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BURGUNDY DIAMOND MINES LIMITED
A B N 3 3 1 60 0 17 3 9 0
2022 ANNUAL REPORT
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Annual Report
For the year ended 30 June 2022
Contents
Corporate Directory ...................................................................................................................................................... 2
Managing Directors’ Report ......................................................................................................................................... 3
Directors’ Report .......................................................................................................................................................... 5
Auditors Independent declaration………………………………………………………………………………………………………………………..22
Financial Statements .................................................................................................................................................. 23
Consolidated Statement of Profit or Loss and Other Comprehensive Income ...................................................... 24
Consolidated Statement of Financial Position ........................................................................................................ 25
Consolidated Statement of Changes in Equity ....................................................................................................... 26
Consolidated Statement of Cash Flows .................................................................................................................. 27
Notes to the Consolidated Financial Statements ....................................................................................................... 28
Directors’ Declaration ................................................................................................................................................. 54
Independent Auditor’s Report .................................................................................................................................... 55
Corporate Governance Statement ............................................................................................................................. 59
ASX Additional Information ........................................................................................................................................ 60
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Corporate Directory
Board of Directors
Kim Truter
Peter Ravenscroft
Michael O’Keeffe
Marc Dorion
Secretary
Non-Executive Chairman
Managing Director and Chief Executive Officer
Non-Executive Director
Non-Executive Director
David Edwards (Appointed 4 October 2021)
Registered Office
Level 25
South32 Tower
108 St Georges Terrace
Perth WA 6000
Telephone:
Website:
08 6313 3945
www.burgundy-diamonds.com
Stock Exchange Listing
Listed on the Australian Securities Exchange (ASX Code: BDM)
Auditors
RSM Australia Partners
Level 32, 2 The Esplanade
Perth WA 6000
Share Registry
Automic Share Registry
Level 2, 267 St Georges Terrace
Perth WA 6000
Telephone: 1300 288 664
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Managing Directors’ Report
Dear Fellow Shareholder
On behalf of the Board of Directors, I am pleased to present the Company’s Annual Report for the financial year
ended 30 June 2022 (FY2022).
FY2022 has been another busy and productive year as we made significant strides in solidifying our strategy of
becoming the world’s leading end-to-end diamond company.
The much-anticipated launch of our ultra-luxury diamond brand, Maison Mazerea, was the final building block of
the Company’s vertically integrated model, which will allow Burgundy to capture the full margins from the
diamond value chain while completely differentiating the Company’s value proposition.
Maison Mazerea is the world’s first Haute Diamanterie Maison, inspired by the famous 17th century diamond
collection bequeathed by Cardinal Jules Mazarin to Louis XIV and the French Crown Jewels, which was the very
start of the luxury industry in France.
The launch of Maison Mazerea was celebrated in Paris in July at a function including notable diamond industry
leaders, high net worth individuals, world leading jewellery designers and global media with further events to
come in Perth and New York this year.
Burgundy now has all the pieces in place to rapidly grow our diamond business, from discovery to design,
delivering greater returns to shareholders.
Over the financial year we announced collaborative sales and profit-sharing agreements with Bäumer Vendôme in
Paris and Solid Gold Diamonds in Perth. These agreements encompassed a profit-sharing arrangement whereby
Burgundy supplies polished Fancy Diamonds under the Maison Mazerea ultra-luxury brand and the jewellers
design, manufacture and sell high-end jewellery pieces featuring these stones.
Burgundy will continue to progress discussions with other high-end design jewellers in establishing collaborative
sales agreements, as well as developing other routes to retail sales including partnership events with the Princess
Grace Foundation. The Princess Grace Foundation has been operating for forty years as a tribute to the legacy of
Princess Grace of Monaco, with Maison Mazerea proud to be announced as a Crown Patron in June 2022.
In honour of this collaboration, Burgundy renamed the iconic Fancy Vivid Purplish Pink diamond Argyle Stella™,
one of the five ‘hero’ stones from the last ever Argyle Pink Diamonds Signature Tender™, as “The Grace
Diamond”, showcased at the Maison Mazerea launch in Paris. We were delighted to partner with Lorenz Bäumer,
renowned Place Vendôme designer-jeweller, to create “La Vie en Rose”, an exquisite creation featuring the
unique beauty of the Grace Diamond. The Vie en Rose will be unveiled at a Princess Grace Foundation event in
New York in November. The Grace Diamond is anticipated to generate significant long-term value for the
Company’s shareholders as the centrepiece of the Burgundy ultra-luxury brand.
We have, as promised, used some funds from our $50 million capital raise in August 2021 to invest in rough
diamonds for cutting, polishing and eventual sale through the collaborative agreements with our selected
jewelers. Our cutting and polishing facilities in Perth have been operating at high capacity polishing these rough
diamonds and revenue flow from sales is expected to start in FY2023, where we will demonstrate the returns that
our innovative end-to-end strategy will generate over the years to come.
Of course, the first step in our strategy, the discovery and mining of rough diamonds still plays an imperative step
in the Burgundy journey. The bulk sampling at the Naujaat Diamond Project has now been completed with the
results confirming the presence of a significant population of Fancy Orange and Yellow diamonds. At the
Ellendale Diamond Project, ongoing exploration activities are underway including trenching, pitting and drilling
programs, updated resource models and the completion of a Scoping Study to define development options for
both Blina and Ellendale projects. Our state-of-the-art bulk sampling plant was being installed on site at the end
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of FY2022 and is now operating in a bulk sampling and trial mining phase as we move to bring the Blina project
into low levels of commercial production. In addition, we continue to evaluate a number of other opportunities
for development of future operations providing a supply of the world’s best Fancy Colour diamonds.
Burgundy remains confident that our strategy will deliver substantial value to shareholders as we are now set to
capture margins across the full value chain of rare and valuable Fancy Colour diamonds.
As COVID-19 continues to impact the world, I wish to reiterate my thanks to our hardworking and dedicated
team, who have delivered outstanding results in the face of ongoing challenges. I wish to extend my thanks to the
Burgundy Board for their support and commitment as we complete the transition from diamond explorer to a
fully integrated operating diamond business.
I also take this opportunity to thank our loyal shareholders for their ongoing support, we look forward to sharing
our success with you in FY2023.
Peter Ravenscroft
Managing Director and Chief Executive Officer
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DIRECTORS’ REPORT
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Directors’ Report
The Directors of Burgundy Diamond Mines Limited (“BDM” or “the Company”) present their report, together with
the financial statements on the consolidated entity consisting of Burgundy Diamond Mines Limited and its controlled
entities for the financial year ended 30 June 2022 (“FY2022”).
Directors
The names and particulars of the Company’s directors in office during the financial year and at the date of this report
are as follows. Directors held office for this entire period unless otherwise stated.
Kim Truter (Non-Executive Chairperson, appointed 22 September 2020)
Mr Truter was most recently the Chief Executive Officer of De Beers Canada from 2015 to 2019. During his tenure he
led the successful completion and ramp-up to full production of the $1bn Gahcho Kué diamond project in Canada, as
well as the value-adding acquisition of the former Peregrine Diamonds assets. He was also a member of the De Beers
Group executive team, driving global business performance across operations, sales, and marketing.
Previously, Mr Truter served as Chief Operating Officer of Rio Tinto Diamonds, managing their global portfolio in
Australia, Canada and Zimbabwe. He also served as Managing Director of Argyle Diamond Mines Pty Limited in
Australia and as the President and Chief Operating Officer of Diavik Diamond Mines Inc in Canada.
Mr Truter brings over 30 years of mining experience in both surface and underground operations and large-scale
project development across multiple geographies. He has substantial diamond experience, providing executive
global leadership in Canada, Australia and Africa; often in complex, remote and challenging operating environments.
He has worked extensively with communities and governments to ensure that local benefits are sustainably
established. His proven leadership capabilities include a very strong dedication to safety, productivity and financial
performance improvement.
Current and former directorships of listed entities in the last three years:
None.
Special responsibilities:
Chair of the Audit and Risk Committee and Chair of the Remuneration and Nomination Committee.
Interest in securities:
2,500,000 unlisted options
Peter Ravenscroft (Managing Director and Chief Executive Officer, appointed 11 March 2020)
Mr Ravenscroft brings 40 years of experience in the international mining industry, with specific knowledge of
diamonds, and a background in exploration, geostatistics, resource evaluation and mine planning. He progressed
from technical roles in De Beers and Anglo American in southern Africa to leadership positions in Rio Tinto in the UK,
Australia and Canada. He has been involved in operations, projects and M&A in base metals, gold and iron ore across
the Rio Tinto group, and was also for many years Rio Tinto’s leading expert on diamond resource evaluation. In an
executive role with Cleveland Cliffs Inc., Mr Ravenscroft built a global exploration function focused on diversification
through earn-in deals with junior partners and brought several successful projects to an advanced evaluation stage.
More recently he has been an independent consultant providing strategic advisory services to a number of global
clients, with a particular focus on the diamond sector in Canada. He has served as a non-executive director on a
number of boards in Australia and Canada. Mr Ravenscroft has a Masters equivalent from the Paris School of Mines
and is a Fellow of the AusIMM.
Current and former directorships of listed entities in the last three years:
None.
Special responsibilities:
None
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Interest in securities:
4,375,000 ordinary shares
5,500,000 unlisted options
Michael O’Keeffe (Non-Executive Director, appointed 15 June 2017)
Mr O’Keeffe was the Managing Director of Glencore Australia Limited from 1995-2004 and was Executive Chairman
of Riversdale Mining Limited prior to that company being acquired by Rio Tinto PLC in 2011. Mr O’Keeffe is currently
the Executive Chairman and former Chief Executive Officer of Champion Iron Limited which operates an iron ore
project in Canada. Mr O’Keeffe is a significant shareholder holding 8.17% of the ordinary share capital of the
Company.
Current and former directorships of listed entities in the last three years:
Executive Chairman of Champion Iron Limited (current)
Non-Executive Director of Mont Royal Resources Limited (current)
Special responsibilities:
Member of the Remuneration and Nomination Committee and member of the Audit and Risk Committee.
Interest in securities:
27,903,535 ordinary shares
5,000,000 convertible notes
Marc Dorion (Non-Executive Director, appointed 5 July 2020)
Mr Dorion is a partner in the Business Law Group of prominent Canadian law firm McCarthy Tétrault, based in
Montreal, where he supervises the natural resources group in Québec. He received his LLL from the Université de
Sherbrooke, Quebec, Canada then did post graduate studies in corporate taxation at Osgoode Hall Law School, York
University. His practice focuses on development, financing, construction and operation of major projects in the
natural resources, energy, infrastructure and industrial sectors. He received the titles of Advocate Emeritus from the
Quebec Bar and also of Queen’s Counsel.
Current and former directorships of listed entities in the last three years:
None.
Special responsibilities:
Member of the Remuneration and Nomination Committee and member of the Audit and Risk Committee.
Interest in securities:
12,541,667 ordinary shares
Stephen Dennis (Non-Executive Chairman, appointed 22 August 2012, retired 9 December 2021)
Mr Dennis has been actively involved in the mining industry for over 35 years, having held senior management
positions in a number of Australian resources companies. Mr Dennis was previously the Managing Director and
Chief Executive Officer of CBH Resources Limited which is the Australian subsidiary of Toho Zinc Co., Ltd of Japan. Mr
Dennis is currently a director of several ASX listed mineral resource companies.
Special responsibilities:
Former Chair of the of the Remuneration and Nomination Committee and member of the Audit and Risk Committee.
Current and former directorships of listed entities in the last three years:
Non-Executive Chairman of Heron Resources Limited (current)
Non-Executive Chairman of Rox Resources Limited (current)
Non-Executive Chairman of Marvel Gold Limited (current)
Non-Executive Chairman of Kalium Lakes Limited (current)
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Interest in securities at date of resignation:
7,689,957 ordinary shares
Jeremy King (Non-Executive Director, appointed 16 February 2016, resigned 9 December 2021)
Mr King is a corporate advisor and lawyer with over 15 years’ experience in domestic and international legal,
financial and corporate matters. Mr King spent several years in London where he worked with Allen & Overy LLP and
Debevoise & Plimpton LLP and has extensive corporate experience, particularly in relation to cross-border private
equity, leveraged buy-out acquisitions and acting for financial institutions and corporate issuers in respect of various
equity capital raising.
Current and former directorships of listed entities in the last three years:
Non-Executive Director ECS Botanics Holdings Ltd (current)
Non-Executive Director of Smart Parking Limited (current)
Non-Executive Director of Transcendence Technologies Limited (current)
Non-Executive Director of Sultan Resources Limited (current)
Executive Director of Red Mountain Mining Limited (resigned 15 November 2021)
Non-Executive Chairman of Aldoro Resources Limited (resigned November 2019)
Non-Executive Director of Vanadium Resources Limited (resigned July 2019)
Special responsibilities:
Former Chair of the Audit and Risk Committee.
Interest in securities at date of resignation:
5,413,122 ordinary shares.
Company Secretary
David Edwards (appointed 4 October 2021)
Mr Edwards is a chartered accountant with over 25 years international experience in the energy and resource sectors
with a broad skillset spanning financial management, governance, strategy, capital markets, construction, and mining
operations.
Sarah Smith (Resigned 3 October 2021)
Sarah Smith is an employee of Mirador Corporate, where she specialises in corporate advisory, company secretarial
and financial management services. Sarah has over 8 years’ experience in the provision of company secretarial and
financial management services for ASX listed companies, capital raisings and IPOs, due diligence reviews and ASX and
ASIC compliance. Sarah is a Chartered Accountant and has acted as the Company Secretary of a number of ASX listed
companies.
Principal Activities
During the financial year the principal activities of the Company consisted of:
•
•
Exploration and development projects in the diamond sector; and
Buying rough diamonds, cutting, and polishing with the intention of selling through an ultra-luxury retail brand
via collaborative sales agreements.
Review of Operations
Exploration and Development
Ellendale Diamond Project
On 22 March 2021 Burgundy announced the signing of an Option Deed with Gibb River Diamonds Ltd (ASX: GIB; “Gibb
River”) to acquire 100% ownership of the Ellendale and Blina projects (together the “Ellendale Diamond Project”) in
the West Kimberley region of Western Australia.
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The acquisition of the Ellendale Diamond Project includes all tenements pegged by Gibb River in 2019 over the historic
Ellendale diamond mine, famed for its production of iconic yellow diamonds, as well as the highly prospective Blina
alluvial diamond deposit to the north-west of the Ellendale properties.
The total tenement package being acquired under the current option agreement is shown in Figure 1, comprising a
number of mining leases, applications for the grant of certain tenements, exploration licences and miscellaneous
licenses that cover all of the prospective ground in the Ellendale and Blina project areas.
Figure 1 - Location of Ellendale Diamond Project Tenements
Developing the Ellendale Diamond Project in Western Australia is a core part of the Company’s strategy of securing
sources of Fancy Colour rough diamonds and the Company made the second payment due under Option Deed to
secure 100% of the Project in March 2022.
On 20 January 2022, the WA Premier announced an indefinite delay to the reopening of the WA border, initially
planned for 5 February 2022. This decision severely impacted the timing for the delivery to site and commissioning
of the bulk sampling plant and also the sampling program that was planned to start in the June 2022 quarter.
Despite the impact of COVID site activity had progressed well and fauna clearance surveys, road sheeting and
installation of a 16-person camp were completed on schedule.
Site operations re-commenced following the opening of the WA borders in March 2022 and the bulk sample plant
was delivered to site in June 2022. The plant is now in the final stages of commissioning and the bulk sampling
program is expected to commence in September 2022.
In addition to the commencement of the bulk sampling program, exploration activities planned for the next six
months include further trenching, pitting and drilling programs, in order to update resource models and to complete
a Scoping Study to define development options for the Blina and Ellendale projects.
Naujaat
The Company is progressing an earn-in agreement with North Arrow Minerals Inc. over the Naujaat diamond project
in Nunavut, Canada (Figure 2). The world class Naujaat project contains an exceptional population of uniquely
coloured and rare high value stones. Burgundy will earn-in to a 40% interest in the project by funding the Phase 1
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sampling program: an approximately 2,000 tonne bulk sample, which was collected in August 2021. Burgundy has
also made a preliminary proposal to earn an additional 20% interest by funding a larger 10,000 tonne Phase 2 bulk
sample, pending positive results from the first phase.
Figure 2 – Location of Naujaat Project
During the December quarter the bulk sample was shipped from Naujaat to Saskatchewan via Montreal, where
processing and diamond recovery commenced. In April 2022, diamond recovery was completed for 70% of the
2,000-tonne bulk sample, confirming the presence of a potentially high value, Fancy Orange and Yellow diamonds.
Diamond recovery for the remaining 30% of the sample was completed in July 2022 and provided further support to
the encouraging indications from the initial sample tested. The results are now being combined in a complete
analysis of the bulk sample and further analysis is underway to fully understand the implications of these results.
On completion of the bulk sampling program, Burgundy will assume 40% ownership of the Naujaat Project under the
terms of an earn-in option agreement with North Arrow Minerals.
Other Exploration Projects
The Company has an Exploration Alliance Agreement in Botswana with Diamond Exploration Strategies Ltd (“DES”), a
privately-owned company with an experienced management team. Burgundy is providing funding of up to US$1.5
million over three years to finance exploration activities, earning 50% ownership of any discoveries made, with
options to earn-in up to 70% by completing a Scoping Study or 90% on completion of a Feasibility Study. The
Company’s multi-target program continues across prospective ground with the assessment of various alluvial
targets. There were no positive discoveries reported during the financial year and the Company is assessing its
options for the final year of the agreement.
Burgundy holds an 18% interest in the La Victoria Gold/Silver Project, located in the prolific North-Central Mineral
Belt of Peru which it acquired through earn-in arrangements starting in 2017 and is able, pursuant to a 2018 option
agreement, to increase this interest to 25% by expending a further C$1.4 million, subject to the receipt of all
permitting. Burgundy has participated in limited exploration activity during the year and has advised Eloro that, at
this time, it has no intention of exercising its option to increase its interest.
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Nanuk Diamonds Inc is a 100% subsidiary of Burgundy and is the owner of 625 mineral claims located East of the
Ungava Bay in Northern Quebec, a prospective diamond district that has received little attention over the last 15
years. There is no on-site activity currently planned for the Nanuk Project.
Sales and Marketing
During the period, the Company made significant progress evolving its strategy into downstream operations in the
high-value Fancy Colour Diamonds sector.
Cutting and Polishing
In September 2021, the Company leased purpose built high security premises in Perth WA, specifically designed for
downstream diamond operations and equipment was secured for valuing, cutting, polishing and grading diamonds.
Additionally, the Company recruited a team of specialised cutting, polishing and grading professionals with
significant Fancy Coloured diamond experience as well as other capabilities critical to the coordination, control and
security of a production stream of high-value Fancy Colour diamonds.
The cutting and polishing facilities in Perth have operated at high capacity during the year, refining third-party rough
diamonds purchased in 2021 and 2022, with initial cashflow from sales of these polished stones anticipated in the
forthcoming financial year.
Branding
Burgundy’s new ultra-luxury diamond brand, Maison Mazerea, was officially launched in Paris on 1 July 2022. The
event also featured the first public appearance of the newly named Grace Diamond, purchased in November 2021,
one of the rarest pink diamonds in the world, soon to be unveiled in a jewellery creation by renowned Place
Vendôme designer, Lorenz Bäumer.
Specialising in the rarest Fancy Colour diamonds of irreproachable provenance, Maison Mazerea is the world’s first
Haute Diamanterie Maison, and has been inspired by the famous 17th century diamond collection bequeathed by
Cardinal Jules Mazarin to Louis XIV and the French Crown Jewels.
The Company is progressing plans for further global launch events to take place later this year, including events in
Australia and the USA, which are intended to incorporate a significant sales component.
Collaborative Sales Agreements
On 8 December 2021, the Company announced it had signed a Collaborative Sales Agreement with leading Paris
design jeweller Bäumer Vendôme. The agreement encompassed a profit-sharing agreement whereby Burgundy
supplies polished Fancy Diamonds under its unique ultra-luxury brand; and Bäumer Vendôme designs, manufactures
and sells high-end jewellery pieces featuring these stones.
On 3 August 2022, the Company announced it had entered into a second agreement with Solid Gold Diamonds, one
of Australia’s leading independent jewellers headquartered in Burgundy’s hometown of Perth, Western Australia.
The agreement comprises two stages, stage one is an initial agreement regarding bridal jewellery, which commenced
in August 2022 presenting uniquely cut Maison Mazerea branded diamonds in Solid Gold’s engagement and bridal
jewellery designs, with a profit-sharing agreement on all sales. Stage two is a collaboration between Burgundy and
Solid Gold on the design and production of an exclusive fine jewellery collection featuring larger and higher value
Maison Mazerea diamonds, with sales expected to commence at a debut of the collection in October 2022.
Corporate
Board and Executive Appointments
On 29 October 2021, the Company announced that Mr Stephen Dennis, non-executive chairperson, would retire
from the Board following Burgundy’s 2021 Annual General Meeting on 9 December 2021. Mr Dennis served as an
independent non-executive director since 22 August 2012.The Board also reviewed its current composition as
Burgundy’s strategy evolves to encompass activities in the downstream diamond industry.
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The Board resolved that Mr Kim Truter, appointed as a non-executive director in September 2020, would be
appointed as non-executive chair of the Board following Mr Dennis’ retirement. Additionally, Mr Jeremy King, an
independent director since February 2016, did not seek re-election at the AGM and resigned on 9 December 2021.
On 4 October 2021, Burgundy announced the appointment of David Edwards as Chief Financial Officer and Company
Secretary. David is a chartered accountant with over 25 years international experience in the energy and resource
sectors with a broad skillset spanning financial management, governance, strategy, capital markets, construction,
and mining operations. He was most recently interim CEO and CFO of Triton Minerals Limited, and prior to that
General Manager Finance at Clough Limited an international engineering, construction, and commissioning
contractor and Group Financial Controller at Fortescue Metals Limited.
On 21 October 2021, the Company announced the appointment of Drew Birrell to lead Burgundy’s marketing and
sales strategy and downstream operations. He is an accomplished executive from the diamond jewellery sector,
including experience in rough and polished diamond sourcing, jewellery manufacture and retail sales. In particular,
as Senior Manager for Tiffany in Australia he was involved in previous processing and sale of Fancy Yellow diamonds
from Ellendale.
On 25 November 2021, Burgundy announced the appointment of Jeremy Taylor to lead Burgundy’s project
development and mining operations. Jeremy is a mining engineer with 40 years international mining experience, of
which 25 years has been in the diamond industry. He has worked for several diamond mining organisations including
Gem Diamonds, Rio Tinto Diamonds, De Beers Consolidated Mines and Debswana Diamond Mining Company. Prior
to joining Burgundy, he was the Chief Operating Officer at Letseng Diamonds.
Capital Raising
On 26 July 2021, the Company announced that it had received binding commitments from institutional and
sophisticated investors to raise $50.2m in new capital via the issue of 35 million unsecured convertible notes with a
face value of $1 to raise $35.0 million (before issue costs) and a share placement of 63,313,647 ordinary shares at 24
cents per share to raise approximately $15.2 million (before costs of the offer). The Share Placement shares were
issued on 2 August 2021 and shareholders approved the issue of the convertible notes on 14 September 2021.
Issue of Shares and Unlisted Options
On 22 September 2021, following shareholder approval, the Company issued 3,000,000 zero priced unlisted options
to Mr Peter Ravenscroft, Managing Director of the Company, in recognition of Mr Ravenscroft's achievement of his
short-term incentive milestones.
On 23 September, following shareholder approval, the Company issued unlisted 5,000,000 options each to Aitken
Murray Capital Partners Pty Ltd and Euroz Hartleys Limited (total issue of 10,000,000 options), the Lead Managers of
the placement and the convertible notes issue announced on 26 July 2021. The exercise price of the options is $0.36
per option with an expiry date of 23 September 2024.
Impact of COVID-19
The Ellendale Diamond Project has been negatively impacted by the COVID-19 pandemic. The WA Premier’s
announcement on 20 January of an indefinite delay to the reopening of the WA border, initially planned for 5 February
2022, impacted the timing of the delivery and commissioning of the bulk sampling plant and delayed the sampling
program that was planned to start in the June 2022 quarter. In addition, the Ellendale Project has been negatively
impacted by shortages of skilled labour. The impact of the pandemic is ongoing and it is not practicable to estimate
the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent
on measures imposed by the Australian Government and other countries, such as maintaining social distancing
requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
Results of Operations
The net loss of the Company for the year ended 30 June 2022 was $19,710,027 (2021: $12,118,039). The loss reflects
the development stage of the Company and arises primarily from exploration expenditure.
Financial performance for the previous 5 years is as follows:
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2022
$
(19,710,027)
(5.93)
0.14
2021
$
(12,118,039)
(4.82)
0.29
2020
$
(3,201,605)
(2.42)
0.096
2019
$
(1,327,120)
(1.05)
0.035
2018
$
(4,723,092)
(4.35)
0.08
Net Loss after tax
EPS (cents per share)
Share Price ($)
Financial Position
The statement of cash flows shows an increase in cash and cash equivalents for the year ended 30 June 2022 of
$19,815,809 (2021: $2,642,345 decrease). During the year, the Company raised $50,195,275 (2020 $7,842,280)
before costs from the issue of share capital and convertible notes. At year end the Company had funds of
$21,506,861 (2021: $1,694,046) available for future operational use.
Dividends
No dividends have been paid or declared by the Company since the end of the previous financial year. No dividend
is recommended in respect of the current financial year.
Significant Changes in the State of Affairs
There were no other significant changes in the state of affairs of the Company other than those described within the
operating and corporate activities review.
Matters Subsequent to The Reporting Period
There were no significant events after the balance sheet date
Likely Developments and Expected Results
The strategic objectives of the Company are to create shareholder value through the operation of an end-to-end
diamond company, with activities including exploration, project development, mining, cutting, and polishing and
retail jewellery sales.
Directors’ Meetings
The number of Directors’ meetings held during the financial year and to the date of this report and the number of
meetings attended by each Director during the time the Director held office are:
Board
Remuneration and
Nomination
Audit and Risk
Committee
Held1
10
10
10
10
5
5
Attended2
9
10
9
9
5
5
Held1
1
N/A
1
1
N/A
N/A
Kim Truter
Peter Ravenscroft
Michael O’Keeffe
Marc Dorion
Stephen Dennis3
Jeremy King4
1. Number of meetings held during the time the director held office or was a member of the committee during the year.
2. Number of meetings attended.
3. Retired 9 December 2021.
4. Resigned 9 December 2021.
N/A: Not a member of this committee.
Attended2
1
N/A
1
1
N/A
N/A
Attended2
2
N/A
1
1
1
1
Held1
2
N/A
1
1
1
1
On 21 January 2022, Kim Truter was appointed Chair of the Audit and Risk Committee and Michael O’Keeffe and
Marc Dorion were appointed as Committee members. Also on 21 January 2022, Kim Truter was appointed as Chair of
the Remuneration and Nomination Committee and Marc Dorion was appointed as a committee member.
In addition to the scheduled Board meetings, Directors regularly communicate by telephone, email or other
electronic means, and where necessary, circular resolutions are executed to effect decisions.
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Remuneration Report (Audited)
This remuneration report for the year ended 30 June 2022 outlines the remuneration arrangements of the Company
in accordance with the requirements of the Corporations Act 2001 (“the Act”) and its regulations. This information
has been audited as required by section 308(3C) of the Act.
The Remuneration Report details the remuneration arrangements for Key Management Personnel (“KMP”) who are
defined as those persons having authority and responsibility for planning, directing and controlling the major
activities of the Company, directly or indirectly, including any Director (whether executive or otherwise) of the
Parent company.
The KMP of the Company for the year ended 30 June 2022 are as follows:
Director
Role
Appointment
Resigned
Kim Truter
Non-Executive Director
22 September 2020
Peter Ravenscroft Managing Director
Michael O’Keeffe Non-Executive Director
Marc Dorion
Non-Executive Director
11 March 2020
15 June 2017
5 July 2020
N/a
N/a
N/a
N/a
Stephen Dennis
Non-Executive Chairman
22 August 2012
9 December 2021
Jeremy King
Non-Executive Director
16 February 2016
9 December 2021
Voting and comments made at the Company's 2021 Annual General Meeting (“AGM”)
At the 2021 AGM, 99.98% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2021. The Company did not receive any specific feedback at the AGM regarding its remuneration
practices.
Remuneration Philosophy
KMP have authority and responsibility for planning, directing and controlling the activities of the Company. During
the financial year, KMP of the Company comprise the Board of Directors and the Managing Director/Chief Executive
Officer.
The Company’s broad remuneration policy is to ensure the remuneration package properly reflects the person’s
duties and responsibilities and that remuneration is competitive in attracting, retaining and motivating people of the
highest quality.
No remuneration consultants were employed during the financial year.
Remuneration Governance, Structure and Approvals
Remuneration of Directors is currently set by the Board. The nature and amount of remuneration is collectively
considered by the Board with reference to relevant employment conditions and fees commensurate to a company of
similar size and level of activity, with the overall objective of ensuring maximum stakeholder benefit from the
retention of high performing Directors.
The Remuneration and Nomination Committee is primarily responsible for:
• The over-arching executive remuneration framework;
• Operation of the incentive plans which apply to executive directors and senior executives, including key
performance indicators and performance hurdles;
• Remuneration levels of executives; and
• Non-Executive Director fees.
Their objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the
long-term interests of the Company.
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Non-Executive Remuneration Structure
The remuneration of Non-Executive Directors consists of Directors’ fees (plus statutory superannuation), payable in
arrears. The current maximum total aggregate fixed sum per annum that may be paid to Non-Executive Directors in
accordance with the Company’s Constitution is $350,000 which may be varied by ordinary resolution of the
Shareholders in a General Meeting.
Remuneration of Non-Executive Directors is based on fees approved by the Board of Directors and is set at levels to
reflect market conditions and encourage the continued services of the Directors. In accordance with the Company’s
Constitution, the Directors may at any time, subject to the Listing Rules, adopt any scheme or plan which they
consider to be in the interests of the Company and which is designed to provide superannuation benefits for both
present and future Non-Executive Directors, and they may from time to time vary this scheme or plan.
Remuneration may also include an invitation to participate in share-based incentive programmes in accordance with
Company policy.
Executive Remuneration Structure
The nature and amount of remuneration of executives are assessed on a periodic basis with the overall objective of
ensuring maximum stakeholder benefit from the retention of high-performance individuals.
The main objectives sought when reviewing executive remuneration is that the Company has:
• Coherent remuneration policies and practices to attract and retain Executives;
• Executives who will create value for shareholders;
• Competitive remuneration offered benchmarked against the external market; and
• Fair and responsible rewards to Executives having regard to the performance of the Company, the
performance of the Executives and the general pay environment.
Relationship between Remuneration and Company Performance
Given the current phase of the Company’s development, the Board does not consider corporate earnings to be an
appropriate measure when determining the nature and amount of KMP remuneration.
The remuneration framework for KMP comprises fixed remuneration, and at risk components comprising short-term
and long-term variable incentives that are determined by individual and Company performance.
Fixed Remuneration
Fixed remuneration consists of fixed contractual salary or fees, legislated employer contributions to superannuation
funds and other employee benefits.
The fixed remuneration for each senior executive is influenced by the nature and responsibilities of each role and
knowledge, skills and experience required for each position. Fixed remuneration provides a base level of
remuneration which is market competitive and comprises a base salary and statutory superannuation. It is
structured as a total employment cost package.
KMP are offered a competitive base salary that comprises the fixed component of pay and rewards. External
remuneration consultants may provide analysis and advice to ensure base pay is set to reflect the market for a
comparable role. No external advice was taken this year. Base salary is reviewed annually to ensure the executives’
pay is competitive with the market. The remuneration of KMP is also reviewed on promotion. There is no guaranteed
pay increase included in any KMP’s contract.
Short -Term Incentives (“STI”)
Short term incentives such as cash incentives may be awarded and are determined based on performance targets
established by the Remuneration and Nomination Committee and take into consideration performance metrics such
as the Company’s performance, an individual employee’s performance, and the individual employee’s contribution
to the Company’s performance.
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Long-Term Incentives (“LTI”)
Options may be issued at the Board’s discretion. The Board is of the opinion that the expiry date and exercise price
of the options currently on issue to the Directors and Executives is a sufficient, long-term incentive to reward
Directors and Executives in a manner which aligns the element of remuneration with the creation of shareholder
wealth.
Details of Remuneration
Details of the nature and amount of each major element of the remuneration of each KMP of the Company for the
year ended 30 June 2022 and 30 June 2021 are as follows:
30 June 2022
Short Term Benefits
Base Salary
and Fees
$
68,396
370,000
57,500
60,363
36,318
28,601
621,178
Short Term
Cash
Incentive
$
-
195,000
-
-
-
-
195,000
Directors
Kim Truter
Peter Ravenscroft (i)
Michael O’Keeffe
Marc Dorion
Stephen Dennis (ii)
Jeremy King (iii)
Total
Post-
Employment
Benefits
Super-
annuation
$
6,840
36,850
5,750
-
3,632
-
53,072
Share Based Payments
Equity-
settled
options
$
Equity-
settled
shares
$
-
810,000
-
-
-
-
810,000
Total
$
75,236
1,411,850
63,250
60,363
39,950
28,601
1,679,250
-
-
-
-
-
-
-
(i)
Share based payments reflect the issue of 3,000,000 options to Peter Ravenscroft as part of his contractual short term
incentive payment and approved by shareholders on 14 September 2021.
(ii) Retired 9 December 2021.
(iii) Resigned 9 December 2021.
30 June 2021
Short Term Benefits
Base Salary
and Fees
$
74,637
318,387
57,782
56,855
59,416
46,335
-
613,412
Short Term
Cash
Incentive
$
-
-
-
-
-
-
-
-
Directors
Mr Stephen Dennis
Peter Ravenscroft (i)
Jeremy King
Michael O’Keeffe
Marc Dorion (ii)
Kim Truter (iii)
David Bradley (iv)
Total
Post-
Employment
Benefits
Super-
annuation
$
7,091
30,247
5,489
5,401
-
4,402
-
52,630
Share Based Payments
Equity-
settled
options
$
Equity-
settled
shares
$
Total
$
-
-
-
-
-
113,000
-
113,000
-
125,000
-
-
-
-
-
125,000
81,728
473,634
63,271
62,256
59,416
163,737
-
904,042
(i)
Shareholders approved the issue of ordinary shares to Peter Ravenscroft on 2 July 2020 as part of his executive
employment agreement.
(ii) Appointed 5 July 2020.
(iii) Appointed 22 September 2020. Following shareholder approval at the Annual General Meeting on 18 November 2020, the
Company issued 2,500,000 unlisted options to Mr Truter.
(iv) Resigned 5 July 2020
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The following table shows the relative proportions of remuneration that are linked to performance and those that
are fixed, based on the amounts disclosed as statutory remuneration expense in the tables above:
Name
Directors
Kim Truter
Peter Ravenscroft
Michael O’Keeffe
Marc Dorion
Stephen Dennis
Jeremy King
Fixed Remuneration
At Risk – STI (%)
At Risk – LTI (%)
2022
100%
29%
100%
100%
100%
100%
2021
31%
100%
100%
100%
100%
100%
2022
2021
2022
2021
-
14%
-
-
-
-
-
-
-
-
-
-
-
57%
-
-
-
-
69%
-
-
-
-
-
The Proportion of the cash bonus paid/ payable or forfeited is as follows:
Name
Directors
Kim Truter
Peter Ravenscroft
Michael O’Keeffe
Marc Dorion
Stephen Dennis
Jeremy King
Cash bonus paid/payable
Cash bonus forfeited
2022
-
100%
-
-
-
-
2021
2022
2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Shareholdings of KMP (direct and indirect holdings)
The number of ordinary shares in BDM held by each KMP of the Company during the year ended 30 June 2022 is as
follows:
30 June 2022
Balance at
1 July 2021
Issued as
Remuneration
Exercised
Directors
Kim Truter
Peter Ravenscroft
Michael O’Keeffe
Marc Dorion
Stephen Dennis (i)
Jeremy King (ii)
Total
-
4,375,000
27,903,535
12,541,667
7,689,957
5,413,122
57,923,281
(i) Retired 9 December 2021.
(ii) Resigned 9 December 2021.
-
-
-
-
-
-
-
Held at date
of
appointment/
(resignation)
-
-
-
-
-
-
-
-
-
-
-
(7,689,957)
(5,413,122)
(13,103,079)
Other
Balance at
30 June 2022
-
-
-
-
-
-
-
-
4,375,000
27,903,535
12,541,667
-
-
44,820,202
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Unlisted Option holdings of KMP (direct and indirect holdings)
30 June 2022
Directors
Kim Truter
Peter Ravenscroft (i)
Michael O’Keeffe
Marc Dorion
Stephen Dennis (ii)
Jeremy King (iii)
Total
Balance at
1 July 2021
Issued as
Remuneration
Exercised
Other
Balance at
30 June 2022
2,500,000
2,500,000
-
-
-
-
5,000,000
-
3,000,000
-
-
-
-
3,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,500,000
5,500,000
-
-
-
-
8,000,000
(iii) Following shareholder approval at the General Meeting of Shareholders on 14 September 2021 the Company issued
3,000,000 zero priced unlisted options to Peter Ravenscroft as part of his contractual short term incentive payment.
(iv) Retired 9 December 2021
(v) Resigned 9 December 2021.
KMP Contractual Arrangements
Peter Ravenscroft Managing Director and Chief Executive Officer
Mr Ravenscroft is employed under an open term contract that may be terminated with 3 months’ notice by either
the Company or Mr Ravenscroft. The key terms of the contract are:
• Fixed remuneration of $360,000 plus statutory superannuation, increased to $400,000 plus statutory
superannuation effective from 1 April 2022.
• Short-term cash incentive equivalent to 50% of Mr Ravenscroft’s base salary (payable in cash or equity). Any issue
of equity will be subject to shareholder approval.
• Long term incentive of 5 million zero priced options with a 5-year expiry subject to Mr Ravenscroft meeting key
performance indicators.
Non-Executive Director Arrangements
Non-executive directors receive a board fee and fees for chairing or participating on board committees. The term of
each Non-Executive Director is open to the extent that they hold office subject to retirement by rotation, as per the
Company’s Constitution, at each AGM and are eligible for re-election as a director at the meeting. Appointment shall
cease automatically if the Director gives written notice to the Board, or the Director is not re-elected as a Director by
the shareholders of the Company. There are no entitlements following retirement or termination of an appointment.
The Non-executive Chairman is paid a fee of $70,000 (plus statutory superannuation) and Non-Executive Directors
are paid fees of $55,000 per annum (plus statutory superannuation). The fee for chairing board committees is $7,500
(plus statutory superannuation) per annum and the fee for participating on board committees is $5,000 per annum
(plus statutory superannuation).
Share-based Compensation
The Company may reward Directors for their performance and aligns their remuneration with the creation of
shareholder wealth by issuing share options. Share-based compensation is at the discretion of the Board and no
individual has a contractual right to receive any guaranteed benefits. Details of shares and options issued to
directors and other KMP as part of compensation during the year ended 30 June 2021 are noted below.
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Options
Following shareholder approval at the General Meeting of Shareholders on 14 September listed options to Peter
Ravenscroft as part of his contractual short term incentive payment. Valuation information is as follows:
Number of
options
granted
3,000,000
Grant date
14 Sept 2021
Vesting and
exercisable
date
14 Sept 2021
Expiry date
Exercise
price
Fair value
per option at
grant date
14 Sept 2024
-
$0.27
Name
Peter Ravenscroft
Ordinary Shares
The Company issued no ordinary shares as part of compensation to KMP during the year.
Equity Instruments Issued on Exercise of Options
There were no options exercised during the year.
Loans with KMP
During the financial year Michael O’Keeffe subscribed for 5,000,000 unsecured convertible notes with a face value of
$1. The notes are convertible into ordinary shares of the Company, at the option of the holder, or repayable on 16
September 2024. The number of shares that will be issued on conversion is equivalent to the principal amount of
notes converted divided by the fixed conversion price of $0.264 per share. The interest rate is 6% per annum and
during the year, interest of $224,384 was paid to Mr O’Keeffe. At 30 June 2022, accrued interest payable due to Mr
O’Keeffe was approximately $10,685.
There were no other loans made to any KMP during the year ended 30 June 2022 (2021: nil). There were no loans
from any KMP during the year ended 30 June 2022 (2021: nil).
Other Transactions with KMP
During the financial year, the Company incurred fees of $28,166 for company secretarial and accounting services to
Mirador Corporate Pty Ltd (a company of which Mr Jeremy King is a Director). All transactions were made on normal
commercial terms and conditions and at market rates.
At 30 June 2022, the Company had no outstanding payables to KMP or their related parties.
There were no other transactions with KMP during the year ended 30 June 2022.
This concludes the remuneration report, which has been audited.
Indemnification and Insurance of Officers and Auditors
The Company has indemnified the Directors and Executives of the Company for costs incurred, in their capacity as a
Director or Executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the Directors and
Executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of
insurance prohibits disclosure of the nature of the liability and the amount of the premium.
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor
of the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
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Environmental Regulations
The Company is not currently subject to any specific environmental regulation. There have not been any known
significant breaches of any environmental regulations during the year under review and up until the date of this
report.
Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purposes of
taking responsibility on behalf of the Company for all or part of these proceedings.
Auditor
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.
Officers of the Company Who Are Former Partners of RSM Australia Partners
There are no officers of the company who are former partners RSM Australia Partners.
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the year ended 30 June 2021 has been received and included within
these financial statements.
Shares Under Option
At the date of this report there were the following unissued ordinary shares for which options are outstanding:
2,500,000 options expiring 19 March 2023, exercisable $0.07
2,500,000 options expiring 31 July 2023, exercisable $0.12
2,500,000 options expiring 31 August 2023, exercisable $0.12
2,500,000 options expiring 30 September 2023, exercisable $0.12
10,000,000 options expiring 23 September 2024, exercisable $0.36
1,000,000 options expiring 5 August 2026, exercisable $0.26
2,929,536 options expiring 30 August 2027, issued to employees in recognition of achieving performance milestones.
There is no consideration payable for the options.
3,000,000 options expiring 21 September 2024, issued to Peter Ravenscroft in recognition of achieving board
approved milestones. There is no consideration payable for the options.
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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 are important.
Details of the amounts paid or payable to the auditor for non-audit services provided during the year by the auditor
are outlined in Note 25 to the financial statements.
The Board of Directors has considered the position and is satisfied that the provision 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 auditors, as set out below, did not compromise
the auditor independent requirements of the Corporations Act 2001 for the following reasons:
•
All non-audit services have been reviewed by the Board of Directors to ensure they do not impact the
impartiality and objectivity of the auditor; and
• None of the services undermine the general principles relating to the auditor independence as set out in APES
110 Code of Ethics for Professional Accountants.
This report is signed in accordance with a resolution of Board of Directors.
Kim Truter
Non-Executive Chairman
15 September 2022
D I R E C T O R ’ S R E P O R T | 2 1
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Burgundy Diamond Mines Limited for the year ended 30
June 2022, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 15 September 2022
ALASDAIR WHYTE
Partner
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FINANCIAL STATEMENTS
F I N A N C I A L S T A T E M E N T S | 2 3
A n n u a l R e p o r t | Y e a r E n d e d 3 0 J u n e 2 0 2 2
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Revenue from continuing operations
Other income
Expenses
Corporate and administrative expenses
Employee benefit expenses
Exploration expenditure expense
Sales and marketing expenses
Share-based payment expense
Depreciation expense
Foreign currency losses
Finance costs
Loss from continuing operations before income tax
Income tax expense
Loss from continuing operations after income tax
Note
2022
$
2021
$
4
5,051
63,148
(584,899)
(2,497,362)
(9,677,238)
(2,328,338)
(828,435)
(184,144)
(376,154)
(3,238,508)
(19,710,027)
-
(19,710,027)
(716,242)
(841,501)
(9,944,536)
-
(448,690)
-
(230,218)
-
(12,118,039)
-
(12,118,039)
22
14, 16
6
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
(3,883)
(3,883)
(6,395)
(6,395)
Total comprehensive loss attributable to the members
(19,713,910)
(12,124,434)
Loss per share for the year attributable to the members
Basic loss per share (cents)
Diluted loss per share (cents)
7
7
(5.93)
(5.93)
(4.82)
(4.82)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the notes to the financial statements.
F I N A N C I A L S T A T E M E N T S | 2 4
A n n u a l R e p o r t | Y e a r E n d e d 3 0 J u n e 2 0 2 2
Consolidated Statement of Financial Position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Plant and equipment
Right of use assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Employee benefits
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Note
2022
$
2021
$
8
9
10
11
12
13
14
15
16
14
17
18
19
21,506,861
488,218
10,731,980
32,727,059
1,694,046
75,495
-
1,769,541
3,299,258
824,429
4,123,687
6,797
-
6,797
36,850,746
1,776,338
1,684,849
145,666
164,771
1,995,286
28,823,558
615,060
94,127
29,532,745
311,105
-
39,884
350,989
-
-
-
-
31,528,031
350,989
5,322,715
1,425,349
41,121,371
10,307,388
(46,106,044)
5,322,715
26,101,068
1,720,298
(26,396,017)
1,425,349
The Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial
statements.
F I N A N C I A L S T A T E M E N T S | 2 5
A n n u a l R e p o r t | Y e a r E n d e d 3 0 J u n e 2 0 2 2
Consolidated Statement of Changes in Equity
Issued
Capital
Convertibl
e Notes
Reserve
Other
Reserves
Accumulated
Losses
Total
$
$
$
$
$
At 1 July 2020
17,070,620
-
1,403,003
(14,277,977)
4,195,646
Loss for the year
Other comprehensive income
Total comprehensive loss for the
year after tax
-
-
-
Transactions with owners in their
capacity as owners:
Issue of share capital (Note 18)
9,387,282
Share issue costs (Note 18)
(356,834)
Share-based payments (Note 22)
-
At 30 June 2021
26,101,068
-
-
-
-
-
-
-
-
(12,118,040)
(12,118,040)
(6,394)
-
(6,394)
(6,394)
(12,118,040)
(12,124,434)
-
-
323,689
-
-
-
9,387,282
(356,834)
323,689
1,720,298
(26,396,017)
1,425,349
At 1 July 2021
26,101,068
-
1,720,298
(26,396,017)
1,425,349
Loss for the year
Other comprehensive income
Total comprehensive loss for the
year after tax
-
-
-
Transactions with owners in their
capacity as owners:
Issue of share capital (Note 18)
16,145,275
Share issue costs (Note 18)
(1,124,972)
Share-based payments (Note 22)
Value of conversion rights on
convertible notes (Note 16)
-
-
-
-
-
-
-
-
-
(19,710,027)
(19,710,027)
(3,883)
-
(3,883)
(3,883)
(19,710,027)
(19,713,910)
-
588,500
1,416,935
6,585,538
-
-
-
-
-
16,145,275
(536,472)
1,416,935
6,585,538
At 30 June 2022
41,121,371
6,585,538
3,721,850
(46,106,044)
5,322,715
The Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the financial
statements.
F I N A N C I A L S T A T E M E N T S | 2 6
A n n u a l R e p o r t | Y e a r E n d e d 3 0 J u n e 2 0 2 2
Consolidated Statement of Cash Flows
Cash flows from operating activities
Payments to suppliers and employees
Payments for exploration and evaluation
expenditure
Interest paid
Interest received
Net cash used in operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Net cash inflow from investing activities
Cash flows from financing activities
Proceeds from issues of shares
Proceeds from borrowings
Transaction costs
Principal elements of lease payments
Payment of bank guarantees
Net cash from financing activities
Net increase/(decrease) in cash and cash
equivalents
Note
2022
$
2021
$
8
15
(16,144,643)
(1,577,865)
(7,849,402)
(8,555,513)
(1,599,653)
5,051
(25,588,647)
-
13,148
(10,120,230)
(3,242,775)
(3,242,775)
(7,563)
(7,563)
15,195,275
35,000,000
(1,286,608)
(78,462)
(182,974)
48,647,231
7,842,282
-
(356,834)
-
-
7,485,448
19,815,809
(2,642,345)
Cash and cash equivalents at the beginning of the
financial year
Effect of exchange rate fluctuations
Cash and cash equivalents at the end of the
financial year
1,694,046
4,342,785
(2,994)
(6,394)
8
21,506,861
1,694,046
The Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial
statements.
F I N A N C I A L S T A T E M E N T S | 2 7
A n n u a l R e p o r t | Y e a r E n d e d 3 0 J u n e 2 0 2 2
Notes to the Consolidated Financial Statements
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity
Burgundy Diamond Mines Limited (“Company”) is a company limited by shares and domiciled in Australia. The
consolidated financial statements of the Company as at and for the year ended 30 June 2022 comprise the
Company and its subsidiaries.
Basis of Preparation
Statement of compliance
The consolidated financial statements are general purpose financial statements which have been prepared in
accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting
Standards Board (“AASB”) and the Corporations Act 2001. The consolidated financial statements comply with
International Financial Reporting Standards (“IFRS”) adopted by the International Accounting Standards Board
(“IASB”). Burgundy Diamond Mines Limited is a for-profit entity for the purpose of preparing the financial
statements.
The annual report was authorised for issue by the Board of Directors on 15 September 2022.
Basis of measurement
The consolidated financial statements have been prepared on a going concern basis in accordance with the
historical cost convention, unless otherwise stated.
Significant Judgements and Estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity’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 2.
Comparatives
Where required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated
entity only. Supplementary information about the parent entity is disclosed in Note 26.
New, revised or amended standards and interpretations adopted by the Company
The Company has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Burgundy
Diamond Mines Limited as at 30 June 2022 and the results of all subsidiaries for the year then ended. Burgundy
Diamond Mines Limited and its subsidiaries together are referred to in this financial report as the consolidated
entity.
Subsidiaries are all entities (including special purpose entities) over which the consolidated entity has the power
to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of
the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible
are considered when assessing whether the consolidated entity controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They
are de-consolidated from the date that control ceases.
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Intercompany transactions, balances and unrealised gains on transactions between consolidated entity
companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the consolidated entity.
The acquisition method of accounting is used to account for business combinations by the consolidated entity. A
change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the
difference between the consideration transferred and the book value of the share of the non-controlling interest
acquired is recognised directly in equity attributable to the parent.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of profit or loss and other comprehensive income, statement of changes in equity and statement of
financial position respectively.
Foreign Currency Translation
Functional and presentation currency
Items included in the financial statements of each of the consolidated entity’s entities are measured using the
currency of the primary economic environment in which the entity operates (“functional currency”). The
consolidated financial statements are presented in Australian dollars, which is Burgundy Diamond Mines Limited’s
functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in profit or loss.
Consolidated entity companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
•
Assets and liabilities for each statement of financial position account presented are translated at the closing
rate at the date of that statement of financial position;
•
•
Income and expenses for each statement of profit or loss and other comprehensive income account are
translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case income and expenses are translated at the
dates of the transactions); and
All resulting exchange differences are recognised in other comprehensive income and included in the foreign
currency translation reserve in the statement of financial position.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment
are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is expensed at the end of the reporting period unless it relates to
a project that the Company has determined economically viable in which case it is carried forward to the extent
that it is expected to be recouped through the successful development of the area, or by its sale.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the
decision to abandon the area is made.
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Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected
to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid
when the liabilities are settled.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are
incurred.
Current and Non-Current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in
the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be
realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are
classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal
operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the
reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months
after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
NOTE 2
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually evaluates its
judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on historical experience and on other various
factors, including expectations of future events management believes to be reasonable under the circumstances.
The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements,
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed below.
Net realisable value of inventories
The key assumptions, which require the use of management judgement, are the variables affecting costs
recognised in bringing the inventory to their location and condition for sale, estimated costs to sell and the
expected selling price. These key assumptions are reviewed at least annually.
Share based payments
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. The fair value is determined by using an
appropriate valuation model taking into account the terms and conditions upon which the instruments were
granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have4
no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may
impact profit or loss and equity.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges
for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S | 3 0
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a result of technical innovations or some other event. The depreciation and amortisation charge will increase
where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that
have been abandoned or sold will be written off or written down.
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S | 3 1
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NOTE 3
SEGMENT INFORMATION
The Company requires operating segments to be identified on the basis of internal reports above components of
the Company that are regularly reviewed by the Board of Directors in order to allocate resources to the segments
and to assess their performance. On this basis, the Company’s reportable segments under AASB Operating
Segments are the Company’s exploration in Australia, Canada, Peru and Botswana.
The accounting policies of the reportable segments are the same as the Company's accounting policies as
described in Note 1. Information regarding the Company's reportable segments is presented below.
2022
Other income
Exploration expenditure
Sales and marketing expense
Administration and other
expense
Share based payments
expense
Finance costs
Loss before income tax
Income tax expense
Loss after income tax for the
year
Total assets
Total assets includes:
Acquisition of non-current
assets
Total liabilities
2021
Other income
Exploration expenditure
Sales and marketing expense
Administration and other
expense
Share based payments
expense
Finance costs
Loss before income tax
Income tax expense
Loss after income tax for the
year
Peru
$
Canada Botswana
$
$
Australia
$
Other
$
Total
$
-
(164,205)
-
(12,809)
-
-
(3,115,598)
-
-
(875,208)
-
-
(5,522,227)
(2,328,338)
5,051
-
-
5,051
(9,677,238)
(2,328,338)
-
-
-
-
-
-
(3,629,750)
(3,642,559)
(828,435)
(828,435)
-
(177,014)
-
-
(3,115,598)
-
-
(875,208)
-
-
(7,850,565)
-
(3,238,508)
(7,691,642)
-
(3,238,508)
(19,710,027)
-
(177,014)
(3,115,598)
(875,208)
(7,850,565)
(7,691,642)
(19,710,027)
8,839
76,723
-
-
-
-
-
-
-
14,031,238
22,733,946
36,850,746
3,375,282
-
3,375,282
-
31,528,031
31,528,031
Peru
$
Canada Botswana
$
$
Australia
$
Other
$
Total
$
-
(35,045)
-
(2,851,624)
-
(517,087)
-
(6,540,780)
63,148
-
63,148
(9,944,536)
(1,128)
-
-
-
-
-
-
(1,786,833)
(1,787,961)
(448,690)
(448,690)
-
(36,173)
-
-
(2,851,624)
-
-
(517,087)
-
-
(6,540,780)
-
-
(2,172,375)
-
-
(12,118,039)
-
(36,173)
(2,851,624)
(517,087)
(6,540,780)
(2,172,375)
(12,118,039)
Total assets
Total liabilities
9,016
-
61,652
-
-
-
-
-
1,705,670
350,989
1,776,338
350,989
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S | 3 2
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NOTE 4
OTHER INCOME
Interest income
Australian Taxation Office ("ATO") Cash Flow Boost
2022
$
5,051
-
5,051
2021
$
13,148
50,000
63,148
Accounting Policy
Revenue
Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it
is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
Interest Income
Interest income is recognised when the Company gains controls of the right to receive the interest payment.
All revenue is stated net of the amount of goods and services tax.
NOTE 5
INVESTMENT IN CONTROLLED ENTITIES
Name
Country of
Incorporation
Peru
BDM Del Peru S.A.C.
Nanuk Diamonds Inc.
Canada
Burgundy Diamonds (Canada) Limited (i) Canada
France
Burgundy Diamonds SARL (ii)
i)
ii)
Named changed 9 May 2022.
Incorporated 13 December 2021.
NOTE 6
INCOME TAX
Percentage Owned (%)
2021
100
100
100
-
2022
100
100
100
100
(a) The components of tax expense comprise:
Current tax
Deferred tax
Income tax expense reported in the statement of profit or loss and other
h
i
i
2022
2021
$
-
-
-
$
-
-
-
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S | 3 3
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(b) The prima facie tax on loss from ordinary activities before income tax is
f ll
h i
(Loss) / profit before income tax expense
il d
Prima facie tax benefit on loss before income tax at 30% (2020: 30%)
(19,710,027)
(5,913,008)
(12,118,040)
(3,635,413)
Increase income tax expense due to:
Non-deductible expenses
Temporary differences not recognised
Tax losses not brought to account
Income tax expense/(benefit)
(c) Deferred tax assets not brought to account are:
Accruals/provisions
Business related costs
Tax losses
Capitalised expenditure
Capital raising
Set-off against deferred tax liabilities
Total deferred tax assets not brought to account
(d) Deferred tax liabilities not recognised
Prepayments
Set-off against deferred tax assets
Total unrecognised deferred tax liabilities
The benefit for tax losses will only be obtained if:
1,328,156
129,272
528,258
2,841,072
4,056,594
665,069
-
-
58,091
47,941
6,583,813
3,038,347
355,871
(247,329)
9,836,734
247,329
(247,329)
-
22,305
20,561
2,527,217
3,289,148
137,648
(2,039)
5,994,840
2,039
(2,039)
-
(i)
(ii)
(iii)
The Company derives future assessable income in Australia of a nature and of an amount sufficient to
enable the benefit from the deductions for the losses to be realised;
The Company continues to comply with the conditions for deductibility imposed by tax legislation in
Australia; and
There are no changes in tax legislation in Australia which will adversely affect the Company in
realising the benefit from the deductions for the losses.
At 30 June 2022, there is no recognised or unrecognised deferred income tax liability for taxes that would be
payable on the unremitted earnings of certain of the Company’s subsidiary as the Company has no liability for
additional taxation should such amounts be remitted.
Accounting Policy
The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax
expense (income).
Current Tax
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using
applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period. Current tax
liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant
taxation authority.
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Deferred Tax
Deferred tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year
as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit
or loss when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result
where amounts have been fully expensed but future tax deductions are available. 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 assets and liabilities are calculated at the tax rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of the
reporting period. Their measurement also reflects the manner in which management expects to recover or settle
the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that
it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be
utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint
ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary
difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that
net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred
tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and
liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of
the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or
liabilities are expected to be recovered or settled.
NOTE 7
LOSS PER SHARE
Basic loss per share amounts are calculated by dividing net loss for the year attributable to ordinary equity
holders of the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted loss per share amounts are calculated by dividing the net loss attributable to ordinary equity holders of
the Company by the weighted average number of ordinary shares outstanding during the year plus the weighted
average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary
shares into ordinary shares.
Net loss for the year attributable to ordinary equity holders
(19,710,027)
(12,118,039)
2022
$
2021
$
Weighted average number of ordinary shares outstanding during the year
used to calculate basic and diluted loss per share.
Loss per share attributable to ordinary equity holders of the Company
332,186,454
251,483,286
2022
Cents
(5.93)
2021
Cents
(4.82)
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Options on issue are not considered dilutive to the earnings per share because the Company is in a loss making
position.
Accounting Policy
Basic earnings per share
Basic earnings per share are calculated by dividing:
• The profit attributable to owners of the Company, excluding any costs of servicing equity other than
ordinary shares; and
• By the weighted average number of ordinary shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the year and excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into
account:
• The after-income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares; and
• The weighted average number of additional ordinary shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
NOTE 8
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Total cash and cash equivalents
2022
$
2021
$
21,506,861
1,694,046
21,506,861
1,694,046
Cash at bank earns interest at floating rates based on daily deposit rates. Short-term deposits are made in varying
periods between one day and three months, depending on the immediate cash requirements of the Company
and earn interest at the respective short-term deposit rates.
The Company’s exposure to interest rate and credit risks is disclosed in Note 20.
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S | 3 6
A n n u a l R e p o r t | Y e a r E n d e d 3 0 J u n e 2 0 2 2
(a) Reconciliation of net loss after tax to net cash flows from operations
2022
$
2021
$
Loss for the financial year
(19,710,027)
(12,118,040)
Adjustments for:
Consideration shares issued for Ellendale option payment
Depreciation
Foreign currency
Share-based payments
Unwinding interest expense on convertible notes
Changes in assets and liabilities
Inventory
Trade and other payables
Employee benefits
Net cash used in operating activities
950,000
184,144
(889)
828,435
1,638,855
(10,731,980)
1,420,000
766
(6,394)
448,690
-
-
1,127,928
134,748
124,887
-
(25,588,647)
(10,120,230)
(b) Non-cash investing and financing activities
Adjustments for:
Consideration shares issued for Ellendale option payment (Note 18)
950,000
1,420,000
(c) Changes in liabilities arising from financing activities
Balance at 1 July 2020
Net cash used in financing activities
Balance at 30 June 2021
Acquisition of plant and equipment by means of leases
Convertible notes liability at year end
Net cash used in financing activities
Balance at 30 June 2022
Convertible
notes
Lease
liability
Total
-
-
$
-
-
-
-
$
-
-
-
$
-
839,188
839,188
28,823,558
- 28,823,558
(78,462)
(78,462)
28,823,558
760,726 29,584,284
Accounting Policy
Cash and cash equivalents comprise cash on hand, deposits held at call with banks, other short term high liquid
investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are shown
within short term borrowings in current liabilities in the statement of financial position.
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NOTE 9
TRADE AND OTHER RECEIVABLES
GST receivable
Bank guarantee
Other deposits and receivables
Total trade and other receivables
2022
$
204,205
182,974
101,039
488,218
2021
$
50,684
-
24,811
75,495
The consolidated entity has recognised a loss of $nil in profit or loss in respect of the expected credit losses for
the year ended 30 June 2022.
Accounting Policy
Trade and Other Receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for
settlement within 30 days.
The Company has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on
days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
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 Taxation Office. In these circumstances, the GST is recognised as
part of the cost of acquisition of the asset of the assets or part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included as a current asset or liability in the
Consolidated Statement of Financial Position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST on investing and
financial activities, which are disclosed as operating cash flows.
Impairment of Assets
Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs
to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for
which they are separately identifiable cash inflows which are largely independent of the cash inflows from other
assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered
impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
NOTE 10
INVENTORIES
Rough and polished diamonds
Total inventories
2022
2021
$
10,731,980
10,731,980
$
-
-
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Accounting Policy
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a
'first in first out' basis. Cost comprises of direct materials and delivery costs, direct labour, import duties and other
taxes, an appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity,
and, where applicable, transfers from cash flow hedging reserves in equity. Costs of purchased inventory are
determined after deducting rebates and discounts received or receivable.
Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs,
net of rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
NOTE 11
PLANT AND EQUIPMENT
Computer equipment – cost
Computer equipment – accumulated depreciation
Polishing equipment – cost
Polishing equipment – accumulated depreciation
Motor vehicle – cost
Motor vehicle – accumulated depreciation
Asset under construction
2022
$
157,293
(34,653)
122,640
380,410
(36,745)
343,665
33,309
(4,626)
28,683
2,804,270
2021
$
7,563
(766)
6,797
-
-
-
-
-
-
-
Total plant and equipment
3,299,258
6,797
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Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are
set out below:
Balance at 1 July 202
Additions
Depreciation expense
Balance at 30 June 2021
Additions
Computer
equipment
Polishing
equipment
Motor
vehicle
Asset under
construction
Total
$
$
$
$
$
-
7,563
(766)
6,797
-
-
-
-
-
-
-
-
-
-
-
-
-
7,563
(766)
6,797
149,730
380,410
33,309
2,804,270
3,367,719
Depreciation expense
(33,887)
(36,745)
(4,626)
-
(75,258)
Balance at 30 June 2022
122,640
343,665
28,683
2,804,270
3,299,258
Accounting Policy
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and
equipment (excluding land) over their expected useful lives as follows:
Class of fixed asset
Depreciation rate
Computer equipment
Polishing equipment
Motor vehicle
3 years
4-10 years
3 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
An item of property, plant and equipment is de-recognised upon disposal or when there is no future economic
benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are
taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to
retained profits
NOTE 12
RIGHT OF USE ASSETS
Office space
Less: Accumulated depreciation
Total right of use assets
2022
$
933,315
(108,886)
824,429
2021
$
-
-
-
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Accounting Policy
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at
cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs incurred,
and, except where included in the cost of inventories, an estimate of costs expected to be incurred for
dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain
ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-
of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets
are expensed to profit or loss as incurred.
NOTE 13
TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Other payables
Total trade and other payables
2022
$
2021
$
616,593
225,105
1,017,866
50,390
40,124
45,876
1,684,849
311,105
Due to the short-term nature of these payables, their carrying value is assumed to be the same as their fair
value.
Accounting Policy
Trade payables and other payables represent liabilities for goods and services provided to the Company prior to
the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of
recognition.
NOTE 14
LEASE LIABILITIES
Current liability
Non-current liability
Total lease liabilities
Accounting Policy
2022
$
145,666
615,060
760,726
2021
$
-
-
-
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the
present value of the lease payments to be made over the term of the lease, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing
rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments
that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of
a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in
which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate
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used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease
liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the
carrying amount of the right-of-use asset is fully written down.
NOTE 15
EMPLOYEE BENEFITS
Employee benefits – accrued annual leave
Total employee benefits
Accounting Policy
2022
$
164,771
164,771
2021
$
39,884
39,884
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected
to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid
when the liabilities are settled.
The current provision for employee benefits includes all unconditional entitlements where employees have
completed the required period of service and also those where employees are entitled to pro-rata payments in
certain circumstances. The entire amount is presented as current, since the consolidated entity does not have an
unconditional right to defer settlement and the consolidated entity expects all employees to take the full amount
of accrued leave within 12 months.
NOTE 16
BORROWINGS
The Company issued 35,000,000 6% convertible notes for $35,000,000 on 16 September 2021. The notes are
convertible into ordinary shares of the Company, at the option of the holder, or repayable on 16 September 2024.
If a note holder elects to convert all or part of its convertible notes, the minimum number of notes that may be
converted is 250,000. The number of shares that will be issued on conversion is equivalent to the principal
amount of notes converted divided by the fixed conversion price of $0.264 per share.
Face value of notes issued
Other equity securities - value of conversion rights
Costs associated with the issue of convertible notes
Interest expense
Interest paid
2022
$
35,000,000
(6,585,538)
(1,229,759)
27,184,703
3,209,540
(1,570,685)
2021
$
-
-
-
-
-
-
Non-current liability
Unamortised transaction costs of $907,733 have been offset against the convertible notes payable liability.
28,823,558
-
Interest paid to note holders during the year
Unwinding of interest per effective interest rate method
Total finance costs
1,570,685
1,638,855
3,209,540
-
-
-
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Accounting Policy
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction
costs. They are subsequently measured at amortised cost using the effective interest method. The component of
the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement of
financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate
for an equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost
basis until extinguished on conversion or redemption. The increase in the liability due to the passage of time is
recognised as a finance cost. The remainder of the proceeds are allocated to the conversion option that is
recognised and included in shareholders equity as a convertible note reserve, net of transaction costs. The
carrying amount of the conversion option is not remeasured in the subsequent years. The corresponding interest
on convertible notes is expensed to profit or loss.
NOTE 17
PROVISIONS
Lease make good
Total provisions
2022
$
94,127
94,127
2021
$
-
-
The provision represents the present value of the estimated costs to make good the premises leased by the
consolidated entity at the end of the respective lease terms.
Accounting Policy
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result
of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate
of the consideration required to settle the present obligation at the reporting date, taking into account the risks
and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted
using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of
time is recognised as a finance cost.
NOTE 18
CONTRIBUTED EQUITY
(a) Ordinary Shares
Ordinary shares
341,568,236
41,121,371
273,254,589
26,101,068
2022
2021
No.
$
No.
$
Ordinary shares entitle the holder to participate in dividends and the proposed winding up of the company in
proportion to the number and amount paid on the share hold.
(b) Movements in Ordinary Shares Issued
2022
At 1 July 2021
2 August 2021
Placement (i)
24 Mar 2022
Issue of shares to Gibb River Limited
Transaction costs
Balance at 30 June 2022
Number
273,254,589
63,313,647
5,000,000
-
341,568,236
$
26,101,068
15,195,275
950,000
(1,124,972)
41,121,371
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i)
Shares were issued to provide working capital to the Company.
2021
At 1 July 2020
3 Jul 2020
6 Aug 2020
6 Aug 2020
Issue of shares to Managing Director (i)
Placement (ii)
Share purchase plan (ii)
10 Dec 2020
Exercise of options
20 Aug 2020
Exercise of options
24 Mar 2021
Issue of shares to Gibb River Limited
20 Apr 2021
Exercise of options
23 Apr 2021
Exercise of options
Transaction costs
Balance at 30 June 2021
Number
$
183,334,983
17,070,620
1,250,000
67,499,670
6,169,936
500,000
500,000
4,000,000
7,500,000
2,500,000
125,000
6,479,968
592,314
35,000
35,000
1,420,000
525,000
175,000
-
(356,834)
273,254,589
26,101,068
ii) Shareholders approved the issue of ordinary shares to Peter Ravenscroft on 2 July 2020 as part of his
executive employment agreement.
iii) Shares were issued to provide working capital to the Company.
Accounting Policy
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the
acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.
If the Company reacquires its own equity instruments, for example as a result of a share buy-back, those
instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the
profit or loss and the consideration paid including any directly attributable incremental costs (net of income
taxes) is recognised directly in equity.
NOTE 19
RESERVES
Convertible notes reserve
Share based payments reserve
Foreign currency translation reserve
Other reserves
Total reserves
2022
$
6,585,538
3,801,611
(79,761)
3,721,850
2021
$
-
1,796,177
(75,879)
1,720,298
10,307,388
1,720,298
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Movement reconciliation
Convertible notes reserve
Balance at the beginning of the year
Derivative portion of convertible notes issued (Note 16)
Balance at the end of the year
Share-based payments reserve
Balance at the beginning of the year
Equity settled share-based payment transactions (Note 22)
Consideration for share placement
Balance at the end of the year
Foreign currency translation reserve
Balance at the beginning of the year
Effect of translation of foreign currency operations to Company
presentation
-
6,585,538
6,585,538
-
-
1,796,177
1,472,487
828,434
1,177,000
323,690
-
3,801,611
1,796,177
(75,879)
(3,882)
(69,484)
(6,395)
Balance at the end of the year
(79,761)
(75,879)
Convertible notes reserve
The amount shown for other equity securities is the value of the conversion rights relating to the 6% convertible
notes, details of which are shown in Note 16.
Share-based payment reserve
The share-based payment reserve is used to record the value of share-based payments provided to outside
parties, and share-based remuneration provided to employees and directors.
Foreign currency translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations where their functional currency is different to the presentation currency of the
reporting entity.
NOTE 20
FINANCIAL RISK MANAGEMENT
Financial Risk Management Objectives
Risk management has focused on limiting liabilities to a level which could be extinguished by sale of assets if
necessary.
The Company's activities expose it to a variety of financial risks; market risk (including interest rate risk, equity
price risk, commodity price risk and foreign currency risk), credit risk and liquidity risk. The Company's overall risk
management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the Company. The Company is engaged in mineral exploration
and evaluation and does not currently sell products and derives only limited revenue from interest earned.
Risk management is carried out by the Board and the Company has adopted a formal risk management policy.
Accounting classifications and fair values
Cash and cash equivalents, trade and other receivables, and trade and other payables are short-term in nature
and their carrying values equate to their fair values. Financial assets at fair value through other comprehensive
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income that comprise equity securities in listed entities are classified as level 1 in the fair value hierarchy and are
carried at the quoted price of the equity securities at the period end date.
Market risk
Interest rate risk
Exposure to interest rate risk arises on floating interest rates on term deposits of cash and cash equivalents only.
The Company has no variable interest rate debt arrangements and interest rate risk is not material.
Equity Price risk
The Company is not exposed to equity risk.
Commodity Price risk
The Company is not exposed to commodity price risk.
Foreign currency risk
Exposure to foreign currency risk may result in the fair value of future cash flows of a financial instrument to
fluctuate due to the movement in the foreign exchange rates of currencies in which the Company holds financial
instruments which are other than Australian dollar.
With instruments being held by overseas operations, fluctuations in currencies may impact on the Company’s
financial results. Since the Company has not yet commenced mining operations, the exposure is limited to short-
term liabilities for expenses which are payable in foreign currencies. The Company limits its foreign currency risk
by limiting funds held in overseas bank accounts and paying its creditors promptly. The Board regularly reviews
this exposure.
Credit risk
Credit exposure represents the extent of credit related losses that the Company may be subject to on amounts to
be received from financial assets. Credit risk arises principally from bank balances and trade and other
receivables. The objective of the Company is to minimise the risk of loss from credit risk. The Company’s
exposure to bad debt risk is insignificant.
Liquidity risk
Liquidity risk arises from the possibility that the Company might encounter difficulty in settling its debts or
otherwise meeting its obligations related to financial liabilities.
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring
sufficient cash and marketable securities are available to meet the current and future commitments of the
Company. Due to the nature of the Company’s activities, being mineral exploration and development, the
Company does not have ready access to credit facilities, with the primary source of funding being equity .The
Board of Directors constantly monitor the state of equity markets in conjunction with the Company’s current and
future funding requirements, with a view to initiating appropriate capital raisings as required. Any surplus funds
are invested with major financial institutions.
The financial liabilities of the Company comprise trade and other payables and convertible notes as disclosed in
the statement of financial position. All trade and other payables are non-interest bearing and due within 30 days
of the reporting date.
The tables below reflect an undiscounted contractual maturity analysis for financial liabilities.
2022
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Financial liabilities due for
repayment
Weighted
average
interest
rate
One year or
less
Within two to five
years
Over five
years
Total
Trade and other payables
-
1,684,849
Lease liabilities
Borrowings
6.0%
15.4%
187,387
-
-
682,936
35,000,000
-
-
-
1,684,849
870,323
35,000,000
2021
Financial liabilities due for
repayment
Weighted
average
interest rate
One year or
less
Within two to
five years
Over five years
Total
Trade and other payables
-
311,105
-
-
311,105
On 16 September 2021, the Company issued 35,000,000 convertible notes with a face value of $1 to raise
$35,000,000. The notes are convertible into ordinary shares of the Company, at the option of the holder, or
repayable on 16 September 2024. If a note holder elects to convert all or part of its convertible notes, the
minimum number of notes that may be converted is 250,000. The number of shares that will be issued on
conversion is equivalent to the principal amount of notes converted divided by the fixed conversion price of
$0.264 per share.
Capital risk management
The Company’s objectives when managing capital are to:
•
•
Safeguard their ability to continue as a going concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the number of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Given the stage of the Company’s development there are no formal targets set for return on capital. There were
no changes to the Company’s approach to capital management during the year. The Company is not subject to
externally imposed capital requirements. The net equity of the Company is equivalent to capital. Net capital is
obtained through capital raisings on the Australian Securities Exchange (“ASX”).
Accounting Policy
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part
of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are
subsequently measured at either amortised cost or fair value depending on their classification. Classification is
determined based on both the business model within which such assets are held and the contractual cash flow
characteristics of the financial asset unless an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred
and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are
classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i)
held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making
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a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements
are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the
consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such
upon initial recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss
allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether
the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and
supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month
expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses
that is attributable to a default event that is possible within the next 12 months. Where a financial asset has
become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is
based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured
on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument
discounted at the original effective interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance
is recognised in other comprehensive income with a corresponding expense through profit or loss. In all other
cases, the loss allowance reduces the asset's carrying value with a corresponding expense through profit or loss.
NOTE 21
RELATED PARTY DISCLOSURE
a) KMP Compensation
The aggregate compensation made to directors and other members of KMP of the consolidated entity is set out
below:
Short-term benefits
Post-employment benefits
Share-based payments
Total KMP Compensation
b) Transactions with related parties
2022
$
2021
$
816,178
613,412
53,072
52,630
810,000
238,000
1,679,250
904,042
During the financial year Michael O’Keeffe subscribed for 5,000,000 unsecured convertible notes with a face value
of $1. The notes are convertible into ordinary shares of the Company, at the option of the holder, or repayable on
16 September 2024. The number of shares that will be issued on conversion is equivalent to the principal amount
of notes converted divided by the fixed conversion price of $0.264 per share. The interest rate is 6% per annum
and during the year, interest of $224,384 was paid to Mr O’Keeffe. At 30 June 2022, accrued interest payable due
to Mr O’Keeffe was approximately $10,685.
During the financial year, the Company incurred fees of $28,166 for company secretarial and accounting services
to Mirador Corporate Pty Ltd (a company of which Mr Jeremy King is a Director). All transactions were made on
normal commercial terms and conditions and at market rates.
At 30 June 2022, the Company had no outstanding payables to KMP or their related parties.
There were no other transactions with KMP during the year ended 30 June 2022.
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NOTE 22
SHARE-BASED PAYMENTS
a) Recognised share-based payment transactions
Options issued to Directors (i)
Shares issued to Directors
Options issued to consultants
Total share-based payments expense
2022
$
810,000
-
18,435
828,435
2021
$
113,000
125,000
210,690
448,690
(i)
Following shareholder approval at the General Meeting of Shareholders on 14 September 2021 the Company issued
3,000,000 zero priced unlisted options to Peter Ravenscroft as part of his contractual short term incentive payment.
b) Summary of options
30 June 2022
Options
Grant
Date
Date of
Expiry
Exercise
Price
Balance at
the start of
the year
Granted
during the
year
Exercised
during the
year
Balance at
the end of
the year
Director
09-03-20
19-03-23
$0.07
2,500,000
Consultant
14-08-20
31-07-23
$0.12
2,500,000
Consultant
08-09-20
31-08-23
$0.12
2,500,000
Director
Director
18-11-20
30-09-23
$0.12
2,500,000
22-09-21
21-09-24
$Nil
-
-
-
-
-
3,000,000
- 10,000,000
Lead Managers 23-09-21
22-09-24
$0.36
Weighted average exercise price is $0.20
-
-
-
-
-
2,500,000
2,500,000
2,500,000
2,500,000
3,000,000
10,000,000
10,000,000 13,000,000
- 23,000,000
On 22 September 2021, following shareholder approval, the Company issued 3,000,000 zero priced unlisted
options to Mr Peter Ravenscroft, Managing Director of the Company, in recognition of Mr Ravenscroft's
achievement of his short term incentive milestones. The options have been valued based on the closing share
price on the grant date being 27 cents. The total value of $810,000 has been recognized as share-based payments
expense in the statement of profit or loss.
On 23 September, following shareholder approval, the Company issued 5,000,000 unlisted options each to Aitken
Murray Capital Partners Pty Ltd and Euroz Hartleys Limited (total issue of 10,000,000 options), the Lead Managers
of the placement and the convertible notes issue announced on 26 July 2021. The exercise price of the options is
$0.36 per option with an expiry date of 23 September 2024.
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The options issued to the lead managers during the period have been valued using the Hoadley ES02 valuation
Model. The model and assumptions are shown in the table below:
Number of unlisted options
Grant date
Expiry date
Exercise price
Share price at grant date
Expected volatility
Risk-free interest rate
Valuation
Lead
Manager
Options
Lead
Manager
Options
5,000,000
5,000,000
23 Sept 2021
23 Sept 2021
23 Sept 2024
23 Sept 2024
$0.36
$0.24
92.03%
0.53%
$0.36
$0.24
92.03%
0.53%
$588,500
$588,500
30 June 2021
Options
Grant
Date
Date of
Expiry
Exercise
Price
Balance at
the start of
the year
Granted
during
the year
Exercised
during the
year
Balance at
the end of
the year
Directors
15-06-17
30-06-21
$0.07
10,000,000
Consultant
01-08-17
22-08-20
$0.07
Consultant
15-06-18
30-06-21
$0.07
500,000
500,000
Director
09-03-20
19-03-23
$0.07
2,500,000
-
-
-
-
Consultant
14-08-20
31-07-23
$0.12
Consultant
08-09-20
31-08-23
$0.12
Director
18-11-20
30-09-23
$0.12
- 2,500,000
- 2,500,000
- 2,500,000
(10,000,000)
(500,000)
(500,000)
-
-
-
-
-
-
-
2,500,000
2,500,000
2,500,000
2,500,000
13,500,000 7,500,000
(11,000,000) 10,000,000
Weighted average exercise price is $0.11
The fair value of the options granted is estimated as at the date of grant using a Black-Scholes model taking into
account the terms and conditions upon which the options were granted.
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The following tables list the inputs to the model used for the year ended 30 June 2021.
Number of listed options – Tranche 1
Consultant
Options1
1,250,000
Consultant
Options2
1,250,000
Director
Options3
2,500,000
Number of listed options – Tranche 2
1,250,000
1,250,000
N/A
Grant date
Expiry date
Exercise price
Share price at grant date
Fair value of listed option – Tranche 1
Fair value of listed option – Tranche 2
Expected volatility
Risk-free interest rate
14 Aug 2020
8 Sep 2020
18 Nov 2020
31 Jul 2023
31 Aug 2023
30 Sep 2023
$0.12
$0.097
$0.045
$0.050
100%
0.27%
$0.12
$0.089
$0.042
$0.047
100%
0.28%
$0.12
$0.095
$0.040
N/A
100%
0.11%
Valuation
1. 1,250,000 options vested on grant and the remaining 1,250,000 options vested on 1 August 2021.
2. 1,250,000 options vested on grant and the remaining 1,250,000 options vested on 1 September 2021.
3. Following shareholder approval at the Annual General Meeting of Shareholders on 18 November 2020, the
Company issued 2,500,000 Unlisted Options to Mr Truter following his appointment to the Board. The options are
subject to voluntary escrow for 24 months from date of issue.
$111,125
$118,000
$113,000
Accounting Policy
Equity-settled and cash-settled share-based compensation benefits are provided to KMP and employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in
exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services,
where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently
determined using an appropriate valuation model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting
conditions that do not determine whether the consolidated entity receives the services that entitle the
employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over
the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the
award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting
period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each
reporting date less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying
an appropriate valuation model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
• During the vesting period, the liability at each reporting date is the fair value of the award at that date
multiplied by the expired portion of the vesting period.
• From the end of the vesting period until settlement of the award, the liability is the full fair value of the
liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash
paid to settle the liability.
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Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met, provided all
other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been
made. An additional expense is recognised, over the remaining vesting period, for any modification that increases
the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or
employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over
the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award,
the cancelled and new award is treated as if they were a modification.
NOTE 23
COMMITMENTS
In June 2020, the Company entered into an Exploration Alliance Agreement (“Alliance”) with Diamond Exploration
Strategies Ltd (“DES”), a privately owned company focused on diamond exploration in Botswana. Under the terms
of the Alliance, BDM will provide funding of up to US$1,5 million over three years to finance exploration activities,
earning 50% ownership of any discoveries made. At 30 June 2022, the remaining commitment is up to US$68,000
million.
On 2 June 2020, the Company announced that it had entered into an Option Agreement with North Arrow
Minerals Inc (TSXV: NAR) over the Naujaat Diamond Project (Project) in the Nunavut territory of Canada. The
agreement provides Burgundy with the option to earn a 40% interest in the Project in return for funding of
CAD$5.6 million for a preliminary bulk sample of 1,500 – 2,000 tonnes. At 30 June 2022, the Company’s has met
its funding commitment of CAD$5.6 million and the process for issuing the completion certificate to confirm the
Company’s 40% interest is underway.
NOTE 24
CONTINGENCIES
All purchases in Peru are subject to the payment of the Impuesto General a las Ventas (“IGV”) which is a General
Sales Tax. Eloro Resources Ltd is entitled to claim back the IGV tax it has paid on all Peruvian purchases which, if
successfully claimed, can then be recovered by BDM. As at 30 June 2021, the potential IGV tax receivable is
approximately US$363,086 (2021: US$354,155). A receivable has not been recognised at 30 June 2022 as receipt
of the amount is dependent upon Eloro and the Company meeting the IGV required refund and the assessment of
the relevant taxation authorities in Peru.
NOTE 25
AUDITOR’S REMUNERATION
Amounts received or due and receivable by RSM Australia:
Audit and review of the annual and half-year financial report
43,750
36,000
2022
$
2021
$
Other services - RSM Australia:
-
Taxation services
Other services
RSM Canada - Tax compliance services
RSM France - Company establishment and compliance
4,500
48,250
5,400
41,400
5,386
13,242
18,628
7,825
-
7,825
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NOTE 26
PARENT ENTITY
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Loss for the year
Total comprehensive loss
2022
$
2021
$
32,641,497
1,698,873
4,209,250
77,465
36,850,747
1,776,338
1,995,286
350,989
29,532,746
31,528,032
350,989
41,121,371
26,101,068
10,301,585
1,796,175
(46,100,241)
(26,471,894)
5,322,715
1,425,349
(19,628,347)
(12,124,435)
(19,628,347)
(12,124,435)
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30 June
2021.
Exploration commitments
The parent entity had exploration commitments as disclosed in Note 16.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed
through the report, except for the following:
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
•
Investments in joint ventures are accounted for at cost, less any impairment, in the parent entity.
• Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt
may be an indicator of an impairment of the investment.
NOTE 27
EVENTS AFTER THE REPORTING DATE
There has been no other matter or circumstance that has arisen since the end of the financial year that has
significantly affected, or may significantly affect, the operations of the Company, the results of those operations,
or the state of affairs of the Company.
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Directors’ Declaration
In the Directors’ opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board as described in Note 1 to the financial
statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial
position as at 30 June 2022 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act
2001.
On behalf of the directors
Kim Truter
Non-Executive Chairman
15 September 2022
D I R E C T O R S ’ D E C L A R A T I O N | 5 4
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
BURGUNDY DIAMOND MINES LIMITED
Opinion
We have audited the financial report of Burgundy Diamond Mines Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including
a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
Giving a true and fair view of the Group's financial position as at 30 June 2022 and of its financial
performance for the year then ended; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed this matter
Measurement and classification for convertible notes
Refer to Statement of Financial Position and Note 16.
The Company issued convertible notes raising
$35,000,000 on 16 September 2021. The notes are
convertible into ordinary shares of the Company, at
the option of the holder, or repayable on 16
September 2024.
Our audit procedures included:
• Assessing the Company's accounting policy for
compliance with Australian Accounting Standards;
• On a sample basis, vouching the proceeds from the
supporting
convertible notes
to
issue of
documentation;
The measurement and classification of convertible
notes is considered a key audit matter, due to the
materiality of the balance and the complexity of the
accounting treatment required, under Australian
Accounting Standards.
Existence of inventories
Refer to Statement of Financial Position and Note 10.
The Company has inventory with a carrying value of
$10,731,980 as at 30 June 2022.
The existence of inventory is considered a key audit
matter due to the materiality of the balance.
• Reading the convertible notes deed to understand
their terms and evaluating the classification of the
convertible notes against the criteria contained
within Australian Accounting Standards;
• Assessing the fair value of the equity and debt
components of the convertible notes at inception,
including challenging the reasonableness of key
inputs used by management to determine fair
value;
• Checking the mathematical accuracy of the re-
measurement at year end of the debt component of
the convertible notes using the effective interest
rate method; and
• Assessing the appropriateness of the disclosures in
financial report.
Our audit procedures included:
• Assessing the Company’s accounting policy for
compliance with Australian Accounting Standards;
• Performing test counts, on a sample basis, to
assess the existence of inventory at year end;
• Testing, on a sample basis, the computation of the
cost of inventory items by agreeing cost inputs to
the
supporting documentation and evaluating
reasonableness
by
applied
management; and
estimates
of
• Assessing management’s estimate for determining
that items of inventory are recorded at the lower of
cost and net realisable value.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2022, but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2022.
In our opinion, the Remuneration Report of Burgundy Diamond Mines Limited, for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 15 September 2022
ALASDAIR WHYTE
Partner
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Corporate Governance Statement
The Board of Directors of Burgundy Diamond Mines Limited is responsible for the corporate governance of the
Company. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders
by whom they are elected and accountable. The Board continuously reviews its governance practices to ensure
they remain consistent with the needs of the Company.
The Company complies with each of the recommendations set out in the Australian Securities Exchange
Corporate Governance Council’s Corporate Governance Principles and Recommendations 4th Edition (“the ASX
Principles”). This statement incorporates the disclosures required by the ASX Principles under the headings of the
eight core principles. All of these practices, unless otherwise stated, are in place.
The Company’s Corporate Governance Statement and policies can be found on its website at www.burgundy-
diamonds.com.
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ADDITIONAL ASX INFORMATION
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ASX Additional Information
Additional information required by the Australian Securities Exchange and not shown elsewhere in this Annual
Report is as follows. The information is current as of 13 September 2022.
1. Fully paid ordinary shares
There is a total of 342,447,207 fully paid ordinary shares on issue which are listed on the ASX.
The number of holders of fully paid ordinary shares is 1,587.
•
•
• Holders of fully paid ordinary shares are entitled to participate in dividends and the proceeds on winding up
of the Company.
There are no preference shares on issue.
•
2. Distribution of fully paid ordinary shareholders is as follows:
Holding Ranges
above 0 up to and including 1,000
above 1,000 up to and including 5,000
above 5,000 up to and including 10,000
above 10,000 up to and including 100,000
above 100,000
Totals
Report Generated on 13-Sep-2022 at 12:58 PM
3. Holders of non-marketable parcels
Holders
55
322
268
656
286
1,587
Total Units % Issued Share Capital
0.00%
0.30%
0.65%
7.19%
91.85%
100.00%
5,274
1,020,490
2,232,832
24,635,059
314,553,552
342,447,207
Holders of non-marketable parcels are deemed to be those whose shareholding is valued at less than $500.
There are 151 shareholders who hold less than a marketable parcel of shares, amount to 0.06% of issued capital.
4. Substantial shareholders of ordinary fully paid shares
The following holders have notified that they are substantial holders of the company at June 2022:
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
30,442,200
8.9%
Holding Balance % of Issued Capital
MICHAEL O’KEEFFE
HSBC & FRAYNE
5. Restricted Securities
None
27,903,535
18,451,656
8.1%
5.4%
6. Share buy-backs
Hi
There is currently no on-market buyback program for any of BDM Resources’ listed securities.
7. Voting rights of Shareholders
Hi
All fully paid ordinary shareholders are entitled to vote at any meeting of the members of the Company and
their voting rights are on:
Show of hands – one vote per shareholder; and
Poll – one vote per fully paid ordinary share.
•
•
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8. Major Shareholders
The Top 20 largest fully paid ordinary shareholders together held 53.99% of the securities in this class and
are listed below:
Position
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Holder Name
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV
LTD
WYNNCHURCH STRATEGIC OPPORTUNITY LP (A DELAWARE
LP)
PROSPECT AG TRADING PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
EASTBOURNE DP PTY LTD
9064-6316 QUEBEC INC
SANDY DOG PTY LTD
GIBB RIVER DIAMONDS LIMITED
CITICORP NOMINEES PTY LIMITED
SANDY DOG PTY LTD
ANDJEN PTY LTD
METECH SUPER PTY LTD
ZERO NOMINEES PTY LTD
BASS FAMILY FOUNDATION PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BUSHWOOD NOMINEES PTY LTD
SABRINA PAULINE MARSHALL
SANDY DOG PTY LTD
BLUE CRYSTAL PTY LTD
BLUE ATLAS PTY LTD
Totals
Total Issued Capital
Holding
% IC
30,442,000
8.89%
14,583,334
14,353,535
12,057,821
11,050,000
11,041,667
10,460,000
9,000,000
7,611,856
6,591,676
6,033,138
5,150,000
5,125,000
5,000,000
4,660,000
4,480,587
4,375,000
4,314,921
4,166,667
3,500,000
173,997,202
342,447,207
4.26%
4.19%
3.52%
3.23%
3.22%
3.05%
2.63%
2.22%
1.92%
1.76%
1.50%
1.50%
1.46%
1.36%
1.31%
1.28%
1.26%
1.22%
1.02%
50.81%
100.00%
9. Unlisted Options
•
•
•
•
•
•
•
•
2,500,000 options expiring 19 March 2023, exercisable $0.07
2,500,000 options expiring 31 July 2023, exercisable $0.12
2,500,000 options expiring 31 August 2023, exercisable $0.12
2,500,000 options expiring 30 September 2023, exercisable $0.12
10,000,000 options expiring 23 September 2024, exercisable $0.36
1,000,000 options expiring 5 August 2026, exercisable $0.26
3,000,000 options expiring 21 September 2024, There is no consideration payable for the options.
2,929,536 options expiring 30 August 2027, There is no consideration payable for the options.
10. Tax Status
The Company is treated as a public company for taxation purposes.
11. Franking Credits
The Company has no franking credits.
12. Business Objectives
Burgundy Diamond Mines Limited has used cash and cash equivalents held at the time of re-compliance in a
way consistent with its stated business objectives.
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13. Securities Exchange Listing
hi
Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the
Australian Securities Exchange Limited under Security Code BDM.
14. Registered Office
Level 25, Suite 32
108 St Georges Terrace
Perth WA 6000
Telephone: 08 6559 1792
Website: www.burgundy-diamonds.com
15. Company Secretary
Mr David Edwards
16. Share Registry
Automic Share Registry
Level 2, 267 St Georges Terrace
Perth WA 6000
Telephone: 1300 288 664
17. Company Assets
.
Project
Location Area
Nature of Interest
Holder
La Victoria Project Peru
~80km2
Farm-in Agreement
Eloro Resources
Limited
Interest at
beginning
of year
Interest at
end of year
18%
18%
Nanuk Diamonds Quebec,
Canada
274km2 100% Acquisition
Nanuk Diamonds Inc.
100%
100%
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