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Castle Minerals LimitedANNUAL REPORT
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CORPORATE DIRECTORY
Directors
Ian Cochrane
Leigh Junk
Barry Patterson
Robert Reynolds
Company Secretary
Kevin Hart
Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Registered Office and Principal Place of Business
Level 2
1 Preston Street
Como WA 6152 Australia
08 6323 9000
08 6323 9099
www.daciangold.com.au
info@daciangold.com.au
Telephone:
Facsimile:
Website:
Email:
Auditor
KPMG
235 St Georges Terrace
Perth WA 6000 Australia
Share Registry
Computershare Investor Services Pty Ltd
Level 11
172 St Georges Terrace
Perth WA 6000 Australia
Stock Exchange Listing
The Company’s shares are quoted on the Australian Securities Exchange. The home exchange is Perth, Western Australia.
ASX Code
DCN – Ordinary shares
Company Information
The Company was incorporated and registered under the Corporations Act 2001 in Western Australia on 23 November 2011.
The Company is domiciled in Australia.
CONTENTS
CORPORATE DIRECTORY
CHAIRMAN’S LETTER
COMPANY HIGHLIGHTS
REVIEW OF OPERATIONS
RESOURCES & RESERVES STATEMENT
CORPORATE GOVERNANCE STATEMENT
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
ASX ADDITIONAL INFORMATION
TENEMENT SCHEDULE
INSIDE COVER
2
4
5
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26
38
40
63
64
65
66
67
68
112
113
119
121
1
CHAIRMAN’S LETTER
Dear Fellow Shareholders,
On behalf of your Board of Directors I am pleased to
present to you, Dacian Gold Limited’s 2020 Annual Report.
Dacian has undergone a significant evolution through
this past year as it navigated the transition from gold
developer to producer. The transition required a significant
re-setting of the bar at Mt Morgans to position the
operation to realise its full potential going forward.
Following the retirement of our Executive Chairman,
Rohan Williams, in January this year, the Company
announced the appointment of Leigh Junk as Managing
Director. Leigh has been instrumental in guiding the
Company through a challenging period that included
updating our Mineral Resources and Ore Reserves and
establishing a three-year operating outlook for FY2021-
2023.
The culmination of this effort was the recapitalisation
of Dacian in April with a $98 million equity raise that
reduced our overall debt position, while also providing
the capital the Company needed to invest in pre-stripping
at its Jupiter open pit and increasing its investment in
exploration across our underexplored tenement package.
In the year under review, the Company produced
138,814oz at a Mt Morgans Gold Operation AISC of
$1,619/oz, generating $23.0 million in operating cash
flow. The Company’s treatment plant set a record mill
throughput for the year of 2.96 million tonnes and has
performed above design capacity consistently since
commissioning in March 2018. A significant milestone
was also achieved during the year with the Company
passing 300,000oz of gold produced since the plant was
commissioned.
The Company’s three-year outlook presents a compelling
proposition going forward, producing an average of
110,000oz pa at an AISC of $1,425/oz. Underpinning this
outlook are Mineral Resources and Ore Reserves totalling
a robust 2.1Moz and 0.8Moz, respectively.
2 ANNUAL REPORT 2020
CHAIRMAN’S LETTER
The Company also took the decision in February to
suspend the Westralia underground operation while
re-optimising activities are undertaken. Since the
commencement of mining, 190,766oz have been
produced at Westralia, a significant achievement.
However, a reassessment of the most optimal economical
approach is required. We plan to update the market
accordingly during FY2021 to unlock the potential
remaining at Westralia, as well as our other underground
deposits which collectively total approximately 1.1Moz in
Mineral Resources.
The Company is excited about its exploration potential
and has increased its investment considerably for FY2021.
Numerous targets have been identified and are being
followed up with the aim of providing a continuous
future ore supply for our processing plant, including both
greenfields and near mine opportunities.
while our hedge position also continues to fall. This is
projected to solidify further during FY2021 as our average
realised gold price is set to increase given the ongoing
extinguishment of our hedges and the buoyant market
conditions for gold.
On behalf of the Board I would like to thank our
executive management team and all our employees for
their tremendous efforts during this time of transition. I
would also like to thank all our other stakeholders and
in particular our shareholders for their support and look
forward to a period of prosperity and the realisation of the
full potential of the Company in the period ahead.
thank all our other stakeholders and in particular our shareholders for their support and look
forward to a period of prosperity and the realisation of the full potential of the Company in
the period ahead.
Our balance sheet has strengthened with a significant
reduction in our debt position to $64.1 million and
our net debt position to $6.8 million at 30 June 2020,
Ian Cochrane
Non-Executive Chairman
Ian Cochrane
Non-Executive Chairman
3
COMPANY HIGHLIGHTS FY2020
Solid operational year with robust gold production and cash flow generation.
Operational
GOLD PRODUCTION
138,814oz
MMGO AISC
$1,619/oz
ORE RESERVES UNDERPINNING THE
COMPANY’S THREE YEAR OUTLOOK
0.75Moz
SIGNIFICANT MINERAL RESOURCE BASE
PRESENTS OPPORTUNITY TO DEVELOP AND
EXPAND THE MT MORGANS GOLD OPERATION
2.1Moz
Financial
CASH FLOW FROM OPERATIONS
$23.0M
REPAID DEBT DURING THE YEAR
$41.4M
FOR A TOTAL DEBT AT 30 JUNE 2020
$64.1M
CASH AND GOLD ON HAND
BALANCE SHEET SET TO FURTHER STRENGTHEN
DURING FY2021 AS HEDGE POSITION REDUCES
$57.3M
NET DEBT POSITION
$6.8M
4 ANNUAL REPORT 2020
OVERVIEW
Dacian Gold Limited’s (Dacian) Mt Morgans Gold Operation (MMGO) is located 25km west of Laverton and
approximately 750km north-east of Perth in Western Australia (see Figure 1). The Company maintains significant
infrastructure at MMGO through its large open pit, extensive underground investment and recently commissioned 2.5Mtpa
processing plant.
The MMGO is a 608km² tenement package comprising predominantly granted mining leases. It is situated in the Laverton
gold district, which is known to contain approximately 30 million ounces of gold, making it the second highest endowed
gold district in Western Australia, after Kalgoorlie.
Figure 1: Location of Dacian’s Mt Morgans Gold Operation in Western Australia
Three Year Production Outlook
In February 2020, the Company announced a Mineral Resource and Ore Reserve update and corresponding three-year
production outlook for FY2021-2023 that focused on establishing a sustainable operation with a robust platform to pursue
its growth objectives.
Prior to the end of FY2020, the Company announced a three year production outlook totalling 325,000oz with FY2021
being 110,000-120,000oz and FY2022-2023 at 100,000-110,000oz per annum.
A summary of the updated FY2021-2023 operating outlook is provided below.
Table 1: Summary of FY2021-2023 Operating Outlook
Production
AISC
FY2021
110-120koz
FY2022
100-110koz
FY2023
100-110koz
Three Year
Outlook
325koz
$1,400-$1,550/oz
$1,400-$1,550/oz
$1,250-$1,400/oz
$1,425/oz
Development Capital
$55M
$18M
nil
$73M
To supplement and extend the Company’s three year outlook, accelerated near mine exploration programs have commenced
which aim to rapidly develop a pipeline of advanced projects and new discoveries through a combination of early stage green
fields exploration and advanced stage exploration projects through RC drilling and targeted diamond drilling.
5
REVIEW OF OPERATIONS The exploration approach is multi-faceted and focused on near-term, near mine production, additional potential
replacement base load ore sources as well as a high-grade underground contribution. The Company has several
exploration targets that are being actively pursued, including:
+ Underground Targets
+ Phoenix Ridge high-grade deposit
+ Transvaal Deposit
+ Craic Deposit
+ Westralia Deposit
+ Near Term, Near Mine
+ Jupiter extensional drilling
+ Doublejay resource upgrade program
+ Ganymede resource upgrade program
+ Mt Marven extensional drilling
+ Drill ready advanced targets
+ Cameron Well syenite target
+ Mt McKenzie target
+ McKenzie Well target
+ Mt Marven South shear zone prospect
Financial Year 2020 Overview
Table 2: Gold Recovery and Sales
Gold Recovered
Gold Sales
Realised Average Price
Gold Revenue
Gold on Hand
Unit
oz
oz
A$/oz
A$M
oz
SQ
42,002
38,101
1,996
76.03
9,462
DQ
33,235
35,046
1,876
65.75
7,564
MQ
31,695
36,933
1,982
73.22
2,406
JQ
31,883
30,866
1,765
54.49
2,980
FY2020
138,814
140,946
1,912
269.49
2,980
The 2019 Mineral Reserve and Resource update (refer ASX announcement 27 February 2020) estimated total Mineral
Resources for MMGO of 32.0Mt @ 2.0g/t for 2.1Moz and total Ore Reserves of 16.9Mt @ 1.4g/t for 754,000 oz. A
key change from the 2018 Mineral Resource estimate was a significant reduction in Mineral Resources at the Westralia
underground operation to a total of 3.9Mt @ 5.2g/t for 655,000oz.
With the prioritisation of open pit production, capital development at Westralia underground ceased in May 2020 with final
ore production from underground operations being completed in August 2020. The Westralia underground operations
are currently undergoing optimisation studies to determine an optimal mining approach encompassing all underground
deposits and projects across MMGO.
Full year production for FY2020 totalled 138,814 ounces at an MMGO AISC of $1,619/oz, within guidance of
138,000-144,000 ounces at an MMGO AISC of between $1,550-$1,650/oz.
The Company continues to reduce its hedging commitments with its total program at 30 June 2020 standing at 84,589
ounces at an average price of $2,055/oz. The Company has no plans to add new hedges to its current program and plans
to continue to reduce its hedge commitments and/or re-sculpt where appropriate to do so.
Below are the Company’s total hedge commitments and outstanding put options as at 30 June 2020. The Company
has materially completed delivery into lower priced hedges throughout FY2020, with FY2021 gold production set to be
exposed to higher priced hedges from 1 July 2020 and an increased proportion of sales at spot prices.
As can be seen in Table 3, subsequent to the end of the financial year, the Company has reduced the hedging exposure
further with a balance remaining at 30 September 2020 of 61,488 ounces at $2,114/oz.
6 ANNUAL REPORT 2020
REVIEW OF OPERATIONS Table 3: Summary of total hedge and put option commitments as at 30 June 2020
Hedge Position at 30 June 2020
Forward Sales (oz)
Hedged Gold Price (A$/oz)
Put Options (oz)
Floor strike price net of option cost (A$/oz)
COVID-19 Response
Sep Q
2020
23,101
$1,899
-
-
Dec Q
2020
19,119
$2,102
5,070
$2,089
Mar Q
2021
20,205
$2,112
-
-
Jun Q
2021
22,164
$2,126
-
-
Total
84,589
$2,055
5,070
$2,089
Dacian has been proactive in its response to the COVID-19 pandemic and has implemented a range of protective and
preventative measures to minimise disruption at MMGO.
MMGO, through its COVID-19 management plan, is continuing to operate unaffected by the pandemic, however, a
number of changes have been made at the operation such that persons employed at the site have reduced exposure to
potential sources of COVID-19, are able to abide by social distancing requirements and improved hygiene standards.
In the unlikely circumstance requiring a scaling-back of the operation, the Company has multiple levers it can engage
including the processing of stockpile material totalling 4.4Mt @ 0.6 g/t for 79,000oz (approximately 19 months of
processing material), providing a level of insulation for the business.
Safety
Safety of our employees and contractors working at our sites is of the utmost importance. Prevention of future injuries
through improvements in workplace culture, training and supervision together with learning from incidents to prevent
reoccurrence is a key consideration for the Company. We expect on-going improvement in safety performance at MMGO
as the business grows and matures.
The Company’s rolling Total Recordable Injury Frequency Rate (TRIFR) calculated as 12 month rolling average was 23.3
at the end of FY2020 (FY2019: 17.6). Recordable injuries include those that result in any days lost from work or where an
employee or contractor can only perform part of their normal work, as well as any injury that requires medical treatment.
7
REVIEW OF OPERATIONS OPEN PIT MINING
A total of 2,060,049t @ 1.1 g/t gold containing 71,937 ounces was mined from the Jupiter open pits during FY2020.
Of the Jupiter open pits, the Heffernans sub-pit remained the primary source of high-grade ore feed to the processing
plant. The upper Cornwall Shear Zone in the Stage 1 pit was mined early in the year, completing the Stage 1 pit. Stage 2 of
the Heffernans pit has been mined concurrently with Stage 1 and by the June quarter, Stage 2 had also progressed to the
upper boundary of the Cornwall Shear Zone.
Pre-stripping of the Doublejay Stage 1 pit commenced early in the June quarter as planned and will transition to become
the dominant source of ROM ore feed during late FY2021.
Mining of a cut-back at the historical Mt Marven pit, located some 2km from the processing plant, commenced in July
2020 as planned and will be a further source of ROM ore feed throughout FY2021.
Table 4: Key Open Pit Statistics for FY2020 at MMGO
Unit
SQ
DQ
236
1.1
MQ
JQ
FY2020
432
1.0
553
1.1
1,633
1.2
412
1.5
20,496
8,665
14,083
19,590
62,834
40
0.6
759
35
0.6
688
43
0.6
765
kbcm
1,941
1,788
1,380
453
1.5
271
1.1
475
1.0
309
0.7
6,890
1,599
862
1.0
427
0.7
9,103
6,708
2,060
1.1
21,255
9,353
14,849
26,480
71,937
t
g/t
oz
t
g/t
oz
t
g/t
oz
Q/Q FY20
Open Pit
Ore Mined to ROM
Mined Ore Grade
Contained Gold Mined
Ore Mined to Low Grade Stockpile
Mined Ore Grade
Contained Gold Mined
Waste Mined
Total Ore Mined
Total Mined Ore Grade
Total Contained Gold Mined
8 ANNUAL REPORT 2020
REVIEW OF OPERATIONS
UNDERGROUND MINING
The Westralia underground mined 756,422t @ 2.8 g/t gold for 68,758 contained ounces during FY2020.
Ore drive development was completed across the Beresford South, Beresford North and Allanson mine areas at Westralia
in May 2020 as planned (see ASX announcement 31 July 2020) and stoping continued on remaining production levels.
Mining ceased in August 2020 following the completion of these planned stopes.
Table 5: Key Underground Statistics for FY2020 at MMGO
Q/Q FY20
Underground
Metres Developed - Capital
Metres Developed - Operating
Stope Ore Mined
Development Ore Mined
Mined Ore Grade
Contained Gold Mined
Unit
SQ
DQ
MQ
JQ
FY2020
m
m
kt
kt
g/t
oz
1,244
1,537
135
67
3.1
979
2,144
125
89
2.4
753
1,444
137
64
2.9
189
721
101
38
3.1
3,164
5,847
498
258
2.8
20,175
16,351
18,409
13,823
68,758
Development of a Holistic Underground Strategy
MMGO currently has four underground projects in its pipeline, namely the Westralia, Phoenix Ridge and Transvaal deposits
and the Craic project. As at 31 December 2019, underground Mineral Resources totalled approximately 1.1M ounces and
the corresponding Ore Reserve was 260,000 ounces (before 2HFY2020 mining depletion; see ASX release dated 27
February 2020).
The Company is currently assessing the mining potential of all its underground deposits, with the view that a holistic
strategy could optimise the Resource inventory. As a component of this assessment, the Company completed development
of a 175m diamond drill drive in the Beresford North mine area during the June quarter to enable diamond drilling of
potential high-grade ore blocks, located within an area of Inferred Mineral Resource.
9
REVIEW OF OPERATIONS
With five declines already established between Westralia, Transvaal and Craic, the Company is evaluating an operating
model that potentially encompasses all of the aforementioned underground deposits, with the model including:
+ Campaign style, ore block focus approach to underground mining;
+ Potential for a leaner operating model;
+ Fit-for-purpose development layout designs and excavation profiles to match revised mining strategy;
+ Mining blocks to be extracted over annual timeframes that support selective, smaller operations;
+ Multiple declines across deposits could be accessible simultaneously with each decline at different stages of the
production life cycle and supporting continuous operations (i.e. drill out, development, stoping).
The Company believes the conceptual plan for its underground operations may deliver meaningful incremental
high-grade ore feed and expects to complete a scoping study level of assessment in December 2020.
Figure 2: Potential underground production sources for MMGO
PROCESSING, PRODUCTION AND COSTS
Full year gold production for FY2020 totalled 138,814 ounces at an MMGO AISC of $1,619/oz, within guidance of
138,000-144,000 ounces at an MMGO AISC of between $1,550-$1,650/oz.
The processing plant performed consistently above nameplate capacity of 2.5mtpa, milling a record total throughput of
2.96 million tonnes of ore for the FY2020. During the June 2020 quarter the Company achieved a milestone of 300,000
ounces recovered since commissioning of the processing plant in March 2018.
Table 6: Key Processing Statistics for the 2020 financial year at MMGO
PROCESSING
Ore Milled
Processed Grade
Contained Gold
Gold Recovery
Gold Recovered
MMGO AISC
Unit
SQ
DQ
MQ
JQ
FY2020
t
g/t
oz
%
oz
A$/oz
765,105
776,247
708,425
714,348
2,964,125
1.85
45,435
92.44%
42,001
1,423
1.45
36,215
91.77%
33,235
1,737
1.50
34,131
92.86%
31,695
1,811
1.48
34,020
93.72%
31,883
1,562
1.57
149,801
92.67%
138,814
1,619
10 ANNUAL REPORT 2020
REVIEW OF OPERATIONS EXPLORATION
Dacian has embarked on a $15 million multi-level exploration program to grow the Company’s Mineral Resources and
Ore Reserves. The program is targeting large potential base load ore feed to replace Jupiter at Cameron Well and the
Mt Marven Shear Zone as well as satellite deposits at Mt Marven, Mt McKenzie and McKenzie Well to bolster annual
production.
Drilling activities have been focussed across several projects including the underground Phoenix Ridge deposit and the
open pit Mt Marven and Cameron Well deposits. In addition to these exploration projects, resource definition drilling
across the near surface portion of the Morgans North deposit (at Westralia) and the Ganymede deposit (at Jupiter) have
been targeted for near mine Mineral Resource updates during FY2021.
Results from recent drilling indicate strong potential for Mineral Resource growth over time (see ASX release 24 July 2020).
11
REVIEW OF OPERATIONS Figure 3: Location of advanced exploration projects across the MMGO
12 ANNUAL REPORT 2020
REVIEW OF OPERATIONS Cameron Well
A framework diamond drilling program commenced in late July. The drilling aims to improve the Company’s
understanding of the broad structural controls, mineralisation styles and relative timing relationships between
mineralisation and intrusive types.
The program includes an initial 11 diamond drill holes for 4,000m of drilling focussed on structural targets
(see Figure 4 below).
The Company will use the information gained through the framework program to optimise FY2021 RC drilling that aims to
grow the current Mineral Resources across the project.
Figure 4: Geological plan of the Cameron Well project highlighting targets for the FY2021 exploration program
13
REVIEW OF OPERATIONS Mt Marven
Five diamond holes for a total of 1,435m of drilling were completed below the current Mineral Resource and Ore Reserve for
Mt Marven. Mt Marven is an open pit deposit, located nearby to Jupiter, that has been advanced by the Company in the last
12 months. Mt Marven hosts an initial Ore Reserve of 460,000t at 1.4 g/t for 20,000oz and is currently in production.
The extensional diamond drilling program was designed to test for grade continuity and structural repetitions below and to
the east of the current Mineral Resource as well as providing structural data for future near mine exploration.
Figure 5 below shows the location of the diamond holes relative to RC drilling and the current pit design.
Highlights included:
+ 5.4m @ 2.9g/t Au from 166m in 20MVDD0006
+ 7m @ 1.7g/t Au from 101m in 20MVDD0006
+ 1m @ 13.2g/t Au from 199m in 20MVDD0006
+ 1m @ 4.5g/t Au from 171m in 20MVDD0008
+ 1.2m @ 3.2g/t Au from 80.6m in 20MVDD0005
Following the success of this program, near mine exploration south of the current open pit, to test for Mineral Resource
extensions beyond the current pit design, is underway with a 5,000m RC program initiated, shown in Figure 5 below.
Figure 5: Interpreted bedrock geology map of the Mt Marven project depicting the location of RC drilling and the
recently completed diamond drilling relative to the historic open pit and the current Ore Reserve open pit design.
The approximate location of planned near mine exploration RC drilling south of the current Ore Reserve is also depicted.
14 ANNUAL REPORT 2020
REVIEW OF OPERATIONS Phoenix Ridge
Infill drilling at Phoenix Ridge aims to upgrade the maiden Phoenix Ridge Mineral Resource of 481,000t at 8.1 g/t for
125,000oz (see ASX release dated 3 October 2019), located just north of the current Westralia underground deposits.
The Company believes Phoenix Ridge may form a part of its underground strategy as highlighted in its ASX announcement
dated 13 July 2020.
A 40m by 40m spaced infill program across the extent of the Inferred Mineral Resource was designed to improve the
geological confidence across the deposit in preparation for a Mineral Resource update in 2H CY2020. The drilling results
have established that the extent of the Phoenix Ridge mineralisation is now well defined (see Figure 6).
A total of 38 diamond holes were completed for 11,300m at a spacing of 40m by 40m, with drilling indicating the grade
and geometry of high-grade mineralisation is influenced by a number of cross cutting structures.
Highlights included:
+ 1.7m @ 16.7g/t Au from 96m in 20MMDD0573
+ 7.5m @ 4.2g/t Au from 221.4m in 20MMDD0557
+ 6.5m @ 3.3g/t Au from 324.5m in 20MMDD0518
+ 2m @ 12.0g/t Au from 224.2m in 20MMDD0559
+ 2.7m @ 5.5g/t Au from 292.7m in 20MMDD0560
In addition to the 40m by 40m drilling, 14 diamond holes for 4,000m at a spacing of 20m by 20m have also been
completed. These holes were designed to further increase the drilling density within the high-grade core of the deposit.
Highlights included:
+ 8.7m @ 74.7g/t Au from 286.4m in 20MMDD0625W1
+ 14.9m @ 12.5g/t Au from 258m in 20MMDD0624
+ 5.2m @ 9.0g/t Au from 309.6m in 20MMDD0625
+ 5.4m @ 8.4g/t Au from 259m in 20MMDD0619
+ 8.5m @ 4.0 g/t Au from 239.6m in 20MMDD0618
15
REVIEW OF OPERATIONS Significant grades were also encountered within a sequence of banded iron formation (BIF) in the hangingwall (designated
the Alpha Package), parallel to the Phoenix Ridge deposit with infill drilling defining a high-grade trend.
Highlights included:
+ 0.5m @ 715g/t Au from 299m in 20MMDD0518
+ 1.1m @ 70.4g/t Au from 288m in 20MMDD0560
+ 0.5m @ 87.2g/t Au from 246m in 20MMDD0625
+ 2m @ 23.1g/t Au from 205.3 in 20MMDD0624
A total of 33 RC holes for 3,500m of drilling was also completed, testing for a near surface expression to the north of
the deposit with results indicating that there is no significant near surface mineralisation up-plunge of the defined Mineral
Resource (see Figure 6).
Figure 6: Longitudinal section depicting diamond and RC drilling intercepts across the Phoenix Ridge deposit
16 ANNUAL REPORT 2020
REVIEW OF OPERATIONS McKenzie Well
Located approximately 12km north of Westralia, the McKenzie Well project has been targeted as part of the Company’s
FY2021 exploration program. Following a detailed mapping campaign completed in 2019 an RC drilling program was
undertaken. RC results identified mineralised BIF along approximately 400m of strike, with higher grades occurring to the
south of the deposit (see Figure 7).
Phase one of the 51 hole, 5,400m RC program for McKenzie Well was completed at a spacing of 40m by 40m along
500m of strike.
Highlights included:
+ 7m @ 2.8g/t Au from 78m in 20MWRC0043
+ 8m @ 2.3g/t Au from 53m in 20MWRC0037
+ 6m @ 2.4g/t Au from 47m in 20MWRC0035
+ 9m @ 1.9g/t Au from 92m in 20MWRC0038
+ 7m @ 2.0g/t Au from 85m in 20MWRC0036
Figure 7: A longitudinal section, south-west facing, across the Vipertooth BIF at McKenzie Well showing RC intercepts from the
recently completed program along with historic RC intercepts completed between 1987 and 1990
17
REVIEW OF OPERATIONS Mt McKenzie
The Mt McKenzie project is located approximately 3.5km north of the Westralia underground. A number of RC drilling
campaigns were completed between 1992 and 1998 targeting BIF hosted mineralisation associated with a series of
cross-cutting north-south striking shears. This historic drilling identified a number of high-grade trends (see Figure 8 below)
which have not been followed up since 1998.
Dacian has commenced a broad diamond drilling program composed of 12 diamond holes for approximately 3,000m of
drilling that aims to test for the continuation of mineralisation at depth, better understand the style of mineralisation and
provide structural and stratigraphic data for future targeting.
Figure 8: West facing longitudinal section across the Mt McKenzie project depicting RC intercepts within the first BIF within each
RC hole. Pale yellow lines represent the interpreted position of mapped D3a structures that correlate with a number of historic RC
intercepts. There is a major structural offset to the North where the BIF is folded along a large scale north-south trending structure
Dacian has refreshed its exploration approach to include discrete strategies for greenfields and advanced targets alongside
dividing the tenement holdings into geologically separate packages.
Greenfields exploration across the defined geological packages requires an improved targeting resolution, utilizing multi-
faceted mineralisation indicators. These include geophysical and geochemical datasets. The company plans to have all
older geophysical datasets evaluated and supplemented with additional data and subsequently introduce new geophysical
programmes. Remote sensing based structural and geomechanical modelling is also planned to supplement the targeting
process. Presently, the regional geochemistry dataset does not provide comprehensive coverage, an evaluation of the
existing multi-element data will be undertaken and consequently a strategic exploration programme is planned.
The objective of acquiring new geophysical, geochemical and geological data is to comprehensively test gold mineralised
prospects both quicker and more cost effectively due to improved targeting.
18 ANNUAL REPORT 2020
REVIEW OF OPERATIONS HUMAN RESOURCES
Dacian currently employs 129 direct employees across the mining operations, exploration, processing and support services.
In addition to the direct employees, the Mt Morgans Gold Operation and Exploration division engages contractors to
perform specialist mining operations and drilling services.
Our recruitment, selection and engagement strategy is based on selecting and retaining the best person for the role,
irrespective of age, sex or cultural background. We value honesty and integrity, doing every job safely and working
collaboratively as part of a team.
We have a commitment to the development of leaders for the future which is evidenced by our leadership development
program and succession through the employment of graduates, university vacation students and apprentices. Employment
opportunities continue to be offered to local and regional communities, including our participation in the 1000 Jobs
package.
19
REVIEW OF OPERATIONS COMMUNITY ENGAGEMENT
Dacian’s aim is to build on its engagement with its local communities, respecting their diversity and culture and
collaborating in various initiatives.
This collaboration has been in the capacity of providing support for employment opportunities, sporting events or funding
assistance and has included:
+ Working with the National Indigenous Australians Agency and the Community Development Program (CDP) provider,
Wirrpanda Foundation, to provide employment opportunities for members of the Yaaliku region (incorporating
Laverton and Leonora) through the 1,000 Jobs Package. The 1,000 Jobs Package has been designed to increase
employment opportunities in remote Australia for CDP participants.
+ Sponsorship of sporting and community events through the Mt Margaret Community School, Laverton School,
Laverton Sports Club and Laverton Leonora Cross Cultural Association.
Managing Director, Leigh Junk and General Manager of Mt Morgans Gold Operation, Ben McAllister, presented to the
Mt Margaret Community School Principal, Debra Lamont, a much needed defibrillator for the Community.
20 ANNUAL REPORT 2020
REVIEW OF OPERATIONS RESOURCES AND RESERVES STATEMENT
Mineral Resources
Mt Morgans Gold Operation (MMGO) total Mineral Resources estimate as of 31 December 2019 is shown in Table 7
below.
Table 7: Total Mineral Resource estimate for MMGO as of 31 December 2019
Cut-off
grade
(Au g/t)
2.0
2.0
2.0
Measured
Indicated
Inferred
Total
Tonnes
303,000
g/t
5.5
Oz
Tonnes g/t
Oz
Tonnes
53,000
1,950,000
6.0
375,000
1,648,000
g/t
4.3
Oz
Tonnes
g/t
Oz
227,000
3,902,000
5.2
655,000
-
-
-
212,000
3.2
22,000
61,000
3.1
6,000
274,000
3.1
27,000
2.0
367,000
5.8
68,000
404,000
5.3
69,000
482,000
4.7
73,000
1,253,000
5.2
210,000
2.0
27,000
3.5
3,000
174,000
3.2
18,000
306,000
3.5
34,000
507,000
3.4
55,000
2.0
2.0
0.5
0.5
0.5
0.5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
481,000
8.1
125,000
481,000
8.1
125,000
583,000
3.0
57,000
615,000
917,000
1.2
35,000
13,891,000
1.3
584,000
1,182,000
469,000
1.8
27,000
42,000
2.4
1.1
1.5
47,000
1,197,000
42,000
15,990,000
2,000
511,000
2.7
1.3
1.8
104,000
661,000
29,000
2,511,000
1.1
89,000
373,000
1.3
16,000
2,884,000
1.1
105,000
250,000
1.4
11,000
40,000
1.6
2,000
290,000
1.3
12,000
0.5
241,000
0.6
5,000
0.5
938,000
0.7
22,000
0.5
3,494,000
0.5
57,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
241,000
0.6
5,000
938,000
0.7
22,000
3,494,000
0.5
57,000
6,287,000
1.2
243,000
20,444,000
1.9 1,252,000 5,323,000
3.4
574,000 31,962,000
2.0 2,067,000
Deposit
Westralia
UG
Ramornie
UG
Transvaal
UG
Morgans
North
Phoenix
Ridge UG
Jupiter UG
Jupiter OP*
Mt Marven
OP*
Cameron
Well OP*
Maxwells
OP*
Mine
Stockpiles
LG
Stockpiles
Jupiter LG
Stockpiles
TOTAL
Please note totals may differ due to rounding
*Reported within an A$2,400/oz pit optimisation
21
Key changes versus the 2018 Mineral Resource estimate are primarily driven by material reductions at the Westralia
underground and a change in reporting method (to within an optimised pit shell) for open pit Mineral Resources, and
include (post mining depletion) (refer to ASX announcement, 27 February 2020):
+ Total Mineral Resources reduced by 40% from 3.5Moz to 2.1Moz (including 52% reduction at Westralia from 1.5Moz
to 0.7Moz)
+ Total Measured and Indicated (M&I) Mineral Resources reduced by 39% from 2.4Moz to 1.5Moz, including 55%
reduction at Westralia from 989koz to 428koz
+ Total Inferred Mineral Resources reduced from 1.1Moz to 0.6Moz, including 50% reduction at Westralia from
528koz to 227koz
+ Jupiter M&I Mineral Resources reduced from 1.0Moz to 0.7Moz (reported within an optimized pit shell)
+ Cameron Well Total Mineral Resources reduced from 245koz to 105koz (reported within an optimized pit shell)
+ Maiden total Mineral Resource estimate for Mt Marven of 0.5Mt @ 1.8 g/t for 29koz
4,000
3,500
3,000
)
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(
2,500
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1,500
1,000
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Figure 9: Key variances between 2018 versus 2019 Mineral Resources estimate for MMGO
The significant changes in the Mineral Resource versus the Company’s 2018 Mineral Resource estimate are shown in Figure 9.
In summary, post mining depletion, the reductions are primarily the result of:
+ Westralia:
1,600
1,400
+ Increased diamond drilling densities across the Beresford and Allanson deposits with approximately 175,500m
and 964 holes completed since the 2018 Mineral Resource estimate, resulting in reductions in previously
assumed high grade domains, as well as reduced strike extent across the mine
1,200
+ A revision in Mineral Resource classification methods applied to the Beresford and Allanson deposits, including
tightening of classification boundaries between M&I and Inferred material
1,000
800
)
z
o
k
(
l
t
a
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T
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v
r
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e
R
+ Jupiter and Cameron Well:
600
+ In line with industry best practice for open pit resource estimation, the Company has revised its reporting methods
for open pit resources. All open pit Mineral Resources are reported within an optimized pit shell using a A$2,400/oz
gold price and current mining parameters from the Jupiter operation
400
200
22 ANNUAL REPORT 2020
a
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O
0
2
0
2
RESOURCES AND RESERVES STATEMENT
Ore Reserves
MMGO total Ore Reserve estimate as of 1 January 2020 is shown in Table 8 below.
Table 8: Total Ore Reserve estimate for MMGO as of 1 January 2020
4,000
3,500
3,000
Deposit
Jupiter OP
2,500
Mt Marven OP
)
z
o
k
(
l
Westralia UG
t
2,000
Transvaal UG
a
o
T
e
c
r
u
o
s
e
R
Mine Stockpiles
1,500
Historical LG Stockpiles
Jupiter LG Stockpile
1,000
TOTAL
Cut off
Grade
Proved
Probable
Total
Au
g/t
0.5
0.5
Tonnes
t
956,000
-
*0.5/2.2
172,000
1.4
0.5
0.5
0.5
193,000
241,000
938,000
3,494,000
Au
g/t
1.0
-
3.6
4.7
0.6
0.7
0.5
Au
oz
Tonnes
t
32,000
8,754,000
-
460,000
20,000
1,332,000
29,000
325,000
5,000
22,000
57,000
-
-
-
Au
g/t
1.3
1.4
4.1
3.4
-
-
-
Au
oz
Tonnes
t
358,000
9,711,000
20,000
460,000
175,000
1,504,000
36,000
-
-
-
518,000
241,000
938,000
3,494,000
Au
g/t
1.3
1.4
4.0
3.9
0.6
0.7
0.5
Au
oz
390,000
20,000
195,000
65,000
5,000
22,000
57,000
5,994,000
0.9 165,000 10,871,000
1.7
589,000
16,866,000
1.4 754,000
* Development and stoping grades respectively. Rounding errors will occur.
500
Compared to the July 2018 Ore Reserve estimate, the updated Ore Reserves see a decrease in total Ore Reserves of 46%,
from 1.4Moz to 0.8Moz. This is inclusive of a 65% decrease to the Westralia Underground Ore Reserve, from 557koz to
195koz. (Refer to ASX announcement, 27 February 2020).
n
o
f
o
l
l
l
The change in the updated Ore Reserves estimate compared to the July 2018 Ore Reserve is as shown in Figure 10.
After mining depletion, the key variances are primarily driven by:
R
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,
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+ A material decrease to the Westralia Underground Mineral Resource
r
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0
2
0
2
+ Removal of the Ganymede sub-pit from the Jupiter Open Pit Ore Reserve
+ Removal of Cameron Well from Ore Reserves
1,600
1,400
1,200
1,000
800
600
400
200
)
z
o
k
(
l
t
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a
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A
e
v
r
e
s
e
R
e
r
O
0
2
0
2
Figure 10: Key variances between 2018 versus 2019 Ore Reserve estimate for MMGO
23
RESOURCES AND RESERVES STATEMENT
Since publishing the Ore Reserve estimate as at 1 January 2020, mining has been carried out at the Jupiter open pits and
the Westralia underground. Table 9 and Table 10 provide the Ore Reserve estimate for the Jupiter open pit and Westralia
underground (respectively) as at 30 June 2020 after depletion for mining.
Table 9: Estimated Ore Reserves for the Jupiter Open Pit as at 30 June 2020 after depletion for mining
Ore Reserves -Jupiter OP
As at 1 Jan 2020
Depletion for mining
As at 30 Jun 2020
Tonnes
(t)
9,711,000
1,289,000
8,422,000
Grade
(g/t)
Contained Metal
(oz)
1.3
1.1
1.3
390,000
47,000
343,000
Table 10: Estimated Ore Reserves for the Westralia Underground as at 30 June 2020 after depletion for mining
Ore Reserves - Westralia UG
As at 1 Jan 2020
Depletion for mining
As at 30 Jun 2020
Governance
Tonnes
(t)
1,503,715
399,850
1,103,865
Grade
(g/t)
Contained Metal
(oz)
4.0
3.4
4.3
195,120
44,105
151,015
Dacian Gold maintains strong governance and internal controls in respect of its estimates of Mineral Resources and
Ore Reserves and the estimation process.
Dacian Gold ensures its sampling techniques, data collection, data veracity and the application of the collected data is
at a high level of industry standard. Contract RC and diamond drilling with QA/QC controls approved by Dacian Gold,
are used routinely. All completed holes are subject to downhole gyro or EMS surveys and collar coordinates surveyed
with DGPS. All drill holes are logged by Dacian Gold geologists. Diamond core is oriented and photographed. Dacian
Gold employs field QC procedures, including addition of standards, blanks and duplicates ahead of assaying which is
undertaken using industry standards including fire assay at Intertek and Bureau Veritas laboratories in Perth and Kalgoorlie.
Assay data is continually validated and stored in DataShed. Geological models and wireframes are built using careful
geological documentation and interpretations, all of which are validated by peer review. Resource estimation is undertaken
by independent consultants and reported under JORC 2012. Estimation techniques are industry standard and include block
modelling using Ordinary Kriging. Application of other parameters including cut off grades, top cuts and classification are
all dependent on the style and nature of mineralisation being assessed.
Ore Reserve estimation is overseen by in-house mining engineers using third party consultants to complete feasibility
studies in mining, metallurgical, geotechnical, environmental and social matters. Results are verified by independent third
party ore reserve specialist consultancies.
Competent Person Statement
The Mineral Resources and Reserves Statement as a whole has been approved by Mr Alex Whishaw a full-time employee
of the Company, and is a Member of the Australasian Institute of Mining and Metallurgy. Mr Whishaw has sufficient
experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity currently
being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves’. Mr Whishaw has approved the Mineral Resources as a whole
and consents to its inclusion in the Annual Report in the form and context in which it appears.
24 ANNUAL REPORT 2020
RESOURCES AND RESERVES STATEMENT Mineral Resources
The information in this report that relates to Mineral Resources for Cameron Well, Morgans North and Maxwells is
based on information compiled by Mr Christopher Oorschot who is a member of the Australasian Institute of Mining and
Metallurgy. Mr Oorschot held options in and was a full-time employee of Dacian Gold Ltd. Mr Oorschot has sufficient
experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which
he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2012).
The information in this report that relates to Mineral Resources for Beresford, Allanson, Jupiter, Mt Marven and Low Grade
Stockpiles is based on information compiled by Mr Calvin Ferguson who is a member of the Australasian Institute of Mining
and Metallurgy. Mr Ferguson was a full-time employee of Dacian Gold Ltd. Mr Ferguson has sufficient experience which is
relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves.
Where the Company refers to the Mineral Resources and Ore Reserves in this report (referencing previous releases made
to the ASX), it confirms that it is not aware of any new information or data that materially affects the information included
in that announcement and all material assumptions and technical parameters underpinning the Mineral Resource estimate
and Ore Reserve estimate with that announcement continue to apply and have not materially changed.
The Company confirms that the form and context in which the Competent Persons findings are presented have not
materially changed from the original announcement.
All information relating to the Mineral Resources and Ore Reserves were prepared and disclosed under the JORC
Code 2012.
Ore Reserves
The information in this report that relates to Open Pit Ore Reserves is based on information compiled by Mr Mathew
Lovelock who is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Lovelock has been
employed by Mt Morgans WA Mining Pty Ltd. (a subsidiary of Dacian Gold Ltd.) since February 2018 and is based
at the Mount Morgans Gold Operation (MMGO). Mr Lovelock has sufficient experience which is relevant to the style
of mineralisation and type of deposit under consideration and to the mining activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves.
The information in this report that relates to Westralia Underground Ore Reserves is based on information compiled by
Dr Kelly Fleetwood (BSc, MSc, PhD MinEng) who is a Member of the Australasian Institute of Mining and Metallurgy
(AusIMM). Dr Fleetwood was employed by Mt Morgans WA Mining Pty Ltd. (a subsidiary of Dacian Gold Ltd.) and was
based at the Mount Morgans Gold Operation (MMGO). Dr Fleetwood has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and to the mining activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves.
The information in this report that relates to Transvaal Underground Ore Reserves (see ASX announcement 21 November
2016) is based on information compiled or reviewed by Mr Matthew Keenan and Mr Shane McLeay. Messrs. Keenan and
McLeay have confirmed that they have read and understood the requirements of the 2012 Edition of the Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2012 Edition). They are Competent
Persons as defined by the JORC Code 2012 Edition, having more than five years’ experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity for which they are accepting responsibility. Messrs
Keenan and McLeay are both a Member of the Australasian Institute of Mining and Metallurgy and fulltime employees of
Entech Pty Ltd.
25
RESOURCES AND RESERVES STATEMENT The Board is responsible for the overall corporate governance of the Company, including the establishing and monitoring
of key performance goals. It is committed to attaining standards of corporate governance that are commensurate with
the Company’s needs. In this regard, the Board has created a framework for managing the Company, including internal
controls and a business risk management process. This framework is reflected, in part, in the policies and charters
described below.
The Board has adopted, and endorses The ASX Corporate Governance Council Principles and Recommendations
(3rd Edition) as amended from time to time (ASX Recommendations) and has adopted the ASX Recommendations
that are considered appropriate for the Company given its size and the scope of its activities. Details of the Company’s
compliance with the ASX Recommendations are set out below.
In light of the Company’s current stage of development, the Board considers that its current composition is appropriate.
As the Company’s activities change in nature and scope, the size of the Board and the implementation of additional
corporate governance policies and structures will be reviewed and may change.
The 2020 Corporate Governance Statement was adopted by the Board on 29 September 2020.
Ian Cochrane
Non-Executive Chairman
Leigh Junk
Managing Director
Robert Reynolds
Non-Executive Director
Barry Patterson
Non-Executive Director
Kevin Hart
Company Secretary
The Company’s corporate governance policies and practices as at the date of this Report are outlined below and are
available on the Company’s website (www.daciangold.com.au).
Board Charter
The Board guides and monitors the business and management of the Company. Under its Charter, the Board is responsible
for, amongst other things:
1.
corporate governance and the strategic direction of the Company;
2. protecting and enhancing Shareholder value;
3.
supervising the Company’s framework of control and accountability systems;
4.
reviewing performance and responsibilities within the Company to ensure division of functions are appropriate to the
Company’s needs and that the Company is properly managed;
5. monitoring and managing the financial performance of the Company;
6. approving the annual budget and statutory reports;
7. developing and implementing the Company’s policies and procedures and assessing their adequacy;
8. monitoring and ensuring compliance with the Company’s continuous disclosure obligations;
9.
convening and attending general meetings of Shareholders; and
10. assessing and approving all transactions which would impact on Shareholder value and, where relevant, make
recommendations to shareholders.
The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’
participation in the Board discussions on a fully informed basis.
26 ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT Audit Committee Charter
The Board has adopted an Audit Committee Charter which outlines the composition of the committee, its purpose, its
responsibilities and requirements of its meetings. In summary, the Audit Committee is responsible for ensuring the integrity
of the Company’s financial statements, the effectiveness of financial reporting and liaison with the Company’s auditor.
Remuneration Committee Charter
The Board has adopted a Remuneration Committee Charter which outlines the composition of the committee, its role, its
responsibilities, its authority, and requirements of its meetings. In summary, the Remuneration Committee is responsible for
preparing and reviewing the Company’s strategy with regard to remunerating, recruiting, incentivising, retaining and, where
appropriate, terminating the Company’s executives, Non-Executive Directors and employees.
Nomination Committee Charter
The Board has adopted a Nomination Committee Charter which outlines the composition of the committee, its role, its
responsibilities, its authority, and requirements of its meetings. In summary, the Nomination Committee is responsible for
ensuring that the Board, and its various Committees, are comprised of the required skills, experience and competencies, to
induct and educate new Directors, and the evaluation of the performance of the Board and its Committees.
Code of Conduct for Directors, Senior Executives and Employees
The Board has adopted a Code of Conduct for Directors, senior executives and employees to promote ethical and
responsible decision making and execution of their roles and responsibilities. The code is based on a code of conduct
prepared by the Australian Institute of Company Directors.
Continuous Disclosure Policy
The Company is, subject to the exceptions contained in the Listing Rules, required to disclose to ASX any information
concerning the Company which is not generally available and which a reasonable person would expect to have a material
impact on the price or value of Shares.
The Company is committed to observing its disclosure obligations under the Corporations Act and the Listing Rules.
The policy encourages a culture of openness which is conducive to fulfilment of the Company’s disclosure obligations
and creates clear lines of communication and authority with regard to the dissemination of information and continuous
disclosure issues. In accordance with this policy, all information provided to ASX is made available on the Company’s
website (www.daciangold.com.au).
Share Trading Policy
The Company has adopted a Share Trading Policy to maintain investor confidence in the integrity of Company’s internal
controls and procedures, and to provide guidance on avoiding any breach of insider trading laws.
Under the policy, all employees and Directors are prohibited from trading in the Company’s securities, except during a
10 day trading window that opens 24 hours after the Company makes a public announcement on ASX, including, but not
limited to, after a general meeting, and on disclosure of half year, full year and quarterly results.
An employee or Director who is in possession of price sensitive information which is not generally available to the market
must not deal in the Company’s securities at any time, or if the Chairman directs, even if a trading window is open.
In addition, a Director who wishes to trade in the Company’s securities must first obtain the consent of the Chairman.
27
CORPORATE GOVERNANCE STATEMENT Directors’ Disclosure Obligations
This policy provides that, in addition to Corporations Act disclosures, any change in a Director’s direct or indirect interest in
Company securities must be disclosed to the Company so that appropriate disclosure can be made by the Company to ASX
in accordance with the Listing Rules.
Shareholder Communications Policy
This policy details how the Company is committed to keeping Shareholders appraised of the Company’s activities, including
by providing regular communications that are balanced and understandable, ensuring information is easily accessible, and
facilitating Shareholder participation in the Company’s general meetings.
Risk Management Policy
The Chief Executive Officer is primarily responsible for administering this policy, which sets out the way in which various
types of risk are to be managed, including by reviews of internal controls, financial reporting, operational activities,
investment proposals, environmental and safety risks and continuous improvement.
Environment Policy
The Company recognises that it has a fundamental requirement to conduct its proposed activities in an environmentally
responsible manner. Under this policy, the Company will develop an environmental management system to ensure
legislative compliance, high levels of employee awareness, stakeholder participation when developing project systems, best
practice performance by contractors and continual improvement in respect of environmental protection issues and hazard
minimisation.
Diversity policy
The Board has adopted a diversity policy which provides a framework for the Company to achieve, amongst other things,
a diverse and skilled board and workforce, a workplace culture characterised by inclusive practices and behaviours for
the benefit of all staff, and a work environment that values and utilises the contributions of all employees, irrespective of
gender, culture, disability, age or religion.
The Company employs new employees and promotes current employees on the basis of performance, ability and attitude.
The Board is continually reviewing its practices with a focus on ensuring that the selection process at all levels within the
organisation is formal and transparent and that the workplace environment is open, fair and tolerant.
The Company, in keeping with the recommendations of the Corporate Governance Council provides the following
information regarding the proportion of gender diversity in the organisation as at 30 June 2020:
Proportion of female /
total number of persons employed
Females employed in the Company as a whole
Females employed in the Company in senior executive positions*
Females appointed as a Director of the Company
29/141
0/2
0/4
*The Board considers that other than the Managing Director, the Company has only two Senior Executives, being the Chief Financial Officer and the
Chief Operating Officer.
The Company is a “relevant employer” for the purposes of the Workplace Gender Equality Act. Our recent Workplace
Gender Equality Agency Report for 2020 which includes the “Gender Equality Indicators” is available on the Company’s
website https://www.daciangold.com.au/site/sustainability/governance
28 ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT The recommendations of the Corporate Governance Council relating to reporting, require a Board to set measurable
objectives for achieving diversity within the organisation, and to report against them on an annual basis. The Company
has implemented measurable objectives as follows:
Measurable Objective
Adoption and promotion of a Formal Diversity
Policy
To ensure Company policies are consistent with
and aligned with the goals of the Diversity Policy
To provide flexible work and salary arrangements
to accommodate family commitments, study and
self-improvement goals, cultural traditions and
other personal choices of current and potential
employees.
To implement clear and transparent policies
governing reward and recognition practices.
To provide relevant and challenging professional
development and training opportunities for all
employees.
Objective
Satisified Comment
Yes
Yes
Yes
Yes
Yes
The Company has adopted a formal diversity policy
which has been made publicly available via the ASX and
the Company’s website.
The Company’s selection, remuneration and promotion
practices are merit based and as such are consistent
with the goals of the Company’s Diversity Policy.
The Company will, where considered reasonable and
where compatible with the Company’s operations,
accommodate requests for flexible working
arrangements.
The Company grants reward and promotion based
on merit and responsibility as part of its annual and
ongoing review processes.
The Company seeks to continually encourage self-
improvement in all employees, irrespective of seniority,
ability or experience, through external and internal
training courses, regular staff meetings and relevant on
job mentoring.
The Company has not at this time implemented specific measurable objectives regarding the proportion of females to be
employed within the organisation or implement requirements for a proportion of female candidates for employment and
Board positions. The Board considers that the setting of quantitative gender based measurable targets is not necessarily
consistent with the merit and ability-based policies currently implemented by the Company.
The Board will consider the future implementation of gender-based diversity measurable objectives when more appropriate
to the size and nature of the Company’s operations.
29
CORPORATE GOVERNANCE STATEMENT Compliance with ASX Recommendations
The Company’s compliance with, and departures from, the ASX Recommendations as at the date of the Report are set out
below:
ASX RECOMMENDATION
COMPANY’S COMMENT
1. Lay solid foundations for management and oversight
1.1. A listed entity should disclose:
(a) The respective roles and responsibilities of its
board and management; and
(b) Those matters expressly reserved to the board
and those delegated to management.
1.2. A listed entity should:
(a) Undertake appropriate checks before appointing
a person, or putting forward to security holders
a candidate for election, as a director; and
(b) Provide security holders with all material relevant
information in its possession relevant to a
decision on whether or not to elect or re-elect a
director.
1.3. A listed entity should have a written agreement with
each director and senior executive setting out the
terms of their appointment.
1.4. The Company Secretary of a listed entity should be
accountable directly to the board, through the chair,
on all matters to do with the proper functioning of the
board.
30 ANNUAL REPORT 2020
The Board assumes ultimate responsibility for providing
leadership and setting the strategic objectives of the
Company. The Board Charter, which is available on the
Company’s website www.daciangold.com.au, provides details
on the board’s specific responsibilities.
Management of the Company’s activities is delegated by the
Board to the CEO, Mr Leigh Junk. Mr Junk commenced as
Managing Director and CEO on 6 January 2020. Prior to that
date, Mr Rohan Williams was the CEO. The CEO is assisted
by the Company Secretary and other senior executives in
managing and reporting on corporate and operational
matters.
As part of the process for the identification of suitable future
candidates for appointment as a director of the Company,
the Board will take into consideration the person’s character,
experience, education, criminal record and bankruptcy history.
Candidate details, as recommended by the ASX Corporate
Governance Principles and Recommendations, are included
in the relevant notice of meeting at which the Company seeks
approval from security holders for the election or re-election
of an individual as a director of the Company.
During the 2020 financial year Mr Leigh Junk was appointed
by the Company as Managing Director and CEO.
The 2020 Annual General Meeting notice will contain
relevant details of any director subject to election by
shareholders. Mr Barry Paterson has advised the Company
that he will retire from the Board at the 2020 AGM.
Executive directors and other senior executives of the
Company are engaged subject to the terms of written
service contracts, key details of which are published in the
Company’s Annual Report.
Non-executive directors are required to enter into written
agreements for the provision of their services.
The respective executive and Non-Executive Director
agreements set out the terms of their respective appointments,
including but not limited to, duties and responsibilities,
remuneration (and where appropriate, any termination
provisions) and indemnity and insurance arrangements.
The Company Secretary attends all board and shareholder
meetings, and provides advice as required on governance
matters.
In addition, each individual director is able to communicate
directly with the Company Secretary, or vice versa, as
required.
CORPORATE GOVERNANCE STATEMENT ASX RECOMMENDATION
1.5. A listed entity should:
(a) Have a diversity policy which includes
requirements for the board or a relevant
committee of the board to set measurable
objectives for achieving gender diversity and
to assess annually both the objectives and the
entity’s progress in achieving them;
(b) Disclose that policy or a summary of it; and
(c) Disclose at the end of each reporting period
the measurable objectives for achieving
gender diversity set by the board or a relevant
committee of the board in accordance with the
entity’s diversity policy and its progress towards
achieving them, and either:
(1) The respective proportions of men
and women on the board, in senior
executive positions and across the whole
organisation; or
(2)
If the entity is a “relevant employer” under
the Workplace Gender Equality Act, the
entity’s most recent “Gender Equality
Indicators”, as defined in and published
under that Act.
1.6. A listed entity should:
(a) Have and disclose a process for periodically
evaluating the performance of the board, its
committees and individual directors; and
(b) Disclose, in relation to each reporting
period, whether a performance evaluation
was undertaken in the reporting period in
accordance with that process.
1.7. A listed entity should:
(a) Have and disclose a process for periodically
evaluating the performance of its senior
executives; and
(b) Disclose, in relation to each reporting
period, whether a performance evaluation
was undertaken in the reporting period in
accordance with that process.
COMPANY’S COMMENT
The Company has adopted a diversity policy which is available
on the Company’s website www.daciangold.com.au.
A brief summary of the policy and its aims are disclosed in this
corporate governance statement.
The measurable objectives adopted by the Board are
disclosed in this corporate governance statement.
The measurable objectives, which seek to allow and
promote diversity by ensuring that the Company’s selection,
remuneration and promotion practices are merit based, do
not at this stage include any specific numerical targets for
gender, or any other, diversity measures.
This corporate governance statement includes disclosure
regarding gender diversity within the Company as at 30 June
2020.
The Company is a “relevant employer” for the purposes of the
Workplace Gender Equality Act.
The Company has a formal process for the evaluation of the
performance of the Board and as such, does comply with
Recommendation 1.6 of the Corporate Governance Council.
The Board undertakes an annual formal review of its
performance. The process includes the completion of
individual questionnaires focussed on Board processes,
effectiveness and structure as well as the effectiveness
and contribution made by each Director. The responses
are collated and discussed with a view to considering
recommendations for improvement.
A formal performance evaluation has not been undertaken
during the year ended 30 June 2020.
The Company has complied with Recommendation 1.7 of the
Corporate Governance Council.
The Managing Director/CEO currently conducts annual
performance appraisal meetings with senior executives
incorporating a formal appraisal form and review of each
individual’s performance and contribution during the year.
The Managing Director/CEO performance is assessed
by the independent Non-Executive Directors through the
Remuneration Committee. Mr Junk commenced as Managing
Director in January 2020.
A formal performance evaluation has not been undertaken
during the year ended 30 June 2020.
31
CORPORATE GOVERNANCE STATEMENT ASX RECOMMENDATION
COMPANY’S COMMENT
2. Structure the board to add value
2.1. The board of a listed entity should:
(a) Have a nomination committee which:
(1) Has at least three members, a majority of
whom are independent directors; and
(2)
Is chaired by an independent director; and
disclose;
(3) The charter of the committee;
(4) The members of the committee; and
(5) As at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b)
If it does not have a nomination committee,
disclose that fact and the processes it employs to
address board succession issues and to ensure
that the board has the appropriate balance of
skills, knowledge, experience, independence
and diversity to enable it to discharge its duties
and responsibilities effectively.
2.2. A listed entity should have and disclose a board skills
matrix setting out the mix of skills and diversity that
the board currently has or is looking to achieve in its
membership.
The Company did have a separate nomination committee
for the whole of the 2019 financial year, and as such does
comply with Recommendation 2.1.
The Company has adopted a formal Nomination Committee
Charter which is available on the Company’s website
www.daciangold.com.au.
The Nomination Committee comprises the Company’s three
independent Non-Executive Directors.
Mr Patterson has been appointed as the Chair of the
Nomination Committee.
The Nomination Committee did not formally meet during the
2020 financial year. The full Board of the Company met to
consider and appoint Mr Junk as Managing Director/CEO.
The Company has developed a board skills matrix and as
such complies with Recommendation 2.2.
Skill sets currently included on the Company’s Board include
technical, financial, managerial, legal, corporate and
commercial.
Key specific skill sets identified include:
+ Mining and exploration geology
+ Mine engineering
+ Accounting, treasury and corporate finance
+ Gold industry knowledge
+ Business strategy and planning
+ Risk management
+ Mergers and acquisitions
+ Project studies and construction
+ Legal
+ Management of public listed companies
Details of the respective directors’ relevant experience and
qualifications is included in the Annual Report.
The Nomination Committee and the Board will consider
the skill, knowledge, experience and independence of the
Company’s directors in response to any actual or proposed
changes in the Company’s activities or operations.
32 ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT ASX RECOMMENDATION
2.3. A listed entity should disclose:
(a) The names of the directors considered by the
board to be independent directors;
(b)
If a director has an interest, position, association
or relationship that may cause doubts about
the independence of a director, but the board is
of the opinion that it does not compromise the
independence of the director, the nature of the
interest, position, association or relationship in
question and an explanation of why the board is
of that opinion; and
COMPANY’S COMMENT
The Board considers its Non-Executive Directors, Mr Barry
Patterson, Mr Robert Reynolds and Mr Ian Cochrane to be
independent directors.
The Board does not consider that Mr Patterson, Mr Reynolds
or Mr Cochrane are party to any interests, positions,
associations or relationships that would compromise their
status as independent directors.
The current directors of the Company commenced office on
the following dates:
Mr Leigh Junk – 6 January 2020
(c) The length of service of each director.
Mr Barry Patterson – 9 January 2012
2.4. A majority of the board of a listed entity should be
independent directors.
2.5. The Chair of the board of a listed entity should be an
independent director and, in particular, should not be
the same person as the CEO of the entity.
2.6. A listed entity should have a program for inducting
new directors and provide appropriate professional
development opportunities for directors to develop
and maintain the skills and knowledge needed to
perform their role as directors effectively.
3. Act ethically and responsibly
3.1. A listed entity should:
(a) Have a code of conduct for its directors, senior
executives and employees; and
(b) Disclose that code or a summary of it.
Mr Robert Reynolds – 26 October 2012
Mr Ian Cochrane – 26 February 2016
The Company confirms that a majority of its Board is
comprised of independent directors.
The Chair of the Company, Mr Ian Cochrane was appointed
as Chair on 6 January 2020 and is considered to be
independent. Prior to that date Mr Rohan Williams was
Executive Chairman and was not considered independent due
to his executive status as CEO of the Company.
As such the Company did not comply with Recommendation
2.5 for the full year. From January 2020 the Company was in
compliance with this recommendation.
Familiarity with the entity’s operations by the directors is
encouraged and facilitated by regular board meetings, and
through direct contact with the Company Secretary and senior
staff members.
The Company will provide resources to directors to enable
them to improve on their skills and knowledge base to enable
them to carry out their duties as directors effectively.
The Company has adopted a Code of Conduct that applies
to all directors, executives and employees.
A copy of the code is available on the Company’s website
www.daciangold.com.au.
33
CORPORATE GOVERNANCE STATEMENT ASX RECOMMENDATION
COMPANY’S COMMENT
4. Safeguard integrity in corporate reporting
4.1. The board of a listed entity should:
(a) Have an audit committee which:
The Company did have a separate audit committee for the
whole of the 2020 financial year, and as such does comply
with Recommendation 4.1.
(1) Has at least three members, all of whom
are Non-Executive Directors and a majority
of whom are independent directors; and
The Company has adopted a formal Audit Committee
Charter which is available on the Company’s website
www.daciangold.com.au.
(2)
Is chaired by an independent director, who
is not the chair of the board; and disclose;
The Audit Committee comprises the Company’s three
independent Non-Executive Directors.
(3) The charter of the committee;
(4) The relevant qualifications and experience
of the members of the committee; and
(5) As at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b)
If it does not have an audit committee,
disclose that fact and the processes it employs
that independently verify and safeguard the
integrity of its corporate reporting, including the
processes for the appointment and removal of
the external auditor and the rotation of the audit
engagement partner.
4.2. The board of a listed entity should, before it approves
the entity’s financial statements for a financial period,
receive from its CEO and CFO a declaration that,
in their opinion, the financial statements of the
entity have been properly maintained and that the
financial statements comply with the appropriate
accounting standards and give a true and fair view of
the financial position and performance of the entity
and that the opinion has been formed on the basis
of a sound system of risk management and internal
control which is operating effectively.
4.3. A listed entity that has an AGM should ensure that its
external auditor attends its AGM and is available to
answer questions from security holders relevant to the
audit.
Mr Reynolds, who is a qualified and experienced Chartered
Accountant has been appointed as the Chair of the Audit
Committee. In addition, Mr Patterson and Mr Cochrane have
extensive experience as directors of publicly listed companies.
The Audit Committee formally met twice during the 2020
financial year.
The Board requires that the CEO and CFO provide a
declaration that satisfies the requirements of section 295A
of the Corporations Act and that confirms that their opinion
has been formed on the basis that a sound system of risk
management and internal control is operating effectively, prior
to approving the annual and half yearly financial statements,
and quarterly cash flow reports.
The Company ensures that the engagement audit partner, or
their representative, attends the AGM.
The Company will make arrangements to enable security
holders to ask questions relevant to the audit at, or ahead of,
its AGM.
34 ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT ASX RECOMMENDATION
COMPANY’S COMMENT
5. Make timely and balanced disclosure
5.1. A listed entity should:
(a) Have a written policy for complying with its
continual disclosure obligations under the Listing
Rules; and
(b) Disclose that policy or a summary of it.
6. Respect the rights of security holders
6.1. A listed entity should provide information about itself
and its governance to investors via its website.
6.2. A listed entity should design and implement an
investor relations program to facilitate effective two-
way communication with investors.
The Company has adopted a formal Continuous Disclosure
Policy which is available on the Company’s website
www.daciangold.com.au.
Information regarding the Company’s management,
corporate governance, projects and other information
relevant to investors and prospective investors is updated
regularly on its website www.daciangold.com.au.
The Company has adopted a formal shareholder
communication policy and strategy, and seeks to inform
investors of developments regularly by communicating
through ASX announcements and by providing information on
its website.
Investors are encouraged to attend the Company’s security
holder meetings and are able to contact management by
email info@daciangold.com.au or by phone (08) 6323 9000.
6.3. A listed entity should disclose the policies and
processes it has in place to facilitate and encourage
participation at meetings of security holders.
The Company has adopted a formal shareholder
communication policy regarding participation at its security
holder meetings.
6.4. A listed entity should give security holders the
option to receive communications from, and send
communications to, the entity and its security registry
electronically.
The Company does provide meeting documents in a timely
manner and seeks to hold meetings that may be attended
by security holders in convenient locations and at times
considered to be reasonable. Security holders attending such
meetings are encouraged to attend and participate, both
during and after the formal notified business.
All security holders are encouraged to provide the Company’s
share registry with email addresses to enable electronic
communication, in addition provision is made, where
possible, for security holders to be able to vote on AGM and
general meeting matters electronically.
The Company has implemented a newsletter service
whereby investors may subscribe via the Company’s website
www.daciangold.com.au to receive relevant Company
updates by email.
Security holders may contact the Company electronically by
email info@daciangold.com.au.
35
CORPORATE GOVERNANCE STATEMENT ASX RECOMMENDATION
COMPANY’S COMMENT
7. Recognise and manage risk
7.1. The board of a listed entity should:
(a) Have a committee or committees to oversee
risk, each of which:
(1) Has at least three members, a majority of
whom are independent directors; and
(2)
Is chaired by an independent director; and
disclose;
(3) The charter of the committee;
(4) The members of the committee; and
(5) As at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b)
If it does not have a risk committee or
committees that satisfy (a) above, disclose that
fact and the processes it employs for overseeing
the entity’s risk management framework.
7.2. The board or a committee of the board should:
(a) Review the entity’s risk management framework
at least annually to satisfy itself that it continues
to be sound; and
(b) Disclose, in relation to each reporting period,
whether such a review has taken place.
The Company has not established a formal committee for the
overseeing of risk and has not adopted a committee charter,
therefore does not comply with Recommendation 7.1. Risk is
managed at the Board level with all members included in the
process.
Day to day risk management is delegated to the Managing
Director/CEO, who is supported in monitoring and managing
risks by the Company Secretary and senior employees.
The Company’s Risk Management Policy, which sets out a
framework for a system of risk management and internal
compliance and control, is available on the Company’s
website www.daciangold.com.au.
The Company seeks to ensure that risks relating to exploration
and mining activities are monitored and mitigated with
reference to generally accepted industry practice and by
adherence to laws and recommendations provided by
regulatory bodies.
Potential and actual material risks identified are reported on,
and considered by directors, at each board meeting.
The Company considers that a formal risk committee is not
essential at this stage and the duties can be effectively carried
out by the Board, with the assistance of senior management.
The Board and senior management review and identify risks
to the Company and its assets on an ongoing basis. Any
new risks identified, or material changes to existing risks are
reported on at subsequent board meetings.
The Company has not undertaken a formal review of the
entity’s risk management framework at board level, therefore
does not comply with Recommendation 7.2.
7.3. A listed entity should disclose:
The Company does not have an internal audit function.
(a)
(b)
If it has an internal audit function, how the
function is structured and what role it performs;
or
If it does not have an internal audit function,
that fact and the processes it employs for
evaluating and continually improving the
effectiveness of its risk management and internal
control processes.
The Board does not consider that the Company’s operations
are of a size or complexity to require a dedicated internal
audit function and that processes and inherent risks are
sufficiently transparent as to be identified by board members.
Board members have direct access to management and
employees to request any information regarding the
Company’s internal control processes.
36 ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT ASX RECOMMENDATION
COMPANY’S COMMENT
7.4. A listed entity should disclose whether it has any
material exposure to economic, environmental
and social sustainability risks and, if it does, how it
manages or intends to manage those risks.
8. Remunerate fairly and responsibly
8.1. The Board of a listed entity should:
(a) Have a remuneration committee which:
(1) Has at least three members, a majority of
whom are independent directors; and
(2)
Is chaired by an independent director; and
disclose;
(3) The charter of the committee;
(4) The members of the committee; and
(5) As at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b)
If it does not have a remuneration committee,
disclose that fact and the processes it employs
for setting the level and composition of
remuneration for directors and senior executives
and ensuring that such remuneration is
appropriate and not excessive.
The Company is subject to a number of economic,
environmental and occupational health and safety risks,
typical of those associated with a publicly listed entity
engaged in the mineral exploration industry. The Company is
not aware of any material social sustainability risks in the local
communities in which it operates.
All business risks are managed by the CEO with the support
of employees and consultants where appropriate.
Potential and actual material risks identified are reported on,
and considered by directors, at each board meeting.
The Company did have a separate remuneration committee
for the whole of the 2020 financial year, and as such does
comply with Recommendation 8.1.
The Company has adopted a formal Remuneration
Committee Charter which is available on the Company’s
website www.daciangold.com.au.
The Remuneration Committee ensures that no individual
director or senior executive is involved in deciding their own
remuneration.
The Company’s annual remuneration report, which is
published in the annual report, provides comment on the
relationship between remuneration and performance and how
it is aligned to the creation of value for security holders.
The Remuneration Committee comprises the Company’s three
independent Non-Executive Directors.
With the appointment of Mr Ian Cochrane as Chairman of the
Company in January 2020, Mr Robert Reynolds has assumed
the role as the Chair of the Remuneration Committee.
The Remuneration Committee formally met twice during the
2020 financial year.
8.2. A listed entity should separately disclose its policies
and practices regarding the remuneration of Non-
Executive Directors and the remuneration of executive
directors and other senior executives.
The Company’s annual remuneration report, which is
published in the annual report, provides information
regarding the remuneration of executive director and other
senior executives, and Non-Executive Directors.
8.3. A listed entity which has an equity-based
remuneration scheme should:
(a) Have a policy on whether participants are
The Company’s annual reports are available for review on
www.daciangold.com.au.
The Company’s policy for trading in its securities by
directors, senior executives and employees is available on
www.daciangold.com.au.
permitted to enter into transactions (whether
through the use of derivatives or otherwise)
which limit the economic risk of participating in
the scheme; and
The policy does not include a specific prohibition in entering
into transactions which limit the economic risk of participating
in the scheme, where the remuneration is unvested, or vested
but remains subject to a holding lock.
(b) Disclose that policy or a summary of it.
A prohibition into entering into such arrangements is provided
for in the Corporations Act.
37
CORPORATE GOVERNANCE STATEMENT DACIAN GOLD LIMITED
ABN 61 154 262 978
Annual Financial Statements
for the
Year Ended 30 June 2020
38 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
DACIAN GOLD LIMITED
ABN 61 154 262 978
FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2020
CONTENTS
CONTENTS ....................................................................................................................................................... 1
DIRECTORS’ REPORT ........................................................................................................................................ 2
AUDITOR’S INDEPENDENCE DECLARATION................................................................................................... 25
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ........................ 26
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................................ 27
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................................................. 28
CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................................................. 29
NOTES TO THE FINANCIAL STATEMENTS ...................................................................................................... 30
DIRECTORS’ DECLARATION……………………………………………………………………………………………………………............74
INDEPENDENT AUDITOR’S AUDIT REPORT………………………………………………………………………………………………..75
39
ANNUAL FINANCIAL STATEMENTS DIRECTORS’ REPORT
The Directors present the financial statements of Dacian Gold Limited (“the Company”) and its controlled subsidiaries
(“the Group”) for the year ended 30 June 2020. In order to comply with the provisions of the Corporations Act 2001,
the Directors’ Report is as follows:
Directors
The Directors of the Company in office since 1 July 2019 and up to the date of this report are:
Ian Cochrane BCom LLB
(Non-Executive Chairman – previously a Non-Executive Director until his appointment as Chairman on 6 January
2020)
Mr Cochrane is a corporate lawyer and was widely regarded as one of Australia’s leading M&A lawyers until his
retirement from the practice of law in December 2013.
Educated in South Africa where he completed degrees in Commerce and Law, he immigrated to Australia in 1986 and
joined national law firm Corrs Chambers Westgarth and then Mallesons Stephen Jaques, specialising in Mergers &
Acquisitions.
In 2006, Mr Cochrane co-established boutique law firm Cochrane Lishman, which was eventually acquired by the global
law firm Clifford Chance in early 2011.
Mr Cochrane is currently the Chairman of diversified ASX-listed mining services group Perenti Global Limited (ASX:
PRN).
Other than as stated above, Mr Cochrane has not served as a Director of any other listed companies in the three years
immediately before the end of the 2020 financial year.
Leigh Junk Dip Surv, GDip MinEng, Msc MinEcon, GAICD
(Managing Director & CEO – appointed 6 January 2020)
Mr Junk is a Mining Engineer with over 25 years of operational and executive management experience in numerous
Australian mining companies across multiple commodities including gold, nickel and manganese.
Mr Junk has been a Director of several public companies in the Mining and Financial sectors in Australia and Canada,
and most recently was the CEO and Managing Director of Doray Minerals Ltd until its merger with Silver Lake Resources
in 2019.
Mr Junk was a co-founder of Donegal Resources which was successful in purchasing and recommissioning several
Nickel operations around Kambalda WA until it was sold to Canadian miner Brilliant Mining Corp.
In 2003, Mr Junk was the recipient of the Ernst & Young WA “Young Entrepreneur of the Year Award” and in 2007 was
a winner in the WA Business News “40 Under 40 Award”.
Other than as stated above, Mr Junk has not served as a Director of any other listed companies in the three years
immediately before the end of the 2020 financial year.
Dacian Gold Limited 2020 Annual Report
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40 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Robert Reynolds MAusIMM
(Non-Executive Director)
Mr Reynolds was the Non-Executive Chairman of Avoca Resources Ltd from 2002 until it merged with Anatolia Minerals
to form Alacer Gold Corp in 2011. Mr Reynolds was Non-Executive Chairman of Alacer Gold Corp until 23 August 2011.
With over 35 years’ commercial experience in the mining sector, Mr Reynolds has worked on mining projects in a
number of locations including Australia, Africa and across the Oceania region and has extensive experience in mineral
exploration, development and mining operations.
Mr Reynolds was a long term Director of Delta Gold Limited and was a Director of Extorre Gold Mines Limited when it
was acquired by Yamana Gold for CAD$414 million on 22 August 2012. Mr Reynolds was also previously a Director of
Canadian company Exeter Resource Corporation when it was acquired by Goldcorp Inc. on 2 August 2017 for CAD$184
million. Mr Reynolds currently holds a Directorship with Canadian company Rugby Mining Limited.
Other than as stated above, Mr Reynolds has not served as a Director of any other listed companies in the three years
immediately before the end of the 2020 financial year.
Barry Patterson ASMM, MAusIMM, FAICD
(Non-Executive Director)
Mr Patterson is a mining engineer with over 50 years of experience in the mining industry and is co-founder, and Non-
Executive Director, of ASX listed GR Engineering Limited.
Mr Patterson was also a founding shareholder of leading engineering services provider JR Engineering, which became
Roche Mining after being taken over by Downer EDI in 2002. He also co-founded contract mining companies Eltin,
Australian Mine Management and National Mine Management.
Mr Patterson has served as a Director of a number of public companies across a range of industries. He was formerly
the Non-Executive Director of Sonic Healthcare Limited for 8 years and Chairman for 11 years, during which time the
company’s market capitalisation increased from $20 million to $4 billion, and Silex Systems Limited.
Other than as stated above, Mr Patterson has not served as a Director of any other listed companies in the three years
immediately before the end of the 2020 financial year.
Rohan Williams BSc (Hons), MAusIMM
(Executive Chairman & CEO – retired 6 January 2020)
Mr Williams has over 30 years of experience in exploration, mine development and operations in both Australia and
overseas. Mr Williams also serves on the Board of the Telethon Kids Institute.
On 14 March 2014, Mr Williams became Executive Chairman of the Company. Prior to this date, Mr Williams
undertook the Chairman’s role on a Non-Executive basis.
Other than as stated above, Mr Williams has not served as a Director of any other listed companies in the three years
immediately before the end of the 2020 financial year.
Mr Williams was the CEO and Executive Chairman until his retirement on 6 January 2020.
Kevin Hart B.Comm, FCA
Company Secretary
Mr Hart is a Chartered Accountant and was appointed to the position of Company Secretary on 27 November 2012.
He has over 35 years’ experience in accounting and the management and administration of public listed entities in the
mining and exploration industry.
He is currently a partner in an advisory firm, Endeavour Corporate, which specialises in the provision of company
secretarial and accounting services to ASX listed entities.
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41
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Meetings of Directors
The number of meetings of the Company’s Board of Directors and each Board Committee held during the year ended
30 June 2020, and the number of meetings attended by each Director were:
Director
Board Meetings
Remuneration &
Nomination Committee
Audit Committee
Leigh Junk (i)
Rohan Williams (ii)
Robert Reynolds
Barry Patterson
Ian Cochrane
A
8
7
15
15
15
B
7
7
15
14
15
A
-
-
2
2
2
B
-
-
2
2
2
A
-
-
2
2
2
B
-
-
2
2
2
A = the number of meetings the Director was entitled to attend
B = the number of meetings the Director attended
(i) Mr Junk was appointed Managing Director & CEO with effect from 6 January 2020.
(ii) Mr Williams retired with effect from 6 January 2020.
Directors’ interests
The following relevant interests in shares, options and performance rights of the Company were held by the Directors
as at the date of this report:
Director
Leigh Junk
Robert Reynolds
Barry Patterson
Ian Cochrane
Number of fully paid
ordinary shares
959,076
3,063,888
19,915,307
530,590
Number of options vested
and exercisable
-
-
-
300,000
Number of rights over
ordinary shares
8,333,334
-
-
-
During the period, 1,499,893 shares were issued to Rohan Williams on the cashless exercise of 2,000,000 options which
had an exercise price of $0.39. The options were exercised for nil consideration pursuant to the cashless exercise
provisions of the Dacian Gold Limited Employee Option Plan.
Further details of the vesting conditions applicable to the options and performance rights are disclosed in the
remuneration report section of this Directors’ Report.
Dacian Gold Limited 2020 Annual Report
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42 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Securities
Options
At the date of this report, unissued ordinary shares of the Company under option are:
Number of options
Exercise price
400,000
40,000
300,000
500,000
$0.60
$0.61
$1.44
$3.11
Expiry date
30 September 2020
31 January 2021
28 February 2021
30 June 2021
During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of options
as follows (there were no amounts unpaid on the shares issued). All options were exercised for nil consideration
pursuant to the cashless exercise provisions of the Dacian Gold Limited Employee Option Plan.
Date options granted
25 September 2014
18 November 2014
5 February 2016
Performance Rights
Exercise price
$0.58
$0.39
$1.16
Number of shares issued
267,294
1,499,893
460,298
On 23 August 2019 the Company issued 1,601,019 performance rights to employees. These performance rights are
subject to performance conditions and expire on 30 June 2026.
On 16 June 2020, following shareholder approval, the Company issued 8,333,334 performance rights to the Managing
Director and CEO Mr Leigh Junk. These performance rights are subject to performance conditions and expire between
30 June 2023 and 30 June 2025.
Shares issued on exercise of performance rights during the year are detailed in the following table:
Date performance rights granted
17 October 2016
30 August 2017
Performance rights value
$544,500
$251,944
Number of shares issued(i)
165,000
129,534
(i) At 30 June 2020 there were no rights that had vested during the year and were unissued at year end. At 30 June
2019, 165,000 rights had vested during the year and were unissued at year end.
A reconciliation of performance rights outstanding at the date of this report appears below.
Rights outstanding at 30 June 2019
Rights issued during the year
Rights vested during the year
Rights forfeited during the year
Rights vested and issued post year end
Rights forfeited post year end
Rights outstanding at the date of this report
Dividends
Number of
Rights
299,893
9,934,353
(129,534)
(556,366)
(51,921)
(13,268)
9,483,157
No dividends have been paid or declared since the start of the financial year and the Directors do not recommend the
payment of a dividend in respect of the financial year.
Dacian Gold Limited 2020 Annual Report
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43
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Nature of Operations and Principal Activities
Dacian Gold Limited is an Australian mid-tier gold producer with its head office in Perth, Western Australia. The
Company operates the Mt Morgans Gold Operation (“MMGO”) near Laverton, Western Australia. The operation
comprises a 2.5 Mtpa CIL treatment plant, the Jupiter open pit and Westralia underground mining areas.
The principal activities of the Group during the period were gold mining, processing and exploration at its 100% owned
MMGO.
Operating and Financial Review
A summary of the operating result for the Group is set out below:
Key Financial Data
Financial Performance
Sales revenue
Costs of sales (excluding D&A)(i)
Exploration costs expensed and written off
Corporate, admin and other costs
Adjusted EBITDA(i)
Impairment losses on assets
Losses on derivative instruments
Depreciation & amortisation (D&A)
Net interest expense
Loss before tax(i)
Income tax (expense) / benefit
Reported (loss)/ profit after tax
Financial Position
Cash flow from operating activities
Cash flow from investing activities
Cash and cash equivalents
Net assets
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
2020
$’000
2019(ii)
$’000
Change
$’000
Change
%
270,047
(210,785)
(9,148)
(11,346)
38,768
(68,537)
(6,808)
(54,646)
(4,864)
(96,087)
(20,377)
(116,464)
22,959
(46,033)
51,976
162,642
(40.6)
(40.6)
132,821
(90,278)
(12,247)
(10,277)
20,019
-
-
(18,889)
(2,462)
(1,332)
4,350
3,018
47,186
(77,322)
35,515
184,875
1.4
1.3
137,226
(120,507)
3,099
(1,069)
18,749
(68,537)
(6,808)
(35,757)
(2,402)
(94,755)
(24,727)
(119,482)
(24,227)
31,289
16,461
(22,233)
(42.0)
(41.9)
103%
(133%)
25%
(10%)
94%
(100%)
(100%)
(189%)
(98%)
(7,114%)
(568%)
(3,959%)
(51%)
40%
46%
(12%)
(3,000%)
(3,223%)
(i) Adjusted EBITDA is a measure of earnings before interest, losses on derivative financial instruments, taxes, depreciation and
amortisation. Cost of sales (excluding D&A) and EBITDA are non-IFRS financial information and are not subject to audit. These
measures are included to assist investors to better understand the performance of the business
(ii) During the financial year ended 30 June 2019, the Group declared commercial production at the MMGO. This declaration was made
on 1 January 2019. During the commissioning phase (prior to the commencement of commercial production) expenditure of an
operating nature was capitalised to mine properties in development. Revenue from the sale of gold was treated as pre-production
income and credited to capitalised mine properties in development.
Results
Consolidated net loss after tax for the year was $116.5 million (30 June 2019: Net profit $3.0 million).
The financial result for the year ending 30 June 2020 has been impacted by the following significant cash and non-cash
adjustments:
- $68.5 million of MMGO asset impairments;
- losses on derivative instruments from deferred premium put options of $6.8 million;
- immediately expensed exploration expenditure of $9.1 million; and
- a net tax expense of $20.4 million which includes the derecognition of deferred tax assets for previously recognised
carried forward tax losses offset by the recognition of a timing deferred tax asset on impairments.
Dacian Gold Limited 2020 Annual Report
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44 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Operating and Financial Review (continued)
Results (continued)
To provide clarity in relation to the operating result of the Group, the following additional unaudited information has
been presented.
Net (loss)/profit for the year
Impairment
Add back: Tax adjustments(i)
Add back: Loss on derivative financial instruments (put options)
Add back: Debt refinancing costs
Adjusted unaudited profit / (loss)
2020
$M
(116.5)
68.5
28.3
6.8
1.2
(11.7)
2019
$M
3.0
-
-
-
2.3
5.3
(i)
2020 Tax adjustments comprise negative $20.6 million for income tax benefits from asset impairments offset by addbacks of $34.1
million for the derecognition of carried forward tax losses and $14.8 million for current period tax losses not recognised.
Mt Morgans Gold Operation (MMGO)
The MMGO achieved full year production of 138,814 ounces of gold at an MMGO All-In Sustaining Cost (“AISC”) of
$1,619 per ounce (30 June 2019: 138,911 ounces of gold produced). The processing plant milled 2.96 million tonnes
for the year at a head grade of 1.6 g/t Au and recovery of 92.7%.
Gold sales revenue of $269.5 million (30 June 2019: $132.6 million) was generated from the sale of 140,946 ounces of
gold at an average price of $1,912 per ounce (30 June 2019: 75,000 ounces from 1 January at an average price of
$1,767 per ounce following the achievement of commercial production on 1 January 2019). Total cost of goods sold
inclusive of amortisation and depreciation was $264.9 million (30 June 2019: $108.9 million). The increase in revenue
and costs compared to the prior year reflects the commencement of commercial production on 1 January 2019.
Underground
Stope Ore Mined
Development Ore Mined
Mined Ore Grade
Contained Gold
Open Pit Operations
Ore Mined
Mined Ore Grade
Contained Gold
Waste Mined
Processing
UOM
Kt
Kt
g/t
oz
Kt
g/t
oz
Kbcm
FY2020
FY2019
Change
Change %
499
258
2.8
68,758
2,060
1.1
71,937
6,708
596
241
3.2
85,520
1,997
1.0
64,888
8,295
(97)
(17)
(0.4)
(16,762)
63
(0.1)
7,049
(1,587)
(16%)
(7%)
(12%)
(20%)
3%
10%
11%
19%
Ore Milled
Head Grade
Recovery(i)
Gold recovered
Gold Sold
Realised average gold price
Gold on Hand
MMGO AISC(ii)
300
(0.1)
(2.4%)
(97)
(2,642)
160
(2,046)
-
The reduction in recovery in FY2020 is due to reporting tails by Fire Assay, FY2019 was from the PAL method.
Prior to the commencement of commercial production on 1 January 2019 AISC was not reported. During this time
expenditure of an operating nature was capitalised to mine properties in development. Revenue from the sale of gold was
treated as pre-production income and credited to capitalised mine properties in development.
2,964
1.6
92.7%
138,814
140,946
1,912
2,980
1,619
2,664
1.7
95.1%
138,911
138,304
1,752
5,026
-
Kt
g/t
%
oz
oz
A$/oz
oz
A$/oz
11%
(6%)
(3%)
(0%)
2%
9%
(41%)
-%
(i)
(ii)
Dacian Gold Limited 2020 Annual Report
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45
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Operating and Financial Review (continued)
Mt Morgans Gold Operation (MMGO) (continued)
Mine production at the Jupiter open pit for the year totalled 2,060kt at 1.1 g/t for 71,937 ounces of contained gold.
Mine planning activities continued during the year, with pre-stripping of the Doublejay open pit commencing during
April 2020. The initial mining activities involve a cut back of the historical Jupiter open pit and associated waste
stripping activities. Preparations for the commencement of mining at the Mt Marven open pit were also progressed
during the year, with mining commencing during July 2020.
A total of 70,610 metres of RC grade control drilling was completed during the year, across Heffernans, Doublejay and
Ganymede pits at Jupiter and at the Mt Marven open pit.
Underground mine production at Westralia for the year totalled 499kt at 2.8 g/t for 68,758 ounces of contained gold.
During February 2020, the Company announced a Mineral Resource and Ore Reserve update which included a 40%
reduction in Mineral Resource at the MMGO from 3.5 million to 2.1 million ounces. The resource reduction related
primarily to the Westralia underground mine where the Mineral Resource decreased by 52% from 1.5 million ounces
to 0.7 million ounces. As a result of the work undertaken to update the Westralia underground resource, together
with an assessment of the forecast mine plan, it was announced by the Company that underground production from
the Westralia mine was scheduled to conclude in December 2020.
The Group undertook an impairment assessment of the carrying value of its assets at 31 December 2019. The primary
impairment indicators were the decision to suspend mining at the Westralia underground mine based on performance
during the period and the overall reduction in the Group’s Mineral Resources and Reserves. This gave rise to an
impairment charge of $68.5 million and a net tax expense of $20.4 million primarily for the derecognition of deferred
tax assets for previously recognised tax losses offset by the recognition of a timing deferred tax asset on the value of
the impairments. Full details of the impairment charge and tax benefit are included in the Notes to the Financial
Statements.
Subsequent to year end, the Company ceased mining activities at Westralia in August 2020 ahead of the previously
scheduled timeline (December 2020), preserving the 195,000 ounce (before 2HFY2020 mining depletion) Ore Reserve
remaining as part of its optimisation studies. The decision was made to suspend Westralia early pending a strategic
review across all underground MMGO operations including the Westralia, Phoenix Ridge and Transvaal deposits as
well as the Craic project. An optimisation study has been commissioned with several work streams now underway to
evaluate the recommencement of underground mining operations.
As a result of the cessation of mining activities at Westralia four months earlier than planned and the rescheduling of
the Jupiter open pit, FY2021 production guidance was revised to 110,000-120,000 ounces (previously 120,000-130,000
ounces). ASIC guidance for FY2021-2023 was also updated to reflect updated FY2021 production and new expenditure
for the Mt Marven expansion and Morgans North open pits.
COVID-19 Response
The Group has been proactive in its response to the COVID-19 pandemic and has implemented a range of protective
and preventative measures. MMGO, through its COVID-19 management plan is continuing to operate unaffected by
the pandemic, however, a number of changes have been made at the operations such that persons employed at the
site have reduced exposure to potential sources of COVID-19, are able to abide by social distancing requirements and
improve hygiene standards. In a worst-case event requiring a scaling-back of the operation, Dacian has multiple
strategies that it can initiate including the processing of stockpile material totalling 4.4Mt @ 0.6g/t for 79,000 ounces
(approximately 19 months of processing material), providing a level of insulation for the business.
Exploration
During the year, a total of 38,044 metres of exploration drilling was completed. The majority of this drilling was
conducted across the Phoenix Ridge project located 650m north of the Allanson underground deposit.
On 3 October 2019, the Company announced a Maiden Inferred Mineral Resource for the Phoenix Ridge deposit at
the MMGO of 481,000t @ 8.1g/t for 125,000 ounces. During the year, infill drilling continued at Phoenix Ridge as work
progressed towards a Mineral Resource update with mining studies shortly after. The Resource was unchanged at 31
December 2019 and was confirmed in the Mineral Resource and Ore Reserve update announcement to the ASX on 27
February 2020.
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46 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Operating and Financial Review (continued)
Financial Position
The Group held cash on hand as at 30 June 2020 of $52.0 million (30 June 2019: $35.5 million). As at 30 June 2020,
the Group has a working capital surplus of $18.3 million (30 June 2019: $21.1 million deficit).
At 30 June 2020, the Group’s net asset position decreased to $162.6 million (30 June 2019: $184.9 million). The
decrease is attributable to a $86.9 million reduction in non-current assets from asset impairments and the
derecognition of carry forward tax losses offset by a $44.9 million reduction in borrowings, a $22.9 million reduction
in trade and other payables and a $16.5 million increase in cash and cash equivalents.
At 30 June 2020, committed hedging totalled 84,589 ounces at a weighted average delivery price of A$2,055 per ounce
on hedge contracts for delivery over the period to 30 June 2021. Project Debt Facility repayments during the year
were made totalling $41.4 million, which reduced outstanding borrowings to $64.1 million at 30 June 2020.
Corporate
In October 2019, the Group agreed to purchase 150,000 ounces in deferred premium gold put options at a strike price
of $2,100 per ounce expiring on 28 February 2020. These options were purchased at the time the Group and the
Project Debt Facility Financiers (“the Financiers”) were undertaking a review of certain terms within the Project Debt
Facility. The options were purchased with the intention of setting a gold price floor such that the Group could
restructure this hedging on or before 28 February 2020 having completed the review of certain Project Debt Facility
Agreement terms with its Financiers. These options were held until expiry on the 28 February 2020.
In January 2020, at the request of the Financiers, the Group purchased a further 67,608 ounces in deferred premium
gold put options at a strike price of $2,100 per ounce expiring over the period April 2020 to June 2021. During the
June 2020 quarter, 61,338 ounces were terminated early to reduce the overall cost of the regime. Total losses of $6.8
million have been recognised on put option fair value movements during the year (30 June 2019: nil).
During the December 2019 quarter, the Group and its Financiers initiated and completed a review of certain terms
under the Project Debt Facility. This resulted in the approval of an updated bank financial model, the re-scheduling of
debt repayments over the existing tenor to 30 June 2022 and the other associated changes and waivers such that as
at 31 December 2019 the Group was in financial compliance with its obligations under the Project Debt Facility.
On 27 February 2020, the Company announced updates to the Mineral Resource and Ore Reserve estimate and the
suspension of capital development at the Westralia underground mine resulting in current underground mining
activities being completed in the period to December 2020. As a result of these changes, the Group sought and
received a number of approvals, waivers and concessions from its Financiers in respect to its Project Debt Facility
Agreement. This resulted in changes to the debt repayment schedules including the deferral of the $24.7 million debt
repayment subject to conditions from 31 March 2020 so as to align the Company’s funding plans with the repayment.
The Group repaid the $24.7 million on 30 April 2020, following the receipt of proceeds from a capital raising.
In May 2020, the Group completed a placement to institutional and sophisticated investors followed by completion of
a retail entitlement offer during May 2020, raising a total of $91.4 million (net of transaction costs), marking a
significant recapitalisation of the Group.
On 13 July 2020, the Group released an Operational and Corporate Update, providing the market with June 2020
quarter and full financial year production, an updated three-year outlook to 30 June 2023 and an update on
underground and exploration strategies for MMGO. As a consequence of these changes the Group sought and
received further approvals, waivers and concessions from the Financiers related to financial covenant requirements of
the Project Debt Facility Agreement. In addition, the Group breached certain non-financial requirements of the Project
Debt Facility Agreement for which a waiver has also been received. These approvals, waivers and concessions were
provided on the basis that the Group make a $25.0 million debt repayment on 30 September 2020 inclusive of the
$14.5 million scheduled repayment. Total Project Debt Facility principal repayments following the capital raise,
completed in May 2020, total $55.6 million, inclusive of the $25.0 million repayment on 30 September 2020. Following
the $25.0 million repayment on 30 September 2020, the Project Debt Facility balance decreased to $39.1 million.
The Directors consider the going concern basis of preparation to be appropriate based on the cash flow forecasts. The
achievement of cash flow forecasts is dependent upon the Group achieving forecast targets for gold revenue, mining
operations and processing activities that are in accordance with management’s plans and forecast gold price and
foreign exchange assumptions to enable the cash flow forecast to be achieved. Critical to achieving forecast cash
flows, and forecast covenant compliance under the Project Debt Facility Agreement, is the Group’s ability to achieve
forecast gold production in accordance with Board approved forecasts.
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ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Operating and Financial Review (continued)
Corporate (continued)
Should the cash flow forecasts and forecast covenant compliance under the Project Debt Facility Agreement not be
achieved, the Group may require additional waivers, a rescheduling of the delivery of gold forward exchange contracts
or rescheduling repayments under the Project Debt Facility Agreement with the Financiers, or additional funding which
may include refinancing the Project Debt Facility with other parties, raising equity or a combination of these options.
The Directors have a reasonable expectation that a suitable funding solution can be secured within the necessary
timeframe, if required, in light of the current gold sector outlook and the past capacity of the Group to obtain funding
as required.
Cash flows
At the end of the financial year the Group had $52.0 million (30 June 2019: $35.5 million) in cash and had a balance of
$64.1 million (30 June 2019: $105.5 million) under the Project Debt Facility. Bullion on hand not sold at balance date
comprised 2,980 ounces recognised at net realisable value of $5.3 million (30 June 2019: at a cost of $6.5 million). The
above gives rise to a net debt position at 30 June 2020 of $6.8 million (30 June 2019: $63.5 million).
Cash inflows from operating activities for the year were $23.0 million (30 June 2019: $47.2 million). Cash flows from
operating activities were impacted by true-up payments to ensure all creditors are aligned with agreed commercial
terms.
Cash flow used in investing activities amounted to $46.0 million (30 June 2019: $77.3 million) and mainly comprised
mine properties, plant and infrastructure expenditure at MMGO. The decrease resulted in the suspension of mine
development activities at the Westralia underground mine from the end of February 2020.
Cash flow from financing activities totalled $39.5 million (30 June 2019: $2.8 million) which during the year included
proceeds from the placement to institutional and sophisticated investors completed during April 2020 and the retail
entitlement offer completed during May 2020, raising a total of $91.4 million (net of transaction costs) net of deferred
premium put option payments of $6.7 million and Project Debt Facility repayments of $41.4 million (30 June 2019:
$44.5 million).
Gold sales receipts comprise 140,946 ounces of gold at an average price of $1,912 per ounce (30 June 2019: 75,000
ounces from 1 January at an average price of $1,767 per ounce). The Company delivered gold produced into a
combination of forward contracts and the prevailing spot price.
Dacian Gold Limited 2020 Annual Report
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48 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Significant Changes in the State of Affairs
The formal strategic review announced to the ASX on 5 June 2019 concluded during February 2020. The review
validated the Group’s strategy to focus on its existing operations, making the necessary changes to establish a
profitable, sustainable operation with a strengthened balance sheet. The planned suspension of underground mining
activities at Westralia (detailed in the preceding section) was an outcome of this review.
The Group has also developed plans to investigate, assess and establish operations at dormant historical mining areas
owned by the Group. The Mt Marven open pit, which commenced mining operations in the September 2020 quarter
is an example of this.
During the year, the Group completed a placement to institutional and sophisticated investors followed by completion
of a retail entitlement offer during May 2020, raising a total of $91.4 million (net of transaction costs), marking a
significant recapitalisation of the Group. Following receipt of the capital raising proceeds, the Group repaid $24.7
million in debt during April 2020, followed by scheduled repayments of $5.9 million during June 2020, leaving total
debt of $64.1 million at 30 June 2020.
Other than the matters noted above, there were no other significant changes in the state of affairs of the Group during
the financial year, not otherwise disclosed in this report.
Events Subsequent to the Reporting Date
Subsequent to year end, the Company ceased mining activities at Westralia during August 2020 ahead of the previously
scheduled timeline (December 2020), preserving the 195,000 ounce (before 2HFY2020 mining depletion) Ore Reserve
remaining as part of its optimisation studies. As a result of the cessation of mining activities at Westralia four months
earlier than planned and the rescheduling of the Jupiter open pit, FY2021 production guidance was revised to 110,000-
120,000 ounces (previously 120,000-130,000 ounces).
As a consequence of these changes the Group sought and received further approvals, waivers and concessions from
the Financiers related to financial covenant requirements of the Project Debt Facility Agreement. In addition, the
Group breached certain non-financial requirements of the Project Debt Facility Agreement for which a waiver has also
been received. These approvals, waivers and concessions were provided on the basis that the Group make a $25.0
million debt repayment on 30 September 2020 inclusive of the $14.5 million scheduled repayment. Total Project Debt
Facility principal repayments following the capital raise, completed in May 2020, total $55.6 million, inclusive of the
$25.0 million repayment on 30 September 2020. Following the $25.0 million repayment, on 30 September 2020, the
Project Debt Facility balance decreased to $39.1 million.
Other than the items noted above, there has not arisen in the interval between the end of the reporting period and
the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the
Directors of the Company, to affect substantially the operations of the Group, the results of those operations or the
state of affairs of the Group, in subsequent financial years.
Likely Developments and Expected Results
There are no other likely developments of which the Directors are aware which could be expected to significantly
affect the results of the Group’s operations in subsequent financial years not otherwise disclosed in the Nature of
Operations and Principal Activities and Operating and Financial Review or the Events Subsequent to the Reporting
Date sections of the Directors’ Report.
Environmental Regulation and Performance
The Group’s mining and exploration activities are subject to significant conditions and environmental regulations
under the Commonwealth and Western Australia State Governments.
So far as the Directors are aware, all activities have been undertaken in compliance with all relevant environmental
regulations.
Dacian Gold Limited 2020 Annual Report
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49
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Officer’s Indemnities and Insurance
During the year, the Company paid an insurance premium to insure certain officers of the Company. The officers of
the Company covered by the insurance policy include the Directors named in this report.
The Directors and Officers Liability insurance provides cover against all costs and expenses that may be incurred in
defending civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the
officers in their capacity as officers of the Company. The insurance policy does not contain details of the premium
paid in respect of individual officers of the Company. Disclosure of the nature of the liability cover and the amount of
the premium is subject to a confidentiality clause under the insurance policy.
The Company has not provided any insurance for an auditor of the Company.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Group is a party, for the purpose of taking
responsibility on behalf of the Group for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under section 237
of the Corporations Act 2001.
Non-audit services
During the year KPMG, the Group auditor, provided the following non-audit services. The directors are satisfied that
the provision of non-audit services is compatible with the general standard of independence for auditors imposed
by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor
independence was not compromised.
Non-audit related services(i)
Total
30 June
2020
$
93,150
93,150
30 June
2019
$
-
-
(i) Relates to Investigating Accountant services for the capital raising in May 2020.
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act is attached
to the Directors’ Report.
Rounding off
The Company is of a kind referred to in ASIC Instrument 2016/191 dated 24 March 2016 and in accordance with that
instrument, amounts in the Financial Statements and Directors’ Report have been rounded to the nearest thousand
dollars, unless otherwise stated.
Dacian Gold Limited 2020 Annual Report
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50 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Remuneration Report (Audited)
Remuneration paid to Directors and Officers of the Group is set by reference to such payments made by other ASX
listed companies of a similar size and operating in the mining and mineral exploration industry. In addition, reference
is made to the specific skills and experience of the Directors and Officers.
Details of the nature and amount of remuneration of each Director, and other Key Management Personnel if
applicable, are disclosed annually in the Company’s Annual Report.
Key Management Personnel
Details of the Key Management Personnel (“KMP”) of the Company and their movements during the year ended 30
June 2020 are set out below:
Mr Ian Cochrane (i)
Mr Leigh Junk (ii)
Mr Barry Patterson
Mr Robert Reynolds
Mr Grant Dyker (iii)
Mr James Howard (iv)
Rohan Williams (v) (Executive Chairman)
(Non-Executive Chairman)
(Managing Director & CEO)
(Non-Executive Director)
(Non-Executive Director)
(Chief Financial Officer)
(Chief Operating Officer)
(i)
Ian Cochrane was a Non-Executive Director until his appointment as Chairman on 6 January 2020.
(ii) Leigh Junk was appointed on 6 January 2020 and continues in office at the date of this report.
(iii) Grant Dyker resigned from his position as Chief Financial Officer subsequent to year end on 15 July 2020.
(iv) James Howard was appointed Chief Operating Officer from 1 March 2020 coinciding with his appointment as KMP.
Mr Howard previously held the role of Project Manager.
(v) Rohan Williams was Executive Chairman from the beginning of the financial year until his retirement on 6 January
2020.
Remuneration & Nomination Committee
The Board has adopted a formal Remuneration & Nomination Committee Charter which provides a framework for the
consideration of remuneration matters.
The Remuneration & Nomination Committee is responsible for reviewing and making recommendations to the Board
which has ultimate responsibility for the following remuneration matters:
1.
2.
Setting remuneration packages for Executive Directors, Non-Executive Directors and other KMP; and
Implementing employee incentive and equity based plans and making awards pursuant to those plans.
Non-Executive Remuneration
The Company’s policy is to remunerate Non-Executive Directors, at rates comparable to other ASX listed companies in
the same industry, for their time, commitment and responsibilities.
Non-Executive Remuneration is not linked to the performance of the Company, however, to align Directors’ interests
with shareholders’ interests, remuneration may be provided to Non-Executive Directors in the form of equity based
long-term incentives.
1.
2.
3.
4.
Fees payable to Non-Executive Directors are set within the aggregate amount approved by shareholders at the
Company’s Annual General Meeting;
Non-Executive Directors’ fees are payable in the form of cash and superannuation benefits;
Non-Executive superannuation benefits are limited to statutory superannuation entitlements; and
Participation in equity based remuneration schemes by Non-Executive Directors is subject to consideration and
approval by the Company’s shareholders.
The maximum Non-Executive Directors’ fees, payable in aggregate, are currently set at $500,000 per annum.
Dacian Gold Limited 2020 Annual Report
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51
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Remuneration Report Audited (Continued)
Executive Director and Other Key Management Personnel Remuneration
Executive remuneration consists of base salary, plus other performance incentives to ensure that:
1.
2.
Remuneration packages incorporate a balance between fixed and incentive pay, reflecting short and long term
performance objectives appropriate to the Company’s circumstances and objectives; and
A proportion of remuneration is structured in a manner to link reward to corporate and individual performances.
Executives are offered a competitive level of base salary at market rates (based on comparable ASX listed companies)
and are reviewed regularly to ensure market competitiveness.
Use of Remuneration Consultants
To date the Company has not engaged external remuneration consultants to advise the Board on remuneration
matters.
Incentive Plans
The Company provides long-term incentives to Directors and Employees pursuant to the Dacian Gold Limited
Employee Option Plan, which was last approved by shareholders on 26 November 2018. Short term incentives are
also awarded to Employees to align remuneration with the strategy and performance of the Company.
The Board, acting in remuneration matters:
1.
2.
3.
Ensures that incentive plans are designed around appropriate and realistic performance targets and provide
rewards when those targets are achieved;
Reviews and improves existing incentive plans established for employees; and
Approves the administration of the incentive plans, including receiving recommendations for, and the
consideration and approval of grants pursuant to such incentive plans.
Engagement of Non-Executive Directors
Non-Executive Directors conduct their duties under the following terms:
1.
2.
A Non-Executive Director may resign from his/her position and thus terminate their contract on written notice
to the Company; and
A Non-Executive Director may, following resolution of the Company’s shareholders, be removed before the
expiration of their period of office (if applicable). Payment is made in lieu of any notice period if termination is
initiated by the Company, except where termination is initiated for serious misconduct.
In consideration of the services provided by Mr Robert Reynolds and Mr Barry Patterson as Non-Executive Directors,
the Company will pay them $80,000 plus statutory superannuation per annum.
In consideration of the services provided by Mr Ian Cochrane as Non-Executive Chairman, the Company will pay
$150,000 inclusive of statutory superannuation per annum. Prior to Mr Cochrane being appointed Non-Executive
Chairman, the Company paid him $80,000 inclusive of statutory superannuation per annum.
Messrs Cochrane, Reynolds and Patterson are also entitled to fees for other amounts as the Board determines where
they perform special duties or otherwise perform extra services or make special exertions on behalf of the Company.
During the financial year ended 30 June 2020, the Company incurred no costs in respect of additional services provided
by Directors.
Dacian Gold Limited 2020 Annual Report
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52 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Remuneration Report Audited (continued)
Engagement of Executive Directors
Mr Leigh Junk
The terms of Mr Leigh Junk’s Executive Services Agreement governing his role as Managing Director and CEO were
disclosed via the ASX platform on 20 December 2019 and are summarised below.
In respect of his engagement as Managing Director and CEO, Mr Junk will receive a salary of $602,250 per annum
inclusive of statutory superannuation (Total Fixed Remuneration). Any increase in salary is subject to the discretion of
the Board.
Mr Junk is eligible to participate in the Company’s short-term incentive program, with the reward in the form of a cash
bonus up to 40% of Base Salary. The reward of short-term incentives is associated with operational key performance
indicators (KPIs) as determined by the Board. Accordingly, 100% of the short-term incentive is at risk.
Mr Junk may participate in the Company’s long-term incentive program which provides for performance rights to be
issued under the Company’s Performance Rights Plan up to a maximum annual incentive of 120% of Base Salary.
Performance Rights issued are subject to measurement against performance criteria. Accordingly, 100% of the long-
term incentive is at risk.
Mr Junk’s Executive Services Agreement also included a one-off on boarding issue of 191,856 shares and a further
191,856 shares contingent to his continuing employment 6 months after his commencement date. The second tranche
of shares were issued on 1 September 2020.
The Company or Mr Junk may terminate the contract at any time by the giving of six months’ notice. Mr Junk may be
required to serve out all or part of this notice period or be paid in lieu of notice at the Board’s election.
Mr Rohan Williams
The terms of Mr Rohan Williams’ Executive Services Agreement governing his role as Executive Chairman and CEO
prior to his resignation on 6 January 2020 are summarised below.
In respect of his engagement as Executive Chairman and CEO, Mr Williams received a salary of $629,625 per annum
inclusive of statutory superannuation (Total Fixed Remuneration). Any increase in salary is subject to the discretion of
the Board.
The Company or Mr Williams may terminate the contract at any time by the giving of six months’ notice. In addition,
there are certain specific termination notice periods applicable to Company change of control events or ill health. The
Company may elect to pay Mr Williams in lieu of part or all of the notice period specified in the contract.
Mr Williams may also receive a short-term performance based reward in the form of a cash bonus up to 40% of the
Total Fixed Remuneration. The performance criteria, assessment and timing of which are determined at the discretion
of the Board.
Mr Williams may participate in the Dacian Gold Limited Employee Option Plan and other long-term incentive plans
adopted by the Board.
On Mr Williams’ resignation on 6 January 2020, termination payments totalling $314,813 in lieu of notice were paid.
Shareholding Qualifications
The Directors are not required to hold any shares in Dacian Gold Limited under the terms of the Company’s
constitution.
Dacian Gold Limited 2020 Annual Report
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53
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Remuneration Report Audited (continued)
Engagement of Executives
Mr Grant Dyker
The terms of Mr Dyker’s employment contract governing his role as Chief Financial Officer, are summarised below.
In respect of his engagement as Chief Financial Officer, Mr Dyker will receive a salary of $383,250 per annum inclusive
of statutory superannuation (Total Fixed Remuneration).
The Company or Mr Dyker may terminate the contract at any time by the giving of six months’ notice. In addition,
there are certain specific termination notice periods applicable to Company change of control events or ill health. The
Company may elect to pay Mr Dyker in lieu of part or all of the notice period specified in the contract.
Mr Dyker may be invited to participate in short-term and long-term incentive schemes. The performance criteria,
percentage of base salary, assessment and timing of which are determined at the discretion of the Board.
Mr Dyker may participate in the Dacian Gold Limited Employee Option Plan and other long-term incentive plans
adopted by the Board.
Mr Dyker resigned from his position as Chief Financial Officer subsequent to year end on 15 July 2020.
Mr James Howard
Mr Howard previously held the role of Project Manager until his appointment of Chief Operating Officer on 1 March
2020. The terms of Mr Howard’s employment contract governing his role as Chief Operating Officer are summarised
below.
In respect of his engagement as Chief Operating Officer, Mr Howard will receive a salary of $383,250 per annum
inclusive of statutory superannuation (Total Fixed Remuneration).
The Company or Mr Howard may terminate the contract at any time by the giving of three months’ notice. In addition,
there are certain specific termination notice periods applicable to Company change of control events or ill health. The
Company may elect to pay Mr Howard in lieu of part or all of the notice period specified in the contract.
Mr Howard may be invited to participate in short-term and long-term incentive schemes. The performance criteria,
percentage of base salary, assessment and timing of which are determined at the discretion of the Board.
Mr Howard may participate in the Dacian Gold Limited Employee Option Plan and other long-term incentive plans
adopted by the Board.
Voting and comments made at the Company’s 2019 Annual General Meeting (“AGM”)
At the last AGM 75.94% of the shareholders voted to adopt the remuneration report for the year ended 30 June 2019.
The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
Consequences of Company Performance on Shareholder Wealth
The Company aims to align executive remuneration to strategic and business objectives and the creation of
shareholder wealth. The table below outlines indicators of Company performance over the last five years as required
by the Corporations Act 2001.
Revenue
2020
$’000
$270,047
2019
$’000
$132,821
Net profit/(loss) after tax
($116,464)
$3,018
Net assets
Share Price
$162,642
$184,875
$0.44
$0.53
2018
$’000
-
($5,402)
$132,866
$2.85
2017
$’000
-
($18,858)
$134,313
$1.98
2016
$’000
-
($21,833)
$13,259
$2.90
Market Capitalisation
$244,756
$119,628
$586,658
$399,430
$386,588
These indicators are not always consistent with those used to determine variable amounts of remuneration awarded
to KMP, as discussed below. As a result, there may not always be a correlation between these statutory performance
indicators and the quantum of variable remuneration awarded to KMP.
Dacian Gold Limited 2020 Annual Report
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54 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
DIRECTORS’ REPORT
Remuneration Report Audited (continued)
Remuneration Report Audited (continued)
In accordance with the Company’s objective to ensure that executive remuneration is competitive and performance
In accordance with the Company’s objective to ensure that executive remuneration is competitive and performance
focused, a portion of Executives’ remuneration is placed “at risk”. The relative proportion of target FY20 and actual
focused, a portion of Executives’ remuneration is placed “at risk”. The relative proportion of target FY20 and actual
FY20 total remuneration packages split between fixed and variable remuneration is shown below.
FY20 total remuneration packages split between fixed and variable remuneration is shown below.
Target Remuneration Mix
Target Remuneration Mix
The on-boarding rights awarded to Leigh Junk and the retention bonus paid to Grant Dyker have been excluded from
The on-boarding rights awarded to Leigh Junk and the retention bonus paid to Grant Dyker have been excluded from
the target remuneration analysis above. Refer to ‘Shares Granted as Remuneration’ and ‘Short-Term Incentives’
the target remuneration analysis above. Refer to ‘Shares Granted as Remuneration’ and ‘Short-Term Incentives’
sections below for further discussion.
sections below for further discussion.
Actual Remuneration Mix
Actual Remuneration Mix
Dacian Gold Limited 2020 Annual Report
Dacian Gold Limited 2020 Annual Report
17 | P a g e
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55
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Remuneration Report Audited (continued)
Short-Term Incentives
The Remuneration and Nomination Committee may, at its sole discretion, set the Key Performance Indicators (“KPIs”)
for the Executive Directors or other Executive Officers. The KPIs are chosen to align the reward of the individual
Executives to the strategy and performance of the Company. Performance objectives, which may be financial or non-
financial, or a combination of both, are determined by the Board. No short-term incentives are payable to Executives
where it is considered that the actual performance has fallen below the minimum requirement.
The Short Term Incentive (“STI”) plan provides eligible employees with the opportunity to earn a cash bonus if certain
financial hurdles and agreed key KPIs are achieved. The board has determined that the Company will not pay an STI if
there is a fatality within the business and the Company, as a whole, is not cash-flow positive in any relevant
performance period, which takes into account any repayment of scheduled debt obligations.
All KMP are eligible to participate in the STI plan with awards capped at 100% of the target opportunity. The target
opportunity for KMP is 40% of total fixed remuneration for the Managing Director and 30% for other KMP. A summary
of the KPI targets which are assessed on a quarterly basis for FY20 and their respective weightings is as follows:
KPI
1. Safety & Environment
Weighting
20%
Measure
• Leading Indicators, Field Interactions, High Impact Frequency
audits and critical risk reviews completed
• Investigations relating to safety and environmental incidents which
occurred have been closed out
2. Production
3. Costs
40%
40%
Production is at least that which is forecasted in the budget and / or
performance period
Production occurs at or below the forecast / budget AISC
Based on an assessment, STI payments for FY20 to Executives were as follows:
Name
Position
Rohan Williams
Grant Dyker
James Howard (i)
Executive Chairman & CEO
Chief Financial Officer
Chief Operating Officer
Maximum STI
opportunity
40% of TFR
30% of TFR
30% of TFR
Achieved STI
25%
25%
0%
Awarded
STI
$57,500
$26,250
$-
(i) Mr Howard was appointed to Chief Operating Officer on 1 March 2020.
The achieved STI was in respect of the September 2019 quarter where the KPI metrics were met.
In addition to the amounts detailed in the table above, the Remuneration and Nomination Committee awarded a
retention bonus to Grant Dyker of $175,000 (representing 50% of TFR). The retention bonus which was offered in
August 2019 related to continuing employment during the strategic review process which was announced to the
market on 5 June 2019. The review process was completed in February 2020 following the release to the market of
the updated 3 year production outlook.
Long-Term Incentives
Under the Dacian Gold Limited Employee Option plan, performance rights are made to executives to align
remuneration with the creation of shareholder wealth. Historically options were also issued to KMP under the same
plan.
Dacian Gold Limited 2020 Annual Report
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56 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Remuneration Report Audited (continued)
Options over Unissued Shares
No options were granted during the 2019 and 2020 financial years. No options lapsed during the 2020 financial year.
The table below outlines movements in options during 2020 and the balance held by each KMP at 30 June 2020.
The options were granted free of charge and are exercisable at a fixed price in accordance with the Plan. Options
issued under the Plan have vesting periods prior to exercise, except under certain circumstances whereby options may
be capable of exercise prior to the expiry of the vesting period.
Number
of
options
held at 1
July 2019
Fair
value of
options
Grant date
Exercise
price
Vesting
date
Expiry date
Number
vested &
Exercisable
Number
exercised
during the
year
Balance
at the
end of
the year
18/11/2014
2,000,000
$201,320
$0.39
18/11/2016
17/11/2019
2,000,000
(2,000,000)
05/02/2016
05/02/2016
05/02/2016
750,000
375,000
375,000
$247,828
$123,914
$123,914
$1.16
$1.16
$1.16
31/01/2018
31/01/2019
31/07/2019
31/01/2021
31/01/2021
31/01/2021
750,000
375,000
375,000
(750,000)
(375,000)
(375,000)
-
-
-
-
26/02/2016
300,000
$173,695
$1.44
26/02/2016
28/02/2021
300,000
-
300,000
3,800,000
3,800,000
(3,500,000)
300,000
Name
Rohan
Williams
Grant
Dyker
Ian
Cochrane
Total
All options were granted for nil consideration. Options lapse if the KMP ceases employment with the Company. The
fair value of options is calculated at the date of grant using the Black Scholes option pricing model and allocated to
each reporting period evenly over the period from grant date to vesting date.
Exercise of Options Granted as Compensation
During the year, the following shares were issued on cashless exercise of options previously granted as compensation,
pursuant to the cashless exercise provision of the Dacian Gold Limited Employee Option Plan.
Name
Rohan Williams
Grant Dyker
Number of options
exercised
2,000,000
1,500,000
Number of shares issued
1,499,893
460,298
Amount paid
$/share
-
-
Performance Rights Granted as Remuneration
Performance rights were introduced during the 2017 financial year with effect from October 2016.
Performance rights were issued to KMP during the 2020 financial year pursuant to the Dacian Gold Limited Employee
Option Plan. No performance rights were issued during the 2019 financial year.
The performance rights are granted for nil consideration and vest subject to certain operational and market
performance conditions being met. The fair value of the performance rights granted were determined using Monte
Carlo simulation, a review of historical share price volatility and correlation of the share price of the Company to its
Peer Group. The fair value is allocated to each reporting period evenly over the period from grant date to vesting date.
During the year the Company issued 8,428,962 Performance Rights to KMP in respect of the LTI component of their
FY20 remuneration.
Name
Leigh Junk(i)
Grant Dyker
Maximum LTI
Opportunity
120% of total fixed
remuneration
50% of total fixed
remuneration
Number of Performance Rights
granted during FY20
Fair Value of
Performance Rights
8,333,334
95,628
$0.42
$1.04
(i) The performance rights issued to Mr Junk were approved by shareholders on 16 June 2020.
Dacian Gold Limited 2020 Annual Report
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57
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Remuneration Report Audited (continued)
Performance Rights Granted as Remuneration (continued)
During the year the Company issued 9,934,353 Performance Rights to employees (including 8,428,962 Performance
Rights to KMP) in respect of the LTI component of their FY20 remuneration. The table below outlines the movements
in performance rights during the 2020 financial year and the balance held by each Executive at 30 June 2020.
Name
Leigh Junk
Grant Dyker
James Howard
Total
Balance at
1 July 2019
Granted in
FY20
-
76,296
-
76,296
8,333,334
95,628
-
8,428,962
Vested
-
(45,338)
-
(45,338)
Lapsed
-
(15,479)
-
(22,669)
Other (i)
-
-
111,107
111,107
Balance at
30 June 2020
8,333,334
111,107
111,107
8,555,548
(i) Relates to performance rights held at the date of Mr Howard’s appointment to Chief Operating Officer on 1 March
2020.
On vesting, each right automatically converts to one ordinary share. If the employee ceases employment before the
rights vest, the rights will be forfeited, except in limited circumstances that are approved by the Board.
The tables below detail the terms and conditions of the grant and the assumptions used in estimating fair value for
performance rights issued to KMP during the 2020 financial year.
Item
Grant date
KMP
Number of rights
Value of underlying security
at grant date
Fair value
Dividend yield
Risk free rate
Volatility
Performance period (years)
Commencement of
measurement period
Test date
Remaining performance
period (years)
23 August
2019
G Dyker/
J Howard
64,071/
64,071
$1.09
23 August
2019
G Dyker/
J Howard
31,557/
31,557
$1.09
16 June
2020
L Junk
16 June
2020
L Junk
16 June
2020
L Junk
16 June
2020
L Junk
16 June
2020
L Junk
16 June
2020
L Junk
916,667
1,861,111
916,667
1,861,111
916,667
1,861,111
$0.465
$0.465
$0.465
$0.465
$0.465
$0.465
$1.014
0%
0.73%
55%
1
1 July
2019
1 July
2020
-
$1.09
0%
0.73%
55%
1
1 July
2019
1 July
2020
-
$0.465
0%
0.26%
60%
3
1 July
2020
30 June
2023
3
$0.378
0%
0.26%
60%
3
1 July
2020
30 June
2023
3
$0.465
0%
0.40%
60%
4
1 July
2020
30 June
2024
4
$0.403
0%
0.40%
60%
4
1 July
2020
30 June
2024
4
$0.465
0%
0.40%
60%
5
1 July
2020
30 June
2025
5
$0.421
0%
0.40%
60%
5
1 July
2020
30 June
2025
5
The performance rights granted to Mr Dyker and Mr Howard are subject to certain operational and market
performance conditions being met, are subject to a 12 month service condition, and vest 1 year from the measurement
date. The number of performance rights that vest will be subject to the Company’s performance against total
shareholder return and company performance vesting conditions.
The performance rights granted to Mr Junk are subject to certain operational and market performance conditions
being met and will vest at the measurement date. The number of performance rights that vest will be subject to the
Company’s performance against total shareholder return and Company performance vesting conditions.
Dacian Gold Limited 2020 Annual Report
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58 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Remuneration Report Audited (Continued)
Performance Rights Granted as Remuneration (continued)
Tranche
Grant Dyker /
James
Howard
Amount
64,071/64,071
31,557/31,557
Weighting
67% of the Performance Rights
Performance Conditions
TSR performance to peers above 50th percentile (measured over
a 1 year period to 1 July 2020)
33% of the Performance Rights Reserve Growth (measured over a 1 year period to 1 July 2020)
Leigh Junk
1,861,111
67% of the Performance Rights
TSR performance to peers above 50th percentile (measured over
the 3 year period to 30 June 2023)
916,667
1,861,111
916,667
1,861,111
33% of the Performance Rights Reserve Growth (measured over a 3 year period to 30 June 2023)
TSR performance to peers above 50th percentile (measured over
67% of the Performance Rights
the 4 year period to 30 June 2024)
33% of the Performance Rights Reserve Growth (measured over a 4 year period to 30 June 2024)
TSR performance to peers above 50th percentile (measured over
67% of the Performance Rights
the 5 year period to 30 June 2025)
916,667
33% of the Performance Rights Reserve Growth (measured over a 5 year period to 30 June 2025)
The Company’s TSR performance for all share rights on issue during the financial year ending, are assessed against
peer group companies.
Shares Granted as Remuneration
During the financial year the Company issued Mr Junk a one-off on-boarding issue of 191,856 shares. Mr Junk was
issued a further 191,856 shares subject to continuing employment 6 months after commencement date. This award
is considered a once off sign on bonus and therefore does not represent a defined percentage of salary. The terms of
the share issue and fair value were as follows:
-
-
Tranche 1: 191,856 shares (fair value of $314,417 using a 5 day VWAP prior to the date of award), issued on
commencement date of 6 January 2020;
Tranche 2: 191,856 shares (fair value of $314,417 using a 5 day VWAP prior to the date of award), issued on 1
September 2020.
Dacian Gold Limited 2020 Annual Report
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59
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Remuneration Report Audited (Continued)
Remuneration Disclosures
The details of the remuneration of each Director and member of KMP of the Company for the years ending 30 June
2020 and 2019 are as follows:
2020
Short-term
Post
employment
Termination
benefits
Long-term
Cash
Salary (i)
Cash
Bonus (ii)
Super-
annuation
L Junk(v)
$
295,492
$
-
R Williams(vi)
311,712
57,500
I Cochrane
110,981
B Patterson
R Reynolds
80,000
80,000
-
-
-
$
25,790
13,340
6,981
7,600
7,600
G Dyker
377,894
201,250
18,523
J Howard (vii)
134,949
-
3,124
Share-based
payment
Share rights
(iii) & options
(iv)
$
1,060,277
-
-
-
-
Long
Service
Leave
$
246
-
314,813
(63,973)
-
-
-
-
-
-
-
-
8,749
4,049
84,466
29,052
Total
Performance
Related
$
1,381,805
633,392
117,962
87,600
87,600
690,882
171,174
%
76.7%
9.1%
-
-
-
41.4%
17.0%
Total
1,391,028
258,750
82,958
314,813
(50,929)
1,173,795
3,170,415
45.2%
2019
Short-term
Post
employment
Long-term
Share-based
payment
Cash Salary
(ii)
Cash Bonus
(ii)
Super-
annuation
Long Service
Leave
Share rights (iii)
& options (iv)
Total
Performance
Related
R Williams
I Cochrane
B Patterson
R Reynolds
$
584,734
80,000
80,000
80,000
G Dyker
355,814
87,500
Total
1,180,548
317,500
$
230,000
$
$
25,000
15,094
$
371,433
$
1,226,261
%
49.0%
-
-
-
7,600
7,600
7,600
20,172
67,972
-
-
-
-
-
-
87,600
87,600
87,600
-
-
-
2,424
134,197
600,107
36.9%
17,518
505,630
2,089,168
39.4%
(i) Salary includes movements in annual leave provision during the year. Entitlements cashed out above the minimum
statutory superannuation threshold have been included in salaries.
(ii) Cash bonus paid is inclusive of superannuation. Superannuation contributions on bonuses which exceed the
minimum statutory superannuation threshold that are cashed out have been included in the cash bonus. Cash
bonus paid to Mr Dyker is inclusive of a $175,000 retention bonus. Refer to discussion on Short-Term Incentives
for further detail on this retention bonus.
(iii) The fair value of performance rights is calculated at the date of grant using a Monte Carlo simulation, a review of
historical share price volatility and correlation of the share price of the Company to its Peer Group. The fair value
is allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed
in the above table is the portion of the fair value of the performance rights recognised in the reporting period.
(iv) The fair value of options is calculated at the date of grant using the Black Scholes option pricing model and allocated
to each reporting period evenly over the period from grant date to vesting date. The value disclosed in the above
table is the portion of the fair value of the options recognised in the reporting period.
(v) Mr Junk was appointed Managing Director and CEO on 6 January 2020.
(vi) Mr Williams was the CEO and Executive Chairman until his retirement on 6 January 2020.
(vii) Mr Howard was appointed Chief Operating Officer on 1 March 2020.
Dacian Gold Limited 2020 Annual Report
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60 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Remuneration Report Audited (Continued)
Shareholdings
The number of shares in the Company held during the financial year by KMP of the Company, including their related
parties, are set out below.
Name
Leigh Junk
Rohan Williams (i)
Ian Cochrane
Barry Patterson
Robert Reynolds
Grant Dyker
James Howard
Balance at start of
the year
-
Vested and issued as
remuneration
191,856
Other changes
during the period(ii)
575,364
Balance at the
end of the year
767,220
8,317,851
265,295
8,954,987
2,730,555
137,455
-
1,664,893
-
-
-
505,636
-
(9,982,744)
265,295
10,960,320
333,333
(182,793)
-
-
530,590
19,915,307
3,063,888
460,298
-
(i) Mr Williams was the CEO and Executive Chairman until his retirement on 6 January 2020.
(ii) Relates to on market purchases / sales during the year or movements upon appointment / cessation as a KMP.
Loans Made to Key Management Personnel
No loans were made to key personnel, including personally related entities during the reporting period.
Other Transactions with Key Management Personnel
For the year ended 30 June 2020, services totalling $74,523 (30 June 2019: $216,042) were provided on normal
commercial terms to the Group by Perenti Global and its subsidiaries (previously Ausdrill Limited), of which Mr
Cochrane is Non-Executive Chairman. The services provided related to open pit grade control drilling and mineral
analysis. Mr Cochrane was not party to any contract negotiations for either party.
Other than the above, there have been no other transactions with, and no amounts are owing to or owed by KMP.
End of Remuneration Report
Dacian Gold Limited 2020 Annual Report
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61
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under Section 307C of the Corporations Act is set out
on the following page.
This report is made in accordance with a resolution of the Directors.
DATED at Perth this 30th day of September 2020.
Leigh Junk
Managing Director & CEO
Dacian Gold Limited 2020 Annual Report
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62 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Dacian Gold Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Dacian Gold Limited
for the financial year ended 30 June 2020 there have been:
i.
ii.
KPMG
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Graham Hogg
Partner
Perth
30 September 2020
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
63
ANNUAL FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Revenue
Cost of goods sold
Gross Profit
Corporate employee expenses
Share-based employee expense
Borrowing and finance costs
Exploration costs expensed and written off
Losses on derivative instruments
Other expenses
Impairment loss on assets
Loss before income tax
Income tax (expense) / benefit
Net (loss) / profit for the year attributable to the
members of the parent entity
Other comprehensive income for the year, net of tax
Note
2
3
3
21
3
12
10
3
14
4
Consolidated
30 June
2020
$’000
270,047
(264,996)
5,051
(3,985)
(1,712)
(6,644)
(9,148)
(6,808)
(4,304)
(68,537)
(96,087)
(20,377)
(116,464)
-
Total comprehensive (loss) / profit for the year
attributable to the members of the parent entity
19
(116,464)
Profit / (loss) per share
Basic (loss) / earnings per share attributable to ordinary
equity holders of the parent (cents per share)
Diluted (loss) / earnings per share attributable to
ordinary equity holders of the parent (cents per share)
5
5
(40.6)
(40.6)
30 June
2019
$’000
132,821
(108,943)
23,878
(3,632)
(760)
(4,946)
(12,247)
-
(3,625)
-
(1,332)
4,350
3,018
-
3,018
1.4
1.3
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
Dacian Gold Limited 2020 Annual Report
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64 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
Consolidated
Current assets
Cash and cash equivalents
Receivables
Inventories
Derivative financial instruments
Total current assets
Non-current assets
Property, plant and equipment
Exploration and evaluation assets
Mine properties
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Borrowings
Other financial liabilities
Total current liabilities
Non-current liabilities
Provisions
Borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Note
7
8
9
10
11
12
13
20
15
16
17
10
16
17
19
19
19
30 June
2020
$’000
51,976
3,179
20,382
45
75,582
107,205
4,072
84,486
13,374
209,137
284,719
21,016
1,420
34,585
261
57,282
21,195
43,600
64,795
122,077
162,642
338,904
2,250
(178,512)
162,642
30 June
2019
$’000
35,515
5,173
20,674
-
61,362
130,858
4,072
142,763
32,573
310,266
371,628
43,954
1,151
37,395
-
82,500
18,608
85,645
104,253
186,753
184,875
244,513
3,007
(62,645)
184,875
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Dacian Gold Limited 2020 Annual Report
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65
ANNUAL FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Note
Issued
capital
Share reserve
Accumulated
losses
Consolidated
$’000
$’000
$’000
Attributable to
owners of the
parent
$’000
Balance at 1 July 2018
195,187
3,516
(65,837)
132,866
Reported profit for the year
Other comprehensive income
Total comprehensive profit for the year
Shares issued
Share issue transaction costs
Options exercised (cash)
Options exercised (non-cash)
Performance rights exercised
Performance rights forfeited
Share-based payments expense
-
-
-
48,429
(1,868)
1,670
458
637
-
-
-
-
-
-
-
-
(458)
(637)
(174)
760
3,018
-
3,018
-
-
-
-
-
174
-
3,018
-
3,018
48,429
(1,868)
1,670
-
-
-
760
Balance at 30 June 2019
19
244,513
3,007
(62,645)
184,875
Reported loss for the year
Other comprehensive income
Total comprehensive profit for the year
Shares issued
Share issue transaction costs
Deferred tax on share issue costs
Options exercised (non-cash)
Performance rights exercised
Performance rights forfeited
Share-based payments expense
-
-
-
98,351
(7,011)
1,179
761
796
-
315
Balance at 30 June 2020
19
338,904
-
-
-
-
-
-
(761)
(796)
(597)
1,397
2,250
(116,464)
(116,464)
-
-
(116,464)
(116,464)
-
-
-
-
-
597
-
98,351
(7,011)
1,179
-
-
-
1,712
(178,512)
162,642
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Dacian Gold Limited 2020 Annual Report
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66 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Consolidated
30 June
2020
$’000
Note
Cash flows from operating activities
Gold sales
Interest received
Other income
Interest paid
Payments for exploration and evaluation
Payments to suppliers and employees
Net cash from operating activities
7
Cash flows from investing activities
Payments for mine properties expenditure (2019: net of
pre-production revenue)
Payments for plant and equipment
Payments for capitalised interest during development
Payments to acquire exploration assets(i)
Proceeds from sale of assets
Net cash from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Proceeds from issue of options
Share issue transaction costs
Repayment of borrowings
Transaction costs associated with borrowings
Repayment of lease liabilities
Premiums paid on put options
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
7
7
269,489
330
557
(5,263)
(8,820)
(233,334)
22,959
(43,085)
(2,993)
-
-
45
(46,033)
98,351
-
(6,954)
(41,400)
(1,269)
(2,481)
(6,712)
39,535
16,461
35,515
51,976
30 June
2019
$’000
132,550
1,046
272
(3,229)
(13,009)
(70,444)
47,186
(59,496)
(3,432)
(2,894)
(11,500)
-
(77,322)
48,330
1,670
(1,948)
(44,500)
(767)
-
-
2,785
(27,351)
62,866
35,515
(i) Consideration paid to terminate a Jupiter life-of-mine royalty obligation accrued in the prior year.
The above statement of cash flows should be read in conjunction with the accompanying notes.
Dacian Gold Limited 2020 Annual Report
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67
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Basis of Preparation ............................................................................................................................... 31
Performance for the Year ...................................................................................................................... 35
Segment Information ........................................................................................................ 35
Note 1
Revenue ............................................................................................................................ 35
Note 2
Expenses ........................................................................................................................... 36
Note 3
Income Tax ........................................................................................................................ 38
Note 4
Earnings per Share ............................................................................................................ 39
Note 5
Note 6
Dividends........................................................................................................................... 39
Operating Assets and Liabilities............................................................................................................. 40
Cash and Cash Equivalents ................................................................................................ 40
Note 7
Receivables ....................................................................................................................... 41
Note 8
Inventories ........................................................................................................................ 41
Note 9
Derivative Financial Instruments & Other Financial Liabilities ......................................... 42
Note 10
Property, Plant and Equipment ........................................................................................ 43
Note 11
Note 12
Exploration and Evaluation Assets .................................................................................... 45
Note 13 Mine Properties ................................................................................................................ 46
Impairment of Assets ........................................................................................................ 49
Note 14
Trade and Other Payables ................................................................................................. 51
Note 15
Note 16
Provisions .......................................................................................................................... 51
Capital Structure, Financial Instruments and Risk ................................................................................. 53
Borrowings and Finance Costs .......................................................................................... 53
Note 17
Note 18
Financial Instruments ........................................................................................................ 57
Issued Capital and Reserves .............................................................................................. 60
Note 19
Other Disclosures .................................................................................................................................. 61
Deferred Tax ..................................................................................................................... 61
Note 20
Share-Based Payments ..................................................................................................... 63
Note 21
Commitments ................................................................................................................... 67
Note 22
Contingencies .................................................................................................................... 67
Note 23
Related Party Disclosures.................................................................................................. 68
Note 24
Key Management Personnel ............................................................................................. 69
Note 25
Auditors Remuneration .................................................................................................... 70
Note 26
Events Subsequent to the Reporting Date ........................................................................ 70
Note 27
New and Revised Accounting Standards .......................................................................... 71
Note 28
Dacian Gold Limited 2020 Annual Report
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68 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Basis of Preparation
Dacian Gold Limited (“Dacian” or the “Company”) is a for profit company limited by shares, incorporated and
domiciled in Australia, whose shares are publicly traded on the Australian Securities Exchange.
A description of the nature of operations and principal activities of Dacian and its subsidiaries (collectively, the
“Group”) is included in the Directors’ Report, which is not part of these financial statements.
The financial statements were authorised for issue in accordance with a resolution of the Directors on 30 September
2020.
The financial report is a general purpose financial report which:
-
-
-
-
-
has been prepared in accordance with the requirements of the Corporations Act 2001, Australian
Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards
Board (“AASB”) and complies with International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”);
has been prepared on a historical cost basis except for assets and liabilities and share-based payments which
are required to be measured at fair value. The basis of measurement is discussed further in the individual
notes;
is presented in Australian dollars with all values rounded to the nearest thousand dollars ($’000) unless
otherwise stated, in accordance with ASIC Instrument 2016/191;
adopts all new and amended Accounting Standards and Interpretations issued by the AASB that are relevant
to the operations of the Group and effective for reporting periods beginning on or after 1 July 2019. Refer
to note 28 for further details;
does not early adopt Accounting Standards and Interpretations that have been issued or amended but are
not yet effective. Refer to note 28 for further details.
Going Concern Basis for Preparation of Financial Statements
These financial statements have been prepared on the going concern basis, which contemplates the continuity of
normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.
The Group held cash on hand as at 30 June 2020 of $52.0 million (30 June 2019: $35.5 million). As at 30 June 2020 the
Group has a working capital surplus of $18.3 million (30 June 2019: $21.1 million deficit).
For the year ended 30 June 2020 the Group incurred a loss after income tax of $116.5 million including impairments
of $68.5 million, losses on derivative financial instruments of $6.8 million and a net income tax expense of $20.4 million
relating to the derecognition of deferred tax assets. Cash inflows from operating activities were $23.0 million and cash
outflows from investing activities were $46.0 million. Investing outflows included mine development expenditure of
$43.1 million. At 30 June 2020 the Group held total assets of $284.7 million and net assets of $162.6 million.
Cash flows for the year have been impacted by lower than expected gold production, continued capital investment in
waste stripping activities at the Doublejay open pit and the cost of deferred premium options which were put into
place at the request of the Project Debt Facility Financiers (“the Financiers”).
During February 2020, the Group announced two material changes to its business and future plans, being a reduction
to its Mineral Resources and Reserves and to immediately suspend capital development at the Westralia underground
mine resulting in current underground mining activities concluding in August 2020. As a consequence of these
changes, the Group sought and received a number of approvals, waivers and concessions from the Financiers. A
further rescheduling of debt repayments was agreed with Financiers in March 2020 to align debt repayments with the
updated forecast mine plan and cash flow which included the deferral of the $24.7 million debt repayment from 31
March 2020 to on or before 30 April 2020, so as to align the Company’s funding plans with the repayment.
Dacian Gold Limited 2020 Annual Report
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69
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Basis of Preparation (continued)
Going Concern Basis for Preparation of Financial Statements (continued)
The Group completed a placement and accelerated entitlement offer to institutional and sophisticated investors
followed by completion of a retail entitlement offer during May 2020, raising a total of $91.4 million (net of transaction
costs), marking a significant recapitalisation of the Group. The capital raising proceeds were used to repay the deferred
$24.7 million debt repayment on 30 April 2020 and provide additional working capital to fund operations, the
development of the Doublejay open pit and fund ongoing exploration activities.
Subsequent to year end, the Group ceased mining activities at Westralia in August 2020 ahead of the previously
scheduled timeline (December 2020), preserving the 195,000 ounce (before 2HFY2020 mining depletion) Ore Reserve
remaining as part of its optimisation studies. As a result of the cessation of mining activities at Westralia four months
earlier than planned and the rescheduling of the Jupiter open pit, FY2021 production guidance was revised to 110,000-
120,000 ounces (previously 120,000-130,000 ounces).
As a consequence of these changes the Group sought and received further approvals, waivers and concessions from
the Financiers related to financial covenant requirements of the Project Debt Facility Agreement. In addition, the
Group breached certain non-financial requirements of the Project Debt Facility Agreement for which a waiver has also
been received. These approvals, waivers and concessions were provided on the basis that the Group make a $25.0
million debt repayment on 30 September 2020 inclusive of the $14.5 million scheduled repayment. Total Project Debt
Facility principal repayments following the capital raise, completed in May 2020, total $55.6 million, inclusive of the
$25.0 million repayment on 30 September 2020. Following the $25.0 million repayment on 30 September 2020, the
Project Debt Facility balance decreased to $39.1 million.
The Directors consider the going concern basis of preparation to be appropriate based on the cash flow forecasts. The
achievement of cash flow forecasts is dependent upon the Group achieving forecast targets for gold revenue, mining
operations and processing activities that are in accordance with management’s plans and forecast gold price and
foreign exchange assumptions to enable the cash flow forecast to be achieved. Critical to achieving forecast cash
flows, and forecast covenant compliance under the Project Debt Facility Agreement, is the Group’s ability to achieve
forecast gold production in accordance with Board approved forecasts.
Should the cash flow forecasts and forecast covenant compliance under the Project Debt Facility Agreement not be
achieved, the Group may require additional waivers, a rescheduling of the delivery of gold forward exchange contracts
or rescheduling repayments under the Project Debt Facility Agreement with the Financiers, or additional funding which
may include refinancing the Project Debt Facility with other parties, raising equity or a combination of these options.
The Directors have a reasonable expectation that a suitable funding solution can be secured within the necessary
timeframe, if required, in light of the current gold sector outlook and the past capacity of the Group to obtain funding
as required.
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70 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Basis of Preparation (continued)
Principles of Consolidation
The consolidated financial statements comprise the financial statements of the Group. A list of controlled entities
(subsidiaries) at year end is contained in note 24.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using
consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may
exist.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses
and profits and losses resulting from intra-group transactions have been eliminated. Subsidiaries are consolidated
from the date on which control is obtained to the date on which control is disposed. The acquisition of subsidiaries is
accounted for using the acquisition method of accounting.
Foreign Currencies
Both the functional currency of each entity within the Group and the Group’s presentation currency is Australian
dollars.
Transactions in foreign currencies are initially recorded in Australian dollars at the exchange rate of the day. Foreign
currency monetary assets and liabilities are translated to Australian dollars at the reporting date exchange rate.
Foreign exchange gains and losses are generally recognised in the profit or loss.
Other Accounting Policies
Significant and other accounting policies that summarise the measurement basis used and are relevant to an
understanding of the financial statements, are provided throughout the notes to the financial statements. Where
possible, wording has been simplified to provide clearer commentary on the financial report of the Group. Accounting
policies determined non-significant are not included in the financial statements.
COVID-19
As the COVID-19 pandemic continues to impact Australia and the world, the Group’s focus remains on keeping its
people well, and maintaining safe and reliable operations. The Group has considered the impact of COVID-19 on
each of its significant accounting judgements and estimates, particularly with respect to assumptions used in
determining receivables, impairment of non-current assets and going concern. At this stage, no further significant
estimates have been identified as a result of COVID-19, however, management is monitoring the increased level of
uncertainty in all future cash flow forecasts used in asset valuation and financial viability.
Key Estimates and Judgements
In the process of applying the Group’s accounting policies, management has made a number of judgements and
applied estimates of future events. Judgements and estimates which are material to the financial report are found in
the following notes.
Note 3 Expenses
Note 9 Inventories
Note 12 Exploration and evaluation assets
Note 13 Mine properties
Note 14 Impairment
Note 16 Provisions
Note 20 Deferred tax
Note 21 Share-based payments
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ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Basis of Preparation (continued)
The Notes to the Financial Statements
The notes include information which is required to understand the financial statements and is material and relevant
to the operations and the financial position and performance of the Group. Information is considered relevant and
material if, for example:
- the amount is significant due to its size or nature;
- the amount is important for understanding the results of the Group;
- it helps to explain the impact of significant changes in the Group’s business; or
- it relates to an aspect of the Group’s operations that is important to its future performance.
The notes are organised into the following sections:
- Performance for the year;
- Operating assets and liabilities;
- Capital structure and risk;
- Other disclosures.
A brief explanation is included under each section.
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72 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Performance for the Year
This section of the notes provides further information on key line items relevant to the financial performance of the
Group. It includes profitability, the resultant return to shareholders via earnings per share and dividends.
Note 1 Segment Information
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board
of Directors in assessing performance and determining the allocation of resources.
Reportable segments disclosed are based on aggregating operating segments, where the segments have similar
characteristics. The Group’s sole activity is mineral production, exploration and development at the Mt Morgans Gold
Operation (“MMGO”) wholly within Australia, therefore it has aggregated all operating segments into the one
reportable segment being mineral production, exploration and development.
The reportable segment is represented by the primary statements forming these financial statements.
Note 2 Revenue
Accounting Policies
Gold Sales
The Group applied AASB 15 Revenue from Contracts with Customers from 1 July 2018.
Under AASB 15, revenue is recognised when a customer obtains control of the goods or services. Determining the
timing of the transfer of control requires judgement. With the sale of gold bullion, this occurs when physical bullion,
from a contracted sale, is transferred from the Company’s account into the account of the buyer.
In the prior year, prior to the commencement of commercial production on 1 January 2019, revenue from the sale of
gold and silver was treated as a pre-production income and credited to capitalised mine properties in development.
Revenue from contracts with customers
Gold Sales
Silver Sales
Gold forward contracts delivery commitments
30 June
2020
$’000
269,489
558
270,047
30 June
2019
$,000
132,550
271
132,821
The Group enters into gold forward sale contracts and put options to manage the gold price of a proportion of gold
sales. Further details of put options which are classified at fair value through profit and loss can be found in note 10.
The treatment of forward sale contracts are discussed further below.
The forward sale contracts are settled by the physical delivery of gold as per the contract terms. The gold forward sale
contracts are accounted for as gold sales contracts with revenue recognised once the gold has been delivered to the
counterparties. Consistent with the gold sales revenue recognition policy, the physical gold delivery contracts are
considered to sell a non-financial item and therefore do not fall within the scope of AASB 9: Financial Instruments.
Gold forward contracts outstanding at balance date are summarised in the table below.
Due within 1 year
Due after 1 year but not more than 5 years
Gold for physical
delivery
oz
84,589
-
Average contract
sale price
A$/oz
2,055
-
Value of
committed sales
$’000
173,854
-
84,589
2,055
173,854
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ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 3 Expenses
Accounting Policies
Costs of production
Cash costs of production is a component of cost of goods sold and includes direct costs incurred for mining, processing
and mine site administration, net of costs capitalised to mine properties, pre-strip and production stripping assets.
This category also includes movements in the cost of inventory.
In the prior year, prior to the commencement of commercial production at the MMGO on 1 January 2019, expenditure
of an operating nature was capitalised to mine properties in development including cash costs of pre-commercial
production, depreciation and amortisation.
Cost of goods sold
Costs of production
Royalties
Depreciation of mine plant and equipment
Amortisation of mine properties
Depreciation & Amortisation
30 June
2020
$’000
202,646
8,139
19,239
34,972
264,996
30 June
2019
$’000
86,924
3,354
8,020
10,645
108,943
Depreciation is calculated on units of production, straight-line or written down value basis over the estimated useful
life of the assets as follows:
Class of Fixed Asset
▪ Office equipment and fixtures
▪ Computer equipment & software
▪ Motor Vehicles
▪ Plant and equipment
Useful Life
3 - 4 years
2 - 4 years
3 years
3 - 10 years / units of production
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
Mine properties are amortised on a unit-of-production basis over the reserve of the relevant mining area. The unit
of account is tonnes of ore mined.
Depreciation and Amortisation
Depreciation expense – recognised in cost of goods sold
Depreciation expense – other
Amortisation expense
30 June
2020
$’000
19,239
435
34,972
54,646
30 June
2019
$’000
8,020
224
10,645
18,889
Key estimates and assumptions
Unit-of-production method of depreciation/amortisation
The Group uses the unit-of-production basis when depreciating / amortising life-of-mine specific assets which results
in a depreciation / amortisation charge proportionate to the depletion of the anticipated remaining life-of-mine
production. Each item’s economic life, which is assessed annually, has due regard for both its physical life limitations
and to present assessments of the available reserve of the mine property at which it is located.
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74 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 3 Expenses (continued)
Borrowings and finance costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its
intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for
their use or sale. Other borrowing costs are expensed in the period in which they are incurred. In the prior year, prior
to the commencement of commercial production on 1 January 2019, borrowing costs attributable to the MMGO have
been capitalised and are amortised over the life of the qualifying asset.
Unwind of rehabilitation and restoration provision
Transaction costs (i)
Interest expense on lease liabilities
Interest expense on borrowings
Interest income
30 June
2020
$’000
248
1,780
578
4,346
308
6,644
30 June
2019
$’000
94
2,484
657
2,757
1,046
4,946
(i) Borrowing costs at 30 June 2019 includes an expense of $2.3 million for previously capitalised transaction costs
(2020: nil).
Employee expenses
Corporate Employee expenses
Salaries and wages
Director fees and consulting expenses
Defined contribution superannuation
Other employment expenses
Other expenses
Other expenses
Administration & corporate
Non-production depreciation
30 June
2020
$’000
3,113
271
317
284
3,985
30 June
2020
$’000
3,869
435
4,304
30 June
2019
$’000
2,829
240
292
271
3,632
30 June
2019
$’000
3,401
224
3,625
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ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 4
Income Tax
Accounting Policy
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
(a)
Income Statement
Current income tax:
Current income tax benefit
Deferred income tax:
Tax losses brought to account for the first time
Relating to origination and reversal of timing differences
Tax losses derecognised
Adjustment in respect of prior years
Income tax expense / (benefit) reported in the Statement
of Profit or Loss and Other Comprehensive Income
(b)
Statement of Changes in Equity
Deferred income tax:
Capital Raising Costs
(c) Reconciliation of consolidated income tax expense to prima facie tax payable
Accounting loss from continuing operations before income
tax expense
Tax at the Australian rate of 30% (2019: 30%)
Non-deductible expenses
Capital raising costs claimed
Tax losses derecognised as deferred tax assets
Current year tax losses not recognised
Adjustment in respect of previous year(i)
Income tax expense / (benefit) reported in Profit or Loss and
Other Comprehensive Income
30 June
2020
$’000
(96,087)
(28,826)
516
(924)
34,138
14,757
716
20,377
30 June
2020
$’000
30 June
2019
$’000
-
(11,997)
-
(14,477)
34,138
716
20,377
30 June
2020
$’000
(1,179)
(9,884)
17,531
-
-
(4,350)
30 June
2019
$’000
(80)
30 June
2019
$’000
(1,332)
(400)
231
(505)
-
(3,676)
(4,350)
(i) Following the commissioning of the treatment plant, management undertook a review of the effective lives of its
assets which resulted in an income tax benefit in the 2019 financial year.
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76 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 5 Earnings per Share
Accounting Policy
Earnings per share (“EPS”) is the amount of post-tax profit attributable to each share. The Group presents basic and
diluted EPS data for ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.
Diluted EPS takes into account the dilutive effect of all potential ordinary shares, being unlisted employee share
options and performance rights on issue.
a) Basic earnings per share
(Loss) / (profit) attributable to ordinary equity holders of the
Company
b) Diluted earnings per share
(Loss) / (profit) attributable to ordinary equity holders of the
Company
c) (Loss) / profit used in calculation of basic and diluted loss per
share
(Loss) / profit after tax from continuing operations
d) Weighted average number of shares
Issued Ordinary shares at 1 July
Effect of shares issued
Weighted average number of ordinary shares at 30 June
Effect of dilution:
Share options (i)
Performance rights (i)
Weighted average number of ordinary shares adjusted for the
effect of dilution
30 June
2020
Cents
(40.6)
(40.6)
$’000
(116,464)
No.
30 June
2019
Cents
1.4
1.3
$’000
3,018
No.
225,713,403
205,844,814
60,920,249
18,071,798
286,633,652
223,916,612
-
-
528,302
299,893
286,633,652
224,744,807
(i) Share options and performance rights of 10,104,712 have been excluded from the 2020 financial year calculation
as the Company was loss making and their effect would have been anti-dilutive.
Note 6 Dividends
No dividends were paid or proposed during the financial year ended 30 June 2020 (30 June 2019: nil).
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ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Operating Assets and Liabilities
This section of the notes shows cash generation, the assets used to generate the Group’s trading performance and the
liabilities incurred as a result. Liabilities relating to the Group’s financing activities are addressed in the Capital
Structure, Financial Instruments and Risk section (refer to note 17).
Note 7 Cash and Cash Equivalents
Accounting Policy
Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand. Cash
equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value. Cash at bank earns interest at floating rates based on daily
deposit rates.
Cash at bank
Reconciliation of profit / (loss) after tax to net cash flow from operating activities:
30 June
2020
$’000
51,976
51,976
(Loss) / profit from ordinary activities after income tax
Depreciation and amortisation
Net gain on sale of assets
Impairment losses on assets
Bank facility fees
Premiums on put options
Share-based payments expense
Exploration write-off
Derivative financial instruments mark to market
Expense of previously capitalised borrowing costs
Unwind of rehabilitation interest
Inventory NRV adjustment
Movement in assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in inventories
(Increase)/decrease in deferred tax assets
Increase/(decrease) in employee leave provisions
Increase/(decrease) in trade and other payables
Net cash flow from operating activities
30 June
2020
$’000
(116,464)
54,646
(28)
68,537
1,269
6,712
1,712
-
216
-
248
3,902
1,996
(3,612)
20,377
350
(16,902)
22,959
30 June
2019
$’000
35,515
35,515
30 June
2019
$’000
3,018
18,889
-
-
-
-
760
91
-
2,349
-
-
(1,941)
(1,231)
(4,349)
231
29,369
47,186
Dacian Gold Limited 2020 Annual Report
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78 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 8 Receivables
Accounting Policy
Receivables are initially recognised at fair value and subsequently at the amounts considered receivable (financial
assets at amortised cost). Balances within receivables do not contain impaired assets, are not past due and are
expected to be received when due.
The Group does not have trade receivables in relation to gold sales. The only material receivables at year end are for
GST and fuel tax credits receivable from the Australian Taxation Office and therefore, the Group is not generally
exposed to credit risk in relation to its receivables.
Due to the short-term nature of these receivables, their carrying value is assumed to approximate fair value.
Current receivables
GST receivable
Prepayments
Other receivables
Note 9
Inventories
Accounting Policy
30 June
2020
$’000
1,837
622
720
3,179
30 June
2019
$’000
2,354
2,055
764
5,173
Gold bullion, gold-in-circuit and ore stockpiles are physically measured or estimated and valued at the lower of cost
and net realisable value. Cost is determined by the weighted average method and comprises direct purchase costs
and an appropriate portion of fixed and variable overhead costs, including depreciation and amortisation, incurred in
converting ore into gold bullion. Net realisable value (“NRV”) is the estimated selling price in the ordinary course of
business, less estimated costs of completion, depreciation, amortisation and the costs of selling the final product,
including royalties.
Consumable stores are valued at the lower of cost and net realisable value. The cost of consumable stores is measured
on a first-in first-out basis. Inventories expected to be sold (or consumed in the case of stores) within 12 months after
the balance sheet date are classified as current assets, all other inventories are classified as non-current.
ROM inventory – at NRV
Crushed ore – at NRV
Gold in circuit– at NRV
Gold dore – at NRV
Mine spares and stores – at cost
30 June
2020
$’000
3,780
1,824
5,773
5,295
3,710
20,382
30 June
2019
$’000
4,635
1,462
4,292
6,464
3,821
20,674
ROM inventory, crushed ore, gold in circuit and gold dore are valued at the lower of costs and NRV. The carrying value
is modelled using assumptions with respect planned usage, future processing costs, and the anticipated gold price
realised from the delivery of processed inventories into out of the money forward gold contracts. As a result, the
Group has recognised a write down to NRV of $3.902 million at 30 June 2020 within cost of goods sold in respect of
these inventory balances.
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79
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 9
Inventories (continued)
Key Estimates and Assumptions
Inventories
Net realisable value tests are performed at each reporting date and represent the estimated future sales price of the
product based on the lower of the prevailing spot metals price or anticipated gold price realised from delivery into
forward gold sales contracts at the reporting date, less estimated costs to complete production and bring the product
to sale, including depreciation and amortisation.
Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of
contained gold ounces based on assay data, and the estimated recovery percentage. Stockpile tonnages are verified
by periodic surveys.
Note 10 Derivative Financial Instruments & Other Financial Liabilities
Accounting Policy
The put options held by the Group at period end do not qualify for hedge accounting and are therefore classified as
fair value through profit and loss and accordingly, the fair value movements of all derivatives are recognised in the
profit and loss.
(a) Derivative Financial Instruments - Assets
Current Assets:
Gold put option fair value
(b) Other Financial Liabilities
Current Liabilities:
Gold put option premium payable
30 June
2020
$’000
30 June
2019
$’000
45
(261)
-
-
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to
fluctuations in foreign exchange and gold price.
In October 2019, the Group agreed to purchase 150,000 ounces in deferred premium gold put options at a strike price
of $2,100 per ounce expiring on 28 February 2020. These options were purchased at the time the Group and Financiers
were undertaking a review of certain terms within the Project Debt Facility Agreement. The options were purchased
with the intention of setting a gold price floor such that the Group could restructure this hedging on or before 28
February 2020 having completed the review of certain Project Debt Facility Agreement terms with its Financiers. These
options were held until expiry on the 28 February 2020.
In January 2020, at the request of the Financiers, the Group purchased a further 67,608 ounces in deferred premium
gold put options at a strike price of $2,100 per ounce expiring over the period April 2020 to June 2021. During the
June 2020 quarter, 61,338 ounces were terminated early to reduce the overall cost of the regime. Total losses of
$6.808 million have been recognised on put option fair value movements during the year (30 June 2019: nil).
As at 30 June 2020, the Group has 5,070 deferred premium gold put options.
The Group also enters into gold forward contracts. Refer to note 2 for further details of gold forward contracts held at
30 June 2020.
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80 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 11 Property, Plant and Equipment
Accounting Policy
The value of property, plant and equipment is measured as the cost of the asset, less accumulated depreciation and
impairment. The cost of the asset also includes the cost of replacing parts that are eligible for capitalisation, the cost
of major inspections and an initial estimate of the cost of dismantling and removing the item from site at the end of
its useful life (rehabilitation provisions). Changes in the rehabilitation provisions resulting from changes in the size or
timing of the cost or from changes in the discount rate are also recognised as part of the asset cost.
Derecognition and Disposal
An item of property, plant and equipment is derecognised when it is sold or otherwise disposed of, or when its use is
expected to bring no further economic benefits. Any gain or loss from derecognising the asset (the difference between
the proceeds on disposal and the carrying amount of the asset) is included in the income statement in the period the
item is derecognised.
Impairment
The carrying values of property, plant and equipment are reviewed for impairment at each reporting date, with
recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may
be impaired. Refer to note 14 for further discussion of impairment.
Right-of-use assets
The Group has lease contracts for various items of laboratory equipment and power infrastructure used in its
operations as well as the corporate head office premises. These leases have lease terms between 5 and 8 years. The
net book value of leased assets at 30 June 2020 is $13.1 million. Further information about the leases for which the
Group is a lessee is presented in the table on the next page.
The Group also has certain leases of assets with lease terms of 12 months or less for mining equipment and equipment
for which the assets are of low value. The Group applies the short-term lease and lease of low-value assets recognition
exemptions for these leases.
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81
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 11 Property, Plant and Equipment (continued)
Office
Equip &
Fixtures
$’000
Computer
Equipment
&
Software
$’000
Motor
Vehicles
$’000
Plant &
Equipment
$’000
Leased
Equipment
$’000
Capital
WIP
$’000
Total
$’000
284
(191)
93
1,757
(1,456)
2,326
(1,880)
301
446
125,439
(32,406)
93,033
114
21
-
-
-
(42)
93
263
(149)
114
130
30
-
-
(42)
(4)
114
659
177
(1)
(6)
-
(528)
301
1,020
142
(16)
(30)
-
(670)
446
113,734
1,447
-
(6,311)
71
(15,908)
93,033
1,587
(928)
2,274
(1,254)
659
1,020
130,232
(16,498)
113,734
1,128
139
-
-
(361)
(247)
659
1,668
36
-
-
(375)
(309)
1,020
129,082
2,513
(54)
(5,065)
(6,308)
(6,434)
113,734
18,644
(5,554)
13,090
15,145
471
-
-
-
(2,526)
13,090
18,173
(3,028)
15,145
17,462
-
-
-
(1,158)
(1,159)
15,145
242
-
242
148,692
(41,487)
107,205
186
766
-
(639)
(71)
-
130,858
3,024
(17)
(6,986)
-
(19,674)
242
107,205
186
-
186
152,715
(21,857)
130,858
603
186
-
(603)
150,073
2,904
(54)
(5,668)
-
-
(8,244)
(8,153)
186
130,858
Year ended 30 June 2020
Cost
Accumulated depreciation
Net Book Value
Movements
Opening net book value
Additions(i)
Disposals
Impairment (note 14)
Transfers
Depreciation expense
Closing net book value
Year ended 30 June 2019
Cost
Accumulated depreciation
Net Book Value
Movements
Opening net book value
Additions
Disposals
Transfers from mine
development
Depreciation expense
Depreciation capitalised(ii)
Closing net book value
(i)
(ii)
Leased Equipment additions includes $0.47 million for right-of-use assets relating to the Group’s head office rental
agreement recognised on initial implementation of AASB 16: Leases.
In the prior year, prior to the commencement of commercial production on 1 January 2019, depreciation has been
capitalised to mine properties in development (refer to note 13).
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82 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 12 Exploration and Evaluation Assets
Accounting Policy
Exploration and evaluation costs are expensed in the year they are incurred, apart from acquisition costs and those
costs that are incurred on an area of interest that contains a JORC Ore Reserve.
Capitalised exploration and evaluation expenditures in relation to specific areas of interest continue to be recognised
as an exploration and evaluation asset where the following conditions are satisfied:
the rights to tenure of the area of interest are current; and
(i)
(ii) at least one of the following conditions is also met:
(a)
(b)
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
exploration and evaluation activities in the area of interest have not at the reporting 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 costs 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.
Deferred exploration costs at the start of the financial year
Exploration and evaluation costs incurred
Exploration and evaluation costs expensed and written off
30 June
2020
$’000
4,072
9,148
(9,148)
4,072
30 June
2019
$’000
4,163
12,156
(12,247)
4,072
Impairment
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.
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 mine properties in
development.
No impairment loss (30 June 2019: $0.1m) in relation to exploration and evaluation assets has been recognised during
the period. The impairments relates to historical tenement acquisition costs.
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83
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 12 Exploration and Evaluation Assets (continued)
Key Estimates and Assumptions
Impairment of exploration and evaluation assets
The future recoverability of capitalised exploration and evaluation expenditure is dependent upon a number of factors,
including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the
related exploration and evaluation asset through sale.
Factors that could impact future recoverability include the level of reserves and resources, future technological
changes which could impact the cost of mining, future legal changes (including changes to environmental restoration
obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the
future, profits and net assets will be reduced in the period in which the determination is made.
Exploration commitments
The Group has certain obligations for payment of tenement rent, shire rates and to perform minimum exploration
work on mineral leases held. These obligations may vary over time, depending on the Group’s exploration
programmes and priorities.
Note 13 Mine Properties
Accounting Policies
Mine Properties Under Development
Mine properties under development represents the costs incurred in preparing mines for production and includes
plant and equipment under construction and operating costs incurred before production commences. These costs are
capitalised to the extent they are expected to be recouped through the successful exploitation of the related mining
leases. Once production commences, these costs are transferred to property, plant and equipment and mine
properties, as relevant, and are depreciated and amortised using the units-of-production method based on the
estimated economically recoverable reserve to which they relate or are written off if the mine property is abandoned.
Mine Properties in Production
Other mine properties represent expenditure in respect of exploration, evaluation, feasibility and pre-production
operating costs incurred by the Group previously accumulated and carried forward in mine properties under
development in relation to areas of interest in which mining has now commenced. Other mine properties are stated
at cost, less accumulated amortisation and accumulated impairment losses.
Other mine properties are amortised on a unit-of-production basis over the economically recoverable reserve of the
mine concerned. The unit of account is tonnes of ore mined. From 1 January 2020 amortisation has been calculated
based on the published Reserve which forms the basis of the current 3 year mine plan.
Deferred Stripping
Stripping activity costs incurred in the development phase of an open pit mine are capitalised as part of the cost of
constructing the mine and subsequently amortised over the life of the mine on a units-of-production basis.
Stripping activity incurred during the production phase of a mine is assessed as to whether the benefit accruing from
that activity is to provide access to ore that can be used to produce ore inventory, or whether it in addition provides
improved access to ore that will be mined in future periods.
To the extent that the benefit from the stripping activity is realised in the form of inventory produced, the Group
accounts for those stripping activity costs in accordance with AASB 102 Inventories. A stripping activity asset is brought
to account if it is probable that future economic benefits (improved access to that ore body) will flow to the Group,
the component of the ore body for which access has been improved can be identified and costs relating to the stripping
activity can be measured reliably.
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84 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 13 Mine Properties (continued)
Accounting Policies (continued)
Deferred Stripping (continued)
The amount of stripping activity costs that are capitalised is determined based on a comparison of the stripping ratio
in the relevant period with the life-of-mine stripping ratio. To the extent that there is a period of sustained stripping
that exceeds the average life-of-mine stripping ratio, mine waste stripping costs are capitalised to the stripping activity
asset. Such capitalised costs are amortised over the life of that component on a units-of-production basis. Changes
to the life-of-mine are accounted for prospectively.
Year ended 30 June 2020
Cost
Accumulated amortisation
Net book value
Movements
Opening carrying amount
Additions
Impairment (note 14)
Change in rehabilitation provision
Amortisation expense
Closing net book value
Year ended 30 June 2019
Cost
Accumulated amortisation
Net book value
Movements
Opening carrying amount
Additions(i)
Transfers from PPE
Transfers
Change in rehabilitation provision
Amortisation expense
Borrowing costs capitalised / (expensed)(ii)
Closing net book value
Mine
Properties in
Development
$’000
Mine
Properties
in
Production
$’000
Deferred
Stripping
$’000
Total
-
-
-
-
-
-
-
-
-
-
-
-
103,004
6,665
5,467
(122,234)
1,106
-
5,992
-
99,445
(35,130)
64,315
30,658
(10,487)
130,103
(45,617)
20,171
84,486
133,161
9,602
142,763
16,422
(61,551)
2,325
(26,042)
64,315
142,249
(9,088)
133,161
-
19,795
201
122,234
2,368
(9,088)
(2,349)
133,161
19,499
-
-
(8,930)
20,171
35,921
(61,551)
2,325
(34,972)
84,486
11,159
(1,557)
153,408
(10,645)
9,602
142,763
-
11,159
-
-
-
(1,557)
-
103,004
37,619
5,668
-
3,474
(10,645)
3,643
9,602
142,763
(i) The 30 June 2019 additions include mine development and capitalised operating costs (including depreciation and
amortisation) net of revenue from gold sales. During the commissioning phase (before the commencement of
commercial production on 1 January 2019) expenditures of an operating nature were capitalised to mine properties
in development. Revenue from the sale of gold prior to 1 January 2019 has been treated as pre-production income
and was credited to capitalised mine properties in development.
(ii) Borrowing costs at 30 June 2019 include capitalised interest of $2.9 million.
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ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 13 Mine Properties (continued)
Key Estimates and Assumptions
Commencement of commercial production – Mt Morgans Gold Operation
On 1 January 2019 the Group announced the commencement of commercial production at MMGO. The criteria used
to assess this were based on the unique nature of the mine including its complexity and location and requires
judgement.
The assessment considered the following: (1) all major capital expenditures to bring the mine to the condition
necessary for it to be capable of operating in the manner intended by the Company have been completed; (2) the
treatment plant and other surface infrastructure has been transferred to the control of the operations team from the
commissioning team; (3) the power station is capable of delivering the required electricity; (4) the treatment plant’s
crushing and milling circuits are capable of running at design capacity; (5) gold recoveries are at or near expected
production levels; and (6) underground and open pit mining operations have achieved their required production levels
and have the ability to sustain the ongoing production of ore at the required volumes.
During the commissioning phase (prior to the commencement of commercial production) expenditures of an operating
nature was capitalised to mine properties in development. Revenue from the sale of gold was treated as pre-
production income and credited to capitalised mine properties in development.
Production Stripping Costs
The Group defers advanced stripping costs incurred during the production stage of its operations. This calculation
requires the use of judgements and estimates, such as estimates of tonnes of waste to be removed over the life of the
mining area and economically recoverable reserves extracted as a result. Changes in a mine’s life and design may
result in changes to the expected stripping ratio (waste to mineral reserves ratio) and amortisation which is calculated
on a units of production basis. Any resulting changes are accounted for prospectively.
Determination of mineral resources and reserves
The Group uses the concept of life-of-mine as an accounting value to determine the amortisation of mine properties
in production and deferred stripping costs. In determining life-of-mine, the Group prepares ore resource and reserve
estimates in accordance with JORC Code 2012, guidelines prepared by the Joint Ore Reserves Committee of the
Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.
The estimate of these resources and ore reserves, by their very nature, require judgements, estimates and
assumptions.
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86 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 14 Impairment of Assets
Accounting Policy
The Group assesses at each reporting 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 Group makes an estimate of the
asset’s recoverable amount.
An asset’s recoverable amount is the higher of its fair value less costs of disposal 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 groups 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 the fair value less cost of disposal, the estimated future cash flows are discounted to their present value
using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the cash generating unit.
An assessment is also made at each reporting 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. Such reversal is recognised in profit or loss unless
the asset is carried at the re-valued amount, in which case the reversal is treated as a re-valuation increase.
After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining useful life.
The Group assessed its cash generating unit (“CGU”) for the half-year ended 31 December 2019 to determine whether
any indication of impairment existed. Where an indicator of impairment existed, a formal estimate of the recoverable
amount was made.
In assessing whether an impairment is required for the CGU, the carrying value is compared to its recoverable amount.
The recoverable amount was assessed by determining the CGU’s fair value less costs of disposal. Management of the
Group has identified one CGU, the Mt Morgans Gold Operation (“MMGO”).
31 December 2019 Assessment
On 27 February 2020 the Company announced an updated Mineral Resource and Ore Reserve estimate which included
a 40% reduction in Mineral Resource at the MMGO from 3.5 million to 2.1 million ounces. The resource reduction
related primarily to the Westralia underground mine where the Mineral Resource estimate decreased by 52% from
1.5 million ounces to 0.7 million ounces.
Subsequent to 31 December 2019, the Company also announced production from Westralia was expected to conclude
in the first half of the 2021 financial year which has now ceased in August 2020. Whilst the Group intends to undertake
optimisation studies on the underground throughout financial year 2021, the outcome of this work cannot be
determined at this time and the results are uncertain.
As a result of these factors, it was determined that there were indicators of potential impairment of the MMGO CGU.
The Group used the fair value less cost of disposal to determine the recoverable value of the MMGO CGU based on
the following methodology and assumptions.
Methodology
The Group has impaired the assets within the MMGO CGU based on the fair values determined by a five year
discounted cash flow assessment underpinned by the Group’s revised life-of-mine outlook. The key assumptions in
addition to the mine plans used in the discounted cash flow valuation are the USD gold price, the Australian dollar
exchange rate against the US dollar and the discount rate (real terms).
Average forecast annual production between financial years 2021 and 2023 averages 110,000 ounces per annum at
an average forecast AISC of $1,350 per ounce.
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ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 14 Impairment of Assets (continued)
Methodology (continued)
Gold price and AUD:USD exchange rate assumptions are estimated by management in real terms, with reference to
external market forecasts. For this review, the forecast gold price was estimated at between US$1,305 – US$1,493,
and the forecast exchange rate of US$0.69 to US$0.74 per A$1.00, based on consensus forecasts over the life of the
operation.
A discount rate of 5.6% was applied to post tax cash flows expressed in real terms. The discount rate was derived from
the Company’s post tax weighted average cost of capital, with appropriate adjustments made to reflect the risks
specific to the CGU, that are not in the underlying cash flows.
The impairment testing at 31 December 2019 resulted in a total impairment charge to the CGU of $68.537 million.
This impairment charge is reflected in the Consolidated Statement of Profit or Loss and Other Comprehensive Income
and is summarised in this note. The impairment is applied against the asset carrying values for the Westralia
underground mine comprising mine properties and property plant and equipment.
A +/-10% change in average gold price would decrease/increase the impairment by between $61.8 million and $63.2
million and a +/- 10% change in gold production would impact the impairment by $16.0 million, all other assumptions
being equal.
Property, plant and equipment
Mine properties
Total impairment
MMGO
carrying value
prior to
impairment
$’000
123,663
159,788
283,451
Impairment
loss
Recoverable
amount
$’000
(6,986)
(61,551)
(68,537)
$’000
116,677
98,237
214,914
The carrying value of the MMGO CGU equals its recoverable amount. Significant changes to key assumptions including
the forecast gold price, forecast exchange rate and operating assumptions will have an impact on the carrying value
of the CGU in future periods.
The Group performed an impairment indicator assessment at 30 June 2020 and determined that no impairment or
impairment reversal was required.
Key Estimates and Assumptions
Determination of Mineral Resources & Ore Reserves
The determination of mineral resources and ore reserves impacts the accounting for asset carrying values. The Group
estimates its mineral resources and ore reserves in accordance with the Australian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves 2012 (the “JORC” Code). The information on mineral resources and ore
reserves was prepared by or under the supervision of Competent Persons as defined in the JORC Code. The amounts
presented are based on the mineral resources and ore reserves determined under the JORC Code.
There are numerous uncertainties inherent in estimating mineral resources and ore reserves, and assumptions that
are valid at the time of estimation may change significantly when new information becomes available.
Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the
economic status of reserves and may ultimately result in reserves being restated.
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88 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 15 Trade and Other Payables
Accounting Policy
Trade and other payables are initially recognised at the value of the invoice received from a supplier and subsequently
measured at amortised cost. They represent liabilities for goods and services provided to the Group prior to the end
of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect
of the purchase of these goods and services. The amounts are unsecured and generally paid within 30 days of
recognition.
Current liabilities
Trade and other payables
Accrued expenses
Note 16 Provisions
Accounting Policy
Rehabilitation and Restoration
30 June
2020
$’000
4,012
17,004
21,016
30 June
2019
$’000
26,082
17,872
43,954
Long-term environmental obligations are based on the Group’s environmental management plans, in compliance with
current environmental and regulatory requirements.
Full provision is made based on the net present value of the estimated cost of restoring the environmental disturbance
that has occurred up to the reporting date. To the extent that future economic benefits are expected to arise, these
costs are capitalised and amortised over the remaining lives of mines.
Annual increases in the provision relating to the change in the net present value of the provision are recognised as
finance costs. The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in
legislation, technology or other circumstances. Cost estimates are not reduced by the potential proceeds from the
sale of assets or from plant clear-up closure.
Employee Benefits
The provision for employee benefits represents annual leave and long service leave entitlements accrued by
employees.
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave that are expected to
be settled wholly within 12 months after the end of the period in which the employees render the related service are
recognised in respect of the employees’ services up to the end of the reporting period and are measured at the
amounts expected to be paid when the liabilities are settled.
Long service leave
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees
have earned in return for their service up to reporting date, plus related on costs. The benefit is discounted to
determine its present value and the discount rate is the yield at the reporting date on high-quality corporate bonds
that have maturity dates approximating the terms of the Group’s obligations.
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ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 16 Provisions (continued)
Current:
Employee leave liabilities
Non-current:
Employee leave liabilities
Rehabilitation provision
Provision for rehabilitation
Balance at the start of the financial year
Rehabilitation costs incurred during the year
Provisions recognised during the year
Unwinding of discount
Balance at the end of the financial year
Key Estimates and Assumptions
Rehabilitation Obligations
30 June
2020
$’000
1,420
1,420
294
20,901
21,195
18,395
(67)
2,325
248
20,901
30 June
2019
$’000
1,151
1,151
213
18,395
18,608
14,827
-
3,157
411
18,395
The provision for rehabilitation and restoration costs is based on the net present value of the estimated cost of
restoring the environmental disturbance that has occurred up to the reporting date. Significant estimates and
assumptions are made in determining the provision for mine rehabilitation as there are numerous factors that will
affect the ultimate liability payable. These factors include an estimate of the extent and costs of rehabilitation
activities, technological changes, regulatory changes, cost increases as compared to the inflation rates and changes in
discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently
provided. The provision at reporting date represents management’s best estimate of the present value of the future
rehabilitation costs required.
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90 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Capital Structure, Financial Instruments and Risk
This section provides further information about the Group’s contributed equity, financial liabilities, related financing
costs and its exposure to various financial risks. It explains how these risks affect the Group’s financial position and
performance and what the Group does to manage these risks.
Note 17 Borrowings and Finance Costs
Accounting Policies
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of borrowings using the effective interest rate method.
Fees paid on establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs
and amortised over the period of the remaining facility.
Finance Leases
From 1 July 2019 the Group has applied the new AASB 16 Leases accounting standard. See note 28 for details of the
impacts of this new standard which has increased the value of right-of-use assets and lease liabilities of the Group.
Prior to 1 July 2019, finance leases which transfer to the Group substantially all the risks and benefits incidental to
ownership for the lease item, were capitalised at the inception of the lease at the fair value of the leased asset or, if
lower, at the present value of the minimum lease payments. Lease payments were apportioned between the finance
charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges were recognised as an expense in profit or loss. Capitalised leased assets were depreciated
over the shorter of the estimated useful life of the asset and the lease term if there was no reasonable certainty that
the Group will obtain ownership by the end of the lease term. The corresponding finance lease liability was reduced
by the leased payments net of finance charges. The interest element of lease payments represented a constant
proportion of the outstanding capital balance and was charged to profit or loss, as finance costs over the period of the
lease. The carrying amounts of the Group’s current and non-current borrowings approximated their fair value.
Unwinding of discount on provisions
The unwinding of discount on provisions represents the cost associated with the passage of time. Rehabilitation
provisions are recognised at the discounted value of the present obligation to restore, dismantle and rehabilitate each
mine site with the increase in the provision due to the passage of time being recognised as a finance cost in accordance
with the policy described in note 16.
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ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 17 Borrowings and Financing Costs (continued)
Current
Insurance premium funding liability
Lease Liabilities
Bank Loans
Non-Current
Lease Liabilities
Bank Loans
Project Debt Facility
30 June
2020
$’000
373
2,412
31,800
34,585
11,300
32,300
43,600
30 June
2019
$’000
1,989
2,106
33,300
37,395
13,445
72,200
85,645
At 30 June 2020 the MMGO Project Debt Facility held with a syndicate of Financiers, comprising Westpac Banking
Corporation, Australia and New Zealand Banking Group Limited and BNP Paribas, had an outstanding balance of $64.1
million (30 June 2019: $105.5 million).
During the year, debt repayments were made totalling $41.4 million (30 June 2019: $44.5 million). As a result, and in
accordance with the loan agreement, the available debt limit was reduced by the same amount as all facilities had
transitioned into the repayment phase.
Repayments under the Project Debt Facility are classified as current or non-current in the financial statements with
reference to the fixed repayment schedule. Fixed repayments are scheduled on a quarterly interval and are
determined based on the cash flow forecast from the approved bank financial model with the repayment amount set
to achieve financial ratio compliance in each quarter. Fixed repayments are scheduled over the period to 30 June
2022, being the full tenor of the project debt facility. The information in the following table has been prepared on this
basis and reflects the agreed fixed repayment schedule as at 30 June 2020.
Bank Loan
6 months or
less
$’000
25,800
6-12 months
1-2 years
$’000
6,000
$’000
32,300
During the December 2019 quarter, the Group and its Financiers initiated and completed a review of certain terms
under the Project Debt Facility agreement that resulted in the following changes.
•
•
•
Fixed debt repayment schedule was modified to better align these repayment obligations with the cash flow
forecast over the facilities remaining tenor to 30 June 2022. This included the deferral of the 31 December
2019 debt repayment to 31 March 2020 totalling $7.05 million and the setting aside of cash totalling $7.05
million to a restricted cash account to part fund the 31 March 2020 debt repayment amount of $24.7 million.
A new variable debt repayment schedule was agreed that had the potential to increase debt repayments from
June 2020. The variable repayment each quarter was set up to a capped amount and subject to a ‘pay if you
can’ condition. Variable repayments were to be made only when working capital funding levels and quarterly
cash flows (after the payment of non-discretionary corporate and exploration costs) exceed certain minimum
levels. The actual cash flows of the MMGO were a function of the gold price achieved (including hedging),
gold production (including grade and recoveries) and the achievement of forecast operating and capital
expenditure.
The Group implemented an interim hedging program with the purpose of this hedging to give the Group and
Financiers future gold price certainty ahead of finalising the review. The interim hedging comprised deferred
premium gold put options covering 150,000 ounces at a strike price of $2,100 per ounce expiring on 28
February 2020. This allowed the Group to lock in a minimum gold price floor whilst retaining upside
participation in higher spot gold prices, which enabled Financiers to agree to changes to the debt repayment
schedule (noted above) and approve an updated bank financial model.
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92 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 17 Borrowings and Financing Costs (continued)
Project Debt Facility (continued)
•
•
Agreement that a final hedging program was to be undertaken on or before 28 February 2020 being the expiry
date for the gold put options. This hedging was to comprise a combination of forward sale contracts and
deferred premium put options executed with a delivery profile over the period to 30 June 2021. Hedge
volumes and timing (up to a maximum 150,000 ounces) are to align with the forecast metal production in the
approved bank model. Further details of this hedging program are disclosed in notes 3 and 10.
The requirement to achieve compliance with the Project Completion Test under the Project Debt Facility by
31 December 2019 was permanently removed as a condition.
In January 2020, at the request of the Financiers, the Group:
•
•
Implemented a put option regime, covering 67,608 ounces at a strike price of $2,050 per ounce (net of costs)
expiring over the period June 2021; and
Gold forward sale contracts covering 49,788 ounces at an average delivery price of A$2,266 per ounce over
the period September 2020 to June 2021.
On 27 February 2020, the Company announced two material changes to its business and future plans, being:
•
•
An updated Mineral Resources and Ore Reserve estimate which included a 40% reduction in the Mineral
Resource from 3.5 million to 2.1 million ounces; and
to immediately suspend capital development at the Westralia underground mine resulting in current
underground mining activities to be completed during the period to December 2020.
As a consequence of these changes, the Group sought and received a number of approvals, waivers and concessions
from the Financiers in relation to these changes. A further rescheduling of debt repayment schedules was agreed with
the Financiers to align debt repayments with the updated forecast mine plan and cash flow including the deferral of
the $24.7 million debt repayment from 31 March 2020 to on or before 30 April 2020, so as to align the Company’s
funding plans with the repayment. The Company repaid the $24.7 million on 30 April 2020, following the receipt of
proceeds from a capital raising.
During the June 2020 quarter, 61,338 ounces of the put option regime were terminated early to reduce the overall
cost of the regime.
The key terms of the Facility as at 30 June 2020 are:
•
•
•
Fixed schedule of repayments through to 30 June 2022;
Security is provided by a fixed and floating charge over the assets of Dacian Gold’s operating subsidiary, Mt
Morgans WA Mining Pty Ltd and a featherweight security over the assets of Dacian Gold Limited capped to a
maximum value of $5,000. The transaction banking accounts for the Group are secured assets. The security
provided by the Parent Entity, Dacian Gold Limited supports the guarantee provided to Mt Morgans WA
Mining Pty Ltd; and
The Facility Agreement contains a number of typical financial covenants that are assessed and reported to
Financiers on a quarterly basis.
The effective interest rate on the facility at 30 June 2020 is 4.1% (30 June 2019: 4.6%).
During the financial year, the Group incurred costs of $1.2 million with respect to the various changes made to the
debt repayment schedule of the Facilities Agreement.
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ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 17 Borrowings and Financing Costs (continued)
Project Debt Facility (continued)
Subsequent to year end, the Group ceased mining activities at Westralia in August 2020 ahead of the previously
scheduled timeline (December 2020), preserving the 195,000 ounce (before 2HFY2020 mining depletion) Ore Reserve
remaining as part of its optimisation studies. As a result of the cessation of mining activities at Westralia four months
earlier than planned and the rescheduling of the Jupiter open pit, FY2021 production guidance was revised to 110,000-
120,000 ounces (previously 120,000-130,000 ounces).
As a consequence of these changes the Group sought and received further approvals, waivers and concessions from
the Financiers related to financial covenant requirements of the Project Debt Facility Agreement. In addition, the
Group breached certain non-financial requirements of the Project Debt Facility Agreement for which a waiver has also
been received. These approvals, waivers and concessions were provided on the basis that the Group make a $25.0
million debt repayment on 30 September 2020 inclusive of the $14.5 million scheduled repayment. Total Project Debt
Facility principal repayments following the capital raise, completed in May 2020, total $55.6 million, inclusive of the
$25.0 million repayment on 30 September 2020. Following the $25.0 million repayment on 30 September 2020, the
Project Debt Facility balance decreased to $39.1 million.
Financing facilities
Total Facilities
Project Debt Facility
Bank Guarantee Facility
Facilities used at reporting date
Project Debt Facility
Bank Guarantee Facility
Facilities unused at reporting date
Project Debt Facility
Bank Guarantee Facility
Lease Liabilities
30 June
2020
$’000
64,100
950
65,050
64,100
674
64,774
-
276
276
30 June
2019
$’000
105,500
950
106,450
105,500
674
106,174
-
276
276
Payment made under lease arrangements qualifying under AASB 16, but variable by nature and therefore not included
in the minimum lease payments used to calculate lease liabilities of $9.5 million were expensed during the period.
These included costs for services, including labour charges, under those contracts that contained payments for right-
of-use assets.
Payments of $13.5 million for short term leases (lease term of 12 months or less) and leases of low value assets were
expensed in the Statement of Profit or Loss for year ended 30 June 2020.
Dacian Gold Limited 2020 Annual Report
56 | P a g e
94 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 18 Financial Instruments
The Group has exposure to a variety of risks arising from its use of financial instruments. This note presents
information about the Group’s exposure to the specific risks, and the policies and processes for measuring and
managing those risks. The Board of Directors has the overall responsibility for the risk management framework and
has adopted a Risk Management Policy.
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from transactions with customers and investments.
Gold Bullion Sales
Credit risk arising from the sale of gold bullion to the Group’s customer is low as the payment by the customer (being
The Perth Mint Australia) is guaranteed under statute by the Western Australian State Government. In addition, sales
are made to high credit quality financial institutions, hence credit risk arising from these transactions is low.
Trade and other receivables
The nature of the business activity of the Group does not result in trading receivables. The receivables that the Group
does experience through its normal course of business are short-term and the risk of non-recovery of receivables is
considered to be negligible.
Other
In respect of derivative financial instruments, the Group’s exposure to credit risk arises from potential default of the
counterparty, with a maximum exposure equal to the mark-to-market of these instruments. The Group does not hold
any credit derivatives to offset its credit exposure.
The Directors do not consider that the Group’s financial assets are subject to anything more than a negligible level of
credit risk, and as such no disclosures are made.
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95
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 18 Financial Instruments (continued)
(b)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Company’s reputation.
The Group manages its liquidity risk by monitoring its cash reserves and forecast spending. Management is cognisant
of the future demands for liquid finance resources to finance the Group’s current and future operations, and
consideration is given to the liquid assets available to the Group before commitment is made to future expenditure or
investment.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding
the impact of netting agreements:
2020
Trade & other payables
Insurance premium
funding liability
Lease liabilities
Bank Loan(i)
Derivative instruments
2019
Trade & other payables
Insurance premium
funding liability
Lease liabilities
Bank Loan
Carrying
amount
Contractual
cash flows
6 months
or less
$’000
$’000
$’000
6-12
months
$’000
1-2 years
2-5 years More than
5 years
$’000
$’000
$’000
21,016
21,016
21,016
-
-
-
-
373
13,712
64,100
261
373
15,095
66,788
265
99,462
103,537
373
1,444
26,961
265
50,059
-
1,445
6,762
-
8,207
-
2,728
33,065
-
35,793
-
7,734
-
-
7,734
-
1,744
-
-
1,744
43,954
43,954
43,954
-
-
-
-
1,989
15,551
105,500
1,989
17,498
113,310
166,994
176,751
870
1,337
19,973
66,134
746
1,336
17,221
19,303
373
2,673
34,442
37,488
-
7,866
41,674
49,540
-
4,286
-
4,286
(i) 2020 Bank loan repayments are presented as per the Project Debt Facility repayment schedule presented in note 17
and have not been adjusted for the $10.5 million unscheduled debt repayment made on 30 September 2020. Refer
to the subsequent events note 27 for further discussion.
(c) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, commodity prices
and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising any return.
Commodity Price Risk
The Group’s exposure to commodity price risk arises largely from Australian dollar gold price fluctuations. The Group’s
exposure to movements in the gold price is managed through the use of Australian dollar gold forward contracts. The
gold forward sale contracts do not meet the criteria of financial instruments for accounting purposes on the basis that
they meet the normal purchase/sale exemption because physical gold will be delivered into the contract. Further
information relating to these forward sale contracts is included in note 2. No sensitivity analysis is provided for these
contracts as they are outside the scope of AASB 9 Financial Instruments.
Dacian Gold Limited 2020 Annual Report
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96 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 18 Financial Instruments (continued)
(c) Market risk (continued)
Interest rate risk
The Group’s exposure to interest rate risk is the risk that a financial instrument’s value will fluctuate as a result of
changes in market interest rates. At the reporting date, the Group had the following exposure to interest rate risk on
financial instruments.
Variable rate instruments
Cash and cash equivalents
Borrowings
Foreign Currency/Equity risk
Carrying amount ($)
30 June
2020
$’000
51,976
(64,100)
(12,124)
30 June
2019
$’000
35,515
(105,500)
(69,985)
The Group does not have any direct contact with foreign exchange or equity risks other than their effect on the general
economy.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) profit or loss
before tax by the amounts shown below. This analysis assumes that all other variables remain constant.
Interest Revenue
Increase 1.0% (2019: 1.0%)
Decrease 1.0% (2019: 1.0%)
Interest Expense
Increase 1.0% (2019: 1.0%)
Decrease 1.0% (2019: 1.0%)
(d) Fair values
Fair values versus carrying amounts
30 June
2020
$’000
520
(520)
(641)
641
30 June
2019
$’000
355
(355)
(1,055)
1,055
The carrying amounts and estimated fair values of all the Group’s financial instruments recognised in the financial
statements are materially the same. The methods and assumptions used to estimate the fair value of financial
instruments are disclosed in the respective notes.
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97
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 19 Issued Capital and Reserves
Accounting Policy
Ordinary shares are classified as equity. Transaction costs directly attributable to the issue of shares or options are
recognised as a deduction from equity, net of any related income tax effects.
30 June
2020
No.
30 June
2019
No.
30 June
2020
$’000
30 June
2019
$’000
Issued share capital
556,264,777
225,713,403
338,904
244,513
Share movements during the year
Balance at the start of the financial year
Share issue
Exercise of options (cash)
Exercise of options (non-cash)
Exercise of performance rights (non-
cash)
Less share issue costs
Deferred tax on share issue costs
Share-based payments for the year
225,713,403
328,029,358
-
2,227,482
294,534
205,844,814
17,948,339
1,700,000
-
220,250
-
-
-
-
-
-
244,513
98,626
-
761
796
(7,011)
1,179
40
195,187
48,429
1,670
458
637
(1,948)
80
-
Balance at the end of the financial year
556,264,777
225,713,403
338,904
244,513
30 June 2020
30 June 2019
Balance at the beginning of the year
(Loss) / profit for the year
Transfer to issued capital on exercise of
options
Transfer to issued capital on exercise of
performance rights
Transfer to accumulated losses due to
market conditions not met
Share-based payments for the year
Accumulated
losses
$’000
(62,645)
(116,464)
-
-
597
-
Balance at the end of the year
(178,512)
Share-based
payments
reserve (i)
$’000
3,007
-
(761)
(796)
(597)
1,397
2,250
Accumulated
losses
$’000
(65,837)
3,018
-
-
174
-
(62,645)
Share-based
payments
reserve (i)
$’000
3,516
-
(458)
(637)
(174)
760
3,007
(i) The share-based payments reserve is used to recognise the fair value of options over unissued shares and
performance rights provided to employees and Key Management Personnel.
Dacian Gold Limited 2020 Annual Report
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98 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Other Disclosures
This section provides information on items which require disclosure to comply with Australian Accounting Standards
and other regulatory pronouncements.
Note 20 Deferred Tax
Deferred tax assets and liabilities are recognised for temporary timing 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 substantially
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 a liability. No deferred tax asset or liability is recognised
in relation to those timing differences if they arose in a transaction, other than a business combination, that at the
time of the transaction did not affect either accounting profit 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 liabilities and assets are not recognised for temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities
are offset where 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.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in
equity.
Amounts receivable from the Australian Tax Office in respect of research and development tax concession claims are
recognised when management have a reasonable basis to estimate claim proceeds.
Tax consolidation
The company and its 100% owned controlled entities have formed a tax consolidated group. Members of the
Consolidated Entity have entered into a tax sharing arrangement in order to allocate income tax expense to the wholly
owned controlled entities on a pro-rate basis. The agreement provides for the allocation of income tax liabilities
between the entities should the head entity default on its tax payment obligations. At reporting date, the possibility
of default is remote. The head entity of the tax consolidated group is Dacian Gold Limited.
Dacian Gold Limited 2020 Annual Report
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99
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 20 Deferred Tax (continued)
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Deferred tax assets
Trade & other payables
Provisions
Borrowings – Finance lease liabilities
Borrowing costs
Business related costs – profit & loss
Other financial liabilities
Capital raising costs – equity
Tax Losses
Deferred tax liabilities
Trade & other receivables
Inventories
Derivative financial instruments
Property, plant and equipment
Exploration and evaluation assets
Mine properties
Net deferred tax assets
Movement in temporary differences during the year:
30 June
2020
$’000
17
6,783
4,114
191
2,114
78
2,334
17,669
(235)
(230)
(13)
(10,033)
(985)
(8,430)
13,374
Trade and other receivables
Inventories
Derivative financial instruments
Property, plant & equipment
Exploration & evaluation
Mine properties in development
Trade & other payables
Provisions
Other financial liabilities
Borrowings
Borrowing costs
Business related costs – profit & loss
Capital raising costs – equity
Tax losses
Balance
30 June
2019
$’000
(284)
(347)
-
(11,912)
(956)
(21,823)
17
5,927
-
4,665
421
3,259
1,155
52,450
32,572
Recognised in
income
$’000
49
117
(13)
1,879
(29)
13,393
-
856
78
(551)
(230)
(1,145)
-
(34,781)
(20,377)
Recognised in
Equity
$’000
-
-
-
-
-
-
-
-
-
-
-
-
1,179
-
1,179
30 June
2019
$’000
17
5,927
4,665
421
3,259
-
1,155
52,450
(283)
(347)
-
(11,912)
(956)
(21,823)
32,573
Balance
30 June
2020
$’000
(235)
(230)
(13)
(10,033)
(985)
(8,430)
17
6,783
78
4,114
191
2,114
2,334
17,669
13,374
The decision by the Group to suspend mining operations at the Westralia underground mine in August 2020 has
reduced the expected future taxable income to be generated by MMGO to utilise the tax losses brought to account at
30 June 2020. As a result, deferred tax assets of $34.138 million (30 June 2019: nil) were derecognised at 31 December
2019. Deferred tax assets have not been recognised in respect of tax losses generated from January 2020 during the
current period because the Group’s cash flow forecasts indicate it is not sufficiently probable that future taxable profit
will be available against which the Company can utilise these losses.
Dacian Gold Limited 2020 Annual Report
62 | P a g e
100 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 20 Deferred Tax (continued)
The value of tax losses (gross basis not tax effected) available to the Group at 30 June 2020 for income tax purposes is
$221.9 million, which comprises (for accounting) recognised tax losses totalling $58.9 million and unrecognised tax
losses totalling $163.0 million. Utilisation will be subject to relevant tax legislation associated with recoupment
including the same business test and continuity of ownership test. The Group has a reasonable expectation that these
losses can be carried forward to future years for income tax purposes.
Key Estimates and Assumptions
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Group’s
future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is
required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.
To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to
realise the net deferred tax assets recorded at the reporting date could be impacted. Additionally, future changes in
the tax laws in Australia could limit the ability of the Group to obtain tax deductions in future periods.
Note 21 Share-Based Payments
Accounting Policy
The Group provides benefits to employees (including senior executives) of the Group in the form of share-based
incentives, whereby employees render services in exchange for options and shares (equity-settled transactions).
There is currently a plan in place to provide these benefits, the Dacian Gold Limited Employee Option Plan, which
provides benefits to Executive Directors and other employees.
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using an appropriate valuation
model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked
to the price of the underlying Shares to which the equity instrument relates (market and non-vesting conditions) if
applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:
(i)
(ii)
the extent to which the vesting period has expired; and
the Group’s best estimate of the number of equity instruments that will ultimately vest.
No adjustment is made for the likelihood of 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 profit or loss charge or credit for a period
represents the movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for share-based incentives that do not ultimately vest, except for incentives where vesting
is only conditional upon market and non-vesting conditions.
If the terms of a share-based incentive 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 modification that increases the total fair value of the
incentive, or is otherwise beneficial to the employee, as measured at the date of modification.
If a share-based incentive is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not
yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled
incentive and designated as a replacement award on the date that it is granted, the cancelled incentive and new
awards are treated as if they were a modification of the incentive, as described in the previous paragraph.
The Group provides benefits to employees (including Executive Directors) of the Group through share-based
incentives. Information relating to these schemes is set out below.
Dacian Gold Limited 2020 Annual Report
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101
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 21 Share-Based Payments (continued)
Recognised share-based payments expense
Employee share-based payments expense
Performance rights expense
Total share-based payments expense
Dacian Gold Limited Employee Option Plan
30 June
2020
$’000
638
1,074
1,712
30 June
2019
$’000
131
629
760
The establishment of the Dacian Gold Limited Employee Option Plan (“the Plan”) was last approved by a resolution of
the shareholders of the Company on 26 November 2018. All eligible Directors, executive officers and employees of
Dacian Gold Limited and its subsidiaries, who have been continuously employed by the Company are eligible to
participate in the Plan. The Plan allows the Company to issue free options or performance rights to eligible persons.
Options over Unissued Shares
The options can be granted free of charge and are exercisable at a fixed price in accordance with the Plan. Options
issued under the Plan have vesting periods prior to exercise, except under certain circumstances whereby options may
be capable of exercise prior to the expiry of the vesting period. The options are granted free of charge and vest subject
to certain operational and market performance conditions being met. Options lapse if the employee ceases
employment with the Company.
During the financial year no options over unissued shares were issued pursuant to the Company’s Employee Option
Plan (30 June 2019: nil). Options issued have been valued and included in the financial statements over the periods
that they vest.
a) Reconciliation of movement of options over unissued shares during the period including weighted average exercise
price (“WAEP”)
Options outstanding at the start of the year (i)
Options exercised during the year
Options outstanding at the end of the year
30 June 2020
30 June 2019
No.
5,250,000
4,000,000
1,250,000
WAEP
$0.96
$0.70
$1.81
No.
6,950,000
1,700,000
5,250,000
WAEP
$1.07
$0.98
$1.10
(i) The number and the weighted average exercise price of options at 1 July 2019 has been adjusted in accordance
with the terms and conditions of the Plan. Further details of the adjustment are noted below.
The terms of the unissued ordinary options at 30 June 2020 are as follows
Number of options
Exercise price
Expiry date
400,000
50,000
300,000
500,000
$0.60
$0.61
$1.44
$3.11
30 September 2020
31 January 2021
28 February 2021
30 June 2021
b) Subsequent to the reporting date
No options have been granted subsequent to the reporting date and to the date of signing this report.
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102 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 21 Share-Based Payments (continued)
Options over Unissued Shares (continued)
c) Adjustment to exercise price
As a result of the Company’s placement and accelerated entitlement offer which was completed in May 2020, the
exercise price of options over unissued shares in the Company issued prior to the offer has been recalculated. The
resulting reduction in exercise price, reflected in the table below, was calculated in accordance with the terms and
conditions of the options on issue and the Company’s employee share option plan.
Date granted
Number of options
5 October 2015
5 February 2016
26 February 2016
28 June 2016
400,000
50,000
300,000
500,000
Original exercise
price
$1.15
$1.16
$1.99
$3.66
Amended exercise
price
$0.60
$0.61
$1.44
$3.11
Expiry date
30 September 2020
31 January 2021
28 February 2021
30 June 2021
Any vesting conditions in relation to the options on issue remain unchanged.
d) Weighted average contract life
The weighted average contractual life for vested and un-exercised options is 8 months (30 June 2019: 12 months).
Performance Rights
During the financial year ended 30 June 2020, 1,601,019 performance rights (30 June 2019: nil) were issued to
employees, pursuant to the terms of the Plan. These performance rights vest one year from the measurement date
subject to the completion of a 12 month service condition. These rights comprise tranches A and B in the table below.
On 16 June 2020, upon approval by the shareholders the company issued 8,333,334 performance rights to Leigh Junk
(Managing Director & CEO) as per the terms of his Executive Services Agreement, pursuant to the terms of the Plan.
These performance rights vest immediately at the measurement date and comprise tranches C to H in the table below.
The performance conditions that the Board has determined will apply to the Performance Rights are summarised
below:
Tranche
A
Amount Weighting
1,072,683
67% of the Performance Rights
B
C
D
E
F
G
H
528,336
33% of the Performance Rights
1,861,111
67% of the Performance Rights
916,667
33% of the Performance Rights
1,861,111
67% of the Performance Rights
916,667
33% of the Performance Rights
1,861,111
67% of the Performance Rights
916,667
33% of the Performance Rights
Performance Conditions
TSR performance to peers above 50th percentile
(measured over a 1 year period to 1 July 2020)
Reserve Growth (measured over a 1 year period to 1
July 2020)
TSR performance to peers above 50th percentile
(measured over the 3 year period to 30 June 2023)
Reserve Growth (measured over a 3 year period to
30 June 2023)
TSR performance to peers above 50th percentile
(measured over the 4 year period to 30 June 2024)
Reserve Growth (measured over a 4 year period to
30 June 2024)
TSR performance to peers above 50th percentile
(measured over the 5 year period to 30 June 2025)
Reserve Growth (measured over a 5 year period to
30 June 2025)
Dacian Gold Limited 2020 Annual Report
65 | P a g e
103
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 21 Share-Based Payments (continued)
Performance Rights (continued)
The fair value of the performance rights granted were determined using Monte Carlo simulation, a review of historical
share price volatility and correlation of the share price of the Company to its Peer Group. The table below details the
terms and conditions of the grant and the assumptions used in estimating fair value:
Item
Grant date
Number of rights
Value of underlying
security at grant date
Fair value
Dividend yield
Risk free rate
Volatility
Performance period
(years)
Commencement of
measurement period
Test date
Remaining performance
period (years)
23 August
2019
1,072,683
$1.09
23 August
2019
528,336
$1.09
16 June
2020
916,667
$0.465
16 June
2020
1,861,111
$0.465
16 June
2020
916,667
$0.465
16 June
2020
1,861,111
$0.465
16 June
2020
916,667
$0.465
16 June
2020
1,861,111
$0.465
$1.014
0%
0.73%
55%
1
1 July
2019
1 July
2020
-
$1.09
0%
0.73%
55%
1
1 July
2019
1 July
2020
-
$0.465
0%
0.26%
60%
3
1 July
2020
30 June
2023
3
$0.378
0%
0.26%
60%
3
1 July
2020
30 June
2023
3
$0.465
0%
0.40%
60%
4
1 July
2020
30 June
2024
4
$0.403
0%
0.40%
60%
4
1 July
2020
30 June
2024
4
$0.465
0%
0.40%
60%
5
1 July
2020
30 June
2025
5
$0.421
0%
0.40%
60%
5
1 July
2020
30 June
2025
5
The movement in weighted average fair value (“WAFV”) appears in the table below:
Rights outstanding at the start of the year
Rights issued during the year
Rights vested during the year(i)
Rights lapsed during the year
Rights forfeited during the year
Rights outstanding at the end of the year
30 June 2020
No.
299,893
9,934,353
(129,534)
-
(556,366)
9,548,346
WAFV
$2.24
$0.52
$1.95
-
$1.30
$0.51
30 June 2019
No.
WAFV
711,068
-
(165,000)
(165,000)
(81,175)
299,893
$2.61
-
$3.30
$2.78
$2.23
$2.24
(i) At 30 June 2020, there were no rights that had vested during the year and were unissued at year end. At 30 June
2019 165,000 rights had vested during the year and were unissued at year end.
Shares
During the financial year, Mr Leigh Junk was issued a one-off on-boarding share issue as part of his Executive Services
Agreement. The terms of the share issues were as follows:
-
-
Tranche 1: 191,856 shares (fair value of $314,417 using a 5 day VWAP prior to the date of award), issued on
commencement date of 6 January 2020;
Tranche 2: 191,856 shares (fair value of $314,417 using a 5 day VWAP prior to the date of award), issued on 1
September 2020.
Key Estimates and Assumptions
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 an appropriate valuation model.
The valuation basis and related assumptions are detailed above. The accounting estimates and assumptions relating
to the equity settled transactions would have no impact on the carrying value of assets and liabilities within the next
annual reporting period but may impact expenses and equity.
Dacian Gold Limited 2020 Annual Report
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104 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 22 Commitments
(a) Operating lease commitments
The Company leases assets for operations and office premises. As at 1 July 2019, with the adoption of AASB 16,
operating leases as previously defined under AASB 117, have for the most part, been recognised and included as lease
liabilities with future commitments disclosed in note 18. Any leases that did not meet the definition of finance leases,
were either short-term in nature or did not meet the recognition requirements. Expenses from operating leases under
AASB 117 for 30 June 2019 totalled $0.2 million. See note 28 for further details of this change. The disclosure of prior
period operating commitments is retained in these financial statements as follows:
30 June
2019
$’000
212
271
483
Due within 1 year
Due after 1 year but not more than 5 years
Note 23 Contingencies
(a) Contingent liabilities
There are no material contingent liabilities at the reporting date.
(b) Contingent assets
There are no material contingent assets at the reporting date.
Dacian Gold Limited 2020 Annual Report
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105
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 24 Related Party Disclosures
(a) Controlled Entities
Parent Entity
Dacian Gold Limited
Subsidiaries
Dacian Gold Mining Pty Ltd
Mt Morgans WA Mining Pty Ltd
(b) Parent Entity
Ownership Interest
2020
%
100
100
Financial statements and notes for Dacian Gold Limited, the legal parent entity are provided below:
Financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive (loss) / income
Total comprehensive loss
Commitments
Parent
30 June
2020
$’000
44,025
183,109
227,134
945
227
1,172
338,904
2,250
(115,192)
225,962
(110,289)
-
(110,289)
2019
%
100
100
30 June
2019
$’000
17,547
225,436
242,983
802
161
963
244,513
3,007
(5,500)
242,020
(20,721)
-
(20,721)
The parent entity had lease commitments of $0.3 million at 30 June 2020 (30 June 2019: $0.5 million) relating to the
lease of the Group’s Perth office and car park. A featherweight security is in place over the assets of the Parent Entity
capped to a maximum value of $5,000 for the benefit of the MMGO project debt facility Financiers. The transaction
banking accounts for the Parent Entity are secured assets. This security supports the guarantee provided by the Parent
Entity to Mt Morgans WA Mining Pty Ltd.
Dacian Gold Limited 2020 Annual Report
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106 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 24 Related Party Disclosures (continued)
(c)
Transactions with related parties
For the year ended 30 June 2020, services totalling $74,523 (30 June 2019: $216,042) were provided on normal
commercial terms to the Group by Perenti Global and its subsidiaries (previously Ausdrill Limited), of which Mr
Cochrane is Non-Executive Chairman. The services provided related to open pit grade control drilling and mineral
analysis. Mr Cochrane was not party to any contract negotiations for either party.
Other than transactions with parties related to Key Management Personnel mentioned above and in the remuneration
report, there have been no other transactions with parties related to the consolidated entity in the financial year
ended 30 June 2020.
Note 25 Key Management Personnel
(a) Directors and Key Management Personnel
The following persons were Directors or Key Management Personnel of the Company during the current and prior
financial year:
Ian Cochrane
Leigh Junk
Robert Reynolds
Barry Patterson
Rohan Williams
Grant Dyker
James Howard
Non-Executive Chairman (i)
Managing Director & CEO (ii)
Non-Executive Director
Non-Executive Director
Executive Chairman & CEO (Iii)
Chief Financial Officer (iv)
Chief Operating Officer (v)
(i)
Ian Cochrane was a Non-Executive Director until his appointment as Non-Executive Chairman on 6 January 2020.
(ii) Leigh Junk was appointed on 6 January 2020 and continues in office at the date of this report.
(iii) Rohan Williams was Executive Chairman from the beginning of the financial year until his retirement on 6 January
2020.
(iv) Grant Dyker was Chief Financial Officer from the beginning of the financial year until his retirement on 15 July 2020.
James Howard was appointed Chief Operating Officer from 1st March 2020 coinciding with his appointment as KMP.
(v)
There were no other persons employed by, or contracted to, the Company during the financial year, having
responsibility for planning, directing and controlling the activities of the Company, either directly or indirectly.
(b) Key management personnel compensation
Details of Key Management Personnel remuneration are contained in the Audited Remuneration Report in the
Directors’ Report. A summary of total compensation paid to Key Management Personnel during the year is as follows:
Short-term employment benefits
Share-based payments
Other long-term benefits
Termination benefits
Post-employment benefits
Total Key Management Personnel remuneration
30 June
2020
$
1,649,778
1,173,795
(50,929)
314,813
82,958
3,170,415
30 June
2019
$
1,498,048
505,630
17,518
-
67,972
2,089,168
Dacian Gold Limited 2020 Annual Report
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107
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 26 Auditors Remuneration
Grant Thornton
Fees in respect to prior year
KPMG
Fees in respect of prior year
Audit and review of financial statements FY20
Other Services
KPMG – other non-audit services(i)
Total
30 June
2020
$
-
45,000
177,000
93,150
315,150
30 June
2019
$
21,588
85,000
-
-
106,588
(i) Relates to Investigating Accountant services for capital raising in May 2020
Note 27 Events Subsequent to the Reporting Date
Subsequent to year end, the Company ceased mining activities at Westralia during August 2020 ahead of the previously
scheduled timeline (December 2020), preserving the 195,000 ounce (before 2HFY2020 mining depletion) Ore Reserve
remaining as part of its optimisation studies. As a result of the cessation of mining activities at Westralia four months
earlier than planned and the rescheduling of the Jupiter open pit, FY2021 production guidance was revised to 110,000-
120,000 ounces (previously 120,000-130,000 ounces).
As a consequence of these changes the Group sought and received further approvals, waivers and concessions from
the Financiers related to financial covenant requirements of the Project Debt Facility Agreement. In addition, the
Group breached certain non-financial requirements of the Project Debt Facility Agreement for which a waiver has also
been received. These approvals, waivers and concessions were provided on the basis that the Group make a $25.0
million debt repayment on 30 September 2020 inclusive of the $14.5 million scheduled repayment. Total Project Debt
Facility principal repayments following the capital raise, completed in May 2020, total $55.6 million, inclusive of the
$25.0 million repayment on 30 September 2020. Following the $25.0 million repayment on 30 September 2020, the
Project Debt Facility balance decreased to $39.1 million.
Other than the items noted above, there has not arisen in the interval between the end of the reporting period and
the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the
Directors of the Company, to affect substantially the operations of the Group, the results of those operations or the
state of affairs of the Group, in subsequent financial years.
Dacian Gold Limited 2020 Annual Report
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108 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 28 New and Revised Accounting Standards
Changes in accounting policy
Any new, revised or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted and are not expected to have a significant impact on the Group.
AASB 16 Leases
This note explains the impact of the adoption of AASB 16 Leases on the Group's financial statements and discloses the
new accounting policies that have been applied from 1 July 2019.
AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both
parties to a contract, i.e. the customer (“lessee”) and the supplier (“lessor”). AASB 16 replaces the previous lease
standard, AASB 117 Leases, and related interpretations. AASB 16 has one model for lessees which will result in almost
all leases being included on the Balance Sheet.
The lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability
representing its obligation to make lease repayments.
The Group has adopted AASB 16 using the modified retrospective approach from 1 July 2019, and has not restated
comparatives for the 2019 reporting period, as permitted under the specific transitional provisions in the standard.
The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening
balance sheet on 1 July 2019.
The Group leases assets including property plant and equipment. As a lessee, the Group previously classified leases
as operating or financial leases based on its assessment of whether the lease transferred substantially all of the risks
and rewards of ownership. Under AASB 16, the Group recognises right-of-use assets and lease liabilities for some of
these leases – i.e. they are on-Balance Sheet.
The Group presents right-of-use assets in property, plant and equipment together with the assets that it owns. The
Group presents lease liabilities separately in the Balance Sheet.
The accounting policy changes have been outlined below.
Definition of a lease
In accordance with AASB 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an
identified asset for a period in exchange for consideration.
Practical expedients applied
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the standard:
•
•
the use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
the accounting for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-
term leases;
the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application
and;
the use of hindsight in determining the lease’s term where the contract contains options to extend or terminate
the lease.
•
•
The Group has applied the grandfathering provisions and also elected not to reassess whether a contract is, or
contains, a lease at the date of initial application. Instead, for contracts entered into before the transition date the
Group relied on its assessment made applying AASB 117 and IFRIC 4 Determining whether an Arrangement contains
a Lease. This applies to the Group’s mining services contracts.
Dacian Gold Limited 2020 Annual Report
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109
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 28 New and Revised Accounting Standards (continued)
Changes in accounting policy (continued)
AASB 16 Leases (continued)
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost,
which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or
before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except
where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing
the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of-use assets are
subject to impairment or adjusted for any re-measurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-
term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are
expensed to profit or loss as incurred.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the
present value of the lease payments to be made over the term of the lease, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing
rate.
Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that
depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a
purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which
they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate
used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease
liability is remeasured, an adjustment is made to the corresponding right-of-use asset, or to profit or loss if the
carrying amount of the right-of-use asset is fully written down.
Dacian Gold Limited 2020 Annual Report
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110 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 28 New and Revised Accounting Standards (continued)
Changes in accounting policy (continued)
AASB 16 Leases (continued)
Adjustments recognised on adoption of AASB 16
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been classified
as 'operating leases' under the principles of AASB 117 Leases. These liabilities were measured at the present value of
the remaining lease payments, discounted using the incremental borrowing rate as of 1 July 2019. The incremental
borrowing rate applied to the lease liabilities on 1 July 2019 was 3.9%.
Operating lease commitments at 1 July 2019
Discounted using the lessee’s incremental borrowing rate at the date of initial application
Lease liability recognised at 1 July 2019
Represented by:
Current lease liabilities
Non-current lease liabilities
2019
$’000
483
471
471
202
269
471
Lease liabilities are classified in Borrowings on the Statement of Financial Position.
The associated right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount
of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet as at 30 June 2019.
There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date
of initial application.
The recognised right-of-use assets relate to the following types of assets:
Land and buildings
Total right-of-use assets
30 June
2020
$’000
261
261
1 July
2019
$’000
471
471
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that
include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts
the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised.
The impact of right-of-use assets and lease liabilities on transition to AASB 16 on the Statement of Profit or Loss was
not material.
The right-of-use assets are classified as property, plant and equipment in the Statement of Financial Position. There
was no impact on retained earnings at 1 July 2019.
IFRIC 23
IFRIC 23 became effective for the Group from 1 July 2019 and clarifies how the recognition and measurement
requirements of AASB 12 – Income Taxes are applied where there is uncertainty over tax treatments. The Group has
reviewed the accounting standard and has determined that there is no material impact.
Dacian Gold Limited 2020 Annual Report
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111
ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
In the opinion of the Directors of Dacian Gold Limited (the ‘Company’):
a.
The accompanying financial statements and notes of the consolidated entity are in accordance with the
Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its
performance for the year then ended; and
complying with Australian Accounting Standards, the Corporations Regulations 2001, professional
reporting requirements and other mandatory requirements.
b.
c.
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
The financial statements and notes thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance
with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2020.
This declaration is signed in accordance with a resolution of the Board of Directors.
DATED at Perth this 30th day of September 2020.
Leigh Junk
Managing Director & CEO
Dacian Gold Limited 2020 Annual Report
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112 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
Independent Auditor’s Report
To the shareholders of Dacian Gold Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of Dacian
Gold Limited (the Company).
In our opinion, the accompanying Financial Report
of the Company is in accordance with the
Corporations Act 2001, including:
• Giving a true and fair view of the Group’s
financial position as at 30 June 2020 and of its
financial performance for the year ended on
that date; and
The Financial Report comprises:
•
•
Consolidated statement of financial position
as at 30 June 2020.
Consolidated statement of profit or loss and
other comprehensive income, Consolidated
statement of changes in equity and
Consolidated statement of cash flows for the
year then ended.
• Notes including a summary of significant
•
Complying with Australian Accounting
Standards and the Corporations Regulations
2001.
accounting policies.
• Directors’ Declaration.
The Group consists of the Company and the
entities it controlled at the year-end or from time
to time during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in
Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
Key Audit Matters
The Key Audit Matters we identified are:
•
•
Impairment of property, plant and equipment
and mine properties.
Recoverability of deferred tax assets.
• Going concern basis of accounting.
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.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
113
ANNUAL FINANCIAL STATEMENTS
Impairment of property, plant and equipment and mine properties ($68.537 million)
Refer to Note 11, 13 and 14 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The impairment of property, plant and equipment
and mine properties was considered a key audit
matter due to the:
•
•
•
Size of the property, plant and equipment
and mine properties balance (being 67% of
total assets).
Level of judgement required by us in
evaluating assumptions used by the Group in
its valuation assessment.
The Group recording an impairment charge
of $68.537 million at 31 December 2019,
against property, plant and equipment and
mine properties. This resulted from the
reduction in Mineral Resource and Ore
Reserve Estimate relating primarily to the
Westralia underground mine and the
subsequent decision to suspend operations
at the Westralia underground mine over the
first half of the 2021 financial year. This
further increased the sensitivity of the model
and our audit effort in this key audit area.
The impairment of the Group’s property, plant
and equipment and mine properties applies
significant and judgmental assumptions in a fair
value less costs of disposal model. These
assumptions include:
•
•
Forecast sales and production output,
production costs and capital expenditure.
The Group’s models are sensitive to changes
in these assumptions indicating possible
impairment. This drives additional audit effort
specific to their feasibility and consistency of
application to the Group’s strategy.
Forecast gold prices experiencing volatility,
increasing the risk of future fluctuations and
inaccurate forecasting.
• Discount rate, which is complicated in
nature.
•
Life of mineral reserves. The Group uses
internal and external experts to assist it in
producing the Reserves statement which
underlies the forecast production output
within the model.
Our procedures included:
• We considered the appropriateness of the
Group’s use of the fair value less costs of
disposal methodology against the
requirements of the accounting standards.
• We, along with our valuation specialists,
assessed the integrity of the fair value less
costs of disposal model used, including the
accuracy of the underlying calculation
formulas.
• We evaluated the sensitivity of the valuation of
property, plant and equipment and mine
properties by considering reasonably possible
changes to the key assumptions, such as
forecast sales and production output, forecast
gold prices, production costs and the discount
rate. We did this to identify those assumptions
at higher risk of bias or inconsistency in
application and to focus our further
procedures.
• We assessed the historical accuracy of
previous Group budgets by comparing to
actual results to inform our evaluation of
forecasts incorporated in the model. We
evaluated the impact on the business, to
determine further testing required.
• We assessed key assumptions underlying the
discounted cash flows in the fair value less
costs of disposal model (including forecast
sales and production output, production costs
and capital expenditure) using our knowledge
of the Group, their past performance, and our
industry experience. We challenged the
Group’s significant forecast cash flows and we
applied increased skepticism to forecasts in
the areas where previous budgets were not
achieved. We compared key events to the
Board approved budget and strategy.
• We compared expected forecast gold prices to
published views of market commentators on
future trends.
• We assessed the scope, competence and
objectivity of the Group’s internal and external
experts involved in the estimation process of
mineral reserves.
• We compared the life of mineral reserves and
production output assumptions in the Group’s
model to the Reserves statement
commissioned by the Group for consistency.
114 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
These conditions necessitate additional scrutiny
and professional scepticism by us, in particular to
address the objectivity of sources used for
assumptions, and their consistent application.
In assessing this key audit matter, we involved
senior team members and valuation specialists.
• Working with our valuation specialists, we
independently developed a discount rate range
considered comparable, using publicly
available market data for comparable entities.
• We recalculated the impairment charge
against the recorded amount disclosed and
assessed the disclosures in the financial report
using our understanding of the issue obtained
from our testing and against the requirements
of the accounting standards.
Recoverability of deferred tax assets ($13.374 million)
Refer to Note 4 and 20 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group has recognised deferred tax assets of
$13.374 million as at 30 June 2020, which
includes tax losses carried forward in Australia.
Accounting standards state deferred tax assets
are only recognised if certain conditions under
Australian tax law are satisfied and if it is
probable that sufficient taxable profits will be
generated in the future in order for the benefits
of the deferred tax assets to be realised.
The recoverability of deferred tax assets was a
key audit matter due to:
Working with our tax specialists, our procedures
included:
• We examined the documentation prepared by
the Group underlying the availability of tax
losses and annual utilisation allowances for
consistency with Australian tax law.
• We assessed the factors that led to the Group
incurring tax losses in the current year and
previous years, and challenged the Group’s
assessment of future taxable profits.
• We compared the forecasts included in the
•
•
•
The significant judgement to assess the
probability the Group can generate sufficient
taxable profits in light of the tax losses
recorded in the current and previous financial
years.
As described in the impairment of property,
plant and equipment and mine properties
key audit matter above, the Group
recognised a reduction in Mineral Resource
and Ore Reserve Estimate relating primarily
to the Westralia underground mine which
has subsequently resulted in the suspension
of mining activities at the Westralia
underground mine over the first half of the
2021 financial year. This has resulted in the
derecogntion of $34.1 million of deferred tax
assets during the year and raises our focus
on the reliability of forecasts and increasing
the possibility that deferred tax assets are
not recoverable.
The risk of the Group incorrectly applying the
requirements of the accounting standards
and Australian tax law to recognise deferred
tax assets for tax losses, which could result
in a substantial effect on the Group’s
statement of profit or loss and other
comprehensive income.
Group’s estimate of future taxable profits used
in their deferred tax asset recoverability
assessment to those used in the Group’s
assessment of the impairment of property,
plant and equipment and mine properties. Our
approach to testing these forecasts was
consistent with the approach detailed above in
relation to the impairment of property, plant
and equipment and mine properties. We
challenged the differences between forecast
cash flows and taxable profits by evaluating
the adjustment of cash flows, for differences
between accounting profits, as presented in
the Group’s forecasts, to taxable profits,
against Australian tax law.
• Understanding the timing of future taxable
profits and considering the consistency of the
timeframes of expected recovery to our
knowledge of the business and its plans. We
placed increased scepticism where there was
a longer timeframe of expected recovery.
• We assessed the disclosures in the financial
report using the results from our testing and
against the requirements of the accounting
standards.
115
ANNUAL FINANCIAL STATEMENTS
We involved tax specialists to supplement our
senior team members in assessing this key audit
matter.
Going concern basis of accounting
Refer to Going Concern Basis for Preparation of Financial Statements Note to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group’s use of the going concern basis of
accounting and the associated extent of
uncertainty is a key audit matter due to the high
level of judgement required by us in evaluating
the Group’s assessment of going concern and
the events or conditions that may cast significant
doubt on their ability to continue as a going
concern. These are outlined in Going Concern
Basis for Preparation of Financial Statements
Note.
The Directors have determined that the use of
the going concern basis of accounting is
appropriate in preparing the financial report. Their
assessment of going concern was based on cash
flow projections. The preparation of these
projections incorporated a number of
assumptions and significant judgements, and the
Directors have concluded that the range of
possible outcomes considered in arriving at this
judgement does not give rise to a material
uncertainty casting significant doubt on the
Group’s ability to continue as a going concern.
We critically assessed the levels of uncertainty,
as it related to the Group’s ability to continue as a
going concern, within these assumptions and
judgements, focusing on the following:
•
•
•
The Group’s forecast sales, production
volumes, production costs and capital
expenditure levels including within the
Group’s cash flow forecasts. This include
feasibility to achieve forecasts in light of
previous production challenges.
Impact of expected gold prices and forecast
exchange rates to cash flows projected.
The Group’s ability to meet financing
commitments and covenants. This included
nature of planned methods to achieve this,
feasibility and status/progress of those plans.
As disclosed in the Going Concern Basis for
Preparation of Financial Statements Note,
subsequent to year end, the Group has
sought and received certain approvals,
concessions and waivers of financial and non-
financial requirements of the Project Debt
Facility agreement, from the Financiers.
Our procedures included:
• We analysed the cash flow projections by:
–
–
–
Evaluating the underlying data used to
generate the projections. We specifically
looked for their consistency with those
tested by us, as set out in the impairment
of property, plant and equipment and
mine properties key audit matter, their
consistency with the Group’s intentions
and their comparability to past results.
Analysing the impact of reasonably
possible changes in projected cash flows
and their timing, to the projected periodic
cash positions. We assessed the resultant
impact to the ability of the Group to pay
debts as and when they fall due and
continue as a going concern. The specific
areas we focused on were informed from
our test results of the accuracy of
previous Group cash flow projections and
sensitivity analysis on key cash flow
projection assumptions.
Assessing the planned levels of operating
and capital expenditures for consistency
of relationships and trends to the Group’s
historical results, results since year end,
and our understanding of the business,
industry and economic conditions of the
Group.
• We assessed historical trends and read
correspondence with existing and potential
financiers to understand and assess the
options available to the Group including
renegotiation or rolling forward of existing
debt facilities, waivers in meeting financial
loan covenants and negotiation of
additional/revised funding arrangements.
• We read and assessed the impact of
concessions, approvals and waivers of certain
financial and non-financial requirements of the
Project Debt Facility received from the
Financiers subsequent to year end, on the
cash flow projections.
116 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
•
The Group’s ability to raise additional funds
from shareholders or other parties and the
projected timing thereof. This included source
of funds, availability of fund type, feasibility
and status/progress of securing those funds.
In assessing this key audit matter, we involved
senior audit team members who understand the
Group’s business, industry and the economic
environment it operates in.
• We read relevant correspondence with the
Group’s advisors to understand and assess
the Group’s ability to raise additional
shareholder funds.
• We evaluated the Group’s going concern
disclosures in the financial report by
comparing them to our understanding of the
matter, the events or conditions incorporated
into the cash flow projection assessment, the
Group’s plans to address those events or
conditions, and accounting standard
requirements.
Other Information
Other Information is financial and non-financial information in Dacian Gold Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Director’s Report.
The Chairman’s Letter, Managing Director’s Letter, Review of Operations, Corporate Governance
Statement, ASX Additional Information and Tenement Schedule are expected to be made available to
us after the date of the Auditor’s Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
and will not express an audit opinion or any form of assurance conclusion thereon, with the exception
of the Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information.
In doing so, we consider whether the Other Information is materially inconsistent with the Financial
Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
•
•
Preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001.
Implementing necessary internal control to enable the preparation of a Financial Report that gives
a true and fair view and is free from material misstatement, whether due to fraud or error.
Assessing the Group’s ability to continue as a going concern and whether the use of the going
concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to
liquidate the Group and Company or to cease operations, or have no realistic alternative but to do
so.
117
ANNUAL FINANCIAL STATEMENTS
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
To obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
To issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of Dacian
Gold Limited for the year ended 30 June 2020,
complies with Section 300A of the Corporations
Act 2001.
The Directors of the Company are responsible for
the preparation and presentation of the
Remuneration Report in accordance with Section
300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report
included in the Directors’ Report for the year
ended 30 June 2020.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit
conducted in accordance with Australian Auditing
Standards.
KPMG
Graham Hogg
Partner
Perth
30 September 2020
118 ANNUAL REPORT 2020
ANNUAL FINANCIAL STATEMENTS
Pursuant to the Listing Requirements of the Australian Securities Exchange, the shareholder information set out below was
applicable as at 29 September 2020.
A. Distribution of Equity Securities
Analysis of numbers of shareholders by size of holding:
Distribution
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
More than 100,000
TOTALS
Number of Shareholders
Securities Held
829
2,039
1,138
2,293
402
6,701
411,882
5,785,127
9,062,437
78,170,760
463,078,348
556,508,554
There are 1,204 shareholders holding less than a marketable parcel of ordinary shares.
B. Substantial Shareholders
An extract of the Company’s Register of Substantial Shareholders (who hold 5% or more of the issued capital) is set out below:
Shareholder Name
Franklin Resources Inc and its Affiliates
C. Twenty Largest Shareholders
Shareholder Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
POLLY PTY LTD
BNP PARIBAS NOMINEES PTY LTD
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