(formerly ARC Exploration Limited)
A N N U A L R E P O R T
31 December 2019
ABN 48 002 678 640
cypriummetals.com
Our Values
S A F E T Y
The safety of our employees, contractors, consultants and visitors is
zero
paramount.
injuries
a
in
culture of safe behaviour inside and outside of the workplace.
The
the workplace by
achieve
to develop
is
continuing
target we
have
to
R E S P O N S I B I L I T Y
Our actions are always guided by a sense of accountability.
We recognise that our activities will
impact the environment
and a wide range of stakeholders. We take all of our responsibilities
and obligations very seriously to meet our various commitments.
I N T E G R I T Y
Integrity and trust are highly valued. We trust our people to make
the right decisions for our business and we value the trust that
our partners give us when working with us. We earn their trust by
being straight forward, open and transparent with our stakeholders.
Our actions must be congruent with what we say we do.
P R O F E S S I O N A L I S M
for the highest
We strive
levels of professionalism, to be
innovative and encourage an entrepreneurial spirit in all our people that
inspires them to conduct themselves responsibly in the best interests
our business, to be innovative and continuously make improvements.
E F F I C I E N C Y
We aim to achieve our key objectives efficiently, minimise
bureaucracy and corporate overheads while maintaining a clear focus
on excellence, quality and sustainability in order to deliver strong
shareholders returns and sustainable value for all of our stakeholders.
A N N U A L R E P O R T
31 December 2019
ABN 48 002 678 640
cypriummetals.com
Contents
C O R P O R A T E D I R E C T O R Y
C H A I R M A N ’ S L E T T E R
R E V I E W O F O P E R A T I O N S
D I R E C T O R S ’ R E P O R T
C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S A N D
O T H E R C O M P R E H E N S I V E I N C O M E
C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N
C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
D I R E C T O R S ’ D E C L A R A T I O N
A U D I T O R ’ S I N D E P E N D E N C E D E C L A R A T I O N
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
A S X A D D I T I O N A L I N F O R M A T I O N
A B O U T C Y P R I U M M E T A L S L I M I T E D A N D S C H E D U L E
O F T E N E M E N T S
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2
3
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2 2
2 3
2 4
2 5
2 6
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4 8
4 9
5 3
5 5
C O R P O R A T E D I R E C T O R Y
Directors
Gary Comb (Chairman, Non-Executive Director)
Barry Cahill (Executive Director)
Nicholas Rowley (Non-Executive Director)
Auditors
HLB Mann Judd
Level 4, 130 Stirling Street
Perth WA 6000
Company Secretary
Wayne Apted
Registered Office
and Principal Place of Business
Level 2
38 Rowland Street
Subiaco WA 6008
Telephone: +61 8 6169 3050
1
Website
www.cypriummetals.com
Share Registry
Advanced Share Registry Limited
PO Box 1156
Nedlands WA 6909
Telephone: +61 8 9389 8033
Chairman’s Letter
On behalf of the Board of Directors, I am pleased to present the 2019 Annual Report for Cyprium Metals Limited
(“CYM” or “the Company”).
The past year has been a very
significant one
for
the Company, with highly credentialed
appointments to the board and senior executive management being made during the middle of the year
along with the 80% earn-in acquisition of the prospective Cue Copper Project, located in Western Australia.
The Company’s strategy is to focus on mid to late stage Australian based projects that have an identified
copper mineralisation with a high sulphide content, which will best suit our unique low-cost processing
methodology, to produce copper metal on site, to be sold into highly liquid global LME grade copper metal markets.
Many
advanced
stage Australian
copper projects were
assessed
and we were pleased
to
commence
the
implementation of our strategy with
the Cue Copper Project. A comprehensive
drilling programme began in July 2019 immediately after transaction completion and receiving regulatory
approvals. The key objectives of the drilling programmes are to
increase the size of the copper
deposits, test prospective exploration targets and provide sufficient sample material for metallurgical test-work.
The drilling
completed
to date
has
significantly
extended
the Hollandaire
and Hollandaire
West copper deposits,
intersected high-grade copper mineralisation at the Eelya South propect and
produced
sufficient
sample material
for metallurgical column
test-work
to be performed. The
metallurgical column test-work undertaken on the samples of the massive and semi-massive sulphides from
the Hollandaire and Hollandaire West prospects has resulted in copper leaching very rapidly into solution.
A
full processing cycle has now been completed,
from drilling
the mineralisation, crushing,
leaching and plating copper. The Hollandaire deposits have proved
to be very suitable
for our
unique processing methodology and
it has outperformed our expectations. To produce a high
purity copper plate so quickly is an extraordinary achievement and reinforces the amenability of the Cue
Copper project, which gives us even greater confidence
in
the project’s developmental potential.
There is also a favourable timeframe for when the project could commence copper production, since
the
longer term outlook for copper remains very positive, driven by global population growth and
rising
living standards
in emerging economies. The supply of copper will also be constrained by
aging copper mines with declining ore grades and the diminishing number of developmental projects.
Climate change policies around the world will also be a significant driving factor as copper is a critical
input for wind and solar technology, energy storage, and electric vehicles. To put this into perspective, the
generation of clean energy from solar and wind typically requires 4-6 times more copper than fossil fuel generators.
Copper for wiring and cabling is required to connect to the renewable power generators, is required for
electrical transformers, and is required for a wide range of infrastructure, including electric vehicle charging
stations. Several car manufacturers have already committed to producing only electric vehicles in the near
future, which requires approximately 4 times theamount of copper compared to conventionally powered vehicles.
The capital raise at the end of 2019 places the Company
in a good position to continue the
advancement of the Cue Copper Project in 2020 whilst evaluating a range of other copper projects.
G a r y C o m b - C h a i r m a n
2
REVIEW OF OPERATIONS
Completion of the Acquisition of Cyprium Australia Pty Ltd
In June 2019, Cyprium Metals Limited (“CYM” or “the Company”) completed the acquisition of 100% of
the issued capital of Cyprium Australia Pty Ltd following satisfaction of all the conditions precedent.
Pursuant to an agreement between Cyprium Australia Pty Ltd and Musgrave Minerals Limited, Cyprium
Australia Pty Ltd has been granted an option to earn-in and joint venture for an 80% interest in the non-
gold rights over the tenements at the Cue Copper Project.
Cue Copper Project
The Cue Copper Project is located in the Murchison region of Western Australia (refer to Figure 1),
which is host to a number of Volcanic Massive Sulphide (“VMS”) deposits. VMS deposits are noted to
occur in clusters when in favourable geological settings, such as those in the Cue Copper Project area.
The exploration leases and mining licenses are held by Musgrave Minerals Limited and are located
approximately 20km to the east of Cue in Western Australia. The Project contains the Hollandaire
copper deposit.
Figure 1 | Location of the Cue Copper Project tenements
CYM commenced extensional and metallurgical drilling at the Cue Copper Project, immediately
adjacent to the current copper mineralisation at Hollandaire in July 2019, following the approval of a
Programme of Work by the WA Department of Mines, Industry Regulation and Safety.
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CYM completed approximately 8,000 meters of Reverse Circulation (“RC”) drilling at the Cue Copper
Project and over 650 meters of diamond drilling at Hollandaire and Hollandaire West prospects during
the second half of 2019.
The drilling programmes involved a number of facets of drilling into and surrounding the mineralised
area, with the majority of the initial Phase 1 Hollandaire RC drilling programme being focused on the
Hollandaire West copper mineralisation, to test for shallow extensions.
The locations of the drill hole collars at the Hollandaire and Hollandaire West copper mineralisation
are shown in Figure 2. The red outline shows the current mineralisation projected to the surface against
drill-hole collars for extensional and infill drilling.
The Phase 1 RC drilling of approximately 4,000 metres was drilled at Hollandaire West to test:
Figure 2 | Hollandaire Phase 1 RC Drill Hole Locations
the veracity of the historical results;
mineralisation where there was a significant gap between historical intersections; and
for mineralisation extensions.
The next phases of RC drilling at the Hollandaire prospect intersected a significant extensional
mineralisation of 18.0 metres @ 1.97% copper in drill hole 19HORC029 (refer to Image 1, Figure 3 and
Section 1) from 295m downhole including:
12.0m @ 2.74% copper from 295 metres
8.0m @ 3.63% copper from 296 metres
3.0m @ 6.10% copper from 296 metres
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Image 1 / 19HORC029 mineralised intersection from 295m downhole
RC drill hole 19HORC029 is 116 metres down dip from drill hole 12HODD034 which returned a
mineralised interval of 14.0m at 2.03% copper from 254 metres downhole, as previously reported by
Silver Lake Resources in 2012, which was previously the deepest recorded drill hole intersection of
mineralisation at the Hollandaire prospect.
The Hollandaire West mineralisation remains open between 617040 mE and 617200 mE and the RC
drilling will be conducted to test for downdip extensions at this prospect.
CYM also completed a regional field mapping and surface sampling programme at the Cue Copper
Project’s Eelya South prospect, which had previously limited drilling activities conducted upon it. The
regional programmes have been undertaken to increase its copper resource base at the Cue Copper
Project, with the Eelya South prospect being located only 5 km to the south of the Hollandaire copper
mineralisation.
Outcropping of malachite mineralised felsic schist was observed whilst conducting surface soil and rock
chip sampling of the shear hosted mineralisation at the Eelya South prospect. The shear hosting the
mineralisation ranged from 0.5 metres to 3.0 metres in width and dipped south from 55° to 75°. The
mineralisation has been mapped over a total distance of 530 metres.
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Figure 3 / 19HORC029 collar location with existing drill hole locations
Section 1 / 617500 mE with drill hole 19HORC029
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The observed surface mineralisation at the Eelya South prospect and laboratory assay results of the
rock chip samples, as illustrated in Figure 4, are very encouraging. The Eelya South surface rock chip
sampling results included:
19.7% copper in surface sample ES13
14.5% copper in surface sample ES11
11.4% copper in surface sample ES15
9.6% copper in surface sample ES12
9.2% copper in surface sample ES08
Figure 4 / Sampling points of the Eelya South outcropping shear hosted mineralisation
An RC drilling programme of over 1,100 metres was completed by the end of the year at the Eelya
South prospect, comprising 13 drill holes which targeting the down-dip extensions of the structure
(refer to figure 5). All of the initial drill holes intersected the targeted structure with altered and
mineralised material observed at the supergene horizon, from a depth of approximately 30 metres
depth below the ground surface. Of the RC drilling completed, 11 drill holes were included in phase
one and two designs, targeting the shallowest section of the structure and has intersected a depleted
zone, including:
19ESRC001: 1.0 metre @ 1.36% copper from 47 metres
19ESRC007: 1.0 metre @ 1.32% copper from 46 metres
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An RC drill hole from the phase 3 programme was completed to target a deeper section of the structure
and has intersected sulphide material below the depletion zone, which included:
19ESRC012: 11.0 metres @ 0.64% copper from 58m, including:
3.0 metres @ 1.34% copper from 61 metres
RC drill hole 19ESRC013 was used for downhole geophysical investigations that will be used, in
conjunction with the RC drilling assay results to design the next phases of drilling to outline further
mineralisation at the Eelya South prospect.
Figure 5 / Eelya South prospect drilled collars and mapped outcrop of drill tested structure
RC drilling continued to the end of February 2020 at the Eelya South prospect which included:
3.0m @ 3.78% Cu in drill hole 20ESRC014 with 6.68 g/t Au and 81.0 g/t Ag from 59m
The high-grade copper/gold southern Eelya South intersection in drill hole 20ESRC014 was drilled to
test a structure that was previously identified at Eelya South in the 1990’s, which returned an
intersection of 2.0m @ 10.12% Cu, 3.19 g/t Au and 92 g/t Ag in drillhole ERC19.
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A metallurgical diamond drilling programme was conducted during the second half of the year which
consisted of three holes totalling over 300 metres into the historical mineralised envelope of
Hollandaire and Hollandaire West to provide representative samples for test-work to be undertaken
as illustrated in Figure 6.
Figure 6 | Hollandaire Metallurgical Diamond Drill Hole Locations
The first drill hole in the metallurgical diamond drilling programme, 19HOMET001 (refer to Section 2)
and, was drilled into the Hollandaire west lode and returned disseminated copper sulphide
mineralisation, dominated by chalcocite. The second and third diamond drill holes in the programme,
19HOMET002 and 19HOMET003, targeted representative sections of the Hollandaire east lode and
returned massive sulphide mineralisation, containing pyrite and copper sulphides, predominantly
chalcocite with minor chalcopyrite and bornite. The results from the metallurgical diamond drill holes
included:
10.4 metres @ 14.9% copper in drill hole 19HOMET003 from 84.5m downhole including:
4.5 metres @ 21.9% copper from 90.4 metres
19.1 metres @ 1.3% copper in drill hole 19HOMET002 from 85.9m downhole including:
6.4 metres @ 2.1% copper from 98.6 metres
27.9m @ 1.1% copper in drill hole 19HOMET001 from 45.7m downhole including:
9.0 metres @ 1.6% copper from 63.2 metres
Metallurgical column test-work was commenced by the end of 2019 on the massive sulphide
mineralisation from the diamond drilling programme, that targeted the known copper mineralisation
at the Hollandaire Prospect. This metallurgical test-work is being conducted to determine the optimal
copper extraction method and has leached copper into solution, as illustrated in Image 2.
Hollandaire samples were composited from holes 19HOMET002 and 19HOMET003 to create two
column samples, Columns A and B, with copper grades of 5.10% and 5.24% respectively. The drill core
Cyprium Metals Limited
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from Hollandaire West, obtained from drill hole 19HOMET001, was composited for testing in a third
column, Column C, with an average grade of 0.76% copper.
Section 2 | 617105E mE with drill hole 19HOMET001
Diagnostic testing and mineralogical analysis were undertaken on the samples to determine the
optimal parameters to use to undertake the column test-work.
The composites were then leached in separate columns with the resultant copper recovery over time
under leach presented in Graph 1 below.
The leaching of these columns is continuing and the results to date demonstrate an accelerated leach
time to extract the copper metal into solution. The test-work on Column C, in particular, has
demonstrated a more rapid leach than Columns A and B, which is remarkable result that has been
achieved after only 6 days.
The metallurgical test-work programme is continuing on these three columns together with other test-
work that is being conducted on the remaining material from the metallurgical drill holes completed in
2019.
The initial Hollandaire metallurgical test results have produced exceptionally rapid leach times. The
effect of the very short leach times on a potential project is significant as it decreases the size of the
heap leach pads, and consequently reduces the capital and operating cost requirements over the life
of the operation.
Cyprium Metals Limited
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Combined with the successful extensional resource drilling at Hollandaire, the critical mass of the
copper resource required for project development is close to being achieved, consequently a scoping
study on the Cue Copper Project was commenced during February 2020.
Image 2 / Metallurgical column test-work
Cumulative Copper Extraction Vs Time
100
%
u
C
,
n
o
i
t
c
a
r
t
x
E
90
80
70
60
50
40
30
20
10
0
0
5
10
15
20
Column A
25
Days
Column B
30
35
40
45
50
Column C
Graph 1 / Copper Extraction
The primary leach solution (“PLS”) produced from the metallurgical column test-work has been
processed in an electrowinning (“EW”) cell (refer to Image 3) to produce cathode copper metal plates
(refer to Image 4), which were then stripped from the cathodes to complete the processing cycle
through to its final product of high purity copper metal plate (refer to Image 5).
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Image 3 / EW Cell
Image 4 / Cathode Copper
Image 5 / Copper Metal Plate
Trenggalek Project - Indonesia
The exploration licences for the Trenggalek Project in East Java, Indonesia were more than 10 years old
and have expired, consequently the Company’s joint venture interest was ended during the year.
Manitou Project - Canada
The Manitou Gold Project tenements held by the Company in North-western Ontario Canada have
been reduced from 245 km2 to 5 km2 during 2019 due to expenditure requirements not being achieved
as a result of access restrictions which prevented surface sampling and mapping work being completed.
Corporate
The consideration for all of the issued capital of Cyprium Australia Pty Ltd was $1,342,500 comprising
5,750,000 fully paid ordinary shares in CYM issued to the shareholders of Cyprium Australia Pty Ltd and
1,308,750 fully paid ordinary shares in CYM issued to Musgrave Minerals Limited.
During the year, in addition to the shares issued for the acquisition of Cyprium Australia Pty Ltd, CYM
issued 22.25 million fully paid ordinary shares in the Company to institutional and sophisticated
investors to raise $4.56 million, and 1.5 million shares to a corporate advisor.
During the year, the Company issued 6.4 million performance rights to Directors and 6.0 million
performance rights to employees.
The Company has been renamed to Cyprium Metals Limited (formerly Arc Exploration Limited) and its
shares are trading under the ASX code CYM (formerly ARX), as approved at the Company’s Annual
General Meeting on 29 May 2019.
The Company’s Registered Office and Principal Place of Business was changed in June 2019 to Level 2,
38 Rowland Street, Subiaco, WA, 6008.
Competent Persons
The information in this report that relates to Exploration Targets, Exploration Results, Mineral Resources and/or Mineral Reserves is an accurate
representation of the available data and is based on information compiled by Mr. Peter van Luyt who is a member of the Australian Institute
of Geoscientists. Mr. Peter van Luyt is the Chief Geologist of Cyprium Australia Pty Ltd, in which he is also a shareholder. Mr. van Luyt has
sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person (CP). Mr. van Luyt consents to the inclusion in the report of the matters based on his information
in the form and context in which it appears.
Cyprium Metals Limited
12
DIRECTORS’ REPORT
The Directors present their report for Cyprium Metals Limited (formerly Arc Exploration Limited) (“CYM” or “the
Company”) and its subsidiaries (“the Group”) for the year ended 31 December 2019.
All amounts are expressed in Australian dollars unless otherwise stated.
DIRECTORS
The following persons were directors of CYM during the year and up to the date of this report:
Gary Comb (Chairman, Non-Executive Director) – appointed 14 June 2019
Barry Cahill (Executive Director) – appointed 14 June 2019
Nicholas Rowley (Non-Executive Director)
Simon Taylor (Non-Executive Director) – resigned 14 June 2019
Marcello Cardaci (Non-Executive Director) – resigned 10 July 2019
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.
DIRECTORS’ INFORMATION
Gary Comb
Non-Executive Chairman
Mr Comb was appointed to the board on 14 June 2019. Mr Comb is an engineer with over 30 years’ experience in
the Australian mining industry, with a strong track record in successfully commissioning and operating base metal
mines. He was Chairman of Finders Resources Limited from 2013 until its takeover in 2018. Mr Comb was previously
the Managing Director of Jabiru Metals Limited and the CEO of BGC Contracting Pty Ltd.
Barry Cahill
Executive Director
Mr Cahill was appointed to the board on 14 June 2019. Mr Cahill is a mining engineer with over 30 years’ experience
in exploration, operational mining and management. In particular his experience covers management of project
development and construction from exploration drilling through project funding, commissioning and
development. He was the Managing Director of Finders Resources Limited from 2013 until its takeover in 2018. Mr
Cahill has previously been executive director of a number of public companies including operations director at
Perilya Limited and Managing Director of Australian Mines Limited and Norseman Gold Plc.
Nicholas Rowley
Non-Executive Director
Mr Rowley is a corporate executive with a strong financial background with over 15 years’ experience in corporate
advisory, M&A transactions and equities markets. He has advised on the equity financings of numerous ASX and
TSX listed companies predominantly in the mining and resources sector. Mr Rowley currently serves as an executive
at Galaxy Resources Ltd and as a Non-Executive Director of Titan Minerals Limited. He previously served as Non-
Executive Director of Cobalt One Ltd which was acquired by Canadian listed First Cobalt Corporation in 2017.
Marcello Cardaci
Non-Executive Director
Mr Cardaci resigned from the board on 10 July 2019.
Simon Taylor
Non-Executive Director
Mr Taylor resigned from the board on 14 June 2019.
Cyprium Metals Limited
13
DIRECTORSHIPS OF OTHER LISTED COMPANIES
Directorships of other listed companies held by current directors in the 3 years immediately before the end of the
financial year are as follows:
Director
Company
Period of Directorship
Gary Comb
Barry Cahill
Nicholas Rowley
Finders Resources Limited
Aurelia Metals Limited
Ironbark Zinc Limited
Finders Resources Limited
Cobalt One Ltd
Titan Minerals Limited
Director from June 2013 to April 2018
Director from July 2012 to June 2017
Director from January 2012 to November 2019
Director from August 2013 to April 2018
Director from September 2014 to November 2017
Director since August 2016
COMPANY SECRETARY
Wayne Apted
Mr Apted was appointed as the Company Secretary on 14 June 2019. Mr Apted is a chartered accountant with
over 25 years’ experience in the mining industry. He was the Chief Financial Officer of Finders Resources Limited
until its takeover in 2018. Mr Apted has previously worked in senior finance roles for Masan Resources Limited,
Glencore plc, Xstrata plc, Normandy Mining Limited and Aurora Gold Limited.
Aaron Bertolatti – resigned 14 June 2019
Mr Bertolatti resigned as the Company Secretary on 14 June 2019.
INTERESTS IN THE SECURITIES OF THE COMPANY
As at the date of this report, the interests of the Directors in the securities of Cyprium Metals Limited are:
Director
Gary Comb
Barry Cahill
Nicholas Rowley
Ordinary Shares
2,194,940
2,066,370
1,100,000
RESULTS OF OPERATIONS
The Group’s net loss after taxation attributable to the members of Cyprium Metals Limited for the year to 31
December 2019 was $2,354,202 (2018: $5,892,371). The current year loss includes an impairment of $972,979 in
respect of the Group’s Canadian project (2018: $5,158,046 in respect of the Group’s Indonesian project).
DIVIDENDS
No dividends were paid or declared. The directors do not recommend the payment of a dividend.
CORPORATE STRUCTURE
Cyprium Metals Limited is a company limited by shares, which is incorporated and domiciled in Australia.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
The principal activity of the Group during the year was identifying and evaluating projects and conducting
exploration activities in the resources and mineral exploration sector as outlined in the Review of Operations.
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Capital Structure
The consideration for all of the issued capital of Cyprium Australia Pty Ltd was $1,342,500 comprising 5,750,000
fully paid ordinary shares in CYM issued to the shareholders of Cyprium Australia Pty Ltd and 1,308,750 fully paid
ordinary shares in CYM issued to Musgrave Minerals Limited.
During the year, in addition to the shares issued for the acquisition of Cyprium Australia Pty Ltd, CYM issued 22.25
million fully paid ordinary shares in the Company to institutional and sophisticated investors to raise $4.56 million,
and 1.5 million shares to a corporate advisor.
During the year, the Company issued 6.4 million performance rights to Directors and 6.0 million performance rights
to employees.
Board and Secretary Changes
Mr Gary Comb and Mr Barry Cahill were appointed to the Board as Non-Executive Chairman and Executive Director
respectively. Mr Wayne Apted has been appointed as Chief Financial Officer and Company Secretary whilst Mr
Simon Taylor and Mr Marcello Cardaci have retired from the Board and Mr Aaron Bertolatti retired as Company
Secretary.
Name Change and Registered Office
The Company has been renamed to Cyprium Metals Limited and its shares are trading under the ASX code CYM,
as approved at the Company’s Annual General Meeting on 29 May 2019. The Company’s Registered Office and
Principal Place of Business was changed in June 2019 to Level 2, 38 Rowland Street, Subiaco, WA, 6008.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE
There are no significant events subsequent to the end of the financial year to the date of this report that are
required to be disclosed.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
The Group will continue identifying and evaluating projects and conducting exploration activities in the resources
and mineral exploration sector.
ENVIRONMENTAL REGULATIONS AND PERFORMANCE
The operations of the Group are subject to environmental regulation under the laws of Australia, Canada and
Indonesia. The Group is, to the best of its knowledge, at all times in full environmental compliance with the
conditions of its licences.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
In accordance with the Constitution of the Company, to the extent permitted by law, the Company indemnifies
every director, officer and employee of the Company and each officer of a related body Corporate of the Company
against any liability incurred by that person:
a)
b)
in his or her capacity as a director, officer or employee of the Company; and
to a person other than the Company or a related body corporate of the Company.
During the financial year, Cyprium Metals Limited paid an insurance premium in respect of a policy for the benefit
of the Directors of the Company, Company Secretary, executive officers and employees of the Company and any
subsidiary bodies corporate as defined in the insurance policy, against a liability incurred as such a director,
company secretary, executive officer or employee to the extent permitted by the Corporations Act 2001. In
accordance with commercial practice, the insurance policy prohibits disclosure of the terms of the policy including
the nature of the liability insured against and the amount of the premium.
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15
INDEMNIFICATION OF THE AUDITOR
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor
of the Company or any related entity against a liability incurred by the auditor. During the financial year, the
Company has not paid a premium in respect of a contract to insure the auditor of the company or any related
entity.
SHARE OPTIONS
As at the date of this report there were no unissued ordinary shares subject to options. During the year, 200,000
options exercisable at $0.375 expired on 10 October 2019 unexercised.
PERFORMANCE SHARES
As at the date of this report there were 1,030,000 performance shares on issue (post share split). The details of the
performance conditions relating to the performance shares are as follows:
Performance Condition
The Performance Shares will convert to ordinary shares if the Company is able to release a
Canadian National Instrument 43-101 report or equivalent JORC Report announcing a minimum
of 1moz inferred resource at minimum cut-off of 0.5 g/t by 31 May 2023 in relation to the
Company’s Manitou gold project in Canada.
Number
1,030,000
PERFORMANCE RIGHTS
As at the date of this report there were 12,400,000 performance rights on issue, expiring in June and July 2024.
The details of the performance conditions relating to the performance rights are as follows:
Performance Condition
Completion of a transaction to acquire or earn into majority ownership interests in projects with
exploration and mining tenements
Anouncement of the delineation of 80,000t of contained copper (within any Mineral Resource
category) upon the Projects
Each Performance Right will vest upon the earlier of:
Announcement of a Scoping Study that confirms the positive economics of the
Projects; or
The volume weighted average price of the Shares equals or exceeds $0.35 per Share
for 5 consecutive trading days
Number
3,775,000
2,875,000
2,875,000
Each Performance Right will vest upon the earlier of:
Board approval to Proceed with a Project Definitive Feasibility Study; or
The volume weighted average price of the Shares equals or exceeds $0.40 per Share
2,875,000
for 5 consecutive trading days
Total
DIRECTORS’ MEETINGS
12,400,000
The number of meetings of Directors (including meetings of committees of Directors) held during the year and
the number of meetings attended by each Director were as follows:
Gary Comb
Barry Cahill
Nicholas Rowley
Marcello Cardaci
Simon Taylor
Directors’ Meetings
Audit Committee
Eligible to
attend
3
3
3
1
-
Attended
3
3
3
1
-
Eligible to
attend
1
-
1
-
-
Attended
1
-
1
-
-
As at the date of this report, the Company had an Audit Committee of the Board of Directors. The Audit Committee
is comprised of non-executive Directors and Nicholas Rowley is the Chairman of the Audit Committee.
Cyprium Metals Limited
16
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of the 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 those proceedings. The Company was not a party to any such proceedings during the year.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of
Cyprium Metals Limited support and adhere to the principles of sound corporate governance. The Board
recognises the recommendations of the Australian Securities Exchange Corporate Governance Council, and
considers that Cyprium Metals Limited complies to the extent possible with those guidelines, which are of
importance and add value to the commercial operation of an ASX listed resources company. The Company has
established a set of corporate governance policies and procedures and these can be found on the Company’s
website: cypriummetals.com.
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
Section 307C of the Corporations Act 2001 requires the Company’s auditors to provide the Directors of Cyprium
Metals Limited with an Independence Declaration in relation to the audit of the financial report. A copy of that
declaration is included within the annual report.
During the year the Company's auditors did not perform any other services in addition to their statutory audit
duties. The Board considers any non-audit services provided by the auditor and satisfies itself that the provision
of those non-audit services is compatible with, and do not compromise, the auditor independence requirements
of the Corporations Act 2001 for the following reasons:
all non-audit services are subject to the corporate governance procedures adopted by the Company and are
reviewed to ensure they do not impact upon the impartiality and objectivity of the auditor.
the non-audit services do not undermine the general principles relating to auditor independence as set out in
APES 110 code of Ethics for Professional Accountants, as they do not involve reviewing or auditing the auditor's
own work, acting in a management or decision-making capacity for the Company, acting as an advocate for
the Company or jointly sharing risks and rewards. Details of the amounts paid to the auditors of the Company,
and its related practices for audit and non-audit services provided during the year are set out in note 19 to the
financial statements.
AUDITED REMUNERATION REPORT
This report, which forms part of the Directors’ report, outlines the remuneration arrangements in place for the key
management personnel of Cyprium Metals Limited for the financial year ended 31 December 2019. The
information provided in this remuneration report has been audited as required by Section 308(3C) of the
Corporations Act 2001.
The remuneration report details the remuneration arrangements for Key Management Personnel (“KMP“) who are
defined as those persons having authority and responsibility for planning, directing and controlling the major
activities of the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Group.
Details of KMP
Gary Comb (appointed 14 June 2019)
Barry Cahill (appointed 14 June 2019)
Nicholas Rowley (appointed 31 May 2018)
Marcello Cardaci (appointed 31 May 2018, resigned 10 July 2019)
Simon Taylor (appointed 11 October 2016, resigned 14 June 2019)
Cyprium Metals Limited
17
Remuneration Policy
The remuneration policy of Cyprium Metals Limited has been designed by the Board taking into consideration the
stage of development of the Group and the activities undertaken. The Board of Cyprium Metals Limited believes
the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and
directors to run and manage the Group.
The remuneration policy aims to attract, retain and motivate the high-performing individuals that will deliver the
business strategy and create long-term value. Performance-related pay to incentivise high performance and
rewards are to be linked to and commensurate with performance. As a result, performance-related pay represents
a meaningful portion of total remuneration for all KMP and employees that have the ability to influence
shareholder value. Shareholder value is created by project acquisition, analysis, expansion, financing, development
and operations.
During the pre-decision to construct mine phase, KMP and employees are incentivised deliver the business strategy
to acquire and grow our project base.
Fixed remuneration
Fixed remuneration consists of total Directors’ fees, salaries, bonus, consulting fees and employer contributions
to superannuation funds, excluding performance pay (cash, shares and options). Fixed remuneration levels are
reviewed annually by the Board.
Executive remuneration
The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework has the following components:
Base salary (which is based on factors such as length of service, performance and experience) and (where
applicable) employer contributions to superannuation;
Consulting fees for executives providing services under a services contract; and
Long-term incentives through participation in the Performance Rights Plan of Cyprium Metals Limited and as
approved by the Board.
Cash base salary or service fees are based on daily rates of pay prior to entering into a Definitive Feasibility Study
stage, in order to conserve cash by remunerating employees based on days worked. Upon entering the Definitive
Feasibility Study stage, personnel will be employed on a full-time basis.
Non-executive Directors’ remuneration
The Board policy is to remunerate non-executive directors at market rates for comparable companies for time,
commitment and responsibilities. The board determines payments to the non-executive directors and reviews their
remuneration annually, based on market practice, duties and accountability.
Fees for non-executive directors are not linked to the performance of the Group. However, to align Directors’
interests with shareholder interests, directors may receive long-term performance incentives via the Performance
Rights Plan of Cyprium Metals Limited.
The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by
shareholders at the Annual General Meeting and is currently $450,000.
The annual remuneration for each non-executive director was set in the range of $36,000 - $60,000 per annum.
These fees have been determined by the Board of the Company, taking into consideration factors such as the
market rates of industry peer companies and the current level of activity. Where there is a significant change in
the size and scale of Company activities these annual fees will be reviewed. Where approved and at the request of
the Board, any of the Non-Executive Directors may from time to time be required to fulfil certain executive
functions.
Cyprium Metals Limited
18
Use of remuneration consultants
The Board may (from time to time) engage the services of external consultants to advise on the remuneration
policy and to benchmark director and key management personnel remuneration against comparable entities so
as to ensure that remuneration packages are consistent with the market and are appropriate for the organisation.
The Group did not employ the services of any remuneration consultants during the year.
Performance Rights Plan
The Performance Rights Plan of Cyprium Metals Limited was last approved by Shareholders at the 2019 Annual
General Meeting.
Directors, full and part time employees and contractors of Cyprium Metals Limited are eligible to participate in the
Performance Rights Plan. Any issue of Performance Rights to Directors is subject to Shareholder approval pursuant
to the provisions of the ASX Listing Rules and the Corporations Act 2001. The Directors consider that the Cyprium
Metals Limited Performance Rights Plan represents an appropriate method to:
Reward Directors, KMP and employees for their performance;
Provide long-term incentives for participation in the Company’s future growth;
Motivate and retain Directors, KMP and employees;
Establish a sense of ownership in the Company for Directors and employees;
Enhance the relationship between the Company and its employees for the long-term mutual benefit of all
parties; and
Enable the Company to attract high calibre individuals who can bring specific expertise to the Company.
Voting on the Remuneration Report - 2019 Annual General Meeting
The Company received approximately 97.9% of “yes” votes on its remuneration report for the year ended 31
December 2018 (2017: 99.6%).
Loans to Directors and Executives
There were no loans to Directors and KMP during the financial year ended 31 December 2019.
Details of Remuneration
Details of the nature and amount of each element of the remuneration of each Director of the Company for the
year ended 31 December 2019 are as follows:
2019
Directors
Gary Comb1
Barry Cahill2
Nicholas Rowley
Marcello Cardaci 3
Simon Taylor 4
Salary or
Consulting
Fees
$
32,500
147,366
33,000
14,460
12,329
239,655
Share Based
Payments
$
Other
Benefits5
$
Total
$
Performance
related
%
12,115
14,538
9,692
-
-
36,345
3,087
14,000
-
1,373
1,171
19,631
47,702
175,904
42,692
15,833
13,500
295,631
25%
8%
23%
-
-
-
1 Gary Comb appointed on 14 June 2019 and the remuneration is from the date appointed.
2 Barry Cahill appointed on 14 June 2019 and the remuneration is from the date appointed.
3 Marcello Cardaci resigned on 10 July 2019.
4 Simon Taylor resigned on 14 June 2019.
5 Other benefit payments related to statutory superannuation.
Cyprium Metals Limited
19
Details of the nature and amount of each element of the remuneration of each Director of the Company for the
year ended 31 December 2018 are as follows:
2018
Directors
Marcello Cardaci1
Nicholas Rowley1
Simon Taylor
Simon O'Loughlin2
Andrew Cooke3
Salary or
Consulting
Fees
$
15,982
17,500
30,137
16,666
42,409
122,694
Share Based
Payments
$
Other
Benefits4
$
Total
$
Performance
related
%
-
-
-
-
-
-
1,652
-
2,877
-
-
4,529
17,634
17,500
33,014
16,666
42,409
127,223
-
-
-
-
-
-
1 Nicholas Rowley and Marcello Cardaci were appointed on 31 May 2018.
2 Simon O'Loughlin resigned on 31 May 2018.
3 Andrew Cooke resigned on 30 June 2018.
4 Other benefit payments related to statutory superannuation.
Shareholdings of Directors
The number of shares in the Company held during the year by Directors of the Company, either directly or
indirectly, is set out below. There were no shares granted during the reporting year as compensation.
2019
Gary Comb1
Barry Cahill1
Nicholas Rowley
Marcello Cardaci2
Simon Taylor3
Balance at the
start of the year
or appointment
1,718,750
1,468,750
1,100,000
250,000
500,000
Granted during
the year as
compensation
On vesting of
performance
rights
Other changes
during the year
Balance at the
end of the year
-
-
-
-
-
-
-
-
-
-
476,190
597,620
-
(250,000)4
(500,000)4
2,194,940
2,066,370
1,100,000
-
-
1 Gary Comb and Bary Cahill were appointed on 14 June 2019.
2 Marcello Cardaci resigned on 10 July 2019.
3 Simon Taylor resigned on 14 June 2019.
4 Balance held at date of resignation.
All equity transactions with Directors have been entered into under terms and conditions no more favourable than
those the Company would have adopted if dealing at arm’s length.
Performance Rights of Directors
The number of performance rights in the Company issued during the year to Directors of the Company, and
outstanding at balance date, is set out below. There were no performance rights granted during the previous
reporting year as compensation.
Vesting Conditions
Nicholas Rowley
Barry Cahill
Gary Comb
Total
1
500,000
700,000
700,000
1,900,000
2
400,000
600,000
500,000
1,500,000
3
400,000
600,000
500,000
1,500,000
4
400,000
600,000
500,000
1,500,000
Total
1,700,000
2,500,000
2,200,000
6,400,000
Cyprium Metals Limited
20
Vesting conditions
1. Completion of a transaction to acquire or earn into majority ownership interests in projects
2. Release of a Copper mineral resource of at least 80,000 tonnes
3. Announcement of a Scoping Study or the average share price of $0.35 per share for 5 consecutive days
4. Board resolves to proceed with a Definitive Feasibility Study or the average share price of $0.40 per share for
5 consecutive days
Options Affecting Remuneration
There were no options affecting remuneration in the current reporting year.
Other transactions with key management personnel
Gilbert + Tobin Lawyers, of which Marcello Cardaci is a partner received professional service fees of $34,621
during the year ended 31 December 2019 (2018: $3,666).
Transactions with key management personnel were made at arm’s length at normal market prices and normal
commercial terms.
Additional Information
The factors that are considered to affect total shareholders’ return are summarised below:
Loss attributable to owners of
the company ($)
Dividends paid ($)
Share price at financial year
end ($)
2019
2018
2017
2016
2015
(2,354,202)
(5,892,371)
(894,116)
(722,652)
(1,292,920)
-
-
-
-
-
0.2450
0.1850
0.2650
0.2683
0.2439
Total shareholders’ return is not used to determine the nature and amount of remuneration as the Board does not
consider that this indicator is particularly relevant in the junior resource sector which is generally speculative in
nature and where exploration success cannot be assured.
While the Group’s main activities relate to early stage exploration the nature and amount of remuneration cannot
be related to traditional financial measures or to share price performance and shareholder value. If the Group does
in due course have exploration success and proves up an economic resource and ultimately develops an
economically viable mining project then it is likely that some component of the remuneration of key management
personnel would relate to financial performance measures that would be expected to enhance share performance
and shareholder wealth.
END OF AUDITED REMUNERATION REPORT
Signed on behalf of the Board in accordance with a resolution of the Directors.
Gary Comb
Chairman, Non-executive Director
Perth, WA
27 March 2020
Cyprium Metals Limited
21
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 December 2019
Continuing Operations
Revenue:
Interest income
Note
31 December
2019
$
31 December
2018
$
16,781
6,948
Employee expenses
Management and administrative expenses
Depreciation
Share-based payments – shares issued to corporate advisor
Share-based payments – performance rights
Interest expense on finance leases
Unrealised foreign exchange loss
Loss before income tax
Income tax expense
Net loss for the year from continuing operations
Discontinued Operations
Loss after tax from discontinued operations
Net loss for the year
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income/(loss) for the period net of tax
Total comprehensive loss for the year
Loss per share
Basic and diluted loss per share (cents per share)
from continuing operations and discontinued operations
Basic and diluted loss per share (cents per share)
from continuing operations
3
9
20
20
(518,232)
(398,662)
(24,280)
(283,500)
(69,662)
(3,263)
(317)
(1,281,135)
-
(1,281,135)
(187,416)
(380,336)
-
-
-
-
(1,358)
(562,162)
-
(562,162)
(1,073,067)
(2,354,202)
(5,330,209)
(5,892,371)
13,879
13,879
(2,340,323)
(7,947)
(7,947)
(5,900,318)
(6.40)
(3.48)
(34.68)
(3.31)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
Cyprium Metals Limited
22
Consolidated Statement of Financial Position
as at 31 December 2019
Current Assets
Cash and cash equivalents
Receivables
Other assets
Total Current Assets
Non-Current Assets
Right-of-use asset
Deferred exploration and evaluation expenditure
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Lease liabilities
Other liabilities
Provisions
Total Current Liabilities
Non-Current Liabilities
Lease liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Note
31 December
2019
$
31 December
2018
$
4
5
6
7
8
10
11
12
13
11
14
15
16
3,466,183
187,266
87,207
3,740,656
100,587
3,164,517
3,265,104
7,005,760
525,717
40,011
-
-
565,728
62,853
62,853
628,581
1,910,897
9,070
61,030
1,980,997
-
946,030
946,030
2,927,027
89,911
-
37,230
71,104
198,245
-
-
198,245
6,377,179
2,728,782
159,599,915
1,996,536
153,680,857
1,912,995
(155,219,272)
(152,865,070)
6,377,179
2,728,782
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Cyprium Metals Limited
23
Consolidated Statement of Changes in Equity
for the year ended 31 December 2019
-
-
-
-
-
Issued capital
$
Accumulated
losses
$
Share-based
payment
reserve
$
Foreign
exchange
translation
reserve
$
Total
$
150,979,294 (146,972,699)
1,137,623
772,187
5,916,405
-
-
-
(5,892,371)
-
(5,892,371)
-
(7,947)
(5,892,371)
(7,947)
(7,947)
(5,900,318)
Balance at 1 January 2018
Total comprehensive loss for
the year
Loss for the year
Foreign currency translation
Total comprehensive loss for
the year
Transactions with owners in
their capacity as owners
Shares issued - placements
1,963,159
Shares issued as consideration
for acquisition
798,250
-
-
Cost of issue
Share based payment
Balance at 31 December 2018
(48,714)
(11,132)
-
-
153,680,857 (152,865,070)
-
11,132
1,148,755
-
-
764,240
-
-
1,963,159
798,250
(48,714)
-
2,728,782
Balance at 1 January 2019
Total comprehensive loss for
the year
Loss for the year
Foreign currency translation
Total comprehensive loss for
the year
Transactions with owners in
their capacity as owners
Shares issued – placements
Shares issued to advisor
Shares issued as consideration
for acquisition
Costs of issue
Share based payment
153,680,857
(152,865,070)
1,148,755
764,240
2,728,782
-
- - - 13,879
- -
(2,354,202)
(2,354,202)
13,879
-
(2,354,202)
- 13,879
(2,340,323)
4,560,000
285,000
- - - 4,560,000
- - - 285,000
1,342,500
(268,442)
- - - 1,342,500
(268,442)
- - -
- 69,662
- - 69,662
Balance at 31 December 2019
159,599,915
(155,219,272)
1,218,417
778,119
6,377,179
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Cyprium Metals Limited
24
Consolidated Statement of Cash Flows
for the year ended 31 December 2019
31 December
2019
$
31 December
2018
$
Note
Cash flows from operating activities
Payments to suppliers and employees – continuing operations
Interest paid on finance leases
Interest received
Net cash used in operating activities 4
(858,913)
(3,263)
16,781
(845,395)
(601,629)
-
6,948
(594,681)
Cash flows from investing activities
Cash acquired on acquisition of subsidiary
Payments for exploration expenditure – continuing operations
Payments for exploration expenditure – discontinued operations
Investment in term deposit
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payments for share issue costs
Payment of finance lease liabilities
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash
Cash and cash equivalents at the end of the year
8
4
4,017
(1,633,004)
(127,354)
(100,000)
(1,856,341)
4,561,500
(282,476)
(22,002)
4,257,022
1,555,286
1,910,897
-
3,466,183
4,688
-
(152,468)
-
(147,780)
1,963,159
(48,714)
-
1,914,445
1,171,984
739,618
(705)
1,910,897
The above Condensed Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Cyprium Metals Limited
25
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
1. Corporate Information
The financial report of Cyprium Metals Limited (“Cyprium Metals” or “the Company”) for the year ended 31
December 2019 was authorised for issue in accordance with a resolution of the Directors on 27 March 2020.
Cyprium Metals is a company limited by shares incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange. The nature of the operations and the principal activities of the Company are
described in the Directors’ Report and Review of Operations.
2. Summary of Significant Accounting Policies
Basis of Preparation
(a)
The financial statements are general purpose financial statements, which 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. The financial statements have also been prepared
on a historical cost basis. The presentation currency is Australian dollars.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 22.
Compliance Statement
(b)
The financial report complies with Australian Accounting Standards, which include Australian equivalents to
International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report,
comprising the financial statements and notes thereto, complies with International Financial Reporting Standards
(IFRS).
Basis of Consolidation
(c)
The consolidated financial statements comprise the financial statements of Cyprium Metals Limited (‘the Company’)
and its subsidiaries as at 31 December each year (‘the Group’). Subsidiaries are those entities over which the
Company has the power to govern the financial and operating policies so as to obtain benefits from their activities.
The existence and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether a Company controls another entity.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and
expenses and profits and losses resulting from intra-company transactions have been eliminated in full. Unrealised
losses are also eliminated unless costs cannot be recovered. Non-controlling interests in the results and equity of
subsidiaries are shown separately in the Statement of Profit or Loss and Other Comprehensive Income and
Statement of Financial Position respectively.
Changes in accounting policies and disclosures
(d)
The Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are
relevant to the Group’s operations and effective for future reporting years, including AASB 16 Leases. It has been
determined by the Directors that other than AASB 16, there is no impact, material or otherwise, of the new and
revised Standards and Interpretations on the Group and therefore, no change will be necessary to Group accounting
policies.
Cyprium Metals Limited
26
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
(e)
New standards, interpretations and amendments adopted by the Group
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board that are mandatory for the current reporting period. Any new, revised or
amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The
Group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most
relevant to the Group, are set out below.
The Group applied, for the first time during the period, AASB 16 “Leases”, however the Group did not have any
leases during 2018 so no restatement of prior year comparative figures was required.
AASB 16 Leases
AASB 16 Leases supersedes AASB 117 “Leases”. The standard sets out the principles for the recognition,
measurement, presentation and disclosure of leases and requires lessees to account for most leases under a single
on-balance sheet model. The Group adopted AASB 16 using the full retrospective method of adoption with the date
of initial application of 1 January 2019. The Group elected to use the transition practical expedient allowing the
standard to be applied only to contracts that were previously identified as leases applying AASB 117 at the date of
initial application. The Group also elected to use the recognition exemptions for lease contracts that, at the
commencement date, have a lease term of 12 months or less and do not contain a purchase option (“short-term
leases”), and lease contracts for which the underlying asset is of low value (“low-value assets”). The new accounting
policy of the Group upon adoption of AASB 16 on 1 January 2019 is set out at item (s) below.
Foreign Currency Translation
Functional and presentation currency
(f)
(i)
Items included in the financial statements of each of the Company’s controlled entities are measured using the
currency of the primary economic environment in which the entity operates (‘the functional currency’). The
functional and presentation currency of Cyprium Metals is Australian dollars. The functional currency of the
Indonesian subsidiary is the US Dollar and the functional currency of the Canadian subsidiary is the Canadian Dollar.
Transactions and balances
(ii)
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the Statement of Profit or Loss and Other Comprehensive Income.
Group entities
(iii)
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the
date of that Statement of Financial Position;
income and expenses for each Statement of Profit or Loss and Other Comprehensive Income are translated at
average exchange rates (unless this is not a reasonable approximation of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities are
taken to shareholders’ equity. When a foreign operation is sold or any borrowings forming part of the net
investment are repaid, a proportionate share of such exchange differences are recognised in the Statement of Profit
or Loss and Other Comprehensive Income, as part of the gain or loss on sale where applicable.
Cyprium Metals Limited
27
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
Segment Reporting
(g)
The Group determines and presents operating segments based on the information that is internally provided to the
Board of Directors who are the Group’s chief operating decision makers. An operating segment is a component of
the Group that engages in business activities whose operating results are reviewed regularly by the Board and for
which discrete financial information is available.
The Group has been involved in exploration activities in Indonesia, Canada and Australia and has three geographical
operating segments, that its Board reviews to make decisions about resources to be allocated to the segment and
to assess its performance. Segment capital expenditure is the total cost incurred during the year to acquire property,
plant and equipment, and exploration and evaluation expenditure.
Exploration and evaluation expenditure
(h)
Exploration for and evaluation of mineral resources is the search for mineral resources after the entity has obtained
legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial
viability of extracting the mineral resource. Accordingly, exploration and evaluation expenditures are those
expenditures incurred by the Group in connection with the exploration for and evaluation of minerals resources
before the technical feasibility and commercial viability of extracting mineral resources are demonstrable.
Accounting for exploration and evaluation expenditures is assessed separately for each 'area of interest'. An 'area
of interest' is an individual geological area which is considered to constitute a favourable environment for the
presence of a mineral deposit or has been proved to contain such a deposit.
Expenditure incurred on activities that precede exploration and evaluation of mineral resources, including all
expenditure incurred prior to securing legal rights to explore an area, is expensed as incurred. For each area of
interest the expenditure is recognised as an exploration and evaluation asset when the following is satisfied:
(i)
(ii) at least one of the following conditions is also met:
the rights to tenure of the area of interest are current; and
(a) the exploration and evaluation expenditures are expected to be recouped through successful development
and exploration of the area of interest, or alternatively, by its sale; or
(b) exploration and evaluation activities in the area of interest have not at the balance date reached a stage
which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves,
and active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies,
exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and
amortisation of assets used in exploration and evaluation activities. General and administrative costs are only
included in the measurement of exploration and evaluation costs where they are related directly to operational
activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the
carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable
amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being
no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any).
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset in
previous years.
Cyprium Metals Limited
28
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant
exploration and evaluation asset is tested for impairment and the balance is then reclassified to development.
Where an area of interest is abandoned, any expenditure carried forward in respect of that area is written off.
Income Tax
(i)
Income tax expense or benefit for the year is the tax payable on the current year’s taxable income or loss based on
the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in
the financial statements. Current and deferred tax expense attributable to amounts recognised directly in equity is
also recognised directly in equity.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when
the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted
for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset or liability. No deferred tax asset or liability is recognised
in relation to these temporary differences if they arose in a transaction, other than a business combination, that at
the time of the transaction did not affect either accounting or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets
and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when
deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset when the
entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.
Impairment of non-financial assets other than goodwill
(j)
The Company assesses at each balance date whether there is an indication that an asset may be impaired. If any
such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate
of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined
for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from
other assets or Group of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such
cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying
amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is
considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses relating to continuing operations are recognised in those expense categories consistent with the
function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is
treated as a revaluation decrease).
An assessment is also made at each balance date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case
the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised
for the asset in prior years.
Cyprium Metals Limited
29
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
A reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is
treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future years to allocate
the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
Cash and cash equivalents
(k)
For the purposes of the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at
call with banks or financial institutions, other short-term, highly liquid investments with original maturities of three
months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of
changes in value, and bank overdrafts.
Trade Receivables
(l)
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision
for impairment. Collectability of trade receivables is reviewed on an ongoing basis. Individual debts that are known
to be uncollectible are written off when identified.
A provision for estimated credit losses is established when there is objective evidence that the Group will not be
able to collect all amounts due according to the original terms of the receivables. The amount of the provision is
the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted
at the original effective interest rate. The amount of the provision is recognised in the Statement of Profit or Loss
and Other Comprehensive Income.
Goods and Services Tax (GST)
(m)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the
cost of acquisition of the asset or as part of an item of the expense. Receivables and payables are stated inclusive
of the amount of GST receivable and recoverable. The net amount of GST recoverable from, or payable to, the
Australian Taxation Office is included with other receivables or payables in the Statement of Financial Position. Cash
flows are included in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash
flows.
Intangible assets
(n)
Intangible assets relate to the option right to farm-in on exploration projects measured at cost. As costs are being
incurred with respect to the option commitment, it is capitalised and recognised as an exploration and evaluation
expenditure asset.
Trade and other payables
(o)
Trade and other payable amounts represent liabilities for goods and services provided to the Group prior to the
end of the financial year which are unpaid. The amounts are non-interest bearing, unsecured and generally paid
within 30 days of recognition. They are recognised initially at fair value less directly attributable transaction costs
and subsequently at amortised cost using the effective interest rate method.
Provisions
(p)
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for
future operating losses.
When the Company expects some or all of a provision to be reimbursed, for example under an insurance contract,
the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The
Cyprium Metals Limited
30
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement.
Provisions are measured at the present value or management’s best estimate of the expenditure required to settle
the present obligation at the end of the reporting year. If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting is used,
the increase in the provision due to the passage of time is recognised as an interest expense.
Issued capital
(q)
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction from proceeds.
Property, plant and equipment
(r)
Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and any
accumulated impairment losses. The cost of self-constructed assets includes the costs of materials, direct labour, any
other costs directly attributable to bringing the asset to a working condition for its intended use, and the initial
estimate, where relevant, of the costs of dismantling and removing items, restoring the site and an appropriate
proportion of production overheads. Purchased software that is integral to the functionality of the related equipment
is capitalised as part of that equipment.
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying value exceeds
its recoverable amount.
Depreciation
Plant and equipment, motor vehicles, office equipment, and furniture are recorded at cost and are depreciated over
their estimated useful economic lives to their estimated residual values using either straight line or diminishing value
methods. Depreciation methods, useful lives and residual values are reviewed at each financial year-end and
adjusted if appropriate.
Leases
(s)
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset
is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount
of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement
date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased
asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over
the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance
fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and
amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price
of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a
lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do
not depend on an index or a rate are recognised as an expense in the period in which the event or condition that
triggers the payment occurs.
Cyprium Metals Limited
31
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change
in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the
underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment
(i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a
purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment
that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognised
as expenses on a straight-line basis over the lease term.
Significant judgement in determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered
by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to
terminate the lease, if it is reasonably certain not to be exercised.
Current and Non-Current Classification
(t)
Assets and liabilities are presented in the Statement of Financial Position based on a current and non-current
classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or
consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be
realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are
classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is
held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there
is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All
other liabilities are classified as non-current.
Revenue
(u)
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue
are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. Revenue is recognised
to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably
measured. The following specific recognition criteria must also be met before revenue is recognised:
Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the
financial asset.
Earnings per share
(v)
Basic earnings/loss per share is calculated as net profit/loss attributable to members, adjusted to exclude any costs
of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number
of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit/loss attributable to members, adjusted for:
costs of servicing equity (other than dividends) and preference share dividends;
the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
Cyprium Metals Limited
32
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
other non-discretionary changes in revenues or expenses during the year that would result from the dilution of
potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any
bonus element.
Employee Benefits
Wages, salaries, and annual leave
(w)
(i)
Liabilities for wages and salaries and annual leave expected to be settled within 12 months of the reporting date are
recognised in provisions in respect of employees' services up to the reporting date. The amount is measured at the
amount expected to be paid, including expected on-costs, when liabilities are settled. Expenses for non-accumulating
sick leave are recognised when the leave is taken and are measured at the rates paid or payable.
Long Service Leave
(ii)
The liability for long service leave is recognised, and measured as the present value of expected future payments to
be made in respect of services provided by employees up to the reporting date, plus expected on-costs.
Consideration is given to expected future wage and salary levels, experience of employee departures and periods of
service. Expected future payments are discounted using interest rates on national government guaranteed securities
with terms to maturity that match, as closely as possible, the estimated future cash outflows.
Share based payment transactions
Equity settled transactions:
(x)
(i)
The Company provides benefits to individuals acting as, and providing services similar to employees (including
Directors) of the Company in the form of share-based payment transactions, whereby individuals render services in
exchange for shares, options or rights over shares (‘equity settled transactions’).
The cost of equity settled transactions with employees is measured by reference to the fair value at the date at which
they are granted. The fair value is determined by using the Black Scholes formula taking into account the terms and
conditions upon which the instruments were granted. The expected price volatility is based on the historic volatility
of the Company’s share price on the ASX.
In valuing equity settled transactions, no account is taken of any performance conditions, other than conditions
linked to the price of the shares of Cyprium Metals (‘market conditions’). The cost of the equity settled transactions
is recognised, together with a corresponding increase in equity, over the period in which the performance conditions
are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting
date’).The cumulative expense recognised for equity settled transactions at each reporting date until vesting date
reflects (i) the extent to which the vesting year has expired and (ii) the number of awards that, in the opinion of the
Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at
balance date.
No adjustment is made for the likelihood of the market performance conditions being met as the effect of these
conditions is included in the determination of fair value at grant date. The statement of comprehensive income
charge or credit for a year represents the movement in cumulative expense recognised at the beginning and end of
the year. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
conditional upon a market condition. Where the terms of an equity settled award are modified, as a minimum an
expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase
in the value of the transaction as a result of the modification, as measured at the date of the modification.
Where an equity settled award is cancelled, it is treated as if it had vested on the date of the cancellation, and any
expense not yet recognised for the award is recognised immediately. However if a new award is substituted for the
cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award
are treated as if they were a modification of the original award, as described in the previous paragraph.
Cyprium Metals Limited
33
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
The cost of equity-settled transactions with non-employees is measured by reference to the fair value of goods and
services received unless this cannot be measured reliably, in which case the cost is measured by reference to the fair
value of the equity instruments granted. The dilutive effect, if any, of outstanding options is reflected in the
computation of loss per share (see note 20).
Cash settled transactions:
(ii)
The Company may also provide benefits to employees in the form of cash-settled share-based payments, whereby
employees render services in exchange for cash, the amounts of which are determined by reference to movements
in the price of the shares of the Company. The cost of cash-settled transactions is measured initially at fair value at
the grant date using the Black-Scholes formula taking into account the terms and conditions upon which the
instruments were granted. This fair value is expensed over the year until vesting with recognition of a corresponding
liability. The liability is remeasured to fair value at each balance date up to and including the settlement date with
changes in fair value recognised in profit or loss.
Critical accounting estimates and judgements
(y)
The application of accounting policies requires the use of judgements, estimates and assumptions about carrying
values of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions are recognised in the year in which the estimate is revised if it affects only that year, or in the year of the
revision and future years if the revision affects both current and future years.
Share-Based Payments:
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined using a Black-Scholes model,
using the assumptions detailed in Note 14.
The Group measures the cost of cash-settled share-based payments at fair value at the grant date using the Black-
Scholes model taking into account the terms and conditions upon which the instruments were granted.
Deferred Tax
In accordance with the Group's accounting policies for deferred taxes, a deferred tax asset is recognised for unused
tax losses only if it is probable that future taxable profits will be available to utilise those losses. Determination of
future taxable profits 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. This includes estimates and judgements about commodity prices, ore reserves, exchange rates,
future capital requirements, future operational performance and the timing of estimated cash flows. Changes in
these estimates and assumptions could impact on the amount and probability of estimated taxable profits and
accordingly the recoverability of deferred tax assets.
The Group has not recognised a net deferred tax asset for temporary differences and tax losses as at 31 December
2019 on the basis that the ability to utilise these temporary differences and tax losses cannot yet be regarded as
probable.
Acquisition of Cyprium Australia Pty Ltd
Key estimates and judgments are applied in the acquisition accounting including determining the type of
acquisition, the fair value of the assets and liabilities acquired and the fair value of the consideration paid. The
acquisition was determined by the directors to be an asset acquisition as detailed in note 8.
Cyprium Metals Limited
34
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
Deferred Exploration and Evaluation Expenditure
Deferred exploration and evaluation expenditure has been capitalised on the basis that the Group will commence
commercial production in the future, from which time the costs will be amortised in proportion to the depletion of
the mineral resources. Key judgements are applied in considering costs to be capitalised which includes determining
expenditures directly related to these activities and allocating overheads between those that are expensed and
capitalised.
In addition, costs are only capitalised that are expected to be recovered either through successful development or
sale of the relevant mining interest. Factors that could impact the future commercial production at the mine include
the level of reserves and resources, future technology changes, which could impact the cost of mining, future legal
changes and changes in commodity prices. To the extent that capitalised costs are determined not to be recoverable
in the future, they will be written off in the year in which this determination is made.
(z)
Going concern
The financial report has been prepared on the going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and settlements of liabilities in the ordinary course of business.
3.
Income Tax
(a) Income tax expense
Numerical reconciliation of income tax expense to prima facie tax payable:
A reconciliation between tax expense and the product of accounting loss
before income tax multiplied by the Company’s applicable tax rate is as
follows:
Loss before income tax expense
Tax at the Australian rate of 30% (2018: 30%)
Share issue costs
Non-deductible impairment of exploration
Share-based payments
Non-deductible expenses
Income tax benefit not brought to account
Adjustment for different tax rates
Income tax expense
(b) Recognised tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Exploration and evaluation expenditure
Tax losses recognised
Net deferred tax liability/(asset)
(c) Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Accruals and other payables
Share issue costs
Tax losses Cyprium Metals Limited
Net deferred tax asset not recognised
2019
$
2018
$
(2,354,202)
(706,261)
(31,649)
291,894
105,949
44,245
259,839
35,983
-
(5,892,371)
(1,767,711)
(16,911)
1,547,414
-
159,775
70,981
6,452
-
552,323
(552,323)
-
-
-
-
8,061
79,550
812,162
899,773
6,316
41,014
-
47,330
The deductible temporary differences and tax losses relating to Cyprium Metals Limited do not expire under current
tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable
that future taxable profit will be available against which the Group can utilise the benefits there from. Management
is currently reviewing the tax losses incurred prior to 2019 in relation to whether the Company has passed the
Cyprium Metals Limited
35
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
continuity of ownership test or the same business test, which would ensure that those tax losses are available. The
above balances do not include any tax losses incurred prior to 2019.
4. Cash and Cash Equivalents
Cash comprises:
Cash at bank and on hand
Short term deposits
Reconciliation of operating loss after tax to net cash from operations
Loss after tax
Non-cash and non-operating items
Exploration expenditure impaired and written off
Impairment of loans receivable
Share based payments
Net exchange differences
Employee provisions - Indonesia
Depreciation
Change in assets and liabilities
Decrease in receivables
(Increase) / decrease in other assets
Increase / (decrease) in trade and other payables
Net cash used in operating activities
2019
$
2018
$
166,183
3,300,000
3,466,183
1,910,897
-
1,910,897
(2,354,202)
(5,892,371)
972,979
-
353,162
317
(71,104)
24,280
47,565
(28,879)
210,487
(845,395)
5,158,046
172,163
-
(6,590)
11,121
-
12,448
28,799
(78,297)
(594,681)
Non-cash investing and financing activities
During the year ended 31 December 2019, the Company issued 7,058,750 ordinary shares as consideration for the
acquisition of Cyprium Australia Pty Ltd. Refer to note 8 for details of the identifiable assets and liabilities acquired.
During the year ended 31 December 2018, the Company issued 2,575,000 ordinary shares as consideration for the
acquisition of GNR Minerals Pty Ltd. Refer to note 8 for details of the identifiable assets/liabilities acquired.
5. Receivables - Current
Other debtors
GST receivable
Term deposits
6. Other Current Assets
Prepayments
Security deposits
Monies held in trust (refer note 12)
-
87,266
100,000
187,266
62,457
24,750
-
87,207
1,590
7,480
-
9,070
16,871
6,929
37,230
61,030
Debtors, other debtors and GST receivable are non-interest bearing and generally receivable on 30-day terms. They
are neither past due nor impaired. The amount is fully collectible. Due to the short-term nature of these receivables,
their carrying value is assumed to approximate their fair value.
Cyprium Metals Limited
36
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
7. Right-of-use asset
Finance Lease
Movements in right-of-use asset:
Opening balance
Additions during the year
Amortisation for the year
Closing balance
8. Deferred Exploration & Evaluation Expenditure
Exploration and Evaluation phase - at cost
Opening balance
Acquisition of exploration properties – current year1
Acquisition of exploration properties – comparative year2
Exploration expenditure written off (refer to note 9)
Exploration and evaluation expenditure incurred during the year
Closing balance
2019
$
2018
$
100,587
100,587
-
124,867
(24,280)
100,587
-
-
-
-
-
946,030
1,309,026
-
(972,979)
1,882,440
3,164,517
5,158,046
-
818,561
(5,158,046)
127,469
946,030
1 In June 2019, the Group acquired 100% of the share capital of Cyprium Australia Pty Ltd, which holds rights to
earn-in and joint venture for an 80% interest in the non-gold rights over the tenements at the Cue Copper Project
in Western Australia. This acquisition did not constitute a business combination and the cost of the acquisition
have been allocated to the individual identifiable assets and liabilities on the basis of their respective fair values.
The ultimate recoupment of costs carried forward for exploration expenditure is dependent on the successful
development and commercial exploitation or sale of the respective mining areas.
The identifiable assets acquired upon the acquisition of Cyprium Australia Pty Ltd is as follows:
Purchase consideration:
7,058,750 Ordinary shares
Identifiable assets/(liabilities) acquired:
Cash
Exploration properties
Other assets
$
1,342,500
4,017
1,309,026
29,457
1,342,500
Cyprium Metals Limited
37
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
2 In May 2018, the Group acquired 100% of the share capital of GNR Minerals Pty Limited which holds exploration
tenements in Canada. This acquisition did not constitute a business combination and the cost of the acquisition
have been allocated to the individual identifiable assets and liabilities on the basis of their respective fair values.
The ultimate recoupment of costs carried forward for exploration expenditure is dependent on the successful
development and commercial exploitation or sale of the respective mining areas.
The identifiable assets acquired upon the acquisition of GNR Minerals Pty Limited is as follows:
Purchase consideration:
2,575,000 Ordinary shares (pre-share split)
Identifiable assets/(liabilities) acquired:
Cash
Exploration properties
Trade and other payables
9. Discontinued Operations
$
798,250
4,688
818,561
(24,999)
798,250
The Manitou Gold Project tenements held by the Company in North-western Ontario Canada reduced from 245
km2 to 5 km2 during the year ended 31 December 2019. The Board has impaired the fair value of the Canadian
assets to $nil as at 31 December 2019. An amount of $972,979 relating to previously capitalised exploration
expenditure forms part of the discontinued operation. In addition, $100,088 of exploration costs relating to the
Trenggalek Project have also been allocated to discontinued operations in the Statement of Profit or Loss and Other
Comprehensive Income in the current period.
Following the acquisition of GNR Minerals Pty Limited, the Company’s focus shifted away from the Indonesian assets
(Trenggalek Project) to the Manitou Gold Project in Ontario, Canada. The Board had impaired the fair value of the
Indonesian assets to $nil at the end of 2018. An amount of $5,158,046 relating to previously capitalised exploration
expenditure forms part of the discontinued operations in the Statement of Profit or Loss and Other Comprehensive
Income in the comparative period. In addition, $172,163 relating to an impairment of loans receivable has also been
allocated to discontinued operations in the Statement of Profit or Loss and Other Comprehensive Income in the
prior year.
2019
$
2018
$
972,979
100,088
-
-
1,073,067
-
-
5,158,046
172,163
5,330,209
Manitou Gold Project
Trenggalek Project
Indonesian assets
Impairment of loans receivable
Loss after tax from discontinued operations
Cyprium Metals Limited
38
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
10. Trade and Other Payables
Trade payables and accrued expenses
Other consumption taxes payable
2019
$
2018
$
413,120
112,597
525,717
85,651
4,260
89,911
Trade creditors and other creditors are non-interest bearing and generally payable on 30-day terms. Due to the
short-term nature of these payables, their carrying value is assumed to approximate their fair value.
11. Lease liabilities
Leased premises - current
Lease premises - non-current
Movement in lease liabilities
Opening balance
Additions
Principal repayments
Closing balance
12. Other Current Liabilities
Amounts payable to other persons
13. Provisions
Current Liabilities
Post-employment benefits
40,011
62,853
102,864
-
124,867
(22,003)
102,864
-
-
-
-
-
-
-
-
-
-
-
37,230
37,230
71,104
71,104
The above post-employment benefits relate to a defined benefit scheme operating for employees in the subsidiary
of the Group, PT Indonusa Mining Services.
14. Issued Capital
(a) Issued and paid-up capital
Issued and fully paid
(b) Movements in ordinary shares on issue
Opening Balance
Shares issued and fully paid
Shares issued as consideration for acquisition 1
Shares split on a 1:2 basis 2
Shares issued - placements
Shares issued to corporate advisor 4
Transaction costs on share issues 3
159,599,915
153,680,857
31 December 2019
31 December 2018
Number of
shares
$
Number of
shares
$
25,250,732 153,680,857
-
1,342,500
-
4,560,000
285,000
(268,442)
56,059,482 159,599,915
-
7,058,750
-
22,250,000
1,500,000
-
5,392,212
908,154
2,575,000
8,875,366
7,500,000
-
-
150,979,294
463,159
798,250
-
1,500,000
-
(59,846)
25,250,732 153,680,857
Cyprium Metals Limited
39
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
1 7,058,750 fully paid ordinary shares were issued to the vendors of Cyprium Australia Pty Ltd and Musgrave Minerals
Limited for the acquisition of the Cue Copper Project in Western Australia in the current year (refer to Note 8).
2,575,000 fully paid ordinary shares were issued to the vendors of GNR Minerals Pty Limited for the acquisition of
the Company’s Manitou Gold Project in Canada in the comparative period (refer to Note 8).
2 The share split approved by shareholders on 30 May 2018, was completed on 12 June 2018.
3 The transaction costs on share issues of $59,846 during 2018 includes an amount of $11,132 being the value of
150,000 options (pre-share split) exercisable at $0.75 on or before 10 October 2019 issued pursuant to a Lead
Manager Mandate dated 8 November 2017.
4 As approved at the Company’s Annual General Meeting on 29 May 2019, 1,500,000 fully paid ordinary shares were
issued to a corporate advisor for consideration received of $1,500. These shares were valued at the Company’s
share price at that time. The value above the consideration received, namely $283,500 has been recorded as a
share-based payment.
(c) Performance Shares
As at 31 December 2019, there were 1,030,000 performance shares on issue. The Performance Shares will convert
to ordinary shares if the Company is able to release a Canadian National Instrument 43-101 report or equivalent
JORC Report announcing a minimum of 1.0 million ounces inferred resource at a minimum cut-off of 0.5 g/t within
5 years of the acquisition date. The fair value of the Performance Shares issued is based on the directors’ assessment
of those shares that are likely to convert to ordinary shares. Given the early-stage nature of the Company’s Projects,
the remaining project area and the limited exploration actives undertaken to date, the performance shares are
considered less likely than likely to convert to ordinary shares. As a result, the fair value of the performance shares
to be brought to account is considered to be nil. The directors will continue to reassess this position at each
reporting period.
(d) Performance Rights
As approved at the Company’s Annual General Meeting on 29 May 2019, the following performance rights were
issued under the Company’s Incentive Performance Rights Plan to directors (or their associates) (6,400,000 in June
2019) and senior management (6,000,000 in July 2019). These rights are exercisable at nil cost and expire during
June and July 2024 respectively:
Vesting Conditions
Nicholas Rowley
Barry Cahill
Gary Comb
Other
Total
1
500,000
700,000
700,000
1,875,000
3,775,000
2
400,000
600,000
500,000
1,375,000
2,875,000
3
400,000
600,000
500,000
1,375,000
2,875,000
4
400,000
600,000
500,000
1,375,000
2,875,000
Total
1,700,000
2,500,000
2,200,000
6,000,000
12,400,000
Vesting conditions
1. Completion of a transaction to acquire or earn into majority ownership interests in projects
2. Release of a Copper mineral resource of at least 80,000 tonnes
3. Announcement of a Scoping Study or the average share price of $0.35 per share for 5 consecutive days
4. Board resolves to proceed with a Definitive Feasibility Study or the average share price of $0.40 per share for
5 consecutive days
The performance rights which are subject to vesting conditions 1 and 2 above are valued at $0.19 each, being the
Company’s share price at the date of the Company’s AGM held on 29 May 2019. The value of these rights will be
brought to account when the Directors consider that these vesting conditions are probable of being achieved. At
Cyprium Metals Limited
40
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
this stage of the Company’s development, the Directors do not consider it appropriate to bring the value of these
rights to account. The performance rights which are subject to vesting conditions 3 and 4 above are valued at
$0.124 and $0.119 each respectively. These valuations are based on a binomial valuation model using the
following major inputs:
Risk free interest rate
Volatility
Expiry date
$0.19
1.18%
70.9%
June and July 2024
Share price at date of approval
The value of these rights will be brought to account over the vesting period.
(e) Options
During the year, 200,000 options exercisable at $0.375 expired on 10 October 2019 unexercised.
15. Reserves
Foreign exchange translation reserve
Share-based payment reserve
Movements in Reserves
Foreign exchange translation reserve
Opening balance
Foreign exchange translation difference
Closing balance
2019
$
2018
$
778,119
1,218,417
1,996,536
764,240
1,148,755
1,912,995
764,240
13,879
778,119
772,187
(7,947)
764,240
The foreign exchange translation reserve comprises all foreign exchange differences arising from the translation of
the financial statements of foreign operations where their functional currency is different to the presentation
currency of the reporting entity.
Share-based payment reserve
Opening balance
Share based payments expense
Closing balance
1,148,755
69,662
1,218,417
1,137,623
11,132
1,148,755
The share-based payments reserve relates to the cumulative expense for share options granted to directors,
employees and contractors in prior periods and performance rights granted to directors and employees in the
current year. Upon the exercise of the options or conversion of the performance rights, the balance of the reserve
relating to those securities is transferred to issued capital.
16. Accumulated Losses
Movements in accumulated losses were as follows:
Opening balance
Loss for the year
Closing balance
(152,865,070)
(2,354,202)
(146,972,699)
(5,892,371)
(155,219,272) (152,865,070)
Cyprium Metals Limited
41
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
17. Directors and Key Management Personnel Disclosures
(a) Remuneration of Directors and Key Management Personnel
Details of the nature and amount of each element of the emolument
of each Director and key management personnel of the Company for
the financial year are as follows:
Short-term employee benefits
Share-based payments
Other benefits
Total remuneration
2019
$
2018
$
239,655
36,345
19,631
295,631
122,694
-
4,529
127,223
(b) Other transactions with key management personnel
Gilbert + Tobin Lawyers, of which Marcello Cardaci is a partner received professional service fees of $34,621 during
the year ended 31 December 2019 (2018: $3,666).
Transactions with key management personnel were made at arm’s length at normal market prices and normal
commercial terms.
18. Related Party Disclosures
(a) Key management personnel
For Director related party transactions please refer to note 17 “Key Management Personnel Disclosures”.
Subsidiaries
The consolidated financial statements include the financial statements of Cyprium Metals Limited and the following
subsidiaries:
Name of Entity
Cyprium Australia Pty Ltd
GNR Minerals Pty Ltd
PT Indonusa Mining Services
Country of
Incorporation
Australia
Australia
Indonesia
Equity Holding
2019
100%
100%
100%
2018
-
100%
100%
19. Auditor’s Remuneration
Audit services:
Amounts received or due and receivable by the auditors of the parent company
Nexia – Australia:
- Audit and review of financial reports
HLB Mann Judd:
- Audit and review of financial reports
Amounts received or due and receivable by the subsidiary auditor:
Persek. Kanaka Puradiredja, Suhartono – Indonesia:
- Audit and review of financial reports
Other services:
Nexia - Australia
- Tax compliance and consulting services
Cyprium Metals Limited
42
2019
$
2018
$
-
25,000
36,680
20,000
-
36,680
3,959
48,959
-
-
36,680
4,500
4,500
53,459
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
20. Loss per Share
Loss used in calculating basic and diluted EPS
From continuing and discontinued operations
Loss used in calculating basic and diluted EPS
From continuing operations
Weighted average number of ordinary shares used in calculating basic
loss per share:
Basic and diluted loss per share (cents per share) from continuing and
discontinued operations
Basic and diluted loss per share (cents per share) from continuing operations
2019
$
2018
$
(2,354,202)
(5,892,371)
(1,281,135)
(562,162)
Number of
Shares
Number of
Shares
36,761,852
16,988,326
(6.40)
(3.48)
(34.68)
(3.31)
There have been no transactions involving ordinary shares or potential ordinary shares that would significantly
change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the
date of completion of these financial statements.
21. Financial Risk Management
Exposure to foreign currency risk, credit risk, liquidity risk and interest rate risk arises in the normal course of the
Company’s business. The Company uses different methods as discussed below to manage risks that arise from these
financial instruments. The objective is to support the delivery of the financial targets while protecting future financial
security.
(a) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial
liabilities. The Company manages liquidity risk by maintaining sufficient cash facilities to meet the operating
requirements of the business and investing excess funds in highly liquid short-term investments. The responsibility
for liquidity risk management rests with the Board of Directors. Alternatives for sourcing our future capital needs
include our cash position and the issue of equity instruments. These alternatives are evaluated to determine the
optimal mix of capital resources for our capital needs. The Directors expect that present levels of liquidity along
with future capital raising will be adequate to meet expected capital needs.
(b) Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value
of financial instruments. The Company’s exposure to market risk for changes to interest rate risk relates primarily to
its earnings on cash and term deposits. The Company manages the risk by investing in short term deposits.
Cash and cash equivalents
2019
$
2018
$
3,466,183
1,910,897
Interest rate sensitivity
The following table demonstrates the sensitivity of the Company’s statement of profit or loss and other
comprehensive income to a reasonably possible change in interest rates, with all other variables constant.
Cyprium Metals Limited
43
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
Effect on equity
including
accumulated losses
($)
Increase/(Decrease)
Effect on Post
Tax Loss ($)
Effect on Post
Tax Loss ($)
Effect on equity
including
accumulated losses
($)
Increase/(Decrease)
2018
25,996
(25,996)
14,332
(14,332)
14,332
(14,332)
Change in Basis Points
Increase 75 basis points
Decrease 75 basis points
2019
25,996
(25,996)
A sensitivity of 75 basis points has been used as this is considered reasonable given the current level of both short
term and long-term Australian Dollar interest rates. The change in basis points is derived from a review of historical
movements and management’s judgement of future trends.
(c) Credit Risk Exposures
Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an obligation
and cause the Company to incur a financial loss. The Company’s maximum credit exposure is the carrying amounts
on the statement of financial position. The Company holds financial instruments with credit worthy third parties. At
31 December 2019, the Company held cash at bank with all of the Company’s cash being held in financial institutions
with a rating from Standard & Poors of AA or above (long term). The Company has no past due or impaired debtors
as 31 December 2019.
(d) Foreign currency risk
The Company undertakes certain transactions denominated in foreign currencies, hence exposures to exchange
rate fluctuations arise. The carrying amounts of the Group’s foreign currency denominated monetary assets and
monetary liabilities at the balance date expressed in Australian dollars are as follows:
2019
US Dollar
(e) Fair value measurement
Liabilities
$
Assets
$
-
392
The Directors consider that the carrying value of current receivables and current payables approximate their fair
values.
22. Parent Entity Information
The following details information related to the parent entity, Cyprium Metals Limited, at 31 December 2019. The
information presented has been prepared using consistent accounting policies with those presented in note 2.
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Loss of the parent entity
Total comprehensive loss of the parent entity
Cyprium Metals Limited
44
2019
$
3,627,016
6,804,358
2018
$
1,947,948
2,898,666
(438,669)
(438,669)
6,365,689
159,599,915
1,218,417
(154,452,643)
6,365,689
(2,399,235)
(2,399,235)
(122,461)
(122,461)
2,776,205
153,680,857
1,148,756
(152,053,408)
2,776,205
(5,848,052)
(5,848,052)
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
Other Commitments
The Company had no commitments as at 31 December 2019.
Contingent Liabilities
The Company had no contingent liabilities as at 31 December 2019.
23. Contingent Assets and Liabilities
There are no known contingent assets or liabilities as at 31 December 2019 (2018: nil).
24. Dividends
No dividend was paid or declared by the Company in the year ended 31 December 2019 or the period since the
end of the financial year and up to the date of this report. The Directors do not recommend that any amount be
paid by way of dividend for the financial year ended 31 December 2019.
25. Significant Events after the Reporting Date
There are no significant events subsequent to the end of the financial year to the date of this report that are
required to be disclosed.
26. Segment Information
The Group has identified its operating segments based on the internal reports that are reported to the Board of
Directors (the chief operating decision makers) in assessing performance and in determining the allocation of
resources. The Board as a whole will regularly review the identified segments in order to allocate resources to the
segment and to assess its performance.
The Group operates predominately in one industry, being the exploration of mineral resources. The main
geographic areas that the entity operated in during the year are Australia, Canada and Indonesia.
The following table present revenue, expenditure and certain asset and liability information regarding geographical
segments for the year ended 31 December 2019 and 31 December 2018:
31 December 2019
Interest income
Segment revenue
Employee expenses
Exploration expenditure
Other expenses
Exploration asset impairment
Unrealised foreign exchange loss
Loss for the year after tax
Asset and liabilities
Segment assets
Segment liabilities
Other Information
Acquisition of non-current assets:
Exploration and evaluation expenditure
Right-of-use asset
Cyprium Metals Limited
Continuing
Operations
Australia /
Corporate
$
16,781
16,781
(518,232)
-
(762,586)
-
(317)
(1,281,135)
7,005,760
(628,581)
3,164,517
124,867
45
Discontinued
Operations
Discontinued
Operations
Canada
$
Indonesia
$
Total
$
16,781
16,781
-
-
-
(100,088)
-
-
-
(100,088)
(518,232)
(100,088)
(762,586)
(972,979)
(317)
(2,354,202)
-
-
-
-
7,005,760
(628,581)
3,164,517
124,867
-
-
-
-
-
(972,979)
-
(972,979)
-
-
-
-
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
31 December 2018
Interest income
Segment revenue
Employee expenses
Other expenses
Impairment of loans receivable
Exploration asset impairment
Unrealised foreign exchange loss
Loss for the year after tax
Asset and liabilities
Segment assets
Segment liabilities
Other Information
Acquisition of non-current assets:
Exploration and evaluation expenditure
27. Commitments
Continuing
Operations
Australia /
Corporate
$
6,948
6,948
(187,416)
(380,336)
-
-
(1,358)
(562,162)
Discontinued
Operations
Discontinued
Operations
Canada
$
Indonesia
$
Total
$
-
-
-
-
-
-
-
-
-
-
6,948
6,948
-
-
(172,163)
(5,158,046)
-
(5,330,209)
(187,416)
(380,336)
(172,163)
(5,158,046)
(1,358)
(5,892,371)
1,980,997
(198,245)
946,030
-
-
946,030
-
-
-
2,927,027
(198,245)
946,030
As disclosed in Note 8, the Group holds rights to earn-in and joint venture for an 80% interest in the non-gold
rights over the tenements at the Cur Copper Project in Western Australia. Currently, Musgrave Minerals Ltd is
the registered holder of these tenements and was issued 1,308,750 fully paid shares in Cyprium when Cyprium
exercised its earn-in option.
The following amounts are payable to Musgrave on achievement of certain milestones:
a) Upon the delineation of 80,000 t of contained copper, Cyprium will pay Musgrave cash of $200,000 or issue
Musgrave shares to the value of $200,000 based on a 15 day VWAP; and
b) Upon a decision to mine, Cyprium will pay Musgrave cash of $300,000 or issue Musgrave shares to the value
of $300,000 based on a 15 day VWAP.
In order to earn its 80% interest in the project, Cyprium is required to spend $2,000,000 on the project within two
years of the earn-in exercise date of 14 June 2019.
Cyprium Metals Limited
46
Directors’ Declaration
In accordance with a resolution of the Directors of Cyprium Metals Limited, I state that:
1. In the opinion of the Directors:
a)
the financial statements and notes of Cyprium Metals Limited for the year ended 31 December 2019 are in
accordance with the Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its
performance for the year ended on that date; and
complying with Accounting Standards (including the Australian Accounting Interpretations), the
Corporations Regulations 2001 and other mandatory professional reporting requirements; and
b)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed
in note 2(b).
2. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
3. This declaration has been made after receiving the declarations required to be made by the Directors in
accordance with sections of 295A of the Corporations Act 2001 for the financial year ended 31 December 2019.
On behalf of the Board
Gary Comb
Chairman, Non-Executive Director
Perth, WA
27 March 2020
Cyprium Metals Limited
47
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Cyprium Metals Limited for the
year ended 31 December 2019, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the
review; and
b)
any applicable code of professional conduct in relation to the review.
Perth, Western Australia
27 March 2020
L Di Giallonardo
Partner
48
INDEPENDENT AUDITOR’S REPORT
To the members of Cyprium Metals Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Cyprium Metals Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 31
December 2019, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its
financial performance for the year then ended; 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 Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We 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. We have determined the matters described below to
be the key audit matters to be communicated in our report.
49
Key Audit Matter
How our audit addressed the key audit
matter
Acquisition of Cyprium Australia Pty Ltd
(Refer to Note 8)
In June 2019, the Group acquired 100% of the share
capital of Cyprium Australia Pty Ltd, which holds rights
to earn-in and joint venture for an 80% interest in the
non-gold rights over the tenements at the Cue Copper
Project in Western Australia. The consideration for this
acquisition comprised the issue of 7,058,750 fully paid
shares in the Company valued at $1,342,500.
We considered this acquisition to be a key audit matter
as it is material and involved a significant degree of
audit effort and communication with those charged with
governance.
Our procedures included but were not
limited to the following:
• We read the heads of agreement to
terms and
key
its
understand
conditions;
• We
considered
the appropriate
treatment of the acquisition as an
asset acquisition or a business
combination;
• We obtained audit evidence that the
acquisition date assets and liabilities of
Cyprium Australia Pty Ltd were fairly
stated; and
• We assessed the adequacy of the
Group’s disclosures in the financial
report with respect to this acquisition.
Carrying value of Deferred Exploration and Evaluation
Expenditure
(Refer to Note 8)
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group capitalises
acquisition costs of rights to explore as well as
subsequent exploration and evaluation expenditure and
applies the cost model after recognition.
Our audit focussed on the Group’s assessment of the
carrying amount of the deferred exploration and
evaluation expenditure, because this is a significant
asset of the Group. We planned our work to address
the audit risk that the capitalised expenditure might no
longer meet the recognition criteria of the standard. In
addition, we considered it necessary to assess whether
facts and circumstances existed to suggest that the
carrying amount of the deferred exploration and
evaluation expenditure may exceed its recoverable
amount.
50
Our procedures included but were not
limited to the following:
processes
• We obtained an understanding of the
key
associated with
management’s review of the carrying
values of deferred exploration and
evaluation expenditure;
considered
the Directors’
assessment of potential indicators of
impairment;
• We
• We obtained evidence that the Group
has current rights to tenure of its areas
of interest;
• We examined the exploration budget
for the year ending 31 December 2020
and discussed with management the
nature of planned ongoing activities;
• We enquired with management,
reviewed ASX announcements and
reviewed minutes
of Directors’
meetings to ensure that the Group had
not resolved to discontinue exploration
and evaluation at any of its areas of
interest;
• We reviewed the Directors’ reasoning
to support the decision to impair the
carried forward expenditure relating to
the Canadian assets; and
• We examined the disclosures made in
the financial report.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 31 December 2019 but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
-
-
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
51
-
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year ended
31 December 2019.
In our opinion, the Remuneration Report of Cyprium Metals Limited for the year ended 31
December 2019 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.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
27 March 2020
L D Giallonardo
Partner
52
ASX Additional Information
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is
as follows. The information is current at 26 March 2020.
Distribution of Share Holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
TOTAL
Ordinary Shares
Number of Holders
Number of Shares
324
190
51
142
104
811
114,726
451,882
405,579
6,644,673
48,442,622
56,059,482
There were 515 holders of ordinary shares holding less than a marketable parcel.
Top Twenty Share Holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
ARALAD MANAGEMENT PTY LTD
ILWELLA PTY LTD
ASHANTI INVESTMENT FUND PTY LTD
BLUEDALE PTY LTD
ZERO NOMINEES PTY LTD
MUSGRAVE MINERALS LIMITED
BIG BEAR NOMINEES PTY LTD
JET CAPITAL PTY LTD
MR WAYNE FRANK APTED
RMVW PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
UBS NOMINEES PTY LTD
MR ROBERT ANTHONY HAMILTON
CALAMA HOLDINGS PTY LTD
BOTSIS HOLDINGS PTY LTD
INFINITY RESOURCES PTY LTD
BLUEDALE PTY LTD
PVL CONSULTING PTY LTD
MR WAYNE FRANK APTED
SLAM CONSULTING PTY LTD
Substantial Shareholders
There are no substantial shareholders of Cyprium Metals Limited.
On-Market Buy Back
There is no current on-market buy back.
Shares
2,913,525
2,380,952
1,510,288
1,476,190
1,330,000
1,308,750
1,178,750
1,100,000
1,000,000
1,000,000
950,596
945,278
776,250
775,000
750,000
718,750
718,750
718,750
718,750
700,000
22,970,579
%
5.2
4.25
2.69
2.63
2.37
2.33
2.1
1.96
1.78
1.78
1.7
1.69
1.38
1.38
1.34
1.28
1.28
1.28
1.28
1.25
40.98
Voting Rights
All ordinary shares carry one vote per share without restriction. Options have no voting rights.
Use of Proceeds
In accordance with listing rule 4.10.19, the Company confirms that it has used cash and assets in a form readily
convertible to cash in a way consistent with its business objectives during the financial year ended 31 December
2019.
Cyprium Metals Limited
53
ASX Additional Information
Performance Shares
Class
Number Holders with more than 20%
1,030,000
- Steven Edward Daniel Siemieniuk 772,000
Performance Shares
- Christian Frederick Jagd Carl 258,000 Performance
Shares
The Performance Shares will convert to
ordinary shares if the Company is able to
release a Canadian National Instrument 43-
101 report or equivalent JORC Report
announcing a minimum of 1moz inferred
resource at minimum cut-off of 0.5 g/t within
the next 5 years, in relation to the Company’s
Manitou gold project in Canada.
Performance Rights
As at the date of this report there were 12,400,000 performance rights on issue, expiring in June and July 2024. The
details of the performance shares are as follows:
Performance Condition
Completion of a transaction to acquire or earn into majority ownership interests in projects with
exploration and mining tenements
Anouncement of the delineation of 80,000t of contained copper (within any Mineral Resource
category) upon the Projects
Each Performance Right will vest upon the earlier of:
Announcement of a Scoping Study that confirms the positive economics of the
Projects; or
The volume weighted average price of the Shares equals or exceeds $0.35 per Share
for 5 consecutive trading days
Number
3,775,000
2,875,000
2,875,000
Each Performance Right will vest upon the earlier of:
Board approval to Proceed with a Project Definitive Feasibility Study; or
The volume weighted average price of the Shares equals or exceeds $0.40 per Share
2,875,000
for 5 consecutive trading days
Total
12,400,000
Cyprium Metals Limited
54
About Cyprium Metals and Schedule of Tenements
About Cyprium Metals Limited
Cyprium Metals Limited (ASX Code: CYM) is an Australian-listed company with exploration projects in
Australia and Canada. The Company is focused on progressing the Cue Copper Project.
The Company has an option to earn-in and joint venture for an 80% interest in the non-gold rights over
the Musgrave Minerals Limited tenements at the Cue Copper Project, which is located approximately
20km to the east of Cue in the Murchison region of Western Australia.
The region is host to a number of base metals deposits and the Hollandaire copper mineralisation is
open to the south-west and at depth. In conjunction with the Hollandaire and Hollandaire West
extensional drilling, the Company is prioritising its other exploration drill targets. Metallurgical test-
work is being conducted to determine the optimal copper extraction method.
The Manitou Project is located approximately 60km South of Dryden, Ontario, Canada. The Project is
strategically located in a geologically favourable Archean sub-province.
Figure 7 | Location of the Cue Copper Project tenements
Tenement Information
Tenement
AUSTRALIA
Musgrave Minerals Limited has granted Cyprium Australia Pty Ltd an option to earn-in and
joint venture for an 80% interest in the non-gold rights over the following tenements at the
Cue Copper Project, WA:
M20/0225, M20/0245, M20/0277, E20/0606, E20/0608, E20/0616, E20/0629, E20/0630,
E20/0659, E20/0698, E20/0699, E20/0700, E20/0836, P20/2279, M20/526
CANADA
The Manitou Gold Project consists of unpatented mining claims. GNR Minerals Pty Ltd
owns 100% of all claims.
Claim numbers are as follows:
4276785, 4276786 ,4276787, 4286148
Location
Interest
Cue, WA
-%
Ontario,
Canada.
100%
Cyprium Metals Limited
55
A N N U A L R E P O R T
31 December 2019
(formely ARC Exploration Limited)