More annual reports from Azure Minerals:
2023 ReportANNUAL REPORT
2020
Find out more www.azureminerals.com.au
CORPORATE DIRECTORY
ABN 46 106 346 918
Directors
Mr. Peter Ingram
Chairman
Mr. Anthony Rovira
Managing Director
Dr Wolf Martinick
Non Executive Director
Mr Hansjörg Plaggemars
Non Executive Director
Company Secretary
Mr. Brett Dickson
Registered Office
Level 1, 34 Colin Street
West Perth WA 6005
(08) 9481 2555
Solicitors
K & L Gates
Level 32
44 St Georges Terrace
Perth WA 6000
Bankers
Commonwealth Bank of Australia Limited
Share Register
Computershare Investor Services Pty Ltd
Level 11
172 St Georges Terrace
Perth WA 6000
Telephone: 1300 787 272
Auditors
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Telephone: 08 6382 4600
Stock Exchange Listing
Shares AZS
WWW.AZUREMINERALS.COM.AU
CONTENTS
Chairman’s Letter ...........................................................................................................................2
Review of Operations .....................................................................................................................3
Directors’ Report ...........................................................................................................................12
Corporate Governance Statement .............................................................................................25
Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income ...........31
Consolidated Statement of Financial Position .................................................................32
Consolidated Statements of Changes in Equity ...............................................................33
Consolidated Statement of Cash Flows ............................................................................34
Notes to the Consolidated Financial Statements ...........................................................35
Directors’ Declaration .........................................................................................................60
Independent Auditor’s Report ...........................................................................................61
Auditor’s Declaration of Independence ............................................................................65
ASX Additional Information .........................................................................................................66
Chairman’s Letter
Dear Fellow Shareholders,
The 2020 Financial Year will long be remembered as one where companies needed to be flexible, nimble and prepared to reinvent
themselves in the face of the COVID-19 global pandemic.
It is with great satisfaction that I can report that your Company rose to the challenge and has delivered for shareholders during these
troubled times.
Upon the onset of the COVID-19 pandemic, Azure acted quickly to ensure the well-being and safety of employees, contractors and
local communities by implementing the following steps:
•
•
•
•
Suspension of drilling and all field exploration;
Suspension of trial processing of ore from Oposura with concentrates bagged and stored in the Company’s warehouse;
Field crews demobilised to their home bases; and
Implementation of recommended policies and procedures which included “no travel”, “no congregating in groups”, “social
distancing” and “working from home”.
On March 31st, the Mexican Federal Government declared a State of Emergency and suspension of all non-essential activities,
industries and travel. This included the immediate shutting down of all mining and exploration activities in Mexico, and all offices
deemed non-essential were closed.
It soon became apparent to the Board that the situation in Mexico would not improve in the short, or even medium term. Rather than
going into hibernation, we immediately started considering other ways to utilise our expertise and shareholder funds.
Subsequent to the end of the financial year, we announced that we had acquired interests in four gold and nickel projects in the
Pilbara region of Western Australia from prominent mining investor Mr Mark Creasy and the Creasy Group. We’re delighted to have
acquired these exciting projects which have strong potential evidenced by historical exploration results, underlying geology and
project locations. Your Company has also recently acquired a promising gold project (Barton) in the Kookynie area of the Eastern
Goldfields of WA.
The Creasy Group has been an Azure shareholder since the Company’s IPO in 2003 and we are excited to take our relationship to the
next level with this acquisition and to partner with them to explore and develop these exciting projects. As a result of this transaction,
the Creasy group is now the largest shareholder in the Company with a 19.1% interest.
Importantly, this acquisition has enabled the Company to reduce risk by diversifying across commodities and jurisdictions, giving
shareholders exposure to both the hottest gold exploration district in Western Australia and a very promising nickel-copper project.
It is important for our shareholders to understand that our projects in Mexico remain a key business for the Company, but the reality
is we have limited ability to advance them in the foreseeable future.
These new Western Australian projects are an exceptional opportunity to explore quality ground in partnership with a proven world-
class mine-finder.
I take this opportunity to thank our shareholders for their ongoing support and our management, staff and contractors for their hard work.
We have a very exciting year ahead of us and I look forward to sharing our ongoing success with shareholders.
Yours sincerely
Peter A J Ingram B Sc
Chairman
2
Azure Minerals Limited Annual Report 2020
Review of Operations
Australia
Subsequent to the year-end, Azure announced (ASX: 17 July 2020) that it had entered into two Tenement Sale and Exploration Joint
Venture Agreements with entities controlled by prominent mining prospector Mr Mark Creasy (“Creasy Group”); one to acquire a 60%
interest in the Andover nickel-copper project and another to acquire 70% interests in the Turner River, Meentheena and Coongan Gold
Projects, located in the Pilbara region of Western Australia (see Figure 1).
In addition, agreement was reached to acquire 100% of the Barton Gold project located in the Kookynie Gold District (see Figure 4).
Figure 1: Locations of Azure’s new Pilbara projects
3
Review of Operations
Andover Nickel-Copper Project - (Azure 60% / Creasy Group 40%)
The Andover Nickel-Copper Project hosts nickel and copper sulphide mineralisation discovered by the Creasy Group in 2018 (refer
Azure’s ASX announcement: 17 July 2020). Three holes intersected significant nickel and copper sulphide mineralisation at shallow
depths in two separate targets, returning:
ADRC002: 7m @ 2.62% Ni & 0.65% Cu within 26m @ 1.03% Ni & 0.46% Cu from 43m
ADRC006: 2m @ 2.10% Ni & 0.44% Cu from 15m
ADRC001: 4m @ 1.10% Ni & 0.80% Cu from 6m and 2m @ 1.77% Ni & 0.53% Cu from 62m
The 70km2 project covers most of the Andover Mafic-Ultramafic Intrusive Complex with historical exploration identifying nickel,
copper, cobalt, platinum and palladium mineralisation. Being a layered mafic-ultramafic intrusion, Andover contains similar geology
to the Fraser Range Province (host to the Nova-Bollinger nickel-copper mine and Legend Mining’s Mawson nickel-copper discovery)
and the Julimar Intrusive Complex (host to Chalice Gold Mine’s Gonneville nickel-copper-PGE discovery).
The Creasy Group completed airborne and ground electromagnetic (EM) surveys, surface mapping and sampling, and Reverse
Circulation (RC) drilling. Numerous bedrock-hosted EM conductors were detected together with outcropping gossans containing
strongly anomalous values of nickel, copper and cobalt.
Seven RC drill holes tested four targets and three holes in two separate locations (ADRC001, 002 & 006) intersected semi-massive,
stringer and disseminated nickel and copper sulphide mineralisation with potentially economic grades and widths (see Figure 2).
Follow-up down-hole EM surveys confirmed the presence of strong off-hole conductors in these holes, indicating potential for
extensive sulphide mineralisation both down-dip and along-strike.
Azure has commenced a diamond drilling program to follow-up these nickel-copper occurrences and to drill the numerous
other geophysical and geological targets that remain untested throughout the 70km2 property. Additionally, an extensive ground
electromagnetic survey is in progress to refine the geophysical anomalies and conductors previously identified by the Creasy Group
and to confirm drill targets.
Figure 2: Andover mafic-ultramafic intrusive complex with drill hole collar locations
4
Azure Minerals Limited Annual Report 2020 Turner River Gold Project - (Azure 70% / Creasy Group 30%)
The Turner River Gold Project comprises two Exploration Licence applications covering 450km2 located just south of Port Hedland
(see Figure 3). The property is mostly sand-covered and there are no indications of drilling or other historical exploration within the
project area.
Figure 3: Turner River Gold Project showing geology, structural setting & gold deposits/occurrences
Turner River contains Mallina Formation sediments and granite intrusions as are found on De Grey Mining’s nearby Mallina Gold
Project, which hosts 2.2Moz of gold resources and the recent Hemi gold discovery. De Grey’s exploration has confirmed that substantial
gold deposits are associated with the confluence of granite intrusions into the Mallina sediments and regionally extensive cross-
cutting shear zones like the Berghaus Shear Zone.
Importantly, approximately 12 kilometres of the fertile Berghaus Shear Zone, which is associated with Hemi and the nearby Mt Berghaus
(De Grey) and Cookes Hill (Haoma Mining) gold deposits, cuts through the south-eastern part of the Turner River project area. This
shear corridor crosses both Mallina sediments and the Louden greenstone volcanic belt, making this area a priority exploration target
for both intrusive-related and shear-hosted gold deposits.
The extensive sand cover, minimal historical exploration, proximity to De Grey’s strongly mineralised project area and gold deposits,
favourable rock types and fertile structural setting all highlight the strong potential for Turner River to host substantial gold
mineralisation.
Azure will undertake geophysical surveys and reconnaissance drilling within this unexplored project as soon as the tenements are
granted.
5
Review of Operations
Meentheena and Coongan Gold Projects - (Azure 70% / Creasy Group 30%)
The Meentheena and Coongan gold exploration projects are located in the eastern Pilbara. Meentheena is located approximately
80km east of Marble Bar with easy access via the sealed Marble Bar to Telfer Gold Mine road and Coongan is located 8km to the west
of Nullagine (see Figure 1).
Meentheena covers 223km2 and the project area has been explored by the Creasy Group for more than 25 years. It is considered
prospective for epithermal-style gold mineralisation and Creasy Group exploration has identified strongly anomalous gold and silver
values and high levels of the pathfinder minerals arsenic, antimony and mercury associated with silica flooding, quartz and sulphide
veining, and crackle breccias indicative of an epithermal event.
The Creasy Group drill-tested this zone with five RC holes totalling 2,204m and one 706m diamond core hole. Several holes intersected
epithermal-style alteration, veining and brecciation with anomalous precious metals and pathfinder elements. Azure plans to
undertake further exploration, initially comprising surface studies followed by drilling.
Coogan covers an area of 141km2. It is situated immediately west of Nullagine and adjoins the western boundary of Novo Resources’
Beatons Creek Gold Project (current resources of 903,000oz @ 2.53g/t Au in conglomerate, alluvial and reef gold). Until recently a joint
venture with the Creasy Group, Novo announced (15 June 2020) that it had consolidated sole ownership of the Beatons Creek project
by acquiring the Creasy Group interests.
There are numerous mineral occurrences and deposits reported in the immediate vicinity of Coongan, including gold to the northwest
and east, copper to the north, Channel Iron Deposits (CID) to the south and tin, tantalum and lithium to the east. The project is
considered prospective for alluvial and conglomerate-hosted gold and also bedrock-hosted primary gold mineralisation similar to
that at Beatons Creek.
Exploration undertaken by the Creasy Group focused on the western half of the project area and comprised surface geochemical
sampling (stream sediment and rock chip) and a close-spaced detailed aeromagnetic survey. Numerous target areas were identified
that warrant follow-up with infill stream sediment sampling, soil sampling, detailed rock chip sampling and geological mapping.
In addition, the eastern half of the property requires similar reconnaissance exploration and an aeromagnetic survey. Next stage
exploration programs are being planned and will be executed in the coming tenement year.
6
Azure Minerals Limited Annual Report 2020 Barton Gold Project - (to be Azure 100%)
Azure finalised the agreement to purchase 100%-ownership of the Barton Gold Project, a single Exploration Licence Application (ELA
40/393) from local company 30 Well Pty Ltd. Consideration for the acquisition is 1,150,000 fully paid ordinary Azure shares and
A$20,000, payable upon grant of the tenement, with no additional payments or royalties.
The Barton Gold Project covers 200.5km2 of the Kookynie Gold District (see Figure 4) and adjoins several growing gold deposits /
projects, including Genesis Minerals’ Ulysses Gold Project (867,000oz) and their Kookynie Gold Project (414,000oz) (recently acquired
for A$10.5M); Metalicity’s recent high-grade Kookynie gold discoveries (earning 51% by spending $5M); and Saturn Minerals’ Apollo
Hill Gold Project (781,000oz).
Figure 4: Barton Gold Project in blue with nearby gold deposits / projects
Since the 1890s, the Kookynie-Orient Well-Ulysses district
has produced more than 1.1Moz of gold from open pit
and underground mining of high-grade, quartz vein gold
deposits and currently hosts additional gold resources of
approximately 1.2Moz. Larger mines in the district were:
• Kookynie (combined): ~366,000oz Au; located 4km
south of Azure’s Barton Project
• Puzzle: ~100,000oz Au; located 1.3km south of Barton
• Orient Well: ~220,000oz Au; located 4km west of
Barton
• Admiral / Butterfly: ~320,000oz Au; located 10km west
of Barton
• Ulysses: ~50,000oz Au; located 15km west of Barton.
Azure will commence exploration on Barton as soon as the
tenement is granted. Initially, the Company will focus on the
Daisy Corner and DKS targets with aircore and RC drilling to
follow-up the historical gold-mineralised drill intersections.
Generative exploration to identify and test additional targets
over the remainder of the 200km2 property will comprise:
• Acquisition and interpretation of geophysical survey
data (aeromagnetics and VTEM);
•
Systematic, grid-based reconnaissance aircore drilling
to penetrate through the alluvial cover and sample for
bedrock-hosted mineralisation; and
• Deeper RC drilling to follow-up identified bedrock-
hosted gold mineralisation.
7
Review of Operations
MEXICO
ALACRAN PROJECT - (AZS 100% ownership)
The Alacrán project hosts two deposits; the Mesa de Plata silver deposit and the adjacent Loma Bonita gold-silver deposit (refer Tables
1 & 2 for Mineral Resources).
Table 1: Mesa de Plata Mineral Resource (in accordance with the JORC Code 2012)
Measured Mineral Resource
Indicated Mineral Resource
Total Mineral Resource
Zone
Tonnes
(Mt)
Silver
Tonnes
(Mt)
Silver
Tonnes
(Mt)
Silver
(g/t Ag)
(Moz)
(g/t Ag)
(Moz)
(g/t Ag)
(Moz)
High-Grade
Mid-Grade
TOTAL
1.21
8.43
9.64
307.4
43.0
76.2
12.0
11.7
23.6
0.54
0.28
0.82
201.7
36.2
145.4
3.5
0.3
3.8
1.75
8.71
10.46
274.7
42.8
81.6
15.5
12.0
27.4
Note: for details refer to ASX announcement dated December 1, 2016
Table 2: Loma Bonita Mineral Resource (in accordance with the JORC Code 2012)
Cut-Off Grade
(g/t Au)
JORC Code
Classification
Tonnes (Mt)
≥ 0.5
≥ 0.21
Indicated Mineral Resource
Inferred Mineral Resource
Total
Indicated Mineral Resource
Inferred Mineral Resource
Total
2.9
0.5
3.4
4.2
1.2
5.4
Gold
(g/t)
1.25
1.0
1.2
0.95
0.6
0.9
(kOz)
116
15
131
128
22
150
Silver
(g/t)
33.9
18.0
32.0
30.1
18.0
28.0
(Moz)
3.1
0.3
3.4
4.1
0.7
4.8
Note: for details refer to ASX announcement dated December 21, 2016
Azure commenced a Reverse Circulation (RC) drilling program in December at the Loma Bonita gold-silver deposit for resource infill
and expansion, at Mesa de Plata to collect additional samples for advanced metallurgical testwork, and at the Cerro San Simon, Mina
San Simon and Gregors greenfields exploration targets.
Drilling was terminated in early March due to COVID-19 with 36 holes (MDPC-138 to MDPC-169 & GGC-001 to GGC-004) drilled for
3,604 metres.
8
Azure Minerals Limited Annual Report 2020 RESOURCE INFILL AND EXPANSION DRILLING AT LOMA BONITA
The Loma Bonita deposit, as defined by the current Mineral Resource Estimate, extends over 600 metres north-south, up to 200
metres east-west, and remains open for expansion. Mineralisation starts at surface and in places the true width/thickness of the
mineralised zone exceeds 100 metres.
Resource expansion drilling comprised stepping out from the southern and eastern resource boundaries to increase the resource size
while resource infill drilling was undertaken to improve definition of internal high-grade zones, confirm internal continuity and obtain
samples for additional metallurgical testwork.
Better gold intersections from drilling outside of the current resource boundaries (ASX: 5 February, 4 March & 23 March 2020) include:
• MDPC-141: 36.0m @ 1.0g/t Au from 12.0m
• MDPC-153: 58.5m @ 0.7g/t Au from 15.0m
• MDPC-154: 73.5m @ 0.7g/t Au from 0m
• MDPC-155: 31.5m @ 1.7g/t Au from 0m (entire hole)
• MDPC-159: 75.0m @ 0.5g/t Au from 0m
• MDPC-160: 37.5m @ 1.8g/t Au from 1.5m
• MDPC-165: 7.5m @ 2.3g/t Au from 22.5m
Based upon these mineralised intersections, which occur up to 150 metres outside of the current resource boundaries, the Company
expects that a revised Mineral Resource Estimate for the Loma Bonita deposit would result in an increase of contained gold ounces.
Several holes were also drilled inside the current resource boundaries to confirm internal continuity of high-grade zones and potentially
upgrade some resources from Inferred to Indicated category. Better gold intersections (ASX: 5 February, 4 March & 23 March 2020)
from these holes include:
• MDPC-143: 126.0m @ 2.0g/t Au from 1.5m
• MDPC-161: 28.5m @ 1.3g/t Au from 0m
• MDPC-162: 34.5m @ 1.2g/t Au from 87.0m
METALLURGICAL DRILLING AT MESA DE PLATA
Azure drilled three holes (MDPC-150 to 152) into the Mesa de Plata silver deposit to collect bulk samples for advanced metallurgical
testwork, with each hole intersecting wide intervals of high-grade silver mineralisation. Intersections from these holes include (ASX: 4
March 2020):
• MDPC-150: 6.0m @ 1,284g/t Ag within 10.5m @ 805g/t Ag from 12.0m
• MDPC-151: 3.0m @ 1,832g/t Ag within 15.0m @ 677g/t Ag from 39.0m
• MDPC-152: 3.0m @ 1,006g/t Ag within 10.5m @ 774g/t Ag from 1.5m
Selected samples from these holes have been submitted for advanced stage metallurgical testwork for the purpose of optimising the
process flowsheet for a Mesa de Plata mining and processing operation.
Previous metallurgical studies (ASX: 17 December 2015) demonstrated that while a majority of the Mesa de Plata silver mineralisation
is recoverable by a combination of flotation followed by cyanide leaching of the tailings stream, a proportion of the silver is not
captured by either of these processing methods. Subsequent testing demonstrated that a dense, silver-rich mineral called romeite,
which neither floats nor leaches, is recoverable by density-based gravity separation methods into a high-grade silver concentrate.
The current metallurgical program is undertaking multiple gravity separation tests, processing the high-grade mineralisation through
Knelson concentrators to maximise romeite recoveries into a high-grade, silver-rich concentrate. The tailings from the gravity
separation will then undergo grinding, flotation and cyanide leaching to maximise the overall silver recovery.
9
Review of Operations
EXPLORATION DRILLING
Gregors Copper Sulphide Discovery
The Gregors prospect was originally recognised by Azure’s geologists in early 2016 when mapping identified breccia and gossan
outcropping over an area of approximately 100m x 100m. The strongly iron-rich breccia and boxwork texture within the gossan
suggested a sulphide-rich source, potentially representing base metal mineralisation. However, geochemical sampling of the outcrop
returned only low grades of precious and base metals, downgrading the priority of the prospect at that time.
In late 2016, Azure flew an airborne VTEM geophysical survey over the entire Alacrán project area, and a small and discrete, reasonably
intense electromagnetic (EM) response was detected coincident with the gossan outcrop. Modelling indicated the presence of a steep
east-dipping EM conductor plate located beneath the gossan outcrop.
No further exploration was undertaken over this anomaly until late in 2019, when Azure regained full ownership and control of the
Alacrán project from former partner Teck Resources. Detailed mapping, surface geochemical sampling and a ground EM survey were
carried out over the gossan and the area of the VTEM anomaly in early 2020. This identified faults and shearing and strong alteration
within and around the gossan, and sampling returned weakly anomalous copper grades.
Four angled RC drill holes were drilled to test the EM anomaly and beneath the gossan with two holes (GGC-002 & GGC-003) being
drilled from the same collar position at different dip angles.
Both holes intersected wide zones of breccia and strongly altered volcanic rocks containing significant visual quantities of disseminated
chalcopyrite (copper sulphide) mineralisation. These holes returned the following copper intersections (ASX: 23 March 2020):
• GGC-002: 30m @ 0.68% Cu from 22.5m; including 6.0m @ 2.30% Cu
• GGC-003: 18m @ 0.96% Cu from 21.0m; including 1.5m @ 7.03% Cu
The other two holes (GGC-001 & GGC-004) intersected altered and brecciated rocks containing disseminated pyrite, pyrite in veins and
minor amounts of disseminated chalcopyrite that returned anomalous copper grades.
The presence of strong copper mineralisation hosted by iron-rich breccia is very promising as numerous high-grade, copper-rich
breccia pipes associated with nearby copper porphyry bodies have been discovered and mined in the Cananea mining district. For
example, the La Colorada breccia pipe (approximately 5Mt @ 7% Cu) was mined up to the 1930s, and the Maria breccia pipe (ore
reserves of 1.6Mt @ 6% Cu) was discovered in 1979 and mined up to the 1990s. At the top of these breccia pipes the cross-sectional
area is usually less than 100m x 100m and the mineralised bodies often extend to very significant depths (in the hundreds of metres).
Azure is undertaking a detailed data review and interpretation to assess potential and assist with planning a follow-up drill program.
Mina San Simon
One RC hole (MDPC-168) was drilled to test at the historical Mina San Simon mine located about 700m southeast of the southern
Loma Bonita resource boundary. The area between Loma Bonita and Mina San Simon and in the vicinity of Mina San Simon is mostly
untested by drilling.
The old workings comprise two horizontal tunnels and a 30m deep vertical shaft which exploited a zone of vuggy silica hosting
gold and silver mineralisation. A hole drilled by Azure in 2015 (LM-02) intersected a void created by the old mine workings that had
extracted the mineralised zone.
Hole MDPC-168 drilled below these old mine workings and returned a well-mineralised gold and silver intersection (ASX: 23 March
2020), hosted in vuggy and massive silica, of:
• MDPC-168: 21.0m @ 2.00g/t Au & 64g/t Ag from 19.5m
Further drilling to test the vuggy silica mineralised zone, which is interpreted to extend further to the east and south beneath the Cerro
San Simon hill, will be undertaken in the next drill program
10
Azure Minerals Limited Annual Report 2020 Cerro San Simon
Two RC holes (MDPC-148 & 149) were drilled at the Cerro San Simon prospect to follow up previous drill holes that intersected
encouraging gold mineralisation, including:
• MDPD-025: 29.6m @ 0.56g/t Au (ASX: 21 December 2016)
• MDPD-035: 12.6m @ 0.37g/t Au (ASX: 21 December 2016)
• ALA-17-004: 63.0m @ 0.47g/t Au (ASX: 10 May 2018)
Both new holes intersected gold mineralisation (ASX: 4 March 2020) at the expected depths, including:
• MDPC-148: 31.5m @ 0.40g/t Au from 12.0m
• MDPC-149: 16.5m @ 0.80g/t Au from 61.5m
The gold mineralisation encountered at both Cerro San Simon and Mina San Simon is hosted in a unit of strongly silicified volcanics
and in some places in vuggy silica. This shallow-dipping unit outcrops extensively around the San Simon hill and north to the old Mina
San Simon mine. In addition to the gold intersections from the drilling, it returned strongly anomalous gold assays from extensive
surface sampling and detailed channel sampling from inside the old mine workings. This suggests the potential for a bulk-tonnage
style gold deposit and further drilling is warranted for this prospect.
OPOSURA PROJECT - (AZS 100% ownership)
Azure made its first foray into mining at the Oposura project during the period with the small-scale, multi-phase mining program
delivering positive results.
Two months of open pit mining selectively extracted and stockpiled more than 6,100 tonnes of near-surface, high-grade, massive zinc
and lead sulphide mineralisation with average grades of 13.4% zinc and 10.7% lead. Of this, approximately 2,100 tonnes of very high-
grade ore averaging 24.0% zinc and 18.3% lead was stockpiled separately as a potential direct shipping ore product. Mining was then
suspended to allow this first batch of ore to be processed to ensure the production of marketable concentrates.
Notably, ore tonnages and grades extracted in this mining campaign significantly exceeded the Mineral Resource Estimate for this
part of the deposit.
Separate small parcels of high-grade ore (23.8% Zn & 17.9% Pb) and mid-grade ore (5.8% Zn & 5.3% Pb) were processed through a
third-party operated sulphide flotation plant on a batch basis to determine optimum comminution regimes and reagent requirements.
Both ore types were successfully upgraded into bulk zinc-lead concentrates, each grading approximately 30-35% Zn, 25-30% Pb and
140-160g/t Ag. High metal recoveries into the concentrates were achieved, producing approximately 20 tonnes of high-quality, bulk
zinc-lead-silver concentrate with very low levels of contaminant metals and minerals.
The bulk concentrate produced was considered a potentially marketable product, having a high value and low transport cost on a per
tonne basis. Azure received two indicative tenders from international metals trading companies for the purchase of this product and
other companies expressed interest. Due to low metal prices and the onset of the COVID-19 pandemic, trial processing of Oposura
ore and production and marketing of bulk zinc-lead-silver concentrates was suspended during the March Quarter and no concentrate
was sold. Concentrate already produced has been bagged and securely stored.
11
Directors’ Report
Your directors present their report on the consolidated entity (referred to hereafter as “the Group”) consisting of Azure Minerals
Limited (“Azure”) and the entities it controlled at the end of or during the year ended 30 June 2020.
Directors
The following persons were directors of Azure Minerals Limited during the whole of the financial year and up to the date of this report,
unless otherwise stated.
Peter Ingram
Anthony Rovira
Wolf Martinick
Hansjörg Plaggemars (appointed 26/11/2019)
Principal Activities
During the year the principal continuing activity of the Group was exploration for precious and base metals in Mexico.
Dividends
No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made.
Review Of Operations
Group Overview
Azure Minerals Limited was incorporated on 19 September 2003. Its principal focus is on exploration for gold, copper, silver and zinc
in Mexico. The Group has several 100% owned projects with two main projects: Alacrán (silver, gold, copper) and Oposura (zinc, lead,
silver) The Group will continue to seek opportunities in Mexico and elsewhere, either 100% owned or in joint venture.
Operating Results for the Year
The operating loss after income tax of the Group for the year ended 30 June 2020 was $5,671,296 (2019: $9,735,486). Included in this
loss figure is $3,467,734 (2019: $7,097,949) of exploration expenditure. Refer to notes 1(c) and 6 to the financial statements.
Shareholder Returns
Basic loss per share (cents)
Diluted loss per share (cents)
2020
(3.75)
(3.75)
2019
(8.77)
(8.77)
Investments For Future Performance
The future performance of the group is dependent upon exploration success, the progress of development of those projects where
precious and base metals are already present, and continued funding. To this end the group has budgeted to continue exploration at
its Mexico projects.
Review Of Financial Condition
At the date of this report the consolidated entity has a sound capital structure and is in a strong position to progress its mineral
properties.
12
Azure Minerals Limited Annual Report 2020 Risk Management
The board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned
with the risks and opportunities identified by the board.
The board has established an Audit and Risk Management Committee and has adopted a Risk Management Policy.
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 covers 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.
The company undertakes risk review meetings as required with the involvement of senior management. Identified risks are weighed
with action taken to mitigate key risks.
Significant Changes In State Of Affairs
During the year a total 23,649,059 fully paid ordinary shares were issued at a price of $0.17 to raise $4.02 million before expenses of
the issue. The Company also issued Convertible Notes with a face value of $2 million. The notes are for a period of 24 months with
interest payable 6 months in arrears at an interest rate of 12.5% per annum. The notes may be converted to fully paid ordinary shares
at an effective price of 12.5 cents per share.
There were no other significant changes in the state of affairs of the Group during the financial year.
Significant Events After The Reporting Date
On 31 January 2020, the World Health Organisation (WHO) announced a global health emergency because of a new strain of coronavirus
originating in Wuhan, China (COVID-19 outbreak) and the risks to the international community as the virus spreads globally beyond
its point of origin. Because of the rapid increase in exposure globally, on 11 March 2020, the WHO classified the COVID-19 outbreak
as a pandemic.
The full impact of the COVID-19 outbreak continues to evolve at the date of this report. The Group is therefore uncertain as to the full
impact that the pandemic will have on its financial condition, liquidity, and future results of operations during FY2021.
Management is actively monitoring the global situation and its impact on the Group’s financial condition, liquidity, operations,
suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread,
the Group is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for
the 2021 financial year.
Since the end of the financial year, the Company has issued 40 million shares at $0.10 each to raise $4.0 million (before expenses of
the issue), issued 40 million shares to acquire 60% in one and 70% in three mineral projects located in the Pilbara region of Western
Australia and entered into an exclusive and binding agreement to acquire 100%-ownership of the Barton Gold Project for the issue of
1.15 million shares and A$20,000, payable upon grant of the tenement.
No other matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly affect
the operations of the group, the results of those operations, or the state of affairs of the group in future financial years.
Likely Developments And Expected Results Of Operations
The group expects to maintain the present status and level of operations. The impact of COVID-19 on the company going forward,
including its financial condition cannot be reasonably estimated at this stage and will be reflected in the Group’s 2021 interim and
annual financial statements.
Environmental Regulation And Performance
The company is subject to significant environmental regulation in respect to its exploration activities.
The company aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in
compliance with all environmental legislation. The directors of the company are not aware of any breach of environmental legislation
for the year under review. The directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007
which requires entities to report annual greenhouse gas emissions and energy use. The directors have assessed that the Company
has no current reporting requirement but may be required to report in the future.
13
Directors’ Report
Information On Directors
Mr. Peter Anthony Ingram
BSc. (appointed 12 October 2011 and on 1 December 2011 appointed Chairman)
Mr. Ingram is a geologist with over fifty years’ experience in the mining and mineral exploration industries within Australia, including
over forty years’ experience in public company management. He was the founding Chairman and Managing Director of Universal
Resources Limited (later Altona Mining Limited).
Mr. Ingram was a founding councilor and past President of the Association of Mining and Exploration Companies (AMEC) and has been
made an Honorary Life Member in recognition of his services to AMEC. He was also a founding director of the Australian Gold Mining
Industry Council. He has served on the board of management of the WA School of Mines at Curtin University and was instrumental in
the establishment of the Chair of Mineral Economics within that institution.
Mr. Ingram’s previous directorships include: Managing Director of Metana Minerals NL and Eastmet Limited, both successful gold
mining companies; Executive Chairman of Australia Oriental Minerals NL and Glengarry Resources Limited; and Non-executive
Director of Dragon Mining Limited, Metana Petroleum Limited and Carnarvon Petroleum Limited.
Other Current Directorships - Nil
Former Directorships in the last 3 years
Altona Mining Limited
Special Responsibilities
Chairman of the Board and Chairman of the Remuneration & Nomination Committee and member of the Audit & Risk Management
Committee
Interests in Shares and Options
500,056 ordinary shares in Azure Minerals Limited all of which are held indirectly.
1,000,000 options over ordinary shares in Azure Minerals Limited
Mr. Anthony Paul Rovira, BSc (Hons) Flinders University, MAusIMM (Managing Director)
Tony Rovira has over 30 years technical and management experience in the mining industry, as an exploration and mining geologist,
and as a company executive at Board level. Since graduating from Flinders University in South Australia in 1983, Tony has worked
for companies both large and small, including BHP, Barrack Mines, Pegasus Gold and Jubilee Mines. From 1997-2003 Tony was the
General Manager of Exploration with Jubilee Mines, during which time he led the team that discovered and developed the world class
Cosmos and Cosmos Deeps nickel sulphide deposits in Western Australia. In the year 2000, the Association of Mining and Exploration
Companies awarded Tony the “Prospector of the Year Award” for these discoveries.
Tony joined Azure Minerals as the inaugural Managing Director in December 2003 and held the position of Executive Chairman from
June 2007 until December 2011. Tony is responsible for the decision to focus Azure Minerals’ activities on the world class mineral
provinces in Mexico, where the company has been operating since 2005.
Other Current Directorships
Ionic Rare Earths Limited
Former Directorships in the last 3 years - Nil
Interests in Shares and Options
806,000 ordinary shares in Azure Minerals Limited, of which 109,669 are held indirectly
2,000,000 options over ordinary shares in Azure Minerals Limited
14
Azure Minerals Limited Annual Report 2020 Information On Directors
Dr Wolf Martinick, PhD, BSc (Agric) (Appointed 1 September 2007)
Dr Martinick is an environmental scientist with over 40 years’ experience in mineral exploration and mining projects around the world,
attending to environmental, water, land access and indigenous people issues. He has conducted due diligence on mining projects
around the world on behalf of international financial institutions and resource companies for a variety of transactions including listings
on international stock exchanges, mergers and debt financing. He is a Fellow of the Australian Institute of Mining and Metallurgy.
He was a founding director and chairman of Weatherly International plc, an AIM listed company with copper mines in Namibia, and a
founding director of Basin Minerals Limited, an ASX listed mineral exploration company that discovered a world-class mineral project
in Victoria, Australia, that was acquired by Iluka Resources Limited in 2003.
Other Current Directorships - Nil
Former Directorships in the last 3 years
Ionic Rare Earths Limited
Special Responsibilities
Chairman of the Audit and Risk Management Committee and member of the Remuneration & Nomination Committee
Interests in Shares and Options
265,000 ordinary shares in Azure Minerals Limited
1,000,000 options over ordinary shares in Azure Minerals Limited
Mr Hansjörg Plaggemars (appointed 26/11/2019)
Mr Plaggemars is an experienced company director with a deep background in corporate finance, corporate strategy and governance.
He has served on the Board of Directors of many listed and unlisted companies in a variety of industries including mining, agriculture,
shipping, construction and investments. This includes the Board of Delphi Unternehmensberatung AG, a major shareholder of Azure.
Mr. Plaggemars has qualifications in Business Administration and is fluent in English and German.
Other Current Directorships
Kin Mining Limited, Davenport Resources Limited, Altech Chemicals Limited, Expedeon AG, Ming Le Sports AG, Decheng Technology
AG, Youbisheng Green Paper AG, Snowbird AG, Cologne, MARNA Beteiligungen AG and S&O Agrar AG
Former Directorships in the last 3 years - Nil
Special Responsibilities - Nil
Interests in Shares and Options- -Nil
Directors’ Meetings
The number of directors’ meetings held (including meetings of committees of directors) and number of meetings attended by each of
the directors of the company during the financial year are:
Meetings of Committees
Directors’ Meetings
Audit & Risk Committee
Remuneration &
Nomination Committee
A
12
12
12
5
B
12
12
12
5
A
1
-
1
-
B
1
-
1
-
A
-
-
-
-
B
-
-
-
-
Peter Anthony John Ingram
Anthony Paul Rovira
Wolf Gerhard Martinick
Mr Hansjörg Plaggemars
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.
15
Directors’ Report
Remuneration Report (Audited)
The remuneration report is set out under the following main headings:
A. Principles used to determine the nature and amount of remuneration
B. Details of remuneration
C. Service agreements
D. Share-based compensation
E. Additional Information
Key management personnel (KMP) covered in this report
Name
Position
Peter Anthony John Ingram
Non-Executive Chair
Wolf Gerhard Martinick
Anthony Paul Rovira
Hansjörg Plaggemars
Brett Douglas Dickson
Non-Executive Director
Executive Managing Director
Non-Executive Director
Company Secretary & CFO
Term as KMP
Full financial year
Full financial year
Full financial year
From 26/11/2019
Full financial year
The information provided in this remuneration report has been audited as required by section 308 (3C) of the Corporation Act 2001.
A. Principles used to determine the nature and amount of remuneration
The remuneration policy of Azure Minerals Limited has been designed to align director and executive objectives with shareholder
and business objectives by providing a fixed remuneration component and where appropriate offering specific short and long term
incentives based on key performance areas affecting the Groups results. Short-term incentives implemented by the Company are
detailed later in the report in section E. At present the Company has not implemented any specific long-term incentives and as such
the remuneration policy is not impacted by the Groups performance, including earnings in shareholder wealth (dividends, changes
in share price or return on capital to shareholders). The board of Azure Minerals Limited believes the remuneration policy to be
appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Group.
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by
the board. All executives receive a base salary (which is based on factors such as length of service and experience) and superannuation.
The board reviews executive packages annually by reference to the Groups performance, executive performance and comparable
information from industry sectors and other listed companies in similar industries.
The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract the
highest calibre of executives and reward them for performance that results in long term growth in shareholder wealth.
Executives are also entitled to participate in the employee share and option arrangements.
The executive directors and executives receive a superannuation guarantee contribution required by the government, which is
currently 9.5% of cash salary, and do not receive any other retirement benefits. Some individuals, however, may choose to sacrifice
part of their salary to increase payments towards superannuation.
All remuneration paid to directors and executives is valued at the cost to the company and expensed. Shares given to directors and
executives are valued as the difference between the market price of those shares and the amount paid by the director or executive;
to date no shares have been awarded to directors or executives. Options are valued using either the Black Scholes or Binomial
methodologies.
The board policy is 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. Independent external advice 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 (currently
$200,000). In line with standard industry practice fees for non executive directors are not linked to the performance of the economic
entity. However, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the company
and are able to participate in employee option plans.
16
Azure Minerals Limited Annual Report 2020 Remuneration Report (Audited)
A. Principles used to determine the nature and amount of remuneration
A Remuneration Committee has been established and is a committee of the board. It is primarily responsible for making recommendations
to the board on:
• Non-executive directors fees
• Remuneration levels of executive directors and other key management personnel
• Key performance indicators and performance hurdles of the executive team
Their objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-term interests
of the Group. The Corporate Governance Statement provides further information on the role of this committee.
In the event of serious misconduct or a material misstatement in the Group’s financial statements, the Board can reduce, cancel or
defer performance-based remuneration and may also clawback performance-based remuneration paid in previous financial years.
Remuneration consultants were not engaged during the year.
There is no Retirement Benefit Policy for directors, other than the payment of statutory superannuation.
B. Details of remuneration
Amount of remuneration
Details of the remuneration of the directors and key management personnel (as defined in AASB 124 Related Party Disclosures) of
Azure Minerals Limited are set out below in the following tables.
The key management personnel of Azure Minerals Limited includes the directors as disclosed earlier in this report and the following
who have authority and responsibility for planning, directing and controlling the exploration activities of the entity and the Company
Secretary/CFO, Mr B Dickson is an executive whose remuneration must be disclosed under the Corporations Act 2001.
Key management personnel of the Group
Short-Term
Post
Employment
Share-based
Payments
Total
Share
Based
Payment %
Name
Year
Cash,
salary &
fees
Cash
Bonus
Non
monetary
benefits
Super-
annuation
Options
Directors
Peter Anthony Ingram
Chairman
2020
2019
37,500
50,000
Anthony Paul Rovira
Managing Director
2020
2019
387,375
416,500
Wolf Gerhard Martinick
Non Executive
Hansjörg Plaggemars
Non Executive
Executives
Brett Dickson
Company Secretary
Total
2020
2019
2020
2019
2020
2019
2020
2019
33,750
45,000
15,688
-
172,125
183,600
646,438
695,100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,561
4,748
25,000
25,000
3,207
4,276
-
-
-
-
31,768
34,024
28,909
25,744
57,818
51,487
69,970
80,492
470,193
492,987
28,909
25,744
65,866
75,020
-
-
15,688
-
40,473
36,041
156,109
139,016
212,598
219,641
834,315
868,140
41.3
32.0
12.3
10.4
43.9
34.3
-
-
19.0
16.4
18.7
16.0
17
Directors’ Report
Remuneration Report (Audited)
Compensation options
There were no alterations to the terms and conditions of options granted as remuneration since their grant date. There were neither
forfeitures nor shares issued on exercise of Compensation Options during 2020 or 2019. During the year 2,700,000 options were
granted as remuneration and no options were exercised during the year. During the year 1,350,000 (2019: 1,350,000) options lapsed.
The Company’s remuneration policy prohibits directors and executives from entering into transactions or arrangements which limit
the economic risk of participating in unvested entitlements.
Retirement benefits provided for the non-executive directors in the financial statements do not form part of the above remuneration
until such time as the amount is paid to the retiring director.
Apart from the issue of options the company currently has no performance based remuneration component built into non-executive
director remuneration (2019: Nil). Performance based remuneration for executives is detailed later in section E of this report.
C. Service Agreement
Remuneration and other terms of employment for the following key management personnel are formalised in service agreements,
the terms of which are set out below:
Anthony Rovira, Managing Director:
Brett Dickson, Company Secretary/Chief Financial Officer:
• Term of agreement – to 31 December 2022.
• Term of agreement – to 31 December 2022.
• Base salary, exclusive of superannuation, of $400,000 to be
• Fixed fee, $15,300 per month.
reviewed annually by the remuneration committee.
• Payment of termination benefit on early termination by
the employer, other than for gross misconduct, includes
an amount equal to the amounts due for the balance of
the term of the contract from the date of termination or
the equivalent of 6 months remuneration, whichever is the
greater.
• Payment of termination benefit on early termination by
the employer, other than for gross misconduct, includes an
amount equal to the amounts due for the balance of the term
of the contract from the date of termination or the equivalent
of 6 months remuneration whichever is the greater.
Retirement Benefits
Other retirement benefits may be provided directly by the company if approved by shareholders.
D. Share based compensation
Options over shares in Azure Minerals Limited may be issued to directors and executives. The options are not issued based on
performance criteria but are issued to directors and executives of Azure Minerals Limited, where appropriate, to increase goal
congruence between executives, directors and shareholders. There are no standard vesting conditions to options awarded with
vesting conditions, if any, at the discretion of Directors at the time of grant. Options are granted for nil consideration.
During the year 2,700,000 options, vesting immediately, with a fair value of $156,109 (2019: 1,350,000 and $139,016) were issued to
Directors and Executives. Refer to note 28 of the Notes to the Consolidated Financial Statements for more information.
No options held by directors or executives were exercised during the financial year and no options have been exercised since the end
of the financial year. During the year 1,350,000 (2019: 1,350,000) options lapsed. The value of the options at lapse date was nil as the
exercise price of the option was significantly in excess of the market price of the underlying share. The value is determined at the time
of lapsing, but assuming any vesting condition was satisfied.
The Company’s remuneration policy prohibits executives from entering into transactions or arrangements which limit the “at risk”
aspect of participating in unvested entitlements.
18
Azure Minerals Limited Annual Report 2020 Remuneration Report (Audited)
E. Additional Information
Performance based remuneration
Variable Remuneration – Short Term Incentive (“STI”)
Objective
The objective of the STI program is to link the achievement of the Company’s operational targets with the remuneration received by
the executives charged with meeting those targets. The total potential STI available is set at a level so as to provide sufficient incentive
to the executive to achieve those operational targets and such that the cost to the Company is reasonable in the circumstances.
Structure
Actual STI payments granted to executives depend on the extent to which specific targets set at the beginning of the review period,
being a fiscal year, are met. The targets consist of a number of Key Performance Indicators (KPI’s) covering both financial and non-
financial, corporate and individual measures of performance. Typically included are measures such as contribution to exploration
success, share price appreciation, risk management and cash flow sustainability. These measures were chosen as they represent the
key drivers for the short term success of the business and provide a framework for delivering long term value.
The Board has predetermined benchmarks that must be met in order to trigger payments under the STI scheme. On an annual basis,
after consideration of performance against KPI’s, the Remuneration Committee, determines the amount, if any, of the STI to be paid
to each executive. This process usually occurs in the last quarter of the fiscal year. Payments made are delivered as a cash bonus in
the fourth quarter of the fiscal year.
STI bonus for 2019 and 2020 financial years
No STI payment was awarded for the 2019 and 2020 financial years.
Variable Remuneration – Long Term Incentive (“LTI”)
Objective
The objective of the LTI plan is to reward senior managers in a manner which aligns this element of remuneration with the creation of
shareholder wealth. As such LTI grants are only made to executives who are able to influence the generation of shareholder wealth.
Structure
LTI grants to executives are delivered in the form of options.
The options, when issued to executives, will not be exercisable for a price less than the then current market price of the Company’s
shares.
The grant of LTI’s is reviewed annually, though LTI’s may not be granted each year. Exercise price and performance hurdles, if any, are
determined at the time of grant of the LTI.
To date no performance hurdles have been set on options issued to executives. The Company believes that as options are issued at
not less than the current market price of the Company’s shares there is an inherent performance hurdle on those options as the share
price of the Company’s shares must increase significantly before there is any reward to the executive.
Shares issued on exercise of compensation options
There were no shares issued on exercise of compensation options during the year.
19
Directors’ Report
Remuneration Report (Audited)
Option holdings of key management personnel
2020
Directors
Balance at
beginning
of year
Granted as
Remuneration
Options
Exercised
Options
Lapsed
Balance
at end of
year
Vested at 30 June
Vested &
Exercisable
Unvested
Wolf Gerhard Martinick
750,000
Peter Anthony Ingram
750,000
500,000
500,000
Anthony Paul Rovira
1,500,000
1,000,000
Hansjörg Plaggemars
-
-
Executives
Brett Dickson
Total
1,050,000
700,000
4,050,000
2,700,000
-
-
-
-
-
-
(250,000)
1,000,000
1,000,000
(250,000)
1,000,000
1,000,000
(500,000)
2,000,000
2,000,000
-
-
-
(350,000)
1,400,000
1,400,000
(1,350,000)
5,400,000
5,400,000
-
-
-
-
-
Shareholdings of key management personnel
2020
Balance 1
July
Ord
Granted
Ord
On Exercise of
Options
Ord
Purchased
Ord
Directors
Wolf G Martinick
Peter A Ingram
Anthony P Rovira
Hansjörg Plaggemars
Executives
Brett Dickson
Total
265,000
500,056
806,000
-
-
1,571,056
Other Related Party Transactions
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance
30 June
Ord
Balance
Indirectly
Held
Ord
265,000
500,056
806,000
215,000
500,056
109,667
-
-
-
-
1,571,056
824,723
The Company has entered into a sub-lease agreement on normal commercial terms with Ionic Rare Earths Limited (IonicRE), a company
of which Brett Dickson and Anthony Rovira are directors. During the year IonicRE paid sub-lease fees totalling $17,872 (2019: $4,800).
The Company has also entered into a sub-lease agreement on normal commercial terms with Rox Resources Limited, a company
of which Brett Dickson is a Director. During the year Rox Resources Limited paid sub-lease fees totalling $110,399 (2019: $121,359).
20
Azure Minerals Limited Annual Report 2020 Remuneration Report (Audited)
Directors and executive options
Set out below are summaries of current Directors & Executives options granted.
2020
Grant
Date
Expiry
Date
Exercise
Price
(cents)
Value per
option at
grant date
(cents)
Granted
during
the year
Number
Exercised
during the
year
Number
Lapsed
during the
year
Balance
at end of
the year
Number
Vested and
exercisable
at end of
the year
Number
Balance
at the
start of
the year
Number
1,350,000
1,350,000
7 Dec
‘16
20 Nov
‘17
30 Nov
‘18
26 Nov
‘19
30 Nov
‘19
30 Nov
‘20
30 Nov
‘21
30 Nov
‘22
1.4
1.6
94
58
29
10.3
1,350,000
-
-
-
20.5
5.8
-
2,700,000
4,050,000
2,700,000
Weighted average exercise price
$0.60
$0.205
-
-
-
-
-
-
(1,350,000)
-
-
-
-
-
1,350,000
1,350,000
1,350,000
1,350,000
2,700,000
2,700,000
(1,350,000)
5,400,000
5,400,000
$0.94
$0.32
$0.32
The weighted average remaining contractual life of share options outstanding at the end of the period was 1.7 years (2019: 1.4 years)
Total expenses arising from share-based payment transactions recognised during the year were as follows:
Options issued to directors and other executives
Consolidated
2020
$
2019
$
156,109
139,016
21
Directors’ Report
Remuneration Report (Audited)
Company’s Performance
Company’s share price performance
The Company’s share price performance shown in the below graph is a reflection of the Company’s performance during the year and
of general market conditions.
The variable components of the executives’ remuneration including short-term and long-term incentives are indirectly linked to the
Company’s share price performance.
The graph below shows the Company’s share price performance during the financial year ended 30 June 2020.
Company’s Share Price Performance
Loss per share
Below is information on the Company’s loss per share for the previous four financial years and for the current year ended 30 June 2020.
Basic loss per share (cents)
*After 1:20 share consolidation
2020
(3.75)
2019
(8.77)
2018
(10.06) *
2017
(0.42)
2016
(0.53)
Voting and comments made at the company’s 2019 Annual General Meeting
Azure Minerals Limited received approximately 97% of “yes” votes on its remuneration report for the 2019 financial year. Remuneration
consultants were not engaged during the year and the company did not receive any specific feedback at the AGM or throughout the
year on its remuneration practices.
End of Audited Remuneration Report
22
Azure Minerals Limited Annual Report 2020 Loans to Directors and Executives
No loans have been provided to directors or executives.
Shares Under Option
At the date of this report there are 8,650,000 unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Share option movements during the year
Issued
Other
Total Number
of options
29,708,850
Exercisable at 20.5 cents, on or before 30 November 2022
4,400,000
4,400,000
Options Lapsed
(25,458,850)
(25,458,850)
Total options issued, exercised and lapsed in the year to 30 June 2020
Total number of options outstanding as at 30 June 2020 and at the date of this report
(21,058,850)
8,650,000
The balance is comprised of the following
Date granted
20 Nov 2017
30 Nov 2018
26 Nov 2019
Expiry date
30 Nov 2020
30 Nov 2021
30 Nov 2022
Total number of options outstanding at the date of this report
Exercise price
(cents)
Number of options
58.0
29.0
20.5
2,050,000
2,200,000
4,400,000
8,650,000
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue
of any other body corporate.
During the financial year no options were exercised by parties unrelated to the Company. Since the end of the financial year no
options have been exercised.
Indemnification And Insurance Of Directors And Officers
During the financial year, Azure Minerals Limited paid a premium of $24,017 (2019: $17,150) to insure the directors and secretary of
the company and its Australian based controlled entities.
The liabilities insured include legal costs that may be incurred in defending civil or criminal proceedings that may be brought against
the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred by the officers
in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by
the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else
or to cause detriment to the company. It is not possible to apportion the premium between amounts relating to the insurance against
legal costs and those relating to other liabilities.
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 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
23
Directors’ Report
Non Audit Services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise
and experience with the company and/or the Group are important.
Details of the amount paid or payable to the auditor (BDO Audit (WA) Pty Ltd) for audit and non-audit services provided during the
year are set out below.
The Board of directors has considered the position and, in accordance with advice received from the audit committee, is satisfied
that the provisions of the non-audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity
of the auditor
• None of the services undermine the general principals relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants.
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-audit firms:
1. Audit Services
BDO Audit (WA) Pty Ltd
Audit and review of financial reports
Consolidated
2020
$
2019
$
41,882
42,935
BDO Castillo Miranda y Compañía, S.C. (BDO México)
Audit and review of financial reports of Mexican subsidiaries
26,430
23,497
2. Non audit Services
Taxation Services
BDO Corporate Tax (WA) Pty Ltd
Tax compliance services
Total remuneration for non-audit services
Auditor’s Independence
4,202
10,455
4,202
10,455
A copy of the auditor’s independence declaration as required under section 307c of the Corporations Act 2001 is set out on page 52.
Auditor
BDO Audit (WA) Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the directors.
Peter Ingram
Chairman
Perth, 25 September 2020.
24
Azure Minerals Limited Annual Report 2020 Approach to Corporate Governance
Azure Minerals Limited ABN 46 106 346 918 (Company) has established a corporate governance framework, the key features of which
are set out in this statement. In establishing its corporate governance framework, the Company has referred to the recommendations
set out in the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations 4th edition. The Company
has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its
corporate governance practices. Where the Company’s corporate governance practices follow a recommendation, the Board has
made appropriate statements reporting on the adoption of the recommendation. In compliance with the “if not, why not” reporting
regime where, after due consideration, the Company’s corporate governance practices do not follow a recommendation, the Board
has explained it reasons for not following the recommendation and disclosed what, if any, alternative practices the Company has
adopted instead of those in the recommendation.
The following governance-related documents can be found on the Company’s website at:
http://www.azureminerals.com.au/ corporate/corporate-governance/
Charters
Board
Audit and Risk Committee
Nomination and Remuneration Committee
Policies and Procedures
Policy and Procedure for the Selection and (Re)Appointment of Directors
Process for Performance Evaluations
Policy on Assessing the Independence of Directors
Securities Trading Policy
Code of Conduct (summary)
Compliance Procedures (summary)
Procedure for the Selection, Appointment and Rotation of External Auditor
Shareholder Communication and Investor Relations Policy
Risk Management Policy (summary)
Diversity Policy (summary)
Policy on Continuous Disclosure (summary)
Whistle Blower Policy
The Company reports below on whether it has followed each of the recommendations during the 2019/2020 financial year (Reporting
Period). The information in this statement is current at 24 September 2020. This statement was approved by a resolution of the
Board on 24 September 2020.
PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
Recommendation 1.1
The Company has established the respective roles and responsibilities of its Board and management, and those matters expressly
reserved to the Board and those delegated to management and has documented this in its Board Charter, which is disclosed on the
Company’s website.
25
Corporate Governance Statement
PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT (CONTINUED)
Recommendation 1.2
The Company undertakes appropriate checks before appointing a person or putting forward to shareholders a candidate for election
as a director and provides shareholders with all material information in its possession relevant to a decision on whether or not to
elect or re-elect a director. The checks which are undertaken, and the information to be provided to shareholders are set out in the
Company’s Policy and Procedure for the Selection and (Re)Appointment of Directors, which is disclosed on the Company’s website.
The Company appointed Mr. Mr Hansjörg Plaggemars to the board on 26 November 2019, and the checks referred to in the Company’s
policies and Procedures for the selection and (Re)Appointment of Directors were undertaken
The Company provided shareholders with all material information in relation to the re-election of Mr Peter Ingram as a director at its
2019 Annual General Meeting.
Recommendation 1.3
The Company has a written agreement with each director and senior executive setting out the terms of their appointment. The
material terms of any employment, service or consultancy agreement the Company, or any of its child entities, has entered into with
its Managing Director, any of its directors, and any other person or entity who is related party of the Managing Director or any of
its directors has been disclosed in accordance with ASX Listing Rule 3.16.4 (taking into consideration the exclusions from disclosure
outlined in that rule).
Recommendation 1.4
The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of
the Board as outlined in the Company’s Board Charter. The Company Secretary’s role is also outlined in the consultancy agreement
between the Company Secretary and the Company.
Recommendation 1.5
The Company has a Diversity Policy. However, the Diversity Policy does not include requirements for the Board to set measurable
objectives for achieving gender diversity and to assess annually both the objectives and the Company’s progress in achieving them.
Nor has the Board set measurable objectives for achieving gender diversity. Given the Company’s stage of development as an
exploration company, the number of employees in Australia and the nature of the labour market in Mexico, the Board considers that
it is not practical to set measurable objectives for achieving gender diversity.
The respective proportions of men and women on the Board, in senior executive positions and across the whole organisation are
set out in the following table. “Senior executive” for these purposes means a person who makes, or participates in the making of,
decisions that affect the whole or a substantial part of the business or has the capacity to affect significantly the company’s financial
standing. For the Reporting Period, this included the Managing Director and the Company Secretary & Chief Financial Officer:
Whole organisation (including Board members)
Senior executive positions
Board
Recommendation 1.6
Proportion of women
2 out of 10 (20%)
0 out of 2 (0%)
0 out of 4 (0%)
The Chair is responsible for evaluation of the Board and, when deemed appropriate, Board committees and individual directors.
The evaluations are undertaken in accordance with the Company’s Process for Performance Evaluations, which is disclosed on the
Company’s website.
During the Reporting Period an evaluation of the Board, its committees, and individual directors took place in accordance with the
process disclosed in the Company’s Process for Performance Evaluations.
Recommendation 1.7
The Managing Director is responsible for evaluating the performance of senior executives in accordance with the process disclosed in
the Company’s Process for Performance Evaluations.
During the Reporting Period an evaluation of the Company Secretary & Chief Financial Officer (the Company’s sole senior executive,
other than the Managing Director) took place in accordance with the process disclosed in the Company’s Process for Performance
Evaluations.
The Nomination and Remuneration Committee is responsible for evaluating the Managing Director.
During the Reporting Period, an evaluation of the Managing Director took place in accordance with the process disclosed in the
Company’s Process for Performance Evaluations.
26
Azure Minerals Limited Annual Report 2020 PRINCIPLE 2 – STRUCTURE THE BOARD TO BE EFFECTIVE AND ADD VALUE
Recommendation 2.1
The Board has established a Nomination and Remuneration Committee comprising two of the Company’s independent non-executive
directors, Peter Ingram (Chairman) and Wolf Martinick. The Nomination and Remuneration Committee is not structured in accordance
with Recommendations 2.1 and 8.1 as it has only two members. However, the Board considers that the committee’s composition is
appropriate as it comprises the Board’s two independent non-executive directors and does not include an executive director.
Details of director attendance at Nomination and Remuneration Committee meetings held during the Reporting Period are set out in
a table in the Directors’ Report on page 15.
The Board has adopted a Nomination Committee Charter which describes the role, composition, functions and responsibilities of the
Nomination Committee and is disclosed on the Company’s website. As noted above, the Board has combined the Nomination and
Remuneration committees.
Recommendation 2.2
Significant geological experience, environmental management experience and professional skills including leadership, governance
and strategy are the skills and diversity which the Board is looking to achieve in its membership, and these are collectively held by
current members of the Board.
While the Company is at exploration stage, it does not wish to increase the size of the Board and considers that the Board weighted
towards technical experience is appropriate at this stage of the Company’s development. The Board may bring in external consultants
with specialist knowledge as and when required to address any areas where the Board does not collectively possess the relevant
attribute.
Recommendation 2.3
The Board considers the independence of directors having regard to the relationships listed in Box 2.3 of the Principles &
Recommendations. The independent directors of the Company are Peter Ingram, Wolf Martinick and Hansjörg Plaggemars.
The length of service of each director is set out in the Directors’ Report on page 14.
Recommendation 2.4
The Board has a majority of directors who are independent.
Recommendation 2.5
The independent Chair of the Board is Peter Ingram, who is not also Managing Director of the Company.
Recommendation 2.6
Mr Hansjörg Plaggemars was appointed during the Reporting Period. The Company has an induction program, coordinated by the
Company Secretary. The goal of the program is to assist new directors to participate fully and actively in Board decision-making at
the earliest opportunity, and to assist senior executives to participate fully and actively in management decision-making at the earliest
opportunity. Mr Hansjörg Plaggemars participated in the induction program.
The Nomination and Remuneration Committee regularly reviews whether the directors as a group have the skills, knowledge and
familiarity with the Company and its operating environment required to fulfil their role on the Board and the Board committees
effectively using a Board skills matrix. Where any gaps are identified, the Nomination and Remuneration Committee considers what
training or development should be undertaken to fill those gaps. In particular, the Nomination and Remuneration Committee ensures
that any director who does not have specialist accounting skills or knowledge has a sufficient understanding of accounting matters
to fulfil his or her responsibilities in relation to the Company’s financial statements. Directors also receive ongoing education on
developments in accounting standards.
27
Corporate Governance Statement
PRINCIPLE 3 – INSTIL A CULTURE OF ACTING LAWFULLY, ETHICALLY AND RESPONSIBLY
Recommendation 3.1
The Company expects that its board and senior executives will conduct themselves with integrity and honesty in accordance with the
Code of Conduct. Directors, executives and employees shall deal with the Company’s customers, suppliers, competitors, shareholders
and each other with honesty, fairness and integrity and observe the rule and spirit of the legal and regulatory environment in which
the Company operates.
The Company aims to increase shareholder value within an appropriate framework which safeguards the rights and interests of the
Company’s shareholders and the financial community and to comply with systems of control and accountability which the Company
has in place as part of its corporate governance with openness and integrity.
The Company is to comply with all legislative and common law requirements which affect its business wherever it operates. Where
the Company has operations overseas, it shall comply with the relevant local laws as well as any applicable Australian laws. Any
transgression from the applicable legal rules is to be reported to the Managing Director as soon as a person becomes aware of such
a transgression.
Recommendation 3.2
The Company has established a Code of Conduct for its directors, senior executives and employees, a summary of which is disclosed
on the Company’s website. Any breach of that code is reported to the board at the next board meeting.
Recommendation 3.3
The Company has adopted a Whistleblower Policy to encourage the raising of any concerns or reporting of instances of any violations
(or suspected violations) of the Code of Conduct (or any potential breach of law or any other legal or ethical concern) without the fear
of intimidation or reprisal.
Recommendation 3.4
The Company has established an anti-bribery and corruption policy which is disclosed on the Company’s website. Any breach of that
policy is immediately reported to the Managing Director and Chairman of the board of directors.
PRINCIPLE 4 – SAFEGUARD THE INTEGRITY OF CORPORATE REPORTS
Recommendation 4.1
The Board has established an Audit and Risk Committee comprised of two of the Company’s independent non-executive directors,
Wolf Martinick (Chairman) and Peter Ingram. The Audit and Risk Committee is not structured in compliance with Recommendations
4.1 and 7.1 as it has only two members. However, the Board considers that the committee’s composition is appropriate as it comprises
the Board’s two independent non-executive directors, and it is chaired by an independent chair that is not also chair of the Board.
Details of each of the director’s qualifications are set out in the Directors’ Report on page 14. Each of the members of the Audit and
Risk Committee consider themselves to be financially literate and have an understanding of the industry in which the Company’s
operates. The Company’s Chief Financial Officer, Mr Brett Dickson, is a Certified Practising Accountant with a Bachelor degree in
Economics & Finance and attends Audit and Risk Committee meetings by invitation.
The Company has also established a Procedure for the Selection, Appointment and Rotation of its External Auditor, which is disclosed
on the Company’s website. The Board is responsible for the initial appointment of the external auditor and the appointment of a new
external auditor when any vacancy arises. Candidates for the position of external auditor must demonstrate complete independence
from the Company through the engagement period. The Board may otherwise select an external auditor based on criteria relevant
to the Company’s business and circumstances. The performance of the external auditor is reviewed on an annual basis by the Board.
Details of director attendance at Audit and Risk Committee meetings held during the Reporting Period are set out in a table in the
Directors’ Report on page 15.
The Board has adopted an Audit and Risk Committee Charter which describes the Audit and Risk Committee’s role, composition,
functions and responsibilities, and is disclosed on the Company’s website.
28
Azure Minerals Limited Annual Report 2020 Recommendation 4.2
Before the Board approved the Company financial statements for the half year ended 31 December 2019 and the full-year ended
30 June 2020, it received from the Managing Director and the Chief Financial Officer a declaration that, in their opinion, the financial
records of the Company for the relevant financial period have been properly maintained and that the financial statements for the
relevant financial period comply with the appropriate accounting standards and give a true and fair view of the financial position and
performance of the Company and the consolidated entity and that the opinion has been formed on the basis of a sound system of risk
management and internal control which is operating effectively (Declaration).
The Board did not receive a Declaration for each of the quarters ending 30 September 2019, 31 December 2019, 31 March 2020 and 30
June 2020 because in the Board’s view its quarterly reports are not financial statements to which the Declaration can be appropriately
given.
Recommendation 4.3
Processes are in place to verify the integrity of the Company’s periodic corporate reports released to the market and not audited
or reviewed by the external auditor. Examples of periodic corporate reports released by the company include quarterly cash flow
reports. IonicRE has adopted a Continuous Disclosure Policy which sets out how market announcements are prepared and released
and has appointed the Company Secretary as the Continuous Disclosure officer who oversees the drafting of and approves the final
release of announcements. The Company Secretary is responsible for satisfying him/herself that the content of any announcement is
accurate and not misleading and is supported by
PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE
Recommendation 5.1
The Company has established written policies and procedures for complying with its continuous disclosure obligations under the
ASX Listing Rules. A summary of the Company’s Policy on Continuous Disclosure and Compliance Procedures are disclosed on the
Company’s website.
Recommendation 5.2
The Company secretary circulates all material market announcements to the board prior to release to ASX.
Recommendation 5.3
All new presentations are released to ASX Markets Platform ahead of any presentation to investors.
PRINCIPLE 6 – RESPECT THE RIGHTS OF SECURITY HOLDERS
Recommendation 6.1
The Company provides information about itself and its governance to investors via its website at www.azureminerals.com.au.
Recommendation 6.2
The Company has designed and implemented an investor relations program to facilitate effective two-way communication with
investors. The program is set out in the Company’s Shareholder Communication and Investor Relations Policy.
Recommendation 6.3
The Company has in place a Shareholder Communication and Investor Relations Policy which outlines the policies and processes that
it has in place to facilitate and encourage participation at meetings of shareholders.
Recommendation 6.4
All resolutions put to the AGM are decided by way of a poll.
Recommendation 6.5
Shareholders are given the option to receive communications from, and send communications to, the Company and its share registry
electronically. The Company engages its share registry to manage the majority of communications with shareholders. Shareholders
are encouraged to receive correspondence from the Company electronically, thereby facilitating a more effective, efficient and
environmentally friendly communication mechanism with shareholders. Shareholders not already receiving information electronically
can elect to do so through the share registry, Computershare Investor Services Pty Ltd at www.computershare.com.au
29
Corporate Governance Statement
PRINCIPLE 7 – RECOGNISE AND MANAGE RISK
Recommendation 7.1
As noted above, the Board has established a combined Audit and Risk Committee. Please refer to the disclosure above under
Recommendation 4.1 in relation to the Audit and Risk Committee.
Recommendation 7.2
The Board reviews the Company’s risk management framework annually to satisfy itself that it continues to be sound, to determine
whether there have been any changes in the material business risks the Company faces and to ensure that the Company is operating
within the risk appetite set by the Board. The Board carried out these reviews during the Reporting Period.
Recommendation 7.3
The Company does not have an internal audit function. To evaluate and continually improve the effectiveness of the Company’s risk
management and internal control processes, the Board relies on ongoing reporting and discussion of the management of material
business risks as outlined in the Company’s Risk Management Policy, a summary of which is disclosed on the Company’s website.
Recommendation 7.4
As the Company is not in production, the Company has not identified any material exposure to any environmental and/or social
sustainability risks. However, the Company does have a material exposure to the following economic risks:
• Market risk – movements in commodity prices. The Company manages its exposure to market risk by monitoring market
conditions, and making decisions based on industry experience; and
•
Future capital risk – cost and availability of funds to meet the Company’s business requirements. The Company manages this
risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows.
The Board has adopted a Risk Management Policy and Risk Management Procedures. Under the Risk Management Policy, the
Board oversees the processed by which risks are managed. This includes defining the Company’s risk appetite, monitoring of risk
performance and those risks that may have a material impact to the business. Management is responsible for the implementation of
the risk management and internal control system to manage the Company’s risk and to report to the Board whether those risks are
being effectively managed.
The Company’s system to manage its material business risks includes the preparation of a risk register by management to identify the
Company’s material business risks, analyse those risks, evaluate those risks (including assigning a risk owner to each risk) and treat
those risks. Risks and their management are to be monitored and reviewed at least annually by senior management. The risk register
is to be updated and a report submitted to the Managing Director. The Managing Director is to provide a risk report at least annually
to the Board.
A summary of the Company’s Risk Management Policy is disclosed on the Company’s website.
PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY
Recommendation 8.1
As noted above, the Board has established a combined Nomination and Remuneration Committee. Please refer to the disclosure
above under Recommendation 2.1 in relation to the Nomination and Remuneration Committee.
The Board has adopted a Remuneration Committee Charter which describes the role, composition, functions and responsibilities of
the Remuneration Committee and is disclosed on the Company’s website. As noted above, the Board has combined the Nomination
and Remuneration committees.
Recommendation 8.2
Details of remuneration, including the Company’s policy on remuneration and “clawback policy” regarding the lapsing of performance-
based remuneration in the event of fraud or serious misconduct and the clawback of the performance-based remuneration in the
event of a material misstatement in the Company’s financial statements, are contained in the “Remuneration Report” which forms of
part of the Directors’ Report and commences at page 16 of the Company’s Annual Report for year ended 30 June 2020.
Recommendation 8.3
The Company has an Employee Share Option Plan. The Company’s Securities Trading Policy includes a statement on the Board’s policy
that participations in the Company’s equity based remuneration schemes are prohibited from entering into transactions (whether
through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme.
30
Loss per share from continuing operations attributable to the ordinary
equity holders of the company
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
24
24
(3.75)
N/A
(8.77)
N/A
Azure Minerals Limited Annual Report 2020 Consolidated Statement of Profit or Loss
and Other Comprehensive Income
YEAR ENDED 30 JUNE 2020
Notes
Consolidated
Other Income
Expenditure
Depreciation
Salaries and employee benefits expense
Directors fees
Exploration expenses
Capitalised exploration written off
Travel expenses
Promotion expenses
Administration expenses
Consulting expenses
Insurance expenses
Lease Interest
Lease Amortisation
Convertible Note Interest
Share based payment expense
Other expenses
Loss before income tax
Income tax expense
Loss for the year
Other comprehensive income / (loss)
Items that may subsequently be reclassified to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income/(loss) for the year net of tax
Total comprehensive loss for the Year
5
6
6
6
28
7
2020
($)
510,802
(48,263)
(533,973)
(109,438)
(3,467,734)
-
(178,339)
(58,418)
(334,292)
(31,094)
(30,452)
(14,359)
(135,310)
(237,022)
(254,400)
(749,004)
2019
($)
45,983
(54,337)
(595,516)
(95,000)
(4,610,484)
(2,487,465)
(250,887)
(108,563)
(391,590)
(78,432)
(27,890)
-
-
-
(226,543)
(854,762)
(5,671,296)
(9,735,486)
-
-
(5,671,296)
(9,735,486)
(1,375,662)
(1,375,662)
(7,046,958)
750,516
750,516
(8,984,970)
The loss for the year and total comprehensive loss for the year is fully attributable to the owners of Azure Minerals Limited
Loss per share from continuing operations attributable to the ordinary
equity holders of the company
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
24
24
(3.75)
N/A
(8.77)
N/A
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the Notes to
the Financial Statements.
31
Consolidated Statement of Financial Position
AT 30 JUNE 2020
Notes
2020
($)
2019
($)
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Investments
Office right of use
Plant and equipment
Capitalised exploration expenditure
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Provisions
Lease Liability
Total Current Liabilities
Non-Current Liabilities
Provisions
Borrowings
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
20
8
9
10
11
13
14
15
14
16
17
18
18
849,549
284,689
1,134,238
948
67,655
123,865
7,889,184
8,081,652
650,348
783,603
1,433,951
948
-
154,783
5,567,921
5,723,652
9,215,890
7,157,603
393,846
144,085
71,050
608,981
114,687
2,000,000
2,114,687
623,113
169,802
-
792,915
107,764
-
107,764
2,723,668
900,679
6,492,222
6,256,924
87,760,331
3,254,707
(84,522,816)
6,492,222
80,732,475
4,375,969
(78,851,520)
6,256,924
The above Consolidated Statement of Financial Position is to be read in conjunction with the Notes to the Financial Statements
32
Azure Minerals Limited Annual Report 2020 Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2020
30 June 2020
Issued Share
Capital
$
Share Option
Reserve
$
Available for
Sale Assets
Reserve
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
$
Total
$
Balance at 1 July 2019
80,732,475
5,388,311
(39,996)
(972,346)
(78,851,520)
6,256,924
Loss for period
Other comprehensive loss
Exchange differences on translation
of foreign operations
Total other comprehensive loss
Total comprehensive loss for
the period
-
-
-
-
Transactions with owners in their capacity as owners:
Issue of shares net of transaction costs
7,027,856
-
-
-
-
-
Share based payments (Note 28)
-
Total transactions with owners
7,027,856
254,400
254,400
-
-
-
-
-
-
-
-
(5,671,296)
(5,671,296)
(1,375,662)
(1,375,662)
-
-
(1,375,662)
(1,375,662)
(1,375,662)
(5,671,296)
(7,046,958)
-
-
-
-
-
-
7,027,856
254,400
7,282,256
Balance as at 30 June 2020
87,760,331
5,642,711
(39,996)
(2,348,008)
(84,522,816)
6,492,222
30 June 2019
Issued Share
Capital
$
Share
Option
Reserve
$
Available for
Sale Assets
Reserve
$
Accumulated
Losses
$
Total
$
Foreign
Currency
Translation
Reserve
$
Balance at 1 July 2018
80,732,475
5,161,768
(39,996)
(1,722,862)
(69,116,034)
15,015,351
Loss for period
Other comprehensive loss
Exchange differences on translation
of foreign operations
Total other comprehensive loss
Total comprehensive loss for
the period
-
-
-
-
-
-
-
-
Transactions with owners in their capacity as owners:
Share based payments
Total transactions with owners
-
-
226,543
226,543
-
-
-
-
-
-
-
(9,735,486)
(9,735,486)
750,516
750,516
-
750,516
750,516
750,516
(9,735,486)
(8,984,970)
-
-
-
-
226,543
226,543
Balance as at 30 June 2019
80,732,475
5,388,311
(39,996)
(972,346)
(78,851,520)
6,256,924
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
33
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2020
Notes
Cash Flows From Operating Activities
Payments to suppliers and employees
Interest received
Other Income
Expenditure on mining interests
NET CASH OUTFLOW FROM OPERATING ACTIVITIES
20(b)
11
Cash Flows From Investing Activities
Payments for plant and equipment
Acquisition Payments for projects
Proceeds from sale of mineral projects
Proceeds from sale of plant and equipment
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
Cash Flows From Financing Activities
Proceeds from issue of ordinary shares
Share issue costs
Proceeds from convertible notes
Interest expense
Lease payments
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET DECREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the financial year
Effect of exchange rate changes on cash and cash equivalents
Cash And Cash Equivalents At End Of Year
20(a)
2020
($)
(2,248,162)
15,166
1,086,721
(3,737,637)
(4,883,912)
(29,116)
(163,400)
35,435
-
(157,081)
4,020,000
(300,612)
2,000,000
(125,000)
(150,872)
5,443,516
402,523
650,348
(203,322)
849,549
2019
($)
(2,121,947)
65,996
-
(3,766,445)
(5,822,396)
(25,112)
(18,531)
-
357
(43,286)
-
-
-
-
-
-
(5,865,682)
6,593,163
(77,133)
650,348
The above Consolidated Statement of Cash Flows is to be read in conjunction with the Notes to the Financial Statements.
34
Azure Minerals Limited Annual Report 2020 Notes to the Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been
consistently pplied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for
Azure Minerals Limited as an individual entity and the consolidated entity consisting of Azure Minerals Limited and its subsidiaries.
Basis of Preparation
This general purpose financial report has been prepared in accordance with the Australian Accounting Standards, and interpretations
issued by the Australian Accounting Standards Board and the Corporations Act 2001. Azure Minerals Limited is a for-profit entity for
the purpose of preparing the financial statements.
Compliance with IFRSs
The consolidated financial statements of Azure Minerals Limited and the separate financial statements of Azure Minerals Limited
also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Historical cost convention
These financial statements have been prepared under the historical cost convention except for financial assets and liabilities at fair
value through other comprehensive income or P&L.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are
disclosed in note 3.
GOING CONCERN
This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the
realisation of assets and settlement of liabilities in the normal course of business.
The Consolidated Entity has incurred a net loss after tax for the year ended 30 June 2020 of $5,671,296 (2019: $9,735,486) and
experienced net cash outflows from operating activities of $4,883,192 (2019: $5,822,396). At 30 June 2020, the Consolidated Entity had
net current assets of $525,257 (2019: $641,036).
The ability of the Consolidated Entity to continue as a going concern is dependent on securing additional funding either through the
issue of further shares, convertible notes (refer note 23) or a combination of both in order to continue to actively explore its mineral
properties.
The COVID-19 pandemic, announced by the World Health Organisation on 31 January 2020, is having a negative impact on world stock
markets, currencies and general business activity. The Group has developed a policy and is evolving procedures to address the health
and wellbeing of employees, consultants and contractors in relation to COVID-19. The timing and extent of the impact and recovery
from COVID-19 is unknown but it may have an impact on activities and potentially impact the ability for the Group to raise capital in
the current prevailing market conditions.
These conditions indicate a material uncertainty that may cast significant doubt about the Consolidated Entity’s ability to continue as
a going concern and therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
The Directors believe that on successful completion of fund-raising activities referred to above there will be sufficient funds to meet
the Consolidated Entity’s working capital requirements and as at the date of this report the Consolidated Entity believes it can meet all
liabilities as and when they fall due. On 24 July and 26 August 2020 Azure Minerals Limited issued a total of 40,000,000 shares at an
issue price of $0.10 each to raise $4,000,000 (before expenses of the issue).
The Directors have reviewed the business outlook and the assets and liabilities of the Consolidated Entity and are of the opinion that
the use of the going concern basis of accounting is appropriate as they believe the Consolidated Entity will continue to be successful in
securing additional funds through the issue of further shares, convertible notes (refer note 23) or a combination of both as and when
the need to raise working capital arises.
Should the Consolidated Entity not be able to continue as a going concern, it may be required to realise its assets and discharge its
liabilities other than in the ordinary course of business, and at amounts that differs from those stated in the financial statements. The
financial report does not include any adjustments relating to the recoverability and classification of recorded assets or liabilities that
may be necessary if the Consolidated Entity is unable to continue as a going concern.
35
Notes to the Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Principles of consolidation
Subsidiaries
Subsidiaries are all entities (including structured 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 deconsolidated from the date that control ceases.
The acquisitions method of accounting is used to account for business combinations by the Group.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting
policies. Adjustments are made to bring into line any dissimilar accounting policies which may exist.
All intercompany balances and transactions, including unrealised profits arising from intra group transactions, have been eliminated
in full. Unrealised losses are eliminated unless costs cannot be recovered.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Azure Minerals Limited.
(b) Property, plant and equipment
Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment
losses.
Plant and equipment
Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors
to ensure it is not in excess of the recoverable amount from these assets.
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. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Depreciation
Depreciation of plant and equipment is calculated on a reducing balance basis so as to write off the net costs of each asset over the
expected useful life. The rates vary between 20% and 40% per annum.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income
statement. When revalued assets are sold, it is group policy to transfer the amounts included in other reserves in respect of those
assets to retained earnings.
(c) Exploration and evaluation costs
Exploration and evaluation costs are written off in the year they are incurred apart from acquisition costs which are 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 reached a stage
that permits reasonable assessment of the existence of economically recoverable reserves.
Where an area of interest is abandoned or the directors decide that it is not commercial, any accumulated acquisition costs in respect
of 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.
36
Azure Minerals Limited Annual Report 2020 Notes to the Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Leases
For the year ended 30 June 2020
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
•
•
leases of low value assets; and
leases with a term of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount
rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which
case the group’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in
the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability
assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the
period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
•
•
•
amounts expected to be payable under any residual value guarantee;
the exercise price of any purchase option granted in favour of the group if it is reasonable certain to assess that option; and
any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option
being exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
•
•
•
lease payments made at or before commencement of the lease;
initial direct costs incurred; and
the amount of any provision recognised where the group is required to dismantle, remove or restore the leased asset.
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding
and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the
lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
When the group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension
or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over
the revised term, which are discounted using a revised discount rate (being the interest rate implicit in the lease for the remainder
of the lease term or, if that cannot be readily determined, the Group’s incremental borrowing rate at the re-assessment date). An
equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over
the remaining (revised) lease term.
The carrying value of lease liabilities is also revised when the variable element of future lease payments dependent on a rate or index
is revised or there is a revision to the estimate of amounts payable under a residual value guarantee. In both cases an unchanged
discount rate is used. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised
carrying amount being amortised over the remaining (revised) lease term.
When the group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature of the modification:
•
•
•
if the renegotiation results in one or more additional assets being leased for an amount commensurate with the standalone
price for the additional rights-of-use obtained, the modification is accounted for as a separate lease in accordance with the
above policy
in all other cases where the renegotiated increases the scope of the lease (whether that is an extension to the lease term, or one
or more additional assets being leased), the lease liability is remeasured using the discount rate applicable on the modification
date, with the right-of-use asset being adjusted by the same amount.
if the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability and right-
of-use asset are reduced by the same proportion to reflect the partial of full termination of the lease with any difference
recognised in profit or loss. The lease liability is then further adjusted to ensure its carrying amount reflects the amount of the
renegotiated payments over the renegotiated term, with the modified lease payments discounted at the rate applicable on the
modification date. The right-of-use asset is adjusted by the same amount.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in
profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets are items such as IT-equipment
and small items of office furniture.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged on a straight-
line basis over the length of the lease.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the lease term.
37
Notes to the Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e) Income tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items.
It is calculated using the tax rates that have been enacted or are substantially enacted by the statement of financial position date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from
the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit
or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled.
Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case
the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which
deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change
will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to
enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
(f) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable
from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of
an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing
activities, which are disclosed as operating cash flows.
(g) Foreign currency translation
Functional and presentation currency
The functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which
that entity operates. The consolidated financial statements are presented in Australian dollars which is Azure Minerals Limited’s
functional and presentation currency. The functional currency of Australian subsidiary (Azure Mexico Pty Ltd) is the Australian dollar.
The functional currency of the Mexican overseas subsidiaries (Minera Piedra Azul CV de SA, Minera Azure CV de SA, Minera Capitana
CV de SA and Servicios AzuPerth CV de SA) is the Mexican Peso.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost
continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at
the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss, except where deferred in equity
as a qualifying cash flow or net investment hedge.
Group companies
The financial results and position of foreign operations whose functional currency is different from the group’s presentation currency
are translated as follows:
•
•
assets and liabilities are translated at year-end exchange rates prevailing at that reporting date; and
income and expenses are translated at average exchange rates for the period.
Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation
reserve in the statement of financial position. These differences are recognised in the profit or loss in the period in which the operation
is disposed.
38
Azure Minerals Limited Annual Report 2020 Notes to the Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Trade and other payables
Liabilities for trade creditors are recognised initially at fair value and subsequently at amortised cost.
Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on
an accrual basis.
(i) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These
benefits include wages and salaries, annual leave, and long service leave.
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled wholly within
twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be
paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash
outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future
cash outflows, the market yield as at the reporting date on national government bonds, which have terms to maturity approximating
the terms of the related liability, are used.
Share-based payments
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 Black Scholes or a Binomial option pricing model.
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 that, in the opinion of the directors of the Group, will ultimately
vest. This opinion is formed based on the best available information at reporting 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.
(j) Revenue recognition
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial assets.
(k) Contributed Equity
Ordinary shares are classified as equity.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received
(l) Earnings per share (EPS)
Basic earnings per share
Basic EPS is calculated as the profit attributable to equity holders of the company, excluding any costs of servicing equity other than
ordinary shares, divided by the weighted average number of ordinary shares outstanding during the financial year, adjusted for any
bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted EPS adjusts the figures used in the determination of basic EPS 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.
39
Notes to the Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short term highly liquid investments with
original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short term borrowings in current
liabilities on the statement of financial position.
(n) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the
current financial year.
(o) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting 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 Executive Chairman.
(p) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivative, and trading and financial assets at
fair value through other comprehensive income or P&L) 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 fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined
using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing
at each reporting date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held.
Other techniques, such as estimated discounted cash flow, are used to determined fair value for the remaining financial instruments.
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward
exchange contracts is determined using forward exchange market rates at the reporting date.
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 fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is available to the Group for similar financial instruments.
(q) Convertible loans
Convertible notes were issued by the Group which include embedded derivatives (options to convert to a variable number of shares).
Convertible notes are initially recognised as financial liabilities at fair value.
On initial recognition the fair value of the convertible notes equate the proceeds received and subsequently the convertible note is
measured at fair value. The movements are recognised in profit or loss as a finance cost, except if the movement is attributable to
changes in the Group’s own credit risk status in which case it is recognised in other comprehensive income.
40
Azure Minerals Limited Annual Report 2020 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(r) Adoption of new and amended accounting standards
The accounting policies adopted are consistent with those of the previous financial year and corresponding reporting period except
for the adoption of the new standards and amendments which became mandatory for the first time this reporting period commencing
1 July 2019. The adoption of these standards and amendments did not result in a material adjustment to the amounts or disclosures
in the current or prior year. The Group has not early adopted any other standard, interpretation or amendment that has been issued
but is not yet effective.
The following relevant standards and interpretations have been issued by the Australian Accounting Standards Board (AASB) but are
not yet effective for the year ending 30 June 2020:
AASB 2018-6: Amendments to the Australia Accounting Standards – Definition of a business
This standard amends AASB 3 Business Combinations’ (“AASB 3”) definition of a business. To be considered a business, an acquisition
would have to include an input and a substantive process that together significantly contributes to the ability to create outputs. The
new guidance provides a framework to evaluate when an input and a substantive process are present. The revisions to AASB 3 also
introduced an optional concentration test. If the concentration test is met, the set of activities and assets acquired is determined not
to be a business combination and asset acquisition accounting is applied. The concentration test is met if substantially all of the fair
value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. The Group's
assessment of the impact of this new amendment is that it is not expected to have a material impact on the Group in the current or
future reporting periods.
(iv) Other standards not yet applicable
A number of other standards, amendments to standards and interpretations issued by the AASB which are not materially applicable
41
Notes to the Consolidated Financial Statements
2 . FINANCIAL RISK MANAGEMENT
Overview
The Company and Group have exposure to the following risks from their use of financial instruments:
• credit risk
• liquidity risk
• market risk
• Currency risk
This note presents information about the Company’s and Group’s exposure to each of the above risks, their objectives, policies and
processes for measuring and managing risk, and the management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management
monitors and manages the financial risks relating to the operations of the group through regular reviews of the risks.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group’s receivables from customers and cash and cash equivalents. For the Company it
arises from receivables due from subsidiaries.
Cash and Cash Equivalents
The Group manages its credit risk on cash and cash equivalents by only dealing with banks licensed to operate in Australia or Mexico.
Trade and other receivables
As the Group operates in the mining exploration sector, it generally does not have trade receivables and therefore is not exposed to
credit risk in relation to trade receivables.
Presently, the Group undertakes exploration and evaluation activities exclusively in Mexico. At the reporting date there were no
significant concentrations of credit risk.
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to
credit risk at the reporting date was:
Trade and other receivables
Cash and cash equivalents
Note
8
20
Consolidated Carrying Amount
2020
$
59,426
849,549
2019
$
36,807
650,348
42
Azure Minerals Limited Annual Report 2020
2 . FINANCIAL RISK MANAGEMENT (CONTINUED)
Expected credit losses
None of the Company’s other receivables are past due (2019: nil).
The Group operates in the mining exploration sector and generally does not have trade receivables and is therefore not materially
exposed to credit risk in relation to trade receivables. Other receivables are principally value added taxes withheld by third parties
and due to the Group from sovereign governments, as such the Group does not consider it is exposed to any significant credit
risk.
The allowance accounts in respect of other receivables is used to record expected credit losses unless the Group is satisfied that
no recovery of the amount owing is possible; at that point the amount is considered irrecoverable and is written off against the
financial asset directly. At 30 June 2020 the Group does not have any collective expected credit on its other receivables.
The Group places its cash deposits with institutions with a credit rating of -AA or better and only with major banks.
Guarantees
The Group has provided a financial guarantee of $94,475 (2019: $94,475) to secure its office lease. Otherwise the Group only
provides guarantees to wholly-owned subsidiaries.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows.
Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 180
days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot
reasonably be predicted, such as natural disasters.
The following are the contractual maturities of financial liabilities at amortised cost:
Consolidated
30 June 2020
Trade and other payables
Lease Liability
Convertible note
30 June 2019
Carrying
amount
Contractual
cash flows
6 mths
or less
6-12 mths
1-2 years
2-5 years More than
5 years
393,846
71,050
393,846
393,846
71,050
71,050
2,000,000
2,000,000
-
-
-
-
-
-
-
2,000,000
-
-
-
-
-
-
-
-
-
Trade and other payables
623,113
623,113
623,113
The Convertible notes may be repaid, at the election of the holder, by the issue of 13,793,103 shares in the Company.
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.
Currency risk
The Group is exposed to currency risk on purchases that are denominated in a currency other than the respective functional currencies
of Group entities, primarily the United Sates Dollar (USD) and Mexican Peso (MxP).
The Group has not entered into any derivative financial instruments to hedge such transactions and anticipated future receipts or
payments that are denominated in a foreign currency.
The Group’s investments in its subsidiaries are not hedged as those currency positions are considered to be long term in nature.
43
Notes to the Consolidated Financial Statements
2 . FINANCIAL RISK MANAGEMENT (CONTINUED)
Exposure to currency risk
The Group’s exposure to foreign currency risk at reporting date was as follows, based on notional amounts:
Trade receivables
Trade payables
Gross statement of financial position
Forward exchange contracts
Net exposure
The following significant exchange rates applied during the year:
AUD/USD
Sensitivity analysis
2020
USD
102,176
85,594
187,770
-
2019
USD
43,765
163,438
207,203
-
187,770
207,203
Average rate
Reporting date spot rate
2020
1.4921
2019
1.3985
2020
1.4541
2019
1.4241
Over the reporting period there have been significant movements in the Australian dollar when compared to other currencies, it is
therefore considered reasonable to review sensitivities base on a 10% movement in the Australian dollar. A 10 percent strengthening
of the Australian dollar against the following currencies at 30 June would have increased equity and decrease loss, before tax, by the
amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is
performed on the same basis for 2019.
Consolidated
30 June 2020
USD
30 June 2019
USD
Profit or loss
18,777
20,720
A 10 percent weakening of the Australian dollar against the above currencies at 30 June would have had the equal but opposite effect
on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
Interest rate risk
Interest rate risk is the risk that the Groups financial position will be adversely affected by movements in interest rates that will increase
the costs of floating rate debt or opportunity losses that may arise on fixed rate borrowings in a falling interest rate environment. The
Group does not have any borrowings therefore is not exposed to interest rate risk in this area. Interest rate risk on cash and short
term deposits is not considered to be a material risk due to the short term nature of these financial instruments.
At the reporting date the interest rate profile of the Company’s and the Group’s interest-bearing financial instruments was:
Variable rate instruments
Short term cash deposits
Cash flow sensitivity analysis for variable rate instruments
Consolidated Carrying Amount
2020
2019
823,584
508,909
The Group has reviewed the likely movements in interest rates and considers that a movement of +/- 100 basis points is reasonable.
44
Azure Minerals Limited Annual Report 2020 Notes to the Consolidated Financial Statements
2 . FINANCIAL RISK MANAGEMENT (CONTINUED)
Group Sensitivity
At 30 June 2020 if interest rates had changed +/- 100 basis points from year end rates with all other variables held constant, equity and
post-tax profit would have been $8,496 higher /lower (2019 – change of 100 basis points $6,503 higher/lower).
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are
as follows:
Consolidated
2020
2019
Carrying amount
Fair value
Carrying amount
Fair value
Trade and other receivables
Cash and cash equivalents
Other financial assets
Trade and other payables
Lease liability
Convertible note
284,689
849,549
948
(393,846)
(71,050)
284,689
849,549
948
(393,846)
(71,050)
(2,000,000)
(2,000,000)
136,763
650,348
948
(623,113)
-
-
136,763
650,348
948
(623,113)
-
-
The methods and assumptions used to estimate the fair value of instruments are:
Cash and cash equivalent: The carrying amount approximates fair value because of their short-term to maturity.
Receivables and payables: The carrying amount approximates fair value.
Other financial assets: The quoted market price
Lease Liability: The carrying amount approximates fair value.
Convertible Note: The carrying amount approximates fair value because of their short-term to maturity.
Capital Management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits of other stakeholders and to maintain an optimal capital structure to reduce the cost
of capital.
In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets.
There were no changes in the Group’s approach to capital management during the year.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
45
Notes to the Consolidated Financial Statements
3. CRITICAL ACCOUNTING ESTIMATES AND SIGNIFICANT JUDGEMENTS
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The
key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets
and liabilities within the next annual reporting period are:
Impact of Coronavirus (COVID-19) pandemic.
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the
company based on known information. Other than as addressed in specific notes, there does not currently appear to be either any
significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact
the company unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
Exploration and evaluation costs
Exploration and evaluation costs are written off in the year they are incurred apart from acquisition costs which are carried forward
where right of tenure of the area of interest is current. The future recoverability of exploration and evaluation expenditure is dependent
on a number of factors, including whether the Group decides to exploit the related lease itself, or, if not, whether it successfully
recovers the related exploration and evaluation assets through sale.
Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, which
could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to
commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, profits and
net assets will be reduced in the period in which this determination is made.
Deferred tax assets
Deferred tax assets are recognised for deductible temporary differences when management considers that it is probable that future
taxable profits will be available to utilise those temporary differences. Currently no deferred tax assets have been recognised as it is
not probable that future taxable profits will be available to utilise those temporary differences.
Share options
The Company measures the cost of equity-settled transactions with employees, including directors, by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value is determined using the binominal formula. For options
issued in this financial year, the assumptions detailed as per Note 28 were used.
Asset acquisition
The Group has determined that the acquisition of the Andover, Turner river, Meentheena and Coongan projects from the Creasy Group
is deemed to be an asset acquisition not a business combination. In assessing the requirements of AASB 3 Business Combinations,
the Group has determined that the assets acquired do not constitute a business. The assess acquired consists of mineral exploration
tenements. When an asset acquisition does not constitute a business combination, the assets and liabilities are assigned a carrying
amount based on their relative fair values in the purchase transaction and no deferred tax will arise in relation to the acquired asset
as the initial recognition exemption for deferred tax under AASB 112 applies. No goodwill will arise on the acquisition and transaction
costs of the acquisition.
Convertible notes carried at fair value
On initial recognition, the value of the convertible notes was calculated based on the proceeds received. At reporting date, the fair
value of the conversion option within the convertible loan has been assessed to be nil and credit risk has not changed since the
inception of the loan.
Impairment of Exploration and Evaluation Asset
The Group assesses impairment of non-financial assets each reporting date by evaluating conditions specific to the Group and to the
particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This
involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
During the 2018/19 year, an impairment charge was recorded against the Group’s Promontorio Project based on a valuation reflecting
the fair value of the Project. The determination of an exploration project’s Fair Value requires management to make certain estimates
and use significant judgement.
46
Azure Minerals Limited Annual Report 2020 Notes to the Consolidated Financial Statements
4. SEGMENT INFORMATION
The Company currently does not have production and is only involved in exploration. As a consequence, activities in the operating
segments are identified by management based on the manner in which resources are allocated, the nature of the resources provided
and the identity of service line manager and country of expenditure. Discrete financial information about each of these areas is
reported to the executive management team on a monthly basis.
Based on this criteria, management has determined that the company has one operating segment being mineral exploration in Mexico.
As the company is focused on mineral exploration, the Board monitors the company based on actual versus budgeted exploration
expenditure incurred by area of interest. These areas of interest meet aggregating criteria and are aggregated into one reporting
sector. This internal reporting framework is the most relevant to assist the Board with making decisions regarding the company and
its ongoing exploration activities, while also taking into consideration the results of exploration work that has been performed to date.
As a result, the operating segment information is as disclosed in the primary statements, and notes to the financial statements,
throughout this report.
5. OTHER INCOME
Other income
Bank interest
IVA Recovered
Other
Total revenues from continuing operations
6. EXPENSES
Loss before income tax includes the following specific expenses
Depreciation of plant and equipment
Exploration expenditure
Capitalised exploration written off
Operating lease expenses
Superannuation
30 June 2020
$
30 June 2019
$
12,121
400,746
97,935
510,802
45,626
-
357
45,983
30 June 2020
$
30 June 2019
$
48,263
3,467,734
-
-
64,774
54,337
4,610,484
2,487,465
72,158
70,344
47
Notes to the Consolidated Financial Statements
7. INCOME TAX
(a) Income tax expense
Current tax
Deferred tax
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
Tax at the Australian tax rate of 27.5% (2019: 27.5%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Share-based payments
Capitalised Exploration written off
Sundry items
Movement in unrecognised temporary differences
Difference in overseas tax rates
30 June 2020
$
30 June 2019
$
-
-
-
-
-
-
30 June 2020
$
30 June 2019
$
(5,671,296)
(1,559,607)
69,960
-
60,354
(1,429,293)
(96,457)
-
(9,735,486)
(2,677,259)
62,299
701,982
76,580
(1,836,398)
(87,330)
-
Tax effect of current year tax losses for which no deferred tax asset has been
recognised
Income tax expense
1,525,750
1,923,728
-
-
(c) Unrecognised temporary differences
Deferred Tax Assets (at 27.5%)
On Income Tax Account
Prepayments
Depreciation of plant and equipment
Provisions
Carry forward tax losses
Carry forward tax losses – foreign
Other – tenement
Deferred Tax Liabilities (at 27.5%)
30 June 2020
$
30 June 2019
$
4,710
(10,201)
76,662
9,104,509
10,025,903
600,100
19,801,683
-
3,969
(10,915)
76,331
9,012,812
9,258,127
600,100
18,940,424
-
Deferred income tax assets have not been recognised as it is not probable that future profit will be available against which deductible
temporary differences can be utilised.
In addition to the above Australian estimated future income tax benefits the consolidated entity has incurred significant expenditure
in Mexico, some of which should give rise to taxable deductions. At this stage the company is unable to reliably estimate the quantity
of such future tax benefits.
There are no franking credits available.
48
Azure Minerals Limited Annual Report 2020 Notes to the Consolidated Financial Statements
8. TRADE AND OTHER RECEIVABLES
Current
Prepayment of insurance premiums
Sundry Receivables (a)
2020
$
2019
$
20,911
263,778
284,689
17,166
766,437
783,603
(a)
These amounts generally arise from activities outside the usual operating activities. Interest is not usually charged and
collateral is not obtained. For the Group the receivable principally arises from consumption taxes paid to third party
suppliers for which a refund from tax authorities is expected.
The carrying amount of trade and other receivables are assumed to approximate their fair values due to their short-term
nature.
No expected credit loss allowance has been recognised at 30 June 2020 (30 June 2019: Nil)
(b)
Refer to note 2 for information on the risk management policy of the Group and the credit quality of the Groups receivables
9. FINANCIAL ASSETS
Listed shares at fair value (a)
Wolfeye Resource Corp.
2020
$
948
2019
$
948
(a)
Financial assets consist of investments in ordinary shares, and therefore have no fixed maturity date or coupon rate.
Wolfeye Resource Corp. is listed on the Toronto Venture Exchange. Fair value has been determined directly by reference
to published quotations on active markets (Level 1). The fair value of these financial assets has been based
on the closing quoted bid prices at reporting date, excluding transaction costs. Also refer to Note 2 – Financial Risk
Management.
At Cost
Impairment
Fair value adjustment to reserve (Note 18)
Fair value at 30 June
2020
$
40,944
-
(39,996)
948
2019
$
40,944
-
(39,996)
948
49
Notes to the Consolidated Financial Statements
10. PLANT AND EQUIPMENT
At 1 July 2018
Cost
Accumulated Depreciation
Net Book Amount
Year ended 30 June 2019
Opening net book value
Additions
Disposals
Depreciation on disposals
Depreciation charge
Foreign exchange translation adjustment
Closing net book value
At 30 June 2019
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2020
Opening net book value
Additions
Disposals
Depreciation on disposals
Depreciation charge
Foreign exchange translation adjustment
Closing net book value
At 30 June 2020
Cost
Accumulated depreciation
Net book amount
Furniture, fittings
and equipment
$
269,278
(166,288)
102,990
102,991
22,692
-
-
(36,813)
3,837
92,707
302,836
(210,129)
92,707
92,708
23,597
(6,521)
6,521
(32,625)
(4,376)
79,304
298,751
(219,447)
79,304
Motor Vehicles
$
79,326
(66,597)
12,729
12,729
-
-
-
(8,175)
1,011
5,565
86,701
(81,136)
5,565
5,565
-
-
-
(5,500)
(65)
-
73,705
(73,705)
-
Exploration
Equipment
$
96,748
(38,189)
58,559
58,559
2,033
-
-
(9,333)
5,252
56,511
107,728
(51,217)
56,511
56,511
5,519
(594)
594
(10,138)
(7,331)
44,561
96,656
(52,095)
44,561
Total
$
445,352
(271,074)
174,278
174,279
24,725
-
-
(54,321)
10,100
154,783
497,265
(342,482)
154,783
154,784
29,116
(7,115)
7,115
(48,263)
(11,772)
123,865
469,112
(345,247)
123,865
50
Azure Minerals Limited Annual Report 2020
Notes to the Consolidated Financial Statements
11. CAPITALISED EXPLORATION EXPENDITURE (NON-CURRENT)
At Cost
Reconciliations
2020
$
2019
$
7,889,184
8,603,854
Movement in the carrying amounts of capitalised exploration expenditure between the beginning and end of the current financial year
Opening net book amount
Additions(a)
Impairment (b)
Foreign exchange translation adjustment
Closing net book amount
2020
$
5,567,921
3,241,716
-
(920,453)
7,889,184
2019
$
7,940,514
18,531
(3,183,459)
792,335
5,567,921
(a) The following payments were made to acquire projects during the Year: $31,506 was made to acquire additional concessions
for the Oposura Project; $122,585 to obtain an additional concession for the Sara Alicia project and $3,087,624 to move to 100%
ownership of the Alacran project. All acquisitions were by cash payments, except for the $3,087,624 to move to 100% ownership
of the Alacran project. This was met by the issue of 27,545,566 fully paid shares in the capital of the Company on 27 August 2019,
which at the time of issue had a fair value of $3,305,468.
(b)
The impairment charge of $3,183,459 arose in relation to the Group’s Promontorio project in Mexico. During the prior period,
a valuation of the Group’s projects was performed for the purposes of an independent expert report. The impairment was
recorded in order to reduce the carrying value of the project from its carrying value to the preferred fair value as disclosed in
the valuation.
Recovery of the capitalised amount is dependent upon successful development and commercial exploitation, or alternatively, sale.
12. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1(a):
Name
Country of incorporation Class of shares
Equity Holding*
Azure Mexico Pty Ltd
Minera Piedra Azul, S.A. de C.V
Minera Capitana S.A. de C.V
Azu-Perth S.A. de C.V.
Minera Azure, S.A. de C.V.
Minera Tlali SAPI. de C.V.
Australia
Mexico
Mexico
Mexico
Mexico
Mexico
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
*Percentage of voting power is in proportion to ownership.
13. TRADE AND OTHER PAYABLES (CURRENT)
Trade payables
2020
%
100%
100%
100%
100%
100%
100%
2019
%
100%
100%
100%
100%
100%
-
2020
$
393,846
393,846
2019
$
623,113
623,113
Information about the Groups financial risk management policies is disclosed in note 2.
The carrying amount of trade and other payables are assumed to approximate their fair values due to their short-term nature.
51
Notes to the Consolidated Financial Statements
14. PROVISIONS
Current
Employee benefits
Non-Current
Employee benefits
2020
$
2019
$
144,085
169,802
114,687
107,764
The provisions for employee benefits include accrued annual leave and long service leave. For long service leave it covers all
unconditional entitlements where employees have completed the required period of service. Based on past experience employee
entitlements that represent annual leave are presented as current and employee entitlements that are in relation to long serve leave
are present as non-current.
15. LEASE LIABILITY
The Company is party to lease agreement for the registered office in West Perth, whereby the company was granted the right of use
to office premises for a period of five years commencing 1 January 2016.
The Company has recognised a lease liability as at 1 July 2019.
Current
Lease Liability
Non-Current
Lease Liability
16. BORROWINGS
Face Value of Convertible Notes issued
Finance Costs
Total Borrowings
Balance included in Non-current Borrowings
Balance included in Current Trade and other Payables
2020
$
71,050
-
2020
$
2,000,000
112,022
2,112,022
2,000,000
112,022
2019
$
-
-
2019
$
-
-
-
-
-
On 19 July 2019, the company issued convertible notes for $2,000,000, as part of a capital raising exercise. The notes can be converted
at the option of the lenders up until 19 July 2021 at 14.5c per share, as at 30 June 2020 they are yet to be converted. The convertible
notes accrue interest payable at 12.5% pa, payable 6 monthly in arrears over the 24 month maturity term.
52
Azure Minerals Limited Annual Report 2020 Notes to the Consolidated Financial Statements
17. CONTRIBUTED EQUITY
(a) Share capital
Consolidated
Ordinary shares fully paid
Total consolidated contributed equity
162,192,617
87,760,331
110,999,992
80,732,475
2020
2019
Number of shares
$ Number of shares
$
(b) Movements in ordinary share capital
Consolidated
1 July opening balance
110,999,992
80,732,475
110,999,992
80,732,475
2020
2019
Number of shares
$ Number of shares
$
Issued to Teck Resources Ltd (Note 20)
Issue at $0.17 per share
Share issue expenses
27,545,566
23,647,059
-
3,308,468
4,020,000
(300,612)
-
-
-
Funds raised from the share issues during the 2020 year were used to progress the company’s exploration activities.
(c) Movements in unlisted options on issue 2020
Exercise Price
(cents)
Expiry
Opening Balance
Issued
Lapsed
Closing Balance
94
58
29
20.5
110
45
30 November 2019
30 November 2020
30 November 2021
30 November 2020
11 September 2019
30 April 2020
2,050,000
2,050,000
2,200,000
-
-
-
-
4,400,000
(2,050,000)
-
-
-
-
-
(9,725,511)
(13,683,339)
9,725,511
13,683,339
29,708,850
4,400,000
(25,458,850)
8,650,000
(c) Movements in unlisted options on issue 2019
Exercise Price
(cents)
Expiry
Opening Balance
Issued
Lapsed
Closing Balance
120
94
58
29
110
45
30 November 2018
30 November 2019
30 November 2020
30 November 2021
11 September 2019
30 April 2020
1,850,000
2,050,000
2,050,000
-
-
-
-
2,200,000
9,725,511
13,683,339
29,358,850
-
-
(1,850,000)
-
-
-
-
-
2,200,000
(1,850,000)
-
-
-
-
2,050,000
2,200,000
4,400,000
-
-
-
2,050,000
2,050,000
2,200,000
9,725,511
13,683,339
29,708,850
Further information on options issued is set out in Note 28
(d) 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. For further information on Capital Management
refer to Note 2.
53
Notes to the Consolidated Financial Statements
18. RESERVES AND ACCUMULATED LOSSES
Accumulated losses
Balance at beginning of year
Loss for the year
Balance at end of year
Share-based payments reserve
Balance at beginning of year
Movement during the year
Balance at end of year
Financial asset reserve
Balance at beginning of year
Revaluation
Balance at end of year
Foreign currency translation reserve
Balance at beginning of year
Movement during the year
Balance at end of year
Total Reserves
(a) Nature and purpose of reserves
Share-based payments reserve
2020
$
2019
$
78,851,520
5,671,296
84,522,816
69,116,034
9,735,486
78,851,520
5,388,311
254,400
5,642,711
5,161,768
226,543
5,388,311
(39,996)
-
(39,996)
(972,346)
(1,375,662)
(2,348,008)
(39,996)
-
(39,996)
(1,722,862)
750,516
(972,346)
3,254,707
4,375,969
The share-based payments reserve is used to recognise the fair value of options issued but not exercised.
Financial asset reserve
This reserve records fair value changes on investments held at Fair Value through Other Comprehensive Income. Amounts are
recognised in profit or loss when the associated assets are sold or impaired.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the statements of
foreign subsidiaries.
19. DIVIDENDS PAID OR PROVIDED FOR ON ORDINARY SHARES
No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made.
54
Azure Minerals Limited Annual Report 2020 Notes to the Consolidated Financial Statements
20. STATEMENT OF CASH FLOWS
(a) Cash and cash equivalents
Cash and cash equivalents comprises:
- cash at bank and in hand
- short-term deposits
Closing cash and cash equivalents balance
2020
$
25,965
823,584
849,549
2019
$
141,439
508,909
650,348
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.
b) Reconciliation of the net loss after income tax to the net cash outflows
from operating activities
Net loss
Convertible Note Interest
Depreciation of non current assets
Share based payment expense
Capitalised exploration written off
Plant and Equipment written off
Profit on sale of mineral concession
Re-classify right to use asset
Operating lease payments
Changes in operating assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in prepayments
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Net cash outflow from operating activities
(c) Non-cash financing and investing activities
2020
$
2019
$
(5,671,296)
(9,735,486)
237,022
48,264
254,400
-
863
(35,435)
3,395
150,872
45,302
(4,392)
87,093
-
-
54,337
226,543
2,487,465
-
(357)
-
-
1,092,558
1,018
9,526
42,000
(4,883,912)
(5,822,396)
During the period the 27,545,546 shares were issued to Teck Resources Limited to move to 100% ownership of the Alacrán project.
There have been no other non-cash financing and investing activities during the 2020 year (2019: Nil).
21. COMMITMENTS
As a result of the acquisition of the additional interest in the Alacran Project, the Group issued to Teck a 0.5% Net Smelter Return
Royalty on the Project, and a participation right on the proceeds of any sale of the project within a five year period.
In addition, the company has certain commitments to meet minimum expenditure requirements on the mineral exploration assets it
has an interest in. Outstanding exploration commitments which are expected to be met in the normal course of business are as follows:
Not later than one year
22. CONTINGENCIES
2020
$
74,305
2019
$
173,773
There are no material contingent liabilities or contingent assets of the company at reporting date (2019: Nil).
55
Notes to the Consolidated Financial Statements
23. EVENTS OCCURING AFTER REPORTING DATE
On 31 January 2020, the World Health Organisation (WHO) announced a global health emergency because of a new strain of coronavirus
originating in Wuhan, China (COVID-19 outbreak) and the risks to the international community as the virus spreads globally beyond
its point of origin. Because of the rapid increase in exposure globally, on 11 March 2020, the WHO classified the COVID-19 outbreak
as a pandemic.
The full impact of the COVID-19 outbreak continues to evolve at the date of this report. The Group is therefore uncertain as to the full
impact that the pandemic will have on its financial condition, liquidity, and future results of operations during FY2021.
Management is actively monitoring the global situation and its impact on the Group’s financial condition, liquidity, operations,
suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread,
the Group is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for
the 2021 financial year
Since the end of the financial year, the Company has issued 40 million shares at $0.10 each to raise $4.0 million (before expenses of
the issue), issued 40 million shares to acquire 60% in one and 70% in three mineral projects located in the Pilbara region of Western
Australia and entered into an exclusive and binding agreement to acquire 100%-ownership of the Barton Gold Project for the issue of
1.15 million shares and A$20,000, payable upon grant of the tenement.
No other matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly affect
the operations of the group, the results of those operations, or the state of affairs of the group in future financial years.
24. LOSS PER SHARE
(a) Reconciliation of earnings to profit or loss
Net loss
Loss used in calculating basic loss per share
Basic loss per share (cents per share)
2020
$
(5,671,296)
(5,671,296)
(3.75)
2019
$
(7,395,547)
(7,395,547)
(8.77)
b) Weighted average number of ordinary shares outstanding during the
year used in calculating basic loss per share
Number of shares
2020
Number of shares
2019
Weighted average number of ordinary shares used in calculating basic loss per share
151,398,370
110,999,992
(c) Effect of dilutive securities
Options on issue at reporting date could potentially dilute basic earnings per share in the future. The effect in the current year is to
decrease the loss per share hence they are considered antidilutive. Accordingly, diluted loss per share has not been disclosed.
25. AUDITOR’S REMUNERATION
Amounts received or due and receivable by BDO Audit (WA) Pty Ltd or associated
entities for:
Tax compliance services
An audit or review of the financial report of the entity
Remuneration of other auditors of subsidiaries
Audit or review of financial report of subsidiaries
2020
$
4,202
41,882
46,084
2019
$
10,455
42,935
53,390
26,430
23,497
56
Azure Minerals Limited Annual Report 2020
Notes to the Consolidated Financial Statements
26 . KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Compensation of key management personnel by compensation
Short-term
Post employment
Share-based payment
2020
$
646,438
31,768
156,109
834,315
2019
$
695,100
34,024
139,016
868,140
For further information refer to the Remuneration Report included as part of the Directors’ Report.
27. RELATED PARTY DISCLOSURES
(a) Parent entity
The ultimate parent entity within the Group is Azure Minerals Limited.
(b) Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1(a):
Name
Country of incorporation
Class of shares
Equity Holding*
Azure Mexico Pty Ltd
Minera Piedra Azul, S.A. de C.V
Minera Capitana, S.A. de C.V
Servicios AzuPerth, S.A. de C.V
Mineral Azure S.A. de C.V.
Mineral Tlali SAPI. de C.V.
Australia
Mexico
Mexico
Mexico
Mexico
Mexico
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2020
%
100
100
100
100
100
100
2019
%
100
100
100
100
100
-
*Percentage of voting power is in proportion to ownership.
No other provision for doubtful debts have been raised in relation other outstanding balances, and no other expense has been
recognised in respect of bad or doubtful debts due from related parties.
(c) Other Related Transactions
The Company has entered into a sub-lease agreement on normal commercial terms with Ionic Rare Earths Limited (IonicRE), a company
of which Anthony Rovira and Brett Dickson are directors. During the year IonicRE paid sub-lease fees totalling $17,872 (2019: $4,800).
The Company has also entered into a sub-lease agreement on normal commercial terms with Rox Resources Limited, a company of
which Brett Dickson is a Director. During the year Rox Resources Limited paid sub-lease fees totalling $110,399 (2019: $121,359). In
addition, the Company paid fees of $45,990 (2019: $44,895) to Rox Resources Limited for the provision of office secretarial support.
57
Notes to the Consolidated Financial Statements
28. SHARE-BASED PAYMENTS
Employee and consultants option plan
The establishment of the Azure Minerals Limited – Employees and Contractors Option Incentive Plan (“Plan”) was approved
by shareholders at the Annual General Meeting. The plan is designed to provide long-term incentives for employees and certain
contractors to deliver long term shareholder returns. Participation in the plan is at the Boards discretion and no individual has a
contractual right to participate in the plan or to receive guaranteed benefits. In addition, under the Plan, the Board determines the
terms of the options including exercise price, expiry date and vesting conditions, if any.
Options granted under the plan carry no dividend or voting rights. When exercised, each option is convertible into an ordinary share
of the company with full dividend and voting rights. No options are on issue pursuant to the plan.
(a) Director, executive and employee options
Set out below are summaries of current directors, executives & employees options granted.
Grant
Date
Expiry
Date
Exercise
Price
(cents)
Value per
option at
grant date
(cents)
Balance at
the start of
the year
Number
Granted
during
the year
Number
Exercised
during
the year
Number
Lapsed
during the
year
Number
Balance at
end of the
year
Number
Vested and
exercisable
at end of
the year
Number
2020
7 Dec
‘16
20 Nov
‘17
19 Dec
‘18
26 Nov
‘19
30 Nov
‘19
30 Nov
‘20
30 Nov
‘21
30 Nov
‘22
94*
58*
29
1.4
1.6
2,050,000
2,050,000
10.3
2,200,000
-
-
-
20.5
5.8
-
4,400,000
Weighted average exercise price
2019
19 Nov
‘15
28 Apr
‘16
7 Dec
‘16
20 Nov
‘17
19 Dec
‘18
30 Nov
‘18
30 Nov
‘18
30 Nov
‘19
30 Nov
‘20
30 Nov
‘21
120*
120*
94*
58*
29
Weighted average exercise price
6,300,000
4,400,000
$0.60
$0.205
2.1
2.2
1.4
1.6
1,560,000
290,000
2,050,000
2,050,000
-
-
-
-
10.3
-
2,200,000
5,950,000
2,200,000
$0.90
$0.29
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,050,000)
-
-
-
-
-
2,050,000
2,050,000
2,200,000
2,200,000
4,400,000
4,400,000
(2,050,000)
8,650,000
8,650,000
$0.94
$0.315
$0.315
(1,560,000)
(290,000)
-
-
-
-
-
-
-
2,050,000
2,050,000
2,050,000
2,050,000
2,200,000
2,200,000
(1,850,000)
6,300,000
6,300,000
$1.20
$0.60
$0.60
The weighted average remaining contractual life of share options outstanding at the end of the period was 1.7 years (2019: 1.4 years).
58
Azure Minerals Limited Annual Report 2020 Notes to the Consolidated Financial Statements
28. SHARE-BASED PAYMENTS (CONTINUED)
(a) Director, executive and employee options (Continued)
Fair value of options granted.
During the 2020 financial year the weighted average fair value of the options granted was 5.8 cents. The price was calculated by using
the Binominal Option valuation methodology applying the following inputs:
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility (%)
Risk free interest rate (%)
2020
20.5
3.0
11.5
100
0.73
2019
29.0
3.0
19.0
100
2.1
Historical volatility has been the basis for determining expected share price volatility as it assumed that this is indicative of future
trends, which may not eventuate.
The life of the options is based on historical exercise patterns, which may not eventuate in the future.
The options vested immediately and the total expenses arising from share-based payment transactions recognised during the year
were as follows:
Options issued to directors and executives
29. PARENT ENTITY FINANCIAL INFORMATION
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Consolidated
2020
$
254,400
2019
$
226,543
Statement of Financial Position
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Shareholder’s equity
Issued capital
Reserves
Accumulated loses
2020
$
8,921,871
9,044,696
(437,793)
(2,552,480)
2019
$
6,779,045
6,830,727
(466,040)
(573,803)
6,492,216
6,256,924
87,760,331
5,602,715
(86,870,830)
6,492,216
80,732,475
5,348,315
(79,823,866)
6,256,924
(b) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities or guarantees as at 30 June 2020 or 30 June 2019.
(c) Contracted commitments for the acquisition of property, plants or equipment
The parent entity did not have any commitments for the acquisition of property, plants or equipment.
59
Directors’ Declaration
The directors of the company declare that:
(1)
The financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
(a)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(b)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance
for the year ended on that date.
(2)
There are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable.
(3)
The directors have been given the declaration by the chief executive officer and chief financial officer as required by
section 295A of the Corporations Act 2001.
(4)
The Company has included in the notes to the financial statements an explicit and unreserved statement of compliance
with International Financial Reporting Standards.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by:
Peter Ingram
Chairman
Perth, 25 September 2020
60
Azure Minerals Limited Annual Report 2020
Independent Auditor’s Report
61
Independent Auditor’s Report
62
Azure Minerals Limited Annual Report 2020 Independent Auditor’s Report
63
Independent Auditor’s Report
64
Azure Minerals Limited Annual Report 2020 Declaration of Independence
65
ASX Additional Information
The number of shareholders, by size of holding, in each class of share as at 31 August 2020 are:
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
The number of shareholders holding less than a marketable parcel of shares are:
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
18
20
Yandal Investments Pty Ltd
Teck Resources Limited
Delphi Unternehmensberatung Aktiengesellschaft
Deutsche Balaton Aktiengesellschaft
Hsbc Custody Nominees
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