Alto Metals Limited
ABN 62 159 819 173
2019 ANNUAL REPORT
CORPORATE DIRECTORY
Directors
Mr Matthew Bowles (Non-executive Director)
Dr Jingbin Wang (Non-executive Director)
Mr Terry Wheeler (Non-executive Chairman)
Company Secretary
Mr Graeme Smith
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
Auditor
Grant Thornton Audit Pty Ltd
Central Park
Level 43, 152-158 St Georges Terrace
PERTH WA 6000
Telephone 08 9480 2000
Facsimile 08 9322 7787
Website: www.grantthornton.com.au
Email: admin@grantthornton.com.au
Share Registry
Automic
Level 2
267 St Georges Terrace
Perth WA 6000
Australian Securities Exchange
ASX code: AME, AMENA
Bank
ANZ
Cnr Hay and Outram Streets
WEST PERTH, WA 6005
CONTENTS
CORPORATE DIRECTORY ..................................................................................................................................
DISCLAIMER AND CAUTIONARY STATEMENTS ..............................................................................................
REVIEW OF OPERATIONS ................................................................................................................................ 1
DIRECTORS’ REPORT ....................................................................................................................................... 8
AUDITOR’S INDEPENDENCE DECLARATION ............................................................................................... 18
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ........... 19
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ........................................................................... 20
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ........................................................................... 21
CONSOLIDATED STATEMENT OF CASH FLOWS ........................................................................................ 22
NOTES TO THE FINANCIAL STATEMENTS ................................................................................................... 23
DIRECTORS’ DECLARATION .......................................................................................................................... 48
INDEPENDENT AUDITOR’S REPORT ............................................................................................................ 49
ADDITIONAL ASX INFORMATION ................................................................................................................... 53
TENEMENT REPORT ....................................................................................................................................... 55
DISCLAIMER AND CAUTIONARY STATEMENTS
Disclaimer
This document has been prepared by Alto Metals Limited (the “Company”). It should not be considered as an
invitation or offer to subscribe for or purchase any securities in the Company or as an inducement to make an
invitation or offer with respect to those securities. No agreement to subscribe for securities in the Company will
be entered into on the basis of this document. This document is provided on the basis that neither the Company
nor its officers, shareholders, related bodies corporate, partners, affiliates, employees, representatives and
advisers make any representation or warranty (express or implied) as to the accuracy, reliability, relevance or
completeness of the material contained in the document and nothing contained in the document is, or may be
relied upon as a promise, representation or warranty, whether as to the past or the future. The Company hereby
excludes all warranties that can be excluded by law.
The document may contain forward-looking information and prospective financial material, which is predictive
in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties, and
may differ materially from results ultimately achieved. All references to future production, production targets and
resource targets and infrastructure access are subject to the completion of all necessary feasibility studies,
permitting, construction, financing arrangements and infrastructure-related agreements. Where such a
reference is made, it should be read subject to this paragraph and in conjunction with further information about
the Mineral Resources and Exploration Results, as well as the Competent Persons' statements. All persons
should consider seeking appropriate professional advice in reviewing the document and all other information
with respect to the Company and evaluating the business, financial performance and operations of the
Company. Neither the provision of the document nor any information contained in the document or subsequently
communicated to any person in connection with the document is, or should be taken as, constituting the giving
of investment advice to any person.
Forward-looking statements
This document may contain certain forward-looking statements. Such statements are only predictions, based
on certain assumptions and involve known and unknown risks, uncertainties and other factors, many of which
are beyond the Company’s control. Actual events or results may differ materially from the events or results
expected or implied in any forward-looking statement. The inclusion of such statements should not be regarded
as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions or that
any forward looking statements will be or are likely to be fulfilled. The Company undertakes no obligation to
update any forward-looking statement to reflect events or circumstances after the date of this document (subject
to securities exchange disclosure requirements). The information in this document does not take into account
the objectives, financial situation or particular needs of any person. Nothing contained in this document
constitutes investment, legal, tax or other advice.
REVIEW OF OPERATIONS
Introduction
Alto Metals Limited is a Western Australian based company and is focused on gold exploration in Australia. The
company holds approximately 800 km2 of the prospective Sandstone Greenstone Belt, ~600km north of Perth
in the East Murchison Mineral Field of Western Australia (Figure 1).
Since acquiring the Project in June 2016, Alto has compiled and reviewed a large legacy database ahead of a
series of focused exploration drilling campaigns which commenced in November 2016.
Alto has defined JORC (2012) Mineral Resources of 5.38Mt @ 1.7 g/t Au for 290,000 ounces gold and identified
numerous drill ready targets using a systematic Mineral System approach.
Figure 1. Location of Sandstone Gold Project within the East Murchison Gold Field, WA
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2019 Annual Report
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Mineral Resource Estimation
In February 2019, Alto completed a drilling program at the Havilah and Ladybird gold prospects to confirm the
geological model and previous mineralised drill intercepts, and to obtain material for preliminary metallurgical
testwork for inclusion in mineral resource estimation.
On 11 June 2019 Alto announced a resource upgrade for the Sandstone Gold Project. The upgraded Mineral
Resource contained the maiden Mineral Resource estimate for the Havilah and Ladybird deposits (Figure 2) in
compliance with the JORC (2012) reporting standard.
The resources were based upon work by Alto’s geologists and external resource consultant Dr Spero Carras of
Carras Mining Pty Ltd.
Figure 2. Priority Targets at Sandstone Gold Project
The Havilah deposit is located approximately 35km SE of the town of Sandstone and lies immediately to the
north of the Sandstone-Menzies Road. The recorded underground production from the area was 48,497 tonnes
@ 21.6g/t Au for 33,870oz between 1904 and 1929. A high-grade ‘footwall’ zone was stoped out, and a lower
Alto Metals Limited
2019 Annual Report
2
grade ‘hanging wall’ zone of mineralisation was left intact and was subsequently drilled by modern explorers.
The Havilah mine area is underlain by a WNW striking dolerite unit, bounded to the northeast by pillowed and
amygdaloidal basalt, and to the southwest by ultramafic rocks.
The Havilah deposit has a (JORC 2012) Inferred Mineral Resource of 371,000 tonnes @1.70 g/t Au for 20,300
ounces.
The Ladybird deposit is located approximately 25km SE of the town of Sandstone and lies approximately 3km
north of the Sandstone-Menzies Road. Gold mineralisation at Ladybird occurs within a sub-vertical dipping
BIF/chert unit that has a strike of approximately 300 degrees. The BIF/chert unit is located at or near the contact
between a mafic unit (to SW) and an ultramafic unit (to NE).
The Ladybird deposit has a (JORC 2012) Inferred Mineral Resource of 136,000 tonnes @1.91 g/t Au for 8,400
ounces.
Figure 3. Havilah NW-SE 1150 Schematic Long Section A-A’ (+/-50m)
Figure 4. Ladybird Prospect – Schematic Cross Section A – A’
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2019 Annual Report
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Sandstone Gold Project Mineral Resources as at 30 June 2019
Together with existing deposits at Lord Henry and Lord Nelson estimated in 2017 by Snowden Mining Industry
Consultants Pty Ltd (Snowden), Alto’s total JORC 2012 compliant mineral resource inventory now consists of
Indicated and Inferred Mineral Resources of 5.38Mt @ 1.7 g/t Au for 290,000 ounces.
Table 1. Sandstone Gold Project – Total Mineral Resources (JORC 2012) at 30 June 2019
Deposit
Lord Henry1
TOTAL INDICATED
Lord Henry1
Lord Nelson2
Indomitable Camp 3
& Vanguard Camp
Category
Indicated
Cut-off
(g/t Au)
0.8
Inferred
Inferred
0.8
0.8
Tonnes
(kt)
1,200
1,200
110
980
Grade
(g/t Au)
1.6
1.6
1.3
2.2
Contained
gold (oz)
65,000
65,000
4,000
68,000
Inferred
0.3 - 0.5
2,580
1.49
124,000
Havilah & Ladybird 4
Inferred
0.5
TOTAL INFERRED
TOTAL INDICATED & INFERRED
510
4,180
5,380
1.8
1.7
1.7
29,000
225,000
290,000
Note 1. ASX Release 16 May 2017. “Maiden Lord Henry JORC 2012 Mineral Resource of 69,000oz.”
Note 2. ASX Release 28 April 2017. “Lord Nelson Mineral Resource Increased to 68,000oz.”
Note 3. ASX Release 25 Sept 2018. “Maiden Gold Resource at Indomitable & Vanguard Camps, Sandstone WA.”
Note 4. ASX Release 11 June 2019. “Alto increases Total Mineral Resource Estimate to 290.000oz, Sandstone Gold Project.”
Notes:
• All Mineral Resources are estimated under guideline of JORC 2012.
• For reporting purposes, all Tables have been rounded. Rounding may result in some slight discrepancies
in totals reported.
• For the Indomitable, Vanguard, Havilah and Ladybird deposits, only material within the A$2,000 per ounce
gold price optimised Whittle pit shells is reported as Inferred Resource
• For the Indomitable, Vanguard, Havilah and Ladybird deposits, the drilling density was sufficient to have
defined the Resources as Indicated, however due to the lack of definitive bulk density information all the
Resources have been placed in the Inferred category and use nominal assigned regional bulk densities.
• For the Indomitable, Vanguard, Havilah and Ladybird deposits, Preliminary metallurgical testwork
completed by Alto, and historic metallurgical data suggests high recoveries in excess of 90% would be
expected.
Drilling Activity
Following the drilling at Havilah and Ladybird, the Company completed an additional 38 reverse circulation drill
holes for approximately 6,300m at the Tiger Moth, Vanguard and Lord Nelson prospects.
The drilling at Tiger Moth and Vanguard demonstrated the continuity of mineralisation at depth and the potential
for further resource growth at these prospects.
The drilling at Lord Nelson, on an 80m step out, confirmed the down plunge extension of mineralisation. The
drilling results also demonstrated that the granodiorite host rock in the Lord Nelson open pit broadens to the
south and there is potential to discover additional gold mineralisation and build on the current mineral resource
(JORC 2012, Inferred Mineral Resource of 908,000 tonnes @ 2.2g/t Au for 68,000oz gold).
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2019 Annual Report
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Figure 5. Plan view of Lord Nelson deposit with down hole Au intersections projected to the surface, and
2019 RC intersections (yellow box) at Lord Nelson Southern Extension
Significant drill results from Alto’s drilling at Lord Nelson Southern Extension, include:
SRC136
SRC148
7m @ 2.2 g/t gold from 183m (incl. 1m @ 11.2g/t gold from 189m)
3m @ 1.2 g/t gold from 43m and 12m @ 3.4 g/t gold from 66m (incl.
5m @ 6.1 g/t gold from 70m)
Previous Troy Resources NL drill results, less than 80m below the Open Pit, and within the current Inferred
Mineral Resource, include:
TRC383
TRC461
TRC374
TRCD291
TRC339
17m @ 3.2 g/t gold from 82m
5m @ 10.4 g/t gold from 92m
5m @ 13.0 g/t gold from 99m
7.8m @ 7.8 g/t gold from 117m
6m @ 16.4 g/t gold from 167m
A72098*
A72098
A72098
A69776*
A69776
Previous Troy Resources NL drill results not in the current Inferred Mineral Resource include:
TRC283
and
TRC328
6m @ 2.5 g/t gold from 82m
3m @ 3.6 g/t gold from 92m
7m @ 3.1 g/t gold from 92m
A69776
A69776
Note: Source is *WA Dep’t of Mines, Industry Regulation and Safety, WAMEX Reporting System
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2019 Annual Report
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Figure 6. Lord Nelson Deposit, Longitudinal Projection, showing Mined Block Model, Unmined Resource
Block Model, and Location of 2019 RC drill sections testing Lord Nelson Southern Extension
Exploration Incentive Scheme Grant Application
During the year the Company was successful in its application for a grant of up to $150,000 under Round 19 of
the WA Governments Exploration
Scheme.
Incentive
The grant will assist in funding drilling to test the
Chance Prospect located within the Edale Shear
Zone on
the Sandstone
Greenstone Belt.
the eastern side of
Figure 7. Location of Chance Prospect
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Mining Lease Applications
As part of its long-term strategy the Company applied for mining leases over the Indomitable, Vanguard,
Havilah, Lord Henry and Lord Nelson gold deposits.
On the 31 July 2019 Alto announced that Mining Lease M57/646 over the Indomitable Camp had been granted.
The Indomitable Camp includes the Indomitable, Indomitable North, Tiger Moth and Piper gold deposits, which
have combined (JORC 2012) Inferred Mineral Resources of 1.7Mt @ 1.3 g/t Au for 74,000oz.
Competent Person Statements
The information in this report that relates to 2018 Vanguard and Indomitable Camp Inferred Mineral Resources, and the 2019 Havilah
and Ladybird Inferred Mineral Resources is based on resource estimation by Dr. Spero Carras of Carras Mining Pty Ltd. Dr. Carras
is a Fellow of the Australasian Institute Mining and Metallurgy (AusIMM) and has over 40 years of experience relevant to the style of
mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person
as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves. Dr. S. Carras consents to the inclusion in the report of the matters based on the
information in the context in which it appears.
With regards to the information in this report that relates to 2017 Lord Henry and Lord Nelson Mineral Resource Estimates by
Snowden, the Company confirms that it is not aware of any further new information or data that materially affects the
information included in the original market announcements by Alto Metals Limited regarding Lord Nelson released on 28
April 2017, and Lord Henry on 5 May 2017, and confirms that all material assumptions and technical parameters
underpinning those estimates in the relevant market announcement continue to apply and have not materially changed. To
the extent disclosed above, the Company confirms that the form and context in which the Competent Person’s findings for
the 2017 Lord Henry and Lord Nelson Mineral Resource Estimates are presented have not been materially modified from
the original market announcement.
The information in this Report that relates to Exploration Results is based on information compiled by Dr Changshun Jia, who is
an employee of Alto Metals Limited. Dr Jia is a Member of the Australian Institute of Geoscientists and has sufficient experience
of relevance to the styles of mineralisation and the types of deposits under consideration, and to the activities undertaken, to qualify
as a Competent Person as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr Jia consents to the inclusion in the report of the
matters based on the information in the context in which it appears.
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.
CORPORATE
On 26 February 2019, Matthew Bowles was appointed as a Non-Executive Director of the Company following
the resignation of Dermot Ryan, the Managing Director.
On 1 March 2019, Middle Island Resources Limited (MDI) advised that it intended to make an off-market
takeover offer of 5 MDI shares for every one Alto share.
On 13 May 2019, Alto placed 56,875,060 ordinary shares and 28,437,523 Options pursuant to the shortfall
from its recent rights issue.
On 5 June 2019 these shares were issued into a separate trading class (AMENA) and suspended from
trading as MDI would not include them in their takeover offer.
On 27 June MDI advised that they were increasing the consideration to 6 MDI shares for every 1 Alto share.
As at the date of this report, there have been 6 Supplementary Bidders Statements from MDI extending the
original offer to 29 November 2019. The minimum bid condition for the offer is 50.1%. At the date of the sixth
supplementary Bidders Statements, MDI had received 1.57% shareholder acceptance of the Offer.
Alto Metals Limited
2019 Annual Report
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DIRECTORS’ REPORT
Your Directors present their report on Alto Metals Limited (“Alto”, “Company” or “Group”) and its controlled
entities (“Group”) for the financial year ended 30 June 2019.
Directors
The names of Directors in office at any time during or since the end of the period are:
Dr Jingbin Wang
Mr Terry Wheeler
Mr Matthew Bowles (appointed 27 February 2019)
Mr Dermot Ryan (resigned 27 February 2019)
Mr Stephen Stone (resigned 17 July 2018)
Mr Terry Streeter (resigned 8 November 2018)
Directors have been in office since the start of the financial period to the date of this Report unless otherwise
stated.
Information on Directors
Matthew Bowles (Non-Executive Director, appointed 27 February 2019)
Mr Bowles is a senior corporate finance executive with extensive corporate advisory, private equity and capital
markets experience within the resources sector. He has a depth of experience in domestic and cross border
financing, joint venture and M&A transactions in Africa, the Americas and Australia.
Mr Bowles was previously the Chief Development Officer for a West African focused gold company. He
commenced his career with Rio Tinto where he worked for nine years in various corporate and commercial
roles, before moving to London to work in resources banking and finance. Since his return to Australia he has
held senior roles with global advisory firms focused on the resources sector.
There have been no other listed entity directorships in the last 3 years.
Dr Jingbin Wang (Non-Executive Director, appointed12 October 2016, held the position of Chairman from 12
October 2016 - 13 March 2018)
Dr. Wang is a senior geologist with extensive international minerals experience, and has been Chairman since
March 2004 of Sinotech Minerals Exploration Co. Ltd. He has a B.Sc in Mineral Prospecting & Exploration from
Central South University of Technology in Changsha, China, and an MSc and PhD in Magmatic Petrology &
Metallogeny and Geotectonics & Metallogeny from the same university.
He has been President of the prestigious Beijing Institute of Geology for Mineral Resources in China since 2002
and is an accomplished mining team leader with excellent 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
resources exploration and mining.
Directorships held in other listed entities: Enterprise Metals Ltd (31 July 2011 – 12 October 2016)
There have been no other listed entity directorships in the last 3 years.
Terry Wheeler (Non-Executive Chairman, appointed 8 November 2018, previously Non-Executive Director,
from 9 September 2016 to 8 November 2018)
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.
Alto Metals Limited
2019 Annual Report
8
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.
Directorships held in other listed entities: There have been no other listed entity directorships in the last 3 years.
Dermot Ryan (Resigned 27 February 2019)
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.
Directorships held in other listed entities: Enterprise Metals Limited (October 2008 – present)
There have been no other listed entity directorships in the last 3 years.
Stephen Stone (Resigned 17 July 2018)
Terry Streeter (Resigned 8 November 2018)
Company Secretary
Graeme Smith Mr Smith was appointed Company Secretary on 22 March 2019. Mr Smith is a corporate
governance & finance professional with over 25 years’ experience in accounting and company administration.
He is a Fellow of the Australian Society of Certified Practicing Accountants, the Institute of Chartered Secretaries
and Administrators and the Governance Institute of Australia. He is the principal of Wembley Corporate which
provides Company Secretarial, CFO, and Corporate Governance services to public and private companies.
Mr Smith is a Non-Executive Director of Anglo Australia Resources NL.
Mr Patrick Holywell (removed on 27 February 2019.)
Principal Activities
The principal activities of the Group during the financial period were the exploration of a number of gold
tenements in Western Australia.
Operating Results
The consolidated loss of the Group after providing for income tax amounted to $1,147,517 (2018: $624,026).
The consolidated loss includes an amount of $5,196 (2018: $16,000) related to exploration expenses which
have been written off during the year following a detailed exploration review.
Financial Position
The net assets of the Group at 30 June 2019 are $11,360,281 (2018: $9,491,047).
Risk Management
The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that
activities are aligned with the risks and opportunities identified by the Board. The Board believes that it is crucial
for all Board members to be a part of this process, and as such the Board has not established a separate risk
management committee. The Board has a number of mechanisms in place to ensure that management's
objectives and activities are aligned with the risks identified by the Board. These include the following:
Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders’
needs and manage business risk.
Implementation of Board approved operating plans and budgets and Board monitoring of progress against
these budgets.
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2019 Annual Report
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Significant Changes in State of Affairs
There have been no significant changes in the affairs of the Group during the year.
Significant Events After the Reporting Date
On 2 July 2019, 3 million ordinary shares issued on 17 January 2019, for the purchase of two meter prospecting
and fossicking rights at Sandstone, were released from escrow.
On 18 July 2019, the Company raised a further $600,000 by way of issue of 16,666,666 ordinary shares at
$0.036 per share together with 1 free attaching option for every two shares held exercisable at $0.07. The
expiry date is 18 January 2021. These shares and options were issued to Alto’s Chairman and major
shareholder, Mr Terry Wheeler.
No other matters or circumstances have arisen since the end of the financial year which significantly affected
or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of
the Group in future financial years.
Likely Developments and Expected Results
The Group expects to maintain the present status and level of operations and hence there are no likely
developments in the Group's operations.
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.
Environmental Regulation and Performance
The Group is subject to significant environmental regulation in respect to its exploration activities. The Group
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 year under review.
Dividends Paid or Recommended
No dividend has been paid or recommended.
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2019 Annual Report
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Meetings of Directors
During the financial period, the following meetings of Directors were held. Attendances by each Director during
the period were as follows:
Directors' Meetings
Committee
Meetings
Number
eligible to
attend
2
8
-
5
8
8
Number
attended
2
8
-
5
8
8
-
-
-
-
-
-
Matthew Bowles(1)
Dermot Ryan(2)
Stephen Stone(3)
Terry Streeter(4)
Jingbin Wang
Terry Wheeler
(1) Appointed 27 February 2019
(2) Resigned 27 February 2019
(3) Resigned 17 July 2018
(4) Resigned 8 November 2018
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 $9,523 (2018: $7,200).
• No indemnity has been given to the Company’s auditors.
Options
At the date of this report, the following options were on issue over ordinary shares of Alto Metals Limited (2018:
Nil).
Unlisted Options
Unlisted Options @ $0.07 Expiry 17/08/2020
Escrowed Unlisted Options @ $0.07 Expiry 13/11/2020
Unlisted Options @ $0.07 Expiry 09/03/2021
Number
4,571,711
28,437,523
30,000,000
Performance Shares
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 previously 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:
Alto Metals Limited
2019 Annual Report
11
Class Performance
Expiry Date
Performance Condition
Rights granted to
Directors and
Staff
A
2,687,500
9 December 2017
B
2,687,500
9 December 2018
C
D
2,687,500
9 June 2019
2,687,500
9 December 2019
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
the Company's announcing to the ASX of a 20,000 oz Au
sold
the Company's announcing to the ASX 50,000 oz Au sold
During the current financial year, 6,625,000 performance rights were cancelled as a result of staff member
resignations as well as vesting conditions not being met.
Non-audit Services
The following non-audit services were provided by the entity's auditor, Grant Thornton Audit Pty Ltd, or
associated entities. The directors are satisfied that the provision of non-audit 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 board 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 non-audit services:
Tax compliance services
Proceedings on Behalf of Company
2019
$
2018
$
10,075
10,000
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.
Alto Metals Limited
2019 Annual Report
12
This report details the nature and amount of remuneration for each Director of Alto Metals Limited and other
key management personnel (“KMP”).
REMUNERATION REPORT (AUDITED)
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 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 Board reviews executive packages periodically 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 Board determines payments to the Non-Executive
Directors and reviews their remuneration periodically 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 as remuneration to Directors as 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 2019.
Voting and comments made at the Company’s 2018 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 2018 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 2019
There were no cash bonuses paid during the period and there are no set performance criteria for achieving
cash bonuses. The following table outlines benefits and payment details, in respect to the financial period, as
well as the components of remuneration for each member of the key management personnel of the Company.
Alto Metals Limited
2019 Annual Report
13
Table of Benefits and Payments for the Period Ended 30 June 2019
Short-term benefits
Post-
employment
benefits
Equity-
settled
share-
based
payments
Salary,
fees and
leave
$
36,530
40,000
13,332
145,356
50,157
1,720
51,562
338,657
36,247
220,000
49,603
40,000
36,530
27,225
35,940
445,545
Cash
bonuses
Superannuation
Equity
Total
Remuneration
performance
based
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
3,470
-
-
-
-
-
-
3,470
-
-
-
-
3,470
-
-
3,470
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
%
40,000
40,000
13,332
145,356
50,157
1,720
51,562
342,127
36,247
220,000
49,603
40,000
40,000
27,225
35,940
449,015
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2019
T Wheeler
J Wang
M Bowles(1)
D Ryan(2)
T Streeter (3)
S Stone(4)
P Holywell(5)
2018
T Streeter (3)
D Ryan(2)
J Wang
S Stone(4)
T Wheeler
P Holywell(5)
S Middlemas(6)
(1) Mr Bowles was appointed to the board on 27 February 2019. All fees paid to Mr Bowles are paid to his private company Atlantic Capital
Pty Ltd. In addition to his directors’ fees, Mr Bowles received $43,250 in consulting services to the Company.
(2) Mr Ryan resigned from the board on 27 February 2019. All fees paid to Mr Ryan are paid to his private company Xserv Pty Ltd.
(3) Mr Streeter resigned from the board on 8 November 2018.
(4) Mr Stone resigned from the board on 17 July 2018. All fees paid to Mr Stone are paid to his private company Stepstone Pty Ltd.
(5) Mr Holywell was removed from his position as Company Secretary on 27 February 2019. All fees paid to Mr Hollywell are paid to his
private company PWT Corporate Pty Ltd.
(6) Mr Middlemas resigned from his position as Company Secretary on 28 February 2018. All fees paid to Sam Middlemas are paid to his
private company Sparkling Investments Pty Ltd.
Equity instrument disclosures relating to KMP
The number of ordinary shares and options were on issue over ordinary shares of Alto Metals Limited held by
each KMP of the Company during the financial period is as follows:
Alto Metals Limited
2019 Annual Report
14
Balance at the
start of the
period
Received
during the
period as
compensation
Other changes during the period Balance at the
Ordinary
Shares
Unlisted
Options
end of the
period
31,405,198
-
-
6,590,141
1,450,000
8,787,500
80,000
48,312,839
-
-
-
-
-
-
-
-
9,302,977
-
-
(6,590,141)
(1,450,000)
(8,787,500)
(80,000)
(7,604,664)
1,447,221
-
42,155,396
-
-
-
-
-
-
-
-
-
-
1,447,221
-
42,155,396
2019
Ordinary
Shares
T Wheeler
J Wang
M Bowles(1)
D Ryan(2)
T Streeter(3)
S Stone(4)
P Holywell (5)
Total
(1) Appointed 27 February 2019.
(2) Resigned 27 February 2019.
(3) Resigned 8 November 2018.
(4) Resigned 17 July 2018.
(5) Removed 27 February 2019.
Performance rights
The number of 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
-
750,000
-
-
-
(500,000)
-
250,000
-
-
-
-
3,750,000
-
562,500
-
5,062,500
-
-
-
-
-
(3,750,000)
-
(562,500)
-
(4,812,500)
-
-
-
-
250,000
2019
Performance Rights
T Wheeler
J Wang
M Bowles(1)
D Ryan(2)
T Streeter (3)
S Stone(4)
P Holywell(5)
Total
(1) Appointed 27 February 2019.
(2) Resigned 27 February 2019.
(3) Resigned 8 November 2018.
(4) Resigned 17 July 2018.
(5) Removed 27 February 2019.
Alto Metals Limited
2019 Annual Report
15
Loans to KMP
There were no loans made to KMP as at 30 June 2019, nor were any made during the reporting period.
C. Share-based compensation
Incentive Option Scheme
Options, where appropriate, may be granted under the Alto Metals Limited Employee Share Option Plan
(“ESOP”). 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 as part of remuneration to Directors and Key Management Personnel during
the 2019 financial period (2018: nil).
Performance Rights
No performance rights were issued to Directors and Key Management Personnel during the 2019 financial
period (2018: nil).
D. Other Transactions with Directors and Key Management Personnel
On 7 December 2018, the Company entered into a convertible loan financing facility agreement (“Loan
Agreement”) with Windsong Valley Pty Ltd a related party of the Chairman. Windsong Valley provided to the
Company $300,000 (in three $100,000 tranches) (“Convertible Loan”). The Company was not required to
provide any security for the Convertible Loan. Interest was accruable on the Convertible Loan at a rate of 8%
per annum.
On 26 February, the Company received the approval of Shareholders to issue Loan Conversion Shares to
Windsong Valley Pty Ltd pursuant to the Convertible Loan agreement.
On 6 March 2019 the Company issued 6,382,948 shares (being conversion of $300,000 Convertible Loan) to
Windsong Valley Pty Ltd a related party of the chairman.
On 5 May 2019, the Chairman advanced the Company $50,000. The funds were repaid in full on 16 May
2019. No interest was paid on the advance.
----- End of Audited Remuneration Report -----
Alto Metals Limited
2019 Annual Report
16
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the period ended 30 June 2019 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.
Terry Wheeler
Non-Executive Director
Dated this 30th day of September 2019
Alto Metals Limited
2019 Annual Report
17
Level 3, 170 Frome Street
Adelaide SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T +61 8 8372 6666
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 2019, I declare that, to the best of 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
J L Humphrey
Partner – Audit & Assurance
Adelaide, 30 September 2019
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘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.
Liability limited by a scheme approved under Professional Standards Legislation.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Other income
Accounting and audit fees
Share registry and listing fees
Employee benefits expense
Consulting expense
Computers and software
Depreciation and amortisation expense
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 for the year
Note
2
3
3
16
19
3
4
2019
$
8,174
(20,341)
(80,117)
(397,267)
(217,510)
(47,803)
(23,997)
(20,835)
(57,753)
(102,984)
(97,344)
(18,138)
-
-
(5,196)
(66,406)
(1,147,517)
-
(1,147,517)
2018
$
327,572
(34,723)
(42,223)
(403,567)
(58,178)
(35,000)
(34,676)
(16,682)
(84,461)
(2,487)
(81,044)
(43,389)
(138,517)
100,064
(16,000)
(60,715)
(624,026)
-
(624,026)
Other comprehensive income, net of tax
Items that may be subsequently reclassified to profit or loss
Transfer to profit or loss on disposal of AFS financial asset
Revaluation of financial asset
Items not to be reclassified to profit or loss in subsequent
periods
Changes in the fair value of equity instruments carried at fair value
through other comprehensive income
Other comprehensive income / (loss) for the period
Total comprehensive loss attributable to members of the parent
entity
-
-
16
(281,124)
(15,000)
16
(32,500)
-
(32,500)
(296,124)
(1,180,017)
(920,150)
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
7
7
(0.55)
(0.55)
(0.36)
(0.36)
The accompanying notes form part of these financial statements.
Alto Metals Limited
2019 Annual Report
19
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Current Assets
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
Prepayments
Total Current Assets
Non-Current Assets
Equity instruments at fair value through other comprehensive income
Plant and equipment
Intangible assets
Exploration and evaluation
Total Non-Current Assets
TOTAL ASSETS
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
2019
$
2018
$
8
9
10
11
12
13
14
1,327,148
140,929
-
160,955
1,629,032
856,345
212,979
52,500
4,228
1,126,052
20,000
103,092
10,637
10,337,937
10,471,666
12,100,698
-
111,788
23,043
8,727,068
8,861,899
9,987,951
726,476
13,941
740,417
740,417
496,904
-
496,904
496,904
11,360,281
9,491,047
15
16
24,218,529
(32,500)
(12,825,748)
11,360,281
21,169,278
-
(11,678,231)
9,491,047
The accompanying notes form part of these financial statements.
Alto Metals Limited
2019 Annual Report
20
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Issued
Capital
Share
Reserve
AFS
Reserve
Equity
Instruments
at FVOCI
Reserve
Accumulated
Losses
Total
$
$
$
$
$
$
18,680,470
100,064
157,607
-
(11,054,205)
7,883,936
(100,064)
123,517
-
(281,124)
(100,064)
(157,607)
-
-
-
2,518,248
(29,440)
-
-
-
-
-
-
-
-
-
-
23,453
(624,026)
(905,150)
(624,026)
(881,697)
2,518,248
(29,440)
-
-
-
-
-
-
-
-
21,169,278
-
-
-
(11,678,231)
9,491,047
Issued
Capital
Share
Reserve
AFS
Reserve
Equity
Instruments
at FVOCI
Reserve
Accumulated
Losses
Total
$
$
$
$
$
$
21,169,278
-
-
-
-
-
-
3,245,287
(196,036)
24,218,529
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(32,500)
(11,678,231)
9,491,047
(1,147,517)
(1,147,517)
-
-
-
(32,500)
(32,500)
(1,147,517)
(1,180,017)
-
-
-
-
3,245,287
(196,036)
(32,500)
(12,825,748)
11,360,281
Balance at 1 July
2017
Loss attributable to
members of the
entity for the period
Revaluation of AFS
Assets
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
2018
Balance at 1 July
2018
Loss attributable to
members of the
entity for the period
Loss for the period
Change in accounting
policy arising from
AASB 9
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
Balance at 30 June
2019
The accompanying notes form part of these financial statements.
Alto Metals Limited
2019 Annual Report
21
CONSOLIDATED STATEMENT OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers and employees
Net cash provided by/(used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of available for sale asset
Purchase of plant and equipment
Payments for exploration and evaluation expenditure
Net cash provided by/(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
Proceeds from related party loan
Net cash provided by/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at 30 June
8
The accompanying notes form part of these financial statements.
Note
2019
$
2018
$
7,573
(866,530)
(858,957)
25,571
(843,846)
(818,275)
17a
-
-
(1,257,801)
(1,257,801)
634,643
(38,422)
(2,338,855)
(1,742,634)
2,471,385
(183,824)
300,000
2,587,561
470,803
856,345
1,327,148
2,518,248
(29,440)
-
2,488,808
(72,101)
928,446
856,345
Alto Metals Limited
2019 Annual Report
22
NOTES TO THE FINANCIAL STATEMENTS
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 $1,147,517 (2018: $624,026) and
a cash outflow from operating activities of $858,957 (2018: $818,275) for the year ended 30 June 2019.
The Board considers that the Company is a going concern and recognises that farming out some of its
tenements, additional funding or selling some of the investments 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 will have the ability to issue additional equity under the Corporations Act 2001 and ASX Listing
Rule 7.1 or otherwise; and
The Company’s commitment to exploration expenditure is discretionary and expenditure requirements are
minimal.
Accordingly, the Directors believe that the Company will have sufficient funding to enable it to continue as a
going concern and that it is appropriate to adopt that basis of accounting in the preparation of the financial
report.
(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.
Alto Metals Limited
2019 Annual Report
23
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
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 for the period comprises current income tax expense and deferred tax expense.
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 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.
(C)
PROPERTY, PLANT & EQUIPMENT
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
Alto Metals Limited
2019 Annual Report
24
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
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
Motor vehicles
Depreciation Rate
25%
25-33%
25%
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.
(E)
EXPLORATION & 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.
Alto Metals Limited
2019 Annual Report
25
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
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 profit or loss and other 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
As mentioned in Note 1(S), AASB 9 replaces AASB 139 Financial Instructions: Recognition and Measurement
(AASB 139) for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the
accounting for financial instruments: classification and measurement; impairment; and hedge accounting.
When adopting AASB 9, the Group elected not to restate prior periods. Rather, differences arising from the
adoption of AASB 9 in relation to classification, measurement, and impairment are recognised in opening
retained earnings at 1 July 2018.
Accounting policy applicable from 1 July 2018
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are
transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at
the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted
for transaction costs (where applicable).
Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets, other than those designated and effective as
hedging instruments, are classified into the following category upon initial recognition:
• equity instruments at fair value through other comprehensive income (FVOCI)
• amortised cost
Classification is determined by both:
• The entity’s business model for managing the financial asset
• The contractual cash flow characteristics of the financial assets
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
Alto Metals Limited
2019 Annual Report
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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Equity instruments at fair value through other comprehensive income (Equity FVOCI)
Investments in equity instruments that are not held for trading are eligible for an irrevocable election at inception
to be measured at FVOCI. Under this category, subsequent movements in fair value are recognised in other
comprehensive income and are never reclassified to profit or loss.
Classification and measurement of financial liabilities
As the accounting for financial liabilities remains largely unchanged from AASB 139, the Group’s financial
liabilities were not impacted by the adoption of AASB 9. However, for completeness, the accounting policy is
disclosed below. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for
transaction costs unless the Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for
derivatives and financial liabilities designated at FVPL, which are carried subsequently at fair value with gains
or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective
as hedging instruments). The Group has not designated any financial liabilities at FVPL.
Accounting policy applicable before 1 July 2018
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.)
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 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
Alto Metals Limited
2019 Annual Report
27
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
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.
(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 wholly 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.
Alto Metals Limited
2019 Annual Report
28
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(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)
OTHER INCOME
Interest income is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
All other income 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.
(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.
Equity instruments at FVOCI reserve – comprises gains and losses relating to these types of financial
instruments.
•
•
•
(P)
EARNINGS PER SHARE
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.
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.
Alto Metals Limited
2019 Annual Report
29
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
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.
(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 25 million 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 probable and accordingly the full value of the performance shares has been
booked in these financials.
Key Estimates – Performance Rights Probability
In the fiscal 2017 report period, the Company issued 10,750,000 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
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 rights have been recorded.
(S)
NEW AND AMENDED STANDARDS ADOPTED BY THE GROUP IN THIS FINANCIAL REPORT
The Group has adopted the new accounting standards that have become effective this year, and are as follows:
AASB 9 Financial Instruments (2014) became mandatorily effective on 1 January 2018. Accordingly, these
standards apply for the first time to this set of financial statements. The nature and effect of changes arising
from AASB 9 Financial Instruments are summarised in below.
AASB 15 Revenue from Contracts with Customers became mandatorily effective on 1 January 2018. The Group
has considered the requirements of AASB 15 Revenue from Contracts with Customers and concluded that
adoption of this standard from 1 July 2018 has no impact due to the Group not having any revenue contracts
with customers.
Except for the impact of adopting Financial Instruments (AASB 9) from 1 July 2018, the accounting policies and
methods of computation adopted in the preparation of this annual financial report are consistent with those
adopted and disclosed in the Group’s annual financial report for the financial year ended 30 June 2018. These
accounting policies are consistent with Australian Accounting Standards and with International Financial
Reporting Standards. The Group has adopted all of the new and revised Standards and Interpretations issued
by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for
the current year. The Group has considered the implications of new amended Accounting Standards but
determined that their application to the financial statements is either not relevant or not material.
Adoption of AASB 9 Financial Instruments
Equity investments were previously classified as available for sale assets. Under AASB 9, these were assessed
as being equity instruments at fair value through other comprehensive income (FVOCI), as the group intends
to hold these for the foreseeable future and which the Group has irrevocably elected to classify upon initial
recognition or transition. This change in classification has had no impact on the measurement of these assets
or comparative financial information.
Alto Metals Limited
2019 Annual Report
30
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The Group’s financial liabilities were not impacted by the adoption of AASB 9. Financial liabilities are initially
measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a
financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised
cost using the effective interest method except for derivatives and financial liabilities designated at FVPL, which
are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative
financial instruments that are designated and effective as hedging instruments). The Group has not designated
any financial liabilities as at fair value through profit or loss. There are no changes in classification and
measurement for the Group’s financial liabilities.
The Group’s financial liabilities include a finance loan. The finance loan was recognised at fair value and
subsequently measured at amortised cost using the effective interest method.
There was no impact on hedging as the Group does not currently apply hedge accounting.
The table below shows the classification of each class of financial asset and financial liability under AASB 139
and AASB 9 as at 1 July 2018:
AASB 139
classification
AASB 9
classification
AASB139
carrying amount
($)
AASB 9 carrying
amount
($)
Financial Assets
Listed shares
Available for
Sale
Financial Liabilities
Funding agreement(1) Amortised Cost
Equity FVOCI
52,500
52,500
Amortised Cost
-
-
(i) Funding agreement – The Groups funding agreement was recognised at amortised cost using the effective interest method.
The effect on classification changes on the Groups equity are summarised below:
Opening Balance at 1 July 2018
Change in Accounting Policy arising from AASB
9
Changes in the fair value of equity instruments
other
at
carried
comprehensive income
Closing Balance at 30 June 2019
through
value
fair
AFS Reserve
($)
-
-
FVOCI Reserve
($)
-
-
Total
($)
-
-
-
-
32,500
32,500
32,500
32,500
(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.
AASB 16 Leases (AASB 16) replaces AASB 17 Leases and some lease related interpretations and becomes
mandatorily effective on 1 January 2019. AASB 16 requires all leases to be accounted for ‘on-balance sheet’
by lessees, other than short term and low value asset leases. AASB 16 provides guidance on the application of
the definition of lease and on sale and lease back accounting. AASB 16 largely retains the existing lessor
accounting requirements of AASB 17. AASB 16 requires new and different disclosures about leases.
When this standard is first adopted for the year ended 30 June 2020, all leases will be accounted for ‘on-balance
sheet’. As the current lease is due to expire prior to 30 June 2020, the impact of the adoption of AASB 16 has
not been quantified.
Alto Metals Limited
2019 Annual Report
31
NOTE 2: OTHER INCOME
Interest received from other parties
Gain on disposal of AFS assets
NOTE 3: LOSS FOR THE PERIOD
(a) Expenses
Depreciation and amortisation
Office rental and occupation expenses
(b) Significant Revenues and Expenses
The following significant revenue and expense items are relevant in
explaining the financial performance:
Exploration and Evaluation expenditure written off
NOTE 4: INCOME TAX
(a) Income tax (benefit)/expense
Current tax
Deferred tax
Note
2019
$
2018
$
8,174
25,561
-
302,011
8,174
327,572
23,997
97,344
34,676
81,044
13
5,196
16,000
-
-
-
-
-
-
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 30% (2018: 30%)
Add / (Less) tax effect of:
Other non-deductible/ (assessable) items
Deferred tax asset not brought to account
Income tax benefit attributable to operating loss
(344,255)
(187,208)
-
344,255
-
5,329
181,879
-
The applicable weighted average effective tax rates are as follows:
nil%
nil%
(b) Deferred tax assets
Tax Losses
Provisions and Accrual
Other - Equity
Set-off deferred tax liabilities
Net deferred tax assets
(c) Deferred tax liabilities
Exploration expenditure
Other – P&L
Set-off deferred tax assets
Net deferred tax liabilities
1,820,217
7,681
60,984
1,888,882
(1,888,882)
-
1,339,362
9,935
9,291
1,358,588
(1,358,588)
-
4(c)
(1,840,397)
(48,485)
(1,888,882)
1,888,882
-
(1,357,137)
(1,451)
(1,358,588)
1,358,588
-
Alto Metals Limited
2019 Annual Report
32
NOTE 4: INCOME TAX
(d) Tax losses
Unused tax losses for which no deferred tax asset has been
recognised
Temporary differences for which no deferred tax asset has
been recognised – Equity
858,609
1,808,407
24,000
15,750
Potential deferred tax assets attributable to tax losses and exploration expenditure carried forward have not
been brought to account at 30 June 2019 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
The totals of remuneration paid to key management personnel during the year are as follows:
Note
2019
$
2018
$
Short-term employee benefits
Post-employment benefits
Share based payments
381,907
3,470
-
385,377
445,545
3,470
-
449,015
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 2019.
The totals of remuneration paid to KMP during the period are as follows:
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
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
Basic / Diluted loss per share (cents per share)
27,144
20,500
10,075
10,000
(1,147,517)
(624,026)
207,685,167 172,735,754
(0.55)
(0.36)
Alto Metals Limited
2019 Annual Report
33
NOTE 8: CASH AND CASH EQUIVALENTS
Cash at bank
1,327,148
856,345
2019
$
2018
$
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:
Cash and cash equivalents
1,327,148
856,345
NOTE 9: TRADE AND OTHER RECEIVABLES
CURRENT
GST receivable
Trade and other receivables
Security bonds
Interest receivable
73,613
33,685
32,971
660
140,929
90,111
94,286
27,972
610
212,979
There are no balances within trade and other receivables that contain assets that are impaired and are past
due. It is expected these balances will be received when due.
Included in security bonds is $26,365 which is subject to an indemnity guarantee for a rental agreement.
NOTE 10: FINANCIAL ASSETS AND LIABILITIES
Note 1 provides a description of each category of financial assets and financial liabilities and related accounting
policies. The carrying amounts of financial assets and financial liabilities in each category are as follows:
30 June 2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Equity instruments
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
30 June 2018
Financial assets
Cash and cash equivalents
Trade and other receivables
Available for sale financial asset
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
Amortised
Cost
$
Available
for Sale
$
FVOCI
$
1,327,148
140,929
-
1,468,077
-
-
-
-
-
-
20,000
20,000
726,476
726,476
-
-
-
-
856,345
217,207
-
1,073,552
-
-
52,500
52,500
-
-
-
-
496,904
496,904
-
-
-
-
Alto Metals Limited
2019 Annual Report
34
NOTE 10: FINANCIAL ASSETS AND LIABILITIES
Equity instruments at fair value through other comprehensive
income
Opening balance
Reclassification arising from the adoption of AASB 9
Revaluation
2019
$
2018
$
-
52,500
(32,500)
20,000
-
-
-
-
Equity instruments are shares held in an ASX listed entity, Enterprise Metals Ltd, and were revalued in the
current period based on the share sale price at reporting date. Fair value has been determined by reference to
quoted market prices.
Available for sale financial assets
Opening balance
Disposals
Revaluation
Reclassification arising from the adoption of AASB 9
2019
$
2018
$
52,500
-
-
(52,500)
-
681,256
(613,756)
(15,000)
-
52,500
Available-for-sale financial asset are shares held in an ASX listed entity, Enterprise Metals Ltd, and were
revalued in the current period based on the share sale price at reporting date. Fair value has been determined
by reference to quoted market prices.
Other financial instruments
The carrying amount of the following financial assets and liabilities is considered reasonable approximation of
fair value:
- cash and cash equivalents
- trade and other receivables
- trade and other payables
NOTE 11: PLANT AND EQUIPMENT
NON-CURRENT
Plant and equipment – cost
Accumulated depreciation
Motor vehicle – cost
Accumulated depreciation
Property – cost
Accumulated depreciation
2019
$
2018
$
136,588
(134,044)
2,544
134,032
(128,702)
5,330
25,000
(12,500)
12,500
88,048
-
88,048
25,000
(6,250)
18,750
87,708
-
87,708
Total property, plant and equipment
103,092
111,788
Alto Metals Limited
2019 Annual Report
35
NOTE 11: PLANT AND EQUIPMENT
a) Reconciliation of Carrying Amounts
Plant and Equipment
Opening balance
- Additions
- Depreciation expense
Carrying amount at the end of the period
Motor Vehicles
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
NOTE 12: INTANGIBLE ASSETS
NON-CURRENT
Software – cost
Accumulated amortisation
Total
Reconciliation of Carrying Amounts
Opening balance
- Amortisation expense
Carrying amount at the end of the period
NOTE 13: EXPLORATION AND EVALUATION
Exploration and evaluation phases – at cost
Exploration and evaluation - movement
Opening balance
Exploration expenditure
Impairment of exploration and evaluation expenses
Closing balance
5,330
2,556
(5,342)
2,544
18,750
-
(6,250)
12,500
87,708
340
-
88,048
111,788
2,896
(11,592)
103,092
3,606
13,422
(11,698)
5,330
-
25,000
(6,250)
18,750
87,708
-
-
87,708
91,314
38,422
(17,948)
111,788
2019
2018
$
$
75,137
(64,500)
10,637
10,637
75,137
(52,094)
23,043
23,043
23,043
(12,406)
10,637
39,770
(16,727)
23,043
10,337,937 8,727,068
8,727,068 6,360,816
1,616,065 2,382,252
(16,000)
10,337,937 8,727,068
(5,196)
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.
Alto Metals Limited
2019 Annual Report
36
NOTE 13: EXPLORATION AND EVALUATION
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.
NOTE 14: TRADE AND OTHER PAYABLES
CURRENT – UNSECURED LIABILITIES
Trade and other payables
Accrued expenses
2019
2018
$
$
407,893
318,583
726,476
467,714
29,190
496,904
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
245,457,115 (2018:160,459,462) Fully paid ordinary shares at no par
value
25,000,000 (2018: 25,000,000) Performance shares
2019
$
2018
$
22,043,529 18,994,278
2,175,000
2,175,000
24,218,529 21,169,278
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
Shares issued during the period
9,733,334 on 6 December 2017 at $0.075 per share
12,226,642 on 21 Nov. 2017 at $0.075 per share
11,616,667 on 23 October 2017 at $0.075 per share
9,595,141 on 27 August 2018 at $0.047 per share
3,000,000 on 18 January 2019 at $0.039 per share(i)
9,143,474 on 18 February 2019 at $0.036 per share
6,382,948 on 6 March 2019 at $0.047 per share(i)
56,875,060 on 13 May 2019 at $0.036 per share(i)(ii)
Costs associated with equity raisings
At reporting date
21,169,278
18,680,470
-
-
-
451,019
117,600
329,166
300,000
2,047,502
(196,036)
24,218,529
730,000
916,998
871,250
-
-
-
-
-
(29,440)
21,169,278
Alto Metals Limited
2019 Annual Report
37
NOTE 15: ISSUED CAPITAL
At the beginning of the reporting period
Shares issued during the period:
9,733,334 on 6 December 2017 at $0.075 per share
12,226,642 on 21 Nov. 2017 at $0.075 per share
11,616,667 on 23 October 2017 at $0.075 per share
9,595,141 on 27 August 2018 at $0.047 per share
3,000,000 on 18 January 2019 at $0.039 per share(i)
9,143,474 on 18 February 2019 at $0.036 per share
6,382,948 on 6 March 2019 at $0.047 per share(i)
56,875,060 on 13 May 2019 at $0.036 per share(i)(ii)
At reporting date
2019
$
No.
2018
$
No.
185,459,462 151,882,819
-
9,733,334
- 12,226,642
- 11,616,667
-
9,596,141
-
3,000,000
-
9,143,474
-
6,382,978
-
56,875,060
270,457,115 185,459,462
(i)
(ii)
Share Based Payments
•
3,000,000 shares issued on 18 January 2019 as consideration for two meter prospecting and fossicking rights at Sandstone.
The shares issues have a six month escrow period, these shares were released from escrow on 17 July 2019.
6,382,948 shares issued on 6 March 2019 being conversion of $300,000 convertible loan with Windsong Valley Pty Ltd a
related party of the chairman.
9,897,278 shares issued on 13 May 2019 at $0.036 per share in lieu of cash payment to trade creditors.
•
•
56,875,060 shares issued on 13 May 2019, are suspended from trading until the earlier of:
•
•
•
Middle Island Ltd (MDI) withdrawing the takeover offer;
22 November 2019 or such later date if the offer period for MDI’s takeover offer is further extended by MDI; and
The date on which MDI announces that the takeover will extend to the shares, following receipt of ASIC relief to extend the
takeover offer to the shares.
(b) Performance shares
At the beginning of the reporting period
Performance shares issued during the period
At reporting date
At the beginning of the reporting period
Performance shares issued during the period
At reporting date
$
2,175,000
-
2,175,000
$
2,175,000
-
2,175,000
No.
25,000,000
-
25,000,000
No.
25,000,000
-
25,000,000
The above 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.
(c) Performance rights
At the beginning of the reporting period
Performance rights issued during the period
Performance rights expired during the period
At reporting date
(d) Options
At the beginning of the reporting period
Options issued during the period:
$0.07 Options expiring 17 August 2020
$0.07 Options expiring 13 November 2020
Options exercised during the period
At reporting date
No.
No.
7,312,500 10,750,000
-
(3,437,500)
7,312,500
-
(6,312,500)
1,000,000
No.
No.
-
-
4,571,711
28,437,523
-
33,009,234
-
-
-
-
Alto Metals Limited
2019 Annual Report
38
NOTE 15: ISSUED CAPITAL
On 18 February 2019, the Company issued of one free attaching option for every two shares subscribed for
under the entitlement offer. The options have been issued to shareholders of the Company and therefore do
not fall within the scope of AASB 2 Share-based payment. Accordingly, the options have a $nil value.
On 13 May 2019, the Company issued of one free attaching option for every two shares subscribed for under
the shortfall placement. The options have been issued to shareholders of the Company and therefore do not
fall within the scope of AASB 2 Share-based payment. Accordingly, the options have a $nil value.
(e) 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 2019 is as
follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Working capital position
NOTE 16: RESERVES
AFS Financial Asset Reserve
Performance Right Reserve
Equity instruments at FVOCI Reserve
Movement in Reserves
AFS Financial Asset Reserve
At the beginning of the reporting period
Add revaluation increments, net of tax
Less impairments
Less disposal of AFS shares transferred to profit or loss
At reporting date
Performance Right Reserve
At the beginning of the reporting period
Add performance rights issued
Less impairments
At reporting date
2019
$
1,327,148
140,929
(726,476)
741,601
2018
$
856,345
212,979
(496,904)
572,420
2019
2018
$
$
-
-
32,500
32,500
-
-
-
-
-
-
-
-
-
157,607
(15,000)
138,517
(281,124)
-
-
-
-
-
100,064
-
(100,064)
-
Alto Metals Limited
2019 Annual Report
39
NOTE 16: RESERVES
Equity instruments at FVOCI Reserve
At the beginning of the reporting period
Add revaluation increments, net of tax
Less impairments
At reporting date
NOTE 17: CASH FLOW INFORMATION
(a) Reconciliation of Cash Flow from Operations with loss after Income Tax
Loss after income tax
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
Depreciation
Share based payment
Impairment of Exploration and Evaluation
Changes in assets and liabilities:
(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 2019 (2018: nil).
NOTE 18: CONTROLLED ENTITIES
-
32,500
-
32,500
-
-
-
-
2019
2018
$
$
(1,147,517)
(624,026)
- (302,011)
138,517
-
34,676
23,997
- (100,064)
16,000
5,196
77,652
-
181,715
(858,957)
(82,627)
-
101,260
(818,275)
Percentage
Owned %
Details of Controlled Entities
Cue Metals Pty Ltd
Sandstone Exploration Pty Ltd
Country of
Incorporation
Australia
Australia
Class of Shares
2019
2018
Ordinary
Ordinary
100
100
100
100
NOTE 19: SHARE-BASED PAYMENT
Share Based Payments made during the year are:
• 3,000,000 shares issued on 18 January 2019 as consideration for two meter prospecting and fossicking
rights at Sandstone. The shares issues have a six month escrow period, these shares were released
from escrow on 17 July 2019.
• 6,382,948 shares issued on 6 March 2019 being conversion of $300,000 convertible loan with
Windsong Valley Pty Ltd a related party of the chairman.
• 9,897,278 shares issued on 13 May 2019 at $0.036 per share in lieu of cash payment to trade creditors.
Alto Metals Limited
2019 Annual Report
40
NOTE 20: EVENTS SUBSEQUENT TO REPORTING DATE
On 2 July 2019, 3 million ordinary shares issued on 17 January 2019, for the purchase of two meter prospecting
and fossicking rights at Sandstone, were released from escrow.
On 18 July 2019, the Company raised a further $600,000 by way of issue of 16,666,666 ordinary shares at
$0.036 per share together with 1 free attaching option for every two shares held exercisable at $0.07. The
expiry date is 18 January 2021. These shares and options were issued to Alto’s Chairman and major
shareholder, Mr Terry Wheeler.
NOTE 21: RELATED PARTY TRANSACTIONS
XServ Pty Ltd
Mr Ryan is a Director and Shareholder of Xserv Pty Ltd. Mr Ryan’s company
provides director and geological consulting services to Alto Metals Limited.
In addition Xserv Pty Ltd provides field equipment and vehicles at commercial
rates equating to $Nil (2018: $32,750) in the current financial year.
Directors fees and vehicle hire
As at 30 June 2019 $Nil (2018: $Nil) was payable to Xserv Pty Ltd
Enterprise Metals Ltd
Enterprise Metals Ltd is a significant Shareholder in the Company. The
Company provides office space and office administration services including
telephone, electricity and office equipment to Enterprise Metals Ltd.
Reimbursement of shared costs charged to Enterprise Metals Ltd.
Rental of office space, purchase of plant and equipment and office
administration expenses charged to Alto Metals Ltd.
2019
$
2018
$
152,221
249,773
47,861
85,627
-
47,861
43,447
129,074
As at 30 June 2019 $22,510 (2018: $85,627) was receivable from Enterprise Metals Ltd.
At reporting date the Company holds 2,500,000 ordinary shares in Enterprise Metals Limited at a fair value
of $20,000 (2018: $52,500).
Atlantic Capital Pty Ltd
Mr Bowles is a Director and Shareholder of Atlantic Capital Pty Ltd. Mr Bowles'
company provides director and corporate advisory services to Alto Metals
Limited.
Directors fees and corporate advisory services
As at 30 June 2019 $14,083 (2018: $Nil) was payable to Atlantic Capital Pty Ltd.
Windsong Valley Pty Ltd
Mr Wheeler is a Director and Shareholder of Windsong Valley Pty Ltd.
During the year Windsong Valley Pty Ltd issued a Convertible Loan to the
Company, the loan was repaid in full during the year.
During the year Windsong Valley made a one-off cash advance to the Company,
the advance was repaid in full during the year. No interest was incurred on the
advance.
As at 30 June 2019 $Nil (2018: $Nil) was payable to Windsong Valley Pty Ltd.
Alto Metals Limited
2019 Annual Report
56,582
300,000
50,000
350,000
-
-
-
-
41
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(a), for the next year is $2,600,000 (2018: $264,000).
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
NOTE 23: FINANCIAL INSTRUMENT RISK
2019
$
2018
$
68,042
-
68,042
65,424
59,972
125,396
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.
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 2019. 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
2019
2018
$
$
Cash and cash equivalents
- AA Rated
8
1,327,148 856,345
Alto Metals Limited
2019 Annual Report
42
NOTE 23: FINANCIAL INSTRUMENT RISK
(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.
A summary of the Group’s financial assets and liabilities exposed to interest rate risk is shown below:
Alto Metals Limited
2019 Annual Report
43
NOTE 23: FINANCIAL INSTRUMENT RISK
Floating
Interest
Rate
Fixed Int
maturing
in 1 year
or less
Fixed Int
maturing
over 1 to
5 years
Non-
interest
bearing
Total
$
$
$
$
$
2019
Financial Assets
Cash and cash equivalents
Loans and receivables
Equity instruments at FVOCI
Total Financial Assets
Weighted ave int rate – cash
Financial Liabilities at cost
Trade and other payables
Total Financial Liabilities
Net financial assets
2018
Financial Assets
Cash and cash equivalents
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
Net financial assets
1,327,148
-
-
1,327,148
1.75%
-
-
1,327,148
856,345
-
-
856,345
1.65%
-
-
856,345
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
140,929
20,000
160,929
1,327,148
140,929
20,000
1,488,077
(726,476)
(726,476)
(565,547)
(726,476)
(726,476)
761,601
-
212,979
52,500
265,479
856,345
212,979
52,500
1,121,824
(496,904)
(496,904)
(231,425)
(496,904)
(496,904)
624,920
(ii)
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 2019
+/-1% in interest rates
Period ended 30 June 2018
Profit
Equity
$
$
+/- 13,271 +/- 13,271
+/-1% in interest rates
+/- 8,563
+/- 8,563
(d) Equity price risk
The Group is exposed to equity securities price risk. This arises from investments held by the Group and
classified on the Statement of Financial Position as equity instruments at fair value through other comprehensive
income (2018: Available for sale financial assets).
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 2019, 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:
Alto Metals Limited
2019 Annual Report
44
NOTE 23: FINANCIAL INSTRUMENT RISK
Listed equity
price -10%
Listed equity
price +10%
Carrying
Amount
$
20,000
52,500
Net
Loss
$
(2,000)
(5,250)
Equity
$
(2,000)
(5,250)
Net
Loss
$
2,000
5,250
Equity
$
2,000
5,250
30 June 2019
30 June 2018
(e) Net Fair Values
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.
Fair value measurement hierarchy
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).
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.
Year ended 30 June 2019
Financial Assets
Equity instruments at FVOCI
Year ended 30 June 2018
Financial Assets
Available for sale financial
assets
Level 1 Level 2 Level 3
$
$
$
Total
$
20,000
52,500
-
-
-
20,000
-
52,500
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.
Alto Metals Limited
2019 Annual Report
45
NOTE 24: PARENT ENTITY DISCLOSURES
(a) Financial Position of Alto Metals Limited
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
Available for sale financial assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Equity instruments at fair value through other comprehensive income
Plant and equipment
Intangible assets
Exploration and evaluation
Other assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
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
Other comprehensive income
Total comprehensive loss
The parent entity has no commitments at year end (2018: Nil)
Refer to Note 25 for contingent liabilities of the parent.
2019
2018
$
$
1,327,146
132,084
160,955
-
856,341
217,207
-
52,500
1,620,185
1,126,048
20,000
103,092
10,637
-
-
111,788
23,043
-
10,346,784
8,737,814
10,480,513
8,872,645
12,100,698
9,998,693
726,476
13,941
740,417
740,417
496,902
-
496,902
496,902
11,360,281
9,501,791
24,218,529
21,169,278
(32,500)
(38,453)
(12,825,748)
(11,629,035)
11,360,281
9,501,790
(1,141,717)
(574,832)
(32,500)
-
(1,174,217)
(574,832)
Alto Metals Limited
2019 Annual Report
46
NOTE 25: CONTINGENT LIABILITIES
As at 30 June 2019 the Group has bank guarantees to the value of $26,365 (2018: $26,512) to secure a rental
bonds.
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
Alto Metals Limited
2019 Annual Report
47
DIRECTORS’ DECLARATION
The directors of Alto Metals Limited declare that:
(a)
in the directors’ opinion the financial statements and notes and the Remuneration Report in the Directors Report
set out on pages 8 to 47, are in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019 and of their
performance, for the financial year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations).
(b)
(c)
the financial report also complies with International Financial Reporting Standards as disclosed in note 2; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable.
The directors have been given the declarations required by Section 295A of the Corporations Act 2001 by the chief
executive and chief financial officer for the year 1 July 2018 to 30 June 2019.
Signed in accordance with a resolution of the directors.
Terry Wheeler
Chairman
Perth, Western Australia
30 September 2019
Alto Metals Limited
2019 Annual Report
48
Level 3, 170 Frome Street
Adelaide SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T +61 8 8372 6666
Independent Auditor’s Report
To the Members of Alto Metals Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Alto Metals Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss
and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘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.
Liability limited by a scheme approved under Professional Standards Legislation.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial statements, which indicates that the Group incurred a net loss of $1,147,517
during the year ended 30 June 2019, and as of that date, the Group’s incurred net operating cash flows of $858,957. As stated
in Note 1, these events or conditions, along with other matters as set forth in Note 2b, 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 - Notes 1E & 13
At 30 June 2019 the carrying value of exploration and
evaluation assets was $10,337,937.
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 significant
judgement involved in determining the existence of
impairment triggers.
Our procedures included, amongst others:
(cid:120) obtaining the management reconciliation of capitalised
exploration and evaluation expenditure and agreeing to the
general ledger;
(cid:120)
reviewing management’s area of interest considerations
against AASB 6;
(cid:120) conducting a detailed review of management’s
assessment of trigger events prepared in accordance with
AASB 6 including;
(cid:16)
tracing projects to statutory registers, exploration
licenses and third party confirmations to determine
whether a right of tenure existed;
(cid:16) enquiry of management regarding their intentions to
carry out exploration and evaluation activity in the
relevant exploration area, including review of
management’s budgeted expenditure;
(cid:16) 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;
(cid:120) assessing the accuracy of impairment recorded for the
year as it pertained to exploration interests; and
(cid:120) assessing the appropriateness of the related financial
statement disclosures.
Information other than the financial report and 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 2019, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Company/Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.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 the Directors’ report for the year ended 30 June 2019.
In our opinion, the Remuneration Report of Alto Metals Limited, for the year ended 30 June 2019 complies with section
300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
J L Humphrey
Partner – Audit & Assurance
Adelaide, 30 September 2019
ADDITIONAL ASX INFORMATION
Additional information required by the ASX Listing Rules and not shown elsewhere in the report is as follows.
The information is current as at 11 September 2019.
(a)
Twenty largest holders of quoted equity securities
Holder Name
1 WINDSONG VALLEY PTY LTD
2
3
4
5
6
SINOTECH (HONG KONG) CORPORATION LIMITED
ENTERPRISE METALS LTD
OLGEN PTY LIMITED
MR STEPHEN STONE
SILVERLIGHT HOLDINGS PTY LTD
MR DERMOT MICHAEL RYAN & MRS VIVIENNE ELEANOR
RYAN
7
CROWNLUXE INVESTMENT LTD
8
MR BRUCE ROBERT LEGENDRE
9
AJAVA HOLDINGS PTY LTD
10
PETER ERMAN PTY LIMITED
10
11 OSSART HOLDINGS PTY LTD
12
12
12
13 MR ROBERT WILMOT CREASY
14
15 WERSMAN NOMINEES PTY LTD
16
16
17 MICJUD PTY LTD
18 WILLOWOOD CORPORATE PTY LTD
ROSANE PTY LTD
19
20 OCTIFIL PTY LTD
NOAH'S ARK INVESTMENT GROUP PTY LTD
DR STUART LLOYD PHILLIPS & MRS FIONA JANE PHILLIPS
FEIS FAMILY TRUST
CORPORATE PROPERTY SERVICES PTY LTD
ALL-STATES FINANCE PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
Total
Holding
56,908,175
15,900,000
12,000,000
9,722,222
8,787,500
8,333,334
7,559,029
7,500,000
5,048,500
4,000,000
4,000,000
3,000,000
2,777,778
2,777,778
2,777,778
2,506,904
2,500,000
2,266,666
2,000,000
2,000,000
1,883,333
1,813,889
1,781,835
1,750,000
169,594,721
%
19.82
5.54
4.18
3.39
3.06
2.90
2.63
2.61
1.76
1.39
1.39
1.04
0.97
0.97
0.97
0.87
0.87
0.79
0.70
0.70
0.66
0.63
0.62
0.61
59.07
There is a total of 287,123,781 fully paid ordinary shares on issue, all of which are listed on the Australian
Securities Exchange.
(b)
The names of the substantial shareholders and the number of shares in which they have a relevant interest are:
Substantial Shareholders
Substantial Holder
WINDSONG VALLEY PTY LTD
SINOTECH (HONG KONG) CORPORATION LIMITED
ENTERPRISE METALS LTD
Holding
56,908,175
15,900,000
12,000,000
%
19.82
5.54
4.18
(c)
Distribution of equity securities
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
Holders
328
465
209
300
259
1,561
Total Units
153,949
1,238,941
1,676,940
11,508,836
272,545,115
287,123,781
% Issued Share Capital
0.05%
0.43%
0.58%
4.01%
94.92%
100.00%
Alto Metals Limited
2019 Annual Report
53
ADDITIONAL ASX INFORMATION
The number of fully paid ordinary shareholdings held in less than marketable parcels is 1,065 (based on a share
price of $0.034).
(d)
Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
(e)
Unquoted securities
The names of the security holders holding more than 20% or more of any unlisted class of security, other than
those securities issued or acquired under an employee incentive scheme, are listed below:
PERFORMANCE
SHARES
- VENDOR
UNLISTED
OPTIONS
$0.07 EXP
17/08/2020
UNLISTED
OPTIONS
$0.07 EXP
18/01/2021
UNLISTED
OPTIONS
$0.07 EXP
09/03/2021
12,500,000
12,500,000
1,388,888
8,333,333
2
108
1
10,000,000
10,000,000
10,000,000
3
MR STEPHEN STONE
MR BRUCE ROBERT LEGENDRE
WINDSONG VALLEY PTY LTD
SILVERLIGHT HOLDINGS PTY LTD
BLUEBIRD CAPITAL PTY LTD
LONGREACH CAPITAL PTY LTD
TOTAL HOLDERS
(f)
Corporate governance statement
The Directors support and adhere to the principles of corporate governance, recognising the need for the highest
standard of corporate behaviour and accountability. Please refer to the corporate governance statement and
the Appendix 4G released to ASX and posted on the Company website. The Directors are focused on fulfilling
their responsibilities individually, and as a Board, for the benefit of all the Company’s stakeholders. That involves
recognition of, and a need to adopt, principles of good corporate governance. The Board supports the guidelines
on the “Principles of Good Corporate Governance and Recommendations – 3rd Edition” established by the ASX
Corporate Governance Council. Given the size and structure of the Company, the nature of its business
activities, the stage of its development and the cost of strict and detailed compliance with all of the
recommendations, it has adopted a range of modified systems, procedures and practices which enables it to
meet the principles of good corporate governance. The Company’s practices are mainly consistent with those
of the guidelines and where they do not correlate with the recommendations in the guidelines the Company
considers that its adopted practices are appropriate to it.
Alto Metals Limited
2019 Annual Report
54
TENEMENT REPORT
As at 30 June 2019
Project
Tenement
Interest Held
State
Lease Status
Holder
Sandstone
E57/1029
Sandstone
E57/1030
Sandstone
E57/1031
Sandstone
E57/1033
Sandstone
E57/1044
Sandstone
E57/1072
Sandstone
E57/1011
Sandstone
M57/646
Sandstone
P57/1377
Sandstone
P57/1378
Sandstone
M57/647
Sandstone
M57/650
Sandstone
P57/1415
Sandstone
P57/1417
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
Granted
Granted
Granted
Granted
Granted
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
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
Application
Sandstone Exploration Pty Ltd
Application
Sandstone Exploration Pty Ltd
Application
Sandstone Exploration Pty Ltd
Alto Metals Limited
2019 Annual Report
55