ACN 009 468 099
Annual Report
31 December 2019
Centaurus Metals Limited ABN 40 009 468 099
And its controlled entities
Contents
Page
3
4
6
7
14
28
29
30
31
32
33
58
59
64
66
Corporate Directory
Directors’ Report
Corporate Governance Statement
Remuneration Report
Operating and Financial Review
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Tenement Information
67 Mineral Resources and Ore Reserves Information
Page 2 of 69
Stock Exchange Listing
Centaurus Metals Limited shares are
listed on the Australian Securities Exchange
Ordinary fully paid shares (ASX code: CTM)
Listed options (ASX code: CTMOB)
Principal & Registered Office in Australia
Level 3, 10 Outram Street
West Perth WA 6005
PO Box 975
West Perth WA 6872
Telephone: (08) 6424 8420
Email: office@centaurus.com.au
Website: www.centaurus.com.au
Brazil Office
Avenida Barao Homem de Melo, 4391
Salas 606 and 607 – Estoril
Belo Horizonte - MG - CEP: 30.494.275
BRAZIL
Telephone: +55 31 3194 7750
Annual Report – 31 December 2019
Corporate Directory
Directors
Mr D M Murcia AM, B. Juris, LL.B
Non-Executive Chairman
Mr D P Gordon B.Bus, FCA, AGIA, ACIS, MAICD
Managing Director
Mr B R Scarpelli M.Sc, PMP
Executive Director
Mr M D Hancock B.Bus, CA, FFin
Non-Executive Director
Mr C A Banasik B.App.Sc (Physics), M.Sc (Geology),
Dip Ed, GAICD
Non-Executive Director
Company Secretary
Mr J W Westdorp B.Bus, CPA, MAICD
Chief Financial Officer/ Company Secretary
Share Registry
Advanced Share Registry Limited
150 Stirling Highway
Nedlands WA 6009
Telephone: (08) 9389 8033
Auditors
KPMG
Chartered Accountants
235 St Georges Terrace
Perth WA 6000
Bankers
Australia
National Australia Bank
Level 14, 100 St Georges Tce
Perth WA 6000
Brazil
Banco Inter
Avenida Barbacena, 1219 – Santo Agostinho
Belo Horizonte - MG – CEP: 30190-924
BRAZIL
Telephone: +55 31 2101 7006
Page 3 of 69
Annual Report – 31 December 2019
Directors’ Report
Your directors present their report on the Consolidated Entity (“Group”) consisting of Centaurus Metals Limited
(“Centaurus” or “the Company”) and the entities it controlled at the end of, or during, the year ended 31
December 2019 together with the consolidated financial report and audit report thereon.
1 Directors
The directors of the Company at any time during or since the end of the year are:
Mr D M Murcia
Mr D P Gordon
Mr B R Scarpelli
Mr M D Hancock
Mr C A Banasik
Mr S A Parsons
Independent Non-Executive Chairman
Managing Director
Executive Director
Independent Non-Executive Director
Independent Non-Executive Director (appointed 28 February 2019)
Independent Non-Executive Director (resigned 28 February 2019)
Unless otherwise disclosed, all directors held their office from 1 January 2019 until the date of this report.
2 Directors and Officers
Mr Didier M Murcia, AM, B.Juris, LL.B
Non-Executive Chairman, Age 57
Experience and Expertise
Independent non-executive director appointed 16 April 2009 and appointed Chairman 28 January 2010. Lawyer
with over 30 years legal and corporate experience in the mining industry. Mr Murcia is currently Honorary
Australian Consul for the United Republic of Tanzania. He is Chairman and founding director of Perth-based
legal group MPH Lawyers. He is Chairman of Strandline Resources Limited and Alicanto Minerals Ltd.
Other Directorships
During the last three years Mr Murcia has held directorships in the following ASX listed companies:
Alicanto Minerals Limited (appointed 30 May 2012) - Non-Executive Chairman
Strandline Resources Limited (appointed 23 October 2014) - Non-Executive Chairman
Gryphon Minerals Limited (appointed 28 July 2006, resigned 13 October 2016)
Cradle Resources Limited (appointed 13 August 2013, resigned 8 May 2016)
Special Responsibilities
Chairman of the Board
Mr Darren P Gordon, B.Bus, FCA, AGIA, ACIS, MAICD
Managing Director, Age 48
Experience and Expertise
Managing Director appointed 4 May 2009. Chartered Accountant with over 25 years resource sector experience
as a senior finance and resources executive. Mr Gordon was formerly Chief Financial Officer for Gindalbie Metals
Limited (1999-2008).
Other Directorships
During the last three years Mr Gordon has held directorships in the following ASX listed company:
Genesis Minerals Limited (appointed 23 March 2016, resigned 10 May 2018) – Non-Executive
Director
Special Responsibilities
Managing Director
Page 4 of 69
Annual Report – 31 December 2019
Mr Bruno R Scarpelli, M.Sc., PMP
Executive Director, Age 42
Experience and Expertise
Executive Director appointed 3 September 2015. Mr Scarpelli is an engineer with over 15 years’ experience in
the mining sector, specifically in the environmental approvals, health and safety and human resources fields. He
was formerly environmental manager for Vale’s world class S11D Iron Ore Project.
Special Responsibilities
Administrator of Centaurus’ Brazilian subsidiaries
Country Manager – Brazil
Mr Mark D Hancock, B.Bus, CA, FFin
Non-Executive Director, Age 51
Experience and Expertise
Independent non-executive director appointed 23 September 2011. Mr Hancock is a Company Director and
consultant to the resource industry with a focus on commercial advisory and commodity marketing. He has over
30 years’ experience in senior commercial and financial roles across a number of leading companies in Australia
and South East Asia, including most recently spending 13 years with Atlas Iron as CFO and CCO and prior to that
with oil and gas industry participants Woodside Petroleum Ltd and Premier Oil Plc.
Other Directorships
Cape Lambert Resources Ltd (Appointed 11 February 2020)
Fe Ltd (Appointed 1 September 2019)
Special Responsibilities
Chairman of the Audit & Risk Committee
Mr Chris A Banasik, B.App.Sc (Physics), M.Sc (Geology), Dip Ed, GAICD
Non-Executive Director, Age 58
Experience and Expertise
Independent non-executive director appointed 28 February 2019. Mr Banasik is a geologist with more than 30
years’ experience across multiple disciplines and commodities. He was a founding Director of WA gold producer
Silver Lake Resources (ASX: SLR), where he held the key role of Director of Exploration and Geology from 2007 to
2014. Prior to that, he held a range of senior geological and executive roles for companies including Consolidated
Minerals, Reliance Nickel and Western Mining Corporation. He has extensive experience in nickel exploration,
project development and operations, having held several geological and management positions with WMC
(1986-2001). He was also Senior Mine Geologist with Goldfields Mine Management (2001-2004) and Chief
Geologist at the Beta Hunt nickel operations (2004-2007).
Other Directorships
During the last three years Mr Banasik held directorships in the following ASX listed company:
First Graphene Ltd (appointed 20 May 2015, resigned 12 February 2018)
Special Responsibilities
Chairman of the Remuneration Committee
Mr Steven A Parsons, B.Sc(Hons) Geology, AusIMM
Non-Executive Director, Age 47
Experience and Expertise
Non-executive director appointed 31 March 2017 resigned 28 February 2019. Mr Parsons is a geologist with over
20 years’ experience in the mining sector. He was formerly the Managing Director of Gryphon Minerals Ltd,
which he founded and listed on the Australian Stock Exchange. He is currently Managing Director of ASX Listed,
Bellevue Gold Ltd.
Other Directorships
During the last three years Mr Parsons held directorships in the following ASX listed companies:
Bellevue Gold Ltd (appointed 31 March 2017) - Executive Director
Blackstone Minerals Ltd (appointed 30 October 2017) – Non-Executive Director
African Gold Limited (appointed 1 February 2018) – Executive Director
Page 5 of 69
Annual Report – 31 December 2019
Mr John W Westdorp, B.Bus, CPA, MAICD, GradDip App Sc
Chief Financial Officer & Company Secretary, Age 56
Experience and Expertise
Mr Westdorp was appointed as Chief Financial Officer on 11 November 2019 and Company Secretary on 15
January 2020. Mr Westdorp is a Certified Practicing Accountant. He was previously Chief Financial Officer and
Company Secretary of Centaurus between 2012 and 2015. He has over 30 years’ experience in the resources
sector and has most recently held the roles of Chief Financial Officer and Interim Chief Executive Officer of
mineral sands producer, MZI Resources Ltd. Mr Westdorp has held senior roles with Murchison Metals Ltd and
Burrup Fertilisers Pty td and has financial, commercial and operations experience across a number of
commodities including iron ore, gold base metals and mineral sands.
Special Responsibilities
Chief Financial Officer
Company Secretary
3 Directors Meetings
The number of meetings of the Company’s Board of Directors held during the year ended 31 December 2019
and the number of meetings attended by each director were:
Meetings of Directors
Meetings of Committees
Audit & Risk Committee
Remuneration
Mr D M Murcia
Mr D P Gordon
Mr B R Scarpelli
Mr M D Hancock
Mr C A Banasik
Mr S A Parsons
Held*
7
7
7
7
7
-
Attended
7
7
6
7
6
-
Held
-
n/a
n/a
-
-
n/a
Attended
-
n/a
n/a
-
-
n/a
Held
1
n/a
n/a
1
1
n/a
Attended
1
n/a
n/a
1
1
n/a
*Denotes the number of meetings held during the time the director held office (excluding circular resolutions)
The Company re-formed Audit & Risk and Remuneration Committees during the year.
The Company does not have a formal Nomination Committee. The function is performed by the full Board. There
is no additional remuneration for committee members.
The Company’s remuneration policy consists of:
a clear structure that distinguishes remuneration of non-executive directors from that of executive
directors and senior management;
balancing the Company’s desire to attract and retain personnel with the need to manage financial
resources.
providing an appropriate balance between fixed and incentive pay to reflect short and long term
performance objectives appropriate to the Company’s circumstances and goals;
motivating personnel to pursue the long-term growth and success of the Company; and
demonstrating a clear relationship between employee performance and remuneration.
Further information on directors’ and executives’ remuneration is set out in the Remuneration Report. Details
of the qualifications of directors of the Remuneration Committee and their attendance at Committee meetings
4 Corporate Governance Statement
A copy of Centaurus’ 2019 Corporate Governance Statement, which provides detailed information about
governance, and a copy of Centaurus’ Appendix 4G which sets out the Company’s compliance with the
in the third edition of the ASX Corporate Governance Council’s Principles and
recommendations
Recommendations
is available on the corporate governance section of the Company’s website at
www.centaurus.com.au/corporate-governance.
Page 6 of 69
Annual Report – 31 December 2019
5 Remuneration Report – Audited
Principles of Remuneration
5.1
The primary objective of the Group’s executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with achievement
of strategic objectives and the creation of value for shareholders. The Board ensures that executive reward
satisfies the following key criteria:
competitiveness and reasonableness;
acceptability to shareholders;
performance linked executive compensation;
transparency; and
capital management.
The Group has structured an executive remuneration framework that is market competitive and complimentary
to the reward strategy of the organisation to ensure:
(i)
Alignment to shareholders’ interests:
focuses on the creation of shareholder value and returns; and
▪
▪ attracts and retains high calibre executives with an inherent knowledge of the Company’s ongoing
business and activities.
(ii)
Alignment to program participants’ interests:
▪ rewards capability and experience;
▪ reflects competitive reward for contribution to growth in shareholder wealth;
▪ provides a clear structure for earning rewards;
▪ provides recognition for contribution; and
▪ seeks to retain experienced and competent individuals in key executive roles.
The remuneration framework consists of base pay and short and long-term incentives. Whilst intended to be
settled in cash, the Board retains the discretion to settle short term incentives with equity. An Employee Share
Option Plan was approved by shareholder at the AGM in May 2019 and incentives settled in equity may be
offered under this plan.
The overall level of executive reward takes into account the performance of the Group over a number of years,
with greater emphasis given to the current and prior year. Over the past 5 years, the Group was involved in
mineral exploration and pre-development activities and therefore growth in earnings is not considered
particularly relevant. Shareholder wealth is dependent upon exploration success and has fluctuated accordingly
in addition to being influenced by broader market factors.
The performance of the Group in respect of the current period and the previous four financial years is set out
below:
Net Loss
Change in share price
Change in share price
2019
$
2018
$
2017
$
2016
$
2015
$
(4,275,397)
(4,197,361)
(3,632,809)
(2,560,899)
(3,700,866)
$0.006
86%
$0.00
-
$0.001
10%
$0.002
($0.046)
64%
(90%)
During the financial year ended 31 December 2019, fee increases were awarded to both non-executive directors,
executive directors and executives of the Company. These increases reflected the increased complexity of the
business and the increase in activity with the acquisition of the Jaguar Project during the period.
The executive pay and reward framework currently has four components:
base pay and benefits;
short term incentives
long term incentives; and
other remuneration such as superannuation and insurances.
The combination of these components comprises the executive’s total remuneration.
Base Pay and Benefits
Base pay is structured as a total employment cost package which may be delivered as a combination of cash and
prescribed non-financial benefits at the executive’s discretion.
Page 7 of 69
Annual Report – 31 December 2019
Executives are offered a competitive base pay that is reflective of current market conditions, comprising a fixed
component of pay and rewards. Base pay for senior executives is reviewed annually to ensure the executive’s
remuneration is competitive with the market. An executive’s base pay is also reviewed on promotion. There
are no guaranteed base pay increases included in any senior executive contracts.
Retirement Benefits
In accordance with regulatory requirements, Directors and employees are permitted to nominate a
superannuation fund of their choice to receive superannuation contributions.
Short Term Incentives
The Board may offer short term performance-based incentives, where employees are paid pre-determined
bonuses on achievement of milestones based on the Company’s short-term objectives. For further details refer
to section 5.5.
Long Term Incentives – Options
Long term incentives may be granted from time to time to reward exceptional performance in the realisation of
strategic outcomes and growth in shareholder wealth. Options or performance rights may be utilised to deliver
long term incentive awards. The Board has discretion to grant options or performance rights for no
consideration. Options or performance rights do not carry voting or dividend entitlements. Information on share
options granted during the year is set out in section 5.3.
Employment Agreements
Remuneration and other terms of employment for executives are formalised in employment agreements which
are reviewed annually. The agreements provide for the provision of other benefits and participation, at the
discretion of the Board in Short and Long-Term Incentive Plans (refer to section 5.5).
Other major provisions of the agreements as at 31 December 2019 relating to remuneration are set out below:
Name
Salary Incl of
Superannuation
Notice Period Company
Notice Period Employee
Redundancy
D P Gordon
$396,000 pa
J W Westdorp (1)
$300,000 pa
12 months
<18 months - 2 months
18 months to 3 years - 4
months
> 3 Years - 6 months
B R Scarpelli
$240,000 pa
2 months
R J Fitzhardinge (2)
$261,000 pa
2 months
6 months
2 months
2 months
2 months
12 months
6 months
6 months
6 months
(1)
(2)
J W Westdorp commenced employment on 11 November 2019.
(2) R J Fitzhardinge was promoted to Operations Manager – Nickel on 1 November 2019 and has been
included as Key Management Personnel from this date.
Non- Executive Directors
Fees and payments to Non-Executive directors reflect the demands which are made on, and the responsibilities
of, the directors. Non-Executive directors’ fees and payments are reviewed at least annually by the Board. The
Chairman’s fees are determined independently to the fees of non-executives based on comparative roles in the
external market and prevailing market conditions.
Non-Executive directors’ remuneration consists of set fee amounts. The level of fees for Non-Executive directors
increased during the year to $43,200 per annum. The Non-Executive Chairman’s fees increased during the year
to $64,800 per annum. Directors do not receive additional committee fees. Non-Executive directors’ fees are
determined within an aggregate directors’ fee pool limit, which is periodically recommended for approval by
shareholders. The total maximum currently stands at $400,000. There is no provision for retirement allowances
for Non-Executive directors.
Non-Executives may from time to time be granted options to provide a material additional incentive for their
ongoing commitment and dedication to the continued growth of the Group. Refer to section 5.3 for options
issued during the current and prior periods. Prior to issuing incentives the Board considers whether the issue is
reasonable in the circumstances. The incentives have been offered to assist the Company in attracting and
retaining the highest calibre of Non-Executive, whilst maintaining the Group’s cash reserves.
Page 8 of 69
Annual Report – 31 December 2019
5.2 Directors’ and Executive Officers’ Remuneration
Details of the nature and amount of each major element of remuneration of each director of the Company, each of the named Company executives and other key management
personnel of the Group are:
Non- Executive Directors
Mr D M Murcia
2019
2018
Mr M D Hancock
2019
2018
Mr C A Banasik (Appointed 1 March 2019)
2019
Mr S A Parsons (Resigned 28 February 2019)
2019
2018
Executive Directors
Mr D P Gordon
2019
2018
Mr B R Scarpelli
2019
2018
Executives
Mr R J Fitzhardinge (Appointed 1 November 2019)
Mr J W Westdorp (Appointed 11 November 2019)
Total
2019
2018
Short Term Benefits
Salary & Fees
$
Other
Benefits(1)
$
Post-
employment
Benefits
Super-
annuation
$
Long Term
Benefits
Share- based
Payments
Long Service
Leave(2)
$
Options(3)
$
Total
$
S300A(1)(e)(i)
Proportion of
Remuneration
Performance
Related
%
S300A(1)(e)(vi)
Value of
Options as
Proportion of
Remuneration
%
48,300
45,000
32,200
30,000
27,500
5,000
30,000
334,333
310,680
194,144
173,806
39,726
36,666
717,869
589,486
-
-
-
-
-
-
-
24,152
29,152
13,922
18,643
2,993
2,821
43,888
47,795
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,820
25,812
3,243
18,102
53,120
70,812
35,443
48,102
19,615
47,115
(19,987)
17,595
(14,987)
47,595
25,000
25,320
19,537
15,413
-
-
3,774
3,483
32,257
25,320
-
-
9,666
-
29,203
15,413
7,013
52,300
7,230
38,718
-
-
21,934
152,527
410,035
432,865
215,296
231,167
56,159
42,970
845,151
830,541
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9.1%
36.5%
9.1%
37.6%
41.6%
-
37.0%
1.7%
12.1%
3.4%
16.7%
-
-
(1) Other benefits include the movement in annual leave entitlements over the 12-month period, measured on an accruals basis, and other minor benefits for executives located in Brazil.
(2) Relates to pro rata long service leave measured on an accruals basis.
(3) The fair value of the options is calculated at the date of grant using the Black Scholes option-pricing model and allocated to each reporting period evenly over the period from grant date to vesting date. The
value disclosed is the portion of the fair value of the options recognised in this reporting period.
Page 9 of 69
Annual Report – 31 December 2019
5.3
Equity Instruments
Options are granted under the Employee Share Option Plan (ESOP) which was approved by shareholders at the
2019 Annual General Meeting. Eligibility to participate in the ESOP (including participation by Executive and Non-
Executive directors) is determined by the Board in its absolute discretion. Where provided, options granted
under the ESOP are for no consideration and are granted for a period of up to 5 years. The vesting and exercise
conditions of options granted are also determined by the Board in its absolute discretion. Employees must
remain in employment during the vesting period. Options may also be granted by the Company outside of the
ESOP, but under similar terms and conditions.
The Group has a policy that prohibits directors and employees who are granted share options as part of their
remuneration from entering into arrangements that limit their exposure to losses that would result from share
price decreases.
Analysis of Options over Equity Instruments Granted as Compensation
Details of vesting profiles of the options granted as remuneration both during the current and in prior years to
key management personnel of the Group are detailed below. There were 3,500,000 options forfeited during the
year. A total of 6,250,000 options with an exercise price of $0.0082 were exercised in June 2019 raising $51,250.
Number of
Options
Issued
Grant Date
Expiry
Date
Exercise
Price
% Vest in
Year
Fair value
per option
at grant
date
Financial
Year in
Which
Grant
Vests (1)
1,000,000
2,500,000
2,500,000
5,000,000
3,000,000
5,000,000
5,000,000
10,000,000
1,500,000
3,750,000
3,750,000
7,500,000
750,000
1,750,000
1,750,000
3,500,000
1,750,000
1,750,000
3,500,000
1,750,000
1,750,000
10/06/16
31/05/17
31/05/17
31/05/17
10/06/16
31/05/17
31/05/17
31/05/17
10/06/16
31/05/17
31/05/17
31/05/17
10/06/16
31/05/17
31/05/17
31/05/17
31/05/19
31/05/19
31/05/19
31/05/17
31/05/17
10/06/20
31/05/20
31/05/21
31/05/22
10/06/20
31/05/20
31/05/21
31/05/22
10/06/20
31/05/20
31/05/21
31/05/22
10/06/20
31/05/20
31/05/21
31/05/22
31/05/22
31/05/23
31/05/24
31/05/20
31/05/21
$0.0082
$0.0130
$0.0140
$0.0150
$0.0082
$0.0130
$0.0140
$0.0150
$0.0082
$0.0130
$0.0140
$0.0150
$0.0082
$0.0130
$0.0140
$0.0150
$0.0120
$0.0120
$0.0120
$0.0130
$0.0140
$0.0031
$0.0064
$0.0069
$0.0072
$0.0031
$0.0064
$0.0069
$0.0072
$0.0031
$0.0064
$0.0069
$0.0072
$0.0031
$0.0064
$0.0069
$0.0072
$0.0041
$0.0058
$0.0063
$0.0064
$0.0069
-
-
-
100%
-
-
-
100%
-
-
-
100%
-
-
-
100%
100%
-
-
-
-
2018
2017
2018
2019
2018
2017
2018
2019
2018
2017
2018
2019
2018
2017
2018
2019
2019
2020
2021
2017
2018
Directors
Mr D M Murcia
Mr D P Gordon
Mr B R Scarpelli
Mr M D Hancock
Mr C A Banasik
Mr S A Parsons
(1)
The options which vest in 2020 and 2021 are subject to the satisfaction of service conditions.
Exercise of Options Granted as Compensation
There were 6,250,000 shares issued on exercise of options which were previously granted as compensation to
key management personnel. There are no amounts unpaid on the shares issued on the exercise of options
previously granted as compensation.
Page 10 of 69
Annual Report – 31 December 2019
Options Over Equity Instruments Granted as Compensation
The movement during the reporting period, by number of options over ordinary shares in Centaurus Metals
Limited held, directly, indirectly and beneficially, by each key management person, including their related
parties, is as follows:
Held 1
January
2019
Exercised
Granted/
(Forfeited)
Held 31
December
2019
Vested
During the
Period
12,000,000
26,000,000
18,000,000
8,500,000
-
7,000,000
(1,000,000)
(3,000,000)
(1,500,000)
(750,000)
-
-
-
-
-
-
7,000,000
(3,500,000)
11,000,000
23,000,000
16,500,000
7,750,000
7,000,000
3,500,000
5,000,000
10,000,000
7,500,000
3,500,000
1,750,000
-
Vested and
Exercisable
31
December
2019
11,000,000
23,000,000
16,500,000
7,750,000
1,750,000
3,500,000
-
-
-
-
-
-
16,500,000
-
-
-
16,500,000
-
Directors
Mr D M Murcia
Mr D P Gordon
Mr B R Scarpelli
Mr M D Hancock
Mr C A Banasik
Mr S A Parsons
Executives
Mr R J Fitzhardinge (1)
Mr J W Westdorp
(1)
Represents balance held on commencement of becoming key management personnel
Analysis of Movements in Options
The movement during the reporting period, by value, of options over ordinary shares in the Company held by
each director, key management person and each of the Company executives and relevant Group executives is
detailed below:
Value of
Options
Granted $(A)
Value of
Options
Exercised in
Year $(B)
Value of
Options
Lapsed in
Year $(C)
-
-
-
-
39,534
-
-
-
(200)
(600)
(300)
(150)
-
-
-
-
-
-
-
-
-
-
-
-
Director
Mr D M Murcia
Mr D P Gordon
Mr B R Scarpelli
Mr M D Hancock
Mr C A Banasik
Mr S A Parsons
Executives
Mr R J Fitzhardinge
Mr J W Westdorp
(A) The value of options granted in the year is the fair value of the options calculated at grant date using
the Black Scholes option-pricing model. The total value of the options granted is included in the table
above. This amount is allocated to remuneration over the vesting period.
(B) The value of options exercised during the year is calculated as the market price of shares of the
Company as at close of trading on the date the options were exercised after deducting the price paid
to exercise the option.
(C) The value of unvested options that lapsed during the year represents the benefit forgone and is
calculated at the date the options lapsed using the Black Scholes option-pricing model assuming the
performance criteria had been achieved. To the extent that the options are out of the money upon
lapsing, the value is nil.
Page 11 of 69
Annual Report – 31 December 2019
5.4
Key Management Personnel Transactions
Loans to Key Management Personnel and Their Related Parties
No loans have been made to directors or other key management personnel of Centaurus Metals Limited or the
Group.
Key Management Personnel and Director Transactions
Key management personnel, or their related parties, hold positions in other entities that result in them having
control or significant influence over the financial or operating policies of these entities.
Two of these entities transacted with the Group in the reporting period. The terms and conditions of the
transactions with key management personnel and their related parties were no more favourable than those
available, or which might reasonably be expected to be available, on similar transactions to non-key
management personnel related entities on an arm’s length basis.
The aggregate value of transactions and outstanding balances relating to key management personnel and
entities over which they have control or significant influence were as follows:
Key Management Person
Mr D M Murcia (1)
Mr C A Banasik (2)
Total and current liabilities
Transaction
Legal fees
Consulting Fees
Transaction Value
2019
$
34,740
7,000
2018
$
19,392
-
Balance Outstanding as at
31 Dec 2019
$
-
-
-
31 Dec 2018
$
10,651
-
10,651
(1)
Payable to MPH Lawyers, a firm in which Mr Murcia is a partner.
(2) Mr C A Banasik was paid consulting fees for geological consulting services provided.
Shareholdings of Key Management Personnel
The movement during the reporting period of ordinary shares in Centaurus Metals Limited held, directly,
indirectly and beneficially, by each key management person, including their related parties, is as follows:
Held 1
January
2019
Received on
exercise of
options(1)
Purchases
Other(2)
Held at 31
December
2019
15,079,462
78,783,121
2,500,000
6,683,754
4,750,000
-
-
-
-
-
4,000,000
-
-
-
-
-
750,000
(3,111,111)
-
-
79,513,103
-
79,513,103
-
Directors
Mr D M Murcia
Mr D P Gordon
Mr B R Scarpelli
Mr M D Hancock
Mr C A Banasik
Mr S A Parsons
Executives
Mr R J Fitzhardinge
Mr J W Westdorp
13,079,462
65,783,121
1,000,000
4,620,460
-
3,111,111
-
-
2,000,000
13,000,000
1,500,000
2,063,294
-
-
-
(1) Exercise of listed and unlisted options.
(2) Represents balance on commencement/ resignation.
All equity transactions with Key Management Personnel other than those arising from the exercise of
remuneration options have been entered into under terms and conditions no more favourable than those the
Group would have adopted if dealing at arms-length.
Page 12 of 69
Annual Report – 31 December 2019
Listed Option Holdings of Key Management Personnel
The movement during the reporting period of the listed options in Centaurus Metals Limited held, directly,
indirectly and beneficially, by each key management person, including their related parties, is as follows:
Directors
Mr D M Murcia
Mr D P Gordon
Mr B R Scarpelli
Mr C A Banasik
Mr M D Hancock
Mr S A Parsons
Executives
Mr R J Fitzhardinge
Mr J W Westdorp
Held 1
January
2019
2,500,000
18,766,877
-
1,313,294
1,111,111
Purchases
Exercised
Expired
Other(1)
-
-
-
4,000,000
-
-
(1,000,000)
(10,000,000)
-
-
(1,313,294)
-
(1,500,000)
(8,766,877)
-
-
-
-
-
-
-
-
(1,111,111)
Held at 31
December
2019
-
-
-
4,000,000
-
-
-
-
-
-
-
-
-
-
9,000,000
-
9,000,000
-
(1)
Represents balance on commencement/ resignation
5.5
2020 Incentive Plans
As part of the annual remuneration review, the Board introduced a Short-Term Incentive (STI) and a Long-Term
Incentive (LTI) Plan to apply from 1 January 2020. The Plans were introduced to incentivise and reward
employees for the achievement of specific milestones linked to the Groups short and long-term objectives.
Short Term Incentive Plan
The short-term incentive plan was introduced for KMP and other Managers of the Group to incentivise and
reward performance for the 12 months to 31 December 2020 based on a number of key deliverables being
achieved. Key Management Personnel, other than the Managing Director, can earn up to 30% of their Total Fixed
Remuneration under the STI Plan whilst the Managing Director can earn up to 50% of his TFR. Other Managers
of the Group can earn up to 15-22.5% of their TFR under Plan.
The following lists the Groups key STI performance measures for the year ending 31 December 2020.
▪ Effective management of environmental conditions, safety performance and community and land
owner engagement in Brazil.
▪ Achievement of defined targets for the Jaguar Project with respect exploration activity performance,
Mineral Resource definition and new target definition.
▪ Achievement of a number of key deliverables in relation to the licencing, feasibility study and other
development activities of the Jaguar Nickel Project
▪ Achievement of value adding outcome for fully licensed Jambreiro Iron Ore project as well as a
number of other
▪ market capitalisation growth targets.
Assessment as to whether the above key deliverables have been met will be made by the Board after the end of
financial year ended 31 December 2020.
Long Term Incentive Plans
The Board has initiated an LTI Plan for 2020 for Key Management Personnel and Executive Directors. The LTI’s
will take the form of Options with no exercise price and will be issued under the Company’s Employee Share
Option Plan. Key Management Personnel, other than the Managing Director, will be issued with options up to
the value of 50% of their Total Fixed Remuneration whilst the Managing Director will be issued with options up
to the value of 75% of his TFR. The options will have a 3-year assessment period from 1 January 2020 to 31
December 2022. The options are subject to the following vesting criteria prior to exercise
▪ 50% based on Total Shareholder Return relative to a peer group of companies determined by the
Board; and
▪ 50% Based upon entry by the Company into the ASX300 Index.
Page 13 of 69
Annual Report – 31 December 2019
Both milestones will be assessed at the end of the 3-year assessment period and the options will not vest or be
capable of being exercised until after this assessment period has closed, other than in the case of a successful
change of control transaction in which case the options will immediately vest. Participants in the LTI plan must
remain in employment during the assessment period.
Information Regarding Relative TSR Measure
To achieve the relative TSR performance measure, the Company must outperform, on a TSR basis, at least 49.9%
of the established peer group. The Peer Group has been established by the Board.
The achievement of relative TSR performance measure will be made at the end of the assessment period and
vesting will be in line with the table below;
Assessment Table
Percentile Ranking
compared to Peers
Amount of ZEPOs to Vest and
become exercisable
<50th Percentile
Zero
B/t 50th and 75th Percentile
Pro Rata B/t 50% and 100%
>75th percentile
100%
Total shareholder return has been defined as the financial gain that results from a change in the stock's price
plus any dividends paid by the Company during the assessment period divided by the share price at the start of
the assessment period.
Vested options can be exercised any time between vesting and the expiry date.
6 Principal Activities
During the period the principal activities of the Group consisted of exploration and evaluation activities related
to mineral resources in Brazil. There were no significant changes in the nature of the activities of the Group
during the year.
7 Operating and Financial Review
A summary of consolidated results is set out below
Interest Income
Other Income
31
December
2019
$
155,131
96,952
252,083
31
December
2018
$
67,097
19,712
86,809
Loss before income tax
Loss attributable to members of Centaurus Metals Limited
(4,275,397)
(4,275,397)
(4,197,361)
(4,197,361)
Financial Performance
During the year ended 31 December 2019 the Group expensed Exploration and Evaluation costs totalling
$2,689,925 (2018: $2,463,216) in accordance with the Group’s accounting policy. The Exploration and Evaluation
costs primarily comprise costs in relation to exploration at the Jaguar Nickel Sulphide Project, the Itapitanga
Nickel-Cobalt Project and the Salobo West and Pebas Copper – Gold Projects in Brazil.
Financial Position
At the end of the year the Group had a cash balance of $9,703,718 (2018: $1,399,910) and net assets of
$11,796,361 (2018: $3,967,189). Total liabilities amounted to $1,089,563 (2018: $492,930) and consisted of
trade and other payables, lease liabilities and employee benefits.
Page 14 of 69
Annual Report – 31 December 2019
Strategy
The key focus for the Group is to explore and develop mineral resource projects which the Company believes
are capable of delivering acceptable returns to its shareholders within a reasonable timeframe.
The key highlight of the 2019 calendar year was the acquisition of the Jaguar Nickel Sulphide Project, located in
the Carajás Mineral Province in Northern Brazil, from global mining giant, Vale S.A. (“Vale). This transformational
acquisition represents an attractive exploration, growth and development opportunity in the international nickel
sulphide sector, repositioning Centaurus as a nickel development company at a time when the demand for nickel
sulphides is forecast to increase over the next decade due to growing demand from the lithium-ion battery
sector.
The Company also progressed strategies to realise value from its other mineral assets in Brazil, including the
completion of an updated Feasibility Study on the advanced Jambreiro Iron Ore Project, located in Minas Gerais,
and the completion of a Scoping Study on the Itapitanga Nickel Project in the Carajás Mineral Province.
Project Activities
Overview
In August 2019, Centaurus secured a significant new exploration, growth and development opportunity in the
international nickel sulphide sector after executing a formal Sale & Purchase Agreement with global mining giant,
Vale S.A. (“Vale”) to acquire the advanced, large-scale Jaguar Nickel Sulphide Project in the Carajás Mineral
Province of northern Brazil (see Corporate Section for acquisition details).
The settlement of the acquisition remains subject to approval by the Brazilian National Bank for Economic and
Social Development (“BNDES”) for the assignment of BNDES’ royalty interest in the Project. BNDES has confirmed
that all is in order with the process and that they continue to work through the internal procedures necessary to
finalise the approval.
The transformational acquisition, secured through an innovative agreement with Vale that includes a key asset-
swap of Centaurus’ greenfields Salobo West Copper-Gold Project, will give the Company an opportunity to
pursue the development of an advanced and well-located nickel sulphide project in northern Brazil which offers
outstanding high-grade open pit development potential.
The Jaguar Project will give the Company further exposure to a metal with exceptional supply-demand
fundamentals and a robust outlook given its use in the stainless-steel industry (which currently accounts for 70%
of global consumption) and growing consumption by the EV (Electric Vehicle) battery sector.
During the first half of the reporting period, Centaurus also completed a new Pre-Feasibility Study (PFS) targeting
a potential 1Mtpa domestic iron operation at its advanced Jambreiro Iron Ore Project, located in the State of
Minas Gerais. This followed the completion of a strategic review of the 2013 Jambreiro Iron Ore Project
Feasibility Study work, an ongoing assessment of the significant changes and marked improvement in the
Brazilian domestic and global iron ore market during the reporting period, and the limited scope changes
required to allow for the timely development of the Project to proceed.
The Company also continued with early stage Scoping Study work on the Itapitanga Nickel Project, located in the
Carajás Mineral Province, during the first half of the reporting period as part of its joint venture with Simulus
Group. The continuation of the joint venture is currently under review given the limited work completed by
Simulus during the second half of the reporting period.
Carajás Base Metal Projects
Jaguar Nickel Sulphide Project
Overview
The Jaguar Nickel Sulphide Project is located in the globally significant Carajás Mineral Province, just 35km north
of the regional centre of Tucumã (population +50,000) in the northern Brazilian state of Para (Figure 1). The
Project is only 15km from Vale’s Onça-Puma Nickel Mine which has a 230kVA sub-station located at the site.
More than 55,000m of diamond core was drilled into the main deposits from 2006 to 2010 by Vale. The drilling
is wide-spaced (+100m between sections) and targeted bulk tonnage,
low-to-medium grade nickel
mineralisation. The extent of the drilling and the exceptional prospectivity of the Project for high-grade nickel
can be seen in the large number of significant drill intersections reported to the ASX in the Company’s ASX
Announcement dated 6 August 2019, which also detailed the terms of the acquisition of the Project from Vale.
Page 15 of 69
Annual Report – 31 December 2019
Figure 1 – Location of the Jaguar Nickel Sulphide Project in the State of Para, northern Brazil.
Jaguar is an at-surface nickel sulphide project with a non-JORC compliant resource of 40.4Mt at 0.78% Ni1 (at a
0.5% Ni cut-off) for a total of 315,000 tonnes of contained nickel metal. This non-JORC compliant resource was
based on the 55,000m of diamond drilling completed by Vale, as well as an extensive geological and geophysical
database.
Within the historical resource drilling, multiple shallow massive to semi-massive sulphide zones have been
identified with outstanding high-grade intersections such as 34.0m at 3.31% Ni from 56m in PKS-JAGU-DH00065.
Re-processing of Historical EM Data
After executing the sale & purchase agreement of the Jaguar Project, Centaurus engaged leading Perth-based
geophysical consulting group Southern Geoscience to re-process historical Fixed Loop Electromagnetic (FLEM)
and down-hole electromagnetic (DHEM) survey data from the Project. Vale completed 72 EM survey lines over
68 fixed-loops and a further 34 DHEM surveys across the project area, assembling an extensive and high-quality
geophysical dataset.
This program of re-processing historical EM data delivered encouraging results, demonstrating clearly that the
EM conductors identified in the FLEM and DHEM surveys correlate extremely well with the high-grade nickel
sulphide zones. Across all the Jaguar Deposits, the FLEM plates from the higher frequency (30Hz) survey
modelled by Vale correlate with the broad, disseminated mineralised zones.
In order to concentrate on the massive and semi-massive sulphide zones, Southern Geoscience focused on re-
modelling the low frequency (3Hz) DHEM survey data. The initial results stemming from this DHEM work over
the Jaguar South Deposit were encouraging, with 14 strong EM plates identified which will greatly assist with the
targeting of the Company’s own drilling programs.
1 Centaurus cautions that the mineral resources for the Jaguar Project are not reported in accordance with the JORC Code. A Competent
Person has not yet done sufficient work to classify the resources as mineral resources in accordance with the JORC code. It is uncertain that,
following evaluation or further work, the foreign estimate will be able to be reported as Mineral Resources in accordance with the JORC
Code. Refer to ASX Announcement 6 August 2019 for detail on foreign resource.
Page 16 of 69
Annual Report – 31 December 2019
In the northern part of the Project area, Southern Geoscience completed re-processing work over the Onça-
Preta Deposit and Onça-Rosa Prospect. At the Onça-Preta Deposit, a strong 400m long FLEM conductor was
modelled that correlates very well with existing nickel sulphide intersections from multiple drill holes within the
deposit. At Onça Rosa, a 600m long conductor plate was modelled that correlates very well with a very high-
grade intersection drilled by Vale of 7.9m at 5.23% Ni in drill hole PKS- JAGU-DH 00158.
Towards the end of the reporting period, several new priority walk-up high-grade nickel sulphide drill targets at
the Jaguar Project were identified after receiving more encouraging results from ongoing re-processing of
historical geophysical survey data.
A further thirty-one (31) new conductor plates have now been modelled from DHEM surveys that correlate with
existing high-grade semi-massive to massive nickel sulphide intersections at the Jaguar North-east, Jaguar North,
Jaguar Central and Jaguar Central South Deposits.
All DHEM and FLEM conductor plates will now be used to assist with drill planning and the targeting of the
massive to semi massive sulphides across the entire project area.
The Company also received and processed Vale’s airborne GeoTEM survey data for the Jaguar Project. GeoTEM
is an airborne Electromagnetic survey technique that collects high data density per line and is a very effective
first- pass exploration tool – as demonstrated by the presence of strong GeoTEM anomalies over the known
high-grade nickel occurrences at the Jaguar Deposits.
Airborne GeoTEM Processing
The first results from the re-processing of the high-frequency airborne GeoTEM survey data (400m line spacing)
showed good correlation between the GeoTEM results and the high-frequency (30Hz) FLEM, as well as the low-
frequency (3Hz) DHEM conductor plates where there is known high-grade nickel sulphide mineralisation.
The GeoTEM results confirmed the prospectivity of the Jaguar and Onça-Preta Deposits but more importantly
identified multiple new greenfields prospects along with confirming the scale of known Prospects (Onça-Rosa).
Historical Drilling
Historical drilling by Vale focused on the broad, bulk tonnage, medium grade mineralisation at the Jaguar Project
and, as such, no follow-up targeted drilling of the high-grade zones of mineralisation was undertaken, creating
a significant opportunity for Centaurus.
Vale drilled 167 diamond holes for over 55,000 metres of drilling. Better drill intersections over the entire Project
included
▪ 34.0m at 3.31% Ni from 56m in PKS-JAGU-DH00065;
▪ 42.4m at 2.20% Ni from 76m in PKS-JAGU-DH00132;
▪ 9.85m at 3.05% Ni from 99.4m in PKS-JAGU-DH00054;
▪ 11.8m @ 2.56% Ni from 55.0m in PKS-JAGU-DH00112;
▪ 30.6m @ 1.46% Ni from 65.0m in PKS-JAGU-DH00048;
▪ 19.0m @ 1.73% Ni from 183.0m in PKS-JAGU-DH00048;
▪ 31.4m at 2.47% Ni from 15.3m in PKS-JAGU-DH00030;
▪ 26.0m at 2.13% Ni from 66.0m in PKS-JAGU-DH00033;
▪ 32.3m at 1.40% Ni from 55.5m in PKS-JAGU-DH00024;
▪ 17.4m at 2.38% Ni from 23.8m in PKS-JAGU-DH00121;
▪ 31.5m at 1.27% Ni from 115.0m in PKS-JAGU-DH00115;
▪ 16.6m at 1.98% Ni from 99.4m in PKS-JAGU-DH00054; and
▪ 31.8m at 1.13% Ni from 66.2m in in PKS-JAGU-DH00127.
Landowner Access Arrangements
Following completion of the acquisition, Centaurus entered into land access arrangements with the four key
landowners that own properties where the main target areas are on the Jaguar tenement. The arrangements
provide the Company with access to the landowner’s properties to undertake all exploration activities (including
drilling and clearing) to advance the Project.
Page 17 of 69
Annual Report – 31 December 2019
Field Office and Core Shed Set Up
To support the Company’s planned accelerated exploration campaign at the Jaguar Project, a new site office and
core yard was set up. The core shed was prepared to receive the 55,000m of historical core as well as all drill
core generated from Centaurus own diamond drill program. Construction of a core logging area and core cutting
facility was also completed.
The Company had contracted local professionals in preparation for the upcoming program including Geologists,
Mine Technicians, Field Labourers and a Site Admin coordinator.
Maiden Diamond Drilling Program
Centaurus commenced its maiden drilling program at the Jaguar Project in early November, initially comprising
55 planned drill-holes for a total of 10,000m. The Company has two clear objectives with this campaign – firstly
to extend the known high-grade nickel sulphide intersections and, secondly, to identify new high-grade nickel
sulphide zones.
The first holes targeted extensions to known high-grade nickel sulphide zones and the identification of new high-
grade zones within the Onça-Preta and Jaguar South Deposits. Assay results were received from the first three
diamond drill holes during the reporting period, all of which returned thick intersections of high-grade nickel
sulphide mineralisation.
The zones of mineralisation intersected at both the Jaguar South and Onça-Preta deposits have correlated
particularly well with historical high-grade intersections and, importantly, with the Down-hole Electromagnetic
(DHEM) and Fixed Loop Electromagnetic (FLEM) conductor plates. This bodes well for all current and future in-
fill and extensional drilling of the high-grade nickel sulphide targets at Jaguar.
Historical drilling by Vale S.A. at Jaguar targeted a bulk tonnage, medium-low grade nickel sulphide resource and,
as such, the project had been pattern drilled on broad 100m x 50m spacing, with little or no follow-up drilling of
the historical high-grade intersections.
Jaguar South Deposit
Highlights of the assay results received during the reporting period from the Jaguar South Deposit include the
following intersections. A full list of significant assay results was provided in the Company’s ASX Announcement
dated 3 December 2019:
▪
▪
▪
12.4m at 1.95% Ni, 0.10% Cu and 0.03% Co from 71.0m, including:
5.1m at 2.86% Ni, 0.16% Cu and 0.05% Co from 71.9m;
9.0m at 1.38% Ni, 0.04% Cu and 0.02% Co from 112.0m, including:
•
•
2.5m at 3.38% Ni, 0.11% Cu and 0.06% Co from 113.3m;
40.9m at 1.41% Ni, 0.04% Cu and 0.03% Co from 131.5m, including:
•
•
6.0m at 3.19% Ni, 0.08% Cu and 0.06% Co from 152.0m; and
4.4m at 2.21% Ni, 0.06% Cu and 0.04% Co from 161.1m.
By the end of the reporting period, a further five diamond drill holes had been completed at Jaguar South, with
the core from the zones of mineralisation sent for assay.
Onça-Preta Deposit
Highlights of the assay results received during the reporting period from the Onça-Preta Deposit include the
following intersections. A full list of significant assay results was provided in the Company’s ASX Announcement
dated 3 December 2019:
▪
▪
▪
▪
▪
6.2m at 1.90% Ni, 0.10% Cu and 0.07% Co from 107.0m in JAG-DD-19-001;
7.9m at 1.58% Ni, 0.11% Cu and 0.11% Co from 126.1m in JAG-DD-19-001, including:
•
2.9m at 3.80% Ni, 0.27% Cu and 0.26% Co from 126.1m;
5.0m at 1.88% Ni, 0.18% Cu and 0.14% Co from 141.5m in JAG-DD-19-001, including:
•
3.8m at 2.28% Ni, 0.22% Cu and 0.12% Co from 142.1m;
10.2m at 1.20% Ni, 0.06% Cu and 0.04% Co from 83.7m in JAG-DD-19-003, including:
•
3.5m at 2.44% Ni, 0.10% Cu and 0.09% Co from 90.3m;
2.5m at 1.44% Ni, 0.04% Cu and 0.21% Co from 100.0m in JAG-DD-19-003;
Page 18 of 69
Annual Report – 31 December 2019
Drilling completed prior to the end of the reporting period indicates that at Onça-Preta, the grade and width of
the mineralisation is increasing with depth. The deepest drill hole, PKS-JAGU-DH00014, returned the best
intersection of 18.0m @ 2.19% Ni including 9.4m @ 2.96% Ni from 318m depth as well as 7.9m @ 2.18% Ni
including 5.7m @ 2.72% Ni from 352m depth. In a significant positive for the potential to extend the Deposit at
depth, the DHEM conductor plates continue down-dip below these intersections.
New Ground Magnetics and Electromagnetic (EM) Surveys
An in-fill ground magnetics survey commenced towards the end of the reporting period.
The survey is being completed by a local geophysical consultancy with Southern Geoscience completing QA/QC
of the survey data and undertaking all of the required processing work. Around 90km of lines were completed
with the results of the survey work expected in Q1 2020.
Metallurgy & Engineering
The Company has completed a comprehensive review of historical metallurgical data and identified several
value-adding processing and project risk reduction opportunities that are now to be investigated.
Historically, the testwork was completed based on consideration of a bulk tonnage, low-grade project with the
testwork starting with a coarse primary grind followed by a rougher concentrate fine regrind. This process is
more like a copper-gold flotation circuit not a conventional nickel flotation circuit. Consequently, the Company
now believes that there are a number of value-adding process optimisation opportunities immediately available
to enhance nickel recoveries and reduce operating costs.
Process Mineralogy
Centaurus commenced process mineralogy studies that amalgamate geological and metallurgical studies to
create a “Geomet” understanding of how each respective ore type will treat and what is metallurgically
significant in the ore in order to guide geological assessment and analysis. This work will be carried out by
McArthur Ore Deposit Assessments Pty Ltd (MODA) in Tasmania. MODA is an industry leader and exceptionally
experienced in base metal flotation performance. The Geomet studies are key to efficiently carrying out the
metallurgical testwork.
Metallurgical Testwork
More than 75kg of sample was shipped to Perth and composites of the Jaguar South and Onça-Preta were being
collected for the process mineralogy assessment and metallurgical testwork. Metallurgical testwork will be
ongoing throughout 2020.
Project Engineering
Project engineering work considering a conventional nickel flotation processing plant project commenced
during the period with the preliminary water balance, waste storage requirements and project layout studies
well advanced by year end.
Licensing
The terms of reference for the EIA/RIMA, which is the main study required to apply for the key project
environmental licence (Preliminary Licence or LP), was issued by the Pará Environmental Agency (SEMAS). The
scope issued by SEMAS is in line with the Company’s expectations for the Jaguar Project.
A considerable amount of baseline data is already at hand for use in the EIA/RIMA given the historical work
completed by Vale, and this has given the Company a strong head-start on the licensing process.
During 2020, the Company will, however, collect further wet and dry season data for the purpose of completing
the EIA/RIMA. Wet season data will be collected prior to April 2020 with dry season data to be collected from
June 2020.
Forward Program
Subsequent to the end of the reporting period, Centaurus announced the commencement of major exploration,
resource definition and project development programs for 2020 (see ASX announcement, 15 January 2020). The
Company has embarked on a multi-pronged strategy aimed at delivering a maiden high-grade JORC Mineral
Resource at Jaguar by mid-2020, making new massive sulphide nickel discoveries and putting in place the
foundations for a rapid pathway to project development and licensing.
Page 19 of 69
Annual Report – 31 December 2019
Diamond drilling is ongoing at the Jaguar South and Onça-Preta Deposits focused on extending known
mineralisation and identifying new high-grade zones. Drilling on the other Jaguar Deposits as well as the Onça-
Rosa Prospect will start in the March 2020 quarter once the drill accesses and pads have been prepared and in
conjunction with the results coming from the Company’s first Down-hole (DHEM) and Fixed Loop (FLEM)
Electromagnetic (EM) survey work.
Itapitanga Nickel-Cobalt Project
Last year, Centaurus secured a 100% interest in the Itapitanga Nickel-Cobalt Project, a highly prospective nickel-
cobalt exploration project in the Carajás Mineral Province of northern Brazil located immediately along strike
from world-class nickel-cobalt deposits owned by global majors Anglo American and Vale. The Itapitanga Project
is located primarily on farm land, covers an area of approximately 50km2 and is located 50km north-east of the
regional centre of São Felix de Xingu and 110km west of Vale’s operating nickel mine, Onça‐Puma.
The Project covers the southern extension of the same ultramafic-mafic intrusive complex that hosts both the
Jacaré Nickel-Cobalt Project and several unpublished nickel-cobalt resources held by Vale.
In November 2018, Centaurus executed a binding earn-in joint venture term sheet with Australian-based battery
metals process leader, the Simulus Group (“Simulus”), covering the development of the Itapitanga Project.
Simulus can earn up to an 80% interest in the project with Centaurus being free-carried through to a decision to
mine.
Whilst Simulus completed some initial scoping study activities in the first half of 2019, work slowed in the second
half of the year due to Simulus’ need to source further funding for the Project. The Company is presently
reviewing the status of the joint venture.
Minas Gerais Iron Ore Projects
Jambreiro Iron Ore Project
The Company’s 100%-owned Jambreiro Project, located in south-east Brazil, is a shovel-ready development
project that is licenced for 3Mtpa of wet production and which represents a strategic asset in the Brazilian
domestic iron ore and steel sector, particularly with premium pricing that exists in the market for high grade ore
(+65% Fe) such as that which could be produced at Jambreiro.
Centaurus originally completed a positive Feasibility Study for the Jambreiro Project in November 2012 for a
2Mtpa Project which was subsequently revised during 2013 to a 1Mtpa iron ore production scenario. This Study
demonstrated low operating costs and strong economics.
The Company updated the Feasibility Study based on significant changes and marked improvements in a number
of key parameters since the 2013 Feasibility Study was completed, including:
▪ Higher prices in the international market for premium 62% Fe ore;
▪ Lower availability of high-grade iron ore in the Brazilian domestic market compared with 2013;
▪
Improved domestic market pricing relative to 2013 as a result of the currency impact of a weaker
Brazilian Real against the US Dollar;
▪ Significant premiums being realised for higher grade 65% Fe product, in light of tighter environmental
conditions for steel mills across the globe, which did not present in the domestic market in 2013;
Improved access to open-access ports, logistics and infrastructure compared with 2013, which should
provide a greater opportunity for the Company to consider supply into the export market;
▪
▪ A number of new potential customers and partners in the domestic market which were not available
to the Company in 2013; and
▪ A new pro-development government in Brazil which should provide strength for the domestic steel
industry in Brazil over the coming years.
Pre-Feasibility Study Outcomes
Centaurus completed the Pre-Feasibility Study (PFS) in the June Quarter of 2019, with the key financial and
technical outcomes announced to the market on 5 July 2019. The PFS outlined a robust 1Mtpa start-up project
capable of generating life-of-mine revenues of A$1.05 billion and EBITDA of A$533 million over its initial 18-year
life.
The strong economics of the proposed A$59.8 million development – including a A$114.9 million post-tax NPV8
and IRR of 32% for a 1Mtpa operation provide a strong foundation for the Company to re-open off-take
arrangements in the Brazilian domestic market.
Page 20 of 69
Annual Report – 31 December 2019
The PFS has been based on the new JORC 2012 Proven and Probable Ore Reserves estimate of 43.3Mt grading
29.1% Fe, which was also released to the market on 5 July 2019. The Ore Reserve estimate focuses only on the
friable component of the JORC 2012 Mineral Resource estimate (Measured, Indicated and Inferred) and utilises
current operating costs and conservative revenue assumptions.
With tailings management being such a strong focus point for all stakeholders in Brazil at the present time, the
Company has proactively made the decision that it will dry stack all tailings from the operations of the Project.
This approach has the benefit of facilitating an easier future expansion pathway for the Project (no tails dam
capacity constraints) and minimising the potential impact of government and/or non-government organisation
intervention as the Project advances towards production.
The full Pre-Feasibility Study was reported in the ASX Announcement of 5 July 2019 (“Jambreiro Pre-Feasibility
Study Confirms Low Costs, Strong Economics for 1Mtpa Iron Ore Operation”) and is available on the ASX Platform
and on the Company’s website.
The Company has re-opened off-take discussions for the high quality Jambreiro product with a number of end
user and trading groups in Brazil. The completion of a suitable offtake is required in order for the Company to
advance financing discussions for the Project. Consequently, until off-take is advanced to a satisfactory stage to
support financing, any development decision in respect to the Project will continue to be deferred.
CDE Global continued to progress engineering and detailed design work on a modular turn key plant solution
for the Project. This work is expected to be completed in the first quarter of 2020.
Conquista Iron Ore Project
The Conquista Iron Ore Project was divested to R3M Mineração Ltda during 2018. The Company retains a 12%
royalty over any production from this asset. R3M is currently licencing the project to undertake further
exploration and future mining activities. As at the end of 2019, Centaurus has no clarity on whether income will
flow from the Royalty it holds over the Conquista Project
Corporate
Acquisition of Jaguar Nickel Project
In August 2019, Centaurus executed a formal Sale & Purchase Agreement to acquire the Jaguar Nickel Project
from Vale S.A. The consideration payable for 100% acquisition of the Jaguar Project requires a US$250,000 cash
payment on Closing, with the main component of the future cash consideration contingent on successful
production from the Project. This significantly de‐risks the acquisition for the Company and allows the Company
to focus on advancing the development aspects of the Project over the next 18 months.
Up-Front Consideration on Closing (Closing of the Formal Agreement to occur upon BNDES approval of the
transfer of royalty obligation in the project from Vale to Centaurus)
▪ US$250,000 cash; and
▪ The transfer of all Salobo West Exploration Licences and Exploration Licence Applications to Vale.
Deferred Consideration
▪ US$1.75 million on the commencement of a Bankable Feasibility Study, or construction funding being
secured, or 3 years from agreement signing, whichever occurs first;
▪ US$5.0 million on First Commercial Production;
▪ A Net Operating Revenue royalty of 0.75% on all concentrate production from the project; and
▪ Centaurus to take on Vale’s obligation to Brazil’s National Bank for Economic and Social Development
(BNDES) for 1.8% Net Operating Revenue royalty.
Page 21 of 69
Annual Report – 31 December 2019
Off-take
Vale and Centaurus agreed to enter into a future Off-take Agreement whereby Vale can purchase 100% of the
production from the Project (with the product or products from the project to be determined during future
Feasibility Study work). Under the proposed key off-take terms, Vale would acquire all production from any
future operation at Jaguar on standard arm’s length prevailing market prices and they may consider a pre-
purchase of product to support Centaurus’ funding of the project.
Cooperation
Vale and Centaurus also agreed to explore opportunities to optimise costs of the Project as well as to generate
potential synergies between the Project and the nearby Projects of Vale.
Salobo West Divestment
A key component of the purchase consideration for the Jaguar Project acquisition is the transfer of Centaurus’
Salobo West Copper-Gold Project to Vale. Salobo West is a highly prospective and strategically located
exploration project with the potential to deliver Tier-1 IOCG-style discoveries in proximity to one of Vale’s
cornerstone copper-gold operations.
Centaurus has pursued a systematic and diligent exploration program over the past two years to advance Salobo
West to a drill-ready stage, while at the same time progressing the permitting process.
The Salobo West Project tenements were originally acquired from the privately-owned Brazilian resource
development group, Terrativa Minerais SA, which retained a 2% production royalty over the tenements or right
to elect to receive a 25% share of sale proceeds in the event Centaurus divested the Project to a third party.
Conditional on the completion of the transaction with Vale, Terrativa elected to convert its royalty interest to a
share of Project sale proceeds.
In that regard, Centaurus agreed to pay Terrativa up to A$3.5 million over a period of 2.5 years, with the first
payment of A$1.0 million to be paid through the issue of ordinary shares in Centaurus concurrent with
completion of the acquisition of the Jaguar Nickel Sulphide Project from Vale (“Closing”). The shares will be
issued at the 10-day VWAP price of Centaurus shares immediately prior to the date of the announcement
regarding the acquisition of the Jaguar Nickel Sulphide Project (6 August 2019).
Centaurus will then pay Terrativa A$500k in cash every six months over the following 30 months, with the first
instalment payable on the date which is six months after Closing. Alternatively, at Centaurus’ election, the
Company may pay a lump sum cash amount of A$2.0 million at any time prior to the first of the above instalments
falling due.
Further, Terrativa will be entitled to two bonus payments contingent on the following milestones being met:
a)
b)
If during the 36-month period after Closing, Centaurus’ market capitalisation exceeds A$50 million for
90 days in any 6-month period, Centaurus will pay Terrativa $1.25 million in cash (or A$1.4 million in
Centaurus shares should Terrativa elect). If Terrativa elects to take the payment in shares, the shares
will be issued as soon as the milestone is achieved and shareholder approval for the issue of shares has
been obtained. The issue price of the shares will be the 15-day VWAP immediately prior to the
achievement of the milestone. If Terrativa elects to take the payment in cash, the payment will be made
60 days after the milestone is achieved but no earlier than 12 months after Closing.
If during the 36-month period after Closing, Centaurus’ market capitalisation exceeds A$100 million for
90 days in any 6-month period, Centaurus will pay Terrativa a further $1.25 million in cash (or A$1.4
million in Centaurus shares should Terrativa elect). If Terrativa elects to take the payment in shares, the
shares will be issued as soon as the milestone is achieved and shareholder approval for the issue. The
issue price of the shares will be the 15-day VWAP immediately prior to the achievement of the
milestone. If Terrativa elects to take the payment in cash, the payment will be made 60 days after the
milestone is achieved but no earlier than 12 months after Closing.
Capital Raisings
In the March 2019 Quarter, Centaurus completed a share placement to raise $2.20 million, before costs.
The capital raising provided funding for the update to the Jambreiro Feasibility Study, to advance permitting for
the Salobo West Copper-Gold Project, to evaluate new project opportunities in the Carajás Mineral Province and
for general working capital.
Page 22 of 69
Annual Report – 31 December 2019
Under the placement, the Company issued 400 million shares at $0.0055, together with 400 million free
attaching options having an exercise price of $0.012 and an expiry date of 31 May 2021, to sophisticated and
professional investors. The options were subject to shareholder approval, which was subsequently obtained at
the Company’s 2019 Annual General meeting in May 2019.
Melbourne-based Pinnacle Equities were the Lead Manager and received 30 million options having the same
exercise price and expiry date as the options issued as part of the placement.
During the December 2019 Quarter, following the execution of the agreement to acquire the Jaguar Nickel
Sulphide Project from Vale, Centaurus raised $10.0 million to underpin an aggressive exploration and
development program at Jaguar. The share placement received strong support from a number of small-cap
institutional investors in Australia and overseas, including clients and affiliates of the Sprott Group, as well as
new and existing sophisticated high net worth investors.
The funds raised via the placement will be predominantly used on the Jaguar Nickel Sulphide Project, including:
▪ Resource drilling activities & JORC Resource definition
▪ Exploration drilling on new high priority targets
▪ Environmental studies and preparation of an EIA (Environmental Impact Assessment)
▪ Metallurgical testwork and process flow sheet definition
▪ Vendor payments
Under the placement, the Company issued a total of 1 billion shares at $0.01 under two Tranches. Tranche 1
comprised 592,379,682 shares under the Company’s placement capacity under ASX Listing Rule 7.1 and 7.1A.
Tranche 1 shares were allotted on 16 September 2019.
Tranche 2 comprised 407,620,318 shares with the issue of shares under this Tranche approved by shareholders
at a General Meeting held on 21 October 2019.
Bell Potter Securities Ltd were the Lead Manager and Bookrunner to the Placement and Orimco Pty Ltd were Co-
Lead Manager.
Board Change
During the reporting period, highly experienced geologist and Australian mining executive Mr Chris Banasik was
appointed to the Centaurus board as a non-executive Director. Mr Banasik filled a board vacancy created by the
departure of Mr Steve Parsons, who stepped down from the Centaurus Board due to his growing work-load and
commitments as Managing Director of ASX-listed gold company, Bellevue Gold Limited. Details of Mr Banasik’s
strong nickel and resource industry experience is set out above under the Directors and Officers Section of the
Directors Report.
Senior Management Appointments
During the reporting period, Centaurus announced a series of new senior appointments to lead the Company’s
nickel exploration and development strategy centred on the Jaguar Nickel Sulphide Project.
Experienced senior executive John Westdorp was appointed as Chief Financial Officer (CFO) and also
transitioned to the role of Company Secretary in January 2020. Mr Westdorp has deep experience in project
financing, development and operations, as well as commercial transactions, including significant international
experience.
Roger Fitzhardinge was appointed as Operations Manager – Nickel having worked for Centaurus for the last 10
years, where he was originally appointed as Senior Geologist and subsequently as Exploration Manager. Mr
Fitzhardinge has extensive nickel sulphide experience in Brazil, having previously worked on the exploration,
implementation and operation of Mirabela Nickel’s Santa Rita nickel sulphide mine.
Mr John Knoblauch was engaged as Principal Metallurgist and Mr Grant “Rocky” Osborne as Principal
Geoscientist. Mr Knoblauch has considerable experience in the management of metallurgical test work
programs and process flow sheet development, including most recently almost 10 years with mid-tier copper
producer Sandfire Resources. Mr Osborne is a highly respected mining professional with over 40 years’
experience in international mineral exploration and underground mining, with particular expertise in nickel and
gold.
Page 23 of 69
Annual Report – 31 December 2019
Competent Person’s Statement
The information in this report that relates to new Exploration Results is based on information compiled by Roger
Fitzhardinge who is a Member of the Australasia Institute of Mining and Metallurgy. Mr Roger Fitzhardinge
confirms that the historical information in this report that relates to the Exploration Results and Mineral Resource
provided under ASX Listing Rules 5.12.2 to 5.12.7 for the Jaguar Nickel Sulphide Project is an accurate
representation of the available data and studies supplied to Centaurus as a foreign estimate.
The information in this report that relates to Jambreiro Mineral Resources is based on information compiled by
Roger Fitzhardinge who is a Member of the Australasian Institute of Mining and Metallurgy and Volodymyr
Myadzel who is a Member of Australian Institute of Geoscientists.
Roger Fitzhardinge is a permanent employee of Centaurus Metals Limited and Volodymyr Myadzel was the Senior
Resource Geologist of BNA Mining Solutions, independent resource consultants engaged by Centaurus Metals,
at the time when the Mineral Resource estimate was first completed.
Roger Fitzhardinge and Volodymyr Myadzel have sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify
as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves’. Roger Fitzhardinge and Volodymyr Myadzel consent to the
inclusion in the report of the matters based on their information in the form and context in which it appears.
The information in this report that relates to Jambreiro Ore Reserves is based on information compiled by Beck
Nader who is a professional Mining Engineer and a Member of the Australian Institute of Geoscientists. Beck
Nader is the Managing Director of BNA Mining Solutions and is a consultant to Centaurus.
Beck Nader has sufficient experience, which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity, which he is undertaking to qualify as a Competent Person as defined in the
2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.
Beck Nader consents to the inclusion in the report of the matters based on his information in the form and context
in which it appears.
Factors and Business Risks Affecting Future Business Performance
The following factors and business risks could have a material impact on the Company’s success in delivering its
strategy:
Access to Funding
The Company’s ability to successfully develop future projects is contingent on the ability to fund those projects
from operating cash flows or through affordable debt and equity raisings. Ongoing exploration of the Company’s
Projects is contingent on developing appropriate funding solutions.
Commodity Prices
Commodity prices fluctuate according to changes in demand and supply. The Company is exposed to changes
in the price of a number of commodities, which could affect the future profitability of the Company’s projects.
Significant adverse movements in commodity prices could also affect the ability to raise debt and equity to fund
future exploration and development of projects.
Exchange Rates
The Company is exposed to changes in the US Dollar and the Brazilian Real. Sales of most commodities are
denominated in US Dollars. The Company’s CAPEX and OPEX costs will be primarily denominated in Brazilian
Real.
Iron Ore Project Offtake
The Company’s strategy in relation to its iron ore assets is dependent on the ability to secure acceptable offtake
arrangements. Whilst iron ore projects with high grade, low impurity product remain profitable in the domestic
market, broader market conditions may impact on the Company’s ability to deliver value that is reflective of the
historical cost of the projects and there is no definitive certainty that the Company will be able to enter into
suitable offtake arrangements.
Page 24 of 69
Annual Report – 31 December 2019
Emphasis of Matter
The audit opinion for the year ended 31 December 2019 contains an emphasis of matter in relation to potential
uncertainty regarding continuation as a going concern. The Financial Statements have been prepared on the
basis of going concern. The Group will require funding in order to continue its exploration activities and iron ore
value realisation process. Refer to Note 2 of the Financial Report for further details.
Significant Changes in the State of Affairs
In the opinion of directors, other than as outlined in this report, there were no significant changes in the state
of affairs of the Group that occurred during the financial year under review.
8 Dividends
No dividend was declared or paid by the Company during the current or previous year.
9
Events Subsequent to Reporting Date
There has not arisen in the interval between the end of the financial year and the date of this report an item,
transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to
affect significantly the operations of the Group, the results of those operations, or the state of affairs of the
Group, in future financial years.
10 Likely Developments
Other than likely developments contained in the “Operating and Financial Review” and “Events Subsequent to
Reporting Date”, further information on likely developments in the operations of the Group and the expected
results of operations have not been included in this report because the directors believe it would be likely to
result in unreasonable prejudice to the Group.
11 Environmental Regulation
The Group is subject to environmental laws and regulations under Brazilian (State and Federal) legislation
depending on the activities undertaken. Compliance with these laws and regulations is regarded as a minimum
standard for the Group to achieve. There were no known breaches of these regulations during the year.
12 Directors’ Interests
The relevant interest of each director in the shares and options over such shares issued by the companies within
the Group and other related bodies corporate, as notified by the directors to the ASX in accordance with S205G
(1) of the Corporations Act 2001, at the date of this report is as follows:
Directors
Mr D M Murcia
Mr D P Gordon
Mr B R Scarpelli
Mr M D Hancock
Mr C A Banasik
Ordinary Shares
Employee Options
Listed Options
15,079,462
78,783,121
2,500,000
6,683,754
4,750,000
11,000,000
23,000,000
16,500,000
7,750,000
7,000,000
-
-
-
-
4,000,000
Page 25 of 69
Annual Report – 31 December 2019
13 Share Options
At the date of this report unissued ordinary shares of the Company under unlisted option are:
Expiry Date
10/06/2020
31/05/2020
31/05/2021
31/05/2022
31/01/2022
31/05/2023
31/05/2024
Exercise
Price
$0.0082
$0.0130
$0.0140
$0.0150
$0.0120
$0.0120
$0.0120
Employee Options
Vested
Unvested
Total Number of
Shares Under
Option
8,500,000
18,500,000
18,500,000
33,500,000
1,750,000
-
-
80,750,000
-
-
-
-
-
1,750,000
3,500,000
5,250,000
8,500,000
18,500,000
18,500,000
33,500,000
1,750,000
1,750,000
3,500,000
86,000,000
A total of 167,500,000 unlisted options exercisable at $0.015 expired on 31 January 2020.
At the date of this report unissued ordinary shares of the Company under listed option are:
Expiry Date
Exercise Price
Total Number of Shares
Under Option
31/05/2021
$0.012
434,100,000
The listed options expiring on 31 May 2021 were issued as 1 for 1 free attaching options as part of the placement
announced on 21 March 2019. The full terms of the options are set out in the Prospectus lodged with the ASX
on 4 June 2019.
14 Performance Rights
The following Performance Rights were issued on 5 September 2017 and are held by Terrativa Minerais SA under
the terms of the Company’s Agreement with Terrativa signed in December 2016 in relation to the acquisition of
100% of the Para Exploration Package in Brazil.
Each tranche of Performance Rights will be converted into Ordinary Shares upon the achievement in full of the
following vesting conditions:
• Tranche A – 30,000,000 Performance Rights will be converted into Ordinary Shares if, within a period of
5 years after the date of issue of the Performance Rights (5 September 2017), a JORC-compliant Inferred
Resource of 500,000oz of gold or gold equivalent is defined on the Para EP Project tenements;
• Tranche B – 30,000,000 Performance Rights will be converted into Ordinary Shares if, within a period of
5 years after the date of issue of the Performance Rights, a JORC-compliant Inferred Resource of
1,000,000oz of gold or gold equivalent is defined on the Para EP Project tenements;
• Tranche C – 30,000,000 Performance Rights will be converted into Ordinary Shares if, within a period
of 5 years after the date of issue of the Performance Rights, a JORC-compliant Inferred Resource of
1,500,000oz of gold or gold equivalent is defined on the Para EP Project tenements.
There are no Performance Rights that remain to be issued. No Performance Rights were converted during the
period as the vesting conditions have yet to be met. No Performance Rights have been cancelled.
15 Indemnification and Insurance of Officers and Auditors
During the period, the Company paid insurance premiums to insure the directors, executive officers and
Company Secretary of the Group. The amount of premiums paid has not been disclosed due to confidentiality
requirements under the contract of insurance.
Page 26 of 69
Annual Report – 31 December 2019
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be
brought against the officers in their capacity as officers of entities in the Group, and any other payments arising
from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities
arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their
position or of information to gain advantage for themselves or someone else or to cause detriment to the Group.
16 Non- Audit Services
During the period KPMG, the Company’s auditor, has performed certain other services in addition to their
statutory duties.
The Board has considered the non-audit services provided during the year by the auditor and in accordance with
written advice provided by resolution of the Board, and is satisfied that the provision of those non-audit services
during the year by the auditor, did not compromise the auditor independence requirements of the Corporations
Act 2001 for the following reasons:
all non-audit services were subject to the corporate governance procedures adopted by the
Company and have been reviewed by the Board to ensure they do not impact the integrity and
objectivity of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not
involve reviewing or auditing the auditor’s own work, acting in a management or decision-making
capacity for the Company, acting as an advocate for the Company or jointly sharing risks and
rewards.
Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and non-
audit services provided during the year are set out below.
Audit Services
Auditors of the Company
Audit and review of financial reports – KPMG
Services other than statutory audit
Taxation compliance services – KPMG
31 December
2019
$
31 December
2018
$
37,471
36,182
8,907
6,150
17 Lead Auditor’s Independence Declaration
The lead auditor’s independence declaration is set out on page 28 and forms part of the directors’ report for the
period ended 31 December 2019.
This report is signed in accordance with a resolution of the directors.
_________________
D P Gordon
Managing Director
Perth
24 March 2020
Page 27 of 69
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Centaurus Metals Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Centaurus Metals
Limited for the financial year ended 31 December 2019 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Trevor Hart
Partner
Perth
24 March 2020
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
Annual Report – 31 December 2019
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2019
Profit or Loss
Other income
Exploration expenditure
Impairment of exploration and evaluation
Impairment of other receivables
Loss on sale of mineral asset
Employee benefits expense
Share based payments expense
Occupancy expenses
Listing and share registry fees
Professional fees
Depreciation
Other expenses
Results from operating activities
Interest income
Finance expense
Net finance income
Loss before income tax
Loss for the period
Other Comprehensive Income
Items that may be reclassified subsequently to
profit or loss
Exchange differences arising on translation of
foreign operations
Other comprehensive loss for the period
Total comprehensive loss for the period
Note
31 December
2019
$
31 December
2018
$
96,952
19,712
15
13
7
8
(2,689,925)
(150,000)
(6,690)
-
(840,932)
(49,519)
(44,428)
(74,265)
(249,268)
(8,704)
(401,039)
(4,417,818)
155,131
(12,710)
142,421
(2,463,216)
-
(64,874)
(66,522)
(723,936)
(191,753)
(46,030)
(92,695)
(325,276)
(9,120)
(300,748)
(4,264,458)
67,097
-
67,097
(4,275,397)
(4,275,397)
(4,197,361)
(4,197,361)
(148,442)
(177,353)
(148,442)
(4,423,839)
(177,353)
(4,374,714)
Earnings per Share
Basic loss per share
Diluted loss per share
11
11
Cents
(0.15)
(0.15)
Cents
(0.19)
(0.19)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the accompanying Notes.
Page 29 of 69
Annual Report – 31 December 2019
Consolidated Statement of Financial Position
As at 31 December 2019
Note
2019
$
2018
$
Current assets
Cash and cash equivalents
Other receivables and prepayments
Total current assets
Non-current assets
Other receivables and prepayments
Property, plant and equipment
Exploration and evaluation assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease Liability
Employee benefits – annual leave
Total current liabilities
Non-current liabilities
Lease Liability
Employee benefits – long service leave
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
12(a)
13
13
14
15
16
17
17
9,703,718
253,446
9,957,164
59,116
604,595
2,265,049
2,928,760
12,885,924
557,572
45,273
249,734
852,579
70,906
166,078
236,984
1,089,563
11,796,361
1,399,910
149,934
1,549,844
97,956
324,461
2,487,858
2,910,275
4,460,119
181,921
-
180,939
362,860
-
130,070
130,070
492,930
3,967,189
128,538,655
(6,618,754)
(110,123,540)
11,796,361
116,382,624
(6,388,926)
(106,026,509)
3,967,189
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying
Notes.
Page 30 of 69
Annual Report – 31 December 2019
Consolidated Statement of Changes in Equity
For the year ended 31 December 2019
Balance at 1 January 2019
Loss for the period
Foreign currency translation difference for foreign operation
Total comprehensive loss for the period
Share-based payment transactions
Issues of ordinary shares
Share options exercised
Share issue costs
Transfer on exercise of options
Transfer of options lapsed
Total transactions with owners
Balance at 31 December 2019
Balance at 1 January 2018
Loss for the period
Foreign currency translation difference for foreign operation
Total comprehensive loss for the period
Share-based payment transactions
Issues of ordinary shares
Share options exercised
Share issue costs
Transfer on exercise of options
Transfer of options lapsed
Total transactions with owners
Balance at 31 December 2018
Issued
Capital
$
116,382,624
-
-
-
-
12,222,000
804,592
(892,888)
22,327
-
12,156,031
128,538,655
111,776,626
-
-
-
-
2,655,000
2,317,199
(377,456)
11,255
-
4,605,998
Share-Based
Payments
Reserve
$
757,290
-
-
-
119,307
-
-
-
(22,327)
(178,366)
(81,386)
675,904
414,399
-
-
-
264,963
-
-
-
(11,255)
89,183
342,891
Foreign
Currency
Translation
Reserve
$
(7,146,216)
-
(148,442)
(148,442)
-
-
-
-
-
-
-
(7,294,658)
(6,968,863)
-
(177,353)
(177,353)
-
-
-
-
-
-
-
Accumulated
Losses
$
(106,026,509)
(4,275,397)
-
(4,275,397)
-
-
-
-
-
178,366
178,366
(110,123,540)
(101,739,965)
(4,197,361)
-
(4,197,361)
-
-
-
-
-
(89,183)
Total
Equity
$
3,967,189
(4,275,397)
(148,442)
(4,423,839)
119,307
12,222,000
804,592
(892,888)
-
-
12,253,011
11,796,361
3,482,197
(4,197,361)
(177,353)
(4,374,714)
264,963
2,655,000
2,317,199
(377,456)
-
-
(89,183)
4,859,706
116,382,624
757,290
(7,146,216)
(106,026,509)
3,967,189
The amounts recognised directly in equity are disclosed net of tax.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
Page 31 of 69
Annual Report – 31 December 2019
Consolidated Statement of Cash Flows
For the year ended 31 December 2019
Note
31 December
2019
$
31 December
2018
$
Cash flows from operating activities
Exploration and evaluation expenditure
Payments to suppliers and employees (inclusive of GST)
Cash receipts from project partners
Court settlement proceeds
Interest received
Interest paid
Net cash used in operating activities
12(b)
Cash flows from investing activities
Payments for plant & equipment
Payment for project acquisitions
Buy back of project royalty
Proceeds from sale of mineral assets
Proceeds from sale of plant & equipment
Net cash from /(used in) investing activities
Cash flows from financing activities
Proceeds from issue of equity securities
Proceeds from the exercise of options
Capital raising costs
Lease Liability
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 31 December
12(a)
(2,724,062)
(1,315,250)
221,647
31,182
149,496
(900)
(3,637,887)
(180,177)
-
(40,979)
-
690
(220,466)
12,222,000
804,592
(817,850)
(10,760)
12,197,982
8,339,629
1,399,910
(35,821)
9,703,718
(2,887,884)
(1,281,868)
21,638
-
66,549
-
(4,081,565)
(17,671)
(221,963)
-
181,927
52,600
(5,107)
2,655,000
2,317,199
(304,247)
4,667,952
581,280
822,132
(3,502)
1,399,910
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes.
Page 32 of 69
Annual Report – 31 December 2019
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019
Note 1. Reporting Entity
Centaurus Metals Limited (“the Company”) is a company domiciled in Australia. The Company’s registered office
is at Level 3, 10 Outram Street, West Perth WA 6005. The consolidated financial statements of the Company as
at and for the year ended 31 December 2019 comprise the Company and its subsidiaries (collectively the “Group”
and individually “Group entities”). The Group is a for-profit entity and is primarily involved in exploration for and
evaluation of mineral resources.
Note 2. 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 (AASBs) (including Australian Accounting Interpretations)
adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated
financial statements comply with International Financial Reporting Standards (IFRS’s) adopted by the
International Accounting Standards Board (IASB).
The consolidated financial statements were authorised for issue by the Board of Directors on 24 March 2020.
Basis of Measurement
The consolidated financial statements have been prepared on the historical cost basis, except for the following
material items in the statement of financial position:
Derivative financial instruments are measured at fair value; and
Share based payments are measured at fair value.
Going Concern
The financial statements for the year ended 31 December 2019 have been prepared on a going concern basis,
which contemplates continuity of normal business activities and the realisation of assets and settlement of
liabilities in the ordinary course of business.
During the year, the Group incurred a loss after tax of $4,275,397 with net cash inflows of $8,339,629. The Group
has a working capital surplus of $9,104,585.
While the Group had cash on hand of $9,703,718 as at 31 December 2019, the Group’s future cashflow forecast
for the period ended 31 December 2020 indicates the need for additional working capital in order to meet the
Group’s stated strategic objectives. Whilst there is no certainty that additional funding will be available to
provide adequate working capital for the Group to achieve its planned objectives, the Directors believe that the
Group will be able to secure funding sufficient to meet requirements to continue as a going concern based on
the Company’s historical success of raising capital. The form, value and timing of any future transactions that
may provide funding is yet to be determined and will depend amongst other things, on capital markets,
commodity prices and the outcome of planned exploration and evaluation activities.
Prevailing market conditions are particularly volatile as a result of the global impact from the Covid-19 declared
pandemic. The extent and the duration of the impact remains uncertain. The ability of the Company to raise
future funding in this environment in order to continue its plans represents a material uncertainty. In the event
that further funding is not available the Company may not be able to realise its assets and extinguish its liabilities
in the normal course of business and at the amounts stated in the financial report.
The Directors are, however, confident that further funding will be obtained to meet the Group’s objectives. In
addition, the Directors have considered the minimum expenditure requirements necessary in order to maintain
tenements in good standing and to meet committed expenditures for the 12-month period from the date of this
report and consider the going concern basis of preparation to be appropriate.
Page 33 of 69
Annual Report – 31 December 2019
Note 3. Functional and Presentation Currency
These consolidated financial statements are presented in Australian Dollars, which is the Company’s functional
currency. The functional currency of the Brazilian subsidiaries is the Brazilian Real.
Note 4. Use of Judgements and Estimates
In preparing these consolidated financial statements, management has made judgements, estimates and
assumptions that affect the application of the Group’s accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
(a) Judgements
Information about judgements made in applying accounting policies that have the most significant effects on
the amounts recognised in the consolidated financial statements is included below and also in the following
notes:
Note 13 - Other Receivables and Prepayments;
Note 15 - Exploration and Evaluation Assets. The application of the Group’s accounting policy for
exploration and evaluation expenditure requires judgement to determine whether future
economic benefits are likely, from either future exploitation or sale, or whether activities have not
reached a stage that permits a reasonable assessment of the existence of reserves; and
Note22 - Financial Instruments – Fair Values and Risk Management.
(b) Assumptions and Estimation Uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment in the year ending 31 December 2019 is included in Note 15 – Exploration and Evaluation Assets. In
addition to applying judgement to determine whether future economic benefits are likely to arise from the
Group’s Exploration and Evaluation assets or whether activities have not reached a stage that permits a
reasonable assessment of the existence of Reserves, the Group has to apply a number of estimates and
assumptions.
The Group is required to make estimates and assumptions as to future events and circumstances, in particular,
whether successful development and commercial exploitation, or alternatively sale, of the respective areas of
interest will be achieved. Critical to this assessment are estimates and assumptions as to Ore Reserves, the
timing of expected cash flows, exchange rates, commodity prices and future capital requirements. Changes in
these estimates and assumptions as new information about the recoverability of Ore Reserves becomes
available, may impact the assessment of the recoverable amount of exploration and evaluation assets. If, after
the expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is
unlikely, the relevant capitalised amount is written off to profit or loss in the period when that information
becomes available.
(c) Measurement of Fair Values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities.
Fair values have been determined for measurement and/or disclosure purposes based on the methods described
below. When applicable, further information about the assumptions made in determining fair values is disclosed
in the notes specific to that asset or liability.
(i) Trade and Other Receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted
at the market rate of interest at the reporting date.
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Annual Report – 31 December 2019
(ii) Share-based Payment Transactions
The fair value of the employee share options is estimated using the applicable valuation methodology.
Measurement inputs include share price on measurement date, exercise price of the instrument, expected
volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available
information), weighted average expected life of the instruments (based on historical experience and general
option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds).
Service and performance conditions attached to vesting are not taken into account in determining fair value.
Where the service period commences prior to grant date the fair value is provisionally calculated and
subsequently revised upon grant date.
Note 5. Significant Accounting Policies
The Group has consistently applied the following accounting policies to all periods presented in these
consolidated financial statements.
(a) Basis of Consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed when necessary to align them with policies adopted
by the Group.
(ii) Transactions Eliminated on Consolidation
Inter-Group balances and transactions and any unrealised income and expenses arising from intra-Group
transactions, are eliminated in preparing the consolidated financial statements.
(b) Foreign Currency
(i) Foreign Currency Transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at
exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency at
the foreign exchange rate at the reporting date. The foreign currency gain or loss on monetary items is the
difference between amortised cost in the functional currency at the beginning of the period, adjusted for
effective interest and payments during the period, and the amortised cost in foreign currency translated at the
exchange rate at the end of the period. Non-monetary assets and liabilities denominated in foreign currencies
that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that
the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences
arising on the retranslation of financial instruments, a financial liability designated as a hedge of the net
investment in a foreign operation, or qualifying cash flow hedges, which are recognised in other comprehensive
income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction.
(ii) Foreign Operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on
acquisition, are translated to Australian dollars at exchange rates at reporting date. The income and expenses
of foreign operations are translated to Australian dollars at average exchange rates for the period.
Foreign currency differences are recognised in other comprehensive income and presented in the foreign
currency translation reserve (translation reserve, or FCTR) within equity.
Page 35 of 69
Annual Report – 31 December 2019
When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to
profit or loss as part of the profit or loss on disposal.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned
nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are
considered to form part of a net investment in a foreign operation and are recognised in other comprehensive
income and are presented within equity in the FCTR.
(c) Financial Instruments
The Group classifies non-derivative financial assets into the following categories at fair value through profit and
loss, at fair value through other comprehensive income and measured at amortised cost.
The Group classifies non-derivative financial liabilities into the other financial liabilities category.
(i) Non- derivative Financial Assets and Financial Liabilities – Recognition and Derecognition
The Group initially recognises loans, receivables and deposits on the date when they are originated. All other
financial assets and financial liabilities are recognised initially on the trade date.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or
it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which
substantially all the risks and rewards of ownership of the financial asset are transferred, or it neither transfers
nor retains substantially all of the risks and rewards of ownership and does not retain control over the
transferred asset. Any interest in such derecognised financial assets that is created or retained by the Group is
recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position
when and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis
or to realise the asset and settle the liability simultaneously.
The Group has the following non-derivative financial assets: receivables and cash and cash equivalents.
Receivables
Receivables are financial assets with fixed or determinable payments that are not quoted in an active market.
Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to
initial recognition, receivables are measured at amortised cost using the effective interest method, less any
impairment losses.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or
less.
(ii) Non derivative Financial Liabilities – Measurement
Non-derivative financial liabilities are initially recognised at fair value less any directly attributable transaction
costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective
interest method.
(iii) Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares
or share options are recognised as a deduction from equity, net of any tax effect.
(d) Property, Plant and Equipment
(i) Recognition and Measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any
accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the
asset.
Page 36 of 69
Annual Report – 31 December 2019
If significant parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items (major components) of property, plant and equipment.
Any gains or loss on disposal of an item of property, plant and equipment are recognised in profit or loss. When
revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings.
(ii) Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated useful lives and is generally recognised in
profit or loss. Land is not depreciated.
The estimated useful lives of property, plant and equipment are 3 to 15 years.
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if
appropriate.
(e) Exploration and Evaluation Expenditure
Exploration and evaluation costs are expensed in the year they are incurred. Acquisition costs are carried
forward where right of tenure of the area of interest is current and they are expected to be recouped through
sale or successful development and exploitation of the area of interest, or, where exploration and evaluation
activities in the area of interest have not reached a stage that permits reasonable assessment of the existence
of economically recoverable reserves.
Where an area of interest is abandoned, or the directors decide that it is not commercial, any accumulated
acquisition costs in respect of that area are written off in the financial period the decision is made. Each area of
interest is also reviewed at the end of each accounting period and accumulated costs written off to the extent
that they will not be recoverable in the future.
Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase
until production commences.
Exploration and evaluation assets are transferred to Development Assets once technical feasibility and
commercial viability of an area of interest is demonstrable. Exploration and evaluation assets are assessed for
impairment and any impairment loss is recognised prior to being reclassified.
The carrying amount of the exploration and evaluation assets is dependent on successful development and
commercial exploitation, or alternatively, sale of the respective area of interest.
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical
feasibility and commercial viability or facts and circumstances suggest that the carrying amount exceeds the
recoverable amount.
Exploration and evaluation assets are tested for impairment when any of the following facts and circumstances
exist:
The term of exploration license in the specific area of interest has expired during the reporting
period or will expire in the near future and is not expected to be renewed;
Substantive expenditures on further exploration for and evaluation of mineral resources in the
specific area are not budgeted nor planned;
Exploration for and evaluation of mineral resources in the specific area has not led to the discovery
of commercially viable quantities of mineral resources and the decision was made to discontinue
such activities in the specified area; or
Sufficient data exists to indicate that although a development in the specific area is likely to
proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in
full from successful development or by sale.
Where a potential impairment is indicated, an assessment is performed for each cash-generating unit which is
no larger than the area of interest. The Group performs impairment testing in accordance with Accounting
Policy 5(g)(ii).
Page 37 of 69
Annual Report – 31 December 2019
Arrangements whereby an external party earns an ownership interest in an exploration or development
property via the sole-funding of a specified exploration, evaluation or development program or by injection of
funds to be utilised for such a program will be accounted so that the Group recognises its share of assets,
liabilities and equity associated with the property. Any gain or loss upon initial recognition of these items will
be recognised in the statement of profit or loss and other comprehensive income.
(f) Leases
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-
use asset recognised by the Group is initially measured at cost, comprised of the initial measurement of the
related lease liability, any lease payments made at or before the commencement of the contract, less any lease
incentives received, any initial direct costs and any restoration costs. Subsequently the asset is measured at cost
less any accumulated depreciation and impairment losses and adjusted for certain re-measurements of the lease
liability. Right-of-use assets are depreciated over the shorter period of either the useful life of the underlying
asset or the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be
determined the lessee’s incremental borrowing rate is used, being the rate the lessee would have to pay to
borrow funds necessary to obtain and asset of similar value in a similar economic environment with similar terms
and conditions.
The lease liability is subsequently increased by the interest costs on the lease liability and decreased by lease
payments made. It is re-measured where there is a change in future lease payments arising from a change in an
index rate, or as appropriate, changes in the assessment of whether an extension options is reasonably certain
to be exercised.
The group applies the low-value assets and the short term lease exemption to leases that are considered of low
value. Lease payments on short term leases and leases of low-value assets are recognised as an expense on a
straight line basis over the lease term.
(g) Impairment
(i) Non-derivative Financial Assets
A loss allowance for expected credit loss (ECL) is recognised on financial assets measured at amortised cost.
The loss allowances are measured at an amount equal to lifetime ECLs, except for, bank balances which are
measured at 12-month ECLs, for which credit risk (i.e. the risk of default occurring over the expected life of the
financial instrument) has not increased significantly since initial recognition.
Loss allowances for trade receivables are always measured at an amount equal to lifetime ECLs.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and qualitative information and analysis,
based on the Group’s historical experience and informed credit assessment and including forward-looking
information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days
past due.
The Group considers a financial asset to be in default when the financial asset is more than 90 days past due.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial
instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the
12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12
months).
The maximum period considered when estimating ECLs is the maximum contractual period over which the
Group is exposed to credit risk.
Page 38 of 69
Annual Report – 31 December 2019
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all
cash shortfalls. ECLs are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised costs are credit-
impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised costs are deducted from the gross carrying amount
of the assets.
Write-off
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of
recovering a financial asset in its entirety or a portion thereof.
(ii) Non-financial Assets
The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then
the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value
less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are
grouped together into the smallest group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups of assets. The group of assets is referred to as
the Cash Generating Unit or CGU.
The Group’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate
asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset
belongs.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs
are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the
carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
In respect of assets, other than goodwill, impairment losses recognised in prior periods are assessed at each
reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would
have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(h) Employee Benefits
(i) Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions
into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss in
the periods during which services are rendered by employees.
(ii) Other Long-term Employee Benefits
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that
employees have earned in return for their service in the current and prior periods plus related on-costs; that
benefit is discounted to determine its present value, and the fair value of any related assets is deducted.
Page 39 of 69
Annual Report – 31 December 2019
(iii) Short-term Benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the
amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a
result of past service provided by the employee and the obligation can be estimated reliably.
(iv) Share-based Payment Transactions
The fair value of share-based payment awards granted to employees is recognised as an expense at grant date
with a corresponding increase in equity, over the period that employees become entitled to the awards. The
amount recognised as an expense is adjusted to reflect the number of awards for which the related service and
non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an
expense is based on the number of awards that meet the related service and non-market performance
conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair
value of the share-based payment is measured to reflect such conditions and there is no true-up for differences
between expected and actual outcomes.
Share-based payment arrangements in which the Group receives goods or services as consideration for its own
equity instruments are accounted for as equity-settled share-based payment transactions, regardless of how the
equity instruments are obtained by the Group.
When the Company grants options over its shares to employees of subsidiaries, the fair value at grant date is
recognised as an increase in the investments in subsidiaries, with a corresponding increase in equity over the
vesting period of the grant.
(i) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the liability. The
unwinding of the discount is recognised as a finance cost.
(j) Revenue
Revenue is recognised when the goods are delivered and have been accepted by customers at their premises.
For contracts that permit the customer to return an item, revenue is recognised to the extent that it is highly
probably that a significant reversal in the amount of cumulative revenue recognised will not occur.
Therefore, the amount of revenue recognised is adjusted for expected returns, which are estimated based on
the historical data. In these circumstances, a refund liability and a right to recover returned goods asset are
recognised.
(k) Finance Income and Finance Costs
Finance income comprises interest income on funds invested, dividend income, gains on the disposal of debt
securities measured at fair value through other comprehensive income, changes in the fair value of financial
assets at fair value through profit and loss, and gains on hedging instruments that are recognised in profit or
loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend
income is recognised in profit or loss on the date that the Group’s right to receive payment is established, which
in the case of quoted securities is the ex-dividend date.
Finance costs comprise interest expense on borrowings, losses on the disposal of debt securities measured at
fair value through other comprehensive income, changes in the fair value of financial assets at fair value through
profit or loss and losses on hedging instruments that are recognised in profit or loss. Borrowing costs that are
not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in
profit or loss using the effective interest method.
Foreign currency gains and losses are reported on a net basis.
Page 40 of 69
Annual Report – 31 December 2019
(l)
Income Tax
Income tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit or loss
except to the extent that it relates to a business combination, or items recognised directly in equity or in other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of previous
years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax
assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax
entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities
will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the
extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred
tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realised.
(m) Goods and Services Tax and Equivalent Indirect Taxes
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST) and equivalent
indirect taxes, except where the amount of tax incurred is not recoverable from the taxation authority. In these
circumstances, the tax is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of tax included. The net amount of tax recoverable from,
or payable to, the taxation authority is included as a current asset or liability in the balance sheet.
Cash flows are included in the statement of cash flows on a gross basis. The tax components of cash flows arising
from investing and financing activities which are recoverable from, or payable to, the tax authority are classified
as operating cash flows.
(n) Earnings per Share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or
loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for
the effects of all dilutive potential ordinary shares, which comprise listed options and share options granted to
employees.
(o) Segment Reporting
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the
Group’s other components. All operating segments’ operating results are regularly reviewed by the Group’s
Managing Director (‘MD’) to make decisions about resources to be allocated to the segment and assess its
performance, and for which discrete financial information is available.
Segment results that are reported to the MD include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Unallocated items comprise minimal, not material corporate assets
(primarily the Group’s headquarters), head office expenses, and income tax assets and liabilities. Segment
capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and
intangible assets other than goodwill.
Page 41 of 69
Annual Report – 31 December 2019
(p) Changes in Accounting Policies
The Group has adopted the following amendment to AASB 16 Leases from 1 January 2019. A number of other
new standards are also effective from 1 January 2019 but they do not have a material affect on the Group’s
financial statements.
AASB 16 Leases became effective for periods beginning on or after 1 January 2019. The standard which replaces
AASB 117 “Leases” removes the concept of operating and finance leases for lessees and replaces it with a single
accounting model under which lessees are required to recognise most leases on balance sheet as lease liabilities,
with the corresponding right to use assets being recognised. Lessees have the option not to recognise certain
types of leases such as ‘short-term’ leases and leases of low value assets.
The Group has applied the ‘modified retrospective’ method in adopting AASB 16 without restating the
comparative information for 2018 as permitted by the transitional provisions of the standard. On transition to
AASB 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions
are leases. It applied AASB 16 only to contracts that were previously identified as leases.
From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at
which the leased asset is available for use by the Company. Each lease payment is allocated between the liability
and finance costs. The finance cost is charged to the profit or loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability for each period.
The right-of-use-asset, initially measured at cost, comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date, any initial direct costs incurred and an estimate
of costs to dismantle and remove the underlying asset or to restore the underlying asset, reduced by any lease
incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date
to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated
useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there
is a change in future lease payments arising from a change in an index or rate or if the Group changes its
assessment of whether it will exercise an extension or termination option. When the lease liability is remeasured
in this way, a corresponding adjustment is made to the carrying amount of the right-of-use-asset, or is recorded
in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low value assets,
including office equipment. The Group recognises the lease payments associated with these leases as an expense
on a straight-line basis over the lease term.
(q) New Standards and Interpretations Not Yet Adopted
A number of new standards are effective for annual periods beginning after 1 January 2020 and earlier
application is permitted; however, the Group has not early adopted the new or amended standards in preparing
these financial statements.
The following amended standards and interpretations are not expected to have a significant impact on the
Group’s financial statements.
Standards
Effective Date
Key Requirements
AASB 2018-7 Amendments to Australian
Accounting Standards – Definition of
Material
1 Jan 2020
Clarifies the definition of “material” and
its application across AASB Standards and
other pronouncements. The principal
amendments
101
are
Presentation of Financial Statements.
to AASB
Page 42 of 69
Annual Report – 31 December 2019
AASB 2018-6 Amendments to Australian
Accounting Standards – Definition of a
Business
1 Jan 2020
Clarifies the definition of a business to
assist entities to determine whether a
transaction should be accounted for as a
business combination or as an asset
acquisition.
The new business definition is narrower
There
is
concentration test
a new optional
asset
considerations
New
been
incorporated to help identify when an
acquired process is substantive
have
AASB 2014-10 Amendments to Australian
Standards – Sale or Contribution of Assets
between an Investor and its Associate or
Joint Venture
1 Jan 2022
The amendments require the full gain or
loss to be recognised when the assets
transferred meet the definition of a
“business” under AASB 3
(whether
housed in a subsidiary or not).
AASB 2015-10 Amendments to Australian
Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128
AASB 2017-5 Amendments to Australian
Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128
and Editorial Corrections
All other pending standards and interpretations issued are either not applicable or have no material effect to
the Group.
Note 6. Operating Segments
The Group operates in the mineral exploration industry. For management purposes the Group is organised into
one main operating segment which involves the exploration of minerals. All of the Group’s activities are
interrelated and financial information is reported to the Managing Director (Chief Operating Decision Maker) as
a single segment. Accordingly, all significant operating decisions are based upon an analysis on the Group as one
segment. The financial results and financial position from this segment are largely equivalent to the financial
statements of the Group as a whole.
Geographical Segment Information
Brazil
Australia
Total
2019
Non-current
Assets
$
2,850,050
78,710
2,928,760
2018
Non-current
Assets
$
2,905,394
4,881
2,910,275
Page 43 of 69
Annual Report – 31 December 2019
Note 7. Employee Benefits Expense
Salaries, fees and other benefits
Superannuation
Recognised in exploration expenditure expense
Total
Note 8. Share-based Payments
31 December
2019
$
1,805,772
87,816
(1,052,656)
840,932
31 December
2018
$
1,678,986
82,577
(1,037,627)
723,936
From time to time the Group may make share based payments in connection with its activities. These payments
may comprise the issue of options under various terms and conditions. Options granted carry no dividend or
voting rights. When exercisable, each option is converted into one ordinary share of the Company with full
dividend and voting rights.
During the reporting period 7,000,000 options were issued to a non-executive director and approved by
shareholders at the 2019 AGM.
An Employee Share Option Plan (“ESOP”) was approved by shareholders at the 2019 AGM. The Board may
nominate Eligible Persons to participate in an award of options under the ESOP. Eligible Persons may include
employees, directors and contractors. No options were issued to Employees under the ESOP during the
reporting period (2018: nil).
Reconciliation of Outstanding Share Options
The number and weighted average exercise prices of share options issued are as follows:
Outstanding at start of period
Exercised during the period
Lapsed during the period
Expired during the period
Issued during the period
Outstanding at balance date
Exercisable at balance date
Weighted
Average
Exercise Price
2019
$0.0133
$0.0082
$0.0015
-
$0.0120
$0.0134
$0.0135
Number of
Options
2019
91,000,000
(8,500,000)
(3,500,000)
-
7,000,000
86,000,000
80,750,000
Weighted
Average
Exercise Price
2018
$0.0151
$0.0082
-
$0.1250
-
$0.0133
$0.0118
Number of
Options
2018
98,500,000
(5,500,000)
-
(2,000,000)
-
91,000,000
54,000,000
The options outstanding at 31 December 2019 have exercise prices ranging from $0.0082 to $0.0150 (2018:
between $0.0082-$0.150) and the weighted average remaining contractual life is 1.43 years (2018: 2.34 years).
There were 8,500,000 options exercised during the year (2018: 5,500,000). There were 7,000,000 options issued
during the year (2018: nil). Details of the options issued during the year are as follows:
Grant Date
Number of Options
Vesting Period
Option Term
Directors
31/05/19
31/05/19
31/05/19
Total
1,750,000
1,750,000
3,500,000
7,000,000
Immediately
12 months1
24 months1
36 months
48 months
60 months
Note 1: From the date of issue subject to continued employment.
Page 44 of 69
Annual Report – 31 December 2019
Note 8. Share-based Payments (continued)
Inputs for Measurement of Grant Date Fair Values
The model inputs for options issued in 2019 include:
Grant Date
Expiry
Date
Exercise
Price
Life of
option
Share
price at
grant date
31/05/19
31/05/19
31/05/19
31/05/22
31/05/23
31/05/24
$0.012
$0.012
$0.012
3 years
4 years
5 years
$0.009
$0.009
$0.009
Expected
share
price
volatility
100%
100%
100%
Risk-free
interest
rate
1.20%
1.10%
1.17%
Fair
Value at
grant
date
$0.0041
$0.0058
$0.0063
Expenses Arising from Share Based Payment Transactions
Total expense recognised as share-based payment – share options
2019
$
49,519
2018
$
191,753
Performance Rights
The following Performance Rights were issued on 5 September 2017 and are held by Terrativa Minerais SA under
the terms of the Company’s Agreement with Terrativa signed in December 2016 in relation to the acquisition of
100% of the Para Exploration Package in Brazil.
Each tranche of Performance Rights will be converted into Ordinary Shares upon the achievement in full of the
following vesting conditions:
•
•
•
Tranche A – 30,000,000 Performance Rights will be converted into 30,000,000 Ordinary Shares if, within
a period of 5 years after the date of issue of the Performance Rights, a JORC-compliant Inferred
Resource of 500,000oz of gold or gold equivalent is defined on the Pará Exploration Package Project
tenements;
Tranche B – 30,000,000 Performance Rights will be converted into 30,000,000 Ordinary Shares if, within
a period of 5 years after the date of issue of the Performance Rights, a JORC-compliant Inferred
Resource of 1,000,000oz of gold or gold equivalent is defined on the Pará Exploration Package Project
tenements;
Tranche C – 30,000,000 Performance Rights will be converted into 30,000,000 Ordinary Shares if, within
a period of 5 years after the date of issue of the Performance Rights, a JORC-compliant Inferred
Resource of 1,500,000oz of gold or gold equivalent is defined on the Pará Exploration Package Project
tenements.
During the year none of the Performance Rights were converted or cancelled and no vesting conditions were
met.
Page 45 of 69
Annual Report – 31 December 2019
Note 9. Income Tax
(a) Numerical Reconciliation of Income Tax Expense to Prima Facie Tax Payable
Loss from continuing operations before income tax expense
Tax at the Australian tax rate of 27.5% (2018: 27.5%)
Tax effect of amounts which are not deductible/(taxable)
calculating taxable income:
Overseas project generation and review costs
Share-based payments
Sundry items
in
Effect of tax rates in foreign jurisdictions
Under provision from prior year
Deferred tax assets not recognised
Income tax benefit, being deferred tax
(b) Tax Losses
Tax losses
Potential tax benefit (between 27.5-34%)
2019
$
2018
$
(4,275,397)
(1,175,734)
(4,197,361)
(1,154,274)
237,183
13,618
6,885
(918,048)
(416,999)
2,898
1,332,149
-
153,405
52,732
(1,803)
(949,940)
(84,607)
329,397
705,150
-
2019
$
67,316,146
20,460,785
2018
$
60,730,448
18,224,348
The tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in
respect of remaining tax losses because it is not probable that future taxable profit will be available against
which the Group can utilise the benefit.
(c) Deferred Tax Assets
The following deferred tax balances have not been recognised:
Deferred Tax Assets
Exploration expenditure
Accrued expenses/provisions
Transaction costs relating to issue of capital
Tax losses carried forward (net of tax losses utilised) – Note 9 (b)
2019
$
2018
$
8,403,682
3,528,278
68,475
20,460,785
32,461,220
8,295,797
4,571,886
37,040
18,224,348
31,129,071
The tax benefits of the above deferred tax assets will only be obtained if:
a) The Company derives future assessable income of a nature and of an amount sufficient to enable the
benefit to be utilized;
b) The Company continues to comply with the conditions for the deductibility imposed by law; and
c) No changes in income tax legislation adversely affect the Company in utilising the benefits.
Note 10. Dividends
There were no dividends paid or declared during the period (2018: nil).
Page 46 of 69
Annual Report – 31 December 2019
Note 11. Earnings/(Loss) Per Share
Basic Loss per Share
The calculation of basic and diluted earnings per share at 31 December 2019 was based on the loss attributable
to ordinary shareholders of $4,275,397 (2018: $4,197,361) and a weighted average number of ordinary shares
outstanding of 2,894,138,337 (2018: 2,197,258,184), calculated as follows:
Loss Attributable to Ordinary Shareholders
Loss attributable to the shareholders
Weighted Average Number of Ordinary Shares
Issued ordinary shares at beginning of the period
Effect of shares issued
Weighted average number of ordinary shares at the end of the
period
2019
$
2018
$
(4,275,397)
(4,197,361)
2019
Number
2,197,258,184
696,880,153
2018
Number
1,777,272,235
419,985,949
2,894,138,337
2,197,258,184
Diluted Earnings per Share
Potential ordinary shares were not considered to be dilutive as the Group made a loss for the year ended 31
December 2019 and the exercise of potential shares would not increase that loss.
Note 12 (a). Cash and Cash Equivalents
Cash at bank and on hand
Deposits - short term
2019
$
11,243
9,692,475
9,703,718
2018
$
60,151
1,339,759
1,399,910
The deposits are bearing floating and fixed interest rates between 1.58% and 4.59% (2018: between 2.38% and
6.55%).
Note 12 (b). Reconciliation of Cash Flows from Operating Activities
Loss for the period
Adjustments for:
Depreciation
Non-cash employee benefits expense– share based payments
Impairment of exploration and evaluation assets
Impairment of other receivables
Loss on sale of mineral asset
(Profit)/Loss on sale of plant and equipment
Operating loss before changes in working capital and provisions
Change in other receivables
Change in trade creditors and provisions
Net cash used in operating activities
2019
$
2018
$
(4,275,397)
(4,197,361)
29,627
49,519
150,000
6,690
-
(690)
(4,040,251)
(62,186)
464,550
(3,637,887)
19,200
191,753
-
64,874
66,522
1,574
(3,853,438)
25,102
(253,229)
(4,081,565)
Page 47 of 69
Annual Report – 31 December 2019
Note 13. Other Receivables and Prepayments
Current
Other Receivables
Security deposits
Prepayments
Non – Current
Prepayments
Other Receivables
Provision for impairment
2019
$
2018
$
57,144
30,133
166,169
253,446
59,116
179,433
(179,433)
59,116
37,551
30,133
82,250
149,934
97,956
944,058
(944,058)
97,956
Non-current other receivables include Brazilian federal VAT (“PIS-Cofins”) levied on the Group’s purchases.
Recoverability of PIS-Cofins assets is dependent upon the Group generating a federal company tax liability, which
may be offset against the Groups PIS-Cofins assets if the Group elects to do so. As at balance date taxable profits
in the ordinary course of business are not considered probable though one-off taxable profits may be generated
on specific transactions. During the year the Company did utilise the PIS-Cofins asset to compensate for the PIS-
Cofins liability on the sale of the Conquista project. Taxable profits in the ordinary course of business are not,
however, considered probable and therefore the Group has determined to fully impair the value of its PIS-Cofins
tax asset. During the period the entity wrote off $781,862 which was previously provided for due to the credits
expiring. An impairment expense of $6,690 was recognised in profit and loss in 2019 (2018: $64,874).
Information about the Group’s exposure to credit and market risk and impairment losses for other receivables
is included in Note 23.
Note 14. Property, Plant and Equipment
At Cost
Accumulated depreciation
(a) Movements in carrying amounts
2019
$
915,598
(311,003)
604,595
2018
$
703,201
(378,740)
324,461
14 (a)
Movement in the carrying amounts for each class of property, plant and equipment between beginning and end
of the current financial year.
Plant and Equipment
Carrying amount at beginning
Additions
Disposals
Depreciation
Effect of movements in exchange rates
Carrying amount at end
2019
$
2018
$
66,439
198,156
(1,118)
(18,891)
(5,694)
238,892
88,562
17,099
(14,832)
(19,200)
(5,190)
66,439
Page 48 of 69
Annual Report – 31 December 2019
Land and buildings
Carrying amount at beginning
Depreciation
Effect of movements in exchange rates
Carrying amount at end
Right-of-use assets
Carrying amount at beginning
Additions
Depreciation
Effect of movements in exchange rates
Carrying amount at end
Total
Note 15. Exploration and Evaluation Assets
Opening net book value
Additions
Disposals
Impairment of capitalised exploration expenditure
Effect of movements in exchange rate
258,022
-
(8,675)
249,347
-
131,350
(10,736)
(4,258)
116,356
604,595
2019
$
2,487,858
-
-
(150,000)
(72,809)
2,265,049
272,911
-
(14,889)
258,022
-
-
-
-
-
324,461
2018
$
2,560,225
226,596
(191,092)
-
(107,871)
2,487,858
During the reporting period the Group relinquished its Aurora tenement resulting in an impairment of capitalised
exploration costs.
The ultimate recoupment of exploration and evaluation expenditure carried forward is dependent on successful
development and commercial exploitation or, alternatively, sale of the respective project areas.
Acquisition of Jaguar Nickel Project
In August 2019, Centaurus executed a formal Sale & Purchase Agreement to acquire the Jaguar Nickel Project
from Vale S.A. Final completion of the transaction is subject to Brazil’s National Bank for Economic and Social
Development “BNDES” approval.
Total consideration will be as follows:
1) Up-Front Consideration on Closing (Closing of the Formal Agreement to occur upon BNDES approval of
the transfer of royalty interest in the Project from Vale to Centaurus)
▪ US$250,000 cash; and
▪ The transfer of all Salobo West Exploration Licenses and Exploration License Applications to Vale.
2) Deferred Consideration
▪ US$1.75 million on the commencement of a Bankable Feasibility Study, or construction funding being
secured, or 3 years from agreement signing, whichever occurs first;
▪ US$5.0 million on First Commercial Production;
▪ A Net Operating Revenue royalty of 0.75% on all concentrate production from the project; and
▪ Centaurus to take on Vale’s obligation to BNDES for 1.8% Net Operating Revenue royalty.
Vale and Centaurus agreed to enter into a future Off-take Agreement whereby Vale can purchase 100% of the
production from the Project (with the product or products from the project to be determined during future
Feasibility Study work). Under the proposed key off-take terms, Vale would acquire all production from any
future operation at Jaguar on standard arm’s length prevailing market prices and they may consider a pre-
purchase of product to support Centaurus’ funding of the project.
Page 49 of 69
Annual Report – 31 December 2019
Note 15. Exploration and Evaluation Assets (continued)
A key component of the purchase consideration for the Jaguar Project acquisition is the transfer of Centaurus’
Salobo West Copper-Gold Project to Vale.
The Salobo West Project tenements were originally acquired from the privately-owned Brazilian resource
development group, Terrativa Minerais SA, which retained a 2% production royalty over the tenements or the
right to elect to receive a 25% share of sale proceeds in the event Centaurus divested the Project to a third party.
Conditional on the completion of the transaction with Vale, Terrativa has elected to convert its royalty interest
to a share of sale proceeds such that Centaurus can transfer the Salobo West title to Vale unencumbered at the
time of settlement.
Therefore, in order to extinguish the Terrativa royalty and allow the unencumbered transfer of the Salobo West
title to Vale, Centaurus has agreed to pay Terrativa up to A$3.5 million over a period of 2.5 years, with the first
payment of A$1.0 million to be paid through the issue of ordinary shares in Centaurus concurrent with
completion of the acquisition of the Jaguar Nickel Sulphide Project from Vale (“Closing”). The shares will be
issued at the 10-day VWAP price of Centaurus shares immediately prior to the date of the announcement
regarding the acquisition of the Jaguar Nickel Sulphide Project (6 August 2019).
Centaurus will then pay Terrativa A$500k in cash every six months over the following 30 months, with the first
instalment payable on the date which is six months after Closing. Alternatively, at Centaurus’ election, the
Company may pay a lump sum cash amount of A$2.0 million at any time prior to the first of the above instalments
falling due.
Further, Terrativa will be entitled to two bonus payments contingent on the following milestones being met:
a)
b)
If during the 36-month period after Closing, Centaurus’ market capitalisation exceeds A$50 million for
90 days in any 6-month period, Centaurus will pay Terrativa $1.25 million in cash (or A$1.4 million in
Centaurus shares should Terrativa elect). If Terrativa elects to take the payment in shares, the shares
will be issued as soon as the milestone is achieved and shareholder approval for the issue of shares has
been obtained. The issue price of the shares will be the 15-day VWAP immediately prior to the
achievement of the milestone. If Terrativa elects to take the payment in cash, the payment will be made
60 days after the milestone is achieved but no earlier than 12 months after Closing.
If during the 36-month period after Closing, Centaurus’ market capitalisation exceeds A$100 million for
90 days in any 6-month period, Centaurus will pay Terrativa a further $1.25 million in cash (or A$1.4
million in Centaurus shares should Terrativa elect). If Terrativa elects to take the payment in shares, the
shares will be issued as soon as the milestone is achieved and shareholder approval for the issue. The
issue price of the shares will be the 15-day VWAP immediately prior to the achievement of the
milestone. If Terrativa elects to take the payment in cash, the payment will be made 60 days after the
milestone is achieved but no earlier than 12 months after Closing.
Since entering into the transaction with Vale, Centaurus has had full access to the Jaguar Project to undertake
exploration and environmental approval work. Consistent with the Company’s accounting policy noted in Note
5, all expenditure on the project has been expensed to the profit and loss account as incurred.
At the time Closing occurs (when final BNDES approval is received), all acquisition costs related to the Jaguar
Nickel Project including the extinguishment of the Salobo West Royalty interest of Terrativa, will be capitalised
as acquisition costs under the Company’s existing accounting policy as set out in Note 5.
Note 16. Trade and Other Payables
Current
Trade and other creditors
Accrued expenses
2019
$
2018
$
309,580
247,992
557,572
162,820
19,101
181,921
Page 50 of 69
Annual Report – 31 December 2019
Note 17. Leases
The Group leases offices and warehouse facilities. The leases are typically for a period of 1 to 3 years. Previously,
these leases were classified as operating leases under AASB 17. The Group has applied the exemptions available
under AASB 16 for short term leases and leases of low value.
Current
Non-Current
Lease payments are payable as follows
Less than one year
Between one to three years
Note 18. Capital and Reserves
On issue at beginning of period
Issue of ordinary shares for placement at $0.0055
Issue of ordinary shares for placement at $0.01
Issue of ordinary shares on exercise of listed options at $0.01 per
share
Issue of ordinary shares on exercise of unlisted options at $0.0082
per share
On issue at the end of the period – Fully paid
2019
$
45,273
70,906
116,179
2019
$
45,273
70,906
116,179
2018
$
2018
$
-
-
-
-
-
-
2019
Number of
Shares
2,304,982,165
404,000,000
1,000,000,000
73,489,197
2018
Number of
Shares
1,777,272,235
-
295,000,000
227,209,930
8,500,000
5,500,000
3,790,971,362
2,304,982,165
Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company
in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of
ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share
is entitled to one vote.
Employee Share Options
Information relating to the Employee Share Option Plan, including details of options issued, exercised or lapsed
during the financial year and outstanding at the end of the financial year are set out in Note 8.
Listed Options
During the year 73,489,197 listed options (ASX: CTMOB) issued in 2017 were exercised at a price of $0.01. During
the year 434,100,000 listed options were issued as part of the share placement in March 2019. As at 31
December 2019, 434,100,000 (2018: 623,049,575) listed options (ASX: CTMOC) remain unexercised with an
expiry date of 31 May 2021.
Page 51 of 69
Annual Report – 31 December 2019
Note 18. Capital and Reserves (continued)
On issue at beginning of period
Options exercised - CTMOA
Options exercised - CTMOB
Options granted - CTMOC
Options expired
On issue at the end of the period
Unlisted Options
Weighted
average
exercise
price
$0.010
$0.010
$0.010
$0.012
$0.010
$0.012
2019
Number of
Listed
Options
623,049,575
-
(73,489,197)
434,100,000
(549,560,378)
434,100,000
Weighted
average
exercise
price
$0.010
$0.010
$0.010
-
-
$0.010
2018
Number of
Listed
Options
850,259,505
(226,233,707)
(976,223)
-
-
623,049,575
In addition to the options disclosed in Note 8, the Company has 167,500,000 (2018: 167,500,000) unlisted
options with an exercise price of $0.015 and an expiry date of 31 January 2020. As at 31 December 2019, all of
these unlisted options remained unexercised. Subsequent to the end of the reporting period, on 31 January
2020, all of these unlisted options lapsed.
Share-based Payments Reserve
The share-based payments reserve is used to recognise the fair value of options issued but not exercised.
Translation Reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations, as well as from the translation of liabilities that hedge the Group’s net
investment in a foreign subsidiary.
Note 19. Contingent Liabilities
Guarantees
The Company has given guarantees in respect of bank security bonds amounting to $30,133 (2018: $30,133),
secured by cash deposits lodged as security with the bank.
No material losses are anticipated in respect of any of the above contingent liabilities. There are no other
contingent liabilities that require disclosure. Refer to Note 15 for details of the Jaguar Project acquisition.
Note 20. Capital Commitments
The Group has no capital commitments as at the year ended 31 December 2019. Refer to Note 15 for details of
the Jaguar Project acquisition.
Note 21. Related Parties
(a) Key Management Personnel
(i) Key management personnel compensation is comprised of the following:
Short term employee-benefits
Long term employee benefits
Post–employment benefits
Share-based payments expense
31 December
2019
$
761,757
29,203
32,257
21,934
845,151
31 December
2018
$
637,281
15,413
25,320
152,527
830,541
Individual Directors and Executives Compensation Disclosures
Information regarding individual directors’ and executives’ compensation and equity instruments disclosures as
required by Corporations Regulation 2M.3.03 is provided in the Remuneration Report section of the Directors’
Report.
Page 52 of 69
Annual Report – 31 December 2019
Note 21. Related Parties (continued)
Key Management Personnel and Director Transactions
Two of the key management personnel, or their related parties, held positions in other entities that resulted in
them having control or significant influence over the financial or operating policies of these entities.
One of these entities transacted with the Group in the reporting period. The terms and conditions of the
transactions with key management personnel and their related parties were no more favourable than those
available, or which might reasonably be expected to be available, on similar transactions to non-key
management personnel related entities on an arm’s length basis.
The aggregate value of transactions and outstanding balances relating to key management personnel and
entities over which they have control or significant influence were as follows:
Key Management Person
Mr D M Murcia (1)
Mr C A Banasik (2)
Total and current liabilities
Transaction
Legal fees
Consulting Fees
Transaction Value
2019
$
34,740
7,000
2018
$
19,392
-
Balance Outstanding as at
31 Dec 2019
$
-
-
-
31 Dec 2018
$
10,651
-
10,651
(1) Payable to MPH Lawyers, a firm in which Mr Murcia is a partner.
(2) Mr C A Banasik was paid consulting fees for geological consulting services..
(b) Transactions with Related Parties
Transactions between the parent company and its subsidiaries which are related parties of that company are
eliminated on consolidation and are not disclosed in this note.
Note 22. Financial Instruments – Fair Values and Risk Management
The effect of initially applying AASB 9 on the Group’s financial instruments is described in Note 5.
Financial Risk Management
The Group has exposure to the following risks arising from the use of financial instruments:
Credit Risk (see (ii))
Liquidity Risk (see (iii))
Market Risk (see (iv))
Currency Risk (see (v)).
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies
and processes for measuring and managing risk, and their management of capital. Further quantitative
disclosures are included throughout these consolidated financial statements.
(i) Risk Management Framework
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate
risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its
training and management standards and procedures, aims to develop a disciplined and constructive control
environment in which all employees understand their role and obligations.
(ii) Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations and arises principally from the Group’s other receivables and investment
securities.
Page 53 of 69
Annual Report – 31 December 2019
Note 22. Financial Instruments – Fair Values and Risk Management (continued)
Other Receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each counterparty.
However, management also considers the default risk of the industry and country in which counterparties
operate, as these factors may have an influence on credit risk.
The other receivables also include refundable deposits and tax credits which include Brazilian federal VAT (“PIS-
Cofins”). The recoverability of PIS-Cofins assets is dependent upon the Group generating a federal company tax
liability, which may be offset against the Groups PIS-Cofins assets. As at 31 December 2019, the PIS-Cofins tax
asset has been fully impaired as taxable profits in the ordinary course of business are not considered probable
though one-off taxable profits may be generated on specific transactions. During the year the Company did
utilise the PIS-Cofins asset to compensate for the PIS-Cofins liability on the sale of the Conquista project.
Exposure to Credit Risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s
maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents (i)
Other receivables
2019
$
9,703,718
98,935
9,802,653
2018
$
1,399,910
70,392
1,470,302
(i)
The cash and cash equivalents are held with bank and financial institution counterparties, which are rated
BBB to AA based on rating agency Standard and Poor’s rating.
The Group’s maximum exposure to credit risk for other receivables at the reporting date by geographic region
was:
Australia
Brazil
Carrying Amount
2019
$
43,871
55,064
98,935
2018
$
32,959
37,433
70,392
These balances are net of provision for impairment (refer to Note 13).
(iii) Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with the
financial liabilities that are settled by delivering cash or another financial asset.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
As at 31 December 2019, the Group has current trade and other payables of $557,572 (31 December 2018:
$181,921). The Group believes it will have sufficient cash resources to meet its financial liabilities when due.
Refer to Note 2 Going Concern.
The following table shows the contractual maturities of financial liabilities, excluding the impact of netting
agreements. It is not expected that the cash flows included in the maturity analysis could occur significantly
earlier, or at significantly different amounts.
Page 54 of 69
Annual Report – 31 December 2019
Note 22. Financial Instruments – Fair Values and Risk Management (continued)
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12 mths
1-2 years
31 December 2019
Non- derivative financial
liabilities
Trade and other payables
31 December 2018
Non- derivative financial
liabilities
Trade and other payables
(iv) Market Risk
557,572
(557,572)
(557,572)
181,921
(181,921)
(181,921)
-
-
-
-
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market
risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return.
(v) Currency Risk
The Group is exposed to currency risk on purchases that are denominated in currency other than the respective
functional currencies of the Group entities, primarily the Australian dollar (AUD) and Brazilian Real (BRL). The
currencies in which these transactions are primarily denominated are AUD and BRL.
The Group’s investments in its Brazilian subsidiaries are denominated in AUD and are not hedged as those
currency positions are considered to be long term in nature.
Interest Rate Risk Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
2018
$
2019
$
Fixed rate instruments
Financial assets
Variable rate instruments
Financial assets
4,900,000
800,000
4,814,533
9,714,533
605,773
1,405,773
Fair Value Sensitivity Analysis for Fixed Rate Instruments
The Group does not account for any fixed rate financial assets at fair value through profit or loss. Therefore, a
change in interest rates at the reporting date would not affect profit or loss or equity.
Cash Flow Sensitivity Analysis for Variable Rate Instruments
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and
profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign
currency rates, remain constant. The analysis is performed on the same basis for 2018.
31 December 2019
Variable rate instruments
Cash flow sensitivity (net)
31 December 2018
Variable rate instruments
Cash flow sensitivity (net)
Profit or Loss
Equity
100bp
Increase
100bp
Decrease
100bp
Increase
100bp
Decrease
(9,714)
(9,714)
(1,405)
(1,405)
9,714
9,714
1,405
1,405
-
-
-
-
-
-
-
-
Page 55 of 69
Annual Report – 31 December 2019
Note 22. Financial Instruments – Fair Values and Risk Management (continued)
Capital Management
The objectives for managing capital are to safeguard the Group’s ability to continue as a going concern and to
provide funding for the Group’s planned exploration activities. Centaurus Metals Limited is an exploration
company and it is dependent on its ability to raise capital from the issue of new shares and its ability to realise
value from its exploration and evaluation assets. The Board is responsible for capital management. This involves
the use of cash flow forecasts to determine future capital management requirements.
There were no changes in the Group’s approach to capital management during the period.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
Note 23. Group Entities
Parent Entity
Centaurus Metals Limited
Subsidiaries
Centaurus Resources Pty Ltd
San Greal Resources Pty Ltd
Itapitanga Holdings Pty Ltd
Centaurus Brasil Mineração Ltda
Centaurus Pesquisa Mineral Ltda
Centaurus Gerenciamento Ltda
Aliança Mineração Ltda
Itapitanga Mineração Ltda
Note 24. Subsequent Events
Country of
Incorporation
Ownership interest
2018
2019
Australia
Australia
Australia
Brazil
Brazil
Brazil
Brazil
Brazil
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
There has not arisen in the interval between the end of the financial year and the date of this report an item,
transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to
affect significantly the operations of the Group, the results of those operations, or the state of affairs of the
Group, in future financial years.
Note 25. Remuneration of Auditors
Audit Services
Auditors of the Company
Audit and review of financial reports – KPMG
Services other than statutory audit
Taxation compliance services - KPMG
31 December
2019
$
31 December
2018
$
37,471
36,182
8,907
6,150
Page 56 of 69
Annual Report – 31 December 2019
Note 26. Parent Entity Disclosures
As at, and throughout, the financial year ended 31 December 2019 the parent entity of the Group was Centaurus
Metals Limited.
Results of the Parent Entity
Loss for the period (1)
Total comprehensive loss for the period
31 December
2019
$
31 December
2018
$
(5,243,390)
(5,243,390)
(4,842,509)
(4,842,509)
(1) During the year ended 31 December 2019 the parent entity provided for an impairment of $3,000,000 (2018:
$2,900,000) (relating to loans to subsidiaries based on an assessment of recoverability).
Financial Position of the Parent Entity at Year End
Current assets
Non-current assets (1)
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Share capital
Reserves
Accumulated losses
Total equity
2019
$
2018
$
5,190,575
6,703,406
11,893,981
359,833
166,078
525,911
11,368,070
981,572
3,731,620
4,713,192
224,673
130,070
354,743
4,358,449
128,538,655
675,904
(117,846,489)
11,368,070
116,382,624
668,107
(112,692,282)
4,358,449
(1)
Included within non-current assets are investments in and loans to subsidiaries net of provision for impairment.
Ultimate recoupment is dependent on successful development and commercial exploitation or, alternatively, sale of
the respective project areas.
Page 57 of 69
Annual Report – 31 December 2019
Directors’ Declaration
1.
In the opinion of the directors of Centaurus Metals Limited (the “Company”):
(a)
The consolidated financial statements and notes, and the Remuneration Report in the Directors’
Report are in accordance with the Corporations Act 2001, including:
(i)
(ii)
Giving a true and fair view of the Group’s financial position as at 31 December 2019 and of
its performance, for the financial year ended on that date; and
Complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001;
(b)
There are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable; and
The directors have been given the declarations required by section 295A of the Corporations Act 2001
from the Managing Director and the Chief Financial Officer for the financial year ended 31 December
2019.
The financial report also complies with International Financial Reporting Standards as disclosed in Note
2.
2.
3.
Signed in accordance with a resolution of the directors.
__________________
D P Gordon
Managing Director
Perth
24 March 2020
Page 58 of 69
Independent Auditor’s Report
To the shareholders of Centaurus Metals Limited
Opinion
We have audited the Financial Report of
Centaurus Metals Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance with the
Corporations Act 2001, including:
• giving a true and fair view of the Group’s
financial position as at 31 December 2019
and of its financial performance for the year
ended on that date; and
The Financial Report comprises:
• Consolidated statement of financial position
as at 31 December 2019
• Consolidated statement of profit or loss and
other comprehensive income, Consolidated
statement of changes in equity, and
Consolidated statement of cash flows for the
year then ended
• Notes including a summary of significant
•
complying with Australian Accounting
Standards and the Corporations Regulations
2001.
accounting policies
• Directors’ Declaration.
The Group consists of the Company and the
entities it controlled at the year-end or from time
to time during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in
Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
Material uncertainty related to going concern
We draw attention to Note 2 “Going Concern” in the financial report. The conditions disclosed in
Note 2, indicate a material uncertainty exists that may cast significant doubt on the Group’s ability to
continue as a going concern and, therefore, whether it will realise its assets and discharge its
liabilities in the normal course of business, and at the amounts stated in the financial report. Our
opinion is not modified in respect of this matter.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
In concluding there is a material uncertainty related to going concern we evaluated the extent of
uncertainty regarding events or conditions impacting the Group’s assessment of going concern. Our
approach to this involved:
• Evaluating the feasibility of the Group’s plans to raise additional shareholder funds to address
going concern;
• Assessing the Group’s cash flow forecasts for incorporation of the Group’s operations and plans
to address going concern;
• Determining the completeness of the Group’s going concern disclosures for the conditions
representing a material uncertainty related to the Group’s ability to continue as a going concern,
the Group’s plans to address these matters.
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.
This matter was 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 this matter.
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matter described below to be the Key Audit Matter.
Capitalised exploration and evaluation assets ($2,265,049)
Refer to Notes 5(e) and 15 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group’s policy is to capitalise acquisition
costs in relation to an area of interest, less any
impairment charges recognised.
E&E is a key audit matter due to:
•
•
the significance of the activity to the Group’s
business; and
the greater level of audit effort to evaluate
the Group’s application of the requirements
of the industry specific accounting standard
AASB 6 Exploration for and Evaluation of
Mineral Resources, in particular the presence
of impairment indicators. The presence of
impairment indicators would necessitate a
detailed analysis by the Group of the value of
E&E assets. Given the criticality of this to the
scope and depth of our work, we involved
senior team members to challenge the
Group’s determination that no such indicators
existed.
Our audit procedures included:
• evaluating the Group’s accounting policy to
recognise exploration and evaluation assets
using the criteria in the accounting standard;
• we assessed the Group’s determination of
its areas of interest for consistency with the
definition in the accounting standard. This
involved analysing the licenses in which the
Group holds an interest and the exploration
programmes planned for those;
•
for the significant areas of interest, we
assessed the Group’s current rights to
tenure by checking the ownership of the
relevant license for mineral resources or
reserves to government registries and
evaluating agreements in place with other
parties. We also tested for compliance with
conditions, on a sample of licenses;
The key audit matter
How the matter was addressed in our audit
In assessing the presence of impairment
indicators, we focused on those that may draw
into question the commercial continuation of E&E
activities where significant carrying value of E&E
assets exists. Given the financial position of the
Group, we paid particular attention to:
• documentation available regarding rights to
tenure, via licensing, and compliance with
relevant conditions, to maintain current rights
to an area of interest and the Group’s
intention and capacity to continue the
relevant E&E activities; and
•
the ability of the Group to fund the
continuation of activities;
results from latest activities regarding the
existence or otherwise of economically
recoverable mineral resources or reserves.
• we tested the Group’s additions to E&E for
the year by evaluating a statistical sample of
recorded expenditure for consistency to
underlying records, the capitalisation
requirements of the Group’s accounting
policy and the requirements of the
accounting standard;
• we evaluated Group documents for
consistency with their stated intentions for
continuing E&E in certain areas. We
corroborated this through interviews with
key operational and finance personnel. The
Group documents we evaluated included:
-
internal management plans and
budgets;
- minutes of board and internal
management meetings;
-
announcements made by the Group to
the Australian Securities Exchange;
• we analysed the Group’s determination of
recoupment of E&E assets through
successful development and exploitation of
the area or by its sale by evaluating
documentation of planned future activities;
including a feasibility study for the Jambreiro
project; and
• we obtained corporate budgets identifying
areas with existing funding and those
requiring alternate funding sources. We
compared this for consistency with areas
with E&E, for evidence of the ability to fund
continued activities. We identified those
areas relying on alternate funding sources
and evaluated the capacity of the Group to
secure such funding;
for the execution of Sales and Purchase
Agreement for Jaguar Nickel Project acquisition
with one of the purchase consideration being the
transfer of Salobo West Copper-Gold Project to
Vale, we evaluated management’s assessment
over the no recognition accounting impacts and
disclosures to Note 15 to the financial report by
evaluating the signed agreements and applicable
accounting standards.
Other Information
Other Information is financial and non-financial information in Centaurus Metals Limited’s annual
reporting which is provided in addition to the Financial Report and the Auditor's Report. The Directors
are responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other
Information. In doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
•
implementing necessary internal control to enable the preparation of a Financial Report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error
• assessing the Group and Company’s ability to continue as a going concern and whether the
use of the going concern basis of accounting is appropriate. This includes disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Group and Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They 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 the 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
Directors’ responsibilities
In our opinion, the Remuneration Report of
Centaurus Metals Limited for the year ended
31 December 2019, complies with Section 300A
of the Corporations Act 2001.
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 responsibilities
We have audited the Remuneration Report
included in section 5 of the Directors’ report for
the year ended 31 December 2019.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit
conducted in accordance with Australian Auditing
Standards.
KPMG
Trevor Hart
Partner
Perth
24 March 2020
Annual Report – 31 December 2019
Shareholder Information
The shareholder information set out below was applicable as at 13 March 2020.
Substantial Shareholders
The Company has no substantial shareholders.
Class of Shares and Voting Rights
(b)
There were 2,375 holders of ordinary shares in the Company as at the above date. The voting rights attaching
to the ordinary shares, set out in Clause 41 of the Company’s Constitution, are:
(a)
On a show of hands, every person present who is a shareholder or a proxy, attorney or representative of
a shareholder has one vote; and
On a poll, every person present who is a shareholder or a proxy, attorney or representative of a
shareholder shall, in respect of each fully paid share held by him, or in respect of which he is appointed
a proxy, attorney or representative, have one vote for the share, but in respect of partly paid shares, shall
have a fraction of a vote for each partly paid share. The fraction shall be equivalent to the proportion
which the amount paid is of the total amounts paid and payable, excluding amounts credited, provided
that the amounts paid in advance of a call are ignored when calculating a true portion.
As at the above date the Company had 97 holders of listed options over 434,100,000 unissued ordinary shares
with an exercise price of $0.012 and an expiry date of 31 May 2021. There are no voting rights attached to the
unissued ordinary shares. Voting rights will attach to the unissued ordinary shares when the options have been
exercised.
There were 8 holders of unlisted options over 86,000,000 unissued ordinary shares. 7,000,000 option have an
exercise price of $0.012 and expire as followings, 1,750,000 on 31 May 2022, 1,750,000 in 31 May 2023 and
3,500,000 on 31 May 2024. 8,500,000 options have an exercise price of $0.0082 and expire on 10 June 2020
18,500,000 options have an exercise price of $0.013 and expire on 31 May 2020. 18,500,000 options have an
exercise price of $0.014 and expire on 31 May 2021. 33,500,000 options have an exercise price of $0.015 and
expire on 31 May 2022.
There were 2 holders of unlisted options over 24,841,904 options with a zero exercise price. The options are
subject to a number of vesting conditions and expire on 31 December 2023.
Restricted Securities
There are currently no restricted securities on issue.
On-market Buy Back
There is no current on-market buy back.
Distribution of Equity Securities
The distribution of numbers of equity security holders by size of holding is shown in the table below. There were
617 holders of less than a marketable parcel (being a minimum $500 parcel at $0.009 per share) of ordinary
shares.
1
1,001
5,001
10,001
100,001
1,000
-
5,000
-
-
10,000
- 100,000
and over
Class of Equity
Security
Listed
Options
(CTMOC)
-
-
-
4
93
97
Ordinary
Shares
139
103
55
658
1,420
2,375
Unlisted
Options
Unlisted
Options
(ESOP)
Performance
Rights
-
-
-
-
7
2
-
-
-
-
2
7
-
-
-
-
1
1
Page 64 of 69
Annual Report – 31 December 2019
Shareholders
The names of the twenty largest shareholders are listed below:
Ordinary Shares (CTM)
Name
1 Citicorp Nominees Pty Ltd
2 Twynam Investments Pty Ltd
3 Harmanis Holdings Pty Ltd
4 Mr Brad Bolin
5 McCusker Holdings Pty Ltd
6 Orimco Holdings Pty Ltd
7 Mr Roger Fitzhardinge
8 Mr Darren Gordon
9 Terrativa Minerais S A
Stockwork (Kal) Pty Ltd
10 Atlas Iron Limited
11
12 Brispot Nominees Pty Ltd
13 Bond Street Custodians Limited
14 Equity Trustees Limited
15
LC Capital Limited
16 Oceanview Road Pty Ltd
17 Olgen Pty Ltd
18 Tavarua International Inc
19
SFN Holdings Pty Ltd
20 HSBC Custody Nominees (Australia) Limited
Total Top 20 Shareholders
Other Shareholders
Total Number of Issued Shares
Number
Held
414,689,698
182,500,000
149,000,000
131,245,249
116,769,854
81,100,001
79,513,103
78,783,121
76,501,476
60,320,264
60,000,000
44,023,026
17,714,285
41,000,000
40,000,000
36,156,266
34,000,000
33,898,305
33,000,000
32,813,913
1,743,028,561
2,047,942,801
3,790,971,362
Percentage of
Issued Shares (%)
10.94
4.81
3.93
3.46
3.08
2.14
2.10
2.08
2.02
1.64
1.59
1.16
0.77
1.08
1.06
0.95
0.90
0.89
0.87
0.87
46.34
53.66
100.00
Listed Option Holders
The names of the twenty largest holders of listed options (CTMOC) are listed below:
Listed Options (CTMOB)
Name
1 Rojul Nominees Pty Ltd
2 Mr Bradley Bolin
3 Hawthorn Grove Investments Pty Ltd
4 Mr Andrew Tate
5 Mr James Laird
6 Mr Kevin Press
7 Mrs Hema Naga Jyothi Danda
8 Mrs Julie Martin
9 Citicorp Nominees
10 Millwest Investments Pty Ltd
11 Mr Roger Fitzhardinge
12 Bond Street Custodians Ltd
13 Matzo Consulting Pty Ltd
14 Petard Pty Ltd
15 Mr Daniel Tuckett
16 Prof Paul O’Brien
17 Mr Keith Ambrose & Mr Craig Ambrose
18 Dymax Consultants Pty Ltd
19 Engelhard Enterprises Pty Ltd
20 Mr Brian Bates
Total Top 20 Optionholders
Other Optionholders
Total Number of Listed Options
Number
Held
51,000,000
40,000,000
31,000,000
30,000,000
17,956,535
17,000,000
15,090,909
15,000,000
11,000,000
10,100,000
9,000,000
9,000,000
7,000,000
6,772,728
6,030,353
5,500,000
5,000,000
4,500,000
4,053,738
4,000,000
299,004,263
135,095,737
434,100,000
Percentage of
Listed Options (%)
11.75
9.21
7.14
6.91
4.14
3.92
3.48
3.46
2.53
2.33
2.07
2.07
1.61
1.56
1.39
1.27
1.15
1.04
0.93
0.92
68.88
31.12
100.00
Page 65 of 69
Annual Report – 31 December 2019
Tenement Information
Brazilian Tenements
Tenement
831.638/2004
831.639/2004
831.649/2004
833.409/2007
834.106/2010
833.410/2007
831.645/2006
830.588/2008
850.430/2013
850.486/2017
850.429/2016
850.130/2013
850.475/2016
Project Name
Canavial
Canavial
Location
Minas Gerais
Minas Gerais
Jambreiro (Mining Lease)
Minas Gerais
Jambreiro (Mining Lease)
Minas Gerais
Jambreiro (Mining Lease)
Minas Gerais
Guanhães Regional
Passabém
Passabém
Salobo West I
Salobo West I
Salobo West II
Pebas
Itapitanga
Minas Gerais
Minas Gerais
Minas Gerais
Pará
Pará
Pará
Pará
Pará
Interest
100%
100%
100%
100%
100%
100%
100%
100%
100%(1)
100%(1)
100%(1)
100%
100%(2)
(1) The Company has agreed to divest the Salobo West Project tenure to Vale SA as part of the acquisition of the Jaguar Nickel
Sulphide Project. Refer ASX Announcement 6 August 2019. At year end the Jaguar acquisition has not yet Closed and hence title
to the Salobo West tenements presently remains with Centaurus
(2)
Itapitanga Project joint ventured out to Simulus Group whereby they can earn 80% by free carrying Centaurus to a decision to
mine
Australian Tenements
Tenement
EPM14233
Project Name
Mt Isa
Location
Queensland
Interest
10% (1)
(1) Subject to a Farm-Out and Joint Venture Exploration Agreement with Summit Resources (Aust) Pty Ltd. Summit has earned a 90%
interest in the Project. Aeon Metals Limited has acquired 80% of Summits Interest giving them a total interest of 72% of the tenement.
Page 66 of 69
Annual Report – 31 December 2019
Mineral Resources & Ore Reserves Information
Total Mineral Resources & Ore Reserves Statement
The Company’s Ore Reserves and Mineral Resource holdings are shown in the following tables.
Ore Reserves
Ore Reserves as at 31 December 2019
Ore Reserves as at 31 December 2018
Project
Million
Tonnes
Fe
%
SiO2
%
Al2O
3 %
P
%
LOI
%
Million
Tonnes
Fe
%
SiO2
%
Al2O3
%
P
%
LOI
%
Jambreiro Project *
Proved
Probable
TOTAL
30.6
12.7
43.3
29.4
49.8
28.4
49.5
29.1
49.7
4.2
4.7
4.4
0.04
0.04
0.04
1.6
2.2
1.8
35.4
13.1
28.5
49.6
27.2
49.0
48.5
28.1
49.4
4.3
5.3
4.6
0.04
0.04
0.04
1.7
2.4
1.9
*20% Fe cut-off grade applied; Mine Dilution - 2%; Mine Recovery - 98%;
Mineral Resources
Mineral Resources as at 31 December 2019
Mineral Resources as at 31 December 2018
Project
Million
Tonnes
Fe
%
SiO2
%
Al2O3
%
P
%
LOI
%
Million
Tonnes
Fe
%
SiO2
%
Al2O3
%
P
%
LOI
%
Jambreiro Project*
Measured
Indicated
Inferred
TOTAL
Canavial Project*
Indicated
Inferred
TOTAL
Passabém Project**
Indicated
Inferred
TOTAL
44.3
29.2
50.5
37.7
27.5
51.1
45.1
27.3
52.7
127.1
28.0
51.4
6.5
33.6
33.6
21.1
29.6
38.0
27.6
30.5
37.0
2.8
33.0
48.8
36.2
30.9
54.0
39.0
31.0
53.6
3.9
3.7
3.3
3.7
7.1
5.7
6.0
1.9
0.7
0.8
0.04
0.04
0.05
0.05
0.10
0.07
0.07
0.03
0.07
0.07
TOTAL
COMBINED
* 20% Fe cut-off grade applied; ** 27% Fe cut-off grade applied;
193.7
29.0
49.8
3.4
0.05
1.6
1.7
1.3
1.5
7.9
5.9
6.4
0.6
0.1
0.1
1.9
44.3
29.2
50.5
37.7
27.5
51.1
45.1
27.3
52.7
127.1
28.0
51.4
6.5
33.6
33.6
21.1
29.6
38.0
27.6
30.5
37.0
2.8
33.0
48.8
36.2
30.9
54.0
39.0
31.0
53.6
3.9
3.7
3.3
3.7
7.1
5.7
6.0
1.9
0.7
0.8
0.04
0.04
0.05
0.05
0.10
0.07
0.07
0.03
0.07
0.07
193.7
29.0
49.8
3.4
0.05
1.6
1.7
1.3
1.5
7.9
5.9
6.4
0.6
0.1
0.1
1.9
(a)
(b)
Mineral Resources are reported inclusive of Ore Reserves.
Rounding may generate differences in last decimal place.
Page 67 of 69
Annual Report – 31 December 2019
Mineral Resources and Ore Reserves Annual Statement and Review
The Company carries out an annual review of its Mineral Resources and Ore Reserves as required by the
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code)
2012 edition and the ASX Listing Rules. The review was carried out as at 31 December 2019. The Jambreiro
Resources and Reserve estimates have been reported in accordance with the JORC Code 2012 edition and the
ASX Listing Rules. The remaining Mineral Resource estimates were prepared and disclosed under the JORC Code
2004 edition.
The information prepared for the Canavial, and Passabém Resource estimates have not been updated to comply
with the JORC Code 2012 edition on the basis that the information has not materially changed since it was last
reported.
The Company is not aware of any new information or data that materially affects the information included in
this Annual Statement and confirms that all material assumptions and technical parameters underpinning the
estimates in the relevant market announcement continue to apply and have not materially changed.
Estimation Governance Statement
The Company ensures that all Mineral Resource and Ore Reserve calculations are subject to appropriate levels
of governance and internal controls. Exploration Results are collected and managed by competent qualified staff
geologists and overseen by the Exploration Manager. All data collection activities are conducted to industry
standards based on a framework of quality assurance and quality control protocols covering all aspects of sample
collection, topographical and geophysical surveys, drilling, sample preparation, physical and chemical analysis
and data and sample management.
Mineral Resource and Ore Reserve estimates are prepared by qualified independent Competent Persons and
further verified by the Company’s technical staff. If there is a material change in the estimate of a Mineral
Resource, the modifying factors for the preparation of Ore Reserves, or reporting an inaugural Mineral Resource
or Ore Reserve, the estimate and supporting documentation in question is reviewed by a suitably qualified
independent Competent Person.
Approval of Mineral Resources and Ore Reserve Statement
The Company reports its Mineral Resources and Ore Reserves on an annual basis in accordance with the JORC
Code 2012 Edition.
The Ore Reserves and Mineral Resources Statement is based on and fairly represents information and supporting
documentation prepared by competent and qualified independent external professionals and reviewed by the
Company’s technical staff. The Ore Reserves and Mineral Resources Statement has been approved by Roger
Fitzhardinge, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy.
Roger Fitzhardinge is a permanent employee of Centaurus Metals Limited. Mr Fitzhardinge has consented to
the inclusion of the Statement in the form and context in which it appears in this Annual Report.
Page 68 of 69
Annual Report – 31 December 2019
Competent Person’s Statement
The information in this Annual Report that relates to Exploration Results and Mineral Resources is based on
information compiled by Roger Fitzhardinge, a Competent Person who is a Member of the Australasian Institute
of Mining and Metallurgy and Volodymyr Myadzel, a Competent Person who is a Member of Australian Institute
of Geoscientists. Roger Fitzhardinge is a permanent employee of Centaurus Metals Limited and Volodymyr
Myadzel is the Senior Resource Geologist of Micromine BNA Consultoria e Sistemas Limited, independent
resource consultants engaged by Centaurus Metals.
Roger Fitzhardinge and Volodymyr Myadzel have sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as
Competent Persons as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Roger Fitzhardinge and Volodymyr Myadzel consent to the inclusion in the
report of the matters based on their information in the form and context in which it appears.
The information in this Annual Report that relates to Jambreiro Ore Reserves is based on information compiled
by Beck Nader, a Competent Person who is a professional Mining Engineer and a Member of Australian Institute
of Geoscientists. Beck Nader is the Managing Director of Micromine BNA Consultoria e Sistemas Ltda and is a
consultant to Centaurus.
Beck Nader has sufficient experience that is relevant to the style of mineralisation and type of deposit under
consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012
Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Beck
Nader consents to the inclusion in the report of the matters based on his information in the form and context in
which it appears.
Page 69 of 69