AuKing Mining Limited
ABN 29 070 859 522
ANNUAL REPORT
For the year ended 31 December 2019
AuKing Mining Limited
2019 Annual Report
CORPORATE DIRECTORY
AuKing Mining Limited ABN 29 070 859 522
Board of Directors
Dr Huaisheng Peng (Chairman)
Mr Paul Williams (Managing Director)
Mr Zewen (Robert) Yang (Executive Director)
Mr Qinghai Wang (Non-Executive Director)
Company Secretary
Mr Paul Marshall
ASX Code: AKN
Auditors
Ernst and Young
Level 51
111 Eagle Street
Brisbane QLD 4000
Head Office
Suite 27, Level 7
320 Adelaide Street
Brisbane QLD 4000
Telephone:
Email:
Website:
07 3535 1208
admin@aukingmining.com
www.aukingmining.com
Share Registry
Link Market Services Limited
Level 21
10 Eagle Street
Brisbane QLD 4000
Telephone:
Fax:
Website:
07 3011 3333
07 3011 3100
www.ey.com
Telephone:
Facsimile:
Website:
1300 554 474
02 9287 0303
www.linkmarketservices.com.au
Page 2 of 37
AuKing Mining Limited
2019 Annual Report
CONTENTS
Directors’ Report
Company Overview and Strategy
Review of Operations
Directors and Officers
Financial Results
Future Developments
Remuneration Report
Auditor's Independence Declaration
Additional Stock Exchange Information
Annual Financial Report
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
4
4
4
6
7
8
14
15
16
17
18
19
20
33
34
Page 3 of 37
AuKing Mining Limited
2019 Annual Report
COMPANY OVERVIEW AND STRATEGY
The principal activities of the Company and its controlled entities during the year comprised ongoing identification and
assessment of copper, gold and other project opportunities for acquisition – both in Australia and overseas.
REVIEW OF OPERATIONS
AKN’s Board continues to focus on transforming the Company into a substantial mid-tier mining group, with a primary
focus on acquiring and developing near-term copper, gold and other base metal production activities (both locally and
overseas). During the course of the year, the Company assessed several project opportunities that did not proceed to a
completed transaction for various reasons.
On 30 September 2019, official quotation of the Company’s securities were suspended from trading on the ASX due to a
lack of suitable operating assets. As a result, the Company will be required to satisfy the requirements of ASX Listing
Rules Chapters 1 and 2 in order to secure re-quotation of the securities, as part of any new transaction that can be
finalised.
At the date of this Report, the Company is finalising the terms of a new proposed acquisition agreement, details of which
will be announced to the ASX as soon as terms are finalised and documentation is signed.
DIRECTORS AND OFFICERS
The following persons were directors of AuKing Mining Limited (‘AKN’ or ‘the Company’) during the whole of the financial
period and up to the date of this report, unless stated:
Dr Huaisheng Peng
Non-Executive Chairman, BE (Mining), Executive MBA, PhD (Science)
(Appointed 6/12/2016)
Dr Peng is a Chinese citizen and professional senior mining engineer with over 35 years’ experience in the mining sector.
He was born in 1964 and obtained a Mining Engineering Bachelor degree from the Northeast University in Shenyang,
Liaoning, an EMBA degree from Tsinghua University, Beijing, and a PhD in Science from Central South University at
Changsha, China. He is also a supervisor of PhD degree applicants.
From August 1984 to December 2007, Dr.Peng served in the China Nonferrous Engineering and Research Institute
successively as Engineer, Senior Engineer, Vice Director, Vice President, and Deputy General Manager of China ENFI
Engineering Corporation (China’s top engineering firm). Between 2008 and mid-2014 Dr Peng served in various roles
with Aluminum Corp of China (“Chinalco”) including Executive Director and CEO of Hong Kong Stock Exchange-listed
Chinalco Mining International Ltd (“CMI”). During this period Dr Peng oversaw construction and development of the large
Toromocho copper mine in Peru as well as the stock market listing of CMI in Hong Kong.
Dr Peng is currently President of JCHX Group Co Ltd and a Director of Shanghai Stock Exchange-listed JCHX Mining
Management Co Ltd (‘JCMM’).
Mr Paul Williams
Managing Director, LLB, BA.
(Appointed 6/3/2013)
Mr Williams holds both Bachelor of Arts and Law Degrees from the University of Queensland and practised as a corporate
and commercial lawyer with Brisbane legal firm Hopgood Ganim for 17 years. He ultimately became an equity partner of
that firm before joining Eastern Corporation as their Chief Executive Officer in August 2004. In mid-2006 Mr Williams joined
Mitsui Coal Holdings in the role of General Counsel, participating in the supervision of the coal mining interests and business
development activities within the multinational Mitsui & Co group.
Mr Williams is well known in the Brisbane investment community as well as in Sydney and Melbourne and brings to the
AKN Board a broad range of commercial and legal expertise – especially in the context of mining and exploration
activities. He also has a strong focus on corporate governance and the importance of clear and open communication of
corporate activity to the investment markets.
Mr Williams is a founding member of Equine Learning for Futures Inc., a charitable organization based in SE Queensland
which provides horse-based workshops and programs for disadvantaged children and youths.
Page 4 of 37
AuKing Mining Limited
2019 Annual Report
Mr Zewen Yang
Executive Director, BA, MComm, MAICD
(Appointed 31/7/2007)
Mr Yang has more than 25 years’ experience in mineral resources trading and project investment areas in China and
Australia. He has previously worked for China Non-Ferrous Metals Import and Export Company and has been with the
Chinalco Yunnan Copper Industry (Group) Co. Limited since March 2004.
He has a Bachelor of Arts degree majoring in Economics and specialising in International Business from Sichuan
University, China and a Masters degree of Commerce majoring in International Business from University of New South
Wales.
Mr Qinghai Wang
Non-Executive Director, MMGT and Fin
(Appointed 6/12/2016)
Mr Wang is a Chinese citizen and holds a Masters Degree in Management and Finance from the University of Bath in
the United Kingdom.
Mr Wang is currently Vice President and Director of JCMM and also the sole Director of AKN’s largest shareholder,
Bienitial International Industrial Co Ltd.
Mr. Wang previously served at JCMM in the roles of Auditor, Vice Manager of Legal & Securities Department, General
Manager of HR Management Centre, Assistant President and Vice President. In his current position Mr Wang supervises
the Operational Management and Information Technology within JCHX Mining Management Co Ltd.
Interests in the shares and options of the Company
As at the date of this report, the interests of the Directors in the shares and convertible notes of AuKing Mining Limited
are shown in the table below:
Director
Huaisheng Peng
Qinghai Wang *
Paul Williams
Zewen Yang
Ordinary
Shares
Convertible
Notes
-
-
349,018,230
10,707,173
-
75,000
-
* Shares are held by Bienitial International Industrial Co Ltd. Mr Wang is a Director of Bienitial International Industrial Co Ltd.
COMPANY SECRETARY
Mr Paul Marshall was the Secretary of AuKing Mining Limited throughout the period and until the date of this report.
Paul Marshall
Company Secretary and Chief Financial Officer, LLB, ACA
Paul Marshall is a Chartered Accountant. He holds a Bachelor of Law degree, and a post Graduate Diploma in Accounting
and Finance. He has 30 years professional experience having worked for Ernst and Young for ten years, and
subsequently twenty years spent in commercial roles as Company Secretary and CFO for a number of listed and unlisted
companies mainly in the resources sector. He has extensive experience in all aspects of company financial reporting,
corporate regulatory and governance areas, business acquisition and disposal due diligence, capital raising and company
listings and company secretarial responsibilities.
PRINCIPAL ACTIVITIES
The principal activity of the Company and its controlled entities (‘Consolidated Entity’) during the period was mineral
exploration. There were no significant changes in the nature of the Consolidated Entity’s principal activity during the
period.
Page 5 of 37
AuKing Mining Limited
2019 Annual Report
DIVIDENDS PAID OR RECOMMENDED
There were no dividends paid or recommended during the period (2018: $nil).
FINANCIAL RESULTS
Capital structure
At 31 December 2019 the Company had 932,584,461 ordinary shares on issue.
Financial position
The Consolidated Entity had net liabilities of $2,210,458 and a working capital deficit of $2,214,356 at 31 December 2019.
The Consolidated Entity’s is currently reliant on funding from its major shareholder via a shareholder loan.
Treasury policy
The Consolidated Entity does not have a formally established treasury function. The Board is responsible for managing
the Consolidated Entity’s currency risks and finance facilities. The Consolidated Entity does not currently undertake
hedging of any kind.
Liquidity and funding
At 31 December 2019 the Consolidated Entity had cash reserves of $96,661. In respect of the JCHX loan facility of $1.5
million (drawn to $1.25 million at year end), JCHX has agreed to extend the loan maturity date until such time as the
Company has completed a new transaction and satisfied the ASX’s re-quotation requirements.
Operating Results
Revenue
As an early stage exploration company, AuKing Mining Limited does not generate any recurring income other than interest
on its cash holdings.
Expenses
The Consolidated Entity’s main expenses are as follows:
Employment and consultancy expenses
Depreciation expense
Project generation and other exploration expenditure
Administration expenses
Finance costs
Total
December 2019
$
676,999
1,878
37,896
224,392
210,866
1,142,555
Comparison with Prior Year
For the 12 months ended 31 December 2019, the loss for the Consolidated Entity after providing for income tax was
$1,142,555 (2018: $1,248,372). The reduction in loss was mainly attributable to:
savings on employment costs arising from a reduction in staff numbers; and
a reduction of potential project evaluation costs.
In the event of the Company securing a new project opportunity and ASX re-quotation approval the Company expects to
establish a substantially different operating cost structure that is more consistent with a company that is in the process of
developing a mining project.
OPTIONS
As at the date of this report there were no options on issue.
Page 6 of 37
AuKing Mining Limited
2019 Annual Report
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the nature of AKN’s principal activities during the year.
AFTER BALANCE DATE EVENTS
There have been no events since 31 December 2019 that impact upon the financial report.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The growth strategy of AKN is based on two key foundations:
Exploration and development of early-stage (but well advanced and highly prospective) prospects that are secured
by way of joint venture and farm-in arrangements; and
Acquisition of interests in projects that are either in production or close to production,
both of which are aimed at AKN having significant holdings in operating (and therefore cashflow-generating) projects
within the next 3-4 years as well as a pipeline of projects capable of becoming mining operations over the medium term.
As a consequence, this growth strategy will be achieved by:
Careful management of AKN treasury;
Focus on high quality copper, gold and other mineral projects; and
Maintaining access to a strong exploration and evaluation team that can assist with project assessment and
development.
ENVIRONMENTAL ISSUES
As the Company has no project interests, it is presently not subject to any environmental regulation. Upon successful
completion of a new transaction, the Company will need to comply with applicable environmental regulations.
Page 7 of 37
AuKing Mining Limited
2019 Annual Report
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for Directors and Key Management Personnel of the Company.
Remuneration Policy
The performance of the Company depends upon the quality of its Directors and Executives. To prosper, the Company
must attract, motivate and retain highly skilled Directors and Executives.
Remuneration Committee
The Board does not have a Remuneration and Nomination Committee. The full Board is responsible for determining and
reviewing compensation arrangements for the Directors and the Executive team.
The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis
by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder
benefit from the retention of a high quality Board and Executive team.
Such officers are given the opportunity to receive their base emolument in a variety of forms including cash and fringe
benefits. It is intended that the manner of payments chosen will be optimal for the recipient without creating undue cost
for the Company.
Remuneration structure
It is the Company’s objective to provide maximum stakeholder benefit from the retention of a high quality Board and
Executive team by remunerating Directors and other Key Management Personnel fairly and appropriately with reference
to relevant employment market conditions for similar companies.
To assist in achieving this objective, the Board considers the nature and amount of Executive Directors’ and Officers’
emoluments alongside the Company’s operational performance, specifically considering their success in:
the identification of prospective tenements;
subsequent design and execution of exploration programs;
negotiating joint venture arrangements on terms favourable to the Company;
investigating other potential acquisition opportunities and negotiating the completion of those acquisitions;
expanding the level of mineral resources under the control of the company;
carrying out exploration programs in a timely and cost effective manner; and
liaising with stockbrokers, investment banks and market participants generally.
The expected outcomes of the remuneration structure are the retention and motivation of key Executives, the attraction
of quality management to the Company and performance incentives which allow Executives to share the rewards of the
success of the Company.
In accordance with best practice corporate governance, the structure of Non-Executive Director remuneration and
Executive Officers and Senior Management remuneration is separate and distinct.
Non-Executive Director Remuneration
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and
retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
The Constitution of AuKing Mining Limited and the ASX Listing Rules specify that the Non-Executive Directors are entitled
to remuneration as determined by the Company in the Annual General Meeting to be apportioned among them in such
manner as the Directors agree and, in default of agreement, equally. The maximum aggregate remuneration currently
approved by shareholders for non-executive Directors’ fees is for a total of $250,000 per annum.
If a Non-Executive Director performs extra services, which in the opinion of the Directors are outside the scope of the
ordinary duties of the Director, the Company may remunerate that Director by payment of a fixed sum determined by the
Directors in addition to or instead of the remuneration referred to above. Non-Executive Directors are entitled to be paid
travel and other expenses properly incurred by them in attending Director's or General Meetings of the Company or
otherwise in connection with the business of the Company.
Dr Peng and Mr Wang have deferred payment of their director fees until the Company’s financial position has improved.
Page 8 of 37
AuKing Mining Limited
2019 Annual Report
Executive Directors and Senior Management remuneration
The Company aims to reward the Executive Directors and Senior Management with a level and mix of remuneration
commensurate with their position and responsibilities within the Company and so as to:
reward Executives for company and individual performance against targets set by reference to appropriate
benchmarks;
align the interests of Executives with those of shareholders;
link reward with the strategic goals and performance of the Company; and
ensure total remuneration is competitive by market standards.
The remuneration of the Managing Director and Senior Management may from time to time be fixed by the Board. As
noted above, the Board’s policy is to align Executive objectives with shareholder and business objectives by providing a
fixed remuneration component and offering long-term incentives. The level of fixed remuneration is set so as to provide
a base level of remuneration which is both appropriate to the position and is competitive in the market.
Fixed remuneration is reviewed annually by the Board, and the process consists of a review of both the Company’s
operational performance and individual performance, relevant comparative remuneration in the market and where
appropriate, external advice provided by executive remuneration consultants.
In relation to the payment of bonuses, options and other incentive payments, discretion is exercised by the Board, having
regard to the overall performance of the Company and the performance of the individual.
Employment contracts
It is the Board’s policy that employment agreements are entered into with all Directors, Executives and employees.
The current employment agreement with the Managing Director has a six month notice period and in the case of the
Executive Directors and with the CFO, there is a three month notice period.
All other employment agreements have one month (or less) notice periods. No current employment contracts contain
early termination clauses.
No retirement allowances for non-executive directors are paid.
Managing Director
The Managing Director, Mr Paul Williams is employed under an executive services contract entered into in March 2013.
The contract had an initial three year period. The contract continued on the same terms and conditions for the year
ended 31 December 2017 and remains current at the date of this report. Under the terms of the current contract Mr
Williams’ current remuneration package includes the following:
Base salary of $300,000 per annum, inclusive of superannuation;
During the year Mr Williams reduced his remuneration to $182,564, with amounts owing of $117,346 to be paid only
once the Company is in a financial position to do so.
Executive Directors
An Executive Director, Mr Zewen Yang, is employed under an executive services contract entered into in July 2008. The
contract had a service term of three years and continues to be extended pending a formal review. Under the terms of
the current contract Mr Yang’s current remuneration package includes the following:
Base salary of $156,120.
During the year Mr Yang reduced his remuneration to $93,072, with amounts owing of $63,048 to be paid only once the
Company is in a financial position to do so.
Mr Yang is also able to earn a bonus as determined by the Board. The bonus will be determined by the Board of the
Company at the end of each financial year. Payment of any or all of the Bonus will be at the sole discretion of the Company
acting reasonably. In exercising its discretion and in determining whether, acting reasonably, all or part of the bonus is to
be paid, the Board of the Company must consider matters including, but not limited to:
Page 9 of 37
AuKing Mining Limited
2019 Annual Report
Whether the Executive has met performance objectives to be agreed to by the Board of the Company and the
Executive from time to time;
The performance of the Company’s share price on ASX that may be attributed to the Executive’s performance;
The Company’s ability to secure relevant acquisitions to be made by the Company; and
The Company’s financial performance for the preceding twelve (12) month period and specifically, whether the
Company has successfully grown revenue.
Company Secretary and CFO
The Company Secretary and CFO, Mr Paul Marshall, is engaged on an on-going consultancy style agreement for the
provision of services as company secretary and chief financial officer. Services are invoiced monthly based on services
provided. The contract provides for a three month notice period.
Page 10 of 37
AuKing Mining Limited
2019 Annual Report
(a) Details of Directors and other Key Management Personnel
Directors
Huaisheng Peng Non-Executive Chairman
Qinghai Wang
Paul Williams
Zewen Yang
Non-Executive Director
Managing Director
Executive Director
Key Management Personnel
Paul Marshall
Company Secretary and CFO
(b) Remuneration of Directors and other Key Management Personnel
31 December 2019
Directors
Huaisheng Peng
Qinghai Wang
Paul Williams
Zewen Yang
36,000
30,000
273,973
142,575
Key Management Personnel
Paul Marshall
39,000
521,458
Short Term
Post-Employment
Salary &
Fees
Cash
Bonus
Other
Superan-
nuation
Retirement
benefits
Share-based
Payments
Options and
performance
shares
Total
Performance
Related %
% consisting
of equity
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,027
13,545
-
39,572
-
-
-
-
-
-
-
-
-
-
-
-
36,000
30,000
300,000
156,120
39,000
561,120
-
-
-
-
-
-
-
-
-
-
-
-
From 1 April 2018, Dr Peng and Mr Wang have deferred payment of their director fees until the Company’s financial
position has improved. Director fees owing to Dr Peng and Mr Wang at 31 December 2019 are $63,000 and $52,500
respectively.
During the year Mr Williams, Mr Yang and Mr Marshall deferred payment for a portion of their fees until the Company’s
financial position has improved. Fees owing at 31 December 2019 were:
Paul Williams $117,346
Zewen Yang $63,048
Paul Marshall $13,000
Short Term
Post-Employment
Salary &
Fees
Cash
Bonus
Other
Superan-
nuation
Retirement
benefits
Share-based
Payments
Options and
performance
shares
Total
Performance
Related %
% consisting
of equity
31 December 2018
Directors
Huaisheng Peng
Qinghai Wang
Paul Williams
Zewen Yang
36,000
30,000
279,951
156,120
Key Management Personnel
Paul Marshall
52,000
554,071
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,049
-
-
20,049
-
-
-
-
-
-
-
-
-
-
-
-
36,000
30,000
300,000
156,120
52,000
574,120
-
-
-
-
-
-
-
-
-
-
-
-
(c) Shares issued on exercise of remuneration options or performance shares
There were no shares issued on the exercise of compensation options or performance shares during the period.
Page 11 of 37
AuKing Mining Limited
2019 Annual Report
(d) Director and Key Management Personnel Equity Holdings
Director/Key Management Personnel share holdings (number of shares)
December 2019
Directors
Huaisheng Peng
Qinghai Wang 1
Paul Williams
Zewen Yang
Opening
Balance
Granted as
remuneration
Purchased
Net change on
appointment/
resignation
-
349,018,230
10,707,173
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Closing
Balance
-
349,018,230
10,707,173
-
5,000,000
Key Management Personnel
Paul Marshall
5,000,000
1 Shares are held by Bienitial International Industrial Co Ltd. Mr Wang is a Director of Bienitial International Industrial Co Ltd.
(e) Additional Information
The factors that are considered to affect shareholder return since over the last 5 financial periods are summarised below:
Measures
Share price at end of financial period
Market capitalisation at end of financial period ($M)
December
2019
$
December
2018
$
December
2017
$
December
2016
$
December
2015
$
0.002
1.87
0.002
1.87
0.006
5.60
0.008
7.10
0.026
12.30
Loss for the financial period
1,142,555
1,248,372
2,238,131
5,059,394
9,112,524
Director and Key Management Personnel remuneration
561,120
574,120
573,520
347,996
543,520
Given that the remuneration is commercially reasonable, the link between remuneration, Company performance and
shareholder wealth generation is tenuous, particularly in the exploration and development stage of a minerals company.
Share prices are subject to the influence of international metal prices and market sentiment towards the sector and
increases or decreases may occur independently of executive performance or remuneration.
The Company may issue options to provide an incentive for directors and key management personnel which, it is believed,
is in line with industry standards and practice and is also believed to align the interests of directors and key management
personnel with those of the Company’s shareholders.
End of Remuneration Report
Page 12 of 37
AuKing Mining Limited
2019 Annual Report
INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITOR
Each Director and the Secretary of the Company has the right of access to all relevant information.
The Company has insured all of the Directors of AuKing Mining Limited. The contract of insurance prohibits the disclosure
of the nature of the liabilities covered and amount of the premium paid. The Corporations Act does not require disclosure
of the information in these circumstances.
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of
its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No
payment has been made to indemnify Ernst & Young during or since the financial year.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings
to which the Company is a party for the purposes of taking responsibility on behalf of the Company for all or any part of
those proceedings. The Company was not a party to any such proceedings during the period.
DIRECTORS’ MEETINGS
The number of meetings of Directors (including meetings of committees of directors) held during the period and the
number of meetings attended by each Director was as follows:
Huaisheng Peng
Qinghai Wang
Paul Williams
Zewen Yang
Directors’ Meetings
A
2
2
2
2
B
2
2
2
2
A – Number of meetings attended
B – Number of meetings held during the time the director held office during the period
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditor's expertise and experience with the Company and/or the group are important.
No non-audit services were provided by the auditor of the parent entity, Ernst & Young and its related practices.
AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration forms part of the Directors’ Report.
Signed in accordance with a resolution of the directors.
Paul Williams
Director
3 April 2020
Page 13 of 37
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Auditor’s Independence Declaration to the Directors of AuKing Mining
Limited
As lead auditor for the audit of the financial report of AuKing Mining Limited for the year ended 31
December 2019, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of AuKing Mining Limited and the entities it controlled during the
financial year.
Ernst & Young
Andrew Carrick
Partner
3 April 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
AuKing Mining Limited
2019 Annual Report
ADDITIONAL STOCK EXCHANGE INFORMATION
Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as follows.
The information is current as at 20 March 2020.
(a)
Distribution of equity securities – AKN Ordinary Fully Paid Shares
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable Parcels
(b)
Twenty largest holders
Securities
No. of holders
911,553,276
18,257,744
2,245,008
492,690
35,743
932,584,461
35,229,960
254
464
275
153
131
1,277
1,108
%
97.74%
1.96%
0.24%
0.05%
0.00%
100.00%
3.78%
Rank
Name
No. Shares
%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
BIENTIAL INTERNATIONAL INDUSTRIAL CO LTD #
YUNNAN COPPER INDUSTRY (GROUP) CO LIMITED #
BILLY FLESHMAN
MR ANTHONY JOHN BARBER
MR PAUL ROBERT WILLIAMS & MS JILL CAROLINE STRACHAN
MR PETER GERARD TIGHE & MRS PATRICIA JOAN TIGHE
MR NORMAN JOSEPH ZILLMAN
MR BARRY EDWARD TANTON & MRS ELIZABETH MARY TANTON
ELLIOTT NOMINEES PTY LTD
SAGAR SMSF PTY LTD
MR JEFFREY HOWARD LATIMER & MRS JUDITH ANN LATIMER
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR ANTHONY DEAN MILICIA
MR JONATHAN PAUL KERSHAW MARSHALL
MR IANAKI SEMERDZIEV
LEMUEL INVESTMENTS LIMITED
CITICORP NOMINEES PTY LIMITED
MR JOSEPH IGNATIUS D'SOUZA
HAMPSHIRE AUTOMOTIVE CENTRE PTY LTD
MINESTRIKE PTY LTD
349,018,230
299,922,326
15,163,208
11,500,002
10,357,173
10,033,333
7,980,343
7,500,000
7,150,000
6,270,000
5,500,000
5,155,364
5,030,000
5,000,000
4,750,000
4,000,000
3,925,109
3,846,000
3,800,000
3,683,251
37.42%
32.16%
1.63%
1.23%
1.11%
1.08%
0.86%
0.80%
0.77%
0.67%
0.59%
0.55%
0.54%
0.54%
0.51%
0.43%
0.42%
0.41%
0.41%
0.39%
Total
Balance of register
769,584,339
163,000,122
82.52%
17.48%
Grand total
932,584,461
100.00%
# Substantial Shareholder
(c)
Voting Rights
All fully paid ordinary shares carry one vote per share without restriction.
(d)
Interests in Exploration Tenements
During the course of 2019, AuKing Mining Limited did not hold any mining and exploration tenements.
Page 15 of 37
AuKing Mining Limited
2019 Annual Report
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2019
Note
Finance income
Gain on disposal of financial assets
Fair value movement on financial assets
3
Employment and consultancy expenses
Depreciation expense
Project generation and other exploration costs expensed
Administration expenses
Finance costs
Loss before income tax
Income tax expense
Loss for the period
Loss after income tax
7
12
2019
$
-
9,476
-
(676,999)
(1,878)
(37,896)
(224,392)
(210,866)
2018
$
575
-
(52,000)
(751,872)
(5,867)
(154,576)
(237,959)
(46,673)
(1,142,555)
(1,248,372)
-
-
(1,142,555)
(1,248,372)
(1,142,555)
(1,248,372)
Other comprehensive income/(loss)
Other comprehensive income for the period, net of tax
-
-
Total comprehensive loss
(1,142,555)
(1,248,372)
Earnings per share
Basic and diluted loss per share
Cents
Cents
11
(0.12)
(0.13)
The Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to the Consolidated Financial Statements.
Page 16 of 37
AuKing Mining Limited
2019 Annual Report
Consolidated Balance Sheet
As at 31 December 2019
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other receivables
Other financial assets
Plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Employee benefit provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET LIABILITIES
EQUITY
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
2
4
3
5
7
6
8
9
2019
$
96,661
3,865
7,032
107,558
2,470
-
1,428
3,898
2018
$
80,295
45,246
29,464
155,005
3,850
42,000
3,307
49,157
111,456
204,162
369,910
1,881,319
70,685
2,321,914
163,308
1,047,221
61,536
1,272,065
2,321,914
1,272,065
(2,210,458)
(1,067,903)
42,630,609
379,457
42,630,609
379,457
(45,220,524)
(44,077,969)
(2,210,458)
(1,067,903)
The Consolidated Balance Sheet should be read in conjunction with the Notes to the Consolidated Financial Statements
Page 17 of 37
AuKing Mining Limited
2019 Annual Report
Consolidated Statement of Changes in Equity
For the year ended 31 December 2019
Consolidated Entity
Share
Capital
$
Reserves
$
Accumulated
Losses
$
Total
Equity
$
Balance at 1 January 2018
42,630,609
379,457
(42,829,597)
180,469
Transactions with owners in their capacity as owners
Issue of share capital
Share issue costs
Comprehensive income
Loss after income tax
Other comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
(1,248,372)
-
(1,248,372)
-
Balance at 31 December 2018
42,630,609
379,457
(44,077,969)
(1,067,903)
Balance at 1 January 2019
42,630,609
379,457
(44,077,969)
(1,067,903)
Transactions with owners in their capacity as owners
Issue of share capital
Share issue costs
Comprehensive income
Loss after income tax
Other comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
(1,142,555)
-
(1,142,555)
-
Balance at 31 December 2019
42,630,609
379,457
(45,220,524)
(2,210,458)
The Consolidated Balance Sheet should be read in conjunction with the Notes to the Consolidated Financial Statements
Page 18 of 37
AuKing Mining Limited
2019 Annual Report
Consolidated Cash Flow Statement
For the year ended 31 December 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Finance costs
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Security deposit refunds
Payments for plant & equipment
Proceeds from the disposal of financial assets
Net cash provided by/(used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Capital raising costs paid
Proceeds from borrowings
Net cash provided by financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
Note
2019
$
2018
$
(658,342)
(1,046,627)
-
(1,768)
(660,110)
575
-
(1,046,052)
-
-
51,476
51,476
-
-
625,000
625,000
16,365
80,295
9,137
(3,124)
-
6,013
-
-
750,000
750,000
(290,039)
370,334
96,661
80,295
2
2
2
The Consolidated Cash Flow Statement should be read in conjunction with the Notes to the Consolidated Financial Statements.
Page 19 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Introduction
This financial report covers the Consolidated Entity of AuKing Mining Limited (the “Company”) and its controlled entities
(together referred to as the “Consolidated Entity”). AuKing Mining Limited is a listed public company, incorporated and
domiciled in Australia. The Consolidated Entity is a for-profit entity for the purpose of preparing the financial statements.
Operations and principal activities
The principal activity of the Consolidated Entity is mineral exploration.
Currency
The financial report is presented in Australian dollars, which is the functional currency of the Company, and is rounded to
the nearest one dollar.
Authorisation of financial report
The financial report was authorised for issue on 3 April 2020.
Comparative figures
When required by accounting standards comparative figures have been adjusted to conform to changes in presentation
for the current financial period.
Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, and the
Corporations Act 2001.
Compliance with IFRS
The consolidated financial statements are general purpose financial statements which have been prepared in accordance
with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the
Corporation Act 2001. The consolidated financial statements comply with International Financial Reporting Standards
(IFRSs) adopted by the International Accounting Standards Board (IASB).
Historical cost convention
The financial statements have been prepared on an accruals basis and are based on historical costs, modified, where
applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the Consolidated Entity’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed below.
Key estimates – impairment
The Consolidated Entity assesses impairment at each reporting date by evaluating conditions specific to the Consolidated
Entity that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is
determined.
Going Concern
At 31 December 2019, the Consolidated Entity reported a net current asset deficiency and net asset deficiency of
$2,214,356 and $2,210,458 respectively. The observed deficiencies are largely due to the Consolidated Entity’s funding
in the recent year being received by way of a loan from its largest shareholder and convertible notes.
The Consolidated Entity had cash of $99,661 at 31 December 2019 and undrawn, committed facilities of $250,000 under
its shareholder loan expiring 30 September 2020. While the Group has a committed facility, the remaining $250,000 facility
is only available if the Company secures a project interest that has been approved by ASX on an “in principle” basis, as
opposed to simply funding ongoing corporate and administrative expenses.
The Consolidated Entity has obtained confirmation from its directors, including the managing director, that payment of
directors’ fees and salaries totalling $295,894 at 31 December 2019, will be deferred until the Consolidated Entity
completes a capital raising transaction associated with a re-quotation on the ASX. At this time, the Consolidated Entity
and its directors anticipate settling the unpaid amount with the issue of new shares. The Consolidated Entity is also
receiving the benefit of extended payment terms from a number of its suppliers of corporate and administrative services.
Page 20 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Given the existence of the above deferral of directors’ fees and salaries and the informal financial support of key suppliers,
the Consolidated Entity’s available cash at 31 December 2019 is sufficient to meet the Consolidated Entity’s corporate and
administrative activities in the short term but are not sufficient to:
Fund the Consolidated Entity’s corporate and administrative activities beyond 30 June 2020;
Fund for the Consolidated Entity’s due diligence, analysis and investment in known and emerging investment
opportunities in the absence of ASX approval for the project interest on and “in principle” basis and beyond 30 June
2020; or
Fund the repayment of the Consolidated Entity’s shareholder loan and convertible notes (refer Note 7) and any
accrued interest at maturity, if these amounts are not otherwise converted to ordinary share capital as part of a re-
quotation of the ASX or as otherwise stipulated in the convertible note agreements.
The Consolidated Entity does not generate revenue to fund operations and ongoing investment in exploration activities.
The ability of the Consolidated Entity to continue as a going concern is dependent on its ability to raise additional equity
(refer also note 19) and the continued support of its creditors and financiers.
These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Consolidated
Entity’s ability to continue as a going concern and therefore, the Consolidated Entity may be unable to realise its assets
and discharge its liabilities in the normal course of business.
If a project is acquired, the Consolidated Entity will need to conduct further capital raising activities, with both existing
shareholders (by way of an entitlement offer) and to new investors, to fund the acquisition and evaluation of the project.
The Consolidated Entity has primarily been funded over the last year through a loan from its largest shareholder and the
proceeds from the issue of convertible notes. Proceeds from future capital raising activities will be used to settle this
shareholder loan and return the Consolidated Entity’s net assets and working capital to a surplus. In the absence of a
capital raising prior to 30 June 2020, the Directors are confident of
Securing a deferral of the requirement to repay the shareholder loan; or
Negotiating the conversion of the loan and convertible notes to equity; and
Negotiating the continued extension of payment terms with key suppliers of corporate and administrative services.
As at the date of this report, no firm funding facilities are in place. If there are delays in sourcing equity funding for planned
activities when the need arises, the Company has plans in place to scale back its activities and expenditure until adequate
funding is obtained.
The Directors are confident of securing funds as and when necessary to meet the Consolidated Entity’s obligations as and
when they fall due. On this basis, the Directors have prepared the financial statements on a going concern basis, which
contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the
ordinary course of business. No adjustment has been made to the classification and amounts of recorded assets and
liabilities should the Consolidated Entity be unable to continue as a going concern.
Page 21 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(a)
New accounting standards and interpretations
The Consolidated Entity applied AASB 16 Leases (“AASB 16”) for the first time from 1 January 2019. The nature and
effect of the changes, as a result of the adoption of the new standard, is described below.
Other than the changes described below, the accounting policies adopted are consistent with those of the previous financial
year. Several other amendments and interpretations applied for the first time during the year but these changes did not
have an impact on the Consolidated Entity’s financial statements and hence, have not been disclosed. The Consolidated
Entity has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective.
Reference
Title
Summary
AASB 16
Leases
The key features of AASB 16 are as follows:
Lessee accounting
• Lessees are required to recognise assets and liabilities for all leases
with a term of more than 12 months, unless the underlying asset is of
low value.
• A lessee measures right-of-use assets similarly to other non-financial
assets and lease liabilities similarly to other financial liabilities.
• Assets and liabilities arising from a lease are initially measured on a
present value basis. The measurement includes non-cancellable lease
payments (including inflation-linked payments), and also includes
payments to be made in optional periods if the lessee is reasonably
certain to exercise an option to extend the lease, or not to exercise an
option to terminate the lease.
• AASB 16 contains disclosure requirements for lessees.
Lessor accounting
• AASB 16 substantially carries forward the lessor accounting
requirements in IAS 17. Accordingly, a lessor continues to classify its
leases as operating leases or finance leases, and to account for those
two types of leases differently.
• AASB 16 also requires enhanced disclosures to be provided by lessors
that will improve information disclosed about a lessor’s risk exposure,
particularly to residual value risk.
The Consolidated Entity currently only has one short-term lease for office space and consequently adoption of the above
Standard did not have a material impact on the Group's financial assets or financial position, financial performance or
disclosure.
(b)
New Standards and Interpretations Not Yet Adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2019
reporting periods. The Consolidated Entity has decided against early adoption of these standards. The Consolidated
Entity’s assessment of the impact of these new standards and interpretations is that they are not expected to have a
material impact on the Group's financial assets or financial position, financial performance or disclosure.
Page 22 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 2 CASH AND CASH FLOW INFORMATION
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of financing and
investing activities, which are disclosed as operating cash flows.
December 2019
December 2018
$
$
Reconciliation of cash flows used in operations with loss after income tax
Loss after income tax
(1,142,555)
(1,248,372)
Non-cash items in loss after income tax
Depreciation
Accrued interest expense
Fair value finance charges recognised – convertible notes
Loss/(gain) on financial assets
Movements in assets and liabilities
Other receivables
Other assets
Trade payables and accruals
Provisions
Cash flow from operations
Reconciliation of cash
1,878
115,348
93,750
(9,476)
41,381
22,432
207,938
9,149
5,867
46,673
-
52,000
(35,652)
131
116,902
16,399
(660,110)
(1,046,052)
Cash at the end of the financial period as shown in the statements of cash flows is reconciled to items in the balance sheet
as follows:
Cash on hand and at bank
Cash on deposit
86,661
10,000
96,661
327,446
42,888
370,334
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.
Reconciliation of cash and non-cash movements in borrowings for the year
Opening balance at 1 January
1,047,221
250,548
Cash movements in borrowings
Drawdowns
Non-cash movements in borrowings
Accrued interest
Fair value finance charges recognised – convertible notes
Closing balance
625,000
750,000
115,348
93,750
1,881,319
46,673
-
1,047,221
Page 23 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 3 OTHER FINANCIAL ASSETS
Shares in Hammer Metals Limited (“HMX”)
December 2019
December 2018
$
-
$
42,000
Other financial assets are non-derivative financial assets that are either not suitable to be classified into other categories
of financial assets due to their nature, or they are designated as such by management. They comprise investments in the
equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.
Under AASB 9, the Consolidated Entity’s investment is Hammer Metals Limited is classified as at fair value through profit
and loss and such all gains and losses are reflected in the profit and loss.
AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair
value measurement hierarchy:
(i)
(ii)
(iii)
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices) (level 2), and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
Level 1 Investments: Quoted prices (unadjusted) in active markets for identical assets
For the year ended 31 December 2018 the value of the listed shares was based on the closing price of Hammer Metals
Limited securities as quoted on the ASX on 31 December 2018. Total realized gains for the 2019 year included in profit
and loss was $9,476.
NOTE 4 TRADE & OTHER RECEIVABLES
Refund receivable on project generation expenses
GST receivable
Receivables are normally settled within 30 days.
NOTE 5 TRADE & OTHER PAYABLES
Trade payables
Other payables and accrued expenses
Accrued wages and fees payable to Directors
-
3,865
3,865
28,029
17,217
45,246
32,246
41,770
295,894
369,910
90,427
23,381
49,500
163,308
A liability is recorded for goods and services received prior to balance date, whether invoiced to the Consolidated Entity or
not. Trade payables are normally settled within 30 days.
NOTE 6 EMPLOYEE BENEFITS PROVISIONS
Employee benefits
70,685
45,137
Provision is made for the Consolidated Entity’s liability for employee benefits arising from services rendered by employees
to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts
expected to be paid when the liability is settled, plus related on-costs.
Page 24 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 7 BORROWINGS
Shareholder loan
Opening balance
Drawdowns during the year
Interest accrued during the year
Convertible notes
Opening balance
Drawdowns during the year
Interest accrued during the year
Fair value finance charges recognised
December 2019
December 2018
$
$
1,047,221
250,000
105,728
250,548
750,000
46,673
1,402,949
1,047,221
-
375,000
9,620
93,750
478,370
-
-
-
-
-
Total Borrowings
1,881,319
1,047,221
Shareholder loan
Shareholders loans are measured at amortised cost. Amortised cost is the amount at which the financial liability is
measured at initial recognition less principal repayments and adjusted for any cumulative amortisation of the difference
between that initial amount and the maturity amount calculated using the effective interest method.
The effective interest method is used to allocate interest expense over the relevant period and is equivalent to the rate that
discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts)
through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the
net carrying amount of the financial liability.
The shareholder loan is unsecured. The facility has a fixed interest rate of 8% per annum. The shareholder loan expires
30 September 2020. The fair value of the shareholder loan approximates its carrying amount at 31 December 2019.
Convertible notes
Convertible notes are measured at amortised cost. Amortised cost is the amount at which the financial liability is measured
at initial recognition less principal repayments and adjusted for any cumulative amortisation of the difference between that
initial amount and the maturity amount calculated using the effective interest method.
The terms of the convertible notes are as follows:
Issue date
Principal amount
Tranche 1
(Managing Director)
Tranche 2
(Private Investor)
19 July 2019
16 September 2019
$75,000
$300,000
Interest rate (payable quarterly in arrears)
10% per annum
10% per annum
Maturity date
19 July 2020
30 September 2020
Conversion rights (at election of lender)
Convertible to ordinary shares at a 25%
discount to the 20 prior trading day
VWAP, subject to shareholder approval
Convertible to ordinary shares
at a 25% discount to the 20
prior trading day VWAP
Financing Facilities
Both the shareholder loan and convertible notes were fully drawn at 31 December 2019. The Consolidated Entity did not
have access to any other finance facilities.
Restrictions as to use or withdrawal
The shareholder loan and convertible notes are not subject to any covenants or restrictions.
Page 25 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 8 SHARE CAPITAL
Issued and paid up capital is recognised at the fair value of the consideration received by the Consolidated Entity. Any
transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share
proceeds received.
Fully paid ordinary shares
Ordinary Shares
December
2019
$
December
2018
$
42,630,609
42,630,609
At the beginning of the period
Shares issue for Bonito Stage 1 at $0.053 per
share
Shares issue for Bonito Stage 2 at $0.057 per
share
At reporting date
December
2019
$
December
2018
$
December
2019
Number
December
2018
Number
42,630,609
42,380,609
932,584,461
886,914,837
-
-
125,000
125,000
-
-
23,809,443
21,860,181
42,630,609
42,630,609
932,584,461
932,584,461
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of
shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has one vote on a show of hands.
NOTE 9 RESERVES
Share based payment reserve
Foreign currency translation reserve
December 2019
December 2018
$
$
549,903
(170,446)
379,457
549,903
(170,446)
379,457
Share based payment reserve
The share based payments reserve is used to record the value of share based payments provided to directors and
employees as part of their remuneration.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries.
NOTE 10 DIVIDENDS & FRANKING CREDITS
There were no dividends paid or recommended during the period. There are no franking credits available to the
shareholders of the Company.
Page 26 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 11 EARNINGS PER SHARE
The Consolidated Entity presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary
shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary
shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential
ordinary shares.
December 2019
December 2018
$
$
Total losses used to calculate basic and dilutive EPS
(1,142,555)
(1,248,372)
Weighted average number of ordinary shares outstanding during the period
932,584,461
932,584,461
Weighted average number of dilutive options outstanding
Weighted average number of ordinary shares outstanding during the period
used in calculating EPS and dilutive EPS
-
-
932,584,461
932,584,461
Basic and diluted loss per share - cents
(0.12)
(0.13)
2019
Number
2018
Number
December 2019
December 2018
$
$
NOTE 12 INCOME TAX
Income tax expense
The income tax expense for the period comprises current income tax expense and deferred tax expense. Current income
tax expense charged to profit or loss is the tax payable on taxable income.
A reconciliation of income tax expense/(benefit) applicable to accounting profit before income tax at the statutory income
tax rate to income tax expense at the Consolidated Entity’s effective income tax rate for the periods ended 31 December
2019 and 31 December 2018 is as follows:
Accounting loss before income tax
(1,142,555)
(1,248,372)
Tax at the Australian tax rate of 27.5% (2018: 27.5%)
Non-deductible/(assessable) items
Deferred tax assets not bought to account
Income tax expense
Current tax liabilities
(314,203)
25,966
288,237
-
(343,302)
899
342,403
-
Current tax liabilities are measured at the amounts expected to be paid to the relevant taxation authority. The Consolidated
Entity did not have any current tax liabilities at 31 December 2019 (2018: Nil).
Page 27 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 12 INCOME TAX (continued)
Deferred tax balances
December 2019
December 2018
$
$
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the period
as well as unused tax losses. Deferred tax is calculated at the tax rates expected to apply to the period when the asset is
realised or liability is settled. Current and deferred tax is recognised in the statement of comprehensive income except
where it relates to items that may be recognised directly in equity, in which case the deferred tax is adjusted directly against
equity. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available
against which deductible temporary differences can be utilised. Future income tax benefits in relation to tax losses have
not been brought to account at this stage as it is not probable the benefit will be utilised. The temporary differences and
tax losses do not expire under current tax legislation.
Unrecognised temporary differences and tax losses
Tax losses
32,047,695
31,835,541
Recognised temporary differences and tax losses
Deferred tax assets and liabilities are attributable to the following:
Provisions
Other
Deferred tax assets attributed to temporary differences not recognised
Tax losses carried forward
Net deferred tax liability/(asset)
Goods & Services Tax
19,438
(1,934)
(17,504)
-
-
16,922
(8,102)
(8,820)
-
-
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 Taxation Office. In these circumstances GST is recognised as part of the acquisition
of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of
GST.
NOTE 13 RELATED PARTY AND KEY MANAGEMENT PERSONNEL
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
Key management personnel compensation
Key management personnel comprise directors and other persons having authority and responsibility for planning, directing
and controlling the activities of the Consolidated Entity.
Summary
Short-term employee benefits
Post-employment benefits
Share-based payments
December 2019
December 2018
$
$
521,548
39,572
-
561,120
554,071
20,049
-
574,120
Detailed remuneration disclosures are provided in the remuneration report on pages 8 to 12.
Amounts owed to Key Management Personnel
$308,894 is owed to Directors for unpaid director fees (December 2018: $49,500). These amounts were at call and did
not bear interest.
Page 28 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 14 FINANCIAL RISK MANAGEMENT
The Consolidated Entity's financial instruments consist mainly of deposits with banks and accounts receivable and payable.
The main risk arising from the financial instruments is foreign exchange risk.
There have been no substantive changes in the Consolidated Entity's exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used to measure them from previous periods unless
otherwise stated in this note.
The Board has overall responsibility for the determination of the Consolidated Entity's risk management objectives and
policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for day to day management of
these risks to the Managing Director and the Chief Financial Officer. The overall objective of the Board is to set policies
that seek to reduce risk as far as possible without unduly affecting the Consolidated Entity's competitiveness and flexibility.
Further details regarding these policies are set out below:
(a) Credit Risk
Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the
Consolidated Entity incurring a financial loss. This usually occurs when debtors fail to settle their obligations owing to the
Consolidated Entity.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised
financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance
sheet and notes to the financial statements. There is no collateral held as security at 31 December 2019.
Credit risk is reviewed regularly by the Board. It arises from exposure to customers as well as through deposits with
financial institutions.
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.
The credit quality of cash and cash equivalents is considered strong. The counterparty to these financial assets are
large financial institutions with strong credit ratings.
(b) Liquidity risk
Liquidity risk is the risk that the Consolidated Entity may encounter difficulties raising funds to meet financial obligations
as they fall due.
Liquidity risk is reviewed regularly by the Board.
The Consolidated Entity manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash
resources are maintained. The Consolidated Entity did not have any financing facilities available at balance date.
Refer to Note 1 “Going Concern” for details on the Consolidated Entity’s current financial position, funding arrangements
and its ability to meet its future obligations.
(c) Market Risk
Market risk arises from the use of interest bearing, tradeable and foreign currency financial instruments. It is the risk that
the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate
risk), foreign exchange rates (currency risk) or other market factors (other price risk).
The Consolidated Entity does not have any material exposure to market risk.
(d) Capital Risk Management
When managing capital, the director’s objective is to ensure the entity continues as a going concern and to maintain a
structure that ensures the lowest cost of capital available and to ensure adequate capital is available for exploration and
evaluation of tenements. In order to maintain or adjust the capital structure, the Consolidated Entity may seek to issue
new shares.
Consistent with other exploration companies, the Consolidated Entity monitors capital on the basis of forecast exploration
and development expenditure required to reach a stage which permits a reasonable assessment of the existence or
otherwise of an economically recoverable reserve. The Consolidated Entity has no minimum capital requirements.
Refer to Note 1 “Going Concern” for details on the Consolidated Entity’s current financial position, funding arrangements
and its ability to meet its future obligations.
Page 29 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 14 FINANCIAL RISK MANAGEMENT (continued)
(e) Net Fair Values
The net fair values of financial assets and liabilities approximate their carrying value. The aggregate net fair values and
carrying amounts of financial assets and liabilities are disclosed in the balance sheet and in the notes to the financial
statements.
NOTE 15 SEGMENT REPORTING
Reportable Segments
The Consolidated Entity has identified its operating segment based on internal reports that are reviewed and used by the
executive team in assessing performance and determining the allocation of resources. The Consolidated Entity does not
yet have any products or services from which it derives an income.
Management currently identifies the Consolidated Entity as having only one reportable segment, being exploration for
minerals in Australia. The financial results from this segment are equivalent to the financial statements of the consolidated
entity. All assets are located in Australia.
NOTE 16 COMMITMENTS
The Consolidated Entity currently does not have any obligations to expend minimum amounts on either operating leases
or exploration in tenement areas.
NOTE 17 CONTINGENT LIABILITIES AND CONTINGENT ASSETS
There are no contingent liabilities or contingent assets at 31 December 2019 (31 December 2018: Nil).
NOTE 18 AUDITORS’ REMUNERATION
Remuneration paid for:
Auditing and reviewing the financial report
- Ernst & Young
December 2019
December 2018
$
$
39,500
43,000
NOTE 19 EVENTS AFTER BALANCE SHEET DATE
Subsequent to 31 December 2019, the COVID 19 outbreak was declared a pandemic by the World Health Organization.
Whilst we have not seen a significant impact on our business to date, the outbreak could interfere with general activity
levels within the community and the economy. Reduced economy activity may impact of ability to raise capital in the short
term. It is not possible to estimate the impact of the outbreak’s near-term and longer effects or governments’ varying efforts
to combat the outbreak and support businesses. This being the case, we do not consider it practicable to provide a
quantitative or qualitative estimate of the potential impact of this outbreak on the Consolidated at this time.
Other the above matter, have been no other events since 31 December 2019 that impact upon the financial report.
Page 30 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 20 PARENT ENTITY INFORMATION
The Parent Entity of the Consolidated Entity is AuKing Mining Limited.
Parent Entity Financial Information
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Share capital
Reserves
Accumulated losses
Total equity
Loss after income tax
Other comprehensive income
Total comprehensive loss
Controlled Entities of the Parent Entity
December 2019
December 2018
$
$
107,558
3,898
111,456
2,296,914
-
2,296,914
154,505
49,157
203,662
1,271,566
-
1,271,566
(2,210,458)
(1,067,904)
42,630,609
559,903
(45,375,970)
42,630,609
559,903
(44,258,416)
(2,210,458)
(1,067,904)
(1,142,555)
(1,238,311)
-
-
(1,142,555)
(1,238,311)
Subsidiaries are all entities (including structured entities) over which the Consolidated Entity has control. The Consolidated
Entity controls an entity when the Consolidated Entity is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the Consolidated Entity. They are deconsolidated
from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Consolidated Entity.
Intercompany transactions, balances and unrealised gains on transactions between Consolidated Entity companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Consolidated Entity.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income
statement, statement of comprehensive income, statement of changes in equity and balance sheet respectively.
Subsidiaries are all entities (including structured entities) over which the Consolidated Entity has control. The Consolidated
Entity controls an entity when the Consolidated Entity is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the Consolidated Entity. They are deconsolidated
from the date that control ceases.
Page 31 of 37
AuKing Mining Limited
2019 Annual Report
NOTE 20 PARENT ENTITY INFORMATION (continued)
Percentage Owned
2019
%
2018
%
Country of Incorporation
China Yunnan Copper Australia Chile Limitada
100%
100%
Chile
China Yunnan Copper Australia Chile Limitada is currently in the process of being wound up.
Commitments, Contingencies and Guarantees of the Parent Entity
The minimum committed expenditure for future periods of the Parent Entity is the same as those for the Consolidated
Entity. The Parent Entity has no contingent assets, contingent liabilities or guarantees at balance date.
Page 32 of 37
AuKing Mining Limited
2019 Annual Report
DIRECTORS' DECLARATION
In the Directors opinion:
(a)
the attached consolidated financial statements and notes that are set out on pages 16 to 32 and the remuneration
report set out on pages 8 to 12 in the Directors’ Report are in accordance with the Corporations Act 2001 and other
mandatory professional reporting requirements, including:
(i)
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
giving a true and fair view of the Consolidated Entity's financial position as at 31 December 2019 and of its
performance for the financial period ended on that date.
the financial statements also comply with International Financial Reporting Standards as disclosed in Note 1 to the
consolidated financial statements; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
(b)
(c)
The directors have been given the declarations by the chief executive officer and chief financial officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of directors.
Paul Williams
Director
3 April 2020
Page 33 of 37
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent auditor’s report
To the Shareholders of AuKing Mining Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of AuKing Mining Limited (“the Company”), including its
subsidiary (“the Group”), which comprises the consolidated balance sheet as at 31 December 2019,
the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated cash flow statement for the year then ended, notes comprising a
summary of significant accounting policies and other explanatory information and the Directors’
Declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s consolidated financial position as at 31 December
2019 and of its consolidated financial performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report. We are independent of the Group in
accordance with the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia; and we have fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report which describes the principal conditions that raise
doubt about the Group’s ability to continue as a going concern. These events or conditions indicate
that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as
a going concern. Our opinion is not modified in respect of this matter.
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Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. In addition to the matter described in the Material Uncertainty
Related to Going Concern section of our report, we have determined the matter described below to be
the key audit matter to be communicated in our report. Our description of how our audit addressed
the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
Recognition and classification of convertible notes
Why significant
How our audit addressed the key audit matter
Note 8 – Borrowings to the financial report discloses
that the Group issued two tranches of convertible
notes during the year ended 31 December 2019. The
convertible notes are interest bearing, have terms of
approximately twelve (12) months, and can be
converted to ordinary shares at the election of the
noteholder any time after issue. In circumstances
where the holder elects to convert the notes to
ordinary shares, the principal amount of the notes
converts based on a 25% discount to the 20 prior
trading day VWAP.
Under Australia Accounting Standards, entities are
required to identify the equity and liability
components (including embedded derivatives) of the
convertible notes at the time of issuance and fair
value the liability component of those notes at that
time.
The identification of the equity and liability
components of convertible notes requires judgement
and the fair valuation of the liability component at
initial recognition can be complex. As such, this was
considered a key audit matter.
We evaluated the recognition, measurement and disclosure
of the Group’s convertible notes at 31 December 2019. In
performing our procedures, we:
(cid:127) Read the convertible note agreements executed
between the parties and understood the relevant
conditions;
(cid:127) Agreed the convertible note proceeds to the Group’s
bank accounts;
(cid:127) Considered the Group’s identification of the liability and
equity components of the convertible notes at each
issue date;
(cid:127) Considered the Group’s measurement of the fair value
of the liability component at each issue date;
(cid:127) Assessed the adequacy of the Group’s classification of
the convertible notes as current liabilities at 31
December 2019; and
(cid:127) Assessed the adequacy of the Group’s disclosure of the
convertible notes in the financial report.
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Information Other than the Financial Statements and Auditor’s Report
The Directors are responsible for the other information. The other information comprises the
information in the Company’s Annual Report for the year ended 31 December 2019, but does not
include the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If,
based upon the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Directors’ Responsibilities for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the Directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
·
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
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· Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control.
·
·
·
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting in
the preparation of the financial report. We also conclude, based on the audit evidence obtained,
whether a material uncertainty exists related to events and conditions that may cast significant
doubt on the entity’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in the auditor’s report to the disclosures in
the financial report about the material uncertainty or, if such disclosures are inadequate, to
modify the opinion on the financial report. However, future events or conditions may cause an
entity to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
We communicate with the Directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated to the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 12 of the Directors' Report for the
year ended 31 December 2019.
In our opinion, the Remuneration Report of AuKing Mining Limited for the year ended 31 December
2019, complies with section 300A of the Corporations Act 2001.
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Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Andrew Carrick
Partner
Brisbane
3 April 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation