2017Suite 19, 100 Hay StreetSubiaco WA 6008Phone: +61 8 9264 7000Email: frontdesk@avenira.comLot 50 Bis Sotrac Mermoz(Ancienne Piste)Dakar, SénégalPhone: +221 33 860 20 03ANNUALREPORTwww.avenira.comAnnual Report 2017 HIGHLIGHTS
(cid:1)
(cid:1)
THE VISION
Avenira Limited has a long-term vision to develop a portfolio of agricultural minerals and production assets that will build
long term shareholder value by supplying agricultural nutrients needed to help address the fundamental issue of global
food security.
CORPORATE STRATEGY
To become a major contributor to the world nutrient market through the development of a carefully selected portfolio of
valuable phosphate and other nutrient projects.
BAOBAB, SENEGAL (80% OWNED)
• Senegal is stable and mining friendly
• Phosphate is a vital commodity
• Sedimentary rock phosphate mineralisation
• Simple open pit mining, unconsolidated sand
• High quality ore, potentially beneficiated to high
grade premium product level
• First shipment March 2017
• Project optimisation work underway
• Good proximity to existing markets
• Progress to Exploitation Permit (Large Mine
Permit) underway
WONARAH, AUSTRALIA (100% OWNED)
• One of Australia’s largest known phosphate Mineral
Resources
•
•
Requires processing technology advances (IHP) to
be financially viable
Strategy implemented to reduce holding costs while
maintaining development opportunity
JDCPHOSPHATE, USA (APPROX. 7% HOLDING)
•
•
•
JDCP owns a proprietary phosphate technology,
Improved Hard Process (IHP)
JDCP has secured funding to accelerate the next
phase of commercialisation, including continuous
piloting of an improved flowsheet design
Avenira holds exclusive IHP licensee rights for
Australia and Senegal
1
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report TABLE OF CONTENTS
3
Corporate Information
4
6
Chairman and Managing Director’s Review
Directors’ Report
24
Corporate Governance Statement
36
Auditor’s Independence Letter
38
Consolidated Statement of Profit and Loss and Other Comprehensive Income
39
Consolidated Statement of Financial Position
40
Consolidated Statement of Changes in Equity
41
Consolidated Statement of Cash Flows
42
93
94
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
100 ASX Additional Information
2
2
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report CORPORATE INFORMATION
ABN 48 116 296 541
DIRECTORS
Christopher Pointon
(Independent Non-executive
Chairman)
Louis Calvarin
(Managing Director and CEO)
Ian McCubbing
(Independent Non-executive Director)
Timothy Cotton
(Non-executive Director)
Farouk Chaouni
(Non-executive Director)
David Mimran
(Non-executive Director)
COMPANY SECRETARY
John Ribbons
Rodney Wheatley
REGISTERED OFFICE
Suite 19, 100 Hay Street
Subiaco, WA 6008
PRINCIPAL PLACE OF BUSINESS
Suite 19, 100 Hay Street
Subiaco, WA 6008
SOLICITORS
Richard O’Shannassy & Co Pty Ltd
Level 3, 46 Ord Street
West Perth, WA 6005
DLA Piper Australia Level
31, Central Park
152-158 St Georges Terrace Perth,
WA 6000
BANKERS
National Australia Bank Limited
1232 Hay Street
West Perth, WA 6005
SHARE REGISTER
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
Perth, WA 6000
Telephone: 1300 787 272
AUDITORS
Ernst & Young
11 Mounts Bay Road
Perth, WA 6000
INTERNET ADDRESS
www.avenira.com
EMAIL ADDRESS
frontdesk@avenira.com
STOCK EXCHANGE LISTING
Avenira Limited shares are listed on the:
Australian Securities Exchange (Code: AEV)
0
3
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report CHAIRMAN AND MANAGING DIRECTOR’S REVIEW
Dear Shareholders
The 2017 financial year has seen Avenira hit many critical milestones and establish a solid foundation with our flagship
Baobab Phosphate Project in Senegal.
We continue to be excited by the opportunity this project presents for your company. In the past 12 months we have:
•
•
•
•
•
Established mining operations and commissioned the Processing Facility at the Gadde Bissik mine without any
lost time injuries or environmental non-compliance events;
Produced phosphate concentrate product at target specification and made two full commercial shipments;
Received important feedback that Baobab’s Gadde Bissik product is of high quality and will deliver value to our
customers;
Continued to grow the phosphate rock resource and lodged an application for an Exploitation Permit (Large
Mine concession); and
Laid out our Strategic Plan for the long term sustainable development of the Baobab project, ultimately leading
to multi-million tonne annual production of Gadde Bissik phosphate rock.
While these milestones have been welcomed, the project ramp-up has been impacted by multiple delays. It is not
uncommon, but nonetheless frustrating, to find that a new facility processing a new ore deposit requires extensive fine-
tuning and process design adjustments.
On the marketing front, phosphate market pricing conditions have deteriorated during the past twelve months. The
combination of lower-than-expected product sales and reduced prices has had a significant impact on working capital.
To meeting these challenges, the Board and our Managing Director and CEO, Mr Louis Calvarin, have developed a
Strategic Plan that will see Baobab upgraded, expanded and funded.
BAOBAB PHOSPHATE PROJECT
Two full vessel cargoes have been sold to customers since first production was achieved at Baobab. Pleasingly, the
shipped Gadde Bissik phosphate rock concentrate has been successfully processed into finished fertiliser products.
Baobab’s Gadde Bissik product has also been tested by Prayon Technologies, a trusted phosphate engineering firm
with extensive global experience in phosphate processing and phosphate concentrates. Prayon’s conclusions were very
positive, showing that the Gadde Bissik product can be processed into commercial phosphoric acid and then into
granulated fertiliser (DAP), with good yields, good productivity and low sulfuric acid consumption. These are all very
positive signs for our project.
However, the early months of operation have confirmed that the design of the current ore processing plant leads to sub-
optimal phosphate recovery and to a finished concentrate silica assay that is higher than our commercial target. Both
parameters make the current operation financially unsustainable in the present market environment.
The Strategic Plan developed by the Company management and approved by the Board is designed to address the
current operation’s key weaknesses. In particular a flotation plant will deliver higher recoveries and reduced silica, while
a drying unit will deliver consistent commercial product moisture throughout the year.
Engineering studies, conducted by Hatch, are underway to establish design parameters and associated capital costs for
the upgrades outlined above. In order to maximise the returns of any additional investment, an expansion of the project
nameplate capacity to 1Mtpa has now been integrated into the plan.
Avenira’s long-term strategic objective is to develop a dedicated Phosphoric Acid Plant that could be supplied with
Gadde Bissik phosphate rock concentrate. Such a Plant would be built using the IHP process or the traditional wet
sulfuric-attack process.
The long-term potential of Baobab was underpinned during the year by a significant 150% increase in the Indicated
Mineral Resource to an estimated 31.7 million tonnes at 20.6% P2O5 and a lift in the Inferred Mineral Resource to 114
million tonnes at 19% P2O5, both at a 15% cut-off garade and as at 31 January 2017. As such the Company has applied
for an Exploitation Permit (previously referred to as a Large Mine Permit) in an expanded area around the current
Gadde Bissik Small Mine Permit. Exploration results give us confidence that these Resources will be further expanded.
This Resource base is sufficient to support long term production of 1 million tonnes/year high quality rock phosphate
concentrate through an expansion project which will add flotation to increase P2O5 recovery by around 40% from that
achieved by the current wet screening. In addition the expansion will incorporate iron and silica reduction and a drying
facility.
FUNDING
The commissioning and ramp-up issues at Baobab did place considerable strain on the Company’s finances
during the year. Fortunately, we have continued to enjoy the support of our two major shareholders, Agrifos
Partners LLC (‘Agrifos’) and Groupe Mimran (‘MNR’), who have great confidence in the future of Baobab. The pair
have provided bridge funding totalling $US3.6 million (A$4.5 million) and also agreed to underwrite, up to
1
4
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report AVENIRA LIMITED AND CONTROLLED ENTITIES
CHAIRMAN AND MANAGING DIRECTOR’S REVIEW (cont(cid:23))
A$7 million, a planned entitlement offer to all shareholders to raise up to A$13 million.This funding will be used to
complete an independent third party Definitive Feasibility Study for the brownfield expansion of Gadde Bissik.
Additional equity and debt funding will be required to implement the expansion, and we look forward to
the support of existing and potentially new shareholders in this quest
WONARAH PHOSPHATE PROJECT
The Wonarah Phosphate Project in Australia’s Northern Territory continues to be part of Avenira’s long term strategic plan.
Wonarah is a very large and highly prospective project however the low-grade nature of the deposit and its remote location will
require an enabling technology to become commercially feasible at current phosphate prices. One such technology is
the Improved Hard Process technology being developed by JDCPhosphate, in which Avenira maintains an investment
and holds technology licensing agreements.
Given the longer-term nature of the Wonarah investment the Company has continued to take action to lower the
holding costs, by reducing the size of its tenements while maintaining secure tenure over all key areas of the Project.
JDCPHOSPHATE
The Board continues to believe in the long-term merits of Avenira’s investment in JDCPhosphate and the Improved
Hard Process technology and in particular its potential to help commercialise the Wonarah Phosphate Project.
The IHP technology is a patented process for the production of high-grade phosphoric acid using low-grade phosphate rock,
and without creating phosphogypmsum waste.
JDCP recently informed the Company that it had successfully raised the required amount of funding to carry out the next step
of its development plan towards a commercial scale process. A continuous smaller scale unit is now being built to demonstrate
at pilot scale the modified flowsheet of its IHP design, as patented by JDCP. This modified design is expected to resolve
the processing issues identified previously and if testing is successful will lead to the development of a full-scale plant.
CONCLUSION
Given the outstanding progress made over the past year we would like to thank, in particular, our on-site staff in Senegal for
efficiently and professionally commissioning the Baobab Project’s Gadde Bissik processing plant, and for operating the mine
and beneficiation plant to produce and ship two full vessels of Gadde Bissik phosphate rock concentrate to its
customers. More broadly, we thank our fellow Board members and our small team of corporate staff for their
enthusiasm and effort throughout the year.
To our shareholders, thank you for supporting the Company during this transformational period.
The current phosphate rock market situation and the limitations of our existing beneficiation plant have combined to
make this year a very challenging and at times frustrating one, for the Company as well as for its shareholders.
We fully appreciate the frustration you may have experienced, and we assure you that these frustrations are shared
by your Board. However, we have not wavered from our belief that the Baobab Project holds tremendous value
for Avenira’s shareholders. The goal of our Strategic Plan is to deliver this value to our stakeholders and shareholders.
Avenira’s Board strongly believe in the long-term fundamentals of the macro-nutrient sector, given the expanding
world population and demand for improved nutrition. It is clear to us that we have a major high quality phosphate
resource in Senegal which has the potential to support the fertiliser needs of West Africa and beyond for many years.
Christopher Pointon
Chairman
Louis Calvarin
Managing Director and CEO
2017 Annual Report
5
DIRECTORS’ REPORT
Your directors submit their report on the consolidated entity (referred to hereafter as the Group) consisting of Avenira
Limited (Company) and the entities it controlled at the end of, or during, the year ended 30 June 2017.
DIRECTORS
The names and details of the Company’s directors in office during the financial year and until the date of this report are as
follows. Where applicable, all current and former directorships held in listed public companies over the last three years have
been detailed below. Directors were in office for this entire period unless otherwise stated.
NAMES, QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES
Dr. Christopher Pointon, B.Sc (Hons), PhD (Geology), FGS, MIMMM, (Non-executive Chairman – appointed 7
December 2016 – former Non-executive Director)
Experience & Expertise
Dr. Christopher Pointon who is based in the United Kingdom, is a respected mining executive with deep public company
board and operational management experience. Dr. Pointon trained as a geologist and has over 35 years’ experience in
the resources business, initially with Rio Tinto and subsequently with Royal Dutch/Shell, Gencor, Billiton and BHP Billiton
where he was a member of the Executive Committee from 2001 to 2006. He has since served on the boards of a number of
public and private companies. His experience includes exploration, operations management, mergers, acquisitions,
post-transaction integration and change management. He has led acquisition and aggressive growth initiatives as well as
major turn-arounds and divestments and he has operated in Australia, Africa, Asia, South America and Europe.
Other Current Listed Company Directorships
None
Former Listed Company Directorships in the last 3 years
African Eagle Resources plc
Special Responsibilities
Member of the Audit Committee
Chairman of the Remuneration and Nomination Committee
Dr. Louis Calvarin, PhD (Process Engineering), (Managing Director and Chief Executive Officer – appointed 29 March
2017)
Experience & Expertise
Louis Calvarin, who is currently based in Sénégal, has three decades’ experience with a focus on operational
excellence and optimisation in various process industries including basic chemicals, specialty chemicals and the
fertiliser industry. In the latter, he has been active in the full value chain, from mining exploration through phosphate
rock procurement, ocean logistics and rock transformation into standard as well as specialty fertiliser products.
Dr. Calvarin has led technology development and engineering projects at Rhodia in France (now Solvay) before
focusing on mineral processing business operations in several European countries. He then relocated to the United
States to lead the manufacturing operations of the merging Rhodia and Albright & Wilson businesses. When the
division was spun-off to private equity major Bain Capital as Innophos, he stayed on board to lead the company’s
operations through a successful IPO, de-leveraging and then external growth into nutrition business lines.
Other Current Listed Company Directorships
None
Former Listed Company Directorships in the last 3 years
None
Special Responsibilities
None
Richard H (Dick) Block, B.Sc (Chemical Engineering), (former Non-executive Chairman – deceased 4 December 2016)
Experience & Expertise
Dick Block was a US based mining and processing industry executive with 4 decades’ experience in the fertiliser and
base and precious metals businesses. The majority of his career was with the Freeport-McMoRan group of companies,
where he rose to Executive Vice President and Chief Operating Officer of Freeport-McMoRan Inc. and senior vice
president of Freeport-McMoRan Copper & Gold Inc. In addition, he was President of two of the world’s largest
phosphate mining and fertiliser producing firms, Agrico Chemical Company and IMC-Agrico Company. Further, he was
deeply involved in Queensland Nickel JV in Australia in the 1980s.
Mr Block was a senior executive or member of the board of directors of six NYSE and TSE listed firms, including Amax
Gold Inc. and Kinross Gold Corporation. Also, he was a member of the board of a number of trade, non- profit and
3
6
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
charitable organisations, including the International Fertiliser Industry Association, the Fertiliser Institute, the Phosphate
Chemicals Export Association (Phos Chem), the Sulphur Institute, United W ay of the North Shore and Illinois Public High
School District 115.
Other Current Listed Company Directorships
None
Former Listed Company Directorships in the last 3 years
None
Special Responsibilities
None
Cliff Lawrenson, B.Com. (Hons), (former Managing Director and Chief Executive Officer – resigned 11 January 2017)
Experience & Expertise
Cliff Lawrenson joined Avenira after holding the position of Chief Executive Officer of FerrAus Limited which he led
to a recommended takeover by Atlas Iron Limited in December 2011. Mr Lawrenson held the position of group Chief
Executive Officer of GRD Limited from 2006 which incorporated GRD Minproc Limited, OceanaGold Limited and
Global Renewables. Prior to joining GRD Limited, Mr Lawrenson was a senior executive and Vice President of
CMS Energy Corporation in the United States of America and Singapore.
He has worked extensively in investment banking around the world and holds postgraduate qualifications in Finance
and Strategy.
Mr Lawrenson has served on several boards in international locations where he led the development and financing
of numerous major infrastructure projects. He is also Non-executive Chairman of Pacific Energy Limited.
Other Current Listed Company Directorships
Non-executive Chairman of Pacific Energy Limited from August 2010
Former Listed Company Directorships in the last 3 years
None
Special Responsibilities
None
Ian McCubbing, B.Comm (Hons), MBA(Ex), CA, GAICD (Non-executive Director)
Experience & Expertise
Ian McCubbing is a Chartered Accountant with more than 25 years’ corporate experience, principally in the areas of
accounting, corporate finance and mergers and acquisitions. He has spent more than 15 years working with ASX-200
and other listed companies in senior finance roles including positions as finance director and Chief Financial Officer in
mining and industrial companies.
Other Current Listed Company Directorships
Non-executive Director of Swick Mining Services Limited from August 2010
Non-executive Chairman of Rimfire Pacific Mining NL from July 2016
Non-executive Chairman of Sun Resources NL from October 2016
Former Listed Company Directorships in the last 3 years
Non-executive Director of Mirabela Nickel Limited from January 2011 to April 2014
Non-executive Director of Kasbah Resources from March 2011 to December 2016
Special Responsibilities
Chairman of the Audit Committee
Member of the Remuneration and Nomination Committee
Timothy Cotton, B.Comm (Hons), (Non-executive Director)
Experience & Expertise
Timothy Cotton has over two decades of experience in the phosphate mining and fertiliser sector, with a strong focus on
business and project development, strategic transactions, M&A and finance. Mr. Cotton is Vice Chairman and a principal
in the Agrifos Group of companies, which include Agrifos Partners LLC, Baobab Partners LLC and Vulcan Phosphates
LLC. The Agrifos Group is a significant shareholder in Avenira and in JDCPhosphate, Inc. Mr. Cotton began his
career in the merchant banking department of Kidder, Peabody & Co., later becoming a Vice President at Lepercq, de
Neuflize & Co., a New York-based investment bank. Mr. Cotton formed the Agrifos Group with his partner, Mr. Farouk
Chaouni, in 1993. In addition to his role in the Agrifos Group, Mr. Cotton is a Director of Zalagh Holding S.A., an
integrated poultry company, andMedInstillLLC,amedicaldevicecompany.
Other Current Listed Company Directorships
None
Former Listed Company Directorships in the last 3 years
None
2017 Annual Report
7
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
Special Responsibilities
Member of the Audit Committee
Member of the Remuneration and Nomination Committee
Farouk Chaouni, MBA, (Non-executive Director)
Experience & Expertise
Farouk Chaouni was involved in numerous transactions in the U.S. phosphate fertiliser industry including
acquisition of the fertiliser assets of W.R. Grace (Seminole Fertilizer), the acquisition of the Wingate Creek Mine,
and the re-commissioning of Mississippi Chemical Pascagoula phosphate fertiliser plant. Mr. Chaouni served as
the Chairman of Seminole Fertilizer until its sale to Tosco in 1989. In 1998, Mr. Chaouni was instrumental in
Agrifos’s acquisition of ExxonMobil’s Pasadena phosphate fertiliser plant, which was converted to an ammonium
sulphate plant in 2011 and sold to Rentech Nitrogen Partners in 2012. Prior to launching his entrepreneurial
activities in the U.S., Mr. Chaouni was the commercial Director of Office Chérifien des Phosphates (OCP) the
large Moroccan phosphate company, where he was responsible for worldwide phosphate rock and fertiliser sales
and raw material purchases.
Other Current Listed Company Directorships
None
Former Listed Company Directorships in the last 3 years
None
Special Responsibilities
None
David Mimran (Non-executive Director)
Experience & Expertise
David Mimran has tremendous knowledge and experience in operation within West Africa. Mr. Mimran is head of
Tablo Corporation, Miminvest SA, and Mimran Natural Resources, all established as investment vehicles into
West Africa’s natural resource sector by Mr. Mimran and the Mimran Group, a family conglomerate with a history
of successful business operations in Africa and Europe. Mr. Mimran’s previous roles included Vice Chairman and
founding partner of Breeden Partners, L.P. from 2006 to 2012, an actively managed investment fund focused on
value generation in U.S. public companies, and Vice Chairman of Milestone Merchant Partners, a Washington-
based investment bank from 2003 to 2005. Prior to 2003, Mr. Mimran served as the President of several food
processing, grain and shipping companies across Europe and West Africa. He has served as a director and
principal to the Bank of West Africa (CBAO), one of the largest banking groups in the region, as well as Archer
Daniels Midland Company.
Other Current Listed Company Directorships
Non-executive Director of Taranga Gold Corporation from October 2015.
Former Listed Company Directorships in the last 3 years
None
Special Responsibilities
None
COMPANY SECRETARY
John Ribbons, B.Bus., CPA, ACIS
Mr John Ribbons is an accountant who has worked within the resources industry for over 20 years in the capacity of
company accountant, Group Financial Controller, Chief Financial Officer or Company Secretary.
Mr John Ribbons has expensive knowledge and experience with ASX listed production and exploration companies.
He has considerable site based experience with operating mines and has also been involved with the listing of
several exploration companies on the ASX. Mr Ribbons has experience in capital raising, ASX and TSX
compliance and regulatory requirements. Currently, Mr Ribbons is a director of Montezuma Mining Company
Limited. Mr Ribbons has not held any Former Listed Company Directorships in the last 3 years.
Rod Wheatley, B.Bus., CPA
Rod W heatley is a senior accountant who has worked within the oil and gas, and resource industry for in excess of 15
years in the capacity of company accountant, Group Financial Controller and Chief Financial Officer.
Mr W heatley joined Avenira in 2009 as Group Financial Controller. He was appointed Chief Financial Officer in 2011
and Joint Company Secretary in July 2013. Prior to joining Avenira, Mr Wheatley held senior accounting positions in a
number of ASX and AIM listed production and exploration companies. He has extensive experience in management
and project accounting, financial reporting at national and international levels and mergers and acquisitions.
2017 Annual Report
8
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
Interests in the shares and options of the Company and related bodies corporate
As at the date of this report, the interests of the directors in the shares rights and options of Avenira Limited were:
Christopher Pointon
Louis Calvarin
ORDINARY SHARES
OPTIONS OVER
ORDINARY SHARES
-
-
Ian McCubbing
Timothy Cotton(i)
Farouk Chaouni(i)
David Mimran(ii)
(i)Mr Timothy Cotton and Mr Farouk Chaouni collectively hold shares and options through their related parties, Baobab
Partners LLCand Vulcan Phosphates LLC.
(ii) Mr David Mimran holds shares through his related party, Tablo Corporation.
148,861,475
104,750,000
148,861,475
400,000
56,000,000
56,000,000
-
-
-
-
PRINCIPAL ACTIVITIES
The principal activity of the Company during the course of the financial year was the development of the Baobab
Phosphate Project in the Republic of Senegal (“Baobab Phosphate Project”). The Group’s operations are discussed in
the Review of Operations section of this report.
CONSOLIDATED RESULTS
Consolidated (loss) before income tax expense
(30,579,063)
(9,464,695)
YEAR END
30 JUNE 2017
$
YEAR END
30 JUNE 2016
$
Income tax benefit
(LOSS) FOR THE YEAR
DIVIDENDS
308,265
-
(30,270,798)
(9,464,695)
No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.
REVIEW OF OPERATIONS
A review of the operations of the Group during the financial year and likely developments and expected results is
included in the Operating and Financial Review set out below.
BAOBAB PHOSPHATE PROJECT (80% OWNED)
During the 2017 financial year the Group established a new strategic plan for the Baobab Phosphate Project; increased
the Indicated and Inferred Mineral Resources to 31.7 million and 114 million tonnes, respectively, following completion of
drill programs; and completed the first sale of rock phosphate to customers in early March 2017, with the second sale
completed in June 2017.
In July 2017 a three year extension was granted for the Cherif Lo-Ngakham Exploration Permit. In May, 2017 an
application was lodged for conversion of the SMP into a 20km2 “permit d’Exploitation” (referred to as the Large Mine
Permit or LMP) with a minimum term of 20 years.
STRATEGIC PLAN
The Company approved a new Strategic Plan in June 2017. The Strategic Plan initially focuses on the optimisation of
the existing ore beneficiation unit to bring it to a fully sustainable operational level, and subsequently implementation of
the next step investments towards the long-term objective of becoming a leading supplier to the fertiliser industry and a
leading fertiliser producer for W est African and international markets.
Subsequent optimisation of the existing ore beneficiation unit will deliver a capacity and performance expansion of the
existing Baobab processing facility. It will include a flotation line to improve P2O5 recovery from around 50% currently to
around 70%, and to reduce the silica assay of the Gadde Bissik phosphate rock concentrate product. It will also include a
2017 Annual Report
9
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
drying process unit to control product moisture at the commercially required level, including during the annual wet
season.
Following completion of the optimisation of the existing ore beneficiation unit, the production capacity is planned to be 1
Mtpy.
The resulting nameplate capacity will provide sufficient product for Avenira to supply a dedicated Phosphoric Acid facility
-this being the Company’s long term strategic objective - while continuing to grow its relationships with its phosphate rock
customers.
Engineering studies, conducted by Hatch, are under way to provide a detailed design as well as capital and operating
cost estimates for optimisation of the existing ore beneficiation unit. The expanded plant is expected to be fully
commissioned within 12 to 18 months of funding.
GEOLOGY AND EXPLORATION
The project location is shown in Figure 1.
Gadde Bissik
Figure 1: Project location plan
Drilling activities for the year primarily focused on Gadde Bissik resource definition within and adjacent to the Small Mine
Permit (“SMP”) at 125 x 125 m spacing.
The results of the 125 x 125 m resource diamond drilling undertaken within and around the SMP in late 2016 became
available during the first quarter of 2017. After validation of assay results from ALS and SGS laboratories, an update of
the Mineral Resource estimate were completed during the March 2017 quarter by independent consultants MPR
Geological. An upgraded Mineral Resource estimate was released to the market on 2 March 2017, with a significant
increase to the Indicated Mineral Resource estimate to 31.7 million tonnes at 20.6% P2O5 at a 15% cut-off grade.
Maiden Inferred Mineral Resource estimates were released for three new prospects, Dinguiraye, Gandal, and Gadde
Escale, taking the global Inferred Resource Estimate at Baobab to 114 million tonnes at 19% P2O5 at a 15% P2O5 cut-off.
At Dinguiraye, an Inferred Mineral Resource of 19 million tonnes at 19% P2O5 has been estimated. The prospect is open
to the north-east and further drilling in that area is planned as well as diamond-core infill drilling designed to identify the
areas of thicker, higher grade mineralisation.
2017 Annual Report
10
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
At Gadde Escale, an Inferred Mineral Resource of 19 million tonnes at 20% P2O5 has been estimated. The prospect is
open to the east, south and west. An additional 28 air core holes were drilled predominantly on the western and
southern margin of the resource area. The results confirm that the significant phosphate mineralisation at Gadde Escale
is extensive and remains open to the west. Figure 3 shows schematic cross-sections of the lithological sequences at
Gadde Escale and Gadde Bissik East and indicates that sequences at Gadde Escale are similar to those at the SMP.
Further drilling is planned at Gadde Escale, both to increase the area to the resource and to infill to determine the areas
of higher phosphate concentration.
The Gandal area is adjacent to the western extension of the Gadde Bissik East Inferred Resource. An Inferred Mineral
Resource of 14 million tonnes at 18% P2O5 is estimated for this area. Further infill drilling is warranted around the better
intercepts. Relative to other Gadde Bissik zones, Gandal mineralisation is estimated to be significantly higher in iron, like
Gadde Bissik W est, and would likely require additional beneficiation for potential economic extraction.
An area of less densely-spaced drilling peripheral to the Inferred Mineral Resource areas is categorised as an
Exploration Target with an estimated tonnage of around 100 million tonnes to 150 million tonnes at approximately 16 to
20% P2O5. The potential quantities and grades are conceptual in nature. There has been insufficient exploration to
estimate a Mineral Resource and it is uncertain that future exploration will result in estimation of a Mineral Resource.
Some 500 x 500 m spaced drilling has already been undertaken in the eastern part of the Exploration Target areas.
The Mineral Resource estimates are summarised in the annual mineral resource statement on page 19. A technical
report prepared by MPR Geological Consultants is available to be viewed on the Company website.
In June 2017, initial results of the 250 x 250 m grid diamond drilling campaign conducted in the Gadde Bissik Inferred
Mineral Resource area east of the SMP became available, and are being interpreted. Diamond drilling at 125 x 125 m grid-
spacing near the SMP and 250 x 250 m further to the east continued in the same Gadde Bissik Inferred Mineral
Resources area to better define the thickness of the mineralisation and for its potential upgrading to Indicated Mineral
Resource status.
Limited diamond drilling at 250 x 250 m grid spacing, with the goal to reinforce the Indicated Mineral Resources, will
continue during the September 2017 quarter around the SMP and in an area between the SMP and the Gadde Escale
prospect.
In the latest drilling program announced, the new exploration results combined with previous drilling data indicate the
Gadde Bissik phosphate mineralisation extends broadly east-west for more than 20 km in varying widths and
thicknessesin September 2017. 500 x 500 m grid-spaced diamond drilling within and to the west of the Gadde Escale
prospect has returned significant interceptions and demonstrated the extension of phosphate mineralisation in the
direction of the SMP. Further infill drilling is currently planned.
Infill drilling over a 125 x 125 m and 500 x 500 m grid-spacing to the east of the SMP has better defined the distribution
and nature of phosphate mineralisation from the eastern edge of the Gadde Bissik East Inferred Mineral Resource area.
These results warrant additional drilling investigation.
2017 Annual Report
11
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
Figure 2: Recent drilling results within the broader Gadde Bissik area
Figure 3: Schematic cross sections showing main lithological relationships in the Gadde Bissik area
(refer to figure 2 and 4 for collar locations)
Mining Support
In May and June 2017, the Company carried out an air core 50 x 50 m grid-spaced Grade Control drilling program within
the SMP perimeter. Drill holes were intended to better control the presence, thickness, grade and geometry of the
phosphate sequence planned to be exploited during Stages 3 and 4 of the mine's operating plan.
Towards the end of June 2017, air core drilling for control and sterilisation began in the northern part of the SMP
perimeter around mine infrastructure. Drilling will resume just outside the SMP perimeter after the rainy season with the
objective to identify and confirm sterile areas where mining infrastructure and processing equipment can be installed,
moved or relocated.
A total of 88 air core holes (3,231 m) were carried out within the SMP sector.
2017 Annual Report
12
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
Figure 4: Recent drilling results within and around SMP area
(greyed circles are drill holes with results not shown here)
Regional Exploration
Results of broad-based 48-hole regional air core drilling were published in an ASX release on 23 February 2017. The
4,000 x 4,000 m grid-spaced program has demonstrated the presence of intervals of good phosphate mineralisation at
locations across the tenement. More than half the holes drilled intersected phosphate mineralisation with at least one
metre of >10% P2O5 material. Just under 20% intersected at least one metre with >20% P2O5.
In late March 2017, a 10-hole air core sterilisation drilling program for 241 metres was conducted in the western part of
the Baobab tenement in preparation for a statutory 25% reduction in tenement size due in mid-2017 (Figure 5). As
expected, results indicate that no significant mineralisation has been intercepted.
No additional drilling is planned in this sector.
2017 Annual Report
13
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
Figure 5: Baobab recent broad-based scout drilling results in the western part of tenement
(greyed circles are drill holes with results not shown here)
Drilling status for the period from 1 July 2016 to 30 June 2017 is as follows:
Tenement
Purpose of drilling
Air-core
Diamond drilling
Baobab
Gossas
TOTAL
Regional exploration
Resource definition
Grade control
Inside SMP
Outside SMP
Regional exploration
Holes
Metres
Holes
Metres
187
-
99
-
-
83
369
7,054
-
3,748
-
-
2,068
12,870
-
-
-
64
175
-
239
-
-
-
2,750
6,880
-
9,630
Table 1: 2017 Drilling Statistics
2017 Annual Report
14
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
PERMITTING
The company submitted its Cherif Lo-Ngakham exploration permit three-year renewal application to the Senegales e
government during the month of May 2017. The renewal was granted by the Senagalese government on 27 July 2017
for a period to 27 July 2020.
During the month of May 2017, the Company also applied for an Exploitation Permit (referred to as a Large Mine Permit
in past communications) in an expanded area around its current Gadde Bissik Small Mine Permit.
Figure 6: Cherif Lo-Ngakham permit new boundary after renewal
MINING
Mining of the Stage 1 open pit progressed with phosphate mining during August and September 2016. Visual grade
control of phosphate mining was confirmed, allowing the optimisation of phosphate mining methods with close geological
control and efficient mining of 2 m high mining benches. Mining of the Stage 1 open pit was completed with phosphate
mining in this pit finished during the third week in November 2016.
Overburden removal in Stage 2 was completed during the third week in December 2016. Phosphate mining commenced
on the 100RL bench in the first week of December 2016 and was completed in April 2017.
Steady partial Stage 3 open pit overburden removal was ongoing at the end of June 2017.
PORT AND LOGISTICS
During the year once the trucking cycle had been established and the number of trucks in the circuit had been optimised,
the planned mean trucking rate of 1,500 tpd was maintained as required.
The product storage facility at the Port of Dakar has been established at 30,000 tonnes capacity with compacted lower
grade phosphate product used to cover the stockpile area base.
A road transport weighbridge was installed and commissioned in September 2016.
WATER SUPPLY
Process water bore pumps and associated equipment were installed and commissioned in the September 2016 quarter,
with water flow rates achieved from the two bores exceeding expectations.
2017 Annual Report
15
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
PROCESSING
Consulmet (Pty) Limited combined with the Company process team completed the wet screening plant construction on
time at the start of August 2016.
Additional pumping capacity for the wet screening plant’s hydrocyclone section was installed and commissioned as
planned during the first week in March 2017. Operations since installation have demonstrated a significant improvement
in plant performance.
A crushing plant productivity and availability review in the March 2017 quarter demonstrated that the existing contractor
plant would require supplementary equipment to provide continuity of crushed product. The required equipment,
including contracted crushing and screening lines, are planned to be commissioned during October 2017.
the December 2016 quarter with
The second phase of product drying pads was constructed early
progressive improvements achieved in the open-air drying procedures and methodology, with product moisture
levels below 3% achieved in late 2016.
in
LOCAL COMMUNITY CONSULTATION AND RELOCATION
Avenira continued to collaborate closely with the local communities throughout the year.
One of the first programs in the project environmental and community plan was completed in September 2016. A large
number of local residents in cooperation with the local Forestry Department were involved in planting trees immediately
outside the project safety fence.
The employment rotation system for selection from potential local employees for short term and longer term operational
functions that commenced in the 2016 financial year was on ongoing at the end of June 2017.
MARKETING
During the September 2016 quarter, the Company signed further export rock phosphate agreements increasing
aggregate commitments to between 360,000 and 480,000 tpa, with Baobab rock phosphate product destined for
downstream phosphate fertiliser producers. Establishing long-term relationships with end users of Baobab product is an
important priority that continues to be diligently worked on.
In March 2017 Baobab sold its maiden shipment of 21,400 tonnes of Gadde Bissik phosphate rock, which
was successfully processed into phosphoric acid and finished fertilisers by the end customer in June 2017.
The company sold a second cargo of approximately 30,000 tonnes, with the vessel sailing from the port of Dakar during
June 2017.
A trusted industry engineering company, Prayon Technologies, has completed a detailed pilot test assessment of
the Gadde Bissik phosphate rock concentrate and concluded that Baobab’s product was very suitable as a raw
material for the production of Phosphoric Acid and DiAmmonium Phosphate (DAP) fertiliser. The test highlighted a
number of very positive Gadde Bissik phosphate rock features, including very low sulfuric acid consumption when
processing into Phosphoric Acid, as well as good processing yields and reaction productivity.
GOSSAS PHOSPHATE PROJECT
The Gossas exploration tenement lies to the south-east of Baobab (Figure 1) and the eastern part of the tenement
covers an area of high prospectivity for phosphate with numerous historical records of phosphate occurrences, mainly
in water wells. Exploration of the tenement has comprised a comprehensive study by the BRGM of all the relevant
documentation held by them in France and the production of a prospectivity plan of the tenement.
Initial exploration of the Gossas tenement commenced in July 2016 with 5 scout air core holes drilled in the Diakhao
area targeting historical anomalies defined by the French geological survey, the BRGM. Drilling investigation restarted
in March 2017 and drilling progressed from the south to the north at a 2,000 x 2,000 m grid spacing in the south-eastern
part, across more BRGM-defined anomalies, and 4,000 x 4,000 m grid spacing to the west and north. The program
ended on 22 March 2017 with a total of 78 drilled aircore for 1,977 m.
The air core drilling campaign results indicate that phosphate mineralisation of economic thickness and continuity is
unlikely to exist in this area. No further drilling is planned in the Gossas area at this time. Resources will be re-allocated
to more prospective areas in the Baobab tenements.
2017 Annual Report
16
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
WONARAH PHOSPHATE PROJECT, NORTHERN TERRITORY (100% OWNED)
SUMMARY
The W onarah Phosphate Project (“W onarah”) hosts one of the largest Mineral Resources of any known phosphate deposit
in Australia. Current Mineral Resource estimates are unchanged from last year and are presented in the annual mineral
resource statement in Table 2.
No new exploration work was undertaken during the reporting period.
The Company continued to take action to reduce the holding costs of the W onarah project until the commercial
validation of the IHP technology.
Following a comprehensive tenement review, the Company has been able to reduce the area size and holding costs of
the tenements held by its wholly-owned subsidiary, Minemakers Australia Pty Ltd (MAPL), while maintaining secure
tenure over the key areas of the Project with the addition of a new exploration license, EL31477. In the process, MAPL
has surrendered ML27244 and intends to apply for two smaller mining leases over the best mineralisation at Arruwurra
and the Main Zone. The surrender of ML27244 will not result in any change to the existing W onarah Project Mineral
Resource estimates.
During the transitional period between the surrender of ML27244 and the grant of new mining leases, MAPL anticipates
substantial saving in annual statutory and other project-related costs.
Figure 7: W onarah tenement status as at 27 July 2017
2017 Annual Report
17
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
Figure 8: W onarah tenement status as at 28 February 2017 (before exploration licence reductions and surrender of ML27244)
2017 Annual Report
18
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
ANNUAL MINERAL RESOURCE STATEMENT AS AT 30/06/17
10
15
Gadde
Bissik
East
Cut off
P2O5 %
Resource
Category
WONARAH PROJECT, NORTHERN TERRITORY, AUSTRALIA
Tonnes
P2O5
Al2O3
CaO
Fe2O3
K2O
MgO MnO
Na2O
SiO2
TiO2
Mt
%
%
Measured
78.3
20.8
4.85
%
28
%
%
%
%
1.11
0.43
0.25
0.04
%
0.1
%
%
39.7
0.21
17.5
4.75
23.2
1.49
0.47
0.2
0.04
0.09
48.3
0.22
Indicated
M+I
Inferred
222
300
542
18.3
4.77
24.4
18
4.8
1.4
2.1
1.1
1.53
24
30
28
Measured
64.9
22.4
4.47
Indicated
M+I
Inferred
133
198
352
21.1
4.77
21.5
4.67
28.7
1.39
21
4.6
28
2.1
0.46
0.21
0.04
0.09
46.1
0.22
0.5
0.2
0.08
0.05
0.37
0.19
0.04
0.09
46
37
0.2
0.19
0.47
0.44
0.5
0.21
0.04
0.09
39.7
0.22
0.2
0.2
0.04
0.09
38.8
0.21
0.1
0.06
39
0.2
BAOBAB PROJECT, REPUBLIC OF SENEGAL
Cut-off grade 15% P2O5
Area
Within
SMP
Resource
Category
Mt
Indicated
25.6
Inferred
Outside
Indicated
SMP
Inferred
3
5.8
53
Combined
Gadde Bissik West
Gandal
Dinguiraye
Gadde Escale
Total Resources
Indicated
31.4
Inferred
Inferred
Inferred
Inferred
Inferred
Indicated
Inferred
56
6
14
19
19
31.4
114
P2O5
%
20.9
20
19.5
19
20.6
19
17
18
19
20
20.6
19
CaO
%
28.9
27
27.0
26
28.5
26
23
25
27
28
28.5
26
MgO
%
0.07
0.14
0.05
0.13
0.07
0.13
0.19
0.10
0.14
0.16
0.07
0.14
Al2O3
%
2.08
2.8
2.10
2.9
2.08
2.9
5.0
3.2
3.0
2.3
2.08
3.0
Fe2O3
%
3.73
3.2
3.64
4.0
3.71
4.0
6.7
8.9
3.2
2.5
3.71
4.3
SiO2
%
41.0
43
44.7
45
41.7
45
42
41
44
44
41.7
44
ANNUAL CHANGE IN RESOURCE CATEGORY
BAOBAB PROJECT
Category
Indicated
Inferred
Tonnes (M)
% P O
2 5
Tonnes (M) % P O
2 5
2017
2016
Change
31.4
12.6
+18.8
20.6
21.0
-0.4
114
87
+27
19
19
-
Table 2: Annual Mineral Resource Statement
2017 Annual Report
19
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
The Mineral Resource estimates for the W onarah Project remained unchanged from 2016. Significant increases to both
the Indicated and Inferred Mineral Resource estimates for the Baobab Phosphate Project are based on substantial
drilling programs undertaken during the year and include three maiden Inferred Mineral Resource estimates at three
prospects. The Annual Mineral Resource Statement also reflects minor depletion from mining when compared to the
estimates released to the market on 2 March 2017. The mineral resource statement is based on, and fairly represents,
information and supporting documentation prepared by a Competent Person.
The mineral resources statement as a whole is approved by Russell Fulton, a Competent Person who is a Member of the
Australian Institute of Geoscientists. Mr Fulton is employed by Russell Fulton Pty Ltd. Mr Fulton was the former
Geological Manager and a full-time employee of the Company and now provides geological consulting services to the
Company. Mr Fulton has sufficient experience deemed relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition
of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Fulton
consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
JDCPHOSPHATE, INC., FLORIDA (APPROX. 7% EQUITY)
Avenira owns approximately 7% of JDCP and has an exclusive licence to utilise the IHP technology in Australia and
Senegal for an extended period of time.
In July 2016 Avenira executed two agreements with JDCP that have:
• Updated and strengthened Avenira’s exclusive IHP licence agreements in Australia and Senegal for a
prepayment of certain licensing fees;
Secured convertible loan funding to JDCP to allow further time for the Company to achieve its strategic
objectives. The convertible loan is interest bearing and has rights to convert into additional JDC equity in
certain circumstances. Avenira has an associated right to a seat on JDCP’s board; and
The total funding is limited to US$2 million and has been fully drawn down.
•
•
JDCP has recently announced that it has raised significant equity financing from Stonecutter Phosphate Investors LLC,
which will accelerate commercialisation of the company’s IHP technology for producing high-grade phosphoric acid using
low-grade phosphate rock, a patented process that eliminates the large volume of phosphogypsum waste that is a
necessary byproduct of the traditional phosphoric acid process. JDCP will modify its facility in Fort Meade, Florida to
gather the processing data for the design of a full-scale commercial IHP plant. The facility will test various qualities of
phosphate rock raw material in the IHP process, allowing potential licensors to validate the process for the phosphate ore
sources that they have available. JDCP expects to complete the plant modifications by early 2018. Independent
engineering studies will be conducted ahead of commercial deployment of IHP.
Due to the uncertainty regarding the timing and achievement of IHP commercialisation, the carrying value of the licence
rights and secured convertible funding remains impaired as at 30 June 2017.
Shareholders are encouraged to view the JDCP website http://jdcphosphate.com
INVESTMENTS AND CORPORATE INFORMATION
BOARD CHANGES
Dr Christopher Pointon was appointed Non-executive Chairman of the Company on 7 December 2016 following the
passing of Mr Dick Block.
Managing Director Cliff Lawrenson left the Company on 11 January 2017, with Mr Louis Calvarin appointed as Avenira’s
new Managing Director and Chief Executive Officer effective 29 March 2017. Mr Calvarin is a highly experienced
executive with over 15 years’ experience in the phosphate industry. Mr Calvarin brings an extensive understanding of the
global phosphate industry and has outstanding experience in leading plant operations, phosphate procurement, supply
chain management, strategy and business development. A native French speaker, Mr Calvarin is based in Senegal
overseeing the ramp-up of the Baobab operations and seeking to expand production and product sales into new markets.
FINANCING
In December 2016 Gadde Bissik Phosphate Operations Suarl (“GBO”), Avenira’s 80%-owned subsidiary, successfully
secured a A$8.8 million finance facility through CBAO Groupe Attijariwafa Bank. The facility consists of a A$4.4 million
working capital facility and access to an additional A$4.4 million for the financing of export receivables, if required.
The facility has been secured to assist with the final stages of commissioning and ramp-up of the Baobab Phosphate
Project. The key terms of the facility are:
• W orking capital facility
o Amount: XOF 2 billion (A$4.4 million);
o
o Repayment Terms: No principal or interest repayments for 12 months, followed by 48 equal principal
Term: 5 years;
plus interest payments; and
o Standard security arrangements over all GBO assets.
2017 Annual Report
20
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
•
Trade facility
o Access to an additional XOF 2billion (A$4.4 million) for the financing of export receivables, if required.
The working capital facility of XOF 2 billion was fully drawn down on 31 December 2016.
In April 2017, the Company announced the launch of a Share Purchase Plan (“SPP”) to raise A$2,500,000 at an
issue price of 8.4 cents. The SPP closed in June 2017 raising A$608,950. An additional A$1,891,050 was raised in
July 2017 via the Shortfall Placement Agreement with Agrifields DMCC.
In June 2017, the Company entered into binding funding agreements with each of its two major shareholders, Agrifos
Partners LLC (“Agrifos”) and Tablo Corporation, an affiliate of Groupe Mimran (“Mimran”), whereby Agrifos will provide
an unsecured bridge loan of US $1,440,000 to the Company and Mimran will provide an unsecured bridge loan of US
$2,160,000 to the Company (together the “Bridge Loans”). The loans bear interest at 6%, are to be drawn progressively
and are repayable on the earlier of the six months from draw down date or completion of the Entitlement Offer (described
below). The bridge loans were fully drawn down as at the date of this report.
The Company will conduct a renounceable pro rata entitlement offer (the “Entitlement Offer”) within the next month to
raise a minimum of A$7,000,000 and a maximum of A$13,000,000.
The major shareholders have each agreed, if requested by the Company, to underwrite any shortfall to the Entitlement
Offer up to a maximum of A$4,200,000, in the case of Mimran, and A$2,800,000 in the case of Agrifos (in each case the
'Underwritten Amount'). If the major shareholders are required by the Company to underwrite the Entitlement Offer, the
Company will pay the major shareholders an underwriting fee of 5% on their respective Underwritten Amounts.
The proceeds from the Bridge Loans and the Entitlement Offer will be used to fund DFS engineering studies and upfront
capital costs required for optimisation of the existing ore beneficiation unit, as well as ongoing working capital
requirements. A portion of the proceeds from the Entitlement Offer will be used to repay the Bridge Loans in full.
Avenira will also be seeking additional financing to progress its Strategic Plan.
FINANCIAL REVIEW
FINANCIAL INFORMATION
At 30 June 2017, the total closing cash balance was $2,946,100 (2016: $24,473,574). The Group has recorded an
operating loss after income tax for the year ended 30 June 2017 of $30,270,798 (2016: loss of $9,464,695).
OPERATING RESULTS FOR THE YEAR
Summarised operating results are as follows
Consolidated entity activities before income tax
Shareholder Returns
Basic profit/(loss) per share (cents)
2017
REVENUE
$
2017
RESULTS
$
393,303
(30,579,063)
2017
2016
(5.09)
(2.31)
IMPAIRMENT – WONARAH PHOSPHATE PROJECT
A valuation review conducted by Optiro in December 2016 revealed that the fair market value of the W onarah
Phosphate Project has decreased from the valuation prepared at June 2016. Optiro’s valuation lies within a range
$6,100,000 and $10,700,000, with a preferred value of $8,400,000. The Company considered the low value of
$6,100,000 as an appropriate representation of the fair value of the project. As a result, during the reporting period an
amount of $9,431,555 was impaired and recognised in the Statement of Profit and Loss and Other Comprehensive
Income. A further review conducted by Optiro in June 2017 revealed the fair market value of the W onarah Phosphate
Project had not changed from the December 2016 valuation.
Refer to Note 15 for further details.
IMPAIRMENT – BAOBAB PHOSPHATE PROJECT
A valuation review conducted by Optiro in June 2017 revealed that the fair market value of the Baobab Phosphate
Project lies within a range of $32,800,000 and $62,800,000, with a preferred value of $47,900,000. The Company
considered the preferred value of $47,900,000 as an appropriate representation of the fair value of the project. As a
result, during the reporting period an amount of $5,954,404 was impaired and recognised in the Statement of Profit and
2017 Annual Report
21
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
Loss and Other Comprehensive Income.
capitalised mine development expenditure in the amount of $1,233,059.
The impairment relates to goodwill in the amount of $4,721,345 and
Refer to Note 16 for further details.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than detailed in the Review of Operations above there were no significant changes in the state of affairs of the
Group.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
The following events occurred subsequent to the end of the year:
• On 3 July 2017, the Company issued 22,512,506 ordinary shares to Agrifields DMCC pursuant to the Shortfall
Placement Agreement, raising a total of $1,891,050. Following completion of the Share Purchase Plan and the
Placement the Company raised a total of $2,500,000.
• During July and August 2017, the Company completed the draw down of the remaining balance of the bridge
loan facilities provided by Agrifos Partners LLC and Tablo Corporation, being US$1,560,000 and US$1,040,000
respectively.
Other than as disclosed above, no event has occurred since 30 June 2017 that would materially affect the operations of
the Group, the results of the Group or the state of affairs of the Group.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Group will continue to focus on executing the Strategic Plan as announced in June 2017. This will involve
Engineering studies, currently underway, to establish design parameters and associated capital costs for the upgrades
with nameplate capacity of 1Mpta and seeking additional funding in the form of debt or equity to complete the expansion.
The Group will continue to advance its application process for an Exploration Permit to pursue its strategy of expansion
across the Baobab Phosphate Project.
The Company’s long term strategic objective is to develop a dedicated Phosphoric Acid Plant that could be supplied
with Gadde Bissik phosphate rock concentrate.
RISK MANAGEMENT
The Board is responsible for ensuring that risks, and opportunities, are identified on a timely basis and that activities are
aligned with the risks and opportunities identified by the Board.
The Company believes that it is crucial for all Board members to be a part of this process, and as such the Board has not
established a separate risk management committee.
The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with
the risks identified by the Board. These include the following:
• Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders’ needs
•
andmanagebusinessrisk.
Implementation of Board approved operating plans and budgets and Board monitoring of progress against these
budgets.
SAFETY AND HEALTH
Avenira aspires to a goal of causing zero harm to people. In this regard, the Company is committed to undertake our
activities so as to protect the safety and health of employees, contractors, visitors and the communities in which we
operate.
There were no lost time injuries during the year.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group is subject to significant environmental regulation with respect to its exploration activities.
The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, as far as it is
aware is in compliance with all environmental legislation. The directors of the Group are not aware of any breach of
environmental legislation for the year under review.
2017 Annual Report
22
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
DIRECTORS’ MEETINGS
During the year the Company held 15 meetings of directors. The attendance of directors at meetings of the Board were:
DIRECTORS MEETINGS
AUDIT COMMITTEE MEETINGS
REMUNERATION AND
NOMINATION COMMITTEE
MEETINGS
Christopher Pointon
Louis Calvarin
Ian McCubbing
Timothy Cotton
Farouk Chaouni
David Mimran
Dick Block
Cliff Lawrenson
A
14
3
15
14
9
8
2
7
B
15
3
15
15
15
15
8
8
A
2
*
2
2
*
*
*
*
B
2
*
2
2
*
*
*
*
A
6
*
6
6
*
*
*
*
B
6
*
6
6
*
*
*
*
Notes
A – Number of meetings attended.
B – Number of meetings held during the time the director held office or was a member of the Committee during the year.
* – Not a member of the Committee.
SHARES UNDER OPTION
At the date of this report there are 88,075,000 unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Movements of share options during the year
Expired on 29 July 2016 ($0.18)
Expired on 20 November 2016 ($0.225)
Expired on 8 April 2017 ($0.30)
Expired on 18 June 2017 ($0.23)
Expired on 18 June 2017 ($0.27)
Expired on 18 June 2017 ($0.31)
Exercised on 2 August 2016 ($0.18)
Exercised on 13 September 2016 ($0.10)
Total number of options outstanding as at 30 June 2017 and the date of this report
The balance is comprised of the following:
NUMBER OF OPTIONS
127,050,000
(1,550,000)
(5,500,000)
(14,000,000)
(5,000,000)
(5,000,000)
(5,000,000)
(2,000,000)
(925,000)
88,075,000
EXPIRY DATE
30 June 2018
30 June 2018
30 June 2018
24 September 2019
GRANT DATE
28 July 2015
28 July 2015
28 July 2015
24 September 2015
EXERCISE PRICE (CENTS)
10
15
25
25
Total number of options outstanding at the date of this report
NUMBER OF OPTIONS
2,075,000
3,000,000
3,000,000
80,000,000
88,075,000
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any
shareissueofanyotherbodycorporate.
INSURANCE OF DIRECTORS AND OFFICERS
During or since the financial year, the Company has paid premiums insuring all the directors of Avenira Limited against
costs incurred in defending proceedings for conduct involving:
a. willful breach of duty;or
b. a contravention of sections 182 or 183 of the Corporations Act 2001, as permitted by section 199B of the Corporations
Act 2001.
The total amount of insurance contract premiums paid is $59,361 (2016: $49,271).
2017 Annual Report
23
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
NON-AUDIT SERVICES AND INDEMNIFICATION OF AUDITORS
Details of amounts paid or payable to the auditor for audit and non-audit services provided during the period, and an
assessment by the Board of whether non-audit service provided during the period are compatible with general standards of
independence for auditors imposed by the Corporations Act 2001 are set out in Note 26 - Remuneration of Auditors, to
the Consolidated Financial Statements on page 79.
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of
the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified
amount). No payment has been made to indemnify Ernst & Young during or since the financial year.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to 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 any part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237
of the Corporations Act 2001.
CORPORATE GOVERNANCE
In recognising the need for the highest standard of corporate behaviour and accountability, the Directors of Avenira
Limited support and adhered
the
recommendations of the Australia Securities Exchange Corporate Governance Council, and considers that Avenira
Limited is in compliance, to the extent with those guidelines, which are of importance to the commercial operation of a
junior listed resources company. During the financial year, shareholders continued to receive the benefit of an efficient
and cost-effective corporate governance policy for the Company.
the principles of sound corporate governance. The Board recognises
to
The Company has established a set of corporate governance policies and procedures and these can be found within the
Company’s Corporate Governance section on the Company’s website: http://www.avenira.com/about-us/governance.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set
out on page 36.
REMUNERATION REPORT - AUDITED
The remuneration report is set out under the following main headings:
Introduction
A.
B. Remuneration governance
C. Overview of executive remuneration
D. Details of remuneration of Key Management Personnel
E. Executive KMP employment agreements
F. Overview of Non-executive Director remuneration
G. Share-based compensation
H. Equity holdings
A.
INTRODUCTION
The remuneration report for the year ended 30 June 2017 outlines the director and executive remuneration
arrangements of the Company and Group.
The information in this remuneration report has been provided in accordance with section 300A of the Corporations Act
2001. The information has been audited as required by section 308(3C) of the Corporations Act 2001.
For the purpose of this report, Key Management Personnel (“KMP”) of the Group are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Company and Group,
directly or indirectly, including any Director (whether executive or otherwise) of the Company.
The table below outlines the KMP of the Group during the financial year ended 30 June 2017. Unless otherwise
indicated, the individuals were KMP for the entire financial year.
2017 Annual Report
24
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
NAME
POSITION
i) Non-executive Directors
Christopher Pointon
Dick Block
Ian McCubbing
Timothy Cotton
Farouk Chaouni
David Mimran
ii) Executive Directors
Louis Calvarin
Independent Non-executive Chairman (Appointed Chairman 7 December 2016)
Independent Non-executive Chairman (Deceased 4 December 2016)
Independent Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Managing Director (Appointed 29 March 2017)
Cliff Lawrenson
Managing Director (Resigned 11 January 2017)
iii) Other executive key management personnel
Rod W heatley
Chief Financial Officer and Company Secretary
B. REMUNERATION GOVERNANCE
Remuneration and Nomination Committee
The Board retains overall responsibility for remuneration policies and practices within the Group.
The Board has established a Remuneration and Nomination Committee (“RNC”) which operates in accordance with its
charter as approved by the Board. A copy of the charter is available under the corporate governance section of the
Group’s website.
For the year ended 30 June 2017 the RNC comprises Non-executive Directors with a majority being independent
directors.
The RNC is primarily responsible for making recommendations to the Board on remuneration arrangements for
Executive Directors, Non-executive Directors and other Senior Executives. The Corporate Governance Statement
provides further information on the role of this committee.
The RNC meets as required throughout the year. Refer to page 23 for the number of Committee meetings held during
the year. The Managing Director attends certain RNC meetings by invitation, where management input is required. The
Managing Director is not present during any discussions relating to his own remuneration arrangements.
Use of remuneration consultants
The RNC seeks external remuneration advice where necessary to ensure it is fully informed when making remuneration
decisions. Remuneration advisors are engaged by, and report directly to, the RNC.
An independent remuneration consultant, Gerard Daniels, was appointed:
•
•
in August 2016 to undertake an independent review of remuneration for the 2017 financial year; and
In August 2017 to assist with the development of a standard executive incentive plan.
No other remuneration consultants were engaged during the financial year.
Both Gerard Daniels and the RNC are satisfied that the advice provided by Gerard Daniels is free from undue influence
from the KMP to whom the remuneration recommendations apply. Gerard Daniels was instructed by the RNC
Chairman, and the RNC Chairman received the remuneration recommendations directly from Gerard Daniels.
The remuneration recommendations were provided to the RNC as an input for decision making purposes only. The
RNC considered the recommendations, along with other factors, in making their remuneration decisions.
The fees paid to Gerard Daniels for the remuneration consultancy services were $18,000 for the 2017 financial year
remuneration review and $10,000 for the development of the standard executive incentive plan. No other services were
provided by Gerard Daniels during the 2017 financial year.
Securities trading policy
The Group securities trading policy applies to all Non-executive Directors and executives. The policy prohibits
employees from dealing in Avenira Limited securities while in possession of material non-public information relevant to
the Group.
The policy is available to be viewed within the corporate governance section of the Company’s website.
Voting and comments – 2016 Annual General Meeting (AGM)
The Company received 97% “Yes” votes cast on its Remuneration Report for the 2016 financial year. The Company did
not receive any specific feedback at the AGM regarding its remuneration practices.
2017 Annual Report
25
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
C. OVERVIEW OF EXECUTIVE REMUNERATION
The remuneration policy of Avenira Limited has been designed to align executives’ objectives with shareholders and
business objectives. The Board of Avenira believes the policy to be appropriate and effective in its ability to:
•
•
attract and retain high quality directors and executives to run and manage the Company.
create goal congruence between directors, executives and shareholders.
The executive KMP receive an appropriate level and mix of remuneration consisting of fixed remuneration and variable
remuneration in the form of incentive opportunities. The RNC reviews executive KMP packages annually by reference to
the Group’s performance, executive performance and comparable information from industry sectors and other listed
companies in similar industries.
Elements of Executive Remuneration
The executive remuneration framework is comprised of:
a.
b.
Fixed Remuneration - Base Salary, including superannuation (if applicable)
Variable Remuneration - Incentives and Cash Bonuses
1. FIXED REMUNERATION - BASE SALARY, INCLUDING SUPERANNUATION
All executive KMPs receive a base cash salary (which is based on factors such as scope of the role, skills, experience,
location and length of service) and superannuation contributions, where applicable. The executive KMPs, where
applicable, receive a superannuation guarantee contribution required by the government, which is currently 9.50%, and
do not receive any other retirement benefits.
2.
VARIABLE REMUNERATION – INCENTIVES AND CASH BONUSES
Incentives in the form of equities and cash bonuses are provided to certain executive KMP at the Board’s
discretion. The policy is designed to provide a variable “at risk” component within the executive KMP’s total
remuneration packages to attract, retain and motivate the highest calibre of executive KMP and reward them for
performance that results in long term growth in shareholder wealth through achievement of the Company’s
financial and strategic objectives.
Receipt of variable remuneration in any form is not guaranteed under any executive KMP’s employment contract.
2.1
PERFORMANCE RIGHTS
The Company has adopted an incentive plan comprising the Avenira Performance Rights Plan (“the Plan”) to reward
executive KMP and key employees and consultants (“Participants”) for long term performance. Shareholders
approved the Plan at the Annual General Meeting (“AGM”) in November 2015. The Plan replaced the Company’s
Employee Share Option Plan.
The objective of the Plan is to:
•
•
•
•
enable the Company to recruit, incentivise and retain talented people needed to achieve the Company’s
business objectives.
link the reward of Participants with the achievements of strategic goals and the long-term performance of
the Company.
align the financial interest of Participants with those of shareholders.
provide incentives to Participants to focus on superior performance that creates shareholder value.
The Plan provides for the issuance of performance rights (“Performance Rights”) which, upon satisfaction of the
relevant performance conditions attached to the Performance Rights, will result in the issue of a fully paid ordinary
share in the Company for each Performance Right. Performance Rights are issued for nil consideration and no
amount is payable upon conversion thereof.
Performance Rights granted under the Plan to eligible Participants are linked to the achievement by the Company of
certain performance conditions as determined by the Board from time to time. These performance conditions must be
satisfied in order for the Performance Rights to vest. The Performance Rights also vest where there is a change of
control of the Company. Upon vesting of the Performance Rights, ordinary shares are automatically issued for no
consideration. If a performance condition of a Performance Right is not achieved by the earlier of the milestone
date (if applicable) or expiry date, then the Performance Right will lapse. The Performance Rights will also lapse if the
Participant ceases employment with the Group. Executive Directors who are not eligible under the Plan were issued
Performance Rights outside of the Plan on the same terms and conditions as those that are eligible.
The Board has adopted the Plan to combine elements of a traditional short-term incentive reward together with a
long-term incentive reward. This is considered a cost effective and efficient reward to appropriately incentivise
continued performance.
There were no performance rights granted during the 2017 financial year.
2017 Annual Report
26
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
During the last quarter of 2015, Performance Rights were granted to certain KMP and other participants. The
Performance Rights expire two years after grant date and vest over the two-year period on the achievement of the
following performance conditions in relation to the Baobab Phosphate Project:
1.
2.
3.
50% on commencement of commercial production being the date the first truck of sold or contracted product
departs the Baobab Phosphate Project site, provided that at that date the actual capital expenditure for the
Baobab Phosphate Project is within the capital expenditure budget for the Baobab Phosphate Project as
approved by the Board from time to time.(1)
25% on the Baobab Phosphate Project achieving steady state commercial production which will occur when
over two consecutive months 75% of the annual production rate approved by the Board from time to time
is sold or contracted production, provided that the cost of production and product specification for the two
months’ period is within the range approved by the Board from time to time.(1)
25% on accumulation of 100Mt of Inferred Resource of P2O5 at 20% or greater, capable of being converted
into saleable product. (1)
(1)
a.
b.
In order for a Performance Right to vest following the satisfaction of the performance condition applying to that Performance Right,
the Board must, acting in good faith and in its sole discretion determine that:
the Company has implemented a procedure to ensure compliance with the occupational health and safety policies and guidelines as
approved by the Board from time to time for the Company and its associated bodies corporate; and
in circumstances where the Satisfaction VWAP is lower than the Benchmark VWAP as at the date which is the last trading day for the
purposes of calculating the Satisfaction VWAP, the decrease is not a consequence of the manner in which the executive management
have performed their duties (i.e. if a minimum 20% increase in Share price has not been achieved over the 2 year’s life of the Performance
Rights, or a pro rata increase over a period less than 2 years, the Board must consider if this is due to the executive management’s
performance).
In paragraph (b) above:
Satisfaction VWAP means the VWAP of Shares for the 10 trading days immediately after the day the Company announces the
satisfaction of the applicable performance condition; and
Benchmark VWAP means 11 cents multiplied by a factor of 1.2, for the period ending on the expiry date of the Performance Rights or pro rata for
any partthereof.
If the Board decides that the Company has not implemented health and safety procedures or, if applicable, that the Share price not
increasing by the target amount is related to the executive management performance of their duties, then it has the discretion to
determine what percentage (if any) of the Performance Rights linked to the performance condition which has been satisfied will vest.
Each performance condition has a milestone date that the performance condition is required to be achieved by
otherwise the Performance Right will lapse. This date can be extended at the discretion of the Board. The Board
has determined the milestone dates as follows:
•
•
•
Tranche 1: 30 September 2016
Tranche 2: 31 May 2017
Tranche 3: 3 December 2017
Following the passing of Tranche 1 and Tranche 2 Performance Rights milestone dates in the 2017 financial year,
the RNC reviewed the achievements of the Company against the terms and conditions of the respective
Performance Rights. Having received and considered the RNC’s analysis and recommendation, the Board made
the following decisions in respect of the vesting of Tranche 1 and Tranche 2 Performance Rights:
•
•
Tranche 1 milestones were deemed to be met, resulting in the vesting of 100% of the Tranche 1 Performance
Rights on the milestone date and conversion to shares on 23 March 2017; and
Tranche 2 milestones were deemed not met, resulting in 100% of the Tranche 2 Performance Rights expiring
unvested on the milestone date.
The Company has recently received independent expert advice on its executive incentive scheme and will present a
new incentive scheme to sharehlders for approval at the AGM in November 2017.
Further information on Performance Rights on issue can be found on pages 32-3 3 under the Share-b ased
Compensation heading within the Remuneration Report.
2.2
CASH BONUSES
There were no bonuses paid to any director or other KMP during the 2017 financial year.
The Managing Director, Mr Louis Calvarin, is entitled to receive a cash bonus of up to $112,500 subject to the
achievement of certain KPI’s within the first 6 months of his employment. Mr Calvarin was employed by the
Company on 29 March 2017; therefore, KPI achievement and eligibility for a bonus payment is due to be
determined by the Board after 29 September 2017. The Board in its absolute discretion will determine
whether Mr Calvarin has achieved the KPI’s and if so what proportion of the bonus amount is payable.
Any bonus ceases to be payable in the event Mr Calvarin is not employed by the Company and/or is under a notice
of termination as at the last day of the financial year or lesser period to which the bonus relates. If Mr Calvarin is
under a notice of termination and has worked during the notice period for a period exceeding 3 months, Mr
Calvarin will remain entitled to receive any bonus on a pro rata ba sis.
The bonus KPIs were chosen as they reflect the core drivers of the short-term performance and also provide a
framework for delivering sustainable value to the Group and its shareholders. A summary of the mea sures and
weightings are set out in the table below:
2017 Annual Report
27
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
ELEMENT
Safety
KPI
LTI
Production
20-day average
Funding
$ received
Growth 1
Dryer: PFS complete & approved
Growth 2
Floatation: Scoping Study, approval to proceed to PFS
FULLY
50%
ACHIEVED
Zero
ACHIEVED
1
1,300 tpd
A$30M
Sep-2017
Sep-2017
1,000 tpd
A$20M
Nov-2017
Nov-2017
% OF TOTAL
BONUS
AMOUNT
10%
30%
20%
20%
20%
The Company has estimated the following bonus probabilities at 30 June 2017; these are subject to review and
adjustment following the conclusion of the bonus period after 29 September 2017.
ELEMENT
Safety
Production
Funding
Growth 1
Growth 2
ESTIMATED PROBABILITY
ESTIMATED %
ESTIMATED % TO BE
OF ACHIEVEMENT
100%
EARNED IN 2017
51%
EARNED IN 2018
49%
0%
0%
100%
50%
-
-
51%
25.5%
-
-
49%
24.5%
The Company has accrued $22,745 in relation to the estimated cash bonus earned by Mr Calvarin as at 30 June
2017. The final bonus amount to be paid to Mr Calvarin will be decided by the Board following the conclusion of
the bonus period on 29 September 2017.
2.3
SIGN ON PAYMENTS
In addition to the fixed remuneration, the Board may determine, from time to time, to award sign on payments to
new executives.
There were no sign on payments paid to any director or other KMP during the 2017 financial year.
The Managing Director, Mr Louis Calvarin, is entitled to receive ordinary fully paid shares to the value of $20,000
as a sign on bonus of shares, subject to shareholders’ approval. It is anticipated the Company will seek
shareholder approval for this issue of shares at its November 2017 Annual General Meeting.
The shares will be issued at the volume weighted average market price of the fully paid ordinary shares of the
Company over the thirty trading days immediately preceding the date of the meeting to approve the issue.
Relationship between remuneration policy and company performance
The remuneration policy has been tailored to increase the direct goal congruence between shareholders, directors and
executives. Currently, this is facilitated through the issue of Performance Rights to executive KMP and executive
directors to encourage the alignment of personal and shareholder interest. The Company believes this policy will be
effective in increasing shareholder wealth. For details of directors’ and executives’ interests in Performance Rights and
options at year end, refer to pages 33 and 34 of the remuneration report.
The table below shows the performance of the Company over the last 5 years:
EPS (cents)
Share Price
2017
(5.09)
$0.07
2016
(2.31)
$0.19
2015
(17.5)
$0.071
2014
(1.4)
$0.081
2013
6.2
$0.120
As the Company is in the development phase the performance of the Company is not related to the profit or earnings of
the Company.
2017 Annual Report
28
I
I
A
V
E
N
R
A
L
I
M
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
DIRECTORS’ REPORT (cont…)
D. DETAILS OF REMUNERATION OF KEY MANAGEMENT PERSONNEL (KMP)
The table below shows details of each component of total remuneration for KMP.
SHORT-TERM
SALARY & FEES CASH BONUS
$
$
POST EMPLOYMENT
LONG-TERM
SHARE-BASED PAYMENTS
NON-
MONETARY(8)
SUPERANNUATION
LONG SERVICE TERMINATION
LEAVE
PAYMENTS
TOTAL CASH
RELATED
PERFORMANCE
RIGHTS(9)
SHARES(10)
TOTAL
REMUNERATION
PERFORMANCE
RELATED
$
$
$
$
$
$
$
$
%
97,519
-
-
-
117,692
22,745
-
291,923
550,000
-
42,258
45,281
191,047
108,991
60,000
55,833
38,596
55,833
30,811
60,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,492
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27,733
52,250
-
-
-
-
5,918
5,700
-
-
-
-
-
-
-
-
-
-
-
24,978
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
550,000
-
-
-
-
-
-
-
-
-
-
-
-
-
97,519
-
154,929
-
869,656
627,228
-
42,258
45,281
191,047
114,909
65,700
55,833
38,596
55,833
30,811
60,000
-
-
-
-
-
48,298(11)
124,202
-
-
-
-
-
-
-
-
-
-
-
-
-
-
97,519
-
20,000
174,929
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
917,954
751,430
-
42,258
45,281
191,047
114,909
65,700
55,833
38,596
55,833
30,811
60,000
-
-
-
13%
-
5%
17%
-
-
-
-
-
-
-
-
-
-
-
Directors
Christopher Pointon(1)
2017
2016
Louis Calvarin(2)
2017
2016
Cliff Lawrenson(3)
2017
2016
Richard O’Shannassy(4)
2017
2016
Dick Block(5)
2017
2016
Ian McCubbing(6)
2017
2016
Timothy Cotton
2017
2016
Farouk Chaouni
2017
2016
David Mimran(7)
2017
2016
Subtotal Directors
2
0
1
7
A
n
n
u
a
l
R
e
p
o
r
t
2
9
DIRECTORS’ REPORT (cont…)
2
0
1
7
A
n
n
u
a
l
R
e
p
o
r
t
2017
2016
Other executive KPM
Rod Wheatley
2017
2016
Total KMP compensation
833,072
912,712
262,555
242,000
22,745
-
-
-
14,492
-
-
-
2017
2016
1,095,627
1,154,712
22,745
14,492
-
-
33,651
57,950
24,943
22,990
58,594
80,940
-
550,000
24,978
32,445
19,712
-
-
-
1,453,960
995,640
48,298
124,202
319,943
284,702
38,376
38,638
86,674
162,840
20,000
-
-
-
1,522,258
1,119,842
358,319
323,340
11%
12%
20,000
-
1,880,577
1,443,182
32,445
44,690
550,000
-
1,773,903
1,280,342
(1) Mr Christopher Pointon was appointed on 30 June 2016. No remuneration was paid to Mr Pointon up to 30 June2016.
(2) Mr Louis Calvarin was appointed on 29 March 2017.
(3) Mr Cliff Lawrenson resigned on 11 January 2017.
(4) The amount represents the total remuneration paid to Mr Richard O’Shannassy last financial year up to his resignation on 14 March 2016.
(5) The amount represents the total director’s fees paid to Mr Dick Block duringthefinancialyear. Noconsulting services fees were paid to Mr Block during the 2017 year (2016: $81,593).
(6) The amount represents the total remuneration paid to Mr Ian McCubbing and includes $46,700 (2016: nil) of fees paid for advisory services provided during the year. Refer to Other Transactions and Balances with KMPs and
Their Related Parties on page 32 for further details.
(7) Mr David Mimran was appointed on 2 March 2016. No remuneration was paid to Mr Mimran up to 30 June 2016.
(8) Non-monetary benefits include housing, car and medical insurance.
(9) Share based payments in the 2017 and 2016 financial years represent Performance Rights granted to executive KMPs in accordance with the Company’s Performance Rights Plan and approval at the Annual General Meeting held
on 18 November 2015. The fair value of the Performance Rights was estimated at the grant date taking into the account both market and non-market based vesting conditions. The Monte-Carlo simulation methodology was used to
calculate the fair value of each performance right. Refer to Note 35 for further details
(10) Mr Louis Calvarin is entitled to receive ordinary fully paid shares to the value of $20,000 as a sign on bonus of shares, subject to shareholders’ approval. It is anticipated the Company will seek shareholder approval for this issue of
shares at its November 2017 Annual General Meeting. The shares will be issued at the volume weighted average market price of the fully paid ordinary shares of the Company over the thirty trading days immediately preceding the
date of the meeting to approve the issue.
(11) A total of 3,750,000 Performance Rights held by Mr Lawrenson were forfeited upon his resignation. While 1,875,000 of these Performance Rights were Tranche 1 Performance Rights that vested during the 2017 financial year, Mr
Lawrenson resigned prior to the conversion of these Performance Rights to shares. His entitlement to receive the shares due on vesting of Tranche 1 Performance Rights was forfeited upon his resignation, however because the
Tranche 1 Performance Rights vested during the year the corresponding pro-rata expense of $80,672 has been recorded by the Group during the year. The net amount of $48,298 relates to the $80,672 pro-rata expense of vested
Tranche 1 Performance Rights less $32,374 in relation to forfeited Tranche 2 and Tranche 3 Performance Rights.
3
0
I
I
A
V
E
N
R
A
L
I
M
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
E. EXECUTIVE KMP EMPLOYMENT AGREEMENTS
The Group has entered into formal employment contracts with Executive KMP. The employment contracts for executive
KMP have no fixed term and do not prescribe how remuneration levels are to be modified from year to year. A summary
of the main provisions of these contracts for the year ended 30 June 2017 are set out below:
NAME
TERMS
Louis Calvarin (Managing
Director – appointed 29 March
2017)
Base salary of $450,000, reviewed annually on 31 December (or such other time as
agreed).
3 months’ notice by Mr Calvarin. 6 months by Company and upon change of control.
Termination payments to reflect appropriate notice, except in cases of termination for
cause.
Cash bonus for first 6 months, calculated at 50% of Mr Calvarin’s salary for the 6-
month period (maximum benefit being $112,500), subject to achieving certain Key
Performance Indicators (KPI’s).
Subject to shareholders’ approval, a sign on bonus of shares in the Company to the
value of $20,000.
Whilst residing in Dakar, Mr Calvarin will be provided customary expatriate benefits
which include housing, car and medical insurance.
Reimbursement of the actual amount of Self Employment Tax payable in the United
States.
Cliff Lawrenson (Managing
Director – resigned 11 January
2017)
Base salary inclusive of superannuation of $602,250 reviewed annually on 31
December (or such other time as agreed).
3 months notice by Mr Lawrenson. 12 months by Company and upon change of
control.
Termination payments to reflect appropriate notice, except in cases of termination for
cause.
Rod W heatley (Chief Financial
Officer and Company Secretary)
Base salary inclusive of superannuation of $295,000 reviewed annually on 31
December (or such other time as agreed).
3 months notice by Mr W heatley, 6 months notice by Company and upon change of
control.
Termination payments to reflect appropriate notice, except in cases of termination for
cause.
F. OVERVIEW OF NON-EXECUTIVE DIRECTOR REMUNERATION
The Board policy is designed to attract and retain high calibre directors and to remunerate Non-executive Directors at
market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to
the Non-executive Directors and reviews their remuneration annually, based on market practice, duties and accountability.
The Chairman’s fee will be determined independently to the fees of the Non-executive Directors based on comparative
roles in the external market. External advice from independent remuneration consultants is sought when required.
The maximum aggregate amount of fees that can be paid to Non-executive Directors is subject to approval by
shareholders at the Annual General Meeting. The most recent determination was at the November 2016 Annual
General Meeting, where shareholders approved the maximum aggregate amount of fees that can be paid to Non-
executive Directors to be $600,000.
The Company makes superannuation contributions on behalf of the Non-executive Directors in accordance with its
Australian statutory superannuation obligations, and each director may sacrifice part of their fee for further
superannuation contribution by the Company.
Any equity components of Non-executive Directors’ remuneration, including the issue of options or Performance
Rights, are required to be approvedbyshareholderspriortoaward.
The table below summaries the Non-executive fees for the 2017 financial year:
2017 Annual Report
31
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
Board
Chair
Non-executive Directors
Committee
Audit Chair
Remuneration and Nomination Chair
2017 FEES
A$110,000
A$60,000
A$10,000
A$10,000
In May 2017, the Board resolved to continue to accrue but defer the payment of all Non-executive Director fees until
further notice.
Termination payments
The Board must approve all termination payments provided to all employees at the level of director, executive or senior
management to ensure such payments reflect the Company’s remuneration policy and are in accordance with the
Corporations Act 2001.
Mr Lawrenson resigned from his position on 11 January 2017. Mr Lawrenson received a total payout of $652,342,
comprised of accrued annual leave entitlements of $102,342 and a termination payment of $550,000 calculated based
on average remuneration over the past three years. Upon his resignation Mr Lawrenson forfeited 1,875,000 vested
Performance Rights and 1,875,000 unvested Performance Rights.
Loans to or from key management personnel
In 2017 and 2016 there were no loans to KMP.
The Group received the following loans from KMP or their related parties during the 2017 financial year (2016: nil):
BALANCE
AT START
OF THE
YEAR
$
LENDER
Agrifos Partners LLC(1)
Tablo Corporation(2)
Mimran Natural Resources(2)
LOAN
PROCEEDS
RECEIVED
INTEREST
CHARGED
INTEREST
NOT
CHARGED
FORGIVEN
DURING THE
YEAR
BALANCE
AT END OF
THE YEAR
$
520,461
780,691
2,464,315
-
-
-
$
$
$
1,369
2,182
50,130
-
-
-
-
-
-
$
521,830
782,873
2,514,445
2,514,445
HIGHEST
BALANCE
DURING THE
YEAR
$
521,830
782,873
(1) Agrifos Partners LLC is a company related through the common control of directors Mr Timothy Cotton and Mr Frank Chaouni.
(2) Tablo Corporation and Mimran Natural Resources are companies related through the common control of director Mr David Mimran.
Key terms and conditions of the loans are as follows:
LENDER
Agrifos Partners LLC
Tablo Corporation
Mimran Natural Resources
INTEREST
RATE(1)
6.00%
6.00%
6.75%
SECURITY
unsecured
unsecured
unsecured
REPAYMENT
DATE
(2)
(2)
no set date
(1) Interest rates on the Group’s borrowings range from 6.00 – 6.75%; as such loans received from KMP are considered to be at commercial rates.
(2) Repayable on the earlier of a) six months from the first drawn down date and b) completion of the Entitlement Offer as further described at Note 21.
Full terms and conditions of the loans can be found at Note 21.
Other transactions and balances with KMPs and their related parties
Mr Ian McCubbing
In addition to his Non-executive Director fee, Mr McCubbing was engaged to provide the Company financial and
commercial advisory services on a consulting basis during the period. The services related to the transition period of
the position of Managing Director of the Company. Total consultancy fees of $46,700 (2016: nil) were charged by Mr
McCubbing during the year. The total amount of fees is included in his Salary & Fees amount in the Details of Remuneration
of KMP table on page 25. The agreement had no fixed term and no termination notice period. At 30 June 2017, advisory fees
paid to Mr McCubbing impacted the Statement of Profit and Loss and Other Comprehensive Income with $46,700 recognised
in Administrative and Other Expenses. There was no impact on the 30 June 2017 Statement of Financial Position.
G. SHARE-BASED COMPENSATION
The Managing Director, Mr Louis Calvarin, is entitled to receive ordinary fully paid shares to the value of $20,000 as a
sign on bonus of shares, subject to a shareholders’ approval. It is anticipated the Company will seek shareholder
approval for this issue of shares at its November 2017 Annual General Meeting.
2017 Annual Report
32
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
There were no other share based payments issued to directors or other KMP during the 2017 financial year.
Share based payments were issued in prior financial years that impact current or future reporting periods; the details of
these are set out below.
Share based compensation – Performance Rights
Performance Rights affecting remuneration in the current or a future reporting period are as follows:
Key terms of Performance Rights held by KMP
GRANT
DATE
NUMBER
GRANTED
VESTING
DATE
EXPIRY
DATE
FAIR
VALUE
AT
GRANT
DATE, $
EXERCISE NUMBER
(1)
PRICE, $ LAPSED
NUMBER
(2)(3)
VESTED
NUMBER
FORFEITED(
3)
VESTED
%
2017
Directors
Cliff Lawrenson
18-Nov-15
1,875,000
30-Sep-16
18-Nov-17
$0.092
18-Nov-15
937,500
31-May-17
18-Nov-17
$0.092
18-Nov-15
937,500
18-Nov-17
18-Nov-17
$0.092
Other Executive KMP
Rod Wheatley
03-Dec-15
825,000
30-Sep-16
03-Dec-17
$0.067
03-Dec-15
412,500
31-May-17
03-Dec-17
$0.067
03-Dec-15
412,500
18-Nov-17
03-Dec-17
$0.067
nil
nil
nil
nil
nil
nil
-
-
-
-
412,500
-
1,875,000
1,875,000
100
-
-
937,500
937,500
825,000
-
-
-
-
-
-
-
100
-
-
(1) 412,500 Performance Rights lapsed on 31 May 2017, when the performance condition of Tranche 2 was not achieved by the milestone date.
(2) 825,000 ordinary shares were issued on 23 March 2017 for nil consideration following the vesting of Tranche 1 Performance Rights on 30
September 2016.
(3) A total of 3,750,000 Performance Rights held by Mr Lawrenson were forfeited upon his resignation. While 1,875,000 of these Performance Rights
were Tranche 1 Performance Rights that vested during the 2017 financial year, Mr Lawrenson resigned prior to the conversion of these
Performance Rights to shares. His entitlement to receive the shares due on vesting of Tranche 1 Performance Rights was forfeited upon his
resignation.
Performance rights granted carry no dividend or voting rights. When exercisable, Performance Rights are convertible into
one ordinary share per right. Further information is set out in Note 35 of the financial statements.
Value of Performance Rights held by KMP
FAIR VALUE
OF PR
GRANTED
DURING THE
YEAR, $
VALUE OF PR
VESTED
DURING THE
YEAR, $
VALUE OF PR
LAPSED DURING
THE YEAR, $(3)
VALUE OF PR
FORFEITED
DURING THE
YEAR, $(4)
VALUE OF PR
INCLUDED IN
REMUNERATION
REPORT FOR
THE YEAR, $
REMUNERATION
CONSISTING
OF PR FOR THE
YEAR, %
2017
Directors
Cliff Lawrenson
Other Executive KMP
Rod Wheatley
-
-
172,500(1)
-
345,000
48,298(5)
55,275(2)
27,638
-
38,376(6)
5%
11%
(1) A total of 3,750,000 Performance Rights held by Mr Lawrenson were forfeited upon his resignation. While 1,875,000 of these Performance Rights
were Tranche 1 Performance Rights that vested during the 2017 financial year, Mr Lawrenson resigned prior to the conversion of these
Performance Rights to shares. His entitlement to receive the shares due on vesting of Tranche 1 Performance Rights was forfeited upon his
resignation. The $172,500 represents the total value of Tranche 1 Performance Rights vested on 30 September 2016 and forfeited upon
resignation.
(2) Tranche 1 Performance Rights vested on 30 September 2016 and were converted to fully paid ordinary shares for nil consideration on 23 March
2017.
(3) Tranche 2 Performance Rights lapsed unvested on 31 May 2017, when the performance condition was not achieved by the milestone date.
(4) The $345,000 represents the total value of the 3,750,000 Performance Rights held by Mr Lawrenson and forfeited upon resignation.
(5) Because the Tranche 1 Performance Rights vested during the year the corresponding pro-rata expense of $80,672 has been recorded by the
Group during the year. The net amount of $48,298 relates to the $80,672 pro-rata expense of vested Tranche 1 Performance Rights less $32,374
in relation to forfeited Tranche 2 and Tranche 3 Performance Rights.
(6) The assessed total fair value of Performance Rights granted is allocated equally over the period from grant date to vesting date, being the relevant
performance milestone and is factored by the probability of achievement of vesting performance conditions. The 30 June 2017 value relates to Tranche 1
vested Performance Rights and Tranche 3 unvested Performance Rights. Tranche 3 Performance Rights remain unvested at 30 June 2017; the Board estimates a
100% likelihood of achieving the Tranche 3 performance milestone. The above amount is recognised as an expense in the statement of profit and loss for
the period ended 30 June 2017. Refer to Note 35 for further details.
2017 Annual Report
33
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
H. EQUITY HOLDINGS
Performance Rights and Share Rights
The number of Performance Rights and contingent share rights in the Company held during the financial year by each
director of Avenira Limited and other KMP of the Group, including their personally related parties, are set out below:
BALANCE AT
START OF
THE YEAR
GRANTED AS
COMPENSATION
VESTED
LAPSED
FORFEITED
UPON
RESIGNATION
BALANCE
AT END OF
THE YEAR EXERCISABLE
VESTED
AND
UNVESTED
2017
Directors
Louis Calvarin
-
Cliff Lawrenson
3,750,000
Ian McCubbing
Dick Block
Timothy Cotton
(2)
Farouk Chaouni
(2)
David Mimran
Christopher Pointon
Other Executive KMP
-
-
40,000,000
40,000,000
-
-
Rod Wheatley
1,650,000
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
(40,000,000)
(40,000,000)
(2)
-
-
-
-
-
-
-
-
-
-
(3)
(825,000)
(4)
(412,500)
-
(1)
(3,750,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
412,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
412,500
(1) Mr Lawrenson’s 1,875,000 vested and 1,875,000 unvested Performance Rights were forfeited upon his resignation.
(2) At the beginning of the year Mr Timothy Cotton and Mr Farouk Chaouni collectively held 40,000,000 share rights through their related party Baobab
Partners LLC. These share rights vested on 20 March 2017 and were converted to fully paid ordinary shares for nil consideration.
(3) Tranche 1 Performance Rights vested on 30 September 2016 and were converted to fully paid ordinary shares for nil consideration on 23 March
2017.
(4) Tranche 2 Performance Rights lapsed unvested on 31 May 2017, when the performance condition was not achieved by the milestone date.
Option Holdings
The number of options over ordinary shares in the Company held during the financial year by each director of Avenira
Limited and other KMP of the Group, including their personally related parties, are set out below:
BALANCE AT
START OF THE
YEAR
GRANTED AS
COMPENSATION
OTHER
CHANGES
EXERCISED
EXPIRED
BALANCE AT
END OF THE
YEAR
VESTED
AND
EXERCISABLE
UNVESTED
2017
Directors
Louis Calvarin
-
Cliff Lawrenson
15,000,000
Ian McCubbing
Dick Block
Timothy Cotton
Farouk Chaouni
David Mimran
Christopher Pointon
Other Executive KMP
Rod Wheatley
1,500,000
2,500,000
94,000,000
94,000,000
-
-
500,000
-
-
-
-
-
-
-
-
-
-
(15,000,000)(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,500,000)(2)
(2,500,000) (2)
-
-
-
-
-
-
-
-
(14,000,000)(3)
80,000,000(4)
80,000,000
(14,000,000)(3)
80,000,000(4)
80,000,000
-
-
(500,000)(5)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Mr Cliff Lawrenson resigned as a Managing Director on 11 January 2017 and is not considered a KMP from that date.
(2) Options were granted 20 November 2013 and expired 20 November 2016.
(3) Options were granted 8 April 2013.
(4) Mr Timothy Cotton and Mr Farouk Chaouni collectively held 80,000,000 options through their related party, Baobab Partners LLC.
(5) Options were granted 30 July 2013 and expired 29 July 2016.
All vested options were exercisable at the end of the year.
2017 Annual Report
34
AVENIRA LIMITED AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (cont…)
Shareholdings
The number of shares in the Company held during the financial year by each director of Avenira Limited and other KMP
of the Group, including their personally related partied, are set out below:
BALANCE AT START OF
THE YEAR
RECEIVED DURING THE
YEAR FOR RIGHTS
CONVERTED
OTHER CHANGES
DURING THE YEAR
BALANCE AT END OF THE
YEAR
2017
Directors
Louis Calvarin
Cliff Lawrenson
Ian McCubbing
Dick Block
Timothy Cotton
Farouk Chaouni
David Mimran
Christopher Pointon
Other Executive KMP
Rod Wheatley
-
2,351,868
400,000
500,000
154,000,000
154,000,000
104,750,000
-
-
-
-
-
-
40,000,000(1)
40,000,000(1)
-
-
825,000(2)
-
(2,351,868)(3)
-
(500,000)(4)
-
-
-
-
-
-
-
400,000
-
194,000,000(5)
194,000,000(5)
104,750,000(6)
-
825,000
(1) Mr Timothy Cotton and Mr Frank Chaouni were collectively issued 40,000,000 ordinary shares for nil consideration on the conversion of contingent
share rights.
(2) Mr Rod Wheatley was issued 825,000 ordinary shares for nil consideration on the vesting of Tranche 1 Performance Rights.
(3) Mr Cliff Lawrenson resigned as a Managing Director on 11 January 2017 and is not considered a KMP from that date.
(4) Mr Dick Block passed away on 4 December 2016 and is not considered a KMP from that date.
(5) Mr Timothy Cotton and Mr Farouk Chaouni collectively held 194,000,000 shares through their related party, Baobab Partners LLC.
(6) Mr David Mimran holds shares through his related party, Tablo Corporation, which is an affiliate of the Mimran Group.
None of the shares above are held nominally by the directors or any of the KMP.
There were no other transactions and balances with KMP and their related parties other than as disclosed.
End of Remuneration Report
Signed in accordance with a resolution of the directors.
LOUIS CALVARIN
Managing Director
Perth, 1 October 2017
2017 Annual Report
35
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of Avenira Limited
As lead auditor for the audit of Avenira Limited for the financial year ended 30 June 2017, I declare to the
best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Avenira Limited and the entities it controlled during the financial year.
Ernst & Young
Gavin Buckingham
Partner
1 October 2017
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:EH:AEV:030
QUALIFYING STATEMENTS
STATEMENT OF GOVERNANCE ARRANGEMENTS AND INTERNAL CONTROLS
Governance of Avenira Limited’s Mineral Resources estimation process is a key responsibility of the Executive Management of the
Company.
The Geological Manager of the Company oversees technical reviews of the estimates and the evaluation process is augmented by utilising
Avenira’s in-house knowledge in operational and project management, ore processing and commercial/financial areas. The Company also
utilises external consultants for these purposes.
The Geological Manager is responsible for managing all Avenira’s drilling programs, including resource definition drilling. The estimation of
Mineral Resources is done by an independent contractor, MPR Geological Consultants Pty Ltd.
The Company has adopted quality assurance and quality control protocols based on current and best practice regarding all field aspects
including drill hole surveying, drill sample collection, sample preparation, sample security, provision of duplicates, blanks and matrix-
matched certified reference materials. All geochemical data generated by laboratory analysis is examined and analysed by the Geological
Manager before accession to the Company database.
Data is subject to additional vetting by the independent contractor who carries out the resource estimates. Resource estimates are based on
well-founded, industry-accepted assumptions and compliance with standards set out in the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves.
Mineral resource estimates are subject to peer review by the independent contractor and a final review by Avenira’s Executive
Management before market release.
Avenira Limited reports its mineral resources and ore reserves on an annual basis, in accordance with the Australian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (the JORC code) 2012 Edition.
COMPLIANCE STATEMENT
Information in this report relating to Exploration Results or estimates of Mineral Resources or Ore Reserves has been extracted from the reports
listed below. The reports are available to be viewed on the company website at: www.avenira.com
BAOBAB PHOSPHATE PROJECT:
27 April 2015:
11 May 2015:
Minemakers to acquire a potential near-term production rock phosphate project in the Republic of Senegal
Minemakers delivers maiden Inferred Resource for Baobab Rock Phosphate Project in Republic of Senegal
22 September 2015:
Baobab Phosphate Project update
7 December 2015:
Maiden Indicated Mineral Resource at Baobab Phosphate Project
7 January 2016:
Technical Report Mineral Resource Estimated for the Gadde Bissik Phosphate Deposit, Republic of Senegal
28 October 2016:
September 2016 Quarterly activities report
23 February 2017:
Baobab exploration results update
2 March 2017:
Significant Increase to Indicated Mineral Resource at Baobab Phosphate Project
11 September 2017:
Baobab Exploration Results Update
WONARAH PROJECT:
15 March 2013:
30 April 2014:
Technical Report Mineral Resource Estimation for the Wonarah Phosphate Project, Northern Territory, Australia
Quarterly activities report
The company confirms that it is not aware of any new information or data that materially affects the information included in the original market
announcements 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 Competent Person’s findings are presented have not been materially modified from the original market
announcement.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
All statements, trend analysis and other information contained in this document relative to markets for Avenira’s trends in resources, recoveries,
production and anticipated expense levels, as well as other statements about anticipated future events or results constitute forward-looking statements.
Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”, “expect”
and “intend” and statements that an event or result “may”, “will”, “should”, “could” or “might” occur or be achieved and other similar expressions.
Forward-looking statements are subject to business and economic risks and uncertainties and other factors that could cause actual results of operations
to differ materially from those contained in the forward-looking statements. Forward-looking statements are based on estimates and opinions of
management at the date the statements are made. Avenira does not undertake any obligation to update forward-looking statements even if
circumstances or management’s estimates or opinions should change. Investors should not place undue reliance on forward-looking statements.
0
37
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
CONSOLIDATED
YEAR ENDED 30 JUNE 2017
NOTES
REVENUE
Other income
EXPENDITURE
Depreciation and amortisation expense
Salaries and employee benefits expense
Exploration expenditure
Net loss on disposal of subsidiary
Net foreign currency loss
Doubtful debts
Write off of exploration and evaluation expenditure
Impairment of exploration and evaluation expenditure
Impairment of mine development expenditure
Impairment of intangible assets
Impairment of goodwill
Net loss on disposal of fixed assets
Interest expense
Share based payment expense
Administrative and other expenses
LOSS BEFORE INCOME TAX
INCOME TAX BENEFIT/(EXPENSE)
LOSS FOR THE YEAR
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to Profit or Loss
Exchange differences on translation of foreign operations
Reclassification of foreign operations on disposal
Exchange differences arising during the year
Available-for-Sale financial assets
Net fair value gain on available-for-sale financial assets
Other comprehensive income/(loss) for the year, net of tax
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
Loss for the year is attributable to:
Owners of Avenira Limited
Non-controlling interest
Total comprehensive loss for the year is attributable to:
Owners of Avenira Limited
Non-controlling interest
LOSS PER SHARE
From continuing operations
Basic loss per share (cents)
Diluted loss per share (cents)
5
6
7
7
25(b)
15
15
16
17
18
35
8
2017
$
393,303
-
(263,189)
(2,504,417)
(323,391)
-
(255,529)
(6,610,202)
-
(9,431,555)
(1,233,059)
(641,826)
(4,721,345)
(23,556)
(189,288)
(244,075)
(4,530,934)
(30,579,063)
308,265
(30,270,798)
-
(8,454)
(8,454)
15,610
7,156
(30,263,642)
2016
$
680,401
108
(120,490)
(1,607,741)
(643,900)
(1,354,707)
(192,683)
(93,588)
(635,125)
(574,962)
-
-
-
-
-
(489,742)
(4,432,266)
(9,464,695)
-
(9,464,695)
2,420,842
(1,369,418)
1,051,424
-
1,051,424
(8,413,271)
24(b)
(27,467,045)
(2,803,753)
(9,324,324)
(140,371)
(30,270,798)
(9,464,695)
(27,472,923)
(2,790,719)
(30,263,642)
(7,957,769)
(455,502)
(8,413,271)
34
34
(5.09)
(5.09)
(2.31)
(2.31)
The above Consolidated Statement of Profit and Loss and Other Comprehensive Income should be read in conjunction
with the Notes to the Consolidated Financial Statements.
1
38
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Available-for-sale financial assets
Plant and equipment
Capitalised exploration and evaluation expenditure
Capitalised mine development expenditure
Intangibles
Goodwill
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Loans and borrowings
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
Loans and borrowings
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
NOTES
CONSOLIDATED
2017
$
2016
$
9
10
11
10
12
14
15
16
17
18
19
20
21
20
21
22
2,946,100
1,205,601
3,456,258
24,473,574
1,657,986
-
7,607,959
26,131,560
1,481,600
31,239
1,339,077
8,722,989
47,579,578
84,152
-
59,238,635
66,846,594
4,726,426
186,404
1,987,997
6,900,827
2,430,202
6,516,600
4,413,080
13,359,882
20,260,709
46,585,885
1,491,217
15,629
800,789
15,418,499
35,526,331
192,619
4,746,961
58,192,045
84,323,605
3,154,788
181,814
-
3,336,602
4,018,459
-
4,746,961
8,765,420
12,102,022
72,221,583
Issued capital
Reserves
Accumulated losses
Capital and reserves attributable to members of Avenira Limited
Non-controlling interest
23
24(a)
24(b)
31
TOTAL EQUITY
125,037,889
25,147,663
(108,657,005)
41,528,547
5,057,338
119,817,389
26,036,371
(81,189,960)
64,663,800
7,557,783
46,585,885
72,221,583
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the
Consolidated Financial Statements.
2
39
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report )
1
7
2
,
3
1
4
,
8
(
)
2
0
5
,
5
5
4
(
)
9
6
7
,
7
5
9
,
7
(
)
4
2
3
,
4
2
3
,
9
(
5
5
5
,
6
6
3
,
1
1
7
6
,
1
3
7
,
9
2
4
2
4
,
1
5
0
,
1
)
5
9
6
,
4
6
4
,
9
(
L
A
T
O
T
$
)
7
0
6
,
8
1
1
(
)
1
7
3
,
0
4
1
(
)
1
3
1
,
5
1
3
(
T
S
E
R
E
T
N
I
$
I
G
N
L
L
O
R
T
N
O
C
N
O
N
-
8
7
2
,
0
5
8
,
9
2
5
5
5
,
6
6
3
,
1
)
4
2
3
,
4
2
3
,
9
(
)
4
2
3
,
4
2
3
,
9
(
-
-
5
5
5
,
6
6
3
,
1
)
6
3
6
,
5
6
8
,
1
7
(
0
1
6
,
4
1
8
,
1
1
4
0
3
,
1
0
9
,
9
8
I
I
I
D
E
T
M
L
A
R
N
E
V
A
F
O
S
R
E
N
W
O
O
T
E
L
B
A
T
U
B
R
T
T
A
I
L
A
T
O
T
$
D
E
T
A
L
U
M
U
C
C
A
S
E
S
S
O
L
$
$
$
S
E
V
R
E
S
E
R
I
L
A
T
P
A
C
D
E
U
S
S
I
S
E
T
O
N
I
D
E
T
A
D
L
O
S
N
O
C
I
Y
T
U
Q
E
N
I
S
E
G
N
A
H
C
F
O
T
N
E
M
E
T
A
T
S
D
E
T
A
D
L
O
S
N
O
C
I
2
4
7
,
9
8
4
)
3
3
8
,
4
5
1
(
8
1
9
,
0
7
0
,
0
3
0
0
0
,
0
0
9
,
4
7
0
6
,
8
1
1
5
8
2
,
3
1
0
,
8
4
6
4
,
5
6
4
,
7
-
-
-
-
-
7
0
6
,
8
1
1
5
8
2
,
3
1
0
,
8
3
8
5
,
1
2
2
,
2
7
3
8
7
,
7
5
5
,
7
2
4
7
,
9
8
4
)
3
3
8
,
4
5
1
(
8
1
9
,
0
7
0
,
0
3
0
0
0
,
0
0
9
,
4
-
-
4
6
4
,
5
6
4
,
7
0
0
8
,
3
6
6
,
4
6
-
-
-
-
-
-
-
-
-
2
4
7
,
9
8
4
0
0
0
,
0
0
9
,
4
-
-
4
6
4
,
5
6
4
,
7
)
8
9
7
,
0
7
2
,
0
3
(
)
3
5
7
,
3
0
8
,
2
(
)
5
4
0
,
7
6
4
,
7
2
(
)
5
4
0
,
7
6
4
,
7
2
(
-
6
5
1
,
7
4
3
0
,
3
1
)
8
7
8
,
5
(
-
)
8
7
8
,
5
(
)
2
4
6
,
3
6
2
,
0
3
(
)
9
1
7
,
0
9
7
,
2
(
)
3
2
9
,
2
7
4
,
7
2
(
)
5
4
0
,
7
6
4
,
7
2
(
)
8
7
8
,
5
(
-
-
-
-
0
5
4
,
1
6
0
,
1
0
5
0
,
1
9
8
,
1
4
4
4
,
5
7
6
,
1
5
8
8
,
5
8
5
,
6
4
-
-
4
7
2
,
0
9
2
8
3
3
,
7
5
0
,
5
-
0
5
4
,
1
6
0
,
1
0
5
0
,
1
9
8
,
1
0
7
1
,
5
8
3
,
1
-
-
-
0
7
1
,
5
8
3
,
1
-
-
-
)
0
0
0
,
8
6
2
,
2
(
0
5
4
,
1
6
0
,
1
0
0
0
,
8
6
2
,
2
0
5
0
,
1
9
8
,
1
7
4
5
,
8
2
5
,
1
4
)
5
0
0
,
7
5
6
,
8
0
1
(
3
6
6
,
7
4
1
,
5
2
9
8
8
,
7
3
0
,
5
2
1
)
0
6
9
,
9
8
1
,
1
8
(
1
7
3
,
6
3
0
,
6
2
9
8
3
,
7
1
8
,
9
1
1
-
-
-
-
-
-
-
-
)
3
3
8
,
4
5
1
(
8
1
9
,
0
7
0
,
0
3
5
3
1
3
3
2
3
2
5
3
r
a
e
y
e
h
t
r
o
f
)
s
s
o
l
(
/
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
E
H
T
R
O
F
E
M
O
C
N
I
I
E
V
S
N
E
H
E
R
P
M
O
C
L
A
T
O
T
5
1
0
2
E
N
U
J
0
3
T
A
E
C
N
A
L
A
B
r
a
e
y
e
h
t
r
o
f
s
s
o
L
R
A
E
Y
I
R
E
H
T
N
I
I
S
R
E
N
W
O
H
T
W
S
N
O
T
C
A
S
N
A
R
T
I
f
o
n
o
i
t
i
s
u
q
c
a
i
n
o
s
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
S
r
a
e
y
e
h
t
g
n
i
r
u
d
d
e
u
s
s
i
s
e
r
a
h
S
s
t
s
o
c
n
o
i
t
c
a
s
n
a
r
t
e
u
s
s
i
e
r
a
h
S
S
R
E
N
W
O
S
A
Y
T
C
A
P
A
C
I
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
S
i
y
r
a
d
s
b
u
s
i
r
a
e
y
e
h
t
r
o
f
)
s
s
o
l
(
/
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
E
H
T
R
O
F
E
M
O
C
N
I
I
E
V
S
N
E
H
E
R
P
M
O
C
L
A
T
O
T
R
A
E
Y
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
n
f
o
n
o
i
t
i
n
g
o
c
e
r
-
e
D
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
N
n
a
r
m
M
o
t
i
C
C
M
B
n
i
t
s
e
r
e
t
n
i
%
0
2
f
o
l
e
a
S
6
1
0
2
E
N
U
J
0
3
T
A
E
C
N
A
L
A
B
r
a
e
y
e
h
t
r
o
f
s
s
o
L
I
R
E
H
T
N
I
I
S
R
E
N
W
O
H
T
W
S
N
O
T
C
A
S
N
A
R
T
I
s
t
h
g
i
r
e
r
a
h
s
t
n
e
g
n
i
t
n
o
c
f
o
i
n
o
s
r
e
v
n
o
C
r
a
e
y
e
h
t
g
n
i
r
u
d
d
e
u
s
s
i
s
e
r
a
h
S
S
R
E
N
W
O
S
A
Y
T
C
A
P
A
C
I
7
1
0
2
E
N
U
J
0
3
T
A
E
C
N
A
L
A
B
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
S
s
e
r
a
h
s
d
e
u
s
s
n
U
i
3
.
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
d
e
t
a
d
i
l
o
s
n
o
C
e
h
t
o
t
s
e
t
o
N
e
h
t
h
t
i
w
n
o
i
t
c
n
u
n
o
c
j
n
i
d
a
e
r
e
b
l
d
u
o
h
s
y
t
i
u
q
E
n
i
s
e
g
n
a
h
C
f
o
t
n
e
m
e
t
a
t
S
d
e
t
a
d
i
l
o
s
n
o
C
e
v
o
b
a
e
h
T
40
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 JUNE 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Payments for exploration expenditure
Receipts for other income
Interest received
NOTES
CONSOLIDATED
2017
$
2016
$
(6,934,244)
(6,918,066)
(323,391)
(643,900)
17,490
208,736
100,781
384,349
NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES
33
(7,031,409)
(7,076,836)
CASH FLOWS FROM INVESTING ACTIVITIES
Research and development tax receipt
Expenditure on mining interests
Payments for mine development
Receipts for phosphate sales capitalised to development
Payments for plant and equipment
Proceeds on sale of plant and equipment
Payments for security deposits
Refund of security deposits
Proceeds on sale of subsidiary
Cash balance from subsidiary acquired
Proceeds from disposal of interest in subsidiary
Payments for intangibles
Loans to other entities
234,567
286,612
(2,970,612)
(2,582,464)
(22,350,486)
(12,694,681)
2,540,694
(674,426)
1,744
-
(222,758)
908
-
(103,013)
30,000
94,500
-
-
-
1,170,965
117,255
15,478,749
10
(551,891)
(2,146,900)
-
-
NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES
(25,887,310)
1,546,073
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Transaction costs on issue of shares
Proceeds from loans and borrowings
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
2,952,500
15,373,376
-
(154,833)
8,315,310
-
11,267,810
15,218,543
(21,650,909)
9,687,780
24,473,574
15,388,406
123,435
(602,612)
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL
YEAR
9
2,946,100
24,473,574
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated
Financial Statements.
4
41
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017
YEAR ENDED 30 JUNE 2017
1. BASIS OF PREPARATION
The financial statements are for the consolidated entity consisting of Avenira Limited and its subsidiaries (the
“Company” or the “Group). The financial statements are presented in the Australian currency. Avenira Limited is a for
profit company limited by shares, domiciled and incorporated in Australia, whose shares are publicly traded on the
Australian Securities Exchange. The Company’s registered office and principal place of business is Suite 19, 100 Hay
Street, Subiaco WA 6008. The financial statements were authorised for issue in accordance with a resolution of the
directors on 1 October 2017. The directors have the power to amend and reissue the financial statements.
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards,
other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
The accounting policies outlined throughout the financial statements have been consistently applied to all the years
presented, unless otherwise stated.
Compliance with IFRS
The financial statements of the Group also comply with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).
Historical cost convention
The financial statements have been prepared under the historical cost convention, modified, where applicable by the
measurement at fair value of selected non-current assets, financial assets and financial liabilities.
Functional and presentation currency
The financial statements are presented in Australian dollars, which is the Group’s reporting currency and the
functional currency of the parent company and its Australian subsidiaries. The functional currencies of the material
subsidiaries are United States dollars and Central African francs (XOF).
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
•
•
Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date
of that statement of financial position;
Income and expenses for each statement of comprehensive income are translated at average exchange rates
(unless that is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the dates of the transactions); and
•
All resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are
repaid, a proportionate share of such exchange differences is reclassified to profit or loss, as part of the gain or loss on
sale where applicable.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entities and translated at the closing rate.
Going concern
Going concern
At 30 June 2017, the Group had cash on hand of A$2,946,100. The Group’s cashflow forecast to 30 September 2018 has
The cashflow forecast has been prepared based on cost estimates which are currently available to the Group. Working
been prepared based on cost estimates which are currently available to the Group and is sensitive to the assumed cash
capital requirements of the Company are expected to fluctuate. Further, certain assumptions included in the Group’s
cashflow forecast relating specifically to the production and sale of phosphate product have not yet been achieved.
flows from the Group’s Baobab Phosphate Project in Senegal.
The Group’s cashflow forecast, even allowing for certain assumptions relating specifically to the production and sale of
The Group’s cashflow forecast indicates the Group will require Avenira to raise additional working capital in the form of
phosphate product needing to be achieved, indicates the Group will need to raise additional working capital in the form of
debt and/or equity to fund Project development and continue as a going concern.
debt and/or equity to fund Project development and continue as a going concern.
The Directors are satisfied that additional working capital can be secured as required for the following reasons:
The Directors are satisfied that additional working capital can be secured as required for the following reasons:
•
•
The Group has the support of its two major shareholders, Agrifos Partners LLC and Tablo Corporation, an affiliate of
The Company successfully raised a total of A$2,500,000 in June 2017. A$608,950 was raised through a Share
Groupe Mimran (“Major Shareholders”). Both Major Shareholders have provided unsecured bridge loans totaling
Purchase Plan with an additional $1,891,050 raised via the Shortfall Placement Agreement with Agrifields DMCC;
US$3,600,000 (“Bridge Loans”). Of the US$3,600,000 Bridge Loan funding available to the Group, US$1,000,000
(A$1,300,000) was drawn down at 30 June 2017 with a further US$2,600,000 (A$3,330,000) received subsequently
to year end.
5
42
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report
AVENIRA LIMITED AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
1. BASIS OF PREPARATION (cont...)
•
The Group will conduct a renounceable pro rata entitlement offer (the ‘Entitlement Offer’) to raise A$13,000,000 within the next
month and;
•
•
The Major Shareholders have each agreed, if requested by the Group, to underwrite any shortfall to the
Entitlement Offer up to a maximum of A$7, 000, 000 (“Underwritten Amount”). A portion of the proceeds from
the Entitlement Offer will be used to repay the Bridge Loans in full
The group is in advanced discussions with a shareholder to take up their shares in the Entitlement
Offer and to agree to terms to subscribe for additional shares up to approximately A$4,500,000 should
there be a shortfall in the Entitlement Offer.
•
The Group has a track record of being able to secure additional working capital as and when required. Sources could
include additional sales, reduced expenditure, VAT refunds in Senegal and if required further debt or minor equity raising.
The financial statements have been prepared on a going concern basis which contemplates continuity of normal business
activities and realisation of assets and settlement of liabilities in the normal course of business. In the event the Group is
unable to raise additional working capital as required, there is a significant uncertainty as to whether the Group will be able to
meet its debts as and when they fall due and thus continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of the recorded asset amounts, nor to the amounts or classifications
of liabilities that might be necessary should the Group not be able to continue as a going concern.
Critical accounting estimates
financial statements
The preparation of
judgments and assumptions.
Application of different assumptions and estimates may have a significant impact on Avenira’s net assets and financial results.
Estimates and assumptions are reviewed on an ongoing basis and are based on the latest available information at
each reporting date. Actual results may differ from the estimates.
requires a management
to use estimates,
The areas involving a higher degree of judgment and complexity, or areas where assumptions are significant to the financial
statements are:
Note 10 Trade and Other Receivables
Note 11 Inventories
Note 15 Capitalised exploration and evaluation expenditure
Note 16 Capitalised mine development expenditure
Note 18 Goodwill
Note 20 Provision for mine rehabilitation and restoration
Note 35 Share based payments
Comparative Figures
Page 54
Page 54
Page 56
Page 57
Page 60
Page 61
Page 86
W hen required by the accounting standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
W hen the Group applies an accounting policy retrospectively, makes a retrospective restatement or reclassifies items in
its financial statements, a statement of financial position as at the beginning of the earliest comparative period will be
disclosed.
No reclassification of the presentation of financial information has occurred during the year and as such, the
comparability of years has been sustained.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable
from the taxation authority. In this case, it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial
position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
2017 Annual Report
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017
1. BASIS OF PREPARATION (cont...)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable
from the taxation authority. In this case, it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial
position.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
2. PRINCIPLES OF CONSOLIDATION
(a) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Avenira Limited
(“Company” or “Parent Entity”) as at 30 June 2017 and the results of all subsidiaries for the year then ended. Avenira
Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.
Subsidiaries are all entities (including special purpose entities) 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 to direct the activities of 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.
The acquisition method of accounting is used to account for business combinations by the Group (refer Note 37).
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of
comprehensive income, statement of changes in equity and statement of financial position respectively.
Investments in subsidiaries are accounted for at cost in the individual financial statements of the Company.
(b) Changes in ownership interests
The Group treats transactions with non-controlling interests in subsidiaries that do not result in a loss of control as
transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the
carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any
difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is
recognised in retained earnings within equity attributable to owners of Avenira Limited.
When the Group ceases to have control of subsidiary, any retained interest in the entity is remeasured to its fair value
with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the
purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial
asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are
accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts
previously recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in a subsidiary is reduced but joint control or significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income are re-classified to profit or
loss where appropriate.
7
44
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending
on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e.
unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine
fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the
market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the
most advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises
the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account
transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset
in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the
respective note to the financial statements.
VALUATION TECHNIQUES
In the absence of an active market for an identical asset or liability, the Group selects and uses one or more valuation
techniques to measure the fair value of the asset or liability. The Group selects a valuation technique that is appropriate in
the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant
data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques
selected by the Group are consistent with one or more of the following valuation approaches:
Market approach: valuation techniques that use prices and other relevant information generated by market transactions
for identical or similar assets or liabilities.
Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single
discounted present value.
Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing
the asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority
to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs
that are developed using market data (such as publicly available information on actual transactions) and reflect the
assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable,
whereas inputs for which market data is not available and therefore are developed using the best information available
about such assumptions are considered unobservable.
FAIR VALUE HIERARCHY
AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair
value measurements into one of three possible levels based on the lowest level that an input that is significant to the
measurement can be categorised into as follows:
Level 1
Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date.
Level 2
Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 3
Measurements based on unobservable inputs for the asset or liability.
8
45
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont...)
The fair values of assets and liabilities that are not traded in an active market are determined using one or more
valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market
data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If
one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3.
The Group would change the categorisation within the fair value hierarchy only in the following circumstances:
I.
If a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice
versa; or
II.
If significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa.
When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy
(i.e. transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances
occurred.
(b) Foreign exchange transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Translation differences on financial assets and liabilities carried at fair value are reported as part of the fair value gain
or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value
through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on
non- monetary financial assets such as equities classified as available-for-sale financial assets are included in the fair
value reserve in equity.
(c) New and revised AASB’s affecting amounts reported and/or disclosures in the financial statements
The Group has adopted all new and amended Australian Accounting Standards and Interpretations effective from 1
July 2016 including:
•
•
•
•
AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interest in
Joint Operations;
AASB 2014-4 Clarification on acceptable methods of depreciation and amortisation (amendments to AASB
116 and AASB 138);
AASB 2015-1 Annual Improvements to IFRSs 2012 – 2014 Cycle (clarification amendments to AASB 5,
AASB 7, AASB 119, and AASB 134); and
AASB 2015-2 (amendments to AASB 101).
The adoption of these new and amended standards and interpretations did not result in any significant changes to the
Group’s accounting policies.
The Group has not elected to early adopt any other new or amended standards or interpretations that are issued but
not yet effective.
(d) New, revised or amended Accounting Standards and Interpretations issued but not yet effective
Australian Accounting Standards that have recently been issued or amended but are not yet effective and have not
been adopted by the Group for the annual reporting period ended 30 June 2017 are outlined in the table below. The
potential effect of these Standards is yet to be fully determined.
TITLE
SUMMARY
AASB 9 Financial
Instruments
A finalised version of AASB 9 which
contains accounting requirements
for financial instruments, replacing
AASB 139 Financial Instruments:
Recognition and Measurement.
The standard contains
requirements in the areas of
classification and measurement,
impairment, hedge accounting and
derecognition.
IMPACT ON GROUP FINANCIAL
REPORT
Gains of losses on an
investment in equity
instruments will be
recognised in profit or loss,
or in other comprehensive
income if the Group makes
such election on a case by
case basis.
APPLICATION
DATE OF
STANDARD
EXPECTED
APPLICATION
DATE FOR
GROUP
1 Jan 2018
1 Jul 2018
9
46
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report IMPACT ON GROUP FINANCIAL
REPORT
The Group is currently in the
process of determining what
impact, if any, the adoption
of AASB 15 will have.
APPLICATION
DATE OF
STANDARD
1 Jan 2018
EXPECTED
APPLICATION
DATE FOR
GROUP
1 Jul 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont...)
TITLE
SUMMARY
AASB 15 Revenue
from Contracts with
Customers
AASB 2014-10
Amendments to
Australian
Accounting
Standards – Sale
or Contribution of
Assets between
an Investor or its
Associate or Joint
Venture.
2016-2
Amendments to
AASB 107
AASB 16
Leases
AASB 2016-5
Amendments to
Australian
Accounting
Standards –
Classification and
Measurement of
Share-based
Payment
Transactions
AASB 15 provides a single,
principles based five-step model to
be applied to all contracts with
customers.
Guidance is provided on topics
such as the point in which revenue
is recognised, accounting for
variable consideration, costs of
fulfilling and obtaining a contract
and various related matters. New
disclosures about revenue are also
introduced.
This standard addresses an
inconsistency between the
requirements in AASB 10 and
AASB 128 in dealing with the sale
or contribution of assets between
an investor and its associate or
joint venture.
This standard requires entities
preparing financial statements with
Tier 1 reporting requirements to
provide disclosures that enable
users of financial statements to
evaluate changes in liabilities from
financing activities, arising from
both cash flows and non-cash
charges.
This standard will require to
recognise assets and liabilities for
all leases with a term of more than
12 months, unless the underlying
asset is of low value.
A full gain or loss to be
recognised when such
transaction involves a
business and partial gain or
loss to be recognised when
such transaction involves
assets that do not constitute
a business.
The adoption of AASB
2016-2 is not expected to
significantly impact the
information of financial
disclosure in the Group’s
financial statements.
The Group is currently in
the process of determining
what impact, if any, the
adoption of AASB will have.
This standard amends AASB 2
Share-based Payment, clarifying
how to account for certain types of
share-based payment transactions.
The amendments provide the
requirements on the accounting for:
The adoption of these
amendments is not
expected to significantly
affect the Group’s
accounting for share-based
payments.
•
•
•
The effects of vesting and
non-vesting conditions on
the measurement of cash-
settled share-based
payments;
Share-based payment
transactions with a net
settlement feature for
withholding tax
obligations; and
A modification to the
terms and conditions of a
share-based payment that
changes the classification
of the transaction from
cash-settled to equity-
settled.
1 Jan
2018
1 Jul
2018
1 Jan 2017
1 Jul 2017
1 Jan 2019
1 Jul 2019
1 Jan 2018
1 Jul 2018
10
47
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont...)
APPLICATION
DATE OF
STANDARD
1 Jan 2018
EXPECTED
APPLICATION
DATE FOR
GROUP
1 Jul 2018
IMPACT ON GROUP FINANCIAL
REPORT
The adoption of these
amendments is not
expected to impact the
information of financial
disclosure in the Group’s
financial statements.
1 Jan 2018
1 Jul 2018
The adoption of this
interpretation is not
expected to impact the
information of financial
disclosure in the Group’s
financial statements.
1 Jan 2019
1 Jul 2019
The adoption of this
interpretation is not
expected to impact the
information of financial
disclosure in the Group’s
financial statements.
TITLE
SUMMARY
AASB 2017-1
Amendments to
Australian
Accounting
Standards –
Transfers of
Investment
Property, Annual
Improvements
2014-2016 Cycle
and Other
Amendments
AASB
Interpretation 22
Foreign Currency
Transactions and
Advance
Consideration
IFRIC 23
Uncertainty over
Income Tax
Treatments
The amendments clarify certain
requirements in:
•
•
•
•
AASB 1 First-time
Adoption of Australian
Accounting Standards;
AASB 12 Disclosure of
Interests in Other Entities;
AASB 128 Disclosure of
Investments in Associates
and Joint Ventures; and
AASB 140 Investment
Property.
The Interpretation clarifies that in
determining the spot exchange rate
to use on initial recognition of the
related asset, expense or income
(or part of it) on the derecognition
of a non-monetary asset or non-
monetary liability relating to
advance consideration, the date of
the transaction is the date on which
an entity initially recognises the
non- monetary asset or non-
monetary liability arising from the
advance consideration. If there are
multiple payments or receipts in
advance, then the entity must
determine a date of the
transactions for each payment or
receipt of advance consideration.
The Interpretation clarifies the
application of the recognition and
measurement criteria in IAS 12
Income Taxes when there is
uncertainty over income tax
treatments. The Interpretation
specifically addresses the following:
• Whether an entity
•
•
•
considers uncertain tax
treatments separately;
The assumptions an entity
makes about the
examination of tax
treatments by taxation
authorities;
How an entity determines
taxable profit (tax loss),
tax bases, unused tax
losses, unused tax
creditors, and tax rates;
and
How an entity considers
changes in facts and
circumstances.
11
48
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
4. SEGMENT INFORMATION
Accounting Policy
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the full Board of Directors.
(a) Description of segments
Management has determined the operating segments based on the reports reviewed by the Board of Directors that
are used to make strategic decisions.
The Board considers the business from both functional and geographic perspectives and has identified that there are
two reportable segments being:
•
•
•
exploration and development of the Wonarah Phosphate Project in the Northern Territory (Wonarah) located in
Australia;
exploration and development of the Baobab Phosphate Project in the Republic of Senegal (Baobab) located
in Africa; and
unallocated items comprise corporate administrative costs, interest revenue, finance costs, investments,
corporate plant and equipment and income tax assets and liabilities.
(b) Segment information provided to the Board
The following table presents revenue and profit for the Group’s operating segments for the reporting period.
2017
Revenue
Interest revenue
Other revenue
Total segment revenue
Total revenue as per statement of
comprehensive income
Impairment of non-current assets
Doubtful debts
Depreciation and amortisation
Net loss on disposal of fixed assets
Segment net loss
Total net loss as per statement of
comprehensive income
WONARAH
(AUSTRALIA)
BAOBAB
(SENEGAL)
UNALLOCATED –
OTHER SEGMENTS
TOTAL
CONSOLIDATED
$
$
$
$
39,861
-
15,222
6,441
320,729
11,049
39,861
(21,664)
331,778
375,812
17,491
393,303
393,303
10,073,381
2,357,854
3,737
-
5,954,404
4,252,348
249,706
23,361
-
-
9,746
195
16,027,785
6,610,202
263,189
23,556
(12,438,304)
(14,018,772)
(3,813,723)
(30,270,798)
(30,270,798)
Segment assets
Capitalised exploration and evaluation
expenditure
Capitalised mine development expenditure
Other assets at balance date
5,978,000
2,744,989
-
47,579,578
-
-
8,722,989
47,579,578
1,515,847
6,001,005
3,027,175
10,544,027
Total segment assets
7,493,847
56,325,573
3,027,175
66,846,594
Segment liabilities
Deferred tax liability
Other liabilities at balance date
Total segment liabilities
-
4,413,080
-
4,413,080
1,289,847
12,284,949
2,272,833
15,847,629
1,289,847
16,698,029
2,272,833
20,260,709
12
49
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
4. SEGMENT INFORMATION (cont…)
2016
Revenue
Interest revenue
Other revenue
Other income
Total segment revenue
Total revenue as per statement of
comprehensive income
Impairment of non-current assets
Write off of non-current assets
Net loss on disposal of subsidiary
Depreciation and amortisation
Segment net loss
Total net loss as per statement of
comprehensive income
WONARAH
(AUSTRALIA)
BAOBAB
(SENEGAL)
UNALLOCATED –
OTHER SEGMENTS
TOTAL
CONSOLIDATED
$
$
$
$
44,599
-
-
21,116
238,166
-
376,520
-
108
442,235
238,166
108
44,599
259,282
376,628
680,509
680,509
574,962
635,125
-
4,339
-
-
-
-
-
574,962
635,125
1,354,707
1,354,707
82,963
33,188
120,490
(1,203,131)
(855,850)
(7,405,714)
(9,464,695)
(9,464,695)
Segment assets
Capitalised exploration and evaluation
expenditure
Capitalised mine development expenditure
15,364,874
53,625
-
35,526,331
-
-
15,418,499
35,526,331
Other assets at balance date
1,580,104
9,351,727
22,446,944
33,378,775
Total segment assets
16,944,978
44,931,683
22,446,944
84,323,605
Segment liabilities
Deferred tax liability
Other liabilities at balance date
Total segment liabilities
5. REVENUE
Accounting policies
-
1,293,836
4,746,961
3,846,765
-
2,214,460
4,746,961
7,355,061
1,293,836
8,593,726
2,214,460
12,102,022
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial
assets.
Sales revenue is recognised and measured at the fair value of consideration received or receivable when the
significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably.
Service revenue is recognised by reference to the stage of completion. Stage of completion is measured by reference
to labour hours incurred to date as a percentage of total estimated labour hours for each contract. When the contract
outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible
to be recovered.
Proceeds from sales made prior to the commencement of commercial production are capitalised against the relevant
mine development asset, to the extent that such sales are considered an integral part of the testing and
commissioning phase of the mine. Refer to Note 16.
13
50
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
5. REVENUE (cont…)
Revenue
Provision of services
Other revenue
Interest from financial institutions
Interest other
Other sundry revenue
6. OTHER INCOME
Net gain on disposal of property, plant and equipment
7. EXPENSES
Loss before income tax includes the following specific expenses
Defined contribution superannuation expense
Minimum lease payments relating to operating leases
Net loss on disposal of property, plant and equipment
Net loss on disposal of subsidiary
Foreign exchange losses (net)
8. INCOME TAX
Accounting Policies
2017
$
2016
$
-
14,154
218,481
157,331
17,491
393,303
410,937
31,298
224,012
680,401
2017
$
2016
$
-
-
108
108
2017
$
2016
$
114,453
132,464
23,556
-
255,529
135,997
137,058
9,148
1,354,707
192,683
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on
the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the Company’s subsidiaries and associated entities operate and
generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis
of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the
deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the
reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
14
51
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
8. INCOME TAX (cont...)
(a) Income tax expense/(benefit)
Current tax
Deferred tax
2017
$
2016
$
-
(308,265)
(308,265)
-
-
-
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
(30,579,063)
(9,464,695)
Prima facie tax benefit at the Australian tax rate of 30% (2016: 30%)
(9,173,719)
(2,839,408)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Share based payments
Other
Loss on sale of subsidiary
Movements in unrecognised temporary differences
Tax effect of current year tax losses for which no deferred tax asset has
been recognised
Income tax expense/(benefit)
Attributed to:
Continuing operations
Discontinuing operations
(c) Tax affect relating to each component of other comprehensive income
Available-for-sale financial assets
(d) Deferred tax assets
Capital raising costs
Rehabilitation provision
Other provisions and accruals
Available-for-sale financial assets
Unrealised foreign exchange losses
Tax losses in Australia
Deferred tax assets not recognised
Offset against deferred tax liabilities
Net deferred tax assets
(e) Deferred tax liabilities
73,222
292,834
-
2,708,431
39,060
(381,170)
406,412
(66,819)
5,790,967
2,841,925
(308,265)
(308,265)
-
(308,265)
-
-
80,792
388,266
82,820
878,080
-
-
-
-
-
-
-
118,478
1,055,970
77,788
882,763
-
29,461,092
29,141,139
30,891,050
31,276,138
(28,994,007)
(25,932,939)
1,897,043
5,343,199
(1,897,043)
(5,343,199)
-
-
Capitalised exploration and evaluation costs and development costs
(6,206,480)
(10,025,543)
Unrealised foreign exchange gain
Other accruals
Offset against deferred tax assets
Net deferred tax liabilities
(103,643)
-
(53,634)
(10,983)
(6,310,123)
(10,090,160)
1,897,043
5,343,199
(4,413,080)
(4,746,961)
15
52
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
8. INCOME TAX (cont...)
DEFFERED TAX
Potential deferred tax assets attributable to tax losses and exploration expenditure carried forward have not been
brought to account at 30 June 2017 because the directors do not believe it is appropriate to regard realisation of the
deferred tax assets as probable at this point in time. These benefits will only be obtained if:
(i)
The Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from
the deductions for the loss and exploration expenditure to be realised;
(ii) The Company continues to comply with conditions for deductibility imposed by law; and
(iii) No changes in tax legislation adversely affect the Company in realising the benefit from the deductions for the loss
and exploration expenditure.
TAX CONSOLIDATION
Avenira Limited and its 100% owned Australian resident subsidiaries are part of a tax consolidated group. As a
consequence, all members of the tax consolidated group are taxed as a single entity. Avenira Limited is the head entity
of the tax consolidated group. Members of the tax consolidated group have entered into a tax sharing agreement that
provides for the allocation of income tax liabilities between the entities should the head entity default on its payment
obligations. No amounts have been recognised in the financial statements in respect of this agreement on the basis
that the possibility of default is remote.
9. CASH AND CASH EQUIVALENTS
Accounting Policies
For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at
call with financial institutions, other short-term highly liquid investments with original maturities of three months or less
that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value,
and bank overdrafts.
Cash at bank and in hand
Short-term deposits
Cash and cash equivalents as shown in the statement of financial position and
the statement of cash flows
2017
$
2016
$
2,946,100
7,916,851
-
16,556,723
2,946,100
24,473,574
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.
Short term deposits are made for varying periods of between one day and three months depending on the immediate
cash requirements of the Group, and earn interest at the respective short-term deposit rates. Refer to Note 25 for
additional details on the impact of interest rates on cash and cash equivalents for the period.
10. TRADE AND OTHER RECEIVABLES
Accounting Policies
Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less an allowance for impairment. An estimate for doubtful debts is made when there is objective
evidence of impairment. Bad debts are written off as incurred.
Current
Trade and other receivables(i)
Government taxes receivable(ii)
Provision for impairment(ii)
Prepayments(iii)
Sundry receivables
Security deposits
2017
$
1,016,743
4,282,642
(4,252,348)
80,648
13,650
64,266
2016
$
57,731
404,425
-
1,022,760
21,903
151,167
1,205,601
1,657,986
53
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
10. TRADE AND OTHER RECEIVABLES (cont…)
(i) Trade and other receivables are generally due for settlement within 30 days and therefore classified as current.
(ii) Government taxes receivable relates to VAT receivable in Senegal of $4,252,348 and GST receivable in Australia of $30,294 (30 June 2016: VAT
receivable in Senegal of $404,425). At 30 June 2017, as a result of the current stage of the Group’s operations in Senegal, the Group has provided
for the full amount of VAT receivable.
(iii) Prepayments include advances prepaid to contractors engaged to perform exploration and development activities at the Baobab Phosphate Project in
Senegal.
The carrying amounts disclosed above represent their fair value.
Non-Current
Convertible promissory notes(i)
Provision for impairment(ii)
Convertible promissory notes(iii)
Provision for impairment(ii)
Security deposits
Sundry receivables
2017
$
86,270
(86,270)
2,227,707
(2,227,707)
2016
$
815,807
(815,807)
-
-
1,481,600
1,487,767
-
3,450
1,481,600
1,491,217
(i)
In February 2015, the Group (the “holder”) entered into convertible secured promissory notes with JDCP, (the “recipient”). The notes accrued interest
at 8% per annum compounded monthly and payable on maturity. In February 2017 the notes were converted into Series A Preferred Shares in
JDCP.
(ii) Refer Note 25 for further details on impairment.
(iii) In July 2016, the Group (the “holder”) entered into convertible secured promissory notes with JDCP, (the “recipient”). The notes accrue interest at
12% per annum compounded annually and payable on maturity. The notes mature on the earlier to occur of (a) any liquidation, dissolution or
winding up of the Company; or (b) either (i) 15 February 2020 or (ii) JDCP’s receipt of an aggregate amount of US$6,000,000 from Stonecutter
Phosphates LLC.
11. INVENTORIES
Accounting Policies
Inventories are physically surveyed or estimated and valued at the lower of cost and net realisable value. Cost includes
all expenses directly attributable to the mining process as well as suitable portions of related production overheads,
including depreciation and amortisation. Costs are assigned using the weighted average cost method. Net realisable
value is the estimated future selling price of the product the Group expects to realise when the product is sold in the
ordinary course of business less estimated costs to complete production and bring the product to sale including any
applicable selling expenses.
Current
Inventories valued at net realisable value(i)
2017
$
3,456,258
3,456,258
2016
$
-
-
(i) At 30 June 2017 inventory cost was $10,048,877 while inventory net realisable value was $3,456,258. The difference of $6,592,619 has been
transferred to capitalised mine development expenditure pending the commencement of commercial production.
Key estimates and assumptions
Net realisable value tests are performed at each reporting date and represent the estimated future sales price of the
product the Group expects to realise when the product is processed and sold, less estimated costs to complete
production and bring the product to sale.
1
54
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
12. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Accounting Policies
Refer to Note 25.
Available-for-sale financial assets include the following classes of financial assets:
Listed investments, at fair value - Australian listed equity securities(i)
Unlisted investments at fair value - international equity securities(ii)
2017
$
2016
$
31,239
-
31,239
15,629
-
15,629
(i) These equity securities represent 15,619,524 ordinary fully paid shares of Niuminco Group Limited valued at 0.20 (2016: 0.10) cents per share.
(ii) These equity securities are comprised of available-for-sale investments in JDCP that were impaired during the 2015 financial year. Their fair value was
assessed as nil at 30 June 2017 (30 June 2016: nil). Refer to Note 25 for further details.
13. DERIVATIVE FINANCIAL INSTRUMENTS
Accounting Policies
Refer to Note 25.
Unlisted warrants at fair value through profit or loss(i) (ii)
2017
$
2016
$
-
-
-
-
(i) The Group held unlisted warrants in JDCP. The warrants had an exercise price of USD0.01 and expire on 17 February 2024. The fair value of the
warrants is considered to equate to the fair value of the underlying ordinary shares. Accordingly, unlisted warrants were fully impaired to nil as at 30
June 2015. As at 30 June 2016 the fair value of the underlying shares was zero, therefore, the carrying amount remained zero. The warrants were
cancelled in July 2016.
(ii) In February 2017 the Group was issued unlisted warrants in JDCP. The warrants have an exercise price of USD0.01 and expire on 7 March 2020.
The fair value of the warrants is considered to equate to the fair value of the underlying ordinary shares. As at 30 June 2017 the fair value of the
underlying shares was zero, therefore the carrying amount of the warrants was zero.
These derivative financial instruments are classified as level 3 hierarchy. Refer to Note 25 for further details.
14. PLANT AND EQUIPMENT
Accounting Policies
All plant and equipment is stated at historical cost less depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss and Other
Comprehensive Income during the reporting period in which they are incurred.
Depreciation of plant and equipment is calculated using the reducing balance method or straight-line method,
depending on a type of an asset, and it allocates their cost or re-valued amounts, net of their residual values, over their
estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter
lease term. The rates vary between 10% and 40% per annum.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in
the Statement of Profit and Loss and Other Comprehensive Income. When re-valued assets are sold, it is Group
policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.
2
55
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
14. PLANT AND EQUIPMENT (cont…)
Cost
Accumulated depreciation
Net carrying amount
Movements in carrying amounts
Opening net carrying amount
Additions
Additions through business combination
Disposals
Depreciation charge
Foreign currency exchange differences
Closing net carrying amount
2017
$
1,805,663
(466,586)
1,339,077
800,789
825,952
-
(25,300)
(256,458)
(5,906)
1,339,077
2016
$
1,079,408
(278,619)
800,789
32,471
721,919
227,617
(9,548)
(91,699)
(79,971)
800,789
15. CAPITALISED EXPLORATION AND EVALUATION EXPENDITURE
Accounting Policies – Capitalised Exploration and Evaluation Expenditure
Exploration and evaluation costs for each area of interest in the early stages of project life are expensed as they are
incurred up until pre-feasibility.
Exploration and evaluation costs for each area of interest that has progressed to pre-feasibility are accumulated and
carried forward where right of tenure of the area of interest is current and they are expected to be recouped through
sale or successful development and exploitation of the area of interest or, where exploration and evaluation activities
in the area of interest have not at the end of the reporting period reached a stage that permits reasonable assessment
of the existence of economically recoverable reserves, and activates and significant operations in, or in relation to, the
area of interest are continuing.
When an area of interest is abandoned or the directors decide that it is not commercial, any accumulated costs in respect
to that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end
of each accounting period and accumulated costs written off to the extent that they will not be recoverable in the future.
Accounting Policies – Government Grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached
conditions will be complied with. The research and development grant received by the Group relates to capitalised
exploration expenditure, as such it is recognised in the statement of financial position offset against capitalised exploration
expenditure.
2017
$
2016
$
Reconciliation of movements of exploration and evaluation costs in respect of mining areas of interest
Opening net carrying amount
Capitalised exploration and evaluation costs(i)
Impairment of exploration and evaluation expenditure(ii)
Write off of exploration and evaluation expenditure(ii)
Research and development tax refund(iii)
Capitalised exploration and evaluation costs on acquisition(iv)
Transfer to capitalised mine development expenditure(v)
Closing net carrying amount(vi)
15,418,499
16,000,000
2,970,612
(9,431,555)
-
(234,567)
1,657,576
(574,962)
(635,125)
(286,612)
-
-
19,908,486
(20,650,864)
8,722,989
15,418,499
The ultimate recoupment of costs carried forward for exploration and evaluation is dependent on the successful
development and commercial exploitation or sale of the respective mining areas. Amortisation of the costs carried
forward for the development phase is not being charged pending the commencement of production.
3
56
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
15. CAPITALISED EXPLORATION AND EVALUATION EXPENDITURE (cont…)
(i) Capitalised exploration and evaluation expenditure includes costs incurred in relation to both Wonarah and Baobab Phosphate Projects.
(ii)
Impairment recognised in respect of the Wonarah Project. Refer to the key estimates and assumptions section below for details regarding the
Group’s assessment of the carrying value of capitalised exploration and evaluation expenditure.
(iii) The research and development (R&D) tax incentive provides a tax offset in the form of a refund, calculated with reference to expenditure on eligible
R&D activities.
(iv) Refer to Note 37 Business Combination for further details.
(v) On 11 November 2015, the capitalised exploration and evaluation expenditure in relation to the Baobab Phosphate Project was reclassified to
capitalised mine development following the decision of Avenira’s Board of Directors to commence mining activities at the Baobab Phosphate
Project. The exploration and evaluation expenditure attributable to this area of interest was first tested for impairment and then reclassified to
capitalised mine development expenditure.
(vi) The closing balance comprises the net carrying amount of exploration and evaluation expenditure attributable to both the Wonarah and Baobab
Phosphate Projects being $5,978,000 and $2,744,989 respectively.
Key estimates and assumptions
The application of the Group’s accounting policy requires management to make certain estimates and assumptions as
to future events and circumstances, in particular, the assessment of whether economic quantities of reserves will be
found. Any such estimates and assumptions may change as new information becomes available, which may require
adjustments to the carrying value of assets.
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead
to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined.
A valuation review conducted by Optiro in December 2016 revealed that the fair market value of the Wonarah Project
has decreased from the valuation prepared at June 2016. Optiro’s valuation lies within a range of $6,100,000 and
$10,700,000, based on a range of resource multiples derived from recent transactions and enterprise values of
market participants with defined phosphate mineral resources (level 3 in the fair value hierarchy).
Considering that no exploration expenditure, other than rental and incidental land costs, has been budgeted for the
financial year ending 30 June 2018 and that there has been a delay in the commercialisation of the IHP technology,
the directors consider that the low end of the independent expert’s range is most representative of the fair value less
costs of disposal of the Wonarah Project, consistent with the position taken by the Group at 30 June 2016. As a
result, during the reporting period an amount of $9,431,555 was impaired and recognised in the Statement of Profit or
Loss and Other Comprehensive Income. The recoverable amount is calculated as $5,978,000, after allowing for
estimated costs of disposal. A further review conducted by Optiro in June 2017 revealed the fair market value of the
Wonarah Project had not changed from the December 2016 valuation.
Impairment of Baobab Phosphate Project capitalised exploration expenditure has been assessed as part of the
impairment assessment of the Baobab CGU, refer to Note 16 for further details. There was no impairment of Baobab
Phosphate Project capitalised exploration expenditure at 30 June 2017.
16. CAPITALISED MINE DEVELOPMENT EXPENDITURE
Accounting Policies
Once technical feasibility and commercial viability of extraction of mineral resources in a particular area of interest
become demonstrable, the exploration and evaluation assets attributable to that area of interest are reclassified as
mine development.
Mine development represents the direct and indirect costs incurred in preparing mines for production and includes
plant and equipment under construction, stripping and waste removal costs incurred before production commences.
These costs are capitalised to the extent that they are expected to be recouped through the successful exploitation of
the related mining leases. Once production commences, these costs are transferred to Mine Properties or Plant and
Equipment, as relevant, and will be amortised using the units of production method based on the estimated
economically recoverable reserves to which they relate or are written off if the mine property is abandoned.
Pre-Strip Costs
In open pit mining operations, it is necessary to remove overburden and waste materials to access the ore. This process
is referred to as stripping and the Group capitalises stripping costs incurred during the development of a mine (or pit)
as part of the investment in constructing the mine (pre-strip). These costs are subsequently amortised over the life of a
mine (or pit) on a unit of production basis.
Pre-strip costs are included in capitalised mine development expenditure with no amortisation recorded until
production levels are achieved.
4
57
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
16. CAPITALISED MINE DEVELOPMENT EXPENDITURE (cont…)
Reconciliation of movements during the year
Opening net carrying amount
Transfer from exploration and evaluation expenditure
Capitalised mine development
Capitalised provision for rehabilitation
Net loss on product sold
Inventory write down to net realisable value
Impairment of mine development expenditure
Foreign currency translation movement
Closing net carrying amount
Key estimates and assumptions
2017
$
2016
$
35,526,331
-
6,828,127
-
20,650,864
13,119,591
(1,563,914)
2,676,481
2,530,984
6,592,619
(1,233,059)
(1,101,510)
-
-
-
(920,605)
47,579,578
35,526,331
The capitalised mine development represents the costs incurred in preparing the mine for production and includes
plant and equipment under construction, stripping and waste removal costs incurred before commercial production
commences at the Baobab Phosphate Project. These costs are capitalised to the extent that they are expected to be
recouped through the successful exploitation of the related mining leases. Amortisation of the costs carried forward
for the development phase is not being charged pending the commencement of commercial production.
Development expenditure assets are assessed for impairment if an impairment trigger is identified. For the purposes of
impairment testing capitalised mine development assets are allocated to the cash generating unit (“CGU”) to which the
development activity relates.
In considering the asset for impairment, the Group needs to determine the recoverable amount of each cash
for impairment testing purposes totals
generating unit. Prior
$52,896,404 at 30 June 2017.
the Baobab CGU
impairment
to any
losses,
The recoverable amount is determined as the higher of the asset’s fair value less costs of disposal and value in use.
The Group conducted an impairment test in relation to the Baobab CGU at 30 June 2017, on the basis of fair value
less costs of disposal (level 3 in the fair value hierarchy). The recoverable amount of the CGU was determined by an
independent valuer, Optiro.
The valuation review conducted by Optiro in June 2017, which excluded working capital including inventory and
rehabilitation obligations, revealed that the fair market value of the Baobab Phosphate Project lies within a range of
$32,800,000 and $62,800,000, with a preferred value of $47,900,000. The Optiro valuation was based on a
range of resource multiples derived from recent transactions and enterprise values of market participants with
defined phosphate mineral resources.
The directors consider that the independent expert’s preferred value of $47,900,000 is most representative of the fair
value less costs of disposal of the Baobab Phosphate Project, therefore the recoverable amount is calculated as
$46,940,000 after allowing for estimated costs of disposal.
As a result, during the period an amount of $5,954,404 was impaired and recognised in the Statement of Profit or
Loss and Other Comprehensive Income. The impairment loss was allocated firstly to goodwill in the amount of
$4,721,345, with the balance of $1,233,059 allocated to capitalised mine development expenditure.
Key Judgements
Production Start Date
The Group assesses the stage of each mine under development/construction to determine when a mine moves into the
production phase, this being when the mine is substaintially complete and ready for its intended use. The criteria used
to asses the start date are determined based on the unique nature of each mine development/construction project. The
Group considers various relevant criteria to assess when the production phase is considered to have commenced. At
this point, all related amounts are reclassified to from “Capitalised Mine Development Expenditure” to “Mine Properties”
and/or “Property, Plant and Equipment”. Some of the critera used to identify the production start date include, but not
limted to:
•
•
•
Level of capital expenditure incurred compared with the original construction cost estimate
Completion of a reasonable period of testing of the mine plant and equipment
The mine is producing at a pre-determined level of design capacity
5
58
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
16. CAPITALISED MINE DEVELOPMENT EXPENDITURE (cont…)
•
•
Ability to produce ore in saleable form (within specifications) and receive validation from customers
Ability to sustain ongoing production of ore
When the mine development project moves into the production phase, the capitalisation of certain mine development
costs ceases and costs are either regarded as forming part of the cost of inventory or expensed, except for costs that
qualify for capitalization relating to mining asset additions or improvements or mineable reserve development. It is also
the point that depreciation and amortization commences.
Based on the above criteria the Group has determined at 30 June 2017 the Baobab Project remains in the
development/construction phase.
17. INTANGIBLES
Accounting Policies
Intangible assets with finite lives that are acquired separately are carried at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives.
The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of
any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that
are acquired separately are carried at cost less accumulated impairment losses.
Intangibles
Cost
Accumulated amortisation
Net carrying amount
Movements in carrying amounts
Opening net carrying amount(i)
Additions(ii)
Additions through business combination
Impairment(iii)
Amortisation
Foreign currency translation movement
Closing net carrying amount at year end
2017
$
2016
$
93,458
(9,306)
84,152
192,619
551,890
-
(641,826)
(6,731)
(11,800)
84,152
275,463
(82,844)
192,619
202,095
9,025
10,290
-
(28,791)
-
192,619
(i) The 2016 licence rights include US$250,000 paid by the Company to JDCP, to extend and improve the terms of Avenira’s exclusive
Australian licence to construct a commercial scale IHP facility at Wonarah for a period up to 10 years after the commercial validation of the IHP
technology. The licence was amortised over the deemed useful life of 10 years during the 2016 financial year.
(ii) Licence rights additions include USD$350,000 (A$447,748) paid by the Company to JDCP, to extend and improve the terms of Avenira’s exclusive
Australian and Senegal licence to construct a commercial scale IHP facility at Wonarah or Baobab for a period up to 10 years after the commercial
validation of the IHP technology.
(iii) At 31 December 2016 the Group assessed the carrying value of intangible assets capitalised in respect of the licence rights paid by the Company to
JDCP for impairment and determined that there is currently uncertainty as to whether the Group will recover the value due to insufficient evidence
of recoverability based on JDCP’s prolonged inability to raise funds, therefore delaying the ability to progress the IHP process towards commercial
validation. The Company assessed the carrying value at 31 December 2016 as nil. The Company reassessed the carrying value of licence rights
at 30 June 2017 and determined that it remain as nil resulting in impairment charge for the year of A$641,826.
6
59
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
18. GOODWILL
Accounting Policies
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other
assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-
generating units). Non-financial assets other than goodwill that have been impaired are reviewed for possible reversal
of the impairment at each reporting date.
Goodwill
Goodwill acquired in business combination(i)
Net carrying amount
Movements in carrying amounts
Opening net carrying amount
Goodwill acquired in business combination at cost
Provision for impairment(ii)
Foreign currency translation movement
Closing net carrying amount at year end
2017
$
2016
$
-
-
4,746,961
4,746,961
4,746,961
-
-
4,977,122
(4,721,345)
(25,616)
-
-
(230,161)
4,746,961
(i) The goodwill arose on acquisition of Baobab Mining and Chemicals Corporation SA (BMCC) on 23 September 2015. Refer to Note 37 for further
details.
(ii) Goodwill was impaired in full following the Group’s 30 June 2017 annual impairment test. Refer to Note 16 for further details.
Key estimates and assumptions
The Group assesses at each reporting date whether goodwill is impaired. Refer to Note 16 for details of the 30 June
2017 impairment assessment.
19. TRADE AND OTHER PAYABLES
Accounting Policies
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year
which are unpaid. The amounts are unsecured, non-interest bearing and are paid on normal commercial terms.
Trade payables(i)
Other payables and accruals
(i) Trade creditors are non-interest bearing and generally on 30-day terms.
The carrying amounts disclosed above represent their fair value.
2017
$
4,336,705
389,721
4,726,426
2016
$
959,388
2,195,400
3,154,788
7
60
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
20. PROVISIONS
Accounting Policies
(cid:2)(cid:1)(cid:3) Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12
months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting
date and are measured at the amounts expected to be paid when the liabilities are settled.
(cid:2)(cid:1)(cid:1)(cid:3) Long service leave
The Group does not expect its long service leave benefits to be settled wholly within 12 months of each reporting date.
The Group recognises a liability for long service leave 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 wages and salary levels, experience of employee departures, and periods of
service. Expected future payments are discounted using market yields at the reporting date on high quality corporate
bonds with terms to maturity and currencies that match, as closely as possible the estimated future cash outflows.
(cid:2)(cid:1)(cid:1)(cid:1)(cid:3) Mine rehabilitation and restoration
The Group records the present value of the estimated cost of legal and constructive obligations to restore operating
locations in the period in which the obligation arises. The nature of restoration activities includes the dismantling and
removing of structures, rehabilitating mines, dismantling operating facilities, closure of plant and waste sites and
restoration, reclamation and revegetation of affected areas.
Typically, the obligation arises when the asset is installed or the ground/environment is disturbed at the production
location. When the liability is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the
related mining asset. Over time, the liability is increased for the change in the present value based on a discount rate
appropriate to the market assessments and the risks inherent in the liability. Additional disturbances or changes in
rehabilitation costs will be recognised as additions or changes to the corresponding asset and rehabilitation liability
when incurred. The unwinding of the effect of discounting the provision is recorded as a finance cost in the statement of
comprehensive income. The capitalised carrying amount is depreciated over the useful life of the related asset.
Costs incurred that relate to an existing condition caused by past operations, and do not have future economic benefit,
are expensed as incurred.
Current
Employment benefits
Non-Current
Mine rehabilitation and restoration(i)
Employment benefits
Movements in mine rehabilitation and restoration provision
Opening net carrying amount
(Decrease)/increase in provision
Foreign currency translation movement
Closing net carrying amount
Movements in employee benefits provision
Opening net carrying amount
Increase in provision
Paid during the year
Closing net carrying amount
2017
$
2016
$
186,404
186,404
181,814
181,814
2017
$
2016
$
2,387,606
3,965,981
42,596
52,478
2,430,202
4,018,459
3,965,981
(1,563,914)
(14,461)
1,289,500
2,676,481
-
2,387,606
3,965,981
52,478
37,878
(47,760)
42,596
43,639
8,839
-
52,478
8
61
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
20. PROVISIONS (cont…)
(i) Provision for future removal and restoration costs are recognised where there is a present obligation as a result of exploration, development,
production, transportation or storage activities having been undertaken, and it is probable that an outflow of economic benefits will be required to settle
the obligation. The provision includes the restoration costs based on the latest estimated future costs as assessed independently by the Northern
Territory Government Department of Regional Development, Primary Industry, Fisheries and Resources and is determined on a discounted basis. The
estimated future obligations include the costs of removing plant, abandoning mine site and restoring the affected areas. The rehabilitation provision also
includes costs of the future rehabilitation works relating to the Baobab Phosphate Project in Senegal and is measured on a discounted basis. The costs
have been preapproved by the Ministry of Environment and Substantial Development of Senegal as part of the progressive rehabilitation plan and include
the costs of backfilling, levelling the ground and creating a macroclimate.
Key estimates and assumptions
The Group assesses its mine rehabilitation provision half yearly in accordance with the above accounting policy.
Significant judgment is required in determining the provision for mine rehabilitation as there are many transactions and
other factors that will affect the ultimate liability payable to rehabilitate the mine sites. Factors that will affect this liability
include future disturbances caused by further development, changes in technology, changes in regulations, price
increases and changes in discount rates. When these factors change, or become known in the future, such differences
will impact the mine rehabilitation provision in the period in which they change or become known. As at 30 June 2017
rehabilitation obligation has a carrying value of $1,289,500 for the Wonarah Phosphate Project and $1,098,106 for the
Baobab Phosphate Project.
21. LOANS AND BORROWINGS
Accounting Policies
Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at
least 12 months after the reporting date.
Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost.
Any differences between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss
over the period of the borrowings using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All
other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the borrowing of funds.
Current
Bridge loans – unsecured
Finance facility – secured
Total current loans and borrowings
Non-current
Finance facility – secured
Other loan – unsecured
Total non-current loans and borrowings
Bridge loans
INTEREST
RATE
%
6.00
6.75
INTEREST
RATE
%
6.75
6.75
2017
$
1,304,703
683,294
1,987,997
2017
$
4,002,155
2,514,445
6,516,600
2016
$
2016
$
-
-
-
-
-
-
In June 2017 the Company entered into funding agreements with each of its two major shareholders, Agrifos Partners
LLC (“Agrifos”) and Tablo Corporation, an affiliate of Groupe Mimran (“Mimran”) (“Major Shareholders”), whereby
Agrifos will provide an unsecured bridge loan of US $1,440,000 (A$1,879,000) to the Company and Mimran will provide
an unsecured bridge loan of US $2,160,000 (A$2,818,000) to the Company (together the “Bridge Loans”) to be drawn
progressively and repayable on the earlier of a) six months from the first drawn down date and b) completion of the
Entitlement Offer.
The Company will conduct a renounceable pro rata entitlement offer (the 'Entitlement Offer') within the next five months
to raise a minimum of A$7,000,000 and a maximum of A$13,000,000.
The Major Shareholders have each agreed, if requested by the Company, to underwrite any shortfall to the Entitlement
62
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
21. LOANS AND BORROWINGS (cont…)
Offer up to a maximum of A$4,200,000, in the case of Mimran, and A$2,800,000 in the case of Agrifos (in each case
the 'Underwritten Amount'). A portion of proceeds from the Entitlement Offer will be used to repay the Bridge Loans.
As at 30 June 2017 the Company had drawn down a total of US$400,000 from Agrifos and US$600,000 from Tablo.
Refer to Note 32 for further details on drawdowns after the reporting date.
Finance facility
Gadde Bissik Phosphate Operations Suarl (“GBO”), Avenira’s 80% owned subsidiary, successfully secured a
A$8,800,000 finance facility through CBAO Groupe Attijariwafa Bank. The facility consists of a A$4,400,000 working
capital facility and access to an additional A$4,400,000 for the financing of export receivables, if required.
The facility has been secured to assist with the final stages of commissioning and ramp-up of the Baobab Phosphate
Project. The key terms of the facility are:
• Working capital facility
•
•
•
•
Amount: XOF 2 billion (A$4,400,000);
Term: 5 years;
Repayment Terms: No principal or interest repayments for 12 months, followed by 48 equal principal
plus interest payments; and
Standard security arrangements over all GBO assets.
•
Trade facility
•
Access to an additional XOF 2billion (A$4,400,000) for the financing of export receivables, if required.
The working capital facility of XOF 2 billion was fully drawn down on 31 December 2016.
Other loan
In March 2017 Mimran Group, the 20% shareholder in BMCC, contributed its pro rata share of loan funds of XOF 1.1
billion (A$2,300,000) to BMCC through a loan from its related party Mimran Natural Resources.
The loan has no set date of repayment. BMCC shall only be required to repay the loan to Mimran Group with the
approval of all BMCC shareholders and BMCC, with repayment terms agreed by all BMCC shareholders and BMCC.
As neither BMCC or Avenira can demand repayment, the repayment of the loan can be deferred. Repayment is
dependent on BMCC generating sufficient free cash flows to repay the loan.
Loan repayments from BMCC will be paid on a pro rata basis against the outstanding balances, i.e. 80% to Avenira and
20% to Mimran.
The loan is limited in recourse to the assets of BMCC.
10
63
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
22. DEFERRED TAX LIABILITIES
Accounting Policies
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
Deferred tax liability
Deferred tax liability on acquisition(i)
Net carrying amount
Movements in carrying amounts
Opening net carrying amount
Deferred tax liability on acquisition
Income tax benefit realised
Foreign currency translation movement
Closing net carrying amount
2017
$
2016
$
4,413,080
4,413,080
4,746,961
4,746,961
4,746,961
-
-
4,977,122
(308,265)
(25,616)
4,413,080
-
(230,161)
4,746,961
(i) The deferred tax liability arose on acquisition of Baobab Mining and Chemicals Corporation on 23 September 2015. Refer to Note 37 for further
details.
11
64
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
23. ISSUED CAPITAL
Accounting Policies
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. Incremental costs directly attributable to the issue of new shares or options for the acquisition
of a business are not included in the cost of the acquisition as part of the purchase consideration.
(a) Share capital
Ordinary shares fully paid
Unissued shares(i)
Total share capital
(b) Movements in ordinary share capital
Beginning of the financial year
Transactions during the year:
- Issue of shares(ii)
- Issue of shares(iii)
- Issue of shares(iv)
- Issue of shares(v)
- Issue of shares(vi)
- Issue of shares(vii)
- Issue of shares(viii)
- Issue of shares(ix)
- Issue of shares(x)
- Unissued shares(i)
- Less: transaction costs
End of the financial year
2017
2016
NOTES
NUMBER OF
SHARES
$
NUMBER OF
SHARES
$
23(b), 23(e)
579,100,867 123,146,839 523,901,468 119,817,389
-
1,891,050
-
-
579,100,867 125,037,889
523,901,468 119,817,389
523,901,468 119,817,389 247,204,006
89,901,304
-
-
-
-
-
-
28,151,676
3,096,682
3,795,786
417,536
- 140,000,000
14,280,000
- 104,750,000
12,276,700
2,000,000
925,000
360,000
92,500
40,000,000
2,268,000
5,025,000
7,249,399
-
-
608,950
1,891,050
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(154,833)
579,100,867 125,037,889 523,901,468 119,817,389
(i)
In June 2017, the Company received $1,891,050 from Agrifields DMCC pursuant to the Shortfall Placement Agreement. The corresponding
22,512,506 ordinary shares were issued subsequent to year end on 3 July 2017.
(ii) Issued at 11 cents per share to JP Morgan Asset Management. Share issue costs of $154,833 were incurred.
(iii) Issued at 11 cents per share under the Stock Option Repurchase Agreement with Baobab Mining and Chemicals Corporation SA.
(iv) Issued to Baobab Partners LLC in consideration for acquisition of Baobab Fertilizer Africa, the parent company of Baobab Mining and Chemicals
Corporation SA: 100 million shares were issued on 24 September 2015 at 10.5 cents and 40 million shares were issued on 11 November 2015 at
9.5 cents.
(v) Issued for cash at 11.72 cents per share to Tablo Corporation.
(vi) Issued on the exercise of $0.18 options expiring on or before 29 July 2016.
(vii) Issued on the exercise of $0.10 options expiring on or before 30 June 2018.
(viii) Issued to Baobab Partners LLC on 20 March 2017 on the vesting and conversion of share rights.
(ix) Issued for nil consideration on the vesting and conversion of Tranche 1 Performance Rights granted in 2015 under the Company’s Performance
Rights Plan.
(x) Issue of shares at $0.084 pursuant to the Company’s Share Purchase Plan.
12
65
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
23. ISSUED CAPITAL (cont…)
(c) Movements in unlisted options on issue
Beginning of the financial year
Issued during the year:
- exercisable at 10 cents on or before 30 June 2018(i)
- exercisable at 15 cents on or before 30 June 2018(i)
- exercisable at 25 cents on or before 30 June 2018(i)
- exercisable at 25 cents on or before 24 September 2019(ii)
Expired/cancelled during the year
- 47 cents, 3 January 2016
- 22 cents, 15 June 2016
- 18 cents, 29 July 2016
- 22.5 cents, 20 November 2016
- 30 cents, 8 April 2017
- 23 cents, 18 June 2017
- 27 cents, 18 June 2017
- 31 cents, 18 June 2017
Exercised during the year:
- 18 cents, 29 July 2016
- 10 cents, 30 June 2018
NUMBER OF OPTIONS
2017
2016
127,050,000
40,050,000
-
-
-
-
-
-
3,000,000
3,000,000
3,000,000
80,000,000
(500,000)
(1,500,000)
(1,550,000)
(5,500,000)
(14,000,000)
(5,000,000)
(5,000,000)
(5,000,000)
(2,000,000)
(925,000)
-
-
-
-
-
-
-
-
88,075,000
End of the financial year
(i) On 28 July 2015, the total of 9 million unlisted options were issued to third parties as an incentive remuneration for services.
(ii) On 24 September 2015 80 million unlisted options were issued to Baobab Partners LLP in accordance with the terms and conditions of the Merger
Implementation Agreement in consideration for the acquisition by the Group of Baobab Fertilizer Africa, the parent company of Baobab Mining and
Chemicals Corporation SA, a company which owns the Baobab Phosphate Project in the Republic of Senegal.
127,050,000
(d) Movements in share rights
Beginning of the financial year
Issued during the year:
Issued contingent share rights, expiring on 20 September 2020(i)
Issued for performance rights, expiring on 10 December 2017(ii)
Issued for performance rights, expiring on 10 December 2017(iii)
Exercised during the year:
Contingent share rights exercised on 11 November 2015(iv)
Contingent share rights exercised on 20 March 2017(iv)
Tranche 1 performance rights vested on 30 September 2016
Lapsed during the year:
Performance rights forfeited on 11 January 2017(v)
Tranche 2 performance rights lapsed on 31 May 2017(vi)
NUMBER OF SHARE RIGHTS
2017
2016
53,800,000
-
-
-
-
-
80,000,000
10,050,000
3,750,000
(40,000,000)
(40,000,000)
(5,025,000)
(3,750,000)
(2,512,500)
-
-
-
-
End of the financial year
2,512,500
53,800,000
(i) On 24 September 2015 80 million contingent share rights were issued to Baobab Partners LLP in accordance with the terms and conditions of the
Merger Implementation Agreement in consideration for the acquisition of Baobab Fertilizer Africa, the parent company of Baobab Mining and
Chemicals Corporation SA, a company which owns the Baobab Phosphate Project in the Republic of Senegal. These share rights will convert to
ordinary shares upon the first commercial production of the phosphate rock at the Baobab Phosphate Project.
(ii) Subsequent to the approval of the Performance Rights Plan (Plan) at the Annual General Meeting held on 18 November 2015 performance share
rights were issued during the period to senior management personnel of the Group. The share rights were issued in three tranches in accordance
with the terms and conditions of the Plan. Each tranche is subject to vesting performance conditions, a vesting milestone date and has an expiry date
2 years from the date of issue.
13
66
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
23. ISSUED CAPITAL (cont…)
(iii) Subsequent to the approval at the Annual General Meeting held on 18 November 2015 Director performance share rights were issued to Mr.
Lawrenson. The share rights were issued in three tranches in accordance with the terms and conditions approved at the Annual General Meeting.
Each tranche is subject to vesting performance conditions, a vesting milestone date and has an expiry date 2 years from the date of issue. Refer to
Note 35 for further details.
(iv) 40 million contingent share rights issued to Baobab Partners LLP (as per note (i)) were exercised and converted to 40 million ordinary shares.
(v) Mr Lawrenson’s 1,875,000 vested and 1,875,000 unvested performance rights were forfeited upon resignation.
(vi) 2,512,500 performance rights granted under the Company’s Performance Rights Plan lapsed on 31 May 2017, when the performance milestone
was not achieved by the milestone date.
(e) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote,
and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
(f) Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that
they may continue to provide returns for shareholders and benefits for other stakeholders. There has been no change
in the strategy adopted by management to control the capital of the Group since the prior year.
Due to the nature of the Group’s activities, being mineral exploration and development, the Group does not have ready
access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Group’s
capital risk management is the current working capital position against the requirements of the Group to support
exploration programmes, development and production start-up phases of the Baobab Phosphate Project and corporate
overheads. The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating
requirements, with a view to initiating appropriate funding as required.
The working capital position of the Group at the end of the year is as follows:
Cash and cash equivalents
Trade and other receivables
Inventory
Trade and other payables
Current provisions
Current loans and borrowings
Working capital position
2017
$
2016
$
2,946,100
1,205,601
3,456,258
24,473,574
1,657,986
-
(4,726,426)
(3,154,788)
(186,404)
(181,814)
(1,987,997)
-
707,132
22,794,958
14
67
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
24. RESERVES AND ACCUMULATED LOSSES
(a) Reserves
Foreign currency translation
Share-based payments
Available-for-sale financial assets reserve
Non-controlling interest reserve
Total reserves
Movements:
Available-for-sale financial assets reserve
Balance at beginning of year
Revaluation
Balance at end of year
Foreign currency translation reserve
Balance at beginning of year
Currency translation differences arising during the year
Reserves of assets held for sale(i)
Balance at end of year
Share-based payments reserve
Balance at beginning of year
Employee and third-party share options
Performance rights and share rights
Other share based payments(ii)
Share rights converted to ordinary shares
Balance at end of year
Non-controlling interest reserve
Balance at beginning of year
Parent equity adjustment for NCI consideration
Balance at end of year
2017
$
2016
$
(697,800)
(676,313)
18,364,389
19,247,220
15,610
-
7,465,464
7,465,464
25,147,663
26,036,371
-
15,610
15,610
-
-
-
(676,313)
(21,487)
121
1,366,555
-
(2,042,989)
(697,800)
(676,313)
19,247,220
13,857,478
-
224,075
1,161,094
(2,268,000)
2,762,200
2,627,542
-
-
18,364,389
19,247,220
7,465,464
-
7,465,464
-
7,465,464
7,465,464
(i) On 16 July 2015 Avenira completed the sale of South African companies Samber Trading No 115 (Pty) Ltd and Matayo Trading 7 (Pty) Ltd to
Spearhead Capital Limited. The foreign currency reserve related to these two entities was transferred from equity to profit or loss at the time the
sale was completed and is included in the net loss on disposal of subsidiary amount of $1,354,707 at 30 June 2016.
(ii) Refer to Note 35 Share Based Payments for further details.
(b) Accumulated losses
Balance at beginning of year
Net loss for the year attributable to owners of Avenira Limited
Balance at end of year
(c) Nature and purpose of reserves
(i) Available-for-sale financial assets reserve
2017
$
2016
$
(81,189,960)
(71,865,636)
(27,467,045)
(9,324,324)
(108,657,005)
(81,189,960)
Changes in the fair value of investments, such as equities classified as available-for-sale financial assets, are
recognised in other comprehensive income and accumulated in a separate reserve within equity. Amounts are
reclassified to profit or loss when the associated assets are sold or impaired.
15
68
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
24. RESERVES AND ACCUMULATED LOSSES (cont…)
(ii) Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of
foreign operations where their functional currency is different to the presentation currency of the reporting entity. The
reserve is recognised in profit and loss when the net assets of foreign controlled entities are disposed of.
(iii) Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options, contingent share rights and
performance rights granted.
(iv) Non-controlling interest reserve
The non-controlling interest’s reserve records the difference between the fair value of the amount by which the non-
controlling interest was adjusted to record their initial relative interest and the consideration paid.
25. FINANCIAL RISK MANAGEMENT
Accounting Policies
CLASSIFICATION
Financial Assets
The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss,
loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends
on the purpose for which the investments were acquired. Management determines the classification of its investments at
initial recognition.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in
this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for
trading unless they are designated as hedges. Assets in this category are classified as current assets.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are included in current assets, except for those with maturities greater than 12 months after the
reporting date which are classified as non-current assets. Loans and receivables are included in trade and other
receivables in the statement of financial position.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell
other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and
reclassified as available-for-sale. Held-to-maturity financial assets are included in non-current assets, except for those
with maturities less than 12 months from the reporting date, which are classified as current assets.
(iv) Available-for-sale financial assets
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are
either designated in this category or not classified in any of the other categories. They are included in non-current
assets unless management intends to dispose of the investment within 12 months of the reporting date. Investments
are designated available-for-sale if they do not have fixed maturities and fixed or determinable payments and
management intends to hold them for the medium to long term.
Financial Liabilities
The Group classifies its financial liabilities in the following categories: payables and loans and borrowings.
16
69
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
25. FINANCIAL RISK MANAGEMENT (cont…)
(i) Payables
This category generally applies to trade and other payables. For more information refer to Note 19.
(ii) Loans and borrowings
This category generally applies to interest-bearing loans and borrowings. For more information refer to Note 21.
RECOGNITION AND DERECOGNITION
Regular purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to
purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets
not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially
recognised at fair value and transaction costs are expensed to the statement of comprehensive income. Financial
assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity
are included in the statement of comprehensive income as gains and losses from investment securities.
All financial liabilities are recognised at fair value and, in the case of loans and borrowings, net of directly attributable
transaction costs. A financial liability is derecognised when the obligation under the liability is discharged.
SUBSEQUENT MEASUREMENT
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest
method.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair
value. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’
category are presented in the statement of comprehensive income within other income or other expenses in the period
in which they arise. Gains or losses arising from changes in the fair value of the available-for-sale financial assets are
recognised in other comprehensive income.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale
are analysed between translation differences resulting from changes in amortised cost of the security and other
changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are
recognised in profit or loss, and other changes in carrying amount are recognised in equity. Changes in the fair value of
other monetary and non-monetary securities classified as available-for-sale are recognised in equity.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the
effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as
well as through the effective interest rate amortisation process. Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective
interest rate amortisation is included as finance costs in the statement of profit or loss.
IMPAIRMENT
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of
financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged
decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any
such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between
the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in
profit or loss – is removed from equity and recognised in the statement of comprehensive income. Impairment losses
recognised in the statement of comprehensive income on equity instruments classified as available-for-sale are not
reversed through the statement of comprehensive income.
If there is evidence of impairment for any of the Group’s financial assets carried at amortised cost, the loss is measured
as the difference between the asset’s carrying amount and the present value of estimated future cash flows, excluding
future credit losses that have not been incurred. The cash flows are discounted at the financial asset’s original effective
interest rate. The loss is recognised in the statement of comprehensive income.
17
70
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
25. FINANCIAL RISK MANAGEMENT (cont…)
FINANCIAL RISK MANAGEMENT POLICIES
The financial risks that arise during the normal course of Avenira operations comprise market risk, credit risk and
liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the Group.
Risk management is carried out by the full Board of Directors as the Group believes that it is crucial for all Board
members to be involved in this process. The Managing Director, with the assistance of senior management as required,
has responsibility for identifying, assessing, treating and monitoring risks and reporting to the Board on risk
management.
These disclosures are not, nor are they intended to be an exhaustive list of risks which the Group is exposed to.
Financial instruments
The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Other non-current receivables
Available-for-sale financial assets
- Listed investments
- Unlisted investments
Derivative financial instruments
Financial liabilities
Trade and other payables
Loans and borrowings
(a) Market risk
2017
$
2016
$
2,946,100
1,205,601
1,481,600
31,239
-
-
24,473,574
1,657,986
1,491,217
15,629
-
-
5,664,540
27,638,406
4,726,426
8,504,597
13,231,023
3,154,788
-
3,154,788
Market risk arises from Avenira’s exposure to interest bearing financial assets and foreign currency financial
instruments. It is a risk that the fair value of future cash flows of a financial instruments will fluctuate because of
changes in foreign exchange rates (currency risk), interest rates (interest rate risk) and share prices (price risk).
(i)
Foreign exchange risk
The functional currency of the Group is Australian dollars, however the Group and the parent entity operate internationally
and are exposed to various currencies, primarily with respect to Central African Franc (XOF). The Group is exposed to
foreign exchange risk arising from fluctuations of the Australian dollar against US Dollar, Euro, and South African Rand at
parent level and fluctuations of the Australian dollar against the Central African Franc at subsidiary level.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a
currency that is not the entity’s functional currency and net investments in foreign operations. The exposure to risks is
measured using sensitivity analysis and cash flow forecasting.
The Group has not formalised a foreign currency risk management policy however, it monitors its foreign currency expenditure
in light of exchange rate movements. The Group does not have any further material foreign currency dealings other than the
noted currencies.
18
71
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
25. FINANCIAL RISK MANAGEMENT (cont…)
The Group’s exposure to foreign currency risk at the reporting date, expressed in Australian Dollars, was as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Loans and borrowings
Total financial liabilities
ZAR
AUD
USD
AUD
EUR
AUD
147,853
13,946
161,799
-
-
-
87,555
1,039,735
1,127,590
128,910
1,304,703
1,433,613
15,931
-
15,931
200,064
-
200,064
The following conversion rates were used at the end of the financial year:
ZAR/AUD: 10.025
XOF/AUD: 441.32
USD/AUD: 0.7686
EUR/AUD: 0.6728
(2016: 10.993)
(2016: 438.69)
(2016: 0.7441)
(2016: 0.6701)
Sensitivity analysis – change in foreign currency rates
The following table demonstrates the estimated sensitivity to a 10% increase/decrease in the ZAR/AUD, XOF/AUD, USD/
AUD and EUR/AUD exchange rates, with all variables held consistent, on a post-tax profit or loss and equity. These sensitivities
should not be used to forecast the future effect of movement in the Australian dollar exchange rate on future cash flows.
Impact on post tax profits
XOF/AUD +10%
XOF/AUD -10%
USD/AUD +10%
USD/AUD -10%
ZAR/AUD +10%
ZAR/AUD -10%
EUR/AUD +10%
EUR/AUD -10%
Impact on equity
XOF/AUD +10%
XOF/AUD -10%
USD/AUD +10%
USD/AUD -10%
ZAR/AUD +10%
ZAR/AUD -10%
EUR/AUD +10%
EUR/AUD -10%
2017
$
2016
$
-
-
27,820
(34,003)
(14,709)
17,978
34,927
1,770
-
-
27,820
(34,003)
(14,709)
17,978
34,927
1,770
(426,671)
521,487
(51,206)
62,585
(23,714)
28,983
(8,219)
10,045
(426,671)
521,487
(51,206)
62,585
(23,714)
28,983
(8,219)
10,045
A hypothetical change of 10% in exchange rates were used to calculate the Group’s sensitivity to foreign exchange rate
movements as this is management’s estimate of possible rate movements over the coming year taking into account
currency market conditions and past volatility (30 June 2016: 10%).
19
72
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
25. FINANCIAL RISK MANAGEMENT (cont…)
(ii)
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. As at and during the year ended 30 June 2017, the Group had interest-bearing assets in the form of
cash and cash equivalents and interest-bearing liabilities in the form of loans and borrowings. As such the Group’s income
and operating cash flows are somewhat exposed to movements in market interest rates due to the movements in variable
interest rates on cash and cash equivalents. The Group’s loans and borrowings have fixed rates of interest. As a result, the
Group’s does not have exposure to interest rate risk arising from its financial liabilities.
The Group’s policy is to monitor the interest rate yield curve out to six months to ensure a balance is maintained between
the liquidity of cash assets and the interest rate return. At 30 June 2017, the entire balance of cash and cash equivalents for
the Group of $2,946,100 (2016: $24,473,574) is subject to interest rate risk. The proportional mix of floating interest rates
and fixed rates, to a maximum of six months, fluctuate during the year depending on current working capital requirements.
Sensitivity analysis – change in interest rates
Based on the financial assets held at reporting date, with all other variables assumed to be held constant, the table
below sets out the notional effect on consolidated profit or loss after tax for the year and on equity at reporting date
under varying hypothetical changes in prevailing interest rates:
Impact on post tax profits
Hypothetical 80 basis points increase in interest
Hypothetical 80 basis points decrease in interest
Impact on equity
Hypothetical 80 basis points increase in interest
Hypothetical 80 basis points decrease in interest
2017
$
2016
$
79,534
(79,534)
79,534
(79,534)
130,852
(130,852)
130,852
(130,852)
The hypothetical movement in basis points for the interest rate sensitivity analysis is based on the currently observed
market environment (30 June 2016: 0.80%).
The weighted average interest rate received on cash and cash equivalents of the Group is 2.68% (2016: 2.51%).
(iii) Price risk
The Group’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about
future values of the investment securities.
At 30 June 2017, the exposure to unlisted equity securities at fair value is nil (2016: nil). Refer to Note 12 for further
details of impairment recognised in respect of unlisted available-for-sale financial assets.
At 30 June 2017, the exposure to listed equity securities at fair value was $31,239 (2016: $15,629). A decrease of 40% on
the market price could have an impact of approximately $12,500 (2016: $6,000) on the income or equity attributable
to the Group, depending on whether the decline is significant or prolonged. An increase of 40% in the value of the
listed security would only impact equity, but would not have an effect on profit or loss.
(b) Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligations that could lead to a financial loss to the Group. Credit risk arises from cash and cash equivalents and
deposits with financial institutions, derivative financial instruments, trade receivables and security deposits receivable.
Credit risk related to balances with banks and other financial institutions is managed by investing surplus funds in
financial institutions that maintain a high credit rating.
The maximum exposure to credit risk at the reporting date is the carrying amount of the assets as summarised below,
none of which are impaired or past due.
20
73
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
25. FINANCIAL RISK MANAGEMENT (cont…)
Financial assets
Cash and cash equivalents
Trade and other receivables
Other non-current receivables
Derivative financial instruments
2017
$
2016
$
2,946,100
1,205,601
1,481,600
-
24,473,574
1,657,986
1,491,217
-
5,633,301
27,622,777
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external
credit ratings (if available) or to historical information about counterparty default rates.
Cash at bank and short-term bank deposits
Held with Australian banks and financial institutions
AA- rated
AA3 rated
Held with South African banks and financial institutions
BBB rated
Held with Mauritius banks and financial institutions
BBB rated
Held with Senegalese banks and financial institutions
BBB rated
Total
Trade and other receivables
Held with Australian banks and financial institutions
AA- rated
AA3 rated
Counterparties with external credit ratings
Counterparties without external credit ratings
(1)
Group 1
Group 2
Group 3
Total
Other non-current receivables
Held with Australian banks and financial institutions
AA- rated
A rated
Counterparties with external credit ratings
Counterparties without external credit ratings
Group 1
Group 2
Group 3
Total
2017
$
2016
$
-
17,098,854
2,633,368
-
147,853
169,883
41,984
68,897
122,895
2,946,100
7,135,940
24,473,574
-
30,000
-
1,063,285
112,316
-
60,000
-
-
1,449,709
148,280
-
1,205,601
1,657,986
1,481,600
1,481,600
-
-
-
-
-
-
-
9,617
-
-
1,481,600
1,491,217
21
74
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report AVENIRA LIMITED AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
25. FINANCIAL RISK MANAGEMENT (cont#)
Derivative financial instruments(1)
Counterparties with external credit ratings
Counterparties without external credit ratings
(2)
Group 1
Group 2
Group 3
Total
2017
$
2016
$
-
-
-
-
-
-
-
-
-
-
(1) Derivative financial instruments were impaired to nil during the 2015 financial year. Refer to Note 13 for further details .
(2) Group 1 – new Advances from suppliers (less than 6 months).
Group 2 – existing Advances from suppliers (more than 6 months) with no defaults in the past.
Group 3 – existing Advances from suppliers (more than 6 months) with some defaults in the past. All defaults were fully recovered.
IMPAIRED RECEIVABLES
Individual receivables which are known to be uncollectible are written off by reducing the carrying amount directly. The
other receivables are assessed to determine whether there is objective evidence that an impairment has been incurred
but not yet identified. For these receivables, the estimated impairment losses are recognised in a separate provision
for impairment.
The Group considers that there is evidence of impairment if any of the following indicators are present:
Significant financial difficulties of the debtor.
Probability that the debtor will enter bankruptcy or financial reorganisation.
•
•
• Default or delinquency in payments (more than 30 days overdue).
Receivables for which an impairment provision was recognised are written off against the provision when there is no
expectation of recovering additional cash.
Impairment losses are recognised in profit or loss within doubtful debts. Subsequent recoveries of amounts previously
written off are credited against other expenses. Refer to Note 10 for information about how impairment losses are
calculated.
At 30 June 2017, the Group has receivables from JDCP totaling $3,129,784.
Due to the uncertainty regarding the timing and achievement of IHP commercialisation, the carrying value was
impaired to nil at 31 December 2016.
JDCP has recently announced that it has raised significant equity from Stonecutter Phosphate Investors LLC, which
will accelerate commercialisation of the company’s IHP technology. The Company assessed the outcome of the
investment and determined the carrying value of the receivables remains fully impaired at 30 June 2017.
Furthermore at 30 June 2017, the Group considered the recoverablilty of the VAT receivable in Senegal totalling
$4,252,348. Due to the uncertainty regarding the timing and the current stage of the operations in Senegal the Group
has provided for the full amount of VAT receivable.
Movem ents in the provision for impairment of current receivables that are assessed for impairment collectively are as
follows:
Opening balance
Provision for impairment recognised during the year
Closing balance
2017
$
815,807
6,566,325
7,382,132
2016
$
727,762
88,045
815,807
During the year, the following gains / (losses) were recognised in profit or loss in relation to impaired receivables:
Impairment losses
Movem ent in provision for impairment
2017
$
2016
$
(6,610,202)
(88,045)
2017 Annual Report
75
AVENIRA LIMITED AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
25. FINANCIAL RISK MANAGEMENT (cont!)
(c) Liquidity risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient
cash and/or funding facilities are available to meet the current and future commitments of the Group. The Board of
Directors constantly monitors the state of equity markets in conjunction with the Group’s current and future funding
requirements, with a view to initiating capital raisings as required.
The financial liabilities of the Group consist of trade and other payables and loans and borrowings as disclosed in the
statement of financial position. All trade and other payables are non-interest bearing and due within 12 months of the
reporting date. Loans and borrowings included interest and non-interest-bearing facilities and mature in accordanc e
with the table below.
The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with
agreed repayment periods.
LESS THAN
1 MONTH
1-3
MONTHS
3 MONTHS -
1 YEAR
1-5
YEARS
5+ YEARS
NO SET
REPAYMENT
DATE
TOTAL
$
$
$
$
$
$
$
Contractual maturities of financial liabilities
2017
Interest bearing loans and
borrowings at 6.00%
Interest bearing loans and
borrowings at 6.75%
Trade and other payables
2016
-
-
-
-
1,304,703
683,295
4,002,154
4,336,706
4,336,706
389,720
389,720
-
1,987,998
-
4,002,154
Trade and other payables
1,072,832
2,081,956
1,072,832 2,081,956
-
-
-
-
-
-
-
-
-
-
1,304,703
2,514,445
7,199,894
-
2,514,445
4,726,426
13,231,023
-
-
3,154,788
3,154,788
(d) Net fair value
Fair value estimation
The fair value of financial assets and financial liabilities held by the Group must be estimated for recognition and
measurement or for disclosure purposes. All financial assets and financial liabilities of the Group at the balance date
are recorded at amounts approximating their fair value.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting
date. The quoted market price used for financial assets held by the Group is the current bid price.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair
values due to their short-term nature.
The totals for each category of financial instruments, other than those with carrying amounts which are reasonable
approximations of fair value, are set out below:
CARRYING AMOUNT
FAIR VALUE
2017
$
2016
$
2017
$
2016
$
Financial assets
Available-for-sale financial assets
31,239
15,629
31,239
15,629
Derivative financial instruments
-
-
-
-
Total financial assets
31,239
15,629
31,239
15,629
2017 Annual Report
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
25. FINANCIAL RISK MANAGEMENT (cont…)
Financial instruments measured at fair value
The financial instruments recognised at fair value in the statement of financial position have been analysed and classified
using a fair value hierarchy reflecting the significance of the inputs used in the making the measurements. The fair value
hierarchy consists of the following levels:
•
•
•
•
•
•
quoted prices in active markets for identical assets or liabilities (Level 1).
inputs other than quoted process included within Level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices) (Level 2).
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
$
$
$
$
2017
Financial assets
Available-for-sale financial assets
-
-
Listed investments
Unlisted investments
Derivative financial instruments
- Warrants
-
Conversion rights on promissory note
2016
Financial assets
Available-for-sale financial assets
-
-
Listed investments
Unlisted investments
Derivative financial instruments
- Warrants
-
Conversion rights on promissory note
31,239
-
-
-
31,239
15,629
-
-
-
15,629
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31,239
-
-
-
31,239
15,629
-
-
-
15,629
The fair value of the financial assets not quoted in an active market has been determined with reference to the
amount at which the instrument could be exchanged in a current active market between willing parties, other than in a
forced or liquidation sale. The following methods were used to estimate the fair value:
•
•
•
•
The Group holds an unlisted investment in JDCP. The fair value of this investment has been estimated based on
the net asset value of JDCP as at 30 June 2017. At each reporting date, the Group considers whether net asset
value is representative of fair value. Where observable market transactions indicate that the net asset value
exceeds fair value, an adjustment to the fair value is made. At 30 June 2017, the fair value of the Group’s investment
in JDCP was considered fully impaired and assessed as nil. Refer to Note 12 for further details of impairment
recognised in respect of unlisted available-for-sale financial assets.
Derivative financial instruments are measured under level 3 disclosure requirements. The Group acquired unlisted
warrants in JDCP during 2014. The warrants have an exercise price of USD0.01 and expire on 17 February
2024. The warrants were cancelled in July 2016. The Group acquired further unlisted warrants in JDCP during
2017. The warrants have an exercise price of USD0.01 and an expire on 20 March 2020. Accordingly, the fair
value of warrants is considered to equate to the fair value of the underlying ordinary shares. The fair value of the
underlying ordinary shares at 30 June 2017 was considered to be nil. Refer to Note 13 for further details of
impairment recognised in respect of unlisted warrants.
• On 2 February 2015, the Group (the “holder”) entered into convertible secured promissory notes with JDCP (the
•
“recipient”) with a face value of US$595,376 (A$834,444). The notes accrued interest at 8% per annum
compounded monthly and payable on maturity. In February 2017 the notes were converted into Series A
Preferred Shares in JDCP. The fair value of the Series A Preferred Shares was considered to be nil at the date
of issue and 30 June 2017.
24
77
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
25. FINANCIAL RISK MANAGEMENT (cont…)
•
• On 15 July 2016, the Group (the “holder”) entered into convertible secured promissory notes with JDCP (“the
recipient”) with a face value of US$1,650,000 (A$2,146,900) (the “Principal Repayment Amount”). The notes
accrue interest at 12% per annum, compounded annually and payable on maturity. The notes mature on the
earlier to occur of (a) any liquidation, dissolution or winding up of the Company; or (b) either (i) 15 February 2020
or (ii) JDCP’s receipt of an aggregate amount of US$6,000,000 from Stonecutter Phosphates LLC. At any time
prior to the earlier of (a) the payment of the notes in full and (b) the conversion of the Repayment Principal
Amount, at the sole option of the holder all or any portion of the entire Repayment Principal Amount together with
all accrued and unpaid interest and any fees and expenses accruing on the Repayment Principal Amount may be
converted into shares in JDCP. The number of shares to be received upon such conversion shall be calculated
by dividing (i) the principal amount plus accrued interest and fees by (ii) the rate of US$17.661, subject to
adjustment in the event of capital reorganisations, mergers, and various other events that impact the JDCP’s
issued capital. The fair value of the conversion rights attached to these JDCP promissory notes at 30 June 2017
was considered to be nil based on a probability weighted option pricing model.
•
•
Refer to Note 25(b) for further details of impairment recognised in respect of promissory notes.
(e) Capital risk management
For the purposes of the Group’s capital management, capital includes issued capital and all other equity reserves
attributable to the equity holders of the parent, which at 30 June 2017 was $41,528,547 (30 June 2016: $64,663,800). The
primary objective of the Group’s capital management is to maximise the shareholder value.
At 30 June 2017, the Group has external debt funding in the form of loans and borrowings as described at Note 21 (30
June 2016: nil). None of the Group’s loans and borrowings impose covenants in respect of capital management.
Key estimates and assumptions
As described in the accounting policy above, the Group uses valuation techniques that include inputs that are not
based on observable market data to estimate the fair value of certain types of financial instruments. Key
assumptions used in the determination of the fair value of financial instruments, as well as the detailed sensitivity
analysis for these assumptions are set out above.
The directors believe that the chosen valuation techniques and assumptions used are appropriate in determining the
fair value of financial instruments.
The Group assesses at each reporting date whether there is objective evidence that an investment or a group of
investments is impaired. In the case of equity investments classified as available-for-sale and derivative financial instruments,
objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. The
determination of what is “significant” or “prolonged” requires judgement. “Significant” is evaluated against the original
cost of the investment and “prolonged” against the period in which the fair value has been below its original cost. The
Board exercises judgement in the process of applying the Group’s accounting policy on impairment at each reporting
period. In this regard, a 20% decline in the fair value of the investment from its original cost represents a significant decline
in value. When an available-for-sale investment carried at fair value is impaired, the cumulative fair value loss recognised
in other comprehensive income (Available-For-Sale Financial Asset reserve) is reclassified to profit and loss for the period.
When a derivative financial instrument carried at fair value is impaired the fair value loss is recognised in profit and loss for
the period. Refer to Notes 12 and 13 for further details relating to impairment.
In relation to the judgement required regarding the Group’s promissory notes receivable refer to Note 10.
25
78
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
26. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
The auditor of Avenira Limited is Ernst & Young Australia.
Auditor remuneration:
Ernst & Young Australia – audit and review of financial reports
W.K.H Landgrebe – statutory audit of foreign subsidiary
Garecgo – statutory audit of foreign subsidiary
Other non-audit remuneration:
Ernst & Young
Tax compliance services
International tax consulting and advice on mergers and acquisitions
Other tax advisory services
W.K.H Landgrebe – tax compliance (South Africa)
Remuneration of related practices of Ernst & Young
Foreign subsidiary audits (Senegal, Mauritius)
Tax compliance services (South Africa)
2017
$
2016
$
132,100
-
29,222
161,322
14,300
-
15,225
-
29,525
41,702
2,756
44,458
66,950
29,976
-
96,296
29,931
21,430
24,365
2,286
78,012
24,286
-
24,286
From time to time the Group may decide to employ the external auditor on assignments additional to their statutory
audit duties where the auditor’s expertise and experience with the Group is important.
The Board has considered the position and is satisfied that the provision of non-audit services is compatible with the
general standard of independence imposed by the Corporations Act 2001.The nature of services provided to the Group
during the period by Ernst & Young and other practices do not compromise the general principles relating to auditor
independence because they relate to tax advice in relation to domestic and international compliance issues, and due
diligence services which involved the provision of assurances arising from their engagement.
27. CONTINGENCIES
In relation to tenement acquisition agreements entered into by the Group, the following additional cash may be
received dependent on future events:
TNT Mines Royalty Deed
The parent entity will receive a royalty on a quarterly basis on all product sold, removed or otherwise disposed from all
tenements held by TNT Mines. The royalty is calculated at 1.5% of the net smelter return and the total amount
receivable is capped at $5,000,000.
The Directors are of the opinion that it is not practicable to estimate the financial effect at the date of this report.
26
79
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
28. COMMITMENTS
The Group has certain commitments to meet minimum expenditure requirements on the mineral exploration assets for
the Wonarah project areas that it has an interest in. Outstanding exploration commitments are as follows:
(a) Exploration commitments
The Group has certain commitments
to meet minimum expenditure
requirements on the mineral exploration assets for the Wonarah project areas
that it has an interest in.
Within one year
Later than one year but no later than five years
Later than five years
2017
$
2016
$
175,114
272,923
13,630
461,667
3,069,682
2,905,365
7,707,000
13,682,047
The During the period the Group surrendered the mining lease in the Northern Territory. This resulted in reduced
exploration commitments.
(b) Non-cancellable operating lease
Minimum lease payments:
Within one year
Later than one year but no later than five years
Aggregate lease expenditure contracted for at reporting date but not recognised
as liabilities
16,463
837
17,300
104,400
8,700
113,100
The Group has a non-cancellable office lease that expires within one year and has no renewal rights.
(c) Mine development commitments
Within one year
Development expenditure contracted for at reporting date but not recognised as
liabilities
2017
$
2016
$
-
-
481,509
481,509
The mine development commitments at 30 June 2016 relate to completion works of the wet screening plant and
water boreholes at the Baobab Phosphate Project. These works were completed during the year ended 30 June
2017.
29. DIVIDENDS
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
27
80
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
30. RELATED PARTY TRANSACTIONS
(a) Parent entity
The ultimate parent entity within the Group is Avenira Limited. The consolidated entity has a related party relationship
with its subsidiaries (see Note 31) and with its key management personnel.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 31.
(c) Compensation of Key Management Personnel
Short-term benefits
Long-term benefits
Post-employment benefits
Termination payments
Share-based payments
2017
$
2016
$
1,132,864
1,154,712
32,445
58,594
550,000
106,674
44,690
80,940
-
162,840
1,880,577
1,443,182
(d) Loans from key management personnel
The Group received the following loans from KMP or their related parties during the 2017 financial year (2016: nil):
LENDER
Agrifos Partners LLC(i)
Tablo Corporation(ii)
Mimran Natural Resources(ii)
BALANCE
AT START
OF THE
YEAR
$
-
-
-
LOAN
PROCEEDS
RECEIVED
INTEREST
CHARGED
INTEREST
NOT
CHARGED
FORGIVEN
DURING
THE YEAR
BALANCE
AT END OF
THE YEAR
$
$
$
$
520,461
780,691
1,369
2,182
-
-
-
-
-
-
2,464,315
50,130
2,514,445
2,514,445
HIGHEST
BALANCE
DURING
THE YEAR
$
521,830
782,873
$
521,830
782,873
(i) Agrifos Partners LLC is a company related through the common control of directors Mr Timothy Cotton and Mr Frank Chaouni.
(ii) Tablo Corporation and Mimran Natural Resources are companies related through the common control of director Mr David Mimran.
Key terms and conditions of the loans are as follows:
LENDER
INTEREST RATE(i)
SECURITY
Agrifos Partners LLC
Tablo Corporation
Mimran Natural Resources
6.00%
6.00%
6.75%
unsecured
unsecured
unsecured
REPAYMENT
DATE
(ii)
(ii)
no set date
(i) Interest rates on the Group’s borrowings range from 6.00 – 6.75%; as such loans received from KMP are considered to be at commercial rates.
(ii) Repayable on the earlier of a) six months from the first drawn down date and b) completion of the Entitlement Offer as further described at Note 21.
Full terms and conditions of the loans can be found at Note 21.
(e) Other transactions and balances with the key management personnel
In addition to his Non-executive Director fee, Mr McCubbing was engaged to provide the Company financial and
commercial advisory services on a consulting basis during the year ended 30 June 2017. The services related to the
transition period of the position of Managing Director of the Company. Total consultancy fees of $46,700 (2016: nil)
were charged by Mr McCubbing during the year. The agreement had no fixed term and no termination notice period.
At 30 June 2017, advisory fees paid to Mr McCubbing impacted the statement of profit and loss and other
comprehensive income with $46,700 recognised in Administrative and Other Expenses. There was no impact on the
30 June 2017 statement of financial position.
During the year ended 30 June 2016 Mr Richard O’Shannassy was engaged to provide legal services. In addition to
the Non-executive Director fees the total amount of $36,000 was paid to Richard O’Shannassy & Pty Co Ltd, the firm
through which the legal consultancy services were provided to the Group.
28
81
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
31. SUBSIDIARIES
Accounting policies
Business combinations
The acquisition method of accounting is used to account for all business combinations. The consideration transferred
for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. The consideration transferred also includes the fair value of any asset or liability resulting
from a contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary.
Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition
date. On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at
fair value or on the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred and the amount of any non-controlling interest in the acquiree over the
fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value
of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the
difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to
their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being
the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and
conditions.
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in Note 2:
SUBSIDIARIES
COUNTRY OF
INCORPORATION
CLASS OF
SHARES
EQUITY HOLDING(i)
2017
2016
Minemakers Australia Pty Ltd
Minemakers (Iron) Pty Ltd
Minemakers (Nickel) Pty Ltd
Minemakers (Salt) Pty Ltd
Minemakers (Gold) Pty Ltd
Bonaparte Diamond Mines Pty Ltd
Baobab Fertilizer Africa(ii) (iii)
Baobab Mining and Chemicals Corporation SA(ii) (iii) (iv)
Gadde Bissik Phosphate Operations Suarl(ii) (iii)
Avenira Holdings LLC(iii) (v) (vi)
Australia
Ordinary
Australia
Australia
Australia
Australia
Australia
Mauritius
Senegal
Senegal
USA
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
$
100
100
100
100
100
100
100
80
80
100
$
100
100
100
100
100
100
100
80
80
100
(i) The proportion of ownership interest is equal to the proportion of voting power held.
(ii) On 23 September 2015 Avenira acquired Baobab Fertilizer Africa through the amalgamation. Baobab Fertilizer Africa (“BFA”) is the parent company
of Baobab Mining and Chemicals Corporation SA (“BMCC”) and its wholly subsidiary, Gadde Bissik Phosphate Operations Suarl.
(iii) The financial year end date is 31 December.
(iv) On 29 February 2016, as a result of the additional share issue by BMCC to Mimran Group and BFA, BFA’s ownership’s percentage in BMCC
decreased
from 100% to 80%. Mimran Group also holds 17.4% direct interest in Avenira Limited.
(v) The entity was incorporated on 8 June 2016.
(vi) The company’s equity represented by an initial capital contribution by Avenira as the sole member.
29
82
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
31. SUBSIDIARIES (cont…)
Transactions with non-controlling interests
On 29 February 2016, the Group disposed of 20% of the ownership interest of BMCC. Following the disposal, the
Group still controls BMCC and retains 80% of the ownership interest. The transaction has been accounted for as an
equity transaction with non-controlling interest (NCI), resulting in the following:
Proceeds from sale of 20% ownership interest
Net assets attributable to NCI
Increase in equity attributable to parent
Represented by increase by:
Increase in non-controlling interest reserve
Portion of equity interest held by non-controlling interests
COUNTRY OF
INCORPORATION
Baobab Mining and Chemicals Corporation SA
Senegal
Accumulated balance of material non-controlling interest
2016
$
15,478,749
(8,013,285)
7,465,464
7,465,464
2016
$
20%
20%
2016
$
2017
$
2017
$
Baobab Mining and Chemicals Corporation SA
(5,057,338)
(7,557,783)
Loss allocated to material non-controlling interest
Baobab Mining and Chemicals Corporation SA
2017
$
2016
$
2,803,753
140,371
The summarised financial information of the subsidiary is provided below. This information is based on amounts
before inter-company elimination.
Summarised profit or loss for Baobab Mining and Chemicals Corporation SA
Other income
Depreciation expense
Salaries and employee benefit expenses
Exploration expenditure
Administrative and other expenses
Impairment expense
Doubtful debts
Finance expense
Loss for the period from continuing operations
Income tax benefit/(expense)
Loss for the period from continuing operations
Total comprehensive loss
Attributable to non-controlling interest
Foreign currency gain/(loss) on translation of foreign operations attributable to
non-controlling interest
2017
$
21,995
(249,706)
(451,982)
(323,391)
(2,470,293)
(5,954,404)
(4,252,348)
(646,907)
2016
$
259,282
(82,963)
(129,588)
(1,507)
(901,074)
-
-
-
(14,327,036)
(855,850)
308,265
(14,018,771)
(14,018,771)
(2,803,753)
-
(855,850)
(855,850)
(140,371)
13,034
(315,131)
30
83
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
31. SUBSIDIARIES (cont…)
Summarised statement of financial position for Baobab Mining and Chemicals Corporation SA
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Total equity
Attributable to:
Equity holders of parent
Non-controlling interest
2017
$
4,662,591
51,662,982
(18,973,220)
(12,065,664)
2016
$
8,552,091
41,126,553
(3,846,765)
(8,042,965)
25,286,689
37,788,914
20,229,351
5,057,338
30,231,131
7,557,783
Summarised statement of cash flows for Baobab Mining and Chemicals Corporation SA
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Net increase/(decrease) in cash and cash equivalents
32. EVENTS OCCURRING AFTER THE BALANCE DATE
The following events occurred subsequent to the end of the year:
2017
$
2016
$
(645,173)
(1,948,351)
(25,722,852)
(10,018,732)
19,591,798
14,986,072
(6,776,227)
3,018,989
•
•
On 3 July 2017, the Company issued 22,512,506 ordinary shares to Agrifields DMCC pursuant to the Shortfall
Placement Agreement, raising a total of $1,891,050. Following completion of the Share Purchase Plan and the
Placement the Company raised a total of $2,500,000.
During July and August 2017, the Company completed the draw down of the remaining balance of the bridge
loan facilities provided by Agrifos Partners LLC and Tablo Corporation, being US$1,560,000 and US$1,040,000
respectively.
Other than as disclosed above, no event has occurred since 30 June 2017 that would materially affect the operations
of the Group, the results of the Group or the state of affairs of the Group not otherwise disclosed in the Group’s
financial statements.
31
84
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
33. STATEMENT OF CASH FLOWS
Reconciliation of net loss after income tax to net cash outflow from operating activities
2017
$
2016
$
(30,270,798)
(9,464,695)
Net loss from continuing operations
Adjustment for non-cash items
Depreciation of plant and equipment
Net loss/(gain) on disposal of plant and equipment
Net loss on disposal of subsidiary
Share based payment expense
Net foreign currency loss/(gain)
Impairment of intangibles
Amortisation of intangibles
Impairment of exploration and evaluation expenditure
Impairment of capitalised mine development expenditure
Impairment of goodwill
Write off of exploration and evaluation expenditure
Doubtful debts
Items classified as investment / financing activities:
Interest income
Other income
Reversal of NCI from pre-acquisition of Bonaparte Dimond Mines
256,458
23,556
-
244,075
255,529
641,826
6,731
9,431,555
1,233,059
4,721,345
-
6,610,202
-
-
-
94,875
(108)
1,354,707
489,742
192,683
-
25,615
574,962
-
-
635,125
93,588
(31,298)
(114,867)
(325,107)
112,937
(778,520)
63,525
-
-
(7,076,836)
Change in operating assets and liabilities, net of effects from purchase of controlled entities
Decrease in trade and other receivables
(70,559)
Increase/(decrease) in trade and other payables
Increase in provisions
Increase in accrued interest component of loans and borrowings
Decrease in deferred tax liabilities
Net cash outflow from operating activities
-
4,590
189,287
(308,265)
(7,031,409)
34. EARNINGS PER SHARE
Accounting Policies
Basic earnings per share
Basic earnings per share is calculated by dividing the loss attributable to owners of the Company, 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 the 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 the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
2017
$
2016
$
(a) Reconciliation of earnings used in calculating loss per share
Loss attributable to the owners of the Company used in calculating basic and
diluted loss per share
(27,467,045)
(9,324,324)
32
85
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
34. EARNINGS PER SHARE (cont…)
2017
2016
NUMBER OF
SHARES
NUMBER OF
SHARES
(b) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in
calculating basic loss per share
Weighted average number of ordinary shares used in calculation of diluted loss
per share
Between the reporting date and the date of authorisation of these financial statements no additional securities were
539,274,664
539,274,664
404,401,121
404,401,121
(c) Effects of anti-dilution from
Unlisted options
Share rights
issued that could potentially dilute basic loss per share in the future.
88,075,000
2,512,500
127,050,000
53,800,000
35. SHARE BASED PAYMENTS
Accounting Policies
The Group provides benefits to employees (including directors) of the Group in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled
transactions’). The cost of these equity-settled transactions with employees is measured by reference to the fair value
at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes
option pricing model and Monte Carlo methodology as appropriate.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period
in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully
entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i)
the extent to which the vesting period has expired and (ii) the number of options or performance rights that, in the
opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the best available
information at balance date. No adjustment is made for the likelihood of market performance conditions being met as
the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon
a market condition.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the
cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award
are treated as if they were a modification of the original award.
(a) Employees and Contractors Option Incentive Plan
There were no options granted to employees during the years ended 30 June 2017 and 2016.
In prior financial years the Group provided benefits to employees (including directors) and contractors of the Group in
the form of share based payment transactions, whereby employees and contractors render services in exchange for
options to acquire ordinary shares. A total of 24,050,000 employee and contractor options were on issue at 30 June
2016; these expired on 30 June 2017.
The Employee and Contractors Option Incentive Plan was replaced by the Performance Rights Plan which was approved
at the Company’s 2015 AGM.
(b) Other option-based payments
There were no other option based payments granted during the year ended 30 June 2017.
During the year ended 30 June 2016 the Group provided unlisted options to third parties as incentive remuneration for
the provision of services. Options were issued in three equal tranches with a different exercise price for each tranche,
being 10 cents, 15 cents and 25 cents, and all have an expiry date of 30 June 2018. 66.6% of the granted options
vested during the 2016 financial year and the rest of the options will vest once the Company’s share price reaches 25
cents.
33
86
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
35. SHARE BASED PAYMENTS (cont…)
All options granted by the Company carry no dividend or voting rights. When exercisable, each option is convertible
into one ordinary share of the Company with full dividend and voting rights.
The below table summarises the number and movement in options granted and their weighted average prices:
AVENIRA LIMITED
2017
2016
SUBSIDIARIES
NUMBER OF OPTIONS
Outstanding at the beginning of the
year
Granted
Forfeited
Exercised
Expired
Outstanding at year end
Exercisable at year end
33,050,000
-
-
(925,000)
(24,050,000)
8,075,000
5,075,000
WEIGHTED
AVERAGE
EXERCISE
PRICE
CENTS
22
-
-
10
25
17
NUMBER OF OPTIONS
26,050,000
9,000,000
-
-
(2,000,000)
33,050,000
33,050,000
WEIGHTED
AVERAGE
EXERCISE
PRICE
CENTS
25
17
-
-
28
22
The weighted average remaining contractual life of share options outstanding at the end of the financial year was 1.00
years (2016: 1.06 years), and the exercise prices range from 10 cents to 25 cents.
All options issued were valued using the Black-Scholes European Option Pricing model. The fair value of options
granted during the 2016 year was estimated on the date of grant using the following inputs:
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Weighted average risk-free interest rate
Weighted average fair value per option granted (cents)
2017
2016
24.16
3.89
10.1
68.20%
1.93%
3.1
Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this is
indicative of future trends, which may not eventuate.
(c) Performance Rights Plan
There were no performance rights granted during the year ended 30 June 2017.
During the year ended 30 June 2016, 13,800,000 performance rights were granted to the executive KMP, key employees
and consultants of the Group under the terms and conditions of the Avenira Performance Rights Plan which was approved
at the November 2015 Annual General Meeting. These performance rights were issued for nil consideration and each
performance right will convert to a fully paid ordinary share upon satisfaction of the relevant performance conditions.
The performance rights expire two years after the grant date and may vest over the two-year period on the achievement of
the following performance conditions in relation to the Baobab Phosphate Project:
•
•
•
Tranche 1 - 50% on commencement of commercial production (vested 30 September 2016);
Tranche 2 - 25% on achievement of steady state commercial production (lapsed 31 May 2017); and
Tranche 3 - 25% on accumulation of 100Mt of inferred resource of P2O5 at 20% or greater, capable of being
converted into saleable product.
34
87
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
35. SHARE BASED PAYMENTS (cont…)
Movements in the number of performance rights on issue are as follows:
AVENIRA LIMITED
2017
BALANCE AT
START OF THE
YEAR
ISSUED
DURING THE
YEAR
Grant Date: 18 November 2015
Tranche 1
Tranche 2
Tranche 3
Grant Date: 3 December 2015
Tranche 1
Tranche 2
Tranche 3
TOTAL
1,875,000
937,500
937,500
5,025,000
2,512,500
2,512,500
13,800,000
-
-
-
-
-
-
-
VESTED
AND
CONVERTED
TO
SHARES(i)
-
-
-
(5,025,000)
LAPSED(ii)
FORFEITED
UPON
RESIGNATION(iii)
BALANCE AT
END OF THE
YEAR
-
-
-
-
(1,875,000)
(937,500)
(937,500)
-
-
-
-
-
-
-
-
2,512,500
-
-
(2,512,500)
-
(5,025,000)
(2,512,500)
(3,750,000)
2,512,000
(i) Tranche 1 performance rights vested on 30 September 2016 and were converted to shares for nil consideration.
(ii) Tranche 2 performance rights lapsed on 31 May 2017, when the performance milestone was not achieved by the milestone date.
(iii) Mr Lawrenson’s 1,875,000 vested and 1,875,000 unvested performance rights were forfeited upon resignation.
2016
AVENIRA LIMITED
BALANCE AT
START OF THE
YEAR
ISSUED DURING
THE YEAR(i)
VESTED
AND
CONVERTED
TO SHARES
LAPSED
FORFEITED
UPON
RESIGNATION
BALANCE AT
END OF THE
YEAR
Grant Date: 18 November 2015
Tranche 1
Tranche 2
Tranche 3
Grant Date: 3 December 2015
Tranche 1
Tranche 2
Tranche 3
TOTAL
-
-
-
-
-
-
1,875,000
937,500
937,500
5,025,000
2,512,500
2,512,500
-
13,800,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,875,000
937,500
937,500
5,025,000
2,512,500
2,512,500
13,800,000
(i)
The below table summarises the details of the performance rights granted during the 2016 financial year:
NUMBER OF
RIGHTS ISSUED
FAIR VALUE AT
GRANT DATE, $
EXERCISE
PRICE, $
VESTING
DATE
EXPIRY
DATE
PROBABILITY
MILESTONE
ACHIEVEMENT(i)
AVENIRA LIMITED
Grant Date: 18 November 2015
Tranche 1
Tranche 2
Tranche 3
Grant Date: 3 December 2015
Tranche 1
Tranche 2
Tranche 3
2016 rights granted
1,875,000
937,500
937,500
5,025,000
2,512,500
2,512,500
13,800,000
0.092
0.092
0.092
0.067
0.067
0.067
nil
nil
nil
nil
nil
nil
30 Sept 16
18 Nov 17
31 May 17
18 Nov 17
18 Nov 17
18 Nov 17
30 Sept 16
3 Dec 17
31 May 17
3 Dec 17
3 Dec 17
3 Dec 17
n/a
n/a
n/a
100%
-
100%
(i) Each performance condition has a milestone date that the performance condition is required to be achieved by otherwise the performance right
will lapse. As at 30 June 2017 the Board considered the percentage of likelihood of achieving the performance milestones as indicated in the
table and it is based on the progress of operations at the Baobab Phosphate Project.
35
88
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
35. SHARE BASED PAYMENTS (cont…)
For further information on the performance conditions refer to the page 24 of the Remuneration Report.
Due to the fact the performance rights have a market-based condition the appropriate methodology, Monte-Carlo
simulation method, was used for the valuation of the performance rights.
The below table lists the inputs used for determination of the fair value of the performance rights granted during the
2016 financial year:
GRANT
DATE
Underlying security spot price, $
(i)
Exercise price
(ii)
Dividend rate
Stock volatility(iii)
Risk free rate
(iv)
(v)
Valuation date
18 NOVEMBER 2015
3 DECEMBER 2015
TRANCHE 1 TRANCHE 2 TRANCHE 3 TRANCHE 1 TRANCHE 2 TRANCHE 3
0.140
0.140
0.140
0.115
0.115
0.115
nil
nil
70%
2.04%
nil
nil
70%
2.04%
nil
nil
70%
2.04%
nil
nil
70%
2.04%
nil
nil
70%
2.04%
nil
nil
70%
2.04%
18 Nov 15
18 Nov 15
18 Nov 15
3 Dec 15
3 Dec 15
3 Dec 15
(i) The underlying security spot price used for the purposes of this valuation is the closing price on the date of grant.
(ii) For the purposes of this valuation it is assumed that the company’s share price is “ex-dividend”.
(iii) The AEV stock volatility is based on historical data.
(iv) The risk-free rate is the implied zero coupon yield on Australian Government Bonds of maturity equivalent to the expected life of the performance rights.
(v) The valuation date is the date of grant of the performance rights.
Fair value of share based payments that were granted or vested to directors, employees, contractors and other parties
are recognised in the profit or loss for the period:
Other option-based payments
Employee benefit expense – performance rights
Employee benefit expense – shares(i)
Total for the year
2017
$
-
224,075
20,000
244,075
2016
$
130,200
359,542
-
489,742
(i) The Managing Director, Mr Louis Calvarin, is entitled to receive ordinary fully paid shares to the value of $20,000 as a sign on bonus of shares,
subject to a shareholders’ approval. It is anticipated the Company will seek shareholder approval for this issue of shares at its November 2017
Annual General Meeting. The shares will be issued at the volume weighted average market price of the fully paid ordinary shares of the Company
over the thirty trading days immediately preceding the date of the meeting to approve the issue.
(d) Other share based payments
In March 2017, the Company entered into an agreement with Agromine Suarl, where the Company may defer payment
of a portion of Agromine’s April – July 2017 monthly invoices, up to a total of XOF 1,240,000,000 (US$2 million) with
the intent that the amount will be converted to shares in Avenira or its subsidiary BMCC. If not converted within six
months the balance will be repaid in cash. Interest will only become payable on the loan if it is repaid in cash.
As at 30 June 2017, the Company has deferred a total of XOF640,487,956 (A$1.5 million) in relation to April – June
2017 invoices. Because it is the intention to convert the balance to equity, the deferred amount has been recorded
within the share based payment reserve in equity at 30 June 2017. As at the date of signing this report the deferred
payment amount of XOF 640,487,956 (A$1.5 million) will now be settled in cash.
Key estimates and assumptions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-
Scholes option pricing model and Monte Carlo simulation method for performance rights, using the assumptions
detailed above.
36
89
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
36. PARENT ENTITY INFORMATION
The following information relates to the parent entity, Avenira Limited, at 30 June 2017. The information presented here
has been prepared using accounting policies consistent with Group accounting policies.
(a) Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Asset Position
Equity
Contributed equity
Reserves:
-
-
-
Share based payments
Performance rights
Available-for-sale financial assets
Accumulated losses
Total equity
(b) Financial performance
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
2017
$
2016
$
5,974,820
37,475,009
43,449,829
18,563,005
42,081,409
60,644,414
1,916,564
4,718
1,921,282
41,528,547
620,198
52,478
672,676
59,971,738
125,037,889
119,817,389
16,619,677
16,619,677
583,616
2,627,542
15,610
(100,728,245)
41,528,547
(79,092,870)
59,971,738
(21,635,375)
15,610
(4,975,667)
-
(21,619,765)
(4,975,667)
(a) Details of any contingent liabilities of the parent entity
The parent entity does not have any contingent liabilities at 30 June 2017.
(b) Details of any commitments by the parent entity for the acquisition of property, plant and equipment
There are no contractual commitments by the parent entity for the acquisition of property, plant and equipment as
at reporting date.
37. BUSINESS COMBINATION
Transaction details
On 23 September 2015 Avenira acquired 100% of the issued shares in Baobab Fertilizer Africa (BFA). BFA is the 100%
shareholder of Baobab Mining and Chemicals Corporation SA (BMCC), a company which owns the Baobab
Phosphate Project in the Republic of Senegal.
The acquisition advances the Group’s focus on the nutrient and fertiliser sector and nearer-term strategic objective of
early cash flow with minimal capital expenditure and no technology risk.
The acquisition of BFA has been accounted for using the acquisition method. The financial statements include the
results of BFA from the date of acquisition.
37
90
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
37. BUSINESS COMBINATION (cont…)
Purchase consideration
The equity instruments were issued as a consideration in a business combination and measured at their fair value on
the acquisition date as follows:
Purchase consideration
100,000,000 fully paid ordinary shares(i) (v)
80,000,000 unlisted options(ii) (v)
40,000,000 Class “A” contingent share rights(iii) (vi)
40,000,000 Class “B” contingent share rights(iv) (vi)
$
10,500,000
2,632,000
3,780,000
2,268,000
19,180,000
(i) Fair value is the share price on acquisition date, being $0.105.
(ii) Fair value price of $0.033 was calculated using Black-Scholes European Option Pricing Model at acquisition date.
(iii) Each Class “A” Contingent Share Right will convert to one ordinary share upon the earlier of achievement of (i) a board-approved preliminary feasibility study;
(ii) the decision by the Board to proceed with the construction of a phosphate rock mine; or (iii) first commercial production of phosphate rock. Fair value is the
share price on acquisition date, being $0.105. Maximum amount of contingent consideration is $4,200,000.
(iv) Each Class “B” Contingent Share Right will convert to one ordinary share upon the first commercial production of the phosphate rock. Fair value is the share
price on acquisition date, being $0.105. Maximum amount of contingent consideration is $4,200,000.
(v) The consideration paid is calculated by multiplying the number of securities issued by the fair value of each security.
(vi) The consideration paid is calculated by multiplying the number of securities issued by the fair value of each security multiplied by the probability of each
milestone being achieved.
Fair value of identifiable net assets and liabilities
The fair values of the identifiable assets and liabilities of BFA as at the date of acquisition were:
Assets
Cash and cash equivalent
Trade and other receivables
Property, plant and equipment
Intangible assets
Capitalised exploration and evaluation expenditure recognised on acquisition
Total assets
Trade and other payables
Deferred tax liability recognised on acquisition
Total liabilities
Total net assets acquired on acquisition
Goodwill arising on acquisition
Total purchase consideration
Analysis of cash flows on acquisitions
Cash consideration paid to acquire subsidiary
Cash balance acquired
Net cash inflow on acquisition
FAIR VALUE ON
ACQUISITION
$
117,255
82,753
227,617
10,290
19,908,486
20,346,401
(1,166,401)
(4,977,122)
(6,143,523)
14,202,878
4,977,122
19,180,000
-
117,255
117,255
The fair value of trade and other receivables represents their recoverable amounts.
The goodwill on the transaction has principally arisen as a result of the requirement to recognise the deferred income
tax liabilities representing the tax effect of the difference between the fair value and the tax base of assets acquired.
Other Considerations
Management are not aware of the existence of any other assets and liabilities that should be considered in the
assessment of the fair value of assets and liabilities of the acquiree except for the recognition of deferred tax liabilities.
38
91
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
37. BUSINESS COMBINATION (cont…)
Revenue and loss of acquiree since the date of acquisition to 30 June 2016
The acquired business contributed revenue of $259,672 and a net loss of $855,850 to the Group for the period from 23
September 2015 to 30 June 2016. If the acquisition had taken place at the beginning of the year, revenue and loss for
the period would have been $790,430 and $1,283,891 respectively.
Transaction costs
Transaction costs of $1,189,532 have been expensed and are included in administrative and other expenses in
the profit or loss.
39
92
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017 (cont...)
YEAR ENDED 30 JUNE 2017
DIRECTORS’ DECLARATION
The Directors declare that:
1. The financial statements and notes set out on pages 38 to 92 are in accordance with the Corporations Act 2001,
including:
a.
b.
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
reporting requirements; and
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and of their
performance for the financial year ended on that date;
2.
In their opinion, subject to achieving the matters set out in Note 1 of the financial report, there are reasonable
grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
and
3. A statement that the attached financial statements are in compliance with International Financial Reporting
Standards has been included in the notes to the financial statements.
The directors have been given the declarations by the chief executive officer and chief financial officer required by
section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
LOUIS CALVARIN
Managing Director
Perth, 1 October 2017
40
93
AVENIRA LIMITED AND CONTROLLED ENTITIES2017 Annual Report Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor’s report to the Members of Avenira Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Avenira Limited (the Company) and its subsidiaries (collectively
the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of profit and loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the Directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017
and of its consolidated financial performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations Act
2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the
Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 to the financial report, which describes the principal conditions that raise
doubt about the Group’s ability to continue as a going concern. These events or conditions indicate that a
material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going
Concern section, we have determined the matters described below to be the key audit matters to be
communicated in our report. For each matter below, our description of how our audit addressed the
matter is provided in that context.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:EH:AEV:029
Page 2
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial statements. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
1.
Impairment assessments of non-current assets
Why significant
How our audit addressed the key audit matter
The Group’s Baobab cash generating unit
(“CGU”), which includes goodwill, property, plant
and equipment and capitalised mine
development, is required to be tested for
impairment at each reporting date in accordance
with the Group’s accounting policies.
At 30 June 2017, the Baobab CGU was tested for
impairment and the CGU’s recoverable amount
was determined based on an independent expert
valuation. As disclosed in note 16 to the financial
report, the independent expert valuation
incorporated primary inputs that were not
directly market observable, and contained a
degree of subjectivity. Management also applied
judgement in selecting the point in the range
provided by the independent expert that was
considered to best represent fair value from a
market participant’s perspective at 30 June
2017. Accordingly, this was considered to be a
key audit matter.
The results of the Group’s impairment testing and
resulting impairment charge are disclosed in note
16 to the financial report.
Our audit procedures included the following:
(cid:127) Assessed whether all indicators of impairment
had been identified
(cid:127) Assessed whether all appropriate assets and
liabilities were included in the CGU carrying
value
(cid:127) Evaluated the competency and objectivity of
experts who produced the reserve and
resource statements underlying the
impairment assessment by considering their
professional qualifications and expertise
(cid:127) Assessed the accuracy and completeness of
the resource estimates used to estimate the
recoverable amount of the Baobab CGU by
comparing them to the Group’s latest
published resource estimates
(cid:127)
Involved our valuation specialists to provide
input on key assumptions made by the
independent experts in arriving at their
preferred valuation
(cid:127) Assessed whether the disclosure in Note 16 to
the financial statements was accurate and
complete, in accordance with the applicable
Australian Accounting Standards.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:EH:AEV:029
Page 3
2.
Carrying value of exploration and evaluation expenditure
Why significant
How our audit addressed the key audit matter
Assessment of the carrying value of exploration
and evaluation assets for impairment can be
subjective, based on the Group’s ability, and
intention, to continue to explore the asset.
Accordingly, this was considered to be a key audit
matter.
As disclosed in Note 15 to the financial
statements, an impairment test was performed in
relation to the Group’s Wonarah project at 30
June 2017. In determining a recoverable amount
for the Wonarah project, the Group relied upon an
independent expert valuation for which the
primary inputs were not directly market
observable, and contained a degree of subjectivity.
Refer to Note 15 to the financial statements for
disclosure of the Group’s capitalised exploration
and evaluation expenditure at 30 June 2017 and
details of the outcome of the Wonarah impairment
testing and resulting impairment charge.
Our audit procedures included the following:
(cid:127) Considered the Group’s right to explore in the
relevant exploration area, which included
obtaining and assessing supporting
documentation such as license agreements
(cid:127) Evaluated the competency and objectivity of
experts who prepared an independent
valuation of the resources contained in the
Wonarah area of interest, by considering their
professional qualifications and expertise
(cid:127) Assessed the accuracy and completeness of
the resource estimates used to estimate the
recoverable amount of the exploration and
evaluation assets with respect to the Wonarah
area of interest by comparing them to the
Group’s latest published resource estimates
(cid:127)
Involved our valuation specialists to provide
input on key assumptions made by the
independent experts in arriving at their
preferred valuation
(cid:127) Assessed whether the disclosure in Note 15 to
the financial statements was accurate and
complete, in accordance with the applicable
Australian Accounting Standards.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:EH:AEV:029
Page 4
3.
Commencement of commercial production
Why significant
How our audit addressed the key audit matter
Our audit procedures included the following:
(cid:127) Assessed the current level of production of the
Baobab plant and the length of time that this
had been sustained
(cid:127) Compared the current level of production of
the Baobab plant to its design capacity
(cid:127) Assessed whether revenue earned prior to the
commencement of commercial production was
properly considered integral to bringing the
asset into the condition necessary to be
capable of operating in the manner intended
(cid:127) Assessed whether the disclosures in Notes 5
and 16 to the financial statements were
accurate and complete, in accordance with the
applicable Australian Accounting Standards.
As disclosed in Note 16 to the financial
statements, the date of commencement of
commercial production at the Baobab mine is a
key judgment applied by the Group, as this is the
date at which:
(cid:127) Capitalisation of operating expenditure ceases
(cid:127) Depreciation of the property, plant and
equipment and mine development assets
commences
(cid:127) Revenue earned is recorded in the income
statement rather than credited against the
mine development asset.
Australian Accounting Standards do not provide
specific guidance as to when a mine has reached
the commercial production stage – that is, when it
is in a condition necessary to operate as intended
– therefore the determination of this date is
subjective. As a result of the factors disclosed in
Note 16 to the financial statements, the Group
determined that commercial production had not
yet commenced at 30 June 2017.
Australian Accounting Standards also do not
provide specific guidance as to the accounting
treatment of income generated in the
development phase. As disclosed in Note 5 to the
financial statements, the Group applied judgment
in determining that revenue earned prior to the
commencement of commercial production was
integral to the development of the assets and
therefore under the Group’s accounting policy,
revenue was credited against the mine
development asset when earned.
Information other than the financial statements and auditor’s report
The Directors are responsible for the other information. The other information comprises the information
included in the Group’s Annual Report for the year ended 30 June 2017, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express 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 and,
in doing so, 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:EH:AEV:029
Page 5
If, based upon the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the Directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
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 and 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 this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgment
and maintain professional scepticism throughout the audit. We also:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting in
the preparation of the financial report. We also conclude, based on the audit evidence obtained,
whether a material uncertainty exists related to events and conditions that may cast significant
doubt on the entity’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in the auditor’s report to the disclosures in the
financial report about the material uncertainty or, if such disclosures are inadequate, to modify the
opinion on the financial report. However, future events or conditions may cause an entity to cease
to continue as a going concern.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:EH:AEV:029
Page 6
(cid:127)
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the Directors' Report for the year ended 30 June
2017.
In our opinion, the Remuneration Report of Avenira Limited for the year ended 30 June 2017, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
Gavin Buckingham
Partner
Perth
1 October 2017
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:EH:AEV:029
ASX ADDITIONAL INFORMATION
Additional information required by Australian Securities Exchange Ltd and not shown elsewhere in this report
is as follows. The information is current as at 7 September 2017.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
ORDINARY SHARES
NUMBER OF
HOLDERS
NUMBER OF
SHARES
367
731
883
81,631
2,614,469
7,146,119
1,790
61,299,561
370
530,471,593
4,141
601,613,373
The number of equity security holders holding less than a marketable parcel of
securities are:
1,363
4,260,112
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
1
Baobab Partners LLC
2* HSBC Custody Nominees
Continue reading text version or see original annual report in PDF format above