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A U R E L I A M E T A L S L T D
A S X C oD E: A M I A Bn: 3 7 1 0 8 4 7 6 3 8 4
LeveL 2 60-62 McNaMara Street , OraNGe NSW 2800
ph o nE: + 6 1 2 6363 5205 FA X: + 6 1 2 6361 4711
WWW.aureLiaMeta LS.c OM.au
A U R E L I A M E T A L S L T D
A n nU A L REp oR T
AURELIA METALS LIMITED - ANNUAL REPORT 2018
COMPANY INFORMATION
Directors
Colin Johnstone – Chairman
James Simpson – Managing Director & CEO
Lawrence Conway
Paul Espie
Michael Menzies
Clifford Tuck
Company Secretary
Timothy Churcher
Registered Office and Principal Place of Business
Aurelia Metals Limited
Lvl 2, 60-62 McNamara St
ORANGE NSW 2800
Telephone:
Facsimile:
Email:
(02) 6363 5200
(02) 6361 4711
office@aureliametals.com.au
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 (ASX Code: AMI), the home branch
being Perth.
Auditor
Ernst and Young
200 George Street
Sydney NSW 2000
Website
www.aureliametals.com.au
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 1
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AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 8
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 8
DIRECTORS’ REPORT
The following report is submitted in respect of the results of Aurelia Metals Limited (‘Aurelia’ or ‘the
Company’) and its subsidiaries, together the consolidated group (‘Group’), for the financial year ended 30
June 2018, together with the state of affairs of the Group as at that date.
1.
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.
Colin Johnstone
Independent Non-Executive Chairman
Mr. Johnstone is a mining engineer with extensive experience building and operating mines in Africa,
Australia, Asia and South America. He held the position of Chief Operating Officer for African copper miner
Equinox Minerals until its acquisition by Barrick Gold in mid-2011, and Chief Operating Officer for China-
focussed gold miner Sino Gold Mining until its acquisition by Eldorado in late 2009.
Mr. Johnstone’s career spans more than 30 years and he has served as General Manager of some of
Australia’s largest mines including the Kalgoorlie Super Pit in Western Australia, Olympic Dam in South
Australia and Northparkes in New South Wales. He is currently a Non-Executive Director of Evolution
Mining, Australia’s second largest gold mining company.
Mr. Johnstone was appointed as a Director and Chairman of the Company on 28 November 2016.
James Simpson
Managing Director and Chief Executive Officer
Mr. Simpson is a Mining Engineer with over 30 years’ experience, specialising in underground metalliferous
mining. His previous roles include General Manager at Mt Isa Mines and at the Peak Gold Mine and Chief
Operating Officer for Peak Gold (TSX). Mr Simpson’s experience ranges from mine management through to
equity market participation in the C$328m listing of Peak Gold on the TSX.
Mr Simpson was appointed as Managing Director of the Company on 1 August 2016 and appointed as Chief
Executive Officer on 1 September 2016.
Lawrence Conway
Independent Non-Executive Director
Mr. Conway has more than 28 years’ experience in the resources sector across a diverse range of commercial,
financial and operational activities. He has held a mix of corporate and operational commercial roles within
Australia, Papua New Guinea and Chile with Evolution Mining, Newcrest and BHP Billiton. Mr Conway is
currently Evolution Mining’s Finance Director and Chief Financial Officer.
Mr Conway was appointed as a Director of the Company on 1 June 2017.
Paul Espie
Non-Executive Director
Mr. Espie was the founding principal of Pacific Road Capital, a manager of private equity funds investing in
the resources sector internationally, in 2006. 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, Trustee of the Australian Institute of Mining &
Metallurgy, Educational Endowment Fund, and a Director of the Menzies Research Centre.
Mr Espie was appointed as a Director of the Company on 10 December 2013.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 9
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 10
Michael Menzies
Non-Executive Director
Mr. 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 MIM Holdings where he was Executive
General Manager Mining. Following a period employed in Private Equity in project evaluation and investment
advice, in recent times Mr Menzies has been engaged in mining consultancy work primarily consulting to
Glencore. Mr Menzies is a former Director of Australian Mines and Metals Association and former Vice-
President of the Queensland Mining Council.
Mr Menzies was appointed as a Director of the Company on 15 December 2015. He was previously a
Director of the Company from 26 March 2013 to 26 June 2015.
Clifford Tuck
Non- Executive Director
Mr Tuck is a corporate and transactional lawyer, and governance professional, with more than fifteen years
experience in the resources sector. Mr Tuck previously spent ten years with Newcrest Mining Limited in
various in-house roles, including Acting General Counsel and Deputy General Counsel, following which he
was General Counsel & Company Secretary at Drillsearch Energy Limited and then Lattice Energy Limited
(Origin Energy Limited’s upstream oil and gas business). Mr Tuck commenced his career with leading
Australian law firm Allens. Mr Tuck is currently a consultant providing counsel and advisory services to
clients in the resources sector.
Mr Tuck was appointed as a Director of the Company on 24 May 2018.
Timothy Churcher
Chief Financial Officer and Company Secretary
Mr. Churcher is a senior finance professional with over 30 years’ experience in the mining industry in a range
of financial and technical disciplines.
His finance experience includes roles as Chief Financial Officer of Evolution Mining Limited and Chief
Financial Officer & Company Secretary of Unity Mining Limited. Prior to this, Tim was employed in private
equity investment with Renaissance Capital Limited and prior to that in stockbroking with Goldman Sachs
(formerly JB Were & Son Limited). He is an Associate of CPA Australia and has a Masters degree from
Imperial College London and an MBA from the Cranfield School of Management in the UK.
Mr. Churcher was appointed as the Company’s Chief Financial Officer on 30 September 2014 and was
appointed as Company Secretary on 20 December 2016.
Directors and Officers who no longer held office at the end of the year are as follows:
Rune Symann (resigned)
Non-Executive Director
Mr. Symann is a finance professional with over 8 years of experience in mergers & acquisitions, financial
advisory and project management within the resources, power & automation and financial sectors. He is
currently employed by Glencore. Mr Symann’s previous experience includes roles with ABB, Ernst & Young
and Amundi. He holds a bachelor degree in Economics, a Master’s degree in International Management from
HEC Paris in France and a Master’s degree in Finance & Strategic Management from Copenhagen Business
School.
Mr Rune Symann resigned as a Non-Executive Director 30 April 2018.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 10
2.
DIRECTORS’ INTERESTS
At 30 June 2018 the interests of the Directors in the shares and other equity securities of the Company were:
Directors
Ordinary Shares
Options
Performance Rights
Johnstone, Colin
Simpson, James (iii)
Espie, Paul (i)
Menzies, Michael (ii)
Conway, Lawrence
Tuck, Clifford (i)
Total
1,000,001
602,429
-
533,929
171,429
-
2,307,788
(i) Directors nominated by Pacific Road Capital Management Pty Ltd and are restricted from owning shares
(ii) Michael Menzies is a Director nominated by Glencore International AG.
-
4,500,000
-
-
-
-
4,500,000
-
-
-
-
-
-
-
(iii) 1,500,000 Performance Rights were tested at 30 Jun 18 and fully vested after balance date and will be
recorded in the next reporting period.
3.
MEETINGS OF DIRECTORS
During the financial year, the number of Directors’ meetings held, and the number attended by each
Director, was as follows:
2017/18
Committees of the Board
Directors’ Meetings
Audit
Remuneration &
Nomination
Attended
Colin Johnstone
James Simpson
Lawrence
Conway
Paul Espie
Michael Menzies
Rune Symann
Clifford Tuck
17
17
16
17
16
12
2
Eligible
to Attend
17
17
17
17
17
15
2
Attended
6
0
6
0
0
6
0
Eligible
to Attend
6
0
6
0
0
6
0
Attended
2
0
0
2
2
0
0
Eligible to
Attend
2
0
0
2
2
0
0
The members of the Board’s Committees at 30 June 2018 are:
Audit Committee:
Remuneration & Nomination Committee: Colin Johnstone, Michael Menzies, Paul Espie
Lawrence Conway, Colin Johnstone, Clifford Tuck
4.
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 Secretary 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.
The Company has entered into a Deed of Indemnity, Insurance and Access with each Director. In Summary,
the Deed provides for access to corporate records for each Director for a period after ceasing to hold office in
the Company; the provision of Directors and Officers Liability Insurance; and Indemnity for legal costs
incurred by Directors in carrying out the business affairs of the Company.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 11
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 12
Except for the above the Company has not otherwise, during or since the financial year, except to the
amount permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any
related body corporate against a liability incurred as such an officer or auditor.
5.
INDEMNIFICATION OF AUDITOR
To the extent permitted by law, the Company has agreed to indemnify its auditor 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 the auditor during or since the financial year.
6.
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 2018.
7.
CORPORATE STRUCTURE
Aurelia Metals Limited is a company limited by shares that is incorporated and domiciled in Australia.
Aurelia has five wholly owned subsidiaries, Defiance Resources Pty Ltd (incorporated 15 May 2007), Hera
Resources Pty Ltd (incorporated 20 August 2009), Nymagee Resources Pty Ltd (incorporated 7 November
2011), Peak Gold Asia Pacific Ltd (incorporated 31 October 1977) and Peak Gold Mines Pty Ltd (incorporated
26 February 2003). On 10 April 2018, Defiance acquired 100% of Peak Gold Asia Pacific Ltd, which owns
100% of Peak Gold Mines Pty Ltd. Stannum Pty Ltd was sold to Big Sky Metals Pty Ltd on 5 June 2018, and
Aurelia has maintained a 25% interest in Big Sky Metals at a fair value of $80,000 as consideration for the
sale of Stannum.
8.
SHARE OPTIONS
As at the date of this report, there were 10,000,000 un-issued ordinary shares under options. The options
are unlisted and have terms as set out below.
Grant
Date
Expiry
Date
Exercise
Price/share
Balance at
start of year
Granted
during
the year
Exercised
during the
year
Expired
during the
year
Balance at
year end
Exercisable
at year end
28-09-20
30-11-15
Total
Weighted average exercise price
1.25 cents
-
10,000,000
10,000,000
1.25 cents
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000,000
10,000,000
1.25 cents
-
10,000,000
10,000,000
1.25 cents
No option holder has any right under the options to participate in any other share issue of the Company or
any other entity.
9.
PERFORMANCE RIGHTS
As at the date of this report, there were 6,500,000 unissued ordinary shares subject to Performance Rights.
The Performance Rights are unlisted and have terms as set out below.
Grant
Date
Expiry
Date
Exercise
Price/share
Balance at
start of year
Granted
during
the year
Vested
during the
year
Expired
during the
year
Balance at
year end
Exercisable at
year end
9-02-15
9-02-18
28-11-16
30-06-18
28-11-16
30-06-19
28-11-16
30-06-20
nil
nil
nil
nil
70,000
2,000,000
2,250,000
2,250,000
6,570,000
-
-
-
-
-
-
-
-
-
-
(70,000)
-
-
-
-
2,000,000
2,250,000
2,250,000
(70,000)
6,500,000
-
-
-
-
-
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 12
The performance rights have 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.
The 2,000,000 Performance Rights listed above were tested at 30 Jun 18 and were fully vested after balance
date. The vesting event will be recorded in the next reporting period.
10.
FUTURE DEVELOPMENTS
Refer to the Operating and Financial Review for information on future prospects of the Company.
11.
ENVIRONMENTAL PERFORMANCE
The Directors are not aware of any environmental incident during the year which would have a material
adverse impact on the Company.
There were a number of minor non-compliances to Project Approval and Environmental Protection Licence
conditions in the reporting period. All minor non-compliances were reported to the relevant authorities (e.g.
Environmental Protection Authority, Department of Planning and Environment) without delay and
immediate actions were taken to return the operation to compliance. No regulator action or fines have been
received by Aurelia Metals Ltd in response to these incidents and due to the minor nature of the incidents, no
such action is anticipated.
12.
CURRENCY AND ROUNDING OF AMOUNTS
All references to dollars are a reference to Australian dollars ($A) unless otherwise stated. ($A) is
occasionally used for clarity.
Aurelia Metals Limited is a company of the kind referred to in ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that instrument, amounts in the
Financial/Directors’ Reports are rounded to the nearest thousand dollars, except where indicated otherwise.
Due to rounding, numbers presented throughout this document may not add up precisely to the totals
provided.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 13
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 14
OPERATIONS AND FINANCIAL REVIEW
1.
OVERVIEW
Aurelia Metals Limited (the Company) is an Australian gold, silver, lead, zinc and copper mining and
exploration company. The Company operates the wholly-owned Hera and Peak gold and base metal mines,
in central west New South Wales.
The past 12 months have been a transformative period for the Company. Operational diversity and cash
flow has been enhanced with the acquisition of Peak Mines, the balance sheet has been improved with the
repayment of all debt and the Company’s ownership structure has been diversified with the orderly sell
down of our former significant shareholder in Pacific Road Capital Management. This was achieved whilst
Hera delivered an excellent production result for the year, positioning the mine as one of Australia’s lowest
cost gold producers.
Key results for the year included:
Group gold production of 97,374 oz at an AISC/oz of $509/oz, representing a 113% increase in
production and a 47% decrease in unit costs relative to prior year (FY17 gold production of 45,679 oz
at $968/oz).
o Hera contributed 59,822 oz at an AISC/oz of $430/oz, a 31% production increase relative to
FY17.
o Peak Mines contributed 37,552 oz at an AISC/oz of $517/oz during the first quarter of ownership.
Revenue increased by 127% to $248.6 million (2017: $109.3 million)
The Commodity contribution to revenue was approximately 70% gold and 30% base metals, with the
splits for the minor metals being lead 11%, zinc 13%, copper 5% and silver 1%.
Net profit increased by 413% to $99.1 million (2017: $19.3 million).
Operating cash flow of $151.8 million was 229% higher than the prior year.
At balance date the Company had available cash of $66.9 million (2017: $34.9 million) and all bank
debt had been repaid.
The successful acquisition of Peak Mines on 10 April 2018 has transformed the Company into a larger more
diversified gold and base metal producer. The Company now has a dominant position in the highly
productive Cobar Mineral Field, with two processing facilities capable of producing gold, lead, zinc and
copper.
The total purchase payment to NewGold was $93.4 million, however the Company acquired the business
with a net cash and working capital position of $34.6 million, leading to an effective purchase price of $58.8
million. The net cash flow from Peak Mines during the first quarter of ownership was approximately $50.5
million (after capital and tax payments).
The acquisition was funded through $85.0 million of new equity and a $45.0 million debt facility. The strong
operating performance in the second half of the financial year, enabled the Company to repay all existing
Glencore debt and all debt drawn to fund the acquisition of Peak Mines. At 30 June 2018, the Company was
debt free.
Hera is a relatively steady-state operation with incremental improvements in throughput and gold recovery
targeted for the year ahead. The strategic imperative at Hera is to increase the currently identified mine life
of 3.0-3.5 years. This may be delivered through the successful delivery of the Nymagee copper/lead/zinc
project, which has potential to add 3-4 years to the mine life profile, or through successful exploration.
Regional exploration, which in the past has been limited due to the Company’s debt position, will commence
in FY19.
Peak has been an excellent acquisition for the Group, with the key focus on delivering a long and productive
mine life through imbedding operational efficiencies to lower unit costs, expanding the processing circuit to
enable the production of separate lead and zinc concentrates and deliver long term growth through the
development of the Great Cobar copper/lead/zinc/gold project.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 14
2.
2.1
OPERATING AND FINANCIAL PERFORMANCE
Key Results
Group net profit after tax for the year ended 30 June 2018 was $99.1 million (30 June 2017: $19.3 million).
Included in net profit are some significant once-off expenses including acquisition and transaction costs of
$1.1 million, stamp duty of $5.6 million and facility and debt arranging fees expensed of $3.2 million. All
borrowing costs have been expensed in the current year due to the repayment of all debt.
Group revenue of $248.6 million represented a 127% increase on prior year and was derived from
approximately 70% gold sales and 30% copper, lead, zinc and silver sales. Of the total Group revenue, Hera
contributed $155.8 million and Peak contributed $92.8 million.
Gold sold for the year was 103,456 oz (dore and payable gold in concentrate) generating revenue of $175.2
million. Peak contributed 43,023 oz of the gold sold (41%) generating $73.9 million.
Base metal revenue was $70.7 million of which Hera contributed $53.7 million and Peak contributed $17.0
million. Revenue was derived from the sale of 1,462 tonnes of payable copper, 10,356 tonnes of payable
lead and 9,757 tonnes of payable zinc.
Total cost of sales for the year increased to $136.1 million (30 June 2017: $81.7 million), largely due to the
inclusion of Peak Mines, which accounted for $42.3 million of operating costs. The total cost of sales is
made up of site production costs of $81.2 million, transport and refining costs of $8.2 million, NSW royalty
costs of $7.2 million and inventory adjustments of $2.9 million. Depreciation and amortisation for the year
was $36.6 million.
Key Group performance metrics for the period are tabulated below.
Performance Indicators
Sales Revenue
Profit/(Loss) for the period
EBITDA
Net Debt
Net Operating Cash Flow
Gold production
Silver production - contained metal
Copper production - contained metal
Lead production - contained metal
Zinc production - contained metal
Sales
Gold dore & gold in Conc sold
Silver dore & Silver in Conc sold
Payable Copper sold
Payable Lead sold
Payable Zinc sold
Prices
Gold price achieved
Silver price achieved
Copper price achieved
Lead price achieved
Zinc price achieved
All in sustaining cost ($/oz)
(a)
(b)
(c)
oz
oz
t
t
t
oz
oz
t
t
t
A$/oz
A$/oz
A$/t
A$/t
A$/t
$/oz
2018
$'000
248,599
99,105
136,717
(66,925)
151,756
97,374
239,460
1,968
11,160
13,282
103,456
123,057
1,462
10,356
9,757
1,698
22
9,308
3,133
4,052
509
2017
$'000
109,298
19,333
48,507
74,750
46,117
45,679
131,430
-
7,885
10,172
46,059
36,640
-
6,759
7,081
1,663
21
-
2,804
3,363
968
Variance
127%
413%
182%
-190%
229%
113%
82%
100%
42%
31%
125%
236%
100%
53%
38%
2%
9%
100%
12%
20%
-47%
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 15
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 16
(a) EBITDA is a non-IFRS measure. The table below reconciles EBITDA to reported Profit for the period:
Profit/(Loss) for the period
Net Interest Cost
Depreciation & Amortisation
Tax (benefit)/expense
EBITDA
99,105
7,804
36,607
(6,799)
136,717
19,333
7,712
21,462
-
48,507
(b) negative net debt is net cash available.
(c) Net operating cashflow excludes growth and sustaining capital costs.
2.2
Hera Mine
The key performance metrics for the Hera Mine are tabulated below:
Hera Mine
Sales Revenue ($000's)
Site EBITDA
Sustaining capital ($000's)
Growth capital ($000's)
Ore Processed (kt)
Gold grade g/t
Silver grade g/t
Lead grade %
Zinc grade %
Gold Recovery %
Silver Recovery %
Lead Recovery %
Zinc Recovery %
Gold production (oz)
Silver production (oz)
Lead production (t)
Zinc production (t)
AISC $/oz (All In Sustaining Cost)
AISC is a non-IFRS measure
2.2.1 Operations
FY18
155,767
86,448
16,519
386
407,131
5.10
13.40
2.6%
3.6%
89.4%
88.2%
89.5%
89.8%
59,822
154,645
9,609
13,031
430
FY17 Variance
43%
78%
42%
-81%
11%
17%
6%
14%
15%
1%
0%
-3%
0%
31%
18%
22%
28%
-51%
109,298
48,507
11,596
2,070
368,086
4.37
12.63
2.3%
3.1%
88.3%
87.8%
91.9%
89.7%
45,679
131,430
7,885
10,172
876
The Hera mine performed strongly as a result of high gold grades and record rates of ore throughput,
following an upgrade of screening capacity during the period. Gold production was 59,822 oz at AISC of
$430/oz, compared to the prior year of 45,679 oz at ASIC of $876/oz, and was derived from the processing
of 407,131 tonnes of ore (up 11% relative to prior year) grading 5.10 g/t gold, 2.6% lead and 3.6% zinc. Gold
recovery averaged 89.4%, being a slight improvement on last year’s average of 88.3%, with a focus on
minimising solution losses being a key driver. During the period, the Company produced 22,640 tonnes of
lead zinc concentrate.
During the year, an upgrade of the Tailings Storage Facility was completed to provide sufficient capacity for
the known life of Hera and Nymagee.
2.2.2 Mining
Mining rates increased during the period to match the increased ore processing rates, with accelerated
development completed earlier in the year to provide adequate ore sources over the course of the year.
Mining tonnage and grade improved, with a total of 406,234 tonnes of ore mined (prior year 373,795
tonnes) at an average grade of 5.07g/t gold, 2.62% lead and 3.53% zinc.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 16
Development was focussed on the North Pod with two production levels completed in preparation for
stoping in the September 2018 quarter.
2.2.3
Exploration
Drilling completed during the year at the North Pod successfully extended the gold and base metal
mineralisation 100 metres vertically below the previous known extent of the lode. The upper section of the
North Pod remains to be infill drilled during FY19, with some potential for extensions above the known limit
of mineralisation.
The underground exploration program targeting extensions to the north of the Hera Mine (Beyond target)
was completed during the last quarter of the financial year. No significant results were achieved.
The main focus of exploration will be a surface-based program, due to commence late in the September
2018 quarter. A budget of $3.9M has been allocated to drill approximately 11,000 metres to test targets at
depth (testing a deeper repetition of the Hera system), and to the south and south-east of the Hera
mineralized trend (Hebe, Zeus, Athena targets).
2.2.4 Ore Reserves and Resources
The Group release an updated Ore Reserve and Resource estimate on 17 July 2018.
The Resource Estimate represents a 24% decrease in tonnage against the previous ore reserve, allowing for
mining depletion of 406,000t at 5.1g/t since June 2017. The updated Ore Reserve Estimate represents a 14%
decrease in gold grade, a 4% increase in lead grade and an 8% increase in zinc grade. The reason for the
change in gold grade relates to the mining of higher grade gold material during the financial year, relative to
the previous ore reserves gold grades. The Resource and Reserve Estimate totals are:
Total Mineral Resource Estimate of 2.5 Mt at 2.44 g/t gold, 2.65% Pb, 3.93% Zn
Total Ore Reserve Estimate of 1.1 Mt at 3.05 g/t gold, 2.84% Pb, 4.36% Zn
2.3
Peak Mine
The key performance metrics for the Peak Mine are tabulated below. Note that FY18 includes performance
from the date of acquisition only (10 April 2018).
Peak Mine
Sales Revenue ($000's)
Site EBITDA
Sustaining capital ($000's)
Growth capital ($000's)
Ore Processed (kt)
Gold grade g/t
Silver grade g/t
Copper grade %
Lead grade %
Zinc grade %
Gold Recovery %
Silver Recovery %
Copper Recovery %
Lead Recovery %
Zinc Recovery %
Gold production (oz)
Silver production (oz)
Copper production (t)
Lead production (t)
Zinc production (t)
AISC $/oz (All In Sustaining Cost)
AISC is a non-IFRS measure
FY18
92,832
62,623
13,619
414
135,345
8.83
25.67
1.6%
1.5%
0.6%
97.7%
75.9%
93.1%
76.2%
29.6%
37,552
84,815
1,968
1,551
251
517
FY17
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 17
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 18
2.3.1 Operations
Under the Company’s ownership, the rationalisation of the workforce and activities at Peak commenced
during the last quarter of the financial year. During the period, performance was driven by the small but high
grade Chronos zone, which contributed 70% of the ounces for only 22% of the tonnes processed.
Throughput was 135,345 tonnes (541kt annualized) which is significantly below the process plant design
throughput rates. This was largely a function of restricted ore supply, and filtration capacity constraints
whilst processing high base metal feed from Chronos.
Strong levels of base metal concentrate production occurred during the quarter with 6,271 tonnes of copper
concentrate, and 3,875 tonnes of lead concentrate produced.
2.3.2 Mining
Development achieved since acquisition date was 978 m (132 m operating development and 846 m capital
development). Mining rates were restricted in the period by limited mine development.
Development was focused on accelerating access in the Chronos zone and pushing the decline down to the
lower levels of the Perseverance zone. Ore mined during the period was sourced from Chronos,
Perseverance and Jubilee.
The high grade nature of the Chronos zone was experienced during the June quarter, with the mining of
32,378 tonnes at 31.4 g/t gold, 70.5 g/t silver and 5.9% lead. Chronos is expected to positively influence
gold production over the next 12 months, however production is difficult to predict due to a very high nugget
effect and high grade variability.
2.3.3
Exploration
Exploration work focused on testing the up-dip extensions of the Chronos zone. Drilling of the zone is
limited by available drill platform, with only incremental step-outs possible.
A program of infill drilling the Chronos lead-zinc rich mineralization (which surrounds the high grade gold
core) is planned.
2.3.4 Ore Reserves and Resources
A comprehensive review of the previous Mineral Resources and Ore Reserves was released on 17 July 2018.
The review includes a proposed mill upgrade to cater for improvements to lead and zinc processing. The
updated Mineral Resource Estimate represents a decrease in tonnage over the previous estimate (allowing
for mining depletion) and exclusion of non-economic resources. This is due to the evaluation techniques
adopted in accordance with Company guidelines. The new guidelines report the estimate from stope shapes,
whereas previous estimates have been based on block reporting.
Mineral Resource Estimate of 10.8 Mt at 1.64 g/t gold, 1.48% Cu, 0.96% Pb, 1.04% Zn
Mineral Reserve Estimate (Cu/Au/Pb) of 2.0 Mt at 3.48 g/t gold, 1.39% Cu, 0.66% Pb
Mineral Reserve Estimate (Pb/Zn) of 0.5 Mt at 0.40 g/t gold, 0.17% Cu, 5.72% Pb, 6.15% Zn
2.4
Nymagee
Work has progressed on advancing the Nymagee Scoping Study (released to ASX 2 May 2017) to a pre-
feasibility study level. The key activity identified during the scoping study was a requirement for additional
metallurgical testwork and the design of an appropriate processing flow sheet for the Hera plant.
The metallurgical drill program at Nymagee (2,900 metres) commenced late in the financial year, with
detailed testwork and flow sheet design to be completed by June 2019.
2.4.1 Ore Reserves and Resources
The Company updated the Mineral Resource Estimate for Nymagee, on 17 July 2018, in preparation for an
upcoming pre-feasibility study that will examine the potential to provide significant additional ore feed to
the Hera processing plant. The Resource estimate represents a decrease in tonnage since the previous
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 18
estimate released in December 2011. This change is a result of an approach that assumes an underground
mining method as opposed to an open cut mining method.
Total Mineral Resource Estimate of 3.780 Mt at 1.31% Cu, 0.84% Pb, 1.63% Zn
2.5
Corporate
The Group has reported a strong performance for the year with improvements, relative to prior year, in
production, revenue and cost control. The acquisition and consolidation of Peak has had an immediate and
positive effect to the financial position of the Group.
2.5.1
Income statement
The Group recorded a net profit after tax of $99.1 million for the year ended 30 June 2018 (2017: $19.3
million), driven by strong gold and base metal production at Hera and a significant contribution from Peak
Mines.
Corporate costs of $3.1 million reduced 16% relative to the prior year. Future corporate costs are expected
to approximate $4-5 million a year with increased costs associated with growth in the business.
Acquisition and integration costs of $6.8 million relating to the Peak Mines transaction were expensed during
the year, and consisted of legal and professional costs of $1.1 million and $5.6 million stamp duty.
Share based payments of $2.4 million were expensed in the period relating to the fair value adjustment of
Performance Rights on issue at balance date. The fair value of share based payments is calculated using the
intrinsic method which uses the market price of the Company’s shares at the reporting date. With the
increase in share price during the year, the share based payment expense has increased accordingly.
Finance costs of $8.6 million consisted of a $4.9 million non-cash finance charge relating to the adjustment
of the carrying value of the Glencore debt upon early repayment, debt arrangement fees relating to the
Investec Facility of $3.2 million and interest on the Investec borrowings of $0.5 million.
Depreciation and amortisation (D&A) was $36.6 million, up 70% from the prior year, primarily as a result of
increased production at Hera and the inclusion of Peak Mine. Hera D&A was $24.5 million and Peak D&A for
the period from 10 April 2018 to 30 June 2018 was $12.1 million. The high rate of Peak depreciation was
largely driven by the 37,552 oz of gold production in the period.
2.5.2
Taxation
At balance date a determination has been made that it is probable that taxable profit will be available in
future periods against which the deferred tax assets can be utilised.
The tax expense for the period consists of a current tax expense (amounts payable in respect of taxable
profit for the period) of $30.9 million (2017: $5.4 million) and, the recognition of a deferred tax asset,
relating to the recognition of carryforward tax losses and deductible temporary differences of $37.7 million,
resulting in a net tax benefit of $6.8 million.
The Group’s current tax expense of $30.9 million will largely utilise existing tax losses carried forward from
the prior year (which had a tax effected amount of $31.6 million). No income tax payments are expected
relating to the FY18 financial year.
At 30 June 2018, the Group had remaining carryforward tax losses of $0.6 million (tax-effected) to utilise
against future taxable profit. As such, the Group expects to be in normal tax paying position, with the
reported tax expense approximating the corporate tax rate of 30%.
2.5.3
Balance Sheet
Total assets increased during the year to $266.5 million (30 June 2017: $125.0 million), representing an
increase of 113%. This was primarily due to the completion of the Peak transaction, which accounts for
$126.2 million of assets at balance date.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 19
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 20
Group sustaining capital expenditure in the period was $30.1 million (Hera: $16.5 million; Peak: $13.6
million) and consisting of $23.2 million of mine development and $6.9 million of PP&E. Growth expenditure
for the period was $0.8 million.
Total liabilities for the Group decreased to $83.5 million at 30 June 2018, a 35% decrease on prior year (30
June 2017: $128.8 million), primarily due to the Glencore debt repayment of $109.6 million. Within the total
liabilities, trade and other payables increased to $29.7 million (2017: $6.9 million) as a result of the inclusion
of Peak ($15.8 million), and the accrual for stamp duty of $5.6 million. Provisions increased to $51.9 million
with the inclusion of the Peak rehabilitation liability of $24.7 million.
During the financial year, the Group entered into financing commitments with Investec Group for new
underwritten debt facilities, to be used to settle the acquisition of Peak. The Group drew down $45 million in
April 2018, and subsequently completed an early full debt repayment of the facility by 30 June 2018.
Glencore debt of $109.6 million, was also settled in full and at 30 June 2018, the Group had eliminated all
bank debt.
A $30 million guarantee facility remains in place with Investec at 30 June 2018.
The Group ended with a cash balance of $66.9 million at 30 June 2018 (30 June 217: $34.8 million).
2.5.4 Cash flow
A summary of cashflows is provided in the table below:
Group Summary of Cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows financing activities
Net movement in cash
Cash at the beginning of the year
Cash at the end of the year
FY18
$'000
151,758
(89,750)
(29,948)
32,060
34,863
66,923
FY17
$'000
46,117
(13,248)
(16,118)
16,751
18,112
34,863
Net cash inflow from operating activities was $151.8 million, an increase of $105.7 million from prior year,
and was derived from Hera contribution of $90.8 million, Peak contribution of $73.0 million, less Corporate
costs of $3.1 million and tax payments of $8.9 million.
Included in the operating cash inflow are income tax payments totalling $8.9 million relating to the Peak
liabilities for the December 2017 financial year ($6.3 million liability which was accounted for in the Net
Cash and Working Capital adjustment) and the period from 1 January 2018 to 9 April 2018 ($2.6 million
liability generated during the ‘locked box’ period). The tax liabilities for Peak were generated prior to Peak
Mines entering the Company’s tax consolidated group on 10 April 2018.
Net cash outflow from investing activities was $89.8 million, a $76.6 million increase since prior year, and
consisted of the Peak cash acquired of $34.4 million, less the Peak purchase payment of $93.4 million,
transaction and integration costs of $1.1 million, mine capital and plant and equipment costs of $26.9
million, an increase in Hera cash-backed security bonds of $1.2 million, deferred Hera acquisition payments
of $2.9 million (royalty payments) and a net inflow of $1.3 million derived from other investing activities
(gold forwards, gain on exchange, sale of investments).
Net cash outflow from financing activities was $29.9 million, an increase of $13.8 million from prior year,
and consisted of net proceeds received from the equity raising ($85.3 million), repayment of Glencore debt
($109.6 million), withholding tax paid on the capitalised interest incurred on the Glencore debt ($2.1
million), drawdown and repayment of Investec debt Facility (nil net cash flow) and arranging fees on the
Investec Facility ($3.1 million), and other finance charges and interest charges ($0.4 million).
2.5.5
Equity
Total equity raised to support the Peak acquisition was $85.3 million with the issue of 425 million shares at
$0.21/share. The capital raising comprised placements to qualified institutional and sophisticated investors,
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 20
placements to the Company’s significant shareholders in Pacific Road and Glencore, and a share purchase
plan offer to retail shareholders.
2.5.6 Hedging
The Group maintains a prudent level of gold forward sales to protect future earnings and cash flow. At year
end the total gold forward sales position was 76,000 oz at an average delivery price of $1727/oz, with
delivery dates spread over the next 12 months. The Company continues to monitor its hedge position and
will manage the position based on the future risk profile of the business and the prevailing spot gold price.
3.
MATERIAL BUSINESS RISKS
Aurelia Metals prepares its business plan using estimates of production and financial performance based on a
range of assumptions and forecasts. There is uncertainty in these assumptions and forecasts, and risk that
variation from them could result in actual performance being different to expected outcomes. The
uncertainties arise from a range of factors, including the nature of the mining industry, and general economic
factors. The material business risks faced by the Group that may have an impact on the operating and
financial prospects of the Group at period end include:
3.1
Fluctuations in commodity prices
The Group’s revenues are exposed to fluctuations in the US$ price of gold, silver, lead, zinc and copper.
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$, hence the Company has a foreign exchange price risk when the US$
price of a particular commodity is translated back to A$ amounts.
During the financial year, gold sales were 103,456 ounces. The effect on the income statement with an
A$50/oz increase/decrease in gold price would have been an increase/decrease in gold revenue of $5.172
million.
During the financial year, the company sold bulk concentrate containing payable lead of 10,356 tonnes,
payable zinc of 9,757 tonnes, and payable copper of 1,462 tonnes. An increase/decrease of US$50/t in the
price of lead, zinc and copper would increase/decrease revenue by $1.018 million.
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 position.
3.2
Ore 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 the 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 some
of the Company’s ore reserves unprofitable to develop for periods of time or may render some low margin
ore reserves uneconomic. Reserves may have to be re-estimated based on actual production and cost
experience. Any of these factors may require the Company to modify its ore reserves, which could have
either a positive or negative impact on the Company’s financial results.
3.3
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, acquiring
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 21
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 22
new assets or achieving higher levels of conversion from resource to reserve with improvements in
production costs and or metal prices. Exploration is highly speculative in nature and as such, the Company’s
exploration projects involve many risks and can often be unsuccessful. Once a prospect with mineralisation
is discovered, it may take several years from the initial discovery phase 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 divestures 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 life,
based on current production rates.
3.4
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, use of
special equipment and services such as shaft haulage and access, 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 operations results.
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.
3.5
Production and cost estimates
The Company, from time to time, prepares internal estimates of future production, cash costs and capital
costs of production. The Company has developed business plans which forecast improvements in metal
recoveries, ore throughput and reductions in operating costs over time from continual improvements at the
Hera and Peak operation. While these assumptions are considered reasonable, there can be no guarantee
that the improvements will be achieved. Failure to achieve production or cost estimates could have an
adverse impact on the Company’s future cash flow, profitability and financial solvency.
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, 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, commodity costs, general inflationary pressures and currency exchange rates.
3.6
Financial solvency
The Company has eliminated all bank debt at balance date. Maintaining sufficient liquidity to operate the
business is impacted by the operational and financial risk factors identified below.
With the acquisition of Peak Gold Mines, the Company has reduced the risk identified in prior year of having
a single source of income from one operating asset. The Group has been transformed from a single mine
company to a business with two operating mines, two complimentary processing facilities, and two sources
of cash flow from a diversified commodity mix (copper, lead, zinc, silver and gold).
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 22
3.7
Environmental, health and safety regulations, permits
The Company’s operations and exploration activities are subject to extensive laws and regulations governing
the protection of the environment, including: 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, damage to property, and in certain instances such
occurrences could give rise to regulatory fines and/or civil liability.
The Directors of the Company are not aware of any material breach of environmental legislation for the year
under review.
3.8
Community relations
The Group has operations near established communities. The Company recognises that a failure to
appropriately manage local community stakeholder expectations may lead to dissatisfaction with the
Company, 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 were:
11 January 2018: Completion of capital raising: 425 million shares placed at $0.21/share raising a
total of $89.2 million before costs.
10 April 2018: Completion of the Peak Gold Mines acquisition for a total consideration price of
$93.420 million.
22 May 2018: Glencore debt fully repaid
12 June 2018: Pacific Road Capital sells its entire 36.7% shareholding (313.7M shares) to a range of
existing and new institutional investors.
28 June 2018: Investec debt fully repaid
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 2018:
17 July 2018: release of updated Hera-Nymagee Ore Resources and Reserve Statement
17 July 2018: release of updated Peak Mines Ore Resources and Reserve Statement
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.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 23
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 24
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.
1. Key Management Personnel (KMP)
Non-Executive Directors
Colin Johnstone
Lawrence Conway
Paul Espie
Michael Menzies
Rune Symann
Clifford Tuck
Executive Directors
James Simpson
Other Key Management Personnel
Timothy Churcher
Position
Independent Non-Executive Chairman
Independent Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Term
Full year
Full year
Full year
Full year
1 Jul 17 to 30 Apr 18
24 May 18 to current
Managing Director & Chief Executive Officer
Full year
Chief Financial Officer & Company Secretary
Full year
2. Remuneration Policy and Strategy
As part of its Corporate Governance Policies and Procedures, the Board has adopted a Remuneration
Committee Charter and has established a Remuneration & Nomination Committee. The Remuneration &
Nomination Committee is responsible for determining and reviewing the appointment and compensation
arrangements of the KMP. 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
benefits may be linked to the Company’s financial and operational performance. The quantum and level of
short and long-term incentives is not fixed and remains at the discretion of the Board.
In light of the Company’s changed circumstances, remuneration consultant, Guerdon Associates, was
engaged during the period to review and benchmark the Company’s remuneration and variable incentive
plans. No remuneration recommendations, as defined under Division 1, Part 1.2.98 (1) of the Corporations
Act 2001, were made by Guerdon Associates.
The objectives and principles of the Company's remuneration strategy are:
(i)
To align the Board and management performance with the interests of shareholders through the
provision of fixed and variable performance based incentives.
(ii) Remuneration is appropriate, market competitive and structured to retain key employees.
(iii) Total Remuneration for Executives and Managers comprise an appropriate mix of fixed and
performance linked at risk variable remuneration.
(iv) Variable remuneration consists of short-term incentive plans and long-term incentive plans.
(v) Total Fixed Remuneration (base salary + superannuation) or TFR, is targeted at the median (P50) range
compared to the industry benchmark McDonald Gold & General Mining Industries Report. Exceptions
may exist depending on the supply and demand of particular roles or skills or for individuals which are
recognised as high achievers within the Company.
(vi) Total Remuneration, including short term and long term incentive plans, for strong business and
personal performance may be targeted within the P50-P75 range compared to the industry benchmark.
For exceptional business and personal performance, Total Remuneration may exceed the P75 level.
(vii) Performance linked at risk remuneration encourages and rewards high performance aligned with
corporate objectives that create strategic or economic value.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 24
(viii) The integrity of the remuneration review process delivers fair and equitable results.
2.1. Non-Executive Directors
The remuneration strategy for Non-Executive Directors is to remunerate at market rates with comparable
companies, for the time, commitment and responsibilities involved in being a Director. The Remuneration &
Nomination Committee is responsible for reviewing Directors remuneration and reviews fee structures as
required, determined by internal or external conditions.
Guidance is obtained as required from independent industry surveys and other sources to ensure that
Directors’ fees are appropriate and in line with the market. The Chairman’s fees reflect the additional
responsibilities of the role and are based on comparative positions in the industry.
The Board fees for Non-Executive Directors are $65,000 and for the Chairman $100,000. Statutory
superannuation contributions are paid to Board members. No fees are paid to Board sub-committee
members. The maximum total Directors’ fee pool approved by shareholders which may be paid by the
Company to all the non-executive Directors is $600,000 per year.
2.2 Executive Directors and Key Management Personnel (KMP)
The remuneration strategy is designed to align the Total Remuneration of the Executive Director and KMP
with shareholder and business objectives by providing a fixed TFR component and variable short and long
term at risk components. The awarding of variable remuneration will be based on the Company's and
individual's achievement of certain performance indicators which are judged to most affect the Company's
overall performance and long term value creation.
The Remuneration & Nomination Committee is responsible for reviewing the specifics of Director and KMP
remuneration and oversee the effective implementation of the Company's remuneration strategy.
The Board will apply the remuneration strategy with regard to the interests of shareholders, overall business
plan, external market conditions, key value drivers in the business, industry benchmarks and individual
performance and contribution towards the Company's objectives.
3. Financial Performance
The Group has demonstrated a marked turnaround in financial performance. The following table displays
the key financial performance metrics for the Group.
Performance Indicators
Sales revenue
Profit (loss) for the year
EBITDA
Net Debt (nominal value) (i)
Profit/(Loss) Per Share (cents)
Share Price (cents)
2018
$'000
248,599
99,105
136,717
(66,925)
15.5
57.0
2017
$'000
109,298
19,333
48,507
74,750
4.8
18.5
2016
$'000
91,945
10,943
41,139
91,759
2.8
13.5
(i) Net Debt is available cash less Nominal (undiscounted) debt
EBITDA is a non-IFRS measure. Reconciliation to Profit/ (loss) for the year is:
EBITDA
Net interest cost
Tax benefit/(expense)
Depreciation & Amortisation
Profit/ (loss) for the year
136,717
(7,804)
6,799
(36,607)
99,105
48,507
(7,712)
-
(21,462)
19,333
41,139
(6,526)
-
(23,669)
10,943
2015
$'000
13,220
(118,158)
(109,123)
109,804
(33.0)
21.5
(109,123)
(2,376)
-
(6,659)
(118,158)
2014
$'000
85
(10,623)
(10,666)
84,992
(3.5)
22.9
(10,666)
261
-
(218)
(10,623)
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 25
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 26
4. Variable Incentive Plans
The Board has absolute discretion on any payments under the Company's Short Term Incentive and Long
Term Incentive Plans, regardless of the achievement of selected targets. The Board will consider the
achievement of targets together with overall business performance, individual performance and broader
economic environment to decide upon the actual payment or allocation of any variable remuneration.
4.1
Short Term Incentive Plan ("STIP")
The Board has adopted an STIP whereby if the Company exceeds its budgeted targets, taking into
consideration a range of relevant physical and financial metrics, the Board may consider the payment of a
STIP cash bonus to selected employees. The allocation of the STIP payment, with a maximum target of 25%
of an individual’s TFR, is based on the achievement of corporate targets and the individual's performance
during the year under review.
The STIP is assessed and, if applicable, paid each financial year, after the Remuneration & Nomination
Committee has assessed the business performance together with individual performance reviews.
For the current year, the corporate measures for the STIP related to various financial and operating metrics,
in particular improvements relative to prior year in gold production (+113%), base metal production (+40%),
net profit (+413%), AISC/oz (-47%), EPS (+223%) and the elimination of all debt were the primary measures.
The Board noted that performance significantly exceeded all targeted levels and was the result of the
successful acquisition of Peak Mines and the continued improvement in performance of the Hera operation.
4.1.1
FY18 STIP Outcomes
The Remuneration & Nomination Committee determined that for FY18, taking into consideration the
significant out-performance in financial and operating metrics, together with the successful Peak Mines
acquisition, above target STIP payments were justified to senior executives. The Committee determined the
Managing Director & CEO would receive a STIP payment equal to 75% of FY18 TFR and the Chief Financial
Officer & Company Secretary would receive a STIP payment equal to 50% of FY18 TFR. The STIP amounts
payable for FY18 are included in the remuneration disclosure in this report, however these amounts will be
paid in FY19.
The Committee has recommended that the future maximum STIP target will be 50% for the Managing
Director & CEO and 30% for the Chief Financial Officer & Company Secretary. Future STIP measures will
include safety, meeting budgeted financial and production targets and delivery towards key internal growth
projects.
The total remuneration mix for FY18 for the Managing Director & CEO was 27% fixed, 73% variable; and for
the Company Secretary & Chief Financial Officer total remuneration mix was 40% fixed and 60% variable.
4.2
Long Term Incentive Plan ("LTIP")
The LTIP is provided by way of allocation of rights to receive shares in the Company (Rights). Upon vesting,
each Right is automatically exercised at nil exercise price and vests into one fully paid ordinary share.
The vesting of Performance Rights incorporates performance conditions which allow for the vesting of a
proportion of the allocated Performance Rights.
The LTIP hurdles are agreed prior to the commencement of a new financial year, or as close to the end of the
year as practical.
Performance Rights under the LTIP are generally granted each year along with relevant performance testing
conditions.
The test date for each issue of performance rights is typically three years from Grant Date, but may be two
years in exceptional circumstances.
The vesting of Performance Rights incorporates performance conditions which the Board will consider in
determining the percentage of performance rights that will ultimately vest.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 26
In accordance with the Company's Remuneration Strategy and standard industry practice, the number of
Performance Rights granted to the KMP is based on a multiple of the executive's Total Fixed Remuneration
divided by the 30-day VWAP of shares in the Company at a date determined by the Remuneration &
Nomination Committee.
4.2.1 Relevant Dates for testing of Vesting Conditions
The issue of Performance Rights to the CEO & Managing Director and the Chief Financial Officer & Company
Secretary will be tested for Vesting Conditions in accordance with the rules of the Performance Rights Plan.
At 30 June 2018, the Class 16A Performance Right (2,000,000 in total) were tested. Based on achieving and
exceeding the required long term performance targets, 100% of the rights were deemed to vest (see "Details
of Share Based Compensation” for further details).
Performance Rights Tranches
2016 Issue - Class 16A
2016 Issue - Class 16B
2016 Issue - Class 16C
Number Issued
2,000,000
2,250,000
2,250,000
Relevant Date
or Testing Date
30-Jun-18
30-Jun-19
30-Jun-20
Maximum Number of Rights
The effective testing date for the Performance Rights is the Relevant date, with the testing to occur within
90 days after that date. Performance Rights will lapse after testing if they do not vest. There is no re-
testing.
6,500,000
4.2.2 Vesting Conditions of Performance Rights
The Vesting Conditions applying to the Performance Rights are to be granted is at the discretion of the Board
and will be based on measures as detailed below.
Subject to the Rules of the Plan, the Performance Rights will only vest on a Relevant Date if the relevant
manager remains an employee of the Company, up to and including the relevant date.
The number of Performance Rights which vest on the Relevant Date will depend on the extent to which the
Board considers the Vesting Conditions have been satisfied for the relevant period.
Upon the Vesting Conditions having been satisfied (as determined and ratified by the Board), the number of
shares for nil value equal to the number of vested Performance Rights will be issued.
The Vesting Conditions will be at the discretion of the Board and will be based on the factors as outlined
below. For the 2016 Issue Classes 16A, 16B & 16C the Performance Measures are:
Performance Right
Relative TSR:
Process Throughput :
Mine Inventory:
Balance Sheet Restructure:
Measure
The Company's relative total Shareholder Return (TSR) measured
against a Comparator Group of companies.
Growth in the throughput capacity of the Hera processing plant.
Growth in the Hera Operation's Mineable Inventory.
Increase in the Company's capacity to appropriately restructure its
balance sheet and share ownership structure.
5. Details of Share Based Compensation
The terms and conditions of each grant of performance rights affecting remuneration in the current or a
future reporting period are as follows:
(i) 2015 Class C Performance Rights (2015 Class C)
On the 9 February 2015, the Company granted 490,000 Performance Rights to various employees. These
Performance Rights were structured to vest if the Company’s share price achieved a 5-day VWAP of
$0.40/share by 9 February 2018. All Performance Rights expired unvested on 9 February 2018.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 27
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 28
(ii) Class 16A Performance Rights
On the 28 November 2016, the Company granted 2,000,000 Performance Rights to the Key Management
Personnel. These Performance Rights are structured to vest based on a variety of performance measures
(see LTI Plan for further details). The Performance rights were measured and tested against the required
measures at 30 June 2018. In terms of the Class16A rights, the outcomes were as follows, with the testing
horizon being 30 June 2016 to 30 June 2018:
Relative TSR:
Process Throughput:
Mine Inventory:
Balance Sheet Restructure: Reduction in Debt from $113M to Nil, increase in Cash from $35M to
Absolute TSR of 322% for the period. Relative TSR in top quartile.
A 32% increase in Hera process throughput delivered.
A 24% increase in inventory delivered.
$67M and the introduction of a wide range of Institutional investors.
Based on a review of the measures and outcomes achieved, the Board decided to vest 100% of the Class16A
performance rights.
(iii) Class 16B Performance Rights
On the 28 November 2016, the Company granted 2,250,000 Performance Rights to the Key Management
Personnel. These Performance Rights are structured to vest based on a variety of performance measures
(see LTI Plan for further details) and remain untested at balance date.
(iv) Class 16C Performance Rights
On the 28 November 2016, the Company granted 2,250,000 Performance Rights to the Key Management
Personnel. These Performance Rights are structured to vest based on a variety of performance measures
(see LTI Plan for further details) and remain untested at balance date.
A summary of movements of Performance Rights within the various plans are tabulated below.
Expired
during
the year
(70,000)
-
-
-
(70,000)
Balance at
start of
year
70,000
2,000,000
2,250,000
2,250,000
6,570,000
2015 Class C
2016 Class16A
2016 Class16B
2016 Class16C
Total
Granted
during
the year
-
-
-
-
-
Vested
during
the year
-
-
-
-
-
-
2000,000
2,250,000
2,250,000
6,500,000
9/2/18
30/6/18
30/6/19
30/6/20
9-02-15
28-11-16
28-11-16
28-11-16
Expiry or
Test
Date
Balance at
year end
Exercise
Price
nil
nil
nil
nil
Grant
Date
FY18
6. Details of Share Based Compensation to KMP
Details on Rights over ordinary shares in the Company that were granted as compensation to each key
management person and details on Rights that vested during the reporting period are as follows:
FY18
Class (1)
Test Date
Number
Granted
Grant
date
Executives
Simpson, James
Churcher,
Timothy
Class 16A
Class 16B
Class 16C
30-06-18
30-06-19
30-06-20
Class 16A
Class 16B
Class 16C
30-06-18
30-06-19
30-06-20
1,500,000 28-11-16
1,500,000 28-11-16
1,500,000 28-11-16
4,500,000
500,000
20-12-16
750,000 20-12-16
750,000 20-12-16
2,000,000
Fair
Value
at
Grant
Date
$/Right
0.145
0.145
0.145
0.145
0.150
0.150
0.150
0.150
Fair
Value at
Vesting
Date
$/Right
Number
of Rights
Vested
Balance at
year end
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,500,000
1,500,000
1,500,000
4,500,000
500,000
750,000
750,000
2,000,000
(1) All classes of Performance Rights that Vest into Ordinary Shares, vest at a nil exercise price.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 28
The Performance Rights have been measured at Fair Value using the intrinsic method at grant date (refer to
Note 2B (a)(v)). The fair value adjustment expensed during the period for Mr Simpson was $1,702,200 and
for Mr Churcher was $720,156.
As noted previously, based on the testing of the Class 16A Performance Rights at 30 June 2018, the Board
decided to vest 100% of the Class16A performance rights after balance date. The vesting event will be
recorded in the next reporting period.
7. Remuneration of Directors and Key Management Personnel
The following tables show details of the remuneration received by Directors and KMP of the Company for
the current and previous financial year.
Short Term
Post-
employ-
ment
Share based
payment
Amortised
Value
Total
Base Salary
and Fees
Non-
Monetary
Benefits
Short
Term
Incentive
Payments
$
-
344,247
-
-
-
-
-
Termi
nation
$
-
-
-
-
-
-
-
Super-
annuation
$
-
20,052
-
-
-
6,175
-
(i)
$
-
20,393
-
-
-
-
-
$
109,500
438,948
71,175
71,175
59,313
65,000
7,491
2018 - Directors
Johnstone, Colin
Simpson, James
Espie, Paul
Menzies, Michael
Symann, Rune
Conway, Lawrence
Tuck, Clifford
2018 - Executives
1,301,143
Churcher, Timothy
Total 2018
4,216,811
(i) Paul Espie is a Pacific Road board nominee and his fees are paid to the account of Pacific Road Resources Fund II (ii) Resigned 30 Apr 18, (iii)
Appointed 24 May 18. Note: The STIP amounts relate to the performance in the current financial year but will be paid in FY19.
$
109,500
2,525,840
71,175
71,175
59,313
71,175
7,491
$
-
1,702,200
-
-
-
-
-
720,156
2,422,356
13,951
34,344
25,000
51,227
1,175,625
533,259
353,024
189,012
(iii)
-
-
(ii)
Post-
employ-
ment
Super-
annuati
on
Share based
payment
Amortised
Value
Base Salary
and Fees
Terminati
on
Short Term
Non-
Monetar
y
Benefits
$
-
7,084
-
-
-
-
-
-
Short
Term
Incentive
Payments
$
-
103,152
-
-
-
-
-
-
(i)
(ii)
(iii)
$
-
-
-
-
-
-
-
-
$
63,875
391,213
75,000
67,646
67,646
67,646
40,000
5,417
2017 - Directors
Johnstone, Colin
Simpson, James
Comb, Gary
Espie, Paul
Menzies, Michael
Symann, Rune
Wehby, Anthony
Conway, Lawrence
2017 - Executives
Churcher, Timothy
Kairaitis, Rimas
Willson, Richard
Total 2017
(i) Appointed 28 Nov 16, (ii) Appointed 1 Aug 16, (iii) Resigned 30 Jun 17, (iv) Resigned 28 Nov 16
(v) Appointed 1 Jun 17, (vi) Appointed as Company Secretary 20 Dec 16, (vii) Resigned 31 Aug 16, (viii) Resigned 20 Dec 16
Note: The FY17 STIP amounts relate to the performance in the current financial year, but will actually be paid in FY18.
$
-
21,398
7,125
-
-
-
3,800
515
330,092
53,288
70,313
1,232,136
-
455,183
174,380
629,563
72,290
-
-
175,442
31,359
5,189
6,680
76,066
14,499
8,154
-
29,737
$
-
150,312
-
-
-
-
-
-
63,588
-
(8,109)
205,791
(vi)
(vii)
(viii)
(iv)
(v)
Total
$
63,875
673,160
82,125
67,646
67,646
67,646
43,800
5,932
511,828
521,814
243,264
2,348,735
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 29
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 30
Executives are employed under executive employment agreements with the Company. The key terms of
these agreements with the Executives at the date of the Report are outlined below:
Executive
James Simpson
Managing Director & CEO
Notice
period by
Executive
Notice
period by
Company
TFR (i)
$711,750
3 months
3 months
Timothy Churcher
Chief Financial Officer & Company Secretary
$438,000
3 months
3 months
Termination Benefit
Accrued entitlements,
12 months TFR
Accrued entitlements,
12 months Base
(i) TFR=Total Fixed Remuneration (base salary + superannuation). Messrs. Simpson and Churcher are entitled to the
private use of a company vehicle as part of their remuneration package.
8. Shareholdings of Directors and Key Management Personnel
The shareholdings of Directors and KMPs presented below include shares held directly, indirectly, and
beneficially by the Directors and other KMPs.
FY18
Directors
Johnstone, Colin
Simpson, James Bruce
Conway, Lawrence
Espie, Paul
Menzies, Mike
Symann, Rune
Tuck, Clifford
Executives
Balance at
the start of
the year
Vesting of
Performance
Rights
On Exercise
of share
options
800,000
331,000
100,000
-
462,500
-
-
(i)
(ii)
(iii)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other
changes
during the
year
200,001
271,429
71,429
-
71,429
-
-
Churcher, Timothy
71,429
685,717
(i) Paul Espie is a Pacific Road board nominee and as such is restricted from purchasing shares on his own account.
(ii)Resigned 30 Apr 18, (iii) Appointed 24 May 18
300,000
1,993,500
-
-
-
-
Balance at
year end
1,000,001
602,429
171,429
-
533,929
-
-
371,429
2,679,217
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 30
FY17
Directors
Johnstone, Colin
Simpson, James Bruce
Comb, Gary
Conway, Lawrence
Espie, Paul
Menzies, Mike
Symann, Rune
Wehby, Anthony
Executives
Churcher, Timothy
Kairaitis, Rimas
Willson, Richard
(i)
(ii)
(iii)
(iv)
(a)
(v)
(a)
(a)
(vi)
(vii)
Balance at the
start of the year
Vesting of
Performance
Rights
On Exercise
of share
options
Other changes
during the
year
Balance at
year end
-
-
281,250
-
-
112,500
-
978,125
-
4,473,544
180,000
6,025,419
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
800,000
331,000
-
100,000
-
350,000
-
(978,125)
800,000
331,000
281,250
100,000
-
462,500
-
-
300,000
(4,473,544)
(180,000)
(3,750,669)
300,000
-
-
2,274,750
(a) Holding of those KMP who resigned during the year shown as a negative change
(i) Appointed 28 Nov 16, (ii) Appointed 1 Aug 16, (iii) Resigned 30 Jun 17
(iv) Appointed 01 Jun 17, (v) Resigned 28 Nov 16, (vi) Resigned 31 Aug 16, (vii) Resigned 20 Dec 16
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.
AUDITOR’S INDEPENDENCE AND NON-AUDIT SERVICES
During the year the Company’s auditor, Ernst & Young Australia provided non-audit services. The directors
are satisfied that the provision of non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-
audit service provided means that auditor independence was not compromised.
The amounts received or due to be received by Ernst & Young Australia for non-audit services are contained
in Note 22.
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 on the following page.
Signed on behalf of the Board in accordance with a resolution of the Directors.
Mr Colin Johnstone
Non-Executive Chairman
27 August 2018
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 31
Ernst & Young
200 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
As lead auditor for the audit of Aurelia Metals Limited for the financial year ended 30 June 2018, I
declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the review.
This declaration is in respect of Aurelia Metals Limited and the entities it controlled during the financial
period.
Ernst & Young
Scott Jarrett
Partner
27 August 2018
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
FINANCIAL STATEMENTS
Statement of Comprehensive Income
for the year ended 30 June 2018
Operating sales revenue
Cost of sales
Gross profit
Corporate administration expenses
Acquisition and integration costs
Share based expenses
Exploration and evaluation costs written off
Gain/(Loss) on commodity derivatives
Other income/(expense)
Profit before interest and income tax
Finance income
Finance costs
Profit before income tax
Income tax (expense)/benefit
Profit after income tax
Other comprehensive income
Total Comprehensive Profit for the year
Note
3(a)
3(b)
3(c)
3(d)
3(e)
11
3(f)
3(g)
3(h)
5(a)
2018
$'000
248,599
(136,093)
112,506
(3,136)
(6,770)
(2,427)
(679)
633
(16)
100,110
772
(8,577)
92,306
6,799
99,105
-
99,105
Earnings per share for Profit attributable to the ordinary equity holders of the parent
15.5
Basic Earnings per share (cents per share)
21
Diluted Earnings per share (cents per share)
21
15.1
The above Statement should be read in conjunction with the accompanying notes.
2017
$'000
109,298
(81,740)
27,558
(3,752)
-
(197)
(609)
4,073
(28)
27,045
453
(8,165)
19,333
-
19,333
-
19,333
4.8
3.9
All amounts in this Financial Report are rounded to the nearest thousand dollars, except where indicated otherwise.
Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 33
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 34
Statement of Financial Position
as at 30 June 2018
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Financial Assets
Total current assets
Non-current Assets
Mine Properties
Property, plant and equipment
Exploration and Evaluation Assets
Deferred tax assets
Financial Assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Borrowings
Total current liabilities
Non-current Liabilities
Provisions
Borrowings
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
EQUITY
Contributed Equity
Reserves
Retained losses
Total equity
Note
6
7
8
9
10
11
5(c)
8
12
5(f)
13
14
13
14
15
16
17
2018
$'000
66,925
5,829
18,345
1,378
1,650
94,127
68,310
91,504
289
7,487
4,822
172,412
2017
$'000
34,863
3,035
6,090
286
2,201
46,476
28,559
44,796
1,581
-
3,625
78,561
266,539
125,036
29,693
1,053
15,287
878
46,910
36,589
-
36,589
6,934
-
3,326
3,344
13,605
12,910
102,302
115,212
83,500
128,817
183,039
(3,780)
185,753
6,658
(9,371)
183,039
100,465
4,231
(108,476)
(3,780)
The above Statement should be read in conjunction with the accompanying notes.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 34
Statement of Changes in Equity
for the year ended 30 June 2018
Note
Balance at 1 July 2016
Total Profit/(Loss) for the period
Transactions with owners in their
capacity as owners
Shares issued for the period
Share based payments
Balance at 30 June 2017
Balance at 1 July 2017
Total Profit/(Loss) for the period
Transactions with owners in their
capacity as owners
Shares issued for the period
Cost of share issue
Share based payments
Balance at 30 June 2018
15
15
27
15,16,17
Issued
Share
Capital
$000's
99,929
-
Share
Based
Payments
Reserve
$000's
4,034
-
Accumulate
d Losses
$000's
(127,810)
19,333
536
100,465
100,465
-
89,254
(3,967)
-
185,753
-
197
4,231
4,231
-
-
-
2,427
6,658
-
(108,476)
(108,476)
99,105
-
-
-
(9,371)
The above Statement should be read in conjunction with the accompanying notes.
Total
$000's
(23,847)
19,333
-
536
197
(3,780)
(3,780)
99,105
89,254
(3,967)
2,427
183,039
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 35
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 36
Note
5(f)
18
4.1 (i)
15
15
14
Cash Flow Statement
for the year ended 30 June 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income taxes paid
Net cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Mine capital capital and exploration costs
Purchase cost of acquisition of business combination
Cash acquired through business combination
Profit /(loss) on foreign exchange
Receipts from settlement of gold forwards
Increase in security deposits
Proceeds from sale of investments
Deferred acquisition (Hera Royalty)
Cash flows from financing activities
Proceeds from issue of shares
Cost of issuing shares
Repayment of Glencore borrowings
Drawdown of Investec Syndicated facility
Repayment of Investec Syndicated facility
Repayment of other borrowings
Debt arrangement and service costs
Other finance costs - withholding tax
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
2018
$000's
258,467
(97,661)
762
(846)
(8,964)
151,758
(8,541)
-
(18,328)
(94,554)
34,397
538
654
(1,232)
200
(2,885)
(89,750)
89,254
(3,967)
(109,614)
45,000
(45,000)
(343)
(3,173)
(2,105)
(29,948)
32,060
34,863
66,923
2017
$000's
109,904
(64,179)
456
(64)
-
46,117
(3,934)
32
(9,513)
-
-
(119)
1,955
(27)
461
(2,103)
(13,248)
536
(15,436)
-
-
(391)
-
(827)
(16,118)
16,751
18,112
34,863
The above Statement should be read in conjunction with the accompanying notes.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 36
NOTES TO FINANCIAL STATEMENTS
1.
CORPORATE INFORMATION
The financial report of Aurelia Metals Limited and its subsidiaries for the year ended 30 June 2018 was
authorised for issue in accordance with a resolution of the Directors on 23 August 2018.
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 has five wholly owned subsidiaries, Defiance Resources Pty Ltd (incorporated 15 May 2007), Hera
Resources Pty Ltd (incorporated 20 August 2009), Nymagee Resources Pty Ltd (incorporated 7 November
2011), Peak Gold Asia Pacific Ltd (incorporated 26 February 2003) and Peak Gold Mines Pty Ltd (incorporated
31 October 1977). Peak Gold Asia Pacific Ltd which owns 100% of Peak Gold Mines Pty Ltd, was acquired by
Defiance Resources Pty Ltd on 10 April 2018. Aurelia sold its 100% owned subsidiary, Stannum Pty Ltd
(incorporated 15 September 2007), on 5 June 2018, and has maintained a 25% investment in Big Sky Metals
Pty Ltd in consideration of that sale.
The current nature of the operations and principal activities of the Group are gold, copper, lead and zinc
production and mineral exploration.
2A.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 also complies with the International Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
The financial report has been prepared on a historical cost basis, except for derivative instruments,
rehabilitation provisions and 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.
is a company of the kind referred to
Aurelia Metals Limited
in
Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that instrument, amounts in the
Financial/Directors’ Reports are rounded to the nearest thousand dollars, except where indicated otherwise.
Due to rounding, numbers presented throughout this document may not add up precisely to the totals
provided.
in ASIC Corporations (Rounding
(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.
(b) 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 2017, which were assessed to have no material impact on the Company, as follows:
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 37
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 38
Reference
Title
Application date
of standard
Application date
for Group
AASB 2016-1
AASB 2016-2
Amendments to Australian Accounting Standards – Recognition of
Deferred Tax Assets for Unrealised Losses
1 January 2017
1 July 2017
Amendments to Australian Accounting Standards – Disclosure
Initiative: Amendments to AASB 107
1 January 2017
1 July 2017
(c) 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 2018. The Company is in the process of assessing the impact of the new standards.
Reference
Title
Application date
of standard
Application date
for Group
AASB 15
AASB 9
AASB
Interpretation 22
Revenue from Contracts with Customers (i)
1 January 2018
1 July 2018
Financial Instruments (ii)
1 January 2018
1 July 2018
Foreign Currency Transactions and Advance Consideration
1 January 2018
1 July 2018
AASB 16
Leases (iii)
1 January 2019
1 July 2019
AASB 2016-5
Amendments to Australian Accounting Standards – Classification
and Measurement of Share-based Payment Transactions
1 January 2018
1 July 2018
AASB 2017-1
Amendments to Australian Accounting Standards – Transfers of
Investments Property, Annual Improvements 2014-2016 Cycle
and other amendments
1 January 2018
1 July 2018
AASB 2017-7
Amendments to Australian Accounting Standards – Long-Term
Interests in Associates and Joint Ventures
1 January 2019
1 July 2019
AASB 2018-1
Annual Improvements to IFRS Standards 2015-2017 Cycle
1 January 2019
1 July 2019
AASB
Interpretation 23
AASB
not yet issued
Uncertainty Over Income Tax Treatments
1 January 2019
1 July 2019
Conceptual Framework for Financial Reporting
1 January 2020
1 July 2020
(i)
AASB 15: Revenue from Contracts with Customers establishes a five-step model to account for
revenue arising from contracts with customers. Under AASB 15, revenue is recognised at an amount
that reflects the consideration to which an entity expects to be entitled in exchange for transferring
goods or services to a customer. Under AASB 15 the revenue recognition model will change from one
based on the transfer of risk and reward of ownership, to the transfer of total control. The standard
has an effective date for the Group of 1 July 2018. The Group plans to adopt the new standard on the
effective date.
During 2018, the Group continued its assessment of AASB 15 and the key issues identified are set out
below. These are based on the Group’s current interpretation of AASB 15 and may be subject to
changes as contracts with customers are renewed and interpretations evolve more generally.
The Group’s revenue is derived from bullion and base metal sales:
Bullion sales: For the sale of bullion, ownership and control are passed onto the customer at delivery.
At this point in time the indicators prescribed in AASB 15 that control has passed are all present. As
such, the Company does not anticipate the timing of revenue recognition in respect of Group gold
sales to be materially affected by the new standard.
Base metal sales: For base metal sales, the point of revenue recognition is dependent on the sales
contract, which is on Cost, Insurance and Freight (CIF) incoterms. Generally, the transfer of title
passes to the Buyer upon date of the Holding and Title Certificate.
AASB 15 introduces the concept of performance obligations that are defined as “distinct” promised
goods or services. For CIF Incoterms, the seller must contract for and pay the costs and freight
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 38
necessary to deliver the goods to the port of destination. Consequently the freight service on export
concentrate represents a separate performance obligation as defined under the new standard. This
means a portion of the revenue earned under these contracts, representing the cost of the freight
services, will be deferred and recognised at the time the obligation is fulfilled.
Management have performed a preliminary assessment on the impact of this change on the basis of
concentrate shipments outstanding at year end and the amount is not material and there is not
expected to be an adjustment on application of AASB 15. Management is finalising its assessment
regarding whether Aurelia is acting as Principle or Agent with regards to the provision of freight
services, which will determine whether the revenue is presented gross or net of costs.
Sales contracts for AMI Group’s concentrate sales incorporate provisional pricing, with the
quotational period (QP) in the contract acting as a derivative instrument (as it can be likened to a
forward contract), with settlement at a future point in time (generally 1 or 3 months). These
embedded derivatives are recognised within the sales revenue and trade receivables at reporting
date. This does not represent a change to current revenue recognition.
The Company will adopt the modified retrospective approach from 1 July 2018.
(ii)
Financial
Instruments replaces AASB 139: Financial
AASB 9:
Instruments: Recognition and
Measurement. The main impact of AASB 9 on the Group is the measurement of equity instruments
in respect of the Aurelia’s 25% investment in Big Sky Metals Pty Ltd. Equity instruments are
generally measured at fair value through profit or loss (FVTPL). However entities have an
irrevocable option on an instrument-by-instrument basis to present changes in the fair value of non-
trading instruments in other comprehensive income (OCI) without subsequent classification to
profit or loss.
The investment in Big Sky Metals Pty Ltd was initially recorded upon completion of the sale of 100%-
owned subsidiary Stannum Pty Limited on 5 June 2018, and initial cost of the investment is deemed
to be materially consistent with the fair value of Big Sky Metals Pty Ltd at 30 June 2018. As a result,
any adjustment required to the comparative value of the investment is not expected to be material.
The other main elements of the new Financial Instruments standard (hedging and impairments) are
not expected to have a material impact on the Group, however this view is based on the Group’s
current interpretation of AASB 9, and may be subject to changes as new transactions arise and as
interpretations evolve more generally. The Group is considering and will continue to monitor any
further developments.
(iii)
AASB 16: Leases requires lessees to account for all leases under a single on-balance sheet model in a
similar way to finance leases under current AASB 117: Leases. Although the new standard is only
effective for the Group from 1 July 2019, in preparation for its adoption, management are
undertaking extensive analysis to identify which supplier contracts might fall within the provisions of
AASB 16.
Where supplier contracts (or elements thereof) are deemed to be classified as ‘leases’ under AASB
16, the value of those elements will be brought onto the Balance Sheet, and the profit or loss
recognition pattern will change with certain operating costs associated with current lease contracts
being replaced with an interest and depreciation charge in the statement of profit or loss.
Preliminary assessment indicates there will be a number of current supplier agreements (or
elements thereof) that will be brought onto the Group balance sheet as leases. Appropriate
systems and procedures are being established to capture the necessary information from contracts
within the scope of AASB 16 to enable compliance with the new standard before it becomes
effective. The Group will continue to monitor industry best-practice and authoritative guidance to
determine the most appropriate approach to measurement and disclosure of its deemed leases in
the financial statements.
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.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 39
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 40
(d) 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.
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.
(e) 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.
(f)
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and on hand.
For the purposes of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as
defined above.
(g) 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.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 40
Other collectables are recognised and carried at original invoice amount less an allowance for any uncollectible
amounts.
(h) 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.
(i) 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 Gold Metal Equivalent
units mined (measured in ounces), whereas the unit of account for post-ROM costs is Gold Metal Equivalent
units processed (measured in ounces). 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 mine 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 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.
38
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 41
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 42
Other plant and equipment, is calculated on a straight-line basis over their estimated useful lives as follows:
Plant and equipment - three to seven years
Land – not depreciated
Motor vehicles – three to seven years
Leasehold improvements – three to seven 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.
(j) 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.
(k) 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;
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.
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 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.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 42
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’.
(l) 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.
(m) 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 discounted using a current pre-tax rate that
reflects, 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 part of finance costs in the statement of profit or loss.
Management judgement is required in determining the future probability of employee departures and period of
service used in the calculation of long service leave.
(n) 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.
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.
(o) 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.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 43
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 44
(p) 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.
(q) Share-based payment transactions
The Company provides benefits to employees 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 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.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 44
(r)
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.
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.
(s) 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 net 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.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 45
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 46
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
(t) 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.
(u) 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. Segment results include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis.
(v) Earnings/(loss) per share
Basic earnings/(loss) per share
Basic earnings /(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 earnings/(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.
(w) 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.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 46
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, which shall be measured at amortised cost using the effective interest method;
Held-to-maturity investments as, 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 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.
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
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 47
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 48
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 of 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.
(x) Comparative information
At balance date, embedded derivatives on provisionally priced sales have been reclassified from current
financial assets to trade and other receivables, and from gain/(loss) on commodity derivatives to sales revenue.
The disclosures of the affected accounts at 30 June 2018 have been restated accordingly for comparability
purposes.
As previously presented - 30 June 2017
As currently presented - 30 June 2017
As previously presented - 30 June 2017
As currently presented - 30 June 2017
Financial
Assets
Trade and other
receivables
Total
2,970
2,201
Sales
108,565
109,298
2,266
3,035
Gain on commodity
derivatives
733
-
5,236
5,236
Total
109,298
109,298
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 estimates and assumptions
(i) 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.
(ii)
Impairment of Assets
The Company assesses each Cash-Generating Unit (GGU), at each reporting period 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 2A(i). 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.
Refer to note 9 and 10.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 48
(iii) Rehabilitation
The Group makes a provision for the future cost of rehabilitating the Hera and Peak mine sites 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 over the life of the respective mines. 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 mines cease to produce at economically viable rates. This, in turn, will depend
upon future gold, lead and zinc prices, which are inherently uncertain.
(iv) 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. Refer to note 23.
(v) Share-based payment transactions
The Company measures the cost of equity-settled transactions with employees and third parties 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. For equity instruments where the fair value cannot be
reliably measured, the equity instruments are measured at their intrinsic value, initially at the grant date, and
subsequently at the end of each reporting period and at the date of final settlement, with any change in
intrinsic value recognised in profit or loss.
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.
3.
REVENUE AND EXPENSES
Profit 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
Gold
Copper
Lead
Zinc
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
2018
$'000
175,236
12,127
27,178
31,430
2,628
248,599
81,174
8,206
7,234
2,912
99,526
36,568
136,093
2017
$'000
76,580
-
14,368
17,495
855
109,298
52,519
5,417
2,641
(236)
60,340
21,400
81,740
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 49
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 50
(c) Corporate administration expenses
Corporate expenses
Corporate depreciation
Total corporate administration expenses
(d) Acquisition and integration expenses
Acquisition and integration expenses
Stamp duty
Total acquisition and integration expenses
4.1(ii)
2018
$'000
3,097
39
3,136
1,133
5,637
6,770
(e) Share based expenses
Share based payments expense - employees
Total share based expenses
(i) Being performance rights measured at intrinsic value to the Key Management Personnel.
2,427
2,427
(i)
(f) Gain/(Loss) on commodity derivatives
Gain/(Loss) on foreign exchange
Gain on gold forward contracts
Total gain/(loss) on commodity derivatives
(g) Other income/(expenses)
Loss on disposal of plant and equipment
Sundry income
Gain on disposal/revaluation of financial assets
Total other income/(expenses)
(h) Finance costs
Interest expense
Debt arrangement and service fees
Unwind of discount
Total finance costs
(i) Depreciation and amortisation
Property, plant and equipment
Mine properties
Total depreciation and amortisation
Represented by:
Cost of sales depreciation
Corporate depreciation
Total depreciation and amortisation
(j) Employee benefits expense
Salaries, on-costs and other employee benefits
Superannuation expense
Share based payments expense - employees
Total employee benefits expense
10
9
985
(352)
633
(1,144)
987
141
(16)
5,267
3,168
141
8,577
14,640
21,968
36,607
36,568
39
36,607
19,909
1,172
2,427
23,508
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 50
2017
$'000
3,691
61
3,752
-
-
-
197
197
(83)
4,156
4,073
(314)
187
99
(28)
8,119
-
45
8,165
9,852
11,610
21,462
21,400
61
21,462
10,215
719
197
11,131
4.
SIGNIFICANT ITEMS
Significant items are those items where their nature or amount is considered material to the financial report.
4.1
BUSINESS COMBINATION – ACQUISITION OF PEAK GOLD ASIA PACIFIC
The Group acquired 100% of the shares in Peak Gold Asia Pacific Pty Ltd (PGA), which through its wholly
owned subsidiary Peak Gold Mines Pty Ltd (Peak Mines), owns and operates Peak, a gold, copper, lead and zinc
mine located in Cobar, New South Wales.
The acquisition was completed on 10 April 2018, and consisted of a base acquisition price of $76.7 million and
an agreed Net Cash and Working Capital Amount of $16.7 million, bringing the total acquisition consideration
paid to $93.4 million.
The Net Cash and Working Capital Amount was based on a 31 December 2017 balance date, and any surplus or
deficit accruing from business activity from 31 December 2017 to 10 April 2018 remained with Peak Mines and
was acquired by the Company on 10 April 2018 (locked box mechanism).
Whilst the Company maintained an economic interest in Peak Gold Mines from 1 January 2018, it had no
managerial control until completion.
(i)
Acquisition date fair values
The provisional fair values of identifiable assets acquired and liabilities assumed of Peak at the date of
acquisition were as follows:
Cash
Trade and Other Receivables
Inventory
Property, Plant & Equip. (PP&E)
Mine Properties
Deferred Tax Asset
Trade and Other Payables
Income Tax Payable
Provisions
Net assets acquired
(ii) Acquisition-date fair value of consideration transferred
Cash paid
Consideration transferred
Direct costs relating to the acquisition
Stamp Duty payable on the acquisition
Total acquisition costs
Note
10
9
Fair Value
$000's
34,397
16,300
14,989
55,611
37,129
688
(18,640)
(10,017)
(37,037)
93,420
$’000
93,420
93,420
$’000
1,133
5,637
6,770
The Group can provisionally account the acquisition entries and has 12 months (the measurement period) from
acquisition date to finalise its acquisition accounting. Considerable work has been undertaken on the
acquisition accounting balances and the Purchase Price Allocation (PPA) for the year ended 30 June 2018 to
minimise the potential for material adjustments in the next financial year. However, if an adjustment to the
provisional amount is recognised during the next financial year, the comparative provisional amounts must be
adjusted and restated for the prior financial year.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 51
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 52
All receivables are stated at fair value and reflect the gross contractual amount receivable. At acquisition date
there were no contractual cash flows not expected to be collected.
The Company used a discounted cash flow model to estimate the expected future cash flows of the mine,
based on the life of mine plans. Expected future cash flows are based on estimates of future production and
commodity prices, operating costs, and forecast capital expenditures using the life of mine plan as at the
acquisition date.
A replacement cost approach was determined to value the fair value of other property, plant and equipment.
A deferred tax liability of $0.7 million was recognised at acquisition date for the difference between the fair
values and tax bases of assets acquired and liabilities assumed.
The acquired business contributed revenues of $92.8 million and net profit of $50.5 million to the Group for
the period 10 April 2018 to 30 June 2018. If the acquisition had taken place at the beginning of the financial
year, Peak’s contributed revenue and profit for the 2018 year would have been $273.3 million and $87.8
million respectively.
Acquisition and integration costs of $6.7 million have been expensed.
4.2
EARLY REPAYMENT OF GLENCORE DEBT
During the current financial year, the Company and its major lender in Glencore agreed a mechanism to enable
early debt repayments. Early debt repayments up to 31 March 2018 were to be applied against the outstanding
balance of Facilities C&E, with the amount of early debt repayments directly reducing the amount of
convertible debt able to be converted on 31 March 2018 for Facilities B&F.
On the 28 March 2018, the Board announced that it had no intention of exercising its right to convert any of
the Glencore Convertible Note Facility (Facility F) into shares, and on 24 April 2018, the Company repaid the
remaining Glencore debt in full.
Opening Face
Value
$'000
52,204
30,461
5,427
16,925
105,018
Interest
$'000
2,199
1,422
263
713
4,596
Repayments Closing Value
$'000
-
-
-
-
-
$'000
(54,403)
(31,883)
(5,690)
(17,638)
(109,614)
Facility C
Facility D
Facility E
Facility F
4.3
EQUITY RAISING
Part of the funding plan to support the acquisition of Peak Mines (Note: 4.1) was provided by equity
placements to institutions and major shareholders, together with a Share Purchase Plan for smaller
shareholders.
Tranche 1 of the equity raising was completed during the first half of the financial year and raised $20.7 million
(net of placement costs) for the issue of 104.0 million shares at $0.21/share.
Tranche 2 (Institutional placement plus Pacific Road and Glencore placements) was completed on 12 January
2018, and raised $56.4 million (net of placement costs) for the issue of 281.2 million shares at $0.21/share.
The Share Purchase Plan raised $8.3M for the issue of 39.8 million shares at $0.21/share.
In total, the Company raised $85.3M (net of placement costs of $3.7M) for the issue of 425.0 million shares at
$0.21/share. This amount exceeded the Company’s expected raising of $70M, with additional funds providing
extra working capital to assist with the Peak Mines integration and the early repayment of the Glencore debt
(note: 4.2).
4.4
INVESTEC DEBT FACILTY
During the financial year, the Group entered into financing commitments with Investec Group for new
underwritten debt facilities which were to be used to settle the acquisition of Peak Gold Asia Pacific Ltd
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 52
(“Peak”) and provide flexibility to restructure its current debt obligations in the first half of 2018. The new
facilities included:
Senior Debt Facility of $45 million which is senior secured over the Peak assets. This was refinanced by 30
June 2018 through the Corporate Amortising Loan referred to below;
Guarantee Facility of $30 million to fund the Performance Bonds required to be provided in relation to
Peak’s rehabilitation obligations and refinancing of Aurelia’s current cash backed Performance Bond for
Hera; and
Corporate Amortising Loan for $85 million. This facility is to be used, following satisfaction of the
conditions precedent, to refinance the Senior Debt Facility used to fund the Transaction and provide
additional debt capacity to restructure existing debt obligations during the first half 2018.
On 10 April 2018, Aurelia drew down $45 million from the Senior Debt Facility to complete the acquisition of
Peak. The Company had the option of drawing a further $40M (total capacity of $85M) from existing debt
facilities, but due to a combination of high cash levels and strong operating performance, the Company was in
a significantly stronger financial position than planned, and as such, the Board decided that no additional net
debt, above the $45M, was required.
On 28 June 2018, following strong operational performance and significant increase in cash flow during the
June 18 quarter, Aurelia fully repaid the $45 million Investec Facility
At 30 June 18, the $30 million guarantee facility with Investec remains in place.
The debt arrangement and servicing fees of $3.168 million have been expensed in the period.
5.
INCOME TAX
The Group is a tax consolidated group at balance date. Peak Gold Asia Pacific Pty Ltd joined the
consolidated group on 10 April 2018.
a) Income Tax Expense
Current tax on profits for the year
Deferred tax movement for the year
Income tax expense/(benefit) reported in the income statement
b) Numerical reconciliation of income tax expense to prima
facie tax payable
Accounting profit before income tax
Tax at the Australian tax rate of 30%
Tax effect of amounts which are not deductible/(taxable) in
calculating taxable income:
Share based payments and other non-assessable items
Previously unrecognised tax benefit now recognised
Deferred tax assets recognised
Income tax benefit
2018
$'000
30,926
(37,725)
(6,799)
92,305
27,692
3,663
(26,137)
(12,017)
(6,799)
2017
$'000
5,423
(5,423)
-
19,333
5,800
(377)
(5,423)
-
-
c) Deferred tax balances
The net Deferred tax asset of $7.487m (2017: Nil), classified as a non-current asset, is comprised of
the following:
Deferred Tax Assets
Carry forward losses not utilised
Provisions
Other
Total
2018
$'000
632
16,617
1,985
19,234
2017
$'000
5,421
6,849
5,069
17,339
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 53
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 54
Deferred Tax Liabilities
Fixed assets
Other
Total
Net deferred tax asset carried forward
d) Tax Losses
2018
$'000
(7,508)
(4,239)
(11,747)
7,487
2017
$'000
(9,290)
(8,049)
(17,339)
-
The Group has available tax losses of $2.106 million (2017: $105.19 million). Deferred tax assets are
recognised for the carry-forward of unused tax losses and unused tax credits to the extent that it is
probable that taxable profits will be available in the future against which the unused tax losses/credits
can be utilised. All available tax losses have been recognised at 30 June 18.
e) Movement in net deferred asset
Opening balance
Deferred tax asset from business acquisition
Tax benefit arising from recognition of deferred tax asset
Net Deferred tax asset at 30 June 2018
f) Movement in tax provision account
Opening balance - 1 Jul 17
Tax liability inherited on business combination
Tax paid to 30 Jun 18
Tax liability at 30 Jun 18
(i) Peak tax liability up to 9 April 18.
6.
TRADE AND OTHER RECEIVABLES
(i)
-
688
6,799
7,487
2018
$'000
-
10,017
(8,964)
1,053
-
-
-
-
2017
$'000
-
-
-
-
Trade debtors
GST receivable
Other receivables
Closing balance
All of the above are non-interest bearing and generally receivable on 30-90 day terms. Due to the
short term nature their carrying value approximates their fair value.
At balance date, no material amount of trade receivables were past due or impaired.
2018
$'000
3,881
1,595
354
5,829
2017
$'000
2,341
677
17
3,035
7.
INVENTORIES
Stores inventory (materials on hand)
Ore stockpiles
Metal in circuit
Finished concentrate
Finished gold dore
Total current inventory
2018
$'000
7,867
2,133
2,011
4,831
1,503
18,345
2017
$'000
2,469
378
117
2,559
568
6,090
All inventory is held at cost. Adjustments to inventory are recognised through cost of sales.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 54
8.
FINANCIAL ASSETS
Current
Gold Forward Contracts
Non-current
Shares in Aus Tin Mining Limited
Term Deposits
Investment in Big Sky Metals (Pty) Ltd
(i)
Movement in carrying value
Opening balance
Investment in Big Sky Metals
Gain revaluation of investment
Sale of investments
Closing balance
2018
$'000
1,650
1,650
-
4,742
80
4,822
115
80
-
(115)
80
2017
$'000
2,201
2,201
115
3,510
3,625
477
-
26
(389)
115
(i) Being 25% interest in Big Sky Metals from the sale of Stannum
Pty Ltd
The fair value of $80,000 is representative of 25% of the total equity raising
$320,000.
Aurelia do not have any controlling rights in the investment.
9.
MINE PROPERTIES
Opening balance
Addition from business combination
Transfer from exploration and evaluation assets
Development expenditure during the year
Transfer from property,plant and equipment
Amortisation for the year
Closing balance
4.1
3(i)
Impairment losses
2018
$'000
28,559
37,129
1,365
22,062
1,162
(21,968)
68,310
2017
$'000
30,006
-
-
10,163
-
(11,610)
28,559
Impairment tests are performed when there are indicators of impairment. The Group conducts a review of
indicators of impairment at each reporting date. Indicators reviewed include, but are not limited to, the
operating performance of the Cash Generating Unit (“CGU”), future business plans, assumptions around future
commodity prices, exchange rates, production rates and production costs.
A review of indicators of impairment was conducted at 30 June 2018 (2017: Nil).
10.
PROPERTY, PLANT AND EQUIPMENT
Plant and equipment at cost
Property at cost
Accumulated depreciation and impairment
Total property, plant and equipment
2018
$'000
128,670
764
(37,931)
91,504
2017
$'000
68,111
275
(23,591)
44,796
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 55
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 56
Movement in Property, Plant & Equipment
Carrying value at the beginning of the year
Additions acquired from business combination
Additions/expenditure during the year
Assets scrapped/written off
Disposals of assets
Transfer to mine properties
Depreciation for the year
Closing balance
4.1
3(i)
11.
EXPLORATION AND EVALUATION ASSETS
At cost
Accumulated write offs
Disposal of assets
Total exploration and evaluation assets
Opening balance
Expenditure during the year
Expenditure written off during the year
Exploration capital transferred to mine development
Disposal of assets
Closing balance
No impairment charge was recognised in 2018 (2017: Nil).
(i)
(i)
44,796
55,611
8,076
(1,132)
(44)
(1,163)
(14,640)
91,504
2018
$'000
25,297
(24,961)
(48)
289
1,581
800
(679)
(1,365)
(48)
289
50,508
-
4,486
(336)
(10)
-
(9,852)
44,796
2017
$'000
24,866
(23,285)
-
1,581
106
2,084
(609)
-
-
1,581
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.
(i) Security deposits on EL 6699 and EL 6258 relinquished as a result of the sale of Stannum Pty Ltd.
12.
TRADE AND OTHER PAYABLES
Trade payables and accruals
Other payables
2018
$'000
24,467
5,225
29,693
2017
$'000
2,481
4,453
6,934
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.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 56
13.
PROVISIONS
2018
Opening balance
Provisions assumed from business
combination (Note: 4.1)
Re-measurement of provision
Discount unwind charged to
Income Statement
Paid/utilised during the year
Closing Balance
Rehabilit
ation (i)
$'000
Deferred
Acquisition
Costs (ii)
$'000
Employee Other (iii)
$'000
$'000
Total
$'000
4,152
9,386
583
2,115
16,236
24,948
3,706
(141)
-
32,665
-
1,097
-
(2,622)
7,860
12,088
(596)
-
(724)
11,352
-
(185)
-
(1,930)
-
37,037
4,022
(141)
(5,276)
51,877
Comprising:
Current 2018
Non-current 2018
Total provisions 2018
761
31,904
32,665
3,428
4,432
7,860
11,098
253
11,352
-
-
-
15,287
36,589
51,877
3,326
12,910
16,236
552
31
583
-
2,115
2,115
-
4,152
4,152
2,774
6,612
9,386
Current 2017
Non-current 2017
Total provisions 2017
(i) Rehabilitation provision represents the present value of the estimated future rehabilitation cost
relating to the mine sites. Timing of rehabilitation is likely to depend on when the mine ceases to
produce at economically viable rates. The Company holds a term deposit of $4.2 million (2017: $2.9
million) as security over the Hera rehabilitation costs. The increase in the Hera provision during the year
is primarily a result of increased tails storage dam (rehabilitation area). A Letter of Credit Facility has
been agreed under the Investec Syndicated Facility (Facility C) for the purposes of environmental bonds
in an aggregate amount of $30 million, which will cover the Group Rehabilitation provision ($25 million
for Peak, and $5 million for Hera).
(ii) Deferred acquisition costs are valued at fair value by using the discounted cash flow methodology
based on the five year Australian government bond rate of 2.23% (refer to note 23).
(iii) Other provisions represent withholding tax paid on the full settlement of the Glencore debt.
14.
BORROWINGS
Current
Finance leases (a)
Insurance Funding (b)
Borrowings (c)
Total current borrowings
Non-current
Finance leases (a)
Borrowings (c)
Total Non-current borrowings
2018
$'000
285
593
-
878
2017
$'000
343
-
3,001
3,344
-
-
-
285
102,017
102,302
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 57
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 58
Total Current and Non-current borrowings
Finance leases
Insurance Funding
Glencore borrowings
Total borrowings
(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 7.1%; Nil residual.
(b) Relates to Insurance funding from Macquarie Bank.
(c) Glencore borrowings were fully repaid during the year. Investec syndicated facilities B & C were
drawn and repaid during the year. Refer to note 4 for more details.
105,018
105,646
2018
$'000
285
593
-
878
2017
$'000
628
Movement in the Glencore and Investec borrowings during the year are tabulated below:
Movement in Borrowings
Opening Current and non-current
Unwind of discount - Glencore borrowings
Debt repayment - Glencore
Debt drawdown - Investec Facility
Debt repayment - Investec Facility
Closing Current and non-current
15.
CONTRIBUTED EQUITY
(a) Movement in ordinary shares on Issue
2018
$'000
105,018
4,596
(109,614)
45,000
(45,000)
-
2018
Opening balance
Issue of shares
Issue of shares
Issue of shares
Cost of share issue
Closing balance
2017
Opening balance
Issue of shares
Issue of shares
Nil
Closing balance
(i)
(ii)
(iii)
Date
01-Jul-17
27-Nov-17
12-Jan-18
15-Jan-18
30-Jun-18
Date
01-Jul-16
(iv) 08-Feb-17
23-Feb-17
(v)
30-Jun-17
Number
430,858,188
104,000,000
58,077,506
262,943,639
-
855,879,333
Number
387,991,188
40,000,000
2,867,000
-
430,858,188
2017
$'000
112,449
8,005
(15,436)
-
-
105,018
$'000
100,465
21,840
12,196
55,218
(3,967)
185,753
$'000
99,929
500
36
-
100,465
(i) Issue relates to Tranche 1 of the Share Placement agreement dated 27 November 2017
(ii) Issue relates to Tranche 2 of the Share placement agreement (27 Nov 17) and is for the issue of
shares to Glencore (18.2 million shares) and SPP issues (40 million shares)
(iii) Issue relates to Tranche 2 of the Share Placement agreement (27 Nov 17) and is for the issue of
shares to Pacific Road (168.7 million shares) and institutional placements (94.2 million shares).
(iv) Issue related to the exercise of 40,000,000 options, exercisable at 1.25c/share by Pacific Road
Capital Management Pty Ltd
(v) Issue to Glencore pursuant to the anti-dilution and top-up rights granted to Glencore under the
subscription agreement dated 11 February 2013, as amended and restated on 18 December 2015
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 58
Note: On 8 June 2018, Pacific Road Capital sold its entire shareholding of 313.7 million shares (36.7%) to a
range of existing and new institutional investors.
15.1 Ordinary shares
Ordinary shares which have no par value 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.
15.2 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 2018.
16.
RESERVES
Share based Payments Reserve
(a) Movement in Reserves
Opening balance
Share based payment expense
Closing balance
2018
$'000
6,658
2018
$'000
4,231
2,427
6,658
2017
$'000
4,231
2017
$'000
4,034
197
4,231
(b) Movement in options on issue
Opening balance
Expiry of options - Glencore
Exercise of options
(i)
(iI)
09-Dec-16
09-Feb-17
Closing balance
Date
2018
Number
10,000,000
-
-
10,000,000
2017
Number
158,000,000
(108,000,000)
(40,000,000)
10,000,000
(i) Relates to share options granted to Glencore on 1 April 2016. These options were cancelled on 9
December 2016 with the full repayment of Facility A.
(ii) Relates to exercise of options by PacRoad Capital Management Pty Ltd.
(c) Movement in Performance Rights on
Issue
Opening balance
Grant of performance rights
Grant of performance rights
Expiry of performance rights
Closing balance
(i) Relates to 2015 Class C
Date
28-Nov-16
20-Dec-16
(i) various
2018
Number
6,570,000
-
-
(70,000)
6,500,000
2017
Number
382,000
4,500,000
2,000,000
(312,000)
6,570,000
17.
RETAINED LOSSES
Movements in retained losses were as follows:
Opening balance
Profit attributable to members of Aurelia Metals Limited
Closing balance
2018
$'000
(108,476)
99,105
(9,371)
2017
$'000
(127,810)
19,333
(108,476)
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 59
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 60
18.
CASHFLOW STATEMENT
(a) Reconciliation of the Profit after tax to the net cash flows
used in operating activities
Net Profit after tax
2018
$'000
2017
$'000
99,105
19,333
3(e)
3(d)
11
3(i)
3(h)
Adjustments for:
Share based payments
Acquisition and integration costs
Exploration and evaluation assets written off
Depreciation and amortisation
(Gain)/Loss on sale of investments
(Gain)/Loss on revaluation of commodity derivatives
(Gain)/Loss on scrapping of plant and equipment
Interest and amortisation of borrowing costs
Debt arrangement costs
Deferred tax recognised to income statement
Income tax payments - Peak liability
Changes in assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in prepayments
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Movement in inventory
Working capital inherited from business
combination
Cash acquired from business combination
Net cash flow from operating activities
2,427
1,133
679
36,607
(141)
352
1,144
5,409
3,168
(6,799)
(8,964)
(2,794)
(1,092)
21,761
10,769
(12,254)
35,646
(34,397)
151,758
197
-
609
21,462
(99)
(4,806)
314
8,101
-
-
-
1,492
72
1,042
(955)
(645)
-
-
46,117
The above Statement should be read in conjunction with the accompanying notes.
19.
EXPENDITURE COMMITMENTS
19.1 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 2018 are as follows:
Within one year
Between one and five years
More than five years
Closing balance
2018
$'000
1,924
345
-
2,268
2017
$'000
2,853
2,178
-
5,032
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 60
19.2 Finance lease and hire purchase commitments
The Group has finance leases and hire purchase contracts for various items of plant and machinery.
Future minimum rentals payable under finance leases and hire purchase contracts together with the
present value (PV) of the net minimum lease payments are as follows:
2018
$'000
2017
$'000
Minimum
payments
PV of
payments
Minimum
payments
PV of
payments
181
293
-
475
(21)
454
169
285
-
454
454
373
293
-
667
(38)
628
343
285
-
628
628
Within one year
Between one and five years
More than five years
Total Payments
Less: Finance charges
PV of lease payments
19.3 Commitments
At 30 June 2018, the Group had commitments of $2.220 million (2017: $2.808 million), including $2.611
million relating to annual exploration/mining lease minimum annual expenditures (2017:$1.271 million)
20.
SUBSEQUENT EVENTS
The following significant events occurred after 30 June 2018:
17 July 2018 : release of Peak Mines 2018 Resources and Reserves Statement
17 July 2018: release of Hera - Nymagee 2018 Resources and Reserves Statement.
21.
EARNINGS PER SHARE
Profit 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 Earnings per share (cents per share)
Diluted Earnings per share (cents per share)
2018
$'000
99,105
2017
$'000
19,333
639,758,911
404,667,835
656,299,952
15.5
490,531,961
4.8
15.1
3.9
22.
AUDITOR’S REMUNERATION
The Auditor of Aurelia Metals Limited is Ernst & Young, who, from Acquisition date have also been appointed
as the auditors of Peak Gold Asia Pacific (previously Deloitte).
Audit Services
Audit and Review work (estimate)
Non-Audit Services
Tax compliance & out of scope work
Tax reviews of the business combination
Total Audit and Non-Audit Services
2018
$'000
290
23
42
355
2017
$'000
138
55
-
193
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 61
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 62
There were no other services provided by Ernst & Young other than as disclosed above.
23.
HERA PROJECT DEFERRED 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 an initial cash purchase price of $12,000,000 and a 5% gold royalty on gravity gold dore
production from the Hera deposit, capped at 250,000 ounces gold. The royalty was commercially negotiated
post acquisition down to 4.5%.
The Consolidated Entity has recorded deferred consideration of $7.860 million ($9.386 million at 30 June
2017) 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 2018. The deferred consideration is
revalued at each reporting date through the carrying value of the asset (mine properties) in accordance with
the transitional requirements of AASB 3 Business combinations.
24.
OPERATING SEGMENTS
24.1 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, Peak Mines project
(acquired 10 April 18), and all other tenements (Corporate). 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.
24.2 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
Share based payment expense
Gain/(Loss) recorded on the sale of financial assets, investment revaluations, debt restructuring,
foreign exchange and commodity derivative transactions.
24.3 Reportable segments
a) Description of segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by
the chief business decision makers in assessing performance.
The Groups two operational mine are treated as individual operating segments. Corporate and exploration are
consolidated. Management monitors the operating results of its business units separately for the purposes of
making decisions.
Corporate includes share-based payment expenses and other corporate expenditure supporting the business
during the year.
Segment performance is evaluate based on earnings before interest, tax, depreciation and amortization
(EBITDA).
The Group’s operations are all conducted in the mining industry of Australia.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 62
b) Segment information
The segment information for the reportable segments is as follows:
Year ended 30 June 2018
Revenue
Site EBITDA
Peak
Mines
$'000
92,832
62,623
Hera‐
Nymagee
project
$'000
155,767
86,448
Reconciliation of profit before income tax expense
Depreciation and amortisation
Corporate costs
Acquisition and integration costs from business combination
Interest, finance and other charges
Share based expenses
Exploration costs expensed
Interest and other income
Gain on foreign exchange/gold forwards
Profit before income tax
Year ended 30 June 2017
Revenue
Site EBITDA
Reconciliation of profit before income tax expense
Depreciation and amortisation
Corporate costs
Acquisition and integration costs from business combination
Interest, finance and other charges
Share based expenses
Exploration costs expensed
Interest and other income
Gain on foreign exchange/gold forwards
Profit before income tax
Recognition and measurement
Peak
Mines
$'000
-
-
Hera‐
Nymagee
project
$'000
109,298
48,507
Total
$'000
248,599
149,072
(36,605)
(3,097)
(6,770)
(8,577)
(2,427)
(679)
756
633
92,306
Total
$'000
109,298
48,507
(21,462)
(3,696)
-
(8,165)
(197)
(609)
453
4,502
19,333
Operating segments are reported in a manner consistent with the internal reporting provided to Group
management.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 63
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 64
25.
PARENT COMPANY INFORMATION
Information relating to the parent entity of the Group, Aurelia Metals Limited:
Current assets
Investment in subsidiary
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net (liabilities)/assets
Issued capital
Reserves
Accumulated losses
Total shareholders' equity
Profit/(Loss) for the year
2018
$000's
43,531
-
27,220
70,751
7,260
-
7,260
63,491
185,753
6,658
(128,920)
63,491
(16,718)
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
Parent
2018
$000's
54
58
111
2017
$000's
5,960
-
3,952
9, 912
461
16,956
17,417
(7,506)
100,465
4,231
(112,202)
(7,506)
(4,841)
Parent
2017
$000's
54
111
165
Commitments include lease of head office premises and lease of office equipment.
26.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
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.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 64
The Group holds the following financial instruments:
Financial Assets
Cash at bank
Term deposits
Receivables
Other financial assets
Balance at year end
Financial Liabilities
Trade and other payables
Borrowings
Deferred acquisition royalty
Closing balance
26.1 Liquidity Risk
2018
$'000
66,925
4,742
5,829
1,650
79,146
29,693
878
7,860
38,430
2017
$'000
34,863
3,510
3,035
2,201
43,609
6,934
105,646
9,386
121,966
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. At 30 June 18, the Company had eliminated all
debt and held $67 million of available cash.
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.
26.2 Maturities of financial liabilities
The table below shows the Group’s financial arrangements at 30 June 2018 in their relevant contractual
maturity groupings. All debt was repaid during the financial year. Trade and other payables are expected to be
settled within 12 months.
Maturity Profile of financial liabilities
2018
Facility B
Facility C
Facility E
Facility F
Sub-total Debt
Equipment Loans
Insurance Loan
Deferred Acquisition
Costs
Total
<1 Yr
$'000
1-2 Yrs
$'000
2-3 Yrs
$'000
3-4 Yrs
$'000
>4 Yrs
$'000
Contracted
cash flow
of liability
$'000
Carrying
value of
liability
$'000
-
-
-
-
-
285
593
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,428
2,506
1,380
4,305
2,506
1,380
546
546
-
-
-
-
-
-
-
-
-
-
-
-
-
-
285
593
7,860
8,738
-
-
-
-
-
285
-
7,860
8,145
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 65
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 66
2017
Facility B
Facility C
Facility E
Facility F
Sub-total Debt
Equipment Loans
Deferred Acquisition
Costs
Total
<1 Yr
$'000
-
2,126
875
-
3,001
343
1-2 Yrs
$'000
3,627
5,286
4,814
1,176
14,904
285
2-3 Yrs
$'000
9,020
10,011
-
2,925
21,956
-
3-4 Yrs
$'000
17,082
14,460
-
5,538
37,080
-
>4 Yrs
$'000
24,674
-
-
8,000
32,673
-
2,799
3,888
2,087
918
-
6,143
19,077
24,043
37,998
32,673
Contracted
cash flow
of liability
$'000
54,403
31,883
5,690
17,638
109,614
Carrying
value of
liability
$'000
52,204
30,461
5,427
16,925
105,018
628
628
9,692
119,934
9,386
115,032
26.3 Credit Risk Exposures
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The
credit risk on financial assets of the entity which have been recognised in the Consolidated Statement of
Financial Position is the carrying amount, net of any provision for doubtful debts. Credit risk is managed
through the maintenance of procedures which ensure, to the extent possible, that counterparties to
transactions are of sound creditworthiness. Such monitoring is used in assessing receivables for impairment.
No receivables are considered past due or impaired.
26.4 Market Risk Exposures
a)
Foreign Currency Risk
The Group undertakes transactions impacted by foreign currencies; hence exposures to exchange rate
fluctuations arise. Although the majority of the Group costs, including development expenditure, are in
Australian dollars many of these costs are affected either directly or indirectly by movements in exchange
rates. Revenue during the year from the sale of commodities is largely affected by movements in the
USD:AUD exchange rate.
Currently the Group does not hedge against this risk. The group considers the effects of foreign currency risk
on its financial position and financial performance and assesses its option to hedge based on current economic
conditions and available market data.
Generally the majority of US$ received from sales are converted to A$ soon after receipt, unless there are cash
outflow commitments that payable in US$. The foreign currency exposure to revenue not converted at time of
sale in the period to a 5% change in US$ exchange rate was an approximately $0.977 million sensitivity in
profit/loss and equity.
The cash balance at year end includes US$9.9 million held in US$ bank accounts. An increase/decrease in
AUD:USD foreign exchange rates of 5% will result in $0.6 million increase/decrease in US$ currency bank
account balances.
b) 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 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.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 66
The Investec Syndicated Facility terms stipulate that the Group must maintain a rolling 12-month hedge
program for a minimum of 50% and a maximum of 65% of the Group’s gold production for that 12 month
period. As such a contract for gold forward sales was implemented during the year. A gain of $1.209 million
was achieved for the year. At balance date, the Company’s gold forward position was 76,000 oz of gold at an
average price of A$1,727/oz with deliveries to mid-2019. Gold put options and base metal quotational period
hedging was not utilised during the year.
During the financial year, gold and gold in concentrate sales were 103,456 ounces. The effect on the income
statement with an A$50/oz increase/decrease in gold price would have been an increase/decrease in profit/loss
and equity of $5.1 million.
During the financial year, the company sold bulk concentrate containing payable lead of 10,356 tonnes,
payable zinc of 9,757 tonnes and payable copper of 1,462 tonnes. An increase/decrease of US$50/t in the price
of lead, zinc and copper would increase/decrease profit/loss and equity by $1.018 million.
c)
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.
During the year, the group had long term financial liabilities on which it paid interest. At 30 June 18 all debt
was eliminated with early repayments. The group also holds cash and short term deposits on which it receives
interest.
The Group’s interest rate risk arises from variable interest rates on interest bearing liabilities. As at 30 June
2018, the Group held nil variable interest rate debt (2017: $109.614 million). However, there was interest of
$0.1 million charged from 1 April 2018 to 24 April 2018 on the Glencore debt balance pre-repayment (face
value: $30.4M) and also on the Investec Syndicated Facility (face value: $45 million) from 09 April 2018 to 28
June 2018. An increase/decrease in the variable interest rates of 0.25% during the year would have resulted in
a $20k decrease/increase in profit/loss and equity.
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.
26.5 Capital risk management
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. During the current financial
year, the Group has repaid all debt and achieved a successful capital raising of $85.3 million (net of costs),
resulting in a net cash position of $66.9M (2017: net debt position of $70.1M).
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
Gearing Ratio (using balance sheet values)
Glencore Borrowings (carrying value value)
Cash at bank
Net Borrowings (using carrying value)
Shareholders Equity (Balance Sheet)
Total Capital (Net Borrowings + equity)
Gearing (Net Borrowings/Total Capital)
(i)
2018
$'000
-
66,925
(66,925)
183,039
116,114
-58%
2017
$'000
105,018
34,863
70,154
(3,780)
66,374
106%
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 67
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 68
Gearing Ratio (using nominal/market values)
Glencore Borrowings (nominal value)
Cash at bank
Net Borrowings (using nominal value)
Market Value of Equity (mkt cap)
Total Capital (Nominal Borrowings + Mkt value equity)
Gearing (Net Borrowings/Total Capital)
(i)
(ii)
-
66,925
(66,925)
487,851
420,926
-16%
109,614
34,863
74,750
79,709
154,459
48%
(i) Asset-backed finance leases of $0.285 million ($0.628 million in 30 Jun 17) and insurance funding of
$0.593 million ($Nil in 30 Jun 17) have been excluded from this calculation.
(ii) Market Value of Equity Calculation
Share price at period end (c/share)
Outstanding shares at period end
Market Value of Equity (mkt cap)
57.0
855,879,333
487,851
18.5
430,858,188
79,709
Gearing reduced over the year due to positive operating performance and debt repayments and increased
equity value.
The Directors consider the carrying values of financial assets and financial liabilities recorded in the financial
statements approximate their fair values.
a)
Fair value hierarchy
The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities. The
following financial instruments are carried at fair value in the statement of financial position, and measured at
fair value through profit or loss.
2018
Assets
Shares in Aus Tin Mining
Gold Forwards
Investment in Big Sky Metals
Term Deposits
Liabilities
Deferred Acquisition Costs
2017
Assets
Shares in Aus Tin Mining
Gold Forwards
Term Deposits
Liabilities
Deferred Acquisition Costs
Quoted
prices in active
markets
(Level 1)
$'000
-
1,650
80
4,742
Significant
observable
inputs
(Level 2)
$'000
-
-
-
-
Significant
unobservable
inputs
(Level 3)
$'000
-
-
-
-
-
-
7,860
Level 1
$'000
115
2,202
3,510
Level 2
$'000
-
-
-
Level 3
$'000
-
-
-
-
-
9,386
During the current reporting period, there were no transfers between level 1 and level 2 fair value
measurements. The techniques and inputs used to value the financial assets and liabilities are as
follows:
· Gold Forward Contracts – marked-to-market value based on spot gold prices at balance date and
future delivery prices and volumes, as provided by hedge counterparty.
· Term Deposits – Face value of cash deposits
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 68
· 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 125,000
ounces. Future royalty revenue is estimated using an assumed future average gold price of
A$1605/oz. The discount rate used was the five year government bond rate of 2.23%.
27.
SHARE BASED PAYMENT ARRANGEMENTS
Recognised share based payments expenses for employee services received in the reporting period is shown in
the table below.
27.1 Type of share based payment plan
Share based payments
Expense from share based payments to employees
Total
2018
$'000
2,427
2,427
2017
$'000
197
197
a)
Employee Share Option Plan and Performance Rights Plan
The Company has established a Performance Rights Plan, as detailed in the Remuneration Report to these
Financial Statements. The objective of these is to assist in the recruitment, reward, retention and motivation of
employees of Aurelia Metals. The plan is open to Directors and eligible employees of Aurelia Metals.
b) Summary of movements of Options on issue
The following table illustrates the number and weighted average exercise price (“WAEP”) of, and movements
in, share options during the year.
Options on Issue
Opening balance issued
Granted in the year
Exercised in the year
Expired in the year
Closing balance issued
30 June 2018
Number
10,000,000
WAEP (c)
1.25
-
-
-
-
-
-
30 June 2017
Number
158,000,000
-
(40,000,000)
(108,000,000)
10,000,000
1.25
10,000,000
WAEP (c)
3.13
-
1.25
4.00
1.25
Exercisable at 30 June
The weighted average remaining contractual life of Options at balance date was 2.25 years (2017: 3.25
years).
10,000,000
10,000,000
1.25
1.25
c)
Summary of movements of Performance Rights on issue
The following table illustrates the number and weighted average exercise price (“WAEP”) of, and movements
in, Performance Rights during the year. All Performance Rights have a zero weighted average exercise price.
Refer to the Remuneration Report (section 3.2) for the vesting conditions of the performance rights issued
during the year.
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 69
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 70
Performance Rights on
Issue
30 June 2018
Opening balance issued
Granted during the year
Vested during the year
Lapsed during the year (i)
Closing balance issued
Exercisable at 30 June (ii)
Number
6,570,000
-
-
(70,000)
6,500,000
-
WAEP (c)
-
-
-
-
-
-
30 June 2017
Number
382,000
6,500,000
-
(312,000)
6,570,000
-
WAEP (c)
-
-
-
-
-
-
(i) The 70,000 performance rights expiring during the year relate to the expiry of 70,000 2015 Class C
Rights.
(ii) Closing balance is comprised of:
2016 Class 16A Perf Rights
2016 Class 16B Perf Rights
2016 Class 16C Perf Rights
d)
Fair Value Determination
2,000,000
2,250,000
2,250,000
6,500,000
Un-vested Not Exercisable
Un-vested Not Exercisable
Un-vested Not Exercisable
Performance Rights granted during the period are measured at fair value using the intrinsic method – refer to
Section 4 of the Remuneration Report.
28.
CONTINGENT LIABILITIES
There are no contingent liabilities that require disclosure.
29.
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 2018. The balance of the Company’s franking account is nil (2017:
Nil).
30.
RELATED PARTY TRANSACTIONS
Payments to Key Management Personnel during the year of $3.078 million (2017: $2.348 million) which is
detailed in the remuneration report. There were no other transactions with related parties.
a) Transactions with other related parties
Directors fees in the amount of $71,175 were paid to Pacific Road Capital Management Pty Ltd, a company of
which Paul Espie is a Director, for services provided during the period (2017:$67,646).
Directors fees in the amount of $71,175 were paid to Kilorin Pty Ltd, a company of which Mike Menzies is a
Director, for services provided during the period (2017: $67,646).
Directors fees in the amount of $59,312 were paid to Glencore International AG, a company of which Rune
Symann is an Executive, for services provided during the period (2017: $67,646).
Directors fees in the amount of $109,500 were paid to Lazy 7 Pty Ltd, a company of which Colin Johnstone is a
Director, for services provided during the period (2017: $63,875).
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 70
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Aurelia Metals Limited, we state that:
In the opinion of the Directors:
The financial statements and notes of the consolidated entity are in accordance with the Corporations Act
2001, including:
Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its
performance for the year ended on that date; and
Complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001;
The Financial Statements and notes also comply with International Financial Reporting Standards as disclosed
in Note 2A (b); and there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
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 2018.
On behalf of the Board,
Colin Johnstone
Non-Executive Chairman
27 August 2018
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 71
Ernst & Young
200 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 Audit of the Financial Report
Opinion
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
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2
Independent Auditor's Report to the Members of Aurelia Metals Limited
Independent Auditor's Report to the Members of Aurelia Metals Limited
Acquisition of Peak Mines
Refer to Note 4.1 in the financial report
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
Why significant
How our audit addressed the key audit matter
Our audit procedures included the following:
Opinion
Opinion
On 10 April 2018 the Group completed the
acquisition of Peak Gold Mines Asia Pacific Pty
Ltd.
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
► Evaluated the qualifications, competency and
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
objectivity of the external valuation experts used
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
by the Group to determine the fair value of mine
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
properties and property, plant and equipment.
including a summary of significant accounting policies, and the directors' declaration.
including a summary of significant accounting policies, and the directors' declaration.
The accounting for the acquisition was
considered a key audit matter due to the
judgement required by the Group to measure the
fair values of the following assets and liabilities
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
acquired:
2001, including:
2001, including:
► Involved our rehabilitation specialists in the
assessment of the fair value assigned to
rehabilitation provisions as follows:
► Property, plant and equipment;
a)
a)
b)
b)
► Mine Properties;
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
and of its consolidated financial performance for the year ended on that date; and
and of its consolidated financial performance for the year ended on that date; and
-
Examined the mine closure plans to
understand the planned timing and
rehabilitation strategy.
► Rehabilitation provision; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
► Deferred tax assets and liabilities.
Note 4.1 to the financial statements discloses
Basis for Opinion
Basis for Opinion
the provisional acquisition accounting performed
by the Group.
-
Physically inspected the site to assess the
completeness of the required rehabilitation
activities.
-
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
ethical responsibilities in accordance with the Code.
Tested the mathematical accuracy of the
rehabilitation net present value calculations
and assessed the discount rate applied.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
our opinion.
Assessed the cost estimates used in the
rehabilitation calculations with reference to
recent market data and historical mining
costs.
► Involved our valuation specialists in the
-
Key Audit Matters
Key Audit Matters
assessment of the valuation methodology
applied by the Group’s independent experts for
Property, plant and equipment and Mine
Properties.
Key audit matters are those matters that, in our professional judgment, were of most significance in our
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
audit of the financial report of the current year. These matters were addressed in the context of our audit
assessment of the tax effects of the acquisition
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
accounting.
opinion on these matters. For each matter below, our description of how our audit addressed the matter
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
is provided in that context.
► Involved our taxation specialists in the
► Considered the classification of the financial
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
included the performance of procedures designed to respond to our assessment of the risks of material
► Assessed the adequacy of the disclosures in
misstatement of the financial report. The results of our audit procedures, including the procedures
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
financial report.
relation to the acquisition.
assets acquired and liabilities assumed and the
fair value on acquisition.
A member firm of Ernst & Young Global Limited
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A member firm of Ernst & Young Global Limited
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Ernst & Young
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200 George Street
200 George Street
Sydney NSW 2000 Australia
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
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3
Independent Auditor's Report to the Members of Aurelia Metals Limited
Independent Auditor's Report to the Members of Aurelia Metals Limited
Carrying value of non-current assets
Refer to Note 2B(v) and Note 9 in the financial report
Why significant
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
How our audit addressed the key audit matter
Opinion
Opinion
At 30 June 2018, the Group’s consolidated
statement of financial position included $172.4m
of non-current assets.
We have considered the Group’s assessment of
indicators of impairment and reversal of previously
recognised impairment at 30 June 2018, which
included the following procedures:
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
► Assessed whether the methodology and
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
principles applied by the Group met the
including a summary of significant accounting policies, and the directors' declaration.
including a summary of significant accounting policies, and the directors' declaration.
requirements of Australian Accounting
Standard.
The Group considered that no indicators of
impairment or reversal of impairments previously
recognised, existed at 30 June 2018, which
would require an impairment test to be
performed in accordance with Australian
Accounting Standards.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
2001, including:
► Compared the assumptions made by the
a)
a)
b)
b)
The carrying value of non-current assets was
considered a key audit matter, given the
significant judgement and inherent uncertainty
involved in the assessment of whether
impairment indicators or reversal of previously
recognised impairment indicators exist.
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
and of its consolidated financial performance for the year ended on that date; and
and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Group which have the most significant
impact on the assessment of whether
indicators of impairment existed, to
information produced by the Group and to
available external data. This included the
discount rate, exchange rates, commodity
prices and reserves and resources estimates.
Basis for Opinion
Basis for Opinion
► Considered whether other external or
internal factors exist that may be an
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
indicator of impairment or reversal of
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
previously recognised impairment.
Report section of our report. We are independent of the Group in accordance with the auditor
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
ethical responsibilities in accordance with the Code.
We assessed the adequacy of the financial report
disclosures contained in Note 2B(v) and Note 9 of the
financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
our opinion.
Key Audit Matters
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
financial report.
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
Ernst & Young
200 George Street
200 George Street
Sydney NSW 2000 Australia
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
Fax: +61 2 9248 5959
ey.com/au
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4
Mine rehabilitation and closure provisions
Independent Auditor's Report to the Members of Aurelia Metals Limited
Independent Auditor's Report to the Members of Aurelia Metals Limited
Refer to Note 13 in the financial report
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
Why significant
How our audit addressed the key audit matter
Opinion
Opinion
The mine rehabilitation and closure provision is
disclosed in Note 13 of the financial report.
In conjunction with our EY rehabilitation specialists,
we performed the following audit procedures:
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
rehabilitation models to surveys completed
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
over areas requiring future rehabilitation or
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
other evidence.
including a summary of significant accounting policies, and the directors' declaration.
including a summary of significant accounting policies, and the directors' declaration.
As a consequence of its operations, the Group
incurs obligations to restore and rehabilitate the
environment. Rehabilitation activities are
governed by a combination of legislative
requirements and Group policies.
► Agreed the disturbed areas included in
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
2001, including:
► Considered the reasonableness of cost rates
applied with respect to government specified
cost rates.
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
and of its consolidated financial performance for the year ended on that date; and
and of its consolidated financial performance for the year ended on that date; and
► Considered the qualifications, competence
and objectivity of the Group’s experts who
produced the surveys and cost estimates.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
a)
a)
b)
b)
Estimating the costs associated with these future
activities requires considerable judgement in
relation to factors such as when the
rehabilitation will take place, the time period
required for the rehabilitation to be effective,
the extent and costs of rehabilitation activities,
technological changes, regulatory changes, cost
increases, and changes in economic assumptions
including an appropriate rate to discount these
future costs back to their net present value.
Basis for Opinion
Basis for Opinion
► Tested the mathematical accuracy of the
rehabilitation models to support the
provision balance.
This was considered to be a key audit matter due
to the significant judgments and assumptions
involved in the calculation of these mine
rehabilitation and closure provisions.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
ethical responsibilities in accordance with the Code.
treatment applied to changes in the
rehabilitation provision, including whether
the impact is expensed or capitalized.
► Considered the discount rate applied by the
► Evaluated the appropriateness of accounting
Group.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
our opinion.
► Evaluated whether the judgments and
estimates disclosures relating to mine
closure and rehabilitation provisions met the
requirements of Australian Accounting
Standards.
Key Audit Matters
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
financial report.
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
Ernst & Young
200 George Street
200 George Street
Sydney NSW 2000 Australia
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
Fax: +61 2 9248 5959
ey.com/au
ey.com/au
5
Information Other than the Financial Report and Auditor’s Report Thereon
Independent Auditor's Report to the Members of Aurelia Metals Limited
Independent Auditor's Report to the Members of Aurelia Metals Limited
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2018 Annual Report other than the financial report and our auditor’s report
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
thereon. We obtained the Directors’ Report that is to be included in the Annual Report, prior to the date
of this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the
Opinion
Opinion
date of this auditor’s report.
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
Our opinion on the financial report does not cover the other information and we do not and will not
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
our related assurance opinion.
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
including a summary of significant accounting policies, and the directors' declaration.
including a summary of significant accounting policies, and the directors' declaration.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
our knowledge obtained in the audit or otherwise appears to be materially misstated.
2001, including:
2001, including:
If, based on the work we have performed on the other information obtained prior to the date of this
a)
a)
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
and of its consolidated financial performance for the year ended on that date; and
and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
b)
b)
Responsibilities of the Directors for the Financial Report
Basis for Opinion
Basis for Opinion
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
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
such internal control as the directors determine is necessary to enable the preparation of the financial
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
Report section of our report. We are independent of the Group in accordance with the auditor
Report section of our report. We are independent of the Group in accordance with the auditor
error.
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
ethical responsibilities in accordance with the Code.
ethical responsibilities in accordance with the Code.
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
our opinion.
Auditor's Responsibilities for the Audit of the Financial Report
Key Audit Matters
Key Audit Matters
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
Key audit matters are those matters that, in our professional judgment, were of most significance in our
Key audit matters are those matters that, in our professional judgment, were of most significance in our
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
audit of the financial report of the current year. These matters were addressed in the context of our audit
audit of the financial report of the current year. These matters were addressed in the context of our audit
conducted in accordance with the Australian Auditing Standards will always detect a material
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
opinion on these matters. For each matter below, our description of how our audit addressed the matter
opinion on these matters. For each matter below, our description of how our audit addressed the matter
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
is provided in that context.
is provided in that context.
users taken on the basis of this financial report.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
judgment and maintain professional scepticism throughout the audit. We also:
included the performance of procedures designed to respond to our assessment of the risks of material
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
Ernst & Young
200 George Street
200 George Street
Sydney NSW 2000 Australia
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
Fax: +61 2 9248 5959
ey.com/au
ey.com/au
6
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
Independent Auditor's Report to the Members of Aurelia Metals Limited
Independent Auditor's Report to the Members of Aurelia Metals Limited
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Opinion
Opinion
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
including a summary of significant accounting policies, and the directors' declaration.
including a summary of significant accounting policies, and the directors' declaration.
estimates and related disclosures made by the directors.
a)
a)
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
2001, including:
2001, including:
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
and of its consolidated financial performance for the year ended on that date; and
and of its consolidated financial performance for the year ended on that date; and
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
complying with Australian Accounting Standards and the Corporations Regulations 2001.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
b)
b)
Basis for Opinion
Basis for Opinion
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
Report section of our report. We are independent of the Group in accordance with the auditor
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
business activities within the Group to express an opinion on the financial report. We are
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
responsible for the direction, supervision and performance of the Group audit. We remain solely
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
responsible for our audit opinion.
ethical responsibilities in accordance with the Code.
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We communicate with the directors regarding, among other matters, the planned scope and timing of the
our opinion.
our opinion.
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
Key Audit Matters
Key Audit Matters
regarding independence, and to communicate with them all relationships and other matters that may
Key audit matters are those matters that, in our professional judgment, were of most significance in our
Key audit matters are those matters that, in our professional judgment, were of most significance in our
reasonably be thought to bear on our independence, and where applicable, related safeguards.
audit of the financial report of the current year. These matters were addressed in the context of our audit
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
From the matters communicated to the directors, we determine those matters that were of most
opinion on these matters. For each matter below, our description of how our audit addressed the matter
opinion on these matters. For each matter below, our description of how our audit addressed the matter
significance in the audit of the financial report of the current year and are therefore the key audit
is provided in that context.
is provided in that context.
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
not be communicated in our report because the adverse consequences of doing so would reasonably be
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
expected to outweigh the public interest benefits of such communication.
included the performance of procedures designed to respond to our assessment of the risks of material
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
misstatement of the financial report. The results of our audit procedures, including the procedures
Report on the Audit of the Remuneration Report
performed to address the matters below, provide the basis for our audit opinion on the accompanying
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
financial report.
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 22 to 31 of the directors' report for the year
ended 30 June 2018.
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 77
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 78
6
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
Ernst & Young
Ernst & Young
200 George Street
200 George Street
Sydney NSW 2000 Australia
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
GPO Box 2646 Sydney NSW 2001
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Tel: +61 2 9248 5555
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
Fax: +61 2 9248 5959
ey.com/au
ey.com/au
Report on the Audit of the Remuneration Report
Independent Auditor's Report to the Members of Aurelia Metals Limited
Independent Auditor's Report to the Members of Aurelia Metals Limited
Opinion on the Remuneration Report
Report on the Audit of the Financial Report
Report on the Audit of the Financial Report
7
We have audited the Remuneration Report included in pages 22 to 31 of the directors' report for the year
ended 30 June 2018.
Opinion
Opinion
In our opinion, the Remuneration Report of Aurelia Metals Limited for the year ended 30 June 2018,
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
We have audited the financial report of Aurelia Metals Limited (the Company) and its subsidiaries
complies with section 300A of the Corporations Act 2001.
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity
Responsibilities
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
and consolidated statement of cash flows for the year then ended, notes to the financial statements,
A member firm of Ernst & Young Global Limited
including a summary of significant accounting policies, and the directors' declaration.
including a summary of significant accounting policies, and the directors' declaration.
Liability limited by a scheme approved under Professional Standards Legislation
The directors of the Company are responsible for the preparation and presentation of the Remuneration
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
2001, including:
2001, including:
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
a)
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
and of its consolidated financial performance for the year ended on that date; and
and of its consolidated financial performance for the year ended on that date; and
b)
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
Basis for Opinion
Ernst & Young
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
ethical responsibilities in accordance with the Code.
Scott Jarrett
Partner
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
Sydney
our opinion.
our opinion.
27 August 2018
Key Audit Matters
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context.
is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
financial report.
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 78
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 79
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 80
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 80
Tenement
Tenement
Project Name
Project Name
Location
Location
Holder
Holder
Size (km2)
Size (km2)
Expiry Date
Expiry Date
Notes
Notes
ML53
ML53
ML90
ML90
Nymagee Mine
Nymagee Mine
Nymagee NSW
Nymagee NSW
Nymagee Resources Pty Ltd
Nymagee Resources Pty Ltd
0.04867
0.04867
31/12/2021
31/12/2021
Nymagee Mine
Nymagee Mine
Nymagee NSW
Nymagee NSW
Nymagee Resources Pty Ltd
Nymagee Resources Pty Ltd
0.3391
0.3391
31/12/2021
31/12/2021
ML5295
ML5295
Nymagee Mine
Nymagee Mine
Nymagee NSW
Nymagee NSW
Nymagee Resources Pty Ltd
Nymagee Resources Pty Ltd
0.003339
0.003339
31/12/2021
31/12/2021
ML5828
ML5828
Nymagee Mine
Nymagee Mine
Nymagee NSW
Nymagee NSW
Nymagee Resources Pty Ltd
Nymagee Resources Pty Ltd
0.01538
0.01538
31/12/2021
31/12/2021
PLL847
PLL847
Nymagee Mine
Nymagee Mine
Nymagee NSW
Nymagee NSW
Nymagee Resources Pty Ltd
Nymagee Resources Pty Ltd
0.127
0.127
31/12/2021
31/12/2021
EL4232
EL4232
Nymagee
Nymagee
Nymagee NSW
Nymagee NSW
EL4458
EL4458
Nymagee Mine
Nymagee Mine
Nymagee NSW
Nymagee NSW
Nymagee Resources Pty Ltd
Nymagee Resources Pty Ltd
(Ausmindex Pty Limited 5%)
(Ausmindex Pty Limited 5%)
Nymagee Resources Pty Ltd
Nymagee Resources Pty Ltd
(Ausmindex Pty Limited 5%)
(Ausmindex Pty Limited 5%)
14.5
14.5
17/03/2019
17/03/2019
11.6
11.6
26/11/2018
26/11/2018
ML1686
ML1686
Hera Mine
Hera Mine
Nymagee NSW
Nymagee NSW
Hera Resources Pty Ltd
Hera Resources Pty Ltd
13.079
13.079
16/05/2034
16/05/2034
EL6162
EL6162
Hera
Hera
Nymagee NSW
Nymagee NSW
Hera Resources Pty Ltd
Hera Resources Pty Ltd
130
130
25/11/2018
25/11/2018
EL6226
EL6226
Kadungle
Kadungle
70km north-west of
70km north-west of
Parkes, central-west
Parkes, central-west
NSW
NSW
Defiance Resources Pty Ltd
Defiance Resources Pty Ltd
43.5
43.5
5/04/2018
5/04/2018
Under Farm-In
Under Farm-In
Agreement with
Agreement with
Emmerson
Emmerson
Resources
Resources
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 81
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 82
EL6258
EL6258
Doradilla
Doradilla
EL6699
EL6699
Tallebung
Tallebung
50km southeast of
50km southeast of
Bourke, north-west
Bourke, north-west
NSW
NSW
70km north-west
70km north-west
of Condobolin,
of Condobolin,
central-west NSW
central-west NSW
Stannum Pty Ltd
Stannum Pty Ltd
110.2
110.2
21/06/2020
21/06/2020
Stannum Pty Ltd
Stannum Pty Ltd
40.6
40.6
10/01/2019
10/01/2019
JV with Big Sky
JV with Big Sky
Metals
Metals
JV with Big Sky
JV with Big Sky
Metals
Metals
EL7447
EL7447
Box Creek
Box Creek
Nymagee NSW
Nymagee NSW
Defiance Resources Pty Ltd
Defiance Resources Pty Ltd
145
145
2/02/2020
2/02/2020
EL7524
EL7524
Barrow
Barrow
EL7529
EL7529
Lyell
Lyell
20km west of
20km west of
Nymagee; western
Nymagee; western
NSW
NSW
20km west of
20km west of
Nymagee; western
Nymagee; western
NSW
NSW
Defiance Resources Pty Ltd
Defiance Resources Pty Ltd
60.9
60.9
3/05/2020
3/05/2020
Defiance Resources Pty Ltd
Defiance Resources Pty Ltd
8.7
8.7
3/05/2020
3/05/2020
ML1746
ML1746
Hera North
Hera North
Nymagee NSW
Nymagee NSW
Hera Resources Pty Ltd
Hera Resources Pty Ltd
0.618
0.618
7/12/2037
7/12/2037
CML6
CML6
Central Area
Central Area
Cobar, NSW
Cobar, NSW
Peak Gold Mines
Peak Gold Mines
13.03
13.03
27/02/2034
27/02/2034
CML7
CML7
CML8
CML8
Coronation
Coronation
Beechworth
Beechworth
Cobar, NSW
Cobar, NSW
Peak Gold Mines
Peak Gold Mines
11.85
11.85
28/06/2025
28/06/2025
Peak
Peak
Cobar, NSW
Cobar, NSW
Peak Gold Mines
Peak Gold Mines
12.50
12.50
16/09/2033
16/09/2033
CML9
CML9
Queen Bee
Queen Bee
Cobar, NSW
Cobar, NSW
Peak Gold Mines
Peak Gold Mines
5.27
5.27
26/09/2027
26/09/2027
Depth
Depth
Restriction -
Restriction -
Underground
Underground
access only.
access only.
From 100m
From 100m
below surface to
below surface to
unlimited depth
unlimited depth
Surface & depth
Surface & depth
restrictions
restrictions
Surface-30m
Surface-30m
depth
depth
exemptions
exemptions
Surface & depth
Surface & depth
restrictions
restrictions
Surface-30m
Surface-30m
depth
depth
exemptions
exemptions
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 83
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 84
ML1483
ML1483
MPL854
MPL854
EL5933
EL5933
Fort Bourke Hill,
Fort Bourke Hill,
Cobar, NSW
Cobar, NSW
Peak Gold Mines
Peak Gold Mines
0.47
0.47
27/01/2029
27/01/2029
Cobar, NSW
Cobar, NSW
Peak Gold Mines
Peak Gold Mines
0.036
0.036
29/09/2022
29/09/2022
Peak
Peak
Cobar, NSW
Cobar, NSW
Peak Gold Mines
Peak Gold Mines
277.47
277.47
16/04/2020
16/04/2020
EL5982
EL5982
Norma Vale
Norma Vale
EL6127
EL6127
Rookery South
Rookery South
EL6149
EL6149
Mafeesh
Mafeesh
EL6401
EL6401
Rookery East
Rookery East
EL7355
EL7355
Nymagee East
Nymagee East
EL8060
EL8060
Nymagee North
Nymagee North
EL8548
EL8548
Narri
Narri
EL8567
EL8567
Kurrajong
Kurrajong
EL8523
EL8523
Margaret Vale
Margaret Vale
35km SW of
35km SW of
Nymagee, NSW
Nymagee, NSW
Cobar-Nymagee,
Cobar-Nymagee,
NSW
NSW
55km S of Cobar,
55km S of Cobar,
NSW
NSW
50km SE of Cobar,
50km SE of Cobar,
NSW
NSW
15km E of
15km E of
Nymagee, NSW
Nymagee, NSW
15km N of
15km N of
Nymagee, NSW
Nymagee, NSW
25km SE of Cobar,
25km SE of Cobar,
NSW
NSW
15km N of
15km N of
Nymagee, NSW
Nymagee, NSW
7km NE of Cobar,
7km NE of Cobar,
SNW
SNW
Peak Gold Mines
Peak Gold Mines
52.32
52.32
29/09/2020
29/09/2020
Peak Gold Mines
Peak Gold Mines
286.01
286.01
23/09/2023
23/09/2023
Peak Gold Mines
Peak Gold Mines
14.57
14.57
16/11/2020
16/11/2020
Peak Gold Mines
Peak Gold Mines
17.51
17.51
4/04/2054
4/04/2054
Peak Gold Mines
Peak Gold Mines
72.75
72.75
23/06/2021
23/06/2021
Peak Gold Mines
Peak Gold Mines
37.89
37.89
19/02/2024
19/02/2024
Peak Gold Mines
Peak Gold Mines
125.7
125.7
3/04/2023
3/04/2023
Peak Gold Mines
Peak Gold Mines
61.21
61.21
22/05/2023
22/05/2023
Peak Gold Mines
Peak Gold Mines
46.86
46.86
1/03/2023
1/03/2023
Letter
Letter
Agreement with
Agreement with
Zintoba P/L
Zintoba P/L
Letter
Letter
Agreement with
Agreement with
Lydail P/L
Lydail P/L
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 85
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 86
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 87
AURELIA METALS LIMITED - ANNUAL REPORT 2018 – 87
2018
2
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1
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A U R E L I A M E T A L S L T D
A S X C oD E: A M I A Bn: 3 7 1 0 8 4 7 6 3 8 4
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A U R E L I A M E T A L S L T D
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