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Guyana Goldfields Inc.Annual Report
for the year ended 30 June 2021
Corporate Directory
Directors
George Bauk
Richard Hay
Rowan Johnston
Hansjoerg Plaggemars
Company Secretary
David Coyne
Non-Executive Chairman
Managing Director and Chief Executive Officer
Non-Executive Director
Non-Executive Director
Australian Business Number
57 139 522 900
Head and Registered Office
Level 1 41-47 Colin Street
West Perth, Western Australia, 6005
PO Box 1449
West Perth, Western Australia, 6872
Telephone: +61 8 9481 3434
+61 8 9481 0411
Facsimile:
admin@gascoyneresources.com.au
Email:
www.gascoyneresources.com.au
Website:
Share Registry
Advanced Share Registry
110 Stirling Highway
Nedlands, Western Australia, 6009
Telephone: +61 8 9389 8033
+61 8 6370 4203
Facsimile:
admin@advancedshare.com.au
Email:
www.advancedshare.com.au
Website:
Auditor
Grant Thornton Audit Pty Ltd
Level 43 Central Park
152-158 St Georges Terrace
Perth, Western Australia, 6000
Telephone: +61 8 9480 2000
+61 8 9480 2050
Facsimile:
Stock Exchange Listing
The Company’s securities are listed on the Australian Securities Exchange (ASX).
ASX Code: GCY
Contents
Chairman’s letter
Environmental, Social and Governance
Review of operations
Mineral Resources and Ore Reserves
Corporate governance statement
Directors’ report
Auditor’s independence declaration
Independent auditor’s report
Directors’ declaration
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
ASX additional information
Tenement schedule
1
2
5
21
25
26
49
50
54
55
56
57
58
59
111
113
Chairman’s letter
Dear Shareholders,
It is my pleasure to present you the Gascoyne Resources Limited (Gascoyne or the Company) Annual Report for the financial
year ended 30 June 2021.
The financial year has been one of significant change for Gascoyne, most notably the recapitalisation of the Company, exit
from administration and reinstatement of the Company’s shares to trading on the ASX in October 2020.
One of the most significant changes that we have seen during the financial year has been the improvement in our safety
culture within the Company and the corresponding improvement in our safety performance. We started the financial year with
an unacceptable total recordable injury frequency rate (TRIFR) of 12.6 and ended the year with a TRIFR of 4.0 - a 68%
improvement.
At the time of reinstatement to trading on the ASX in October 2020, the Company outlined its business strategy and plans for
the following 18 months. As we are now around halfway through this time period, it is worth reflecting on our performance to
date on these objectives:
•
Our primary objective was to consolidate operating performance and cashflow generation at Dalgaranga. We performed
well in this area with full year production of 77,278 ounces of gold. Financially, we reduced our bank debt balance to only
$14.0 million at year end and we had $23.4 million cash in the bank.
• We conducted resource definition drilling in Gilbey’s, Sly Fox and Plymouth with the intent to extend mine life. While we
had success in Gilbey’s, the depth of the additional ore delineated prevented it from making it into the ore reserve. Results
from Sly Fox have highlighted the strong potential for a future high-grade underground development and we will be mining
the new Plymouth pit in the 2022 financial year.
• We doubled our exploration budget to focus on Dalgaranga regional prospects. Exploration activities are ongoing at the
Greencock Trend, Hendricks, Vickers and Lindville prospects with the 2021 financial year marking the first time that these
prospects have seen concerted exploration activity in a number of years.
•
•
•
Our 2.5+ million tonne per annum processing plant is a core and strategic asset for Gascoyne and one of our strategies
is to leverage the investment in this asset by securing access to near surface higher-grade ore from regional prospects
in order to increase near term production to over 100,000 ounces per annum. After evaluating regional opportunities, we
were very pleased to sign the agreement to acquire Firefly Resources Limited (Firefly) in June 2021. Access to the higher-
grade near surface ore at Firefly’s Yalgoo project is fundamental to our near term growth strategy. We are also excited
by the exploration potential to increase the mineral inventory at Yalgoo to help underpin a sustained increase in ore feed
for Dalgaranga.
At Glenburgh, we reassessed the previous Mineral Resource Estimate and applied, for the first time, a gold price
constraint to the estimate and released an updated resource in December 2020. Toward the end of the financial year,
we were able to commence additional exploration drilling at Glenburgh and the results of this drilling in the 2022 financial
year will help guide our future decisions and activities at Glenburgh.
Finally, we completed an aeromagnetic survey at our Mumbakine Well prospect. The interpretation from this survey has
resulted in the identification of high priority drill targets that we expect to test in the foreseeable future.
Gascoyne has a robust balance sheet at the end of the 2021 financial year with low bank debt, a solid forward gold hedge
position and cash in the bank exceeding bank debt. From a profit and loss perspective, we regrettably had to recognise a non-
cash impairment expense of approximately $80 million which is an outcome of a lower future gold price assumption and an
increase in the remaining waste stripping ratio at Dalgaranga.
Looking forward, we plan on continuing to consolidate and improve our cost and production performance at Dalgaranga, and
continue to explore in and around Dalgaranga with the intent of adding to the existing mine life. On completion of the acquisition
of Firefly the focus will be to bring the Melville deposit into production in the second half of the 2022 calendar year.
I would like to conclude by acknowledging the contribution to the turnaround in the Company’s operations and financial
condition made by our employees, service providers, suppliers and stakeholders. We have achieved a lot over the past year
and we look forward to achieving a lot more in the months and years ahead as we continue to build on the platform set in place
to grow the Gascoyne rate of production and profitability.
George Bauk
Non-Executive Chairman
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
1
Environmental, Social and Governance
Environmental, Social and Governance (ESG) at Gascoyne
Gascoyne sustainability ambition:
‘Delivering safe, responsible environmental and social outcomes while creating positive shareholder value.’
ESG foundations established
The context in which Gascoyne operates is rapidly changing due to climate risk, biodiversity loss, and more recently COVID-
19 and its associated public health and social challenges. This new global setting is transforming traditional expectations of
corporate behaviour and redirecting investment capital towards more responsible sources. Global sustainable investment now
exceeds $35.0 trillion globally1, with two-year growth of 25% across Australasia. Gascoyne is committed to building resilience
and driving positive impact through stronger commitments to long-term, sustainable value creation for all stakeholders.
In response, a Gascoyne ESG project team has been formed, comprising of senior leaders across the business from safety
to environment and includes the Executive Management team. The team has been tasked with developing the roadmap for
Gascoyne’s ESG progress and collecting relevant data to report against required ESG metrics. Gascoyne is working with
independent ESG specialists, Futureproof Consulting, to assess materiality and guide direction of sustainability focus areas.
The scope of the project will include the Company’s flagship Dalgaranga mine operations, various exploration and development
activities and Perth head office.
1 http://www.gsi-alliance.org/wp-content/uploads/2021/08/GSIR-20201.pdf
GRI standards
Whilst not being ready to report fully against all requirements, Gascoyne has adopted a number of internationally-recognised
Global Reporting Initiative (GRI) standards to guide ESG strategy and sustainability reporting and commits to communicating
progress on a regular basis. GRI is the most widely-used global ESG reporting standard, and is used by 66% of ASX 100
listed companies. Gascoyne aims to fully report against the GRI framework within the next one to two years.
Stakeholder engagement and material topics
High-quality stakeholder relationships are central to creating positive impacts across the communities in which the Company
operates. Trusted partnerships and relationships are the foundation of strong social licence to operate, supporting shared
values and a reputational improvement. Following GRI recommendations, Gascoyne stakeholders were mapped, and their
inputs considered when prioritising material topics. Primary stakeholders include, but are not limited to, Gascoyne employees
and families, shareholders and providers of debt, local communities and landowners, suppliers, traditional owners, government
and regulators.
Following the stakeholder mapping, a comprehensive materiality analysis was conducted and seven material sustainability
topics and eleven watchlist topics were identified. The material topics are health, safety and wellbeing, water management,
economic performance, business ethics, governance and compliance, diversity, greenhouse gas emissions and climate
change, and community relations. A materiality matrix has been developed to prioritise the highest-impact ESG issues to
address as production at Dalgaranga continues to progress.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
2
Environmental, Social and Governance
Gascoyne materiality matrix
Release of inaugural Sustainability report
Gascoyne is pleased to advise that its first Sustainability report will be published in the 2022 financial year Annual Report to
shareholders. The Company’s values are the foundations of the business, enabling safe, responsible environmental and social
outcomes while creating positive shareholder value. As production at Dalgaranga continues, Gascoyne and its controlled
entities (together, the Group) will build on these values and is committed to sustainability and ESG initiatives to further embed
responsible practices across all aspects of the business.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
3
Environmental, Social and Governance
ESG case study: Development of new Gascoyne Values
During the year, the Group’s employees participated in a series of workshops to develop a set of new core values for the
Group. These core values are the beliefs that drive the conduct, activities and goals of Gascoyne. By engaging with the
employees of the Group, Gascoyne has ensured that these core values resonate with everyone to ensure that all employees
are working towards the same goals to build great teams, deliver an excellent product and foster safety and innovation. The
newly adopted core values formed the basis of quarterly performance discussions for all employees and serve as the
foundation for developing a high-performance culture within Gascoyne.
“Putting HEARTS into Mining”
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
4
Review of operations
Overview
Gascoyne Resources Limited (Gascoyne or the Company) is a gold mining and exploration company. Gascoyne and its
controlled entities (together, the Group) hold assets and exploration tenements in the Gascoyne and Murchison regions of
Western Australia.
The Group’s current projects include:
•
•
•
•
gold production and exploration at the Dalgaranga Gold Project;
gold exploration at the Glenburgh Gold Project;
gold exploration at the Mt Egerton Gold Project and
regional exploration in Western Australia.
Figure 1: Gascoyne project locations
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
5
Review of operations
COVID-19 management
To address the risks associated with the COVID-19 pandemic, the Company implemented measures in March 2020 to
minimise the risk to employees and the wider community. The Company worked closely with all regulatory and representative
bodies to develop and implement the agreed Western Australian Resource Industry Framework and Implementation Plan, and
continues to work closely with all regulatory and industry bodies to implement agreed actions as and when required.
Social distancing policies were developed and implemented at the corporate office, site and across all Fly-in Fly-out and Drive-
in Drive-out aspects of the business. Roster durations are extended to reduce travel interactions between personnel and the
community whenever required to meet Western Australian Government restrictions, and return to normal following completion
of lockdown periods. Periodic screening of all personnel travelling to and from site has proven successful in preventing any
COVID-19 cases in the Group to date.
The Group has not experienced any material impact to its operations due to COVID-19 to date and continues to closely monitor
developments and maintain a high level of readiness to actively respond to potential COVID-19 risks. Building on the
experience gained from the introduction of initial measures, the Company has established protocols and procedures to manage
COVID-19 risks. These protocols and procedures were reactivated during the more recent COVID-19 lockdowns in Western
Australia that occurred during the six months ending 30 June 2021.
While the Group has not experienced any material impact to its operations from interstate border closures as a result of COVID-
19 restrictions, the current shortage in skilled workers in Western Australia has created pressure on existing personnel
workloads, which is being constantly monitored by the Group.
Company assets
Dalgaranga Gold Project
Overview
The Dalgaranga Gold Project (Dalgaranga), with a tenement area of around 500km2, is located approximately 65km by road
north-west of Mount Magnet in the Murchison region of Western Australia and covers the majority of the Dalgaranga
greenstone geological belt.
Dalgaranga, which is currently producing gold, consists of a fully established mine and carbon-in-leach processing facility,
camp and airstrip. Commissioning and the first gold pour were completed in May 2018. Between the first gold pour and the
end of June 2021, over 210,000 ounces of gold have been produced from Dalgaranga.
Dalgaranga has a Measured, Indicated and Inferred Mineral Resource of 24.99Mt @ 0.8g/t Au for 648,900 ounces of gold
from several deposits. The project has Proved and Probable Ore Reserves of 13.53Mt @ 0.8g/t Au for 339,000 ounces of
gold. The annual update to the Dalgaranga Mineral Resource and Ore Reserve estimate was completed as at 31 March 2021.
Production
Over the past 12 months, the Group has focussed on maintaining a profitable gold mining operation which has been
demonstrated by improved production results for the year. The Group achieved the upper end of its guidance for the current
year (70,000 - 80,000 ounces) with 77,278 ounces of gold produced for the year.
This achievement directly reflects the higher grades of ore accessed from the Gilbey’s Main Zone (GMZ) at Dalgaranga. During
the first three quarters of the year, ore was sourced entirely from the GMZ with greater than 99% of fresh and transitional ore
processed at a grade of 1.05g/t Au. During the year, $49.6 million was reinvested into capitalised Stage 2 pre-stripping of the
Gilbey’s open pit to gain access to the deeper, wider, more continuous high-grade GMZ transitional and fresh rock ore zones
within Stage 2 thus ensuring consistent ore supply to the processing plant for the 2022 financial year. A total of 7.5 million
BCM were mined in the current year compared to 9.3 million BCM mined in the prior year. The difference of 1.8 million BCM
is primarily driven by the decision to defer commencement of the Stage 3 cutback as well as access restrictions to Stage 1
ore for the first quarter of the 2021 calendar year following a blast misfire in January 2021 and consequential impact on the
mining schedule.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
6
Review of operations
Average plant feed grade significantly improved from 0.86g/t Au in the prior year to 1.03g/t Au in the current year. During the
year, plant feed grade remained above 0.90g/t Au, with record average grade of 1.12g/t Au processed in the September 2020
quarter. During the March 2021 and June 2021 quarters, plant feed grade dropped marginally due to access restrictions in
mining as a result of the misfire in January 2021 and the out-of-schedule mining of higher grade, elevated sulphide content
ore from the northern end of the pit outside the GMZ as a result of Stage 2 cut-back being approximately four to six weeks
behind schedule.
Processing plant throughput remained steady throughout the year with excellent full year throughput of 2.64Mtpa exceeding
fresh rock nameplate design of 2.5Mtpa. This full year performance, combined with ongoing operational enhancement
initiatives, provides Gascoyne with confidence that the plant will continue to exceed its design capacity. As part of its ongoing
improvement initiatives, the Group invested in the Millstar® technology late in the current year.
During the year, the Group invested a further $1.5 million and constructed the infrastructure required to convert the depleted
Golden Wings pit into a tailings storage facility (TSF) which was commissioned in March 2021. This has enabled the original
TSF located adjacent to the Gilbey’s pit to be decommissioned. The in-pit tailings storage solution has no risk for tailings
breaches at surface and avoids the cost of any TSF wall lifts for the next three to four years.
Reported resource ore grades have historically been based on assays using photon or fire assay methodology and mill feed
grade based on assays from the onsite laboratory that only test using PAL / cyanide leachable gold methodology. However,
in the June 2021 quarter the Group completed a full year reconciliation for mining and processing using photon / fire assay
methods for both. The outcome from the use of photon / fire assay results undertaken in offsite laboratories provides a better
indication of overall metallurgical recovery than the PAL / cyanide leachable gold methodology results undertaken in the onsite
laboratory.
Mined grade, mill feed grade and recovery shown for the current year in the key operating indicators table below have now
been based on reconciled data for mining and processing using photon / fire assay results. Importantly, recovery is now shown
as gross metallurgical recovery as opposed to leachable gold recovery previously reported, and the gross metallurgical
recovery of 88.3% for the year continues to compare favourably to the original feasibility study of 88% for non-shale ores. In
addition, gross metallurgical recoveries show a close correlation to the resource model.
Recoveries in the June 2021 quarter were lower than previous quarters due to the increased processing of the higher-grade
elevated sulphide content ore and higher than usual processing of shale ore, noting that planned level of recovery for shale
ores is typically much lower at 77%. Importantly the return to GMZ ore from Stage 2 in the September 2021 quarter is expected
to see a return to higher rates of recovery in the 2022 financial year.
Understanding of the treatment of the elevated sulphide content ore progressed during the June 2021 quarter. One of the six
carbon-in-leach tanks (tank 1) was converted to an oxygen pre-conditioning tank towards the end of the current year, and this
has proven to be successful in improving the recovery rate for elevated sulphide and shale ores. Further enhancements to the
tank 1 oxygen distribution system are being progressed for implementation in the first half of the year ended 30 June 2022.
Shale ores are scheduled to be processed at a blend rate of between 10 - 15% of ore feed throughout the year ended 30 June
2022.
Gravity gold recovery continued to improve during the year, with the 2021 financial year averaging 20.9% compared to an
average recovery of 12.7% in the 2020 financial year. During the planned April 2021 shutdown, a number of improvements to
the gravity circuit were made contributing to the improvement in gravity gold recovery.
All-in sustaining cost (AISC) of $1,308 per ounce improved from the prior year AISC of $1,576 per ounce. The improvement
was primarily driven by the increased ounces of gold poured of 77,014 ounces this year compared to 73,283 ounces in the
prior year. Increase in gold ounces poured is a result of the combination of factors discussed above. All-in cost (AIC) of $2,064
per ounce has improved from the prior year AIC of $2,260 per ounce primarily due to the increased waste capitalisation in
2021 driven by the life of stage waste to ore stripping ratio for Stage 2 of the Gilbey’s pit being approximately twice that of
Stage 1. Please refer to note 13 in the financial statements for further details on the capitalisation of deferred stripping costs.
During the year, the Group continued to progress a program of resource definition drilling at Dalgaranga targeting the down
dip potential of the Gilbey’s, Sly Fox and Plymouth deposits. Results of the drilling are discussed in the Resource definition
drilling section below.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
7
Review of operations
Key operating indicators
Key operational information is summarised as follows:
Production summary
Unit
September
2020
December
2020
March
2021
June
2021
Quarter
Financial year
2021
2020
Mining
Total material movement Kbcm
Waste
Ore (volume)
Ore (tonnage)
Mined grade1
Processing
Throughput
Feed grade1
Recovery1
Recovered gold
Poured fine gold
Revenue summary
Production sold
Average price
Gold sales revenue
Cost summary
Mining (net)
Processing
Site support
Site cash cost
Royalties
Sustaining capital, leases
& exploration
Corporate allocation
AISC2
AIC3
Kbcm
Kbcm
Kt
g/t Au
Kt
g/t Au
%
Ounces
Ounces
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
Gold on hand4
Note: Discrepancies in totals are a result of rounding.
Ounces
2,248
1,859
389
1,038
0.91
621
1.12
91.0
20,314
20,540
718
400
92
1,209
58
160
16
1,444
1,949
2,441
Ounces
A$/oz
A$’000
20,088
2,667
53,565
3,102
2,800
302
905
0.90
654
1.08
89.7
20,353
19,640
21,341
2,605
55,601
316
401
206
922
68
94
17
1,100
2,214
1,856
1,599
258
700
0.93
705
0.96
87.9
19,195
19,087
19,073
2,495
47,593
349
422
165
935
58
103
17
1,514
1,275
239
521
1.17
655
0.98
84.0
17,416
17,746
8,720
7,533
1,188
3,164
0.95
2,635
1.03
88.3
77,278
77,014
11,072
9,333
1,739
3,488
0.78
2,921
0.86
91.0
73,062
73,283
17,993
2,516
45,278
78,495
2,574
72,848
2,346
202,037
170,925
931
511
(22)
573
431
113
860
468
157
1,420
1,117
1,485
57
93
19
60
114
17
57
17
18
1,114
1,589
1,308
1,576
2,058
2,039
2,064
2,260
739
754
504
504
1,981
1 Mined grade, mill feed grade and recovery reported in the 2021 financial year are based on photon / fire assay results. In the 2020 financial
year, these metrics were based on PAL / cyanide leachable gold methodology and are not able to be restated to photon / fire assay
equivalent results.
2 All-in sustaining cost (AISC) includes mining (net of deferred waste capitalised) and processing costs, site administration, net movement
in the value of site stockpiles, refining charges, sustaining exploration and capital, site rehabilitation, state government royalties and a
share of corporate overheads. Capitalised stripping costs and non-sustaining exploration and capital costs are not included. AISC is a non-
IFRS measure.
3 All-in cost (AIC) is the AISC plus deferred waste capitalised, plus non-sustaining exploration and capital costs. AIC is a non-IFRS measure.
4 Gold on hand as at period end.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
8
Review of operations
Dalgaranga tenements and ownership interest
Tenements 100% owned by the Group
• Mining Lease: ML59/749.
• Miscellaneous Licences: L59/141, L59/142, L59/151, L59/152, L59/153, L59/167, L59/168, L59/169 and L59/170.
•
Exploration Licences: EL59/2053, EL59/2150 and EL59/2289.
Tenements 80% owned by the Group
•
Exploration Licences: EL21/195, EL59/1709, EL59/1904 and EL59/1906.
Refer to the Tenements schedule section for further details on tenements held by the Group.
Resource definition drilling
Resource definition drilling programs were undertaken on the mining lease at Dalgaranga to support the current year Mineral
Resource and Ore Reserve updates released on the ASX on 31 May 2021. One Reverse Circulation (RC) rig continued at
Dalgaranga on the resource definition program throughout the year with 9,494 metres drilled in total targeting the down dip
potential of the Gilbey’s, Sly Fox and Plymouth deposits. Results from the drilling confirmed the grade and continuity of GMZ
mineralisation, with mineralisation still open to the south of 3450N. A south-west orientated steeply plunging high-grade shoot
remains open at depth and along strike at Sly Fox.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
9
Review of operations
Refer to Figures 2 and 3 below for cross sections and location plans of the area drilled.
Two deeper diamond core holes were drilled at Sly Fox during the June 2021 quarter with results from the deeper hole returning
an intersection of 43m @ 0.8g/t Au from 464m including 6m @ 2.2g/t Au. The first hole returned an intersection of very
significant width confirming the mineralisation extends at depth. Results from the second deeper diamond core hole drilled,
returned a significant gold intersection approximately 450m vertically below surface, the deepest hole drilled to date targeting
the Sly Fox lode. Results received include 44m @ 2.0g/t Au from 466m, including 18m @ 3.8g/t Au from 489m which includes
a higher-grade interval of 6m @ 6.3g/t Au. A hanging wall zone of mineralisation was also intersected containing 21m @ 1.3g/t
Au from 435m. Follow-up drilling is being planned to further scope out the underground mining potential of the Sly Fox deposit,
initially targeting infill of the 200m gap above drill hole DGRC0657-DT (Figure 4).
Significant intersections included:
Gilbey’s
•
•
•
•
•
•
11m @ 4.2g/t Au (DGRC0592) from 227m (Estimated True Width (ETW) of 11m)
19m @ 0.8g/t Au (DGRC0594) from 273m (ETW of 17m)
13m @ 2.1g/t Au (DGRC0620) from 228m (ETW of 13m)
44m @ 1.0g/t Au (DGRC0608) from 221m (ETW of 44m), including 10m @ 1.9g/t Au
16m @ 1.6g/t Au (DGRC0632) from 250m (ETW of 16m)
23m @ 1.3g/t Au (DGRC0633) from 242m (ETW of 23m), including 13m @ 2.0g/t Au
Sly Fox
•
•
•
•
•
•
•
26m @ 1.8g/t Au (DGRC0589) from 184m including 13m @3.0g/t Au (ETW of 18m)
21m @ 1.2g/t Au (DGRC0588) from 198m (ETW of 18m)
19m @ 1.4g/t Au (DGRC0587) from 174m (ETW of 15m)
11m @ 15.7g/t Au (DGRC0599) from 142m (ETW of 10m)
21m @ 3.0g/t Au (DGRC0598) from 144m (ETW of 16m), including 15m @ 3.9g/t Au
26m @ 2.3g/t Au (DGRC0623) from 277m (ETW of 18m), including 16m @ 3.0g/t Au
46m @ 1.5g/t Au (DGRC0637) from 226m (ETW of 25m), including 25m @ 2.1g/t Au
Plymouth
•
•
•
•
20m @ 2.4g/t Au (DGRC0595) from 150m including 13m @ 3.8g/t Au (ETW of 15m)
3m @ 6.2g/t Au (DGRC0611) from 31m (ETW of 3m), including 1m @ 16.2g/t Au
12m @ 3.0g/t Au (DGRC0604) from 129m (ETW of 12m), including 6m @ 4.9g/t Au
18m @ 1.0g/t Au (DGRC0603) from 93m (ETW of 18m)
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
10
Review of operations
Figure 2: Schematic long section GMZ – Southern End of the Gilbey’s open pit highlighting drill results during the year
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
11
Review of operations
Figure 3: Gilbey’s resource definition - RC drill hole location plan view
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
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Review of operations
Figure 4: Sly Fox long section showing the results from DGRC0657-DT
Exploration
Dalgaranga comprises approximately 90% of the Dalgaranga greenstone belt. Exploration to date by the Group has been
predominantly focussed on the central mining lease area (ML59/749). The Dalgaranga greenstone belt is a zoned belt, the
southern portion of the Dalgaranga Belt is gold dominated, while the layered mafic intrusives and felsic volcanics in the northern
domain are also prospective for Volcanic-Hosted Massive Sulphide base metals and pegmatite-related mineralisation in
addition to gold. A total of 33,126 metres of drilling was completed during the year.
Regional exploration close to Dalgaranga is targeting discoveries greater than 100,000 ounces, that are ideally higher grade
than Gilbey’s to supplement the bulk tonnages at Gilbey’s. During the year, RC and aircore drilling was focused on testing a
number of targets within a 15km radius of the process plant.
Tanqueray
The Tanqueray prospect is located approximately 2km north-west of the Dalgaranga processing plant, in a covered area that
is interpreted to be an east-west trending structural zone between magnetic highs. The Company has delineated the
Tanqueray prospect into east and west sections. The Tanqueray East prospect is located on tenements E59/1904 and
E59/1709 where the Group holds an 80% interest. The full area has previously had wide spaced aircore drilling completed on
200m spaced lines and minimal RC drilling.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
13
Review of operations
In November 2020 infill aircore lines on 100m spacing were completed along the Tanqueray trend, to follow up on RC drilling
completed late in 2018, where encouraging oxide zone intersections were found. Assay results from the infill aircore drilling,
returned the significant intersection of 28m @ 1.5g/t Au from 64m to end of hole (EOH), including 12m @ 3.3g/t Au from 80m
to EOH from 4m composite samples.
On 17 February 2021, the Company announced the early exploration success at the Tanqueray prospect from three follow-up
RC holes targeting up and down dip of the aircore intersection. Significant intersections on the Tanqueray East prospect
include:
•
•
•
9m @ 7.0g/t Au (DGRC0636) from 138m, including 3m @15.4g/t Au
8m @ 3.1g/t Au (DGRC0635) from 125m
13m @ 1.0g/t Au (DGRC0640) from 75m
Results from a further ten-hole follow-up RC drilling program undertaken at Tanqueray East targeting strike extensions to the
primary fresh rock mineralisation, announced on 9 June 2021, returned an excellent intersection of 28m @ 2.5g/t Au from
114m, including 7m @ 5.0g/t Au from DGRC0652. Other significant results from this area include 7m @ 1.0g/t Au in
DGRC0646 and 15m @ 0.6g/t Au, including 4m @ 1.4g/t Au from DGRC0641 (Figure 5). Drilling has now defined a limited
short length high-grade zone. Further analysis of the structural controls on mineralisation is required to determine the next
steps to potentially expand the extent of the mineralisation.
Results have now been received from all of the RC drill holes completed at Tanqueray West. The RC drilling targeted a large
aircore drilling defined gold anomaly. The large gold anomaly is located approximately 1km west of the Tanqueray East
prospect. In total ten RC holes were drilled; strongly altered quartz, sericite and pyrite altered schists over broad intervals have
been intersected with results returned from most holes generally showing wide zones of anomalous gold within which there
are narrower zones assaying greater than 1.0g/t Au. Only ten RC holes have been drilled to date on the 2km by 1km anomaly
(Figure 5), and although these have recorded lower grade mineralised intersections, further analysis of the large regional
anomaly is required to determine whether there are potentially structurally controlled zones where higher grade mineralisation
is better developed.
Figure 5: Wider Tanqueray region showing area of recent RC drilling and results received to date from Tanqueray East and West
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
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Review of operations
Vickers
Three RC holes were completed at the Vickers prospect targeting mineralised zones below gold anomalous laterites. Drilling
has intersected multiple zones of mineralisation including 6m @ 1.0g/t Au from 69m and 2m @ 1.0g/t Au from 92m in
DGRC0662, 2m @ 4.2g/t Au from 110m in DGRC0663 and 1m @ 2.9g/t Au from 47m in DGRC0664. Mineralisation is
associated with quartz pyrite altered basalts. Further analysis of Vickers is required prior to follow-up drilling.
Greencock Trend
163 holes were drilled for 8,803 metres of aircore drilling targeting the highly prospective Greencock structural trend. Wide
spaced drilling on 400m spaced lines is targeting prominent regional structural zones associated with the Big Bell Lineament
located within 15km of the Dalgaranga processing plant. Further drilling on the south-western end will be completed in the
September 2021 quarter once ground conditions allow rig access which was hampered during the June 2021 quarter by wet
weather.
Glenburgh Gold Project
Overview
The Glenburgh Gold Project (Glenburgh) with a tenement area of around 2,000km2, is located approximately 250km east of
Carnarvon in the southern Gascoyne region of Western Australia. The project consists of a gold mineralised shear system
hosted in interpreted remnants of Archean terrain in a Proterozoic mobile belt in a similar setting to the Tropicana Gold Mine.
The tenement holding for Glenburgh includes one mining lease as well as a number of exploration licenses.
Glenburgh tenements and ownership interest
Tenements 100% owned by the Group
• Mining Licence: ML09/148.
•
• Miscellaneous Licences: L09/56 and L09/62.
Exploration Licences: EL09/1325, EL09/1764, EL09/1865, EL09/1866, EL09/2025 and EL09/2148.
Refer to the Tenements schedule section for further details on tenements held by the Group.
Resource definition
During the year, the Company engaged Cube Consulting Pty Ltd to perform a detailed review of historic information and drilling
and prepare a new Mineral Resource estimate that is aligned with mining requirements. On 18 December 2020, the Company
released an updated Mineral Resource estimate for its Glenburgh advanced exploration project. The updated Mineral
Resource estimate was prepared in accordance with JORC Code 2012 and is 16.3Mt @ 1.0g/t Au for 510,100 ounces of
contained gold. Following the completion of the updated Mineral Resource estimate for Glenburgh, desktop studies into
development options are underway, including the potential to incorporate the Mt Egerton project into a future Glenburgh
processing hub development plan. Refer to the Mineral Resources and Ore Reserves section of this Annual Report for further
information.
Exploration activities
In late June, RC drilling was completed at Glenburgh targeting resource extensions at the Zone 126, Zone 102, Cobra deposits,
and the South West prospect (Figure 6). In total 17 RC holes were completed for 2,785 metres of drilling. Results are pending
from this drilling.
On the south-western side of the Group’s Glenburgh tenements, a heritage survey was conducted with the traditional owners
during the June quarter. This will enable planned aircore drilling to be carried out in the September 2021 quarter.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
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Review of operations
Figure 6: Glenburgh geology and deposit location plan
Mt Egerton Gold Project
Overview
The Mt Egerton Gold Project (Mt Egerton) consists of two granted mining leases and three exploration licences covering
approximately 200km² of the Lower Proterozoic Egerton inlier in the Gascoyne Region of Western Australia.
Mt Egerton tenements and ownership interest
Tenements 100% owned by the Group
• Mining Licences: ML52/343 and ML52/567.
•
Exploration Licences: EL52/2117, EL52/2515 and EL52/3574.
Refer to the Tenements schedule section for further details on tenements held by the Group.
Resource definition and exploration activities
RC drilling at the Mt Egerton project was completed in the June 2021 quarter, with the aim of testing for resource extensions
to the Hibernian deposit. The Hibernian deposit Mineral Resource estimate was updated during the year resulting in 0.3Mt @
3.1g/t Au for 27,000 ounces (Figure 7), refer to the Mineral Resources and Ore Reserves section of this Annual Report for
further information. Twelve RC holes for 1,482 metres were completed targeting the high-grade north and south lodes.
Results received from the drilling undertaken at Hibernian returned a number of significant intersections. Better results include
15m @ 1.2g/t Au from 47m including 3m @ 4.2g/t Au in MERC053, 5m @ 2.6g/t Au from 63m, including 1m @ 10.3g/t Au in
MERC056, and 13m @ 1.9g/t Au from 24m, including 7m @ 3.0g/t Au. Mineralisation is associated with quartz veining in
strongly sheared zones.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
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Review of operations
Figure 7: Mt Egerton prospects including high-grade Hibernian deposit
Regional exploration
Overview
Regional exploration includes key gold regional exploration projects in the Murchison and Gascoyne regions of Western
Australia including Mumbakine Well and Beebyn.
Mumbakine Well
Mumbakine Well is located adjacent to the Capricorn Metals Ltd (ASX:CMM) Karlawinda project. During the year, the Company
conducted a detailed aeromagnetic survey on the project. Interpretation of the aeromagnetic survey results highlighted a
number of prospective targets. A future work program for Mumbakine Well is being developed.
Beebyn
Beebyn is located 45km north of Cue; previous exploration has identified high-grade iron ore and arsenic anomalies that have
not been tested for gold. During the year, soil sampling was completed at Beebyn with results pending.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
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Review of operations
Figure 8: Mumbakine Well
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
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Review of operations
Corporate
Firefly Transaction
On 16 June 2021, Gascoyne and Firefly Resources Limited (ASX:FFR) (Firefly) jointly announced the planned merger of the
two companies through the signing of a binding Scheme Implementation Deed (Deed). Under the terms of the Deed, Gascoyne
will acquire 100% of the fully paid ordinary shares in Firefly via a Scheme of Arrangement (Scheme) to create a regional gold
production and development business in the Murchison Region of Western Australia.
Firefly shareholders are to receive 0.34 Gascoyne shares for each Firefly share held at the Scheme record date, representing
an implied offer price of $0.145 per share based on Gascoyne’s five day volume weighted average price prior to the date of
signing the Deed. This is expected to result in shareholders of Gascoyne and Firefly having an interest in the merged entity of
approximately 67.6% and 32.4%, respectively.
Gascoyne sees a number of key benefits for its shareholders from the proposed merger with Firefly, including:
•
•
Optimised Dalgaranga mine schedule through integration of Firefly’s higher-grade Yalgoo (Melville) Mineral Resource
within haulage distance of Dalgaranga:
•
Firefly’s Melville gold deposit at Yalgoo is shallow, with ore from surface;
• Melville is located only 110km by road from the Dalgaranga production hub; and
•
Opportunities to optimise the Dalgaranga mine schedule given the presence of higher-grade ore at Yalgoo which
will serve as valuable blending material at Dalgaranga in the future.
Increased exploration and development opportunities to further extend life of mine, thereby enhancing shareholder
returns:
•
Advanced exploration opportunities outlined at Yalgoo to extend the existing Mineral Resource through exploration
activities, with in excess of 100 gold targets including 30 targets at untested historical workings with recorded gold
production;
Current Yalgoo Mineral Resource covers just 0.9km of the 28km regional shear zone;
Combination of Yalgoo and Dalgaranga tenements unlocks access to approximately 1,200km2 of highly prospective
greenstone belts; and
Advanced exploration opportunities at Yalgoo complemented with broader exploration and development potential
at Gascoyne’s Glenburgh - Mt Egerton project and other regional projects such as Beebyn and Mumbakine Well.
•
•
•
In accordance with the Deed, Gascoyne and Firefly have also agreed to demerge Firefly’s gold/copper assets located outside
of the Yalgoo project area and their lithium rights over certain tenements at Yalgoo and Dalgaranga. Under the terms of the
demerger deed that has been signed, Firefly shareholders and Gascoyne will respectively hold 90.1% and 9.9% of the
demerged entity.
As at the date of this report, Gascoyne and Firefly were continuing to progress the material required to implement the Scheme
and subject to Court and Firefly shareholder approvals, expect the Scheme to be completed in mid-November 2021.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
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Review of operations
Administration Period
On 2 June 2019, Michael Ryan, Kathryn Warwick and Ian Francis of FTI Consulting were appointed as Joint and Several
Voluntary Administrators (Administrators) of the Company and each of its wholly-owned subsidiaries. The Administrators
determined that the best option to preserve value of the Group’s assets was to continue trading the operations on a ‘business
as usual’ basis, rather than placing the mine on care and maintenance. With the support of the Group’s secured creditors,
employees and key suppliers, the Administrators stabilised the business, implemented workstreams to complete mining
technical work necessary to optimise the mine and its operations, and initiated a dual track process to achieve either a sale of
its assets or recapitalisation of the Company.
On 25 June 2020, at the second meeting of creditors, the Group’s creditors passed a resolution approving entry into a Deed
of Company Arrangement (DOCA). The purpose of the DOCA was to restructure the Group’s debts and facilitate the
recapitalisation of the Company. The Group entered into the DOCA on 26 June 2020. Under the DOCA, the Administrators
were appointed as Joint and Several Deed Administrators (Deed Administrators).
The recapitalisation of the Company was completed and control of the Group reverted to the Directors following effectuation
of the DOCA on 20 October 2020. ASX reinstatement conditions were satisfied following effectuation of the DOCA and trading
in the Company’s shares recommenced on 21 October 2020.
Refer to the Deed of Company Arrangement and Recapitalisation section in the Directors’ report for further details.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
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Mineral Resources and Ore Reserves
Governance
Reporting of Mineral Resources and Ore Reserves has been compiled in accordance with the 2012 Edition of the Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code 2012), Chapter 5 of the
ASX Listing Rules and ASX Guidance Note 31. The JORC Code 2012 is a set of minimum standards, recommendations and
guidelines for public reporting of Exploration Results, Mineral Resources and Ore Reserves, as defined by the Joint Ore
Reserves Committee (JORC).
Governance of Gascoyne’s Mineral Resources and Ore Reserves development and the estimation process is a key
responsibility of the Executive Management of the Company. The Managing Director and Chief Executive Officer of the
Company oversees the reviews and technical evaluations of the Mineral Resource and Ore Reserve estimates.
The Company has governance processes in place to manage the Mineral Resource and Ore Reserve estimates in accordance
with industry best practice.
All Mineral Resource and Ore Reserve estimates are prepared by qualified professionals in accordance with JORC Code
processes that ensure representative and unbiased samples are obtained with appropriate QA/QC practices in place.
Mineral Resource and Ore Reserve estimates are then peer reviewed by external consultants and by the Company.
Mineral Resources
As defined in the JORC Code 2012, a Mineral Resource is a concentration or occurrence of solid material of economic interest
in or on the Earth’s crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual
economic extraction. The location, quantity, grade (or quality), continuity and other geological characteristics of a Mineral
Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. Mineral
Resources are subdivided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.
The Group’s Mineral Resources represent the estimated quantities of minerals that can potentially be commercially recovered
from the Group’s projects but which do not have demonstrated economic viability.
The Group’s Mineral Resources estimate was updated during the year, refer ASX announcement released on 31 May 2021.
All new estimates were constrained within optimised pit shells based on a gold price of A$2,800, the same as the previous
Dalgaranga Mineral Resource estimate at 30 April 2020. The Group Mineral Resources now stand at 41.6Mt @ 0.9g/t Au for
1,186,000 ounces as at 31 March 2021.
Dalgaranga Mineral Resource
The Dalgaranga Mineral Resource estimate was updated during the year, refer ASX announcement released on 31 May 2021.
The updated Mineral Resource estimate for Dalgaranga is 25.0Mt @ 0.8g/t Au for 648,900 ounces of contained gold. The
Gilbey’s Main Zone (GMZ) ore body includes 563,800 ounces of Measured and Indicated Resources, representing more than
87% of the Dalgaranga Mineral Resource.
The Dalgaranga Mineral Resource decreased by 152,400 ounces of gold from 801,300 ounces of gold as at 30 April 2020 to
the current 648,900 ounces of gold Measured, Indicated and Inferred Mineral Resource. The decrease is related to mining
depletion and a smaller A$2,800 gold price pit optimisation pit shell for the southern end of the Gilbey’s deposit. The smaller
2021 pit optimisation shell did not include a deeper area in the south end of the Gilbey’s pit when compared to the 2020
estimate. This is primarily due to new information from drilling showing that the GMZ flattens off by approximately 10 - 15
degrees in the southern end. This shallower dip of the GMZ has the effect of increasing the waste to ore mining strip ratio in
the southern end of the Gilbey’s pit and consequently a portion of drilling delineated mineralisation is not economic at a
A$2,800 gold price and as a result has been excluded from the 2021 Mineral Resource estimate. Additionally, the Golden
Wings pit was converted to an in-pit tailings storage facility during the March 2021 quarter and as a result approximately 15,000
ounces have been removed. Grade decreased at Dalgaranga from 0.89g/t Au at 30 April 2020 to 0.84g/t Au at 31 March 2021.
Glenburgh Mineral Resource
The Glenburgh Mineral Resource estimate was updated during the year, refer ASX announcement released on 18 December
2020. The updated Mineral Resource estimate for the Glenburgh Project is 16.3Mt @ 1.0g/t Au for 510,100 ounces of
contained gold. A total of 430,700 ounces of gold (approximately 85% of the Mineral Resource) is contained in the Indicated
category.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
21
Mineral Resources and Ore Reserves
Mt Egerton - Hibernian Mineral Resource
The Mt Egerton - Hibernian Mineral Resource estimate was updated during the year, refer ASX announcement released on
31 May 2021. The Hibernian deposit contains 0.3Mt @ 3.1g/t Au for 27,000 ounces.
The Company is not aware of any new information or data that materially affects the information contained in the Group Mineral
Resources statement as at 31 March 2021 other than changes due to normal mining depletion during the three months ended
30 June 2021.
Group Mineral Resources as at 31 March 2021
Classification
Dalgaranga Mineral Resource1
Measured
Indicated
Measured and Indicated
Inferred
Total
Glenburgh Mineral Resource
Indicated
Inferred
Total
Mt Egerton - Hibernian Mineral Resource
Indicated
Inferred
Total
Group total
Note: Discrepancies in totals are a result of rounding.
1 Dalgaranga Mineral Resource includes surface stockpiles and gold in circuit.
Tonnes
Mt
Gold grade
g/t
Contained
gold
koz
1.38
20.04
21.43
3.56
24.99
13.50
2.80
16.30
0.23
0.04
0.28
0.7
0.8
0.8
0.7
0.8
1.0
0.9
1.0
3.4
1.5
3.1
30.6
533.1
563.8
85.1
648.9
430.7
79.4
510.1
25.0
2.0
27.0
41.58
0.9
1,186.0
Ore Reserves
As defined in the JORC Code 2012, an Ore Reserve is the economically mineable part of a Measured and/or Indicated Mineral
Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted
and is defined by studies at Pre-Feasibility or Feasibility level, as appropriate, that include application of Modifying Factors
(considerations used to convert Mineral Resources to Ore Reserves). Such studies demonstrate that, at the time of reporting,
economic extraction could reasonably be justified.
Ore reserves are sub-divided in order of increasing confidence into:
•
•
Probable Ore Reserves, the economically mineable part of an Indicated and, in some circumstances, a Measured Mineral
Resource; and
Proved Ore Reserves, the economically mineable part of a Measured Mineral Resource.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
22
Mineral Resources and Ore Reserves
The Dalgaranga Ore Reserve was updated during the year, refer ASX announcement released on 31 May 2021. The Ore
Reserve estimate has been constrained within final pit designs based on A$2,100 optimised pit shells, the same as the
previous Ore Reserve estimate at 30 April 2020. The Ore Reserve estimate decreased by 87,300 ounces of gold from 426,300
ounces of gold as at 30 April 2020 to the current 339,000 ounces of gold Proved and Probable Reserve at the date of signing
this report. The Ore Reserve estimate increased by 22,000 ounces of gold in the southern end of the Gilbey’s pit which was
lower than hoped due to the unfavourable orientation of the orebody which increased the mining waste to ore strip ratio. An
addition of 10,000 ounces of gold at Plymouth was also included for the first time, before accounting for mining depletion and
pit design revisions. At 31 March 2021, grade remained unchanged from 30 April 2020 at 0.8g/t Au.
The Company is not aware of any new information or data that materially affects the information contained in the Dalgaranga
Ore Reserve statement as at 31 March 2021 other than changes due to normal mining depletion during the three months
ended 30 June 2021.
Dalgaranga Ore Reserve as at 31 March 2021
Classification
Oxidation state
Cut-off grade
g/t
Tonnes
Mt
Gold grade
g/t
Proved
Probable
Oxide
Transition
Fresh
Stockpiles
Gold in circuit
Subtotal
Oxide
Transition
Fresh
Subtotal
Total
Note: Discrepancies in totals are a result of rounding.
0.30
0.30
0.30
0.30
0.30
0.30
0.30
0.002
0.62
0.45
1.84
-
2.91
0.36
0.36
9.90
10.62
13.53
1.1
0.7
0.8
0.4
-
0.5
0.9
0.9
0.9
0.8
0.8
Contained
gold
koz
0.1
13.5
10.0
24.4
1.7
49.8
9.0
9.2
271.0
289.2
339.0
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
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Mineral Resources and Ore Reserves
Competent Persons Statement
As defined in the JORC Code 2012, a Competent Person is a minerals industry professional who is a Member or Fellow of
The Australasian Institute of Mining and Metallurgy, or of the Australian Institute of Geoscientists (or of a ‘Recognised
Professional Organisation’, as included in a list available on the JORC and ASX websites) and must have a minimum of five
years’ relevant experience in the style of mineralisation or type of deposit under consideration and in the activity that they are
undertaking.
The information in this report that relates to the Group Mineral Resources and Ore Reserve is based on information compiled
by Competent Persons, as named below.
Each Competent Person named below:
•
•
has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the
activity that was undertaken to qualify as a Competent Person as defined in the JORC Code 2012; and
consents to the inclusion in this report of the matters based on their information in the form and context in which it
appears.
Accountability Competent Person
Employer
Institute
Dalgaranga Project
Mr Julian Goldsworthy
Chief Geologist
Gascoyne Resources Limited The Australasian Institute of Mining and Metallurgy
Member
Dalgaranga Mineral Resource
Mr Michael Job1,2
Principal Geologist/Geostatistician
Cube Consulting Pty Ltd
The Australasian Institute of Mining and Metallurgy
Fellow
and
Mr Michael Millad1,2
Director and
Principal Geologist/Geostatistician
Cube Consulting Pty Ltd
Australian Institute of Geoscientists
Member
Dalgaranga Ore Reserve
Mr Neil Rauert3
Senior Mining Engineer
Gascoyne Resources Limited The Australasian Institute of Mining and Metallurgy
Fellow
Glenburgh and Mt Egerton - Hibernian Mineral Resources
Mr Brian Fitzpatrick
Principal Geologist
Cube Consulting Pty Ltd
The Australasian Institute of Mining and Metallurgy
Member
1
2
3
Information compiled under the supervision of named Competent Person.
Information relating to the Mineral Resource for the Gilbey’s, Gilbey’s South, Plymouth and Sly Fox deposits.
Information relating to the Ore Reserve for the Gilbey’s, Gilbey’s South and Plymouth deposits.
The Company confirms that the form and context in which the Competent Person’s findings are presented have not been
materially modified from the original market announcements.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
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Corporate governance statement
The Board of Gascoyne Resources Limited is committed to achieving and demonstrating the highest standards of Corporate
Governance. The Board is responsible to its shareholders for the performance of the Company and seeks to communicate
extensively with shareholders. The Board believes that sound Corporate Governance practices will assist in the creation of
shareholder wealth and provide accountability. In accordance with ASX Listing Rule 4.10.3, the Company has elected to
disclose its Corporate Governance policies and its compliance with them on its website, rather than in the Annual Report.
Accordingly, information about the Company's Corporate Governance practices is set out on the Company's website at
www.gascoyneresources.com.au.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
25
Directors’ report
The Directors of Gascoyne Resources Limited (Gascoyne or the Company) present their report together with the financial
statements of the consolidated entity, being Gascoyne Resources Limited and its controlled entities (together, the Group), for
the year ended 30 June 2021.
Directors
The following persons were Directors of Gascoyne Resources Limited during the year and up to the date of this report unless
otherwise stated:
George Bauk B.Bus, FCPA, MBA, GAICD
Independent Non-Executive Chairman
Appointed Non-Executive Director on 5 August 2020 and Non-Executive Chairman on 20 October 2020
Mr Bauk is an experienced mining executive with over 30 years’ experience in the resources industry, including over 15 years’
experience as a listed company director in Australian companies with interests in Australian and international production and
exploration assets.
Prior to Gascoyne, Mr Bauk was Managing Director of Northern Minerals Limited from 2010, leading its rapid development
from a greenfields heavy rare earths explorer to a global producer of dysprosium.
Mr Bauk previously held global operational and corporate roles with WMC Resources Limited and Western Metals Limited and
has significant experience in strategic management, business planning, leadership and corporate financing, across
commodities, in particular rare earths, gold and industrial minerals.
Mr Bauk has served in a number of senior governing positions with The Chamber of Minerals and Energy of Western Australia,
including as Vice President.
Board committee membership:
Audit and Risk Committee; Remuneration and Nomination Committee.
Other directorships of ASX listed entities in the past three years:
•
•
•
Executive Director of PVW Resources Limited since February 2021
Executive Chairman of Valor Resources Limited since October 2020
Non-Executive Chairman of BlackEarth Minerals NL since November 2020 and former Non-Executive Director from
February 2018 to November 2020
Non-Executive Chairman of Lithium Australia NL since July 2015
•
• Managing Director of Northern Minerals Limited from March 2010 to June 2020
Richard Hay MSc, MAIG
Managing Director and Chief Executive Officer
Appointed as Executive Director on 5 August 2020 and Managing Director and Chief Executive Officer on 20 October 2020
Mr Hay is a geologist and highly experienced mining executive with over 30 years’ operational experience. Mr Hay initially
joined Gascoyne as Executive General Manager in January 2019, prior to his appointment as Chief Executive Officer of the
Company in April 2019. Mr Hay led the successful operational turnaround of the Company’s Dalgaranga mine resulting in the
Group’s exit from Administration on 20 October 2020.
Prior to joining the Company, Mr Hay was General Manager of Evolution Mining Limited’s Mt Carlton gold operation in North
Queensland. Mr Hay previously held the role of Managing Director of gold developer Dampier Gold Limited, following a
successful 14-year career with Barrick Gold Corporation, which included four years as Mine General Manager at the Darlot
gold mine in Western Australia and two years as General Manager - Shared Services for four gold operations in Western
Australia.
Board committee membership:
Nil.
Interests in shares of the Company: 700,000 shares
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
26
Directors’ report
Directors (continued)
Rowan Johnston BSc (Mining Engineering)
Independent Non-Executive Director
Appointed 5 August 2020
Mr Johnston is a mining engineer with over 40 years’ resources industry experience, including significant experience as a
company director through executive and non-executive directorship roles. Mr Johnston has held various senior executive roles
in Australia and internationally, primarily in the gold sector, and has experience in feasibility studies, company formations,
construction, expansions and mergers.
Mr Johnston is currently a Non-Executive Director of Bardoc Gold Limited and was the Managing Director of Excelsior Gold
Limited. Previous roles held by Mr Johnston include Acting Chief Executive Officer and Executive Director of Operations for
Mutiny Gold Limited, prior to its takeover by Doray Minerals Limited, and Executive Director of Integra Mining Limited prior to
its merger with Silver Lake Resources Limited.
Board committee membership:
Audit and Risk Committee; Remuneration and Nomination Committee.
Other directorships of ASX listed entities in the past three years:
•
Non-Executive Director of Bardoc Gold Limited since December 2019 and former Executive Director from October 2018
to December 2019
• Managing Director of Excelsior Gold Limited from September 2016 to October 2018
Hansjoerg Plaggemars MBA
Non-Executive Director
Appointed 1July 2021
Mr Plaggemars is an experienced company director specialising in corporate finance, corporate strategy and governance and
has served on the Board of Directors of various international listed and unlisted companies, in a variety of industries including
mining, agriculture, shipping, construction and investment. Mr Plaggemars has previously served on the Board of Deutsche
Balaton AG, the Company’s largest shareholder, and is the founder of Value Consult, a management consultancy firm.
Board committee membership:
Audit and Risk Committee; Remuneration Committee.
Other directorships of ASX listed entities in the past three years:
•
•
•
•
•
•
Non-Executive Director of Wiluna Mining Corporation Limited since July 2021
Non-Executive Director of PNX Metals Limited since November 2020
Non-Executive Director of Altech Chemicals Limited since August 2020
Non-Executive Director of Azure Minerals Limited since November 2019
Non-Executive Director of South Harz Potash Limited since October 2019
Non-Executive Director of Kin Mining NL since July 2019
Company Secretaries
David Coyne B.Com (Acct and Economics), CPA, GDIP (Applied Finance and Investment)
Company Secretary
Appointed 6 October 2020
Mr Coyne has over 25 years‘ experience in the mining, and engineering and construction industries, both within Australia and
internationally. Prior to joining Gascoyne, Mr Coyne held senior executive positions with Australian listed companies
Macmahon Holdings Limited, VDM Group Limited, Peninsula Energy Limited and with unlisted global manganese miner
Consolidated Minerals. Over the past 15 years, Mr Coyne has been directly involved in a number of equity and debt raising
transactions. Mr Coyne remains as a Non-Executive Director of Peninsula Energy Limited and has previously served on the
Board of BC Iron Limited, where he also held the role of Chairman of the Audit and Risk Committee.
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Directors’ report
Company Secretaries (continued)
Shane McBride B.Bus (Acct), FCPA, FGIA, FCG (CS, CGP), MAICD
Joint Company Secretary
Appointed 17 March 2020, resigned 30 March 2021
Mr McBride has 38 years of commercial management experience gained in listed Australian public companies including
corporate management, project development and mine operations management, corporate finance, investor relations and
company secretarial functions.
Mr McBride has a B.Bus (Acct) degree, is a Fellow of CPA Australia, a Fellow of the Governance Institute of Australia and The
Chartered Governance Institute; and is a Member of the Australian Institute of Directors.
Principal activities
During the year, the principal activities of the Group were the production of gold from the Dalgaranga Gold Project (Dalgaranga)
and the exploration and evaluation of gold projects in Western Australia.
Review of operations and financial results
For a detailed review of the Group’s operations during the year, refer to the Review of operations section presented on page
5 in this report.
Financial performance
Gold sales revenue of $202.0 million (2020: $170.9 million) was generated from the sale of 78,495 ounces at an average gold
price of A$2,574 per ounce (2020: 72,848 ounces at an average price of A$2,346 per ounce). Revenue from the sale of 32,651
ounces of silver was $1.1 million (2020: $0.6 million; 22,390 ounces). The increase in revenue compared to the prior year is
driven by an improvement in operating performance increasing gold production, as well as an increase in the realised gold
price from delivering a portion of gold production into forward contracts fixed at a higher than spot price.
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Directors’ report
Review of operations and financial results (continued)
Total cost of sales inclusive of depreciation and amortisation was $150.1 million (2020: $149.9 million). The movement in cost
of sales compared to the prior year is driven by reduced material movements in the second half of the year, along with an
increase in the proportion of mining costs capitalised to deferred waste from Gilbey’s Stage 2, partially offset by lower gold
inventory balances at the reporting date, write-down of gold inventory including run of mine stockpiles to net realisable value
and increased amortisation of deferred waste stripping assets on completion of mining activities at Gilbey’s Stage 1.
Although the volume of waste mined was lower compared to the prior year, a higher proportion of mining costs were capitalised
to deferred waste in the current year. This is a result of the life of stage waste to ore stripping ratio for Stage 2 (7.2:1) of the
Gilbey’s pit being approximately twice that of Stage 1 (3.7:1), combined with minimal ore being mined from Stage 2 to date.
Depreciation and amortisation of property, plant and equipment and capitalised mine properties expenditure totalled $52.0
million (2020: $42.2 million) for the year. The higher charge for the year is due to an increased level of production for assets
depreciated on a units of gold production basis.
The net consolidated loss of the Group for the year was $44.1 million (2020: $2.0 million profit) primarily due to the impairment
expense of $80.2 million (2020: $nil) recorded against the Dalgaranga gold operations cash-generating unit (Dalgaranga
CGU). The Group was required to test the Dalgaranga CGU for impairment as the carrying value of the Dalgaranga CGU
exceeded the market capitalisation of the Company on the reporting date, and due to changes in the Ore Reserve estimate
and remaining life of mine plan made in the current year. Refer to note 14 for further details on the impairment expense.
Corporate expenses for the year totalled $9.5 million (2020: $11.9 million). The decrease is primarily driven by the reduction
in Administrator, corporate advisory and legal costs following the recapitalisation completed in October 2020.
Financial position
The Group held cash and cash equivalents of $23.4 million as at 30 June 2021 (2020: $5.6 million), trade receivables of $3.4
million (2020: $nil) and $1.2 million in unsold gold on hand was recognised in inventory at net realisable value (2020: $3.5
million at cost). Market value of unsold gold on hand at 30 June 2021 was $1.2 million (2020: $5.1 million).
The Group’s free cashflow generation (cash flow from operations less cash flows used in investing activities) improved from
the prior year as a result of the increasing realised gold price as well as improved operating performance. The Group generated
cash from operations of $75.1 million for the year offset by investing activities of $64.5 million, resulting in free cashflow
generation of $10.6 million for the year. Free cashflow generation in the first half of the year was $0.5 million, and the second
half of the year was impacted favourably by reduced waste material movements and lower corporate costs post-Administration
in achieving positive free cash generation of $10.1 million.
As at 30 June 2021 the Group has a working capital surplus of $12.6 million (2020: $116.0 million deficit) which includes a
cash balance of $23.4 million and a trade receivable of $3.4 million. The significant improvement in working capital over the
year is driven by the completion of the recapitalisation of the Group in October 2020, including retirement of the previous
project finance debt facility provided by Commonwealth Bank of Australia and National Australia Bank (Original Banks), entry
into the Investec finance facility, conversion of the NRW Pty Ltd (NRW) working capital facility to equity, and conversion of
part of the pre-June 2019 amount owing to NRW (face value $13.7 million) to quarterly payments over time.
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Directors’ report
Significant changes in the state of affairs
On 31 July 2020, the Company released an updated Dalgaranga Ore Reserve estimate on the ASX platform of 16.3Mt at
0.8g/t Au for 426,300 ounces of contained gold (as at 30 April 2020). The Company also released its then current seven-year
life of mine plan on the same date.
On 4 August 2020, the Group received notice that proceedings had been commenced in the Federal Court of Australia (Federal
Court) by Habrok (Dalgaranga) Pty Ltd (Habrok). Habrok’s claims related to alleged deficiencies in the Administrators’ Report
to Creditors which resulted in the proposed DOCA, asserting that the DOCA is oppressive and unfairly prejudicial to creditors
and that it shields the Directors and advisors of the Company from appropriate scrutiny and investigations. On 29 September
2020, the Federal Court issued its judgement dismissing each of Habrok’s claims and awarded costs to the Company.
On 13 August 2020, the Group entered into a $40.0 million amortising debt facility (finance facility) with Investec Bank plc
(Investec) as part of a $125.2 million recapitalisation package ($40.0 million debt and $85.2 million in equity proceeds). The
Group drew down the $40.0 million in full on 20 October 2020.
On 13 August 2020, the Company issued a prospectus to raise approximately $85.2 million (before costs) through the issue
of new shares as part of the proposed $125.2 million recapitalisation of the Company. On 13 October 2020, the Company
completed the capital raising component of its recapitalisation through the issue of 3,409,729,916 new shares (pre-equity
consolidation) raising $85.2 million (before costs). On the same date, a further 602,566,745 new shares (pre-equity
consolidation) were issued in order to partly settle amounts owing to NRW, settle the equity component of the DOCA and to
settle the equity sign-on bonus to the Managing Director and Chief Executive Officer.
On 20 October 2020, the Company completed a 1-for-20 consolidation of its issued equity.
On 20 October 2020, the Deed Administrators confirmed that conditions required to effectuate the DOCA had been satisfied
and control of the Group reverted to its Directors on this date.
On 20 October 2020, following the drawdown of proceeds under the finance facility, the Group initially entered into gold forward
sale contracts with Investec for approximately 46,000 ounces of gold (being 40% of forecast gold production and sales over
the 18-month period commencing 1 November 2020) at an average forward sale price of A$2,667 per ounce. The Group
subsequently executed discretionary gold forward sale contracts and purchased gold put options with Investec to further
protect against adverse movements in the gold price.
On 21 October 2020, shares of the Company were reinstated to trading on the ASX platform.
On 18 December 2020, the Company released an updated Mineral Resource Estimate in accordance with the JORC Code
2012 for its Glenburgh Gold Project in the Gascoyne region of Western Australia of 16.3Mt @ 1.0g/t Au for 510,100 ounces of
contained gold, as at 15 December 2020.
On 31 May 2021, the Company released an updated Group Mineral Resource Estimate in accordance with the JORC Code
2012 of 41.6Mt @ 0.9g/t Au for 1,186,000 ounces of contained gold as at 31 March 2021, and an updated Dalgaranga Ore
Reserve estimate of 13.5Mt at 0.8g/t Au for 339,000 ounces of contained gold, also as at 31 March 2021.
On 15 June 2021, the Company entered into a binding Scheme Implementation Deed with Firefly Resources Limited (Firefly),
pursuant to which both companies will merge by way of a Scheme of Arrangement (Scheme), under which the Company will
acquire 100% of the fully paid ordinary shares of Firefly. Firefly shareholders will receive 0.34 Gascoyne ordinary shares for
each Firefly share held at the Scheme record date, which is expected to result in shareholders of the Company and Firefly
having an interest in the combined entity of approximately 67.6% and 32.4% respectively.
As a result of the change in the Ore Reserve estimate and resulting increase in remaining life of mine strip ratio at the
Dalgaranga CGU, as well as the net assets being greater than the Company’s market value at 30 June 2021, an impairment
expense of $80.2 million (2020: $nil) has been recorded against the mine properties, property, plant and equipment of the
Dalgaranga CGU. Refer to note 14 for further details on the impairment expense.
The Group completed a review of the rehabilitation and mine closure provision during the year, which resulted in an increase
of $2.4 million (2020: $1.3 million) to both the provision and the corresponding rehabilitation asset recorded in mine properties.
Dividends
No dividend has been paid or recommended for the current year.
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Directors’ report
Events occurring after the reporting date
On 7 July 2021, the Company entered into a binding Demerger Implementation Deed, pursuant to which the Company and
Firefly have agreed the terms of a demerger of various assets including the Paterson Copper-Gold Project, the Forrestania
Gold Project and lithium mineral rights over various tenements held by both the Company and Firefly which are to be acquired
by a newly incorporated wholly-owned subsidiary of Firefly, Firetail Resources Limited.
On 24 August 2021, the Company announced on the ASX that it had received a non-binding indicative proposal from Rivet
Group for the Company to acquire the gold rights in the Snake Well gold project owned by Rivet Group. The proposal was
conditional on a number of items, including the requirement for Gascoyne to terminate the Scheme Implementation Deed with
Firefly. The Board of Gascoyne unanimously determined that the Rivet Group proposal was not superior to the Firefly
transaction and rejected the proposal.
In August 2021, the Group signed a cost settlement deed with Habrok (Dalgaranga) Pty Ltd and Habrok Mining Pty Ltd to
settle recovery of legal costs awarded to the Group in September 2020 following successful defence by the Group of legal
action commenced by Habrok (Dalgaranga) Pty Ltd. Part proceeds under the settlement deed were received by the Group in
early September 2021 and it is uncertain as to the extent, if any, of the remaining amount under the settlement deed will be
recovered by the Group. The terms of the settlement deed are confidential, and the aggregate cost recovery amount agreed
is not considered to be material to the Group.
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Directors’ report
Events occurring after the reporting date (continued)
On 6 September 2021, the Company announced on the ASX that the Supreme Court of Western Australia (Supreme Court)
ordered the convening of a meeting of Firefly shareholders to consider and, if thought fit, approve the Scheme. The meeting
is currently scheduled for 21 October 2021. The Supreme Court also made orders approving the despatch of the Scheme
Booklet and Firefly despatched the Scheme Booklet to Firefly shareholders on or before 10 September 2021. The Scheme
Booklet included an Independent Expert’s Report which concluded that the Scheme is fair and reasonable, and is in the best
interests of Firefly shareholders in the absence of a superior proposal.
The Directors are not aware of any other matter or circumstance that has arisen since the end of the year which has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the
Group, in future years.
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Directors’ report
Deed of Company Arrangement and Recapitalisation
On 26 June 2020, a DOCA was executed by the Administrators, in support of a plan for the recapitalisation and reinstatement
in trading of the shares of Gascoyne, following creditor approval of the DOCA proposal on 25 June 2020. The Administrators
were appointed as Joint and Several Deed Administrators of the Company and each of its wholly-owned subsidiaries. The
DOCA provided for the continuation of the Group’s business and operations and a possible return of up to 100 cents in the
dollar for priority and unsecured creditors through a combination of debt repayment and shares in the Company, by
restructuring Group debt and facilitating a recapitalisation of the Company.
Following recapitalisation of the Company, on 20 October 2020 the Deed Administrators confirmed that the conditions
precedent to effectuate the DOCA were complete. From this date, control of the Company reverted back to its directors.
Settlement of pre-Administration debt
On 24 July 2020, former employees were paid their outstanding pre-Administration entitlements in full under the terms of the
DOCA. Current employees will receive their full outstanding pre-Administration entitlements in the ordinary course of business.
On 25 August 2020, the Company transferred $2.9 million to an external trust account held by the Deed Administrators. This
amount represents the estimated maximum cash payment (approximately 50% of the amount owing to unsecured creditors
owed more than $10,000) that the Group was required to make in order to satisfy its obligations to these creditors under the
DOCA. Upon effectuation of the DOCA, the Deed Administrators transferred this amount to the Creditors’ Trust and, shortly
thereafter, made cash payments to the unsecured creditors.
The remaining obligations of the Group to unsecured creditors were met on or prior to completion of the recapitalisation through
a cash payment of up to $10,000 for each unsecured creditor out of proceeds received from the capital raise and through the
issue of shares to the Creditors’ Trust.
NRW received the following as settlement of the total amount owing of $34.8 million ($32.7 million excluding GST), in return
for releasing the NRW security over the Group’s assets:
•
•
•
an upfront cash payment of $7.0 million including GST ($6.4 million excluding GST);
$12.0 million in shares priced at $0.025 (pre-equity consolidation), representing a conversion from debt to equity; and
entry into a liability payment arrangement for the remaining balance due after settlement of the upfront cash payment
and the conversion of debt to equity.
On 20 October 2020, the balance due to the Original Banks under the syndicated facility agreement was repaid in full, thereby
releasing the security held by the Original Banks over the Group’s assets.
Future developments
The Group is expected to continue exploration, development, operations and production and marketing of gold bullion in
Western Australia and will continue the development of its gold exploration projects. The Group also expects to complete the
acquisition of Firefly during the financial year ended 30 June 2022 and progress the studies and approvals required to
commence initial mining activities from the Melville deposit at Yalgoo, with ore to be processed at the Dalgaranga Gold Project.
Environmental regulation
The Group is subject to significant environmental regulations under laws of the Commonwealth and State in respect of its
exploration, evaluation and development activities and its mining operations. The Group aspires to the highest standard of
environmental management and insists its staff and contractors maintain that standard. A significant environmental incident is
considered to be one that causes a major impact or impacts to land biodiversity, ecosystem services, water resources or air,
with effects lasting greater than one year.
During the year, the Group continued to regularly engage with relevant regulators regarding ongoing matters as part of normal
operations management including seeking modifications to certain licence conditions and limits at Dalgaranga. Among the
modifications being sought are the removal of limits to the weak acid dissociable cyanide discharge into the tailings storage
facility. As the Company has not been able to consistently meet the weak acid dissociable cyanide levels and after extensive
and regular dialogue with the relevant regulators, and in line with other similar operations, a formal application has been
submitted by the Company for the removal of the weak acid cyanide licence condition which is currently under assessment by
the regulator.
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Directors’ report
Meetings of Directors
On commencement of Administration on 2 June 2019, the responsibilities of the Board as outlined in the Board Charter were
assumed by the Administrators pursuant to section 437A of the Corporations Act 2001, hence meetings of Directors did not
resume until 20 October 2020 following effectuation of the DOCA.
The number of meetings held during the year by the Board of Directors (Board) and Board committees, and the number of
those meetings attended by each Director were:
Board meetings
Remuneration and Nomination
Committee meetings
Audit and Risk
Committee meetings
Entitled to
attend1
Attended
Entitled to
attend1
Attended
Entitled to
attend1
Attended
G Bauk2
R Hay3
R Johnston4
12
12
12
12
12
12
4
4
4
4
4
4
2
2
2
2
2
2
In addition to the above meetings a number of meetings were dealt with by circular resolution.
1
2 Mr G Bauk was appointed as a Non-Executive Director on 5 August 2020. On 20 October 2020 Mr Bauk assumed the role of Non-Executive
Chairman.
3 Mr R Hay was appointed as an Executive Director on 5 August 2020, retaining the title of Chief Executive Officer. On 20 October 2020 Mr
Hay assumed the role of Managing Director and Chief Executive Officer.
4 Mr R Johnston was appointed as a Non-Executive Director on 5 August 2020.
Gender diversity
The Board of the Company is currently comprised of four male directors and no female directors (100% male). Within senior
executive positions of the Company, 67% of persons holding these positions are male and 33% are female. Senior executive
positions are those roles that are, or directly report to, the Managing Director and Chief Executive Officer, Chief Financial
Officer and Executive General Manager - Operations and Development. Across the whole Group, 83% of employees are male
and 17% are female.
As the Board of the Company was only reconstituted on 20 October 2020 following the effectuation of the DOCA, the initial
focus of the Company has been to solidify the operation and business performance of its assets. As the Company matures as
an organisation, the Board shall set measurable objectives to achieve gender diversity in accordance with its Diversity Policy.
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Directors’ report
Remuneration report (audited)
The Directors of the Company present the Remuneration report for Directors and other Key Management Personnel (KMP)
prepared in accordance with the Corporations Act 2001, the Corporations Regulations 2001 and applicable accounting
standards.
This Remuneration report is presented under the following sections:
•
•
•
•
•
•
•
Key management personnel
Remuneration governance
Remuneration policy and framework
Details of remuneration
Service agreements
Share-based remuneration
Other information.
Key management personnel
The term KMP refers to those persons having authority and responsibility for planning, directing and controlling the activities
of the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Group, as defined by AASB
124 Related Party Disclosures.
The Directors and other KMP of the Group during the year were:
Name
Position1
Term as KMP during the financial year
Directors
G Bauk
R Hay
R Johnston
Other KMP
J Goldsworthy
D Coyne
Non-Executive Chairman2
Appointed 5 August 2020
Managing Director and Chief Executive Officer3 Appointed 5 August 2020
Non-Executive Director
Appointed 5 August 2020
Chief Geologist
Chief Financial Officer and Company Secretary4 Appointed 20 July 2020
Full year
D Baumgartel
Executive General Manager
Appointed 1 November 2020
T Magan
S McBride
Head of Finance
Joint Company Secretary5
Full year
Resigned 30 March 2021
1 At the reporting date or on the last day of designation as KMP.
2 Mr G Bauk was appointed as a Non-Executive Director on 5 August 2020. Mr Bauk assumed the role of Non-Executive Chairman on 20
October 2020.
3 Mr R Hay was appointed as an Executive Director on 5 August 2020, retaining the title of Chief Executive Officer. On 20 October 2020 Mr
Hay assumed the role of Managing Director and Chief Executive Officer.
4 Mr D Coyne was appointed as Chief Financial Officer on 20 July 2020 and subsequently appointed as Joint Company Secretary on 6
October 2020. Upon the resignation of Mr S McBride as Joint Company Secretary on 30 March 2021, Mr Coyne was confirmed as sole
Company Secretary.
5 Mr S McBride was appointed as Joint Company Secretary on 6 October 2020, following his appointment as Company Secretary on 17
March 2020.
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Directors’ report
Remuneration report (audited) (continued)
Subsequent to 30 June 2021, the following KMP appointment was announced:
Name
Position
Appointment date
H Plaggemars1
Non-Executive Director
1 July 2021
1 Mr H Plaggemars is to receive a director’s fee of $120,000 p.a. inclusive of committee fees. No retirement benefits are payable.
Full remuneration details for KMP appointed after 30 June 2021 will be disclosed in the Remuneration report for year ending
30 June 2022.
Remuneration governance
The Board has established Remuneration and Nomination Committees which operate in accordance with their Charters as
approved by the Board and are responsible for determining and reviewing compensation arrangements for the Directors and
the Executive team.
The Remuneration Committee is responsible for assessing the appropriateness of the nature and amount of remuneration on
a periodic basis by reference to recent employment market conditions with the overall objective of maximising shareholder
value. The payment of bonuses, equity-settled awards, and other incentive payments are reviewed by the Remuneration
Committee annually having regard to performance against expectations and market conditions as part of the review of
executive remuneration, and a recommendation is submitted to the Board for approval.
The Remuneration Committee may engage independent external remuneration consultants to provide advice on remuneration.
No external remuneration consultants were engaged by the Group during the year.
The Remuneration Committee is comprised of Mr George Bauk as Chairman, and Mr Rowan Johnston and Mr Hansjoerg
Plaggemars as Committee members. The Nomination Committee is comprised of Mr George Bauk as Chairman, and Mr
Rowan Johnston as a Committee member.
Remuneration policy and framework
The principles of the Group’s executive remuneration policy are to ensure that remuneration packages properly reflect the
duties and responsibilities of Executives and are sufficient to attract, retain and motivate personnel of the requisite capabilities
and experience. The Board reviews principles governing the Group’s executive remuneration policy to ensure that these are
appropriately aligned with shareholder expectations and the objectives of the Group.
The remuneration structure adopted by the Group consists of the following components:
•
•
fixed remuneration being annual salary and superannuation; and
variable at-risk incentive remuneration comprising:
•
short-term incentives, including bonuses; and
•
long-term incentives, including employee equity-settled awards.
Following recapitalisation of the Company on 20 October 2020, the Board implemented an incentive scheme for all Group
employees comprised of a short-term incentive plan (STIP) and a long-term incentive plan (LTIP). The LTIP, included in the
Company’s GCY Equity Incentive Plan Rules (Incentive plan), was approved by shareholders at the Company’s 2020 Annual
General Meeting on 18 December 2020.
The incentive scheme is structured to reward employees for their contributions towards achieving short-term and long-term
Group business objectives, align part of employee remuneration to shareholder returns and provide employees the opportunity
to share in longer term value creation of the Company through part-ownership of the Company.
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Directors’ report
Remuneration report (audited) (continued)
Composition of KMP remuneration
The composition of salary (fixed remuneration including superannuation) and STIP and LTIP awards (variable at-risk
remuneration) for the current year performance period is summarised as follows:
Target remuneration mix
MD / CEO
39%
26%
35%
Other KMP
59%
10%
31%
0%
20%
40%
60%
80%
100%
Salary
STI (at risk)
LTI (at risk)
Actual remuneration mix
MD / CEO
45%
23%
32%
Other KMP
72%
8%
20%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Salary
STI (at risk)
LTI (at risk)
Short-term incentives
The Group uses short-term incentives (STIs) to incentivise members of KMP that may be linked to performance measures.
Performance measures involve the use of annual performance objectives, metrics, performance appraisals and Group values.
STIs may incorporate cash and/or equity-based components for KMP and other employees. Performance measures are
considered on commencement of employment for new KMP and annually for all KMP. They are set after consultation with the
Directors and KMP and may be tailored to the areas over which the KMP has a level of control and may include both financial
and non-financial measures.
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Directors’ report
Remuneration report (audited) (continued)
For the financial year ended 30 June 2021, performance areas include:
•
•
financial: performance against budget; and
non-financial: performance against budget, operational improvements and efficiency, growth in mineral resources and/or
ore reserves and strategic goals dependent on KMP areas of influence.
If a major safety or environmental incident occurs, the STI key performance indicator for safety and environment will be reduced
to zero, meaning that the safety or environmental key performance indicator within the overall STI weighting will be nil
irrespective of any other improvements within safety and environment.
STIP objective
The intent of the STIP is to incentivise achievement of key annual targets that are expected to contribute to the growth in
shareholder value and reward Executives for achieving those targets.
Performance measurement
Key performance indicators (KPIs) are set by the Board and are typically advised to Executives prior to or at the
commencement of each financial year. The following KPIs used to measure performance were applied to all Executives for
the current year:
KPI
Weighting Performance measure
Outcome
Safety and environment
30%
Reduction in TRIFR1 of 12.6 by at least
5%;100% of the KPI earned if TRIFR
reduced by 50% or more.
Actual TRIFR as at 30 June 2021 was 4.0
resulting in all 100% of this KPI being
earned.
Production guidance
Share price growth
30%
30%
Gold production of at least 78,000oz to
earn 50%; 100% earned at 84,000oz.
Gold production of 77,278oz was less than
the threshold, resulting in nil for this KPI.
Increase in share price above the $0.50
per share October 2020 recapitalisation
price; 100% earned if share price
exceeds $1.00.
30 day volume weighted average price to
30 June 2021 was $0.395, resulting in nil
for this KPI.
Discretionary
10%
Discretionary at Board discretion taking
into account outcomes of individual
performance reviews.
Varied outcome of between 4% and 10%
for this KPI.
1 Total Recordable Injury Frequency Rate (TRIFR).
STI award
The STI award is based on a maximum percentage of annual base salary (excluding superannuation) and is determined
following assessment of the Executive’s annual performance. The STI award is paid in cash, typically before 31 August in the
following financial year. For the current financial year, the STIP only applied from 1 January 2021 to 30 June 2021, but will
apply to full years in future.
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Directors’ report
Remuneration report (audited) (continued)
Details of the STI awards payable to KMP for the current year, and paid in the year ended 30 June 2022, are as below:
KMP
R Hay
D Coyne
D Baumgartel
J Goldsworthy
T Magan
Maximum STI
opportunity1
%
STI
achieved2
%
STI
awarded3
$
50%
30%
30%
20%
20%
9.5%
5.3%
5.3%
3.6%
3.9%
52,250
21,375
21,375
8,088
8,580
1 Maximum percentage of KMP’s base salary, excluding superannuation. The percentage assigned to each KMP is dependent on the
individual KMP’s role within the Group.
2 Weighted percentage assigned to each KMP following assessment of KMP performance and review of Group performance for the current
year. As the STIP for the financial year ended 30 June 2021 only applied for a six month period, the STI achieved has been reduced by
50%.
3 Award excludes compulsory superannuation contributions (if applicable).
Long-term incentives
The Board considers that long-term incentives (LTIs) should form a key component of total annual remuneration of Executives,
KMP and other eligible employees (collectively Eligible Participants), which can be achieved by setting a significant portion of
total annual remuneration ‘at risk’ to better align interests with those of shareholders to encourage the production of long-term
sustainable growth and to assist with retention.
The Board recognises that to preserve shareholder value it must operate a long-term remuneration structure which ensures
Eligible Participants are attracted, retained and motivated by the Group.
Under the Group’s Incentive plan, approved by shareholders on 18 December 2020, annual grants of equity-settled awards
(including performance rights, restricted share units and share options) may be made to eligible employees. For the current
financial year, the Group offered performance rights (rights) as a long-term incentive to Eligible Participants. The rights are
issued for nil consideration and contain a service condition. Any unvested rights lapse on the date of cessation of employment,
subject to the discretion of the Board and the terms of the Incentive plan.
LTIP objective
The intent of the LTIP is to support long-term business strategy and value creation, and reward sustained performance in
achieving long-term growth in shareholder value.
Performance measurement
KPIs are set by the Board and are advised to Eligible Participants prior to, or shortly after, the commencement of each financial
year.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
39
Directors’ report
Remuneration report (audited) (continued)
The following KPIs used to measure long-term performance applied to all Eligible Participants for the current year performance
period:
KPI
Weighting Performance measure
Outcome
Growth in mineral resources
20%
End FY2021 with resources (excl.
Glenburgh) of at least 90% of start of
FY2021 resources of 3.06 ounces of gold
per 1,000 shares on issue (post-equity
consolidation).
End of FY2021 mineral resource (excl.
Glenburgh) was 659,749oz, or 2.63oz per
1,000 shares, resulting in a nil score for
this KPI for KMP.
Retention
45-60% One-off measure for FY2021 only. Maintain
employment with the Group through until the
dates of award and vesting.
45% for CEO/MD, CFO and
EGM Operations and Development.
60% for all other Eligible Participants.
Total Shareholder Return
30%
Gascoyne shares to outperform the ASX
Gold Index by at least 5% to earn 50% of
the weighting, sliding scale to earn 100% of
weighting if outperform by 25% or more.
Gascoyne shares did not outperform the
ASX Gold Index, resulting in a nil score for
this KPI.
Culture development
20%
Establish high-performing team by
establishing Gascoyne Values, developing
objectives and development plans for each
employee and conducting quarterly and
annual performance reviews.
Gascoyne Values were developed and all
employees had objectives and
development plans set. All employees had
quarterly and annual performance reviews.
Full 20% earned for this KPI.
LTI award
The determination of the number of rights granted is based on the Eligible Participant’s salary and performance against LTIP
KPIs. There are no further performance conditions after the grant of rights.
The number of rights granted is determined by dividing the dollar value of the LTI award achieved by the Eligible Participant,
by the 30 day volume weighted average price of the Company’s shares for the period to 30 June of the relevant financial year.
While the KPIs described above relate to the performance period ending 30 June 2021, the rights were not granted as at the
end of the financial year. In September 2021, a total of 797,208 rights were granted and issued to KMP, excluding the Managing
Director and Chief Executive Officer. The Managing Director and Chief Executive Officer is to be granted 452,532 rights subject
to approval by shareholders at the Company’s 2021 Annual General Meeting.
Details of rights granted as remuneration to KMP during the year are as follows:
2021
KMP
D Coyne
D Baumgartel
Class of
right1
Grant date2
Maximum LTI
opportunity3
%
LTI
granted3
%
Rights
granted
No.
Grant date
fair value
$/right
A
B
A
B
26 March 2021
26 March 2021
26 March 2021
26 March 2021
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
100,000
100,000
100,000
100,000
$0.525
$0.525
$0.525
$0.525
1 Class A and Class B rights vest on 1 July 2022 and 1 January 2023 respectively, and expire on 30 June 2032 and 31 December 2032
respectively.
2 Prior to the grant of the annual LTI awards, Mr Coyne and Mr Baumgartel were granted Class A and Class B rights on 26 March 2021.
3 The rights granted in the current year were not subject to the KPI performance testing applicable to annual LTI awards as described in the
LTIP KPI performance measures as they are rights granted in accordance with respective employment agreements.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
40
Directors’ report
Remuneration report (audited) (continued)
Sign-on bonus
Upon the Company exiting Administration on 20 October 2020 and following his appointment as an Executive Director of the
Company on 5 August 2020, Mr R Hay received a sign-on bonus of $250,000 on 13 October 2020, equity-settled in Company
shares.
Non-Executive Director remuneration
Non-Executive Directors are remunerated by fees determined by the Board within the aggregate Directors’ fee pool limit as
approved by shareholders, currently $450,000. Total Non-Executive Directors’ fees paid during the year was $235,538. In
setting the fees, account is taken of the responsibilities inherent in the stewardship of the Company and the demands made
of Directors in the discharge of their responsibilities. Advice is taken from independent consultancy sources where appropriate,
to ensure remuneration accords with market practice. The Group has largely adopted the ASX Corporate Governance
Principles and decided to remunerate its Non-Executive Directors on an ongoing basis with no accrual or entitlement to a
retirement benefit.
Voting and comments made at the Company’s last Annual General Meeting
At the Company’s 2020 Annual General Meeting (AGM) 99.8% of the votes cast in relation to the resolution to adopt the 2020
Remuneration report were cast in favour of the resolution. The Company did not receive any specific feedback at the AGM on
its Remuneration report.
Statutory performance indicators
The Company aims to align KMP remuneration to its strategic and business objectives and the creation of shareholder wealth.
The table below shows measures of the Group’s financial performance over the last five financial years as required by the
Corporations Act 2001. However, these are not necessarily consistent with the specific measures in determining the variable
amounts of remuneration to be awarded to KMP. As a consequence, there may not always be a direct correlation between the
statutory key performance indicators and the variable remuneration awarded.
Statutory key performance indicator
2021
2020
2019
2018
2017
Profit/(loss) per share (cents)1
Dividends (cents per share)
Net profit/(loss) ($’000)
Share price2
(22.8)
-
(44,130)
$0.300
4.0
-
(371.0)
-
1,989
(107,105)
$0.039
$0.039
(2.7)
-
(559)
$0.50
(9.7)
-
(1,444)
$0.435
1 Profit/(loss) per share has been restated for the years ended 30 June 2017 to 30 June 2020 to account for the effect of the 1-for-20 share
consolidation undertaken in the year ended 30 June 2021.
2 Closing share price at 30 June (or the last trading day immediately before) for the relevant year, other than for years ended 30 June 2019
and 30 June 2020, where the closing price is at the last trading day before suspension from official quotation on 3 June 2019, following the
voluntary appointment of Administrators on 2 June 2019.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
41
Directors’ report
Remuneration report (audited) (continued)
Details of remuneration
Details of the nature and amount of each element of remuneration of each Director and other KMP of the Group are presented
in the table below:
2021
Short-term employee
benefits
Long-term
employee
benefits
Post-
employment
benefits
Accrued
long service
leave5
Bonus4
Super-
annuation
Total
Performance
related2
Share-based
payments1
Shares,
options and
performance
rights
$
$
$
$
%
Salary
and fees3
$
115,825
$
-
-
11,003
-
126,828
571,966
302,250
6,092
57,144
250,000
1,187,452
99,278
-
-
9,431
-
108,709
787,069
302,250
6,092
77,578
250,000
1,422,989
371,976
272,115
225,652
232,650
142,869
51,375
21,375
19,320
30,580
-
-
-
4,151
1,823
-
25,000
19,586
23,210
24,558
13,573
18,870
467,221
18,870
331,946
-
-
-
272,333
289,611
156,442
1,245,262
122,650
5,974
105,927
37,740
1,517,553
2,032,331
424,900
12,066
183,505
287,740
2,940,542
-
47%
-
15%
12%
7%
11%
-
Directors
G Bauk6
R Hay7
R Johnston8
Other KMP
D Coyne9
D Baumgartel10
J Goldsworthy11
T Magan12
S McBride13
1 Share-based payments represent the fair value of granted shares, options and rights over the vesting period, recognised as an accounting
expense during the year.
2 Calculated as the total of ‘Bonus’ plus ‘Share-based payments’ divided by Total remuneration, reflecting the percentage of at-risk
performance-tested remuneration.
3 Salary and fees include movements in the annual leave provision.
4 Bonuses comprised of:
a. STI award earned for the current financial year. For further information, refer to the Short-term incentives section above in this
Remuneration report.
b. Retention bonuses earned during the Administration period. For further information, refer to the Retention bonus section below in this
Remuneration report.
5 Benefits for accrued long service leave represent the movements in the long service leave provision. Amounts are net of leave taken,
therefore they may be negative where KMP have taken more leave than accrued during the year or when accrued leave is paid as part of
final salary payments.
6 Mr G Bauk was appointed as a Non-Executive Director on 5 August 2020 and as Non-Executive Chairman on 20 October 2020.
7 Mr R Hay received a cash bonus of $250,000 and a discretionary equity-settled bonus of $250,000 upon the Company exiting
Administration. Mr Hay also received $52,250 as an STI award earned for the current financial year.
8 Mr R Johnston was appointed as Non-Executive Director on 5 August 2020.
9 Mr D Coyne received $30,000 in retention bonuses earned during the Administration period and $21,375 as an STI award earned for the
current financial year.
10 Mr D Baumgartel was appointed as Executive General Manager on 1 November 2020. Mr Baumgartel received $21,375 as an STI award
earned for the current financial year.
11 Mr J Goldsworthy received $11,232 in retention bonuses earned during the Administration period and $8,088 as an STI award earned for
the current financial year.
12 Ms T Magan received $22,000 in retention bonuses earned during the Administration period and $8,580 as an STI award earned for the
current financial year.
13 Mr S McBride resigned on 30 March 2021.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
42
Directors’ report
Remuneration report (audited) (continued)
2020
Short-term employee
benefits
Long-term
employee
benefits
Post-
employment
benefits
Salary
and fees3
$
6,762
21,424
28,186
Accrued
long service
leave5
Bonus4
Super-
annuation
$
-
-
-
$
-
(3,796)
(3,796)
642
1,711
2,353
547,993
125,000
-
220,683
33,699
4,353
62,068
-
-
25,000
23,744
3,382
122,148
4,194
(12,842)
11,151
952,892
162,893
(8,489)
63,277
981,078
162,893
(12,285)
65,630
Total
Performance
related2
Share-based
payments1
Shares,
options and
performance
rights
$
$
$
%
-
-
18%
12%
-
3%
-
-
-
-
-
-
-
-
-
7,404
19,339
26,743
697,993
282,479
65,450
124,651
1,170,573
1,197,316
Directors
R M Joyce6
I Kerr7
Other KMP
R Hay
J Goldsworthy
S McBride8
E O’Malley9
1 Share-based payments represent the fair value of granted options recognised as an accounting expense during the year.
2 Calculated as the total of ‘Bonus’ plus ‘Share-based payments’ divided by Total remuneration, reflecting the percentage of at-risk
performance-tested remuneration.
3 Salary and fees include movements in the annual leave provision.
4 Bonuses comprised of retention bonuses earned during the Administration period.
5 Benefits for accrued long service leave represent the movements in the long service leave provision. Amounts are net of leave taken,
therefore they may be negative where KMP have taken more leave than accrued during the year or when accrued leave is paid as part of
final salary payments.
6 Mr R M Joyce resigned on 30 April 2020.
7 Mr I Kerr resigned on 5 July 2019. His salary included normal earnings of $37,075 less the movement in annual leave provision of $15,651.
Pre-Administration annual leave entitlements and any contractual payments in lieu of notice due to Mr Kerr were included in unsecured
creditors under the terms of the DOCA. For details on unsecured creditor payment terms, refer to the Deed of Company Arrangement and
Recapitalisation section in the Directors’ report.
8 Mr S McBride was appointed as Company Secretary on 17 March 2020.
9 Ms E O’Malley resigned on 16 March 2020. Her salary comprised a termination payment of $51,538, normal earnings of $61,333 and
movement in annual leave provision of $9,277.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
43
Directors’ report
Remuneration report (audited) (continued)
Service agreements
Remuneration and other terms of employment for Executive Directors and other KMP are formalised in service agreements.
The major provisions of the agreements relating to remuneration as at the date of this report or on the last day of designation
as KMP are presented below.
Name
Position
Base salary1
Term of agreement
Notice period2
R Hay3
D Coyne
Managing Director and Chief
Executive Officer
Chief Financial Officer and
Company Secretary
$575,000 p.a.
Unspecified
Three and six months4
$400,000 p.a.
Unspecified
Three and six months4
D Baumgartel
Executive General Manager
$400,000 p.a.
J Goldsworthy
Chief Geologist
T Magan
S McBride5
Head of Finance
Joint Company Secretary
$246,000 p.a.
$240,900 p.a.
$275 p.h.
Unspecified
Unspecified
Unspecified
Unspecified
Three and six months4
Three months
Four weeks
One week
Inclusive of superannuation entitlement.
1
2 Notice period to be provided by either party to the agreement, except for Mr R Hay, Mr D Coyne and Mr D Baumgartel, as stated below.
3 Mr R Hay entered into a formal contract of employment with the Company on 5 August 2020 when he was appointed as an Executive
Director of the Company.
4 Mr R Hay, Mr D Coyne and Mr D Baumgartel are required to provide notice of three months, the Company is required to provide notice of
six months.
5 Mr S McBride resigned on 30 March 2021.
Short-term incentives
Performance bonuses
Refer to the Short-term incentives section above in this Remuneration report for details of STI cash bonuses awarded during
the year.
Other bonuses
Retention bonus
Mr R Hay received a total of $250,000 cash retention bonuses, payable upon his continued employment on the date of
recapitalisation of the Company on 20 October 2020. Refer to the Remuneration report in the Annual Report for the year ended
30 June 2020 for further details of the conditions for payment of Mr Hay’s retention bonuses.
Mr D Coyne received the following cash retention bonuses:
•
•
$15,000 on 14 October 2020 due to his continued employment to 30 September 2020; and
$15,000 on 15 January 2021 due to the successful exit from Administration and reinstatement of the Company’s shares
to trading on the Australian Securities Exchange (ASX).
Mr J Goldsworthy received the following cash retention bonuses:
•
•
$5,616 on 14 October 2020 due to his continued employment to 30 September 2020; and
$5,616 on 15 January 2021 due to the successful exit from Administration and reinstatement of the Company’s shares
to trading on the ASX.
Ms T Magan received the following cash retention bonuses:
•
•
$11,000 on 14 October 2020 due to her continued employment to 30 September 2020; and
$11,000 on 15 January 2021 due to the successful exit from Administration and reinstatement of the Company’s shares
to trading on the ASX.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
44
Directors’ report
Remuneration report (audited) (continued)
Share-based remuneration
Long-term incentives
Long-term incentive plans were introduced during the current year.
Performance rights
Granted performance rights
Refer to the Long-term incentives section above in this Remuneration report for details of LTI rights awards granted during the
year and for LTI rights earned during the year but granted subsequent to the end of the year in September 2021.
Rights are granted to eligible employees under the Company’s GCY Equity Incentive Plan Rules (Incentive plan) as part of
their remuneration. Each right entitles the employee to receive one fully paid ordinary share in the Company, for nil
consideration on exercise, after vesting.
The rights contain a service condition, vesting in two equal tranches of 50%, the first on the 30 June in the year immediately
following the award, and the second on the 30 June of the following year.
Rights may be exercised from the vesting date until expiry and are not transferrable. The employee may only exercise the
rights by submitting a written notice of exercise to the Board of Directors.
The rights refer to rights over ordinary shares in the Company, which are exercisable on a one-for-one basis under the terms
of the Incentive plan rules. The rights are provided at no cost to the recipients.
Unvested rights are forfeited within 30 days of cessation of the employee’s employment, subject to Board discretion. Rights
which have vested but not exercised lapse on their expiry date. The rights carry no dividend or voting rights and do not entitle
the holder to participate in any share issue of the Company other than on exercise of the right.
There has been no alteration of the terms and conditions of the above rights since grant date.
Exercised performance rights
No performance rights granted as part of KMP remuneration were exercised in the current year.
Performance rights held by KMP
The following table discloses details of rights over ordinary shares in the Company held during the year by KMP of the Group.
2021
KMP
R Hay
D Coyne
D Baumgartel
J Goldsworthy
T Magan
Class of
right1
Balance at
start of year
No.
Granted as
remuneration
No.
Exercised1
No.
Forfeited/
lapsed
No.
Balance at
end of year
No.
Unvested1
No.
A
B
A
B
A
B
A
B
A
B
-
-
-
-
-
-
-
-
-
-
-
-
100,000
100,000
100,000
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
100,000
100,000
100,000
-
-
-
-
-
-
100,000
100,000
100,000
100,000
-
-
-
-
1 Class A and Class B rights vest on 1 July 2022 and 1 January 2023 respectively, and expire on 30 June 2032 and 31 December 2032
respectively.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
45
2021
Directors
G Bauk
R Hay
R Johnston
Other KMP
D Coyne
D Baumgartel
Directors’ report
Remuneration report (audited) (continued)
Share options
No options were granted as remuneration to KMP during the current year, or were exercised in the current year. There were
no options held by KMP at the end of, or during the current year.
Other information
Shares held by KMP
The following table discloses details of ordinary shares in the Company held during the year by KMP of the Group.
Balance at
start of year
No.
Granted as
remuneration
No.
Share
purchase1
No.
Received on
exercise
of options and
performance
rights
No.
Net other
change2
No.
Balance at
end of year
No.
Balance held
nominally
No.
-
-
-
-
-
-
-
10,000,000
4,000,000
-
-
-
-
-
-
-
1,000,000
-
1,400,000
80,000
-
4,130,000
10,000,000
6,480,000
J Goldsworthy
4,130,000
T Magan
S McBride
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(13,300,000)
700,000
700,000
-
-
-
(950,000)
50,000
30,000
-
-
-
(5,253,500)
276,500
50,000
(76,000)
-
4,000
-
-
-
(19,579,500)
1,030,500
780,000
1 Cash subscription as part of private placement at $0.025 per share (pre-equity consolidation) in accordance with prospectus dated 13
August 2020. Refer to the Significant changes in the state of affairs section in the Directors’ report.
2 Net other change includes the effect of the 1-for-20 share consolidation. Refer to note 19 for details.
Other transactions with KMP
There were no other transactions between the Company and KMP during the year.
End of audited Remuneration report.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
46
Directors’ report
Shares under option
Unissued ordinary shares of the Group under options at the date of this report are:
Date options granted
Expiry date
Exercise price
Number under
option
5 October 2018
7 October 2021
$7.40
107,000
In September 2020, option holders were offered nominal consideration of $100 to relinquish their options resulting in the
cancellation of 1,660,000 options, leaving a remaining balance of 2,140,000 options. Following the 1-for-20 share consolidation
completed on 20 October 2020, the option exercise price was adjusted from $0.37 to $7.40, and the remaining balance of
options outstanding was adjusted proportionately from 2,140,000 options to 107,000 options.
Unvested employee incentive options expire on the earlier of their expiry date or within 30 days of cessation of the employee’s
employment. These options do not entitle the holder to participate in any share issue of the Company, other than on exercise
of the option.
No options were granted to Directors or other KMP during the year. There were no fully paid ordinary shares issued upon the
exercise of options during and since the end of the year (2020: nil shares).
Refer to the Remuneration report and note 27 for information on rights over unissued ordinary shares.
Indemnification and insurance of Officers
On 5 August 2020, the Company entered into deeds of indemnity, insurance and access with each Director and Executive
Officer. Each deed contains a right of access to certain books and records of the Group for a period of seven years after the
Director or Executive Officer ceases to hold office. This seven-year period is extended where certain proceedings or
investigations commence during the seven-year period but are not resolved until later.
Pursuant to the newly adopted Constitution on 5 August 2020, the Group must indemnify Directors and Executive Officers on
a full indemnity basis and to the full extent permitted by law against all losses, liabilities, costs, charges and expenses incurred
by those individuals as Officers of the Group. Under the deeds of indemnity, insurance and access, the Company indemnifies
each Director and Executive Officer on a full indemnity basis and to the full extent permitted by law, against all losses or
liabilities (including all reasonable legal costs) incurred by the Director as an Officer of the Group.
On 12 August 2020 the Company paid an insurance premium to insure all of the Directors and Officers of the Group.
The liabilities insured include legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the Officers in their capacity as Officers of the Group, and any other payments arising from liabilities incurred by the
Officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of
duty by the Officers or the improper use by the Officers of their position or of information to gain advantage for themselves or
someone else to cause detriment to the Group. Under the deeds of indemnity, insurance and access, the Company must
maintain such insurance for each Director and Executive Officer until a period of seven years after a Director or Executive
Officer ceases to hold office. This seven-year period is extended where certain proceedings or investigations commence during
the seven-year period but are not resolved until later.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility
on behalf of the Company for all or part of those proceedings.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
47
Directors’ report
Non-audit services
The Company may decide to employ the auditor Grant Thornton Audit Pty Ltd and related entities on assignments additional
to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important.
No non-audit services were provided to the Group by the Group’s auditor for the year ended 30 June 2021 (2020: $5,000 paid
for due diligence services). Details of the amounts paid or payable to the auditor for audit services provided during the year
are disclosed in note 28.
The Board considered the non-audit services provided during the prior year by the auditor and is satisfied that the provision of
non-audit services during the prior year is compatible with, and did not compromise, the auditor independence requirements
of the Corporations Act 2001 for the following reasons:
•
•
all non-audit services were subject to the corporate governance procedures adopted by the Company and have been
reviewed by the Board to ensure they do not impact upon the impartiality and objectivity of the auditor; and
the non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting
in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing
risks and rewards.
Auditor’s independence declaration
A copy of the Auditor's independence declaration as required under section 307C of the Corporations Act 2001 is attached to
and forms part of this Directors’ report.
Rounding of amounts
The Company has relied on the relief provided by the ASIC Corporations (Rounding in Financial/Directors' Report) Instrument
2016/191, and therefore the amounts contained in the Directors’ report and the financial report have been rounded to the
nearest thousand dollars, unless otherwise stated.
This report is made in accordance with a resolution of the Directors.
George Bauk
Non-Executive Chairman
Perth
24 September 2021
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
48
Central Park, Level 43
152-158 St Georges Terrace
Perth WA 6000
Correspondence to:
PO Box 7757
Cloisters Square
Perth WA 6850
T +61 8 9480 2000
E info.wa@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Gascoyne Resources Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Gascoyne
Resources Limited for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
L A Stella
Partner – Audit & Assurance
Perth, 24 September 2021
Grant Thornton Audit Pty Ltd ACN 130 913 594
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Central Park, Level 43
152-158 St Georges Terrace
Perth WA 6000
Correspondence to:
PO Box 7757
Cloisters Square
Perth WA 6850
T +61 8 9480 2000
E info.wa@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Gascoyne Resources Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Gascoyne Resources Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2021, the 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, and notes to the consolidated financial statements, including a summary of significant
accounting policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Key audit matter
How our audit addressed the key audit matter
Value of the mine properties, property, plant and
equipment – Notes 13 & 14
The Group recorded mine properties and property, plant and
equipment totalling $112.6 million at 30 June 2021 relating to
the construction and development of the Group’s Dalgaranga
Gold Project (DGP) cash generating unit (CGU).
Management, as prescribed in AASB 136 Impairment of
Assets, are required to undertake annual impairment testing.
Management test the CGU for impairment by comparing its
carrying amount against its recoverable amount determined by
either, the greater of its fair value less costs to sell and its
value in use. An impairment charge totalling $80.2 million was
recorded at 30 June 2021.
The valuation of the DGP was considered a key audit matter
due to the size of mine properties and property, plant and
equipment asset recorded and the level of estimates and
judgements used by management within the assumptions to
prepare a value in use calculation. These assumptions
included;
forecast mining production and gold sale schedules
forecast gold price
forecasted production costs
life of mine reserves underpinning production schedules
discount rate
These estimates and judgements required specific valuation
expertise and analysis.
Provision for rehabilitation – Note 18
The Group held a rehabilitation provision of $28.1 million as at
30 June 2021 relating to the Dalgaranga Gold Project (DGP).
The Group reviews its rehabilitation calculations annually or as
new information becomes available. Changes in estimates
and underlying assumptions are reviewed annually including
changes to the mining operations, local regulations and
rehabilitation requirements.
The process for determining the rehabilitation provision
involves significant management judgement and subjectivity
with regard to the underlying assumptions in determining the
expected significant increase in rehabilitation provision.
The ability for the Group to determine an appropriate
rehabilitation provision based on the expected life of mine is
dependent on readily available information to support the
estimates and judgements used within the calculation in
determining the rehabilitation provision.
This area is a key audit matter due to the judgemental nature
of the estimates and assumptions used in the rehabilitation
provision assessment.
Our procedures included, amongst others:
Enquiring with management to obtain and document an
understanding of management’s process relating to the
assessment of impairment, including management’s
consideration of valuation techniques required by the
accounting standards for determining the recoverable
amount for the DGP;
Obtaining the management reconciliation of capitalised
mine properties and agreeing to the general ledger;
Evaluating the value in use models against the
requirements of AASB 136, including consultation with
our valuations experts, in order to:
- Scrutinise management’s life-of-mine production
schedules;
- Test the mathematical accuracy of the calculation
formulas;
- Evaluate management’s ability to perform accurate
estimates;
- Test forecast cash inflows and outflows to be derived
by the DGP’s assets; and
- Scrutinise discount rates, forecasted gold and foreign
exchange rates applied to forecast future cash flows.
Evaluating the competence and objectivity of the experts
used by management;
Engaging an independent auditors’ expert to evaluate
management’s assessment of mineral resources
including compliance with the JORC 2012;
Performing sensitivity analysis on the significant inputs
and assumptions made by auditor’s expert in preparing its
calculation;
Agreeing the impairment allocation of the Dalgaranga
assets on a pro-rata basis; and
Assessing the adequacy of financial report disclosures.
Our procedures included, amongst others:
Obtaining an understanding of management’s process for
determining the rehabilitation provision;
Evaluating the reasonableness of management’s
estimates and judgements to available supporting
documentation, including assessing estimates and
judgements determined by management experts;
Assessing the competencies of management’s expert in
accordance with ASA 500;
Evaluating the rehabilitation cost models against industry
benchmarks including consultation with our valuations
experts;
- Scrutinising management’s cost allocation to stages
of rehabilitation and mine closure;
- Considering the timing of the Groups rehabilitation
activities against the life of mine schedules.
Assessing the Group’s legal obligations with respect to
the rehabilitation requirements in accordance with the
Mining Rehabilitation Fund 2012 and the associated
effect on the estimated costs;
Reviewing the appropriateness of the related disclosures
within the financial statements.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2021, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: https://www.auasb.gov.au/auditors_responsibilites/ar1_2020.pdf. This description forms part of
our auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 35 to 46 of the Directors’ report for the year ended 30 June
2021.
In our opinion, the Remuneration Report of Gascoyne Resources Limited, for the year ended 30 June 2021 complies with
section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
L A Stella
Partner – Audit & Assurance
Perth, 24 September 2021
Directors’ declaration
1
In the Directors’ opinion:
(a)
the consolidated financial statements and notes of Gascoyne Resources Limited and its controlled entities are in
accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance for
the financial year ended on that date, 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
Note 2 confirms that the consolidated financial statements comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief
Executive Officer and Chief Financial Officer for the financial year ended 30 June 2021.
This declaration is made in accordance with a resolution of the Directors.
George Bauk
Non-Executive Chairman
Perth
24 September 2021
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
54
Consolidated statement of comprehensive income
For the year ended 30 June 2021
Revenue
Cost of sales
Gross profit
Other income
Impairment expense
Other expenses
Operating (loss)/profit
Finance income
Finance costs
(Loss)/profit before income tax
Income tax expense
(Loss)/profit for the year after income tax
Total other comprehensive income
Total comprehensive (loss)/income for the year
(Loss)/profit for the year after income tax attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive (loss)/profit for the year attributable to:
Owners of the Company
Non-controlling interests
(Loss)/profit per share
Basic (cents per share)
Diluted (cents per share)
This statement should be read in conjunction with the accompanying notes.
Note
2021
$’000
2020
$’000
4
5
4
14
5
6
6
7
203,149
171,489
(150,145)
(149,940)
53,004
21,549
1,354
(80,232)
(11,955)
(37,829)
2
(3,863)
(41,690)
(2,440)
(44,130)
-
3
-
(12,873)
8,679
15
(6,556)
2,138
(149)
1,989
-
(44,130)
1,989
(44,130)
-
(44,130)
(44,130)
-
(44,130)
1,989
-
1,989
1,989
-
1,989
8
8
(22.8)
(22.8)
4.0
4.0
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
55
Consolidated statement of financial position
As at 30 June 2021
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Prepayments
Non-current assets
Mine properties, property, plant and equipment
Exploration and evaluation
Other financial assets
Total assets
Current liabilities
Trade and other payables
Borrowings and lease liabilities
Provisions
Other financial liabilities
Non-current liabilities
Borrowings and lease liabilities
Provisions
Other financial liabilities
Total liabilities
Net assets
Equity
Share capital
Non-controlling interests
Reserves
Accumulated losses
Total equity
Note
2021
$’000
2020
$’000
9
10
11
12
13
15
12
16
17
18
12
17
18
12
19
19
19
23,448
5,504
13,029
-
1,697
43,678
112,575
32,881
407
145,863
189,541
9,736
16,769
2,650
1,894
5,640
4,196
15,255
633
1,375
27,099
179,747
30,114
380
210,241
237,340
43,608
71,532
2,958
24,995
31,049
143,093
11,526
28,147
10,929
50,602
81,651
107,890
10,678
26,200
-
36,878
179,971
57,369
266,196
171,583
1,352
672
1,125
861
(160,330)
(116,200)
107,890
57,369
This statement should be read in conjunction with the accompanying notes.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
56
Consolidated statement of changes in equity
For the year ended 30 June 2021
Share capital
$’000
Share-based
payments
reserve
$’000
Exploration
asset
reserve
$’000
Accumulated
losses
$’000
Attributable
to owners of
the parent
$’000
Non-
controlling
interests
$’000
Total
$’000
At 1 July 2019
Profit for the year
Other comprehensive income
Total comprehensive income for
the year
Movement in non-controlling
interests’ share of net assets
Share issue costs (net of tax)
Share-based payments
171,931
1,699
(817)
(118,189)
54,624
1,129
55,753
-
-
-
-
(348)
-
-
-
-
-
-
(25)
-
-
-
4
-
-
1,989
1,989
-
-
1,989
1,989
-
-
-
4
(348)
(25)
-
-
-
(4)
-
-
1,989
-
1,989
-
(348)
(25)
At 30 June 2020
171,583
1,674
(813)
(116,200)
56,244
1,125
57,369
Loss for the year
Other comprehensive income
Total comprehensive loss for the
year
Movement in non-controlling
interests’ share of net assets
Shares issued during the year
Share issue costs (net of tax)
-
-
-
-
100,307
(5,694)
-
-
-
-
-
-
Share-based payments
-
38
-
-
-
(227)
-
-
-
(44,130)
(44,130)
-
-
(44,130)
(44,130)
-
-
-
(44,130)
-
(44,130)
-
-
-
-
(227)
227
-
100,307
(5,694)
38
-
-
-
100,307
(5,694)
38
At 30 June 2021
266,196
1,712
(1,040)
(160,330)
106,538
1,352
107,890
This statement should be read in conjunction with the accompanying notes.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
57
Consolidated statement of cash flows
For the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Other revenue received
Finance charges paid
Interest received
Interest paid
Net cash flows from operating activities
Cash flows from investing activities
Payments for exploration and evaluation
Payments for mine properties, property, plant and equipment
Transfer to security deposits
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue costs
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Payments for borrowings transaction costs
Net cash flows from/(used in) financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
This statement should be read in conjunction with the accompanying notes.
Note
2021
$’000
2020
$’000
199,826
171,489
(121,280)
(119,742)
15
(57)
2
(3,434)
75,072
3
(146)
14
(695)
50,923
(3,306)
(61,117)
(27)
(1,147)
(44,763)
-
(64,450)
(45,910)
85,243
(8,134)
40,000
(105,864)
(3,008)
(1,051)
7,186
17,808
5,640
23,448
-
(497)
-
(12,245)
(3,360)
-
(16,102)
(11,089)
16,729
5,640
9
9
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
58
Notes to the financial statements
Basis of preparation
1
2
Financial performance
3
4
5
6
7
8
Capital management
9
10
11
12
13
14
15
16
17
18
19
60
Reporting entity ........................................................................................................................................................... 60
Basis of preparation ..................................................................................................................................................... 60
62
Operating segments .................................................................................................................................................... 62
Revenue and other income ......................................................................................................................................... 63
Expenses ..................................................................................................................................................................... 64
Finance income and costs ........................................................................................................................................... 66
Income tax ................................................................................................................................................................... 67
Earnings per share ...................................................................................................................................................... 71
73
Cash and cash equivalents ......................................................................................................................................... 73
Trade and other receivables ........................................................................................................................................ 74
Inventories ................................................................................................................................................................... 75
Other financial assets and liabilities ............................................................................................................................. 76
Mine properties, property, plant and equipment .......................................................................................................... 78
Impairment of non-current assets ................................................................................................................................ 82
Exploration and evaluation .......................................................................................................................................... 84
Trade and other payables ............................................................................................................................................ 86
Borrowings and lease liabilities ................................................................................................................................... 86
Provisions .................................................................................................................................................................... 91
Equity .......................................................................................................................................................................... 93
95
Financial risk management .......................................................................................................................................... 95
Capital risk management ........................................................................................................................................... 100
101
Commitments ............................................................................................................................................................ 101
Contingent assets and liabilities ................................................................................................................................ 102
Events occurring after the reporting date ................................................................................................................... 102
104
Interests in other entities ........................................................................................................................................... 104
Related party transactions ......................................................................................................................................... 104
Share-based payments ............................................................................................................................................. 105
Auditor’s remuneration .............................................................................................................................................. 108
Parent entity financial information.............................................................................................................................. 108
Summary of other significant accounting policies ...................................................................................................... 109
Other information
25
26
27
28
29
30
Unrecognised items
22
23
24
Risk management
20
21
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
59
Notes to the financial statements
This section includes the accounting policies, accounting estimates and judgements relating to the consolidated financial
statements of Gascoyne Resources Limited (Gascoyne or the Company) and its controlled entities (together, the Group). The
recognition and measurement principles of each accounting policy and the critical accounting estimates and judgements are
contained within the note for the financial item to which they relate. Accounting policies which are not specific to an individual
financial item are presented in note 30.
The financial report for the Group for the year ended 30 June 2021 was approved and authorised for issue by the Directors on
24 September 2021.
Basis of preparation
1 Reporting entity
Gascoyne Resources Limited is a listed public company, incorporated and operating in Australia. The address of its registered
office and its principal place of business is Level 1, 41-47 Colin Street, West Perth, Australia.
2 Basis of preparation
The financial report is a general purpose financial report that has been prepared in accordance with the Corporations Act 2001,
Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board
(AASB).
Gascoyne Resources Limited is a for-profit entity for the purpose of preparing financial statements.
Accounting policies
The principal accounting policies adopted in the preparation of the financial statements are described in the notes to the
financial statements. These policies have been applied consistently to all financial years presented, unless otherwise stated.
Compliance with IFRS
The financial statements of the Group also comply with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
Historical cost convention
The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities
(including derivative instruments) which are measured at fair value.
Functional and presentation currency
The financial statements are presented in Australian dollars which is the Group’s functional and presentation currency.
Accounting estimates and judgements
In the process of applying the Group’s accounting policies, management has made a number of judgements and applied
estimates of future events that affect the carrying amounts disclosed in these financial statements. Estimates and underlying
assumptions are based on historical experience, reasonable expectation of future events and other factors that are considered
relevant. Actual results may differ from these estimates.
The estimates and judgements are reviewed on an ongoing basis and are based on the latest available information. Revisions
to estimates are recognised in the period in which the estimate is revised and in any future period affected.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
60
Notes to the financial statements Basis of preparation
2 Basis of preparation (continued)
Accounting estimates and judgements which are material to the financial report are contained in the following notes:
Note
Item subject to estimates and judgement
7
Income tax
11
Inventories
Income tax provisions; Recognition of deferred tax assets
Inventory valuation; Net realisable value and classification of inventory
13 Mine properties, property, plant
and equipment
Mine properties under development; Mine properties; Deferred stripping costs;
Depreciation and amortisation; Units of production method; Mineral resources
and ore reserves estimates
14
Impairment of non-current assets Assessment of indicators of impairment; Assessment of CGU recoverable
amounts
15
17
18
20
27
Exploration and evaluation
Recovery of capitalised exploration and evaluation expenditure
Leases
Identifying a lease; Determining the lease term; Determining the incremental
borrowing rate
Provisions
Rehabilitation and mine closure provision
Financial risk management
Fair value measurement of financial assets and liabilities
Share-based payments
Valuation methodology
Going concern
The financial statements have been prepared on a going concern basis, which assumes the continuity of normal business
activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
For the year ended 30 June 2021 the Group recorded a net loss after tax of $44.1 million that includes a pre-tax non-cash
impairment expense of $80.2 million, an operating cash inflow of $75.1 million and free cashflow generation of $10.6 million.
Free cashflow generation in the period is net of one-off outflows of $16.9 million in payments to pre-Administration creditors
incurred prior to June 2019.
The working capital surplus of $12.6 million includes a cash balance of $23.4 million. Unsold gold on hand had a market value
of $1.2 million as at 30 June 2021 and the Group had a trade receivable of $3.4 million resulting from the sale of gold bullion
shortly before the end of the year. The significant improvement in working capital over the year is driven by the completion of
the recapitalisation of the Group in October 2020, including:
•
•
•
•
retirement of the previous project finance debt facility provided by the Original Banks;
entry into the Investec finance facility;
conversion of the NRW working capital facility to equity; and
conversion of part of the pre-June 2019 amount owing to NRW (face value $13.7 million) to quarterly payments over the
life of mine.
The Directors have reasonable grounds to believe that the Group will be able to pay its debts as and when they become due
and payable, and the Directors consider the going concern basis of preparation to be appropriate for these financial statements.
If the Group is unable to continue as a going concern, it may be required to realise its assets and/or settle its liabilities other
than in the ordinary course of business and at amounts different from those stated in the financial report.
The financial report does not include adjustments to the recoverability and classification of recorded asset amounts nor to the
amounts and classification of liabilities that may be necessary should the Group not continue as a going concern.
Rounding of amounts
The Company has relied on the relief provided by the ASIC Corporations (Rounding in Financial/Directors' Report) Instrument
2016/191, and therefore the amounts contained in the financial report have been rounded to the nearest thousand dollars,
unless otherwise stated.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
61
Notes to the financial statements
Financial performance
This section of the notes to the financial statements provides information relevant to the financial results and performance of
the Group during the year, including the resultant tax position.
3 Operating segments
The Group’s operating segments are based on the internal management reports that are reviewed and used by the Managing
Director and Chief Executive Officer and the Executive team, identified together as the chief operating decision makers, in
assessing performance. The Group’s business is organised into two operating segments, being gold operations and the
exploration, evaluation and development of gold projects, all conducted within Western Australia.
The evaluation of each segment’s performance is based on revenue, costs and earnings before tax.
Corporate expenditures supporting the business during the period, adjustments and eliminations processed on consolidation
and other items that cannot be directly attributed to the reportable operating segments are identified as ‘Other’ balances. The
Group has formed a tax consolidation group and therefore tax balances have been included in the ‘Other’ grouping.
During the year to 30 June 2021, there have been no changes from prior periods in the measurement methods used to
determine operating segments and reported segment profit or loss.
The revenues and results generated by each of the Group’s operating segments are summarised as follows:
2021
Exploration,
evaluation
and
development
$’000
Gold
operations
$’000
Total
operations
$’000
Other
$’000
Total
$’000
External revenue
203,149
-
203,149
-
203,149
Segment loss before income tax
(29,782)
(1,043)
(30,825)
(10,865)
(41,690)
Segment loss includes the following adjustments:
Depreciation and amortisation
Impairment expense
Deferred stripping costs capitalised
Deferred stripping costs write-off
(51,807)
(80,232)
54,325
(1,225)
-
-
-
-
Exploration and evaluation expenditure write-off
(29)
(1,043)
Inventory movement and provision
(3,349)
-
(51,807)
(80,232)
54,325
(1,225)
(1,072)
(3,349)
(189)
-
-
-
-
-
(51,996)
(80,232)
54,325
(1,225)
(1,072)
(3,349)
(82,317)
(1,043)
(83,360)
(189)
(83,549)
At 30 June 2021
Segment assets
Segment liabilities
152,292
248,694
32,568
18,610
184,860
4,681
189,541
267,304
(185,653)
81,651
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
62
Notes to the financial statements Financial performance
3 Operating segments (continued)
2020
Exploration,
evaluation
and
development
$’000
Gold
operations
$’000
Total
operations
$’000
Other
$’000
Total
$’000
External revenue
171,489
-
171,489
-
171,489
Segment profit/(loss) before income tax
9,772
(2)
9,770
(7,632)
2,138
Segment profit/(loss) includes the following adjustments:
Depreciation and amortisation
Deferred stripping costs capitalised
Exploration and evaluation expenditure write-off
Inventory movement and provision
(41,987)
43,220
-
6,607
7,840
-
-
(1)
-
(1)
(41,987)
43,220
(1)
6,607
7,839
(202)
(42,189)
-
-
-
(202)
43,220
(1)
6,607
7,637
At 30 June 2020
Segment assets
Segment liabilities
205,848
264,243
29,801
16,961
235,649
1,691
281,204
(101,233)
237,340
179,971
4 Revenue and other income
Revenue
Gold sales
Silver sales
2021
$’000
2020
$’000
202,038
170,925
1,111
564
203,149
171,489
During the year, the Group sold gold and silver in the form of bullion to:
• The Perth Mint which is wholly owned by the Government of Western Australia; and
•
Investec Bank plc, the Group’s finance facility provider (refer note 22).
Management of gold price risk
The Group uses derivative gold contracts to manage its exposure to gold price fluctuations.
During the year, the Group entered into and utilised gold forward sale contracts (gold forward contracts) to assist in managing
the price risk associated with a portion of its estimated future gold sales.
The Group also purchased short-term gold put options during the year to provide protection against a fall in gold prices. Put
options remaining at 30 June 2021 had an exercise price of A$2,300 per ounce for 10,200 ounces, expiring between 28 July
2021 and 29 December 2021.
The sale price of gold bullion not sold into gold forward contracts is fixed on the date of sale, based on the Australian dollar
denominated gold spot price.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
63
Notes to the financial statements Financial performance
4 Revenue and other income (continued)
Recognition and measurement
Sales revenue is recognised when:
•
•
•
•
control of the goods has been transferred to the customer, which occurs when goods are delivered to the customer;
the customer has the significant risks and rewards of ownership through the ability to direct the use of and obtain
substantially all of the remaining benefits from the goods;
there is no unfulfilled obligation that could affect the customer’s acceptance of the goods; and
payment is due from the customer.
The amount of revenue recognised reflects the consideration to which the Group is, or expects to be, entitled in exchange for
the goods. Revenue is measured at the transaction price agreed under a sales contract.
Gold bullion and silver sales
Revenue from gold bullion and silver sales is recognised at the time of physical delivery on the settlement date, when control
of the goods passes to the customer, satisfying the sole performance obligation to deliver gold bullion and silver. For gold
bullion and silver sales, the transfer of control is generally at the point in time when gold bullion and silver is credited to the
metal account of the customer on the settlement date.
Other income
Net gain on disposal of property, plant and equipment
Discount on restructure of NRW liability1
Other income
1 Refer to note 12 for details of the discount resulting from the NRW liability payment arrangement.
5 Expenses
Cost of sales
Cash costs of production
Deferred stripping costs capitalised
Inventory movement
Inventory net realisable value provision
Depreciation and amortisation1
Royalties
Deferred stripping costs write-off2
2021
$’000
54
1,285
15
1,354
2020
$’000
-
-
3
3
2021
$’000
2020
$’000
143,425
(54,325)
(1,861)
5,210
51,807
4,664
1,225
153,557
(43,220)
(6,067)
(540)
41,987
4,223
-
150,145
149,940
1 Refer to note 13 for details on the Group’s accounting policy for depreciation and amortisation.
2 Relates to write-off of remaining unamortised capitalised deferred waste costs on the completion of mining at Gilbey’s Stage 1.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
64
Notes to the financial statements Financial performance
5 Expenses (continued)
Cash costs of production
Cash costs of production includes ore and waste mining costs, processing costs and site administration and support costs.
Cash costs of production includes employee benefits expense of $13.8 million (2020: $12.6 million).
Net deferred stripping costs capitalised
Net deferred stripping costs capitalised represent costs incurred in the development and production phase of a mine and are
capitalised as part of the upfront cost of stripping overburden in order to access ore and subsequently amortised over the
useful life of the ore body that access is provided to on a units-of-production basis. Where the waste to ore stripping ratio in a
period exceeds the stripping ratio for the life of that stage, the cost of waste movement beyond the average stripping ratio for
that stage is capitalised. The amount recognised in a period is the gross amount capitalised less amortisation of previously
capitalised amounts. Refer to note 13 for further details on the Group's accounting policy for deferred stripping costs.
Inventory movement
Inventory movement represents the movement in the inventory value of ore stockpiles, gold in circuit, gold on hand and
consumable stores. Refer to note 11 for further details on the Group's accounting policy for inventory.
Inventory net realisable value provision
Inventory must be carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the
ordinary course of business less estimated costs to complete processing and to make a sale. The net realisable value provision
equals the decrement between the net realisable value and the carrying amount before provision. Refer to note 11 for further
details on the Group's accounting policy for inventory.
Royalties
Royalties are payable based on the amount of gold produced from a mining tenement and are payable quarterly at a fixed rate
of 2.5% (2020: 2.5%) of the royalty value of gold sold. The royalty value of gold is the amount of gold produced during the
month multiplied by an average gold spot price for the month provided by the Government of Western Australia Department
of Mines, Industry Regulation and Safety.
Other expenses
Corporate expenses1
Put option expense2
Exploration and evaluation expenditure write-off3
Depreciation and amortisation
Share-based payments
2021
$’000
9,506
1,150
1,072
189
38
2020
$’000
11,946
749
1
202
(25)
11,955
12,873
1 Corporate expenses include $2.1 million in non-recurring Administrators’ fees, and $2.4 million in legal fees in successfully defending the
action brought by Habrok (Dalgaranga) Pty Ltd who sought to set aside the DOCA.
2 Relating to short-term put options purchased to protect revenue, measured at cost.
3 Refer to note 15 for details of the exploration and evaluation expenditure write-off.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
65
Notes to the financial statements Financial performance
5 Expenses (continued)
Employee benefits expense
Salaries and wages
Superannuation
Share-based payments
Other employment costs
Amounts capitalised
6 Finance income and costs
Finance income
Interest income
Finance costs
Interest expense on borrowings
Interest expense on lease liabilities
Borrowing costs
Unwinding of discount
2021
$’000
15,542
1,431
38
750
17,761
(887)
16,874
2020
$’000
13,320
1,190
(25)
886
15,371
(674)
14,697
2021
$’000
2020
$’000
2
2
15
15
2,538
5,420
951
40
334
677
146
313
3,863
6,556
Recognition and measurement
Interest income and interest expense is accrued using the effective interest rate method.
Finance costs are expensed as incurred, except where costs relate to the financing of construction or development of qualifying
assets.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
66
Notes to the financial statements Financial performance
7
Income tax
The major components of income tax expense are:
Current income tax
Deferred income tax
Relating to origination and reversal of temporary differences
Deferred tax liability offset by deferred tax asset losses
Derecognition of previously recognised deferred tax asset losses
Income tax expense
2021
$’000
2020
$’000
-
-
(15,095)
2,600
14,935
2,440
8,525
(7,890)
(486)
149
Income tax expense
The current income tax expense of $2.4 million recorded for the year (2020: $0.1 million) arises as a result of the recognition
of a deferred tax credit relating to share issue expenses recognised directly in equity. The Group is not liable to pay income
tax to the Australian Taxation Office and remains in a cumulative tax loss position for income tax purposes.
Reconciliation of income tax expense to prima facie tax
Accounting (loss)/profit before income tax
Tax at the Australian tax rate of 30% (2020: 30%)
Tax effect of expenses not deductible for tax purposes:
Share-based payments
Entertainment expenditure
Derecognition/(recognition) of deferred tax asset losses
Income tax expense
2021
$’000
2020
$’000
(41,690)
2,138
(12,507)
641
11
1
14,935
2,440
(7)
1
(486)
149
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
67
Notes to the financial statements Financial performance
7
Income tax (continued)
Deferred tax
Recognised deferred tax balances
The movement for the year in the Group’s net deferred tax position is as follows:
Opening
balance
$’000
Recognised
in profit
or loss
$’000
Recognised
in equity
$’000
Over/(under)
provision Unrecognised
$’000
$’000
Closing
balance
$’000
2021
Deferred tax assets
Tax losses
Capital raising costs
Mine properties, property, plant
and equipment
Provisions
Borrowing costs
Deferred tax liabilities
Exploration and evaluation
Mine properties, property, plant
and equipment
Financial assets and liabilities
Net deferred tax assets
2020
Deferred tax assets
Tax losses
Capital raising costs
Provisions
Borrowing costs
Derivative financial instruments
Deferred tax liabilities
Exploration and evaluation
Mine properties, property, plant
and equipment
17,847
1,134
-
772
349
20,102
(2,600)
(1,010)
6,404
(100)
(349)
2,345
(8,710)
(862)
(11,392)
11,397
-
(20,102)
-
(385)
10,150
12,495
564
1,575
425
814
8,907
12,285
7,889
(590)
347
(465)
-
7,181
149
(8,335)
(375)
(3,950)
(7,442)
(12,285)
(7,817)
-
-
-
-
2,440
-
-
-
2,440
-
-
-
-
2,440
-
149
-
-
-
5
-
-
-
-
5
-
(5)
-
(5)
-
-
-
-
(8,907)
1
-
-
-
1
(14,935)
-
-
-
-
317
2,564
6,404
672
-
(14,935)
9,957
-
-
-
-
(14,935)
-
-
-
-
(9,572)
-
(385)
(9,957)
-
17,847
1,134
772
349
-
486
20,102
-
-
-
486
(8,710)
(11,392)
(20,102)
-
8,908
486
Net deferred tax assets
-
(636)
149
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
68
Notes to the financial statements Financial performance
7
Income tax (continued)
The Company and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation.
Therefore, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities have been
offset in the consolidated financial statements.
Unrecognised tax losses
Unrecognised tax losses
Derecognised tax losses
Potential tax benefit at 30% (2020: 30%)
2021
$’000
71,307
95,134
2020
$’000
71,307
45,351
166,441
116,658
49,932
34,997
In accordance with the Group’s policies for deferred taxes, a deferred tax asset is recognised only if it is probable that sufficient
future taxable income will be generated to offset against the asset.
Determination of future taxable profits requires estimates and assumptions as to future events and circumstances including
commodity prices, ore reserves, exchange rates, future capital requirements, future operational performance, the timing of
estimated cash flows and the ability to successfully develop and commercially exploit resources.
Tax legislation prescribes the rate at which tax losses transferred from entities joining a tax consolidation group can be applied
to taxable incomes and this rate is diluted by changes in ownership, including capital raisings.
A deferred tax asset has not been recognised for tax losses at the reporting date due to the uncertainty of their recoverability
in future periods, because the period over which the losses can be applied to future taxable incomes and the period over which
it is forecast that these losses may be utilised, has extended beyond that which management considers prudent to support
their continued recognition for accounting purposes. These tax losses do not expire and can be used to reduce future tax
profits.
Deferred tax recognised directly in equity
Deferred tax credit relating to share issue costs
2021
$’000
2020
$’000
2,440
149
Tax consolidation legislation
The Company and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation and are
therefore taxed as a single entity. The head entity, Gascoyne Resources Limited, and the wholly-owned controlled entities in
the tax consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are
measured as if each entity in the tax consolidated group continues to be a stand-alone taxpayer in its own right.
In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities (or assets) and
the deferred tax assets arising from unused tax losses and unused tax credits assumed from wholly-owned controlled entities
in the tax consolidated group.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
69
Notes to the financial statements Financial performance
7
Income tax (continued)
The entities have also entered into a tax funding agreement, under which the wholly-owned controlled entities:
•
•
fully compensate the Company for any current tax payable assumed; and
are compensated by the Company for any:
•
•
current tax receivable; and
deferred tax assets relating to unused tax losses or unused tax credits that are transferred to the Company under
the tax consolidation legislation.
The funding amounts are determined by reference to the amounts recognised in the wholly-owned controlled entities’ financial
statements.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts
receivable from or payable to other entities in the Group.
Recognition and measurement
The income tax expense or credit recognised in profit or loss for the period comprises the tax payable on the current period’s
taxable income based on the applicable tax rate adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
Current and deferred tax is recognised in profit and loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity, in which case the tax is recognised in other comprehensive income or directly in
equity, respectively.
Current and deferred tax assets and liabilities are offset:
•
•
when the Group has a legally enforceable right to offset; and
when the tax balances are related to taxes levied by the same tax authority and the Group intends to settle on a net
basis, or realise the asset and settle the liability simultaneously.
Current tax
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted
at the reporting date, including any adjustment to tax payable in respect of previous years.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation. Provisions are established where appropriate on the basis of amounts expected to be paid to the
tax authorities.
Any research and development tax offset due to the Company, from the Australian Taxation Office, will be recognised in
current income tax expense when the amount to be received is known.
Deferred tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined
using tax rates and laws enacted or substantively enacted at the end of the reporting period and are expected to apply when
the related deferred income asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary
differences. Deferred tax liabilities are always provided for in full.
Accounting estimates and judgements
Income tax provisions
The Group is subject to income taxes in Australia. Significant judgement is required in determining the provision for income
taxes. There are certain transactions and calculations undertaken during the ordinary course of business for which the ultimate
taxation determination is uncertain. The Group estimates its tax liabilities based on its understanding of the tax law. Where the
final outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current
and deferred income tax assets and liabilities in the period in which such a determination is made.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
70
Notes to the financial statements Financial performance
7
Income tax (continued)
Recognition of deferred tax assets
The Group recognises deferred tax assets, relating to carry forward tax losses and other unused tax credits, to the extent that
it is probable that there are sufficient taxable temporary differences (deferred tax liabilities), relating to the same taxation
authority, against which the losses and other unused tax credits can be utilised. Utilisation of the tax losses also depends upon
the ability of the Group to satisfy certain tests at the time the losses are recouped. Significant judgement is required to
determine the amount of deferred tax assets that can be recognised, based upon the likely timing and amount of future taxable
income, together with future tax planning strategies.
8 Earnings per share
Basic (loss)/profit per share
Diluted (loss)/profit per share
2021
2020
Cents per
share
(22.8)
(22.8)
Cents per
share
4.0
4.0
The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted (loss)/profit per
share are as follows:
$’000
$’000
Earnings used in calculating earnings per share
(Loss)/profit after tax attributable to the owners of the Company
(44,130)
1,989
Weighted average number of ordinary shares used as the
denominator in calculating earnings per share1
No. of shares No. of shares
193,147,001
50,243,257
1
In accordance with paragraph 26 of AASB 133 Earnings per Share, the weighted average number of shares outstanding during the period
and for all periods presented shall be adjusted for events, such as a share consolidation, that have changed the number of shares
outstanding without a corresponding change in resources. As a result, the share consolidation described in note 19 has been applied to
years ended 30 June 2021 and 30 June 2020.
Earnings per share is the amount of post-tax profit or loss attributable to each share.
Performance rights have not been included in the determination of diluted earnings per share as the Group was loss-making
and the effect on earnings per share would have been anti-dilutive.
The exercise price of employee share options was higher than the average market price of the Company’s shares for both
current and prior years and are therefore not considered to be dilutive.
Recognition and measurement
Basic earnings per share
Basic earnings per share is calculated by dividing:
•
•
the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares, by
the weighted average number of ordinary shares outstanding during the year.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
71
Notes to the financial statements Financial performance
8
Earnings per share (continued)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings by allowing for:
•
•
the post-tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and
the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion
of all dilutive potential ordinary shares.
Potential ordinary shares
Employee share options and rights over ordinary shares in the Company are considered to be potential ordinary shares, and
are included in determining diluted earnings per share to the extent to which they are dilutive.
The rest of this page has been left blank intentionally
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
72
Notes to the financial statements
Capital management
This section of the notes to the financial statements provides information on the assets used to generate the Group’s trading
performance and the resultant liabilities incurred, including working capital, long-term assets, liabilities arising from finance
activities, and equity.
9 Cash and cash equivalents
Cash at bank and on hand
2021
$’000
2020
$’000
23,448
5,640
Recognition and measurement
Cash and cash equivalents include cash on hand and deposits held at call with financial institutions and other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
Reconciliation of cash flows
Reconciliation of cash flows from operating activities
2021
$’000
2020
$’000
(Loss)/profit for the year after income tax
(44,130)
1,989
Adjustments
Depreciation and amortisation
Exploration and evaluation expenditure write-off
Deferred stripping costs write-off
Impairment expense
Unwinding of discount
Share-based payments
Finance costs
Income tax expense
Loss on disposal of assets
Net changes in operating assets and liabilities
Increase in trade and other receivables
Decrease/(increase) in inventories
Increase in prepayments
(Decrease)/increase in trade and other payables
(Decrease)/increase in provisions
Net cash flows from operating activities
51,996
1,072
1,225
80,232
334
38
(553)
2,440
749
(1,308)
1,493
(322)
(16,902)
(1,292)
75,072
42,189
1
-
-
313
(25)
1,610
149
-
(215)
(5,207)
(548)
9,103
1,564
50,923
Non-cash transactions
Mine properties, property, plant and equipment includes $1.3 million (2020: $5.8 million) of additional assets arising from lease
arrangements during the year.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
73
Notes to the financial statements Capital management
9 Cash and cash equivalents (continued)
The Group equity-settled an employee bonus and outstanding pre-Administration debt obligations during the year, refer to
note 27 for further details.
Reconciliation of changes in borrowings and lease liabilities to cash flows arising from financing activities
At 1 July 2019
Cash flows
Repayments
Interest and transaction costs paid
Non-cash movements
Recognised on adoption of AASB 16
Interest and fees expense
Remeasurement1
Other movements
At 30 June 2020
Cash flows
Proceeds
Repayments
Interest and transaction costs paid
Non-cash movements
Additions
Interest and fees expense
Remeasurement1
Other movements2
At 30 June 2021
Secured bank
loan facility
$’000
Investec
finance
facility
$’000
Lease
liabilities
$’000
Working
capital facility
$’000
Total
$’000
58,378
(6,124)
-
-
3,795
-
-
56,049
-
-
-
-
-
-
-
-
11,714
11,181
81,273
(3,360)
(661)
5,764
661
82
(39)
-
-
-
819
-
-
(9,484)
(661)
5,764
5,275
82
(39)
14,161
12,000
82,210
-
(55,244)
(1,463)
40,000
(26,002)
(2,177)
-
658
-
-
-
-
1,716
-
-
-
(3,008)
(960)
1,299
951
3,191
-
-
-
-
-
-
40,000
(84,254)
(4,600)
1,299
3,325
3,191
(876)
(12,000)
(12,876)
13,537
14,758
-
28,295
1 Remeasurement arising from a change in the lease term and/or revised contractual payments.
2 Other movements in lease liabilities include the impact of lease terminations. Other movements in the working capital facility relate to
equity-settlement of pre-Administration debt, refer to note 27 for details of the share-based payment.
10 Trade and other receivables
Trade receivables
GST and fuel tax receivables
Other receivables
2021
$’000
3,361
1,881
262
5,504
2020
$’000
-
4,192
4
4,196
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
74
Notes to the financial statements Capital management
10 Trade and other receivables (continued)
Recognition and measurement
Receivables
Receivables are recognised initially at fair value and subsequently measured at amortised cost, less loss allowance. The
carrying amounts of receivables are considered to be the same as their fair values, due to their short-term nature.
Trade receivables
Trade receivables are amounts due from customers for goods sold in the ordinary course of business. Trade receivables are
recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less loss
allowance.
The Group applies a simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance
for trade receivables classified at amortised cost. The expected credit loss on trade receivables is estimated by reference to
past default experience and credit rating, adjusted as appropriate for current observable data.
Other receivables
As other receivables mainly comprise balances due from the Australian Taxation Office, the Group’s exposure to credit risk
on other receivables is limited.
11 Inventories
Ore stockpiles
Gold in circuit
Gold on hand
Consumable stores
2021
$’000
5,316
2,628
1,160
3,925
2020
$’000
6,794
2,120
3,540
2,801
13,029
15,255
Ore stockpiles represent material with a grade greater than 0.5g/t Au that, at the time of extraction, is expected to be processed
into a saleable form and sold at a profit. Lower grade ore stockpiles yet to be processed at Dalgaranga are not recognised in
inventories. Gold in circuit represents gold in the processing circuit that has not completed the production process, and is not
yet in a saleable form. Gold on hand represents the pre-refined saleable product before refining.
Consumable stores include diesel, grinding media, reagents and other consumables held for use in the production process or
maintenance of the operating plant and equipment.
Inventories are valued at the lower of cost and net realisable value. At the reporting date, ore stockpiles, gold in circuit and
gold on hand are valued at net realisable value, consumable stores are valued at cost (2020: all inventories valued at cost).
A provision of $5.2 million was required to write down inventories (except consumable stores) to their recoverable value at 30
June 2021 (2020: $nil).
Recognition and measurement
Ore stockpiles, gold in circuit and gold on hand are physically measured or estimated and valued at the lower of cost and net
realisable value. Cost is determined on a weighted average basis and comprises direct materials, direct labour, depreciation
and amortisation expense and an appropriate proportion of project overhead expenditure, the latter being allocated on the
basis of normal operating capacity.
Consumable stores are valued at weighted average cost, after appropriate provision for obsolete and slow-moving items.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
75
Notes to the financial statements Capital management
11 Inventories (continued)
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
estimated costs necessary to make the sale.
Accounting estimates and judgements
Inventory valuation
Accounting for inventory involves the use of judgements and estimates, particularly related to the measurement and valuation
of inventory on hand within the production process. Certain estimates, including expected metal recoveries and work in
progress volumes, are calculated by engineers using available industry, engineering and scientific data. Estimates used are
periodically reassessed by the Group after considering technical analysis and historical performance. Changes in estimates
are adjusted for on a prospective basis.
Net realisable value and classification of inventory
The assessment of the net realisable value and classification of inventory involves significant judgements and estimates in
relation to timing and cost of processing, commodity prices, recoveries and the likely timing of sale of the bullion produced. A
change in any of these assumptions will alter the estimated net realisable value and may therefore impact the carrying amount
of inventory.
12 Other financial assets and liabilities
Current assets
Receivable on close out of commodity swap contracts
Non-current assets
Term deposits
Current liabilities
Payable on close out of commodity forward contracts
NRW liability payment arrangement
Non-current liabilities
NRW liability payment arrangement
2021
$’000
2020
$’000
-
633
407
380
-
24,995
1,894
10,929
-
-
Commodity swap contracts
During the year ended 30 June 2018 the Group entered into a fixed price Singapore Gasoil 10ppm cash-settled swap
transaction contract with Commonwealth Bank of Australia (CBA) for a total of 13.74 million litres of diesel (86,431.39 barrels),
effective 1 May 2018 until 30 April 2021 at a fixed forward price of A$94.5077 per barrel. Following the voluntary appointment
of Administrators on 2 June 2019, CBA terminated the Singapore Gasoil diesel swap contract of 58,879 barrels outstanding
as at 5 June 2019, resulting in a gain of $0.6 million due from CBA at that time.
The amount due from CBA was offset against debt repayments made to CBA on the date of recapitalisation, 20 October 2020.
Term deposits
The Group holds cash in term deposits used as bank guarantees provided by the Group in favour of service providers for
credit card facilities, leased premises and road maintenance responsibilities. These bank guarantees are secured by blocked
deposits held by the grantor of the guarantee.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
76
Notes to the financial statements Capital management
12 Other financial assets and liabilities (continued)
Commodity forward contracts
During the year ended 30 June 2018, the Group entered into gold forward contracts with Commonwealth Bank of Australia
and National Australia Bank (Original Banks) for 176,500 ounces of gold at an average forward price of A$1,717 per ounce.
Following the voluntary appointment of Administrators on 2 June 2019, the gold forward contracts of 135,264 ounces
outstanding as at 5 June 2019 were terminated, resulting in an additional liability of $30.3 million payable to the Original Banks
at that time. The hedges were locked in at a rate of A$1,713 per ounce. On 11 July 2019, the Original Banks closed the Group’s
bank accounts held with them prior to Administration. A portion of funds held in those bank accounts was offset against the
liability of $30.3 million.
The remaining balance of $25.0 million was settled as part of the repayment to the Original Banks on the date of
recapitalisation, 20 October 2020.
NRW liability payment arrangement
During the year ended 30 June 2020, the Group entered into an arrangement with NRW to settle the pre-Administration total
amount owing of $34.8 million including GST ($32.7 million excluding GST). The arrangement included the following:
• an upfront cash payment of $7.0 million including GST ($6.4 million excluding GST);
• $12.0 million in shares priced at $0.025 (pre-equity consolidation), representing a conversion of debt to equity (being the
retirement in full of the working capital facility entered into on 21 December 2018 with NRW); and
• entry into a liability payment arrangement (LPA) for the remaining balance due after settlement of the upfront cash payment
and the conversion of debt to equity.
As the LPA liability is not expected to be settled within 12 months, the liability has been discounted to net present value using
the Group’s incremental borrowing rate (BBSY rate plus a margin of 5.25% per annum) as a discount rate. The amount of the
discount recognised is disclosed in note 4 as other income. There is no interest payable on the LPA liability.
Recognition and measurement
The Group classifies financial assets at amortised cost if the asset is held within a business model whose objective is to collect
the contractual cash flows, and the contractual terms give rise to cash flows that are solely payments of principal and interest.
Other financial liabilities, which are not measured at fair value through profit or loss, are measured at amortised cost using the
effective interest method.
Refer to note 20 for further details on accounting for financial assets and liabilities.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
77
Notes to the financial statements Capital management
13 Mine properties, property, plant and equipment
Right-of-use assets
Owned assets
Plant and
equipment
$’000
Property
$’000
Mine
properties
$’000
Plant and
equipment
$’000
Capital
work in
progress
$’000
Mine
properties
$’000
Total
$’000
Cost
At 1 July 2019
Recognised on adoption of AASB 16
Reclassified on adoption of AASB 161
Restated at 1 July 2019
Additions
Disposals
Remeasurement2
Transfers between classes
Transfers to inventory
At 30 June 2020
Accumulated depreciation, amortisation
and impairment
At 1 July 2019
Reclassified on adoption of AASB 161
Restated at 1 July 2019
Depreciation and amortisation
Disposals
At 30 June 2020
Net book value
Cost
At 1 July 2020
Additions
Disposals
Remeasurement2
Transfers between classes
Transfers to inventory
At 30 June 2021
Accumulated depreciation, amortisation
and impairment
At 1 July 2020
Depreciation and amortisation
Impairment expense
Disposals
At 30 June 2021
Net book value
-
5,198
14,278
19,476
-
-
-
-
-
-
172
-
172
-
-
82
-
-
-
394
-
394
-
-
-
-
-
96,669
6,389
131,590
234,648
-
(14,278)
-
-
-
-
5,764
-
82,391
6,389
131,590
240,412
9
3,286
45,670
48,965
(585)
-
-
-
-
-
2,672
(7,874)
5,202
(585)
82
-
-
(473)
-
(473)
19,476
254
394
84,487
1,328
182,462
288,401
-
4,045
4,045
2,721
-
6,766
12,710
19,476
884
-
-
-
147
-
147
107
254
415
(1,465)
(254)
3,162
-
-
-
-
-
-
-
-
54
-
54
340
27,399
(4,045)
23,354
9,505
(585)
32,274
52,213
-
-
-
-
-
-
39,651
67,050
-
-
39,651
67,050
29,762
42,189
-
(585)
69,413
108,654
1,328
113,049
179,747
394
84,487
1,328
182,462
288,401
-
-
29
-
-
58
4,073
58,641
64,071
(279)
-
-
-
(1,225)
(3,223)
-
3,191
1,151
(3,978)
2,827
-
-
-
-
-
22,057
415
423
85,417
1,423
242,705
352,440
6,766
3,589
-
147
135
-
(788)
(229)
9,567
12,490
53
362
54
64
-
-
118
305
32,274
9,713
18,976
-
60,963
24,454
-
-
-
-
-
69,413
108,654
38,495
51,996
61,256
80,232
-
(1,017)
169,164
239,865
1,423
73,541
112,575
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
78
Notes to the financial statements Capital management
13 Mine properties, property, plant and equipment (continued)
1 Finance lease arrangements previously presented within plant and equipment were reclassified to the right-of-use asset class. There
was no change in the amounts recognised.
2 Remeasurement arising from a change in the lease term and/or revised contractual payments.
Mine properties, property, plant and equipment includes $1.3 million (2020: $5.8 million) of additional assets arising from
leasing arrangements during the year. Mine properties includes $9.4 million (2020: $18.0 million) relating to the rehabilitation
asset after impairment. Following the review of the rehabilitation and mine closure provision, refer to note 18, the rehabilitation
asset was increased by $2.4 million (2020: $1.3 million increase in the asset value) at the reporting date.
Recognition and measurement
Mine properties, property, plant and equipment is stated at cost less accumulated depreciation and amortisation and
accumulated impairment expenses.
Items of mine properties, property, plant and equipment are initially recognised at cost at the date of acquisition when it is
probable that future economic benefits associated with the asset will flow to the Group and the cost of the item can be reliably
measured. Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included
in the asset’s carrying amount or recognised as a separate asset, as appropriate, only where it is probable that future economic
benefits will flow to the Group and the cost of the item can be measured reliably.
The assets’ residual value and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An
asset’s carrying amount is immediately written down to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are recognised in profit
or loss.
Mine properties under development
Mine properties under development represents the costs incurred in preparing mines for production and includes plant and
equipment under construction and operating costs incurred before production commences.
Pre-production revenues are offset against capitalised pre-production costs.
Once production commences, these costs are transferred to property, plant and equipment and mine properties as appropriate,
and are depreciated and amortised using the units of production method based on the estimated economically recoverable
resource contained in the mine plan to be extracted to which they relate, or are written off if the mine property is abandoned.
Mine properties
Mine properties represent the accumulation of all pre-production expenditure incurred in relation to areas of interest for which
the technical feasibility and commercial viability of the extraction of mineral resources are demonstrable.
Production is deemed to commence when the mine assets are installed and ready for use in the location and condition
necessary for them to be capable of operating in the manner intended by management. These costs are capitalised to the
extent they are expected to be recouped through the successful exploitation of the related mining leases.
Mine properties include:
•
•
•
•
Capitalised expenditure in relation to exploration, evaluation, feasibility and acquisition costs incurred on projects for
which the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.
The cost of rehabilitation and mine closure relating to assets reflected in mine properties.
Capitalised development and production stripping costs.
Pre-production operating costs, net of pre-production revenue, previously accumulated and carried forward in mine
properties under development, transferred to mine properties in relation to areas of interest in which mining has now
commenced.
Associated mine infrastructure including access roads, evaporation ponds, tailings facility and the airstrip.
•
• Mining contractor mobilisation costs.
Mine properties are amortised on a units of production basis over the economically recoverable ore reserve contained in the
relevant mine plan.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
79
Notes to the financial statements Capital management
13 Mine properties, property, plant and equipment (continued)
When further development expenditure is incurred in respect of a mine property after the commencement of production, such
expenditure is carried forward as part of the mine property only when it is probable that the additional future economic benefits
associated with the expenditure will flow to the Group. Otherwise such expenditure is classified as part of the cost of production.
Right-of-use assets
Right-of-use (ROU) assets, representing the Group’s right to use an underlying leased asset for the lease term, are measured
at cost, less any accumulated depreciation and impairment, and adjusted for any remeasurement of lease liabilities. Refer to
note 17 for the lease accounting policy and the related accounting estimates and judgements.
Capital work in progress
Capital work in progress represents expenditure incurred on mine asset enhancement and sustainment projects which are
incomplete at the reporting date, and are therefore not yet depreciated or amortised.
Deferred stripping costs
Stripping costs are incurred in both development and production phases during the removal of overburden and waste materials
in order to access the ore.
Development stripping costs
Overburden and other mine waste materials removed during the initial development of an open pit mine in order to access the
mineral deposit is referred to as development stripping. Costs directly attributable to development stripping, inclusive of an
allocation of relevant overhead expenditure, are capitalised in mine properties under development when future economic
benefits are probable.
Capitalisation of development stripping costs cease at the time that ore begins to be extracted from the mine. Development
stripping costs are amortised over the useful life of the ore body that access has been provided to on a units of production
basis, based on the estimated economically recoverable ore reserve contained in the mine plan to be extracted.
Production stripping costs
Production stripping commences when ore begins to be extracted from the mine and normally continues throughout the life of
a mine. The costs of production stripping are recognised as operating costs in profit or loss, when the current ratio of waste
material to ore extracted for a component of the ore body is below the expected stripping ratio of that component or production
stage.
When the ratio of waste to ore is not expected to be constant, production stripping costs are accounted for as follows:
All costs are initially charged to profit or loss as operating costs.
•
• When the current ratio of waste to ore is greater than the estimated ratio of a component of the ore body, a portion of the
stripping costs, inclusive of an allocation of relevant site overhead expenditure, is capitalised to mine properties.
The capitalised stripping asset is amortised on a units of production basis (contained gold ounces mined) over the useful
life of the identified component of the ore body to which access has been improved.
•
The amount of production stripping costs capitalised or charged in a reporting period is determined so that the stripping
expense for the period reflects the estimated strip ratio of the economically recoverable ore reserve component over its relevant
life. Changes to the estimated waste to ore ratio of a component of the ore body are accounted for prospectively from the date
of change.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during
the period of time that is necessary to complete and prepare the asset for its intended use.
Depreciation and amortisation
Depreciation commences when an asset is in the location and condition necessary for it to be capable of operating in the
manner intended by management. Depreciation of assets is calculated using either the straight-line method or units of
production method to allocate the assets’ cost, net of residual values, over the estimated useful lives of the assets.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
80
Notes to the financial statements Capital management
13 Mine properties, property, plant and equipment (continued)
Mine-related plant and equipment is depreciated on a units of production basis, except for assets with a useful life less than
the life of mine, for which the straight-line method is applied. Non-mine-related plant and equipment is depreciated on a
straight-line basis. The depreciation rates used when applying the straight-line method vary between 10% to 33% per annum.
Mine properties are amortised on a units of production basis over the life of the estimated ore reserve of the mine.
Units of production method
Where the useful life of an asset is directly linked to the extraction of ore from a mine, the asset is depreciated using the units
of production method. The units of production method results in depreciation and amortisation charges proportional to the
depletion of the estimated ore reserve of the mine. The unit of account used in the calculation is ounces fine gold poured
except for deferred stripping costs that utilises contained gold ounces mined as the unit of account.
Accounting estimates and judgements
Mine properties under development
Development activities commence after a project is considered economically viable and a final investment decision has been
made to develop the asset. In determining economic viability, significant judgement is required in the estimates and
assumptions made, including future reserve estimates, existence of an accessible market, forecast prices and cash flows.
These estimates and assumptions may be subject to change.
Mine properties
The future recoverability of mine properties is dependent on the generation of sufficient future cash flows from operations or
through sale of the respective mine property assets. Factors that could impact the future recoverability of mine properties
include resource and reserve estimates, future technological changes, costs of drilling and production, production rates, future
legal changes, including changes to environmental restoration obligations, and changes to commodity prices and exchange
rates.
Deferred stripping costs
Significant accounting judgements and estimates are required when identifying components of an ore body and estimating
stripping ratios and ore reserves by component. Changes to estimates related to life-of-component waste-to-ore strip ratios
and the expected ore production from identified components are accounted for prospectively and may affect depreciation rates
and asset values.
Depreciation and amortisation
The estimation of useful lives, residual values and depreciation methods requires judgement and is reviewed annually, based
on the expected utilisation of the assets. Any changes to current estimations may affect prospective depreciation rates and
asset values.
Units of production method
The Group uses the units of production method when amortising mine properties and depreciating other mine-related assets,
which results in an amortisation or depreciation charge proportional to the depletion of the anticipated remaining ore reserve.
The annual assessment of an asset's economic life includes evaluation of its physical life limitations and current assessments
of economically recoverable ore reserves of the mine property at which it is located. These calculations require the use of
estimates and assumptions.
Mineral resources and ore reserves estimates
Estimates of economically recoverable quantities of mineral resources and ore reserves also include assumptions requiring
significant judgement as detailed in mineral resources and ore reserves statements. The Group estimates its mineral resources
and ore reserves in accordance with the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (the JORC Code 2012). The information on mineral resources and ore reserves was prepared
by Competent Persons as defined in the JORC Code 2012.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
81
Notes to the financial statements Capital management
13 Mine properties, property, plant and equipment (continued)
There are numerous uncertainties inherent in estimating mineral resources and ore reserves, and assumptions that are valid
at the time of estimation may change significantly when new information is available. Information obtained through infill drilling,
changes in the forecast prices of commodities, exchange rates, operating costs or recovery rates may change the economic
status of reserves and may ultimately result in the reserves being restated. Changes in reported reserve estimates can impact
the carrying amount of mine properties and related amortisation, exploration and evaluation expenditure, the rehabilitation and
mine closure provision, and the recognition of deferred tax assets.
14 Impairment of non-current assets
2021
$’000
2020
$’000
Dalgaranga gold operations cash-generating unit
80,232
-
The Group has assessed its Dalgaranga gold operations cash-generating unit (Dalgaranga CGU) to determine whether
indicators of impairment existed at 30 June 2021. The Group identified two indicators of impairment, namely the change in the
Ore Reserve estimate and resulting increase in remaining life of mine strip ratio, and the net assets being greater than the
Company’s market value. Accordingly, the Group has completed an impairment assessment of the Dalgaranga CGU.
Impairment testing
Methodology
Impairment is recognised when the carrying amount exceeds the recoverable amount. The recoverable amount, being the
value in use (VIU) of the Dalgaranga CGU, has been estimated using the discounted cash flows method based on the Group’s
recoverable gold minerals.
VIU is estimated based on discounted cash flows using a market-based commodity price, estimated quantities of recoverable
minerals, production levels, operating costs and capital requirements.
The estimates in the VIU calculation are considered to be level 3 measurements as they are derived from calculation
techniques that include inputs that are not based on observable market data. The Group considers the inputs and the valuation
approach to be consistent with the approach taken by similar market participants.
Estimates of recoverable minerals, production levels, operating costs and capital requirements are sourced from the Group’s
life of mine planning process including mill capacity levels. The current Life of Mine Plan was developed in the context of the
current gold price environment and using an Ore Reserve estimate determined using a gold price of A$2,100 per ounce.
Key assumptions used in calculations
The table below summarises the key assumptions used in the 30 June 2021 carrying value assessments.
Key assumption
Gold price (spot)
Average gold hedge price (forward contracts)
Pre-tax discount rate
Ore Reserve
Recovery %
Process plant capacity per annum (fresh ore feed)
Unit
A$/oz
A$/oz
%
Ounces
%
tonnes
2021
2020
2,300
2,564
9
2,550
-
22
339,000
426,300
88
86
2,750,000
2,500,000
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
82
Notes to the financial statements Capital management
14 Impairment of non-current assets (continued)
Commodity prices and exchange rate estimation approach
Gold prices and foreign exchange rates are estimated with reference to external market forecasts and reviewed at least
annually. The price applied has considered observable market data including spot and committed forward values in place to
September 2022.
Discount rate
A pre-tax nominal discount rate of 12% (2020: 22%) was used, which equated to a post-tax rate of 9% (2020: 10%), reflecting
the time value of money, the price for bearing the uncertainty inherent in the asset as well as a comparison to other mid-tier
producing gold mining companies in Australia.
Production activity and operating and capital costs
Life of mine production activity and operating and capital cost assumptions are based on the Group’s internal life of mine
financial model. Discounted cash flows include expected cost improvements and sustaining capital requirements. Estimated
production is assumed to be consistent with the capacity constraint of the Dalgaranga mill. Recoveries are based on the mix
of ore type processed through the plant, supported by recent operating results.
Resources and reserves
Mineral Resource and Ore Reserve ounces are based on the Group’s JORC Code 2012 compliant Mineral Resource and Ore
Reserve updates announced to the ASX on 31 May 2021.
Impact
The impairment review conducted indicated a lower recoverable amount than the current carrying amount of the Dalgaranga
CGU. In addition, the carrying value exceeded the market capitalisation of the Company on the reporting date, therefore the
Group has recognised an impairment expense of $80.2 million (pre-tax) at 30 June 2021 (2020: $nil). The impairment expense
of $80.2 million has not been applied to ROU assets as the value of this asset class is independent of the Group’s other mine
properties, property, plant and equipment assets within the Dalgaranga CGU. Following the recognition of the impairment
expense, the net asset value for the Dalgaranga CGU approximates the market capitalisation of the Company as at 30 June
2021.
Mine properties, property, plant and equipment
Carrying amount
Impairment
Recoverable amount
2021
$’000
2020
$’000
192,807
(80,232)
112,575
179,747
-
179,747
Sensitivity analysis
The following changes in the key assumptions would have the following approximate impact (increase or decrease) on the
VIU of the Dalgaranga CGU in Australian dollars:
Key assumption
Change in assumption
Amount of change
$’000
Gold price
Pre-tax discount rate
Ore Reserve
$150/oz increase / decrease
1% point increase / decrease
5% increase / decrease
29,000
3,000
26,000
It must be noted that each of the sensitivities above assume that the specific assumptions move in isolation whilst all other
assumptions are held constant. In reality, a change in one of the aforementioned assumptions may accompany a change in
another assumption which may have an offsetting impact. Action is also usually taken by management to respond to adverse
changes in economic assumptions that may mitigate the impact of any such change.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
83
Notes to the financial statements Capital management
14 Impairment of non-current assets (continued)
Recognition and measurement
At each reporting date, the Group reviews the carrying amounts of its assets to determine whether there is any indication that
those assets have been subject to an impairment expense, or reversal of impairment expense. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent if any, of the impairment expense or reversal.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount
of the cash-generating unit (CGU) to which the asset belongs. For impairment assessment purposes, assets are grouped at
the lowest levels for which there are largely independent cash inflows (CGUs).
If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the
asset or CGU is reduced to its recoverable amount. An impairment expense is recognised immediately in profit or loss.
The recoverable amount of a CGU is the higher of its fair value less costs of disposal (FVLCD) and its value in use (VIU).
FVLCD is the best estimate of the amount obtainable from the sale of a CGU in an arm's length transaction between
knowledgeable willing parties, less the costs of disposal. This estimate is determined on the basis of best available market
information considering specific conditions. VIU is the present value of the future cash flows expected to be derived from the
CGU or group of CGUs. Cash flow projections are based on economic and regulatory assumptions and forecast trading
conditions prepared by management.
Where an impairment expense subsequently reverses, the carrying amount of the asset or CGU is increased to the revised
estimate of its recoverable amount, not to exceed the carrying amount that would have been determined had no impairment
expense been recognised for the asset or CGU in prior years. A reversal of an impairment expense is recognised immediately
in profit or loss.
Accounting estimates and judgements
Assessment of indicators of impairment
The assessment of indicators of impairment or impairment reversal requires significant management judgement. Indicators of
impairment may include unfavourable changes in market rates, indication of a decline in asset value, the anticipation of lower
than expected asset performance and significant adverse market, technological, economic or legal changes.
Assessment of CGU recoverable amounts
The assessment of the recoverable amount of non-current assets involves significant judgements and estimates in relation to
the determination of estimated future cash flows expected to be derived from the assets’ use and the associated discounting
of those cash flows to the estimated present value. CGU recoverable amounts are subject to variability in key estimates and
assumptions which include ore reserves, commodity prices, currency exchange rates, discount rates, production profiles,
operating and sustaining capital costs and operating performance. The inputs to models used in these assessments are taken
from observable markets where possible, but where this is not feasible, management uses the best information available and
a degree of judgement is required in establishing recoverable amounts. Changes in assumptions used to estimate VIU or
FVLCD could affect the reported recoverable amounts of assets.
15 Exploration and evaluation
At 1 July
Expenditure incurred during the year
Expenditure reclassified to mine properties
Exploration and evaluation expenditure write-off
At 30 June
2021
$’000
30,114
5,835
(1,996)
(1,072)
32,881
2020
$’000
28,971
1,604
(460)
(1)
30,114
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
84
Notes to the financial statements Capital management
15 Exploration and evaluation (continued)
Exploration expenditure is incurred in the initial search for mineral deposits with economic potential or in the process of
obtaining more information about existing mineral deposits. Evaluation expenditures are the costs incurred to establish the
technical and commercial viability of developing identified mineral deposits.
There may exist, on the Group's exploration properties, areas subject to claim under native title or containing sacred sites or
sites of significance to Aboriginal people. As a result, exploration properties or areas within tenements may be subject to
exploration or mining restrictions.
As part of annual impairment testing, the Group’s currently held exploration and mining tenements were assessed for any
events or issues that would impact the Group’s ongoing ability to perform exploration and evaluation activities. On completion
of this testing, tenements determined to be impacted by proposed National Park applications, likely future divestment or
forfeiture were written down by $1.1 million to their carrying value as at 30 June 2021.
Recognition and measurement
Exploration and evaluation expenditure is capitalised and carried forward on an area of interest basis to the extent that rights
to tenure of the area of interest are current and either:
•
•
the expenditure is 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 exploration and evaluation
activities in, or in relation to, the area of interest are continuing.
No amortisation is charged during the exploration and evaluation phase.
Reclassification to mine properties under development
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are
demonstrable and a management decision to invest further has been made, exploration and evaluation assets attributable to
that area of interest are first tested for impairment and then reclassified to mine properties under development.
Impairment
Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and
commercial exploitation or through sale of the respective areas of interest.
Exploration and evaluation assets are tested for impairment when reclassified to mine properties under development, or
whenever facts or circumstances indicate impairment. An impairment expense is recognised for the amount by which the
exploration and evaluation assets’ carrying amount exceeds their recoverable amount. The recoverable amount is the higher
of the exploration and evaluation assets’ fair value less costs of disposal and their value in use.
Accounting estimates and judgements
Recovery of capitalised expenditure
The Group has capitalised significant exploration and evaluation expenditure on the basis that such expenditure is expected
to be recouped through future successful development or through sale of the areas of interest concerned, or on the basis that
it is not yet possible to assess whether it will be recouped and activities are planned to enable that determination.
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including
whether the Group decides to exploit the area of interest itself, or if not, whether it successfully recovers the asset through
sale.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
85
Notes to the financial statements Capital management
16 Trade and other payables
Trade payables
Employee benefits
2021
$’000
9,725
11
9,736
2020
$’000
43,409
199
43,608
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the year which
are unpaid. These amounts are unsecured and are usually paid within 30 days of recognition or in accordance with the payment
terms agreed with the supplier.
Trade payables at 30 June 2020 included pre-Administration unsecured creditor debts of $6.8 million and secured creditor
debt owed to NRW under the mining services contract of $20.7 million.
On 13 October 2020, a total of 112.6 million shares (pre-equity consolidation) were issued to the Creditors’ Trust held by the
Deed Administrators to settle approximately 50% of the amount owing to creditors that were owed more than $10,000. On 20
October 2020, the Company transferred $3.6 million to the Creditors’ Trust. This amount represented the estimated maximum
cash payment that the Group was required to make in order to satisfy its obligations to these creditors under the DOCA.
Following effectuation of the DOCA, the Creditors’ Trust assumed sole responsibility to pay creditors as part of the settlement
of pre-Administration obligations.
The secured NRW debt was settled partly through a cash payment of $7.0 million (inclusive of GST) from the proceeds of the
capital raising and entry into a payment arrangement for the remaining balance due. For further details of the settlement of
NRW pre-Administration debt, refer to note 12.
Recognition and measurement
Trade and other payables are recognised initially at their fair value and subsequently measured at amortised cost using the
effective interest method. The carrying amounts of trade and other payables are considered to be the same as their fair values,
due to their short-term nature.
Trade and other payables are presented in current liabilities unless payment is not due within 12 months after the reporting
date.
17 Borrowings and lease liabilities
Current
Secured bank loan facility
Investec finance facility1
Lease liabilities
Working capital facility
Non-current
Lease liabilities
2021
$’000
2020
$’000
-
56,049
13,537
3,232
-
16,769
-
3,483
12,000
71,532
11,526
10,678
1 The face value of the Investec finance facility was $14.0 million as at 30 June 2021.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
86
Notes to the financial statements Capital management
17 Borrowings and lease liabilities (continued)
Refer to note 9 for reconciliation of changes in borrowings and lease liabilities to cash flows arising from financing activities.
Secured bank loan facility
In December 2017, the Group entered into a syndicated facility agreement (SFA) with Commonwealth Bank of Australia and
National Australia Bank (Original Banks) for the provision of a secured $60.0 million Project Finance Facility to fund the
development of Dalgaranga.
The SFA was originally repayable by June 2022, however, voluntary appointment of Administrators on 2 June 2019 was an
event of default under the terms of the SFA, therefore the remaining loan balance due to the Original Banks as at 2 June 2019
became due and payable in full on that date.
Monthly payments to the Original Banks of $1.0 million per month (combination of principal and interest) commenced on 1
July 2020 and continued until repayment of the SFA in full on 20 October 2020.
As part of the recapitalisation of the Company, on 13 August 2020, the Group entered into a finance facility agreement with
Investec Bank plc (Investec) to refinance $40.0 million of the SFA debt with the remaining balance of the SFA to be repaid
from the capital raising proceeds. On 20 October 2020, the funds were fully drawn down and the remaining balance due to the
Original Banks under the SFA was repaid in full, thereby releasing the security held by the Original Banks over the Group’s
assets.
The SFA was secured over various Group assets including all assets of GNT Resources Pty Ltd and its holding company
Dalgaranga Operations Pty Ltd, along with other mortgages and guarantees customary for a facility of this nature.
Investec finance facility
The $40.0 million facility was fully drawn down on 20 October 2020. The finance facility is to be repaid over three years in
quarterly instalments commencing 31 December 2020, with a variable interest rate based on the BBSY rate plus a margin of
5.25% per annum. The facility is secured, with Investec having senior security over the assets of the Company and all wholly-
owned subsidiaries, subject to agreed carve-outs that are customary for a facility of this nature.
Principal repayments of $26.0 million were made during the year and the face value of the remaining debt was $14.0 million
as at 30 June 2021.
Lease liabilities
The Group leases power generating and storage facilities, plant and equipment, and property, for which contracts are typically
entered into for fixed periods and may include extension options.
Lease liabilities are secured with the rights to leased assets recognised in the financial statements reverting to the lessor in
the event of default.
Working capital facility
On 21 December 2018 the Group secured a $12.0 million working capital facility from Dalgaranga mining contractor NRW Pty
Ltd (NRW). The facility was repayable by 30 June 2020, however, voluntary appointment of Administrators on 2 June 2019
resulted in a suspension of repayments. Fees and interest rates were set at commercial rates commensurate for this type of
facility.
The facility was secured by a subordinated general security agreement over the assets of GNT Resources Pty Ltd, a Group
subsidiary, until full repayment of the facility. On 13 October 2020 the working capital facility was settled in full through the
issue of 480 million shares (pre-equity consolidation, refer note 19) to NRW. The security held by NRW over the Group’s
assets was released following effectuation of the DOCA on 20 October 2020.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
87
Notes to the financial statements Capital management
17 Borrowings and lease liabilities (continued)
Assets pledged as security
The carrying amounts of assets pledged as security for borrowings and lease liabilities at the reporting date are:
Current
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Prepayments
Non-current
Mine properties, property, plant and equipment
Exploration and evaluation
Other financial assets
Total assets pledged as security
2021
$’000
2020
$’000
23,448
5,504
13,029
-
1,697
43,678
112,575
32,881
407
145,863
189,541
5,599
3,902
15,255
633
670
26,059
179,540
20,040
250
199,830
225,889
Recognition and measurement
Borrowings are initially recognised at fair value of the consideration received, less directly attributable transaction costs. After
initial recognition, borrowings are subsequently measured at amortised cost using the effective interest method.
Borrowings are derecognised when the contractual obligations are discharged, cancelled or expire. Any difference between
the carrying amount of a derecognised liability and the consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for
at least 12 months after the reporting period.
Borrowing costs
Borrowing costs, which do not meet the criteria for capitalisation, are expensed in the period in which they are incurred and
reported as finance costs in profit or loss.
Lease liabilities
Lease liabilities are initially recognised on the commencement date of the lease, measured at the present value of lease
payments to be made over the lease term.
Lease assessment
Applying the definition of a lease
At inception of a contract, the Group assesses whether a contract is, or contains, a lease, by determining whether the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Control is considered to exist if the Group has the right to obtain substantially all of the economic benefits from the use of an
explicitly or implicitly identified asset over which the supplier does not have a substantive substitution right, and the right to
direct the use of that asset throughout the period of use.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
88
Notes to the financial statements Capital management
17 Borrowings and lease liabilities (continued)
Lease term
The lease term is the non-cancellable term of the lease and any periods covered by:
•
•
an extension option, if that option is reasonably certain to be exercised, and;
a termination option, if that option is reasonably certain not to be exercised.
Non-lease components
At inception or on reassessment of a contract that contains a lease component, the consideration in the contract is allocated
to each lease component on the basis of their relative stand-alone prices, unless an election is made to account for the lease
and non-lease components as a single lease component.
Non-lease components are excluded from future lease payments and recognised separately as incurred as operating
expenses on a straight-line basis in profit or loss.
Initial recognition
Leases are recognised as an ROU asset and a corresponding lease liability at the commencement date, which is the date the
leased asset is available for use by the Group.
Short-term leases and leases of low-value assets
All leases are accounted for by recognising an ROU asset and a lease liability except for:
•
•
short-term leases (defined as leases with a lease term of 12 months or less and which do not contain a purchase option)
and;
leases of low-value assets.
Lease payments on short-term leases and leases of low-value assets are recognised as incurred as operating expenses on a
straight-line basis over the lease term in profit or loss.
Lease liabilities
Initial measurement
Lease liabilities are initially measured at the present value of lease payments to be paid after the commencement date over
the lease term, discounted using the lessee’s incremental borrowing rate (IBR), if the interest rate implicit in the lease cannot
be readily determined.
The lessee’s IBR is the rate the Group would have to pay to borrow the funds necessary to obtain an asset of similar value in
a similar economic environment with similar terms and conditions. To determine the IBR, the Group obtains external interest
rate advice and adjusts the interest rates to reflect the lease conditions and the underlying asset.
Lease payments included in the measurement of the lease liabilities comprise:
•
•
•
•
fixed payments, including in-substance fixed payments, less any lease incentives receivable;
variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement
date;
amounts payable under residual value guarantees; and
payments arising from purchase, extension or termination options reasonably certain to be exercised by the Group.
Variable lease payments not dependent on an index or a rate, for example, variable lease payments linked to the use of an
underlying asset, are not included in the measurement of lease liabilities, and are recognised as operating expenses in profit
or loss as incurred.
Subsequent measurement
The lease liability is subsequently measured on an amortised cost basis using the effective interest method, where the lease
liability is increased to reflect the accretion of interest and reduced by the lease payments made, over the lease term.
Interest expense is recognised as interest expense on lease liabilities in profit or loss over the lease term, on the remaining
lease liability balance for each period.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
89
Notes to the financial statements Capital management
17 Borrowings and lease liabilities (continued)
Remeasurement
Lease liabilities are remeasured if:
•
•
there is a lease modification that is not accounted for as a separate lease; or
there are changes in: the lease term; the assessment to exercise a purchase option; amounts payable under a residual
guarantee; in-substance fixed payments; or future lease payments arising from a change in an index or rate.
A revised discount rate is applied when there is a change in the assessment to exercise a purchase option, the lease term or
floating interest rates. A corresponding adjustment is recognised in the ROU asset, or in profit or loss if the carrying amount
of the ROU asset has been reduced to nil.
ROU assets
ROU assets, representing the Group’s right to use the underlying leased asset for the lease term, are measured at cost, less
any accumulated depreciation and impairment expenses, and adjusted for any remeasurement of lease liabilities.
Initial measurement
The initial cost of ROU assets includes:
•
•
•
•
the initial measurement of the related lease liabilities recognised;
any lease payments made on or before the commencement date, less any lease incentives received;
initial direct costs incurred; and
restoration cost estimates, recognised and measured applying AASB 137 Provisions, Contingent Liabilities and
Contingent Assets.
Subsequent measurement
ROU assets are subsequently depreciated, in accordance with the Group's existing depreciation accounting policy, over the
shorter of the estimated useful life of the underlying asset and the lease term. If it is reasonably certain that the Group will
either obtain ownership of the underlying asset by the end of the lease term or exercise a purchase option, the ROU asset is
depreciated over its estimated useful life.
ROU assets are assessed for any impairment in accordance with the Group's existing impairment accounting policy.
Accounting estimates and judgements
Leases
The application of AASB 16 Leases requires judgements that affect the valuation of lease liabilities and ROU assets. In addition
to the critical judgements and areas of estimation uncertainty discussed below, the following judgements and estimations need
to be considered when assessing leases:
•
•
determination of stand-alone prices of lease and non-lease components, whether remeasurement or a separate lease is
required following a change in lease terms and conditions, and whether variable payments are in-substance fixed or not
to be included in the calculation of the lease liability; and
assessments of whether a purchase option will be exercised or an ROU asset is impaired.
Identifying a lease
Identifying whether a contract is, or contains, a lease involves the exercise of judgement about whether:
•
•
•
the contract depends on a specified asset;
the Group obtains substantially all of the economic benefits from the use of the asset and has the right to direct the use
of the asset; and
the contract is perpetual or for a period of time over which the underlying assets are to be used.
Determining the lease term
The following assessments impact the lease term which may significantly affect the amount of lease liabilities and ROU assets
recognised.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
90
Notes to the financial statements Capital management
17 Borrowings and lease liabilities (continued)
Extension and termination options
The Group applies judgement in determining whether it is reasonably certain to exercise extension or termination options, by
considering all relevant factors that could provide an economic incentive to exercise these options.
Non-cancellable period
In determining the lease term, the assessment of a contract following the contractual non-cancellable period needs to consider
the substance of the contract and whether any economic penalties exist which may affect the term of the non-cancellable
period.
Determining the incremental borrowing rate
Where the Group (or Group entity) cannot readily determine the interest rate implicit in the lease, it uses its IBR to measure
lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a
similar security, the funds necessary to obtain an asset of a similar value to the ROU asset in a similar economic environment.
Therefore, as the IBR reflects what the Group would have to pay, estimation is required when no observable rates are available
or when observable rates need to be adjusted to reflect the terms and conditions of the lease.
18 Provisions
Current
Employee benefits
Royalty payments
Non-current
Employee benefits
Rehabilitation and mine closure
Movements in the rehabilitation and mine closure provision during the year are as follows:
At 1 July
Expenditure on rehabilitation and closure activities
Additional provisions recognised
Reassessment of economic assumptions
Unwinding of discount
At 30 June
2021
$’000
2020
$’000
1,624
1,026
2,650
90
28,057
28,147
2021
$’000
25,524
(169)
-
2,368
334
28,057
1,528
1,430
2,958
676
25,524
26,200
2020
$’000
23,864
-
1,347
-
313
25,524
The Group completed a review of the rehabilitation and mine closure provision during the year, which resulted in an increase
of $2.4 million (2020: $1.3 million) to both the provision and the corresponding rehabilitation asset recorded in mine properties.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
91
Notes to the financial statements Capital management
18 Provisions (continued)
Recognition and measurement
Provisions are recognised when the Group has a present legal or constructive obligation, it is probable that an outflow of
resources will be required to settle the obligation, and the amount can be reliably estimated.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present
obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due
to the passage of time is recognised as a finance cost in profit or loss.
Employee benefits
The provision for employee benefits relates to the Group's liabilities for annual leave, long service leave and the short-term
incentive plan (STIP).
The current provision represents amounts for annual leave that are expected to be settled within 12 months of the end of the
period in which the employees render the service and is measured at the amounts expected to be paid when the liabilities are
settled.
The liability for long service leave not expected to vest within 12 months after the end of the period in which the employees
render the service is recognised in the non-current provision for employee benefits and is measured at the present value of
expected future payments to be made in respect of services provided up to the end of the reporting period. Consideration is
given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future
payments are discounted using market yields on high quality corporate bonds at the reporting date with terms and currencies
that match the estimated future cash outflows as closely as possible.
Where the Group does not have an unconditional right to defer settlement for any annual or long service leave owed, it is
classified as a current provision regardless of when the Group expects to realise the provision.
For details of the STIP, refer to the Short-term incentives section of the Remuneration report.
Rehabilitation and mine closure
The Group has obligations to dismantle and remove certain items of mine properties, property, plant and equipment and to
restore and rehabilitate the land on which they sit.
A provision is recognised for the estimated cost of settling the rehabilitation and restoration obligations existing at the reporting
date, discounted to present value using high quality corporate bond market yields at the reporting date, that match the timing
of the estimated future cash outflows as closely as possible.
Where the obligation is related to an item of mine properties, property, plant and equipment, its cost includes the present value
of the estimated costs of dismantling and removing the asset and restoring the site on which it is located. The related
rehabilitation asset for Dalgaranga is included in mine properties. Costs that relate to obligations arising from waste created
by the production process are recognised as operating costs in the period in which they arise.
The discounted value reflects a combination of management's assessment of the nature and extent of the work required, the
future cost of performing the work required, the timing of cash flows and the discount rate. Over time, the discounted value is
increased for the change in present value based on the discount rates that reflect current market assessments and the risks
specific to the liability. This increase in the provision, being the periodic unwinding of the discount due to the passage of time,
is recognised as a finance cost in profit or loss.
The provision is reassessed at least annually. A change in any of the assumptions used to determine the provisions could
have a material impact on the carrying amount of the provision. Any change in the provision is reflected as an addition to, or
deduction from, the related rehabilitation asset in mine properties and amortised as appropriate.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
92
Notes to the financial statements Capital management
18 Provisions (continued)
Accounting estimates and judgements
Rehabilitation and mine closure
The provision recognised for rehabilitation and mine closure costs relating to Dalgaranga represents the discounted value of
the present obligation to restore, dismantle and rehabilitate certain items of mine properties, property, plant and equipment
and to rehabilitate the site.
As the discounted value reflects a combination of management's assessment of the nature and extent of the work required,
the future cost of performing the work required, the timing of cash flows and the discount rate, then changes to one or more
of these assumptions is likely to result in changes to the carrying amount of the provision and the related rehabilitation asset
and costs and may result in future actual expenditure differing from the amounts currently provided.
19 Equity
Share capital
Fully paid ordinary shares
At 1 July
Issue of shares1
Issue of shares2
Issue of shares3
Issue of shares4
Issue of shares5
2021
2020
No. of shares
$’000
No. of shares
$’000
1,004,864,955
2,009,729,916
1,400,000,000
480,000,000
112,566,745
10,000,000
171,583 1,004,864,955
171,931
50,243
35,000
12,000
2,814
250
-
(8,134)
2,440
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(497)
149
Effect of 1-for-20 share consolidation
(4,766,303,488)
Share issue costs
Deferred tax credit relating to share issue costs
-
-
At 30 June
250,858,128
266,196 1,004,864,955
171,583
1 Entitlement offer at $0.025 per share (pre-equity consolidation) on 13 October 2020.
2 Private placement at $0.025 per share (pre-equity consolidation) on 13 October 2020.
3 Private placement issued to NRW at $0.025 per share (pre-equity consolidation), at nil consideration representing a conversion from debt
to equity, on 13 October 2020.
4 Private placement issued to the Creditors’ Trust at $0.025 per share (pre-equity consolidation), at nil consideration representing equity
settlement of pre-Administration unsecured creditor claims, on 13 October 2020.
5 Bonus shares issued to Managing Director and Chief Executive Officer Mr Richard Hay at $0.025 per share (pre-equity consolidation), at
nil consideration representing an equity-settled sign-on bonus, on 13 October 2020.
Fully paid ordinary shares have no par value and entitle the holder to participate in dividends and the proceeds on winding up
of the Company in proportion to the number of and amounts paid on the shares held.
Every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share
is entitled to one vote. Ordinary shares have no par value.
Recapitalisation
As proposed under the DOCA executed on 26 June 2020, 4,012,296,661 shares (pre-equity consolidation) were issued on 13
October 2020 to meet working capital requirements and equity-settlement of debt, creditor and employment contract
obligations. Following the capital raising, the total shares on issue were consolidated on a basis of 1 share for every 20 shares
on issue, resulting in 250,858,128 shares on issue on 20 October 2020.
The prior period earnings per share quoted in the consolidated statement of comprehensive income has been adjusted as a
result of the completion of the share consolidation.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
93
Notes to the financial statements Capital management
19 Equity (continued)
Non-controlling interests
At 1 July
Non-controlling interests’ share of current year exploration expenditure
At 30 June
2021
$’000
1,125
227
1,352
2020
$’000
1,129
(4)
1,125
Under the contractual joint venture agreements giving rise to the non-controlling interests (NCI), the Company is required to
free carry the NCI by sole funding the joint venture operations until the earlier of the completion of a bankable feasibility study,
a decision to commence mining operations, or an election by the non-controlling joint venture partner to convert their respective
20% participation interest to a 2% net smelter return royalty.
Reserves
At 1 July 2019
Share-based payments
Non-controlling interests’ share of current year exploration expenditure
At 30 June 2020
Share-based payments
Non-controlling interests’ share of current year exploration expenditure
At 30 June 2021
Share-based payments reserve
Share-based
payments
reserve
$’000
Exploration
asset reserve
$’000
1,699
(817)
(25)
-
-
4
1,674
(813)
38
-
1,712
-
(227)
(1,040)
Total
$’000
882
(25)
4
861
38
(227)
672
The share-based payments reserve recognises the fair value of equity-settled share-based payments provided to eligible
employees as part of their remuneration including options issued under the Company’s Employee Share Option Plan, and
performance rights issued under the Company’s GCY Equity Incentive Plan Rules.
Exploration asset reserve
The exploration asset reserve recognises exploration expenditure incurred on contractual joint venture tenements in proportion
to any non-controlling interest in the joint venture during the free carry/sole funding period.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
94
Notes to the financial statements
Risk management
This section of the notes to the financial statements provides information about the Group’s exposure to various risks, how
these risks could affect the Group’s financial position and performance, and how the Group manages these risks.
20 Financial risk management
The Group’s activities expose it to financial risks including market risk, liquidity risk and credit risk, arising from the financial
instruments held by the Group. The Board has overall responsibility for the establishment and oversight of a risk management
framework, through the Audit and Risk Committee, to ensure that financial activities are governed by policies and procedures
and that financial risks are identified, measured and managed in accordance with policies, to support the delivery of financial
targets while protecting future financial security. The Audit and Risk Committee is responsible for developing and monitoring
the Group’s risk management policies.
Financial assets and liabilities
The Group’s financial instruments are as below:
2021
Financial assets at amortised cost
Cash and cash equivalents
Trade and other receivables1
Term deposits
Total financial assets
Financial liabilities at amortised cost
Trade and other payables1
Investec finance facility
Lease liabilities
Other financial liabilities
Total financial liabilities
Interest
bearing
- variable
$’000
Interest
bearing
- fixed
$’000
Non-interest
bearing
$’000
23,434
-
-
23,434
-
13,537
-
-
-
-
407
407
-
-
14,758
-
13,537
14,758
14
3,623
-
3,637
9,232
-
-
12,823
22,055
Total
$’000
23,448
3,623
407
27,478
9,232
13,537
14,758
12,823
50,350
1 Excludes balances which do not meet the definition of financial instruments.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
95
Notes to the financial statements Risk management
20 Financial risk management (continued)
2020
Financial assets at amortised cost
Cash and cash equivalents
Other receivables1
Term deposits
Other financial assets
Total financial assets
Financial liabilities at amortised cost
Trade and other payables1
Secured bank loan facility
Lease liabilities
Working capital facility
Other financial liabilities
Total financial liabilities
Interest
bearing
- variable
$’000
Interest
bearing
- fixed
$’000
Non-interest
bearing
$’000
Total
$’000
-
-
-
-
-
-
56,049
-
-
-
-
-
380
-
380
-
-
14,161
12,000
-
56,049
26,161
5,640
5,640
4
-
633
6,277
42,857
-
-
-
24,995
67,852
4
380
633
6,657
42,857
56,049
14,161
12,000
24,995
150,062
1 Excludes balances which do not meet the definition of financial instruments.
Recognition and measurement
Initial measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the
financial instrument, and are measured initially at fair value adjusted by transactions costs, except for those carried at fair
value through profit or loss, which are measured initially at fair value.
Classification and subsequent measurement
Financial assets
Classification and measurement of financial assets are based on the business model in which they are managed and their
contractual cash flow characteristics. On initial recognition, financial assets, other than those designated and effective as
hedging instruments, are classified as measured at amortised cost using the effective interest method, fair value through profit
or loss (FVTPL) or fair value through other comprehensive income (FVOCI).
Financial assets at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
•
•
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise to cash flows on specified dates that are solely payments of principal and interest on the
principal amount outstanding.
For financial assets subsequently measured at amortised cost, any interest income, impairment expenses, foreign exchange
gains and losses are recognised in profit or loss.
Financial assets at FVTPL
Financial assets whose contractual cash flows are not solely payments of principal and interest, or are not classified as
measured at amortised cost or FVOCI, are measured at FVTPL. Derivative financial assets are measured at FVTPL.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
96
Notes to the financial statements Risk management
20 Financial risk management (continued)
For financial assets subsequently measured at FVTPL, net gains and losses, including any interest or dividend income, are
recognised in profit or loss.
Impairment of financial assets
The Group assesses, on a forward-looking basis, the expected credit losses associated with debt instruments measured at
amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase
in credit risk.
Financial liabilities
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as measured at
FVTPL if it is classified as held for trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities
at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method.
Derecognition
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the
financial asset and all substantial risks and rewards of ownership are transferred.
Financial liabilities are derecognised when they are extinguished, discharged, cancelled or expire.
Any gain or loss on derecognition is recognised in profit or loss.
Derivative financial instruments
Derivatives are only used for economic hedging purposes and not as speculative investments. However, where derivatives do
not meet the hedge accounting criteria, they are classified as held for trading for accounting purposes and are accounted for
at FVTPL. They are presented as current assets or liabilities to the extent they are expected to be settled within 12 months
after the end of the reporting period.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends
on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group
designates certain derivatives as either:
•
•
hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges); or
hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast
transactions (cash flow hedges).
Accounting estimates and judgements
Fair value measurement
When the fair values of financial assets and financial liabilities cannot be measured based on quoted prices in active markets,
they are measured using valuation techniques including discounted cash flows (DCF). The inputs to DCF models are taken
from observable markets where possible, but where this is not feasible, management uses the best information available and
a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity
risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial
instruments.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices and arises from the Group’s exposure to movements in commodity prices, interest rates and foreign currency.
At the reporting date, the Group has minimal exposure to foreign currency risk as the Group’s operations are all located within
Australia and material transactions are denominated in Australian dollars, the Group’s functional currency.
The Group manages market risk through the use of derivatives, within the guidelines set by the Audit and Risk Committee.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
97
Notes to the financial statements Risk management
20 Financial risk management (continued)
Interest rate risk
Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instruments will
fluctuate due to changes in market interest rates.
The Group is exposed to interest rate risk on its outstanding borrowings and short-term cash deposits, as profiled in the
Financial assets and liabilities analysis above. The Group’s main interest rate risk arises from the variable rates payable on
the Investec finance facility, which exposes the Group to cash flow interest rate risk.
Interest rate sensitivity
The analyses below illustrate the sensitivity of profit or loss and other equity to a change in interest rates of +/- 1% (2020: +/-
1%), representing management’s assessment of the reasonably possible change in interest rates. This analysis assumes that
all other factors remain constant.
Profit/(loss)
Other equity
+1%
$’000
-1%
$’000
+1%
$’000
-1%
$’000
234
(140)
94
-
(512)
(512)
(234)
140
(94)
-
512
512
-
-
-
-
-
-
-
-
-
-
-
-
Cash and cash equivalents
Borrowings
At 30 June 2021
Cash and cash equivalents
Borrowings
At 30 June 2020
Commodity price risk
The Group uses derivative commodity contracts to manage its exposure to commodity price fluctuations.
Gold price risk
The Group’s exposure to gold price fluctuations is managed by executing derivative gold contracts such as gold forward sales
commitments, or purchasing gold put options, all denominated in Australian dollars, refer to notes 4 and 22.
Oil price risk
The Group’s diesel fuel costs are exposed to the volatility in crude oil prices. To mitigate the risk of adverse movements in the
diesel fuel price, the Group may execute derivative fuel contracts such as diesel swap transaction contracts.
Liquidity risk
Liquidity risk is the risk that that the Group might be unable to meet its financial obligations as they fall due.
The Group manages liquidity risk by monitoring cash flows and ensuring that adequate levels of working capital are maintained.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
98
Notes to the financial statements Risk management
20 Financial risk management (continued)
Contractual maturities of financial liabilities, including estimated interest payments are as follows:
2021
Trade and other payables1
Investec finance facility
Lease liabilities
Other financial liabilities
2020
Trade and other payables1
Secured bank loan facility
Lease liabilities
Working capital facility
Other financial liabilities
Within 1
year
$’000
Between 1
and 2 years
$’000
Between 2
and 5 years
$’000
Later than 5
years
$’000
Total
contractual
cash flows
$’000
Carrying
amount
$’000
9,232
14,466
4,015
1,894
29,607
42,857
56,049
4,043
12,000
24,995
-
-
3,813
3,117
6,930
-
-
7,530
7,812
-
-
1,630
-
15,342
1,630
-
-
-
-
-
-
3,861
7,175
483
-
-
-
-
-
-
9,232
14,466
16,988
12,823
53,509
42,857
56,049
15,562
12,000
24,995
9,232
13,537
14,758
12,823
50,350
42,857
56,049
14,161
12,000
24,995
139,944
3,861
7,175
483
151,463
150,062
1 Excludes balances which do not meet the definition of financial instruments.
Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. Credit risk arises from cash and cash
equivalents, deposits with banks and financial institutions, as well as credit exposure to customers, including outstanding
receivables and committed transactions.
The Group limits its exposure to credit risk in relation to cash and cash equivalents and other financial assets by only dealing
with banks and financial institutions with acceptable credit ratings.
The carrying amount of financial assets represents the maximum credit exposure.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
99
Notes to the financial statements Risk management
20 Financial risk management (continued)
Fair value measurement
Fair value hierarchy
As prescribed under AASB 13 Fair Value Measurement, financial assets and financial liabilities measured at fair value in the
consolidated statement of financial position are grouped into three levels of a fair value hierarchy, which categorises the inputs
to valuation techniques used to measure fair value.
The valuation inputs are categorised as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(prices) or indirectly (derived from prices).
Level 3: Unobservable inputs for the asset or liability - inputs for the asset or liability that are not based on observable market
data.
Therefore Level 3 inputs include the highest level of estimation uncertainty.
The fair value of financial instruments that are not traded in active market (for example, over-the-counter derivatives) is
determined using valuation techniques.
These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on
entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included
in level 2.
There were no financial assets and financial liabilities measured and recognised at fair value on a recurring basis as at 30
June 2021 or 30 June 2020. The carrying values of financial assets and liabilities recognised in the financial statements
approximate their fair values.
21 Capital risk management
The Group's objectives when managing capital are to safeguard the ability to continue as a going concern, so that it can
continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may return capital to shareholders,
pay dividends to shareholders, issue new shares or sell assets.
The Group monitors the adequacy of capital by analysing cash flow forecasts.
The Group manages and adjusts the capital structure when funding is required.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
100
Notes to the financial statements
Unrecognised items
This section of the notes to the financial statements provides information about items not recognised in the financial
statements, as they do not satisfy recognition criteria, but which could affect the Group’s financial position and performance in
future.
22 Commitments
Exploration expenditure
Minimum exploration expenditure commitments due:
Within one year
Between one year and five years
Later than five years
2021
$’000
2020
$’000
2,138
2,971
3,945
9,054
1,621
4,677
4,435
10,733
In order to maintain current rights of tenure to exploration tenements, the Group is required to meet minimum expenditure
commitments required under the lease conditions. These expenditure obligations can be reduced by selective relinquishment
of exploration tenure or application for expenditure exemptions.
Capital expenditure
Group subsidiary GNT Resources Pty Ltd had commitments for capital expenditures relating to Dalgaranga at the reporting
date that were not recognised as liabilities amounting to $0.1 million (2020: $0.2 million) all due within one year.
Gold delivery commitments
A requirement under the Investec finance facility is to partially protect against adverse movements in the gold price by hedging,
on a rolling 18-month basis, a minimum of 40% of forecast gold sales. Following the drawdown of proceeds under the facility
during the year, the Group initially entered into gold forward contracts with Investec for approximately 46,000 ounces of gold
(being 40% of forecast gold production and sales over the 18-month period commencing 1 November 2020) at an average
forward sale price of A$2,667 per ounce. The Group subsequently executed discretionary gold forward contracts and
purchased gold put options with Investec to further protect against adverse movements in the gold price.
On 31 March 2021, the Group voluntarily pre-paid $14.6 million to Investec, reducing the remaining term of the loan by 12
months to 30 June 2022. As a result, the Group is no longer required to enter into any further mandatory hedges. The balance
of gold production is currently to be sold at spot prices or settled against discretionary gold forward contracts. The first gold
delivery into the forward sale contracts was in November 2020 and as at 30 June 2021, the last delivery date is in September
2022.
At the reporting date the Group has contractual sale commitments of 44,782 ounces of gold (2020: nil ounces) at an average
forward price of A$2,528 per ounce.
2021
Gold forward contracts maturing:
Within one year
Between one year and five years
Gold for
physical
delivery
Ounces
Weighted
average
contracted
gold sale price
A$/oz
Value of
committed
sales
$’000
38,982
5,800
44,782
2,568
2,261
2,528
100,094
13,116
113,210
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
101
Notes to the financial statements Unrecognised items
22 Commitments (continued)
Gold forward contract price sensitivity
Using the gold forward contracts in place as at the reporting date, a movement of $100 in gold spot prices would result in the
Group’s mark-to-market gold hedge position (a contingent asset or liability, refer to note 23) changing by approximately $4.5
million.
Recognition and measurement
Gold delivery commitments
The gold forward contracts are settled by the physical delivery of gold as per contract terms. These physical gold forward
contracts are considered a contract to sell a non-financial item and therefore do not fall within the scope of AASB 9 Financial
Instruments. Accordingly, no derivatives are recognised and the gold forward contracts are accounted for as sale contracts
with revenue recognised at the agreed price when the contractual commitment is met through physical delivery of gold.
The market value of the outstanding gold forward contracts varies over time as a result of changes in the market price of gold.
At each reporting date the Group calculates the fair value of outstanding gold forward contracts and discloses the fair value
as either a contingent asset or liability in the notes to the financial statements. The fair value represents the amount which
would be received (asset) or paid (liability) if the outstanding obligations were settled on the valuation date, in the event the
gold forward contracts were not settled by the physical delivery of gold.
23 Contingent assets and liabilities
Bank guarantees
The Group has provided bank guarantees in favour of service providers for credit card facilities, leased premises and road
maintenance responsibilities. The total of these guarantees at the reporting date was $0.4 million (2020: $0.4 million). The
bank guarantees are secured by blocked deposits held by the grantor of the guarantee. The deposit accounts are recognised
as other financial assets in the consolidated statement of financial position.
Demobilisation costs
The Group has entered into certain contracts relating to Dalgaranga that provide for the payment of demobilisation costs upon
termination of the contract. The amount to be paid is contingent upon the timing and basis of contract termination. The Group
estimates that the maximum amount payable is not greater than $1.3 million (2020: $0.9 million).
Early termination payment
The Group has entered into a contract relating to Dalgaranga that provides for the payment to the contractor in the event of
early termination of that contract. The amount to be paid is dependent on the period of time remaining under the contract at
the time of termination. The amount payable in the event of early termination of this contract varies on a sliding scale between
$nil and $14.7 million.
Gold forward contracts
The Group has entered into gold forward contracts to manage exposure to gold price fluctuations. At the reporting date the
Group had gold forward contracts for 44,782 ounces of gold that have an estimated contingent asset value of $7.4 million
(2020: $nil) in the event that the gold forward contracts were not settled by the physical delivery of gold.
24 Events occurring after the reporting date
On 7 July 2021, the Company entered into a binding Demerger Implementation Deed, pursuant to which the Company and
Firefly have agreed the terms of a demerger of various assets including the Paterson Copper-Gold Project, the Forrestania
Gold Project and lithium mineral rights over various tenements held by both the Company and Firefly which are to be acquired
by a newly incorporated wholly-owned subsidiary of Firefly, Firetail Resources Limited.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
102
Notes to the financial statements Unrecognised items
24 Events occurring after the reporting date (continued)
On 24 August 2021, the Company announced on the ASX that it had received a non-binding indicative proposal from Rivet
Group for the Company to acquire the gold rights in the Snake Well gold project owned by Rivet Group. The proposal was
conditional on a number of items, including the requirement for Gascoyne to terminate the Scheme Implementation Deed with
Firefly. The Board of Gascoyne unanimously determined that the Rivet Group proposal was not superior to the Firefly
transaction and rejected the proposal.
In August 2021, the Group signed a cost settlement deed with Habrok (Dalgaranga) Pty Ltd and Habrok Mining Pty Ltd to
settle recovery of legal costs awarded to the Group in September 2020 following successful defence by the Group of legal
action commenced by Habrok (Dalgaranga) Pty Ltd. Part proceeds under the settlement deed were received by the Group in
early September 2021 and it is uncertain as to the extent, if any, of the remaining amount under the settlement deed will be
recovered by the Group. The terms of the settlement deed are confidential, and the aggregate cost recovery amount agreed
is not considered to be material to the Group.
On 6 September 2021, the Company announced on the ASX that the Supreme Court of Western Australia (Supreme Court)
ordered the convening of a meeting of Firefly shareholders to consider and, if thought fit, approve the Scheme of Arrangement
(Scheme). The meeting is currently scheduled for 21 October 2021. The Supreme Court also made orders approving the
despatch of the Scheme Booklet and Firefly despatched the Scheme Booklet to Firefly shareholders on or before 10
September 2021. The Scheme Booklet included an Independent Expert’s Report which concluded that the Scheme is fair and
reasonable, and is in the best interests of Firefly shareholders in the absence of a superior proposal.
The Directors are not aware of any other matter or circumstance that has arisen since the end of the year which has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the
Group, in future years.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
103
Notes to the financial statements
Other information
This section of the notes to the financial statements provides additional financial information, including information which is
not specifically related to individual financial items, and other disclosures which are required to comply with Australian
Accounting Standards and other regulatory pronouncements.
25 Interests in other entities
Interests in subsidiaries
Subsidiary
Gascoyne Resources (WA) Pty Ltd
Dalgaranga Operations Pty Ltd
GNT Resources Pty Ltd
Egerton Exploration Pty Ltd
Dalgaranga Exploration Pty Ltd
Gascoyne (Ops Management) Pty Ltd
Dalgaranga Joint Ventures1
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Unincorporated
Ownership interest
2021
%
2020
%
100
100
100
100
100
100
80
100
100
100
100
100
100
80
1 Principal place of business is Perth, Western Australia.
Gascoyne is party to two contractual joint ventures to undertake mineral exploration on tenements that form part of Dalgaranga.
The joint venture entities are classified as subsidiaries of the Group in accordance with AASB 10 Consolidated Financial
Statements.
The Dalgaranga Joint Ventures’ activities include the exploration of the joint venture tenements for minerals and if successful,
to develop and mine minerals within the joint venture tenements. Under the terms of the agreements Gascoyne is required to
free carry the vendors’ participating interest in the joint ventures by sole funding the joint venture costs until the earlier of the
completion of a bankable feasibility study, a decision to commence mining operations, or an election by the non-controlling
joint venture partner to convert their respective 20% participation interest to a 2% net smelter return royalty. If an election is
made to convert the 20% participation interest to a net smelter royalty, the Group’s ownership interest in the respective joint
ventures’ net assets will increase to 100%.
26 Related party transactions
Key management personnel remuneration
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Share-based payments
2021
$
2020
$
2,457,231
1,143,971
12,066
183,505
287,740
(12,285)
65,630
-
2,940,542
1,197,316
Detailed KMP remuneration disclosures are provided in the Remuneration report section of the Directors’ report. There were
no other transactions between the Company and KMP during the year.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
104
Notes to the financial statements Other information
27 Share-based payments
Employee share-based remuneration
Benefits in the form of share-based remuneration are provided to employees via the Company’s incentive plans. The total of
share-based payments recognised in profit or loss during the year as part of employee benefits expense was $37,740 (2020:
credit of $24,024).
Employee performance rights
Employee performance rights plan
Eligible employees are entitled to obtain shares or rights to shares in the Company, under the Company’s GCY Equity Incentive
Plan Rules (Incentive plan), through the grant of performance rights (rights), as part of employee remuneration. Each right
entitles the employee to receive a fully paid ordinary share in the Company, for nil consideration on exercise, after vesting.
Employee rights do not carry any dividend or voting rights. All rights are equity-settled.
In accordance with the terms of the Incentive plan, rights may be exercised at any time from the vesting date to the date of
their expiry. Unvested rights are forfeited within 30 days of cessation of the employee’s employment, subject to Board
discretion.
Details of rights outstanding at the reporting date are as follows:
Number granted
Vested and exercisable
Unvested
Forfeited
Vesting conditions
Weighted average remaining contractual life
Grant date
Expiry date2
Weighted average fair value at grant date
March 2021 Grant
400,000
Nil
400,000
Nil
Service condition1
10 years
26 March 2021
2032
$0.525
1 The rights contain a service condition, vesting in two equal tranches of 50% on 1 July 2022, and on 1 January 2023.
2 The first tranche expires on 30 June 2032 and the second tranche expires on 31 December 2032.
Fair value of rights granted
The fair value assigned to each right at grant date was the underlying market price of the Company’s shares at the grant date,
as the rights contain a service condition only and there is no expectation of dividends being declared during the vesting period.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
105
Notes to the financial statements Other information
27 Share-based payments (continued)
Employee share options
Employee share options
Outstanding at 1 July
Expired during the year
Cancelled during the year1
Effect of 1-for-20 option consolidation
Outstanding at 30 June2
Exercisable at 30 June3
2021
2020
No. of
options
Weighted
average
exercise
price1
No. of
options
Weighted
average
exercise
price
3,800,000
$0.38
11,650,000
-
-
(7,850,000)
(1,660,000)
(2,033,000)
107,000
107,000
$0.37
-
$7.40
$7.40
-
-
3,800,000
-
$0.48
$0.53
-
-
$0.38
-
1
In September 2020, option holders were offered nominal consideration of $100 (per option holder) to relinquish their options resulting in
the cancellation of 1,660,000 options, leaving a remaining balance of 2,140,000 options. Options outstanding were repriced in accordance
with ASX listing rule 6.22, on issue of shares pursuant to a pro-rata non-renounceable entitlement offer. The option price was reduced from
$0.38 to $0.37.
2 Following the 1-for-20 share consolidation completed on 20 October 2020, the option exercise price was adjusted from $0.37 to $7.40.
3 Options were not exercisable at 30 June 2020 due to the Company being in Administration at that time. Share transfers were not permitted
during Administration without the consent of the Administrators or the Court.
Employee share option plan
Eligible employees are entitled to purchase shares in the Company, under the Company’s Employee Share Option Plan
(ESOP). Employee share options do not carry any dividend or voting rights. All options are equity-settled.
In accordance with the terms of the ESOP, options may be exercised at any time from the vesting date to the date of their
expiry. Unvested options expire on the earlier of their expiry date or within 30 days of cessation of the employee’s employment,
subject to Board discretion.
Details of options outstanding at the reporting date are as follows:
Number granted
Forfeited
Vested
Unvested
Cancelled1
Effect of 1-for-20 option consolidation
Vesting conditions
Weighted average remaining contractual life
Grant date
Expiry date
Exercise price at grant date
Exercise price at reporting date1
Fair value at grant date3
2018 Grant
4,180,000
380,000
3,800,000
-
1,660,000
2,033,000
Service condition2
0.25 years
5 October 2018
7 October 2021
$0.40
$7.40
$0.084
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
106
Notes to the financial statements Other information
27 Share-based payments (continued)
1
In September 2020, option holders were offered nominal consideration of $100 (per option holder) to relinquish their options resulting in
the cancellation of 1,660,000 options, leaving a remaining balance of 2,140,000 options. Options outstanding were repriced in accordance
with ASX listing rule 6.22, on issue of shares pursuant to a pro-rata non-renounceable entitlement offer. The option price was reduced from
$0.38 to $0.37. Following the 1-for-20 share consolidation completed on 20 October 2020, the option exercise price was adjusted from
$0.37 to $7.40.
2 The options contain a six-month service condition expiring on 7 April 2019 and a twelve-month service condition expiring on 7 October
2019. The options vest one-third on grant, one-third after six months and one-third after twelve months, and remain exercisable until the
options lapse.
3 For information about the principal assumptions applied in the valuation of outstanding options, refer to note 27 in the Annual Report for
the year ended 30 June 2020.
Valuations of options may not necessarily represent the market price of the options at the date of valuation.
Employee bonus share issue
Following shareholder approval on 5 August 2020, the Company issued 10,000,000 bonus shares at $0.025 per share (pre-
equity consolidation) to Mr Richard Hay (Managing Director and Chief Executive Officer) for nil consideration on 13 October
2020.
NRW working capital facility
On 21 December 2018 the Group secured a $12.0 million working capital facility from Dalgaranga mining contractor NRW Pty
Ltd (NRW). On 13 October 2020 the $12.0 million working capital facility was settled in full through the issue of 480 million
shares (pre-equity consolidation) to NRW. The security held by NRW over the Group’s assets was released following
effectuation of the DOCA on 20 October 2020. Refer notes 17 and 19 for further details.
Unsecured creditors
On 13 October 2020, the Company issued 112.6 million shares (pre-equity consolidation) to the Creditor’s Trust in accordance
with the DOCA in order to settle approximately 50% of the amounts owed to unsecured creditors individually owed more than
$10,000.
Recognition and measurement
Employee share-based payments
The fair value of equity-settled share-based payment awards (awards), measured at grant date, is recognised as an employee
benefits expense with a corresponding increase in equity, over the period that the employees become unconditionally entitled
to the awards (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the
vesting date). The total amount to be expensed is determined by reference to the fair value of the awards granted, which
includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any
service and non-market performance vesting conditions, for example, profitability and sales growth targets.
At each reporting date, the Company revises its estimate of the number of awards that are expected to become exercisable.
The employee benefits expense recognised each period includes the most recent estimate.
Upon the exercise of awards, the balance of the share-based payments reserve relating to those awards is transferred to
share capital.
Fair value of rights
The fair value of rights at grant date is determined using the most appropriate valuation model, taking into consideration the
terms and conditions upon which the rights were issued, including market and non-vesting conditions.
Fair value of options
The fair value of options at grant date is determined using a Black Scholes option pricing model that considers the exercise
price, term of the option, share price at grant date of the underlying share, expected price volatility of the underlying share,
expected dividend yield and the risk-free interest rate for the term of the option.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
107
Notes to the financial statements Other information
27 Share-based payments (continued)
Accounting estimates and judgements
Valuation methodology
Management and external specialists use a Black Scholes option pricing model to determine the fair values of options granted.
Both the selection of the valuation methodology and various inputs to models are subject to judgement.
28 Auditor’s remuneration
Audit and review of financial statements
Other assurance and due diligence services1
2021
$
2020
$
110,000
110,000
1,700
5,000
111,700
115,000
1 Prior year non-audit services provided by Grant Thornton Australia Limited.
The auditor of the parent entity Gascoyne Resources Limited is Grant Thornton Audit Pty Ltd.
29 Parent entity financial information
Summary financial information
The individual financial statements of Gascoyne Resources Limited, the parent entity, are summarised below:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Financial performance
Loss for the year
2021
$’000
2020
$’000
3,760
120,593
124,353
16,161
302
16,463
107,890
266,196
1,712
1,041
60,258
61,299
3,729
201
3,930
57,369
171,583
1,674
(160,018)
(115,888)
107,890
57,369
(44,130)
(64,612)
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
108
Notes to the financial statements Other information
29 Parent entity financial information (continued)
Determining the parent entity financial information
The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements,
except for tax consolidation legislation as referred to in note 7.
Contingent liabilities
Refer to note 23 for details of a bank guarantee given by the parent entity for leased premises.
Contractual commitments for the acquisition of property, plant and equipment
The parent entity had no contractual commitments for the acquisition of property, plant and equipment as at the reporting date
(2020: $nil).
30 Summary of other significant accounting policies
The Group’s accounting policies referred to in this financial report are consistent in all material respects with those applied in
the previous year. Significant accounting policies not already disclosed in the notes to the financial statements above are
presented in this note.
Principles of consolidation
Subsidiaries
The Group financial statements consolidate those of the parent company and all of its subsidiaries as at the reporting date. A
subsidiary is an entity that is controlled by the parent. The parent controls an entity if it is exposed, 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 consolidated financial statements are prepared using uniform accounting policies for each Group member and all Group
members have a 30 June reporting date.
The Group consolidates the assets, liabilities and results of a subsidiary from the date on which it first controls the entity. On
loss of control of a subsidiary the Group derecognises the assets and liabilities of the former subsidiary, and recognises any
investment it retains in its former subsidiary in accordance with the relevant accounting standard(s).
All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and
losses on transactions between Group entities. Amounts reported in the financial statements of subsidiaries have been
adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
A non-controlling interest is recognised in the consolidated statement of financial position within equity where an entity outside
of the Group has an ownership interest in a subsidiary or its net assets.
Joint ventures
A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous
consent of the parties sharing control.
A joint venture is a joint arrangement in which the parties have rights to the net assets of the arrangement. Investments in joint
ventures are recognised as an investment and are typically accounted for using the equity method of accounting. The
Dalgaranga Joint Ventures, refer to note 25, are classified as subsidiaries of the Group, based on the Group’s controlling
interest in the joint ventures.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or
loss.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
109
Notes to the financial statements Other information
30 Summary of other significant accounting policies (continued)
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the consolidated
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing transactions
which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
New standards not yet adopted by the Group
The Group has adopted all of the new and revised standards and interpretations issued by the Australian Accounting Standards
Board (AASB) that are relevant to its operations and effective for the current reporting period. The adoption of new and revised
standards and interpretations has had no effect on the amounts reported for prior periods.
There are no new standards and interpretations in issue which are mandatory for 30 June 2021 reporting periods that would
be expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future
transactions.
The Group has not elected to early adopt any issued standards and interpretations which are not mandatory for 30 June 2021
reporting periods. All issued standards and interpretations relevant to the Group will be adopted on their effective date. These
standards are not expected to have a material impact on the Group in the current or future reporting periods and on foreseeable
future transactions.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
110
ASX additional information
The following information as required by the Australian Exchange Securities Limited Listing Rules was current as at 22
September 2021.
Voting rights
Fully paid ordinary shares
On a show of hands, every holder of fully paid ordinary shares present at a meeting in person or by proxy shall have one vote
and upon a poll each share shall have one vote in accordance with the Company’s Constitution.
Options and rights
Options and rights hold no voting rights.
Distribution of shareholdings – ordinary fully paid shares (ASX:GCY)
Size of holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Number of
shareholders
Number of
shares
% of
Issued capital
1,172
817
278
628
145
333,943
2,121,435
2,206,269
21,326,259
225,055,058
3,040
251,042,964
0.13
0.84
0.88
8.50
89.65
100.00
There were 1,370 holders of less than a marketable parcel of shares.
Distribution of unquoted equity securities – employee performance rights
Size of holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Number of
rights
holders
Number of
rights
% of
Outstanding
rights
-
-
-
40
4
44
-
-
-
1,714,400
817,092
2,531,492
-
-
-
90.91
9.09
100.00
Unquoted equity securities – employee incentive options
The number of options on issue was 107,000 and the number of holders of those options was 11.
GASCOYNE RESOURCES LIMITED | ANNUAL REPORT | 30 JUNE 2021
111
ASX additional information
Substantial shareholders1
Shareholder
Deutsche Balaton AG
NRW Holdings Limited
First Sentier Investors Holdings Pty Limited
1 As notified in substantial shareholder notices received by the Company.
Twenty largest shareholders
Rank
Shareholder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Deutsche Balaton AG
Citicorp Nominees Pty Limited
NRW Holdings Limited
HSBC Custody Nominees (Australia) Limited
BNP Paribas Nominees Pty Limited
Troca Enterprises Pty Ltd
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