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A N N U A L
R E P O R T
A U S T R A LGOLD
CONTENTS
Corporate Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Chairman’s Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Review of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Directors’ Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
1
2015 ANNUAL REPORT CORPORATE
DIRECTORY
Directors:
Registered Principal Office:
Auditors:
Eduardo Elsztain
Chairman & Non-Executive Director
Saul Zang
Non-Executive Director
Pablo Vergara del Carril
Non-Executive Director
Stabro Kasaneva
Executive Director
Wayne Hubert
Independent Non-Executive Director
Robert Trzebski
Independent Non-Executive Director
Ben Jarvis
Independent Non-Executive Director
Company Secretary:
Andrew Bursill
Franks & Associates
Suite 4, Level 9
341 George Street
Sydney NSW 2000
Suite 203, 80 William Street
Sydney NSW 2011
Tel: +61 2 9380 7233
Fax: +61 2 8354 0992
Email: info@australgold.com.au
Web: www.australgold.com.au
Antofagasta, Chile Office:
14 de Febrero 2065, of. 1103
Antofagasta, Chile
Tel: +56 (55) 2892 241
Fax: +56 (55) 2893 260
BDO East Coast Partnership
www.bdo.com.au
Principal Bankers:
National Australia Bank Limited
www.nab.com.au
Solicitors:
Addisons Lawyers
www.addisonslawyers.com.au
Buenos Aires, Argentina Office:
Listed:
Bolivar 108
Buenos Aires (1066) Argentina
Tel: +54 (11) 4323 7500
Fax: +54 (11) 4323 7591
Australian Stock Exchange
ASX: AGD
Place of Incorporation:
Share Registry:
Western Australia
Computershare Investor Services
GPO Box 2975
Melbourne VIC 3001
Tel: 1300 850 505 (within Australia)
Tel: +61 3 9415 5000 (outside Australia)
2
CHAIRMAN’S
LETTER
Dear Shareholders,
Strategic acquisitions ongoing
Austral Gold has experienced another year
of strong progress shaped by record levels
of production and successful acquisitions
that strengthen our asset base in South
America.
Record production continues
Once again, it is encouraging to note that
Austral Gold has delivered record production
at the company’s flagship Guanaco mine in
Chile. Gold production for the Financial Year
2015 (FY15) was 51,534 ounces (50,193 for
FY14), with 40,108 ounces of silver (61,240
for FY14), which equates to 52,133 gold
equivalent ounces* (51,107 for FY14). These
figures are in line with guidance provided
throughout the year.
This is a pleasing outcome for the company,
as the cash flow from production gives
Austral Gold the financial flexibility to pursue
its growth objectives. This result also reflects
the dedication and hard work of Austral
Gold’s technical team and especially the
operational team at the Guanaco mine,
complemented by our executives in
Antofagasta and Buenos Aires, all of whom
are to be commended for their efforts.
* assuming an average gold to silver ratio of 1:67.
In FY15, Austral Gold, through its
subsidiary Guanaco Compañia Minera
SpA (‘Guanaco’) acquired the Amancaya
exploration property in Chile, a gold-silver
deposit consisting of eight mining
exploration concessions covering 1,755
hectares. The total consideration of US$12
million is payable in a series of five six-monthly
instalments until 2016, (US$7 million has
been paid to 31 July 2015) as well as a
royalty agreement.
The acquisition of Amancaya is strategically
significant for Austral Gold, as its proximity
to our Guanaco mine will not only provide
synergies and cost benefits, but will
also give our Chilean asset base much
greater scale. This acquisition opens the
way for further consolidation of assets
in the Guanaco region and the Group is
currently assessing several other brownfield
opportunities that will strengthen our
Chilean portfolio.
3
2015 ANNUAL REPORT “This pleasing outcome for the company...
reflects the dedication and hard work of
Austral Gold’s technical team and especially
the operational team at the Guanaco mine.”
4
On 31 August 2015, Austral Gold
announced its intention to acquire all
the remaining shares in Argentex Mining
Corporation and become dual-listed on
the Australian and Canadian securities
exchanges. This transaction secures a
high quality asset for Austral Gold and
significantly strengthens our asset base
in Argentina where we have considerable
comparative advantages.
These and future acquisitions ensure
Austral Gold continues on the path of
reaching its goal of becoming a leading
South American precious metals resource
company.
Strengthening Productivity and
Controlling Costs
During FY15, Guanaco maintained its
record as an exceptional low-cost gold
producer with an average cash cost* for
the year of US$548/AuEq oz
(US$586/AuEq oz in FY14). All-in
sustaining costs* for the operation were
also competitive at US$694/AuEq oz
(US$751/AuEq oz in FY14). We are also
pleased to note that our safety record has
improved significantly in FY15, with 2
lost-time accidents occurring (3 in FY14)
and 7 nil-lost-time accidents (18 in FY14).
These figures include Austral Gold
employees and third party contractors.
All of these factors have greatly assisted
with boosting productivity and controlling
costs at the Guanaco mine.
Financial Year 2015 (FY15)
Austral Gold is in the strongest position in
its history as we enter FY16. Our strategic
acquisitions, combined with a solid financial
position, and backed by an experienced
management team, all provide the platform
for continued growth. FY16 will be a key
year as we seek to advance the Amancaya
Project and secure further brownfield
opportunities in Chile and Argentina.
Production at our flagship Guanaco mine is
expected to be in the 40,000 – 50,000 Au oz
range in FY16.
We intend to maintain our strong operating
cashflows and assess these next steps in
further expanding our operations.
As always, we remain committed to
the wellbeing of our employees and the
communities in which we operate and
continue to promote the highest health,
safety and environmental standards.
Longer Term Objectives
The Board remains committed to its
stated vision of growing Austral Gold to
become a leading South America-focused
precious metals company, and in doing so,
delivering maximum value to shareholders.
I would like to thank our shareholders for
their continued support.
Eduardo Elsztain
Chairman
* following the non-GAAP measures as outlined by
the World Gold Council.
5
2015 ANNUAL REPORT REVIEW OF
ACTIVITIES
Key milestones for Austral Gold
Low operating cash costs – US$548/AuEq oz.
Operating profit US$30.7 million for year ended 30 June 2015.
Amancaya Project advancing to deliver future growth in
production to 100,000 AuEq oz/year.
Third consecutive year of gold
production in 50k oz range.
Agreement to aquire TSX-V listed Argentex Mining
Corporation with high quality Pinguino asset.
Austral Gold signs agreement to acquire the
Amancaya exploration property. Amancaya
is expected to significantly enhance Austral
Gold’s reserves and production profile.
US$7.5 million royalty agreement exit payment to
Compañia Minera Kinam Guanaco (a subsidiary of
Kinross Gold Corporation).
Acquisition of 51% of underground mining contractor for Guanaco
mine since 2011, Humberto Reyes SpA (now Ingeneria y Mineria
Cachinalito Ltd) to gain greater control and flexibility over the
underground mining operations and equipment.
2015
2014
$
Completed strategic equity transactions in two Canadian
listed companies with assets in Argentina to expand the
Group´s mineral resource base in the region.
2013
Private placement in Goldrock for
15% shareholding interest.
Private placement in Argentex for
19.9% shareholding interest.
Cash flow positive starting late in the year.
2012
Gold production of 12k oz.
2011
October 2010 – Poured the first doré bar
from retreatment of material on the existing
heap leach pads late in the year.
2003 – 2010
Austral Gold conducted multiple exploration programs
and reconditioned the processing plant and facilities
that were on site. In August 2010, the Bankable
Feasibility Study was finalised confirming the viability
of a new mine at Guanaco.
7
2015 ANNUAL REPORT Currently, the majority of the ore processed
from the Guanaco operation comes from
the Cachinalito underground system and
nearby vein systems with higher average
grades. Gold mineralisation at Guanaco
is controlled by pervasively silicified, E/NE
trending sub-vertical zones with related
hydrothermal breccias. Silicification grades
outward into advanced argillic alteration and
further into zones with propylitic alteration.
In the Cachinalito vein system, most of the
gold mineralisation is concentrated between
depths of 75m and 200m and is contained
in elongated shoots. High grade ore shoots
(up to 180 g/t Au), 0.5m to 3.0m wide,
have been exploited, but the lower grade
halos, below 3 g/t Au, can reach up to 20m
in width. The alteration pattern and the
mineralogical composition of the Guanaco
ores have led to the classification as a
high-sulfidation epithermal deposit.
Austral Gold Limited (‘the Company’)
and its subsidiaries (‘the Group’) remain
committed to maximising shareholder value
as it continues to explore and invest in its
flagship asset, the Guanaco gold and silver
mine, and expand and invest in South
America precious metals opportunities.
Guanaco Gold and Silver mine,
Chile (100% interest)
Project and Mine Description
The 100% owned Guanaco mine has been
operated by Austral Gold since September
2009 and remains the Company’s flagship
asset. Guanaco is located approximately
220km SE of Antofagasta in Northern Chile
at an elevation of 2,700m and 45km from
the Pan American Highway. Guanaco is
located in the Paleocene/Eocene belt, a
structural trend which runs north/south
through the centre of Chile, and hosts
several large gold and copper mining
operations including Zaldivar, El Peñon and
Escondida.
8
Figure 1: Guanaco mine and the nearby location of the Amancaya properties
Production
Guanaco Operational Performance
Total production from the heap-leach process
reached a total of 51,534 gold ounces and
40,108 silver ounces for the 12-month period
ended June 2015.
The Company reached its target of producing
over 50,000 gold ounces in FY15.
For the 12-month period ended 30 June
2015, the average operating cash cost was
US$548/AuEq oz.
For the 12-month period ended
Total Ore processed (t)
Underground grade (g/t Au)
Gold recovery (%)
Gold Produced (Au oz)
Silver Produced (Ag oz)
Average realized gold price (US$/oz)
Cash cost (US$/AuEq oz)
June 2015
June 2014
430,480
457,795
4.7
79
51,534
40,108
1,222
548
5.29
77
50,193
61,240
1,293
586
Gold and Silver Production
Gold (Au oz)
Silver (AuEq oz)
1,117
28,911
1,105
50,226
693
50,375
914
50,193
599
51,534
2012 Calendar Year
2013 Calendar Year
2014 Calendar Year
2014 Financial Year
2015 Financial Year
9
2015 ANNUAL REPORT Quarterly production - Gold (Au) oz
Gold Production
Average Selling Price
15,393
12,222
11,736
12,540
12,176
11,425
10,219
16,016
13,702
8,841
8,528
8,772
Sept
2012
Dec
2012
March
2013
June
2013
Sept
2013
Dec
2013
March
2014
June
2014
Sept
2014
Dec
2014
March
2015
June
2015
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
)
z
o
q
E
u
A
/
$
S
U
(
e
c
i
r
P
g
n
i
l
l
e
S
e
g
a
r
e
v
A
n
o
i
t
c
u
d
o
r
P
)
z
o
u
A
(
l
d
o
G
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
10
Safety
Two (2) lost-time accidents (LTAs) occurred
and seven (7) nil-lost-time accidents (NLTAs)
were reported involving employees and third
party contractors of the Group during the
year ended 30 June 2015. All accidents
were investigated and corrective actions
were identified and implemented to prevent
recurrence. Safety and environmental
protection are core values of the Group. The
implementation of safety best practices along
with a sound risk management program are
key priorities for Austral Gold.
“...we remain committed to the
wellbeing of our employees and
the communities in which we
operate and continue to promote
the highest health, safety and
environmental standards.”
11
2015 ANNUAL REPORT Main Guanaco Vein Systems
Red = Mineralised veins
Figure 2: Mineralised veins of the Guanaco mine deposit
Exploration Program
The Geology team continued to advance on
the exploration program within the current
mine development area of the Guanaco
deposit. The 2014/2015 exploration program
comprised the following main activities:
(i) detailed ground magnetics with the goal
of testing mineralised structures beneath the
alluvial cover; (ii) cross-cuts development
to reach mineralised intercepts recognised
in previous drilling campaigns; (iii) ICP and
geochemistry analysis; (iv) drilling campaigns
of about 2,400 metres, amongst others.
Additionally, an update of the geological
district mapping at a scale of 1:5,000
was performed to further understand the
structural-alteration-mineralisation of the
Guanaco district.
12
Veta Cachinalito: Analysis of Resources
Figure 3: Geographical mapping continues to advance in the Guanaco district revealing
further exploration potential
13
2015 ANNUAL REPORT Mineral Resources and Ore
Reserves Statement
Table 1 (below) and 2 (page opposite)
compares the Company’s Mineral Resource
Estimate as at 30 June 2015 against that
from 30 June 2014. All resources relate to
the Company’s flagship Guanaco mine. The
main reason for the change between the
periods is the extraction of resources during
the year ended 30 June 2015.
Table 1: Mineral Resource Estimate
(JORC 2004) 30 June 2015
RESOURCES
MEASURED (ME)
INDICATED (IND)
TOTAL (ME + IND)
INFERRED (INF)
Ton
(Kt)
Grade
(g/t)
Ounces
Au
Ton
(Kt)
Grade
(g/t)
Ounces
Au
Ton
(Kt)
Grade
(g/t)
Ounces
Au
Ton
(Kt)
Grade
(g/t)
Ounces
Au
900
2.84
82,226
2,433
2.56
200,582
3,333
2.64
282,808
2,400
2.37
182,890
360
1.8
20,883
419
1.52
20,460
779
1.65
41,343
15
1.67
798
7,988
9,248
0.53
0 .80
136,620
-
-
-
7,988
239,729
2,852
2 .41
221,042
12,100
0.53
1 .18
136,620
460,771
2,777
5,192
0.55
1 .39
49,261
232,949
Ton
(Kt)
900
360
7,988
9,248
Grade
(g/t)
Ounces
Ag
Ton
(Kt)
Grade
(g/t)
Ounces
Ag
Ton
(Kt)
Grade
(g/t)
Ounces
Ag
Ton
(Kt)
Grade
(g/t)
9.66
279,740
2,433
18.48
213,790
2.66
681,892
419
-
11.88
13.38
-
928,823
3,333
10.62
1,137,896
2,400
180,268
779
15.73
394,058
-
7,988
2.66
681,892
3 .96
1,175,422
2,852
12 .10
1,109,091
12,100
5 .69
2,213,846
Ounces
Ag
902,344
5,107
11.69
10.59
2.63
234,813
6 .84
1,142,264
15
2,777
5,192
Gold (Au)
Underground
(>1 .0 g/t Au)
Open Pit
(>0 .4 g/t )
Heap Leach
(>0 .4 g/t Au)
Total
Silver (Ag)
Underground
Open Pit
Heap Leach
Total
14
Table 2: Mineral Resource Estimate
(JORC 2004) 30 June 2014
RESOURCES
MEASURED (ME)
INDICATED (IND)
TOTAL (ME + IND)
INFERRED (INF)
Gold (Au)
Underground
(>1 .0 g/t Au)
Open Pit
(>0 .4 g/t)
Heap Leach
(>0 .4 g/t Au)
Total
Total
Silver (Ag)
Ton
(Kt)
Grade
(g/t)
Ounces
Au
Ton
(Kt)
Grade
(g/t)
Ounces
Au
Ton
(Kt)
Grade
(g/t)
Ounces
Au
Ton
(Kt)
Grade
(g/t)
Ounces
Au
1,024
3.22
105,868
2,608
2.7
226,441
3,632
2.85
332,309
2,501
2.398
192,809
360
1.8
20,883
419
1.52
20,460
779
1.65
41,343
15
1.67
798
7,988
9,372
0.53
136,620
-
-
-
7,988
0 .874
263,371
3,027
2 .537
246,901
12,399
0.53
1 .28
136,620
510,272
2,777
5,293
0.55
49,261
1 .427
242,868
Ton
(Kt)
Grade
(g/t)
Ounces
Ag
Ton
(Kt)
Grade
(g/t)
Ounces
Ag
Ton
(Kt)
Grade
(g/t)
Ounces
Ag
Ton
(Kt)
Grade
(g/t)
Ounces
Ag
Underground
1,024
8.87
291,704
2,608
Open Pit
360
18.48
213,790
948,249
3,632
10.62
1,239,953
2,501
11.479
922,868
180,268
779
15.73
394,058
15
10.59
5,074
Heap Leach
Total
7,988
9,372
2.66
681,892
-
7,988
2.66
681,892
3 .941
1,187,386
3,027
11 .596
1,128,517
12,399
5 .81
2,315,903
2,777
5,293
2.63
234,946
6 .834
1,162,888
11.31
13.38
-
419
-
The Company ensures that the Mineral
Resource Estimates are subject to
appropriate levels of governance and
internal controls.
Governance of the Company’s Mineral
Resources development and the
estimation process is a key responsibility
of the Executive Management of the
Company. The Chief Operating Officer
of the Company oversees the review
and technical evaluations of the Mineral
Resource estimates.
All Mineral Resource estimates for the
Guanaco mine project are based on
information compiled by Carlos Arévalo,
Principal Geologist with AMEC International
Ingeniería y Construcción Limitada.
This document contains Mineral Resources
which are reported under JORC 2004
Guidelines as there has been no Material
Change or Re-estimation of the Mineral
Resources since the introduction of the
JORC 2012 Codes. Future estimations will
be completed to JORC 2012 Guidelines.
15
2015 ANNUAL REPORT Amancaya Project, Chile
(100% interest)
Since the acquisition of this low
sulphidation epithermal gold-silver deposit
consisting of eight mining exploration
concessions covering 1,755 hectares in
July 2014 (and a further 1,390 hectares
of second layer mining claims), the focus
has been on the environmental impact
statement and early exploration and
engineering works.
The Geology team has initiated a detailed
surface mapping at a 1:5000 scale and
new samples were taken for ICP analysis
along with a drilling campaign of about
790 metres.
Figure 4: Shows the location of Guanaco relative to Amancaya.
Figure 5 aside: Proposed location of any open pit operations
at Amancaya.
16
Appendix
5
Expanding
Footprint
in
South
America
Explora/on
Projects
in
Argen/na
• Santa
Cruz
Province
• 8
de
Julio
project
(85K
Ha),
100%
AGD,
minimal
exploraVon
in
2014
• Pinguino
Project
-‐
Argentex
(TSX-‐V:ATX)
(10K
Ha)
-‐
19.9%
shareholder
• Strategic
investment
in
known
gold
province
Buenos
Aires
Lake
Perito Moreno
70 W
Las Heras
68 W
Caleta Olivia
47 S
San José Mine
Cerro Negro Project
Bajo Caracoles
La Paloma Project
Virginia
Project
La Invernada
Project
ATLANTIC OCEAN
47 S
Las
Calandrias
Project
Martinetas
Project
Puerto Deseado
La Josefina
Project
Pingüino
Project
Cerro Moro
Project
8 de Julio
Nearby
Au/Ag
mines:
•
•
•
•
•
Cerro
Vanguardia
(Anglo):
Expansion
Cerro
Negro
(Goldcorp):
ProducVon
Cerro
Moro
(Yamana):
In
construcVon
Lomada
(Patagonia):
ProducVon
San
Jose
(Hochschild):
ProducVon
Gobernador
Gregores
Primero de Abril
Project
Martha Mine
El Dorado-Monserrat
Project
Cerro Vanguardia
Mine
Cardiel
Lake
Manantial Espejo
Mine
ATLANTIC OCEAN
Santa Cruz Province,
Patagonia Region, Argentina
0
25
50
100 Km.
References:
Chon Aike Formation
Operating mine
Main mining projects
Puerto San Julián
68 W
Austral Properties (100% owned)
Austral
Proper/es
(100%
owned)
Argentex Properties (20% shareholder)
with Austral Gold announcing its
Argentex
Proper/es
(20%
shareholder)
intention to aquire all remaining
shares in August 2015
Figure 6: Austral Gold exploration property interests in the Santa Cruz province in Argentina.
13
8 de Julio Project - Santa Cruz,
Argentina (100% interest)
The Group holds several exploration
licences (cateos) and “manifestations
of discovery” over more than 76,000
hectares in the Deseado Massif corridor
in the Province of Santa Cruz (the “8 de
Julio Project”). Two of these properties are
classified as “Cateos” (10,499 hectares)
while the remaining properties are already
classified as “manifestations of discovery”
(56,888 hectares).
Some of the cateos that were held as part
of the 8 de Julio property expired during the
year. At the same time, new “manifestations
of discovery” over that part of the property,
which is considered to have the highest
potential, were requested. Additionally, the
company continued filing base geological
reports in compliance with local regulations.
17
2015 ANNUAL REPORT DIRECTORS’
REPORT
Austral Gold Limited and its
Subsidiaries
Review and Results of
Operations
For the Year Ended 30 June 2015
Operating Results and Dividends
Your Directors present the following
report for the financial year ended 30
June 2015 together with the consolidated
financial report of Austral Gold Limited (the
Company) and its subsidiaries, (referred to
hereafter as the Group) for the year ended
30 June 2015 and the auditor’s report
thereon.
Principal Activities
The principal activities of the Group
during the course of the financial year
were exploration, evaluation of mineral
properties, and gold and silver production
as described in the Review of Activities.
There were no significant changes in the
nature of those activities during the year.
The Group’s net loss attributable to
shareholders for the year ended 30 June
2015 was US$5,343,187 (2014: loss
US$11,681,223).
The Group achieved revenue of
US$62,495,078 (2014: US$66,376,158)
following slightly higher gold sales volumes
but offset by 5% lower average gold
prices during FY15. The decrease in silver
production and average price compared
to prior year contributed to the decrease in
revenue by US$547,813.
Cost of sales decreased by 6%
contributing to 57% gross margin for the
current year (2014 gross margin%: 51%).
The better margins are mainly due to a
more favourable CLP: USD fx rate with the
US$ worth an average 604 Chilean Pesos
in FY15 compared to 532 in FY14.
Administration expenses decreased by 20%
to US$5,361,417 (2014: US$6,721,746)
mainly as a result of (i) a one-off bonus paid
to workers in FY14 of US$2.4 million as part
of the agreement with the Union; offset by
(ii) a bonus payment of US$1 million to
senior management in Chile.
In the current year, impairment losses
of US$15.4 million were charged to the
statement of profit or loss and other
comprehensive income ($10 million in
FY14). As of 30 June 2015, the fair value
of the Guanaco mine was US$34.5 million
(6.5% post-tax discount rate) while the net
book value of the mine was US$49.9 million
(prior to the impairment) as the Group
continues to invest in its flagship asset.
With relatively low levels of capex foreseen
for the remaining life of the mine and the
potential to create synergies with the new
Amancaya project acquisition, management
believes that the value of the assets will be
enhanced in future years.
19
2015 ANNUAL REPORT No dividends of the Company or its
subsidiaries have been paid, declared
or recommended since the end of the
financial year.
Financial Position
The net assets of the Group have
increased by US$44.4 million since 30
June 2014 to US$58,535,543 at 30 June
2015 (2014: US$14,098,372). This is
primarily due to the conversion of the long-
term debt balance of US$53,733,935 to
equity on 19 December 2014.
As at 30 June 2015, the Group continued
showing healthy liquidity figures with a
current ratio equal to 1.5x along with
US$7.3 million cash balance and a cash
conversion cycle of 12 days.
The decrease in non-current assets
is mainly driven by amortisation and
impairment of intangible assets and
goodwill, offset by the acquisition of
Amancaya with US$12.8 million capitalized
as part of exploration and evaluation
expenditure for the properties. Deferred
consideration for Amancaya is reflected in
the increase to trade payables (current and
non-current) with US$7.8 million still owing
on this transaction at balance sheet date.
The non-current financial assets of
US$2.5 million (down from US$6.3 million
as at 30 June 2014) reflects the fair value
of the equity investments in Argentex and
Goldrock at their market prices as traded
on the TSX-V.
The $53.7 million loan with IFISA held in
non-current liabilities was converted to
equity in the Company’s own shares on
19 December 2014 after approval of
AGD shareholders. This saw a significant
improvement in the Company’s balance sheet.
The equity balance in FY15 includes a
negative reserve of US$7.2 million that
mainly reflects the fair value fluctuation of
the Argentex and Goldrock investments.
The Group used part of its strong
FY15 operating cashflows of US$22.9
million (FY14: US$30 million) to meet
its commitments regarding deferred
consideration for the acquisitions of
Cachinalito and Amancaya and on capital
expenditure to support production.
Therefore, the Directors are confident the
Company is in a position to maintain its
current operations.
Significant Changes in the State
of Affairs
There were no significant changes in the
state of affairs of the Group during the
financial year other than those disclosed
in the Review and Results of Operations
above.
Future Developments, Prospects
and Business Strategies
Since its incorporation, Austral Gold has
been an explorer for gold. First production
of gold and silver from Guanaco occurred
in late 2010, with gold production steadily
increasing since this time. The Guanaco
gold and silver mine remains the Company’s
key asset and a focus of management along
with its Amancaya acquisition.
20
Events Subsequent to
Balance Date
Acquisition of Argentex
On August 31, 2015, Austral Gold
announced that the board of directors of
Argentex Mining Corporation (“Argentex
Mining”, TSXV: ATX; OTCQB: AGXMF)
had approved entering into a binding
letter agreement (the “Agreement”) with
Austral Gold, in connection with a business
combination transaction involving Austral
Gold and Argentex Mining.
Pursuant to the Agreement, Austral Gold
has agreed to acquire all of the issued and
outstanding common shares of Argentex
(“Argentex Shares”) that are not already
held by Austral Gold and its subsidiaries,
which represents approximately 80.1% of
the Argentex Shares currently outstanding
(the “Transaction”).
The proposed Transaction is expected
to be completed by way of a share-
for-share exchange whereby Argentex
Shareholders (other than Austral Gold and
its subsidiaries) are expected to receive
0.5651 of an ordinary share of Austral Gold
in respect of each Argentex Share held
(the “Exchange Ratio”), which represents
an implied valuation of CAD$~0.08 per
Argentex Share (or CAD$~5.8 million
total valuation) and ~7.75% of the total
outstanding shares of Austral Gold after
adjusting for the shares issued in the
Transaction.
The proposed Transaction is subject to
all applicable regulatory, court, stock
exchange and shareholder approvals.
In addition, the Exchange Ratio may
be adjusted in certain circumstances,
including as a result of any change in the
capital structure of either Argentex or
Austral (other than a change resulting from
the completion by Austral of a financing
transaction on specified terms).
Performance In Relation to
Environmental Regulation
The Group has no exploration activities in
Australia and is therefore not subject to
any particular and significant environmental
regulations under a law of the
Commonwealth or of a State or Territory.
In relation to the Group’s mineral
exploration operations in Chile, licence
requirements relating to “Bases Generales
de Medio Ambiente” exist under the
Chilean Law No.19,300. The Directors
are not aware of any breaches during the
period covered by this report. Moreover, all
the exploration activities performed so far
have been approved by the Environmental
Authority, Comisión Nacional de Medio
Ambiente (CONAMA).
Dr Robert Trzebski is a Director of
Austral Gold Limited. He has a degree
in Geology, PhD in Geophysics,
Masters in Project Management and
has over 20 years of professional
experience in mineral exploration,
project management and mining
services.
Dr Robert Trzebski is a fellow of the
Australian Institute of Mining and
Metallurgy (AUSIMM) and qualifies as
a Competent Person as defined in the
2004 Edition of the ‘Australasian Code
for Reporting of Exploration Results,
Mineral Resources and Ore Reserves.’
Dr Robert Trzebski consents to the
inclusion of the resources noted in this
Annual Report.
21
2015 ANNUAL REPORT DIRECTORS &
OFFICERS
The Directors and Officers of the Company throughout
and since the end of the financial year are:
(iv) Banco Hipotecario (BASE: BHIP):
one of Argentina’s largest commercial
banks, engaged in the personal
banking and corporate banking sectors.
(v) IDB Development (TASE: IDBD): a
leading conglomerate in Israel which
directly and indirectly owns Clal
Insurance (TASE: CLIS), Shufersal
(TASE: SAE), Cellcom (NYSE & TASE:
CEL), Properties & Building Corp.
(TASE: PTBL), ADAMA Agricultural
Solutions, Elron Electronic Industries
(TASE: ELRN) among others.
Mr Elsztain has not held any other
Directorships with listed companies in the
last three years.
Mr. Elsztain is a member of the World
Economic Forum, Council of the Americas,
the Group of 50 and Argentina’s Business
Association (AEA), among others.
He is president of Fundacion IRSA, which
promotes education among children and
young people, including “Puerta 18”, a
program that provides free computing and
technology education for young people
from low-income backgrounds in order
to develop their scientific, artistic and
professional talents.
Stabro Kasaneva
Executive Director
Chief Operating Officer
Appointed 7 Oct 2009
Re-elected by shareholders on
28 Nov 2012
Mr Kasaneva holds a degree in Geology
from the Universidad Católica del Norte,
Chile. He has more than 20 years
experience in geology and exploration
of gold deposits, mainly focused on the
Paleocene belt in Northern Chile, where
Guanaco, Austral Gold’s flagship gold/silver
mine, is located.
Mr Kasaneva has not held any other
Directorships with listed companies in the
last three years.
Eduardo Elsztain
Chairman
Appointed Director 29 Jun 2007
Re-elected by shareholders on
28 Nov 2012
Appointed Chairman on 2 Jun 2011
Mr Elsztain is the Chairman of:
(i) IRSA (NYSE: IRSA, BASE: IRSA):
Argentina’s largest real estate company,
operating a diversified portfolio of
shopping centres, office buildings,
luxury hotels and residential properties
in Argentina and United States;
(ii) Cresud (NASDAQ: CRESY, BASE:
CRES): a leading agri-business
company, with presence in Argentina
and Bolivia, involved in activities such
as crop production, beef cattle raising
and milk production;
(iii) BrasilAgro (NYSE: LND,
BOVESPA:AGRO3): Companhia
Brasileira de Propriedades Agrícolas,
Cresud’s arm in Brazil and Paraguay;
22
Saul Zang
Non-Executive Director
Appointed 29 Jun 2007
Ben Jarvis
Non-Executive Director
Appointed 2 Jun 2011
Re-elected by shareholders on
16 Dec 2014
Re-elected by shareholders on
16 Dec 2014
Mr. Zang obtained a law degree from
Universidad de Buenos Aires. He is a founding
member of the law firm Zang, Bergel & Viñes.
Mr Zang is an adviser and Member of the
Board of Directors of Buenos Aires Stock
Exchange and provides legal advice to
national and international companies. Mr
Zang currently holds (i) Vice-Chairmanships
on the Boards of IRSA (NYSE: IRSA, BASE:
IRSA), IRSA Propiedades Comerciales
(NASDAQ: IRCP, BASE: APSA), Cresud
(NASDAQ: CRESY, BASE: CRES) and (ii)
holds Directorships with Banco Hipotecario
(BASE: BHIP), BrasilAgro (NYSE: LND,
BOVESPA:AGRO3), IDB Development
Corporation Ltd. (TASE:IDBD) – a leading
conglomerate in the State of Israel which
directly and indirectly owns Clal Insurance
Enterprises Holdings (TASE: CLIS), Shufersal
(TASE: SAE), Cellcom (NYSE & TASE: CEL),
Properties & Building Corp. (TASE: PTBL),
ADAMA Agricultural Solutions, Elron Electronic
Industries (TASE: ELRN) among others.
Mr Zang has not held any other Directorships
with listed companies in the last three years.
Robert Trzebski
Non-Executive Director
Chairman of the Audit Committee
Appointed 10 Apr 2007
Re-elected by shareholders on
27 Nov 2013
Dr Trzebski holds a degree in Geology, PhD in
Geophysics, Masters in Project Management
and has over 20 years of professional
experience in mineral exploration, project
management and mining services. He is
currently Chief Operating Officer of Austmine
Ltd. As a fellow of the Australian Institute
of Mining and Metallurgy, Dr Trzebski has
acted as the Competent Person (CP) for the
Company’s ASX releases.
Dr Trzebski has not held any other Directorships
with listed companies in the last three years.
Mr Jarvis is the Managing Director and
co-founder of Six Degrees Investor
Relations, an Australian advisory firm that
provides investor relations to a broad
range of companies listed on the Australian
Securities Exchange.
Mr Jarvis was educated at the University of
Adelaide where he majored in Politics. In the
last three years, Mr Jarvis has also been a
non-executive director of Eagle Nickel Limited.
Pablo Vergara del Carril
Non-Executive Director
Member of the Audit Committee
Appointed 18 May 2006
Re-elected by shareholders on
27 Nov 2013
Mr Vergara del Carril is a lawyer and is
professor of Postgraduate Degrees for Capital
Markets, Corporate Law and Business Law at
the Argentine Catholic University.
He is a member of the International
Bar Association and the American Bar
Association as well as an officer of the Legal
Committee of the Argentine Chamber of
Corporations. He is recognized as a leading
lawyer in Corporate, Real Estate, M&A,
Banking & Finance and Real Estate Law by
international publications such as Chamber
& Partners, Legal 500, International Financial
Law Review, Latin Lawyer and Best Lawyer.
He is a director of Banco Hipotecario
SA.[BASE: BHIP], Nuevas Fronteras (owner
of the Intercontinental Hotel in Buenos
Aires), IRSA Propiedades Comerciales
[Nasdaq / BASE] and Emprendimiento
Recoleta SA (owner of the Buenos Aires
Design Shopping Centre), among other
companies. Mr Vergara del Carril is also
a director of Guanaco Mining Company
Limited and Guanaco Capital Holding Corp.
Mr Vergara del Carril has not held any
other Directorships with listed companies
in the last three years.
Wayne Hubert
Non-Executive Director
Member of the Audit Committee
Appointed 18 Oct 2011
Re-elected by shareholders on
16 Dec 2014
Mr Hubert is a mining executive with over
15 years experience working in the South
American resources sector. From 2006 until
2010 he was the Chief Executive Officer of
ASX-listed Andean Resources Limited, and
led the team that increased Andean’s value
from $70 million to $3.5 billion in four years.
Andean was developing a world-class silver
and gold mine in Argentina with a resource
of over 5 million ounces of gold when it was
acquired by Goldcorp Inc. of Canada.
Mr Hubert holds a degree in Engineering
and a Master of Business Administration
and has held executive roles for Meridian
Gold with experience in operations, finance
and investor relations. Currently he is a
Director of: Midas Gold Corp [TSX], a
Canadian company with a 5.7 million ounce
gold resource, InZinc Mining Limited [TSX]
and Argentex Mining Corporation (ATX).
In the last three years, Mr Hubert has also been
a non-executive director of Samco Gold Limited.
Andrew Bursill
(Franks & Associates)
Company Secretary
Appointed 10 Jan 2014
Since commencing his career as an
outsourced CFO and Company Secretary
in 1998, Mr Bursill has been CFO,
Company Secretary and/or Director for
numerous ASX listed, unlisted public and
private companies, in a range of industries
including mineral exploration, oil and gas
exploration and biotechnology.
23
2015 ANNUAL REPORT
DIRECTORS’
MEETINGS
The number of Directors’ meetings
(including meetings of committees of
Directors) and number of meetings
attended by each of the Directors of the
Company during the financial year are:
Directors’
meetings
Audit
Committee
meetings
Director
A
B
A
B
Pablo
Vergara
del Carril
Robert
Trzebski
Wayne
Hubert
Eduardo
Elsztain
Saul Zang
Stabro
Kasaneva
Ben Jarvis
2
2
2
2
2
1
2
2
2
2
2
2
2
2
2
2
2
N/A
N/A
N/A
N/A
2
2
2
N/A
N/A
N/A
N/A
A – Number of meetings attended
B – Number of meetings held during the time the
director held office during the year
Board and Audit Committee meetings held from
July 2014 – June 2015
Shares and Options
The above indemnities:
During or since the end of the financial year,
the Company has not granted options over
its ordinary shares.
At the date of this report there are 140,949
options over the Company’s ordinary shares
with an exercise price of $0.30 expiring
15 November 2016. No shares have been
issued during or since the end of the year
as a result of the exercise of an option over
unissued shares.
Indemnity and Insurance
of Officers
Under a deed of access, indemnity and
insurance, the Company indemnifies each
person who is a director or secretary of
Austral Gold Limited against:
• any liability (other than for legal costs)
incurred by a director or secretary in his or
her capacity as an officer of the Company
or of a subsidiary of the Company; and
• against reasonable legal costs incurred in
defending an action for a liability incurred or
allegedly incurred by a secretary in his or
her capacity as an officer of the Company
or of a subsidiary of the Company.
• apply only to the extent the Company is
permitted by law to indemnify a director
or secretary;
• are subject to the Company’s constitution
and the prohibitions in section 199A of
the Corporations Act; and
• apply only to the extent and for the
amount that a director or secretary is
not otherwise entitled to be indemnified
and is not actually indemnified by
another person (including a related body
corporate or an insurer).
Indemnity and Insurance
of Auditor
The Company has not, during or since
the end of the financial year, indemnified
or agreed to indemnify the auditor of the
Company or any related entity against a
liability incurred by the auditor.
During the financial year, the Company
has not paid a premium in respect of
a contract to insure the auditor of the
Company or any related entity.
24
Interests of Directors
Remuneration Report (Audited)
The relevant interest of each director
(directly or indirectly) in the share capital of
the Company, as notified by the Directors
to the Australian Securites Exchange
in accordance with S205G(1) of the
Corporations Act 2001, at the date of this
report is as follows:
Director
Ordinary Shares
P Vergara del Carril
R Trzebski
E Elsztain
S Zang
S Kasaneva
B Jarvis
W Hubert
68,119
-
452,748,809
1,435,668
1,691,398
-
1,750,000
It is also noted:
1. P Vergara del Carril, E Elsztain and
S Zang are directors of Guanaco Capital
Holding Corp which holds 24,289,330
shares according to the last substantial
holder notice lodged in December 2014.
2. E Elsztain and S Zang are directors of
IFISA which holds 423,773,273 shares
according to the last substantial holder
notice lodged in December 2014.
E Elsztain is the ultimate beneficial
owner of IFISA.
Remuneration Policy
The Company has a Remuneration Policy
that aims to ensure the remuneration
packages of directors and senior
executives properly reflect the person’s
duties, responsibilities and level of
performance, as well as ensuring that
remuneration is competitive in attracting,
retaining and motivating people of the
highest quality.
The level of remuneration for non-executive
directors is considered with regard to
the practices of other public companies
and the aggregate amount of fees paid
to non-executive directors approved by
shareholders.
At this stage, the level of remuneration is
based on market rates and is not directly
linked to shareholders’ wealth.
Remuneration of Executive Director and
Chief Operating Officer (COO) Stabro
Kasaneva is made up of a fixed component
and a variable component equal to 50%
of the fixed component. Performance
against pre-determined targets are used
to determine the portion of the variable
component paid.
The targets are based on financial and non-
financial indicators and include production,
safety and new business.
The bonus (variable component) paid in
the year ended 30 June 2015 represents
100% achievement of his 2014 calendar
year targets. Stabro Kasaneva was
awarded 100% bonus (in FY15 the cash
bonus of US$679,869 also included a
one-off incentive of US$528,436) based on
the following three main achievements for
the year:
• Production of more tham 50K gold
ounces.
• Competitive Cash Costs below
US$600/oz.
•
Initiation and securing suitable assets
that are in line with the Austral Gold
strategy.
25
2015 ANNUAL REPORT Details of Remuneration (current year)
YEAR ENDED 30 JUNE 2015
PRIMARY
Cash Bonus
Cash Salary
& Fees
Non-
monetary
Benefits
POST-EMPLOYMENT
SHARE-BASED
TOTAL
Super-
annuation
Retirement
Benefits
Shares
Options
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
2,842
2,842
-
5,684
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
80,000
40,000
992,835
48,000
33,367
33,367
40,000
1,267,569
E . Elsztain
S . Zang
S Kasaneva
W Hubert
R Trzebski
B Jarvis
P Vergara del Carril
US$
80,000
40,000
-
-
312,966
679,869
48,000
30,525
30,525
40,000
-
-
-
-
Total Directors
582,016
679,869
26
Details of Remuneration (prior year)
YEAR ENDED 30 JUNE 2014
PRIMARY
Cash Bonus
Cash Salary
& Fees
Non-
monetary
Benefits
POST-EMPLOYMENT
SHARE-BASED
TOTAL
Super-
annuation
Retirement
Benefits
Shares
Options
US$
US$
US$
US$
US$
US$
E . Elsztain
S . Zang
S Kasaneva
W Hubert
R Trzebski
B Jarvis
P Vergara del Carril
US$
80,000
40,000
-
-
340,253
167,128
48,000
33,682
33,682
40,000
-
-
-
-
Total Directors
615,617
167,128
OTHER KEY MANAGEMENT PERSONNEL
C Lloyd
Total Other KMP
72,193
72,193
-
-
Total 2014
687,810
167,128
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,116
3,116
-
6,232
5,355
5,355
11,587
-
-
-
-
-
-
-
-
-
-
-
-
-
185,756
-
-
-
-
185,756
-
-
185,756
-
-
-
-
-
-
-
-
-
-
-
US$
80,000
40,000
693,137
48,000
36,798
36,798
40,000
974,733
77,548
77,548
1,052,281
Service Agreements
Further to his responsibilities as a Director
of Austral Gold Limited, Stabro Kasaneva is
employed by the Group as COO.
His employment contract commenced
in September 2009 and has no fixed
termination date. The termination period
is 30 days notice by either party and the
termination payment provided for under
the contract is approximately US$28,000
plus any pro rata bonus accrued. His salary
is paid in Chilean pesos and is subject to
a 6-monthly review. Details of payments
made for the year ended 30 June 2015 are
contained in the table opposite.
This concludes the remuneration report,
which has been audited.
27
2015 ANNUAL REPORT Proceedings on Behalf
of the Company
No person has applied for leave of Court
to bring proceedings on behalf of the
Company or intervene in any proceedings
to which the Company is a party for the
purpose of taking responsibility on behalf
of the Company for all or part of those
proceedings.
Auditors
BDO continues in office as auditors in
accordance with the requirements of the
Corporations Act 2001.
Non-audit services
Details of the amounts paid or payable to
the auditor for non-audit services provided
during the financial year by the auditor
are outlined in note 6 to the financial
statements.
The directors are satisfied that the provision
of non-audit services during the financial
year by the auditor (or by another person or
firm on the auditor’s behalf), is compatible
with the general standard of independence
for auditors imposed by the Corporations
Act 2001.
The directors are of the opinion that the
services as disclosed in note 6 to the
financial statements do not compromise
the external auditor’s independence
requirements of the Corporations Act 2001
for the following reasons:
• all non-audit services have been
reviewed and approved to ensure that
they do not impact the integrity and
objectivity of the auditor; and
• none of the services undermine the
general principles relating to auditor
independence as set out in APES
110 Code of Ethics for Professional
Accountants issued by the Accounting
Professional and Ethical Standards
Board, including reviewing or auditing
the auditor’s own work, acting in a
management or decision-making
capacity for the company, acting as
advocate for the company or jointly
sharing economic risks and rewards.
28
Auditor’s Independence
Declaration
The lead auditor’s independence
declaration for the year ended 30 June
2015 has been received and is included in
this report.
Signed in accordance with a resolution of
Directors at Sydney.
Ben Jarvis
Director
25 September 2015
29
2015 ANNUAL REPORT
“The Guanaco gold and silver mine
remains the Company’s key asset and
a focus of management along with its
Amancaya acquisition.”
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF AUSTRAL GOLD LIMITED
As lead auditor of Austral Gold Limited for the year ended 30 June 2015, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
This declaration is in respect of Austral Gold Limited and the entities it controlled during the period.
Gareth Few
Partner
DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF AUSTRAL GOLD LIMITED
BDO East Coast Partnership
As lead auditor of Austral Gold Limited for the year ended 30 June 2015, I declare that, to the best of
my knowledge and belief, there have been:
Sydney, 25 September 2015
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Austral Gold Limited and the entities it controlled during the period.
Gareth Few
Partner
BDO East Coast Partnership
Sydney, 25 September 2015
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International
Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
31
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International
Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
2015 ANNUAL REPORT
FINANCIAL
STATEMENTS
Statement of Profit or Loss and Other Comprehensive Income
Austral Gold Limited and its Subsidiaries
For the year ended 30 June 2015 – All figures are reported in US$
CONTINUING OPERATIONS
Revenue
Cost of sales
Gross profit
Administration expenses
Gain/(loss) from foreign exchange
Operating profit
Royalty agreement exit fee
Impairment of assets
Profit before interest, tax, depreciation & amortisation
Finance costs
Depreciation and amortisation expense
Loss before income tax expense
Income tax expense
Loss after income tax expense
Profit/(loss) attributable to:
Owners of the Company
Non-controlling interests
OTHER COMPREHENSIVE INCOME
Items that may not be classified subsequently to profit or loss
Loss arising on revaluation of financial assets, net of tax
Items that may be classified subsequently to profit or loss
Foreign currency translation
Total comprehensive income for the year
Comprehensive income attributable to:
Owners of the Company
Non-controlling interests
EARNINGS PER SHARE (cents per share):
Basic earnings per share
Diluted earnings per share
Consolidated
Notes
2015
US$
2014
US$
4
62,495,078
66,376,158
(26,542,790)
(32,115,429)
35,952,288
34,260,729
(5,361,417)
(6,721,746)
125,693
545,299
30,716,564
28,084,282
-
(7,500,000)
14
(15,400,000)
(10,000,000)
5
5
7
15,316,564
10,584,282
(1,325,735)
(2,369,908)
(17,079,097)
(17,180,541)
(3,088,268)
(8,966,167)
(2,199,154)
(2,641,568)
(5,287,422)
(11,607,735)
21
(5,343,187)
(11,681,223)
55,765
73,488
(5,287,422)
(11,607,735)
23
23
8
8
(3,844,345)
(3,970,036)
(27,397)
(17,862)
(9,159,164)
(15,595,633)
(9,214,929)
(15,669,121)
55,765
73,488
(9,159,164)
(15,595,633)
(1.58)c
(1.58)c
(6.82)c
(6.82)c
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
33
2015 ANNUAL REPORT
Statement of Financial Position
Austral Gold Limited and its Subsidiaries
As at 30 June 2015 – All figures are reported in US$
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Inventories
Total current assets
Non-current assets
Other receivables
Financial assets
Intangible assets and goodwill
Plant and equipment
Exploration and evaluation expenditure
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Borrowings
Total current liabilities
Non-current liabilities
Trade and other payables
Provisions
Borrowings
Deferred tax liability
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
Reserves
Non-controlling interest
TOTAL EQUITY
Consolidated
Notes
30 June 2015
US$
30 June 2014
US$
10
12
13
11
12
13
14
15
16
17
18
19
17
18
19
7
20
21
23
22
7,303,315
9,615,694
189,978
4,347,075
3,375,885
278,072
5,272,583
3,934,932
22,381,570
11,935,964
285,483
589,582
2,495,597
6,339,952
11,814,129
36,348,774
28,944,901
28,124,421
13,279,319
506,718
56,819,429
71,909,447
79,200,999
83,845,411
12,745,893
5,620,582
692,305
1,627,471
15,065,669
2,185,508
1,842,352
766,514
805,413
595,969
2,271,375
8,487,926
1,127,280
1,695,702
54,274,278
4,161,853
5,599,787
61,259,113
20,665,456
69,747,039
58,535,543
14,098,372
93,537,023
39,803,088
(29,378,937)
(24,035,750)
(7,179,114)
(3,307,372)
1,556,571
1,638,406
58,535,543
14,098,372
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
34
Statement of Changes in Equity
Austral Gold Limited and its Subsidiaries
For the year ended 30 June 2015 – All figures are reported in US$
Balance at 1 July 2013
Loss for the period
Other comprehensive income for the year,
net of income tax
Foreign exchange movements from
translation of financial statements to US dollars
Total comprehensive income for the year
Acquisition of subsidiary with non-controlling
interests
Transactions with owners in their capacity as owners:
Share-based payment
Return of capital
185,756
(933,866)
Consolidated
Issued
capital
US$
Accumulated
losses
US$
Reserves
US$
Non-controlling
interest
US$
Total
US$
40,551,198
(12,354,527)
680,526
110
28,877,307
-
-
-
-
-
(11,681,223)
-
73,488
(11,607,735)
-
-
(3,970,036)
(17,862)
-
-
(3,970,036)
(17,862)
(11,681,223)
(3,987,898)
73,488
(15,595,633)
-
-
-
-
-
-
1,564,808
1,564,808
-
-
185,756
(933,866)
Balance at 30 June 2014
39,803,088
(24,035,750)
(3,307,372)
1,638,406
14,098,372
Loss for the period
Other comprehensive income for the year,
net of income tax
Foreign exchange movements from translation
of financial statements to US dollars
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
-
-
-
-
(5,343,187)
-
55,765
(5,287,422)
-
-
(3,844,345)
(27,397)
-
-
(3,844,345)
(27,397)
(5,343,187)
(3,871,742)
55,765
(9,159,164)
Shares issued
53,733,935
Dividend distribution to non-controlling interest
-
-
-
-
-
-
53,733,935
(137,600)
(137,600)
Balance at 30 June 2015
93,537,023
(29,378,937)
(7,179,114)
1,556,571
58,535,543
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
35
2015 ANNUAL REPORT Statement of Cash Flows
Austral Gold Limited and its Subsidiaries
For the year ended 30 June 2015 – All figures are reported in US$
Cash flows from operating activities
Receipts from sale of goods
Payments to suppliers and employees
Taxes paid
Consolidated
Notes
30 June 2015
US$
30 June 2014
US$
58,420,697
71,315,617
(28,692,632)
(40,212,271)
(6,782,049)
(977,185)
Net cash provided through operating activities
28
22,946,016
30,126,161
Cash flows from investing activities
Purchase of plant and equipment
Payment for investment in listed shares
Payment to exit the Kinam royalty
Deferred consideration for investment in subsidiaries (Cachinalito)
Payment for exploration and evaluation expenditure
Payment for investment in development assets
Interest received
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Proceeds from borrowings
Return of capital to shareholders
Dividend distribution to non-controlling interest
Loans issued to related party
Repayment of borrowings to related party
Net cash used in financing activities
Movement attributable to foreign currency translation
Net increase / (decrease) in cash held
Cash at beginning of financial year
Cash at end of financial year
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
(5,258,487)
-
-
(1,150,287)
(4,962,356)
(4,685,071)
9,611
(1,514,177)
(7,854,486)
(7,500,000)
(132,346)
(160,020)
(8,249,887)
14,018
(16,046,590)
(25,396,898)
(510,499)
66,837
-
(137,600)
(3,000,000)
(106,719)
313,609
(933,866)
-
-
(460,585)
(4,644,316)
(4,041,847)
(5,371,292)
98,661
2,956,240
4,347,075
402,791
(239,238)
4,586,313
7,303,315
4,347,075
36
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
Measurement of fair values
1.1 Reporting entity
Austral Gold Limited (“the Company”) is a company limited by
shares that is incorporated and domiciled in Australia, whose
shares are publicly traded on the Australian Securities Exchange.
These consolidated financial statements comprise the Company
and its subsidiaries (‘the Group’) and are presented in English.
They were authorised for issue in accordance with a resolution of
the Board of Directors on 25 September 2015.
The nature of the operations and principal activities of the Group
are described in the Directors’ Report.
1.2 Basis of accounting
The consolidated financial statements are general purpose
financial statements which have been prepared in accordance
with Australian Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board (‘AASB’) and
the Corporations Act 2001, as appropriate for for-profit oriented
entities. The consolidated financial statements also comply with
International Financial Reporting Standards as issued by the
International Accounting Standards Board (‘IASB’).
The consolidated financial statements have been prepared under
the historical cost convention, except for certain financial assets
and liabilities which are stated at fair value.
1.3 Presentation and functional currency
These consolidated financial statements are presented in United
States dollars (US$), which is the presentation and functional
currency of the Group.
1.4 Use of estimates and judgements
In preparing these consolidated financial statements, management
has made judgements, estimates and assumptions that affect the
application of the Group’s accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
Information about assumptions and estimation uncertainties that
have a significant risk of resulting in a material adjustment in the
year ending 30 June 2015 is detailed below:
Estimated impairment / reversal of impairment
of development assets
Where indicators of impairment or reversal of impairment are
identified the recoverable amounts of the assets are determined.
The recoverable amounts of the assets have been determined using
reports from independent experts. The calculations require the use
of assumptions. Refer to note 14 for details of these assumptions.
Estimated impairment of exploration
and evaluation assets
The Group tests at each reporting date whether there are any
indicators of impairment as identified by AASB 6 “Exploration
for and Evaluation of Mineral Resources”. Where indicators of
impairment are identified, the recoverable amounts of the assets
are determined. No indicators of impairment were identified in the
current year.
A number of the Group’s accounting policies and disclosures
require the measurement of fair values, for both financial and
non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Group
uses market observable data as far as possible. Fair values are
categorised into different levels in a fair value hierarchy based on
the inputs used in the valuation techniques as follows:
•
•
•
Level 1 – the instrument has quoted prices (unadjusted) in
active markets for identical assets or liabilities
Level 2 – inputs other than quoted prices within level 1
that are observable for the asset or liability, either directly
(i.e. as prices), or indirectly (i.e. derived from prices)
Level 3 – inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
The Group hold bonds and listed equity securities at fair value,
which are measured at the closing bid price at the end of the
reporting period. All financial assets held at fair value fall within
Level 1 of the fair value hierarchy.
1.5 Parent entity information
In accordance with the Corporations Act 2001, these financial
statements present the results of the Group only. Supplementary
information about the parent entity is disclosed in note 29.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the material accounting policies
adopted by the Group in the preparation of the consolidated
financial statements. The accounting policies have been
consistently applied, unless otherwise stated.
2.1 Basis of consolidation
A subsidiary is any entity over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the
entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases.
A list of subsidiaries is contained in note 27 to the financial
statements. The financial statements of the subsidiaries are
prepared for the same reporting periods as the parent company
using consistent accounting policies.
All intercompany balances and transactions between entities in
the Group, including any unrealised profits or losses, have been
eliminated on consolidation.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting.
Non-controlling interests in the equity and results of the
subsidiaries are shown separately in the statement of profit or loss
and other comprehensive income, statement of financial position
and statement of changes in equity of the Group.
37
2015 ANNUAL REPORT Business combinations
Amortisation
The Group accounts for business combinations using the
acquisition method when control is transferred to the Group. The
consideration transferred in the acquisition is generally measured
at fair value, as are the identifiable net assets acquired. Any
goodwill that arises is tested annually for impairment. Any gain
on a bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if related to
the issue of debt or equity securities.
2.2 Revenue recognition
Sale of minerals
Sale of minerals is recognised at the point of sale, which is when
the customer has taken delivery of the goods, the risks and
rewards have been transferred to the customer and there is a
valid contract.
Interest revenue
Interest revenue is recognised as it 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, which 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.
2.3 Goods and services tax (GST)/ Value
added tax (VAT)
Revenues, expenses and assets are recognised net of the
amount of GST/VAT, except where the amount of GST/VAT
incurred is not recoverable from the tax authorities. In these
circumstances the GST/VAT is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables in the statement of financial position
are shown inclusive of GST/VAT.
Cash flows are presented in the statement of cash flows on a
gross basis, except for the GST/VAT component of investing and
financing activities, which are disclosed as operating cash flows.
2.4 Foreign currency translation
The financial statements are presented in United States Dollars
(US$), which is the Group’s functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into US$ using
the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation at financial year-end
exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in profit or loss.
2.5
Intangibles
Development assets
When the technical and commercial feasibility of an undeveloped
mining project has been demonstrated, the project enters the
development phase. The cost of the project assets are transferred
from exploration and evaluation expenditure and reclassified into
development phase and include past exploration and evaluation
costs, development drilling and other subsurface expenditure.
When full commercial operation commences, the accumulated
costs are transferred into producing assets.
Costs on productive areas are amortised over the life of the area
of interest to which such costs relate on the production output
basis.
2.6 Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in
respect of each identifiable area of interest and carried forward in
the statement of financial position where:
2 .6 .1
rights to tenure of the area of interest are current; and
2 .6 .2 one of the following conditions is met:
i such costs are expected to be recouped through
successful development and exploitation of the
area of interest or alternatively, by its sales; or
ii exploration and/or evaluation activities in the area
of interest have not, at reporting date, yet reached
a stage which permits a reasonable assessment
of the existence or otherwise of economically
recoverable reserves and active and significant
operations in the area are continuing.
Expenditure relating to pre-exploration activities is written off to
the profit or loss during the period in which the expenditure is
incurred.
A regular review is undertaken of each area of interest to
determine the appropriateness of continuing to carry forward
costs in relation to that area of interest.
Accumulated expenditure on areas that have been abandoned,
or are considered to be of no value, are written off in the year in
which such a decision is made.
When production commences, the accumulated costs for the
relevant area of interest are amortised over the life of the area
according to the production output basis.
Investments in subsidiaries
2.7
Investments in subsidiaries are carried in the Parent Entity’s
financial statements at the lower of cost and recoverable amount.
2.8 Plant and equipment
Plant and equipment is stated at cost less accumulated
depreciation and any accumulated impairment losses.
Depreciation
The depreciated amount of plant and equipment is recorded
either on a straight-line basis or on the production output basis
to the residual value of the asset over the lesser of mine life or
estimated useful life of the asset.
Depreciation rates and methods are reviewed annually for
appropriateness. When changes are made, adjustments are
reflected prospectively in current and future periods only.
Depreciation is expensed, except those that are included in
the amount of exploration assets as an allocation of production
overheads.
The depreciation rate used for fixed assets which are not used in
mining production is between 10%–20%.
The depreciation rate used in mining production is provided for
over the life of the area of interest on a production output basis.
38
De-recognition and disposal
An item of property, plant and equipment is derecognised
upon disposal or when no further future economic benefits are
expected from its use or disposal.
Any gain or loss arising on de-recognition of the asset (calculated
as the difference between net disposal proceeds and the carrying
amount of the asset) is included in the statement of profit or loss
in the year the asset is de-recognised.
2.9 Cash and cash equivalents
For the purpose of the Statement of Cash Flows, cash includes:
i cash on hand and at call deposits with banks or financial
institutions; and
ii other short-term highly liquid investments with original
maturities of three month or less, and bank overdrafts.
2.10 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. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively
enacted by reporting date.
Deferred income tax is provided on all temporary differences at
reporting 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:
i when the deferred income tax liability arises from the
initial recognition of goodwill or of an asset or liability in
a transaction that is not a business combination and
that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
ii when the taxable temporary difference is associated
with investments in subsidiaries, associates, or interests
in joint ventures, and the timing of the reversal of the
temporary difference can be controlled and it is probable
that the temporary difference 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 credits and
unused tax losses can be utilised, except:
i when 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; or
ii when the deductible temporary difference is associated
with investments in subsidiaries, associates, or interests
in joint ventures, in which case a deferred tax asset is
only recognised to the extent that it is probable that
the temporary difference will reverse in the foreseeable
future and taxable profit will be available against which
the temporary difference can be utilised.
The carrying amount of any deferred income tax assets
recognised is reviewed at each reporting 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.
Deferred income tax assets and liabilities are measured at the tax
rates that are expected to apply for the year when the asset is
realised or the liability is settled, based on tax laws that have been
enacted or substantively enacted at reporting date.
Income taxes relating to items recognised directly to equity are
recognised in equity and not in profit or loss.
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.
2.11 Inventories
Materials and supplies are stated at the lower of cost and net
realisable value on a ‘first in first out’ basis. Cost comprises direct
materials and delivery costs, direct labour, import duties and other
taxes, an appropriate proportion of variable and fixed overhead
expenditure based on normal operating capacity. Gold and
gold-in-process are stated at net realisable value. Net realisable
value is determined using the prevailing metal prices.
2.12 Trade and other receivables
Trade accounts receivable, amounts due from related parties and
other receivables represent the principal amounts due at balance
date plus accrued interest and less, where applicable, any
unearned income and provisions for doubtful accounts.
2.13 Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial year and
which are unpaid. They are measured at amortised cost and are
not discounted. The amounts are unsecured and are usually paid
within 30 days of recognition.
2.14 Interest bearing liabilities
Loans and borrowings are initially recognised at the fair value of
the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective
interest method.
Where there is an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date, the loans or
borrowings are classified as non-current.
2.15 Provisions
Provisions are recognised when the Group has a legal or
constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that
outflow can be reliably measured.
If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a
pre- tax rate that reflects current market assessments of the time
value of money and where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision
due to the passage of time is recognised as a finance cost.
2.16 Leases
Assets held by the Group under leases that transfer to the
Group substantially all of the risks and rewards of ownership
are classified as finance leases. The leased assets are measured
initially at an amount equal to the lower of their fair value and the
present value of the minimum lease payments.
Lease payments for operating leases, where all the risks and
benefits remain with the lessor, are recognised as an expense in
the profit or loss on a straight line basis over the lease term.
39
2015 ANNUAL REPORT 2.17 Impairment of non-financial assets
At each reporting date, the Group reviews the carrying values of
its tangible and intangible assets to determine whether there is
any indication that those assets have been impaired. If such an
indication exists, the recoverable amount of the asset, being the
higher of the asset’s fair value less costs to sell or value in use, is
compared to the asset’s carrying value. Any excess of the asset’s
carrying value over its recoverable amount is expensed to the
profit or loss. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax rate.
Impairment testing is performed annually for goodwill and
intangible assets with indefinite lives or more frequently if events
or circumstances indicate that the carrying value may be
impaired.
Where it is not possible to estimate the recoverable amount of an
individual asset, the Group estimates the recoverable amount of
the cash-generating unit to which the asset belongs.
modification is treated as a de-recognition of the original liability
and the recognition of a new liability, and the difference in the
respective carrying amounts is recognised in profit or loss.
2.19 Contributed equity
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
2.20 Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing net profit after
income tax attributable to members of the parent, excluding
any costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares
issued during the year.
2.18 De-recognition of financial assets and
Diluted earnings per share
financial liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset
or part of a group of similar financial assets) is derecognised
when:
i
the rights to receive cash flows from the asset have
expired; or
ii the Group retains the right to receive cash flows from
the asset, but has assumed an obligation to pay them in
full without material delay to a third party under a ‘pass-
through’ arrangement; or
iii the Group has transferred its rights to receive cash flows
from the asset and either;
a) has transferred substantially all the risks and
rewards of the asset; or
b) has neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.
When the Group has transferred its rights to receive cash
flows from an asset and has neither transferred nor retained
substantially all the risks and rewards of the asset nor transferred
control of the asset, the asset is recognised to the extent of
the Group’s continuing involvement in the asset. Continuing
involvement that takes the form of a guarantee over the
transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration
received that the Group could be required to repay.
Fair value through Other Comprehensive Income
The Group’s investments in equity securities are classified as ‘fair
value through Other Comprehensive Income’. Subsequent to
initial recognition fair value through other comprehensive income
investments are measured at fair value with gains or losses being
recognised directly through Other Comprehensive Income in the
Statement of Profit or Loss and Other Comprehensive Income.
Financial liabilities
A financial liability is derecognised when the obligation under the
liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
Diluted earnings per share adjusts the figures used in
determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and weighted
average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
2.21 Borrowing costs
Borrowing costs are recognised as an expense when incurred
unless they are attributable to qualifying assets, in which case
they are then capitalised as part of the assets.
2.22 Employee leave benefits
Short-term employee benefits
Liabilities for employees’ entitlements to wages and salaries,
annual leave and other employee entitlements expected to be
settled within 12 months of the reporting date are recognised
in the current provisions in respect of employees’ services up
to reporting date and are measured at the amounts expected
to be paid when the liabilities are settled. Liabilities for non-
accumulating sick leave are recognised when the leave is taken
and measured at the rates paid or payable.
Long service leave
The liability for long service leave is recognised in the provision
for employee benefits and measured as the present value of
expected future payments to be made in respect of services
provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee departures,
and periods of service. Expected future payments are discounted
using market yields at the reporting date on national government
bonds with terms to maturity and currencies that match, as
closely as possible, the estimated cash outflows.
Superannuation
The Company contributes to employee superannuation funds.
Contributions made by the Company are legally enforceable.
Contributions are made in accordance with the requirements of
the Superannuation Guarantee Legislation.
40
Annual improvements project – 2011–2013 cycle
(AASB 2014–1 Part A)
These amendments are applicable to annual reporting periods
beginning on or after 1 January 2014. Amendments to clarify minor
points in various accounting standards, including AASB 1, AASB 3,
AASB 8, AASB 13 and AASB 140. The adoption of the amendments
from 1 July 2014 did not have a material impact on the Group.
3. NEW ACCOUNTING STANDARDS
AND INTERPRETATIONS NOT YET
MANDATORY OR EARLY ADOPTED
There are currently no AASB standards, amendments to
standards and interpretations that have been identified as those
which may impact the entity in the period of initial application.
IFRS Revenue from Contracts with Customers
The IASB has issued a new standard for the recognition of
revenue with an effective date of 1 January 2018. This will replace
IAS 18 which covers contracts for goods and services and IAS 11
which covers construction contracts.
The new standard is based on the principle that revenue is
recognised when control of a good or service transfers to a
customer – so the notion of control replaces the existing notion of
risks and rewards.
A new five-step process must be applied before revenue can be
recognised:
•
•
•
•
•
identify contracts with customers
identify the separate performance obligation
determine the transaction price of the contract
allocate the transaction price to each of the separate
performance obligations, and
recognise the revenue as each performance obligation
is satisfied.
These accounting changes may have flow-on effects on the
entity’s business practices regarding systems, processes and
controls, compensation and bonus plans, contracts, tax planning
and investor communications.
2 .23 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors.
2 .24 New, revised or amending Accounting
Standards and Interpretations adopted
The Group has adopted all of the new, revised or amending
Accounting Standards and Interpretations issued by the AASB
that are mandatory for the current reporting period. The adoption
of these Accounting Standards and Interpretations did not have
any significant impact on the financial performance or position of
the Group.
AASB 2013–9 Amendments to Australian Accounting
Standards – Conceptual Framework, Materiality and
Financial Instruments
Three amendments were made to AASB 9, which includes adding
the new hedge accounting requirements into AASB 9, deferring
the effective date of AASB 9 from 1 January 2015 to 1 January
2017, and making available for early adoption the presentation of
changes in ‘own credit’ in other comprehensive income (OCI) for
financial liabilities under the fair value option without early applying
the other AASB 9 requirements. The adoption of the amendments
from 1 July 2014 did not have a material impact on the Group.
AASB 2012–3 Amendments to Australian Accounting
Standards – Offsetting Financial Assets and Financial
Liabilities
The amendments are applicable to annual reporting periods
beginning on or after 1 January 2014. The amendments add
application guidance to address inconsistencies in the application
of the offsetting criteria in AASB 132 ‘Financial Instruments:
Presentation’, by clarifying the meaning of “currently has a
legally enforceable right of set-off”; and clarifies that some gross
settlement systems may be considered to be equivalent to net
settlement. The adoption of the amendments from 1 July 2014
did not have a material impact on the Group.
AASB 2013–3 Amendments to AASB 136 –
Recoverable Amount Disclosures for Non-Financial
Assets
These amendments are applicable to annual reporting
periods beginning on or after 1 January 2014. The disclosure
requirements of AASB 136 ‘Impairment of Assets’ have been
enhanced to require additional information about the fair value
measurement when the recoverable amount of impaired assets
is based on fair value less costs of disposals. Additionally, if
measured using a present value technique, the discount rate is
required to be disclosed. The adoption of the amendments from 1
July 2014 did not have a material impact on the Group.
Annual improvements project – 2010–2012 cycle
(AASB 2014–1 Part A)
These amendments are applicable to annual reporting periods
beginning on or after 1 January 2014. Amendments to clarify
minor points in various accounting standards, including AASB 2,
AASB 3, AASB 8, AASB 13, AASB 116, AASB 138 and AASB
124. The adoption of the amendments from 1 July 2014 did not
have a material impact on the Group.
41
2015 ANNUAL REPORT Consolidated
30 June 2015
US$
30 June 2014
US$
62,217,269
66,147,537
19,474
258,335
14,018
214,603
62,495,078
66,376,158
Consolidated
30 June 2015
US$
30 June 2014
US$
8,710,115
5,889,667
8,368,982
11,290,874
17,079,097
17,180,541
998,720
327,015
2,225,707
144,201
1,325,735
2,369,908
16,284
16,643
-
14,162
19,443
185,756
Consolidated
30 June 2015
US$
30 June 2014
US$
62,280
-
62,280
69,148
1,177
70,325
59,246
11,932
71,178
68,858
19,501
88,359
4. REVENUE
Operating activities
Revenue from gold and silver sales
Interest revenue
Other revenue
Total revenue
5. LOSS FOR THE YEAR
Loss before income tax includes the following specific expenses:
Depreciation of plant and equipment
Amortisation of intangible assets
Total depreciation and amortisation
Finance costs – related parties
Finance costs – other
Total finance costs
Rental expense on operating leases
Defined contribution plan expense
Share-based payment
6. AUDITORS’ REMUNERATION
Remuneration of the auditors of the parent entity (BDO) for:
Auditing or reviewing the financial reports
Other services
Total auditors’ remuneration – parent entity (BDO)
Remuneration of auditors of subsidiaries (Nexia & PKF) for:
Auditing or reviewing the financial reports
Other services/taxation
Total auditors’ remuneration – subsidiaries (Nexia & PKF)
42
7.
INCOME TAX EXPENSE
Amounts recognised in profit and loss
Current tax paid
Current tax payable
Deferred tax expense
Income tax expense
Reconciliation of effective tax rate
Loss before tax
Prima facie income tax benefit calculated at 30% (2014: 30%) on the loss
Difference due to change in tax rate
Non-deductible expenses
Income tax expense
Deferred tax balances
Deferred tax assets
Provision for obsolescence
Accrual for mine closure
Leasing assets
Impairment of intangible assets
Accrual for annual leave
Total deferred tax assets
Deferred tax liabilities
Mining concessions
Other receivables
Total deferred tax liabilities
Net deferred tax liabilities
Movement in deferred tax balances
Opening balance
Charged to profit or loss
Closing balance
Consolidated
30 June 2015
US$
30 June 2014
US$
5,035,884
977,185
519,710
1,577,846
(3,356,440)
86,537
2,199,154
2,641,568
(3,088,268)
(8,966,167)
(926,480)
(2,689,850)
540,876
(2,062,663)
2,584,758
7,394,081
2,199,154
2,641,568
3,462
233,716
-
3,018,568
163,484
3,419,230
-
339,140
14,477
-
117,644
471,261
(4,099,775)
(4,562,669)
(124,868)
(70,445)
(4,224,643)
(4,633,114)
(805,413)
(4,161,853)
(4,161,853)
(4,075,316)
3,356,440
(86,537)
(805,413)
(4,161,853)
43
2015 ANNUAL REPORT 8. EARNINGS PER SHARE
Classification of securities as ordinary shares
Ordinary shares have been included in basic earnings per share.
Earnings reconciliation
Net loss attributable to owners
Net profit attributable to non-controlling interests
Net loss
Weighted average number of shares used as the denominator
Number for basic earnings per share
Number for diluted earnings per share
Basic earnings per ordinary share (cents)
Diluted earnings per ordinary share (cents)
9. SEGMENTS
Consolidated
30 June 2015
US$
30 June 2014
US$
(5,343,187)
(11,681,223)
55,765
73,488
(5,287,422)
(11,607,735)
334,102,169
170,138,779
334,102,169
170,138,779
(1.58)c
(1.58)c
(6.82)c
(6.82)c
Management have determined the operating segments based on reports reviewed by the Chief Operating Decision Maker (“CODM”). The
CODM considers the business from both an operations and geographic perspective and has identified two reportable segments, Australia
and South America. The CODM monitors the performance in these two regions separately.
2015
2014
Australia
US$
South America
US$
Consolidated
US$
Australia
US$
South America
US$
Consolidated
US$
-
62,217,269
62,217,269
-
66,147,537
66,147,537
1,319
-
18,155
258,335
19,474
258,335
2,617
-
11,401
214,603
14,018
214,603
1,319
62,493,759
62,495,078
2,617
66,373,541
66,376,158
-
(26,542,790)
(26,542,790)
-
(32,115,429)
(32,115,429)
(879,790)
(4,481,627)
(5,361,417)
(1,227,840)
(5,493,906)
(6,721,746)
-
-
-
125,693
125,693
-
-
(15,400,000)
(15,400,000)
-
-
-
545,299
545,299
(7,500,000)
(7,500,000)
(10,000,000)
(10,000,000)
(998,720)
(327,015)
(1,325,735)
(2,225,707)
(144,201)
(2,369,908)
-
(8,368,982)
(8,368,982)
-
(11,290,874)
(11,290,874)
(2,898)
(8,707,217)
(8,710,115)
(1,418)
(5,888,249)
(5,889,667)
Revenue from gold
and silver sales
Interest revenue
Other
Total segment
revenue
Cost of sales
Administration
expenses
Gain/(loss) from
foreign exchange
Royalty agreement
exit fee
Impairment of assets
Finance costs
Amortisation
Depreciation
Income tax expense
-
(2,199,154)
(2,199,154)
-
(2,641,568)
(2,641,568)
Segment loss
(1,880,089)
(3,407,333)
(5,287,422)
(3,452,348)
(8,155,387)
(11,607,735)
Segment assets
694,444
78,506,555
79,200,999
1,791,062
82,054,349
83,845,411
Segment liabilities
35,156
20,630,300
20,665,456
53,288,757
16,458,282
69,747,039
Acquisition of non-
current assets
-
-
-
-
4,849,924
4,849,924
44
10. CASH AND CASH EQUIVALENTS
Cash at call and in hand
Short-term bank deposits
Total cash and cash equivalents
Reconciliation of Cash
Consolidated
2015
US$
2014
US$
7,258,142
4,202,553
45,173
144,522
7,303,315
4,347,075
Cash at the end of the financial year as shown in the Statement of Cash Flows, is reconciled to items in the Statement of Financial Position
as follows:
Cash and cash equivalents
Risk Exposure
7,303,315
4,347,075
The Group’s exposure to interest rate risk is discussed in note 24. The maximum exposure to credit risk at the reporting date is the
carrying amount of each class of cash and cash equivalents mentioned above.
11. INVENTORIES
Materials and supplies – at cost
Gold bullion and gold in process – at net realisable value
Total inventories
12. TRADE AND OTHER RECEIVABLES
CURRENT
Trade receivables
Other current receivables
Loan receivable from related party
Pre-payments
GST/VAT receivable
Total current receivables
NON CURRENT
GST/VAT receivable
Pre-payments
Other
Total non-current receivables
TRADE DEBTORS
The ageing of trade receivables is 0 – 30 days
Consolidated
2015
US$
2,361,548
2,911,035
2014
US$
2,749,369
1,185,563
5,272,583
3,934,932
Consolidated
2015
US$
4,535,201
1,187,730
3,009,863
2014
US$
480,294
419,231
-
-
937,450
882,900
1,538,910
9,615,694
3,375,885
195,077
-
90,406
285,483
116,910
472,066
606
589,582
4,535,201
480,294
45
2015 ANNUAL REPORT 12.1 Past due but not impaired
There were no receivables past due at 30 June 2015 (2014: nil).
12.2 Fair value and credit risk
Due to the short term nature of trade receivables, their carrying amount is assumed to approximate their fair value.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. Refer to
note 24 for more information on the risk management policy of the Group and the credit quality of the receivables.
12.3 Key Customers
The Company is not reliant on any one customer to sell gold and silver produced from the Guanaco mine.
13. FINANCIAL ASSETS
CURRENT
Bonds – level 1
Total current financial assets at fair value
NON CURRENT
Listed equity securities – level 1
Total non-current financial assets at fair value
Consolidated
2015
US$
2014
US$
189,978
189,978
278,072
278,072
2,495,597
6,339,952
2,495,597
6,339,952
The table above sets out the Group’s assets and liabilities that are measured and recognised at fair value at 30 June 2015.
Bonds are US$ Argentina government bonds maturing in April 2017, but with the ability to redeem at any time, and with a fixed interest
rate of 7% payable annually.
Listed equity securities represents the fair value of the Company’s 19.9% investment in Argentex Mining Corporation (TSX–V: ATX) and
12.8% investment in Goldrock Mines Corp (TSX–V: GRM). A fair value movement of US$3.8 million relating to these investments has been
recognised in other comprehensive income.
Fair value hierachy
Refer to note 1.4 of these financial statements for details of the fair value hierarchy.
Transfers
During the year ended 30 June 2015, the Group had no level 2 or level 3 financial instruments. As such, there were no transfers between
the financial instrument levels of hierarchy.
46
14. INTANGIBLE ASSETS
Development assets – Guanaco
Cost
Accumulated amortisation
Carrying value – Development assets – Guanaco
Goodwill
Cost
Carrying value – Goodwill
Total intangible assets
Cost
Accumulated amortisation
Total Carrying Value – Intangible assets
MOVEMENTS IN CARRYING VALUE – Development assets – Guanaco
Carrying amount at beginning of the year
Additions for the year
Reclassification to plant and equipment
Write-off
Amortisation for the year
Impairment
Carrying amount at end of the year
MOVEMENTS IN CARRYING VALUE – Goodwill
Carrying amount at beginning of the year
Additions for the year
Impairment
Carrying amount at end of the year
Impairment – Guanaco
Consolidated
2015
US$
2014
US$
45,097,973
61,167,534
(34,209,737)
(25,840,755)
10,888,236
35,326,779
925,893
1,021,995
925,893
1,021,995
46,023,866
62,189,529
(34,209,737)
(25,840,755)
11,814,129
36,348,774
35,326,779
53,998,000
4,685,071
8,249,887
(4,473,765)
(5,568,154)
(880,867)
(62,080)
(8,368,982)
(11,290,874)
(15,400,000)
(10,000,000)
10,888,236
35,326,779
1,021,995
-
-
1,021,995
(96,102)
-
925,893
1,021,995
The Guanaco project has been determined by Management to be a single cash generating unit (“CGU”). The intangible assets noted
above and the plant and equipment that is an intrinsic part of the mine and its structure (included in note 15) are included in determining
the carrying value of the CGU for the purposes of assessing for impairment.
Management have assessed the fair value and book value of the Guanaco project to be US$34.5 million (2014: US$59m) which resulted
in a US$15.4 million impairment charge, due largely to the drop in the gold price assumptions used in the valuation. The fair value is based
on an independent valuation using a discounted cash flow model and the following assumptions:
• Gold price: US$1,202/oz – US$1,169/oz (2014: US$1,278/oz – US$1,228/oz)
•
Life of Mine: 4 years (2014: 5 years)
• Discount Rate (post-tax): 6.5% (2014: 7%)
Goodwill
Goodwill has arisen on the acquisition of a subsidiary.
The recoverable amount of the goodwill arising from the Cachinalito business has been determined by a value-in-use calculation using a
discounted cash flow model, based on a 5-year projection period approved by management, together with a terminal value.
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive.
The following key assumptions were used in the discounted cash flow model for Cachinalito:
•
6.5% post-tax discount rate;
• Average 1–2% per annum projected growth rate; and
•
2% growth rate for terminal value.
The discount rate of 6.5% reflects management’s estimate of the time value of money and the Group’s weighted average cost of capital
adjusted for the Cachinalito business, the risk free rate and the volatility of the share price relative to market movements.
47
2015 ANNUAL REPORT Management have estimated a 1-2% growth in accordance with the strategy and has no reason to revise this estimation based on current
performance.
Sensitivity
Should these judgements and estimates not occur, the resulting goodwill carrying amount may decrease. The sensitivities are as follows:
a) The discount rate would be required to increase by 5% before goodwill would need to be impaired, with all other assumptions
remaining constant.
b) Negative growth rate of at least 1.25% per annum before goodwill would need to be impaired, with all other assumptions
remaining constant.
15. PLANT AND EQUIPMENT
Plant and equipment – at cost
Accumulated depreciation
Carrying amount at end of year
MOVEMENTS IN CARRYING VALUE
Carrying amount at beginning of the year
Additions for the year
Reclassification from intangible assets
Disposals for the year
Depreciation for the year
Movement attributable to foreign currency translation
Carrying amount at end of year
Consolidated
2015
US$
2014
US$
53,327,624
43,797,029
(24,382,723)
(15,672,608)
28,944,901
28,124,421
28,124,421
21,957,189
5,258,487
4,473,765
(201,292)
6,488,638
5,568,154
-
(8,710,115)
(5,889,667)
(365)
107
28,944,901
28,124,421
Part of the plant and equipment has been included in the Guanaco cash generating unit. Refer to note 14 for discussion on impairment.
Plant and equipment that does not form part of the Guanaco cash generating unit are being carried at the lower of their book value and
recoverable amount.
The Group leases production equipment under a number of finance leases. At 30 June 2015, the net carrying amount of lease equipment
was US$3,235,954 (2014:US$2,601,931).
16. EXPLORATION AND EVALUATION EXPENDITURE
Costs carried forward in respect of areas of interest:
Carrying amount at the beginning of the year
Additions for the year
Carrying amount at end of year
Consolidated
2015
US$
506,718
12,772,601
2014
US$
346,698
160,020
13,279,319
506,718
The recovery of the carrying amount of the exploration and evaluation assets is dependent on the successful development and
commercial exploration or sale of the areas of interest.
Additions for the year relate mainly to the aquisition of the Amancaya properties.
48
17. TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Accrued expenses
Income tax payable
Other payables
Total current trade and other payables
NON CURRENT
Other payables
Refer to note 24 for detailed information on financial instruments.
18. PROVISIONS
CURRENT
Employee entitlements
MOVEMENT IN CURRENT PROVISIONS
Opening balance
Charged to the profit or loss
Closing balance
Consolidated
2015
US$
2014
US$
4,442,048
1,953,896
866,397
519,710
559,264
1,746,165
6,917,738
1,361,257
12,745,893
5,620,582
2,185,508
1,127,280
Consolidated
2015
US$
2014
US$
692,305
595,969
595,969
96,336
480,604
115,365
692,305
595,969
The current provision for employee entitlements includes all unconditional entitlements in accordance with the applicable legislation. The
entire amount is presented as current, since the Group does not have an unconditional right to defer payment. The entire balance of
employee benefits is expected to be settled within the next 12 months.
NON CURRENT
Mine closure
MOVEMENT IN NON CURRENT PROVISIONS
Opening balance
Charged to the profit or loss
Closing balance
Consolidated
2015
US$
2014
US$
1,842,352
1,695,702
1,695,702
146,650
831,297
864,405
1,842,352
1,695,702
The restoration provision relates to the estimated costs of dismantling and restoring mining sites and exploration tenements to their original
condition at the end of the life of the mine or exploration drilling program. The provision at year end represents the present value of the
Directors’ best estimate of the future sacrifice of economic benefits that will be required for meeting environmental obligations for existing
tenements after activities have been completed. The provision is reviewed annually by the Directors.
The present value of the restoration provision was determined based on the following assumptions:
• Undiscounted rehabilitation costs: US$2,181,886;
• Remaining life of Mine: 4 years; and
• Discount rate (post-tax) of 6.5%
49
2015 ANNUAL REPORT 19. BORROWINGS
CURRENT
Lease liability
Royalty payable
Total current borrowings
NON-CURRENT
Lease liability
Loan – IFISA
Total non-current borrowings
LOAN IFISA
Balance at beginning of year
Repayments of principal and interest
Interest
Conversion of principal and interest to equity
Balance at end of year
Consolidated
2015
US$
2014
US$
1,627,471
1,248,671
-
1,022,704
1,627,471
2,271,375
766,514
1,078,478
-
53,195,800
766,514
54,274,278
53,195,800
55,614,409
-
(4,644,316)
538,135
2,225,707
(53,733,935)
-
-
53,195,800
Refer to note 24 for detailed information on financial instruments.
19.1 Loan Inversiones Financieras del Sur SA (IFISA)
At the Annual General Meeting held on 16 December 2014, Austral Gold Limited shareholders voted to convert the entire balance of the
loan with IFISA at that date (US53,733,935) into equity in the Group’s own shares.
19 .2 Royalty payable
In late 2013, the Company exercised an option to exit the royalty agreement with the previous owners of the Guanaco mine, Compañia
Minera Kinam Guanaco (subsidiary of Kinross Corporation).
19 .3 Lease liabilities
Refer to note 15 for further information on plant and equipment secured under finance leases.
50
20. ISSUED CAPITAL
Fully paid ordinary shares (US$)
Number of ordinary shares at year end
Movements in ordinary share capital
Balance at 30 June 2013
Consolidated
2015
US$
2014
US$
93,537,023
39,803,088
478,761,995
170,831,137
Date
Number of
ordinary shares
US$
169,139,739
39,003,832
Foreign exchange movements from change of accounting policy
1 July 2013
-
1,547,366
Balance at 1 July 2013
169,139,739
40,551,198
Share-based payment to Chief Operating Officer
27 December 2013
1,691,398
12 December 2013
-
185,756
(933,866)
170,831,137
39,803,088
Return of Capital to shareholders
Balance at 30 June 2014
Shares issued to convert IFISA debt to equity
19 December 2014
307,930,858
53,733,935
Balance at 30 June 2015
478,761,995
93,537,023
Ordinary shares participate in dividends and the proceeds on winding up of the Parent Entity in proportion to the number of shares held.
At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a
show of hands. The ordinary shares do not have any par value.
Conversion of debt to equity
On 19 December 2014, after approval at the Annual General Meeting, 307,930,858 new shares in Austral Gold were issued to IFISA to
convert the debt into equity.
Return of capital to shareholders
A payment of US$933,866 in the form of a return of capital was made to shareholders on 12 December 2013.
Share-based payment
On 27 December 2013, after approval at the Annual General Meeting, a share-based payment of 1,691,398 new ordinary shares was
issued to Stabro Kasaneva, for his services as an Executive Director and Chief Operating Officer of the Company. The shares were issued
for nil consideration at the share price at that date for a total value of US$185,756.
21. ACCUMULATED LOSSES
Accumulated losses at beginning of year
Foreign exchange movements from change of accounting policy - AGD functional currency change
from AUD to USD
Net loss for the year
Accumulated losses at end of year
Consolidated
2015
US$
2014
US$
(24,035,750)
(12,698,850)
-
344,323
(5,343,187)
(11,681,223)
(29,378,937)
(24,035,750)
51
2015 ANNUAL REPORT 22. NON-CONTROLLING INTEREST
Non-controlling interest in subsidiaries comprise:
Acquired as part of subsidiary
23. RESERVES
FOREIGN CURRENCY TRANSLATION RESERVE
Balance at beginning of year
Foreign exchange movements from change of accounting policy
Foreign exchange movements from translation of financial statements to US dollars
Balance at end of year
SHARE OPTION RESERVE
Balance at beginning of year
Balance at end of year
ASSET REVALUATION RESERVE
Balance at beginning of year
Fair value movement during the year
Balance at end of year
Total Reserves
Nature and purpose of reserves
Foreign Currency Translation Reserve
Consolidated
2015
US$
2014
US$
1,556,571
1,638,406
Consolidated
2015
US$
2014
US$
649,423
7,513,029
-
(6,845,744)
(27,397)
622,026
(17,862)
649,423
13,241
13,241
13,241
13,241
(3,970,036)
-
(3,844,345)
(3,970,036)
(7,814,381)
(3,970,036)
(7,179,114)
(3,307,372)
Exchange differences arising on translation of the non-US$ denominated non-monetary balances of Group Companies are recognised in
the foreign currency translation reserve. The reserve is recognised in profit or loss when the net investment is disposed of.
Share Option Reserve
Options granted / issued as share-based payments are recognised in the share option reserve. No options were granted during the year
ended 30 June 2015.
Asset Revaluation Reserve
The reserve is used to recognise increments and decrements in the fair value of equity securities.
52
24. FINANCIAL INSTRUMENTS
Financial risk management objectives
The Group’s principal financial instruments comprise borrowings, receivables, listed equity securities, cash and short-term deposits. These activities
expose the Group to a variety of financial risks: market risk (interest rate risk and foreign currency risk), credit risk, price risk and liquidity risk.
The Group recognises the importance of risk management, and has adopted a Risk Management and Internal Compliance and Control
policy which describes the role and accountabilities of management and of the Board. The Directors manage the different types of risks
to which the Group is exposed by considering risk and monitoring levels of exposure to the main financial risks by being aware of market
forecasts for interest rates, foreign exchange rates, commodity and market prices. The Group does not have significant exposure to credit
risk and liquidity risk is monitored through general business budgets and forecasts.
Interest Rate Risk
The Group’s main interest rate risk arises from finance leases. The Group’s borrowings are at fixed rates and therefore do not carry any
variable interest rate risk.
Foreign Currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign
currency exchange rate fluctuations.
Foreign exchange rate risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated
in a currency that is not the functional currency of the Group. The risk is measured using cash flow forecasting. Foreign currency risk is
minimal as most of the transactions are settled in US$.
Price Risk
The Group’s revenues are exposed to fluctuations in the price of gold and other prices. Gold and silver produced is sold at prevailing
market prices in US dollars.
The Group has resolved that for the present time the production should remain unhedged. The Group considers exposure to commodity
price fluctuations within reasonable boundaries to be an integral part of the business.
2000
1800
1600
1400
1200
1000
Historical gold price
(US$ per gold ounce)
2012
2013
2014
2015
1,000,000
920,000
840,000
760,000
680,000
600,000
Historical gold price
(CLP per gold ounce)
2012
2013
2014
2015
Yearly average
Yearly average
Sensitivity to changes in the gold price
10% increase in gold price
10% decrease in gold price
Financial Market Risk
Effect of earnings (US$)
Effect on equity (US$)
2015
US$
2014
US$
2015
US$
2014
US$
+ 6,159,009
+ 6,480,644
+ 6,159,009
+ 6,480,644
- 6,159,009
- 6,480,644
- 6,159,009
- 6,480,644
The financial market risk is the risk that the fair value or future cash flows of the financial instruments will fluctuate because of changes
in market prices, which occurs due to the Group’s investment in listed securities where share prices can fluctuate over time. This risk
however is not deemed to be significant as these investments are held for long term strategic purposes and therefore movement in the
market prices do not impact the short-term profit or loss or cash flows of the Group.
53
2015 ANNUAL REPORT Credit Risk
The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any allowance for
doubtful debts, as disclosed in the statement of financial position and notes to the financial statements.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to
securitize its other receivables.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not
significant. There are no significant concentrations of credit risk.
Liquidity Risk
The liquidity of the Group is managed to ensure sufficient funds are available to meet financial commitments in a timely and cost effective manner.
Management continuously reviews the Group’s liquidity position through cash flow projections based upon the current life of mine plan to
determine the forecast liquidity position and maintain appropriate liquidity levels.
Financing arrangements
Under the previous funding agreement with IFISA, the Group had access to the following undrawn US dollar denominated borrowing
facilities at the reporting date:
Consolidated
2015
US$
2014
US$
-
-
-
59,000,000
42,529,119
16,470,881
Total facility
Total used
Amount available
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting
date to the contractual maturity date.
The amounts disclosed in the table are the contractual undiscounted cash flows.
< 6 months
US$
6–12 months
US$
1–5 years
US$
>5 years
US$
Total
US$
Consolidated
YEAR ENDED 30 JUNE 2015
FINANCIAL LIABILITIES
Trade and other payables
Lease liabilities
Total 2015 liabilities
YEAR ENDED 30 JUNE 2014
FINANCIAL LIABILITIES
Trade and other payables
Lease liabilities
Royalty payable
Loan - IFISA
9,022,260
3,723,633
2,185,508
944,108
776,945
792,757
9,966,368
4,500,578
2,978,265
5,620,582
676,070
1,022,704
-
-
676,069
-
-
1,127,280
1,147,456
-
53,195,800
Total 2014 liabilities
7,319,356
676,069
55,470,536
-
-
-
-
-
-
-
-
14,931,401
2,513,810
17,445,211
6,747,862
2,499,595
1,022,704
53,195,800
63,465,961
Defaults and breaches
During the current and prior years, there were no defaults or breaches on the loan or any of the other financial liabilities.
Capital management
The Group’s policy is to maintain a strong and flexible capital base to maintain investor, creditor and market confidence and to sustain
future development of the business. The Group monitors the return on capital which the Group defines as total shareholders’ equity
attributable to the members of Austral Gold Limited. The Group monitors financial position strength and flexibility using cash flow forecast
analysis and a detailed budget process. There were no changes in the Group’s approach to capital management during the year.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments approximate their fair value.
54
25. DIVIDENDS
No dividends were paid or proposed during the year (2014: Nil).
26. COMMITMENTS
LEASE COMMITMENTS – FINANCE
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing:
Lease liability – current
Lease liability – non-current
27. SUBSIDIARIES
PARENT ENTITY
Austral Gold Limited
SUBSIDIARIES
Guanaco Mining Company Limited
Guanaco Compañía Minera SpA
Austral Gold Argentina S.A.
Ingenieria y Mineria Cachinalito Limitada
2015
US$
2014
US$
1,721,053
792,757
2,513,810
(119,825)
2,393,985
1,352,139
1,147,456
2,499,595
(172,446)
2,327,149
1,627,471
766,514
1,248,671
1,078,478
Country of
Incorporation
2015
% owned
2014
% owned
Australia
British Virgin Islands
100.000
100.000
Chile
Argentina
Chile
99.998
99.940
51.000
99.998
99.930
51.000
55
2015 ANNUAL REPORT 28. CASH FLOW INFORMATION
Reconciliation of cash flow from operations with loss after income tax:
Loss after income tax
Non-cash flows in loss
Interest expense capitalised
Royalty agreement exit fee
Impairment loss
Interest income
Finance costs
Equity-settled share-based payment transaction
Foreign exchange translation (gain)/ loss
Depreciation and amortisation
Disposal of plant and equipment
Write-off and impairment of intangible assets
Consolidated
2015
US$
2014
US$
(5,287,422)
(11,607,735)
998,720
-
2,225,707
7,500,000
15,400,000
10,000,000
(19,474)
327,015
-
(14,018)
106,719
185,756
(125,693)
(545,299)
17,079,097
17,180,541
201,292
976,967
-
-
Net cash from operating activities before change in assets and liabilities
29,550,502
25,031,671
Changes in assets and liabilities:
Decrease / (increase) in inventory
Decrease / (increase) in trade and other receivables
Increase / (decrease) in trade and other payables
Increase / (decrease) in tax payable
Movement attributable to foreign currency translation
Cash flow from operations
29. PARENT ENTITY INFORMATION
Information relating to Austral Gold Limited
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Accumulated losses
Reserves
Total shareholders’ equity
Loss of the parent entity
Total comprehensive income of the parent entity
Details of any guarantees entered into by the parent entity in relation to the debts of its subsidiaries
Details of any contingent liabilities of the parent entity
Details of any contractual commitments by the parent entity for the acquisition of property, plant or equipment
56
(1,337,651)
(2,837,743)
(521,728)
5,288,401
2,153,803
(1,920,374)
(4,582,895)
1,664,383
-
583,808
22,946,016
30,126,161
Consolidated
2015
US$
71,392
2014
US$
114,404
63,257,033
75,880,676
12,871,436
11,548,361
12,871,436
64,744,162
50,385,597
11,136,514
93,537,023
39,803,088
(43,119,406)
(28,661,951)
(32,020)
(4,623)
50,385,597
11,136,514
(14,457,455)
(3,476,033)
(14,457,455)
(3,476,033)
None
None
None
None
None
None
30. SUBSEQUENT EVENTS
Acquisition of Argentex Mining Corporation
On August 31, 2015, Austral Gold announced that the board of directors of Argentex Mining Corporation (“Argentex Mining”, TSXV:
ATX; OTCQB: AGXMF) had approved entering into a binding letter agreement (the “Agreement”) with Austral Gold, in connection with a
business combination transaction involving Austral Gold and Argentex Mining.
Pursuant to the Agreement, Austral Gold has agreed to acquire all of the issued and outstanding common shares of Argentex (“Argentex
Shares”) that are not already held by Austral Gold and its subsidiaries, which represents approximately 80.1% of the Argentex Shares
currently outstanding (the “Transaction”).
The proposed Transaction is expected to be completed by way of a share-for-share exchange whereby Argentex Shareholders (other than
Austral Gold and its subsidiaries) are expected to receive 0.5651 of an ordinary share of Austral Gold in respect of each Argentex Share
held (the “Exchange Ratio”), which represents an implied valuation of CAD$~0.08 per Argentex Share (or CAD$~5.8 million total valuation)
and ~7.75% of the total outstanding shares of Austral Gold after adjusting for the shares issued in the Transaction.
The proposed Transaction is subject to all applicable regulatory, court, stock exchange and shareholder approvals. In addition, the
Exchange Ratio may be adjusted in certain circumstances, including as a result of any change in the capital structure of either Argentex or
Austral (other than a change resulting from the completion by Austral of a financing transaction on specified terms).
31. RELATED PARTY TRANSACTIONS
31 .1 Directors holdings of shares and share options
The names of each person holding the position of Director during the year are: Eduardo Elsztain, Saul Zang, Wayne Hubert, Pablo Vergara
del Carril, Robert Trzebski, Stabro Kasaneva and Ben Jarvis. Amounts paid to Directors are set out in the table below.
Mr Eduardo Elsztain holds 452,748,809 shares indirectly in Austral Gold Limited.
Mr Saul Zang holds 1,435,668 shares indirectly in Austral Gold Limited.
Mr Pablo Vergara del Carril holds 68,119 shares directly in Austral Gold Limited.
E Elsztain and S Zang are directors of IFISA which holds 423,773,273 shares according to the last substantial holder notice lodged in
December 2014.
P Vergara del Carril, E Elsztain and S Zang are directors of Guanaco Capital Holding Corp which holds 24,289,330 shares according
to the last substantial holder notice lodged in December 2014.
Mr Stabro Kasaneva holds 1,691,398, shares indirectly in Austral Gold Limited.
Mr Wayne Hubert holds 1,750,000 shares indirectly in Austral Gold Limited.
31.2 Directors and Key Management Personnel Remuneration
The aggregate compensation made to directors and other members of key management personnel of the Group is set out below:
Short-term employment benefits
Post-employment benefits
Share-based payments
Total
31.3 Borrowings from majority shareholder
IFISA
Amount payable at end of year
Interest incurred
Funds repaid
Consolidated
2015
US$
1,261,885
5,684
-
2014
US$
854,938
11,587
185,756
1,267,569
1,052,281
2015
US$
-
-
-
2014
US$
53,195,800
2,225,707
(4,644,316)
During the period, IFISA converted its debt of US$53.7 million to equity following the shareholders’ approval at the 2014 Annual General Meeting.
57
2015 ANNUAL REPORT 31.4 Lending to majority shareholder
In May 2015, a short-term loan for US$3 million was made to Inversiones Financieras del Sur SA, a related party, on better than arm’s
length terms. The loan will be repaid in 2 instalments with US$1.5 million to be repaid on 30 September 2015 and the remaining balance
plus 4% interest accrued on the loan, to be repaid on 30 November 2015. The loan is unsecured and borrowers rights and obligations
under the loan can be assigned or transferred at any time.
31.5 Ultimate parent entity
The Parent Entity is controlled by IFISA with a 94.57% interest in Austral Gold Limited and is incorporated in Uruguay.
The ultimate beneficial owner of IFISA is Eduardo Elsztain.
58
DIRECTORS’ DECLARATION
In the Directors’ opinion:
1 .
2 .
3 .
the attached consolidated financial statements and notes thereto comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached consolidated financial statements and notes thereto comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the consolidated financial statements;
the attached consolidated financial statements and notes thereto give a true and fair view of the Group’s financial position as at 30 June
2015 and of its performance for the financial year ended on that date; and
4 .
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
Signed on behalf of the Directors by:
Ben Jarvis
Director
Sydney
25 September 2015
59
2015 ANNUAL REPORT
Tel: +61 2 9251 4100
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
Fax: +61 2 9240 9821
www.bdo.com.au
www.bdo.com.au
Level 11, 1 Margaret St
Level 11, 1 Margaret St
Sydney NSW 2000
Sydney NSW 2000
Australia
Australia
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
To the members of Austral Gold Limited
To the members of Austral Gold Limited
Report on the Financial Report
Report on the Financial Report
We have audited the accompanying financial report of Austral Gold Limited, which comprises the
We have audited the accompanying financial report of Austral Gold Limited, which comprises the
statement of financial position as at 30 June 2015, the statement of profit or loss and other
statement of financial position as at 30 June 2015, the statement of profit or loss and other
comprehensive income, the statement of changes in equity and the statement of cash flows for the
comprehensive income, the statement of changes in equity and the statement of cash flows for the
year then ended, notes comprising a summary of significant accounting policies and other explanatory
year then ended, notes comprising a summary of significant accounting policies and other explanatory
information, and the directors’ declaration of the consolidated entity comprising the company and the
information, and the directors’ declaration of the consolidated entity comprising the company and the
entities it controlled at the year’s end or from time to time during the financial year.
entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
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
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Financial Reporting Standards.
Auditor’s Responsibility
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation of the financial report that gives a true and fair view in order to design audit procedures
preparation of the financial report that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
for our audit opinion.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd
Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International
approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
60
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of Austral Gold Limited, would be in the same terms if given to the
directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a)
the financial report of Austral Gold Limited is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included under the heading ‘Remuneration Report’ of the
directors’ report for the year ended 30 June 2015. The directors of the company are responsible for
the preparation and presentation of the Remuneration Report in accordance with section 300A of the
Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based
on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Austral Gold Limited for the year ended 30 June 2015
complies with section 300A of the Corporations Act 2001.
BDO East Coast Partnership
Gareth Few
Partner
Sydney, 25 September 2015
2
61
2015 ANNUAL REPORT
ADDITIONAL INFORMATION
Corporate Governance Statement
Austral Gold Limited and its subsidiaries have adopted the corporate governance framework and practices set out in its Corporate Governance
Statement. The Corporate Governance Statement is available on the Company’s website at www.australgold.com.au.
Statement of Issued Capital
As at 31 August 2015 the total issued capital of Austral Gold Limited was 478,761,995 ordinary shares. 478,761,995 shares were quoted on
the Australian Securities Exchange under the code AGD. The only shares of the Company on issue are fully paid ordinary shares. None of these
shares are restricted securities or securities subject to voluntary escrow within the meaning of the Listing Rules of the Australian Securities
Exchange.
There are no restrictions on the voting rights attached to the fully paid ordinary shares. On a show of hands, every member present in person,
by proxy, by attorney or by representative shall have one vote. On a poll, every member present in person, by proxy, by attorney or by
representative shall have one vote for every share held.
As at 31 August 2015, there exist 140,949 unlisted options as set out below:
No of options
140,949
Exercise Price
AU$0.30
Expiry Date
15 Nov 2016
No of Holders
1
Options do not carry any voting rights.
These options were issued to Chad Williams, a consultant providing financial advisory and corporate finance services to the Group.
Distribution of fully paid ordinary shares
Size of Holding
1 – 100
101 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 50,000
50,001 – 100,000
>100,001
Holders
Shares held
% of issued
capital
191
421
268
75
55
17
23
9,375
234,317
715,069
607,721
1,271,204
1,167,375
474,756,934
1,050
478,761,995
0.00%
0.05%
0.15%
0.13%
0.27%
0.24%
99.16%
100%
The number of members holding less than a marketable parcel of 3,125 ordinary shares (based on a market price of AUD $0.16 on 31 August
2015) is 798. They hold a total of 619,204 ordinary shares.
Substantial Shareholders
The Company has been notified of the following substantial shareholdings as at 31 August 2015:
Registered Holder
Citicorp Nominees
Beneficial Holder
Inversiones Financieras Del Sur S.A. (IFISA)
HSBC Custody Nominees
Inversiones Financieras Del Sur S.A. (IFISA)
HSBC Custody Nominees
Guanaco Capital Holding Corp
Citicorp Nominees
Eduardo Sergio Elsztain
Shares Held
422,997,773
775,500
24,289,330
4,686,206
452,748,809
62
Top twenty shareholders as at 31 August 2015
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
J P MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
FORSYTH BARR CUSTODIANS LTD
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