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Email: frontdesk@avenira.com
Phone: +221 33 860 20 03
Lot 50 Bis Sotrac Mermoz
(Ancienne Piste)
Dakar, Sénégal
Suite 19, 100 Hay Street
Subiaco WA 6008
Phone: +61 8 9264 7000
www.avenira.com
2018
ANNUAL
REPORT
HIGHLIGHTS
AVENIRA’S VISION
Avenira Limited’s ambition is 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
Avenira aims 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)
WONARAH, AUSTRALIA (100% OWNED)
• Senegal is stable and mining friendly
• One of Australia’s largest known phosphate
• 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
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, the 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
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report TABLE OF CONTENTS
CORPORATE INFORMATION ......................................................................................................................... 3
CHAIRMAN AND MANAGING DIRECTOR’S REVIEW ...................................................................................... 4
DIRECTORS’ REPORT ..................................................................................................................................... 5
CORPORATE GOVERNANCE ...................................................................................................................... ..22
REMUNERATION REPORT - AUDITED ........................................................................................................ ..22
AUDITORS INDEPENDENCE LETTER............................................................................................................. 36
QUALIFYING STATEMENTS ........................................................................................................................ ..37
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME ................... 38
CONSOLIDATED STATEMENT OF FINANCIAL POSITION .......................................................................... 39
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................................................ 40
CONSOLIDATED STATEMENT OF CASH FLOWS ........................................................................................ 41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2018 .......................... .42
DIRECTORS’ DECLARATION ......................................................................................................................... 96
INDEPENDENT AUDITORS REPORT ............................................................................................................. 97
ASX ADDITIONAL INFORMATION .............................................................................................................. 101 102
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2
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report CORPORATE INFORMATION
ABN 48 116 296 541
DIRECTORS
Brett Clark
(Independent Non-executive Chairman)
Louis Calvarin
SOLICITORS
Richard O’Shannassy & Co Pty Ltd
Level 3, 46 Ord Street
West Perth, WA 6005
(Managing Director and CEO)
DLA Piper Australia
Ian McCubbing
(Independent Non-executive Director)
Level 31, Central Park, 152-158 St Georges Terrace
Perth, WA 6000
Timothy Cotton
(Non-executive Director)
Farouk Chaouni
(Non-executive Director)
David Mimran
(Non-executive Director)
Christopher Pointon
(Independent 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
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)
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
CHAIRMAN AND MANAGING DIRECTOR’S REVIEW
Dear Shareholders,
It gives us great pleasure to provide you with the 2018 Avenira Annual Report, as the Company continues to implement
its strategy of becoming a major contributor to the world nutrient market through the development of valuable phosphate
and nutrient projects, in particular the Baobab Phosphate Project in Senegal.
Throughout the year, your Company has continued to progress the Feasibility Study for the expansion of its 80% owned
Baobab Phosphate Project, which builds on earlier concept studies and includes the consideration for a major expansion
of the existing Gadde Bissik Mine.
As our Baobab Feasibility Study is nearing completion, and with a decision to initiate the “Bankable” Feasibility Study to
follow, Mr Brett Clark has stepped up his day to day activities as non-executive Chairman to take a more active role with
the Company focusing on investor engagement and capital markets. Your Board and management teams have been
working tirelessly with an increased focus on project financing and project implementation.
Post period the Company announced a two-tranche placement to raise $2.8 million, with tranche one completed in August
2018 and tranche two scheduled to be completed in October 2018. Funds raised under the Placement will be used to
complete the Feasibility Study, expected Q4 2018.
The Placement followed the completion of the Entitlement Offer to raise $15 million (before costs) in November 2017.
We believe Avenira is ideally placed to take advantage of the recent rises in phosphate rock prices and look to capitalise
on the improved industry sentiment.
Brett Clark
Chairman
Louis Calvarin
Managing Director and CEO
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
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 2018.
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
Brett Clark, B. Eng., Dip. Fin. (Independent Non-executive Chairman – appointed 21 March 2018 former
Independent Non-Executive Director - appointed 14 December 2017)
Experience & Expertise
Mr. Clark is a senior executive with 25 years’ experience in the mining and energy sectors in funding, operations and
advisory, notably with Hamersley Iron Pty Ltd, CRA Limited, WMC Resources Limited, Iron Ore Company of Canada, Rio
Tinto Limited and subsequently with Ernst and Young, Tethyan Copper Company Pty Ltd, Oakajee Port and Rail, Mitsubishi
Development and Murchison Metals. Mr. Clark has extensive leadership experience in board positions held at both listed
and unlisted companies. His expertise ranges from project development to operations, sales and marketing in gold, iron
ore, copper, nickel, coal, industrial minerals, and upstream oil and gas across Africa, Asia, Latin America and North
America. His experience includes bond raisings, debt restructuring, equity, and mezzanine financing in the US and Asian
capital markets.
Other Current Listed Company Directorships
Non-Executive Director of Nelson Resources Limited (formerly Mongolian Resources Limited) from July 2016
Non-Executive Director of Great Lakes Graphite Corp from November 2017
Former Listed Company Directorships in the last 3 years
Non-Executive Director of Surefire Resources NL (formerly BlackRidge Mining NL) from March 2016 to August
2017
Non-Executive Director of Equatorial Mining & Exploration PLC from February 2017 to May 2017
Managing Director of Ardea Resources from April 2018 to June 2018
Special Responsibilities
Chairman of the Remuneration and Nomination Committee
Dr. Christopher Pointon, B.Sc. (Hons), PhD (Geology), FGS, MIMMM, (Non-Executive Director – appointed 21
March 2018 former Independent Non-Executive Chairman)
Experience & Expertise
Dr. Christopher Pointon, 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 more than 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
None
Special Responsibilities
Member of the Audit Committee
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
Dr. Louis Calvarin, PhD (Process Engineering), (Managing Director and Chief Executive Officer)
Experience & Expertise
Louis Calvarin 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
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 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 more than 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, and MedInstill LLC, a medical device company and Managing Director of JDC Phosphate Incorporated.
Other Current Listed Company Directorships
None
Former Listed Company Directorships in the last 3 years
None
Special Responsibilities
Member of the Audit Committee
Member of the Remuneration and Nomination Committee
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
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 Teranga 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 has more than 20 years as a company
accountant, Group Financial Controller, Chief Financial Officer or Company Secretary.
Mr. John Ribbons has extensive 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 Wheatley is a senior accountant who has worked within the oil and gas, and resource industry for more than 15 years
as a company accountant, Group Financial Controller and Chief Financial Officer. Mr Wheatley 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.
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
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:
Brett Clark
Christopher Pointon
Louis Calvarin
Ian McCubbing
Timothy Cotton(i)
Farouk Chaouni(i)
David Mimran(ii)
ORDINARY
SHARES
OPTIONS OVER
ORDINARY SHARES
RIGHTS OVER
ORDINARY SHARES
-
-
377,358
580,000
207,194,808
207,194,808
192,250,000
-
-
-
-
56,000,000
56,000,000
-
-
-
5,000,000
-
-
-
-
(i)Mr Timothy Cotton and Mr Farouk Chaouni collectively hold shares and options through their related parties, Baobab
Partners LLC and Vulcan Phosphates LLC.
(ii) Mr David Mimran holds shares through his related party, Tablo Corporation.
PRINCIPAL ACTIVITIES
The principal activity of the Company during the course of the financial year was the development and operation 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
Income tax benefit
(LOSS) FOR THE YEAR
DIVIDENDS
YEAR END
30 JUNE 2018
$
YEAR END
30 JUNE 2017
$
(7,641,770)
1,465,793
(6,175,977)
(30,579,063)
308,265
(30,270,798)
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)
EXPANSION AND UPGRADE PROJECT
During the 2018 financial year, the Company continued its focus on the projected major expansion and upgrade of the
existing Baobab Project's operations at Gadde Bissik mine to bring it to a sustainable operational level, to be followed by
next-step investments towards its longer-term objective of downstream integration.
Under the plan to expand and upgrade the existing ore beneficiation unit, the Company engaged engineering firm Hatch
to conduct a conceptual study which delivered positive results detailed in the Company's announcement of 17 October
2017.
The expanded and upgraded ore beneficiation unit is projected to deliver a higher processing capacity and performance
at Baobab’s Gadde Bissik facility. The project includes a flotation step and a magnetic separation step to improve P2O5
recovery from around 50% currently to around 70%, to reduce the silica assay and to control iron levels in the phosphate
rock concentrate product, as well as a drying process unit to control product moisture at the commercial target at all times,
annual wet season included. Following completion of the expansion and upgrade of the project, the nameplate production
capacity is projected to be 1 Mtpa.
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
The 2017 conceptual engineering study concluded that upgrading the processing plant and increasing its nameplate
capacity to 1 Mtpa of high-grade phosphate rock concentrate, could be undertaken for an upfront capital expenditure of
approximately US$53 million (to ± 30% accuracy) within processing unit battery limits (outside processing unit battery
limits exclusions include in particular mining equipment, site infrastructure and support facilities as well as potential
investments at the projected new bulk-handling port at Bargny-Sendou). This expansion should significantly improve
product specifications and place the Baobab Project in a globally competitive unit operating cost position, on a quality
adjusted basis.
Following the positive conceptual study, the Company appointed Wood PLC (formerly AMEC Foster Wheeler) as lead
engineering consultants for the Baobab Project Feasibility Study. Building on the conceptual study focused on ore
processing completed in 2017 the feasibility study will cover all project aspects, with teams in South Africa (ore processing
and overall lead) supported by process experts in the United States, as well as Great Britain (mining and tailings
management).
Development test work completed during early 2018, including wet high-intensity magnetic separation tests, comminution
tests and flotation tests using the actual mine site water have all led to positive outcomes confirming engineering
expectations and past assumptions. . The purpose of the test work is to confirm the feasibility and effectiveness of selected
technologies and to provide a design basis for the mass-balance projection and equipment sizing, in line with the project
objective to deliver a concentrate with > 34% P2O5 with Fe 2O3 and SiO2 levels meeting market requirements. The results
of all testwork is being incorporated into the feasibility design basis. The Company and Wood continue to advance key
areas in process design, Tailings Dam Storage Facility design and mine scheduling and have started the process to
develop capital and operating cost estimates.
Comminution test work was performed to evaluate the hardness and abrasiveness characteristics of the larger size rocks
in Baobab’s ore from the Gadde Bissik Mine and provide data for crushing and milling equipment selection and design.
The Bond Low Energy Impact Crusher Work Index tests indicated that the material is Soft within the range for resistance
to breakage. The Bond Abrasion Index test results yielded an average abrasion index indicating that the material is Very
Soft or not very abrasive. The Bond Rod Mill Work Index test results showed that the material is in the Medium range for
resistance to breakage.
Magnetic Separation (MS) test work has been carried out on both Rare Earth Dry Roll and on Wet High-Intensity
technologies with both types of processes achieving effective separation of ferruginous particles from the rock
concentrates at the laboratory scale. MS test work is continuing to further optimise processing arrangements and maximise
phosphate recovery and final concentrate grade.
Extensive laboratory scale flotation tests have been performed and have demonstrated at that scale that the target
separation performance can be met by reverse flotation of silica (SiO2) using amine-based formulated reagents. Current
period test work includes onsite bench scale flotation testing using actual mine water on various samples extracted from
the Gadde Bissik open pit. Settling and dewatering tests of tailings and of the final concentrate product are being performed
by process technology suppliers in the September quarter.
While testwork completed to date supports the selected flowsheet, Wood and Avenira have instigated further flotation and
comminution testwork to validate results achieved to date. This additional work will enable Wood to finalise the basis of
engineering and freeze the process plant design ahead of finalising the Feasibility Study.
Due to the additional work, the Feasibility Study is now likely to be completed in the fourth quarter of the calendar year
2018 (Class 4 estimate). The Company is planning to initiate the “Bankable” Feasibility Study phase once a final project
configuration has been selected, with a targeted second quarter of 2019 completion (Class 3 estimate).
The Company's mining operations have been conducted under a three-year renewable Small Mine Permit granted on 6
May 2015, for a 5 km2 area in the zone of Gadde Bissik. In May 2017, the Company applied to transform the Small Mine
Permit into an Exploitation Permit covering an expanded area of 75 km2 around its current Gadde Bissik operations and
continues to wait for the approval from the Senegalese Government; as long as the Company’s application to transform
the Small Mine Permit is pending, and until the official Exploitation Permit decree is issued, the Small Mine rights and
obligations remain applicable. Should the Exploitation Permit not be granted for any reason and the Company wishes to
continue mining operations, it may need to apply for a renewal of the existing Small Mine Permit.
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
GEOLOGY AND EXPLORATION
The project location is shown in Figure 1.
Gadde Bissik
Figure 1: Project location plan
The Group released two updated Mineral Resource estimates during the financial year, significantly increasing the
potential longevity of the Baobab Phosphate Project. The first was released on 12 October 2017 with an updated Indicated
Resource tonnage of 34.9 million tonnes at 20.7% P 2O5 at a cut-off grade of 15% P 2O5, 11% higher than the previous
estimate, and Inferred Resource tonnage of 156 million tonnes at 18% P2O5 at a cut-off grade of 15% P 2O5, 37% higher
than the previous estimate (both as announced on 2 March 2017).
A second upgraded mineral resource estimate was released to the market on the 5 February 2018 with an updated Inferred
Mineral Resource estimate of 173 million tonnes at 18% P 2O5 at a 15% cut-off grade of 15% P 2O5, 10.9 % higher than
the previously estimated Inferred Resource tonnage at Gadde Bissik. Indicated Mineral resource estimates remains at
34.9 million tonnes at 20.7% P2O5 at a 15% cut-off grade of 15% P 2O5.
This resource update and a planned resource report are key components of Baobab’s Gadde Bissik Expansion and
Upgrade project feasibility study currently underway. At a 10% P2O5 cut-off, the Indicated Resource tonnage and Inferred
Resource tonnage are estimated at 42.0 million tonnes at 19.4% P 2O5 and 320 million tonnes at 16% P2O5, respectively.
An objective of the Feasibility Study will be to confirm the mining plan’s cut-off.
The tables on page 15 summarise the current Mineral Resource estimate, including depletion by mining to date, at a P2O5
cut-off grade of 15% and at a P 2O5 cut-off grade of 10%. The figures in the tables are rounded to reflect the precision of
estimates and include rounding errors.
The broader Baobab Project tenement covers approximately 1,163 km2 (see Figure 3). A Small Mine Permit ("SMP") was
granted in May 2015 over the area of thickest and highest-grade mineralisation identified at that point in the Gadde Bissik
area. The focus of exploration has continued largely within and adjacent to this area since that time, including an infill
drilling campaign within the SMP to better define the geometry of the phosphate sequence (Figure 2). In addition, drilling
campaigns were carried out further to the east, with the objective to increase Inferred Resources at Gadde Bissik East
and Gadde Escale prospects.
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
At the Gadde Bissik East area, drill holes outside and along the eastern edge of the SMP perimeter and those inside, in
the southern part of the SMP, were designed to increase the Indicated Resources. The drilling further east of the SMP, in
the direction of Gadde Escale prospect, at a broader-spaced grid, had the objective to increase the Inferred Resources.
Results from 22 additional diamond holes drilled within the resource area to the north, and in extension to the east have
increased the Inferred Resources. An Inferred Resource of 82 million tonnes at 18% P 2O5 at 15% P2O5 cut-off is now
estimated for this area. Further infill drilling is warranted around the better intercepts.
At Gadde Escale (formerly Gad Escale), results from 12 additional diamond holes drilled at the western, southern and
northern margins of the resource area have increased the Inferred Resources. An Inferred Resource of 48 million tonnes
at 18% P2O5 at 15% P2O5 cut-off has now been estimated. The prospect is open to the east, south and west and further
drilling in this area is warranted, with the dual objective to increase the area of the Resource and to identify the areas of
thicker, higher grade mineralisation.
Gadde Bissik East and Gadde Escale prospects are now connected and an Inferred Resource area is continuous over
20km from Gandal to Gadde Escale prospects.
At Dinguiraye, Gandal and Gadde Bissik West, the resource extents have not changed. The mineralised domain
interpretations have been updated. Those prospects warrant further investigations and drilling in those areas, including
diamond-core infill drilling to define the areas of thicker, higher grade mineralisation.
An area of less densely-spaced drilling peripheral to the current Inferred Resource areas is categorised as an Exploration
Target with an estimated tonnage of around 30 million tonnes to 60 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.
Figure 2: Drill status plan and resource outlines for Gadde Bissik area. Small mine permit outline in red. Pit outline in
blue. Drilling status as at 30 June 2018.
Mining Support
During the financial year, results of the air core 50 x 50 m grid-spaced Grade Control drilling program within the SMP
perimeter undertaken 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 became available. Assays confirm the presence and
the expected grade of the phosphate horizon.
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
Furthermore, 10 air core holes at 250 x 250 m grid-spaced have been drilled, mainly outside and along the west border of
the SMP perimeter. The aim was to confirm condemnation of areas for construction of future infrastructure and processing
facilities. Based on visual observation of the drilling cuttings, there appears no reason for any change to the planned
footprint; the phosphate horizon, though present, is too thin and deep to have economic potential. One hole intercepted a
5 m thick phosphate sequence, however visual sample observations suggest a low-grade mineralisation.
During early 2018 in support of the ongoing Baobab project feasibility study, 10 trial pits were excavated by tracked
excavators on proposed future plant and tailings dam areas located outside the west border the SMP perimeter. The
purpose of these trial pits was geotechnical evaluation of soils for future construction of site infrastructure and processing
facilities.
Drilling statistics for the financial year is as follows:
BAOBAB PROJECT
Purpose of drilling
Regional exploration
Resource definition
- Within SMP
- Outside SMP
TOTAL
PERMITTING
Air core drilling
Diamond drilling
Holes
Metres
Holes
Metres
-
1
9
10
-
47
408
455
-
-
31
31
-
-
1,314
1,314
Table 1: Drilling statistics – 1 July 2017 to 30 June 2018
The Company submitted its Cherif Lo-Ngakham exploration permit three-year renewal application to the Senegalese
government during May 2017. The renewal was granted by the Senegalese government on 27 July 2017 for a period to
27 July 2020.
The Company awaits the approval from the Senegalese Government for an Exploitation Permit applied for in May 2017 in
an expanded area of 75 km2 around its current Gadde Bissik Small Mine Permit.
Figure 3: Cherif Lo-Ngakham permit new boundary after renewal
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
MINING AND PROCESSING
During July and August 2017 overburden was removed from a section of Stage 3 open pit, designated as Stage 3A, with
limited cover left over the ore in that 3A area, for protection. Mining activities were put on hold due to the commencement
of the wet season starting 1 September 2017.
Crushing and processing of mined ore from the ROM pad recommenced following the end of the 2017 wet season in
preparation for the third shipment. This took place in January 2018 and crushing and processing activities are ongoing as
final product is prepared for sale to a local end user.
SAFETY AND LOCAL COMMUNITY
No lost time injuries or significant incidents were reported during the financial year.
The Company continued to collaborate closely with the local communities through the financial year. Starting with the
inception of the rainy season in July 2017 and scaling back in operations, rotational employment at the Baobab Project
has been reduced.
BARGNY-SENDOU PORT
During late 2017 the Company entered into a lease agreement with Senegal Minergy Port to secure a parcel of land in the
Industrial Free Zone of a new bulk solids and liquids port development at Bargny-Sendou east of Dakar, from which exports
are expected to be shipped in the future. Initial civil works (land clearing and levelling of the entire port area) were completed
and the Minergy Port project’s next phase is planned to include construction of the port jetty.
MARKETING
On 19 January 2018, the Company announced that it had completed its third shipment. The vessel loaded with 25,155
tonnes of Gadde Bissik phosphate rock concentrate departed from the port of Dakar. In addition, in November 2017
1,646 tonnes of phosphate concentrate was sold locally. Since June 2018 the Company has been shipping limited
quantities of phosphate rock product to a Senegalese major fertiliser producer.
OTHER
In early January 2018 Senegalese subsidiary company, Gadde Bissik Phosphate Operations SUARL, received a VAT
refund of XOF 1.6 billion (A$3.7 million) in the form of tax certificates on its outstanding VAT receivable from the Senegalese
Tax Authority following approval from the Senegalese Tax Commissioner. The tax certificates, excluding XOF 8.1 million
(A$19,000), were redeemed for cash.
In late March 2018 Gadde Bissik Phosphate Operations SUARL finalised an agreement with CBAO Groupe Attijariwafa
Bank to extend the deferral of the principal repayments of the existing working capital facility by a further 12 months to
December 2018. All other terms and conditions remain as previously disclosed.
GOSSAS PHOSPHATE PROJECT
Following notification in the June 2017 quarterly report that no further drilling in the Gossas area was planned, the Board
decided not to proceed with the acquisition of the Gossas tenement.
WONARAH PHOSPHATE PROJECT, NORTHERN TERRITORY (100% OWNED)
SUMMARY
Avenira’s other asset is the 100% owned Wonarah Phosphate Project in the Northern Territory, which forms part of the
Company’s long-term strategy and will be enabled by the success of the Improved Hard Process (IHP) process.
Wonarah is one of the largest known phosphate deposits in Australia containing the following resource:
• Measured and indicated resources 300Mt @ 18.2% P2O5 (10% cut off)
•
Inferred Resource 542Mt @ 18% P 2O5 (10% cut off)
Avenira believes that Wonarah has the potential to become a major centre for the production of super phosphoric acid and
some of its main advantages, apart from its size and grade, include:
• Situated in a stable political jurisdiction
• Northern Territory Government support and designation as a Major Project
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
•
•
•
•
•
•
Close proximity to the regional centre at Tennant Creek Access to an established bulk commodity port at Darwin
Bitumen highway access via the Barkley Highway
Proximity to a standard gauge railway with spare freight capacity
Proximity to a natural gas supply, the pipeline for which closely follows the railway line
Proximity to ample groundwater
Silica available on site and petroleum coke (required as inputs to the IHP Process) readily available nearby
Wonarah is currently on hold awaiting validation of the IHP Process and the Company continues to monitor the improving
phosphate market conditions with respect to progressing the Wonarah Project.
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report DIRECTORS’ REPORT (cont…)
ANNUAL MINERAL RESOURCE STATEMENT AS AT 30/06/18
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
10
15
Indicated
M+I
Inferred
222
300
542
17.5
4.75
23.2
1.49
18.3
4.77
24.4
18
4.8
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
1.4
2.1
1.1
1.53
24
30
28
0.47
0.46
0.5
0.37
0.47
0.44
0.5
0.2
0.21
0.2
0.19
0.21
0.2
0.2
%
0.04
0.04
0.04
0.08
0.04
0.04
0.04
0.1
%
0.1
0.09
0.09
0.05
0.09
0.09
0.09
0.06
%
%
39.7
0.21
48.3
0.22
46.1
0.22
46
37
0.2
0.19
39.7
0.22
38.8
0.21
39
0.2
BAOBAB PROJECT, REPUBLIC OF SENEGAL
Cut-off grade 15% P 2O 5
Area
Within
SMP
Outside
SMP
Combined
Gadde
Bissik
East
Gadde Bissik West
Gandal
Dinguiraye
Gadde Escale
Total Resources
Resource
Category
Mt
Indicated
27.2
Inferred
Indicated
Inferred
2
7.7
80
Indicated
34.9
Inferred
Inferred
Inferred
Inferred
Inferred
Indicated
Inferred
82
6
16
21
48
34.9
173
P 2O 5
%
21
20
19.6
18
20.7
18
17
18
19
18
20.7
18
CaO
%
29
28
27.2
25
28.6
25
23
25
27
26
28.6
25
MgO
%
0.08
0.14
0.08
0.12
0.08
0.12
0.2
0.1
0.2
0.1
0.08
0.13
BAOBAB PROJECT, REPUBLIC OF SENEGAL
Cut-off grade 10% P 2O 5
Area
Within
SMP
Outside
SMP
Combined
Gadde
Bissik
East
Gadde Bissik West
Gandal
Dinguiraye
Gadde Escale
Total Resources
Resource
Category
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
Inferred
Inferred
Inferred
Inferred
Indicated
Inferred
Mt
31.5
3
10.5
142
42.0
145
26
32
35
82
42.0
320
P 2O 5
%
20
18
17.9
16
19.4
16
13
15
17
16
19.4
16
CaO
%
28
24
24.7
22
26.8
22
17
21
25
23
26.8
22
MgO
%
0.09
0.15
0.08
0.17
0.09
0.17
0.4
0.1
0.2
0.2
0.09
0.18
Al 2O 3
%
Fe 2O 3
%
2.10
2.6
2.28
2.9
2.14
2.9
5.1
3.4
3.1
2.2
2.14
2.8
3.68
2.7
3.93
3.6
3.74
3.6
6.7
8.8
3.3
2.9
3.74
4
Al 2O 3
%
Fe 2O 3
%
2.19
3.0
2.40
3.4
2.24
3.4
6.7
4.2
3.4
2.4
2.24
3.5
3.80
2.9
4.10
3.9
3.88
3.9
7.0
7.9
3.7
3.0
3.88
4
SiO 2
%
40.7
43
44
47
41.4
47
42
41
43
47
41
46
SiO 2
%
42.9
49
47
51
44.0
51
48
46
46
52
44
50
15
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
ANNUAL CHANGE IN RESOURCE CATEGORY
BAOBAB PROJECT AT 15% P 2O 5 CUTOFF GRADE
Category
Indicated
Inferred
Tonnes (M)
% P 2O 5 Tonnes (M) % P 2O 5
2018
2017
Change
34.9
31.4
+3.5
20.7
20.6
+0.1
173
114
+59
18
19
-1
Table 2: Annual Mineral Resource Statement
The Mineral Resource estimates for the Wonarah Project remained unchanged from 2017. Increases to both the
Indicated and Inferred Mineral Resource estimates for the Baobab Phosphate Project, at a 15% P2O5 cut-off grade, are
based on the results of substantial drilling programs undertaken during previous years, in particular, both within and
adjacent to the Small Mine Permit and at the Gadde Escale prospect. The Mineral Resource estimates include depletion
by mining to date. Mineral Resource estimates for Baobab are also included at a 10% P 2O5 cut-off grade. The lower
cut-off grade reflects potentially reduced feed grades based on the proposed enhanced beneficiation process released
to the market on 16 May 2018.
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.
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
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.
During the period, JDCP commissioned its new demonstration plant at its Fort Meade, Florida facility. Since
commissioning its redesigned demonstration plant JDCP has successfully used its proprietary IHP technology to produce
high-quality super-phosphoric acid (SPA) using low-quality phosphate rock tailings. In recent operations at its
demonstration plant, JDCP operated its entire process continuously – including feed preparation and agglomeration,
induration, reduction, oxidation, and acid production – to produce super-phosphoric acid using low-quality phosphate rock
waste tailings from local mining operations in Florida combined with clay and petroleum coke.
Over the next several months JDCP, is planning to further upgrade its commercial demonstration plant for on-demand
and sustained operations. By early 2019 JDCP are planning to be capable of testing various qualities of phosphate ore
raw material at their Fort Meade facility, allowing potential licensees to validate the process for the phosphate ore and
silica sources they have available, and will then complete its process design engineering for commercial-scale applications
of the IHP technology.
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 2018.
Shareholders are encouraged to view the JDCP website http://jdcphosphate.com
INVESTMENTS AND CORPORATE INFORMATION
BOARD CHANGES
On 14 December 2017 Brett Clark was appointed as an independent Non-Executive Director. On 21 March 2018 he was
appointed as independent Non-Executive Chairman. Mr. Clark replaced Dr Christopher Pointon who stepped down as
chairman and remains a Non-Executive Director.
FINANCING
During the financial year the Company undertook the following financing activities to fund the completion of the expansion
and upgrade investment and the Company's ongoing working capital requirements.
Short term shareholder loans
In June 2017 the Company secured short-term financing by way of shareholder loans from shareholders Tablo and Agrifos
totalling US$4.9 million (Shareholder Bridge Loans). During the second half of 2017 the Company drew down the remaining
US$3.6 million available under the Shareholder Bridge Loans.
Entitlement Offer
The Entitlement Offer was announced to the ASX on 24 October 2017 and successfully closed on Wednesday 22
November 2017 raising A$13 million (before costs). Under the Entitlement Offer, eligible shareholders were offered the
opportunity to subscribe for nine (9) New Shares (New Shares) for every twenty (20) existing shares they hold at an issue
price of 4.8 cents per Share.
The Entitlement Offer was well supported by eligible shareholders, with valid applications received for a total of
144,685,470 New Shares, resulting in gross proceeds raised of A$6,944,903. The number of New Shares offered under
the Entitlement Offer was 270,833,345 which resulted in a shortfall of 126,147,875 (Shortfall).
The Shortfall Shares were allocated in accordance with the Shortfall Allocation Policy detailed in the Offer Document. The
Company received subscriptions for 40,362,500 Shortfall Shares from Tablo Corporation and 85,785,375 Shortfall Shares
17
17
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
from Agrifields DMCC, the Underwriters of the Entitlement Offer. The Agrifields Shortfall Shares were paid for in two
tranches: A$500,000 was received on 13 December 2017 and A$3,617,698 was received in January 2018.
A portion of the funds from the Entitlement Offer was used to repay, in full, the Shareholder Bridge Loans from Tablo
Corporation of US$2.94 million plus interest and from Agrifos Partners LLC of US$1.96 million plus interest.
November 2017 Placement
In addition to the Entitlement Offer, the Company completed a placement offer of 41,666,667 ordinary shares to clients of
Foster Stockbroking Pty Ltd, the Company’s lead manager for the Entitlement Offer, at an issue price of 4.8 cents per
share. raising A$2 million (before costs) (Placement). The Placement was carried out under the Company's existing
placement capacity.
Therefore, the total amount raised via the Entitlement Offer and Placement was A$15 million (before costs).
August 2018 Placement
Following the end of the financial year on 7 August 2018 the Company announced a share placement to raise A$2.8 million
via the issue of 139,999,999 fully paid ordinary shares at a price of $0.02 per share (Placement). The Placement will be
completed in two tranches as follows:
(i)
(ii)
40,000,000 was issued following receipt of A$800,000 on 16 August under the Company’s existing 15% capacity
under ASX Listing Rule 7.1 (Tranche 1 Shares); and
99,999,999 shares will be issued, following shareholder approval at a general meeting of shareholders held on
20 September 2018 (Tranche 2 Shares) (General Meeting). The receipt of A$2 million and settlement of the
Tranche 2 Shares is expected to occur on or around 8 October 2018.
With the Feasibility Study now likely to be completed in 4Q 2018, the Company is currently reviewing the potential amount,
timing and sources of interim funding to enable the Company to complete the Feasibility Study.
FINANCIAL REVIEW
FINANCIAL INFORMATION
At 30 June 2018, the total closing cash balance was $3,679,173 (2017: $2,946,100). The Group has recorded an operating
loss after income tax for the year ended 30 June 2018 of $6,175,977 (2017: loss of $30,270,798).
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)
2018
REVENUE
$
83,859
2018
RESULTS
$
(7,641,770)
2018
2017
(0.69)
(5.09)
IMPAIRMENT – WONARAH PHOSPHATE PROJECT
A valuation review conducted by Optiro in December 2016 revealed that the fair market value of the Wonarah Phosphate
Project had 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 at that time. Subsequent reviews conducted by Optiro in June
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
2017, December 2017 and June 2018 revealed the fair market value of the Wonarah Project had not changed from the
December 2016 valuation. Therefore, any costs incurred during the period that were capitalised were impaired. As a
result, during the reporting period an amount of $109,630 (30 June 2017: $9,431,555) was impaired and recognised in
the Statement of Profit and Loss and Other Comprehensive Income.
Refer to Note 14 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. Further reviews were
conducted by Optiro at 31 December 2017 and 30 June 2018 on the same basis as at 30 June 2017. The valuation review
as at 30 June 2018 revealed that the fair market value of the Baobab Phosphate Project had increased and lies within a
range of $35,800,000 and $78,900,000 with a preferred value of $55,500,000. The valuation increase was due to the
significant increase in mineral resources estimates announced by the Company in October 2017. The directors considered
that the independent expert’s preferred value of $55,500,000 was most representative of the fair value of the Baobab
Phosphate Project, therefore at 30 June 2018, the recoverable amount was calculated as $54,390,000 after allowing for
estimated costs of disposal. As a result, during the reporting period an amount of $5,863,171 (30 June 2017: $5,954,404)
was impaired and recognised in the Statement of Profit and Loss and Other Comprehensive Income. The 30 June 2018
impairment loss was allocated to the capitalised mine development expenditure. The 30 June 2017 impairment loss was
allocated firstly to Goodwill in the amount of $4,721,345, with the balance of $1,233,059 allocated to the capitalised mine
development expenditure.
Refer to Note 15 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 7 August 2018 the Company announced a share placement to raise A$2.8 million via the issue of 139,999,999
fully paid ordinary shares at a price of $0.02 per share (Placement). The Placement will be completed in two
tranches as follows:
o
40,000,000 was issued following receipt of A$800,000 on 16 August under the Company’s existing 15%
capacity under ASX Listing Rule 7.1 (Tranche 1 Shares); and
o
99,999,999 shares will be issued, following shareholder approval at a general meeting of shareholders held
on 20 September 2018 (Tranche 2 Shares) (General Meeting). The receipt of A$2 million and settlement of
the Tranche 2 Shares is expected to occur on or around 8 October 2018.
Other than as disclosed above, no event has occurred since 30 June 2018 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 the
feasibility study currently underway for the targeted 1Mpta nameplate capacity, expansion and upgrade of the existing
operations at the Gadde Bissik mine 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.
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
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.
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20
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report DIRECTORS’ REPORT (cont…)
DIRECTORS’ MEETINGS
During the year the Company held 13 meetings of directors. The attendance of directors at meetings of the Board were:
DIRECTORS MEETINGS
AUDIT COMMITTEE MEETINGS
REMUNERATION AND
NOMINATION COMMITTEE
MEETINGS
A
8
13
12
13
13
10
3
B
8
13
13
13
13
13
13
A
*
*
2
2
2
*
*
B
*
*
2
2
2
*
*
A
*
*
5
5
5
*
*
B
*
*
5
5
5
*
*
Brett Clark
Louis Calvarin
Christopher Pointon
Ian McCubbing
Timothy Cotton
Farouk Chaouni
David Mimran
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 80,000,000 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 30 June 2018 ($0.12)
Expired on 30 June 2018 ($0.18)
Expired on 30 June 2018 ($0.25)
Total number of options outstanding as at 30 June 2018 and the date of this
report
The balance is comprised of the following:
NUMBER OF OPTIONS
88,075,000
(2,075,000)
(3,000,000)
(3,000,000)
80,000,000
EXPIRY DATE
24 September 2019
GRANT DATE
24 September 2015
EXERCISE PRICE (CENTS)
25
Total number of options outstanding at the date of this report
NUMBER OF OPTIONS
80,000,000
80,000,000
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any
share issue of any other body corporate.
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 $132,000 (2017: $59,361).
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report 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 83.
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 to the principles of sound corporate governance. The Board recognises 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 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
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
A.
INTRODUCTION
The remuneration report for the year ended 30 June 2018 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 2018. Unless otherwise
indicated, the individuals were KMP for the entire financial year.
NAME
POSITION
i) Non-executive Directors
Brett Clark
Independent Non-executive Chairman
Independent Non-executive Director
Independent Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Christopher Pointon
Ian McCubbing
Timothy Cotton
Farouk Chaouni
David Mimran
ii) Executive Directors
Louis Calvarin
iii) Other executive key management personnel
Rod Wheatley
Managing Director
Chief Financial Officer and Company Secretary
TERM AS KMP
i. Appointed Non-executive Director 14
December 2017
ii Appointed Chairman 21 March 2018
Full financial Year
Full financial Year
Full financial Year
Full financial Year
Full financial Year
Full financial Year
Full financial Year
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 2018 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 21 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.
23
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
An independent remuneration consultant, Gerard Daniels, was appointed 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 development of the standard executive incentive plan were $10,000 for the 2018
financial year. No other services were provided by Gerard Daniels during the 2018 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 – 2017 Annual General Meeting (AGM)
The Company received 97% “Yes” votes cast on its Remuneration Report for the 2017 financial year. The Company did
not receive any specific feedback at the AGM regarding its remuneration practices.
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
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
objectives.
Receipt of variable remuneration in any form is not guaranteed under any executive KMP’s employment contract.
2.1
LONG TERM INCENTIVE (LTI)
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.
Following the receipt of independent expert advice on its executive incentive scheme, the company
implemented a new long-term incentive structure for the 2018 financial year. This is considered a cost effective
and efficient reward to appropriately incentivise continued performance.
2.1.1 2017 Performance Rights
Mr. Louis Calvarin was granted 5,000,000 Performance Rights following approval by shareholders at the
2017 Annual General Meeting with the condition that the Performance Rights expire five years after the issue
date. The maximum number of Performance Rights to be issued to Mr. Calvarin (or his nominees) being
5,000,000 is based on an 80% conversion of Mr. Calvarin’s annual Total Fixed Remuneration (TFR) at a
Share price of A$0.072, being the 30-day VWAP of shares prior to 1 July 2017. The actual number of
Performance Rights that will vest and convert into shares is dependent on the satisfaction of the following
Performance conditions:
1. Mr. Calvarin remaining in the employment of the company at the relevant testing date; and
2. The company’s relative “Total Shareholder Return” (TSR) is;
(i)
(ii)
greater than zero; and
when ranked amongst the TSR achieved by other companies of the S&P ASX 300 Metals and
Mining Index is equal to, or greater than, the returns of 50% of those companies
Subject to the satisfaction of the above performance conditions, at the end of the 3-year performance
period, the Board will determine the number of Performance Rights that will vest based on the performance
of the Company’s relative TSR compared to the S&P ASX 300 Metals and Mining Index as follows:
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
RELATIVE TSR PERFORMANCE
PERCENTAGE VESTING
Below the 50th percentile
Between the 50th and 75th percentile
At or above the 75th percentile
0%
Straight-line vesting between 50 – 100%
100%
2.1.2
2015 Performance Rights
During 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. 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)
2. 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)
3. 25% on accumulation of 100 Mt of Inferred Resource of P2O5 at 20% or greater, capable of being converted
into saleable product. (1)
(1)
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:
a. 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
b. 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 part thereof.
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
Tranche 1 and 2, performance rights milestone dates were applied in the 2017 financial year. Following the passing
of Tranche 3 Performance Rights milestone dates in the 2018 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 decision that Tranche 3 milestones were
deemed to be met, resulting in the vesting of 100% of the Tranche 3 Performance Rights on 21 September 2017 and
conversion to shares on 2 February 2018.
Further information on Performance Rights on issue can be found on pages 32 under the Share-based
Compensation heading within the Remuneration Report.
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
2.2 SHORT TERM INCENTIVE (STI)
Under the STI, certain executives have the opportunity to earn an annual incentive award. The STI recognises and
rewards annual performance. The bonus KPIs are 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.
2017 Short term incentive
The Managing Director, Mr. Louis Calvarin, was 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 was determined by the
Board after 29 September 2017. The Board in its absolute discretion determined whether Mr Calvarin had achieved
the KPI’s and what proportion of the bonus amount was 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 basis.
A summary of the measures and weightings are set out in the table below:
ELEMENT KPI
LTI
Safety
Production 20-day average
Funding
$ received
Growth 1
Dryer: PFS complete & approved
FULLY
ACHIEVED
Zero
50%
ACHIEVED
1
1,300 tpd
1,000 tpd
A$30M
A$20M
Sep-2017
Nov-2017
% OF TOTAL
BONUS
AMOUNT
10%
30%
20%
20%
Growth 2
Floatation: Scoping Study, approval to
proceed to PFS
Sep-2017
Nov-2017
20%
% OF TOTAL
BONUS
AMOUNT
ACHIEVED
10%
-
8%
20%
20%
Based on the assessment, a cash bonus in the amount of $65,250 was paid to the Managing Director, Mr. Louis
Calvarin, during the 2018 financial year.
2018 short term incentive
The Managing Director, Mr. Louis Calvarin, was entitled to receive a bonus of up to 50% of his total fixed annual
remuneration for the financial year ending 30 June 2018, with 50% to be paid in cash and 50% in shares, with the
share issue deferred for 12 months, subject to the achievement of certain KPI’s.
A summary of the measures and weightings are set out in the table below:
KPI
Class 3 FS Cost Estimate
FULLY
ACHIEVED
Full only
50%
ACHIEVED
-
Gov’t Decree awarding Exploration Permit
Full only
Rights Issue-A$ raised
Cashflow Performance
Major fund raise
LTI
A$15M
+/-5%
Full only
Zero
-
A$13M
+/-15%
-
1
% OF TOTAL
BONUS
AMOUNT
25%
5%
20%
20%
25%
5%
% OF TOTAL
BONUS
AMOUNT
ACHIEVED
Nil
Nil
20%
20%
Nil
5%
27
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
Based on the assessment, the Company has accrued $101,250 in relation to the estimated cash bonus earned by
Mr. Calvarin as at 30 June 2018. The final bonus amount to be paid to Mr. Calvarin will be 50% in cash and 50% in
shares based on the share price at 1 July 2018 and will be issued on 1 July 2019.
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.
The Managing Director, Mr. Louis Calvarin was entitled and received a sign on bonus on 14 December 2017 of
377,358 fully paid ordinary shares to the value of $20,000 following approval of shareholders at the Annual General
Meeting held on 14 November 2017. The amount accrued at 30 June 2018 was nil (30 June 2017: $20,000).
The shares were issued at $0.053 per share being, 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
2018
(0.69)
$0.02
2017
(5.09)
$0.07
2016
(2.31)
$0.19
2015
(17.5)
$0.071
2014
(1.4)
$0.081
As the Company is in the development phase the performance of the Company is not related to the profit or earnings of
the Company.
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
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29
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
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30
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
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 2018 are set out below:
NAME
TERMS
Louis Calvarin (Managing
Director)
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).
Target STI opportunity of 50% of total fixed remuneration for FY 2018
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.
Base salary inclusive of superannuation of $295,000 reviewed annually on 31
December (or such other time as agreed).
3 months’ notice by Mr. Wheatley, 6 months’ notice by Company and upon change
of control.
Termination payments to reflect appropriate notice, except in cases of termination
for cause.
Rod Wheatley (Chief Financial
Officer and Company
Secretary)
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 approved by shareholders prior to award.
The table below summaries the Non-executive fees for the 2018 financial year:
Board
Chair
Non-executive Directors
Committee
Audit Chair
Remuneration and Nomination Chair
2018 FEES
A$110,000
A$60,000
A$10,000
A$10,000
31
31
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ REPORT (cont…)
In May 2017, the Board resolved to continue to accrue but defer the payment of all Non-independent non-executive Director
fees until further notice.
Termination payments
There were no termination payments paid to any Director or other KMP during the 2018 financial year.
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.
Loans to or from key management personnel
In 2018 there were no loans to KMP.
The Group received the following loans from KMP or their related parties during the 2018 financial year (2017: $3,765,467):
2018
LENDER
BALANCE
AT START
OF THE
YEAR
LOAN
PROCEEDS
RECEIVED
INTEREST
CHARGED
INTEREST
NOT
CHARGED
FORGIVEN
DURING
THE YEAR
FX
IMPACT
REPAID
DURING
THE YEAR
$
$
$
$
$
BALANCE
AT END
OF THE
YEAR
HIGHEST
BALANCE
DURING
THE YEAR
$
$
521,830
2,065,394
Agrifos Partners
LLC(1)
Tablo Corporation (2)
Mimran Natural
Resources (2)
(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.
(2,581,675)
(3,872,513)
3,098,090
2,514,445
(45,817)
(74,894)
782,873
176,660
40,268
66,444
-
-
-
-
-
-
-
-
-
-
-
2,581,675
3,872,513
2,847,084
2,847,084
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) Repaid in November 2017 from proceeds on the Entitlement Offer as further described at Note 20.
Full terms and conditions of the loans can be found at Note 20.
Other transactions and balances with KMPs and their related parties
(i)
(ii)
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. Total consultancy fees of $13,700
(2017: 46,700) 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 2018, advisory fees paid to Mr. McCubbing impacted the
Statement of Profit and Loss and Other Comprehensive Income with $13,700 recognised in Administrative and
Other Expenses. There was no impact on the 30 June 2018 Statement of Financial Position.
The Company owns approximately 7% of JDCPhosphates, Inc (JDCP) and has an exclusive licence to ultilise
the IHP technology. Avenira Non-Executive Directors Mr Chaouni and Mr Cotton are Directors of and have an
equity interest in JDCP. Please refer to Note 7, Note 11, Note 12 and Note 16 for further details on transactions
between the two companies during the period.
G. SHARE-BASED COMPENSATION
The Managing Director, Mr. Louis Calvarin, received 377,358 ordinary fully paid shares to the value of $20,000 as a sign
on bonus of shares, following shareholders’ approval at its November 2017 Annual General Meeting.
Mr. Louis Calvarin was also granted 5,000,000 Performance Rights with the conditions that the Performance Rights
expire five years after the issue date. Refer to 2.1.1 within Section C of the Remuneration Report on page 25 for further
details of the terms and conditions.
The performance rights plan was approved by shareholders at the AGM meeting of the company in 2015.
32
32
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report DIRECTORS’ REPORT (cont…)
There were no other share-based payments issued to directors or other KMP during the 2018 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
PRICE, $
NUMBER
LAPSED
NUMBER
VESTED
NUMBER
FORFEITED
VESTED
%
NUMBER
VESTED
2018
Directors
Louis Calvarin
14-Dec-17
5,000,000
30-Jun-20
30-Jun-22
$0.049
Other Executive KMP
Rod Wheatley
03-Dec-15
412,500
18-Nov-17
03-Dec-17
$0.067
nil
nil
-
-
-
412,500(1)
-
-
-
100
(1) 412,500 ordinary shares were issued on 2 February 2018 for nil consideration following the vesting of Tranche 3 Performance Rights on 21 September
2017.
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, $(1)
VALUE OF PR
VESTED
DURING THE
YEAR, $
VALUE OF PR
LAPSED
DURING THE
YEAR, $
VALUE OF PR
FORFEITED
DURING THE
YEAR, $
VALUE OF PR
INCLUDED IN
REMUNERATION
REPORT FOR
THE YEAR, $(2)
REMUNERATION
CONSISTING
OF PR FOR THE
YEAR, %
2018
Other Executive KMP
Louis Calvarin
Rod Wheatley
245,000
-
-
27,638
-
-
-
-
40,721
5,898
6%
2%
(1) The total fair value of performance rights granted is estimated based on the number of rights issued multiplied by the fair value of a right at the grant date. The fair value
at grant date is determined using the Monte-Carlo Simulation pricing methodology. Please refer to Note 35 for further details.
(2) The assessed total fair value of performance rights granted is allocated equally over the period from grant date to vesting date and is factored by the
probability of achievement of vesting performance conditions. As at 30 June 2018 the Board considered the percentage likelihood of achieving the
performance milestones as 50%. The above amount is recognised as an expense in the statement of profit and loss for the period ended 30 June
2018. Please refer to Note 35 for further details.
33
33
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
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
VESTED
AND
EXERCISABLE
UNVESTED
2018
Directors
Louis Calvarin
Brett Clark
Ian McCubbing
Timothy Cotton
Farouk Chaouni
David Mimran
Christopher Pointon
Other Executive KMP
-
-
-
-
-
-
-
5,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
Rod Wheatley
412,500
-
(412,500)(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
-
-
-
-
-
-
-
(1) Tranche 3 2015 Performance Rights vested on 21 September 2017 and were converted to fully paid ordinary shares for nil consideration on 2 February
2018.
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
2018
Directors
Louis Calvarin
Brett Clark
Ian McCubbing
Timothy Cotton
(1)
Farouk Chaouni
(1)
David Mimran
Christopher Pointon
Other Executive KMP
Rod Wheatley
-
-
-
80,000,000
80,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(24,000,000) (ii)
(24,000,000) (ii)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,000,000
56,000,000
56,000,000
56,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Mr. Timothy Cotton and Mr. Farouk Chaouni collectively hold their options through their related party, Baobab Partners LLC.
(2) Number reduced following an ownership restructure of Baobab Partners LLC
All vested options were exercisable at the end of the year.
34
34
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
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 as follows:
BALANCE AT
START OF THE
YEAR
RECEIVED DURING
THE YEAR FOR
RIGHTS CONVERTED
GRANTED AS
REMUNERATION
OTHER CHANGES
DURING THE YEAR
BALANCE AT END
OF THE YEAR
2018
Directors
Louis Calvarin
Brett Clark
Ian McCubbing
Timothy Cotton
Farouk Chaouni
David Mimran
Christopher Pointon
Other Executive KMP
Rod Wheatley
-
-
400,000
194,000,000
194,000,000
104,750,000
-
-
-
-
-
-
-
-
377,358
-
-
-
-
-
-
825,000
412,500(1)
-
-
180,000
13,194,808
13,194,808
87,500,000
-
-
377,358
-
580,000
207,194,808(2)
207,194,808(2)
192,250,000(3)
-
1,237,500
(1) Mr. Rod Wheatley was issued 412,500 ordinary shares for nil consideration on the vesting of Tranche 3 2015 Performance Rights.
(2) Mr. Timothy Cotton and Mr. Farouk Chaouni collectively holds shares through their related parties, Baobab Partners LLC and Vulcan Phosphates LLC.
(3) 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,
28 September 2018
35
35
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 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
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 2018, I declare to the
best of my knowledge and belief, there have been:
a)
b)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
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
28 September 2018
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:EH:AEV:039
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:
Minemakers to acquire a potential near-term production rock phosphate project in the Republic of Senegal
11 May 2015:
Minemakers delivers maiden Inferred Resource for Baobab Rock Phosphate Project in Republic of Senegal
22 September 2016:
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
12 October 2017
Mineral Resource increase at Boabab Phosphate Project
5 February 2018:
Mineral Resource increase at Boabab Phosphate Project
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.
37
37
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
YEAR ENDED 30 JUNE 2018
REVENUE
EXPENDITURE
Depreciation and amortisation expense
Salaries and employee benefits expense
Exploration expenditure
Net foreign currency loss
(Impairment) / impairment reversal of Doubtful debts
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
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 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)
CONSOLIDATED
NOTES
2018
$
2017
$
5
83,859
393,303
6
25(b)
14
15
16
17
35
7
24(b)
(364,632)
(1,874,371)
(114,515)
(148,478)
3,295,751
(109,630)
(5,863,171)
-
-
-
-
(60,918)
(2,485,665)
(7,641,770)
1,465,793
(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
(6,175,977)
(30,270,798)
-
2,626,616
2,626,616
-
2,626,616
(3,549,361)
-
(8,454)
(8,454)
15,610
7,156
(30,263,642)
(5,335,683)
(840,294)
(6,175,977)
(27,467,045)
(2,803,753)
(30,270,798)
(3,198,895)
(27,472,923)
(350,466)
(2,790,719)
(3,549,361)
(30,263,642)
34
34
(0.69)
(0.69)
(5.09)
(5.09)
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.
38
38
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
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
Other Assets
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
NOTES
CONSOLIDATED
2018
$
2017
$
8
9
10
9
11
13
14
15
16
17
18
19
20
21
20
21
22
3,679,173
969,294
2,286,116
6,934,583
1,481,600
31,239
1,334,802
10,018,672
51,407,026
141,682
-
683,958
65,098,979
72,033,562
1,959,721
210,958
804,442
2,975,121
2,483,047
7,215,150
3,221,045
12,919,242
15,894,363
56,139,199
2,946,100
1,205,601
3,456,258
7,607,959
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
EQUITY
Issued capital
Reserves
Accumulated losses
Capital and reserves attributable to members of Avenira Limited
Non-controlling interest
TOTAL EQUITY
23
24(a)
24(b)
31
139,480,390
26,234,899
(113,992,689)
51,722,600
4,416,599
125,037,889
25,147,663
(108,657,005)
41,528,547
5,057,338
56,139,199
46,585,885
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the
Consolidated Financial Statements.
39
39
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
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T
40
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 JUNE 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Payments for exploration expenditure
Receipts for other income
Interest received
NOTES
CONSOLIDATED
2018
$
2017
$
(4,054,365)
(114,515)
(6,934,244)
(323,391)
-
77,522
17,490
208,736
NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES
33
(4,091,358)
(7,031,409)
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
Net refund from VAT
Refund of security deposits
Payments for intangibles
Loans to other entities
NET CASH (OUTFLOW) FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Transaction costs on issue of shares
Proceeds from loans and borrowings
Repayments of loans
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
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL
YEAR
9
-
(1,235,014)
234,567
(2,970,612)
(12,143,633)
(22,350,486)
2,463,737
2,540,694
(249,353)
(674,426)
-
3,108,098
-
1,744
-
30,000
(80,425)
(38,453)
(551,891)
(2,146,900)
(8,175,043)
(25,887,310)
15,000,000
(577,500)
2,952,500
-
5,163,484
8,315,310
(6,454,188)
-
13,131,796
11,267,810
865,395
(21,650,909)
2,946,100
24,473,574
(132,322)
123,435
8
3,679,173
2,946,100
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated
Financial Statements.
41
41
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE
2018
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 27
September 2018. 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.
42
42
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
1. BASIS OF PREPARATION (cont…)
Going concern
At 30 June 2018, the Group had cash on hand of A$3,679,173 (30 June 2017: A$2,946,100). The Group made an operating
loss before tax of $7,641,770 for the year ended 30 June 2018 (30 June 2017: loss of $30,579,063) and had a cash outflow
from operating and investing activities of $12,266,401 (30 June 2017: $32,918,719).
In addition the Group’s cashflow forecast for the period ending 30 September 2019 which has been prepared based on
cost estimates currently available to the Group and is sensitive to the assumed cash flows from the Group’s Baobab
Phosphate Project in Senegal, reflects that the group will be required to raise additional working capital, in addition to the
funds raised subsequent to year end, during the 12 month period.
The Group has established a strategic plan for its Baobab Phosphate Project, focussed on a major expansion and upgrade
of the existing Baobab Project’s operations at the Gadde Bissik mine. Upcoming activities includes feasibility studies,
approvals and financing. Furthermore, operational activities onsite have been cut back with cash flow forecasts relating to
the production and sale of phosphate product reduced.
The ability of the Group to be able to continue as a going concern is thus dependent upon the Group being able to secure
additional working capital as and when required, until the Baobab project materially achieves its operational and financial
projections.
The Directors are satisfied that additional working capital can be secured as required and that it is appropriate to prepare
the financial statements on a going concern basis based on the following:
• The strong support of existing and new shareholders and the continued strong support from the major shareholders
including:
i. Subsequent to year end the Group successfully raised A$2.8 million via a Placement, including A$2 million to
its major shareholders, which is expected to be received in October 2018, and A$0.8 million to new
shareholders
ii. In November and December 2017, the Group successfully raised A$15 million via a A$13 million Entitlement
Offer to existing shareholders and a A$2 million Placement to new shareholders
iii. In June 2017 the Group raised A$2.5 million via a Share Purchase Plan (“SPP”) to existing shareholders
iv. Continued strong support of its two major shareholders, Agrifos Partners LLC (22% equity ownership), and
Tablo Corporation (20% equity ownership), an affiliate of Groupe Mimran via the provision of bridge loans and
through the participation in the Entitlement Offer
v. Significant participation in the SPP and as an underwriter in the Entitlement Offer has resulted in Agrifields
DMCC becoming a major shareholder
• The Group is seeking additional financing in the next 6 to 12 months via a combination of debt and equity, supported
by off-take agreements, to finance and implement the expansion and upgrade project. Private equity, off-takers and
other strategic investors (including the Company’s existing shareholders) will be targeted to cornerstone the equity
component. For the debt, the Company has received preliminary interest from local and international banks and
development finance institutions.
• The Group has a historical track record of being able to secure additional working capital as and when required.
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, when required, there is 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 classification of liabilities that might be necessary should the Group not be able to continue as a going
concern.
Critical accounting estimates
The preparation of financial statements requires a management to use estimates, 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.
43
43
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
1. BASIS OF PREPARATION (cont…)
2. PRINCIPLES OF CONSOLIDATION (cont…)
The areas involving a higher degree of judgement and complexity, or areas where assumptions are significant to the
financial statements are:
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
Note 9 Trade and Other Receivables Page 53
Page 54
Note 10 Inventories
Page 56
Note 14 Capitalised exploration and evaluation expenditure
Page 58
Note 15 Capitalised mine development expenditure
Page 63
Note 20 Provision for mine rehabilitation and restoration
Page 91
Note 35 Share based payments
Comparative Figures
When required by the accounting standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
When 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)
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.
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.
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.
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.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Fair Value of Assets and Liabilities
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.
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.
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 2018 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. Intercompany
transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised
44
44
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
45
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
2. PRINCIPLES OF CONSOLIDATION (cont…)
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.
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
45
45
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont…)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont…)
(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
(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
equity.
2017 including:
• AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interest in
• AASB 2014-4 Clarification on acceptable methods of depreciation and amortisation (amendments to AASB
• AASB 2015-1 Annual Improvements to IFRSs 2012 – 2014 Cycle (clarification amendments to AASB 5, AASB
Joint Operations;
116 and AASB 138);
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.
not yet effective.
The Group has not elected to early adopt any other new or amended standards or interpretations that are issued but
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.
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.
ii.
If a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa;
or
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
46
46
47
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont…)
(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
2017 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.
47
47
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont…)
(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 2018 are outlined in the table below. The potential
effect of these Standards is yet to be fully determined.
TITLE
AASB 9
Financial
Instruments
AASB 15
Revenue from
Contracts with
Customers
AASB 16
Leases
SUMMARY
Instruments: Recognition and
AASB 9 replaces AASB 139 Financial
Measurement.
Except for certain trade receivables, an entity initially measures a financial asset
at its fair value plus, in the case of a financial asset not at fair value through profit
or loss (FVTPL), transaction costs.
Debt instruments are subsequently measured at FVTPL, amortised cost, or fair
value through other comprehensive income (FVOCI), on the basis of their
contractual cash flows and the business model under which the debt instruments
are held.
There is a fair value option (FVO) that allows financial assets on initial
recognition to be designated as FVTPL if that eliminates or significantly reduces
an accounting mismatch.
Equity instruments are generally measured at FVTPL. However, entities have
an irrevocable option on an instrument-by-instrument basis to present changes
in the fair value of non-trading instruments in other comprehensive income (OCI)
without subsequent reclassification to profit or loss.
For financial liabilities designated as FVTPL using the FVO, the amount of
change in the fair value of such financial liabilities that is attributable to changes
in credit risk must be presented in OCI. The remainder of the change in fair value
is presented in profit or loss, unless presentation in OCI of the fair value change
in respect of the liability’s credit risk would create or enlarge an accounting
mismatch in profit or loss.
All other AASB 139 classification and measurement requirements for financial
liabilities have been carried forward into AASB 9, including the embedded
derivative separation rules and the criteria for using the FVO.
The incurred credit loss model in AASB 139 has been replaced with an expected
credit loss model in AASB 9.
The requirements for hedge accounting have been amended to more closely
align hedge accounting with risk management, establish a more principle-based
approach to hedge accounting and address inconsistencies in the hedge
accounting model in AASB 139.
Existing financial assets and liabilities of the Group were assessed in terms of
the measurements of AASB 9, and the Group has determined that the adoption
of AASB 9 will not materially impact the measurement and classification its
assets and liabilities and will not result in any re-measurement adjustments at 1
July 2018.
AASB 15 provides a single, principles based five-step model to be applied to all
contracts with customers. Under AASB 15, revenue is recognized at an amount
that reflects the consideration to which an entity expects to be entitled in
exchange for transferring goods or services to a customer. Under AASB 15 the
revenue recognition model will change from one based on the transfer of risk
and reward of ownership to the transfer of control of ownership.
The Group will apply this standard when the recognition of revenue from core
operations becomes applicable. The adoption of AASB 15 is not expected to
have a material impact on the measurement of revenue at 1 July 2018.
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.
The adoption of AASB 15 is not expected to have a material impact on the
financial statements.
APPLICATION
DATE OF
STANDARD
1 Jan 2018
EXPECTED
APPLICATION
DATE FOR GROUP
1 Jul 2018
1 Jan 2018
1 Jul 2018
1 Jan 2019
1 Jul 2019
48
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
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.
Management has determined the operating segments based on the reports reviewed by the Board of Directors that
(a) Description of segments
are used to make strategic decisions.
two reportable segments being:
•
•
in Africa; and
The Board considers the business from both functional and geographic perspectives and has identified that there are
• exploration and development of the Wonarah in the Northern Territory (Wonarah) located in Australia;
exploration and development of the Baobab Phosphate Project in the Republic of Senegal (Baobab) located
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.
Depreciation and amortisation
3,815
343,570
17,247
364,632
2018
Revenue
Interest revenue
Total segment revenue
Total revenue as per statement of
comprehensive income
Impairment of non-current assets
Impairment / (impairment reversal) of
Doubtful debts
Segment net loss
Total net loss as per statement of
comprehensive income
Segment assets
Capitalised exploration and evaluation
expenditure
Plant and equipment
Other assets at balance date
Total segment assets
Segment liabilities
Deferred tax liability
Other liabilities at balance date
Total segment liabilities
WONARAH
(AUSTRALIA)
BAOBAB
(SENEGAL)
UNALLOCATED –
TOTAL
OTHER SEGMENTS
CONSOLIDATED
$
$
$
$
36,455
36,455
-
-
47,404
47,404
83,859
83,859
83,859
109,630
5,863,171
36,725
(3,332,476)
-
-
5,972,801
(3,295,751)
(152,023)
(5,175,522)
(848,432)
(6,175,977)
(6,175,977)
3,058
1,510,708
1,322,407
4,020,378
9,337
3,741,976
1,334,802
9,273,062
7,491,766
60,698,283
3,843,513
72,033,562
-
3,221,045
-
3,221,045
1,289,864
10,495,092
1,289,864
13,716,137
888,362
888,362
12,673,318
15,894,363
49
Capitalised mine development expenditure
-
51,407,026
-
51,407,026
5,978,000
3,948,472
92,200
10,018,672
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
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 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.
2018
Revenue
Interest revenue
Total segment revenue
Total revenue as per statement of
comprehensive income
Impairment of non-current assets
Impairment / (impairment reversal) of
Doubtful debts
Depreciation and amortisation
Segment net loss
Total net loss as per statement of
comprehensive income
Segment assets
Capitalised exploration and evaluation
expenditure
Capitalised mine development expenditure
Plant and equipment
Other assets at balance date
Total segment assets
Segment liabilities
Deferred tax liability
Other liabilities at balance date
Total segment liabilities
WONARAH
(AUSTRALIA)
BAOBAB
(SENEGAL)
UNALLOCATED –
OTHER SEGMENTS
TOTAL
CONSOLIDATED
$
$
$
$
36,455
36,455
-
-
47,404
47,404
83,859
83,859
83,859
109,630
5,863,171
36,725
(3,332,476)
-
-
5,972,801
(3,295,751)
3,815
343,570
17,247
364,632
(152,023)
(5,175,522)
(848,432)
(6,175,977)
(6,175,977)
5,978,000
3,948,472
92,200
10,018,672
-
51,407,026
-
51,407,026
3,058
1,510,708
1,322,407
4,020,378
9,337
3,741,976
1,334,802
9,273,062
7,491,766
60,698,283
3,843,513
72,033,562
-
3,221,045
-
3,221,045
1,289,864
10,495,092
1,289,864
13,716,137
888,362
888,362
12,673,318
15,894,363
49
49
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
4. SEGMENT INFORMATION (cont…)
5. REVENUE (cont…)
2017
Revenue
Interest revenue
Other revenue
WONARAH
(AUSTRALIA)
BAOBAB
(SENEGAL)
UNALLOCATED –
OTHER SEGMENTS
TOTAL
CONSOLIDATED
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.
39,861
-
15,222
6,441
320,729
11,049
375,812
17,491
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 15.
Total segment revenue
Total revenue as per statement of
comprehensive income
39,861
21,664
331,778
393,303
393,303
Impairment of non-current assets
Impairment / (impairment reversal) of
doubtful debts
Depreciation and amortisation
Net loss on disposal of fixed assets
10,073,381
5,954,404
2,357,854
4,252,348
-
-
16,027,785
6,610,202
3,737
-
249,706
23,361
9,746
195
263,189
23,556
Other revenue
Interest from financial institutions
Interest other
Other sundry revenue
6. EXPENSES
(12,438,304)
(14,018,772)
(3,813,723)
(30,270,798)
Segment net loss
Total net loss as per statement of
comprehensive income
Segment assets
Capitalised exploration and evaluation
expenditure
Capitalised mine development expenditure
Plant and equipment
6,872
1,322,607
9,598
Other assets at balance date
1,508,975
4,678,398
3,017,577
5,978,000
2,744,989
-
47,579,578
-
-
(30,270,798)
8,722,989
47,579,578
1,339,077
9,204,950
Total segment assets
7,493,847
56,325,573
3,027,175
66,846,594
Segment liabilities
Deferred tax liability
-
4,413,080
-
4,413,080
Other liabilities at balance date
1,289,847
12,284,949
2,272,833
15,847,629
Total segment liabilities
1,289,847
16,698,029
2,272,833
20,260,709
5. REVENUE
Accounting policies
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.
50
50
51
2018
$
2017
$
83,859
-
-
83,859
218,481
157,331
17,491
393,303
2018
$
2017
$
49,951
106,694
-
148,478
114,453
132,464
23,556
255,529
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
Foreign exchange losses (net)
7. INCOME TAX
Accounting Policies
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.
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
5. REVENUE (cont…)
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 15.
Other revenue
Interest from financial institutions
Interest other
Other sundry revenue
6. 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
Foreign exchange losses (net)
7. INCOME TAX
Accounting Policies
2018
$
2017
$
83,859
-
-
83,859
218,481
157,331
17,491
393,303
2018
$
2017
$
49,951
106,694
-
148,478
114,453
132,464
23,556
255,529
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.
51
51
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
7. INCOME TAX (cont…)
(a) Income tax expense/(benefit)
Current tax
Deferred tax
2018
$
2017
$
-
(1,465,793)
(1,465,793)
-
(308,265)
(308,265)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
(7,641,770)
(30,579,063)
Prima facie tax benefit at the Australian tax rate of 30% (2017: 30%)
(2,292,531)
(9,173,719)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Share based payments
Other
Movements in unrecognised temporary differences
Tax effect of current year tax losses for which no deferred tax asset has
been recognised
Income tax (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
Tax losses in Australia
Deferred tax assets not recognised
Offset against deferred tax liabilities
Net deferred tax assets
(e) Deferred tax liabilities
18,275
204
73,222
292,834
(290,573)
2,708,431
1,098,832
5,790,967
(1,465,793)
(308,265)
(1,465,793)
(308,265)
-
-
(1,465,793)
(308,265)
-
-
157,180
386,850
68,129
878,080
-
-
80,792
388,266
82,820
878,080
30,353,826
29,461,092
31,844,065
30,891,050
(29,715,818)
(28,994,007)
2,128,247
1,897,043
(2,128,247)
(1,897,043)
-
-
Capitalised exploration and evaluation costs and development costs
(5,042,105)
(6,206,480)
Unrealised foreign exchange gain
Other accruals
Offset against deferred tax assets
Net deferred tax liabilities
(303,827)
(103,643)
(3,360)
-
(5,349,292)
(6,310,123)
2,128,247
1,897,043
(3,221,045)
(4,413,080)
52
52
7. 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 2018 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.
8. CASH AND CASH EQUIVALENTS
Accounting Policies
bank overdrafts.
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
Cash at bank and in hand
Short-term deposits
the statement of cash flows
Cash and cash equivalents as shown in the statement of financial position and
2018
$
2017
$
1,179,173
2,500,000
2,946,100
-
3,679,173
2,946,100
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.
9. 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.
53
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
7. 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 2018 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.
8. 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
2018
$
2017
$
1,179,173
2,500,000
2,946,100
-
3,679,173
2,946,100
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.
9. 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.
53
53
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
9. TRADE AND OTHER RECEIVABLES (cont…)
Current
Trade and other receivables(i)
Government taxes receivable(ii)
Provision for impairment(ii)
Prepayments
Sundry receivables
Security deposits
2018
$
2017
$
45,605
922,509
1,016,743
4,282,642
(292,687)
(4,252,348)
126,414
99,811
67,642
969,294
80,648
13,650
64,266
1,205,601
(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 $904,503 and GST receivable in Australia of $18,006 (30 June 2017: VAT
receivable in Senegal of $4,252,348 and GST receivable in Australia of $30,294). Due to the finalisation of the VAT refund claim in Senegal that
resulted in receipt of $3,629,684 the Group reversed the previously impaired VAT receivable balance. Furthermore, at 30 June 2018, based on
historical VAT recovery outcomes the Group has determined that 30% of the outstanding VAT receivable still subject to approval in Senegal should
be provided for resulting in an impairment of $292,687.
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)
Convertible promissory notes(iv)
Provision for impairment(ii)
Security deposits
2018
$
2017
$
-
-
86,270
(86,270)
2,312,716
2,227,707
(2,312,716)
(2,227,707)
38,455
(38,455)
1,481,600
1,481,600
-
-
1,481,600
1,481,600
(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 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.
(iv) In June 2018, the Group (the “holder”) entered into convertible secured promissory notes with JDCP, (the “recipient”). The notes accrued interest at
12% per annum compounded monthly and payable on maturity. The notes mature on the earlier 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.
10. 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.
54
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
10. INVENTORIES (cont…)
Current
Inventories valued at net realisable value(i)
Inventories valued at Cost(ii)
2018
$
2017
$
2,214,758
3,456,258
71,358
-
2,286,116
3,456,258
(i) At 30 June 2018 Ore inventory cost was $6,122,454 while inventory net realisable value was $2,214,758. The difference of $3,907,696 has been
transferred to capitalised mine development expenditure pending the commencement of commercial production.
(ii) At 30 June 2018 Fuel and Spare parts inventory cost was valued at cost.
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.
11. 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)
(i) These equity securities represent 15,619,524 ordinary fully paid shares of Niuminco Group Limited valued at 0.20 (2017: 0.20) 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 2018 (30 June 2017: nil). Refer to Note 25 for further details.
12. DERIVATIVE FINANCIAL INSTRUMENTS
Accounting Policies
Refer to Note 25.
Unlisted warrants at fair value through profit or loss(i) (ii) (iii)
(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 2018 the fair value of the underlying
shares was zero, therefore the carrying amount of the warrants was zero.
(iii) In May 2018 and June 2018, the Group was issued unlisted warrants in JDCP. The warrants have an exercise price of USD7.34 and expire in May
2023 and June 2023. The fair value of the warrants is considered to equate to the fair value of the underlying ordinary shares. As at 30 June 2018 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.
2018
$
2017
$
31,239
31,239
-
-
31,239
31,239
2018
$
2017
$
-
-
-
-
55
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
10. INVENTORIES (cont…)
Current
Inventories valued at net realisable value(i)
Inventories valued at Cost(ii)
2018
$
2017
$
2,214,758
3,456,258
71,358
-
2,286,116
3,456,258
(i) At 30 June 2018 Ore inventory cost was $6,122,454 while inventory net realisable value was $2,214,758. The difference of $3,907,696 has been
transferred to capitalised mine development expenditure pending the commencement of commercial production.
(ii) At 30 June 2018 Fuel and Spare parts inventory cost was valued at cost.
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.
11. 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)
2018
$
2017
$
31,239
31,239
-
-
31,239
31,239
(i) These equity securities represent 15,619,524 ordinary fully paid shares of Niuminco Group Limited valued at 0.20 (2017: 0.20) 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 2018 (30 June 2017: nil). Refer to Note 25 for further details.
12. DERIVATIVE FINANCIAL INSTRUMENTS
Accounting Policies
Refer to Note 25.
Unlisted warrants at fair value through profit or loss(i) (ii) (iii)
2018
$
2017
$
-
-
-
-
(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 2018 the fair value of the underlying
shares was zero, therefore the carrying amount of the warrants was zero.
(iii) In May 2018 and June 2018, the Group was issued unlisted warrants in JDCP. The warrants have an exercise price of USD7.34 and expire in May
2023 and June 2023. The fair value of the warrants is considered to equate to the fair value of the underlying ordinary shares. As at 30 June 2018 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.
55
55
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
13. 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.
area of interest are continuing.
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.
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
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.
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.
14. CAPITALISED EXPLORATION AND EVALUATION EXPENDITURE (cont…)
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
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.
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
2018
$
2,162,344
(827,542)
1,334,802
1,339,077
249,353
-
-
(327,447)
73,819
2017
$
1,805,663
(466,586)
1,339,077
800,789
825,952
-
(25,300)
(256,458)
(5,906)
1,334,802
1,339,077
14. 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
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)
Research and development tax refund(iii)
Foreign currency translation movement
Closing net carrying amount(iv)
2018
$
2017
$
8,722,989
15,418,499
1,235,032
2,970,612
(109,630)
(9,431,555)
-
(234,567)
170,281
-
10,018,672
8,722,989
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.
(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) 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 (30 June 2017: $5,978,000) and $4,040,672 (30 June 2017: $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
had 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
56
56
57
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
14. CAPITALISED EXPLORATION AND EVALUATION EXPENDITURE (cont…)
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.
2018
$
2017
$
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)
Research and development tax refund(iii)
Foreign currency translation movement
Closing net carrying amount(iv)
8,722,989
15,418,499
1,235,032
2,970,612
(109,630)
(9,431,555)
-
(234,567)
170,281
-
10,018,672
8,722,989
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.
(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) 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 (30 June 2017: $5,978,000) and $4,040,672 (30 June 2017: $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
had 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
57
57
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
14. CAPITALISED EXPLORATION AND EVALUATION EXPENDITURE (cont…)
15. CAPITALISED MINE DEVELOPMENT EXPENDITURE (cont…)
participants with defined phosphate mineral resources (level 3 in the fair value hierarchy). Subsequent reviews
conducted by Optiro in June 2017, December 2017 and June 2018 revealed the fair market value of the Wonarah
Project had not changed from the December 2016 valuation.
Considering that no exploration expenditure, other than rental and incidental land costs, has been budgeted for the
financial years since December 2016 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 2017. As a result,
during the reporting period an amount of $109,630 (30 June 2017: $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.
Impairment of Baobab Phosphate Project capitalised exploration expenditure has been assessed as part of the
impairment assessment of the Baobab CGU, refer to Note 15 for further details. There was no impairment of Baobab
Phosphate Project capitalised exploration expenditure at 30 June 2017 or 30 June 2018. Any impairment recognised
that related to the Baobab Phosphate Project CGU was allocated to mine development. Refer to Note 15 for further
details.
15. 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.
Reconciliation of movements during the year
Opening net carrying amount
Capitalised mine development
Capitalised interest
Capitalised provision for rehabilitation
Impairment of mine development expenditure
Foreign currency translation movement
Closing net carrying amount
Key estimates and assumptions
2018
$
2017
$
47,579,578
35,526,331
6,310,401
15,951,730
618,736
-
(22,755)
(1,563,914)
(5,863,171)
(1,233,059)
2,784,237
(1,101,510)
51,407,026
47,579,578
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.
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 generating
unit. Prior to any impairment losses, the Baobab CGU for impairment testing purposes, totals $58,812,506 at 30 June
2018 (30 June 2017: $52,896,404).
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 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 considered that the
independent expert’s preferred value of $47,900,000 was most representative of the fair value of the Baobab Phosphate
Project, therefore at 30 June 2017, the recoverable amount was calculated as $46,940,000 after allowing for estimated
costs of disposal.
Further reviews were conducted by Optiro at 31 December 2017 and 30 June 2018 on the same basis as at 30 June
2017. The valuation review revealed that the fair market value of the Baobab Phosphate Project had increased and lies
within a range of $35,800,000 and $78,900,000 with a preferred value of $55,500,000. The valuation increase was due
to the significant increase in mineral resources estimates announced by the Company in October 2017. The directors
considered that the independent expert’s preferred value of $55,500,000 was most representative of the fair value of the
Baobab Phosphate Project, therefore at 30 June 2018, the recoverable amount was calculated as $54,390,000 after
allowing for estimated costs of disposal.
As a result, during the period an amount of $5,863,171 (30 June 2017: $5,954,404) was impaired and recognised in
the Statement of Profit or Loss and Other Comprehensive Income. The 30 June 2018 impairment loss was allocated
to the capitalised mine development expenditure. The 30 June 2017 impairment loss was allocated firstly to Goodwill in
the amount of $4,721,345, with the balance of $1,233,059 allocated to the capitalised mine development expenditure.
58
58
59
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
15. CAPITALISED MINE DEVELOPMENT EXPENDITURE (cont…)
Reconciliation of movements during the year
Opening net carrying amount
Capitalised mine development
Capitalised interest
Capitalised provision for rehabilitation
Impairment of mine development expenditure
Foreign currency translation movement
Closing net carrying amount
Key estimates and assumptions
2018
$
2017
$
47,579,578
35,526,331
6,310,401
15,951,730
618,736
-
(22,755)
(1,563,914)
(5,863,171)
(1,233,059)
2,784,237
(1,101,510)
51,407,026
47,579,578
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.
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 generating
unit. Prior to any impairment losses, the Baobab CGU for impairment testing purposes, totals $58,812,506 at 30 June
2018 (30 June 2017: $52,896,404).
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 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 considered that the
independent expert’s preferred value of $47,900,000 was most representative of the fair value of the Baobab Phosphate
Project, therefore at 30 June 2017, the recoverable amount was calculated as $46,940,000 after allowing for estimated
costs of disposal.
Further reviews were conducted by Optiro at 31 December 2017 and 30 June 2018 on the same basis as at 30 June
2017. The valuation review revealed that the fair market value of the Baobab Phosphate Project had increased and lies
within a range of $35,800,000 and $78,900,000 with a preferred value of $55,500,000. The valuation increase was due
to the significant increase in mineral resources estimates announced by the Company in October 2017. The directors
considered that the independent expert’s preferred value of $55,500,000 was most representative of the fair value of the
Baobab Phosphate Project, therefore at 30 June 2018, the recoverable amount was calculated as $54,390,000 after
allowing for estimated costs of disposal.
As a result, during the period an amount of $5,863,171 (30 June 2017: $5,954,404) was impaired and recognised in
the Statement of Profit or Loss and Other Comprehensive Income. The 30 June 2018 impairment loss was allocated
to the capitalised mine development expenditure. The 30 June 2017 impairment loss was allocated firstly to Goodwill in
the amount of $4,721,345, with the balance of $1,233,059 allocated to the capitalised mine development expenditure.
59
59
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
15. CAPITALISED MINE DEVELOPMENT EXPENDITURE (cont…)
Key inputs
The fair value was calculated on an implied value per tonne of P2O5 input with a range between $1.00 to $2.00. This
value range was verified against enterprise value per P2O5 resource tonne of selected companies with comparable
phosphate Mineral Resources
Sensitivity
Price multiple of $1.00 tonne of P20 5
Price multiple of $1.50 tonne of P 20 5
Price multiple of $2.00 tonne of P20 5
Key Judgements
Production Start Date
Impact of impairment
$23,729,000
$5,863,171
Nil
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 substantially complete and ready for its intended use. The criteria used to
assess 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 from “Capitalised Mine Development Expenditure” to “Mine Properties”
and/or “Property, Plant and Equipment”. Some of the criteria used to identify the production start date include, but not
limited to:
•
• Completion of a reasonable period of testing of the mine plant and equipment
•
• Ability to produce ore in saleable form (within specifications) and receive validation from customers
• Ability to sustain ongoing production of ore
Level of capital expenditure incurred compared with the original construction cost estimate
The mine is producing at a pre-determined level of design capacity
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 capitalisation relating to mining asset additions or improvements or mineable reserve development. It is also
the point that depreciation and amortization commence.
Based on the above criteria the Group has determined at 30 June 2018 the Baobab Project remains in the
development/construction phase.
60
60
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
16. 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.
2018
$
2017
$
175,191
(33,509)
141,682
84,152
80,425
(23,578)
683
141,682
93,458
(9,306)
84,152
192,619
551,890
(6,731)
(11,800)
84,152
-
(641,826)
Intangibles
Cost
Accumulated amortisation
Net carrying amount
Movements in carrying amounts
Opening net carrying amount(i)
Additions(ii)
Impairment(iii)
Amortisation
Foreign currency translation movement
Closing net carrying amount at year end
17. GOODWILL
Accounting Policies
Impairment of assets
(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 in 2017 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 2018 and determined that it remains as nil (30 June 2017: Nil).
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.
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
16. 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)
Impairment(iii)
Amortisation
Foreign currency translation movement
2018
$
2017
$
175,191
(33,509)
141,682
93,458
(9,306)
84,152
84,152
80,425
192,619
551,890
-
(641,826)
(23,578)
683
(6,731)
(11,800)
Closing net carrying amount at year end
84,152
(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.
141,682
(ii) Licence rights additions in 2017 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 2018 and determined that it remains as nil (30 June 2017: Nil).
17. 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.
61
61
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
17. GOODWILL (cont…)
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
2018
$
2017
$
-
-
-
-
-
-
-
-
-
4,746,961
-
(4,721,345)
(25,616)
-
(i) The goodwill arose on acquisition of Baobab Mining and Chemicals Corporation SA (BMCC) on 23 September 2015.
(ii) Goodwill was impaired in full following the Group’s 30 June 2017 annual impairment test. Refer to Note 15 for further details.
Key estimates and assumptions
The Group assesses at each reporting date whether goodwill is impaired. Refer to Note 15 for details of the 30 June
2017 impairment assessment.
18. OTHER ASSETS
During the financial year the Company entered into a lease agreement with Senegal Minergy Port to secure a
parcel of land in the Industrial Free Zone of this new bulk solids and liquids port development east of Dakar, from
which exports will be shipped in the future. An upfront payment of $678,622 (XOF290 million) was required under
the agreement. This amount will be amortised on a pro rata basis over the term of the lease being 25 years. The
total amortisation accrued to 30 June 2018 was $13,607(XOF5.8million) (30 June 2017: Nil).
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.
2018
$
2017
$
1,043,988
4,336,705
915,733
389,721
1,959,721
4,726,426
62
62
20. PROVISIONS
Accounting Policies
(i) 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.
(ii) 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.
(iii) 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
Movements in mine rehabilitation and restoration provision
Mine rehabilitation and restoration(i)
Employment benefits
Opening net carrying amount
(Decrease)/increase in provision
Foreign currency translation movement
Closing net carrying amount
210,958
210,958
186,404
186,404
2018
$
2018
$
2017
$
2017
$
2,432,970
2,387,606
50,077
42,596
2,483,047
2,430,202
2,387,606
3,965,981
(22,755)
(1,563,914)
68,119
(14,461)
2,432,970
2,387,606
63
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
20. PROVISIONS
Accounting Policies
(i) 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.
(ii) 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.
(iii) 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
2018
$
2017
$
210,958
210,958
186,404
186,404
2018
$
2017
$
2,432,970
2,387,606
50,077
42,596
2,483,047
2,430,202
2,387,606
3,965,981
(22,755)
(1,563,914)
68,119
(14,461)
2,432,970
2,387,606
63
63
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
20. PROVISIONS (cont…)
21. LOANS AND BORROWINGS (cont…)
2018
$
2017
$
Current
Movements in employee benefits provision
Opening net carrying amount
Increase in provision
Paid during the year
Foreign currency translation movement
Closing net carrying amount
42,596
7,688
(2,557)
2,350
50,077
52,478
37,878
(47,760)
-
42,596
(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 2018
rehabilitation obligation has a carrying value of $1,289,500 for the Wonarah Phosphate Project and $1,143,470 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.
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
2018
$
2017
$
-
1,304,703
804,442
683,294
804,442
1,987,997
2018
$
2017
$
4,368,066
4,002,155
2,847,084
2,514,445
7,215,150
6,516,600
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
would provide an unsecured bridge loan of US $1,440,000 (A$1,879,000) to the Company and Mimran would 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.
In October 2017, the facilities under the Bridge Loans were increased by a total of US$1,300,000 (A$1,696,020),
US$780,000 provided by Mimran and US$520,000 by Agrifos.
The remaining amounts available under the facilities were fully drawn upon during the period.
During November and December 2017 funds from the Entitlement Offer was used to repay, in full, the Shareholder loans
from Mimran of US$2,940,000 (A$3,872,523) plus interest and from Agrifos of US$1,960,000 (A$2,581,665) plus
interest.
Finance facility
Gadde Bissik Phosphate Operations Suarl (“GBO”), Avenira’s 80% owned subsidiary, successfully secured a
A$9,600,000 finance facility through CBAO Groupe Attijariwafa Bank (“CBAO”). The facility consists of a A$4,800,000
working capital facility and access to an additional A$4,800,000 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
o Amount: XOF 2 billion (A$4,800,000);
o Term: 5 years;
plus interest payments; and
o Standard security arrangements over all GBO assets
•
Trade facility
o Repayment Terms: No principal or interest repayments for 12 months, followed by 48 equal principal
o Access to an additional XOF 2billion (A$4,800,000) for the financing of export receivables, if required.
The working capital facility of XOF 2 billion was fully drawn down on 31 December 2016.
64
64
65
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
21. LOANS AND BORROWINGS (cont…)
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
2018
$
2017
$
-
1,304,703
804,442
683,294
804,442
1,987,997
2018
$
2017
$
4,368,066
4,002,155
2,847,084
2,514,445
7,215,150
6,516,600
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
would provide an unsecured bridge loan of US $1,440,000 (A$1,879,000) to the Company and Mimran would 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.
In October 2017, the facilities under the Bridge Loans were increased by a total of US$1,300,000 (A$1,696,020),
US$780,000 provided by Mimran and US$520,000 by Agrifos.
The remaining amounts available under the facilities were fully drawn upon during the period.
During November and December 2017 funds from the Entitlement Offer was used to repay, in full, the Shareholder loans
from Mimran of US$2,940,000 (A$3,872,523) plus interest and from Agrifos of US$1,960,000 (A$2,581,665) plus
interest.
Finance facility
Gadde Bissik Phosphate Operations Suarl (“GBO”), Avenira’s 80% owned subsidiary, successfully secured a
A$9,600,000 finance facility through CBAO Groupe Attijariwafa Bank (“CBAO”). The facility consists of a A$4,800,000
working capital facility and access to an additional A$4,800,000 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
o Amount: XOF 2 billion (A$4,800,000);
o Term: 5 years;
o Repayment Terms: No principal or interest repayments for 12 months, followed by 48 equal principal
plus interest payments; and
o Standard security arrangements over all GBO assets
Trade facility
•
o Access to an additional XOF 2billion (A$4,800,000) for the financing of export receivables, if required.
The working capital facility of XOF 2 billion was fully drawn down on 31 December 2016.
65
65
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
21. LOANS AND BORROWINGS (cont…)
In March 2018 an agreement was finalised with CBAO to extend the deferral of the principal repayments of the existing
working capital facility by a further twelve months to December 2018. All other terms and conditions remain.
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.
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
Income tax benefit realised
Foreign currency translation movement
Closing net carrying amount
2018
$
2017
$
3,221,045
3,221,045
4,413,080
4,413,080
4,413,080
(1,465,793)
273,758
4,746,961
(308,265)
(25,616)
3,221,045
4,413,080
(i) The deferred tax liability arose on acquisition of Baobab Mining and Chemicals Corporation on 23 September 2015.
66
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
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:
NOTES
NUMBER OF
SHARES
$
NUMBER OF
SHARES
$
2018
2017
23(b), 23(e)
915,903,243 139,480,390 579,100,867 123,146,839
915,903,243 139,480,390 579,100,867 125,037,889
-
1,891,050
579,100,867 125,037,889 523,901,468 119,817,389
22,512,506
270,833,345
13,000,001
377,358
20,000
41,666,667
2,000,000
1,412,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
360,000
925,000
92,500
40,000,000
2,268,000
5,025,000
7,249,399
608,950
1,891,050
- Issue of shares(i)
- 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
(577,500)
915,903,243 139,480,390 579,100,867 125,037,889
(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 at 8.4 cents per share subsequent to year-end on 3 July 2017.
(ii) Issued at 4.8 cents per share pursuant to the Company’s Entitlement Offer.
(iii) Issued at 5.3 cents per share to Mr. L Calvarin following approval by shareholders at the 14 November 2017 Annual General Meeting.
(iv) Issued at 4.8 cents per share to Foster Stockbroking
(v) Issued for nil consideration on the vesting and conversion of Tranche 3 Performance Rights granted in 2015 under the Company’s Performance Rights
(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.
Plan.
(x) Issue of shares at $0.084 pursuant to the Company’s Share Purchase Plan.
-
-
-
-
-
-
-
67
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
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(i)
- 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
NOTES
NUMBER OF
SHARES
$
NUMBER OF
SHARES
$
2018
2017
23(b), 23(e)
915,903,243 139,480,390 579,100,867 123,146,839
-
-
-
1,891,050
915,903,243 139,480,390 579,100,867 125,037,889
579,100,867 125,037,889 523,901,468 119,817,389
22,512,506
-
270,833,345
13,000,001
377,358
20,000
41,666,667
2,000,000
1,412,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(577,500)
-
-
-
-
-
-
-
-
-
-
2,000,000
360,000
925,000
92,500
40,000,000
2,268,000
5,025,000
-
7,249,399
608,950
-
-
1,891,050
-
End of the financial year
915,903,243 139,480,390 579,100,867 125,037,889
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 at 8.4 cents per share subsequent to year-end on 3 July 2017.
(i)
(ii) Issued at 4.8 cents per share pursuant to the Company’s Entitlement Offer.
(iii) Issued at 5.3 cents per share to Mr. L Calvarin following approval by shareholders at the 14 November 2017 Annual General Meeting.
(iv) Issued at 4.8 cents per share to Foster Stockbroking
(v) Issued for nil consideration on the vesting and conversion of Tranche 3 Performance Rights granted in 2015 under the Company’s Performance Rights
Plan.
(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.
67
67
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
23. ISSUED CAPITAL (cont…)
NUMBER OF OPTIONS
2018
2017
23. ISSUED CAPITAL (cont…)
(e) Ordinary shares
(c) Movements in unlisted options on issue
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion
Beginning of the financial year
Issued during the year:
Expired/cancelled during the year
- 10 cents, 30 June 2018
- 15 cents, 30 June 2018
- 25 cents, 30 June 2018
- 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
End of the financial year
(d) Movements in share rights
Beginning of the financial year
Issued during the year:
88,075,000
127,050,000
to the number of and amounts paid on the shares held.
(2,075,000)
(3,000,000)
(3,000,000)
-
-
-
-
-
-
-
-
-
-
-
(1,550,000)
(5,500,000)
(14,000,000)
(5,000,000)
(5,000,000)
(5,000,000)
(2,000,000)
(925,000)
80,000,000
88,075,000
NUMBER OF SHARE RIGHTS
2018
2017
2,512,500
53,800,000
- Issued for performance rights, expiring on 30 June 2022 (i)
5,000,000
-
Exercised during the year:
- Contingent share rights exercised on 20 March 2017(ii)
- Tranche 1 performance rights vested on 30 September 2016
-
-
(40,000,000)
(5,025,000)
- Tranche 3 performance rights vested on 21 September 2017
(1,412,500)
-
Lapsed during the year:
- Performance rights forfeited on 11 January 2017(iii)
- Tranche 2 performance rights lapsed on 31 May 2017(iv)
- Tranche 3 performance rights lapsed on 10 December 2017(v)
End of the financial year
-
-
(3,750,000)
(2,512,500)
(1,100,000)
-
5,000,000
2,512,500
(i) Subsequent to the approval at the Annual General Meeting held on 14 November 2017 Director performance share rights were issued to Mr. Louis
Calvarin. The share rights were issued in accordance with the terms and conditions approved at the Annual General Meeting. The share rights are
subject to vesting performance conditions, a vesting milestone date and has an expiry date 5 years from the date of issue. Refer to Note 35 for further
details.
(ii) 40 million contingent share rights issued to Baobab Partners LLP (as per note (i)) were exercised and converted to 40 million ordinary shares.
(iii) Mr. Lawrenson’s 1,875,000 vested and 1,875,000 unvested performance rights were forfeited upon resignation.
(iv) 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.
(v) 1,100,000 performance rights granted under the Company’s Performance Rights Plan were forfeited upon resignation.
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
2018
$
3,679,173
969,294
2,286,116
2017
$
2,946,100
1,205,601
3,456,258
(1,959,721)
(4,726,426)
(210,958)
(186,404)
(804,442)
(1,987,997)
3,959,462
707,132
68
68
69
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
23. ISSUED CAPITAL (cont…)
(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
2018
$
3,679,173
969,294
2,286,116
2017
$
2,946,100
1,205,601
3,456,258
(1,959,721)
(4,726,426)
(210,958)
(186,404)
(804,442)
(1,987,997)
3,959,462
707,132
69
69
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
24. RESERVES AND ACCUMULATED LOSSES
24. RESERVES AND ACCUMULATED LOSSES (cont…)
(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
Balance at end of year
Share-based payments reserve
Balance at beginning of year
Performance rights and share rights
Other share-based payments(i)
Share rights converted to ordinary shares
Balance at end of year
Non-controlling interest reserve
Balance at beginning of year
Balance at end of year
(i) 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
2018
$
2017
$
1,438,988
(697,800)
17,314,837
18,364,389
15,610
15,610
7,465,464
7,465,464
26,234,899
25,147,663
15,610
-
15,610
-
15,610
15,610
(697,800)
2,136,788
1,438,988
(676,313)
(21,487)
(697,800)
18,364,389
19,247,220
111,543
224,075
(1,161,095)
1,161,094
-
(2,268,000)
17,314,837
18,364,389
7,465,464
7,465,464
7,465,464
7,465,464
2018
$
2017
$
(108,657,005)
(81,189,960)
(5,335,683)
(27,467,045)
(113,992,689)
(108,657,005)
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.
(iv) Available-for-sale financial assets
70
70
(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.
The share-based payments reserve is used to recognise the fair value of options, contingent share rights and
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.
(iii) Share-based payments reserve
performance rights granted.
(iv) Non-controlling interest reserve
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.
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
71
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
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
71
71
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
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.
IMPAIRMENT
Financial Liabilities
The Group classifies its financial liabilities in the following categories: payables and loans and borrowings.
(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
FINANCIAL RISK MANAGEMENT POLICIES
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.
Market risk arises from Avenira’s exposure to interest bearing financial assets and foreign currency financial instruments.
72
72
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.
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
2018
$
2017
$
3,679,173
969,294
1,481,600
2,946,100
1,205,601
1,481,600
31,239
31,239
-
-
-
-
6,161,306
5,664,540
1,959,721
8,019,592
9,979,313
4,726,426
8,504,597
13,231,023
73
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
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.
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
2018
$
2017
$
3,679,173
969,294
1,481,600
2,946,100
1,205,601
1,481,600
31,239
31,239
-
-
-
-
6,161,306
5,664,540
1,959,721
8,019,592
9,979,313
4,726,426
8,504,597
13,231,023
Market risk arises from Avenira’s exposure to interest bearing financial assets and foreign currency financial instruments.
73
73
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
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
Impact on post tax profits
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.
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
32,109
-
32,109
(140,261)
-
(140,261)
USD
AUD
11,601
1,182
12,783
(274,663)
-
(274,663)
EUR
AUD
46,672
-
46,672
(40,948)
-
(40,948)
The following conversion rates were used at the end of the financial year:
ZAR/AUD: 10.143
XOF/AUD: 415.61
USD/AUD: 0.7403
EUR/AUD: 0.6336
(2017: 10.025)
(2017: 441.32)
(2017: 0.7686)
(2017: 0.6728)
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.
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%
(ii)
Interest rate risk
2018
$
2017
$
23,807
(29,098)
9,832
(12,017)
3,202
5,186
-
-
-
-
23,807
(29,098)
9,832
(12,017)
3,202
5,186
27,820
(34,003)
(14,709)
17,978
34,927
1,770
-
-
-
-
27,820
(34,003)
(14,709)
17,978
34,927
1,770
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 2017: 10%).
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 2018, 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 2018, the entire balance of cash and cash equivalents
for the Group of $3,679,173 (2017: $2,946,100) 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:
74
74
75
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
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%
2018
$
2017
$
-
-
23,807
(29,098)
9,832
(12,017)
3,202
5,186
-
-
23,807
(29,098)
9,832
(12,017)
3,202
5,186
-
-
27,820
(34,003)
(14,709)
17,978
34,927
1,770
-
-
27,820
(34,003)
(14,709)
17,978
34,927
1,770
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 2017: 10%).
(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 2018, 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 2018, the entire balance of cash and cash equivalents
for the Group of $3,679,173 (2017: $2,946,100) 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:
75
75
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
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
2018
$
2017
$
27,033
(27,033)
27,033
(27,033)
79,534
(79,534)
79,534
(79,534)
The hypothetical movement in basis points for the interest rate sensitivity analysis is based on the currently observed
market environment (30 June 2017: 0.80%).
The weighted average interest rate received on cash and cash equivalents of the Group is 2.29% (2017: 2.68%).
(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 2018, the exposure to unlisted equity securities at fair value is nil (2017: nil). Refer to Note 11 for further details of
impairment recognised in respect of unlisted available-for-sale financial assets.
Counterparties with external credit ratings
Counterparties without external credit ratings
(2)
At 30 June 2018, the exposure to listed equity securities at fair value was $31,239 (2017: $31,239). A decrease of 40% on
the market price could have an impact of approximately $12,500 (2017: $12,500) 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.
Financial assets
Cash and cash equivalents
Trade and other receivables
Other non-current receivables
Derivative financial instruments
2018
$
2017
$
3,679,173
969,294
1,481,600
-
2,946,100
1,205,601
1,481,600
-
6,130,067
5,633,301
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.
(1) Derivative financial instruments were impaired to nil during the 2015 financial year. Refer to Note 12 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.
76
76
AA- rated
AA3 rated
BBB rated
BBB rated
BBB rated
AA- rated
AA3 rated
Group 1
Group 2
Group 3
AA- rated
A rated
Group 1
Group 2
Group 3
Cash at bank and short-term bank deposits
Held with Australian banks and financial institutions
Held with South African banks and financial institutions
Held with Mauritius banks and financial institutions
Held with Senegalese banks and financial institutions
Total
Trade and other receivables
Held with Australian banks and financial institutions
Total
Other non-current receivables
Held with Australian banks and financial institutions
Counterparties with external credit ratings
Counterparties without external credit ratings
Derivative financial instruments
(1)
Counterparties with external credit ratings
Counterparties without external credit ratings
(2)
Group 1
Group 2
Group 3
Total
2018
$
2017
$
-
-
3,467,913
2,633,368
32,109
147,853
11,339
41,984
167,812
3,679,173
122,895
2,946,100
30,000
30,000
716,667
222,627
1,063,285
112,316
969,294
1,205,601
1,481,600
1,481,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
77
Total
1,481,600
1,481,600
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
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
(2)
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
Derivative financial instruments
Counterparties with external credit ratings
(1)
Counterparties without external credit ratings
(2)
Group 1
Group 2
Group 3
Total
2018
$
2017
$
-
-
3,467,913
2,633,368
32,109
147,853
11,339
41,984
167,812
3,679,173
122,895
2,946,100
-
30,000
-
716,667
222,627
-
-
30,000
-
1,063,285
112,316
-
969,294
1,205,601
1,481,600
1,481,600
-
-
-
-
-
-
-
-
-
-
1,481,600
1,481,600
-
-
-
-
-
(1) Derivative financial instruments were impaired to nil during the 2015 financial year. Refer to Note 12 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.
-
-
-
-
-
77
77
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
IMPAIRED RECEIVABLES
During the year, the following gains / (losses) were recognised in profit or loss in relation to 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 2018, the Group has receivables from JDCP totaling $2,351,171 (30 June 2017: $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.
In 2017 JDCP 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 2018. In 2017 the Company
converted its 2015 promissory notes totalling $902,077 into Series A preferred shares in JDCP.
In June 2018 the Company provided a bridge loan to JDCP of $38,455. This amount was provided for in full at 30 June
2018.
Contractual maturities of financial liabilities
(i) Furthermore, at 30 June 2017, the Group considered the recoverability 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. Finalisation of a VAT refund claim in Senegal during the financial year
resulted in the approval of a VAT refund of $3,629,684. This resulted in the reversal of a previously impaired VAT receivable
balance of $3,629,684 at 31 December 2017. Furthermore, based on historical VAT recovery outcomes the Company has
determined that 30% of the outstanding VAT receivable still subject to approval in Senegal should be provided for resulting
in an impairment of $292,687.
Movements 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
Reversal of provision during the year
Closing balance
2018
$
7,382,132
322,141
(5,060,415)
2,643,858
2017
$
815,807
6,566,325
-
7,382,132
Impairment losses
Movement in provision for impairment
(c) Liquidity risk
2018
$
2017
$
3,295,751
(6,610,202)
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 accordance with the table
The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed
below.
repayment periods.
LESS THAN
1 MONTH
1-3
MONTHS
3 MONTHS -
1 YEAR
1-5
YEARS
5+ YEARS
REPAYMENT
TOTAL
$
$
$
$
$
$
NO SET
DATE
$
2018
Interest bearing loans
and borrowings at 6.00%
Interest bearing loans
and borrowings at 6.75%
Trade and other payables 1,043,988
915,733
-
1,959,721
1,043,988
915,733
804,442 4,368,066
2,847,084
9,979,313
804,442 4,368,066
2,847,084
8,019,592
-
-
-
-
-
-
LESS THAN
1 MONTH
1-3
MONTHS
3 MONTHS -
1 YEAR
1-5
YEARS
5+ YEARS
REPAYMENT
TOTAL
$
$
$
$
$
$
NO SET
DATE
$
Contractual maturities of financial liabilities
2017
Interest bearing loans
and borrowings at 6.00%
Interest bearing loans
and borrowings at 6.75%
- 1,304,703
-
1,304,703
-
683,295 4,002,154
2,514,445
7,199,894
Trade and other payables 4,336,706
389,720
-
-
4,726,426
4,336,706
389,720 1,987,998 4,002,154
2,514,445
13,231,023
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78
78
79
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
During the year, the following gains / (losses) were recognised in profit or loss in relation to impaired receivables:
Impairment losses
Movement in provision for impairment
(c) Liquidity risk
2018
$
2017
$
3,295,751
(6,610,202)
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 accordance 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
2018
Interest bearing loans
and borrowings at 6.00%
Interest bearing loans
and borrowings at 6.75%
Trade and other payables 1,043,988
-
-
915,733
-
-
-
-
804,442 4,368,066
-
-
1,043,988
915,733
804,442 4,368,066
-
-
-
-
-
-
2,847,084
8,019,592
-
1,959,721
2,847,084
9,979,313
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 4,336,706
-
-
- 1,304,703
-
-
683,295 4,002,154
389,720
-
-
4,336,706
389,720 1,987,998 4,002,154
-
-
-
-
-
1,304,703
2,514,445
7,199,894
-
4,726,426
2,514,445
13,231,023
79
79
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
(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.
- Conversion rights on promissory note
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
2018
$
2017
$
2018
$
2017
$
Financial assets
Available-for-sale financial assets
31,239
31,239
31,239
31,239
Derivative financial instruments
-
-
-
-
Total financial assets
31,239
31,239
31,239
31,239
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).
80
80
2018
Financial assets
Available-for-sale financial assets
-
Listed investments
- Unlisted investments
Derivative financial instruments
- Warrants
2017
Financial assets
Available-for-sale financial assets
-
Listed investments
- Unlisted investments
Derivative financial instruments
- Warrants
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
$
$
$
$
31,239
31,239
31,239
31,239
31,239
31,239
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- Conversion rights on promissory note
31,239
31,239
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 2018. 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 2018, 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
In 2014 the warrants have an exercise price of USD0.01 and expire on 17 February 2024. The warrants
warrants in JDCP as detailed below:
were cancelled in July 2016.
o
o
o
In 2017 the warrants have an exercise price of USD0.01 and an expire on 20 March 2020.
In 2018 the warrants have an exercise price of USD0.0734 and expire in May and June 2023.
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 2018 was considered to be nil (30 June 2017: 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
at 30 June 2018 (30 June 2017: Nil).
-
-
-
-
-
-
81
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
2018
Financial assets
Available-for-sale financial assets
-
Listed investments
- Unlisted investments
Derivative financial instruments
- Warrants
- Conversion rights on promissory note
2017
Financial assets
Available-for-sale financial assets
-
Listed investments
- Unlisted investments
Derivative financial instruments
- Warrants
- Conversion rights on promissory note
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
$
$
$
$
31,239
-
-
-
31,239
31,239
-
-
-
31,239
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31,239
-
-
-
31,239
31,239
-
-
-
31,239
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 2018. 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 2018, 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 as detailed below:
o
o
o
In 2014 the warrants have an exercise price of USD0.01 and expire on 17 February 2024. The warrants
were cancelled in July 2016.
In 2017 the warrants have an exercise price of USD0.01 and an expire on 20 March 2020.
In 2018 the warrants have an exercise price of USD0.0734 and expire in May and June 2023.
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 2018 was considered to be nil (30 June 2017: 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
at 30 June 2018 (30 June 2017: Nil).
81
81
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
25. FINANCIAL RISK MANAGEMENT (cont…)
26. REMUNERATION OF AUDITORS
• 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 2018 was considered to be nil (30 June 2017: 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 2018 was $51,722,600 (30 June 2017: $41,528,547). The primary
objective of the Group’s capital management is to maximise the shareholder value.
At 30 June 2018, the Group has external debt funding in the form of loans and borrowings as described at Note 21. 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 9.
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
Non Ernst & Young audit firms - Statutory audit of foreign subsidiaries
Other non-audit remuneration:
Ernst & Young Australia
Tax compliance services
Other tax advisory services
Remuneration of related practices of Ernst & Young
Foreign subsidiary audits
Tax compliance services
2018
$
2017
$
109,684
53,061
162,745
132,100
29,222
161,322
18,000
20,000
38,000
28,653
-
28,653
14,300
15,225
29,525
41,702
2,756
44,458
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.
In relation to tenement acquisition agreements entered into by the Group, the following additional cash may be received
27.CONTINGENCIES
dependent on future events:
TNT Mines Royalty Deed
capped at $5,000,000.
28.COMMITMENTS
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
The Directors are of the opinion that it is not practicable to estimate the financial effect at the date of this report.
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:
82
82
83
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
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
Non Ernst & Young audit firms - Statutory audit of foreign subsidiaries
Other non-audit remuneration:
Ernst & Young Australia
Tax compliance services
Other tax advisory services
Remuneration of related practices of Ernst & Young
Foreign subsidiary audits
Tax compliance services
2018
$
2017
$
109,684
53,061
162,745
132,100
29,222
161,322
18,000
20,000
38,000
28,653
-
28,653
14,300
15,225
29,525
41,702
2,756
44,458
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.
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:
83
83
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
28. COMMITMENTS (cont…)
(a) Exploration commitments
to meet minimum expenditure
The Group has certain commitments
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
2018
$
2017(i)
$
136,762
114,151
-
250,913
175,114
272,923
13,630
461,667
In the prior reporting period the Group surrended the mining lease ML272244 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
16,463
837
17,300
2018
LENDER
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
Later than one year but no later than five years
Later than five years
Development expenditure contracted for at reporting date but not recognised as
liabilities
2018
$
2017
$
308,416
519,722
2,598,608
3,426,746
-
-
-
-
The mine development commitments at 30 June 2018 pre-dominantly relate to the annual fee to be paid for the lease on the
Bargny Port. The first annual payment is due in January 2019. The lease term is for 25 years.
29. DIVIDENDS
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
Key terms and conditions of the loans are as follows:
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.
(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.
84
84
85
30. RELATED PARTY TRANSACTIONS (cont…)
(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
2018
$
2017
$
1,284,573
1,132,864
14,552
31,667
-
97,244
32,445
58,594
550,000
106,674
1,428,036
1,880,577
(d) Loans from key management personnel
The Group received the following loans from KMP or their related parties during the 2018 financial year (2017: $3,765,467):
BALANCE
AT START
OF THE
YEAR
LOAN
PROCEEDS
RECEIVED
INTEREST
CHARGED
INTEREST
FORGIVEN
NOT
DURING
CHARGED
THE YEAR
FX IMPACT
REPAID
DURING
THE YEAR
$
$
$
$
$
BALANCE
AT END
OF THE
YEAR
HIGHEST
BALANCE
DURING
THE YEAR
$
$
-
-
2,581,675
3,872,513
2,847,084
2,847,084
(45,817)
(2,581,675)
(74,894)
(3,872,513)
-
-
Agrifos Partners LLC (i)
521,830
2,065,394
Tablo Corporation (ii)
782,873
3,098,090
40,268
66,444
Mimran Natural
Resources (ii)
2,514,445
-
176,660
(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.
2017
LENDER
Agrifos Partners LLC(i)
Tablo Corporation(ii)
Mimran Natural
Resources(ii)
LOAN
PROCEED
RECEIVED
S
$
520,461
780,691
BALANCE
AT START
OF THE
YEAR
$
-
-
-
$
1,369
2,182
2,464,315
50,130
INTEREST
CHARGED
INTEREST
FORGIVEN
NOT
DURING
CHARGED
THE YEAR
FX
IMPACT
REPAID
DURING
THE YEAR
$
$
$
$
BALANCE
AT END
OF THE
YEAR
HIGHEST
BALANCE
DURING
THE YEAR
$
$
521,830
521,830
782,873
782,873
2,514,445
2,514,445
-
-
-
-
-
-
(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.
-
-
-
-
-
-
-
-
-
-
-
-
LENDER
Agrifos Partners LLC
Tablo Corporation
Mimran Natural Resources
INTEREST
RATE(i)
6.00%
6.00%
6.75%
SECURITY
unsecured
unsecured
unsecured
REPAYMENT
DATE
(ii)
(ii)
no set date
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
30. RELATED PARTY TRANSACTIONS (cont…)
(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
2018
$
2017
$
1,284,573
1,132,864
14,552
31,667
-
97,244
32,445
58,594
550,000
106,674
1,428,036
1,880,577
(d) Loans from key management personnel
The Group received the following loans from KMP or their related parties during the 2018 financial year (2017: $3,765,467):
2018
LENDER
BALANCE
AT START
OF THE
YEAR
LOAN
PROCEEDS
RECEIVED
INTEREST
CHARGED
INTEREST
NOT
CHARGED
FORGIVEN
DURING
THE YEAR
FX IMPACT
REPAID
DURING
THE YEAR
$
$
$
$
$
Agrifos Partners LLC (i)
521,830
2,065,394
Tablo Corporation (ii)
Mimran Natural
Resources (ii)
782,873
3,098,090
2,514,445
-
176,660
40,268
66,444
-
-
-
-
-
-
(45,817)
(2,581,675)
(74,894)
(3,872,513)
-
-
BALANCE
AT END
OF THE
YEAR
HIGHEST
BALANCE
DURING
THE YEAR
$
$
-
-
2,581,675
3,872,513
2,847,084
2,847,084
(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.
2017
LENDER
BALANCE
AT START
OF THE
YEAR
LOAN
PROCEED
S
RECEIVED
INTEREST
CHARGED
INTEREST
NOT
CHARGED
FORGIVEN
DURING
THE YEAR
$
$
$
$
$
FX
IMPACT
REPAID
DURING
THE YEAR
$
$
BALANCE
AT END
OF THE
YEAR
HIGHEST
BALANCE
DURING
THE YEAR
$
$
Agrifos Partners LLC(i)
-
520,461
1,369
-
-
-
-
521,830
521,830
Tablo Corporation(ii)
Mimran Natural
Resources(ii)
(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.
2,464,315
780,691
50,130
2,182
-
-
-
-
-
-
-
-
2,514,445
-
782,873
-
782,873
2,514,445
Key terms and conditions of the loans are as follows:
LENDER
Agrifos Partners LLC
Tablo Corporation
Mimran Natural Resources
INTEREST
RATE(i)
6.00%
6.00%
6.75%
SECURITY
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.
85
85
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
30. RELATED PARTY TRANSACTIONS (cont…)
Full terms and conditions of the loans can be found at Note 21.
(e) Other transactions and balances with the key management personnel
(iii)
(iv)
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 2018. Total consultancy fees of
$13,700 (2017: $46,700) were charged by Mr. McCubbing during the year. The agreement had no fixed term
and no termination notice period. At 30 June 2018, advisory fees paid to Mr. McCubbing impacted the
statement of profit and loss and other comprehensive income with $13,700 recognised in Administrative and
Other Expenses. There was no impact on the 30 June 2018 statement of financial position.
The Company owns approximately 7% of JDCPhosphates, Inc (JDCP) and has an exclusive licence to ultilise
the IHP technology. Avenira Non-Executive Directors Mr Chaouni and Mr Cotton are Directors of and have an
equity interest in JDCP. Please refer to Note 7, Note 11, Note 12 and Note 16 for further details on transactions
between the two companies during the period.
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:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
31. SUBSIDIARIES (cont...)
SUBSIDIARIES
COUNTRY OF
INCORPORATION
CLASS OF
SHARES
EQUITY HOLDING(i)
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)
Baobab Mining and Chemicals Corporation SA(ii)
Gadde Bissik Phosphate Operations Suarl(ii)
Avenira Holdings LLC (iii)
Australia
Australia
Australia
Australia
Australia
Australia
Mauritius
Senegal
Senegal
USA
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
(i) The proportion of ownership interest is equal to the proportion of voting power held.
(ii) The financial year end date is 31 December.
(iii) The company’s equity represented by an initial capital contribution by Avenira as the sole member.
Transactions with non-controlling interests
Portion of equity interest held by non-controlling interests
COUNTRY OF
INCORPORATION
Baobab Mining and Chemicals Corporation SA
Senegal
20%
20%
Accumulated balance of material non-controlling interest
Baobab Mining and Chemicals Corporation SA
(4,416,599)
(5,057,338)
Loss allocated to material non-controlling interest
Baobab Mining and Chemicals Corporation SA
840,294
2,803,753
2018
$
100
100
100
100
100
100
100
80
80
100
2018
$
2018
$
2018
$
2017
$
100
100
100
100
100
100
100
80
80
100
2017
$
2017
$
2017
$
86
86
87
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
31. SUBSIDIARIES (cont...)
SUBSIDIARIES
COUNTRY OF
INCORPORATION
CLASS OF
SHARES
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)
Baobab Mining and Chemicals Corporation SA(ii)
Gadde Bissik Phosphate Operations Suarl(ii)
Avenira Holdings LLC (iii)
Australia
Australia
Australia
Australia
Australia
Australia
Mauritius
Senegal
Senegal
USA
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
(i) The proportion of ownership interest is equal to the proportion of voting power held.
(ii) The financial year end date is 31 December.
(iii) The company’s equity represented by an initial capital contribution by Avenira as the sole member.
Transactions with non-controlling interests
EQUITY HOLDING(i)
2018
$
100
100
100
100
100
100
100
80
80
100
2017
$
100
100
100
100
100
100
100
80
80
100
Portion of equity interest held by non-controlling interests
COUNTRY OF
INCORPORATION
2018
$
2017
$
Baobab Mining and Chemicals Corporation SA
Senegal
20%
20%
Accumulated balance of material non-controlling interest
2018
$
2017
$
Baobab Mining and Chemicals Corporation SA
(4,416,599)
(5,057,338)
Loss allocated to material non-controlling interest
Baobab Mining and Chemicals Corporation SA
2018
$
2017
$
840,294
2,803,753
87
87
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
31. SUBSIDIARIES (cont…)
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
Impairment reversal / (impairment) of Doubtful debts
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
2018
$
-
(343,570)
(345,557)
(114,515)
2017
$
21,995
(249,706)
(451,982)
(323,391)
(1,013,635)
(2,470,293)
(7,182,462)
(6,601,311)
3,332,476
(4,252,348)
(5,667,263)
(14,327,036)
1,465,793
308,265
(4,201,470)
(14,018,771)
(4,201,470)
(14,018,771)
(840,294)
(2,803,753)
-
13,034
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
2018
$
2017
$
3,251,022
4,662,591
57,447,261
51,662,982
(27,229,167)
(18,973,220)
(11,386,123)
(12,065,664)
22,082,993
25,286,689
17,666,394
20,229,351
4,416,599
5,057,338
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
2018
$
2017
$
(1,340,884)
(645,173)
(8,164,953)
(25,722,852)
9,658,390
19,591,798
(152,553)
(6,776,227)
88
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
32. EVENTS OCCURING AFTER THE BALANCE DATE
The following events occurred subsequent to the end of the year:
• On 7 August 2018 the Company announced a share placement to raise A$2.8 million via the issue of 139,999,999
fully paid ordinary shares at a price of $0.02 per share (Placement). The Placement will be completed in two
tranches as follows:
o
o
40,000,000 was issued following receipt of A$800,000 on 16 August under the Company’s existing 15%
capacity under ASX Listing Rule 7.1 (Tranche 1 Shares); and
99,999,999 shares will be issued, following shareholder approval at a general meeting of shareholders held
on 20 September 2018 (Tranche 2 Shares) (General Meeting). The receipt of A$2 million and settlement of
the Tranche 2 Shares is expected to occur on or around 8 October 2018.
Other than as disclosed above, no event has occurred since 30 June 2018 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.
33. STATEMENT OF CASHFLOWS
Reconciliation of net loss after income tax to net cash outflow from operating activities
Net loss from continuing operations
Adjustment for non-cash items
Depreciation of plant and equipment
Net loss/(gain) on disposal of plant and equipment
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
Other equity items
Impairment / (impairment reversal) of Doubtful debts
Change in operating assets and liabilities,
net of effects from purchase of controlled entities
Decrease in trade and other receivables
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
(4,091,358)
(7,031,409)
2018
$
2017
$
(6,175,977)
(30,270,798)
341,054
60,918
148,478
23,578
109,630
5,863,171
70,623
-
-
-
(52,103)
258,915
21,899
-
(1,465,793)
256,458
23,556
244,075
255,529
641,826
6,731
9,431,555
1,233,059
4,721,345
-
-
(70,559)
4,590
189,287
(308,265)
(3,295,751)
6,610,202
89
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
32. EVENTS OCCURING AFTER THE BALANCE DATE
The following events occurred subsequent to the end of the year:
• On 7 August 2018 the Company announced a share placement to raise A$2.8 million via the issue of 139,999,999
fully paid ordinary shares at a price of $0.02 per share (Placement). The Placement will be completed in two
tranches as follows:
o
40,000,000 was issued following receipt of A$800,000 on 16 August under the Company’s existing 15%
capacity under ASX Listing Rule 7.1 (Tranche 1 Shares); and
o
99,999,999 shares will be issued, following shareholder approval at a general meeting of shareholders held
on 20 September 2018 (Tranche 2 Shares) (General Meeting). The receipt of A$2 million and settlement of
the Tranche 2 Shares is expected to occur on or around 8 October 2018.
Other than as disclosed above, no event has occurred since 30 June 2018 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.
33. STATEMENT OF CASHFLOWS
Reconciliation of net loss after income tax to net cash outflow from operating activities
2018
$
2017
$
Net loss from continuing operations
Adjustment for non-cash items
Depreciation of plant and equipment
Net loss/(gain) on disposal of plant and equipment
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
Other equity items
Impairment / (impairment reversal) of Doubtful debts
Change in operating assets and liabilities,
net of effects from purchase of controlled entities
Decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Increase in provisions
Increase in accrued interest component of loans and borrowings
Decrease in deferred tax liabilities
(6,175,977)
(30,270,798)
341,054
-
60,918
148,478
-
23,578
109,630
5,863,171
-
70,623
256,458
23,556
244,075
255,529
641,826
6,731
9,431,555
1,233,059
4,721,345
-
(3,295,751)
6,610,202
(52,103)
258,915
21,899
-
(1,465,793)
(70,559)
-
4,590
189,287
(308,265)
Net cash outflow from operating activities
(4,091,358)
(7,031,409)
89
89
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
33. STATEMENT OF CASH FLOWS (cont...)
1) Change in liabilities from financing activities
35. SHARE BASED PAYMENTS
Accounting Policies
Interest bearing
loans & borrowings
- Bridge loans
Interest bearing
loans & borrowings
- CBAO
Interest bearing
loans & borrowings
- Mimran
1-Jul-17
Proceeds
from
Borrowing
Repayment of
Borrowing
Interest
Accrued
Interest
Paid
FX
30-Jun-18
1,304,703
5,163,484
(6,454,188)
103,171
(103,171)
(13,999)
-
methodology as appropriate.
4,685,449
2,514,445
-
-
-
279,069
(82,664)
-
290,654
5,172,508
-
176,660
155,979
2,847,084
8,504,597
5,163,484
(6,454,188) 558,900 (185,835) 432,634 8,019,592
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.
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
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.
(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
(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
(c) Effects of anti-dilution from
Unlisted options
Share rights
2018
$
2017
$
(5,335,683)
(27,467,045)
2018
2017
NUMBER OF
SHARES
NUMBER OF
SHARES
768,865,253
539,274,664
768,865,253
539,274,664
80,000,000
88,075,000
5,000,000
2,512,500
Between the reporting date and the date of authorisation of these financial statements no additional securities were issued
that could potentially dilute basic loss per share in the future.
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
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.
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 2018 and 2017.
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
The Employee and Contractors Option Incentive Plan was replaced by the Performance Rights Plan which was approved at
on 30 June 2017.
the Company’s 2015 AGM.
(b) Other option-based payments
There were no other option-based payments granted during the year ended 30 June 2018 or 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. The remaining 8,075,000 unlisted options expired
during the year ended 30 June 2018.
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 following table summarises the number and movement in options granted and their weighted average prices:
90
90
91
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
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 2018 and 2017.
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 2018 or 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. The remaining 8,075,000 unlisted options expired
during the year ended 30 June 2018.
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 following table summarises the number and movement in options granted and their weighted average prices:
91
91
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
35. SHARE BASED PAYMENTS (cont...)
35. SHARE BASED PAYMENTS (cont...)
SUBSIDIARIES
Outstanding at the beginning of the
year
Granted
Forfeited
Exercised
Expired
Outstanding at year end
Exercisable at year end
AVENIRA LIMITED
2018
2017
NUMBER OF OPTIONS
WEIGHTED
AVERAGE
EXERCISE
PRICE
CENTS
NUMBER OF OPTIONS
WEIGHTED
AVERAGE
EXERCISE
PRICE
CENTS
8,075,000
-
-
-
(8,075,000)
-
-
17
-
-
-
17
-
33,050,000
-
-
(925,000)
(24,050,000)
8,075,000
5,075,000
22
-
-
10
25
17
There was no share options outstanding at the end of the financial year.
(c) Performance Rights Plan
There were 5,000,000 performance rights granted during the year ended 30 June 2018.
There were no performance rights granted during the year ended 30 June 2017.
Movements in the number of performance rights on issue are as follows:
Grant Date: 14 November 2017
2018
AVENIRA LIMITED
2018 rights granted
5,000,000
BALANCE AT
START OF THE
YEAR
ISSUED
DURING THE
YEAR(i)
VESTED AND
CONVERTED
TO SHARES (ii)
LAPSED (iii)
FORFEITED
UPON
RESIGNATION
BALANCE AT
END OF THE
YEAR
Grant Date: 3 December 2015
Tranche 1
Tranche 2
Tranche 3
Grant Date: 14 November 2017
Tranche 1
TOTAL
-
-
2,512,500
-
-
-
-
-
-
-
(1,412,500)
(1,100,000)
-
5,000,000
-
-
2,512,500
5,000,000
(1,412,500)
(1,100,000)
-
-
-
-
-
-
-
-
5,000,000
5,000,000
(i) Tranche 1 performance rights issued on 14 December 2017.
(ii) Tranche 3 performance rights vested on 21 September 2017 and were converted into shares for nil consideration on 2 February 2018.
(iii) Tranche 3 performance rights lapsed unvested upon resignation of recipients of rights.
Grant Date: 18 November 2015
Grant Date: 3 December 2015
2017
Tranche 1
Tranche 2
Tranche 3
Tranche 1
Tranche 2
Tranche 3
TOTAL
BALANCE AT
START OF THE
YEAR
ISSUED DURING
THE YEAR(i)
CONVERTED
LAPSED (ii)
FORFEITED
UPON
BALANCE AT
END OF THE
RESIGNATION (iii)
YEAR
AVENIRA LIMITED
VESTED
AND
TO
SHARES(i)
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)
-
-
-
-
-
-
-
-
2,512,500
(5,025,000)
(2,512,500)
(5,025,000)
(2,512,500)
(3,750,000)
2,512,500
(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.
The below table summarises the details of the performance rights granted during the 2018 financial year:
NUMBER OF
FAIR VALUE AT
EXERCISE
RIGHTS ISSUED
GRANT DATE, $
PRICE, $
VESTING
DATE
EXPIRY
DATE
PROBABILITY
MILESTONE
ACHIEVEMENT(i)
AVENIRA LIMITED
Tranche 1
5,000,000
0.049
nil
30 June 20
30 June 22
50%
(i) The 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 2018 the Board considered the percentage of likelihood of achieving the performance milestone as indicated in the
table and it is based on Company’s assessment against the performance condition.
For further information on the performance conditions refer to the page 32 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.
92
92
93
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
35. SHARE BASED PAYMENTS (cont...)
2017
AVENIRA LIMITED
BALANCE AT
START OF THE
YEAR
ISSUED DURING
THE YEAR(i)
VESTED
AND
CONVERTED
TO
SHARES(i)
LAPSED (ii)
FORFEITED
UPON
RESIGNATION (iii)
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
-
-
-
-
-
-
-
-
-
-
(5,025,000)
-
-
-
-
-
-
(2,512,500)
-
(1,875,000)
(937,500)
(937,500)
-
-
-
-
-
-
-
-
2,512,500
(5,025,000)
(2,512,500)
(3,750,000)
2,512,500
(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.
The below table summarises the details of the performance rights granted during the 2018 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: 14 November 2017
Tranche 1
5,000,000
0.049
nil
30 June 20
30 June 22
50%
2018 rights granted
5,000,000
(i) The 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 2018 the Board considered the percentage of likelihood of achieving the performance milestone as indicated in the
table and it is based on Company’s assessment against the performance condition.
For further information on the performance conditions refer to the page 32 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.
93
93
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
(v)
14 November 2017
Valuation date
(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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
35. SHARE BASED PAYMENTS (cont...)
36. PARENT ENTITY INFORMATION
The following table lists the inputs used for determination of the fair value of the performance rights granted during the 2018
financial year:
Grant Date
14 November 2017
The following information relates to the parent entity, Avenira Limited, at 30 June 2018. The information presented here
has been prepared using accounting policies consistent with Group accounting policies.
Underlying security spot price, $
(i)
Exercise price
(ii)
Dividend rate
Stock volatility(iii)
Risk free rate
(iv)
0.049
nil
nil
91.12%
2.57%
(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
2018
$
2017
$
3,653,532
5,974,820
48,957,431
37,475,009
52,610,963
43,449,829
888,363
1,916,564
-
4,718
888,363
1,921,282
51,722,600
41,528,547
139,480,390
125,037,889
16,619,677
16,619,677
695,159
15,610
583,616
15,610
(105,088,236)
(100,728,245)
51,722,600
41,528,547
(9,109,064)
(21,635,375)
-
15,610
(9,109,064)
(21,619,765)
(a)
Details of any contingent liabilities of the parent entity
The parent entity does not have any contingent liabilities at 30 June 2018.
(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
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 and equity for the period:
Other option-based payments
Employee benefit expense – performance rights
Employee benefit expense – shares(i)
Total for the year
2018
$
-
60,918
-
60,918
2017
$
-
224,075
20,000
244,075
(i) The Managing Director, Mr Louis Calvarin, received ordinary fully paid shares to the value of $20,000 as a sign on bonus of shares following shareholder
approval for this issue of shares at its November 2017 Annual General Meeting. The shares were issued at $0.053 per share, being 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.
In November 2017 the Company repaid the outstanding deferred payment amount plus interest. Therefore, the amount of
XOF640,487,956 (A$1.5 million) included in share-based payment reserve in equity at 30 June 2017 was reversed.
reporting date.
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.
94
94
95
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2018 (cont…)
36. PARENT ENTITY INFORMATION
The following information relates to the parent entity, Avenira Limited, at 30 June 2018. 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
2018
$
2017
$
3,653,532
5,974,820
48,957,431
37,475,009
52,610,963
43,449,829
888,363
1,916,564
-
4,718
888,363
1,921,282
51,722,600
41,528,547
139,480,390
125,037,889
16,619,677
16,619,677
695,159
15,610
583,616
15,610
(105,088,236)
(100,728,245)
51,722,600
41,528,547
(9,109,064)
(21,635,375)
-
15,610
(9,109,064)
(21,619,765)
(a)
Details of any contingent liabilities of the parent entity
The parent entity does not have any contingent liabilities at 30 June 2018.
(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.
95
95
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
DIRECTORS’ DECLARATION
The Directors declare that:
1. The financial statements and notes set out on pages 38 to 95 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 2018 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, 28 September 2018
96
96
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 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 2018, 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:
a)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018
and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in 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:038
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
1.
Impairment assessment of Baobab non-current assets
Why significant
How our audit addressed the key audit matter
The Group’s Baobab Cash Generating Unit
(“CGU”), which includes property, plant and
equipment, capitalised exploration and evaluation
expenditure 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 2018, 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 15 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 2018. 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
15 to the financial report.
Our audit procedures included the following:
• Assessed whether all indicators of impairment
had been identified.
• Assessed whether all appropriate assets and
liabilities were included in the CGU carrying
value.
• 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.
• 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.
Involved our valuation specialists to provide
input on key assumptions made by the
independent experts in arriving at their
preferred valuation.
•
• 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:038
2.
Carrying value of Wonarah exploration and evaluation expenditure
Why significant
How our audit addressed the key audit matter
The carrying value of exploration and evaluation
expenditure is assessed for impairment by the
Group when facts and circumstances indicate that
the exploration and evaluation expenditure may
exceed its recoverable amount.
The determination as to whether there are any
indicators to require an exploration and evaluation
asset to be assessed for impairment, involves a
number of judgments including whether the Group
has tenure, will be able to perform ongoing
expenditure and whether there is sufficient
information for a decision to be made that the
area of interest is not commercially viable.
As disclosed in Note 14 to the financial
statements, the Group determined there were
indicators of impairment in relation to its Wonarah
project at 30 June 2018 and performed an
impairment test. 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. Accordingly, this was considered to
be a key audit matter.
Our audit procedures included the following:
• Considered the Group’s right to explore in the
relevant exploration area, which included
obtaining and assessing supporting
documentation such as license agreements.
• 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.
• 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.
•
Involved our valuation specialists to provide
input on key assumptions made by the
independent experts in arriving at their
preferred valuation.
• Assessed whether the disclosure in Note 14 to
the financial statements was accurate and
complete, in accordance with the applicable
Australian Accounting Standards.
Information other than the financial report and auditor’s report thereon
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 2018, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly 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.
If, based on 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:EH:AEV:038
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 relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
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 the 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 the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
►
►
►
►
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:EH:AEV:038
►
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
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 audit of 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
2018.
In our opinion, the Remuneration Report of Avenira Limited for the year ended 30 June 2018, 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
28 September 2018
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:EH:AEV:038
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 14 September 2018.
(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
362
666
773
73,175
2,357,005
6,237,799
1,644
56,221,425
437
891,013,839
3,882
955,903,243
The number of equity security holders holding less than a marketable parcel of
securities are:
2,650
23,547,027
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
1
2
3
4
5
6
7
8
9
HSBC CUSTODY NOMINEES 1
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED2
AGRIFIELDS DMCC
J P MORGAN NOMINEES AUSTRALIA LIMITED
MRS VINEETA GUPTA
SOLVOCHEM HOLDINGS LTD
MR GIOVANNI DEL CONTE
SOCIETE DE POLYSERVE POUR LES ENGRAIS ET PRODUITS CHIMIQUES
SA
VULCAN PHOSPHATES LLC
10 CITICORP NOMINEES PTY LIMITED
11 ZERO NOMINEES PTY LTD
12 MR BRETT WILMOTT
13 MR PAUL WINSTON ASKINS
14 MS KAREN THOMAS
15 MR GREGORY BRUCE HILL
16 MR MANAR BA
17 DJ CARMICHAEL PTY LTD
18 BIGA NOMINEES PTY LTD
19 ANDREW DRUMMOND & ASSOCIATES PTY LTD
20 W & K ASSOCIATES PTY LTD
Total top 20
Other
Total ordinary shares on issue as at 14 September 2018
1 Beneficial owner of 193,194,804 fully paid shares
2 Beneficial owner of 192,250,000 fully paid shares
LISTED ORDINARY SHARES
NUMBER OF
SHARES
PERCENTAGE OF
ORDINARY
SHARES
199,012,078
194,730,260
118,428,509
54,083,129
20,733,821
15,584,951
14,849,612
14,703,962
14,000,000
11,261,029
7,500,000
7,153,567
6,103,117
3,997,920
3,600,000
3,210,393
3,142,500
2,997,535
2,700,000
2,620,153
20.82
20.37
12.39
5.66
2.17
1.63
1.55
1.54
1.46
1.18
0.78
0.75
0.64
0.42
0.38
0.34
0.33
0.31
0.28
0.27
700,412,536
255,490,707
955,903,243
73.27
26.73
100.00
102
101
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
(c) Substantial shareholders
The name of the substantial shareholder who has notified the Company in accordance with Section 671F of the
Corporations Act 2001 is:
Baobab Partners LLC1
Tablo Corporation1
Agrifields DMCC
J P Morgan Nominees Australia Limited
1 Beneficial owner of 193,194,804 fully paid shares
2 Beneficial owner of 192,250,000 fully paid shares
(d) Voting rights
NUMBER OF SHARES
193,194,808
192,250,000
118,428,509
51,886,509
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
(e) Company Secretary, registered and principal administrative office and share registry
Details can be found in the Corporate Information on page 2 of the Annual Report.
(f) Schedule of interest in mining tenements
LOCATION
Arruwurra, Northern Territory
Wonarah, Northern Territory
Dalmore, Northern Territory
Central Wonarah, Northern Territory
Baobab, Senegal
Gadde Bissik Senegal (1)
TENEMENT
EL29840
EL29841
EL29849
EL31477
014015/MIM/DMG
09810/MIM/DMG
PERCENTAGE HELD /
EARNING
100
100
100
100
80
80
Note:
(1)
The Company's mining operations continue to operate under the Small Mine Permit whilst the Company’s
Exploitation Permit application is going through the Government approval process.
102
103
AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report
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AVENIRA LIMITED AND CONTROLLED ENTITIES2018 Annual Report A
n
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u
a
l
R
e
p
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t
2
0
1
8
Suite 19, 100 Hay Street
Subiaco WA 6008
Phone: +61 8 9264 7000
Email: frontdesk@avenira.com
www.avenira.com
Lot 50 Bis Sotrac Mermoz
(Ancienne Piste)
Dakar, Sénégal
Phone: +221 33 860 20 03
2018
ANNUAL
REPORT