ANNUAL REPORT
2019
1
TABLE OF CONTENTS
TABLE OF CONTENTS ..................................................................................................................................... 2
CORPORATE INFORMATION ......................................................................................................................... 3
DIRECTORS’ REPORT ..................................................................................................................................... 4
AUDITORS INDEPENDENCE LETTER............................................................................................................. 33
QUALIFYING STATEMENTS .......................................................................................................................... 34
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME ................... 35
CONSOLIDATED STATEMENT OF FINANCIAL POSITION .......................................................................... 36
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................................................ 37
CONSOLIDATED STATEMENT OF CASH FLOWS ........................................................................................ 38
DIRECTORS’ DECLARATION ......................................................................................................................... 83
INDEPENDENT AUDITORS REPORT ............................................................................................................. 84
ASX ADDITIONAL INFORMATION ................................................................................................................ 90
2
CORPORATE INFORMATION
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)
ABN 48 116 296 541
DIRECTORS
Brett Clark
(Independent Non-executive Chairman)
Louis Calvarin
(Executive Director)
Timothy Cotton
(Non-executive Director)
COMPANY SECRETARY
Graeme Smith
REGISTERED OFFICE
Level 2, 8 Broadway
Crawley WA 6009
PRINCIPAL PLACE OF BUSINESS
Level 2, 8 Broadway
Crawley WA 6009
SOLICITORS
DLA Piper Australia
Level 31, Central Park, 152-158 St Georges Terrace
Perth, WA 6000
BANKERS
National Australia Bank Limited
1232 Hay Street
West Perth, WA 6005
SHARE REGISTER
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
Perth, WA 6000
Telephone: 1300 787 272
3
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 2019.
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)
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
Nil
Former Listed Company Directorships in the last 3 years
Non-Executive Director of Surefire Resources 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
Non-Executive Director of Nelson Resources Limited from July 2016 to January 2019
Non-Executive Director of Great Lakes Graphite Corp from November 2017 to July 2019
Special Responsibilities
Chairman of the Remuneration and Nomination Committee
Dr. Louis Calvarin, PhD (Process Engineering), (Executive Director - resigned as Managing Director and Chief
Executive Officer on 30 June 2019)
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
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 Novaphos, 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
Dr. Christopher Pointon, B.Sc. (Hons), PhD (Geology), FGS, MIMMM, (Non-Executive Director – resigned 31
December 2018)
Ian McCubbing, B. Comm (Hons), MBA(Ex), CA, GAICD (Non-Executive Director - resigned 31 January 2019)
Farouk Chaouni, MBA, (Non-Executive Director- resigned 28 June 2019)
David Mimran (Non-Executive Director - resigned 28 June 2019)
COMPANY SECRETARY
Graeme Smith (Appointed 26 August 2019)
Mr Smith is the principal of Wembley Corporate Services which provide corporate secretarial, CFO and governance
services. Mr Smith has over 25 years’ experience in company secretarial work. Mr Smith is a non-executive director of
Anglo Australian Resources NL.
John Ribbons, B. Bus., CPA, ACIS (Resigned 26 August 2019)
Rod Wheatley, B. Bus., CPA (Resigned 26 August 2019)
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:
ORDINARY
SHARES
OPTIONS OVER
ORDINARY SHARES
RIGHTS OVER
ORDINARY SHARES
Brett Clark
Louis Calvarin
Timothy Cotton(i)
(i)Mr Timothy Cotton holds shares through related parties, Baobab Partners LLC and Vulcan Phosphates LLC.
-
2,402,358
240,528,141
-
-
-
-
-
-
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.
5
On 28 June 2019 the Company executed an agreement to sell or assign all its rights and interests in the following assets:
• Baobab Fertilizer Africa (BFA) (the wholly owned subsidiary which holds Avenira’s interests in the Baobab
Phosphate Project) and the associated Baobab Intellectual Property and Other Information;
• Avenira’s 7% equity interest in Novaphos Inc. (Novaphos) (previously JDCPhosphate Inc.), and associated loans
and accrued interest (other than the existing Australian Licence Agreement as outlined below). Novaphos owns
a proprietary phosphate technology, the Improved Hard Process (IHP).
The intercompany loan between Avenira and BMCC; and
The intercompany loan between Avenira and BFA.
•
•
CONSOLIDATED RESULTS
Consolidated (loss) before income tax expense from continuing
operations
Income tax benefit
LOSS FOR THE YEAR
DIVIDENDS
YEAR END
30 JUNE 2019
YEAR END
30 JUNE 2018
$
$
(3,084,624)
-
(3,084,624)
(3,225,309)
-
(3,225,309)
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 SALE
On 1 July 2019 the Company announced under an agreement executed 28 June 2019 (Transaction Agreement) it has
agreed to sell or assign all its rights and interests in the following assets to the Purchasers:
• Baobab Fertilizer Africa (BFA) (the wholly owned subsidiary which holds Avenira’s interests in the Baobab
Phosphate Project) and the associated Baobab Intellectual Property and Other Information;
• Novaphos (other than the existing Australian Licence Agreement as outlined below);
•
The intercompany loan between Avenira and BMCC; and the intercompany loan between Avenira and BFA.
Avenira shareholders will have an opportunity to vote on the Transaction and capital reduction at the shareholder meeting
on 14 October 2019. Subject to meeting all of the condition’s precedent, the Transaction is likely to complete shortly after
the shareholder meeting.
BAOBAB PHOSPHATE PROJECT (80% OWNED)
REDEVELOPMENT PROJECT
During the 2019 year, Avenira announced the completion of the Feasibility Study (‘FS’, ‘Feasibility Study’ or the ‘Study’)
(Class 4 estimate) for the redevelopment of its 80%-owned Baobab Phosphate Project (‘Project’) in the Republic of Senegal
to a projected high-grade phosphate rock mine with a concentrate product capacity of 1 Mtpa. The FS confirms the
technical and financial robustness of a long-life operation for the Company’s Baobab Phosphate Project.
This Feasibility Study is classified as an AACE Class 4 estimate with a ± 20% estimated accuracy. The “Bankable” or
“Definitive” Feasibility Study (‘BFS’) phase intended to follow will target an AACE Class 3 estimate with a ±10% accuracy.
The FS is based on an open-pit strip-mining design and conventional flotation and magnetic separation ore processing
plant operating at an ore throughput of 2.9Mtpa and a phosphate rock concentrate post ramp-up production rate of 1Mtpa.
It determined that the Project’s Probable Ore Reserve is 39.3Mt at 18.9% P2O5.
6
The Study indicates a technically sound and financially robust project, delivering post-tax unlevered NPV8% of US$212M
and IRR of 25.5% over a 13.4-year mine life based on the Project’s Indicated Resource.
Finalisation of the FS represents a key milestone in the evolution of the Project. The Company intends to initiate the BFS
phase (Class 3 estimate) once the final project configuration has been confirmed as part of a planned value-engineering
study and BFS funding has been secured. Concurrently, the Company intends to undertake more advanced and detailed
discussions with potential funding parties.
KEY PROJECT METRICS
Life of Mine Physical Parameters
Life of Mine (from Probable Reserve)
Ore tonnes Mined
Total phosphate rock production
LOM Average P2O5 recovery
Table 1: Production Parameters
Life of Mine Financial Outcomes
Baobab Phosphate Rock Concentrate FOB Dakar Price
(LOM range)
Total Revenue
EBITDA
NPV8% (unlevered, pre-tax)
IRR (unlevered, pre-tax)
NPV8% (unlevered, post-tax)
IRR (unlevered, post-tax)
Free cash flow (post all capital expenditures and tax)
Pre-production Capital Expenditure
Post-Commissioning Sustaining Capital Expenditure
Mobile Equipment Costs included in Pre-production and
Sustaining Capital Expenditures
Payback from First Production
Payback from Start of Detailed Engineering
Units
Years
Mt
Mt
%
Units
US$/t
US$M
US$M
US$M
%
US$M
%
US$M
US$M
US$M
US$M
Years
Years
Value
13.4
39.3
13.2
65
Value
138 - 164
1,997
1,020
306
29.4
212
25.5
544
183.1
61.2
59.3
3.3
5.3
Table 2: Key Financial Outcomes
The key assumptions in the economic evaluation of the project include no terminal value and no inflation plus
the assumptions outlined in Table 3.
7
Financial Assumptions
Discount Rate (real basis)
Senegal Government Royalty
Private royalties
Corporate tax rate
Unit
Value
%
%
%
%
8.0%
5.0%
3.5%
30%
Table 3: Key Financial Model Assumptions
The Project is 100%-owned by BMCC, itself 80%-owned by Avenira. As part of the post-Exploitation Permit
award restructuring, the government of Senegal will be awarded 10% free-carried interest in the Project and
BMCC’s ownership will thereby be reduced to 90%, thus reducing Avenira’s ownership to 72%: Avenira’s share
of Project returns will therefore be 72% of the corresponding total Project amounts.
Unless otherwise stated, all financial numbers are in US$ and are based on 100% of the Project. All tonne (‘t’)
references are to dry metric tonnes. Base date for estimated capital expenditures is August 1, 2018.
Component
Baobab Phosphate Rock
Concentrate
P2O5
SiO2
Fe2O3
Al2O3
MgO
CaO/P2O5
36.4%
8.7%
1.2%
0.8%
0.1%
1.38
Table 4: Projected Typical Analysis, Gadde Bissik Phosphate Rock Concentrate
TENURE
Avenira was granted an Exploitation Permit (Permit) by Presidential Decree dated 27 September 2018 and
notified to Baobab Mining & Chemicals Corporation SA (‘BMCC), Avenira’s 80%-owned subsidiary, on 17
October 2018. The Permit covers an area of 75 km2 around the former Gadde Bissik Small Mine Permit (SMP)
and is valid for an initial renewable term of 20 years. Following the restructure triggered by this Permit grant,
the Senegalese Government will hold a 10% free-carried interest in the operating entity that holds the Permit.
Figure 1: Location of Baobab Phosphate Project
GEOLOGY & RESOURCE ESTIMATION
The Exploration Permit covers an area of 1,163 km2 around the Exploitation Permit. The Indicated Mineral
Resource within the Exploitation Permit area is estimated at 41.8Mt at 19.4% P2O5 at a cut-off grade of 10%
P2O5, and the Inferred Mineral Resource within this same area is estimated at 247 Mt at 16% P2O5 at a cut-off
8
grade of 10% P2O5, both taking into account depletion by mining to date (see Table 5) and rounded to reflect
the precision of estimates and therefore including rounding errors. The Mineral Resource estimates are
inclusive of Ore Reserves.
Area
Deposit
Classificati
on
Mt
P2O5
%
CaO
%
MgO
%
Al2O
3
%
Fe2O
3
%
SiO2
%
Gadde Bissik East
Indicated
Inferred
Gandal
Gadde Escale
Inferred
Inferred
Subtotal within
Exploitation Permit
Indicated
Inferred
Gadde Bissik East
Indicated
Inferred
Gadde Bissik West
Gandal
Gadde Escale
Dinguiraye
Inferred
Inferred
Inferred
Inferred
Within
Exploitation
Permit
Outside
Exploitation
Permit
Subtotal outside
Exploitation Permit
Total Resource
Indicated
Inferred
Indicated
Inferred
19.4
16
26.8
22
0.08
0.17
2.23
3.4
3.87
4.0
44.0
51
15
16
21
23
19.4
16
26.8
22
16.4
16
22.3
22
13
14
15
17
17
19
21
25
16.4
15
19.4
16
22.3
21
26.8
22
0.10
0.15
0.08
0.16
0.17
0.19
0.35
0.06
0.32
0.24
0.17
0.27
0.08
0.18
4.3
2.4
7.9
3.0
46
52
2.23
3.2
3.87
4.1
44.0
50
3.96
4.2
3.76
3.3
48.7
50
6.7
2.5
2.9
3.4
3.96
4.7
2.24
3.5
7.0
6.9
4.6
3.7
3.76
4.9
3.87
4.3
48
54
51
46
48.7
48
44.0
50
41.
8
136
31
80
41.
8
247
0.3
9
26
1
2
35
0.3
73
42.
1
320
Table 5: Gadde Bissik Mineral Resource Estimates at 10% P2O5 Cut-off Grade
The estimated Indicated Mineral Resource and estimated Inferred Mineral Resource within the Exploitation
Permit area represent 99% of the total estimated Indicated Mineral Resource and 77% of the total estimated
Inferred Mineral Resource, respectively, within the Company’s Baobab Project Cherif Lo-Ngakham Exploration
Permit as identified in the Company’s most recent Mineral Resource estimates.
MINING
The Company engaged Wood PLC to complete a mining study on the Project as part of the FS. Mining will be
open pit and free-digging within a sedimentary type deposit, eliminating the need for costly drill and blast
operations.
The results of a trade-off study indicate that a strip-mining method using dozers for the movement of
overburden material and a combination of excavators and 8 x 4 trucks for ore mining is the most cost effective,
feasible combination for the extraction of the ore at the Gadde Bissik deposit.
Pit optimisation studies confirmed the development of a strip-mining sequence that, in addition to facilitating
access to higher grade ore in the early stages of the mine plan, also minimises mine development costs by
using the existing open pit for access.
Mine planning dictates that two strips be operational at the same time (utilising two excavators), targeting the
production of about 2.9Mtpa of ore to achieve an output of 1Mtpa of phosphate concentrate. The mine plan
extends to year 13.4 incorporating only Indicated Mineral Resources.
9
The mining plan calls for 307.2Mt of overburden waste material to be dozer-pushed to give access to the
39.3Mt of ore to be extracted over the projected Indicated Resource mine life of about 13.4 years, adding up
to a LOM-average stripping ratio of 7.8.
ORE RESERVE
Wood PLC reported the maiden Ore Reserves in accordance with the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves, JORC Code 2012.
Reserves were estimated from the block model after mining dilution, based on pit-optimisation run at a variable
cut-off, using a minimum, pre-royalties, 34.7% P2O5 concentrate product price of 97.561 €/t (120 US$/t at
1.23 US$:€), ore recoveries as advised by the metallurgical test work and software simulations, and estimated
mining, processing, logistics and overhead costs.
Ore Reserves for the deposit total 39.3 Mt grading 18.9% P2O5, based on an estimated Indicated Mineral
Resource of 41.8 Mt at 19.4% P2O5 within the Permit area. The full amount of reserves has been classified as
Probable Reserves as they derive exclusively from Indicated Resources.
A tabulation of the Ore Reserve categories based on the mine planning sequence proposed for the Indicated
Mineral Resource of the deposit is presented in Table 6 below.
Reserves
Ore
(kt)
P2O5
Grade
(%)
P2O5
Content
(kt)
Proved
-
-
-
Al2
O3
(%)
-
CaO
(%)
Fe2O
3 (%)
MgO
(%)
SiO2
(%)
CaO/P2O
5
-
-
-
-
-
Probable
Total
39,30
5
39,30
5
18.9
7,446
2.1
26.1
3.7
0.1
43.2
1.38
18.9
7,446
2.1
26.1
3.7
0.1
43.2
1.38
Table 6: Ore Reserves for Baobab Exploitation Permit Mining Lease
All of the Indicated Mineral Resource that forms part of the tonnage that is Ore Reserves in Table 6 above is
within the Exploitation Permit, which includes the entire area of mining considered in this Study.
After mining losses and dilution, 39.3 Mt of ore at an average grade of 18.9% P2O5 are projected to be mined
and hauled to the primary crusher feedbin for processing over 13.4 years of mining within the Indicated Mineral
Resource area of the Permit.
PROCESS & METALLURGY
The process plant is designed to separate clay, silica, iron and other minor gangue minerals present in the ore
from the phosphate containing minerals to achieve a phosphate concentrate with maximum assays of 8% SiO2
and 1% Fe2O3. The plant design target is to produce ~1Mtpa of concentrate by varying the feed tonnage within
the design allowance parameters.
Process Description
The process plant receives ore from the mining area via mine trucks. Ore is crushed in a three-stage crushing
circuit, with the tertiary stage in closed circuit with a screen, to produce a beneficiation circuit feed of -20 mm.
Material from the crushed ore stockpile is fed at a controlled rate to the rod mill closed-circuit screen (cutting
at 2mm). The screen undersize (-2 mm) is then split into a pebble fraction (+850 µm) sent to magnetic
separation and a fines fraction (-850 µm) delivered to the flotation feed preparation circuit. The reverse flotation
circuit is a staged rougher flotation configuration, with the sinks (concentrate) combining with the pebble
10
fraction for iron removal in the magnetic separation circuit. The final concentrate is dewatered in 3 stage:
thickening followed by horizontal vacuum belt filtration and by rotary drying targeting a ±3% moisture content.
The dry concentrate is stored on a covered stockpile and then loaded into trucks.
The slimes fraction is dewatered in a thickener prior to disposal. Flotation circuit floats (silica tailings) and
magnetics are delivered to a separate "Sand" facility (utilising cyclones for initial dewatering). The cyclones
overflow is delivered to a clarifier and the underflow combined with the slimes thickener underflow. The
overflows from the thickeners and the clarifier are recycled as process water. Other water, air and reagent
services are included as part of the process plant design.
The process mass and water balances were completed using Metsim® software. The basis for the Metsim
model was completed by Project Simulation Consulting.
With 39.3 Mt of ore at 18.9% P2O5, which corresponds to 7.446 MtP2O5, projected to be processed over the
Ore Reserve LOM, and 13.2 Mt of phosphate rock concentrate at 36.4% P2O5, which corresponds to
4.8 MtP2O5, produced over the period, overall average projected processing recovery stands at 65%.
TAILINGS MANAGEMENT
Fines (slimes) residue and coarse tailings (sand) will be separately discharged to two separate dedicated
storage areas. After the first year, tailings will be delivered as backfill to the mining pit area. The tailings
deposition strategy minimises both initial capital and sustaining capital costs and also facilitate the
implementation of the closure strategy.
To achieve these objectives a combination of surface and “in-pit” disposal will be implemented. Year 1, slimes
will be discharged via open-end/spigots in a purpose-built ‘surface’ Slimes Residue Storage Facility (‘SRSF’),
located west of the Processing Plant area and coarse tailings (sand) will be discharged via a cyclone system
into a dedicated ‘surface’ Tailings Storage Facility (TSF) confined by 1 m-high confining and flow-control
berms, located south of the SRSF. Years 2 and 3, slimes will continue to be discharged via open-end/spigots
into the SRSF and coarse tailings (sand) will be discharged via cyclone into the mined-out (inactive haul road)
area. From year 4 onwards, slimes and coarse tailings (sand) will both be discharged into the mined-out area.
SITE, INFRASTRUCTURE & ENGINEERING DESIGN
Infrastructure items which have been catered for in both the design and estimate include bulk earthworks and
terracing, re-routed 7.2 km long and 8 m wide access road, and overhead power line, ponds, buildings and
workshops, sewage and fencing. There are few site selection, layout or infrastructure constraints.
Grid power is available in adequate quantities by accessing the 90 kV HT national distribution grid operated
by Senelec at the Mékhé transformer station approximately 30 km from site, and this is the power supply option
selected for this Study, with the estimated cost to build a 30 km-long HT connection line included in the
Project’s capital expenditures.
11
DIRECTORS’ REPORT
CAPITAL ESTIMATE
The total capital cost estimated to achieve the defined scope of work for mining, process plant, infrastructure
and TSF for the Baobab Phosphate Project is US$183.1M, excluding allowance for traditional Owners Cost
(such costs, as estimated, are factored in the Project’s financial model).
A summary of the capital cost estimate by major area is presented in Table 7. The base date of the estimate
is 1 August 2018 and the currency of the estimate is US$.
Description
Mine Development
Tailings Storage Facility
Site and Port Infrastructure & Bulk Earthworks
Process Plant
Total Direct Field Costs
Total Indirect Field Costs
Total Net Cost
Total Contingency & Other Costs
Overhead Power Supply & Reticulation
Mining & Other Mobile Equipment
Site Establishment, Eq. Relocation, First Fills
& Spares
Total Pre-Production Project Capital
Expenditure
Capital Expenditure
(US$M)
5.0
10.4
15.8
79.8
111.0
14.4
125.4
24.7
8.9
19.2
4.9
183.1
Table 7: Feasibility Study Pre-Production Capital Cost Estimate for Baobab Phosphate
Project
A post-production capital amount of US$61M has been estimated and includes sustaining mining and
processing capital, further mine development costs, relocation costs and rehabilitation costs. Mobile equipment
purchases account for US$59.3M of the total LOM US$244M capital expenditures.
The capital cost estimate was developed within a level of accuracy of ± 20% (AACE Class 4). It must be noted
that certain components of the capital cost estimate were developed to an accuracy level of ±10% (AACE
Class 3). These components are:
Mining Fleet.
TSF, namely the SRSF and the Coarse Sand TSF.
The inclusion of the Class 3 components in the capital cost estimate improves the overall confidence level of
the capital cost estimate.
12
DIRECTORS’ REPORT
Power supply by a contracted Independent Power Provider instead of connecting to and purchasing from the
national power grid, leasing the mining and other mobile equipment instead of purchasing outright, as well as
contract mining will be further reviewed during the upcoming engineering study phases as part of additional
capital costs to operating costs trade-off studies.
OPERATING COST ESTIMATE
The direct operating costs include the mining operations, process plant, port area facilities and the TSF. The
Project operating cost estimate is applicable for a process plant that will process ±2.94 Mtpa of phosphate ore
with a nominal grade of ≈ 19.4% P2O5, to produce 1 Mtpa of product.
The direct operating cost estimate was developed within a level of accuracy of ± 20% (AACE Class 4).
Table 8 summarises the direct operating costs by cost centre of the Project, per ton of 36.4% P2O5 Phosphate
Rock Concentrate product.
Royalty fees, in-country administration overhead costs and social & institutional support expenditures are not
included in direct operating costs listed in Table 8.
Direct Operating Costs, US$/t Rock
Concentrate
Mining
Labour
Reagents, Materials, Consumables & Miscellaneous
Power
HFO
Concentrate Transport & Port Handling
Total
$20.9
$2.1
$4.3
$5.5
$8.0
$15.4
$56.2
Table 8: Project Direct Operating Costs Summary per Cost Centre
MARKETING
Projected Baobab phosphate rock concentrate prices have been estimated by industry consultant CRU for
Baobab’s premium product. CRU’s pricing model refers to industry standard reference Moroccan 32% P2O5
phosphate rock, corrected by three factors:
• Positive adjustment due to higher P2O5 content (proportional adjustment).
• Positive adjustment for lower CaO ÷ P2O5 ratio.
• Minor negative adjustment for MER ratio.
Events affecting the global phosphate rock supply-demand balance or adverse regulatory environment-driven
changes could cause projected mid-term and long-term phosphate rock concentrate market prices to deviate
from the estimated outlook as forecast by CRU, with potential impacts on the Project profitability.
LOGISTICS
The distance between mine gate and Port of Dakar is approximately 140 km on the existing road network. The
new Dakar to Touba sealed toll highway, opened in Q1, 2019, runs east - west approximately 15 km south of
the mine site and is expected to reduce rotation times to port.
Contracted covered single trailer rear-tipping trucks with typical capacity of approximately 50 t have been used
under the mine’s actual operations to ship product to the Port of Dakar and to the domestic customer and are
forecasted to be used in the expanded operation contemplated in this Study.
13
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL & GOVERNANCE
Senegalese rules and regulations, as well as Equator principles, IFC Performance Standards for
Environmental and Social Sustainability, and World Bank Group’s Environmental, Health and Safety Directives
have been incorporated into the existing Baobab Project. As confirmed in the Presidential decree awarding
the Exploitation Permit to BMCC (Presidential decree n°2018-1840 dated 27 September 2018), BMCC holds
a valid environmental license, fully compliant with the standards and rules enacted by the Senegalese
environmental code, to run its operations in the expanded Exploitation Permit area. The Environmental, Social
and Governance (ESG) management systems will be updated for the expanded scope of operations.
ADDITIONAL WORK
Further metallurgical test work will be required during BFS. This will include additional rod milling test-work for
rod mill design, attrition test-work to specify attrition cells design, flotation locked-cycle tests, magnetic
separation test-work (scavenger step on the combined pebble and flotation concentrate stream, and Fe range
extension) for wider process guarantees, additional filtration test-work to confirm concentrate dewatering filters
design and dryer feed moisture levels. Ore feed to the processing plant needs to be further characterised in
terms of particle size distribution and associated chemical analysis by size fraction.
Additional work on the tailing storage facilities include physical characterisation of sand tailings and slimes
tailings to confirm tailings density for detailed design, and geotechnical information (load bearing, ground
conditions, etc.) needs to be confirmed for detailed foundations and terracing designs. TSF and SRSF
permitting and regulatory requirements also need to be confirmed.
Other items that will need to be confirmed during the BFS include the projected cost to relocate the villages
affected by the mining operation, the projected Owners Costs, including operational capability ramp-up costs,
and the bulk power connection schedule. An IFC/Equator Principles gap analysis will better define any gaps
that should be closed to fully meet such standards.
RISK MANAGEMENT
Key risks identified during the FS Phase of the Project include a project execution risk linked to delays in
receiving ancillary permits and licenses and a projected mining cost risk linked to the possible existence of
internal waste lenses smaller than the 125 m x 125 m drilling and sampling grid dimensions which, if they exist,
would result in waste mining impacting the production schedule. Mining costs and schedule would also be
materially impacted should any harder pockets of material requiring blasting be found, in particular in the ore
zone. Additional risks also include potential findings relative to the additional metallurgical, geometallurgical
(characterisation and mapping of variability of metallurgical test work samples) and geotechnical test work
deviating from assessments to date, which could lead in particular to a revision of the comminution circuits or
to higher or lower projected P2O5 recoveries and final phosphate rock concentrate grade.
While the Company has exported several full-vessel phosphate rock cargoes from the Port of Dakar during
the Small Mine operation, thereby demonstrating truck and port logistics, and despite the projected additional
export capability associated with the projected bulk port at Bargny-Sendou, port congestion could increase in
the future, potentially burdening the Project with increased shipment costs due in particular to demurrage
expenditures. Changing truck-freight or ocean-freight market conditions in the future could also result in
spending on shipping logistics deviating from current projections.
VALUE-ENGINEERING
The pre-BFS value-engineering study will consider several capital expenditures vs. operating cost trade-off
opportunities, including power supply by a contracted Independent Power Provider instead of connecting to
and purchasing from the national power grid (removal of 30 km-long grid-connection HT line from projected
Project capital expenditure) and leasing the mining and other mobile equipment instead of purchasing such
equipment outright.
14
DIRECTORS’ REPORT
The value-engineering study will also review in particular the general processing plant layout compactness,
crushed-ore stockpiling requirements and stockpile design, comminution circuit and concentrate settling,
filtration and drying schemes to identify potential streamlining and other capital cost-reduction options.
PROJECT IMPLEMENTATION
The current mining schedule covers a period of ± 14 years, with initial mining development starting 8 months
before delivery of first ore to the process plant.
MINING AND PROCESSING
Between June and September 2018, the company has been crushing and processing mined ore from the Run
of Mine material onsite to stockpile small quantities of phosphate rock product to be sold to a local Senegalese
major fertiliser producer. Post September 2018 crushing and processing activities during the period have been
minimal as the Company has been monitoring commissioning and evaluation tests of a modified contracted
crushing and screening operation.
SAFETY AND LOCAL COMMUNITY
No lost time injuries or significant incidents were reported during the financial year.
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
Between June and September 2018, the company has been shipping small quantities of phosphate rock
product to a local Senegalese major fertiliser producer.
OTHER
Senegal Tax audit
Following a tax audit BMCC has received a demand notice from the tax department for US$1.6 million
(including penalties) on outstanding VAT and WHT. On advice from the Company’s tax advisors we believe
the amount due is significantly lower as a result BMCC will submit an arbitration appeal request to the tax
department. The appeal process is expected to take approximately six months.
WONARAH PHOSPHATE PROJECT, NORTHERN TERRITORY (100% OWNED)
SUMMARY
The 100% owned Wonarah Phosphate Project in the Northern Territory, 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% P2O5 (10% cut off)
During the period Wonarah was 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. The
company intends to review the Wonarah Project once the sale of the Baobab Project is complete, including
whether to commence a scoping study.
15
DIRECTORS’ REPORT
ANNUAL MINERAL RESOURCE STATEMENT AS AT 30/06/19
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
Area
Deposit
Classification
Mt
P2O5
CaO
MgO
Al2O3
Fe2O3
SiO2
%
%
%
%
%
%
Gadde Bissik East
Within
Exploitation
Permit
Gandal
Gadde Escale
Subtotal
Exploitation Permit
within
Gadde Bissik East
Indicated
Inferred
Inferred
Inferred
Indicated
Inferred
Indicated
Inferred
Gadde Bissik West
Inferred
Outside
Exploitation
Permit
Gandal
Gadde Escale
Dinguiraye
Subtotal
Exploitation Permit
outside
Total Resource
Inferred
Inferred
Inferred
Indicated
Inferred
Indicated
Inferred
41.8
136
31
80
41.8
247
0.3
9
26
1
2
35
0.3
73
19.4
26.8
16
15
16
22
21
23
19.4
26.8
16
22
16.4
22.3
16
13
14
15
17
22
17
19
21
25
16.4
22.3
15
21
42.1
320
19.4
26.8
16
22
0.08
0.17
0.10
0.15
0.08
0.16
0.17
0.19
0.35
0.06
0.32
0.24
0.17
0.27
0.08
0.18
2.23
3.87
44.0
3.4
4.3
2.4
2.23
3.2
3.96
4.2
6.7
2.5
2.9
3.4
3.96
4.7
2.24
3.5
4.0
7.9
3.0
51
46
52
3.87
44.0
4.1
50
3.76
48.7
3.3
7.0
6.9
4.6
3.7
50
48
54
51
46
3.76
48.7
4.9
48
3.87
44.0
4.3
50
Table 9: Mineral Resource Statement
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.
16
DIRECTORS’ REPORT
NOVAPHOS INC. (PREVIOUSLYJDCPHOSPHATE INC.), FLORIDA (APPROX. 7% EQUITY)
If shareholder approval for the sale (Refer Section 1) is received, Avenira will dispose of its 7% equity interest in Novaphos
Inc. and assign the associated loans and accrued interest outstanding. Novaphos owns a proprietary phosphate
technology, the Improved Hard Process (IHP). Avenira will retain the right to utilize the Novaphos technology in Australia.
INVESTMENTS AND CORPORATE INFORMATION
BOARD/ AND EXECUTIVE CHANGES
In December 2018, Mr Charles Graham was appointed as Project Director to manage Avenira’s Baobab 1Mtpa High-
Grade Phosphate Rock Concentrate project, and to lead the Baobab Feasibility Study.
Former company chairman and Non-Executive Director Dr Christopher Pointon retired from the Board on 31 December
2018 and Non-Executive Director Mr Ian McCubbing retired from the Board on 31 January 2019.
Mr Louis Calvarin resigned as Managing Director and Chief Executive officer on 30 June 2019. He will continue as a non-
executive director until the Transaction completes.
Non-Executive Directors Mr Farouk Chaouni and Mr David Mimran retired from the Board on 28 June 2019.
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.
August 2018 Placement
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 was completed in two tranches as follows:
(i)
(ii)
40,000,000 shares were 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 were issued, following shareholder approval at a general meeting of shareholders held on 20
September 2018 (Tranche 2 Shares) and receipt of A$2 million on 8 October 2018.
Short term shareholder loans
On 15 March 2019 the Company entered into convertible loans (the ‘Bridge Loans’) with its three major shareholders
Agrifos Partners LLC, Tablo Corporation and Agrifields DMCC (each a ‘Lender’).
The combined funding amount made available to Avenira by these three Bridge Loans is A$1.25M (US$0.9M), with the
funds to be drawn down immediately.
The Bridge Loans have a 12-month maturity and accrue interest at 10%. Subject to Avenira obtaining shareholder
approval, each Bridge Loan may be converted into fully-paid ordinary shares of Avenira (Shares) (a) at any time at the
Lender’s election at the 15 trading days volume weighted average ASX Share price (’15-day VWAP’), subject to a $0.008
floor and a $0.024 ceiling, or (b) at any time at Avenira’s election with prior Lender’s consent, or under certain conditions
at Avenira’s request during the final month before the Bridge Loan maturity date, at the 15-day VWAP, subject to a $0.001
floor and $0.024 Ceiling.
On the 15 May 2019, the Company’s 80% subsidiary Baobab Mining and Chemicals Corporation (‘BMCC’) executed loan
agreements (‘Shareholder Loans’) with the Company’s three major shareholders Agrifos Partners LLC, Tablo Corporation
and Agrifields DMCC (each a ‘Lender’) for US$0.8M (approximately A$1.1m)
The unsecured Shareholder Loans have been entered into on the following previously announced terms:
• Maturity: 30 September 2019 (or as extended by agreement between the parties – extended to 21 October 2019
on 27 September 2019)
Interest: accrued at 10% per annum
•
17
DIRECTORS’ REPORT
• Structure: the Shareholder Loans are between the Company’s 80% subsidiary BMCC and the Lenders, to be
drawn down in tranches over the coming weeks
• Other: Customary events of default, negative pledges and undertakings
As part of the sale transaction referred to above, an additional US$1.8M (approximately A$2.6M) in facilities was agreed
with the major shareholders on identical terms, to the unsecured shareholder loans to achieve completion.
FINANCIAL REVIEW
FINANCIAL INFORMATION
At 30 June 2019, the total closing cash balance, including cash applicable to the discontinued operations was $300,544
(2018: $3,679,173). The Group has recorded an operating loss after income tax for the year ended 30 June 2019 of
$43,439,722 (2018: loss of $6,175,977).
OPERATING RESULTS FOR THE YEAR
Summarised operating results are as follows
Revenue
Loss before tax
Shareholder Returns
Basic loss per share from continuing operations (cents)
Basic loss per share from discontinued operations (cents)
IMPAIRMENT – BAOBAB PHOSPHATE PROJECT
2019
CONTINUING
OPERATIONS
$
2019
DISONTINUED
OPERATIONS
$
63,973
696,477
(3,084,624)
(40,355,098)
2019
2018
(0.30)
(3.94)
(0.42)
(0.38)
On 1 July 2019 Avenira announced that it proposed to sell its interests in the Baobab Phosphate Project and Novaphos to
a consortium of its major shareholders (the Purchasers) in return for cash consideration and essential funding support (the
‘Transaction’).
During the year the carrying value of the Project was impaired by $38.76 million. Refer Note 12.
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
On 1 July 2019 Avenira announced that it proposed to sell its interests in the Baobab Phosphate Project and Novaphos to
a consortium of its major shareholders (the Purchasers) in return for cash consideration and essential funding support (the
‘Transaction’).
18
DIRECTORS’ REPORT
Under the Transaction:
• Avenira to receive cash consideration of US$3.0M (A$4.3M), and loan and director fees forgiveness of approximately
US$1.2M (A$1.8M), for a total value of approximately US$4.2M (A$6.1M), using a A$:US$ 0.69 exchange rate.
• Avenira to undertake, for nil consideration, a buy-back and capital reduction of all the existing shares held by the major
shareholders.
• Pending completion of the sale (‘Completion’), the Purchasers will provide loan funding of up to US$1.8M to BMCC.
(the Avenira subsidiary which holds the Baobab Project) and US$ 300,000 to Avenira Limited. Of these facilities BMCC
has drawn down US$1.265M to date and Avenira has drawn down US$300,000 to date.
Other than as disclosed above, no event has occurred since 30 June 2019 that would materially affect the operations of
the Group, the results of the Group or the state of affairs of the Group.
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
•
and manage business risk.
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.
19
DIRECTORS’ REPORT
DIRECTORS’ MEETINGS
During the year the number of meetings of directors (including meetings of committees of directors) and the number of
meetings attended by each director were as follows:
DIRECTORS MEETINGS
AUDIT COMMITTEE MEETINGS
REMUNERATION AND
NOMINATION COMMITTEE
MEETINGS
Brett Clark
Louis Calvarin
Christopher Pointon
Ian McCubbing
Timothy Cotton
Farouk Chaouni
David Mimran
A
17
17
8
8
15
11
-
B
17
17
8
9
17
16
16
A
*
*
-
1
2
*
*
B
*
*
1
1
2
*
*
A
-
*
-
-
-
*
*
B
-
*
-
-
-
*
*
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 nil 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 24 September 2019 ($0.25)
Total number of options outstanding as at the date of this report
NUMBER OF OPTIONS
80,000,000
(80,000,000)
Nil
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 $125,780 (2018: $132,000).
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 22 - Remuneration of Auditors, to the
Consolidated Financial Statements on page 73.
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.
20
DIRECTORS’ REPORT
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 33.
EXTENSION OF LEAD AUDIT PARTNER
On 27 June 2019, the Board granted approval pursuant to section 324DAC of the Corporations Act 2001 ("the Act"),
for Mr Gavin Buckingham of Ernst & Young to play a significant role in the audit of the Company for an additional two
financial years ending 30 June 2021. The Board considered the matters set out in section 324DAB(3) of the Act and is
satisfied that the approval:
(i)
(ii)
is consistent with maintaining the quality of the audit provided to the Company; and
would not give rise to a conflict of interest situation.
Reasons supporting this decision include:
• the benefits associated with the continued retention of knowledge regarding key audit matters;
• the Board being satisfied with the quality of Ernst & Young and Mr Buckingham's work as auditor; and
• the Company's on-going governance processes to ensure the independence of the auditor is maintained.
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
21
DIRECTORS’ REPORT
A.
INTRODUCTION
The remuneration report for the year ended 30 June 2019 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 2019. Unless otherwise
indicated, the individuals were KMP for the entire financial year.
NAME
Directors
POSITION
TERM AS KMP
Brett Clark
Independent Non-executive Chairman
Full financial year
Christopher Pointon
Independent Non-executive Director
Ian McCubbing
Independent Non-executive Director
Timothy Cotton
Non-executive Director
Farouk Chaouni
Non-executive Director
David Mimran
Non-executive Director
Louis Calvarin
Executive Director
Other key management personnel
Rod Wheatley
Chief Financial Officer and Company Secretary
Resigned 31 December 2018
Resigned 31 January 2019
Full financial Year
Resigned 28 June 2019
Resigned 28 June 2019
Full financial Year (Resigned as
Managing Director and CEO on 30 June
2019)
Full financial year - resigned 30 August
2019
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.
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 20 for the number of Committee meetings held during
the year. The Managing Director attends certain RNC meetings by invitation, where management input is required. The
Managing Director is not present during any discussions relating to his own remuneration arrangements.
Use of remuneration consultants
The RNC seeks external remuneration advice where necessary to ensure it is fully informed when making remuneration
decisions. Remuneration advisors are engaged by, and report directly to, the RNC.
An independent remuneration consultant, Gerard Daniels, was appointed in October 2018 to review the Chief Executive
Officer’s total fixed remuneration.
22
DIRECTORS’ REPORT
No other remuneration consultants were engaged during the financial year.
Both Gerard Daniels and the RNC are satisfied that the advice provided by Gerard Daniels is free from undue influence
from the KMP to whom the remuneration recommendations apply. Gerard Daniels was instructed by the RNC Chairman,
and the RNC Chairman received the remuneration recommendations directly from Gerard Daniels.
The remuneration recommendations were provided to the RNC as an input for decision making purposes only. The RNC
considered the recommendations, along with other factors, in making their remuneration decisions.
The fees paid to Gerard Daniels for the remuneration review was $5,000 for the 2019 financial year. No other services
were provided by Gerard Daniels during the 2019 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 – 2018 Annual General Meeting (AGM)
The Company received 98% “Yes” votes cast on its Remuneration Report for the 2018 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
objectives.
Receipt of variable remuneration in any form is not guaranteed under any executive KMP’s employment contract.
23
DIRECTORS’ REPORT
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 was
approved for a further three years at the November 2018 AGM. 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. Performance Rights issued outside of the Plan to Directors are
required to receive shareholder approval prior to their issue.
2.1.1 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:
24
DIRECTORS’ REPORT
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%
Mr Calvarin ceased to be an eligible person on 30 June 2019, therefore the 5,000,000 unvested performance
rights were cancelled on 30 June 2019.
Further information on Performance Rights on issue can be found on page 30 under the Share-based Compensation
heading within the Remuneration Report
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.
2019 short term incentive
There were no short-term incentives in place during 2019 financial year.
In 2018, 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 $93,130 was paid to the Managing Director, Mr. Louis
Calvarin, during the 2018 financial year.
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 30 and 31 of the remuneration report.
25
DIRECTORS’ REPORT
The table below shows the performance of the Company over the last 5 years:
EPS (cents)
Share Price
Net Profit / (Loss) before
discontinued operations
2019
(0.30)
$0.006
2018
(0.42)*
$0.02
2017
(5.09)
$0.07
2016
(2.31)
$0.19
2015
(17.5)
$0.071
(3,084,624)
3,225,309*
(30,579,063)
(9,464,695)
(43,018,117)
* 2018 Comparatives have been re-stated due to the re-classification of the discontinued operations, refer Note 12.
As the Company is in the development phase the performance of the Company is not related to the profit or earnings of
the Company.
26
DIRECTORS’ REPORT
D. DETAILS OF REMUNERATION OF KEY MANAGEMENT PERSONNEL (KMP)
The table below shows details of each component of total remuneration for KMP.
SHORT-TERM
SALARY & FEES
CASH BONUS
$
$
POST EMPLOYMENT
LONG-TERM
SHARE-BASED PAYMENTS
NON-
MONETARY (5)
SUPERANNUATION
LONG SERVICE
LEAVE
ANNUAL LEAVE
TOTAL CASH
RELATED
PERFORMANCE
RIGHTS (6)
SHARES
TOTAL
REMUNERATION
PERFORMANCE
RELATED
$
$
$
$
$
$
$
$
%
Directors
Brett Clark (7)
2019
2018
Louis Calvarin (1)
2019
2018
Christopher Pointon (2)
2019
2018
Ian McCubbing (3) (4)
2019
2018
Timothy Cotton
2019
2018
Farouk Chaouni (8)
2019
2018
David Mimran (9)
2019
2018
Subtotal Directors
254,713
49,839
450,000
450,000
30,000
95,887
37,291
77,627
60,000
60,000
60,000
60,000
60,000
60,000
-
-
-
93,130
-
-
96,402
68,684
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2019
2018
Other executive KPM
Rod Wheatley
2019
2018
Total KMP compensation
2019
2018
952,003
853,353
-
93,130
96,402
68,684
269,406
269,406
1,221,410
1,122,759
-
-
-
93,130
-
-
96,402
68,684
-
-
-
-
-
-
3,543
6,073
-
-
-
-
-
-
3,543
6,073
25,594
25,594
25,594
31,667
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
254,713
49,839
546,402
611,814
30,000
95,887
40,833
83,700
60,000
60,000
60,000
60,000
60,000
60,000
-
-
(40,721)
40,721
-
-
-
50,625
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
254,713
49,839
505,681
703,160
30,000
95,887
40,833
83,700
60,000
60,000
60,000
60,000
60,000
60,000
-
-
-
-
1,051,948
1,021,240
(40,721)
40,721
-
50,625
1,011,227
1,112,586
6,710
14,552
6,710
14,552
22,450
-
22,450
-
324,160
309,552
-
5,898
1,376,108
1,330,792
(40,721)
46,619
-
-
-
50,625
324,160
315,450
1,335,387
1,428,036
-
-
(8%)
26%
-
-
-
-
-
-
-
-
-
-
-
2%
27
DIRECTORS’ REPORT
(1) Mr. Louis Calvarin resigned as Managing Director and Chief Executive Officer on 30 June 2019. Mr Calvarin continues as a Non-Executive Director.
(2) Dr. Christopher Pointon resigned on 31 December 2018.
(3) Mr. Ian McCubbing resigned on 31 January 2019.
(4) The amount represents the total remuneration paid to Mr. Ian McCubbing and includes Nil (2018: $13,700) of fees paid for advisory services provided
during the year. Refer to Other Transactions and Balances with KMPs and Their Related Parties on page 29 for further details.
(5) Non-monetary benefits include housing, car and medical insurance.
(6) Share based payments in the 2019 and 2018 financial years represent Performance Rights granted to executive KMPs in accordance with the Company’s
Performance Rights Plan and approval at the Annual General Meeting held on 18 November 2015. The fair value of the Performance Rights was
estimated at the grant date taking into account both market and non-market based vesting conditions. The Monte-Carlo simulation methodology was
used to calculate the fair value of each performance right. Refer to Note 31 for further details.
(7) The amount represents the total remuneration paid to Mr. Brett Clark and includes $134,713 (2018: $Nil) of fees paid for advisory services provided
during the year. Refer to Other Transactions and Balances with KMPs and Their Related Parties on page 29 for further details.
(8) Mr Farouk Chaouni resigned on 28 June 2019.
(9) Mr David Mimran resigned on 28 June 2019.
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 2019 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.
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.
28
DIRECTORS’ REPORT
The table below summaries the Non-executive fees for the 2019 financial year:
Board
Chair
Non-executive Directors
Committee
Audit Chair
Remuneration and Nomination Chair
2019 FEES
A$110,000
A$60,000
A$10,000
A$10,000
In May 2017, the Board resolved to continue to accrue but defer the payment of all Non-independent non-executive Director
fees until further notice.
Accrued Director fees for Messrs Chaouni, Mimran and Cotton will be forgiven on completion of the transaction.
Termination payments
There were no termination payments paid to any Director or other KMP during the 2019 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 2019 there were no loans to KMP.
The Group received the following loans from KMP or their related parties during the 2019 financial year (2018: $2,847,084):
2019
LENDER
Agrifos Partners
LLC(i)
Tablo Corporation
(ii)
Mimran Natural
Resources (ii)
BALANCE
AT START
OF THE
YEAR
LOAN
PROCEEDS
RECEIVED
INTEREST
CHARGED
INTEREST
NOT
CHARGED
FORGIVEN
DURING
THE YEAR
FX IMPACT
REPAID
DURING
THE YEAR
BALANCE
AT END OF
THE YEAR
HIGHEST
BALANCE
DURING
THE YEAR
$
$
$
$
$
-
-
554,960
40,268
1,248,0780
66,444
2,847,084
-
178,154
-
-
-
-
-
-
(42,611)
(71,432)
80,676
$
$
674,709
717,319
1,243,090
1,314,522
3,105,914
3,105,914
-
-
-
(i) Agrifos Partners LLC is a company related through the common control of directors Mr. Timothy Cotton and Mr. Frank Chaouni.
(ii) Tablo Corporation and Mimran Natural Resources are companies related through the common control of director Mr. David Mimran.
Key terms and conditions of the loans are as follows:
LENDER
Agrifos Partners LLC
Tablo Corporation
INTEREST
RATE(i)
6.00%
6.00%
SECURITY
REPAYMENT DATE
unsecured
unsecured
30 September 2019ii
30 September 2019ii
Mimran Natural Resources
(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) On 27 September 2019, the Company obtain an extension to the maturity of the Shareholder Loans, extending the maturity date to 21 October 2019.
no set date
unsecured
6.75%
Full terms and conditions of the loans can be found at Note 17.
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 prior period. Total consultancy fees of Nil
(2018: $13,700) 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 27. The agreement had no fixed
term and no termination notice period.
In addition to his Non-executive Chairman fee, Mr. Clark was engaged to provide the Company strategic
advisory services on a consulting basis during the period. Total consultancy fees of $134,713 (2018: Nil) were
charged by Mr Clark during the year. The total amount of fees is included in his Salary & Fees amount in the
Details of Remuneration of KMP table on page27. The agreement had no fixed term and no termination notice
29
DIRECTORS’ REPORT
period. At 30 June 2019, advisory fees paid to Mr. Clark impacted the Statement of Profit and Loss and Other
Comprehensive Income with $134,713 recognised in Administrative and Other Expenses. There was no
impact on the 30 June 2019 Statement of Financial Position
(iii)
The Company owns approximately 7% of Novaphos, Inc (Novaphos) and has an exclusive licence to ultilise the IHP
technology. Forner Avenira Non-Executive Director Mr Chaouni and Director Mr Cotton are Directors of and have
an equity interest in Novaphos.
G. SHARE-BASED COMPENSATION
In 2018, 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 24 for
further details of the terms and conditions.
Mr Calvarin ceased to be an eligible person on the 30 June 2019, therefore the 5,000,000 unvested performance rights
were cancelled on 30 June 2019.
The performance rights plan was approved initially by shareholders at the AGM meeting of the company in 2015, and
subsequently at the AGM in 2018.
There were no other share-based payments issued to directors or other KMP during the 2019 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
NUMBER
VESTED
2019
Directors
Louis Calvarin
GRANT
DATE
NUMBER
GRANTED
VESTING
DATE
EXPIRY
DATE
FAIR
VALUE
AT
GRANT
DATE, $
EXERCISE
PRICE, $
NUMBER
LAPSED
NUMBER
VESTED
NUMBER
FORFEITED
VESTED
%
14-Dec-17
5,000,000
30-Jun-20
30-Jun-22
$0.049
nil
-
-
(5,000,000)
-
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 31 of the financial statements.
Value of Performance Rights held by KMP
FAIR VALUE
OF PR
GRANTED
DURING THE
YEAR, $
VALUE OF PR
VESTED
DURING THE
YEAR, $
VALUE OF PR
LAPSED
DURING THE
YEAR, $
VALUE OF PR
FORFEITED
DURING THE
YEAR, $(1)
VALUE OF PR
INCLUDED IN
REMUNERATION
REPORT FOR
THE YEAR, $
REMUNERATION
CONSISTING
OF PR FOR THE
YEAR, %
2019
Other Executive KMP
Louis Calvarin
-
-
-
($40,721)
($40,721)
(8%)
(1) Mr Calvarin resigned as Managing director and Chief Executive Officer on 30 Jun 2019, therefore his 5,000,000 unvested performance rights were
forfeited resulting in a reversal of the previous year’s accrual. The above amount is recognised as an expense reversal in the statement of profit and
loss for the period ended 30 June 2019. Please refer to Note 31 for further details.
30
DIRECTORS’ REPORT
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
2019
Directors
Louis Calvarin
5,000,000
Brett Clark
Ian McCubbing
Timothy Cotton
Farouk Chaouni
David Mimran
Christopher Pointon
Other Executive KMP
Rod Wheatley
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,000,000)(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Mr Calvarins performance rights were cancelled on 30 June 2019.
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
2019
Directors
Louis Calvarin
Brett Clark
Ian McCubbing
Timothy Cotton
(1)
Farouk Chaouni
(1)
David Mimran
Christopher Pointon
Other Executive KMP
Rod Wheatley
-
-
-
56,000,000
56,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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.
All vested options were exercisable at the end of the year. Options were exercisable at $0.25 and expired on 24
September 2019.
31
DIRECTORS’ REPORT
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
2019
Directors
Louis Calvarin
Brett Clark
Ian McCubbing
Timothy Cotton
Farouk Chaouni
David Mimran
Christopher Pointon
Other Executive KMP
Rod Wheatley
377,358
-
580,000
207,194,808
207,194,808
192,250,000
-
1,237,500
-
-
-
-
-
-
-
-
2,025,000
-
-
-
-
-
-
-
-
(580,000)(3)
2,402,358
-
-
33,333,333(2)
240,528,141(2)
(207,194,808)(1)
(192,250,000)(4)
-
-
-
-
(345,016)
892,484
(1) Mr. Chaouni resigned as a Director on 28 June 2019 and is not considered a KMP from that date.
(2) Mr. Timothy Cotton and Mr. Farouk Chaouni collectively holds shares through their related parties, Baobab Partners LLC and Vulcan Phosphates LLC.
(3) Mr. Ian McCubbing resigned as a Director on 31 January 2019 and is not considered a KMP from that date.
(4) Mr. Mimran resigned as a Director on 28 June 2019 and is not considered a KMP from that date.
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.
BRETT CLARK
Chairman
Perth, 7 October 2019
32
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 the financial report of Avenira Limited for the financial year ended 30
June 2019, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Avenira Limited and the entities it controlled during the financial year.
Ernst & Young
Gavin Buckingham
Partner
7 October 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:JG:AVENIRA:052
QUALIFYING STATEMENTS
STATEMENT OF GOVERNANCE ARRANGEMENTS AND INTERNAL CONTROLS
Governance of Avenira Limited’s Mineral Resources estimation process is a key responsibility of the Executive Management of the Company.
The Geological Manager of the Company oversees technical reviews of the estimates and the evaluation process is augmented by utilising
Avenira’s in-house knowledge in operational and project management, ore processing and commercial/financial areas. The Company also
utilises external consultants for these purposes.
The Geological Manager is responsible for managing all Avenira’s drilling programs, including resource definition drilling. The estimation of
Mineral Resources is done by an independent contractor, MPR Geological Consultants Pty Ltd.
The Company has adopted quality assurance and quality control protocols based on current and best practice regarding all field aspects
including drill hole surveying, drill sample collection, sample preparation, sample security, provision of duplicates, blanks and matrix-matched
certified reference materials. All geochemical data generated by laboratory analysis is examined and analysed by the Geological Manager
before accession to the Company database.
Data is subject to additional vetting by the independent contractor who carries out the resource estimates. Resource estimates are based on
well-founded, industry-accepted assumptions and compliance with standards set out in the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves.
Mineral resource estimates are subject to peer review by the independent contractor and a final review by Avenira’s Executive Management
before market release.
Avenira Limited reports its mineral resources and ore reserves on an annual basis, in accordance with the Australian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (the JORC code) 2012 Edition.
COMPLIANCE STATEMENT
Information in this report relating to Exploration Results or estimates of Mineral Resources or Ore Reserves has been extracted from the reports listed
below. The reports are available to be viewed on the company website at: www.avenira.com
BAOBAB PHOSPHATE PROJECT:
27 April 2015:
11 May 2015:
Minemakers to acquire a potential near-term production rock phosphate project in the Republic of Senegal
Minemakers delivers maiden Inferred Resource for Baobab Rock Phosphate Project in Republic of Senegal
22 September 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
22 October 2018:
Avenira receives Exploitation Permit for Baobab Phosphate Project
18 March 2019:
Avenira Delivers strong feasibility study for Expansion of Baobab 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
34
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE
INCOME
YEAR ENDED 30 JUNE 2019
INCOME
Interest Income
EXPENDITURE
Depreciation and amortisation expense
Salaries and employee benefits expense
Net foreign currency gain/(loss)
Impairment of exploration and evaluation expenditure
Interest expense
Share based payment (expense)/reversal
Administrative and other expenses
LOSS BEFORE INCOME TAX FROM CONTINUING OPERATIONS
INCOME TAX BENEFIT
LOSS FOR THE YEAR FROM CONTINUING OPERATIONS
Discontinued Operations
Loss after tax for the year from discontinued operations
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
Financial assets measured at fair value through profit and loss
Net fair value loss on financial assets measured at fair value through OCI
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 profit per share (cents)
Diluted profit per share (cents)
From total operations
Basic loss per share (cents)
Diluted loss per share (cents)
CONSOLIDATED
NOTES
2019
$
2018
$
5
63,973
83,859
(19,421)
(21,061)
(1,349,912)
(1,528,814)
146,519
(143,642)
(35,134)
40,833
(1,787,840)
(3,084,624)
-
(25,499)
(109,630)
-
(60,918)
(1,563,247)
(3,225,309)
-
(3,084,624)
(3,225,309)
(40,355,098)
(43,439,722)
(2,950,688)
(6,175,977)
-
1,085,849
1,085,849
(15,610)
1,070,239
(42,369,483)
-
2,626,616
2,626,616
-
2,626,616
(3,549,361)
(35,396,670)
(8,043,052)
(43,439,722)
(5,335,683)
(840,294)
(6,175,977)
(34,525,626)
(7,843,860)
(3,198,895)
(350,466)
(42,369,483)
(3,549,361)
(0.30)
(0.28)
(4.24)
(3.93)
(0.42)
(0.38)
(0.80)
(0.72)
6
13
31
7
12
30
30
30
30
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.
35
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Assets of disposal group held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Financial assets
Plant and equipment
Capitalised exploration and evaluation expenditure
Capitalised mine development expenditure
Intangibles
Other Assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Loans and borrowings
Liabilities of disposal group held for sale
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
Loans and borrowings
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
NOTES
CONSOLIDATED
2019
$
2018
$
8
9
10
12
9
21
11
13
14
15
16
17
12
16
17
18
278,689
43,020
-
25,101,830
25,423,539
1,481,600
15,620
5,034
5,889,800
-
44,223
-
7,436,277
32,859,816
643,986
143,008
1,317,984
12,987,325
15,092,303
1,289,500
-
-
1,289,500
16,381,803
16,478,013
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
EQUITY
Issued capital
Reserves
Accumulated losses
Capital and reserves attributable to members of Avenira Limited
Non-controlling interest
TOTAL EQUITY
19
20(a)
20(b)
27
142,280,148
27,014,485
(149,389,359)
19,905,274
(3,427,261)
16,478,013
139,480,390
26,234,899
(113,992,689)
51,722,600
4,416,599
56,139,199
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the
Consolidated Financial Statements.
36
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED
NOTES
BALANCE AT 30 JUNE 2017
Loss for the year
Other comprehensive income/(loss) for the
year
TOTAL COMPREHENSIVE INCOME FOR
THE YEAR
TRANSACTIONS WITH OWNERS IN
THEIR CAPACITY AS OWNERS
Shares issued during the year
Share Issue transaction costs
Unissued shares
Share based payment
BALANCE AT 30 JUNE 2018
Loss for the year
Other comprehensive income/(loss) for the
year
TOTAL COMPREHENSIVE INCOME FOR
THE YEAR
TRANSACTIONS WITH OWNERS IN
THEIR CAPACITY AS OWNERS
Shares issued during the year
Share issue transaction costs
Conversion of Share rights
Share based payment
BALANCE AT 30 JUNE 2019
ATTRIBUTABLE TO OWNERS OF AVENIRA LIMITED
ISSUED
CAPITAL
$
RESERVES
ACCUMULATED
LOSSES
$
$
125,037,889
25,147,663
(108,657,005)
-
(5,335,683)
TOTAL
$
41,528,547
(5,335,683)
NON-CONTROLLING
INTEREST
$
5,057,338
(840,294)
TOTAL
$
46,585,885
(6,175,977)
2,136,787
-
2,136,787
489,828
2,626,615
2,136,787
(5,335,683)
(3,198,896)
(350,466)
(3,549,362)
-
-
-
16,911,051
(577,500)
(1,891,050)
-
-
-
-
(1,049,551)
-
-
-
-
139,480,390
26,234,899
(113,992,689)
16,911,051
(577,500)
(1,891,050)
(1,049,551)
51,722,600
-
-
-
(290,273)
4,416,599
16,911,051
(577,500)
(1,891,050)
(1,339,825)
56,139,199
(35,396,670)
(35,396,670)
(8,043,052)
(43,439,722)
871,044
871,044
199,192
1,070,236
871,044
(35,396,670)
(34,525,627)
(7,843,860)
(42,369,486)
2,860,425
(60,667)
31
(50,625)
(40,833)
2,860,425
(60,667)
(50,625)
(40,833)
2,860,425
(60,667)
(50,625)
(40,833)
142,280,148
27,014,485
(149,389,359)
19,905,274
(3,427,261)
16,478,013
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial Statements.
37
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 JUNE 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Payments for exploration expenditure
Receipts for other income
Interest received
NOTES
CONSOLIDATED
2019
$
2018
$
(4,211,822)
-
(4,054,365)
(114,515)
112
45,850
-
77,522
NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES
29
(4,165,860)
(4,091,358)
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditure on mining interests
Payments for mine development
Receipts for phosphate sales capitalised to development
Payments for plant and equipment
Net refund from VAT
Payment of security deposits
Payments for intangibles
Loans to other entities
(733,803)
(1,235,014)
(4,352,645)
(12,143,633)
1,405,314
(27,554)
-
(101,085)
(5,203)
(137,024)
2,463,737
(249,353)
3,108,098
-
(80,425)
(38,453)
NET CASH (OUTFLOW) FROM INVESTING ACTIVITIES
(3,952,000)
(8,175,043)
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
8
2,809,799
(60,667)
2,419,346
15,000,000
(577,500)
5,163,484
(649,421)
(6,454,188)
4,519,057
13,131,796
(3,598,803)
865,395
3,679,173
220,174
2,946,100
(132,322)
300,544
3,679,173
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated
Financial Statements.
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
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 Level 2, 8 Broadway Crawley WA 6009.
The financial statements were authorised for issue in accordance with a resolution of the directors on 7 October 2019.
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.
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
1. BASIS OF PREPARATION (continued)
Going concern
At 30 June 2019, the Group had cash on hand of A$300,544 (30 June 2018: A$3,679,173). The Group made an operating
loss before tax of $43,439,722 for the year ended 30 June 2019 (30 June 2018: loss of $6,175,977) and had a cash outflow
from operating and investing activities of $8,117,860 (30 June 2018: $12,266,401).
The Company will be holding a general meeting of shareholders on 14 October 2019 to seek approval for the sale of its
Baobab Phosphate Project.
If shareholder approval is received for the sale, the Company will have approximately $1.7 million of outstanding directors
fees and shareholder loans forgiven, have no ongoing obligations in relation to funding the development of the Baobab
Project, have no ongoing loans or borrowings and will receive US$3 million (approximately A$4.3 million) in cash (less any
amounts received in advance). Further, the groups cashflow forecast, prepared on the basis shareholders approve the
sale of the Baobab Phosphate Project, reflects that the group will have sufficient cash to continue as a going concern
beyond 31 October 2020 without having to raise any additional working capital.
The Directors expect that shareholder approval will be received for the sale and therefore it is appropriate to prepare the
financial statements on a going concern basis. Additionally, the Group has a historical track record of being able to secure
additional working capital as and when required.
In the event the Company does not receive shareholder approval for the sale, 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.
The areas involving a higher degree of judgement and complexity, or areas where assumptions are significant to the
financial statements are:
Note 9 Trade and Other Receivables Page 52
Page 53
Note 10 Inventories
Page 54
Note 12 Discontinued operations
Page 57
Note 13 Capitalised exploration and evaluation expenditure
Page 58
Note 14 Capitalised mine development expenditure
Page 59
Note 16 Provision for mine rehabilitation and restoration
Page 80
Note 31 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.
The Group has reclassified comparative figures in the Consolidated statement of profit and loss and other comprehensive
income as a part of the discontinued operations disclosure, refer Note 12.
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
1. BASIS OF PREPARATION (continued)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case, it is recognised as part of the cost of acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement
of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
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 2019 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
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.
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.
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective
note to the financial statements.
VALUATION TECHNIQUES
In the absence of an active market for an identical asset or liability, the Group selects and uses one or more valuation
techniques to measure the fair value of the asset or liability. The Group selects a valuation technique that is appropriate in
the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant
data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques
selected by the Group are consistent with one or more of the following valuation approach:
Market approach: valuation techniques that use prices and other relevant information generated by market transactions
for identical or similar assets or liabilities.
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
(i.e. transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances
occurred.
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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 financial assets through other comprehensive income 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 AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments which
became effective for financial reporting periods commencing on or after 1 January 2018.
AASB 15 Revenue from contracts with customers
AASB 15 replaces AASB 118 Revenue, AASB 111 Construction Contracts and several revenue-related
Interpretations. AASB 15 establishes a five-step model to account for revenue arising from contracts with customers
and requires that revenue to be recognised 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.
The Group has applied the new Standard effective from 1 July 2018 using the modified retrospective approach. Under
this method, the cumulative effect of initial application is recognised as an adjustment to the opening balance of
retained earnings at 1 July 2018 and comparatives are not restated.
The adoption of AASB 15 does not have a significant impact on the Group as the Group does not currently have any
revenue from customers.
AASB 9 Financial Instruments
The Group has adopted AASB 9 as issued in July 2014 with the date of initial application being 1 July 2018. In
accordance with the transitional provisions in AASB 9, comparative figures have not been restated. AASB 9 replaces
AASB 39 Financial Instruments: Recognition and Measurement (“AASB 39”), bringing together all three aspects of the
accounting for financial instruments: classification and measurement; impairment; and hedge accounting. The
accounting policies have been updated to reflect the application of AASB 9 for the period from 1 July 2018.
Measurement and classification
Under AASB 9, debt instruments are subsequently measured at fair value through profit or loss (FVTPL), amortised
cost, or fair value through other comprehensive income (FVOCI). The classification is based on two criteria: the Group’s
business model for managing the assets; and whether the instruments’ contractual cash flows represent ‘solely
payments of principal and interest’ on the principal amount outstanding (the ‘SPPI criterion’). The SPPI test is applied
to the entire financial asset, even if it contains an embedded derivative. Consequently, a derivative embedded in a debt
instrument is not accounted for separately.
At the date of initial application, existing financial assets and liabilities of the Group were assessed in terms of the
requirements of AASB 9. The assessment was conducted on instruments that had not been derecognised as at 1 July
2018. In this regard, the Group has determined that the adoption of AASB 9 has impacted the classification of financial
instruments at 1 July 2018 as follows:
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Class of financial instrument
presented in the statement of
financial position
Cash and cash equivalents
Original measurement category
under AASB139 (prior to 1 July
2018)
Loans and receivables
New measurement category
under AASB 9 (from 1 July
2018)
Financial assets at amortised cost
Trade and other receivables
Loans and receivables
Financial assets at amortised cost
Investments in equity instruments
Available for sale assets
Trade and other payables
Financial liability at amortised cost
Fair value through other
comprehensive income
Financial liabilities at amortised
cost
Interest bearing loans and borrowings Financial liability at amortised cost
Financial liability at amortised cost
The change in classification of financial instruments has not resulted in any re-measurement adjustments at 1 July
2018.
Impairment of financial assets
In relation to the financial assets carried at amortised cost, AASB 9 requires an expected credit loss model to be applied
as opposed to an incurred credit loss model under AASB 39. The expected credit loss model requires the Group to
account for expected credit losses and changes in those expected credit losses at each reporting date to reflect
changes in credit risk since initial recognition of the financial asset. In particular, AASB 9 requires the Group to measure
the loss allowance at an amount equal to lifetime expected credit loss (“ECL”) if the credit risk on the instrument has
increased significantly since initial recognition. On the other hand, if the credit risk on the financial instrument has not
increased significantly since initial recognition, the Group is required to measure the loss allowance for that financial
instrument at an amount equal to the ECL within the next 12 months.
As at 1 July 2018, the directors of the Company reviewed and assessed the Group’s existing financial assets for
impairment using reasonable and supportable information. The result of the assessment is as follows:
Items existing as at 1 July 2018
that are subject to the impairment
provisions of AASB 9
Credit risk attributes
Cumulative additional
loss allowance
recognised on
1 July 2018
$’000:
Cash and cash equivalents and
deposits
Receivables at amortised cost
Investments in equity instruments
All bank balances are assessed to have low credit
risk as they are held with a reputable financial
institution with a Moody’s Credit Rating of AA3.
The Group applied the simplified approach and
concluded that the lifetime ECL for these assets
would be negligible and therefore no additional
loss allowance was required at 1 July 2018.
The investments in equity instruments have been
assessed as having a low credit risk as the
investments relate to reputable listed entities, and
the Group has concluded any loss on the equity
instruments would be negligible.
-
-
-
Hedge accounting
The Group has not applied hedge accounting.
AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-
based Payment Transactions
The Group has adopted AASB 2016-5 as issued in December 2016 with the date of initial application being 1 July
2018.
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
This standard amends AASB 2 Share-based Payment, clarifying how to account for certain types of share-based
payment transactions. The amendments provide requirements on the accounting for:
The effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments
Share-based payment transactions with a net settlement feature for withholding tax obligations
A modification to the terms and conditions of a share-based payment that changes the classification of the
transaction from cash-settled to equity-settled
At 1 July 2017 and at 1 July 2018 it was determined that the adoption of AASB 2016-5 had no impact on the Group as
the Group had no share-based payment transactions with features described in the amendment.
AASB Interpretation 22 Foreign Currency Transactions and Advance Consideration
The Group has adopted Interpretation 22 as issued in December 2016 with the date of initial application being 1 July
2018.
The Interpretation clarifies that in determining the spot exchange rate to use on initial recognition of the related asset,
expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to
advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary
asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in
advance, then the entity must determine a date of the transaction for each payment or receipt of advance consideration.
At 1 July 2017 and at 1 July 2018 it was determined that the adoption of Interpretation 22 had no impact on the
Group.
(a) New and revised Accounting Standards for Application in Future Periods
AASB 16: Leases applies to annual reporting periods beginning on or after 1 January 2019.
Interpretation 4 Determining whether an Arrangement
This Standard supersedes AASB 117 Leases,
contains a Lease, AASB intrpretation 115 Operating Leases-Incentives and AASB intrpretation 127 Evaluating
the Substance of Transactions
Involving the Legal Form of lease. AASB 16 sets out the principles for the
recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under
a single on-balance sheet model similar to the accounting for finance leases under AASB 117.
The key features of AASB 16 are as follows:
Lessees are required to recognise assets and liabilities for all leases with a term of more than 12 months, unless
the underlying asset is of low value.
A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly to other
financial liabilities.
Assets and Liabilities arising from the lease are initially measured on a present value basis. The measurement
includes non-cancellable lease payments (including inflation-linked payments), and also includes payments to be
mad in optional periods if the lessee is reasonably certain to exercise an option to extend to lease, or not to
exercise an option to terminate the lease.
AASB 16 contains disclosure requirements for leases.
The Group is finalising its assessment of the impact of AASB 16.
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.
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
i) Non-current assets held sale and discontinued operations
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups
classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.
Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance
costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or
disposal group is available for immediate sale in its present condition. Actions required to complete the sale should
indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn.
Management must be committed to the plan to sell the asset and the sale expected to be completed within one year
from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial
position.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or
is classified as held for sale, and:
Represents a separate major line of business or geographical area of operations
Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of
operations
Avenira advised the market on 1 July 2019 of its intention to sell its interests in the Baobab Phosphate Project and
Novaphos to a consortium of its major shareholders (the Purchasers) and receive immediate funding support (the
‘Transaction’).
Under the Transaction:
Avenira to receive cash consideration of US$3.0M (A$4.3M), and loan and director fees forgiveness of
approximately US$1.2M (A$1.8M), for a total value of approximately US$4.2M (A$6.1M), using a A$:US$ 0.69
exchange rate.
Avenira to undertake, for nil consideration, a buy-back and capital reduction of all the existing shares held by the
major shareholders.
Pending completion of the sale (‘Completion’), the Purchasers will provide loan funding of up to US$1.8M to
BMCC (the Avenira subsidiary which holds the Baobab Project) and US$ 300,000 to Avenira Limited. Of these
facilities BMCC has drawn down US$1.265M to date and Avenira has drawn down US$300,000 to date.
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.
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
4. SEGMENT INFORMATION (continued)
(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.
2019
Income
Interest revenue
Total segment revenue
Total revenue as per statement of
comprehensive income
Impairment of non-current assets
Salaries, administrative and other
expenses
Impairment of doubtful debts
Depreciation and amortisation
WONARAH
(AUSTRALIA)
BAOBAB
(SENEGAL)
UNALLOCATED –
OTHER SEGMENTS
TOTAL
CONSOLIDATED
$
$
$
$
39,085
39,085
112
112
24,776
24,776
63,973
63,973
63,973
(143,642)
(38,786,263)
-
(38,929,905)
(37,739)
(3,612,135)
(2,947,683)
(6,597,557)
-
(2,174)
(896,095)
(371,991)
-
(17,247)
(896,095)
(391,412)
Segment net loss before tax
(144,470)
(43,666,372)
(2,940,154)
(46,750,996)
Tax benefit
Segment net loss after tax
Loss from discontinued operations
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
-
3,311,274
-
3,311,274
(144,470)
(40,355,098)
(2,940,154)
(43,439,722)
WONARAH
(AUSTRALIA)
BAOBAB
(SENEGAL)
UNALLOCATED –
OTHER
SEGMENTS
5,889,800
1,941,789
-
883
20,534,534
423,027
1,502,302
2,202,480
7,392,985
25,101,830
-
-
4,151
360,850
365,001
(40,355,098)
(3,084,624)
TOTAL
CONSOLIDATED
7,831,589
20,534,534
428,061
4,065,632
32,859,816
Other liabilities at balance date
1,291,515
12,987,325
2,102,963
16,381,803
Total segment liabilities
1,291,515
12,987,325
2,102,963
16,381,803
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
4. SEGMENT INFORMATION (continued)
2018
Revenue
Interest revenue
Total segment revenue
Total revenue as per statement of
comprehensive income
Impairment of non-current assets
Salaries, administrative and other
expenses
(Impairment) / impairment reversal of
doubtful debts
Depreciation and amortisation
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)
-
(5,972,801)
(38,308)
(1,505,470)
(3,103,443)
(4,647,221)
(36,725)
3,295,750
-
3,259,025
(3,815)
(343,570)
(17,247)
(364,632)
Segment net loss before tax
(152,023)
(4,416,461)
(3,073,286)
(7,641,770)
Tax benefit
Segment net loss after tax
Loss from discontinued operations
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
5. INCOME
Accounting policies
-
1,465,793
-
1,465,793
(152,023)
(2,950,668)
(3,073,286)
(6,175,977)
(2,950,668)
(3,225,309)
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
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial
assets.
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 14.
Other revenue
Interest from financial institutions
2019
$
2018
$
63,973
63,973
83,859
83,859
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
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
2019
$
2018
$
39,071
103,023
-
49,951
106,694
-
146,519
1,012,758
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.
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
7. INCOME TAX (continued)
(a) Income tax expense/(benefit)
Current tax
Deferred tax
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
Loss from discontinued operations before income tax expense
Accounting loss before income tax
Prima facie tax benefit at the Australian tax rate of 30% (2018: 30%)
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
Financial assets
(d) Deferred tax assets
Capital raising costs
Rehabilitation provision
Other provisions and accruals
Financial assets at FVOCI
Tax losses in Australia
Deferred tax assets not recognised
Offset against deferred tax liabilities
Net deferred tax assets
(e) Deferred tax liabilities
Capitalised exploration and evaluation costs and development costs
Unrealised foreign exchange gain
Other accruals
Offset against deferred tax assets
Net deferred tax liabilities
2019
$
2018
$
-
(3,311,274)
(3,311,274)
(3,084,624)
(40,355,098)
(43,439,722)
(13,031,916)
12,550
-
(75,653)
9,783,745
-
(1,465,793)
(1,465,793)
(3,225,309)
(2,950,688)
(6,175,977)
(1,852,799)
18,275
204
(290,573)
659,100
(3,311,274)
(1,465,793)
-
(3,311,274)
(3,311,274)
-
(1,465,793)
(1,465,793)
-
-
251,840
386,850
69,549
-
-
-
157,180
386,850
68,129
878,080
30,600,468
31,308,707
30,353,826
31,844,065
(29,223,846)
(29,715,818)
2,084,861
(2,084,861)
-
(1,829,436)
(254,807)
(618)
(2,084,861)
2,084,861
-
2,128,247
(2,128,247)
-
(5,042,105)
(303,827)
(3,360)
(5,349,292)
2,128,247
(3,221,045)
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
7. INCOME TAX (continued)
DEFFERED TAX
Potential deferred tax assets attributable to tax losses and exploration expenditure carried forward have not been brought
to account at 30 June 2019 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 (continuing operations)
Cash at bank and in hand (discontinued operations)
Short-term deposits
Cash and cash equivalents
2019
$
278,689
21,855
-
300,544
2018
$
1,179,173
-
2,500,000
3,679,173
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 21 for
additional details on the impact of interest rates on cash and cash equivalents for the period.
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
9. TRADE AND OTHER RECEIVABLES
Accounting Policies
Recognition and measurement
Trade receivables are initially recognised at fair value and subsequently at amortised cost less a provision for any
expected credit losses. Trade receivables are due for settlement no more than 30 days from the date of recognition.
Impairment
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value
through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate. The
expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral
to the contractual terms.
For trade receivables and other receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the
Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each
reporting date. The Group has established a provision matrix that is based on its historical credit loss experience,
adjusted for forward-looking factors specific to the debtors and the economic environment.
The Group considers trade and other receivables in default when contractual payments are past due. However, in certain
cases, the Group may also consider a financial asset to be in default when internal or external information indicates that
the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit
enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering
the contractual cash flows.
Current
Trade and other receivables(i)
Government taxes receivable(ii)
Provision for impairment(ii)
Prepayments
Sundry receivables
Security deposits
2019
$
11,446
380
-
-
-
31,194
43,020
2018
$
45,605
922,509
(292,687)
126,414
99,811
67,642
969,294
(i) Trade and other receivables are generally due for settlement within 30 days and therefore classified as current.
(ii) Government taxes receivable in 2018 relates to VAT receivable in Senegal of $904,503 and GST receivable in Australia of $18,006. At 30 June 2018,
based on historical VAT recovery outcomes the Group has determined that 30% of the outstanding VAT receivables 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(ii)
Provision for impairment(i)
Convertible promissory notes(iii)
Provision for impairment(i)
Security deposits
2019
$
-
-
-
-
1,481,600
1,481,600
2018
$
2,312,716
(2,312,716)
38,455
(38,455)
1,481,600
1,481,600
(i) In July 2016, the Group (the “holder”) entered into convertible secured promissory notes with Novaphos, (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) Novaphos receipt of an aggregate amount of US$6,000,000 from Stonecutter Phosphates LLC.
(ii) In June 2018, the Group (the “holder”) entered into convertible secured promissory notes with Novaphos, (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) Novaphos’ receipt of an aggregate amount of US$6,000,000 from Stonecutter Phosphates
LLC.
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
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.
Current
Inventories valued at net realisable value(i)
Inventories valued at Cost(ii)
2019
$
2018
$
2,214,758
71,358
2,286,116
-
-
-
(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. PLANT AND EQUIPMENT
Accounting Policies
All plant and equipment is stated at historical cost less depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss and Other
Comprehensive Income during the reporting period in which they are incurred.
Depreciation of plant and equipment is calculated using the reducing balance method or straight-line method,
depending on a type of an asset, and it allocates their cost or re-valued amounts, net of their residual values, over their
estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter
lease term.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset Depreciation Rate
Plant and equipment
Computer Equipment
Furniture and Fittings
Camp Buildings
Software
Motor Vehicles
10% to 25%
33%
20%
10%
16%
25%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
11. PLANT AND EQUIPMENT (continued)
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
Depreciation charge
Impairment
Assets held for Sale
Foreign currency exchange differences
Closing net carrying amount
12. DISCONTINUED OPERATIONS
2019
$
80,432
(75,398)
5,034
1,334,802
27,554
(336,722)
(628,409)
(423,027)
31,106
5,034
2018
$
2,162,344
(827,542)
1,334,802
1,339,077
249,353
(327,447)
-
-
73,819
1,334,802
On 1 July 2019 Avenira announced that it proposed to sell its interests in the Baobab Phosphate Project and Novaphos to
a consortium of its major shareholders (the Purchasers) in return for cash consideration and essential funding support (the
‘Transaction’).
Under the Transaction:
• Avenira to receive cash consideration of US$3.0M (A$4.3M), and loan and director fees forgiveness of approximately
US$1.2M (A$1.8M), for a total value of approximately US$4.2M (A$6.1M), using a A$:US$ 0.69 exchange rate.
• Avenira to undertake, for nil consideration, a buy-back and capital reduction of all the existing shares held by the major
shareholders.
• Pending completion of the sale (‘Completion’), the Purchasers will provide loan funding of up to US$1.8M to BMCC
(the Avenira subsidiary which holds the Baobab Project) and US$ 300,000 to Avenira Limited. Of these facilities BMCC
has drawn down US$1.265M to date and Avenira has drawn down US$300,000 to date.
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
12. DISCONTINUED OPERATIONS (continued)
The results of the Baobab Phosphate Project and Novaphos for the year as presented below:
Other income
Administrative and other expenses
Salaries and employee benefits
Exploration expenses
Depreciation
Impairment Financial assets
(Impairment)/Impairment reversal of Doubtful debts
Impairment
FX Movements
Loss before tax from discontinued operation
Tax benefit:
Loss for the year from discontinued operations
The net cash flows from the discontinued operation are as follows:
Operating
Investing
Financing
Net cash (outflow) / inflow
Earnings per share
2019
$
2018
$
112
(3,348,690)
(192,074)
-
(371,991)
(139,838)
(896,095)
-
(922,418)
(345,557)
(114,515)
(343,570)
-
3,295,750
(38,786,264)
(5,863,171)
68,468
(122,980)
(43,666,372)
(4,416,461)
3,311,274
1,465,793
(40,355,098)
(2,950,668)
(3,531,994)
(3,029,245)
(3,782,219)
(7,806,812)
7,156,918
11,015,206
(157,295)
179,149
Basic loss for the year from discontinued operations (cps)
Diluted loss for the year from discontinued operations (cps)
(3.94)
(3.65)
(0.38)
(0.35)
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
12. DISCONTINUED OPERATIONS (continued)
The major classes of assets and liabilities classified as held for sale as at 30 June 2019 are, as follows:
AS AT 30 JUNE 2019
ASSETS
Cash and cash equivalents
Trade and other receivables
Convertible promissory notes(ii)
Provision for impairment(i)
Inventories
Plant and equipment
Intangibles
Capitalised exploration and evaluation expenditure
Other Assets
Capitalised mine development expenditure
Assets held for Sale
LIABILITIES
Trade and other payables
Provisions
Loans and borrowings
Liabilities directly associated with disposal group
NET ASSETS DIRECTLY ASSOCIATED WITH DISPOSAL
GROUP
Amounts included in accumulated OCI
Foreign Currency revaluation reserve
RESERVE OF DISPOSAL GROUP
CLASSIFIED AS HELD FOR SALE
(i) Refer Note 21 for further details on impairment.
2019
$
21,855
380,761
2,488,195
(2,488,195)
1,497,138
423,027
31,607
1,941,789
271,119
20,534,534
25,101,830
1,127,275
2,957,158
8,902,892
12,987,325
12,114,515
447,524
447,524
(ii) In July 2016 and June 2018, the Group (the “holder”) entered into convertible secured promissory notes with Novaphos, (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) Novaphos’ receipt of an aggregate amount of US$6,000,000 from Stonecutter
Phosphates LLC.
Write-down of Baobab Phosphate Project assets
Immediately before the classification of the Baobab Phosphate Project and Novaphos as discontinued operations, the
recoverable amount was estimated for certain items of property, plant and equipment, capitalized mining expenditure
and capitalized exploration expenditure. An impairment loss of $38.8 million was recognised to reduce the carrying
amount of the assets in the disposal group to their fair value less costs to sell of $25.1 million. This was recognized in
discontinued operations in the statement of profit or loss. The fair value methodology adopted is classified as Level 3 in
the fair value hierarchy. In determining the fair value, estimates were made in relation to the underlying value of the
assets being disposed.
Key estimates and assumptions
On 1 July 2019, Avenira announced its proposal to sell its interests in the Baobab Phosphate Project and Novaphos.
Operations of the Baobab Phosphate Project and assets and liabilities associated to Avenira’s interest in Novaphos are
classified as a disposal group held for sale. The Directors considered the operations to meet the criteria to be classified
as held for sale for the following reasons:
•
The Baobab Phosphate Project and the Groups equity interest in Novaphos is available for immediate sale and
can be sold to the buyer in its current condition
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
12. DISCONTINUED OPERATIONS (continued)
•
•
•
The actions to complete the sale were initiated and expected to be completed within one year from the date of
initial classification
A potential buyer has been identified and negotiations as at the reporting date are at an advance stage
Avenira shareholders will have an opportunity to vote on the Transaction and capital reduction at the shareholder
meeting on 14 October 2019. Subject to meeting all of the condition’s precedent, the Transaction is likely to
complete shortly after the shareholder meeting.
13. CAPITALISED EXPLORATION AND EVALUATION EXPENDITURE
Accounting Policies – Capitalised Exploration and Evaluation Expenditure
Exploration and evaluation costs for each area of interest in the early stages of project life are expensed as they are
incurred up until pre-feasibility.
Exploration and evaluation costs for each area of interest that has progressed to pre-feasibility are accumulated and
carried forward where right of tenure of the area of interest is current and they are expected to be recouped through
sale or successful development and exploitation of the area of interest or, where exploration and evaluation activities
in the area of interest have not at the end of the reporting period reached a stage that permits reasonable assessment
of the existence of economically recoverable reserves, and activates and significant operations in, or in relation to, the
area of interest are continuing.
When an area of interest is abandoned or the directors decide that it is not commercial, any accumulated costs in respect
to that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end
of each accounting period and accumulated costs written off to the extent that they will not be recoverable in the future.
Accounting Policies – Government Grants
Government grants are recognised where there is reasonable assurance that the grant will be received, and all attached
conditions will be complied with. The research and development grant received by the Group relates to capitalised
exploration expenditure, as such it is recognised in the statement of financial position offset against capitalised exploration
expenditure.
2019
$
2018
$
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)
Assets Held for Sale
Foreign currency translation movement
Closing net carrying amount(iii)
10,018,672
733,804
(3,028,186)
(1,941,789)
8,722,989
1,235,032
(109,630)
-
107,299
170,281
5,889,800
10,018,672
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 recognized 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 recognised exploration and evaluation expenditure.
(iii) The 2019 closing balance comprises the net carrying amount of exploration and evaluation expenditure attributable to the Wonarah Phosphate
Projects being $5,889,800.
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
13. CAPITALISED EXPLORATION AND EVALUATION EXPENDITURE (continued)
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 SRK Consulting for the year ending 30 June 2019 revealed fair values for the Wonarah
Project ranging from $6,010,000 to $16,020,000, based on a range of resource multiples derived from recent
transactions and enterprise values of market participants with defined phosphate mineral resources (level 3 in the fair
value hierarchy).
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. As a result, during the reporting period an amount of $143,642 (30 June 2018:
$109,630) was impaired and recognised in the Statement of Profit or Loss and Other Comprehensive Income. The
recoverable amount is calculated as $5,889,800 after allowing for estimated costs of disposal.
14. 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 recognized 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 recognized 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.
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
14. CAPITALISED MINE DEVELOPMENT EXPENDITURE (continued)
Reconciliation of movements during the year
Opening net carrying amount
Capitalised mine development
Capitalised interest
Capitalised reversal of provision for rehabilitation
Impairment of mine development expenditure
Foreign currency translation movement
Assets held for sale
Closing net carrying amount
15. TRADE AND OTHER PAYABLES
Accounting Policies
2019
$
2018
$
51,407,026
47,579,578
2,697,272
540,564
(642,461)
6,310,401
618,736
(22,755)
(34,924,804)
(5,863,171)
1,456,937
2,784,237
(20,534,534)
-
-
51,407,026
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.
2019
$
530,667
113,319
643,986
2018
$
1,043,988
915,733
1,959,721
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.
16. 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 recognized 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 recognized 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.
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
16. PROVISIONS (continued)
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 recognized 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 recognized 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 recognized 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
Assets held for sale
Closing net carrying amount
2019
$
2018
$
143,008
143,008
210,958
210,958
2019
$
2018
$
1,289,500
2,432,970
-
50,077
1,289,500
2,483,047
2,432,970
(632,351)
20,963
(532,082)
1,289,500
2,387,606
(22,755)
68,119
2,432,970
(i) Provision for future removal and restoration costs are recognized 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 2019
rehabilitation obligation has a carrying value of $1,289,500 (2018: $1,289,500) for the Wonarah Phosphate Project.
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
17. LOANS AND BORROWINGS
Accounting Policies
Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least
12 months after the reporting date.
Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost.
Any differences between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss
over the period of the borrowings using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other
borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that
an entity incurs in connection with the borrowing of funds.
Current
Bridge loans – unsecured
Finance facility – secured
Total current loans and borrowings
Non-current
Finance facility – secured
Other loan – unsecured
Total non-current loans and borrowings
Bridge loans
INTEREST
RATE
%
6.00
6.75
INTEREST
RATE
%
6.75
6.75
2019
$
1,317,984
-
1,317,984
2019
$
-
-
-
2018
$
-
804,442
804,442
2018
$
4,368,066
2,847,084
7,215,150
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;
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
17. LOANS AND BORROWINGS (continued)
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.
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. At 30 June
2019, the finance facility loan is classified as part of the Discontinued Operations, refer note 12.
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. At 30 June 2019, the Mimran Group loan is
classified as part of the Discontinued Operations, refer note 12.
18. 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
Net carrying amount
Movements in carrying amounts
Opening net carrying amount
Income tax benefit realised as part of discontinued operations
Foreign currency translation movement
Closing net carrying amount
2019
$
2018
$
-
-
3,221,045
3,221,045
3,221,045
(3,311,274)
90,229
4,413,080
(1,465,793)
273,758
-
3,221,045
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
19. 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.
NOTES
NUMBER OF
SHARES
$
NUMBER OF
SHARES
$
2019
2018
(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)
- Less: transaction costs
End of the financial year
23(b), 23(e) 1,058,628,242
-
1,058,628,242
142,280,148 915,903,243 139,480,390
-
-
-
142,280,148 915,903,243 139,480,390
915,903,243
139,480,390 579,100,867 125,037,889
-
-
-
-
-
22,512,506
-
- 270,833,345
377,358
-
-
13,000,001
20,000
-
-
41,666,667
2,000,000
1,412,500
-
-
-
-
-
-
-
-
-
-
(577,500)
142,280,148 915,903,243 139,480,390
40,000,000
800,000
99,999,999
2,000,000
2,025,000
700,000
-
1,058,628,242
50,625
9,800
(60,667)
(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
Plan.
(vi) Issued at 2.0 cents pursuant to placement.
(vii) Issued at 2.0 cents pursuant to placement.
(viii) Issued at 2.5 cents to Mr. L Calvarin pursuant to 2018 start term incentive plan.
(ix) Issued at 1.4 cents.
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
19. ISSUED CAPITAL (continued)
(c) Movements in unlisted options on issue
Beginning of the financial year
Expired/cancelled during the year
- 10 cents, 30 June 2018
- 15 cents, 30 June 2018
- 25 cents, 30 June 2018
End of the financial year
(d) Movements in share rights
Beginning of the financial year
Issued during the year:
- Issued for performance rights, expiring on 30 June 2022 (i)
Exercised during the year:
- Tranche 3 performance rights vested on 21 September 2017
Lapsed during the year:
- Performance rights forfeited on 30 June 2019(ii)
- Tranche 3 performance rights lapsed on 10 December 2017(iii)
End of the financial year
NUMBER OF OPTIONS
2019
2018
80,000,000
88,075,000
-
-
-
(2,075,000)
(3,000,000)
(3,000,000)
80,000,000
80,000,000
NUMBER OF SHARE RIGHTS
2019
2018
5,000,000
2,512,500
-
-
5,000,000
(1,412,500)
(5,000,000)
-
-
-
(1,100,000)
5,000,000
(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 31 for further
details.
(ii) Mr. Calvarin 5,000,000 unvested performance rights were forfeited upon resignation as Managing Director and Chief Executive Office
(iii) 1,100,000 performance rights granted under the Company’s Performance Rights Plan were forfeited upon resignation.
(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.
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
19. ISSUED CAPITAL (continued)
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
20. RESERVES AND ACCUMULATED LOSSES
(a) Reserves
Foreign currency translation
Share-based payments
Fair Value Reserve of Financial Assets at FVOCI
Non-controlling interest reserve
Total reserves
Movements:
Fair Value Reserve of Financial Assets at FVOCI
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 31 Share Based Payments for further details.
2019
$
2018
$
278,689
43,020
3,679,173
969,294
-
2,286,116
(643,986)
(143,008)
(1,317,984)
(1,783,269)
(1,959,721)
(210,958)
(804,442)
3,959,462
2019
$
2018
$
2,325,644
1,438,988
17,223,378
17,314,837
-
15,610
7,465,464
7,465,464
27,014,485
26,234,899
2019
$
2018
$
15,610
(15,610)
-
15,610
-
15,610
1,438,988
886,656
2,325,644
(697,800)
2,136,788
1,438,988
17,314,837
18,364,389
(40,833)
111,543
-
(1,161,095)
(50,626)
-
17,223,378
17,314,837
7,465,464
7,465,464
7,465,464
7,465,464
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
20. RESERVES AND ACCUMULATED LOSSES (continued)
(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
2019
$
2018
$
(113,992,689)
(108,657,005)
(35,396,670)
(5,335,683)
(149,389,359)
(113,992,689)
(i) Fair Value Reserve of Financial Assets at FVOCI
Changes in the fair value of investments, such as equities classified as Fair value reserve of financial assets at FVOCI,
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.
(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.
21. FINANCIAL RISK MANAGEMENT
Accounting Policies
Financial Assets
The Group classifies its financial assets in the following categories: at fair value through profit or loss (FVTPL), financial
assets at amortised cost, or fair value through other comprehensive income (FVOCI). The classification is based on two
criteria: the Group’s business model for managing the assets; and whether the instruments’ contractual cash flows
represent ‘solely payments of principal and interest’ on the principal amount outstanding (the ‘SPPI criterion’). The SPPI
test is applied to the entire financial asset, even if it contains an embedded derivative. Consequently, a derivative
embedded in a debt instrument is not accounted for separately.
(i) Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently at amortised cost less a provision for any
expected credit losses. Trade receivables are due for settlement no more than 30 days from the date of recognition.
(ii) Financial assets measured at fair value through other comprehensive income
These financial assets consist of investments in ordinary shares, comprising principally of marketable equity securities.
Investments are initially recognised at fair value plus transaction costs. Unrealised gains and losses arising from changes
in the fair value of these investments are recognised in equity in the financial assets revaluation reserve. Amounts
recognised are not recycled to the statement of comprehensive income in future periods.
The fair value of the listed securities are based on quoted market prices and accordingly is a Level 1 measurement basis
on the fair value hierarchy.
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
21. FINANCIAL RISK MANAGEMENT (continued)
Impairment of financial assets
Expected credit losses are recognised in the statement of profit and loss and other comprehensive income on financial
assets measured at amortised cost.
For financial assets a 12-month expected credit loss (“ECL”) allowance is recorded on initial recognition. If there is
evidence of a significant increase in the credit risk of an asset, the allowance is increased to reflect the full lifetime ECL.
If there is no realistic prospect of recovery, the asset is written off.
Financial Liabilities
The Group classifies its financial liabilities in the following categories: financial liabilities at amortised cost.
(i) Payables
This category generally applies to trade and other payables. Liabilities for trade creditors and other amounts are carried
at amortised cost which is the amount initially recognised. Minus repayments whether or not billed to the Group. Payables
are non-interest bearing and generally settled on 30-90 day terms. Due to the short term nature of these payables, their
carrying value is assumed to approximate their fair value. For more information refer to Note 15.
(ii) Loans and borrowings
This category generally applies to interest-bearing loans and borrowings. All loans and borrowings are initially recognised
at fair value less transaction costs and subsequently at amortised cost. Any difference between the proceeds received
and the redemption amount is recognised in the income statement over the period of the borrowings using the effective
interest method. For more information refer to Note 17.
FINANCIAL RISK MANAGEMENT POLICIES
The Group’s principal financial liabilities, other than derivatives, comprise loans and borrowings, and trade and other
payables. The main purpose of these financial liabilities is to finance the Group’s operations. The Group’s principal
financial assets include trade receivables, and cash and short-term deposits that derive directly from its operations. The
Group also holds investments in debt and equity instruments and enters into derivative transactions.
The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the
management of these risks. The Group’s senior management is supported by a financial risk committee that advises on
financial risks and the appropriate financial risk governance framework for the Group. The financial risk committee
provides assurance to the Group’s senior management that the Group’s financial risk activities are governed by
appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with
the Group’s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist
teams that have the appropriate skills, experience and supervision. It is the Group’s policy that no trading in derivatives
for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of
these risks, which are summarised below.
Financial instruments
The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Other non-current receivables
Fair value reserve of financial assets at FVOCI
- Listed investments
2019
$
2018
$
278,689
43,020
1,481,600
15,620
1,818,929
3,679,173
969,294
1,481,600
31,239
6,161,306
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
21. FINANCIAL RISK MANAGEMENT (continued)
Financial liabilities
Trade and other payables
Loans and borrowings
(a) Market risk
643,986
1,317,984
1,961,970
1,959,721
8,019,592
9,979,313
Market risk arises from Avenira’s exposure to interest bearing financial assets and foreign currency financial instruments.
It is a risk that the fair value of future cash flows of a financial instruments will fluctuate because of changes in foreign
exchange rates (currency risk), interest rates (interest rate risk) and share prices (price risk).
(i) Foreign exchange risk
The functional currency of the Group is Australian dollars; however, the Group and the parent entity operate internationally
and are exposed to various currencies, primarily with respect to Central African Franc (XOF). The Group is exposed to
foreign exchange risk arising from fluctuations of the Australian dollar against US Dollar, Euro, and South African Rand at
parent level and fluctuations of the Australian dollar against the Central African Franc at subsidiary level.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in
foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s
operating activities (when revenue or expense is denominated in a foreign currency) and the Group’s net investments in foreign
subsidiaries.
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: 9.8545
XOF/AUD: 404.8763
USD/AUD: 0.7015
EUR/AUD: 0.6172
(2018: 10.143)
(2018: 415.61)
(2018: 0.7403)
(2018: 0.6336)
(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 2019, 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.
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
21. FINANCIAL RISK MANAGEMENT (continued)
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 2019, the entire balance of cash and cash equivalents
for the Group of $300,544 (2018: $3,679,173) 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.
(b) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its
financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial
instruments
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
2019
$
2018
$
278,689
43,020
1,481,600
1,803,309
3,679,173
969,294
1,481,600
6,130,067
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit
ratings (if available) or to historical information about counterparty default rates.
Cash at bank and short-term bank deposits
Held with Australian banks and financial institutions
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
Group 1
Group 2
Total
2019
$
2018
$
277,253
3,467,913
1,436
32,109
-
-
278,689
-
15,000
-
28,020
-
43,020
11,339
167,812
3,679,173
-
30,000
-
716,667
222,627
969,294
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
21. FINANCIAL RISK MANAGEMENT (continued)
Other non-current receivables
Held with Australian banks and financial institutions
AA- rated
Total
IMPAIRED RECEIVABLES
1,481,600
1,481,600
1,481,600
1,481,600
Customer credit risk is managed subject to the Group’s established policy, procedures and control relating to customer credit
risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit
limits are defined in accordance with this assessment. Outstanding customer receivables and contract assets are regularly
monitored.
An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The
provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by
geographical region, product type, customer type and rating, and coverage by letters of credit or other forms of credit
insurance). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and
supportable information that is available at the reporting date about past events, current conditions and forecasts of future
economic conditions. Generally, trade receivables are written-off if past due for more than one year and are not subject to
enforcement activity
At 30 June 2019, the Group has receivables from Novaphos totaling $3,184,560 (30 June 2018: $2,351,171).
Due to the uncertainty regarding the timing and achievement of IHP commercialisation, the carrying value was impaired to nil
at 31 December 2016.
Movements in the provision for impairment of current receivables that are assessed for impairment collectively are as
follows:
Opening balance
Net provision for impairment recognised during the year
Assets held for sale
Closing balance
(c) Liquidity risk
2019
$
2,643,858
1,035,933
(3,679,791)
2018
$
7,382,132
(4,783,274)
-
-
2,643,858
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.
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
21. FINANCIAL RISK MANAGEMENT (continued)
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
2019
Interest bearing loans
and borrowings at 6.00%
Interest bearing loans
and borrowings at 6.75%
-
-
-
-
- 1,317,984
Trade and other payables
530,666
113,320
-
530,666
113,320 1,317,984
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
1,043,988
-
(d) Net fair value
Fair value estimation
-
-
-
804,442 4,368,066
915,733
-
-
915,733
804,442 4,368,066
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,317,984
643,986
1,961,970
-
2,847,084
8,019,592
-
1,959,721
2,847,084
9,979,313
The fair value of financial assets and financial liabilities held by the Group must be estimated for recognition and
measurement or for disclosure purposes. All financial assets and financial liabilities of the Group at the balance date are
recorded at amounts approximating their fair value.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The
quoted market price used for financial assets held by the Group is the current bid price.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair
values due to their short-term nature.
The totals for each category of financial instruments, other than those with carrying amounts which are reasonable
approximations of fair value, are set out below:
Financial assets
Financial assets measured at fair value
through profit and loss
Total financial assets
CARRYING AMOUNT
FAIR VALUE
2019
$
2018
$
2019
$
2018
$
15,620
31,239
15,620
31,239
15,620
31,239
15,620
31,239
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
21. FINANCIAL RISK MANAGEMENT (continued)
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).
2019
Financial assets
Financial assets measured at fair value
through profit and loss
2018
Financial assets
Financial assets measured at fair value
through profit and loss
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
$
$
$
$
15,620
15,620
31,239
31,239
-
-
-
-
-
-
-
-
15,620
15,620
31,239
31,239
On 15 July 2016, the Group (the “holder”) entered into convertible secured promissory notes with Novaphos (“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) Novaphos 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 Novaphos. 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 Novaphos issued capital. The fair value of the conversion rights attached to these Novaphos promissory notes
at 30 June 2019 was considered to be nil (30 June 2019: Nil) based on a probability weighted option pricing model.
(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 2019 was $19,905,274 (30 June 2018: $51,722,600). The primary
objective of the Group’s capital management is to maximise the shareholder value.
At 30 June 2019, the Group has external debt funding in the form of loans and borrowings as described at Note 17. 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.
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
21. FINANCIAL RISK MANAGEMENT (continued)
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 FVOCI 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 a financial asset at
FVOCI investment carried at fair value is impaired, the cumulative fair value loss recognised in other comprehensive income
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.
22. 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
2019
$
2018
$
112,583
27,440
140,023
109,684
53,061
162,745
6,000
21,761
27,761
-
-
-
18,000
20,000
38,000
28,653
-
28,653
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.
23.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.
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
24.COMMITMENTS
The Group has certain commitments to meet minimum expenditure requirements on the mineral exploration assets for
the Wonarah project areas that it has an interest in. Outstanding exploration commitments are as follows:
(a) Exploration commitments
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
(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
2019
$
2018(i)
$
131,613
114,151
-
136,762
114,151
-
245,764
250,913
2019
$
5,454
-
5,454
2018(i)
$
16,463
837
17,300
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
2019
$
2018
$
217,350
652,051
308,416
519,722
2,348,866
2,598,608
3,218,267
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 lease term is for 25 years.
25. DIVIDENDS
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
26. 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 27) and with its key management personnel.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 27.
(c) Compensation of Key Management Personnel
Short-term benefits
Long-term benefits
Post-employment benefits
Termination payments
Share-based payments
2019
$
2018
$
1,340,262
1,284,573
6,710
25,594
-
(40,721)
14,552
31,667
-
97,244
1,335,387
1,428,036
(d) Loans from key management personnel
The Group received the following loans from KMP or their related parties during the 2019 financial year (2018: NIL):
2019
LENDER
BALANCE
AT
START
OF THE
YEAR
LOAN
PROCEEDS
RECEIVED
INTEREST
CHARGED
INTEREST
NOT
CHARGED
FX IMPACT
Agrifos Partners LLC(i)
Tablo Corporation (ii)
Mimran Natural
Resources (ii)
$
$
-
-
677,051
1,248,078
$
$
40,268
66,444
2,847,084
-
178,154
-
-
-
(42,611)
(71,432)
80,676
REPAID
DURING
THE
YEAR
BALANCE
AT END OF
THE YEAR
HIGHEST
BALANCE
DURING
THE
YEAR
$
$
674,709
717,319
1,243,090
1,314,522
3,105,914
3,105,914
-
-
-
(i) Agrifos Partners LLC is a company related through the common control of directors Mr. Timothy Cotton and Mr. Frank Chaouni.
(ii) Tablo Corporation and Mimran Natural Resources are companies related through the common control of director Mr. David Mimran.
Key terms and conditions of the loans are as follows:
LENDER
Agrifos Partners LLC
Tablo Corporation
INTEREST
RATE(i)
6.00%
6.00%
SECURITY
REPAYMENT DATE
unsecured
unsecured
30 September 2019iii
30 September 2019iii
Mimran Natural Resources
(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) On 27 September 2019, the Company obtain an extension to the maturity of the Shareholder Loans, extending the maturity date to 21 October 2019.
no set date
unsecured
6.75%
Full terms and conditions of the loans can be found at Note 17.
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
26. RELATED PARTY TRANSACTIONS (continued)
(e) Other transactions and balances with the key management personnel
(iv)
(v)
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 2019. Total consultancy fees of
nil (2018: $13,700) were charged by Mr. McCubbing during the year. The agreement had no fixed term and no
termination notice period.
The Company owns approximately 7% of Novaphos, Inc (Novaphos) 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 Novaphos.
27. 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:
EQUITY HOLDING(i)
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
2019
$
100
100
100
100
100
100
100
80
80
100
(i) The proportion of ownership interest is equal to the proportion of voting power held.
(ii) The financial year end date is 31 December. These companies forms part of the disposal group. (Refer to Note 12 for further details).
(iii) The company’s equity represented by an initial capital contribution by Avenira as the sole member.
2018
$
100
100
100
100
100
100
100
80
80
100
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
27.SUBSIDIARIES (continued)
Transactions with non-controlling interests
Portion of equity interest held by non-controlling interests
COUNTRY OF
INCORPORATION
2019
$
2018
$
Baobab Mining and Chemicals Corporation SA
Senegal
20%
20%
Accumulated balance of material non-controlling interest
Baobab Mining and Chemicals Corporation SA
Loss allocated to material non-controlling interest
Baobab Mining and Chemicals Corporation SA
2019
$
2018
$
(3,427,261)
(4,416,599)
2019
$
2018
$
8,043,052
1,640,910
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
2019
$
112
(371,991)
(192,074)
-
2018
$
-
(343,570)
(345,557)
(114,515)
(3,280,222)
(1,013,635)
(38,786,264)
(7,182,462)
(896,095)
3,332,476
(43,526,534)
(5,667,263)
3,311,274
1,465,793
(40,215,260)
(4,201,470)
(40,215,260)
(4,201,470)
(8,043,052)
(840,294)
-
-
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
27. SUBSIDIARIES (continued)
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
2019
$
2018
$
1,895,401
25,421,796
3,251,022
57,447,261
(37,926,684)
(27,229,167)
(6,526,819)
(11,386,123)
(17,136,305)
22,082,993
(13,709,044)
(3,427,261)
17,666,394
4,416,599
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
28. EVENTS OCCURING AFTER THE BALANCE DATE
2019
$
(3,469,434)
(4,174,350)
7,494,723
(149,061)
2018
$
(1,340,884)
(8,164,953)
9,658,390
(152,553)
On 1 July 2019 Avenira announced that it proposed to sell its interests in the Baobab Phosphate Project and Novaphos to
a consortium of its major shareholders (the Purchasers) in return for cash consideration and essential funding support (the
‘Transaction’).
Under the Transaction:
• Avenira to receive cash consideration of US$3.0M (A$4.3M), and loan and director fees forgiveness of approximately
US$1.2M (A$1.8M), for a total value of approximately US$4.2M (A$6.1M), using a A$:US$ 0.69 exchange rate.
• Avenira to undertake, for nil consideration, a buy-back and capital reduction of all the existing shares held by the major
shareholders.
• Pending completion of the sale (‘Completion’), the Purchasers will provide loan funding of up to US$1.8M to BMCC
(the Avenira subsidiary which holds the Baobab Project) and US$ 300,000 to Avenira Limited. Of these facilities BMCC
has drawn down US$1.265M to date and Avenira has drawn down US$300,000 to date.
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.
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
29. STATEMENT OF CASHFLOWS
Reconciliation of net loss after income tax to net cash outflow from operating activities
2019
$
2018
$
Net loss from continuing operations
Net loss from discontinuing operations
Adjustment for non-cash items
Depreciation of plant and equipment
Share based payment expense
Net foreign currency loss/(gain)
Amortisation of intangibles
Impairment of exploration and evaluation expenditure
Impairment of financial assets
Impairment of capitalised mine development expenditure
Impairment of property plant and equipment
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 (decrease) in provisions
Decrease in deferred tax liabilities
Net cash outflow from operating activities from operating activities
Change in liabilities from financing activities
(3,084,624)
(40,355,098)
(3,225,309)
(2,950,688)
19,421
(40,833)
(146,519)
449,703
3,028,186
139,838
34,823,608
628,409
-
341,054
60,918
148,478
23,578
109,630
-
5,863,171
-
70,623
896,095
(3,295,751)
545,513
2,848,008
(606,923)
(3,311,274)
(4,165,860)
(52,103)
258,915
21,899
(1,465,793)
(4,091,358)
Interest bearing
loans &
borrowings -
Shareholder loans
Interest bearing
loans &
borrowings -
CBAO
Interest bearing
loans &
borrowings -
Mimran
1-Jul-18
Proceeds from
Borrowing
Tfr to Assets
held for Sale
Interest
Accrued
Interest
Paid
FX
30-Jun-19
-
1,317,984
-
5,172,508
-
(5,172,508)
2,847,084
-
(2,847,084)
-
-
-
-
-
-
- 1,317,984
-
-
-
-
8,019,592
1,317,984
(8,019,592)
-
-
- 1,317,984
30. 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.
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
30. EARNINGS PER SHARE (continued)
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
2019
$
2018
$
(35,396,670)
(3,198,895)
2019
2018
NUMBER OF
SHARES
NUMBER OF
SHARES
1,024,675,297
768,865,253
1,104,675,297
853,865,253
80,000,000
80,000,000
-
5,000,000
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.
31.
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.
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
30. SHARE BASED PAYMENTS (continued)
(a) Performance Rights Plan
There were no performance rights granted during the year ended 30 June 2019.
Movements in the number of performance rights on issue are as follows:
2019
AVENIRA LIMITED
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: 14 November
2017
Tranche 1
TOTAL
5,000,000
5,000,000
-
-
-
-
-
-
(5,000,000)
(5,000,000)
-
-
5,000,000 performance rights lapsed on 30 June 2019 when Mr Calvarin resigned as Managing Director and Chief Executive Officer there by ceasing
to be an Eligible Person.
2018
AVENIRA LIMITED
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 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.
There were no performance rights granted during the 2019 financial year.
(b) 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.
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.
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, YEAR ENDED 30 JUNE 2019
32. PARENT ENTITY INFORMATION
The following information relates to the parent entity, Avenira Limited, at 30 June 2019. 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
Financial assets at FVOCI
Accumulated losses
Total equity
(b) Financial performance
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
2019
$
2018
$
300,088
3,653,532
21,710,164
48,957,431
22,010,252
52,610,963
2,104,978
888,363
-
-
2,104,978
888,363
19,905,274
51,722,600
142,280,148
139,480,390
16,619,677
16,619,677
603,701
-
695,159
15,610
(139,598,016)
(105,088,236)
19,905,274
51,722,600
(34,510,016)
(9,109,064)
-
-
(34,510,016)
(9,109,064)
(c) Details of any contingent liabilities of the parent entity
The parent entity does not have any contingent liabilities at 30 June 2019.
(d) 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.
82
DIRECTORS’ DECLARATION
The Directors declare that:
1. The financial statements and notes set out on pages 35 to 82 are in accordance with the Corporations Act 2001,
including:
a. complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
reporting requirements; and
b. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019 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.
Brett Clark
Chairman
Perth, 7 October 2019
83
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 2019, 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 2019
and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
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:JG:AVENIRA:051
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 the Baobab Cash Generating Unit
Why significant
How our audit addressed the key audit matter
The Group’s Baobab Cash Generating Unit
(“Baobab CGU”), which includes property,
plant and equipment and capitalised mine
development, is required to be tested for
impairment at each reporting date in
accordance with the Group’s accounting
policies.
Our audit procedures included the following:
• Read and considered all pertinent matters
set out in the binding sale agreement
including the consideration to be received,
the assets and liabilities to be acquired and
the likelihood of the conditions precedent
being satisfied.
• Assessed whether all appropriate assets
and liabilities were included in the Baobab
CGU carrying value to be tested for
impairment.
Involved our valuation specialists to
provide inputs on the impairment
assessment including the valuation
methodology.
•
• Assessed the adequacy of the disclosures in
the financial statements.
At 28 June 2019, the group entered into a
binding sale agreement for the sale of its
interest in the Baobab CGU for
consideration lower than the carrying value.
Having regard to the expected sale
proceeds, an impairment of the Baobab CGU
of $38.78 million was recognised in the 30
June 2019 financial report. Refer to note
12 in the financial report for further details
relating to the impairment assessment and
resultant impairment recognised.
Given the magnitude of the impairment and
the complexity of the impairment
assessment methodology, this was
considered to be a key audit matter.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2. Assets and liabilities of disposal group held for sale
Why significant
How our audit addressed the key audit matter
On 28 June 2019, the Board of Directors
for Avenira Limited entered into a binding
agreement for the sale of its interests in the
Baobab Phosphate Project and Novaphos
Inc. to a consortium of its major
shareholders as disclosed in Note 12.
At 30 June 2019, the sale process had
progressed sufficiently in order to classify
Avenira’s interest in the Baobab Phosphate
Project and Novaphos Inc. as assets and
liabilities of a disposal group held for sale.
We consider the classification and
presentation of assets and liabilities of a
disposal group held for sale as a key audit
matter due to the judgment required and
the effect of this assessment on the
statement of financial position, the
statement of profit and loss and other
comprehensive income and in certain note
disclosures in the financial report.
Our audit procedures included the following:
• Obtained and read the key documents
associated with the sale to identify the
terms relevant to the transaction.
• Held discussions with management to
determine the criteria for the classification
as assets and liabilities of a disposal group
held for sale, being the sale is highly
probable and the disposal group is available
for sale in their present condition.
• Assessed the Group’s determination of the
value of assets and liabilities of the disposal
group held for sale at the balance date and
the operating result relating to the
discontinued operations for the period
(including the reclassification of
comparative figures).
• Assessed the adequacy of the disclosure in
the financial statements.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
3. Carrying value of exploration and evaluation expenditure
Why significant
How our audit addressed the key audit matter
Assessment of the carrying value of
exploration and evaluation assets for
impairment can be subjective, based on the
Group’s ability, and intention, to continue to
explore the asset. Accordingly, this was
considered to be a key audit matter.
As disclosed in Note 13 to the financial
statements, an impairment test was
performed in relation to the Group’s
Wonarah project at 30 June 2019 and an
impairment of $0.14 million was recognised
in the 30 June 2019 financial report. 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.
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 the adequacy of the disclosures
in the financial statements.
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 2019, 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
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
►
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
2019.
In our opinion, the Remuneration Report of Avenira Limited for the year ended 30 June 2019, 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
7 October 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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 4 October 2019.
(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
359
643
736
72,079
2,258,478
5,915,133
1,509
51,610,248
444
998,772,304
3,691
1,058,628,242
The number of equity security holders holding less than a marketable parcel of
securities are:
3157
23,942,624
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
Top Holders Snapshot - Grouped
Rank Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
HSBC CUSTODY NOMINEES
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
AGRIFIELDS DMCC
HOLY INVESTMENTS PTY LTD
MRS VINEETA GUPTA
SOLVOCHEM HOLDINGS LTD
MR GIOVANNI DEL CONTE
SOCIETE DE POLYSERVE POUR LES ENGRAIS ET
PRODUITS CHIMIQUES SA
VULCAN PHOSPHATES LLC
MR BRETT WILMOTT
MR PAUL WINSTON ASKINS
GLOWSHORE PTY LTD
MR YIYANG QIU
INKESE PTY LTD
MR GREGORY BRUCE HILL
MR SHANE JAMES MEAD + MRS JANICE MARION MEAD
MS KAREN THOMAS
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MR JAY HUGHES + MRS LINDA HUGHES
20. W & K ASSOCIATES PTY LTD
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (TOTAL)
Total Remaining Holders Balance
Units
% of Units
228,613,629
227,383,911
151,761,842
50,742,430
20,733,821
15,584,951
14,849,612
14,703,962
14,000,000
7,153,567
6,103,117
5,891,536
5,165,803
4,500,000
4,000,000
4,000,000
3,997,920
3,908,728
3,500,000
3,450,832
790,045,661
268,582,581
21.60
21.48
14.34
4.79
1.96
1.47
1.40
1.39
1.32
0.68
0.58
0.56
0.49
0.43
0.38
0.38
0.38
0.37
0.33
0.33
74.63
25.37
90
(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:
HSBC CUSTODY NOMINEES
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
AGRIFIELDS DMCC
(d) Voting rights
NUMBER OF SHARES
228,613,629
227,383,911
151,761,842
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 3 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.
91