Cazaly Resources Limited
ABN: 23 101 049 334
and
Controlled Entities
Annual Report
For the Year Ended
30 June 2020
CONTENTS
Cazaly Resources Limited Annual Report 2020
Corporate Directory
Directors’ Report
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 Cash Flow Statement
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Shareholder Information
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CORPORATE DIRECTORY
Cazaly Resources Limited Annual Report 2020
JOINT MANAGING DIRECTORS
Nathan McMahon
Clive Jones
NON-EXECUTIVE DIRECTOR
Terry Gardiner
COMPANY SECRETARY
Mike Robbins
PRINCIPAL & REGISTERED OFFICE
Level 3, 30 Richardson Street
WEST PERTH WA 6005
AUDITORS
Bentleys Audit & Corporate (WA) Pty Ltd
Level 3, London Hose, 216 St Georges Tce
Perth WA 6000
SHARE REGISTRAR
Advanced Share Registry Services
110 Stirling Highway
Nedlands WA 6009
STOCK EXCHANGE LISTING
Australian Securities Exchange
(Home Exchange: Perth, Western Australia)
Code: CAZ
BANKERS
National Australia Bank
100 St Georges Terrace
PERTH WA 6000
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
Your directors present their report, together with the financial statements of Cazaly Resources Limited (the
Company or Cazaly) and its controlled entities (the Group) for the financial year ended 30 June 2020.
1.
DIRECTORS AND COMPANY SECRETARY
Directors
The following directors have been in office since the start of the financial year to the date of this report
unless otherwise stated:
Nathan McMahon
Clive Jones
Terry Gardiner
Company Secretary
Mike Robbins
2.
PRINCIPAL ACTIVITIES
The principal activity of the Group during the financial year was mineral exploration and evaluation
activities as well as seeking out further exploration, acquisition and joint venture opportunities.
There were no significant changes in the nature of the Group’s principal activities during the financial
period.
3.
OPERATING RESULTS & FINANCIAL POSITION
The Group’s profit after tax for the year was $1,719,306 (2019 loss: $1,804,071). The Group’s net assets at
the end of the year are $15,762,508 (2019: $21,448,009).
Cash and cash equivalents as at year end were $10,085,562 (2019: $836,709).
Exploration expenditure for the year was $879,535 (2019: $1,110,937). The main expenditure was on Mt
Venn, Parker Range and the Hamerlsey JV in WA and the Kaoko Kobalt Project in Namibia. Exploration
expenditure written off for the year was $394,219 (2019: $520,505). The main write offs related to Parker
Range and Mt Venn as well as previously capitalised expenditures relating to the various tenements
and/or applications that were relinquished during the financial year.
The Group’s operating results were unusually affected by the sale of its Parker Range project and the sale
of an 80% interest in its Mt Venn project (via the sale of its wholly owned subsidiary Yamarna West Pty Ltd).
Net administration expenses and employee benefits for the year totalled $1,639,659 (2019: $613,602).
During the next financial year the Group intends to continue to further develop its current core projects
whilst also exploring new key commodity opportunities both in Australia and overseas. These opportunities
are being explored by the Board and corporate consultants who operate on a success fee basis only.
4.
RISKS
There are specific risks associated with the activities of the Group and general risks which are largely
beyond the control of the Group and the Directors. The risks identified below, or other risk factors, may
have a material impact on the future financial performance of the Group and the market price of the
Company’s shares.
All mining ventures are exposed to risks and the Group continues to monitor risks associated with current
projects whilst also analysing the risks associated with any new mining opportunities. These risks may cover
such areas as:
(cid:120)
Title Risk
This may specifically cover mining tenure whereby country specific mining laws and legislation apply.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
Any opportunity in Australia and overseas will be subject to particular risks associated with operating in
Australia or the respective foreign country. These risks may include economic, social or political instability
or change, hyperinflation, currency non-convertibility or instability and changes of law affecting foreign
ownership, exchange control, exploration licensing, export duties, investment into a foreign country and
repatriation of income or return of capital, environmental protection, land access and environmental
regulation, mine safety, labour relations as well as government control over mineral properties or
government regulations that require the employment of local staff or contractors or require other benefits
be provided to local residents.
(cid:120)
Exploration Risk
The Directors of the Company realise that mineral exploration and development are high risk undertakings
due to the high level of inherent uncertainty. There can be no assurance that exploration of the Group’s
tenements, or of any other tenements that may be acquired by the Group in the future, will result in the
discovery of economic mineralisation. Even if economic mineralisation is discovered there is no guarantee
that it can be commercially exploited.
Any future exploration activities of the Group may be affected by a range of factors including geological
conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and
technical difficulties, industrial and environmental accidents, native title process, changing government
regulations and many other factors beyond the control of the Group.
(cid:120)
Resource Estimates
The Group’s projects may contain JORC Code compliant resources. There is no guarantee that a JORC
Code compliant resource will be discovered on any of the Group’s other tenements. Resource estimates
are expressions of judgement based on knowledge, experience and industry practice. Estimates which
were valid when originally calculated may alter significantly when new information or techniques
become available. In addition, by their very nature, resource estimates are imprecise and depend to
some extent on interpretations which may prove to be inaccurate. As further information becomes
available through additional fieldwork and analysis the estimates are likely to change. This may result in
alterations to development and mining plans which may, in turn, adversely affect the Group’s operations
and the value of the Company’s listed shares.
(cid:120)
Access Risks – Cultural Heritage and Native Title
The Group must comply with various country specific cultural heritage and native title legislation including
access agreements which require various commitments, such as base studies and compliant survey work,
to be undertaken ahead of the commencement of mining operations.
It is possible that some areas of those tenements may not be available for exploration due to cultural
heritage and native title legislation or invalid access agreements. The Group may need to obtain the
consent of the holders of such interests before commencing activities on affected areas of the
tenements. These consents may be delayed or may be given on conditions which are not satisfactory to
the Group.
(cid:120)
JV and Contractual Risk
The Group has and may have additional options where it can increase its holding in the selective assets
by achieving or undertaking selected milestones. The Group’s ability to achieve its objectives and earn
or maintain an interest in these projects is dependent upon it and the registered holders of those
tenements complying with their respective contractual obligations under joint venture agreements in
respect of those tenements, and the registered holders complying with the terms and conditions of the
tenements and any other relevant legislation.
(cid:120)
Economic
General economic conditions, introduction of tax reform, new legislation, the general level of activity
within the resources industry, movements in interest and inflation rates and currency exchange rates may
have an adverse effect on the Group’s exploration, development and possible production activities, as
well as on its ability to fund those activities.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
(cid:120)
Market conditions
Share market conditions may affect the value of the Company’s quoted securities regardless of the
Group’s operating performance. Share market conditions are affected by many factors such as:
introduction of tax reform or other new legislation;
interest rates and inflation rates;
- general economic outlook;
-
-
- changes in investor sentiment toward particular market sectors;
-
-
the demand for, and supply of, capital; and
terrorism or other hostilities.
The market price of securities can fall as well as rise and may be subject to varied and unpredictable
influences on the market for equities in general and resource exploration stocks in particular. Neither the
Group nor the Directors warrant the future performance of the Group or any return on an investment in
the Company.
(cid:120)
Volatility in Global Credit and Investment Markets
Global credit, commodity and investment markets have recently experienced a high degree of
uncertainty and volatility. The factors which have led to this situation have been outside the control of
the Group and may continue for some time resulting in continued volatility and uncertainty in world stock
markets (including the ASX). This may impact the price at which any Listed Options and Shares trade
regardless of operating performance and affect the Company’s ability to raise additional equity and/or
debt to achieve its objectives, if required.
(cid:120)
Commodity Price Volatility and Exchange Rates Risks
If the Group achieves success leading to mineral production, the revenue it will derive through the sale
of gold, iron ore, lithium or any other minerals it may discover exposes the potential income of the Group
to commodity price and exchange rate risks. Commodity prices fluctuate and are affected by many
factors beyond the control of the Group. Such factors include supply and demand fluctuations for
commodities and metals, technological advancements, forward selling activities and other macro-
economic factors such as inflation expectations, interest rates and general global economic conditions.
Furthermore, international prices of various commodities are denominated in United States dollars
whereas the income and expenditure of the Group are and will be taken into account in Australian
currency. This exposes the Group to the fluctuations and volatility of the rate of exchange between the
United States dollar and the Australian dollar as determined in international markets.
If the price of commodities declines this could have an adverse effect on the Group’s exploration,
development and possible production activities, and its ability to fund these activities, which may no
longer be profitable.
(cid:120)
Environmental Risks
The operations and proposed activities of the Group are subject to each project’s jurisdiction, laws and
regulations concerning the environment. As with most exploration projects and mining operations, the
Group’s activities are expected to have an impact on the environment, particularly if advanced
exploration or mine development proceeds. Future legislation and regulations governing exploration,
development and possible production may impose significant environmental obligations on the Group.
The cost and complexity of complying with the applicable environmental laws and regulations may
prevent the Group from being able to develop potential economically viable mineral deposits. The Group
may require approval from the relevant authorities before it can undertake activities that are likely to
impact the environment. Failure to obtain such approvals or to obtain them on terms acceptable to the
Group may prevent the Group from undertaking its desired activities. The Group is unable to predict the
effect of additional environmental laws and regulations, which may be adopted in the future, including
whether any such laws or regulations would materially increase the Group’s cost of doing business or
affect its operations in any area.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
There can be no assurances that new environmental laws, regulations or stricter enforcement policies,
once implemented, will not oblige the Group to incur significant expenses and undertake significant
investments in such respect which could have a material adverse effect on the Group’s business, financial
condition and results of operations.
(cid:120)
Climate Change
The Group recognises that physical and non-physical impacts of climate change may affect assets,
productivity, markets and the community. Risks related to the physical impacts of climate change include
the risks associated with increased severity of extreme weather events and chronic risks resulting from
longer-term changes in climate patterns. Non-physical risks and opportunities arise from a variety of
policy, legal, technological and market responses to the challenges posed by climate change and the
transition to a lower carbon world.
(cid:120)
Sovereign and Political Risk
The Group has an 80% interest in two uranium applications in the Czech Republic and a 95% interest in
the Kaoko Kobalt Project in Namibia.
The Group’s interests in the Czech Republic and Namibia are subject to the risks associated with operating
in a foreign country. These risks may include economic, social or political instability or change,
hyperinflation, currency non-convertibility or instability and changes of law affecting foreign ownership,
exchange control, exploration licensing, export duties, investment into a foreign country and repatriation
of income or return of capital, environmental protection, land access and environmental regulation, mine
safety, labour relations as well as government control over petroleum properties or government
regulations that require the employment of local staff or contractors or require other benefits be provided
to local residents.
The Group may also be hindered or prevented from enforcing its rights with respect to government
instrumentalities because of the doctrine of sovereign immunity.
Any future material adverse changes in government policies or legislation in the Czech Republic or
Namibia that affect ownership, development or mining activities, may affect the viability and profitability
of the Group.
The legal systems operating in the Czech Republic and Namibia are different to that in Australia and this
may result in risks such as:
- Different forms of legal redress in the courts whether in respect of a breach of law or regulation,
or in ownership dispute.
- A higher degree of discretion on the part of governmental agencies.
- Differences in political and administrative guidance on implementing applicable rules and
regulations including, in particular, as regards local taxation and property rights.
- Different attitudes of the judiciary and court.
- Difficult in enforcing judgments.
The commitment by local businesses, government officials and agencies and the judicial system to abide
by legal requirements and negotiated agreements may be more uncertain, creating particular concerns
with respect to licences and agreements for business. These may be susceptible to revision or
cancellation and legal redress may be uncertain or delayed. There can be no assurance that joint
ventures, licences, licence applications or other legal arrangements will not be adversely affected by the
actions of government authorities or others and the effectiveness and enforcement of such arrangements
cannot be assured. Further, there is no guarantee that any applications for tenements will be granted or
granted on conditions satisfactory to the Group.
The Group’s future operations in the Czech Republic and Namibia may be affected by changing political
conditions and changes to laws and petroleum and/or mining policies. The effects of these factors
cannot be accurately predicted and developments may impede the operation or development of a
project or even render it uneconomic.
The above risks are not exhaustive but are the minimum exposure areas observed by the Group.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
5.
DIVIDENDS PAID OR RECOMMENDED
On 18 October 2019, there was a Board Determination that subject to business as usual and Shareholder
Approval being obtained there would be a cash distribution of $0.026 per share ($9 million) to
Shareholders in December 2019. This followed the completion of the 100% sale of the Parker Range Iron
Ore Project (ASX announcement dated 30 August 2019) and the 80% sale of the Mt Venn Project (ASX
announcement dates 20 September 2019).
The cash distribution comprised a payment of $0.005 per Share as a declared unfranked dividend plus a
payment of $0.021 per Share as a return of capital (Return of Capital). The Record Date for both the
unfranked dividend and the Return of Capital was 25 November 2019. Shareholder approval was
obtained at the Company’s AGM held on 20 November 2019.
6.
REVIEW OF OPERATIONS
Projects
Parker Range Iron Ore Project
On 11 June 2019, Cazaly agreed commercial terms for the sale of its 100% owned subsidiary, Cazaly Iron
Pty Ltd (Cazaly Iron) to Gold Valley Iron Pty Ltd (Gold Valley). Cazaly Iron held the tenements that
comprised Parker Range. The agreement with Gold Valley allowed for an initial three-month due
diligence exclusivity period, however Cazaly reserved the right to terminate the exclusivity period should
it receive another proposal or offer from a third party which was more favourable to Cazaly and its
shareholders.
As announced on 21 August 2019, the Company, following the receipt of an unsolicited superior proposal
from Mineral Resources Limited (Mineral Resources) to purchase the Parker Range Iron Ore Project (Parker
Range), terminated the exclusivity period with Gold Valley.
Following such termination, Cazaly agreed to commercial terms with Mineral Resources for the sale of the
assets comprising Parker Range via a binding Heads of Agreement (HOA). The agreement with Gold
Valley remained in place whilst Cazaly evaluated the Mineral Resources proposal and its next steps for
the sale of Parker Range.
HOA consideration compromised:
(a) a payment of $20,000,000 cash upon completion of the sale; and
(b) a royalty of $0.50 for every dry metric tonne of iron ore extracted and removed from the
area of the Project after the first 10,000,000 dry metric tonnes.
On 30 August 2019, both parties finalised the sale of Parker Range and completed or waived their HOA
Conditions Precedent responsibilities as noted in their ASX announcements dated 21 August 2019. Cazaly
also received the cash consideration component of $20 million.
A break fee of $250,000 was paid to Gold Valley on 3 September 2019 as per the terms of their agreement
with the Company.
Mount Venn Gold Project (WML 80% CAZ 20%)
On 23 May 2019, the Company entered into a Heads of Agreement with Woomera Mining Ltd (Woomera)
(ASX:WML) for the sale of an 80% interest in the Mount Venn Project.
A Share Purchase Agreement (SPA) was executed on 8 August 2019 which was subject to customary
share and tenement acquisition conditions as well as Woomera successfully undertaking a fund raising in
order to fund the acquisition and to provide capital for exploration.
On 20 September 2019, both parties announced that they had completed or waived their Conditions
Precedent responsibilities as noted in the SPA. Woomera purchased the 80% interest in the project from
Cazaly, who retained a 20% interest in the tenements and the project through the establishment of an
unincorporated Joint Venture (managed by Woomera).
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
The consideration comprised:
(a) total cash payments of AUD$1,000,000; and
(b) the issue of seven million (7,000,000) fully paid ordinary shares in Woomera at completion
(subject to a voluntary escrow of 12 months from date of issue).
The Mt Venn Project comprises two exploration tenements covering approx. 400 square kilometres and is
located 125km northeast of Laverton in the Eastern Goldfields Region of Western Australia.
The project area lies within the Mount Venn-Dorothy Hills greenstone belt which is the most easterly major
NW/SE striking greenstone belt of the Yilgarn Craton. Together these greenstone belts account for 30% of
the world’s gold reserves, most of Australia’s nickel production, plus other base metal and rare earth
deposits.
The following is an extract from the WML June 2020 Quarterly Report and WML ASX announcement dated
17 August 2020:
Despite the limitations imposed by COVID-19 on Woomera’s on ground exploration activities,
management have been actively progressing the planning for the drilling and exploration program at its
key project, the Mt Venn Gold Project. This has included continuing with its review of existing and historical
exploration data, analysis of the geophysics and geology of the area, in-house geophysical modelling,
progressing drilling contracts and preparation of Plan of Works and associated
regulatory
documentation.
Woomera has also negotiated a force majeure on the joint venture with Cazaly Resources Limited for the
interim period whilst JV activities have been paused to ensure compliance with the terms of the Joint
Venture.
Woomera has heritage clearances in place at the high-grade gold target at Lang’s Find and at the Three
Bears Prospect. It is also in negotiation to complete heritage clearances for Chapman’s Reward and
Jutson Rocks during September 2020, at the earliest, with exploration activities to commence once
clearances have been received.
Kaoko Kobalt Project (CAZ 95%)
Cazaly now holds a 95% interest in the Kaoko base metal project located in northern Namibia
approximately 800km by road from the capital of Windhoek and approximately 750km from the port of
Walvis Bay. The project is situated immediately north of, and abuts, Celsius Resources Limited’s (ASX:CLA)
Opuwo Cobalt project resource of 112Mt @ 0.11% Co & 0.41% Cu (CLA ASX: 16 April & 5 November 2018).
Historic work at Kaoko highlighted the potential for base metal and cobalt mineralisation akin to Opuwo
within the extensive prospective DOF, host to the Opuwo cobalt mineralisation. Previous geochemistry at
Kaoko delineated a 20km by 5km area of subdued magnetics coincident with anomalous Cu-Co-Zn-Mn
at the Kamwe prospect.
There is a strong correlation between conductive targets and higher cobalt values in the western and
eastern zones at Kamwe. These are separated by a structurally complex corridor containing known high-
grade copper mineralisation in gossans as well as further discrete late-time conductors and cobalt-in-soil
anomalies.
Previously the company re-assessed historic data and combined it with company acquired data
including 3,000 geochemical soil re-assays, rock chip and trench assays and airborne geophysical SkyTEM,
data. This work highlighted several areas of coincident geochemical anomalies and conductive
stratigraphy. In particular, cobalt, zinc, copper, europium and manganese anomalies have been
prioritised and reviewed with SkyTEM and other data sets. Priority target areas have been selected for
follow up work in the north east over largely soil covered prospective Ombombo sequence with surface
geochemical sampling planned to commence before the end of the calendar year.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
Geology of the Kaoko Kobalt project showing target areas
McKenzie Springs (FIN 51% CAZ 49%)
Sammy Resources Pty Ltd (a wholly owned subsidiary of Cazaly) is in joint venture with Fin Resources Ltd
(ASX:FIN) over exploration licence E80/4808, the McKenzie Springs Project, located in the Kimberley region
of Western Australia. The project lies south along strike from the Savannah nickel mine owned by
Panoramic Resources Ltd and is prospective for intrusive - hosted nickel copper mineralisation. FIN has the
right to farm-in to an additional 19% interest in the Project by spending $500,000 on exploration by 30
November 2020 (as recently agreed). FIN plans to engage with the Traditional Owners to commence
Heritage Agreement negotiations, facilitating the commencement of heritage surveys over areas of
interest. Subject to successful negotiations with the Native Title Claimants and the heritage survey
clearances, the necessary regulatory approvals will be lodged with the DMIRS for a maiden drilling
program.
The following is an extract from the Fin Resources Ltd 2020 Annual Report:
During the year, FIN considered its options for exploration on previously validated and refined drill targets
at McKenzie Springs. Consideration was given to completing a new geochemical survey over the Spring
Creek intrusion, inquiries were made to consultants to assist with heritage clearance and initial costings
for FIN’s maiden drill program were also completed.
Access to the McKenzie Springs Project was restricted from March to July 2020 due to a COVID-19
Commonwealth Biosecurity Act Direction.
On 17 August 2020, FIN advised that it had appointed a drill contractor for its maiden drilling program at
the McKenzie Springs Project. The drilling contract was awarded to proven Western Australian operator
DDH1 Drilling (DDH1). The field program for the McKenzie Springs Project is expected to commence during
October. The planned program includes three diamond drill holes targeting modelled strong high priority
conductors defined from Fixed Loop Electromagnetic (FLEM) geophysical survey.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
Halls Creek Copper Project (DDD 80% CAZ 20%)
The Halls Creek Project is a copper-zinc project in the East Kimberley near the historic township of Halls
Creek. The project comprises a Mining Lease which includes the Mt Angelo North volcanogenic massive
sulphide deposit and is jointly held with 3D Resources Limited (ASX: DDD) (80%) under a joint venture
agreement (with Cazaly owning 20%). DDD is the manager of the project and the parties contribute to
the expenditure and holdings costs of the project proportionate with their ownership interest therein.
Minimal work was undertaken during the last financial year.
Brown Well (CAZ 100%, EL Applications)
The Brown Well Project comprises two licence applications situated 7km to the west of Laverton and 3km
south east of the historic Windarra South Nickel Mine in the Eastern Goldfields of West Australia and are
prospective for both gold and nickel however, due to extensive surficial cover, the ground has not
previously been effectively tested to date.
Work by previous explorers identified potential nickel sulphide targets within extensions of ultra-mafic
komatiite flows which were flagged as priority targets but never tested. Other work highlighted the
potential for gold bearing structures to occur within the ground.
Data compilation and target prioritisation has been completed readying for field programs once access
is granted.
Panton (CAZ 100%, EL Application)
The Company has an exploration license application adjacent to Panoramic Resources Ltd’s
(Panoramic) Panton Sill Platinum Group Metals (PGM) resource located in the east Kimberley region of
West Australia. Application E80/5446 is in a ballot with other competing applications lodged with the
DoMIR on the 12 December 2019.
The Panton total PGM Resource is quoted by Panoramic as 14.32Mt @ 2.19g/t Pt, 2.39g/t Pd and 0.31g/t
Au, or approximately 2Moz Pt+Pd (www.panoramicresources.com – Resources at 30 June 2018). The
resource consists of high-grade platinum and palladium mineralisation within a number of stratiform reefs.
The Panton orebody is one of Australia’s largest, highest grade, undeveloped PGM deposits.
Hamersley JV
Cazaly was made aware that a plaint had been lodged against the relevant tenement by a third party
and that it is being defended by Pathfinder Resources Limited (manager of the JV). The Company has
requested to be informed of the progress of the matter.
Other
The Company has completed and is currently reviewing, numerous other potential new projects. Project
specifics cannot be discussed due to confidentiality requirements however the commodity focus is on
gold and base metal projects. Other commodities have also been reviewed and will not be discounted
going forward.
The Company’s preference is for advanced exploration to near mine ready assets in jurisdictions
amenable to mining and exploration.
Corporate
Note Deed
On 23 August 2019, a total of 28,331,099 fully paid ordinary shares were issued to the various note holders,
upon the final conversion of outstanding notes and all accrued interest.
All of the options (exercisable at $0.02745 and exercisable before 31 December 2021) issued under the
2018 note deed were converted to fully paid ordinary shares as follows:
(cid:120)
(cid:120)
10 September 2019 - 27,720,000 options converted for proceeds of $760,914.
17 September 2019 - 2,200,000 options converted for proceeds of $60,390.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
The 7.3m options (exercisable at $0.039) issued under the 2017 note deed expired in line with their terms
on 31 December 2019.
Other
The Company terminated its Controlled Placement Deed (CPD) with Acuity Capital.
On 22 June 2020, the Company and its controlled entities change their registered address and principal
place of business to Level 3, 30 Richardson St West Perth WA 6005.
The Group continues to monitor the COVID-19 situation closely and has been managing the situation in
a balanced, calm and measured way.
7.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Group will continue its mineral exploration activity at and around its exploration projects with the
object of identifying commercial resources. The Group has continued to reduce its tenement holdings
but is also focussed on sourcing key commodity projects.
8.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the financial year, other than
the disposal of the Parker Range and Mt Venn projects disclosed above.
9.
AFTER BALANCE DATE EVENTS
On 22 July 2020, the Company issued 200,000 fully paid shares on the conversion of options exercisable
at $0.029 on or before 31 March 2021.
On 19 August 2020, the Company issued 5,630,000 fully paid shares on the conversion of options
exercisable at $0.029 on or before 31 March 2021.
On 22 August 2020, 2,500,000 options (exercisable at $0.195) expired in line with their terms and conditions.
Apart from the above, the Directors are not aware of any matters or circumstances at the date of the
report, other than those referred to in this report or the financial statements or notes thereto, that has
significantly affected or may significantly affect the operations, the results of operations or the state of
affairs of the Group in subsequent financial years.
10.
ENVIRONMENTAL ISSUES
The Group has a policy of complying with or exceeding its environmental performance obligations. The
Board believes that the Group has adequate systems in place for the management of its environmental
requirements. The Group aims to ensure the appropriate standard of environmental care is achieved,
and in doing so, that it is aware of and is in compliance with all environmental legislation. The Directors
are not aware of any breach of environmental legislation for the financial year under review.
11.
INFORMATION ON DIRECTORS
Nathan McMahon
Managing Director (Corporate and Administration) (B.Com)
Experience
Mr McMahon has provided corporate and tenement management advice to
the mining industry for nearly 25 years to in excess of twenty public listed mining
companies. Nathan has specialised in native title negotiations, joint venture
negotiations and project acquisition due diligence.
Equity Holdings
36,363,256 fully paid ordinary shares
2,500,000 options exercisable at $0.039 expiring 26 November 2020
4,000,000 options exercisable at $0.0495 expiring 19 November 2022
Listed Directorships
Galan Lithium Limited (February 2011 to February 2020)
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
Clive Jones
Managing Director (Technical) (B.App.Sc(Geol), M.AusIMM)
Experience
Mr Jones has been involved in mineral exploration for over 25 years and has
worked on the exploration for a range of commodities including gold, base
metals, mineral sands, uranium and iron ore. Mr Jones is also a director of other
ASX listed mining companies.
Equity Holdings
18,329,904 fully paid ordinary shares
2,500,000 options exercisable at $0.039 expiring 26 November 2020
4,000,000 options exercisable at $0.0495 expiring 19 November 2022
Listed Directorships
Corazon Mining Ltd (from February 2005 to November 2019)
Bannerman Resources Ltd (from January 2007)
Terry Gardiner
Non-Executive Director (B.Bus)
Experience
Equity Holdings
Mr Gardiner has been involved in capital markets, corporate advising,
stockbroking & derivatives trading for over 20 years. For the past twelve years
Mr Gardiner has been an Executive Director of boutique broker Barclay Wells
Ltd. Mr Gardiner is also a director of various ASX listed and unlisted public
companies.
5,421,500 fully paid ordinary shares
1,500,000 options exercisable at $0.039 expiring 26 November 2020
500,000 options exercisable at $0.029 expiring 31 March 2021
2,000,000 options exercisable at $0.0495 expiring 19 November 2022
Listed Directorships
Galan Lithium Limited (from December 2013)
Roto-Gro International Limited (from July 2019)
Affinity Energy and Health Limited (from October 2019)
Mike Robbins
Company Secretary
Mr Robbins has over 25 years resource industry experience gathered at both operational and corporate
levels, both within Australia and overseas. During that time, he has held numerous project and head office
roles and is also Company Secretary for Galan Lithium Limited.
12.
REMUNERATION REPORT - AUDITED
This report details the nature and amount of remuneration for each director of the Company.
Remuneration Policy
The remuneration policy of Cazaly has been designed to align Director and executive objectives with
shareholder and business objectives by providing a fixed remuneration component which is assessed on
an annual basis in line with market rates. The further tailoring of goals between shareholders and the
Directors and executives is achieved through the issue of equity to the directors and executives to
encourage the alignment of personal and shareholder interest.
The Board of the Company believes the remuneration policy to be appropriate and effective in its ability
to attract and retain the best personnel to run and manage the Company, as well as create goal
congruence between Directors, executives and shareholders.
The remuneration policy, setting the terms and conditions for the Directors and executives was developed
by the Managing Directors and approved by the Board after seeking professional advice from
independent external consultants.
In determining competitive remuneration rates, the Board seeks independent advice on local and
international trends among comparative companies and industry generally. It examines terms and
conditions for employee incentive schemes benefit plans and other incentive plans.
11
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
12.
REMUNERATION REPORT – AUDITED (Cont’d)
Independent advice is obtained to confirm that executive remuneration is in line with market practice
and is reasonable in the context of Australian executive reward practices.
The Group is exploration and development focussed, and therefore speculative in terms of performance.
Consistent with attracting and retaining talented people, the Directors and executives are paid market
rates associated with individuals in similar positions, within the same industry.
Options and performance incentives will be issued in the event that the entity moves from an exploration
entity to a producing entity, and key performance indicators such as profits and growth can be used as
measurements for assessing Board and executive performance.
All remuneration paid to Directors and executives is valued at the cost to the Company and expensed
or carried forward on the balance sheet for time that is attributable to exploration and evaluation.
Options are valued using the Black-Scholes methodology.
The Board policy is to remunerate non-executive directors at market rates for comparable companies for
time, commitment and responsibilities. The Managing Directors, in consultation with independent advisors
as necessary, determine payments to the non-executive Directors and review their remuneration
annually, based on market practice, duties and accountability. The maximum aggregate amount of fees
that can be paid to non-executive directors is subject to approval by shareholders at the Annual General
Meeting. Fees for non-executive Directors are not linked to the performance of the Company. However,
to align Directors’ interests with shareholder interests, all Directors are encouraged to hold shares in the
company.
Employment Contracts of Directors and Senior Executives
The employment conditions of the Managing Directors are each formalised in contracts of employment.
These contracts commenced on 1 July 2010 and have 3 year rolling terms which include an annual salary
review incorporating a minimum increase in fees based upon the prevailing CPI in June and December
each year. The contracts provided Messrs. McMahon and Jones with a commencement annual salary of
$180,000 each since 1 July 2010. In the event of termination, the fixed proportion of remuneration is
payable up until the date of the termination. After the completion of the sale of Parker Range, the annual
salaries of Messrs McMahon and Jones were adjusted to $210,806 per annum applicable from 1 July 2019
based entirely upon the contractual CPI review clauses contained in their contracts of employment.
The annual salary of Mr Clive Jones was reviewed and increased to $275,000 per annum from 1 January
2020. This amount is well inside the MD salary spectrum of similar sized entities and is a just reward for Mr
Jones’ past efforts and continued service to the Company. Mr Nathan McMahon’s salary remains in line
with his existing contract. Outside of standard annualised CPI increases, which were unpaid since the
date of their last contracts, both Mr Jones and Mr McMahon have not had any increase in their salaries
since 2007. During the reporting period, the Board resolved to pay out the CPI contractual increases since
their last contracts resulting in payments to Messrs Jones and McMahon of $154,942.
Appropriate bonuses were also awarded to the Board and employees of the Company after the sale of
Parker Range. Total bonuses paid to Key Management Personnel were $235,800
An employment contract is in place for the Non-Executive Director, Terry Gardiner. Mr Gardiner’s annual
fee has been $30,000 per annum since his appointment but was reviewed to $50,000 (plus
superannuation) from 1 July 2019.
The employment contracts stipulate a range of resignation notice periods. The Company may terminate
an employment contract without cause by providing written notice or making payment in lieu of notice,
based on the individual’s annual salary component. Termination payments are not payable on
resignation or under the circumstances of unsatisfactory performance.
Voting and comments made at the Company’s 2019 Annual General Meeting
The adoption of the Remuneration Report for the financial year ended 30 June 2019 was put to the
shareholders of the Company at the Annual General Meeting held 20 November 2019. The Company
received 100% of the vote, of those shareholders who exercised their right to vote, in favour of the
remuneration report for the 2019 financial year. The resolution was passed without amendment on a show
of hands. The Company did not receive any specific feedback at the AGM or throughout the year on its
remuneration practices.
12
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
12.
REMUNERATION REPORT – AUDITED (Cont’d)
Details of Remuneration for Years Ended 30 June 2020 & 30 June 2019
The remuneration for key management personnel of the company during the year was as follows:
Short-term Benefits
Post
Employment
Benefits
Other
Long-term
Benefits
Share based
Payment
Total
Performance
Related
Cash, salary
Cash
Non-cash
Other
Super
Other
Equity
Options
& bonuses
profit
Benefit
share
$
$
$
$
Nathan McMahon – Joint Managing Director (i)
2020
2019
309,203
180,000
-
-
-
-
154,942
-
$
-
-
Clive Jones – Joint Managing Director (ii)
2020
2019
354,902
180,000
-
-
-
-
154,942
2,603
-
-
Terry Gardiner – Non Executive Director
2020
2019
70,000
30,000
Total Remuneration
2020
2019
734,105
390,000
-
-
-
-
-
-
-
-
5,000
4,750
-
-
314,884
7,353
-
-
$
$
$
$
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
102,175 566,320
13,710
193,710
102,175 614,622
13,710
193,710
51,088
130,838
8,225
38,225
255,438 1,311,780
35,645
425,645
18%
7%
17%
7%
39%
22%
19%
8%
i) An aggregate short term benefits total of $464,145 (2019:$ 180,000) was paid, or was due and payable to Kingsreef
Pty Ltd, a company controlled by Mr Nathan McMahon, for the provision of corporate management services to
the Company. This amount included backpay of $154,942 which had been unpaid since 2011 and a bonus of
$105,400
ii) An aggregate short term benefits total of $509,844 (2019:$ 180,000) was paid, or was due and payable to Clive
Jones or Widerange Corporation Pty Ltd, a company controlled by Mr Clive Jones, for the provision of corporate
and technical management services to the Company. This amount included backpay of $154,942 which had been
unpaid since 2011 and a bonus of $105,400.
Related Party Information
The Company received a total of $122,853 (2019: $126,720) in respect of an Office Services Agreement
with Galan Lithium Limited and is considered by the Company to be a related party, as the joint
Managing Director of Cazaly, Mr Nathan McMahon, was formally a director of Galan Lithium Limited
during the financial year (resigned February 2020).
Barclay Wells Ltd was paid a total of Nil (2019: $42,900) in capital raising and advisory fees for the 2020
financial year. Barclay Wells Ltd is considered by the Company to be a related Party, as the Non-Executive
Director of Cazaly, Mr Terry Gardiner, is also a director of Barclay Wells Ltd.
The Company received a total of $14,418 (2019: $38,655) under an Office Services Agreement with
Abyssinian Gold Limited (previously known as Hodges Resources Limited) and is considered by the
Company to be a related party, as both the joint Managing Director and Non-Executive Director of
Cazaly, Mr Nathan McMahon and Mr Terry Gardiner respectively, were also directors of Abyssinian Gold
Limited during the financial year.
13
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
12.
REMUNERATION REPORT – AUDITED (Cont’d)
Key Management Personnel (KMP) Share and Option Holdings
Share Holdings
30 June 2020
N. McMahon
C. Jones
T. Gardiner
30 June 2019
N. McMahon
C. Jones
T. Gardiner
Option Holdings
30 June 2020
N. McMahon
C. Jones
T. Gardiner
30 June 2019
N. McMahon
C. Jones
T. Gardiner
Balance
01-07-19
Granted as
Remuneration
Options
Exercised
Net Change
Other
29,366,142
16,329,904
5,071,500
50,767,546
-
-
-
-
-
-
-
-
5,997,114
2,000,000
350,000
7,847,114
Balance
01-07-18
Granted as
Remuneration
Options
Exercised
Net Change
Other
28,772,022
15,329,904
1,375,000
45,476,926
-
-
-
-
-
-
-
-
594,120
1,000,000
3,696,500
5,290,620
Balance
30-06-20
35,363,256
18,329,904
5,421,500
58,614,660
Balance
30-06-19
29,366,142
16,329,904
5,071,500
50,767,546
Balance
01-07-19
Issued
Acquired
(i)
2,500,000
4,000,000
2,500,000
4,000,000
2,000,000
2,000,000
7,000,000
10,500,000
Exercised
Lapsed
Balance
30-06-20
Vested
during
the year
Vested
and
exercisable
-
-
-
-
-
-
-
-
6,000,000
4,000,000
6,000,000
6,000,000
4,000,000
6,000,000
4,000,000
2,000,000
4,000,000
16,000,000
10,500,000
16,000,000
Balance
01-07-18
Issued
Acquired (ii)
Exercised
Lapsed
Balance
30-06-19
Vested
during the
year
Vested
and
exercisable
2,500,000
2,500,000
2,500,000
2,500,000
-
2,000,000 (iii)
5,000,000
7,000,000
-
-
-
-
(2,500,000)
2,500,000
(2,500,000)
2,500,000
-
2,000,000
(5,000,000)
7,000,000
-
-
-
-
2,500,000
2,500,000
2,000,000
7,000,000
(i)
(ii)
(iii)
Approved by shareholders at the AGM held on 20 November 2019. Options are exercisable at $0.0495
(originally issued at $0.0705) on or before 19 November 2022.
Approved by shareholders at the AGM held on 23 November 2018. Options are exercisable at $0.039
(originally issued at $0.06) on or before 26 November 2020.
Includes 500,000 options exercisable at $0.029 (originally issued at $0.05) on or before 31 March 2021
issued under a placement and approved by shareholders on 6 June 2019.
End of Remuneration Report (Audited).
14
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
13. MEETINGS OF DIRECTORS
The number of directors' meetings held and conducted during the financial year, each director held
office during the financial year and the number of meetings attended by each director is:
Director
N McMahon
C Jones
T Gardiner
Number Eligible
Number Participated
8
8
8
8
8
8
The Company does not have a formally constituted audit and risk committee or remuneration and
nomination committee as the Board considers that the Company’s size and type of operation do not
warrant the formation of such committees.
14.
INDEMNIFYING OFFICERS OR DIRECTORS
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001 every
Officer, or agent of the Company shall be indemnified out of the property of the Company against any
liability incurred by him in his capacity as Officer or agent of the Company or any related corporation in
respect of any act or omission whatsoever and howsoever occurring or in defending any proceedings,
whether civil or criminal. No indemnification has been paid with respect to the Company’s auditor.
The Company has insurance policies in place for Directors and Officers insurance.
15. OPTIONS
Options forfeited or cancelled
During, or since the end of the financial year, no options were forfeited or cancelled.
Options Expired or Lapsed
On 31 December 2019, 7,300,000 options exercisable at $0.039 (originally $0.06) expired as did 2,500,000
options exercisable at $0.195 (originally $0.216) on 22 August 2020.
Options on Issue
At the date of this report the Company had the following options on issue:
Expiry Date
26/11/2020
31/3/2021
19/11/2022
Exercise Price
Options on Issue
$0.0390
$0.0290
$0.0495
8,750,000
14,800,000
10,000,000
Option holders do not have any rights to participate in any issue of shares or other interests in the
Company or any other entity.
16.
PROCEEDINGS ON BEHALF OF GROUP
No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any
proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group
for all or any part of those proceedings. The Group was not a party to any such proceedings during the
year.
17. AUDITORS INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2020 has been received and
can be found on page 17.
15
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2020
18. NON-AUDIT SERVICES
The Board of Directors is satisfied that the provision of non-audit services performed during the year by the
Group’s auditors is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. No other fees were paid or payable to the auditors for non-audit services
performed during the year ended 30 June 2020.
This report of the Directors, incorporating the Remuneration Report, is signed in accordance with a
resolution of the Board of Directors.
Nathan McMahon
Managing Director
23 September 2020
Competent Persons Statement
This information that relates to exploration targets, exploration results, resource reporting and drilling data of Cazaly
operated projects is based on information compiled by Mr Clive Jones and Mr Don Horn who are Members of The
Australasian Institute of Mining and Metallurgy and/or The Australian Institute of Geoscientists and are employees of
the Company. Mr Jones and Mr Horn 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 Persons
as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves’. Mr Jones and Mr Horn consent to the inclusion in their names in the matters based on their information in the
form and context in which it appears.
16
To the Board of Directors
Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001
As lead audit partner for the audit of the financial statements of Cazaly Resources Limited
for the financial year ended 30 June 2020, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
any applicable code of professional conduct in relation to the audit.
Yours Faithfully,
BENTLEYS
Chartered Accountants
DOUG BELL CA
Partner
Dated at Perth this 23rd day of September 2020
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For Year Ended 30 June 2020
Revenue from continuing operations
Other Income
Employee benefits
Finance Costs
Depreciation
Administrative expenses
Compliance and regulatory expenses
Occupancy expenses
Written-off exploration expenditure
Equity based payments
Gain/(Loss) on sale of financial assets
Loss on disposal of subsidiary
Revaluation /(Impairment) of financial assets
Profit/(loss) before income tax
Income tax (expense)/ benefit
Profit/(loss) for the year from continuing operations
Other comprehensive income
Total comprehensive income/(loss) for the year
Earnings/(loss) for the year attributable to:
Members of the parent entity
Non-controlling interest
Total comprehensive income/(loss) attributable to:
Members of the parent entity
Non-controlling interest
Earnings/(loss) per share from continuing and
discontinuing operations
Note
2
2
3
3
9
6
2020
$
311,810
3,967,005
(1,149,859)
(157,741)
(14,398)
(489,800)
(183,682)
(245,981)
(394,219)
(255,438)
(1,300)
(135,138)
468,047
1,719,306
-
1,719,306
-
1,719,306
1,719,359
(53)
1,719,306
1,719,359
(53)
1,719,306
2019
$
217,833
120,000
(386,296)
(507,912)
(8,741)
(227,306)
(209,075)
(183,512)
(520,505)
-
-
-
(98,557)
(1,804,071)
-
(1,804,071)
-
(1,804,071)
(1,803,888)
(183)
(1,804,071)
(1,803,888)
(183)
(1,804,071)
Basic weighted average earnings/(loss) per share
Diluted weighted average earnings/(loss) per share
20
20
Cents
0.50
0.50
Cents
(0.75)
(0.75)
The accompanying notes form part of these financial statements.
18
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 30 June 2020
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Non current assets held for sale
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Trade and other receivables
Financial assets
Property, plant and equipment
Exploration and evaluation assets
Rights of use assets
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Convertible Notes
Interest bearing loans and borrowings
TOTAL CURRENT LIABILITIES
NON CURRENT LIABILITIES
Note
2020
$
2019
$
7
8
9
8
10
11
12
29
13
14
15
29
10,085,562
59,396
10,144,958
-
836,709
71,030
907,739
16,875,456
10,144,958
17,783,195
59,717
1,514,427
15,276
4,324,283
215,417
26,929
155,058
25,419
4,128,235
-
6,129,120
4,335,641
16,274,078
22,118,836
143,619
145,607
-
59,973
165,021
143,564
362,241
-
349,199
670,826
Interest bearing loans and borrowings
29
162,371
-
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Controlling entity interest
Non-controlling interest
TOTAL EQUITY
511,570
670,826
15,762,508
21,448,010
16
17
18
25,852,471
358,724
(10,433,300)
15,777,895
(15,387)
31,288,827
777,627
(10,603,110)
21,463,344
(15,334)
15,762,508
21,448,010
The accompanying notes form part of these financial statements.
19
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 30 June 2020
Issued Capital (Accumulated
Losses)
Option
Reserve
$
$
$
Non-
Controlling
Interest
$
Total
$
Balance at 1 July 2018
29,963,658
(8,855,399)
305,198
(15,151)
21,398,306
Earnings/(loss) for the year
Other comprehensive
income for the year
Total comprehensive
income/(loss) for the year
Transactions with owners, in
their capacity as owners, and
other transfers:
Shares issued
Issue costs
Options issued
Options expired
Fair value of options
exercised
Option reserve
Return of capital
Unfranked dividend paid
Balance at 30 June 2019
Earnings/(loss) for the year
Other comprehensive
income for the year
Total comprehensive
income/(loss) for the year
Transactions with owners, in
their capacity as owners, and
other transfers:
Shares issued
Issue costs
Options issued
Options expired
Fair value of options
exercised
Option reserve
Return of capital
Unfranked dividend paid
Balance at 30 June 2020
-
-
-
(1,803,888)
-
(1,803,888)
-
-
-
(183)
(1,804,071)
-
(183)
-
(1,804,071)
1,370,169
(45,000)
-
-
-
-
-
56,177
-
-
-
-
31,288,827
-
-
-
-
(10,603,110)
-
-
-
1,719,359
-
1,719,359
-
-
528,606
(56,177)
-
-
-
-
777,627
-
-
-
-
-
-
-
-
-
-
-
(15,334)
1,370,169
(45,000)
528,606
-
-
-
-
-
21,448,010
(53)
1,719,306
-
(53)
-
1,719,306
1,339,763
-
-
-
-
-
-
193,751
480,590
-
(7,256,709)
-
25,852,471
-
-
-
(1,743,300)
(10,433,300)
-
-
-
(193,751)
(480,590)
255,438
-
-
358,724
-
-
-
-
1,339,763
-
-
-
-
-
-
-
(15,387)
-
255,438
(7,256,709)
(1,743,300)
15,762,508
The accompanying notes form part of these financial statements.
20
CONSOLIDATED CASH FLOW
STATEMENT
For the year ended 30 June 2020
Cash Flows from Operating Activities
Receipts from services agreements
Cash received from government grant
Payments to suppliers and employees
Interest received and bill discounts received
Note
2020
$
2019
$
158,914
50,000
(2,066,915)
149,730
199,237
-
(962,356)
2,706
Net cash used in operating activities
21
(1,708,271)
(760,413)
Cash Flows From Investing Activities
Purchase of property, plant & equipment
Purchase of equity investments
Payments for exploration and evaluation
Payment for term deposit bond
Proceeds from the Sale of Subsidiary
Proceeds from sale of exploration assets (net of
transaction costs)
Proceeds from term deposit bond
(5,826)
(731,622)
(955,297)
(49,679)
934,470
19,926,883
17,595
(15,823)
(8,159)
(929,115)
-
-
120,000
-
Net cash provided by investing activities
19,135,820
(833,097)
Cash Flows from Financing Activities
Proceeds from issue of share
Proceeds from conversion of options
Payment for costs of issue of securities
Payment of notes and interest
Payment for the return of capital
Payment for unfranked dividend
-
821,304
-
-
(7,256,700)
(1,743,300)
1,050,000
-
(39,000)
(55,000)
-
-
Net cash provided by financing activities
(8,178,696)
956,000
Net increase/(decrease) in cash held
9,248,853
(637,510)
Cash and cash equivalents at beginning of the
financial year
836,709
1,474,219
Cash and cash equivalents at end of the financial
year
7
10,085,562
836,709
The accompanying notes form part of these financial statements.
21
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements and notes represent those of Cazaly Resources Limited (the
Company or Cazaly) and its controlled entities (the Group). Cazaly Resources Limited is a listed public
company, incorporated and domiciled in Australia.
The financial statements were authorised for issue on 23 September 2020 by the Directors of the Company.
Basis of Preparation
The financial report is a general purpose financial report that has been prepared in accordance with
Australian Accounting
Interpretations, other authoritative
pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The Group
is a for-profit entity for financial reporting purposes under Australian Accounting Standards.
Standards, Australian Accounting
Australian Accounting Standards set out in accounting policies that the AASB has concluded would result in
financial statements containing relevant and reliable information about transactions, events and conditions.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also
comply with International Financial Reporting Standards as issued by the IASB. Material accounting policies
adopted in the preparation of these financial statements are presented below and have been consistently
applied unless otherwise stated.
These financial statements have been prepared on an accruals basis and are based on historical costs,
modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets
and financial liabilities.
Going Concern
The financial report has been prepared on a going concern basis, which contemplates the continuity of
normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of
business.
(a)
Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by
the Company at the end of the reporting period. A controlled entity is any entity over which the Company
has the power to govern the financial and operating policies so as to obtain benefits from the entity’s
activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more
than half of the voting power of an entity. In assessing the power to govern, the existence and effect of
holdings of actual and potential voting rights are also considered.
Where controlled entities have entered or left the Group during the year, the financial performance of those
entities are included only for the period of the year that they were controlled. A list of controlled entities, as
at 30 June 2020 is contained in Note 23 to the financial statements.
In preparing the consolidated financial statements, all inter-group balances and transactions between
entities in the Group have been eliminated on consolidation. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with those adopted by the Company.
Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent,
are shown separately within the Equity section of the consolidated Statement of Financial Position and
Statement of Profit or Loss and other Comprehensive Income. The non-controlling interest in the net assets
comprises their interests at the date of the original business combination and their share of changes in equity
since that date.
(b)
Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and impairment. The carrying
amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected
net cash flows that will be received from the asset’s employment and subsequent disposal. The expected
net cash flows have been discounted to their present values in determining recoverable amounts.
22
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(c)
Depreciation
Depreciation is provided on plant and equipment. Depreciation is calculated on a straight line basis so as to
write off the net cost or other revalued amount of each asset over its expected useful life to its estimated
residual value.
The depreciation rates used for each class of depreciable assets are plant and equipment (40%), office
furniture and equipment (18%) and motor vehicles (22.5%).
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period. The value for office furniture and equipment was written down to nil at 30 June 2020.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains
and losses are included in the Statement of Profit or Loss and other Comprehensive Income. When revalued
assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained
earnings.
(d)
Exploration, Evaluation and Development Expenditure
Costs incurred during exploration and evaluations relating to an area of interest are accumulated. Costs are
carried forward to the extent they are expected to be recouped through successful development, or by
sale, or where exploration and evaluation activities have not yet reached a stage to allow a reasonable
assessment regarding the existence of economically recoverable reserves. In these instances the entity must
have rights of tenure to the area of interest and must be continuing to undertake exploration operations in
the area.
Accumulated costs carried forward in respect of an area of interest that is abandoned are written off in full
against profit in the year in which the decision to abandon the area is made. When production commences,
the accumulated costs for the relevant area of interest will be amortised over the life of the area according
to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to
capitalise costs in relation to that area of interest.
Costs of site restoration are provided over the life of the project from when exploration commences and are
included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant,
equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses
of the mining permits. Such costs have been estimated of future costs, current legal requirements and
technology on an undiscounted basis.
(e)
Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset,
but not the legal ownership, are transferred to entities in the consolidated group are classified as finance
leases. Finance leases are capitalised by recording an asset and a liability equal to the present value of the
minimum lease payments, including any guaranteed residual values. Leased assets are depreciated on a
straight-line basis over the shorter of their estimated useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are
charged as expenses in the periods in which they are incurred.
23
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(f)
Financial Instruments
Financial Assets
Initial Recognition and Measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value
through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash
flow characteristics and the Group’s business model for managing them. With the exception of trade
receivables that do not contain a significant financing component or for which the Group has applied the
practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it
needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal
amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order
to generate cash flows. The business model determines whether cash flows will result from collecting
contractual cash flows, selling the financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the
date that the Group commits to purchase or sell the asset.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets
designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required
to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the
purpose of selling or repurchasing in the near term.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair
value with net changes in fair value recognised in the statement of profit or loss.
This category includes listed equity investments which the Group had not irrevocably elected to classify at
fair value through OCI. Dividends on listed equity investments are also recognised as other income in the
statement of profit or loss when the right of payment has been established.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)
is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:
(cid:120) The rights to receive cash flows from the asset have expired; or
(cid:120) The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a ‘pass-through’
arrangement; and
either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has
neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control
of the asset.
The Group considers a financial asset in default when contractual payments are 90 days past due. However,
in certain cases, the Group may also consider a financial asset to be in default when internal or external
information indicates that the Group is unlikely to receive outstanding contractual amounts in full before
taking into account any credit enhancements held by the Group. A financial asset is written off when there
is no reasonable expectation of recovering the contractual cash flows
24
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Financial Liabilities
Initial Recognition and Measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss,
loans and borrowings, payables as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payable and convertible notes.
The accounting policy on convertible notes are at 1(v).
(g)
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are
shown within short-term borrowings in current liabilities on the statement of financial position.
(h)
Trade and Other Receivables
Trade receivables, which generally have 30-90 day terms, are recognised and carried at original invoice
amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when
there is objective evidence that the entity will not be able to collect the debts. Bad debts are written off
when identified.
(i)
Revenue and Other Income
Revenue from the sale of goods is recognised upon the delivery of goods to customers. Interest revenue is
recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.
All revenue is stated net of the amount of goods and services tax (GST).
(j)
Impairment of Assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset may
be impaired. The assessment will include the consideration of external and internal sources of information
including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of
pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing
the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in
use, to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is
recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with
another standard (eg in accordance with the revaluation model in AASB 116). Any impairment loss of a
revalued asset is treated as a revaluation decrease in accordance with that other standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed
annually for goodwill and intangible assets with indefinite lives.
(k)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office (“ATO”). In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables
and payables in the statement of financial position are shown inclusive of GST. The net amount of GST
recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial
position.
Cash flows are included in the cash flow statement on a gross basis. The GST components of cash flows
arising from investing and financing activities which are recoverable from, or payable to, the ATO are
classified as operating cash flows.
25
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(l)
Taxation
The income tax expense (revenue) for the year comprises current income tax expense (income) and
deferred tax expense (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated
using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax
liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the
relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances
during the year as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the
profit or loss when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also
result where amounts have been fully expensed but future tax deductions are available. No deferred income
tax will be recognised from the initial recognition of an asset or liability, excluding a business combination,
where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at
reporting date. Their measurement also reflects the manner in which management expects to recover or
settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent
that it is probable that future taxable profit will be available against which the benefits of the deferred tax
asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint
ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the
temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable
future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended
that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur.
Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred
tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same
taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation
and settlement of the respective asset and liability will occur in future periods in which significant amounts of
deferred tax assets or liabilities are expected to be recovered or settled.
Tax Consolidation
Cazaly and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under
tax consolidation legislation. Each entity in the group recognises its own current and deferred tax assets and
liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation. Current tax
liabilities (assets) and deferred tax assets arising from unused tax losses and tax credits in the subsidiaries are
immediately transferred to the head entity.
(m)
Trade and Other Payables
Trade payables and other payables are carried at amortised costs and represent liabilities for goods and
services provided to the company prior to the end of the financial year that are unpaid and arise when the
company becomes obliged to make future payments in respect of the purchase of these goods and
services.
(n)
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events,
for which it is probable that an outflow of economic benefits will result and that outflow can be reliably
measured.
26
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows.
(o)
Share Based Payments
The Group operates equity-settled share-based payment employee share and option schemes. The fair
value of the equity to which employees become entitled is measured at grant date and recognised as an
expense over the vesting period, with a corresponding increase to an equity account. Share-based
payments to non-employees are measured at the fair value of goods or services received or the fair value
of the equity instruments issued, if it is determined the fair value of the good or services cannot be reliably
measured, and are recorded at the date the goods or services are received. The corresponding amount is
shown in the option reserve.
The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using
a Black–Scholes pricing model which incorporates all market vesting conditions. The number of shares and
options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount
recognised for services received as consideration for the equity instruments granted shall be based on the
number of equity instruments that eventually vest.
(p)
Issued Capital
Issued and paid up capital is recognised at the fair value of the consideration received by the Company.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction
of the share proceeds received.
(q)
Earnings Per Share
Basic earnings per share is calculated as net earnings attributable to members, adjusted to exclude costs of
servicing equity (other than dividends) and preference share dividends, divided by the weighted average
number of ordinary shares, adjusted for an bonus element.
Diluted earnings per share is calculated as net earnings attributable to members, adjusted for costs of
servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and
interest associated with dilutive potential ordinary shares that would have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution
of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive
potential ordinary shares, adjusted for any bonus element.
(r)
Employee Benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees
to the end of the reporting period. Employee benefits that are expected to be settled within one year have
been measured at the amounts expected to be paid when the liability is settled.
(s)
Interest in Joint Operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when decisions about the
relevant activities require unanimous consent of the parties sharing control.
When a Group entity undertakes its activities under joint operations, the Group as a joint operator recognises
in relation to its interest in a joint operation:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
its assets, including its share of any assets held jointly;
its liabilities, including its share of any liabilities incurred jointly;
its revenue from the sale of its share of the output arising from the joint operation;
its share of the revenue from the sale of the output by the joint operation; and
its expenses, including its share of any expenses incurred jointly.
27
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation
in accordance with the AASBs applicable to the particular assets, liabilities, revenues and expenses.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a
sale or contribution of assets), the Group is considered to be conducting the transaction with the other parties
to the joint operation, and gains and losses resulting from the transactions are recognised in the Group's
consolidated financial statements only to the extent of other parties' interests in the joint operation.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a
purchase of assets), the Group does not recognise its share of the gains and losses until it resells those assets
to a third party.
(t)
Critical Accounting Estimates and Judgements
The preparation of financial statements requires management to make judgements, estimates and
assumptions that affect the application of 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 estimate is revised and in any future periods affected.
The directors evaluate estimates and judgments incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future
events and are based on current trends and economic data, obtained both externally and within the group.
Key Judgements –Exploration and evaluation expenditure
Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current.
These costs are carried forward in respect of an area that has not at balance sheet date reached a stage
that permits reasonable assessment of the existence of economically recoverable reserves, refer to the
accounting policy stated in note 1(d).
Key Judgements - Share based payment transactions
The Company measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined by an internal
valuation using a Black-Scholes option pricing model.
Key Judgments – Environmental issues
Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or
enacted environmental legislation, and the directors understanding thereof. At the current stage of the
company’s development and its current environmental impact the directors believe such treatment is
reasonable and appropriate.
Key Estimate – Taxation
Balances disclosed in the financial statements and the notes thereto, related to taxation, are based on the
best estimates of directors. These estimates take into account both the financial performance and position
of the company as they pertain to current income taxation legislation, and the directors understanding
thereof. No adjustment has been made for pending or future taxation legislation. The current income tax
position represents that directors’ best estimate, pending an assessment by the Australian Taxation Office.
(u)
Fair value measurements
The Group measures and recognises the asset, ‘Financial assets held for trading’ at fair value on a recurring
basis after initial recognition.
The Group does not subsequently measure any liabilities at fair value on a non-recurring basis.
28
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(i) Fair Value Hierarchy
AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of the fair value
hierarchy, which categorises fair value measurements into one of three possible levels based on the
lowest level that an input that is significant to the measurement can be categorised into as follows:
Level 1
Measurements based on
quoted prices (unadjusted) in
active markets for identical
assets or liabilities that the entity
can access at the
measurement date.
Level 2
Measurements based on inputs
other than quoted prices
included in Level 1 that are
observable for the asset or
liability, either directly or indirectly.
Level 3
Measurements based on
unobservable inputs for the asset
or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or
more valuation techniques. These valuation techniques maximise, to the extent possible, the use of
observable market data. If all significant inputs required to measure fair value are observable, the asset or
liability is included in Level 2. If one or more significant inputs are not based on observable market data, the
asset or liability is included in Level 3.
(ii) Valuation techniques
The Company selects a valuation technique that is appropriate in the circumstances and for which sufficient
data is available to measure fair value. The availability of sufficient and relevant data primarily depends on
the specific characteristics of the asset or liability being measured. The valuation technique selected by the
Company is the Market approach whereby valuation techniques use prices and other relevant information
generated by market transactions for identical or similar assets or liabilities.
When selecting a valuation technique, the Company gives priority to those techniques that maximise the
use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using
market data (such as publicly available information on actual transactions) and reflect the assumptions that
buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas
inputs for which market data is not available and therefore are developed using the best information
available about such assumptions are considered unobservable.
The following table provides the fair values of the Company’s assets and liabilities measured and recognised
on a recurring basis after initial recognition and their categorisation within the fair value hierarchy:
30 June 2020
Note
Level 1
$
Level 2
$
Level 3
$
Total
$
Recurring fair value measurements
Financial assets at fair value through
profit or loss:
-
-
Australian listed shares at fair value
1,514,427
unlisted Australian shares
-
1,514,427
-
-
-
-
-
-
1,514,427
-
1,514,427
29
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
30 June 2019
Note
Level 1
$
Level 2
$
Level 3
$
Total
$
113,818
-
113,818
-
-
-
-
41,240
41,240
113,818
41,240
155,058
Recurring fair value measurements
Financial assets at fair value through
profit or loss:
-
-
Australian listed shares at fair value
unlisted Australian shares
(v) Convertible Notes
Convertible notes issued by the Group include embedded derivatives (option to convert to variable number
of shares in the Group). These convertible notes are recognized as financial liabilities at fair value through
profit or loss. On initial recognition, the fair value of the convertible note will equate to the proceeds received
less costs to issue and subsequently the liability is measured at fair value at each reporting period until
settlement. The fair value movements are recognized on the profit and loss as finance costs.
(w) Non current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through continuing use. This condition is
regarded as met only when the asset (or disposal group) is available for immediate sale in its present
condition subject only to terms that are usual and customary for sales for such asset (or disposal group) and
its sale is highly probable. Management must be committed to the sale, which should be expected to qualify
for recognition as a completed sale within one year from the date of classification.
When the Company is committed to a sale plan involving loss of control of a subsidiary, all of the assets and
liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless
of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.
When the Group is committed to a sale plan involving disposal of an investment, or a portion of an
investment, in an associate or joint venture, the investment or the portion of the investment that will be
disposed of is classified as held for sale when the criteria described above are met, and the Group
discontinues the use of the equity method in relation to the portion that is classified a held for sale. Any
retained portion of an investment in an associate or a joint venture that has not been classified as held for
sale continues to be accounted for using the equity method. The Group discontinues the use of the equity
method at the time of disposal when the disposal results in the Group losing significant influence over the
associate or joint venture.
After the disposal takes place, the Group accounts for any retained interest in the associate or joint venture
in accordance with AASB 139 unless the retained interest continues to be an associate or a joint venture, in
which case the Group uses the equity method (see the accounting policy regarding investments in
associates or joint ventures above).
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous
carrying amount and fair value less costs to sell.
(x) New, revised or amending accounting standards and interpretations adopted
In the year ended 30 June 2020, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Company and effective for the current annual
reporting period. Those which have a material impact on the Company are set out below.
30
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
AASB 16 - Leases
AASB 16 Leases introduces a new framework for accounting for leases and replaces AASB 117 Leases and
sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires
lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance
leases under AASB 117. At the commencement date of a lease, a lessee will recognise a liability to make
lease payments (i.e. the lease liability) and an asset representing the right-to-use the underlying asset during
the lease term (i.e. the right-of-use asset). Lessees are required to separately recognise the interest expense
on the lease liability and the amortisation expense on the right-of-use asset.
AASB 16 Leases:
(cid:120)
requires all leases to be accounted for ‘on-balance sheet’ by lessees, other than short-term and low
value asset leases.
(cid:120) provides new guidance on the application of the definition of lease and on sale and lease back
accounting.
largely retains the existing lessor accounting requirements in AASB 117 Leases.
requires new and different disclosures about leases.
(cid:120)
(cid:120)
The Company has adopted AASB 16 with effect from 1 July 2019 using the modified retrospective approach
and accordingly has not restates comparative for the 2019 reporting period as permitted under the specific
transitional provisions in the standard. There was no significant impact on the financial statements on
adoption of AASB 16, as the lease was short term.
Practical expedients applied
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the
standard:
(cid:120)
To measure the right-of-use asset on transition at an amount equal to the lease liability (as adjusted
for prepaid or accrued lease payments);
(cid:120) Not to recognise low-value or short-term leases on the balance sheet. Costs for these lease
(cid:120)
(cid:120)
(cid:120)
arrangements will continue to be expensed;
To use a single discount rate for a portfolio of leases with reasonably similar characteristics;
To use hindsight in determining the lease term where lease contracts include options to extend or
terminate the lease; and
To reflect the impairment of right-of-use assets on transition by adjusting their carrying amounts for
onerous lease provisions recognised on the Group balance sheet as at 30 June 2019.
The Group’s leasing activities and how these are accounted for:
(cid:120)
From 1 July 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 Group. Each lease payment is allocated
between the liability and finance cost. The right-of-use asset is depreciated over the lease term on
a straight-line basis.
(cid:120) Assets and liabilities arising from a lease are initially measured on a present value basis. Lease
liabilities include the net present value of the following lease payments:
o
o
Fixed payments (including in-substance fixed payments), less any lease incentives receivable
Variable lease payments that are based on an index or a rate
(cid:120)
Right-of-use assets are measured at cost comprising the following:
o
o
The amount of the initial measurement of the lease liability net of any previously recognised
onerous lease provisions; and
Any restoration costs applicable to the lease.
(cid:120)
Payments associated with short-term leases and leases of low-value assets are recognised on a
straight-line basis as an expense in profit or loss. Short term leases are leases with a lease term of 12
months or less. Low-value assets comprise of office equipment.
31
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
BASIS OF PREPARATION
(a)
Revenue recognition
The Group first determines whether an enforceable agreement exists and whether the promise to transfer
goods or provide services to the customer is “sufficiently specific”. If an enforceable agreement exists and
the promise is “sufficiently specific” (to a transaction or part of a transaction), the Group applies the general
AASB15 Revenue from Contracts with Customers principles to determine if the revenue is to be recognised
either over time or at a point in time. Any distinct goods or services are separately identified and any
discounts in the contract price are allocated to the separate elements identified. If this criteria is not met, the
Group considers whether AASB1058 Income of Not-for-Profit Entities applies.
Grant revenue
Government grants are recognised where there is reasonable assurance that the grant will be received and
all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as
income on a systematic basis over the periods that the related costs, for which it is intended to compensate,
are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the
expected useful life of the related asset.
When the Group receives grants of non-monetary assets, the asset and the grant are recorded at nominal
amounts and released to profit or loss over the expected useful life of the asset, based on the pattern of
consumption of the benefits of the underlying asset by equal annual instalments.
Operating revenue
Revenue from the rendering of services is recognised upon the delivery of the service to the customer.
Interest revenue
Interest revenue is recognised using the effective interest rate method.
(b) Operating Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the underlying assets.
i)
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
and lease payments made at or before the commencement date less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the
estimated useful lives of the assets, as follows:
Office premises
3 years
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects
the exercise of a purchase option, depreciation is calculated using the estimated useful life of the
asset.
The right-of-use assets are also subject to impairment.
32
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
ii)
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including in substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a purchase option reasonably
certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease
term reflects the Group exercising the option to terminate. Variable lease payments that do not
depend on an index or a rate are recognised as expenses (unless they are incurred to produce
inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at
the lease commencement date because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments made. In addition, the carrying amount
of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the
lease payments (e.g., changes to future payments resulting from a change in an index or rate used to
determine such lease payments) or a change in the assessment of an option to purchase the
underlying asset.
The Group’s lease liabilities are included in Interest-bearing loans and borrowings, refer note 29.
iii)
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery
and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement
date and do not contain a purchase option). It also applies the lease of low-value assets recognition
exemption to leases of office equipment that are considered to be low value. Lease payments on
short-term leases and leases of low value assets are recognised as expense on a straight-line basis over
the lease term.
Group as a lessor
Leases in which the Group does not transfer substantially all the risks and rewards incidental to
ownership of an asset are classified as operating leases. Rental income arising is accounted for on a
straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due
to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and recognised over the lease term on the same
basis as rental income. Contingent rents are recognised as revenue in the period in which they are
earned.
33
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
2.
REVENUE & OTHER INCOME
Revenue
-
-
-
interest received
recoupment of office costs on-charged
other revenue
Other Income
-
-
-
gain from tenement sale agreement
government grant received
other
2020
$
2019
$
149,730
162,080
-
311,810
3,907,005
50,000
10,000
3,967,005
3,329
212,994
1,510
217,833
120,000
-
-
120,000
3.
PROFIT/(LOSS) FOR THE YEAR
Profit/(loss) before income tax from continuing operations includes the following specific expenses:
Expenses
Administrative expenses
Consulting
Advertising, printing and stationery
Travel and accommodation
Insurance
Break fee
Other
Compliance and regulatory expenses
ASX, ASIC, registry and secretarial
Legal
Employee Benefits
Superannuation
4.
KEY MANAGEMENT PERSONNEL
Interests of Key Management Personnel
80,092
13,987
40,815
29,900
250,000
75,006
489,800
176,844
6,838
183,682
67,502
13,749
22,511
31,296
-
92,248
227,306
157,000
52,075
209,075
34,810
27,457
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or
payable to each member of the Company’s key management personnel for the year ended 30 June 2020.
The totals of remuneration paid to key management personnel of the Company during the year are as
follows:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share based payments
1,056,342
-
-
255,438
1,311,780
390,000
-
-
35,645
425,645
No termination benefits were paid to any Key Management Personnel.
A total of $264,474 (2019:$270,000) was capitalised as exploration expenditure.
34
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
4.
KEY MANAGEMENT PERSONNEL (Cont’d)
Related Party Information
The Company received a total of $122,853 (2019: $126,720) under an Office Services Agreement with Galan
Lithium Limited and is considered by the Company to be a related party, as the joint Managing Director of
Cazaly, Mr Nathan McMahon, was also a director of Galan Lithium Limited during the financial year (resigned
February 2020).
Barclay Wells Ltd was paid a total of Nil (2019: $42,900) in capital raising and advisory fees for the 2020
financial year. Barclay Wells Ltd is considered by the Company to be a related Party, as the Non-Executive
Director of Cazaly, Mr Terry Gardiner, is also a director of Barclay Wells Ltd.
The Company received a total of $14,418 (2019: $38,655) under an Office Services Agreement with Abyssinian
Gold Limited (previously known as Hodges Resources Limited) and is considered by the Company to be a
related party, as both the joint Managing Director and Non-Executive Director of Cazaly, Mr Nathan
McMahon and Mr Terry Gardiner respectively, were also directors of Abyssinian Gold Limited during the
financial year.
5.
AUDITORS REMUNERATION
Remuneration of the auditor for:
- Auditing or reviewing the financial report
6.
INCOME TAX EXPENSE
The components of the tax expense/(income) comprise:
Current tax
Deferred tax
2020
$
2019
$
22,500
22,500
32,988
32,988
-
-
-
-
-
-
(a)
The prima facie tax on profits/(losses) from ordinary activities
before income tax is reconciled to the income tax as follows:
Profit/(loss) from continuing operations
1,719,306
(1,804,071)
Prima facie tax benefit on loss from ordinary activities before
income tax at 27.5% (2019: 27.5%)
472,809
(496,120)
Add/(subtract):
Tax effect of:
Non-assessable income
Effect of tax losses derecognised
Other non-allowable items
Recognition of previously unrecognised prior year tax losses
Utilisation of previously unrecognised capital losses
Tax benefit of deductible equity raising costs
Movement in unrecognised temporary differences
Income tax expense (benefit) attributable to entity
(b)
Recognised deferred tax assets at 27.5% (2019:
27.5%) comprise the following
Carry forward revenue losses
Capital raising and future black hole deductions
Provisions and accruals
Other
Less: Set off of deferred tax liabilities
(13,750)
-
98,808
(273,167)
(216,378)
(8,267)
(60,056)
-
765,978
-
46,554
69,280
881,812
(881,812)
-
-
327,621
143,959
-
-
(8,267)
32,807
-
5,360,491
-
47,654
67,375
5,475,521
(5,475,521)
-
35
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
6.
INCOME TAX EXPENSE (Cont’d)
Recognised deferred tax liabilities at 27.5% (2019:
27.5%) comprise the following
Exploration expenditure
Other
Less: Set off of deferred tax asset
(c)
Deferred tax recognised directly in equity:
Relating to equity raising costs
(d)
Unrecognised deferred tax assets at 27.5% (2019:
27.5%) comprise the following:
Deferred tax assets have not been recognized in respect to
the following as they are not considered to have met the
recognition criteria:
Deductible temporary differences
Tax revenue losses
Tax capital losses
7.
CASH AND CASH EQUIVALENTS
Cash at bank
Petty cash
8.
TRADE AND OTHER RECEIVABLES
Current
Other receivables
2020
$
2019
$
865,933
15,879
881,812
(881,812)
-
5,470,021
5,500
5,475,521
(5,475,521)
-
-
-
-
-
171,400
1,783,085
113,639
2,068,124
242,490
2,058,161
325,916
2,626,567
10,085,362
200
10,085,562
836,509
200
836,709
59,396
59,396
71,030
71,030
Other receivables normally have 30 to 60 day terms. At 30 June 2020, $18,311 (2019: $13,757) is receivable
from companies related to one of the Directors.
Non-Current
Bonds
Bonds are term deposits, held by way of bank guarantee.
59,717
59,717
26,929
26,929
36
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
9.
NON-CURRENT ASSETS HELD FOR SALE
Non-current asset held for sale – Mt Venn (i)
Non-current asset held for sale – Parker Range (ii)
Movements
Balance brought forward
Transfer from exploration and evaluation assets
Expenditure incurred up to disposal date
Disposal on sale of subsidiary
Disposal to proceeds on sale of tenements
2020
$
2019
$
-
-
-
868,076
16,007,380
16,875,456
16,875,456
-
2,498
(870,574)
(16,007,380)
-
727,328
16,148,128
-
-
-
16,875,456
(i)
On 20 September 2019, the Company and Woomera Mining Ltd (WML) completed and waived the
conditions precedents under the terms of the Share Sale Agreement and the transaction for the sale
of an 80% interest in the Mt Venn project was completed (via the sale of Yamarna West Pty Ltd). The
Company received gross proceeds of $1 million and 7 million WML shares. The breakdown of the loss
on disposal is as follows:
Proceeds from disposal
Deposit received in the previous financial year
Carrying amount of net assets at disposal date
Original acquisition costs
Transaction costs
Loss on disposal of subsidiary
1,161,000
(20,000)
(870,574)
(289,268)
(116,296)
(135,138)
(ii)
As announced on 21 August 2019, the Company received an unsolicited offer from Mineral Resources
Ltd in respect of the sale of the Parker Range Iron Ore Project. On 30 August 2019, both parties
completed or waived the conditions precedent and the transaction was completed. The Company
received gross proceeds of $20m. The breakdown of the gain on disposal is as follows:
Proceeds from disposal
Carrying amount of net assets at disposal date
Transaction costs
Gain on disposal of tenements
20,000,000
(15,981,210)
(111,785)
3,907,005
10.
FINANCIAL ASSETS
Current
Financial assets, at fair value through profit or loss:
Australian listed shares at fair value
Unlisted Australian public company shares
1,514,427
-
113,818
41,240
1,514,427
155,058
37
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
11.
PROPERTY, PLANT AND EQUIPMENT
Plant and Equipment
At cost
Accumulated depreciation
Office Furniture and Equipment
At cost
Accumulated depreciation
Motor Vehicle
At cost
Accumulated depreciation
2020
$
330,010
(320,532)
9,478
43,638
(43,638)
-
65,878
(60,080)
5,798
15,276
2019
$
326,331
(310,889)
15,442
41,491
(38,995)
2,496
65,878
(58,397)
7,481
25,419
Movement in the carrying amounts for each class of property, plant and equipment between the beginning
and end of the current financial year.
Balance at the beginning of the year
Additions
Disposals/write offs
Depreciation expense
Carrying amount at the end of the year
Balance at the beginning of the year
Additions
Disposals/write offs
Depreciation expense
Carrying amount at the end of the year
Plant and
Equipment
$
15,442
3,679
(2,750)
(6,893)
9,478
Plant and
Equipment
$
6,426
14,716
-
(5,700)
15,442
2020
Office
Furniture
$
2,496
2,147
(4,643)
-
-
2019
Office
Furniture
$
2,446
1,107
-
(1,057)
2,496
Motor
Vehicles
$
7,481
-
-
(1,683)
5,798
Motor
Vehicles
$
9,465
-
-
(1,984)
7,481
Total
$
25,419
5,826
(7,393)
(8,576)
15,276
Total
$
18,337
15,823
-
(8,741)
25,419
38
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
12.
EXPLORATION AND EVALUATION ASSETS
Non-Current
Costs carried forward in respect of areas of interest in:
2020
$
2019
$
Exploration and evaluation phases at cost
4,324,283
4,187,203
Movement – exploration and evaluation
Brought forward
Exploration expenditure capitalised during the year
Acquisitions
Exploration expenditure capitalised on tenements sold during the
year
Mt Venn acquisition costs transferred to loss on subsidiary
Exploration expenditure written off
Transfer to Non current assets classified as held for sale (refer note 9)
4,128,235
472,983
-
406,552
(289,268)
(394,219)
-
19,685,931
1,110,937
-
-
-
(520,505)
(16,148,128)
4,324,283
4,128,235
Exploration expenditure for the year was $879,535 (2019: $1,110,937). The main expenditure was on Mt Venn,
Parker Range and the Hamerlsey JV in WA and the Kaoko Kobalt Project in Namibia. Exploration expenditure
written off for the year was $394,219 (2019: $520,5050). The main write offs related to Parker Range and Mt
Venn as well as previously capitalised expenditures relating to the various tenements and/or applications
that were relinquished during the financial year.
The value of the Group’s interest in exploration expenditure is dependent upon:
-
-
-
the continuance of the Group’s rights to tenure of the areas of interest;
the results of future exploration; and
the recoupment of costs through successful development and exploitation of the areas of interest, or
alternatively, by their sale.
13.
TRADE AND OTHER PAYABLES
Current
Trade creditors
Other creditors and accrued expenses
Creditors are non-interest bearing and settled on 30 to 45 day terms.
14.
PROVISIONS
Current
Provision for annual leave
Provision for long service leave
55,239
88,380
143,619
77,924
87,097
165,021
93,042
52,565
145,607
94,090
49,474
143,564
39
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
15.
CONVERTIBLE NOTES
Face value
Opening Balance
Issue costs
Interest expense
7,300,000 options issued
-
- Consultancy costs settled in shares
-
- Cost of unwound during the period
- Repayment of 2017 interest and notes
-
-
- Cost of unwound during the period
- Convertible note converted
2018 notes issued
Interest expense
2020
$
-
362,241
-
-
-
-
-
-
27,145
129,072
(518,458)
-
2019
$
-
670,288
(480,590)
(44,880)
73,000
59,712
(803,000)
748,000
18,603
396,397
(275,289)
362,241
Deed
As announced on 13 December 2018, the Company provided an update in relation to the unsecured 2017
convertible note deed (2017 Deed), which expired on that date.
The Company and Oracle Capital Group Pty Ltd (Oracle) agreed that the Company would repay the
original notes and all accrued interest.
Oracle, a Perth based portfolio management and corporate advisory firm, provided the Company with a
new unsecured note facility of $748,000 (Deed) via the issue of 748,000 unsecured notes (face value of one
dollar ($1.00))(Notes). The Company and Oracle agreed and acknowledged that by entering into the Deed,
any and all liabilities, amounts and obligations which are outstanding or owing by the Company in favour of
Oracle and/or its nominees or any other any other person under the 2017 Deed are deemed to have been
repaid, satisfied and extinguished in full and the Company is released and discharged from all of its liabilities,
amounts and obligations under the 2017 Deed.
Under the terms of the Deed, Oracle and/or its nominees, would also be entitled to 29,920,000 Company
options exercisable at a price that is equal to 150% of the Share price calculated on the basis of 85% of the
VWAP of the Shares on the ASX calculated over the 5 consecutive trading days which immediately precede
the date of the Deed.
The 29,920,000 options were valued at $480,590 based on the following assumptions:
Number of
Options
Fair Value at
Grant Date per
Option
Estimated
Volatility
Life of Option
(years)
Exercise Price
Share Price at
Grant Date
Risk Free
Interest Rate
29,920,000
$0.01606
100%
3.04
$0.02745
$0.021
2.0%
On 10 June 2019, a total of 15,043,110 fully paid ordinary shares were issued on the conversion of notes and
accrued interest by note holders. Total face value of notes outstanding at 30 June 2019 is $485,100.
On 23 August 2019, a total of 28,331,099 fully paid ordinary shares were issued on the final conversion of the
remaining notes and all accrued interest by note holders.
40
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
16.
ISSUED CAPITAL
346,113,267 fully paid ordinary shares (2019: 287,862,168)
with no par value
25,852,471
31,288,827
2020
$
2019
$
Ordinary Share Movements
30 June
2020
Number
30 June
2020
$
30 June
2019
Number
30 June
2019
$
Balance at the beginning of the year
Issue of shares at $0.0183 each
Issue of shares at $0.025 each
Issue of shares at $0.025 each
Issue of shares at $0.0183 each
Issue of shares at $0.03 each
Issue of shares at $0.0183 each
Issue of shares at $0.02745 each
Issue of shares at $0.02745 each
Less Fair value of options exercised
Less return of capital
Less capital raising costs
Balance at the end of the year
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(vii)
(viii)
287,862,168
-
-
-
-
-
28,331,099
27,720,000
2,200,000
346,113,267
-
-
-
346,113,267
31,288,827
518,459
760,914
60,390
32,628,590
480,590
(7,256,709)
-
25,852,471
230,366,599
2,452,459
29,000,000
1,000,000
15,043,110
10,000,000
-
-
-
287,862,168
-
-
-
287,862,168
29,963,658
44,880
725,000
25,000
275,289
300,000
-
-
-
31,333,827
-
-
(45,000)
31,288,827
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Shares issued to consultants on 18 December 2018 in lieu of fees due on 2018 note deed.
Placement shares issued on 21 March 2019.
Placement shares issued to a Director on 10 June 2019 (as approved by shareholders at a general meeting on 6
June 2019).
Shares issued on the part conversion of notes and accrued interest under the 2018 note deed.
Gold Valley placement shares issued on 10 June 2019.
Shares issued on 23 August 2019 for the full conversion of notes and accrued interest under the 2018 note deed.
Shares issued on 10 September 2019 (27,720,000) and 17 September 2019 (2,200,000) for the full conversion of
options issued under the 2018 note deed.
(viii) On 18 October 2019, there was a Board Determination that subject to business as usual and Shareholder Approval
being obtained there would be a cash distribution of $0.026 per share ($9 million) to Shareholders in December
2019. This followed the completion of the 100% sale of the Parker Range Iron Ore Project (ASX announcement dated
30 August 2019) and the 80% sale of the Mt Venn Project (ASX announcement dates 20 September 2019). The cash
distribution comprised a payment of $0.005 per Share as a declared unfranked dividend plus a payment of $0.021
per Share as a return of capital. The Record Date for both the unfranked dividend and the return of capital was 25
November 2019. Shareholder approval was obtained at the Company’s AGM held on 20 November 2019.
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to
the number of shares held and in proportion to the amount paid up on the shares held.
At shareholders meetings each ordinary share is entitled to one vote in proportion to the paid-up amount of
the share when a poll is called, otherwise each shareholder has one vote on a show of hands.
41
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
16.
ISSUED CAPITAL (Cont’d)
Option Movements
Exercise Period
On or before 22/8/19
On or before 22/8/19
On or before 22/10/20
On or before 31/12/19
On or before 26/11/20 (i)
On or before 31/3/21(iii)
On or before 31/12/21(ii)
On or before 19/11/22 (iv)
Exercise
Price (*)
Number on
issue at 30
June 2019
Issued
during the
year
Exercised/
Expired/
Cancelled
Number on
issue at 30
June 2020
$0.180
$0.144
$0.195
$0.039
$0.039
$0.029
$0.02745
$0.0495
1,450,000
2,500,000
2,500,000
7,300,000
8,750,000
15,000,000
29,920,000
-
-
-
-
-
-
-
-
10,000,000
(1,450,000)
(2,500,000)
-
(7,300,000)
-
-
(29,920,000)
-
-
-
2,500,000
-
8,750,000
15,000,000
-
10,000,000
Total options
67,420,000
10,000,000
(41,170,000)
36,250,000
(*) Where applicable, the exercise price of options has been adjusted by the return of capital ($0.021 per share) as
approved by shareholders at Company’s AGM held on 20 November 2019.
(i)
(ii)
(iii)
(iv)
6,500,000 options were issued to directors on 26 November 2018 (approved at Company’s AGM held on 23
November 2018) at an original exercise price of $0.06. 2,250,000 options were issued to employees under the Cazaly
employee incentive scheme on 21 January 2019 (awarded to employees on 20 December 2018) at an original
exercise price of $0.06.
29,920,000 options expiring 31 December 2021 with an exercise price of $0.02745 were issued on 18 December 2018
as part of the issue of 2018 notes. Shareholders subsequently ratified the issue of these options at a general meeting
held on 6 March 2019. All options were converted before their expiring date.
Issued under a placement announced on 18 March 2019 with an original exercise price of $0.05. 14,500,000 options
were issued on 21 March 2019 and 500,000 options were issued to a Director (approved by shareholders on 6 June
2019) on 10 June 2019.
Issued to directors on 20 November 2019 with an original exercise price of $0.0705 (approved at Company’s AGM
held on 20 November 2019).
Options are issued to directors, employees and consultants. The options may be subject to performance
criteria, and are issued to directors, employees and consultants to increase goal congruence between
executives, directors and shareholders. Options carry no dividend or voting rights. The fair value of share
options issued during the year was $255,438.
Allottee
Directors
Number of
Options
Fair Value at
Grant Date
per Option
Estimated
Volatility
Life of Option
(years)
Exercise
Price
Share Price at
Grant Date
Risk Free
Interest Rate
10,000,000
$0.02554
100%
3.00
$0.0705
$0.047
1.75%
Capital risk management
The Board controls the capital of the Group in order to provide the shareholders with adequate returns and
ensure that the Group can fund its operations and continue as a going concern. The Group’s capital includes
ordinary share capital. There are no externally imposed capital requirements.
42
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
The working capital position of the Group at 30 June 2020 and 30 June 2019 are as follows:
Cash and cash equivalents
Trade and other receivables
Financial assets
Current liabilities
Working capital position
17. OPTION RESERVE
2020
$
10,085,562
59,396
1,514,427
(349,199)
11,310,186
2019
$
836,709
71,030
155,058
(670,826)
391,971
Opening balance
Equity based payments (refer note 16)
Fair value of exercised options transferred to share capital
Transfers to accumulated losses
Closing balance
777,627
255,438
(480,590)
(193,751)
358,724
305,198
528,606
-
(56,177)
777,627
This reserve is used to record the value of equity benefits provided to employees and directors as part of
their remuneration and for the value of equity benefits provided to vendors in respect of asset purchases.
18. ACCUMULATED LOSSES
Opening balance
Net earnings/(loss) attributable to members
Unfranked dividend paid (refer note 16 (viii)
Transfers from option reserve
Closing balance
19.
FINANCIAL RISK MANAGEMENT
(10,603,110)
1,719,359
(1,743,300)
193,751
(10,433,300)
(8,855,399)
(1,803,888)
-
56,177
(10,603,110)
The Group’s principal financial instruments comprise receivables, payables, held-for-trading investments,
cash and short-term deposits.
The Board of Directors has overall responsibility for the oversight and management of the Group’s exposure
to a variety of financial risks (including fair value interest rate risk, credit risk, liquidity risk and cash flow interest
rate risk).
The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the financial performance of the Group.
Interest rate risks
The Group’s exposure to market interest rates relates to cash deposits held at variable rates. The Board
constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals
of existing positions.
Credit risk
The maximum exposure to credit risk at balance date is the carrying amount (net of provision of doubtful
debts) of those assets as disclosed in the Statement of Financial Position and notes to the financial
statements. The Consolidated group has adopted a policy of only dealing with creditworthy counterparties
and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from
defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and
the aggregate value of transactions concluded is spread amongst approved counterparties.
Credit risk related to balances with banks and other financial institutions is managed by the board. The
board’s policy requires that surplus funds are only invested with counterparties with a Standard & Poor’s
rating of at least A+. All of the Group’s surplus funds are invested with AA and A+ Rated financial institutions,
the amount is $10,085,562 (2019: $836,709).
Liquidity risk
The responsibility for liquidity risk management rests with the Board of Directors. The Consolidated group
manages liquidity risk by maintaining sufficient cash or credit facilities to meet the operating requirements
of the business and investing excess funds in highly liquid short term investments.
43
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
19.
FINANCIAL RISK MANAGEMENT (Cont’d)
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising the return.
Maturity profile of financial instruments
The following tables detail the Group’s exposure to interest rate risk as at 30 June 2020 and 30 June 2019:
30 June 2020
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets – held for trading
Floating
Interest
Rate
$
3,085,562
-
-
3,085,562
Fixed
Interest
maturing
in 1 year
or less
$
7,000,000
59,717
-
7,059,717
Non-
interest
bearing
2020
Total
$
$
200
59,396
1,514,427
1,574,023
10,085,762
119,113
1,514,427
11,719,302
Weighted average effective interest rate
0.37%
Financial Liabilities
Trade and other payables
30 June 2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets – held for trading
-
-
-
-
143,619
143,619
143,619
143,619
Floating
Interest
Rate
$
836,509
-
-
836,509
Fixed
Interest
maturing
in 1 year
or less
$
-
26,929
-
26,929
Non-
interest
bearing
2019
Total
$
$
200
71,028
155,058
226,286
836,709
97,957
155,058
1,089,724
Weighted average effective interest rate
0.77%
Financial Liabilities
Trade and other payables
-
-
-
-
165,021
165.021
165,021
165,021
44
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
19.
FINANCIAL RISK MANAGEMENT (Cont’d)
Net Fair Values
The carrying value and net fair values of financial assets and liabilities at balance date are:
Financial assets
Cash and deposits
Receivables
Investment held for trading
Financial liabilities
Convertible notes
Payables
2020
2019
Carrying
Amount
$
10,085,562
119,113
1,514,427
11,719,102
-
143,619
143,619
Net fair
Value
$
10,085,562
119,113
1,514,427
11,719,102
-
143,619
143,619
Carrying
Amount
$
836,709
97,957
155,058
1,089,724
362,241
165,021
527,262
Net fair
Value
$
836,709
97,957
155,058
1,089,724
362,241
165,021
527,262
The financial instruments recognised at fair value in the statement of financial position have been
analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making
the measurements. All financial instruments measured at fair value are level one, meaning fair value is
determined from quoted prices in active markets for identical assets.
Sensitivity Analysis -Interest Rate Risk
The Company has performed sensitivity analysis relating to its exposure to interest rate risk at balance
date. This sensitivity analysis demonstrates the effect on the current year results and equity which could
result from a change in these risks.
Change in loss
(cid:120)
(cid:120)
Increase in interest rate by 100 basis points
Decrease in interest rate by 100 basis points
Change in equity
(cid:120)
(cid:120)
Increase in interest rate by 100 basis points
Decrease in interest rate by 100 basis points
20.
EARNINGS PER SHARE
a)
Reconciliation of earnings to profit or loss:
2020
$
100,690
(100,690)
100,690
(100,690)
2019
$
8,364
(8,364)
8,364
(8,364)
Earnings/(loss) for the year
Earnings/(loss) used to calculate basic and diluted EPS
1,719,306
1,719,306
(1,804,071)
(1,804,071)
b)
Basic and diluted weighted average number of ordinary
shares outstanding during the year used in calculating
dilutive EPS
336,137,190
241,943,079
2020
No. of Shares
2019
No. of Shares
45
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
21.
CASH FLOW INFORMATION
Reconciliation of cash flows from operating activities with
profit/(loss) after income tax
Profit/(Loss) after income tax
Non-operating cash flows in loss for the year:
Depreciation
Property, plant and equipment written off
Net (Gain)/ Loss on sale of shares
Finance costs on convertible note
Net profit on the sale of exploration assets
Net loss on the sale of subsidiary
Employee & Consultant equity settled transactions
Fair value adjustment to investments
Exploration write-off
2020
$
2019
$
1,719,306
(1,804,071)
14,398
7,393
1,300
157,323
(3,917,005)
135,138
255,438
(468,047)
394,219
8,741
-
-
547,712
(120,000)
-
48,016
98,557
520,505
Changes in assets and liabilities:
Decrease/(increase) in trade receivables and prepayments
Increase/(decrease) in trade payables, accruals and
employee entitlements
11,625
252,820
(19,359)
(312,693)
Cash outflow from operations
(1,708,271)
(760,413)
Financing Activity Information
30 Jun 2019
Cashflows
Options issued
Conversion
Finance cost accrued 30 Jun 2020
Convertible Notes
(362,241)
-
-
518,458
(156,217)
-
22.
COMMITMENTS
In order to maintain rights of tenure to mining tenements, the Group would have the following discretionary
exploration expenditure requirements up until expiry of leases. These obligations, which are subject to
renegotiation upon expiry of the leases, are not provided for in the financial statements and are payable:
No longer than one year
Longer than one year, but not longer than five years
Longer than five years
34,230
112,674
-
146,904
303,066
252,168
-
555,234
If the Group decides to relinquish certain leases and/or does not meet these obligations, assets recognised in
the statement of financial position may require review to determine the appropriateness of carrying values.
The sale, transfer or farm-out of exploration rights to third parties will reduce or extinguish these obligations.
23.
CONTROLLED ENTITIES
Parent Entity
Cazaly Resources Limited
Controlled Entities
Cazaly Iron Pty Ltd
Sammy Resources Pty Ltd
Cazroy Pty Ltd
Baker Fe Pty Ltd
Baldock Fe Pty Ltd
Lockett Fe Pty Ltd
Hase Fe Pty Ltd
Caz Yilgarn Pty Ltd
Discovery Minerals Pty Ltd
Yamarna West Pty Ltd
Kunene North Pty Ltd
Philco 173 (Pty) Ltd
Incorporation Country
Percentage Owned
2020
2019
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Namibia
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
100%
95%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
46
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
24. OPERATING SEGMENTS
The Group has identified its operating segments based on the internal reports that are reviewed and used
by the Board of Directors in assessing performance and determining the allocation of resources. The Group
is managed primarily on the basis of its exploration and corporate activities. Operating segments are
therefore determined on the same basis.
Exploration
Segment assets, including acquisition cost of exploration licenses, all expenses related to the tenements and
profit on sale of tenements are reported on in this segment.
Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that receives the
majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable
on the basis of their nature and physical location. Unless indicated otherwise in the segment assets note,
deferred tax assets and intangible assets have not been allocated to operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and
the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group
as a whole and are not allocated. Segment liabilities include trade and other payables.
Unallocated items
Non-recurring items of revenue or expenses are not allocated to operating segments as they are not
considered part of the core operations of any segment.
2020
Revenue
Interest received
Other
Total segment revenue
Segment net operating profit (loss)
before tax
Depreciation
Impairment of exploration assets
Share based payments
Segment assets
Exploration expenditure
Non current assets held for sale
Property, plant & equipment
Segment liabilities
2019
Revenue
Interest received
Other
Total segment revenue
Segment net operating profit (loss)
before tax
Depreciation
Impairment of exploration assets
Share based payments
Segment assets
Exploration expenditure
Non current assets held for sale
Property, plant and equipment
Segment liabilities
Exploration
$
Unallocated
$
Total
$
-
3,917,005
3,917,005
3,522,786
-
394,219
-
4,324,283
4,324,283
-
-
8,555
149,731
212,080
361,810
(1,803,480)
14,398
-
255,438
11,949,794
-
-
15,276
503,015
149,731
4,129,085
4,278,815
1,719,306
14,398
394,219
255,438
16,274,078
4,324,283
-
15,276
511,570
Exploration
$
Unallocated
$
Total
$
-
120,000
120,000
(400,505)
-
520,505
-
21,003,691
4,128,235
16,875,456
-
47,195
3,329
212,504
217,833
(1,403,566)
8,741
-
48,016
1,115,144
-
-
25,419
623,629
3,329
334,504
337,833
(1,804,071)
8,741
520,505
48,016
22,118,835
4,128,235
16,875,456
25,419
670,826
47
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
25.
PARENT ENTITY DISCLOSURES
(a) Statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Reserves:
Equity settled employee benefits
Retained profits
Total Equity
(b) Statement of Profit or Loss and Other Comprehensive
Income
Total profit/ (loss)
Total comprehensive income
Loans to Controlled Entities
2020
$
2019
$
10,204,675
3,966,930
905,823
2,666,335
14,171,605
3,572,158
349,195
162,371
670,802
511,566
670,802
25,852,479
31,288,826
358,724
(12,551,164)
777,627
(29,165,097)
13,660,039
2,901,356
15,064,384
(2,296,749)
15,064,384
(2,296,749)
Loans are provided by Cazaly (‘the Parent’) to its controlled entities for their respective operating activities.
Amounts receivable from controlled entities are non-interest bearing with no fixed term of repayment. The
eventual recovery of the loan will be dependent upon the successful commercial application of these
projects or the sale to third parties.
26.
EVENTS SUBSEQUENT TO REPORTING DATE
On 22 July 2020, the Company issued 200,000 fully paid shares on the conversion of options exercisable at
$0.029 on or before 31 March 2021.
On 19 August 2020, the Company issued 5,630,000 fully paid shares on the conversion of options exercisable
at $0.029 on or before 31 March 2021.
On 22 August 2020, 2,500,000 options (exercisable at $0.195) expired in line with their terms and conditions.
Apart from the above, the Directors are not aware of any matters or circumstances at the date of the report,
other than those referred to in this report or the financial statements or notes thereto, that has significantly
affected or may significantly affect the operations, the results of operations or the state of affairs of the Group
in subsequent financial years.
48
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
27. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Contingent Liabilities
As announced on 26 March 2018, the Company acquired an option to earn the rights to a 95% interest in
the Kaoko Kobalt Project (‘Kaoko Project’) in Namibia. The following contingent liabilities remain for Cazaly’s
registered 95% interest at 30 June 2020:
Under the KDN JV:
KDN JV’s partner’s remaining 5% free carried to a definitive feasibility study and to be NEEEF compliant
(governmental draft “New Equitable Economic Empowerment Framework”)
Under the Kunene Purchase Agreement:
The Company acquired 100% of the issued capital of Kunene North Pty Ltd and therefore its rights under the
KDN JV, and has the following commitments outstanding:
i)
Issue 10.5 million fully paid Cazaly shares upon the delineation of a JORC compliant mineral resource
containing at least 10,000t of contained cobalt (or other metal equivalent)
ii) Pay A$1 million (or issue fully paid Cazaly shares to that amount) upon a formal Decision to Mine
Contingent Asset
As announced on 30 August 2019, the sale of Parker Range to Mineral Resources was completed and the
Company received the cash consideration of $20 million. A royalty is also due at the rate of A$0.50 for every
dry metric tonne of iron ore extracted and removed from the area of the Project after the first 10,000,000
dry metric tonnes of production.
28.
SHARE BASED PAYMENTS
The following table illustrates the number and weighted average exercise prices of and movements in all
options on issue during the year:
2020
2019
Number of
Options
Weighted
Ave Exercise
Price $
Number of
Options
Weighted
Ave Exercise
Price $
Balance at beginning of reporting
period
Expired during the year
Exercised during the year
Issued during the year
Balance at end of reporting period
Exercisable at end of reporting
period
67,420,000
0.055
37,838,847
0.124
(11,250,000)
(29,920,000)
10,000,000
36,250,000
36,250,000
0.094
0.02745
0.0705
0.069
(24,088,847)
-
53,670,000
67,420,000
67,420,000
0.129
-
0.039
0.055
The options outstanding at 30 June 2020 had a weighted average remaining life of 1.08 years (2019 – 1.89 years). The
weighted average fair value of the options outstanding at 30 June 2020 was $0.01 (2019 - $0.011).
Please refer to note 16 for further details of equity based payments issued during the year.
49
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2020
29.
RIGHT OF USE ASSET AND LEASE LIABILITY
Right-of-use assets
Office lease
At carrying amount
Less: Accumulated amortisation
2020
$
221,239
(5,822)
215,417
2019
$
-
-
-
Movement in the carrying amounts for each class of right-of-use assets between the beginning and the end
of the financial year.
Opening balance
New lease
Amortisation expense
Closing balance
Leases
Right-of-use asset
Total $
-
221,239
(5,822)
215,417
-
-
-
-
Group as a lessee
The Group’s office lease is held under lease arrangements. As of 30 June 2020, the net carrying amount of
the office held under a lease arrangement is $215,417.
Set out below are the carrying amounts of lease liabilities (included under interest-bearing loans and
borrowings) and the movements during the period:
As at 1 July 2019
Additions
Accretions of interest
Payments
As at 30 June 2020
Current
Non-current
The following are the amounts recognised in profit or loss:
Depreciation
Interest expense on lease liabilities
Total amount recognised in profit or loss
The Group had total cash outflows for leases of NIL in 2020 (2019: NIL).
-
221,238
1,106
-
222,344
59,973
162,371
5,822
1,106
6,928
-
-
-
-
-
-
-
-
-
-
50
DIRECTORS’ DECLARATION
Cazaly Resources Limited Annual Report 2020
In accordance with a resolution of the directors of Cazaly Resources Limited, the directors of the Company
declare that:
1.
the financial statements and notes, as set out, are in accordance with the Corporations Act 2001
and:
a.
b.
comply with Australian Accounting Standards, which, as stated in accounting policy Note 1
to the financial statements, constitutes compliance with International Financial Reporting
Standards (IFRS); and
give a true and fair view of the financial position as at 30 June 2020 and of the performance
for the year ended on that date of the consolidated group;
2.
3.
in the directors’ opinion 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 s 295A of the Corporations Act 2001 from
the Chief Executive Officer and Chief Financial Officer.
On behalf of the Directors
Nathan McMahon
Managing Director
Perth,
23 September 2020
51
Independent Auditor's Report
To the Members of Cazaly Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Cazaly Resources Limited (“the Company”) and its
subsidiaries (“the Consolidated Entity”), which comprises the consolidated statement of
financial position as at 30 June 2020, the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion:
a.
the accompanying financial report of the Consolidated Entity is in accordance with
the Corporations Act 2001, including:
(i)
giving a true and fair view of the Consolidated Entity’s financial position as
at 30 June 2020 and of its financial performance for the year then ended;
and
(ii)
complying with Australian Accounting Standards and the Corporations
Regulations 2001.
b.
the financial report also complies with International Financial Reporting Standards
as disclosed in Note 1.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under
the Auditor’s
Responsibilities for the Audit of the Financial Report section of our report. We are
those standards are
further described
in
independent of the Consolidated Entity in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia.
We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report of the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key audit matter
How our audit addressed the key audit matter
Evaluation and Evaluation Assets
Our procedures included, amongst others:
(Refer to Note 12)
Exploration and evaluation is a key audit matter due
to:
The significance of
the balance
to
the
Consolidated Entity’s financial position.
The level of judgement required in evaluating
management’s application of the requirements of
AASB 6 Exploration for and Evaluation of Mineral
Resources. AASB 6 is an industry specific
accounting standard requiring the application of
significant judgements, estimates and industry
knowledge. This includes specific requirements
for expenditure to be capitalised as an asset and
subsequent
requirements which must be
complied with for capitalised expenditure to
continue to be carried as an asset.
Assessed management’s determination of its
areas of interest for consistency with the definition
in AASB 6. This involved analysing the tenements
in which the consolidated entity holds an interest
and the exploration programs planned for those
tenements.
For each area of interest, we assessed the
to
tenure by
rights
Consolidated Entity’s
corroborating
registries and
to government
evaluating agreements in place with other parties
as applicable;
We tested the additions to capitalised expenditure
for the year by evaluating a sample of recorded
expenditure for consistency to underlying records,
the
the
requirements
capitalisation
of
Consolidated Entity’s accounting policy and the
requirements of AASB 6;
We considered the activities in each area of
interest to date and assessed the planned future
activities for each area of interest by evaluating
budgets for each area of interest.
We assessed each area of interest for one or
more of the following circumstances that may
capitalised
indicate
impairment
the
of
expenditure:
the licenses for the right to explore expiring in
the near future or are not expected to be
renewed;
substantive expenditure for further exploration
in the specific area is neither budgeted or
planned
decision or intent by the Consolidated Entity to
discontinue activities in the specific area of
interest due to lack of commercially viable
quantities of resources; and
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
Key audit matter
How our audit addressed the key audit matter
data indicating that, although a development
in the specific area is likely to proceed, the
carrying amount of the exploration asset is
unlikely to be recovered in full from successful
development or sale; and
We assessed the appropriateness of the
related disclosures in note 12 to the financial
statements.
Return of capital and unfranked dividend
Our procedures included, amongst others:
(Refer to notes 16 and 18)
Verified the shareholder approval to approve the
Following the completion of the disposal of the Parker
distribution of unfranked dividend and return of
Range and Mt Venn projects, and pursuant to
capital;
shareholder approval at the Company’s AGM in
Verified the calculations and payments to bank
November 2019,
the Company paid a cash
statements and;
distribution to the shareholders of the Company via a
Assessed the appropriateness of the disclosure in
$0.005 per share unfranked dividend plus a payment
notes 16 and 18 to the financial statements.
of $0.021 per share as a return of capital.
Disposal of Parker Range and Mt Venn Projects
Our procedures included, amongst others:
(Refer to Note 9)
In the previous financial year, the Company entered
agreements;
into agreements to sell its Parker Range and Mt Venn
Verified proceeds received during the year and
Assessed the terms and conditions within the sale
projects.
checked the calculation of the gain and loss;
Assessed the appropriateness of the disclosure in
The sale was completed during the year resulting in
notes 2 and 9 to the financial statements.
a gain from disposal of the Parker Range Project of
$3,907,005 and a loss on disposal of $135,138 for the
Mt Venn Project via the sale of the Company’s
subsidiary Yamarna West Pty Ltd.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Consolidated Entity’s annual report for the year ended 30 June 2020, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also
state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial report complies with International Financial Reporting Standards.
In preparing the financial report, the directors are responsible for assessing the Consolidated Entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Consolidated Entity or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
−
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
−
−
−
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Consolidated Entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Consolidated Entity’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion.
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
−
−
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Consolidated Entity to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Consolidated Entity to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Consolidated Entity audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2020.
The directors of the Company are responsible for the preparation and presentation of the remuneration report in
accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion, the Remuneration Report of Cazaly Resources Limited, for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
DOUG BELL CA
Partner
Dated at Perth this 23rd day of September 2020
ADDITIONAL SHAREHOLDER INFORMATION
Cazaly Resources Limited Annual Report 2020
Additional information required by Australian Securities Exchange Limited and not shown elsewhere in this
Annual Report is as follows. The information is provided as at 18 September 2020.
DETAILS OF HOLDERS OF EQUITY SECURITIES
ORDINARY SHAREHOLDERS
There are 351,943,267 fully paid ordinary shares on issue, held by 2,434 individual shareholders. Each member
entitled to vote may vote in person or by proxy or by attorney and on a show of hands every person who is
a member or a representative or a proxy of a member shall have one vote and on a poll every member
present in person or by proxy or attorney or other authorised representative shall have one vote for each
share held.
TWENTY LARGEST SHAREHOLDERS (AS AT 18 SEPTEMBER 2020)
Ordinary Shareholders
Kingsreef Pty Ltd (NB & DL Family A/c)
Mr Clive Bruce Jones (Alyse Investment A/C)
ACN 139 886 025 Pty Ltd
BT Portfolio Services Limited (Warrell Holdings S/F A/C)
BB Capital Pty Ltd
Mr William Mcarthur
Mr Anthony Robert Ramage
Kingsreef Pty Ltd
Citicorp Nominees Pty Ltd
Gurravembi Investments Pty Ltd
Mr Anthony Ramage (ARR S/F A/C)
Mr Nathan McMahon
Mr C W Chalwell & Mrs J R Chalwell (Chalwell pension Fund A/c)
Maincoast Pty Ltd
Mr Peter David Sheppeard & Mrs Sharon Fay Sheppeard (Sheppeard Family S/F A/C)
Mrs Anna Carina Hart & Mr Paul Hart (Hart Family Super Fund A/C)
Mr Terry James Gardiner
Mr Terry James Gardiner & Mrs Victoria Helen Gardiner (Terry James Gardiner S/F A/C)
123 Home Loans Pty Ltd
Micale Consulting Pty Ltd (The Micale Family A/C)
Fully Paid Ordinary
Number
26,195,950
18,329,904
16,917,640
13,000,000
9,698,408
8,670,400
6,200,000
5,343,550
5,000,482
5,000,000
5,000,000
4,823,756
4,000,000
3,473,849
3,421,000
3,000,000
2,721,500
2,700,000
2,600,000
2,512,625
%
7.4%
5.2%
4.8%
3.7%
2.8%
2.5%
1.8%
1.5%
1.4%
1.4%
1.4%
1.4%
1.1%
1.0%
1.0%
0.8%
0.8%
0.8%
0.7%
0.7%
148,609,064
42.2%
VOTING RIGHTS
Subject to any rights or restrictions for the time being attached to any class or classes (at present there are
none) at general meetings of shareholders or classes of shareholders:
(a) each shareholder entitled to vote, may vote in person or by proxy, attorney or representative;
(b) 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
(c) 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, or in respect of which he/she has 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 equivalent to the proportion which the amount paid up bears to the
total issue price for the share.
HOLDERS OF NON-MARKETABLE PARCELS
There are 1,066 shareholders who hold less than a marketable parcel of shares.
57
ADDITIONAL SHAREHOLDER INFORMATION
Cazaly Resources Limited Annual Report 2020
STOCK EXCHANGE INFORMATION
DISTRIBUTION OF SHARE HOLDERS (AS AT 18 SEPTEMBER 2020)
1 to
1,001 to
5,001 to
10,001 to
1,000
5,000
10,000
100,000
100,001 and over
SUBSTANTIAL SHAREHOLDERS
Ordinary
Shares
133,314
1,690,367
2,662,531
31,501,074
315,955,981
351,943,267
As at report date, the following shareholders are recorded as Substantial Shareholders pursuant to notices
lodged with the ASX in accordance with section 671B of the Corporations Act:
Substantial Shareholder
Ordinary Shares held
% Held
Nathan McMahon & associated entities
Clive Jones & associated entities
Anthony Ramage and associated entities
33,267,005
18,329,904
18,500,000
9.61%
5.30%
5.35%
The shares and percentages held, as set out above, are based on the total issued share capital at the
date of notification to the Company of the relevant substantial shareholder interest.
SHARE BUY-BACKS
There is no current on-market buy-back scheme.
OTHER INFORMATION
Cazaly Resources Limited, incorporated and domiciled in Australia, is a public listed Company limited by
Shares.
58
ADDITIONAL SHAREHOLDER INFORMATION
Cazaly Resources Limited Annual Report 2020
INTEREST IN MINING TENEMENTS AS AT 18 SEPTEMBER 2020
TID
PROJECT
ENTITY
% INT
TID
PROJECT
ENTITY
% INT
Managed
E09/2346
E38/3425 *
E38/3426 *
E80/5446 *
Czech Rep *
Czech Rep *
BLACKHILL BORE
BROWN WELL
BROWN WELL
PANTON NORTH
Horní Věžnice
Brzkov II
Namibia
EPL 6667
SAMR
SAMR
SAMR
SAMR
Discovery
Discovery
Kunene
100
100
100
100
80
80
95
Not
Managed
E31/1019
E31/1020
M31/0427
M47/1450
M80/0247
E80/4808
E38/3111
E38/3150
* – application
CAROSUE
CAROSUE
CAROSUE
HAMERSLEY
MT ANGELO
MCKENZIE SPRINGS
MOUNT VENN
MOUNT VENN
CAZR
CAZR
CAZR
LOFE
CAZR
SAMR
CAZ
CAZ
10
10
10
30
20
49
20
20
59