23 October 2020
The Manager Companies
ASX Limited
20 Bridge Street
SYDNEY NSW 2000
Dear Sir/Madam
(87 pages by email)
ANNUAL REPORT AND NOTICE OF AGM
In accordance with Listing Rule 4.7 and 3.17, I attach the Company’s Annual Report for the year ended 30
June 2020 and the Company’s Notice of Annual General Meeting to be held at 11 am on 25 November 2020.
Yours sincerely
Marcelo Mora
Company Secretary
pjn10541
Equus Mining Limited ABN 44 065 212 679
Level 2, 66 Hunter Street, Sydney NSW 2000, Australia
T: +61 2 9300 3366 F: +61 2 9221 6333
EQUUS MINING LIMITED
and its controlled entities
ABN 44 065 212 679
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Annual Report
2020
Contents
Corporate Directory
Chairman and Managing Director’s Letter
Review of Operations
Corporate Governance Statement
Directors’ Report
Lead Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Stock Exchange Information
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Equus Mining Limited
Corporate Directory
Directors
Mark Lochtenberg
John Braham
Damien Koerber
Robert Yeates
Company Secretary
Marcelo Mora
Non-Executive Chairman
Managing Director
Executive Director – Chief Operating Officer
Non-Executive Director
Principal Place of Business and Registered Office
Level 2
66 Hunter Street
Sydney NSW 2000
Australia
Telephone:
Facsimile:
Email address:
Web site:
Share Registry
(61 2) 9300 3366
(61 2) 9221 6333
info@equusmining.com
www.equusmining.com
Advanced Share Registry Limited
110 Stirling Highway
Nedlands, Western Australia 6009
Telephone:
Facsimile:
(61 8) 9389 8033
(61 8) 9262 3723
Auditors
KPMG
Level 16, Riparian Plaza
71 Eagle Street
Brisbane QLD 4000
Stock Exchange Listings
Australian Securities Exchange
Berlin and Frankfurt Securities Exchanges
(Third Market Segment)
(Code – EQE)
Annual Report 2020
1
Chairman and Managing Director’s Letter
Dear fellow shareholders, it gives us great pleasure to present the 2020 Annual Report
for Equus Mining Limited (ASX:EQE) (Equus or Company).
Late last year the Company signed an option agreement
with Mandalay Resources to acquire the Cerro Bayo Mine
district and plant infrastructure in Southern Chile. The
option agreement means Equus has up to three years to
finalise the acquisition, and the flexibility to take over
the project at any time.
In a world with low interest rates and strong investor
appetite for commodities, the Company’s focus for 2020
is clear - entering the burgeoning precious metals super-
cycle as a gold-silver producer in our own right.
The Company is well placed to achieve this goal with the
option agreement including the Cerro Bayo processing
plant, which has a daily capacity of 1,500 tonnes,
producing approximately 31 tonnes of high grade
gold-silver concentrate in a simple two-step crushing,
grinding, and flotation process.
The plant, which has produced about 600,000oz of gold
and 45 million ounces of silver since 1995, has been on
care and maintenance since mid-2017. The Company
was further buoyed by the news that Mandalay plans to
commence processing of low-grade stockpiles by early
2021 at an initial rate of 40,000 tonnes per month.
To achieve a production re-start, the Company has
begun the process of delineating the potential initial
resources. Management have been executing a dual-
track development strategy to methodically uncover
new ounces within walking distance of the Cerro Bayo
plant, combined with a review of historical data and new
drilling at the historically mined Taitao Pit.
To this end, the exploration that has taken place,
combined with the historical data review will be used to
complete a JORC compliant Mineral Resource Estimate,
due in fourth quarter of 2020, which will underpin the
mine re-start study which will likely be finished in
Q1 2021.
On the exploration front it was exciting to see the duel-
track strategy deliver strong results, with a standout
drill intersection at the greenfields Droughtmaster
Prospect returning 3.81m at 20.4 g/t gold and 55.5 g/t
silver. Results at Droughtmaster to date confirm the
area’s potential and are interpreted to relate to the
upper portions of a wide, large-scale epithermal gold
system. The Company is already planning further drilling
at Droughtmaster, with a second phase of 2,500m
follow-up drilling planned.
2
Equus Mining Limited Chairman and Managing Director’s Letter
During the period, the Company also undertook drilling
programs beneath the historic Taitao Pit, with 1,385m of
diamond drilling at NE and Central Taitao, better results
included: 19m at 1.26 g/t gold and 10.0 g/t silver from
68.5m.
Taitao was mined between 1995 to mid-2000, when the
gold price averaged ~US$300/oz and silver ~US$5/oz.
The current price for gold, circa US$1,700/oz (+580%),
and silver, circa US$17.50/oz (+250%) present the
opportunity for Equus to become a significant
and profitable producer in a world class gold-silver
epithermal district.
It has been pleasing to watch the significant
development in the Company’s strategy and we firmly
believe Cerro Bayo represents one of the most advanced
gold-silver projects on the ASX. With resource and
re-start studies currently being completed, considering
the close proximity to the processing plant, the next
six months of activity have the potential to deliver
significant value for shareholders as we look to become a
profitable near-term gold and silver producer.
We are greatly appreciative of your support throughout
2019-20 and believe that the company will continue
to increase value for shareholders over the upcoming
year. We also thank our fellow board members and
management as well as our in-country staff for all their
efforts and success during the past year.
Yours Sincerely,
Mark H. Lochtenberg
Non-Executive Chairman
John Braham
Managing Director
3
Annual Report 2020 Review of Operations
THE CERRO BAYO PROJECT
In late June 2019, the Company announced it had
executed an agreement with Mandalay Resources
Corporation (TSX:MND, OTCQB: MNDJF) for a 3-year
option to acquire all the mining properties resources and
mine infrastructure at Mandalay’s Cerro Bayo project
in Southern Chile1. The 3-year option agreement is
comprised of an initial 18-month period commencing
June 2020 to January 2022, with an 18-month extension
from January 2022 until June 2023 on agreement with
Mandalay2.
At any time during the option period, the Company
can exercise its option to acquire all the mining
properties, resources and mine infrastructure at Cerro
Bayo including the 1,500 tpd processing plant, which is
currently on care and maintenance.
The Cerro Bayo Project lies within a premier world
class epithermal silver-gold district in southern Chile
(Figures 1, 2), centred approximately ~10km west of
the township of Chile Chico. Throughout the 295km²
Cerro Bayo mining property there are 9 historical
mines located within 15km of the Cerro Bayo 1,500
tpd flotation processing plant for which historical
production to date totals approximately 0.65Moz Au
and 45Moz Ag between 1995-20173.
Figure 1 – Cerro Bayo Claim Regional Location
ASX Announcement – EQUUS EXECUTES AGREEMENT TO EXPLORE AND OPTION TO ACQUIRE MANDALAY RESOURCES CORPORATION’S CERRO BAYO MINING PROJECT
https://wcsecure.weblink.com.au/pdf/EQE/02117478.pdf
ASX Announcement – BROAD ZONES OF SHALLOW GOLD-SILVER MINERALISATION CONFIRMED BENEATH TAITAO PIT AT CERRO BAYO
https://wcsecure.weblink.com.au/pdf/EQE/02247975.pdf
Based on Mandalay Resources Corporation, Cerro Bayo Mine NI 43-101 Technical Reports dated May 14, 2010. & March 21, 2017 Report #2699
1
2
3
4
Equus Mining Limited
Review of Operations
Figure 2 – Cerro Bayo Claim Area, with Brownfields/Greenfields targets, historical mines and interpreted
geology including faults and veins
DEVELOPMENT STRATEGY
The Company is implementing a dual-track strategy
of brownfields resource evaluation and Brownfields/
Greenfields exploration to define sufficient resources to
sustain a potential mine restart.
The Company is also reviewing other brownfields
exploration targets along strike from previously partially
mined vein systems within a 2.5km radius of the
processing plant.
The Cerro Bayo claim area contains numerous historic
mines including the Taitao Pit area and the Marcela
Mine for which the latter hosts Remaining NI 43.101
compliant Measured and Indicated Resources of 21.8Koz
gold at 2.53 g/t gold and 2.74 Moz silver at 318 g/t silver4.
The Taitao Pit was historically mined up to mid-2000
with the gold price circa US$300/oz and silver US$5/
oz. The current gold price at circa US$1,700/oz (+580%)
and silver US$17.50/oz (+250%)5, paired with potential
operational efficiencies, highlights the compelling
opportunity for Equus to become a profitable near-term
gold-silver producer.
Post reporting period, the Company announced that
Mandalay Resources planned to commence processing of
low-grade stockpiles in early Q4 2020 at an initial rate of
40Kt per month6.
The results of this processing campaign will provide
Equus with valuable insight on the plant in operation
and its potential profitability, with valuable additional
confirmatory data to be included in the re-start study.
4
5
6
Resource based on Mandalay Resources Corporation, Cerro Bayo Mine NI 43-101 Technical Reports dated May 14, 2010. & March 21, 2017
ASX Announcement – KITCO HISTORICAL GOLD PRICE CHART 2000-2020
ASX Announcement – DRILLING CONFIRMS BROAD ZONES OF SHALLOW MINERALISATION BELOW TAITAO PIT
https://wcsecure.weblink.com.au/pdf/EQE/02256113.pdf
5
Annual Report 2020 Review of Operations
Under Equus’s potential re-start scenario, both the
Taitao Open Pit and Marcela Mines are expected to
provide initial supply ‘feeder’ ore to the Cerro Bayo
processing plant, which has capacity to process 1,500
tonnes per day.
BROWNFIELDS DRILLING
In mid-April, the Company announced it had begun
a drilling program at the Taitao Pit7, which currently
comprises five contiguous, shallow open pits which
extend over approximately 1.2km length and up to 260m
wide. The Taitao Pit was historically mined to relatively
shallow depths of approximately 35-45m (Figure 3, 4),
which focused on narrow high-grade veining enveloped
by bulk tonnage stockwork vein and hydrothermal
breccia style mineralisation.
During April and May, the Company completed 1,385m
of diamond drilling with results confirming shallow and
broad mineralised zones8, potentially suitable for an
‘open-pittable’ production scenario.
The drilling, combined with 60,000m of historical surface
and underground tunnel-based drilling data, will allow
the Company to complete a JORC compliant Mineral
Resource Estimate (MRE) to form the basis of a mine-
restart study.
Figure 3 – Cerro Bayo Project - Diamond Drilling within the historic Taitao Pit
ASX Announcement – SHALLOW HIGH-GRADE GOLD-SILVER DRILL RESULTS FROM DROUGHT MASTER PROSPECT AND COMMENCEMENT OF DRILLING AT
TAITAO PIT
https://wcsecure.weblink.com.au/pdf/EQE/02225391.pdf
ASX Announcement – BROAD ZONES OF SHALLOW GOLD-SILVER MINERALISATION CONFIRMED BENEATH TAITAO PITAT CERRO BAYO
https://wcsecure.weblink.com.au/pdf/EQE/02247975.pdf
ASX Announcement – DRILLING CONFIRMS BROAD ZONES OF SHALLOW MINERALISATION BELOW TAITAO PIT
https://wcsecure.weblink.com.au/pdf/EQE/02256113.pdf
7
8
6
Equus Mining Limited
Review of Operations
Figure 4 – Taitao Pit, Equus brownfields diamond drilling results overlying historical drilling results
Better results from Equus drilling included:
• Hole CBD025: 19.0m at 1.26 g/t gold and 10.0 g/t
silver from 68.5m, including 9.6m at 1.93 g/t gold
and 12.3 g/t silver from 77.92m
• Hole CBD026: 12.5m at 1.45 g/t gold, 30.9 g/t silver
• Hole CBD034: 4.2m at 1.47 g/t gold and 15.3 g/t
silver from 35.65 metres and 28.6m at 1.14 g/t gold
and 8.6 g/t silver from 48 metres including 7.65m at
2.27 g/t gold and 10.67 g/t silver from 56.9 metres
from 36.8m
• Hole CBD030: 0.7m at 23.2 g/t gold and 111.0 g/t
silver from 15.9 metres
The results from the NE Taitao drilling are presented
graphically through figures 4 and 7.
7
Annual Report 2020 Review of Operations
Figure 5 – Cross section (A-A’) through Equus DD hole CBD025 overlying historical drill intercepts and interpreted geology
Better historical NE Taitao results include:
• 22.77m at 2.11 g/t gold and 12.99 g/t silver from
25m, including 9m at 3.26 g/t gold and 16.41 g/t
silver from 25m;
• 33.58m at 1.66 g/t gold and 8.16 g/t silver from 35m,
including 11.25m at 3.04 g/t gold and 10.97 g/t silver
from 43.75m
• 37.2m at 2.1 g/t gold and 9.56 g/t silver from 38.71m,
including 13.6m at 3.96 g/t gold, 14.18 g/t silver from
55.4m;
• 21.2m at 1.35 g/t gold and 7.07 g/t silver from 14m,
including 5m at 3.52 g/t gold and 9.41 g/t silver from
19m;
• 16.96m at 2.2 g/t gold and 18.48 g/t silver from 22m,
including 5m at 4.49 g/t gold and 35.12 g/t silver
from 22m;
• 19m at 4.4 g/t gold and 27.4 g/t silver
• 11m at 3.5 g/t gold and 17.2 g/t silver
• 2.9m at 4.79 g/t gold and 3.72 g/t silver from 37m
• 10m at 2.6 g/t gold and 9.3 g/t silver
• 23m at 1.7 g/t gold and 8.8 g/t silver
• 16m at 1.6 g/t gold and 14.1 g/t silver
• 9m at 1.6 g/t gold and 15.0 g/t silver9
9 Details regarding the reporting of the historical results in ASX Announcement - https://wcsecure.weblink.com.au/pdf/EQE/02247975.pdf on page 9 dated 25 June 2020
8
Equus Mining Limited Review of Operations
Figure 6 – Cross section (C-C’) through Equus DD holes CBD034 and CBD030 overlying historical drill intercepts and
interpreted geology
At Central Taitao, a single drill-hole was completed
(CBD033) to test results identified through the historic
review (Figure 7)10 for which better results included:
• 5.9m at 1.28 g/t gold and 24.4 g/t silver
• 0.7 at 1.25 g/t gold and 47 g/t silver
• 11.6m at 0.35 g/t gold and 12.2 g/t silver
Historical drilling results include:
• 16m at 2.5 g/t gold and 104.3 g/t silver
• 3.0m at 3.3 g/t gold and 288.0 g/t silver
• 6.4m at 1.2 g/t gold and 382.9 g/t silver
• 14m at 0.9 g/t gold and 10.5 g/t silver
• 5.1m at 3.1 g/t gold and 65.0 g/t silver
• 2.5m at 2.4 g/t gold and 70.0 g/t silver
• 4.9m at 2.2 g/t gold and 35.9 g/t silver
10 ASX Announcement - DRILLING CONFIRMS BROAD ZONES OF SHALLOW MINERALISATION BELOW TAITAO PIT
https://wcsecure.weblink.com.au/pdf/EQE/02256113.pdf
9
Annual Report 2020
Review of Operations
Figure 7 – Central Taitao cross section B-B’ with Equus drillhole CBD033 overlying historical drill intercepts and
interpreted geology
BROWNFIELDS RESOURCE EVALUATION – NEXT STEPS
Cube Consulting has been engaged to undertake the
JORC 2012 compliant resource evaluation for the Taitao
Pit11 which is scheduled to be completed by early Q4
2020. The Resource evaluation will form the basis of a
mine re-start study expected to be completed by early
Q1 2021.
Post reporting period, the company announced new
brownfields drill targets, along trend from historic
producing mines and within 2km of the processing plant
and infrastructure. Known collectively as the Pegaso
I-V Targets (Figure 8)12, they comprise five individual
underexplored host fault extensions of historic mines in
the interpreted highly prospective northwest margin of
a 3.5km x 5km caldera structure.
11 ASX Announcement – DRILLING TO FOCUS ON HIGH GRADE GOLD AND SILVER TARGETS WITHIN HISTORICAL 45MOZ SILVER PRODUCING
DISTRICT AT CERRO BAYO
https://wcsecure.weblink.com.au/pdf/EQE/02264242.pdf
12 ASX Announcement – NEW GOLD AND SILVER TARGETS AT CERRO BAYO
https://wcsecure.weblink.com.au/pdf/EQE/02266302.pdf
10
Equus Mining Limited Review of Operations
Figure 8 – Five individual underexplored, host fault extensions of historic mines, known collectively as the Pegaso I-V Targets
GREENFIELDS DRILLING
Between October to December, based on historical data
review and detailed mapping and sampling the company
generated a pipeline of drill targets at the Simmental,
Brahman and Droughtmaster Prospects.
In mid-December, the Company announced that
greenfields drilling had commenced at the Simmental13
and Brahman Prospects.
Early results from the reconnaissance 7-hole diamond
drilling program conducted at the Frison Target within the
Brahman Prospect returned encouraging results14, including;
• Hole CBD007: 3m at 43.3 g/t Ag, 0.08 g/t Au, 1.72%
Cu, 13.15% Pb and 9.9% Zn from 75.3-78.3m
In late May, from drilling at the Droughtmaster Prospect
(Percheron Vein Target) the Company reported its most
promising results to date, with 3.81m at 20.4 g/t gold
and 55.5 g/t silver from 109m, including 1.06m at 62.58
g/t gold and 129.3 g/t silver from 112m15 (Figure 9,10).
13 ASX Announcement – DRILLING COMMENCES AT CERRO BAYO MINING PROJECT
https://wcsecure.weblink.com.au/pdf/EQE/02185892.pdf
14 ASX Announcement – ENCOURAGING SILVER RESULTS FROM DRILLING AT CERRO BAYO
https://wcsecure.weblink.com.au/pdf/EQE/02209457.pdf
15 ASX Announcement – STANDOUT INTERSECTION BOLSTERS DROUGHT MASTER POTENTIAL
https://wcsecure.weblink.com.au/pdf/EQE/02238028.pdf
11
Annual Report 2020 Review of Operations
Figure 9 – Long Section of identified mineralized trends within the Droughtmaster Prospect
The results from CBD020 build on highly encouraging
results reported from Hole CBD016, located
approximately 50m along-strike, which include16:
• 0.64m @ 1.44 g/t gold, 240.0 g/t silver from 68.10m
• 0.62m @ 17.28 g/t gold, 271.0 g/t silver from 73.5m
• 1.01m @ 5.32 g/t gold, 43.1 g/t silver from 96.57m
The 9-hole diamond drilling program confirmed
widespread high-grade epithermal gold-silver veining
centred within a 4.5km-long NW district scale trending
fault corridor, which extends 2.5km northwest towards
the Marcela Mine. It is interpreted that drill intercepts
to date relate to the upper portions of a wide, large-
scale epithermal system and good potential exists
for discovery of high-grade mineralisation in deeper
favourable levels along this fault trend.
16 ASX Announcement – SHALLOW HIGH-GRADE GOLD-SILVER DRILL RESULTS FROM DROUGHTMASTER PROSPECT AND COMMENCEMENT OF DRILLING AT
TAITAO PIT
https://wcsecure.weblink.com.au/pdf/EQE/02225391.pdf
12
Equus Mining Limited
Review of Operations
Figure 10 – Droughtmaster Prospect Geological Cross Section for Drill-hole CBD020
GREENFIELDS EXPLORATION – NEXT STEPS
Approximately 2,500m of diamond drilling has been
designed to target mineralization down-dip and along
strike from the better Droughtmaster result from DD-
hole CBD020.
COVID-19
To date the Company is pleased to report that its staff
and Contractors have been minimally impacted by the
Covid-19 pandemic and enhanced health monitoring
and sanitary procedures have been implemented by
the Company´s local staff under stringent protocols to
reduce the possibility of infection.
The Cerro Bayo Mine Area is located within the Aysen
Region of Chile. Whilst the Region boasts a considerable
land mass almost double that of Tasmania (108,000km2),
it is considered the country’s most sparsely populated
region with a population of only ~103,000.
The isolated nature of the area compounded by strict
self-isolation policies implemented by the Chilean
government have seen relatively low number of
infections and deaths compared to other nations
and areas. To date there have only been 188 cases
in total within the Aysen Region and 1 fatality.
Equus management continues to actively monitor
developments and will provide further updates should
the situation change. At this stage, fieldwork is expected
to continue as planned.
13
Annual Report 2020 Review of Operations
LOS DOMOS PROJECT
CORPORATE
Placement and Non-Renounceable Rights Issue - $4.5M
The Company undertook a placement to institutional
and sophisticated investors comprising 450 million
shares at $0.01per share. The placement was issued in
two tranches:
• Tranche 1 – 134,591,529 Placement Shares raising
$1.35 million before costs, under the Company’s
existing capacity in accordance with ASX Listing
Rules 7.1.
• Tranche 2 – 315,408,471 Placement Shares to raise
$3.15 million before costs, subject to shareholders
approval at a shareholders meeting to be called by
the Company
The Non-Renounceable Rights Issue was offered to
eligible shareholders, of approximately 52,780,992
new shares at an issue price of $0.01 per share17 on the
basis of 1 new share for every 17 shares held, to raise
approximately $527,810 before issue costs.
Institutional Placement – $3.5M
Subsequent to 30 June 2020, the Company completed a
AUD$3.5 million before costs institutional placement,
with cornerstone investments made by Palisades
Goldcorp Ltd (AUD$1.0 million) and Tribeca Investment
Partners Pty Ltd (Tribeca) (AUD$1.0 million)18.
As part of the rasing the Company granted Tribeca a
right of first refusal to provide Equus with up to US$20
million of debt funding towards restarting production at
the Cerro Bayo Project over the next 24 months.
The Los Domos gold-silver project is located 15km south
of the township of Chile Chico and 20km southeast of
the Cerro Bayo gold-silver mine and treatment plant,
which is held under an option for acquisition by Equus
from Mandalay Resources, Region XI, Chile. The project
area´s altitude range of 800-1200m and a dry, moderate
climate permits year-round exploration.
During the year ended 30 June 2020, Equus incorporated
a joint venture company “Equus Patagonia SpA” with
Patagonia Gold SCM, the Chilean subsidiary of Patagonia
Gold Corp (TSXV: PGDC). This entity incorporates the
Company´s 75% interest in the mining concessions
owned by Patagonia Gold SCM, which form part of the
Los Domos Project. Southern Gold SpA can acquire a
further 20% interest in the Mining Concessions via sole
funding exploration through the Equus Patagonia SpA
joint venture company at which point Patagonia Gold
SCM has the right to retain a 5% free carried interest or
convert its equity into a 1.5% NSR.
CERRO DIABLO PROJECT
The Cerro Diablo Project is located in the interpreted
northwest limit of the world-class Deseado Massif
mineral province, where it extends into southern
Chile, in a corridor also broadly coincident with the
slightly younger Andean-type arc and back-arc tectonic
belt which host epithermal, skarn, porphyry and
volcanic-hosted massive sulfide (VHMS) style mineral
occurrences.
With the focus of exploration efforts during the
reporting period targeted towards evaluation
and discovery of resources close to infrastructure
throughout the Cerro Bayo Project, work and
expenditure on both the Los Domos and Cerro Diablo
Projects were limited to maintenance of claim tenure.
Both projects are viewed to host good, underexplored
potential for precious and base metals and the
Company during the course of the 2021 financial year
will undertake limited work including mapping and
sampling.
17 ASX Announcement – NON-RENOUNCEABLE RIGHTS ISSUE OFFER DOCUMENT
https://wcsecure.weblink.com.au/pdf/EQE/02129423.pdf
18 ASX Announcement – COMPLETION OF INSTITUTIONAL PLACEMENT
https://wcsecure.weblink.com.au/pdf/EQE/02256622.pdf
14
Equus Mining Limited Review of Operations
Compliance statement
The information in this report that relates to Exploration Results for the Cerro Bayo Project is based on information
compiled by Damien Koerber. Mr Koerber is a fulltime employee to the Company. Mr Koerber is a Member of the Australian
Institute of Geoscientists and has sufficient experience which is relevant to the style of mineralisation and type of
deposits under consideration and to the activities which he is undertaking to qualify as a Competent Person as defined in
the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr
Koerber has a beneficial interest as shareholder of Equus Mining Limited and consents to the inclusion in this report of the
matters based on his information in the form and context in which it appears.
No Material Changes
Equus Mining Limited confirms that it is not aware of any new information or data that materially affects the
information included in this Annual Report and that all information continues to apply.
Yours sincerely,
John Braham
Managing Director
Dated this 30th day of September 2020
15
Annual Report 2020 Corporate Governance Statement
The Board is committed to maintaining the highest standards of Corporate Governance. Corporate Governance is about
having a set of core values and behaviours that underpin the Company’s activities and ensure transparency, fair dealing
and protection of the interests of stakeholders. The Company has reviewed its corporate governance practices against
the Corporate Governance Principles and Recommendations (3rd edition) published by the ASX Corporate Governance
Council.
The 2020 corporate governance statement is dated 30 September 2020 and reflects the corporate governance practices
throughout the 2020 financial year. The board approved the 2020 corporate governance on 30 September 2020. A
description of the Company’s current corporate governance practices is set out in the Company’s corporate governance
statement, which can be viewed at http://www.equusmining.com/corporate-governance/.
16
Equus Mining Limited Directors’ Report
The Directors present their report, together with the consolidated financial statements of the Group, comprising of
Equus Mining Limited (‘Equus’ or ‘the Company’) and its controlled entities for the financial year ended 30 June 2020
and the auditor’s report thereon.
DIRECTORS
The names and details of the Directors in office during
or since the end of the previous financial year are as
follows. Directors were in office for the entire year
unless otherwise stated.
Mark Hamish Lochtenberg, Non-Executive Chairman
Director since 10 October 2014
John Richard Braham, Managing Director
Director since 13 November 2018
Mr Lochtenberg graduated with a Bachelor of Law
(Hons) degree from Liverpool University, U.K. and has
been actively involved in the coal industry for more than
30 years.
Mr Braham is an experienced Mining Finance and
Investment professional with a 24-year career at
Macquarie Bank, the last 11 of which were as an
Executive Director within the Mining Finance Division.
John built and ran a successful mining finance business
in New York for Macquarie Bank from 2001 to 2008,
providing capital to the junior mining industry. This
involved providing debt and equity to exploration
companies and mine developers in both North and South
America including companies operating in Argentina,
Peru and Chile.
On returning to Australia, John built from scratch
a successful bulk commodity finance business for
Macquarie Bank which he ran from 2008 to 2015 based
in Sydney. He was made co-head of Macquarie’s global
Mining Finance business in 2016. John left Macquarie
Bank in 2017 to be Principal of JR Braham Consulting Pty
Ltd which provides advice to junior resource companies
seeking capital.
He has not served as a director of any other listed
company during the past three years.
Mark Lochtenberg is Non Executive Director of recently
listed Nickel Mines Limited and is the former Executive
Chairman and founding Managing Director of ASX-listed
Baralaba Coal Company Limited (formerly Cockatoo
Coal Limited). He was a principal architect of Cockatoo’s
inception and growth from an early-stage grassroots
explorer through to an emerging mainstream coal
producer. He was also formerly the co-head of Glencore
International AG’s worldwide coal division, where he
spent 13 years overseeing a range of trading activities
including the identification, due diligence, negotiation,
acquisition and aggregation of the coal project portfolio
that would become Xstrata Coal.
Prior to this Mark established a coal “swaps” market for
Bain Refco, (Deutsche bank) after having served as a
senior coal trader for Hansen Neuerburg AG and as coal
marketing manager for Peko Wallsend Limited.
Mr Lochtenberg is currently Non-Executive Director of
public listed company Nickel Mines Limited, Director of
Australian Transport, Energy Corridor Pty Limited and
Montem Resources Limited. He was Managing Director
of Pacific American Coal Limited and has previously been
a Director of ASX-listed Cumnock Coal Limited and of
privately held United Collieries Pty Limited.
He has not served as a director of any other listed
company during the past three years.
17
Annual Report 2020 Directors’ Report
Damien John Koerber, Executive Director, Chief
Operating Officer
Director since 27 November 2019
Mr Koerber commenced with Equus in 2012 as
exploration manager at the Naltagua copper project in
Chile which brought considerable senior management
and technical experience in the resources industry, from
both in Australia and throughout South America.
Mr Koerber is a geologist with 30 years of exploration
experience, mainly throughout and based in Latin
America. He has held senior management and consulting
exploration and business development positions in
companies including Billiton Gold (Northern Territory
and Western Australia), North (Chile), Rio Algom (Chile),
Newcrest (Chile, Argentina and Peru), MIM (Argentina
and Brazil), Patagonia Gold SA (Chile and Argentina) and
Mirasol Resources (Chile and Argentina).
During his career, he has been directly involved in
several discoveries including Cleo-Sunrise Dam (Western
Australia), Tanami (Northern Territory), Union Reefs
(Northern Territory) and Cap Oeste-COSE (Argentina).
Mr Koerber graduated from the UNSW (BSc. Geology
Hons Class 1) in 1989 and is a bilingual, Australian
geologist.
Robert Ainslie Yeates, Non-Executive Director
Director since 20 July 2015
Dr Yeates is a graduate of the University of NSW,
completing a Bachelor of Engineering (Honours 1) in
1971 and a PhD in 1977 and then an MBA in 1986 from
Newcastle University. He began his career with Peko
Wallsend working in a variety of roles including mining
engineering, project management, mine management
and marketing.
He became General Manager Marketing for Oakbridge
Pty Limited in 1989 following a merger with the Peko
Wallsend coal businesses and went on to become
Managing Director of Oakbridge, which was the largest
coal mining company in NSW at that time, operating one
open cut and five underground coal mines.
18
Dr Yeates also has gained operating, business
development and infrastructure experience as a
director of Port Waratah Coal Services (Newcastle
Port), Port Kembla Coal Terminal, Great Northern
Mining Corporation NL and Cyprus Australia Coal and
for the past 20 years has been principal of his own mine
management consultancy, providing a wide range of
technical, management and strategic planning services
to the mining industry. Until 2014 he was also Project
Director then CEO of Newcastle Coal Infrastructure
Group, which has developed and is operating coal export
facilities in Newcastle.
Dr Yeates was until 2015 and for the prior ten years a
director in ASX-listed Baralaba Coal Company Limited
(formerly Cockatoo Coal Limited), and from 2016 to
2019 he was a director of Watagan Mining Ltd and from
2018 to early 2020 was a director of Montem Resources
Limited.
He has not served as a director of any other listed
company during the past three years.
Juerg Marcel Walker, Non-Executive Director
Director appointed 20 May 2002 – Resigned 27
November 2019
Mr Walker is a European portfolio manager and investor.
He has over 30 years’ experience in the Swiss banking
industry, operating his own portfolio management
company after leaving his position as senior vice
president of a private bank in Zurich.
He has not served as a director of any other listed
company during the past three years.
COMPANY SECRETARY
Marcelo Mora
Company Secretary since 16 October 2012
Marcelo Mora holds a Bachelor of Business degree and
Graduate Diploma of Applied Corporate Governance. Mr
Mora has been an accountant for more than 30 years
and has experience in resources and mining companies
both in Australia and internationally, providing financial
reporting and company secretarial services to a range of
publicly listed companies.
Equus Mining Limited Directors’ Report
DIRECTORS’ MEETINGS
The number of Directors’ meetings and number of meetings attended by each of the Directors (while they were a
Director) of the Company during the year are:
Director
Mark H. Lochtenberg
John R. Braham
Damien J. Koerber
Juerg M. Walker
Robert A. Yeates
Board Meetings
Held
Attended
6
6
3
3
6
6
3
3
1
6
DIRECTORS’ INTERESTS
At the date of this report, the beneficial interests of each director of the Company in the issued share capital of the
Company and options, each exercisable to acquire one fully paid ordinary share of the Company are:
Director
Fully Paid
Ordinary Shares
Options over
ordinary shares
Option Terms
(Exercise Price and Term)
Mark H. Lochtenberg
John R. Braham
63,110,762
14,849,674
-
-
-
-
-
-
Damien J. Koerber
Robert A. Yeates
42,290,938
6,870,767
11,111,111
$0.015 at any time up to 16 September 2023
5,555,556
5,000,000
5,000,000
5,000,000
6,666,666
6,666,667
6,666,667
2,222,222
3,333,333
$0.015 at any time up to 16 September 2023
$0.030 at any time up to 13 November 2020
$0.050 at any time up to 13 November 2021
$0.070 at any time up to 13 November 2023
$0.027 at any time up to 13 November 2021
$0.030 at any time up to 13 November 2022
$0.035 at any time up to 13 November 2024
$0.015 at any time up to 16 September 2023
$0.015 at any time up to 16 September 2023
Following shareholder approval in October 2019 and November 2019, 35,000,000 unlisted options were granted to John
Braham.
There were no options over unissued ordinary shares granted as compensation to directors or executives of the
Company during or since the end of the financial year.
On 18 September 2020, following the approval by shareholders the Company issued 22,222,222 ordinary shares to
the Directors of the Company and granted 22,222,222 free attaching unlisted options on a 1 for 1 basis as part of the
Placement announced on 20 July 2020. The options are exercisable at $0.015 per share vesting on Grant Date and expiry
3 years from Grant Date.
19
Annual Report 2020 Directors’ Report
OPTION HOLDINGS
Options granted to directors’ and officers’
Since the end of the financial year, the Company did not grant any options over unissued ordinary shares to directors or
officers as part of their remuneration.
At the General Meeting held on 18 September 2019, the Company received shareholders’ approval to issue 15,000,000
unlisted options to John Braham as remuneration. At the Annual General Meeting held on 27 November 2019, the
Company received shareholders’ approval to issue 20,000,000 unlisted options to John Braham as remuneration.
UNISSUED SHARES UNDER OPTIONS
At the date of this report, unissued ordinary shares of the Company under option are:
Number of Options
Exercise Price
5,000,000
5,000,000
5,000,000
6,666,666
6,666,667
6,666,667
403,888,889
$0.030
$0.050
$0.070
$0.027
$0.030
$0.035
$0.015
Expiry Date
13 November 2020
13 November 2021
13 November 2023
13 November 2021
13 November 2022
13 November 2024
16 September 2023
All options expire on their expiry date. In the event that the employment of the option holder is terminated by breach
of its obligations to the Company, then the options shall lapse upon written notification to the holder. The persons
entitled to exercise the options do not have, by virtue of the options, the right to participate in a share issue of the
Company or any other body corporate.
SHARES ISSUED ON EXERCISE OF OPTIONS
During or since the end of the financial year, the Company has not issued ordinary shares as a result of the exercise of
options.
20
Equus Mining Limited Directors’ Report
CORPORATE INFORMATION
Corporate Structure
Equus Mining Limited is a limited liability company that is incorporated and domiciled in Australia. It has prepared
a consolidated financial report incorporating the entities that it controlled during the financial year. The Group’s
structure at 30 June 2020 is outlined below.
EQUUS MINING LIMITED – GROUP STRUCTURE AT 30 JUNE 2020
The Companies referred above comprise the “Consolidated Entity” for the purposes of the Financial Statements
included in this report.
21
Annual Report 2020 Directors’ Report
PRINCIPAL ACTIVITIES
The principal activities of the Group during the course
of the financial year were the execution of the option
for acquisition agreement for the Cerro Bayo Mine
Project and implementation of its dual-track strategy
of brownfields resource evaluation and Brownfields/
Greenfields exploration to define sufficient resources
to sustain a potential mine restart, and furthermore the
maintenance of claims held by Equus for the nearby Los
Domos and Cerro Diablo Projects.
FINANCIAL RESULTS
The consolidated loss after income tax attributable to
members of the Company for the year was $1,728,160
(2019: $942,751 loss).
REVIEW OF OPERATIONS
A review of the Group’s operations for the year ended 30
June 2020 is set out on pages 4 to 15 of this Annual Report.
DIVIDENDS
The Directors do not recommend the payment of a
dividend in respect of the financial year ended 30 June
2020. No dividends have been paid or declared during
the financial year (2019 - $nil).
CHANGES IN STATE OF AFFAIRS
In the opinion of the Directors, significant changes in
the state of affairs of the Group that occurred during
the year ended 30 June 2020 were as follows:
During the year, the Group executed an option
agreement which provides it the right to acquire the
Cerro Bayo Mining Project adjacent to the existing Los
Domos Gold-Silver project located in Chile’s XI region.
Equus has a 3-year period to exercise the option to
acquire the Cerro Bayo Mining project from Mandalay
Resources Corporation (“Mandalay’). The option
period commences from the date when Equus receives
all required approval to set up and drill from 60 drill
platforms on the Cerro Bayo property. Under the option
agreement, Equus can at any time during the option
period acquire the mining properties and the mine
infrastructure including the mine processing plant.
22
The consideration payable by Equus to Mandalay if
Equus decides to exercise the option to acquire the Cerro
Bayo mining project is by the issue of 19% of Equus’s
share capital at the time of exercise the option plus a
2.25% Net Smelter Royalty (NSR).
On 8 August 2019, the Company issued 134,591,529
new ordinary shares under a placement at an issue price
$0.01 per share for a total consideration of $1,345,915
before costs.
On 3 September 2019, the Company raised $527,810
(before costs) under a Rights Issue Offer resulting in the
allotment of 52,780,992 new ordinary shares at $0.01
per shares.
On 14 October 2019, the Company issued 315,408,471
new ordinary shares under a placement at an issue price
$0.01 per share for a total consideration of $3,154,084
before costs.
On 14 October 2019, the Company issued 8,687,500
new ordinary fully paid shares to Terrane Minerals
SpA as consideration for acquiring 75% interest in the
mining concessions owned by Patagonia Gold Sociedad
Contractual Minera (‘Patagonia’) which form part of the
Los Domos Project. Equus and Patagonia formed a Joint
Venture where the mining concessions are held whereby
Patagonia owned 25% interest and Equus 75% interest.
On 14 October 2019, the Company issued 15,000,000
unlisted options to Mr John Braham as part of his
employment agreement for the 12 month period to
November 2019 as follows:
• 5,000,000 options exercisable at $0.030 each vesting
immediately and expiring on 13 November 2020;
• 5,000,000 options exercisable at $0.050 each vesting
immediately and expiring on 13 November 2021;
• 5,000,000 options exercisable at $0.070 each vesting
immediately and expiring on 13 November 2023;
On 29 November 2019, the Company issued 20,000,000
unlisted options to Mr John Braham as part of his
employment agreement for the 12 month period to
November 2020 as follows:
• 6,666,666 options exercisable at $0.027 each vesting
immediately and expiring on 13 November 2021;
• 6,666,667 options exercisable at $0.030 each vesting
immediately and expiring on 13 November 2022;
• 6,666,667 options exercisable at $0.035 each vesting
immediately and expiring on 13 November 2024;
Equus Mining Limited On 27 November 2019, Mr Juerg Walker retired from
the Board of Directors and Mr Damien Koerber was
appointed as Executive Director and Chief Operating
Officer (COO) of the Company.
On 12 May 2020, the Company issued 3,300,000 new
ordinary fully paid shares to Westoaks Enterprises Pty
Ltd as consideration for Geological Technical Services
provided in connection with the Cerro Bayo project in
southern Chile.
Other than the matters detailed above, there were no
other significant changes in the affairs of the Company
during the year.
ENVIRONMENTAL REGULATIONS
The Group’s operations are not subject to any significant
environmental regulations under either Commonwealth
or State legislation.
The Group’s exploration activities in Chile are subject to
environmental laws, regulations and permit conditions
as they apply in the country of operation. Prior to
recommencing drilling at the Los Domos Project,
approval of an Environmental Impact Statement (DIA) is
required. Environmental and related studies as part of
the Environmental Impact Statement were completed
but due to the coronavirus continued restricted
access to face to face meetings with the government
environmental authorities in Chile, Equus has not had an
opportunity to physical present nor submit the DIA for
Los Domos. Due to this uncertainty of when restrictions
will be lifted in Australia and Chile lodgement of the
Environmental Impact Statement (DIA) for Los Domos is
likely to take place during the second quarter of 2021.
The Board believes that the Group has adequate systems
in place for the management of its environmental
requirements and is not aware of any breach of those
environmental requirements as they apply to the Group.
LIKELY DEVELOPMENTS
During the course of the 2021 financial year, the
Company will focus on drilling programs throughout
the Cerro Bayo, mine claim surveying for Los Domos
and Cerro Diablo Project and its ongoing strategic
assessment of additional areas of exploration interest
in the vicinity of the Cerro Bayo Mine infrastructure. The
Directors expect to receive results of future exploration
programs at Cerro Bayo, Los Domos and the Cerro Diablo
gold-silver and polymetallic projects, which they will
make public in accordance with ASX listing rules once
the information is received.
Directors’ Report
Further information as to likely developments in the
operations of the Group and the expected results of
those operations in subsequent years have not been
included in this report because disclosure of this
information would be likely to result in unreasonable
prejudice to the Group.
EVENTS SUBSEQUENT TO BALANCE DATE
On 20 July 2020, the Company announced a placement to
institutional investors to raise up to $3.5 million by the
issue of 388,888,889 shares at an issue price of $0.009.
The placement is made up of two tranches, tranche one
completed on 28 July 2020 raised $3,139,977 before
costs by the issue of 348,886,300 ordinary shares.
For tranche two, the Company obtained approval at a
shareholders’ meeting held on 16 September 2020 for
the issue of 40,002,589 ordinary shares at $0.009 and
raised $360,023 before costs.
On 16 September 2020, following the approval by
shareholders the Company granted 388,888,889
free attaching unlisted options on a 1 for 1 basis to
the investors and Directors who participated in the
placement. The options are exercisable at $0.015 per
share vesting on Grant Date and expiring in three years
from Grant date.
On 16 September 2020, following the approval by
shareholders the Company granted 15,000,000 unlisted
options to Brokers of the placement under the same
terms and conditions to the options granted to the
investors who participated in the Placement.
No other matters or circumstances have arisen in the
interval between the end of the financial year and the
date of this report any item, transaction or event of a
material or unusual nature likely, in the opinion of the
Directors of the Company, to affect significantly the
operations of the Group, the results of those operations,
or the state of affairs of the Group, in future financial
years.
INDEMNIFICATION AND INSURANCE OF
OFFICERS AND AUDITORS
During or since the end of the financial, the Company
has not indemnified or made a relevant agreement to
indemnify an officer or auditor of the Company against
a liability incurred as such by an officer or auditor.
The Group has not paid or agreed to pay, a premium in
respect of a contract insuring against a liability incurred
by an officer or auditor.
23
Annual Report 2020 Directors’ Report
REMUNERATION REPORT - Audited
Principals of compensation - Audited
Key management personnel have authority and responsibility for planning, directing and controlling the activities of
the Group. Key management personnel comprise the directors of the Company. No other employees have been deemed
to be key management personnel.
The remuneration policy of Directors and senior executives is to ensure the remuneration package properly reflects
the persons’ duties and responsibilities, and that remuneration is competitive in attracting, retaining and motivating
people of the highest quality. The Board is responsible for reviewing its own performance. The evaluation process is
designed to assess the Group’s business performance, whether long-term strategic objectives are being achieved, and
the achievement of individual performance objectives.
The Constitution and ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be
determined from time to time by a general meeting. The latest determination was at a shareholders meeting on 29
November 2005 when the shareholders approved an aggregate remuneration of $200,000 per year.
Remuneration generally comprises of salary and superannuation. Long-term incentives are able to be provided through
the Company’s share option program, which acts, to align the Director’s and senior executive’s actions with the
interests of the shareholders.
The remuneration disclosed below represents the cost to the Group for services provided under these arrangements.
John Braham, Mark Lochtenberg and Damien Koerber are paid through the Company’s payroll. All other Directors
services are paid by way of an arrangement with related parties.
There were no remuneration consultants used by the Company during the year ended 30 June 2020, or in the prior year.
Consequences of performance on shareholders’ wealth - Audited
In considering the Group’s performance and benefits for shareholders’ wealth, the Board has regard to the following
indices in respect of the current financial year and the previous four financial years.
2020
$
2019
$
2018
$
2017
$
2016
$
Net loss attributable to equity holders of the parent
1,728,160
942,751
2,142,214
899,548
3,573,850
Dividends paid
Change in share price
-
-
-
(0.02)
-
-
-
0.02
-
(0.01)
The overall level of key management personnel’s compensation has been determined based on market conditions, the
advancement of the Group’s projects and the financial performance of the Group.
Remuneration Structure - Audited
In accordance with better practice corporate governance, the structure of Executive Director and Non-Executive
Director remuneration is separate and distinct.
24
Equus Mining Limited Directors’ Report
Service contracts - Audited
In accordance with better practice corporate governance the company provided each key management personnel with a
letter detailing the terms of appointment, including their remuneration.
Details of the nature and amount of each major element of the remuneration of each Director of the Company and
other key management personnel of the Company and Group are:
Executive Directors
John Braham (1)
Damien Koerber (2)
Edward Leschke (3)
Non-Executive
Directors
Robert Yeates
Juerg Walker (4)
Mark Lochtenberg
Total all directors
Year
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Primary
Salary / Fees
$
Superannuation
$
Share-Based
Payments Options
$
Short Term
Benefit
$
182,667
75,333
200,000
-
-
17,353
5,890
19,000
-
-
62,899
5,243
30,000
30,000
12,500
30,000
30,000
30,000
455,167
228,232
-
-
-
-
2,850
2,850
39,203
13,983
338,833
7,674
-
-
-
-
-
-
-
-
-
-
-
15,385
-
-
-
-
-
-
-
-
-
338,833
-
23,059
-
Total
$
546,527
81,223
234,385
-
-
68,142
30,000
30,000
12,500
30,000
32,850
32,850
856,262
242,215
(1) Appointed as Director on 13 November 2018.
(2) Appointed as Director on 27 November 2019.
(3) Resigned as Director on 13 November 2018.
(4) Resigned as Director on 27 November 2019.
Executive Directors - Audited
During the financial year ended 30 June 2020, John Braham and Damien Koerber were considered Executive
Directors. Their remuneration for the year ended 30 June 2020 comprised of fixed remuneration plus 9.5% statutory
superannuation paid through the Company’s payroll. During the year, the Company received shareholder approval
to issue 35,000,000 unlisted options to Mr Braham for no consideration as part of his remuneration. The terms and
conditions of the options are outlined below.
25
Annual Report 2020 Directors’ Report
Options granted as compensation - Audited
No bonuses were paid during the financial year. Refer below for the Options granted to John Braham. The Company
employed no other key management personnel.
Details of options granted as compensation to each key management person:
Director
Grant Date
Number of
Options
Granted
Fair value
per option at
grant date
Fair Value
at Grant
Date
Option Terms
(Exercise Price and Term)
John Braham 14 October 2019
(1) 5,000,000
$0.0067
$33,500
$0.030 at any time to 13 November 2020
John Braham 14 October 2019
(1) 5,000,000
$0.0086
$43,000
$0.050 at any time to 13 November 2021
John Braham 14 October 2019
(1) 5,000,000
$0.0118
$59,000
$0.070 at any time to 13 November 2023
John Braham 29 November 2019 (2) 6,666,666
$0.0084
$56,000
$0.027 at any time to 13 November 2021
John Braham 29 November 2019 (2) 6,666,667
$0.0101
$67,333
$0.030 at any time to 13 November 2022
John Braham 29 November 2019 (2) 6,666,667
$0.0120
$80,000
$0.035 at any time to 13 November 2024
There were no options over ordinary shares granted to Directors as remuneration during the year ended 30 June 2019.
• The fair value of the (1) 15,000,000 options at grant date was determined based on a Black- Scholes formula. The
model inputs of the options issued, were the Company’s share price of $0.0155 at the grant date, a volatility factor
of 152.60% based on historic share price performance, a risk free rate of 0.71% based on the 2 year government
bond rate and no dividends paid. The value also considered the vesting conditions in relation to the options.
• The fair value of the (2) 20,000,000 options at grant date was determined based on a Black- Scholes formula. The
model inputs of the options issued, were the Company’s share price of $0.014 at the grant date, a volatility factor of
149.46% based on historic share price performance, a risk free rate of 0.65% based on the 3 year government bond
rate and no dividends paid.
No options lapsed or were exercised during the 2020 and 2019 financial years.
Non Executive Directors - Audited
During the financial year ended 30 June 2020, the following Directors were considered Non-Executive Directors:
• Mark Lochtenberg;
•
Juerg Walker (resigned 27 November 2019);
• Robert Yeates.
The salary component of Non-Executive Directors was made up of:
•
fixed remuneration;
• 9.5% statutory superannuation for Australian resident directors pay through the Company’s payroll; and
• an entitlement to receive options, subject to shareholders’ approval.
The services of non-executive directors who are not paid through the Company’s payroll system are provided by way of
arrangements with related parties.
26
Equus Mining Limited Directors’ Report
Modification of terms of equity-settled share-based payment transactions - Audited
No terms of equity-settled share-based payment transactions (including options granted as compensation to a key
management person) have been altered or modified by the issuing entity during the 2020 and 2019 financial years.
Exercise of options granted as compensation - Audited
There were no shares issued to Directors on the exercise of options previously granted as compensation during the
2020 and 2019 financial years.
Analysis of options and rights over equity instruments granted as compensation - Audited
All options refer to options over ordinary shares of Equus Mining Limited, which are exercisable on a one-for-one basis.
Options granted
Director
Number
Date
John Braham
15,000,000
14 October 2019
John Braham
20,000,000
29 November 2019
% vested
at year end
100%
100%
Exercised /
forfeited
during the year
Balance at
year end
Financial
year in which
grant vests
-
-
15,000,000
30 June 2020
20,000,000
30 June 2020
The number of options that had vested as at 30 June 2020 is 35,000,000 (2019 - nil). 35,000,000 options were granted as
remuneration during the year (2019: nil). No options were granted as compensation subsequent to year end.
Analysis of movements in options ganted as compensation - Audited
Director
John Braham
Granted in the year
Valuation of options exercised in the year
Lapsed in the year
$338,833
-
-
Options and rights over equity instruments - Audited
The movement during the reporting period in the number of options over ordinary shares in the Company held directly,
indirectly or beneficially, by each key management person, including their personally related entities, is as follows:
Option holdings 2020 - Audited
Directors
Mark Lochtenberg
John Braham
Damien Koerber
Robert Yeates
Held at
1 July 2019
Granted /
Purchased
Exercised /
Sold
Expired
Held at
30 June 2020
Vested and
exercisable at
30 June 2020
-
-
-
-
-
35,000,000
-
-
-
-
-
-
-
-
-
-
-
-
35,000,000
35,000,000
-
-
-
-
27
Annual Report 2020 Directors’ Report
Loans to key management personnel and their related parties - Audited
There were no loans made to key management personnel or their related parties during the 2020 and 2019 financial
years and no amounts were outstanding at 30 June 2020 (2019 - $nil).
Other transactions with key management personnel - Audited
There were no other transactions with key management personnel or their related parties during 2020.
At 30 June 2020, the amount outstanding for salaries, superannuation and directors fees were nil (2019: $7,500).
Movements in shares - Audited
The movement during the reporting period in the number of ordinary shares in the Company held directly, indirectly or
beneficially by each key management personnel, including their related parties, is as follows:
Fully paid ordinary shareholdings and transactions - 2020
Key management personnel
Mark Lochtenberg
John Braham
Damien Koerber *
Juerg Walker **
Robert Yeates
Held at
30 June 2019
36,360,781
5,000,000
N/A
8,297,861
3,340,909
15,638,870
4,294,118
-
-
196,525
-
-
-
-
-
Held at
30 June 2020
51,999,651
9,294,118
-
-
40,068,716
40,068,716
-
-
N/A
3,537,434
Purchases
Sales
Other
* Number of shares held at date of appointment as a Director
** Number of shares held up until date of resignation as a Director
End of remuneration report.
28
Equus Mining Limited Directors’ Report
NON-AUDIT SERVICES
During the year ended 30 June 2020 KPMG, the Group’s auditor, did not perform other services in addition to the audit
and review of the financial statements.
Details of the amounts paid to the auditor of the Group, KPMG, and its network firms for audit and non-audit services
provided during the year are set out below.
Services other than audit and review of financial statements:
Other services
Audit and review of financial statements
AUDITOR’S INDEPENDENCE DECLARATION
2020
$
2019
$
-
-
84,998
84,998
82,920
82,920
The lead auditor’s independence declaration is set out on page 30 and forms part of the Directors’ Report for the
financial year ended 30 June 2020.
Signed at Sydney this 30th day of September 2020
in accordance with a resolution of the Board of Directors:
Mark H. Lochtenberg
Non-Executive Chairman
John R. Braham
Managing Director
29
Annual Report 2020 Lead Auditor’s Independence Declaration
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Equus Mining Limited
i.
I declare that, to the best of my knowledge and belief, in relation to the audit of Equus Mining Limited for
the financial year ended 30 June 2020 there have been:
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
no contraventions of the auditor independence requirements as set out in the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
ii.
To the Directors of Equus Mining Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Equus Mining Limited for
KPMG
the financial year ended 30 June 2020 there have been:
Jason Adams
Partner
i.
ii.
no contraventions of the auditor independence requirements as set out in the Corporations Act
2001 in relation to the audit; and
Brisbane
30 September 2020
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Jason Adams
Partner
Brisbane
30 September 2020
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
27 | Pa g e
30
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
27 | Pa g e
Equus Mining Limited
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the Year Ended 30 June 2020
Notes
2020
$
2019
$
CONTINUING OPERATIONS
Other income
Expenses
Employee, directors and consultants costs
Travel expenses
Other expenses
Results from operating activities
Finance income
Finance costs
Net finance income/(expense)
Loss before tax
Tax benefit/(expense)
Loss for the year
4
4
5
5
6
Other comprehensive income for the year
Items that may be classified subsequently to profit or loss:
Exchange differences on translation of foreign operations
13
Items that will not be classified subsequently to profit or loss
Net change in fair value of equity instruments at fair value
through other comprehensive income
13
Total other comprehensive gain/(loss)
Total comprehensive loss for the year
Loss for the year attributable to:
Equity holders of the Company
Non-controlling interest
Total comprehensive loss attributable to:
Equity holders of the Company
Non-controlling interest
50,000
-
(1,036,551)
(83,600)
(675,599)
(1,745,750)
16,099
-
16,099
(1,729,651)
-
(521,602)
(16,001)
(418,164)
(955,767)
13,016
-
13,016
(942,751)
-
(1,729,651)
(942,751)
(1,030,039)
(1,030,039)
65,682
65,682
(343,371)
(1,373,410)
(3,103,061)
73,427
139,109
(803,642)
(1,728,160)
(1,491)
(1,729,651)
(3,101,570)
(1,491)
(3,103,061)
-
-
-
-
-
-
Earnings per share
Basic and diluted loss per share (dollars)
14
(0.0013)
(0.0012)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
31
Annual Report 2020 Consolidated Statement of Financial Position
As at 30 June 2020
Current Assets
Cash and cash equivalents
Receivables
Total Current Assets
Non-Current Assets
Other financial assets
Exploration and evaluation expenditure
Total Non-Current Assets
Total Assets
Current Liabilities
Payables
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Accumulated losses
Parent entity interest
Non-controlling interest
Total Equity
Notes
7
8
9
10
11
12
13
2020
$
1,304,130
14,806
1,318,936
14,802
6,895,276
6,910,078
8,229,014
352,742
352,742
352,742
2019
$
398,819
14,513
413,332
370,179
5,228,559
5,598,738
6,012,070
190,343
190,343
190,343
7,876,272
5,821,727
121,182,362
116,371,685
(493,028)
541,549
(112,819,667)
(111,091,507)
7,869,667
5,821,727
6,605
-
7,876,272
5,821,727
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
32
Equus Mining Limited Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2020
Share
Capital
$
Accumulated
Losses
$
Option
Reserve
$
Fair Value
Reserve
$
Foreign
Currency
Translation
Reserve
$
Non-
controlling
Interest
$
Total
$
Balance at 1 July 2018
113,833,684 (110,148,756)
Profit/(Loss) for the year
Total other comprehensive
income / (loss)
Total comprehensive profit/
(loss) for the year
Transactions with owners
recorded directly in equity
-
-
-
(942,751)
-
(942,751)
Ordinary shares issued
2,627,750
Transaction costs on issue
of shares
(89,749)
-
-
Balance at 30 June 2019
116,371,685 (111,091,507)
Balance at 1 July 2019
116,371,685 (111,091,507)
Profit/(Loss) for the year
Total other comprehensive
income / (loss)
Total comprehensive profit/
(loss) for the year
Transactions with owners
recorded directly in equity
-
-
-
(1,728,160)
-
(1,728,160)
Ordinary shares issued
5,151,859
Transaction costs on issue
of shares
(341,182)
Employee share options
granted
Changes in ownership interest
in subsidiaries
Acquisition of subsidiary
with non-controlling interest
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
338,833
-
672,105
(269,665)
4,087,368
-
-
(942,751)
73,427
65,682
139,109
73,427
65,682
(803,642)
-
-
-
-
2,627,750
(89,749)
745,532
(203,983)
5,821,727
745,532
(203,983)
5,821,727
-
-
-
-
-
-
-
-
Total
Equity
$
4,087,368
(942,751)
139,109
(803,642)
2,627,750
(89,749)
5,821,727
5,821,727
-
-
(1,728,160)
(1,491)
(1,729,651)
(343,371)
(1,030,039)
(1,373,410)
-
(1,373,410)
(343,371)
(1,030,039)
(3,101,570)
(1,491)
(3,103,061)
-
-
-
-
-
-
-
-
5,151,859
(341,182)
338,833
-
-
-
5,151,859
(341,182)
338,833
-
8,096
8,096
Balance at 30 June 2020
121,182,362 (112,819,667)
338,833
402,161
(1,234,022)
7,869,667
6,605
7,876,272
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
33
Annual Report 2020 Consolidated Statement of Cash Flows
For the Year Ended 30 June 2020
Cash flows from operating activities
Cash receipts in the course of operations
Cash payments in the course of operations
Net cash used in operations
Interest received
Notes
2020
$
34,149
(1,337,246)
(1,303,097)
12,559
Net cash used in operating activities
15
(1,290,538)
2019
$
-
(904,289)
(904,289)
11,179
(893,110)
Cash flows from investing activities
Payments for exploration and development expenditure
Proceed from sale of financial assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from share issues
Share issue expenses
Net cash provided by financing activities
Net increase / (decrease) in cash held
Cash and cash equivalents at 1 July
Effects of exchange rate fluctuations on cash held
(2,506,325)
(1,569,635)
12,006
8,908
(2,494,319)
(1,560,727)
5,027,810
(341,182)
4,686,628
901,771
398,819
3,540
2,282,000
(89,749)
2,192,251
(261,586)
658,568
1,837
398,819
Cash and cash equivalents at 30 June
15
1,304,130
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
34
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
1. REPORTING ENTITY
Equus Mining Limited (the ‘Company’) is a company domiciled in Australia. The address of the Company’s registered
office is Level 2, 66 Hunter Street, Sydney, NSW, 2000. The consolidated financial statements of the Company as at
and for the year ended 30 June 2020 comprises the Company and its subsidiaries (together referred to as the ‘Group’).
The Group is a for-profit entity and is primarily engaged in identifying and evaluating mineral resource opportunities in
southern Chile, South America.
2. BASIS OF PREPARATION
(a) Statement of compliance
The consolidated financial statements are general purpose financial statements which have been prepared in
accordance with Australian Accounting Standards (‘AASBs’) adopted by the Australian Accounting Standards Board
(‘AASB’) and the Corporations Act 2001. The consolidated financial statements comply with International Financial
Reporting Standards (‘IFRSs’) and interpretations adopted by the International Accounting Standards Board (‘IASB’).
The consolidated financial statements were authorised for issue by the Directors on 30 September 2020.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for certain financial
assets which are measured at fair value.
(c) Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the Company’s functional
currency.
(d) Going concern
The consolidated financial statements have been prepared on a going concern basis, which contemplates the
realisation of assets and settlement of liabilities in the ordinary course of business.
During the year, the Company raised $4,686,628 (net of associated costs) through the issue of ordinary shares via
placements.
The Group recorded a loss attributable to equity holders of the Company of $1,728,160 for the year ended 30 June 2020
and has accumulated losses of $112,819,667 as at 30 June 2020. The Group has cash on hand of $1,304,130 at 30 June
2020 and used $3,796,863 of cash in operations, including payments for exploration and evaluation, for the year ended
30 June 2020.
Since the end of the financial year, Equus raised $3,139,977 (before costs) through tranche one of a share placement.
On 16 September 2020, the Company obtained approval from shareholders at a General Meeting for tranche two of
the share placement which allows it to raise further funding of $360,023 (before costs). The additional funding will
primarily be used by the Group to pursue its plans for the Cerro Bayo project.
The Directors have prepared cash flow projections that support the ability of the Group to continue as a going concern.
These cash flow projections assume the Group completes tranche 2 of the share placement together with the receipt of
proceeds from the anticipated exercise of options to enable it to pursue its plans for the Cerro Bayo project and takes
into consideration the estimation of impacts of COVID-19. If such funding is not achieved, the Group plans to reduce
expenditure to the level of funding available.
These conditions give rise to a material uncertainty that may cast significant doubt upon the Group’s ability to
continue as a going concern. The ongoing operation of the Group is dependent upon the Group raising additional
funding from shareholders or other parties and/or the Group reducing expenditure in-line with available funding.
35
Annual Report 2020 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
2. BASIS OF PREPARATION (Cont.)
(d) Going concern (Cont.)
In the event that the Group does not obtain additional funding and/or reduce expenditure in line with available
funding, it may not be able to continue its operations as a going concern and therefore may not be able to realise its
assets and extinguish its liabilities in the ordinary course of operations and at the amounts stated in the consolidated
financial statements.
(e) Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with AASBs requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts
of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the consolidated financial
statements are described in the following notes:
• Note 2(d) - Going concern;
• Note 6 - Unrecognised deferred tax assets; and
• Note 10 - Exploration and evaluation expenditure.
COVID-19
During the year, the COVID-19 pandemic resulted in significant uncertainty in global economic conditions as well
as from the impacts of government imposed restrictions implemented in response to the outbreak. The Group
has considered the impacts of COVID-19 on the key estimates and judgements in the preparation of the financial
statements for the year ended 30 June 2020.
Subsequent to the end of the reporting period, the COVID-19 pandemic has remained prevalent and this may impact
the results of operations of the Group in future reporting periods. Given the nature and uncertainties associated with
the pandemic, these impacts are not able to be reliably estimated at the date of issuing this financial report.
3. SIGNIFICANT ACCOUNTING POLICIES
(a) Changes in accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated
financial statements, and have been applied consistently by entities in the Group, except for the adoption of new
standards effective as of 1 July 2019. The adoption of AASB 16 Leases from 1 July 2019 had no material impact on the
Group’s financial statements.
(b) Finance income and finance costs
Finance income comprises interest income on funds invested, dividend income. Interest income is recognised as it
accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the date
that the Group’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
Finance costs comprise interest expense on borrowings. Borrowing costs that are not directly attributable to the
acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest
method.
Foreign currency gains and losses are reported on a net basis.
36
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(c) Exploration and evaluation expenditure
Exploration and evaluation expenditure, including the costs of acquiring licences, are capitalised as intangible
exploration and evaluation assets on an area of interest basis, less any impairment losses. Costs incurred before the
Group has obtained the legal rights to explore an area are recognised in profit or loss.
Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either:
•
the expenditures are expected to be recouped through successful development and exploitation of the area of
interest; or
• activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves and active and significant
operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical
feasibility and commercial viability and facts and circumstances suggest that the carrying amount exceeds the
recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-
generating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of
interest.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are
demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment
and then reclassified to developing mine properties.
(d) Financial instruments
Non-derivative financial assets
Recognition and initial measurement
The Group initially recognises trade receivables on the date that they are originated. All other financial assets are
recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the
instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially
all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial
assets that is created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,
and only when, the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to
realise the asset and settle the liability simultaneously.
37
Annual Report 2020 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(d) Financial instruments (Cont.)
Classification and subsequent measurement
On initial recognition, a financial asset is classified as measured at:
• Amortised cost;
• Fair value through other comprehensive income – equity investment; or
• Fair value through profit or loss.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business
model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the
first reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets both the following conditions and is not designated as fair
value through profit or loss:
•
•
It is held within a business model whose objective is to hold assets to collect contractual cash flows; and
Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present
subsequent changes in the investment’s fair value through OCI. This election is made on an investment-by-investment
basis.
All financial assets not classified as measured at amortised cost or fair value through other comprehensive income
as described above are measured at fair value through profit or loss. This includes all derivative financial assets. On
initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be
measured at amortised cost or at fair value through other comprehensive income as at fair value through profit or loss
if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Non-derivative financial liabilities
Financial liabilities are measured at amortised cost.
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated.
All other financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party
to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.
Other financial liabilities comprise loans and borrowings and trade and other payables.
(e) Share Capital
Ordinary Shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are
recognised as a deduction from equity, net of any tax effects.
38
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(f) Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it 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 over
the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date
that control commences until the date that control ceases.
Non-controlling interests
NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of
acquisition.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions.
Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any
related NCI and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest
retained in the former subsidiary is measured at fair value when control is lost.
Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intragroup transactions
are eliminated in preparing the consolidated financial statements.
(g) Trade and other receivables and payables
Trade receivables and payables are carried at amortised cost. For receivables and payables with a remaining life of
less than one year, the notional amount is deemed to reflect the fair value. All other receivables and payables are
discounted to determine the fair value.
(h) Impairment
Non-derivative financial assets
The Group recognises loss allowances to an amount equal to lifetime expected credit losses (ECLs), except for the
following, which are measured at 12-month ECLs:
• Debt securities that are determined to have a low credit risk at the reporting date; and
• Other debt securities and bank balances for which credit risk (i.e the risk of default occurring over the expected life
of the financial instrument) has not increased significantly since initial recognition.
Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs.
Measurement of ECLs
ECLs are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash
shortfalls. ECL’s are discounted at the effective interest rate of the financial asset.
39
Annual Report 2020 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(h) Impairment (Cont.)
Non-financial assets
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit (CGU) exceeds
its recoverable amount. The recoverable amount of an asset or CGU is the greater of their fair value less costs to sell
and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset or CGU. For impairment testing, assets are grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Impairment
losses are recognised in profit or loss.
Reversals of impairment
An impairment loss in respect of a financial asset carried at amortised cost is reversed if the subsequent increase in
recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.
In respect of non-financial assets, an impairment loss is reversed if there has been a conclusive change in the estimates
used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
(i) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less.
(j) Income tax
Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business
combination or items recognised directly in equity or in other comprehensive income.
Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted
or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
•
•
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries to the extent that the Group is able to control the
timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable
future; or
•
taxable temporary differences arising on the initial recognition of goodwill.
40
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(j) Income tax (Cont.)
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group
expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse,
using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset if
there is a legally enforceable right to offset current tax liabilities and assets and they relate to taxes levied by the same
tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities
and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent
that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets
are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
(k) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the
functional currency at the exchange rate at the reporting date. The foreign currency gain or loss on monetary items is
the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective
interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at
the end of the reporting period.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated
to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency
differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation
of investments in equity securities designated as FVOCI, a financial liability designated as a hedge of the net
investment in a foreign operation or qualifying cash flow hedges, which are recognised in other comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction.
(l) Foreign operations
The assets and liabilities of foreign operations are translated to Australian dollars at foreign exchange rates ruling
at the reporting date. The income and expenses of foreign operations are translated to Australian dollars at rates
approximating the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising
on retranslation are recognised directly in the foreign currency translation reserve (‘FCTR’), a separate component of
equity.
Foreign exchange gains and losses arising from a monetary item receivable or payable to a foreign operation, the
settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net
investment in a foreign operation and are recognised directly in the FCTR.
Any references to functional currency, unless otherwise stated, are to the functional currency of the Company,
Australian dollars.
When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to profit or
loss as part of the profit or loss on disposal.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely
in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form
part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented
within equity in the FCTR.
41
Annual Report 2020 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(m) Segment reporting
Determination and presentation of operating segments
The Group determines and presents operating segments based on the information that is provided internally to the
Executive Director, who is the Group’s chief operating decision maker.
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. All operating segments’ operating results are regularly reviewed by the Group’s Executive Director
to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete
financial information is available.
Segment results that are reported to the Executive Director include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the
Company’s headquarters), head office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and
intangible assets other than goodwill.
(n) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can
be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current
market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is
recognised as a finance cost.
(o) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is
not recoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown
inclusive of GST.
Cash flows are presented in the Consolidated Statement of Cash Flows on a gross basis, except for the GST component
of investing and financing activities, which are disclosed as operating cash flows.
42
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(p) Employee benefits
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount
expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be estimated reliably.
Share-based payment transactions
The grant-date fair value of share-based payment awards granted is recognised as an employee and consultants
expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled
to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related
service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an
expense is based on the number of awards that meet the related service and non-market performance conditions at
the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-
based payment is measured to reflect such conditions and there is no true-up for differences between expected and
actual outcomes.
(q) Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value for both financial
and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes
based on the following methods. When applicable, further information about the assumptions made in determining
fair values is disclosed in the notes specific to that asset or liability.
Investments in equity securities
The fair values of investments in equity securities are determined with reference to the quoted market price that is
most representative of the fair value of the security at the measurement date.
Share-based payment transactions
The fair value of the share options is measured using the Black-Scholes formula. Measurement inputs include share
price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic
volatility), expected dividends, and the risk-free interest rate (based on government bonds).
The grant-date fair value of share-based payment awards is recognised as an expense, with a corresponding increase in
equity, over the period that the recipient unconditionally become entitled to the awards. The amount recognised as an
expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions
are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards
that meet the related service and non-market performance conditions at the vesting date. For share-based payment
awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such
conditions and there is no true-up for differences between expected and actual outcomes. Service and non-market
performance conditions are not taken into account in determining fair value.
(r) Standards issued but not yet effective
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning
after 1 January 2020, and have not been applied in preparing these financial statements. The following amended
standards and interpretations are not expected to have a significant impact on the financial statements.
• Amendments to References to Conceptual Frameworks in IFRS standards;
• Definition of a Business (Amendments to AASB 3);
• Definition of Material (Amendments to AASB 101 and AASB 108);
• AASB 17 Insurance Contracts
43
Annual Report 2020 2020
$
2019
$
50,000
50,000
113,869
84,998
24,000
267,729
43,225
59,771
22,007
60,000
-
-
71,745
82,920
45,407
70,665
32,108
40,761
14,558
60,000
675,599
418,164
2020
$
12,559
3,540
16,099
-
16,099
2019
$
11,179
1,837
13,016
-
13,016
73,427
73,427
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
4. LOSS FROM OPERATING ACTIVITIES
Other income
Recognised in profit or loss
Government grant
Other expenses
Administration costs
Audit and review services – KPMG
Accounting and secretarial fees
Legal fees
Insurance
ASIC and ASX fees
Share registry fees
Rent
5. FINANCE INCOME AND FINANCE COSTS
Recognised in profit and loss
Interest income on cash deposits
Foreign exchange gain / (loss)
Finance income
Finance costs
Net finance income/(costs) recognised in profit or loss
Recognised in other comprehensive income
Net change in fair value of equity instruments at fair value
Finance cost recognised in other comprehensive income, net of tax
(343,371)
(343,371)
44
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
INCOME TAX EXPENSE
6.
Current tax expense
Current year
Overprovision in prior year
Losses not recognised
Numerical reconciliation of income tax expense to prima facie tax payable:
Loss before tax
Prima facie income tax benefit at the Australian tax rate of 27.5%
Decrease in income tax benefit due to:
- non-deductible expenses
- effect of deferred tax asset (DTA) for capital losses not brought to account
- effect of DTA for tax losses not brought to account
- effect of DTA for temporary differences not brought to account
Income tax expense/(benefit)
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Capital losses
Tax losses
Net deductible temporary differences
Potential tax benefit at 27.5%
2020
$
2019
$
(357,745)
-
357,745
-
79,023
-
(79,023)
-
1,729,651
(475,654)
942,751
(259,257)
179,699
-
371,496
(75,541)
-
44,970
-
183,266
31,021
-
6,131,868
3,985,145
185,268
10,302,281
6,131,868
3,613,649
43,531
9,789,048
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets
have not been recognised in respect of these items because it is not probable that future taxable profit will be available
against which the Group can utilise the benefits there-from.
7. CASH AND CASH EQUIVALENTS
Cash at bank
Deposits at call
2020
$
229,412
1,074,718
1,304,130
2019
$
141,714
257,105
398,819
45
Annual Report 2020 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
8. RECEIVABLES
Current
Sundry debtors
2020
$
2019
$
14,806
14,513
Trade and sundry debtors are non-interest bearing and generally on 30-day terms.
9.
INVESTMENTS
At 30 June 2020, the Group holds 1,327,000 shares (30 June 2019: 1,368,300) in Blox Inc., a US over the counter traded
company at which had a closing share price of US$0.0077 at 30 June 2020 (30 June 2019: US$0.19).
The Group recognises its financial assets at fair value and classifies its investments as follows:
2020
$
2019
$
Equity instruments at fair value through other comprehensive income
Equity securities – Investment in Blox Inc.
14,802
370,179
Equity instruments at fair value through other comprehensive income are equity instruments which the Group intends
to hold for the foreseeable future. Any dividends received are recognised as income in profit or loss unless the dividend
clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in the fair
value reserve in OCI and are never reclassified to profit or loss.
Movement of the carrying amount of investment.
Movement during the period
Opening balance
Disposal
Net change in fair value
Equity securities – at fair value through other comprehensive income
2020
$
370,179
(12,006)
(343,371)
14,802
2019
$
305,660
(8,908)
73,427
370,179
46
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
10. EXPLORATION AND EVALUATION EXPENDITURE
Los Domos gold-silver
Cerro Diablo gold-silver
Cerro Bayo
Net Book Value
Los Domos gold-silver
Carrying amount at the beginning of the year
Additions
Impairment
Foreign currency translation movement
Balance carried forward
Cerro Diablo gold-silver
Carrying amount at the beginning of the year
Additions
Impairment
Foreign currency translation movement
Balance carried forward
Cerro Bayo
Carrying amount at the beginning of the year
Additions
Impairment
Foreign currency translation movement
Balance carried forward
Net book value
2020
$
4,743,528
58,423
2,093,325
6,895,276
5,173,477
435,360
-
(865,309)
4,743,528
55,082
13,507
-
(10,166)
58,423
-
2,292,035
-
(198,710)
2,093,325
6,895,276
2019
$
5,173,477
55,082
-
5,228,559
3,650,684
1,441,309
-
81,484
5,173,477
38,597
15,603
-
882
55,082
-
-
-
-
-
5,228,559
The ultimate recoupment of exploration and evaluation expenditure is dependent on the successful development and
commercial exploitation, or alternatively sale of the respective areas of interest.
11. TRADE AND OTHER PAYABLES
Current liabilities
Trade creditors and accruals
Employee leave entitlements
2020
$
2019
$
319,696
33,046
352,742
180,356
9,987
190,343
47
Annual Report 2020 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
12. ISSUED CAPITAL
1,412,045,355 (2019: 897,276,863) fully paid ordinary shares
2020
$
2019
$
121,182,362
116,371,685
2020
2019
Nº
$
Nº
$
(a) Fully paid ordinary shares
Balance at beginning of financial year
897,276,863 116,371,685
754,364,363
113,833,684
Issued ordinary shares 5 October 2018 for $0.02
Issued ordinary shares 29 October 2018 for $0.02
Issued ordinary shares 4 December 2018 for $0.02
Issued ordinary shares 31 December 2018 for $0.012
-
-
-
-
-
-
-
-
95,000,000
1,900,000
14,100,000
5,000,000
28,812,500
282,000
100,000
345,750
Issued ordinary shares 8 August 2019 for $0.010
134,591,529
1,345,915
Issued ordinary shares 3 September 2019 for $0.010
52,780,992
527,809
Issued ordinary shares 14 October 2019 for $0.010
315,408,471
3,154,085
Issued ordinary shares 14 October 2019 – non cash 1
Issued ordinary shares 12 May 2020 – non cash 2
Less cost of issue
8,687,500
3,300,000
104,250
19,800
-
(341,182)
-
-
-
-
-
-
-
-
-
-
-
(89,749)
1,412,045,355 121,182,362
897,276,863
116,371,685
1 Shares issued on 14 October 2019 related to the acquisition of 75% interest in three mining concessions owned by
Patagonia Gold Sociedad Contractual Minera (‘Patagonia’) which form part of the Los Domos Project.
2 Shares issued on 12 May 2020 related to the issued of shares as consideration for Geological Technical Services
provided in connection with the Cerro Bayo project in southern Chile.
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote
per share at the shareholders meetings. In the event of winding up of the Company, ordinary shareholders rank after
creditors and are fully entitled to any proceeds of liquidation.
48
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
12.
ISSUED CAPITAL (Cont.)
(b) Share Options
During the year ended 30 June 2020, the Company granted 35,000,000 options to the Managing Director (2019 option
nil).
On 14 October 2019, 15,000,000 unlisted options were granted to the Managing Director (‘MD’) as follows:
Number
of options
Exercise
price
Vesting
Expiry Date
Fair Value per Option
at Grant Date
Tranche 1
5,000,000
Tranche 2
5,000,000
Tranche 3
5,000,000
$0.03
$0.05
$0.07
Immediately
13 November 2020
Immediately
13 November 2021
Immediately
13 November 2023
$0.0067
$0.0086
$0.0118
Fair
Value
$33,500
$43,000
$59,000
The fair value of the options granted on 14 October 2019 to the MD was $135,500. The Black-Scholes formula model
inputs were the Company’s share price of $0.0155 at the grant date, a volatility factor of 152.6% based on historical
share price performance and a risk-free interest rate of 0.71% based on the 2-year government bond rate.
On 29 November 2019, 20,000,000 unlisted options were granted to the Managing Director as follows:
Number
of options
Exercise
price
Vesting
Expiry Date
Fair Value per Option
at Grant Date
Tranche 1
6,666,666
Tranche 2
6,666,667
Tranche 3
6,666,667
$0.027
$0.030
$0.035
Immediately
13 November 2021
Immediately
13 November 2022
Immediately
13 November 2024
$0.0084
$0.0101
$0.0120
Fair
Value
$56,000
$67,333
$80,000
The fair value of options granted on 29 November 2019 to the MD was $203,333. The Black-Scholes formula model
inputs were the Company’s share price of $0.014 at the grant date, a volatility factor of 149.46% based on historical
share price performance and a risk-free interest rate of 0.65% based on the 3-year government bond rate.
As the options are not subject to vesting conditions, the total grant date fair value of $338,833 has been recognised
as an expense in the year ended 30 June 2020. The expense has been included in “employee, director and consultants
costs” in the income statement.
The following unlisted options were on issue as at 30 June 2020:
Opening Balance
1 July 2019
Number
-
-
-
-
-
-
Exercise
Price
$
0.030
0.050
0.070
0.027
0.030
0.035
Granted during
the year
Number
Exercised/Expired
during the year
Number
Closing Balance
30 June 2020
Number
5,000,000
5,000,000
5,000,000
6,666,666
6,666,667
6,666,667
-
-
-
-
-
-
5,000,000
5,000,000
5,000,000
6,666,666
6,666,667
6,666,667
49
Annual Report 2020 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
13. RESERVES
Fair value reserve (a)
Foreign currency translation reserves (b)
Equity based compensation reserve (c)
Movements during the period:
(a) Fair value reserve
Balance at beginning of period
Net change in fair value
Balance at end of period
(b) Foreign currency translation reserves
Balance at beginning of period
Currency translation differences
Balance at end of period
(c) Equity based compensation reserve
Balance at beginning of period
Share based payment – vested share options
Exercised options
Balance at end of period
Nature and purpose of reserves
Fair value reserve:
2020
$
402,161
(1,234,022)
338,833
(493,028)
745,532
(343,371)
402,161
2019
$
745,532
(203,983)
-
541,549
672,105
73,427
745,532
(203,983)
(1,030,039)
(1,234,022)
(269,665)
65,682
(203,983)
-
338,833
-
338,833
-
-
-
-
The fair value reserve comprises the cumulative net change in the fair value of equity securities designated at fair value
through other comprehensive income.
Foreign currency translation reserve:
The foreign currency translation reserve records the foreign currency differences arising from the translation of the
financial statements of foreign operations where their functional currency is different to the presentation currency of
the reporting entity.
Equity based compensation reserve:
The equity based compensation reserve is used to record the options issued to directors and executives of the Company
as compensation.
50
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
2020
$
2019
$
14. LOSS PER SHARE
Basic and diluted loss per share has been calculated using:
Net loss for the year attributable to equity holders of the parent
(1,728,160)
(942,751)
Weighted average number of ordinary shares (basic and diluted)
Issued ordinary shares at beginning of year
Effect of shares issued (Note 12)
897,276,863
754,364,363
395,411,400
96,580,941
Weighted average ordinary shares at the end of the year
1,292,688,263
850,945,304
As the Group is loss making, none of the potentially dilutive securities are currently dilutive in the calculation of total
earnings per share.
15. RECONCILIATION OF CASH FLOWS FROM
OPERATING ACTIVITIES
Cash flows from operating activities
Loss for the year
Non-cash items
Other income
Provisions for employee entitlements
Share based payments
Foreign currency exchange loss/(gain)
Changes in assets and liabilities
Decrease/(increase) in receivables
Decrease/(increase) in other assets
(Decrease)/Increase in payables
Net cash used in operating activities
Reconciliation of cash
2020
$
2019
$
(1,729,651)
(942,751)
(15,851)
23,059
338,833
(3,540)
(293)
-
96,905
-
248
-
(1,837)
4,582
-
46,648
(1,290,538)
(893,110)
For the purposes of the statement of cash flows, cash includes cash on hand
and at bank and cash on deposit net of bank overdrafts and excluding security
deposits. Cash 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 and cash equivalents
1,304,130
398,819
51
Annual Report 2020
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
16. RELATED PARTIES
Parent and ultimate controlling party
Equus Mining Limited is both the parent and ultimate controlling party of the Group.
Key management personnel and director transactions
During the year ended 30 June 2020 and 2019, no key management persons, or their related parties, held positions in
other entities that provide material professional services resulting in them having control or joint control over the
financial or operating policies of those entities.
17. KEY MANAGEMENT PERSONNEL DISCLOSURES
Information regarding individual key management personnel’s compensation and some equity instruments disclosures
as permitted by Corporations Act and Corporations Regulations 2M.3.03 are provided in the Remuneration Report
section of the Director’s Report.
Key management personnel compensation
Primary fees/salary
Superannuation
Share based payment
Short term benefits
2020
$
455,167
39,203
338,833
23,059
856,262
2019
$
228,232
13,983
-
-
242,215
At 30 June 2020 no fees were outstanding (2019 – $7,500). There were no loans made to key management personnel or
their related parties during the 2020 and 2019 financial years.
The Board reviews remuneration arrangements annually based on services provided. Apart from the details disclosed in
this note, there were no material contracts involving Directors’ interest’s existing at year-end.
52
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
18. SHARE BASED PAYMENT
During the year the Company granted 35,000,000 unlisted options to the Managing Director under no specific plan
to acquire options over unissued ordinary shares in the Company (2019 – Nil). The options have no voting or dividend
rights. The options vested immediately on Grant Date and there are no vesting conditions attached to the options
issued. Any options not exercised by the expiry date will lapse automatically.
The terms and conditions of the options held by key management personnel during the year ended 30 June 2020 are as
follows:
Grant date
Expiry date
Vesting date
Fair value
of options
granted
$
Exercise
price
Total
granted
Number
Total
Exercised
Number
14 October 2019
13 November 2020
14 October 2019
$0.030
33,500
5,000,000
14 October 2019
13 November 2021
14 October 2019
$0.050
43,000
5,000,000
14 October 2019
13 November 2023
14 October 2019
$0.070
59,000
5,000,000
29 November 2019 13 November 2021 29 November 2019 $0.027
56,000
6,666,666
29 November 2019 13 November 2022 29 November 2019 $0.030
67,333
6,666,667
29 November 2019 13 November 2024 29 November 2019 $0.035
80,000
6,666,667
-
-
-
-
-
-
Movement of options in the equity based compensation reserve during the year
Balance at
end of the
period
Number
5,000,000
5,000,000
5,000,000
6,666,666
6,666,667
6,666,667
Number of
options
2020
35,000,000
Weighted average
exercise price
2020
$0.039
Number of
options
2019
-
Weighted average
exercise price
2019
-
Outstanding
The equity based compensation reserve is used to record the options issued to directors and executives of the Company
as compensation. Options are valued using the Black-Scholes option pricing model.
The weighted average remaining contractual life of share options outstanding at the end of the year in the equity
based compensation reserve was 2.28 years (2019 – nil).
During the year, no ordinary shares were issued as a result of the exercise of options granted to Directors (2019 – nil).
19. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS DISCLOSURE
The Group’s financial instruments comprise deposits with banks, receivables, trade and other payables and from time
to time short term loans from related parties. The Group does not trade in derivatives.
The main risks arising from the Group’s financial instruments are market risk, credit risk and liquidity risks. This note
presents information about the Group’s exposure to each of these risks, its objectives, policies and processes for
measuring and managing risk, and the Group’s management of capital.
Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management
framework. Risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. These policies are reviewed regularly
to reflect changes in market conditions and the Group’s activities. The primary responsibility to monitor the financial
risks lies with the Managing Director and the Company Secretary under the authority of the Board.
53
Annual Report 2020 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
19. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS DISCLOSURE (Cont.)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligation 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 monitors rolling forecasts of liquidity based on expected fund raisings, trade payables and other obligations
for the ongoing operation of the Group. At balance date, the Group has available funds of $1,304,130 for its immediate
use.
The following are the contractual maturities of financial liabilities:
Financial liabilities
Trade and other payables
30 June 2020
30 June 2019
Carrying
amount
$
Contractual
cash flows
$
Less than
6 months
$
6 to 12
months
$
1 to 5
years
$
More than
5 years
$
319,696
180,356
(319,696)
(180,356)
(319,696)
(180,356)
-
-
-
-
-
-
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at
significantly different amounts.
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.
The carrying amount of the Group’s financial assets represents the maximum credit risk exposure as follows:
Cash and cash equivalents
Receivables
Cash and cash equivalents
2020
$
1,304,130
14,806
1,318,936
2019
$
398,819
14,513
413,332
At 30 June 2020, the Group held cash and cash equivalents of $1,304,130 (2019: $398,819), which represents its
maximum credit exposure on these assets. The cash and cash equivalents are held with reputable banks and financial
institution counterparties, which are rated AA- to AAA+, based on rating agency ‘Moody’s rating’.
Receivables
For the year ended 30 June 2020, the Group does not hold a significant value of trade receivables, and therefore has
minimal exposure to credit risk.
54
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
19. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS DISCLOSURE (Cont.)
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices
will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters, while optimising the
return.
Interest Rate Risk
The Group’s income statement is affected by changes in interest rates due to the impact of such changes on interest
income and expenses.
At year-end, the interest rate risk profile of the Group’s interest bearing financial instruments was:
Cash and cash equivalents
There are no fixed rate instruments (2019 - $nil).
2020
$
1,304,130
2019
$
398,819
The Group does not have interest rate swap contracts. The Group has two interest bearing accounts from where it
draws cash when required to pay liabilities as they fall due. The Group normally invests its funds in the two interest
bearing accounts to maximise the available interest rates. The Group analyses its interest rate exposure when
considering renewals of existing positions including alternative financing arrangements.
Sensitivity analysis
A change of 100 basis points in interest rates at the current and prior reporting date would have increased/(decreased)
equity and loss for the period by an immaterial amount.
Currency risk
The Group is exposed to currency risk on bank account denominated in USD totalling $43,538 at 30 June 2020 (2019 –
US$63,624).
Sensitivity analysis
A 10% strengthening of the Australian dollar against the United States dollar at 30 June 2020 would have decreased
post-tax profit and net assets of the Group by $5,733. A 10% weakening of the Australian dollar against the United
States dollar at 30 June 2020 would have an increased post-tax profit and net assets of the Group by $7,008, on the
basis that all other variables remain constant.
Exchange rates applied:
AUD/USD
Reporting date spot rate
2020
0.6903
2019
0.7023
55
Annual Report 2020 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
19. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS DISCLOSURE (Cont.)
Price risk
The Group is exposed to equity securities price risk. This arises from investments held by the Group and classified in the
balance sheet as other financial assets.
The Group’s investments are publicly traded on the Over-The-Counter-Market (‘OTC market’) in the USA.
The table below summarises the impact of increases/decreases of the bid price on the Group’s post-tax profit for the
year and on equity
Blox-Inc. - 10% bid price increase
Blox-Inc. - 10% bid price decrease
Capital management
Impact on post-tax profit
Impact on Total equity
2020
$
-
-
2019
$
-
-
2020
$
1,472
(1,339)
2019
$
37,019
(33,652)
Management aim to control the capital of the Group in order to maintain an appropriate debt to equity ratio, provide the
shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern.
The Group’s capital includes ordinary share capital supported by financial assets. There are no externally imposed
capital requirements on the Group.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of cash
levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior
year.
Financial instruments carried at fair value
The carrying amounts of financial assets and financial liabilities included in the balance sheet approximate fair values.
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have
been defined as follows:
•
•
•
Level 1 - fair value measurements are those instruments valued based on quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 - fair value measurements are those instruments valued based on inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices).
Level 3 - fair value measurements are those instruments valued based on inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
Equity instruments at fair value through other comprehensive income
30 June 2020
30 June 2019
Level 1
$
Level 2
$
Level 3
$
Total
$
-
-
14,802
370,179
-
-
14,802
370,179
The financial assets held at 30 June 2020 and 30 June 2019 relate to investments held in quoted equity securities and
were designated as equity instruments at fair value through other comprehensive income.
56
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
20. CONTROLLED ENTITIES
Parent entity
Equus Mining Limited is an Australian incorporated company listed on the Australian Securities Exchange.
Wholly owned controlled entities
Country of incorporation
2020 %
2019 %
Ownership Interest
Hotrock Enterprises Pty Ltd (i)
Okore Mining Pty Ltd
Dataloop Pty Ltd
Equus Resources Pty Ltd (ii)
(i) Subsidiary of Hotrock Enterprises Pty Ltd
Derrick Pty Ltd
Andean Coal Pty Ltd (iii)
(iii) Subsidiary of Andean Coal Pty Ltd
Minera Carbones Del Sur Limitada
(ii) Subsidiary of Equus Resources Pty Ltd
Equus Resources Chile SpA (iv)
Minera Equus Chile Ltda
Southern Gold SpA (v)
(iv) Subsidiary of Equus Resources Chile SpA
Minera Equus Chile Ltda
(v) Subsidiary of Southern Gold SpA
Equus Patagonia SpA
21. COMMITMENTS
Exploration expenditure commitments
Australia
Australia
Australia
Australia
Australia
Australia
Chile
Chile
Chile
Chile
Chile
Chile
100
100
100
100
100
100
99.9
100
0.1
100
99.9
75
100
100
100
100
100
100
99.9
100
0.1
100
99.9
-
The Group does not have any minimum expenditure commitments in relation to its mineral interests in the Los Domos
Gold-Silver project or Cerro Diablo project at the date of this report.
22. SUBSEQUENT EVENTS
On 20 July 2020, the Company announced a placement to institutional investors to raise up to $3.5 million by the issue
of 388,888,889 shares at an issue price of $0.009. The placement is made up of two tranches, tranche one completed on
28 July 2020 raised $3,139,977 before costs by the issue of 348,886,300 ordinary shares. For tranche two, the Company
obtained approval at a shareholders’ meeting held on 16 September 2020 for the issue of 40,002,589 ordinary shares at
$0.009 and raised $360,023 before costs.
On 16 September 2020, following the approval by shareholders the Company granted 388,888,889 free attaching
unlisted options on a 1 for 1 basis to the investors and Directors who participated in the placement. The options are
exercisable at $0.015 per share vesting on Grant Date and expiring in three years from Grant date.
On 16 September 2020, following the approval by shareholders the Company granted 15,000,000 unlisted options
to Brokers of the placement under the same terms and conditions to the options granted to the investors who
participated in the Placement.
No other matters or circumstances have arisen in the interval between the end of the financial year and the date of
this report any item, transaction or event of a material or unusual nature likely, in the opinion of the Directors of the
Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of
the Group, in future financial years.
57
Annual Report 2020 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
23. OPERATING SEGMENTS
The Group’s chief operating decision maker has considered the requirements of AASB 8, Operating Segments, and
has concluded that, during the year ended 30 June 2020, the Group operated in the mineral exploration within the
geographical segments of Australia and Chile. The Company holds shares in Blox Inc., a US over the counter traded
company and has concluded that during the year ended 30 June 2020, to recognise the investment in Blox Inc., as a
separate operating segment.
Mineral Exploration
$
Investing
$
30 June 2020
External revenues
-
Reportable segment profit /(loss) before tax
(239,710)
Interest income
Interest expense
Reportable segment assets
Reportable segment liabilities
30 June 2019
External revenues
12
-
7,017,624
220,115
-
Reportable segment profit /(loss) before tax
(110,170)
Interest income
Interest expense
98
-
-
-
-
-
14,802
-
-
-
-
-
Total
$
-
(239,710)
12
-
7,032,426
220,115
-
(110,170)
98
-
Reportable segment assets
Reportable segment liabilities
5,257,625
74,846
370,179
-
5,627,804
74,846
58
Equus Mining Limited Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
23. OPERATING SEGMENTS (Cont.)
Reconciliations of reportable segment revenues and profit or loss
Revenues
Total revenue for reportable segments
Total revenue unallocated
Consolidated revenue
Profit or loss
Total loss for reportable segments
Unallocated amounts:
Other income
Net finance income
Net other corporate expenses
Consolidated loss before tax from continuing operations
Assets
Total assets for reportable segments
Unallocated corporate assets
Consolidated total assets
Liabilities
Total liabilities for reportable segments
Unallocated corporate liabilities
Consolidated total liabilities
Geographical information
2020
$
2019
$
-
-
-
-
-
-
(239,710)
(110,170)
50,000
16,087
(1,556,028)
(1,729,651)
7,032,426
1,196,588
8,229,014
220,115
132,627
352,742
-
12,918
(845,499)
(942,751)
5,627,804
384,266
6,012,070
74,846
115,497
190,343
In presenting information on the basis of geography, segment revenue and segment assets are based on the
geographical location of the operations.
Australia
Chile
United States of America
2020
2019
Revenue
$
-
-
-
Non-current
assets
$
-
6,895,276
14,802
Revenues
$
-
-
-
Non-current
assets
$
-
5,228,559
370,179
59
Annual Report 2020 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2020
24. PARENT ENTITY DISCLOSURES
As at, and throughout the financial year ended 30 June 2020 the parent entity of the Group was Equus Mining Limited.
Result of the parent entity
Net (loss)/profit
Other comprehensive income
Total comprehensive profit/(loss)
Financial position of the parent entity at year end
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Accumulated losses
Reserve
Total equity
Company
2020
$
2019
$
(1,449,738)
(819,831)
-
-
(1,449,738)
(819,831)
1,196,588
19,520,844
20,717,432
384,266
16,965,171
17,349,437
132,625
115,497
-
-
132,625
115,497
20,584,807
17,233,940
121,182,362
116,371,683
(101,316,549)
(99,866,811)
718,994
729,068
20,584,807
17,233,940
The Directors are of the opinion that no commitments or contingent liabilities existed at or subsequent to year end.
60
Equus Mining Limited Directors’ Declaration
1. In the opinion of the Directors of Equus Mining Limited (the ‘Company’):
(a) the consolidated financial statements and notes there to, set out on pages 31 to 60, and the Remuneration
Report as set out on pages 24 to 28 of the Directors’ Report are 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 performance, for
the financial year ended on that date;
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
2. The Directors have been given the declarations required under section 295A of the Corporations Act 2001 for the
financial year ended 30 June 2020.
3. The Director’s draw attention to Note 2(a) to the consolidated financial statements, which includes a statement of
compliance with International Financial Reporting Standards.
Signed at Sydney this 30th day of September 2020 in accordance with a resolution of the Board of Directors:
Mark H. Lochtenberg
Non-Executive Chairman
John R. Braham
Managing Director
61
Annual Report 2020 Independent Auditor’s Report
Independent Auditor’s Report
To the shareholders of Equus Mining Limited
Report on the audit of the Financial Report
Independent Auditor’s Report
Opinion
We have audited the Financial Report of
To the shareholders of Equus Mining Limited
Equus Mining Limited (the Company).
The Financial Report comprises:
• Consolidated statement of financial position as at 30
Report on the audit of the Financial Report
In our opinion, the accompanying
Financial Report of the Company is in
accordance with the Corporations Act
2001, including:
June 2020;
Opinion
• giving a true and fair view of the
Group's financial position as at 30
We have audited the Financial Report of
June 2020 and of its financial
Equus Mining Limited (the Company).
performance for the year ended on
that date; and
In our opinion, the accompanying
Financial Report of the Company is in
complying with Australian
accordance with the Corporations Act
Accounting Standards and the
2001, including:
Corporations Regulations 2001.
• giving a true and fair view of the
•
Basis for opinion
Group's financial position as at 30
June 2020 and of its financial
performance for the year ended on
that date; and
• Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of cash
flows for the year then ended;
• Notes including a summary of significant accounting
The Financial Report comprises:
policies; and
• Consolidated statement of financial position as at 30
• Directors’ Declaration.
June 2020;
The Group consists of the Company and the entities it
• Consolidated statement of profit or loss and other
controlled at the year-end or from time to time during the
comprehensive income, Consolidated statement of
financial year.
changes in equity, and Consolidated statement of cash
flows for the year then ended;
• Notes including a summary of significant accounting
policies; and
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during the
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
financial year.
audit of the Financial Report section of our report.
complying with Australian
Accounting Standards and the
Corporations Regulations 2001.
• Directors’ Declaration.
•
Basis for opinion
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
have fulfilled our other ethical responsibilities in accordance with the Code.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
have fulfilled our other ethical responsibilities in accordance with the Code.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
53 | Pa g e
62
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
53 | Pa g e
Equus Mining Limited
Independent Auditor’s Report
Material uncertainty related to going concern
We draw attention to Note 2(d), “Going Concern” in the financial report. The conditions disclosed in Note
2(d), indicate a material uncertainty exists that may cast significant doubt on the Group’s ability to continue
as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal
course of business, and at the amounts stated in the financial report. Our opinion is not modified in
respect of this matter.
In concluding there is a material uncertainty related to going concern we evaluated the extent of
uncertainty regarding events or conditions casting significant doubt in the Group’s assessment of going
concern. This included:
• Analysing the cash flow projections by:
- Evaluating the underlying data used to generate the projections. We specifically checked the cash
flow projections were updated for COVID-19 implications to the business based on credible and
authoritative sources, for consistency with other information tested by us, our understanding of
the Group’s intentions, and past results and practices;
- Assessing the planned levels of operating and capital expenditures for consistency of relationships
and trends to the Group’s historical results, results since year end and our understanding of the
business, industry, economic and expected market conditions due to COVID-19;
• Assessing significant non-routine forecast cash inflows and outflows for feasibility, quantum and
timing. We used our knowledge of the client, its industry and current status of those initiatives to
assess the level of associated uncertainty;
• Reading directors’ meeting minutes and relevant correspondence with the Group’s advisors to
understand the Group’s ability to raise additional shareholder funds particularly in considering the
expected market conditions due to COVID-19, and assess the level of associated uncertainty;
• Evaluating the Group’s going concern disclosures in the financial report by comparing them to our
understanding of the matter and COVID-19 implications for the Group, the events or conditions
incorporated into the cash flow projection assessment, the Group’s plans to address those events or
conditions, and accounting standard requirements. We specifically focused on the principle matters
giving rise to the material uncertainty.
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.
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matter described below to be the Key Audit Matter:
54 | Pa g e
63
Annual Report 2020
Independent Auditor’s Report
Exploration and evaluation expenditure ($6,895,276)
Refer to Note 10 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Exploration and evaluation expenditure capitalised
(E&E) is a key audit matter due to:
• The significance of the activity to the Group’s
business and the balance (being 84% of total
assets); and
• The greater level of audit effort to evaluate
the Group’s application of the requirements of
the industry specific accounting standard
AASB 6 Exploration for and Evaluation of
Mineral Resources, in particular the
conditions allowing capitalisation of relevant
expenditure and the presence of impairment
indicators. The compliance with these
requirements necessitates a detailed analysis
by the Group and therefore gives criticality to
the scope and depth of our work. We
involved senior team members to challenge
the Group’s determination of its compliance
with the accounting standard.
In assessing the conditions allowing capitalisation
of relevant expenditure, we focused on:
• The determination of the areas of interest
(areas);
• Documentation available regarding rights to
tenure, via licencing, and compliance with
relevant conditions to maintain current rights
to an area of interest;
• The Group’s intention and capacity to
continue the relevant E&E activities; and
• The Group’s determination of whether the
E&E meets the carry forward conditions of
AASB 6 including whether the E&E is
expected to be recouped through successful
development and exploitation of the area of
interest, or alternatively, by its sale.
In assessing the presence of impairment
indicators, we focused on those that may draw
into question the commercial continuation of E&E
activities for areas of interest where significant
capitalised E&E exists. In addition to the
Our procedures included:
• Evaluating the Group’s accounting policy to
recognise exploration and evaluation assets
using the criteria in the accounting standard;
• We assessed the Group’s determination of its
areas of interest for consistency with the
definition in the accounting standard. This
involved analysing the licenses in which the
Group holds an interest and the exploration
programmes planned for those for consistency
with documentation such as license related
technical conditions, contractual agreements,
and planned work programmes;
• For each area of interest, we assessed the
Group’s current rights to tenure by
corroborating the ownership of the relevant
license to government registries or
government correspondence and evaluating
agreements in place with other parties. We
also tested for compliance with conditions;
• We tested the Group’s additions to E&E for the
year by evaluating a statistical sample of
recorded expenditure for consistency to
underlying records, the capitalisation
requirements of the Group’s accounting policy
and the requirements of the accounting
standard;
• We evaluated Group documents, such as
minutes of directors’ meetings, for consistency
with their stated intentions for continuing E&E
in certain areas. We corroborated this through
interviews with key operational and finance
personnel;
• We obtained project and corporate budgets
identifying areas with existing funding and
those requiring alternate funding sources. We
compared this for consistency with areas with
E&E, for evidence of the ability to fund
continued activities. We identified those areas
relying on alternate funding sources and
evaluated the capacity of the Group to secure
such funding;
64
55 | Pa g e
Equus Mining Limited
Independent Auditor’s Report
assessments above, we paid particular attention
to:
• The strategic direction of the Group and its
intent to continue exploration activities in
each area of interest;
• The ability of the Group to fund the
continuation of activities in each area of
interest; and
• Results from latest activities regarding the
existence or otherwise of economically
recoverable reserves for each area of interest.
• We analysed the Group’s activities in each area
of interest, and assessed the Group’s
documentation of planned future activities
including work programmes and project
budgets for each area of interest to determine
whether carry forward conditions of AASB 6
have been satisfied;
• We assessed each area of interest for one or
more of the indicators of impairment for areas
of interest that may indicate the carrying value
of capitalised expenditure exceeds its
recoverable amount. We did this through
testing the status of the Group’s tenure and
documented planned future activities,
considering the results of exploration
programmes completed to date, and
discussion with management.
Other Information
Other Information is financial and non-financial information in Equus Mining Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001;
•
•
implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error; and
assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend to
liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.
56 | Pa g e
65
Annual Report 2020
Independent Auditor’s Report
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of 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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration
Report of Equus Mining Limited for
the year ended 30 June 2020,
complies with Section 300A of the
Corporations Act 2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration Report in
accordance with Section 300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in pages
24 to 28 of the Directors’ report for the year ended 30 June
2020.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Jason Adams
Partner
Brisbane
30 September 2020
KPMG
66
Equus Mining Limited
Additional Stock Exchange Information
Additional information as at 21 September 2020 required by the Australian Stock Exchange Listing Rules and not
disclosed elsewhere in this report.
Home Exchange
The Company is listed on the Australian Securities Exchange. The Home Exchange is Sydney.
Audit Committee
As at the date of the Directors’ Report, an audit committee of the Board of Directors is not considered warranted due
to the composition of the Board and the size, organisational complexity and scope of operations of the Group.
Class of Shares and Voting Rights
The voting rights attached to ordinary shares, as set out in the Company’s Constitution, are that every member in
person or by proxy, attorney or representative, shall have one vote on a show of hands and one vote for each share held
on a poll.
A member holding partly paid shares is entitled to a fraction of a vote equivalent to the proportion, which the amount
paid up bears to the issue price for the share.
Distribution of Shareholders and Optionholders
The total distribution of fully paid shareholders and Optionholders as at 21 September 2020 was as follows:
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Total Shareholders
Total Number of Shares
Total Optionholders
Total Number of Options
264
292
260
1,223
944
2,983
115,409
820,302
2,335,679
51,110,727
1,746,552,127
1,800,934,244
-
-
-
-
85
85
-
-
-
-
438,888,889
438,888,889
Less than Marketable Parcels
On 21 September 2020, 1,304 shareholders held less than marketable parcels of 27,778 shares.
On Market Buy Back
There is no current on-market buy-back.
Substantial Holders
The name of the substantial shareholders in Equus Mining Limited as advised to the Company are set out below.
Tribeca Investment Partners Pty Ltd
Gerard C Toscan Management Pty Limited
Number of Ordinary Shares
111,111,111
117,483,132
67
Annual Report 2020 Additional Stock Exchange Information
Twenty Largest Shareholders
As at 21 September 2020, the twenty largest quoted shareholders held 43.06% of the fully paid ordinary shares as
follows:
Name
1 Citicorp Nominees Pty Limited
2 USB Nominees Pty Ltd
Mark Hamish Lochtenberg & Michael Lochtenberg
and Rigi Investments Pty Ltd
3
4 Gerard C Toscan Management Pty Limited
5 Permgold Pty Ltd
6 Gerard C Toscan Management Pty Limited
7 Terrane Minerals SpA
8 Palisades Goldcorp Ltd
9 HSBC Custody Nominees (Australia) Limited
10 Perrin Legal Pty Ltd
11 JP Morgan Nominees Australia Pty Limited
12 DRYCA Pty Ltd
13 Ringwood Management Pty Limited
14 John Wardman & Associates Pty Ltd
15 Altinova Nominees Pty Ltd
16 GP Securities Pty Ltd
17 Calama Holdings Pty Ltd
18 Jamie Muspratt
19 Sambas Energy Pty Ltd
20 Rosignol Pty Ltd
Substantial Optionholders In The Company
Number
139,504,683
82,277,802
63,110,762
63,103,049
46,627,420
41,530,463
41,417,075
40,000,000
35,580,546
26,289,792
21,337,623
21,000,059
21,000,000
20,000,000
20,000,000
18,000,000
17,775,106
16,248,179
16,000,000
15,750,000
%
7.75
4.57
3.50
3.50
2.59
2.31
2.30
2.22
1.98
1.46
1.18
1.17
1.17
1.11
1.11
1.00
0.99
0.90
0.89
0.87
As at 21 September 2020, the twenty largest optionholders that held 20% or more of the unquoted options.
Name
1
USB Nominees Pty Ltd
Escrow securities
As at 21 September 2020, there were escrow securities.
Unlisted Options
Quantity
91,825,017
%
20.92
68
Equus Mining Limited Additional Stock Exchange Information
Group Mineral Concession Interests at 21 September 2020
The Company provides the following information regarding its mining tenements:
Project
Location
Tenement
Ownership
% interest
Type of Tenement
Los Domos
Cerro Diablo
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Electrum 3A 1-24
Southern Gold SpA
Electrum 4A 1-26
Southern Gold SpA
Electrum 5A 1-42
Southern Gold SpA
Electrum 6A 1-32
Southern Gold SpA
Electrum 7A 1-44
Southern Gold SpA
Electrum 6A
Electrum 7A
Electrum 8
Electrum 10
Electrum 11
Southern Gold SpA
Southern Gold SpA
Southern Gold SpA
Southern Gold SpA
Southern Gold SpA
Pedregoso I 1-30
Equus Patagonia SpA
Pedregoso VII 1-30
Equus Patagonia SpA
Honda 20 1-20
Equus Patagonia SpA
Diablo 1
Diablo 2
Diablo 3
Diablo 4
Diablo 5
Diablo 6
Diablo 7
Diablo 8
Diablo 9
Diablo 10
Diablo 11
Diablo 12
Diablo 13
Minera Equus Chile Limitada
Minera Equus Chile Limitada
Minera Equus Chile Limitada
Minera Equus Chile Limitada
Minera Equus Chile Limitada
Minera Equus Chile Limitada
Minera Equus Chile Limitada
Minera Equus Chile Limitada
Minera Equus Chile Limitada
Minera Equus Chile Limitada
Minera Equus Chile Limitada
Minera Equus Chile Limitada
Minera Equus Chile Limitada
100
100
100
100
100
100
100
100
100
100
75
75
75
100
100
100
100
100
100
100
100
100
100
100
100
100
Mining Concession
Mining Concession
Mining Concession
Mining Concession
Mining Concession
Exploration
Exploration
Exploration
Exploration
Exploration
Mining Concession
Mining Concession
Mining Concession
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
69
Annual Report 2020 www.equusmining.com
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of members is to be convened. The meeting will be held on
Wednesday 25 November 2020 at 11 am Daylight Saving Time (EDST). Due to the continuing developments concerning
coronavirus (COVID19), the health and safety of our shareholders and employees being of paramount importance,
continuing restrictions on large gatherings, it is not feasible or advisable for shareholders to physically attend this
General Meeting. Accordingly, the General Meeting will be made accessible to shareholders via a live webcast as well
as an online platform. These processes are set out in this notice of meeting.
AGENDA
ORDINARY BUSINESS
Financial Statements
To receive and consider the Company's Annual Financial Report, the Directors' Report and the Auditor's Report for the year
ended 30 June 2020.
Resolution 1
Adoption of the Remuneration Report
To consider and, if thought fit, to pass the following as a non-binding resolution:
'That the Remuneration Report for the year ended 30 June 2020 be and is hereby adopted.'
Resolution 2
Re-election of Dr Robert Ainslie Yeates as a Director
To consider and, if thought fit, to pass the following as an ordinary resolution:
'That Robert A. Yeates having retired in accordance with clause 3.6 of the Company’s Constitution and the Listing Rules, and
being eligible, offers himself for re-election as a Director of the Company.'
Resolution 3
Re-election of Mr Damien J. Koerber as a Director
To consider and, if thought fit, to pass the following as an ordinary resolution:
'That Damien J. Koerber who was appointed during the year retires in accordance with clause 3.5 of the Company’s
Constitution and being eligible, offers himself for re-election, be re-elected as a Director of the Company.'
Resolution 4
Approval to issue Unlisted Options to John Braham
To consider and, if thought fit, to pass the following as an ordinary resolution:
“That, for the purposes of ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue
20,000,000 Options to John Brham or his nominee on the terms and conditions set out in the Explanatory Statement.”
Equus Mining Limited ABN 44 065 212 679
Level 2, 66 Hunter Street, Sydney NSW 2000, Australia
T: +61 2 9300 3366 F: +61 2 9221 6333
Resolution 5
Approval to issue Unlisted Options to Damien Koerber
To consider and, if thought fit, to pass the following as an ordinary resolution:
“That, for the purposes of ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue
5,000,000 Options to Damien Koerber or his nominee on the terms and conditions set out in the Explanatory Statement.”
Resolution 6
Approval of 10% Placement Facility
To consider and, if thought fit, to pass with or without amendment, as a special resolution the following:
“That pursuant to and in accordance with Listing Rule 7.1A and for all other purposes, Shareholders approve the issue of
Equity Securities up to 10% of the issued capital of the Company (at the time of issue) on the terms and conditions set out in
the Explanatory Memorandum.”
To transact any other business that may be brought forward in accordance with the Company's Constitution.
By order of the Board
Marcelo Mora
Company Secretary
23 October 2020
Explanatory Memorandum
to the Notice of Annual General Meeting
This Explanatory Memorandum has been prepared to assist members to understand the business to be put to members at the
Annual General Meeting to be held on Wednesday, 25 November 2020 at 11 am Eastern Daylight Saving Time (EDST).
Financial Report
The Financial Report, Directors' Report and Auditor's Report for the Company for the year ended 30 June 2020 will be laid before
the meeting. There is no requirement for shareholders to approve these reports, however, the Chair of the meeting will allow a
reasonable opportunity to ask the auditor questions about the conduct of the audit and the content of the Auditor's Report.
Resolution 1
Adoption of Remuneration Report
The Remuneration Report, which forms part of the Directors’ Report in the Company’s 2020 Annual Report, contains certain
prescribed details, sets out the policy adopted by the Board of Directors and discloses the payments to Directors.
In accordance with section 250R of the Corporations Act, a resolution that the Remuneration Report be adopted must be put to the
vote. The resolution is advisory only and does not bind the Directors or the Company.
Shareholders will be given a reasonable opportunity at the meeting to comment on and ask questions about the Company’s
Remuneration Report.
The Chair intends to exercise all undirected proxies in favour of Resolution 1. If the Chair of the Meeting is appointed as your proxy
and you have not specified the way the Chair is to vote on Resolution 1, by signing and returning the Proxy Form, you are considered
to have provided the Chair with an express authorisation for the Chair to vote the proxy in accordance with the Chair's intention.
Voting Exclusion Statement
The company will disregard any votes cast on Resolution 1 (in any capacity, whether as proxy or as shareholder) by any of the
following persons:
Key Management Personnel and Closely Related Parties of Key Management Personnel.
However, the Company need not disregard a vote if it is:
• Cast by a person as a proxy or attorney for a person who is entitled to vote on the resolution, in accordance with the
directions of the proxy form that specifies how the proxy is to vote on Resolution 1; or
• Cast by the chair of the Meeting as proxy or attorney appointed in accordance with the directions of the proxy form for a
person who is entitled to vote, and such appointment on the proxy form expressly authorises the chair to exercise the
proxy even if the resolution is connected directly with the remuneration report; or
• Cast by a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided
the following conditions are met:
o The beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and
is not an associate of a person excluded from voting on the resolution; and
o The holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in
that way.
The Directors recommend that you vote IN FAVOUR of this advisory Resolution 1.
The Chair of the Meeting intends to vote undirected proxies IN FAVOUR of Resolution 1.
Resolution 2
Re-election of Dr Robert Ainslie Yeates
In accordance with clause 3.6 of the Company's Constitution, a Director must not hold office without re-election past the third
Annual General Meeting following the Director’s appointment or three years, whichever is longer. A Director who retires in
accordance with these requirements is eligible for re-election. Dr Robert Yeates retires by rotation and, being eligible, offers himself
for re-election.
Dr Yeates is a graduate of the University of NSW, completing a Bachelor of Engineering (Honours 1) in 1971 and a PhD in 1977 and
then an MBA in 1986 from Newcastle University. He began his career with Peko Wallsend working in a variety of roles including
mining engineering, project management, mine management and marketing.
1
He became General Manager Marketing for Oakbridge Pty Limited in 1989 following a merger with the Peko Wallsend coal
businesses and went on to become Managing Director of Oakbridge, which was the largest coal mining company in NSW at that
time, operating one open cut and five underground coal mines.
Dr Yeates also has gained operating, business development and infrastructure experience as a director of Port Waratah Coal
Services (Newcastle Port), Port Kembla Coal Terminal, Great Northern Mining Corporation NL and Cyprus Australia Coal and for the
past 20 years has been principal of his own mine management consultancy, providing a wide range of technical, management and
strategic planning services to the mining industry. Until 2014 he was also Project Director then CEO of Newcastle Coal Infrastructure
Group, which has developed and is operating coal export facilities in Newcastle.
Dr Yeates was until 2015 and for the prior ten years a director in ASX-listed Baralaba Coal Company Limited (formerly Cockatoo Coal
Limited), and from 2016 to 2019 he was a director of Watagan Mining Ltd and from 2018 to early 2020 was a director of Montem
Resources Limited.
The Directors recommend that you vote IN FAVOUR of Resolution 2.
The Chair of the Meeting intends to vote undirected proxies IN FAVOUR of Resolution 2.
Resolution 3
Re-election of Mr Damien Koerber
In accordance with Article 3.5 of the Company’s Constitution and the Corporations Act, Damien Koerber who was appointed as a
Director during the year retires in accordance with these requirements and, being eligible, offers himself for re-election.
Mr Koerber commenced with Equus in 2012 as exploration manager at the Naltagua copper project in Chile which brought
considerable senior management and technical experience in the resources industry, from both in Australia and throughout South
America.
Mr Koerber is a geologist with 30 years of exploration experience, mainly throughout and based in Latin America. He has held senior
management and consulting exploration and business development positions in companies including Billiton Gold (Northern
Territory and Western Australia), North (Chile), Rio Algom (Chile), Newcrest (Chile, Argentina and Peru), MIM (Argentina and Brazil),
Patagonia Gold SA (Chile and Argentina) and Mirasol Resources (Chile and Argentina).
During his career, he has been directly involved in several discoveries including Cleo-Sunrise Dam (Western Australia), Tanami
(Northern Territory), Union Reefs (Northern Territory) and Cap Oeste-COSE (Argentina).
Mr Koerber graduated from the UNSW (BSc. Geology Hons Class 1) in 1989 and is a bilingual, Australian geologist.
The Directors recommend that you vote IN FAVOUR of Resolution 3.
The Chair of the Meeting intends to vote undirected proxies IN FAVOUR of Resolution 3.
Resolutions 4 and 5
Issue of unlisted options to Mr John Braham and Mr Damien Koerber
For the purposes of Chapter 2E of the Corporations Act, Messrs Braham and Koerber are related parties of the Company.
Resolutions 4 and 5 relates to a proposed issued of options to Messrs Braham and Koerber (or entities related to them or in
which they have an indirect interest), which is a financial benefit that requires Shareholder approval for the purposes of
section 208 of the Corporations Act.
The Company has agreed, subject to obtaining shareholder approval to issue 20,000,000 Options to Mr Braham and 5,000,000
Options to Mr Koerber or their nominees. The Board considers that it is reasonable for the remuneration of directors to have
a cash component and an equity component to further align directors’ interests with those of Shareholders. The Board
believes that the issue of the options to Directors provides a reasonable, appropriate and cost-effective method of
remunerating Directors by providing an equity-based incentive for their ongoing commitment and contribution to the
Company in their roles as Directors and when required as members of a Committee.
Information Requirements - Listing Rules 10.11 and 10.13
Listing Rule 10.11 provides that unless one of the exceptions in Listing Rule 10.12 applies, the Company must not issue or
agree to issue equity securities to:
• a related party (Listing Rule 10.11.1);
• a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (30%+) holder in the
Company (Listing Rule 10.11.2);
2
• a person who is, or was at any time in the 6 months before the issue or agreement, a substantial (10%+) holder in the
Company and who has nominated a Director to the Board pursuant to a relevant agreement which gives them a right
or expectation to do so (Listing Rule 10.11.3);
• an associate of a person referred to in Listing Rules 10.11.1 to 10.11.3 (Listing Rule 10.11.4); or
• a person whose relationship with the Company or a person referred to in Listing Rules 10.11.1 to 10.11.4 is such that,
in ASX’s opinion, the issue or agreement should be approved by Shareholders (Listing Rule 10.11.5),
unless it obtains the approval of its Shareholders.
The proposed issue of Options under Resolutions 4 and 5 will be to parties who fall within Listing Rule 10.11.1 and does not
fall within any of the exceptions in Listing Rule 10.12. It, therefore, requires the approval of Shareholders under Listing Rule
10.11.
If Resolutions 4 and 5 are passed, the Company will be able to proceed with the issue of the Options to Directors. If all of the
Options to Directors are exercised the Company will receive $616,666 in exercise monies.
If Resolutions 4 and 5 are not passed, the Company will not be able to proceed with the issue of the Options to Directors or
their nominees and the Company will not receive up to $616,666 in exercise monies.
If approval is given for the grant of the Options under Listing Rule 10.11, approval is not required under Listing Rule 7.1 in
accordance with Listing Rule 7.2 Exception 14
Details of the issue, as required by ASX Listing Rule 10.13
• Names of the
allottees:
• The category
under Listing Rule
10.11:
• The number and
class of securities
to be issued:
• Terms:
• Allotment date:
• Issue price:
• Exercise price:
• Vesting dates:
• Expiry date:
• Use of the funds:
Resolution 4 the options to be issued to John Braham or his nominee;
Resolution 5 the options to be issued to Damien Koerber or his nominee.
John Braham (Resolution 4) and Damien Koerber (Resolution 5) are Directors of the Company and
therefore related parties under Listing Rule 10.11.1
Mr Braham and Mr Koerber both received an annual salary of $200,000 and statutory
superannuation of 9.5%. The options provide an incentive to align the Director's interest with
those of Shareholders.
The options will be issued as follows:
•
•
John Braham or his nominee 20,000,000 options; and
Damien Koerber or his nominee 5,000,000 options.
The full terms and conditions of the Options to be issued under Resolutions 4 and 5 are set out in
Appendix “B” on page 9.
Each Option entitles the holder to subscribe for and be allotted one fully paid ordinary share. The
options vest on Grant Date and are exercisable at any time before the Expiry Date.
The options will be issued no later than 1 month after the date of the Annual General Meeting and
it is intended that issue will occur on the same date.
Nil for the Options, as the Options are being issued as equity remuneration to directors.
8,333,332 options at $0.022 per share;
8,333,334 options at $0.025 per share; and
8,333,334 options at $0.027 per share;
Immediately following shareholder approval of the grant of options.
For the $0.022 options the expiry date is 25 November 2023;
For the $0.025 options the expiry date is 25 November 2024;
For the $0.027 options the expiry date is 25 November 2025.
No funds will be raised from the issue of the options. The options are issued to remunerate
directors and any funds raised on exercise will be applied towards insuring Equus is well funded to
continue the drilling and resource evaluation programs at Cerro Bayo aiming to develop a JORC
compliant resource at the Cerro Bayo Project in Chile and for general corporate and working capital
purposes.
3
Voting Exclusion Statement
The Company will disregard any votes cast in favour on Resolution 4 by or on behalf of
•
John Braham or an associate of John Braham or any other person who is to receive the securities and any other
person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason
of being a holder of ordinary securities in the Company).
However, this does not apply to a vote cast in favour of Resolution 4 by:
• a person as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with directions
given to the proxy or attorney to vote on the resolution in that way; or
•
the chair of the meeting as proxy or attorney for a person who is entitled to vote on the resolution, in accordance
with a direction given to the chair to vote on the resolution as the chair decides; or
• a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided
the following conditions are met:
•
•
the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and
is not an associate of a person excluded from voting, on the resolution; and
the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in
that way.
The Directors recommend that you vote IN FAVOUR of Resolution 4.
The Chair of the Meeting intends to vote undirected proxies IN FAVOUR of Resolution 4.
Voting Exclusion Statement
The Company will disregard any votes cast in favour on Resolution 5 by or on behalf of
Damien Koerber or an associate of Damien Koerber or any other person who is to receive the securities and any other person
who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder
of ordinary securities in the Company).
However, this does not apply to a vote cast in favour of Resolution 5 by:
• a person as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with directions
given to the proxy or attorney to vote on the resolution in that way; or
•
the chair of the meeting as proxy or attorney for a person who is entitled to vote on the resolution, in accordance
with a direction given to the chair to vote on the resolution as the chair decides; or
• a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided
the following conditions are met:
•
•
the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and
is not an associate of a person excluded from voting, on the resolution; and
the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in
that way.
The Directors recommend that you vote IN FAVOUR of Resolution 5.
The Chair of the Meeting intends to vote undirected proxies IN FAVOUR of Resolution 5.
Resolution 6 Approval of 10% Placement Facility
ASX Listing Rule 7.1A enables the Company to issue equity securities up to 10% of its issued share capital through placements
over a 12 month period after the AGM ('10% Placement Facility'). The 10% Placement Facility is in addition to the Company's
15% placement capacity under ASX Listing Rule 7.1. Listed entities with a market cap of $300 million or less are eligible to
seek shareholder approval under Listing Rule 7.1A and the Company’s approximate market cap at the time of this Notice of
Meeting is $ 23.4 million.
4
Resolution 6, which is a Special Resolution requiring 75% of votes cast to be in favour of the resolution, seeks shareholder
approval for the Company to have the ability to issue equity securities under the 10% Placement Facility on the following
terms:
If resolution 6 is passed, the Company will be able to issue equity securities up to the combined 25% limit in Listing Rules 7.1
and 7.1A without any further shareholder approval.
If resolution 6 is not passed, the Company will not be able to access the additional 10% capacity to issue equity securities to
issue equity securities without shareholder approval provided for in Listing Rule 7.1A and will remain subject to the 15% limit
on issuing equity securities without shareholder approval set out in Listing Rule 7.1
(a) Placement Period
Shareholder approval of the 10% Placement Facility is valid from the date of the AGM and expires on the earlier of:
(i) The date that is 12 months after the date of the annual general meeting at which the approval is obtained.
(ii) The time and date of the entity’s next annual general meeting.
(iii) The time and date of the approval by shareholders of the Company’s of a transaction under Listing Rules 11.1.2
(a significant change to the nature or scale of activities) or 11.2 (disposal of main undertaking).
(b) Equity Securities
Any equity securities issued under the 10% Placement Facility must be in the same class as an existing quoted class of equity
securities of the Company which, in the Company's case, are fully paid ordinary shares.
(c) The formula for calculating 10% Placement Facility
The maximum number of shares that can be issued under the 10% Placement Facility is calculated as follows:
(A x D) - E
Where: A is the number of fully paid ordinary securities on issue at the commencement of the relevant period being 12
months before the date of issue or agreement:
(i) plus the number of fully paid ordinary shares issued in the relevant period under an exception in ASX Listing Rule
7.2 other than exception 9, 16 or 17;
(ii) plus the number of fully paid ordinary shares issued in the relevant period on the conversion of convertible
securities within rule 7.2 exception 9 where:
• The convertible securities were issued or agreed to be issued before the commencement of the relevant
period; or
• The issue of, or agreement to issue, the convertible securities was approved or taken under these rules to
have been approved, under rule 7.1 or rule 7.4;
(iii) plus the number of fully paid ordinary securities issued in the relevant period under an agreement to issue securities
within rule 7.2 exception 16 where:
• The agreement was entered into before the commencement of the relevant period ; or
• The agreement or issue was approved, or taken under these rules to have approved, under rule 7.1 or rule
7.4
(iv) plus the number of any other fully paid ordinary securities issued in the relevant period with approval under rule 7.1
or rule 7.4;
(v) plus the number of partly paid ordinary securities that became fully paid in the relevant period;
(vi) less the number of fully paid ordinary securities cancelled in the relevant period.
D is 10%.
E is the number of fully paid ordinary shares issued or agreed to be issued under ASX Listing Rule 7.1A.2 in the 12 months
before the date of the issue or agreement to issue that are not issued with the approval of shareholders under ASX Listing
Rules 7.1 or 7.4.
5
The current maximum number of shares, as at the date of this notice of meeting, that can be issued under the 10% Placement
Facility is 180,093,424. The Company’s current capacity to issue securities as at the date of this notice meeting pursuant to
listing rule 7.1 is 270,140,136.
(d) Minimum Issue Price
The minimum issue price of equity securities when issued for cash a consideration for the purpose of Listing Rule 7.1.A.3
must be not less than 75% of the volume weighted average price of equity securities in the same class calculated over the 15
trading days on which trades were recorded immediately before:
(i)
the date on which the price at which the equity securities are to be issued is agreed; or
(ii)
if the equity securities are not issued within 10 trading days of the date in paragraph (i) above, the date on which
the securities are issued.
(e) Risk of Economic and Voting Dilution
If Resolution 6 is approved by shareholders and the Company issues equity securities under the 10% Placement Facility, the
existing shareholders' voting power in the Company will be diluted as shown in the table below. Further, there is a risk that:
(i)
the market price for the Company's equity securities may be significantly lower on the date of the issue of the equity
securities than on the date of the AGM; and
(ii) the equity securities may be issued at a price that is at a discount to the market price for the Company's equity
securities on the issue date.
Because Variable A in the formula for calculating 10% Placement Facility, and consequently the number of shares that can be
issued under the 10% Placement Facility, can change during the Placement Period, the table below shows a matrix of scenarios
of the potential dilution of existing shareholders as at the date of the AGM on the basis of:
(i)
the issue price of equity securities being the current approximate market price of fully paid ordinary shares, plus
50% and minus 50%; and
(ii) the maximum number of shares that can be issued under the 10% Placement Facility in accordance with the
definition of Variable A in the formula for calculating 10% Placement Facility increasing by 50% and 100%.
Variable A in
10% Placement Facility
under ASX Listing Rule
7.1A.2
Voting Dilution
and Placement
Facility Capacity
Current
Variable A
1,800,934,244 shares
50% increase in current
Variable A
2,701,401,366 shares
100% increase in current
Variable A
3,601,868,488 shares
9.09%
180,093,424
Shares
13.04%
270,140,137
Shares
16.67%
360,186,849
shares
50% Decrease in
Current Approximate
Market Price
$0.007
Issue Price and
Funds Raised
Current
Approximate
Market Price
$0.013*
50% Increase in
Current Approximate
Market Price
$0.020
$1,170,607
$2,341,215
$3,511,822
$1,755,911
$3,511,822
$5,267,733
$2,341,215
$4,682,429
$7,023,644
*The current approximate market price of $0.013 was the closing price as at 6 October 2020.
As an example, if Variable A is increased to 3,601,868,488 shares, the 10% Placement Facility capacity is 360,186,849 shares
and therefore the dilution of existing shares as at the date of the AGM, being 1,800,934,244 shares, is calculated as:
360,186,849 ÷ (1,800,934,244 + 360,186,849) = 16.67%
(f) Other Matters
The Company may issue equity securities under the 10% Placement Facility for cash consideration to support the Company's
ongoing exploration activities and working capital
6
The Company’s allocation policy is dependent on the prevailing market conditions at the time of any proposed issue pursuant
to the 10% Placement Facility. As there is no issue currently proposed, the identity of the allottees is not currently known
and will be determined on a case-by-case basis at the time of allotment, having regard to factors including, but not limited
to, the following:
(i) the methods of raising funds that are available to the Company, including but not limited to, rights issues or other
issues in which existing security holders can participate;
(ii) the effect of the issue of the equity securities on the control of the Company;
(iii) the financial situation and solvency of the Company;
(iv) advice from corporate, financial and broking advisers (if applicable);
(v) the intention to raise fund during the period of the mandate; and
(vi) the number of issues it intends to make under the mandate and the time frame over which they will be made.
The allottees under the 10% Placement Facility have not currently been determined but may include existing substantial
shareholders and/or new shareholders who are not related parties or associates of a related party of the Company.
The Company obtained shareholder approval under ASX Listing Rule 7.1A at its 2019 Annual General Meeting, The Company
issued a total of 140,874,497 ordinary fully paid shares under Listing Rule 7.1A in the 12 months preceding the date of this
Notice of Annual General Meeting which based on the number of Equity Securities on issue at the commencement of that
period represents 10% of the Company’s Equity Securities.
Further details of the issues of Equity Securities by the Company during the 12 months period preceding the date of this
notice of meeting are set out in Appendix “A” on page 8 of this Explanatory Memorandum.
Information relating to the issue of Equity Securities in the preceding 12 months under Listing Rule 7.1A is as follows:
• Number of securities issued: 140,874,497;
• Class of securities issued:
• Issued of the Securities:
• Issue price:
Ordinary fully paid shares;
To professional and sophisticated investors.
• The issue was for cash:
Voting Exclusion:
140,874,497 shares were issued at $0.009 per share and the closing price on the date of
the issue was $0.012.
The total cash consideration received was $1,267,870 during July 2020, the cash will be
used to continue with the drilling and resource evaluation programs at Cerro Bayo and for
general corporate and working capital purposes.
The Company will disregard any votes cast on Resolution 6 by or on behalf of any persons or any associates of those persons
who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit
solely by reason of being a holder of ordinary securities in the entity).
However, this does not apply to a vote cast in favour of the resolution by:
• a person as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with directions
given to the proxy or attorney to vote on the resolution in that way; or
•
the chair of the meeting as proxy or attorney for a person who is entitled to vote on the resolution, in accordance
with a direction given to the chair to vote on the resolution as the chair decides; or
• a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary
provided the following conditions are met:
•
•
the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting,
and is not an associate of a person excluded from voting, on the resolution; and
the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote
in that way.
The Directors recommend that you vote IN FAVOUR of Resolution 6.
The Chairman of the Meeting intends to vote undirected proxies IN FAVOUR of Resolution 6.
7
Issue of Equity Securities since 27 November 2019 Under Listing Rule 7.1A
Appendix “A”
Date
Number of
Equity
Securities
Names of recipients or
basis on which
recipients determined
Class of
Equity
Securities
and
summary of
terms
28 July 2020
140,874,497 Ordinary
shares
To professional and
sophisticated investors
identified by the Lead
Manager of the offer,
Taylor Collison Limited
pick through their
network (none of
whom were related
parties of the Company
under Listing Rule 10.1
or 10.11 and none are
material investors as
defined in section 7.4
of Guidance Note 21).
Issue price of
Equity
Securities and
discount to
the closing
price on the
date of issue
$0.009
Represent a
discount of
25.0% to the
market price
Form of Consideration
The cash consideration of
$1,267,870 before costs the
cash will be used to
continue with the drilling
and resource evaluation
programs at Cerro Bayo and
for general corporate and
working capital purposes.
At the date of this notice, the Company holds 100% of the cash raised during July 2020 placement. The Cash held at 30 June
2020 was used to advance the Cerro Bayo project in Chile and for general corporate and working capital purposes.
8
Appendix “B”
Terms and Conditions of Options
1. Entitlement and Exercise Price
The Options entitle John Braham to subscribe for fully paid shares in the Company as follows:
• 6,666,666 options with an exercise price of $0.022 per share;
• 6,666,667 options with an exercise price of $0.025 per share; and
• 6,666,667 options with an exercise price of $0.027 per share.
The Options entitle Damien Koerber to subscribe for fully paid shares in the Company as follows:
• 1,666,666 options with an exercise price of $0.022 per share;
• 1,666,667 options with an exercise price of $0.025 per share; and
• 1,666,667 options with an exercise price of $0.027 per share.
2. Subject to paragraph 6 below:
Vesting and expiry date of the options
• 8,333,332 Options with an exercise price of $0.022 per share; vesting immediately upon shareholder approval
and expiring on 25 November 2023;
• 8,333,334 Options with an exercise price of $0.025 per share; vesting immediately upon shareholder approval
and expiring on 25 November 2024; and
• 8,333,334 Options with an exercise price of $0.027 per share; vesting immediately upon shareholder approval
and expiring on 25 November 2025;
3. Exercised Period
The Options not exercised on or before the Expiry Date will automatically lapse.
4. Notice of Exercise
The Options may be exercised at any time prior to the Expiry Date wholly or in part by delivering a duly completed form
of notice of exercise together with payment of the exercise price for each Option being exercised to the Company.
5. Exercise Date
A Notice of Exercise is only effective on and from the later of the date of receipt of the Notice of Exercise and the date
of receipt of the payment of the Exercise Price for each Option being exercised in cleared funds.
6.
If the holder has acted fraudulently, dishonestly or in breach of its obligations to the Company (as determined by the
Board, acting reasonably), then the Options shall lapse upon written notification to the holder.
7. Shares issued on exercise
All Shares allotted on the exercise of Options will rank equally in all respects with the Company’s then existing ordinary
fully paid common Shares.
8. The Options will not be listed for official quotation on the ASX.
9. Participation in new issue
The holders of an Option may only participate in new issues of securities to holders of ordinary shares in the Company if
the Option has been exercised and Shares allotted in respect of the Option before the record date for determining
entitlements to the issue.
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10. Change in exercise price
There will be no change to the exercise price of the Option or the number of Shares over which an Option is exercisable
in the event of the Company making a pro-rata issue of shares or other securities to the holders of ordinary shares in the
Company.
11. Timing of issue of shares on exercise
Within 15 Business Days after the Exercise Date, If the Company’s Ordinary Shares are quoted by ASX, the Company
must:
(a)
(b)
(c)
on the date that the Shares are allotted pursuant to the exercise of Options, apply for quotation of all Shares
allotted;
on the date that the Shares are allotted pursuant to the exercise of Options and in relation to the allotted Shares,
give to the ASX a written notice in accordance with section 708A(5)(e) of the Corporations Act and which
complies with the requirements of section 708A(6) of the Corporations Act; and
perform such other acts or take such other actions to ensure the Shares that are allotted pursuant to the exercise
of the Options are quoted by the ASX and freely tradeable.
12. Reconstruction of Capital
If prior to the Expiry Date there is a reorganisation of the issued capital of the Company, the rights of a holder of Options
will be changed to the extent necessary to comply with the applicable ASX Listing Rules in force at the time of the
reorganisation.
13. Transferability
The Options are not transferable.
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LODGE YOUR PROXY APPOINTMENT ONLINE
ONLINE PROXY APPOINTMENT
www.advancedshare.com.au/investor-login
MOBILE DEVICE PROXY APPOINTMENT
Lodge your proxy by scanning the QR code below, and enter
your registered postcode.
It is a fast, convenient and a secure way to lodge your vote.
\
Important Note: Due to the continuing developments concerning coronavirus
(COVID19), Shareholders are encouraged to consider participating in the Meeting
virtually or voting by proxy rather than attending the Meeting in person.
2020 ANNUAL GENERAL MEETING PROXY FORM
I/We being shareholder(s) of Equus Mining Limited and entitled to attend and vote hereby:
APPOINT A PROXY
The Chair of the
meeting
OR
PLEASE NOTE: If you leave the section blank, the
Chair of the Meeting will be your proxy.
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or failing the individual(s) or body corporate(s) named, or if no individual(s) or body corporate(s) are named, the Chair of the Meeting, as
my/our proxy to act generally at the meeting on my/our behalf, including to vote in accordance with the following directions (or, if no
directions have been given, and to the extent permitted by law, as the proxy sees fit), at the Annual General Meeting of the Company to
be held online on 25 November 2020 at 11 am (EDST) and at any adjournment or postponement of that Meeting.
Chair authorised to exercise undirected proxies on remuneration related resolutions: Where I/we have appointed the Chair of the
Meeting as my/our proxy (or the Chair becomes my/our proxy by default), I/we expressly authorise the Chair to exercise my/our proxy on
Resolution 1 (except where I/we have indicated a different voting intention below) even though this resolution is connected directly or
indirectly with the remuneration of a member(s) of key management personnel, which includes the Chair. I/we acknowledge the Chair of
the Meeting intends to vote all undirected proxies available to them in favour of each Resolution of Business.
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VOTING DIRECTIONS
Resolutions
1
2
3
4
5
6
Adoption of the Remuneration Report
Re-election of Dr Robert Ainslie Yeates as a Director
Re-election of Mr Damien J. Koerber as a Director
Approval to issue Unlisted Options to John Braham
Approval to issue Unlisted Options to Damien Koerber
Approval of 10% Placement Facility
For
Against Abstain*
◼ ◼ ◼
◼ ◼ ◼
◼ ◼ ◼
◼ ◼ ◼
◼ ◼ ◼
◼ ◼ ◼
* If you mark the Abstain box for a particular Resolution, you are directing your proxy not to vote on your behalf on a show of hands
or on a poll and your votes will not be counted in computing the required majority on a poll.
SIGNATURE OF SHAREHOLDERS – THIS MUST BE COMPLETED
Shareholder 1 (Individual)
Joint Shareholder 2 (Individual)
Joint Shareholder 3 (Individual)
Sole Director and Sole Company Secretary
This form should be signed by the shareholder. If a joint holding, all the shareholders should sign. If signed by the shareholder’s attorney,
the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company,
the form must be executed in accordance with the company’s constitution and the Corporations Act 2001 (Cth).
Director/Company Secretary (Delete one)
Director
Email Address
Please tick here to agree to receive communications sent by the company via email. This may include meeting notifications, dividend
remittance, and selected announcements.
COVID-19: EQUUS MINING LIMITED ANNUAL GENERAL MEETING
Due to the continuing developments concerning coronavirus (COVID19), the Company encourages Shareholders to consider participating in the Meeting virtually or
voting by proxy rather than attending the Meeting in person.
To facilitate such participation, voting on each Resolution will occur by a poll rather than a show of hands.
A live webcast and electronic voting via www.advancedshare.com.au/virtual-meeting will be offered to allow Shareholders to listen to the Meeting and vote online.
Please refer to the Meeting ID and Shareholder ID on the proxy form to login to the website.
Shareholders may submit questions ahead of the Meeting via the portal from 23 November 2020.
More information regarding online participation at the Meeting is available in the Virtual Attendance Instructions accompanying the Notice of Meeting.
HOW TO COMPLETE THIS SHAREHOLDER PROXY FORM
CHANGE OF ADDRESS
This form shows your address as it appears on the Company’s share register. If
this information is incorrect, please make the correction on the form.
Shareholders sponsored by a broker should advise their broker of any changes.
APPOINTMENT OF A PROXY
If you wish to appoint the Chair as your proxy, mark the box in Step 1. If you
wish to appoint someone other than the Chair, please write that person’s name
in the box in Step 1. A proxy need not be a shareholder of the Company. A proxy
may be an individual or a body corporate.
DEFAULT TO THE CHAIR OF THE MEETING
If you leave Step 1 blank, or if your appointed proxy does not attend the
Meeting, then the proxy appointment will automatically default to the Chair of
the Meeting.
VOTING DIRECTIONS – PROXY APPOINTMENT
You may direct your proxy on how to vote by placing a mark in one of the boxes
opposite each resolution of business. All your shares will be voted in
accordance with such a direction unless you indicate only a portion of voting
rights are to be voted on any resolution by inserting the percentage or number
of shares you wish to vote in the appropriate box or boxes. If you do not mark
any of the boxes on a given resolution, your proxy may vote as they choose to
the extent they are permitted by law. If you mark more than one box on a
resolution, your vote on that resolution will be invalid.
PROXY VOTING BY KEY MANAGEMENT PERSONNEL
If you wish to appoint a Director (other than the Chair) or other member of the
Company’s key management personnel, or their closely related parties, as your
proxy, you must specify how they should vote on Resolution 1, by marking the
appropriate box. If you do not, your proxy will not be able to exercise your vote
for Resolution 1.
PLEASE NOTE: If you appoint the Chair as your proxy (or if they are
appointed by default) but do not direct them how to vote on a resolution (that
is, you do not complete any of the boxes “For”, “Against” or “Abstain” opposite
that resolution), the Chair may vote as they see fit on that resolution.
APPOINTMENT OF A SECOND PROXY
You are entitled to appoint up to two persons as proxies to attend the meeting
and vote on a poll. If you wish to appoint a second proxy, an additional Proxy
Form may be obtained by telephoning Advanced Share Registry Limited or you
may copy this form and return them both together.
To appoint a second proxy you must:
(a) On each Proxy Form state the percentage of your voting rights or number
of shares applicable to that form. If the appointments do not specify the
percentage or number of votes that each proxy may exercise, each proxy
may exercise half your votes. Fractions of votes will be disregarded; and
(b) Return both forms together.
COMPLIANCE WITH LISTING RULE 14.11
In accordance to Listing Rule 14.11, if you hold shares on behalf of another
person(s) or entity/entities or you are a trustee, nominee, custodian or other
fiduciary holder of the shares, you are required to ensure that the person(s) or
entity/entities for which you hold the shares are not excluded from voting on
resolutions where there is a voting exclusion. Listing Rule 14.11 requires you to
receive written confirmation from the person or entity providing the voting
instruction to you and you must vote in accordance with the instruction
provided.
By lodging your proxy votes, you confirm to the company that you are in
compliance with Listing Rule 14.11.
CORPORATE REPRESENTATIVES
If a representative of a nominated corporation is to attend the meeting the
appropriate “Certificate of Appointment of Corporate Representative” should
be produced prior to admission in accordance with the Notice of Meeting. A
Corporate Representative Form may be obtained from Advanced Share
Registry.
SIGNING INSTRUCTIONS ON THE PROXY FORM
Individual:
Where the holding is in one name, the security holder must sign.
Joint Holding:
Where the holding is in more than one name, all shareholders should sign.
Power of Attorney:
If you have not already lodged the Power of Attorney with Advanced Share
Registry, please attach the original or a certified photocopy of the Power of
Attorney to this form when you return it.
Companies:
Where the company has a Sole Director who is also the Sole Company
Secretary, this form must be signed by that person. If the company (pursuant
to section 204A of the Corporations Act 2001) does not have a Company
Secretary, a Sole Director can sign alone. Otherwise this form must be signed
by a Director jointly with either another Director or a Company Secretary.
Please sign in the appropriate place to indicate the office held.
LODGE YOUR PROXY FORM
This Proxy Form (and any power of attorney under which it is
signed) must be received at an address given below by 11:00am
(EDST) on 23 November 2020, being not later than 48 hours before
the commencement of the Meeting. Proxy Forms received after
that time will not be valid for the scheduled meeting.
ONLINE PROXY APPOINTMENT
www.advancedshare.com.au/investor-login
BY MAIL
Advanced Share Registry Limited
110 Stirling Hwy, Nedlands WA 6009; or
PO Box 1156, Nedlands WA 6909
BY FAX
+61 8 6370 4203
BY EMAIL
admin@advancedshare.com.au
IN PERSON
Advanced Share Registry Limited
110 Stirling Hwy, Nedlands WA 6009
ALL ENQUIRIES TO
Telephone: +61 8 9389 8033