/ Annual Report
2019
TENEMENT INTERESTS
DIRECTOR’S REPORT
REMUNERATION REPORT (AUDITED)
FINANCE INFORMATION
NOTES TO THE FINANCIAL
STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2019
DIRECTORS DECLARATION
ADDITIONAL INFORMATION
CORPORATE DIRECTORY
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33
36
49
54
87
92
94
CONTENTS.
CHAIRMAN’S REPORT
OPERATING AND FINANCIAL REVIEW
ADVANCED MATERIALS
Quantum Technology
Human Health
Reliable Energy
Carbon Allotropes
MINERAL EXPLORATION
Graphite
Copper
Cobalt
Tin and Tungsten
Manganese
Sale of Magnesia Project
IPO of Non-graphite Projects
Sale of Sugarloaf Land
MINERAL RESOURCES
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06
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CHAIRMAN’S
REPORT
Archer has made significant progress over the year
on several strategic fronts. Our Advanced Materials
Business is building a suite of disruptive technologies,
in the key areas of Quantum Technology,
Human Health and Reliable Energy. Successful
exploration programs during the year increased our
understanding and confidence in our mineral projects,
including copper and gold.
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Archer has made a long-term commitment to building an
industry-leading Materials Technology Business. We are only
just commencing this journey and success will be achieved
over time. Our team in Sydney has been steadily growing, and
has achieved much success during the 2019/20 financial year.
Most significant over the year, was the execution of a licence
agreement with the University of Sydney for exclusive rights
to develop and commercialise intellectual property (IP) related
to carbon-based quantum computing technology. The binding
licence agreement gives Archer exclusive international rights
to develop and commercialise patents protecting this IP in
Australasia, the EU and US.
The licenced quantum technology IP relates to the
development of a room temperature quantum computer chip.
Currently, the materials used in quantum computers either
function at really low temperatures (at temperatures colder
than outer space), or if they function at room temperatures,
they are extremely difficult to integrate into modern
electronics, which limits quantum computer ownership.
At the start of 2019, Dr Martin Fuechsle joined the Archer
team in the position of Manager, Quantum Technology. Dr
Fuechsle is among the few highly talented physicists in the
world capable of building quantum devices that push the
boundaries of current information processing technology.
Dr Fuechsle brings more than 10 years’ experience in
successfully designing, fabricating, and integrating quantum
devices.
With the execution of the licence agreement and the
appointment of Martin, we have the building blocks in place to
commence development of our room temperature quantum
computer chip and in April of this year we announced the
commencement of the 12CQ Project. 12CQ has a simple value
proposition, that of realising practical quantum computing.
The success of 12CQ will be based on us being able
to build and test atomic-scale quantum devices using
special chip fabrication tools and instruments for
patterning and testing materials and quantum logic
circuits. To that end, in April 2019 we announced that the
Company had started building the quantum computer
chip and that we had successfully assembled the first
components of a prototype qubit processor. We have
started to build the chip on silicon substrates as silicon
is the computer industry standard material for current
classical computer chips. The compatibility of our
carbon-based qubits with silicon chip substrates will aide
with industry acceptance of our technology.
The assembly of the first components of a prototype qubit
processor is a significant achievement that cannot be
overstated. Our CEO, Dr Mohammad Choucair and his
team have achieved a lot in a short period of time. To go
from execution of the licence agreement to the building
of a prototype chip within 6 months is a great effort by
Mohammad, Martin and the rest of the team.
The market potential for quantum computing is significant and
growing rapidly.
In addition to the quantum technology, Archer has made
great progress in the development of a graphene ink based
biosensor. We were able to prepare graphene inks that took
advantage of the superior physical and chemical properties
of our Campoona graphite at the University of Adelaide
Australian Research Council Graphene Hub (Graphene Hub).
We then were able to print two basic electrode patterns
using an inkjet printer and a laser-scribed printer. The
results of the technical analysis confirmed that the graphite
from the Campoona deposit could be used to produce
graphene-based inks and printed electrodes with electronic
characteristics in-line with or better than benchmarks set in
related research fields.
Following on from this early success, we entered into a
legally binding Material Transfer Agreement with a leading
German biotechnology company for the fabrication of a
proof-of-concept biosensor, comprising printable components
capable of detecting disease state markers, such as
antibodies or antigens. The German partner specialises in
commercial biological detection technology and materials,
and is concurrently developing and improving biosensing
technology for emerging markets.
With the help of our German partner and Graphene Hub
we were able to successfully make and print graphene ink
formulations that comprised primarily of human antibody
immunoglobulin G (IgG) as the active constituent. The IgG
inks were printed on resin-coated paper and a number of
graphene based electrodes and were able to withstand the
chemical and physical processes in the formulation, printing,
and post-printing steps. Optimisation of the antigen ink
formulation, printing, stability, and electrode performance is
the subject of ongoing collaboration with the Graphene Hub.
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Annual Report 2019 / Archer Exploration Limited
/ Chairman’s Report Due to the success of this early work by Dr Choucair and his
team, we registered a provisional patent with the Australian
Patent Office, comprising intellectual property relating to
graphene ink compositions, methods of synthesising the
inks, and the use of the inks for biomolecular sensing. The
registration of the patent is part of Archer’s strategy to
commercially develop materials and technology in the key
vertical of Human Health.
The final pillar of our Advanced Materials Business strategy is
the key area of Reliable Energy and specifically the suitability
of our Campoona graphite for use in lithium ion batteries.
High purity graphite used as an anode material in lithium
ion batteries traditionally sells at a higher price than other
forms of graphite. As a means of increasing the value of the
Campoona graphite, we undertook test work during the year
to test the suitability of Campoona graphite in lithium ion
batteries. As part of this work, full-cell lithium ion batteries
that are functional and commercially scalable, and that
incorporated Archer’s Campoona graphite, were successfully
assembled and validated for performance. The batteries were
prepared with Archer’s Campoona graphite at the anode, and
commercially equivalent cathode materials and chemistries
used in consumer electronics and electric vehicles.
The next stage in this development work was the processing
of the Campoona graphite to make spherical graphite and
then the subsequent testing of this graphite in a lithium ion
battery. Dr Choucair and his team were able to make uniform
40-micron flake size (99%+ and 95% TCC) using small-
scale (kilogram quantity) mechanical milling processes. The
processing was performed by a Japanese company using
proprietary technology developed by the Partner. The results
were then verified by Archer using world-class microscopy
and analysis facilities at the University of Sydney. Archer and
the Partner intend to progress the work in the near term by
focusing on scaling quantities of graphite using processes
available to the Partner, to accurately obtain and optimise
measures of yield and efficiencies of scale for Archer’s
Campoona graphite feedstocks.
Archer has a successful track record of developing and
selling assets to fund our activities, examples include the sale
of the West Roxby Project for $8m cash (2012), sale of the
Leigh Creek Magnesite for $2.0 million cash (2018) and the
sale of the Sugarloaf Farmland for $1.35 million cash (2018).
Consistent with this strategy was our decision to “spin out”
non-graphite assets into a new company which would then
list on the ASX. The “spin out” was withdrawn in late 2018 due
to a deterioration in market conditions. Despite this set back,
/ Chairman’s Report
we will continue to identify opportunities to monetise non-key
assets and to identify and acquire undervalued assets.
We drilled our Blue Hills Copper-Gold project in early 2019,
following the decision not to proceed with the “spin out”.
The Blue Hills drill program was successful in proving the
presence of a large intrusive related mineralising system that
warrants further exploration. Blue Hills is a massive target
that covers an area greater than the Sydney CBD. The drilling
of such a large target area is beyond our current financial
capacity and we are looking for a joint venture partner to help
with financially supporting the cost of exploring Blue Hills.
We made a decision not to explore our other tenements while
the “spin out” was pending, and when the decision was made
not to proceed with the “spin out” we focused on exploring
Blue Hills and were unable to fulfil the full exploration
potential of several of our prospective projects. We believe
that our projects are prospective for minerals such as gold,
manganese, copper and high purity alumina and intend to
either explore or divest them during the next year.
We will continue to invest in materials technology IP
development within our Advanced Materials Business, and
this work will increase again in FY20. Our relentless pursuit of
new product innovation sits at the core of our strategic growth
strategy, and is complemented by our transition from being
a purely mineral exploration focussed business to a more
diverse and specialist Materials Technology company.
Our CEO, Dr Choucair and his team in Sydney have done a
wonderful job in growing our Advanced Materials Business
and have achieved so much in a short period of time. I would
like to thank all staff for their dedication and hard work during
the year and also my fellow Directors for their unwavering
support and implementation of our strategy.
We could not have achieved what we did without the support
of our shareholders. I am certain that the achievements
described above should give you a very clear indication of
our strategy and our resolve to develop the extraordinary
opportunities by the Archer team. We expect to achieve much
in this coming year and look forward to reporting the results of
our work to shareholders.
GREG ENGLISH
Executive Chairman
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/ Operating and Financial Review
OPERATING AND
FINANCIAL REVIEW
Archer is a diversified materials technology
company with a focus on developing its Advanced
Materials and Mineral Exploration businesses.
strategy to commercially develop materials
technology in the key verticals of Quantum
Technology, Human Health, and Reliable Energy.
The Company will continue the growth and
development of its Advanced Materials business
with a focus in the three key areas: quantum
technology, human health, and reliable energy. The
Company has:
• Signed a Licence Agreement with the University
of Sydney that allows Archer to develop and
commercialise intellectual property in the form
of patents related to electronic devices with the
potential for room-temperature quantum computing.
In addition, the Company will explore its current
tenement assets and will look for opportunities
to divest non-core exploration assets to fund the
Company’s activities. The sale of the Company’s
Leigh Creek Magnesia Project and Sugarloaf
Farmland in 2018/19 is consistent with this strategy.
Key priorities in 2019/20 to grow the Company span
both business functions of Advanced Materials and
Mineral Exploration, and specifically include:
• Developing quantum computing technology as part
• Registered a provisional patent with the Australian
of the Company’s 12CQ Project.
Patent Office, comprising intellectual property
relating to graphene ink compositions, methods of
synthesising the inks, and the use of the inks for
biomolecular sensing.
• Developed high-value materials for use in energy
storage devices like lithium-ion batteries and has
developed a number of graphitic and graphene
materials for potential down-stream battery
technology integration.
• Developing biosensor technology in conjunction
with the University of Adelaide.
• Developing high-value materials for energy storage
and use, including graphene and spherical graphite
derived from Archer’s Campoona graphite.
• Permitting of the Campoona Graphite Mine.
• Identifying opportunities to divest non-core
The licencing, acquisition and ownership of
intellectual property assets is part of Archer’s
exploration assets and acquire undervalued assets
of advanced-stage mining projects.
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SUMMARY OF
FINANCIAL
PERFORMANCE
The net loss of the Group for the 2018/19 financial year
was $1,738,332 (2018: $1,854,520) after accounting for
R&D tax concession benefits of $102,421 (2018: $58,641)
and includes mineral exploration impaired and written
off $82,159 (2018: $257,931) and inventory write-down of
$76,800 (2018: Nil).
During the year ended 30 June 2019 the Group’s net
cash position decreased by $2,053,837 from $2,749,586
(1 July 2018) to $695,749 (30 June 2019) and no corporate
debt. This net decrease in cash was predominantly
influenced by cash outflows associated with exploration
expenditure ($1,014,979) and wages, corporate &
administration expenditure ($1,708,395). The outflows
were offset by inflows associated with a successful share
placement of ($300,000 before costs), the exercise of
share options (exercise price of $0.075 and expiry date of
28 February 2019) issued under the share purchase plan
($100,706), the deposit received for the sale of the Leigh
Creek Magnesite Project ($250,000) and a research and
development tax incentive ($58,641).
CHANGES IN
SHARE CAPITAL
SHARES
The number of shares on issue increased from
186,925,829 (1 July 2018) to 196,304,283 (30 June 2019)
during the year as a result of the following events:
• Exercise of options issued under the share purchase
plan (1,342,740 shares)
• Share Placement to sophisticated and professional
investors (4,285,714 shares)
• 3,000,000 shares were issued to CEO following vesting
of 3,000,000 performance rights that were issued to
him as compensation for the Company’s acquisition of
Carbon Allotropes Pty. Limited in October 2017.
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Annual Report 2019 / Archer Exploration Limited
• A total of 750,000 shares were issued to Archer Directors
and employees following the vesting and exercise of
performance rights previously issued to them.
PERFORMANCE RIGHTS
The number of performance rights on issue decreased
from 4,500,000 (1 July 2018) to 1,050,000 (30 June 2019)
during the year as a result of the following events:
• 150,000 performance rights were issued to each of the
CEO and Archer’s three Sydney based employees (total
of 450,000 performance rights). During the year 150,000
of these performance rights lapsed in accordance with
the Archer Performance Rights Plan.
• 750,000 performance rights vested into an equivalent
number of shares following the satisfaction of the
performance conditions for the year ended 30 June 2018.
• 3,000,000 performance rights previously issued to the CEO
as compensation for the Company’s acquisition of Carbon
Allotropes Pty. Limited in October 2017, vested into shares.
UNLISTED OPTIONS
The number of unlisted options on issue decreased from
13,907,978 (1 July 2018) to Nil (30 June 2019) during the
year as a result of the following events:
• 5,000,000 unlisted options previously issued to Paul Rix,
a Director of the Company, expired unexercised.
• 1,342,740 share options (exercise price of $0.075 and
expiry date of 28 February 2019) issued under the share
purchase plan, were exercised into shares, with the
remaining 7,565,238 share options expiring unexercised.
CORPORATE
In December 2018, the Company executed an exclusive
Licence Agreement with the University of Sydney that allows
Archer to develop and commercialise patents describing a
technology with the potential for room-temperature quantum
computing. The technology is a device (chip) capable of
quantum information processing at room-temperature, and
the materials that form the critical componentry of the chip
are available in the inventory of Archer’s wholly owned
subsidiary Carbon Allotropes. Patents protecting the licenced
/ Operating and Financial Review
intellectual property have been filed internationally to
cover Europe, Australia, United States of America, Japan,
Republic of Korea, Hong Kong, and China. Archer intends to
commercialise the quantum technology through licencing
and direct sales channels.
During 2018, Archer announced the sale of the Leigh
Creek Magnesia Project for $2.0 million and sale of the
Sugarloaf Farmland for $1.35 million. The sale of the
Sugarloaf Farmland has already completed with Archer
receiving all funds. The Leigh Creek Magnesia Project
sale is scheduled to complete on 15 January 2020 but
may be extended by the buyer by 3 months at a time
(maximum of two extensions) until 15 July 2020 at the
latest by the payment of $250,000 per extension. The
sale of the Leigh Creek Magnesia Project and Sugarloaf
Farmland is consistent with Archer’s strategy of selling
non-core assets to pay for Company activities.
In January 2019, Dr Martin Fuechsle was appointed to the
position of Manager, Quantum Technology. Dr Fuechsle
brings more than 10 years’ experience in successfully
designing, fabricating, and integrating quantum devices.
Between 2011 and 2014, he held a research position at
the Centre for Quantum Computation & Communication
Technology (CQC2T) at the UNSW Sydney, which is
headed by Prof Michelle Simmons, the 2018 Australian of
the Year. There he built quantum computing devices and
the single-atom transistor.
ACCESS TO FUNDING
The Company does not receive any income
from its operating business and the Company is
reliant on capital raisings and the sale of non-core
assets to fund its future operations. Therefore,
the Company’s ability to continue to develop
its Advanced Materials and Mineral Exploration
businesses is contingent upon the Company’s
ability to source timely access to additional
funding as it is required.
GOVERNMENT APPROVALS
In December 2017 the Company was granted
a mining lease application for the Campoona
graphite project. The mining lease does not permit
the Company to commence mining operations.
The Company is only permitted to commence
mining once it has lodged a Program for
Environmental Protection and Rehabilitation (PEPR)
and the PEPR is approved by the South Australian
Government. Under the terms of the mining lease,
the PEPR must be submitted and approved before
the end of 2019. The Company has lodged a
request with the South Australian Government to
extend the due date of the PEPR to December
2020. The South Australian Government has not
yet granted the extension, but the Company has
no reason to believe that the extensions will not
be granted.
DIVIDENDS
KEY AGREEMENTS
No dividends were declared or paid during the financial
year. No recommendation for payment of dividends has
been made to the date of this report.
FACTORS AND RISKS
AFFECTING FUTURE
PERFORMANCE
Development and commercialisation of the
quantum technology chip intellectual property
and associated patents is dependent on the
Licence Agreement with the University of
Sydney remaining in-place. Termination of the
Licence Agreement would mean that Archer
would be unable to access the intellectual
property and patents required to commercialise
the associated quantum technology. As at the
date of this document, the Company is not
aware of any grounds that the University of
Sydney may have to terminate the Licence
Agreement.
The following describes some of the external factors and
business risks that could have a material impact on the
Company’s ability to deliver its strategy:
The development of the biosensor technology is
conducted in conjunction with the University of
Adelaide as part of a Collaboration Agreement
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/ Operating and Financial Review
under the Australian Research Council Program
for Industrial Research Transformation Hubs.
Termination of the Collaboration Agreement
would mean that Archer would be unable to
immediately access institutional level scientific
and technical resources required to develop the
associated biosensor technology. As at the date
of this document, the Company is not aware of
any grounds that the University of Adelaide may
have to terminate the Collaboration Agreement.
COMMODITY OFFTAKE AGREEMENTS
The development of the Campoona Graphite
resource is dependent on Archer securing long
term offtake agreements with key customers.
Archer has not yet entered into any offtake
agreements.
COMMODITY DEMAND AND RISK
The Company is exposed to adverse global demand for
different commodities and/or adverse commodity price
movements. This could affect the Company’s ability to
raise funds to advance its projects.
SALE OF LEIGH CREEK MAGNESIA PROJECT
Under the terms of the Leigh Creek Magnesia Project sale and
purchase agreement, the buyer may extend the completion date
up to 15 July 2020. Also, if the buyer lists on a stock exchange
before 31 December 2019, then the buyer may elect to issue
shares instead of cash to Archer. Any such shares may be
subject to escrow which will affect Archer’s ability to sell the
shares to raise funds. The extension of the completion date and/
or issue of shares subject to escrow may mean that Archer will
be required to raise additional funds.
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/ Advanced Materials
ADVANCED MATERIALS
Materials are the tangible physical basis of all technology.
Archer is developing and integrating materials to address
complex global challenges in quantum technology,
human health, and reliable energy. The Company is
developing advanced materials to build disruptive
technology, and these materials include carbon-based
qubits for quantum computing, graphene enhanced
biosensors, and graphitic battery anodes. Archer’s
approach to materials development is enabling a
new wave of converging technologies, each with the
potential to positively impact global industries spanning
electronics, medicine, and energy.
At Archer, we know that this can only be achieved
by applying our values of excellence, creativity, and
collaboration, in everything we aim to achieve.
Annual Report 2019 / Archer Exploration Limited
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/ Quantum Technology
THE DEVELOPMENT OF ARCHER’S
12CQ QUBIT PROCESSOR CHIP
COULD PROVIDE A POTENTIAL
SOLUTION TO ROOM-
TEMPERATURE QUANTUM
COMPUTING AND ENABLE DIRECT
CONSUMER OWNERSHIP OF
QUANTUM COMPUTING POWERED
TECHNOLOGY.
Materials that enable quantum information processing could
transform all industries dependent on computational power
and are at the heart of some of the biggest challenges
facing quantum computing.
Quantum computing represents the next generation of
high-performance computing. The development of quantum
computers is envisioned to impact all industries reliant
on computational power, including financial modelling,
pharmaceutical drug design, cryptography, digital currencies,
and artificial intelligence. On 23 May 2018 Archer and the
University of Sydney agreed to exclusively negotiate terms for
an exclusive licence to intellectual property (IP) in the form of
patents, that would allow Archer to develop and commercialise
quantum computing technology. The subsequent negotiations
facilitated the filing of an international patent application by
the University of Sydney under the Patent Cooperation Treaty
in the jurisdictions of Australia, European Union, China, Japan,
Hong Kong, South Korea, and the United States of America.
Archer CEO, Dr Mohammad Choucair, is the co-inventor of
the IP. The first written opinion of the international searching
authority found that all 16 claims in the PCT were novel and
inventive, and the invention can be made by, or used in,
industry, respectively. This was the best possible result for the
development at that time.
Less than 6 months later, on 15 August 2018, key licence
terms for the exclusive licence were finalised with the
University of Sydney, and shortly after on 12 December
2018, Archer obtained an exclusive licence for the
breakthrough quantum computing IP. In January 2019,
pioneering quantum physicist Dr Martin Fuechsle joined the
Archer team as Quantum Technology Manager to lead the
technology development aspect of commercialisation of
12CQ and more broadly the Quantum Technology vertical.
Dr Martin Fuechsle brings over 10 years’ experience in building
quantum computing devices and technology. Dr Fuechsle holds
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Annual Report 2019 / Archer Exploration Limited
a PhD in Physics, 2011 (UNSW), BSc and MA in Physics at the
University of Regensburg, Germany. He is the Australian Institute
of Physics Bragg Gold Medallist for the most outstanding
Physics PhD in Australia (2013), and an Honorary Affiliate of
the University of Sydney, and a Former Research Fellow at
CQC2T at UNSW (which is led by 2018 Australian of the Year
Prof. Michelle Simmons). He is a former Researcher, Rio Tinto VK
Technologies, at the University of Western Australia and was a
Member of the Australian delegation at the Lindau Meeting of
Nobel Laureates (2008). His work is highly cited ranking in the
top 1% in the field of quantum technology and is an inventor on a
number of patents detailing quantum computing technology.
Less than a year after negotiations began for the exclusive licence
with the University of Sydney, on 3 April 2019, Archer commenced
the 12CQ Project with the aim of building a carbon-based
quantum computing device (chip) capable of room-temperature
quantum information processing that would form the future
basis of a practical quantum computer. The 12CQ qubit processor
chip prototypes are being built at the Research and Prototype
Foundry within the world-class $150 million purpose-built Sydney
Nanoscience Hub facility at the University of Sydney. A Facilities
Access Agreement with the University of Sydney provides Archer
access to a number of dedicated instruments and cleanroom
facilities at the Research & Prototype Foundry.
The cleanrooms at the Research and Prototype Foundry are
classified at ISO Class 5 level, defined by a tightly regulated
environment (temperature, humidity, and light) to provide an
environment with extremely low levels of particulates.
The cleanrooms mitigate the risk of the external
environment destroying the fabricated devices (e.g. dust
particles can be thousands of times bigger than the circuitry
and can damage the components). The cleanrooms are
comparable to production-level cleanrooms found in major
international semiconductor chip building foundries.
On 26 June 2019, the first stage assembly of the 12CQ
qubit processor components had been completed (Fig.
Fig. X. First-stage assembled components of the 12CQ chip.
X). The componentry assembled and shown in Fig. X. form
a prototype chip’s first-stages of basic device architecture
(pattern assembly) intended to allow for the quantum
computing functions of the 12CQ carbon-based qubits once
they are incorporated. This pattern assembly is an initial step
towards fabricating a working qubit prototype representing a
minimum viable product: a commercially-ready chip that can
practically address and validate solutions to room-temperature
quantum computing. The entire 12CQ qubit processor chip is
about the size of the width of a few human hairs and designed
to accommodate Archer’s nanosized qubits, that are similar in
size to the main features of classical computer chips.
The technical development at the heart of 12CQ is a world-first.
Archer intends to continue technology de-risking value-added
development of the 12CQ qubit processor chip by completing the
next stages of component assembly towards a proof-of-concept
prototype chip at the Research and Prototype Foundry at the
University of Sydney. The prototype chip validation is required
to establish a minimum viable product solution that can address
industry problems of room-temperature quantum computing
operation and ready integration into modern electronics.
During this time, Archer will seek to establish commercial
partnerships with highly resourced and skilled organisations
including software developers and hardware manufacturers,
that could allow the opportunity for product scale,
knowledge and technology transfer, and product integration
and distribution channels.
Given the established years of research and results
supporting this IP, it has the potential, over a short time
frame, to allow Archer to develop and commercialise a
world first, practical quantum computing chip (device)
and we are looking forward to our involvement in the
development and commercialisation of this potential
breakthrough in quantum computing.
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/ Quantum Technology
A WORLD-FIRST:
ROOM TEMPERATURE
QUBIT PROCESSOR
CHIP
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/ Quantum Technology
Quantum computers consist of a core qubit
processor (chip) made from materials capable of
processing quantum information to solve complex
calculations. The critical componentry, the qubits,
inherently rely on advanced materials to allow
for successful operation. One of the biggest
challenges to wide-spread consumer use involves
keeping the qubit stable at room-temperature
while integrating into existing electronic
componentry.
12CQ aims to develop a room-temperature operation
qubit processor chip that may overcome both the
limitations of sub-zero operating temperatures and
electronic device integration for qubits. This has
the potential to reduce the commercial barriers to
quantum computing making it globally accessible
and catalysing a multibillion-dollar industry. The
chip integration could allow for quantum computing
onboard technologies consumed globally that would
enable the widespread use of Artificial Intelligence,
Digital Currencies, and Transportation, that may
never be possible with current impractical quantum
computing technology.
The technical discovery at the heart of 12CQ’s core IP
has been published in the prestigious peer-reviewed
scientific journal Nature Communications (www.
nature.com/articles/ncomms12232) and the research
was conducted between the University of Sydney
(Australia) and EPFL (Switzerland), and validated at
The Freie University of Berlin (Germany). The qubit
processor comprises advanced carbon material
components critical for its function, which are
available in the inventory of Archer’s wholly owned
subsidiary, Carbon Allotropes.
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/ Human Health
ARCHER IS DEVELOPING
MATERIALS
TECHNOLOGY FOR RAPID
DETECTION OF COMPLEX
BIOMOLECULES
CONNECTED TO THE
HUMAN IMMUNE
SYSTEM
Future technologies incorporating complex
biosensing devices will need to quickly identify
disease and infection. Archer is developing
materials technology that can be integrated
as functional elements for rapid detection of
complex biological molecules connected to the
human immune system. To do this, Archer is
engaged in a collaboration agreement with the
Australian Research Council Graphene Enabled
Industry Transformation Research Hub (ARC
Graphene Hub) at the University of Adelaide
(ASX Announcement 20 March 2018) and has
a material transfer agreement in place with a
leading German Biotech (ASX Announcement
27 September 2018).
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/ Human Health
During the year, Archer provisionally patented a
potential solution to printable biosensors capable
of multiplexing (ASX Announcement 19 February
2019). Archer is the sole applicant of the
provisional patent, maintaining 100% ownership
of the biosensor technology intellectual property
(IP). Archer has until 15 February 2020 to
consider maturing the application to a full patent.
To mature the provisional patent, support of the
claims in Archer’s provisional patent requires
detailed scientific protocols and evidence
of the technical viability of the biosensor
technology. This means that the exclusive right
to commercially exploit the IP is fundamentally
dependent on the successful development of the
biosensor technology.
Key milestones were met in the development of
the biosensor technology (ASX Announcement
23 July, 30 July, and 15 April 2019). Ink
formulations comprised primarily of graphene,
then human antibody immunoglobulin G (IgG),
as the active constituents were successfully
prepared and printed using proprietary methods.
Printing techniques were employed using a
state-of-art inkjet printer for the preparation of
basic patterns. The IgG inks were printed on
resin-coated paper and a number of graphene-
based electrodes and were able to withstand
the chemical and physical processes in the
formulation, printing, and post-printing steps. The
electrodes were characterised and confirmed
for adequate biosensor function by a range of
techniques at the ARC Graphene Hub.
Archer is in discussions with the German
Biotech to cooperatively continue the
development of the biosensor technology by
establishing legally binding long-term material
agreements. Collaboration with the ARC
Graphene Hub will continue, with a focus on
optimising ink formulations and their digitised
processing methods (e.g. synthesis, printing,
post printing treatments), and identifying
transduction methods, bioreceptors, analytes,
coupling and assay reagents for the proper
function of the biosensor technology to provide
strong support for the claims and embodiments
in the provisional patent.
Annual Report 2019 / Archer Exploration Limited
17
/ Reliable Energy
MATERIALS THAT HAVE
THE ABILITY TO CONTROL
THE ACCUMULATION
OF HEAT, LIGHT AND
ELECTRICITY REVERSIBLY
AND EFFICIENTLY
HAVE WIDE-REACHING
APPLICATIONS IN ENERGY
STORAGE AND USE.
Energy technologies are an integral part of society. The ability to control the accumulation of electricity
efficiently and reversibly has wide-reaching applications in energy storage and use. At Archer, we are
developing materials for a future circular economy based on alternatives to fossil fuels, like lithium-ion
batteries.
Spherical graphite materials are a high-value materials
entry point for the Li-ion battery. Li-ion batteries consist
of a group of batteries which operate with graphite in
the anode. Improvements in the anode are based on
using graphite with high structural quality and purity, and
an appropriate particle size and optimal morphology for
effective lithium-ion intercalation chemistry. Materials
processing can lead to graphite morphologies that
contribute to positive performance trade-offs, with typical
examples including spherical graphite.
Archer is engaged in a Collaboration Agreement and
Research Service Agreement with the University of New
South Wales (“UNSW”) to focus on carbon-based energy
storage technology (ASX Announcement 18 April 2018).
During the year, Archer and UNSW signed an agreement
extending the term of the Research Service Agreement to
January 2021. The ongoing work with UNSW is focused
on addressing the trade-off between cost and battery
performance using Archer’s Campoona graphite at the
anode of lithium-ion batteries and formulating, building,
and testing full-cell batteries.
Graphite from Campoona is known to be structurally
near perfect down to the atom-scale (ASX
Announcement 6 April 2018), and the intrinsic physical
18
Annual Report 2019 / Archer Exploration Limited
/ Reliable Energy
properties of Campoona graphite confirmed suitability
for use in lithium-ion batteries. On 21 August 2018, it
was announced that 99%+ and 95% natural Campoona
flake graphite was used to produce commercially
scalable full-cell configuration Li-ion batteries at the
University of New South Wales.
Archer’s Campoona graphite materials were used at the
anode, with commercially equivalent cathode materials
and chemistries used that are commonly found in
consumer electronics and electric vehicles. The cathode
materials used to construct the full-cells were lithium-iron
phosphate (LFP), lithium-cobalt oxide (LCO), and lithium-
nickel-manganese-cobalt (NMC), and batteries were
prepared as coin-cells i.e. in a small-sized compact battery
construction resembling a coin.
Key battery performance parameters, including specific
capacity and cycle stability, were in-line with industry
state-of-art values, owing in-part to the exceptional
structural and chemical properties of Archer’s Campoona
graphite.
On 12 March 2019, Archer announced the successful
conversion of 95% and 99%+ natural flake graphite
from Campoona into high value spherical graphite using
proprietary technology developed by Archer’s Japanese
Partner. The high-value graphite conversion to a spherical
graphite product was performed by small-scale (kilogram
quantity) mechanical milling processes that led to products
with a particle size centred around 15-microns with a narrow
size distribution (i.e. D90/10 ratio of less than 3); morphology
properties which meet a key established market requirement
for use in lithium-ion battery applications.
Optimal morphologies (such as spherical graphite) for
lithium-ion batteries are being tested in commercially
relevant battery types to address a prerequisite market
requirement of consistency in technical specifications for
large-volume production materials. Testing and integration
of high-value add graphitic materials continues, to ensure
that the Company can successfully add value to the
Campoona graphite resource, and that the project can
be successfully developed to return maximum benefit to
shareholders and the community.
Annual Report 2019 / Archer Exploration Limited
19
/ Carbon Allotropes
BRINGING
CARBON
TOGETHER
The acquisition of Carbon Allotropes (www.
carbonallotropes.com) in late 2017 was in line
with Archer’s goal of acquiring businesses
that complement existing operations, deliver
scale, and are of immediate benefit to Archer
shareholders. Carbon Allotropes fit all of these
criteria, as well as spearheading Archer’s
global reach by expanding real-world validation
of the Company’s materials technology
with institutes and companies in Australia,
Asia, the US, and EU. Carbon Allotropes is
an online carbon materials marketplace,
including graphene, graphite, nanodiamonds,
fullerenes and other carbon allotropes
products. The acquisition brought to Archer
world-class expertise, a diverse advanced
materials inventory, and access to over $300
million in product research and development
infrastructure. This has allowed the Company
to rapidly identify, evaluate and respond
to market opportunities for acquisitions,
partnerships, and growth, by applying end-to-
end materials centric solutions that address
complex challenges in computing, healthcare,
and electricity consistent with Archer’s strategy.
20
Annual Report 2019 / Archer Exploration Limited
/ Mineral Exploration
MINERAL EXPLORATION
Early in the materials lifecycle there is the need to
source and secure high-volume and high-value
feedstock minerals and commodities. We’re exploring
Australia’s natural resources to source the building
blocks of modern technology. Our projects span critical
minerals like graphite, copper, cobalt, manganese,
tungsten, and more, as part of our broader mineral
exploration strategy to capture valuable commodities
for downstream energy and technology markets.
At Archer, we explore for minerals that are
categorised by many world economies as ‘critical’
raw materials that are important to their long-term
economic growth and supply-chain security. In this
report, we also provide important information in
the context of our exploration activity.
GRAPHITE
Archer’s Eyre Peninsula Graphite Project is located
near the township of Cleve which is approximately
120km south-east of Whyalla, South Australia.
The larger Eyre Peninsula Graphite Project (EPGP)
comprises Campoona Shaft, Campoona Central
and Wilclo South, Waddikee (including Lacroma,
Wilclo, Wilclo South and Cut Snake) and Sugarloaf
projects. The EPGP has a global Mineral Resource
of 8.55 million tonnes at 9.0% TGC (5% TGC lower
cut-off), refer to the “Mineral Resources” section of
this document for a detailed description of all of the
Company’s mineral resources by project and mineral
resource category.
The Company’s plan is to mine the Campoona Shaft
deposit by open-pit method using conventional
truck and excavator operations. Mining trucks (most
likely 40t class) will transport material from the pit to
the run-of-mine (ROM) pad and waste rock storage
facilities (WRSF) adjacent to the Campoona Shaft
mine. The mine will most likely commence as free
dig operations.
Mineral processing will be carried out at the
centralised on-site Sugarloaf Graphite Processing
Facility, located 22km by road from Campoona Shaft
(see Sale of Sugarloaf Land). The graphite mineral
processing will comprise crushing, blunging, rougher
flotation, concentrate milling, cleaner/recleaner
flotation and chemical leaching.
In December 2017, Archer was granted a mining
lease (Campoona Shaft) and two associated
miscellaneous purposes licences for the EPGP.
The mining lease allows, subject to the grant of all
remaining environmental approvals, the mining of
graphite ore at Campoona Shaft and the processing
of approximately 10,000 tonnes per annum (tpa)
of ultra-high-quality graphite and up to 100 tpa of
graphene at the Sugarloaf Graphite Processing
Facility.
Although the mining lease and two miscellaneous
purpose licences have been granted, activities
on-site cannot commence until a Program for
Environment Protection and Rehabilitation (PEPR) has
been approved by the South Australian Government.
Since the grant of the mining lease, the Company
has undertaken successful testing of the graphite
in lithium ion batteries and the making and testing
of spherical graphite (refer to the “Reliable Energy”
section of this document for more information).
Due to the success of this work, Archer plans to
Annual Report 2019 / Archer Exploration Limited
21
/ Mineral Exploration
investigate high-value added graphite product processes
(spherical graphite coating; and graphite purification)
and other market opportunities (end-use integration) to
ensure that the Company can successfully add value
to Campoona, and that the project can be successfully
developed to return maximum benefit to shareholders
and the community.
In order to investigate the graphite processing value
add opportunities, Archer has drafted a request to a
further 12-month extension to submit a proposed PEPR
to the South Australian Government Department of
Energy and Mining. An extension to 4 December 2020
would allow Archer to pursue downstream partnership
and development opportunities with lithium-ion battery
manufacturers and end-users prior to the completion
of a PEPR. The Company has not yet received an
extension to the PEPR submission date.
COPPER
Archer has previously reported successful copper
exploration on the Company’s Eyre Peninsula and
North Burra project areas. Both areas are prospective
for different styles of copper mineralisation with Emu
Plain (Eyre Peninsula) more likely to be associated with
iron-oxide-copper-gold (IOCG) style mineralisation and
the larger Blue Hill (North Burra) prospect displaying
characteristics of a large intrusive style mineralising
system. The Company completed a reverse circulation
drill program at Blue Hills in early 2019, there was no
exploration at Emu Plain during the 2018/19 financial
year.
The Blue Hills Copper-Gold Prospect is a large district
scale copper anomaly covering an area of 25km2,
located approximately 240km north of Adelaide,
South Australia. At Blue Hills, Archer has discovered
three large scale gold and copper in soil anomalies
(Hood, Hawkeye and Katniss). The large scale of these
anomalies is shown in Fig. 1. which compares their size
to the size of the Melbourne CBD.
In January / February 2019 Archer completed a
twelve hole reverse circulation (RC) drill program, a
total of approximately 1,800 drill metres, at the Blue
Hills Copper-Gold Project. The drilling was targeting
large coincident copper-gold in soils anomalies
at Hood, Hawkeye and Katniss prospects and an
electromagnetic signature proximal to a modelled
intrusion.
22
Annual Report 2019 / Archer Exploration Limited
Fig. 1. Blue Hills gold and copper in soil anomaly. The
area representing the Melbourne CBD is overlaid for size
comparison, with the respective bounds of the CBD’s
Spencer Street and Spring Street shown.
The first drill results from Hood were reported in April
2019, with Archer reporting that drilling appeared to
confirm the conceptual model of Hood as an intrusive
style copper-gold mineralised system. The holes drilled
at Hood confirmed that the rocks are different to the
surrounding geology and that Hood has been subjected
to a large-scale alteration event. The drill results also
showed that the alteration at Hood is consistent with the
type of alteration associated with intrusive style copper-
gold deposits.
In 2017, Archer drilled some shallow RC holes below a
shallow historic mine near Hood. The reverse circulation
drill holes drilled by Archer in 2017 and those drilled
in 2019 were targeting the areas of coincident high
surface mineralisation and associated electromagnetic
conductors. The holes that were drilled to relatively
shallow depths at Hood in 2017 and 2019 (RC holes
HDRC19-01, HDRC19-02, HDRC19-03, YGRC19-01 and
HDRC19-04) appear to have gone over the top of the
target and the drill results have been interpreted by
Archer to mean that the mineralisation encountered in
some of these holes may represent the edge of a stronger
mineralised zone at depth and to the south (Fig. 2).
/ Mineral Exploration
Fig 2. Conceptual model for the alteration system
observed in RC drilling at Hood prospect.
The drill results from Hawkeye and Katniss were higher in
gold and lower in copper grade than at Hood which may
indicate fractionation across the district, over an area of
approximately 8km2, implying a different intrusive source at
Katniss and Hawkeye than the mineralisation at Hood. This
widespread fractionation is most likely the reason for Katniss
and Hawkeye assay results showing higher gold values than
at Hood.
The higher gold values at Katniss and Hawkeye could
also be the result of these prospects being further from
the intrusion that Hood or result from the mineralisation
at Hawkeye and Katniss being derived from a separate
intrusion. Several intrusions have been modelled in the area.
In addition to the results from the RC drill holes, Archer
discovered the presence of albitite (a sodium rich rock) as
float in the Hood area and also in situ between Hawkeye
and Katniss. The vein nature of this material could be
a “high level” type of rock/mineral, which exists above
the actual granite intrusion. The presence of albitite also
supports the intrusive model proposed for the large-scale
mineralising system at Blue Hills.
The drilling at Blue Hills also showed the presence of
pathfinder minerals such as bismuth, tellurium and arsenic
(e.g. in the form of pyrite) associated with the copper, gold
and molybdenum mineralisation. Whilst relatively low in
concentration, the presence of these pathfinder minerals
with the gold mineralisation and the identification of minor
intrusive material (e.g. albitite) supports Archer’s intrusive
style geological model.
In summary, the 2017 and 2019 drilling results at Blue Hills
supports the concept that the exposed mineralisation is
proximal in nature to an inferred intrusion or intrusions
located at depth immediately east of Hood, Hawkeye
and Katniss. The possible presence of these buried
intrusions is important as the intrusions are most likely
to be the main source of the mineralisation. In addition
to the modelled intrusives, the review identified several
conductors that run parallel to regional west-northwest
and north-northeast structural trends. Confirmation of the
interpreted intrusions would require further drilling.
Emu Plain is located near Cleve on South Australia’s Eyre
Peninsula. The Emu Plain Copper Project is focussed on
the discovery of copper mineralisation proximal to the
historic Emu Plain copper mine that was first developed in
the early 1900s and last re-developed in the 1950s.
Annual Report 2019 / Archer Exploration Limited
23
/ Mineral Exploration
Previous RC drilling by Archer in the vicinity of the historic
shaft, intersected copper mineralisation with the best
results being: 37m @ 0.13% Cu and 4.2g/t Ag from 0 to
37m in EPRC11_001 (EOH); and 10m @ 0.50% Cu from 27
to 38m in EPRC11_003 (including 1m@ 2.18% Cu and 6g/t
Ag from 29m).
Whilst all three RC holes drilled by Archer intersected
broad zones of highly anomalous copper mineralisation,
it is believed that the holes were drilled in the footwall,
rather than into the body of the main copper lode.
The scale and intensity of alteration suggests that the
drilling intersected part of a much larger alteration
and mineralisation system. The size and nature of the
mineralised system is unknown at this time.
No exploration was undertaken at Emu Plain during the
2018/19 financial year.
COBALT
The Company’s North Broken Hill Project is the focus of
Archer’s cobalt exploration efforts. The North Broken Hill
Project is located approximately 20km north of Broken
Hill, New South Wales.
The North Broken Hill Project area has had
considerable historic exploration by other explorers
which was focussed on the discovery of Broken Hill
style lead-zinc targets using the nearby giant Broken
Hill deposit as a model. Virtually no exploration has
been undertaken over the greater Wilyama Complex
rocks for other deposit styles despite the existence of
hundreds of small prospects and workings for copper
and gold. In addition, no significant exploration had
been undertaken for cobalt despite the occurrence of
cobalt at Cobalt Blue Ltd’s nearby Thackaringa Cobalt
Project Pyrite Hill, Big Hill and Railway deposits. The
Thackaringa Cobalt Project is hosted in the Himalaya
Formation which extends north from Thackaringa into
Archer’s tenements and has not been systematically
explored for cobalt.
Archer reviewed the existing databases for the region for
geology and mineralisation, and noted the occurrences
of many small workings for copper and/or gold, often
grouped along apparent structures for considerable
strike lengths. The North Broken Hill Project covers an
area >400km2 and since the grant of the tenements
Archer has been systematically evaluating and sampling
known mineral occurrences with the objective of defining
24
Annual Report 2019 / Archer Exploration Limited
prospects with suitable drill targets for copper, cobalt and
gold. The project commenced in mid-2017 and is at an
early stage. However, significant progress has been made
with some early encouraging results.
Based on geochemical results to date, Archer has
identified eight prospects, identified as either cobalt
or copper prospective. These are Yancowinna
(cobalt), Himalaya (cobalt), Golden King West (cobalt),
Purnamoota (cobalt), Highway (cobalt), Salty Hill
(cobalt), Yancowinna (copper) and Purnamoota (copper).
Archer identified a total of 135 sites related to copper
(Cu) and cobalt (Co) potential from open file data and
unrelated to silver-lead-zinc occurrences. To date
approximately 90% of these occurrences have been
assessed by reconnaissance site visits and rock chip
sampling. In excess of 1,000 samples have been
submitted for analysis.
Archers work to date has identified two different styles of
cobalt mineralisation:
• Himalaya style where cobalt is hosted within the
Himalaya Formation and associated with pyrite
mineralisation; and
• Great Eastern /Sisters style, cobalt associated with
iron formations and often with associated copper
mineralisation.
The North Broken Hill Project is at an early stage and
all prospects defined to date require further exploration
assessment before their potential can be properly
evaluated.
Whilst the North Broken Hill Project has been the focus of
the Company’s cobalt exploration efforts, the Company
has also discovered cobalt at the Yarcowie Project,
located 20km east of the Tesla 100MW battery array at
Jamestown, South Australia.
Archer has mapped the cobalt mineralisation
at Yarcowie over a length of 1km and a width
of approximately 500 metres. Much of the area
prospective for cobalt is under cover and the Company
has only been able to collect samples from those
areas where rock outcome has been identified. Rock
chips have been collected from the rock outcrop with
high grades ranging from 0.36% (3,600ppm) to 0.94%
(9,400ppm) cobalt.
/ Mineral Exploration
The vein sets that host the manganese and cobalt
mineralisation were originally thought to be conformable
to the geology (i.e. orientated in the same direction),
however the discovery of cobalt over a larger area
suggests that the mineralisation is in fact at right
angles to the stratigraphy. This feature will require
further exploration to better understand the structure,
topographical features and geology that controls the
cobalt mineralisation.
and it is uncertain if further exploration will result in the
estimation of a Mineral Resource.
Previous test work undertaken by Kemetco, on behalf of
Archer, showed that the Jamieson Tank manganese was
capable of making an electrolytic manganese dioxide
(EMD) product with a manganese content of > 92% which
is the standard required for alkaline and lithium ion
batteries.
The prolonged decrease in the cobalt price during the
past 12 months has led to Archer focussing on the Blue
Hills Copper-Gold Project rather than cobalt exploration
at Yarcowie and North Broken Hill. The Yarcowie Project
remains prospective for cobalt and Archer may revisit the
area when cobalt prices increase.
TIN AND TUNGSTEN
Whilst the Company’s main focus at the North Broken Hill
Project has been on exploration for cobalt and copper
mineralisation, a review of historical information led to the
identification of scheelite hosted tungsten mineralisation
within the tenement area. The tungsten mineralisation is
stratigraphically hosted, and it is thought that the scheelite
was partially remobilised into fold hinges and retrograde
calc-silicate rocks in the deformation history.
The known outcrop has been mapped extensively over
Archer’s tenement area and the mineralised horizon
likely extends under cover. The Company intends to
undertake further exploration for tin and tungsten
during 2019/20.
MANGANESE
The Company has two early stage exploration manganese
projects, the Ketchowla Cobalt-Manganese Project and the
Jamieson Tank Manganese Project. Ketchowla is located
within the area of the North Burra Project tenements and
is approximately 45km north of Burra, South Australia.
Jamieson Tank is located on South Australia’s Eyre Peninsula
and is within 2km of the proposed Sugarloaf Graphite
Processing Facility, near the township of Cleve.
In May 2018, Archer announced a maiden exploration
target of 15Mt - 25Mt at a grade of 8 - 12% manganese for
the Jamieson Tank Manganese Project. Investors should
be aware that the potential quantity and grade of the
Exploration Target is conceptual in nature, there has been
insufficient exploration to estimate a Mineral Resource
As a result of the positive results from the Kemetco work,
Archer has commissioned additional test work, the results
of which are not yet available. Apart from this additional
test work, no exploration was undertaken at Ketchowla or
Jamieson Tank during 2019/20.
SALE OF MAGNESIA PROJECT
Archer acquired the Leigh Creek Magnesia Project in
2011 when the Company was granted two exploration
licences that covered the Leigh Creek Magnesia
deposits. The deposits extend for over 20km, are
mostly outcropping and have been mapped and
explored since the mid-1900s. In the late 1990’s,
Magnesium International Ltd (formerly Pima Mining Ltd)
sought to develop a magnesium metal processing plant
at Port Pirie using magnesite feedstock from the Leigh
Creek Magnesia Project. Magnesium International were
unable to fund development of the magnesium metal
project and subsequently relinquished all tenements
covering the Leigh Creek Magnesia deposits.
The manufacture of magnesium metal from magnesite
ore is a very capital intensive and power-hungry
process. Consequently, Archer sought to identify
other low capital costs methods for the processing
of the magnesite ore. The Company identified the
manufacture of caustic calcined magnesia (CCM) and
dead burn magnesia (DBM) as possible processing
options for the magnesite ore. Both CCM and DBM
can be made by heating the magnesite in a kiln to
approximately 750 Celsius for CCM and 1500 Celsius
for DBM.
The Company undertook a bulk trial at the Whyalla
Steelworks where approximately 300 tonnes of magnesite
ore was heated in a kiln to make CCM and DBM. Whilst
the trial was successful, the Company was unable to
secure a long-term deal to access the kiln and the
decision was made to sell the Leigh Creek Magnesia
Project.
Annual Report 2019 / Archer Exploration Limited
25
/ Mineral Exploration
On 2 July 2018, Archer executed legally binding
agreements for the sale of the Leigh Creek Magnesia
Project for $2.0 million. Completion of the sale and
purchase (Completion) was conditional on the satisfaction
or waiver of the following conditions precedent (each a
Condition):
• Buyer conducting due diligence and the results of those
enquiries being to the satisfaction of the buyer.
the sale and purchase of the non-graphite assets were
terminated and Archer retained 100% ownership of the
non-graphite assets.
The Company remains confident in the potential of
the non-graphite assets. Since the termination of the
agreements with Ballista, the Company has explored the
non-graphite assets, including:
• Declaration of a maiden exploration target for the Eyre
• Archer shareholder approval to the sale of the Leigh
Peninsula High Purity Alumina Project.
Creek Magnesia Project.
• Completion a reverse circulation drill program at Blue
• The consent (if required) of counterparties under
Hills.
agreements affecting the Tenements.
The last of the Conditions was satisfied in September
2018 and the sale and purchase agreement became
unconditional at that time. Completion is scheduled to
take place by 15 January 2020 unless extended by the
buyer. The buyer may extend Completion by three months
(i.e. to 15 April 2020) by paying the amount of $250,000
to Archer and the buyer may also extend for a further
three months (i.e. to 15 July 2020) by paying an additional
$250,000 (total of $500,000) to Archer. The Company will
receive $1.75 million at Completion less any amounts paid
by buyer to extend the date of Completion (see “Factors
Affecting Future Performance” Section of this report).
IPO OF NON-GRAPHITE PROJECTS
In July 2018, the Company announced its intention to
separate the Advanced Materials and Mineral Exploration
business functions by way of a spin out and initial public
offering (IPO) of the non-graphite assets. Under this
proposal, the graphite project and Advanced Materials
business would stay with Archer and the other non-
graphite assets would be sold to a new company, Ballista
Resources Ltd (Ballista), which would list on the ASX
before the end of 2018.
Ballista was to complete an IPO and then list on
ASX. Upon ASX listing of Ballista, the Company was
to receive 48 million Ballista shares. As a result of
a number of external factors including poor market
conditions, Ballista was unable to complete the IPO
and ASX listing in 2018. The relevant agreements for
• Announcement of an updated assessment of the Bartels
Gold Project.
• Further metallurgical test work at the Jamieson Tank
Manganese Project.
• Undertaking of tungsten focussed exploration at North
Broken Hill Project.
SALE OF SUGARLOAF LAND
During November 2018, Archer announced the sale of
its Sugarloaf farmland for $1.35 million. Under the terms
of the Land Sale Agreement, Archer sold the entirety of
the Sugarloaf farmland but retains an option to buy back
approximately 30% of the Sugarloaf farmland, which will
be required for the construction of the Sugarloaf Graphite
Processing Facility. The option to buy back part of the
land may be exercised by Archer any time during the next
20 years.
Archer purchased the farmland in April 2013 and at the
time of the acquisition, the final size of the Sugarloaf
Graphite Processing Facility and associated tailings
dam was unknown. Since 2013, Archer has finalised
the design and areal extent of the Sugarloaf Graphite
Processing Facility, and as a result, the Company has
made the decision to sell the Sugarloaf farmland.
Settlement of the sale and purchase was completed in
July 2019 with Archer receiving the $1.35 million sale
proceeds at that time.
26
Annual Report 2019 / Archer Exploration Limited
/ Mineral Exploration
MINERAL RESOURCES
EYRE PENINSULA GRAPHITE PROJECT
JORC 2012 Compliant
Project
Category
Cut-off grade
(% Cg)
Tonnes
(Mt)
Graphitic
Carbon
%
Contained
Graphite
(t)
Campoona Shaft
Central
Campoona
Wilclo South
Total Resource
Measured
Indicated
Inferred
Indicated
Inferred
Inferred
>5.0
>5.0
>5.0
>5.0
>5.0
>5.0
LEIGH CREEK MAGNESIA PROJECT
JORC 2012 Compliant
Project
Category
Mount Hutton Central
Measured
Indicated
Total Resource
JORC 2004 Compliant
Project
Category
Mount Hutton South
Mount Playfair
Pug Hill
Termination Hill
Witchelina
Total Resource
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
Measured
Indicated
Inferred
Measured
Indicated
Inferred
0.32
0.78
0.55
0.22
0.30
6.38
8.55
Tonnes
(kt)
12,059
5,460
17,523
Tonnes
(Mt)
72
53
21
23
10
10
4
5
20
23.7
94
99
434.7
12.7
8.2
8.5
12.3
10.3
8.8
9.0
40,600
64,000
46,800
27,100
30,900
561,400
770,800
MgO
(%)
40.1
40.2
40.3
MgO
(%)
42.9
42.9
42.5
42.5
42.7
42.7
42.8
42.8
42.8
40.0
40.0
40.0
41.4
Annual Report 2019 / Archer Exploration Limited
27
/ Mineral Exploration
COMPETENT PERSON STATEMENT
• prepared by Ms Sharon Sylvester who at the time
The Mineral Resources Statement as a whole has been
approved by Wade Bollenhagen who consents to its
inclusion in the Annual Report in the form and context in
which it appears.
The exploration results and exploration targets reported
herein, insofar as they relate to mineralisation, are based
on information compiled by Mr Wade Bollenhagen,
Exploration Manager of Archer Exploration Limited. Mr
Bollenhagen is a Member of the Australasian Institute of
Mining and Metallurgy who has more than twenty years’
experience in the field of activity being reported. Mr
Bollenhagen has sufficient experience which is relevant
to the style of mineralisation and type of deposit under
consideration and to the activity that he is undertaking
to qualify as a Competent Person as defined in the
2012 Edition of the “Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore
Reserves” relating to the reporting of Exploration Results.
Mr Bollenhagen consents to the inclusion in the report of
matters based on his information in the form and context
in which it appears.
CAMPOONA SHAFT AND CENTRAL CAMPOONA
of the report Ms Sylvester was a full-time employee
of AMC Consultants Pty Ltd and qualifies as a
Competent Person as defined in the 2012 Edition of the
‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’.
LEIGH CREEK MAGNESITE PROJECT
The information pertaining to the Mt Hutton Central
Mineral Resource estimate was:
• extracted from an announcement entitled “Mount
Hutton Central JORC 2012 Resource”, lodged with ASX
on 12 April 2016.
• prepared by Mr Wade Bollenhagen who is a
full-time employee of Archer Exploration Limited
and qualifies as Competent Persons as defined
in the 2012 Edition of the “Australasian Code for
Reporting of Exploration Results, Mineral Resources
and Ore Reserves”.
The information relating to the Leigh Creek Magnesite
Resource (excluding Mount Hutton Central) was first
reported by Pima Mining NL on 3 September 1999 and
was prepared in accordance with the JORC Code 1999.
The information pertaining to the Campoona Shaft and
Central Campoona Mineral Resource estimates were:
CONFIRMATION BY ARCHER
• detailed in an announcement entitled “Archer Exploration
announces Australia’s largest JORC 2012 Graphite
Resources”, lodged with ASX on 6 August 2014.
• prepared by Mr B Knell who is a Member of the AusIMM
and peer reviewed by Dr C Gee who is also a Member
of the AusIMM (CP). At the time of the report Mr Knell
and Dr Gee were both full time employees of Mining
Plus Pty Ltd and both qualify as Competent Persons as
defined in the 2012 Edition of the ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and
Ore Reserves’.
WILCLO SOUTH
The information pertaining to the Wilclo South Mineral
Resource estimate was:
• extracted from an announcement entitled “Maiden
Wilclo South Graphite Resource”, lodged by Monax
Mining Limited with ASX on 26 August 2013.
The Company confirms it is not aware of any new
information or data that materially affects the information
included in the original market announcements referred
to above and, in the case of estimates of Mineral
Resources, that all material assumptions and technical
parameters underpinning the estimates in the relevant
market announcements continue to apply and have not
materially changed. The Company confirms that the form
and context in which the Competent Person’s findings are
presented have not been materially modified from the
original market announcement.
EYRE PENINSULA GRAPHITE PROJECT
There has been no change in the Campoona Shaft,
Central Campoona or Wilclo South Mineral Resource
estimate stated as at 30 June 2018. Accordingly, no
comparison is provided.
The information pertaining to the Campoona Shaft and
Central Campoona Mineral Resource estimates were:
28
Annual Report 2019 / Archer Exploration Limited
• Detailed in an announcement entitled “Archer
Exploration announces Australia’s largest JORC 2012
Graphite Resources”, lodged with ASX on 6 August
2014.
• Prepared by Mr B Knell who is a Member of the AusIMM
and peer reviewed by Dr C Gee who is also a Member
of the AusIMM (CP). At the time of the report Mr Knell
and Dr Gee were both full time employees of Mining
Plus Pty Ltd and both qualify as Competent Persons as
defined in the 2012 Edition of the ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and
Ore Reserves’.
WILCLO SOUTH MINERAL RESOURCE
The information pertaining to the Wilclo South Mineral
Resource estimate was:
• Extracted from an announcement entitled “Maiden
Wilclo South Graphite Resource”, lodged by Monax
Mining Limited with ASX on 26 August 2013.
• Prepared by Ms Sharon Sylvester who at the time of the
report was a full-time employee of AMC Consultants Pty
Ltd and qualifies as a Competent Person as defined in
the 2012 Edition of the ‘Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore
Reserves’.
SCOPING STUDY
The Eyre Peninsula Graphite Project Scoping Study
was first released as an ASX announcement entitled
“Positive results from SA Graphite Project scoping
study”, lodged with ASX on 19 September 2016. Archer
confirms that all material assumptions underpinning
the production target and financial information set out
in that announcement continue to apply and have not
materially changed.
LEIGH CREEK MAGNESIA PROJECT
There has been no change in the Leigh Creek Magnesia
Project Mineral Resource estimate as at 30 June 2018.
Accordingly, no comparison is provided.
MT HUTTON CENTRAL MINERAL RESOURCE
The information pertaining to the Mt Hutton Central
Mineral Resource estimate was:
/ Mineral Exploration
Extracted from an announcement entitled ‘Mount Hutton
Central JORC 2012 Resource’, lodged with ASX on 12
April 2016.
• Prepared by Mr Wade Bollenhagen who is a full-time
employee of Archer Exploration Limited and qualifies
as Competent Persons as defined in the 2012 Edition
of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves’.
LEIGH CREEK MAGNESIA MINERAL RESOURCES
(EXCLUDING MT HUTTON CENTRAL)
The information relating to the Leigh Creek
Magnesia Resource (excluding Mount Hutton
Central) was first reported by Pima Mining NL on 3
September 1999 and was prepared in accordance
with the JORC Code 1999.
Archer has since updated the Mount Hutton Central
Resources to JORC 12 standard however, the remaining
Leigh Creek Magnesia Project Mineral Resource
(comprising Witchelina, Termination Hill, Pug Hill, Mt
Playfair and Mount Hutton South) is a historic estimate
prepared by Pima Mining NL. There has been no material
change or re-estimation of those mineral resources since
they were first reported or as a result of the introduction
of the 2012 JORC Code.
Future estimations will be prepared in accordance with
2012 JORC Code. Archer’s focus is on the development
of Mount Hutton Central, which the Company believes,
has the potential to support a mining operation. As such,
no work was done during the year on updating and
reporting the remaining Leigh Creek Magnesia Project
Mineral Resource historic estimate in accordance with
JORC Code 2012.
Archer does not intend to upgrade the historic estimate
to JORC 2012 standard prior to completion of the sale of
the Leigh Creek Magnesia Project.
LEIGH CREEK MAGNESIA PROJECT STUDY
The Leigh Creek Magnesia Project Study was first
released as an ASX announcement entitled “Leigh Creek
Magnesite - Project Study”, lodged with ASX on 21 March
2016. Archer confirms that all material assumptions
underpinning the production target and financial
information set out in that announcement continue to
apply and have not materially changed.
Annual Report 2019 / Archer Exploration Limited
29
/ Mineral Exploration
GOVERNANCE
Archer maintains strong governance and internal
controls in respect of its estimates of Mineral
Resources and the estimation process. Archer ensures
its sampling techniques, data collection, data veracity
and the application of the collected data is at a high
level of industry standard. Contract RC and diamond
drilling with QA/QC controls approved by Archer are
used routinely. All drill holes are logged by Archer
geologists.
Archer employs QC procedures, including addition of
standards, blanks and duplicates ahead of assaying which
is undertaken using industry standards and fully accredited
laboratories. Assay data is continually validated and stored.
Geological models and wireframes are built using careful
geological documentation and interpretations. Resource
estimation is undertaken using industry standard estimation
techniques and include block modelling. Application of
other parameters including cut off grades, top cuts and
classification are all dependent on the style and nature of
mineralisation being assessed.
30
Annual Report 2019 / Archer Exploration Limited
TENEMENT INTERESTS
EXPLORATION LICENSES
Location
Tenement
Commodity
South Australia
North Cowell
Cockabidnie
Wildhorse Plains
Waddikee
Carpie Puntha
Carappee Hill
Witchelina
Termination Hill
Burra North
Napoleons Hat
Blue Hills
Whyte Yarcowie
Pine Creek
Altimeter
Franklyn
Peterborough
Bendigo
EL 6363
EL 5791
EL 5804
EL 5815
EL 5870
EL 5920
EL 6019(1)
EL 5730(1)
EL 6351
EL 5769
EL 5794
EL 5935
EL 6000
EL 6029
EL 6160
EL 6287(2)
EL 6354(2)
Graphite
Graphite
Graphite
Graphite
Graphite
Graphite
Magnesite
Magnesite
Base Metals
Copper / Gold
Copper / Gold
Cobalt / Copper
Copper / Gold
Copper / Gold
Copper / Gold
Copper / Gold
Copper/Gold
Annual Report 2019 / Archer Exploration Limited
31
/ Tenement Interests
Location
Tenement
Commodity
New South Wales
Morris’s Blow
Broken Hill
Broken Hill
Broken Hill
Campbells Ck
Crowie Creek
Western Australia
Mt Keith
OTHER LICENSES
EL 8592
EL 8593
EL 8594
EL 8595
EL 8779(2)
EL 8871(3)
Cobalt / Copper
Cobalt / Copper
Cobalt / Copper
Cobalt / Copper
Cobalt / Copper
Copper/Gold
E53/1926 (2)
Nickel
Location
Tenement
Commodity
South Australia
Campoona Shaft
Sugarloaf
Pindari
1. Tenement sold during FY19
2. Tenement granted during FY19
3. Tenement granted subsequent to FY19
ML 6470
MPL 150
MPL 151
Graphite mining
Graphite and graphene processing
Process water for Sugarloaf
32
Annual Report 2019 / Archer Exploration Limited
/ Tenement Interests DIRECTOR’S
REPORT
Your Directors present this report on Archer Exploration
Limited and its consolidated entities (‘Group’ or ‘Archer’), for
the year ended 30 June 2019.
The Operating and Financial Review (which includes the
Chairman’s Review) of this Annual Report is incorporated by
reference into, and forms part of, this Directors’ Report.
Annual Report 2019 / Archer Exploration Limited
33
DIRECTORS
ALICE MCCLEARY
DUniv, BEc FCA FTIA FAICD
Director (Non-Executive)
The following Directors were in office at any time during
or since the end of the financial year.
• Gregory David English
• Alice McCleary
• Paul Rix
GREGORY ENGLISH
LLB, BE (Mining)
Executive Chairman
Greg English is the co-founder and Executive Chairman
of Archer. He has been Chairman of the board since
2008 and has overseen Archer’s transition from
a South Australian focussed minerals exploration
company to a diverse technology materials company.
He has more than 25 years of engineering and legal
experience and has held senior roles for Australian and
multinational companies.
Alice McCleary is a Chartered Accountant. She is Deputy Chair
of the Uniting Church of South Australia’s Resources Board.
She is a former Chairman of ASX Listed Company Twenty
Seven Co. Limited (ASX:TSC) and former Director of Adelaide
Community Healthcare Alliance Inc. (ACHA), Benefund Ltd and
Forestry Corporation of South Australia. Previous leadership
roles include Vice-President of the South Australian Chamber
of Mines and Energy (SACOME), Deputy Chancellor of the
University of South Australia and National President of the
Taxation Institute of Australia. Alice’s professional interests
include financial management and corporate governance.
Directorships of other ASX Listed entities in the last 3
years:
Twenty Seven Co. Limited (ASX: TSC)
Interest in Shares:
2,700,761 ordinary shares.
Special Responsibilities:
Chair, Audit & Risk Management Committee.
Greg has received recognition for his work as a lawyer
having been recognised in The Best Lawyers® in Australia,
2020 Edition in the area of Commercial Law.
PAUL RIX
B.Com FAICD
Director (Non-Executive)
Greg is an experienced company director and also serves
on the boards of other ASX listed companies. He holds a
bachelor’s degree in engineering and a law degree (LLB).
Directorships of other ASX Listed entities in the last 3
years:
Core Lithium Limited (ASX:CXO), Leigh Creek Energy
Limited (ASX:LCK).
Interest in Shares:
9,482,233 ordinary shares.
Paul Rix was appointed as a Director of the Company
on 8 February 2016. Paul Rix is an experienced mining
professional with more than 30 years’ experience in the
marketing of industrial minerals and products. From 2003 –
2013, Paul worked for Queensland Magnesia Pty Ltd (QMAG)
as General Manager Marketing where he was responsible
for the development and implementation of QMAG’s long
term marketing strategy, focusing on diversification of
magnesia products and markets whilst maintaining high plant
utilisation. His magnesia marketing responsibilities stretched
across six continents and more than 30 countries.
Special Responsibilities:
Executive Chairman.
Member, Audit & Risk Management Committee.
Directorships of other ASX Listed entities in the last 3
years:
None.
Interest in Shares:
312,500 ordinary shares.
Special Responsibilities:
Member, Audit & Risk Management Committee.
34
Annual Report 2019 / Archer Exploration Limited
/ Directors’ Report MANAGEMENT
DR MOHAMMAD CHOUCAIR
FRSN FRACI GAICD
BSc Nanotechnology (Hon. 1), PhD (Chemistry)
Chief Executive Officer
Dr Mohammad Choucair was appointed Chief Executive
Officer on 1st December 2017. Dr Choucair has a strong
technical background in nanotechnology, and has spent
the last decade implementing governance, control
and key compliance requirements for the creation and
commercial development of innovative technologies with
global impact. Dr Choucair served a 2-year mandate on
the World Economic Forum Global Council for Advanced
Materials and is a Fellow of both The Royal Society of
New South Wales and The Royal Australian Chemical
Institute. He has a strong record of delivering innovation
and has been recognised internationally as a forward
thinker.
DAMIEN CONNOR
CA GAICD AGIA B.Com
CFO / Company Secretary
Damien Connor was appointed Company Secretary on 1
August 2014. Damien performs the financial/accounting
role in the Company as well as the secretarial duties.
Damien has been a member of the Institute of Chartered
Accountants since 2002 and is a Graduate of the
Australian Institute of Company Directors and a Member
of the Governance Institute of Australia. Damien has been
employed in the resources sector since 2005. He also
provides Company Secretary and Chief Financial Officer
services to other ASX-listed and unlisted entities.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The Directors are not aware of any significant changes
in the state of affairs of the Group occurring during the
financial year, other than as disclosed in this Annual
Report.
EVENTS ARISING SINCE THE END OF THE
REPORTING PERIOD.
• On 1 July 2019, the Company announced the completion
of the sale of its Sugarloaf farmland located on the Eyre
Peninsula. At completion Archer received $1.35 million.
Under the terms of the Sale Agreement, Archer has
sold the entirety of the Sugarloaf farmland but maintains
an option to buy back approximately 30% of the Land,
which will be required for the construction of the
Processing Facility. The option to buy back part of the
land can be exercised by Archer any time during the
next 20 years.
• On 8 July 2019, the Company allotted 787,500 fully
paid ordinary shares as a result of vesting of 75% of the
Performance Rights that met the performance conditions
for the year ended 30 June 2019. The remaining
262,500 Performance Rights (representing 25%) were
forfeited.
ENVIRONMENTAL ISSUES
The Group’s operations are subject to significant
environmental regulations under the laws of the
Commonwealth and/or State. No notice of any breach
has been received and to the best of the Directors’
knowledge no breach of any environmental regulations
has occurred during the financial year or up to the date of
this Annual Report.
CORPORATE GOVERNANCE
The Board has adopted the ASX Corporate
Governance Council’s “Corporate Governance
Principles and Recommendations – 3rd Edition” (ASX
Recommendations). The Board continually monitors
and reviews its existing and required policies, charters
and procedures with a view to ensuring its compliance
with the ASX Recommendations to the extent deemed
appropriate for the size of the Company and the status
of its projects and activities. Good corporate governance
practices are also supported by the ongoing activities of
the Audit & Risk Management Committee.
The Company’s Corporate Governance Statement for the
financial year ending 30 June 2019 is dated as at 30 June
2019 and was approved by the Board on 17th September
2019.
The Corporate Governance Statement provides
a summary of the Company’s ongoing corporate
governance practices in accordance with the ASX
Recommendations. The Corporate Governance
Statement is supported by a number of policies,
procedures, code of conduct and formal charters, all of
which are located in the Corporate Governance section
of the Company’s website: www.archerx.com.au.
Annual Report 2019 / Archer Exploration Limited
35
/ Directors’ Report
The Directors of Archer Exploration Limited (the Group)
present the Remuneration Report for Non-Executive
Directors, Executive Directors and other Key Management
Personnel, prepared in accordance with the Corporations
Act 2001 and the Corporations Regulations 2001.
The names and roles of the Company’s key management
personnel during the year are:
• Mr Gregory English
Chairman - Executive
• Ms Alice McCleary
Director - Non executive
• Mr Paul Rix
Director - Non executive
• Dr Mohammad Choucair Chief Executive Officer
• Mr Damien Connor
Chief Financial Officer &
Company Secretary
The Remuneration Report is set out under the following
main headings:
A. Principles used to determine the nature and amount of
remuneration
B. Details of remuneration
C. Service agreements
D. Share-based remuneration
E. Bonuses included in Remuneration
F. Other information
36
Annual Report 2019 / Archer Exploration Limited
/ Remuneration Report (Audited)
A. PRINCIPLES USED TO DETERMINE THE NATURE
AND AMOUNT OF REMUNERATION
The Board acts as the remuneration committee as a
consequence of the size of the Board and the Group.
The Board believes that individual salary negotiation
is more appropriate than formal remuneration policies
and external advice and market comparisons are sought
where necessary. The Group discloses the fees and
remuneration paid to all Directors as required by the
Corporations Act 2001. The Board recognises that
the attraction of high calibre executives is critical to
generating shareholder value.
The directors and executives receive a superannuation
guarantee contribution required by the government
of 9.50% per annum and do not receive any other
retirement benefits. Some individuals, however, may
choose to sacrifice part of their salary to increase
payments towards superannuation and/or elected to
increase superannuation contributions a part of their
salary package.
All remuneration paid to Directors and executives
is valued at the cost to the Group. The Group has
established a Performance Rights Plan and a Share
Option Plan for the benefit of Directors, officers, senior
executives and consultants. Shares issued under the
Share Option Plan to Directors and executives are valued
at the difference between the market price of those
shares and the amount paid by the director or executive.
Options are valued using the Black-Scholes valuation
methodology. Performance Rights are valued
using a Monte Carlo based model and recognised
as remuneration in accordance with the attached
vesting conditions. The Board policy is to remunerate
non-executive directors at the market rates for
time, commitment and responsibilities. The Board
determines payments to non-directors and reviews
their remuneration annually, based on market price,
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 $500,000 per annum which
has not changed since Archer listed on the ASX in August
2007. These amounts are not linked to the financial
performance of the consolidated Group. However, to
align director’s interests with shareholder interests, the
directors are encouraged to hold shares in Archer.
Each member of the executive team has signed
a formal contract at the time of their appointment
covering a range of matters including their duties,
rights, responsibilities and any entitlements on
terminations. The standard contract sets out the
specific formal job description.
USE OF REMUNERATION CONSULTANTS
The Company has not engaged the services of a
remuneration consultant during the year.
VOTING AND COMMENTS MADE AT THE COMPANY’S
LAST ANNUAL GENERAL MEETING
The Company only received 15.2% ‘no’ votes on its
Remuneration Report for the financial year ending
30 June 2018. The Company received no specific
feedback on its Remuneration Report at the Annual
General Meeting.
CONSEQUENCES OF PERFORMANCE ON
SHAREHOLDER WEALTH
In considering the Group’s performance and benefits
for shareholder wealth, the Board has regard to the
following in respect of the current financial year and the
previous four (4) financial years:
30
June
2019
30
June
2018
30
June
2017
30
June
2016
30
June
2015
$0.110
$0.110
$0.036 $0.072 $0.093
Item
Share
price
($)
Annual Report 2019 / Archer Exploration Limited
37
/ Remuneration Report (Audited)
B. DETAILS OF REMUNERATION
Details of the nature and amount of each element of the remuneration of each key management personnel (KMP) of the
Company are shown in the table below:
Director and
other Key
Management
Personnel
Short-term
Employee Benefits
Post
employment
Benefits
Termination
Benefits
Share Based
Payments 4
Employee
Year
Cash
Salary &
Fees $
Cash
Bonus $
Super-
annuation $
Termination
Benefits $
Total $
Unlisted
Options &
Performance
Rights 4 $
Performance
based
remun-
eration %
Executive Directors
Greg English 1
2019
301,370
22,603 2
Executive
Chairman
2018
301,370
45,205 3
Non-Executive Directors
Alice McCleary
Independent
Paul Rix
Independent
2019
2018
2019
2018
59,361
59,831
59,361
59,361
Other Key Management Personnel
-
-
-
-
30,777
32,925
5,639
5,169
5,639
5,639
2019
175,000
31,050 5
19,575
2018
100,962
Damien Connor
2019 130,950
2018 123,848
-
-
-
9,591
-
-
Dr Mohammad
Choucair 6
Chief Executive
Officer
Company
Secretary &
CFO
Total
Total
2019 726,042
53,653
2018 645,372
45,205
61,630
53,324
-
-
-
-
-
-
-
-
-
-
-
-
570 355,320
1,563 381,063
7.1%
13.4%
570
65,570
1,563
66,563
570
65,570
1,563
66,563
0.9%
2.3%
0.9%
2.3%
83,108 6 308,733
37.9%
160,000 6 270,553
59.1%
570 131,520
1,563 125,411
0.4%
1.2%
85,388 926,713
166,252 910,153
1. In addition, Piper Alderman Lawyers were paid $26,453 (2018: $57,449) during the year for services rendered to the Company. Mr English is a partner of
Piper Alderman lawyers. The fees were at normal commercial rates.
2. Short-term incentive bonus related to KPI achievement for the year ended 30 June 2019, pursuant to Mr English’s employment contract.
3. Short-term incentive bonus related to KPI achievement for the year ended 30 June 2018, pursuant to Mr English’s employment contract.
4. In accordance with Accounting Standards, remuneration includes a portion of the notional value of the options and performance rights (Rights) granted
during the year. The notional value of options and Rights are determined as at the issue date and is progressively allocated over the vesting period. The
amount included as remuneration is not indicative of the benefit (if any) that the employee may ultimately realise should the option or Right vest. The notional
value of the options and Rights as at the issue date has been determined in accordance with the accounting policy detailed at Note 22.
5. Short-term incentive bonus related to KPI achievement for the year ended 30 June 2019.
6. Dr Mohammad Choucair, the founder of Carbon Allotropes Pty Limited, was issued 3,000,000 performance rights on 30 October 2017, as purchase
consideration for Archer acquiring all of the shares in Carbon Allotropes Pty Limited. The share based payment expense for the 3,000,000 Rights issued to
Dr Mohammad Choucair, was calculated in accordance with AASB 2: Share Based Payments. The total fair value for the 3,000,000 Rights issued is $240,000,
with $80,000 expensed to the Statement of Profit or Loss and Other Comprehensive Income under employee benefits expense for the year ended 30 June
2019 (30 June 2018: $160,000) to recognise the vesting criteria within the Share Purchase Agreement.
38
Annual Report 2019 / Archer Exploration Limited
/ Remuneration Report (Audited) C. SERVICE AGREEMENTS
Remuneration and other terms of employment for the Executive Directors and other key management personnel are
formalised in a Service Agreement. The major provisions of the agreements relating to remuneration are set out below:
Notice Period
Calculated based
on reasons for
termination from
4 weeks plus
leave entitlements
up to 12 months’
salary plus leave
entitlements.
Either party may
terminate by
providing 6 months’
notice.
Employee
Base Salary
Terms of agreement
Greg English
Executive Chairman
$330,000 per annum
(inclusive of 9.50%
Superannuation)
Contract term:
Permanent employee, no fixed term.
Short-term incentive bonus:
Discretionary up to 15% of salary each year, is
determined with reference to KPIs as set by the
Board annually.
Long-term incentive bonus:
Entitled to receive Options or Performance Rights
equal to the maximum number of Options or
Performance Rights granted to a director of the
Company in the same financial year, subject to
shareholder approval and KPIs including the
Company’s share Price compared with the ASX
Small Ordinaries Resources Index.
Dr Mohammad
Choucair
Chief Executive
Officer
$191,625 per annum
(inclusive of 9.50%
Superannuation)
Contract term:
Permanent employee, no fixed term.
Short-term incentive bonus:
Short-term inventive bonus as determined by the
Board from time to time.
For the year ended 30 June 2019, a discretionary
bonus of up to 25% of salary was offered by the
Board, subject to satisfaction of agreed KPIs for the
year ended 30 June 2019.
For the year ended 30 June 2020, a discretionary
bonus of up to 25% of salary has been offered, and
is determined with reference to KPI’s set by the
Board.
Long-term incentive bonus:
Eligible to participate in any incentive or bonus
plans, as may be introduced by the Company from
time to time.
Hourly rate
None.
Damien Connor
Company Secretary
& Chief Financial
Officer
Either party may
terminate by
providing 3 months’
notice.
Annual Report 2019 / Archer Exploration Limited
39
/ Remuneration Report (Audited)
D. SHARE-BASED REMUNERATION
UNLISTED OPTIONS (OPTIONS)
All Options refer to options over ordinary shares of the
Company, which are exercisable on a one-for-one basis
under the terms of the agreements.
The Group has established a Performance Rights and
Share Option Plan for the benefit of Directors, officers,
senior executives and consultants. Under the Performance
Rights and Share Option Plan, the Company, through
the Board, may offer Options to eligible persons on such
terms that the Board considers appropriate, including any
performance or other vesting hurdles that may apply.
No Options have been issued as remuneration during the
year ended 30 June 2019.
PERFORMANCE RIGHTS (RIGHTS)
The Archer Exploration Performance Rights and Share
Option Plan (Plan) adopted by the Board on 28 August
2019 (replacing the previously adopted Performance
Rights Plan) provides for the issue of Rights to Directors,
employees and contractors of the Company and its
associated body corporates.
All Rights issued under the Plan refer to Rights over
ordinary shares of the Company, which are exercisable on
a one-for-one basis under the terms of the agreements.
3,000,000 Rights previously issued to Dr Mohammad
Choucair as purchase consideration for the Company’s
acquisition of Carbon Allotropes Pty Limited on 30 October
2017, vested into 3,000,000 fully paid ordinary share on
31 October 2018, following the satisfaction of a service
condition, being that Dr Mohammad Choucair had to remain
employed by the company for at least 12 months from 30
October 2017, being the completion date of the Company’s
acquisition of Carbon Allotropes Pty Limited.
For all other Rights on issue, vesting is subject to the
achievement of the following performance conditions:
1. Service Condition
Must be employed by a member of Archer
Exploration Group on the date of grant and must
remain employed by a member of the Archer
Exploration Group on the third anniversary of the
date of the grant (or such other date as the Board
determines at the time of grant).
2. Share price performance condition
Archer’s share price performance as compared to the ASX
Small Ordinaries Resources Index (ASXR). The Company
share price performance for each year commencing 1
July to 30 June each year will be compared to ASX Small
Ordinaries Resources Index (ASXRD) movement for the
same 12 month period.
Archer Ranking versus ASX
Small Ordinaries Resources Index
(ASXRD)
% of Maximum
Award
Below the 100th percentile
Between the 100th and 125th
percentile
Between the 125th and 150th
percentile
0% vest
50% vest
75% vest
At or above 150th percentile
100% vest
In addition to each level of performance set out in the
above table, the share price performance condition will
not be met if the Company’s share price at 30 June in a
particular year is below the Company’s share price on 1
July of the preceding year.
No Rights will vest if the Company share price
performance does not meet thresholds detailed above.
40
Annual Report 2019 / Archer Exploration Limited
/ Remuneration Report (Audited) RIGHTS PREVIOUSLY ISSUED AS CONSIDERATION FOR
ACQUISITION OF CARBON ALLOTROPES PTY LIMITED
RIGHTS GRANTED TO KMP DURING THE REPORTING
PERIOD
Dr Mohammad Choucair, the founder of Carbon Allotropes
Pty Limited, was issued 3,000,000 Rights on 30 October
2017, as purchase consideration for Archer acquiring
all of the shares in Carbon Allotropes Pty Limited. In
accordance with Accounting Standards, the 3,000,000
Rights are required to be treated as remuneration, even
though the Rights were issued to Dr Mohammad Choucair
as consideration for Archer acquiring the business that
he was the founder and sole shareholder of. The Rights
have been treated as remuneration as a result of the
service condition for the rights to vest, being that Dr
Mohammad Choucair must remain employed by the
company for at least 12 months from 30 October 2017,
being the completion date of the Company’s acquisition
of Carbon Allotropes Pty Limited. In accordance with
AASB 2: Share Based Payments, the total fair value for the
3,000,000 Rights was $240,000. An amount of $80,000
has been expensed to the Statement of Profit or Loss and
Other Comprehensive Income under employee benefits
expense for the year ended 30 June 2019 (30 June
2018: $160,000) to recognise the vesting criteria within
the Share Purchase Agreement. This expense amount
of $80,000 is also shown in the Remuneration table at
item B of the Remuneration Report as ‘a ‘Share Based
Payment’.
On 6 July 2018, 150,000 Rights were granted to Dr
Mohammad Choucair. The Rights are subject to meeting
vesting criteria for the performance period 1 July 2018 to 30
June 2019 and expire on 31 July 2019. On vesting, the holder
will be issued fully paid ordinary shares in the Company on a
one for one basis and the holder will not pay for the shares.
The Rights are governed by the terms and conditions of the
Company’s Performance Rights Plan. An amount of $3,108
has been expensed to the Statement of Profit or Loss and
Other Comprehensive Income under employee benefits
expense for the year ended 30 June 2019.
RIGHTS TO KMP THAT HAVE VESTED DURING THE
REPORTING PERIOD
On 31 October 2018, 3,000,000 new shares were
issued to Mohammad Choucair following the vesting of
Rights previously issued to him as consideration for the
Company’s acquisition of Carbon Allotropes Pty Limited.
The vesting of the Rights was subject to the satisfaction of
certain conditions precedent.
RIGHTS TO KMP FORFEITED DURING THE
REPORTING PERIOD
No Rights previously issued to KMP were forfeited during
the reporting period.
Annual Report 2019 / Archer Exploration Limited
41
/ Remuneration Report (Audited)
E. BONUSES INCLUDED IN REMUNERATION
Details of the short-term incentive cash bonuses awarded as remuneration to each key management personnel, the percentage
of the available bonus that was paid in the financial year, and the percentage that was forfeited because the person did not meet
the performance criteria is set out below. No part of the bonus is payable in future years.
Employee
Included in remuneration ($)
Percentage vested
during the year
Percentage forfeited
during the year
Greg English 1
Executive Chairman
$24,750
(inclusive of 9.5% Superannuation)
Dr Mohammad Choucair 2
Chief Executive Officer
$34,000
(inclusive of 9.5% Superannuation)
50%
71%
50%
29%
1. Mr English’s contract of employment provides for a discretionary cash bonus of up to 15% of his salary each year, determined with reference to KPIs as set by
the Board annually.
2. For the year ended 30 June 2019, a discretionary cash bonus of up to 25% of salary was offered by the Board, to Mr Choucair, subject to satisfaction of
agreed KPIs for the year ended 30 June 2019.
No other key management personnel were awarded short-term incentive cash bonuses as remuneration during the year
ended 30 June 2019. The board has agreed to award Dr Mohammad Choucair (CEO) a short-term incentive cash bonus for
the year ended 30 June 2020, subject to meeting agreed KPIs.
42
Annual Report 2019 / Archer Exploration Limited
/ Remuneration Report (Audited) F. OTHER INFORMATION
NUMBER OF UNLISTED OPTIONS HELD BY DIRECTORS AND KEY MANAGEMENT PERSONNEL
The number of options to acquire shares in the Company held during the 2019 reporting period by each of the key
management personnel of the Group, including their related parties are set out below.
2019 Key Management
Personnel
Balance 1/7/18
Granted as
Remuneration
Exercised
Expired/
Forfeited
Balance
30/6/19
Vested and
exercisable
Vested and
un-exercisable
Greg English
Alice McCleary
Paul Rix
Dr Mohammad Choucair
Damien Connor
Total
46,545
-
5,000,000
-
-
5,046,545
-
-
-
-
-
-
-
-
(46,545)
-
- (5,000,000)
-
-
-
-
- (5,046,545)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
No further unlisted options held by Key Management Personnel were issued, exercised, forfeited, expired or cancelled
during the year ended 30 June 2019.
NUMBER OF UNLISTED PERFORMANCE RIGHTS HELD BY DIRECTORS AND KEY MANAGEMENT PERSONNEL
2019 Key Management
Personnel
Balance 1/7/18
Granted as
Compensation
Vested Forfeited
Greg English 1
Alice McCleary 1
Paul Rix 1
Dr Mohammad Choucair 2, 3
Damien Connor 1
Total
300,000
300,000
300,000
3,000,000
300,000
4,200,000
-
-
-
150,000
-
150,000
(150,000)
(150,000)
(150,000)
(3,000,000)
(150,000)
(3,600,000)
-
-
-
-
-
-
Balance
30/6/19
150,000
150,000
150,000
150,000
150,000
750,000 4
Total Vested
-
-
-
-
-
-
1. On 6 July 2018, the Company allotted 600,000 fully paid ordinary shares as a result of the vesting of 100% of the Performance Rights that met the
performance conditions for the performance period 1 July 2017 to 30 June 2018.
2. On 6 July 2018, 150,000 Performance Rights were granted to Dr Mohammad Choucair. The Rights were granted in accordance with the long-term equity
incentive as outlined in the Archer Performance Rights Plan.
3 On 31 October 2018, 3,000,000 new shares were issued to Mohammad Choucair following the vesting of Rights previously issued to him as consideration for
the Company’s acquisition of Carbon Allotropes Pty Limited. The vesting of the Rights was subject to the satisfaction of certain conditions precedent.
4 On 8 July 2019, the Company allotted 562,500 fully paid ordinary shares as a result of vesting of 75% of Performance Rights previously issued to KMP that
met the performance conditions for the year ended 30 June 2019. The remaining 187,500 Performance Rights (representing 25%) were forfeited.
Annual Report 2019 / Archer Exploration Limited
43
/ Remuneration Report (Audited)
NUMBER OF SHARES HELD BY DIRECTORS AND KEY MANAGEMENT PERSONNEL
2019 Key
Management
Personnel
Greg English 1
Alice McCleary 1
Paul Rix 1
Dr Mohammad
Choucair 1
Damien
Connor 1
Total
Balance 1/7/18
Granted as
Compensation
Unlisted Options
Exercised
Performance
Rights Vested
Other changes Balance 30/6/19
9,169,733
2,438,261
-
-
-
11,375,271
-
-
-
-
-
-
-
-
-
-
-
-
150,000
150,000
150,000
3,000,000
150,000
50,000
9,369,733
-
2,588,261
50,000
200,000
-
-
3,000,000
150,000
3,600,000
100,000
15,307,994
1 On 8 July 2019, the Company allotted 112,500 fully paid ordinary shares each to Greg English, Alice McCleary, Paul Rix, Mohammad Choucair and Damien
Connor (in aggregate 562,500 fully paid ordinary shares), as a result of the vesting of Rights previously granted to them, that met the performance conditions
for the performance period 1 July 2018 to 30 June 2019.
END OF AUDITED REMUNERATION REPORT
44
Annual Report 2019 / Archer Exploration Limited
/ Remuneration Report (Audited) MEETINGS OF DIRECTORS
The number of meetings of the Company’s Board of Directors and each Board Committee held during the year ended 30
June 2019 and the numbers of meetings attended by each Director were as follows:
Director
Board
Audit & Risk Management Committee
A
12
12
12
B
12
12
11
A
2
2
2
B
2
2
1
Greg English
Alice McCleary
Paul Rix
Where:
Column A is the number of meetings the Director was
entitled to attend
There are no unissued ordinary shares in the Company
under option at the date of this report. See Note 14 for
further details regarding movement in unlisted options
during the reporting period.
Column B is the number of meetings the Director
attended
PERFORMANCE RIGHTS
Greg English was appointed a member of the Audit & Risk
Management Committee on 3 September 2018. Greg
English attended each of the Audit & Risk Management
Committee Meetings as a member of the Audit & Risk
Management Committee.
The Company has not formed a Remuneration Committee or
a Corporate Governance Committee. The Board as a whole
considers these matters. The Board considers this appropriate
given the size and nature of the Company at this time.
UNISSUED SHARES UNDER OPTION
During the financial year, 1,342,740 shares have been
issued as a result of exercise of options and 12,565,238
unlisted options over ordinary shares lapsed unexercised.
No unlisted options over ordinary shares have been
issued since the end of the financial year.
During the financial year and since the end of the
financial year, 4,537,500 shares have been issued as a
result of vesting and exercise of an equivalent number
of Performance Rights and 262,500 Performance Rights
lapsed unexercised.
There are no Performance Rights on issue at the date
of this report. See Note 14 for further details regarding
movements in Performance Rights during the reporting
period.
PROCEEDINGS ON BEHALF OF COMPANY
As far as the Directors’ are aware, no person has
applied to the Court for leave to bring proceedings
on behalf of the Company or to intervene in any
proceedings to which the Company is a party for
the purpose of taking responsibility on behalf of the
Company for all or any part of those proceedings. The
Company was not a party to any such proceedings
during the year.
Annual Report 2019 / Archer Exploration Limited
45
/ Directors’ Report
INDEMNIFICATION AND INSURANCE OF DIRECTORS
AND OFFICERS
The Company’s Constitution provides that the Company
indemnifies, on a full indemnity basis and to the full
extent permitted by law, officers of the Company for
all losses or liabilities incurred by the person as an
officer of the Company or a related body corporate. In
conformity with the Constitution, the Company is party
to Deeds of Indemnity in favour of each of the Directors
referred to in this report who held office during the
year.
the end of the year the Company has paid, or agreed
to pay, premiums in respect of such contracts for the
year ending 30 June 2019.
NON-AUDIT SERVICES
The Board of Directors is satisfied that the provision of the
non-audit services during the year is compatible with the
general standard of independence for auditors imposed
by the Corporations Act 2001. The Directors are satisfied
that the services disclosed below did not compromise the
external auditor’s independence for the following reasons:
The Company has paid premiums to insure each
of the Directors, Officers and Consultants 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
or Executive of the company, other than conduct
involving wilful breach of duty or a lack of good
faith in relation to the company. The policy does
not specify the individual premium for each officer
covered and the amount paid is confidential. Since
• all non-audit services are reviewed and approved by
the board prior to commencement to ensure they do
not adversely affect the integrity and objectivity of the
auditor; and
• the nature of the services provided do not compromise
the general principles relating to auditor independence
in accordance with APES 110: Code of Ethics for
Professional Accountants set by the Accounting
Professional and Ethical Standards Board.
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence for the year ended 30 June 2019 has been received and can be found on page 48 of the
Financial Report.
Signed in accordance with a resolution of the Board of Directors.
Greg English
Executive Chairman
Adelaide
Dated this 17th day of September 2019
46
Annual Report 2019 / Archer Exploration Limited
/ Directors’ Report
AUDITOR’S
INDEPENDENCE
DECLARATION
Annual Report 2019 / Archer Exploration Limited
47
48
Annual Report 2019 / Archer Exploration Limited
FINANCIAL
INFORMATION
Annual Report 2019 / Archer Exploration Limited
49
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019
Notes
CONSOLIDATED GROUP
INCOME
Income
EXPENSES
Depreciation and amortisation expense
Impairment of exploration assets
Exploration expenditure expensed
Research and development expenditure expensed
Employee benefits expense
Amortisation of intangibles
Write-down of Campoona Land asset
Write-down of inventory
Corporate Consultants/Public Relations
Occupancy expense
ASX listing and share registry expense
Other expenses
LOSS BEFORE INCOME TAX EXPENSE
Income tax benefit – R&D tax concession
2
10
2019
$
2018
$
97,604
149,192
(17,730)
(82,159)
(33,287)
(129,711)
(956,831)
(52,403)
-
(76,800)
(161,021)
(77,942)
(97,526)
(252,102)
(16,225)
-
-
-
(889,169)
(104,808)
(180,629)
-
(159,647)
(62,074)
(129,646)
(257,553)
(1,839,908)
(1,650,559)
3
102,421
58,641
LOSS FOR THE PERIOD FROM CONTINUING OPERATIONS
(1,737,487)
(1,591,918)
DISCONTINUED OPERATIONS
Loss after income tax for the period from discontinued operations
(845)
(262,602)
LOSS ATTRIBUTED TO MEMBERS OF THE PARENT ENTITY
(1,738,332)
(1,854,520)
Other comprehensive income
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO
-
-
MEMBERS OF THE PARENT ENTITY
(1,738,332)
(1,854,520)
Earnings per share
Basic and diluted loss for the year per share
Earnings per share for continuing operations
Basic and diluted loss for the year per share
The accompanying notes form part of the financial statements.
Cents
(0.91)
-
Cents
(1.14)
(0.98)
15
15
50
Annual Report 2019 / Archer Exploration Limited
/ Financial Information STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventory
Non-current assets classified as held for sale
Assets of disposal groups classified as held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Exploration and evaluation expenditure
Intangible assets
TOTAL NON- CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Deposit received in advance for the sale of the Leigh Creek
Magnesia Project
Employee entitlements
Liabilities of disposal groups classified as held for sale
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Employee entitlements
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Notes
CONSOLIDATED GROUP
2019
$
2018
$
6
7
18
9
10
12
18
13
18
13
14
16
695,749
282,721
-
1,217,170
2,195,640
1,556,659
3,752,299
2,749,586
110,107
76,800
-
2,936,493
3,661,551
6,598,044
59,179
14,500,289
68,623
1,247,806
11,638,439
52,403
14,628,091
12,938,648
18,380,390
19,536,692
233,385
250,000
125,836
609,221
263
609,484
22,475
22,475
227,090
-
143,829
370,919
140,528
511,447
11,454
11,454
631,959
522,901
17,748,431
19,013,791
23,873,093
23,249,187
264,698
(6,389,360)
17,748,431
503,632
(4,739,028)
19,013,791
The accompanying notes form part of the financial statements.
Annual Report 2019 / Archer Exploration Limited
51
/ Financial Information
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2019
Issued Capital
$
Retained
Earnings
$
BALANCE AT 1 JULY 2017
19,519,325
(2,891,281)
Fair value of performance rights
issued in prior period(s)
Fair value of performance rights issued
as consideration for acquisition of
Carbon Allotropes Pty Limited
Shares issued during the year (net
of costs)
-
-
3,729,862
-
-
-
Share Based
Payments
Reserve
$
102,589
167,816
-
-
Acquisition
Reserve
$
Total
$
-
-
16,730,633
167,816
240,000
240,000
-
3,729,862
Transactions with owners
23,249,187
(2,891,281)
270,405
240,000
20,868,311
Transfer of share based payments
reserve to retained earnings 1
Total loss for the year
Other comprehensive income
-
-
-
6,773
(6,773)
(1,854,520)
-
-
-
-
-
-
-
(1,854,520)
-
BALANCE AT 30 JUNE 2018
23,249,187
(4,739,028)
263,632
240,000
19,013,791
1. Relates to the prior year(s) share-based payments expense associated with forfeited performance rights
Issued Capital
$
Retained
Earnings
$
Share Based
Payments
Reserve
$
Acquisition
Reserve
$
Total
$
BALANCE AT 1 JULY 2018
23,249,187
(4,739,028)
263,632
240,000
19,013,791
Fair value of performance rights
issued in prior period(s)
Shares issued during the year (net
of costs)
-
623,906
-
-
Transactions with owners
23,873,093
(4,739,028)
Transfer of share- based payments
reserve to retained earnings 1
Total loss for the year
Other comprehensive income
-
-
-
88,000
(1,738,332)
-
89,066
(240,000)2
112,698
(88,000)
-
-
-
-
89,066
383,906
240,000
19,486,763
-
-
-
-
(1,738,332)
-
BALANCE AT 30 JUNE 2019
23,873,093
(6,389,360)
24,698
240,000
17,748,431
1. Relates to the prior year(s) share-based payments expense associated with expired unlisted options.
2. Adjustment to the share based payments reserve following the vesting and exercise of 3,000,000 performance rights into fully paid ordinary shares. The 3,000,000
performance rights were previously issued to Mohammad Choucair as consideration for the Company’s acquisition of Carbon Allotropes Pty Limited in October 2017.
52
Annual Report 2019 / Archer Exploration Limited
/ Financial Information STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2019
CASH FLOW FROM OPERATING ACTIVITIES
Receipts from rental activities
Payments to suppliers and employees
Interest received
Research and development tax concession
Notes
CONSOLIDATED GROUP
2019
$
2018
$
32,533
82,601
(1,708,395)
(1,206,380)
28,545
58,642
29,190
157,790
NET CASH USED IN OPERATING ACTIVITIES
21
(1,588,675)
(936,799)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration expenditure
Payments for property, plant and equipment
Proceeds from sale of plant and equipment
Payments for intellectual property
Deposit received for sale of the Leigh Creek Magnesite Project
(1,014,979)
(1,534,727)
(15,466)
(85,687)
-
48,303
(68,623)
250,000
-
-
NET CASH USED IN INVESTING ACTIVITIES
(849,068)
(1,572,111)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Share issue transaction costs
NET CASH PROVIDED BY FINANCING ACTIVITIES
Net (decrease)/ increase in cash held
Cash at the beginning of the year
14
400,706
3,729,862
(16,800)
-
383,906
3,729,862
(2,053,837)
1,220,952
2,749,586
1,528,634
CASH AT THE END OF THE FINANCIAL YEAR
6
695,749
2,749,586
The accompanying notes form part of the financial statements.
Annual Report 2019 / Archer Exploration Limited
53
/ Financial Information
NOTE 1 – STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES
operating results have been included/(excluded) from the
date control was obtained/(ceased).
The financial report includes the consolidated financial
statements and notes of Archer Exploration Limited and
controlled entities (‘Consolidated’ or ‘Group’).
Basis of Preparation
The financial report is a general purpose financial
report that has been prepared in accordance with
Australian Accounting Standards, Australian Accounting
Interpretations, other authoritative pronouncements of
the Australian Accounting Standards Board (AASB) and
the Corporations Act 2001.
Archer Exploration Limited is a for profit entity for
the purposes of preparing the financial statements.
The financial report has been presented in Australian
dollars.
Australian Accounting Standards set out accounting
policies that the AASB has concluded would result in a
financial report containing relevant and reliable information
about transactions, events and conditions to which they
apply. Compliance with Australian Accounting Standards
ensures that the financial statements and notes also
comply with International Financial Reporting Standards.
Material accounting policies adopted in the preparation of
this financial report are presented below. They have been
consistently applied unless otherwise stated.
The financial report has been prepared on an accruals
basis and is based on historical costs modified, where
applicable, by the measurement at fair value of selected
non-current assets, financial assets and financial liabilities.
a. Principles of Consolidation
The parent entity controls a subsidiary if it is exposed, or
has rights, to variable returns from its involvement with
the subsidiary and has the ability to affect those returns
through its power over the subsidiary.
A list of controlled entities is contained in Note 8 to the
financial statements.
As at reporting date, the assets and liabilities of all
controlled entities have been incorporated into the
consolidated financial statements as well as their results
for the year then ended. Where controlled entities have
entered (left) the consolidated group during the year, their
54
Annual Report 2019 / Archer Exploration Limited
All inter-group balances and transactions between entities
in the consolidated group, including any recognised
profits or losses, have been eliminated on consolidation.
Accounting policies of subsidiaries have been changed,
where necessary, to ensure consistency with those
adopted by the parent entity.
Business Combination
The Group applies the acquisition method in accounting
for business combinations.
The acquisition method requires an acquirer of the
business to be identified and for the cost of the
acquisition and fair values of identifiable assets,
liabilities and contingent liabilities to be determined at
acquisition date, being the date that control is obtained.
Cost is determined as the aggregate of fair values of
assets given, equity issued and liabilities assumed
in exchange for control together with costs directly
attributable to the business combination. Any deferred
consideration payable is discounted to present value
using the entity’s incremental borrowing rate.
Goodwill is recognised initially at the excess of cost
over the acquirer’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities
recognised. If the fair value of the acquirer’s interest is
greater than cost, the surplus is immediately recognised
in profit or loss.
b. Income Tax
The income tax expense/(revenue) for the year comprises
current income tax expense/(income) and deferred tax
expense/(income).
Current income tax expense charged to the profit or
loss is the tax payable on taxable income calculated
using applicable income tax rates enacted, or
substantially enacted, as at reporting date. 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 year as well as unused tax losses. Current
and deferred income tax expense/(income) is charged
/ Notes to the Financial Statements for the Year Ended 30 June 2019 or credited directly to equity instead of the profit or loss
when the tax relates to items that are credited or charged
directly to equity.
Deferred tax assets and liabilities are ascertained
based on temporary differences arising between the
tax bases of assets and liabilities and their carrying
amounts in the financial statements. Deferred tax
assets also result where amounts have been fully
expensed but future tax deductions are available. No
deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business
combination, where there is no effect on accounting or
taxable profit or loss.
Deferred tax assets and liabilities are calculated at
the tax rates that are expected to apply to the period
when the asset recognised or the liability is settled,
based on tax rates enacted or substantively enacted
at reporting date. 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.
Tax Consolidation
Archer Exploration Limited and its wholly-owned Australian
subsidiaries have formed an income tax consolidated group
under tax consolidation legislation. The Group notified
the Australian Tax Office that it had formed an income tax
consolidated group to apply from 1 July 2007.
Research and Development Tax Concession
To the extent that research and development costs are
eligible activities under the “Research and development
tax incentive” programme, a refundable tax offset is
available for companies with annual turnover of less
than $20 million. The Group recognises refundable tax
offsets received in the financial year as an income tax
benefit, in profit or loss, resulting from the monetisation
of available tax losses that otherwise would have
been carried forward. These amounts are recognised
at their fair value only to the extent that where there
is reasonable assurance that the incentive will be
received.
c. Property, Plant and Equipment
Property, plant and equipment is carried at cost less
where applicable, any accumulated depreciation and
impairment losses.
The carrying amount of property, plant and
equipment is reviewed annually by Directors to
ensure it is not in excess of the recoverable amount
from these assets. The recoverable amount is
assessed on the basis of the expected net cash flows
that will be received from the assets employment
and subsequent disposal. The expected net cash
flows have been discounted to their present values in
determining recoverable amounts.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost
of the item can be measured reliably. All other repairs and
maintenance are charged to the Statement of Profit or Loss
during the financial period in which are they are incurred.
Depreciation
The depreciable amount of all fixed assets is
depreciated on a straight-line basis over their useful
lives to the consolidated entity commencing from
Annual Report 2019 / Archer Exploration Limited
55
/ Notes to the Financial Statements for the Year Ended 30 June 2019
the time the asset is held ready for use. Leasehold
improvements are depreciated over the shorter
of either the unexpired period of the lease or the
estimated useful lives of the improvements.
rehabilitation of the site in accordance with clauses of the
mining permits. Such costs have been determined using
estimates of future costs, current legal requirements and
technology on an undiscounted basis.
The depreciation rates used for each class of depreciable
assets are:
Class of Non-
Current Asset
Depreciation
Rate
10 – 33%
Basis of
Depreciation
Straight Line
Plant and
Equipment
Buildings
2%
Straight Line
e. Leases
Any changes in the estimates for the costs are accounted
on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and
extent of the restoration due to community expectations
and future legislation. Accordingly, the costs have been
determined on the basis that the restoration will be
completed within one year of abandoning the site.
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at each
reporting date. An asset’s carrying amount is written
down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These gains and losses
are included in the Statement of Profit or Loss.
d. Exploration and Evaluation Expenditure
Exploration and evaluation expenditure incurred is
accumulated in respect of each identifiable area of interest.
These costs are only carried forward to the extent that
they are expected to be recouped through the successful
development of the area or where activities in the area have
not yet reached a stage that permits reasonable assessment
of the existence of economically recoverable reserves.
Leases of fixed assets where substantially all the risks
and benefits incidental to the ownership of the asset,
but not the legal ownership that are transferred to
entities in the consolidated Group, are classified as
finance leases.
Finance leases are capitalised by recording an asset and a
liability at the lower of the amounts equal to the fair value
of the leased property or the present value of the minimum
lease payments, including any guaranteed residual values.
Lease payments are allocated between the reduction of the
lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis
over the shorter of their estimated useful lives the lease
term. Lease payments for operating leases, where
substantially all the risks and benefits remain with the
lessor, are charged as expenses in the periods in which
they are incurred.
Accumulated costs in relation to an abandoned area are
written off in full against profit in the year in which the
decision to abandon the area is made.
Lease incentives under operating leases are recognised
as a liability and amortised on a straight-line basis over
the life of the lease term.
Where a decision is made to proceed with development
the accumulated costs for the relevant area of interest
will be amortised over the life of the area according to
the rate of depletion of the economically recoverable
reserves. A regular review is undertaken of each area of
interest to determine the appropriateness of continuing to
carry forward costs in relation to that area of interest.
Costs of site restoration are provided over the life of
the facility from when exploration commences and are
included in the costs of that stage. Site restoration costs
include the dismantling and removal of mining plant,
equipment and building structures, waste removal, and
f. Financial Instruments - initial recognition and
subsequent measurement
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value
56
Annual Report 2019 / Archer Exploration Limited
/ Notes to the Financial Statements for the Year Ended 30 June 2019 through other comprehensive income (OCI), and fair value
through profit or loss.
Financial assets at amortised cost (debt instruments)
The classification of financial assets at initial recognition
depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for
managing them. With the exception of trade receivables
that do not contain a significant financing component or
for which the Group has applied the practical expedient,
the Group initially measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs. Trade receivables
that do not contain a significant financing component or
for which the Group has applied the practical expedient
are measured at the transaction price determined under
AASB 15.
In order for a financial asset to be classified and
measured at amortised cost or fair value through
OCI, it needs to give rise to cash flows that are ‘solely
payments of principal and interest (SPPI)’ on the
principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an
instrument level.
The Group’s business model for managing financial assets
refers to how it manages its financial assets in order to
generate cash flows. The business model determines
whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both.
Purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation or
convention in the market place (regular way trades) are
recognised on the trade date, i.e., the date that the Group
commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial
assets are classified in four categories:
• Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The
Group measures financial assets at amortised cost if both
of the following conditions are met:
• The financial asset is held within a business model with
the objective to hold financial assets in order to collect
contractual cash flows;
and
• The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments
of principal and interest on the principal amount
outstanding
Financial assets at amortised cost are subsequently
measured using the effective interest (EIR) method
and are subject to impairment. Gains and losses
are recognised in profit or loss when the asset is
derecognised, modified or impaired.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
primarily derecognised (i.e., removed from the Group’s
consolidated statement of financial position) when:
• The rights to receive cash flows from the asset have
expired
or
• The Group has transferred its rights to receive cash flows from
the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under
a ‘pass-through’ arrangement; and either (a) the Group has
transferred substantially all the risks and rewards of the
asset, or (b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset, but has
transferred control of the asset
• Financial assets at fair value through OCI with recycling
of cumulative gains and losses (debt instruments)
• Financial assets designated at fair value through OCI
with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
• Financial assets at fair value through profit or loss
When the Group has transferred its rights to receive cash
flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has
retained the risks and rewards of ownership. When it
has neither transferred nor retained substantially all
of the risks and rewards of the asset, nor transferred
control of the asset, the Group continues to recognise
the transferred asset to the extent of its continuing
Annual Report 2019 / Archer Exploration Limited
57
/ Notes to the Financial Statements for the Year Ended 30 June 2019
involvement. In that case, the Group also recognises
an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects
the rights and obligations that the Group has retained.
ii) Financial liabilities
Initial recognition and measurement
Continuing involvement that takes the form of a guarantee over
the transferred asset is measured at the lower of the original
carrying amount of the asset and the maximum amount of
consideration that the Group could be required to repay.
Impairment of financial assets
The Group recognises an allowance for expected credit
losses (ECLs) for all debt instruments not held at fair value
through profit or loss. ECLs are based on the difference
between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects
to receive, discounted at an approximation of the original
effective interest rate. The expected cash flows will include
cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures
for which there has not been a significant increase in
credit risk since initial recognition, ECLs are provided
for credit losses that result from default events that are
possible within the next 12-months (a 12-month ECL).
For those credit exposures for which there has been a
significant increase in credit risk since initial recognition,
a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of the
timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Group
applies a simplified approach in calculating ECLs.
Therefore, the Group does not track changes in credit risk,
but instead recognises a loss allowance based on lifetime
ECLs at each reporting date. The Group has established
a provision matrix that is based on its historical credit loss
experience, adjusted for forward-looking factors specific
to the debtors and the economic environment.
The Group considers a financial asset in default when
contractual payments are 90 days past due. However,
in certain cases, the Group may also consider a
financial asset to be in default when internal or external
information indicates that the Group is unlikely to
receive the outstanding contractual amounts in full
before taking into account any credit enhancements
held by the Group. A financial asset is written off when
there is no reasonable expectation of recovering the
contractual cash flows.
58
Annual Report 2019 / Archer Exploration Limited
Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit or
loss, loans and borrowings, payables, or as derivatives
designated as hedging instruments in an effective
hedge, as appropriate.
All financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings and
payables, net of directly attributable transaction
costs.
The Group’s financial liabilities include trade and other
payables, loans and borrowings including bank overdrafts,
and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Derecognition
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the
derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit or loss.
g. Impairment of Non-Financial Assets
At each reporting date, the Group reviews the carrying
values of its tangible and intangible assets to determine
whether there is any indication that those assets
have been impaired. If such an indication exists, the
recoverable amount of the asset, being the higher of
the asset’s fair value less costs to sell and value in use,
is compared to the asset’s carrying value. Any excess of
the asset’s carrying value over its recoverable amount is
expensed to the Statement of 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.
/ Notes to the Financial Statements for the Year Ended 30 June 2019 h. Interests in Joint Arrangements
i) the extent to which the vesting period has expired; and
The Consolidated Group’s share of assets, liabilities,
revenue and expenses of the joint operations are
included in the appropriate items of the Consolidated
Financial Statements. Details of the Consolidated
Group’s interest is shown in Note 17.
i. Employee Benefits
Provision is made for the Company’s liability for
employee benefits arising from services rendered
by employees to reporting date. Employee benefits
that are expected to be settled wholly within one
year have been measured at the amounts expected
to be paid when the liability is settled, plus related
on-costs. Employee benefits payable later than one
year have been measured at the present value of the
estimated future cash outflows to be made for these
benefits. Those cashflows are discounted using
market yields on high quality corporation bonds with
terms to maturity that match the expected timing of
cashflows.
Equity Settled Compensation
The Company provides benefits to employees
(including directors) in the form of share-based payment
transactions, whereby employees render services in
exchange for shares or rights over shares (‘equity-settled
transactions’).
The Company currently provides benefits under an
Employee Share Option Plan and a Performance Rights Plan.
The cost of these equity-settled transactions with
employees and directors is measured by reference to the
fair value at the date at which they are granted.
In valuing equity-settled transactions, no account
is taken of any performance conditions, other than
conditions linked to the price of the shares of the
Company (‘market conditions’). The cost of equity-
settled transactions is recognised, together with a
corresponding increase in equity, over the period in
which the performance conditions are fulfilled, ending
on the date on which the relevant employees become
fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled
transactions at each reporting date until vesting date
reflects:
ii) the number of awards that, in the opinion of the
directors, will ultimately vest. This opinion is formed
based on the best available information at reporting
date. No adjustment is made for the likelihood
of market performance conditions being met as
the effect of these conditions is included in the
determination of fair value at grant date.
No expense is recognised for awards that do not
ultimately vest, except for awards where vesting is
conditional upon a market condition.
Where the terms of an equity-settled award are
modified, as a minimum an expense is recognised
as if the terms had not been modified. In addition, an
expense is recognised for any increase in the value
of the transaction as a result of the modification,
as measured at the date of modification. Where an
equity-settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised
immediately. However, if a new award is substituted for
the cancelled award, and designated as a replacement
award on the date that it is granted, the cancelled and
new award are treated as if they were a modification
of the original award, as described in the previous
paragraph.
The dilutive effect, if any, of outstanding options and rights
is reflected as additional share dilution in the computation
of earnings per share.
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 include cash on hand,
deposits held at call with banks, other short-term
highly liquid investments with original maturities
of three months or less, and bank overdrafts. Bank
overdrafts are shown within short-term borrowings
in current liabilities on the Statement of Financial
Position.
Annual Report 2019 / Archer Exploration Limited
59
/ Notes to the Financial Statements for the Year Ended 30 June 2019
l. Revenue
Interest revenue is recognised on a proportional basis
taking into account the interest rates applicable to the
financial assets.
Revenue from the rendering of a service is recognised upon
the delivery of the service to the customers. All revenue is
stated net of the amount of goods and services tax (GST).
m. Borrowing Costs
Borrowing costs directly attributable to the acquisition,
construction or production of assets that necessarily take
a substantial period of time to prepare for their intended
use or sale, are added to the cost of those assets, until
such time as the assets are substantially ready for their
intended use or sale. All other borrowing costs are
recognised in profit or loss in the period in which they are
incurred.
n. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of
the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax
Office. In these circumstances, the GST is recognised
as part of the cost of acquisition of the asset or as part
of an item of the expense. Receivables and payables in
the Statement of Financial Position are shown inclusive
of GST.
Cash flows are presented in the Statement of Cash
Flows on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as
operating cash flows.
o. Comparative Figures
When required by accounting standards, comparative
figures have been adjusted to conform to changes in
presentation of the current financial year.
p. 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.
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Annual Report 2019 / Archer Exploration Limited
Key estimates
Impairment
The Group assesses impairment at each reporting date
by evaluating conditions specific to the Group that may
lead to impairment of assets. Where an impairment
trigger exists, the recoverable amount of the asset is
determined. Value–in-use calculations performed in
assessing recoverable amounts incorporate a number of
key estimates.
Impairment was recognised in respect of non-current
exploration and evaluation assets for the year ended
30 June 2019 $82,159 expensed (2018: $244,954).
Impairment recognised for the year ended 30 June
2019 and 30 June 2018 related to relinquishment of the
tenement(s) to which expenditure had been previously
capitalised.
Exploration and evaluation
The consolidated entity’s policy for exploration and
evaluation is discussed at Note 1(d). The application
of this policy requires the Directors to make certain
estimates and assumptions as to future events and
circumstances. Any such estimates and assumptions
may change as new information becomes available.
If, after having capitalised exploration and evaluation
expenditure, the Directors conclude that the
capitalised expenditure is unlikely to be recovered
by future sale or exploitation, then the relevant
capitalised amount will be written off though the
Statement of Profit or Loss.
q. Non-current assets held for sale and discontinued
operations
The Group classifies non-current assets and disposal
groups as held for sale if their carrying amounts will be
recovered principally through a sale transaction rather
than through continuing use. Non-current assets and
disposal groups classified as held for are measured
at the lower of their carrying amount and fair value
less costs to sell. Costs to sell are the incremental
costs directly attributable to the disposal of an asset
(disposal group), excluding finance costs and income
tax expense.
The criteria for held for sale classification is regarded
as met only when the sale is highly probable and the
asset or disposal group is available for immediate sale
/ Notes to the Financial Statements for the Year Ended 30 June 2019 in its present condition. Actions required to complete
the sale should indicate that it is unlikely that significant
changes to the sale will be made or that the decision to
sell will be withdrawn. Management must be committed
to the plan to sell the asset and the sale expected to
be completed within one year from the date of the
classification.
Property, plant and equipment and intangible assets are not
depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are
presented separately as current items in the statement of
financial position.
A disposal group qualifies as discontinued operation if it
is a component of an entity that either has been disposed
of, or is classified as held for sale, and:
• Represents a separate major line of business or
geographical area of operations
• Is part of a single co-ordinated plan to dispose of a
separate major line of business or geographical area of
operations or
• Is a subsidiary acquired exclusively with a view to resale
Discontinued operations are excluded from the results
of continuing operations and are presented as a single
amount as profit or loss after tax from discontinued
operations in the statement of profit or loss.
Additional disclosures are provided in Note 11. All other
notes to the financial statements include amounts for
continuing operations, unless indicated otherwise.
r. Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value
at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any
accumulated amortisation and accumulated impairment
losses. Internally generated intangibles, excluding
capitalised development costs, are not capitalised and
the related expenditure is reflected in profit or loss in
the period in which the expenditure is incurred.
Intangible assets with finite lives are amortised over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with
a finite useful life are reviewed at least at the end
of each reporting period. Changes in the expected
useful life or the expected pattern of consumption
of future economic benefits embodied in the asset
are considered to modify the amortisation period or
method, as appropriate, and are treated as changes
in accounting estimates. The amortisation expense on
intangible assets with finite lives is recognised in the
statement of profit or loss in the expense category
that is consistent with the function of the intangible
assets.
Intangible assets with indefinite useful lives are not
amortised, but are tested for impairment annually,
either individually or at the cash-generating unit
level. The assessment of indefinite life is reviewed
annually to determine whether the indefinite life
continues to be supportable. If not, the change
in useful life from indefinite to finite is made on a
prospective basis.
An intangible asset is derecognised upon disposal (i.e.,
at the date the recipient obtains control) or when no
future economic benefits are expected from its use or
disposal. Any gain or loss arising upon derecognition
of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the
asset) is included in the statement of profit or loss.
Research and development costs
Research costs are expensed as incurred and included
in the statement of profit or loss as research and
development costs. Development expenditures on an
individual project are recognised as an intangible asset
when the Group can demonstrate:
• The technical feasibility of completing the
intangible asset so that the asset will be available
for use or sale
• Its intention to complete and its ability and intention to
use or sell the asset
• How the asset will generate future economic benefits
The useful lives of intangible assets are assessed as
either finite or indefinite.
• The availability of resources to complete the asset
Annual Report 2019 / Archer Exploration Limited
61
/ Notes to the Financial Statements for the Year Ended 30 June 2019
• The ability to measure reliably the expenditure during
development
Following initial recognition of the development
expenditure as an asset, the asset is carried at cost
less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins
when development is complete and the asset is
available for use. It is amortised over the period of
expected future benefit. Amortisation is recorded in
cost of sales. During the period of development, the
asset is tested for impairment annually.
Patents and licences
The Group made upfront payments to purchase
patents and licences. The patents have been granted
for a period of 17 years by the relevant government
agency with the option of renewal at the end of this
period. Licences for the use of intellectual property are
granted for periods ranging between three and five
years depending on the specific licences. The licences
require an annual fee to be paid to continue to access
the licenses. As a result, those licences are assessed as
having an indefinite useful life.
A summary of the policies applied to the Group’s
intangible assets is, as follows:
Licences
Patents
Useful lives
Finite (5 years)
Finite (17 years)
Amortisation
method used
Internally
generated or
acquired
Amortised on
a straight-line
basis over the
period of the
licence
Amortised on
a straight-line
basis over the
period of the
patent
Acquired
Acquired
s. Going Concern basis of accounting
from operating and investing activities of $2,437,743
(2018: outlay of $2,508,909). The cash flow projections of
the Group indicate that it will require additional capital for
continued operations.
The Group’s ability to continue as a going concern is
contingent on obtaining additional capital through either an
equity capital raise, asset sale or a combination of both. If
additional capital is not obtained, then going concern basis
may not be appropriate, with the result that the Group may
have to realise its assets and extinguish its liabilities, other
than in the ordinary course of business and at amounts
different from those stated in the financial report. No
allowance for such circumstances has been made in the
financial report for the year ended 30 June 2019.
t. Adoption of New and Revised Accounting Standards
During the current year the Group adopted all of the
new and revised Australia Accounting Standards and
Interpretations applicable to its operations which became
mandatory.
New standards adopted as at 1 July 2018
AASB 15 Revenue from Contracts with Customers
AASB 15 replaces AASB 118 Revenue, AASB 111
Construction Contracts and several revenue-related
Interpretations. The new Standard has been applied as at
1 July 2018. Given the entity is a Junior Explorer and does
not have any material revenue streams the introduction
of the new standard does not have a significant impact
on the timing or amount of revenue recognized by the
group during the reporting period and therefore has been
applied using the modified approach and no prior period
restatements were required.
Revenue arises mainly from the commercial rent and
interest.
To determine whether to recognise revenue, the Group
follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
This financial report has been prepared on the basis of
going concern.
3. Determining the transaction price
The Group incurred a net loss of $1,738,332 (2018: loss of
$1,854,520) and operations were funded by a cash outlay
4. Allocating the transaction price to the performance
obligations
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Annual Report 2019 / Archer Exploration Limited
/ Notes to the Financial Statements for the Year Ended 30 June 2019
5. Recognising revenue when/as performance
obligation(s) are satisfied.
Classification and initial measurement of financial
assets
The Group enters into transactions involving a range of
the Group’s products and services. In all cases, the total
transaction price for a contract is allocated amongst the
various performance obligations based on their relative
stand-alone selling prices. The transaction price for a
contract excludes any amounts collected on behalf of
third parties.
Financial assets are classified according to their business
model and the characteristics of their contractual cash
flows. Except for those trade receivables that do not
contain a significant financing component and are
measured at the transaction price in accordance with
AASB 15, all financial assets are initially measured at fair
value adjusted for transaction costs (where applicable).
Revenue is recognised either at a point in time or over
time, when (or as) the Group satisfies performance
obligations by transferring the promised goods or services
to its customers.
The Group recognises contract liabilities for
consideration received in respect of unsatisfied
performance obligations and reports these amounts as
other liabilities in the statement of financial position.
Similarly, if the Group satisfies a performance obligation
before it receives the consideration, the Group
recognises either a contract asset or a receivable in its
statement of financial position, depending on whether
something other than the passage of time is required
before the consideration is due.
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139’s
‘Financial Instruments: Recognition and Measurement’
requirements. It makes major changes to the previous
guidance on the classification and measurement of
financial assets and introduces an ‘expected credit loss’
model for impairment of financial assets.
The Group has adopted AASB 9 as at 1 July 2018, the
Group elected not to restate prior periods as the Group
does not hold any material 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.
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 four categories:
• Financial assets at amortised cost
• Financial assets at fair value through profit or loss
(FVTPL)
• Debt instruments at fair value through other
comprehensive income (FVTOCI)
• Equity instruments at FVTOCI
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. Currently the Group
only holds financial assets at amortised cost.
Financial assets at amortised cost
Financial assets with contractual cash flows representing
solely payments of principal and interest and held within a
business model of ‘hold to collect’ contractual cash flows
are accounted for at amortised cost using the effective
interest method. The Group’s trade and most other
receivables fall into this category of financial instruments
as well as bonds that were previously classified as held-
to-maturity under AASB 139.
Impairment of financial assets
AASB 9’s new forward-looking impairment model
applies to Group’s investments at amortised cost and
debt instruments at FVTOCI. The application of the new
impairment model depends on whether there has been a
significant increase in credit risk.
Annual Report 2019 / Archer Exploration Limited
63
/ Notes to the Financial Statements for the Year Ended 30 June 2019
Trade and other receivables and contract assets
The Group makes use of a simplified approach in
accounting for trade and other receivables as well as
contract assets and records the loss allowance at the
amount equal to the expected lifetime credit losses. In
using this practical expedient, the Group uses its historical
experience, external indicators and forward-looking
information to calculate the expected credit losses using a
provision matrix.
Classification and measurement of financial liabilities
As the accounting for financial liabilities remains largely
unchanged from AASB 139, the Group’s financial
liabilities were not impacted by the adoption of AASB
9. However, for completeness, the accounting policy is
disclosed below.
The Group’s financial liabilities include borrowings, trade
and other payables and derivative financial instruments.
Financial liabilities are initially measured at fair value, and,
where applicable, adjusted for transaction costs unless
the Group designated a financial liability at fair value
through profit or loss.
Subsequently, financial liabilities are measured at
amortised cost using the effective interest method except
for derivatives and financial liabilities designated at FVPL,
which are carried subsequently at fair value with gains or
losses recognised in profit or loss (other than derivative
financial instruments that are designated and effective as
hedging instruments).
AASB Interpretation 22 Foreign Currency Transactions
and Advance Considerations
The Interpretation clarifies that, in determining the
spot exchange rate to use on initial recognition of
the related asset, expense or income (or part of it) on
the derecognition of a non-monetary asset or non-
monetary liability relating to advance consideration,
the date of the transaction is the date on which an
entity initially recognises the non-monetary asset
or non-monetary liability arising from the advance
consideration. If there are multiple payments or
receipts in advance, then the entity must determine
the date of the transactions for each payment or
receipt of advance consideration. This Interpretation
does not have any impact on the Group’s
consolidated financial statements.
64
Annual Report 2019 / Archer Exploration Limited
AASB 2017-1 Amendments to Australian Accounting
Standards – Transfer of Investment Property, Annual
Improvements 2014-2016 Cycle and Other Amendments
AASB 140 Investment Property
The amendments clarify when an entity should transfer
property, including property under construction or
development into, or out of investment property. The
amendments state that a change in use occurs when
the property meets, or ceases to meet, the definition of
investment property and there is evidence of the change in
use. A mere change in management’s intentions for the use
of a property does not provide evidence of a change in use.
These amendments do not have any impact on the Group’s
consolidated financial statements.
AASB 128 Investments in Associates and Joint Ventures
The amendments clarify that an entity that is a venture
capital organisation, or other qualifying entity, may elect, at
initial recognition on an investment-by-investment basis, to
measure its investments in associates and joint ventures
at fair value through profit or loss. If an entity that is not
itself an investment entity, has an interest in an associate or
joint venture that is an investment entity, then it may, when
applying the equity method, elect to retain the fair value
measurement applied by that investment entity associate
or joint venture to the investment entity associate’s or joint
venture’s interests in subsidiaries. This election is made
separately for each investment entity associate or joint
venture, at the later of the date on which: (a) the investment
entity associate or joint venture is initially recognised; (b) the
associate or joint venture becomes an investment entity;
and (c) the investment entity associate or joint venture first
becomes a parent. These amendments do not have any
impact on the Group’s consolidated financial statements.
AASB 1 First-time Adoption of International Financial
Reporting Standards
Short-term exemptions in paragraphs E3–E7 of AASB
1 were deleted because they have now served their
intended purpose. These amendments do not have any
impact on the Group’s consolidated financial statements.
AASB 2016-5 Amendments to Australian Accounting
Standards - Classification and Measurement of Share-
based Payment Transactions
The AASB issued amendments to AASB 2 Share-based
Payment that address three main areas: the effects of
/ Notes to the Financial Statements for the Year Ended 30 June 2019 vesting conditions on the measurement of a cash-settled
share-based payment transaction; the classification of
a share-based payment transaction with net settlement
features for withholding tax obligations; and accounting
where a modification to the terms and conditions of a
share-based payment transaction changes its classification
from cash-settled to equity-settled. On adoption, entities
are required to apply the amendments without restating
prior periods, but retrospective application is permitted
if elected for all three amendments and other criteria are
met. The Group’s accounting policy for cash-settled share-
based payments is consistent with the approach clarified
in the amendments. In addition, the Group has no share-
based payment transaction with net settlement features
for withholding tax obligations and had not made any
modifications to the terms and conditions of its share-based
payment transaction. Therefore, these amendments do
not have any impact on the Group’s consolidated financial
statements.
AASB 2016-6 Amendments to Australian Accounting
Standards - Applying AASB 9 Financial Instruments
with AASB 4 Insurance Contracts
The amendments address concerns arising from
implementing the new financial instruments standard,
AASB 9, before implementing AASB 17 Insurance
Contracts, which replaces AASB 4. The amendments
introduce two options for entities issuing insurance
contracts: a temporary exemption from applying AASB
9 and an overlay approach. These amendments are not
relevant to the Group.
Accounting standards issued but not yet effective and
not been adopted early by the Group
Australian Accounting Standards and Interpretations that
are issued, but are not yet effective, up to the date of
issuance of the Group’s financial statements are disclosed
below. The Group intends to adopt these new standards
and interpretations, if applicable, when they become
effective.
AASB 16 was issued in January 2016 and it replaces
AASB 117 Leases, AASB Interpretation 4 Determining
whether an Arrangement contains a Lease, AASB
Interpretation-115 Operating Leases-Incentives and
AASB Interpretation 127 Evaluating the Substance
of Transactions Involving the Legal Form of a Lease.
AASB 16 sets out the principles for the recognition,
measurement, presentation and disclosure of leases and
requires lessees to account for all leases under a single
on-balance sheet model similar to the accounting for
finance leases under AASB 117. The standard includes
two recognition exemptions for lessees – leases of
’low-value’ assets (e.g., personal computers) and short-
term leases (i.e., leases with a lease term of 12 months
or less). At the commencement date of a lease, a lessee
will recognise a liability to make lease payments (i.e.,
the lease liability) and an asset representing the right to
use the underlying asset during the lease term (i.e., the
right-of-use asset). Lessees will be required to separately
recognise the interest expense on the lease liability and
the depreciation expense on the right-of-use asset.
Lessees will be also required to remeasure the lease
liability upon the occurrence of certain events (e.g.,
a change in the lease term, a change in future lease
payments resulting from a change in an index or rate used
to determine those payments). The lessee will generally
recognise the amount of the remeasurement of the lease
liability as an adjustment to the right-of-use asset.
Lessor accounting under AASB 16 is substantially unchanged
from today’s accounting under AASB 117. Lessors will
continue to classify all leases using the same classification
principle as in AASB 117 and distinguish between two types
of leases: operating and finance leases.
AASB 16, which is effective for annual periods beginning
on or after 1 January 2019, requires lessees and lessors to
make more extensive disclosures than under AASB 117.
The Group plans to adopt AASB 16 using the modified
retrospective approach. The Group will elect to apply the
standard to contracts that were previously identified as
leases applying AASB 117 and AASB Interpretation 4. The
Group will therefore not apply the standard to contracts
that were not previously identified as containing a lease
applying AASB 117 and AASB Interpretation 4.
The Group will elect to use the exemptions proposed by
the standard on lease contracts for which the lease terms
ends within 12 months as of the date of initial application,
and lease contracts for which the underlying asset is
of low value. All Group leases are short-term leases,
therefore no right of use assets exist and will not be
recognised upon application of AASB 16.
AASB 17 Insurance Contracts
In July 2017, the AASB issued AASB 17 Insurance Contracts
(AASB 17), a comprehensive new accounting standard for
insurance contracts covering recognition and measurement,
Annual Report 2019 / Archer Exploration Limited
65
/ Notes to the Financial Statements for the Year Ended 30 June 2019
presentation and disclosure. Once effective, AASB 17 will
replace AASB 4 Insurance Contracts, AASB 1023 General
Insurance Contracts and AASB 1038 Life Insurance
Contracts. AASB 17 applies to all types of insurance contracts
(i.e., life, non-life, direct insurance and re-insurance),
regardless of the type of entities that issue them, as well
as to certain guarantees and financial instruments with
discretionary participation features. A few scope exceptions
will apply. The overall objective of AASB 17 is to provide
an accounting model for insurance contracts that is more
useful and consistent for insurers. The core of AASB 17 is the
general model, supplemented by:
• A specific adaptation for contracts with direct
participation features (the variable fee approach)
• A simplified approach (the premium allocation approach)
mainly for short-duration contracts
AASB 17 is effective for reporting periods beginning on or
after 1 January 2021, with comparative figures required. Early
application is permitted, provided the entity also applies
AASB 9 and AASB 15 on or before the date it first applies
AASB 17. This standard is not applicable to the Group.
AASB Interpretation 23 Uncertainty over Income Tax
Treatment
The Interpretation addresses the accounting for income
taxes when tax treatments involve uncertainty that affects
the application of AASB 112 and does not apply to taxes
or levies outside the scope of AASB 112, nor does it
specifically include requirements relating to interest and
penalties associated with uncertain tax treatments. The
Interpretation specifically addresses the following:
• Whether an entity considers uncertain tax treatments
separately
• The assumptions an entity makes about the examination
of tax treatments by taxation authorities
• How an entity determines taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax rates
• How an entity considers changes in facts and
circumstances
An entity has to determine whether to consider each
uncertain tax treatment separately or together with one or
more other uncertain tax treatments. The approach that
better predicts the resolution of the uncertainty should
66
Annual Report 2019 / Archer Exploration Limited
be followed. The interpretation is effective for annual
reporting periods beginning on or after 1 January 2019,
but certain transition reliefs are available. The Group will
apply the interpretation from its effective date, however it
is not expected to have a material impact on the Group.
AASB 2017-6 Amendments to Australian Accounting
Standards – Prepayment Features with Negative
Compensation
Under AASB 9, a debt instrument can be measured at
amortised cost or at fair value through other comprehensive
income, provided that the contractual cash flows are ‘solely
payments of principal and interest on the principal amount
outstanding’ (the SPPI criterion) and the instrument is held
within the appropriate business model for that classification.
The amendments to AASB 9 clarify that a financial asset passes
the SPPI criterion regardless of the event or circumstance that
causes the early termination of the contract and irrespective of
which party pays or receives reasonable compensation for the
early termination of the contract.
The amendments should be applied retrospectively and
are effective from 1 January 2019, with earlier application
permitted. These amendments have no impact on the
consolidated 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
The amendments address the conflict between AASB 10 and
AASB 128 in dealing with the loss of control of a subsidiary
that is sold or contributed to an associate or joint venture. The
amendments clarify that the gain or loss resulting from the sale
or contribution of assets that constitute a business, as defined
in AASB 3, between an investor and its associate or joint
venture, is recognised in full. Any gain or loss resulting from the
sale or contribution of assets that do not constitute a business,
however, is recognised only to the extent of unrelated investors’
interests in the associate or joint venture. The IASB and
AASB have deferred the effective date of these amendments
indefinitely, but an entity that early adopts the amendments
must apply them prospectively. The Group will apply these
amendments when they become effective.
AASB 2018-2 Amendments to Australian Accounting
Standards – Plan Amendment, Curtailment or
Settlement
The amendments to AASB 119 address the accounting when
a plan amendment, curtailment or settlement occurs during a
/ Notes to the Financial Statements for the Year Ended 30 June 2019 reporting period. The amendments specify that when a plan
amendment, curtailment or settlement occurs during the
annual reporting period, an entity is required to:
• Determine current service cost for the remainder of
the period after the plan amendment, curtailment
or settlement, using the actuarial assumptions used
to remeasure the net defined benefit liability (asset)
reflecting the benefits offered under the plan and the
plan assets after that event
• Determine net interest for the remainder of the period
after the plan amendment, curtailment or settlement
using: the net defined benefit liability (asset) reflecting
the benefits offered under the plan and the plan
assets after that event; and the discount rate used to
remeasure that net defined benefit liability (asset).
The amendments also clarify that an entity first determines
any past service cost, or a gain or loss on settlement,
without considering the effect of the asset ceiling. This
amount is recognised in profit or loss. An entity then
determines the effect of the asset ceiling after the plan
amendment, curtailment or settlement. Any change in that
effect, excluding amounts included in the net interest, is
recognised in other comprehensive income.
The amendments apply to plan amendments, curtailments,
or settlements occurring on or after the beginning of the first
annual reporting period that begins on or after 1 January
2019, with early application permitted. These amendments
will apply only to any future plan amendments, curtailments,
or settlements of the Group.
AASB 2017-7 Amendments to Australian Accounting
Standards – Prepayment Features with Negative
Compensation
The amendments clarify that an entity applies AASB 9
to long-term interests in an associate or joint venture
to which the equity method is not applied but that, in
substance, form part of the net investment in the associate
or joint venture (long-term interests). This clarification is
relevant because it implies that the expected credit loss
model in AASB 9 applies to such long-term interests.
The amendments also clarified that, in applying AASB 9, an
entity does not take account of any losses of the associate
or joint venture, or any impairment losses on the net
investment, recognised as adjustments to the net investment
in the associate or joint venture that arise from applying
AASB 128 Investments in Associates and Joint Ventures.
The amendments should be applied retrospectively and are
effective from 1 January 2019, with early application permitted.
Since the Group does not have such long-term interests in its
associate and joint venture, the amendments will not have an
impact on its consolidated financial statements.
AASB 2018-1 Amendments to Australian Accounting
Standards – Annual Improvements 2015–2017 Cycle
These improvements include:
• AASB 3 Business Combinations
The amendments clarify that, when an entity obtains control of a
business that is a joint operation, it applies the requirements for a
business combination achieved in stages, including remeasuring
previously held interests in the assets and liabilities of the joint
operation at fair value. In doing so, the acquirer remeasures its
entire previously held interest in the joint operation.
An entity applies those amendments to business
combinations for which the acquisition date is on
or after the beginning of the first annual reporting
period beginning on or after 1 January 2019, with early
application permitted. These amendments will apply on
future business combinations of the Group.
• AASB 11 Joint Arrangements
A party that participates in, but does not have joint
control of, a joint operation might obtain joint control
of the joint operation in which the activity of the joint
operation constitutes a business as defined in AASB 3.
The amendments clarify that the previously held interests
in that joint operation are not remeasured.
An entity applies those amendments to transactions in which it
obtains joint control on or after the beginning of the first annual
reporting period beginning on or after 1 January 2019, with early
application permitted. These amendments are currently not
applicable to the Group but may apply to future transactions.
• AASB 112 Income Taxes
The amendments clarify that the income tax
consequences of dividends are linked more directly to
past transactions or events that generated distributable
profits than to distributions to owners. Therefore, an entity
recognises the income tax consequences of dividends
in profit or loss, other comprehensive income or equity
according to where the entity originally recognised those
past transactions or events.
Annual Report 2019 / Archer Exploration Limited
67
/ Notes to the Financial Statements for the Year Ended 30 June 2019
An entity applies those amendments for annual reporting periods beginning on or after 1 January 2019, with early
application permitted. When an entity first applies those amendments, it applies them to the income tax consequences of
dividends recognised on or after the beginning of the earliest comparative period. Since the Group’s current practice is in
line with these amendments, the Group does not expect any effect on its consolidated financial statements.
• AASB 123 Borrowing Costs
The amendments clarify that an entity treats as part of general borrowings any borrowing originally made to develop a qualifying
asset when substantially all of the activities necessary to prepare that asset for its intended use or sale are complete.
An entity applies those amendments to borrowing costs incurred on or after the beginning of the annual reporting
period in which the entity first applies those amendments. An entity applies those amendments for annual reporting
periods beginning on or after 1 January 2019, with early application permitted. Since the Group’s current practice is in
line with these amendments, the Group does not expect any effect on its consolidated financial statements.
The financial report was authorised for issue on 17th September 2019 by the Board of Directors.
NOTE 2 - INCOME
- Rental income
- Interest received
- Gain on sale of plant and equipment
- Carbon Allotropes product sales
Income from continuing operations
Income from discontinued operations
Interest income received from discontinued operations
Total Income
NOTE 3 – INCOME TAX BENEFIT
a) The components of income tax benefit comprise:
Current tax
b) The prima facie tax on loss before income tax is reconciled to the income tax as
follows 30% (2018: 27.5%):
Net loss from continuing operations
Prima facie tax benefit before income tax at 30%
Research and development tax concession
Tax effect of temporary differences not brought to account as they do not meet the
recognition criteria
CONSOLIDATED GROUP
2019
$
75,473
22,131
-
-
2018
$
80,418
28,634
37,479
2,661
97,604
149,192
-
1,444
97,604
150,636
102,421
102,421
58,641
58,641
(1,840,753)
(1,913,161)
(552,226)
(552,226)
102,421
552,226
(526,119)
(526,119)
58,641
526,119
Income Tax attributable to operating loss
102,421
58,641
c) Unused tax losses for which no deferred tax asset has been recognised at 30%
5,542,536
4,779,311
68
Annual Report 2019 / Archer Exploration Limited
/ Notes to the Financial Statements for the Year Ended 30 June 2019 NOTE 4 – KEY MANAGEMENT PERSONNEL REMUNERATION
a) Names and positions held of consolidated entity key management personnel in office at any time during the
financial year are:
Mr Greg English
Chairman – Executive
Ms Alice McCleary
Director – Non-executive
Mr Paul Rix
Director – Non-executive
Dr Mohammad Choucair Chief Executive Officer
Mr Damien Connor
Chief Financial Officer & Company Secretary
Other than those employees of the company listed above there are no additional key management personnel.
b) Key Management Personnel Compensation
Refer to the Remuneration Report for details of the remuneration paid or payable to each member of the Group’s key
management personnel (KMP).
The aggregate remuneration of KMP of the Group during the year is as follows:
Short term benefits
Post-employment benefit
Share - based payments
NOTE 5 – AUDITORS’ REMUNERATION
Remuneration of the auditor for:
- auditing or review of the financial report
- tax compliance services provided by the practice of the auditor
NOTE 6 – CASH AND CASH EQUIVALENTS
Short term deposits
Cash at bank and on hand
The effective interest rate on short term bank deposits at 30 June 2019 is 1.98% (30 June
2018: 2.33%). These deposits have an average maturity term of 143 days (30 June 2018:
90 days). The Group’s exposure to interest rate risk is summarised at Note 25.
CONSOLIDATED GROUP
2019
$
779,695
61,630
85,388
926,713
31,500
-
31,500
2018
$
690,577
53,324
166,252
910,153
29,500
15,000
44,500
140,208
555,541
695,749
2,131,803
617,783
2,749,586
Annual Report 2019 / Archer Exploration Limited
69
/ Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 7 – TRADE AND OTHER RECEIVABLES
CURRENT
Prepayments 1
Other receivables 2
CONSOLIDATED GROUP
2019
$
136,684
146,037
282,721
2018
$
10,597
99,510
110,107
1. In June 2019, the Company prepaid corporate office and warehouse lease charges and share registry related services for the twelve-month period ending
30 June 2020.
2. Includes an amount of $102,421 relating to research and development tax concession for the year ended 30 June 2019 (30 June 2018: $58,641).
NOTE 8 – INVESTMENT IN CONTROLLED ENTITIES
Parent Entity
- Archer Exploration Limited
Subsidiaries of Archer Exploration Limited:
- Pirie Resources Pty Ltd
- Archer Pastoral Company Pty Ltd
- Archer Energy and Resources Pty Ltd
- SA Exploration Pty Ltd
- Carbon Allotropes Pty Limited
- Leigh Creek Magnesite Pty Ltd 1
- CH Magnesite Pty Ltd 1
Country of Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Percentage Owned
2019
2018
%
-
100
100
100
100
100
100
100
%
-
100
100
100
100
100
100
100
1. During the reporting period the Company executed a legally binding agreement for sale of subsidiaries that hold the Leigh Creek Magnesia Project
tenements (Refer to Note 18). Shareholders approved the sale of the Company’s wholly owned subsidiaries that hold the Leigh Creek Magnesia Project,
being Leigh Creek Magnesite Pty Ltd and CH Magnesite Pty Ltd, at the General Meeting of Shareholders held on 3 September 2018.
70
Annual Report 2019 / Archer Exploration Limited
/ Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 9 – PROPERTY, PLANT AND EQUIPMENT
a) Plant and Equipment at cost
Accumulated depreciation
Movements in carrying amounts:
Balance at the beginning of the year
Additions
Disposals
Depreciation
Transferred to assets held for sale
Reclassification of assets previously held for sale
Balance at 30 June
b) Land at cost
Movements in carrying amounts:
Balance at the beginning of the year
Additions
Transferred to assets held for sale 1
Write-off of Campoona Land asset
Balance at 30 June
c) Buildings at cost
Accumulated depreciation
Movements in carrying amounts:
Balance at the beginning of the year
Depreciation
Transferred to assets held for sale 1
Balance at 30 June
CONSOLIDATED GROUP
2019
$
2018
$
236,970
192,637
(177,791)
(152,617)
59,179
40,020
40,020
2,083
-
(24,294)
-
41,370
59,179
21,443
88,639
(11,587)
(17,105)
(41,370)
40,020
-
1,028,453
1,028,453
1,208,981
13,384
(1,041,837)
-
-
-
-
-
179,333
(4,000)
(175,333)
101
-
(180,629)
1,028,453
200,000
(20,667)
179,333
183,333
(4,000)
-
-
179,333
Total property, plant and equipment
59,179
1,247,806
1. Refer to Note 11 for further information regarding the non-current assets held for sale.
Annual Report 2019 / Archer Exploration Limited
71
/ Notes to the Financial Statements for the Year Ended 30 June 2019
CONSOLIDATED GROUP
2019
$
2018
$
14,500,289
11,638,439
11,638,439
13,970,106
909,294
1,504,526
(82,159)
(244,954)
(34,471)
(3,591,239)
2,069,186
-
14,500,289
11,638,439
NOTE 10 – EXPLORATION AND EVALUATION EXPENDITURE
Costs carried forward in respect of areas of interest in:
Exploration and evaluation at cost
Movements in carrying amounts:
Balance at the beginning of the year
Amounts capitalised during the year
Impairment expense during the year
Transferred to assets held for sale
Reclassification of assets previously held for sale
Balance at 30 June
During the year $10,562 (2018: $4,763) of equipment depreciation was included in
the amount capitalised as exploration and evaluation.
Impairment recognised for the year ended 30 June 2019 and 30 June 2018 related
to relinquishment of the tenement(s) to which expenditure had been previously
capitalised.
A summary by tenement is included at Note 17.
NOTE 11 – NON-CURRENT ASSETS HELD FOR SALE
Key terms of the legally binding land Sale Agreement
included:
On 8 November 2018, the Company announced the
execution of a legally binding contract (the “Sale
Agreement”), for the sale of the Sugarloaf farmland
located near the township of Cleve on South Australia’s
Eyre Peninsula. The Sugarloaf farmland is contained
within Archer tenement EL 5920 and hosts the Sugarloaf
carbon deposit and the proposed site of the Sugarloaf
Graphite Processing Facility, which may be used to
process the graphite from the nearby Campoona mining
lease.
The transaction settled on 1 July 2019 with Archer
receiving the $1.35 million sale proceeds in July 2019.
Under the terms of the Sale Agreement, Archer sold
the entirety of the Sugarloaf farmland but maintains an
option to buy back approximately 30% of the Sugarloaf
farmland, which may be required for the construction of
the Sugarloaf Graphite Processing Facility. The option to
buy back part of the land can be exercised by Archer any
time during the next 20 years.
72
Annual Report 2019 / Archer Exploration Limited
• Sale price of $1.35 million (excluding GST). A 10%
deposit was paid and held in trust on execution of the
Sale Agreement and the Company received the $1.35
million sale proceeds in July following settlement on 1
July 2019.
• Settlement took place on 1 July 2019 as scheduled.
• Settlement was subject to (the “Condition”) the buyer
obtaining finance by 1 February 2019 (“End Date”). This
condition was satisfied during the reporting period.
• Archer subsidiary company Pirie Resources Pty Ltd
(“Pirie”) has been granted an option (the “Option”) to
purchase the part the land that it requires to construct
and operate the Sugarloaf Graphite Processing Facility.
The Option may be exercised by Pirie at any time before
4 December 2038. On exercise of the Option, Pirie
agrees to purchase that part of the land that it requires
for a price approximately equal to 1.33 times market
value, adjusted for CPI.
/ Notes to the Financial Statements for the Year Ended 30 June 2019 • The purchaser has agreed to enter into land access
and compensation agreements with Archer subsidiary
companies Pirie and Archer Energy and Resources Pty
Ltd to allow these companies to access the land for
exploration and other purposes permitted under the
South Australian Mining Act.
Land and
buildings
2019
$
1,217,170
2018
$
-
NOTE 12 – TRADE AND OTHER PAYABLES
CURRENT
Unsecured liabilities:
Trade payables
Other creditors and accruals
NOTE 13 – EMPLOYEE ENTITLEMENTS
Current 1
Non-current
CONSOLIDATED GROUP
2019
$
2018
$
170,253
93,294
63,132
133,796
233,385
227,090
125,836
143,829
22,475
11,454
1. Includes an amount of $42,325 (including 9.5% SGC), in aggregate, related to outstanding STI bonus amounts payable to executives of the Company for the
performance year ended 30 June 2019 (30 June 2018: $49,500).
Annual Report 2019 / Archer Exploration Limited
73
/ Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 14 – ISSUED CAPITAL
196,304,283 (2018: 186,925,829) fully paid ordinary shares
23,873,093
23,249,187
CONSOLIDATED GROUP
2019
$
2018
$
Number
$
196,304,283
23,873,093
186,925,829
23,249,187
750,000
570,431
55,854
13,964
3,000,000
107,054
169,364
426,073
4,285,714
-
42,782
4,189
1,047
240,000
8,029
12,702
31,955
283,200
196,304,283
23,873,093
Number
$
186,925,829
23,249,187
137,194,306
40,000,376
1,670,968
954,175
628,359
696,008
1,670,314
1,166,940
2,634,457
309,926
186,925,829
19,519,325
3,000,025
125,323
71,563
47,127
52,201
125,274
87,521
197,584
23,244
23,249,187
a) Shares on issue:
30 June 2019
Issued and paid up capital
Fully paid ordinary shares
Movements in fully paid shares
Balance as at 1 July 2018
Shares issued - vested performance Rights (6 Jul 2018)
Shares issued - Exercise of SPP Options (25 Jul 2018)
Shares issued - Exercise of SPP Options (18 Aug 2018)
Shares issued - Exercise of SPP Options (31 Oct 2018)
Shares issued - vested performance rights (31 Oct 2018)
Shares issued - Exercise of SPP Options (4 Jan 2019)
Shares issued - Exercise of SPP Options (21 Feb 2019)
Shares issued - Exercise of SPP Options (6 Mar 2019)
Shares issued - Placement (22 May 2019)
Balance as at 30 June 2019
30 June 2018
Issued and paid up capital
Fully paid ordinary shares
Movements in fully paid shares
Balance as at 1 July 2017
Shares issued - Share Purchase Plan (27 Nov 2017)
Shares issued - Exercise of SPP Options (16 Feb 2018)
Shares issued - Exercise of SPP Options (13 Mar 2018)
Shares issued - Exercise of SPP Options (3 Apr 2018)
Shares issued - Exercise of SPP Options (1 May 2018)
Shares issued - Exercise of SPP Options (16 May 2018)
Shares issued - Exercise of SPP Options (7 June 2018)
Shares issued - Exercise of SPP Options (25 June 2018)
Shares issued - Exercise of SPP Options (29 June 2018)
Balance as at 30 June 2018
74
Annual Report 2019 / Archer Exploration Limited
/ Notes to the Financial Statements for the Year Ended 30 June 2019 b) Options on issue
Details of the share options outstanding as at the end of the year are set out below:
Grant Date
Options
Expiry Date
Exercise Price
30 June 2019
30 June 2018
01 February 2016
Rix Options
31 Jan 2019
22 January 2018
SPP Options
28 Feb 2019
$0.15
$0.075
-
-
-
5,000,000
8,907,978
13,907,978
On 31 January 2019, Rix Options lapsed unexercised. Paul Rix, a Director of the Company, was previously issued 5,000,000
Rix Options as compensation for the termination of a consultancy agreement between Archer and Mr. Rix which was in
place prior to Mr. Rix becoming a director of Archer.
On 22 January 2019, 18,639,125 SPP Options were issued pursuant to the prospectus dated 5 December 2017. SPP Options,
had an exercise price of $0.075 each and expiry date of 28 February 2019. During the reporting period 1,342,740 SPP
Options were exercised into shares and the remaining 7,565,238 SPP Options expired unexercised.
No further Options were issued, exercised or forfeited during the reporting period.
All Options were unlisted.
c) Performance Rights on issue
Details of the performance rights outstanding as at the end of the year are set out below:
Grant Date
Total Granted
Expiry Date
Exercise Price
Total Vested Total Forfeited
28 Oct 2016
30 Oct 2017
6 Jul 2018
2,700,000
3,000,000
450,000
31 Jul 2019
Nil
31 Jul 2019
Nil
Nil
Nil
750,000
3,000,000
-
1,200,000
-
150,000
Balance at
30 June 2019 1
750,000
-
300,000
1,050,000
1. On 8 July 2019, the Company allotted 787,500 fully paid ordinary shares as a result of vesting of 75% of Performance Rights previously issued to employees
that met the performance conditions for the year ended 30 June 2019. The remaining 262,500 Performance Rights (representing 25%) were forfeited.
During the reporting period, 450,000 Rights were granted to employees of the Company. The Rights were granted in
accordance with the long-term equity incentive as outlined in the Archer Performance Rights Plan. The Rights are subject
to meeting vesting criteria for the performance period 1 July 2018 to 30 June 2019 and expire on 31 July 2019. 150,000 of
those Rights lapsed during the reporting period in accordance with the terms of the Performance Rights Plan.
During the reporting period, 3,000,000 new shares were issued to Mohammad Choucair following the vesting of Rights
previously issued to him as consideration for the Company’s acquisition of Carbon Allotropes Pty Limited. The vesting of the
Rights was subject to the satisfaction of certain conditions precedent.
Annual Report 2019 / Archer Exploration Limited
75
/ Notes to the Financial Statements for the Year Ended 30 June 2019
d) Capital Management
The Group has no externally imposed capital requirements
NOTE 15 – EARNINGS PER SHARE
Reconciliation of earnings to Statement of Profit or Loss and other
Comprehensive Income
Loss for year used to calculate basic EPS
CONSOLIDATED GROUP
2019
$
2018
$
(1,738,332)
(1,854,520)
Number
Number
a) Weighted average number of shares outstanding during the year
190,946,622
162,236,875
used in calculation of basic EPS
CONSOLIDATED GROUP
2019
$
24,698
240,000
264,698
2018
$
263,632
240,000
503,632
NOTE 16 – RESERVES
Share based payment reserve
Acquisition reserve
The share based payments reserve records items recognised as an
expense on valuation of options or performance rights.
The acquisition reserve represents the fair value 3,000,000 performance
rights previously issued as consideration for the Company’s acquisition
of Carbon Allotropes Pty Limited, treated in accordance with AASB 3
Business Combinations. There are no changes from the prior year.
76
Annual Report 2019 / Archer Exploration Limited
/ Notes to the Financial Statements for the Year Ended 30 June 2019 NOTE 17 – TENEMENT INTERESTS
Exploration Licences
The Company’s interest in tenements are as follows:
Location
Tenement
Commodity
2019
Carrying value $
2018
Carrying value $
South Australia
Carappee Hill
Wildhorse Plains
Waddikee
Cockabidnie
North Cowell
Carpie Puntha
Mt Messenger 2
Blue Hills
Pine Creek
Altimeter
Napoleons Hat
North Burra
Whyte Yarcowie
Franklyn
Peterborough 1
Bendigo 1
Yanyarrie 2
Ediacara 2
Ediacara 2
New South Wales
North Broken Hill
North Broken Hill
North Broken Hill
North Broken Hill
North Broken Hill 1
North Broken Hill 2
North Broken Hill 2
North Broken Hill 2
Crowie Creek 4
Western Australia
Mt Keith
EL 5920
EL 5804
EL 5815
EL 5791
EL 6363
EL 5870
EL 5383
EL 5794
EL 6000
EL 6029
EL 5769
EL 6351
EL 5935
EL 6160
EL 6287
EL 6354
EL 5909
EL 4869
PELA 567
EL 8592
EL 8593
EL 8594
EL 8595
EL 8779
EL 8596
EL 8597
EL 8598
EL 8871
Graphite
Graphite
Graphite
Graphite
Graphite
Graphite
Graphite
Copper/Gold
Copper/Gold
Copper/Gold
Copper/Gold
Base Metals
Cobalt/Copper
Copper/Gold
Copper/Gold
Copper/Gold
Barite
Barite
Coal to Liquids
Cobalt/Copper
Cobalt/Copper
Cobalt/Copper
Cobalt/Copper
Cobalt/Copper
Cobalt/Copper
Cobalt/Copper
Cobalt/Copper
Copper/Gold
E53/1926
Nickel
Total non-current exploration and evaluation expenditure
1,473,446
8,945,620
1,013,881
36,752
391,703
25,899
-
604,023
458,351
68,061
134,876
977,996
22,371
18,937
10,348
7,985
-
-
-
1,492,029
8,696,325
996,358
35,052
383,256
16,257
19,162
346,019
318,101
51,984
118,528
952,266
17,717
10,200
-
-
-
-
-
14,190,249
13,453,254
79,855
118,447
73,519
13,951
9,197
-
-
-
-
294,969
15,072
15,072
14,500,289
62,208
97,817
32,145
6,889
-
25,300
24,372
5,640
-
254,371
--
-
13,707,625
Annual Report 2019 / Archer Exploration Limited
77
/ Notes to the Financial Statements for the Year Ended 30 June 2019
Tenements classified as assets of disposal group held for sale:
South Australia
Witchelina 5
Termination Hill 5
Exploration assets classified as assets of disposal group held for sale
EL 6019
EL 5730
Magnesite
Magnesite
153,985
1,402,538
1,556,523
145,112
1,376,941
1,522,053
TOTAL TENEMENT INTEREST CARRYING VALUE
16,056,812
15,229,678
OTHER LICENSES
Location
Campoona Shaft
Sugarloaf
Pindari
Tenement
ML 6470
MPL 150
MPL 151
Description
Campoona Shaft
Graphite and graphene processing
facility
Pindari pipeline
1. Granted during the year.
2. Relinquished during the year.
3. Relinquished subsequent to year end.
4. EL 8871 (Crowie Creek) was granted subsequent to 30 June 2019.
5. The magnesite tenements consist the Leigh Creek Magnesia Project and were sold during the Reporting Period. The sale and purchase of these tenements
is subject to satisfaction of several conditions precedent (Refer to Note 18).
All tenements and tenement applications are held 100%
by Archer and its related body corporates except for EL
5804 where S Uranium Pty Ltd has the rights to explore and
develop uranium projects.
operations’, for both SA Exploration Pty Ltd and Archer
Energy & Resources Pty Ltd have been re-classified in the
Statement of Financial Position to no longer be classified
as held for sale.
NOTE 18 – ASSETS AND DISPOSAL GROUPS
CLASSIFIED AS HELD FOR SALE AND
DISCONTINUTED OPERATIONS
On 9 October 2018, the Company announced the
termination of the Share Sale Agreements with Ballista
Resources Limited and subsequent cessation of
non-graphite assets spin-out via IPO. The Share Sale
Agreement involved the sale of Archer’s wholly owned
subsidiaries SA Exploration Pty Ltd and Archer Energy &
Resources Pty Ltd to Ballista Resources Limited. Given the
Share Agreement has been terminated all of the assets
and liabilities previously classified as ‘assets and disposal
groups classified as held for sale and discontinued
SALE OF THE LEIGH CREEK MAGNESIA PROJECT
During the year ended 30 June 2018, the Company
decided to sell its wholly owned subsidiaries, Leigh Creek
Magnesite Pty Ltd (LCM) and CH Magnesite Pty Ltd (CHM),
which together comprise the Company’s Leigh Creek
Magnesia Project.
The Leigh Creek Magnesia Project is located
approximately 20 kilometres northwest of Leigh Creek
Township, South Australia and consists of two granted
exploration licences – EL 5730 (held by LCM) and EL 6019
(held by CHM).
78
Annual Report 2019 / Archer Exploration Limited
/ Notes to the Financial Statements for the Year Ended 30 June 2019
This decision was taken in line with the group’s strategy to
intensify its focus on its advanced materials activities with
the associated development of the Campoona graphite
mine, which is consistent with the goal of the Review,
to focus Archer’s future investment and management
attention towards areas that will deliver the best risk
weighted returns for its investors.
Consequently, certain assets and liabilities allocable to
Leigh Creek Magnesite Pty Ltd and CH Magnesite Pty Ltd
are classified as a disposal group.
Revenue and expenses, gains and losses relating to the
discontinuation of this subgroup have been eliminated
from profit or loss from the groups continuing operations
and are shown as a single line item on the face of the
statement of profit or loss.
In July 2018, the Company announced that it had signed
a legally binding share sale agreement (Magnesia Sale
Agreement) for the sale of all of the shares in Leigh Creek
Magnesite Pty Ltd (LCM) and CH Magnesite Pty Ltd (CHM)
to Australian Consolidated Venture Capital Pty Ltd (ACN
611 739 210). Australian Consolidated Venture Capital Pty
Ltd is an incorporated private Australian company, based
in Brisbane.
Key terms of the Magnesia Sale Agreement are:
• The Magnesia Sale Agreement is between Archer and
Australian Consolidated Venture Capital Pty Ltd and
deals with the sale by Archer of all the shares in LCM
and CHM to the Buyer.
• Completion of the sale and purchase of the shares
(Completion) is conditional upon:
1. Buyer conducting due diligence by 31 August 2018
and the results of those enquiries being to the
satisfaction of the Buyer. This condition has been
satisfied;
2. Archer shareholder approval of the sale of the
shares in LCM and CHM. This condition has been
satisfied; and
3. the consent (if required) of counterparties under
agreements affecting the Tenements. This condition
has since been satisfied.
• Completion will take place on 31 December 2019 or
such other date agreed by Archer and the Buyer. The
date for Completion may be extended by Buyer for
three months at a time (up to 31 December 2019) by
paying to Archer $250,000 per extension (up to a
total of $500,000) (Extension Payments).
• The purchase price payable to Archer is $2.0 million
(Base Payment) plus a Bonus. The Buyer has paid to
Archer a $50,000 non-refundable deposit (Deposit)
and a further non-refundable $200,000 (Additional
Deposit). The Deposit, Additional Deposit and Extension
Payments (if any) all form part of the Base Payment, the
balance of which may be satisfied in cash or, if a listing
has occurred, shares in the relevant listed entity (or a
combination of both) at the election of the Buyer.
The Bonus is payable if the Buyer or a related entity of the
Buyer lists on a regulated stock exchange either before
or within 6 months of Completion. The Bonus amount is
an additional payment calculated as 5.0% of an amount
$2 million below the IPO market capitalisation of the listed
entity.
Shareholders approved the sale of the Company’s
wholly owned subsidiaries Leigh Creek Magnesite Pty
Ltd and CH Magnesite Pty Ltd at the General Meeting of
Shareholders held on 3 September 2018.
Annual Report 2019 / Archer Exploration Limited
79
/ Notes to the Financial Statements for the Year Ended 30 June 2019
Operating profit of Leigh Creek Magnesite Pty Ltd and CH Magnesite Pty Ltd are shown below:
Impairment of exploration assets
Other expenses
Loss for year from discontinued operations before tax
Assets and Liabilities of Leigh Creek Magnesite Pty Ltd and CH Magnesite Pty Ltd
are shown below:
Statement of financial position
Other current assets
Non-current exploration assets
Assets of the disposal group held for sale
Current trade payables
Liabilities included in disposal group held for sale
Cash flows generated by Leigh Creek Magnesite Pty Ltd and CH Magnesite Pty Ltd
are shown below:
Operating activities
Net cash used in discontinued operations
NOTE 19 – CAPITAL AND OTHER EXPENDITURE COMMITMENTS
(a) Expenditure Commitments
Capital commitments relating to tenements
The consolidated group is required to meet minimum expenditure requirements
of various Australian Government bodies. These obligations are subject to
renegotiation, may be farmed out or may be relinquished and have not been
provided for in the financial statements.
Exploration expenditure commitments
Expenditure commitment
2019
$
-
(845)
(845)
2018
$
(21,618)
(1,145)
(22,763)
136
1,556,523
1,556,659
263
263
18
1,522,053
1,522,071
254
254
(845)
(845)
(1,145)
(1,145)
CONSOLIDATED GROUP
2018
2019
$
$
2,309,500 1
2,339,500
1. Includes exploration expenditure commitments relating to tenements that have been classified as assets of disposal groups held for sale in the statement of
financial position as at 30 June 2019.
Property commitments
The Company has no property commitments as at 30
June 2019 (30 June 2018: Nil)
(b) Contingent Assets/Liabilities
of the Sugarloaf Graphite Processing Facility. The option to
buy back part of the land can be exercised by Archer any time
during the next 20 years. Refer Note 11.
The Group did not have any further contingent assets as
at 30 June 2019.
In November 2018, Company executed a legally binding
contract (the “Sale Agreement”), for the sale of the Sugarloaf
farmland located near the township of Cleve on South
Australia’s Eyre Peninsula. Under the terms of the Sale
Agreement, Archer sold the entirety of the Sugarloaf farmland
but maintains an option to buy back approximately 30% of the
Sugarloaf farmland, which may be required for the construction
The Group did not have any contingent liabilities as at 30
June 2019.
The Group has minimum expenditure commitments on
exploration licences as per the terms of the exploration licences.
Unexpended commitment for a particular year can be deferred
or rolled over to subsequent years of the licence term.
80
Annual Report 2019 / Archer Exploration Limited
/ Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 20 – OPERATING SEGMENTS
Segment Information
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 have concluded at this time there are no
separately identifiable segments.
NOTE 21 – CASH FLOW INFORMATION
a) Reconciliation of cash flows from operations with Loss after Income Tax
CONSOLIDATED GROUP
2019
$
2018
$
Loss after income tax
(1,738,332)
(1,854,520)
Depreciation (net of capitalised depreciation)
Amortisation of intangibles
Write-off of Campoona land asset
Write-down of inventory
Share based payment - to employees
Gain on sale of assets
Exploration expenditure expensed
Impairment of exploration assets
Changes in assets and liabilities:
- Decrease / (increase) in trade and other receivables
- Increase / (decrease) in trade and other payables
- Decrease in employee entitlements
Net cash used in operating activities
17,730
52,403
-
76,800
89,066
-
33,287
82,159
(117,124)
(77,693)
(6,971)
17,105
104,808
180,629
167,816
(37,479)
12,977
244,954
75,586
86,955
64,370
(1,588,675)
(936,799)
Annual Report 2019 / Archer Exploration Limited
81
/ Notes to the Financial Statements for the Year Ended 30 June 2019
b) Non-Cash Financing and Investing Activities
There were no non-cash financing and investing activities undertaken during the current or prior reporting periods.
NOTE 22 – SHARE BASED PAYMENTS
a) Performance Rights
Balance at the beginning of the year
Performance rights granted during the year
Performance rights vested during the year
Performance rights forfeited /cancelled during the year
Balance at the end of the year
CONSOLIDATED GROUP
2019
2018
Number of
Performance Rights
Number of
Performance Rights
4,500,000
450,000
(3,750,000)
(150,000)
1,050,000 2
2,250,000
3,000,000 1
-
(750,000)
4,500,000
1. The share-based payment expense for the 3,000,000 Rights issued to Dr Mohammad Choucair, the founder of Carbon Allotropes Pty Limited was calculated
in accordance with AASB 2: Share Based Payments. The total fair value for the 3,000,000 Rights issued is $240,000, with $80,000 expensed to the
Statement of Profit or Loss and Other Comprehensive Income under employee benefits expense for the year ended 30 June 2019 (30 June 2018: $160,000)
to recognise the vesting criteria within the Share Purchase Agreement.
2. On 8 July 2019, the Company allotted 787,500 fully paid ordinary shares as a result of vesting of 75% of Performance Rights previously issued to employees that met the
performance conditions for the year ended 30 June 2019. The remaining 262,500 Performance Rights (representing 25%) were forfeited
In October 2016, 2,700,000 Performance Rights (Rights)
were granted to Directors, the Company Secretary and
employees. The Rights were granted in accordance with
the long-term equity incentive as outlined in the Archer
Performance Rights Plan. Following director Tom Phillip’s
retirement on in December 2016, the 450,000 Rights that
were granted to him lapsed.
in accordance with the long-term equity incentive as
outlined in the Archer Performance Rights Plan. The
Rights are subject to meeting vesting criteria for the
performance period 1 July 2018 to 30 June 2019 and
expire on 31 July 2019. During the reporting period
150,000 of these Rights lapsed in accordance with
the Archer Performance Rights Plan.
The share based payment expense for the remaining
2,250,000 Rights issued was calculated in accordance
with AASB 2: Share Based Payments, using a Monte Carlo
Simulation method to determine the fair value of the
Rights.
The total fair value for the 2,250,000 Rights issued is
$25,253 and this amount is being expensed over 3 years
commencing 1 July 2016. $2,850 has been included in
the Statement of Profit or Loss and Other Comprehensive
Income under employee benefits expense for the year
ended 30 June 2019 (30 June 2018: $7,816).
Rights granted during the reporting period
On 6 July 2018, a 450,000 Rights were granted to
employees of the Company. The Rights were granted
The share-based payment expense for the 450,000
Rights issued was calculated in accordance with AASB 2:
Share Based Payments, using a Monte Carlo Simulation
method to determine the fair value of the Rights. The total
fair value for the 450,000 Rights issued during the period
is $9,324 and this amount is being expensed over 1 year
commencing 1 July 2018.
The fair value of the Rights was estimated on the grant
date using the following assumptions:
Stock price 1 July 2018 ($/share)
Stock volatility (%)
Index volatility (%)
Correlation (stock v index)
Risk-free interest rate (%)
Expected life (years)
0.10
103.4
18.2
0.06
2.00
0.98
82
Annual Report 2019 / Archer Exploration Limited
/ Notes to the Financial Statements for the Year Ended 30 June 2019
During the period the share-based payments expense was
reduced following the lapsing of 150,000 Rights during the
reporting period. An amount of $6,216 has been included
in the Statement of Profit or Loss and Other Comprehensive
Income under employee benefits expense for the year
ended 30 June 2019 (30 June 2018: nil)
Rights vested during the period
On 6 July 2018, 750,000 new shares were issued as a
result of the vesting of Rights that met the performance
conditions for the performance period 1 July 2017 to 30
June 2018.
On 31 October 2018, 3,000,000 new shares were issued to Mohammad Choucair following the vesting of Rights previously
issued to him as consideration for the Company’s acquisition of Carbon Allotropes Pty Limited. The vesting of the Rights
was subject to the satisfaction of certain conditions precedent.
Rights forfeited during the period
During the reporting period, 150,000 Rights previously issued to an employee of the Company, lapsed in accordance with
the terms and conditions of the Company’s Performance Rights Plan.
b) Unlisted Options
Balance at the beginning of the year
Unlisted options granted during the year
Unlisted options vested during the year
Unlisted options lapsed/cancelled during the year
Balance at the end of the year
CONSOLIDATED GROUP
Number of Unlisted Options Number of Unlisted Options
2019
2018
5,000,000
5,000,000
-
-
(5,000,000)
-
-
-
-
5,000,000
During the reporting period 5,000,000 Rix Options lapsed, unexercised. There were no further options issued, exercised or
forfeited during the reporting period.
No amount has been included in the Statement of Profit or Loss and Other Comprehensive Income under employee
benefits expense during the reporting period (2018: Nil).
During the period an amount of $88,000 has been transferred to retained losses from the Share Based Payments Reserve.
Annual Report 2019 / Archer Exploration Limited
83
/ Notes to the Financial Statements for the Year Ended 30 June 2019
NOTE 23 – EVENTS AFTER REPORTING DATE
NOTE 25 – FINANCIAL INSTRUMENTS
a) Financial Risk Management Policies
The Group’s financial instruments consist mainly
of deposits with banks, short-term investments,
accounts receivable and payables and loans to
and from subsidiaries.
i) Treasury Risk Management
The Board meets on a regular basis to analyse
financial risk exposure and to evaluate
treasury management strategies in the context
of the most recent economic conditions and
forecasts.
The Board’s overall risk management strategy
seeks to assist the consolidated group in
meeting its financial targets, whilst minimising
potential adverse effects on financial
performance.
ii) Financial Risk Exposure and Management
the main risk the group is exposed to through its
financial instruments is interest rate risk.
Interest Rate Risk
Interest rate risk is managed with a mixture of
fixed and floating rate cash deposits. It is the
policy of the group to keep surplus cash in high
yielding deposits.
• On 1 July 2019, the Company announced the completion
of the sale of its Sugarloaf farmland located on the Eyre
Peninsula. At completion Archer received $1.35 million.
Under the terms of the Sale Agreement, Archer has
sold the entirety of the Sugarloaf farmland but maintains
an option to buy back approximately 30% of the Land,
which will be required for the construction of the
Processing Facility. The option to buy back part of the
land can be exercised by Archer any time during the
next 20 years.
• On 8 July 2019, the Company allotted 787,500 fully
paid ordinary shares as a result of vesting of 75% of the
Performance Rights that met the performance conditions
for the year ended 30 June 2019. The remaining
262,500 Performance Rights (representing 25%) were
forfeited.
Other than the matters noted above there have been no
other subsequent events which require disclosure.
NOTE 24 – RELATED PARTY TRANSACTIONS
a) Subsidiaries
Interests in subsidiaries are disclosed in Note 8.
b) Key Management Personnel
Disclosures relating to Key Management personnel are
set out in Note 4 and the Remuneration Report contained
within the Directors’ Report.
c) Other transactions with related parties
Piper Alderman lawyers were paid a total of $26,453
(2018: $57,449) for legal services rendered to the Group.
Mr English is a partner of Piper Alderman lawyers. The
fees were at normal commercial rates.
84
Annual Report 2019 / Archer Exploration Limited
/ Notes to the Financial Statements for the Year Ended 30 June 2019
2019
%
0.40%
1.98%
Weighted Average
Effective Interest Rate
Interest Bearing Non Interest Bearing
Total
2018
%
2019
$
$
2018
2019
2018
2019
2018
$
$
$
-
-
$
-
-
1.50%
555,541
617,783
2.33%
140,208
2,131,803
555,541
617,783
140,208 2,131,803
-
-
282,721
110,107
282,721
110,107
695,749 2,749,586
282,721
110,107
978,470 2,859,693
-
-
-
-
-
-
-
-
(483,385)
(227,090)
(483,385)
(227,090)
(483,385)
(227,090)
(483,385)
(227,090)
695,749
2,749,586
200,664 (116,983)
495,085 2,632,603
Financial Assets
Cash at bank
Deposits
Receivables
Total Financial
Assets
Financial liabilities
Payables
Total Financial
Liabilities
Total Net Financial
Assets/ (Liabilities)
b) Sensitivity Analysis
Interest Rate and Price Risk
The group has performed a sensitivity analysis relating to its exposure to interest rate risk and price risk at reporting date. This
sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks.
Interest Rate Sensitivity Analysis
At 30 June 2019, the effect on loss and equity as a result of changes in the interest rate, with all other variables remaining
constant would be as follows:
Change in loss
- Increase in interest rates by 2%
- Decrease in interest rates by 2%
Change in equity
- Increase in interest rates by 2%
- Decrease in interest rates by 2%
CONSOLIDATED GROUP
2019
$
2,804
(2,804)
2,804
(2,804)
2018
$
42,636
(42,636)
42,636
(42,636)
c) Net Fair Value of Financial Assets and Liabilities
The net fair value of cash and cash equivalent and non-
interest bearing monetary financial assets and financial
liabilities of the consolidated entity approximate their
carrying value.
flows by the current interest rates for assets and liabilities
with similar risk profiles. The balances are not materially
different from those disclosed in the balance sheet of the
consolidated entity.
d) Credit Risk
The net fair value of other monetary financial assets and
financial liabilities is based on discounting future cash
The maximum exposure to credit risk, excluding the value
of any collateral or other security, at reporting date to
Annual Report 2019 / Archer Exploration Limited
85
/ Notes to the Financial Statements for the Year Ended 30 June 2019
recognised financial assets, is the carrying amount, net
of any provisions for doubtful debts of those assets, as
disclosed in the balance sheet and notes to the financial
statements.
The consolidated entity does not have any material
credit risk exposure to any single debtor or group of
debtors under financial instruments entered into by the
consolidated entity.
NOTE 26 – ARCHER EXPLORATION LIMITED PARENT COMPANY INFORMATION
PARENT ENTITY
ASSETS
Current Assets
Non-current assets
Loans to subsidiaries
Investments in subsidiaries
Other non-current assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Non-current Liabilities
Loans from subsidiaries
TOTAL LIABILITIES
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
FINANCIAL PERFORMANCE
Loss for the year 1
Other comprehensive income
TOTAL EQUITY
PARENT ENTITY
2019
$
2018
$
706,318
2,656,821
-
266,624
94,005
1,066,947
518,072
22,475
25,269
565,816
-
266,624
35,787
2,959,232
320,994
11,454
25,268
357,716
23,873,093
264,698
(23,636,660)
501,131
23,249,187
503,632
(21,151,303)
2,601,516
(2,485,357)
-
(2,485,357)
(12,066,936)
-
(12,066,936)
1. Includes expense associated with the elimination of intercompany balances between wholly owned subsidiaries within the Archer Group as at the end of the
respective reporting periods.
Guarantees in relation to relation to the debts of
subsidiaries
Contingent Liabilities
Archer Exploration Limited has not entered into a deed
of cross guarantee with its wholly-owned subsidiaries
Pirie Resources Pty Ltd, Archer Pastoral Company Pty
Ltd, Leigh Creek Magnesite Pty Ltd, Archer Energy &
Resources Pty Ltd, SA Exploration Limited, CH Magnesite
Pty Ltd and Carbon Allotropes Pty Limited.
86
Annual Report 2019 / Archer Exploration Limited
Archer Exploration Limited has no contingent liabilities as
at 30 June 2019 (2018: nil).
Contractual Commitments
Archer Exploration Limited has no contractual
commitments as at 30 June 2019 (2018: nil).
In July 2018, the Company and the vendor re-structured the
terms of the Campoona land sale agreement such that instead
of purchasing the land outright, Archer has been granted an
option of acquiring the land sometime in the next 20 years.
/ Notes to the Financial Statements for the Year Ended 30 June 2019 The Directors of the Company declare that:
1. the Financial Statements and Notes as set out on pages 50 to 86 are in accordance with the Corporations Act 2001 and:
a) comply with Australian Accounting Standards and International Financial Reporting Standards as disclosed in Note 1;
and
b) give a true and fair view of the financial position as at 30 June 2019 and of the performance for the year ended on that
date of the Company and Consolidated Group;
2. the Executive Chairman and the Chief Financial Officer have each declared that:
a) the financial records of the Company for the year ended have been properly maintained in accordance with section
286 of the Corporations Act 2001;
b) the financial statements and notes for the financial year comply with the Accounting Standards; and
c) the financial statements and notes give a true and fair view;
3. in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
GREG ENGLISH
CHAIRMAN
Adelaide
Dated this 17th September 2019
Annual Report 2019 / Archer Exploration Limited
87
/ Directors Declaration
88
Annual Report 2019 / Archer Exploration Limited
Annual Report 2019 / Archer Exploration Limited
89
90
Annual Report 2019 / Archer Exploration Limited
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91
ADDITIONAL INFORMATION
Compiled as at 11 September 2019
Additional information required by the ASX Listing Rules and not disclosed elsewhere in this report is set out below.
SHAREHOLDER INFORMATION
Substantial Shareholders
There are no substantial shareholders in the Company with 5% or greater relevant interest in securities of the company.
Distribution of equity securities
Number of security holders by size of holding:
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 999,999,999
Total
Shares
148
322
484
1,210
370
2,534
Unlisted Options
Unlisted Performance Rights
-
-
-
-
-
-
-
-
-
-
-
-
Unmarketable Parcels
Minimum parcel size
Minimum $500.00 parcel at
$0.14 per unit
3,572
Holders
273
Units
355,254
VOTING RIGHTS
At meeting of members or classes of members.
Ordinary shares
On a show of hands, every person present who is a member or proxy, attorney or representative of a member has one vote.
Unlisted options and Unlisted Performance Rights
No voting rights.
92
Annual Report 2019 / Archer Exploration Limited
/ Additional Information TWENTY LARGEST HOLDERS OF EACH CLASS OF QUOTED EQUITY SECURITY
Ordinary Shares
Rank
Name
Units % Issued capital
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
GDE EXPLORATION (SA) PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
DR MOHAMMAD CHOUCAIR
MS ALICE MCCLEARY + MR BRIAN JOHN MCCLEARY
MR ROGER EDWARD KOCH
MR BASIL CATSIPORDAS
BNP PARIBAS NOMINEES PTY LTD
GDE EXPLORATION (SA) PTY LTD
MR JOHN VINCENT WIGGINS
DEBORAH ANNETTE ROSSITER
MR PETER PALAN + MRS CLARE PALAN
MR ALISTAIR CHARLES JACKSON
KOOYAP PTY LTD
GERARD ANDERSON SUPER PTY LTD
MR STEPHEN MAHNKEN + MS DIOR MAHNKEN
MR PETER IRWIN
NAVIGATOR AUSTRALIA LTD
MR NEVILLE ROBERT STEVENS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
7,543,414
7,534,798
6,847,608
3,972,236
3,112,500
2,700,761
2,600,000
2,000,000
1,956,417
1,947,435
1,917,945
1,883,679
1,836,363
1,547,347
1,500,000
1,478,041
1,428,571
1,400,000
1,208,197
1,195,348
3.83
3.82
3.47
2.02
1.58
1.37
1.32
1.01
0.99
0.99
0.97
0.96
0.93
0.79
0.76
0.75
0.72
0.71
0.61
0.61
55,610,660
28.22
Corporate Governance Statement
For the Year Ended 30 June 2019
The Corporate Governance Statement for the Group is located in the Corporate Governance section of the Company’s
website at: www.archerx.com.au
Annual Report 2019 / Archer Exploration Limited
93
/ Additional Information
DIRECTORS
AUDITORS
Greg English – Executive Chairman
Alice McCleary – Non-Executive Director
Paul Rix – Non-Executive Director
Grant Thornton Audit Pty Ltd
Level 3, 170 Frome Street
ADELAIDE SA 5000
CHIEF EXECUTIVE OFFICER
Mohammad Choucair
COMPANY SECRETARY
Damien Connor
SOLICITOR
Piper Alderman
Level 16, 70 Franklin Street
ADELAIDE SA 5000
REGISTERED OFFICE
BANKERS
Ground Floor
28 Greenhill Road
WAYVILLE SA 5034
Telephone:
Fax:
Email:
+61 8 8272 3288
+61 8 8272 3888
info@archerx.com.au
SHARE REGISTRY
Computershare Investor Services Pty Ltd
Level 5, 115 Grenfell Street
ADELAIDE SA 5000
National Australia Bank
Level 11, 22 King William Street
ADELAIDE SA 5000
AUSTRALIAN SECURITIES EXCHANGE
The Company is listed on the Australian Securities
Exchange
ASX CODE: AXE
94
Annual Report 2019 / Archer Exploration Limited
/ Corporate Directory
ANNUAL REPORT / 2019