ANNUAL REPORT
For the year ended December 2018
www.australgold.com
TAbLE Of cONTENTs
Corporate Directory
Chairman’s Letter
Review of Activities
Directors’ Report
Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information
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6
10
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48
82
84
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Austral Gold Limited
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Annual Report 2018
diREcTORy
Austral Gold Limited
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Annual Report 2018
Share Registries
Computershare Investor Services
Australia
GPO Box 2975
Melbourne VIC 3001
Tel: 1300 850 505 (within Australia)
Tel: +61 3 9415 5000 (outside Australia)
Computershare Investor Services
Canada
510 Burrard Street, 2nd Floor
Vancouver, BC V6C 3B9
Tel: +1 604 661 9400
Fax: +1 604 661 9549
Auditors
KPMG
www.kpmg.com.au
Principal Bankers
National Australia Bank Limited
www.nab.com.au
Solicitors
David Selig
Level 12, 60 Carrington Street
Sydney NSW 2000 Australia
dpselig@dpslawyers.com.au
Listed
Australian Securities Exchange
ASX: AGD
TSX Venture Exchange
TSXV: AGLD
Place of Incorporation:
Western Australia
Directors
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
Automic Group
Registered and Principal Office
Suite 5
126 Phillip Street
Sydney NSW 126
Tel: +61 2 9698 5414
Email: info@australgold.com
Web: www.australgold.com
Other Offices
Santiago, Chile Office
Lo Fontecilla 201 of. 334
Santiago, Chile
Tel: +56 (2) 2374 8560
Buenos Aires, Argentina Office
Bolivar 108
Buenos Aires (1066) Argentina
Tel: +54 (11) 4323 7500
Fax: +54 (11) 4323 7591
Vancouver, Canada Office
1630-609 Granville Street
Vancouver, BC V7Y 1A1
Tel: +1 778 987 1929
Austral Gold Limited
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Annual Report 2018
chAiRmAN’s LETTER
“I am pleased to report record production of 88,107 gold equivalent ounces from
the two mine sites in Argentina and Chile.”
Dear Shareholders,
For 2018, I am pleased to report record production of 88,107
gold equivalent ounces from the two mine sites in Argentina
and Chile. However, this past year has not been without
its challenges. Significant progress has been made at our
Guanaco/Amancaya mine in Chile, while production at our
Casposo mine in Argentina was less than we expected.
During the second half of 2017, we stabilised production at
our new agitation leaching plant at Guanaco, which led to a
65% year over year increase year in 2018 of gold equivalent
ounces produced at Guanaco. More significantly, produc-
tion cash costs (“C1”) and all in sustaining costs (“AISC”)
decreased at Guanaco due to higher gold and silver grades,
higher recovery rates and higher throughput. We anticipate
production at Guanaco/Amancaya to increase in 2019 and
for the team to continue to improve operational efficiencies.
In late 2018, management performed a comprehensive
review of the Casposo operational and business model
following the lower than expected production volume and
negative margins. Based on this review, the Company imple-
mented cost saving initiatives and reduced the workforce
to align with the newly designed mine plan, while continu-
ing evaluating alternatives for the project with the goal of
extending the life of the mine.
We forecast overall production in 2019 to be stable at
75,000-85,000 gold equivalent ounces and our overall 2019
C1 and AISC to continue to improve.
Austral Gold Limited
6
Annual Report 2018
“We forecast overall production in 2019 to be stable at 75,000–85,000 gold
equivalent ounces and our overall 2019 C1 and AISC to continue to improve.”
The Board is proud of key milestones that Austral Gold
achieved this year, including:
• Increased production at Guanaco/Amancaya due to
completion of the construction of the new agitation leach-
ing plant in the latter part of 2017, higher gold and silver
grades, improved recovery rates and higher throughput;
• Reduced cash and ASIC costs of production at Guanaco/
Amancaya;
• Reduced administration costs compared to 2017 on a
pro-rata basis;
We continued exploration activities at Guanaco/Amancaya
and Casposo which we believe will result in an expansion
of both these very prospective resources. At Amancaya,
exploration focused on performing a detailed review of the
potential of a variety of veins as our goal is to identify high-
grade gold and silver mineralised ore shoots. At Casposo,
we worked to design a drill program with the goal of discov-
ering new mineral bodies.
Our CEO, Stabro Kasaneva restructured the technical teams
in an effort to continuously improve operations and deliver
further value from our projects.
Other opportunities aligning with our strategic vision for
value accretive investments in Latin America continue to be
explored as well as unlocking value from other properties.
Safety remains a key focus and priority for Austral Gold. We
are committed to the well-being of our employees and the
communities in which we operate, and continue to promote
the highest health, safety and environmental standards. We
are very supportive of the local communities in which we
operate through local hiring of personnel and community
and education initiatives.
Our strategic acquisitions and organic growth opportuni-
ties, backed by an experienced management team with a
proven operational and exploration track record, and an
exceptional understanding of the Chilean and Argentinean
resources sector provides the foundation for continued
growth.
We anticipate this will be a good year for the Guanaco/
Amancaya mine as production is expected to increase
from last year while we continue to resolve our operational
issues at Casposo, and unlock value from Austral Gold’s
other mining and exploration properties. In addition, we will
actively explore new strategic opportunities.
In last year’s letter to shareholders, I informed you that we
were beginning to witness gold and silver prices trending
upwards. Prices decreased during the first nine months
of the year, however more recently, we have witnessed an
upward trend in the price of gold and silver. We at Austral
Gold will continually work to strengthen profit margins
through lower costs of production, while increasing the
value of our mineral resources to ultimately increase share-
holder value.
I would like to thank our shareholders for their continued
support, all of our employees and contractors, and our
Board members for their hard work and dedication during
this year.
Eduardo Elsztain
Chairman
“We at Austral Gold will continually work to strengthen profit margins through
lower costs of production, while increasing the value of our mineral resources to
ultimately increase shareholder value.”
Austral Gold Limited
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Annual Report 2018
kEy PRiNciPLEs
Austral Gold Limited
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Annual Report 2018
Establish position amongst leaders of precious
metals miners, with the highest rates of safety
and stewardship of the environment.
Strive for the lowest operating costs among
companies of the same scale in the Americas.
Be the preferred partner for companies,
communities and governments to operate
precious metal projects in Latin America,
currently focussed in Argentina and Chile.
Maximize value creation
for shareholders
Austral Gold Limited
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Annual Report 2018
REviEw Of AcTiviTiEs
Austral Gold Limited
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Annual Report 2018
Operations
(Guanaco/Amancaya
& Casposo)
Properties
Projects
(Pingüino)
Operations
(Guanaco/Amancaya
& Casposo)
Projects
(Pingüino)
Guanaco/Amancaya
Antofagasta, Chile
Casposo
San Juan Province, Argentina
Guanaco/Amancaya
Antofagasta, Chile
Casposo
San Juan Province, Argentina
Guanaco & Amancaya mines
Antofagasta, Chile
Casposo mine
San Juan, Argentina
Pingüino
Santa Cruz Province, Argentina
Pingüino
Santa Cruz Province, Argentina
Pingüino project
Santa Cruz, Argentina
100%
Interest
70%
Interest
100%
Interest
Austral Gold Limited (‘the Company’ or ‘Austral’) and its
subsidiaries (‘the Group’) is a growing precious metals
mining and exploration company building a portfolio of
assets in South America.
The Group produces gold and silver from the Guanaco and
Amancaya mines in Chile (100% interest) and the Casposo
mine in San Juan, Argentina (70% interest). The Group
also holds an attractive portfolio of exploration projects
including the Pingüino project in Santa Cruz, Argentina
(100% interest) and the San Guillermo and Reprado proj-
ects within the Amancaya district (100% interest). With
an experienced and highly regarded major shareholder,
Austral Gold is strengthening its asset base by investing in
new precious metals projects in Chile and Argentina that
have near-term development potential.
Austral Gold Limited
11
Annual Report 2018
Total combined
production for calendar
year 2018 reached
A summary of key operational parameters for the 12 months ended December 2018 and June 2017
and for the 6 months ended December 2017 is set out in the following table for comparative purposes.
Guanaco/Amancaya Mines
Casposo Mine (100% basis)
Net to Austral Gold*
Operations
12 months
ended
Dec 2018
6 months
ended
Dec 2017
12 months
ended
June 2017
12 months
ended
Dec 2018
6 months
ended
Dec 2017
12 months
ended
June 2017
12 months
ended
Dec 2018
6 months
ended
Dec 2017
12 months
ended
June 2017
Processed (t)
278,447
201,148
505,711
166,194
281,848
505,711
461,675 288,944 653,855
Gold produced (oz)
54,075
17,456
44,275
11,564
9,939
16,793
62,170
24,414
54,330
Silver produced (oz)
585,201
117,497
58,832 1,213,316 1,022,639 1,411,282 1,447,122 833,344 904,539
Gold-Equivalent (oz)
61,271
18,997
45,098
26,836
23,340
35,811
80,056
35,335
66,609
C1 Cash Cost
(US$/AuEq oz)**
All-in Sustaining Cost
(US$/Au oz)#
Realised gold price
(US$/Au oz)
Realised silver price
(US$/Ag oz)
792
1,103
759
1,362
924
952
957
1,004
844
943
1,330
908
1,710
1,096
1,262
1,175
1,201
1,065
1,227
1,276
1,251
1,227
1,278
1,259
1,264
1,277
1,253
15
17
17
15
17
18
16
17
18
* Austral Gold owned 70% of Casposo since March 2017
** The cash cost (C1) includes: Mine, Plant, On-Site G&A, Smelting, Refining, and Royalties (excludes Corporate G&A)
*** The AuEq ratio is calculated at 84:1 for the 12 months ended December 2018 (76:1 for the 6 months ended December 2017; 77:1 for the 12 months ended
December 2017)
The All-in Sustaining Cost (AISC) includes: C1, Sustaining Capex, Brownfield Exploration, and Mine Closure Amortisation
#
Austral Gold Limited
12
Annual Report 2018
80,056
net gold equivalent ounces
Actual and Forecasted figures for 2018:
Total combined production for calendar year 2018 reached 88,107 gold equivalent ounces (100% basis) or 80,056 (net
to Austral Gold*) with an average C1 and AISC of US$957/oz and US$1,175 per ounce of gold equivalent respectively. The
table below provides with a comparison between the 2018 actual and its forecasted production figures*.
Operations
Guanaco/Amancaya
Mines
Casposo Mine
(100% basis)
Net to Austral Gold*
Calendar
2018
Actual
Calendar
2018
Forecasted
Calendar
2018
Actual
Calendar
2018
Forecasted
Calendar
2018
Actual
Calendar
2018
Forecasted
Gold produced (oz)
54,075
56,000
11,564
10,000-
12,000
62,170
63,000-
64,000
Silver produced (oz)
585,201
520,000
1,231,316
1,400,000
1,447,122
1,520,000
Gold-Equivalent (oz)***
61,271
62,000
26,836
26,000-
28,000
80,056
80,000-
82,000
C1 Cash Cost (US$/AuEq oz)**
792
820-850
1,362
1,270-1,300
957
950-990
All-in Sustaining Cost
(US$/Au oz)#
943
950-1,000
1,710
1,600-1,650
1,175
1,150-1,200
Sustaining Capital ($000’s)
6,646
10,000
8,273
9,000
14,919
16,300
* Updated and disclosed in the December 2018 quarterly report.
** The cash cost (C1) includes: Mine, Plant, On-Site G&A, Smelting, Refining, and Royalties (excludes Corporate G&A)
*** The AuEq ratio is calculated at 84:1 for the 12 months ended December 2018
# The All-in Sustaining Cost (AISC) includes: C1, Sustaining Capex, Brownfield Exploration, and Mine Closure Amortisation
Austral Gold Limited
13
Annual Report 2018
miLEsTONEs
Austral Gold has produced over 390,000 gold
equivalent ounces over last eight years.
Sound cash flows have funded Austral’s
growth initiatives.
51,365
51,088
30,058
12,950
Gold-
Equivalent
Production
(oz)
2011
2012
2013
2014
9 First gold
doré bar
poured at
Guanaco
9 Guanaco cash
flow positive
9 Guanaco
mineral
resources
increased
by 10%
9 Purchased 15%
stake in Goldrock
Mines
9 Purchased 20%
stake in Argentex
Mining
9 Acquired Aman-
caya Project
9 Acquired 51%
of U/G mining
contractor
9 Kinross royalty
agreement exited
* Includes production from Casposo (51%)
** Includes production from Casposo (70%)
Austral Gold Limited
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Annual Report 2018
80,056**
64,488**
55,014*
46,888
2015
2016
2017
2018
9 Third consecutive
year of +45 koz
gold production
9 Achieved low
cash costs of
US$548/AuEq oz
9 Acquired 51% of
Casposo Mine
9 Acquired Argentex
9 Acquired San
Guillermo &
Reprado Projects
9 First full year operating
the new agitation
leaching in plant
Mining
9 Acquired further
9 Record combined
9 Dual listed on
TSX-V
19% of Casposo Mine
9 Updated FS for
mining projects
9 Finalized construction
of new agitation
leaching plant in Chile
production surpassing
80K Geo
9 Starts UG operations
at Amancaya
Austral Gold Limited
15
Annual Report 2018
chiLE
The Guanaco &
Amancaya mines
Guanaco and Amancaya Mines
Background
The Guanaco and Amancaya mines remain the Company’s
flagship asset. Guanaco is located approximately 220km
south-east of Antofagasta in Northern Chile at an elevation
of 2,700m and 45km from the Pan American Highway.
Guanaco is embedded in the Paleocene/Eocene belt, a
geological feature which runs north/south through the centre
of the Antofagasta region, Chile.
Gold mineralisation at Guanaco is controlled by pervasively
silicified, sub-vertical east/northeast-west/southwest trend-
ing zones with related hydrothermal breccias.
Silicification grades outward into advanced argillic alteration
and further into zones with argillic and propylitic alteration. In
the Cachinalito vein system, most of the gold mineralisation
is concentrated between depths of 75m and 200m and is
contained in horizontally elongated mineralised
shoots. The alteration pattern and the mineralogical composi-
tion of the Guanaco mineralisation have led to the classifica-
tion as a high-sulfidation epithermal deposit.
In July 2014, the Company acquired the Amancaya Project
(‘Amancaya’) from Yamana Gold Inc which is located approxi-
mately 60km south-west of the Guanaco mine. Amancaya is
a low sulfidation epithermal gold-silver deposit consisting of
eight mining exploration concessions covering 1,755 hectares
(and a further 1,390 hectares of second layer mining claims).
At Amancaya, open-pit mining operations began during the
first half of 2017 while underground operations started in
2018. The Amancaya ore is being trucked to the new plant at
Guanaco for processing.
Austral Gold Limited
16
Annual Report 2018
San Guillermo and Reprado Properties
On 14 November 2017, Austral Gold completed its purchase of
a 100% interest in the San Guillermo and Reprado gold-silver
projects, located in the emerging Amancaya precious metals
district of northern Chile, from Revelo Resources Corp. (TSX-
V:RVL) for consideration of ten million Austral Gold ordinary
shares. Revelo has retained Net Smelter Return (NSR) Royalties
on future metals production of 1% and 0.5% at Reprado and San
Guillermo, respectively.
The San Guillermo property consists of concessions totalling
12,175 hectares that surround the company’s high-grade gold and
silver Amancaya operation, which Austral began mining via open
pit operations in 2017. The Reprado Project consists of conces-
sions totalling 3,960 hectares situated approximately 20km north
of the Company’s Amancaya operation. Historical drilling under-
taken by Teck Resources Ltd intersected gold in low sulfidation
quartz veins trending essentially east-west.
A technical report on combined resources and construction of
a new agitation leaching plant at the Guanaco mine site was
completed in August 2017 and the commissioning phase was
completed in November 2017.
Austral Gold Limited
17
Annual Report 2018
Production
During the year ended December 2018, total production
at Guanaco/Amancaya was 54,075 Au oz and 585,201 Ag
oz (or 61,271 AuEq oz) compared to 18,997 AuEq oz during
the six months ended 31 December 2017. The increase in
production occurred due to completion of the construc-
tion of the new agitation leaching plant at Guanaco during
the latter part of 2017, higher gold and silver grades, higher
recovery rates and higher throughput
The operating cash cost (C1) at Guanaco/Amancaya
for the twelve months ended 31 December 2018 and six
months ended 31 December 2017 were US$792/AuEq oz
and US$1,103 AuEq while the all-in sustaining cost (AISC)
was US$943/AuEq oz and US$1,330/AuEq. The reason for
the decrease in costs is explained above. C1 and AISC are
forecasted to continue to decrease further in 2019 as a
result of operational efficiences. Production guidance for
2019 is 71,000-75,000 AuEq.
Mining
During the year ended 31 December 2018, mining continued at the Guanaco underground operations with a total of 100,586
tonnes mined while 126,819 tonnes were mined at the Amancaya underground operations and 68,076 tonnes mined at
the Amancaya open pit. The geological team continues to investigate opportunities to extend both the life of mine of the
Guanaco deposit (reserves depleted during 2018) and the Amancaya deposit.
Operations
Processed (t)
Average Plant Grade (g/t Au)
Average Plant Grade (g/t Ag)
Gold produced (oz)
Silver produced (oz)1
Gold-Equivalent (oz)2
C1 Cash Cost (US$/AuEq oz)1
All-in Sustaining Cost (US$/Au oz)2
Realised gold price (US$/Au oz)
Realised silver price (US$/Ag oz)
Guanaco/Amancaya Mines
12 months ended
31 December 2018
6 months ended
31 December 2017
12 months ended
31 June 2017
278,447
4.96
79.42
54,075
585,201
61,271
792
943
1,227
15
201,148
3.57
45.21
17,456
117,497
18,997
1,103
1,330
1,276
17
505,711
3.96
8.44
44,275
58,832
45,098
759
908
1,251
17
1 The cash cost (C1) for the Guanaco Mine includes: Mine, Plant, On-Site G&A, Smelting, Refining, and Royalties (excludes Corporte G&A)
2 The All-in Sustaining Cost (AISC) for the Guanaco Mine includes: C1, Sustaining Capex, Exploration, and Mine Closure Amortisation
Austral Gold Limited
18
Annual Report 2018
Safety and Environmental protection
During the year ended 2018 December 31, there were three
lost-time accidents (LTA) and five nil-lost-time accidents
(NLTA) involving employees of Guanaco and third party
contractors.
Safety and environmental protection are core values of
the Company. The implementation of best practice safety
standards along with a sound risk management program
are key priorities for Austral Gold.
Community activities
IGCM carried out a study of alternatives through which it
could contribute to the present and future sustainability of
the closest town Taltal, located 173k from Guanaco Mine.
Among the alternatives, education was chosen as we
believe through education it is possible to improve citizens
socio-economic conditions and contribute to youth remain-
ing and contributing to the community. The objective is to
contribute to the training of future graduates with compe-
tencies that meet the requirements of the mining industry
in the region.
Exploration in Chile
Exploration in 2018 was focused on drilling the extensions
of the Dumbo and Perseverancia open pits, mineralised
structures at the Guanaco mine, and the upper parts of the
Amancaya mine to support those portions of the model
evaluated mainly with Reverse Circulation drill holes. A
complementary DDH drill program of twelve holes was
completed on the Nueva vein, approximately 5km north of
the Amancaya open pit operation, with four areas of gold
mineralisation encountered, confirming a structure 2.8km
in strike length and the Central vein.
Drilling to test extensions of known mineralised structures at
Dumbo open pit continued during Q1 2018. The target was
divided in four, the west northern part (Dumbo Oeste Norte,
DWN), the west southern part (Dumbo Oeste Sur, DWS),
the east northern part (Dumbo Este Norte, DEN), and the
east southern part (Dumbo Este Sur, DES).
The Central vein (Amancaya) was studied in detail with
geological sections and geophysics, defining interpreted
extension of the mineralization north and south of the vein
to be tested with in-house IP equipment. Alteration mapping
at Sierra Inesperada, an intensely hydrothermally altered
range located 6 Km SW of the Guanaco area, indicates a
potential for ENE-striking high sulphidation structures.
A total of 3,224.15 meters were drilled in the program testing
DWS (Beatriz and the Chilena structures), and DEN (Dumbo
Norte structures) targets.
During the second quarter of 2018, a drilling program of
6,263 meters was completed at the Dumbo target. One
drill hole (75 meters) at Perseverancia Este target (Vania
structure) was also drilled during this program.
Other mine exploration target areas were studied. Cachinal-
ito Oeste was the most relevant and targets were selected
for future exploration in the near term.
Guanaco Brownfield Exploration
Alteration mapping in the Sierra Inesperada area, SW of
the Guanaco mine, has identified several alunite rich altera-
tion zones along ENE striking structures. These have the
potential to represent additional high sulphidation systems.
Planning for follow-up exploration activities is expected to
be undertaken to test the potential of these areas.
Figure 1: Plan view of the Minex drilling program at Dumbo area
Figure 2: Plan view of Sierra Inesperada
* Interval length is representative of true width as most holes are sub-horizontal and perpendicular to structure.
Austral Gold Limited
19
Annual Report 2018
Amancaya Mine Exploration:
The exploration at Amancaya, Chile has been focused on
performing a detailed review of the potential of different
veins identified through surface works such as float mapping
and trench construction. The exploration program’s goal is
to find the presence of high-grade gold and silver mineral-
ized ore shoots in those structures. Consequently, several
structural and mineralogical studies were carried out in the
Central Vein to extrapolate the shape of the mineralization
distributions to the other veins identified.
Two DDH holes totaling 168.9m were completed in 2018 to
improve the block model and confirm high-grade areas in
the near surface area of the existing mineral resource.
A series of works were completed to extend resources at the
Central vein area. 25m spaced cross sections were updated
all along the Central vein, a 3D solid was created, and with
this information a new long section was generated, showing
three major portions of the Central vein.
IP pole-dipole geophysics survey was also completed and
results were interpreted using a 3D model. The 6 pole dipole
lines and previous gradient geophysics were interpreted
with available geological information. The area includes the
Central, Julia, Nueva and Cerro Amarillo veins. Gradient IP
shows that chargeability (green color anomaly) and resis-
tivity (yellow color anomaly) has a good correlation with
the Central vein mineralized area. Using these parameters,
there is one anomalous area in the north and west part of
the Central vein, that was not previously drilled properly.
The geological and structural model was improved at
the Central vein, defining a E-W pure extensional vector
(279°/3°), that highlights the NNE strike as the most likely
to contain extensional quartz veins.
Amancaya Brownfield Exploration: Nueva Vein
During 2018, a 595.95m DDH drill program was completed
at the Nueva vein. This program was a compliment of the
1,367m RC drilling program completed in December 2017.
Lag sampling analyses from the Janita hill area were
processed, and different anomalies are concentrated along
the known NNW and NW veins, but also along a blind inter-
mediate NNW structure. The highest lag anomalies are
concentrated in the southern portion of the hill, where the
structures merge. This area was not previously drilled.
Brownfield exploration at Amancaya focused on the
preparation of the longitudinal sections for Nueva, Nueva
Norte, Janita Rosa, Gabriela, and Yesica veins. Two types of
sections were identified: (i) drill hole and trench data and;
(ii) float data.
The infill drilling program in Amancaya has progressed well.
in 2018, 1,337 meters were drilled (1,068 meters correspond-
ing to RC and 229 meters to DDH). Significant results to
date are included in the following table:
Hole ID
From
To
Length H width Level
Intercept Geology
Au g/t Ag g/t Cu ppm
AM-189
124.37
124.75
0.38
0.22
1807
Brecciated Qz Vein with Jaros
and MinOX weaks
2.8
21
379
184.91
186.07
1.16
0.42
1740
Brecciated Qz Vein with Jar(s)
and CuOx (–)
20.7
51
3682
AM-190A
187.55 195.04
7.49
2.7
1735
Brecciated Qz Vein + veintles(s)
with Jar(s) and CuOx (–)
14.0
13
1648
AM-191
147.57
148.83
1.26
0.57
1782
Brecciated Qz Vein with Jar(w),
affected by fault
6.6
20
306
AM-192
187.6
190.35
2.75
0.92
1734
Brecciated Qz Vein with Jar (+),
MnOX, Py, CuOx and Hem (–)
21.8
22
2703
Austral Gold Limited
20
Annual Report 2018
Plan view of the Central and Julia veins with the IP sections, Amancaya
Janita hill lag sampling results (left) and previous drill holes in the area (right)
Central Vein structural analysis
During the year, geologists continued studying the structure and mineralization of the Central Vein at Amancaya. The
distribution of gold grades along structures is not random but is structurally controlled. This concept indicates that it
originated as a dilatational ore shoot from a structure with normal displacement, purely extensional, in T1.
In the South-Central Vein, the orientation of the high-grade ore shoot is subparallel to the movement vector, which may
indicate that the morphology is conditioned by the post-mineralization reworking of the structure in T2.
Austral Gold Limited
21
Annual Report 2018
ARgENTiNA
The Caposo Mine &
Pingüino Project
Casposo Mine
The Casposo mine is located in the department of Calin-
gasta, San Juan Province, Argentina, approximately 150km
from the city of San Juan, and covers an area of 100.21km2.
Casposo is a low sulfidation epithermal deposit of gold and
silver located in the eastern border of the Cordillera Frontal
geological province.
The Cordillera Frontal represents the eastern portion of
the Cordillera Principal that runs along the Chile-Argentine
border for approximately 1,500km. The Casposo gold– silver
mineralisation is Permian in age, and occurs in the exten-
sive Permo-Triassic volcanic rocks of the Choiyoi Group,
at both rhyolite, and underlying andesitic rocks, where it
is associated with NW-SE, E-W and N-S striking banded
quartz, chalcedony and calcite veins, typical of low sulfida-
tion epithermal environments. Post-mineralisation dykes of
rhyolitic, mafic, and trachytic composition often cut the vein
systems. These dykes, sometimes reaching up to 30m thick-
ness, are usually steeply dipping and north–south oriented.
Mineralisation at Casposo occurs along a 10km long north-
west to southeast trending regional structural corridor, with
the main Kamila Vein system forming a 500m long sigmoi-
dal set near the centre. The Mercado Vein system is the
northwest continuation of Kamila and is separated by an
east–west fault from the Kamila deposit.
Austral Gold has undertaken a complete revision of histori-
cal work (geology, geochemistry, geophysics and drillings),
and finished a regional mapping at a 1:10,000 scale, defining
significant potential for discovering additional mineralisa-
tion in Casposo, and ranking a series of mine and brownfield
exploration targets.
Austral Gold Limited
22
Annual Report 2018
Underground mine
The Casposo Mine consists of a number of narrow steeply dipping ore bodies known as Aztec, B-Vein, B-Vein1, Inca0,
Inca1, Inca2A, Inca2B, and Mercado. The main production from the underground mine to date has been from Inca1, Aztec,
and Inca2A.
The mining method used at the Casposo Mine is Longitudinal Longhole Retreat. Mine production is made up of a combina-
tion of ore development through sill drifts (34%) and stope production (66%).
The processing and recovery method is well known and widespread throughout the gold and silver mining industry, agitation
leaching in tanks followed by Merrill Crowe. Gold recoveries from the plant during 2018 was 91% for gold and 83% for silver.
The table below summarises the results at the Casposo mine for the 12 months ended December 2018, the 6 months
ended December 2017 and for the 12 months ended June 2017.
Operations
Processed (t)
Average Plant Grade (g/t Au)
Average Plant Grade (g/t Ag)
Gold produced (oz)
Share of Gold produced*
Silver produced (oz)
Share of Silver produced*
C1 Cash Cost (US$/AuEq oz)
All-in Sustaining Cost (US$/Au oz)
Realised gold price (US$/Au oz)
Realised silver price (US$/Ag oz)
Casposo Mine
12 months ended
31 December 2018
6 months ended
31 December 2017
12 months ended
30 June 2017
166,194
2.0
277.3
11,564
8,095
1,213,316
861,921
1,362
1,710
1,227
15
125,423
248,109**
3.0
331.3
9,939
6,458
1,022,639
715,848
924
1,096
1,278
17
2.6
215.5
16,793
9,622
1,411,282
811,662
952
1,262
1,259
18
* Austral Gold owned 70% of the Casposo mine since March 2017
**Casposo production includes the last three Quarters of the 12 months ended 30 June 2017 and also includes production during recommissioning
Safety and Environmental protection
The implementation of best practice safety standards along
with a sound risk management program are key priorities
for Austral Gold as safety and evironmental protection are
core values of the Company. During the year ended 2018
December 31, there were three lost-time accidents (LTA)
and seventeen nil-lost-time accidents (NLTA) involving
employees of Casposo and third party contractors.
We share our commitment to the environment by conduct-
ing participatory social monitoring every six months. We are
committed to work with local communities and suppliers
and we have an environmental policy, in which we promote
responsible behavior towards the environment and promote
safety and health. We also seek to implement best practices
in environmental management, complying with current local
and international legislation.
Austral Gold Limited
23
Annual Report 2018
Exploration in Argentina:
Exploration in Argentina was focused on adjacent areas to the
Casposo mine, testing the extensions of the MV1 vein at the
Mercado area, and confirming the potential of the Julieta vein
brownfield target. Reinterpretation of previous IP geophys-
ics at Kamila area defined a series of blind targets. Four vein
areas were investigated for potentially shallow mineralisa-
tion with mapping and sampling of the Cerro Norte Sur and
Amanda veins. A 6-hole drill program at the Amanda vein
started during the second quarter of 2018 for further testing.
An underground drill program was designed to identify exten-
sions of the bodies in operation and / or growth of the areas
with development and another drill program that from surface
points to the discovery of new mineral bodies recognized
through surface structures by hydrothermal manifestations
of lower temperature.
B-vein Minex drill program was completed with 3 holes and
295.5 m in total. These results confirm that B-vein has an
erratic behaviour, with isolated high-grade zones and a 45°
plunge to the south.
Casposo Brownfield Exploration:
Julieta drilling program (13 holes and 1525m) started in
March and continued to June 2018.
In addition, an infill program of 13 holes (1653.6 meters) were
drilled at the Julieta vein target area to improve the quality
of the resource. Drilling successfully intersected the Julieta
vein in most of the cases, including mineralised secondary
veins in the hanging wall in some cases. The presence of a
post-mineral dike is attributed to holes that failed to inter-
sect the vein.
In addition to the drill program at Julieta, surface mapping,
geophysics interpretation, and channel sampling were
performed at Amanda, Cerro Norte Sur, Lucía, and Oveja
Negra vein targets.
Casposo Cluster Exploration: Cristina project
Channel samples were taken at Cristina project with low
and erratic gold contents. An analysis of the new sampling
shows the different structural controls of the mineralization:
N-S, NW and NNE. The NW strike structures are probably
controlling the best gold results, which are related with Pb
and erratic Ag values.
During the year, the Company designed a brownfield explo-
ration program for Q1 2019 comprising the following main
activities: (i) a drilling program to confirm the Southeast
extension of the Julieta vein (currently being exploited as
open pit) (ii) geophysics studies over the Mercado north
west area including Panzon and Maya, (iii) a new modelling
of the Kamila offset and Rosarita Hill areas to investigate
below steam heated alterations observed at surface.
Other activities included metallurgical sampling at Julieta
and analysis of the corresponding thin sections.
Figure 5: Long section of
the Julieta target area
Austral Gold Limited
24
Annual Report 2018
Pingüino Project
Recent activities
During the year, the Company continued analyzing the vari-
ous business scenarios for the sulphide mineral resource
within the Pingüino vein system.
To date, studies have focused on the sub-surface oxidized
portion of the deposit and the Company´s analysis indicates
that the size of the mineral resource base is not significant
enough to justify the construction of a processing plant.
However, based on recent internal studies Management
believes there is an opportunity to build a resource of zinc
equivalent (zinc, lead, silver and indium) that could expand
the size of the project in areas that were not previously
considered.
A new selection of samples from the oxidized zone of the
most important veins for the execution of metallurgical tests
was carried out. The analysis resulted in recovery rates of
+90% which were alligned with the former NI-43-101 report
released by Argentex Mining Corporation.
Pingüino Project
The Company completed the acquisition of Toronto Venture
Exchange listed company, Argentex Mining Corporation
(‘Argentex’) on 22 August 2016. Currently, Argentex owns
100% mineral rights of 20 properties with over 51,000
hectares of land. These properties are located within two
prominent geographical features, the Deseado and Somun-
cura Massifs, both of which have proven to host significant
epithermal precious metal deposits. The large epithermal
vein swarm at Pingüino contains Argentex’s discovery of
indium-enriched vein-hosted base metal mineralisations
which represented a new deposit type for the region, as
well as low sulphidation precious metal vein mineralisation.
The combination of these two types of mineralisation within
the same property is unique for the province of Santa Cruz
and a significant asset for the Company.
The Silver-Gold-Zinc-Lead-Indium Pingüino Project is an
advanced stage development project located in south-
central Argentina, 300km southwest of the city of Como-
doro Rivadavia and 220km northwest of Puerto San Julián.
In the last 15 years, six mines have been constructed in Santa
Cruz, making it one of the most prolific precious metal prov-
inces in the world, including world class deposits such as
Cerro Vanguardia and Cerro Negro.
The Pingüino Project lies in a vein field similar but smaller
to Cerro Vanguardia some 35kms north-west along same
controlling structure as Pingüino deposit (225km strike
length of veins vs 115 km strike length of veins).
The project has year round access, is close to major infra-
structure, has no nearby communities and more than 70%
of surface land is owned by the Company.
Pinguino
100%
Owned
Argentex Properties including
Pingüino Project (100% owned)
Competent person statement
The information in this report that relates to Exploration Results listed in the Review of Activities section of this December 2017 Annual Report is based on
work supervised, or compiled on behalf of, Dr. Robert Trzebski, a Non-Executive Director of the Company.
Technical Information in this included has been reviewed by Dr. Robert Trzebski, who is a fellow of the Australian Institute of Mining and Metallurgy (AUSIMM)and
qualifies as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.
Dr Robert Trzebski consents to the inclusion in the report of matters based on his information in the form and context in which it appears.
Dr Robert Trzebski has sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration and to the activity which
he has undertaken to qualify as a Competent Person as defined in the JORC Code 2012.
Austral Gold Limited
25
Annual Report 2018
Mineral Resources & Ore Reserves Statement
Tables 1 and 2 are the Company’s Mineral Reserves and Resource Estimates as at 31 December 2018 compared to Tables 3
and 4 which are the Company’s Mineral Reserves and Resource Estimates as at 31 December 2017.
Please note that numbers in the tables are subject to rounding differences.
Table 1: Ore Reserves Estimate
31 December 2018
Ore Reserves (JORC 2012 and NI 43-101 Compliant)
Location
Proven Reserves
Probable Reserves
Total Ore Reserves
Gold (Au)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal
(koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Underground
Total Guanaco
65
65
Underground
109
Total Amancaya
109
Total Combined
174
Underground
Total Casposo
–
–
4.7
4.7
6.7
6.7
6.0
–
–
Guanaco
168
168
Amancaya
472
472
640
Casposo
676
676
3.1
3.1
6.6
6.6
5.7
2.5
2.5
10
10
23
23
33
–
–
Total
174
6.0
33
1,316
4.0
17
17
100
100
117
55
55
171
233
233
581
581
814
676
676
3.6
3.6
6.6
6.6
5.7
2.5
2.5
27
27
123
123
150
55
55
1,490
4.3
205
Silver (Ag)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal
(koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Underground
Total Guanaco
65
65
Underground
109
Total Amancaya
109
Total Combined
174
Underground
Total Casposo
Total
0
0
174
6
6
80
80
52
0.0
0.0
52
Guanaco
168
168
Amancaya
472
472
3.5
3.5
26
26
12
12
281
281
293
640
20.1
Casposo
19
19
395
395
414
0.0
0.0
676
676
181
181
3,939
3,939
233
233
581
581
814
676
676
293
1,316
103
4,353
1,490
4.1
4.1
36
36
27
181
181
97
31
31
676
676
707
3,939
3,939
4,646
Austral Gold Limited
26
Annual Report 2018
Table 2: Mineral Resources Estimate
31 December 2018
Mineral Resources (JORC 2012 and NI 43-101 Compliant)
Location
Measured (Me)
Indicated (Ind)
Total (Me + Ind)
Inferred (Inf)
Gold (Au)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Underground
422
3.2
Total Guanaco
422
3.2
Open Pit
0
0
Underground
99
10.0
Total
Amancaya
99
10.0
Total Combined 522
4.5
Underground
37
2.4
Total Casposo
37
2.4
43
43
0
32
32
75
3
3
Guanaco
1,213
2.8
108
1,636
2.9
151
1,134
2.6
1,213
2.8
108
1,636
2.9
151
1,134
2.6
96
96
Amancaya
15
5.9
3
15
5.9
3
23
4.49
3
516
8.7
145
615
8.9
177
840
6.71
181
531
8.7
148
630
8.9
180
864
6.7
185
1,744
4.6
256
2,266
4.5
331
1,998
4.4
281
Casposo
1,090
2.9
102
1,127
2.9
105
913
5.4
158
1,090
2.9
102
1,127
2.9
105
913
5.4
158
Total
559
4.3
78
2,834
3.9
358
3,393
4.0
435
2,912
4.7
438
Silver (Ag)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Guanaco
Underground
422
17
235
1,213
Total Guanaco
422
17
235
1,213
15
15
592
1,636
16
827
1,134
592
1,636
16
827
1,134
13
13
477
477
Amancaya
Open Pit
0
0
0
15
141
68
15
141
68
23
37
28
Underground
99
129
413
516
35
587
615
51
1,000
840
26
707
Total
Amancaya
99
129
413
531
38
655
630
53
1,068
864
26
734
Total Combined 522
39
648
1,744
22
1,247
2,266
26
1,895
1,998
19
1,211
Casposo
Underground
37
221
264
1,090
183
6,413
1,127
184
6,677
913
143
4,204
Total Casposo
37
221
264
1,090
183
6,413
1,127
184
6,677
913
143
4,204
Total
559
51
911
2,834
84
7,661
3,393
79
8,572
2,912
58
5,415
Austral Gold Limited
27
Annual Report 2018
Table 3: Ore Reserves Estimate
31 December 2017
Ore Reserves (JORC 2012 and NI 43-101 Compliant)Ore (JORC 2012 and NI 43-101 Compliant)
Location
Proven Reserves
Probable Reserves
Total Ore Reserves
Gold (Au)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal
(koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Underground
100
Total Guanaco
100
Open Pit
Underground
Total Amancaya
–
–
–
4.4
4.4
–
–
–
14
14
–
–
–
Guanaco
183
183
Amancaya
157
693
850
3.1
3.1
7.6
6.5
6.7
Total Combined
100
4.4
14
1,033
6.1
Underground
Total Casposo
5
5
2.7
2.7
Total
105
4.3
0.5
0.5
14
Casposo
742
2.6
742
2.62
18
18
38
145
183
201
63
63
283
283
157
693
3.5
3.5
7.6
6.5
850
6.7
1,133
5.9
747
747
2.6
2.6
32
32
38
145
183
215
63
63
1,775
4.6
264
1,880
4.6
278
Silver (Ag)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal
(koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Underground
100
Total Guanaco
100
Open Pit
Underground
Total Amancaya
–
–
–
Total Combined
100
5
5
–
–
–
5
Guanaco
183
183
3.6
3.6
Amancaya
157
113.4
693
42.5
21
21
572
946
283
4.2
283
4.2
157
693
113
42
38
38
572
946
850
55.5
1,518
850
55.5
1,518
17
17
–
–
–
17
1,033
46.3
1,539
1,133
43
1,556
Casposo
Underground
Total Casposo
5
5
355
355
Total
105
23
59
59
76
742
214
5,108
747
215
5,167
742
214
5,108
747
215
5,167
1,775
116
6,647
1,880
111
6,723
Austral Gold Limited
28
Annual Report 2018
Table 4: Mineral Resources Estimate
31 December 2017
Mineral Resources (JORC 2012 and NI 43-101 Compliant)
Location
Measured (Me)
Indicated (Ind)
Total (Me + Ind)
Inferred (Inf)
Gold (Au)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Guanaco
Underground
447
3.0
Total Guanaco
447
3.0
Open Pit
Underground
Total
Amancaya
0
0
0
0
0
0
43
43
0
0
0
1,255
2.9
1,255
2.9
115
115
1,703
2.9
1,703
2.9
157
157
1,136
2.6
1,136
2.6
96
96
Amancaya
106
11.3
38
106
11.3
38
41
6.11
8
633
9.2
187
633
9.2
187
900
6.70
194
739
9.5
225
739
9.5
225
941
6.7
203
Total Combined 447
3.0
43
1,994
5.3
341
2,441
4.9
382
2,077
4.5
299
Underground
167
2.7
Total Casposo
167
2.7
Total
615
2.9
14
14
57
Casposo
1,144
3.0
1,144
3.0
110
110
1,311
2.9
124
1,050
4.2
142
1,311
2.9
124
1,050
4.2
142
3,138
4.5
451
3,753
4.2
507
3,127
4.4
441
Silver (Ag)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Tonnes
(Kt)
Grade
(g/t)
Contained
Metal (koz)
Guanaco
Underground
447
17
244
1,255
15
596
1,703
15
840
1,136
Total Guanaco
447
17
244
1,255
15
596
1,703
15
840
1,136
13
13
485
485
Amancaya
Open Pit
Underground
Total
Amancaya
-
-
-
-
-
-
-
-
-
106
169
576
106
169
576
41
77
101
633
54
1,109
633
54
1,109
900
31
901
739
71
1,682
739
71
1,682
941
33
1,001
Total Combined 447
17
244
1,994
36
2,278
2,441
32
2,522
2,077
22
1,485
Casposo
Underground
167
257
1,382
1,144
206
7,568
1,311
212
8,950
1,050
136
4,605
Total Casposo
167
257
1,382
1,144
206
7,568
1,311
212
8,950
1,050
136
4,605
Total
615
82
1,625
3,138
98
9,846
3,753
95
11,472
3,127
61
6,091
Austral Gold Limited
29
Annual Report 2018
affects the information included in the original market
announcement and, in the case of estimates of Mineral
Resources or Ore Reserves, that all material assumptions
and technical parameters underpinning the estimates in the
relevant market announcement continue to apply and have
not materially changed. The Company confirms that the
form and context in which the CP’s findings are presented
have not been materially modified from the original market
announcement. The Company ensures that the Ore Reserves
and Mineral Resource Estimates are subject to appropriate
levels of governance and internal controls. Governance of
the Company’s Ore Reserves and Mineral Resources devel-
opment and the estimation process is a key responsibility
of the Executive Management of the Company. The Chief
Executive Officer of the Company oversees the review
and technical evaluations of the Ore Reserves and Mineral
Resource estimates.
Competent Persons Statements
The information in the report to which this statement is
attached that relates to Mineral Resources is based upon
information compiled by Sebastian Ramirez, a Competent
Person (CP 165) who is a registered member of the Comis-
ion Calificadora de Competencias en Recursos y Reservas
Mineras. Sebastian Ramirez is a full time employee of the
company and has sufficient experience that is relevant to
the style of mineralisation and the type of deposit under
consideration and to the activity being undertaken to qual-
ify as a Competent Person as defined in the 2012 Edition of
the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Sebastian Ramirez
consents to the inclusion in the report of matters based on
his information in the form and context in which it appears.
The information in the report to which this statement is
attached that relates to Ore Reserves is based upon informa-
tion compiled by Dr Robert Trzebski, a Competent Person
who is a fellow of the Australian Institute of Mining and
Metallurgy (AUSIMM). Dr Robert Trzebski is a Non- Execu-
tive Director of the Company and has sufficient experience
that is relevant to the style of mineralisation and the type
of deposit under consideration and to the activity being
undertaken to qualify as a Competent Person as defined in
the 2012 Edition of the ‘Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves’.
Dr Robert Trzebski consents to the inclusion in the report
of matters based on his information in the form and context
in which it appears.
Notes to the Mineral
Resources & Ore
Reserves Statement
Casposo Mine
The RPA Qualified Persons (‘QP’) for the Casposo Reserve
and Resource Estimate include: Jason J. Cox, P.Eng.
(Mineral Reserves) and Chester M. Moore, P.Eng., (Mineral
Resources). The Mineral Resources and Reserves are clas-
sified and reported in accordance with Canadian Institute
of Mining, Metallurgy and Petroleum Definition Standards
for Mineral Resources and Ore Reserves dated May 10, 2014
(‘CIM’) definitions as incorporated in NI 43- 101, as well as
JORC 2012, within the Technical Report on the Casposo
Gold-Silver Mine, Department of Calingasta, San Juan Prov-
ince, Argentina dated 7 September 2016.
Mineral Resources and Ore Reserves have been updated
to account for depletion from mining activities by Nicolas
Pizarro, P.Eng, an Austral Gold employee and a QP as per
NI-43-101 and a Competent Person (‘CP’) as per JORC 2012.
Ore reserves have been updated to account for depletion
from mining activities by Dr Robert Trzebski, who is an Inde-
pendent Director of Austral Gold, and a QP as per NI-43-101
and a CP as per JORC 2012.
The information is extracted from the news release published
on the ASX website (www.asx.com.au) on 27 September
2016. The Company confirms that it is not aware of any new
information or data that materially affects the information
included in the original market announcement and, in the
case of estimates of Mineral Resources or Ore Reserves, that
all material assumptions and technical parameters under-
pinning the estimates in the relevant market announcement
continue to apply and have not materially changed. The
Company confirms that the form and context in which the
CP’s findings are presented have not been materially modi-
fied from the original market announcement.
Guanaco and Amancaya Mines
The RPA Qualified Persons (QPs) for the Amancaya and
Guanaco Reserve and Resource Estimate include: Kathleen
Ann Altman, P.E., Ph.D. (Metallurgy); Jason J. Cox, P.Eng.
(Mineral Reserves); Ian Weir, P.Eng. (Mineral Reserves);
Chester M. Moore, P.Eng., (Mineral Resources). The Mineral
Resources and Reserves are classified and reported in accor-
dance with CIM definitions as incorporated in NI 43-101, as
well as JORC 2012, within the Guanaco and Amancaya Gold
Project, Region II, Chile, dated 16 June, 2017, with an effec-
tive date of 31 December 2016. Mineral resources have been
updated to account for depletion from mining activities by
Nicolas Pizarro, P.Eng, an Austral Gold employee and a QP
as per NI-43-101 and a CP as per JORC 2012. Ore reserves
have been updated to account for depletion from mining
activities by Dr Robert Trzebski, who is an Independent
Director of Austral Gold, and a QP as per NI-43-101 and a
CP as per JORC 2012.
The information is extracted from the news release
published on the ASX website (www.asx.com.au) on 13 June
2017. The Company confirms that it is not aware of any new
information or data that materially
Austral Gold Limited
30
Annual Report 2018
Austral Gold Limited
31
Annual Report 2018
diREcTORs’ REPORT
Austral Gold Limited
32
Annual Report 2018
Austral Gold Limited and
its Subsidiaries
Review of Results
For the 12 Months Ended 31 December 2018
The following report on the review of results for the
12-month period ended 31 December 2018 together with
the consolidated financial report of Austral Gold Limited
(the Company) and its subsidiaries, (referred to hereafter as
the Group). The comparative numbers are for the 6-month
period ended 31 December 2017 (FYD17) as the Company
changed its year end to align the Company’s financial year
with that of its operating subsidiaries in 2017.
Review and Results of Operations
Operating Results and Dividends
The Group’s net loss attributable to shareholders for the
12-month period ended 31 December 2018 (FY18) was
US$26.1m (6 months ended 31 December 2017: net loss
FYD18 Production Summary
$13.3m) (FYD17). The net loss during FY18 was mainly due
to a US$29.2m impairment loss related to the Casposo mine
as explained below.
The Group earned sales revenue of US$122.8m in FY18
(FYD17: US$48.9m) as production (100% basis) was 88,107
AuEq oz (FYD17: 42,337 AuEq oz). The increase in revenue
was due to (i) 12-month period as compared to a 6-month
period, and (ii) an increase of production at Guanaco/Aman-
caya, which was partially offset by a decrease in production
at Casposo. The increase in production at Guanaco/Aman-
caya occurred due to completion of the construction of the
new agitation leaching plant during the latter part of 2017,
higher gold and silver grades, higher recovery rates and
higher throughput. Production at Casposo decreased due
to lower head grades, lower tonnage of ore extraction from
the mine due to operational delays, changes in exploitation
sequence, poor rock quality conditions that required further
fortification work, amongst others.
Operations
Guanaco/
Amancaya Mines
Casposo Mine
(100% basis)
Net to
Austral Gold*
YTD
2018
Actual
Calendar
2018
Forecasted
YTD
2018
Actual
Calendar
2018
Forecasted
YTD
2018
Actual
Calendar
2018
Forecasted
Gold produced (Oz)
54,075
56,000
11,564
10,000–
12,000
62,170
63,000–
64,000
Silver produced (Oz)
585,201
520,000
1,231,316
1,400,000
1,447,122
1,500,000
Gold-Equivalent (Oz) ***
61,271
62,000
26,836
26,000–
28,000
80,056
80,000–
82,000
C1 Cash Cost
(US$/AuEq Oz)**
All-in Sustaining Cost
(US$/Au Oz)#
Sustaining Capital
($000’s)
Realised gold price
(US$/Au oz)
Realised silver price
(US$/Ag oz)
792
820-850
1,362
1,270-1,300
957
950-990
943
950-1,000
1,710
1,600-1,650
1,175
1,150-1,200
6,646
10,000
8,273
9,000
14,919
16,300
1,227
1,214
1,227
1,215
1,227
1,282
15
17
15
17
15
17
* Austral Gold owned 70% of Casposo since March 2017
** The cash cost (C1) includes: Mine, Plant, On-Site G&A, Smelting, Refining, and Royalties (excludes Corporate G&A)
# The All-in Sustaining Cost (AISC) includes: C1, Sustaining Capex, Brownfield Exploration, and Mine Closure Amortisation
*** AuEq ratio is calculated at 84:1 Ag:Au for the twelve months ended 31 December 2018
(1) “Cash cost” and All-in Sustaining-Cost (AISC) are non-IFRS financial information and are not subjected to audit
Austral Gold Limited
33
Annual Report 2018
Overall operating cash costs decreased to US$957/AuEq oz
during FY18 compared to US$994/AuEq oz during FYD17.
The overall decrease in operating costs was mainly driven
by the Guanaco/Amancaya operation that offset the weaker
performance of the Casposo operation. The cash costs of
production at the Guanaco/Amancaya mine decreased to
US$792/AuEq oz in FY18 from US$1,103/AuEq oz in FYD17
while the operating cash costs at Casposo increased to
US$ 1,362/AuEq oz in FY18 from US$924/AuEq oz in FYD17.
Overall operating cash costs were primarily impacted by
cost saving initiatives, depreciation of local currencies
against the US dollar, higher gold and silver grades and
higher recovery rates at the Guanaco/Amancaya operation.
The Group achieved a gross profit of US$6.0m or 5%
(including US$18.4m of depreciation and amortization)
during FY18 (FYD17: negative gross profit of US$4.0m or
-8% including US$13.9m of depreciation and amortiza-
tion. Excluding depreciation and amortisation, the Group
earned a gross profit in FY18 of US$24.4m or 20% (FYD17:
US$10.0m or 20.4%).
The Group recorded an impairment loss of US$29.2m
related to its Casposo property during FY18 as the Group
valued the property at US$7.8m. The low valuation is based
on a change in the Group’s mine plan for Casposo which
anticipates the current remaining life of the mine to end
during the first half of FY19. The Company is currently evalu-
ating alternatives for Casposo.
FY18 administration expenses were US$12.4m (FYD17:
US$8.6m). Administration expenses were lower in FYD18
on a pro-rata basis in comparison to FYD17 mainly due
to lower administration costs, lower staff costs as FYD17
included a performance bonus paid in shares to the CEO
and the effect of the depreciation of the Chilean peso and
Argentine peso against the US dollar.
Other income increased to US$1.9m in FY18 from US$0.1m
in FYD17 primarily from the realization of Argentine silver
tax credits in FY18.
A loss on movements in financial assets of US$1.2m was
realised in FY18 compared to a gain of US$0.6m in FYD17.
The loss realised in FY18 was primarily due to the decrease
in the valuation of the option to acquire the remaining 30%
interest in Casposo.
Net finance costs were US$2.1m in FY18 compared to
US$3.0m in FYD17. The decrease was mainly due to lower
losses on foreign exchange due to the devaluation of the
Argentine Peso and Chilean Peso against the USD and the
net monetary position of the Group. This was partially offset
by an increase in interest expense which was mainly due
to new short-term financing and the renewal of certain
borrowings.
FY18 negative EBITDA was US$(16.5m) (FYD17: US$2.0m).
Excluding the gain/(loss) on movements in financial assets
and the impairment loss, FY18 resulted in adjusted EBITDA
of US$13.9m (FYD17: US$1.4m).
12 months ended
31 December 2018
US$000
6 months ended
31 December 2017
US$000
Revenue
Gross (loss) profit
Gross (loss) profit %
Adjusted gross profit (excluding depreciation and amortization)
Adjusted gross profit %
EBITDA
EBITDA per share (basic)
Adjusted EBITDA*
Adjusted EBITDA per share (basic)
(Loss)/profit attributed to shareholders
(Loss)/profit attributed to non-controlling interests
(Loss)/earnings per share (Basic)
(Loss) /earnings per share (Diluted)
Comprehensive loss/(income)
122,767
5,958
4.9%
24,380
19.86%
(16,506)
(0.031)
13,886
0.026
(26,064)
(10,171)
(4.88)c
(4.88)c
(36,262)
48,867
(3,958)
(8.1%)
9,952
20.37%
2,032
0.004
1,407
0.003
(13,299)
(81)
(2.56)c
(2.56)c
(13,357)
*excluding gain/(loss) on financial assets and impairment loss
Note: Readers are cautioned that adjusted gross profit and net/(loss) profit before finance costs, income tax expense and depreciation (‘Adjusted EBITDA’)
do not have standardised meanings as prescribed by IFRS and may not be comparable to similar measures presented by other companies. Further, readers
are cautioned that Adjusted EBITDA should not replace profit or loss or cash flows from operating, investing and financing activities (as determined in
accordance with IFRS), as an indicator of the Company’s performance. are cautioned that Adjusted EBITDA should not replace profit or loss or cash flows
from operating, investing and financing activities (as determined in accordance with IFRS), as an indicator of the Company’s performance.
Austral Gold Limited
34
Annual Report 2018
Financial Position
The net assets of the Group decreased by US$36.5m since
31 December 2017 to US$54.9m at 31 December 2018 (31
December 2017: US$91.4m). Working capital was nega-
tive US$5.2m at 31 December 2018, a decrease of US$6.6m
compared to working capital of US$1.4m at 31 December
2017. The decrease in working capital arose mainly due to
the operational performance at Casposo and related other
issues as described above.
Trade and other receivables decreased by US$3.6m to
US$9.2m mainly due to a decrease in trade receivables and
prepaid income tax which was partially offset by an increase
in VAT credits receivable.
Inventories decreased by US$9.0m to US$13.8m and is
mainly due to a decrease in ore stockpiles and a decrease
in gold and silver bullion in process. The ore stockpiles
were higher at 31 December 2017 mainly due to the start up
of the open pit operation at Amancaya. The allowance for
inventory obsolescence increased by US$0.1m to US$1.1m
as at 31 December 2018.
Non-current assets decreased by US$29.3m in FY18
compared to FYD17 primarily due to the impairment on
the Group’s Casposo property.
Trade and other payables decreased by US$8.4m in FYD18
compared to FYD17 and is mainly due to a decrease in trade
payables.
Cash flow
Net cash provided from operating activities before and
after changes in assets and liabilities was US$13.0m and
US$21.3m during FY18 compared to US$2.0m and US$9.2m
during FYD17 respectively. In addition to the FY18 being for
12 months compared to 6 months for FYD17, the increase is
mainly due to higher cash generated at Guanaco/Amancaya
as described above.
Cash used in investing activities totaled US$17.7m during
FY18 compared to US$8.1m during FYD17. Cash was used
primarily for additions to property, plant and equipment
and mine properties.
Cash flows from financing activities were US$(8.5m) during
FY18 compared to US$(0.6m) during FYD17 mainly due to
the repayment of borrowings.
Liquidity
As at 31 December 2018, the Group had a current ratio equal
to 0.83 (FYD17 1.03) along with US$1.7m cash and cash
equivalents (FYD17 $6.6m). In addition, the Group forecasts
2019 production of 75,000-85,000 gold equivalent ounces
(100% basis*) and 74,000-77,000 gold equivalent ounces
(net basis).
Cash & Cash equivalents
Current Assets
Non-Current Assets
Current-Liabilities
Non-Current Liabilities
Net Assets
Net Current (Liabilities) Assets
Total Borrowings
Current ratio *
Total Liabilities to Net Assets
*Current Assets divided by Current Liabilities
As at
31 December 2018
US$000
As at
31 December 2017
US$000
1,716
25,264
81,970
30,487
21,875
54,872
(5,223)
18,471
0.83
0.95
6,612
43,519
111,242
42,104
21,241
91,416
1,415
22,592
1.03
0.69
Austral Gold Limited
35
Annual Report 2018
ThE diREcTORs
The Directors and
Senior Management of
the Company in office
during or since the end
of the financial year.
Eduardo Elsztain
Chairman
Mr. Eduardo Elsztain is Chairman of IRSA Inversiones y Representaciones
S.A. (NYSE:IRS; BASE:IRSA), one of Argentina’s largest and most diversified
real estate companies; and IRSA Commercial Properties (NASDAQ:IRCP;
BASE: IRCP), with 15 shopping centres in Argentina, premium office build-
ings, five-star hotels and residential developments. These investments are
also extended into the US real estate market.
He also serves as Chairman of Cresud (NASDAQ:CRESY; BASE: CRES) and
BrasilAgro (NYSE:LND; BVMF: AGRO3), leading Latin American agricultural
companies that own directly and indirectly almost one million hectares of
farmland.
Mr Elsztain is also Chairman of Banco Hipotecario S.A. (BASE:BHIP) and
of BACS, a leading Argentinean bank specialised in providing innovative
financial solutions to local companies.
He is Chairman of IDB Development, a leading conglomerate in Israel which
directly and indirectly owns Discount Investment Corporation Ltd. (TASE:
DISI); Property & Building Corp. (TASE: PTBL); Elron Electronic Industries
(TASE: ELRN); Clal Insurance Enterprises Holdings (TASE: CLIS); Shufersal
(TASE: SAE); and Cellcom (NYSE: CEL; TASE: CEL), among others.
Mr. Elsztain has not held any other Directorships with Australian or Canadian
listed companies in the last three years.
Mr. Elsztain is also a member of the World Economic Forum, the Council of
the Americas, the Group of 50 and Argentina’s Business Association (AEA).
He is President of Fundación 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.
Appointed Director 29 Jun 2007
Appointed Chairman on 2 Jun 2011
Re-elected by shareholders on 30 May 2018
Austral Gold Limited
36
Annual Report 2018
Stabro Kasaneva
Executive Director, Chief Executive Officer
Saul Zang
Non-Executive Director
Mr. Kasaneva is a Geologist with a degree from the
Universidad Católica del Norte, Chile and has over 30
years of experience in production geology, exploration
and management of precious metal mining operations.
Since Mr. Kasaneva joined Austral Gold in 2009, he has
been instrumental in transforming the Company by
consolidating the operation of Guanaco Mine in Chile,
restarting operations at the Casposo Mine in Argentina
as well as identifying a number of opportunities that
represent the growth potential for Austral Gold.
Throughout his career as a geologist, he worked on
exploration and production gaining vast experience
in grade control, QA/QC, modeling and geological
resources estimation.
Mr. Kasaneva led Business Development Depart-
ments for several years evaluating a number of
mining business opportunities in South America,
Central America and North America. He has held the
roles of General Manager of Mining Operations,
Vice-President of Operations and COO.
Mr. Kasaneva has not held any other Directorships.
Appointed 7 Oct 2009
Re-elected by shareholders on 30 May 2018
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 the 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:
IRS, BASE: IRSA), IRSA Commercial Properties
(NASDAQ: IRCP, BASE: IRCP), Cresud (NASDAQ:
CRESY, BASE: CRES) and
ii. Directorships with Banco Hipotecario (BASE: BHIP),
BrasilAgro (NYSE: LND, BVMF:AGRO3), IDB Develop-
ment – 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
Australian or Canadian listed companies in the last
three years.
Appointed 29 Jun 2007
Re-elected by shareholders on 30 May 2018
Austral Gold Limited
37
Annual Report 2018
ThE diREcTORs
Wayne Hubert
Non-Executive Director,
Ben Jarvis
Non-Executive Director
Member of the Audit Committee
Mr Hubert is a mining executive with over 15 years’ expe-
rience 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. In addition to his role at Austral
Gold Limited, Mr Hubert is the Chief Executive Officer
and Director of InZinc Mining Limited (TSX-V: IZN).
Appointed 18 Oct 2011
Re-elected by shareholders on30 May 2018
Mr Jarvis is the Managing Director of Six Degrees
Investor Relations, an Australian advisory firm that
provides investor relations services 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.
Mr Jarvis has not held any other Directorships with
listed companies in the last three years.
Appointed 2 Jun 2011
Re-elected by shareholders on 30 May 2018
The Company’s Board believes that a highly credentialed Board, with a diver-
sity of background, skills and perspectives, will be effective in supporting and
enabling delivery of good governance for the Company and value for the
Company’s shareholders. The Board brings a broad mix of experience and
skills to the Company including in the areas of corporate governance, legal,
geological expertise and financial management.
Austral Gold Limited
38
Annual Report 2018
Pablo Vergara del Carril
Non-Executive Director,
Member of the Audit Committee
Robert Trzebski
Non-Executive Director,
Chairman of the Audit Committee
Mr Vergara del Carril is a lawyer and is professor
of Postgraduate Degrees for Capital Markets, Corpo-
rate Law and Business Law at the Argentine Catholic
University.
Dr Trzebski holds a degree in Geology, PhD in
Geophysics, Masters in Project Management and has
over 25 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.
Appointed 10 Apr 2007
Re-elected by shareholders on 30 May 2018
He is a member of the International Bar Association,
the American Bar Association and the AMCHAM, among
other legal and business organisations. He is a founding
Board member of the recently incorporated Australian-
Argentinean Chamber of Commerce. He is a Board
member of the Argentine Chamber of Corporations
and also an officer of its Legal Committee. He is
recognised 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 Intercontinen-
tal Hotel in Buenos Aires), IRSA Commercial Properties
(NASDAQ: IRCP, BASE: APSA) and Emprendimiento
Recoleta SA (owner of the Buenos Aires Design Shop-
ping 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 Director-
ships with Australian or Canadian listed companies in
the last three years.
Appointed 18 May 2006
Re-elected by shareholders on 30 May 2018
Austral Gold Limited
39
Annual Report 2018
sENiOR mANAgEmENT ANd cOmPANy sEcRETARy
Mr. Ramirez holds a Mining Engineering degree from the University
of Chile.
He assumed the role of VP of Operations as the Company looks to
maximize efficiencies across three operations and seek out growth
opportunities.
He has been involved with the Company since it was founded, to recom-
mission the Guanaco mine. Mr. Ramirez has led mining and engineering
activities since then, as well as all reviews and analysis of the Company’s
growth activities. Mr. Ramirez recently led the design and construc-
tion of the Company’s new agitation leach plant at Guanaco. Prior to
joining Austral, had senior operational, planning and execution roles
at Antofagasta PLC and at Meridian Gold’s world class El Peñon mine
acquired by Yamana Gold.
Appointed 7 August 2017
Mr. Bordogna is a Certified Public Accountant and holds a Bachelor
of Accounting from the Universidad Catolica Argentina, a Masters of
Finance from Universidad del CEMA, Argentina and a Masters of Inter-
national Business from the University of Sydney, Australia.
In his time with the company, José has overseen the conversion of more
than US$50m in debt to equity, more than $15m in equity investments
with TSX-V listed companies, as well as more than US$50m in direct
investments in key exploration and mining-related assets.
Prior to joining Austral Gold in 2013, Mr. Bordogna worked for the
International Finance Corporation (IFC) — member of the World
Bank Group, and Deloitte & Touche in Latin America. He has over
15 years’ experience in corporate finance, M&A, investment banking
and accounting roles.
Appointed 22 August 2016
Mr. Bursill holds a Bachelor of Agricultural Economics from the Univer-
sity of Sydney and is a Chartered Accountant, qualifying with Price-
waterhouseCoopers (formerly Price Waterhouse). 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 covering mineral exploration, oil and gas explo-
ration, biotechnology, technology, medical devices, retail, venture
capital and wine manufacture and distribution. In addition to his role
at Austral Gold Limited, Mr. Bursill is currently a Director of Argonaut
Resources Limited.
Appointed 10 Jan 2014
Rodrigo Ramirez
Vice President of Operations
José Bordogna
Chief Financial Officer
Andrew Bursill
Automic Group, Company Secretary
Austral Gold Limited
40
Annual Report 2018
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 were
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.
Directors’
meetings
Audit
Committee
meetings
• 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.
Director
Pablo Vergara del Carril
Robert Trzebski
Wayne Hubert
Eduardo Elsztain
Saul Zang
Stabro Kasaneva
Ben Jarvis
A
3
2
2
3
3
3
3
B
3
3
3
3
3
3
3
A
3
3
2
N/A
N/A
N/A
1
B
3
3
2
N/A
N/A
N/A
1
A: Number of meetings attended
B: Number of meetings held during the time the Director held office during
the financial year
Shares and Options
At the date of this report there are no options over the
Company’s ordinary shares.
During or since the end of the financial year, the Company
has not granted options over its ordinary shares.
Interests Key Management Personnel
• The relevant interest of each Director (directly or indi-
rectly) in the share capital of the Company, as notified
by the Directors to the Australian Securities 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
R Ramirez
It is also noted:
68,119
-
455,443,295
1,435,668
6,881,230
-
1,750,000
279,514
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:
1. E Elsztain, S Zang, P Vergara del Carril and are Directors
of Guanaco Capital Holding Corp which holds 31,386,890
shares according to the last substantial holder notice
lodged in January 2019.
• 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
2. E Elsztain and S Zang are Directors of IFISA which holds
414,880,857 shares according to the last substantial
holder notice lodged in January 2019.
• 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.
The above indemnities:
• 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 prohi-
bitions in section 199A of the Corporations Act; and
• apply only to the extent and for the amount that a Direc-
tor or secretary is not otherwise entitled to be indemni-
fied and is not actually indemnified by another person
(including a related body corporate or an insurer).
E Elsztain is the ultimate beneficial owner of IFISA.
Remuneration Report (Audited)
Remuneration Policy
The full Board of Austral Gold is responsible for determin-
ing remuneration policies in respect of executives and Key
Management Personnel (KMP).
The Company has a Remuneration Policy that aims to
ensure the remuneration packages of Directors and senior
executives properly reflect the person’s duties, responsi-
bilities 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.
Austral Gold Limited
41
Annual Report 2018
The Key Management Personnel (KMP) during or since the end of the financial year were:
The Directors of the Group during or since the end of the financial year:
• Eduardo Elsztain
Non-Executive Chairman
• Saul Zang
Non-Executive Director
• Pablo Vergara de Carril
Non-Executive Director
• Wayne Hubert
Non-Executive Director
• Robert Trzebski
Non-Executive Director
• Ben Jarvis
Non-Executive Director
• Stabro Kasaneva
Chief Executive Officer and Director
The Senior Executive KMP during or since the end of the financial year:
• Rodrigo Ramirez
Vice President of Operations
• Juan Andres Morel
Former Chief Operating Officer
• José Bordogna
Chief Financial Officer
• Diego Guido
Former Vice President Exploration
Remuneration of KMP
The Group has employment agreements with all executive KMP in accordance with the laws in the jurisdiction in which
the KMP is employed.
Remuneration of executive KMP is made up of a fixed component and a variable component. Performance against pre-
deter-mined targets (KPIs) are used to determine the portion of the variable component paid annually.
The KPIs are based on financial and non-financial indicators and include production, safety, cost of production, sustaining
capital investments and new business and value accretive investments amongst others.
Link Between Remuneration and Performance
The Group aims to align its executive remuneration to its strategic and business objectives and the creation of shareholder
wealth. The table below shows the measures of the Group’s financial performance over the last 5 financial years as required
by the Corporations Act 2001. However, these are not necessarily consistent with the measures used in determining the
variable amounts of remuneration to be awarded to KMP. As a consequence, there may not always be a direct correlation
between the statutory key performance measure and the variable remuneration awarded.
12 months ended
30 June
2015
12 months ended
30 June
2016
12 months ended
30 June
2017
6 months ended
31 December
2017
12 months ended
31 December
2018
Sales Revenue
(US$’000)
Profit/(loss) before
tax (US$’000)
Basic EPS (US
cents per share)
Share price
(cents AUD)
62,465
55,865
101,025
48,867
122,767
(3,088)
27,711
(6,232)
(14,905)
(37,054)
(1.58)
5.25
(0.85)
(2.56)
(4.88)
14.2
15.6
15.0
15.0
6.0
Austral Gold Limited
42
Annual Report 2018
Details of Remuneration
Details of the nature and amount of each major element of the remuneration of each Directors of the Group and each of
the KMP of the Group during the financial year are:
Twelve-month period ended 31 December 2018
Primary
Post-employment
Share-based
Total
Cash and
accrued
Salary and
Fees
US$
Accrued
Cash
Bonus
US$1
Non-
monetary
benefits
US$
Superannuation
US$
Retirement/
Termination
benefits
US$
Shares
US$
Options
US$
US$
E Elsztain
100,000
S Zang
50,000
–
–
S Kasaneva
381,371
381,371
W Hubert
58,000
R Trzebski
45,675
B Jarvis
45,675
P Vergara del
Carril
50,000
–
–
–
–
Total Directors
730,721
381,371
R. Ramirez
309,362
309,362
J. Morel2
170,703
307,132
J Bordogna
150,454
83,250
D Guido3
112,100
116,626
Total Executive
KMP
Total 2018
December
742,619
816,370
1,473,340
1,197,741
Directors
–
–
–
–
4,325
4,325
–
8,650
Executive KMP4
–
–
–
–
–
8,650
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100,000
50,000
762,742
58,000
45,675
45,675
50,000
1,120,742
618,724
477,835
233,704
228,726
1,558,989
2,679,731
1 Accrued cash bonus defined as bonus earned during the year that has been paid or accrued
2 KMP was employed by the Group up to 31 May 2018
3 No longer employed as a KMP effective 30 September 2018 and engaged as a part-time consultant at a monthly fee of US$3,125 per month effective
October 2018.
4 All salaries are paid in local currency and converted to USD by average FX — only for the purpose of preparing this table
Austral Gold Limited
43
Annual Report 2018
Six-month period ended 31 December 2017
Primary
Post-employment
Share-based
Total
Cash and
accrued
Salary and
Fees US$
Accrued
Cash
Bonus
US$
Non-
monetary
benefits
US$1
Superannuation
US$
Retirement
benefits
US$
Shares
US$
Options
US$
US$
Directors
–
–
-
–
1,357
1,357
–
2,714
Executive KMP3
–
–
–
-
–
–
–
–
–
–
–
–
–
–
322,161
322,161
–
–
547,330
–
–
–
–
547,330
–
–
–
–
E Elsztain
40,000
S Zang
20,000
–
–
S Kasaneva
187,916
170,000
W Hubert
24,000
R Trzebski
14,282
B Jarvis
14,282
P Vergara del
Carril
20,000
–
–
–
–
Total Directors
320,480
170,000
R. Ramirez
151,893
135,000
J. Morel
134,493
121,000
J Bordogna
91,906
50,000
D Guido
92,522
50,000
–
–
–
–
–
–
–
–
–
–
M Brown1, 2
107,085
–
6,111
577,899
356,000
6,111
Total Executive
KMP
Total 2017
December
–
–
–
–
–
–
–
–
–
–
–
–
-
40,000
20,000
905,246
24,000
15,639
15,639
20,000
1,040,524
286,893
255,493
141,906
142,522
435,357
1,262,171
2,302,695
898,379
526,000
6,111
2,714
322,161
547,330
1 Represents health benefits
2 No longer employed as KMP effective as of 31 December 2017
3 All salaries are paid in local currency and converted to USD by average FX — only for the purpose of preparing this table
Austral Gold Limited
44
Annual Report 2018
Contractual Arrangement with Executive KMP at December 31, 2018
Name
Term of Agreement
and notice period
Base salary
Termination payments
Stabro Kasaneva
Chief Executive
Officer
No fixed term
30 days notice
Rodrigo Ramirez
VP of Operations
No fixed term
30 days notice
Jose Bordogna
Chief Financial
Officer
No fixed term
30 days notice
Base salary is paid in Chilean
pesos annually with no FX
adjustment clause
(US$381,731 at USD:CLP
exchange rate 1:642)
Base salary is paid in Chilean
pesos annually with no FX
adjustment clause
(US$309,362 at USD:CLP
exchange rate 1:642)
Base salary is paid in
Argentine pesos annually
with no FX adjustment
clause
(US$138,130 at ARS:USD
exchange rate 30:1)
Pro rata bonus accrued
Pro rata bonus accrued
Pro rata bonus accrued
Relative Proportion of Fixed vs Variable Remuneration Expense
The following table shows the relative proportions of executive remuneration that are linked to performance and those
that are fixed, based on the amounts disclosed as statutory remuneration expense in the tables above
Fixed remuneration
At risk — short-term incentive At risk — long-term incentive
Name
December
2018
December
2017
December
2018
December
2017
December
2018
December
2017
Stabro Kasaneva
50%
21%
50%
79%
Executive Directors
Rodrigo Ramirez
Jose Bordogna
Juan Andrés Morel
Diego Guido
50%
62%
36%
52%
End of Remuneration Report (Audited)
KMP
50%
38%
64%
48%
53%
46%
53%
65%
47%
54%
47%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Austral Gold Limited
45
Annual Report 2018
Other transactions with KMP
Zang, Bergel & Viñes Abogados is a related party since two non-executive Directors, Saul Zang and Pablo Vergara del
Carril have significant influence over this law firm based in Buenos Aires, Argentina. Legal fees charged to the Company
for the twelve month period ended 31 December 2018 amounted to US$117,663 (six months ended 31 December 2017:
US$63,536). This concludes the remuneration report, which has been audited.
Cresud S.A.C.I.F.Y.A, IRSA Inversiones y Representaciones S.A., IRSA Proiedades Comerciales S.A. and Consultores Asset
Management S.A. are related parties as they are controlled by Non-executive Director and Chairman, Eduardo Elsztain.
During the twelve month period ended 31 December 2018 a total of US$197,237 was charged to the Company (six months
ended 31 December 2017: US$270,368) in regard to IT services support, HR services, software licenses and building/
office expenses.
Auditors
KPMG 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 period by the auditor
are outlined in note 9 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the period 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 9 during the period 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.
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 proceed-
ings 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.
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the period ended 31 December 2018 has been received and is included
in this report.
Signed in accordance with a resolution of Directors at Sydney.
Rounding of Amounts
The Company is a company of the kind referred to in ASIC Instrument 2016/191, dated 1 April 2016, and in accordance
with that Instrument amounts in the Directors’ Report and the financial report are rounded off to the nearest thousand
dollars, unless otherwise indicated.
Signed in accordance with a resolution of Directors made pursuant to s.298(2) of the Corporations Act 2001.
For and on behalf of the board
Robert Trzebski
Director
15 March 2019
Austral Gold Limited
46
Annual Report 2018
Austral Gold Limited
47
Annual Report 2018
fiNANciAL sTATEmENTs
Austral Gold Limited
48
Annual Report 2018
Austral Gold Limited Financial Report 2018
Consolidated statement of profit or loss and other comprehensive income
All figures are reported in thousands of US$
Note
12 months ended 31
December 2018
6 months ended 31
December 2017
Continuing operations
Sales revenue
Cost of sales
Gross (loss) profit before depreciation
and amortisation expense
Depreciation and amortisation expense
Gross (loss) profit
Other income
Administration expenses
Impairment of assets
Net finance costs
Gain/(loss) on financial assets
(Loss)/Profit before income tax
Income tax benefit
(Loss)/Profit after income tax expense
(Loss)/Profit attributable to:
Owners of the Company
Non-controlling interests
Items that may not be classified subsequently to profit or loss
Foreign currency translation
Total comprehensive (loss)/income for the year
Comprehensive (loss)/income attributable to:
Owners of the Company
Non-controlling interests
Earnings per share (cents per share):
Basic earnings per share
Diluted earnings per share
6
7
17/18
8
10
11
11
122,767
(98,387)
24,380
(18,422)
5,958
1,868
(12,362)
(29,190)
(2,126)
(1,202)
(37,054)
819
(36,235)
(26,064)
(10,171)
(36,235)
(27)
(36,262)
(26,091)
(10,171)
(36,262)
(4.88)
(4.88)
48,867
(38,915)
9,952
(13,910)
(3,958)
100
(8,645)
-
(3,027)
625
(14,905)
1,525
(13,380)
(13,299)
(81)
(13,380)
23
(13,357)
(13,276)
(81)
(13,357)
(2.56)
(2.56)
The notes on pages (6) to (34) are an integral part of these consolidated financial statements.
Austral Gold Limited
49
Annual Report 2018
Austral Gold Limited Financial Report 2018
Consolidated statement of financial position
All figures are reported in thousands of US$
Note
As at
31 December 2018
As at
31 December 2017
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Total current assets
Non-current assets
Other receivables
Mine properties
Property, plant and equipment
Exploration and evaluation expenditure
Goodwill
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Deferred revenue
Employee entitlements
Borrowings
Total current liabilities
Non-current liabilities
Trade and other payables
Provisions
Borrowings
Employee entitlements
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Non-controlling interest
Total equity
13
15
16
14
15
17
18
19
17
10
20
30
21
23
20
22
23
21
10
24
25
26
27
1,716
9,168
561
13,819
25,264
139
6,723
54,020
16,270
926
3,892
81,970
107,234
17,541
2,140
1,860
8,946
30,487
5
10,664
9,525
793
888
21,875
52,362
54,872
100,569
(49,473)
35
3,741
54,872
6,612
12,722
1,354
22,831
43,519
371
12,336
78,839
15,891
926
2,879
111,242
154,761
25,966
-
2,049
14,089
42,104
6
11,729
8,503
1,003
-
21,241
63,345
91,416
100,569
(23,210)
62
13,995
91,416
The notes on pages (6) to (34) are an integral part of these consolidated financial statements.
Austral Gold Limited
50
Annual Report 2018
Austral Gold Limited Financial Report 2018
Consolidated statement of changes in equity
For the 12 months ended 31 December 2018 and 6 months ended 31 December 2017
All figures are reported in thousands
of US$
Note
Issued
capital
Accumulated
losses
Reserves
Balance at 30 June 2017
Profit/(loss) for the period
Foreign exchange movements from
translation of financial statements to
US$
Total comprehensive income/(loss)
Shares issued
Dividends declared
Balance at 30 December 2017
Adjustment on initial application of
AASB15 (net of tax)
99,050
–
–
–
1,519
–
(9,911)
(13,299)
–
(13,299)
–
–
100,569
(23,210)
–
(199)
24
29
5
Adjusted balance at 1 January 2018
100,569
(23,409)
(26,064)
Profit (loss) for the period
Foreign exchange movements from
translation of financial statements to
US$
Total comprehensive income / (loss)
Dividends declared
26
29
–
–
–
–
Balance at 31 December 2018
100,569
(49,473)
The notes on pages (6) to (34) are an integral part of these consolidated financial statements
Non-
controlling
interest
Total
14,201
103,379
(81)
(13,380)
–
23
(81)
(13,357)
–
(125)
1,519
(125)
13,995
91,416
–
(199)
13,995
91,217
(10,171)
(36,235)
39
–
23
23
–
–
62
–
62
–
–
(27)
–
(27)
(26,064)
(27)
(10,171)
(36,262)
–
–
35
(83)
(83)
3,741
54,872
Austral Gold Limited
51
Annual Report 2018
Austral Gold Limited Financial Report 2018
Consolidated statement of cash flows
All figures are reported in thousands of US$
All figures are reported in thousands of US$
Changes in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents, at the end of the period
Net (decrease) / increase in cash and cash equivalents
Causes of change in cash and cash equivalents
Operating activities
(Loss) / profit after income tax
Non-cash items
Income tax benefit recognised in profit or loss
Impairment of assets
Depreciation and amortisation
Interest received
Gain on sale of plant, property and equipment
Non-cash net finance charges
Inventory write-down
Allowance for doubtful accounts
Performance bonus paid through issuance of ordinary shares
Non-cash employee entitlements
(Gain)/loss in fair value of other financial assets
Net cash from operating activities before change
in assets and liabilities
Changes in working capital:
Decrease / (increase) in inventory
Decrease / (increase) in trade and other receivables
Increase / (decrease) in trade and other payables
Increase / (decrease) in deferred revenue
Increase / (decrease) in employee entitlements
Net cash provided through operating activities
Cash flows from investing activities
Net additions to plant and equipment
Proceeds from sale of bonds and securities
Proceeds from sale of property, plant and equipment
Payment for investment in bonds and securities
Payment for investment in exploration and evaluation
Payment for investment in mine properties
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Financial lease payments
18
19
17
15
Note
12 months ended
31 December 2018
6 months ended
31 December 2017
6,612
1,716
(4,896)
6,094
6,612
518
(36,235)
(13,380)
(819)
29,190
18,422
(84)
(141)
1,680
133
(97)
–
(210)
1,202
13,041
8,680
3,883
(6,219)
2,140
(189)
21,335
(15,854)
894
203
(1,303)
(553)
(1,214)
84
(17,743)
5,746
(11,421)
(2,813)
(8,488)
(4,896)
(1,525)
-
13,910
-
-
1,763
-
-
547
1,318
(625)
2,008
(3,484)
2,314
8,343
–
–
9,181
(7,469)
333
–
(87)
(744)
(105)
–
(8,072)
5,333
(2,047)
(3,877)
(591)
518
Net cash used in financing activities
Net (decrease) / increase in cash and cash equivalents
The notes on pages (6) to (34) are an integral part of these consolidated financial statements
Austral Gold Limited
52
Annual Report 2018
Notes to the financial statements
1. Reporting entity
Austral Gold Limited (“the Company”) is a company limited by shares that is incorporated and domiciled in
Australia. The Company’s shares are publicly traded on the Australian Securities Exchange under the symbol
AGD and on the TSX Venture Exchange under the symbol AGLD.
These consolidated financial statements (“financial statements”) as at and for the 12 months ended 31 Decem-
ber 2018 comprise the Company and its subsidiaries (together referred to as the “Group”). The nature of the
operations and principal activities of the Group are described in the Directors’ Report.
These financial statements are available upon request from the Company’s registered office at Level 5, 126
Phillip Street, Sydney NSW 2000 or at www.australgold.com.
2. Basis of preparation
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 profit oriented entities. The
consolidated financial statements also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
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.
This is the first set of the Group’s audited financial statements where AASB 15 Revenue from Contracts with
Customers and AASB 9 Financial Instruments has been applied. Changes to significant accounting policies
are described in note 5.
These financial statements were authorised for issue by the Company’s Board of Directors on 15 March 2019.
Details of the Group’s accounting policies are included in Note 36.
2.1 Presentation and functional currency
These consolidated financial statements are presented in United States dollars (US$), which is the presenta-
tion and functional currency of the Group.
2.2 Rounding off
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 and in accordance with the legislative instrument, amounts in the audited financial
statements have been rounded off to the nearest thousand dollars, unless otherwise stated.
2.3 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 32.
2.4 Change in year-end
In November 2017, the financial year end of the Company was changed from 30 June to 31 December
to be coterminous with the year end of its operating companies. Accordingly, the financial statements
are prepared for the 12 months from 1 January 2018 to 31 December 2018 and the comparative figures
stated in the statement of profit or loss and other comprehensive income, statement of changes in equity,
statement of cash flows and the related notes and relate to the period 1 July 2017 to 31 December 2017.
Austral Gold Limited
53
Annual Report 2018
Notes to the financial statements
3. Going concern
For the 12 months ended 31 December 2018, the Group incurred a loss after income tax of $34.125 million (6
months ended 31 December 2017: loss after income tax of $13.380 million) from continuing operations and
generated net cash flows from operating activities of $21.335 million (6 months ended 31 December 2017:
net cash flow from operating activities of $9.181 million). At 31 December 2018, the group has net current
liabilities of $5.223m.
The Directors note the following with regards to the ability of the Group to continue as a going concern:
i. At 31 December 2018, the Group had a cash balance of $1.716 million.
ii. The Group’s cash flow forecasts following the most likely mine plan and 2019 production guidance that
forecast production of;
• 75,000-85,000 gold equivalent ounces (100% basis*) and 74,000-77,000 gold equivalent ounces
(net basis*); and
• average 2019 gold and silver selling price of US$1,300 and US$15.9 per ounce respectively, indicate
that the Group forecasts that it will have free cash flow from operations to meet its current and non-
current borrowing obligations and to meet the required capital expenditures.
The financial statements have been prepared on a going concern basis, which contemplates the continu-
ation of normal business operations and the realization of assets and settlement of liabilities in the normal
course of business. Based on the factors set at above, the Directors believe that the going concern basis
of preparation is appropriate and the Group will be able to repay its debts as and when they fall due.
4. Use of estimates and judgements
In preparing these financial statements, Management has made judgements, estimates and assumptions
that affect the application of the 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 recog-
nised prospectively. Information about assumptions and estimation uncertainties that have a significant risk
of resulting in a material adjustment in the 12 months ended 31 December 2018 is detailed below:
Carrying value of Mine Properties
The Group estimates its ore reserves and mineral resources annually at each year end and reports
within the following three months, based on information compiled by Competent Persons as defined
in accordance with the Australasian code for reporting Exploration Results, Mineral Resources and
Ore Resources (JORC code 2012). The estimated quantities of economically recoverable reserves
are based upon interpretations of geological models and require assumptions to be made regarding
factors such as estimates of short and long-term exchange rates, estimates of short and long-term
commodity prices, future capital requirements and future operating performance. Changes in reported
reserves estimates can impact the carrying amount of mine development (including mine properties,
property, plant and equipment and exploration and evaluation assets), the provision for mine closure
provisions, the recognition of deferred tax assets, as well as the amount of amortization charged to
the statement of profit or loss.
Impairment
Significant judgements, estimates and assumptions are required in determining value in use or fair value
less costs of disposal. This is particularly so in the assessment of long life assets. It should be noted that
the CGU recoverable amounts are subject to variability in key assumptions including, but not limited to,
gold and silver prices, currency exchange rates, discount rates, production profiles and operating and
capital costs. A change in one or more of the assumptions used to determine value in use or fair value
less costs of disposal could result in a change in a CGU’s recoverable amount. Indications of impair-
ment of the Group’s Casposo mine property were identified in the current year as disclosed in note 17.
Carrying value 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.
*Austral owns 70% of Casposo
Austral Gold Limited
54
Annual Report 2018
Notes to the financial statements
Mine closure provisions
Obligations associated with exploration and mine properties are recognised when the Group has a
present obligation, the future sacrifice of the economic benefits is probable, and the provision can
be measured reliably. The provision is measured at the present value of the future expenditure and a
corresponding rehabilitation asset is also recognised. On an ongoing basis, the rehabilitation will be
remeasured in line with the changes in the time value of money (recognised as an expense and an
increase in the provision), and additional disturbances (recognised as additions to a corresponding
asset and rehabilitation liability).
Measurement of fair values
The Group has established a control framework with respect to the measurement of fair values. Esti-
mates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recog-
nised prospectively. Information about assumptions and estimation uncertainties that have a significant
risk of resulting in a material adjustment in the 12 months ended 31 December 2018 is detailed below:
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:
i. Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities
ii. 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)
iii. Level 3 — inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels
of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of
the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.
The Group holds listed equity securities on the Australian and Canadian stock exchanges and listed Argen-
tine sovereign bonds at fair value, which are measured at the closing bid price at the end of the reporting
period. These financial assets held at fair value fall within Level 1 of the fair value hierarchy. The Group also
holds options (warrants) which rely on estimates and judgements to calculate a fair value for these financial
instruments using the Black Scholes model. These financial assets held at fair value fall within Level 2 of the
fair value hierarchy. The option to buy a further 10% in the Casposo mine is within Level 3 of the fair value
hierarchy.
Further information about the assumptions made in measuring fair values is included in Note 16 – Other
financial assets and Note 28 – Financial instruments.
Austral Gold Limited
55
Annual Report 2018
Notes to the financial statements
5. Changes in significant accounting policies and adoption of new/amended AASB
and AASB interpretations
The Group has initially applied AASB 15 (see (i)) and AASB 9 (see (ii)) and AASB Interpretation 22 (see iii)
from 1 January 2018. A number of other new standards are also effective from 1 January 2018, but they do
not have a material effect on the Group’s financial statements.
Due to the transition methods chosen by the Group in applying these standards, comparative information
throughout these financial statements has not been restated to reflect the requirements of the new standards.
(i) AASB 15 Revenue from Contracts with Customers (“AASB 15”)
AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue
is recognized. It replaced AASB 118 Revenue, AASB 111 Construction Contracts and related interpretations.
Under AASB 15, the sale of minerals is recognised at the transfer of control or 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. Determining the timing of the transfer of control-at a point in time or over
time-requires judgement.
The Group has adopted AASB 15 using the cumulative effect method. This has been applied to those contracts
that were not completed as at 1 January 2018, with the effect of initially applying this standard recognized
at the date of initial application (i.e. 1 January 2018). Accordingly, the information presented for 2017
has not been restated – i.e. it is presented, as previously reported, under AASB 118, AASB 111 and related
interpretations.
The details of the new significant accounting policies and the nature of the changes to previous accounting
policies in relation to the Group’s sales are set out below.
Type of product or service
Gold and silver
Nature, timing of satisfaction of
performance obligations, significant
payment terms
When the customer is the refinery,
the control of the metals is
transferred at the metal availability
date. The metal availability date
is when the metals are available
for pricing by the refinery. If the
customer is not the refinery, revenue
is recognized when the metals are
transferred to the customer upon
receipt and the customer obtains
control of the metals. Invoices are
payable two business days after the
metal availability date.
Nature of change in accounting
policy
Under AASB 118, revenue was
recognised at the Group’s mines
as follows:
a) at the Casposo mine when the
refinery confirmed the number
of ounces
b) at the Guanaco/Amancaya mine
revenue was recognized when
silver/gold doré bars were shipped
to the refinery which was taken to
be the point in time at which the
customer accepted the material
and related risk and rewards of
ownership transferred.
Under AASB 15, at the Group’s
Guanaco /Amancaya and Casposo
mines, revenue is recognized when
the customer obtains control of the
gold and silver sold.
When the customer is a refinery,
control occurs when material is
received and when the customer is
not a refinery, control occurs when
the ounces of metals are received.
Austral Gold Limited
56
Annual Report 2018
Notes to the financial statements
The following table summarises the impact, net of tax, of transition to AASB 15 on retained earnings and
non- controlling interest at 1 January 2018.
Impact of adopting AASB 15 as of 1 January 2018
In thousands of US$
Accumulated losses
Control of gold and silver sold (1)
Related tax
Impact at 1 January 2018
Non-controlling interests
Impact at 1 January 2018
(267)
68
(199)
–
(199)
(1) Represents sales less cost of sales that was accounted for in December 2017 which under AASB15 would
have been accounted for in January 2018.
The following tables summarise the impact of adopting AASB 15 on the Group’s consolidated statement
of financial position as at 31 December 2018 and its consolidated statement of profit or loss and other
comprehensive income (“OCI”) for the year then ended for each of the line items affected. There was no
material impact on the Group’s interim statement of cash flows for the year ended 31 December 2018.
Impact on the consolidated statement of financial position
In thousands of US$
As at 31 December 2018
Amount without
adoption of AASB 15
Adjustment
As reported
Assets
Non-current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Current assets
Total assets
Equity
Issued capital
Accumulated losses
Reserves
Equity attributable to
owners of the Group
Non-controlling interest
Total equity
Liabilities
Non-current liabilities
Trade and other payables
Deferred revenue
Employee entitlements
Borrowings
Current liabilities
Total liabilities
Total equity and liabilities
81,970
1,716
10,614
561
12,989
25,880
107,850
100,569
(49,084)
35
51,220
3,741
55,261
22,019
19,764
–
1,860
8,946
30,570
52,589
107,850
–
–
(1,446)
–
830
(616)
(616)
–
(389)
–
(389)
–
(389)
(144)
(2,223)
2,140
–
–
(83)
(227)
(616)
81,970
1,716
9,168
561
13,819
25,264
107,234
100,569
(49,473)
35
51,131
3,741
54,872
21,875
17,541
2,140
1,860
8,946
30,487
52,362
107,234
The Group had several sales to a customer who held back approximately 5% of the sale until the price and
quantity of gold and silver are verified. In addition, the Group controls when these amounts are sold. These
amounts are not considered a sale transaction at 31 December 2018 under AASB 15. Had the revenue been
recognised without the adoption of AASB 15, an adjustment to receivables and inventory would have been
recorded.
Austral Gold Limited
57
Annual Report 2018
Notes to the financial statements
Impact on the consolidated statement of profit or loss and OCI
For the 12 months ended 31 December 2018
In thousands of US$
Amount without
adoption of AASB 15
Adjustment
As reported
Sales revenue
Cost of sales
Gross (loss) profit before depreciation
and amortisation expense
Depreciation and amortisation expense
Gross (loss) profit
(Loss)/Profit before income tax
Income tax benefit
(Loss)/Profit after income tax benefit
115,755
(91,109)
24,646
(18,422)
6,224
(36,788)
743
(36,045)
7,012
(7,278)
(266)
–
(266)
(266)
76
(190)
122,767
(98,387)
24,380
(18,422)
5,958
(37,054)
819
(36,235)
The revenue and cost of sales adjustment above reflects the change in accounting policy of applying AASB
15 as referred to on page 9.
ii. AASB 9 Financial Instruments (“AASB 9”)
AASB 9 sets out requirements for recognizing and measuring financial assets, financial liabilities and some
contracts to buy or sell non-financial items. This standard replaces AASB 139 Financial Instruments: Recogni-
tion and Measurement. The adoption of AASB 9 did not have a significant impact on the Group’s Consolidated
Financial statements.
iii. Adoption of other narrow scope amendments to IFRSs and IFRS Interpretations
The Group also adopted other amendments to IFRSs, as well as the Interpretation IFRIC 22 Foreign Currency
Transactions and Advance Consideration, which were effective for accounting periods beginning on or after
1 January 2018. The impact of adoption was not significant to the Group’s Consolidated Interim Financial
Statements.
6. Cost of sales
in thousands of US$
Profit before income tax includes the following specific expenses:
12 months ended 31
December 2018
6 months ended 31
December 2017
Production
Staff costs
Royalties
Mining Fees
Total cost of sales before depreciation and amortisation expense
Depreciation of plant and equipment
Depreciation of mine properties
Total depreciation and amortisation expense
Severance included in staff costs
7. Administration expenses
63,631
30,161
4,050
545
98,387
16,430
1,992
18,422
2,728
21,312
15,664
1,934
5
38,915
9,184
4,726
13,910
319
in thousands of US$
12 months ended 31 December 2018
6 months ended 31 December 2017
Consulting and professional services
Administration
Staff costs
Non-executive director fees
Other
Total administration expenses
Severance included in staff costs
2,110
1,635
6,794
358
1,465
12,362
330
1,098
1,693
4,559
135
1,160
8,645
322
Austral Gold Limited
58
Annual Report 2018
Notes to the financial statements
8. Net finance costs
in thousands of US$
Interest (income)
Interest expense
Loss from foreign exchange
Present value adjustment to mine closure provision
Other
Net finance costs
9. Auditor’s remuneration
in thousands of US$
Remuneration of the auditors (KPMG) of the parent entity for:
Auditing or reviewing the
financial reports
Total auditors’ remuneration – parent entity
Remuneration of auditors (KPMG)
of subsidiaries for:
Auditing or reviewing the
financial reports
Other services/taxation
Total auditors’ remuneration – subsidiaries
10. Income tax expense
in thousands of US$
(A) Income tax expense comprises:
Current tax payable
Deferred tax expense
Income tax (benefit)
(B) Reconciliation of effective income tax rate
Profit/ (Loss) before tax
Prima facie income tax (benefit)/expense calculated at 30%
Difference due to blended overseas tax rate*
Difference due to change in tax rate
Non-deductible expenses
Temporary differences not brought into account
Allowance for doubtful carryforward losses
Income tax (benefit)
12 months ended 31
December 2018
6 months ended 31
December 2017
(84)
1,642
826
(381)
123
2,126
(1)
666
1,881
508
(27)
3,027
12 months ended 31
December 2018
6 months ended 31
December 2017
95,830
95,830
207,030
–
207,030
47,200
47,200
185,848
14,888
200,736
12 months ended 31
December 2018
6 months ended 31
December 2017
591
(1,410)
(819)
(37,054)
(11,116)
(114)
(88)
4,295
682
5,522
(819)
694
(2,219)
(1,525)
(14,905)
(4,471)
513
(311)
2,259
485
–
(1,525)
* Chile tax rate: 27.0% (31 December 2017: 25.5%). Argentina tax rate: Effective June 2018-30% (31 December 2017: 35%)
Austral Gold Limited
59
Annual Report 2018
Notes to the financial statements
in thousands of US$
(C) Deferred tax assets and liabilities
Deferred tax assets
Other receivable
Inventory
Mining Concessions
Accrual for mine closure
Tax losses carried forward
Property, plant and equipment
Payroll accrual
Other
Temporary differences not brought into
account
Deferred tax assets
Deferred tax liabilities
Other provisions
Mining concessions
Financial assets
Leasing assets
102
69
–
967
3,258
–
83
307
55
518
– 8,255
385
–
–
303
4,781
3,999
–
(102)
(4,625)
–
(1,044)
–
(5)
–
Deferred tax liabilities
(5,669)
(107)
Net deferred tax assets / (Liabilities)
(888)
3,892
Movement in deferred tax balances
Opening balance
Exchange rate difference
Charged to profit or loss
Closing balance
11. Earnings per share
in thousands of US$
Net profit attributable to owners
683
2,196
12
(1,583)
(1,297)
2,993
(888)
3,892
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)
12. Operating segments
31 December 2018
31 December 2017
Chile
Argentina
Other
Total
Chile
Argentina
Other
Total
–
–
–
–
102
152
307
1,022
26
367
–
920
9,144
12,920
2,583
–
–
–
2,732
385
303
–
381
–
–
–
477
886
112
463
585
–
3
–
–
–
–
–
26
844
886
1,032
10,307
13,353
–
–
–
585
381
3
(10,307) (10,307)
– (5,522)
(9,144)
(14,666)
–
–
–
–
–
–
–
–
–
–
–
8,780
4,277
2,526
(102)
–
(220)
(4,625)
(2,139)
(5)
(1,044)
–
(1,455)
–
(110)
–
(5,776)
(3,594)
(330)
3,004
683
2,196
2,879
(1,516)
2,873
(1,285)
1,410
3,004
–
2,199
683
(697)
20
2,196
–
–
–
–
–
–
–
–
–
–
6,803
(220)
(2,139)
(110)
(1,455)
(3,924)
2,879
1,357
(697)
2,219
–
2,879
12 months ended
31 December 2018
6 months ended
31 December 2017
(26,064)
(13,299)
534,173,010
534,173,010
(4.88)
(4.88)
519,883,471
519,883,471
(2.56)
(2.56)
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, Guanaco/Amancaya and Casposo. The CODM monitors the performance
in these two regions separately.
Austral Gold Limited
60
Annual Report 2018
Notes to the financial statements
12 months ended 31 December 2018
6 months ended 31 December 2017
in thousands of
US$
Guanaco/
Amancaya
Group and
Casposo
unallocated
Consolidated
items
Guanaco/
Amancaya
Group and
Casposo
unallocated
Consolidated
items
Revenue:
Gold
Silver
76,032
15,384
9,058
22,293
–
–
91,416
31,351
20,077
12,307
1,910
14,573
Cost of sales
(59,882)
(38,505)
(98,387)
(20,131)
(18,784)
–
–
–
32,384
16,483
(38,915)
Depreciation
and amorti-
sation expense
(13,638)
(4,738)
(46)
(18,422)
(8,469)
(5,424)
(17)
(13,910)
Other income
8
1,860
–
1,868
16
84
–
100
Administration
expenses
(7,278)
(2,164)
(2,920)
(12,362)
(3,324)
(3,706)
(1,615)
(8,645)
Finance costs
460
(1,931)
(655)
(2,126)
(2,182)
(831)
(14)
(3,027)
Gain/ (loss) on
movements in
financial assets
Impairment
of assets
Income tax
benefit
Segment
profit/(loss)
Segment
assets
Segment
liabilities
Capital
expenditure
8
–
(903)
(307)
(1,202)
(29,190)
–
(29,190)
–
–
(1,789)
3,072
(464)
819
1,505
625
–
20
–
–
–
625
–
1,525
2,979
(34,822)
(4,392)
(36,235)
(10,598)
(1,136)
(1,646)
(13,380)
68,394
27,350
11,490
107,234
83,623
61,801
9,337
154,761
38,264
12,994
1,104
52,362
48,095
14,037
1,213
63,345
8,824
8,455
342
17,621
5,131
4,900
227
10,258
Geographical information:
in thousands of US$
Revenue by geographic location
Chile
Argentina
Australia
Canada
Total revenue
Non-current assets by geographic location
Chile
Argentina
Australia
British Virgin Islands
Canada
Total non-current assets
12 months ended
31 December 2018
6 months ended
31 December 2017
85,090
37,677
–
–
122,767
58,171
23,697
–
92
10
81,970
21,987
26,880
–
–
48,867
64,849
46,299
–
81
13
111,242
Austral Gold Limited
61
Annual Report 2018
Notes to the financial statements
13. Cash and cash equivalents
in thousands of US$
Cash at call and in hand
Total cash and cash equivalents
31 December 2018
31 December 2017
1,716
1,716
Reconciliation of Cash
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
1,716
Risk Exposure
The Group’s exposure to interest rate risk is discussed in note 28. The maximum exposure to credit risk at the
reporting date is the carrying amount of each class of cash and cash equivalents mentioned above
6,612
6,612
6,612
14. Inventories
in thousands of US$
Materials and supplies
Ore stocks
Gold bullion and gold in process
Total inventories
31 December 2018
31 December 2017
10,453
354
3,012
13,819
9,178
5,730
7,923
22,831
* Ore stock inventories require estimates and assumptions most notably in regard to grades, volumes, densities, future completion costs and ultimate
sale price. Such estimates and assumptions may change as new information becomes available which may impact upon the carrying value of inventory.
The allowance for inventory obsolescence forming part of the above balance is US$1,082k (31 December 2017:US$949k).
15. Trade and other receivables
in thousands of US$
Current
Trade receivables
Other current receivables
Prepaid income tax
GST/VAT receivable
Total current receivables
Non-current
GST/VAT receivable
Other
Prepaid income tax
Total non-current receivables
Trade debtors
The ageing of trade receivables is 0–30 days
15.1 Past due but not impaired
31 December 2018
31 December 2017
–
272
2,827
6,069
9,168
12
121
6
139
–
2,036
1,435
4,402
4,849
12,722
226
145
–
371
2,036
There were no receivables past due at 31 December 2018 (31 December 2017: nil).
15.2 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 28 for more information on the risk management policy of the Group and
the credit quality of the receivables.
15.3 Key customers
The Group is not reliant on any one customer to sell gold and silver produced from the Guanaco/Amancaya
and Casposo mines.
Austral Gold Limited
62
Annual Report 2018
Notes to the financial statements
16. Other Financial Assets
in thousands of US$
Current
Call option to buy a further 10% of Casposo - level 3
Options (warrants) — level 2
Listed bonds — level 1
Listed equity securities — level 1
Total current other financial assets at fair value
31 December 2018
31 December 2017
–
–
341
220
561
903
364
69
18
1,354
The table above sets out the Group’s assets and liabilities that are measured and recognised at fair value at
31 December 2018.
Listed equity securities as at 31 December 2018 are shares of Fortuna Silver Mines Inc. (31 December 2017;
shares of Troy Resources Limited).
The Group has options to buy the remaining 30% of the Casposo mine. The call options were valued by
comparing the discounted future cash flows related to each remaining 10% tranche and comparing against
the contracted price for each 10% option.
Fair value hierarchy
Refer to note 4 of these financial statements for details of the fair value hierarchy.
Transfers
During the year ended 31 December 2018 there were no transfers between the financial instrument levels
of hierarchy.
17. Mine properties
in thousands of US$
Guanaco/Amancaya
Casposo
Total
Mine Properties – 31 December 2018
Cost
Accumulated amortisation
Carrying value – Mine Properties
Movements in carrying value
Carrying amount at 1 January 2018
Additions
Transfers from Exploration and Evaluation
expenditure
Amortisation
Impairment
Carrying amount at 31 December 2018
Mine Properties – 31 December 2017
Cost
Accumulated amortisation
Carrying value – Mine Properties
Movements in carrying value
Carrying amount at 1 July 2017
Additions
Increase in mine closure provision
Present value adjustment
Amortisation
Carrying amount at 31 December 2017
61,129
(54,406)
6,723
6,608
1,214
–
(1,099)
–
6,723
59,915
(53,307)
6,608
8,939
105
961
–
(3,397)
6,608
8,889
(8,889)
–
5,728
–
174
(893)
(5,009)
–
8,715
(2,987)
5,728
7,003
–
–
54
(1,329)
5,728
70,018
(63,295)
6,723
12,336
1,214
174
(1,992)
(5,009)
6,723
68,630
(56,294)
12,336
15,942
105
961
54
(4,726)
12,336
Austral Gold Limited
63
Annual Report 2018
Notes to the financial statements
Carrying value — Guanaco/Amancaya
The Guanaco mine has been determined by Management, along with the Amancaya properties in the
surrounding areas to be a single cash generating unit (“CGU”). The mine properties noted above and the
property, plant and equipment that is an intrinsic part of the mine and its structure (included in note 18) with
a total book value of $51.861m are included in determining the carrying value of the CGU for the purposes
of assessing for impairment.
Management have assessed the fair value to be above book value of the Guanaco project and therefore no
impairment charge has been applied to the assets for the current year. The fair value is based on an inde-
pendent valuation using a discounted cash flow model and the following key assumptions:
• Gold price: US$1,268/oz – US$1,325/oz (31 December 2017 US$1,277/oz – US$1,301/oz)
• Silver price: US$15.90/oz – US$17.5/oz (31 December 2017 US$17.30/oz – US$18.10/oz)
• Life of Mine: 2.5 years (Life of mine based on most recent financial model used for impairment testing)
• Discount Rate (post-tax): 5.2% (31 December 2017: 6.4%)
Carrying value — Casposo
After the acquisition of and as part of the restart of full operations at the Casposo gold-silver mine (‘Casposo’)
an update to the Mineral Resource and Ore Reserve estimate was made. The estimates were reviewed by
independent consultants Roscoe Postle Associates (“RPA”), and are summarised in a National Instrument
43-101 (“NI 43-101”) and JORC 2012 compliant Technical Report dated September 7, 2016. The mine proper-
ties noted above and the property, plant and equipment that is an intrinsic part of the mine and its structure
There has been a decrease in production at Casposo throughout 2018 due to lower tonnage of ore extraction
from the mine due to operational delays, changes in exploitation sequence, poor rock quality conditions that
required further fortification work, amongst others. As a result of the decrease in production, management
performed a comprehensive review of the Casposo operational and business model which facilitated a short-
term mine plan for only the first-half of 2019 with production guidance of 12,000-16,000 GEOs. As such, the
Group anticipates that with the current level of reserves, the remaining life of the mine will end during the
first half of FY19. This has resulted in a valuation for Casposo which facilitated the impairment loss to write
down the book value of the mine and property, plant and equipment to its estimated fair value.
Management have assessed the fair value of Casposo to be lower than the book value. As a result, manage-
ment has recorded an impairment charge of $29.190m against the carrying value of the Casposo Mine of
which US$5.009m has been charged against Mine Properties and US$24.181m against Property, Plant and
Equipment. The fair value is based on an independent valuation using a discounted cash flow model and
the following assumptions:
• Gold price: US$1,268/oz US (31 December 2017 US$1,277/oz – US$1,301/oz)
• Silver price: US$15.90/oz US/oz (31 December 2017 US$17.30/oz – US$18.10/oz)
• Life of Mine: 0.5 years (Life of mine based on most recent financial model used for impairment testing)
• Discount Rate (post-tax): 10.5% (31 December 2017: 8.4%)
Change to amortisation
Changes to estimates of the recoverable ounces of the Company’s mining projects are reviewed at least
annually, or whenever facts and circumstances warrant that an assessment should be made. During the year
ended December 2018, management assessed the estimated recoverable ounces that form the basis for the
Company’s Life of Mine (LOM) plans which are used for business purposes and accounting estimates, includ-
ing: determination of the useful life of property, plant and equipment and measurement of the depreciation
and amortisation expense, and impairment assessment for non-current assets.
As a result of this review, the Group determined that the depreciation and amortisation of mining properties
and property, plant and equipment should be aligned with the Company’s LOM plans.
Amortisation of the Casposo mine will be over the remaining 6 month expected production life.
The effect of these changes on actual and expected deprecation and amortisation expense on the Guanaco
mine included in “cost of sales” is as follows:
In thousands of US$
(Decrease) increase in deprecation and
amortisation expense
2018
(199)
2019
(288)
2020
(292)
2021
779
Net
0
Austral Gold Limited
64
Annual Report 2018
Notes to the financial statements
Goodwill
Goodwill has arisen on the acquisition of a subsidiary, Ingenieria y Mineria Cachinalito Limitada. The recov-
erable amount of the goodwill arising from the Cachinalito business has been determined by including it as
part of the combined Guanaco/Amancaya CGU described above. In light of the results of the independent
valuation, management has assessed the goodwill as not being impaired.
18. Property, plant and equipment
in thousands of US$
31 December 2018
31 December 2017
Property, plant and equipment – at cost
Accumulated depreciation
Carrying amount at end of the period
Movements in carrying value
Carrying amount at beginning of the period
Additions
Depreciation
Disposals
Impairment of Casposo
Carrying amount at end of the period
155,436
(101,416)
54,020
78,839
15,854
(16,430)
(62)
(24,181)
54,020
139,644
(60,805)
78,839
80,554
7,469
(9,184)
–
–
78,839
The majority of the property, plant and equipment is included in either the Guanaco/Amancaya Cash Gener-
ating Unit (“CGU”) or the Casposo (“CGU”). Refer to note 17 for discussion on impairment. Property, plant
and equipment that does not form part of the Guanaco or Casposo CGUs 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 31 December 2018, the net
carrying amount of lease equipment was US$12.2m (31 December 2017: US$16.4m).
in thousands of US$
31 December 2018
31 December 2017
Stripping costs in production phase included in
Property, Plant and Equipment
Movements in carrying value
Carrying amount at beginning of the period
Amortisation
Carrying amount at end of the period
19. Exploration and evaluation expenditure
244
2,241
(1,997)
244
2,241
2,314
(73)
2,241
in thousands of US$
31 December 2018
31 December 2017
Costs carried forward in respect of areas of interest:
Carrying amount at the beginning of the period
Additions
Transfers to Mining Properties
Write-off for the period
Carrying amount at end of the period
15,891
553
(174)
–
16,270
14,175
1,723
–
(7)
15,891
The recovery of the carrying amount of the exploration and evaluation assets is dependent on the success-
ful development and commercial exploration or sale of the areas of interest. This balance mainly relates to
expenditures at the Guanaco, Casposo and Pingüino exploration projects.
Additions for the 12 months ended 31 December 2018 relate mainly to exploration on the Casposo and
Pingüino projects.
Additions for the 6 months ended 31 December 2017 relate mainly to the acquisition of the San Guillermo
and Reprado projects from Revelo Resources Corporation (‘Revelo’, TSX-V: RVL) for consideration of ten
million Austral Gold ordinary shares and subject to existing Net Smelter Royalties (‘NSR’) and an additional
NSR of up to 1%. At the time of acquisition, the San Guillermo and Reprado projects were not in production
and there was no mine plan to place them into production. For these reasons, among others, the acquisition
was accounted for as an asset acquisition. The value of the shares issued was US$972,006.
Austral Gold Limited
65
Annual Report 2018
Notes to the financial statements
20. Trade and other payables
in thousands of US$
Current
Trade payables
Accrued expenses
Royalty payable
Salaries and bonuses
Income tax payable
Other taxes payable
Director fees payable
Other payables
Total trade and other payables
Non-Current
Other payables
21. Employee entitlements
in thousands of US$
Current
Employee entitlements
31 December 2018
31 December 2017
8,582
3,868
1,656
2,975
15
148
297
–
17,541
5
14,655
4,331
2,259
4,105
241
277
92
6
25,966
6
31 December 2018
31 December 2017
1,860
2,049
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
Employee entitlements
793
1,003
Indemnification for years of service
Retirement benefits are to be paid upon the death of workers and for disability and retirement.
The methodology followed to determine the provision for all employees adhering to the agreements has
considered turnover rates and the RV-2014 mortality table established by the Superintendency of Securi-
ties and Insurance to calculate the reserves of life insurance in Chile according to the valuation method
called Accumulated Benefit Valuation Method or Accrued Benefit Cost. This methodology is established
in the International Accounting Standard No. 19 on Retirement Benefits Costs. The parameters of turnover
rates, rates of increase of remunerations and discount rate have been determined by the Group.
22. Provisions
in thousands of US$
Non current
Mine closure
Others
Closing balance
Movement in non current provisions
Opening balance
Additions
Reclassifications from payables
Exchange difference
Present Value Adjustment
Closing balance
31 December 2018
31 December 2017
10,628
36
10,664
11,729
25
5
(714)
(381)
10,664
11,718
11
11,729
10,195
961
11
–
562
11,729
Austral Gold Limited
66
Annual Report 2018
Notes to the financial statements
The mine closure (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 period 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.
Concurrent reclamation, along with mining operations, is ongoing throughout the facility and continues to
be a vital part of the Group’s reclamation practices. The plans are developed taking into consideration all
legal, regulatory, governmental, and community requirements and compromises. Thus, the plan incorporates
a number of assumptions used to estimate closure and post-closure objectives.
As at 31 December 2018, the total restoration provision amounts to US$7.3m for Guanaco/Amancaya mine.
The present value of the restoration provision was determined based on the following assumptions:
• Undiscounted rehabilitation costs: US$8.8m; and
• Remaining life of Mine: 2.5 years (Life of mine based on most recent financial model used for impair-
ment testing).
• Discount rate: 2.50% (2017-2.25%)
As at 31 December 2018, the total restoration provision amounts US$3.365m for the Casposo mine. The pres-
ent value of the restoration provision was determined based on the following assumptions:
• Undiscounted rehabilitation costs: US$4.2m; and
• Remaining life of Mine: 0.5 years (Life of mine based on most recent financial model used for impair-
ment testing).
• Discount rate: 9.63% (2017–2.49%)
There are no current plans for rehabilitation and restoration as the Group plans to operate the mine at Casposo
until the forecasted life of mine in June 2019 and an exploration program is expected to continue along with
a regular review of market conditions for the potential future restart of operations.
23. Borrowings
in thousands of US$
Current
Lease liability
Credit facilities
Total current borrowings
Non-Current
Lease liability
Credit facilities
Total non-current borrowings
31 December 2018
31 December 2017
2,086
6,860
8,946
6,617
2,908
9,525
5,640
8,449
14,089
5,503
3,000
8,503
The Group’s owes US$10.9m to Santander Bank (Chile) which is to be repaid over 60 months at an annual
interest rate of 5.5%. The amount is classified as follows: US$0.5m as a current lease, US$1.2m as a current
credit facility, non-current lease of US$5.9m and non-current credit facility of US$2.9m.
In addition to the amount referred to above, the current Credit facilities consists of the following facilities:
• US$2.5m pre-export facility for Casposo mine operation with Banco San Juan (180 days) at an annual
interest rate of 6.25%;
• US$0.5m credit facility for Casposo mine operation with Banco Comafi (6 months) at an annual interest
rate of 4.75%; and
• the current portion of a US$3.0m credit facility with the BAF Latam Credit Fund at an annual interest
rate of 8.5%. The credit facility is secured by a guarantee from the Group and a corresponding propor-
tion of the receipts of doré sales from the Guanaco mine in Chile. Amounts drawn against the credit
facility are to be repaid within 6 months.
Austral Gold Limited
67
Annual Report 2018
Notes to the financial statements
24. Issued capital
in thousands of US$
Fully paid ordinary shares
Number of ordinary shares at year end
Movements in ordinary share capital
Date
Balance at 30 June 2017
Shares issued to purchase properties from Revelo
Shares issued to a non-executive Director
08 Dec 17
12 Dec 17
Balance at 31 December 2017
Balance at 31 December 2018
31 December 2018
31 December 2017
100,569
100,569
534,173,010
534,173,010
Number of
ordinary shares
518,983,178
10,000,000
5,189,832
534,173,010
534,173,010
US$’000
99,050
972
547
100,569
100,569
Ordinary shares participate in dividends and the proceeds on winding up of the Parent Entity in proportion
to the number of shares held. At shareholders meetings each ordinary share is entitled to one vote when a
poll is called, otherwise each shareholder has one vote on a show of hands. The ordinary shares do not have
any par value.
25. Accumulated losses
in thousands of US$
Note
31 December 2018
31 December 2017
Accumulated losses at beginning of year
Adjustment on initial application of AASB15
(net of tax)
Adjusted balance at 1 January 2018
Net profit/(loss) for the year
Accumulated losses at end of year
26. Reserves
in thousands of US$
Foreign currency translation reserve
Balance at beginning of period
Foreign exchange movements from translation of
financial statements to US dollars
Balance at end of period
Share option reserve
Balance at beginning of period
Balance at end of period
Total reserves
Nature and purpose of reserves
5
(23,210)
(199)
(23,409)
(26,064)
(49,473)
(9,911)
–
(9,911)
(13,299)
(23,210)
31 December 2018
31 December 2017
383
(27)
356
(321)
(321)
35
360
23
383
(321)
(321)
62
Foreign Currency Translation Reserve
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.
27. Non-controlling interest
in thousands of US$
31 December 2018
31 December 2017
Non controlling interest in subsidiaries comprise
Acquired as part of subsidiary
3,741
13,995
Austral Gold Limited
68
Annual Report 2018
Notes to the financial statements
28. 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 (inter-
est 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’s exposure to credit risk and liquidity
risk is monitored through general business budgets and forecasts.
The Group holds the following financial instruments:
in thousands of US$
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Borrowings
a. Market Risk
31 December 2018
31 December 2017
1,716
3,226
561
17,546
18,471
6,612
8,018
1,354
25,972
22,592
i. 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$.
As at 31 December 2018, the Group was exposed to foreign exchange risk though the following financial assets
and liabilities denominated in currencies other than the Group’s functional currency (thousands of $US).
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Borrowings
Argentinian
Peso (ARS)
Chilean Peso
(CLP)
Australian
Dollar
Canadian
Dollar
81
5,310
54
6,236
128
21
3,915
–
8,554
191
8
22
–
118
–
8
23
–
43
–
Austral Gold Limited
69
Annual Report 2018
Notes to the financial statements
ii. Price Risk
The Group’s revenues are exposed to fluctuations in the price of gold, silver and other prices. Gold and silver
produced is sold at prevailing market prices in US$.
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.
Historical Evolution in the gold and silver commodity prices (US$)
Sensitivity to Changes in Commodity Prices (Gold and Silver)
The below sensitivity analysis demonstrates the after tax effect on the profit/(loss) and equity which could
result if there were changes in the gold and silver commodity prices by +/- 10% of the actual commodity
prices realised by the Group.
in thousands of US$
10% increase in gold
and silver prices
10% decrease in gold
and silver prices
Effect on profit/(loss)
Effect on equity
year ended
31 December 2018
6 months ended
31 December 2017
31 December 2018
31 December 2017
12,277
4,887
12,277
4,887
(12,277)
(4,887)
(12,277)
(4,887)
iii. 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.
b. Financial Market Risk
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 securi-
ties 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.
The group holds listed government bonds and listed equity securities (note 16). These are classified as level
1 within the fair value hierarchy as per AASB 7 “Financial Instruments. The call option to buy a further 10%
interest in Casposo (note 16) are classified as level 3.
Austral Gold Limited
70
Annual Report 2018
Notes to the financial statements
c. 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 securitise 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.
d. 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.
Maturities of financial liabilities
The tables below analyses 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.
in thousands of US$
31 December 2018
Financial liabilities
Trade and other payables
Borrowings
Total 31 December 2018
liabilities
31 December 2017
Financial liabilities
Trade and other payables
Borrowings
Total 31 December 2017
liabilities
29. Dividends
in thousands of US$
< 6 months
6-12 months
1-5 years
> 5 years
Total
Consolidated
17,544
7,374
24,918
25,966
3,150
29,116
–
1,572
1,572
–
3,149
3,149
2
9,525
9,527
6
5,526
5,532
–
–
–
–
–
–
17,546
18,471
36,017
25,972
11,825
37,797
31 December 2018
31 December 2017
No dividends to shareholders were paid or proposed during the current and prior period.
During the year ended 31 December 2018 a dividend was declared to the shareholders of Ingenieria y Minera
Cachinalito Limitada. US$83k (6 months ended 31 December 2017— US$125k) corresponds to the minority interest
shareholder.
Austral Gold Limited
71
Annual Report 2018
Notes to the financial statements
30. Commitments
in thousands of US$
Lease commitments
31 December 2018
% owned
31 December 2017
% owned
Finance lease commitments at the reporting date and recognised as liabilities, payable:
Within one year
Two to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing:
Lease liability—current
Lease liability—non-current
Operating leases not recognised as liabilities
2,536
7,264
9,800
(1,097)
8,703
2,036
6,617
122
6,083
5,743
11,826
(683)
11,143
5,640
5,503
326
To maintain legal rights to its properties, the Group pays fees for mining concessions and exploration. It anticipates that it will need to pay approximately
US$0.488m during the next year to maintain legal rights to all of its properties.
As at 31 December 2018 US$2.1 million has been recognised as deferred revenue for cash received in advance from its customer. A contractual obligation
exists for the supply of 1,910 ounces of gold equivalent ounces by 2019 February. The shipment was made on 9 January 2019.
31. Subsidiaries
Parent entity
Austral Gold Limited
Subsidiaries
Country of
Incorporation
31 December 2018
% owned
31 December 2017
% owned
owned
Guanaco Mining Company Limited
British Virgin Islands
Guanaco Compañía Minera SpA
Austral Gold Argentina S.A.
Ingenieria y Mineria Cachinalito Limitada
Argentex Mining Corporation
SCRN Properties Ltd.
Casposo Project 1
Chile
Argentina
Chile
Canada
Canada
Argentina
100.000
99.998
99.970
51.000
100.000
100.000
70.000
100.000
99.998
99.970
51.000
100.000
100.000
70.000
1. The Group has power over the key operating and strategic decisions of the Casposo project and accordingly consolidates the project.
32. Parent Entity Information
in thousands of US$
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Accumulated losses
Reserves
Total shareholders’ equity
Gain/(Loss) of the parent entity
Total comprehensive income/(loss) 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.
31 December 2018
31 December 2017
39
66,933
12,552
12,552
54,381
100,569
(45,878)
(310)
54,381
(978)
(1,005)
A*
None
None
1,022
67,916
12,530
12,530
55,386
100,569
(44,900)
(283)
55,386
(1,056)
(1,033)
A*
None
None
A* Austral Gold Limited is guarantor for the credit facility of US$3m between BAF and Guanaco Compañía Minera SpA.
Austral Gold Limited
72
Annual Report 2018
Notes to the financial statements
33. Related party transactions
33.1 KMP holdings of shares and share options at 31 December 2018
• Mr Eduardo Elsztain holds 455,443,295 shares indirectly in Austral Gold Limited. (31 December 2017—
451,573,010)
• Mr Saul Zang holds 1,435,668 shares directly in Austral Gold Limited. (31 December 2017—1,435,668)
• Mr Pablo Vergara del Carril holds 68,119 shares directly in Austral Gold Limited. (31 December
2017—68,119)
• E Elsztain and S Zang are Directors of IFISA which holds 414,880,857 shares according to the last sub-
stantial holder notice lodged in January 2019. (31 December 2017—414,880,857)
• P Vergara del Carril, E Elsztain and S Zang are Directors of Guanaco Capital Holding Corp which
holds 31,386,890 shares according to the last substantial holder notice lodged in January 2019.
(31 December 2017—31,386,890)
• Mr Stabro Kasaneva holds 6,881,230 shares indirectly in Austral Gold Limited. (31 December
2017—6,881,230)
• Mr Wayne Hubert holds 1,750,000 shares indirectly in Austral Gold Limited. (31 December
2017—1,750,000)
• Mr. Rodrigo Ramirez holds 279,514 shares directly in Austral Gold Limited. (31 December 2017—279,514)
33.2 Directors and Key Management Personnel Remuneration
The aggregate compensation made to Directors and other members of Key Management Personnel of the
Group is set out below:
in thousands of US$
12 months ended 31 December 2018
6 months ended 31 December 2017
Short-term employment benefits
Non-executive director fees
Share-based payment (note 24)
Post-employment benefits
Total
2,322
358
–
–
2,680
1,620
135
547
322
2,624
Other transactions with related parties
Zang, Bergel & Viñes Abogados is a related party since two non-executive Directors, Saul Zang and Pablo
Vergara del Carril have significant influence over this law firm based in Buenos Aires, Argentina. Legal fees
charged to the Group for the 12 months ended 31 December 2018 amounted to US$117,663 (6 months ended
31 December 2017: US$63,536).
Cresud S.A.C.I.F.Y.A, IRSA Inversiones y Representaciones S.A., IRSA Proiedades Comerciales S.A. and
Consultores Asset Management S.A. are related parties as they are controlled by Non-executive Director and
Chairman, Eduardo Elsztain. During the twelve month period ended 31 December 2018 a total of US$197,237
was charged to the Company (six months ended 31 December 2017: US$270,368) in regard to IT services
support, HR services, software licenses and building/office expenses.
33.3 Ultimate parent entity
The Parent Entity is controlled by IFISA with a 77.67% interest in Austral Gold Limited and is incorporated
in Uruguay.
The ultimate beneficial owner of IFISA is Eduardo Elsztain.
Austral Gold Limited
73
Annual Report 2018
Notes to the financial statements
34. Unrecognised deferred tax assets
In certain entities of the Group, tax losses have not been recognised as deferred tax assets in respect of
the following items, because it is not probable that future taxable profit will be available against which the
Group can use the benefits therefrom.
Australia
Tax losses
Capital losses
Canada
Tax losses
US$ ‘000
14,096
2,277
15,677
Expiry
No Expiry
No Expiry
2019-2039
The ability of the Group to utilise Australian or Canadian tax losses will depend on the applicability and
compliance with the respective Australian or Canadian tax laws regarding continuity of ownership or same
or similar business tests.
35. Subsequent events
None
36. Significant accounting policies
The group has consistently applied the following accounting policies to all periods presented in these
consolidated financial statements, except if mentioned otherwise (see also Note 5).
Set out below is an index of the significant accounting policies.
Basis of consolidation
Revenue recognition
Goods and services tax (GST)/ Value added tax (VAT)
Foreign currency translation
Mine properties
Exploration and evaluation expenditure
Property, plant and equipment
Cash and cash equivalents
Income tax
Inventories
Trade and other receivables
Trade and other payables
Interest bearing liabilities
Provisions
Leases
Impairment of non-financial assets
De-recognition of financial assets and financial liabilities
Contributed equity
Earnings per share
Borrowing costs
Employee leave benefits
Segment reporting
New, revised or amending Accounting Standards and Interpretations adopted
36.1
36.2
36.3
36.4
36.5
36.6
36.7
36.8
36.9
36.10
36.11
36.12
36.13
36.14
36.15
36.16
36.17
36.18
36.19
36.20
36.21
36.22
36.23
Austral Gold Limited
74
Annual Report 2018
Notes to the financial statements
36.1 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 31 to the financial statements. The financial statements of the
subsidiaries are prepared for the same reporting periods as the parent company using consistent account-
ing 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.
Business combinations
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.
Goodwill
Goodwill has arisen on the acquisition of a subsidiary, Ingenieria y Mineria Cachinalito Limitada. The recov-
erable amount of the goodwill arising from the Cachinalito business has been determined by including it as
part of the combined Guanaco/Amancaya CGU described above.
In light of the results of the independent valuation, management has assessed the goodwill as not being
impaired.
36.2 Revenue Recognition
The Group has initially applied AASB 15 from 1 January 2018. Information about the Group’s accounting
policies related to contracts with customers is provided in Note 5. The effect of initially applying AASB 15
is also described in Note 5.
36.3 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 recog-
nised 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 invest-
ing and financing activities, which are disclosed as operating cash flows.
36.4 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.
36.5 Mine Properties
Mines in production represent the aggregated exploration and evaluation expenditure and capitalised devel-
opment costs in respect of areas of interest in which mining is ready to or has commenced. Mine develop-
ment costs are deferred until commercial production commences, at which time they are depreciated on a
units-of-production basis over the mineable reserves. Once production commences, further development
expenditure is classified as part of the cost of production, unless substantial future economic benefits can
be established.
Amortisation
Aggregated costs on productive areas are amortised over the life of the area of interest to which such costs
relate on the units-of-production basis.
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Notes to the financial statements
Deferred stripping costs
Deferred stripping costs represent certain mining costs, principally those that relate to the stripping of waste,
which provides access so that future economically recoverable ore can be mined. Stripping (i.e. overburden
and other waste removal) costs incurred in the production phase of a surface mine are capitalised to the
extent that they improve access to an identified component of the ore body and are subsequently amortised
on a systematic basis over the expected useful life of the identified component of the ore body.
Capitalised stripping costs are disclosed as a component of Mine Properties. Components of an ore body
are determined with reference to life of mine plans and take account of factors such as the geographical
separation of mining locations and/or the economic status of mine development decisions. Capitalised
stripping costs are initially measured at cost and represent an accumulation of costs directly incurred in
performing the stripping activity that improves access to the identified component of the ore body, plus
an allocation of directly attributable overhead costs. The amount of stripping costs deferred is based on a
relevant production measure which uses a ratio obtained by dividing the tonnage of waste mined by the
quantity of ore mined for an identified component of the ore body. Stripping costs incurred in the period
for an identified component of the ore body are deferred to the extent that the current period ratio exceeds
the expected waste to ratio for the life of the identified component of the ore body. Such deferred costs
are then charged against the statement of profit or loss when the stripping ratio falls below the life of mine
ratio. These are a function of the mine design and therefore any changes to the design will generally result in
changes to the ratio. Changes in other technical or economic parameters that impact on reserves may also
have an impact on the component ratio even though they may not impact the mine design. Changes to the
life of mine plan, identified components of an ore body, stripping ratios, units of production and expected
useful life are accounted for prospectively. Deferred stripping costs form part of the total investment in a
cash generating unit, which is reviewed for impairment if events or changes in circumstances indicate that
the carrying value may not be recoverable.
36.6 Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of inter-
est and carried forward in the statement of financial position where rights to tenure of the area of interest
are current; and 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 recover-
able 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 writ-
ten off in the year in which such a decision is made.
When the technical and commercial feasibility of an undeveloped mining project has been demonstrated,
the project enters the construction phase. The cost of the project assets are transferred from exploration and
evaluation expenditure and reclassified into construction 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 Mine Properties or an appropriate class of property, plant and
equipment.
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.
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Notes to the financial statements
36.7 Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impair-
ment losses.
Depreciation
The depreciated amount of property, 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, adjust-
ments 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.
De-recognition and disposal
An item of property, plant and equipment is de-recognised 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.
36.8 Cash and cash equivalents
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 months or less, and bank
overdrafts.
36.9 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.
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Notes to the financial statements
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.
36.10 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.
If the ore stockpile is not expected to be processed in 12 months after reporting date, it is included in
non-current assets and the net realisable value is calculated on a discounted cash flow basis. Stockpiles
are measured by estimating the number of tonnes added and removed from the stockpile, the number of
contained ounces based on assay data, and the estimated recovery percentage. Stockpile tonnages are
verified to periodic surveys.
Gold bullion and gold-in-process are valued at the lower of cost and net realisable value. Net realisable value
is determined using the prevailing metal prices.
36.11 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.
36.12 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.
36.13 Interest bearing liabilities
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transac-
tion 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.
36.14 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.
36.15 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.
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Notes to the financial statements
36.16 Impairment of non-financial assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to deter-
mine 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.
36.17 De-recognition of financial assets and 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 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.
36.18 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.
36.19 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.
Diluted earnings per share
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.
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Notes to the financial statements
36.20 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.
36.21 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.
36.22 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker (“CODM”).
The CODM, who is responsible for allocating resources and assessing performance of the operating segments,
has been identified as the Chief Executive Officer.
36.23 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.
37. New accounting standards and interpretations not yet mandatory or early adopted
A number of new standards and amendments to standards are effective for annual periods beginning after
1 January 2018 and earlier application is permitted; however, the Group has not early adopted the following
new or amended standards in preparing these consolidated financial statements.
AASB 16 Leases
AASB 16 removes the classification of leases as either operating or finance leases – for the lessee – effec-
tively treating all leases as finance leases. Short leases (less than 12 months) and leases of low-value assets
(such as personal computers) are exempt from the lease accounting requirements. There are also changes
in accounting over the life of a lease. In particular, companies will now recognise a front-loaded pattern of
expenses for most leases, even when they pay constant annual rentals. Lessor accounting remains similar to
current practice – i.e. Lessors continue to classify leases as finance and operating leases.
AASB 16 is effective for annual reporting periods beginning on or after 1 January 2019. The Group does not
foresee a significant impact for its operations or its financial statement disclosures with regard to this new
accounting standard given that the majority of leases held by the Group are already classified as finance
leases.
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diREcTORs’ dEcLARATiON
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In the Directors’ opinion:
1. the attached consolidated financial statements and notes thereto comply with the Corpora-
tions Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other man-
datory professional reporting requirements;
2. 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;
3. the attached consolidated financial statements and notes thereto give a true and fair view of
the Group’s financial position as at 31 December 2018 and of its performance for the 12 months
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:
Robert Trzebski
Director
Sydney
15 March 2019
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kPmg iNdEPENdENT AUdiT REPORT
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AddiTiONAL iNfORmATiON
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Forward Looking Statements
In this annual report that are not historical facts are forward-looking statements. Forward-looking statements are statements that are not historical, and consist
primarily of projections — statements regarding future plans, expectations and developments. Words such as “expects”, “intends”, “plans”, “may”, “could”,
“potential”, “should”, “anticipates”, “likely”, “believes” and words of similar import tend to identify forward-looking statements. All forward-looking statements
are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed
or implied, including, without limitation, business integration risks; uncertainty of production, development plans and cost estimates, commodity price fluc-
tuations; political or economic instability and regulatory changes; currency fluctuations, the state of the capital markets, uncertainty in the measurement of
mineral reserves and resource estimates, Austral’s ability to attract and retain qualified personnel and management, potential labour unrest, reclamation and
closure requirements for mineral properties; unpredictable risks and hazards related to the development and operation of a mine or mineral property that are
beyond the Company’s control, the availability of capital to fund all of the Company’s projects and other risks and uncertainties identified under the heading
“Risk Factors” in the Company’s continuous disclosure documents filed on the ASX and SEDAR. You are cautioned that the foregoing list is not exhaustive
of all factors and assumptions which may have been used. Austral cannot assure you that actual events, performance or results will be consistent with these
forward-looking statements, and management’s assumptions may prove to be incorrect. Austral’s forward-looking statements reflect current expectations
regarding future events and operating performance and speak only as of the date hereof and Austral does not assume any obligation to update forward-looking
statements if circumstances or management’s beliefs, expectations or opinions should change other than as required by applicable law. For the reasons set
forth above, you should not place undue reliance on forward-looking statements.
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.
Statement of Issued Capital
As at 28 February 2019 the total issued capital of Austral Gold Limited was 534,173,010 ordinary shares. 494,588,975 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. 39,584,035 shares were quoted on the Toronto
Venture Exchange under the code AGLD.
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.
Distribution of fully paid ordinary shares
As at 28 February 2019
Size of Holding
Holders
Shares Held
% of Issued capital
1-1,000
1,001-5,000
5,001-10,000
10,001-50,000
50,001-100,000
>100,000
595
376
138
134
30
57
1,330
270,125
990,531
1,054,655
3,004,209
2,232,753
526,562,509
534,173,010
Substantial Shareholders
The Company has been notified of the following substantial shareholdings as at 28 February 2019:
Registered Holder
Citicorp Nominees
HSBC Custody Nominees
HSBC Custody Nominees
Inversiones Financieras Del Sur SA (IFISA)
Beneficial Holder
Eduardo Sergio Elsztain
Guanaco Capital Holding Corp
HSBC Custody Nominees
Inversiones Financieras Del Sur SA (IFISA)
0.05
0.18
0.20
0.56
0.42
98.59
100.00
Shares Held
414,440,857
9,175,548
31,386,890
440,000
455,443,295
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Rank Name
No. of shares % of issued capital
1
2
3
4
5
6
7
8
9
CITICORP NOMINEES PTY LIMITED
431,153,815
80.71%
CDS & CO
32,667,938
6.12%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED — A/C 2
24,469,692
4.58%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
16,073,840
3.01%
MINERA MENA CHILE LIMITADA
6,000,000
1.12%
CITICORP NOMINEES PTY LIMITED
5,189,832
0.97%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2,211,726
0.41%
ASOCIACION ISRAELITA ARGENTINA TZEIRE AGUDATH JABAD
1,158,265
0.22%
BNP PARIBAS NOMINEES PTY LTD
1,102,748
10
J P MORGAN NOMINEES AUSTRALIA LIMITED
11
MR ERLE EDWINSON
12
MR HAROLD JOSEPH FREIMAN
879,517
870,000
770,416
13
BNP PARIBAS NOMINEES PTY LTD
585,535
0.21%
0.17%
0.16%
0.14%
0.11%
14
MR RUDOLF ALBERT SCHULTZ
379,872
0.07%
15
MR ERLE RYAN EDWINSON
329,195
0.06%
16
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
319,469
0.06%
17
MR RODNEY DAVID JACKSON
311,090
0.06%
18
LIMOL TRADING CORP
297,445
0.06%
19
JP MORGAN TRUST COMPANY LTD
297,445
0.06%
20
BIRCHALL PROJECTS LTD
230,000
0.04%
Total
Other
521,314,715
97.59%
12,858,295
2.41%
Total shares on issue
534,173,010
100.00%
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www.australgold.com