Alto Metals Limited
ABN 62 159 819 173
2020 ANNUAL REPORT
CORPORATE DIRECTORY
Directors
Mr Richard Monti (Non-Executive Chairman)
Mr Matthew Bowles (Managing Director and CEO)
Dr Jingbin Wang (Non-Executive Director)
Mr Terry Wheeler (Non-Executive Director)
Company Secretary
Mr Graeme Smith
Principal registered office
Suite 9,
12-14 Thelma Street,
WEST PERTH, WA 6005
Telephone 08 9381 2808
Website: www.altometals.com.au
Email: admin@altometals.com.au
Auditor
Pitcher Partners BA&A Pty Ltd
Level 11, 12-14 The Esplanade
Perth WA 6000
Telephone 08 9322 2022
Share Registry
Automic Registry Services
Level 5, 126 Philip Street
Sydney NSW 2000
Australian Securities Exchange
ASX code: AME
CONTENTS
DISCLAIMER AND CAUTIONARY STATEMENTS
CHAIRMAN’S LETTER
REVIEW OF OPERATIONS
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
3
4
5
17
28
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 29
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
ADDITIONAL ASX INFORMATION
TENEMENT REPORT
30
31
32
33
61
62
67
70
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.
3
CHAIRMAN’S LETTER
Dear Shareholder,
The 2020 financial year for Alto has been exciting, exhilarating and at times extremely frustrating for your
Company.
Since April 2019, Alto has had to deal with three unsolicited takeover bids, one after the other.
Responding to these bids is a normal part of doing business for a listed company, but it does distract
management and the Board from the job they were specifically hired for and that is running the Company.
These unsolicited approaches also cause disruptions to those things other companies take for granted, such
as raising capital during a period when gold companies are in demand by investors, and they are expensive.
Your Company has spent in excess of $300,000 responding to these bids, money that could have funded 3,000
metres of drilling and assaying.
Despite these distractions, it was very pleasing to see that the Alto exploration team, led by Dr Changshun Jia
and Mike Kammerman, enjoyed significant success during the year including:
•
•
•
Increasing the mineral resource at the Sandstone Project by 14% to 331,000 ounces from 290,000
ounces;
Solid exploration results from over 9,200 metres of drilling at the Sandstone Gold Projects which included
intercepting wide zones of high grade mineralisation below the open pit in every drill hole; and
Discovery of the new shallow Orion Lode gold area located only 200m south of Lord Nelson.
Off the back of this success, Alto is planning a further 5,000m of drilling to be completed by the end of the
calendar year as part of the next stage of a planned 30,000m drill program, and, with continued success, we
will look to undertake additional drilling next year.
Subsequent to year end, Matthew Bowles moved from Non-Executive Director to Managing Director and CEO,
and during the year, I joined the Board as Chairman following Terry Wheeler’s decision to step down to a Non-
Executive Director role.
Terry Wheeler has helped Alto enormously during the past few years culminating in the provision of an
unsecured $1 million loan to assist with the continuity of planned exploration work whilst the Company was
caught up in takeover battles.
Following the 22 September 2020 announcement that Alto had raised $5.5 million via a placement, I believe the
Company will finally be in a position to undertake its extensive planned exploration work at the highly prospective
Sandstone Gold Project in Western Australia, and I look forward to seeing the results from that future
exploration.
Yours sincerely,
Richard Monti
Non-Executive Chairman
Dated this 30th day of September 2020
4
REVIEW OF OPERATIONS
Introduction
Alto Metals Limited (“Alto” or the “Company”) and the entities it controlled (together “the Group”) 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).
Figure 1. Location of Sandstone Gold Project within the East Murchison Gold Field, WA
Since the discovery of gold at the end of the 19th Century, the Sandstone greenstone belt has produced over
1.3 million ounces of gold from numerous underground and open pit mining operations. Of this, some 612,000
ounces was produced between 1994 and 2008 from the open-pit mining of shallow oxide ore by ASX listed
companies Herald Resources Ltd and Troy Resources Ltd.
Alto has defined a JORC (2012) Mineral Resource of 6.2Mt @ 1.7 g/t Au for 331,000 ounces gold (Table 4) at
Lord Nelson, Lord Henry, Vanguard Camp, Indomitable Camp, Havilah and Ladybird (Figure 2). Notably, vast
majority of current Mineral Resource inventory is within shallow oxide and transitional Zone, the Company is
now at the beginning of new phase exploration into primary zone of large orogenic gold mineral systems within
800km2 the under-explored Sandstone Greenstone Belt. Numerous drill ready targets with significant discovery
and Mineral Resource growth potential has been well advanced, with initial focus on the +3km Lord Nelson –
Lord Henry Corridor (“Lords Corridor”, Figure 3).
5
REVIEW OF OPERATIONS
Figure 2. Mineral Deposits and Priority Targets at Sandstone Gold Project
Lords Camp Targeting Review
Late 2019, a number of high-priority target areas were identified by Alto’s geologists and its external peer review
team, including Prof. David Groves and Terra Resources. The Lord Nelson prospect was prioritised and
subjected to a detailed review and reinterpretation of the geology and historical results. The review defined
multiple new drill ready targets comprising depth extensions to the shallow-mined Lord Nelson and Lord Henry
historical open-pits and potential near-surface ‘Lord’s style’ geological repetitions along a +3km corridor
between the two pits (Figure. 3). The Lord Nelson and Lord Henry deposits, which produced 207,000oz gold
and 48,000oz gold respectively, were only mined to shallow depths of 90m and 50m. This was primarily due to
the inability of the former Sandstone process plant to treat large volumes of the fresh rock. Little to no systematic
6
REVIEW OF OPERATIONS
work has been undertaken to test for depth extensions to the shallow Lord’s mineralisation which, given that
many similar orogenic gold deposits are known to extend to great depth, provides an exciting opportunity for
Alto.
Figure 3. Lords Deposits and +3km Lords’ Corridor - 1:5,000 geological interpretation (labelled drill results are
from unmined zones).
7
REVIEW OF OPERATIONS
RC Drilling Campaign
During the year, the Group carried out RC drilling programs at the Lords corridor and other areas including the
Bollinger prospect (Indomitable Camp) and Bulchina. These programs included 3,718m of RC drilling up to 30
June 2020 and a further 5,562m of RC drilling in July-August 2020. Significant drill intercepts included in Table
1.
Table 1 Significant RC drill results at Lords and Bollinger
Hole_ID
SRC168
incl.
and
SRC169
incl.
SRC174
incl.
SRC175
incl.
incl.
SRC176
and
incl.
and
and
SRC178
incl.
SRC183*
SRC184*
Incl.
Incl.
SRC190*
Incl.
SRC191*
Incl.
SRC192*
Incl.
SRC200*
incl.
SRC205*
SRC209*
SRC214*
From(m)
To(m)
Interval(m)
Au_g/t
Comments
106
106
116
34
36
106
109
200
211
214
228
240
240
247
255
220
232
64
228
244
244
24
36
48
56
108
116
4
24
84
208
192
129
112
126
44
38
117
110
217
215
215
233
256
243
251
256
241
237
84
256
256
248
40
40
76
60
124
120
32
28
96
216
196
23
6
10
10
2
11
1
17
4
1
5
16
3
4
1
21
5
20
28
12
4
16
4
28
4
16
4
28
4
12
8
4
3.8
4.6
4.5
4.1
12.8
1.8
10.8
3.5
11.6
25.5
2.8
5.2
13.5
5.5
6.0
1.7
3.1
2.26
3.06
4.99
11.34
1.58
3.77
2.80
7.39
3.69
8.16
2.12
6.24
4.83
4.10
3.44
Lords
Lords
Lords
Lords
Lords
Lords
Lords
Lords
Lords
Bollinger
Lords
Lords
Lords
Note* - 4m composite photon assays
Refer to: AME ASX release on 02 April 2020, 22 April 2020, 27 July 2020, 29 July 2020, 18 August 2020
and 31 August 2020
8
REVIEW OF OPERATIONS
Table 2 RC drillhole collar summary (February 2020 – August 2020)
Hole_ID Hole_Type
SRC163
SRC164
SRC165
SRC166
SRC167
SRC168
SRC169
SRC170
SRC171
SRC172
SRC173
SRC174
SRC175
SRC176
SRC177
SRC178
SRC179
SRC180
SRC181
SRC182
SRC183
SRC184
SRC185
SRC186
SRC187
SRC188
SRC189
SRC190
SRC191
SRC192
SRC193
SRC194
SRC195
SRC196
SRC197
SRC198
SRC199
SRC200
SRC201
SRC202
SRC203
SRC204
SRC205
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
RC
m_East
746,269
746,228
746,291
746,210
746,170
746,213
746,270
746,241
746,201
746,380
746,196
746,089
746,011
745,973
745,903
745,920
745,920
745,900
745,900
746,252
746,251
745,972
745,938
746,009
746,050
745,972
746,232
746,280
746,241
746,198
746,270
746,230
746,238
746,200
746,189
718,878
718,912
734,262
733,279
733,318
746,200
746,251
746,212
m_North m_RL Dip Azimith m_MaxDepth
6,883,380 474
6,883,370 472
6,883,412 471
6,883,410 471
6,883,410 472
6,883,450 475
6,883,490 473
6,883,528 468
6,883,528 473
6,883,698 462
6,883,370 473
6,883,561 472
6,883,570 473
6,883,619 472
6,883,622 473
6,883,720 473
6,883,720 473
6,883,920 473
6,883,820 473
6,883,410 470
6,883,447 471
6,883,620 475
6,883,618 474
6,883,619 477
6,883,569 473
6,883,571 475
6,883,407 473
6,883,472 474
6,883,470 473
6,883,470 473
6,883,510 476
6,883,511 471
6,883,568 472
6,883,565 473
6,883,290 471
6,892,382 515
6,892,420 511
6,894,690 521
6,895,039 513
6,895,038 516
6,883,290 470
6,883,485 472
6,883,485 472
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
90
270
270
90
90
90
123
176
98
158
200
140
80
80
104
158
218
164
230
266
315
290
308
302
308
122
98
260
284
232
200
260
144
70
120
138
80
126
70
100
198
198
198
100
114
138
180
78
120
-60
-60
-60
-60
-60
-60
-60
-60
-60
-60
-60
-60
-60
-60
-60
-50
-60
-60
-60
-60
-60
-55
-55
-57
-60
-60
-60
-60
-60
-60
-60
-60
-60
-60
-60
-50
-50
-60
-60
-60
-50
-60
-60
Prospect
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Bulchina
Bulchina
Bollinger
Bollinger
Bollinger
Lord Nelson
Lord Nelson
Lord Nelson
9
REVIEW OF OPERATIONS
Hole_ID Hole_Type
SRC206
SRC207
SRC208
SRC209
SRC210
SRC211
SRC212
SRC213
SRC214
RC
RC
RC
RC
RC
RC
RC
RC
RC
m_East
746,251
746,212
745,970
745,999
745,950
745,918
746,068
745,990
746,070
m_North m_RL Dip Azimith m_MaxDepth
6,883,429 471
6,883,428 472
6,883,719 475
6,883,660 475
6,883,654 474
6,883,658 476
6,883,488 472
6,883,490 474
6,883,450 474
120
156
258
242
264
240
186
252
216
-60
-60
-50
-60
-60
-60
-60
-60
-60
90
90
90
90
90
90
90
90
90
Prospect
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Lord Nelson
Refer to: AME ASX release on 02 April 2020, 22 April 2020, 27 July 2020, 29 July 2020, 18 August 2020
and 31 August 2020
These drill programs led to:
• Discovery of a new high-grade shallow gold lode 200m south of the Lord Nelson open pit (Orion Lode);
• Confirmed Lord Nelson is a multiple lode high-grade gold system; and
• Discovery of high-grade primary zone gold mineralisation beneath the open pit.
The drilling results
encouragement to test the numerous drill-ready targets (along the +3,000m Lords corridor).
the Company’s exploration strategy and provide significant
further strengthen
New Orion Gold Lode
The drilling programs resulted in the exciting discovery of a shallow high-grade (~70m below surface) gold lode,
located approximately 200 meters south of the current Lord Nelson Pit. The Company has named this new lode
the Orion Lode. The lode strikes NNW-SSE (350° Azimuth) with a moderate dip to the west (50°-70°)
(Figure 7). The Orion Lode gold is considered a repeat lode of the Lord Nelson deposit. The geology and
mineralisation is identical to the mined portion of the Lord Nelson oxide mineralisation, with the majority of the
mineralisation defined in shallow oxide and transitional zone. The August 2020 drilling program extended the
Orion Lode up to 300m along strike, +200 down dip (Figure 2). Mineralisation remains widely open along strike,
down dip and down plunge.
Significant assays from the Orion lode including:
23m @ 3.8g/t gold from 106m (SRC168)
28m @ 2.8 g/t gold from 48m, incl. 4m @ 7.4 g/t gold from 56m (SRC191)
16m @ 3.7 g/t gold from 108m, incl. 4m @ 8.2 g/t gold from 116m (SRC192)
20m @ 2.3 g/t gold from 64m (SRC183)
10m @ 4.1g/t gold from 34m, incl. 2m @12.8g/t gold form 36m (SRC169)
12m @ 3.4g/t gold from 66m, incl 2m @ 8.2 g/t gold from 70 (SRC148)
10
REVIEW OF OPERATIONS
Figure 4. RC Drilling at Lord Nelson, February 2020
Figure 5. RC Drilling at Lord Nelson, July 2020. Facing south with Lord Henry deposit in the background.
11
REVIEW OF OPERATIONS
6,883,660mN
6,883,620mN
6,883,470mN
6,883,450mN
Figure 6. Lord Nelson plan view showing significant assay results (AME ASX 31 August 2020)
12
REVIEW OF OPERATIONS
Figure 7. E-W Cross section 6,883,470mN Lord Nelson (AME ASX 18 August 2020)
Figure 8. Longitudinal projection of Lord Nelson showing the Orion Lode and primary mineralisation
beneath the open pit (AME ASX 18 August 2020)
13
REVIEW OF OPERATIONS
Mineral Resource Estimation
Lord Nelson Resource Update
Following the Group’s successful RC drilling program in February-March 2020, Snowden Mining Industry
Consultants (Snowden) were engaged by the Company to update the mineral resource estimate for the Lord
Nelson deposit. The updated Inferred Mineral Resource represents an increase of 840kt (+86%) for an
increase of 41,000 ounces gold (+60%) from the previous mineral resource estimated by Snowden in 2017.
The updated Lord Nelson JORC 2012 Inferred Mineral Resource estimate by Snowden amounts to;
• 1.8 million tonnes at 1.9g/t Au for 109,000 ounces gold (Table 3, Figure 9).
Table 3: Update of Mineral Resources for Lord Nelson deposit (27 May 2020)
Category
Inferred
Reporting Cut-off
(g/t Au)
0.8
Tonnage
(kt)
1,820
Grade
(g/t Au)
1.9
Contained
Gold(oz)
109000
Figure 9. Mineral Resources 3D modelling at Lord Nelson showing existing drilling (Blue lines),
existing open pit, and mineral resource lower boundary (yellow dashed line). The mineralisation below
the yellow line is unclassified due to wide spaced drilling.
Importantly, the mineral resource is limited by drilling with significant mineralisation intersected in the primary
zone below the Lord Nelson pit outside the current resource (refer to Figures 8, 9). These results include:
16m @ 5.2 g/t gold from 240m, incl. 3m @ 13.5g/t gold from 240m (SRC176)
17m @ 3.5 g/t gold from 200m, incl. 4m @ 11.6 g/t gold from 211m (SRC175)
28m @ 3.1 g/t gold from 228m, incl. 12m @ 5.0 g/t gold from 244m (SRC184)
14
REVIEW OF OPERATIONS
Sandstone Gold Project Mineral Resources as at 30 June 2020
Total Indicated and Inferred (JORC 2012) Mineral Resources for the Sandstone Gold Project has increased
to;
• 6.2 Million tonnes at 1.7 g/t Au for 331,000 ounces gold (Table 4).
Table 4: Sandstone Gold Project – Summary of Total Mineral Resources (JORC 2012)
Category
Cut-off
(g/t Au)
Tonnage
(kt)
Grade
(g/t Au)
Contained
gold (oz)
Deposit
Lord Henry1
TOTAL INDICATED
Lord Henry1
Lord Nelson4
Indicated
0.8
Inferred
Inferred
0.8
0.8
Indomitable & Vanguard Camp2
Inferred
0.3-0.5
Havilah & Ladybird3
TOTAL INFERRED
TOTAL INDICATED AND INFERRED
Inferred
0.5
1,200
1,200
110
1,820
2,580
510
5,020
6,220
1.6
1.6
1.3
1.9
1.5
1.8
1.7
1.7
65,000
65,000
4,000
109,000
124,000
29,000
266,000
331,000
Note 1. AME ASX Release 16 May 2017. “Maiden Lord Henry JORC 2012 Mineral Resource of 69,000oz.”
Note 2. AME ASX Release 25 Sept 2018. “Maiden Gold Resource at Indomitable & Vanguard Camps, Sandstone WA”
Note 3. AME ASX release 11 June 2019. “Alto increases Total Mineral Resource Estimate to 290,000oz, Sandstone Gold Project”
Note 4. AME ASX release 27 May 2020. “Alto increases Lord Nelson Resource by 60% to 109,000 Ounces at 1.9 g/t Gold”
Mining Lease Applications
During the year, the Group received advice from the Department of Mines, Industry Regulation and Safety that
the Company’s applications for Mining Leases over its JORC 2012 mineral resources at the Vanguard Camp
(M67/647), Lord Nelson deposit (M57/652), Lord Henry deposit (M57/651), and the Havilah deposit (M57/650)
were granted.
The above Mining Leases complement M57/646 over the Indomitable Camp, which was granted in June 2019.
Securing these Mining Leases is part of the Group’s longer-term strategy for Sandstone, however the
Company’s immediate focus remains the exploration of its numerous prospects within its wholly owned ~800km2
project area.
CORPORATE
Takeover offers
During 2019 and 2020 the Group received 3 unsolicited takeover offers from different companies.
In November 2019 an offer from Middle Island Resources lapsed.
In March 2020, Goldsea Australia Mining Pty Ltd lodged a 6.5 cents per share bid on the Company
(subsequently increased to 7.5 cents) which was allowed to lapse in July 2020.
In May 2020, Habrok (Alto) Pty Ltd announced it would lodge an unconditional cash offer of 6.6 cents per share
for all the issued shares in the Company (subsequently increased to 7 cents) and a separate cash offer for the
Company’s options.
15
REVIEW OF OPERATIONS
Forward-Looking Statements
This release may include forward-looking statements. Forward-looking statements may generally be identified
by the use of forward-looking verbs such as anticipate, aim, expect, intend, plan or similar words, which are
only predictions and are subject to risks, uncertainties and assumptions which are outside the control of Alto
Metals Limited. Actual values, results or events may be materially different to those expressed or implied in this
release. Given these uncertainties, recipients are cautioned not to place reliance on forward-looking statements.
Any forward-looking statements in this release speak only at the date of issue. Subject to any continuing
obligations under applicable law and the ASX Listing Rules, Alto Metals Limited does not undertake any
obligation to update or revise any information or any of the forward-looking statements in this release or any
changes in events, conditions or circumstances on which any such forward-looking statement is based.
Competent Persons Statement
The information in this Report that relates to current and historical Exploration Results is based on information
compiled by Dr Changshun Jia, who is an employee and security holder 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 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.
Previously Reported Results
There is information in this report relating to Mineral Resource estimates, which have been cross referenced to
previous market announcements made by the Company. The Company confirms that it is not aware of any new
information or data that materially affects the information included in the relevant market announcements and,
in the case of estimates of Mineral Resources that all material assumptions and technical parameters
underpinning the Mineral Resources estimates in the relevant market announcement continue to apply and
have not materially changed. With regards to Exploration Results, please refer to ASX announcement for full
details on these exploration results. Alto Metals Ltd is not aware of any new information or data that materially
effects the information in the said announcements.
16
DIRECTORS’ REPORT
Your Directors submit their report together with the annual financial statements of Alto Metals Limited (“Alto” or
the “Company”) and the entities it controlled (together “the Group”) for the year ended 30 June 2020 and the
auditor’s review report thereon.
Directors
The names of the Directors who held office during or since the end of the year are:
Mr Richard Monti (appointed 16 March 2020)
Mr Matthew Bowles
Dr Jingbin Wang
Mr Terry Wheeler
Directors were in office for the entire year unless otherwise stated.
Information on Directors
Richard Monti (Non-Executive Chairman, appointed 16 March 2020)
Mr Monti is a geologist with a successful career of over 50 years in the international mineral resource industry,
resulting in broad industry knowledge and strong strategic planning capabilities. He has first-hand working
knowledge of all aspects of the industry. He has 50 years of experience as a Director on 15 ASX and TSX listed
companies, covering exploration and mining activities. Directorships include 4 as Chairman and sitting on
numerous sub-committees. Richard has held roles at several international and Australian companies including
Anaconda Nickel, Azimuth Resources Limited, The North Group and The Normandy Group. He was a founding
Director of Azimuth Resources and the architect of the Company’s eventual take over for A$190m in 2013.
Richard was Principal of Ventnor Capital from 2005 to 2010, a corporate advisory business supplying advice
across the commercial and corporate spectrum to junior and mid-size companies.
Directorships held in other listed entities: Pacifico Minerals Ltd, Zinc of Ireland NL, Black Dragon Gold Corp and
Caravel Minerals Ltd.
There have been no other listed entity directorships in the last 3 years.
Matthew Bowles (Managing Director and Chief Executive Officer, appointed 13 July 2020, previously Non-
Executive Director from 27 February 2019 to 13 July 2020)
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.
Directorships held in other listed entities: Tanga Resources Limited (resigned 8 September 2020).
Dr Jingbin Wang (Non-Executive Director, appointed 12 October 2016, previously held position of Chairman
from 12 October 2016 to 13 March 2018)
Dr. Wang is a senior geologist with extensive international minerals experience, and has been Chairman of
Sinotech Minerals Exploration Co. Ltd since March 2004. He has a B.Sc in Mineral Prospecting & Exploration
from Central South University of Technology in Changsha, China, and a 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: There have been no listed entity directorships in the last 3 years.
17
DIRECTORS’ REPORT
Terry Wheeler (Non-Executive Director, appointed 8 November 2018, previously held position of Chairman,
from 8 November 2018 to 16 March 2020)
Mr Wheeler commenced employment as a laboratory assistant at the DSIR (Department of Scientific & Industrial
Research) in London in 1958 and achieved his academic qualifications whilst gaining excellent practical work
experience. He migrated to Perth, Western Australia, in 1967 and joined Western Mining Corporation, where
his mineral analysis experience was gained, and with further study and qualifications he was promoted to Chief
Chemist of the Kambalda Nickel Operation in the Eastern Goldfields.
Terry and his wife Christina established Genalysis Laboratory Services in 1975 and grew the company into one
of the largest and most successful analytical companies in the southern hemisphere with over 300 technical
staff. In 2007, Genalysis Laboratory Services was purchased by Intertek Group plc.
Terry is a Fellow of the Royal Australian Chemical Institute, a Member of the Australasian Institute of Mining
and Metallurgy Inc., a Member of the Association of Exploration Geochemists, and an Associate Member of the
International Association of Geoanalysts.
Directorships held in other listed entities: There have been no listed entity directorships in the last 3 years.
Company Secretary
Graeme Smith 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.
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 $1,393,043 (2019: $1,147,517).
Financial Position
The net assets of the Group at 30 June 2020 are $10,854,306 (2019: $11,360,281).
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.
COVID-19
The COVID-19 outbreak has developed rapidly in 2020, with a significant number of infections. Measures taken
by various governments to contain the virus have affected economic activity. We have taken a number of
measures to monitor and prevent the effects of the COVID-19 virus such as safety and health measures for
our people (like social distancing and working from home).
At this stage, the impact on our business and results is limited. We will continue to follow the various national
institutes policies and advice and in parallel will do our utmost to continue our operations in the best and safest
way possible without jeopardizing the health of our people.
Significant Changes in State of Affairs
There have been no significant changes in the affairs of the Group during the year.
18
DIRECTORS’ REPORT
Significant Events After the Reporting Date
On 13 July 2020, Non-Executive Director Matthew Bowles was appointed as Managing Director and Chief
Executive Officer.
On 13 July 2020, major shareholder, Windsong Valley Pty Ltd agreed to vary the terms of the Loan Agreement
to increase the unsecured amount available under the facility to $1 million.
On 11 August 2020, the Company entered into a Loan Facility Agreement with major shareholder, Harvest
Lane Asset Management Pty Ltd for up to $1 million. The loan can be drawn down upon between 11 August
2020 and 10 August 2021, interest is payable on the loan at a rate of 8% per annum and the loan is repayable
in full by 11 August 2021.
On 22 September 2020, the Company announced it had received firm commitments from professional and
sophisticated investors for a placement of $5.5 million through the issue of 66,666,666 shares at $0.075 per
share.
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 Group 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 Group.
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.
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(2)
R Monti(1)
M Bowles
J Wang
T Wheeler
Number eligible
to attend
8
17
17
16
Number
attended
8
17
15
16
-
-
-
-
(1) Appointed Non-Executive Chairman on 16 March 2020
(2) Remuneration and audit risk committee performed by full board.
19
DIRECTORS’ REPORT
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 $11,476 (2019: $9,523).
• 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 (2019:
63,009,234).
Date options granted
13 May 2019
12 July 2019
18 July 2019
29 November 2019
Total options on issue
Number of unissued
shares under option
28,059,745
30,000,000
8,333,333
7,500,000
73,893,078
Exercise price per
option
$0.07
$0.07
$0.07
$0.07
Expiry date of
options
13 November 2020
9 March 2021
18 January 2021
29 November 2023
No options were cancelled, lapsed or were forfeited during the financial year. No shares were issued as a
result of the exercise of options during the year.
Performance Shares
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 25,000,000 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 any time prior to 23 June 2021.
Performance Rights
During the current financial year, 1,000,000 performance rights expired. As at reporting date there are nil
performance rights on issue (2019: 1,000,000).
Non-audit Services
The following non-audit services were provided by the entity's auditor, Pitcher Partners BA&A 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 (including Independence Standards).
20
DIRECTORS’ REPORT
Pitcher Partners BA&A Pty Ltd, or associated entities, received or are due to receive the following amounts for
the provision of non-audit services:
Tax compliance services
2020
$
5,000
2019
$
-
The following non-audit services were provided by the entity's previous auditor, Grant Thornton Audit Pty Ltd,
or associated entities.
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
2020
$
-
2019
$
10,075
21
REMUNERATION REPORT
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) and superannuation. 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. To align Directors’ interests with
shareholder interests, the Directors are encouraged to hold shares in 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. There is no direct link between remuneration paid to Non-Executive
Directors and corporate performance.
Use of remuneration consultants
The Company did not employ the services of any remuneration consultants during the financial period ended
30 June 2020.
Voting and comments made at the Company’s 2019 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 2019 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 2020
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.
As a result of COVID-19, the Non-Executive Directors did not draw fees during the period 1 April 2020 to year
end.
22
REMUNERATION REPORT
Table of Benefits and Payments for the Period Ended 30 June 2020
Short-term benefits
Post-
employment
benefits
Equity-settled
share-based
payments
Salary,
fees and
leave
$
Cash
bonuses
Superannuation
Options and
LTI Rights
$
$
$
Total
$
Remuneration
performance
based
%
2020
R Monti(1)
T Wheeler
J Wang
M Bowles(2)
2019
T Wheeler
J Wang
M Bowles(2)
D Ryan(3)
T Streeter (4)
S Stone(5)
P Holywell(6)
14,000
37,397
40,000
203,242
294,639
36,530
40,000
13,332
145,356
50,157
1,720
51,562
338,657
-
-
-
-
-
-
-
-
-
-
-
-
-
1,330
2,603
-
-
3,933
3,470
-
-
-
-
-
-
3,470
-
-
-
238,905
238,905
-
-
-
-
-
-
-
-
15,330
40,000
40,000
442,147
537,477
40,000
40,000
13,332
145,356
50,157
1,720
51,562
342,127
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Mr Monti was appointed to the board on 16 March 2020.
(2) 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. During the year, Mr Bowles was issued 7,500,000 options under the ESOP and 6,250,000 LTI rights.
(3) 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.
(4) Mr Streeter resigned from the board on 8 November 2018.
(5) 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.
(6) Mr Holywell left his position as Company Secretary on 27 February 2019.
Equity instrument disclosures relating to KMP
Ordinary Shares
The number of ordinary shares 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
LTI Rights
Other changes
during the
period(1)
Balance at the
end of the
period
-
40,708,175
-
-
40,708,175
-
-
-
6,250,000
6,250,000
-
16,666,666
-
-
16,666,666
-
57,374,841
-
6,250,000
63,624,841
2020
Ordinary Shares
R Monti
T Wheeler
J Wang
M Bowles
Total
(1) Purchase pursuant to shareholder approval at a general meeting held on 12 July 2019.
23
REMUNERATION REPORT
Options
The number of options on issue over ordinary shares of 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(1)
Balance at the
end of the
period
Vested and
exercisable
2020
Unlisted Options
R Monti
T Wheeler
J Wang
M Bowles
Total
-
1,447,221
-
-
1,447,221
-
-
-
7,500,000
7,500,000
-
8,333,333
-
-
8,333,333
-
9,780,554
-
7,500,000
17,280,554
-
9,780,554
-
7,500,000
17,280,554
(1) Purchase pursuant to shareholder approval at a general meeting held on 12 July 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(1)
Balance at the
end of the
period
2020
Performance Rights
R Monti
T Wheeler
J Wang
M Bowles
Total
-
-
250,000
-
250,000
-
-
-
-
-
-
-
(250,000)
-
(250,000)
-
-
-
-
-
(1) Cancelation of performance rights following expiration of term.
Loans to KMP
There were no loans to KMP as at 30 June 2020, nor were any made during the reporting period.
Service Agreements
The Company had service agreements with the following key management personnel during the year:
Matthew Bowles – Managing Director and Chief Executive Officer (appointed 13 July 2020, previously Non-
Executive Director from 27 February 2019 to 13 July 2020)
Mr Bowles’ remuneration for his services as Non-Executive Director increased from $10,000 per month to
$20,000 per month from 1 March 2020. Fees were paid directly to his related party, Atlantic Capital Pty Ltd.
Subsequent to year end, on 13 July 2020, Mr Bowles was appointed managing director for an indefinite term,
and his remuneration was increased to $260,000 per annum plus statutory contributions.
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.
24
REMUNERATION REPORT
The options vest as specified when the options are issued. 7,500,000 options have been issued under the
ESOP in the current period.
Long term incentive rights (LTI)
LTI rights to directors and employees are delivered under an Employee Share Plan (the “Plan”) that was adopted
by the Group pursuant to approval by shareholders at the Annual General Meeting held of 29th November 2019.
A material feature of the Plan is that the issue of ordinary shares to directors and employees can be by way of
provision of a limited-recourse, interest free loan, to be used for the purpose of subscribing for the shares. The
offer of a limited-recourse, interest free loan is based on a share price not less than the volume weighted
average price at which shares are traded on the ASX over the 10 trading days up to and including the date of
the issue of shares offered under the Plan, or such other price as the Board of Directors determines. The term
of each loan will be 3 years from the date of issue of the shares, subject to the earlier repayment in accordance
with the terms of the Plan.
After subscription, the shares are issued as ordinary shares, and the directors and employees enjoy the same
rights and benefits as other shareholders, apart from any vesting conditions that are attached and the fact the
shares cannot be sold until the loan is settled. Shares may be issued subject to vesting conditions relating to
achievement of milestones (such as period of employment) or escrow restrictions which must be satisfied before
the shares can be sold, transferred, or encumbered.
The nature of the Plan is to provide an incentive to cause the share price to rise over the term of a director’s
and employee’s service, as well as retaining the director’s and employee’s service, and hence there are no
specific performance conditions attaching to these shares. The shares are considered to be “in substance
options” or “long-term incentive rights” (“LTI rights”) under generally accepted accounting principles, and
accordingly are accounted for similar to options. The fair value of the LTI rights is estimated as at the date of
grant using the Black Scholes model taking into account the terms and conditions upon which the LTI rights are
granted and factors such as the share price at grant date, volatility of the share price and risk free rate.
Accounting standards require the value of the LTI rights to be brought to account over the expected term of
vesting the benefits to the holder.
During the year 6,250,000 LTI rights were issued to Director M Bowles, the shares have been issued with no
vesting conditions attached and are retained by Mr Bowles even if employment with the Group ceases, in all
circumstances other than a case of gross misconduct. As there were no vesting conditions attached, the
expense of $118,004 was recognised in full in the reporting period.
A summary of the key assumptions used in applying the Black Scholes model to the share based payments
recognised in the period is as follows:
LTI rights issued to
Director
Number of rights
Date of grant
Share price at grant date
Volatility factor
Risk free rate
Expected life of right (years)
Valuation per right
Exercise price per right
Vesting conditions
Number of rights exercisable as at 30 June 2020
6,250,000
29-Nov-19
$0.04
76.00%
0.65%
3 years
$0.02
$0.03
None
6,250,000
25
REMUNERATION REPORT
Director and Key Management Personnel Options
During the year the following options were issued to Director M Bowles.
7,500,000 unlisted options exercisable at $0.07, fully vested and expiring on 29 November 2023.
As there were no vesting conditions attached, the expense of $120,901 was recognised in full in the reporting
period.
A summary of the key assumptions used in applying the Black Scholes model to the share based payments
recognised in the period is as follows:
Options issued to
Director
Number of options
Date of grant
Share price at grant date
Volatility factor
Risk free rate
Expected life of option (years)
Valuation per option
Exercise price per option
Vesting conditions
Number of options exercisable as at 30 June 2020
7,500,000
29-Nov-19
$0.04
84.00%
0.65%
4 years
$0.02
$0.07
None
7,500,000
Performance Rights
No performance rights were issued to Directors and KMP during the 2020 financial period (2019: nil).
D. Other Transactions with Directors and Key Management Personnel
On 11 March 2020, the Company entered into a loan facility agreement (“Loan”) with Windsong Valley Pty Ltd
a related party of the director Terry Wheeler. Under the terms of the Loan, the Company may issue drawdown
notices to the Lender for an aggregate amount of $500,000. The Company was not required to provide any
security for the Loan. Interest is accruable on the Loan at a rate of 8% per annum. The loans and all accrued
interest must be repaid on or before maturity date, being 10 March 2021.
On 15 June 2020, the Company drew down an amount of $250,000 from the Loan, these funds and accrued
interest remain owing to Windsong Valley Pty Ltd at year end.
During the year, the spouse of M Bowles, a Director of the Company provided media consulting services to the
Company, all fees paid for such services were at market rates and on a normal arm’s length basis. Total fees
paid during the year were $2,200 (2019: $Nil). As at 30 June 2020 $Nil (2019: $Nil) was payable to M Bowles’
spouse.
Group’s Performance
The table below sets out information about the Group’s earnings and movements in shareholder wealth for
the past five years up to and including the current financial year.
2020
2019
2018
2017
2016
Net loss after tax ($)*
(1,393,043)
(1,147,517)
(624,026)
(1,482,442)
(1,921,795)
Basic loss per share (cents)*
(0.48)
(0.55)
(0.36)
Share Price at year end (cents)
Total dividends (cps)
6.8
-
3.3
-
6.4
-
(1.0)
2.6
-
(2.4)
7.1
-
*Historical results have not been assessed and adjusted for the impact of new accounting standards.
----- End of Audited Remuneration Report -----
26
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the period ended 30 June 2020 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.
Richard Monti
Non-Executive Chairman
Dated this 30th day of September 2020
27
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF ALTO METALS LIMITED
In relation to the independent audit for the year ended 30 June 2020, to the best of my
knowledge and belief there have been:
(i)
(ii)
No contraventions of the auditor independence requirements of the Corporations Act
2001; and
No contraventions of APES 110 Code of Ethics for Professional Accountants
(including Independence Standards).
This declaration is in respect of Alto Metals Limited and the entities it controlled during the
year.
PITCHER PARTNERS BA&A PTY LTD
PAUL MULLIGAN
Executive Director
Perth, 30 September 2020
28
Pitcher Partners BA&A Pty LtdAn independent Western Australian Company ABN 76 601 361 095.Level 11, 12-14 The Esplanade, Perth WA 6000Registered Audit Company Number 467435.Liability limited by a scheme under Professional Standards Legislation.Adelaide Brisbane Melbourne Newcastle Perth SydneyPitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
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
Insurance
Investor relations
Legal fees
Office rental and occupation expenses
Travel and accommodation
Share based payments
Impairment of exploration and evaluation
Other expenses
Loss before income tax
Income tax (expense) / benefit
Loss for the year
Other comprehensive income, net of tax
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
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
The accompanying notes form part of these financial statements.
Note
2
3
3
4
3
5
10
7
7
2020
$
57,690
(37,574)
(66,055)
(435,423)
(235,934)
(45,047)
(20,758)
(25,763)
(22,359)
(139,607)
(63,524)
(3,921)
(288,905)
(6,519)
(59,344)
(1,393,043)
-
(1,393,043)
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)
5,000
5,000
(32,500)
(32,500)
(1,388,043)
(1,180,017)
(0.48)
(0.48)
(0.55)
(0.55)
29
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note
2020
Current Assets
Cash and cash equivalents
Trade and other receivables
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
Loans and borrowings
Provisions
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
8
9
10
11
12
13
14
15
2019
restated(i)
$
1,327,148
140,929
160,955
1,629,032
$
126,834
79,971
9,315
216,120
25,000
20,000
95,971
-
11,354,999
11,475,970
11,692,090
103,092
10,637
10,337,937
10,471,666
12,100,698
530,014
250,000
57,770
837,784
837,784
726,476
-
13,941
740,417
740,417
10,854,306
11,360,281
16
17
24,583,726
489,371
(14,218,791)
10,854,306
23,990,563
195,466
(12,825,748)
11,360,281
(i) Certain amounts shown here do not correspond to the 30 June 2019 financial statements and reflect
adjustments disclosed in Note 27.
The accompanying notes form part of these financial statements.
30
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Issued
Capital
$
Share
Based
Payments
Reserve
$
Equity
Instruments
at FVOCI
Reserve
$
Accumulated
Losses
Total
21,169,278
-
-
(11,678,231)
$
$
9,491,047
-
-
-
3,245,287
(424,002)
23,990,563
-
-
-
600,000
-
-
-
(6,837)
24,583,726
-
-
-
-
-
(1,147,517)
(1,147,517)
(32,500)
-
(32,500)
(32,500)
(1,147,517)
(1,180,017)
-
-
3,245,287
227,966
227,966
-
(32,500)
-
(12,825,748)
(196,036)
11,360,281
-
-
-
-
120,901
118,004
50,000
-
516,871
-
(1,393,043)
(1,393,043)
5,000
-
5,000
5,000
(1,393,043)
(1,388,043)
-
-
-
-
-
(27,500)
-
600,000
-
-
-
-
(14,218,791)
120,901
118,004
50,000
(6,837)
10,854,306
Balance at 1 July 2018
Loss attributable to
members of the entity for the
period
Loss for the period
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(i)
Restated at 30 June 2019(i)
Loss attributable to
members of the entity for the
period
Loss for the period
Other comprehensive income,
net of tax
Total comprehensive loss
for the period
Transaction with owners,
directly in equity
Shares issued during the
period
Options issued to Director
LTI rights issued to Director
Shares issued to creditors
Share issue transaction costs
Balance at 30 June 2020
(i) Certain amounts shown here do not correspond to the 30 June 2019 financial statements and reflect
adjustments disclosed in Note 27.
The accompanying notes form part of these financial statements.
31
CONSOLIDATED STATEMENT OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers and employees
Other receipts
Net cash 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 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 financing activities
Note
2020
$
2019
$
6,963
(1,057,557)
50,000
(1,000,594)
7,573
(866,530)
-
(858,957)
18a
-
(3,000)
(1,039,883)
(1,042,883)
-
-
(1,257,801)
(1,257,801)
600,000
(6,837)
250,000
843,163
2,471,385
(183,824)
300,000
2,587,561
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
(1,200,314)
1,327,148
126,834
470,803
856,345
1,327,148
8
The accompanying notes form part of these financial statements.
32
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 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 Group’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 $1,393,043 (2019: $1,147,517),
net current liabilities of $621,664 (2019: net current assets $888,615), net cash outflows used in operating
activities of $1,000,594 (2019: $858,957), net cash outflows used in investing activities of $1,042,883 (2019:
$1,257,801) and had cash and cash equivalents of $126,834 (2019: $1,327,148) for the year ended 30 June
2020.
The board considers that the Group is a going concern. In arriving at this position the Directors have had regard
to the fact that based on the matters noted below the Group has, or in the Directors opinion, will have access
to, sufficient cash to fund administrative and other committed expenditure for a period of at least 12 months
from the date of signing this report.
In forming this view the Directors have taken into consideration the following:
• The planned completion of a $5.5 million capital raising in October 2020 at a level that provides sufficient
financial resources, combined with funds raised from the matters noted below, to fund forecasted
operational expenditure for a period for 12 months from the date of signing this financial report (Refer Note
20);
• Entering into a loan facility agreement (the “Loan”) on 11 March 2020 with Windsong Valley Pty Ltd, a
related entity of the Group, for the amount of $1,000,000. As per the terms of the Loan, any amounts drawn
on the Loan must be repaid by 11 March 2021 (Refer to Note 15);
Entering into a loan facility agreement (the “Loan”) on 11 August 2020 with Harvest Lane Asset
Management Pty Ltd, a major shareholder of the Group, for the amount of $1,000,000. As per the terms of
the Loan, any amounts drawn on the Loan must be repaid by 11 August 2021; and,
• Reducing both administrative and exploration expenditure (on the basis exploration expenditure is
discretionary and expenditure requirements are minimal) as required through careful cash management.
The Group’s ability to continue as a going concern and meet its debts and future commitments as and when
they fall due is dependent on a number of factors, including:
• Obtaining additional funding as outlined above; and
• Receiving the continued support of its shareholders and creditors.
Should the Group not achieve the matters set out above there is significant uncertainty whether the Group will
continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the
normal course of business and at the amounts stated in the financial report. The financial report does not include
33
NOTES TO THE FINANCIAL STATEMENTS
any adjustment relating to the recoverability or classification of recorded asset amounts or to the amounts or
classification of liabilities that might be necessary should the Group not be able to continue as a going concern
and meet its debts as and when they fall due.
(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 19.
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.
(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.
34
NOTES TO THE FINANCIAL STATEMENTS
(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
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
Depreciation Rate
Plant and equipment
Computers and software
Motor vehicles
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.
35
NOTES TO THE FINANCIAL STATEMENTS
When production commences, the accumulated costs for the relevant area of interest are amortised over the
life of the area according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest.
The Company receives R&D grants from the Australian Taxation Office. Where an R&D rebate can be directly
attributable to an area of interest the R&D rebate is applied against the area of interest. For any amounts that
cannot be directly attributable to an existing area of interest the amount will be recognised as grant income in
the Statement of Profit or Loss and Other Comprehensive income.
(F)
LEASES
As mentioned in Note 1(T), AASB 16 replaces AASB 117 Leases for annual periods beginning on or after 1
January 2019.
In accordance with the transition requirements of AASB 16, the Group has elected to apply AASB 16
retrospectively to those contracts that were previously identified as leases under the predecessor standard, with
the cumulative effect of initially applying the new standard recognised at the beginning of the current reporting
period (i.e. at 1 July 2019). Accordingly, comparative information has not been restated.
Accounting policy applicable from 1 July 2019
Initial recognition
AASB 16 requires a lessee to recognise right-of-use assets and lease liabilities for all leases with a term of more
than 12 months unless the underlying asset is of low value. Right-of-use assets are initially measured at their
cost and lease liabilities are initially measured on a present value basis.
Subsequent measurement
Subsequent to initial recognition:
(a)
(b)
right-of-use assets are accounted for on a similar basis to non-financial assets, whereby the right-of-use
asset is accounted for in accordance with a cost model unless the underlying asset is accounted for on
a revaluation basis, in which case if the underlying asset is:
1.
investment property, the lessee applies the fair value model in AASB 140: Investment Property to
the right-of-use asset; or
2. property, plant or equipment, the lessee can elect to apply the revaluation model in AASB 116:
Property, Plant and Equipment to all of the right-of-use assets that relate to that class of property,
plant and equipment; and
lease liabilities are accounted for on a similar basis as other financial liabilities, whereby interest expense
is recognised in respect of the liability and the carrying amount of the liability is reduced to reflect lease
payments made.
Accounting policy applicable before 1 July 2019
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
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
36
NOTES TO THE FINANCIAL STATEMENTS
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.
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
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 (FVPL). 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.
(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 Group’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.
37
NOTES TO THE FINANCIAL STATEMENTS
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 Consolidated Statement of Profit of Loss and Other 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. The issue of Shares pursuant to the plan may be undertaken by way of provision
of a limited-recourse, interest-free loan to be used for the purposes of subscribing for the Shares. The Shares
issued are fully paid ordinary shares in the capital of the Company, issued on the same terms and conditions
as the Company’s existing Shares, other than being subject to any Loan being extinguished or repaid under the
terms of the Plan.
Although these are shares for legal and taxation purposes, Accounting Standards require they be treated as
options for accounting purposes.
(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 result and that outflow can be reliably measured.
(K)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are
shown within short-term borrowings in current liabilities on the Consolidated 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.
Government grants are recognised at fair value where there is reasonable assurance that the grant will be
received, and all grant conditions will be met. Grants relating to expense items are recognised as income over
the periods necessary to match the grant to the costs it is compensating. Grants relating to assets are credited
to deferred income at fair value and are credited to income over the expected useful life of the asset on a
straight-line basis.
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
Consolidated Statement of Financial Position are shown inclusive of GST.
Cash flows are presented in the Consolidated Statement of Cash Flows on a gross basis, except for the GST
component of financing activities, which are disclosed as operating cash flow.
(O)
LOANS AND BORROWINGS
Borrowings are recognised initially at fair value net of transaction costs.
Subsequent to initial recognition, borrowings are stated at amortised cost, with any difference between cost and
redemption value being recognised in profit or loss over the period of the borrowings on an effective interest
basis. Transaction costs are capitalised initially and included in the effective interest rate calculation and
unwound over the expected term of the facility.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer the settlement
of the liability for at least 12 months after the end of the reporting period.
38
NOTES TO THE FINANCIAL STATEMENTS
Interest expense is recognised as interest accrues using the effective interest rate and if not paid at balance
date, is reflected in the balance sheet as a payable.
(P)
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:
•
•
•
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.
(Q)
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.
(R)
PERFORMANCE RIGHTS
The Company measures the value of its performance rights using the listed price of the Company’s shares at
the date of granting of the rights, as the rights convert to ordinary shares at a ratio of 1:1. The Company then
determines the probability that performance conditions attaching to the rights will be met and the rights will
convert. Where the probability is greater than 50%, the full value is assigned to the rights. Where the probability
is less than 50%, no value is assigned to the rights. The value of the rights are then amortised into expense
evenly over the service period to the date of expiry, resulting in a share based payment expense in the
Consolidated Statement of Profit or Loss and Other Comprehensive Income and accumulating in the
performance rights reserves in equity on the Consolidated Statement of Financial Position.
(S)
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 of Assets
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.
In determining the recoverable amount of assets, in the absence of quoted market prices, estimations are made
regarding the present value of future cash flows using asset-specific discount rates and the recoverable amount
of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate
a number of key estimates.
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 25,000,000 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
39
NOTES TO THE FINANCIAL STATEMENTS
the Sandstone Tenements any time prior to 23 June 2021. 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 16. 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. In respect of these
performance rights, at 30 June 2019 management estimated that the remaining performance conditions were
not probable to be achieved. During the period, these performance rights expired, and the performance
conditions were not met.
Key Judgments – Benefit from Deferred Tax Losses
The future recoverability of the carried forward tax losses are dependent upon Group’s ability to generate
taxable profits in the future in the same tax jurisdiction in which the losses arise. This is also subject to
determinations and assessments made by the taxation authorities. The recognition of a deferred tax asset on
carried forward tax losses (in excess of taxable temporary differences) is dependent on management’s
assessment of these two factors. The ultimate recoupment and the benefit of these tax losses could differ
materially from management’s assessment.
Potential deferred tax assets attributable to tax losses and exploration expenditure carried forward have not
been brought to account at 30 June 2020 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 Group 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 Group continues to comply with conditions for deductibility imposed by law; and
• no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for
the loss and exploration expenditure.
(T)
NEW AND AMENDED STANDARDS ADOPTED BY THE GROUP IN THIS FINANCIAL REPORT
The following significant Australian Accounting Standard has been issued and is applicable to the financial
statements of the Group:
AASB No.
Standard / Interpretation
Effective date for the group
AASB 16
Leases
1 July 2019
The Group has assessed its leases and concluded that per the guidance provided by AASB 16 they are short
term leases or of low value, and as such the Group has elected to apply the practical expedients included with
AASB 16 and not recognise a right-of-use asset or lease liability in the financial statements. In addition, leases
relating to exploration assets are outside the scope of AASB 16 and hence have also not been recognised in
the financial statements.
Leases of 12-months or less and leases of low value assets
Lease payments made in relation to leases of 12-months or less and leases of low value assets (for which a
lease asset and a lease liability has not been recognised) are recognised as an expense on a straight-line basis
over the lease term.
The Group leases office and storage premises with lease terms of 12 months or less and leases office
equipment of low value.
Expenses relating to these leases, recognised in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income are as follows:
40
NOTES TO THE FINANCIAL STATEMENTS
Expense relating to short-term leases
Expense relating to leases of low-value assets
2020
$
52,331
3,120
55,451
2019
$
82,133
3,120
85,253
Reconciliation between AASB 16 right-of-use asset and lease liability and lease commitments as at 30 June
2019 is as follows:
Aggregate non-cancellable lease commitments as at 30 June 2019
Less:
Payments previously included in non-cancellable lease commitments for leases with
remaining terms less than 12 months
Carrying amount of right-of-use asset and lease liability recognised as at 1 July 2019
2020
$
68,042
(68,042)
-
(U)
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. Details of these standards and interpretations are set out below:
AASB No.
AASB 2018-7
Standard / Interpretation
Amendments to Australian Accounting Standards –
Definition of Material
Effective date for the group
1 July 2020
AASB 2018-7 principally amends AASB 101: Presentation of Financial Statements and AASB 108: Accounting
Policies, Changes in Accounting Estimates and Errors. The amendments refine the definition of material in
AASB 101. The amendments clarify the definition of material and its application by improving the wording and
aligning the definition across AASB Standards and other publications. The amendment also includes some
supporting requirements in AASB 101 in the definition to give it more prominence and clarifies the explanation
accompanying the definition of material.
AASB 2018-7 mandatorily applies to annual reporting periods commencing on or after 1 January 2020 and will
be first applied by the Group in the financial year commencing 1 July 2020.
AASB No.
AASB 2019-3
Standard / Interpretation
Amendments to Australian Accounting Standards –
Interest Rate Benchmark Reform
Effective date for the group
1 July 2020
The reliefs apply to all hedging relationships that are directly affected by the interest rate benchmark reform. A
hedging relationship is affected if the reform gives rise to uncertainties about the timing and/or amount of
benchmark-based cash flows of the hedged item or the hedging instrument.
AASB 2019-3 mandatorily applies to annual reporting periods commencing on or after 1 January 2020 and will
be first applied by the Group in the financial year commencing 1 July 2020.
AASB No.
AASB 2019-5
Standard / Interpretation
Amendments to Australian Accounting Standards –
Disclosure of the Effect of New IFRS Standards Not Yet
Issued in Australia
Effective date for the group
1 January 2020
AASB 2019-5 makes amendments to AASB 1054 Australian Additional Disclosures by adding a disclosure
requirement for an entity intending to comply with IFRS Standards to disclose the information required by
paragraph 30 of AASB 108 (regarding disclosing the effect of new standards not yet issued) to IFRS Standards
that have not yet been issued by the Australian Accounting Standards Board.
AASB 2019-5 mandatorily applies to annual reporting periods commencing on or after 1 January 2020 and will
be first applied by the Group in the financial year commencing 1 July 2020.
41
NOTES TO THE FINANCIAL STATEMENTS
AASB No.
AASB 2020-1
Standard / Interpretation
Amendments to Australian Accounting Standards –
Classification of Liabilities as Current or Non-current
Effective date for the group
1 January 2022
AASB 2020-1 amends AASB 101 Presentation of Financial Statements to clarify requirements for the
presentation of liabilities in the Statement of Financial Position as current or non-current.
AASB 2020-1 mandatorily applies to annual reporting periods commencing on or after 1 January 2022 and will
be first applied by the Group in the financial year commencing 1 July 2022.
AASB No.
AASB 2020-3
Standard / Interpretation
Amendments to Australian Accounting Standards –
Improvements 2018 – 2020 and Other
Annual
Amendments
Effective date for the group
1 January 2022
AASB 2020-3 amends AASB 1 First-time Adoption of Australian Accounting Standards, AASB 3 Business
Combinations, AASB 9 Financial Instruments, AASB 116 Property, Plant and Equipment, AASB 137 Provisions,
Contingent Liabilities and Contingent Assets and AASB 141 Agriculture as a consequence of the recent
issuance by IASB of the following IFRS: Annual Improvements to IFRS Standards 2018-2020, Reference to the
Conceptual Framework, Property, Plant and Equipment: Proceeds before Intended Use and Onerous Contracts
– Cost of Fulfilling a Contract.
AASB 2020-3 mandatorily applies to annual reporting periods commencing on or after 1 January 2022 and will
be first applied by the Group in the financial year commencing 1 July 2022.
AASB No.
AASB 2020-4
Standard / Interpretation
Amendments to Australian Accounting Standards –
Covid-19-Related Rent Concessions
Effective date for the group
1 June 2020
AASB 2020-4 amends AASB 16: Leases to provide an optional practical expedient to lessees from assessing
whether a rent concession related to COVID-19 is a lease modification. Lessees can elect to account for such
rent concessions in the same way as they would if they were not lease modifications. The practical expedient
only applies to rent concessions occurring as a direct consequence of the COVID-19 pandemic and only if all
the following conditions are met:
a)
the change in lease payments results in revised consideration for the lease that is substantially the
same as, or less than, the consideration for the lease immediately preceding the change;
b) any reduction in lease payments affects only payments due on or before 30 June 2021; and
c)
there is no substantive change to other terms and conditions of the lease.
AASB 2020-4 mandatorily applies to annual reporting periods commencing on or after 1 June 2020 and is
available for earlier application. It will be applied by the Group in the financial year commencing 1 July 2020.
The Group has reviewed the above amended standards and interpretations are concludes that none are
expected to have a significant impact on the Groups consolidated financial statements.
NOTE 2: OTHER INCOME
Interest received
Government grants
2020
$
7,690
50,000
57,690
2019
$
8,174
-
8,174
42
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3: LOSS FOR THE PERIOD
Included in the loss for the period are the following items of revenue and expenses:
Depreciation expense
Superannuation expense
Office short term lease expenses
Impairment of exploration and evaluation
NOTE 4: SHARE-BASED PAYMENTS
Share based payments recognised during the year are:
Options issued to Director(i)
LTI rights issued to Director(ii)
Shares issued to creditors for services received(iii)
2020
2019
$
20,758
46,258
63,524
6,519
$
23,997
52,945
97,344
5,196
13
2020
$
120,901
118,004
50,000
288,905
2019
$
-
-
-
-
(i)
(ii)
(iii)
On 29 November 2019, Shareholders approved the issue of 7,500,000 options with an exercise price
of $0.07 to Mr Matthew Bowles expiring 29 November 2023, a Director of the Group. The fair value of
the options granted was estimated as at the date of grant using the Black Scholes model taking into
account the terms and conditions upon which the options were granted and factors such as the share
price at grant date, volatility of the share price and risk free rate. As there were no vesting conditions
attached, the expense of $120,901 was recognised in full in the reporting period.
On 29 November 2019, Shareholders approved the provision of a limited-recourse, interest-free loan
to Mr Matthew Bowles, a Director of the Group, for the purpose of subscribing for 6,250,000 shares at
$0.032 per share. Although these are shares for legal and taxation purposes, Accounting Standards
require they be treated as options for accounting purposes. As there were no vesting conditions
attached, the expense of $118,004 was recognised in full in the reporting period.
Equity settled share based payment measured at fair value of services received in accordance with
accounting standard AASB 2. As at 30 June 2020, the shares remain to be issued. On issue, an amount
of $50,000 will be transferred from share-based payments reserve to issued capital.
Valuation of Share Based Payments
A summary of the key assumptions used in applying the Black Scholes model to the share based payments
recognised in the period is as follows:
Options issued to
Director
LTI rights
issued to
Director
Number of options/rights
Date of grant
Share price at grant date
Volatility factor
Risk free rate
Expected life of option/right (years)
Valuation per option/right
Exercise price per option/right
Vesting conditions
Number of options/rights exercisable as at 30 June 2020
7,500,000
29-Nov-19
$0.04
84.00%
0.65%
4 years
$0.02
$0.07
None
7,500,000
6,250,000
29-Nov-19
$0.04
76.00%
0.65%
3 years
$0.02
$0.03
None
6,250,000
43
NOTES TO THE FINANCIAL STATEMENTS
NOTE 5: INCOME TAX
(a) Income tax (benefit)/expense
Current tax
Deferred tax
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% (2019: 30%)
Add / (Less) tax effect of:
Entertainment
Penalties and Fines
Share based payments
Cash flow boost payment
Deferred tax asset not brought to account
Income tax benefit attributable to operating loss
-
-
-
-
-
-
(417,914)
(344,255)
210
180
86,672
(15,000)
345,582
-
-
-
-
-
344,255
-
The applicable weighted average effective tax rates are as follows:
nil%
nil%
(b) Deferred tax assets
Tax Losses
Provisions and Accrual
Capital Raising and business-related costs
Investments revalued through equity
Set-off deferred tax liabilities
Net deferred tax assets
(c) Deferred tax liabilities
Exploration expenditure
Prepayments
Set-off deferred tax assets
Net deferred tax liabilities
(d) Deferred tax assets not brought to account
Unused tax losses for which no deferred tax asset has been
recognised
Temporary differences for which no deferred tax asset has been
recognised
4,540,171
33,271
59,515
24,000
4,656,957
(4,656,957)
-
3,883,940
102,259
39,230
22,500
4,047,929
(4,047,929)
-
4(c)
(3,406,499)
(2,795)
(3,409,294)
3,409,294
-
(3,101,381)
(48,287)
(1,358,588)
1,358,588
-
4,540,171
1,808,407
(3,292,507)
15,750
Potential deferred tax assets attributable to tax losses and exploration expenditure carried forward have not
been brought to account at 30 June 2020 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.
44
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6: AUDITORS’ REMUNERATION
Remuneration of the auditor of the parent entity for:
- Auditing or reviewing the financial report by Pitcher Partners
BA&A Pty Ltd
- Auditing or reviewing the financial report by Grant Thornton
Audit
Remuneration of the auditor, or associated entities, of the parent
entity for non-audit services:
- Tax compliance services
NOTE 7: LOSS PER SHARE
2020
$
2019
$
25,500
-
-
27,114
5,000
10,075
2020
$
2019
$
(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)
(1,393,043)
(1,147,517)
289,540,448
207,685,167
(0.48)
(0.55)
NOTE 8: CASH AND CASH EQUIVALENTS
Cash at bank
Reconciliation of cash
Cash at the end of the financial period as shown in the Statement Of
Cash Flows is reconciled to items in the Statement of Financial
Position as follows:
Cash and cash equivalents
NOTE 9: TRADE AND OTHER RECEIVABLES
CURRENT
GST receivable
Trade and other receivables
Interest receivable
2020
$
126,834
2019
$
1,327,148
126,834
1,327,148
2020
$
2019
$
29,169
50,802
-
79,971
73,613
66,656
660
140,929
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 trade and other receivables is a security bond of $26,365 (2019: $26,365) which is subject to an
indemnity guarantee for a rental agreement.
NOTE 10: FINANCIAL INSTRUMENTS
Note 1(G) provides a description of each category of financial instrument and related accounting policies. The
carrying amounts of financial assets and financial liabilities in each category are as follows:
45
NOTES TO THE FINANCIAL STATEMENTS
30 June 2020
Financial assets
Cash and cash equivalents(i)
Trade and other receivables(i)
Equity instruments(ii)
Total financial assets
Financial liabilities
Trade and other payables(i)
Loans and borrowings(iii)
Total financial liabilities
Financial assets
Cash and cash equivalents(i)
Trade and other receivables(i)
Equity instruments(ii)
Total financial assets
Financial liabilities
Trade and other payables(i)
Loans and borrowings(iii)
Total financial liabilities
Amortised
Cost
$
FVOCI
$
126,834
79,971
-
206,805
-
-
25,000
25,000
530,014
250,000
780,014
-
-
-
-
-
1,327,148
140,929
- 20,000
20,000
1,468,077
726,476
-
726,476
-
-
-
(i)
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
(ii)
Equity instruments at fair value through other comprehensive income
At the beginning of the reporting period
Reclassification arising from the adoption of AASB 9
Add revaluation increments/(decrements), net of tax
2020
$
20,000
-
5,000
25,000
2019
$
-
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.
(iii)
Loans and borrowings – refer to note 15 for details
46
NOTES TO THE FINANCIAL STATEMENTS
NOTE 11: PLANT AND EQUIPMENT
NON-CURRENT
Plant and equipment – cost
Accumulated depreciation
Motor vehicle – cost
Accumulated depreciation
Property – cost
Accumulated depreciation
2020
$
2019
$
139,588
(137,898)
1,690
136,588
(134,044)
2,544
25,000
(18,767)
6,233
88,048
-
88,048
25,000
(12,500)
12,500
88,048
-
88,048
Total property, plant and equipment
95,971
103,092
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
Reconciliation of Carrying Amounts
Opening balance
Amortisation expense
Carrying amount at the end of the period
2,544
3,000
(3,854)
1,690
12,500
-
(6,267)
6,233
88,048
-
-
88,048
103,092
3,000
(10,121)
95,971
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
2020
$
2019
$
75,137
(75,137)
-
10,637
(10,637)
-
75,137
(64,500)
10,637
23,043
(12,406)
10,637
47
NOTES TO THE FINANCIAL STATEMENTS
NOTE 13: EXPLORATION AND EVALUATION
Exploration and evaluation phases – at cost
Exploration and evaluation - movement
Opening balance
Exploration expenditure
Impairment of exploration and evaluation
Closing balance
2020
$
2019
$
11,354,999
10,337,937
10,337,937
1,023,581
(6,519)
11,354,999
8,727,068
1,616,065
(5,196)
10,337,937
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.
As at 30 June 2020, the Directors have concluded that there remains an expectation that the carrying amount
of the Group’s exploration and evaluation assets will be recovered in full on the basis of the above factors, and
hence no impairment triggers exist. Consequently, no detailed impairment assessment has been performed.
During the year, an impairment of $6,519 (2019: $5,196) was recognised due to the surrender of tenements.
NOTE 14: TRADE AND OTHER PAYABLES
CURRENT – UNSECURED LIABILITIES
Trade and other payables
Accrued expenses
2020
$
486,531
43,483
530,014
2019
$
407,893
318,583
726,476
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: LOANS AND BORROWINGS
Loan from related party(i)
2020
$
250,000
2019
$
-
(i)
On 11 March 2020, the Company entered into a Loan Facility Agreement (“Loan Agreement” or
“Facility”) for up to A$1 million with its largest shareholder, Windsong Valley Pty Ltd (Windsong), an
entity associated with Non-Executive Director, Terry Wheeler. The Facility provides Company with the
flexibility to draw down for working capital as required to ensure the continuation of planned exploration
at Lord Nelson.
The key terms of the Facility are set out below:
• The Company may drawdown up to $500,000 during the period 11 March 2020 to 10 March 2021
(Availability Period);
• Subject to the Company receiving the shareholder approval for the granting of a security interest in
all of the Company's present and after acquired property for all monies outstanding under the
Facility (including interest) by 8 May 2020, the Company may drawdown up to an additional
$500,000 during the Availability Period (for a maximum drawdown of $1 million under the Facility);
In the event that Shareholder Approval is not obtained, the maximum drawdown under the Facility
will reduce to $500,000 and no security will be granted;
•
• The interest rate applicable on outstanding monies is 8% per annum, accrued monthly and calculate
monthly;
48
NOTES TO THE FINANCIAL STATEMENTS
• All outstanding monies and interest under the Facility are payable on or before 11 March 2021
(Maturity Date); and
• The Facility is repayable immediately in the event that the Company is subject to a change of
control.
As the Company did not seek shareholder approval for the granting of a security interest in all of the
Company's present and after acquired property, the loan facility available remains at $500,000
unsecured. At the end of the period, the Company has drawn down $250,000.
NOTE 16: ISSUED CAPITAL
(a) Issued capital
293,373,781 (2019: 270,457,115) Fully paid ordinary shares at no
par value
25,000,000 (2019: 25,000,000) Performance shares
2020
$
2019
restated(i)
$
22,408,726
21,815,563
2,175,000
24,583,726
2,175,000
23,990,563
Fully paid ordinary shares have no par value, carry one vote per share and carry the right to dividends.
(b) Ordinary shares
The following movements in ordinary share capital occurred during
the reporting period:
Balance at beginning of the period
Shares issued during the period
16,666,666 on 3 December 2019 at $0.036 per share(ii)
Prior year
9,595,141 on 27 August 2018 at $0.047 per share
3,000,000 on 18 January 2019 at $0.039 per share(vi)
9,143,474 on 18 February 2019 at $0.036 per share
6,382,948 on 6 March 2019 at $0.047 per share(vi)
56,875,060 on 13 May 2019 at $0.036 per share(vi)
Costs associated with equity raisings restated(i)
Balance at end of the period
Balance at beginning of the period
Shares issued during the period
16,666,666 on 3 December 2019 at $0.036 per share(ii)
Prior year
9,595,141 on 27 August 2018 at $0.047 per share
3,000,000 on 18 January 2019 at $0.039 per share(vi)
9,143,474 on 18 February 2019 at $0.036 per share
6,382,948 on 6 March 2019 at $0.047 per share(vi)
56,875,060 on 13 May 2019 at $0.036 per share(vi)
Balance at end of the period
2020
$
2019
restated(i)
$
21,815,563
18,994,278
600,000
-
-
-
-
-
-
(6,837)
22,408,726
451,019
117,600
329,166
300,000
2,047,502
(424,002)
21,815,563
No.
270,457,115
No.
185,459,462
16,666,666
-
-
-
-
-
-
293,373,781
9,595,141
3,000,000
9,143,474
6,382,948
56,875,060
270,457,115
49
NOTES TO THE FINANCIAL STATEMENTS
(c) Performance shares
The following movements in performance shares occurred during
the reporting period:
Balance at beginning of the period
Performance shares issued during the period
Balance at end of the period(iv)
Balance at beginning of the period
Performance shares issued during the period
Balance at end of the period(iv)
(d) Performance rights
The following movements in performance rights occurred during
the reporting period:
Balance at beginning of the period
Performance rights issued during the period
Performance rights expired during the period
Balance at end of the period(vii)
(e) LTI rights
The following movements in LTI rights occurred during
the reporting period:
Balance at beginning of the period
LTI rights issued during the period(iii)
LTI rights expired during the period
Balance at end of the period
(f) Unlisted Options
The following movements in performance rights occurred during
the reporting period:
Balance at beginning of the period restated(i) (vi)
Options issued during the period:
$0.07 Options expiring 9 March 2021(i)
$0.07 Options expiring 29 November 2023(v)
Balance at end of the period
227,966
-
120,901
348,867
2020
$
2019
$
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
2020
No.
2019
No.
1,000,000
-
(1,000,000)
-
7,312,500
-
(6,312,500)
1,000,000
2020
No.
2019
No.
-
6,250,000
-
6,250,000
2020
$
2019
$
restated(i)
-
-
-
-
-
227,966
-
227,966
50
NOTES TO THE FINANCIAL STATEMENTS
Balance at beginning of the period
Options issued during the period:
$0.07 Options expiring 17 August 2020
$0.07 Options expiring 13 November 2020
$0.07 Options expiring 9 March 2021(i)
$0.07 Options expiring 18 January 2021(ii)
$0.07 Options expiring 29 November 2023(v)
Balance at end of the period
No.
No.
restated(i)
63,009,234
-
-
-
-
8,333,333
7,500,000
78,842,567
4,571,711
28,437,523
30,000,000
-
-
63,009,234
(i)
(ii)
(iii)
(iv)
Prior to restatement, costs associated with equity raisings was $196,036. This has been restated to
$424,002, following the valuation of options issued as partial consideration for capital raising services.
Refer to note 27 for details on restatement to prior period and summary of key assumptions used in
applying the Black Scholes model to the share-based payment.
On 12 July 2019, following Shareholder approval, the Company raised $600,000 through a placement
of 16,666,666 ordinary shares together with 8,333,333 options, to Alto’s then Chairman and major
shareholder Mr Terry Wheeler. 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 24 December 2019, following Shareholder approval at the 2019 AGM, the Company issued
6,250,000 shares to Atlantic Capital Pty Ltd, the private company of Mr Matthew Bowles. Details are
set out in Note 4.
The above Performance Shares will convert into 25,000,000 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
any time prior to 23 June 2021.
(v)
On 24 December, following Shareholder approval at the 2019 AGM the Company issued 7,500,000
options to a Director under the Employee Share Option Plan. Details are set out in Note 4.
(vi)
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 director Terry Wheeler.
9,897,278 shares issued on 13 May 2019 at $0.036 per share in lieu of cash payment to trade
creditors.
(vii)
During the period, the 1,000,000 performance rights issued to key management personnel and
employees have now all expired, and the performance conditions were not met.
(g) 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.
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 or alternative funding arrangements as required. The Group’s working
capital position, being current assets less current liabilities as at 30 June 2020 is a deficit of $621,664 (2019:
surplus $888,615).
51
NOTES TO THE FINANCIAL STATEMENTS
NOTE 17: RESERVES
Equity instruments at FVOCI Reserve
Share based payments reserve
Movements in reserves
Equity instruments at FVOCI Reserve
Balance at beginning of the period
Add revaluation increments, net of tax, during the period
Balance at end of the period
2020
$
(27,500)
516,871
489,371
2019
restated(i)
$
(32,500)
227,966
195,466
2020
$
2019
$
(32,500)
5,000
(27,500)
-
(32,500)
(32,500)
This reserve is used to record the fair value movements of the Group’s equity instruments in accordance its
accounting policy.
Share-based payments reserve
Balance at beginning of the period restated(i)
Issue of option to Brokers during the period(i)
Issue of options to Director during the period(ii)
Issue of LTI rights to Director during the period(ii)
Issue of shares to creditors for services received
Balance at end of the period
2020
$
2019
restated(i)
$
227,966
-
118,004
120,901
50,000
516,871
-
227,966
-
-
-
227,966
This reserve is used to record the value of equity benefits provided to Directors, employees and third parties
of the Group in accordance with its accounting policy.
(i)
(ii)
Refer to Note 27 for details.
Refer to Note 4 for details of share-based payments made during the reporting period.
NOTE 18: 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:
Depreciation
Share based payments
Impairment of Exploration and Evaluation
Changes in assets and liabilities:
(Increase) / Decrease in receivables
(Increase) / Decrease in prepayments
(Increase) / Decrease in other assets
Increase / (Decrease) in payables
Cash flow used in operations
2020
$
(1,393,043)
2019
$
(1,147,517)
20,758
288,905
6,519
60,958
13,535
-
1,774
(1,000,594)
23,997
-
5,196
77,652
-
-
181,715
(858,957)
52
NOTES TO THE FINANCIAL STATEMENTS
(b) Credit Standby Facilities
The Group had credit standby facilities of $250,000 (unsecured) as at 30 June 2020 (2019: $nil). Refer to Note
15 for details on the Loan Facility Agreement with Windsong Valley Pty Ltd.
NOTE 19: CONTROLLED ENTITIES
Percentage
Owned %
Details of Controlled Entities
Cue Metals Pty Ltd
Sandstone Exploration Pty Ltd
Country of
Incorporation
Australia
Australia
Class of Shares
2020
2019
Ordinary
Ordinary
100
100
100
100
NOTE 20: EVENTS SUBSEQUENT TO REPORTING DATE
On 13 July 2020, Non-Executive Director Matthew Bowles was appointed as Managing Director and Chief
Executive Officer.
On 13 July 2020, major shareholder, Windsong Valley Pty Ltd agreed to vary the terms of the Loan Agreement
to increase the unsecured amount available under the facility to $1 million.
On 11 August 2020, the Company entered into a Loan Facility Agreement with major shareholder, Harvest
Lane Asset Management Pty Ltd for up to $1 million. The loan can be drawn down upon between 11 August
2020 and 10 August 2021, interest is payable on the loan at a rate of 8% per annum and the loan is repayable
in full by 11 August 2021.
On 22 September 2020, the Company announced commitments had been received for a placement to
professional and sophisticated investors to raise up to $5.5 million through the issue of 66,666,666 shares.
NOTE 21: RELATED PARTY TRANSACTIONS
Transactions between related parties are on normal commercial terms and conditions, no more favourable than
those available to other parties, unless otherwise stated.
Key Management Personnel Compensation
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid to each
member of the Group’s KMP for the year ended 30 June 2020. The totals of remuneration paid to KMP during
the year are as follows:
Short-term employee benefits (i)
Post-employment benefits
Share based payments
2020
2019
$
294,639
3,933
238,905
537,477
$
338,657
3,470
-
342,127
(i)
A portion of short-term employee benefits are paid to director-related parties.
Other Related Party Transactions
During the reporting period the Company shared office space with Enterprise Metals Ltd (“Enterprise’),
Enterprise was a significant shareholder of the Company during the reporting period, in addition the Company
holds 2,500,000 shares in Enterprise at a fair value of $25,000 (2019: $20,000). Enterprise Metals reimbursed
the Company in full for its share of office space. Total reimbursement received from Enterprise Metals Ltd during
the year was $21,900 (2019: $47,861). At the end of the reporting period $4,022 (2019: $22,510) was
receivable.
During the year, the spouse of Matthew Bowles, a director of the Company provided media consulting services
to the Company, all fees paid for such services were at market rates and on a normal arm’s length basis. Total
53
NOTES TO THE FINANCIAL STATEMENTS
fees paid during the year were $2,200 (2019: $Nil). As at 30 June 2020 $Nil (2019: $Nil) was payable to
M Bowles’ spouse.
During the year, the Company entered into a Loan Facility Agreement (“Loan Agreement” or “Facility”) for up to
A$1m with its largest shareholder, Windsong Valley Pty Ltd (Windsong), an entity associated with Non-
Executive Director, Terry Wheeler. The Facility provides Alto with the flexibility to draw down for working capital
as required to ensure the continuation of planned exploration at Lord Nelson. Refer to Note 15 for key terms of
the facility. At the end of the period $250,000 was payable to Windsong Valley Pty Ltd (2019: Nil).
During the previous financial year, Windsong Valley Pty Ltd issued a Convertible Loan of $300,000 to the
Company, the loan was repaid in full during the previous financial year. In addition, in the previous financial
year, Windsong Valley made a one-off cash advance to the Company, the advance was also repaid in full during
the previous financial year. No interest was incurred on the advance.
NOTE 22: CAPITAL AND LEASING COMMITMENTS
Expenditure commitments
The Group has entered into certain obligations to perform minimum work on mineral tenements held. The
Group is required to meet tenement minimum expenditure requirement which are set out below. These may
be varied or deferred on application and are expenditures expected to be met in the normal course of
business.
- not later than 12 months
- between 12 months and 5 years
2020
$
629,020
2,516,080
3,145,100
2019
$
465,820
1,863,280
2,329,100
Operating lease commitments:
Operating lease commitments contracted for rental of the Company’s Registered Office and storage premises.
Amounts payable:
- not later than 12 months
- between 12 months and 5 years
NOTE 23: FINANCIAL INSTRUMENT RISK
2020
$
2019
$
-
-
-
68,042
-
68,042
The Group’s financial instruments consist mainly of deposits with banks, local money market instruments, short-
term investments, accounts receivable and payable and short-term fixed rate loans. 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
54
NOTES TO THE FINANCIAL STATEMENTS
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 Consolidated Statement of Financial
Position and Notes to the Financial Statements.
There are no other material amounts of collateral held as security at 30 June 2020. Trade and other receivables
are expected to be settled within 30 days and there is no history of credit losses.
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
2020
2019
$
$
Cash and cash equivalents
- AA Rated
8
126,834 1,327,148
(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.
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 or alternative funding
arrangements as required. Any surplus funds are invested with major financial institutions.
The financial liabilities of the Group include trade and other payables, and loans and borrowings, 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. All loans and borrowings are 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 and using fixed rate
debt.
A summary of the Group’s financial assets and liabilities exposed to interest rate risk, and contractual maturity
analysis, is shown below:
55
NOTES TO THE FINANCIAL STATEMENTS
Floating
Interest
Rate
$
Fixed Int
maturing
in 1 year
or less
$
Fixed Int
maturing
over 1 to
5 years
$
Non-
interest
bearing
$
Total
$
2020
Financial Assets
Cash and cash
equivalents
Total Financial
Assets
Weighted ave int
rate – cash
Financial Liabilities
at cost
Loans and
borrowings
Total Financial
Liabilities
Net financial
assets
2019
Financial Assets
Cash and cash
equivalents
Total Financial
Assets
Weighted ave int
rate – cash
Total Financial
Liabilities
Net financial
assets
126,834
126,834
1.54%
-
-
-
-
250,000
250,000
126,834
(250,000)
1,327,148
1,327,148
1.75%
-
1,327,148
-
-
-
-
(ii)
Sensitivity Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
126,834
126,834
250,000
250,000
(123,166)
1,327,148
1,327,148
-
1,327,148
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.
Profit
Equity
$
$
Period ended 30 June 2020
+/-1% in interest rates
+/- 127
+/- 127
Period ended 30 June 2019
+/-1% in interest rates
+/- 13,271 +/- 13,271
(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 Consolidated Statement of Financial Position as equity instruments at fair value through other
comprehensive income.
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 2020, 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:
56
NOTES TO THE FINANCIAL STATEMENTS
Listed equity
price -10%
Listed equity
price +10%
Carrying
Amount
$
25,000
20,000
Net
Loss
$
(2,500)
(2,000)
Equity
$
(2,500)
(2,000)
Net
Loss
$
2,500
2,000
Equity
$
2,500
2,000
30 June 2020
30 June 2019
(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 used 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 2020
Financial Assets
Equity instruments at FVOCI
Year ended 30 June 2019
Financial Assets
Equity instruments at FVOCI
Level 1 Level 2 Level 3
$
$
$
Total
$
25,000
20,000
-
-
-
25,000
-
20,000
Valuation techniques used to derive level 2 and level 3 fair values
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.
57
NOTES TO THE FINANCIAL STATEMENTS
NOTE 24: PARENT ENTITY DISCLOSURES
(a) Financial Position of Alto Metals Limited
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
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
Loans and borrowings
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 (2019: Nil)
(i)
Refer to Note 27 for details.
NOTE 25: CONTINGENT LIABILITIES
2020
$
2019
restated(i)
$
126,832
1,327,146
79,971
9,315
216,118
132,084
160,955
1,620,185
25,000
95,971
-
-
20,000
103,092
10,637
-
11,361,761
10,346,784
11,482,732
10,480,513
11,698,850
12,100,698
530,014
250,000
57,770
837,784
837,784
726,476
-
13,941
740,417
740,417
10,861,066
11,360,281
24,583,726
23,990,563
489,371
195,466
(14,212,031)
(12,825,748)
10,861,066
11,360,281
(1,386,283)
(1,141,717)
5,000
(32,500)
(1,381,283)
(1,174,217)
As at 30 June 2020 the Group has bank guarantees to the value of $26,365 (2019: $26,365) to secure rental
bonds.
58
NOTES TO THE FINANCIAL STATEMENTS
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: RESTATEMENT OF PRIOR PERIOD
The Directors, while preparing the financial statements of the Group for the year ended 30 June 2020, identified
that due to an oversight, following Shareholders approval of the issue of 30,000,000 options with an exercise
price of $0.07 as partial consideration for capital raising services provided to the Group during the year ended
30 June 2019, the associated share based payment had not been recognised in the financial statements at the
date the services were received (being 12 May 2019) in accordance with the requirements of AASB 2 Share
Based Payment.
The fair value of the options granted was estimated as at the date of grant using the Black Scholes model taking
into account the terms and conditions upon which the options were granted and factors such as the share price
at grant date, volatility of the share price and risk free rate. The fair value as at the date of grant is materially
consistent with the fair value as at the date the services were received.
This resulted in restatement of the following line items in the financial statements for the year ended 30 June
2019:
•
• Share based payment reserve was increased by $227,966.
Issued capital was decreased by $227,966; and
There is no impact on net assets as at 30 June 2019, nor on the Consolidated Statement of Profit or Loss and
Other Comprehensive Income as at 30 June 2019.
The above adjustment had the following impact on the 30 June 2019 Consolidated Statement of Financial
Position:
Financial report line item / balance
affected
Actual
30 June 2019
$
Adjustment
$
Consolidated Statement of Financial Position extract
Restated
Actual
30 June 2019
$
EQUITY
Issued capital
Reserves
NET ASSETS
Valuation of Share Based Payments
(24,218,529)
(32,500)
11,360,281
227,966
(227,966)
-
(23,990,563)
(195,466)
11,360,281
A summary of the key assumptions used in applying the Black Scholes model to the share based payment is
as follows:
59
NOTES TO THE FINANCIAL STATEMENTS
Number of options/rights
Date of grant
Share price at grant date
Volatility factor
Risk free rate
Expected life of option/right (years)
Valuation per right
Exercise price per right
Vesting conditions
Number of options exercisable as at 30 June 2019
Year in which Vesting and Expense occurs
Year ended 30 June 2019
Total valuation
NOTE 28: COMPANY DETAILS
Options issued to Brokers
30,000,000
12 July 2019
$0.036
84.00%
0.85%
1.5 years
$0.076
$0.07
None
30,000,000
Options issued to Brokers
227,966
227,966
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
60
DIRECTORS’ DECLARATION
The Directors declare that:
1. The financial statements and notes set out on pages 29 to 60 are in accordance with the Corporations
Act 2001, including:
a. complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
reporting requirements; and
b. giving a true and fair view of the Group’s financial position as at 30 June 2020 and of their
performance for the financial year ended on that date;
2.
In their opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as
and when they become due and payable; and
3. A statement that the attached financial statements are in compliance with International Financial
Reporting Standards has been included in the notes to the financial statements.
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Richard Monti
Non-Executive Chairman
Dated this 30th day of September 2020
61
ALTO METALS LIMITED
ABN 62 159 819 173
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 controlled entities
(the “Group”), which comprises the consolidated statement of financial position as at 30 June 2020,
the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(a)
(b)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year then ended; and
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 (including Independence Standards) (“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.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 to the financial report which indicates that the Group recorded an
operating loss of $1,393,043 (2019: $1,147,517), net current liabilities of $621,664 (2019: net current
assets $888,615), net cash outflows used in operating activities of $1,000,594 (2019: $858,957), net
cash outflows used in investing activities of $1,042,883 (2019: $1,257,801) and had cash and cash
equivalents of $126,834 (2019: $1,327,148) for the year ended 30 June 2020.
These conditions, along with other matters as set forth in Note 1, indicate the existence of a material
uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
62
Pitcher Partners BA&A Pty LtdAn independent Western Australian Company ABN 76 601 361 095.Level 11, 12-14 The Esplanade, Perth WA 6000Registered Audit Company Number 467435.Liability limited by a scheme under Professional Standards Legislation.Adelaide Brisbane Melbourne Newcastle Perth SydneyPitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
ALTO METALS LIMITED
ABN 62 159 819 173
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ALTO METALS LIMITED
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Key Audit Matter
How our audit addressed the key audit matter
Capitalisation of exploration and evaluation
expenditure
Refer to Note 13 to the financial report.
As at 30 June 2020, the Group held capitalised
exploration and evaluation expenditure of
$11,354,999.
The carrying value of exploration and evaluation
expenditure is assessed for impairment by the
Group when facts and circumstances indicate that
the capitalised exploration and evaluation
expenditure may exceed its recoverable amount.
The determination as to whether there are any
indicators to require the capitalised exploration
and evaluation expenditure to be assessed for
impairment involves a number of judgments
including but not limited to:
• Whether the Group has tenure of the relevant
area of interest;
• Whether the Group has sufficient funds to
meet the relevant area of interest minimum
expenditure requirements; and
• Whether there is sufficient information for a
decision to be made that the relevant area of
interest is not commercially viable.
Due to the significance to the Group’s financial
report and the level of judgment involved in
assessing whether there are impairment
indicators present and in the calculation of the
recoverable amount of the capitalised exploration
and evaluation expenditure, we consider this to be
a key audit matter.
Share-based Payments
Refer to Note 1(i) & 4
Our procedures included, amongst others:
Obtaining an understating of and evaluating
the processes and controls associated with
the capitalisation of exploration and
evaluation expenditure, and those associated
with the assessment of impairment
indicators.
Examining the Group’s right to explore in the
relevant area of interest, which included
obtaining and assessing supporting
documentation. We also considered the
status of the exploration licences as it related
to tenure.
Considering the Group’s intention to carry out
significant exploration and evaluation activity
in the relevant area of interest, including an
assessment of the Group’s cash-flow
forecast models, discussions with senior
management and directors as to the
intentions and strategy of the Group.
Reviewing management’s evaluation and
judgement as to whether the exploration
activities within each relevant area of interest
have reached a stage where the commercial
viability of extracting the resource could be
determined.
Assessing the adequacy of the disclosures
included within the financial report.
Share-based payments represent $288,905 of the
Group’s expenditure.
Share-based payments must be recorded at fair
value of the service provided, or in the absence of
Our procedures included, amongst others:
Obtaining an understanding of the relevant
controls and evaluating the controls
associated with the preparation of the
63
ALTO METALS LIMITED
ABN 62 159 819 173
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ALTO METALS LIMITED
valuation model used to assess the fair value
of share-based payments, including those
relating to volatility of the underlying security
and the appropriateness of the model used
for valuation.
Critically evaluating and challenging the
methodology and assumptions of
management in their preparation of valuation
model, including management’s assessment
of likelihood of vesting, agreeing inputs to
internal and external sources of information
as appropriate.
Assessing the Group’s accounting policy as
set out within Note 1(i) for compliance with
the requirements of AASB 2 Share-based
Payment.
Assessing the adequacy of the disclosures
included in the financial report.
such, at the fair value of the underlying equity
instrument granted.
Under Australian Accounting Standards, equity
settled awards are measured at fair value on the
measurement date taking into consideration the
probability of the vesting conditions (if any)
attached. This amount is recognised as an
expense either immediately if there are no vesting
conditions, or over the vesting period if there are
vesting conditions.
In calculating the fair value there are a number of
judgements management must make, including
but not limited to:
• Estimating the likelihood that the equity
instruments will vest;
• Estimating expected future share price
volatility;
• Expected dividend yield; and
• Risk-free rate of interest.
Due to the significance to the Group’s financial
report and the level of judgment involved in
determining the valuation of the share-based
payments, we consider the Group’s calculation of
the share-based payment expense to be a key
audit matter.
Other Information
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 2020, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
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.
64
ALTO METALS LIMITED
ABN 62 159 819 173
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ALTO METALS LIMITED
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
65
ALTO METALS LIMITED
ABN 62 159 819 173
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ALTO METALS LIMITED
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 22 to 26 of the directors’ report for the
year ended 30 June 2020. In our opinion, the Remuneration Report of Alto Metals Limited, for the
year ended 30 June 2020, 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.
PITCHER PARTNERS BA&A PTY LTD
PAUL MULLIGAN
Executive Director
Perth, 30 September 2020
66
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 15 September 2020.
(a)
Twenty largest holders of quoted equity securities
Position Holder Name
1
2
3
4
5
6
7
8
9
10
11
12
12
13
14
15
16
17
18
19
20
20
WINDSONG VALLEY PTY LTD
ADAMAN MINERALS PTY LTD
GS GROUP AUSTRALIA PTY LTD
NATIONAL NOMINEES LIMITED
SINOTECH (HONG KONG) CORPORATION LIMITED
OLGEN PTY LIMITED
SILVERLIGHT HOLDINGS PTY LTD
CROWNLUXE INVESTMENT LTD
ATLANTIC CAPITAL PTY LTD
MS XIAOXIA LIU
MOSTIA DION NOMINEES PTY LTD
AJAVA HOLDINGS PTY LTD
PETER ERMAN PTY LIMITED
MR DERMOT MICHAEL RYAN &
MRS VIVIENNE ELEANOR RYAN
MR BIN LI
MRS LUCY FEI
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO
ECA
WERSMAN NOMINEES PTY LTD
SPACETIME PTY LTD
DR JOSHUA EHRLICH
BC ASSET MANAGEMENT (WA) PTY LTD
MR GREGORY ROLLAND CUNNOLD &
MS LARA CHERYL GROVES
Holding
% IC
56,908,175
19.14%
31,825,000
10.70%
29,450,863
24,932,749
15,900,000
9,722,222
8,333,334
7,500,000
6,250,000
5,115,881
5,000,000
4,000,000
4,000,000
3,059,029
2,906,509
2,777,778
2,500,000
2,266,666
2,088,820
1,754,062
1,500,000
1,500,000
9.91%
8.39%
5.35%
3.27%
2.80%
2.52%
2.10%
1.72%
1.68%
1.35%
1.35%
1.03%
0.98%
0.93%
0.84%
0.76%
0.70%
0.59%
0.50%
0.50%
Total
229,291,088
77.12%
Total issued capital - selected security class(es)
297,320,055
100.00%
67
ADDITIONAL ASX INFORMATION
(b)
Substantial Shareholders
The names of the substantial shareholders and the number of shares in which they have a relevant interest are:
Holder Name
WINDSONG VALLEY PTY LTD
ADAMAN MINERALS PTY LTD
GS GROUP AUSTRALIA PTY LTD
NATIONAL NOMINEES LIMITED
SINOTECH (HONG KONG) CORPORATION LIMITED
Holding
Balance
% IC
56,908,175
19.14%
31,825,000
10.70%
29,450,863
24,932,749
15,900,000
9.91%
8.39%
5.35%
(c)
Distribution of equity securities
Holding Ranges
above 0 up to and including 1,000
above 1,000 up to and including 5,000
above 5,000 up to and including 10,000
above 10,000 up to and including 100,000
above 100,000
Totals
Holders
Total Units
% Issued
Share Capital
318
444
237
379
166
143,193
1,170,252
1,872,761
14,610,135
0.05%
0.39%
0.63%
4.91%
279,523,714
94.01%
1,544
297,320,055
100.00%
The number of fully paid ordinary shareholdings held in less than marketable parcels is 796 (based on a share
price of $0.085).
(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
18/01/2021
UNLISTED
OPTIONS
$0.07 EXP
09/03/2021
UNLISTED
OPTIONS
$0.07 EXP
29/11/2023
MR STEPHEN STONE
12,500,000
MR BRUCE ROBERT LEGENDRE
12,500,000
WINDSONG VALLEY PTY LTD
SILVERLIGHT HOLDINGS PTY
LTD
BLUEBIRD CAPITAL PTY LTD
LONGREACH CAPITAL PTY LTD
ATLANTIC CAPITAL PTY LTD
-
-
-
-
-
-
-
8,333,333
-
-
-
-
-
-
-
-
-
10,000,000
10,000,000
10,000,000
-
-
-
-
-
7,500,000
TOTAL HOLDERS
2
1
3
1
68
ADDITIONAL ASX INFORMATION
(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.
69
ADDITIONAL ASX INFORMATION
TENEMENT REPORT
As at 30 June 2020
Tenement
Location
E57/1029
Sandstone, WA
E57/1030
Sandstone, WA
E57/1031
Sandstone, WA
E57/1033
Sandstone, WA
E57/1044
Sandstone, WA
E57/1072
Sandstone, WA
E57/1101
Sandstone, WA
E57/1153
Sandstone, WA
P57/1377
Sandstone, WA
P57/1378
Sandstone, WA
M57/646
M57/647
M57/650
Sandstone, WA
Sandstone, WA
Sandstone, WA
M57/651
Sandstone, WA
M57/652
Sandstone, WA
Interest
Held
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Registered Holder
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
Lease
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Sandstone Exploration Pty Ltd
Application
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
Granted
Granted
Granted
Granted
Granted
Granted
Granted
70