Annual Report 2021
Alto Metals Limited
ABN 62 159 819 173
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
“During FY2021,
Alto commenced the
largest single drilling
campaign it has ever
undertaken to unlock
the value of the
Sandstone Gold
Project.
And we are starting to
see the rewards from
that program."
CONTENTS
CHAIRMAN’S LETTER
REVIEW OF OPERATIONS
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
3
4
16
27
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 28
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
29
30
31
32
57
58
63
66
CHAIRMAN’S LETTER
Dear Fellow Shareholders,
Welcome to the 2021 Annual Report for Alto Metals Limited, a year
which has been one of growth for our Company.
Irrespective of
the distractions
from various
of last year and I would
like to thank our
corporate approaches Alto has continued to focus
shareholders, both new and existing for your
on exploration and commenced the largest single
support.
drilling campaign it has ever undertaken, to start
unlocking the value of the Sandstone Gold Project.
Looking to the future the Alto team is currently
working on expanding our resource base which
Our major drilling campaign started at the end of
currently sits at 6.2 million tonnes @ 1.7 g/t for
last year and has continued for over eight months.
331,000 ounces and planning the next major drill
During which time we have drilled over 50,000
program, once all pending results have been
metres of RC drilling, more than the Company has
received.
drilled in last four years combined. In addition to the
record amount of RC drilling, Alto commenced its
maiden 3,000m diamond drilling program at the
Lords corridor, Vanguard and Indomitable Camps.
I would like to thank our Managing Director,
Matthew Bowles, and the Alto exploration & support
team for their dedication and hard work. Your
commitment and perseverance has led to the
And we are starting to see the rewards from that
success we have achieved to date.
program. Recent drilling below the Lord Nelson pit
has intercepted significant gold mineralisation,
including 19m @ 6.0 g/t gold, while drilling at the
Orion lode delivered 134m @ 1.9 g/t gold. All of
which highlights the potential for additional lodes to
be discovered further along the corridor.
We appreciate the support our shareholders have
given us this past 12 months as we continue to
unlock the value of the Sandstone Gold Project.
Next year will be another exciting year for the
Company as we focus on resource growth and
further new discoveries, and I hope you continue to
In addition to the Lords Corridor, Vanguard, located
share the journey with us.
only 5kms to the west, continues to deliver excellent
results from step-out drilling, with mineralisation
Yours sincerely,
now defined along a NW corridor for over 2km and
remaining open.
We believe these results demonstrate the clear
potential
for a much
larger gold system at
Sandstone and believe that our drilling will lead to
further discoveries across our
large strategic
landholding.
These achievements were made possible through
Richard Monti
Non-Executive Chairman
the successful capital raising completed at the end
Dated this 30th day of September 2021
Alto Metals Limited | 2021 Annual Report
3
REVIEW OF OPERATIONS
EXPLORATION HIGHLIGHTS OF 2021
• 237 RC drill holes for ~43,200m of infill and step-out drilling at Lord Nelson, Orion, Central Zone and
Lord Henry.
• 6 diamond drill holes were completed for ~1,100m during the period.
• High-grade results from Lord Nelson & Orion Lode including:
➢
➢
➢
➢
➢
19m @ 6.0 g/t gold from 223m within 48m @ 3.4 g/t gold from 214m
134m @ 1.9 g/t gold from 24m, incl. 20m @ 5.9 g/t gold from 80m (SRC257)
60m @ 1.9 g/t gold from 44m, incl. 12m @ 6.3 g/t gold from 92m (SRC254)
28m @ 1.2 g/t gold from 112m incl. 4m @ 3.8 g/t gold from 132m (SRC255)
20m @ 1.5 g/t gold from 124m incl. 4m @ 4.3 g/t gold from 44m (SRC251)
• Step-out drilling north of the Lord Henry pit, continue to intersect multiple stacked shallow lodes, incl:
➢
➢
➢
72m @ 1.2 g/t gold from 60m, incl. 12m @ 5.1 g/t gold from 108m (SRC259)
52m @ 2.1 g/t gold from 40m, incl 4m @ 13.8 g/t gold from 72m
8m @ 13.6 g/t gold from 56m
• New Central Zone discovered 1km south of the Lord Nelson Pit
➢
➢
4m @ 5.3g/t gold from 124m; within
16m @ 1.6g/t gold from 116m, (SRC240).
• Vanguard drilling continues to highlight the continuity of gold mineralisation over 800 metre strike
➢
➢
➢
➢
12m @ 22.5 g/t gold from 40m, incl. 4m @ 60.6 g/t gold from 40m (SRC286)
8m @ 3.1 g/t gold from 8m incl. 4m @ 5.8 g/t gold from 8m (SRC318)
8m @ 2.8 g/t gold from 44m incl. 4m @ 5.3 g/t gold from 44m (SRC290) – Vanguard North
12m @ 3.0g/t gold from 132m (SRC220)
• EIS grants totalling $300,000 as co-funded drilling by the WA government for:
➢
Up to four deep diamond holes designed to test the down-plunge extensions of known
primary gold mineralisation in the central part of the Lords Corridor; and
➢
RC and diamond drilling to test the Chance Prospect, within the Edale Shear
• Preliminary testwork highlights excellent gold recoveries averaging 96% in Lord Nelson primary zone
mineralisation
Alto Metals Limited | 2021 Annual Report
4
REVIEW OF OPERATIONS
Sandstone Gold Project (100%)
Alto Metals Limited (“Alto” or the “Company”) and the entities it controls (together “the Group”) is a Western
Australian based company and is focused on gold exploration in Australia.
The Group’s Sandstone Gold Project is located ~600km north of Perth in the East Murchison Mineral Field of
Western Australia and covers approximately 900 km2 of the highly prospective Sandstone Greenstone Belt,
(Figure 1).
Since the discovery of gold at the end of the 19th century the Sandstone Greenstone Belt has produced over
1.3 million ounces gold 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 NL.
Figure 1. Location of Sandstone Gold Project within the East Murchison Gold Field, WA
Alto Metals Limited | 2021 Annual Report
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REVIEW OF OPERATIONS
During the 2021 financial year, Alto focused on discovery and mineral resource growth and delivered on a
number of key objectives in relation to advancing the Sandstone Gold Project, including:
•
A successful major drilling campaign utilising multiple RC drill rigs, which returned significant high-grade
results from the Lords Corridor, Vanguard Camp and other prospects.
•
•
The discovery of thick, shallow gold mineralisation at the Orion Lode, south of the Lord Nelson pit
A second discovery of high grade gold mineralisation down plunge, below the Lord Nelson pit
• High-grade results from Vanguard which is now defined over 2 kilometre NW trend and remains open
•
In addition to the record amount of RC drilling, the Company commenced its maiden 3,000m diamond
drilling program at the Lords corridor, Vanguard and Indomitable Camps.
The Company drilled more metres in 2021 than in the previous 4 years. RC drilling remains ongoing into H2
2021.
Sandstone Gold Project Mineral Resources as at 30 June 2021
The current Total Indicated and Inferred (JORC 2012) Mineral Resource Estimate for the Sandstone Gold
Project is 6.2 Million tonnes at 1.7 g/t Au for 331,000 ounces gold
Table 1: JORC 2021 Sandstone Gold Project – Summary of Total Mineral Resources1
Tonnage
(kt)
Grade
(g/t Au)
Contained
Gold (oz)
Deposit
Lord Henry
TOTAL INDICATED
Lord Henry
Lord Nelson
Indomitable Camp
Vanguard Camp
Havilah & Ladybird
TOTAL INFERRED
TOTAL
INFERRED
INDICATED
Category
Indicated
Inferred
Inferred
Reporting
cut-off
(g/t Au)
0.8
0.8
0.8
1,200
1,200
110
1,820
Inferred
0.3 - 0.5
2,580
Inferred
0.5
&
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
For reporting purposes at a high level, totals have been rounded. Rounding may result in some slight
discrepancies in totals reported.
There is a low level of geological confidence associated with Inferred Mineral Resources and there is no
certainty that further exploration work will result in the conversion of all Inferred Mineral Resources to Indicated
Mineral Resources.
All material assumptions and technical parameters underpinning the 2017, 2018, 2019 and 2020 JORC (2012)
Mineral Resource estimates continue to apply and have not materially changed since last reported.
The Company views the current Resource as an interim estimate and further resource growth is targeted in
FY2022, based on numerous high-grade results which are outside the current resource. A regional review is
currently underway targeting additional mineralisation from both step-out targets, such as Vanguard and
Indomitable and new targets, such as Bulchina camp.
1. AME ASX Release 16 May 2017. “Maiden Lord Henry JORC 2012 Mineral Resource of 69,000oz.”. AME ASX Release 25 Sept 2018. “Maiden Gold
Resource at Indomitable & Vanguard Camps, Sandstone WA” AME ASX release 11 June 2020. “Alto increases Total Mineral Resource Estimate to
290,000oz, Sandstone Gold Project” AME ASX release 27 May 2021. “Alto increases Lord Nelson Resource by 60% to 109,000 Ounces at 1.9 g/t Gold”
Alto Metals Limited | 2021 Annual Report
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REVIEW OF OPERATIONS
The Lords Corridor
The Lord Nelson and Lord Henry deposits are hosted predominantly within a +3km long, granodiorite intrusion
with sheared remnant ultramafic layers.
Troy Resources NL (Troy) previously mined the Lord Nelson deposit and produced 220,000 ounces of gold at
4.6 g/t. Troy also previously mined the Lord Henry deposit and produced 48,000 ounces of gold at 3.6 g/t.
The current mineral resources for the two deposits are;
• Lord Nelson; 109,000oz of gold (Inferred Mineral Resource, Refer to Table 1).
• Lord Henry; 69,000oz of gold (65,000oz Indicated, 4,000oz Inferred, Refer to Table 1).
During FY 2021 the Company completed 142 RC drill holes for ~27,000m at the Lords Corridor targeting infill,
step-out and exploration targets. In addition, a further 6 diamond holes for ~1,100m were completed.
Figure 2. 3km long Lords Corridor showing pending RC assays and planned DD holes – Simplified geological
interpretation.
Alto Metals Limited | 2021 Annual Report
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REVIEW OF OPERATIONS
Primary mineralisation beneath Lord Nelson
RC drilling was carried out at Lord Nelson targeting the primary high grade gold zone beneath the Lord Nelson
pit.
Significant mineralisation was intersected extending the high grade gold mineralisation down-dip and down-
plunge with excellent continuity in the primary zone.
These results are outside of the current Mineral Resource and include:
• 32m @ 2.5g/t gold from 223m, including 4m @ 12.3g/t gold from 245m (SRC184)
• 7m @ 4.6g/t gold from 209m, including 2m @ 11.6g/t gold from 210m (SRC209)
• 8m @ 2.5g/t gold from 190m, including 2m @ 7.8g/t gold from 194m (SRC214)
Figure3. Mineral Resources 3D modeling at Lord Nelson showing existing drilling (blue lines), existing open pit,
and mineral resource lower boundary (yellow dashed line). The blocks below yellow line are unclassified.
Alto Metals Limited | 2021 Annual Report
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REVIEW OF OPERATIONS
Figure 4. Lord Nelson Long Section
Orion Lode
The Orion Lode, a shallow high-grade gold lode, is located approximately 200 meters south of the current Lord
Nelson Pit. The lode strikes NNW-SSE (350° Azimuth) with a moderate dip to the west (50°-70°). The Orion
Lode 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.
Significant results reported from infill and step-out RC drilling at the Orion lode include;
• 134m @ 1.9 g/t gold from 24m;
• 60m @ 1.9 g/t gold from 44m;
• 29m @ 3.5 g/t gold from 49m; and
• 23m @ 3.8 g/t gold from 106m.
Central Zone
Wide-spaced (80m x80m) exploration drilling along the Central Zone of the Lords Corridor, targeting an IP
anomaly and conceptual targets based on the current geological model, continue to intercept broad zones of
gold mineralisation, including:
• 24m @ 1.1 g/t gold from 88m, incl. 8m @ 2.6 g/t gold from 100m (SRC321)
This intercept is located 240 metres south of SRC240, which reported 16m @ 1.6 g/t gold from 116m, incl. 4m
@ 5.3 g/t gold from 124m and is open in all directions.
Anomalous gold results have been returned in a number of RC holes from the Central Zone, including 20m @
0.3 g/t gold from 140m (SRC334). Mineralisation within the new Central Zone has now been defined over a
1 kilometre strike and remains open.
Alto Metals Limited | 2021 Annual Report
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REVIEW OF OPERATIONS
Lord Henry
Step-out drilling beneath the Lord Henry open-pit has intersected multiple stacked lodes of high-grade gold
within the primary mineralisation, outside the current resource, including:
•
•
72m @ 1.2 g/t gold from 60m, incl. 12m @ 5.1 g/t gold from 108m, incl.
4m @ 10.1 g/t gold from 112m (SRC259)
SRC259 is located ~230 metres north of SRC252, which reported 12m @ 6.1 g/t gold from 40m, incl. 4m @
16.8 g/t gold from 40m. These results demonstrate the potential for further high-grade mineralisation outside
the current resource and that mineralisation at Lord Henry remains open to the North.
Drilling at Lord Henry is designed to target extensions on a 40m x 40m spacing around previous high-grade
intersections and 40m x 80m spaced section stepping out to the NNE of the open pit. Assay results for nine
RC holes drilled to an average depth of ~150m are currently pending, with further RC drilling continuing.
• 52m @ 2.1 g/t gold from 40m and 4m @ 13.8 gold from 72m
• 4m @ 16.8 g/t gold from 40m
• 12 @ 5.1 g/t gold from 108m
• 2m @ 51.3 g/t gold from 70m
•
Figure 5. Lord Henry cross-section 746,690mE
Alto Metals Limited | 2021 Annual Report
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REVIEW OF OPERATIONS
Maiden diamond drilling program
Alto commenced its maiden diamond drilling program in May 2021, planned for a total of 17 holes for ~3,000
metres at Lord Nelson, Lord Henry, Vanguard and Indomitable deposits The purpose of this drilling is to target
the extensions of known primary mineralisation at each of the deposits and also assist with advancing mineral
resource work, including bulk density, acquiring geotechnical information as well as gaining details for litho-
structural study, aiming for further discovery at the Sandstone Gold Project.
Results for the first diamond hole, SDD001, drilled at Lord Nelson were received subsequent to the period:
o 36m @ 2.0 g/t gold from 203m, incl. 3.6m @ 10.5 g/t gold from 232.8m
This high-grade intercept is less than 200m vertical depth and continues to demonstrate the high-grade
mineralisation outside the current mineral resource that remains open down plunge
The high-grade (+10 g/t Au) gold mineralisation observed in SDD001, is characterised by multiple phases of
gold carrying fluids and deposition of pyrite-quartz gold mineralisation, accumulating gold mineralisation over
multiple generations.
The remaining 16 diamond holes have been completed and assays are currently pending.
Figure 6. Lord Nelson diamond core from 229.6m to 236.8m showing high-grade gold associated with strong
sulphide rich alteration (SDD001).
Alto Metals Limited | 2021 Annual Report
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REVIEW OF OPERATIONS
Vanguard
The Vanguard Camp is located five kilometres west of the Lords Corridor, within a 20 kilometre north-
west/south-east trending corridor of which also hosts the Indomitable and Havilah deposits.
Gold mineralisation at Vanguard is hosted within a north-west/south-east trending differentiated dolerite
package and is predominantly associated with quartz-pyrite veins in carbonate alteration haloes. The
differentiated dolerite and granophyre texture occur within a sequence of mafic rocks, with the overall
stratigraphy intruded by numerous felsic intrusions.
The current mineral resource at Vanguard Camp is 856kt @ 1.8g/t gold for 50,000oz (Inferred Mineral
Resource, Refer to Table 1).
Drilling during the year has more clearly defined mineralisation at the Vanguard and Vanguard North trends,
with both significantly extended to over 2,000m and remain open along strike and down dip. Some of the
significant results reported from Vanguard during the year include:
• 12m @ 22.5 g/t gold from 40m, incl. 4m @ 60.6 g/t gold from 40m (SRC286)
• 28m @ 1.5 g/t gold from 132m, incl. 4m @ 4.3 g/t gold from 152m (SRC272)
• 8m @ 3.1 g/t gold from 8m incl. 4m @ 5.8 g/t gold from 8m (SRC318)
• 8m @ 2.8 g/t gold from 44m incl. 4m @ 5.3 g/t gold from 44m (SRC290)
• 4m @ 6.8 g/t gold from 124m (SRC307)
• 9m @ 2.0 g/t gold from 120m incl. 1m @ 10.3 g/t gold from 126m (SRC222)
The results highlight the continuity of high-grade gold in primary mineralisation at Vanguard and the significant
likelihood of further resource growth with multiple significant intercepts outside the current resource.
RC drilling is ongoing into the second half of 2021 calendar year concurrent with four planned diamond holes,
which will be the first ever diamond drilling into the Vanguard deposit.
Figure 7. Vanguard Plan View
Alto Metals Limited | 2021 Annual Report
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REVIEW OF OPERATIONS
Regional exploration
The Group’s exploration efforts are currently focused on the south east quadrant of the Sandstone Gold Project
area, referred to as the Alpha Domain, which hosts both the Lords corridor and the much larger north-west
trending 20 kilometre corridor, which hosts the Vanguard, Indomitable, Ladybird and Havilah deposits.
Figure 8. Regional prospect map (Alpha domain) showing gold in soil anomalies over 1VD Magnetics.
Alto Metals Limited | 2021 Annual Report
13
REVIEW OF OPERATIONS
Preliminary Gold Recovery Testwork
Primary Mineralisation
During August 2020, Alto collected 4 RC drill samples within primary zone mineralisation from Lord Nelson with
gold grades ranging from ~3 g/t Au to ~11 g/t Au and submitted the samples to Intertek Genalysis (Intertek) for
Accelerated Cyanide Leach LeachWELLTM testwork.
The preliminary testwork was carried out to determine the cyanide extractable gold and to provide an indication
of the potential gold recovery in metallurgical processes and circuits of the Lord Nelson primary mineralisation.
This testwork is preliminary in nature and Alto intends to carry out further gold recovery testwork as the project
continues to be advanced.
All four samples reported an average gold recovery of 96%, suggesting the gold within the Lord Nelson primary
zone mineralisation is amenable to conventional cyanide extraction methods.
Oxide and Transitional Mineralisation
A further sample was collected within oxide zone mineralisation at Lord Nelson and submitted to Intertek for the
same testwork. This sample returned a gold recovery of 82.5%.
More rigorous metallurgical testwork was previously carried out at Lord Nelson by Troy Resources NL (Troy) as
part of initial feasibility study work on both oxide and transitional ore (Troy, 2009).
This testwork determined:
• Lord Nelson ore was found to be free milling.
• Gravity gold recovery was found to be required to prevent coarse gold entering the leach circuit and being
partially lost to the tailings and it was estimated that over 20% of total gold could be recovered as
concentrate from the oxide ore and close to 40% for the transitional ore.
• Acceptable gold recoveries of >93% for oxide and transitional ores were obtained after 24 hours of direct
cyanide leaching.
Troy mined the Lord Nelson deposit as an open pit mine to ~90m below surface between 2005 and 2010 and
recovered 207koz at 4.6 g/t Au. The ore was processed through Troy’s Sandstone treatment plant, which had
a general design flow sheet described by Troy as fairly typical of other gold plants in operation on the WA
goldfields (Troy, 2009).
Troy reported that recovery of gold at the Sandstone plant typically ranged from 93% to 96% with total recovery
in the period July 2006 to end of June 2007 of 94.4%.
Preliminary Gold Recovery testwork at Indomitable & Vanguard Camps, Havilah and Ladybird
In 2018 and 2019 the Company announced maiden mineral resource estimates for the Vanguard Camp,
Indomitable Camp, Havilah and Ladybird deposits. (Refer to ASX announcements on 25/09/18 and 11/06/19).
As part the Mineral Resource estimation, Alto collected and submitted a total of 25 samples to Intertek Genalysis
for Accelerated Cyanide Leach LeachWELLTM testwork.
Samples comprised various grades and lithologies within oxide, transitional and primary mineralisation.
An average gold recovery of >92% was reported indicating the mineralisation at these deposits is also amenable
to conventional cyanide extraction methods.
Alto Metals Limited | 2021 Annual Report
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REVIEW OF OPERATIONS
CORPORATE
Takeover offers
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 July 2020, Habrok (Alto) Pty Ltd lodged 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. This offer expired on 30 September 2020.
Subsequent to the period, ASX listed Western Australian gold miner Westgold Resources acquired ~14%
interest in the Company.
EIS Co-funding Grants of $300,000 Received
Alto was awarded 2 EIS grants by the WA Government during the year. The first in November 2020 was for
$150,000 for RC and diamond drilling at the Company’s Edale Shear prospect.
A further $150,000 grant targeting depth extensions of known mineralisation within the Lords Corridor was
awarded in June.
Forward-Looking Statements
This report 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.
Alto Metals Limited | 2021 Annual Report
15
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 2021 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
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)
Mr Monti is a geologist with a successful career of over 30 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 been a Director on 15 ASX and TSX listed companies, covering
exploration and mining activities. Directorships include four as Chairman and sitting on numerous sub-
committees. Mr Monti 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. Mr Monti
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: Boab Metals Ltd, Zinc of Ireland NL, Black Dragon Gold Corp (retired
11 August 2021) 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)
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 an 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.
Alto Metals Limited | 2021 Annual Report
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DIRECTORS’ REPORT
Terry Wheeler (Non-Executive Director)
Mr Wheeler 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.
Mr Wheeler 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 and finance professional with over 30 years’ experience in
accounting and company administration. He is a Fellow of the Australian Society of Certified Practicing
Accountants, the Chartered Governance Institute 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 $1,810,766 (2020: $1,393,043).
Financial Position
The net assets of the Group at 30 June 2021 are $20,389,312 (2020: $10,854,306). The cash and cash
equivalent of the Group at 30 June 2021 are $4,048,593 (2020: $1,107,261). The net current assets of the
Group at 30 June 2021 are 3,617,001 (2020: $621,664)
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 continued to affect everybody in 2021, 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 jeopardising the health of our people.
Significant Changes in State of Affairs
Other than the Capital raising of $11 million during the year, there have been no significant changes in the
affairs of the Group during the year.
Alto Metals Limited | 2021 Annual Report
17
DIRECTORS’ REPORT
Significant Events After the Reporting Date
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
Number eligible
to attend
16
15
16
16
Number
attended
16
15
15
16
R Monti
M Bowles
J Wang
T Wheeler
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 $11,040 (2020: $11,476).
• No indemnity has been given to the Group’s auditors.
Alto Metals Limited | 2021 Annual Report
18
DIRECTORS’ REPORT
Options
At the date of this report, the following options were on issue over ordinary shares of the Company. (on 30
September 2020: 73,893,078).
Date options granted
29 November 2019
Total options on issue
Number of unissued
shares under option
7,500,000
7,500,000
Exercise price per
option
$0.07
Expiry date of
options
29 November 2023
During the year 70,613,545 options were exercised at $0.07 per share and 70,613,545 new shares were issued
as a result. Refer to note 16 (b) for details. 729,073 $0.07 options lapsed during year. Refer to note 16 (e) for
details.
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.
The Group did not confirm a combined inferred and /or indicated mineral resource and/or reserve of at least
500,000oz gold in aggregate and the 25,000,000 performance shares converted into one (1) ordinary share.
Performance Rights
On 25 November 2020, Shareholders approved the issue of 8,000,000 Performance Rights to Messrs Bowles,
Monti, Wheeler and Wang, Directors of the Company. These were issued on 1 December 2020 along with an
additional 4,000,000 Performance Rights under the Company’s Employee Share Plan. The fair value of these
Performance Rights granted was estimated as at the date of grant using the Black Scholes model taking into
account the terms and conditions upon which the Performance Rights were granted and factors such as the
share price at grant date, volatility of the share price and risk free rate. 12 million performance rights remains
as at reporting date. (2020: Nil). Refer to note 4 for further details.
Non-audit Services
The following non-audit services were provided by the Group’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).
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
Corporate
2021
$
6,069
2020
$
5,000
During the year, shareholders exercised 70,613,545 options at an exercise price of $0.07 each for $4.9 million.
A further 85.7 million shares were issued through placements and raised $6.4 million.
An unsolicited takeover offer by Habrok (Alto) Pty Ltd to acquire all the issued shares in Alto for A$0.07 cash
per share and a separate cash offer to acquire all the issued options lapsed during the year.
Alto Metals Limited | 2021 Annual Report
19
DIRECTORS’ REPORT
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 between 11 August 2020 and 10
August 2021, interest is payable on the loan at a rate of 8% per annum. The loan was not utilised during the
year and has now expired.
Substantial Shareholders
At year end, the following substantial shareholders were noted:
Holder
Number of Shares
Windsong Valley Pty Ltd & Marymount Pty Ltd
83.5 million
Westgold Resources Limited
GS Group Australia Pty Ltd (GSGA)
64.5 million
56.75 million
This report details the nature and amount of each element of the remuneration of each of the key management
personnel(“KMP”) of the Group (defined as “Directors”, both Non-Executive and Executive).
REMUNERATION REPORT (AUDITED)
A. Remuneration Policy
The remuneration policy of Alto Metals Limited has been designed to align Directors 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 Group’s financial results. The Board believes the remuneration
policy to be appropriate and effective in its ability to attract and retain the best Directors to run and manage the
Group, as well as create goal congruence between Directors and shareholders.
The Board’s policy for determining the nature and amount of remuneration for Directors of the Company is as
follows:
The remuneration policy, setting the terms and conditions for the Managing Director (“MD”), was developed and
approved by the Board. The MD receives a base salary (which is based on factors such as length of service
and experience) and superannuation. The Board reviews the MD’s package periodically by reference to the
Group’s performance, the MD’s performance, and comparable information from industry sectors and other listed
companies in similar industries.
The MD is also entitled to participate in the employee share and option arrangements.
All remuneration paid to Directors is valued at the cost to the Company and expensed. Options given to Directors
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 Group. To align Directors’ interests with shareholder
interests, the Non-Executive 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 KMP’s performance. The Group 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.
From time to time, the Board may issue, at its discretion, issue performance rights or incentive options to KMP
which are intended to align the interests of the KMP with those of Shareholders. During the year ended 30 June
2021, the Board issued 8,000,000 Performance Rights to KMP. The Performance Rights will vest subject to the
relevant KMP remaining an employee, office-bearer or consultant of the Company for 3 years from the date of
grant and the satisfaction of key performance milestones within that timeframe.
Use of remuneration consultants
The Group did not employ the services of any remuneration consultants during the financial period ended 30
Alto Metals Limited | 2021 Annual Report
20
DIRECTORS’ REPORT
June 2021.
Voting and comments made at the Company’s 2020 Annual General Meeting (“AGM”)
The Company received approximately 99.9% of “yes” votes based on the number of proxy votes received on
its remuneration report for the 2020 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 2021
There were no cash bonuses paid during the year and there are no set performance criteria for achieving cash
bonuses. The following table outlines benefits and payment details, in respect to the financial year, as well as
the components of remuneration for each member of the KMP of the Group.
Table of Benefits and Payments for the Period Ended 30 June 2021
Short-term benefits
Salary,
fees and
leave
Cash
bonuses
Post-
employment
benefits
Superannuation
Equity-settled
share-based
payments
Options and
Performance
Rights
$
$
$
$
Total
$
Remuneration
performance
based
%
2021
R Monti
M Bowles
T Wheeler
J Wang
2020
R Monti(1)
M Bowles(2)
T Wheeler
J Wang
50,000
272,350
35,662
40,000
398,012
14,000
203,242
37,397
40,000
294,639
-
-
-
-
-
-
-
-
-
-
6,080
12,350
4,338
-
22,768
1,330
-
2,603
-
3,933
66,444
93,022
26,578
26,578
212,622
-
238,905
-
-
238,905
122,524
377,722
66,578
66,578
633,402
15,330
442,147
40,000
40,000
537,477
54%
25%
40%
40%
34%
-
-
-
-
-
(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 Employee Share Option Plan (“ESOP”) and 6,250,000
LTI rights.
Equity instrument disclosures relating to KMP
Ordinary Shares
The number of ordinary shares held by each KMP of the Group during the financial period is as follows:
Balance at the
start of the
period
Other changes
during the
period(1)
Other changes
during the
period(2)
Balance at the
end of the
period
2021
Ordinary Shares
R Monti
T Wheeler
J Wang
M Bowles
Total
-
57,374,841
-
6,250,000
63,624,841
-
15,480,554
-
-
15,480,554
666,667
10,666,667
-
-
11,333,334
666,667
83,522,062
-
6,250,000
90,438,729
(1) Pursuant to the conversion of $0.07 options.
(2) Placement pursuant to shareholder approval at the 2020 AGM
Alto Metals Limited | 2021 Annual Report
21
DIRECTORS’ REPORT
Options
The number of options on issue over ordinary shares of the Company held by each KMP of the Group during
the financial period is as follows:
Balance at
the start of
the period
Other
changes
during the
period(1)
Other
changes
during the
period(2)
Balance at
the end of
the period
Vested and
exercisable
Unvested and
unexercisable
2021
Unlisted
Options
R Monti
T Wheeler
J Wang
M Bowles
Total
-
9,780,554
-
7,500,000
17,280,554
-
5,700,000
-
-
5,700,000
-
(15,480,554)
-
-
(15,480,554)
-
-
-
7,500,000
7,500,000
-
-
-
7,500,000
7,500,000
-
-
-
-
-
(1) Options were acquired via an off market transfer on 10 March 2021.
(2) 15,480,554 number of Options were exercised at $0.07
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(1)
Other
changes
during
the
period
Balance at
the end of
the period
Vested and
exercisable
Unvested and
unexercisable
2021
Performance
Rights
R Monti
T Wheeler
J Wang
M Bowles
Total
-
-
-
-
-
2,500,000
1,000,000
1,000,000
3,500,000
8,000,000
-
-
-
-
-
2,500,000
1,000,000
1,000,000
3,500,000
8,000,000
-
-
-
-
-
2,500,000
1,000,000
1,000,000
3,500,000
8,000,000
(1) Pursuant to shareholder approval at the 2020 AGM . Refer to page 23 of the Director’s report.
Loans to KMP
There were no loans to KMP as at 30 June 2021 (2020: Nil), nor were any made during the reporting period.
Service Agreements
The Group has entered into formal employment contracts with Matthew Bowles in July 2020. The employment contract for
Mr Bowles has no fixed term and does not prescribe how remuneration levels are to be modified from year to year. A
summary of the main provisions of these contracts for the year ended 30 June 2021 are set out below:
NAME
TERMS
Matthew Bowles
Director and CEO)
(Managing
Base salary of $260,000 (exclusive of superannuation contributions), reviewed
annually.
6 months’ notice by Mr. Bowles. 12 months by Company, including upon change of
control.
Termination payments to reflect appropriate notice, except in cases of termination for
cause.
Mr. Bowles shall be eligible to participate in any Short Term or Long Term Incentive
Schemes that the Company may offer.
Alto Metals Limited | 2021 Annual Report
22
DIRECTORS’ REPORT
C. Share-based compensation
Incentive Option Scheme
Options, where appropriate, may be granted under the Alto Metals Limited Employee Share Option Plan
(“ESOP”). Options are granted under the plan for no consideration on terms and conditions considered
appropriate by the Board at the time of issue. Options are granted for up to a five year period. Options granted
under the plan carry no dividend or voting rights.
The ability for the employee to exercise the options is restricted in accordance with the terms and conditions
detailed in the ESOP. Each option will automatically lapse if not exercised within five years of the date of issue.
The exercise period may also be affected by other events as detailed in the terms and conditions in the ESOP.
The options vest as specified when the options are issued.
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.
Performance Rights
On 25 November 2020, Shareholders approved the issue of 8,000,000 Performance Rights to Messrs Bowles,
Monti, Wheeler and Wang, directors of the Company. These were issued on 1 December 2020 along with an
additional 4,000,000 Performance Rights issued to employee and contractors under the Plan. The fair value of
these Performance Rights granted was estimated as at the date of grant using the Black Scholes model taking
into account the terms and conditions upon which the Performance Rights were granted and factors such as
the share price at grant date, volatility of the share price and risk free rate.
An expense of $318,932 was recognised for the year ended 30 June 2021. $212,622 was related to the share
based payment expense for the directors.
Alto Metals Limited | 2021 Annual Report
23
DIRECTORS’ REPORT
The Performance Rights are subject to the following vesting conditions:
The Performance Rights will vest subject to the relevant Related Party remaining an employee, office-bearer
or consultant of the Company for 3 years from the date of grant (“Retention Condition”) and the satisfaction of
the following performance milestones within that timeframe (“Milestone”).
Performance Rights will vest upon the Group announcing a Joint Ore Reserves Committee (JORC) 2012
compliant Mineral Resource within the Sandstone Gold Project, as follows:
JORC 2012 compliant Mineral
Resource located within the
Sandstone Gold Project
% of Class
Performance Rights
Eligible for Vesting
500,000 ounces of gold
1,000,000 ounces of gold
80%
50%
For the avoidance of doubt, both the Retention Condition and the relevant Milestone (together, the Vesting
Conditions) must be satisfied before a Performance Right will vest.
A summary of the key assumptions used in applying the Black Scholes model to the share based payments
recognised is as follows:
Number of instruments
Date of grant
Share price at grant date
Volatility factor
Risk free rate
Expected life of instrument (years)
Valuation per instrument
Exercise price per instrument
Vesting conditions
Number of instruments exercisable as at 30 June 2021
Performance
Rights issued
12,000,000
25-Nov-20
$0.10
77.54%
0.11%
3 years
$0.10
-
As above
Nil
D. Other Transactions with Directors and Key Management Personnel
In March 2020, the Company entered into a Loan Facility Agreement (“Loan Agreement”) for up to A$1 million
with its largest shareholder, Windsong Valley Pty Ltd (“Windsong”), an entity associated with Non-Executive
Director, Terry Wheeler. Refer to Note 15 for key terms of the facility. At June 2020, $250,000 was owed under
the facility and during the year, an additional $200,000 was drawn down.
During the year, all outstanding amounts under the facility ($450,000 plus interest) were repaid to Windsong.
During the year, the spouse of M Bowles, a Director of the Group, provided media consulting services to the
Group. 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 $7,300 (2020: $2,200). As at 30 June 2021 $Nil (2020: $Nil) was payable to Mr Bowles’
spouse.
During the year, Mr Monti was paid $26,000 in consulting fees for services beyond those expected of a non-
executive director.
Other than noted elsewhere in this report, no significant related party transactions have arisen during the year
ended 30 June 2021.
Alto Metals Limited | 2021 Annual Report
24
DIRECTORS’ REPORT
Group’s Performance
The table below sets out information about the Group’s earnings and movements in shareholder wealth for
the past five years up to and including the current financial year.
2021
2020
2019
2018
2017
Net loss after tax ($)*
(1810,766)
(1,393,043)
(1,147,517)
(624,026)
(1,482,442)
Basic loss per share (cents)*
Share Price at year end (cents)
(0.46)
9.3
(0.48)
6.8
(0.55)
3.3
(0.36)
6.4
(1.0)
2.6
*Historical results have not been assessed and adjusted for the impact of new accounting standards.
----- End of Audited Remuneration Report -----
Alto Metals Limited | 2021 Annual Report
25
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the period ended 30 June 2021 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.
Rounding amounts
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the
amounts in the directors’ report and in the financial report have been rounded to the nearest dollar.
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the
purpose of taking responsibility on behalf of the Group for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under section
237 of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors
Richard Monti
Non-Executive Chairman
Dated this 30th day of September 2021
Alto Metals Limited | 2021 Annual Report
26
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF ALTO METALS LIMITED
In relation to the independent audit for the year ended 30 June 2021, 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 2021
27
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
Computers and software expense
Consulting expense
Depreciation
Employee benefits expense
Impairment of exploration and evaluation
Insurance
Investor relations
Legal fees
Office rental and occupation expenses
Share based payments
Share registry and listing fees
Travel and accommodation
Other expenses
Loss before income tax
Income tax (expense) / benefit
Loss for the year
Other comprehensive income
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 for the year
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
2021
$
2020
$
2
3
3
3
4
5
10
7
7
60,030
(47,830)
(72,110)
(225,785)
(17,495)
(535,709)
-
(28,839)
(161,975)
(122,295)
(68,679)
(268,932)
(121,639)
(14,498)
(185,010)
(1,810,766)
-
57,690
(37,574)
(45,047)
(235,934)
(20,758)
(435,423)
(6,519)
(25,763)
(22,359)
(139,607)
(63,524)
(288,905)
(66,055)
(3,921)
(59,344)
(1,393,043)
-
(1,810,766)
(1,393,043)
15,000
15,000
5,000
5,000
(1,795,766)
(1,388,043)
(0.46)
(0.46)
(0.48)
(0.48)
Alto Metals Limited | 2021 Annual Report
28
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
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
Property, 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
The accompanying notes form part of these financial statements.
Note
2021
2020
8
9
10
11
12
13
14
15
16
17
$
$
5,108,054
298,683
10,071
5,416,808
126,834
79,971
9,315
216,120
40,000
170,715
-
16,561,596
16,772,311
25,000
95,971
-
11,354,999
11,475,970
22,189,119
11,692,090
1,691,632
-
108,175
1,799,807
1,799,807
530,014
250,000
57,770
837,784
837,784
20,389,312
10,854,306
35,645,566
773,303
(16,029,557)
20,389,312
24,583,726
489,371
(14,218,791)
10,854,306
Alto Metals Limited | 2021 Annual Report
29
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Balance at 1 July 2019
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
Issued
Capital
Share
Based
Payments
Reserve
Equity
Instruments
at FVOCI
Reserve
Accumulated
Losses
Total
$
$
$
$
$
23,990,563
227,966
(32,500)
(12,825,748)
11,360,281
-
-
-
-
-
-
-
5,000
(1,393,043)
-
(1,393,043)
5,000
5,000
(1,393,043)
(1,388,043)
600,000
-
-
-
(6,837)
-
120,901
118,004
50,000
-
-
-
-
-
-
-
-
-
-
-
600,000
120,901
118,004
50,000
(6,837)
Balance at 30 June 2020
24,583,726
516,871
(27,500)
(14,218,791)
10,854,306
-
-
-
-
-
-
-
15,000
(1,810,766)
-
(1,810,766)
15,000
15,000
(1,810,766)
(1,795,766)
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
Performance Rights issued
Shares cancelled
11,422,840
-
-
318,932
-
(50,000)
-
-
-
-
11,422,840
318,932
-
-
(50,000)
(361,000)
20,389,312
Share issue transaction costs
Balance at 30 June 2021
(361,000)
35,645,566
-
-
-
785,803
(12,500)
(16,029,557)
The accompanying notes form part of these financial statements.
Alto Metals Limited | 2021 Annual Report
30
CONSOLIDATED STATEMENT OF CASH FLOWS
Note
2021
$
2020
$
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
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
Repayment of related party loan principle and interests
Net cash provided by financing activities
18a
11
16
15
15
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at 30 June
8
The accompanying notes form part of these financial statements.
5,149
(1,523,163)
54,881
(1,463,133)
6,963
(1,057,557)
50,000
(1,000,594)
(92,239)
(4,259,029)
(4,351,268)
(3,000)
(1,039,883)
(1,042,883)
11,422,840
(361,000)
200,000
(466,219)
10,795,621
600,000
(6,837)
250,000
843,163
4,981,220
126,834
5,108,054
(1,200,314)
1,327,148
126,834
Alto Metals Limited | 2021 Annual Report
31
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(“AASB”) 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 investments.
The financial statements were authorised for issue by the Directors.
Rounding amounts
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the
amounts in the directors’ report and in the financial report have been rounded to the nearest dollar.
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 $1,810,766 (2020: $1,393,043),
net current assets of $3,617,001 (2020: net current liabilities $621,664), net cash outflows used in operating
activities of $1,463,133 (2020: $1,000,594), net cash outflows used in investing activities of $4,351,268 (2020:
$1,042,883) and had cash and cash equivalents of $5,108,054 (2020: $126,834) for the year ended 30 June
2021.
The Group is forecasting an increase in operations over the next 12 months and consequently requires an
additional injection of capital to ensure that it can meet its forecasted liabilities as and when they fall due based
on the increased operations. The COVID-19 pandemic has resulted in uncertain economic market conditions in
which the Group operates and hence the exact timing and nature of the required capital injection remains
uncertain at the date of this report.
Notwithstanding the uncertainty regarding the exact timing and nature of the required capital injection, these
financial statements have been prepared on a going concern basis. 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, the
Group will have access to, sufficient cash to fund administrative and additional committed exploration
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:
• Obtaining an additional capital injection as and when required to meet forecasted liabilities;
• The ability to reduce budgeted exploration and evaluation expenditures accordingly should the need
arise through the ongoing closing monitoring of cash reserves; 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 statements. The financial statements do
not include any adjustment relating to the recoverability or classification of recorded asset amounts or to the
Alto Metals Limited | 2021 Annual Report
32
NOTES TO THE FINANCIAL STATEMENTS
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 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 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.
Alto Metals Limited | 2021 Annual Report
33
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.
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
25%
Computers equipment
25-33%
Motor vehicles
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 profit or loss.
(D)
INTANGIBLE ASSETS
Recognition of intangible assets
Acquired intangible assets
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and install the
specific software.
Subsequent measurement
All intangible assets are accounted for using the cost model whereby capitalised costs are amortised on a
straight-line basis over their estimated useful lives, as these assets are considered finite. Residual values and
useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing.
The following useful lives are applied:
Software: 4 years
Amortisation has been included within depreciation, amortisation and impairment of non-financial assets.
Subsequent expenditures on the maintenance of computer software are expensed as incurred.
When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between
the proceeds and the carrying amount of the asset and is recognised in profit or loss within other income or
other expenses.
(E)
EXPLORATION & EVALUATION EXPENDITURE
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest.
These costs are only carried forward to the extent that they are expected to be recouped through the successful
development of the area or where activities in the area have not yet reached a stage that permits reasonable
assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the period in which
the decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the
life of the area according to the rate of depletion of the economically recoverable reserves.
Alto Metals Limited | 2021 Annual Report
34
NOTES TO THE FINANCIAL STATEMENTS
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 research and development (“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 profit or loss.
(F)
LEASES
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.
Leases of 12-months or greater
Lease Asset
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured
at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs incurred,
and, except where included in the cost of inventories, an estimate of costs expected to be incurred for
dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are
depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the
asset, whichever the shorter. Where the Company expects to obtain ownership of the leased asset at the end
of the lease term, the depreciation is over the estimated useful life. Right-of-use assets are subject to
impairment or adjusted for any remeasurement of lease liabilities.
Lease Liability
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease. Lease payments comprise of
fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a
rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when
the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable
lease payments that do depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a
rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a
lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset, or to profit or loss
if the carrying amount of the right-of-use asset is fully written down.
(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
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 Revenue from Contracts with Customers, 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:
Alto Metals Limited | 2021 Annual Report
35
NOTES TO THE FINANCIAL STATEMENTS
• equity instruments at fair value through other comprehensive income (FVOCI)
• amortised cost
Classification is determined by both:
• The Group’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 (“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
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.
Equity-settled compensation
The Company operates an Incentive Option Scheme share-based compensation plan (“the 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 profit of loss. 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.
Alto Metals Limited | 2021 Annual Report
36
NOTES TO THE FINANCIAL STATEMENTS
(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.
(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.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
(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.
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.
Shared based payment reserves – comprises expenses recorded for share based payments.
Alto Metals Limited | 2021 Annual Report
37
NOTES TO THE FINANCIAL STATEMENTS
•
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 profit or loss
and accumulating in the Share based payment reserve 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 year ended 30 June 2021.
Key Estimates – Share-based payments (Refer to note 4)
The Group measures the cost of equity settled share-based payments at fair value at the grant date using the
Black Scholes model taking into account the exercise price, the term of the option, the impact of dilution, the
share price at grant date, the expected volatility of the underlying share, the expected dividend yield and risk
free interest rate for the term of the option.
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
Alto Metals Limited | 2021 Annual Report
38
NOTES TO THE FINANCIAL STATEMENTS
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 2021 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 ACCOUNTING STANDARDS AND INTERPRETATIONS
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. There is
no material impact on any new or amended Accounting Standards and Interpretations adopted by the Group.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
The following relevant standards and interpretations have been issued by the AASB but are not yet effective for
the year ending 30 June 2021:
AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018 – 2020
and Other Amendments
AASB 1 – simplifies the application by a subsidiary that becomes a first-time adopter after its parent in
AASB 3 – updates references to the Conceptual Framework for Financial Reporting;
AASB 9 – clarifies the fees an entity includes when assessing whether the terms of a new or modified
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. The main amendments relate to:
(a)
relation to the measurement of cumulative translation differences;
(b)
(c)
financial liability are substantially different from the terms of the original financial liability;
AASB 116 – requires an entity to recognise the sales proceeds from selling items produced while
(d)
preparing PP&E for its intended use and the related cost in profit or loss, instead of deducting the amounts
received from the cost of the asset;
(e)
making; and
(f)
AASB 141 – removes the requirement to exclude cash flows from taxation when measuring fair value,
thereby aligning the fair value measurement requirements in AASB 141 with those in other Australian
Accounting Standards.
AASB 137 – specifies the costs that an entity includes when assessing whether a contract will be loss
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.
The Group is in the process of assessing the likely impact of this accounting standard on the financial statements
of the Group.
AASB 2014-10: Amendments to Australian Accounting Standards – Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture, AASB 2015-10: Amendments to Australian
Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and AASB 2017-5:
Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and
AASB 128 and Editorial Corrections
AASB 2014-10 amends AASB 10: Consolidated Financial Statements and AASB 128: Investments in
Associates and Joint Ventures to clarify the accounting for the sale or contribution of assets between an investor
and its associate or joint venture by requiring:
(a) a full gain or loss to be recognised when a transaction involves a business, whether it is housed in a
subsidiary or not; and
Alto Metals Limited | 2021 Annual Report
39
NOTES TO THE FINANCIAL STATEMENTS
(b) a partial gain or loss to be recognised when a transaction involves assets that do not constitute a business,
even if these assets are housed in a subsidiary.
These amending standards mandatorily apply 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.
The Group is in the process of assessing the likely impact of this accounting standard on the financial statements
of the Group.
AASB 2020-1: Amendments to Australian Accounting Standards – Classification of Liabilities as Current
or Non-current, AASB 2020-6 Amendments to Australian Accounting Standards – Classification of
Liabilities as Current or Non-current – Deferral of Effective Date
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. It requires a liability to
be classified as current when entities do not have a substantive right to defer settlement at the end of the
reporting period.
AASB 2020-6 defers the mandatory effective date of amendments that were originally made in AASB 2020-1
so that the amendments are required to be applied for annual reporting periods beginning on or after 1 January
2023 instead of 1 January 2022. They will first be applied by the Company in the financial year commencing 1
July 2023.
The Group is in the process of assessing the likely impact of this accounting standard on the financial statements
of the Group.
AASB 2021-2: Amendments to Australian Accounting Standards – Disclosure of Accounting Policies
and Definition of Accounting Estimates
AASB 2020-1 amends AASB 7 Financial Instruments: Disclosures, AASB 101 Presentation of Financial
Statements, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, AASB 134 Interim
Financial Reporting and AASB Practice Statement 2 Making Materiality Judgements. The main amendments
relate to:
(a) AASB 7 – clarifies that information about measurement bases for financial instruments is expected to be
material to an entity’s financial statements;
(b) AASB 101 – requires entities to disclose their material accounting policy information rather than their
significant accounting policies;
(c) AASB 108 – clarifies how entities should distinguish changes in accounting policies and changes in
accounting estimates;
(d) AASB 134 – to identify material accounting policy information as a component of a complete set of financial
statements; and
(e) AASB Practice Statement 2 – to provide guidance on how to apply the concept of materiality to accounting
policy disclosures.
AASB 2021-2 mandatorily applies to annual reporting periods commencing on or after 1 January 2023 and will
be first applied by the Group in the financial year commencing 1 July 2023.
The Group is in the process of assessing the likely impact of this accounting standard on the financial statements
of the Group.
Alto Metals Limited | 2021 Annual Report
40
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2: OTHER INCOME
Interest received
Government grants
2021
$
5,149
54,881
60,030
2020
$
7,690
50,000
57,690
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 (cancelled) / issued for services received(iii)
Performance Rights issued(iv)
2021
2020
$
17,495
87,169
68,679
-
$
20,758
46,258
63,524
6,519
13
2021
$
-
-
(50,000)
318,932
268,932
2020
$
120,901
118,004
50,000
-
288,905
(i) On 29 November 2019, Shareholders approved the issue of 7,500,000 options with an exercise price of
$0.07 to Mr Matthew Bowles, 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 year ended 30 June 2020.
(ii) 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. After subscribing, the shares were issued as ordinary shares and Mr Matthew Bowles enjoyed
the same rights and benefits as any other shareholder (other than he cannot sell the shares until they are
paid for). The loan is limited-recourse because it is repayable in full no later than 3 years from the issue
date, but can be settled by Mr Matthew Bowles at any time by returning the shares to the Company. The
shares have been issued with no vesting conditions attached and are retained by Mr Matthew Bowles even
if employment with the Group ceases, in all circumstances other than a case of gross misconduct. The
nature of the arrangement is to retain Mr Matthew Bowles’ as a Director and hence there are no specific
performance conditions attaching to the arrangement. The arrangement is considered “in substance
options” or “long-term incentive rights” (“LTI rights”) under generally accepted accounting principles, and
accordingly is accounted for similar to options. The fair value of the LTI rights was estimated as at the date
of grant using the Black Scholes model taking into account the terms and conditions upon which the LTI
rights were 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. As there were no vesting conditions attached, the
expense of $118,004 was recognised in full in the year ended 30 June 2020.
Alto Metals Limited | 2021 Annual Report
41
NOTES TO THE FINANCIAL STATEMENTS
(iii) During the year ended 30 June 2020, an accrual was raised for an expected share-based payment payable
to a creditor. During the current half-year period, an agreement was reached between the creditor and the
Company that the shares would not be issued. Consequently, the share-based payment expense accrued
at 30 June 2020 was reversed in the year ended 30 June 2021.
(iv) On 25 November 2020, Shareholders approved the issue of 8,000,000 Performance Rights to Messrs
Bowles, Monti, Wheeler and Wang, Directors of the Group. These were issued on 1 December 2020 along
with an additional 4,000,000 Performance Rights under the Company’s Employee Share Plan. The fair
value of these Performance Rights granted was estimated as at the date of grant using the Black Scholes
model taking into account the terms and conditions upon which the Performance Rights were granted and
factors such as the share price at grant date, volatility of the share price and risk free rate. An expense of
$318,932 was recognised for the year ended 30 June 2021.
The Performance Rights are subject to the following vesting conditions:
The Performance Rights will vest subject to the relevant Related Party remaining an employee, office-bearer
or consultant of the Company for 3 years from the date of grant (“Retention Condition”) and the satisfaction of
the following performance milestones within that timeframe (“Milestone”).
Performance Rights will vest upon the Group announcing a Joint Ore Reserves Committee (JORC) 2012
compliant Mineral Resource within the Sandstone Gold Project, as follows:
JORC 2012 compliant Mineral
Resource located within the
Sandstone Gold Project
% of Class
Performance Rights
Eligible for Vesting
500,000 ounces of gold
1,000,000 ounces of gold
80%
50%
For the avoidance of doubt, both the Retention Condition and the relevant Milestone (together, the Vesting
Conditions) must be satisfied before a Performance Right will vest.
Change of control
In the event that the Sandstone Gold Project is sold or a Change of Control Event (as defined in the Plan rules)
occurs or the Board determines that either such an event is likely to occur before the Vesting Conditions are
met, the Board will have a discretion whether to allow the vesting of the Performance Rights and on what terms.
When determining the vesting of the Performance Rights, the Directors will take into consideration a number of
criteria, but in particular the value to shareholders as a result of the event.
Valuation of Share Based Payments
A summary of the key assumptions used in applying the Black Scholes model to the share based payments
recognised is as follows:
Number of instruments
Date of grant
Share price at grant date
Volatility factor
Risk free rate
Expected life of instrument (years)
Valuation per instrument
Exercise price per instrument
Vesting conditions
Number of instruments exercisable as at 30 June 2021
Performance
Rights issued
12,000,000
25-Nov-20
$0.10
77.54%
0.11%
3 years
$0.10
-
As above
Nil
Options
issued to
Director
7,500,000
29-Nov-19
$0.04
84.00%
0.65%
4 years
$0.02
$0.07
None
7,500,000
LTI Rights
issued to
Director
6,250,000
29-Nov-19
$0.04
76.00%
0.65%
3 years
$0.02
$0.03
None
6,250,000
Alto Metals Limited | 2021 Annual Report
42
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% (2020: 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
The applicable weighted average effective tax rates are as follows:
-
-
-
-
-
-
(543,230)
(417,914)
2,864
-
80,680
(15,000)
474,686
-
210
180
86,672
(15,000)
345,852
-
(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(c)
6,570,363
64,201
143,586
18,000
6,796,150
(6,796,150)
-
(4,968,479)
(3,021)
(4,971,500)
4,971,500
4,540,171
33,271
59,515
24,000
4,656,957
(4,656,957)
-
(3,406,499)
(2,795)
(3,409,294)
3,409,294
-
6,570,363
4,540,171
(4,745,714)
(3,292,507)
Potential deferred tax assets attributable to tax losses and exploration expenditure carried forward have not
been brought to account at 30 June 2021 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.
Alto Metals Limited | 2021 Annual Report
43
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6: AUDITORS’ REMUNERATION
Remuneration of the auditor of the Group for:
- Auditing or reviewing the financial report by Pitcher Partners
BA&A Pty Ltd
Remuneration of the auditor, or associated entities, of the Group
for non-audit services:
- Tax compliance services
NOTE 7: LOSS PER SHARE
(a) Reconciliation of earnings to loss
Earnings used in the calculation of basic EPS
(b) Weighted average number of ordinary shares outstanding during
the period used in calculation of basic EPS
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Antidilutive options on issue not used in dilutive EPS calculation
NOTE 8: CASH AND CASH EQUIVALENTS
Cash at bank
Reconciliation of cash
Cash at the end of the financial period as shown in the Consolidated
Statement Of Cash Flows is reconciled to items in the Consolidated
Statement of Financial Position as follows:
Cash and cash equivalents
NOTE 9: TRADE AND OTHER RECEIVABLES
CURRENT
GST receivable
Trade and other receivables
2021
$
2020
$
28,358
25,500
6,069
5,000
2021
$
2020
$
(1810,766)
(1,393,043)
390,260,110
289,540,448
(0.46)
(0.46)
7,500,000
(0.48)
(0.48)
78,842,567
2021
$
5,108,054
2020
$
126,834
5,108,054
126,834
2021
$
2020
$
264,662
34,021
298,683
29,169
50,802
79,971
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 (2020: $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:
Alto Metals Limited | 2021 Annual Report
44
NOTES TO THE FINANCIAL STATEMENTS
30 June 2021
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
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
Amortised
Cost
$
FVOCI
$
5,108,054
298,683
-
5,406,737
-
-
40,000
40,000
(1,691,632)
-
(1,691,632)
-
-
-
126,834
79,971
-
206,805
-
-
25,000
25,000
530,014
250,000
780,014
-
-
-
(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
- loan and borrowings
(ii)
Equity instruments at fair value through other comprehensive income
Balance at the beginning of the reporting period
Add revaluation increments/(decrements)
2021
2020
$
$
25,000
20,000
5,000
15,000
40,000 25,000
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
Alto Metals Limited | 2021 Annual Report
45
NOTES TO THE FINANCIAL STATEMENTS
NOTE 11: PROPERTY, PLANT AND EQUIPMENT
NON-CURRENT
Plant and equipment – cost
Accumulated depreciation
Motor vehicles – cost
Accumulated depreciation
Land and Building – cost
Accumulated depreciation
2021
$
2020
$
163,895
(141,831)
22,064
139,588
(137,898)
1,690
92,933
(32,330)
60,603
88,048
-
88,048
25,000
(18,767)
6,233
88,048
-
88,048
Total property, plant and equipment
170,715
95,971
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
1,690
24,307
(3,933)
22,064
6,233
67,933
(13,563)
60,603
88,048
-
88,048
95,971
92,240
(17,496)
170,715
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
2021
$
2020
$
75,137
(75,137)
-
-
-
-
75,137
(75,137)
-
10,637
(10,637)
-
Alto Metals Limited | 2021 Annual Report
46
NOTES TO THE FINANCIAL STATEMENTS
NOTE 13: EXPLORATION AND EVALUATION
Exploration and evaluation – at cost
Exploration and evaluation - movement
Opening balance
Exploration and evaluation expenditure
Impairment of exploration and evaluation
Closing balance
2021
$
16,561,596
2020
$
11,354,999
11,354,999
5,206,597
-
16,561,596
10,337,937
1,023,581
(6,519)
11,354,999
The Directors’ assessment of the carrying amount for the Group’s exploration and evaluation assets 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 and evaluation assets for an amount at least equal to
the carrying value. There may exist on the Group’s exploration and evaluation assets, 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 and evaluation assets or areas within the tenements may be subject to exploration and mining
restrictions.
As at 30 June 2021, 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 $NIL (2020: $6,519) was recognised due to the surrender of tenements.
NOTE 14: TRADE AND OTHER PAYABLES
CURRENT – UNSECURED LIABILITIES
Trade and other payables
Accrued expenses
2021
$
2020
$
1,552,795
138,837
1,691,632
486,531
43,483
530,014
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)
2021
$
2020
$
-
250,000
(i)
On 11 March 2020, the Company entered into a Loan Facility Agreement (“Loan Agreement”) 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 $1,000,000 during the period 11 March 2020 to 10 March 2021
(Availability Period);
• The interest rate applicable on outstanding monies is 8% per annum, accrued monthly and calculate
monthly;
• 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.
During the year, the Company drew down an additional $200,000. Total balance owing including interest
was $466,219 prior to the settlement of the loan. The loan was fully repaid during the year.
Alto Metals Limited | 2021 Annual Report
47
NOTES TO THE FINANCIAL STATEMENTS
NOTE 16: ISSUED CAPITAL
(a) Issued capital
450,259,736(2020: 270,457,115) Fully paid ordinary shares
35,645,566
22,408,726
- (2020: 25,000,000) Performance shares
-
35,645,566
2,175,000
24,583,726
Fully paid ordinary shares have no par value, carry one vote per share and carry the right to dividends.
2021
$
2020
$
(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
70,613,545 options exercised at $0.07 per share
73,007,311 on 2 Oct at $0.075 per share
1,391,250 on 9 Oct at $0.075 per share
11,333,334 on 16 Dec 2020 @ $0.075 per share
540,515 on 15 Feb 2021 at $0.093 per share
Lapse of 25,000,000 Performance Shares
Prior year
16,666,666 on 3 December 2019 at $0.036 per share(ii)
Costs associated with equity raisings
Balance at end of the period
Balance at beginning of the period
Shares issued during the period
70,613,545 Options exercised at $0.07 per share
73,007,311 on 2 Oct at $0.075 per share
1,391,250 on 9 Oct at $0.075 per share
11,333,334 on 16 Dec 2020 @ $0.075 per share
540,515 on 15 Feb 2021 at $0.093 per share
Conversion of 25,000,000 Performance Shares
Prior year
16,666,666 on 18 July 2019 at $0.036 per share(ii)
Director incentive shares
Balance at end of the period
2021
$
2020
$
22,408,726
21,815,563
4,942,949
5,475,548
104,344
850,000
50,000
2,175,000
600,000
(361,001)
35,645,566
(6,837)
22,408,726
No.
No.
293,373,781
270,457,115
70,613,544
73,007,311
1,391,250
11,333,334
540,515
1
16,666,666
6,250,000
293,373,781
450,259,736
Alto Metals Limited | 2021 Annual Report
48
NOTES TO THE FINANCIAL STATEMENTS
(c) 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(v)
Performance rights expired during the period
Balance at end of the period
(d) 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
(e) Unlisted Options
The following movements in unlisted options occurred during
the reporting period:
Balance at beginning of the period
Options issued during the period:
$0.07 Options expiring 29 November 2023(iv)
Balance at end of the period
Balance at beginning of the period
Options exercised during the period
Options lapsed during the period
Options issued during the period:
$0.07 Options expiring 18 January 2021(ii)
$0.07 Options expiring 29 November 2023(iv)
Balance at end of the period
(f) Performance shares
The following movements in performance shares occurred during
the reporting period:
Balance at beginning of the period
Performance shares lapsed during the period
Balance at end of the period(i)
Balance at beginning of the period
Performance shares converted during the period
2021
No.
2020
No.
-
12,000,000
-
12,000,000
1,000,000
-
(1,000,000)
-
2021
No.
2020
No.
6,250,000
-
-
6,250,000
-
6,250,000
-
6,250,000
2021
$
2020
$
348,867
-
-
348,867
227,966
-
120,901
348,867
No.
No.
63,009,234
78,842,567
(70,613,544)
(729,023)
8,333,333
7,500,000
78,842,567
7,500,000
2021
$
2020
$
2,175,000
(2,175,000)
-
2,175,000
-
2,175,000
No.
No.
25,000,000
(25,000,000)
25,000,000
-
Alto Metals Limited | 2021 Annual Report
49
NOTES TO THE FINANCIAL STATEMENTS
Balance at end of the period(i)
-
25,000,000
(i)
(ii)
The above Performance Shares expired on 23 June 2021 and converted into one fully paid ordinary
share.
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.
(iii)
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.
(iv)
On 24 December 2019, 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.
(v)
Refer Note 4 (iv).
(g) Capital Management
The Directors’ objectives when managing capital are to ensure that the Group can fund its operations and
continue as a going concern, so that it may continue to provide returns for shareholders and benefits for other
stakeholders. The Group has no debt as at 30 June 2021 therefore has no externally imposed capital
restrictions.
The focus of the Group’s capital risk management is the current working capital position against the
requirements of the Group to meet exploration programmes and corporate overheads. The Group’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 2021 is a surplus of $3,617,001 (2020: deficit
of $621,664).
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 during the period
Balance at end of the period
2021
$
(12,500)
785,803
773,303
2020
$
(27,500)
516,871
489,371
2021
$
2020
$
(27,500)
15,000
(12,500)
(32,500)
5,000
(27,500)
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
Issue of performance rights during the period(i)
Issue of options to Director during the period(ii)
2021
$
2020
$
516,871
318,932
-
227,966
-
118,004
Alto Metals Limited | 2021 Annual Report
50
NOTES TO THE FINANCIAL STATEMENTS
Issue of LTI rights to Director during the period(ii)
Issue of shares to creditors for services received
Balance at end of the period
-
(50,000)
785,803
120,901
50,000
516,871
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 4 (iv) for details.
Refer to Note 4 (i) and (ii) for details.
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
Interest expense
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
(b) Credit Standby Facilities
2021
$
(1,810,766)
2020
$
(1,393,043)
17,495
268,932
-
16,219
20,758
288,905
6,519
-
24,191
(756)
50,405
(28,853)
(1,463,133)
60,958
13,535
-
1,774
(1,000,594)
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. The loan was not utilised during the year.
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
2021
2020
Ordinary
Ordinary
100
100
100
100
NOTE 20: EVENTS SUBSEQUENT TO REPORTING DATE
No matter or circumstance has 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 subsequent financial periods.
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.
KMP Compensation
Alto Metals Limited | 2021 Annual Report
51
NOTES TO THE FINANCIAL STATEMENTS
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 2021. The totals of remuneration paid to KMP during
the year are as follows:
Short-term employee benefits (i)
Post-employment benefits
Share based payments
2021
2020
$
398,012
22,768
212,622
633,402
$
294,639
3,933
238,905
537,477
(i)
A portion of short-term employee benefits are paid to director-related parties.
Other Related Party Transactions
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
fees paid during the year were $7,300 (2020: $2,200). As at 30 June 2021 $Nil (2020: $Nil) was payable to
M Bowles’ spouse.
In March 2020, the Company entered into a Loan Facility Agreement (“Loan Agreement”) 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.
During the current year, $250,000 was drawn down and the full amount owing including interests amounting to
repaid $466,219 was fully settled via shares (2020: Nil).
During the year, Mr Monti was paid $26,000 in consulting fees for services beyond those expected of a non-
executive director.
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
NOTE 23: FINANCIAL INSTRUMENT RISK
2021
$
710,970
3,256,080
3,967,050
2020
$
629,020
2,516,080
3,145,100
The Group’s financial instruments consist mainly of deposits with banks, short-term and long-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, and equity price risk.
(a) Credit risk
Alto Metals Limited | 2021 Annual Report
52
NOTES TO THE FINANCIAL STATEMENTS
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties
of contract obligations that could lead to a financial loss to the Group.
The Group does not have any material credit risk exposure to any single receivable or company of receivables
under financial instruments entered into by the Group.
Credit risk exposures
The maximum exposure to credit risk is that to its alliance partners and that is limited to the carrying amount,
net of any provisions for impairment of those assets, as disclosed in the Consolidated Statement of Financial
Position and Notes to the Financial Statements.
There are no material amounts of collateral held as security at 30 June 2021. 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
2021
2020
$
$
Cash and cash equivalents
- AA Rated
8
5,108,054 126,834
(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 constantly monitors 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.
The table below reflects an undiscounted contractual maturity analysis for financial liabilities. Cash flows
realised from financial assets reflects management’s expectation as to the timing of realization. Actual timing
may therefore differ from that disclosed.
Within 1 Year
2021
2020
$
$
1 to 5 Years
2021
$
2020
$
Total
2021
$
2020
$
Financial liabilities due
for payment
Trade and other payables
1,605,576
486,531
-
- 1,605,576
486,531
Total expected outflows
Financial asset - cash
flows realisable
Cash and cash equivalent
Trade and other
receivables
1,605,576
486,531
-
- 1,605,576
486,531
5,108,054
126,529
-
- 5,108,054
126,529
290,884
55,534
-
- 290,884
55,534
Alto Metals Limited | 2021 Annual Report
53
NOTES TO THE FINANCIAL STATEMENTS
Equity Instruments at fair
value
-
- 40,000
25,000
40,000
25,000
Other assets
7,799
7,799
-
- 7,799
7,799
Total anticipated inflows
5,406,737
189,862
40,000
25,000
5,446,737
214,862
Net (outflow)/inflow on
financial instruments
(c) Market risk
3,801,161
(296,669)
(40,000)
(25,000)
3,841,161
(271,669)
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.
At the reporting date the Group’s only exposure to interest rate risk is related to the balance of its cash and
cash equivalents. The following table represents the Group’s exposure to interest rate risk:
Variable rate instruments
2021
2020
Cash and cash equivalents
5,108,054 126,834
A change of 1% (2020: 1%) in variable interest rates would have increased or decreased the Group’s equity
and profit by $51,080 (2020: $1,268) and would have had the same effect on cash. The 1% sensitivity is based
on reasonable possible movements over a financial year, after observation of a range of actual historical rate
movement over the past five years.
(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 2021, 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:
Listed equity
price -10%
Listed equity price
+10%
Carrying
Amount
$
40,000
25,000
Net
Loss
$
(4,000)
(2,500)
Equity
$
(4,000)
(2,500)
Net
Loss
$
4,000
2,500
Equity
$
4,000
2,500
30 June 2021
30 June 2020
(e) Net Fair Values
Cash and cash equivalents, trade and other receivables, loan and borrowings and trade and other payables are
short-term investments in nature whose carrying value is equivalent to fair value.
Alto Metals Limited | 2021 Annual Report
54
NOTES TO THE FINANCIAL STATEMENTS
Fair value measurement hierarchy
AASB 13 Fair value measurement: 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 Fair value measurement.
Year ended 30 June 2021
Financial Assets
Equity instruments at FVOCI
Year ended 30 June 2020
Financial Assets
Equity instruments at FVOCI
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
Property, plant and equipment
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
Level 1 Level 2 Level 3
$
$
$
Total
$
40,000
25,000
-
-
-
40,000
-
25,000
2021
$
2020
$
5,108,052
298,683
10,071
5,416,806
40,000
170,715
126,832
79,971
9,315
216,118
25,000
95,971
16,561,598
11,361,761
16,772,313
11,482,732
22,189,119
11,698,850
1,691,632
-
108,175
1,799,807
1,799,807
530,014
250,000
57,770
837,784
837,784
20,389,312
10,861,066
35,645,566
24,583,726
773,303
489,371
(16,029,557)
(14,212,031)
Alto Metals Limited | 2021 Annual Report
55
NOTES TO THE FINANCIAL STATEMENTS
TOTAL EQUITY
20,389,312
10,861,066
(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 (2020: Nil)
NOTE 25: CONTINGENT LIABILITIES
(1,810,766)
(1,386,283)
15,000
5,000
(1795,766)
(1,381,283)
As at 30 June 2021 the Group has bank guarantees to the value of $26,365 (2020: $26,365) to secure rental
bonds.
NOTE 26: OPERATING SEGMENTS
The Directors have considered the requirements of AASB 8 Operating Segments and the internal reports that
are reviewed by the chief operating decision maker (the Board) in allocating resources and have concluded that
at this time there are no separately identifiable segments. The Group remains focused on mineral exploration
over areas of interest solely in Western Australia.
Alto Metals Limited | 2021 Annual Report
56
DIRECTORS’ DECLARATION
The Directors declare that:
1. The financial statements and notes set out on pages 28 to 56 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 2021 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 2021
Alto Metals Limited | 2021 Annual Report
57
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 profit and loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and notes to the financial 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 2021 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 consolidated financial report which indicates that the Group
incurred a net loss of $1,810,766 during the year ended 30 June 2021 (2020: $1,393,043), and as of
that date, the Group had net current assets of $3,617,001 (2020: $ net current liabilities $621,664)
and net assets of $20,389,312 (2020: $10,854,306). The Group incurred net cash outflows used in
operating activities of $1,463,133 (2020: $1,000,594), net cash outflows used in investing activities of
$4,351,268 (2020: $1,042,883) and had cash and cash equivalents of $5,416,808 (2020: $126,834)
for the year ended 30 June 2021.
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.
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.58 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 2021, the Group held capitalised
exploration and evaluation expenditure of
$16,561,596.
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.
Our procedures included, amongst others:
Obtaining an understating of and evaluating
the design and implementation of 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.
59
ALTO METALS LIMITED
ABN 62 159 819 173
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ALTO METALS LIMITED
Share-based Payments
Refer to Note 1(i) & 4
Share-based payments represent $268,932 of the
Group’s expenditure.
Share-based payments must be recorded at fair
value of the service provided, or in the absence of
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;
Our procedures included, amongst others:
Obtaining an understanding of the relevant
controls and evaluating the design and
implementation of the controls associated
with the preparation of the 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, which includes below but not
limited to:
• Estimating expected future share price
• Estimating the likelihood that the equity
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 payments expense to be a key
audit matter.
instruments will vest;
• Estimating expected future share price
volatility;
• Expected dividend yield; and
• Risk-free rate of interest.
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.
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 2021, 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.
60
ALTO METALS LIMITED
ABN 62 159 819 173
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ALTO METALS LIMITED
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or 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.
61
ALTO METALS LIMITED
ABN 62 159 819 173
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ALTO METALS LIMITED
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.
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 20 to 25 of the directors’ report for the
year ended 30 June 2021. In our opinion, the Remuneration Report of Alto Metals Limited, for the
year ended 30 June 2021, 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 2021
62 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 23 September 2021.
(a)
Twenty largest holders of quoted equity securities
Position Holder Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
20
WINDSONG VALLEY PTY LTD
GS GROUP AUSTRALIA PTY LTD
ARGONAUT SECURITIES (NOMINEES) PTY LTD
WESTGOLD RESOURCES LIMITED
SINOTECH (HONG KONG) CORPORATION LIMITED
OLGEN PTY LIMITED
NATIONAL NOMINEES LIMITED
SILVERLIGHT HOLDINGS PTY LTD
MERCHANT GROUP PTY LTD
CROWNLUXE INVESTMENT LTD
ATLANTIC CAPITAL PTY LTD
CITICORP NOMINEES PTY LIMITED
MS XIAOXIA LIU
PETER ERMAN PTY LIMITED
DELPHI UNTERNEHMENSBERATUNG
AKTIENGESELLSCHAFT
MRS LUCY FEI
LONGREACH CAPITAL PTY LTD
MR DERMOT MICHAEL RYAN &
MRS VIVIENNE ELEANOR RYAN
MR KENNETH JOSEPH HALL
CERTANE CT PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO
ECA
Holding
% IC
82,997,063
18.43%
56,754,212
12.60%
37,313,438
18,900,464
17,291,250
14,583,333
13,457,289
11,182,781
9,166,318
7,500,000
6,250,000
5,722,346
5,115,881
5,000,000
4,650,000
4,166,667
3,191,666
3,059,029
2,666,666
2,500,000
2,500,000
8.29%
4.20%
3.84%
3.24%
2.99%
2.48%
2.04%
1.67%
1.39%
1.27%
1.14%
1.11%
1.03%
0.93%
0.71%
0.68%
0.59%
0.56%
0.56%
Total
313,968,403
69.73%
Total issued capital - selected security class(es)
450,259,736
100.00%
Alto Metals Limited | 2021 Annual Report
63
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
Holding
Balance
% IC
WINDSONG VALLEY PTY LTD & MARYMOUNT PTY LTD
83,522,062
18.55%
WESTGOLD RESOURCES LIMITED
GS GROUP AUSTRALIA PTY LTD
65,380,220
14.52%
56,754,212
12.60%
(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
320
447
258
584
311
142,693
1,211,086
2,066,860
24,727,446
0.03%
0.27%
0.46%
5.49%
422,111,651
93.75%
1,920
450,259,736
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:
UNLISTED
OPTIONS $0.07
EXP 29/11/2023
PERFORMANCE
RIGHTS
EXP 30/11/2023
GREATCITY CORPORATION PTY LTD
-
2,500,000
ATLANTIC CAPITAL PTY LTD
7,500,000
3,500,000
TOTAL HOLDERS
1
2
Alto Metals Limited | 2021 Annual Report
64
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 – 4th Edition” established by the ASX
Corporate Governance Council. Given the size and structure of the Company, the nature of its business
activities, the stage of its development and the cost of strict and detailed compliance with all of the
recommendations, it has adopted a range of modified systems, procedures and practices which enables it to
meet the principles of good corporate governance. The Company’s practices are mainly consistent with those
of the guidelines and where they do not correlate with the recommendations in the guidelines the Company
considers that its adopted practices are appropriate to it.
Alto Metals Limited | 2021 Annual Report
65
ADDITIONAL ASX INFORMATION
TENEMENT REPORT
As at 30 June 2021
Tenement
Location
Interest
Registered Holder
Lease
Status
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
M57/646
Sandstone, WA
M57/647
Sandstone, WA
M57/650
Sandstone, WA
M57/651
Sandstone, WA
M57/652
Sandstone, WA
P57/1377
Sandstone, WA
P57/1378
Sandstone, WA
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
Sandstone Exploration Pty Ltd
Granted
E57/1108
Sandstone, WA
100%
Sandstone Exploration Pty Ltd
Granted
Alto Metals Limited | 2021 Annual Report
66