MEDIA RELEASE
Austral Gold Limited
6 March 2020
Austral Gold Announces Filing of Annual Report for the Financial Year
Ended 31 December 2019
Austral Gold Limited (the “Company”) (ASX: AGD; TSX-V: AGLD) is pleased to announce that it
has filed its Annual Report for the Financial Year ended 31 December 2019. The Annual Report is
available at http://www.asx.com.au, www.sedar.com and
the Company’s website at
www.australgold.com.
About Austral Gold
in Chile and Argentina. The Company's
Austral Gold Limited is a growing precious metals mining, development and exploration company
building a portfolio of quality assets
flagship
Guanaco/Amancaya project in Chile is a gold and silver producing mine with further exploration
upside. The company also holds the Casposo Mine (San Juan, Argentina), a ~23.62% interest in
the Rawhide Mine (Nevada, USA) and an attractive portfolio of exploration projects including the
Pingüino project in Santa Cruz, Argentina (100% interest) and the San Guillermo and Reprado
projects near Amancaya (100% interest). With an experienced local technical team and highly
regarded major shareholder, Austral's goal is to continue to strengthen its asset base through
acquisition and discovery. Austral Gold Limited is listed on the TSX Venture Exchange (TSXV:
AGLD), and the Australian Securities Exchange. (ASX: AGD). For more information, please consult
the company's website www.australgold.com.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this
release.
On behalf of Austral Gold Limited:
"Stabro Kasaneva" CEO
For additional information please contact:
Jose Bordogna
Chief Financial Officer
Austral Gold Limited
jose.bordogna@australgold.com
+54 (11) 4323 7558
David Hwang
Company Secretary
Austral Gold Limited
info@australgold.com
+61 (2) 9698 5414
Austral Gold Limited ABN 30 075 860 472 ASX: AGD TSXV: AGLD
Level 5 126-130 Phillip St, Sydney NSW 2000 | T +61 2 9380 7233 | F +61 2 9251 7455 | info@australgold.com | www.australgold.com
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CORPORATE DIRECTORY
CHAIRMAN’S LETTER
KEY PRINCIPLES
REVIEW OF ACTIVITIES
DIRECTORS’ REPORT
FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
ADDITIONAL INFORMATION
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Austral Gold Limited
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Annual Report 2019
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KEY MANAGEMENT
Stabro Kasaneva
Chief Executive Officer and Executive Director
Rodrigo Ramirez
Vice President of Operations
Jose Bordogna
Chief Financial Officer
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
David Hwang
Automic Group
REGISTERED AND
PRINCIPAL OFFICE
Level 5 126-130 Phillip Street
Sydney NSW 2000
Tel: +61 2 9380 7233
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 2019
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
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
Austral Gold Limited
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Annual Report 2019
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“I am pleased to report that
2019 was another solid
year for Austral Gold Lim-
ited that created a strong
foundation for the future of
your Company.”
Austral Gold Limited
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Annual Report 2019
We also plan on accelerating exploration in 2020 to extend the
mine life at Guanaco/Amancaya mine.
Our Board is proud of key milestones that Austral Gold achieved
this year, including:
• Record production at Guanaco/Amancaya
• Record EBITDA and adjusted EBITDA of US$33.6m and
US$37.6m respectively with solid C1 and AISC metrics at
our mining operations in Chile
• Exploration success that identified a new mineralised NW
structural Corridor at our Guanaco property in the Sierra
Inesperada area
• The continued support from our shareholders through the
Rights offering which raised US$1.4m
• A stronger balance sheet
• Entry into the North America through the investment in the
Rawhide gold and silver mine.
Safety is a significant priority for Austral Gold. We are commit-
ted 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 opportunities,
backed by an experienced management team with a proven
operational and exploration track record, an exceptional under-
standing of the Chilean and Argentinean resources sector and
the strategic equity investment in the Rawhide mine in Nevada,
USA provides us with the foundation for continued growth.
In 2019 and early 2020, we saw a positive trend for gold and
silver prices and we expect the price of precious metals to
remain strong in 2020 and increase over the long term. Although
we have improved our financial results in 2019, we continually
strive to improve profit margins, while increasing the life and
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
Dear Shareholders,
I am pleased to report that 2019 was another solid year for
Austral Gold Limited that created a strong foundation for the
future of your Company. Our operations in Chile generated
record cash flows through the realisation of higher gold and
silver prices, improved production and lower operating cash
costs. In addition, we accomplished key strategic objec-
tives that added significant value to your Company which are
discussed below.
At our Guanaco/Amancaya mine complex in Chile, our 2019
cash costs and all-in sustaining costs decreased to US$661
per gold equivalent ounce (2018-US$792) and US$899 per
gold equivalent ounce (2018-US$943) respectively while record
production of 67,005 gold equivalent ounces was achieved,
representing a +9.4% year over year increase.
The Guanaco/Amancaya mine complex is our primary cash
generating asset after placing our Casposo mine in Argentina
on care & maintenance in April 2019. However, we have a clear
objective to recommence mining operations at Casposo, and
to accomplish this, we increased our brownfield exploration
and drilling activities during the second half of 2019 and will
continue to do so in 2020. Our commitment to grow our Argen-
tinean mining operations is further reflected by increasing our
interest in Casposo to 100%.
In addition, we continually assess opportunities to consolidate
projects that surround Casposo and to source ore from third
parties in the region. This is a work in progress and several
compelling opportunities are being pursued by us.
Further, we intend to advance the Pingüino project in Santa
Cruz, Argentina by continuing with exploration activities.
In Chile, we made a considerable financial commitment to
exploration with encouraging results which led to the identifi-
cation of the Sierra Inesperada mineralized area located 7km
from the Guanaco Mine.
In addition to improved operational and financial results, we
met a key strategic objective by entering the North American
mining sector with a US$4 million investment in the Rawhide
gold and silver mine located in the state of Nevada which gave
us 22.5% of this potentially valuable asset. This investment
strengthens our portfolio of mining projects by adding a new
potentially cash-flow generating asset in one of the most promi-
nent jurisdictions for mining. The Rawhide mining operation is
located in the Walker Lane’s Regent mining district. Gold was
discovered at Rawhide in 1906 and from 1990-2003 the mine
produced 1.4 million ounces of gold and 10.9 million ounces
of silver. We believe there is considerable production upside
with this asset and our team is actively involved to maximise
the return on our investment.
In 2020 we plan to build upon the accomplishments we made
this year. We forecast production to be at 55,000-60,000 gold
equivalent ounces, which is marginally lower than production
in 2019, but we expect to achieve solid margins resulting in free
cash which can be used to strategically expand our operations.
Austral Gold Limited
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Annual Report 2019
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Minimize health and safety risks, be socially and
environmentally responsible and strive to continually
reduce operating costs.
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 2019
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Annual Report 2019
Rawhide Mine
Fallon Nevada,
USA
PROPERTIES
Operations
Exploration projects
100%
Interest
100%
Interest
GUANACO/AMANCAYA
CASPOSO
100%
Interest
22.48%
Interest
PINGÜINO
RAWHIDE MINE
Guanaco/Amancaya
Antofagasta,
Chile
Casposo
San Juan Province,
Argentina
Pingüino
Santa Cruz Province,
Argentina
Austral Gold Limited (‘the Company’ or ‘Austral’) and its subsidiaries (‘the Group’) is a precious metals mining and exploration
company building a portfolio of assets in South America and recently entered into North America.
The Group produces gold and silver from the Guanaco and Amancaya Mines in Chile. The Group also holds the Casposo Mine
in San Juan, Argentina, which is currently on care and maintenance and the recently acquired 22.48% effective interest (with
three option agreements to acquire up to an additional 3.795%)* in the Rawhide Mine located ~50 miles outside of Fallon,
Nevada, United States. It also holds an attractive portfolio of exploration projects including the Pingüino project in Santa Cruz,
Argentina (100% interest).
*Additional 1.14% acquired through the exercise of one option agreement on 31 January 2020. The other two option agreements expire on 8 May 2020.
Austral Gold Limited
11
Annual Report 2019
A summary of key operating results for the year ended December 2019 and 2018 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*
Key Operating
Results
12 months
ended
Dec 2019
12 months
ended
Dec 2018
6 months
ended
Dec 2017
12 months
ended
Dec 2019
12 months
ended
Dec 2018
6 months
ended
Dec 2017
12 months
ended
Dec 2019
12 months
ended
Dec 2018
6 months
ended
Dec 2017
Mined Ore (t)
250,986
295,481
169,524
33,318
166,336
98,298
274,323
411,817
238,333
Processed (t)
253,024
278,447
201,148
39,545
181,2421
281,848
280,706
405,3162
288,944
Average Plant
Grade (g/t Au)
Average Plant
Grade (g/t Ag)
Gold
produced
(Oz)
Silver
produced
(Oz)
Gold
Equivalent
Ounces (Oz)
Operating
Cash Cost
(US$/Oz)**
All-in
Sustaining
Cost (US$/
Oz)#
Average
Selling Gold
Price (US$/
Oz)
Average
Selling Silver
Price (US$/
Oz)
Sales Volume
(AuEq Oz)
7.6
4.96
3.6
2.7
2.0
3.0
7.2
5.6
2.4
81.2
79.42
45.4
97.8
277.3
331.3
82.9
167.5
96.3
60,666
54,075
17,456
2,770
11,564
9,939
62,605
62,170
24,414
543,906
585,201
117,497
143,542
1,213,316
1,022,639
644,385
1,447,122
833,344
67,005
61,271
18,997
4,473
26,836
23,340
70,136
80,056
35,335
661
792
1,103
2,133
1,362
924
767
957
1,004
899
943
1,330
2,289
1,710
1,096
1,004
1,175
1,201
1,404
1,227
1,276
1,303
1,227
1,278
1,398
1,2643
1,277
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66,657
63,042
17,117
6,653
30,576
21,425
70,491
84,4453
32,115
As of 23 December 2019, Austral Gold owned 100% of Casposo. From March 2017 to 22 December 2019, Austral Gold owned 70% of Casposo
*
** The cash cost (C1) includes: Mine, Plant, On-Site G&A, Smelting, Refining, and Royalties (excludes Corporate G&A)
***
#
1
2
3
The AuEq ratio is calculated at 85:1 for the 12 months ended December 2019 (84:1 for the 12 months ended December 2018, 76:1 for the 6 months ended December 2017)
The All-in Sustaining Cost (AISC) includes: C1, Sustaining Capex, Brownfield Exploration, and Mine Closure Amortisation
Reported as 166,194 in the 2018 annual report
Reported as 461,675 in the 2018 annual report
Excludes the impact of AASB 15
Austral Gold Limited
12
Annual Report 2019
TOTAL COMBINED
PRODUCTION FOR
CALENDAR YEAR 2019
70,136
NET GOLD
EQUIVALENT
OUNCES
Total combined production for calendar year 2019 reached 71,148 gold equivalent ounces (100% basis) or 70,136 (net to Austral
Gold*) with an average C1 and AISC of US$767/oz and US$1,004 per ounce of gold equivalent respectively. The table below
provides with a comparison between the 2019 actual and its forecasted production figures*.
Operations
Guanaco/Amancaya Mines
Casposo Mine (100% basis)
Net to Austral Gold*
Calendar
2019 Actual
Calendar
2019
Forecasted
Calendar
2019 Actual
Calendar 2019
Forecasted
Calendar
2019
Actual
Calendar
2019
Forecasted
Gold produced (oz)
60,066
70,000
2,770
10,000
62,605
77,000
Silver produced (oz)
543,906
400,000
143,542
200,000
644,385
540,000
Gold-Equivalent (oz)***
67,005
70,000-
75,000
4,473
12,000
70,136
83,400
C1 Cash Cost (US$/AuEq oz)**
All-in Sustaining Cost (US$/Au oz)#
661
899
700-800
2,133
950-1,100
767
800-900
950-1,000
2,289
1,300-1,400
1,004
1,000-1,300
Sustaining Capital ($000’s)
9,715
10,000
63
1,000
9,778
11,000
*
As of 23 December 2019, Austral Gold owned 100% of Casposo. From March 2017 to 22 December 2019, Austral Gold owned 70% of Casposo; C1 and AISC
calculated based on 100% Processed (t).
** 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 85:1 for the 12 months ended December 2019
#
The All-in Sustaining Cost (AISC) includes: C1, Sustaining Capex, Brownfield Exploration, and Mine Closure Amortisation
Austral Gold Limited
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Annual Report 2019
AUSTRAL GOLD HAS PRODUCED OVER 460,000 GOLD
EQUIVALENT OUNCES OVER LAST TEN YEARS.
SOUND CASH FLOWS HAVE FUNDED AUSTRAL’S
GROWTH INITIATIVES.
5
6
3
,
1
5
8
8
0
,
1
5
8
8
8
,
6
4
Acquired
Amancaya
Project
Acquired
51% of U/G
mining
contractor
Kinross
royalty
agreement
exited
2014
Purchased
15% stake in
Goldrock
Mines
Purchased
20% stake
in Argentex
Mining
2013
Achieved low cash
costs of US$548/
AuEq oz
2015
8
5
0
,
0
0 3
5
9
,
2
1
First gold
doré bar
poured at
Guanaco
2011
Guanaco cash
flow positive
Guanaco
mineral
resources
increased
by 10%
2012
*
Includes production from Casposo (51%)
** Includes production from Casposo (70%)
Austral Gold Limited
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Annual Report 2019
*
*
6
5
0
,
0
8
6
3
1
,
0
7
*
*
8
8
4
,
4
6
*
4
1
0
,
5
5
Acquired San
Guillermo &
Reprado Projects
Acquired additional
19% of Casposo
Mine
Updated FS for
mining projects
Finalized
construction of
new agitation
leaching plant
in Chile
First full year
operating the
new agitation
leaching in plant
Record combined
production
surpassing
80K Geo
Starts UG opera-
tions at Amancaya
Record individual
production at
Guanaco/Amancaya
Placed Casposo
on Care &
Maintenance
Effectively acquired remaining
30% of Casposo mine
Entered into North
America through
investment in the
Rawhide mine
2017
2018
2019
Acquired 51%
of Casposo
Mine
Acquired
Argentex
Mining
Dual listed
on TSX-V
2016
Austral Gold Limited
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Annual Report 2019
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Austral Gold Limited
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Annual Report 2019
BACKGROUND
The Guanaco and Amancaya mines remain the Company’s flagship asset.
Guanaco is located approximately 220km south-east of Antofagasta in North-
ern 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 trending zones with related hydro-
thermal 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 composition of the Guanaco miner-
alisation have led to the classification as a high-sulfidation epithermal deposit.
In July 2014, the Company acquired the Amancaya Project (‘Amancaya’)
from Yamana Gold Inc (TSX:YRI | NYSE:AUY) which is located approximately
60km south-west of the Guanaco mine. Amancaya is a low sulfidation epith-
ermal 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 delivered
to the Guanaco plant for processing.
On 14 November 2017, Austral Gold purchased a 100% interest in the San
Guillermo and Reprado gold-silver projects, located in the emerging Aman-
caya precious metals district of northern Chile, from Revelo Resources Corp.
(TSX- V:RVL) for consideration of ten million Austral Gold ordinary shares.
The San Guillermo property consists of concessions totalling 12,175 hect-
ares 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 concessions totalling 3,960 hectares situated
approximately 20km north of the Company’s Amancaya operation. Historical
drilling undertaken 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 June 2017 and the
commissioning phase was completed in November 2017.
Austral Gold Limited
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Annual Report 2019
PRODUCTION
During the year ended December 2019, total production at Guanaco/Amancaya was
60,666 Au oz and 543,906 Ag oz (or 67,005 AuEq oz) compared to 61,271 AuEq oz during
the year ended 31 December 2018. The increase in production is mainly a result of higher
throughput from Amancaya, higher gold recoveries, additional mine equipment available
and an increase in the amount of ore.
The operating cash cost (C1) at Guanaco/Amancaya for the years ended 31 December
2019 and 2018 were US$661/AuEq oz and US$792/AuEq while the all-in sustaining costs
(AISC) were US$899/AuEq oz and US$943/AuEq. The reasons for the decrease in costs
is explained in the prior paragraph. Production guidance for 2020 is 55,000-60,000 AuEq
and C1 and AISC are forecasted to be US$600-700 and US$900-1,000.
MINING
During the year ended 31 December 2019, mining continued at the Guanaco underground
operations with a total of 18,809 tonnes mined while 232,177 tonnes were mined at the
Amancaya underground operations. The geological team continues to investigate oppor-
tunities to extend both the life of mine of the Guanaco deposit (reserves depleted during
2018) and the Amancaya deposit.
Operations
Guanaco/Amancaya Mines
12 months
ended
31 December
2019
12 months
ended
31 December
2018
6 months
ended
31 December
2017
Processed (t)
253,024
278,447
201,148
Average Plant Grade (g/t Au)
Average Plant Grade (g/t Ag)
Gold produced (oz)
Silver produced (oz)1
Gold-Equivalent (oz)2
C1 Cash Cost (US$/AuEq oz)1
All-in Sustaining Cost (US$/Au oz)2
Realised gold price (US$/Au oz)
Realised silver price (US$/Ag oz)
7.6
81.2
60,066
543,906
67,005
661
899
1,404
16
4.96
79.42
54,075
585,201
61,271
792
943
1,227
15
3.57
45.21
17,456
117,497
18,997
1,103
1,330
1,276
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The cash cost (C1) for the Guanaco Mine includes: Mine, Plant, On-Site G&A, Smelting, Refining, and Royalties
(excludes Corporate G&A)
The All-in Sustaining Cost (AISC) for the Guanaco Mine includes: C1, Sustaining Capex, Exploration, and Mine
Closure Amortisation
SAFETY AND ENVIRONMENTAL PROTECTION
During the year ended 2019 December 31, there were five lost-time accidents (LTA) and
seven 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
Austral Gold has an extensive history of being a committed neighbor to the communities
in which it operates.
Our support to the communities surrounding our projects in Chile focuses mainly on
education programs as we believe that through education it is possible to improve citizens
socio-economic conditions and contribute to the youth population and the overall commu-
nity. During 2019, we fund special programs in the city of Taltal (located 173 km from the
Guanaco Mine) with the main objective to contribute to the training of future graduates
with competencies that meet the requirements of the mining industry in the region.
EXPLORATION IN CHILE
Exploration in 2019 was focused on brownfield areas in the Amancaya District and Sierra
Inesperada (Guanaco District).
Austral Gold Limited
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Annual Report 2019
AMANCAYA MINE EXPLORATION
The exploration activities at the Amancaya Project focused on the block immediately to the north of the Central Vein area where several
veins with the same characteristics have been mapped and sampled.
HIGHLIGHTS
Completion of the 3,012 meters drilling program (24 drill holes) with some positive intercepts at Julia, Janita and Rosa veins.
Julia and Janita intercepts represent extensions of the previous drilled veins. Rosa is a vein that was recognized with surface sampling
and this preliminary result open opportunities to expand the ore shoot in all directions.
We plan to continue drilling this area during 2020.
Drill highlights this year at Amancaya were as follows:
Sector
From (m)
Drill hole
ROS_012
ROS_013
JUL_003
JUL_004
Veta Rosa
Veta Julia
JAN-037
Veta Janita
118.90
92.00
93.75
95.15
72.60
To (m)
119.40
92.80
95.15
95.85
73.70
Interval (m)
Height (m)
Au g/t
Ag g/t
Cu g/t
0.50
0.80
1.40
0.70
1.10
0.25
0.40
0.70
0.35
0.55
1.14
2.59
3.66
1.16
5.18
11
88
241
55
7
0.02
0.00
0.00
0.00
0.00
Complete drill results have been posted on the Company’s website www.australgold.com.
Considering the geological characteristics of the Amancaya District, a reinterpretation of the recognized structures in the sector has
begun. This has been done with the support of geological mapping, structural pattern observations and the geophysical studies carried
out to date.
Work was also performed on the review of the soil geochemical information of the Amancaya database and development and plotting
of distribution maps of elements for Hg, Sb, As, and Tl. Mapping and sampling of UG faces and different levels was carried out inside
Amancaya mine for ICP analysis.
Austral Gold Limited
19
Annual Report 2019
GUANACO DISTRICT EXPLORATION
Sierra Inesperada mine Area Highlights
The planned drilling campaign for the area was completed. Forty-
eight holes were drilled totaling 4,806 meters corresponding to
4,256 meters of RC drilling and 550 meters of DDH.
The focus of this program was to explore the vicinity of an old
small mining works, represented by a shaft located in the south
west portion of the area known as Sierra Inesperada, and not
previously evaluated.
A mineralised structural corridor was identified, which is oriented
N60 W / 85 SW, with a thickness that varies between 5 and 40
meters and an interpreted depth greater than 150 meters and
strike of 200 meters.
The structures have brecciated textures with fragments of gray
quartz, vuggy silica and lithics. The wall rock is affected by an
advanced argillic alteration with moderate to intense silicification
and a strong presence of alunite.
The oxidation zone is recognized by the presence of iron oxides
that mostly correspond to hematite-jarosite and traces of copper
oxides. The sulphide zone is clearly represented by the weak to
high presence of disseminated pyrite in irregular veinlets. Gray
sulphides are observed as enargite and traces of chalcocite, which
are arranged as a very thin patina in the pyrite.
The host rock of the mineralization corresponds to a pyroclastic
sequence formed by layers of tuffs and lithic tuffs of andesitic-
dacitic composition, defined as Inesperada Hydro-magmatic
Sequence. It covers a unit of green porphyric andesites with
medium-sized plagioclase phenocrystals.
The gold grades observed varied mostly in a range between 0.5 g/t
and 3 g/t Au, with a maximum gold grade of 19.17 g/t Au.
The Company believes the geological characteristics and orienta-
tion of the structural patterns observed in the veins will provide an
important exploration guide to recognize the mineral potential of
the Sierra Inesperada.
Significant new intersections were observed as follows (please
refer to the Company´s press release dated 30 January 2020.
Complete drill results have been posted on the Company’s website
www.australgold.com.)
• Guanaco_INES_38N 8.0m @ 4.26 g/t Au incl. 1m @ 19.17 g/t Au
• Guanaco_INES_27N 14m @ 2.90 g/t Au incl. 1.0m @ 13.77 g/t
Au and 16m@ 2.29 g/t Au incl. 2.0m @ 6.64 g/t Au
• Guanaco_INES_42N-DDH 4.05m @ 4.33 g/t Au incl. 0.63m @
13.80 g/t Au
Sierra Inesperada District Geological Map
In addition, a geological map was developed in the area which
defined the lithological units and the hydrothermal alterations,
based on field geology, analysis of samples with Terraspec and
geochemistry. Three HS type mineralization events were recog-
nized as follows: i) ground preparation-alteration event, ii) phre-
atomagmatic explosion, and iii) mineralizing event.
The next planned activity along with the drilling program for Q1
2020 along with metallurgical testing is a geophysics campaign
using the ground magnetometry method. The objective is to recog-
nize the main trends for mineralisation present in the sector.
Figure: Julia, Janita and Rosa veins
Figure: Sierra Inesperada drilling holes with grade intervals
of Au > 1.0ppm (1 g/t Au)
Austral Gold Limited
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Annual Report 2019
Austral Gold Limited
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Annual Report 2019
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Austral Gold Limited
22
Annual Report 2019
CASPOSO MINE
The Casposo mine is located in the department of Calingasta, 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 Prin-
cipal that runs along the Chile-Argentine border for approximately 1,500km.
The Casposo gold– silver mineralisation is Permian in age, and occurs in the
extensive Permo-Triassic volcanic rocks of the Choiyoi Group, at both rhyo-
lite, 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
sulfidation epithermal environments. Post-mineralisation dykes of rhyolitic,
mafic, and trachytic composition often cut the vein systems. These dykes,
sometimes reaching up to 30m thickness, 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 sigmoidal 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.
In March 2016, Austral Gold acquired a controlling stake and management
of the Casposo gold and silver project. Since then, Austral Gold undertook a
complete revision of historical work (geology, geochemistry, geophysics and
drillings), and completed a regional mapping at a 1:10,000 scale to identify
potential opportunities for discovering additional mineralisation and ranking
a series of mine and brownfield exploration targets.
In March 2017, Austral Gold acquired an additional 19% of the Casposo
silver and gold project and in December 2020, it effectively acquired the
remaining 30%.
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 combination of ore development
through sill drifts (34%) and stope production (66%).
The processing and recovery method is well known and widespread through-
out 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.
CARE AND MAINTENANCE
During the June 2019 quarter, Austral completed a comprehensive review of
operations, and as the mine operator, decided to temporarily place the mine
on care and maintenance. During the year, Austral paid approximately US$2
million in severance to 199 Casposo employees.
The Casposo Mine continues to be on care and maintenance, although
exploration activities commenced during the December 2019 quarter with
the goal of recommencing processing operations in the future.
Austral Gold Limited
23
Annual Report 2019
The table below summarises the results at the Casposo mine for the 12 months ended December 2019 and 2018 and the 6 months
ended December 2017.
Operations
Processed (t)
Average Plant Grade (g/t Au)
Average Plant Grade (g/t Ag)
Gold produced (oz)
Share of Gold produced*
Silver produced (oz)
Share of Silver produced*
C1 Cash Cost (US$/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 2019
12 months ended
31 December 2018
6 months ended
31 December 2017
39,545
2.7
97.8
2,770
1,939
143,542
100,479
2,133
2,289
1,303
15
166,194
125,423
2.0
277.3
11,564
8,095
1,213,316
861,921
1,362
1,710
1,227
15
3.0
331.3
9,939
6,458
1,022,639
715,848
924
1,096
1,278
17
* As of 23 December 2019, Austral Gold owned 100% of Casposo. From March 2017 to 22 December 2019, Austral Gold owned 70% of Casposo; C1
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 environmental protection are core values of the
Company. During the year ended 2019 December 31, there were
two lost-time accidents (LTA) and seven nil-lost-time accidents
(NLTA) involving employees of Casposo and third party contractors.
We share our commitment to the environment by conducting
participatory social monitoring every six months. We are commit-
ted 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.
EXPLORATION IN ARGENTINA:
A drilling plan at Casposo was defined in the Inca 3 and Julieta
sectors with the objective of extending the existing mineralization
and consolidating resources. Works started in Q4 2019.
Completion of an inventory of all the information of the Pingüino
Project with a breakdown on epithermal, polymetallic, and mix
veins. A trenching and drilling program are being designed with
the goal of expanding the deposit’s oxidized silver rich resource.
CASPOSO EXPLORATION
The Company finalized the first phase of the drilling campaign
that was designed during the year. To date a total of 2,294 meters
of Diamond Drill holes (DDH) were drilled in the Inca 3 sector. No
significant intercepts were identified.
The exploration team continued with the analysis of Inca 3 and its
surrounding areas. The next target is the Julieta sector which is
expected to commence in Q1 2020. Construction of new access
to the Julieta sector and drilling platforms were finalized during the
December 2019 quarter.
Figure: Casposo Exploration Targets
Austral Gold Limited
24
Annual Report 2019
PINGÜINO PROJECT
100%
Interest
Argentex Properties including
Pingüino Project (100% owned)
Recent activities
During the year, the geology team completed
a trenching program at the Pingüino project
which totaled 113 trenches with 5,000 meters
excavated within the main targets (Tranquilo,
Silvia and Trinda). Samples were sent to an
external laboratory and the first results are
expected in Q1 2020.
Pingüino Project
The Company completed the acquisition of
Toronto Venture Exchange listed company,
Argentex Mining Corporation (‘Argentex’) in
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 Somuncura 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 prop-
erty 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 Comodoro
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 provinces in the
world, including world class deposits such as
Cerro Vanguardia and Cerro Negro.
The Pingüino Project lies in a vein field simi-
lar but smaller to Cerro Vanguardia some
35kms north-west along same control-
ling 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 commu-
nities and more than 70% of surface land is
owned by the Company.
Figure: Julieta Sector
Figure: Casposo Exploration Targets
Pingüino Veins
Ag Soil Geochemistry Values:
Epithermal Quartz Veins
Polimetallic Veins
Mix Veins
High Values
Low Values
Figure: Pingüino veins and soil sampling
Austral Gold Limited
25
Annual Report 2019
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Austral Gold Limited
26
Annual Report 2019
BACKGROUND
On 17 December, 2019, Austral Gold’s newly formed Nevada subsidiary, Austral Gold
North America Corp. (“AGNA”), acquired an equity interest in Rawhide Acquisition Hold-
ing LLC (“RWH”), a privately-held Delaware limited liability company that owns Rawhide
Mining LLC which in turn owns the Rawhide Mine located ~50 miles outside of Fallon,
Nevada, United States.
The Rawhide mine is located in Nevada’s prolific Walker Lane gold-silver belt, among
multiple historic mines that produced more than 1 million ounces of gold (e.g., Comstock,
Round Mountain, Borealis, and Tonopah). Rawhide is a historical mining operation that
started in the early 1900s. Rawhide was formerly operated as a subsidiary of Kennecott
Corporation prior to Coral Reef Capital, a private equity firm, partnering with the Rawhide
mine management team to acquire the property from Rio Tinto Plc in 2010. Currently, Coral
Reef Capital is the controlling shareholder of Rawhide Acquisition Holding LLC.
The Rawhide mine is a fully permitted operation that produces gold and silver through an
open pit heap leaching operation. In 2019, Rawhide received a mine expansion permit asso-
ciated with the Regent open pit. It is surrounded by multiple 1.0 million+ gold oz deposits.
Austral Gold made the strategic investment in the Rawhide operation as part of its acquisi-
tion plan to focus on near-term cash producing mining assets.
OVERVIEW OF RAWHIDE OPERATION
Gold was discovered at Rawhide in 1906, with intermittent small scale production until
Kennecott undertook open pit mining from 1990-2003, producing 1.4 million ounces of
gold and 10.9 million ounces of silver from 88 million tons1. Residual heap leaching until
2010 recovered an additional 200 thousand ounces of gold and 1.9 million ounces of
silver. Austral Gold has been advised by Rawhide that from 2011-2018 its mining at the
Rawhide property totaled 4.9 million tons, with 160,000 ounces of gold and 1.8 million
ounces of silver produced.
Gold-silver mineralization at Rawhide has been historically mined from a series of low
sulfidation epithermal veins, vein swarms and replacement zones hosted by various
basaltic to rhyolitic volcanic units. The lower grade bulk tonnage mineralization that is the
focus of current operations occurs between structures within permeable volcanic units
and at intrusive contacts. Rawhide Mining received a mine expansion permit earlier this
year covering the Regent satellite deposit, and open pit mining has recently commenced.
Regent highlights the upside exploration and production optionality of Austral’s strategic
investment in the Rawhide mining operation.
OVERVIEW OF COMMERCIAL TERMS
• Purchase of a 22.48% membership interest (21.28% on a fully diluted basis) in Rawhide
Acquisition Holding LLC (“RAH”) for a purchase price of US$3.957 million of which US
$2,000,000 was paid in cash at closing. The balance of US $1,957,406 was paid on 31
January 2020.
• Entered into three option agreements with three existing Unit owners pursuant to which
it has the option to purchase up to an additional 3.795% of the issued and outstand-
ing Rawhide Units for an aggregate purchase price of US $750,813 (collectively, the
“Options”) until they expire at various dates during the first six months of 2020. If Austral
Gold exercises all of these Options, it will own approximately 26.46% (25.04% on a fully
diluted basis). On 30 January 2020, Austral paid US$214,576 to exercise options under
the option agreement due 30 January 2020, increasing the Group’s equity investment
in Rawhide to 23.62%.
• RAH distributes 50% of its taxable income to the LLC members on a quarterly basis
as a Tax Distribution.
• RAH has historically made significant additional Ordinary Distributions to its members,
and may continue doing so given ongoing mining at the Rawhide and Regent open pits.
• Austral Gold is entitled to nominate one manager to the six-member RAH management
committee. Upon exercise of the Options, AGNA will be entitled to a second seat on a
seven-member Rawhide management committee. AGNA is also entitled to nominate
one member of each of Rawhide’s Operating and Exploration Committees.
Austral Gold Limited
27
Annual Report 2019
COMPETENT PERSON
STATEMENT
The information in this report
that relates to Exploration
Results listed in the Review
of Activities section of this
December 2019 Annual Report
is based on work supervised,
or compiled on behalf of, Dr.
Robert Trzebski, a Non-Exec-
utive 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 Metal-
lurgy (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 informa-
tion in the form and context in
which it appears.
Dr Robert Trzebski has suffi-
cient experience which is
relevant to the style of miner-
alisation and types of deposits
under consideration and to the
activity which he has under-
taken to qualify as a Compe-
tent Person as defined in the
JORC Code 2012.
MINERAL RESOURCES
& ORE RESERVES
STATEMENT
Tables 1 and 2 are the Compa-
ny’s Mineral Reserves and
Resource Estimates as at 31
December 2019 compared to
Tables 3 and 4 which are the
Company’s Mineral Reserves
and Resource Estimates as at
31 December 2018.
Please note that numbers
in the tables are subject to
rounding differences.
Austral Gold Limited
28
Annual Report 2019
TABLE 1: ORE RESERVES ESTIMATE
31 December 2019
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
264
Total Amancaya
264
Total Combined
329
Underground
Total Casposo
–
–
4.7
4.7
6.9
6.9
6.5
–
–
10
10
59
59
69
–
–
Guanaco
168
168
Amancaya
243
243
410
Casposo
608
608
3.1
3.1
5.5
5.5
4.5
2.4
2.4
17
17
43
43
60
46
46
233
233
506
506
739
608
608
Total
329
6.5
69
1,018
3.2
106
1,347
3.6
3.6
6.3
6.3
5.4
2.4
2.4
4.0
27
27
102
102
129
46
46
175
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
264
Total Amancaya
264
Total Combined
329
Underground
Total Casposo
0
0
6
6
32
32
27
0
0
12
12
274
274
285
0
0
Guanaco
168
168
Amancaya
243
243
410
Casposo
3
3
25
25
16
19
19
196
196
215
233
233
506
506
739
4
4
29
29
21
31
31
470
470
500
608
179
3,495
608
179
3,495
608
179
3,495
608
179
3,495
Total
329
27
285
1,019
113
3,709
1,347
92
3,995
Austral Gold Limited
29
Annual Report 2019
TABLE 2: MINERAL RESOURCES ESTIMATE
31 December 2019
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
422
3.2
Total Guanaco
422
3.2
43
43
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
Open Pit
0
0
0
2
8.9
0.4
2
8.9
0.4
23
4.49
3
Underground
307
10.2
101
298
7.3
Total Amancaya
307
10.2
101
300
7.3
70
70
605
8.8
171
716
5.96
137
607
8.8
171
739
5.9
140
Total Combined
730
6.1
144
1,513
3.7
178
2,243
4.5
322
1,874
3.9
236
Casposo
Underground
37
2.4
Total Casposo
37
2.4
3
3
1,009
2.8
1,009
2.8
92
92
1,046
2.8
1,046
2.8
95
95
913
5.4
158
913
5.4
158
Total
767
5.9
147
2,522
3.3
270
3,289
3.9
417
2,787
4.4
394
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
15
592
1,636
16
827
1,134
Total Guanaco
422
17
235
1,213
15
592
1,636
16
827
1,134
Amancaya
Open Pit
0
0
0
2
Underground
307
49
480
298
Total Amancaya
307
49
480
300
81
28
28
4
2
265
605
269
607
81
38
38
4
23
744
716
748
739
Total Combined
730
30
715
1,513
18
861
2,243
22
1,576
1,874
13
13
37
17
18
15
477
477
28
399
426
903
Casposo
Underground
37
221
264
1,090
167
5,409
1,046
169
5,673
913
143
4,204
Total Casposo
37
221
264
1,009
167
5,409
1,046
169
5,673
913
143
4,204
Total
767
40
978
2,522
77
6,270
3,289
69
7,248
2,787
57
5,108
Austral Gold Limited
30
Annual Report 2019
TABLE 3: ORE RESERVES ESTIMATE
31 December 2018
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
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
–
–
17
17
100
100
117
55
55
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
Total
174
6.0
33
1,316
4.0
171
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
0
0
6
6
80
80
52
0
0
12
12
281
281
293
0
0
Guanaco
168
168
Amancaya
472
472
3.5
3.5
26
26
640
20.1
Casposo
19
19
395
395
414
233
233
581
581
814
4.1
4.1
36
36
27
31
31
676
676
707
676
181
3,939
676
181
3,939
676
181
3,939
676
181
3,939
Total
174
52
293
1,316
103
4,353
1,490
97
4,646
Austral Gold Limited
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Annual Report 2019
TABLE 4: 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)
Guanaco
Underground
422
3.2
Total Guanaco
422
3.2
Open Pit
Underground
Total Amancaya
0
99
99
0
10
10
Total Combined
522
4.5
Underground
Total Casposo
37
37
2.4
2.4
43
43
0
32
32
75
3
3
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
15
592
1,636
16
827
1,134
13
477
Total Guanaco
422
17
235
1,213
15
592
1,636
16
827
1,134
13
477
Amancaya
Open Pit
0
0
0
15
141
68
15
141
68
23
Underground
99
129
413
516
Total Amancaya
99
129
413
531
35
38
587
615
655
630
51
53
1,000
840
1,068
863
37
26
26
28
707
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
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Annual Report 2019
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 Comission Calificadora de
Competencias en Recursos y Reservas Mineras. Sebastian
Ramirez is a full time employee of the company and has suffi-
cient 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’. 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 information 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- Executive 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 Explo-
ration 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 classified 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 Province, 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 Independent Director of Austral Gold,
and a QP as per NI 43-101 and a CP as per JORC 2012.
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 accordance 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 effective date of 31 December 2016. Mineral
resources have been updated to account for depletion from mining
activities by Sebastian Ramirez, P.Eng, an Austral Gold employee
and a QP as per NI 43-101 and a CP as per JORC 2012.
The Company confirms that it is not aware of any new informa-
tion or data that materially affects the information included in
the original market announcement on 13 June 2017 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 announce-
ment. The Company ensures that the Ore Reserves and Mineral
Resource Estimates are subject to appropriate levels of gover-
nance and internal controls. Governance of the Company’s Ore
Reserves and Mineral Resources development 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.
Austral Gold Limited
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Annual Report 2019
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Annual Report 2019
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
REVIEW OF RESULTS
For the Year Ended 31 December 2019
The following report on the review of results for the year ended 31 December 2019 (“FY19”) and 2018 (“FY18”) together with the consoli-
dated financial report of Austral Gold Limited (the Company) and its subsidiaries, (referred to hereafter as the Group).
PRINCIPAL ACTIVITIES
The principal activities of the Group during FY19 were gold and silver production at the Group’s Guanaco/ Amancaya mine and Casposo
mine, exploration at areas surrounding the Guanaco/Amancaya mines and the Casposo mine, acquisition of the non-controlling interests
in Casposo, the strategic investment in the Rawhide gold and silver mine in Nevada, USA and a rights offering financing. During FY19,
the Group’s Casposo mine was placed on care and maintenance as a result of the mine operating at a loss and following the decrease
of mineral reserves of the project. There were no other significant changes in those activities during the period.
OPERATING AND FINANCIAL RESULTS
Key Operating Results
Mined Ore (t)
Processed (t)
Years ended
31 December 2019
31 December 2018
Guanaco/
Amancaya
Casposo
(100%
basis)
Net to
Austral*
Guanaco/
Amancaya
Casposo
(100%
basis)
Net to
Austral*
250,986
33,318
274,309
295,481
166,194
411,817
253,024
39,545
280,706
278,447
181,2421
405,3162
Average Plant Grade (g/t Au)
7.6
2.7
7.2
4.96
2.0
5.6
Average Plant Grade (g/t Ag)
81.2
97.8
82.9
79.42
277.3
167.5
Gold Produced (Oz)
60,666
2,770
62,605
54,075
11,564
62,170
Silver Produced (Oz)
543,906
143,542
644,385
585,201
1,213,316
1,447,122
Gold Equivalent Ounces (Oz)
67,005
4,473
70,136
61,271
26,836
80,056
Operating Cash Cost (US$/Oz) **
All-in Sustaining Cost (US$/Oz) #
661
899
2,133
767
2,289
1,004
792
943
1,362
957
1,710
1,175
Average Selling Gold Price (US$/Oz)
1,404
1,303
1,398
1,227
1,227
1,264
Average Selling Silver Price (US$/Oz)
16
16
16
15
15
16
Sales Volume (AuEq Oz)
66,657
6,653
70,491
63,042
30,576
84,445
* As of 23 December 2019, Austral Gold owned 100% of Casposo. From March 2017 to 22 December 2019, Austral Gold owned 70% of Casposo; C1 and AISC calculated
based on 100% Processed (t).
** 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 85:1 Ag:Au for the twelve months ended 31 December 2019
“Cash cost” and All-in Sustaining-Cost (AISC) are non-IFRS financial information and are not subjected to audit
* Note: The Operating cash cost (C1) includes: Mine, Plant, On-Site G&A, Smelting, Refining, and Royalties (excludes Corporate G&A) while the All-in Sustaining Cost (AISC)
includes: C1, Sustaining Capex, Brownfield Exploration, and Mine Closure Amortisation and Mine Closure Amortisation.
1 Reported as 166,194 in the 2018 annual report
2 Reported as 461,675 in the 2018 annual report
Austral Gold Limited
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Annual Report 2019
OPERATING AND FINANCIAL RESULTS
The Group’s profit attributable to shareholders for 2019 was US$5.3m (2018: net loss 26.1m)
During FY19, the Group realised a gross profit of US$26.7m or 26% (including US$20.3m of depreciation and amortisation) (FY18:
gross profit of US$6.0m or 5% including US$18.4m of depreciation and amortisation). Excluding depreciation and amortisation, the
Group earned a gross profit of US$46.9m in FY19 or 46% (FY18: US$24.4m or 20%).
The turnaround to a net profit in FY19 from a loss in FY18 was the first net profit for the Group since 2016 and was mainly due to higher
operating margins and lower administration costs, which were partially offset by an increase in net finance costs (mainly due to a foreign
exchange loss on the Group’s assets in Argentina from the depreciation of the Argentine peso), income taxes, care and maintenance
costs and restructuring expenses at Casposo. The 2018 net loss was primarily due to a US$29.2m impairment loss related to the
Casposo mine.
During FY19, the Group markedly improved the operational margins when compared to FY18. As explained below, despite lower
combined production and revenue in FY19, the Guanaco/Amancaya mine complex generated higher levels of production along with
higher gold grades leading to record cash flows during FY19.
Sales revenue of US$102.2m in FY19 (FY18: US$122.8m) was earned as production (100% basis) was 71,478 AuEq oz (2018: 88,107
AuEq oz). The decrease in revenue during FY19 was mainly due to less gold equivalent ounces produced at Casposo, which was
impacted by the placement of the mine on care and maintenance in Q2 2019 and the impact of AASB 15 for FY18 that resulted in an
increase in sales of US$7.0m. The decrease was partially offset by an increase in production at the Guanaco/Amancaya mine complex
and the realisation of higher gold and silver selling prices.
Despite the lower sales revenue, the combined gross profit before depreciation and amortisation increased to US$46.9m (46%) from
US$24.4m (20%) during FY18. The increase was mainly due to the stronger performance at the Guanaco/ Amancaya mine complex with
a gross profit of 52% compared to 30% in FY18 which offset the decrease in gross profit at Casposo. The gross profit from Guanaco/
Amancaya in FY18 was mainly impacted by the delay in the stabalisation of the new agitation leaching plant until the second quarter
and the implementation of AASB 15.
Net gold equivalent ounces (GEO) produced during the FY19 decreased to 70,136 GEO from 80,056 GEO produced during FY18.
However, production from the Guanaco/Amancaya mine complex increased to 67,005 GEO from 61,271 GEO or an increase of 9.4%
or average monthly production of almost 5,584 GEO from 5,106 GEO in FY18. The increase in production at Guanaco/Amancaya was
offset by the decrease in production at Casposo.
Overall operating cash costs (“C1) of production* and All-in sustaining costs (“AISC”) decreased to US$767/AuEq oz and US$1,004/
AuEq oz during FY19 compared to US$957/AuEq oz and US$1,175/AuEq oz during FY18. C1 at the Guanaco/ Amancaya mine decreased
to US$661/AuEq oz during FY19 from US$792/AuEq oz during FY18. The decrease in costs was mainly a result of higher throughput
from Amancaya due to greater mine equipment availability, higher gold grades, higher gold recoveries and a decrease in the value of
the Argentine and Chilean currencies versus the US dollar. Operating cash costs* at Casposo increased significantly during FY19 to
US$ 2,133/ AuEq oz compared to cash costs of US$1,362/AuEq oz during FY18. The higher operating cash costs at Casposo in FY19
were due to lower production and temporarily placing the mine on care and maintenance.
Austral Gold Limited
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Annual Report 2019
KEY FINANCIAL RESULTS
Key financial metrics
Thousands of US$
Revenue
Gross profit
Gross profit %
Adjusted gross profit (excluding depreciation and amortisation)
Adjusted gross profit % (excluding depreciation and amortisation)
EBITDA
EBITDA per share (basic)
EBITDA per share (fully diluted)
Adjusted EBITDA*
Adjusted EBITDA per share (basic)
Adjusted EBITDA per share (fully diluted)
Profit/ (loss) attributed to shareholders
(Loss) attributed to non-controlling interests
Earnings/(loss) per share (Basic)
Earnings/(Loss) earnings per share (diluted)
Comprehensive income (loss)
*excluding gain/(loss) on financial assets and impairment loss
Year ended
31 December 2019
31 December 2018
102,209
26,661
26.1%
46,916
45.9%
33,550
0.062
0.059
37,612
0.070
0.066
5,225
(3,586)
0.97c
0.93c
1,658
122,767
5,958
4.9%
24,380
19.9%
(16,506)
(0.031)
(0.031)
12,018
0.023
0.023
(26,064)
(10,171)
(4.88)c
(4.88)c
(36,262)
Note: Readers are cautioned that adjusted gross profit and net profit/(loss) 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.
EBITDA AND ADJUSTED EBITDA
Thousands of US$
Profit/(loss) before tax
Depreciation and amortisation
Net finance costs
EBITDA
Restructuring cost (Casposo)
Care and maintenance expenses
Other income
Gain/(loss) on movements of financial assets
Impairment of assets
Adjusted EBITDA
Year ended
31 December 2019
31 December 2018
9,508
20,255
3,787
33,550
2,087
1,185
(62)
(10)
862
37,612
(37,054)
18,422
2,126
(16,506)
-
-
(1,868)
1,202
29,190
12,018
Austral Gold Limited
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Annual Report 2019
FINANCIAL RESULTS
EBITDA and adjusted EBITDA increased to US$33.6m (33%) and US$37.6m (37%) during FY19 from (US$-16.5m)
(-13%) and US$12.0m (10.0%) during FY18.
During FY19 administration expenses decreased to US$9.3m (FY18-US$12.4m). The decrease was mainly due to the Casposo care
and maintenance phase and the impact of the decrease in the value of the Argentine Peso and Chilean Peso versus the US dollar.
Net Finance costs increased to US$3.8m during FY19 (FY18-US$2.1m). The increase was mainly due to an increase in foreign exchange
losses and an increase in the mine closure provision.
Restructuring and care and maintenance costs related to placing the Casposo mine on care and maintenance in the respective amounts
of US$2.1m and $1.2m were incurred during FY 19.
An impairment loss of US$0.9m of which $US 0.6m related to exploration expenses in Chile and US$0.3m related to exploration
expenses in Argentina was recorded in FY19, while an impairment loss of US$29.2m related to its Casposo property was recorded in
FY18 as the Group valued the property at US$7.8m.
FINANCIAL POSITION
The net assets of the Group increased by US$1.9m since 31 December 2018 to US$56.7m at 31 December 2019 (31 December 2018:
US$54.9m). The increase was partially due to $US1.4m raised from the rights offering financing and profit earned in FY19. Working
capital increased by US$8.5m to US$3.3m at 31 December 2019, (31 December 2018: negative working capital of US$5.2m at 31).
The increase in working capital arose mainly due to the strong operational performance at Guanaco.
As at 31 December 2019, the Group had a current ratio equal to 1.14 (FY18 negative 0.83) along with US$9.2m cash and cash equiva-
lents (FY18-$1.7m)
Combined net debt (borrowings and financial leases net of cash & cash equivalents) decreased by US$10.5m to US$6.3m at 31
December 2019 compared to US$16.8m at 31 December 2018.
Trade and other receivables (current and non-current) decreased by US$1.5m to US$7.8m at 31 December 2019 mainly due to a
decrease tax credits receivable and an increase in trade receivables.
Inventories decreased by US$3.3m to US$10.6m at 31 December 2019 and was mainly due to a decrease in materials and supplies
and a decrease in gold and silver bullion in process. The allowance for inventory obsolescence increased by US$0.2m to US$1.3m at
31 December 2019.
Trade and other payables (current and non-current) decreased by US$3.6m to US$10.9m at 31 December 2019 mainly due to a decrease
in trade payables as a result of an increase in cash generated from operations during FY19.
CASH FLOW
Net cash provided from operating activities before and after changes in assets and liabilities was US$33.3m and US$29.6m during FY19
compared to US$14.1m and US$21.3m during FY18 respectively. In addition, the increase is mainly due to additional cash generated
at Guanaco/Amancaya as described above.
Cash used in investing activities totaled US$14.7m during FY19 compared to US$17.7m during FY18. Cash was used primarily for
additions to property, plant and equipment, mine properties and the acquisition of a 22.5% equity interest in the Rawhide Mine in
Nevada, USA.
Cash used in financing activities totaled US$7.5m during FY19 compared to US$8.5m during FY18 mainly due to the net repayment
of borrowings and financial leases.
LIQUIDITY
The Group forecasts 2020 profitable production of 55,000-60,000 gold equivalent ounces.
Austral Gold Limited
38
Annual Report 2019
Thousands of US$
Cash & cash equivalents
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Net current assets (liabilities)
Current loans and borrowings
Current financial leases
Non-current loans and borrowings
Non-current financial leases
Combined debt (borrowings and financial leases)
Combined net debt (net of cash & cash equivalents)
Combined debt to EBITDA
Combined net debt to EBITDA
Current ratio*
Total liabilities to net assets
*Current Assets divided by Current Liabilities
Year ended
31 December 2019
31 December 2018
9,196
26,849
79,318
23,529
25,907
56,731
3,320
4,045
3,047
2,077
6,302
15,471
6,275
46%
19%
1.14
0.87
1,716
25,264
81,970
30,487
21,875
54,872
(5,223)
6,860
2,086
2,908
6,617
18,471
16,755
112%
102%
0.83
0.95
Austral Gold Limited
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Annual Report 2019
The Directors and
Senior Management of
the Company in office
during or since the end
of the financial year.
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EDUARDO ELSZTAIN
Chairman
Mr. Eduardo Elsztain is chairman of IRSA Inversiones y Representaciones S.A.
(NYSE:IRS), one of Argentina’s largest and most diversified real estate compa-
nies; and IRSA Commercial Properties (NASDAQ:IRCP), with 14 shopping centers,
premium office buildings, five-star hotels and residential developments. These
investments extend also into the US real estate market. He also serves as Chairman
of Cresud (NASDAQ:CRESY) and BrasilAgro (NYSE:LND), leading Latin American
agricultural companies that own directly and indirectly almost 1M HA of farmland.
Mr. Elsztain is Chairman of Banco Hipotecario S.A. (BASE:BHIP); and of BACS,
Argentinean leading bank specialized in providing innovative financial solutions to
local companies.
Mr. Elsztain serves as Chairman of IDB Development, a huge conglomerate in the
State of Israel with direct and indirect interest in various industries: communica-
tions, retail, insurance, real estate, oil exploration, air transport, medical R&D and
oil exploration
Mr. Elsztain has not held any other Directorships with Australian or Canadian listed
companies in the last three years.
He is also member of the World Economic Forum, the Council of the Americas, the
Group of 50 and Argentina’s Business Association (AEA). Is President of Fundacion
IRSA, which promotes education among children and young people; President
of TAGLIT — Birthright Argentina; Co-Founder of Endeavor Argentina; and Vice-
President of the World Jewish Congress.
Appointed Director 29 Jun 2007
Appointed Chairman on 2 Jun 2011
Re-elected by shareholders on 30 May 2019
Austral Gold Limited
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Annual Report 2019
STABRO KASANEVA
Executive Director, Chief Executive Officer
SAUL ZANG
Non-Executive Director
Mr. Kasaneva is a Geologist with a degree from the Universi-
dad Católica del Norte, Chile and has over 30 years of experi-
ence 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 explora-
tion and production gaining vast experience in grade control,
QA/QC, modeling and geological resources estimation.
Mr. Kasaneva led Business Development Departments
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 2019
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 Direc-
tors 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), Brasil
Agro (NYSE: LND, BVMF:AGRO3), IDB Development — 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 2019
Austral Gold Limited
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Annual Report 2019
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 Busi-
ness Administration and has held executive roles for Merid-
ian Gold with experience in operations, finance and investor
relations. In addition to his role at Austral Gold Limited, Mr
Hubert is currently serving as Chairman of Revival Gold Inc.
(TSX.V:RVG) (OTCQB:RVLGF) and Viking Strategic Metals Ltd.
(TSX.V:SMD), and is also a director of InZinc Mining.
Appointed 18 Oct 2011
Re-elected by shareholders on 30 May 2019
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.
Other Directorships with listed companies in the last three
years: Hip Resources Limited (ASX: HIP) Appointed 24
October 2019.
Appointed 2 Jun 2011
Re-elected by shareholders on 30 May 2019
The Company’s Board believes that a highly credentialed Board, with diverse
backgrounds, skills and perspectives, will be effective in supporting and enabling delivery
of strong governance for the Company and create value for the Company’s shareholders.
Austral Gold Limited
42
Annual Report 2019
PABLO VERGARA DEL CARRIL
Non-Executive Director,
Member of the Audit Committee
ROBERT TRZEBSKI
Non-Executive Director,
Chairman of the Audit Committee
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 2019
Mr Vergara del Carril is a lawyer and is professor of Post-
graduate Degrees for Capital Markets, Corporate Law and
Business Law at the Argentine Catholic University.
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- Argentin-
ean 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 2019
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
43
Annual Report 2019
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 recommis-
sion the Guanaco mine in 2010. 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 construction 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 Account-
ing from the Universidad Catolica Argentina, a Masters of Finance from Univer-
sidad del CEMA, Argentina and a Masters of Inter- national Business from the
University of Sydney, Australia.
At Austral Gold, Mr. Bordogna has overseen the conversion than US$50m
in debt to equity, $15m in equity investments with TSX-V listed companies,
as well as greater 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. He is also CFA Candidate
Level 3.
Appointed 22 August 2016
Mr. Hwang assumed the role of Company Secretary in July 2019. Mr. Hwang
is an experienced corporate lawyer specialising in listings on the ASX,
equity capital markets and providing advice on corporate governance and
compliance issues.
Appointed 31 July 2019
RODRIGO RAMIREZ
Vice President of Operations
JOSÉ BORDOGNA
Chief Financial Officer
DAVID HWANG
Automic Group, Company Secretary
Austral Gold Limited
44
Annual Report 2019
DIRECTORS’ MEETINGS
The number of Directors’ meetings (including meetings of Commit-
tees of Directors) and number of meetings attended by each of the
Directors of the Company during the financial year were
Directors’
meetings
Audit
Committee
meetings
Director
Pablo Vergara del Carril
Robert Trzebski
Wayne Hubert
Eduardo Elsztain
Saul Zang
Stabro Kasaneva
Ben Jarvis
A
2
2
2
2
1
2
2
B
2
2
2
2
2
2
2
A
3
3
N/A
N/A
N/A
N/A
3
B
3
3
N/A
N/A
N/A
N/A
3
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.
INDEMNITY AND INSURANCE OF OFFICERS
Under a deed of access, indemnity and insurance, the Company
indemnifies each person who is a Director or secretary of Austral
Gold Limited against:
• any liability (other than for legal costs) incurred by a Director or
secretary in his or her capacity as an officer of the Company or
of a subsidiary of the Company; and
• 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 prohibitions
in section 199A of the Corporations Act; and
• apply only to the extent and for the amount that a Director or
secretary is not otherwise entitled to be indemnified and is not
actually indemnified by another person (including a related body
corporate or an insurer).
•
INDEMNITY AND INSURANCE OF AUDITOR
• The Company has not, during or since the end of the finan-
cial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by
the auditor.
• During the financial year, the Company has not paid a premium
in respect of a contract to insure the auditor of the Company or
any related entity.
INTERESTS KEY MANAGEMENT PERSONNEL
• The relevant interest of each Director and Executive Officer
(directly or indirectly) 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
Options
P Vergara del Carril
68,119
-
-
-
R Trzebski
E Elsztain
S Zang
S Kasaneva
B Jarvis
W Hubert
R Ramirez
J Bordogna
It is also noted:
479,805,958
16,241,776
1,640,763
6,881,230
-
1,750,000
279,514
-
136,730
-
-
-
-
-
1. E Elsztain, S Zang, P Vergara del Carril and are Directors of
Guanaco Capital Holding Corp which holds 35,870,730 shares
and 2,989,227 options according to the last substantial holder
notice lodged in October 2019.
2. E Elsztain and S Zang are Directors of IFISA which holds
433,448,890 shares and 12,378,689 options according to the
last substantial holder notice lodged in October 2019.
E Elsztain is the ultimate beneficial owner of IFISA.
REMUNERATION REPORT (AUDITED)
Remuneration Policy
The full Board of Austral Gold is responsible for determining remu-
neration 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, responsibilities and level of
performance, as well as ensuring that remuneration is competitive
in attracting, retaining and motivating people of the highest quality.
The level of remuneration for non-executive Directors is consid-
ered 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
45
Annual Report 2019
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
• José Bordogna
Chief Financial Officer
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 predetermined
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, 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 value. 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 remunera-
tion to be awarded to each KMP. Consequently, there may not always be a direct correlation between the statutory key performance
measures and the variable remuneration awarded.
12 months ended
30 June
2016
12 months ended
30 June
2017
12 months ended
30 June
2017
6 months ended
31 December
2018
12 months ended
31 December
2019
Sales Revenue
(US$’000)
Profit/(loss) before
tax (US$’000)
Basic EPS (US cents
per share)
Diluted EPS (US
cents per share)
Share price (cents
AUD/CDN)
55,865
101,025
48,867
122,767
102,209
27,711
(6,232)
(14,905)
(37,054)
9,508
5.25
(0.85)
(2.56)
(4.88)
0.97
5.25
(0.85)
(2.56)
(4.88)
0.93
15.6/NA
15.0/15.0
15.0/13.0
6.0/6.0
9.0/8.5
Austral Gold Limited
46
Annual Report 2019
Details of Remuneration
Details of the nature and amount of each major element of the remuneration of each Director of the Group and each of the KMP of the
Group during the financial year were:
12 month period ended 31 December 2019
Primary
Post-employment
Share-based
Total
Cash and
accrued
Salary and
Fees
US$
Accrued
Cash
Bonus
US$1
Non-
monetary
benefits
US$
Superannuation
US$
Retirement/
Termination
benefits
US$
Shares
US$
Options
US$
US$
Directors
Non-executive directors
E Elsztain
100,000
S Zang
50,000
W Hubert
58,000
R Trzebski
45,976
B Jarvis
45,976
P Vergara del Carril
50,000
Total non-
executive director
remuneration
349,952
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,024
4,024
–
8,048
S Kasaneva
355,127
311,255
Total Director
remuneration
705,079
311,255
Executive Director
–
–
–
8,048
Other Key Executives
R. Ramirez
287,069
251,606
J. Bordogna
119,390
69,857
Total other
executive
remuneration
Total director and
executive officer
remuneration
406,459
321,463
1,111,538
632,718
–
–
–
–
–
–
–
8,048
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100,000
50,000
58,000
50,000
50,000
50,000
358,000
666,382
1,024,382
538,675
189,247
727,922
1,752,304
1 Accrued cash bonus defined as bonus earned during the year that has been paid or accrued
2 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
47
Annual Report 2019
Twelve-month period ended 31 December 2018
Cash and
accrued
Salary and
Fees US$
Primary
Accrued
Cash
Bonus
US$
Non-
monetary
benefits
US$1
Post-employment
Share-based
Total
Superannuation
US$
Retirement
benefits
US$
Shares
US$
Options
US$
US$
Directors
Non-executive directors
E Elsztain
100,000
S Zang
50,000
W Hubert
58,000
R Trzebski
45,675
B Jarvis
45,675
P Vergara del Carril
50,000
Total non-
executive director
remuneration
349,350
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,325
4,325
–
8,650
Executive director
S Kasaneva
381,371
381,371
Total Director
remuneration
730,721
381,371
8,650
Other Key Executives3
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 Other
Executive
remuneration
Total director and
executive officer
remuneration
742,619
816,370
1,473,340
1,197,741
8,650
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100,000
50,000
58,000
50,000
50,000
50,000
358,000
762,742
1,120,742
618,724
477,835
233,704
228,726
1,588,989
2,679,731
1 Accrued cash bonus defined as bonus earned during the year that has been paid or accrued
2 No longer employed as an Executive Officer effective 31 May 2018
3 No longer employed as an Executive Officer effective 30 September 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
48
Annual Report 2019
Contractual Arrangement with Executive KMP at December 31, 2019
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
Base salary is paid in Chilean
pesos annually with no FX
adjustment clause
Base salary is paid in Chilean
pesos annually with no FX
adjustment clause
Pro rata bonus accrued
Pro rata bonus accrued
Jose Bordogna
Chief Financial
Officer
No fixed term
30 days notice
Base salary is paid in Argentine
pesos annually with no FX
adjustment clause
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 2019 December 2018 December 2019 December 2018 December 2019 December 2018
Executive Directors
Stabro Kasaneva
53%
50%
47%
50%
0%
Rodrigo Ramirez
Jose Bordogna
Juan Andrés Morel
Diego Guido
53%
63%
N/A
N/A
Executive Officers
50%
62%
36%
52%
47%
37%
N/A
N/A
50%
38%
64%
48%
0%
0%
N/A
N/A
0%
0%
0%
0%
0%
Austral Gold Limited
49
Annual Report 2019
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 year ended 31
December 2019 amounted to US$141,022 (2018: US$117,663).
Cresud S.A.C.I.F.Y.A, IRSA Inversiones y Representaciones S.A., IRSA Proiedades Comerciales S.A. and Consultores Asset Manage-
ment 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 2019 a total of US$326,437 was charged to the Company (2018: US$197,237) in regard to IT services
support, HR services, software licenses building/ office expenses and other fees. In addition, during April 2019, Consultores Assets
Management SA, a company controlled by E Elsztain provided a loan of US$1.6 million at an annual interest rate of at 10% per annum.
The loan plus interest of $30,609, was repaid in July 2019.
This concludes the remuneration report, which has been audited.
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 10 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 audi-
tor; 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 proceedings to which the
Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the period ended 31 December 2019 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 Instru-
ment 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
6 March 2020
Austral Gold Limited
50
Annual Report 2019
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Austral Gold Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Austral Gold Limited for
the financial year ended 31 December 2019 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Daniel Camilleri
Partner
Sydney
6 March 2020
51
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
Austral Gold Limited
51
Annual Report 2019
Austral Gold Limited
52
Annual Report 2019
Austral Gold Limited
53
Annual Report 2019
S
T
N
E
M
E
T
A
T
S
I
L
A
C
N
A
N
I
F
Austral Gold Limited
54
Annual Report 2019
AUSTRAL GOLD LIMITED FINANCIAL REPORT 2019
Consolidated statement of profit or loss and other comprehensive income
All figures are reported in thousands of US$
For the year ended 31 December
Note
2019
2018
Continuing operations
Sales revenue
Cost of sales
Gross profit before depreciation and amortisation expense
Depreciation and amortisation expense
Gross profit (loss)
Other income
Administration expenses
Impairment of assets
Care and maintenance expenses
Restructuring expenses
Net finance costs
Gain/(loss) on financial assets
Profit/(loss/before income tax
Income tax (expense)/benefit
Profit/(loss) after income tax expense
Profit/(loss) 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 income/(loss) attributable to:
Owners of the Company
Non-controlling interests
Earnings per share (cents per share):
Basic earnings per share
Diluted earnings per share
The notes on pages (5) to (33) are an integral part of these consolidated financial statements.
13
6
6
7
18/20
8
9
11
12
12
102,209
122,767
(55,293)
46,916
(20,255)
26,661
62
(9,304)
(862)
(1,185)
(2,087)
(3,787)
10
9,508
(7,869)
1,639
5,225
(3,586)
1,639
19
1,658
5,244
(3,586)
1,658
0.97
0.93
(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)
Austral Gold Limited
55
Annual Report 2019
AUSTRAL GOLD LIMITED FINANCIAL REPORT 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
All figures are reported in thousands of US$
As at 31 December
Note
2019
2018
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
Equity Investment
Goodwill
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Deferred revenue
Employee entitlements
Loans and borrowings
Promissory note
Financial leases
Total current liabilities
Non-current liabilities
Trade and other payables
Provisions for reclamation and rehabilitation
Loans and borrowings
Financial leases
Employee entitlements
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Non-controlling interest
Total equity
14
16
17
15
16
18
19
20
21
18
11
22
23
25
21
19
22
24
25
19
23
11
26
27
28
29
9,196
6,825
277
10,551
26,849
990
6,484
50,432
15,281
3,976
926
1,229
79,318
106,167
10,932
-
3,548
4,045
1,957
3,047
23,529
1
10,814
2,077
6,302
1,048
5,665
25,907
49,436
56,731
101,682
(44,238)
(713)
-
56,731
1,716
9,168
561
13,819
25,264
139
6,723
54,020
16,270
-
926
3,892
81,970
107,234
14,566
2,140
4,835
6,860
-
2,086
30,487
5
10,664
2,908
6,617
793
888
21,875
52,362
54,872
100,569
(49,473)
35
3,741
54,872
The notes on pages (5) to (33) are an integral part of these consolidated financial statements.
Austral Gold Limited
56
Annual Report 2019
AUSTRAL GOLD LIMITED FINANCIAL REPORT 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019 and 2018
All figures are reported in
thousands of US$
Note
Issued
capital
Accumulated
losses
Reserves
Balance at 31 December 2017
100,569
(23,210)
Adjustment on initial application of
AASB15 (net of tax)
-
(199)
Adjusted balance at 1 January 2018
100,569
Profit (loss) for the period
Foreign exchange movements from
translation of financial statements to US$
Total comprehensive income/ (loss)
Dividends declared
Balance at 31 December 2018
Adjustment on initial application of
AASB16
Adjusted balance at 1 January 2019
100,569
Profit (loss) for the period
Foreign exchange movements from
translation of financial statements to US$
Total comprehensive income/ (loss)
Issued Capital
Acquisition of 49% of Cachinalito
Acquisition of 30% of Casposo
Balance at 31 December 2019
28
26/28
28/29
28/29
100,569
(49,473)
-
10
-
-
-
-
-
-
-
1,113
-
-
(23,409)
(26,064)
-
(26,064)
-
(49,463)
5,225
-
5,225
-
-
-
Non-
controlling
interest
Total
13,995
91,416
-
(199)
13,995
(10,171)
91,217
(36,235)
-
(27)
(10,171)
(36,262)
(83)
3,741
(83)
54,872
-
10
3,741
(3,586)
54,882
1,639
-
19
(3,586)
-
(1,361)
1,206
1,658
1,299
(908)
(200)
-
56,731
62
-
62
-
(27)
(27)
-
35
-
35
-
19
19
186
453
(1,406)
(713)
101,682
(44,238)
The notes on pages (5) to (33) are an integral part of these consolidated financial statements
Austral Gold Limited
57
Annual Report 2019
AUSTRAL GOLD LIMITED FINANCIAL REPORT 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
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 increase/(decrease) in cash and cash equivalents
Causes of change in cash and cash equivalents
Operating activities
Profit / (loss) after income tax
Non-cash items
Income tax expense/(benefit) recognized in profit or loss
Impairment of assets
Depreciation and amortisation
Interest received
Loss/(gain) on sale of equipment
Non-cash net finance charges
Provision for reclamation and rehabilitation
Inventory write-down
Allowance for doubtful accounts
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
Additions to plant, property and equipment
Proceeds from maturity of bonds and sale of securities
Proceeds from sale of inventory and equipment
Payment for investment in bonds and securities
Payment for investment in exploration and evaluation
Payment for investment in mine properties
Payment for equity investment, net of costs
Payment for purchase of non-controlling interests
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from loans and borrowings
Repayment of loans and borrowings
Repayment of lease liabilities
Interest paid on leases
Proceeds from rights offering net of offering costs
Net cash used in financing activities
Net (decrease) / increase in cash and cash equivalents
The notes on pages (5) to (33)are an integral part of these consolidated financial statements
For the year ended 31 December
Note
2019
1,716
9,196
7,480
1,639
7,869
862
20,255
(27)
215
1,860
175
179
75
255
(10)
33,347
2,481
1,417
(4,183)
(2,140)
(1,287)
29,635
(10,035)
294
650
-
(779)
(1,993)
(2,019)
(817)
27
(14,672)
5,991
(11,455)
(2,794)
(524)
1,299
(7,483)
7,480
19
20
18
21
29
16
2018
6,612
1,716
(4,896)
(36,235)
(819)
29,190
18,422
(84)
(141)
1,680
1,095
133
(97)
(210)
1,202
14,136
8,680
3,882
(7,314)
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)
Austral Gold Limited
58
Annual Report 2019
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 year ended 31 December 2019 comprise
the Company and its subsidiaries (together referred to as the “Group”). The nature of the operations and principal activi-
ties 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.
These financial statements were authorised for issue by the Company’s Board of Directors on 6 March 2020.
Details of the Group’s accounting policies are included in Note 38.
2.1 Functional and Presentation currency
These consolidated financial statements are presented in United States dollars (US$), which is the Group’s functional
currency. The Group 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.
2.2 Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supple-
mentary information about the parent entity is disclosed in note 34.
2.3 Reclassification of Prior Year Presentation
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifica-
tions had no effect on the reported results of operations. Financial leases previously included in Borrowings have been
disclosed separately and Salaries and bonuses payable previously included with Trade and other payables have been
grouped with Employee entitlements.
3. GOING CONCERN
For the year ended 31 December 2019, the Group made a profit after income tax of $1.639 million (2018: loss after income
tax of $36.235 million) from continuing operations and generated net cash flows from operating activities of $29.635
million (2018: net cash flow from operating activities of $21.335 million). At 31 December 2019, the group has net current
assets of $3.32 million (2018: net current liabilities of $5.223 million).
The Directors note the following with regards to the ability of the Group to continue as a going concern:
i. At 31 December 2019, the Group had a cash balance of $9.196 million.
ii. The Group’s cash flow forecasts following the most likely mine plan and 2020 production guidance that forecast
production of;
• 55,000-60,000 gold equivalent ounces; and
• average 2020 gold and silver selling price of US$1,500 and US$17.3 per ounce respectively, indicate that the Group
forecasts that it will have free cash flow from operations to meet its borrowing obligations and to meet the required
capital expenditures.
The financial statements have been prepared on a going concern basis, which contemplates the continuation of normal
business operations and the realization of assets and settlement of liabilities in the normal course of business. Based
on the factors set out 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.
Austral Gold Limited
59
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
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 recognised prospec-
tively. Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment in the year ended 31 December 2019 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 amortisation 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.
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 “Explora-
tion for and Evaluation of Mineral Resources”. Where indicators of impairment are identified, the recoverable amounts
of the assets are determined.
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. Estimates and underly-
ing assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. Information
about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the
year ended 31 December 2019 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.
ii.
Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 — inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices), or indirectly (i.e. derived from prices)
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.
Austral Gold Limited
60
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
The Group holds listed equity securities on the Australian and Canadian stock exchanges and listed Argentine 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 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.
Further information about the assumptions made in measuring fair values is included in Note 17 – Other financial assets
and Note 30 – Financial instruments.
5. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES AND ADOPTION OF NEW/AMENDED AASB AND
AASB INTERPRETATIONS
AASB 16 Leases
On January 1, 2019, the Group adopted AASB 16 – Leases (“AASB 16”) which replaced AASB 17 – Leases and
IFRIC 4 – Determining Whether an Arrangement Contains a Lease. AASB 16 sets out the principles for the recognition,
measurement, presentation and disclosure of leases. The standard is effective for annual periods beginning on or after
January 1, 2019. AASB 16 eliminates the classification of leases as either operating leases or finance leases for a lessee.
Instead, all leases are treated in a similar way to finance leases applied in AASB 17. AASB 16 does not require a lessee
to recognize assets and liabilities for short-term leases (i.e. leases of 12 months or less) and leases of low value assets.
The Group applied AASB 16 using the modified retrospective method. Under this method, comparative financial infor-
mation will not be restated and will continue to be reported under IAS 17 Leases and IFRIC 4: Determining whether an
Arrangement Contains a Lease. The Group recognised lease liabilities related to its lease commitments. The lease liabilities
were measured at the present value of the remaining lease payments, discounted using the Group’s entities estimated
incremental borrowing rate as at January 1, 2019. The associated right-of-use assets are be measured retrospectively
but using the incremental borrowing rates ranging from 6.5%-9% at 1 January 2019. The difference between the pres-
ent value of the remaining lease payments and the right-of-use assets resulted in an adjustment to the accumulated
losses at 1 January 2019.
Accounting policy changes
Prior to 1 January 2019, assets acquired through a finance lease were recorded as an asset with a corresponding liabil-
ity at an amount equal to the lower of the fair value of the leased property and the present value of the minimum lease
payments. Each lease payment was allocated between the liability and finance cost using the effective interest method,
whereby a constant rate of interest expense was recognized on the balance of the liability outstanding. The interest
element of the lease was charged to the consolidated statement of profit or loss as a finance cost. Property, plant and
equipment assets acquired under finance leases were depreciated over the shorter of the useful life of the asset and the
lease term. All other leases were classified as operating leases. Operating lease payments were recognized as an operat-
ing cost in the consolidated statements of profit or loss and on a straight-line basis over the lease term. Effective January
1, 2019, leases are recognized as a right-of use asset and a corresponding liability at the date at which the leased asset
is available for use by the Company. Each lease payment is allocated between the liability and finance cost. The finance
cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset’s useful life and
the lease term on a straight-line basis. Assets and liabilities arising from a lease are initially measured on a present value
basis. Lease liabilities include the net present value of the lease payments. The lease payments are discounted using
the Group’s incremental borrowing rate, being the rate that each entity of the Group would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Right-of-use assets are measured retrospectively from the date of the lease net of accumulated depreciation but using
the incremental borrowing rate at 1 January 2019. Payments associated with short-term leases and leases of low-value
assets are recognized on a straight-line basis as an expense in the condensed statement of profit or loss. Short-term
leases are leases with a lease term of 12 months or less.
Austral Gold Limited
61
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
Impact on financial statements
Impact on transition*
On transition to AASB 16, the Group recognized additional right-of-use assets, including office, vehicles, and machinery
and equipment lease liabilities, recognizing the difference in accumulated losses. The impact on transition is summarized
below.
In thousands of US$
Right-of-use assets-property, plant and equipment
Lease liabilities
Accumulated losses
When measuring lease liabilities for leases that were classified as operating leases, the Group
discounted lease payments using its incremental borrowing rate at 1 January 2019. The weighted
average rate applied is 11%
Operating lease commitments at 31 December 2018 as disclosed under IAS 17 in the Group’s
consolidated financial statements
Discounted using the incremental borrowing rate at 1 January, 2019
Financial lease liabilities recognized as of 31 December 2018
-Recognition exemption for leases of low-value assets
-Recognition exemption for leases with less than 12 months of lease term at transition
-Extension options reasonably certain to be exercised
Lease liabilities recognized at 1 January, 2019
1 January, 2019
339
(329)
10
1 January, 2019
122
329
8,703
568
11
217
9,349
ii. 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 Transac-
tions and Advance Consideration, which were effective for accounting periods beginning on or after 1 January 2019. The
impact of adoption was not significant to the Group’s Consolidated Financial Statements. A number of new standards
and amendments to standards are effective for annual periods beginning after 1 January 2019 and earlier application is
permitted; however, the Group has not early adopted the new or amended standards in preparing these consolidated
financial statements.
Austral Gold Limited
62
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
6. COST OF SALES
All figures are reported in thousands of US$
Profit before income tax includes the following
specific expenses:
Production
Staff costs
Royalties
Mining Fees
Total cost of sales before depreciation and
amortisation expense
Depreciation of plant and equipment
Amortisation of mine properties
Total depreciation and amortisation expense
Severance included in staff costs
7. ADMINISTRATION EXPENSES
All figures are reported in thousands of US$
Consulting and professional services
Administration
Staff costs
Non-executive director fees
Other
Total administration expenses
8. RESTRUCTURING EXPENSES
All figures are reported in thousands of US$
Severance
Tax credits write-down
Other
Total restructuring expenses
9. NET FINANCE COSTS
All figures are reported in thousands of US$
Interest (income)
Interest expense
Interest expense on leases
Loss from foreign exchange
Present value adjustment to mine closure provision
Other
Net finance costs
For the year ended 31 December
2019
2018
30,615
21,616
2,560
502
55,293
17,117
3,138
20,255
988
For the year ended 31 December
2019
1,987
1,044
4,909
358
1,006
9,304
For the year ended 31 December
2019
1,670
238
179
2,087
For the year ended 31 December
2019
(27)
901
524
1,845
517
27
3,787
63,631
30,161
4,050
545
98,387
16,430
1,992
18,422
2,728
2018
2,110
1,635
6,794
358
1,465
12,362
2018
-
-
-
-
2018
(84)
1,642
-
826
(381)
123
2,126
Austral Gold Limited
63
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
10. AUDITOR’S REMUNERATION
All figures are reported in thousands of US$
Audit and review services:
Auditors of the Group-KPMG
Audit and review of financial statements-Group
Audit and review of financial statements-controlled entities
11. INCOME TAX EXPENSE
All figures are reported 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
Recognition of carry-forward tax losses
Income tax (benefit)
* Chile tax rate: 27.0% (31 December 2019: 27.0%). Argentina tax rate: 30% (31 December 2018: 30%)
For the year ended 31 December
2019
2018
74,000
159,500
233,500
For the year ended 31 December
2019
2,312
5,557
7,869
9,508
2,852
(721)
-
6,510
(460)
(312)
7,869
95,830
207,030
302,860
2018
591
(1,410)
(819)
(37,054)
(11,116)
(114)
(88)
4,295
682
5,522
(819)
Austral Gold Limited
64
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
Accrual for mine closure
1,198
All figures are reported in
thousands of US$
(C) Deferred tax assets and
liabilities
Deferred tax assets
Other receivable
Inventory
Mining Concessions
Deferred income
Tax losses carried forward
Property, plant and equipment
Payroll accrual
Other
Leasing
Temporary differences not
brought to account
Deferred tax assets
Deferred tax liabilities
Other provisions
Mining concessions
Property plant and equipment
inflation adjustment
Financial assets
Leasing assets
31 December 2019
31 December 2018
Chile
Argentina
Other
Total
Chile
Argentina
Other
Total
57
69
–
18
-
–
780
36
1,147
–
–
61
320
198
–
98
1,072
–
989
-
–
–
–
–
–
–
9,182
–
–
–
–
57
130
320
1,396
18
9,280
1,072
780
1,025
1,147
(9,182)
(9,182)
102
69
–
967
–
3,258
–
385
–
–
–
–
83
307
55
–
518
8,255
–
303
–
–
–
–
–
–
102
152
307
1,022
–
9,144
12,920
–
–
–
–
8,255
385
303
–
(5,522)
(9,144)
(14,666)
3,305
2,738
–
(8,950)
–
–
–
–
–
6,043
4,781
3,999
–
–
(102)
(8,950)
(4,625)
(1,474)
(20)
(1,494)
–
–
–
(35)
–
–
–
(1,044)
(5,669)
(35)
-
(10,479)
–
–
(5)
–
(107)
–
–
(20)
(20)
–
12
(32)
(20)
(4,436)
(888)
3,892
3,004
(1,883)
(5,557)
(4,436)
683
12
(1,583)
(888)
2,196
(1,297)
2,993
3,892
–
–
–
–
–
–
–
–
–
–
–
–
8,780
(102)
(4,625)
–
(5)
(1,044)
(5,776)
3,004
2,879
(1,285)
1,410
3,004
Deferred tax liabilities
(8,950)
(1,509)
Net deferred tax (liabilities)/
assets
Movement in deferred tax
balances
Opening balance
Exchange rate difference
Charged to profit or loss
Closing balance
(5,645)
1,229
(888)
2
(4,759)
(5,645)
3,892
(1,897)
(766)
1,229
12. EARNINGS PER SHARE
All figures are reported in thousands of US$
Net profit/(loss) attributable to owners
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)
For the year ended 31 December
2019
5,244
2018
(26,064)
539,424,350
556,237,880
0.97
0.93
534,173,010
534,173,010
(4.88)
(4.88)
Austral Gold Limited
65
Annual Report 2019
All figures are
reported in
thousands of
US$
Revenue:
Gold
Silver
NOTES TO THE FINANCIAL STATEMENTS
13. OPERATING SEGMENTS
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 which is based in Chile and Casposo which is based in Argentina. The
CODM monitors the performance in these two regions separately. During the year ended 31 December 2019, the Group
earned approximately 78% (2018-90%) of its consolidated revenue from sales made to one customer.
For the year ended 31 December 2019
For the year ended 31 December 2018
Guanaco/
Amancaya
Casposo
Group and
unallocated
items
Consolidated
Guanaco/
Amancaya
Casposo
Group and
unallocated
items
Consolidated
Cost of sales
(44,985)
(10,308)
84,823
8,650
5,045
3,691
–
–
–
89,868
12,341
76,032
9,058
15,384
22,293
(55,293)
(59,882)
(38,505)
–
–
–
91,416
31,351
(98,387)
Depreciation
and amortisation
expense
Other (loss)/
income net
Administration
expenses
Care and
maintenance
expense
Restructuring
expense
Finance costs
(gain)
Gain/(loss) on
financial assets
Impairment of
assets
Income tax
(expense) benefit
Segment profit/
(loss)
(16,269)
(3,927)
(59)
(20,255)
(13,638)
(4,738)
(46)
(18,422)
(49)
36
75
62
8
1,860
1,868
(5,455)
(887)
(2,962)
(9,304)
(7,278)
(2,164)
(2,920)
(12,362)
–
–
(1,185)
(2,087)
–
–
(1,185)
(2,087)
–
–
–
–
–
–
–
–
(1,239)
(2,545)
(3)
(3,787)
460
(1,931)
(655)
(2,126)
–
–
(619)
(243)
10
–
10
(862)
8
–
(903)
(307)
(1,202)
(29,190)
–
(29,190)
(7,155)
(832)
118
(7,869)
(1,789)
3,072
(464)
819
17,702
(13,242)
(2,821)
1,639
2,979
(34,822)
(4,392)
(36,235)
Segment assets
76,525
13,568
16,074
106,167
68,394
27,350
11,490
107,234
Segment
liabilities
Capital
expenditure
41,832
4,565
3,039
49,436
38,264
12,994
1,104
52,362
12,138
486
183
12,807
8,824
8,455
342
17,621
Austral Gold Limited
66
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
Geographic information:
All figures are reported in thousands of US$
Revenue by geographic location
Chile
Argentina
Australia
Canada
United States
Total revenue
Non-current assets by geographic location
Chile
Argentina
Australia
British Virgin Islands
Canada
United States
Total non-current assets
14. CASH AND CASH EQUIVALENTS
All figures are reported in thousands of US$
Cash at call and in hand
Short-term investments
Total cash and cash equivalents
For the year ended 31 December
2019
93,473
8,736
-
-
-
2018
85,090
37,677
-
-
-
102,209
122,767
57,615
17,619
-
102
6
3,976
79,318
As at 31 December
2019
7,756
1,440
9,196
58,171
23,697
-
92
10
-
81,970
2018
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
9,196
1,716
Risk Exposure
The Group’s exposure to interest rate risk is discussed in note 30. The maximum exposure to credit risk at the reporting date is
the carrying amount of each class of cash and cash equivalents mentioned above.
15. INVENTORIES
All figures are reported in thousands of US$
Materials and supplies
Ore stocks
Gold bullion and gold in process
Total inventories
As at 31 December
2019
8,648
71
1,832
10,551
2018
10,453
354
3,012
13,819
* 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$1,262k (31 December 2018:US$1,082k).
Austral Gold Limited
67
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
16. TRADE AND OTHER RECEIVABLES
All figures are reported in thousands of US$
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
Allowance for doubtful accounts
Trade debtors
The ageing of trade receivables is 0–30 days
16.1 Past due but not impaired
As at 31 December
2019
3,787
548
1,252
1,238
6,825
578
412
–
990
390
3,787
2018
–
272
2,827
6,069
9,168
12
121
6
139
315
–
There were no receivables past due at 31 December 2019 (31 December 2018: nil).
16.2 Fair value and credit risk
Due to the short-term nature of trade receivables, their carrying amount is assumed to approximate their fair value.
Refer to note 30 for more information on the risk management policy of the Group and the credit quality of the receivables.
16.3 Key customers
The Group is mainly reliant on two customers to which gold and silver produced from the Guanaco/Amancaya mines
are sold.
17. OTHER FINANCIAL ASSETS
All figures are reported in thousands of US$
Current
Call option to buy a further 3.795% of Rawhide — level 3
Listed bonds — level 1
Listed equity securities — level 1
Total current other financial assets at fair value
As at 31 December
2019
4
29
244
277
2018
–
341
220
561
The table above sets out the Group’s assets and liabilities that are measured and recognised at fair value at 31 December
2019.
Listed equity securities as at 31 December 2019 and 2018 are shares of Fortuna Silver Mines Inc.
The Group has options to buy 3.795% of the equity investment in Rawhide. Options with one unit owner are exercisable
by 31 January, 2020 and options with two unit owners are exercisable by 8 May, 2020.
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 2019 there were no transfers between the financial instrument levels of hierarchy.
Austral Gold Limited
68
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
18. MINE PROPERTIES
All figures are reported in thousands of US$
Guanaco/Amancaya
Casposo
Total
Mine Properties — 31 December 2019
Cost
Accumulated amortisation
Carrying value — Mine Properties
Movements in carrying value
Carrying amount at 1 January 2019
Additions
Transfers from Exploration and Evaluation expenditure
Amortisation
Carrying amount at 31 December 2019
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 of Casposo
Carrying amount at 31 December 2018
63,122
(56,638)
6,484
6,723
1,993
–
(2,232)
6,484
61,129
(54,406)
6,723
6,608
1,214
-
(1,099)
-
6,723
9,795
(9,795)
–
–
–
906
(906)
–
8,889
(8,889)
–
5,728
–
174
(893)
(5,009)
–
72,917
(66,433)
6,484
6,723
1,993
906
(3,138)
6,484
70,018
(63,295)
6,723
12,336
1,214
174
(1,992)
(5,009)
6,723
Carrying value — Guanaco/Amancaya
The Guanaco mine along with the Amancaya properties in the surrounding areas has been determined by Management
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 19) with a total book value of $US51.150m 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/Amancaya project and therefore
no impairment charge has been applied to the assets for the current year. The impairment test was performed by an
independent party using the discounted cash flow model (DCF) as the primary valuation methodology with the following
key assumptions:
• Real Forecast Gold price: US$1,493/oz – US$1,498/oz (31 December 2018 US$1,255/oz – US$1,290/oz)
• Real Forecast Silver price: US$17.10/oz – US$17.90/oz (31 December 2018 US$15.70/oz – US$16.80/oz)
• Life of Mine: 2.0 years (Life of mine based on most recent financial model used for impairment testing)
• Real Discount Rate (post-tax): 4.9% (31 December 2018: 6.2%)
The sensitivity to +/- 10% variation in the gold price (US$1,300-1,600/oz) and in the discount rate (4.4%–5.4%) on the
fair value of the Guanaco/Amancaya project results in an inpact of +/- US$11.25 million on the valuation which does not
lead to a fair value below the book value of the project.
Goodwill
Goodwill has arisen on the acquisition of a subsidiary, Ingenieria y Mineria Cachinalito Limitada. The recoverable 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.
Carrying value-Casposo
At 31 December, 2018, Management assessed the fair value of Casposo to be lower than the book value. As a result,
management recorded an impairment charge of $29.190m against the carrying value of the Casposo Mine of which
US$5.009m was charged against Mine Properties and US$24.181m against Property, Plant and Equipment.
Austral Gold Limited
69
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
19. PROPERTY, PLANT AND EQUIPMENT
All figures are reported in thousands of US$
31 December 2019
31 December 2018
Property, plant and equipment owned
Right-of-use-assets
Property, plant and equipment owned
Cost
Accumulated depreciation
Carrying amount at end of the period
Movements in carrying value
Carrying amount at beginning of the period
Additions
Transfer of leases to right-of-use assets
Depreciation
Disposals
Impairment of Casposo
Carrying amount at end of the period
37,515
12,917
50,432
146,883
(109,368)
37,515
54,020
10,035
(12,930)
(13,352)
(258)
-
37,515
54,020
-
54,020
155,436
(101,416)
54,020
78,839
15,854
-
(16,430)
(62)
(24,181)
54,020
The majority of the property, plant and equipment is included in the Guanaco/Amancaya Cash Generating Unit (“CGU”).
Property, plant and equipment that does not form part of the Guanaco CGUs are being carried at the lower of their book
value and recoverable amount. The Casposo property, plant and equipment is recorded at salvage value as it is currently
not being used.
The Group leases production equipment under a number of finance leases. At 31 December 2019, the net carrying
amount of finance lease assets under AASB 16 was US$12.917m.
All figures are reported in
thousands of US$
Underground
Mine
Development
Plant
Mining
Equipment
31 December 2019
Buildings
Land
Other
Total
Movements in carrying value
Balance at 1 January, 2019
14,669
28,090
7,687
655
–
–
–
(10,652)
–
–
(5,670)
(5,392)
5,600
1,013
(888)
(258)
–
(917)
4,056
680
(1,390)
–
–
(1,173)
815
790
–
–
–
–
–
54,020
10,035
(12,930)
(258)
–
–
–
–
(200)
(13,352)
16,686
2,701
4,550
2,173
815
590
37,515
Movements in carrying value
Balance at 1 January, 2018
26,746
33,164
11,214
2,422
–
–
502
–
(15,812)
(2,218)
(7,479)
(5,780)
9,316
1,535
–
(62)
(3,688)
(1,501)
6,838
642
–
–
(2,027)
(1,397)
815
–
–
–
–
–
14,669
28,090
5,600
4,056
815
1,960
41
(502)
–
(436)
(273)
790
78,839
15,854
–
(62)
(24,181)
(16,430)
54,020
Additions
Transfer of leases to
right-of-use assets
Disposals
Impairment
Depreciation
Carrying amount at the
end of the period
Additions
Transfer of leases to
right-of-use assets
Disposals
Impairment
Depreciation
Carrying amount at the
end of the period
Austral Gold Limited
70
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
Reconciliation of carrying amount
All figures are
reported in
thousands of US$
Underground
Mine
Development
Plant
Mining
Equipment
Buildings
Land
Other
Total
Cost
Balance at 1
January 2018
Additions
Transfer between
classes
Disposals
Impairment loss
Balance at 31
December 2018
Recognition of
right-of-use assets
on initial application
of AASB 16
Adjusted balance
at 1 January 2019
Additions
Disposals
Impairment loss
Balance at 31
December 2019
51,556
45,684
19,928
14,090
815
7,550
139,623
11,214
-
-
-
2,422
502
-
-
1,557
642
-
(81)
-
-
-
-
-
-
-
-
59
15,894
(502)
-
-
-
(81)
-
62,770
48,608
21,404
14,732
815
7,107
155,436
-
(14,352)
(1,240)
(2,499)
-
-
(18,091)
62,770
34,256
20,164
12,233
815
7,107
137,345
7,687
-
-
655
-
-
1,013
(497)
-
680
-
-
-
-
-
-
-
-
10,035
(497)
-
70,457
34,911
20,680
12,913
815
7,107
146,883
All figures are
reported in
thousands of US$
Underground
Mine
Development
Plant
Mining
Equipment
Buildings
Land
Other
Total
Accumated depreciation and impairment losses
Balance at 1
January 2018
24,810
12,520
Depreciation
Disposals
7,479
5,780
-
-
Impairment loss
15,812
2,218
10,631
7,251
1,501
(19)
3,688
1,397
-
2,027
Balance at 31
December 2018
Recognition of
right-of-use assets
on initial application
of AASB 16
Adjusted balance
at 1 January 2019
Depreciation
Disposals
Impairment loss
Balance at 31
December 2019
Carrying amounts
48,101
20,518
15,801
10,675
-
(3,700)
(352)
(1,110)
48,101
16,818
15,449
9,565
5,670
5,392
-
-
-
-
917
(238)
-
1,173
-
-
53,771
22,210
16,128
10,738
At 1 January 2018
26,746
33,164
9,297
At 31 December
2018
At 31 December
2019
14,669
28,090
5,603
815
6,839
4,057
16,686
12,701
4,553
2,175
815
-
-
-
-
-
-
-
-
-
-
-
5,612
60,824
273
-
436
16,430
(19)
24,181
6,321
101,416
-
(5,162)
6,321
96,254
200
13,352
-
-
(238)
-
6,521
109,368
815
1,937
78,799
785
585
54,020
37,515
Austral Gold Limited
71
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
Right of use assets
All figures are reported in thousands of US$
Balance at 1 January, 2019
Recognised on adoption of AASB 16
Additions
Less depreciation
Carrying amount at the end of the period
Lease liabilities
Lease liabilities
Less: current portion
Non-current long-term liability
*Not recorded as property plant and equipment as of 31 December 2018.
Undiscounted lease payments
All figures are reported in thousands of US$
Less than a year
Greater than a year
31 December 2019
Office
Vehicles
Machinery and
equipment
–
339*
47
(94)
292
–
3,206
3,366
(1,383)
5,189
–
9,724
–
(2,288)
7,436
Total
–
13,269
3,413
(3,765)
12,917
9,349
(3,047)
6,302
As at 31 December 2019
3,233
7,811
11,044
Stripping costs in production phase included in Property, Plant and Equipment
All figures are reported in thousands of US$
31 December 2019
31 December 2018
Movements in carrying value
Carrying amount at the beginning of the period
Amortisation
Carrying amount at end of the period
244
(244)
-
Stripping costs were related to the surface mine at Amancaya mine. All production at Amancaya in 2019 was from the
underground mine.
20. EXPLORATION AND EVALUATION EXPENDITURE
All figures are reported in thousands of US$
Costs carried forward in respect of areas of interest:
Carrying amount at the beginning of the period
Additions
Impairment for the period
Transfers to Mining Properties
Carrying amount at end of the period
As at 31 December
2019
16,270
779
(862)
(906)
15,281
2,241
(1,997)
244
2018
15,891
553
-
(174)
16,270
The recovery of the carrying amount of the exploration and evaluation assets is dependent on the successful development
and commercial exploration or sale of the areas of interest. This balance mainly relates to expenditures at the Guanaco,
Casposo and Pingüino exploration projects.
Additions for the year ended 31 December 2019 and 2018 relate mainly to exploration on the Guanaco, Casposo and
Pingüino projects.
Impairment for the year ended 31 December 2019 relate exploration projects with no expected value in Chile and
Argentina.
Austral Gold Limited
72
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
21. EQUITY INVESTMENT
The Group’s interests in equity-accounted investees comprise an interest in a Rawhide Acquisition Holding LLC.
(“Rawhide”). On 17 December 2019 the Group made an initial purchase of approximately 22.48% (21.28% on a fully
diluted basis) directly from Rawhide for a purchase price of US$3,957,406, of which US$2,000,000 was paid in cash at
closing. The balance of US $1,957,406 is to be paid pursuant to a promissory note of 0% interest maturing January 31,
2020. Transaction costs of $19,016 were incurred. In addition, the Group entered into separate option agreements with
three existing unit owners whereby the Group has the option to purchase up to an additional 3.795% of the issued and
outstanding Rawhide Units for a total of US$750,813. The fair value of the options of $4,261 was determined using the
Black-scholes model.
22. TRADE AND OTHER PAYABLES
All figures are reported in thousands of US$
Current
Trade payables
Accrued expenses
Royalty payable
Director fees
Income taxes payable
Other
Total trade and other payables
Non-Current
Other payables
23. EMPLOYEE ENTITLEMENTS
All figures are reported in thousands of US$
Current
Salaries and bonuses
Employee entitlements
Total employee entitlements
As at 31 December
2019
2018
4,081
3,075
746
432
2,022
576
10,932
1
As at 31 December
2019
1,894
1,654
3,548
8,582
3,868
1,656
297
15
148
14,566
5
2018
2,975
1,860
4,835
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
1,048
793
Retirement benefits
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 turn-
over rates and the RV-2014 mortality table established by the Superintendency of Securities 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 AASB 119 Employee benefits on Retirement Benefits Costs. The
parameters of turnover rates, rates of increase of remunerations and discount rate have been determined by the Group.
Austral Gold Limited
73
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
24. PROVISIONS
All figures are reported in thousands of US$
Non current
Mine closure
Others
Closing balance
Movement in non current provisions
Opening balance
(Reductions)/additions
Reclassifications from payables
Exchange difference
Present Value Adjustment
Closing balance
As at 31 December
2019
2018
10,804
10
10,814
10,664
(25)
-
(342)
517
10,628
36
10,664
11,729
25
5
(714)
(381)
10,814
10,664
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 2019, 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$7.6m; and
• Discount period: 2 years (Discount period based on expected timing of restoration activities).
• Discount rate: 1.75% (2018-2.50%)
As at 31 December 2019, the total restoration provision amounts US$3.6m for the Casposo mine. The present value of
the restoration provision was determined based on the following assumptions:
• Undiscounted rehabilitation costs: US$4.2m; and
• Discount rate: 12.3% (2018–9.63%)
There are no current plans for rehabilitation and restoration as the Group has initiated an exploration program and there
is potential to restart operations in the future.
Austral Gold Limited
74
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
25. LOANS AND BORROWINGS
All figures are reported in thousands of US$
Current
Loan facilities
Vendor take-back loan
Total current loans and borrowings
Loan facilities
Total non-current loans and borrowings
As at 31 December
2019
3,754
291
4,045
2,077
2,077
2018
6,860
-
6,860
2,908
2,908
Loan Facilities
At 31 December 2019, the breakdown of Loan Facilities payable in US$ is as follows:
• Banco Santander: US$4.9 million total outstanding amount structured in two facilities:
i) US$2.1 million pre-export loan that carries an annual interest rate of 5.25% (due in January 2020 and renewed for
another 6 months ( Note 37), and;
ii) US$2.8 million to be repaid over 48 months at an annual average interest rate of 5.5%. The total outstanding amount
is classified as follows: US$2.1 million as current and US$2.8 million as a non-current loan facility.
• Baf Latam Credit Fund: US$0.6 million outstanding at an annual interest rate of 9.5%. The outstanding amount was
repaid on 20 February, 2020.
• Banco de Crédito e Inversiones (BCI): US$0.3 million outstanding at an annual interest rate of 5.4% due 4 April 2020.
Vendor loan
A vendor take-back loan of US$949,728 payable in Chilean UF bearing no interest per annum, unsecured, payable in
eighteen monthly installments of approximately US$52,651. The amortized cost of the loan has been discounted using
a rate of 6.50%. The loan matures on 30 June 2020.
26. ISSUED CAPITAL
All figures are reported in thousands of US$
Fully paid ordinary shares
Number of ordinary shares
Weighted average number of ordinary shares (basic)
Movements in ordinary share capital
Balance at 31 December 2018
Shares issued pursuant to pro-rata rights offering
Share issue costs pursuant to pro-rata rights offering
Balance at 31 December 2019
As at 31 December
2019
101,682
559,393,259
539,424,350
Number of
ordinary shares
534,173,010
25,220,249
-
559,393,259
2018
100,569
534,173,010
534,173,010
US$’000
100,569
1,194
(81)
101,682
Date
16 Oct
2019
On 15 October 2019, the Group closed its non-renounceable pro-rata rights offer of ordinary shares and attaching options
at a price of A$0.08 per share. One option was granted for each 1.5 shares ordinary issued. The fair value of the options
granted was US$186,000 (note 28). The Group received gross proceeds of US$1.38m (A$2.018m).
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.
Movements in share options
Unlisted Options to acquire ordinary fully paid shares at A$0.092
on or before 18 October, 2021
Date
18 Oct
2019
As at 31 December
2019
16,813,530
2018
-
Austral Gold Limited
75
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
27. ACCUMULATED LOSSES
All figures are reported in thousands of US$
Accumulated losses at beginning of year
Adjustment on initial application of AASB15 (net of tax)
Adjustment on initial application of AASB16 (net of tax)
Adjusted balance at 1 January 2019/1 January 2018
Net profit/(loss) for the year
Accumulated losses at end of year
28. RESERVES
31 December 2019
31 December 2018
(49,473)
-
10
(49,463)
5,225
(44,238)
(23,210)
(199)
-
(23,409)
(26,064)
(49,473)
All figures are reported in thousands of US$
Note
31 December 2019
31 December 2018
Foreign currency translation reserve
Balance at beginning of year
Foreign exchange movements from translation of financial
statements to US dollars
Balance at end of year
Share option reserve
Balance at beginning of year
Unlisted options (1)
Balance at end of year
Business combination reserve
Balance at beginning of year
Acquisition of 49% of Cachinalito
Acquisition of 30% of Casposo
Balance at end of year
Total reserves
356
19
375
(321)
186
(135)
-
453
(1,406)
(953)
(713)
383
(27)
356
(321)
-
(321)
-
-
-
35
(1)
The fair value of the unlisted options issued in its non-renounceable pro-rata rights offer is determined at the date of
issuance using the Black-Scholes options valuation model that takes into account the assumptions per the follow-
ing table. Upon the exercise of options, the balance of the reserve relating to those options is transferred to share
capital.
Exercise price
Term of option
Share price at date of issuance
Expected price volatility
Risk-free interest rate
Nature and purpose of reserves
AUS$ 0.092
2 years
AUS$ 0.073
53% per annum
0.72%
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 invest-
ment is disposed of.
Share Option Reserve
Options granted/issued as share-based payments and a capital raise are recognised in the share option reserve.
Austral Gold Limited
76
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
29. NON-CONTROLLING INTEREST
All figures are reported in thousands of US$
Non-controlling interest in subsidiaries comprise
Acquired as part of subsidiary
As at 31 December
2019
-
2018
3,741
On 20 March 2019, the Group entered into an agreement to acquire the 49% non-controlling interest in Cachinalito for
US$949,729 to be paid in eighteen monthly installments of approximately US$52,651. During the year ended 31 December
2019, the Company made twelve payments totaling US$617,000.
On 23 December 2019, the Group entered into an agreement to effectively acquire the 30% non-controlling interest in
Casposo for US$200,000.
30. FINANCIAL INSTRUMENTS
Financial risk management objectives
The Group’s principal financial instruments comprise borrowings, receivables, listed equity securities, cash and short-
term deposits. These activities expose the Group to a variety of financial risks: market risk (interest rate risk and foreign
currency risk), credit risk, price risk and liquidity risk.
The Group recognises the importance of risk management and has adopted a Risk Management and Internal Compliance
and Control policy which describes the role and accountabilities of management and of the Board. The Directors manage
the different types of risks to which the Group is exposed by considering risk and monitoring levels of exposure to the
main financial risks by being aware of market forecasts for interest rates, foreign exchange rates, commodity and market
prices. The Group’s exposure to credit risk and liquidity risk is monitored through general business budgets and forecasts.
The Group holds the following financial instruments:
All figures are reported in thousands of US$
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Employee entitlements
Borrowings
Promissory note
Financial leases
a. Market Risk
As at 31 December
2019
9,196
6,000
277
10,933
4,596
6,122
1,957
9,349
2018
1,716
3,226
561
14,571
5,628
9,768
-
8,703
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 2019, 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 $US).
Austral Gold Limited
77
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Employee entitlements
Financial leases
Borrowings
Argentinian
Peso (ARS)
Chilean Peso
(CLP)
Australian
(CLP)
Canadian
Dollar
65
2,320
29
327
483
34
-
119
1,324
-
4,388
1,411
155
291
601
20
-
84
-
-
-
7
17
-
25
-
-
-
ii. Price Risk
The Group’s revenues are exposed to fluctuations in the price of gold, silver and other prices. Gold and silver produced
is sold at prevailing market prices in US$.
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$)
2000
1800
1600
1400
1200
1000
800
600
400
200
0
60
50
40
30
20
10
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 2019
Sensitivity to Changes in Commodity Prices (Gold and Silver)
The below sensitivity analysis demonstrates the after tax effect on the profit/(loss) and equity which could result if there
were changes in the gold and silver commodity prices by +/- 10% of the actual commodity prices realised by the Group.
All figures are reported in thousands of
US$
Effect on profit/(loss)
For the year ended
Effect on equity
December 2019
December 2018
31 December 2019
31 December 2018
10% increase in gold
and silver prices
10% decrease in gold
and silver prices
10,221
12,277
10,221
12,277
(10,221)
(12,277)
(10,221)
(12,277)
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.
Austral Gold Limited
78
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
a.
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 securities where share prices
can fluctuate over time. This risk however is not deemed to be significant as these investments are held for long term
strategic purposes and therefore movement in the market prices do not impact the short-term profit or loss or cash
flows of the Group.
The group holds listed government bonds, and listed equity securities (note 17). These are classified as level 1 within the
fair value hierarchy as per AASB 7 “Financial Instruments. The group also holds a call option to purchase an additional
3.795% in the equity investment (note 21) which is classified as level 3.
b. 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.
c. 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.
Consolidated
All figures reported in
thousands of US$
31 December 2019
Financial liabilities
Trade and other
payables
Employee entitlements
Promissory note
Borrowings
Leasing
Total 31 December
2019 liabilities
31 December 2018
Financial liabilities
Trade and other
payables
Employee entitlements
Borrowings
Leasing
Total 31 December
2018 liabilities
6 months
6-12 months
1-5 years
> 5 years
Total
10,932
3,548
1,957
3,484
1,532
21,453
14,566
4,835
6,331
1,043
26,775
-
-
-
561
1,515
2,076
-
-
529
1,043
1,572
1
1,048
-
2,077
6,302
9,428
5
793
2,908
6,617
10,323
-
-
-
-
-
-
-
-
-
-
-
10,933
4,596
1,957
6,122
9,349
32,957
14,571
5,628
9,768
8,703
38,670
Austral Gold Limited
79
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
31. DIVIDENDS
All figures are reported in thousands of US$
For the year ended 31 December
2019
2018
No dividends to shareholders were paid or proposed during the current and prior period.
During the year ended 31 December 2019 no dividends were declared to the shareholders of Ingenieria y Minera Cachinalito
Limitada. (2018— US$83k) corresponds to the former minority interest shareholder.
32. COMMITMENTS
All figures are reported in thousands of US$
Lease commitments
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
As at 31 December
2019
2018
3,496
6,711
10,207
(858)
9,349
3,047
6,302
-
2,536
7,264
9,800
(1,097)
8,703
2,036
6,617
122
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$0.499m during
the next year to maintain legal rights to all of its properties.
33. SUBSIDIARIES
Subsidiaries
Country of Incorporation
% owned
31 December 2019
31 December 2018
Guanaco Mining Company Limited
British Virgin Islands
Guanaco Compañía Minera SpA
Ingenieria y Mineria Cachinalito Limitada
Casposo Energías Renovables S.A.U.
Austral Gold Argentina S.A.
Chile
Chile
Argentina
Argentina
Austral Gold North America Corp.
United States
Argentex Mining Corporation
SCRN Properties Ltd.
Casposo Argentina Limited1
Canada
Canada
Canada
100.000
99.998
100.000
100.000
99.970
100.000
100.000
100.000
100.000
100.000
99.998
51.000
100.000
99.970
-
100.000
100.000
70.000
1 In 2018, the Group owned 70% of the Casposo project and had power over the key operating and strategic decisions of the Casposo project and accordingly consolidated
the project.
Austral Gold Limited
80
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
34. PARENT ENTITY INFORMATION
All figures are reported in thousands of US$
31 December 2019
31 December 2018
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Accumulated losses
Reserves
Total shareholders’ equity
Profit for the year
Total comprehensive income/(loss) for the year
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.
A* Austral Gold Limited is guarantor for the credit facility of US$0.3m between BAF and Guanaco Compañía Minera SpA.
35. RELATED PARTY TRANSACTIONS
1,136
67,920
12,896
12,896
55,024
101,682
(46,553)
(106)
55,023
(676)
(657)
A*
None
None
39
66,933
12,552
12,552
54,381
100,569
(45,878)
(310)
54,381
(978)
(1,005)
A*
None
None
35.1 KMP holdings of shares and share options at 31 December 2019
• Mr Eduardo Elsztain holds 479,805,958 shares and 16,241,776 options directly and indirectly in Austral Gold Limited.
(31 December 2018— 455,443,295 shares and nil options)
• Mr Saul Zang holds 1,640,763 shares and 136,730 options directly in Austral Gold Limited. (31 December 2018—
1,435,668 shares and nil options)
• Mr Pablo Vergara del Carril holds 68,119 shares directly in Austral Gold Limited. (31 December 2018—68,119)
• E Elsztain and S Zang are Directors of IFISA which holds 433,448,890 shares and 12,378,689 options according to
the last substantial holder notice lodged in October 2019. (31 December 2018—414,880,857)
• P Vergara del Carril, E Elsztain and S Zang are Directors of Guanaco Capital Holding Corp which holds 35,870,730
shares and 2,989,227 options according to the last substantial holder notice lodged in October 2019. (31 December
2018—31,386,890)
• Mr Stabro Kasaneva holds 6,881,230 shares indirectly in Austral Gold Limited. (31 December 2018—6,881,230)
• Mr Wayne Hubert holds 1,750,000 shares indirectly in Austral Gold Limited. (31 December 2018—1,750,000)
• Mr. Rodrigo Ramirez holds 279,514 shares directly in Austral Gold Limited. (31 December 2018—279,514)
35.2 Directors and Key Management Personnel Remuneration
The aggregate compensation made to Directors and other members of Key Management Personnel of the Group is set
out below:
All figures are reported in thousands of US$
Short-term employment benefits
Non-executive director fees
Total
For the year ended 31 December
2019
1,394
358
1,752
2018
2,322
358
2,680
Austral Gold Limited
81
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
Other transactions with related parties
During April 2019, Consultores Assets Management SA, a company controlled by E Elsztain provided a loan of US$1.6
million at an annual interest rate of at 10% per annum. The loan plus interest of US$30,609 was repaid in July 2019.
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 and expenses to
reimbursement to the Group for the 12 months ended 31 December 2019 amounted to US$141,022 (2018: US$117,663).
Cresud S.A.C.I.F.Y.A, IRSA Inversiones y Representaciones S.A., IRSA Propiedades Comerciales S.A. and Consultores
Asset Management S.A. are related parties as they are controlled by Non-executive Director and Chairman, Eduardo Elsz-
tain. During the twelve month period ended 31 December 2019 a total of US$326,437 was charged to the Company (2018:
US$197,237) in regard to IT services support, HR services, software licenses building/office expenses and other fees.
35.3 Ultimate parent entity
The Parent Entity is controlled by IFISA with a 77.49% non-diluted and 77.97% diluted interest in Austral Gold Limited
and is incorporated in Uruguay.
The ultimate beneficial owner of IFISA is Eduardo Elsztain.
36. UNRECOGNISED DEFERRED TAX ASSETS
In certain entities of the Group, tax losses have not been recognised as deferred tax assets in respect of the following
items, because it is not probable that future taxable profit will be available against which the Group can use the benefits
therefrom.
Australia
Tax losses
Capital losses
Canada
Tax losses
As at 31 December 2019
US$ ‘000
14,042
2,277
Expiry
No Expiry
No Expiry
15,877
2020-2040
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.
37. SUBSEQUENT EVENTS
37.1 On 9 January 2020, a pre-export loan facility was renewed with Banco Santander for US$2.0 million. The loan is due
on 9 July 2020 and carries an annual interest rate of 4.47%, a decrease from 5.25% from the previous loan facility
(note 25).
37.2 On 16 January 2020, 1,063 ordinary shares were issued pursuant to the exercise of 1,063 options at a conversion price
of A$0.092 for proceeds US$68.
37.3 On 30 January 2020, US$ 1,945,409 was paid to Rawhide for the amount owed under the Promissory note. In addi-
tion, US$214,576 was paid to exercise options held by one optionholder due 30 January 2020, increasing the Group’s
equity investment in Rawhide to 23.62%.
37.4 On February 20, 2020, the Company repaid the outstanding loan amount with Baf Capital for US$0.6 million.
37.5 During February 2020, the Group changed the production plan at its Guanaco plant which resulted in the decision to
reduce its workforce by 80 emloyees at the Guanaco plant. The Group estimates the severance to cost approximately
US$1.6 million.
Austral Gold Limited
82
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
38. 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).
38. 1
38.2
38.3
38.4
38.5
38.6
38.7
38.8
38.9
38.10
38.11
38.12
38.13
38.14
38.15
38.16
38.17
38.18
38.19
38.20
38.21
38.22
38.23
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
38.1 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.
Austral Gold Limited
83
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
Goodwill
Goodwill has arisen on the acquisition of a subsidiary, Ingenieria y Mineria Cachinalito Limitada. The recoverable 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.
38.2 Revenue Recognition
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.
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.
38.3 Goods and services tax (GST)/ Value added tax (VAT)
Revenues, expenses and assets are recognised net of the amount of GST/VAT, except where the amount of GST/ VAT
incurred is not recoverable from the tax authorities. In these circumstances the GST/VAT is recognised as part of the
cost of acquisition of the asset or as part of the expense.
Receivables and payables in the statement of financial position are shown inclusive of GST/VAT. Cash flows are presented
in the statement of cash flows on a gross basis, except for the GST/VAT component of investing and financing activities,
which are disclosed as operating cash flows.
38.4 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 transac-
tions. 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.
38.5 Mine Properties
Mines in production represent the aggregated exploration and evaluation expenditure and capitalised development costs
in respect of areas of interest in which mining is ready to or has commenced. Mine development 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.
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.
Austral Gold Limited
84
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
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 strip-
ping 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.
38.6 Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest and
carried forward in the statement of financial position where rights to tenure of the area of interest are current; and one
of the following conditions is met:
i.
ii.
such costs are expected to be recouped through successful development and exploitation of the area of interest
or alternatively, by its sales; or
exploration and/or evaluation activities in the area of interest have not, at reporting date, yet reached a stage which
permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active
and significant operations in the area are continuing.
Expenditure relating to pre-exploration activities is written off to the profit or loss during the period in which the expen-
diture is incurred.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward
costs in relation to that area of interest.
Accumulated expenditure on areas that have been abandoned, or are considered to be of no value, are written off in the
year in which such a decision is made.
When 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.
Austral Gold Limited
85
Annual Report 2019
NOTES TO THE FINANCIAL STATEMENTS
38.7 Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment 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, adjustments are
reflected prospectively in current and future periods only. Depreciation is expensed, except those that are included in
the amount of exploration assets as an allocation of production overheads.
The depreciation rate used for fixed assets except for underground mine development is between 10%-20%. The depre-
ciation rate used in underground mine development 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.
38.8 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.
38.9 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.
ii.
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
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.
ii.
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
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 tempo-
rary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary
difference can be utilised.
Austral Gold Limited
86
Annual Report 2019
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 report-
ing 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.
38.10 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 deter-
mined using the prevailing metal prices.
38.11 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.
38.12 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.
38.13 Interest bearing liabilities
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method. Where there is an unconditional
right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are clas-
sified as non-current.
38.14 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.
38.15 Leases
The Group adopted AASB 16 - Leases (“AASB 16”) 1 January 2019. Information about the Group’s accounting policies
related to leases is provided in Note 5. The effect of initially applying AASB 16 is also described in Note 5.
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38.16 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.
38.17 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 derec-
ognised when:
i.
ii.
the rights to receive cash flows from the asset have expired; or
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’. Subse-
quent 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.
38.18 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.
38.19 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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38.20 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.
38.21 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. Liabili-
ties 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 enforce-
able. Contributions are made in accordance with the requirements of the Superannuation Guarantee Legislation.
38.22 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.
38.23 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 Interpreta-
tions did not have any significant impact on the financial performance or position of the Group.
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IN THE DIRECTORS’ OPINION:
1. the attached consolidated financial statements and notes thereto comply with
the Corporations Act 2001, the Accounting Standards, the Corporations Regu-
lations 2001 and other mandatory professional reporting requirements;
2. the attached consolidated financial statements and notes thereto comply with
International Financial Reporting Standards as issued by the International Ac-
counting 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 2019 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
6 March 2020
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Independent Auditor’s Report
To the shareholders of Austral Gold Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Austral Gold Limited (the Company).
In our opinion, the accompanying
Financial Report of the Company is in
accordance with the Corporations Act
2001, including:
giving a true and fair view of the
Group's financial position as at 31
December 2019 and of its financial
performance for the year ended on
that date; and
The Financial Report comprises:
Consolidated statement of financial position as at 31
December 2019;
Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of cash
flows for the year then ended;
Notes including a summary of significant accounting
policies; and
Directors' Declaration.
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Group consists of Austral Gold Limited (the Company)
and the entities it controlled at the year-end or from time to
time during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
have fulfilled our other ethical responsibilities in accordance with the Code.
93
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
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Key Audit Matters
The Key Audit Matters we identified
are:
• Going concern basis of preparation;
• Carrying value of mine assets and
plant & equipment; and
• Carrying value of exploration and
evaluation assets.
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in our
audit of the Financial Report of the current period.
These matters were addressed in the context of our audit of
the Financial Report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Going concern basis of preparation
Refer to Note 3 “Going concern” to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group’s use of the going concern basis of
preparation and the associated extent of
uncertainty is a key audit matter due to the high
level of judgment required by us in evaluating
the Group’s assessment of going concern.
The Directors have determined that the use of
the going concern basis of accounting is
appropriate in preparing the financial report.
Their assessment of going concern was based
on cash flow projections. The preparation of
these projections incorporated a number of
assumptions and judgments, and the Directors
have concluded that the range of possible
outcomes considered in arriving at this
judgment does not give rise to a material
uncertainty casting significant doubt on the
Group’s ability to continue as a going concern.
We critically assessed the level of uncertainty,
as it related to the Group’s ability to continue as
a going concern, within these assumptions and
judgments, focusing on the following:
•
•
impact of future commodity prices to cash
inflows projected;
the Group’s planned levels of operational
and capital expenditures, and the ability of
We evaluated the extent of uncertainty regarding
events or conditions casting significant doubt in the
Group’s assessment of going concern. This included:
• analysing cash flow projections by:
-
-
evaluating the underlying data used to
generate the projections for consistency
with other information tested by us, our
understanding of the Group’s intentions, and
past results and practices. We specifically
looked for consistency between commodity
prices used by management and those
tested by us and consistency with the
Group’s intentions, as outlined in Directors
minutes and strategy documents; and
assessing the planned levels of operating
and capital expenditures for consistency of
relationships and trends with the Group’s
historical results, results since year end, and
our understanding of the business, industry
and economic conditions of the Group.
• analysing the impact of reasonably possible
changes in projected cash flows and their timing,
to the projected monthly cash positions. We
assessed the resulting impact on the ability of
the Group to pay debts as and when they fall
due and continue as a going concern. The
specific areas we focused on were informed
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the Group to manage cash outflows within
available funding; and
•
the nature and feasibility of planned
methods the Group has to meet its
financing commitments.
In assessing this key audit matter, we involved
senior audit team members who understand
the Group’s business, industry and the
economic environment it operates in.
from the results of our tests of the accuracy of
previous Group cash flow projections and
sensitivity analysis on key cash flow projection
assumptions;
• assessing significant non-routine forecast cash
inflows and outflows for feasibility, quantum and
timing. We used our knowledge of the Group, its
industry and status to assess the level of
associated uncertainty;
•
reading Directors’ meeting minutes to
understand the Group’s ability to raise additional
shareholder funds, and assess the level of
associated uncertainty; and
• evaluating the Group’s going concern disclosures
in the financial report by comparing them to our
understanding of the matter, the events or
conditions incorporated into the cash flow
projection assessment, the Group’s plans, and
accounting standard requirements.
Carrying value of mine assets and plant & equipment ($56.916 million)
Refer to Notes 18 “Mine properties” and 19 “Property, plant and equipment” to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group’s mine properties and plant &
equipment are a significant portion (54%) of the
Group’s total assets. The recoverable value is
based on a net present value model for each
cash generating unit (‘CGU’), and is a key audit
matter due to:
•
the high level of judgement used in
evaluating key assumptions applied by the
Group in each net present value model,
which are affected by expected future
operating performance and market
conditions, including:
-
-
level of resources and reserves capable
of being produced economically, as
reported in the Group’s third party
Reserve Report;
forecast cost of developing areas of
interest and producing silver and gold;
Our procedures included:
• obtaining an understanding of the key controls
associated with the preparation of the net
present value models used to assess the
recoverable amount of each CGU;
• evaluating the net present value methodology
used by the Group for consistency with the
requirements of the Accounting Standards;
• evaluating the Group’s determination of CGUs
based on our understanding of the operations of
the Group’s business and each area of interest,
and how independent cash inflows were
generated, against the requirements of the
accounting standards;
• critically evaluating the Group’s key assumptions
used to determine the recoverable amount of
key CGUs relating to commodity prices, and
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-
-
future production volumes and timing;
and
specific discount rate applied in each
model.
discount rate based on our knowledge of the
industry, publicly available data of comparable
entities, and published forecast price
expectations of industry commentators;
These forward looking assumptions necessitate
additional scrutiny by us due to:
•
•
•
the inherent uncertainties in estimating
these assumptions;
the consistency of application and the
changes in silver and gold pricing increasing
the risk of inaccurate forecasting; and
the sensitivity of the net present value
model to changes in assumptions such as
commodity prices and discount rate,
reducing available headroom.
Management engaged third party experts to
assist in their assessment of mine property and
plant & equipment carrying value.
• considering the sensitivity of the models by
varying key assumptions such as commodity
price and discount rate within a reasonably
possible range to identify those CGUs at higher
risk of impairment and to focus our further
procedures;
• checking the forecast cost of developing areas of
interest and producing silver and gold, future
production volumes and timing to those within
the Group’s Reserves Report, Board approved
plans and budgets. We assessed these against
our understanding of the business and industry
trends;
• corroborating mine closure plans with the key
operational and finance personnel;
• assessing the historical accuracy of budgeting
and forecasting by the Group to inform our
evaluation of forecasts incorporated in the
models;
• evaluating the scope, competence, and
objectivity of the Group’s external experts
engaged to 1) assist the Group prepare the
Group’s Reserves Report as utilised within the
net present value model and 2) assess the
salvage value of plant and equipment; and
• assessing the financial report disclosures based
on our understanding and the requirements of
the accounting standards.
Carrying value of exploration and evaluation assets ($15.281 million)
Refer to Note 20 “Exploration and evaluation expenditure” to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group’s exploration and evaluation assets
(‘E&E assets’) are a significant portion (14%) of
the Group’s total assets.
Our procedures included:
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The carrying value of E&E assets is a key audit
matter due to the high level of judgement used
in application of the requirements of the
industry specific accounting standard AASB 6
Exploration for and Evaluation of Mineral
Resources, in particular the conditions allowing
capitalisation of relevant expenditure and
presence of impairment indicators.
The conditions allowing capitalisation of
relevant expenditure focus on:
•
the determination of the areas of interest
(areas) in particular evaluating the results of
the external expert engaged by the Group;
• documentation available regarding rights to
tenure, via licensing, and compliance with
relevant conditions, to maintain current
rights to an area of interest;
•
•
the Group’s determination of whether the
E&E are expected to be recouped through
successful development and exploitation of
the area of interest, or alternatively, by its
sale; and
the presence of impairment indicators
would necessitate a detailed analysis by the
Group of the value of E&E. Assessing the
presence of impairment indicators includes
factors that may draw into question the
commercial continuation of E&E activities
for the areas of interest where significant
capitalised E&E exists.
In addition to the assessments above we paid
particular attention to:
•
•
•
the impact of changes in gold and silver
prices to the Group’s strategy and
intentions;
the intention of the Group to fund the
continuation of activities; and
results from latest activities regarding the
existence or otherwise of economically
recoverable reserves or commercially viable
quantity of the reserves.
The Group engaged an external third party
expert to assist with these assessments for
certain exploration interests.
• obtaining an understanding of the key controls
associated with evaluating the E&E assets;
• evaluating the Group’s accounting policy to
recognise exploration and evaluation assets
using the criteria in the accounting standard;
• evaluating the Group’s determination of areas of
interest based on our understanding of the
operations of the Group and each area of
interest, and how independent cash inflows
were generated, against the requirements of the
accounting standards;
•
•
for each area of interest, we assessed the
Group’s current rights to tenure by corroborating
the ownership of the relevant license to
government registries and evaluating
agreements in place with other parties. We also
tested for compliance with conditions, such as
minimum expenditure requirements, on a
sample of licenses;
testing the Group’s additions to E&E assets for
the period by evaluating a sample of recorded
expenditure for consistency to underlying
records, the capitalisation requirements of the
Group’s accounting policy and the requirements
of the accounting standard;
• evaluating documents, such as minutes of
directors meetings and ASX market
announcements, for consistency with the
Group’s stated intentions for continuing E&E in
certain areas. We corroborated this through
interviews with key operational and finance
personnel;
• analysing the Group’s determination of
recoupment through successful development
and exploitation of the area (or by its sale) by
evaluating the Group’s documentation of
planned future and continuing activities including
work programmes and project and corporate
budgets for a sample of areas;
• assessing the impact of changes in the gold and
silver prices to the Group’s modelling underlying
their decision for commercial continuation of
activities;
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• obtaining project and corporate budgets
identifying areas with existing funding and those
requiring alternate funding sources. We
compared this for consistency with areas with
E&E, for evidence of the ability to fund continued
activities. We identified those areas relying on
alternate funding sources and evaluated the
capacity of the Group to secure such funding;
and
• evaluate the scope, competence and objectivity
and assess the results of the external expert.
Other Information
Other Information is financial and non-financial information in Austral Gold Limited’s annual reporting which
is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for
the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001;
• implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error; and
• assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate
the Group and Company or to cease operations, or have no realistic alternative but to do so.
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Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
• to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
• to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration
Report of Austral Gold Limited for the
year ended 31 December 2019,
complies with Section 300A of the
Corporations Act 2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration Report in
accordance with Section 300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in pages
45 to 50 of the Directors’ report for the year ended 31
December 2019.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Daniel Camilleri
Partner
Sydney
6 March 2020
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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”, “antici-
pates”, “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 fluctuations; 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 manage-
ment, 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, expecta-
tions 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 29 February 2020 the total issued capital of Austral Gold Limited was 559,394,322 ordinary shares. 520,076,181 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. 39,318,141 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 2020
Size of Holding
1-1,000
1,001-5,000
5,001-10,000
10,001-50,000
50,001-100,000
>100,000
Holders
Shares held
% of issued capital
570
379
137
141
25
56
1,308
265,519
1,002,534
1,024,488
3,121,340
1,857,980
552,122,461
559,394,322
0.05
0.18
0.18
0.56
0.33
98.70
100.00
SUBSTANTIAL SHAREHOLDERS
The Company has been notified of the following substantial shareholdings as at 29 February 2019:
Registered Holder
Beneficial Holder
Shares Held
Options Held
HSBC Custody Nominees
(Australia) Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees
(Australia) Limited
HSBC Custody Nominees
(Australia) Limited
Inversiones Financieras
Del Sur SA (IFISA)
Inversiones Financieras
Del Sur SA (IFISA)
Guanaco Capital
Holding Corp
367,222,395
47,658,462
–
–
35,870,730
2,989,227
Eduardo Elsztain
29,054,371
13,252,548
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Rank
Name
No. of shares % of issued capital
1
2
3
4
5
6
7
8
9
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
402,554,799
71.96%
CITICORP NOMINEES PTY LIMITED
56,975,721
10.19%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
27,941,253
4.99%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
10,367,589
1.85%
REVELO RESOURCES CORP.
10,000,000
1.79%
CITICORP NOMINEES PTY LIMITED
5,189,832
0.93%
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
1,928,655
0.34%
BNP PARIBAS NOMINEES PTY LTD
1,563,524
0.28%
ASOCIACION ISRAELITA ARGENTINA TZEIRE AGUDATH JABAD
1,158,265
0.21%
10
MR ERLE EDWINSON
860,000
0.15%
11
MR HAROLD JOSEPH FREIMAN
770,416
0.14%
12
BNP PARIBAS NOMS PTY LTD
687,450
0.12%
13
ENDEAVOUR SILVER CORP
668,011
0.12%
14
MR. RICHARD BROOK
628,487
0.11%
15
MR RUDOLF ALBERT SCHULZ
387,272
0.07%
16
MR RODNEY DAVID JACKSON
300,000
0.05%
17
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
297,449
0.05%
18
JP MORGAN TRUST COMPANY LTD
297,445
0.05%
19
LIMOL TRADING CORP
297,445
0.05%
20
MR DEAN MATHEWS
280,000
0.05%
Total
Other
523,153,613
93.52%
36,240,709
6.48%
Total shares on issue
559,394,322
100.00%
Austral Gold Limited
104
Annual Report 2019
Austral Gold Limited
105
Annual Report 2019
Austral Gold Limited
106
Annual Report 2019
Austral Gold Limited
107
Annual Report 2019
www.australgold.com