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2 0 2 0 A N N U A L R E P O R T
PERTH HEAD OFFICE
Ground Floor, 6 Kings Park Road
West Perth
Western Australia 6005
PO Box 761, West Perth
Western Australia 6872
TEL +61 (0)8 6555 1816
NAMIBIA OPERATIONS OFFICE
35 Daniel Tjongarero Avenue
Commercial Unit 3, Second Floor
Swakopmund, Namibia
PO Box 8485
Swakopmund, Namibia
TEL +264 (0)64 40 2221
FAX +264 (0)64 40 6363
www.marenicaenergy.com.au
Contents
Corporate Information
Chairman’s Letter
Review of Operations
Directors’ Report
Auditor’s Independence Declaration
Remuneration Report - Audited
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
Consolidated Notes to the Financial Statements
Directors' Declaration
Audit Report
Additional ASX Information
Schedule of Interests in Minerals Tenements
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66
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Corporate Information
ABN 71 001 666 600
DIRECTORS
A Bantock (Independent Non-executive Chairman)
M Hill (Managing Director and CEO)
N Chen (Non-executive Director)
AUDITOR
Rothsay Auditing
Level 1, Lincoln House
4 Ventnor Avenue
West Perth WA 6005
Tel: +61 8 9486 7094
COMPANY SECRETARY
S McBride
REGISTERED OFFICE
Office C1
1139 Hay Street
West Perth WA 6005
Tel: +61 8 6555 1816
BUSINESS OFFICE
Office C1
1139 Hay Street
West Perth WA 6005
Tel: +61 8 6555 1816
WEB SITE
www.marenicaenergy.com.au
STOCK EXCHANGES
Australian Securities Exchange Limited – MEY
Namibia Stock Exchange – MEY
HOME EXCHANGE
Perth
SHARE REGISTRY
Advanced Share Registry Services
110 Stirling Highway
Nedlands WA 6009
Tel: +61 8 9389 8033
Fax: +61 8 9262 3723
ASX CODE
MEY
3
4
Chairman
Andrew Bantock
Yours faithfully
ahead, and again thank shareholders for their continued and much valued support.
I look forward to your company realising the opportunity that the past year’s efforts have generated over the year
the past year.
support of your CFO Shane McBride, my fellow director Nelson Chen and all who have worked with Marenica over
In closing, I again extend my thanks for the leadership and efforts of your CEO Murray Hill, as well as the ongoing
re-rating, should the uranium price finally take-off.
recent exploration success and substantial uranium resources; is well placed to benefit from a significant equity price
with Namibian and Australian uranium projects. We therefore believe your Company, with its vast tenement holdings,
We know that past uranium price increases delivered substantial market capitalisation growth for listed companies
catalysts to future market re-pricing.
market fundamentals, including the reduction of intermediate refined uranium product stockpiles, as potential
reported spot pricing remaining stubbornly low. Frustrating as that is, we recognise the reported firming of underlying
We continue to see market dynamics as supportive of a significant future increase in the uranium price, despite recent
of Marenica’s owned or controlled uranium resources.
processing surficial uranium ores. We will continue to look to apply U-pgradeTM to accelerate the development
Our patented U-pgradeTM beneficiation technology, which we believe is likely to transform the economics of
and
A corporate capacity for growth by acquisition, as demonstrated by our Australian uranium portfolio acquisition;
Hirabeb, confirmed to extend over 36 kilometres;
mineralised palaeochannel systems; the first at Koppies covering over 6.4 square kilometres and the second at
An active and successful Namibian exploration program, that over the past year has discovered two extensive
ground rights, by area, in Namibia;
A geological strategy which has seen your Company become the largest holder of nuclear fuels exploration
world’s most stable, valued and reliable uranium producing jurisdictions;
Over 90 million pounds of U3O8 resources across multiple uranium projects in Namibia and Australia - two of the
appreciation. Our stand-out investment features now include:
With these achievements in hand we believe your Company is well positioned for future growth and value
has confirmed exciting mineralised zones.
Discovering a new extensive palaeochannel system at our Hirabeb tenement in Namibia, where scout drilling
and
Discovering high-grade mineralisation within the extensive palaeochannels on our Koppies tenement in Namibia;
Adding further to our strategic Namibian exploration ground position;
of Australian uranium assets;
Adding 48 million pounds of high-grade uranium resources to our asset base, through the acquisition of a portfolio
including:
I am pleased to write to you following a year in which your Company substantially advanced its strategic objectives,
Dear Shareholder,
Chairman’s Letter
Review of Operations
OVERVIEW
The 2020 financial year proved to be transformative for the Company, adding two uranium discoveries in Namibia
and the acquisition of over 48 million pounds of U3O8 resources in Australia, to our existing Marenica Project
resources.
The discovery of extensive uranium mineralisation within an expansive palaeochannel system at Hirabeb
demonstrates the Company’s ability to discover new uranium projects at low cost. There remains extensive untested
potential at Hirabeb, Marenica’s largest tenement in Namibia, and the Company is excited about continuing
exploration of this tenement.
Marenica has continued a highly successful exploration program at Koppies after drilling the first hole in July 2019.
A large palaeochannel system has been identified with drilling indicating an approximate grade of 300 to 350 ppm
U3O8.
Adding significance to these discoveries is that the application of Marenica’s proprietary and patented U-pgradeTM
process could potentially halve the capital and operating cost of development for these styles of deposits, hence
potentially lowering the threshold uranium price for their development and significantly increasing their value.
Marenica finalised the acquisition of uranium projects in the Northern Territory and Western Australia containing
JORC resources of 48.4 Mlb of U3O8 at an average grade of 859 ppm U3O8 during the year. The company believes
that they can add value to these assets through further geological work and application of the U-pgradeTM process
or part thereof to these ore sources.
Marenica is delivering on its business strategy to acquire and explore tenements with uranium mineralisation styles
suitable for value adding through application of its breakthrough proprietary U-pgradeTM beneficiation process.
Impact of COVID
For Marenica, like most of the mining industry in Namibia and Australia, the COVID-19 pandemic has had some
impact on operations, although thankfully to date these have been relatively minor. The pandemic restricted
exploration activities in Namibia for a short period of time and although the Erongo region of Namibia entered a
second lockdown period in June 2020, mining and exploration were exempt and Marenica’s exploration program
continued. In Australia the impact has been greater, with restrictions on travel to projects in the Northern Territory
and in the north of Western Australia due to biosecurity risks. Ground based exploration in Australia has been
suspended and the Company is currently undertaking desktop exploration by analysing historical data.
Due to restricted vehicle movements and reduced industry activity during this pandemic the airborne pollution in
many countries has been reduced, and countries can now see the benefit of reduced pollution levels. This is likely
to reinforce the value and benefits of reliable base load low carbon emission energy that is generated by nuclear.
Namibian Exploration Process
In Namibia, Marenica is targeting uranium mineralisation contained within historical river systems, known as
palaeochannels, where calcrete hosted uranium mineralisation can occur, the same style of mineralisation used to
develop Marenica’s U-pgradeTM uranium beneficiation process. The Company is therefore confident that
U-pgradeTM could be successfully applied if mining and processing operations were developed at Koppies or any of
the Namibian tenements, for a consequent significant reduction in development costs compared to Marenica’s peers
with similar grade ores in Namibia.
These palaeochannel deposits are referred to as surficial deposits due to their close proximity to the surface and in
general the palaeochannels are no deeper than 30 metres. The style of uranium mineralisation is also known as
secondary uranium mineralisation as the uranium in the deposit has been relocated from a primary source and
reprecipitated.
These palaeochannels have no obvious surface expression nor do they emit sufficient radiation that could be
detected at surface and therefore used to locate the palaeochannels. Marenica are using a ground based
geophysical measuring system known as Horizontal Loop Electromagnetics (“HLEM”) to identify the outlines of the
5
Review of Operations
palaeochannels, with drilling used to validate the accuracy of the HLEM. Both Rotary Air Blast (“RAB”) and Reverse
Circulation (“RC”) drilling techniques have been used in the exploration program to date.
Koppies Uranium Project (EPL 6987) – Namibia
The exploration program at Koppies commenced with drilling programs targeting areas which were extrapolated from
mineralisation identified by Deep Yellow Limited (“Deep Yellow”) across the tenement boundary in the west.
Subsequent exploration was conducted iteratively and alternated between HLEM and drilling to arrive at the current
outcome (refer Figure 1), which resulted in the delineation of a 6.4 km² palaeochannel system outline and significant
mineralisation identified in drill intervals within the area drilled to date.
Figure 1 – Koppies (EPL 6987)
The best intersections from drilling at Koppies include:
KP004
6 m at 432 ppm U3O8 from 7 m
KP045
o
KP055
o
10 m at 687 ppm U3O8 from 2 m
Including 2 m at 1,974 ppm U3O8
13 m at 905 ppm U3O8 from 3 m
Including 2 m at 4,504 ppm U3O8
KOR2
6 m at 354 ppm U3O8 from 1 m
KOR21
11 m at 502 ppm U3O8 from 6 m
KOR62
o
3 m at 3,087 ppm U3O8 from 1 m
Including 1 m at 7,060 ppm U3O8
6
Review of Operations
The average depth of the 90 holes drilled in the Koppies palaeochannel system is 12 metres, with the deepest hole
drilled to a depth of 22 metres. This indicates the shallow nature of the mineralisation in this system and the low cost
for drilling due to the shallow depth of holes. For full details of the Koppies drill intersections refer to the following
ASX announcements – 27/08/19 ‘Marenica Identifies Significant Grade Mineralisation at Koppies’, 07/11/19 ‘Drill
Results Deliver Exceptional Uranium Mineralisation at Koppies’, 10/02/20 ‘Koppies Drilling Intersects 1m at 7,060ppm
U3O8’.
New Discovery at Hirabeb
On 21 July 2020 Marenica announced a new uranium discovery from its maiden scout RC drilling program at Hirabeb
(EPL 7278). Hirabeb is the second of Marenica’s tenements in the Namib Project Area to be explored. With an area
of 730 km2, Hirabeb is Marenica’s largest tenement in Namibia, 15 times the area of the Koppies tenement. The
exploration program identified a massive palaeochannel system, with the major palaeochannel extending from the
northeast corner to the southwest corner of the tenement, a distance of over 36 kilometres. To put this into
perspective the palaeochannel is longer than the width of the English Channel, as shown in Figure 2.
The main palaeochannel is mineralised for the majority of its length, providing Marenica with a multitude of follow up
exploration targets with the potential to host a significant uranium deposit. The drill lines completed in this scouting
program are on average 5.5 kilometres apart, greater than the width of the Koppies mineralised area. Consequently,
there is significant upside potential for large scale uranium deposits along the identified palaeochannel as well as in
other areas of the tenement.
This is an exciting new uranium discovery in an area not previously explored using modern exploration techniques.
Marenica consider this to potentially be the most significant new uranium discovery in Namibia since Extract
Resources discovered Husab in 2008.
Figure 2 – Comparison of the Hirabeb Palaeochannel with the English Channel
7
Review of Operations
The maiden scout exploration program included HLEM surveys and an RC drilling program of 120 holes. The location
of the drill holes and HLEM survey lines and the potential extent of the palaeochannels is shown in Figure 3. Note
there are large areas of the tenement yet to be explored, including in the northwest and southeast.
Detailed follow-up work will include the identification of geological characteristics along the palaeochannels that
would be suited to increased deposition of mobile uranium that has precipitated to form these calcrete hosted uranium
deposits.
Figure 3 – Location of Hirabeb HLEM Survey Lines, Drill Holes and Potential Extent of Palaeochannels
The best intersections from drilling at Hirabeb include:
HIR050
10 m at 242 ppm eU3O8 from 16 m
o
Including 2 m at 787 ppm eU3O8
HIR070
4 m at 193 ppm eU3O8 from 4 m
o
Including 1 m at 462 ppm eU3O8
HIR075
6 m at 153 ppm eU3O8 from surface
o
Including 1 m at 334 ppm eU3O8
8
Review of Operations
Largest Land Package for Nuclear Fuel (Uranium) Minerals in Namibia
The Erongo region of Namibia contains the fourth highest aggregate of uranium mineral resources of any region in
the world and has a long history of uranium discovery and production. The region’s world scale Rossing Uranium
Mine commenced operation in 1976 and has been operating continuously for 44 years.
Marenica has three uranium project areas in the Erongo Region:
Namib Project,
Marenica Project, and
Mile 72 Project.
The Koppies and Hirabeb projects are located in the Namib Project Area (Figure 4) where Marenica has a contiguous
land package of 1,988 km² across six active tenements. The strategy to acquire land in the Namib Area was initiated
following development of a geological model built on the theory of deposition of soluble uranium within historical
palaeochannels. Marenica also sourced historical General Mining Union Corporation Limited (“Gencor”) maps and
reports from exploration activities in the 1970’s in which extensive fieldwork identified exploration targets. The vast
majority of these exploration targets are located east of the known deposits of Langer Heinrich, Tumas and
Aussinanis, and inside the Marenica tenements. The identification of exploration targets led Marenica to apply for
tenements between the known deposits and the foot of the Khomas Highlands in the east (dark brown area in Figure
4).
The Namib area is highly prospective for uranium with over 275 Mlb of JORC resources downstream of Marenica’s
tenements, 230 Mlb of which are calcrete hosted uranium deposits, greatly improving the potential for continued
exploration success.
Figure 4 – Namib Project Area
9
Review of Operations
At year end, Marenica held ten active tenements in the Erongo Region of Namibia covering 2,899 km², with a further
four tenements under application (Figure 5).
Figure 5 – Marenica's tenements in the Erongo Region of Namibia
Marenica’s tenements in the north of the Erongo region are also highly prospective for calcrete hosted uranium
mineralisation, the Marenica Uranium Project has a JORC resource of 61 Mlb of U3O8.
Marenica Uranium Project Resource
The Marenica Uranium Project includes the Marenica deposit and the smaller MA7 deposit, 5 km to the southeast of
the main resource. Both are calcrete hosted uranium deposits located in the same palaeochannel system that hosts
Orano’s Trekkopje uranium deposit, which has similar mineralogical characteristics to the Marenica Uranium Project.
The Marenica Project has a Mineral Resource of 61 Mlb at 93 ppm U3O8 at a 50 ppm cut-off grade, Marenica owns
75% of this Mineral Resource.
10
Review of Operations
Table 1 – Marenica Project Resource Estimate
Deposit
Category
Cut-off
(ppm
U3O8)
Total Resource
Tonnes
(M)
U3O8
(ppm)
U3O8
(Mlb) Holding
Marenica’s Share
U3O8
(ppm)
Tonnes
(M)
U3O8
(Mlb)
Marenica
Marenica
Indicated
Inferred
Total
50
50
50
26.5
249.6
276.1
110
92
94
6.4
50.9
57.3
Marenica
MA7
MA7
Inferred
Total
MA7
Namibia Resource Total
The Marenica and MA7 Mineral Resources were prepared and first disclosed under the JORC Code 2004. These
estimates have not been updated since to comply with JORC Code 2012 on the basis that the information that the
estimates are derived from has not materially changed since it was last reported.
22.8
22.8
298.9
4.0
4.0
61.3
17.1
224.2
81
81
93
81
93
50
50
207.1
75%
75%
94
43.0
3.0
46.0
Namibian Uranium Association
Marenica is a long standing and proud member of the Namibian Uranium Association (“NUA”). The NUA are the
leading point of contact for government, media, stakeholders, general public and anybody interested in the position
and policies of the Namibian uranium industry. Membership of the NUA signifies adherence to a strong sustainable
development ethos, product stewardship and compliance with the Namibian legislative framework.
Australian Uranium Projects
During December 2019, approval was obtained from Marenica’s and Optimal Mining Limited’s (“Optimal”)
shareholders to acquire subsidiaries of Optimal (“Acquisition Entities”) that owned tenements and Mineral Resources
in Australia (“Acquisition Assets”).
Marenica acquired 100% of the share capital of the Acquisition Entities for a consideration of A$250,000 cash and
27.5 million fully paid ordinary shares in Marenica. The purchase price is equivalent to A$0.06 (US$0.04) per pound
of JORC resources.
The Acquisition Assets own the Angela, Thatcher Soak, Oobagooma and Minerva project areas and joint venture
holdings in the Bigrlyi, Malawiri, Walbiri and Areva joint ventures and added 48.4 Mlb U3O8 of high-grade mineral
resources to Marenica’s asset base. The mineral resources are significant in their own right but their value could be
enhanced when coupled with Marenica’s U-pgradeTM beneficiation process.
The Acquisition Assets are significantly more advanced than most of Marenica’s Namibian tenements. Most already
have estimated mineral resources, one has an historical resource that cannot be reported, and the remainder are
joint venture interests.
All but Thatcher Soak were formerly held by Paladin Energy Limited (“Paladin”), however, it is Marenica’s view that
Paladin had other priorities and did not thoroughly explore these assets. Thus, it is Marenica’s view these assets
are underdeveloped, presenting an opportunity for Marenica to add value.
The project locations of the Acquisition Assets are shown in Figure 6 and the JORC resources listed in Table 2.
11
Review of Operations
Figure 6 – Location of Tenements
Table 2 – Uranium Mineral Resources in Australia
Cut-off
(ppm
U3O8)
Total Resource
Tonnes
(M)
U3O8
(ppm)
U3O8
(Mlb)
Holding Tonnes
Marenica’s Share
U3O8
(ppm)
(M)
U3O8
(Mlb)
300
150
10.7 1,310
425
11.6
850
22.3
30.8
10.9
41.7
100%
100%
100%
10.7 1,310
425
11.6
850
22.3
30.8
10.9
41.7
Deposit
Category
100% Holding
Inferred
Angela *
Thatcher Soak
Inferred
100% Held Resource Total
Bigrlyi Joint Venture
Bigrlyi Deposit *
Indicated
Inferred
500
500
500
200
200
200
200
4.7 1,366
2.8 1,144
7.5 1,283
259
1.01
281
0.26
371
0.24
556
1.24
10.2 1,049
14.0
7.1
21.1
0.57
0.16
0.19
1.52
23.5
20.82%
20.82%
20.82%
1.55 1,283
259
0.21
281
0.05
Bigrlyi Deposit Total
Inferred
Sundberg
Inferred
Hill One JV
Inferred
Hill One EME
Inferred
Karins
Bigrlyi Joint Venture Total
Walbiri Joint Venture
Joint Venture
100% EME
Walbiri Total
Malawiri Joint Venture
Malawiri JV
Joint Venture Resource Total
Australia Resource Total
Angela and Bigrlyi Mineral Resources were prepared and first disclosed under the JORC Code 2004. These estimates
have not been updated since to comply with JORC Code 2012 on the basis that the information that the estimates are
derived from has not materially changed since it was last reported.
0.42 1,288
847
21.6
848
43.9
0.10 1,288
923
3.34
859
25.6
556
0.26
2.07 1,065
Inferred
Inferred
20.82%
20.82%
1.20
40.2
81.9
5.1
5.9
11.0
7.1
8.4
15.5
200
200
200
636
646
641
Inferred
23.97%
22.88%
1.16
100
636
4.39
0.12
0.03
0.32
4.86
1.63
0.29
6.77
48.4
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Review of Operations
Minerva Project (100%)
The Minerva Project covers exploration licences located in the Ngalia Basin approximately 170 km northwest of Alice
Springs in the Northern Territory (see Figure 7). The Ngalia Basin is an intercontinental trough filled with Late
Proterozoic to Carboniferous age sediments and surrounded by the Proterozoic Arunta Block, its dimensions are 300
km in east-west length and up to 70 km wide. The Ngalia Basin is a uranium rich area, it is host to a number of
Marenica’s uranium projects as well as other uranium projects.
Figure 7 – Minerva deposit geological setting
Minerva was explored by Agip Australia Pty Ltd and Central Pacific Minerals NL during the 1970’s and early 1980’s.
A number of drilling programs were completed but a JORC resource has not been estimated.
Marenica completed a detailed review of extensive historical drill data from the Minerva Uranium Project. The data
review identified 49 mineralised drill holes with sample uranium grades greater than 250 ppm U3O8, including 29 drill
intervals with sample grades in excess of 10,000 ppm or 1.0% U3O8. The exploration results have identified uranium
mineralisation over a 2,400 metre strike length (Figure 8).
Significant uranium intercepts from drilling include:
Y116RD – 11 m at 4,218 ppm U3O8 from 129.5 m incl. 0.5 m at 41,200 ppm U3O8 from 138.0 m
Y134RD – 4 m at 4,334 ppm U3O8 from 145.0 m incl. 0.5 m at 25,000 ppm U3O8 from 146.5 m
And 15.5 m at 2,313 ppm U3O8 from 166.0 m incl. 1.0 m at 18,300 ppm U3O8 from 179.0 m
Y153RD – 9 m at 2,667 ppm U3O8 from 229.0 m incl. 0.5 m at 26,400 ppm U3O8 from 237.0 m
Y158RD - 5.5 m at 11,131 ppm U3O8 from 117.5 m incl. 2.0 m at 20,725 ppm U3O8 from 118.0 m
Y166RD - 3.5 m at 17,843 ppm U3O8 from 277.5 m
In addition to the high-grade uranium mineralisation, high-grade gold was present in one of the two drill holes on
which detailed gold assays are available. Hole Y153RD included 0.5 m at 19.2 g/t Au from 143.5 m, and 0.5 m at
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Review of Operations
2.3 g/t Au from 141.5 m, with the gold intervals contained within a broader uranium mineralised zone of 8.5 m at 653
ppm U3O8. A second drill hole assayed for gold (Y160RD) did not contain either uranium or gold mineralisation.
The presence of significant gold values in hole Y153RD suggests that there is potential for additional gold
mineralisation to be associated with the existing uranium mineralisation within the deposit. Refer to the ASX
announcement dated 05/05/20 ‘High Grade Uranium and Gold at Minerva Uranium Project, NT.’ for full details.
Figure 8 – Drill hole layout, note the proximity of the Tanami road
Marenica Team
To enable Marenica to support the expansion of exploration activities on its large uranium tenement position in
Namibia and on its extensive Australian uranium tenements and deposits, the exploration team was expanded with
several key additions. The new team members have been engaged via flexible part-time employment and consulting
arrangements which provides access to critical skills for Marenica, on a cost effective basis.
Jessica Bezuidenhout was appointed “General Manager - Namibia”. Ms Bezuidenhout is an environmental scientist
with 13 years exploration and mining experience in Australia and Namibia. Ms Bezuidenhout is responsible for
overseeing the smooth running of the Namibian operations, she will ensure that exploration activities are completed
under the most efficient and optimal conditions.
Berti Roesener was appointed “Consulting Exploration Manager - Namibia”. Mr Roesener is a geologist with over
33 years geological experience in Namibia, in particular, on the mineralisation type targeted by Marenica, being
calcrete hosted uranium mineralisation. Mr Roesener is author of the uranium chapter of the book on “Mineral
Resources of Namibia”.
Dave Princep was appointed “Consulting Geologist” and will oversee, from a technical point of view, all planning,
execution and analysis of exploration activities in Namibia and Australia. Mr Princep has extensive experience on
exploration for calcrete hosted uranium mineralisation and mining in Namibia, having worked for Paladin and Deep
Yellow on their projects in Namibia, over the last 16 years. Whilst working at Paladin, Mr Princep also prepared or
oversaw the mineral resource estimates on the majority of the Australian assets (as they were previously owned by
Paladin) and therefore, he has invaluable knowledge of these assets.
The addition of these highly experienced personnel to the Marenica exploration team, has supported the acceleration
of exploration activities.
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Review of Operations
U-pgradeTM Beneficiation Process
U-pgradeTM is a potential industry leading and economically transformational beneficiation process for upgrading
surficial uranium ores.
This breakthrough process was developed on ore from Marenica’s namesake Marenica Uranium Project in Namibia
and subsequently, testwork has been undertaken on ore samples from a number of other sources.
In summary, Marenica has demonstrated, in bench scale testwork on the Marenica Uranium Project ore, that the
U-pgradeTM beneficiation process;
Concentrates the uranium by a factor of 50
Increases Marenica Uranium Project ore grade from 93 ppm to ~5,000 ppm U3O8
Rejects ~98% of the mass prior to leaching
Produces a high-grade concentrate in a low mass of ~2% (leach feed)
Rejects acid consumers
Potentially reduces operating costs by ~50% and capital costs by ~50% as compared to conventional
processing.
Similar results in fresh and sea water, which is particularly beneficial in a dry environment such as Namibia.
Beyond application at the Marenica Uranium Project, Marenica has determined, through bench scale testing, that
Deep Yellow’s Tumas and Aussinanis deposits, Paladin’s Langer Heinrich deposit, Orano’s Trekkopje deposit and
Toro Energy’s Wiluna deposits, are amongst those that are amenable to the U-pgradeTM process.
Mineral Resources
All of the Company’s Mineral Resources are internally peer reviewed at the time of estimation and are subject to
ongoing review, as and when required. The Australian Mineral Resources were first reported by Marenica on 4 July
2019 (“Uranium Resource Base Increased by 48 Mlbs to 110 Mlbs”), when the Company announced the acquisition
of the Mineral Resources from Optimal Mining Limited, which was at the time subject to shareholder and regulatory
approval. The Australian Mineral Resource estimates included in this report have not changed since 4 July 2019,
Marenica’s share of these resources remain at 25.6 Mt at 859 ppm U3O8 for 48.4 Mlb U3O8 (see Table 3).
The Namibian Mineral Resources have not changed since last reported in the 2019 Annual Report and remain at
224.2 Mt at 93 ppm U3O8 for 46 Mlb U3O8 (see Table 3).
Governance and Internal Controls
The Company maintains thorough QAQC protocols for conducting exploration, site practice, sampling, safety,
monitoring and rehabilitation.
Drilling methods vary according to the nature of the prospect under evaluation. These can include rotary air blast or
reverse circulation drilling for unconsolidated formations. Typically, resource estimations are based on a mix of
downhole radiometric sampling and chemical assaying. Assay samples are collected over one metre intervals.
Radiometric data is acquired at 10 cm intervals and composited to one metre intervals. Where statistical validation
confirms radiometric and chemical assay equivalence, the resource estimate is primarily based on the radiometric
data.
Drill hole collars are DGPS-surveyed by in-house operators, after an initial pick-up by hand-held GPS. Downhole
radiometric surveys are outsourced to independent contractors.
Drill hole sample logging captures a suite of lithologic, alteration, mineralogic and hand-held radiometric data, at one
metre intervals. This data is captured as permanent hard copy prior to digital input onto an in-house database.
Drill plans and sections generated from drilling and surface mapping are used to constrain wireframe mineralisation
models; upon which resource estimations are made.
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Review of Operations
Table 3 – Uranium Mineral Resources
Deposit
Category
Cut-off
(ppm
U3O8)
Total Resource
Tonnes
(M)
U3O8
(ppm)
U3O8
(Mlb) Holding
Marenica’s Share
U3O8
(ppm)
Tonnes
(M)
U3O8
(Mlb)
100% Holding
Inferred
Angela
Thatcher Soak
Inferred
100% Held Resource Total
Bigrlyi Joint Venture
Bigrlyi Deposit
Indicated
Inferred
Bigrlyi Deposit Total
Inferred
Sundberg
Inferred
Hill One JV
Inferred
Hill One EME
Karins
Inferred
Bigrlyi Joint Venture Total
Walbiri Joint Venture
Joint Venture
100% EME
Walbiri Total
Malawiri Joint Venture
Malawiri JV
Joint Venture Resource Total
Australia Resource Total
Inferred
Inferred
Inferred
Marenica
Marenica
Indicated
Inferred
Total
Marenica
MA7
Inferred
MA7
MA7
Total
Namibia Resource Total
300
150
500
500
500
200
200
200
200
200
200
200
100
50
50
50
50
50
AUSTRALIA
10.7 1,310
425
11.6
850
22.3
4.7 1,366
2.8 1,144
7.5 1,283
259
1.01
281
0.26
371
0.24
1.24
556
10.2 1,049
5.1
5.9
11.0
636
646
641
0.42 1,288
847
21.6
848
43.9
NAMIBIA
26.5
249.6
276.1
22.8
22.8
298.9
110
92
94
81
81
93
30.8
10.9
41.7
14.0
7.1
21.1
0.57
0.16
0.19
1.52
23.5
7.1
8.4
15.5
1.20
40.2
81.9
6.4
50.9
57.3
4.0
4.0
61.3
100%
100%
100%
10.7 1,310
425
11.6
850
22.3
30.8
10.9
41.7
20.82%
20.82%
20.82%
1.55 1,283
259
0.21
281
0.05
20.82%
20.82%
0.26
556
2.07 1,065
4.39
0.12
0.03
0.32
4.86
22.88%
1.16
636
1.63
23.97%
0.10 1,288
923
3.34
859
25.6
0.29
6.77
48.4
75%
207.1
94
43.0
75%
17.1
224.2
81
93
3.0
46.0
The Mineral Resource Estimate for the Angela, Bigrlyi, Marenica and MA7 resources in the table above were
prepared and first disclosed under the 2004 Edition of the Australian Code for the Reporting of Exploration Results,
Minerals Resources and Ore Reserves (JORC Code 2004). It has not been updated since to comply with the 2012
Edition of the Australian Code for the Reporting of Exploration Results, Minerals Resources and Ore Reserves
(JORC Code 2012) on the basis that the information has not materially changed since it was last reported. A
Competent Person has not undertaken sufficient work to classify the estimate of the Mineral Resource in
accordance with the JORC Code 2012; it is possible that following evaluation and/or further exploration work the
currently reported estimate may materially change and hence will need to be reported afresh under and in
accordance with the JORC Code 2012.
16
Review of Operations
The Competent Person that completed the most recent Mineral Resource estimate for each project is listed as
follows.
Accountability
Competent Person
Employer
Angela
Mr David Princep
Paladin Energy Limited
Thatcher Soak
Mr Peter Gleeson
SRK Consulting
Bigrlyi
Mr Arnold van der Heyden
Helman & Schofield Pty Ltd
Sundberg / Hill One
Mr Dimitry Pertel and Dr Maxim Seredkin CSA Global Ltd
Karins
Walbiri
Malawiri
Marenica
MA7
Mr Dimitry Pertel and Dr Maxim Seredkin CSA Global Ltd
Mr Dimitry Pertel and Dr Maxim Seredkin CSA Global Ltd
Dr Maxim Seredkin
Mr Ian Glacken
Mr Ian Glacken
CSA Global Ltd
Optiro Pty Ltd
Optiro Pty Ltd
The information in this Annual Mineral Resource Statement relating to exploration activities and Mineral Resources
is based on information compiled by David Princep B.Sc P.Geo FAusIMM (CP) who is an independent consultant
and who is a member of the AusIMM. Mr Princep has sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as
Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves”. Mr Princep consents to the inclusion of this information in the form and
context in which it appears.
17
Directors’ Report
Your Directors present their report on the group consisting of Marenica Energy Limited and the entities it controlled
at the end of, or during, the year ended 30 June 2020 (“Group”).
DIRECTORS
The following persons were Directors of Marenica Energy Limited during or since the end of the financial year and
up to the date of this report. Directors were in office for the entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Andrew Bantock
Independent Non-executive Chairman
Appointed 1 February 2018
Mr. Bantock is a Senior Managing Director of international corporate advisory firm FTI Consulting, where he co-leads
the Australian Mining and Mining Services Practice.
Mr Bantock has operated as CFO, Chairman, CEO and Director of international, ASX listed, government sector and
private corporations. Previous roles include: CFO of Glencore Xstrata plc’s Australian nickel business; Director of
Water Corporation, Western Australia’s water utility, where he also chaired the audit committee; Chairman, CEO and
Corporate Director of an ASX listed multi-commodity minerals exploration group; and Finance Director of ASX/NZSE
listed GRD Ltd, owner of New Zealand’s largest gold miner and GRD Minproc, a world class mining construction and
development engineer.
During the last three years, Mr. Bantock has not been a director of any other listed companies.
Murray Hill – B.Sc. (Metallurgy), FAusIMM
Chief Executive Officer - Appointed 1 May 2012
Managing Director - Appointed 2 May 2016
Mr. Hill has 36 years’ experience in the mining industry. He is a respected metallurgist with extensive experience in
the design, operation and commissioning of gold, uranium and base metal process plants. His experience was
broadened by management of a metallurgical testwork laboratory and his role as a process engineer in an engineering
group, and he is well experienced in uranium metallurgy. For the 10 years prior to joining the Company, Mr. Hill
operated his own business providing metallurgical consulting services to the mining industry world-wide. Mr. Hill is a
Fellow of the Australasian Institute of Mining and Metallurgy.
During the last three years, Mr. Hill has not been a director of any other listed companies.
Nelson Chen – Master of Applied Finance, CA
Non-executive Director
Appointed 29 November 2011
Mr. Chen is a Director of Hanlong Resources Limited and a Chartered Accountant in Australia. He holds postgraduate
degrees
joining Hanlong, Mr. Chen spent over 11 years with
PricewaterhouseCoopers, Sydney office, in their audit and M&A advisory practice. Mr. Chen served on the board of
Australia China Business Council, NSW for over six years.
finance and accounting. Prior
to
in
During the last three years, Mr. Chen has been a director of the following listed companies:
- Young Australian Mines Limited* – appointed 23 April 2010.
* Denotes current directorship
18
Directors’ Report
Directors' interests
The interests of Directors in securities of the Company are:
Director
M Hill
N Chen
A Bantock
Fully Paid Ordinary Shares
Options
Performance
Rights
At 30 June 2020
At 30 June 2019
3,963,911
2,647,496
857,895
2,542,858
7,200,000
202,500
1,331,707
2,142,857
200,000
2,000,000
-
-
Shane McBride B.Bus (Acct), FCPA, FGIA, FCG (CS, CGP), MAICD
Chief Financial Officer - Appointed 1 May 2017
Company Secretary - Appointed 8 June 2017
Shane McBride has 38 years of commercial management experience gained in listed Australian public companies
including corporate management, project development and mine site operations management, management and
financial accounting, corporate finance, investor relations and company secretarial functions. He has a BBus (Acct)
degree, is a Fellow of CPA Australia, Fellow of Governance Institute of Australia and The Chartered Governance
Institute; and is a Member of the Australian Institute of Directors.
Mr McBride has been intimately involved with exploration, development, scoping and pre-feasibility studies, and
financing activities. He was the managing director of an ASX listed mining company which acquired and operated an
operating SX/EW Copper Cathode production facility in Queensland, Australia and has substantial experience as a
listed company director.
DIVIDENDS
No dividends have been provided for or paid by the Group in respect of the year ended 30 June 2020 (30 June 2019:
Nil).
PRINCIPAL ACTIVITIES
The principal activities of the Group during the course of the financial year was to create value through exploration
and evaluation of its mineral tenements through the potential application of the Company’s patented U-pgradeTM
uranium beneficiation process to its own mineral tenements and those of third parties.
OPERATING RESULTS FOR THE YEAR
The total loss of the Group attributable to the owners of Marenica Energy Limited for the financial year was
$1,658,605 (2019: $1,296,861).
FINANCIAL POSITION AND SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The Group has significantly improved its balance sheet position during the year after reporting net assets of
$3,924,259 from a net assets position of $503,750 at 30 June 2019. This is as a result of the Company acquiring the
interests in three Australian subsidiaries (“Acquisition Entities”) of Optimal Mining Limited (“Optimal”) which
collectively hold sixteen mining tenements and joint venture interests in twenty-eight mining tenements in Western
Australia and the Northern Territory that are prospective for uranium (“Acquisition Assets”).
Cash on hand at 30 June 2020 was $1,062,967 (2019: $487,862).
19
Directors’ Report
On 4 July 2019, the Company announced that it executed a binding term sheet with Optimal Mining Limited
(“Optimal”) for the acquisition of tenements and minerals resources in Australia (“Acquisition Assets”). Following
shareholder approval from both Marenica and Optimal shareholders, on 13 December 2019, the Company acquired
subsidiary companies of Optimal, which owned the Acquisition Assets, by paying cash of $250,000 and issuing
27,500,000 convertible preference shares (“CPS”). On 16 December 2019, Optimal in-specie distributed the CPS to
its shareholders, at which time the CPS automatically converted into ordinary shares in Marenica. The total cost of
Acquisition Assets at the reporting date was $3,145,885.
Other than the changes mentioned above, there were no significant changes in the state of affairs of the consolidated
entity during the financial year.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
On 3 July 2020, the Company announced that it issued 26,349,989 Placement Options to those who participated in
the Placement which raised $1,001,300. The Placement consisted of two tranches:
(a)
The issue on 17 April 2020 of 13,157,894 Shares at an issue price of $0.038 per Share; and
(b)
The issue on 15 June 2020 of 13,192,095 Shares at an issue price of $0.038 per Share
The Placement Options were granted on the basis of one Option for every Share subscribed. The company also
announced that it issued 1,000,000 Broker Options to the participating brokers. The Placement Options and Broker
Options are exercisable at $0.10 within three years of grant.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and therefore, it is not practicable to estimate the
potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent
on measures imposed by the Australian Government and other countries, such as maintaining social distancing
requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
Other than the matters referred to above, there have been no matters or circumstances that have arisen since the
end of the financial year which significantly affected or may significantly affect:
(i)
(ii)
the Group's operations in future years; or
the results of those operations in future years; or
(iii)
the Group's state of affairs in future years.
LIKELY DEVELOPMENTS AND BUSINESS STRATEGY
The Company intends to continue to explore and evaluate its mineral tenements and potentially apply its patented
U-pgrade™ uranium beneficiation process to the development of those mineral tenements.
ENVIRONMENTAL REGULATIONS
The Company’s environmental obligations are regulated by the laws of the Commonwealth of Australia and the
Republic of Namibia. The Company has complied with its environmental performance obligations. No environmental
breaches have been notified by any Government agency to the date of this Directors’ Report.
SHARE OPTIONS
At the date of this report, the unissued ordinary shares of the Company under option are as follows:
Expiry Date
Exercise Price
Number under Option
13 December 2020
13 December 2020
13 December 2020
30 November 2021
$0.17
$0.17
$0.17
$0.21
20
5,890,000
2,000,000
7,600,000
422,233
Directors’ Report
11 December 2021
30 June 2023
30 June 2023
1 December 2023
$0.17
$0.10
$0.10
$0.17
19,214,900
26,349,989
1,000,000
7,600,000
The Options do not entitle the holder to participate in any share issue of the Company or any other body corporate.
During or since the end of the financial year the Company has not issued any shares as a result of the exercise of
options. In regard to the Directors options with an expiry date of 30 November 2021, the Company is required to fund
the exercise price in the event of exercise.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has agreed to indemnify former and current directors and officers of the Company against all liabilities
to another person and the Company that may arise from their position as directors and officers of the Company and
its controlled entities, except where the liability arises out of conduct involving a wilful breach of duty. The agreement
stipulates that the Company will meet the full amount of such liabilities including costs and expenses.
During the year the Company has paid insurance premium for a Directors and Officers insurance policy negotiated
at commercial terms. The terms of the insurance policies prevent the Company from disclosing the premium amount.
During or since the financial year-end, in respect of any person who is, or has been an officer or auditor of the
Company or a related body corporate the Company has not:
Indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer,
including costs and expenses in successfully defending legal proceedings; or
Paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as an officer for
the costs or expenses to defend legal proceedings.
DIRECTORS' MEETINGS
The number of meetings attended by each Director during the year is as follows:
Directors
Number of
meetings held
while in office
5
5
5
Number of
meetings
attended
5
5
5
Director
M Hill
A Bantock
N Chen
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The auditor’s independence declaration for the year ended 30 June 2020 has been received and is located on the
next page.
NON-AUDIT SERVICES
No non-audit services have been provided by the Company’s auditor.
21
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001
As lead auditor of the audit of Marenica Energy Limited for the year ended 30 June
2020, I declare that, to the best of my knowledge and belief, there have been:
no contraventions of the auditor independence requirements of the Corporations
Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
This declaration is in relation to Marenica Energy Limited and the entities it controlled
during the year.
Rothsay Auditing
Daniel Dalla
Partner
30 September 2020
Liability limited by a scheme approved under Professional Standards Legislation
Remuneration Report – Audited
This remuneration report for the year ended 30 June 2020 outlines remuneration arrangements of the Company and
the Group in accordance with the requirements of the Corporations Act 2001 and its regulations (the Act). This
information has been audited as required by section 308(3C) of the Act.
The remuneration report details the remuneration arrangements for key management personnel (KMP) who are
defined as those persons having authority and responsibility for planning, directing and controlling the major activities
of the Company and the Group, directly or indirectly, including any Director (whether executive or otherwise) of the
parent company, and including the executives in the Parent and the Group receiving the highest remuneration.
For the purposes of this report, the term “executive” includes a chief executive officer (CEO), executive Directors,
senior management and company secretaries of the Parent.
A.
Individual key management personnel disclosures
Details of KMP including the top five remunerated executives of the Parent and Group are set out below:
Key management personnel
(i) Directors
A Bantock
M Hill
N Chen
(ii) Executives
S McBride
Non-executive chairman
Managing director and CEO
Non-executive director
Chief Financial Officer and Company Secretary
B. Principles used to determine the nature and amount of remuneration
The objective of the Company's reward framework is to set aggregate remuneration at a level which provides the
Company with the ability to attract and retain directors and executives of the highest calibre whilst maintaining a cost
which is acceptable to shareholders.
Non-executive Directors
Fees and payments to non-executive Directors reflect the demands which are made on, and the responsibilities of,
the Directors. Non-executive Directors' fees and payments are reviewed by the Board. The Chairman's fees are
determined independently to the fees of non-executive Directors based on comparative roles in the external market.
The Chairman is not present at any discussions relating to determination of his remuneration.
Directors’ fees
Directors' fees are determined within an aggregate Directors' fee pool limit, which is periodically recommended for
approval by shareholders. The maximum currently stands at $300,000 in aggregate. This amount is separate from
any specific tasks the Directors may take on for the Company in the normal course of business, which are charged
at normal commercial rates.
Fees for Directors are not linked to the performance of the Group however, to align all Directors’ interests with
shareholders’ interests; Directors are encouraged to hold shares in the Company and may receive options. This
effectively links Directors’ performance to the share price performance and therefore to the interests of shareholders.
There have been no performance conditions imposed prior to the grant of options which act as an incentive to
increase the value for all shareholders.
Executive remuneration
The Company aims to reward Executives with a level and mix of remuneration commensurate with their position and
responsibilities within the Company and so as to:
Reward executives for Company performance;
Align the interests of executives with those of shareholders; and
Ensure total remuneration is competitive by market standards.
Fixed remuneration is reviewed annually or upon renewal of fixed term contracts by the Board and the process
consists of a review of Company and individual performance, relevant comparative remuneration in the market and
23
Remuneration Report – Audited
internal policies and practices. Executives are given the opportunity to receive their fixed remuneration in a variety of
forms including cash and fringe benefits. It is intended that the manner of payment chosen will be optimal for the
recipient without creating undue cost for the Company.
The objective of variable remuneration provided is to reward executives in a manner which aligns this element of
remuneration with the creation of shareholder wealth. Variable remuneration may be delivered in the form of share
options granted with or without vesting conditions and/or employee performance shares granted subject to the
successful completion, within an appropriate timeframe, of various key tasks.
C. Executive contractual arrangements
M Hill – Managing Director and Chief Executive Officer
A formal written service agreement is in place. Details of Mr Hill’s employment agreement are:
Base salary, exclusive of superannuation, effective 1 May 2012 is $260,000 per annum, reviewable on an
annual basis.
Payment of a termination benefit on early termination by the Company, other than for grave misconduct or
long-term incapacity, equal to three (3) months’ salary.
S McBride – Chief Financial Officer/Company Secretary
Effective 15 March 2020, Mr McBride’s remuneration is based on a fixed monthly retainer of $15,000 for 3 days per
week, with a 2-month notice period for either party.
D. Remuneration of Key Management Personnel (“KMP”)
Fees &
Consulting
Paid
Super-
annuation
Paid
Fees &
Consulting
Accrued
Super-
annuation
Accrued
Share-
based
Payments
30-Jun-2020
Directors
M Hill
A Bantock *
N Chen *
260,000
24,700
41,096
30,822
3,904
2,928
Total Directors
331,918
31,532
Other KMP
S McBride
Total executive KMP
Totals
247,877
247,877
579,795
22,123
22,123
53,655
Total
365,395
65,804
54,554
80,695
20,804
20,804
122,303
485,753
% of
Equity
Based
Payments
22.08%
31.62%
38.13%
25.18%
41,608
41,608
311,608
311,608
13.35%
13.35%
163,911
797,361
20.56%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* Note: Messrs Bantock and Chen agreed to forego their entitlement to director fees for three months from 1 April
2020 to 30 June 2020, as a result of the uncertain impact on the Company’s operations and capital markets, as a
consequence of government imposed restrictions to combat COVID-19 .
24
Remuneration Report – Audited
30-Jun-2019
Directors
M Hill
A Bantock
D Buerger1
N Chen
260,000
57,680
3,750
41,096
24,700
2,820
-
3,904
Total Directors
362,526
31,424
Other KMP
S McBride
Total executive KMP
Totals
1 Retired on 31 July 2018.
168,138
168,138
530,664
15,617
15,617
47,041
Fees &
Consulting
Paid
Super-
annuation
Paid
Fees &
Consulting
Accrued
Super-
annuation
Accrued
Share-
based
Payments
Total
368,409
82,146
3,750
66,646
83,709
21,646
-
21,646
127,001
520,951
% of
Equity
Based
Payments
22.72%
26.35%
-%
32.48%
24.38%
43,292
43,292
227,047
227,047
19.07%
19.07%
170,293
747,998
22.77%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
E. Value of options issued, exercised and expired during the year
Details of vesting profile of options vested or expired during the year and those options unexercised at reporting date
granted as remuneration to current key management personnel of the Company are detailed below:
Year ended 30 June 2020
During the 2020 financial year, the following options lapsed:
Expiry Date
Exercise Price
Number under Option
-
-
-
The following options were exercised during the year:
Expiry Date
Exercise Price
Number under Option
1 December 2019
$0.1806
290,698
The following options were issued during the year:
Expiry Date
Exercise Price
Number under Option
28 November 2023
$0.17
7,600,000
These options were fair valued at $0.036867 using the Black Scholes option pricing model.
Year ended 30 June 2019
During the 2019 financial year, the following options lapsed:
Expiry Date
Exercise Price
Number under Option
26 November 2018
$0.355
320,338
The following options were issued during the year:
Expiry Date
Exercise Price
Number under Option
13 December 2020
$0.17
7,600,000
These options were fair valued at $0.021546 using the Black Scholes option pricing model.
25
Remuneration Report – Audited
F. Shareholdings for Key Management Personnel
30 June 2020
Directors
M Hill
N Chen
A Bantock
Other KMP:
S McBride
30 June 2019
Directors
M Hill
D Buerger 1
N Chen
A Bantock
Other KMP:
S McBride
1 Retired 31 July 2018
Balance at
1 July 2019
Purchased/
(Sold) during
the year
Granted as
remuneration
Balance at
30 June
2020
2,542,858
1,331,707
200,000
1,421,053
1,315,789
657,895
70,000
782,895
4,144,565
4,177,632
-
-
-
-
-
3,963,911
2,647,496
857,895
852,895
8,322,197
Balance at
1 July 2018
Purchased/
(Sold) during
the year
Granted as
remuneration
Balance at
30 June
2019
2,467,147
1,245,242
1,331,707
200,000
18,300
5,262,396
75,711
-
-
-
51,700
127,411
-
-
-
-
-
-
2,542,858
1,245,242
1,331,707
200,000
70,000
5,389,807
G. Option holdings for Key Management Personnel
30 June 2020
Balance at
1 July 2019
Exercised
Lapsed
Issued
Balance at
30 June 2020
Total
Exercisable
Not
exercisable
Vested at 30 June 2020
Directors
M Hill
N Chen
A Bantock
Other KMP
3,600,000
1,292,857
1,100,000
S McBride
2,207,948
8,200,805
-
-
-
-
-
-
3,600,000
7,200,000
7,200,000
3,600,000
3,600,000
(150,000)
1,000,000
2,142,657
2,142,657
1,142,657
1,000,000
(100,000)
1,000,000
2,000,000
2,000,000
1,000,000
1,000,000
-
2,000,000
4,207,948
4,207,948
2,207,948
2,000,000
(250,000)
7,600,000
15,550,605
15,550,605
7,950,605
7,600,000
In regard to 142,857 of the Directors options above, the Company will fund the exercise price in the event of exercise.
26
Remuneration Report – Audited
30 June 2019
Balance at
1 July 2018
Exercised
Issued
Balance at
30 June 2019
Total
Exercisable
Not
exercisable
Vested at 30 June 2019
Directors
M Hill
N Chen
A Bantock
Other KMP
S McBride
-
292,857
100,000
207,948
600,805
-
-
-
-
-
3,600,000
3,600,000
3,600,000
3,600,000
1,000,000
1,292,857
1,292,857
1,292,857
1,000,000
1,100,000
1,100,000
1,100,000
2,000,000
2,207,948
2,207,948
2,207,948
7,600,000
8,200,805
8,200,805
8,200,805
-
-
-
-
-
In regard to 142,857 of the Directors options above, the Company will fund the exercise price in the event of exercise.
H. Performance Rights for Key Management Personnel
30 June 2020
Directors
M Hill
A Bantock
N Chen
Other KMP
S McBride
Balance at
1 July 2019
Issued
Vested
Balance at
30 June 2020
Total
Unvested
202,500
-
-
-
202,500
-
-
-
-
-
-
-
-
-
-
202,500
202,500
202,500
-
-
-
-
-
-
-
-
-
202,500
202,500
202,500
On 14 July 2016, the Company issued Mr Hill 675,000 performance rights with the following hurdles:
270,000 – successful raising of capital for pilot plant construction and operation
202,500 – successful completion of the initial pilot plant programme proving U-pgradeTM works on samples
tested
202,500 – first commercialisation deal on U-pgradeTM
Any unvested performance rights will automatically vest on the occurrence of any of the following events:
the sale by Uranium Beneficiation Pty Ltd of the Intellectual Property comprising the U-pgradeTM process.
the sale by Marenica of all of its shares in Uranium Beneficiation Pty Ltd.
A change of control in Marenica by virtue of any person or entity obtaining a relevant interest within the
meaning of the Corporations Act in more than 50% of the voting shares in Marenica.
In the event of Mr Hill ceasing to be an employee of Marenica or a subsidiary of Marenica, any unvested performance
rights will lapse unless the Board of Marenica otherwise determines, at its discretion, that all or any of the unvested
performance rights shall vest. In any case, the performance rights lapse on 14 July 2023, if they are not vested.
Following the signing of the Technology Licence Agreement with Deep Yellow Limited in 2016, including at the time,
advice of its intention to fund a pilot plant to demonstrate the U-pgradeTM technology on a continuous basis, the
Board determined that the first and third milestones noted above were achieved and 472,500 performance rights
vested on 30 September 2016.
27
28
30 September 2020
Chairman
Andrew Bantock
Signed in accordance with a resolution of the Directors.
End of Remuneration Report
Remuneration Report – Audited
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2020
Continuing operations
Revenue
Interest received
Research and development tax refund
Government cash flow boosts
Other income
Expenses
Exploration and evaluation expenses
Share based employee benefits
Employee benefit expense
Foreign exchange loss
Administration expenses
Depreciation expense
Finance expense
Total expenses
Loss before income tax expense
Income tax (expense)/benefit
Net loss for the year
Other comprehensive income
Total comprehensive loss for the year
Loss for the year is attributable to:
Owners of Marenica Energy Limited
Non-controlling interests
Total comprehensive loss for the year is attributable to:
Owners of Marenica Energy Limited
Non-controlling interests
Note
2020
$
2019
$
4
4
4
4
5
5
5
6
5,740
106,362
100,000
22,208
234,310
14,703
101,654
-
18,336
134,693
(503,541)
(163,911)
(691,501)
(21,355)
(463,751)
(46,003)
(2,853)
(1,892,915)
(1,658,605)
-
(1,658,605)
-
(1,658,605)
(220,574)
(170,293)
(562,543)
(10,419)
(390,302)
(4,317)
(73,106)
(1,431,554)
(1,296,861)
-
(1,296,861)
-
(1,296,861)
(1,658,605)
-
(1,658,605)
(1,296,861)
-
(1,296,861)
(1,658,605)
-
(1,658,605)
(1,296,861)
-
(1,296,861)
Earnings per share
Basic loss per share (cents per share)
21
(1.61)
(1.89)
Diluted losses per share are not disclosed as they are not materially different to basic losses per share.
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
notes to the Financial Statements.
29
Consolidated Statement of Financial Position
As at 30 June 2020
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Plant & equipment
Trade and other receivables
Right-of-use asset
Tenement acquisition cost
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Lease liability
Employee benefits
Total Current Liabilities
Non-Current Liabilities
Lease liability
Employee benefits
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
Note
2020
$
2019
$
19
7
8
7
9
10
11
12
12
1,062,967
65,910
1,128,877
20,248
-
64,247
3,145,885
3,230,380
4,359,257
227,768
22,718
103,318
353,804
42,520
38,674
81,194
434,998
3,924,259
487,862
286,956
774,818
20,886
3,360
-
-
24,246
799,064
170,276
-
91,053
261,329
-
33,985
33,985
295,314
503,750
13
14
15
55,929,259
485,191
(52,490,191)
51,030,575
409,674
(50,936,499)
TOTAL CAPITAL AND RESERVES ATTRIBUTABLE TO THE OWNERS
OF MARENICA ENERGY LIMITED
Non-controlling interests
TOTAL EQUITY
3,924,259
-
3,924,259
503,750
-
503,750
The Consolidated Statement of Financial Position should be read in conjunction with the notes to the Financial Statements.
30
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
30 June 2020
Notes
Issued
Capital
Accumulated
Losses
Reserves
Total
Non-
Controlling
Interests
Total
Equity
Balance at beginning of year
51,030,575
(50,936,499)
409,674
503,750
Adjustment for change in
accounting policy
Balance at beginning of year
– restated
Loss for the year
Other comprehensive
income
Total comprehensive loss
for the year
Transactions with owners in
their capacity as owners:
Issue of shares
Share issue costs
Transfer on exercise or
expiry of equity
Options issued during year
Options lapsed during year
Performance Rights vesting
2
15
-
(827)
51,030,575
(50,937,326)
-
-
-
(1,658,605)
-
(1,658,605)
-
-
-
-
-
-
-
(827)
502,923
(1,658,605)
-
(1,658,605)
5,157,542
(290,283)
(31,105)
-
206,563
206,883
105,740
(105,740)
-
-
5,799
5,799
5,157,542
(290,283)
13, 14
31,105
14
14
14
320
-
-
Balance at end of year
55,929,259
(52,490,191)
485,191
3,924,259
30 June 2019
Notes
Issued
Capital
Accumulated
Losses
Reserves
Total
Non-
Controlling
Interests
Total
Equity
Balance at beginning of year
48,072,158
(49,702,722)
423,299
(1,207,265)
-
-
-
(1,296,861)
-
(1,296,861)
Loss for the year
14
Other comprehensive
income
Total comprehensive loss
for the year
Transactions with owners in
their capacity as owners:
Issue of shares
Share issue costs
Transfer on exercise or
expiry of equity
1,178,000
(153,228)
12, 13
1,933,445
-
-
-
-
-
(1,296,861)
-
(1,296,861)
1,178,000
(153,228)
(163,926)
1,769,519
207,602
207,802
Options issued during year
Options lapsed during year
Performance Rights vesting
13
13
13
200
-
-
63,084
(63,084)
-
-
5,783
5,783
Balance at end of year
51,030,575
(50,936,499)
409,674
503,750
-
-
-
-
-
-
-
-
-
-
-
-
-
503,750
(827)
502,923
(1,658,605)
-
(1,658,605)
5,157,542
(290,283)
-
206,883
-
5,799
3,924,259
-
-
-
-
-
-
-
-
-
-
-
(1,207,265)
(1,296,861)
-
(1,296,861)
1,178,000
(153,228)
1,769,519
207,802
-
5,783
503,750
-
-
-
-
-
-
-
-
The Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the Financial Statements.
31
Consolidated Statement of Cash Flows
For the year ended 30 June 2020
Cash flows from operating activities
Payments to suppliers and employees
Research and development refund received
Government cash flow boosts received
Interest received
Interest paid
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of plant and equipment
Payments for tenement acquisition cost
Investments in subsidiaries
Loans to other entities
Cash generated / (used) in investing activities
Cash flows from financing activities
Proceeds from issue of equity securities
Expenses from issue of equity securities
Repayment of lease liabilities
Cash generated / (used) in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of foreign exchange changes on cash and cash equivalents
Cash at the end of the financial year
19
Note
2020
$
2019
$
(1,614,187)
106,362
50,000
5,741
-
(1,452,084)
(1,255,312)
101,654
-
14,703
(13,205)
(1,152,160)
20
(4,103)
(298,151)
-
-
(302,254)
(11,869)
-
(672)
(250,000)
(262,541)
2,602,872
(229,688)
(44,278)
2,328,906
574,568
487,862
537
1,062,967
1,178,200
(123,564)
-
1,054,636
(360,065)
847,922
5
487,862
The Consolidated Statement of Cash flows should be read in conjunction with the notes to the Financial Statements.
32
Notes to the Financial Statements
For the year ended 30 June 2020
1.
CORPORATE INFORMATION
The financial statements of Marenica Energy Limited (the “Company”) for the year ended 30 June 2020 were
authorised for issue in accordance with a resolution of the Directors on 30 September 2020.
Marenica Energy Limited is a company limited by shares incorporated in Australia whose shares are publicly
traded on the Australian Stock Exchange and the Namibia Stock Exchange.
The nature of operations and principal activities of the Group, comprising Marenica Energy Limited and its
subsidiaries, (“Group”) are described in the Directors’ Report.
2.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the
Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply
with International Financial Reporting Standards as issued by the International Accounting Standards Board
(‘IASB’).
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the
revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative
instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment
property.
Critical Accounting Estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed in Note 3.
Functional and Presentation Currency
These consolidated financial statements are presented in Australian dollars, which are the Company’s
functional currency and the functional currency of the majority of the Group’s current financial transactions.
(b) Going Concern
The Group incurred losses of $1,658,605 (2019: $1,296,861) and net operating cash outflows of $1,452,084
(2019: $1,152,160). These were offset by net cash inflows from financing activities of $2,328,906
(2019:$1,054,636).
The Group’s ability to continue as a going concern and meet its debts and future commitments as and when
they fall due, is dependent on a number of factors, including:
the ability of the Group to obtain financing through equity, debt or hybrid financing, joint ventures or
other financing arrangements
the ability of the Group to sell assets as required.
The financial report has been prepared on a going concern basis. In arriving at this position, the Directors have
had regard to the fact that the Company has, or in the Directors’ opinion will have access to, sufficient cash to
fund administrative and other committed expenditure for a period of not less than 12 months from the date of
this report.
Should the Company not achieve the matters set out above, there is significant uncertainty whether it will be
able to continue as a going concern and therefore whether it will be able to pay its debts as and when they fall
due and realise its assets and extinguish its liabilities in the normal course of business and at the amounts
stated in the financial statements.
33
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
2
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c)
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Marenica
Energy Limited (“Company” or “parent entity”) as at 30 June 2020 and the results of all subsidiaries for the
year then ended. Marenica Energy Limited and its subsidiaries together are referred to in these financial
statements as the Group.
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect
those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using
consistent accounting policies. The effects of all intercompany transactions, balances and unrealised gains on
transactions between entities in the Group are eliminated in full.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in
ownership interest, without loss of control, is accounted for as an equity transaction, where the difference
between the consideration transferred and the book value of the share of the non-controlling interest acquired
is recognised directly in equity attributable to the parent entity.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit
or loss and other comprehensive income, statement of financial position and statement of changes in equity
of the Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if that
results in a deficit balance.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill (if any), liabilities
and non-controlling interest in the subsidiary together with any cumulative translation differences recognised
in equity. The Group recognises the fair value of the consideration received and the fair value of any investment
retained together with any gain or loss in profit or loss.
(d) Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed
in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12
months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are
classified as non-current.
A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there
is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
(e)
Exploration expenses
Exploration and evaluation costs represent intangible assets. Exploration, evaluation and development costs
are expensed as incurred. Acquisition costs related to an area of interest are capitalised and carried forward
to the extent that they are expected to be recouped through the successful development of the area or where
activities in the area have not yet reached a stage which permits reasonable assessment of the existence of
economically recoverable reserves and active and significant operations in, or in relation to, the areas of
interest are continuing.
Costs of site restoration are provided over the life of the facility from when exploration commences and are
included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant,
equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of
the mining permits. Such costs have been determined using estimates of future costs, current legal
requirements and technology on an undiscounted basis.
34
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
2
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of
site restoration, there is uncertainty regarding the nature and extent of the restoration due to community
expectations and future legislation. Accordingly, the costs have been determined on the basis that the
restoration will be completed.
(f)
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-
term, highly liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
(g)
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any provision for impairment. Trade receivables are generally due for settlement
within 30 days.
Other receivables are recognised at amortised cost, less any provision for impairment
(h)
Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight line basis so as to write off the net cost of each asset during their
expected useful life of 3 to 5 years.
An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to
the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or
loss.
(i)
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 remeasurement 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.
(j)
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as
part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are
subsequently measured at either amortised cost or fair value depending on their classification. Classification
is determined based on both the business model within which such assets are held and the contractual cash
flow characteristics of the financial asset unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred
and the Group has transferred substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, its carrying value is written off.
Financial assets at fair value through profit and loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are
classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either:
(i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of
making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value
movements are recognised in profit or loss.
35
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
2
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the
consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as
such upon initial recognition.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss
allowance depends upon the consolidated entity's assessment at the end of each reporting period as to
whether the financial instrument's credit risk has increased significantly since initial recognition, based on
reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month
expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit
losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset
has become credit impaired or where it is determined that credit risk has increased significantly, the loss
allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss
recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls
over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is
recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or
loss.
(k)
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.
(l)
Provisions and employee benefits
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past
event, it is probable the Group will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the reporting date, taking into account the risks and uncertainties
surrounding the obligation. If the time value of money is material, provisions are discounted using a current
pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is
recognised as a finance cost.
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected
to be paid when the liabilities are settled.
36
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
2
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting
date are measured at the present value of expected future payments to be made in respect of services provided
by employees up to the reporting date. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using
market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are
incurred.
(m) Share based payments
The Company provides benefits to Directors, employees, consultants and other advisors of the Company in
the form of share-based payments, whereby the directors, employees, consultants and other advisors render
services in exchange for shares or rights over shares (equity-settled transactions).
The cost of these equity-settled transactions is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is independently determined using the Black-
Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of
dilution, the share price at grant date and expected volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not
determine whether the Group receives the services that entitle the employees to receive payment.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions
linked to the market price of the shares of the Company, if applicable.
The cost of equity-settled transactions is recognised as an expense 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 recipient becomes 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)
the extent to which the vesting period has expired and
(ii) the Company’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 income statement 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 awards that do not ultimately vest, except for awards where vesting is only
conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms
had not been modified. In addition, an expense is recognised for any modification that increases the total fair
value of the share-based payment arrangement, or is otherwise beneficial to the recipient, as measured at the
date of modification.
If an equity-settled award 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 award and designated as a replacement award on the date that it is granted, the cancelled
and new award are treated as if they were a modification of the original award, as described in the previous
paragraph.
(n)
Earnings per share
Basic earnings per share is determined by dividing the profit (loss) after income tax attributable to equity
holders of the Company by the weighted average number of ordinary shares outstanding during the year.
37
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
2
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date; and assumes that the
transaction will take place either: in the principal market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interests. For non-financial assets, the fair value
measurement is based on its highest and best use. Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value, are used, maximising the use
of relevant observable inputs and minimising the use of unobservable inputs. Assets and liabilities measured
at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of the lowest level of input that is significant to the
fair value measurement. For recurring and non-recurring fair value measurements, external valuers may be
used when internal expertise is either not available or when the valuation is deemed to be significant. External
valuers are selected based on market knowledge and reputation. Where there is a significant change in fair
value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification
of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources
of data.
(p)
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount.
(q)
Trade and Other Payables
Trade payables and other accounts payable are recognised when the Group becomes obliged to make future
payments resulting from the purchase of goods and services.
(r)
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction
costs. They are subsequently measured at amortised cost using the effective interest method.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in
the statement of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate
for an equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised
cost basis until extinguished on conversion or redemption. The increase in the liability due to the passage of
time is recognised as a finance cost. The remainder of the proceeds are allocated to the conversion option
that is recognised and included in shareholders equity as a convertible note reserve, net of transaction costs.
The carrying amount of the conversion option is not remeasured in the subsequent years. The corresponding
interest on convertible notes is expensed to profit or loss.
(s)
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
38
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
2
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(t)
Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the
Group: identifies the contract with a customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates of variable consideration and the time
value of money; allocates the transaction price to the separate performance obligations on the basis of the
relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when
or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the
goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such
as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other
contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount'
method. The measurement of variable consideration is subject to a constraining principle whereby revenue
will only be recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty
associated with the variable consideration is subsequently resolved. Amounts received that are subject to the
constraining principle are recognised as a refund liability.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered based on
either a fixed price or an hourly rate.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant period
using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying amount of the financial asset.
Grants
Grant revenue is recognised in profit or loss when the Group satisfies the performance obligations stated within
the funding agreements. If conditions are attached to the grant which must be satisfied before the company is
eligible to retain the contribution, the grant will be recognised in the statement of financial position as a liability
until those conditions are satisfied.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
(u)
Foreign currency translation
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates
at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars
using the average exchange rates, which approximate the rates at the dates of the transactions, for the period.
(v)
Segment reporting
The Group uses a ‘management approach’, under which segment information is presented on the same basis
as that used for internal reporting purposes. Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is
responsible for allocating resources and assessing performance of the operating segments, has been identified
as the Board of Directors.
39
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
2
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(w)
Income tax
The income tax expense or revenue for the year is the tax payable on the current year’s taxable income based
on the notional income tax rate, adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences between tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
A deferred tax asset for unused tax losses is recognised only if it is probable that future taxable amounts will
be available to utilise losses.
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 assets and settle the liability simultaneously.
(x) Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred
is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of
the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in
the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to the tax authority, are presented as operating
cash flows.
(y) New accounting standards and interpretations
(i) New and amended standards adopted by the Company
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
The following Accounting Standards and Interpretations are most relevant to the Group:
AASB 16 Leases
The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases'
and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term
leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised
in the statement of financial position. Straight-line operating lease expense recognition is replaced with a
depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the
recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses
associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117.
However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the
operating expense is now replaced by interest expense and depreciation in profit or loss. For classification
within the statement of cash flows, the interest portion is disclosed in operating activities and the principal
portion of the lease payments are separately disclosed in financing activities. For lessor accounting, the
standard does not substantially change how a lessor accounts for leases.
40
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
2
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been
restated. The impact of adoption on opening retained profits as at 1 July 2019 was as follows:
Operating lease commitments as at 1 July 2019 (AASB 117)
Operating lease commitments discount based on the weighted average incremental
borrowing rate of 5% (AASB 16)
Short-term leases not recognised as a right-of-use asset (AASB 16)
Accumulated depreciation as at 1 July 2019 (AASB 16)
Right-of-use assets (AASB 16)
Lease liabilities - current (AASB 16)
Lease liabilities - non-current (AASB 16)
Tax effect on the above adjustments
Reduction in opening retained profits as at 1 July 2019
1 July 2019
$
78,889
(2,149)
(66)
(25,558)
51,116
(38,639)
(13,304)
-
(827)
When adopting AASB 16 from 1 July 2019, the consolidated entity has applied the following practical
expedients:
applying a single discount rate to the portfolio of leases with reasonably similar characteristics;
accounting for leases with a remaining lease term of 12 months as at 1 July 2019 as short-term leases;
excluding any initial direct costs from the measurement of right-of-use assets;
using hindsight in determining the lease term when the contract contains options to extend or terminate
the lease; and
not apply AASB 16 to contracts that were not previously identified as containing a lease.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January
2020 and early adoption is permitted. The Conceptual Framework contains new definition and recognition
criteria as well as new guidance on measurement that affects several Accounting Standards. Where the
consolidated entity has relied on the existing framework in determining its accounting policies for transactions,
events or conditions that are not otherwise dealt with under the Australian Accounting Standards, the Group
may need to review such policies under the revised framework. At this time, the application of the Conceptual
Framework is not expected to have a material impact on the consolidated entity's financial statements.
3.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually evaluates
its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements and estimates on historical experience and on other various factors it
believes to be reasonable under the circumstances, the results of which form the basis of the carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions and conditions.
Management has identified the following critical accounting policies for which significant judgements, estimates
and assumptions are made. Actual results may differ from these estimates under different assumptions and
conditions and may materially affect financial results or the financial position reported in future periods.
Further details of the nature of these assumptions and conditions may be found in the relevant notes to the
financial statements.
41
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
3
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued)
Share based payment transactions
The Group measures the cost of equity-settled share based payment transactions with employees by reference
to the fair value of the equity instruments at the grant date. The fair value is determined by using a recognised
option valuation model, with the assumptions detailed in Note 14. The accounting estimates and assumptions
relating to equity-settled share based payments would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact expenses and equity.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has
had, or may have, on the consolidated entity based on known information. This consideration extends to the
nature of the products and services offered, customers, supply chain, staffing and geographic regions in which
the Group operates. Other than as addressed in specific notes, there does not currently appear to be either
any significant impact upon the financial statements or any significant uncertainties with respect to events or
conditions which may impact the consolidated entity unfavourably as at the reporting date or subsequently as
a result of the Coronavirus (COVID-19) pandemic.
Income tax
The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement
is required in determining the provision for income tax. There are many transactions and calculations
undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The
consolidated entity recognises liabilities for anticipated tax audit issues based on the consolidated entity's
current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying
amounts, such differences will impact the current and deferred tax provisions in the period in which such
determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity
considers it is probable that future taxable amounts will be available to utilise those temporary differences and
losses.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability.
Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease
or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised,
when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and
circumstances that create an economical incentive to exercise an extension option, or not to exercise a
termination option, are considered at the lease commencement date. Factors considered may include the
importance of the asset to the consolidated entity's operations; comparison of terms and conditions to
prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements;
and the costs and disruption to replace the asset. The consolidated entity reassesses whether it is reasonably
certain to exercise an extension option, or not exercise a termination option, if there is a significant event or
significant change in circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is
estimated to discount future lease payments to measure the present value of the lease liability at the lease
commencement date. Such a rate is based on what the consolidated entity estimates it would have to pay a
third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with
similar terms, security and economic environment.
Employee benefits provision
As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from
the reporting date are recognised and measured at the present value of the estimated future cash flows to be
made in respect of all employees at the reporting date. In determining the present value of the liability,
estimates of attrition rates and pay increases through promotion and inflation have been taken into account.
42
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
3
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued)
Exploration and evaluation costs
Exploration and evaluation costs have been capitalised on the basis that the consolidated entity will commence
commercial production in the future, from which time the costs will be amortised in proportion to the depletion
of the mineral resources. Key judgements are applied in considering costs to be capitalised which includes
determining expenditures directly related to these activities and allocating overheads between those that are
expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered either
through successful development or sale of the relevant mining interest. Factors that could impact the future
commercial production at the mine include the level of reserves and resources, future technology changes,
which could impact the cost of mining, future legal changes and changes in commodity prices. To the extent
that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in
which this determination is made.
4.
REVENUE FROM CONTINUING OPERATIONS
U-pgrade™ -based income
Research and development tax refund
Government cash flow boosts
Interest received
5.
EXPENSES
Loss before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Right-of-use asset
Finance costs
Convertible notes
Lease liability
Net foreign exchange loss
Rental expense relating to operating lease
Minimum lease payments
Superannuation expense
2020
$
2019
$
22,208
106,362
100,000
5,740
18,336
101,654
-
14,703
4,588
41,415
46,003
4,317
-
4,317
-
73,106
2,853
21,355
-
10,419
9,707
41,472
Defined contribution superannuation expense
51,791
56,818
Share-based payments expense
Equity-settled share based payments
163,911
170,293
43
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
6.
INCOME TAX
Loss for year
Tax expense/(benefit) at tax rate of 27.5% (2019: 27.5%)
Tax effect of amounts that are not deductible/taxable in calculating taxable
income
Impact of reduction in future corporate tax rate
Deferred tax assets not brought to account
Revenue losses not brought to account
Income tax expense/(benefit)
DEFERRED TAX
Deferred Tax Assets
at 25% (2019: 27.5%) unless stated otherwise
Provisions and accruals
Capital raising costs
Overseas tax losses (at 32% corporate tax rate)
Australian capital losses carried forward
Australian carried forward revenue losses
Other
2020
$
(1,658,605)
2019
$
(1,296,861)
(456,116)
(356,637)
(4,325)
28,122
754,025
(784,286)
490,702
-
(38,521)
(38,521)
367,036
-
41,466
72,351
706,874
910,848
6,804,657
264
8,536,460
36,671
70,955
574,395
1,001,933
7,185,800
-
8,869,754
The tax benefit of the above Deferred Tax Assets will only be obtained if:
a) The company derives future assessable income or a nature and of an amount sufficient to enable the
benefits to be utilised; and
b) The company continues to comply with the conditions for deductibility imposed by law; and
c) No changes in income tax legislation adversely affect the company in utilising the benefits
Deferred Tax Liabilities
at 25% (2019: 27.5%)
Prepayments
Convertible note
983
-
983
1,081
-
1,081
The above Deferred Tax Liabilities have not been recognised as they have given rise to the carry forward
revenue losses for which the Deferred Tax Asset has not been recognised.
7.
TRADE AND OTHER RECEIVABLES
Current Assets
GST and VAT refundable
Other receivables
Government Cash Flow Boosts
Loans to entities
Rental & Security Bonds
20,029
5,021
37,500
-
3,360
65,910
33,026
3,930
-
250,000
-
286,956
The Company provided Optimal Mining Limited a bridge loan of $250,000 to provide funding for Optimal while
it was completing the sale of its Australian Uranium Assets to Marenica. On 13 December 2019, this amount
became the cash portion of the purchase price of $250,000 of the Australian Uranium Assets and is recognised
as part of the tenement acquisition costs capitalised as a non-current asset during the period (refer to note
10).
44
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
7
TRADE AND OTHER RECEIVABLES (continued)
Non-Current Assets
Amount receivable from sale of Marenica Minerals (Proprietary) Limited
(incorporated in Namibia)
Provision for impairment
Rental & Security Bonds
2020
$
3,425,275
2019
$
3,425,275
(3,425,275)
-
-
(3,425,275)
3,360
3,360
The recoverability of the amount receivable from the sale to the Company’s Black Economic Empowerment
partner Millennium Minerals Pty Ltd of a 5% interest in the Company’s shareholding in Marenica Minerals
(Proprietary) Limited (incorporated in Namibia) is subject to the successful exploitation and development of
the Company’s Marenica Uranium Project. As the project has not yet reached a stage at which this can be
assured, the amount receivable from the purchaser is considered to be impaired.
8.
PLANT AND EQUIPMENT
Cost
Less: Accumulated Depreciation
Net book value
Reconciliations:
116,093
(95,845)
20,248
112,143
(91,257)
20,886
Reconciliations of written down values at the beginning and end of the current and previous financial year are
set out below:
Opening net book amount
Additions
Disposals
Profit on sale
Depreciation charge
Closing net book amount
9.
RIGHT-OF-USE ASSET
Land and buildings – right-of-use
Less: Accumulated depreciation
20,886
3,950
-
-
(4,588)
20,248
105,293
(41,046)
64,247
13,360
11,870
(27)
-
(4,317)
20,886
-
-
-
The Company leases land and buildings for its office in Australia under a two-year agreement and for its
warehouse in Namibia under a five-year agreement. On renewal, the terms of the leases are renegotiated.
The Company also leases land and buildings under a separate agreement of less than two years and is either
short-term or low-value, so has been expensed as incurred and not capitalised as a right-of-use assets.
45
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
10. CAPITALISED TENEMENT ACQUISITION COSTS
Balance at beginning of period/year
Cash component of purchase price
Share-based consideration of purchase price
Acquisition costs
2020
$
-
250,000
2,502,500
393,385
3,145,885
2019
$
-
-
-
-
-
On 11 December 2019, the Company acquired 100% of the interests in the Acquisition Entities of Optimal
Mining Limit which collectively hold tenements and minerals resources (“the Acquisition Assets”) in Western
Australia and the Northern Territory that are prospective for uranium. Refer to Note 17 for the names and
countries of incorporation of the Acquisition Entities. Details of the purchase of assets are as follows:
Amount settled in cash
Fair value of equity shares issued
Acquisition costs
Total
Recognised amount of identifiable net assets:
Capitalised exploration expenditure
Net identifiable assets and liabilities
Goodwill
2020
$
250,000
2,502,500
393,385
3,145,885
3,145,885
3,145,885
-
Capitalised tenement acquisition costs represent the accumulated cost of acquiring the Acquisition Assets.
Ultimate recoupment of these costs is dependent on the successful development and commercial exploitation
or alternatively, sale of the respective areas of interest.
11. PAYABLES
Trade payables
Accrued charges
2020
$
47,317
180,451
227,768
2019
$
69,019
101,257
170,276
Included in Accrued charges is the sum of $45,000 (2019: $97,500) relating to unpaid non-executive Directors
fees (inclusive of superannuation) at year end. The sum of $45,000 relates to the Company’s obligation to fund
the exercise price of options issued to Directors should those specific Directors choose to exercise the options.
Refer to Note 27 for further information on financial instruments. Also included in Accrued charges is the sum
of $15,820 (2019: $nil) relating to the share-based payment valuation of 1,000,000 options issued to the
Company’s on 3 July 2020, which was part consideration of the selling fees for shares issued during the year.
Refer to Note 27 for further information on the shares and options issued.
12. PROVISIONS
Current Liabilities
Provision for annual leave
Non-Current Liabilities
Provision for long service leave
103,318
103,318
38,674
38,674
91,053
91,053
33,985
33,985
46
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
13. CONTRIBUTED EQUITY
(a) Ordinary Shares
Paid up capital – ordinary shares
Capital raising costs capitalised
Movement during the year
Balance at 1 July 2018
Share placement on 24 September 2018
Share placement on 13 November 2018
Share issued to convert converting loan and in lieu of interest on
convertible notes on 13 November 2018
Share options issued on 13 December 2018
Add: Transfer from convertible note reserve
Less: Share issue costs
Balance at 30 June 2019
Balance at 1 July 2019
Share placement on 1 August 2019
Exercise of options on 29 November 2019
In lieu of options exercised on 29 November 2019
Share options issued on 12 December 2019
Convertible preference shares issued to Optimal Mining Limited on 17
December 2019
Share placement on 17 April 2020
Share placement on 15 June 2020
Less: Share issue costs
Balance at 30 June 2020
2020
$
57,497,810
(1,568,552)
55,929,259
Number of
Shares
57,397,824
8,609,674
3,170,326
2019
$
52,308,844
(1,278,269)
51,030,575
$
48,072,158
860,967
317,033
4,034,469
1,769,519
-
-
-
73,212,293
73,212,293
16,012,417
290,698
-
-
27,500,000
13,157,894
13,192,095
-
143,365,397
200
163,926
(153,228)
51,030,575
51,030,575
1,601,242
52,500
31,105
320
2,502,500
500,000
501,300
(290,283)
55,929,259
Ordinary shares participate in dividends and the proceeds on winding up of Marenica Energy Limited in
proportion to the number of shares held. The fully paid ordinary shares have no par value.
At shareholder meetings, when a poll is called, each ordinary share is entitled to one vote otherwise each
shareholder has one vote on a show of hands.
(b) Share Options
Movements in share
options:
Balance at 1 July 2018
Issued during the year
Lapsed during the year
Balance at 30 June 2019
Unlisted,
$0.17
Options
28/11/23
-
Unlisted,
$0.17
Options
10/12/21
-
Unlisted,
$0.21
Options
30/11/21
422,233
Unlisted,
$0.17
Options
13/12/20
-
Unlisted,
$0.17
Options
13/12/20
-
Unlisted,
$0.17
Options
25/05/20
7,309,998
Unlisted,
$0.1806
Options
01/12/19
290,698
-
-
-
-
-
-
-
-
7,890,000
7,600,000
-
-
-
-
-
-
422,233
7,890,000
7,600,000
7,309,998
290,698
Issued during the year
7,600,000
19,214,900
Exercised during the year
Lapsed during the year
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 30 June 2020
7,600,000
19,214,900
422,233
7,890,000
7,600,000
-
47
-
-
-
(290,698)
-
-
(7,309,998)
Unlisted,
$0.355
Options
26/11/18
320,338
-
(320,338)
-
-
-
-
-
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
14. RESERVES
Share-based payments reserve
Convertible note reserve
(A) Share-Based Payments Reserve
Balance at beginning of year:
Options issued during the year
-
In lieu of placement fees
- Directors’ options
Options lapsed/exercised during the year
Performance rights vesting (b)
Balance at end of year:
(i) Share Options
Movements in share options
Balance as at 1 July 2018
Options lapsed
Options issued to placement lead manager
Options issued to specific officers
Options issued
Balance as at 30 June 2019
Options exercised
Options lapsed
Options issued ref. (a) next page
Balance as at 30 June 2020
(ii) Performance Rights
Movements in performance rights
Balance as at 1 July 2018
Rights vesting ref. (b) next page
Balance as at 30 June 2019
Rights vesting ref. (b) next page
Balance as at 30 June 2020
2020
$
2019
$
485,191
-
409,674
-
485,191
409,674
409,674
259,373
48,450
43,092
158,112
164,510
(136,844)
(63,084)
5,799
5,783
485,191
409,674
Number of
options
$
8,343,267
(320,338)
2,000,000
7,600,000
5,890,000
23,512,929
236,478
(63,084)
43,092
164,510
-
380,996
(290,698)
(7,309,998)
26,814,900
42,727,133
(31,105)
(105,740)
206,562
450,713
Weighted
average
exercise
price
$
0.1795
0.3550
0.17
0.17
0.17
0.1708
0.1806
0.17
0.17
0,1704
22,896
5,783
28,679
5,799
34,478
Total (i) & (ii) Share Based Payments Reserve
485,191
(a) On 28 November 2019, 7,600,000 options were granted and exercisable at $0.17 each on or before 28
November 2023, to directors and management of the Company. The fair value of these options is
$0.036867 per option for a total value of $280,189. The vesting condition attached to these options is
continuous employment of directors and management of the Company to 13 December 2020. At the
reporting period date, the amount vested was $158,112. In valuing these options the Company used
the following inputs in the Black Scholes option valuation model.
48
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
14 RESERVES (continued)
Inputs into the Model
Grant date share price
Exercise price
Expected volatility
Option life
Risk-free interest rate
On 10 December 2019, 3,202,483 options were granted and exercisable at $0.17 each on or before 10
December 2021, to a broker as part of the fees relating to a placement of shares and options. The fair value
of these options is $0.015129 per option (a subscription amount of $0.0001 was paid by the broker and this
amount has been taken off the valuation) for a total value of $48,450. In valuing these options the Company
used the following inputs in the Black Scholes option valuation model.
$0.086
$0.170
79.29%
4 years
0.640%
Inputs into the Model
Grant date share price
Exercise price
Expected volatility
Option life
Risk-free interest rate
$0.073
$0.170
79.29%
2 years
0.730%
(b)
As at the reporting date, 202,500 performance rights remain which have not yet vested. However, the
expense relating to the fair value of these performance rights has been spread across their seven-year
life on the assumption that they will vest. If they do not vest, the expense will be reversed.
(B) Convertible Note Reserve
Balance at beginning of year:
Conversion of convertible note and interest in lieu of shares
Balance at end of year:
Nature and purpose of reserves
(i) Share-based payments reserve
2020
$
2019
$
-
-
-
163,926
(163,926)
-
The share-based payments reserve represents the fair value of the actual or estimated number of unexercised
equity instruments granted to management and consultants of the Company recognised in accordance with
the accounting policy adopted for share-based payments and the cash price of rights/options issued to
investors.
(ii) Convertible note reserve
The convertible note reserve represented the fair value of the option portion of the convertible note.
15. ACCUMULATED LOSSES
Accumulated losses at beginning of year
Adjustment for change in accounting policy (note 2)
Net losses attributable to members of the parent entity
Options lapsed during the year
Accumulated losses at the end of the year
2020
$
(50,936,499)
(827)
2019
$
(49,702,722)
(163,926)
(1,658,605)
105,740
(1,296,861)
63,084
(52,490,191)
(50,936,499)
49
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
16. SEGMENT INFORMATION
The Group operates predominately in the mineral exploration and evaluation industry in Namibia. For
management purposes, the Group is organised into one main operating segment which involves the
exploration and evaluation of uranium deposits in Namibia. All of the Group’s activities are inter-related and
discrete financial information is reported to the Board (Chief Operating Decision Maker) as a single segment.
Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The
financial results from this segment are equivalent to the financial results of the Group as a whole.
17. RELATED PARTIES
(a) Subsidiaries
The consolidated financial statements include the financial statements of Marenica Energy Limited and the
subsidiaries listed in the following table:
Name
Marenica Energy Namibia (Pty) Ltd
Marenica Minerals (Pty) Ltd
Marenica Ventures (Pty) Ltd
Uranium Beneficiation Pty Ltd
Metals Namibia Pty Ltd
Africa Uranium Ltd (note 10)
Jackson Cage Pty Ltd (note 10)
Northern Territory Uranium Pty Ltd (note 10)
(b) Ultimate parent
Country of
Incorporation
Namibia
Namibia
Namibia
Australia
Namibia
Australia
Australia
Australia
% Equity
Interest
2020
100%
% Equity
Interest
2019
100%
75%
100%
100%
100%
100%
100%
100%
75%
100%
100%
100%
-
-
-
Marenica Energy Limited is the ultimate Australian parent entity and ultimate parent of the Group.
(c) Key management personnel
Details relating to key management personnel, including remuneration paid, are included in Note 23 and the
audited remuneration report section of the Directors’ report.
18. COMMITMENTS FOR EXPENDITURE
Mineral Tenement Lease
Exploration expenditure
The Company has been granted tenements in Namibia which have the
following exploration commitments
Within one year
Between 1 and 5 years
Lease commitments - operating
Within one year
Between 1 and 5 years
2020
$
2019
$
638,373
671,123
1,309,496
440,492
993,385
1,433,877
26,535
49,108
75,643
40,386
13,440
53,826
50
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
19. CASH AND CASH EQUIVALENTS
Cash as at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related
items in the Statement of Financial Position as follows:
Cash at bank and on deposit
Balance per statement of cash flows
2020
$
1,062,967
1,062,967
2019
$
487,862
487,862
20. RECONCILIATION OF LOSS AFTER INCOME TAX TO CASH FLOWS USED IN OPERATING
ACTIVITIES
Operating Profit (Loss)
A dd non-cash items
Depreciation
Interest on unwinding of lease liability
Share-based payments
Amortisation of convertible note
Unrealised foreign exchange loss
D ecrease/increase in operating assets and liabilities:
Receivables
Trade and other payables
Provisions
Accrued interest
Net cash (outflow) from operating activities
(1,658,605)
(1,296,861)
45,634
2,713
163,911
-
1,614
4,317
-
132,330
23,541
4,952
(23,243)
(1,062)
16,954
-
(1,452,084)
(28,917)
(132,707)
58,697
82,488
(1,152,160)
21. EARNINGS PER SHARE
(a) Basic earnings per share – cents per share
Loss attributable to the ordinary equity holders of the Company
(1.61)
(1.89)
(b) Diluted earnings per share
Diluted earnings per share are not disclosed as they are not materially different to basic earnings per share.
(c) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares outstanding during the year
used in calculation of basic earnings per share
103,291,964 68,554,455
22. AUDITORS’ REMUNERATION
During the year the following fees were paid or payable for services provided by the auditors:
(a) Audit services
Audit and review of financial reports under the Corporations Act 2001
Audit and review of financial reports of Namibian subsidiaries
29,500
6,769
16,200
4,524
(b) Other services
Income tax return preparation
Total remuneration of auditors
-
36,269
-
20,724
51
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
23. KEY MANAGEMENT PERSONNEL
Compensation for Key Management Personnel
The aggregate compensation made to directors and other members of key management personnel of the
Group is set out below:
Short term employee benefits
Post-employment benefits
Share-based payments
Total compensation
24. SHARE BASED PAYMENTS
Set out below are summaries of options granted during the year:
2020
$
579,795
53,655
163,911
797,361
2019
$
530,664
47,041
170,293
747,998
2020
Grant date Expiry date
Exercise
price
Balance at the
start of the
year
Granted
Expired/
forfeited/
other
Balance at
the end of the
year
3/12/2019
12/12/2019
1/12/2023
11/12/2021
$0.17
$0.17
-
-
7,600,000
19,214,900
2019
Grant date Expiry date
Exercise
price
Balance at the
start of the
year
Granted
Expired/
forfeited/
other
13/12/2018
13/12/2018
13/12/2020
13/12/2020
$0.17
$0.17
-
-
7,890,000
7,600,000
-
-
-
-
7,600,000
19,214,900
Balance at
the end of the
year
7,890,000
7,600,000
Set out below are the options exercisable at the end of the financial year:
Grant date
Expiry date
30/11/2015
22/11/2017
25/05/2018
13/12/2018
13/12/2018
3/12/2019
11/12/2019
1/12/2019
30/11/2021
25/05/2020
13/12/2020
13/12/2020
28/11/2023
10/12/2021
2020
Number
-
422,233
-
7,890,000
7,600,000
7,600,000
19,214,900
42,727,133
2019
Number
290,698
422,233
7,309,998
7,890,000
7,600,000
-
-
23,512,929
The weighted average exercise price during the financial year was $0.1704 (2019: $0.1708).
The weighted average remaining contractual life of options outstanding at the end of the financial year was
1.44 years (2019: 1.29 years).
52
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
25. PARENT ENTITY FINANCIAL INFORMATION
(a) Information relating to Marenica Energy Limited
Current Assets
Non-Current Assets
Total Assets
Current Liabilities
Non-Current Liabilities
Total Liabilities
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Loss for the year
Total comprehensive income
(b) Guarantees
2020
$
1,100,675
3,290,202
4,390,877
2019
$
748,855
20,886
769,741
(342,494)
(257,572)
(38,674)
(33,985)
(382,168)
(291,557)
4,009,709
478,184
55,929,259 51,030,575
485,191
409,674
(52,404,741) (50,962,065)
4,009,709
478,184
(1,547,589)
(1,328,335)
(1,547,589)
(1,328,335)
No guarantees have been entered into by the Company in relation to the debts of its subsidiaries.
(c) Commitments
Commitments of the Company as at reporting date are disclosed in Note 18 to the financial statements.
26. CONTINGENT LIABILITIES
Mallee Minerals Pty Limited
On 7 April 2006, the Company entered into an introduction agreement with Mallee Minerals Pty Limited in
respect of a mineral licence in Namibia (Project). Upon the Company receiving a bankable feasibility study in
respect of the Project or the Company delineating, classifying or reclassifying uranium resources in respect of
the project, the Company will pay to Mallee Minerals Pty Limited:
(i) $0.01 per tonne of uranium ore classified as inferred resources in respect of the Project; and a further
(ii) $0.02 per tonne of uranium ore classified as indicated resources in respect of the Project; and a further
(iii) $0.03 per tonne of uranium ore classified as measured resources in respect of the Project.
Pursuant to this agreement, no payments were made during the year ended June 2020 (2019: nil). In total
$2,026,000 has been paid under this agreement.
Metals Australia Limited
In May 2018, the Company signed binding agreement to purchase the Mile 72 Uranium Project (EPL 3308)
from Metals Australia Limited. The agreement includes a provision to pay a gross production preferential
dividend of 1% on any production from EPL 3308.
Jackson Cage Royalties
On 13 December 2019, Marenica acquired Jackson Cage Pty Ltd (“Jackson Cage”), one of the Acquisition
Entities acquired from Optimal Mining Limited. Jackson Cage is liable for a 1% gross royalty payable to Paladin
Energy Limited and a 1% gross royalty payable to Areva Resources Australia Pty Ltd on any production from
the Oobagooma Project in Western Australia (being tenement E04/2297) and a 1.5% gross royalty payable to
Paladin NT Pty Ltd on any production from the Pamela/Angela Project in the Northern Territory (being
tenement application EL25759 and tenement EL25758).
53
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
26 CONTINGENT LIABILITIES (continued)
Marenica Namibia VAT
Marenica Energy Namibia Pty Ltd (“Marenica Namibia”), a subsidiary of the Group, received an equivalent
amount in Australian Dollars of $26,470 that relate to Namibian VAT debtors from prior reporting periods which
were previously not considered to be recoverable. Marenica Namibia will be liable to pay the stated amount
back if the Namibian VAT authorities issue a letter demanding the stated amount to be repaid
27. EVENTS AFTER THE REPORTING PERIOD
On 3 July 2020, the Company announced that it issued 26,349,989 Placement Options to those who
participated in the Placement which raised $1,001,300. The Placement consisted of two tranches:
-
-
The issue on 17 April 2020 of 13,157,894 Shares at an issue price of $0.038 per Share; and
The issue on 15 June 2020 of 13,192,095 Shares at an issue price of $0.038 per Share
The Placement Options were granted on the basis of one Option for every Share subscribed. The company
also announced that it issued 1,000,000 Broker Options to the participating brokers. The Placement Options
and Broker Options are exercisable at $0.10 within three years of grant.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and it is not practicable to estimate the
potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is
dependent on measures imposed by the Australian Government and other countries, such as maintaining
social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
Other than the matters referred to above, there have been no matters or circumstances that have arisen since
the end of the financial year which significantly affected or may significantly affect:
(i)
the Group's operations in future years; or
(ii)
the results of those operations in future years; or
(iii) the Group's state of affairs in future years.
28.
FINANCIAL INSTRUMENTS
Overview – Risk Management
This note presents information about the Group’s exposure to credit, liquidity and market risks, its objectives,
policies and processes for measuring and managing risk and the management of capital.
The Group does not use any form of derivatives as it is not at a level of exposure that requires the use of
derivatives to hedge its exposure. Exposure limits are reviewed by management on a continuous basis. The
Group does not enter into or trade financial instruments, including derivative financial instruments, for
speculative purposes.
The Board of Directors of the Company has overall responsibility for the establishment and oversight of the
risk management framework. Management monitors and manages the financial risks relating to the operations
of the Company and the Group through regular reviews of the risks.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations and arises principally from the Group’s receivables from customers and
investment securities. At 30 June 2020, there were no significant concentrations of credit risk.
Cash and cash equivalents
The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties
that have an acceptable credit rating.
Trade and other receivables
As the Group operates primarily in exploration activities, it does not have any significant trade receivables and
therefore is not exposed to credit risk in relation to trade receivables.
The Group where necessary establishes an allowance for impairment that represents its estimate of incurred
losses in respect of other receivables and investments. Management does not expect any counterparty to fail
to meet its obligations.
54
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
28
FINANCIAL INSTRUMENTS (continued)
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s
maximum exposure to credit risk at the reporting date was:
Trade and other receivables
Cash and cash equivalents
Impairment Losses
None of the Group’s receivables are past due (2019: $ nil).
Liquidity Risk
Note
7
19
2020
$
2019
$
65,910
290,316
1,062,967
487,862
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 Group’s reputation.
The Group manages liquidity risk by maintaining adequate cash reserves from funds raised in the market and
by continuously monitoring forecast and actual flows. Apart from the convertible note, the Group does not have
any significant external borrowings.
The Group will need to raise additional capital in the next 12 months to meet forecast operational and
development activities. The decision on when and how the Group will raise future capital will depend on market
conditions existing at that time.
The following are the contractual maturities of financial liabilities, including estimated interest payments and
excluding the impact of netting agreements:
30 June 2020
Note
Trade and other payables
Directors Fees
11
11
30 June 2019
Note
Trade and other payables
Directors Fees
11
11
Carrying
amount
182,768
45,000
Carrying
amount
72,776
97,500
Contractual
cash flow
182,768
45,000
Contractual
cash flow
72,776
97,500
6 months
or less
182,768
-
6 months
or less
72,776
52,500
>12
months
-
45,000
>12
months
-
45,000
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market
risk management is to manage and control market risk exposure within acceptable parameters, while
optimising the return.
Currency Risk
The Group’s exposure to currency risk at 30 June 2020 on financial assets denominated in Namibian dollars
was nil (2019: nil) which amounts are not hedged. The effect of future movements in the exchange rate for
Namibian dollars on the Group’s financial position and results of fully expensed exploration and evaluation
activities is likely to be negligible.
Interest Rate Risk
The Group is exposed to interest rate risk (primarily on its cash and cash equivalents), which is the risk that a
financial instrument’s value will fluctuate as a result of changes in the market interest rates on interest-bearing
financial instruments. The Group does not use derivatives to mitigate these exposures.
The Company adopts a policy of ensuring that as far as possible it maintains excess cash and cash equivalents
on short term deposit at interest rates maturing over 30 to 90 day rolling periods.
55
Notes to the Financial Statements (continued)
For the year ended 30 June 2020
28
FINANCIAL INSTRUMENTS (continued)
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
Fixed rate instruments
Financial assets – cash and cash equivalents
Variable rate instruments
Financial assets – cash and cash equivalents
Fair value sensitivity analysis for fixed rate instruments
Carrying Amount
2019
$
2020
$
-
300,000
1,062,967
187,862
The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or
loss or through equity, therefore a change in interest rates at the reporting date would not affect profit or loss
or equity.
Cash flow sensitivity analysis for variable rate instruments
A change of 50 basis points (2019: 50 basis points) in interest rates at the reporting date would have increased
(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other
variables remain constant. The analysis is performed on the same basis for 2020.
30 June 2020
Variable rate instruments
30 June 2019
Variable rate instruments
Profit or loss
Equity
50bp
increase
5,315
50bp
increase
939
50bp
decrease
(5,315)
50bp
decrease
(939)
50bp
increase
5,315
50bp
increase
939
50bp
decrease
(5,315)
50bp
decrease
(939)
Fair Value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Commodity Price Risk
The Group operates primarily in the exploration and evaluation phase and accordingly the Group’s financial
assets and liabilities are subject to minimal commodity price risk.
Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern, so as to maintain a strong capital base sufficient to maintain future exploration and development of
its projects. The Group’s focus has been to raise sufficient funds through equity or debt to fund its exploration
and evaluation activities.
There were no changes in the Group’s approach to capital management during the year. Risk management
policies and procedures are established with regular monitoring and reporting.
The Group is not subject to externally imposed capital requirements.
29.
FAIR VALUE MEASUREMENT
Fair value hierarchy
The carrying amounts of trade and other receivables and trade and other payables are assumed to
approximate their fair values due to their short-term nature.
56
Directors’ Declaration
The Directors of the Company declare that:
1.
the financial statements, notes and additional disclosures included in the Directors’ Report designated as
audited, of the Company and of the Group are in accordance with the Corporations Act 2001, including:
a. complying with Accounting Standards and the Corporations Regulations 2001; and
b. giving a true and fair view of the Company’s and Group’s financial position as at 30 June 2020 and
of their performance for the year ended on that date.
2.
in the Directors' opinion there are reasonable grounds to believe that the Company and Group will be able to
pay their debts as and when they become due and payable.
3.
the financial report also complies with International Financial Reporting Standards.
4.
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 made in accordance with a resolution of the board of Directors.
On behalf of the board.
Andrew Bantock
Chairman
Perth
30 September 2020
57
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
MARENICA ENERGY LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Marenica Energy Limited (“the Company”) and its controlled entities
(“the Group”) which comprises the statement of financial position as at 30 June 2020, the statement of
profit or loss and other comprehensive income, the statement of changes in equity and the statement of
cash flows for the year then ended on that date and notes to the financial statements, including a summary
of significant accounting policies and the directors’ declaration of the Company.
In our opinion the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i) 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
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under these
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report
section of this report. We are independent of the Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and
Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the “Code”) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the Company, would be in the same terms if given to the directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
MARENICA ENERGY LIMITED (continued)
Key Audit Matter – Cash and Cash Equivalents
How our Audit Addressed the Key Audit Matter
The Group’s cash and cash equivalents make up 94%
of current assets by value and are considered to be
the key driver of the Group’s operations.
Our procedures over the existence of the Group’s
cash and cash equivalents included but were not
limited to:
We do not consider cash and cash equivalents to be
at a high risk of significant misstatement or to be
subject to a significant level of judgement.
However due to their materiality in the context of
the financial statements as a whole, they are
considered to be the area which had an effect on
our overall strategy and allocation of resources in
planning and completing our audit.
Key Audit Matter – Exploration and evaluation
expenditure
During the year the Group has acquired a 100%
interest in the Australian Uranium Assets of Optimal
Mining Limited which hold tenements and mineral
resources.
We do not consider the acquisition of the entities
and underlying tenements to be at a high risk of
significant misstatement, or to be subject to a
significant level of judgement.
However due to the materiality in the context of
the financial statements as a whole, this is
considered to be an area which had an effect on our
overall strategy and allocation of resources in
planning and completing our audit.
Documenting and assessing the processes and
controls in place to record cash transactions;
Testing a sample of cash payments to
determine they were bona fide payments,
were properly authorised and recorded in the
general ledger; and
Agreeing balances to independent
confirmations.
We have also assessed the appropriateness of the
disclosures included in the financial report.
How our Audit Addressed the Key Audit Matter
Our procedures in assessing exploration and
evaluation expenditure included but were not
limited to the following:
We assessed exploration and evaluation
expenditure with reference to AASB 6
Exploration for and Evaluation of Mineral
Resources;
We assessed the treatment of the
acquisition with reference to AASB 3
Business Combinations;
We tested a sample of exploration and
evaluation expenditure to supporting
documentation to ensure they were bona
fide payments; and
We documented and assessed the processes
and controls in place to record exploration
and evaluation transactions.
We have also assessed the appropriateness of the
disclosures included in the financial report.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
MARENICA ENERGY LIMITED (continued)
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2020, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Directors’ Responsibility for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with the Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or cease operations,
or have no realistic alternative but to do so.
Auditor’s Responsibility for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at: www.auasb.gov.au/Home.aspx.
We communicate with the directors regarding, amongst other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
MARENICA ENERGY LIMITED (continued)
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe those matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communications.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the remuneration report included in the directors’ report for the year ended 30 June 2020.
In our opinion the remuneration report of Marenica Energy Limited for the year ended 30 June 2020 complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Rothsay Auditing
Dated 30 September 2020
Daniel Dalla
Partner
Additional ASX Information
The following additional information is required by the Australian Securities Exchange and is current
as at 6 September 2020.
(a) Distribution schedule and number of holders of equity securities
Fully Paid
Ordinary Shares
(MEY)
Unlisted Options
– $0.21
30/11/2021
Unlisted Options
– $0.17
13/12/2020 (A)
Unlisted Options
– $0.17
13/12/2020 (B)
Unlisted Options
- $0.17
01/12/2023
Unlisted Options
- $0.17
11/12/2021
Unlisted Options
- $0.10
30/06/2023
Performance
Rights
1 – 1,000
1,001 –
5,000
5,001 –
10,000
10,001 –
100,000
100,001 –
and over
Total
3,815
843
243
405
186
5,492
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
2
29
21
-
-
4
4
16
32
3
-
47
1
3
50
4
4
48
50
1
The number of holders holding less than a marketable parcel of fully paid ordinary shares 4,736.
62
Additional ASX Information
(b) 20 Largest holders of quoted equity securities
The names of the twenty largest holders of fully paid ordinary shares (ASX code: MEY) are:
Rank Name
Shares
% of Total
Shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Hanlong Resources Limited
11,635,072
Retzos Executive Pty Ltd
Amax Holdings Pty Ltd
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