ALCHEMY RESOURCES LIMITED
ABN 17 124 444 122
ANNUAL REPORT
For the year ended 30 June 2019
CONTENTS
CORPORATE DIRECTORY ................................................................................................................................................... 2
CHAIRMAN’S LETTER .......................................................................................................................................................... 3
KEY INVESTMENT HIGHLIGHTS....................................................................................................................................... 4
REVIEW OF ACTIVITIES ....................................................................................................................................................... 5
DIRECTORS’ REPORT ......................................................................................................................................................... 31
AUDITOR’S INDEPENDENCE DECLARATION ........................................................................................................... 41
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019 ......................................................................................................................... 42
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019 ......................................... 43
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2019 ......... 44
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2019 ......................... 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED
30 JUNE 2019 ....................................................................................................................................................................... 46
DIRECTORS’ DECLARATION............................................................................................................................................ 68
INDEPENDENT AUDITOR’S REVIEW REPORT ........................................................................................................... 69
ADDITIONAL SHAREHOLDER INFORMATION AS AT 23 SEPTEMBER 2019 ................................................. 72
TENEMENT SCHEDULE ..................................................................................................................................................... 74
ANNUAL REPORT 30 JUNE 2019
Page 1 of 75
CORPORATE DIRECTORY
DIRECTORS
Lindsay Dudfield Non-Executive Chairman
Leigh Ryan
Liza Carpene
Anthony Ho
Managing Director
Non-Executive
Non-Executive
COMPANY SECRETARY
Bernard Crawford
REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS
Suite 8, 8 Clive Street
West Perth WA 6005
Telephone:
Facsimile:
Email:
Web:
AUDITORS
+61 (8) 9481 4400
+61 (8) 9481 4404
admin@alchemyresources.com.au
www.alchemyresources.com.au
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
BANKERS
National Australia Bank
226 Main Street
Osborne Park WA 6017
SHARE REGISTRY
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross WA 6153
Telephone:
Facsimile:
+61 (8) 9315 2333
+61 (8) 9315 2233
STOCK EXCHANGE LISTING
The Company is listed on the Australian Securities Exchange Ltd (“ASX”)
Home Exchange: Perth, Western Australia
ALY
ASX Code:
ANNUAL REPORT 30 JUNE 2019
Page 2 of 75
CHAIRMAN’S LETTER
Dear Fellow Shareholders,
On behalf of the Board of Directors, I am pleased to present the Annual Report of Alchemy Resources
Limited for the year ended 2019.
Alchemy holds five main projects covering a range of commodities including gold, base metals, nickel,
cobalt and high purity alumina (“HPA”), all located in mining friendly parts of Australia and each with
the potential to host “company making” deposits.
Most of Alchemy’s efforts through 2018/19 were directed towards our West Lynn project in New South
Wales. This time last year Alchemy had just commenced drilling to assess the potential for nickel,
cobalt and HPA at West Lynn. I’m pleased to report that this work was very successful and resulted in
delineation of a maiden JORC 2012 nickel-cobalt resource at the project, with initial testwork returning
high recoveries of nickel and cobalt.
Furthermore, drilling at the Summervale prospect, which was primarily designed to define nickel-
cobalt mineralisation, confirmed an alumina rich layer overlying the nickel-cobalt resource enabling a
separate alumina resource to be estimated; this resource remains open in all directions. Sighter
metallurgical testwork has returned high alumina recoveries with 99.95% HPA produced without
process optimisation, and further work is expected to improve on these encouraging initial results.
Our Bryah Basin Base Metals and Gold Joint Ventures in Western Australia continue to be advanced at
no cost to Alchemy by partners Sandfire Resources and Superior Gold respectively. Sandfire currently
has several rigs blanket drilling our ground immediately along strike from their DeGrussa copper-gold
mine and we are hopeful that a significant discovery will result. Drilling at Hermes South during the
year returned numerous intercepts, resulting in gold resources at Hermes South increasing to
114,000oz. Superior Gold is currently evaluating the potential to add Hermes South as a source of
open pit feed for their Plutonic Mine, 65km to the northeast.
The focus on West Lynn meant that other high quality targets in the portfolio still remain to be tested.
At Karonie (WA) drilling is proposed at several gold targets abutting Silver Lake’s Aldiss mining
operations, and along the 38km long Claypan Shear Zone, directly along strike of Breaker Resources’
million ounce Bombora deposit; whilst drill testing of the interpreted extensions of high grade gold
and base metal mineralisation at Overflow (NSW) is planned for late 2019.
In early September 2019 Alchemy completed an entitlement offer to raise funds to follow up targets at
Karonie and Overflow, and undertake further metallurgical testwork at West Lynn. The offer, which
raised the full $1.3M sought, was strongly supported by existing shareholders with the shortfall taken
up by strategic investors. I’m pleased to advise that shares issued pursuant to the offer will qualify for
tax credits for FY2020 under the Junior Minerals Exploration Incentive scheme.
On behalf of the Board I would like to thank Leigh Ryan, our Managing Director, and the rest of the
Alchemy team for their efforts during the period and thank you, our shareholders, for your ongoing
support as we continue to build the Company.
Lindsay Dudfield
Chairman
ANNUAL REPORT 30 JUNE 2019
Page 3 of 75
KEY INVESTMENT HIGHLIGHTS
Growth strategy focussed on building a portfolio of quality mineral resources through innovative
exploration and strategic acquisition, with the aim of becoming a producer of metals
Karonie Project - drill-ready gold targets close to existing resources and processing infrastructure
West Lynn Project - significant Ni-Co-Al resource potential close to quality infrastructure
Bryah Basin Project - joint-venture funded exploration for high-grade gold and base metals in
emerging metallogenic province
Lachlan/Cobar Basin Projects - high grade base metal and gold intercepts at Overflow
Experienced Board and management team
Enterprise Value of <$6M; highly leveraged to success
Strong major shareholder support
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
Alchemy Resources Limited (ASX: ALY; “Alchemy” or “the Company”) is an Australian exploration
company focused on growth through the discovery and development of gold, base metal and more
recently nickel-cobalt-alumina resources within Australia. The Company has built a significant land
package in the Karonie greenstone belt in the Eastern Goldfields region in Western Australia, and has
entered into a Farm-In and Joint Venture Agreement with Heron Resources Ltd (ASX: HRR; “Heron”) to
earn an 80% interest in the Lachlan/Cobar Basin Projects in New South Wales, a well-endowed metal
province with significant upside for gold, silver, copper, lead, zinc, nickel and cobalt mineralisation.
The Company also maintains its interest in the Bryah Basin Project in the emerging gold and base
metal-rich Gascoyne region of Western Australia, where farm-in and joint venture partners, Sandfire
Resources NL (ASX: SFR; “Sandfire”), and Billabong Gold Pty Ltd (“Billabong”), a subsidiary of TSX-V
listed Superior Gold Inc. (TSX-V: SGI) (“Superior”), are continuing to advance base metal and gold
exploration, respectively (Figure 1).
Figure 1: Alchemy Resources’ Project Location Map
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
Exploration over the past 12 months focussed on the West Lynn Project in NSW. This work included
aircore drilling, diamond drilling, density determinations and metallurgical testwork, resulting in
maiden JORC Code 2012 Edition compliant inferred mineral resource estimates for separate nickel-
cobalt, and alumina resources (21.3Mt @ 0.84% Ni, 0.05% Co 1, and 6.6Mt @ 20.8% Al2O3
2 ).
A Native Title Land Access Agreement with respect to accessing Crown Land within the Overflow
Project was executed, and a subsequent deep diamond drill hole, a downhole electromagnetic survey,
and a high powered surface electromagnetic survey were completed.
After a comprehensive geological assessment of all the Bryah Basin exploration data, and completion
of Aboriginal culture and heritage clearance surveys across the project area, Sandfire commenced an
extensive drilling program including wide spaced aircore (AC) and follow-up reverse circulation (RC)
drilling designed to test a 40km strike of the Narracoota-Karalundi volcano-sedimentary sequence
that potentially hosts DeGrussa style high grade copper-gold mineralisation. The AC and RC drilling
and receipt of assay results is ongoing.
During the year Billabong completed a large RC drill program at Hermes South which ultimately
upgraded the gold resource at the prospect to 2.2Mt @ 1.6g/t for 114,000oz Au 3. The gold
mineralisation at Hermes South remains open at depth and Alchemy is hopeful that the deposit will
become part of the production profile for the Plutonic Gold Operation.
Alchemy’s strategy for the next 12 months is to:
• Undertake targeted drill programs at the highly prospective Karonie Gold Project with the aim of
delineating significant gold resources;
• Unlock the gold and base metal potential of the Lachlan/Cobar projects through systematic
exploration and targeted drilling campaigns with a focus on the Overflow Project;
• Continue to advance the West Lynn Project by conducting kinetic leach test work for nickel-cobalt
and alumina on selected ore samples, and subsequent resource evaluation work;
• Create value for shareholders through joint venture-funded exploration for gold and base metal
deposits within the Bryah Basin Project; and
• Continue to enhance the Company’s position through strategic investment decisions and
evaluation of quality advanced gold and base metal project opportunities throughout Australia.
LACHLAN/COBAR BASIN PROJECTS (NSW) (ALCHEMY 51% - EARNING UP TO 80%)
The Lachlan/Cobar Basin Projects consist of the Overflow Gold-Base Metal Project, the Eurow Copper-
Gold Project, the Girilambone Copper Project, and the West Lynn and Woodsreef Nickel-Cobalt
Projects, each containing multiple gold and/or base metal and/or nickel-cobalt-alumina targets,
including drill-ready targets at Overflow and West Lynn. Alchemy has earned a 51% interest in the
NSW licences, and subject to the Farm-In and Joint Venture Agreement with Heron Resources can
earn an additional 29% interest by spending an additional $1M before 30 May 2021.
1 Refer to Alchemy Resources Limited’s ASX Announcement dated 19 February 2019
2 Refer to Alchemy Resources Limited’s ASX Announcement dated 19 June 2019
3 Refer to Alchemy Resources Limited’s ASX Announcement dated 8 May 2019
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REVIEW OF ACTIVITIES
The projects represent a strategic exploration project acquisition for Alchemy, with a large (1,055km2)
land package in the underexplored central Lachlan province and Cobar Superbasin. The projects are
proximal to high profile mining centres including Cobar, Hera/Nymagee, Mineral Hill, Tritton and the
Parkes mining centre (Figure 2).
During the year exploration licence EL5878 (Overflow) was renewed for a further 5 years.
Figure 2: Lachlan projects – Overflow, Overflow North, Yellow Mountain, Eurow, Girilambone and West Lynn –
Alchemy earning up to 80% interest through farm-in/joint venture with Heron Resources Ltd
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
West Lynn Nickel-Cobalt-Alumina Project
EL8631 (West Lynn) is centred 17km northwest of Nyngan, NSW. The project, which covers an area of
100km2, is contiguous with EL8318 (Girilambone) and forms part of the Alchemy/Heron NSW Farm-In
and Joint Venture Agreement. The licence is located within a belt of ultramafic/mafic rocks that cut
through central NSW, extending from the ACT to the Queensland border and host numerous Ni-Co
(+Sc+Al) deposits such as Sunrise/Syerston (Clean TeQ Holdings Limited – ASX: CLQ), Homeville
(Alpha HPA Limited – ASX: A4N), and the Nyngan Scandium deposit (Scandium International Mining
Corp. – TSX: SCY), just 11km southwest of West Lynn (Figure 2).
Figure 3: West Lynn Ni-Co Project, Ni-Co+Sc occurrences, and NSW Serpentinite Belts over state-wide greyscale
TMI aeromagnetic image
During the year Alchemy completed an intensive two-phase drilling campaign comprising 119 holes
(including three diamond holes), and subsequently announced a maiden inferred nickel-cobalt
resource at West Lynn, and a separate inferred alumina resource for the kaolinite zone overlying the
nickel-cobalt mineralisation at the Summervale prospect (Figure 4).
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REVIEW OF ACTIVITIES
Figure 4: West Lynn Project showing Ni-Co resource outline and Summervale alumina resource outline over interpreted
structures and bedrock geology (left) and all drilling coloured by maximum downhole Ni (%) over regional aeromagnetic
image (right)
Diamond drilling included two holes totalling 124.5m at the West Lynn Prospect, and one 65m hole at
the Summervale prospect. The drilling was completed in order to determine accurate SG/density
estimations for the different weathering intensities encountered within both the Ni-Co and alumina
ore zones. The different ore zones and corresponding density estimates are summarised in Table 1
below and were used in both resource tonnage estimates. All three diamond holes twinned previous
Alchemy aircore holes, and a comparison of nickel and cobalt analyses between original aircore and
duplicate diamond holes returned assay values within acceptable error limits.
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
Table 1: Average density (SG) measurements from West Lynn/Summervale diamond drilling 4
Rock Type
SVDD001* WLDD001* WLDD002*
AVG*
1.87
1.96
1.53
1.85
1.83
-
1.83
1.66
1.99
2.25
-
2.01
1.63
1.73
2.06
1.87
1.93
1.61
1.86
2.05
Kaolinite (HPA)
Laterite
Saprolite
Transitional
Weathered Serpentinite
*Dry weight basis
West Lynn Prospect
During the reporting period 66 AC holes and two diamond holes were completed at the West Lynn
prospect at a 100m x 100m and 100m x 200m drill spacing. The nickel-cobalt mineralisation identified
in the drilling at West Lynn is associated with variably limonitic and ferruginous clay, saprolite, and
weathered serpentinite units. Elevated alumina grades are associated with pale cream to white clay
units located immediately above the Ni-Co mineralisation. The Ni-Co mineralisation at West Lynn
shows good thickness and continuity especially around 6513800mN.
Significant Ni-Co results from the drilling included 5:
• 34m @ 0.97 % Ni, 0.05% Co from 38m (WLAC076)
• 25m @ 0.99% Ni, 0.06% Co from 36m (WLAC048)
• 20m @ 0.97% Ni, 0.10% Co from 38m (WLAC084)
• 19m @ 0.86 % Ni, 0.05% Co from 41m (WLAC075)
The locations of significant Ni-Co-alumina (Al2O3) intercepts from the West Lynn drilling can be seen
in Figure 5, and in cross section below (Figure 6).
4 Refer to Alchemy Resources Limited’s ASX Announcement dated 10 December 2018
5 Refer to Alchemy Resources Limited’s ASX Announcements dated 10 December 2018 & 22 October 2018
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
Figure 5: Plan of West Lynn Prospect showing all drilling (coloured by Ni%),
significant
(labelled) and Ni-Co resource outline over regional
intercepts
aeromagnetic image.
Figure 6: West Lynn Prospect cross section (6514000N) showing mineralised zones, significant intercepts and geology.
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
Summervale Prospect
Fifty AC holes and one diamond hole were completed at the Summervale prospect at a 100m x 100m
drill spacing during the year (Figures 4 & 7). Nickel-cobalt mineralisation at Summervale is also
associated with variably limonitic and ferruginous clay, saprolite, and weathered serpentinite units,
and the higher alumina grades are associated with pale cream to white clay units located immediately
above the Ni-Co mineralisation. Ni-Co and alumina mineralisation at Summervale also shows good
continuity along and across strike.
Significant Ni-Co results from the drilling included 6:
• 18m @ 1.02% Ni, 0.06% Co from 36m (SVAC069)
• 20m @ 0.87% Ni, 0.04% Co from 31m (SVAC039)
• 19m @ 0.87% Ni, 0.04% Co from 27m (SVAC040)
Broad, high grade alumina (Al2O3) intercepts from the zone immediately above the Ni-Co
mineralisation included 7:
• 19m @ 23.7% Al2O3 from 25m (SVAC045)
• 16m @ 26.4% Al2O3 from 23m (SVAC068)
• 29m @ 18.0% Al2O3 from 19m (SVAC037)
• 16m @ 19.7 % Al2O3 from 25m (SVAC035)
Locations of the significant Ni-Co-Al2O3 intercepts from the Summervale drilling can be seen in Figure
7, and in selected cross sections below (Figures 8 & 9).
6 Refer to Alchemy Resources Limited’s ASX Announcement dated 10 December 2018
7 Refer to Alchemy Resources Limited’s ASX Announcement dated 22 October 2018
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REVIEW OF ACTIVITIES
Figure 7: Plan of Summervale Prospect showing all drilling (coloured by Ni ppm), Phase 1
significant intercepts (labelled), and proposed Phase 2 resource drilling (yellow dots) over
regional aeromagnetic image.
Figure 8: Summervale Prospect cross section (502330E) showing recent and historic drill holes, mineralised zones,
significant intercepts and geology.
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REVIEW OF ACTIVITIES
Figure 9: Summervale Prospect cross section (6523900N) showing resource drill holes, mineralised zones,
significant intercepts and geology.
West Lynn Project Resource Estimate
Subsequent to completion of the Company’s drilling campaigns, a JORC Code 2012 Edition compliant
inferred nickel-cobalt resource estimate totalling 21.3Mt @ 0.84% Ni, 0.05% Co, 2.4% Al & 20.0% Fe 8
was completed for the West Lynn and Summervale prospects by Resource Evaluation Services. The
resource is summarised at a 0.6% Ni lower cut-off in Tables 2 and 3 below and presented as Grade
Tonnage Curves in Figure 10.
Table 2: Resource tonnes and grade broken down by prospect
Deposit
Cut Off (Ni %) Tonnes (Mt) Ni % Co % Al % Fe %
West Lynn
Summervale
0.6
0.6
14.70
0.85
0.05
2.4
20.2
6.64
0.82
0.04
2.4
19.7
TOTAL
0.05
The mineral resource is reported on a dry tonnage basis.
0.84
21.3
0.6
2.4
20.0
Table 3: Resource tonnes and grade broken down by ore type
Ore Type
Cut Off (Ni %) Tonnes Ni % Co % Al % Fe %
Laterite
Saprolite
Transitional
0.6
0.6
0.6
9.03
0.88
0.06
3.6
28.6
9.95
0.83
0.04
1.6
14.2
2.35
0.73
0.03
1.1
12.1
TOTAL
The mineral resource is reported on a dry tonnage basis.
0.84
0.05
21.3
0.6
2.4
20.0
8 Refer to Alchemy Resources Limited’s ASX Announcement dated 19 February 2019
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REVIEW OF ACTIVITIES
Figure 10: West Lynn Project: Ni% Grade Tonnage Curve - All Domains, All Material
Nickel-cobalt mineralisation at the West Lynn and Summervale prospects is flat lying and associated
with variably lateritic clay, saprolite, and weathered serpentinite units. Mineralisation remains open
both along and across strike, showing good potential to deliver additional resources.
The average Fe grade at West Lynn (~20%) is approximately half that of typical WA laterite deposits
which provides significant processing advantages, including the ability to use a nitric acid leach and
standard solvent extraction at atmospheric pressure for Ni-Co production, eliminating the
requirement for high pressure acid leaching and potentially reducing upfront capital expenditure.
Other advantages of nitric acid over sulphuric acid leaching include; the ability to treat the entire
profile of the deposit (limonite and saprolite) leading to much better economic use of the resource,
efficient acid recycling (>95%), potentially saleable iron, aluminium hydroxide and magnesium oxide
by-products, and environmentally friendly benign tailings. Calcination (heating) of the aluminium
hydroxide by-product can also be used to produce alumina (Al2O3) and potentially High Purity
Alumina (HPA).
Initial metallurgical testwork completed by Direct Nickel (DNi) using a nitric acid leach via the
patented DNi Process™ returned very encouraging recoveries for both nickel and cobalt from a
variety of composite samples, with average recoveries of 91.5% Ni (saprolite), 88.3% Co (saprolite),
86.4% Ni (laterite), and 82.1% Co (laterite) (Table 4) 9.
9 Refer to Alchemy Resources Limited’s ASX Announcement dated 19 February 2019
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REVIEW OF ACTIVITIES
Recoveries for both nickel and cobalt from composite blended laterite/saprolite samples averaged
87.1% for nickel and 86.9% for cobalt (Table 4), similar to the separate laterite and saprolite samples.
Recoveries for composite weathered serpentinite samples collected from the base of the mineralised
zone averaged 91.6% for nickel and 79.6% for cobalt (Table 4). Recoveries for by-product elements
(Al, Fe, Mg) are also included in Tables 4-6. The nitric acid leach testwork on separate laterite and
saprolite samples, and blended laterite/saprolite and weathered serpentinite samples was conducted
at 1100C under atmospheric pressure over a period of 6 hours.
Table 4: Nitric Acid Leach Recoveries
Laterite/Saprolite
Ni
Co
Al
Fe
Mg
All Saprolite
91.5% 88.3% 66.6% 49.1% 99.4%
All Laterite
86.4% 82.1% 73.4% 69.3% 68.3%
All Average
89.5% 85.8% 69.4% 57.2% 87.0%
Table 5: Nitric Acid Leach Recoveries
Blended Laterite/Saprolite
Ni
Co
Al
Fe
Mg
West Lynn
Summervale
89.4% 88.6% 71.2% 64.3% 93.4%
84.7% 85.3% 63.6% 59.8% 89.4%
West Lynn / Summervale Avg 87.1% 86.9% 67.4% 62.0% 91.4%
Table 6: Nitric Acid Leach Recoveries
Weathered Serpentinite
Ni
Co
Al
Fe
Mg
West Lynn
Summervale
93.4% 84.9% 85.3% 61.4% 97.5%
89.8% 74.3% 90.6% 52.5% 97.3%
West Lynn / Summervale Avg 91.6% 79.6% 88.0% 57.0% 97.4%
Additional metallurgical testwork including bench scale kinetic leaching is planned for the
Summervale and West Lynn blended samples. For further information on the DNi Process™ refer to
the Direct Nickel website (http://www.directnickel.com/).
Summervale Prospect Alumina Resource Estimate
A JORC Code 2012 Edition compliant inferred alumina resource estimate totalling 6.6Mt @ 20.8%
Al2O3 (18% Al2O3 lower cut-off) 10 was also completed for the Summervale prospect by Resource
Evaluation Services as detailed in Table 7 below and presented as Grade Tonnage Curves in Figure 11.
The grades are not screened or beneficiated figures.
Table 7: Summervale JORC Code 2012 Edition Inferred Mineral Resource Estimate
Deposit
Cut-off (Al2O3) Tonnes (M) Al2O3% Fe2O3% K2O% Na2O% TiO2% SiO2%
Summervale
The inferred mineral resource is reported on a dry tonnage basis.
6.55
20.8
18%
2.8
1.79
0.43
1.15
64.2
10 Refer to Alchemy Resources Limited’s ASX Announcement dated 19 June 2019
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REVIEW OF ACTIVITIES
Figure 11: Grade Tonnage Curve – Kaolin Domain
The kaolinite zone hosting the alumina mineralisation at Summervale is flat lying, commences from
~15 to 25m below surface, is between 2m and 40m thick (commonly ~10m thick), and is interpreted to
be derived from weathered pelite units of the Girilambone Group. Mineralisation remains open along
and across strike, showing good potential to deliver additional resources. It is anticipated that the
alumina resource could potentially be exploited in conjunction with open pit mining of the underlying
nickel-cobalt resource.
The alumina resource at Summervale compares favourably with the grades for deposits elsewhere in
Australia currently being evaluated for High Purity Alumina (HPA), including Hill End Gold Limited’s
(ASX: HEG) Yendon Kaolin deposit (3.7Mt @ 34.7% Al2O3) 11, and the FYI Resources Limited (ASX: FYI)
Cadoux deposit with a probable ore reserve of 2.9Mt @ 24.4% Al2O3
12.
Initial metallurgical testwork completed by Simulus Laboratories using a hydrochloric acid leach
returned aluminium extractions of up to 70%. The leach was completed on a non-screened, non-
beneficiated basis, subsequent to a heat treatment at 6500C for 1 hour. Crystallisation and calcination
of the leach solution produced 99.95% alumina (HPA). XRD results suggest that aluminium extraction
could be improved with optimisation of the heat treatment and leaching stages, enabling the
production of >99.99% alumina (4N HPA). Alchemy intends to conduct further metallurgical testwork,
including ore beneficiation and process optimisation, in order to improve aluminium recoveries and
confirm the potential for 99.99% alumina (4N HPA) production.
Alchemy also continues to see potential for significant expansion of the nickel-cobalt and alumina
resources by drilling untested sections of the 22km long West Lynn Serpentinite magnetic high.
11 Refer to Hill End Gold Limited ASX Announcement dated 12 February 2018
12 Refer to FYI Resources Limited ASX Announcement dated 24 October 2018
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REVIEW OF ACTIVITIES
Overflow Gold-Base Metal Project
The Overflow Project consists of three exploration licences covering 285km2 located over a 34km long
section of the Gilmore Suture ~20km east of the high grade Hera/Nymagee deposits (Figure 2). The
licences are located on Ordovician-Devonian metasediments and volcanics which are highly
prospective for epithermal gold and Cobar-style gold and base-metal mineralisation.
The Project is centred on the historic Overflow mining centre, a past producer of gold, silver and lead,
which has been the focus of previous exploration in the area since mining ceased in 1942. Previous
drilling at the Overflow Mine has returned numerous high-grade gold-silver and base metal intercepts
including 7m @ 6.7g/t Au, 1.9% Zn, 1.4% Pb, 0.3% Cu (TBB008), and 18m @ 2.1g/t Au, 111g/t Ag, 1.1%
Zn from 245m, and 3m @ 7.3g/t Au, 43g/t Ag, 4.6% Zn, 4.2% Pb, 0.3% Cu from 286m from Alchemy’s
first diamond drill hole (OFDD001) 13 (Figure 12). Mineralisation at Overflow is shear hosted, shows a
vertical polymetallic zonation, and displays chlorite-silica alteration typical of Hera / Cobar-style
mineralisation.
During the year Alchemy completed a high powered moving loop surface electromagnetic (EM)
survey across a strong EM conductivity anomaly down-plunge to the south of the Overflow prospect
which was identified in a 2011 airborne EM survey. The surface EM survey was unable to confirm the
airborne EM anomaly, but clearly identified the Overflow Shear Zone between the highly resistive
hanging wall volcanic units and the much less resistive Girilambone footwall sediments.
One 457.3m deep diamond drill hole (OFDD002) was subsequently drilled to intercept the Overflow
shear zone ~120m below Alchemy drill hole OFDD001. The hole returned an intercept of 14m @
0.4g/t Au, 0.4% Zn from 368m (OFDD002) (including 1m @ 2.1g/t Au, 12g/t Ag, 2.0% Zn, 1.0% Pb,
0.19% Cu from 379m)14. The hole has helped define the known extent of mineralisation at Overflow
and reinforced Alchemy’s interpretation of a shallow southern plunge to the high grade gold-base
metal mineralisation, and an increase in copper grade with depth (Figures 12 & 13).
The diamond hole intercepted intense silica alteration but did not encounter epithermal style quartz
veining or the steeply dipping, cross-cutting, quartz vein sets seen in the high grade gold-silver
portion of OFDD001. The hole confirmed the persistence of intense shearing over a 20m interval
encompassing the gold mineralisation at depth, and identified shallow southerly dipping fault sets
immediately above and below the mineralised zone. These shallow south dipping faults are
considered to be the structures that control the shallow southerly plunge observed in the gold grade
shells (Figure 12). OFDD002 also intercepted an elevated copper zone of 1m @ 0.19% Cu from 379m,
consistent with elevated copper values seen in the lower parts of OFDD001 and TBB008.
A downhole EM (DHEM) survey within OFDD002 did not identify any significant off-hole conductors,
suggesting that EM surveys are not suitable for detecting the Overflow style of base metal
mineralisation, and the potential to use other geophysical methods such as Induced Polarisation (IP) is
being assessed.
Alchemy is planning to undertake additional diamond drilling immediately down plunge to the south
of OFDD001 and TBB008 in the coming period (Figures 12 & 13).
13 Refer to Alchemy Resources ASX Announcement dated 29 March 2017
14 Refer to Alchemy Resources Limited’s ASX Announcement dated 30 January 2019
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
Figure 12: Long section looking east showing OFDD002 intercept (white), historic
workings, previous drilling ore zone pierce points coloured by GxM (i.e. Au grade (g/t) x
intercept width (m)), drill intercepts >15GxM, and 1g/t Au grade shell outline (red).
Figure 13: Cross section showing OFDD002 targeting the down
dip extension of high grade gold and base metal intercepts.
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
A single drill hole (OFTRC005) designed to test a very strong IP chargeability anomaly located 2km
along strike to the south of the Overflow mine was terminated in weak mineralisation (12m @ 0.42g/t
Au to end of the hole) with visible chalcopyrite identified. This represents a priority target which will
also be drill tested in the next 12 months. Other targets warranting further drilling include the BO2,
Deeves Shaft and Parkvale Prospects which have returned elevated Cu-Pb-Zn values in both soil
geochemistry and historic drilling.
Yellow Mountain Gold-Base Metal Project
The Yellow Mountain Project consists of one 93km2 exploration licence covering a 20km long section
of the Gilmore Suture approximately 8km west of the historic Mineral Hill deposits (Figure 2). The
project is located on Ordovician-Silurian granites, Ordovician metasediments, and Devonian volcanics
which are prospective for epithermal gold, Cobar-style gold and base-metal mineralisation.
The potential for porphyry hosted copper-gold at the Fountaindale prospect, where interpretation of
aeromagnetic data suggests the presence of porphyry intrusives, will be investigated in the coming
period.
Eurow Copper-Gold Project
The Eurow Copper-Gold Project (“Eurow”), located 30km southeast of Parkes (Figure 2), covers 167km2
of Ordovician and Devonian-aged meta-sediments intruded by Silurian and Devonian granites, and
proximal to the intersection of the Narromine-Coolac Fault Zone and the Lachlan Transverse Zone.
The Project area contains the historic Eurow-Vychan copper-gold workings where historic drilling
returned high-grade intercepts of 8m @ 2.94% Cu and 0.85g/t Au from 47m, 3m @ 4.0% Cu and
1.25g/t Au from 73m, and 4.4m @ 1.57% Cu and 0.63g/t Au from 212m below the workings.
Copper-gold mineralisation at Eurow appears to be planar and stratiform and is associated with semi-
massive and breccia zones of pyrite-pyrrhotite-chalcopyrite. Previous shallow aircore drilling across
targets north and south of the historic copper workings was hampered by thick clay zones and did
not reach target depths; this area warrants further drill testing.
Girilambone Copper Project
Girilambone comprises one granted tenement covering 129km2, located about 20km east of Aeris
Resources Ltd’s (ASX: AIS) Tritton copper operation on the eastern edge of the Girilambone Basin
(Figure 2). Girilambone is prospective for ‘Besshi-type’ volcanic massive sulphide (VMS) copper-gold
mineralisation within mafic units of the Ordovician Girilambone Group, and located along an
interpreted VMS trend extending south from the Girilambone Copper Mine. The Project area is
adjacent to copper anomalism along structural and magnetic trends from the historic Kurrajong
copper workings where mineralisation dips east towards the Girilambone tenement. Recent drilling
beneath the workings has returned high grade copper and gold intercepts including 17m @ 2.6% Cu,
0.3g/t Au from 753m, 19m @ 2.2% Cu, 0.3g/t Au from 677m and 4.6m @ 5.1% Cu, 0.8g/t Au from
403m 15. No ground work was completed by Alchemy during the year.
15 Refer to Aeris Resources Ltd ASX Announcements dated 12 June 2018 and 21 August 2018
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REVIEW OF ACTIVITIES
Woodsreef Ni-Co Project
Exploration Licence 8711 is located 35km north of Tamworth, NSW, and covers an area of 281km2
within the New England Fold Belt. The licence encompasses a 34km long section of the Peel Fault,
which is recognised as a regional thrust system that hosts intrusive serpentinites and separates the
Woolomin Beds and Permian granites to the east from the Tamworth Belt to the west. The principal
targets in the region are vein hosted orogenic gold and copper mineralisation hosted by silica-
carbonate altered serpentinites located on or adjacent to the Peel Fault, and cobalt, chromite,
platinoid and nickel sulphide targets associated with composite/layered ultramafic intrusives within
the licence.
KARONIE PROJECT (WA) (Alchemy 100%)
The Karonie Project includes ten granted licences and five licence applications covering 1,015km2 of
Archean greenstones in the Eastern Goldfields of Western Australia. The project is located 100km east
of Kalgoorlie in a highly prospective geological setting, covering numerous mineralised structures
between two regional-scale fault zones (Figure 14). It is strategically located within 50km of the
Randalls gold processing plant, and is along strike to the north and south of Silver Lake Resources’
(ASX: SLR) Karonie/Harry’s Hill and French Kiss deposits which host resources and reserves of over
590,000oz @ 2.0g/t Au, including a probable reserve of 1.31Mt at 2.2g/t Au for 93,000oz gold at
Harry’s Hill 16 where mining continues. Alchemy’s two large eastern licences are located just 12km
along strike to the south of Breaker Resources’ (ASX: BRB) Bombora deposit which contains an
Indicated and Inferred Resource of 23.2Mt @ 1.3g/t Au for 981,000oz 17. The Bombora mineralisation is
associated with the Claypan Shear Zone, a major regional structure which extends for over 38km of
strike through Alchemy’s eastern licences.
16 Refer to Silver Lake Resources Limited ASX Announcement dated 24 August 2018
17 Refer to Breaker Resources Limited ASX Announcement dated 2 September 2019
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
Figure 14: Karonie Project tenements, major deposits, prospects and
interpreted major structures over aeromagnetic image
During the year drill programs were designed for several key gold targets including the KZ5, Taupo,
Parmelia, Gilmore, Aldiss, Challenger, and Esplanade prospects (Figure 14). Additional RAB drilling was
also planned for the Claypan Shear Zone, along strike of Breaker’s Bombora resource, where folded
and/or converging dolerite units have been interpreted from detailed aeromagnetic imagery.
Programs of Work have been submitted and drilling is scheduled to commence Q4 2019.
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
BRYAH BASIN PROJECT (WA) (100% AND 10-20% ALCHEMY)
Alchemy’s base metal and gold prospective Bryah Basin Project comprises a 488km2 tenement
package, located 130km northeast of Meekatharra, Western Australia. The Project is located along
strike and south-west of Sandfire Resources NL’s (ASX: SFR) high-grade DeGrussa and Monty copper-
gold deposits, and adjacent to Peak Hill where about 1Moz of gold has been mined from several
deposits (Figure 15). Alchemy retains its interests in the Bryah Basin Project through farm-in and joint
venture agreements over the base metal prospective part of the project with Sandfire Resources and
over the gold prospective part of the project with Plutonic gold mine operator Billabong Gold, a
wholly-owned subsidiary of Superior Gold. Should an economic base metal or gold discovery be
made by Sandfire or Billabong, Alchemy retains the right to participate as a 20% partner with all costs
repaid from 50% of production profits, an equity position that could deliver significant value to
shareholders.
Alchemy also retains a 1% net smelter royalty over future production from 70,000oz to 90,000oz gold
from the Hermes gold deposit (Figure 15). Hermes has produced 45,800oz since mining commenced
in 2017 18 and Superior Gold currently reports a Measured and Indicated Resource (inclusive of
Reserves) of 160,000oz gold (3.7Mt @ 1.3g/t Au) at Hermes 19.
Figure 15: Bryah Basin Project – Sandfire Resources JV and Billabong Gold JV areas and gold and base metal prospects
18 Refer to Superior Gold Inc. Interactive Analyst Centre (company website) 26 August 2019
19 Refer to Superior Gold Inc. TSX-V Announcement dated 20 June 2019
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
Base Metals Exploration (Sandfire earning up to 80%)
Sandfire acquired Independence Group NL’s (ASX: IGO) Bryah Basin Project Farm-In Rights in August
2018, including whole and part tenements that cover the base metal prospective areas of Alchemy’s
Bryah Basin Project (red outlines in Figure 15) 20. Sandfire has advised that at 31 August 2019
exploration expenditure within the Bryah Basin Base Metals Joint Venture area was approximately
$8.9M (including ~$2.9M spent by previous JV partner IGO) 21. Alchemy has completed an audit of
this expenditure and agrees that expenditure has exceeded the $6M earn-in requirement and that
Sandfire has earned a 70% interest in the Bryah Basin project tenements owned 80% Alchemy / 20%
Jackson Minerals Pty Ltd (a wholly owned subsidiary of Fe Ltd (ASX: FEL)), and an 80% interest in
Alchemy’s 100% owned tenements. Alchemy is now free-carried on further exploration to completion
of a Pre-Feasibility Study, and then carried on an interest-free deferred basis for a further $5M of
Definitive Feasibility Study expenditure with the deferred amount to be repaid in full from 50% of
Alchemy’s share of profits earned through production.
Alchemy intends to formally transfer the relevant interest in the Bryah Basin tenements to Sandfire in
due course and the parties are currently negotiating a comprehensive industry standard Joint Venture
Agreement based on the terms of the Farm-in Letter Agreement, with Sandfire to manage the Joint
Venture.
The introduction of Sandfire resulted in a significant increase in exploration activities within the base
metal prospective area of the Bryah Basin Project. Exploration work by Sandfire initially included a
comprehensive review of all historical geological and geophysical datasets, and a high resolution
gravity survey (100m x 50m stations). Extensive Phase 1 (1.6km line spacing) and Phase 2 (800m infill
line spacing) AC drilling programs (Figure 15) were subsequently designed prior to completing
mandatory Indigenous cultural and heritage surveys.
Early in the June 2019 Quarter, Sandfire commenced the Phase 1 AC drilling, completing 1,188 holes
(91,146m) on 1.6km x 100m and 800m x 100m spacings along strike to the southwest of the DeGrussa
deposit. The program aims to test a 40km strike of the Narracoota-Karalundi volcano-sedimentary
sequence that hosts the DeGrussa VMS copper-gold mineralisation (Figure 15). The drilling results will
be used to compile a more detailed geological interpretation of the area, which in turn will be used in
the planning process for narrowing the line spacing to 800m and then to 400m in the September 2019
Quarter.
Best results from the first 909 aircore holes for which assays have been received include 22:
•
•
•
•
•
•
5m @ 6.4g/t Au from 100m
5m @ 2.7g/t Au from 65m
5m @ 1.6g/t Au from 65m
30m @ 0.5g/t Au from 55m
5m @ 0.15% Cu, 0.69g/t Au from 75m
5m @ 0.13% Cu from 45m
20 Refer to Alchemy Resources ASX Announcement dated 6 August 2018
21 Refer to Alchemy Resources ASX Announcement dated 23 September 2019
22 Refer to Alchemy Resources ASX Announcement dated 8 July 2019 & 23 September 2019
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
It is important to note that these intercepts are from wide spaced drilling and have yet to be followed
up with infill drill holes.
The majority of anomalous gold and copper results from the AC drilling to date, including the latest
results, are being returned from sediments and quartz-carbonate schists within two sub-parallel
mineralised zones immediately east of the Churchill Prospect, and from the substantial gravity high at
the Neptune Prospect (Figure 16).
Seven reverse circulation (RC) holes (2,215m) have also been drilled as follow-up to earlier anomalous
AC drilling results returning best results of 5m @ 0.8g/t Au from 20m, and 5m @ 0.26g/t Au from
60m (Figure 16). Infill aircore drilling at 800m and 400m line spacings is underway, and follow-up RC
drilling is continuing.
A detailed moving loop electromagnetic (MLEM) survey designed to further improve targeting of the
host volcanogenic massive sulphide (VMS) horizon also commenced during the period. Strongly
conductive stratigraphic units are present along both the southwest and northeast margins of the
survey area. Processing of the EM data is ongoing and, along with recently processed and gridded
gravity data, will be incorporated into existing regional datasets and inversion models created. The
resulting models will then be used to target VMS mineralisation and further refine the Phase 2 infill
drilling program.
Aircore drilling has also been planned for the Horseshoe Lights area. This drilling will target copper-
gold mineralisation within the Narracoota volcanics and the Ravelstone Formation sediments.
Figure 16: Sandfire aircore and previous drilling (coloured by maximum downhole Cu (ppm)), recent Sandfire drilling
results (labelled), JV tenement outlines, and proposed drilling over regional gravity image.
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
Gold Exploration (Billabong Gold 80%)
Exploration of Alchemy’s tenements that cover the gold prospective part of the Bryah Basin Project
(blue outline in Figure 15) continued under the farm-in and joint venture agreement with Billabong
Gold, a subsidiary of Superior Gold Inc. Billabong has now earned 70–80% of Alchemy’s interests in
the gold prospective tenements. Alchemy’s remaining interest is carried on an interest-free deferred
basis to production, with Alchemy to repay the deferred amount at the rate of 50% of its share of free
cash flow from production following commencement of mining.
During the year Billabong completed Phase 2 RC drilling at Hermes South which included 51 holes for
a total of 7,308m. The program aimed to further define a newly discovered shallow parallel lode 150m
to the south of the main Hermes South ore zone and to extend the existing resource down-plunge to
the east (Figure 17 & 18).
Significant intercepts (>20 grade x width) from the Hermes South Phase 2 drilling (labelled in Figure
17) included 23:
• 16m @ 3.0g/t Au from 137m (BHSRC082)
• 14m @ 3.0g/t Au from 81m (BHSRC064)
• 9m @ 4.4g/t Au from 98m (BHSRC068)
• 10m @ 3.8g/t Au from 151m (BHSRC095)
• 11m @ 3.3g/t Au from 123m (BHSRC094)
• 3m @ 10.9g/t Au from 85m (BHSRC083)
• 10m @ 3.2g/t Au from 23m (BHSRC100)
• 16m @ 1.7g/t Au from 120m (BHSRC048)
• 17m @ 1.5g/t Au from 121m (BHSRC062)
• 11m @ 2.2g/t Au from 168m (BHSRC097)
• 10m @ 2.3g/t Au from 190m (BHSRC104)
All gold intercepts from the 51 RC drill holes can be seen in Table 9.
Results from Phase 1 and Phase 2 drilling were used to upgrade the JORC 2012 compliant resource at
Hermes South to 2.2Mt @ 1.6g/t for 114,000oz Au 24. The Hermes South resource modelling and
resource estimation was completed Superior Gold, with top-cuts applied to the drill hole composite
file prior to grades being interpolated. A lower cut-off of 0.6 g/t Au was used to report resources, with
a summary of the updated Hermes South resource estimate shown in Table 8.
Table 8: Hermes South JORC Code 2012 Indicated and Inferred Mineral Resource Estimate
Hermes South
Tonnes Grade (g/t Au) Au (Ounces) Lower Cut
Indicated
1,285,000
Inferred
950,000
Total
2,235,000
1.7
1.4
1.6
72,000
42,000
114,000
0.6
0.6
0.6
23 Refer to Alchemy Resources ASX Announcement dated 3 December 2018
24 Refer to Alchemy Resources ASX Announcement dated 8 May 2019
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
Figure 17: Hermes South plan showing Phase 2 drill intercepts (>20gxm) and resource outline (red) over WVII image.
Figure 18: Hermes South long section (+/-100m) showing Phase 2 intercepts (>20gxm) labelled, and outline of ESE
plunging gold shoots (light grey dashes). Billabong drilling hole traces (red) and all drill hole traces are coloured by Au
g/t.
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
Four HQ diamond holes were also drilled during the year for the purpose of gathering geotechnical
information, additional bulk density data through the ore zone, and samples for metallurgical
testwork. Additional detailed geotechnical data was collected from nine previously drilled RC holes
using an acoustic/optical televiewer, and a geotechnical model using all the recent drilling information
was completed. Assays and metallurgical testwork results for the 4 HQ diamond holes are pending
and metallurgical testwork results are expected during Q4 2019. Previous metallurgical testwork
undertaken on oxidised core from the Hermes South gold deposit indicated that the ore is amenable
to treatment in a conventional crush, grind and carbon-in-leach (CIL) plant with good recoveries
across all size fractions. A high proportion of gold is contained in the coarse fraction, and the testwork
indicated that a large percentage (40–60%) of the free gold at Hermes South could be recovered by
gravity concentration. No technical issues have been identified that would result in a poor recovery or
extenuating cost issues 25.
The gold mineralisation at Hermes South remains open at depth and has excellent potential for
further drilling to expand the area of gold mineralisation and add to the known resource, and
Alchemy is hopeful that the Hermes South deposit will become part of the production profile for the
Plutonic Gold Operation. Miscellaneous Licence applications to accommodate the development of a
haul road between the existing Plutonic - Hermes Haul road and the Hermes South resource area
have been lodged by Billabong.
Targeted drilling is also required at the Seaborg and Central Bore gold prospects where high-grade
gold intercepts including 6m @ 4.17g/t Au from 9m 26, and 9m @ 5.86g/t Au from 35m 27 respectively
remain open at depth and potentially along strike.
25 Refer to Alchemy Resources ASX Announcement dated 22 October 2012
26 Refer to Alchemy Resources ASX Announcement dated 17 April 2014
27 Refer to Alchemy Resources ASX Announcement dated 5 July 2012
ANNUAL REPORT 30 JUNE 2019
Page 28 of 75
RL
Dip (°)
Azimuth (°)
Total
depth (m)
From
(m)
To (m)
Intersection
(m)
REVIEW OF ACTIVITIES
Table 9: Drill intercepts from Hermes South 28
Hole ID
BHSRC048
BHSRC054
BHSRC057
BHSRC059
BHSRC060
BHSRC060
BHSRC062
BHSRC062
BHSRC064
BHSRC064
BHSRC065
BHSRC065
BHSRC065
BHSRC065
BHSRC066
BHSRC066
BHSRC067
BHSRC067
BHSRC067
BHSRC068
BHSRC068
BHSRC082
BHSRC082
BHSRC082
BHSRC082
BHSRC083
BHSRC084
BHSRC084
BHSRC087
BHSRC091
BHSRC091
BHSRC094
BHSRC094
BHSRC094
BHSRC095
BHSRC096
BHSRC097
BHSRC097
BHSRC098
BHSRC098
BHSRC098
BHSRC098
BHSRC099
BHSRC099
BHSRC099
BHSRC100
BHSRC100
BHSRC100
BHSRC101
BHSRC101
BHSRC102
BHSRC102
BHSRC102
BHSRC102
BHSRC102
BHSRC103
BHSRC103
BHSRC103
BHSRC104
Easting
MGA94
(z50)
685160
685172
685088
685134
685537
Northing
MGA94
(z50)
7155629
7155561
7155433
7155435
7155573
577
572
573
571
568
685525
7155555
568
685543
7155587
568
685526
7155603
567
685534
7155619
568
685529
7155508
569
685563
7155580
569
685571
7155549
570
685554
685610
7155610
7155533
685648
685241
7155549
7155382
568
570
569
568
685188
7155628
576
685172
685214
685203
7155596
7155595
7155569
574
574
573
685398
7155619
569
-59
-61
-62
-60
-59
-60
-60
-61
-60
-57
-63
-59
-61
-58
-58
-61
-60
-61
-60
-60
-61
685389
7155600
569
-60
685433
7155596
568
-61
685424
7155575
568
685561
7155525
570
-60
-61
685594
7155505
569
-59
685241
7155554
573
-59
24
22
22
24
22
23
23
25
25
22
30
25
23
24
24
23
25
25
24
26
24
23
22
27
24
23
24
162
222
72
60
138
156
138
120
114
192
156
180
126
210
192
126
174
192
204
222
162
234
192
204
240
222
270
120
170
28
50
90
118
96
121
81
108
53
61
70
83
42
69
73
90
105
98
116
25
124
137
161
85
160
174
144
31
58
113
123
139
151
149
0
168
32
44
124
131
17
42
142
23
76
157
46
174
46
56
73
130
143
79
87
145
190
136
173
29
52
99
119
97
138
95
110
54
66
72
84
43
73
76
91
113
107
118
26
129
153
162
88
166
179
146
32
59
114
134
140
161
159
1
179
33
46
126
132
19
50
148
33
77
160
47
179
48
57
74
139
146
80
88
157
200
16
3
1
2
9
1
1
17
14
2
1
5
2
1
1
4
3
1
8
9
2
1
5
16
1
3
6
5
2
1
1
1
11
1
10
10
1
11
1
2
2
1
2
8
6
10
1
3
1
5
2
1
1
9
3
1
1
12
10
Au
(g/t)
uncut
1.71
2.39
1.45
3.06
1.56
1.13
1.56
1.49
2.99
1.72
2.21
1.38
5.38
1.58
1.80
2.99
3.89
1.17
1.19
4.37
1.12
1.69
2.31
3.04
1.75
10.86
1.34
1.84
5.29
1.06
1.40
6.11
3.27
3.02
3.82
1.66
3.22
2.21
7.44
1.27
2.52
1.54
3.08
1.48
2.23
3.22
1.20
1.43
1.79
3.80
6.48
1.01
1.21
1.38
1.37
1.19
3.70
1.57
2.31
NB. 0.6g/t Au lower grade cut-off, no upper cut-off grade, maximum 3m internal waste, all >1g/t Au intercepts reported.
28 Refer to Alchemy Resources ASX Announcement dated 15 June 2018
ANNUAL REPORT 30 JUNE 2019
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REVIEW OF ACTIVITIES
CORPORATE
Entitlement Issue
A pro-rata non-renounceable 1 for 4 Rights Issue of 88,083,896 ordinary fully paid shares at a price of
$0.015 per share was successfully completed in July 2018, raising $1,321,258 (before costs).
Junior Minerals Exploration Incentive
During the year the Company applied to be a participant in the Federal Government's Junior Mineral
Exploration Incentive (“JMEI”) scheme for the tax year ending 30 June 2020. On 2 July 2019, the
Company received a notification from the Australian Tax Office (“ATO”) that its application had been
accepted and that it had been allocated up to $330,000 of JMEI credits.
The JMEI scheme allows entities who are required to lodge a tax return in Australia and who apply for
and are issued Shares as part of the Company's capital raising activities between 1 July 2019 and 30
June 2020 (“JMEI Eligible Shareholders”) to receive JMEI credits from the ATO. JMEI credits entitle JMEI
Eligible Shareholders to refundable tax offsets (for individual shareholders or superannuation funds)
or franking credits (for companies). Eligible Shareholders who participated in the Company’s recent
pro-rata non-renounceable Rights Issue may be entitled to a JMEI credit.
Competent Person’s Statement
The information in this report that relates to Exploration Results is based on information compiled by Mr Leigh Ryan, who is the
Managing Director of Alchemy Resources Limited and holds shares and options in the Company. Mr Ryan is a Member of the
Australian Institute of Geoscientists and has sufficient experience of relevance to the styles of mineralisation and the types of
deposits under consideration, and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of
the Joint Ore Reserves Committee ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’
(‘JORC Code 2012’). Mr Ryan consents to the inclusion in this report of the matters based on his information in the form and context
in which it appears.
The information in this report that relates to Mineral Resources at the West Lynn Nickel-Cobalt-Alumina Deposit is based on
information compiled by Stephen Godfrey, who is an employee of Resource Evaluation Services Pty Ltd, a consultant to Alchemy
Resources Limited. Mr Godfrey is a Fellow of the Australasian Institute of Mining and Metallurgy and a member of the Australian
Institute of Geoscientists, and has sufficient experience of relevance to the styles of mineralisation and the types of deposits under
consideration, and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore
Reserves Committee ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (‘JORC Code
2012’). Mr Godfrey consents to the inclusion in this report of the matters based on his information in the form and context in which
it appears.
The information in this report that relates to Mineral Resources at the Hermes South Gold Deposit is based on information compiled
by Mr Pascal Blampain, who is an employee of Superior Gold Inc. Mr Blampain is a Member of the Australasian Institute of Mining
and Metallurgy, a Member of the Australian Institute of Geoscientists, and has sufficient experience of relevance to the styles of
mineralisation and the types of deposits under consideration, and to the activities undertaken, to qualify as a Competent Person as
defined in the 2012 Edition of the Joint Ore Reserves Committee ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’ (‘JORC Code 2012’). Mr Blampain consents to the inclusion in this report of the matters based on his
information in the form and context in which it appears.
Forward Looking Statements
This report may include forward looking statements. Forward looking statements are only predictions and are subject to risks,
uncertainties and assumptions which are outside the control of Alchemy. Actual values, results or events may be materially different
to those expressed or implied in this report. Given these uncertainties, recipients are cautioned not to place reliance on forward
looking statements. Any forward looking statements in this presentation speak only at the date of issue of this presentation. Subject
to any continuing obligations under any applicable law and the ASX Listing Rules, Alchemy does not undertake any obligation to
update or revise any information or any of the forward looking statements in this presentation of any changes in events, conditions
or circumstances on which any such forward looking statement is based.
ANNUAL REPORT 30 JUNE 2019
Page 30 of 75
DIRECTORS’ REPORT
Your directors present their report on the consolidated entity consisting of Alchemy Resources
Limited (“the Company”) and its subsidiaries (“the Group” or “the Consolidated Entity”) at the end of
the year ended 30 June 2019.
DIRECTORS
The following persons were directors of Alchemy Resources Limited during the whole of the financial
year and up to the date of this report unless noted otherwise:
Lindsay Dudfield, Non-Executive Chairman
Leigh Ryan, Managing Director
Liza Carpene, Non-Executive Director
Anthony Ho, Non-Executive Director
PRINCIPAL ACTIVITIES
During the year, the principal activity of the Group was exploration for gold, base metals and cobalt.
During the year, there was no change in the nature of this activity.
FINANCIAL RESULTS
The consolidated loss of the Group after providing for income tax for the year ended 30 June 2019
was $390,981 (2018: $528,830).
DIVIDENDS
No dividends have been paid or declared since the start of the financial year. No recommendation for
the payment of a dividend has been made by the Directors.
OPERATIONS AND FINANCIAL REVIEW
Information on the operations of the Group and its prospects is set out in the “Review of Activities”
section of this Annual Report.
FINANCIAL
Exploration and evaluation costs totalling $9,899,844 (2018: $65,528) were expensed during the year
in accordance with the Group’s accounting policy. The expensed exploration and evaluation costs
primarily comprise a write down of the carrying value of the Group’s Bryah Basin Project.
As at 30 June 2019, the Group had net assets of $5,466,803 (2018: $14,437,642) including cash and
cash equivalents of $533,886 (2018: $742,854).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Significant changes in the state of affairs of the Group during the financial year were as follows:
A pro-rata non-renounceable 1 for 4 Rights Issue of 88,083,896 ordinary fully paid shares at a price of
$0.015 per share was successfully completed in July 2018, raising $1,321,258 (before costs).
ANNUAL REPORT 30 JUNE 2019
Page 31 of 75
REVIEW OF ACTIVITIES
During the year a JORC Code 2012 Edition compliant inferred nickel-cobalt resource estimate totalling
21.3Mt @ 0.84% Ni, 0.05% Co, 2.4% Al & 20.0% Fe was completed for the West Lynn and Summervale
prospects. A JORC Code 2012 Edition compliant inferred alumina resource estimate totalling 6.6Mt @
20.8% Al2O3 (18% Al2O3 lower cut-off) was also completed for the Summervale prospect.
Also during the year, the JORC 2012 compliant resource at Hermes South was upgraded to 2.2Mt @
1.6g/t for 114,000oz Au.
There were no other significant changes in the state of affairs of the Group during the financial year.
EVENTS SINCE THE END OF THE FINANCIAL YEAR
On 16 September 2019, the Company completed the issue of 110,104870 new Shares pursuant to a
pro-rata non-renounceable entitlement and shortfall offer to eligible shareholders of 1 new Share for
every 4 existing Shares held at an issue price of $0.012 per share raising $1,321,258 (before costs).
As announced to ASX on 23 September 2019, Sandfire Resources NL (ASX:SFR) has advised the
Company that it has exceeded its joint venture earn-in expenditure requirement under the terms of
the Bryah Basin Letter Agreement. The Company has completed an audit and agrees that the
expenditure has exceeded the earn-in requirement and that Sandfire has earned a 70% interest in the
Bryah Basin project tenements owned 80% Alchemy / 20% Jackson Minerals Pty Ltd (a wholly owned
subsidiary of Fe Ltd (ASX: FEL)), and an 80% interest in Alchemy’s 100% owned tenements.
There has not arisen in the interval between the end of the financial year and the date of this report
any other item, transaction or event of a material and unusual nature likely, in the opinion of the
Directors, to affect significantly the operations, the results of those operations, or the state of affairs of
the Group in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
The Directors are not aware of any developments that might have a significant effect on the
operations of the Group in subsequent financial years not already disclosed in this report.
ENVIRONMENTAL REGULATION
The Group is subject to significant environmental regulation in respect of its exploration activities.
Tenements in Western Australia and New South Wales are granted subject to adherence to
environmental conditions with strict controls on clearing, including a prohibition on the use of
mechanised equipment or development without the approval of the relevant Government agencies,
and with rehabilitation required on completion of exploration activities. These regulations are
controlled by the Department of Mines, Industry Regulation and Safety (Western Australia) and the
Department of Planning, Industry and Environment (New South Wales).
Alchemy Resources Limited conducts its exploration activities in an environmentally sensitive manner
and the Group is not aware of any breach of statutory conditions or obligations.
ANNUAL REPORT 30 JUNE 2019
Page 32 of 75
REVIEW OF ACTIVITIES
Greenhouse gas and energy data reporting requirements
The Directors have considered compliance with the National Greenhouse and Energy Reporting Act
2007 which requires entities to report annual greenhouse gas emissions and energy use. The Directors
have assessed that there are no current reporting requirements for the year ended 30 June 2019,
however reporting requirements may change in the future.
INFORMATION ON DIRECTORS
The following information is current as at the date of this report.
L Dudfield, Non-Executive Chairman (appointed Director 25 November 2011, Chairman since 1 June 2017)
Experience and expertise
Mr Dudfield is a qualified geologist with over 40 years’ experience exploring
for gold and base metals in Australia and abroad, including close involvement
with a number of greenfields discoveries. He was a founding director of
Jindalee Resources, Alchemy’s third largest shareholder, and is currently an
Executive Director of Jindalee. Mr Dudfield is a member of the Australasian
Institute of Mining and Metallurgy, the Australian Institute of Geoscientists, the
Geological Society of Australia and the Society of Economic Geologists.
Other current directorships
Executive Director of Jindalee Resources Limited (director since 1996)
Non-Executive Director of Energy Metals Limited (director since 2004)
Former directorships in last 3 years None
Special responsibilities
Member of the Audit Committee
Interests in shares and options
Ordinary Shares – Alchemy Resources Limited
64,909,200
L Ryan, Managing Director (appointed 9 January 2017)
Experience and expertise
Other current directorships
Mr Ryan is a qualified geologist with over 30 years of experience in the
exploration and resource industry, specifically focused on project evaluation,
exploration management and executive management roles throughout
Australia and Africa. He has been involved in the discovery and resource
definition of numerous gold and base metal deposits and has successfully
negotiated numerous exploration related corporate transactions.
Mr Ryan was previously the Managing Director of Chrysalis Resources Limited
and Boss Resources Limited, and prior to that was Resolute Mining Limited’s
Group Exploration Manager for Africa and Australia. He has worked
extensively in WA, Queensland, NSW, Zambia, Tanzania, Burkina Faso, Mali,
and Cote d’Ivoire. He is also a member of the Australian Institute of
Geoscientists and has recently completed a graduate certificate in Mineral
Economics at the Curtin School of Business, Western Australia.
Non-Executive Director of Peppermint Innovation Limited (formerly Chrysalis
Resources Limited) (director since 2014)
Former directorships in last 3 years None
Special responsibilities
Managing Director
Interests in shares and options
Ordinary Shares – Alchemy Resources Limited
Unlisted Options – Alchemy Resources Limited
1,250,000
12,000,000
ANNUAL REPORT 30 JUNE 2019
Page 33 of 75
REVIEW OF ACTIVITIES
L Carpene, Non-Executive Director (appointed 18 March 2015)
Experience and expertise
Ms Carpene has worked in the resources industry for more than 20 years and
has significant experience in acquisitions, corporate administration, HR, legal,
IT and stakeholder relations. Ms Carpene spent five years on the Executive
Team of Northern Star Resources Limited as Company Secretary and Head of
Environment and Social Responsibility ceasing in February 2018.
Prior to Northern Star, Ms Carpene was Company Secretary/CFO for listed
explorers Venturex Resources and Newland Resources, and previously held
various site and Perth based management roles with Great Central Mines,
Normandy Mining, Newmont Australia, Agincourt Resources and Oxiana.
Other current directorships
Non-Executive Director of Mincor Resources NL (appointed 16 April 2018)
Former directorships in last 3 years None
Special responsibilities
Member of the Audit Committee
Interests in shares and options
Ordinary Shares – Alchemy Resources Limited
Nil
A Ho, Non-Executive Director (appointed 25 November 2011)
Experience and expertise
Other current directorships
Mr Ho is a Chartered Accountant and a partner in a consulting firm focused
principally on corporate and financial services to listed companies. He has
significant experience in the resource industry, having served as director and
secretary of companies listed on ASX.
Executive director of Newfield Resources Limited (director since 2011)
Non-Executive Director of Australian Agricultural Projects Australia Limited
(director since 2003)
Non-Executive Director of Mustera Property Group Limited (director since 2014)
Former directorships in last 3 years None
Special responsibilities
Chair of the Audit Committee
Interests in shares and options
Ordinary Shares – Alchemy Resources Limited
Nil
COMPANY SECRETARY
Mr Bernard Crawford was appointed Company Secretary on 1 December 2010. Mr Crawford is a
Chartered Accountant with over 25 years’ experience in the resources industry in Australia and
overseas. He has held various positions in finance and management with NYSE, TSX and ASX listed
companies.
MEETINGS OF DIRECTORS
The number of meetings of the Company’s board of directors and of each board committee held
during the year ended 30 June 2019, and the numbers of meetings attended by each Director were:
Director
L Dudfield
L Ryan
L Carpene
A Ho
Board of Directors
A
7
12
12
12
B
12
12
12
12
Audit Committee
B
A
2
*
2
2
2
*
2
2
A = Number of meetings attended
ANNUAL REPORT 30 JUNE 2019
Page 34 of 75
REVIEW OF ACTIVITIES
B = Number of meetings held during the time the Director held office or was a member of the committee during the year
* = Not a member of the relevant committee
RETIREMENT, ELECTION AND CONTINUATION IN OFFICE OF DIRECTORS
Mr Ho, being a Director retiring by rotation who, being eligible, will offer himself for re-election at the
Annual General Meeting.
REMUNERATION REPORT (AUDITED)
The directors present the Alchemy Resources Limited 2019 remuneration report, outlining key aspects
of the Company’s remuneration policy and framework, and remuneration awarded this year.
The report contains the following sections:
a) Key management personnel covered in this report
b) Remuneration governance and the use of remuneration consultants
c) Executive remuneration policy and framework
d) Relationship between remuneration and the Group’s performance
e) Non-executive director remuneration policy
f) Voting and comments made at the Company’s 2018 Annual General Meeting
g) Details of remuneration
h) Service agreements
i) Details of share-based compensation and bonuses
j)
k) Loans to key management personnel
l) Other transactions with key management personnel
Equity instruments held by key management personnel
a) Key management personnel covered in this report
Non-executive and executive directors (see pages 33 to 34 for details about each director):
Name
L Dudfield
L Ryan
L Carpene
A Ho
Position
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
b) Remuneration governance and the use of remuneration consultants
The Company does not have a Remuneration Committee. Remuneration matters are handled by
the full Board of the Company. In this respect the Board is responsible for:
•
•
•
•
the over-arching executive remuneration framework;
the operation of the incentive plans which apply to executive directors and senior executives
(the executive team), including key performance indicators and performance hurdles;
remuneration levels of executives; and
non-executive director fees.
ANNUAL REPORT 30 JUNE 2019
Page 35 of 75
REVIEW OF ACTIVITIES
The objective of the Board is to ensure that remuneration policies and structures are fair and
competitive and aligned with the long-term interests of the Company.
In addition, all matters of remuneration are handled in accordance with the Corporations Act
2001 requirements, especially with regard to related party transactions. That is, none of the
Directors participate in any deliberations regarding their own remuneration or related issues.
Independent external advice is sought from remuneration consultants when required, however no
advice was sought during the period ended 30 June 2019.
c) Executive remuneration policy and framework
In determining executive remuneration, the Board aims to ensure that remuneration practices are:
•
•
•
•
competitive and reasonable, enabling the Company to attract and retain key talent;
aligned to the Company’s strategic and business objectives and the creation of shareholder
value;
transparent and easily understood; and
acceptable to shareholders.
All executives receive consulting fees or a salary, part of which may be taken as superannuation,
and from time to time, options. The Board reviews executive packages annually by reference to
the executive’s performance and comparable information from industry sectors and other listed
companies in similar industries.
All remuneration paid to specified executives is valued at the cost to the Group and expensed.
Options are valued using a Black-Scholes option pricing model.
d) Relationship between remuneration and the Group’s performance
Emoluments of Directors are set by reference to payments made by other companies of similar
size and industry, and by reference to the skills and experience of Directors. Fees paid to Non-
Executive Directors are not linked to the performance of the Group. This policy may change once
the exploration phase is complete and the Group is generating revenue. At present the existing
remuneration policy is not impacted by the Group’s performance including earnings and changes
in shareholder wealth (e.g. changes in share price).
The Board has not set short term performance indicators, such as movements in the Company’s
share price, for the determination of Non-Executive Director emoluments as the Board believes
this may encourage performance which is not in the long-term interests of the Company and its
shareholders. The Board has structured its remuneration arrangements in such a way it believes is
in the best interests of building shareholder wealth in the longer term. The Board believes
participation in the Company’s Incentive Option Scheme motivates key management and
executives with the long-term interests of shareholders.
e) Non-Executive Director remuneration policy
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.
ANNUAL REPORT 30 JUNE 2019
Page 36 of 75
REVIEW OF ACTIVITIES
The Board policy is to remunerate Non-Executive Directors at commercial market rates for
comparable companies for their time, commitment and responsibilities. Non-Executive Directors
receive a Board fee but do not receive fees for chairing or participating on Board committees.
Board members are allocated superannuation guarantee contributions as required by law, and do
not receive any other retirement benefits. From time to time, some individuals may choose to
sacrifice their salary or consulting fees to increase payments towards superannuation.
The maximum annual aggregate Non-Executive Directors’ fee pool limit is $250,000 and was
approved by shareholders at the Annual General Meeting held on 22 July 2008.
Fees for Non-Executive Directors are not linked to the performance of the Group. Non-Executive
Directors’ remuneration may also include an incentive portion consisting of options, subject to
approval by shareholders.
f) Voting and comments made at the Company’s 2018 Annual General Meeting
Alchemy Resources Limited received more than 97% of “yes” votes on its remuneration report for
the 2018 financial year. The Company did not receive any specific feedback at the Annual General
Meeting or throughout the year on its remuneration practices.
g) Details of remuneration
The following table shows details of the remuneration received by the Group’s key management
personnel for the current and previous financial year.
Short-term benefits
Post-
employment
benefits
Share-
based
payment
Salary and
fees
Cash
bonus
Non-
monetary
benefit
Super-
annuation
Options
Total
Performance
related
$
$
$
$
$
$
%
20,000
150,000
-
19,998
189,998
20,000
150,000
-
19,998
-
-
-
-
-
-
50,000(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000
15,200
11,295
176,495
-
-
-
-
-
19,998
15,200
11,295
216,493
-
-
20,000
14,250
32,244
246,494
-
-
-
-
-
19,998
-
6.4
-
-
-
13.1
-
-
Name
2019
Directors
L Dudfield
L Ryan
L Carpene
A Ho
Totals
2018
Directors
L Dudfield
L Ryan
L Carpene
A Ho
Totals
(1) Bonus for completion of 12 months service in January 2018. Of this, $10,000 was payable at 30 June 2018
286,492
189,998
14,250
32,244
50,000
-
ANNUAL REPORT 30 JUNE 2019
Page 37 of 75
REVIEW OF ACTIVITIES
h) Service agreements
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 of appointment, including remuneration relevant to the office of Director.
Remuneration and other terms of employment for other members of key management personnel
are formalised in service agreements as summarised below.
L Ryan, Managing Director
Mr Ryan is remunerated pursuant to an ongoing Executive Service Agreement under which he is
paid a base salary of $150,000 plus superannuation. The Executive Service Agreement has no
fixed term and either party can terminate the Agreement (without cause) with three months’
notice.
i) Details of share-based compensation and bonuses
Options
Options over ordinary shares in Alchemy Resources Limited are granted under the Incentive
Option Scheme (“Scheme”). Participation in the Scheme and any vesting criteria are at the Board’s
discretion and no individual has a contractual right to participate in the Scheme or to receive any
guaranteed benefits. Any options issued to Directors of the Company are subject to shareholder
approval.
The terms and conditions of each grant of options affecting remuneration in the current or future
reporting periods are set out below.
Option
series
12
13
14
Grant date
9 Jan 2017
9 Jan 2017
9 Jan 2017
Vesting and
exercise date
8 Jan 2018
8 Jan 2019
8 Jan 2020
Expiry date
8 Jan 2021
8 Jan 2021
8 Jan 2021
Exercise
price
Value per option
at grant date
% Vested
$0.04
$0.08
$0.12
$0.0075
$0.0054
$0.0042
100%
100%
0%
The fair value of options at grant date are independently determined using a Black-Scholes
option pricing model that takes into account the exercise price, the term of the option, the share
price at grant date and expected price volatility of the underlying share, the expected dividend
yield and the risk-free interest rate for the term of the option.
Further information on the fair value of share options and assumptions is set out in note 22 to the
financial statements.
j) Equity instruments held by key management personnel
The following tables detail the number of fully paid ordinary shares and options over ordinary
shares in the Company that were held during the financial year by key management personnel of
the Group, including their close family members and entities related to them.
ANNUAL REPORT 30 JUNE 2019
Page 38 of 75
REVIEW OF ACTIVITIES
Options
2019
Executives
L Ryan
Opening
balance
(1 July)
Granted as
remuneration
Options
exercised
Net
change
other
Balance at
30 June
Vested but
not
exercisable
Vested and
exercisable
Unvested
12,000,000
12,000,000
-
-
-
-
-
-
12,000,000
12,000,000
-
-
8,000,000
8,000,000
4,000,000
4,000,000
During the year, no ordinary shares in the Company were provided as a result of the exercise of
remuneration options.
Shareholdings
2019
Directors
L Dudfield
L Ryan
Opening balance
(1 July)
Granted as
remuneration
Options
exercised
Net change
other
Balance at
30 June
37,756,795
500,000
38,256,795
-
-
-
-
-
-
17,665,715
500,000
18,165,715
55,422,510
1,000,000
56,422,510
k) Loans to key management personnel
There were no loans to individuals or members of key management personnel during the
financial year or the previous financial year.
l) Other transactions with key management personnel
The wife of Mr Ryan, the Managing Director, provided geological drafting and data mapping
services to the Company to the value of $4,350 (2018: $2,235). The services were provided on
normal commercial terms and conditions.
There were no other transactions with key management personnel during the financial year or
the previous financial year.
END OF REMUNERATION REPORT (AUDITED)
SHARES UNDER OPTION
Unissued ordinary shares of the Company under option at the date of this report are as follows:
Date options granted
27 November 2017
27 November 2017
27 November 2017
16 April 2018
Expiry date
8 January 2021
8 January 2021
8 January 2021
15 April 2021
Issue price of shares
$0.04
$0.08
$0.12
$0.05
Number under option
4,000,000
4,000,000
4,000,000
10,000,000
22,000,000
No option holder has any right under the options to participate in any other share issue of the
Company or any other entity.
ANNUAL REPORT 30 JUNE 2019
Page 39 of 75
REVIEW OF ACTIVITIES
SHARES ISSUED ON THE EXERCISE OF OPTIONS
There were no shares issued on the exercise of options during the year and up to the date of this
report.
CORPORATE GOVERNANCE STATEMENT
The Company’s 2019 Corporate Governance Statement has been released as a separate document
and is located on the Company’s website at http://alchemyresources.com.au/corporate-governance.
PROCEEDINGS ON BEHALF OF THE CONSOLIDATED ENTITY
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.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, the Company paid a premium to insure the Directors and Officers of the
consolidated entity against any liability incurred as a Director or Officer to the extent permitted by the
Corporations Act 2001. The contract of insurance prohibits the disclosure of the nature of the liabilities
covered or the amount of the premium paid.
The Group has not entered into any agreement with its current auditors indemnifying them against
claims by a third party arising from their position as auditor.
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 Company and/or the Group are
important.
Details of the amounts paid or payable to the auditor (BDO Audit (WA) Pty Ltd) for audit and non-
audit services provided during the year are set out in note 17. During the year ended 30 June 2019 no
fees were paid or were payable for non-audit services provided by the auditor of the consolidated
entity (2018: $Nil).
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 on the following page.
Signed in accordance with a resolution of the Directors
Lindsay Dudfield
Chairman
Perth, 24 September 2019
ANNUAL REPORT 30 JUNE 2019
Page 40 of 75
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY GLYN O'BRIEN TO THE DIRECTORS OF ALCHEMY RESOURCES LIMITED
As lead auditor of Alchemy Resources Limited for the year ended 30 June 2019, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Alchemy Resources Limited and the entities it controlled during the
period.
Glyn O'Brien
Director
BDO Audit (WA) Pty Ltd
Perth, 24 September 2019
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019
Continuing operations
Other income
Corporate expense
Employee expense
Administration expense
Exploration expense
Loss from continuing operations before income tax
Income tax benefit
CONSOLIDATED
2019
$
14,204
(148,479)
(151,922)
(96,126)
(9,899,844)
2018
$
36,111
(172,422)
(225,833)
(101,158)
(65,528)
(10,282,167)
(528,830)
-
-
Notes
3
3
3
3
9
5
Loss after income tax for the period attributable to the
owners of Alchemy Resources Limited
(10,282,167)
(528,830)
Other comprehensive income
Other comprehensive income for the period (net of tax)
-
-
-
-
Total comprehensive loss for the period attributable to the
owners of Alchemy Resources Limited
(10,282,167)
(528,830)
Cents
per share
Cents
per share
Loss per share attributable to the owners of Alchemy
Resources Limited
Basic loss per share
Diluted loss per share
16
16
2.36
N/A
0.15
N/A
This Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
ANNUAL REPORT 30 JUNE 2019
Page 42 of 75
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total Current Assets
Non-Current Assets
Exploration and evaluation
Property, plant and equipment
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Notes
CONSOLIDATED
2019
$
2018
$
6
7
8
9
11
12
13
14
15
533,886
13,524
6,241
553,651
742,854
18,392
4,745
765,991
5,105,234
2,592
13,824,978
3,496
5,107,826
13,828,474
5,661,477
14,594,465
158,675
35,999
194,674
194,674
135,440
21,383
156,823
156,823
5,466,803
14,437,642
32,404,105
134,452
31,104,072
182,417
(27,071,754)
(16,848,847)
5,466,803
14,437,642
This Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
ANNUAL REPORT 30 JUNE 2019
Page 43 of 75
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
ATTRIBUTABLE TO EQUITY HOLDERS OF THE ENTITY
Issued
capital
$
Option
reserves
Accumulated
losses
$
$
Total
equity
$
30,914,072
525,820
(16,764,664) 14,675,228
-
-
-
(528,830)
(528,830)
-
-
(528,830)
(528,830)
(444,647)
444,647
32,244
-
-
69,000
-
32,244
190,000
69,000
-
-
-
At 1 July 2017
Loss for the year
Other comprehensive income
Total comprehensive loss for the period, net
of tax
Transactions with owners in their capacity as
owners
Transfer from option reserve to accumulated losses
Share-based payment
Issue of shares to Heron Resources
Issue of options to Heron Resources
-
-
-
-
-
190,000
At 30 June 2018
31,104,072
182,417
(16,848,847) 14,437,642
At 1 July 2018
Loss for the year
Other comprehensive income
Total comprehensive loss for the period, net
of tax
Transactions with owners in their capacity as
owners
31,104,072
182,417
(16,848,847) 14,437,642
-
-
-
-
-
-
(10,282,167)
(10,282,167)
-
-
(10,282,167)
(10,282,167)
Issue of shares
Share issue costs
Share-based payment
Expiry of options
At 30 June 2019
1,321,258
(21,225)
-
-
11,295
(59,260)
-
59,260
1,321,258
(21,225)
11,295
-
32,404,105
134,452
(27,071,754)
5,466,803
This Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
ANNUAL REPORT 30 JUNE 2019
Page 44 of 75
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
CONSOLIDATED
2019
$
2018
$
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
NET CASH FLOWS USED IN OPERATING ACTIVITIES
23
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Payments for exploration assets
NET CASH FLOWS USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Share issue costs
NET CASH FLOWS FROM FINANCING ACTIVITIES
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
CASH AND CASH EQUIVALENTS AT END OF THE
PERIOD
(391,564)
14,204
(377,360)
-
(1,131,641)
(1,131,641)
1,321,258
(21,225)
1,300,033
(208,968)
742,854
(442,656)
26,862
(415,794)
(3,773)
(834,258)
(838,031)
-
-
-
(1,253,825)
1,996,679
6
533,886
742,854
This Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
ANNUAL REPORT 30 JUNE 2019
Page 45 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: CORPORATE INFORMATION
The consolidated financial report of Alchemy Resources Limited for the year ended 30 June 2019 was
authorised for issue in accordance with a resolution of the directors on 24 September 2019.
Alchemy Resources Limited is a for-profit company incorporated in Australia and limited by shares
which are publicly quoted on the Australian Securities Exchange. The nature of the operation and
principal activities of the consolidated entity are described in the attached Directors’ Report.
The principal accounting policies adopted in the preparation of these consolidated financial
statements are set out below and have been applied consistently to all periods presented in the
consolidated financial statements and by all entities in the consolidated entity.
NOTE 2: STATEMENT OF COMPLIANCE
These general purpose financial statements have been prepared in accordance with Australian
Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards
Board, Urgent Issues Group Interpretations and the Corporations Act 2001.
Compliance with IFRS
The consolidated financial statements of Alchemy Resources Limited also comply with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
New and amended accounting standards and interpretations adopted by the Group
The following standards and interpretations relevant to the operations of the Group and effective
from 1 July 2018 have been adopted. The adoption of these standards did not have any impact on the
current period or any prior period and is not likely to affect future periods.
AASB 9: Financial Instruments;
AASB 15: Revenue from Contracts with Customers; and
AASB 2016-5: Amendments to Australian Accounting Standards - Classification and Measurement of
Share-based Payment Transactions.
The adoption of these Accounting Standards and Interpretations did not have any significant impact
on the financial performance or position of the Group. Details of each standards’ impact, and the new
accounting policies adopted are set out below.
Impact of adoption of AASB 9: Financial Instruments (“AASB 9”)
AASB 9 replaces the provisions of AASB 139: Financial Instruments: Measurement and Recognition,
that relate to the recognition, classification and measurement of financial assets and financial
liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.
The adoption of AASB 9 resulted in minimal changes in accounting policies. There was no impact on
the financial performance or position of the Group on the date of initial application, 1 July 2018, or at
the reporting date, 30 June 2019.
ANNUAL REPORT 30 JUNE 2019
Page 46 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Impact of adoption of AASB 15: Revenue from Contracts with Customers (“AASB 15”)
AASB 15 replaces AASB 118 Revenue. AASB 15 provides a single, principles based five step model to be
applied to all contracts with customers.
The adoption of AASB 15 resulted in minimal changes in accounting policies. There was no impact on
the financial performance or position of the Group on the date of initial application, 1 July 2018, or at
reporting date, 30 June 2019.
New accounting standards and interpretations
The following new and amended accounting standards and interpretations relevant to the operations
of the Group have been published but are not mandatory for the current financial year. The Group
has decided against early adoption of these standards, and has not yet determined the potential
impact on the financial statements from the adoption of these standards and interpretations.
Application
date of
standard
Application
date for
Group
1 Jan 2019
1 Jul 2019
New or revised requirement
AASB 16: Leases
This Standard sets out the principles for the recognition, measurement, presentation
and disclosure of leases. The objective is to ensure that lessees and lessors provide
relevant information in a manner that faithfully represents those transactions. This
information gives a basis for users of financial statements to assess the effect that
leases have on the financial position, financial performance and cash flows of an entity.
The entity is yet to undertake a detailed assessment of the impact of AASB 16.
However, based on the entity’s preliminary assessment, the Standard is not expected to
have a material impact on the transactions and balances recognised in the financial
statements when it is first adopted for the year ending 30 June 2020.
a) Basis of measurement
Historical Cost Convention
These consolidated financial statements have been prepared under the historical cost convention,
except where stated.
Critical Accounting Estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the Group’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 where
appropriate.
b) Going Concern
These consolidated financial statements have been prepared on the going concern basis, which
contemplates continuity of normal business activities and the realisation of assets and the
settlement of liabilities in the ordinary course of business.
ANNUAL REPORT 30 JUNE 2019
Page 47 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
On 16 September 2019, the Company completed the issue of 110,104,870 new Shares pursuant to
a pro-rata non-renounceable entitlement and shortfall offer to eligible shareholders of 1 new
Share for every 4 existing Shares held at an issue price of $0.012 per share raising $1,321,258
(before costs).
c) Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of
the Company as at 30 June 2019 and the results of all subsidiaries for the year then ended. The
Company and its subsidiaries together are referred to in this financial report as the Group or the
consolidated entity.
Subsidiaries are all entities (including structured entities) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from its
investment with the entity and has the ability to affect those returns through its power to direct
the activities of the entity.
The acquisition method of accounting is used to account for business combinations by the
Group.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the
consolidated Statement of Profit or Loss and Other Comprehensive Income, consolidated
statement of financial position and the consolidated statement of changes in equity respectively.
d) Critical accounting judgements and key sources of estimation uncertainty
The application of accounting policies requires the use of judgments, estimates and assumptions
about carrying values of assets and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are
recognised in the period in which the estimate is revised if it affects only that period, or in the
period of the revision and future periods if the revision affects both current and future periods.
e) Functional and presentation currency
The consolidated financial statements are presented in Australian dollars, which is the Group’s
functional and presentation currency.
ANNUAL REPORT 30 JUNE 2019
Page 48 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
f) Leases
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks
and rewards of ownership are classified as finance leases. Finance leases are capitalised at the
lease's inception at the fair value of the leased property or, if lower, the present value of the
minimum lease payments. The corresponding rental obligations, net of finance charges, are
included in other short-term and long-term payables.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged
to the profit or loss over the lease period so as to produce a constant periodic rate of interest on
the remaining balance of the liability for each period. The property, plant and equipment
acquired under finance leases is depreciated over the asset's useful life or over the shorter of the
asset's useful life and the lease term if there is no reasonable certainty that the Group will obtain
ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to
the Group as lessee are classified as operating leases. Payments made under operating leases
(net of any incentives received from the lessor) are charged to profit or loss on a straight-line
basis over the period of the lease.
NOTE 3: REVENUE AND EXPENSES
Other income
Interest
Other
Total other income
Expenses
Employee expense
Employee benefit and director compensation expense
Expense of share-based payments (note 22)
Other employee expenses
Total employee expense
Administration expense
Depreciation
Occupancy
Other administration expenses
Total administration expense
CONSOLIDATED
2019
$
2018
$
14,204
-
14,204
134,611
11,295
6,016
151,922
904
21,819
73,403
96,126
26,661
9,450
36,111
189,188
32,244
4,401
225,833
1,478
24,239
75,441
101,158
Revenue is recognised at an amount that reflects the consideration to which the Group expects to be
entitled to in exchange for transferring services to a customer. Revenue and expenses are recognised
on an accruals basis.
Interest income is recognised on a time proportion basis using the effective interest method.
ANNUAL REPORT 30 JUNE 2019
Page 49 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4: SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker. The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Board of
Directors of Alchemy Resources Limited.
The Group operates in one geographical segment, being Australia and in one operating category,
being mineral exploration. Therefore, information reported to the chief operating decision maker (the
Board of Alchemy Resources Limited) for the purposes of resource allocation and performance
assessment is focused on mineral exploration within Australia.
NOTE 5: INCOME TAX
Major components of income tax expense are as follows:
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Current income tax
At the rate of 30% (2018: 27.5%)
Current income tax charge
Deferred income tax
Relating to origination and reversal of temporary differences
Utilisation of prior year tax losses
Income tax expense/(benefit) reported in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income
CONSOLIDATED
2019
$
2018
$
-
-
-
-
-
-
-
-
-
-
A reconciliation of income tax expense/(benefit) applicable to accounting profit/(loss) before income
tax at the statutory income tax rate to income tax expense/(benefit) at the Company’s effective
income tax is as follows:
ANNUAL REPORT 30 JUNE 2019
Page 50 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5: INCOME TAX (Continued)
Accounting loss from continuing operations before income tax
At the statutory income tax rate of 27.5% (2018: 27.5%)
Add:
- Non-deductible expenses
- Other deductible expenses
- Share-based payment
- Tax loss not brought to account as a deferred tax asset
- Capital raising costs
Income tax expense/(benefit) reported in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income
CONSOLIDATED
2019
$
2018
$
(10,282,167)
(3,084,650)
(528,831)
(145,428)
63
(6,302)
3,389
3,019,264
(3,764)
3,092
-
8,867
137,616
(4,147)
-
-
The income tax expense or benefit for the period is the tax payable on the current period’s taxable
income based on the applicable income tax rate, adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at the end of the reporting period. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulations are subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
ANNUAL REPORT 30 JUNE 2019
Page 51 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5: INCOME TAX (Continued)
Deferred income tax
Recognised on the Statement of Financial Position
Deferred income tax at the end of the reporting period relates to the
following:
Deferred income tax liabilities
- Capitalised expenditure deductible for tax purposes
- Trade and other receivables
Deferred income tax assets
- Trade and other payables
- Employee benefits
- Capitalised expenditure non-deductible for tax purposes
- Tax losses available to offset DTL
Net deferred tax asset/(liability)
Tax consolidation
CONSOLIDATED
2019
$
2018
$
1,439,544
1,872
3,717,512
1,305
1,441,416
3,718,817
(6,601)
(10,800)
(12,344)
(1,411,671)
-
(5,376)
(6,382)
(13,524)
(3,693,535)
-
The Company and its 100% owned controlled entities have formed a tax consolidated group. The
head entity of the tax consolidated group is Alchemy Resources Limited.
Alchemy Resources is no longer considered a base rate entity for income tax purposes and is
therefore subject to income tax at a rate of 30% (2018: 27.5%).
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if
it is probable that future taxable amounts will be available to utilise those temporary differences and
losses.
At 30 June 2019, Alchemy Resources Limited had $30,714,317 (2018: $30,248,137) of tax losses that are
available indefinitely for offset against future taxable profits subject to satisfaction of the loss tests. No
deferred tax asset has been recognised in the Consolidated Statement of Financial Position in respect
of the amount of either these losses or other deferred tax expenses. Should the Company not satisfy
the Continuity of Ownership Test, the Company will be able to utilise the losses to the extent that it
satisfies the Same Business Test.
ANNUAL REPORT 30 JUNE 2019
Page 52 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6: CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Deposits at call
CONSOLIDATED
2019
$
2018
$
517,386
16,500
533,886
126,354
616,500
742,854
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other
short-term, highly liquid investments with original maturities of six months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value.
The weighted average interest rate for the year was 0.92% (2018: 1.72%).
The Group’s exposure to interest rate risk is set out in note 21. The maximum exposure to credit risk at
the end of the reporting period is the carrying amount of each class of cash and cash equivalents
mentioned above.
NOTE 7: TRADE AND OTHER RECEIVABLES
Current
GST receivable
Other
CONSOLIDATED
2019
$
2018
$
13,524
-
13,524
18,273
119
18,392
Trade receivables are normally due for settlement within 30 days. They are presented as current assets
unless collection is not expected for more than 12 months after the reporting date.
Trade and other receivables are recognised at amortised cost using the effective interest rate method,
less any allowance for expected credit losses.
The Group assesses at each balance date whether there is objective evidence that a financial asset or
group of financial assets is impaired. For trade and other receivables, the Group applies the simplified
approach permitted by AASB 9 to determine any allowances for expected credit losses, which requires
expected lifetime losses to be recognised from initial recognition of the receivables. The expected
credit losses on these financial assets are estimated using a provision matrix based on the Group’s
historical credit loss experience. The amounts held in trade and other receivables do not contain
impaired assets and are not past due. Based on the credit history of these trade and other receivables,
it is expected that the amounts will be received when due.
The Group’s financial risk management objectives and policies are set out in Note 21.
Due to the short-term nature of these receivables their carrying value is assumed to approximate their
fair value.
ANNUAL REPORT 30 JUNE 2019
Page 53 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8: OTHER CURRENT ASSETS
Prepayments
NOTE 9: EXPLORATION AND EVALUATION
Opening balance
Exploration expenditure incurred during the year
Exploration expenditure written off
Closing balance
CONSOLIDATED
2019
$
6,241
6,241
2018
$
4,745
4,745
CONSOLIDATED
2019
$
2018
$
13,824,978
1,180,100
(9,899,844)
12,759,016
1,131,490
(65,528)
5,105,234
13,824,978
Following a review of the Group’s tenements, the Directors wrote down the carrying value of its Bryah
Basin Project by $9,891,186. The remaining write down of $8,658 relates to charges for tenements not
granted at reporting date.
Exploration and evaluation expenditure, including the costs of acquiring licences and permits, are
capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the
Group has obtained the legal rights to explore an area are recognised in the Statement of Profit or
Loss and Other Comprehensive Income.
Exploration and evaluation assets are only recognised if the rights of the area of interest are current
and either:
i) the expenditures are expected to be recouped through successful development and exploitation or
from sale of the area of interest; or
ii) 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 operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine
technical feasibility and commercial viability, and facts and circumstances suggest that the carrying
amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and
evaluation assets are allocated to cash-generating units to which the exploration activity relates. The
cash generating unit shall not be larger than the area of interest.
Once the technical feasibility and commercial viability of the extraction of minerals 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 mineral property and development assets within
property, plant and equipment.
When an area of interest is abandoned or the directors decide that it is not commercial, any
accumulated costs in respect of that area are written off in the financial period the decision is made.
ANNUAL REPORT 30 JUNE 2019
Page 54 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9: EXPLORATION AND EVALUATION (Continued)
Significant estimate and judgement
There is some subjectivity involved in the carry forward of capitalised exploration and evaluation
expenditure or, where appropriate, the write off to the Statement of Profit or Loss and Other
Comprehensive Income, however management give due consideration to areas of interest on a
regular basis and are confident that decisions to either write off or carry forward such expenditure
fairly reflect the prevailing situation.
NOTE 10: SUBSIDIARIES
Details of the Company’s subsidiaries are as follows:
Subsidiary
Principal
activity
Country of
incorporation
Alchemy Resources (Murchison) Pty Ltd
Alchemy Resources (Three Rivers) Pty Ltd
Goldtribe Corporation Pty Ltd
Alchemy Resources (NSW) Pty Ltd
Exploration
Exploration
Exploration
Exploration
Australia
Australia
Australia
Australia
Proportion of ownership
2019
100%
100%
100%
100%
2018
100%
100%
100%
100%
NOTE 11: TRADE AND OTHER PAYABLES
Trade creditors and accruals
NOTE 12: PROVISIONS
Current
Employee benefits
Short–term obligations
CONSOLIDATED
2019
$
2018
$
158,675
135,440
CONSOLIDATED
2019
$
2018
$
35,999
21,383
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be
settled within 12 months, are recognised in respect of employees’ services up to the end of the
reporting period and are measured at the amounts expected to be paid when the liabilities are
settled. The liability for annual leave is recognised in the provision for employee benefits. All other
short-term employee benefit obligations are presented as payables.
The obligations are presented as current liabilities in the Statement of Financial Position of the Group.
ANNUAL REPORT 30 JUNE 2019
Page 55 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13: CONTRIBUTED EQUITY
a) Share capital
Ordinary shares fully paid
b) Movements in ordinary shares on issue
Balance at 1 July 2017
Issue of shares to Heron Resources Limited
Balance at 30 June 2018
Non-renounceable issue to shareholders (1)
Share issue costs
Balance at 30 June 2019
CONSOLIDATED
2019
$
2018
$
32,404,105
31,104,072
CONSOLIDATED
Number
$
342,335,585
30,914,072
10,000,000
190,000
352,335,585
31,104,072
88,083,896
1,321,258
-
(21,225)
440,419,481
32,404,105
(1) On 23 July 2018 the Company completed the issue of 88,083,896 new Shares pursuant to a pro-rata non-renounceable
entitlement and shortfall offer (“Issue”) to eligible shareholders of 1 new Share for every 4 existing Shares held at an issue
price of $0.015 per share.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds. Ordinary
shares have the right to receive dividends as declared, and in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the
number of and amounts paid upon on shares held. Ordinary shares entitle their holder to one
vote, either in person or by proxy, at a meeting of the Company.
c) Movements in options on issue
Balance at beginning of the financial year
Options granted
Options expired
Balance at end of the financial year
CONSOLIDATED
2019
Number
2018
Number
29,500,000
-
(7,500,000)
10,500,000
22,000,000
(3,000,000)
22,000,000
29,500,000
ANNUAL REPORT 30 JUNE 2019
Page 56 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14: RESERVES
Options reserve
Opening balance
Option expense
Expiry of options
Transfer from option reserve to accumulated losses
Balance at the end of the financial year
CONSOLIDATED
2019
$
2018
$
182,417
11,295
(59,260)
-
134,452
525,820
101,244
-
(444,647)
182,417
The options reserve is used to recognise the fair value of options issued to directors, employees and
contractors.
NOTE 15: ACCUMULATED LOSSES
Balance at the beginning of the financial year
Net loss attributable to members
Transfer from option reserve to accumulated losses
Balance at the end of the financial year
NOTE 16: EARNINGS PER SHARE
Basic loss per share
Diluted loss per share
CONSOLIDATED
2019
$
2018
$
(16,848,847)
(10,282,167)
59,260
(16,764,664)
(528,830)
444,647
(27,071,754)
(16,848,847)
CONSOLIDATED
2019
Cents
2.36
N/A
2018
Cents
0.15
N/A
The following reflects the income and share data used in the calculations of basic and diluted loss per
share:
CONSOLIDATED
2019
$
2018
$
Profits/(losses) used in calculating basic and diluted earnings per share
(10,282,167)
(528,830)
Weighted average number of ordinary shares used in
calculating basic and diluted loss per share
CONSOLIDATED
2019
Number
2018
Number
434,868,989
344,390,380
ANNUAL REPORT 30 JUNE 2019
Page 57 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16: EARNINGS PER SHARE (Continued)
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Group,
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.
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 after income tax effect of interest and other financing costs associated with
dilutive potential ordinary shares, and the weighted average number of additional ordinary shares that
would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
NOTE 17: AUDITOR’S REMUNERATION
Audit services
BDO Audit (WA) Pty Ltd
- Audit and review of the financial reports
Total remuneration
NOTE 18: CONTINGENT ASSETS AND LIABILITIES
The Group had contingent assets at 30 June 2019 in respect of:
Future royalty payments
CONSOLIDATED
2019
$
2018
$
28,000
28,000
23,892
23,892
In March 2015, Alchemy completed a Sale and Purchase Agreement with Northern Star Resources
Limited (“Northern Star”) whereby the tenement containing the Hermes gold resource and adjacent
tenements were acquired by Northern Star (“Hermes Tenements”).
In October 2016, Northern Star completed the sale of its Plutonic gold operations, which included the
Hermes Tenements to Billabong Gold Pty Ltd.
Alchemy retains a 1% of Net Smelter Return Royalty payable on refined gold recovered from the
Hermes Tenements in excess of 70,000oz and up to 90,000oz.
There are no other material contingent assets or liabilities as at 30 June 2019.
ANNUAL REPORT 30 JUNE 2019
Page 58 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19: EVENTS OCCURRING AFTER THE REPORTING PERIOD
On 16 September 2019, the Company completed the issue of 110,104,870 new Shares pursuant to a
pro-rata non-renounceable entitlement and shortfall offer to eligible shareholders of 1 new Share for
every 4 existing Shares held at an issue price of $0.012 per share raising $1,321,258 (before costs).
As announced to ASX on 23 September 2019, Sandfire Resources NL (ASX:SFR) has advised the
Company that it has exceeded its joint venture earn-in expenditure requirement under the terms of
the Bryah Basin Letter Agreement. The Company has completed an audit and agrees that the
expenditure has exceeded the earn-in requirement and that Sandfire has earned a 70% interest in the
Bryah Basin project tenements owned 80% Alchemy / 20% Jackson Minerals Pty Ltd (a wholly owned
subsidiary of Fe Ltd (ASX: FEL)), and an 80% interest in Alchemy’s 100% owned tenements.
There have been no other events subsequent to reporting date which are sufficiently material to
warrant disclosure.
NOTE 20: COMMITMENTS
In order to maintain an interest in the exploration tenements in which the Group is involved, the
Group is committed to meet the conditions under which the tenements were granted. The timing and
amount of exploration expenditure commitments and obligations of the Group are subject to the
minimum expenditure commitments required as per the Mining Act 1978, as amended, and may vary
significantly from the forecast based upon the results of the work performed which will determine the
prospectivity of the relevant area of interest. Currently, the minimum expenditure commitments for
the granted tenements are $790,500 (2018: $1,938,976) per annum.
Commitments in relation to the lease of office premises are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
CONSOLIDATED
2019
$
6,957
-
-
6,957
2018
$
7,707
-
-
7,707
ANNUAL REPORT 30 JUNE 2019
Page 59 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Financial Risk Management
Overview
The Group has exposure to the following risks from their use of financial instruments:
Interest rate risk
Credit risk
Liquidity risk
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.
Risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management
policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s
activities.
The Audit Committee oversees how management monitors compliance with the Group’s risk
management policies and procedures and reviews the adequacy of the risk management framework
in relation to the risks faced by the Group. The Group’s principal financial instruments are tabled
below.
Financial assets
Current
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Current
Trade and other payables
Interest rate risk
CONSOLIDATED
2019
$
2018
$
533,886
533,886
742,854
742,854
158,675
158,675
135,440
135,440
Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the
instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from
fluctuations in interest bearing financial assets and liabilities that the Group uses.
Interest bearing assets comprise cash and cash equivalents which are considered to be short-term
liquid assets. It is the Group’s policy to settle trade payables within the credit terms allowed and
therefore not incur interest on overdue balances.
ANNUAL REPORT 30 JUNE 2019
Page 60 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
The following tables set out the carrying amount, by maturity, of the financial instruments that are
exposed to interest rate risk:
Floating
interest rate
$
Fixed interest rate maturing in
Over 1 to 5
years
$
More than
5 years
$
1 year or
less
$
Consolidated 2019
Financial assets
Cash and cash equivalents
Weighted average interest rate
Financial liabilities
Trade and other payables
Weighted average interest rate
Consolidated 2018
Financial assets
Cash and cash equivalents
Weighted average interest rate
Financial liabilities
Trade and other payables
Weighted average interest rate
516,967
516,967
0.42%
16,500
16,500
2.55%
-
-
-
-
-
-
124,630
124,630
616,500
616,500
0.52%
2.21%
-
-
-
-
-
-
Sensitivity analysis for interest rate exposure
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Non-
interest
bearing
$
Total
$
419
419
-
158,675
158,675
-
1,724
1,724
-
135,440
135,440
-
533,886
533,886
-
158,675
158,675
-
742,854
742,854
-
135,440
135,440
-
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased)
equity and profit or loss by the amounts shown below:
Impact on profit/(loss) and equity
Increase of 100 basis points
Decrease of 100 basis points
2019
$
15,418
(15,418)
2018
$
15,501
(15,501)
ANNUAL REPORT 30 JUNE 2019
Page 61 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables
from customers and investment securities. The Group trades only with recognised, creditworthy third
parties. It is the Group policy that all customers who wish to trade on credit terms are subject to credit
verification procedures. In addition, receivable balances are monitored on an ongoing basis with the
result that the Group’s exposure to bad debts is not significant. The maximum exposure to credit risk
is the carrying value of the receivable, net of any provision for doubtful debts.
With respect to credit risk arising from the other financial assets of the Group, which comprise cash
and cash equivalents, the Group’s exposure to credit risk arises from default of the counter party, with
a maximum exposure equal to the carrying amount of these instruments. This risk is minimised by
reviewing term deposit accounts from time to time with approved banks of a sufficient credit rating
which is -AA and above.
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The
Group’s maximum exposure to credit risk is tabled below:
Cash and cash equivalents
Liquidity risk
CONSOLIDATED
2019
$
2018
$
533,886
533,886
742,854
742,854
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity 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.
ANNUAL REPORT 30 JUNE 2019
Page 62 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
The Group’s objective is to maintain a balance between continuity of funding and flexibility. The
following are the contractual maturities of financial liabilities:
Consolidated - 2019
Trade and other payables
Consolidated - 2018
Trade and other payables
Capital risk management
Less than 6
months
$
Contractual
cash flows
$
Carrying amount
$
158,675
158,675
158,675
158,675
158,675
158,675
135,440
135,440
135,440
135,440
135,440
135,440
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital. The management of the Group’s
capital is performed by the Board.
The capital structure of the Group consists of net debt (trade and other payables and provisions
detailed in notes 11 and 12 offset by cash and bank balances) and equity of the Group (comprising
issued capital, reserves, offset by accumulated losses detailed in notes 13, 14 and 15).
The Group is not subject to any externally imposed capital requirements. None of the Group’s entities
are subject to externally imposed capital requirements.
ANNUAL REPORT 30 JUNE 2019
Page 63 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 22: SHARE-BASED PAYMENTS
a) Share option plan
The Group has an Incentive Option Scheme (“Scheme”) for executives and employees of the
Group. In accordance with the provisions of the Scheme, as approved by shareholders at a
previous annual general meeting, executives and employees may be granted options at the
discretion of the directors.
Each share option converts into one ordinary share of Alchemy Resources Limited on exercise. No
amounts are paid or are payable by the recipient on receipt of the option. The options carry
neither rights of dividends nor voting rights. Options may be exercised at any time from the date
of vesting to the date of their expiry.
Options issued to directors are not issued under the Scheme but are subject to approval by
shareholders.
The following share-based payment arrangements were in existence during the reporting period:
Option
series
12
13
14
15
Number
Grant date
Expiry date
Vesting date
Exercise
price
Fair value at
grant date
4,000,000
4,000,000
4,000,000
10,000,000
9 Jan 2017
9 Jan 2017
9 Jan 2017
16 Apr 2018
8 Jan 2021
8 Jan 2021
8 Jan 2021
15 Apr 2021
8 Jan 2018
8 Jan 2019
8 Jan 2020
Immediate
$0.04
$0.08
$0.12
$0.05
$0.0075
$0.0054
$0.0042
$0.0069
Fair value of share options granted during the year
The fair value of share options at grant date are determined using a Black-Scholes option pricing
model that takes into account the exercise price, the term of the option, the share price at grant
date, the expected price volatility of the underlying share and the risk free rate for the term of the
option. The fair value of share options expensed during the year was $11,295 (2018: $32,244)
The fair value of options granted is recognised as an employee benefits expense with a
corresponding increase in equity. The fair value is measured at grant date and spread over the
period during which the employees become unconditionally entitled to the options.
b) Movements in share options during the year
Movement in the number of share options held by directors, employees and advisors:
2019
2018
No. of
options
Weighted
average exercise
price ($)
No. of
options
Weighted
average exercise
price ($)
Outstanding at the beginning of the year
Granted during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
29,500,000
-
(7,500,000)
22,000,000
18,000,000
0.07
-
0.15
0.07
0.05
10,500,000
22,000,000
(3,000,000)
29,500,000
21,500,000
0.11
0.07
0.15
0.07
0.07
ANNUAL REPORT 30 JUNE 2019
Page 64 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 22: SHARE-BASED PAYMENTS (Continued)
The weighted average remaining contractual life of share options outstanding at the end of the
year was 1.65 years (2018: 1.72 years).
c) Share options outstanding at the end of the year
Share options issued and outstanding at the end of the year have the following exercise prices:
Expiry date
31 May 2019
8 January 2021
8 January 2021
8 January 2021
15 April 2021
Exercise price ($)
0.10
0.04
0.08
0.12
0.05
2019 (number)
2018 (number)
-
4,000,000
4,000,000
4,000,000
10,000,000
7,500,000
4,000,000
4,000,000
4,000,000
10,000,000
22,000,000
29,500,000
NOTE 23: RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operating activities
Loss for the period
Non-cash flows in profit/(loss):
- Depreciation
- Share-based remuneration
- Exploration expenditure write-off
Change in assets and liabilities:
- Decrease/(increase) in trade receivables
- Decrease/(increase) in prepayments
- Increase/(decrease) in trade creditors and accruals
- Increase/(decrease) in provisions
CONSOLIDATED
2019
$
2018
$
(10,282,167)
(528,830)
904
11,295
9,899,844
1,801
(1,496)
(20,330)
12,789
1,478
32,244
65,528
5,308
(4,745)
(178)
13,401
Net cash used in operating activities
(377,360)
(415,794)
Non-cash investing and financing activities
Acquisition of tenements through issue of shares and options
-
-
259,000
259,000
During the year ended 30 June 2018, the Company issued 10,000,000 shares and 10,000,000 unlisted
options to Heron Resources Limited (“Heron”) as consideration for the inclusion of the West Lynn and
Woodsreef licences into the Joint Venture Agreement with Heron.
ANNUAL REPORT 30 JUNE 2019
Page 65 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 24: RELATED PARTY DISCLOSURE
a) Parent entity
Alchemy Resources Limited
Ordinary
Australia
-
-
Class
Country of
incorporation
Investment at cost
2019 ($)
2018 ($)
b) Subsidiaries
Alchemy Resources (Murchison) Pty Ltd
Alchemy Resources (Three Rivers) Pty Ltd
Goldtribe Corporation Pty Ltd
Alchemy Resources (NSW) Pty Ltd
Class
Ordinary
Ordinary
Ordinary
Ordinary
Country of
incorporation
Investment at cost
2019 ($)
2018 ($)
Australia
Australia
Australia
Australia
100
100
1
1
100
100
1
1
c) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Bonus payment
Share-based payments
CONSOLIDATED
2019
$
2018
$
189,998
15,200
-
11,295
216,493
189,998
14,250
50,000
32,244
286,492
Detailed remuneration disclosures are provided in the remuneration report on pages 35 to 39.
ANNUAL REPORT 30 JUNE 2019
Page 66 of 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 25: PARENT ENTITY DISCLOSURE
Financial Performance
Loss for the year
Other comprehensive income
Total comprehensive loss
Financial Position
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued equity
Reserves
Accumulated losses
TOTAL EQUITY
CONSOLIDATED
2019
$
2018
$
1,517,730
-
1,562,694
-
1,517,730
1,562,694
546,851
4,880
755,353
5,784
551,731
761,137
116,301
119,305
116,301
119,305
435,430
641,832
32,404,105
134,452
(32,103,127)
31,104,072
182,417
(30,644,657)
435,430
641,832
No guarantees have been entered into by Alchemy Resources Limited in relation to the debts of its
subsidiaries. Alchemy Resources Limited had no expenditure commitments as at 30 June 2019 other
than the commitment in relation to the lease of office premises as disclosed in note 20.
ANNUAL REPORT 30 JUNE 2019
Page 67 of 75
DIRECTORS’ DECLARATION
The directors of Alchemy Resources Limited declare that:
a)
in the directors’ opinion, the financial statements and notes set out on pages 42 to 67 and the
Remuneration Report in the Directors’ Report are in accordance with the Corporations Act 2001,
including:
i)
ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019
and its performance, for the financial year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations), Corporations Regulations 2001 and mandatory professional reporting
requirements.
b)
c)
the financial statements also comply with International Financial Reporting Standards as disclosed
in note 2; and
there are reasonable grounds to believe that the consolidated entity will be able to pay its debts
as and when they become due and payable.
The directors have been given the declarations required by Section 295A of the Corporations Act 2001
by the Managing Director and Chief Financial Officer for the financial year ended 30 June 2019.
Signed in accordance with a resolution of the directors
Lindsay Dudfield
Chairman
Perth, Western Australia
24 September 2019
ANNUAL REPORT 30 JUNE 2019
Page 68 of 75
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Alchemy Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Alchemy Resources Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Carrying Value of Exploration and Evaluation Asset
Key audit matter
How the matter was addressed in our audit
Our audit procedures included, but were not
limited to, the following:
·
·
·
·
Considering the basis of the impairment and
methods used by management in determining
the amount of impairment to charge;
Holding discussions with management to gain
an understanding of the strategic rationale
behind the various farm-out arrangements;
Assessing other observable indicators of the
recoverable amount, including the market
capitalisation of the group;
Assessing the adequacy of the related
disclosures in Note 9 to the Financial Report.
At 30 June 2019, the carrying value of the
exploration and evaluation asset is disclosed in
Note 9. During the year, an impairment was
charged to the asset as per Note 9.
Refer to Note 9 of the Financial Report for a
description of the accounting policy and
significant judgement applied to capitalised
exploration and evaluation expenditure.
The recoverability of exploration and evaluation
expenditure requires significant judgement by
management in determining whether there are
any facts or circumstances that exist to suggest
that the carrying amount of the asset may
exceed its recoverable amount. Due to the
quantum of this impairment, and the significant
management judgements involved, this was
considered a key audit matter.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2019, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 35 to 39 of the annual report for the year
ended 30 June 2019.
In our opinion, the Remuneration Report of Alchemy Resources Limited, for the year ended 30 June
2019, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Glyn O'Brien
Director
Perth, 24 September 2019
ADDITIONAL SHAREHOLDER INFORMATION AS AT 23 SEPTEMBER 2019
Additional information required by the Australian Securities Exchange Limited and not shown
elsewhere in this report is as follows.
Distribution of Holders of Equity Securities
Shares held
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Shareholders
144
171
137
472
356
1,280
The number of holders of less than a marketable parcel of ordinary fully paid shares is 724.
Substantial Shareholders
Substantial shareholders (i.e. shareholders who hold 5% or more of the issued capital):
Number of shares
Percentage held
Northern Star Resources Limited
LG Dudfield Pension Fund
Rossdale Superannuation Pty Ltd
78,125,000
44,836,090
33,250,001
14.19
8.14
6.04
Voting Rights
a) Ordinary shares
Each shareholder is entitled to receive notice of and attend and vote at general meetings of the
Company. At a general meeting, every shareholder present in person or by proxy, representative
of attorney will have one vote on a show of hands and on a poll, one vote for each share held.
b) Options
No voting rights.
Quoted Securities on Issue
The Company has 550,524,351 quoted shares on issue. No options on issue by the Company are
quoted.
On-Market Buy Back
There is no current on-market buy back.
ANNUAL REPORT 30 JUNE 2019
Page 72 of 75
ADDITIONAL SHAREHOLDERS INFORMATION
Unquoted Equity Securities
Options exercisable at $0.04 on or before 8 January 2021
Options exercisable at $0.08 on or before 8 January 2021
Options exercisable at $0.12 on or before 8 January 2021
Options exercisable at $0.05 on or before 15 April 2021
Twenty Largest Holders of Quoted Ordinary Shares
Number of shares
4,000,000
4,000,000
4,000,000
10,000,000
Number of holders
1
1
1
1
Shareholder
Number of shares
Percentage held
Northern Star Resources Limited
LG Dudfield Pension Fund
Rossdale Superannuation Pty Ltd
TBB NSW Pty Ltd
Dr Stephen Garth Nordstrom
Jindalee Resources Limited
Mr Christopher Paul Lewis
Grandor Pty Ltd
Jetosea Pty Ltd
Heron Resources Limited
Mr Eric Anthony Bennik
Kale Capital Corporation Limited
New Greenwich Pty Ltd
Dr Colin Rose
Cardinal Management Services Pty Ltd
Netwealth Investments Ltd
MKM Superannuation Pty Ltd
Honker Pty Ltd
Mrs Stella Emily Downey
Girdis Superannuation Pty Ltd
78,125,000
44,836,090
33,250,001
22,732,500
20,000,000
17,469,759
14,100,415
12,323,689
12,208,520
12,000,000
9,685,240
9,587,750
8,333,333
8,150,397
5,893,602
4,816,666
4,000,000
3,580,000
3,467,750
3,333,333
14.19
8.14
6.04
4.13
3.63
3.17
2.56
2.24
2.22
2.18
1.76
1.74
1.51
1.48
1.07
0.87
0.73
0.65
0.63
0.61
327,894,045
59.56
ANNUAL REPORT 30 JUNE 2019
Page 73 of 75
TENEMENT SCHEDULE
Project/Tenement
Bryah Basin Project
E52/1668
E52/1678
E52/1722
E52/1723-I
E52/1730
E52/1731
E52/1810
E52/1852
E52/2360
E52/2362
E52/3292
E52/3358
E52/3359
E52/3405
E52/3406
E52/3407
E52/3408
E52/3409
E52/3472
E52/3475
M52/722
M52/723
M52/737
M52/795
M52/844-I
M52/1049
P52/1425
P52/1427
P52/1428
P52/1429
P52/1467
P52/1468
P52/1469
P52/1470
P52/1531
P52/1532
P52/1533
P52/1534
P52/1535
P52/1538
P52/1539
P52/1540
P52/1541
P52/1565
Location/Status
Western Australia
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Transfer
Transfer
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Transfer
Transfer
Granted
Interest
Co-Holder
10%
10%
10%
20%
10%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
20%
10%
10%
20%
20%
20%
Jackson / Billabong / Sandfire
Jackson / Billabong / Sandfire
Jackson / Sandfire
Billabong / Sandfire
Jackson / Billabong / Sandfire
Billabong / Sandfire
Sandfire
Billabong
Sandfire
Billabong / Sandfire
Sandfire
Sandfire
Sandfire
Billabong / Sandfire
Billabong / Sandfire
Sandfire
Billabong / Sandfire
Sandfire
Sandfire
Sandfire
Billabong / Sandfire
Billabong / Sandfire
Billabong
Billabong / Sandfire
Sandfire
Billabong
Sandfire
Sandfire
Sandfire
Billabong
Sandfire
Sandfire
Sandfire
Sandfire
Sandfire
Sandfire
Sandfire
Sandfire
Sandfire
Jackson / Billabong
Jackson / Billabong
Sandfire
Sandfire
Sandfire
Notes
1, 2, 3
1, 2, 3
1, 2
2, 4, 5
1, 2, 3
2, 4
2
4
2, 6
2, 4, 6
2
2
2
2, 4
2, 4
2
2, 4
2
2
2
2, 4, 6
2, 4, 6
4, 6
2, 4, 6
2, 6
4, 6
2
2
2
4
2
2
2
2
2
2
2
2
2
1, 4
1, 4
2
2
2
ANNUAL REPORT 30 JUNE 2019
Page 74 of 75
TENEMENT SCHEDULE
Project/Tenement
P52/1566
P52/1567
P52/1568
P52/1572
P52/1577
Karonie Project
E28/2575
E28/2576
E28/2601
E28/2619
E28/2643
E28/2657
E28/2667
E28/2668
E28/2681
E28/2752
E28/2818
E28/2821
E28/2824
E28/2880
E28/2940
Lachlan Projects
EL5878 - Overflow
EL7941 - Overflow
EL8267 – Overflow Nth
EL8356 – Yellow Mtn
EL8192 - Eurow
EL8318 - Girilambone
EL8631 – West Lynn
EL8711 - Woodsreef
Notes:
Location/Status
Granted
Granted
Granted
Granted
Granted
Western Australia
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Appl. pending
Appl. pending
Appl. pending
Granted
Appl. pending
New South Wales
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Interest
20%
20%
20%
20%
20%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
100%
-
51%
51%
51%
51%
51%
51%
51%
51%
Co-Holder
Sandfire
Sandfire
Sandfire
Sandfire
Billabong
Notes
2
2
2
2, 6
4, 6
7
7
7
7
7
7
7
7
7
7
7
7
7
7
7
8
8
8
8
8
8
8
8
Heron Resources
Heron Resources
Heron Resources
Heron Resources
Heron Resources
Heron Resources
Heron Resources
Heron Resources
1.
Jackson Minerals Pty Ltd, a subsidiary of Fe Ltd (ASX: FEL), retains a 20% interest free-carried to a decision to mine.
2. Sandfire Resources NL (ASX: SFR) holds a 70-80% interest (excludes iron ore) in whole or part tenements, with Alchemy
free-carried up to completion of a pre-feasibility study.
3. Billabong Gold Pty Ltd (a wholly owned subsidiary of Superior Gold Inc.) holds a 70% interest in whole or part of
tenement.
4. Billabong Gold Pty Ltd (a wholly owned subsidiary of Superior Gold Inc.) holds an 80% interest in whole or part of
tenement.
5. PepinNini Robinson Range Pty Ltd retains a 1% NSR on iron ore.
6. Carey Mining Iron Ore JV: Alchemy has 100% mineral rights for all minerals, excluding iron ore where ownership is
Alchemy 50% / Carey Mining 50%.
7. Goldtribe Corporation Pty Ltd, a subsidiary of Alchemy Resources Ltd, holds a 100% interest in the tenement.
8. Alchemy Resources (NSW) Pty Ltd, a subsidiary of Alchemy Resources Ltd, holds a 51% interest in the tenement, and has
a right to earn an 80% interest in tenements from Heron Resources Ltd by sole funding a total of $2,000,000 on
exploration expenditure prior to 27 May 2021.
ANNUAL REPORT 30 JUNE 2019
Page 75 of 75