Annual Report 2017
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1 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Contents
02
CYGNUS WAS FORTUNATE TO ATTRACT SUPPORT FROM A
NUMBER OF MAJOR INDUSTRY SHAREHOLDERS.
2 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Contents
03
Contents
04 Chairman’s Statement
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06 Directors’ Report
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31 Auditor’s Independence Declaration
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33 Statement of Profit and Loss and Other Comprehensive Income
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34 Statement of Financial Position
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35 Statement of Changes in Equity
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36 Statement of Cash Flows
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37 Notes to the Financial Statements
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52 Directors’ Declaration
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53 Independent Auditor’s Report
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56 ASX Additional Information
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60 Corporate Directory
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3 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Chairman’s Statement
04
Chairman’s statement
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Dear shareholders,
It is with great pleasure that we present Cygnus
• Consolidated a significant tenement
Gold Limited’s first Annual Report as an ASX
listed company.
Last year was a very busy year for Cygnus. Led
by Managing Director James Merrillees, we
progressed from an early stage exploration
entity all the way through the initial public
offering process to a point where we
successfully listed on 15 January 2018.
holding for gold exploration in
Western Australia
—
• Attracted cornerstone investment from
Resource Capital Funds, Southern
Cross Capital and Gold Road
Resources Limited
—
• Recruited a management team to
undertake both the corporate and
technical management processes
—
It was pleasing to see the strong support for
• Arranged land access for exploration
the Cygnus story, culminating in the Company
on the Stanley Project area
comfortably achieving its maximum $6 million
subscription goal.
It is a testament to the organisational skills of
—
• Arranged permitting for the proposed
drilling and exploration programs
—
• Entered into two earn-in agreements
the management team that Cygnus collared its
with Gold Road
first diamond drill hole on the same morning as
—
official quotation on the ASX was achieved – a
great milestone.
Speaking of milestones, I believe it is worth
highlighting some of the many achievements
the company made in 2017;
• Undertook all pre-IPO work necessary
to obtain official quotation
on the ASX
—
• Successfully applied for WA
Government co-funding for diamond
drilling at Bottleneck.
4 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Chairman’s Statement
05 Chairman’s statement
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Turning to our gold exploration assets, our tenements in the Wheatbelt region of Western Australia have
been selected following application of extensive geoscientific work by our talented team. We believe the
Wheatbelt is an under-explored area for gold, and the earn-in agreements executed with Gold Road are a strong
endorsement of that belief.
Located within a comfortable three to four hours’ drive from Perth, Cygnus’ primary targets are shallow, and in
many cases, have either had previous drill success - with high-grade gold results achieved in previous drilling -
or they demonstrate strong geochemical gold targets.
In parallel with the above achievements, and as we progressed from start-up in late 2016 and throughout 2017,
Cygnus was fortunate to attract support from a number of major industry shareholders. This commenced
with Resource Capital Funds, becoming our founding cornerstone shareholder. That support was backed-up
through investment by Southern Cross Capital and then subsequently consolidated by Gold Road Resources
Limited becoming not only a cornerstone investor, but also an exploration partner via two earn-in agreements.
The early and ongoing support and encouragement of these respected resource industry groups is greatly
appreciated by the board and management.
Speaking of the board, I would like to thank our directors - comprising James Merrillees, geoscientists Dr
Amanda Buckingham and Dr Oliver Kreuzer (both founders) and rounded out by the highly experienced mining
executive Simon Jackson. The board has experience from early stage exploration, right through to mine
development and operations and I look forward to the opportunity of utilising all of those skills as we progress.
In the short term, there are a number of exciting programs planned for 2018, including drilling of the Bottleneck
target on the 100 per cent owned Stanley tenement, and advancing exploration work with Gold Road on our JV
tenements.
I take this opportunity to thank all our shareholders – large and small – for the tremendous support shown to us
throughout 2017 and to also thank the many stakeholders who have assisted Cygnus over the last 12 months.
Michael Bohm
Non-executive Chairman
5 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Directors’ Report
06 Directors’ Report
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The directors present their report, together with the financial statements for the year
ended 31 December 2017 for Cygnus Gold Limited (Cygnus or the Company).
Comparative information is for the period ended from incorporation to
31 December 2016.
Directors
—
The names and details of the Company’s directors in office during the financial year
and until the date of this report (unless otherwise stated) are as follows:
Mr Michael Bohm - Non-executive Chairman
Director since September 2016
—
Mr Bohm is a qualified mining professional with
in the gold, nickel and diamond sectors. Mr Bohm
significant corporate and operations experience.
currently serves as a Director and Chair of a number
He has had extensive minerals industry experience
of ASX listed companies and sits on their Audit &
in Australia, South East Asia, Africa, Chile, Canada
Risk and Remuneration Committees. Prior to this, he
and Europe. A graduate of WA School of Mines,
held directorships at Argyle Diamonds Mines, Sally
Michael has worked as a mining engineer, mine
Malay Mining Limited and Ashton Mining of Canada.
manager, study manager, project manager, project
director and managing director and has been
directly involved in a number of mine developments
Over the past three years, Mr Bohm has also held
directorships with the following ASX listed companies:
Other current directorships
Commenced
Ceased
Perseus Mining Limited
Mincor Resources Limited
15 October 2009
1 January 2017
Ramelius Resources Limited
29 November 2012
-
-
-
Former directorships in the last 3 years
Tawana Resources Limited
1 August 2015
21 October 2016
Berkut Minerals Limited
1 July 2016
30 June 2017
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Mr James Merrillees – Managing Director
Appointed 17 November 2017
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Mr Merrillees is a professional geologist with more than 20 years’ global experience in minerals exploration
and development. He has wide experience leading teams exploring and evaluating precious and base metals
throughout Australia, Europe, South America, Asia and Africa. After 12 years with BHP, Mr Merrillees worked in
technical and corporate roles for both ASX listed and private gold and base metals explorers and producers.
He has extensive experience in exploring Archean and Proterozoic mineral systems and has been involved in
the discovery of greenfields nickel, uranium and iron ore deposits in Scandinavia, and bauxite and gold in West
Africa. He is a member of the AusIMM and holds Bachelor of Science (Geology) and Bachelor of Commerce
(Accounting and Finance) degrees and a Graduate Diploma in Applied Finance.
Over the past three years, Mr Merrillees has not held any directorships with an ASX listed company.
Mr Simon Jackson – Non-executive Director
Appointed 17 November 2017
—
Mr Jackson is a Chartered Accountant with 25 years’ experience in the gold industry. He is currently the CEO
and MD of ASX listed Brazilian focussed gold producer Beadell Resources Limited. Prior to this, Mr Jackson was
a founding shareholder and President & CEO of the TSXV listed Orca Gold Inc, a junior exploration company
with multiple gold discoveries in Sudan. From 1999 to 2010 he was an integral part of the senior management
team at Red Back Mining Inc, which grew from a small West Perth based junior to a TSX listed intermediate
producer that was taken over by Kinross Gold Corp in 2010. Mr Jackson’s career includes corporate transactions
and equity financings involving assets in Australia, Africa, Asia and South America. Over the past three years, Mr
Jackson has also held directorships with the following ASX listed companies:
Other current directorships
Commenced
Ceased
Beadell Resources Limited
10 November 2013
Orca Gold Inc
Sarama Resources Limited
4 April 2013
11 March 2011
-
-
-
Former directorships in the last 3 years
Cardinal Resources Limited
31 August 2015
12 October 2017
RB Energy Inc.
31 January 2014
2 April 2015
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Dr Oliver Kreuzer – Non-executive Director
Director since April 2016
—
Dr Kreuzer is a Registered Professional Geoscientist (MAIG RPGeo) with a broad skill set in structural, generative
and corporate geology honed during a 18+ year career in applied research and mineral exploration across a
wide range of gold, base metals and uranium projects in Australia, Africa, North America, Europe and Asia.
His work directly contributed to new company floats (ASX:AUC, ASX:RGU), company transforming project
acquisitions (ASX:AWV) and new discoveries. Dr Kreuzer’s passion lies in the application of superior geoscience
to exploration targeting and shortening the time frame to discovery.
Over the past three years, Dr Kreuzer has not held any directorships with an ASX listed company.
Dr Amanda Buckingham – Non-executive Director
Director since April 2016
—
Dr Buckingham has been involved full-time in mineral exploration for over 20 years. Dr Buckingham founded
and remains a major shareholder and director of companies in the United States, Australia and Singapore
and has been fundamental to their high profitability. Dr Buckingham founded Fathom Geophysics in 2007, an
industry leading geophysical group that has developed worlds-best technology for targeting under cover and
significantly increasing the chance of discovery.
Dr Buckingham’s early career was at major mining companies such as Rio Tinto and several listed juniors. She
has wide-ranging exploration experience in North and Sub-Saharan Africa, North and South America, South East
and Central Asia, Russia and Europe. Dr Buckingham is a research fellow at the University of Western Australia
and a founder of Cygnus.
Over the past three years, Dr Buckingham has not held any directorships with an ASX listed company.
Mr Alan Cleland – Non-executive Director
Resigned 17 November 2017
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Cygnus Gold - Directors’ Report
09
Interests in the shares and options of the Company
—
As at the date of this report, the interests of the directors in the shares (direct and indirect) of Cygnus Gold
Limited were:
Name
Number of ordinary shares
Mr Michael Bohm
3,170,001
Mr James Merrillees
Mr Simon Jackson
150,000
303,334
Dr Oliver Kreuzer
1,883,334
Dr Amanda Buckingham
2,333,334
There are no options on issue at the date of this report.
Company Secretary
—
Mr Michael Naylor
—
Mr Naylor has 21 years’ experience in corporate advisory and public company management since commencing
his career and qualifying as a Chartered Accountant with Ernst & Young. He has been involved in the financial
management of mineral and resource focused public companies serving on the board and in the executive
management team focusing on advancing and developing mineral resource assets and business development.
Operating results
—
The loss of the Company for the year ended 31 December 2017 after providing for income tax amounted to
$784,721 (2016: $81,504).
Review of financial position
—
The net assets are $6,607,517 as at 31 December 2017 (2016: $869,738).
Principal activities
—
Cygnus is a gold exploration company focused on gold exploration in south west Yilgarn region of
Western Australia.
There have been no significant changes in the nature of these activities during the period.
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It was pleasing to see the strong support for
the Cygnus story, culminating in the Company
comfortably achieving its maximum $6 million
subscription goal.
10 // Cygnus Gold Limited - Annual Report 2017
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Review of Operations
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Overview
—
Cygnus is targeting the discovery of high grade gold deposits within the Southwest
Terrane of Western Australia. The Southwest Terrane is a unit of high metamorphic
grade rocks forming part of the well mineralised Yilgarn Craton.
In Western Australia, particularly in the Southwest Terrane, high-grade metamorphosed
greenstone sequences have been targeted sporadically for their gold potential with
some success at Griffins Find, Katanning and Tampia. However, compared to other
parts of the Yilgarn Craton, the intensity of exploration activity is relatively low. Cygnus
believes this is partly a result of widespread, post-mineral cover which requires detailed
geophysical data to effectively explore.
It was only in February 2016 new, higher resolution geophysical data over the
Southwest Yilgarn became publicly available. Using this newly released data Cygnus’
team generated maps identifying the greenstone belts across the Southwest Terrane
including key structures controlling the location of mineralisation. The areas identified
by this approach were subject to detailed screening and the Company subsequently
applied for exploration licences over targets that passed this initial screening and were
ranked highest for potential to host economic gold deposits.
At 31 December 2017 the Company has assembled a 5,392km² land package,
comprising approximately 2,148 km² of Exploration Licences and approximately
3,244 km² of Exploration Licence Applications to explore for gold in this highly
prospective region.
11 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Directors’ Report
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Overview
—
Figure 1: Location of Cygnus’ Projects, Southwest Western Australia
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The Projects
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As at 31 December 2017 Cygnus’ granted Exploration Licences are as follows:
—
(a)
(b)
(c)
(d)
(e)
(f)
Stanley Project – E70/4787;
Kulin Project – E70/4854;
Borden Project – E70/4912;
Burracoppin – E77/2405;
Frankland Project – E70/4910; and
Bullock North Project – E70/4952.
In addition, the Company has applied for the following Exploration Licences (not granted
at 31 December 2017):
—
(a)
(b)
Bencubbin Project – E70/4988 (application); and
Burracoppin North Project – E70/4992 (application) and
E77/2463 (application).
The Company also has two other projects comprising the following Tenements which are
the subject of earn-in agreements under which Gold Road Resources can earn up to a
75% interest:
—
(a)
Lake Grace Project – E70/4855, E70/4853, E70/4991 (application), E70/5017
(application); and
(b)
Wadderin Project – E70/4911, E70/4939, E70/4990 (application), E70/4989
(application), E70/5018 (application), E70/5019 (application), E70/5020
(application) and E70/5021 (application),
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Stanley Project (E70/4787)
—
Cygnus’ key asset and most advanced exploration project is the Stanley Project,
comprising an area of 161km2 and is approximately 60km northeast of the Wheatbelt
town of Katanning. Stanley was targeted following Cygnus’ interpretation of available
geophysical datasets which identified a >20km long strike length of prospective
greenstone sequences with widespread, shallow high grade gold mineralisation
identified by previous explorers (Figure 2).
—
Review of historical exploration data at Stanley identified many of these high-grade
prospects were never adequately followed up. Importantly previous explorers drilled
limited deeper holes, and no diamond core holes and therefore had little
to no information regarding the structures or lithologies which focus and host
gold mineralisation.
Cygnus immediate focus at Stanley are the high-grade Bottleneck, Bottlerack, Stanley
Hill, Brays and McDougall prospects where the Company has approvals in place
enabling on-ground work.
At Bottleneck historical air core drilling by previous explorers included intersections of
21m @ 3.3 g/t Au, 7m @ 6.4g/t Au, and 9m @ 6.9 g/t Au.1 Cygnus has reinterpreted this
historical drilling and identified down-plunge extensions of the known mineralisation at
Bottleneck which have not been tested.
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Figure 2: E70/4787 (Stanley Project), key drill results and prospects. Note: The geology interpretation is
explained in the Independent Technical Assessment Report in Section 8 of the Cygnus Gold Prospectus dated
22 November 2017.
Following the successful listing on the ASX in January 2018 the Company immediately commenced diamond
drilling at Bottleneck and intersected high grade gold including intervals of:
—
• 2.4m @ 114.63 g/t Au from 38.70m in hole BNDD001
• 4.8m @ 34.17 g/t Au from 24.7m in hole BNDD003
• 6.0m @ 3.3 g/t Au from 157.5m in hole BNDD006
(refer CY5 ASX announcement 22 February 2018).2
The Company is excited to build on this early success as it targets follow up at Bottleneck and the remaining
prospects identified at Stanley in 2018.
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Other Cygnus 100% Projects
—
Other Cygnus 100% Projects
—
Cygnus has an additional 1,237km2 of granted tenements and 590km2 of applications,
covering prospective greenstone rocks of the Southwest Terrane of the Yilgarn Craton.
During the period the Company identified and met with landowners of properties
covering prospects and targets identified from Cygnus’ interpretation of the
geophysics and review of historical data. The response from landowners has been
overwhelmingly positive and it is expected that field work will commence following the
signing of land access agreements.
Gold Road Earn-in and Joint Venture Agreements
—
On 9 October 2017, the Company entered into two earn-in and joint venture
agreements with Gold Road Resources Limited (ASX:GOR); whereby GOR is earning
into Cygnus’ Wadderin and Lake Grace Projects (Figure 3). Cygnus is manager of the
Projects and the key terms of the Agreements are outlined on the following page
(refer GOR’s ASX Announcement 10 October 2017).
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Wadderin Earn-In Agreement
—
• Gold Road can earn a 51% interest
in the Wadderin Project by spending
A$1.6 million within 30 months
—
• After the initial earn-in, Gold Road
can elect to earn a further 24% interest
(75% in total) by spending a further
A$900,000 (A$2.5 million in aggregate)
over a further 18 months (4 years in
aggregate)
—
• Gold Road can withdraw from the
earn-in after spending a minimum of
A$900,000 within 18 months.
Lake Grace Earn-In Agreement
—
• Gold Road can earn a 51% interest
in the Lake Grace Project by spending
A$700,000 within 30 months
—
• After the initial earn-in, Gold Road can
elect to earn a further 24% interest (75%
in total) by spending a further
A$500,000 (A$1.2 million in aggregate)
over a further 18 months (4 years in
aggregate)
—
• Gold Road can withdraw from the
earn-in after spending a minimum of
A$400,000 within 18 months.
17 // Cygnus Gold Limited - Annual Report 2017
Figure 3: Location and outline of the Wadderin and
Lake Grace Projects
Cygnus Gold - Directors’ Report
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Corporate
—
Admission to the Australian Securities Exchange
—
Cygnus was successfully admitted to the Official List with official quotation commencing
on 15 January 2018. Cygnus raised $6,000,000 (before costs) and was well supported
from cornerstone shareholders including Resource Capital Funds, Southern Cross
Capital and Gold Road Resources and lead broker Morgans Corporate Limited.
After the listing the Company had 60,683,341 shares on issue.
Board and Management Changes
—
Subsequent Events
—
In March 2017, the Company appointed Chief
The Company was successfully admitted to the
Executive Officer, Mr James Merrillees.
Official List with official quotation commencing
Mr Merrillees was appointed as Managing Director
on 15 January 2018 and $6,000,000 capital raised
in November 2017.
On 17 November 2017, the Company appointed Mr
Simon Jackson to the Board. Refer to page 7 for
more details on Mr Jackson.
On 17 November 2017, Mr Alan Cleland resigned as
a Director. The Company expressed its sincere
thanks to Mr Cleland as a founding director who
(before costs) was well supported from cornerstone
shareholders including Resource Capital Funds,
Southern Cross Capital and Gold Road Resources
and lead broker Morgans Corporate Limited.
On the 22 March 2018, Cygnus announced a new
joint venture was entered with a wholly owned
subsidiary of Gold Road Resources.
was an integral part of the team in acquiring
Other than what is mentioned above, there are no
Cygnus’ original assets and the success of the initial
matters or circumstances that have arisen since the
public offering.
end of the year that have significantly affected or
Dividends paid or recommended
—
may significantly affect either:
•
the Company’s operations in future
financial years
The directors do not recommend the payment of a
•
the results of those operations in future
dividend and no amount has been paid or declared
financial years; or
by way of a dividend to the date of this report.
•
the Company’s state of affairs in future
financial years.
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Cygnus’ technical team has considerable knowledge
and experience in targeting and evaluating gold
mineralised systems world-wide.
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Likely Developments and Expected Results
—
Significant changes in the state of affairs
—
The Company is committed to:
There have been no changes in the state of affairs
•
systematically explore the Company’s key asset
being the Stanley Gold Project;
of the Company other than those outlined in the
Review of Operations.
• advance exploration for gold on the other
Cygnus Exploration Licences at Kulin, Borden,
Burracoppin, Frankland, and Bullock North;
Corporate Governance
—
• manage the Wadderin and Lake Grace
Projects in conjunction with Gold Road
Projects in accordance with the relevant
earn-in agreements;
• advance the Company’s Exploration Licence
Applications to grant;
• continue to negotiate further access with private
landholders in relation to areas of interest
identified by the above activities; and
•
implement a growth strategy to seek out
further exploration, acquisition and joint venture
opportunities in Australia.
Environmental issues
—
The directors of Cygnus Gold Limited believe
that effective corporate governance improves
company performance, enhances corporate social
responsibility and benefits all stakeholders. Changes
and improvements are made in a substance over
form manner, which appropriately reflect the
changing circumstances of the company as it grows
and evolves. Accordingly, the Board has established
a number of practices and policies to ensure that
these intentions are met and that all shareholders
are fully informed about the affairs of the Company.
Cygnus reviews all of its corporate governance
practices and policies on an annual basis to ensure
they are appropriate for the Company’s current
stage of development. This year, the review was
made against the new ASX Corporate Governance
Council’s Principles and Recommendations (third
edition) which became effective for financial years
The Company is aware of its environmental obligations
beginning on or after 1 July 2014.
with regards to its exploration activities and ensures
that it complies with all regulations when carrying out
any exploration work. The directors have considered
the National Greenhouse and Energy Reporting
Act 2007 (‘the NGER Act’) and at the current stage
of development and based on the locations of the
Company’s operations, the directors have determined
that the NGER Act will have no effect on the Entity
for the current or subsequent financial year. The
directors will reassess this position as and when
the need arises. No environmental breaches have
occurred or have been notified by any Government
agencies during the year ended 31 December 2017.
The Company’s initial Corporate Governance
Statement was approved by the Board on 17
November 2017. The Company was listed on the
Australian Securities Exchange on 15 January 2018
and the Board has reviewed and approved its revised
Corporate Governance Statement on 26 March 2018
and is available on the Company’s website at
www.cygnusgold.com
The Company has a corporate governance section
on the website which includes details on the
company’s governance arrangements and copies of
relevant policies and charters.
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REMUNERATION REPORT (AUDITED)
—
This remuneration report for the year ended
and controlling the major activities of the Entity,
31 December 2017 outlines the remuneration
directly or indirectly including any director
arrangements of the Company in accordance
(whether executive or otherwise) of the parent.
with the requirements of the Corporations
Act 2001(Cth), as amended (the Act) and its
regulations. This information has been audited as
required by section 308(3C) of the Act.
The remuneration report details the remuneration
The table below outlines the KMP of the Entity
during the financial year ended 31 December 2017.
Unless otherwise indicated, the individuals were
KMP for the entire financial year.
arrangements for Key Management Personnel
For the purposes of this report, the term
(KMP) who are defined as those persons having
“executive” includes the executive directors and
authority and responsibility for planning, directing
senior executives of the Company.
Executive director
James Merrillees
NON EXECUTIVE DIRECTORS
Managing Director (appointed CEO on 13 March 2017 and Managing
Director on 17 November 2017)
Michael Bohm
Non-executive Chairman (appointed 30 September 2016)
Simon Jackson
Non-executive Director (appointed 17 November 2017)
Oliver Kreuzer
Non-executive Director (appointed 21 April 2016)
Amanda Buckingham
Non-executive Director (appointed 21 April 2016)
Alan Cleland
Senior executive
Non-executive Director (appointed 3 November 2015, resigned
17 November 2017)
Michael Naylor
Company Secretary (appointed 4 October 2016)
There were no other changes to KMP after reporting date and before the date the financial report was
authorised for issue.
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Remuneration governance
—
The Board has decided there are no efficiencies to be gained from forming a separate remuneration committee
and hence the current board members carry out the roles that would otherwise be undertaken by a remunera-
tion committee with each director excluding themselves from matters in which they have a personal interest.
The Board considers and recommends compensation arrangements for the directors and senior executives;
remuneration policies and practices; retirement termination policies and practices; Company share schemes
and other incentive schemes; Company superannuation arrangements and remuneration arrangements for
members of the Board.
The Board obtains professional advice where necessary to ensure that the Company attracts
and retains talented and motivated directors, executives and employees who can enhance Company
performance through their contributions and leadership.
Remuneration framework
—
The Board recognises that the Company’s performance and ultimate success in project delivery depends
very much on its ability to attract and retain highly skilled, qualified and motivated people in an increasingly
competitive remuneration market. At the same time, remuneration practices must be transparent to
shareholders and be fair and competitive taking into account the nature and size of the organisation and its
current stage of development.
The approach to remuneration has been structured with the following objectives:
•
•
to attract and retain a highly skilled executive team;
to link remuneration with performance, based on long-term objectives and shareholder return,as
well as critical short-term objectives which are aligned with the Company’s business strategy;
•
to set clear goals and reward performance for successful project development in a way which is
sustainable, including in respect of health and safety, environment and community based objectives; to be
fair and competitive against the market;
•
to preserve cash where necessary for exploration, by having the flexibility to attract, reward or remunerate
executives with an appropriate mix of equity based incentives;
•
to reward individual performance and Company performance thus promoting a balance of individual
performance and teamwork across the executive management team and the organisation; and
•
to have flexibility in the mix of remuneration, including offering a balance of conservative long term
incentive instruments to ensure executives are rewarded for their efforts, but also share in the upside of the
Company’s growth.
Due to the Company not being listed in 2017, the Company only remunerated by way of fixed remuneration,
However, the directors are considering a remuneration framework that provides a mix of fixed and variable “at
risk” remuneration and a blend of short and long-term incentives.
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The remuneration for executives has three components:
• Fixed remuneration, inclusive of superannuation and allowances;
• Short Term Incentives (“STI”); and
• Long Term Incentives (“LTI”).
These three components comprise each executive’s total annual remuneration.
To link executive remuneration with the Company’s performance, the Company’s policy is to endeavour to
provide an appropriate portion of each executive’s total remuneration as “at risk”. Mr Merrillees was provided
a short term incentive of $20,000 for Cygnus to list on the Australian Securities Exchange. This milestone was
successfully completed and paid after 31 December 2017 and is included in Mr Merrillees compensation for the
period as an accrual.
Executive director remuneration
—
Fixed Remuneration
Executives receive a fixed base cash salary and other associated benefits. Executives also receive a superannuation
guarantee contribution required by Australian legislation which was 9.5% at 31 December 2017. No executives
receive any other retirement benefits.
Fixed remuneration of executives will be set by the Board each year and is based on market relativity and individual
performance. In setting fixed remuneration for executives, individual performance, skills, expertise and experience
are also taken into account to determine where the executive’s remuneration should sit within the market range.
Where appropriate, external remuneration consultants will be engaged to assist the Board to ensure that fixed
remuneration is set to be consistent with market practices for similar roles.
Short Term Incentives
The executive director was eligible to earn a short-term cash bonuses upon achievement of significant performance
based outcomes aligned with the Company’s strategic objectives at that time. These performance based outcomes
are considered to be an appropriate link between executive remuneration and the potential for creation of
shareholder wealth.
The objective of STI’s is to provide the opportunity to earn a cash bonus by rewarding those executives who
successfully achieve in the opinion of the Board the critical short-term objectives of the Company over a 12 month
period. Those short-term objectives are pre-determined and recommended by the Board each year and approved
by the Board as being aligned with the Company’s stated strategy to derive shareholder return.
Executive
STI amount
Performance Hurdle
Mr James Merrillees
$20,000
The Company listing on the ASX.
23 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Directors’ Report
24
Non-executive director remuneration
—
Non-executive directors’ fees are paid within an aggregate limit which is approved by the shareholders
from time to time. Retirement payments, if any, are determined in accordance with the rules set out in the
Company’s Constitution and the Corporations Act at the time of the director’s retirement or termination. Non-
executive directors’ remuneration may include an incentive portion consisting of bonuses and/or options, as
considered appropriate by the Board, which is subject to shareholder approval in accordance with the ASX
Listing Rules.
The aggregate remuneration, and the manner in which it is apportioned amongst non-executive directors, is
reviewed annually. The Board considers the amount of director fees being paid by comparable companies with
similar responsibilities and levels of experience of the non-executive directors when undertaking the annual
review process.
The current maximum amount of non-executive directors’ fees payable is fixed at $300,000 in total, for each 12
month period commencing 1 January each year, until varied by ordinary resolution of shareholders.
Non-executive directors are not entitled to any termination payments.
Use of remuneration consultants
—
During the year ended 31 December 2017 the Board did not engage the services of remuneration consultants.
Voting and comments made at the company’s last Annual General Meeting
—
The Company did not need to vote on the Remuneration Report for the 2016 financial year as it was not a
listed entity.
Consequences of performance on shareholder wealth
—
In considering the Company’s performance and benefits for shareholder wealth, the Board has regard to the
following indices in respect of the current and the previous financial year:
Item
Revenue
Net loss
2016
1,285
81,504
2017
3,262
784,721
24 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Directors’ Report
25
Details of remuneration for year ended 31 December 2017
—
The directors and KMP of Cygnus Gold Limited are set out in the following tables:
Short term employee benefits
s
e
e
F
t
n
a
t
l
u
s
n
o
C
s
e
e
F
/
y
r
a
l
a
S
l
a
u
n
n
A
e
v
a
e
L
s
u
n
o
B
t
n
e
m
y
o
p
m
E
l
t
s
o
P
n
o
i
t
a
u
n
n
a
r
e
p
u
S
l
a
t
o
T
e
c
n
a
m
r
o
f
r
e
P
f
o
%
d
e
s
a
b
n
o
i
t
a
r
e
n
u
m
e
r
-
-
-
-
-
-
-
-
-
-
396
74,313
-
317
-
317
-
317
-
-
-
20,000
62,766
20,000
105,650
20,000
3,650
-
5,250
-
-
-
-
-
-
-
-
-
-
-
Non-executive Directors
Mr Michael Bohm1
Dr Amanda Buckingham2
Dr Oliver Kreuzer2
Mr Simon Jackson3
Alan Cleland7
Executives
James Merrillees4
Michael Naylor5
Total Remuneration
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
4,167
69,750
-
20,000
3,333
59,116
-
20,000
-
-
-
-
3,333
102,000
-
-
20,000
-
-
-
-
-
-
-
5,250
-
-
3,333
-
-
-
129,714
-
-
-
9,786
18,2656
14,998
172,763
11.6%
-
-
-
60,000
15,000
-
-
-
-
-
-
-
60,000
15,000
143,880
296,116
9,786
18,265
16,345
484,392
-
75,000
-
-
-
75,000
-
-
-
-
-
1 Appointed as Non-executive Chairman on 30 September 2016.
2 Appointed as Non-executive Director on 21 April 2016.
3 Appointed as Non-executive Director on 21 November 2017.
4 Appointed as CEO on 13 March 2017 and Managing Director on 17 November 2017.
5 Appointed as Company Secretary on 4 October 2016.
6 Bonus for the Company listing on the ASX is accrued at year end and net of superannuation.
7 Resigned as Non-executive Director on 17 November 2017.
25 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Directors’ Report
26 Shares Issues on Exercise of Options
—
There were no shares issued on exercise of options.
Value of Options Awarded, Exercised and Lapsed During the Year
—
No options or shares were issued as part of remuneration during the year ended 31 December 2017.
Grant of Long Term Incentives
—
There were no LTI’s issued during the year.
Shares held by directors and key management personnel including their related parties, is
set out below:
Balance at
start of the
year
Balance at
date of
appointment
Received during
the year on
exercise of
options
Other
acquisition/
disposal of
shares during
the year
Balance
at date of
resignation
Balance at
end of
the year
Non-executive Directors
Mr Michael Bohm
3,000,001
-
Mr Simon Jackson
-
133,334
Dr Oliver Kreuzer
1,833,334
Dr Amanda Buckingham 2,333,334
Mr Alan Cleland
3,000,001
-
-
-
Executives
Mr James Merrillees
-
100,000
Mr Michael Naylor
1,300,000
-
Total
11,466,670
233,334
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,000,001
133,334
1,833,334
2,333,334
(3,000,001)
-
-
-
100,000
1,300,000
(3,000,001)
8,700,003
Options Held by Directors and Key Management Personnel
—
There are no options on issue as at 31 December 2017 or 31 December 2016.
26 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Directors’ Report
27
Employment contracts of directors and senior executives
—
On 13 September 2017, the Company had entered into a standard appointment agreement with Mr Merrillees
as CEO which provides for an initial appointment one year, $200,000 (inclusive of superannuation) annual
salary and a short-term incentive (STI) of $20,000 if the Company lists on the ASX. Subsequent to year end Mr
Merrillees agreement was revised (15 March 2018) to recognise his promotion to Managing Director, $246,375
(inclusive of superannuation) annual salary takes affect from December 2017. As part of the new agreement a
STI of 15% of total fixed remuneration (Base Salary + Superannuation) is in place should several key performance
indicators be met, including exploration targets generated, exploration targets tested and Health, Safety and
Environmental components.
In addition, the agreement includes long term incentives which are granted subject to shareholder approval.
The Board will grant the Executive Performance Rights (PR’s), subject to shareholder approval, as follows:
Tranche 1 - 350,000 PR’s with a measurement period 15/1/18 to 15/1/2019
Tranche 2 - 350,000 PR’s with a measurement period 15/1/18 to 15/1/2020
Vesting will be dependent upon:
•
•
•
Continued employment at the end of each measurement period
The Total Shareholder Return (TSR) performance of Cygnus against a peer group
Any ‘Gates’ and/or ‘Modifiers that are applied
Cygnus’ TSR compared to the peer group will determine the proportion of Performance Rights that will vest
(subject to the other vesting conditions being met), as set out below:
Relative TSR over the Measurement Period
Proportion of Performance Rights vested
Below the 50th percentile
At the 50th percentile
0%
50%
Between the 50th and the 75th percentile
Pro-rata between 50% and 100%
Above the 75th percentile
100%
Subject to the vesting criteria being met, the executive will be entitled to exercise the number of Performance
Rights vesting and be issued with a corresponding number of ordinary shares in Cygnus Gold Limited.
Mr Merrillees is required to give the Company six weeks’ notice to terminate the agreement and the Company is
required to give Mr Merrillees three months’ notice to terminate the contract or payment in lieu.
The Company entered into an agreement with Blue Leaf Corporate Pty Ltd, an entity associated with Mr Naylor,
which commenced on 15 January 2018 for the provision of company secretarial and financial management
services. Mr Naylor is required to give the Company 90 days’ notice to terminate the contract and the
Company is required to give Mr Naylor 90 days’ notice to terminate the contract or payment in lieu.
27 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Directors’ Report
28
Loans to key management personnel
—
There were no loans to key management personnel of the Company, including their personally related parties,
as at 31 December 2017 or 31 December 2016.
Other transactions with key management personnel
—
Mr Naylor, the Company Secretary of the Company, previously held a senior position with Tawana Resources NL
and Teranga Gold (Australia) Pty Ltd, which received $25,416 in fees for the provision of administration services
including rent. Payments were based on commercial terms and conditions.
END OF REMUNERATION REPORT
—
Meetings of directors
—
During the financial year, 6 meetings of directors were held. Attendances by each director during the year were
as follows:
Director’s names
Number attended
Number eligible to attend
Michael Bohm
James Merrillees
Simon Jackson
Dr Oliver Kreuzer
Dr Amanda Buckingham
Alan Cleland
6
1
1
6
5
5
6
1
1
6
6
5
Given the size of the Board the Company has decided that there are no efficiencies to be gained from forming
separate committees.
Share Options
—
There are no share options on issue.
28 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Directors’ Report
29
Indemnifying officers
—
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001, every officer
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. The terms of
the policy prevent disclosure of the amount of the premium payable and the level of indemnification under the
insurance contract.
Indemnifying of Auditors
—
To the extent permitted by law, the Company has agreed to indemnify its auditors, Grant Thornton, as part
of the terms of its audit engagement agreement, against claims by third parties arising from the audit (for an
unspecified amount). No payments have been made to indemnify Grant Thornton to the date of this report.
Proceedings on behalf of the Company
—
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of these proceedings.
The Company was not a party to any such proceedings during the year.
Non-audit services
—
The directors are satisfied that the provision of non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The directors ensure that:
• Non-audit services are reviewed and approved by the directors to ensure that the provision of such services
does not adversely affect the integrity and objectivity of the auditor; and
• Audit services do not compromise the general principles relating to auditor independence in accordance
with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical
Standards Board.
The total remuneration for audit and non-audit services provided during the prior and current financial years is
set out in note 9 of the financial statements.
29 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Directors’ Report
30
Auditor’s independence declaration
—
The lead auditor’s independence declaration for the year ended 31 December 2017 has been received and is
attached to this Directors’ Report.
This report is made in accordance with a resolution of the directors.
James Merrillees
Managing Director
Dated in Perth this 26th day of March 2018.
Notes
1.
Information on historical results from the Stanley Project, including JORC Code Table 1 information, is contained in the Independent
Technical Assessment Report within Cygnus’ Prospectus dated 22 November 2017. Cygnus is not aware of any new information or data
that materially affects the information included in the Prospectus.
2. Refer ASX announcement on the said date for full details of these exploration results. Cygnus is not aware of any new information or
data that materially affects the information included in the said announcement.
Competent Persons Statement
The information in this announcement that relates to Exploration Results is based on information and supporting documentation compiled by
Mr James Merrillees, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy. Mt Merrillees is Managing
Director and a full-time employee of Cygnus Gold and holds shares in the Company.
Mr Merrillees has sufficient experience relevant to the style of mineralisation under consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined in the 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves”. Mr Merrillees consents to the inclusion in this announcement of the matters based on this information in the form and
context in which it appears.
Forward Looking Statement
This report may contain certain forward looking statements and projections regarding estimated, resources and reserves; planned production
and operating costs profiles; planned capital requirements; and planned strategies and corporate objectives. Such forward looking statements/
projections are estimates for discussion purposes only and should not be relied upon. They are not guarantees of future performance and
involve known and unknown risks, uncertainties and other factors many of which are beyond the control of Cygnus Gold Limited. The forward
looking statements/projections are inherently uncertain and may therefore differ materially from results ultimately achieved.
Cygnus Gold Limited does not make any representations and provides no warranties concerning the accuracy of the projections, and disclaims
any obligation to update or revise any forward looking statements/projects based on new information, future events or otherwise except to the
extent required by applicable laws. While the information contained in this report has been prepared in good faith, neither Cygnus Gold or any
of its directors, officers, agents, employees or advisors give any representation or warranty, express or implied, as to the fairness, accuracy,
completeness or correctness of the information, opinions and conclusions contained in this presentation. Accordingly, to the maximum
extent permitted by law, none of Cygnus Gold Limited, its directors, employees or agents, advisers, nor any other person accepts any liability
whether direct or indirect, express or limited, contractual, tortuous, statutory or otherwise, in respect of, the accuracy or completeness of the
information or for any of the opinions contained in this presentation or for any errors, omissions or misstatements or for any loss, howsoever
arising, from the use of this presentation.
30 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Auditor’s independence declaration
31
Central Park, Level 43
152-158 St Georges Terrace
Perth WA 6000
Correspondence to:
PO Box 7757
Cloisters Square
Perth WA 6850
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
Auditorʼs Independence Declaration
to the Directors of Cygnus Gold Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of Cygnus Gold Limited for the year ended 31 December 2017, I declare that, to the
best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
M P Hingeley
Partner - Audit & Assurance
Perth, 26 March 2018
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
31 // Cygnus Gold Limited - Annual Report 2017
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Cygnus Gold
32
CYGNUS DIRECTORS BELIEVE THAT EFFECTIVE CORPORATE
GOVERNANCE IMPROVES COMPANY PERFORMANCE,
ENHANCES CORPORATE SOCIAL RESPONSIBILITY AND
BENEFITS ALL STAKEHOLDERS.
32 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Statement of Profit or Loss and Other Comprehensive Income
33
Statement of Profit or Loss and Other Comprehensive Income
—
For the year ended 31 December 2017
Revenues
Notes
2017
$
3,262
Depreciation of property, plant and equipment
14
(2,814)
2016
$
1,285
-
-
(2,385)
(80,404)
(81,504)
-
Employee benefits expense
Exploration expense
Other expense
Loss before income tax
Income tax expense
Loss for the year
(207,179)
(230,625)
(347,365)
(784,721)
-
16
15
(784,721)
(81,504)
Other comprehensive loss for the year, net of tax
-
-
Total comprehensive loss for the year
(784,721)
(81,504)
Loss per share
Basic and diluted loss per share (cents per share)
7
Total
(2.69)
(2.69)
(1.17)
(1.17)
This statement above should be read in conjunction with the Notes to the Financial Statements.
33 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Statement of Financial Position
34
Statement of Financial Position
—
As at 31 December 2017
Notes
2017
$
2016
$
778,604
-
7,760
84,262
870,626
65,047
-
65,047
935,673
54,786
11,149
-
65,935
65,935
145,517
6,000,000
374,079
-
6,519,596
565,924
12,111
578,035
7,097,631
479,400
-
10,714
490,114
490,114
Assets
Current
Cash and cash equivalents
Subscriptions receivable
Trade and other receivables
Deposits
Current assets
Non-current
Exploration & evaluation
Property, plant and equipment
Non-current assets
3
19
4
13
14
Total assets
Liabilities
Current
Trade and other payables
5
Loans
Employee benefit provisions
Current liabilities
Total liabilities
Net assets
Equity
Share capital
Other contributed equity
Accumulated losses
Total equity
6,607,517
869,738
6
19
1,473,742
6,000,000
(866,225)
6,607,517
951,242
-
(81,504)
869,738
This statement above should be read in conjunction with the Notes to the Financial Statements.
34 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Statement of Changes in Equity
35
Statement of Changes in Equity
—
For the year ended 31 December 2017
s
s
o
l
d
e
t
a
l
u
m
u
c
c
$ A
i
d
e
t
u
b
r
t
n
o
C
y
t
i
u
q
E
$
s
e
t
o
N
l
a
t
i
p
a
c
e
r
a
h
S
r
e
h
t
$ O
y
t
i
u
q
e
l
a
t
o
T
$
Balance at 3 November 2015
Loss for the period
Other comprehensive loss
Total comprehensive loss
Transactions with owners
-
-
-
-
Issue of share capital
6
951,242
Balance at 31 December 2016
951,242
Balance at 1 January 2016
Loss for the year
Other comprehensive loss
Total comprehensive loss
Transactions with owners
Issue of share capital
Subscriptions yet to be issued
6
19
-
-
-
-
522,500
-
-
-
-
-
-
-
-
-
-
-
-
6,000,000
-
-
(81,504)
(81,504)
-
-
(81,504)
(81,504)
-
951,242
(81,504)
869,738
-
-
(784,721)
(784,721)
-
-
(784,721)
(784,721)
-
-
522,500
6,000,000
Balance at 1 January
1,473,742
6,000,000
(866,225)
6,607,517
This statement above should be read in conjunction with the Notes to the Financial Statements.
35 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Statement of Cash Flows
36
Statement of Cash Flows
—
For the year ended 31 December 2017
Operating activities
Payments to suppliers and employees
Payments for exploration expenditure
Interest received
Notes
2017
$
(487,015)
(217,982)
3,262
2016
$
(47,437)
(269)
1,285
Net cash used in operating activities
8
(701,735)
(46,421)
Investing activities
Deposits paid for exploration tenements
Payments for capitalised exploration expenditure
Purchase of property plant and equipment
-
(427,777)
(14,925)
(84,262)
(53,104)
-
Net cash used in investing activities
(442,702)
(137,366)
Financing activities
Proceeds from share issued
6
522,500
951,242
Costs of shares issued
Proceeds from related party loan
Repayment of loan
Proceeds from loan
Net cash provided by financing activities
Net change in cash and cash equivalents
-
-
(11,149)
-
511,351
(633,087)
-
6,149
-
5,000
962,391
778,604
Cash and cash equivalents, beginning of period
778,604
-
Cash and cash equivalents, end of year
3
145,517
778,604
This statement above should be read in conjunction with the Notes to the Financial Statements.
36 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
37
Notes to the Financial Statements
—
1 Nature of operations
–
Cygnus Gold Limited (Cygnus) (the Company or the Entity) principal activities include the exploration for gold
deposits in Western Australia.
The Company’s planned activities include:
(a)
(b)
Continued exploration; and
Listing of the Company of the Australian Securities Exchange.
2 General information and statement of compliance
–
The general purpose financial statements of the Company have been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board (AASB). Compliance with Australian Accounting
Standards results in full compliance with the International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB). Cygnus Gold Limited is a for-profit entity for the purpose of
preparing the financial statements.
Cygnus Gold Limited is a Company incorporated and domiciled in Australia. The address of its registered office and
its principal place of business is Level 3, 20 Parkland Road, Osborne Park, Western Australia.
The financial statements were approved and authorised for issue by the Board of Directors on 26 March 2018.
3 Cash and cash equivalents
–
Cash at bank and in hand
Cash and cash equivalents
2017
$
145,517
145,517
2016
$
778,604
778,604
37 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
38
4 Trade and other receivables
–
Trade and other receivables
Prepayments
2017
$
35,803
338,276
374,079
2016
$
-
7,760
7,760
All amounts are short-term. The carrying values of trade and other receivables are considered to be a reasonable
approximation of fair value.
5 Trade and other payables
–
Trade and other payables
Related parties payables
2017
$
479,400
-
479,400
2016
$
38,786
16,000
54,786
All amounts are short-term. The carrying values of trade and other payables are considered to be a reasonable
approximation of fair value.
38 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
39
6 Equity Share capital
–
The share capital of Cygnus consists only of fully paid ordinary shares; the shares do not have a par value. All shares
are equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders’
meeting of Cygnus.
2017
Shares
2016
Shares
2017
$
2016
$
Shares issued and fully paid:
Beginning of the year
25,416,675
-
951,242
-
Share issue
5,266,666
56,750,002
522,500
951,242
Share consolidation on a ratio of 1 share for 3 held
-
(31,333,327)
Share issue costs
-
-
-
-
Total contributed equity at 31 December
30,683,341
25,416,675
1,473,742
951,242
Each share has the same right to receive dividend and the repayment of capital and represents one vote at the
shareholders’ meeting of Cygnus.
7 Loss per share
–
Both the basic and diluted loss per share have been calculated using the loss attributable to shareholders of the
Company as the numerator (ie no adjustments to profit were necessary in 2017).
2017
$
2016
$
Net loss attributable to ordinary equity holders of the Company
(784,721)
(81,504)
Weighted average number of ordinary shares outstanding during the year used
in calculation of basic and diluted loss per share
29,150,557
6,957,154
Basic and diluted loss per share (cents per share
(2.69)
(1.17)
39 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
40
8 Reconciliation of cash flows from operating activities
–
Cash flows from operating activities
Loss for the period
Adjustments for depreciation
Net changes in working capital:
Change in trade and other receivables
Change in employee benefits provisions
Change in trade and other payables
Net cash from operating activities
9 Auditor remuneration
–
2017
$
2016
$
(784,721)
(81,504)
2,814
-
(28,044)
(6,652)
10,715
97,501
-
41,735
(701,735)
(46,421)
2017
$
2016
$
Audit and review of financial statements
Auditors of Cygnus Gold Limited - Grant Thornton Australia
27,875
6,000
Non-audit services
Investigation accountant’s report and due diligence services
Tax compliance
12,000
5,500
-
-
Total auditor’s remuneration
45,375
6,000
40 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
41
10 Related party transactions
–
The Company’s related parties include its associates and joint venture, key management, post-employment benefit
plans for the Company’s employees and others as described below.
Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were
given or received. Outstanding balances are usually settled in cash.
10.1 Related party transactions
–
Names and positions of key management personnel in office at the time during the financial year:
Name
Mr Michael Bohm
Mr James Merrillees
Position
Non-Executive Chairman
Managing Director (appointed CEO on 13 March 2017 & Managing Director on 17
November 2017)
Mr Simon Jackson
Non-Executive Director (appointed 17 November 2017
Dr Oliver Kreuzer
Non-Executive Director
Dr Amanda Buckingham
Non-Executive Director
Alan Cleland
Mr Michael Naylor
Non-Executive Director (resigned 17 November 2017)
Company Secretary
10.2 Key management personnel remuneration
–
Short term employee benefits
Post employment benefits
2017
$
468,047
16,345
484,392
2016
$
75,000
-
75,000
Detailed information about the remuneration received by each Key Management Personnel is provided in the
remuneration report on page 21.
41 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
42
10.3 Services by key management personnel
–
Key management of the Company are the executive members of Cygnus’s Board of Directors and members of the
Executive Council. All transactions with other related parties are made on normal commercial terms and conditions
and at deemed market rates.
Mr Michael Bohm – Non-executive Chairman
Mr Michael Bohm provided corporate and project advisory services to the Company during the year.
•
•
2017 $69,750
2016 $20,000
Dr Amanda Buckingham – Non-executive Director
Fathom Geophysics Australia Pty Ltd, a company of which Dr Amanda Buckingham is a Director, provided
geophysical consulting services to the Company during the year.
•
•
2017 $59,116
2016 $20,000
Dr Oliver Kreuzer – Non-executive Director
Corporate Geoscience Group, a company of which Dr Oliver Kreuzer is the Managing Partner and Principal
Consultant, provided geological consulting services to the Company during the period.
•
•
2017 $102,000
2016 $20,000
Michael Naylor – Company Secretary
Blue Leaf Corporate Pty Ltd, a company of which Mr Naylor is a Director, provided company secretarial and financial
management services to the Company during the year.
•
•
2017 $60,000
2016 $15,000
11 Financial instrument risk
–
Loans and receivables
Loans
Trade payables and accruals
2017
$
-
479,400
2016
$
11,149
54,786
Risks associated with market risk, credit risk and liquidity risk are not considered material with respect to the above
items.
42 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
43
12 Commitments and contingent assets and liabilities
–
Due to the nature of the Company’s operations in exploring and evaluating areas of interest, it is difficult to
accurately forecast the nature or amount of future expenditure, although it will be necessary to incur expenditure in
order to retain present interests in mineral tenements.
Annual rent on exploration licenses held by the Company are $100,098 with a minimum exploration commitment of
$761,000 per annum. The Company is not aware of any other contingent commitments.
13 Exploration and evaluation
–
Opening balance
Expenditure incurred during the year
14 Property, plant and equipment
–
Assets at cost
Accumulated depreciation
Carrying value 31 December 2017
Balance at 1 January 2017
Additions
Depreciation
Balance at 31 December 2017
43 // Cygnus Gold Limited - Annual Report 2017
2017
$
65,047
500,877
565,924
2016
$
-
65,047
65,047
2017 $
IT equipment
14,925
(2,814)
12,111
-
14,925
(2,814)
12,111
Cygnus Gold - Notes to the Financial Statements
44
15 Income tax expense
–
The major components of tax expense and the reconciliation of the expected tax expense based on the domestic
effective tax rate is at 27.5% (2016: 28.5%) and the reported tax expense in profit or loss are as follows:
Accounting loss before tax
2017
$
2016
$
784,721
81,504
At Australia’s statutory income tax rate of 27.5% (2016: 28.5%)
215,798
23,229
Deferred tax asset not recognised
(215,798)
(23,229)
Income tax expense attributable to entity
-
-
Deferred income tax at balance date relates to the following:
Deferred tax assets
Accrued expenditure
Capital raising cost
Tax losses
Total deferred tax assets
Deferred tax liabilities
Exploration and evaluation assets
Total deferred tax liability
10,313
9,675
32,800
-
342,360
23,229
385,743
32,904
155,629
18,538
155,629
18,538
Deferred tax asset recognised to offset deferred tax liability
(155,629)
(18,538)
Net deferred tax asset not brought to account
229,944
14,365
Total tax losses not used against deferred tax liabilities for which no
deferred tax asset has been recognised (not tax effected)
1,364,219
12,647
44 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
45
16 Other expenses
–
Corporate expenses
Occupancy
Travel and accommodation
2017
$
313,320
23,463
10,582
347,365
2016
$
80,404
-
-
80,404
17 Operating segments
–
19 Subscriptions receivable and Other
Contributed Equity
The Company has identified its operating segments
–
based on the internal reports that are reviewed
As at 31 December 2017, the company has an
and used by the directors (chief operating decision
unconditional right to cash balances raised as part of
makers) in assessing performance and determining
their Initial Public Offering. As at balance date, these
the allocation of resources.
amounts were held in trust by the Share Register
The company operates in one segment being
pending the official listing and quotation which
Exploration and Evaluation of Minerals in Australia.
occurred post year-end. See Note 20 below for details
18 Capital management policies
and procedures
–
Given that the related shares had not been issued
as at 31 December 2017, the balance receivable is
recorded in equity as Other Contributed Equity and
the amounts will transfer to Share Capital in 2018
The Entity’s capital management objectives are:
accordingly.
•
•
to ensure the Entity’s ability to continue as a
going concern; and
20 Post-reporting date events
to provide an adequate return to shareholders
–
The Company was successfully admitted to the
The Entity monitors capital on the basis of the carrying
Official List with official quotation commencing
amount of equity less cash and cash equivalents as
on 15 January 2018 and $6,000,000 capital raised
presented on the face of the Statement of Financial
(before costs) was well supported from cornerstone
Position recognised in other comprehensive income.
shareholders including Resource Capital Funds,
Management assesses the Entity’s capital requirements
Southern Cross Capital and Gold Road Resources and
in order to maintain an efficient overall financing
lead broker Morgans Corporate Limited.
structure while avoiding excessive leverage. The Entity
manages the capital structure and makes adjustments
to it in the light of changes in economic conditions
and the risk characteristics of the underlying assets.
In order to maintain or adjust the capital structure,
the Entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new
On the 22 March 2018, the Company announced a
new joint venture was entered with a wholly owned
subsidiary of Gold Road Resources.
Other than the paragraphs above, there have been
no adjusting or significant non-adjusting events have
occurred between the reporting date and the date
shares, or sell assets to reduce debt.
of authorisation.
45 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
46
21 Changes in accounting policies
–
21.1
Accounting Standards issued but not yet effective and not being adopted
early by the Company
–
A number of Accounting Standards (and Interpretations) have been issued by the AASB and IASB as at the date
of authorisation of the financial report that are not yet effective until future periods. None of these standards are
expected to impact the financial statements.
21.2 New and revised standards that are effective for these financial statements
–
A number of new and revised standards became effective for the first time to annual periods beginning on or after 1
January 2017. Information on the more significant standard(s) is presented below.
AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15
This standard extends the mandatory effective date of AASB 15 Revenue from Contracts with Customers by 12
months so that AASB 15 is required to be applied for annual reporting periods beginning on or after 1 January 2018
instead of 1 January 2017. AASB 2015-8 is applicable to annual reporting periods beginning on or after 1 January 2017.
The adoption of these amendments has not had a material impact on the Entity.
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107
AASB 2016-2 amends AASB 107 Statement of Cash Flows to require entities preparing financial statements in
accordance with Tier 1 reporting requirements to provide disclosures that enable users of financial statements to
evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and
non-cash changes. AASB 2016-2 is applicable to annual reporting periods beginning on or after 1 January 2017.
The adoption of these amendments has not had a material impact on the Entity.
AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle
This Standard clarifies the scope of AASB 12 Disclosure of Interests in Other Entities by specifying that the disclosure
requirements apply to an entity’s interests in other entities that are classified as held for sale, held for distribution to
owners in their capacity as owners or discontinued operations in accordance with AASB 5 Noncurrent Assets Held
for Sale and Discontinued Operations.
AASB 2017-2 is applicable to annual reporting periods beginning on or after 1 January 2017
The adoption of these amendments has not had a material impact on the Entity.
22 Summary of accounting policies
–
22.1 Overall considerations
–
The financial statements are presented in Australian Dollars, which is also the functional currency of the Company.
22.2 Operating expenses
–
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.
Expenditure for warranties is recognised and charged against the associated provision when the related revenue
is recognised.
46 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
47
22.3 Financial instruments
–
A number of Accounting Standards (and Interpretations) have been issued by the AASB and IASB as at the date
of authorisation of the financial report that are not yet effective until future periods. None of these standards are
expected to impact the financial statements.
Recognition, Initial Measurement and Derecognition
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual
provisions of the financial instrument, and are measured initially at fair value adjusted by transactions costs,
except for those carried at fair value through profit or loss, which are measured initially at fair value. Subsequent
measurement of financial assets and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or
when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised
when it is extinguished, discharged, cancelled or expires.
Classification and Subsequent Measurement of Financial Assets
For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging
instruments are classified into the following categories upon initial recognition:
•
•
loans and receivables
financial assets at Fair Value Through Profit or Loss (‘FVTPL’)
• Held-To-Maturity (‘HTM’) investments; or
• Available-For-Sale (‘AFS’) financial assets
The only category that is relevant to this set of financial statements are loans and receivables.
All financial assets are subject to review for impairment at least at each reporting date to identify whether there is
any objective evidence that a financial asset or a Company of financial assets is impaired.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. After initial recognition, these are measured at amortised cost using the effective interest method,
less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Company’s
trade and most other receivables fall into this category of financial instruments.
Individually significant receivables are considered for impairment when they are past due or when other objective
evidence is received that a specific counterparty will default. Receivables that are not considered to be individually
impaired are reviewed for impairment in companies, which are determined by reference to the industry and region
of a counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent
historical counterparty default rates for each identified Company.
Classification and subsequent measurement of financial liabilities
The Company’s financial liabilities include trade and other payables.
Financial liabilities are measured subsequently at amortised cost using the effective interest method.
47 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
48
22.4
Income taxes
–
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other
comprehensive income or directly in equity.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian Taxation
Office (‘ATO’) and other fiscal authorities relating to the current or prior reporting periods that are unpaid at the
reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements.
Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the
end of the reporting period.
Deferred income taxes are calculated using the liability method on temporary differences between the carrying
amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition
of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments
in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the
Company and it is probable that reversal will not occur in the foreseeable future.
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to
their respective period of realisation, provided they are enacted or substantively enacted by the end of the
reporting period.
Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future
taxable income, based on the Company’s forecast of future operating results which is adjusted for significant non-
taxable income and expenses and specific limits to the use of any unused tax loss or credit. Deferred tax liabilities
are always provided for in full. Deferred tax assets and liabilities are offset only when the Company has a right and
intention to set off current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or
loss, except where they relate to items that are recognised in other comprehensive income (such as the revaluation
of land) or directly in equity, in which case the related deferred tax is also recognised in other comprehensive
income or equity, respectively.
22.5 Cash and cash equivalents
–
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly
liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant
risk of changes in value.
22.6 Equity and reserves
–
Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the
issuing of shares are deducted from share capital, net of any related income tax benefits.
Retained earnings include all current and prior period retained profits.
48 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
49
22.7 Provisions, contingent liabilities and contingent assets
–
Provisions for product warranties, legal disputes, onerous contracts or other claims are recognised when the
Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of
economic resources will be required from the Company and amounts can be estimated reliably. Timing or amount
of the outflow may still be uncertain.
Restructuring provisions are recognised only if a detailed formal plan for the restructuring has been developed and
implemented, or management has at least announced the plan’s main features to those affected by it. Provisions are
not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the
most reliable evidence available at the reporting date, including the risks and uncertainties associated with the
present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required
in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their
present values, where the time value of money is material.
Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the
obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related
provision.
No liability is recognised if an outflow of economic resources as a result of present obligation is not probable. Such
situations are disclosed as contingent liabilities, unless the outflow of resources is remote in which case no liability is
recognised.
22.8 Exploration and Development expenditure
–
Exploration, evaluation and development expenditures incurred are capitalised in respect of each identifiable
area of interest. These costs are only capitalised to the extent that they are expected to be recovered through
the successful development of the area or where activities in the area have not yet reached a stage that permits
reasonable assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the
decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are 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 local laws and
regulations and clauses of permits. Such costs have been determined using estimates of future costs, current legal
requirements and technology on an undiscounted basis.
49 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
50
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations
and future legislation. Accordingly the costs have been determined on the basis that the restoration will be
completed within one year of abandoning the site.
22.9 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 Tax Office. In these circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial
Position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST components of
investing and financing activities, which are disclosed as operating cash flows.
22.10 Significant management judgement in applying accounting policies
–
The preparation of the consolidated financial statements in conformity with IFRS 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.
In preparing this Annual Financial Report, the significant judgements made by management in applying the Entity’s
accounting policies and the key sources of estimation uncertainty are detailed below.
Exploration and Evaluation Expenditure
Determining the recoverability of exploration and evaluation expenditure capitalised in accordance with the Entity’s
accounting policy requires estimates and assumptions as to future events and circumstances, in particular, whether
successful development and commercial exploitation, or alternatively sale, of the respective areas of interest will be
achieved. Critical to this assessment is estimates and assumptions as to the presence of mineral reserves, timing
of expected cash flows, exchange rates, commodity prices and future capital requirements. Changes in these
estimates and assumptions as new information about thepresence or recoverability of a mineral reserve becomes
available, may impact the assessment of the recoverable amount of exploration and evaluation assets. If, after
having capitalised the expenditure a judgement is made that recovery of the expenditure is unlikely, an impairment
loss is recorded in the consolidated statement profit or loss and other comprehensive income.
22.11 Going Concern
–
The Company has incurred a net loss of $784,721 (2016 $81,504) during the year and the cash outflows from
operating activities equates to $701,735 (2016: $46,421).
The financial statements have been prepared on the basis of going concern which contemplates continuity of
normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.
The directors consider this to be appropriate given the ability to manage the Company’s cost structure and in turn
the levels of cash outflow dependent on timing of its exploration activities.
Taking into account the current cash reserves and successful fund raising from the Initial Public Offering which
occurred subsequent to year-end of $6,000,000 before cost, the directors are confident the Company has
adequate resources to continue as a going concern for the foreseeable future.
50 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Notes to the Financial Statements
51
22.12 Employee benefits
–
Wages and salaries and annual leave:
Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the related service. Examples of such
benefits include wages and salaries, non-monetary benefits and accumulating sick leave. Short-term employee
benefits are measured at the undiscounted amounts expected to be paid when the liabilities are settled.
22.13 Property, Plant and Equipment
–
Recognition and Measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.
Costs include expenditures that are directly attributable to the acquisition of the asset.
Subsequent Costs
Subsequent expenditure is only capitalised when it is probable that the future economic benefits associated with
the expenditure will flow to the Entity. Ongoing repairs and maintenance are expensed as incurred.
Depreciation
Depreciation is recognised in profit or loss on a straight line basis over the estimated useful lives of each part of
an item of property, plant and equipment. The expected useful lives in the current and comparative period are as
follows:
IT equipment 2 – 3 years
The estimated useful lives, Depreciation methods and residual values are reviewed at the end of each r
eporting period.
51 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Directors’ declaration
52
Directors’ Declaration
—
1.
In the opinion of the directors of Cygnus Gold Limited:
a
The financial statements and notes of Cygnus Gold Limited are in accordance with the
Corporations Act 2001, including:
i
ii
Giving a true and fair view of its financial position as at 31 December 2017 and of its
performance for the year ended on that date; and
Complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
b
There are reasonable grounds to believe that Cygnus Gold Limited will be able to pay its debts as
and when they become due and payable.
2. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the
Chief Executive Officer and Chief Financial Officer for the period from incorporation to 31 December 2017.
3. Note 2 confirms that the financial statements also comply with International Financial Reporting Standards.
Signed in accordance with a resolution of the directors:
James Merrillees
Managing director
Perth, 26 March 2018
52 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Independent Auditor’s Report
53
Central Park, Level 43
152-158 St Georges Terrace
Perth WA 6000
Correspondence to:
PO Box 7757
Cloisters Square
Perth WA 6850
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
Independent Auditorʼs Report
to the Members of Cygnus Gold Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Cygnus Gold Limited (the Company), which comprises the
statement of financial position as at 31 December 2017, the statement of profit or loss and other
comprehensive income, statement of changes in equity and statement of cash flows for the year
then ended, and notes to the financial statements, including a summary of significant accounting
policies, and the directorsʼ declaration.
In our opinion, the accompanying financial report of the Company is in accordance with the
Corporations Act 2001, including:
a Giving a true and fair view of the Companyʼs financial position as at 31 December 2017 and of
its performance for the year ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditorʼs Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Company in accordance with
the independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Boardʼs 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.
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.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
53 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Independent Auditor’s Report
54
Key audit matter
How our audit addressed the key audit matter
Exploration and Evaluation Assets – valuation
Note 14 and Note 22.8
At 31 December 2017, the carrying value of
Exploration and Evaluation Assets was $566
thousand.
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Company is
required to assess at each reporting date if there are
any triggers for impairment which may suggest the
carrying value is in excess of the recoverable value.
The process undertaken by management to assess
whether there are any impairment triggers in each
area of interest involves an element of management
judgement.
This area is a key audit matter due to the valuation of
exploration and evaluation assets being a significant
risk.
Our procedures included, amongst others:
• obtaining the management prepared reconciliation
of capitalised exploration and evaluation
expenditure and agreeing to the general ledger;
reviewing managementʼs area of interest
considerations against AASB 6;
•
-
• conducting a detailed review of managementʼs
assessment of trigger events prepared in
accordance with AASB 6 including;
-
tracing projects to statutory registers,
exploration licenses and third party
confirmations to determine whether a right of
tenure existed;
enquiry of management regarding their
intentions to carry out exploration and
evaluation activity in the relevant exploration
area, including review of managementsʼ
budgeted expenditure;
understanding whether any data exists to
suggest that the carrying value of these
exploration and evaluation assets are unlikely
to be recovered through development or sale;
• assessing the accuracy of impairment recorded for
the year as it pertained to exploration interests;
and
reviewing the appropriateness of the related
disclosures within the financial statements.
-
•
Information Other than the Financial Report and Auditorʼs Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Companyʼs annual report for the year ended 31 December 2017, but
does not include the financial report and our auditorʼs report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directorsʼ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Companyʼs 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
Company or to cease operations, or have no realistic alternative but to do so.
54 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Independent Auditor’s Report
55
Auditorʼs 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 auditorʼs report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditorʼs report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 21 to 28 of the directorsʼ report for
the year ended 31 December 2017.
In our opinion, the Remuneration Report of Cygnus Gold Limited, for the year ended 31 December
2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
M P Hingeley
Partner - Audit & Assurance
Perth, 26 March 2018
55 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Additional shareholder information as at 22 March 2018
56
Top 20 holders of ordinary shares
–
In accordance with ASX Listing Rule 4.10, the following information is provided as at 22 March 2018.
Rank
Name
Units
% of issued
capital
8.30
8.24
6.87
6.18
4.94
4.94
4.12
3.02
2.75
2.75
2.20
1.65
1.10
0.82
0.82
0.77
0.66
0.66
0.55
0.55
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Merrill Lynch (Australia) Nominees Pty Limited
5,036,091
Southern Cross Capital Pty Ltd
Resource Capital Fund VI L.P.
Gold Road (Projects) Pty Ltd
Mr Alan Frank Cleland
Ms Charmaine Linda Lobo
Southern Cross Capital Pty Ltd
Mr Oliver Pierre Kreuzer
Fathom Geophysics Australia Pty Ltd
Insurgent Metals Pty Ltd
Dale Park Pty Ltd
5,000,000
4,166,667
3,750,000
3,000,001
3,000,001
2,500,000
1,833,334
1,666,667
1,666,667
1,333,334
Eastern Goldfields Exploration Pty Ltd
1,000,000
Mr Robert Angus Castle Stuart
Ms Sarah June McAlpine
SAS Investments Pty Ltd
666,667
500,000
500,000
Mr Michael Dylan Naylor + Ms Sarah McAlpine
470,000
Mrs Sarah June Naylor + Mr Michael Dylan Naylor
400,000
Payne Geological Services Pty Ltd
Ms Anthea Clare Cooke
20
Mr Timothy Richard Cooke
56 // Cygnus Gold Limited - Annual Report 2017
400,000
333,334
333,334
37,556,097
61.89
Cygnus Gold - Additional shareholder information as at 22 March 2018
57
Range of shares
–
Range
Total holders
Units
% of issued capital
6
60
71
409
52
598
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
Substantial Holders
–
2,524
157,561
672,226
16,536,195
43,314,835
0.00
0.26
1.11
27.25
71.38
60,683,341
100.00
Range
Units
% of issued capital
Resource Capital Fund VI L.P.
Southern Cross Capital Pty Ltd
Gold Road (Projects) Pty Ltd
Mr Alan Frank Cleland
Ms Charmaine Linda Lobo
9,166,664
7,500,000
3,750,000
3,170,001
3,170,001
15.11
12.36
6.18
5.22
5.22
57 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Additional shareholder information as at 22 March 2018
58
Unmarketable Parcels
–
There were 41 shareholders with less than a marketable parcel of shares, based on the closing price $0.2050.
Restricted Securities
–
From the date of listing there are 4,166,667 ordinary shares subject to a 12 month escrow, plus 15,577,088 ordinary
shares subject to a 24 month escrow.
Voting Rights
–
In accordance with the Company’s constitution, on a show of hands every member present in person or by proxy or
attorney or duly appointed representative has one vote. On a poll every member present or by proxy or attorney or
duly authorised representative has one vote for every fully paid share held.
ASX Listing Rule 4.10.19
–
In accordance with Listing Rule 4.10.19, the company states that it has used the cash and assets in a form readily
convertible to cash that it had at the time of admission in a way consistent with its business objectives. The business
objective is primarily mineral exploration.
Schedule of tenements
–
A listing of the Entity’s tenements:
Tenement
Location
Registered Owner
Structure and Owner
E70/4787
Western Australia
Cygnus Gold Limited
100%
E70/4854
Western Australia
Cygnus Gold Limited
100%
E70/4910
Western Australia
Cygnus Gold Limited
100%
E70/4912
Western Australia
Cygnus Gold Limited
100%
E70/4952
Western Australia
Cygnus Gold Limited
100%
E70/4988
Western Australia
Cygnus Gold Limited
100%
E70/4992
Western Australia
Cygnus Gold Limited
100%
E70/5050
Western Australia
Cygnus Gold Limited
Pending, 100%
E70/5131
Western Australia
Cygnus Gold Limited
Pending, 100%
E70/5137
Western Australia
Cygnus Gold Limited
Pending, 100%
E77/2405
Western Australia
Cygnus Gold Limited
100%
E77/2463
Western Australia
Cygnus Gold Limited
100%
58 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Additional shareholder information as at 22 March 2018
59
Wadderin Earn-In Project
E70/4911
Western Australia
Cygnus Gold Limited
100%, diluting to 25%
E70/4939
Western Australia
Cygnus Gold Limited
100%, diluting to 25%
E70/4989
Western Australia
Cygnus Gold Limited
100%, diluting to 25%
E70/4990
Western Australia
Cygnus Gold Limited
100%, diluting to 25%
E70/5018
Western Australia
Cygnus Gold Limited
Pending, 100%, diluting to 25%
E70/5019
Western Australia
Cygnus Gold Limited
Pending, 100%, diluting to 25%
E70/5020
Western Australia
Cygnus Gold Limited
Pending, 100%, diluting to 25%
E70/5021
Western Australia
Cygnus Gold Limited
Pending, 100%, diluting to 25%
Lake Grace Earn-In Project
E70/4853
Western Australia
Cygnus Gold Limited
100%, diluting to 25%
E70/4855
Western Australia
Cygnus Gold Limited
100%, diluting to 25%
E70/4991
Western Australia
Cygnus Gold Limited
100%, diluting to 25%
Yandina Joint Venture Project
E70/5098
Western Australia
Gold Road (Projects) Pty Ltd
Pending, 25%
E70/5099
Western Australia
Gold Road (Projects) Pty Ltd
Pending, 25%
E70/5100
Western Australia
Gold Road (Projects) Pty Ltd
Pending, 25%
E70/5101
Western Australia
Gold Road (Projects) Pty Ltd
Pending, 25%
59 // Cygnus Gold Limited - Annual Report 2017
Cygnus Gold - Corporate directory
60 Corporate directory
—
–
–
Principal Place of Business & Registered Office
Stock Exchange Listing
Level 3, 20 Parkland Road
Osborne Park WA 6017
–
Contact information
Phone: +61 8 9489 2680
Email:
info@cygnusgold.com
Website: www.cygnusgold.com
–
Australian Business Number
80 609 094 653
–
Directors
Primary listing: Australian Securities Exchange
ASX Code: CY5
–
Share Register
Computershare Investor Services Pty Ltd
GPO Box 2975, Melbourne VIC 3001
Phone: +61 3 9415 5000
Fax:
+61 3 9473 2500
–
Bankers
National Australia Bank
100 St Georges Terrace
Mr Michael Bohm
Non-executive Chairman
Perth WA 6000
Mr James Merrillees
Managing Director
–
Mr Simon Jackson
Non-executive Director
Solicitors
Dr Oliver Kreuzer Non-executive Director
Gilbert and Tobin
Dr Amanda Buckingham Non-executive Director
Level 16, Brookfield Place Tower 2
123 St Georges Terrace
PERTH WA 6000
–
Company Secretary
Mr Michael Naylor
–
Auditors
Grant Thornton Audit Pty Ltd
Central Park
Level 43 152-158 St Georges Terrace
Perth WA 6000
60 // Cygnus Gold Limited - Annual Report 2017