as Managing Director in 2006, overseeing the Group's minerals exploration efforts
across Australia and the development and operations of the Peak Hill Gold Mine (NSW). During his time as Chief Executive
he steered Alkane through the discovery, feasibility, construction and development of the now fully operational Tomingley
Gold Operations; the discovery and ultimate sale of the McPhillamys gold deposit; the recent discovery of the gold deposits
immediately south of Tomingley; and the porphyry gold-copper discovery at Boda. Mr Chalmers also managed the process
development and global marketing effort for the Dubbo Project, advancing it to the threshold of development.
Mr Chalmers is currently a non-executive director of Australian Strategic Materials Limited (appointed 18 March 2014). (This
company was demerged and admitted to the ASX on 29 July 2020.)
Mr Chalmers is a member of the Nomination Committee.
Anthony Dean Lethlean – Non-Executive Director
BAppSc (Geology)
Appointed Director 30 May 2002.
Mr Lethlean is a geologist with over 10 years mining experience, including four years underground on the Golden Mile in
Kalgoorlie. In later years, he has worked as a resource analyst with various stockbrokers and investment banks including CIBC
World Markets. He was a founding director of Helmsec Global Capital Limited, which seeded, listed and funded a number of
companies in a range of commodities. He retired from the Helmsec group in 2014. He is also a director of corporate advisory
Rawson Lewis and a non-executive director of Alliance Resources Ltd (appointed 15 October 2003).
Mr Lethlean is the senior independent Director, Chairman of the Audit Committee and Risk Committee, and a member of the
Remuneration and Nomination Committees.
32
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - DIRECTORS
Gavin Murray Smith – Non-Executive Director
B.Com, MBA, MAICD
Appointed Director 29 November 2017.
Mr Smith is an accomplished senior executive and non-executive director within multinational business environments. He
has more than 35 years' experience in information technology, business development, and general management in a wide
range of industries and sectors. Mr Smith has worked for the Bosch group for the past 29 years in Australia and Germany, and
is current chair and president of Robert Bosch Australia. In this role Mr Smith has led the restructuring and transformation
of the local Bosch subsidiary. Concurrent with this role, he is a non-executive director of the various Bosch subsidiaries, joint
ventures, and direct investment companies in Australia and New Zealand. In addition, Mr Smith is the chair of the Internet of
Things Alliance Australia (IoTAA), the peak body for organisations with an interest in the IoT.
Mr Smith is currently a non-executive director of Australian Strategic Materials Limited (appointed 12 December 2017). (This
company was demerged and admitted to the ASX on 29 July 2020.)
Mr Smith is a member of the Audit Committee, Risk Committee and Chair of the Remuneration and Nomination Committees.
Dennis Wilkins – Joint Company Secretary
B.Bus, ACIS, AICD
Appointed Company Secretary 29 March 2018.
Mr Wilkins is the founder and principal of DWCorporate Pty Ltd, a corporate advisory firm servicing the natural resources
industry.
Since 1994 he has been a director, and involved in the executive management, of several publicly listed resource companies
with operations in Australia, PNG, Scandinavia and Africa. Since July 2001 Mr Wilkins has been running DWCorporate Pty Ltd,
where he advises on the formation of, and capital raising for, emerging companies in the Australian resources sector.
Mr Wilkins is currently a director of Key Petroleum Limited.
James Carter – Joint Company Secretary
Appointed Company Secretary 20 May 2020.
Mr Carter is a CPA and Chartered Company Secretary with over 25 years international experience in the resources industry.
He has held senior finance positions across listed resources companies since 2001.
33
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | DIRECTORS' REPORT - PRINCIPAL ACTIVITIES
Principal activities
During the financial year, the principal activities of the consolidated entity consisted of:
• mining operations at the Tomingley Gold Operation;
• exploration and evaluation activities on tenements held by the Group; and
• pursuing strategic investments in gold exploration companies.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Result for the year
The profit for the consolidated entity, after providing for income tax, amounted to $55,701,000 (30 June 2020: $12,762,000)
of which continued operations amounted to $33,567,000 and discontinued operations amounted to $22,134,000.
This result included a profit before tax of $57,791,000 (30 June 2020: $30,362,000) in relation to Tomingley Gold Operations.
Review of operations
Tomingley Gold Operations
Tomingley Gold Operations (TGO) is a wholly owned subsidiary of Alkane, located near the village of Tomingley, approximately
50km southwest of Dubbo in central western New South Wales. The gold processing plant was commissioned in January 2014
and has been operating at the design capacity of 1Mtpa since late May 2014. Mining is based on four gold deposits (Wyoming
One, Wyoming Three, Caloma One and Caloma Two).
TGO continues to perform well and is processing underground stope material with recovery as expected. The cutback in
the northeast of the Caloma pit is mining ore. Reconciliations of mined material show that the grade mined is higher than
forecast.
Gold recovery of 88.8% for the period was in-line with expectations (2020: 88.1%). Average grade milled increased to 2.14g/t
in the current year (2020: 1.45g/t). In the prior year, the average grade milled was lower, as a result of processing both
medium and low-grade stockpiles as the operation transitioned from open cut to underground.
Production for the period was 56,958 ounces of gold (2020: 33,507 ounces of gold), with all in sustaining costs of $1,320
per ounce (2020: $1,357 per ounce). The average sales price achieved for the year increased to $2,286 per ounce (2020:
$2,199 per ounce). Gold sales of 55,929 ounces (2020: 32,995 ounces) resulted in sales revenue of $127,833,000 (2020:
$72,549,000).
Bullion on hand increased by 1,015 ounces from 30 June 2020 to 3,246 ounces (fair value of $7,633,000 at year end).
Alkane’s intention is to develop the Roswell and San Antonio deposits, which are located 3 – 5km south of Tomingley, as soon
as possible.
Alkane has commenced the approval process for this development. Consultations with regulators, landholders and
other stakeholders, as well as on ground assessments needed for the Environmental Impact statement, continue. The
Environmental Impact Statement is being prepared for submission in the current September quarter. The expected timing of
Project Approval is mid-2022.
34
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - REVIEW OF OPERATIONS
The table below summarises the key operational information:
TGO Production
Unit
September
Quarter
2020
December
Quarter
2020
March
Quarter
2021
June
Quarter
2021
FY
2021
FY
2020
Open cut
Waste mined
Ore mined
Stripping Ratio
Grade mined(2)
Underground
Ore mined
Grade mined
Ore Milled
Head Grade
Gold Recovery
Gold poured(3)
Revenue summary
Gold sold
Average price realised
Gold revenue
Cost summary
Surface works
Mining
Processing
Site support
C1 cash cost(1)
Royalties
Sustaining capital
Gold in circuit movement
Rehabilitation
Corporate
All in sustaining cost(1)
Bullion on hand
Stockpiles
BCM's
Tonnes
Ratio
g/t
-
-
-
-
390,159
2,755
243.5
0.40
429,443
10,953
67.4
1.15
399,177
1,218,779
57,638
71,347
13.7
0.56
32.8
0.64
50,473
5,331
9.5
2.37
Tonnes
181,831
180,642
169,444
174,971
706,889
335,879
g/t
1.85
3.41
2.88
2.37
2.63
2.37
Tonnes
254,423
235,217
237,455
201,437
928,531
838,743
g/t
%
1.56
88.4
2.50
88.1
2.40
91.0
2.16
87.1
2.14
88.8
1.45
88.1
Ounces
11,499
15,919
16,040
13,500
56,958
33,507
Ounces
A$/Oz
A$M
A$/Oz
A$/Oz
A$/Oz
A$/Oz
A$/Oz
A$/Oz
A$/Oz
A$/Oz
A$/Oz
A$/Oz
A$/Oz
Ounces
11,945
2,261
27.0
16,613
2,302
38.2
15,844
2,203
34.9
11,526
2,401
27.7
55,929
2,286
127.8
32,995
2,199
72.5
-
606
446
126
1,178
63
183
66
19
66
1,575
1,781
-
336
290
94
720
71
326
25
19
41
1,201
1,083
96,029
1.43
4,403
-
389
295
119
803
70
172
(103)
19
35
997
1,275
83
545
398
174
1,199
89
540
(243)
22
62
1,669
3,246
17
452
347
125
940
73
296
(58)
20
49
50
272
517
158
997
56
205
-
26
73
1,320
3,246
1,357
2,231
41,487
1.23
1,811
71,938
0.95
2,856
71,938
207,414
0.95
2,856
0.83
5,566
Ore for immediate milling
Tonnes
139,025
Stockpile grade(2)
Contained gold
g/t
Ounces
0.74
3,319
(1) All in sustaining cost (AISC) comprises all site operating costs, royalties, mine exploration, sustaining capex, sustaining mine
development and an allocation of corporate costs on the basis of ounces sold since 1 July 2020 (AISC was prepared on a production
basis using gold poured ounces in the previous period). AISC does not include share-based payments, production incentives or net
realisable value provision for product inventory.
(2) Based on the resource models.
(3) Represents gold sold at site, not adjusted for refining adjustments which results in minor differences between the movements in
bullion on hand and the difference between production and sales.
35
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | DIRECTORS' REPORT - REVIEW OF OPERATIONS
Tomingley Gold Extension Project
An extensive exploration program focused on the immediate area to the south of the Tomingley mine has continued as part of
the plan to source additional ore feed, either at surface or underground. On the back of strong results from exploration and
resource drilling to the immediate south of Tomingley, the Company is expediting the process to move to mine development.
Alkane has commenced the approval process for development of the Roswell and San Antonio deposits located to
the immediate south of TGO. Consultations with regulators, landholders and other stakeholders, as well as on ground
assessments needed for the Environmental Impact Statement, continue.
Feasibility plans that include both open cut and underground mines at Roswell and San Antonio have been prepared and
released as part of a Tomingley Life of Mine Plan, that shows extension of the mine life beyond 2030 (on approval).
Exploration
During the year the exploration program continued to focus on increasing the drilling density within the Roswell and San
Antonio prospects, as well as testing strike and depth extensions.
Roswell infill drilling is complete and an Indicated Resource has been released. Further drilling around the Roswell resource
continues. At San Antonio an Indicated Resource has also been released.
Regional drilling of the San Antonio to Peak Hill corridor focused on stratigraphy south of the El Paso target where earlier
exploration had returned encouraging results.
Northern Molong Porphyry Project (gold-copper)
Initial drill testing of the Boda prospect was completed during the year and results demonstrated continuity to the south of
the broad gold-copper mineralised alteration envelope.
A major RC and diamond core drilling program totalling over 30,000 metres has been completed, with received results
released. A further program continues around Boda, with reconnaissance work also underway throughout the NMPP.
Corporate
In accordance with its strategy of investing part of its cash balance in junior gold mining companies and projects that meet its
investment criteria, namely potential investments that have high exploration potential and/or require near term development
funding, the Company continues to hold its investment in gold exploration and development companies Calidus Resources Ltd
(ASX:CAI) and Genesis Minerals Ltd (ASX:GMD).
36
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Significant changes in the state of affairs
On 20 July 2020, Australian Strategic Materials Ltd (ASM) was demerged with its cash reserves and no bank debt. All interests
in the Dubbo Project and associated assets (including land and water rights), together with ASM’s investment in South
Korean metals technology company RMR Tech Corporation, was 100% owned by ASM following the demerger. A net gain of
$22,134,000 has been recognised on demerger of the ASM business.
On 17 July 2020, Alkane Resources Ltd and Australian Strategic Materials Ltd entered into a restructure deed as part of the
demerger to capitalise $113,000,000 and forgive $4,731,000 of loans to Australian Strategic Materials Ltd.
In early 2020 with the outbreak of Coronavirus Disease 2019 (“COVID-19” or “the coronavirus”), unprecedented measures
put in place by the Australian Government, as well as governments across the globe, to contain the coronavirus have had a
significant impact on the economy. Management continues to maintain high vigilance around COVID-19.
As at the date these financial statements were authorised, Management was not aware of any material adverse effects on the
financial statements as a result of the coronavirus.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
No matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect, the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
Likely developments and expected results of operations
The Group intends to continue efforts at TGO to be focused on continued safe operation of the underground mine and
exploration, evaluation and project approval of several of its other tenements to secure additional ore feed. Exploration and
evaluation activities will continue on existing tenements, and opportunities to expand the Group's tenement portfolio will be
pursued with a view to ensuring there is a pipeline of development opportunities for consideration.
Refer to the Review of Operations for further detail on planned developments.
Environmental regulation
The Group is subject to significant environmental regulation in respect of its exploration and evaluation, development and
mining activities.
The Group aspires to the highest standards of environmental management and insists its staff and contractors maintain
that standard. A significant environmental incident is considered to be one that causes a major impact or impacts to land
biodiversity, ecosystem services, water resources or air, with effects lasting greater than one year. There were no significant
environmental incidents reported at any of the Group's operations.
37
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | DIRECTORS' REPORT - MEETINGS OF DIRECTORS
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and of each board committee held during the year
ended 30 June 2021, and the number of meetings attended by each director, were:
Meetings of committees
Meetings of directors
Audit Committee
Risk Committee
Remuneration and
Nomination Committee*
Attended
Held
Attended
Held
Attended
Held
Attended
Held
I J Gandel
A D Lethlean
D I Chalmers
G Smith
N Earner
12
12
12
12
12
12
12
12
12
12
2
2
-
2
-
2
2
-
2
-
-
2
-
2
2
-
2
-
2
2
-
-
-
-
-
-
-
-
-
-
Held: represents the number of meetings held during the time the director held office or was a member of the committee during the year.
*While the Remuneration Committee did not formally meet during the year, informal discussions between committee members were
undertaken. The informal discussions resulted in recommendations which were duly implemented.
Remuneration report
The directors are pleased to present Alkane Resources Ltd's remuneration report which sets out remuneration information for
the company's Non-Executive Directors, Executive Directors and other Key Management Personnel ('KMP').
The report contains the following sections:
(a) Key Management Personnel (‘KMP’) disclosed in this report
(b) Remuneration governance
(c) Use of remuneration consultants
(d) Executive remuneration policy and framework
(e) Statutory performance indicators
(f) Non-Executive Director remuneration policy
(g) Voting and comments made at the Company's 2020 Annual General Meeting
(h) Details of remuneration
(i)
Service agreements
(j) Details of share-based payments and performance against key metrics
(k) Shareholdings and share rights held by Key Management Personnel
(l) Other transactions with Key Management Personnel
38
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT
(a) Key Management Personnel ('KMP') disclosed in this report
Non-Executive and Executive Directors
I J Gandel
N P Earner
A D Lethlean
D I Chalmers
G M Smith
Other Key Management Personnel
J Carter
S Parsons
Chief Financial Officer/ Joint Company Secretary
Executive General Manager - Operations (commenced this role 19 April 2021)
(b) Remuneration governance
The Company has established a Remuneration Committee to assist the Board in fulfilling its corporate governance
responsibilities with respect to remuneration by reviewing and making appropriate recommendations to the Board on:
• the overall remuneration strategy and framework for the Company;
• the operation of the incentive plans which apply to the executive team, including the appropriateness of key
performance indicators and performance hurdles; and
• the assessment of performance and remuneration of the Executive Directors, Non-Executive Directors and other Key
Management Personnel.
The Remuneration Committee is a committee of the Board and at the date of this report the members were I J Gandel, A D
Lethlean and G M Smith, all of whom were non-executive (with Mr Smith and Mr Lethlean being independent).
Their objective is to ensure that remuneration policies and structures are fair, competitive and aligned with the long-term
interests of the Company and its shareholders.
The Company's annual Corporate Governance Statement provides further information on the role of this committee, and the
full statement is available at URL: http://www.alkane.com.au/company/governance.
(c) Use of remuneration consultants
The Remuneration Committee of the Board commissioned Godfrey Remuneration Group to assist in industry benchmarking
review to ensure remuneration remains market competitive.
39
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT
(d) Executive remuneration policy and framework
In determining executive remuneration, the Board (or the Remuneration Committee as its delegate) aims to ensure that
remuneration practices:
• are competitive and reasonable, enabling the Company to attract and retain key talent while building a diverse,
sustainable and high achieving workforce;
• are aligned to the Company’s strategic and business objectives and the creation of shareholder value;
• promote a high-performance culture recognising that leadership at all levels is a critical element in this regard;
• are transparent; and
• are acceptable to shareholders.
The executive remuneration framework has three components:
• Total Fixed Remuneration (TFR);
• Short-Term Incentives (STI); and
• Long-Term Incentives (LTI).
(i) Executive remuneration mix
The Company has in place executive incentive programs which provide the mechanism to place a material portion of
executive pay "at risk".
(ii) Total fixed remuneration
A review is conducted of remuneration for all employees and executives on an annual basis, or as required. The Remuneration
Committee is responsible for determining Executive TFR.
(iii) Incentive arrangements
The Company may utilise both short-term and long-term incentive programs to balance the short and long-term aspects of
business performance, to reflect market practice, to attract and retain key talent and to ensure a strong alignment between
the incentive arrangements of executives and the creation and delivery of shareholder return.
Performance rights have been used in the current period to incentivise the Company’s executives and KMP. The performance
rights plan was approved by shareholders at the 2016 Annual General Meeting.
Short-term incentives
The executives have the opportunity to earn an annual Short-Term Incentive (STI) if predefined targets are achieved.
The executive STI is provided in the form of rights to ordinary shares in the Company that vest at the end of the 12-month
period, provided the predefined targets are met. On vesting, the rights automatically convert into one ordinary share each.
The executives do not receive any dividends and are not entitled to vote in relation to the rights to shares during the vesting
period. If an executive ceases to be employed by the Group within the performance period (the service condition), the rights
will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis.
STI awards for the executive team in the 2021 financial year were based on the scorecard measures and weighting as
disclosed below. Targets were approved by the Remuneration Committee through a rigorous process to align to the
Company's strategic and business objectives.
40
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT
Performance metrics
Production performance at TGO
Cost performance at TGO
Safety Performance, Environment & Social Licence
Planning, Approval SAR
Resource Growth
Weighting
25%
25%
25%
10%
15%
The committee has the discretion to adjust short-term incentives downwards in light of unexpected or unintended
circumstances.
Long-term incentives
The LTI is designed to focus executives on delivering long-term shareholder returns. Eligibility for the plan is restricted to
executives and nominated senior managers, being the employees who are most able to influence shareholder value. Under
the plan, participants have an opportunity to earn up to 100% of their total fixed remuneration (calculated at the time of
approval by the Remuneration Committee) comprised of performance rights. In previous periods, performance rights were
granted in two tranches each year. Each tranche of performance rights has separate vesting conditions, being share price
growth and company milestone events, with the executives' LTI weighted more heavily to the share price growth tranche. The
LTI vesting period is three years. In FY2021 LTI's were issued with vesting conditions linked to total shareholder return with a
vesting period of three years.
The performance rights will be provided in the form of rights to ordinary shares in Alkane Resources Ltd that will vest at the
end of the three-year vesting period, provided the predefined targets are met. On vesting, the rights automatically convert
into one ordinary share each. Participants do not receive any dividends and are not entitled to vote in relation to the rights
to shares prior to the vesting period. If a participant ceases to be employed by the Group within this period, the rights will be
forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis.
Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan.
Targets are generally reviewed annually and set for a forward three-year period. Performance-related targets reflect factors
such as the expectations of the Group’s business plans, the stage of development of the Group’s projects and the industry
business cycle. The most appropriate target benchmark will be reviewed each year prior to the granting of rights.
The Remuneration Committee is responsible for determining the LTI to vest based on an assessment of whether the
predefined targets are met. To assist in this assessment, the committee receives detailed reports on performance
from management. The committee has the discretion to adjust LTI's downwards in light of unexpected or unintended
circumstances.
(iv) Clawback policy for incentives
Under the terms and conditions of the Company’s incentive plan offer and the plan rules, the Board (or the Remuneration
Committee as its delegate) has discretion to determine forfeiture of unvested equity awards in certain circumstances (e.g.
unlawful, fraudulent or dishonest behaviour or serious breach of obligations to the Company). All incentive offers and final
outcomes are subject to the full discretion of the Board (or the Remuneration Committee as its delegate).
(v) Share trading policy
The trading of shares issued to participants under any of the Company’s employee share plans is subject to, and conditional
upon, compliance with the Company’s employee share trading policy. Executives are prohibited from entering into any
hedging arrangements over unvested rights under the Company’s employee incentive plans. The Company would consider a
breach of this policy as gross misconduct which may lead to disciplinary action and potentially dismissal.
41
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT
(e) Statutory performance indicators
The Company aims to align executive remuneration to the Company’s strategic and business objectives and the creation of
shareholder wealth. The table below shows measures of the Group’s financial performance over the last five years as required
by the Corporations Act 2001. However, these are not necessarily consistent with the specific measures in determining the
variable amounts of remuneration to be awarded to KMP. As a consequence, there may not always be a direct correlation
between the statutory key performance measures and the variable remuneration rewarded.
Revenue ($'000)
Profit/(loss) for the year attributable to owners ($'000)
Basic earnings/(loss) per share (cents)
Dividend payments ($'000)
Share price at period end (cents)
Total KMP incentives as a percentage of profit/(loss) for the year (%)
(f) Non-Executive Director remuneration policy
30 June
2021
127,833
55,701
5.6
-
1.15
2.1%
30 June
2020
30 June
2019
30 June
2018
30 June
2017
74,397
12,762
95,852
23,293
129,974
117,792
24,471
(28,937)
2.4
-
1.21
8.3%
4.6
-
0.46
3.3%
4.8
-
0.23
3.0%
(5.8)
-
0.24
0.3%
On appointment to the Board, all Non-Executive Directors enter into a service agreement with the Company in the form of a
letter of appointment. The letter summarises the Board policies and terms, including remuneration, relevant to the office of
Director.
Non-Executive Directors receive a Board fee and fees for chairing or participating on Board Committees. Non-Executive
Directors appointed do not receive retirement allowances. Fees provided are inclusive of superannuation and the Non-
Executive Directors do not receive performance-based pay.
Fees are reviewed annually by the Remuneration Committee, taking into account comparable roles and market data obtained
from independent data providers.
The maximum annual aggregate directors’ fee pool limit (inclusive of applicable superannuation) is $700,000 and was
approved by shareholders at the Annual General Meeting on 16 May 2013.
42
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT
Details of Non-Executive Director fees in the year ended 30 June 2021 are as follows:
Base fees
Chair*
Other Non-Executive Directors*
Additional fees*
Audit Committee - chair
Audit Committee - member
Remuneration Committee - chair
Remuneration Committee - member
$ per annum
191,000
95,000
12,500
7,500
12,500
7,500
For services in addition to ordinary services, Non-Executive Directors may charge per diem consulting fees at the rate specified by the
Board from time to time for a maximum of four days per month over a 12-month rolling basis. Any fees in excess of this limit are to be
approved by the Board.
*Remuneration for directors changed on 1 October 2020. From 1 July 2020 until 30 September 2020 the Chair base fee was $129,400 and
other Non-Executive Directors base fee was $77,600. From 1 July 2020 to 30 September 2020 the committee fees were for chair $7,800
and for member $5,200.
(g) Voting and comments made at the Company's 2020 Annual General Meeting
The Company received more than 99% of “yes” votes on its remuneration report for the financial year ended 30 June 2020.
The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.
(h) Details of remuneration
The following table shows details of the remuneration expense recognised for the directors and the KMP of the Group for the
current and previous financial year, measured in accordance with the requirements of the accounting standards.
30 June 2021
Executive Directors
N P Earner
D I Chalmers
Other KMP
D Woodall(g)
A MacDonald(g)
J Carter
S Parsons(f)
Total Executive Directors and other KMP
Total NED remuneration(e)
Total KMP remuneration expense
576,942
309,105
26,344
28,769
362,300
87,586
1,391,046
376,661
1,767,707
Fixed remuneration
Cash Salary(a)
Annual and
long service
leave(b)
Post-
employment
benefits(c)
$
$
$
Variable
Remuneration
Rights to
deferred
shares(d)
$
Total
$
1,335,675
621,915
28,847
60,867
649,450
143,622
28,234
142,783
-
-
17,546
11,105
199,668
-
23,058
21,694
2,503
2,660
25,000
5,065
79,980
24,965
707,441
148,333
-
29,438
244,604
39,866
1,169,682
2,840,376
-
401,626
199,668
104,945
1,169,682
3,242,002
43
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT
30 June 2020
Executive Directors
N P Earner
D I Chalmers
Other KMP
D Woodall(g)
A MacDonald(g)
D Wilkins
J Carter
Total Executive Directors and other KMP
Total NED remuneration(e)
Total KMP remuneration expense
Fixed remuneration
Cash Salary(a)
Annual and
long service
leave(b)
Post-
employment
benefits(c)
$
$
$
Variable
Remuneration
Rights to
deferred
shares(d)
$
Total
$
484,142
244,645
121,180
359,136
309,049
345,000
1,863,152
300,419
2,163,571
28,214
29,443
10,720
15,566
-
17,792
101,735
-
101,735
23,058
19,255
11,512
23,023
-
25,000
101,848
20,589
122,437
748,241
90,312
1,283,655
383,655
-
104,770
-
119,548
1,062,871
-
1,062,871
143,412
502,495
309,049
507,340
3,129,606
321,008
3,450,614
(a) Short-term benefits as per Corporations Regulation 2M.3.03(1) Item 6.
(b) Other long-term benefits as per Corporations Regulation 2M.3.03(1) Item 8. The amounts disclosed in this column represent the
movements in the associated provisions. They may be negative where a KMP has taken more leave than accrued during the year.
(c) Post-employment benefits are provided through superannuation contributions.
(d) Rights to deferred shares granted under the executive STI and LTI schemes are expensed over the performance period, which includes
the year to which the incentive relates and the subsequent vesting period of the rights.
Rights to deferred shares are equity-settled share-based payments as per the Corporations Regulations 2M.3.03(1) Item11. These
include negative amounts for the rights forfeited during the year.
Details of each grant of share right are provided in the table in section (j). Shareholder approval was received in advance to the grant
of share rights where required.
(e) Refer below for details of Non-Executive Directors' (NED) remuneration.
(f) Mr Parsons was appointed an Executive General Manager - Operations on 19 April 2021. Before this appointment he was the Group's
General Manager Operations.
(g) D Woodall and A MacDonald ceased to be KMP after the demerger of ASM from Alkane Resources on the 20th of July 2020.
30 June 2021
Non-Executive Directors
I J Gandel
A D Lethlean
G M Smith
Total Non-Executive Directors
30 June 2020
Non-Executive Directors
I J Gandel
A D Lethlean
G M Smith
Total Non-Executive Directors
Cash salary and fees
$
Superannuation
$
Total
$
163,333
99,452
113,876
376,661
130,045
82,366
88,008
300,419
15,517
9,448
-
24,965
12,355
8,234
-
20,589
178,850
108,900
113,876
401,626
142,400
90,600
88,008
321,008
Remuneration for the directors was changed on 1 October 2020. Refer to footnote in section (f) for details.
44
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT
The relative proportions of remuneration expense recognised during the year that are linked to performance and those that
are fixed are as follows:
Fixed remuneration
At risk - LTI
At risk - STI
2021
%
2020
%
2021
%
2020
%
2021
%
2020
%
Executive Directors of Alkane Resources Ltd
D I Chalmers
N P Earner
Other Key Management Personnel
J Carter
S Parsons
76%
47%
62%
72%
76%
42%
76%
-
14%
40%
26%
11%
24%
58%
24%
-
10%
13%
12%
17%
-
-
-
-
D Wilkins was a KMP in the prior year. However, he is not involved in decision-making activities regarding overall running of the Group in
the current year. He is not an employee of the Company and therefore not eligible to participate in incentive programs. Instead, a fee for
services was paid as set out previously.
Mr Parsons was appointed an Executive General Manager - Operations on 19 April 2021.
(i) Service agreements
Remuneration and other terms of employment for KMP are formalised in service agreements. Details of these agreements are
as follows:
Name and Position
Term of agreement
TFR(1)
Termination payment(2)
D I Chalmers - Technical Director
Ongoing commencing 1 September 2017
$330,800
6 months
N Earner - Managing Director
J Carter - Chief Financial Officer
Ongoing commencing 1 September 2017
$600,000
see note 2 below
Ongoing commencing 1 October 2018
$388,725
S Parsons - Executive General Manager - Operations
Ongoing commencing 1 October 2015
$443,475
3 months
1 month
(1) Total Fixed Remuneration (TFR) is for the year ended 30 June 2021, and is inclusive of superannuation, but does not include long
service leave accruals. TFR is reviewed annually by the Remuneration Committee.
(2) Specified termination payments are within the limits set by the Corporations Act 2001. The termination benefit provision for the
Managing Director was approved at the Annual General Meeting on 29 November 2017.
Mr Earner may resign with 3 months' notice; or
Alkane may terminate the Executive Employment agreement with 3 months' notice; or
Where Mr Earner resigns as a result of a material diminution in the position, Mr Earner will be entitled to payment in lieu of 12
months' notice and short-term incentives and long term-incentives granted or issued but not yet vested.
45
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT
(j) Details of share-based payments and performance against key metrics
Details of each grant of share rights affecting remuneration in the current or future reporting period are set out below.
Date of
grant
Number
of rights
granted
Fair value of
share rights
at the date
of grant
$
Share rights
at fair value
$
Performance
period end
Share-based
payment
expense
current year
$
Name
I Chalmers
FY2019 LTI - Performance Rights - Tranche 1
21/11/2018
305,785
FY2019 LTI - Performance Rights - Tranche 2
21/11/2018
65,525
FY2020 LTI - Performance Rights - Tranche 1
22/11/2019
198,624
FY2020 LTI - Performance Rights - Tranche 2
22/11/2019
42,562
FY2021 LTI - Performance Rights
11/11/2020
174,903
0.050
0.215
0.419
0.623
0.748
15,289
16/07/2020
14,088
16/07/2020
83,223
30/06/2022
26,519
16/07/2020
130,827
31/08/2023
FY2021 STI - Performance Rights
11/11/2020
-
-
101,721
11/11/2021
679,724
30/06/2022
226,575
N Earner
FY2019 LTI - Performance Rights - Tranche 1
21/11/2018
2,497,245
FY2019 LTI - Performance Rights - Tranche 2
21/11/2018
535,124
FY2020 LTI - Performance Rights - Tranche 1
22/11/2019
1,622,252
FY2020 LTI - Performance Rights - Tranche 2
22/11/2019
FY2021 LTI - Performance Rights
FY2021 STI - Performance Rights
Other Key Management Personnel
J Carter
11/11/2020
11/11/2020
347,625
687,346
-
FY2019 LTI - Performance Rights - Tranche 1
18/10/2018
1,841,591
FY2019 LTI - Performance Rights - Tranche 2
18/10/2018
FY2020 LTI - Performance Rights - Tranche 1
02/09/2019
FY2020 LTI - Performance Rights - Tranche 2
02/09/2019
FY2021 LTI - Performance Rights
FY2021 STI - Performance Rights
11/11/2020
11/11/2020
S Parsons
FY2020 LTI - Performance Rights - Tranche 1
02/09/2019
FY2021 LTI - Performance Rights
FY2021 STI - Performance Rights
11/11/2020
11/11/2020
A MacDonald (01/07/18-20/07/2020)
FY2019 LTI - Performance Rights - Tranche 1
18/10/2018
FY2019 LTI - Performance Rights - Tranche 2
18/10/2018
394,626
604,146
129,460
205,530
-
306,451
214,214
-
976,601
139,514
0.050
0.215
0.419
0.623
0.748
124,862
16/07/2020
115,052
16/07/2020
216,590
16/07/2020
514,135
31/08/2023
-
276,750
11/11/2021
0.059
0.220
0.236
0.406
0.748
108,654
16/07/2020
86,818
16/07/2020
142,578
30/06/2022
52,596
16/07/2020
153,736
31/08/2023
-
119,533
11/11/2021
0.236
0.748
72,322
30/06/2022
160,232
31/08/2023
-
124,584
11/11/2021
0.059
0.220
57,619
16/07/2020
30,693
16/07/2020
5,096
3,131
27,741
11,786
36,202
64,377
41,621
25,567
96,262
142,267
175,149
36,218
19,293
47,526
23,376
42,541
75,650
4,755
10,536
24,575
19,206
10,231
(a) The value at grant date for share rights granted during the year as part of remuneration is calculated in accordance with AASB 2
Share-Based Payments. Differences will arise between the number of share rights at fair value in the table above and the STI and LTI
percentages mentioned in section (d) due to different timing of valuation of rights as approved by the Remuneration Committee and
at grant. Refer to note 30 for details of the valuation techniques used for the rights plan.
(b) Share rights only vest if performance and service targets are achieved. The determination is usually made at the conclusion of the
statutory audit.
(c) Shares for the deferred portion of the 2021 STI will be granted on 11 November 2021. The number of shares will depend on the Alkane
Resources Ltd share price over the five days prior to the grant date.
46
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT
The determination of the number of rights that are to vest or be forfeited during a financial year is made by the Remuneration
Committee after the statutory audit has been substantially completed. As such, the actual determination is made after the
balance sheet date. Where there are rights that have vested or been forfeited, details will be included in the Remuneration
Report as the relevant performance period will conclude at the end of the relevant financial year.
Performance against key metrics
On 16 July 2020 at the Extraordinary General Meeting in relation to the demerger of the ASM business, Alkane's shareholders
also voted on the following changes to long-term incentives.
a) all Alkane Performance Rights with a Dubbo Project (DP) performance condition will be cancelled with no consideration
payable to the holders of those performance rights; and
b) all FY2018 and FY2019 Alkane Performance Rights with a Total Shareholder Return (TSR) performance condition will
vest in full, thereby entitling the holder to one Alkane share for each such Alkane Performance Right exercised.
The vesting and cancellation of the FY2018 performance rights was reported in the 2020 financial report.
The remaining FY2020 LTI Tranche 1 performance targets relate to share price performance growth as per below:
TSR compound annual growth rate (CAGR)
% Performance rights vesting
Less than 10% CAGR
Nil
Above 10% CAGR up to 15% CAGR
Pro rata vesting from 0% - 50%
At 15% CAGR
50%
Above 15% CAGR up to 30% CAGR
Pro rata vesting from 50% - 100%
At 30% CAGR
100%
The STI performance metrics for the year are detailed in section (d)(iii) of the Remuneration Report.
The Company's TSR for FY2021 will be compared to the S&P/ASX All Ordinaries Gold (Sub industry) XGD (Gold Index). TSR and
number of performance rights will vest as follows:
Shareholder return comparison
TSR is less than Gold Index TSR
TSR is equal to Gold Index TSR
TSR is >5% and <10% to Gold Index TSR
TSR is equal to or >10% to Gold Index TSR
Proportion of performance rights that vest
-
25%
50%
100%
47
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT
(k) Shareholdings and share rights held by Key Management Personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of Key Management
Personnel of the consolidated entity, including their personally related parties, is set out below:
Ordinary shares
I J Gandel
A D Lethlean
D I Chalmers
N P Earner
G Smith
D Woodall*
A MacDonald*
J Carter
S Parsons
Balance at
the start of
the year
Received
as part of
remuneration
Additions
Disposals/
other
Balance at
the end of
the year
136,021,143
720,086
-
-
4,671,140
1,016,745
165,000
331,875
35,000
8,462,496
-
-
1,460,000
2,013,418
-
-
1,841,591
488,300
14,771,363
-
-
-
-
-
-
-
-
-
-
-
150,792,506
720,086
5,687,885
(5,000,000)
3,627,496
-
331,875
(35,000)
(3,473,418)
(1,841,591)
-
-
-
(238,300)
250,000
143,404,244
13,822,550
14,771,363
(10,588,309)
161,409,848
*D Woodall and A MacDonald ceased to be KMP after the demerger of ASM from Alkane Resources on 20 July 2020.
Performance rights holding
The number of performance rights over ordinary shares in the Company held during the financial year by each director and
other members of Key Management Personnel of the consolidated entity, including their personally related parties, is set out
below:
Balance at
the start of
the year
Granted
Vested
Expired/
forfeited/
other
Balance at
the end of
the year
Performance rights over ordinary shares
D I Chalmers - Performance rights
612,496
174,903
(305,785)
N P Earner - Performance rights
J Carter - Performance rights
A MacDonald - Performance rights
S Parsons - Performance rights
5,002,246
2,969,823
1,185,872
687,346
(2,497,245)
205,530
(1,841,591)
-
(976,601)
(488,300)
965,054
214,214
(108,087)
(882,749)
(524,086)
(209,271)
(170,303)
373,527
2,309,598
809,676
-
520,665
10,735,491
1,281,993
(6,109,522)
(1,894,496)
4,013,466
On 16 July 2020 at the Extraordinary General Meeting in relation to the demerger of the ASM business, the shareholders
also voted for early vesting of the FY2019 Tranche 1, the cancellation of the FY2019 Tranche 2 performance rights, and the
cancellation of the FY2020 Tranche 2 performance rights.
48
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - INDEMNITY AND INSURANCE OF OFFICERS
(l) Other transactions with Key Management Personnel
There were no other transactions with KMP's during the financial year ended 30 June 2021.
There were no unissued ordinary shares of Alkane Resources Ltd under performance rights outstanding at the date of this
report.
This concludes the remuneration report, which has been audited.
Indemnity and insurance of officers
Alkane Resources Ltd has entered into deeds of indemnity, access and insurance with each of the directors. These deeds
remain in effect as at the date of this report. Under the deeds, the Company indemnifies each director to the maximum
extent permitted by law against legal proceedings or claims made against or incurred by the directors in connection with
being a director of the Company, or breach by the Group of its obligations under the deed.
The liability insured is the indemnification of the Group against any legal liability to third parties arising out of any directors’ or
officers’ duties in their capacity as a director or officer, other than indemnification not permitted by law.
No liability has arisen under this indemnity as at the date of this report.
The Group has not otherwise, during or since the financial year, indemnified nor agreed to indemnify an officer of the Group
or of any related body corporate, against a liability incurred as such by an officer.
During the year the Company has paid premiums in respect of directors' and executive officers' insurance. The contracts
contain prohibitions on disclosure of the amount of the premiums and the nature of the liabilities under the policies.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility
on behalf of the Company for all or part of those proceedings.
49
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | DIRECTORS' REPORT - AUDITOR'S INDEPENDENCE DECLARATION
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties, where the auditor's
expertise and experience with the Group is important.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors, in accordance with advice provided by the Audit Committee, are of the opinion that the services as disclosed
in note 24 to the financial statements do not compromise the external auditor's independence requirements of the
Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants.
Auditor's independence declaration
A copy of the auditor's independence declaration, as required under section 307C of the Corporations Act 2001, is set out
immediately after this directors' report.
Rounding of amounts
The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to the 'rounding-off' of amounts in the directors' report and financial report. Amounts in
this report have been rounded off in accordance with that ASIC Legislative Instrument to the nearest thousand dollars, or in
certain cases, to the nearest dollar.
This report is made in accordance with a resolution of directors.
On behalf of the directors
N P Earner
Managing Director
27 August 2021
Perth
50
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - AUDITOR'S INDEPENDENCE DECLARATION
51
Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - FINANCIAL STATEMENTS
Financial Statements
Consolidated Financial Statements
Consolidated statement of profit or loss and other comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the Consolidated Financial Statements
Note 1. Segment information
Note 2. Revenue
Note 3. Expenses
Note 4. Income tax
Note 5. Discontinued operations
Note 6. Cash and cash equivalents
Note 7. Trade and other receivables
Note 8. Inventories
Note 9. Financial assets at fair value through other comprehensive income
Note 10. Other financial assets
Note 11. Property, plant and equipment
Note 12. Exploration and evaluation
Note 13. Investments accounted for using the equity method
Note 14. Trade and other payables
Note 15. External borrowings
Note 16. Provisions
Note 17. Issued capital
Note 18. Reserves
Note 19. Retained profits
Note 20. Critical accounting judgements, estimates and assumptions
Note 21. Financial risk management
Note 22. Capital risk management
Note 23. Key management personnel disclosures
Note 24. Remuneration of auditors
Note 25. Contingent assets
Note 26. Contingent liabilities
Note 27. Commitments
Note 28. Events after the reporting period
Note 29. Related party transactions
Note 30. Share-based payments
Note 31. Earnings per share
Note 32. Parent entity information
Note 33. Deed of cross guarantee
Note 34. Reconciliation of profit after income tax to net cash from operating activities
Note 35. Significant accounting policies
52
54
55
56
57
58
59
59
60
64
66
66
67
68
68
69
71
72
72
73
74
75
76
77
77
79
81
82
82
82
82
83
84
84
84
86
87
89
89
90
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - FINANCIAL STATEMENTS
These financial statements are consolidated financial statements for the Group consisting of Alkane Resources Ltd and
its subsidiaries.
The financial statements are presented in the Australian currency.
Alkane Resources Ltd is a company limited by shares, incorporated and domiciled in Australia. Its registered office and
principal place of business is:
Alkane Resources Ltd
Level 4, 66 Kings Park Road
West Perth WA 6005
The financial statements were authorised for issue by directors on 27 August 2021. The directors have the power to
amend and reissue the financial statements.
All press releases, financial reports and other information are available at the Shareholders’ Centre on our website:
www.alkane.com.au
53
Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
Note
2021
$'000
2020
$'000
Continuing operations
Revenue
Cost of sales
Gross profit
Other income
Interest income
Net gain on derecognition of financial assets
Total revenue
Expenses
Other expenses
Finance costs
Share of loss of associates accounted for using the equity method
Net (loss)/gain on disposal of property, plant and equipment
Total expenses
Profit before income tax expense from continuing operations
Income tax expense
Profit after income tax expense from continuing operations
Profit/(loss) after income tax benefit from discontinued
operations
Profit after income tax (expense)/benefit for the year
attributable to the owners of Alkane Resources Ltd
Other comprehensive income/(loss)
Items that will not be reclassified subsequently to profit or loss
Changes in the fair value of equity investments at fair value
through other comprehensive income, net of tax
Items that may be reclassified subsequently to profit or loss
Cash flow hedges transferred to profit or loss, net of tax
Net change in the fair value of cash flow hedges taken to equity,
net of tax
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income for the year attributable to the
owners of Alkane Resources Ltd
Total comprehensive income for the year is attributable to:
Continuing operations
Discontinued operations
Earnings per share for profit from continuing operations attributable to the
owners of Alkane Resources Ltd
Basic earnings per share
Diluted earnings per share
Earnings per share for profit/(loss) from discontinued operations attributable
to the owners of Alkane Resources Ltd
Basic earnings per share
Diluted earnings per share
Earnings per share for profit attributable to the owners of Alkane Resources Ltd
Basic earnings per share
Diluted earnings per share
2
3
13
3
3
13
4
5
19
21
21
31
31
31
31
31
31
127,833
(66,341)
61,492
667
94
2,698
131,292
(12,219)
(2,835)
(870)
(957)
(16,881)
48,070
(14,503)
33,567
22,134
55,701
2,045
1,017
(459)
2,603
58,304
36,170
22,134
58,304
72,549
(41,940)
30,609
141
625
-
73,315
(10,677)
(553)
(240)
9
(11,461)
19,914
(6,569)
13,345
(583)
12,762
(251)
278
(487)
(460)
12,302
12,885
(583)
12,302
Cents
Cents
5.64
5.60
3.72
3.69
9.37
9.28
2.44
2.37
(0.11)
(0.10)
2.33
2.26
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
54
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheet
As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Assets of disposal group classified as held for distribution to owners
Total current assets
Non-current assets
Property, plant and equipment
Exploration and evaluation
Investments accounted for using the equity method
Financial assets at fair value through other comprehensive income
Deferred tax
Derivative financial instruments
Other financial assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
External borrowings
Provisions
Other liabilities
Liabilities directly associated with assets classified as held for distribution to owners
Total current liabilities
Non-current liabilities
External borrowings
Provisions
Deferred tax
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
Note
2021
$'000
2020
$'000
6
7
8
5
11
12
13
9
4
10
14
15
16
5
15
16
4
17
18
19
18,991
1,894
11,648
521
33,054
-
33,054
99,411
57,794
15,944
18,471
-
-
11,541
203,161
236,215
11,082
3,294
3,660
143
18,179
-
18,179
5,922
15,363
4,737
449
26,471
44,650
48,337
2,940
7,647
172
59,096
139,538
198,634
62,322
32,745
14,385
-
10,947
64
8,614
129,077
327,711
9,425
2,090
2,659
64
14,238
26,565
40,803
4,515
14,873
-
134
19,522
60,325
191,565
267,386
218,079
(65,178)
38,664
191,565
258,876
3,413
5,097
267,386
The above consolidated balance sheet should be read in conjunction with the accompanying notes
55
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | DIRECTORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of changes in equity
For the year ended 30 June 2021
Balance at 1 July 2019
Adjustment for reclassification
Balance at 1 July 2019 - restated
Profit after income tax expense for the year
Other comprehensive loss for the year, net of tax
Total comprehensive income/(loss) for the year
Transactions with owners in their
capacity as owners:
Contributions of equity, net of transaction costs (note 17)
Share-based payments (note 30)
Deferred tax recognised in equity
Balance at 30 June 2020
Share
capital
$'000
220,111
(922)
219,189
-
-
-
39,442
-
245
258,876
Share-based
payments
reserve
$'000
Other
reserves
$'000
Retained
profits
$'000
Total equity
$'000
2,981
-
2,981
-
-
-
-
1,225
-
4,206
(629)
-
(629)
-
(460)
(460)
-
-
296
(793)
(8,587)
922
(7,665)
12,762
-
12,762
213,876
-
213,876
12,762
(460)
12,302
-
-
-
5,097
39,442
1,225
541
267,386
Share
capital
$'000
Share-based
payments
reserve
$'000
Other
reserves
$'000
Retained
profits
$'000
Total equity
$'000
Balance at 1 July 2020
258,876
4,206
(793)
5,097
267,386
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Share issue transaction costs (note 17)
Share-based payments (note 30)
Capital distribution and demerger dividend (note 5)
Transfer of gain on demerger (note 5)
Deferred tax recognised in equity
Balance at 30 June 2021
-
-
-
(31)
2,577
(43,237)
-
(106)
218,079
-
-
-
-
(893)
-
-
-
3,313
-
3,676
3,676
-
-
(92,435)
22,134
(1,073)
(68,491)
55,701
-
55,701
-
-
-
(22,134)
-
38,664
55,701
3,676
59,377
(31)
1,684
(135,672)
-
(1,179)
191,565
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
56
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | DIRECTORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of cash flows
For the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers (inclusive of GST)
Interest received
Finance costs paid
Royalties and selling costs
Other receipts
Net cash from operating activities
Cash flows from investing activities
Payments for investments
Payments for property, plant and equipment and development expenditure
Proceeds from disposal of property, plant and equipment
Payments for exploration expenditure
Payments for security deposits
Purchase of biological assets
Proceeds from the sale of biological assets
Transaction costs relating to ASM demerger
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Cost of share issue
Proceeds from borrowings
Repayment of borrowings
Principal elements of lease payment
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Less cash classified as held for distribution to owners at the beginning of the
period
Cash and cash equivalents at the end of the financial year
Note
2021
$'000
2020
$'000
128,035
(51,879)
76,156
99
(1,614)
(4,047)
522
71,116
(14,664)
(59,477)
1,522
(26,642)
(2,927)
-
-
(538)
(102,726)
-
(31)
8,150
(5,783)
(72)
2,264
(29,346)
66,881
(18,544)
18,991
34
17
17
6
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
72,347
(44,059)
28,288
986
(127)
(1,490)
879
28,536
(8,966)
(46,122)
1
(20,132)
(217)
(457)
118
(1,525)
(77,300)
40,665
(1,223)
7,885
(1,264)
-
46,063
(2,701)
69,582
-
66,881
57
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 1
Note 1. Segment information
The consolidated entity is currently with one operating segment: gold operations. The ASM business has been accounted for
as discontinued operations since 30 June 2020 and was previously reported in the critical metals segment. Information about
this discontinued segment is provided in note 5. The operating segments are based on the internal reports that are reviewed
and used by the Board of Directors (who are identified as the chief operating decision makers) in assessing performance and
in determining the allocation of resources.
Costs that do not relate to the gold operating segment have been identified as unallocated costs. Corporate assets and
liabilities that do not relate to the gold operating segment have been identified as unallocated. The Group has formed a tax
consolidation group and therefore tax balances are disclosed under the unallocated grouping. The Group utilises a central
treasury function resulting in cash balances being included in the unallocated segment.
Gold
Operations
$'000
Unallocated
$'000
Total
$'000
127,833
-
127,833
57,791
(21,028)
-
3,226
-
(17,802)
122,856
(35,618)
87,238
72,549
-
72,549
30,362
(9,072)
-
2,203
(147)
-
(7,016)
77,834
(30,890)
46,944
-
94
94
12,413
(226)
(1,331)
-
(14,503)
(16,060)
113,359
(9,032)
104,327
-
625
625
(10,448)
(79)
(329)
-
-
(6,569)
(6,977)
110,339
(2,870)
107,469
127,833
94
127,927
70,204
(21,254)
(1,331)
3,226
(14,503)
(33,862)
236,215
(44,650)
191,565
72,549
625
73,174
19,914
(9,151)
(329)
2,203
(147)
(6,569)
(13,993)
188,173
(33,760)
154,413
30 June 2021
Gold sales to external customers
Interest income
Segment net profit/(loss) before income tax
Segment net profit/(loss) includes the following non-cash adjustments:
Depreciation and amortisation
Exploration expenditure written off or provided for
Inventory product movement and provision
Income tax expense
Total adjustments
Total segment assets
Total segment liabilities
Net segment assets
30 June 2020
Gold sales to external customers
Interest income
Segment net profit/(loss) before income tax
Segment net profit/(loss) includes the following non-cash adjustments:
Depreciation and amortisation
Exploration expenditure written off or provided for
Inventory product movement and provision
Restructuring provision
Income tax expense
Total adjustments
Total segment assets
Total segment liabilities
Net segment assets
58
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 2
Note 2. Revenue
Revenue from continuing operations
Gold sales
(a) Revenue
2021
$'000
2020
$'000
127,833
72,549
Revenue is recognised when control of a good or service transfers to a customer. Control is generally determined to be when
the customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or
service.
(b) Gold Sales
Revenue from the sale of goods is recognised when the Group satisfies its performance obligations under its contract with the
customer by transferring such goods to the customer's control. Control is generally determined to be when the customer has
the ability to direct the use and obtain substantially all of the remaining benefits from that good.
Note 3. Expenses
Cost of sales
Cash costs of production
Inventory product movement
Depreciation and amortisation
Royalties and selling costs
(a) Cash costs of production
2021
$'000
2020
$'000
44,393
(3,226)
21,028
4,146
66,341
33,137
(2,203)
9,072
1,934
41,940
Cash costs of production include ore and waste mining costs, processing costs and site administration and support costs. Cash
costs of production include $20,401,000 of employee remuneration benefits (2020: $13,085,000).
(b) Inventory product movement
Inventory product movement represents the movement in the balance sheet inventory ore stockpile, gold in circuit and
bullion on hand.
Refer to note 8 for further details on the Group's accounting policy for inventory.
59
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 4
(c) Inventory product provision for net realisable value
Inventory must be carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price
in the ordinary course of business less estimated costs to complete processing and to make a sale. The net realisable value
provision equals the decrement between the net realisable value and the carrying value before provision.
Refer to note 8 for further details on the Group's accounting policy for inventory.
2021
$'000
2020
$'000
2,363
3,836
1,684
1,881
-
1,331
751
226
147
12,219
2021
$'000
2020
$'000
408
1,906
521
2,835
3,387
2,361
1,225
2,321
147
329
660
79
168
10,677
177
317
59
553
2021
$'000
2020
$'000
-
-
14,503
-
14,503
6,569
(248)
6,321
Other expenses
Corporate administration
Employee remuneration and benefits expensed
Share-based payments
Professional fees and consulting services
Restructuring provision
Exploration expenditure provided for or written off
Directors' fees and salaries expensed
Depreciation
Non-core project expenses
(d) Finance costs
Finance costs
Interest Expense
Put Options
Other
Note 4. Income tax
a) Income tax expense
Total current tax expense
Income tax expense is attributable to:
Profit from continuing operations
Loss from discontinued operations
60
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 4
(b) Reconciliation of income tax expense/(benefit) to prima facie tax payable
Profit from continued operations before income tax expense
Profit/(loss) from discontinued operations before income tax expense
Profit before income tax expense
Tax at the Australian tax rate of 30% (2020 - 30%)
Tax benefits of deductible equity raising costs
Non-deductible share-based payments
Non-deductible expenses
Non-assessable income
Non-assessable gain on disposal of subsidiaries
Other deductible expenses
Movement in unrecognised temporary differences
Over/(under) Provision for Prior Year
(c) Deferred tax assets
2021
$'000
2020
$'000
48,070
22,134
70,204
21,061
(116)
505
8
(8)
(6,801)
(4)
(126)
(16)
14,503
19,914
(831)
19,083
5,725
(123)
367
112
-
-
-
-
240
6,321
Tax losses
$'000
Rehabilitation
Provision and
assets
$'000
Property,
plant and
equipment
$'000
R&D Tax
incentive
credits
$'000
Other
$'000
Total
$'000
Movements
At 1 July 2019
- to profit or loss
- direct to equity
At 30 June 2020
-
7,065
-
7,065
3,617
(296)
-
3,321
16,352
(2,888)
-
13,464
1,072
179
-
1,251
1,358
150
541
2,049
22,399
4,210
541
27,150
Recognised deferred tax assets are attributable to:
Losses and
temporary
differences
carried forward
for continued
operations
Losses and
temporary
differences
carried forward
for discontinued
operations
7,065
3,321
12,420
1,251
1,934
25,991
-
-
1,044
-
115
1,159
7,065
3,321
13,464
1,251
2,049
27,150
61
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 4
Tax losses
$'000
Rehabilitation
Provision and
assets
$'000
Property,
plant and
equipment
$'000
R&D Tax
incentive
credits
$'000
Other
$'000
Total
$'000
Movements
At 1 July 2020
- profit or loss
- directly to equity
- demerger of
subsidiaries
7,065
2,343
-
-
3,321
331
-
-
As at 30 June 2021
9,408
3,652
(d) Deferred tax liabilities
13,463
(3,227)
-
(1,044)
9,192
The balance comprises temporary differences attributable to:
Exploration expenditure
Property, plant & equipment
Other
Gross recognised deferred tax liabilities
Set-off of deferred tax assets
Net recognised deferred tax assets/(liabilities) are attributable to:
Losses and temporary differences carried forward for continued operations
Losses and temporary differences carried forward for discontinued operations
1,251
180
-
-
1,431
2021
$'000
2,050
544
(346)
(115)
2,133
27,150
171
(346)
(1,159)
25,816
2020
$'000
(36,995)
(4,744)
(507)
(42,246)
27,150
(15,096)
10,947
(26,043)
(15,096)
(17,314)
(11,440)
(1,799)
(30,553)
25,816
(4,737)
(4,737)
-
(4,737)
Exploration
Expenditure
$'000
Property, plant
and equipment
$'000
Other
$'000
Total
$'000
31,168
-
5,827
36,995
9,795
27,200
36,995
36,995
-
7,518
-
(27,200)
17,313
-
-
4,744
4,744
4,744
-
4,744
4,744
-
6,697
-
-
11,441
548
-
(41)
507
505
2
507
507
-
459
836
(3)
1,799
31,716
-
10,530
42,246
15,044
27,202
42,246
42,246
-
14,674
836
(27,203)
30,553
Movements
At 1 July 2019
Charged/(credited)
- to profit or loss
At 30 June 2020
Recognised deferred tax liabilities are attributable to:
Temporary differences in respect of continued operations
Temporary differences in respect of discontinued operations
At 1 July 2020
Charged/(credited)
- to profit or loss
- directly to equity
- demerger of subsidiaries
At 30 June 2021
62
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 4
(e) Deferred tax recognised directly in equity
Relating to equity raising costs
Relating to revaluations of investments/financial instruments
(f) Unrecognised temporary differences and tax losses
Unrecognised tax losses
Deductible temporary differences
Potential tax benefit at 30% (2020: 30%)
2021
$'000
2020
$'000
106
1,073
1,179
(245)
(296)
(541)
2021
$'000
2020
$'000
18,378
-
18,378
5,513
18,378
513
18,891
5,667
The potential benefit of carried forward tax losses will only be obtained if taxable income is derived of a nature and amount
sufficient to enable the benefit from the deductions to be realised. In accordance with the Group’s policies for deferred taxes,
a deferred tax asset is recognised only if it is probable that sufficient future taxable income will be generated to offset against
the asset.
Determination of future taxable profits requires estimates and assumptions as to future events and circumstances including
commodity prices, ore resources, exchange rates, future capital requirements, future operational performance, the timing of
estimated cash flows, and the ability to successfully develop and commercially exploit resources.
Tax legislation prescribes the rate at which tax losses transferred from entities joining a tax consolidation group can be applied
to taxable incomes and this rate is diluted by changes in ownership, including capital raisings. As a result, the reduction in the
rate at which the losses can be applied to future taxable incomes, the period of time over which it is forecast that these losses
may be utilised has extended beyond that which management considers prudent to support their continued recognition for
accounting purposes. Accordingly, no deferred tax asset has been recognised for certain tax losses. Recognition for accounting
purposes does not impact the ability of the Group to utilise the losses to reduce future taxable profits.
Alkane Resources Ltd and its wholly owned Australian-controlled entities have implemented the tax consolidation legislation.
As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set
off in the consolidated financial statements.
Deferred tax assets relating to deductible temporary differences can only be recognised to the extent that it is probable that
future taxable profits will be available against which the deductible temporary difference can be utilised. Recognition for
accounting purposes does not impact the ability of the Group to utilise the deductible temporary differences to reduce future
taxable profits.
63
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 5
Note 5. Discontinued operations
(a) Demerger – ASM
ASM Group
On 17 June 2020, the Group publicly announced the demerger of Alkane's critical metals and materials business and assets
(the ASM Business) from the remainder of Alkane's business.
Australian Strategic Materials Ltd (ASM) was admitted to the ASX on 29 July 2020 and will operate the ASM Business; and
Alkane will continue to own and operate the remainder of Alkane's business being, principally, its Australian gold business.
Following the demerger, Alkane will be an Australian-focused gold company, with existing production from its Tomingley
operations and the opportunity to grow its production base through organic exploration and discovery (including the Boda
discovery) and through further strategic acquisitions. Corporately, Alkane will continue to have an experienced board and
management team, the remainder of its cash position.
ASM was demerged with its cash reserves and no bank debt. All interests in the Dubbo Project and associated assets
(including land and water rights), together with ASM’s investment in South Korean metals technology company RMR Tech
Corporation, has been 100% owned by ASM following the demerger.
The Group recognised a net fair gain on demerger as follows:
Fair value of ASM demerger(i)
Carrying value of net assets of ASM
Less transaction costs
30 June 2021
$'000
135,672
(113,000)
22,672
(538)
22,134
(i) Based on the first five trading days after the demerger date volume weighted average price (“VWAP “) of ASM ($1.14) multiplied by
the number of ASM shares (119,049,778 ordinary shares). The demerger distribution is accounted for a reduction in equity, split
between share capital $43,237,000 and demerger reserve of $92,435,000.
The amount treated as a reduction in share capital has been calculated by reference to the market value of Alkanes' shares and the
market value of ASMs' shares post demerger. The difference between the fair value of the distribution and the capital reduction
amount is the demerger dividend.
64
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 5
(b) Discontinued operation – ASM
Financial performance information
Discontinued other income
Gain on demerger
Total other income
Share of loss of Joint Venture
Professional fees and consulting services
General and administration expenses
Pastoral company expenses
Audit fees
Transaction costs
Total expenses
Profit/(loss) before income tax expense
Income tax expense
Income tax benefit
Gain on disposal after income tax benefit
Profit/(loss) after income tax benefit from discontinued operations
Carrying amounts of assets and liabilities held for distribution to the owners
Cash and cash equivalents
Trade and other receivables
Consumables
Biological assets
Investments accounted for using the equity method
Property, plant and equipment
Exploration and evaluation assets
Other non-current assets
Total assets
Trade and other payables
Provisions
Deferred tax
Total liabilities
Net assets
2021
$'000
2020
$'000
-
22,672
22,672
-
-
-
-
-
(538)
(538)
22,134
-
-
-
22,134
2021
$'000
2020
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,073
-
1,073
(10)
(624)
(381)
(848)
(41)
-
(1,904)
(831)
-
248
248
(583)
18,544
233
5
783
1,721
27,567
90,665
20
139,538
344
178
26,043
26,565
112,973
The major classes of assets and liabilities of the ASM Business classified as held for distribution to the owners as at 30 June
2020 were demerged from the consolidated entity on 20 July 2020, thus nil balances on the Alkane balance sheet for the
current year.
65
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 6
Cash flows of ASM businesses
Operating
Investing
Financing
Cash at the beginning of the period
Net cash at the end of the period
2021
$'000
2020
$'000
-
-
-
-
-
(222)
(4,894)
(3,308)
26,968
18,544
Accounting policy for discontinued operations
A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held for
distribution to owners and that represents a separate major line of business or geographical area of operations, is part of a
single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with
a view to resale. The results of discontinued operations are presented separately on the face of the statement of profit or loss.
Note 6. Cash and cash equivalents
Current assets
Cash at bank
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the
financial year as shown in the statement of cash flows as follows:
Balances as above
Cash and cash equivalents - classified as held for distribution by owners
Balance as per statement of cash flows
2021
$'000
2020
$'000
18,991
48,337
18,991
-
18,991
48,337
18,544
66,881
Cash at bank at balance date weighted average interest rate was 0.01% (2020: 0.67%).
Cash and cash equivalents include cash on hand and deposits held at call with financial institutions and other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in value.
Note 7. Trade and other receivables
Current assets
Trade receivables
Prepayments
GST and fuel tax credit receivable
66
2021
$'000
2020
$'000
43
963
888
1,894
1,057
922
961
2,940
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 8
(i) Classification as receivables
Receivables are recognised initially at fair value and then subsequently measured at amortised cost, less provision for credit
losses. As at 30 June 2021 the Group has determined that the expected provision for credit losses is not material.
In determining the recoverability of a trade or other receivables using the expected credit loss model, the Group performs
a risk analysis considering the type and age of outstanding receivables, the creditworthiness of the counterparty, contract
provisions, letter of credit and timing of payment.
(ii) Fair value of receivables
Due to the short-term nature of the current receivables, their carrying amount is assumed to be the same as their fair value.
(iii) Impairment and risk exposure
Information about the impairment of receivables, their credit quality and the Group’s exposure to credit risk, foreign currency
risk and interest rate risk can be found in note 21.
Note 8. Inventories
Current assets
Ore stockpiles
Gold in circuit
Bullion on hand
Consumable stores
2021
$'000
2020
$'000
1,571
2,398
4,537
3,142
11,648
934
1,940
2,407
2,366
7,647
(i) Assigning costs to inventories
Costs are assigned to ore stockpiles, gold in circuit and bullion on hand on the basis of weighted average costs. Inventories
must be carried at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an
appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating
capacity. At balance date ore stockpiles, gold in circuit, bullion on hand and consumable stores were carried at cost.
No provision was recorded at 30 June 2021 to write down inventories to their recoverable value (2020: $nil).
Consumable stores include diesel, explosives and other consumables items. These items are carried at cost.
(ii) Amounts recognised in profit or loss
Consumable inventories recognised as an expense during the year ended 30 June 2021 amounted to $2,240,000 (2020:
$6,920,000). These were included in costs of production.
Product inventory movement during the year ended 30 June 2021 amounted to an expense of $3,226,000 (2020: $2,203,000)
and is disclosed as part of cost of sales in note 3.
67
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 9
Note 9. Financial assets at fair value through other comprehensive income
Non-current assets
Listed securities
Calidus Resources Ltd (ASX: CAI)
Sky Metals Ltd (ASX: SKY)
2021
$'000
2020
$'000
17,811
660
18,471
-
-
-
Calidus Resources Ltd was reclassified from investments accounted for using the equity method during the year. Refer to note
13 for further information.
Note 10. Other financial assets
Non-current assets
Security deposits
2021
$'000
2020
$'000
11,541
8,614
The above deposits are held by financial institutions or regulatory bodies as security for rehabilitation obligations as required
under the respective exploration and mining leases or as required under agreement totalling $11,541,000 for the current
period (2020: $8,614,000 backed by security deposits).
All interest bearing deposits are held in Australian dollars and therefore there is no exposure to foreign currency risk. Please
refer to note 21 for the Group’s exposure to interest rate risk. The fair value of other financial assets is equal to its carrying
value.
68
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 11
Note 11. Property, plant and equipment
Year ended 30 June 2021
Opening cost
Additions
Transfers between classes
Disposals
Net movement
Closing cost
Land and
buildings
$'000
Plant and
equipment
$'000
Capital
WIP
$'000
Mine
properties
$'000
Total
$'000
22,326
-
12,206
(703)
11,503
33,829
90,060
468
11,932
(1,901)
10,499
100,559
1,687
24,662
(24,138)
-
524
2,211
205,682
34,963
-
-
34,963
240,645
319,755
60,093
-
(2,604)
57,489
377,244
Opening accumulated depreciation
and impairment
- to profit or loss
Disposals
Net movement
Closing accumulated depreciation and
impairment
Closing net carrying value
(12,787)
(75,908)
(289)
-
(289)
(13,076)
20,753
(6,595)
854
(5,741)
(81,649)
18,910
-
-
-
-
-
(168,738)
(257,433)
(14,370)
-
(14,370)
(21,254)
854
(20,400)
(183,108)
(277,833)
2,211
57,537
99,411
Year ended 30 June 2020
Opening cost
Additions
Transfers between classes
Assets classified as held for distribution
to owners and other disposals
Net movement
Closing cost
Opening accumulated depreciation
and impairment
- to profit or loss
Assets classified as held for distribution
to owners and other disposals
Net movement
Closing accumulated depreciation and
impairment
Closing net carrying value
Land and
buildings
$'000
Plant and
equipment
$'000
Capital
WIP
$'000
Mine
properties
$'000
Total
$'000
40,379
-
8,403
(26,456)
(18,053)
22,326
(12,674)
(121)
8
(113)
(12,787)
9,539
80,448
-
11,445
(1,833)
9,612
90,060
(73,322)
(3,306)
720
(2,586)
(75,908)
14,152
3,728
18,873
(20,794)
(120)
(2,041)
1,687
174,479
30,257
946
-
31,203
205,682
299,034
49,130
-
(28,409)
20,721
319,755
-
-
-
-
-
(162,000)
(247,996)
(6,738)
(10,165)
-
(6,738)
728
(9,437)
(168,738)
(257,433)
1,687
36,944
62,322
69
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 11
All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment charges.
Historical cost includes:
• expenditure that is directly attributable to the acquisition of the items;
• direct costs associated with the commissioning of plant and equipment including pre-commissioning costs in testing the
processing plant;
• where the asset has been constructed by the Group, the cost of all materials used in construction, direct labour on the
project and project management costs associated with the asset; and
• the present value of the estimated costs of dismantling and removing the asset and restoring the site on which it is
located.
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 Group and the cost of the item can be
measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced.
All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost over their estimated useful lives as follows:
Buildings
Plant and equipment
Mining properties
Office equipment
Furniture and fittings
Motor vehicles
Software
units of production
units of production
units of production
3-5 years
4 years
4-5 years
2-3 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
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 the carrying amount. These are included in the
statement of comprehensive income.
Mine properties
Mine properties represent the accumulation of all exploration, evaluation and development expenditure incurred by the
Group in relation to areas of interest for which the technical feasibility and commercial viability of the extraction of mineral
resources are demonstrable.
When further development expenditure is incurred in respect of a mine property after the commencement of production,
such expenditure is carried forward as part of the mine property only when it is probable that the additional future economic
benefits associated with the expenditure will flow to the Group. Otherwise, such expenditure is classified as part of the cost
of production. Mine properties are amortised on a units of production basis over the economically recoverable resources of
the mine concerned.
Commercial production of the underground mine was declared in February 2020. Amortisation of mine properties
commenced with commercial production and is being charged using units of production method.
70
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 12
Note 12. Exploration and evaluation
Opening balance
Expenditure during the year
Amounts provided for or written off
Exploration and evaluation classified as available for distribution to owners
2021
$'000
2020
$'000
32,745
27,040
(1,991)
-
57,794
103,894
17,964
(329)
(88,784)
32,745
(a) Amounts recognised in profit or loss
Exploration and evaluation costs are carried forward on an area of interest basis. Costs are recognised and carried forward
where rights to tenure of the area of interest are current and either:
• the expenditures are expected to be recouped through successful development and exploitation of the area of
interest; or
• activities in the area of interest have not at the reporting date reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active and significant exploration
and evaluation activities in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are tested for impairment when reclassified to development tangible or intangible assets,
or whenever facts or circumstances indicate impairment. An impairment loss is recognised for the amount by which the
exploration and evaluation assets carrying amount exceeds their recoverable amount. The recoverable amount is the higher
of the exploration and evaluation assets fair value less costs of disposal and their value in use.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are
demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then
reclassified to mine properties under development. No amortisation is charged during the exploration and evaluation phase.
Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and
commercial exploitation, or alternatively, sale of the respective areas of interest.
There may exist, on the Group's exploration properties, areas subject to claim under native title or containing sacred sites
or sites of significance to Aboriginal people. As a result, exploration properties or areas within tenements may be subject to
exploration or mining restrictions.
71
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 13
Note 13. Investments accounted for using the equity method
Non-current assets
Investment in associates
Reconciliation
Reconciliation of the carrying amounts at the beginning and end of the current
and previous financial year are set out below:
Opening carrying amount
Additions
OCI
Reclassification
Closing carrying amount
Share of profit/(loss) of equity accounted for investments
Share of losses - associates
Interests in associates
2021
$'000
2020
$'000
15,944
14,385
14,385
14,663
(109)
(12,995)
15,944
7,616
7,110
(341)
-
14,385
(870)
(240)
Interests in associates and joint venture are accounted for using the equity method of accounting. Information relating to the
investments that are material to the consolidated entity are set out below:
Name
Genesis Minerals Ltd (GMD)
Calidus Resources Ltd (CAI)
Principal place of business /
Country of incorporation
2021
%
2020
%
Ownership interest
Australia
Australia
19.84%
9.65%
15.51%
12.99%
On 1 April 2021, Alkane’s percentage of holding in Calidus reduced below 10% to a balance of 9.65%, which no longer gives
Alkane the right to appoint one nominated director (out of five) to the Board. Calidus was reclassified to financial assets at fair
value through other comprehensive income, a $2,698,000 derecognition gain resulted.
On 24 October 2019, Nic Earner (Alkane’s Managing Director) was appointed as a non-executive director to the Genesis
Board. Alkane’s 20% representation on the Board out of five directors entitles the Company significant influence in policy-
making processes including participation in decisions about dividends and other distributions.
Note 14. Trade and other payables
Current liabilities
Trade payables
Other payables
72
2021
$'000
2020
$'000
2,760
8,322
11,082
4,588
4,837
9,425
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 15
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial
period which are unpaid. Current trade and other payables are unsecured and are usually paid within 30 days of recognition.
Trade and other payables are presented in current liabilities unless payment is not due within 12 months from the reporting
date.
The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term
nature.
Note 15. External borrowings
Hire purchase liabilities are secured over the assets to which they relate, the carrying value of which exceeds the value of the
hire purchase liability. The Group does not hold title to the equipment under the hire purchase pledged as security.
Current liabilities
External borrowings
Non-current liabilities
Hire purchase liabilities
2021
$'000
2020
$'000
3,294
5,922
2,090
4,515
Refer to note 21 for further information on financial risk management.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank overdraft
Used at the reporting date
Bank overdraft
Unused at the reporting date
Bank overdraft
Accounting policy for borrowings
2021
$'000
2020
$'000
20,000
-
20,000
-
-
-
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective interest method.
73
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 16
Note 16. Provisions
Current liabilities
Employee benefits
Non-current liabilities
Employee benefits
Rehabilitation
(i) Provisions
2021
$'000
2020
$'000
3,660
2,659
232
15,131
15,363
122
14,751
14,873
Provisions are recognised when the Group has a present legal or constructive obligation, it is probable that an outflow of
resources will be required to settle the obligation, and the amount can be reliably estimated.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the
present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate
that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the
provision due to the passage of time is recognised in finance charges.
(ii) Information about individual provisions and significant estimates
Employee benefits
The provision for employee benefits relates to the Group's liability for long service leave and annual leave.
The current portion of this liability includes all of the accrued annual leave. The entire amount of the provision of $2,490,000
(2020: $1,833,000) is presented as current, since the Group does not have an unconditional right to defer settlement for any
of these obligations. However, based on past experience, the Group does not expect all employees to take the full amount of
accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be
taken or paid within the next 12 months.
Current leave obligations expected to be settled after 12 months
973
595
2021
$'000
2020
$'000
The liability for long service leave not expected to vest within 12 months after the end of the period in which the employees
render the related service is recognised in the non-current provision for employee benefits and measured at the present
value of expected future payments to be made in respect of services provided up to the end of the reporting period.
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 corporate bonds with
terms and currencies that match as closely as possible, the estimated future cash outflows. Where the Group does not have
an unconditional right to defer settlement for any annual or long service leave owed, it is classified as a current provision
regardless of when the group expects to realise the provision.
74
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 17
Rehabilitation and mine closure
The Group has obligations to dismantle and remove certain items of property, plant and equipment and to restore and
rehabilitate the land on which they sit.
A provision is raised for the estimated cost of settling the rehabilitation and restoration obligations existing at balance date,
discounted to present value using an appropriate pre-tax discount rate.
Where the obligation is related to an item of property, plant and equipment, its cost includes the present value of the
estimated costs of dismantling and removing the asset and restoring the site on which it is located. Costs that relate to
obligations arising from waste created by the production process are recognised as production costs in the period in which
they arise.
The discounted value reflects a combination of management's assessment of the nature and extent of the work required, the
future cost of performing the work required, the timing of cash flows and the discount rate. An increase in the provision due
to the passage of time of was recognised in finance charges in the statement of comprehensive income of $59,000 (2020:
$127,000).
The provisions are reassessed at least annually. A change in any of the assumptions used to determine the provisions could
have a material impact on the carrying value of the provision.
Movements in rehabilitation and mine closure provision during the financial year are set out below:
Rehabilitation and mine closure
Opening balance
Additional provision incurred
Expenditure during the year
Unwinding of discount
Change in estimate
Note 17. Issued capital
2021
$'000
2020
$'000
14,751
321
-
59
-
15,131
14,456
1,276
(1,881)
127
773
14,751
Ordinary shares - fully paid
595,388,800
580,033,307
218,079
258,876
2021
Shares
2020
Shares
2021
$'000
2020
$'000
75
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 18
Movements in ordinary share capital
Details
Balance
Adjustment for reclassification
Share issue
Share issue costs
Less: Deferred tax credit recognised directly into equity
Balance
Demerger capital distribution
Shares issued on vesting of performance rights
Share issue
Share issue costs
Less: Deferred tax credit recognised directly into equity
Balance
Ordinary shares
Date
1 July 2019
30 June 2020
30 June 2021
Shares
$'000
506,096,222
-
73,937,085
-
-
580,033,307
-
15,215,584
139,909
-
-
595,388,800
220,111
(922)
40,665
(1,223)
245
258,876
(43,237)
2,416
161
(31)
(106)
218,079
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the
Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
Note 18. Reserves
The following table shows a breakdown of the balance sheet line item ‘Reserves’ and the movements in these reserves during
the year. A description of the nature and purpose of each reserve is provided below the table.
Financial assets at fair value through other comprehensive income reserve
Hedging reserve - cash flow hedges
Share-based payments reserve
Demerger reserve
2021
$'000
2020
$'000
1,943
(134)
3,313
(70,300)
(65,178)
(101)
(692)
4,206
-
3,413
Financial assets at fair value through other comprehensive income reserve
The cash flow hedge reserve is used to recognise the effective portion of gains or losses on derivatives that are designated
and qualify as cash flow hedges. Amounts are subsequently either transferred to the initial cost of inventory or reclassified to
profit or loss as appropriate.
76
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 19
Hedging reserve – cash flow hedges
The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined to
be an effective hedge.
Share-based payments reserve
The reserve is used to recognise the grant date fair value of shares issued to directors and KMP, as well as the grant date fair
value of deferred rights granted but not yet vested.
Demerger reserve
The demerger reserve is used to recognise the gain on ASM demerger and demerger dividend. Refer to note 5 for further
details.
Note 19. Retained profits
Retained profits/(accumulated losses) at the beginning of the financial year
Adjustment for reclassification
Transfer gain on demerger
Accumulated losses at the beginning of the financial year - restated
Profit after income tax (expense)/benefit for the year
Retained profits at the end of the financial year
2021
$'000
2020
$'000
5,097
-
(22,134)
(17,037)
55,701
38,664
(8,587)
922
-
(7,665)
12,762
5,097
Note 20. Critical accounting judgements, estimates and assumptions
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgement in applying the Group’s accounting policies.
Carrying value of non-current assets
Non-current assets include capitalised exploration and evaluation expenditures and mine properties. The Group has
capitalised significant exploration and evaluation expenditure on the basis either that such expenditure is expected to be
recouped through future successful development (or alternatively sale) of the areas of interest concerned or on the basis that
it is not yet possible to assess whether it will be recouped and activities are planned to enable that determination.
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related lease itself, or, if not, whether it successfully recovers the related
exploration asset through sale. The future recoverability of mine properties is dependent on the generation of sufficient
future cash flows from operations (or alternately sale). Factors that could impact the future recoverability of exploration and
evaluation and mine properties include the level of reserves and resources, future technological changes, costs of drilling and
production, production rates, future legal changes (including changes to environmental restoration obligations) and changes
to commodity prices and exchange rates.
77
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 20
Estimates of recoverable quantities of resources and reserves also include assumptions requiring significant judgment as
detailed in the resource and reserve statements.
An impairment review is undertaken to determine whether any indicators of impairment are present. The Group has not
recorded an impairment charge or reversal against either the gold operations cash generating units in the current financial
year.
Depreciation of property, plant and equipment
Non-current assets include property, plant and equipment. The Group reviews the useful lives of depreciable asset at each
reporting date or when there is a change in the pattern in which the asset's future economic benefits are expected to be
consumed, based on the expected utilisation of the assets. Depreciation and amortisation are calculated using the units of
production method based on ounces of gold produced.
Rehabilitation and mine closure provisions
These provisions represent the discounted value of the present obligation to restore, dismantle and rehabilitate certain
items of property, plant and equipment and to rehabilitate exploration and mining leases. The discounted value reflects a
combination of management's assessment of the nature and extent of the work required, the future cost of performing the
work required, the timing of cash flows and the discount rate. Changes to one or more of these assumptions is likely to result
in a change to the carrying value of the provision and the related asset or a change to profit and loss in accordance with the
group's accounting policy stated in note 16.
Net realisable value and classification of inventory
The Group's assessment of the net realisable value and classification of its inventory requires the use of estimates, including
the estimation of the relevant future commodity or product price, future processing costs and the likely timing of sale.
Share-based payments
The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value for share appreciation rights and performance rights
component tranche 1 is determined with the assistance of an external valuer. The number of performance rights issued under
the long-term incentive plan tranche 2 component are adjusted to reflect management’s assessment of the probability of
meeting the targets and service condition. The related assumptions are set out in note 30. The accounting estimates and
assumptions relating to equity settled share-based payments would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact expenses and equity.
Income tax
The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required
in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. The consolidated entity recognises liabilities for
anticipated tax audit issues based on the consolidated entity's current understanding of the tax law. Where the final tax
outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax
provisions in the period in which such determination is made.
In addition, the Group has recognised deferred tax assets relating to carried forward tax losses to the extent there are
sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority against which the
unused tax losses can be utilised. Utilisation of the tax losses also depends on the ability of the entity to satisfy certain tests at
the time the losses are recouped. Refer to note 4 for the current recognition of tax losses.
78
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 21
Exploration and evaluation costs
Exploration and evaluation costs have been capitalised on the basis that the consolidated entity will commence commercial
production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources.
Key judgements are applied in considering costs to be capitalised which includes determining expenditures directly related
to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only
capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest.
Factors that could impact the future commercial production at the mine include the level of reserves and resources, future
technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices.
Where economic recoverable reserves for an area of interest have been identified, and a decision to develop has occurred,
capitalised expenditure is classified as mine development.
To the extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in
which the determination is made.
Note 21. Financial risk management
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the
consolidated entity. The Group uses derivative financial instruments including gold forward and gold put option contracts to
mitigate certain risk exposures.
This note presents information about the Group's exposure to each of the above risks, their objectives, policies and processes
for measuring and managing risk, and the management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
Management monitors and manages the financial risks relating to the operations of the Group through regular reviews of the
risks and mitigating strategies.
(a) Market risk
(i) Foreign currency risk
The Group's sales revenue for gold are largely denominated in US dollars and the majority of operating costs are denominated
in Australian dollars, hence the Group's cash flow is significantly exposed to movement in the A$:US$ exchange rate. The
Group mitigates this risk through the use of derivative instruments, including but not limited to a combination of Australian
dollar denominated gold forward contracts and put options to hedge a portion of future gold sales.
The Australian dollar denominated gold forward contracts are entered into and continue to be held for the purpose of
physical delivery of gold bullion. As a result, the contracts are not recorded in the financial statements. Refer to notes 27 for
further information.
(ii) Commodity price risk
The Group's sales revenues are generated from the sale of gold. Accordingly, the Group's revenues are exposed to commodity
price fluctuations, primarily gold. The Group mitigates this risk through the use of derivative instruments, including but not
limited to Australian dollar denominated gold forward contracts.
79
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 21
(iii) Interest rate risk
The Group's main interest rate risk arises through its cash and cash equivalents and other financial assets held within financial
institutions. The Group minimises this risk by utilising fixed rate instruments where appropriate.
Summarised market risk sensitivity analysis:
Interest rate risk
Impact on profit/(loss) after tax
30 June 2021
30 June 2020
+100BP
$000
-100BP
$000
Carrying
amount
$000
+100BP
$000
-100BP
$000
133
-
79
-
212
(133)
-
(79)
48,337
2,028
8,614
-
(9,425)
(212)
-
338
-
60
-
399
(338)
-
(60)
-
(399)
Carrying
amount
$000
18,991
43
11,541
(19,956)
-
Financial assets
Cash and cash equivalents
Receivables*
Other financial assets
Financial liabilities
Trade and other payables
Total increase/(decrease) in profit
*The receivables balance excludes prepayments and tax balances which do not meet the definition of financial assets and liabilities.
There is no exposure to foreign exchange risk or commodity price risk for the above financial assets and liabilities.
(b) Credit risk
The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade
receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the consolidated entity based on recent sales experience, historical collection rates and
forward-looking information that is available.
In determining the recoverability of a trade or other receivable using the expected credit loss model, the Group performs a
risk analysis considering the type and age of the outstanding receivables, the creditworthiness of the counterparty, contract
provisions, letter of credit and timing of payment.
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposure to
customers, including outstanding receivables and committed transactions.
(i) Risk management
The Group limits its exposure to credit risk in relation to cash and cash equivalents and other financial assets by only utilising
banks and financial institutions with acceptable credit ratings.
(ii) Credit quality
Tax receivables and prepayments do not meet the definition of financial assets. The Group assesses the credit quality of the
customer, taking into account its financial position, past experience and other factors.
80
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 22
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial liabilities as they fall due. The Group's approach
to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when
due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's
reputation. The Board of Directors monitors liquidity levels on an ongoing basis.
The Group's financial liabilities generally mature within 3 months, therefore the carrying amount equals the cash flow
required to settle the liability.
Financing arrangements
Unused borrowing facilities at the reporting date:
Bank overdraft
2021
$'000
2020
$'000
20,000
-
The facility can be drawn for periods up to 3 months prior to the final repayment date, which is 2 January 2022. The final
repayment date may be extended for a further 12 months, upon request by the Company.
Hedge accounting
Movements in hedging reserves during the current and previous financial year are set out below:
Balance at 1 July 2019
Change in fair value of hedging instrument recognised in other comprehensive income
Reclassified from other comprehensive income to profit or loss
Deferred tax
Balance at 30 June 2020
Change in fair value of hedging instrument recognised in other comprehensive income
Reclassified from other comprehensive income to profit or loss
Deferred tax
Balance at 30 June 2021
Cashflow hedges
$'000
779
487
(278)
(296)
692
220
(1,017)
239
134
Note 22. Capital risk management
The Group's objectives when managing capital are to safeguard the 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 an optimal capital
structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may return capital to
shareholders, pay dividends to shareholders, issue new shares or sell assets.
81
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 23
Note 23. Key management personnel disclosures
The aggregate compensation made to directors and other members of KMP of the consolidated entity is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
2021
$'000
2020
$'000
1,767
105
200
1,170
3,242
Note 24. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by PricewaterhouseCoopers, the
auditor of the Company:
Audit services - PricewaterhouseCoopers
Audit or review of the financial statements
Other services - PricewaterhouseCoopers
Other advisory services
Other assurance services
2021
$'000
2020
$'000
139
153
35
188
327
2,164
122
102
1,063
3,451
115
175
-
175
290
Note 25. Contingent assets
The Group has entered into forward gold sales contracts which are not accounted for on the balance sheet. A contingent
asset of $537,000 (2020: liability $14,178,000) existed at the balance date in the event that the contracts are not settled by
the physical delivery of gold. Refer to the commitment’s disclosure note 27 for more information.
Note 26. Contingent liabilities
The Group has contingent liabilities estimated up to the value of $3,223,000 (2020: $8,330,000 including amount of
$3,670,000 related to land acquisition surrounding the Dubbo Project) for the potential acquisition of several parcels.
82
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 27
Note 27. Commitments
(a) Exploration and mining lease commitments
In order to maintain current rights of tenure to exploration and mining tenements, the Group will be required to outlay the
amounts disclosed in the below table. These amounts are discretionary, however if the expenditure commitments are not
met then the associated exploration and mining leases may be relinquished.
Within one year
(b) Physical gold delivery commitments
2021
$'000
2020
$'000
941
1,505
As part of its risk management policy, the Group enters into derivatives including gold forward contracts and gold put options
to manage the gold price of a proportion of anticipated gold sales.
Alkane purchased gold forward sales and put options as part of a risk mitigation strategy on any potential downward price
pressure while Tomingley was processing the low grade stockpiles during the year.
The gold forward sales contracts disclosed below did not meet the criteria of financial instruments for accounting purposes
on the basis that they met the normal purchase/sale exemption because physical gold would be delivered into the contract.
Accordingly, the contracts were accounted for as sale contracts with revenue recognised in the period in which the gold
commitment was met. The balances in the table below relate to the value of the contracts to be delivered into by transfer of
physical gold.
30 June 2021
Fixed forward contracts
Within one year
30 June 2020
Fixed forward contracts
Within one year
(c) Capital commitments
Gold for
physical
delivery
Ounces
Contracted
gold sale price
per ounce ($)
Value of
committed
sales
$'000
24,000
2,307
55,368
17,770
1,836
32,619
Capital commitments committed for the year at the end of the reporting period but not recognised as liabilities amounted to
$11,462,000 (2020: $8,787,000, including amount related to the discontinued operation of $3,200,000).
83
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 28
Note 28. Events after the reporting period
No matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
Note 29. Related party transactions
Parent entity
Alkane Resources Ltd is the parent entity of the Group.
Associates
Interests in associates are set out in note 13.
Key management personnel
Disclosures relating to key management personnel are set out in note 23 and the remuneration report included in the
directors' report.
Transactions with other related parties
Nuclear IT, a director-related entity, provides information technology consulting services to the Group which includes the
coordination of the purchase of information technology hardware and software. These terms are documented in a service
level agreement and represent normal commercial terms.
Purchase of computer hardware and software
Consulting fees and services
Total
Note 30. Share-based payments
2021
$'000
2020
$'000
126
304
430
88
310
398
Share-based compensation benefits are provided to employees via the Group's incentive plans. The incentive plans consist of
short-term and long-term incentive plans for executive directors and other executives and the employee share scheme for all
other employees. Information relating to these plans is set out in the remuneration report and below.
The fair value of rights granted under the short term and long term incentive plans is recognised as an employee benefits
expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair
value of the rights granted, which includes any market performance conditions and the impact of any non-vesting conditions
but excludes the impact of any service and non-market performance vesting conditions.
84
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 30
Non-market vesting conditions and the impact of service conditions are included in assumptions about the number of rights
that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of
rights that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the
revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity.
The initial estimate of fair value for market based and non-vesting conditions is not subsequently adjusted for differences
between the number of rights granted and number of rights that vest.
When the rights are exercised, the appropriate number of shares are transferred to the employee. The proceeds received net
of any directly attributable transaction costs are credited directly to equity.
Under the employee share scheme, shares issued by the Group to employees for no cash consideration vest immediately
on grant date. On this date, the market value of the shares issued is recognised as an employee benefits expense with a
corresponding increase in equity.
The fair value of deferred shares granted to employees for nil consideration under the employee share scheme is recognised
as an expense over the relevant service period, being the year to which the incentive relates and the vesting period of the
shares. The fair value is measured at the grant date of the shares and is recognised in equity in the share-based payment
reserve. The number of shares expected to vest is estimated based on the non-market vesting conditions. The estimates are
revised at the end of each reporting period and adjustments are recognised in profit or loss and the share-based payment
reserve.
Executive Directors and other executives
The Company’s remuneration framework is set out in the remuneration report, including all details of the performance rights
and share appreciation rights plans, the associated performance hurdles and vesting criteria.
Participation in the plans is at the discretion of the Board of Directors and no individual has a contractual right to participate
in the plans or to receive any guaranteed benefits. Participation is currently restricted to senior executives within the Group.
The following tables illustrate the number and weighted average fair value of, and movements in, share rights during the year.
Performance Rights
Outstanding at the beginning of the year
Issued during the year
Vested during the year
Lapsed/Cancelled during the year
Outstanding at the end of the year
2021
2020
Number of
performance
rights
Weighted
average
fair value
Number of
performance
rights
Weighted
average
fair value
12,092,879
1,492,626
(6,785,208)
(2,134,033)
4,666,264
$0.18
$0.75
$0.06
$0.32
$0.47
18,476,061
3,853,701
(8,430,376)
(1,806,507)
12,092,879
$0.18
$0.37
$0.24
$0.34
$0.18
The number of performance rights to be granted is determined by the Remuneration Committee with reference to the fair
value of each performance right which is generally the volume weighted average price for the month preceding the start of
the performance period. This will differ from the fair value reported in the table above which is determined at the time of
grant.
85
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 31
The following table lists the inputs to the models used.
Grant date
Performance hurdle
Dividend
yield
%
Expected
stock
volatility
%
Risk free
rate
%
Expected
life
years
18/10/2018
Services condition and market condition
21/11/2018
Services condition and market condition
02/09/2019
Services condition and market condition
22/11/2019
Services condition and market condition
11/11/2020
Services condition and market condition
-
-
-
-
-
66%
65%
67%
65%
72%
2.14%
2.14%
0.69%
0.73%
0.19%
3.0
2.9
2.8
2.6
3.0
Weighted
average
share price
at grant
date
$
$0.22
$0.22
$0.40
$0.63
$1.08
Expenses arising from share-based payment transactions:
Performance rights
Employee share scheme
Note 31. Earnings per share
2021
$'000
2020
$'000
1,523
161
1,684
1,225
-
1,225
Earnings per share for profit from continuing operations
Profit after income tax attributable to the owners of Alkane Resources Ltd
33,567
13,345
2021
$'000
2020
$'000
Basic earnings per share
Diluted earnings per share
Cents
Cents
5.64
5.60
2.44
2.37
2021
$'000
2020
$'000
Earnings per share for profit/(loss) from discontinued operations
Profit/(loss) after income tax attributable to the owners of Alkane Resources
22,134
(583)
Basic earnings per share
Diluted earnings per share
86
Cents
Cents
3.72
3.69
(0.11)
(0.10)
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 32
Earnings per share for profit
Profit after income tax attributable to the owners of Alkane Resources Ltd
55,701
12,762
2021
$'000
2020
$'000
Basic earnings per share
Diluted earnings per share
Weighted average number of ordinary shares
Weighted average number of ordinary shares used in calculating basic
earnings per share
Adjustments for calculation of diluted earnings per share:
Performance rights
Weighted average number of ordinary shares used in calculating diluted
earnings per share
Cents
Cents
9.37
9.28
2.33
2.26
Number
Number
594,734,110
547,023,712
5,201,943
599,936,053
17,141,368
564,165,080
Note 32. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Total comprehensive income
Parent
2021
$'000
2020
$'000
15,195
15,195
14,091
14,091
87
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 32
Balance sheet
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Financial assets at fair value through other comprehensive income reserve
Share-based payments reserve
Demerger reserve
Accumulated losses
Total equity
Determining the parent entity financial information
Parent
2021
$'000
2020
$'000
50,669
144,462
3,875
9,776
218,077
1,945
3,313
(70,300)
(18,349)
134,686
203,910
254,611
2,801
3,040
258,876
(101)
4,206
-
(11,410)
251,571
The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements,
except as set out below.
(i) Tax consolidation legislation
Alkane Resources Ltd and its wholly owned Australian controlled entities have implemented the tax consolidation legislation.
Refer to note 4 for further details.
(ii) Share-based payments rights
The grant by the Company of rights to equity instruments to the employees of subsidiary undertakings in the Group is treated
as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured by reference
to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with
a corresponding credit to equity.
(iii) Investment in subsidiaries
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 (2020: $nil).
88
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 33
Note 33. Deed of cross-guarantee
The following Group entities have entered into a deed of cross-guarantee. Under the deed of cross-guarantee, each body has
guaranteed that the debts to each creditor of each other body which is a party to the deed will be paid in full in accordance
with the deed:
• Alkane Resources Limited (the Holding Entity)
• Tomingley Holdings Pty Ltd and Tomingley Gold Operations Pty Ltd (the wholly owned subsidiaries, which are eligible for
the benefit of the ASIC Instrument)
By entering into the deed, the wholly owned entities have been relieved from the requirement to prepare financial
statements and directors' report under Corporations Instrument 2016/785 issued by the Australian Securities and
Investments Commission.
The above companies represent a 'Closed Group' for the purposes of the Corporations Instrument, and as there are no other
parties to the deed of cross-guarantee that are controlled by Alkane Resources Ltd, they also represent the 'Extended Closed
Group'.
The statement of profit or loss and other comprehensive income and balance sheet (excluding ASM business, which is
separately disclosed in note 5) are substantially the same as the consolidated entity as stated in the Consolidated Statement
of Profit or Loss and Other Comprehensive Income and therefore have not been separately disclosed.
Note 34. Reconciliation of profit after income tax to net cash from operating
activities
Profit after income tax (expense)/benefit for the year
Adjustments for:
Depreciation and amortisation
Net loss/(gain) on disposal of property, plant and equipment
Share of loss - associates
Share-based payments
Investment paid for by tenement transfer
Exploration costs provided for or written off
Gain from demerger of ASM Group
Finance charges
Realised loss on expiry put option derivatives
Demerger costs reclassified
Gain on derecognition of equity investment
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Increase in inventories
Increase/(decrease) in trade and other payables
Increase in deferred tax liabilities
Decrease in other provisions
Increase/(decrease) in fair value of biological assets
Net cash from operating activities
2021
$'000
2020
$'000
55,701
21,254
957
870
1,684
(660)
1,991
(22,672)
51
938
538
(2,698)
301
(4,002)
1,217
14,503
-
1,143
71,116
12,762
9,231
(9)
250
1,225
-
329
-
126
258
1,525
-
(749)
(3,134)
143
6,320
(81)
340
28,536
89
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 35
Net debt reconciliation
This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.
Cash and cash equivalents
Borrowings - repayable within one year
Borrowings - repayable after one year
Net cash
2021
$'000
2020
$'000
18,991
(3,778)
(5,922)
9,291
48,337
(2,659)
(4,515)
41,163
Opening net cash
18,991
(3,778)
(5,922)
9,291
Cash
$'000
Borrowings
repayable
within one year
$'000
Borrowings
repayable after
one year
$'000
Net cash
$'000
Note 35. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective
notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the consolidated entity.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for certain financial assets and
liabilities which are measured at fair value.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 20.
90
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 35
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 32.
Tax consolidated legislation
Alkane Resources Ltd and its wholly owned Australian controlled entities have implemented the tax consolidation legislation.
The head entity, Alkane Resources Ltd, and the controlled entities in the Tax Consolidated Group 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, Alkane Resources Ltd also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in
the Tax Consolidated Group.
The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate
Alkane Resources Ltd for any current tax payable assumed and are compensated by Alkane Resources Ltd for any current tax
receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Alkane Resources
Ltd under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in
the wholly owned entities financial statements.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts
receivable from or payable to other entities in the Group.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Alkane Resources Ltd
('Company' or 'parent entity') as at 30 June 2021 and the results of all subsidiaries for the year then ended. Alkane Resources
Ltd and its subsidiaries together are referred to in these financial statements as the 'consolidated entity' or the 'Group'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the consolidated entity.
The financial statements are presented in Australian dollars, which is Alkane Resources Ltd's functional and presentation
currency.
91
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 35
Accounting policy for lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise
of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is
reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an
index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if
there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee;
lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment
is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully
written down.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either
amortised cost or fair value depending on their classification. Classification is determined based on both the business model
within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting
mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset, its carrying value is written off.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity
intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured
at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon
the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk
has increased significantly since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable
to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where
it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit
losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is recognised
in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss allowance
reduces the asset's carrying value with a corresponding expense through profit or loss.
92
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 35
Impairment of non-financial assets
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group
of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of
the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset
or group of financial assets that can be reliably estimated.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the
period in which they are incurred.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from, or payable to, the tax authority is included in other receivables or other payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
• the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares; by
• the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year and excluding treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
• the profit attributable to owners of the Company, excluding any costs of servicing equity, and
• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion
of all dilutive potential ordinary shares.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
93
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | DIRECTORS' DECLARATION
In the directors' opinion:
• the financial statements and notes set out on pages 54 to 93 are in accordance with the Corporations Act 2001
including:
(a) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(b) giving a true and fair view of the consolidated entity's financial position as at 30 June 2021 and of its performance for
the financial year ended on that date; and
• the financial statements and notes also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 35 to the financial statements;
• there are reasonable grounds to believe that Alkane Resources Limited will be able to pay its debts as and when they
become due and payable.
• at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group
will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of
cross guarantee described in note 33 to the financial statements.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors.
On behalf of the directors
N P Earner
Managing Director
27 August 2021
Perth
94
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
95
Alkane Resources Annual Report 2021 | FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
96
| Alkane Resources Annual Report 2021 FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
97
Alkane Resources Annual Report 2021 | FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
98
| Alkane Resources Annual Report 2021 FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
99
Alkane Resources Annual Report 2021 | FINANCIAL REPORT | SHAREHOLDER INFORMATION
Shareholder Information
Additional information required by Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows.
The information is current as at 13 September 2021.
Distribution of Equity Securities
Analysis of numbers of equity security holders by size of holding:
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
The number of equity security holders holding less than a marketable parcel of securities are:
Twenty Largest Shareholders
The names of the 20 largest holders of quoted ordinary shares are:
IJ GANDEL
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CHAPELGREEN PTY LTD
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
FYVIE PTY LTD
LEEFAB PTY LTD
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
BNP PARIBAS NOMINEES PTY LTD
NICHOLAS EARNER
GARRETT SMYTHE LTD
HOME IDEAS SHOW PTY LTD
AUBURNVALLEY PTY LTD
LILYCREEK PTY LTD
MAGNABAY PTY LTD
S MAAS HOLDINGS PTY LIMITED
MS JILLANNE HOMEWOOD
BERNE NO 132 NOMINEES PTY LTD <152417 A/C>
BNP PARIBAS NOMS PTY LTD
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
100
Ordinary shares
Number of
holders
Number of
shares
1,715
3,001
1,557
2,646
444
9,363
766
1,011,540
8,630,858
12,186,438
84,510,440
489,049,524
595,388,800
189,462
Listed ordinary shares
Number of
shares
142,692,506
64,482,077
40,700,000
37,999,186
20,920,496
6,650,000
5,238,258
4,779,962
4,549,021
4,211,958
3,627,496
3,385,125
3,050,000
2,900,000
2,900,000
2,900,000
2,776,232
2,210,636
2,207,000
2,057,980
360,237,933
Percentage of
ordinary shares
23.95
10.83
6.84
6.38
3.51
1.12
0.88
0.80
0.76
0.71
0.61
0.57
0.51
0.49
0.49
0.49
0.47
0.37
0.37
0.35
60.50
| Alkane Resources Annual Report 2021
FINANCIAL REPORT | CORPORATE GOVERNANCE STATEMENT
Substantial Shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations
Act 2001 are:
Ian Jeffrey Gandel
Chapelgreen Pty Ltd
(*includes securities beneficially held by Citicorp Nominees Pty Limited)
Number of Shares
147,392,506*
43,526,931
Voting Rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
Unquoted Securities
At 13 September 2021, the Company had the following unlisted securities on issue:
Class
Employee Performance Rights LTI FY2020
Employee Performance Rights LTI FY2021
Number of
Securities
3,173,638
1,492,626
Number of Holders
Holder Name
6
7
Nicholas Paul Earner
Nicholas Paul Earner
Number of
Securities
1,622,252
687,346
Holders of 20% or more of the class
Corporate Governance Statement
The Company's annual Corporate Governance Statement has been published and released to the ASX separately.
It is available on the Company's website at www.alkane.com.au/company/governance
101
Alkane Resources Annual Report 2021 |
FINANCIAL REPORT | SCHEDULE OF MINING TENEMENTS
Schedule of mining tenements – as at 30 June 2021
Project/Location
Tenement
Interest
Nature of interest
Peak Hill, NSW
Tomingley, NSW
Cudal, NSW
Rockley NSW
Northern Molong Porphyry Project, NSW
Bodangora
Kaiser
South Bodangora
Finns Crossing
GL 5884 (Act 1904)
ML 6036
ML 6042
ML 6277
ML 6310
ML 6389
ML 6406
ML 1351
ML 1364
ML 1479
EL 6319
ML 1684
EL 5675
EL 5830
EL 5942
EL 6085
EL 8676
EL 8794
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity through subsidiary
Equity
Equity
Equity
Equity
Equity
Equity
EL 7020
100%
Equity
EL 8194
EL 8527
EL 4022
EL 6209
EL 8887
EL 8261
100%
100%
100%
100%
100%
100%
Equity
Equity
Equity
Equity (subject to royalty of 2% net smelter return)
Equity
Equity
Elsienora, NSW
EL 8550
100%
Equity
Trangie, NSW
EL 8765
100%
Equity
Armstrongs (near Parkes), NSW
EL8784
100%
Equity
Mt Conqueror, NSW
EL8940
100%
Equity
Nullagine, WA
E 46/522-I & 523-I
0%
M 46/515, 522 & 523
0%
60% retained interest in diamond potential – FMGN
(FMG Nullagine Pty Ltd)
60% retained interest in diamond potential – FMGN
(FMG Nullagine Pty Ltd)
102
| Alkane Resources Annual Report 2021 104