Annual Report 2017
Alto Metals Limited
ABN 62 159 819 173
Alto Metals Limited
Contents
Chairman’s Letter ..................................................................................................................................1
Review of Operations ............................................................................................................................2
Directors’ Report .................................................................................................................................11
Auditor’s Independence Declaration ...................................................................................................23
Consolidated Statement of Profit or Loss and Other Comprehensive Income ...................................24
Consolidated Statement of Financial Position ....................................................................................25
Consolidated Statement of Changes in Equity ....................................................................................26
Consolidated Statement of Cash Flows ...............................................................................................27
Notes to the Financial Statements ......................................................................................................28
Directors’ Declaration ..........................................................................................................................57
Independent Auditor’s Report.............................................................................................................58
Additional ASX Information ................................................................................................................62
Tenement Report ................................................................................................................................64
Corporate Directory
Directors
Auditor
Dr Jingbin Wang - Non-Executive Chairman
Grant Thornton Audit Pty Ltd
Dermot Ryan - Executive Director
Level 1
Terry Wheeler - Non-Executive Director
Stephen Stone - Non-Executive Director
Company Secretary
Sam Middlemas
Email: smiddlemas@altometals.com.au
Principal Registered Office
Suite 9,
12-14 Thelma Street,
WEST PERTH, WA, 6005
Telephone: 08 9381 2808
Facsimile: 08 9321 6084
Website: www.altometals.com.au
Email: admin@altometals.com.au
10 Kings Park Road
West Perth WA 6005
Telephone 08 9480 2000
Facsimile 08 9322 7787
Website: www.grantthornton.com.au
Email: admin@grantthornton.com.au
Share Registry
Computershare Registry Services
Level 2, 45 St Georges Terrace
PERTH WA 6000
Australian Securities Exchange: ASX Code – AME
Chairman’s Letter
Dear Shareholders,
Following a transformational period in which Alto Metals shifted its
commodity focus from uranium to gold, the 2017 financial year saw the
Company start exploration at the highly prospective Sandstone Gold Project
in Western Australia and make excellent progress towards its ultimate goal
of defining a 5 million ounce-plus resource in the region that can support a
profitable mining operation over 10–20 years.
To reiterate the rationale behind the Sandstone acquisition,
the project has favourable Archaean geology, an established
history of mining high grade mineralisation and excellent
access to infrastructure. Our technical team also considered
that the region had been relatively underexplored compared
to other greenstone belts in WA, which are the structures that
host the state’s major gold deposits.
From June 2016 when we acquired the Sandstone Project,
our exploration team has continued to compile valuable
historical exploration data for the Sandstone area from the
WA Department of Mines Open File system. This system
contains detailed reports and data on the approximate A$20
million that has been spent at Sandstone over many years
by previous explorers. The majority of this data relates to
shallow drilling (average depth less than 40 metres) because
previous explorers were seeking shallow soft oxide resources
for the small local gold plant. Alto recognises that many of
the shallow low-grade gold drill intersections achieved by
previous explorers, although not economic, potentially provide
the clues to the discovery of high grade primary gold deposits
at depth.
Following the grant of our tenements in late September 2016,
Alto has flown high-resolution magnetic and radiometric
surveys and undertaken a detailed interpretation of the data
to identify favourable geological domains and structures for
the emplacement of major gold deposits.
The “Alpha Domain” was identified by our team as a 21 km
long favourable host unit, which contains the previously known
Indomitable, Piper, Tigermoth, and Vanguard prospects. These
prospects were targeted for initial aircore drill testing. High
grade gold results were returned from Indomitable, Vanguard
North and Vanguard prospects. Following these results, Alto
undertook reverse circulation drilling at these prospects, with
numerous high grade gold intersections being achieved. To
date, Alto has drilled 120 AC holes for 10,989m, and 36 RC
holes for 4,858m.
There is much work still to be done, but results to date have
given us no reason to question the acquisition. Indeed, we
are extremely encouraged and excited by what lies ahead.
This includes the prospect of restarting mining operations at
Sandstone in the near-term through a profit sharing agreement
with one of the companies operating a gold treatment plant
in the region. Such an agreement would likely be applied to
the Lord Henry and Lord Nelson deposits, both of which have
JORC 2012-compliant resources and Mining Lease Applications
pending.
The macroeconomic environment continues to be favourable
for gold, and despite the prospect of an increase in the royalty
paid to the Western Australian State Government on gold
production, in our eyes WA still represents one of the best
jurisdictions in the world for mineral exploration.
In July 2016, Alto raised $1.7 million through a fully subscribed
Share Purchase Plan. This was followed by a private placement
of shares to professional and sophisticated investors in October
2016 that raised a further $1 million. The money raised through
these two initiatives was used to fund exploration activities at
Sandstone throughout the year and for working capital.
In August-September 2017, Alto sold on market 25,573,183
shares in ASX-listed Antipa Minerals Ltd shares for gross
proceeds of $631,445. Alto has maintained an interest of
2,500,000 shares in ASX-listed Enterprise Metals, currently
worth approximately $50,000. This investment is reviewed on
a regular basis.
In finishing, I would like to thank all shareholders and staff for
their ongoing support. It has been crucial in getting to the point
where we believe we are excellently placed to experience
more exploration success and move towards production.
Yours sincerely,
Dr Jingbin Wang - Chairman
19 October 2017
1
Annual Report 2017
In October 2016, Alto raised a further $1 million for its second
drilling program in 2017 from professional and sophisticated
investors via a share placement of 7,407,404 ordinary fully
paid shares at 13.5 cents per share.
Alto presently has 151,882,819 shares on issue and 100%
ownership of the Sandstone Gold Project. The Company’s
objective at Sandstone is to discover high grade mineral
deposits containing five million ounces of gold which will
support profitable mining operations over a 10 – 20 year
period.
Alto has an experienced Board of Directors with extensive
skills in exploration, mining, accounting, corporate governance
and provision of corporate advice. The Company currently has
approximately 800 km2 under granted title at Sandstone for
gold, and a further 945km2 under title for uranium at four
prospects.
The Company has also established an External Research
Advisory Committee (ERAC) chaired by Emeritus Professor
David Groves, who is a world renowned expert in Archaean
orogenic gold deposits. The Company is also funding a PhD
student at the University of Western Australia (UWA), to
undertake an “Assessment of the potential orogenic gold
endowment of the Sandstone Greenstone Belt using a mineral
systems approach”. This research is being co-supervised by
Professors Allan Trench and Michael Dentith of the Centre for
Exploration Targeting, (UWA).
In support of Alto’s short-term strategy to undertake early
stage mining of known resources to provide an early cashflow,
two Mining Lease Applications (MLA’s) were lodged with the
WA Department of Mines, Industry Regulation and Safety
(DMIRS) in June 2017. The Lord Nelson MLA57/640 covers
~286 hectares, and the Lord Henry MLA57/639 covers ~185
hectares. The two MLA’s are large enough to accommodate
possible extensions to the open pits, existing and future
waste dumps, and infrastructure that may be required for the
resumption of mining.
Review of Operations
Introduction
Alto Metals Limited (ASX: AME) is an Australian public company
which listed on the Australian Securities Exchange on the 20
December 2012 as Enterprise Uranium Limited (ASX: ENU).
Between 2013 and 2014, uranium was the primary exploration
target and a portfolio of projects prospective for sand hosted
uranium deposits was assembled and explored.
On 23 March 2016, an agreement was signed to purchase
Sandstone Exploration Pty Ltd, the owner of the Sandstone
Gold Project, located 600km northeast of Perth in Western
Australia. Shareholders subsequently approved a company
name change from Enterprise Uranium Limited to Alto Metals
Limited, and in June 2016 Alto completed the purchase of
Sandstone Exploration Pty Ltd.
In July 2016, Alto raised $1.703 million for its first Sandstone
drilling program via a Shareholder Purchase Plan (“SPP”) at
5.9 cents/share which closed fully subscribed, and issued
28,779,603 new shares to eligible shareholders.
Sandstone Gold Project
In
June 2016, Alto’s Sandstone Gold Project covered
approximately 80% of the Archaean Sandstone Greenstone Belt
and comprised five Exploration Licence applications [E57/1029
– 1031, E57/1033 & E57/1041] and two Prospecting Licences
[P57/1377-1378] for a total landholding of ~723km². The
tenements were subsequently granted on 23 September
2016, and during the year, Alto has added further tenements
bringing the total area under title to approximately 800km2.
Alto’s short-term strategy is to delineate at least 1 million
ounces of gold in shallow deposits (Vanguard, Indomitable, Lord
Nelson, Lord Henry, and others) that can be mined profitably
and supply cash to fund ongoing exploration and discovery of
new gold deposits. Alto is also investigating opportunities to
enter into 50:50 profit share mining agreements with mining
companies which have operating gold treatment facilities
within a 200km radius of Sandstone.
To support Alto’s main objective, since the grant of the
tenements in late 2016, it has undertaken:
acquisition and interpretation of high-resolution airborne
magnetic and radiometric data,
litho-structural interpretation of the geology of the
greenstone belt and gold deposit targeting,
Induced Polarisation (IP) surveys where appropriate (to
detect large deep sulphide systems)
estimation of remaining Mineral Resources at Lord Nelson
and Lord Henry deposits to JORC (2012) standard by
Snowden Mining Industry Consultants (Snowden),
aircore (AC) drill testing of seven prospects and reverse
circulation (RC) drill testing of five prospects.
•
•
•
•
•
2
Alto Metals Limited Review of Operations
Alto envisages developing the Lords Project under a 50:50
profit-sharing mining agreement with one of several gold
producers in the region that have surplus milling capacity.
These types of arrangements are relatively common in the WA
Goldfields as they allow for the development of smaller gold
deposits at minimal capital cost.
Alto’s Mineral Resource inventory estimated by Snowden
Mining Industry Consultants is shown in Tables 1 & 2.
Lord Nelson Resource Model
3
Annual Report 2017 Review of Operations
Lord Henry Resource Model
4
Alto Metals Limited Sandstone Mineral Resources JORC (2012)
Prospect
Category
Lord Nelson
Lord Henry
Lord Henry Total
TOTAL (JORC 2012)
Inferred
Indicated
Inferred
Sandstone Mineral Resources JORC (2004)
Prospect
Category
Indicated
Inferred
Inferred
Inferred
Indicated
Inferred
Inferred
Inferred
Inferred
Inferred
Indicated
Havilah
Bull Oak Reefs
Vanguard
Ladybird
Maninga Marley
Sandstone North
Oroya Underground
Tigermoth
Piper
TOTAL (JORC 2004)
Total Indicated
Total Inferred
TOTAL (JORC 2004)
Review of Operations
Kt
983
1,238
110
1,348
2,331
Kt
285
41
390
330
118
40
80
77
63
561
91
2,076
494
1,582
2,076
Grade
2.2
1.6
1.3
1.6
1.8
Grade
1.7
2.1
1.5
1.6
2.5
2.1
3.1
2.0
5.3
1.7
1.4
1.9
1.8
1.9
1.9
KOz
68
65
4
69
137
KOz
15.5
2.8
18.8
16.7
9.6
2.7
8.0
4.9
10.7
31.2
4.0
125
29
96
125
Note 1. JORC (2012) Mineral Resources estimated by Snowden in 2017 for Alto Metals Ltd.
Full details of the 2017 Lord Nelson & Lord Henry Mineral Resource Estimates are available from the Alto Website:
http://www.asx.com.au/asxpdf/20170428/pdf/43htcqvxrlmp2w.pdf
http://www.asx.com.au/asxpdf/20170516/pdf/43j8w1mhq5290t.pdf
Note 2: JORC (2004) Mineral Resources estimated by Snowden in 2007 for Troy Resources NL.
A Competent Person has not completed sufficient work to accurately classify the JORC 2004 estimates as Mineral Resources
under the JORC 2012 Code. Historic exploration and drilling data and Mineral Resources (JORC 2004) were reported in Snowden
Mining Industry Consultants, June 2007, “National Instrument 43-101 Technical Report-Sandstone, for Troy Resources NL.” TRY:
ASX release 10 December 2007, Page 139. Alto understands that this information has not been updated since to comply with
the JORC Code 2012, and Alto is not aware of any new information or data that materially affects the information provided in
the Snowden 2007 NI43-101 Report, and considers that all of the previous assumptions and technical parameters underpinning
the estimates in the previous reports have not materially changed.
Note 3: There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that
further exploration work will result in the conversion of Inferred Mineral Resources to Indicated Mineral Resources.
5
Annual Report 2017
Review of Operations
Initial Drill Testing of Sandstone Gold Targets
In the nine months following the grant of the Sandstone
Project tenements, Alto has undertaken aircore drilling (120
holes for 10,989m) at the following prospects: Indomitable,
Piper, Tigermoth, Bulchina, Vanguard North and Vanguard to
test for shallow oxide hosted gold mineralisation. High grade
assay results were returned from Indomitable, Vanguard North
and Vanguard prospects. Following these encouraging assay
results, Alto undertook RC drilling at these prospects, with
numerous high grade gold intersections being attained. To
date, Alto has drilled 36 RC holes for 4,858m. Significant gold
assay results are shown in Tables 3–6.
At Vanguard, the primary mineralisation is hosted in dolerite,
which is considered a favourable host rock for larger gold
deposits in Western Australia. Alto has re-appraised the
broader Sandstone Greenstone Belt, and re-prioritised its
exploration strategy to focus on the “Alpha Mafic Volcanic
Domain”. This zone encompasses the 20km long mafic
volcanic sequence from Indomitable to Maninga Marley. Alto
is now designing a drilling program to extend the Vanguard
mineralisation to the southwest and northeast, and to test
the dolerite unit hosting Maninga Marley. Multiple Programs
of Work have been lodged with a view to this RC drilling
commencing in the latter half of 2017.
Sandstone Geology Interpretation – Alpha Domain 1st Priority
6
Alto Metals Limited RC Drilling at Vanguard 2017
See Tables 3–6 below.
Table 3. Vanguard North Prospect – Significant Aircore Assay Results
Hole
SAC105
incl.
SAC107
SAC108
incl.
SAC109
incl.
SAC112
SAC113
SAC115
incl.
SAC116
SAC117
and
incl.
SAC118
SAC119
and
East
North
Hole Depth
From
(m)
To
(m)
Interval
(m)
Grade
(g/t Au)
740495
6884952
740563
740543
6884979
6884951
740515
6884916
740576
740551
740632
740606
740578
6884928
6884893
6884929
6884895
6884864
740616
740598
6884850
6884825
72
71
63
73
65
72
67
71
72
76
82
64
66
30
45
45
65
66
34
63
28
28
47
50
65
65
56
71
74
68
67
31
48
46
67
67
35
64
31
29
50
51
69
66
57
77
75
4
1
1
3
1
2
1
1
1
3
1
3
1
4
1
1
6
1
5.2
18.4
2.1
8.8
22.2
4.9
8
4.8
2.2
8.2
21.7
2.1
2.4
5.4
19.4
2.2
3.4
17.8
7
Annual Report 2017Review of Operations
Table 4. Vanguard Prospect – Significant Aircore Assay Results
East
North
Hole Depth
From
(m)
To
(m)
Interval
(m)
Grade
(g/t Au)
740697
6884154
740747
6884214
740773
6884247
740800
6884224
740831
6884188
740853
6884216
74
79
76
58
61
64
27
29
52
54
33
36
9
16
17
40
42
47
53
56
57
Table 5. Significant Vanguard RC Assay Result
East
Local
29900
30084
North
Local
9312
9290
120
132
Hole Depth
From (m)
30119
9291
150
30150
9291
30113
9248
30051
29920
29956
9329
9092
9089
180
156
138
96
90
30
30
58
56
37
37
10
26
18
49
43
48
61
59
58
To
(m)
61
56
24
58
55
55
36
99
98
97
108
105
108
130
125
128
56
55
140
138
128
131
135
135
80
137
31
47
43
46
59
56
54
3
1
6
2
4
1
1
10
1
9
2
1
8
3
1
3.9
9.7
2.8
5.7
3.6
12.6
8.5
2.2
6.1
2.0
3.2
8.0
2.6
5.2
9.5
Interval
(m)
Grade
(g/t Au)
7
1
1
6
2
1
4
12
4
1
5
1
1
11
1
1
2
1
18
12
1
1
2
1
11
1
1
8
1
2
7
3
1
2.3
5.8
4.5
5.3
9.2
11.1
2.7
3.0
5.8
11.1
4.8
5.8
8.6
2.4
6.6
7.6
5.5
8.9
4.3
5.6
10.6
7.5
12.2
14.7
2.2
3.5
6.3
3.6
5.3
7.2
5.9
11.6
26.8
54
55
23
52
53
54
32
87
94
96
103
104
107
119
124
127
54
54
122
126
127
130
133
134
69
136
30
39
42
44
52
53
53
Hole
SAC090
incl.
SAC092
incl.
SAC093
incl.
SAC096
and
incl.
SAC098
incl.
and
SAC099
incl.
incl.
Hole
SRC012
incl.
SRC013
and
incl.
incl.
SRC014
and
incl.
incl.
and
incl.
and
SRC015
incl.
and
SRC016
incl.
and
incl.
incl.
and
and
incl.
SRC017
and
SRC018
SRC019
incl.
and
and
incl.
incl.
8
Alto Metals LimitedReview of Operations
“the oxide gold deposits are the geochemical
anomalies that lead to the discovery of the million
ounce deposits at depth...”
Drilling at Indomitable
Table 6. Indomitable Prospect – Significant Aircore Assay Results
Hole
AHMAC009
incl.
AHMAC010
incl.
and
AHMAC015
and
incl.
and
AHMAC019
incl.
and
incl.
AHMAC025
East
North
Hole Depth
733180
6892295
733220
6892295
138
113
733180
6892260
126
733280
6892180
136
734660
6892460
80
From
(m)
120
121
60
65
94
44
48
44
100
64
64
77
79
52
To
(m)
123
122
104
73
104
51
49
50
111
73
67
82
81
56
Interval
(m)
Grade
(g/t Au)
3
1
44
7
10
7
1
2
11
9
3
5
2
4
3.7
6.1
2.0
3.8
3.1
4.0
13.3
5.8
2.3
4.1
10.2
6.4
14.4
2.9
9
Annual Report 2017Review of Operations OTHER PROJECTS
Competent Persons Statement
The Company holds granted tenements and tenement
applications in Western Australia over three project areas
(Yalgoo, Gascoyne and Marmion) prospective for sand hosted
“in situ recovery” style (ISR) and calcrete hosted uranium
deposits. The current strategy is to maintain this uranium
exploration portfolio while the Company seeks an opportunity
to divest the projects. However, as no active exploration
is being carried out at present on these properties the
tenements may be surrendered or tenement applications may
be withdrawn as appropriate.
The information in this Report that relates to Exploration
Targets and Exploration Results is based on information
compiled by Mr Dermot Ryan, who is an employee of Xserv
Pty Ltd and a Director and security holder of the Company.
Mr Ryan is a Fellow of the Australasian Institute of Mining
and Metallurgy and a Fellow 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 (JORC) Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves. Mr Ryan consents to the inclusion in this report of
the matters based on information in the form and context in
which it appears.
10
Alto Metals LimitedReview of Operations Directors’ Report
Your Directors present their report on Alto Metals Limited (“Alto” or “Company”) and its controlled entities (“Group”) for the
financial year ended 30 June 2017.
Directors
The names of Directors in office at any time during or since the end of the period are:
Dr Jingbin Wang (appointed 12 October 2016)
Mr Dermot Ryan
Mr Stephen Stone
Mr Terry Wheeler (appointed 2 December 2016)
Ms Anna Mao (resigned 12 October 2016)
Mr William Robertson (resigned 2 December 2016)
Directors have been in office since the start of the financial period to the date of this Report unless otherwise stated.
Information on Directors
Dr Jingbin Wang
— Non-Executive Chairman, appointed 12 October 2016
Experience
— Dr Wang is a geologist with extensive international minerals experience, and has been Chairman
since 2004 of Sinotech Minerals Exploration Co. Ltd. He has a B.Sc in Mineral Prospecting and
Exploration from Central-South University of Technology Changsha, China, and an MSc and PhD in
magmatic petrology and economic geology from the same university.
He has been President of the prestigious Beijing Institute of Geology for Mineral Resources since
2002, and is an accomplished mining team leader with a track record of discovering major deposits
around the world. Dr Wang has also held the title of Vice-President of the China Nonferrous Metals
Industry Association since 2008 and was Executive Director of China Nonferrous Metals Resource
Geological Survey from 2003 -2015. Dr Wang is a leader in the non-ferrous metals industry in
China with over 30 years’ experience in mineral exploration and mining.
Special Responsibilities
— Member of the Remuneration & Nomination Committee and Member of the Audit & Risk
Committee.
Directorships held in
— Enterprise Metals Ltd (July 2011 – 12 October 2016)
other listed entities
East Africa Metals Limited (TSX) (June 2013 – present)
Orca Gold Inc (TSX) (June 2009 – present)
Nickel North Exploration Corp. (TSX) (August 2012 – present)
Mr Dermot Ryan
— Executive Director, appointed 8 August 2012
Experience
— Mr Ryan spent 20 years with CRA Ltd from 1977-1996, including 10 years as Chief Geologist for
CRA Exploration in various states of Australia. He was GM Exploration for Great Central Mines Ltd
(later Normandy Yandal Operations Ltd) from late 1996-2001, and for the past 10 years has run
a private mineral exploration consulting Company (XServ Pty Ltd). He is a Fellow of the AusIMM,
(CP), a Fellow of the AIG, and holds a BApSc (Geol). Acting CEO since 26 June 2013.
Special Responsibilities
— Member of the Remuneration & Nomination Committee
Directorships held in
— Legend Mining Limited (May 2005 – October 2013)
other listed entities
Enterprise Metals Limited (October 2008 – present). There have been no other listed entity
directorships in the last 3 years.
11
Annual Report 2017 Directors’ Report
Mr Stephen Stone
— Non-Executive Director, appointed 23 June 2016
Experience
— Mr Stone is currently Managing Director of the ASX Listed Azumah Resources Limited. He graduated
with honours in Mining Geology from University of Wales, Cardiff and has since gained more
than 30 years’ operating, project evaluation, executive management and corporate development
experience in the international mining and exploration industry.
Mr Stone worked for several years at the large open pit and underground copper mines of the
Zambian Copperbelt. He came to Australia in 1986 and since then has been involved in the
formation and management of several junior ASX listed exploration companies.
Mr Stone is a Member of the Australasian Institute of Mining and Metallurgy, a Fellow of the
Australian Institute of Company Directors and a member of the Editorial Board of International
Mining Magazine.
Special Responsibilities
— Chairman of the Remuneration & Nomination Committee and Chairman of the Audit & Risk
Committee.
Directorships held in
— Managing Director of Azumah Resources Limited since November 2006
other listed entities
Director of Castle Minerals Limited since 18 January 2016.
Mr Terry Wheeler
— Independent Non-Executive Director, appointed 9 September 2016
Experience
— Mr Wheeler commenced employment as a laboratory assistant at the DSIR (Department of
Scientific & Industrial Research) in London in 1958 and achieved his academic qualifications
whilst gaining excellent practical work experience. He migrated to Perth, Western Australia, in
1967 and joined Western Mining Corporation, where his mineral analysis experience was gained,
and with further study and qualifications he was promoted to Chief Chemist of the Kambalda
Nickel Operation in the Eastern Goldfields.
Terry and his wife Christina established Genalysis Laboratory Services in 1975, and grew the
company into one of the largest and most successful analytical companies in the southern
hemisphere with over 300 technical staff. In 2007, Genalysis Laboratory Services was purchased
by Intertek Group plc.
Terry is a Fellow of the Royal Australian Chemical Institute, a Member of the Australasian Institute
of Mining and Metallurgy Inc., a Member of the Association of Exploration Geochemists, and an
Associate Member of the International Association of Geoanalysts.
Special Responsibilities
— Member of the Remuneration & Nomination Committee and Member of the Audit & Risk Committee.
Directorships held in
— Nil
other listed entities
Ms Anna Mao resigned from the board on 12 October 2016, and Mr William Robertson resigned from the board on 2 December
2016.
Company Secretary
The following persons held the position of Company Secretary during or since the end of the financial period:
Mr Sam Middlemas was appointed Company Secretary and Chief Financial Officer on 15 July 2016. Sam is a chartered accountant
with more than 15 years’ experience in various financial and company secretarial roles with a number of listed public companies
operating in the resources sector. He is the principal of a corporate advisory company which provides financial and secretarial
services specialising in capital raisings and initial public offerings. Previously Mr Middlemas worked for an international
accountancy firm. His fields of expertise include corporate secretarial practice, financial and management reporting in the mining
industry, treasury and cash flow management and corporate governance.
Ms Susan Hunter resigned as Company Secretary 15 July 2016.
12
Alto Metals Limited Directors’ Report
Principal Activities
The principal activities of the Group during the financial period were the exploration of a number of gold and uranium tenements
in Western Australia.
Significant Changes in State of Affairs
At the end of 2016 financial year, the Group acquired the Sandstone gold project and refocused its activities on the gold sector,
and changed its name from Enterprise Uranium Limited to Alto Metals Limited.
During the current year the Company raised $2.6 million in funds through a Share Purchase Plan in July 2016 and a placement in
October 2016, to sophisticated investors to fund exploration on the Sandstone project.
Exploration activities will continue at the Sandstone Gold project to increase the current Mineral Resource inventory.
Operating Results
The consolidated loss of the Group after providing for income tax amounted to $1,482,442 (2016: $1,921,795). The consolidated
loss includes an amount of $450,526 (2016: $1,942,656) related to exploration expenses which have been written off during the
year following a detailed exploration review.
Dividends Paid or Recommended
No dividend has been recommended.
REVIEW OF OPERATIONS
SANDSTONE GOLD PROJECT
On 23rd June 2016, Alto announced that it had completed the acquisition of all of the issued capital of Sandstone Exploration Pty
Ltd (Sandstone), whose only asset was the Sandstone Gold Project located approximately 600km northeast of Perth in the East
Murchison Mineral Field of Western Australia.
The Company issued 19 million ordinary fully paid Alto shares to the vendors, and a sum of $500,000 cash, to complete the
acquisition. The vendors have retained a 2% gross royalty, the right to fossick down to 2m below the surface for all minerals and
metals including gold nuggets, and were issued 25 million performance shares. The performance shares convert on a one-for-
one basis into Alto fully paid ordinary shares upon Alto confirming total combined Inferred and / or Indicated Mineral Resources
and / or Ore Reserves of at least 500,000oz gold (or equivalent for other minerals or metals) in aggregate, on one or more of
the Tenements.
The Sandstone Gold Project tenure at that stage covered approximately 80% of the Archaean Sandstone Greenstone Belt
and comprised five Exploration Licence applications [E57/1029 – 1031, E57/1033 & E57/1044] and two Prospecting Licences
[P57/1377-1378] for a total landholding of ~723km². The tenements were subsequently granted on 23 September 2016, and
during the year, Alto has added further tenements bringing the total area under title to approximately 800km2.
Alto’s ultimate objective is to discover 5 million ounces in high-grade gold deposits which will support profitable mining operations
over a 10 – 20 year period at Sandstone. Its short term strategy is to delineate at least 1 million ounces of gold in shallow
deposits (Vanguard, Indomitable, Lord Nelson, Lord Henry, and others) that can be mined profitably and supply cash to fund
ongoing exploration and discovery of new gold deposits. Alto is also investigating opportunities to enter into 50:50 profit share
mining agreements with mining companies which have operating gold treatment facilities within a 200km radius of Sandstone.
13
Annual Report 2017 Directors’ Report
To support Alto’s main objective, since the grant of the tenements in late 2016, it has undertaken:
• acquisition and interpretation of high-resolution airborne magnetic and radiometric data,
•
•
litho-structural interpretation of the geology of the greenstone belt and gold deposit targeting,
Induced Polarisation (IP) surveys where appropriate (to detect large deep sulphide systems)
• estimation of remaining Mineral Resources at Lord Nelson and Lord Henry deposits to JORC (2012) standard by
Snowden Mining Industry Consultants (Snowden),
• aircore (AC) drill testing of seven prospects and
•
reverse circulation (RC) drill testing of five prospects.
The Company has also established an External Research Advisory Committee (ERAC) chaired by Emeritus Professor David Groves,
who is a world renowned expert in Archaean orogenic gold deposits. The Company is also funding a PhD student at the
University of Western Australia (UWA), to undertake an “Assessment of the potential orogenic gold endowment of the Sandstone
Greenstone Belt using a mineral systems approach”. This research is being co-supervised by Professors Allan Trench and Michael
Dentith of the Centre for Exploration Targeting (UWA).
In support of Alto’s short term strategy to undertake early stage mining of known resources to provide an early cashflow, two
Mining Lease Applications (MLA’s) were lodged with the WA Department of Mines, Industry Regulation and Safety (DMIRS) in June
2017. The Lord Nelson MLA57/640 covers ~286 hectares, and the Lord Henry MLA57/639 covers ~185 hectares. The two MLA’s
are large enough to accommodate possible extensions to the open pits, existing and future waste dumps, and infrastructure that
may be required for the resumption of mining.
Alto envisages developing the Lords Project under a 50:50 profit-sharing mining agreement with one of several gold producers
in the region that have surplus milling capacity. These types of arrangements are relatively common in the WA Goldfields as they
allow for the development of smaller gold deposits at minimal capital cost.
14
Alto Metals Limited
Alto’s Mineral Resource inventory estimated by Snowden Mining Industry Consultants is shown in Tables 1 & 2 below.
Directors’ Report
Table 1. Sandstone Gold Project - Mineral Resources JORC (2012)*
Prospect
Lord Nelson
Lord Henry
Lord Henry Total
TOTAL (JORC 2012)
Category
Inferred
Indicated
Tonnes
(,000)
983
1,238
1,348
2,331
Table 2. Sandstone Gold Project - Mineral Resources JORC (2004)**
Category
Indicated
Inferred
Inferred
Inferred
Indicated
Inferred
Inferred
Indicated
Inferred
Inferred
Inferred
Prospect
Havilah
Maninga Marley
Vanguard
Ladybird
Tigermoth
Piper
Bull Oak Reefs
Sandstone North
Oroya Underground
TOTAL (JORC 2004)
Total Indicated
Total Inferred
TOTAL (JORC 2004)
Tonnes
(,000)
285
41
80
330
118
40
561
91
390
77
63
2,076
494
1,582
2,076
Grade (g/t)
2.2
1.6
1.6
1.8
Grade (g/t)
1.7
2.1
3.1
1.6
2.5
2.1
1.7
1.4
1.5
2.0
5.3
1.9
1.8
1.9
1.9
Ounces
(,000)
68
65
69
137
Ounces
(,000)
15.5
2.8
8.0
16.7
9.6
2.7
31.2
4.0
18.8
4.9
10.7
125
29
96
125
*Note 1. JORC (2012) Mineral Resources estimated by Snowden in 2017 for Alto Metals Ltd.
Full details of the 2017 Lord Nelson & Lord Henry Mineral Resource Estimates are available from the Alto Website:
http://www.asx.com.au/asxpdf/20170428/pdf/43htcqvxrlmp2w.pdf
http://www.asx.com.au/asxpdf/20170516/pdf/43j8w1mhq5290t.pdf
**Note 2: JORC (2004) Mineral Resources estimated by Snowden in 2007 for Troy Resources NL.
A Competent Person has not completed sufficient work to accurately classify the JORC 2004 estimates as Mineral Resources under
the JORC 2012 Code. Historic exploration and drilling data and Mineral Resources (JORC 2004) were reported in Snowden Mining
Industry Consultants, June 2007, “National Instrument 43-101 Technical Report-Sandstone, for Troy Resources NL.” TRY: ASX
release 10 December 2007, Page 139. Alto understands that this information has not been updated since to comply with the JORC
Code 2012, and Alto is not aware of any new information or data that materially affects the information provided in the Snowden
2007 NI43-101 Report, and considers that all of the previous assumptions and technical parameters underpinning the estimates
in the previous reports have not materially changed.
Note 3: There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that
further exploration work will result in the conversion of Inferred Mineral Resources to Indicated Mineral Resources.
15
Annual Report 2017
Directors’ Report
Initial Drill Testing of Sandstone Project Targets
In the nine months since the Sandstone Project tenements were granted, Alto has undertaken aircore (AC) drilling (120 holes for
10,989m) at the following prospects: Indomitable, Piper, Tigermoth, Bulchina, Vanguard North and Vanguard to test for shallow
oxide hosted gold mineralisation. High grade assay results were returned from Indomitable, Vanguard North and Vanguard. See
Tables 3 – 5 of the 2017 Annual Report.
Following these encouraging assay results, Alto undertook RC drilling at these prospects, with numerous high grade gold
intersections being attained. To date, Alto has drilled 36 RC holes for 4,858m. Significant RC gold assay results returned from
Vanguard are shown in Table 6 of the 2017 Annual Report.
From the Vanguard RC results, it is apparent that the primary mineralisation at Vanguard is hosted in dolerite, which is considered
a favourable host rock for larger gold deposits in Western Australia. Alto has re-appraised the broader Sandstone Greenstone Belt,
and re-prioritised its exploration strategy to focus on the “Alpha Mafic Volcanic Domain”. This zone encompasses the 20km long
mafic volcanic sequence from Indomitable to Maninga Marley. Alto is now designing a drilling program to extend the Vanguard
mineralisation to the southwest and northeast, and to test the dolerite unit hosting Maninga Marley. Multiple Programs of Work
have been lodged with a view to this RC drilling commencing in the latter half of 2017.
URANIUM PROJECTS
The Company holds granted tenements and tenement applications in Western Australia over three project areas (Yalgoo, Gascoyne
and Marmion) prospective for sand hosted “in situ recovery” style (ISR) and calcrete hosted uranium deposits. The current strategy
is to maintain this uranium exploration portfolio while the Company seeks an opportunity to divest the projects. However, as no
active exploration is being carried out at present on these properties the tenements may be surrendered or tenement applications
may be withdrawn as appropriate.
Competent Persons Statement
The information in this Report that relates to Exploration Targets and Exploration Results is based on information compiled by
Mr Dermot Ryan, who is an employee of Xserv Pty Ltd and a Director and security holder of the Company. Mr Ryan is a Fellow
of the Australasian Institute of Mining and Metallurgy and a Fellow 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 (JORC)
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Ryan consents to the inclusion
in this report of the matters based on information in the form and context in which it appears.
Financial Position
The net assets of the Group at 30 June 2017 are $7,883,936 (2016: $7,117,768).
After Reporting Date Events
There has not arisen since the end of the financial year any item, transaction or event of a material and unusual nature likely, in
the opinion of the Directors of the Company to affect substantially the operations of the Company, the results of those operations
or the state of affairs of the Company in subsequent financial years.
Future developments, prospects and business strategies
The next year exploration activities will be focussed on building up the gold resource at the Sandstone Gold Project.
Exploration Risk
Mineral exploration and development are high-risk undertakings, and there is no assurance that exploration of the Tenements
will result in the discovery of an economic deposit. Even if an apparently viable deposit is identified there is no guarantee that it
can be economically exploited.
The future exploration activities of the Company may be affected by a range of factors including geological conditions, limitations
on activities due to permitting requirements, availability of appropriate exploration equipment, exploration costs, seasonal
weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents and many other
factors beyond the control of the Company.
16
Alto Metals Limited Meetings of Directors
During the financial period, six meetings of Directors (including committees of Directors) were held. Attendances by each Director
during the period were as follows:
Directors’ Report
DIRECTORS’ MEETINGS
REMUNERATION & NOMINATION
COMMITTEE
AUDIT & RISK
COMMITTEE
Number
eligible to
attend
Number
Attended
Number
eligible to
attend
Number
Attended
Number
eligible to
attend
Number
Attended
4
6
6
3
2
3
4
6
6
3
2
3
1
1
1
1
0
0
1
1
1
1
0
0
1
2
2
1
1
1
1
2
2
1
1
1
Dr Jingbin Wang (1)
Dermot Ryan
Stephen Stone
Terry Wheeler (2)
Anna Mao (3)
William Robertson (4)
(1) Appointed 12 October 2016
(2) Appointed 2 December 2016
(3) Resigned 12 October 2016
(4) Resigned 2 December 2016
Indemnifying Officers or Auditor
During or since the end of the financial period the Company has given an indemnity or entered into an agreement to indemnify,
or paid or agreed to pay insurance premiums as follows:
•
•
The Company has entered into agreements to indemnify all Directors and provide access to documents, against any liability
arising from a claim brought by a third party against the Company. The agreement provides for the Company to pay all
damages and costs which may be awarded against the Directors.
The Company has paid premiums to insure each of the Directors against liabilities for costs and expenses incurred by them
in defending any legal proceedings arising out of their conduct while acting in the capacity of Director of the Company, other
than conduct involving a wilful breach of duty in relation to the Company. The amount of the premium was $6,577 (2016:
$6,742).
• No indemnity has been given to the Company’s auditors.
Options/Performance Shares
At the date of this report, there are nil options on issue over ordinary shares of Alto Metals Limited (2016 – Nil).
No person entitled to exercise the option has or has any right by virtue of the option to participate in any share issue of any other
body corporate.
The Company issued 25,000,000 performance shares for nil consideration to the vendors of Sandstone Exploration Pty Ltd following
approval at a shareholders meeting on 20 May 2016. These performance shares will convert into 25,000,000 fully paid ordinary
shares once an announcement of an inferred JORC 2012 Mineral Resource is made of a tonnage and grade to establish contained
metal of at least 500,000 ounces of gold (or other metal equivalent) on the Sandstone tenements any time prior to 23 June 2021.
17
Annual Report 2017 Directors’ Report
The Company issued 10,750,000 performance rights to Directors and employees on 9 December 2016 following approval at the
Annual General Meeting of shareholders on 30 November 2016. The Performance rights were issued in four tranches with the
following hurdle rates:
Performance
Rights granted to
Directors and Staff
Class
Expiry Date
Performance Condition
A
B
C
D
2,687,500
9 December 2017
2,687,500
9 December 2018
the Company’s announcing to the ASX of an Inferred Mineral Resource (as
defined by a Competent Person in accordance with JORC Code 2012) of at
least 500,000 oz Au of at least 1.5g/t
the Company’s announcing to the ASX of an Inferred Mineral Resource (as
defined by a Competent Person in accordance with JORC Code 2012) of at
least 1,000,000 oz Au of at least 1.5g/t
2,687,500
2,687,500
9 June 2019
the Company’s announcing to the ASX of a 20,000 oz Au sold
9 December 2019
the Company’s announcing to the ASX 50,000 oz Au sold
Environmental Regulations
The Company is subject to significant environmental regulation in respect to its exploration activities.
The Company aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and
is in compliance with all environmental legislation. The directors of the Company are not aware of any breach of environmental
legislation for the period under review.
Non-audit Services
The following nonaudit services were provided by the entity’s auditor, Grant Thornton Audit Pty Ltd, or associated entities. The
directors are satisfied that the provision of nonaudit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set
out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity
of the auditor;
None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
Grant Thornton Audit Pty Ltd, or associated entities, received or are due to receive the following amounts for the provision of
nonaudit services:
Tax compliance services
Proceedings on Behalf of Company
2017
$
3,900
2016
$
5,150
No person has applied for leave of Court to bring proceedings on behalf of the Company or 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 any part of those proceedings.
The Company was not a party to any such proceedings during the period.
18
Alto Metals Limited Directors’ Report
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for each Director of Alto Metals Limited and other key management
personnel.
A. Remuneration Policy
The remuneration policy of Alto Metals Limited has been designed to align director and executive objectives with shareholder
and business objectives by providing a fixed remuneration component, and offering specific long-term incentives based on key
performance areas affecting the Company’s financial results. The Board of Alto Metals Limited believes the remuneration policy
to be appropriate and effective in its ability to attract and retain the best management and directors to run and manage the
Company, as well as create goal congruence between directors, executives and shareholders.
The Board’s policy for determining the nature and amount of remuneration for Board members and senior executives of the
Company is as follows:
The remuneration policy, setting the terms and conditions for the executive Directors and other senior executives, was developed
by the Remuneration & Nomination Committee and approved by the Board. All executives receive a base salary (which is based
on factors such as length of service and experience), superannuation, and options as performance incentives. The Remuneration &
Nomination Committee reviews executive packages annually by reference to the Company’s performance, executive performance,
and comparable information from industry sectors and other listed companies in similar industries.
Executives are also entitled to participate in the employee share and option arrangements.
All remuneration paid to Directors and executives is valued at the cost to the Company and expensed. Options given to Directors
and employees are valued using the Black-Scholes methodology.
The Board policy is to remunerate Non-Executive Directors at the lower end of market rates for comparable companies for
time, commitment, and responsibilities. The Remuneration & Nomination Committee determines payments to the Non-Executive
Directors and reviews their remuneration annually based on market practice, duties and accountability. Independent external
advice is sought when required. The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject
to approval by shareholders at the Annual General Meeting. Fees for non-Executive Directors are not linked to the performance
of the Company. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in
the Company.
There is no relationship between KMP remuneration and the performance of the Company.
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment objectives
and Directors’ and executives’ performance. The Company believes this policy will be effective in increasing shareholder wealth.
No options have been issued to Directors in the period under review to the date of this report.
Use of remuneration consultants
The Company did not employ the services of any remuneration consultants during the financial period ended 30 June 2017.
Voting and comments made at the Company’s 2017 Annual General Meeting
The Company received approximately 99% of “yes” votes based on the number of proxy votes received on its remuneration
report for the 2016 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its
remuneration practices.
B. Details of Remuneration for Period Ended 30 June 2017
There were no cash bonuses paid during the period and there are no set performance criteria for achieving cash bonuses. The
following table of benefits and payment details, in respect to the financial period, the components of remuneration for each
member of the key management personnel of the Company.
19
Annual Report 2017 Directors’ Report
Table of Benefits and Payments for the Period Ended 30 June 2017
Key Management
Personnel
2017
Jingbin Wang –
Chairperson (1)
Dermot Ryan –
Managing Director (2)
Stephen Stone –
Non-Executive Director (3)
Terry Wheeler –
Non-Executive Director (4)
Anna Mao –
former Chairperson (5)
William Robertson –
Non-Executive Director (6)
Sam Middlemas –
Company Secretary (7)
Total
2016
Dermot Ryan –
Managing Director (2)
Dr Zhen Huang –
Non-Executive Director (5)
William Robertson –
Non-Executive Director (6)
Stephen Stone –
Non-Executive Director (3)
Susan Hunter –
Company Secretary (8)
Short-term benefits
Salary, fees
and leave
Cash from
other activities
Post-
employment
benefits
Equity-settled
share-based
payments
Superannuation
Equity
$
$
$
Total
$
9,308
51,306
Remuneration
performance
based
%
18.2
–
–
–
–
–
–
–
–
2,024
–
46,541
274,401
16.9
6,981
46,981
14.6
–
–
23,328
14,000
–
–
$
41,998
227,860
40,000
21,304
14,000
15,221
10,020
1,446
11,635
38,322
30.3
65,571
–
–
9,308
74,879
–
425,954
10,020
3,470
83,774
523,217
14.4
Anna Mao – Chairperson (5)
49,000
148,577
10,000
–
–
–
–
–
–
7,000
–
–
56,000
148,577
10,000
31,530
5,400
3,470
5,000
45,400
765
32,968
–
–
–
–
–
–
765
32,968
–
–
–
–
–
–
–
Total
272,840
5,400
3,470
12,000
293,710
(1) Dr Jingbin Wang was appointed to the board on 12 October 2016.
(2) The amount shown above is the amount paid for services provided by Dermot Ryan through his private company Xserv Pty Ltd.
(3) Fees paid to Stephen Stone are paid to his private company Westone Pty Ltd.
(4) Terry Wheeler was appointed to the board on 2 December 2016.
(5)
The amounts shown above are the amounts paid for services provided by Anna Mao and Zhen Huang through their private
company Mega Capital Resources Ltd. Anna Mao resigned from the board on 12 October 2016, Zhen Huang resigned from
the Board on 1 October 2015
The amounts shown above for William Robinson includes $10,020 (2016-5,400) paid to his private company Value Added
Resources Pty Ltd for geophysical consulting services. Mr Robinson resigned from the Board on 2 December 2016.
Sam Middlemas was appointed Company Secretary on 15 July 2016. All fees are paid to his private company Sparkling
Investments Pty Ltd
Fees paid to Susan Hunter were paid to her private company Hunter Corporate Pty Ltd. Susan resigned as Company Secretary
on 15 July 2016.
(6)
(7)
(8)
20
Alto Metals Limited Directors’ Report
Equity instrument disclosures relating to KMP
(i) Option holdings
No options are held by Key Management Personnel.
(ii) Shareholdings and performance rights
The number of ordinary shares and performance rights in Alto Metals Limited held by each KMP of the Company during the
financial period is as follows:
Balance at
the start of
the period
Received during
the period as
compensation
Other
changes during the
period
Balance at
the end of
the period
Performance Rights issued
during the period and held
at the end of the period
2017
KMP
Ordinary Shares
Jingbin Wang (1)
Dermot Ryan
Stephen Stone
Terry Wheeler (2)
Anna Mao (3)
–
2,415,000
9,500,000
–
318,182
William Robertson (4)
2,137,794
Sam Middlemas (5)
–
Total
14,370,976
–
3,508,474
(712,500)
–
5,923,474
8,787,500
20,832,639
20,832,639
(318,182)
(2,137,794)
263,500
–
–
263,500
21,436,137
35,807,113
–
–
–
–
–
–
–
2016
Anna Mao
Dermot Ryan
William Robertson
Susan Hunter (6)
Stephen Stone
–
318,182
2,415,000
1,874,521
–
227,273
–
–
–
–
–
–
36,000
–
318,182
2,415,000
2,137,794
–
9,500,000
9,500,000
Total
4,289,521
545,455
9,536,000
14,370,976
(1) Appointed 12 October 2016
(2) Appointed 2 December 2016
(3) Resigned 12 October 2016
(4) Resigned 2 December 2016
(5) Appointed 15 July 2016
(6) Resigned on 15 July 2016
Loans to KMP
1,000,000
5,000,000
750,000
–
–
1,250,000
1,000,000
9,000,000
–
–
–
–
–
–
There are no loans made to KMP as at 30 June 2017, nor were any made during the reporting period.
C. Service Agreements
Mr Ryan commenced as a Non-Executive Director on 8th October 2012, and on 26th June 2013 was appointed Executive Director
and Acting CEO. Mr Ryan is remunerated at normal commercial rates pursuant to the terms of an ongoing Consultancy Agreement
with Xserv Pty Ltd to fulfil the duties of Director and Acting CEO. Fees attributable to Mr Ryan’s services for the year ended 30 June
2017 were charged at the rate of $1,039 per day and totalled $227,860 (2016 - $148,577). The agreement may be terminated
(other than for gross misconduct) by either party on three months’ written notice.
21
Annual Report 2017 Annual Report 2017
Alto Metals Limited
Directors’ Report
D. Share-based compensation
Incentive Option Scheme
Options, where appropriate, may be granted under the Alto Metals Limited Employee Share Option Plan (ESOP) adopted on the
5th of October 2012. Options are granted under the plan for no consideration on terms and conditions considered appropriate by
the Board at the time of issue. Options are granted for up to a five year period. Options granted under the plan carry no dividend
or voting rights.
The ability for the employee to exercise the options is restricted in accordance with the terms and conditions detailed in the
ESOP. Each option will automatically lapse if not exercised within five years of the date of issue. The exercise period may also be
affected by other events as detailed in the terms and conditions in the ESOP.
The options vest as specified when the options are issued. No options have been issued under the ESOP in the current period.
Director and Key Management Personnel Options
There were no options issued to Directors and Key Management Personnel during the 2017 financial period.
Performance Rights
The Company issued 10,750,000 performance rights to Directors and employees on 9 December 2016 following approval at the
Annual General Meeting of shareholders on 30 November 2016. 9,000,000 of these rights were issued to KMP. The Performance
rights were issued in four tranches with the following performance conditions and expiry dates:
Performance Rights
granted to KMP
Class
Expiry Date
Performance Condition
A
B
C
D
TOTAL
2,250,000
9 December 2017
2,250,000
9 December 2018
the Company’s announcing to the ASX of an Inferred Mineral Resource (as
defined by a Competent Person in accordance with JORC Code 2012) of at
least 500,000 oz Au of at least 1.5g/t
the Company’s announcing to the ASX of an Inferred Mineral Resource (as
defined by a Competent Person in accordance with JORC Code 2012) of at
least 1,000,000 oz Au of at least 1.5g/t
2,250,000
2,250,000
9,000,000
9 June 2019
the Company’s announcing to the ASX of a 20,000 oz Au sold
9 December 2019
the Company’s announcing to the ASX 50,000 oz Au sold
End of Audited Remuneration Report
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the period ended 30 June 2017 has been received and can be found on the
following page.
This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of
Directors.
Dermot Ryan
Executive Director
Dated this 27th day of September 2017
2222
23
Alto Metals Limited Alto Metals Limited
Annual Report 2017
Auditor’s Independence Declaration
Level 1
10 Kings Park Road
West Perth WA 6005
Correspondence to:
PO Box 570
West Perth WA 6872
Level 1
T +61 8 9480 2000
10 Kings Park Road
F +61 8 9322 7787
West Perth WA 6005
E info.wa@au.gt.com
W www.grantthornton.com.au
Correspondence to:
PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
to the Directors of Alto Metals Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of Alto Metals Limited for the year ended 30 June 2017, I declare that, to the best of
Auditor’s Independence Declaration
my knowledge and belief, there have been:
to the Directors of Alto Metals Limited
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
relation to the audit; and
for the audit of Alto Metals Limited for the year ended 30 June 2017, I declare that, to the best of
no contraventions of any applicable code of professional conduct in relation to the audit.
b
my knowledge and belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
M P Hingeley
Partner - Audit & Assurance
Perth, 27 September 2017
M P Hingeley
Partner - Audit & Assurance
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
Perth, 27 September 2017
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to
one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the
member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not
provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In
the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries
and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Grant Thornton Audit Pty Ltd ACN 130 913 594
Liability limited by a scheme approved under Professional Standards Legislation.
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
16
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to
one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the
member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not
provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In
the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries
and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
23
Liability limited by a scheme approved under Professional Standards Legislation.
16
22
Alto Metals Limited
Annual Report 2017
Consolidated Statement Of Profit Or Loss And Other Comprehensive Income
For the Year Ended 30 June 2017
Other Income
Accounting and Audit Fees
Share Registry and Listing Fees
Employee Benefits Expense
Corporate and Consulting expense
Computers and Software
Depreciation
Insurance
Investor Relations
Legal Fees
Office Rental and Occupation Expenses
Travel and Accommodation
Impairment of AFS Financial Asset
Share Based payments
Impairment of Exploration and Evaluation Expenses
Other Expenses
Loss before income tax
Income tax (expense) / benefit
Loss from operations
Other comprehensive income, net of tax
Items that may be reclassified to profit or loss
Transfer to profit or loss on disposal of AFS financial assets
Revaluation of financial asset
Total comprehensive income / (loss) for the period
Notes
2
3
3
10
19
3
4
16
2017
$
35,172
(33,358)
(38,373)
(299,856)
(117,163)
(29,830)
(34,083)
(15,524)
(65,253)
(9,743)
(34,978)
(36,200)
–
(100,064)
(450,526)
(41,684)
2016
$
312,641
(31,920)
(33,598)
(40,765)
(233,750)
(13,833)
(36,089)
(14,660)
(46,517)
(15,650)
(30,625)
(15,937)
(42,500)
–
(1,942,656)
(50,432)
(1,271,463)
(2,236,291)
(210,979)
314,496
(1,482,442)
(1,921,795)
–
(523,716)
(523,716)
(294,286)
662,858
388,572
Total comprehensive loss attributable to members of the parent entity
(2,006,158)
(1,533,223)
Overall Operations
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
7
7
(1.0)
(1.0)
(2.4)
(2.4)
The accompanying notes form part of these financial statements.
2424
25
Alto Metals Limited Alto Metals Limited
Annual Report 2017
Consolidated Statement of Financial Position
As At 30 June 2017
Current Assets
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
Total Current Assets
Non-Current Assets
Available for sale financial assets
Plant and equipment
Intangible assets
Exploration and evaluation
Total Non-Current Assets
TOTAL ASSETS
Current Liabilities
Trade and other payables
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of these financial statements.
Notes
8
9
10
10
11
12
13
14
15
16
2017
$
928,446
134,580
681,256
Restated
2016
$
1,122,691
56,918
–
1,744,282
1,179,609
–
1,415,952
91,314
39,770
6,360,816
6,491,900
8,236,182
22,034
8,269
4,816,377
6,262,632
7,442,241
352,246
352,246
352,246
324,473
324,473
324,473
7,883,936
7,117,768
18,680,470
16,008,208
257,671
681,323
(11,054,205)
(9,571,763)
7,883,936
7,117,768
24
25
Alto Metals Limited
Annual Report 2017
Consolidated Statement Of Changes In Equity
For the Period Ended 30 June 2017
Notes
Issued
Capital
$
Reserves
$
Restated
Accumulated
Losses
$
Total
$
Balance at 1 July 2015
11,044,157
292,751
(7,649,968)
3,686,940
Loss attributable to members of the entity for the period
Other comprehensive income, net of tax
16
Total comprehensive loss for the period
Transaction with owners, directly in equity
–
–
–
–
(1,921,795)
(1,921,795)
388,572
–
388,572
388,572
(1,921,795)
(1,533,223)
Shares issued during the period
Share issue transaction costs
Share based payments
Balance at 30 June 2016
4,981,010
(16,959)
16
–
–
–
–
–
–
–
4,981,010
(16,959)
–
16,008,208
681,323
(9,571,763)
7,117,768
Balance at 1 July 2016
16,008,208
681,323
(9,571,763)
7,117,768
Notes
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total
$
Loss attributable to members of the entity for the period
Revaluation of AFS Assets
16
Other comprehensive income, net of tax
Total comprehensive loss for the period
Transaction with owners, directly in equity
Shares issued during the period
Share issue transaction costs
Share based payments
Balance at 30 June 2017
–
–
–
(523,716)
–
(523,716)
–
(1,482,442)
(1,482,442)
(523,716)
(1,482,442)
(2,006,158)
2,698,000
(25,738)
–
–
16
–
100,064
–
–
–
2,698,000
(25,738)
100,064
18,680,470
257,671
(11,054,205)
7,883,936
The accompanying notes form part of these financial statements.
26
27
Alto Metals Limited
Annual Report 2017
Consolidated Statement Of Cash Flows
For the Period Ended 30 June 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers and employees
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of available-for-sale financial assets
Proceeds from sale of available for sale asset
Purchase of plant and equipment
Payments for exploration and evaluation expenditure
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares during the period
Costs associated with shares issued during the period
Net cash provided by financing activities
Net increase / (decrease) in cash and cash equivalents held
Cash and cash equivalents at beginning of the period
Cash acquired from subsidiary purchased
Cash and cash equivalents at 30 June
The accompanying notes form part of these financial statements.
Notes
2017
$
2016
$
35,172
(796,637)
(761,465)
17,808
(553,912)
(536,104)
17a
–
–
(135,149)
(1,969,893)
(2,105,042)
(255,734)
425,314
–
(602,005)
(432,425)
2,697,997
1,141,010
(25,735)
(16,959)
2,672,262
1,124,051
(194,245)
1,122,691
–
155,522
965,197
1,972
8
928,446
1,122,691
26
27
Annual Report 2017
Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report includes the consolidated financial statements and notes of Alto Metals Limited (“the Company”) and
controlled entities (“the Consolidated Group” or “the Group”). Alto Metals Limited is a listed public company, incorporated
and domiciled in Australia. The financial information is presented in Australian dollars.
Basis of Preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Alto Metals Limited is
a for-profit entity for the purpose of preparing the financial statements.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report
containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance
with Australian Accounting Standards ensures that the financial statements and notes also comply with International
Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented
below. They have been consistently applied unless otherwise stated.
The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable,
by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
The financial statements were authorised for issue by the Directors. The Directors have the power to amend and reissue
the financial statements.
Going Concern
The financial report has been prepared on the basis of accounting principles applicable to a going concern, which assumes
the commercial realisation of the future potential of the Company’s assets and the discharge of their liabilities in the
normal course of business.
As disclosed in the financial report, the Group recorded an operating loss of $1,482,442 (2016: $1,921,795) and a cash
outflow from operating activities of $761,465 (2016: $536,104) for the year ended 30 June 2017 and at reporting date,
had a net current asset balance of $1,392,035 (2016: $855,136).
The Board considers that the Company is a going concern and recognises that selling some of the investments or farming
out some of its tenements or additional funding will be required to ensure that the Company can continue to fund its
operations for the 12 month period from the date of this financial report.
The Directors believe it is appropriate to prepare the financial report on a going concern basis because:
•
•
•
The Company has the ability to issue additional equity under the Corporations Act 2001 and ASX Listing Rule 7.1 or
otherwise and has had historical success in doing so;
The Company’s commitment to exploration expenditure is discretionary and other expenditure requirements are
minimal; and
The Company owns $681,256 in available-for-sale financial assets (see note 10) and is able to discretionarily liquidate
those share for cash in order to meet its obligations. These are shares held in listed companies on the ASX.
Accordingly, the Directors believe that the Company will have sufficient resources to meet its debts and obligations as they
fall due to enable it to continue as a going concern for the foreseeable future and that it is appropriate to adopt that basis
of accounting in the preparation of the financial report.
28
29
Alto Metals Limited
Annual Report 2017
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(a) Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent Alto Metals Limited
and all of the subsidiaries (including any structured entities). Subsidiaries are entities the parent controls. The parent
controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 18.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from
the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that
control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between group entities
are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made
where necessary to ensure uniformity of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling
interests”. The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and
are entitled to a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-controlling
interests’ proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling interests are
attributed their share of profit or loss and each component of other comprehensive income. Non-controlling interests are
shown separately within the equity section of the statement of financial position and statement of comprehensive income.
(b) Income Tax
The income tax expense (revenue) for the period comprises current income tax expense (income) and deferred tax
expense (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable
income tax rates enacted, or substantially enacted, as at the end of the reporting period. Current tax liabilities (assets) are
therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the
period as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss
when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have
been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable
profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of the reporting period.
Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of
the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets
and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where
it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur
in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
28
29
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Annual Report 2017
Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(c) Property, Plant, and Equipment
Each class of property, plant, and equipment is carried at cost less, where applicable, any accumulated depreciation and
impairment losses.
Plant and equipment
Plant and equipment are measured on the historical cost basis.
The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs, and an
appropriate proportion of fixed and variable overheads.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the Company
commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and equipment
Computers and software
Depreciation Rate
25%
25–33%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses
are included in the profit or loss.
(d) Intangible assets
Recognition of intangible assets
Acquired intangible assets
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and install the specific
software.
Subsequent measurement
All intangible assets, are accounted for using the cost model whereby capitalised costs are amortised on a straight-line
basis over their estimated useful lives, as these assets are considered finite. Residual values and useful lives are reviewed
at each reporting date. In addition, they are subject to impairment testing.
The following useful lives are applied:
software: 4 years
Amortisation has been included within depreciation, amortisation and impairment of non-financial assets. Subsequent
expenditures on the maintenance of computer software are expensed as incurred.
When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds
and the carrying amount of the asset, and is recognised in profit or loss within other income or other expenses.
30
31
Alto Metals Limited
Annual Report 2017
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(e) Exploration and Evaluation Expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs
are only carried forward to the extent that they are expected to be recouped through the successful development of the
area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of
economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the period in which the decision
to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the
area according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward
costs in relation to that area of interest.
The Company receives R&D grants from the Australian Taxation Office. Where an R&D rebate can be directly attributable to
an area of interest the R&D rebate is applied against the area of interest. For any amounts that cannot be directly attributable
to an existing area of interest the amount will be recognised as grant income in the statement of comprehensive income.
(f) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the
legal ownership that are transferred to entities in the Group are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value
of the leased property or the present value of the minimum lease payments, including any guaranteed residual values.
Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the Group will
obtain ownership of the asset or over the term of the lease.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as
expenses in the periods in which they are incurred.
(g) Financial Instruments
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to
the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase
or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified
‘at fair value through profit or loss’, in which case transaction costs are expensed to profit or loss immediately.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the
requirements of accounting standards specifically applicable to financial instruments.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months
after the end of the reporting period. (All other loans and receivables are classified as non-current assets.)
30
31
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Annual Report 2017
Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(g) Financial Instruments (Cont.)
Available-for-sale “AFS” financial assets
AFS financial assets are non-derivative financial assets that are either designated to this category or do not qualify for
inclusion in any of the other categories of financial assets. The Company’s AFS financial assets include listed securities.
AFS financial assets are measured at fair value. Gains and losses are recognised in other comprehensive income and
reported within the AFS reserve within equity, except for permanent impairment losses and foreign exchange differences
on monetary assets, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired,
the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or
loss and presented as a reclassification adjustment within other comprehensive income.
Interest calculated using the effective interest method and dividends are recognised in profit or loss within ‘finance
income’.
Reversals of impairment losses are recognised in other comprehensive income, except for financial assets that are debt
securities which are recognised in profit or loss only if the reversal can be objectively related to an event occurring after
the impairment loss was recognised.
Financial assets at fair value through profit or loss
Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading for the purpose
of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid
an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key
management personnel on a fair value basis in accordance with a documented risk management or investment strategy.
Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.
Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.
Derivative instruments
Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken to the
profit or loss unless they are designated as hedges.
Impairment
At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has been
impaired. In the case of available-for-sale financial instruments, a significant or prolonged decline in the value of the
instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the
statement of comprehensive income.
Derecognition
Financial assets are derecognised where the contractual rights to cash flow expires or the asset is transferred to another
party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with
the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired.
The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair
value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
32
33
Alto Metals Limited
Annual Report 2017
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(h) Impairment of Non-Financial Assets
At each the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired.
The assessment will include the consideration of external and internal sources of information including dividends received
from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication
exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher
of the asset’s fair value less costs to sell and value in use, to the asset’s carrying value. Any excess of the asset’s carrying
value over its recoverable amount is expensed to the profit or loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
(i) Employee Benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to
reporting date. Employee benefits that are expected to be settled within one year have been measured at the amounts
expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year
have been measured at the present value of the estimated future cash outflows to be made for those benefits.
Equity-settled compensation
The Company operates an Incentive Option Scheme share-based compensation plan. The bonus element over the exercise
price of the employee services rendered in exchange for the grant of shares and options is recognised as an expense in the
statement of comprehensive income. The total amount to be expensed over the vesting period is determined by reference
to the fair value of the shares of the options granted.
(j) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will results and that outflow can be reliably measured.
(k) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within
short-term borrowings in current liabilities on the statement of financial position.
(l) Revenue and Other Income
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
Rental income is recognised on an accrual basis.
Management fees are recognised on portion of completion basis.
All revenue is stated net of the amount of goods and services tax (GST).
(m) Trade and Other Payables
Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services
received by the Group during the reporting period which remains unpaid. The balance is recognised as a current liability
with the amount being normally paid within 30 days of recognition of the liability.
32
33
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Annual Report 2017
Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(n) Goods and Services Tax (GST)
Revenues, expenses, and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of
the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown
inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of financing
activities, which are disclosed as operating cash flow.
(o) Equity and reserves
Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing
of shares are deducted from share capital, net of any related income tax benefits.
Other components of equity include the following:
• AFS financial assets reserves – comprises gains and losses relating to these types of financial instruments Retained
earnings include all current and prior period retained profits.
•
Performance rights reserves – comprises expenses recorded for share based payments.
(p) Earnings Per Share
i. Basic earnings per share
Basic earnings per share is determined by dividing the profit attributable to equity holders of the company, excluding any
costs of service equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the financial period, adjusted for bonus elements in ordinary shares issued during the period.
ii. Diluted earnings per share
Diluted earnings per share adjusts the figure used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financial costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
(q) Performance rights
The Company measures the value of its performance rights using the listed price of the Company’s shares at the date of
granting of the rights, as the rights convert to ordinary shares at a ratio of 1:1. The Company then determines the probability
that performance conditions attaching to the rights will be met and the rights will convert. Where the probability is greater
than 50%, the full value is assigned to the rights. Where the probability is less than 50%, no value is assigned to the rights.
The value of the rights are then amortised into expense evenly over the service period to the date of expiry, resulting in
a share based payment expense in the Statement of Profit or Loss and Other Comprehensive Income and accumulating in
the Performance rights reserves in Equity on the Statement of Financial Position.
34
35
Alto Metals Limited
Annual Report 2017
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(r) Critical Accounting Estimates and Judgments
The Directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and
best available current information. Estimates assume a reasonable expectation of future events and are based on current
trends and economic data, obtained both externally and within the Group.
Key Estimates — Impairment
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to
impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined.
No impairment has been recorded for the period, except for in relation to exploration and evaluation expenditure
Key Estimates – Performance Share Probability
In the fiscal 2016 reporting period, the Company completed an asset acquisition of the Sandstone Project. As part of the
Share Sale Agreement, the Company issued 25m Performance Shares to the vendors, which will convert on a one-for-one
basis into fully paid ordinary shares upon the Group confirming a combined inferred and /or indicated mineral resource
and/or reserve of at least 500,000oz gold in aggregate, on one or more of the Sandstone Tenements. Management and
the Board have assessed the probability of the Group meeting these triggers as greater than 50% and accordingly the full
value of the performance shares were booked.
Key Estimates – Performance Rights Probability
In the fiscal 2017 report period, the Company issued 10,750,000 (2016: nil) performance rights to its key management
personnel and employees. The rights convert on a one-to-one basis into fully paid ordinary shares as specified by the
performance conditions outlined in note 15. Where management has estimated that the performance condition has a
greater than 50% probability of being achieved, the full value of the relevant performance shares has been recorded.
Key Judgments – Exploration and Evaluation Expenditure
The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable
or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves.
While there are certain areas of interest from which no reserves have been extracted, the Directors are of the continued
belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Such
capitalised expenditure is carried at the end of the reporting period at $6,360,816 (2016: 4,816,377). An impairment of
$450,526 was recognised during the period ended 30 June 2017 (2016: 1,942,656).
(s) New and amended standards adopted by the Group in this financial report
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australia Accounting
Standards Board (AASB) that are relevant to its operations and effective for the current reporting period. The adoption of
these new and revised Standards and Interpretations has not resulted in any changes to the Group’s accounting policies
and has had no effect on the amounts reported for the current or prior periods.
34
35
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(t) Impact of standards issued but not yet applied by the Group
There are a number of new standards, amendments to standards and interpretations issued by the AASB which are
applicable to future reporting periods. The Group has not early adopted any of these standards or interpretations. The new
or revised accounting standard that is currently issued for future reporting periods and relevant to the Group is as follows:
Annual Report 2017
Likely impact
on initial
application
The entity is yet
to undertake
a detailed
assessment
of the impact
of AASB 9.
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 2019.
New/revised
pronouncement
Superseded
pronouncement Nature of change
AASB 9
Financial
Instruments
AASB 139
Financial
Instruments:
Recognition and
Measurement
AASB 9 introduces new requirements for the
classification and measurement of financial
assets and liabilities and includes a forward-
looking ‘expected loss’ impairment model
and a substantially-changed approach to
hedge accounting.
Effective date
(annual reporting
periods beginning
on or after…)
1 January
2018
These requirements improve and simplify the
approach for classification and measurement
of financial assets compared with the
requirements of AASB 139. The main
changes are:
a. Financial assets that are debt
instruments will be classified based on:
(i) the objective of the entity’s business
model for managing the financial
assets; and (ii) the characteristics of the
contractual cash flows.
b. Allows an irrevocable election on initial
recognition to present gains and losses
on investments in equity instruments
that are not held for trading in other
comprehensive income (instead of in
profit or loss). Dividends in respect of
these investments that are a return on
investment can be recognised in profit
or loss and there is no impairment or
recycling on disposal of the instrument.
c.
Introduces a ‘fair value through other
comprehensive income’ measurement
category for particular simple debt
instruments.
d. Financial assets can be designated
and measured at fair value through
profit or loss at initial recognition if
doing so eliminates or significantly
reduces a measurement or recognition
inconsistency that would arise from
measuring assets or liabilities, or
recognising the gains and losses on
them, on different bases.
36
37
Alto Metals Limited
Annual Report 2017
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(t) Impact of standards issued but not yet applied by the Group (Cont.)
New/revised
pronouncement
Superseded
pronouncement Nature of change
Effective date
(annual reporting
periods beginning
on or after…)
Likely impact
on initial
application
AASB 9
Financial
Instruments
(cont.)
e Where the fair value option is used for
financial liabilities the change in fair
value is to be accounted for as follows:
-
-
the change attributable to changes
in credit risk are presented in Other
Comprehensive Income (OCI)
the remaining change is presented
in profit or loss
If this approach creates or enlarges an
accounting mismatch in the profit or loss,
the effect of the changes in credit risk
are also presented in profit or loss.
Otherwise, the following requirements
have generally been carried forward
unchanged from AASB 139 into AASB 9:
-
classification and measurement of
financial liabilities; and
- derecognition requirements for
financial assets and liabilities.
AASB 9 requirements regarding hedge
accounting represent a substantial overhaul
of hedge accounting that enable entities
to better reflect their risk management
activities in the financial statements.
Furthermore, AASB 9 introduces a new
impairment model based on expected
credit losses. This model makes use of more
forward-looking information and applies to
all financial instruments that are subject to
impairment accounting.
36
37
Notes To The Financial StatementsFor the Period Ended 30 June 2017
Annual Report 2017
Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 2: OTHER INCOME
Interest received from other parties
Gain on disposal of AFS assets
Total Other Income
NOTE 3: LOSS FOR THE PERIOD
(a) Expenses
Depreciation of plant and equipment
Office rental and occupation expenses
Defined benefit superannuation expense
(b) Significant Revenues and Expenses
Notes
2017
$
35,172
–
35,172
34,083
34,978
–
2016
$
17,808
294,833
312,641
36,089
30,625
3,470
The following significant revenue and expense items are relevant in
explaining the financial performance:
Exploration and Evaluation expenditure written off
13
450,526
1,942,656
NOTE 4: INCOME TAX
(a) Income tax (benefit)/expense
Current tax
Deferred tax
–
210,979
210,979
–
(314,496)
(314,496)
(b) Reconciliation of income tax expense to prima facie tax payable
The prima facie tax payable on profit from ordinary activities before income tax
is reconciled to the income tax expense as follows:
Prima facie tax on operating loss at 27.5% (2016: 30%)
(349,652)
(670,887)
Add / (Less) tax effect of:
Other non-deductible/ (assessable) items
Deferred tax asset not brought to account
Income tax benefit attributable to operating loss
29,883
530,748
210,979
6,738
349,653
(314,496)
The applicable weighted average effective tax rates are as follows:
nil%
nil%
(c) Deferred tax assets
Tax Losses
Provisions and Accrual
Other - Equity
Set-off deferred tax liabilities
Net deferred tax assets
4(c)
653,257
5,087
12,712
671,056
(671,056)
-
391,866
6,900
26,521
425,287
(425,287)
-
38
39
Alto Metals Limited
Annual Report 2017
NOTE 4: INCOME TAX (Cont.)
(d) Deferred tax liabilities
Exploration expenditure
Financial asset
Other – P&L
Set-off deferred tax assets
Net deferred tax liabilities
(e) Tax losses
Notes
2017
$
2016
$
(593,323)
(77,309)
(424)
(671,056)
671,056
–
(110,281)
(314,496)
(510)
(425,287)
425,287
–
Unused tax losses for which no deferred tax asset has been
recognised
Temporary differences for which no deferred tax asset has been
recognised – Equity
1,367,881
1,904,942
8,938
34,500
Potential deferred tax assets attributable to tax losses and exploration expenditure carried forward have not been brought
to account at 30 June 2017 because the Directors do not believe it is appropriate to regard realisation of the deferred tax
assets as probable at this point in time. These benefits will only be obtained if:
•
•
•
the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the
deductions for the loss and exploration expenditure to be realised;
the Company continues to comply with conditions for deductibility imposed by law; and
no changes in tax legislation adversely affect the Company in realising the benefit from the deductions for the loss
and exploration expenditure.
NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION
(a) Key management personnel (KMP) compensation
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid to each member
of the Company’s KMP for the period ended 30 June 2017.
The totals of remuneration paid to KMP during the period are as follows:
Short-term employee benefits
Post-employment benefits
Share based payments
Total
2017
$
435,974
3,470
83,774
523,218
2016
$
289,340
3,470
–
292,810
38
39
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Annual Report 2017
Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 6: AUDITORS’ REMUNERATION
Remuneration of the auditor of the parent entity for:
– Auditing or reviewing the financial report by Grant Thornton Audit
Pty Ltd
27,020
27,020
2017
$
2016
$
Remuneration of the auditor, or associated entities, of the parent
entity for non-audit services:
– Tax compliance services
NOTE 7: LOSS PER SHARE
(a) Reconciliation of earnings to loss
Earnings used in the calculation of basic EPS
(b) Weighted average number of ordinary shares outstanding during
the period used in calculation of basic EPS
5,150
5,150
2017
$
2016
$
(1,482,442)
(1,921,795)
147,694,882
79,019,962
Basic / Diluted loss per share (cents per share)
(1.0)
(2.4)
As at 30 June 2017, the Company did not have any options outstanding.
NOTE 8: CASH AND CASH EQUIVALENTS
Cash at bank
Reconciliation of cash
Cash at the end of the financial period as shown in the statement of
cash flows is reconciled to items in the statement of financial position
as follows:
2017
$
928,446
928,446
2016
$
1,122,691
1,122,691
Cash and cash equivalents
928,446
1,122,691
Cash at bank earns an effective interest rate of 1.65%.
Included in cash and cash equivalents is an amount of $nil (2016: nil) that is restricted cash in relation to a security deposit.
40
41
Alto Metals Limited
Annual Report 2017
NOTE 9: TRADE AND OTHER RECEIVABLES
CURRENT
GST receivable
Trade and other receivables
Interest receivable
Prepayments
2017
$
83,519
46,601
620
3,840
134,580
2016
$
22,188
29,889
1,098
3,743
56,918
There are no balances within trade and other receivables that contain assets that are impaired and are past due. The
trade receivables relate to reimbursed expenditures receivable and interest receivable. It is expected these balances
will be received when due. Refer to note 21 related party transactions for receivable balances with related parties.
NOTE 10: AVAILABLE-FOR-SALE FINANCIAL ASSETS
Current
Non-Current
2017
$
681,256
–
681,256
2016
$
–
1,415,952
1,415,952
There was a re-classification of a portion of AFS financial assets from non-current assets to current assets on 30 June 2017
when the Company made a decision to sell a portion of the assets within the next 12 months. Those shares were sold
post year end.
Movement for the period:
Opening balance
Additions
Disposals
Revaluations
Impairment
1,415,952
–
–
(734,696)
–
502,814
383,598
(425,314)
997,354
(42,500)
681,256
1,415,952
Available-for-sale financial assets are shares held in an ASX listed entities. Fair value as per note 23 (i) is determined by
reference to the quoted market price at reporting date.
40
41
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Annual Report 2017
Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 11: PLANT AND EQUIPMENT
NON-CURRENT
Plant and equipment – cost
Accumulated depreciation
Property – cost
Accumulated depreciation
Total property, plant and equipment
a) Reconciliation of Carrying Amounts
Plant and Equipment
Opening balance
- Additions
- Depreciation expense
Carrying amount at the end of the period
Land and Buildings
Opening balance
– Additions
– Depreciation expense
Carrying amount at the end of the period
Totals
Opening balance
– Additions
– Depreciation expense
Carrying amount at the end of period
2017
$
120,610
(117,004)
3,606
87,708
–
87,708
91,314
22,034
9,850
(28,278)
3,606
–
87,708
–
87,708
22,034
97,558
(28,278)
91,314
2016
$
110,761
(88,727)
22,034
–
–
–
22,034
48,712
–
(26,678)
22,034
–
–
–
–
48,712
–
(26,678)
22,034
42
43
Alto Metals Limited
Annual Report 2017
NOTE 12: INTANGIBLE ASSETS
NON-CURRENT
Software – cost
Accumulated amortisation
Formation Expenses
Total
a) Reconciliation of Carrying Amounts
Opening balance
– Additions
– Disposals
– Amortisation expense
Carrying amount at the end of the period
NOTE 13: EXPLORATION AND EVALUATION
2017
$
75,137
(35,367)
39,770
–
39,770
7,984
37,592
–
(5,806)
39,770
2016
$
37,545
(29,561)
7,984
285
8,269
17,395
–
–
(9,411)
7,984
Exploration and evaluation phases – at cost
6,360,816
4,816,377
Note
2017
$
2016
$
(a) Exploration and evaluation
Opening balance
Exploration expenditure
Purchase of Sandstone exploration properties
18
Impairment of exploration and evaluation expenses
Closing balance
4,816,377
1,994,965
–
2,074,419
481,981
4,202,633
(450,526)
(1,942,656)
6,360,816
4,816,377
Impairment losses have been recognised in relation to a number of projects given drilling and exploration expenditure has
not resulted in a discovery of significance. The Directors believe that given the continued difficult market conditions, it is
prudent to impair the carrying values of a number of projects.
The Directors’ assessment of the carrying amount for the Group’s exploration properties was after consideration of
prevailing market conditions; previous expenditure for exploration work carried out on the tenements; and the potential for
mineralisation based on the Group’s and independent geological reports. The ultimate value of these assets is dependent
upon recoupment by commercial development or the sale of the whole or part of the Group’s interests in these exploration
properties for an amount at least equal to the carrying value. There may exist on the Group’s exploration properties, areas
subject to claim under Native Title or containing sacred sites or sites of significance to Aboriginal people. As a result, the
Group’s exploration properties or areas within the tenements may be subject to exploration and mining restrictions.
42
43
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Annual Report 2017
Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 14: TRADE AND OTHER PAYABLES
CURRENT – unsecured liabilities
Trade and other payables
Accrued expenses
Deferred payment on purchase of Sandstone Exploration Pty Ltd
18
Note
2017
$
291,748
60,498
–
352,246
2016
$
101,209
23,264
200,000
324,473
All amounts in trade and other payables are short term and the carrying values are considered a reasonable approximation
of fair value. Refer to note 21 related party transactions for payable balances with related parties.
NOTE 15: ISSUED CAPITAL
151,882,819 (2016: 115,695,812) fully paid ordinary shares
at no par value
25,000,000 (2016: 25,000,000) performance shares
Note
2017
$
2016
$
16,505,470
13,833,208
2,175,000
2,175,000
18,680,470
16,008,208
Fully paid ordinary shares have no par value, carry one vote per share and carry the right to dividends.
(a) Ordinary shares
At the beginning of the reporting period
Ordinary shares issued during the period
• 28,779,603 on 25 July 2016 at $0.059 Share Purchase Plan
• 7,407,404 on 27 October 2016 at $0.135 – Sophisticated
Investors
• 545,455 on 9 December 2015 at $0.022 for settlement of
consultancy fees
• 19,339,160 on 2 June 2016 at $0.059 – Sophisticated
Investors
• Costs associated with equity raisings
• 19,000,000 on 24 June 2016 purchase Sandstone at $0.087 (1)
13,833,208
11,044,157
1,697,997
1,000,000
–
–
(25,735)
–
12,000
1,141,010
(16,959)
1,653,000
At reporting date
16,505,470
13,833,208
44
45
Alto Metals Limited
Annual Report 2017
NOTE 15: ISSUED CAPITAL (Cont.)
At the beginning of the reporting period
Ordinary shares issued during the period:
2017
No.
2016
No.
115,695,812
76,811,197
• 28,779,603 on 25 July 2016 at $0.059 Share Purchase Plan
• 7,407,404 on 27 October 2016 at $0.135 – Placement to
28,779,603
7,407,404
–
–
Sophisticated Investors
• 545,455 on 9 December 2015 at $0.022 for settlement of
third party consultancy fees
• 19,339,160 on 2 June 2016 at $0.059 – Placement to
Sophisticated Investors
• 19,000,000 on 24 June 2016 to Purchase Sandstone Project at
$0.087 (1)
At reporting date
(b) Performance shares
At the beginning of the reporting period
Performance shares issued during the period
• 25,000,000 Performance Shares at $0.087(1)
At reporting date
At the beginning of the reporting period
Performance shares issued during the period:
25,000,000 Performance Shares at $0.087(1)
At reporting date
–
–
–
545,455
19,339,160
19,000,000
151,882,819
115,695,812
Note
2017
$
2016
$
2,175,000
–
–
2,175,000
2,175,000
2,175,000
2017
No.
2016
No.
25,000,000
–
–
25,000,000
25,000,000
25,000,000
(1)
On 24 June 2016, the Company finalised the purchase of the investment in Sandstone Exploration Pty Ltd (“the Entity”)
through the issue of 19,000,000 Fully Paid Ordinary Shares and 25,000,000 Performance Shares. These Ordinary
Shares and the Performance Shares (refer (b) below for additional information and conversion conditions), were
valued at the Share Price of 8.7 cents per share on the date the Company gained control of the Entity in accordance
with the Accounting Standards.
These Performance Shares will convert into 25,000,000 fully paid ordinary shares once an announcement of an Inferred
JORC 2012 Mineral Resource is made of a tonnage and grade to establish contained metal of at least 500,000 Ounces of
Gold (or other metal equivalent) on the Sandstone tenements any time prior to 23 June 2021.
44
45
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Annual Report 2017
Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 15: ISSUED CAPITAL (Cont.)
(c) Performance rights on issue
Performance rights
At the beginning of the reporting period
Performance rights issued during the period
10,750,000 Performance Shares at $0.087(1)
At reporting date
Note
2017
No.
–
10,750,00
10,750,00
2016
No.
–
–
–
(1)
During the financial year, the Company issued 10,750,000 (2016: nil) in performance rights to directors and employees
as follows:
Class
A
B
C
D
Performance
Rights granted to
Directors and Staff
2,687,500
Expiry Date
9 December
2017
Performance Condition
the Company’s announcing to the ASX of an Inferred Mineral Resource
(as defined by a Competent Person in accordance with JORC Code 2012)
of at least 500,000 oz Au of at least 1.5g/t
2,687,500
2,687,500
2,687,500
9 December
2018
the Company’s announcing to the ASX of an Inferred Mineral Resource
(as defined by a Competent Person in accordance with JORC Code 2012)
of at least 1,000,000 oz Au of at least 1.5g/t
9 June 2019
the Company’s announcing to the ASX of a 20,000 oz Au sold
9 December
2019
the Company’s announcing to the ASX 50,000 oz Au sold
The issuance of these performance rights resulted in a share based payment expense recorded in the Statement of Profit
or Loss and Other Comprehensive Income. See Note 19.
(d) Capital Management
The Directors’ objectives when managing capital are to ensure that the Company can fund its operations and continue as
a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders. The
Company has no debt therefore has no externally imposed capital restrictions.
Due to the nature of the Company’s activities, being mineral exploration, the Company does not have ready access to
credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Company’s capital
risk management is the current working capital position against the requirements of the Company to meet exploration
programmes and corporate overheads. The Company’s strategy is to ensure appropriate liquidity is maintained to meet
anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital
position of the Company at 30 June 2016 is as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Working capital position
2017
$
928,446
134,580
(352,246)
710,780
2016
$
1,122,691
56,918
(324,473)
855,136
46
47
Alto Metals Limited
Annual Report 2017
NOTE 16: RESERVES
AFS Financial Asset Reserve
Performance Share Reserve
(a) Movement in Reserves
AFS Financial Asset Reserve
At the beginning of the reporting period
Add revaluation increments, net of tax
Less disposal of AFS shares transferred to profit or loss
At reporting date
Performance Rights Reserve
At the beginning of the reporting period
Add performance rights issued
At reporting date
NOTE 17: CASH FLOW INFORMATION
2017
$
157,607
100,064
257,671
681,323
(523,716)
–
157,607
–
100,064
100,064
2016
$
681,323
–
681,323
292,751
682,858
(294,286)
681,323
–
–
–
(a) Reconciliation of Cash Flow from Operations with loss after Income Tax
Loss after income tax
(1,482,442)
(1,921,795)
Cash flows excluded from loss attributable to operating activities
Non-cash flows in loss from ordinary activities:
Gain on disposal of AFS asset
Impairment of AFS asset
Tax expense
Depreciation
Share based payment
Impairment of Exploration and Evaluation
Changes in assets and liabilities, net of the effects of purchase and disposal of
subsidiaries:
(Increase)/Decrease in receivables
(Increase)/Decrease in other assets
Increase/(Decrease) in payables
Cash flow used in operations
(b) Credit Standby Facilities
The Group had no credit standby facilities as at 30 June 2017.
(c) Non-Cash Financing and Investing Activities
Share Issues – no movements for the year ended 30 June 2017
For the period ended 30 June 2016
–
–
210,979
34,083
100,064
450,526
(51,768)
–
(22,907)
(761,465)
(252,333)
–
(314,496)
36,089
–
1,942,656
(5,517)
6,610
(27,318)
(536,104)
On 9 December 2015, 545,455 ordinary shares were issued at $0.022 each for the settlement of third party consultancy fees.
On 24 June 2016, 19,000,000 ordinary shares and 25,000,000 Performance Shares were issued for $0.087 each for
settlement of the purchase of Sandstone Exploration Pty Ltd.
46
47
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Annual Report 2017
Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 18: CONTROLLED ENTITIES
Details of Controlled Entities
Cue Metals Pty Ltd (1)
Sandstone Exploration Pty Ltd (2)
Country of
Incorporation
Class of
Shares
Australia
Australia
Ordinary
Ordinary
Percentage Owned %
2017
100
100
2016
100
100
(1) Cue Metals Pty Ltd was incorporated on 14 September 2015 as a wholly owned subsidiary of Alto Metals Limited.
(2)
Alto Metals Limited acquired 100% of the issued capital of Sandstone Exploration Pty Ltd (“the Entity”) following
shareholder approval on 24 June 2016.
NOTE 19: SHARE-BASED PAYMENTS
A share based payment expense of $100,064 (2016: nil) was recorded in the period based on management’s estimate of
the value of the performance rights issued in fiscal 2017 as outlined below and detailed further in note 15.
Despite that share based payments occurred in 2016 as detailed below, there was no share based payment expense
recorded given that the transactions met the criteria of capitalised exploration and evaluation.
The following share based payments took place during the 2017 financial year:
On 9 December 2016, 10,750,000 performance rights were issued to key management personnel and employees of the
company. Refer Note 15.
The following share based payments
On 9 December 2015, 545,455 ordinary shares were issued at $0.022 each for the settlement of third party consultancy
fees.
On 24 June 2016, 19,000,000 ordinary shares and 25,000,000 Performance Shares were issued for $0.087 each for
settlement of the purchase of Sandstone Exploration Pty Ltd. Refer Note 15.
NOTE 20: EVENTS SUBSEQUENT TO REPORTING DATE
There has not arisen since the end of the financial year any item, transaction or event of a material and unusual nature
likely, in the opinion of the Directors of the Company to affect substantially the operations of the Company, the results of
those operations or the state of affairs of the Company in subsequent financial years, other than:
Subsequent to balance date the Company has sold part of the available for sale financial assets realising a total of
$632,156 compared to the carrying value of those available for sale financial assets of $613,756 at the end of the financial
year. This sale will be reflected in the 2017/18 financial year accounts.
48
49
Alto Metals Limited
Annual Report 2017
NOTE 21: RELATED PARTY TRANSACTIONS
XServ Pty Ltd
Mr Ryan is a Director and Shareholder of Xserv Pty Ltd. Mr Ryan’s company provides
geological consulting services to Alto Metals Limited as Managing Director.
Included in the payments to Xserv Pty Ltd are payments for field equipment and
vehicles at commercial rates equating to $21,246 (2016 - $Nil) in the current
financial year.
As at 30 June 2017 $22,966 (2016: $Nil) was payable to Xserv Pty Ltd
Mega Capital Resources Ltd
Ms Mao was a sole director of Mega Capital Resources Ltd. Mega Capital
Resources Ltd provides consulting services to Alto Metals Limited.
2017
$
2016
$
249,106
148,577
Consulting Services
14,000
66,000
As at 30 June 2017, $Nil (2016: $28,000) was payable to Mega Capital Resources Ltd.
Enterprise Metals Ltd
Enterprise Metals Ltd is a significant shareholder in the Company and provides
office space in which the Company operates as well as accounting and office
administration services including telephone, electricity and office equipment.
Reimbursement of shared costs of staff and office premises charged to Enterprise
Metals Ltd.
Rental of office space, purchase of plant and equipment and office administration
expenses charged to Alto Metals Ltd.
Total
92,993
61,289
154,282
–
44,256
44,256
As at 30 June 2017 $9,474 (2016: $11,939) was receivable and $3,811 (2016: $12,546) was payable to Enterprise
Metals Ltd.
At reporting date the Company holds 2,500,000 ordinary shares in Enterprise Metals Limited at a fair value of $37,500
(2016 - $35,000).
Value Adding Resources Pty Ltd
Mr Robertson is a Director and Shareholder of Value Adding Resources Pty Ltd.
Mr Robertson’s company provides director’s fee and geophysical consulting
services to Alto Metals Limited.
As at 30 June 2017 $nil (2016: $nil) was payable to Value Adding Resources Pty Ltd
10,000
40,000
48
49
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Annual Report 2017
Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 22: CAPITAL AND LEASING COMMITMENTS
Expenditure commitments
The Group is planning exploration work on its exploration tenements in order to retain the rights of tenure. These obligations
will be met, subject to availability of funds and can be reduced by selective relinquishment of exploration tenure or
application for expenditure exemptions. Due to the nature of the Group’s operations in exploring and evaluating areas of
interest, it is very difficult to forecast the nature and amount of future expenditure. The Group’s planned exploration and
expected commitments, subject to available funds – refer note 1, for the next year are as follows:
Australian tenements
385,320
404,320
In addition, under the acquisition agreement, Sandstone has granted the Vendors of the Company a 2% gross revenue
royalty on all minerals produced from the Tenements and the right to fossick down to 2m below surface for all minerals
and metals including gold nuggets. At the date of this report this has not been recognised given the timing and amount
cannot be determined.
The Group also agreed to incur a minimum $300,000 per annum on exploration expenditure on the Sandstone tenements
in the first two years following completion, of which $264,320 (2016 – $271,320) is included in the expenditure
commitments above for Australian tenements. The expenditure will be subject to future drilling success.
Operating lease commitments:
Operating lease commitments contracted for Rental of the Company’s
Registered Office
Amounts payable:
- not later than 12 months
- between 12 months and 5 years
2017
$
2016
$
74,724
157,488
232,212
24,312
–
24,312
50
51
Alto Metals Limited
Annual Report 2017
NOTE 23: FINANCIAL INSTRUMENT
The Group’s financial instruments consist mainly of deposits with banks, local money market instruments, short-term
investments, and accounts receivable and payable. The main purpose of non-derivative financial instruments is to raise
finance for Group operations. The Group does not speculate in the trading of derivative instruments.
A summary of the Group’s financial assets and liabilities is shown below using level inputs measured at fair value or a
recurring basis.
2017
Floating
Interest Rate
$
Financial Assets
Cash and cash equivalents
928,446
Loans and receivables
Available for sale financial assets
Total Financial Assets
Weighted ave int rate – cash
Financial Liabilities at cost
Trade and other payables
Total Financial Liabilities
–
–
928,446
1.65%
–
–
Net financial assets
928,446
2016
Financial Assets
Floating
Interest Rate
$
Cash and cash equivalents
1,122,691
Loans and receivables
Total Financial Assets
Weighted ave int rate – cash
Financial Liabilities at cost
Trade and other payables
Total Financial Liabilities
–
1,122,691
2.00%
–
–
Net financial assets
1,122,691
(i) Fair value measurement hierarchy
Fixed Int
maturing in 1
year or less
Fixed Int maturing
over
1 to 5 years
Non-interest
bearing
$
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
Fixed Int
maturing in
1 year or less
Fixed Int
maturing over
1 to 5 years
$
–
–
–
–
–
–
$
–
–
–
–
–
–
$
–
134,580
681,256
815,836
Total
$
928,446
134,580
681,256
1,744,282
(352,246)
(352,246)
(352,246)
(352,246)
463,590
1,392,036
Non–interest
bearing
$
Total
$
–
1,122,691
56,918
56,918
56,918
1,179,609
(124,173)
(124,173)
(124,173)
(124,173)
(67,255)
1,055,436
50
51
AASB 13 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair
value measurement hierarchy:
(a) Level 1 – the instrument has quoted prices (unadjusted) in active markets for identical assets and liabilities;
(b) Level 2 – a valuation technique is used using inputs other than quoted priced within Level 1 that are observable for the
financial instrument, either directly (i.e. as prices), or indirectly (i.e. derived from prices); or
(c) Level 3 – a valuation technique is sued using inputs that are not based on observable market data (unobservable inputs).
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 23: FINANCIAL INSTRUMENT (Cont.)
The table below classifies financial instruments recognised in the consolidated Statement of Financial Position according
to the fair value measurement hierarchy stipulated in AASB 13 Financial Instruments: Disclosures.
Level 1
Level 2
Level 3
Year ended 30 June 2017
Financial assets
Available for sale financial assets
Year ended 30 June 2016
Financial assets
$
681,256
Available for sale financial assets
1,415,952
$
–
–
$
–
–
Total
$
681,256
1,415,952
Valuation techniques used to derive level 2 and level 3 fair values
The fair value of financial instruments traded in active markets is based upon quoted market prices at the end of the
reporting period.
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques.
The Group makes a number of assumptions based upon observable market data existing at each reporting period.
The Group does not have any level 3 assets or liabilities.
Specific Financial Risk Exposures and Management
The main risk the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk
consisting of interest rate, foreign currency risk and equity price risk.
a. Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract
obligations that could lead to a financial loss to the Group.
The Group does not have any material credit risk exposure to any single receivable or Company of receivables under
financial instruments entered into by the Group.
Credit risk exposures
The maximum exposure to credit risk is that to its alliance partners and that is limited to the carrying amount, net of any
provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial
statements.
There are no other material amounts of collateral held as security at 30 June 2017. Trade and other receivables are
expected to be settled within 30 days.
Credit risk related to balances with banks and other financial institutions is managed by the Group in accordance with
approved Board policy. Such policy requires that surplus funds are only invested with counterparties with a Standard and
Poor’s rating of at least AA-. The following table provides information regarding the credit risk relating to cash and money
market securities based on Standard and Poor’s counterparty credit ratings.
Note
2017
$
2016
$
8
928,446
1,122,691
Cash and cash equivalents
- AA Rated
52
Annual Report 2017
53
Alto Metals Limited
Annual Report 2017
NOTE 23: FINANCIAL INSTRUMENT (Cont.)
b. Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting
its obligations related to financial liabilities.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash
and marketable securities are available to meet the current and future commitments of the Group. Due to the nature
of the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the
primary source of funding being equity raisings. The Board of Directors constantly monitor the state of equity markets in
conjunction with the Group’s current and future funding requirements, with a view to initiating appropriate capital raisings
as required. Any surplus funds are invested with major financial institutions.
The financial liabilities of the Group are confined to trade and other payables as disclosed in the statement of financial
position. All trade and other payables are non-interest bearing and due within 12 months of the reporting date.
c. Market risk
The Board meets on a regular basis to analyse currency and interest rate exposure and to evaluate treasury management
strategies in the context of the most recent economic conditions and forecasts.
i. Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period
whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments.
The Group is also exposed to earnings volatility on floating rate instruments.
Interest rate risk is managed by closely monitoring the interest rates at various financial institutions. The Group has no
debt and as such the interest rate risk is limited to the Group’s investments in term deposits and other interest bearing
investments.
Sensitivity Analysis
The following table illustrates sensitivities to the Group’s exposures to changes in interest rates. The table indicates the
impact on how profit and equity values reported at reporting date would have been affected by changes in the relevant
risk variable that management considers to be reasonably possible. These sensitivities assume that the movement in a
particular variable is independent of other variables.
Period ended 30 June 2017
Profit
$
Equity
$
+/-1% in interest rates
+/- 9,284
+/- 9,284
Period ended 30 June 2016
$
$
+/-1% in interest rates
+/- 11,227
+/- 11,227
52
53
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Annual Report 2017
Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 23: FINANCIAL INSTRUMENT (Cont.)
d. Price risk on AFS assets
The Group is exposed to equity securities price risk. This arises from investments held by the Group and classified on the
balance sheet as available for sale.
Listed investments have been valued at the quoted market bid price at the end of reporting period, adjusted for transaction
costs expected to be incurred. At 30 June 2017, the effect on profit and equity as a result of changes in listed equity prices,
with all other variables remaining constant would be as follows:
Carrying amount
Net loss
Equity
Net loss
Equity
Listed equity price -10%
Listed equity price +10%
30 June 2017
681,256
(68,125)
(68,125)
68,125
68,125
30 June 2016
1,415,952
(141,595)
(141,595)
141,595
141,595
e. Net Fair Values
2017
2017
2016
2016
Carrying Amount
$
Net Fair Value
$
Carrying Amount
$
Net Fair Value
$
Financial Assets
Cash and cash equivalents
Loans and receivables
Available for sale financial assets
928,446
134,580
681,256
928,446
134,580
681,256
Total Financial Assets
1,744,282
1,744,282
1,122,691
1,122,691
56,918
1,415,952
2,595,561
56,918
1,415,952
2,595,561
Financial Liabilities at amortised cost
Trade and other payables
Total Financial Liabilities
352,246
352,246
352,246
352,246
324,473
324,473
324,473
324,473
Cash and cash equivalents, trade and other receivables, and trade and other payables are short-term investments in
nature whose carrying value is equivalent to fair value.
54
55
Alto Metals Limited
Annual Report 2017
NOTE 24: PARENT ENTITY DISCLOSURES
(a) Financial Position of Alto Metals Limited
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Available for sale financial assets
Plant and equipment
Intangible assets
Exploration and evaluation
Other financial assets
Other assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
(b) Financial Performance of Alto Metals Limited
Loss for the year
Unrealised gain on revaluation of AFS asset
Total comprehensive loss
2017
$
2016
$
928,442
134,580
681,256
1,120,718
56,445
-
1,744,278
1,177,163
-
1,415,952
91,314
39,770
-
-
6,364,273
6,495,357
8,239,635
352,247
352,247
352,247
22,034
7,984
367,602
37,730
3,261,863
5,113,165
6,290,328
124,474
124,474
124,474
7,887,388
6,165,854
18,680,470
14,973,620
46,692
970,426
(10,839,774)
(9,778,192)
7,887,388
6,165,854
(1,268,011)
(2,236,291)
-
25,394
(1,268,011)
(2,210,897)
54
55
Notes To The Financial StatementsFor the Period Ended 30 June 2017 Alto Metals Limited
Notes To The Financial Statements
For the Period Ended 30 June 2017
NOTE 25: CONTINGENT LIABILITIES
As at 30 June 2017 the Group has bank guarantees to the value of $26,366 (2016: $9,300) to secure a credit card facility
and in 2016 a rental bond.
NOTE 26: OPERATING SEGMENTS
The Directors have considered the requirements of AASB 8 – Operating Segments and the internal reports that are reviewed
by the chief operating decision maker (the Board) in allocating resources and have concluded that at this time there are
no separately identifiable segments.
The Group remains focused on mineral exploration over areas of interest solely in Western Australia.
NOTE 27: COMPANY DETAILS
The registered office and principal place of business of the Company is:
Alto Metals Limited
Level 2, Suite 9
12-14 Thelma Street
WEST PERTH WA 6005
Annual Report 2017
56
57
Alto Metals Limited
Annual Report 2017
Directors’ Declaration
The directors of the Company declare that:
1.
The financial statements and notes, as set out on pages 24 to 56, are in accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards; and
(b) are in accordance with International Financial Reporting Standards issued by the International Accounting Standards
Board, as stated in note 1 to the financial statements; and
(c) give a true and fair view of the financial position as at 30 June 2017 and of the performance for the period ended on that
date of the Company;
2.
The Chief Executive Officer and Chief Finance Officer have each declared that:
(a) the financial records of the Company for the financial period have been properly maintained in accordance with s 286 of
the Corporations Act 2001; and
(b) the financial statements and notes for the financial period comply with the Accounting Standards; and
(c) the financial statements and notes for the financial period give a true and fair view; and
(d) they have given the declarations required by Section 295A of the Corporations Act, 2001 for the financial period ended
30 June 2017.
3.
In the directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Dermot Ryan
Executive Director
Dated 27th September 2017, Perth WA
56
57
Independent Auditor’s Report
Independent Auditor’s Report
to the Members of Alto Metals Limited
Level 1
10 Kings Park Road
West Perth WA 6005
Correspondence to:
PO Box 570
Level 1
West Perth WA 6872
10 Kings Park Road
West Perth WA 6005
T +61 8 9480 2000
F +61 8 9322 7787
Correspondence to:
E info.wa@au.gt.com
PO Box 570
W www.grantthornton.com.au
West Perth WA 6872
Level 1
10 Kings Park Road
West Perth WA 6005
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
Correspondence to:
PO Box 570
West Perth WA 6872
Report on the audit of the financial report
Independent Auditor’s Report
to the Members of Alto Metals Limited
Opinion
We have audited the financial report of Alto Metals Limited (the Company) and its subsidiaries (the
Report on the audit of the financial report
Group), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of profit or loss and other comprehensive income, consolidated statement
of changes in equity and consolidated statement of cash flows for the year then ended, and notes
Opinion
to the consolidated financial statements, including a summary of significant accounting policies,
We have audited the financial report of Alto Metals Limited (the Company) and its subsidiaries (the
and the directors’ declaration.
Group), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of profit or loss and other comprehensive income, consolidated statement
In our opinion, the accompanying financial report of the Group, is in accordance with the
of changes in equity and consolidated statement of cash flows for the year then ended, and notes
Corporations Act 2001, including:
to the consolidated financial statements, including a summary of significant accounting policies,
and the directors’ declaration.
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
Auditor’s Independence Declaration
to the Directors of Alto Metals Limited
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
b
a
relation to the audit; and
performance for the year ended on that date; and
performance for the year ended on that date; and
no contraventions of any applicable code of professional conduct in relation to the audit.
for the audit of Alto Metals Limited for the year ended 30 June 2017, I declare that, to the best of
In our opinion, the accompanying financial report of the Group, is in accordance with the
my knowledge and belief, there have been:
Corporations Act 2001, including:
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
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
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Financial Report section of our report. We are independent of the Group in accordance with the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Basis for Opinion
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
also fulfilled our other ethical responsibilities in accordance with the Code.
Financial Report section of our report. We are independent of the Group in accordance with the
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
independence requirements of the Corporations Act 2001 and the ethical requirements of the
basis for our opinion.
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
M P Hingeley
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
Partner - Audit & Assurance
Perth, 27 September 2017
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to
one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the
member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not
provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In
Grant Thornton Audit Pty Ltd ACN 130 913 594
the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to
one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the
45
member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not
provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In
Grant Thornton Audit Pty Ltd ACN 130 913 594
the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
58
Liability limited by a scheme approved under Professional Standards Legislation.
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to
one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the
member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not
provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In
the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries
and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
45
Liability limited by a scheme approved under Professional Standards Legislation.
16
Alto Metals Limited
Independent Auditor’s Report
Material Uncertainty Related to Going Concern
We draw attention to Note 1 “Going Concern” in the financial statements, which indicates that the
Group incurred a net loss of $1,482,442 during the year ended 30 June 2017. As stated in Note 1,
these events or conditions, along with other matters as set forth in the notes, indicate that a
material uncertainty exists that may cast doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
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.
Key audit matter
How our audit addressed the key audit matter
Exploration and Evaluation Assets – valuation
Note 1(e) and Note 13
At 30 June 2017, the carrying value of Exploration
and Evaluation Assets was $6.4 million.
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group is
required to assess at each reporting date if there are
any triggers for impairment which may suggest the
carrying value is in excess of the recoverable value.
The process undertaken by management to assess
whether there are any impairment triggers in each
area of interest involves an element of management
judgement.
This area is a key audit matter due to the valuation of
exploration and evaluation assets being a significant
risk.
Our procedures included, amongst others:
• obtaining the management prepared reconciliation
of capitalised exploration and evaluation
expenditure and agreeing to the general ledger;
reviewing management’s area of interest
considerations against AASB 6;
•
-
• conducting a detailed review of management’s
assessment of trigger events prepared in
accordance with AASB 6 including;
-
tracing projects to statutory registers,
exploration licenses and third party
confirmations to determine whether a right of
tenure existed;
enquiry of management regarding their
intentions to carry out exploration and
evaluation activity in the relevant exploration
area, including review of managements’
budgeted expenditure;
understanding whether any data exists to
suggest that the carrying value of these
exploration and evaluation assets are unlikely
to be recovered through development or sale;
• assessing the accuracy of impairment recorded for
the year as it pertained to exploration interests;
and
reviewing the appropriateness of the related
disclosures within the financial statements.
-
•
59
46
Annual Report 2017 Independent Auditor’s Report
Performance rights – valuation
Note 1(q), Note 15(c) and Note 19
During the year ended 30 June 2017, the Group
issued performance rights resulting in the recording
Performance rights – valuation
of a share based payment expense of $0.1 million.
Note 1(q), Note 15(c) and Note 19
During the year ended 30 June 2017, the Group
The Group records the issuance of its performance
issued performance rights resulting in the recording
rights in accordance with AASB 2 Share based
of a share based payment expense of $0.1 million.
payments, which, for the conditions underlying the
issuance, requires management to determine a value
The Group records the issuance of its performance
of the transaction based on the probability that the
rights in accordance with AASB 2 Share based
conditions will be met.
payments, which, for the conditions underlying the
issuance, requires management to determine a value
This area is a key audit matter given that
of the transaction based on the probability that the
management exercises its judgments and estimates
conditions will be met.
in determining the probability that the relevant
conditions will be met, which impacts the amounts
This area is a key audit matter given that
recorded.
management exercises its judgments and estimates
in determining the probability that the relevant
conditions will be met, which impacts the amounts
recorded.
Our procedures included, amongst others:
•
•
Our procedures included, amongst others:
•
•
• assessing management’s estimates and
reviewing the conditions of the performance rights
and tracing the conditions to agreements signed
by all parties and to related ASX announcements;
testing the mathematical accuracy of
reviewing the conditions of the performance rights
management’s valuation
and tracing the conditions to agreements signed
by all parties and to related ASX announcements;
judgments around the probabilities applied to each
testing the mathematical accuracy of
condition by discussing with employees of the
management’s valuation
Group that sit outside of the Group’s finance
department and obtaining further corroborating
judgments around the probabilities applied to each
evidence through review of source documents;
condition by discussing with employees of the
and
Group that sit outside of the Group’s finance
• assessing the appropriateness of the related
department and obtaining further corroborating
disclosures within the financial statements.
evidence through review of source documents;
and
• assessing management’s estimates and
• assessing the appropriateness of the related
Information Other than the Financial Report and Auditor’s Report Thereon
disclosures within the financial statements.
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
Information Other than the Financial Report and Auditor’s Report Thereon
include the financial report and our auditor’s report thereon.
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
Our opinion on the financial report does not cover the other information and we do not express any
include the financial report and our auditor’s report thereon.
form of assurance conclusion thereon.
Our opinion on the financial report does not cover the other information and we do not express any
In connection with our audit of the financial report, our responsibility is to read the other information
form of assurance conclusion thereon.
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.
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
If, based on the work we have performed, we conclude that there is a material misstatement of this
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
other information, we are required to report that fact. We have nothing to report in this regard.
If, based on the work we have performed, we conclude that there is a material misstatement of this
Responsibilities of the Directors’ for the Financial Report
other information, we are required to report that fact. We have nothing to report in this regard.
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
Responsibilities of the Directors’ for the Financial Report
2001 and for such internal control as the Directors determine is necessary to enable the
The Directors of the Company are responsible for the preparation of the financial report that gives
preparation of the financial report that gives a true and fair view and is free from material
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
misstatement, whether due to fraud or error.
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
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
misstatement, whether due to fraud or error.
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
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
to cease operations, or have no realistic alternative but to do so.
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
Auditor’s Responsibilities for the Audit of the Financial Report
to cease operations, or have no realistic alternative but to do so.
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
Auditor’s Responsibilities for the Audit of the Financial Report
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
material misstatement when it exists. Misstatements can arise from fraud or error and are
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
considered material if, individually or in the aggregate, they could reasonably be expected to
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
influence the economic decisions of users taken on the basis of this financial report.
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.
60
47
47
Alto Metals Limited
Independent Auditor’s 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 in pages 19 to 22 of the directors’ report for
the year ended 30 June 2017.
In our opinion, the Remuneration Report of Alto Metals Limited, for the year ended 30 June 2017,
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.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
M P Hingeley
Partner - Audit & Assurance
Perth, 27 September 2017
61
48
Annual Report 2017 Alto Metals Limited
Additional ASX Information
The following additional information is required by the Australian Securities Exchange. The information is current as at 6 October 2017.
(a) Distribution schedule and number of holders of equity securities as at 6 October 2017
Fully Paid Ordinary Shares
Number of Holders
Number of Shares
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,000 and over
Total
336
484
221
297
158
1,496
161,296
1,289,847
1,785,692
10,957,341
137,688,643
151,882,819
The number of holders with less than a marketable parcel of 5,495 fully paid ordinary shares as at 6 October 2017 is 836.
(b) 20 Largest holders of quoted equity securities as at 6 October 2017
The names of the twenty largest holders of fully paid ordinary shares (ASX code: AME) as at 6 October 2017 are:
Rank Holder
WINDSONG VALLEY PTY LTD
SINOTECH (HONG KONG) CORPORATION LIMITED
ENTERPRISE METALS LTD
MR STEPHEN STONE
CROWNLUXE INVESTMENT LTD
MR BRUCE ROBERT LEGENDRE
OSSART HOLDINGS PTY LTD
MR DERMOT MICHAEL RYAN + MRS VIVIENNE ELEANOR RYAN
CITICORP NOMINEES PTY LIMITED
MR ROBERT WILMOT CREASY
MR DERMOT MICHAEL RYAN + MRS VIVIENNE ELEANOR RYAN
PETER ERMAN PTY LIMITED
MR CHRISTOPHER CLEGG + MRS TAMARA FRANCIS CLEGG
MR DERMOT MICHAEL RYAN + MRS VIVIENNE ELEANOR RYAN
AM-AUSTRALIAN MINERALS EXPLORATION PTY LTD
MR PETER ROSS BILBE + MRS JANET CHRISTINE BILBE
GANDRIA CAPITAL PTY LTD
PYC INVESTMENTS PTY LIMITED
RICH CHANCE DEVELOP LIMITED
Top 20 Shareholders
Shares
21,788,531
15,900,000
12,000,000
8,787,500
7,500,000
3,548,500
3,000,000
3,000,000
2,727,747
2,506,904
1,669,237
1,500,000
1,425,000
1,254,237
1,239,200
1,000,000
1,000,000
1,000,000
1,000,000
%
14.35
10.47
7.90
5.79
4.94
2.34
1.98
1.98
1.80
1.65
1.10
0.99
0.94
0.83
0.82
0.74
0.66
0.66
0.66
0.66
92,976,690
61.22
MR WILLIAM JOHN ROBERTSON + MRS JUNE DIANE ROBERTSON
1,129,834
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
62
Annual Report 2017
63
Alto Metals Limited
Annual Report 2017
Additional ASX Information
(c) Substantial shareholders
Substantial shareholders in Alto Metals Limited and the number of equity securities over which the substantial shareholder has
a relevant interest as disclosed in substantial holding notices provided to the Company are listed below:
Holder
WINDSONG VALLEY PTY LTD
SINOTECH (HONG KONG) CORPORATION LIMITED
ENTERPRISE METALS LTD
MR STEPHEN STONE
(d) Unquoted Securites
Shares
21,788,531
15,900,000
12,000,000
8,787,500
%
14.35
10.47
7.90
5.79
The Company issued 25,000,000 performance shares for nil consideration to the vendors of Sandstone Exploration Pty Ltd following
approval at a shareholders meeting on 20 May 2016. These performance shares will convert into 25,000,000 fully paid ordinary
shares once an announcement of an inferred JORC 2012 Mineral Resource is made of a tonnage and grade to establish contained
metal of at least 500,000 ounces of gold (or other metal equivalent) on the Sandstone tenements any time prior to 23 June 2021.
The Company issued 10,750,000 performance rights to Directors and staff on 9 December 2016 following approval at the Annual
General Meeting of shareholders on 30 November 2016. The Performance rights were issued in four tranches with the following
hurdle rates:
Class
Performance Rights granted
to Directors and Staff
Expiry Date
Performance Condition
A
B
C
D
2,687,500
9 December 2017 the Company’s announcing to the ASX of an Inferred Mineral
Resource (as defined by a Competent Person in accordance with
JORC Code 2012) of at least 500,000 oz Au of at least 1.5g/t
2,687,500
9 December 2018 the Company’s announcing to the ASX of an Inferred Mineral
Resource (as defined by a Competent Person in accordance with
JORC Code 2012) of at least 1,000,000 oz Au of at least 1.5g/t
2,687,500
2,687,500
9 June 2019
the Company’s announcing to the ASX of a 20,000 oz Au sold
9 December 2019 the Company’s announcing to the ASX 50,000 oz Au sold
(e) Restricted Securities as at 6 October 2017
There were no restricted securities on issue as at 6 October 2017
(f) Voting Rights
All fully paid ordinary shares carry one vote per ordinary share without restriction.
Unquoted options have no voting rights.
(g) Corporate Governance
The Board of Alto Metals Limited is committed to achieving and demonstrating the highest standards of Corporate Governance.
The Board is responsible to its Shareholders for the performance of the Company and seeks to communicate extensively with
Shareholders. The Board believes that sound Corporate Governance practices will assist in the creation of shareholder wealth and
provide accountability. In accordance with ASX Listing Rule 4.10.3, the Company has elected to disclose its Corporate Governance
policies and its compliance with them on its website, rather than in the Annual Report. Accordingly information about the
Company’s Corporate Governance practices is set out on the Company’s website at www.altometals.com.au
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63
Alto Metals Limited
Tenement Report
As at 30 June 2017
Project
Sandstone
Sandstone
Sandstone
Sandstone
Sandstone
Sandstone
Sandstone
Sandstone
Gascoyne
Marmion
Yalgoo
Yalgoo
Tenement
Interest Held
State
Lease Status
Holder
E57/1029
E57/1030
E57/1031
E57/1033
E57/1044
E57/1054
P57/1377
P57/1378
E09/2204
E29/980
E59/2180
E59/2060
100%**
100%**
100%**
100%**
100%**
100%**
100%
100%
100%
100%
100%
100%
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
Granted
Granted
Granted
Granted
Granted
Sandstone Exploration Pty Ltd
Sandstone Exploration Pty Ltd
Sandstone Exploration Pty Ltd
Sandstone Exploration Pty Ltd
Sandstone Exploration Pty Ltd
Application
Sandstone Exploration Pty Ltd
Granted
Granted
Granted
Granted
Granted
Granted
Sandstone Exploration Pty Ltd
Sandstone Exploration Pty Ltd
Alto Metals Limited
Alto Metals Limited
Alto Metals Limited
Alto Metals Limited
Annual Report 2017
64
PB
www.altometals.com.au