2015 ANNUAL REPORT
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AURELIA METALS LTD
2 CORPORATION PLACE
ORANGE NSW 2800
ASX CODE: AMI
ABN: 37 108 476 384
PHONE: +61 2 6363 5200
FAX: +61 2 6361 4711
WWW.AURELIAMETALS.COM
CONTENTS
COMPANY INFORMATION ........................................................................................................................................... 2
CHAIRMAN’S LETTER..................................................................................................................................................... 3
REVIEW OF OPERATIONS........................................................................................................................................... 5
COMPETENT PERSONS STATEMENTS ............................................................................................................... 11
STATEMENT OF RESOURCES AND RESERVES ........................................................................................... 13
DIRECTORS’ REPORT .................................................................................................................................................. 14
REMUNERATION REPORT (AUDITED) .............................................................................................................. 28
FINANCIAL STATEMENTS ......................................................................................................................................... 34
NOTES TO FINANCIAL STATEMENTS................................................................................................................ 38
DIRECTORS’ DECLARATION ................................................................................................................................... 78
AUDITORS INDEPENDENCE DECLARATION ................................................................................................. 79
INDEPENDENT AUDITORS REPORT ...................................................................................................................80
ADDITIONAL ASX INFORMATION ....................................................................................................................... 83
AURELIA METALS LIMITED –
ANNUAL REPORT 2015 1
COMPANY INFORMATION
Directors
Mr Anthony Wehby – Chairman
Mr Gary Comb
Mr Paul Espie
Mr Mark Milazzo
Company Secretary
Mr Richard Willson
Registered Office and Principal Place of Business
Aurelia Metals Limited
2 Corporation Place
ORANGE NSW 2800
Telephone:
Facsimile:
Email: office@aureliametals.com
(02) 6363 5200
(02) 6361 4711
Share Register
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross WA 6153
Telephone:
Facsimile:
(08) 9315 2333
(08) 9315 2233
Stock Exchange Listing
Aurelia Metals Limited shares are listed on the Australian Stock Exchange, the home branch being Perth. ASX Code:
AMI
Auditors
Ernst and Young
680 George Street
Sydney NSW 2000
Website
www.aureliametals.com
2
AURELIA METALS LIMITED –
ANNUAL REPORT 2015
CHAIRMAN’S LETTER
Dear Stakeholders
Looking back into the 2015 financial year Aurelia achieved some notable milestones, some of which were imminent at
the time of our last AGM. It graduated from being an exploration company to being a mining company, a processing
plant was built and brought on line, gold and base metal concentrates were produced and sales during commissioning
and commercial production in excess of A$36m were achieved.
While the Hera mine continues to improve and provide every reason for confidence in its future, there is money to be
spent to rectify process plant problems. The reality for the future of Aurelia is complex and uncertain.
The Financial Statements set out in this Annual Report reflect the impact of both the operating problems experienced
during and since commissioning of the Hera processing plant and the dispute with Glencore regarding conversion of
Facility A and Facility B Converting Notes. It is clear from those Financial Statements that in order to remain viable
Aurelia needs to repair its Balance Sheet and establish adequate liquidity to achieve the potential of its assets.
At the time of writing, the Company is in litigation with Glencore; by the time of our AGM the initial results of that
litigation may be known – I will, therefore, update shareholders at an appropriate time before the AGM.
I am pleased to advise that, despite the ongoing proceedings in the Supreme Court of NSW, negotiations with
Glencore to secure an agreed settlement are continuing.
Throughout these very trying times I have been buoyed by the operational improvements being made at Hera and by
the focus, commitment and support of our staff, contractors and suppliers. While not yet being in a financial position
to make the necessary changes to the processing plant, the operations at Hera are now cash flow positive.
Contact from shareholders during this period, to express support or provide advice, has been greatly appreciated.
On behalf of the Board, and personally, I express my deep appreciation to staff and management for their
professionalism and dedication in difficult times. Finally, a sincere thank you to my fellow directors for their support
and unflagging commitment to the Company.
Yours sincerely
Anthony Wehby
Non-Executive Chairman
12 October 2015
AURELIA METALS LIMITED – ANNUAL REPORT 2015
3
4
AURELIA METALS LIMITED – ANNUAL REPORT 2015
REVIEW OF OPERATIONS
The financial year commenced strongly for Aurelia with the on-time completion of the Hera project construction, the
first gold and concentrate production in the December quarter, and numerous strong exploration drilling results
extending the Hera deposit to the north and south.
Disappointing operating performance since the commencement of the Hera Project commissioning provided for a poor
operating result with a net loss recorded for the period of $118.158 million after a $92.915 million asset impairment.
At time of this report, the operating performance of Hera has substantially improved, however the performance over
the year has placed considerable financial strain on the Company.
The Company has sought to deliver a significant recapitalisation, seeking new funding and reducing gearing through
the conversion of some $79m of convertible debt held by Glencore Group Funding Limited (‘Glencore’). This process is
being challenged by Glencore who have purported an event of default and attempted to appoint an Administrator to
the Company.
As a key driver of the recapitalisation, Aurelia is seeking additional external funding for the delivery of the Hera
Expansion Plan, which leverages off the expanded Hera resource to expand and rectify key areas of the Hera processing
circuit and to deliver an expanded throughput capacity for the mine and process plant of up to 450,000 t/y with
increased metal production, reduced operating costs and attractive financial returns.
At time of this report, there remained considerable uncertainty as to the Company’s future funding arrangements and
to the proposed conversion of Glencore debt. The Company’s ability to convert is currently due to be heard by a court
in early-November. Note that at the time of writing the court date has been deferred from the original plan of 14
October to 4 and 5 November. The Directors’ Report and Financial Statements contained in this annual report were
finalised prior to this new information being available and refer to the earlier date of 14 October.
The financial uncertainty and operating losses notwithstanding, the Company retains the view as to the value and
potential of both the Hera mine and the neighbouring Nymagee copper deposit and is hopeful of a near term
resolution of the funding uncertainty, the delivery of the Hera Expansion Study, and the return of value to
shareholders.
HERA-NYMAGEE PROJECT
The Hera-Nymagee Project represents Aurelia Metals’ (AMI) flagship Project and consists of the Hera gold-base metal
deposit (AMI 100%) and the Nymagee copper deposit (AMI 95%), and is located approximately 100km south-east of
Cobar, hosted in the Cobar Basin rocks of central NSW. The Cobar Basin also hosts the major mineral deposits at CSA
(Cu-Ag), The Peak (Cu-Au) and Endeavor (Cu-Pb-Zn-Ag).
Company activities for the period were dominated by the finalisation of development activities on the Hera Project
and the commissioning and ramp-up of the Hera processing plant.
HERA PROJECT
SUMMARY
The operational performance of the Hera Project for the 12 months to June 2015 was disappointing and below
expectations.
The highlights for the year included:
•
The successful on-time completion of the Hera Project construction
AURELIA METALS LIMITED – ANNUAL REPORT 2015 5
•
•
•
First gold pour in September 2014 and first concentrate shipment in November 2014
The formal opening of the Hera Mine on 26 November 2014
Successful exploration extending high-grade gold-lead-zinc mineralisation to the north and south
However, despite these highlights, the Hera process plant commissioning and production ramp up has been challenged
by numerous issues, summarised by:
The under performance of the gold grades in the Hera orebody, relative to the reserve block model
Poor mechanical stability of the Hera Process Plant, particularly in the tertiary crushing circuit
Poor gold and silver recovery
Poor zinc recovery
•
•
•
•
• High process operating and process maintenance costs
At the report date, substantial improvement in each of these areas had been achieved, however the disappointing
operating performance has substantially contributed to significant financial uncertainty, which is detailed elsewhere in
this report.
Total metal production for the year, which includes production during commissioning and during the commercial
production phase, is summarised in the table below:
Physicals
Gold Production
Silver Production
Concentrate produced
Concentrate Grade - Gold
Concentrate Grade - Silver
Concentrate Grade - Lead
Concentrate Grade - Zinc
HERA UNDERGROUND
Units
Total FY15
oz
oz
DMT
g/t
g/t
%
%
12,930
7,246
20,773
7.96
112.50
24.35
28.86
The development of the Hera underground mine progressed smoothly for the year with the commencement of stope
ore production in March 2015.
Underground development and mining rates progressed well ahead of schedule during the year, leaving the mine well
developed at June 2015.
During the year 223,338 tonnes of ore was mined grading 3.26g/t gold, 13.4g/t silver, 2.77% lead and 3.90% zinc.
HERA PROCESS PLANT
Construction of the Hera Process Plant progressed well during the year, with commissioning commencing on time in
August 2014 and the formal plant acceptance from the EPCM contractors taken on 22 September 2014.
Notwithstanding a successful construction period, the Hera Process Plant performance for the year has been
disappointing with numerous challenges summarised below.
Gold production for the year was 12,930 ounces with 4,125 ounces produced in the operating period and 8,805 ounces
produced during the commissioning period. Gold production was derived from the processing of 223,215 tonnes of ore
grading 2.9 g/t gold, 2.6% lead and 3.45% zinc. Gold recovery averaged 62%.
6
AURELIA METALS LIMITED – ANNUAL REPORT 2015
Summary physical production for the year is presented in the table below:
Physicals
Ore Processed
Ore Processed Grade - Gold
Ore Processed Grade - Silver
Ore Processed Grade - Lead
Ore Processed Grade - Zinc
Ore Processed Grade - Copper
% Recovery - Gravity Gold
% Recovery - Leach Gold
% Recovery - Total Gold
% Recovery - Silver Dore
% Recovery - Silver Concentrate
% Recovery - Total Silver
% Recovery - Lead
% Recovery - Zinc
Gold Production
Silver Production
Concentrate produced
Concentrate Grade - Gold
Concentrate Grade - Silver
Concentrate Grade - Lead
Concentrate Grade - Zinc
Production - Contained Metal - Silver
Production - Contained Metal - Lead
Production - Contained Metal - Zinc
Units
t
g/t
g/t
%
%
%
%
%
%
%
%
%
%
%
oz
oz
DMT
g/t
g/t
%
%
oz
t
t
Total
223,215
2.92
14.05
2.60
3.45
0.20
30.37
31.33
61.71
7.43
82.84
90.28
86.16
78.36
12,930
7,246
20,773
7.96
112.50
24.35
28.86
75,133
5,057
5,995
Throughput
Process plant throughput has been challenged by poor mechanical stability, particularly in the tertiary crushing circuit,
merrill crowe circuit and the concentrate filter press. Issues with mechanical stability have been sequentially
addressed during the year, and design throughput rates were achieved in May 2015.
Design throughput rates in the crushing circuit are largely being achieved through the reconfiguration of the primary
and secondary crushers to reduce the load on the under-performing tertiary VSI (Vertical Shaft Impact) crushers. This
has had a consequential impact on processing maintenance costs as other elements of the crushing circuit are taking
the load and experiencing higher wear rates than design.
Precious Metal Recovery
Gold recovery has fallen below expectation since the start of commissioning, affected by a series of issues including:
Poor performance of the gravity gold circuit
•
• Unstable leach conditions caused by the oxidation of reactive ore on the ROM stockpile
•
• Concentrate filter cloth failures
Instability in the Merrill Crowe circuit
AURELIA METALS LIMITED – ANNUAL REPORT 2015 7
The process circuit is designed to recover gold by gravity separation and by cyanide leach extraction. To date, gravity
gold recovery has been below design level (approx. 30%), which has meant that additional gold is reporting to the
leach circuit for recovery. Peroxide/oxygen sparging, and increasing cyanide dosing have been employed to enhance
gold recovery in the leach circuit. These actions have contributed to the currently high process operating cost.
In addition, the gold room furnace was inoperable for most of the month of June resulting in delayed shipments of
gold production. The furnace has returned to operations in July with a new larger furnace planned for installation in
the December 2015 quarter.
Total gold recovery was 62% to June 2015 and showed little improvement since the completion of commissioning.
However at report date gold recoveries had been substantially improved to 73% for September 2015. Gold recovery
of 80%-90% is considered achievable under stable process conditions.
Changes in process design to both enhance precious metal recovery and reduce operating costs were in progress at
June 2015. The installation of additional gravity infrastructure, being a Knelson concentrator on the rougher
concentrate (now installed), and hydro-cyclones are expected to make material improvements in gravity gold
recovery.
Silver recovery to doré of 7.5% is well below design, due to poor silver extraction from the leach circuit. Whilst some
commercial value is recovered from payable silver in concentrate, further work is required to bring silver leach
performance back to design.
Lead and Zinc Recovery
Lead and zinc recovery were both at design level in the December quarter at approximately 90%. These levels reduced
to mid-80% in the March quarter, with lead recovery remaining steady in the mid-80% level with zinc reducing further
into the June quarter.
Zinc recovery has been affected by a concerted effort to reduce silica content in the final concentrate product. Further
work is ongoing to resolve this issue and continuous improvement in the zinc recovery is underway, including changes
to reagents.
Lead flotation performance is very satisfactory however recovery was partially affected by the focus on silica content
reduction in the June quarter.
HERA EXPLORATION
AMI maintained a significant exploration effort around the Hera deposit during the first half of the financial year.
Highlights of the exploration effort were the discovery of high grade gold-lead-zinc mineralisation at the Hera North
Pod, and high grade extensions to Hera Main Lens south, the 1530 Lens and the Hays South Lens.
Highlight exploration results from these areas received in the year include:
Hera North Pod
17.1m @ 14.8g/t Au, 168g/t Ag, 15.9% Pb and 15.2% Zn
o
o 3.65m at 39.7 g/t Au, 243 g/t Ag, 7.91% Pb and 11.3% Zn
Hera Main Lens South:
o 9.0m @ 32.6g/t Au, 1.3% Pb and 2.3% Zn
o 3.1m @ 80.9g/t Au, 24g/t Ag, 1.1% Pb and 1.6% Zn
o 4.2m @ 17g/t Au, 6g/t Ag, 0.9% Pb and 1.9% Zn
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AURELIA METALS LIMITED – ANNUAL REPORT 2015
Hays Lens South:
o 7.7m @ 16.4g/t Au, 9g/t Ag and 5.1% Pb+Zn
o 7.2m @ 10.5g/t Au, 29g/t Ag and 10.2% Pb+Zn
o 4.0m @ 32.8g/t Au, 22g/t Ag and 4.8% Pb+Zn
o
12.0m at 24 g/t Au and 4.3% Pb+Zn
HERA RESOURCE REVISION
In April 2015, Aurelia released a new resource estimate for the Hera ore-body, inclusive of stope delineation drilling
and exploration success at Hera North, Hays North and the 1530 Lens. In June 2015, following an independent review,
a coding problem in the April 2015 resource was found which served to overestimate volumes by approximately 12%.
As a result, the Resource was re-estimated with this issue resolved and inclusive of adopting more conservative geo-
statistical parameters. These more conservative parameters provide a stronger correlation to the reconciled ore
grades to June 2015 (based on reconciliations of around 2% of the previous resource).
The revised resource was released in July 2015, as per the table below:
Category
NSR ($/t)
Au (g/t)
Tonnes
Ag (g/t)
Measured
Indicated
Inferred
Total
658,000
958,000
890,000
2,506,000
277.9
220.0
224.9
236.9
5.14
3.37
2.37
3.48
15.59
17.97
73.91
37.21
Cu (%)
Pb (%)
Zn (%)
0.24
0.15
0.10
0.15
2.96
3.02
4.85
3.65
3.40
4.51
6.02
4.76
Whilst tonnage has been reduced relative to the April 2015 estimate, and the gold grade has been reduced from
3.75g/t Au to 3.48g/t Au, the grade of silver, zinc and lead have all increased as a result of the revision, and overall, the
resource model demonstrates that Hera remains a high grade deposit. In addition the higher confidence categories of
measured and indicated resources still represents approximately 65% of the total resource.
HERA EXPANSION STUDY
To deliver improved operating performance the Company has developed the Hera Expansion Study to rectify sections
of the Process Plant, to deliver improved performance of the processing circuit and lower operating costs, but also
deliver enhanced throughput capacity of up to 450,000 t/y. The Expansion Study shows the Hera Project capable of
delivering:
• A five year mine life assuming no additional exploration success
• Mining inventory of 2.18 Mt at 3.1 g/t gold, 3.2% lead and 4.2% zinc
• Average annual production of 40,000 ounces gold, 14,000 t/y zinc, 12,500 t/y lead
•
• An All-in Sustaining Cost (AISC) over the life of mine of less than A$700/ounce, after base metal credits
•
LOM operating costs of around $160/t (mining, processing, admin, transport & royalty)
Processing capital expenditure of $16.8 million in FY16 (revised crushing and grinding circuit including ball mill
installation) is based on acquiring second hand equipment.
The delivery of the Hera Expansion Project is contingent on securing external funding and an amendment to the
existing project approval for increased annual mining rates and total ore mined, an increase in groundwater extraction
licences, and an extension to the existing Hera Mining Lease. The study includes allowances for timing and cost for
additional licence and permit requirements for the study.
The study has not yet included any value associated with the planned Stage 2 integration of the Nymagee copper
deposit, nor has it included any further exploration success and attendant mine life additions. The Company has
confidence that each of these will be delivered in time providing additional uplift to the value of the Hera Expansion
Study.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 9
CORPORATE
Share issues
In September 2014, Aurelia reached agreement to issue shares to the value of $2 million (5,590,027 Ordinary Fully
Paid shares at an average price of 35.78 cents per share) to Pybar Mining Services as part payment for mining services
rendered. At the same time, agreement was also reached with Pacific Road Capital subscribed for $3.2 million of new
equity, according to a share subscription agreement, on the following terms: 2,778,050 shares at $0.2434 to raise
$676,177 and 7,126,950 shares at $0.3578 to raise $2,552,032.
Rights issue
On 21 January 2015, Aurelia closed a fully underwritten, non-renounceable rights issue to raise $10 million.
Applications for 18,316,232 new shares to raise $4.286 million were received from eligible shareholders, not including
the sub-underwriter and major shareholder Pacific Road Capital Management Pty Ltd as trustee for the YTC Managed
Investment Trust (Pacific Road).
In addition to the applications received from eligible shareholders, pursuant to the underwriting agreement between
Key Pacific Advisory Partners Pty Ltd (fully sub-underwritten by Aurelia’s largest shareholder, Pacific Road) a total of
24,661,011 new shares were allotted to the underwriter/sub-underwriter. Pacific Road as the holder of 19.99% of the
Company’s shares prior to the issue of the new shares were entitled to subscribe for 8,594,159 new shares under the
offer which were taken up as part of the underwritten amount.
A total of 42,977,243 new shares raising $10,056,675 (before costs) were issued on 28 January 2015.
The Company wishes to thank shareholders including Pacific Road, for their strong support of this Rights Issue.
CORPORATE GOVERNANCE
A copy of The Company’s Corporate Governance Statement is located on the Company’s website:
http://www.aureliametals.com/about/Corporate-Governance.aspx
10
AURELIA METALS LIMITED – ANNUAL REPORT 2015
COMPETENT PERSONS STATEMENTS
Competent Persons Statement – Exploration Results
The information in this report that relates to Exploration Results is based on information compiled by Rimas Kairaitis, who is a
Member of the Australasian Institute of Mining and Metallurgy. Rimas Kairaitis is a fulltime employee of Aurelia Metals and has
sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity
which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves.’ Mr Kairaitis consents to the inclusion in this report of the matters based
on his information in the form and context in which it appears.
Competent Persons Statement –Hera Resource Estimate
The Resource Estimation for the Hera deposit has been completed by:
· Mr Lynn Widenbar, BSc (Hons), MSc, DIC, MAusIMM, MAIG , is a geologist and a Director and Principal of Widenbar and
Associates, and co-authored by:
· Mr Stuart Jeffrey, Senior Project Geologist – Hera Project BSc (Hons), MSc (Econ Geology), MAusIMM
Mr Widenbar is a full time employee of Widenbar and Associates Pty Ltd. Mr Widenbar has sufficient experience that is relevant to
the style of mineralisation and type of deposit under consideration and to the activity that is being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Minerals Resources
and Ore Reserves’. Mr Widenbar consents to the inclusion in the report of the matters based on his information in the form and
context that the information appears.
Mr Jeffrey is a full time employee of Aurelia Metals Limited and has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person
as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’
Mr Jeffrey consents to the inclusion in this report of the matters based on his information in the form and context in which it
appears.
Competent Persons Statement – Nymagee Resource Estimate
The Resource Estimation for the Nymagee deposits has been completed by Mr Dean Fredericksen who is a Member of the
Australasian Institute of Mining and Metallurgy. Mr Dean Fredericksen was a full time employee of Aurelia Metals and has sufficient
experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves.’ Mr Fredericksen consents to the inclusion in this report of the matters based on his
information in the form and context in which it appears. The information on the Nymagee and Hera Resource estimates is extracted
from the ASX Reports available on the Aurelia Metals Website:
· Maiden Nymagee Resource Estimate – 22 December 2011
The Company confirms that it is not aware of any new information or data that materially affects the information included in the
original market announcement and that all material assumptions and technical parameters underpinning the estimates in the
relevant market announcement 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.
Competent Persons Statement – Hera DFS Ore Reserve
The Information in this report relating to Ore Reserves is based on work undertaken by Mr Michael Leak of Optiro Pty Ltd under
supervision of Mr Sean Pearce. This report has been compiled by Sean Pearce, who is a Member of the Australasian Institute of
Mining and Metallurgy. Sean Pearce was a full time employee of Aurelia Metals and has sufficient experience which is relevant to
the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves.’ Mr Pearce consents to the inclusion in this report of the matters based on his information in the form and
context in which it appears.
The information on the Hera Ore Reserve is extracted from the ASX Report available on the Aurelia Metals Website:
· Hera DFS Release – 19 September 2011
The Company confirms that it is not aware of any new information or data that materially affects the information included in the
original market announcement and that all material assumptions and technical parameters underpinning the estimates in the
relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and
AURELIA METALS LIMITED – ANNUAL REPORT 2015 11
context in which the Competent Person’s findings are presented have not been materially modified from the original market
announcement.
Competent Persons Statement – 3KEL-Midway Resource Estimation
The resource estimates of oxide material at 3KEL and Midway have been performed by Dr William Yeo, MAusIMM, who is an
employee of Hellman & Schofield Pty Ltd and who qualifies as a Competent Person under the meaning of the 2012 JORC Code. He
consents to the inclusion of these estimates, and the attached notes, in the form and context in which they appear.
The information on the Nymagee and Hera Resource estimates is extracted from the ASX Reports available on the Aurelia Website:
·
Inferred Resource for 3KEL and Midway Laterite Deposits – 3 March 2008
The Company confirms that it is not aware of any new information or data that materially affects the information included in the
original market announcement and that all material assumptions and technical parameters underpinning the estimates in the
relevant market announcement 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.
12
AURELIA METALS LIMITED – ANNUAL REPORT 2015
STATEMENT OF RESOURCES AND RESERVES
Hera Deposit Mineral Resource Estimate (AMI– 100%) – July 2015
Category
Measured
Indicated
Inferred
Total
Tonnes
NSR ($/t)
Au (g/t)
Ag (g/t)
Cu (%)
Pb (%)
Zn (%)
658,000
958,000
890,000
2,506,000
277.9
220.0
224.9
236.9
5.14
3.37
2.37
3.48
15.59
17.97
73.91
37.21
0.24
0.15
0.10
0.15
2.96
3.02
4.85
3.65
3.40
4.51
6.02
4.76
Hera Deposit – DFS Mining Reserve (AMI-100%) – September 2011
Source
Tonnes
Au (g/t) Ag (g/t) Cu (%) Pb (%)
Zn (%)
Au Eq
(g/t)
Contained
Gold
Ounces
(Au Eq.)
Development Sub-total
Stope Sub-Total
278,158
1,597,760
MINE PROBABLE RESERVE
1,875,918
2.86
3.72
3.59
13.06
15.39
15.04
0.13
0.17
0.16
2.26
2.56
2.51
3.19
3.55
3.50
7.00
423,471
Nymagee Deposit Mineral Resource Estimate (AMI– 95%) – December 2011
Description
INDICATED
Cut Off
Tonnes
Cu %
Pb %
Zn %
Ag g/t
Shallow Cu Resource (above 90mRL)
0.3% Cu
5,147,000
Deeper Cu Resource (below 90m RL)
0.75% Cu
1,984,000
Lead-Zinc-Silver Lens
5% Pb + Zn
364,000
INFERRED
Deeper Cu Resource (below 90m RL)
0.75% Cu
601,000
GLOBAL
Contained Metal (tonnes)
8,096,000
1.00
1.80
0.50
1.30
1.20
0.10
0.30
4.40
0.10
0.30
0.20
0.60
7.80
0.20
0.70
96,000t
27,000
53,000
5
11
41
8
9
69
Midway & 3KEL deposits – Doradilla JV (AMI 100%) – February 2008
Midway
3KEL
TOTAL
Category
Sn Cut-off
Tonnes (M)
% Sn
Tonnes (M)
% Sn
Tonnes (M)
% Sn
Inferred
Inferred
Inferred
0.1%
0.2%
0.5%
4.63
1.97
0.38
0.25
0.4
0.92
3.18
1.85
0.56
0.34
0.48
0.89
7.81
3.82
0.94
0.29
0.44
0.90
AURELIA METALS LIMITED – ANNUAL REPORT 2015 13
DIRECTORS’ REPORT
The following report is submitted in respect of the results of Aurelia Metals Limited (‘Aurelia’ or ‘the Company’,
formerly YTC Resources Limited) and its subsidiaries, together the consolidated group (‘Group’), for the financial year
ended 30 June 2015, together with the state of affairs of the Group as at that date.
DIRECTORS AND OFFICERS
The names, qualifications and experience of the Company’s Directors in office during the financial year and until the
date of this report are as follows. Directors and Officers were in office for this entire period unless otherwise stated.
Mr Anthony Wehby - Chairman
Anthony Wehby was a partner with PWC Australia (Coopers & Lybrand) for 19 years during which time he specialised
in the provision of corporate finance advice to a wide range of clients including those in the mining and exploration
sectors. Since 2001, Mr Wehby has maintained a financial consulting practice, advising corporate clients considering
significant changes to their business activities.
Mr Wehby is a Fellow of the Institute of Chartered Accountants in Australia and a Member of the Australian Institute
of Company Directors.
Mr Wehby is a Director of Royal Rehab, and he was the Chairman of Tellus Resources Limited until December 2013.
Mr Gary Comb
Gary Comb is an engineer with over 30 years’ experience in the Australian Mining Industry, both with mining
companies and in mining contractor roles. From 2003, Mr Comb was Managing Director of Jabiru Metals Limited,
taking the Jaguar Copper/Zinc Project from discovery through feasibility, construction to operations. Jabiru Metals was
taken over by Independence Group Limited for A$532 million in 2011.
Prior to joining Jabiru, Mr Comb was the Chief Executive Officer of BGC Contracting Pty Ltd, the mining contracting
arm of West Australian construction group BGC Pty Ltd. Mr Comb has also worked in various mining operational
management roles including with Macmahon Contractors, St Barbara Mines, Metana Minerals and Central Murchison
Gold.
Mr Comb is currently a Non-Executive Director of Ironbark Zinc Ltd and Non-Executive Chairman at Finders Resources
Ltd, he was previously a director of Jabiru Metals Ltd and Tanami Gold Ltd.
Mr Paul Espie
Paul Espie established the Pacific Road Group, investment banking business in resources and infrastructure, in 1986. He
was Chairman of Oxiana Limited during the development of the Sepon copper/gold project in Laos (2000 to 2003) and
prior to that Chairman of Cobar Mines Pty Ltd after a management buy-out in 1993.
Mr Espie was previously responsible for Bank of America operations in Australia, New Zealand and Papua New Guinea
and Chairman of the Australian Infrastructure Fund. He is a Fellow of the Australian Institute of Company Directors
and Trustee of the Australian Institute of Mining & Metallurgy, Educational Endowment Fund, also a Director of the
Menzies Research Centre.
Mr Mark Milazzo
Mark Milazzo is a mining engineer with over 30 years’ experience in the development and management of mines and
mineral processing plants across a range of commodities in Australia and overseas. This includes both underground and
surface operations, and covers a wide range of mining applications, from small scale
14
AURELIA METALS LIMITED – ANNUAL REPORT 2015
selective to mechanised bulk extraction methods. He has been involved in a number of new mine
development and mine expansion projects.
Past senior roles include General Manager of the Olympic Dam Mine and Kambalda Nickel Operations with
WMC Resources, and General Manager with mining contractor HWE Mining. Mr Milazzo is a Fellow of the
Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Company
Directors.
He is a Non-Executive Director of Red 5 Limited and was previously a Director of Mirabela Nickel Limited
from June 2014 until September 2015 and Cortona Resources Limited from May 2011 until January 2013.
Mr Rimas Kairaitis (Resigned as Director 2 August 2015)
Rimas Kairaitis is a geologist with over 20 years’ experience in minerals exploration and resource
development in gold, base metals and industrial minerals in Queensland and NSW, working with companies
including Shell Minerals, Plutonic Resources, CRA (Rio Tinto) and Alkane Resources.
Mr Kairaitis was a founding Director of the mineral exploration company LFB Resources NL (now a
subsidiary of Alkane Resources Limited). From 1999 to 2006 he worked as a geological consultant to Alkane
until becoming a founding Director of Aurelia Metals Limited and its Chief Executive Officer in 2007.
Mr Kairaitis has a strong exploration track record, leading the geological field team to the discovery of the
Tomingley Gold deposit in NSW in 2001 and the McPhillamy’s Gold Deposit in 2006.
He graduated with a Bachelor of Applied Science (Geology) with first class Honours and University Medal in
1992 from the University of Technology, Sydney. He is also a member of the Australian Institute of Mining
and Metallurgy.
In the last three years Mr Kairaitis has held no other listed company directorships.
Mr Michael Menzies (Resigned 26 June 2015)
Michael Menzies is a law graduate who has over 35 years of experience in a variety of industrial, operational
and managerial roles within the mining industry in Australia and off- shore, in base metals, gold, mineral
sands and coal. He has worked with Renison Goldfields CRA Limited and in private equity, prior to working
in mining consultancy work in recent times.
From 1998 to 2003 Mr Menzies was employed as Executive General Manager Mining of MIM Holdings LTD.
Mr Menzies is experienced in mining project operational and investment evaluation work.
Mr Menzies is a former Director of Australian Mines and Metals Association and former Vice-President of
the Queensland Mining Council.
Dr Guoqing Zhang (Resigned 12 November 2014)
Dr Zhang is Chief Executive Officer of Yunnan Tin Australia TDK Resources Pty Ltd and Chairman of China
Yunnan Tin Minerals Group Company Limited (Hong Kong Stock Exchange), appointed 26 November 2010.
Dr Zhang was previously Deputy General Manager of the Sino-Platinum Metal Company Limited, which is a
Shanghai listed subsidiary company of the Yunnan Tin Group. Dr. Zhang is based in Australia and is a
Director of Australian companies controlled by the Yunnan Tin Group.
Dr Zhang has extensive experience in research and development of metal alloys and has received a number
of Chinese national awards. Dr. Zhang has a B.Sc (Hon) degree and Ph.D. in Material Science.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 15
Mr Yong Chen – Alternate for Dr Guoqing (to 12 November 2014)
Yong Chen is an accountant with more than 20 years’ experience in both Australia and China.
Mr Chen is a Director and CFO of Yunnan Tin Australia Investment Holding Pty Limited, a subsidiary of
Yunnan Tin Group Limited based in China which is the world’s largest tin producer.
He has worked in various accounting roles including 9 years as the GST & Investment Accountant with
Sydney Church of England Grammar School (Shore School) in North Sydney.
Mr Chen has a Bachelor of Economics from the Shanghai University of Finance & Economics and a Master of
Business in Accounting and Finance from the University of Technology, Sydney.
Ms Susan Corlett – Alternate for Mr Paul Espie (for 17 July 2014)
Susan Corlett is a geologist and executive with over 20 years’ experience in exploration, mining, and finance
in Africa, Australasia and the Pacific Rim.
Ms Corlett is an Investment Director of Pacific Road Capital and a Director of the not-for-profit charity, the
David Burgess Foundation. She was previously a Non-Executive Director of Mawson West Limited from 5
April 2014 to 15 October 2014.
Ms Corlett’s experience includes exploration and mine geology with RGC Limited and Goldfields Limited,
and broad experience in the banking industry with Standard Bank, Macquarie Bank and Deutsche Bank.
Ms Corlett holds a BSc Hons (Geology) from the University of Melbourne, is a Member of the AusIMM and a
graduate of the Australian Institute of Company Directors.
Mr Richard Willson – Company Secretary, Alternate for Mr Gary Comb and Mr Mark Milazzo
(to 22 January 2015).
Richard Willson is an accountant with more than 20 years’ experience in public practice and in various
financial management and company secretarial roles within the resources and agricultural sectors for both
publicly listed and private companies.
Mr Willson has a Bachelor of Accounting from the University of South Australia, is a fellow of CPA Australia,
and a Fellow of the Australian Institute of Company Directors.
In addition to his role as Company Secretary with Aurelia Metals Limited, Mr Willson is Company Secretary
of the ASX listed Beston Global Food Company Limited, a Non-Executive Director of ASX listed companies
Aus Tin Mining Limited and Crestal Petroleum Limited, and a Non-Executive Director and Company
Secretary of the not-for-profit Unity Housing Company.
16
AURELIA METALS LIMITED – ANNUAL REPORT 2015
DIRECTORS’ INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
At the date of this report the interests of the Directors in the shares and other equity securities of the
Company were:
Ordinary
Shares
Options over Ordinary
Shares
Performance
Rights
Directors
Anthony Wehby
Gary Comb
Paul Espie
Mark Milazzo
Rimas Kairaitis *
Michael Menzies*
Guoqing Zhang
Yong Chen
Susan Corlett
Richard Willson
Total
*For past directors, holdings were current at date of final director’s interest notice.
600,000
500,000
-
500,000
600,000
-
-
-
-
-
2,200,000
978,125
281,250
-
225,000
4,473,544
112,500
-
-
-
37,574
6,107,993
-
-
-
-
250,000
-
-
-
-
50,000
300,000
DIVIDENDS
No dividend was paid or declared by the Company in the period since the end of the previous financial year,
and up to the date of this report. The Directors do not recommend that any amount be paid by way of
dividend for the financial year ended 30 June 2015.
CORPORATE STRUCTURE
Aurelia Metals Limited (formerly YTC Resources Limited) is a company limited by shares that is incorporated
and domiciled in Australia.
Aurelia has four wholly owned subsidiaries, Stannum Pty Ltd (incorporated 15 September 2007), Defiance
Resources Pty Ltd (incorporated 15 May 2007), Hera Resources Pty Ltd (incorporated 20 August 2009) and
Nymagee Resources Pty Ltd (incorporated 7 November 2011).
AURELIA METALS LIMITED – ANNUAL REPORT 2015 17
OPERATIONS AND FINANCIAL REVIEW
Overview
1.
Aurelia Metals Limited is an Australian gold, lead and zinc miner and exploration company. The Company operates the
wholly-owned gold and base metal mine Hera, in central west New South Wales.
The majority of activity during the financial year was related to the construction and commissioning of the Hera mine,
with commercial operations commencing for the last quarter of the fiscal year on 1 April 2015.
On 23 September 2014, the Company announced the move from the construction phase into the commissioning
phase of the processing circuit. During the construction and commissioning phase, all revenue associated with metal
production during the commissioning phase was credited towards the cost of mine development and all site costs
were capitalised until commercial production was declared. It was determined that the effective date of commercial
production at Hera was 1 April 2015. From this date, all relevant operating costs and revenue were accounted for in
the income statement. Commercial production was declared after the satisfactory review of a number of key design
and financial parameters, including process plant availability, throughput, metal recovery and final product quality.
On 16 December 2014, the Company announced an underwritten non-renounceable 1:8 rights issue to raise
approximately $10 million. Funds were utilised for working capital during commissioning, and to accelerate
exploration around the Hera underground resource, particularly to the north.
A longer commissioning phase than planned, together with a delayed ramp up in operating performance in the first
quarter of operations, delivered a weak financial result for the year. Lower than planned gold recovery reduced
expected revenues and higher than planned reagent consumption and crusher maintenance costs in the processing
circuit, delivered significantly higher costs than planned. These factors significantly impacted the financial
performance of the first quarter of operations and therefore the full year financial results.
A review of the Company’s asset carrying values, in the context of the lower than planned operating performance and
an underestimate of certain site administration and processing costs relative to the feasibility study, and other factors,
resulted in the impairment of the carrying value of some assets. The review has resulted in the recognition of a total
impairment loss of $92.915 million, comprising mine properties ($75.031 million) and exploration assets ($17.884
million).
The reported net loss for the period was $118.158 million after the $92.915 million asset impairment.
To deliver improved operating and financial performance, the Company developed the Hera Expansion Study. The key
element of this plan is the rectification of sections of the process plant; to deliver improved performance of the
processing circuit and lower operating costs, but also deliver expanded throughput capacity for the mine and process
plant of up to 450,000 t/y. The detailed Hera Expansion Study was released to ASX on 7 July 2015 ‘Hera Project
Performance, Expansion Study and Financial Update’, with the Study demonstrating that the Hera Project is capable of
delivering:
• A five year mine life assuming no additional exploration success
• Mining inventory of 2.18 Mt at 3.1 g/t Au, 3.2% lead and 4.2% zinc
• Average annual production of 40,000 oz gold, 14,000 t/y zinc, 12,500 t/y lead
•
• An All-in Sustaining Cost (AISC) over the life of mine of less than A$700/oz, after base metal credits
•
Processing capital expenditure of $16.8 million (revised crushing and grinding circuit including ball mill
installation) based on acquiring second hand equipment.
Life of Mine (LOM) operating costs of around $160/t (mining, processing, admin, transport and royalty)
The delivery of the Hera Expansion Project is contingent on securing external funding and an amendment to the
existing project approval for increased annual mining rates and total ore mined, an increase in groundwater extraction
licences, and an extension to the existing Hera Mining Lease. The study includes allowances for timing and cost for
additional licence and permit requirements for the study.
18
AURELIA METALS LIMITED – ANNUAL REPORT 2015
To secure the future value of the Hera Project, a recapitalisation of the Company’s balance sheet was proposed to the
Company’s secured lender Glencore Group Funding Limited ‘Glencore’, involving a conversion of a portion of existing
debt facilities together with a potential equity raising. As announced to ASX on 1 July 2015, Glencore lodged a Notice
of Default, which if valid, would bar the debt conversion. The notice of default was given on the grounds that the
secured lender believed or believes the Company to be insolvent. This has been rejected by the Company.
Conversion notices, to convert a combined amount of $70 million of principal debt (excluding capitalised interest),
were issued to Glencore on 7 July (Facility B) and 7 September (Facility A). Glencore rejected the conversion notices
due to the notice purporting an event of default.
Without consultation with the Company’s Board, Glencore appointed a voluntary administrator to the Company and
certain of its subsidiaries on 14 September 2015. The Company sought and received from the Supreme Court of NSW
on the 15 September 2015 a standstill on the secured creditor’s appointment of an administrator and a standstill on
the Company’s ability to convert the Glencore facilities A and B. The matter is to be heard by the Supreme Court on
14 October 2015.
The going concern basis upon which these accounts are prepared rely on a positive outcome of the court hearing on
the 14 October or any alternative settlement achieved with the secured lender. Regardless of the Company’s legal
position, there remains uncertainty as to the outcome of the court hearing and therefore uncertainty about the
validity of the secured creditor’s appointment of the voluntary administrator.
Operating and Financial Performance
2.
Commercial production at the Hera Operation was declared on 1 April 2015. Performance in the last quarter of the
2015 financial year was below expectations due to a range of mechanical and technical issues which affected gold and
zinc recovery, processing throughput, and processing operating costs.
The Company incurred a net loss of $118.158 million compared to a net loss of $10.623 million in the prior year. The
key significant item is the combined asset and exploration impairment loss of $92.915 million.
Asset impairment amounts
2.1
Accounting standards require an entity to assess at each reporting date whether there is an indication that an asset
book value may be impaired. Where the indicators are present, a full review of the recoverable amount of the assets at
the cash generating unit (‘CGU’) level is required. Any excess of asset book value at the reporting period, over the
recoverable value, is impaired.
The primary impairment indicator has been the performance of Hera since commissioning. The review has resulted in
the recognition of a total impairment loss of $92.915 million, comprising mine development ($75.031 million) and
exploration and evaluation assets ($17.884 million).
The impairment of exploration and evaluation assets is in recognition of the uncertainty around the recovery of asset
values through successful development. The Nymagee asset, in particular, has been written down to a nominal value
reflecting the timing and certainty of recovery of the former book value.
The impairment has created negative equity on the balance sheet, which can be restored through profitable trading,
and or, a conversion of debt into equity, and or, the introduction of new equity. The impairment is a non-cash item
and therefore has no impact on the Company’s cash position. The written down asset values do not create any concern
with regard to conditions around the Company’s debt facilities with Glencore.
Sales
2.2
Sales revenue for the period was $13.220 million, with $6.187 million derived from gold sales and $6.988 million
derived from the sale of lead zinc concentrates. Gold sales were derived from the sale of 3,924oz of gold at an average
price of A$1578/oz. Concentrate sales were derived from the sale of 10,144 dmt of lead zinc concentrate shipped.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 19
During the year the Company utilised gold and base metal hedging contracts to protect against adverse movements in
metal prices. All gold forwards, gold put options and lead and zinc metal quotational period hedge contracts were
closed out at year end.
Production
2.3
Gold production for the operating period was 4,125 ounces, with 8,805oz produced during the commissioning period.
Gold production was derived from the processing of 75,660 tonnes of ore grading 2.7 g/t gold, 2.5% lead and 3.3%
zinc. Gold recovery averaged 62.1%.
Processing throughput in the June quarter was at a nominal annualised 303,000 t/y rate, some 85% of nameplate
capacity. Significant effort is being applied to improve throughput despite the limitations of the tertiary crushing
circuit. Post balance date, throughput has improved with the plant operating at a nominal annualised rate of 325,000
t/y during July and August 2015.
As noted in the Hera Expansion Study (released to ASX 7 July) to deliver a step change in performance, certain sections
of the plant require rectification, particularly the tertiary crushing circuit which will require replacement with a tertiary
cone crusher and installation of a ball mill.
Gold recovery was 62% during the period and has shown steady improvement post year end, with gold recovery
averaging 70% during July and August 2015. Gold recoveries of greater than 80% are considered achievable once
operating stability is achieved in the leach, gravity and Merrill Crowe circuits.
Zinc recovery was 66%, but improved to 80% in the month of June and has averaged 84% during July and August
2015. Lower recoveries in the year were in part related to trial work associated with suppression of silica in the
concentrate.
The performance of the underground mine has remained positive. A total of 69,319 t of ore was mined during the year
at an average grade of 2.6 g/t gold and 2.5% lead and 3.3% zinc. Ore was sourced from three active stopes with some
60-70% from stoping, the remainder from development. Underground development of 215 m was comprised wholly
of operating development. Discussions are continuing with our mining contractor with a view to achieving a significant
reduction in the current schedule of rates.
Costs
2.4
Total cost of sales for the period was $26.445 million. Site production costs were $13.161 million (mining, processing
and site admin departments), transport and refining costs were $1.368 million (gold refining charges, concentrate
trucking, rail, port and shipping charges) and a cost of $5.381 million relating to a reduction in inventory (primarily
related to the sale of two shipments of lead zinc concentrates in the period). Depreciation charged in the period of
$6.453 million was based on asset values prior to the asset impairment at 30 June 2015.
Cash flow
2.5
As at 30 June 2015, the Company held cash in bank of $4.848 million ($3.020 million which is unavailable and held as
cash deposits for environmental bonds). Operating cash flow for the period of negative $3.009 million was impacted
by concentrate shipment#4, which departed on 29 June with cash from provisional invoicing not received until after
balance date.
Investment cash outflows were $25.702 million and related primarily to $43.128 million of payments for capital
expenditure (completion of construction and commissioning activity up to 31 March 2015) net of $19.595 million of
receipts from product sales during the commissioning period. Net cash flow from financing activities was positive
$11.968 million. The key inflows related to two separate capital raisings during the year. In October 2014 the
Company completed a placement to Pacific Road raising $3.226 million (before issue costs) and in January 2015 raised
$10.506 million (before issue costs) via a non-renounceable rights issue to shareholders.
20
AURELIA METALS LIMITED – ANNUAL REPORT 2015
Borrowings
2.6
At balance date, the Company held $114.652 million of borrowings, consisting of $22.737 million of current
borrowings and $91.915 million of non-current borrowings. The classification between current and non-current
borrowings is based on the Company’s legal position that the notice of default issued by the Company’s secured
creditor (see Overview section) is invalid. If valid, the classification of current borrowings would increase to reflect all
borrowings related to Glencore as due and payable.
The total borrowings from the Company’s secured lender (Glencore) at balance date was $117.246 million across four
facilities (Facilities A, B, C and E), inclusive of accrued interest and prior to facility establishment costs. At balance
date, Facility A had a principal and accrued interest balance of $23.054 million, Facility B had a principal and accrued
interest balance of $55.774 million, Facility C had a principal and accrued interest balance of $32.592 million and
Facility E had a principal and accrued interest balance of $5.824 million.
Facility A and B, representing total outstanding liabilities of $78.829 million, are in the form of Converting Notes and
have an original terms of 60 months. A key feature of these securities is the ability convert these Notes into ordinary
equity of the Company based on certain pricing formulae. The decision to convert the Notes in accordance with the
Converting Note Deed Poll is at the election of the Company, subject to satisfaction of certain conditions, namely FIRB
approval, no Event of Default is continuing and The Security Trustee (a Glencore entity) has not commenced
enforcement proceedings.
The remaining facilities, Facility C and E, represent total outstanding debt of $38.416 million and have original terms
of 60 months and 42 months respectively.
The first repayment date across all facilities was 15 September 2015. The repayment obligation was approximately
$4.23 million on 15 September, and $4.84 million on 15 October, then quarterly repayment obligations from this date
until maturity. Maturity of the facilities is 30 months from first repayment on Facilities A, B and C and 13 months
from first repayment of Facility E.
Assuming conversion of Facilities A and B prior to first repayment, the repayment obligations would reduce to $1.56
million on 15 September and $1.77 million on 15 October, then quarterly repayment obligations from this date until
maturity.
As discussed in the overview section, the Company has, after balance date, issued the lender with conversion notices
to convert the outstanding balances of Facilities A and B into shares at set prices. At the date of this report, the
Company remains in a court-ordered standstill with its secured lender. As a result of the court-ordered standstill, all
debt repayments due on 15 September were frozen until the outcome of the court hearing on 14 October 2015 is
known.
Material business risks
3.
Aurelia Metals prepares its business plan using estimates of production and financial performance based on a range of
assumptions and forecasts. There is uncertainty in these assumptions and forecasts, and risk that variation from them
could result in actual performance being different to expected outcomes. The uncertainties arise from a range of
factors, including the nature of the mining industry and general economic factors. The material business risks faced by
the Group that may have an impact on the operating and financial prospects of the Group as at 30 June 2015 are:
Financial solvency
The Company has significant short and long term financial obligations. Maintaining sufficient liquidity to operate the
business is impacted by the operational and financial risk factors identified below. Additional risk factor relate to the
Company’s ability to reorganise its debts when required to manage any foreseen or unforeseen liquidity events.
The Company currently has a single source of income from one operating asset. The lack of asset diversity, together
with significant debt amounts, can exacerbate overall risk to the Company.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 21
The Company is in dispute with its major lender (as detailed in the overview section), who has lodged a default notice
and declared all amounts owing are immediately due and payable. The Company has rejected this notice and as the
date of this report is currently in a court ordered standstill with its secured lender. Under the standstill, the Company
cannot exercise its rights to convert debt into equity (under the terms of the Convertible Notes Deed Poll), repayment
obligations are suspended, and the secured lender is restrained from exercising its rights to enforce its security by
appointing a voluntary administrator.
The court hearing date is set for 14 October 2015. An outcome of the court hearing could be that the appointment of
the voluntary administrator by the secured lender is valid. In this case, the Company may immediately enter voluntary
administration, with management control of the Company passing to the Voluntary Administrator. A favourable
ruling could enable the Company to significantly reduce its debt through converting the majority of its debt to equity.
If completed, the debt to equity conversion will significantly increase Glencore’s equity ownership and potential
control of the Company.
Fluctuations in the commodity price
The Group’s revenues are exposed to fluctuations in the price of gold, silver, lead and zinc. Volatility in metal prices
creates revenue uncertainty and requires careful management of business performance to ensure that operating cash
margins are maintained despite volatile metal prices.
Metal prices are denominated in US dollars, hence the Company has a foreign exchange price risk when the US$ price
of a particular commodity is translated back to Australian dollars.
Declining metal prices can also impact operations by requiring a reassessment of the feasibility of a particular
exploration or development project. Even if a project is ultimately determined to be economically viable, the need to
conduct such a reassessment could cause substantial delays and/or may interrupt operations, which may have a
material adverse effect on our results of operations and financial condition.
Mineral reserves and resources
Company ore reserves and mineral resources are estimates, and no assurance can be given that the estimated reserves
and resources are accurate or that the indicated level of metal or other mineral will be produced. Such estimates are,
in large part, based on interpretations of geological data obtained from drill holes and other sampling techniques.
Actual mineralisation or geological conditions may be different from those predicted. No assurance can be given that
any part or all of Company’s mineral resources constitute or will be converted into reserves.
Market price fluctuations of metal prices as well as increased production and capital costs may render the Company’s
ore reserves unprofitable to develop for periods of time or may render mineral reserves containing relatively lower
grade mineralisation uneconomic. Estimated reserves may have to be recalculated based on actual production
experience. Any of these factors may require the Company to modify its mineral reserves and resources, which could
have a negative, or positive impact on the Company’s financial results.
Replacement of depleted reserves
The Company must continually replace reserves depleted by production to maintain production levels over the long
term. Reserves can be replaced by expanding known ore bodies, locating new deposits or making acquisitions.
Exploration is highly speculative in nature. The Company’s exploration projects involve many risks and are frequently
unsuccessful. Once a site with mineralisation is discovered, it may take several years from the initial phases of drilling
until production is possible.
As a result, there is no assurance that current or future exploration programs will be successful. There is a risk that
depletion of reserves will not be offset by discoveries or acquisitions or that divestitures of assets will lead to a lower
reserve base. The mineral base of the Company may decline if reserves are mined without adequate replacement and
the Company may not be able to sustain production beyond the current mine lives, based on current production rates.
22
AURELIA METALS LIMITED – ANNUAL REPORT 2015
Mining risks and insurance risks
The mining industry is subject to significant risks and hazards, including environmental hazards, industrial accidents,
unusual or unexpected geological conditions, unavailability of materials and equipment, rock failures, cave-ins, and
weather conditions (including flooding and bushfires), most of which are beyond the Company’s control. These risks
and hazards could result in significant costs or delays that could have a material adverse effect on the Company’s
financial performance, liquidity and results of operation.
The Company maintains insurance to cover some of these risks and hazards. The insurance is maintained in amounts
that are believed to be reasonable depending on the circumstances surrounding each identified risk. However
property, liability and other insurance may not provide sufficient coverage for losses related to these or other risks or
hazards.
Production and cost estimates
The Company, from time to time, prepares estimates of future production, cash costs and capital costs of production.
No assurance can be given that such estimates will be achieved. Failure to achieve production or cost estimates or
material increases in costs could have an adverse impact on the Company’s future cash flows, profitability, results of
operations and financial condition.
The Company’s actual production and costs may vary from estimates for a variety of reasons, including: actual ore
mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; short-term
operating factors relating to the ore reserves, such as the need for sequential development of ore bodies and the
processing of new or different ore grades; revisions to mine plans; risks and hazards associated with mining; natural
phenomena, such as inclement weather conditions, water availability, and floods; and unexpected labour shortages or
strikes.
Costs of production may also be affected by a variety of factors, including: ore grade metallurgy, labour costs,
consumable costs, the cost of commodities, general inflationary pressures and currency exchange rates.
Environmental, health and safety regulations; permits
The Company’s mining and processing operations and exploration activities are subject to extensive laws and
regulations governing the protection of the environment, waste disposal, worker safety, mine development and
protection of endangered and other special status species. The Company’s ability to obtain permits and approvals and
to successfully operate may be adversely impacted by real or perceived detrimental events associated with the
Company’s activities or those of other mining companies affecting the environment, human health and safety or the
surrounding communities. Delays in obtaining or failure to obtain government permits and approvals may adversely
affect the Company’s operations, including its ability to continue operations.
While the Company has implemented health, safety and community initiatives at its operations to ensure the health
and safety of its employees, contractors and members of the community affected by its operations, there is no
guarantee that such measures will eliminate the occurrence of accidents or other incidents which may result in
personal injuries or damage to property, and in certain instances such occurrences could give rise to regulatory fines
and/or civil liability.
Community Relations
The Company operates near established communities. The Company recognises that a failure to appropriately
manage local community stakeholder expectations may lead to dissatisfactions which has the potential to disrupt
production and exploration activities.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Significant changes in the state of affairs of the Company during the financial year follows in chronological order as
announced on:
•
24 July 2014, discovery of a new massive sulphide lens at Hera North.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 23
•
•
•
•
•
•
•
5 August 2014, commission started at Hera process plant
1 September 2014, first base metal concentrate produced at Hera
15 September 2014, first gold pour at Hera.
22 September 2014, agreement to issue shares to the value of $2 million (5,590,027 Ordinary Fully Paid
shares at an average price of 35.78 cents per share) to Pybar Mining Services as part payment for mining
services rendered. It also announced that Pacific Road Capital subscribed for $3.2 million of new equity,
according to a share subscription agreement, on the following terms: 2,778,050 shares at $0.2434 to raise
$676,177 and 7,126,950 shares at $0.3578 to raise $2,552,032.
12 November 2014, retirement of Director Guoquing Zhang.
27 November 2014, formal Hera mine opening and the first concentrate shipment made.
16 December 2014, announced fully underwritten, non-renounceable rights issue pursuant to which eligible
shareholders were entitled to subscribe for 1 new share for every 8 shares held at $0.234 per share to raise
approximately $10.0 million.
• 3 February 2015, as a result of the underwriting agreement relating to the rights issue announced on 16
December 2014, Pacific Road’s interest in the Company increased from 20% to 24.2%.
14 April 2015, effective date of commercial production at Hera declared as 1 April 2015.
21 April 2015, updated Hera resource to 3.2 Mt at 3.75 g/t Au, 33.4 g/t Ag, 3.5% Pb and 4.6% Zn.
• 6 March 2015, reported half year loss to 31 December 2014 of $5,487,317.
•
•
• 4 June 2015, Pybar become a substantial shareholder with a 5.01% ownership interest.
•
• 30 June 2015, entered a voluntary suspension from official quotation.
29 June 2015, resignation of Director Mike Menzies.
.
Apart from the above, or as noted elsewhere in this report, no significant changes in the state of affairs of the
Company occurred during the financial year.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
The following significant events occurred after 30 June 2015 as announced by the Company on:
•
•
•
•
1 July 2015, received a notice on 26 June from Glencore Group Funding Limited (‘Glencore’) asserting that an
event of default had occurred under its loan facility documentation. The principal event of default asserted
by Glencore was an alleged inability on the part of Aurelia and/or the other borrowers within the group to
repay the amounts borrowed under the four separate facilities provided by Glencore. Aurelia rejected the
notice and engaged in discussions with Glencore.
7 July 2015, deposited a conversion notice with Glencore Group Funding Limited (Glencore) in respect of its
A$50,000,000 Facility B Converting Notes.
7 July 2015, update on Hera Project Performance, the Hera Expansion Study and a financial performance
update.
7 July 2015, due to a coding error and more conservative estimation parameters in the resource estimate,
the estimate previously released on 21 April was revised to 2.5 Mt at 3.48 g/t Au, 37.2 g/t Ag, 3.65% Pb and
4.76% Zn.
• 9 July 2015, received notification from Glencore that it considers the conversion notice of 7 July not to be
•
effective.
From 23 July 2015 to 7 September 2015: during the period mutual ongoing agreements with Glencore
extended the Conversion Date with respect of its A$50,000,000 Facility B Converting Notes from 31 July to
10th September 2015 and that Glencore agreed not to take any action to enforce any right it contends that
it had as a consequence of the alleged event of default, before the 9th September 2015.
• 3 August 2015, Rimas Kairaitis resigned as Managing Director and continued as CEO.
•
7 September 2015, deposited a conversion notice with Glencore Group Funding Limited (Glencore) in
respect of its A$20,000,000 Facility A Converting Notes.
• 9 September 2015, improved Hera production performance with record gold production in July and August
and a Term Sheet for a $6m Working Capital Facility and a $6m Standby Funding Facility executed with
Pacific Road Capital Management.
24
AURELIA METALS LIMITED – ANNUAL REPORT 2015
•
•
16 September 2015, discussions with Glencore on a negotiated re-financing ceased. Without consultation,
on Monday 14 September Glencore appointed a voluntary administrator to Aurelia and its subsidiaries on
the grounds of alleged insolvency. The Company successfully obtained orders from the Supreme Court of
NSW deeming that the appointment of the administrator is not effective (and the administrator has no
power over Aurelia and its subsidiaries) until a court hearing on the validity of the appointment can be
heard. An injunction has been granted by the court, pending a further hearing on 14 October 2015.
28 September 2015, $6m Working Capital Facility and a $6m convertible subordinated loan facility formally
executed with Pacific Road together with entitlement to underwrite up to $25 million in new equity. Pybar
agreed to adjusted payment terms for outstanding amounts owed to 31 January 2016.
FUTURE DEVELOPMENTS
Other likely developments in the operations of the Company and the expected results of those operations in future
financial years have not been included in this report as the inclusion of such information is likely to result in
unreasonable prejudice to the Company. Accordingly, this information has not been disclosed in this report.
ENVIRONMENTAL REGULATIONS
The Company is subject to significant environmental regulation in respect to its exploration, mining and processing
activities. The Company aims to ensure the appropriate standard of environmental care is achieved, and in doing so,
that it is aware of and is in compliance with all environmental legislation. The Directors of the Company are not aware
of any breach of environmental legislation for the year under review.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 25
SHARE OPTIONS
Unissued shares under option
(i) As at the date of this report, there were 2,700,000 un-issued ordinary shares under options. the options are unlisted
and have various terms as set out below.
Number of
Options
1,600,000
1,100,000
2,700,000
Expiry
Exercise Price (per share)
29-Nov-2015
29-Nov-2015
$0.35
$0.45
No option holder has any right under the options to participate in any other share issue of the Company or any other
entity.
(ii) Shares issued as a result of the exercise of options
During the year no unlisted options were exercised.
(iii) Expiry of options
During the year 2,290,000 unlisted options expired.
PERFORMANCE RIGHTS
(i) Unissued shares under performance right
As at the date of this report, there were 1,512,000 un-issued ordinary shares subject to Performance Rights. The
Performance Rights are unlisted and have terms as set out below.
Number of
Performance Rights
840,000
134,000
538,000
1,512,000
Expiry
Performance Hurdle
15-Mar-2016
18-Jun-2016
9-Feb-2022
5 Day Aurelia VWAP of 80 cents per share
Various share price and operational performance measures
Various share price and operational performance measures
Refer to the Remuneration Report for further details.
No performance right holder has any right under the performance right to participate in any other share issue of the
Company or any other entity.
(ii) Shares issued as a result of the exercise of performance rights
During the year 1,196,000 shares were issued as a result of the exercise of performance rights.
(iii) Expiry of performance rights
During the year 592,000 unlisted performance rights expired.
26
AURELIA METALS LIMITED –
ANNUAL REPORT 2015
MEETINGS OF DIRECTORS
During the financial year, the number of meetings of Directors attended by each director and the number of meetings
held was as follows:
Board
Meetings
Board
Committee Meetings
Audit
Finance
Nomination
Remuneration Operations
(ii)
(i)
(ii)
(i)
(ii)
(i)
(ii)
(i)
(ii)
(i)
(ii)
Anthony Wehby
Gary Comb
Paul Espie
Mark Milazzo
Rimas Kairaitis
Michael Menzies
Guoqing Zhang
Yong Chen
Susan Corlett
(i)
13
11
9
12
13
12
3
-
1
13
13
11
13
13
12
3
-
-
2
-
-
2
-
2
-
-
-
2
-
-
2
-
2
-
-
-
7
7
5
-
7
-
-
-
-
7
7
6
-
7
-
-
-
-
1
1
1
-
-
-
-
-
-
1
1
1
-
-
-
-
-
-
2
-
-
2
-
2
-
-
-
Richard Willson
(i) Attended - Number of Board/Board Committee Meetings attended
(ii) Eligible - Number of Board/Board Committee Meetings held which were eligible to be attended
-
-
-
-
-
-
-
-
-
2
-
-
2
-
2
-
-
-
-
-
3
-
3
3
3
-
-
-
-
-
3
-
3
3
3
-
-
-
-
Current members of various Board Committees at 30 June 2015
Board Committee
Audit Committee
Members of each committee
Mark Milazzo, Anthony Wehby
Finance Committee
Gary Comb, Paul Espie, Rimas Kairaitis, Anthony Wehby
Remuneration Committee
Mark Milazzo, Anthony Wehby
Nomination Committee
Gary Comb, Paul Espie, Anthony Wehby
Operations Committee
Gary Comb, Rimas Kairaitis, Mark Milazzo
EMPLOYEES
The Company had 57 employees at 30 June 2015 (2014: 27 employees) with 14 (25%) being female (2014: 12 female
(44%)). None of the senior executives is female. The Company’s Board has 1 female alternate director.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year the Company paid a premium in respect of a contract insuring the Directors of the Company,
the company secretaries and all executive officers of the Company and of any related body corporate against a liability
incurred as such a Director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The
contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
INDEMNIFICATION OF AUDITOR
To the extent permitted by law, the Company has agreed to indemnify its auditor, 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.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 27
REMUNERATION REPORT (AUDITED)
This remuneration report outlines the director and executive remuneration arrangements of the Company and the
Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this
report, key management personnel (KMP) of the Group are defined as those persons having authority and
responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or
indirectly, including any Director (whether executive or otherwise) of the Company, and includes key management
personnel.
Remuneration policy and committee
As part of its Corporate Governance Policies and Procedures, the Board has adopted a formal Remuneration
Committee Charter and has established a Remuneration Committee. The Remuneration Committee is responsible for
determining and reviewing compensation arrangements for the directors and executives. The committee 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. At the committee’s discretion the nature and amount of
executive and director’s emoluments may be linked to the Company’s financial and operational performance.
Details of Directors and Key Management Personnel
Position
Appointed
Resigned
Directors
Anthony Wehby
Gary Comb
Paul Espie
Independent Non-Executive Director
Independent Non-Executive Chairman
Independent Non-Executive Director
Non-Executive Director
Mark Milazzo
Independent Non-Executive Director
Rimas Kairaitis
Managing Director
Michael Menzies
Non-Executive Director
Guoqing Zhang
Yong Chen
Non-Executive Director
Alternate Director
Alternate Director
Susan Corlett
Alternate Director
Richard Willson
Alternate Director
Executives
Rimas Kairaitis
Chief Executive Officer
Timothy Churcher
Chief Financial Officer
Dean Fredericksen
Chief Operating Officer
Sean Pearce
General Manager – Hera Project
Richard Willson
Company Secretary
* Rimas Kairaitis was a Director from 24 March 2004 to 27 March 2007.
14-Sep-2006
13-Dec-2011
4-Jul-2012
10-Dec-2013
6-Aug-2012
12-Jun-2008*
26-Mar-2013
13-Mar-2014
24-Nov-2011
4-Jun-2014
5-Dec-2011
17-Jul-2014
30-Jan-2014
4-Jul-2012
22-Sep-2012
20-Nov-2012
24-Mar-2004
29-Sep-2014
1-Mar-2011
1-Mar-2011
5-Feb-2010
-
-
-
-
-
2-Aug-2015
26-Jun-15
11-Nov-2014
13-Mar-2014
11-Nov-2014
6-Nov-2013
17-Jul-2014
30-Jan-2014
4-Jul-2012
22-Oct-2012
22-Jan-2015
-
-
12-Jun-2015
21-Apr-2015
-
28
AURELIA METALS LIMITED – ANNUAL REPORT 2015
Remuneration of Directors and Key Management Personnel
Short term
Post
employment
Share based
payment
Directors
Fees
Salary and
Fees
Non-
Monetary
Other
Superannuation
Options/
Perform-
ance Rights
Total
$
$
$
$
$
$
2015 - Directors
Anthony Wehby
Rimas Kairaitis
Gary Comb
Paul Espie
Mike Menzies
Mark Milazzo
Guoqing Zhang
2015 - Executives
Timothy Churcher(iv)
Richard Willson
Dean Fredericksen
Sean Pearce
Total 2015
2014 – Directors
75,000
-
-
-
322,329
34,733
50,000
50,000
49,450
50,000
18,390
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
205,474
206,521
280,299
233,465
292,840
1,248,088
5,957
-
19,595
12,858
73,143
68,188(i)
147,597(ii)
155,643(ii)
371,428
Anthony Wehby
60,000
-
-
Rimas Kairaitis
Gary Comb
Paul Espie
Mike Menzies
Mark Milazzo
Guoqing Zhang
Robin Chambers
Wenxiang Gao
Christine Ng
2014 – Executives
Dean Fredericksen
Sean Pearce
Richard Willson
Total 2014
-
308,174
28,027
50,000
27,842
50,000
50,000
15,102
34,863
38,087
19,162
7,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
345,056
297,577
301,044
237,739
1,152,034
20,238
32,471
-
80,736
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,125
28,541
4,750
-
-
4,750
1,747
19,520
26,097
26,629
22,179
9,563
9,563
7,969
7,969
27,320
48,533
44,533
91,688
395,166
62,719
50,000
49,450
62,719
20,137
230,951
328,126
522,653
468,678
141,338
155,450
2,282,287
5,550
25,204
5,319
-
-
4,625
1,397
3,224
45,700
45,700
38,083
-
-
38,083
-
7,802
-
-
7,802
(37,698)(iii)
111,250
407,105
100,902
27,842
50,000
92,708
16,499
45,889
45,889
(18,536)
24,923
26,039
18,760
115,041
23,473
19,473
-
188,418
366,211
379,027
256,499
1,881,285
Remuneration
consisting of
options/
performance
rights
%
10%
2%
13%
-
-
13%
-
-
8%
9%
10%
7%
41%
11%
38%
-
-
41%
-
33%
33%
-
6%
5%
-
10%
(i) Compensation for reduction in duties from full-time to part-time on 1 March 2015
(ii) Employment termination payments relating to 30 June 2015, paid in July 2015
(iii) Reversal of prior year share based income, due to vesting conditions not being met
(iv) Commenced employment on 29 September 2014
AURELIA METALS LIMITED – ANNUAL REPORT 2015 29
Shareholdings of Directors and Key Management Personnel (consolidated)
The shareholdings of Directors and KMPs presented below include shares held directly, indirectly, and beneficially by
the Directors and other KMPs.
2015
Directors
Anthony Wehby
Gary Comb
Paul Espie
Mike Menzies*
Mark Milazzo
Guoqing Zhang
Yong Chen
Susan Corlett
Executives
Rimas Kairaitis
Timothy Churcher
Richard Willson
2014
Directors
Anthony Wehby
Rimas Kairaitis
Gary Comb
Paul Espie
Mike Menzies
Mark Milazzo
Guoqing Zhang
Robin Chambers*
Wenxiang Gao*
Christine Ng
Yong Chen
Susan Corlett
Executives
Dean Fredericksen
Sean Pearce
Richard Willson
Balance at the
start of the year
Granted during the
year as
compensation
On exercise of
options/
Performance
Rights options
Other changes
during the year
Balance at the
end of the
year
845,000
250,000
-
100,000
200,000
-
-
-
4,468,544
-
37,574
5,901,118
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at the
start of the year
Granted during the
year as
compensation
745,000
4,468,544
250,000
-
-
-
-
860,003
510,000
-
-
-
-
-
20,000
6,853,547
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60,000
60,000
On exercise of
options/
Performance
Rights options
-
-
-
-
-
-
-
-
-
-
-
-
200,000
100,000
-
300,000
133,125
31,250
-
12,500
25,000
-
-
-
5,000
-
82,426
289,301
978,125
281,250
-
112,500
225,000
-
-
-
4,473,544
-
180,000
6,250,419
Other changes
during the year
Balance at the
end of the
year
100,000(a)
-(a)
-(a)
-(a)
100,000(a)
200,000(a)
-(a)
-(a)
-(a)
-(a)
-(a)
-(a)
-(a)
-(a)
17,574(a)
417,574(a)
845,000
4,468,544
250,000
-
100,000
200,000
-
860,003
510,000
-
-
-
200,000
100,000
37,574
7,571,121
(a) Acquired or disposed via on, or off market transaction.
*For past director’s, holdings were current at date of final director’s interest notice.
All equity transactions with KMPs other than those arising from exercise of remuneration options and performance
rights have been entered into under terms and agreements no more favourable than those the Company would have
adopted if dealing at arm’s length.
30
AURELIA METALS LIMITED – ANNUAL REPORT 2015
Option holdings of Directors and Key Management Personnel (consolidated)
The numbers of options over ordinary shares in the Company held during the financial year by each director, executive
and key management personnel of Aurelia Metals Limited and specified executive of the Group, including their
personally related parties, are set out below.
2015
Directors
Anthony Wehby
Gary Comb
Paul Espie
Mike Menzies
Mark Milazzo
Guoqing Zhang
Yong Chen
Susan Corlett
Executives
Rimas Kairaitis
Timothy Churcher
Dean Fredericksen
Sean Pearce
Richard Willson
2014
Directors
Anthony Wehby
Rimas Kairaitis
Gary Comb
Paul Espie
Mike Menzies
Mark Milazzo
Guoqing Zhang
Robin Chambers
Wenxiang Gao
Christine Ng
Yong Chen
Susan Corlett
Executives
Dean Fredericksen
Sean Pearce
Richard Willson
Balance at the
start of the year
Granted during the
year as
compensation
Exercised
during the
year
Other changes
during the year
Balance at the
end of the year
600,000
500,000
-
-
500,000
-
-
-
600,000
-
340,000
500,000
100,000
3,140,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at the
start of the year
Granted during the
year as
compensation
Exercised
during the
year
600,000
600,000
500,000
-
-
500,000
-
500,000
500,000
500,000
-
-
340,000
500,000
100,000
4,640,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(340,000)(b)
(500,000)(b)
(100,000)(b)
(940,000)
600,000
500,000
-
-
500,000
-
-
-
600,000
-
-
-
-
2,200,000
Other changes
during the year
Balance at the
end of the year
-)(a)
-)(a)
-)(a)
-)(a)
-)(a)
-)(a)
-)(a)
(250,000)(a)
(250,000)(a)
(500,000)(a)
-)(a)
-)(a)
600,000
600,000
500,000
-
-
500,000
-
250,000
250,000
-
-
-
-)(a)
-)(a)
-)(a)
(1,000,000)(a)
340,000
500,000
100,000
3,640,000
(a) Lapsed due to vesting conditions not being met
(b) Expired during the year
AURELIA METALS LIMITED – ANNUAL REPORT 2015 31
Performance right holdings of Directors and Key Management Personnel (consolidated)
The numbers of performance rights held during the financial year by each director, executive and key management
personnel of Aurelia Metals Limited and specified executive of the Group, including their personally related parties, are
set out below.
2015
Executives
Rimas Kairaitis
Timothy Churcher
Dean Fredericksen
Sean Pearce
Richard Willson
2014
Directors
Rimas Kairaitis
Executives
Dean Fredericksen
Sean Pearce
Richard Willson
Balance at the
start of the year
Granted during
the year as
compensation
Exercised
during the
year
Other changes
during the year
Balance at the
end of the year
250,000
160,000
195,000
50,000
655,000
-
-
250,000
220,000
150,000
-
-
(120,000)
(120,000)
(60,000)
620,000
(300,000)
-
-
(290,000)
(295,000)
(40,000)
(625,000)
250,000
-
-
-
100,000
350,000
Balance at the
start of the year
Granted during the
year as
compensation
Exercised
during the year
Other changes
during the year
Balance at the
end of the year
250,000
410,000
320,000
50,000
1,030,000
-
-
-
-
-
-)
-)
250,000
(200,000)
(100,000)
-)
(300,000)
(50,000)(a)
(25,000)(a)
-)(a)
(75,000)(1)
160,000
195,000
50,000
655,000
(a) Expired during the year
Compensation options and performance rights: granted and vested during the year (consolidated)
On 9 February 2015, 620,000 Performance Rights with various share price and operational performance hurdles were
issued to KMPs.
During the year, 300,000 Performance Rights previously issued to KMPs vested and were exercised. A further 625,000
Performance Rights previously issued to KMPs expired.
No other options or performance rights were granted or vested in relation to KMPs during the financial year ended 30
June 2015.
Directors and Executives
A summary of the key terms of remuneration agreements with directors and executives are outlined below:
Executive Directors and Executives
The Chief Executive Officer, Rimas Kairaitis, is employed under an executive employment agreement. The agreement
may be terminated by Mr Kairaitis at any time by giving three months’ notice in writing, or such shorter period of
notice as may be agreed. The Company may terminate the agreement by the Board giving three months written
notice and making a payment equivalent to nine months remuneration or by paying an amount equivalent to twelve
months remuneration or by giving one months’ notice for gross misconduct or a serious persistent beach of the
employment agreement or without notice in case of Mr Kairaitis being convicted of a major criminal offence which
brings the Company into lasting disrepute, at which time Mr Kairaitis would be entitled to that portion of
remuneration arising up to the date of termination. Mr Kairaitis’ annual salary is $358,886 inclusive of
superannuation for services as Chief Executive Officer. Mr Kairaitis is entitled to the private use of a company motor
vehicle.
32
AURELIA METALS LIMITED – ANNUAL REPORT 2015
The Chief Financial Officer, Timothy Churcher, is employed under an executive employment agreement. The
agreement may be terminated by Mr Churcher at any time by giving three months’ notice in writing, or such shorter
period of notice as may be agreed. The Company may terminate the agreement by the Board giving three months
written notice and making a payment equivalent to nine months remuneration or by paying an amount equivalent to
twelve months remuneration or by giving one months’ notice for gross misconduct or a serious persistent beach of the
employment agreement or without notice in case of Mr Churcher being convicted of a major criminal offence which
brings the Company into lasting disrepute, at which time Mr Churcher would be entitled to that portion of
remuneration arising up to the date of termination. Mr Churcher’s annual salary is $339,450 inclusive of
superannuation for services as Chief Financial Officer. Mr Churcher is entitled to the private use of a company motor
vehicle.
The Company Secretary, Richard Willson, is employed under an executive employment agreement. The agreement
may be terminated by Mr Willson at any time by giving three months’ notice in writing, or such shorter period of
notice as may be agreed. The Company may terminate the agreement by giving three months written notice and
making a payment equivalent to nine months remuneration or by paying an amount equivalent to twelve months
remuneration or by giving one months’ notice for gross misconduct or a serious persistent beach of the employment
agreement or without notice in case of Mr Willson being convicted of a major criminal offence which brings the
Company into lasting disrepute, at which time Mr Willson would be entitled to that portion of remuneration arising up
to the date of termination. Mr Willson’s annual salary is $164,250 inclusive of superannuation for services as
Company Secretary.
No performance conditions are currently stipulated in any of the executive agreements.
Non-Executive Directors
The constitution and the ASX listing rules specify that the aggregate remuneration of Non-Executive Directors shall be
determined from time to time by a general meeting. The latest determination was an aggregate annual remuneration
excluding consulting fees of $600,000. Directors’ fees are as follows:
• Chairman $90,000 annual fee plus superannuation or equivalent
• Directors $50,000 annual fee plus superannuation or equivalent
AUDITOR’S INDEPENDENCE AND NON-AUDIT SERVICES
During the year the Company’s auditor did not provide any non-audit services.
The Company has obtained an independence declaration from its auditor, Ernst and Young, which forms part of this
report. A copy of that declaration is included at page 79 of this report.
Signed on behalf of the Board in accordance with a resolution of the Directors.
Mr Anthony Wehby
Non-Executive Chairman
30 September 2015
AURELIA METALS LIMITED – ANNUAL REPORT 2015 33
FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2015
Operating sales revenue
Cost of sales
Gross profit
Corporate administration expenses
Exploration and evaluation costs written off
Impairment of exploration and evaluation assets
Impairment of mine properties
Other income/(expenses)
Loss on commodity derivatives
Loss on revaluation of investments
Loss before interest and income tax
Finance income
Finance costs
Loss before income tax
Income tax expense
Loss after income tax
Other comprehensive income
Total comprehensive profit/(loss) for the period
Note
3(a)
3(b)
3(c)
9
9
10
3(d)
3(e)
4
16
Consolidated
2015
$
13,220,208)
(26,444,951)
(13,224,743)
(4,357,210)
(3,347,093)
(17,884,374)
(75,031,403)
24,667)
(1,674,599)
(287,231)
(115,781,986)
279,680)
(2,656,142)
(118,158,448)
-)
(118,158,448)
-)
(118,158,448)
2014
$
-)
-)
-)
(3,589,420)
(788,291)
-)
-)
85,286)
(6,318,966)
(272,800)
(10,884,191)
260,750)
-)
(10,623,441)
-)
(10,623,441)
-)
(10,623,441)
Earnings per share for loss attributable to the
ordinary equity holders of the parent
Basic profit/(loss) per share (cents per share)
Diluted profit/(loss) per share (cents per share)
20
20
(33.01)
(33.01)
(3.54)
(3.54)
The above Statement of Comprehensive Income should be read in conjunction with the
accompanying notes.
34
AURELIA METALS LIMITED – ANNUAL REPORT 2015
STATEMENT OF FINANCIAL POSITION
as at 30 June 2015
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Total current assets
Non-current assets
Property, plant and equipment
Financial assets
Exploration and evaluation
Mine properties
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Borrowings
Total current liabilities
Non-current liabilities
Provisions
Borrowings
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained losses
Total equity
Note
)) 17(b)
5
6
7
8
9
10
11
12
13
12
13
14
15
16
Consolidated
2015
$
2014
$
4,847,638)
6,184,999)
2,692,563)
145,234)
13,870,434)
21,590,959)
915,788)
2,437,235)
117,253)
25,061,235)
57,459,043)
272,800)
116,000)
33,306,747)
91,154,590)
939,283)
3,940,884)
19,228,531)
143,408,631)
167,517,329)
105,025,024)
192,578,564)
16,394,713)
1,885,698)
22,737,009)
41,017,420)
8,739,703)
1,344,163)
397,653)
10,481,519)
7,856,432)
91,914,752)
99,771,184)
8,248,049)
106,185,245)
114,433,294)
140,788,604)
124,914,813)
(35,763,580)
67,663,751)
99,929,152)
3,060,597)
(138,753,329)
(35,763,580)
85,361,160)
2,897,472)
(20,594,881)
67,663,751)
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 35
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2015
Consolidated
Balance as at 1 July 2013
Total comprehensive profit loss
for the period
Transactions with owners in
their capacity as owners
Shares issued for the period
Costs of share issue
Share based payments
Note
Issued Share
Capital
$
Share Based
Payments
Reserve
$
Accumulated
Losses
$
Total
$
70,180,671)
2,396,118)
(9,971,440)
62,605,349)
-)
-)
(10,623,441)
(10,623,441)
15,983,823)
(803,334)
-)
-)
-)
501,354)
-)
-)
-)
15,983,823)
(803,334)
501,354)
Balance as at 30 June 2014
85,361,160)
2,897,472)
(20,594,881)
67,663,751)
Balance as at 1 July 2014
Total comprehensive loss for the
period
Transactions with owners in
their capacity as owners
Shares issued for the period
Costs of share issue
Share based payments
85,361,160)
2,897,472)
(20,594,881)
67,663,751)
-)
-)
(118,158,448)
(118,158,448)
15,282,736)
(714,744)
-)
-)
-)
163,125)
-)
-)
-)
15,282,736)
(714,744)
163,125)
Balance as at 30 June 2015
14,15
99,929,152)
3,060,597)
(138,753,329)
(35,763,580)
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
36
AURELIA METALS LIMITED – ANNUAL REPORT 2015
CASH FLOW STATEMENT
for the year ended 30 June 2015
Cash flows from operating activities
Receipts from customers (1)
Payments to suppliers and employees
Research & development refund
Interest received
Receipt from Close out of Hedge
GST on purchases refunded from ATO
Net cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Exploration & evaluation expenditure
Development expenditure
Receipts from pre-production sales(1)
Receipts from sale of gold put options
Deferred acquisition (Hera royalty)
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Borrowings
Loan repayments
Interest on borrowings
Share issue costs
Facility establishment costs
Net cash flows from financing activities
Consolidated
Note
2015
$
2014
$
17 (a)
8 (b)
8,206,624)
(15,904,256)
85,286)
355,474)
388,289)
3,859,403)
(3,009,180))
(657,832)
30,531)
(2,450,229)
(43,128,286)
19,595,301)
1,119,905)
(211,537)
(25,702,147)
13,282,736)
-)
(397,653)
(150,333)
(726,744)
(40,000)
11,968,006)
- )
(2,839,053)
547,384)
627,283)
-)
8,065,066)
6,400,680)
(10,761)
-)
(3,574,349)
(82,975,871)
-)
-)
-)
(86,560,981)
14,390,331)
72,138,564)
(34,384)
(12,906)
(803,334)
(240,000)
85,438,271)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
(16,743,321)
21,590,959)
4,847,638)
5,277,970)
16,312,989)
21,590,959)
17 (b)
(1) Total receipts from customers for the year ended 30 June 2015 pre and post the declaration of commercial production on 1 April
2015 was $27,801,925.
The above Cash Flow Statement should be read in conjunction with the accompanying notes.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 37
NOTES TO FINANCIAL STATEMENTS
1.
CORPORATE INFORMATION
The financial report of Aurelia Metals Limited and its subsidiaries for the year ended 30 June 2015 was authorised for
issue in accordance with a resolution of the Directors on 30 September 2015.
Aurelia Metals Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on
the Australian Stock Exchange. The Company is a for-profit entity.
Aurelia Metals has four 100% owned subsidiaries, Stannum Pty Ltd (incorporated 15 September 2007), Defiance
Resources Pty Ltd (incorporated 15 May 2007), Hera Resources Pty Ltd (incorporated 20 August 2009) and Nymagee
Resources Pty Ltd (incorporated 7 November 2011).
The current nature of the operations and principal activities of the Group are gold, lead and zinc production and
mineral exploration.
2A.
SUMMARY OF SIGNIFICANT ACCOUNTING
The significant accounting policies that have been adopted by Aurelia Metals Limited are as follows:
(a) Basis of preparation
The financial report is a general-purpose financial report which has been prepared in accordance with the requirements
of the Corporations Act 2001, the Australian Accounting Standards and other authoritative pronouncements of the
Australian Accounting Standards Board. The financial report has been prepared on a historical cost basis, except
deferred acquisition costs which are measured at fair value.
The financial report is presented in Australian dollars, which is the functional currency of the Company.
(i) Going concern
The financial report has been prepared on the going concern basis which contemplates the continuity of normal
business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
For the full year ended 30 June 2015, the Group reported a net loss of $118.158 million (2014: $10.623 million) and net
operating cash outflows of $3.009 million (2014: inflows of $6.401 million). At 30 June 2015, the Group is in a net
current liability position of $27.147 million and net liability position of $35.764 million.
The net liability position reflects the outstanding loan arrangements with the Company’s main financiers. The
Company anticipated the conversion of a significant amount of this balance into equity, under the terms of the facility
agreements. The Company has, after balance date, issued the lender with conversion notices to convert the
outstanding balances of Facilities A and B into shares at set prices. As announced to ASX on 1 July 2015, Glencore
lodged a notice of default, which if valid, would bar the debt conversion. The notice of default was given on the
grounds that the secured lender believed or believes the Company to be insolvent.
This has been rejected by the Company. Without the consultation of the Company’s Board, Glencore appointed a
voluntary administrator to the Company and certain of its subsidiaries on 14 September 2015. The Company sought
and received from the Supreme Court of NSW on the 15 September 2015 a standstill. Under the standstill, the
Company cannot exercise its rights to convert debt into equity (under the terms of the Convertible Notes Deed Poll),
repayment obligations are suspended, and the secured lender is restrained from exercising its rights to enforce its
security by appointing a voluntary administrator. The matter is to be heard by the Supreme Court on 14 October
2015.
While the Company rejects the position taken by Glencore, the going concern basis upon which the financial
statements have been prepared is reliant on the outcome of the Court case, the Company’s ability to convert the
Facilities A and B as intended and an anticipated equity raise subsequent to these matters being resolved. Until this
38
AURELIA METALS LIMITED – ANNUAL REPORT 2015
matter is resolved in the Court and the financing options available to the Company are executed, which include and
not limited to refinancing of the borrowings and an equity raising, there is a significant uncertainty whether the Group
will continue to operate as a going concern. If the Group is unable to continue as a going concern it may be required to
realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different to
those stated in the financial statements.
No adjustments have been made to the financial report relating to the recoverability and classification of the asset
carrying amounts or the classification of liabilities that might be necessary should the Group not continue as a going
concern.
Classification of non-current borrowings
(ii)
At balance date, the Company held $114.652 million of borrowings, consisting of $22.737 million of current
borrowings and $91.915 million of non-current borrowings. The classification between current and non-current
borrowings is based on the Company’s legal position that the notice of default issued by the Company’s secured
creditor is invalid.
An outcome of the court hearing could be that the appointment of the voluntary administrator by the secured lender
is valid. In this case, the classification of current borrowings would increase to reflect all borrowings related to
Glencore as due and payable. A favourable ruling is expected to enable the Company to complete the debt to equity
conversion and the current classification would therefore remain appropriate.
(b) Compliance with IFRS
The Financial Report complies with Australian Accounting Standards as issued by the Australian Accounting Standards
Board and International Financial Reporting Standards as issued by the International Accounting Standards Board.
(c) New accounting standards and interpretations
Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous financial year, except that the Group has
adopted new and amended Australian Accounting Standards and AASB interpretations where applicable from 1 July
2014, which were assessed to have no material impact on the Company, as follows:
Reference
Title
AASB 2013-3
Amendments to AASB 136 –
Recoverable Amount Disclosures for
Non-Financial Assets
Application date of
standard
Application date for
Group
1 January 2014
1 July 2014
AASB 1031
Materiality
1 January 2014
1 July 2014
(d) Accounting standards and interpretations issued but not yet effective
The following table sets out new Australian Accounting Standards and Interpretations that have been issued but are
not yet mandatory and which have not been early adopted by the Company for the annual reporting period ending 30
June 2015, and have been assessed to have no material impact on the Company.
Reference
Title
AASB 2014-1
AASB 9
AASB 2014-4
IFRS 15
Amendments to Australian Accounting
Standards – Part A – Annual Improvements
to IFRs 2010-2012 Cycle
Financial Instruments
Clarification of Acceptable Methods of
Depreciation and Amortisation
(Amendments to AASB 116 and AASB 138)
Revenue from Contracts with Customers
Application date of
standard
1 July 2014
Application date for
Group
1 July 2014
1 January 2018
1 January 2016
1 July 2018
1 July 2016
1 January 2017
1 July 2017
AURELIA METALS LIMITED – ANNUAL REPORT 2015 39
All other new Australian Accounting Standards that have been issued but are not yet effective are not expected to
have a material impact on the group.
(e) Voluntary change of Accounting Policy
(i) Nature of the change: During the year ended 30 June 2015 the Group changed the presentation of the
Statement of Comprehensive income, to a ‘by function’ rather than ‘by nature’ presentation.
(ii) Reasons for the change in accounting policy: This is to better reflect the change in the business due to the
commencement of commercial production on 1 April 2015.
(iii) Reclassification of each line item in the Statement of Comprehensive Income for the prior period is as follows:
Income/(expenses):
Operating sales revenue
Cost of sales
Compliance costs
Consulting and legal costs
Audit fees
Employee benefits expense
Directors fees
Promotion
Administration expense
Travel expenses
Depreciation and amortisation
Corporate administration expenses
Capitalised exploration costs written off
Other income/(expenses)
Loss on commodity derivatives
Loss on revaluation of investments
Finance income
Total comprehensive profit/(loss) for the period
As reported 30
June 2014
2014
$
Consolidated
As reported 30
June 2015
2014
$
Adjustment
2014
$
-)
-)
(257,697)
(243,442)
(86,383)
(1,758,296)
(345,056)
(102,563)
(394,854)
(182,652)
(218,477)
-)
(788,291)
85,286)
(6,318,966)
(272,800)
260,750)
(10,623,441)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
(3,589,420)
(788,291)
85,286)
(6,318,966)
(272,800)
260,750)
(10,623,441)
-)
-)
257,697)
243,442)
86,383)
1,758,296)
345,056)
102,563)
394,854)
182,652)
218,477)
(3,589,420)
-)
-)
-)
-)
-)
-)
(f) Basis of consolidation
The consolidated financial statements comprise the financial statements of Aurelia Metals Limited and its subsidiaries
(as outlined in Note 1).
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. Specifically, the Group
controls an investee if and only if the Group has:
•
•
•
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of
the investee)
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant
facts and circumstances in assessing whether it has power over an investee, including:
The contractual arrangement with the other vote holders of the investee
•
• Rights arising from other contractual arrangements
•
The Group’s voting rights and potential voting rights
40
AURELIA METALS LIMITED – ANNUAL REPORT 2015
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control
over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and
expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive
income from the date the Group gains control until the date the Group ceases to control the subsidiary.
The financial statements of subsidiaries are prepared for the same reporting period as the Company, using consistent
accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses
and profit and losses resulting from intra-group transactions, have been eliminated in full.
(g) Foreign Currency
Functional and Presentation Currency
Both the functional and presentation currency of Aurelia Metals Limited and its controlled entities is Australian Dollars
($ or A$).
Transactions and Balances
Transactions in foreign currency are initially recorded in the foreign currency at the exchange rates ruling at the date of
transaction. The subsequent payment of receipt of funds related to a transaction is translated at the rate applicable on
the date of payment or receipt. Monetary assets and liabilities denominated in foreign currencies are retranslated at
the rate of exchange ruling at the reporting date. All exchange differences in the consolidated financial statements are
taken to the Income Statement as gain or loss on exchange.
(h) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and on hand and short-term deposits with an
original maturity of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
For the purposes of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts. Bank overdrafts are included within interest-bearing loans and borrowings
in current liabilities on the balance sheet.
(i) Trade and other receivables
Trade receivables comprising base metal concentrates and gold bullion awaiting settlement are initially recorded at
the fair value of contracted sale proceeds expected to be received only when there has been a passing of significant
risks and awards of ownership to the customer. Collectability of debtors is reviewed on an ongoing basis.
An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written
off when identified.
Other collectables are recognised and carried at original invoice amount less an allowance for any uncollectible
amounts.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 41
(j) Inventories / Materials on hand
Gold bullion, metal in concentrate, metal in circuit and ore stockpiles are physically measured or estimated and valued
at the lower of cost or net realisable value. Net realisable value is the estimated future sales price of the product the
entity expects to realise when the product is processed and sold, less estimated costs to complete production and
bring the product to sale. Where the time value of money is material, these future prices and costs to complete are
discounted. Until mine properties are in production, any differences in cost and net realisable value are capitalised to
the respective asset in development.
If the ore stockpile is not expected to be processed in 12 months after the reporting date, it is included in non-current
assets and the net realisable value is calculated on a discounted cash flow basis.
Cost is determined by using the weighted-average method and comprises direct purchase costs and an appropriate
portion of fixed and variable overhead costs, including depreciation and amortisation, incurred in converting materials
into finished goods, based on the normal production capacity. The cost of production is allocated to joint products
using a ratio of spot prices by volume at each month end. Separately identifiable costs of conversion of each metal are
specifically allocated.
Materials and supplies on hand are valued at the lower of cost or net realisable value. Any provision for obsolescence is
determined by reference to specific items of stock. A regular review is undertaken to determine the extent of any
provision for obsolescence.
(k) Property Plant and Equipment and Mine Properties
Items of property, plant and equipment and producing mines are stated at cost, less accumulated depreciation,
amortisation and accumulated impairment losses.
Initial recognition
The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing
the asset into operation, the initial estimate of the rehabilitation obligation, and, for qualifying assets (where relevant),
borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other
consideration given to acquire the asset. The capitalised value of a finance lease is also included in property, plant and
equipment.
Mine properties also consist of the fair value attributable to mineral reserves and the portion of mineral resources
considered to be probable of economic extraction at the time of an acquisition. When a mine construction project
moves into the production phase, the capitalisation of certain mine construction costs ceases, and costs are either
regarded as part of the cost of inventory or expensed, except for costs which qualify for capitalisation relating to
mining asset additions, improvements or new developments, underground mine development or mineable reserve
development.
Depreciation/amortisation
Accumulated mine development costs are depreciated/amortised on a unit-of-production basis over the economically
recoverable reserves and the portion of mineral resources considered to be probable of economic extraction, except in
the case of assets whose useful life is shorter than the life of the mine, in which case the straight-line method is
applied. The unit of account for run of mines (ROM) costs is tonnes of ore mined, whereas the unit of account for post-
ROM costs is tonnes of ore processed. Rights and concessions are depleted on the unit-of-production (UOP) basis
over the economically recoverable reserves of the relevant area. The unit-of-production rate calculation for the
depreciation/amortisation of mine development costs takes into account expenditures incurred to date, together with
planned future development expenditure.
The estimated fair value attributable to the mineral reserves and the portion of mineral resources considered to be
probable of economic extraction at the time of the acquisition is amortised on a UOP basis whereby the denominator
is the proven and probable reserves and the portion of resources expected to be extracted economically. The
estimated fair value of the mineral resources that are not considered to be probable of economic extraction at the
42
AURELIA METALS LIMITED – ANNUAL REPORT 2015
time of the acquisition is not subject to amortisation, until the resource becomes probable of economic extraction in
the future and is recognised in exploration and evaluation assets.
Other plant and equipment, is calculated on a straight-line basis over their estimated useful lives as follows:
Plant and equipment over three to five years
Land – not depreciated
•
•
• Motor vehicles – three to five years
•
Leasehold improvements – three to five years
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs. If any indication of impairment exists and where the carrying values
exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable
amount.
The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses are recognised in the income statement. Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These are included in the income statement.
Derecognition
Items of property, plant and equipment and producing mines are derecognised upon disposal or when no further future
economic benefits are expected from its use or disposal.
(l) Recoverable amount of assets
At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. Where
an indicator of impairment exists, the Company makes a formal estimate of recoverable amount. Where the carrying
amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its
recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual
asset, unless the asset's value in use cannot be estimated to be close to its fair value less costs to sell and it does not
generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the
recoverable amount is determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
(m) Exploration and evaluation expenditure
Expenditure on acquisition, exploration and evaluation relating to an area of interest is carried forward where rights to
tenure of the area of interest are current and;
i)
It is expected that expenditure will be recouped through successful development and exploitation of the area of
interest or alternatively by its sale and/or;
Exploration and evaluation activities are continuing in an area of interest but at balance date have not yet
reached a stage which permits a reasonable assessment of the existence or otherwise of economically
recoverable reserves.
ii)
If facts and circumstances suggest that the carrying amount of any recognised exploration and evaluation assets may
be impaired, the entity must perform impairment tests on those assets in accordance with AASB 136 ‘Impairment of
Assets’. Impairment of exploration and evaluation assets is to be assessed at a cash generating unit or group of cash
AURELIA METALS LIMITED – ANNUAL REPORT 2015 43
generating units level provided this is no larger than an area of interest. Any impairment loss is to be recognised as an
expense in accordance with AASB 136. Accumulated costs in relation to an abandoned area are written off to the
income statement in the period in which the decision to abandon the area is made.
Mines under construction
When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated then
any capitalised exploration and evaluation expenditure is reclassified as capitalised ‘Mine properties under
construction ’. Prior to reclassification, capitalised exploration and evaluation expenditure is assessed for impairment.
Producing mines
Upon completion of the mine construction phase, assets are transferred into ‘Property, Plant and Equipment’ or ‘Mine
Properties’.
(n) Trade and other payables
Trade payables and other payables are carried at amortised cost. They represent liabilities for goods and services
provided to the Company prior to the end of the financial year that are unpaid and arise when the Company becomes
obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured
and are usually paid within 30 days of recognition.
(o) Provisions and employee benefits
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a
separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented
in the income statement net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate,
the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is
recognised as a finance cost.
Liabilities for wages and salaries, including non-monetary benefits, annual leave, long service leave and accumulating
sick leave expected to be settled within 12 months of the reporting date are recognised in respect of employee’s
services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are
settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the
rates paid or payable.
(p) Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at
the inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of
a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not
explicitly specified in an arrangement.
Finance leases that transfer substantially all the risks and benefits incidental to ownership of the leased item to the
Group, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the
present value of the minimum lease payments. Lease payments are apportioned between finance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are recognised in finance costs in the statement of profit or loss.
44
AURELIA METALS LIMITED – ANNUAL REPORT 2015
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the
Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated
useful life of the asset and the lease term.
Operating lease payments are recognised as an operating expense in the statement of profit or loss on a straight-line
basis over the lease term.
(q) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All
other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the borrowing of funds.
(r) Income recognition
Income, including management fees, is recognised and measured at the fair value of the consideration received or
receivable to the extent it is probable that the economic benefits will flow to the Company and the income can be
reliably measured. The following specific recognition criteria must also be met before income can be recognised:
Gold and Silver Bullion Sales
Revenue from gold and silver bullion sales is brought to account when the significant risks and rewards of ownership
have transferred to the buyer and selling prices are known or can be reasonably estimated.
Zinc, Lead and Silver in Concentrate Sales
The terms of metal in concentrate sales contracts with third parties contain provisional pricing arrangements whereby
the selling price for metal in concentrate is based on prevailing spot prices on a specified future date after shipment to
the customer (quotation period). Adjustments to the sales price occur based on movements in quoted market prices
up to the date of final settlement. The period between provisional invoicing and final settlement is typically between
one and three months.
Interest
Income is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate. This is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
(s) Share-based payment transactions
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 cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at
which they are granted. The fair value is determined by an internal valuation using the Black Scholes model or
Trinomial Barrier Option model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked
to the price of the shares of Aurelia (‘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 (i)
the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the Directors of
the Company, will ultimately vest. This opinion is formed based on the best available information at balance date. No
AURELIA METALS LIMITED – ANNUAL REPORT 2015 45
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 is reflected as additional share dilution in the computation of
earnings per share.
(t) Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
•
•
Except where the deferred income tax liability arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
In respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, except where the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
•
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:
Except where the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss; and
In respect of deductible temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the
temporary differences will reverse in the foreseeable future and taxable profit will be available against which
the temporary differences can be utilised.
•
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income
tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the balance sheet date.
46
AURELIA METALS LIMITED – ANNUAL REPORT 2015
Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the
same taxation authority.
(u) Other taxes
Income, expenses and assets are recognised net of the amount of GST except:
• Where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item
as applicable; and
• Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the balance sheet.
Cash flows are included in the cash flow statement on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as
operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
(v) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown directly in equity as a deduction, net of tax, from proceeds.
(w) Operating segments
An operating segment is a component of an entity that engages in business activities from which it may earn income
and incur expenses (including income and expenses relating to transactions with other components of the same
entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to make
decisions about resources to be allocated to the segment and assess its performance and for which discrete financial
information is available. This includes start up operations which are yet to earn income. Management will also consider
other factors in determining operating segments such as the existence of a line manager and the level of segment
information presented to the Board of Directors.
Operating segments have been identified based on the information provided to the chief operating decision makers –
being the executive management team.
The group aggregates two or more operating segments when they have similar economic characteristics, and the
segments are similar in each of the following respects:
• Nature of the products and services
• Nature of the production processes
•
• Methods used to distribute the products or provide the services, and if applicable
• Nature of the regulatory environment.
Type or class of customer for the products and services
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However, an
operating segment that does not meet the quantitative criteria is still reported separately where information about
the segment would be useful to users of the financial statements. Information about other business activities and
operating segments that are below the quantitative criteria are combined and disclosed in a separate category for ‘all
other segments’.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 47
(x) Profit/(loss) per share
Basic profit/(loss) per share
Basic profit / (loss) per share is calculated by dividing the profit / (loss) attributable to equity holders of the company,
excluding any costs of servicing equity other than dividends, by the weighted average number of ordinary shares,
adjusted for any bonus elements.
Diluted profit/(loss) per share
Diluted earnings per share is calculated as net profit / (loss) attributable to members of the Company, adjusted for:
• Costs of servicing equity (other than dividends);
• The after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
• Other non-discretionary changes in income or expenses during the period that would result from the dilution
of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any
bonus elements.
(y) Financial instruments
(i) Financial assets
Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are
categorised as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity
investments, or available-for-sale financial assets. The classification depends on the purpose for which the investments
were acquired or originated. Designation is re-evaluated at each reporting date, but there are restrictions on
reclassifying to other categories.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at fair
value through profit or loss, directly attributable transaction costs.
Recognition and de-recognition
All regular way purchases and sales of financial assets are recognised on the trade date i.e., the date that the Group
commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under
contracts that require delivery of the assets within the period established generally by regulation or convention in the
market place. Financial assets are derecognised when the right to receive cash flows from the financial assets has
expired or when the entity transfers substantially all the risks and rewards of the financial assets. If the entity neither
retains nor transfers substantially all of the risks and rewards, it derecognises the asset if it has transferred control of
the assets.
Subsequent valuation
After initial recognition, the Group measures financial assets, including derivatives that are assets, at their fair values,
without any deduction for transaction costs it may incur on sale or other disposal, except for the following financial
assets:
Loans and receivables as defined in paragraph, which shall be measured at amortised cost
using the effective interest method;
•
•
• Held-to-maturity investments as defined in paragraph, which shall be measured at amortised cost using the
•
effective interest method; and
Investments in equity instruments that do not have a quoted market price in an active market and whose fair
value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such
unquoted equity instruments, which shall be measured at cost.
The Group assesses, at each reporting date, whether there is any objective evidence that a financial asset or a group of
financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there
is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of
48
AURELIA METALS LIMITED – ANNUAL REPORT 2015
the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the
financial asset or the group of financial assets that can be reliably estimated.
(ii) Financial liabilities
Initial recognition and measurement
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 may 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:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are acquired or incurred for the purpose of selling or
repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group
that are not designated as hedging instruments in hedge relationships as defined by AASB 139. Separated embedded
derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial
date of recognition, and only if the criteria in AASB 139 are satisfied. The Group has not designated any financial
liability as at fair value through profit or loss.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the
Effective Interest Rate (‘EIR’) method. Gains and losses are recognised in profit or loss when the liabilities are de-
recognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is
included in finance costs in the statement of profit or loss. This category generally applies to interest-bearing loans
and borrowings. For more information refer Note 13.
De-recognition
A financial liability is de-recognised 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 de-recognition of
the original liability and the recognition of a new liability. The difference in the respective carrying amounts is
recognised in the statement or profit or loss.
(iii) Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of
financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an
intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(z) Comparative information
Where necessary, the prior year financial data was restated for comparability purposes.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 49
2B.
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements.
Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities,
income and expenses. Management bases its judgements and estimates on historical experience and on various other
factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions and conditions.
Management has identified the following critical accounting policies for which significant judgements, estimates and
assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and
may materially affect financial results or the financial position reported in future periods.
(a) Significant accounting judgements
(i) Exploration and evaluation expenditure
Exploration and evaluation expenditure is capitalised when either, costs are expected to be recouped through
successful development and exploitation of the area of interest; or alternatively by its sale: or exploration and/or
evaluation activities in the area have not reached a stage which permits a reasonable assessment of the existence or
otherwise of economically recoverable reserves. Costs incurred on mining tenements are allocated to specific
geological structures within the mining tenement. Where specific geological structures within tenement are yet to be
identified, the costs are allocated across the entire tenement on a proportional basis. In determining this, assumptions,
including the maintenance of title, ongoing expenditure and prospectivity are made and in the event that these
assumptions no longer hold valid then this expenditure may, in part or full, be expensed through the income statement
in future periods – see Note 9 for disclosure of carrying values.
(ii) Production start date
The Company assesses the stage of each mine under construction to determine when a mine moves into the
production phase. This being when the mine is substantially complete, ready and available for its intended use. The
criteria used to assess the start date are determined based on the unique nature of each mine construction project,
such as the complexity of the project and its location. The Company considers various relevant criteria to assess when
the production phase is considered to have commenced. At this point, all related amounts are reclassified from ‘Mines
under construction’ to ‘producing mines’ and/or ‘Property, Plant and Equipment.’ Some of the criteria used to identify
the production start date include, but are not limited to:
Level of capital expenditure incurred compared with the original construction cost estimate
•
• Completion of a reasonable period of testing of the mine plant and equipment (‘commissioning period’)
• Ability to produce metal in saleable form (within specifications)
• Ability to sustain ongoing production of metal at commercial production level
When a mine development/construction project moves into the production phase, the capitalisation of certain mine
development/construction costs ceases and costs are either regarded as forming part of the cost of inventory or
expensed, except for costs that qualify for capitalisation relating to mining asset additions or improvements,
underground mine development or mineable reserve development. It is also at this point that
depreciation/amortisation commences.
Revenue generated during a development or commissioning period from the production and sale of metal is
considered to be integral to the development of the mine and is therefore credited to the mine development asset.
Revenue earned after the production start date is credited to the profit and loss.
At 1 April 2015, Aurelia Metals moved from ‘Mine under Construction’ to ‘Producing Mine’.
50
AURELIA METALS LIMITED – ANNUAL REPORT 2015
(b) Significant accounting estimates and assumptions
(i) Share-based payment transactions
The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by using a Black-Scholes or
Trinomial Barrier Option Model formula taking into account the terms and conditions upon which the instruments
were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have
no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact
expenses and equity.
(ii) Deferred acquisition costs in relation to Hera
The Company measures the deferred acquisition costs by reference to the fair value of net present value of future cash
outflows. The following assumptions have been taken into account: risk free bond rate, gold price, timing and
possibility of payment.
(iii) Unit of Production Method of Depreciation/Amortisation
The Company uses the unit-of production basis where depreciating/amortising specific assets which results in a
depreciation/amortisation charge proportional to the depletion of the anticipated remaining life of mine production.
Each item’s economic life, which is assessed annually, has due regard to both its physical life limitations and to present
assessments of economically recoverable reserves of the mine property at which it is located. These calculations
require the use of estimates and assumptions.
(iv) Impairment of Assets
The Company assesses each Cash-Generating Unit (GGU), annually to determine whether there is any indication of
impairment or reversal. Where an indicator of impairment or reversal exists, a formal estimate of the recoverable
amount is made, which is deemed as being the higher of the fair value costs of disposal and value in use calculated in
accordance with accounting policy note 2(m). These assessments require the use of estimates and assumptions such as
discount rates, exchange rates, commodity prices, gold multiple values, future operating development and sustaining
capital requirements and operating performance.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 51
3.
REVENUE AND EXPENSES
Loss before income tax includes the following
revenues, income and expenses whose disclosure is
relevant in explaining the performance of the Group:
(a) Operating sales revenue
Base metal concentrate
Gold
Silver
Total operating sales revenue
(b) Cost of sales
Site production costs
Transport and refining
Royalty
Inventory movement
Depreciation and amortisation
Total cost of sales
(c) Corporate administration expenses
Corporate costs
Corporate depreciation
Options and performance rights expense
Total corporate administration expense
(d) Other income/(expenses)
Gain on disposal of plant and equipment
Sundry income
Total other income/(expenses)
(e) Finance costs
Interest expense
Withholding tax incurred on borrowings
Amortisation of capitalised borrowing costs
Total other income/(expenses)
(f) Depreciation and amortisation
Property plant and equipment
Mine development
Less: Capitalised to mine under construction
Total depreciation and amortisation
Represented by:
Cost of sales depreciation
Corporate depreciation
Total depreciation and amortisation
Consolidated
2015
$
6,987,824)
6,186,614)
45,770)
13,220,208)
13,160,913)
1,368,195)
81,450)
5,381,365)
19,991,923)
6,453,028)
26,444,951)
3,987,754)
206,331)
163,125)
4,357,210)
2014
$
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
2,869,409)
218,477)
501,354)
3,589,240)
19,940)
4,727)
24,667)
-)
85,286)
85,286)
1,844,744)
568,684)
242,714)
2,656,142)
2,252,044)
4,444,040)
6,696,084)
(36,725)
6,659,359)
6,453,028)
206,331)
6,659,359)
-)
-)
-)
-)
278,676)
-)
-)
(60,199)
218,477)
-))
218,477)
218,477)
52
AURELIA METALS LIMITED –
ANNUAL REPORT 2015
(g) Employee benefits expense
Salaries, on-costs and other employment benefits
Superannuation expense
Options and performance rights expense
Total employee benefits expense
(h) Other items
Operating lease rentals
Consolidated
2015
$
2014
$
3,680,416
350,182
163,125
4,193,723
1,162,934
94,008
501,354
1,758,296
75,920
68,911
INCOME TAX
4.
A reconciliation between tax expense and the product of accounting loss before income tax multiplied by the
Company's applicable income tax rate is as follows:
The major components of income tax expense
income statement
Current income tax
Current income tax charge
Consolidated
2015
$
2014
$
-
(201,686)
Deferred income tax
Relating to origination and reversal of temporary differences
Unrecognised tax losses
5,484,672
(5,484,672)
1,237,831
(1,036,145)
Income tax expense reported in the income statement
-
-
A reconciliation between tax expense and the product of accounting loss before income tax multiplied by
the Company's applicable income tax rate is as follows:
Accounting profit/(loss) before income tax
(118,158,448)
(10,623,441)
At the Company's statutory income tax rate (30%)
Share based payments & other non-assessable items
Income tax benefit (expense) not brought to account
Income tax reported in the income statement
(35,447,534)
(175,921)
35,623,455
-
(3,187,032)
(201,687)
3,388,719
-
AURELIA METALS LIMITED – ANNUAL REPORT 2015 53
The Group had formed a tax consolidated group at 30 June 2014.
Consolidated
Statement of
Financial Position
2015
$
2014
$
Statement of Comprehensive
Income
2015
$
2014
$
Deferred income tax
Deferred income tax at 30 June relates to the
following:
Deferred tax liabilities
Deferred exploration and
evaluation expenditure
Receivables
(15,710,363)
24,102)))
(14,297,147)
(45,249)
(29,686,777)
(5,092)
(2,667,625)
1,516,056)
Deferred tax assets
Provisions
Carried forward losses not
recognised
Deferred tax income/(expense)
2,922,639
2,754,829)
446,915)
125,424)
12,763,622
-
11,587,567)
-
29,244,954)
-)
1,036,145)
-)
At 30 June 2015 the Group had carried forward tax losses totalling $77,432,743 (2014: $59,183,097).
5.
TRADE AND OTHER RECEIVABLES - CURRENT
Trade debtors
GST receivable
Accrued interest
Consolidated
2015
$
5,311,548
838,291
35,160
6,184,999
2014
$
206,214)
646,370)
63,204)
915,788)
All of the above are non-interest bearing and generally receivable on 30 day terms. Due to the short term nature
their carrying value approximates their fair value.
As at 30 June 2015, the analysis of trade receivables that were past due, but not impaired, is as follows:
Neither past due
nor impaired
Past due but not impaired
Total
< 30 days
30 – 60 days 61 – 90 days
91 – 120 days
>120 days
$
6,184,999
915,788
2015
2014
$
5,343,248
840,497
$
450
39,386
$
775,006
6,758
$
16,394
10,339
$
49,901
18,808
54
AURELIA METALS LIMITED – ANNUAL REPORT 2015
6.
INVENTORIES
Stores inventory (Materials on hand)
Ore stockpiles
Metal in circuit
Finished concentrate
Finished gold dore
Total current inventory
Consolidated
2015
$
1,476,792
23,880
515,378
471,691
204,872
2,692,563
2014
$
87,464
2,349,771
-
-
-
2,437,235
Ore, metal and finished gold dore are held at Net Realisable Value (NRV). Finished concentrate is held at cost. Stores
inventory is held at cost.
The result of the NRV/cost adjustment of inventories has been recognised through cost of sales during the period.
7.
PROPERTY, PLANT AND EQUIPMENT
Plant and equipment at cost
Property at cost(1)
Accumulated depreciation and impairment
Total property, plant and equipment
Year ended 30 June
Carrying amount at 1 July
Additions/expenditure during the year
Reclassification/transfers(2)
Depreciation for the year
Disposals of assets
Carrying amount at 30 June
Note
10
Consolidated
2015
$
60,440,267)
275,000)
(3,256,224)
57,459,043)
939,283)
598,029)
58,181,590)
(2,252,044)
(7,815)
57,459,043)
2014
$
1,744,103)
275,000)
(1,079,820)
939,283)
1,208,177)
9,782)
-
(278,676)
-
939,283)
(1) Property assets are held at cost and are not depreciated.
(2) Represents reclassification/transfer from mines under development upon declaration of commercial production.
8.
FINANCIAL ASSETS
(a) Carrying values of financial assets
Shares in Aus Tin Mining Limited
Options in Aus Tin Mining Limited
Gold put options
(b) Gold Put Options
At 1 July
Loss on revaluation of put options
Cash received on closure of put options
At 30 June
Note
8(b)
17
Consolidated
2015
$
272,800)
-
-
272,800)
3,380,853)
(2,260,948)
(1,119,905)
-
2014
$
204,600)
355,431)
3,380,853)
3,940,884)
9,699,819)
(6,318,966)
-
3,380,853)
AURELIA METALS LIMITED – ANNUAL REPORT 2015 55
9.
EXPLORATION AND EVALUATION ASSETS
At cost
Accumulated write offs
Accumulated impairment
Total exploration and evaluation assets
At 1 July
Exploration expenditure during the year
Exploration and evaluation assets written off
Exploration and evaluation assets impaired
At 30 June
Consolidated
2015
$
23,188,430)
(5,188,056)
(17,884,374)
116,000)
19,228,531)
2,118,936)
(3,347,093)
(17,884,374)
116,000)
2014
$
21,131,532)
(1,903,001)
-
19,228,531)
16,149,403)
3,867,419)
(788,291)
-
19,228,531)
The recoverability of the carrying amount of the deferred exploration and evaluation expenditure is dependent on
successful development and commercial exploitation, or alternatively the sale, of the respective areas of interest.
An impairment charge of $17,884,374 has been recognised in 2015 (2014: Nil). Impairment has been recognised on
exploration and evaluation assets where recoupment through successful development is now uncertain. See Note 10
for further discussion.
Movements in the provision for impairment loss were as follows:
At 1 July
Tenements relinquished during the year
Exploration and evaluation assets written off
Exploration and evaluation assets impaired
At 30 June
Consolidated
2015
$
(1,903,001)
62,038)
(3,347,093)
(17,884,374)
(23,072,430)
2014
$
(1,222,311)
107,601)
(788,291)
-
(1,903,001)
56
AURELIA METALS LIMITED – ANNUAL REPORT 2015
10. MINE PROPERTIES
Note
Consolidated
2015
$
2014
$
Mines under construction:
At 1 July
Development expenditure during the year
Increase/(decrease) in deferred acquisition costs
Amortisation of project loan facility establishment costs
Interest on project borrowings
Sales during commissioning
Treatment and refining charges during commissioning
Less: Transfers to property, plant and equipment
Less: Transfers to producing mines
Mine under construction 30 June
7
Producing Mines:
At 1 July
Transfers from mines under construction
Impairment of mine properties
Amortisation for the year
Producing mines 30 June
Impairment losses
143,408,631)
40,792,684)
(528,176)
730,810)
6,019,562)
(22,801,274)
3,341,543)
170,963,780)
(58,181,590)
(112,782,190)
-
-
112,782,190)
(75,031,403)
(4,444,040)
33,306,747)
57,934,018
78,257,231
754,065
633,030
5,830,287
-
143,408,631
-
-
143,408,631
-
-
-
-
-
A comprehensive impairment review was conducted at 30 June 2015. The recoverable amount of each cash generating
unit (‘CGU’) was reviewed. As a result of the review, asset values have been reduced to their recoverable amounts
through the recognition of an impairment charge.
In assessing whether an impairment is required, the carrying value of the asset or CGU is compared with its
recoverable amount. The recoverable amount is the higher of the CGU’s Fair Value Less Cost of Disposal (FVLCD) and
Value In Use (VIU). Given the nature of the Company’s activities, information on the fair value of an asset is usually
difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently,
the FVLCD for each CGU was determined based on the net present value of the future estimated cash flows (expressed
in real terms) expected to be generated from the continued use of the CGUs (based on the most recent life of mine
plans), including any expansion projects, and its eventual disposal, using assumptions a market participant may take
into account. These cash flows were discounted using a real post-tax discount rate that reflected current market
assessments of the time value of money and the risks specific to the CGU. The determination of FVLCD for each CGU
uses Level 3 valuation techniques.
Inputs into the FVLCD calculation included: forecast payable production of approximately 196,000 oz gold, 57,000
tonnes of lead and 60,000 tonnes of zinc based on the Company’s expanded life of mine plan; long term commodity
prices of US$1207/oz gold, $2000/t lead and US$2750/t zinc; average A$/US$ exchange rate of 0.78; cash flows
discounted using an after tax real discount rate of 10%.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 57
a) Summary of impairments
As a result of the review, the following impairment losses were recognised:
Impairment losses
Mine properties
Exploration and evaluation assets
Total
2015
$
75,031,403
17,884,374
92,915,777
2014
$
-
-
-
Impairment losses by CGU
Mine properties
Exploration and
evaluation assets
Total Impairment
Value
Hera Project
Nymagee Project
Regional exploration
Total
$
75,031,403
75,031,403
$
3,465,531
14,386,405
32,438
17,884,374
$
78,496,934
14,386,405
32,438
92,915,777
Mine properties: Total impairment losses of $75,031,403 (2014: Nil) were recognised in respect of the Hera CGU mine
property. The triggers for the impairment test were primarily the effect of recent operating experience, which resulted
in higher costs of extraction and lower than expected gold recovery relative to the feasibility study estimates. The
recoverable amount of Hera was based on management’s estimate of FVLCD.
Exploration and evaluation (E&E) assets: Total impairment losses of $17,884,374 (2014: Nil) were recognised in
respect of Hera, Nymagee and regional exploration properties. The triggers for impairment of the Hera E & E asset is
related to the Hera CGU impairment, whereby increased forecast operating costs have rendered certain inferred
resource uneconomic and unlikely to be recoverable. At Nymagee, it is management’s view that the focus on
improving performance at Hera will mean that the timeline for any development of Nymagee is now deferred to an
indefinite future date. Management’s expectation that the book value of E&E assets at Nymagee, together with
smaller E&E assets in the regional exploration portfolio, will be recouped through successful development is now
uncertain. As such, these assets have been impaired to a nominal value representing security deposits recoverable
upon relinquishment of tenement.
11.
TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Consolidated
2015
$
6,101,969)
10,292,744)
16,394,713)
2014
$
665,202)
8,074,501)
8,739,703)
Trade payables are non-interest bearing and generally payable on 7 to 30 day terms and due to the short term nature
of these payables their carrying value is assumed to approximate their fair value.
58
AURELIA METALS LIMITED – ANNUAL REPORT 2015
12.
PROVISIONS
At 1 July 2014
Arising during the year(a)
Paid during the year
At 30 June 2015
Comprising:
Current 2015
Non-current 2015
Total Provisions 2015
Current 2014
Non-current 2014
Total Provisions 2014
Rehabilitation
CBH Royalty
Other
1,445,000
71,000
1,516,000
-
1,516,000
1,516,000
-
1,445,000
1,445,000
7,816,368
59,183
(192,306)
7,683,245
1,382,232
6,301,013
7,683,245
1,013,319
6,803,049
7,816,368
330,844
212,041
542,885
503,466
39,419
542,885
330,844
-
330,844
Total
9,592,212
342,224
(192,306)
9,742,130
1,885,698
7,856,432
9,742,130
1,344,163
8,248,049
9,592,212
(a) The Group makes full provision for the future cost of rehabilitating the Hera mine site and related production facilities at the time of developing
the mine and installing and using those facilities. The rehabilitation provision represents the present value of rehabilitation costs relating to
mine sites, which are expected to be incurred up to July 2020. These provisions have been created based on Aurelia’s internal estimates.
Assumptions based on the current economic environment have been made, which management believes are a reasonable basis upon which to
estimate the future liability. These estimates are reviewed regularly to take into account any material changes to the assumptions. However,
actual rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation works required that will reflect
market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mine ceases to produce at
economically viable rates. This, in turn, will depend upon future gold, lead and zinc prices, which are inherently uncertain. During the period
$71,000 (2014: $1,106,000) has been provided for as a result of further development at the Hera project site.
13.
BORROWINGS
Current
Finance leases(a)
Insurance funding
Glencore borrowings
Total current borrowings
Non-current
Glencore borrowings:
Facility A
Facility B
Facility C
Facility E
Glencore facilities drawn
Add: Interest accrued on borrowings
Total Glencore borrowings
Less: Facility establishment costs
Net Glencore borrowings
Less: Current portion of Glencore borrowings
Net Glencore borrowings – non-current
Add: Finance leases – non-current(a)
Total non-current borrowings
Consolidated
2015
$
426,685)
80,407)
22,229,917)
22,737,009)
2014
$
397,653)
-)
-)
397,653)
20,000,000)
50,000,000)
30,000,000)
5,000,000)
105,000,000)
12,245,821)
117,245,821)
(4,380,994)
112,864,827)
(22,229,917)
90,634,910)
1,279,842)
91,914,752)
20,000,000)
50,000,000)
30,000,000)
5,000,000)
105,000,000)
4,833,236)
109,833,236)
(5,354,518)
104,478,718)
-)
104,478,718)
1,706,527)
106,185,245)
a) Finance leases have been used to fund light vehicles, and some fixed and mobile plant for the crushing/screening
circuit of the processing mill. Terms: Fixed monthly repayments in advance; Period three-five years; Fixed interest
rates ranging between 6.66% - 7.13%; Nil residual.
The Glencore borrowings are fully secured against all mine property, plant and equipment assets.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 59
The key terms of the Glencore loan facilities are summarised below:
Facility A
Facility B
Facility C
Facility D
Facility E
Limit:
Conversion:
Interest Rate:
Use of Funds:
Maturity Date:
Drawdown Period:
Limit:
Conversion:
Interest Rate:
Use of Funds:
Maturity Date:
Drawdown Period:
Limit:
Interest Rate:
Use of Funds:
Maturity Date:
Drawdown Period:
Limit:
Interest Rate:
Use of Funds:
Maturity Date:
Drawdown Period:
Limit:
Interest Rate:
Use of Funds:
Maturity Date:
Drawdown Period:
A$20 million Converting Note Facility
Convertible at Aurelia’s option at $0.251 per share
3M AUD BBSW + 4%
Hera Development, Nymagee feasibility study and development, working capital
60 months after date of shareholder approval
12 months from date of shareholder approval
A$50 million Converting Note Facility
Convertible at Aurelia’s option at 60 day VWAP Price prior to conversion
3M AUD BBSW + 4%
Hera Development, Nymagee feasibility study and development, working capital
60 months after date of shareholder approval
12 months from date of shareholder approval
A$30 million Debt Facility
3M AUD BBSW + 4.5%
Hera Development, Nymagee feasibility study and development, working capital
60 months after date of shareholder approval
18 months from date of shareholder approval
A$50 million Debt Facility
3M AUD BBSW + 4.5%
Nymagee development
42 months after first drawdown
12 months after completion of approved Nymagee bankable feasibility study or earlier
with Glencore consent
A$5m Debt Facility
3M AUD BBSW + 4.5%
Purchase of precious and/or base metal option cover.
42 months after first drawdown
12 months from date of shareholder approval
As discussed in the overview section and Basis of Preparation 2A the Company has, after balance date, issued the
lender with conversion notices to convert the outstanding balances of Facilities A and B into shares at set prices. As
announced to ASX on 1 July 2015, Glencore lodged a notice of default, which if valid, would bar the debt conversion.
The notice of default was given on the grounds that the secured lender believed or believes the Company to be
insolvent.
This has been rejected by the Company. Without the consultation of the Company’s Board, Glencore appointed a
voluntary administrator to the Company and its subsidiaries on 14 September 2015. The Company sought and
received from the Supreme Court of NSW on the 15 September 2015 a standstill. Under the standstill, the Company
cannot exercise its rights to convert debt into equity (under the terms of the Convertible Notes Deed Poll), repayment
obligations are suspended, and the secured lender is restrained from exercising its rights to enforce its security by
appointing a voluntary administrator. The matter is to be heard by the Supreme Court on 14 October 2015.
60
AURELIA METALS LIMITED – ANNUAL REPORT 2015
CONTRIBUTED EQUITY
14.
(a) Issued and paid up capital
Ordinary shares fully paid
(b) Movements in ordinary shares on issue
2015
Opening balance
Issue of shares (i)
Issue of shares (ii)
Issue of shares (iii)
Less: Share issue costs
Closing balance
2014
Opening balance
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Less: Share issue costs
Closing balance
Consolidated
2015
$
2014
$
9999,929,152)
85,361,160)
Date
01-Jul-2014
03-Oct-2014
03-Oct-2014
28-Jan-2015
Number of shares
328,322,918)
5,590,027)
9,905,000)
42,977,243)
30-Jun-2015
386,795,188)
1-Jul-2013
13-Sep-2013
3-Oct-2013
14-Oct-2013
9-Dec-2013
10-Dec-2013
07-Apr-2014
30-Jun-2014
262,669,890)
917,459)
332,541)
4,000,000)
874,126)
58,848,902)
680,000)
-)
328,322,918
$
85,361,160)
2,000,000)
3,226,311)
10,056,425)
(714,744)
99,929,152)
70,180,671)
183,492)
66,508)
1,160,000)
250,000)
14,323,823)
-)
(803,334)
85,361,160)
(i) During the period AMI reached an agreement with its primary underground contractor, Pybar Mining Services Pty Ltd, to
issue shares as part payment for mining services rendered to the Company during July and August 2014.
(ii) During the period AMI and Pacific Road agreed an amendment to the Share Subscription Agreement (‘SSA’) announced to
the ASX on 6 December 2013, and issued 2,778,050 shares at $0.2434 to raise $676,177 being the remaining Phase 1
shares under the SSA and 7,126,950 shares at $0.3578 to raise $2,549,880 being shares issued under Phase 2 of the
amended SSA.
(iii) Fully underwritten 1 for 8 rights issue at $0.234 per share.
(c) Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of a winding up of the Parent, to
participate in the proceeds from sale of all surplus assets in proportion to the number of and amounts paid up on
shares held. Ordinary shares entitle their holder to one vote, either in person or proxy, at a meeting of the Company.
(d) Capital management
The entity does not have a defined share buy-back plan or a dividend reinvestment plan. No dividends were paid in the
year ending 30 June 2015.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 61
15.
RESERVES
Option and performance rights reserve
(a) Movements
Carrying amount at beginning of financial year
Options and performance rights vested (previously issued)
during the year
Carrying amount at the end of the financial year
(b) Details of options and performance rights issued or lapsed
2015
Opening balance
Expiry of 340,000 options at $0.40
Expiry of 950,000 options at $0.45
Expiry of 596,000 performance rights
Issue of 1,730,000 performance rights(i)
Expiry of 696,000 performance rights
Expiry of 496,000 performance rights
Vesting of previously issued performance rights
Closing balance
2014
Opening balance
Exercise of 680,000 performance rights
Expiry of 250,000 options at $0.35
Expiry of 750,000 options at $0.45
Expiry of 70,000 performance rights
Expiry of 190,000 performance rights
Vesting of previously issued performance rights
Closing balance
Date
1-Jul-2014
31-Dec-2014
31-Dec-2014
4-Feb-2015
9-Feb-2015
28-Apr-2015
29-Apr-2015
30-Jun-2015
1-Jul-2013
7-Apr-2014
9-Apr-2014
9-Apr-2014
9-Apr-2014
9-Apr-2014
30-Jun-2014
Consolidated
2015
$
3,060,597
2014
$
2,897,472
2,897,472
2,396,118
163,125
3,060,597
501,354
2,897,472
Number
5,560,000)
(340,000)
(950,000)
(596,000)
1,730,000)
(696,000)
(496,000)
-)
4,212,000)
7,500,000)
(680,000)
(250,000)
(750,000)
(70,000)
(190,000)
-)
5,560,000)
$
2,897,472)
-)
-)
-)
-)
-)
-)
163,125)
3,060,597)
2,396,118)
-)
-)
-)
-)
-)
501,354)
2,897,472)
(i) The Company Performance Right Plan imposes various restrictions on the sale of the shares upon the exercise of performance
rights.
16.
RETAINED LOSSES
Movements in retained losses were as follows:
Balance at beginning of year
Net loss attributable to members of Aurelia Metals Limited
Balance at end of year
Consolidated
2015
$
(20,594,881)
(118,158,448)
(138,753,329)
2014
$
(9,971,440)
(10,623,441)
(20,594,881)
62
AURELIA METALS LIMITED – ANNUAL REPORT 2015
17.
CASHFLOW STATEMENT
(a) Reconciliation of the net loss after tax to the net cash flows used
in operating activities
Net loss after tax
Adjustments for:
Share based payments
Exploration and evaluation assets written off
Impairment of exploration and evaluation assets
Impairment of producing mine assets
Depreciation and amortisation
Gain on sale of PPE
Loss on revaluation of investments
(Profit)/loss on revaluation of commodity derivatives
Interest expense and amortisation of borrowing costs
GST not included in net loss
Changes in assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in prepayments
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Changes in asset and liability values not related to net loss
Net cash flow from operating activities
(b) Reconciliation of cash
Cash at bank and in hand (i)
Short-term deposits (ii)
Total cash
Consolidated
2015
$
2014
$
(118,158,448)
(10,623,441)
)
163,125)
3,347,093)
17,884,374)
75,031,403)
6,659,359)
(19,940)
287,231)
2,260,948)
2,656,142)
4,277,774)
-)
(5,269,211)
(27,981)
7,329,206)
475,722)
94,023)
(3,009,180)
501,354)
788,291)
-)
-)
218,477)
-)
272,800)
6,318,966)
-)
7,932,547)
-)
574,112)
1,539)
4,882,485)
1,137,655)
(5,604,105)
6,400,680)
1,827,638)
3,020,000)
4,847,638)
9,420,959)
12,170,000)
21,590,959)
(i) Of the $1,827,638 of cash at bank held at 30 June 2015 ($9,420,959 at 30 June 2014), $1,258,560 (30 June 2014: $11,265,799)
is held within Hera Resources Limited and subject to existing loan agreements is restricted for use by Hera Resources.
(ii) Of the $3,020,000 short term deposits held at 30 June 2015 ($12,170,000 at 30 June 2014), $3,020,000 (30 June 2014:
$3,970,000) has been pledged as security, and cannot currently be withdrawn.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 63
EXPENDITURE COMMITMENTS
18.
Operating lease commitments
The Group has entered into commercial leases on certain services and items of plant and machinery. These leases have
an average life of between three and five years with no renewal option included in the contracts. There are no
restrictions placed upon the Group by entering into these leases.
Future minimum rentals payable under non-cancellable operating leases as at 30 June 2015 are as follows:
Within one year
After one year but not more than five years
More than five years
Total
2015
$
2,057,208
2,192,192
-
4,249,400
2014
$
2,057,208
4,256,179
-
6,313,387
Finance lease and hire purchase commitments
The Group has finance leases and hire purchase contracts for various items of plant and machinery.
Future minimum lease payments under finance leases and hire purchase contracts together with the present value of
the net minimum lease payments are as follows:
2015
$
2014
$
Minimum
payments
Present value
of payments
Minimum
payments
Present value
of payments
Within one year
After one year but not more than five years
More than five years
Total minimum lease payments
Less: amounts representing finance charges
Present value of minimum lease payments
531,060)
1,408,379)
-)
1,939,439)
(232,912)
1,706,527)
426,686
1,279,841
1,706,527
1,706,527
531,059)
1,939,439)
-)
2,470,498)
(366,318)
2,104,180)
397,653)
1,706,527)
-)
2,104,180)
-)
2,104,180)
Commitments
At 30 June 2015, the Group has commitments of $4,326,113 (2014: $ 11,880,359) including $1,406,000 relating to
annual exploration/mining lease minimum annual expenditures (2014: $1,125,000).
64
AURELIA METALS LIMITED – ANNUAL REPORT 2015
SUBSEQUENT EVENTS
19.
The key events after the balance date affecting the Company were:
•
•
•
•
1 July 2015, received a notice on 26 June from Glencore Group Funding Limited (‘Glencore’) asserting that an
event of default had occurred under its loan facility documentation. The principal event of default asserted
by Glencore was an alleged inability on the part of Aurelia and/or the other borrowers within the group to
repay the amounts borrowed under the four separate facilities provided by Glencore. Aurelia rejected the
notice and engaged in discussions with Glencore.
7 July 2015, deposited a conversion notice with Glencore Group Funding Limited (Glencore) in respect of its
A$50,000,000 Facility B Converting Notes.
From 23 July 2015 to 7 September 2015: during the period mutual ongoing agreements with Glencore
extended the Conversion Date with respect of its A$50,000,000 Facility B Converting Notes from 31 July to
10th September 2015 and that Glencore agreed not to take any action to enforce any right it contends that
it had as a consequence of the alleged event of default, before the 9th September 2015.
7 September 2015, deposited a conversion notice with Glencore Group Funding Limited (Glencore) in
respect of its A$20,000,000 Facility A Converting Notes.
•
• 9 September 2015, improved Hera production performance with record gold production in July and August
and a Term Sheet for a $6m Working Capital Facility and a $6m Standby Funding Facility executed with
Pacific Road Capital Management.
16 September 2015, discussions with Glencore on a negotiated re-financing ceased. Without consultation,
on Monday 14 September Glencore appointed a voluntary administrator to Aurelia and its subsidiaries on
the grounds of alleged insolvency. The Company successfully obtained orders from the Supreme Court of
NSW deeming that the appointment of the administrator is not effective (and the administrator has no
power over Aurelia and its subsidiaries) until a court hearing on the validity of the appointment can be
heard. An injunction has been granted by the court, pending a further hearing on 14 October 2015.
28 September 2015, $6m Working Capital Facility and a $6m convertible subordinated loan facility formally
executed with Pacific Road together with entitlement to underwrite up to $25 million in new equity. Pybar
agreed to adjusted payment terms for outstanding amounts owed to 31 January 2016.
•
Refer to the Operations and Financial Review for further detail on all subsequent events.
20.
PROFIT/(LOSS) PER SHARE
Loss used in calculating basic and dilutive EPS
Weighted average number of ordinary shares outstanding
during the period used in the calculation of basic EPS
Weighted average number of ordinary shares outstanding
during the period used in the calculation of diluted EPS
Basic loss per share (cents per share)
Loss per share (cents per share)
AUDITOR’S REMUNERATION
21.
The Auditor of Aurelia Metals Limited is Ernst & Young.
Amounts received or due and receivable by Ernst & Young for:
Audit or review of the financial report of the Company and
any other entity in the Group
Consolidated
2015
$
2014
$
(118,158,448)
(10,623,441)
357,960,309)
255,224,325)
362,172,309)
262,724,325)
(33.01)
(33.01)
(3.54)
(3.54)
Consolidated
2015
$
2014
$
121,651)
86,383)
There were no other services provided by Ernst & Young other than as disclosed above.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 65
22. HERA PROJECT DEFFERED ACQUISITION COSTS
On 18 June 2009, the Company reached agreement to purchase a 100% interest in the Hera Project and an 80%
interest in the adjacent Nymagee Joint Venture from CBH Resources Limited (CBH).
The total cost of the acquisition was as follows:
Initial purchase price of $12,000,000 paid in cash.
5% gold royalty on gravity gold dore production from the Hera deposit, capped at 250,000 oz Au.
•
•
• During the reporting period ending 30 June 2013, the Consolidated Entity made a payment of $1,000,000 to
amend the terms of the acquisition, which includes reducing the gold royalty from 5% to 4.5%.
The Consolidated Entity has recorded deferred consideration of $7,683,245 ($7,816,368 at 30 June 2014) representing
the net present value of projected royalty payments due under the revised terms of the acquisition, calculated based
on information available as at 30 June 2015. The deferred consideration is revalued at each reporting date in
accordance with AASB 3 with a through the profit and loss.
23. OPERATING SEGMENTS
Identification of reportable segments
The Consolidated Entity has identified its operating segments based on the internal reports that are reviewed and used
by the Managing Director and the Board of Directors (the chief operating decision makers) in assessing performance
and in determining the allocation of resources.
The Consolidated Entity operates entirely in the industry of exploration for and development of minerals in Australia.
The operating segments are identified by management based on the size of the exploration tenement. The reportable
segments are split between the Hera – Nymagee project, being the most significant current project of the Company,
and all other tenements. Financial information about each of these segments is reported to the Managing Director and
Board of Directors on a monthly basis.
Corporate office activities are not allocated to operating segments and form part of the reconciliation to net loss after
tax.
Accounting policies and inter-segment transactions
The accounting policies used by the Company in reporting segments are the same as those contained in note 2A to the
accounts. The following items are not allocated to operating segments as they are not considered part of the core
operations of any segment:
Interest and other income
•
• Gain or loss on sale of financial assets
• Research and development refund
• Corporate costs
• Depreciation and amortisation of property, plant and equipment
66
AURELIA METALS LIMITED – ANNUAL REPORT 2015
The following represents profit and loss and asset and liability information for reportable segments for the years ended
30 June 2015 and 30 June 2014.
Segment Results
Year ended 30 June 2015
Sales
Site EBITDA
Depreciation and amortisation
Impairment of mine properties
Impairment of exploration assets
Exploration costs written-off
Segment net profit/(loss) after tax
Hera –
Nymagee
project
$
Other
Exploration
Projects
$
13,220,208)
(6,565,384)
(6,453,028)
(75,031,403)
(17,884,374)
(105,934,189)
-
-
-
-
-
(3,347,093)
(3,347,093)
Reconciliation of segment net profit/(loss)
after tax to net profit/(loss) after tax:
Interest income
Other income
Loss on revaluation of investments
Corporate operating costs
Loss on hedging, foreign exchange and
derivatives
Interest and finance charges
Corporate depreciation and amortisation
Net loss after tax per the statement of comprehensive income
Total
$
13,220,208)
(6,565,384)
(6,453,028)
(75,031,403)
(17,884,374)
(3,347,093)
(109,281,282)
279,680)
24,667)
(287,231)
(4,357,210)
(1,674,599)
(2,656,142)
(206,331)
(118,158,448)
Year ended 30 June 2014
Segment loss - revaluation of financial asset
Deferred exploration costs written-off
Segment net profit after tax
(6,318,966))
-)
(6,318,966))
-)
(788,291)
(788,291)
(6,318,966)
(788,291)
(7,107,257)
Reconciliation of segment net loss after tax
to net loss after tax
Interest income
Other income
Loss on sale/revaluation of investments in associates
Research and development refund
Corporate operating costs
Corporate asset depreciation and amortisation
Net profit after tax per the statement of comprehensive income
260,750)
-)
(272,800)
85,286)
(3,370,943)
(218,477)
(10,623,441)
AURELIA METALS LIMITED – ANNUAL REPORT 2015 67
Segment Results
Segment assets and liabilities for the year
ended 30 June 2015 are as follows:
Segment assets at 30 June 2015
Cash and cash equivalents
Trade and other receivables
Prepayments
Property, plant and equipment
Financial Assets
Inventory – ore/product in circuit
Materials on hand
Deferred exploration and evaluation
expenditure
Mines Properties
Reconciliation of segment assets to total
assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Corporate plant and equipment
Financial assets
Total assets per the balance sheet at 30 June 2015
Segment liabilities at 30 June 2015
Trade and other payables
Deferred acquisition costs – current
Deferred acquisition costs – non-current
Hera rehabilitation provision
Provisions
Insurance funding
Borrowings
Reconciliation of segment liabilities to total liabilities
Trade and other payables
Provisions
Total liabilities per the balance sheet at 30 June 2015
Hera –
Nymagee
project
$
Other
Exploration
Projects
$
Total
$
1,258,560
5,309,666
45,180
56,956,173
1,215,770
1,476,792
43,000
33,306,747
99,611,888
-
-
-
-
-
-
-
1,258,560
5,309,666
45,180
56,956,173
1,215,770
1,476,792
73,000
-
73,000
116,000
33,306,747
99,684,888
16,370,761
1,382,232
6,301,013
1,516,000
133,694
80,407
114,571,354
140,355,461
-
-
-
-
-
-
-
3,589,079
875,333
100,054
502,870
272,800
105,025,024
16,370,761
1,382,232
6,301,013
1,516,000
133,694
80,407
114,571,354
140,355,461
23,950
409,193
140,788,604
68
AURELIA METALS LIMITED – ANNUAL REPORT 2015
Segment Results
Segment assets and liabilities for the year
ended 30 June 2014 are as follows:
Segment assets at 30 June 2014
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Financial Assets
Inventory – Ore/product in circuit
Materials on hand
Deferred exploration and evaluation
expenditure
Mines under development
Reconciliation of segment assets to total
assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Corporate plant and equipment
Financial assets
Total assets per the balance sheet at 30 June 2014
Segment liabilities at 30 June 2014
Trade and other payables
Deferred acquisition costs – current
Deferred acquisition costs – non-current
Hera rehabilitation provision
Provisions
Insurance funding
Borrowings
Reconciliation of segment liabilities to total
liabilities
Trade and other payables
Provisions
Total liabilities per the balance sheet at 30 June 2014
Hera –
Nymagee
project
$
Other
Exploration
Projects
$
Total
$
11,265,799
22,630
315,002
3,380,853
2,349,771
87,464
-
-
-
-
-
-
11,265,799
22,630
315,002
3,380,853
2,349,771
87,464
15,913,268
143,408,631
176,743,418
3,315,263
-
3,315,263
19,228,531
143,408,631
180,058,681
16,370,761
1,382,232
6,301,013
1,516,000
133,694
47,623
114,571,354
140,322,677
-
-
-
-
-
-
-
10,325,160
893,158
117,253
624,281
560,031
192,578,564
16,370,761
1,382,232
6,301,013
1,516,000
133,694
47,623
114,571,354
140,322,677
685,505
330,844
124,914,813
(1) Geographic and revenue diversity information
During the period the $6.232 million of gold and silver revenue was derived from customers in Australia and base
metal revenue of $6.988 million was derived from countries outside of Australia.
The Company has base metal concentrate offtake agreements with Glencore. During the period approximately 52%
of revenue relied on the sale and purchase of base metal concentrate from Glencore.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 69
PARENT COMPANY INFORMATION
24.
Information relating to the
parent entity of the Group,
Aurelia Metals Limited:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Total shareholders’ equity
Profit/(loss) for the year
Commitments
Commitments contracted for at reporting date but not
recognised as liabilities are as follows:
Within one year
After one year but not longer than five years
2015
2014
$
4,564,533)
776,635)
5,341,168)
426,506)
39,419)
465,925)
4,875,243)
99,929,152)
3,060,597)
(98,114,506)
4,875,243)
$
11,335,570)
59,786,992)
71,122,562)
1,016,350)
-)
1,016,350)
70,106,212)
85,361,155)
2,897,472)
(18,152,415)
70,106,212)
(4,410,859)
(3,516,183)
Parent
2015
$
202,848
76,412
279,260
Parent
2014
$
225,003
286,039
511,042
Commitments include lease of head office premises, lease of office equipment, and telecommunications
services contract.
70
AURELIA METALS LIMITED – ANNUAL REPORT 2015
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
25.
The Group’s management of financial risk aims to ensure cash flows are sufficient to:
• Withstand significant changes in cash flow at risk scenarios and still meet all financial commitments as and
when they fall due; and
• Maintain the capacity to fund project development, exploration and acquisition strategies.
The Group continually monitors and tests its forecast financial position against these criteria. The key financial risk
exposures are liquidity risk, credit risk, and market risk (including foreign exchange risk, commodity price risk and
interest rate risk).
The Directors are responsible for monitoring and managing financial risk exposures of the Group. The Group’s financial
instruments consist mainly of borrowings, deposits with banks, derivatives, payables and receivables. The Group holds
the following financial instruments:
The Group holds the following financial instruments:
Financial Assets
Cash at bank
Term deposits
Receivables
Derivatives (Put Options)
Other financial assets
Total financial assets
Financial Liabilities
Trade and other payables
Borrowings
Total financial liabilities
2015
$
1,827,638
3,020,000
6,184,999
-
272,800
11,305,437
2014
$
9,420,959
12,170,000
915,788
3,380,853
560,031
26,447,631
16,394,713
114,651,761
131,046,474
8,739,703
106,582,898
115,322,601
a) Liquidity Risk
Liquidity risk arises from the possibility that the group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities. The Company has significant short and long term financial
obligations. The primary risk factor relates to the Company’s ability to reorganise its debts when required to manage
any foreseen or unforeseen liquidity events.
As detailed in the Accounting Policy 2(a) Basis of Preparation, the Company is currently in dispute with its major
lender who has lodged a default notice and declared all amounts owning are immediately due and payable. The
Company has rejected this notice and as the date of this report is currently in a court ordered standstill with its
secured lender. Under the standstill, the Company cannot exercise its rights to convert debt into equity (under the
terms of the Convertible Notes Deed Poll), repayment obligations are suspended, and the secured lender is restrained
from exercising its rights to enforce its security by appointing a voluntary administrator.
The Company’s operation remains in a state of ramp-up after initial commissioning. Liquidity risk is managed through
maximising operational cash flow, negotiation of its current debt commitments and a reliance on equity funding from
its shareholders or other market participants.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 71
Maturities of financial liabilities:
Payables: Trade and other payables are expected to be settled within 12 months.
Borrowings: The table below shows the Group’s financial arrangements at 30 June 2015 in their relevant contractual
maturity groupings. The contractual maturity of loans for 2015 exclude $4.381 million of facility establishment costs
(2014: $5.355 million).
2015
Contractual
maturities of loans
Glencore Facility A
matures 15/3/18
Glencore Facility B
matures 15/3/18
Glencore Facility C
matures 15/3/18
Glencore Facility E
matures 15/8/16
Equipment Loans
Insurance Fund
Total
2014
Contractual
maturities of loans
Glencore Facility A
matures 5/3/18
Glencore Facility B
matures 5/3/18
Glencore Facility C
matures 5/3/18
Glencore Facility E
matures 15/8/16
Equipment Loans
Total
<1
Year
3,264,125
1-2
Years
4,853,098
2-3
Years
14,937,264
3-4
Years
4-5
Years
Total
-
-
23,054,487
7,896,776
4,614,411
11,740,924
36,137,174
6,860,706
21,116,877
-
-
-
-
55,774,874
32,591,994
2,173,776
3,650,690
-
-
-
5,824,466
426,685
80,407
18,456,180
449,007
-
419,349
-
27,554,425 72,610,664
411,486
-
411,486
-
-
-
1,706,527
80,407
119,032,755
<1
Year
-
1-2
Years
13,962,375
2-3
Years
7,684,106
3-4
Years
4-5
Years
Total
-
-
21,646,481
-
-
-
6,534,091
3,706,907
13,659,333
5,963,490
32,134,713
20,745,124
-
-
52,328,137
30,415,521
1,352,246
4,090,851
-
-
5,443,097
397,653
397,653
426,685
449,007
25,982,304 31,846,787
419,349
53,299,186
411,486
411,486
2,104,180
111,937,416
b) Credit Risk Exposures
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The credit
risk on financial assets of the entity which have been recognised in the Consolidated Statement of Financial Position is
the carrying amount, net of any provision for doubtful debts. Credit risk is managed through the maintenance of
procedures which ensure, to the extent possible, that counterparties to transactions are of sound creditworthiness.
Such monitoring is used in assessing receivables for impairment. No receivables are considered past due or impaired.
72
AURELIA METALS LIMITED – ANNUAL REPORT 2015
c) Market Risk Exposures
i) Foreign Currency Risk
The Group undertakes transactions impacted by foreign currencies; hence exposures to exchange rate fluctuations
arise. Although the majority of the Group costs, including development expenditure, are in Australian dollars many of
these costs are affected either directly or indirectly by movements in exchange rates. Revenue during the year from
the sale of commodities in 2015 most of the revenue will be affected by movements in the USD:AUD exchange rate.
Currently the Group does not hedge against this risk. The group considers the effects of foreign currency risk on its
financial position and financial performance and assesses its option to hedge based on current economic conditions
and available market data.
The foreign currency exposure to revenue in the period to a 10% change in US$ exchange rate was approximately 10%
and was immaterial to net income. The majority of sales, 100% in the case of gold and 75% to 80% in the case of base
metals, are immediately converted to Australian dollars at the time of sale.
ii) Commodity Price Risk
The Group’s revenue is exposed to commodity price fluctuations, particularly gold, lead and zinc prices. Price risk
relates to the risk that the fair value of future cash flows of commodity sales will fluctuate because of changes in
market prices largely due to supply and demand factors for commodities. The Group is exposed to commodity price
risk due to the sale of gold, lead, zinc and copper on physical prices determined by the market at the time of sale.
Gold price risk is managed, from time to time and as required and deemed appropriate by the Board, with the use of
hedging strategies through the purchase of put options or forward sale contracts. These contracts can establish a
minimum commodity price denominated in either US$ or A$ over part of the group’s future metal production.
Gold put options, gold forward sales and base metal quotational period hedging was used throughout the year. At
balance date, there are no hedging products in existence.
During the financial year gold sales were to 3,924 ounces, therefore the effect on the income statement to changes in
gold price were immaterial, with a 10% price movement impacting gold revenue by 10% but impacting net income by
less than 1%. Likewise with payable lead sold in the year of 2,338 tonnes and payable zinc sold in the year of 1,983
tonnes, the sensitivity to lead and zinc revenue with a 10% price movement was approximately 15% to base metal
revenue but impacting net income by less than 1%.
iii) Interest Rate Risk
Exposure to interest rate risk arises on financial assets and liabilities recognised at reporting date whereby a future
change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The group has
long term financial liabilities on which it pays interest and also holds cash and short term deposits on which it receives
interest.
The Group has not entered in any hedging activities to cover interest rate risk. The Group continually analyses its
exposure to interest rate risk. Consideration is given to alternative financing options, potential renewal of existing
positions, alternative investments and the mix of fixed and variable interest rates.
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk at balance date. This
sensitivity analysis demonstrates the effect on the current year income result which could result from a change in
interest rates.
The following table demonstrates the impact on Income before tax, due to a reasonably possible change in interest
rates over the year by +/– 2 %, on the major secured debts of the Company (with all other variables held constant).
Trade and other receivables, payables, derivatives and available for sale assets, are not interest bearing.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 73
Interest rate sensitivity on Income:
Interest rate increases by 2%
Interest rate decreases by 2%
d) Capital risk management
2015
$
(730,608)
730,608)
2014
$
-
-
The Group’s capital structure consists of borrowings and equity. The capital management strategy is to maximise
shareholder value through having an appropriate balance of debt and equity in recognition of the maturity and
operational risk of the business. The current debt position of the Company is high in absolute and relative terms. The
Group has sought to reduce the financial risk of the debt amounts by ensuring a significant part of the debt be
convertible to equity (noting the discussion in section (a) Liquidity Risk), and by having, when commercially possible,
commodity price protection and ensuring that non development activities including exploration and acquisitions are
funded from equity.
The Group continues to monitor the capital of Aurelia by assessing the financial risks and adjusting the capital
structure in response to changes in the risks. The Group is continually evaluating financing and capital raising
opportunities.
The Group is not subject to any externally imposed capital requirements.
Aurelia’s capital structure consists of:
Capital Structure
Borrowings(i)
Cash and cash equivalents
Net borrowings
Equity
Total capital (net borrowings and equity)
2015
$
(119,032,755)
4,847,638)
(114,185,117)
(35,763,580)
(149,948,697)
2014
$
(111,937,416)
21,590,959)
(90,346,457)
67,663,751)
(22,682,706)
(i) Borrowings is the total of amounts outstanding, and excludes facility establishment costs of $4,380,994 (2014: $5,354,518)
e) Fair Value
The Directors consider the carrying values of financial assets and financial liabilities recorded in the financial
statements approximate their fair values. It is noted that there is significant judgement in determining the fair value of
borrowings which could be expected to be less than the carrying value of borrowing due to the higher interest rate a
market participant would expect to receive on the present borrowings relative to the actual interest rate obtained by
the Company at inception of the borrowings given the notice of default issued by Glencore. Given this uncertainty and
the lack of reliable inputs to arrive at an alternate valuation the Company has not disclosed an alternative fair value.
Borrowings are adjusted for capitalised transaction costs. Capitalised transaction costs are determined in accordance
with the accounting policies disclosed in Note 2 of the financial statements. The fair value is estimated based on
parameters such as interest rates, specific country risk factors, individual creditworthiness and the risk characteristics
of the financing.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by
valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: techniques that use inputs which have a significant effect on the recorded fair value that are not based on
observable market data.
74
AURELIA METALS LIMITED – ANNUAL REPORT 2015
The Group held the following financial instruments carried at fair value in the statement of financial position, and
measured at fair value through profit or loss:
2015
Assets
Shares in Aus Tin Mining Limited
Options in Aus Tin Mining Limited
Gold put options
Liabilities
Deferred acquisition costs
2014
Assets
Shares in Aus Tin Mining Limited
Options in Aus Tin Mining Limited
Gold put options
Liabilities
Deferred acquisition costs
Level 1
$
272,800
-
-
-
Level 1
$
204,600
-
-
Level 2
$
Level 3
$
-
-
-
-
Level 2
$
-
355,431
3,380,853
-
-
-
7,683,245
Level 3
$
-
-
-
-
-
7,816,368
During the reporting period ended 30 June 2015, and 30 June 2014, there were no transfers between level 1 and level 2
fair value measurements.
Technique and inputs used to value financial assets and liabilities:
Shares – market value of shares listed on the Australian Stock Exchange (ASX).
Options – revalued each period using a Black-Scholes methodology, with revaluation adjustments appearing as
gains/(losses) in the statement of comprehensive income. Inputs include: current share price, strike price, years to
maturity, risk-free rate and volatility.
Gold put options – revalued each period using a Black-Scholes methodology, with revaluation adjustments appearing
as gains/(losses) in the statement of comprehensive income. Inputs include: current gold price, strike price, years to
maturity, gold lease rate, risk-free rate and volatility.
Deferred acquisition costs – revalued each period to fair value by using the discounted cash flow methodology. Inputs
include forecast gravity gold production applicable to the royalty of 108,000 ounces. Future royalty revenue is
estimated using the forward US$ gold price curve and forward exchange rate curve delivering an average gold price of
A$1638/oz. The discount rate used was the five year government bond rate of 2.2%.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 75
SHARE BASED PAYMENT ARRANGEMENTS
26.
(a) Recognised share based payments expenses
The expense recognised for executive and employee services received during the year is shown in the table below:
Expenses arising from the equity settled share based payment transactions -
eligible employees and directors
Consolidated
2015
$
2014
$
163,125
501,354
(b) Type of share based payment plan
Employee Share Option Plan and Performance Rights Plan
The Company has established an Employee Share Option Plan (ESOP) and a Performance Rights Plan. The
objective of these is to assist in the recruitment, reward, retention and motivation of employees of Aurelia Metals.
An individual may receive the options or nominate a relative or associate to receive the options. The plans are
open to directors and eligible employees of Aurelia Metals.
(a) Options and performance rights granted as at 30 June 2015
Grant Date
6-May-11
6-May-11
15-Mar-12
29-Nov-12
29-Nov-12
12-Apr-13
9-Feb-15
Expiry
Date
31-Dec-14
31-Dec-14
15-Mar-16
29-Nov-15
29-Nov-15
18-Jun-16
9-Feb-22
Exercise
Price
$0.40
$0.45
-
$0.35
$0.45
-
-
Balance at
start of the
year Number
340,000
950,000
840,000
1,600,000
1,100,000
730,000
-
Granted
during the
year
Number
-
-
-
-
-
-
1,730,000
Exercised
during the
year Number
-
-
-
-
-
500,000
696,000
Forfeited or
Lapsed
during the
year Number
340,000
950,000
-
-
-
96,000
496,000
Balance at
the end of
the year
Number
Exercisable
at the end of
the year
Number
-
-
840,000
1,600,000
1,100,000
134,000
538,000
-
-
-
1,600,000
1,100,000
134,000
538,000
5,560,000
1,730,000
1,196,000
1,882,000
4,212,000
3,372,000
Weighted average exercise price
0.41
-
-
0.30
0.25
0.39
(b) Options and performance rights granted as at 30 June 2014
Grant Date
6-May-11
6-May-11
15-Mar-12
29-Nov-12
29-Nov-12
12-Apr-13
Expiry
Date
31-Dec-14
31-Dec-14
15-Mar-16
29-Nov-15
29-Nov-15
18-Jun-16
Exercise
Price
$0.40
$0.45
-
$0.35
$0.45
-
Weighted average exercise price
Balance at
start of the
year Number
340,000
950,000
840,000
1,850,000
1,850,000
1,670,000
7,500,000
0.41
Granted
during the
year
Number
-
-
-
-
-
-
-
-
Exercised
during the
year Number
-
-
-
-
-
680,000
Lapsed
during the
year Number
-
-
-
250,000
750,000
260,000
Balance at
the end of
the year
Number
Exercisable
at the end of
the year
Number
340,000
950,000
840,000
1,600,000
1,100,000
730,000
340,000
950,000
-
1,600,000
-
80,000
680,000
1,260,000
5,560,000
2,970,000
-
0.43
0.41
0.39
(c) Weighted average remaining contractual life
The weighted average remaining contractual life for the options outstanding as at 30 June 2015 is 1.3 years (2014:
1.3 years).
76
AURELIA METALS LIMITED – ANNUAL REPORT 2015
(d) Fair value of options granted
There were no options issued during the year.
(e) Fair value of performance rights
During the year there were 1,740,000 Performance Rights issued with various share price and operational
performance measure performance hurdles.
As at the date of this report, there were 1,512,000 un-issued ordinary shares subject to performance rights. The
performance rights are unlisted and have terms as set out below.
Number of
Performance
Rights
840,000
134,000
538,000
1,512,000
Expiry
Performance Hurdle
15-Mar-2016
18-Jun-2016
9-Feb-2022
5 Day Aurelia VWAP of 80 cents per share
Various share price and operational performance measures
Various share price and operational performance measures
CONTIGENT LIABILITIES
27.
There are no contingent liabilities that require disclosure.
DIVIDENDS
28.
No dividend was paid or declared by the Company in the period since the end of the previous financial year, and up to
the date of this report. The Directors do not recommend that any amount be paid by way of dividend for the financial
year ended 30 June 2015. The balance of the Company’s franking account is nil (2014: Nil).
KEY MANAGEMENT PERSONNEL
29.
Share, option and performance rights holdings of directors, executives and key management
personnel
Short-term employee benefits
Post-employment benefits
Share based payments
Total
Consolidated
2015
$
1,985,499
141,338
155,450
2,282,287
2014
$
1,577,826
115,041
188,418
1,881,285
(i) Share holdings
For details of shareholdings, refer to the remuneration report section of the Directors Report (page 28 of this report).
(ii) Options and performance rights holdings
For details of options and performance rights holdings, refer to the remuneration report section of the Directors
Report (page 28 of this report).
AURELIA METALS LIMITED – ANNUAL REPORT 2015 77
Aurelia Metals Limited
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Aurelia Metals Limited, we state that:
In the opinion of the Directors:
(a) The financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001,
including:
(i) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of its
performance for the year ended on that date; and
(ii) Complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001;
(b) The Financial Statements and notes also comply with International Financial Reporting Standards as disclosed in
Note 2A (b); and
(c) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
(d) This declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for the Financial Year Ending 30 June 2015.
On behalf of the Board
Anthony Wehby
Non-Executive Chairman
30 September 2015
78
AURELIA METALS LIMITED – ANNUAL REPORT 2015
680 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of Aurelia Metals
Limited
In relation to our audit of the financial report of Aurelia Metals Limited for the financial year ended 30
June 2015, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
Ryan Fisk
Partner
Sydney
30 September 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
AURELIA METALS LIMITED – ANNUAL REPORT 2015 79
Ernst & Young
680 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent auditor's report to the members of Aurelia Metals Limited
Report on the financial report
We have audited the accompanying financial report of Aurelia Metals Limited, which comprises the
consolidated statement of financial position as at 30 June 2015, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information, and the directors' declaration of the consolidated entity comprising the
company and the entities it controlled at the year's end or from time to time during the financial year.
Directors' responsibility 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 controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also
state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the
financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation and
fair presentation of the financial report 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
80
AURELIA METALS LIMITED – ANNUAL REPORT 2015
Opinion
In our opinion:
a.
the financial report of Aurelia Metals Limited is in accordance with the Corporations Act 2001,
including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June 2015
and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
b.
the financial report also complies with International Financial Reporting Standards as disclosed
in Note 2.
Emphasis of matters
Without qualifying our conclusion, we draw attention to Note 2 (a)(i) in the financial report which
describes the principal conditions that raise doubt about the entity’s ability to continue as a going
concern. As a result of these matters, there is significant uncertainty whether the consolidated entity will
continue as a going concern, and therefore whether it will realise its assets and extinguish its liabilities in
the normal course of business and at the amounts stated in the financial report. The financial report does
not include any adjustments relating to the recoverability and classification of recorded asset amounts or
to the amounts and classification of liabilities that might be necessary should the company not continue
as a going concern.
We also draw attention to Note 2 (a)(ii) of the financial statements which describes the uncertainty
relating to the outcome of the Court hearing, and the possible impacts on the classification of the entity’s
non-current borrowings if the event of default is validated. The financial report does not include any
adjustments that may be required if the decision of the Court results in the entity being required to repay
any or all of the non-current borrowings in less than twelve months.
Report on the remuneration report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June
2015. 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
AURELIA METALS LIMITED – ANNUAL REPORT 2015 81
Opinion
In our opinion, the Remuneration Report of Aurelia Metals Limited for the year ended 30 June 2015,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
Ryan Fisk
Partner
Sydney
30 September 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
82
AURELIA METALS LIMITED – ANNUAL REPORT 2015
Aurelia Metals Limited
ADDITIONAL ASX INFORMATION
SHAREHOLDER INFORMATION
Additional Information required by the Australia Stock Exchange Limited Listing Rules and not disclosed elsewhere in
this report.
This additional information was applicable as at 15 October 2015.
DISTRIBUTION OF SECURITY HOLDERS
Analysis of numbers of listed equity security holders by size of holding
Distribution of Security Holders
Spread of Holdings
NIL holding
1 -1,000
1,001-5,000
5,001-10,000
10,001-100,000
Over 100,000
Total on Register
Holders
0
193
510
431
1,183
332
2649
There are 1,711 holders of less than a marketable parcel of shares.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 83
AMI STATEMENT OF TOP 20 SHAREHOLDERS
Aurelia Metals Limited
HOLDER NAME
PACIFIC ROAD CAPITAL
1
YUNNAN TIN AUSTRALIA
2
PYBAR HOLDINGS PTY LIMITED
3
PERSHING AUSTRALIA NOMINEES
4
HSBC CUSTODY NOMINEES
5
YUNNAN TIN (YTC) HOLDINGS PTY
6
GLENCORE AUSTRALIA HOLDINGS
7
1215 CAPITAL PTY LTD
8
LUJETA PTY LTD
9
SMIFF PTY LTD
10
BNP PARIBAS NOMS (NZ) LTD
11
JOJO ENTERPRISES PTY LTD
12
NINETEEN25 PTY LIMITED
13
14 MR STEPHEN CANSDELL HIRST
15 MR BRIAN HENRY MCCUBBING &
16
17
18
19 MR DONALD JEFFREY SMITH &
20
J P MORGAN NOMINEES AUSTRALIA
B&M JACKSON PTY LTD
PERSHING AUSTRALIA NOMINEES
B & R JAMES INVESTMENTS
TOP 20 TOTAL
OTHER SHAREHOLDERS
TOTAL ON ISSUE
SHARES
93,414,913
30,630,504
19,438,850
16,560,316
14,881,404
12,141,905
9,390,000
7,219,569
6,000,000
4,167,244
3,606,359
3,461,000
3,350,000
2,900,000
2,700,000
2,615,195
2,541,045
2,010,249
2,000,000
2,000,000
241,028,553
146,962,635
387,991,188
PERCENTAGE OF
ISSUED SHARES
24.08
7.89
5.01
4.27
3.84
3.13
2.42
1.86
1.55
1.07
0.93
0.89
0.86
0.75
0.70
0.67
0.65
0.52
0.52
0.52
62.13
37.87
100.00
84
AURELIA METALS LIMITED – ANNUAL REPORT 2015
Aurelia Metals Limited
STATEMENT OF RESTRICTED SECURITIES
There are no Restricted Securities.
SUBSTANTIAL SHAREHOLDERS
Substantial Shareholders of the Company are as follows;
Substantial Shareholders
Pacific Road Capital Management Pty Ltd ATF the YTC Managed
Investment Trust
Glencore Australia Holdings Pty Ltd*
Yunnan Tin Aust TDK Resources Pty Ltd**
93,414,913
25,950,316
24,237,433
* The Holder is a member of the Glencore International Group
**The Holder is a wholly owned subsidiary of Yunnan Tin Company Group Limited
The number of securities disclosed above is as per substantial notices given to the Company. Substantial
shareholder interests in securities may change without requiring the Holder to provide notice of the change,
therefore resulting in a difference between their disclosure and other disclosures in this report.
UNQUOTED SECURITIES
Holder
Director Options
Director Options
Performance Rights
Performance Rights
Performance Rights
Performance Rights
Performance Rights
Total Unlisted Securities on Issue
VOTING RIGHTS
# Options over
Ordinary Shares
1,600,000
1,100,000
840,000
70,000
490,000
48,000
64,000
3,674,000
Expiry Date
Exercise Price
29-11-2015
29-11-2015
15-03-2015
18-06-2016
09-02-2022
09-02-2022
18-06-2016
$0.35
$0.45
Nil
Nil
Nil
Nil
Nil
The Voting Right attached to each class of equity security are as follows;
Ordinary Shares
Each ordinary share is entitled to one vote when a poll is called otherwise each member present at a meeting or by
proxy has one vote on a show of hands.
Options
These securities have no voting rights.
AURELIA METALS LIMITED – ANNUAL REPORT 2015 85
Aurelia Metals Limited
SCHEDULE OF TENEMENT INTERESTS
Tenement Project Name
Location
Holder
Size (km2) Expiry Date Notes
ML53
Nymagee Mine Nymagee NSW
Nymagee Resources Pty Ltd 0.04867
31/12/2013
ML90
Nymagee Mine Nymagee NSW
Nymagee Resources Pty Ltd 0.3391
31/12/2013
ML5295
Nymagee Mine Nymagee NSW
Nymagee Resources Pty Ltd 0.003339
31/12/2013
ML5828
Nymagee Mine Nymagee NSW
Nymagee Resources Pty Ltd 0.01538
31/12/2013
PLL847
Nymagee Mine Nymagee NSW
Nymagee Resources Pty Ltd 0.1227
31/12/2013
EL4232
Nymagee
Nymagee NSW
Nymagee Resources Pty Ltd 14.5
16/03/2015
EL4458
Nymagee Mine Nymagee NSW
Nymagee Resources Pty Ltd 11.6
16/09/2015
Expired, renewal
pending
Expired, renewal
pending
Expired, renewal
pending
Expired, renewal
pending
Expired, renewal
pending
Expired, renewal
pending
ML1686
Hera Mine
Nymagee NSW
Hera Resources Pty Ltd
13.079
16/05/2034
EL6162
Hera
Nymagee NSW
Hera Resources Pty Ltd
130
25/11/2018
EL6226
Kadungle
EL6258
Doradilla
EL6673
Baldry
EL6699
Tallebung
EL7447
Box Creek
EL7524
Barrow
EL7529
Lyell
70km north-west of
Parkes, central-west
NSW
50km southeast of
Bourke, north-west
NSW
32km north-east of
Parkes, central-west
NSW
70km north-west of
Condobolin, central-
west NSW
Nymagee NSW
20km west of Nymagee;
western NSW
20km west of Nymagee;
western NSW
Defiance Resources Pty Ltd 43.5
5/04/2016
Being disposed of
Stannum Pty Ltd
110.2
20/06/2017 Being disposed of
Defiance Resources Pty Ltd 69.6
4/12/2015
Being allowed to lapse
Stannum Pty Ltd
72.5
9/01/2017
Being disposed of
Defiance Resources Pty Ltd
145
1/02/2017
Defiance Resources Pty Ltd 60.9
2/05/2017
Being disposed of
Defiance Resources Pty Ltd 8.7
2/05/2017
Being disposed of
86
AURELIA METALS LIMITED – ANNUAL REPORT 2015
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AURELIA METALS LTD
2 CORPORATION PLACE
ORANGE NSW 2800
ASX CODE: AMI
ABN: 37 108 476 384
PHONE: +61 2 6363 5200
FAX: +61 2 6361 4711
WWW.AURELIAMETALS.COM