Freehill Mining Limited
ACN 091 608 025
Annual Report - 30 June 2019
For personal use only Freehill Mining Limited
Corporate directory
30 June 2019
Directors
Raymond Charles Mangion
Paul Davies
Samuel Duddy
Peter Hinner
Company secretary
Paul Davies
Registered office
Principal place of business
Share register
Auditor
Level 24, 570 Bourke St
Melbourne, Victoria,
Australia, 3000
Level 24, 570 Bourke St,
Melbourne, Victoria,
Australia, 3000
Automic Registry Services
Level 12, 50 Holt Street
Surry Hills, NSW 2000
RSM Australia Partners
Level 21, 55 Collins Street
Melbourne, Victoria, 3000
Stock exchange listing
Freehill Mining Limited shares are listed on the Australian Securities Exchange (ASX
code: FHS)
Website
www.freehillmining.com
Corporate Governance Statement Refer to www.freehillmining.com
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For personal use only Freehill Mining Limited
Directors' report
30 June 2019
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'consolidated entity') consisting of Freehill Mining Limited (referred to hereafter as the 'company' or 'parent entity') and
the entities it controlled at the end of, or during, the year ended 30 June 2019.
Directors
The following persons were directors of Freehill Mining Limited during the whole of the financial year and up to the date of
this report, unless otherwise stated:
Raymond Charles Mangion
Paul Davies
Samuel Duddy (appointed 9 July 2018)
Peter Hinner (appointed 31 July 2018)
Wayne Johnson (appointed 30 November 2018 and resigned 29 August 2019)
Frank Terranova (resigned 12 July 2018)
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the consolidated entity after providing for income tax amounted to $2,508,162 (30 June 2018: $2,965,058).
Refer to the Chairman's Letter that directly precedes this Directors' Report.
Significant changes in the state of affairs
On 18 January 2019, 203,982,421 fully paid ordinary shares were released from escrow.
During the financial year, the company issued 451,072,259 fully paid ordinary shares upon:
●
●
●
●
receiving cash and cash equivalents totalling $1,593,467 ($250,000 was also received before 30 June 2018 in relation
to shares issued on 6 July 2018);
the extinguishment of borrowings and interest payable totalling $4,097,957;
the extinguishment of trade and other payables totalling $463,926; and
settlement of capital raising costs of $90,000.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
On 30 August 2019, the company announced that it has received commitments from sophisticated and professional investors
for a placement of shares raising a total of $2,600,000. The company will issue 236,363,637 fully paid ordinary shares at
$0.011 (1.1 cents), plus one free attaching option for every share placed exercisable at $0.025 (2.5 cents) expiring two years
from date of issue.
The placement is subject to approval of the company's shareholders expected to be held in October 2019.
At the time of signing the company had received $1,036,000 of these funds.
On 2 September 2019, the company announced that it had completed the acquisition of an 80 hectare tenement known as
Arenas XI 1/20, located directly to the south of the Yerbas Buenas project area. The tenement acquisition was settled by
means of exchanging the receivable from Lacerta amounting to AUD912,091 (refer to Note 6) and a payment of CLP100,000
(AUD210).
On 17 September 2019, convertible debt amounting to $459,519 were extended to 31 May 2021.
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Directors' report
30 June 2019
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
Likely developments and expected results of operations
Information on likely developments in the operations of the consolidated entity and the expected results of operations have
not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the
consolidated entity.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Raymond Charles Mangion
Non-Executive Director and Chairman since 9 July 2018)
Associate Diploma of Business (Accounting) and an Associate Diploma in Financial
Planning.
Ray Mangion has performed the role of Managing Director of Morbak Investments Pty
Ltd for the past 18 years, having created the business as a start-up business. He has
approximately 30 years’ managerial experience.
Other current directorships:
Nil
Former directorships (last 3 years): Nil
Interests in shares:
19,108,305 fully paid ordinary shares
Name:
Title:
Qualifications:
Experience and expertise:
Paul Davies
Director and Chief Financial Officer
Paul holds an Economics Degree from Monash University, has qualified as a Chartered
Accountant and is an alumnus of the Stanford Business School.
Paul Davies has extensive experience as CFO of both publicly traded and privately
held companies. Over the past 10 years he has been involved with many early stage
companies involving reporting, strategic planning, systems implementation and
fundraising. Prior to this Paul was Director in charge of Corporate and Institutional
Banking for Deutsche Bank Australia and a member of the Deutsche Bank Credit
Committee. He has been directly involved in over $20 billion worth of transactions
involving origination, advising, arranging, structuring, project finance, lead managing,
syndication, negotiation, risk management, including servicing many of Australia’s
major mining companies. Before Deutsche Bank Paul worked for a number of years
with both Bankers Trust Australia and Macquarie Bank.
With his 20 plus years in the finance sector, Paul brings to the Company considerable
experience in both debt and equity markets in addition to significant understanding of
the mining sector.
Other current directorships:
Nil
Former directorships (last 3 years): Nil
Interests in shares:
2,134,330 fully paid ordinary shares
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Directors' report
30 June 2019
Name:
Title:
Qualifications:
Experience and expertise:
Peter Hinner
Chief Executive Officer (appointed 31 July 2018)
Bachelor of Science in Chemistry from the Queensland University of Technology with
post graduate qualifications in mining, metallurgy and business management
Mr Hinner was appointed COO of the Company in February 2017 and has over 35
years experience in the heavy minerals and gold industry both within Australia and
internationally.
Over the past several years he has worked predominantly internationally as a project
development consultant on a variety of projects in Africa, Korea, Indonesia, Malaysia
and South America. His previous roles have included senior management and
operational roles in several of the world’s largest mineral operations as well as mine
management roles with BP Minerals Indonesia, Operations Manager for the Tiwest
Joint Venture mine in Western Australia, Chief Operating Officer of an industrial
minerals company and senior consultant for KPMG.
He has significant mining, operating and project management experience in most
facets of the industry including exploration, dredging, processing, engineering design,
construction, commissioning and feasibility studies.
Other current directorships:
Former directorships (last 3 years): Nil
Interests in shares:
Interests in rights:
2,018,697 fully paid ordinary shares
Nil
Experience and expertise:
Name:
Title:
Qualifications:
Samuel Duddy
Non-Executive Director (appointed 9 July 2018)
First Class Honours Degree Science, Master of Property Science and Master of
Business Administration (all from University of Queensland)
Mr Duddy is a substantial investor in Freehill and has previously visited the Yerbas
Buenas operations as part of his own due diligence process. Mr Duddy is currently a
board member and majority shareholder of a Civil Construction firm and brings to the
Board a wealth of knowledge and experience in business management, engineering
and finance.
Other current directorships:
Nil
Former directorships (last 3 years): Nil
Interests in shares:
131,859,482 fully paid ordinary shares
Name:
Title:
Qualifications:
Experience and expertise:
Frank Terranova
Non - Executive Director (resigned 12 July 2018)
Fellow of Institute of Chartered Accountants
Mr Frank Terranova has extensive experience as a Director and Executive with a wide
range of Australian and international publicly listed companies. He has held senior roles
in a number of organisations including, Normandy Mining Limited and Queensland
Cotton Limited. He was Chief Financial Officer and ultimately Managing Director of
Allied Gold PLC which was subsequently acquired by St Barbara Limited in 2012.
Mr Terranova was also Managing Director of Polymetals Mining Limited where he led
its transformation through a merger with Southern Cross Goldfields Limited in 2013 and
oversaw the combined group’s recapitalisation program. He has also served on the
Boards of a number of resource public companies overseeing a variety of successful
growth and restructuring initiatives. He is currently a Director of Mayur Resources PTE
and Executive Chairman of AUSAG Resources Limited.
Mr Terranova is a member of the Australian Institute of Company Directors and the
Finance and Treasury Association of Australia.
N/A
Other current directorships:
Former directorships (last 3 years): N/A
N/A
Interests in shares:
N/A
Interests in rights:
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Directors' report
30 June 2019
Name:
Title:
Experience and expertise:
Wayne Johnson
Non-Executive Director (appointed 30 November 2018 and resigned 29 August 2019)
Wayne Johnson has over 30 years business and financial transaction experience
gained in Australia, New Zealand, Asia and America. He has extensive experience in
corporate advisory, governance and compliance as as as result of building, managing
and directing public and private companies from start-up to established public
corporations.
Other current directorships:
N/A
Former directorships (last 3 years): N/A
N/A
Special responsibilities:
N/A
Interests in shares:
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretary
Paul Davies is company secretary. Refer above for details of his qualifications and experience.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2019, and
the number of meetings attended by each director were:
Raymond Charles Mangion
Paul Davies
Samuel Duddy
Peter Hinner
Frank Terranova
Wayne Johnson
Full Board
Attended
Held
5
5
5
4
1
1
5
5
5
4
1
2
Held: represents the number of meetings held during the time the director held office.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
● Principles used to determine the nature and amount of remuneration
● Details of remuneration
● Service agreements
● Share-based compensation
● Additional information
● Additional disclosures relating to key management personnel
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Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of
reward. The Board of Directors ('the board') ensures that executive reward satisfies the following key criteria for good reward
governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The
performance of the consolidated entity depends on the quality of its directors and executives. The remuneration philosophy
is to attract, motivate and retain high performance and high quality personnel. The board have structured an executive
remuneration framework that is market competitive and complementary to the reward strategy of the consolidated entity.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it
should seek to enhance shareholders' interests by:
●
●
having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value
attracting and retaining high calibre executives
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors'
fees and payments are reviewed annually by the Board. The Board may, from time to time, receive advice from independent
remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market.
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. The most recent determination, where the shareholders approved a maximum annual aggregate remuneration of
$200,000.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits
Long-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the
Board based on individual and business unit performance, the overall performance of the consolidated entity and comparable
market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the
executive.
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Directors' report
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The short-term incentives ('STI') program is designed to align the targets of the business units with the performance hurdles
of executives. STI payments are granted to executives based on specific annual targets and key performance indicators
('KPI's') being achieved. KPI's include profit contribution, customer satisfaction, leadership contribution and product
management.
The long-term incentives ('LTI') include long service leave and share-based payments including performance rights issued
in accordance with the company's Equity Incentive Plan.
Use of remuneration consultants
During the financial year ended 30 June 2019, the consolidated entity did not engage remuneration consultants.
Voting and comments made at the company's 30 November 2018 Annual General Meeting ('AGM')
At the 30 November 2018 AGM, 58.19% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2018. The company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
2019
Raymond Charles Mangion
Samuel Duddy
Wayne Johnson
Executive Directors:
Paul Davies
Peter Hinner *
Other Key Management
Personnel:
Peter Hinner *
Cash salary
and fees
$
7,875
24,375
26,250
69,000
199,833
18,167
345,500
Cash
Super-
Non-
bonus monetary ** annuation
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Long
service
leave
$
Equity-
settled *
$
37,125
20,625
-
Total
$
45,000
45,000
26,250
30,000
26,000
99,000
225,833
50,000
163,750
68,167
509,250
-
-
-
-
-
-
-
*
Peter Hinner was appointed as a director on 31 July 2018. Fees earnt before that time has been recognised as key
management personnel remuneration.
** Peter Hinner has met the performance obligation in relation to 250,000 of the performance shares that have been issued
in relation to him. An expense has been recognised in relation to those shares.
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Directors' report
30 June 2019
2018
Raymond Charles Mangion
Nicholas Kapes
Stephen Chaplin
Frank Terranova
Executive Directors:
Paul Davies
Other Key Management
Personnel:
Peter Hinner
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Long
service
leave
$
45,000
22,500
22,500
22,500
69,000
174,567
356,067
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Equity-
settled
$
-
-
-
40,500
Total
$
45,000
22,500
22,500
63,000
-
69,000
100,000
140,500
274,567
496,567
-
-
-
-
-
-
-
*
Share based payments were issued before completion of the reverse acquisition therefore the expense is not included
in the Statement of Comprehensive Income.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Raymond Charles Mangion
Samuel Duddy
Wayne Johnson
Nicholas Kapes
Stephen Chaplin
Frank Terranova
Executive Directors:
Paul Davies
Peter Hinner
Other Key Management
Personnel:
Peter Hinner
Fixed remuneration
2018
2019
At risk - STI
At risk - LTI
2019
2018
2019
2018
100%
100%
100%
-
-
-
100%
88%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12%
-
-
-
-
-
-
-
-
-
-
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details
of these agreements are as follows:
Name:
Title:
Agreement commenced:
Details:
Name:
Title:
Agreement commenced:
Details:
Paul Davies
Executive Director and Chief Financial Officer
1 January 2017
Remuneration is set at $99,000 per annum inclusive of statutory superannuation.
Raymond Charles Mangion
Chairman
1 January 2017
Remuneration is set at $45,000 per annum inclusive of statutory superannuation.
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Directors' report
30 June 2019
Name:
Title:
Agreement commenced:
Details:
Peter Hinner
Chief Operating Officer
6 February 2017
Under the agreement Peter Hinner is entitled to $218,000 in his first year and $297,000
in his second year. He also received shares valued at $100,000.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2019.
Options
There were no options over ordinary shares issued to directors and other key management personnel as part of
compensation that were outstanding as at 30 June 2019.
There were no options over ordinary shares granted to or vested by directors and other key management personnel as part
of compensation during the year ended 30 June 2019.
Performance rights
On 5 May 2018, Frank Terranova was issued 500,000 performance rights which vest in six months from issue provided that
he is still working for the company. An expense of $40,500 has been recognised in relation to these performance rights.
When appointed Peter Hinner in February 2017, was granted 1,250,000 performance rights which vest upon delivery of
certain milestones. The performance hurdles in relation to 250,000 of these performance rights had been met at 30 June
2019.
Additional information
The earnings of the consolidated entity for the five years to 30 June 2019 are summarised below:
2019
$
2018
$
2017
$
2016
$
2015
$
Revenue
Loss after income tax
370
(2,508,162)
61
(2,965,089)
172
(1,522,205)
-
(968,925)
-
(1,606,589)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end (cents)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
2019
2018
2017
1.40
(0.43)
(0.43)
6.00
(0.84)
(0.84)
10.00
(0.51)
(0.51)
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Directors' report
30 June 2019
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key management
personnel of the consolidated entity, including their personally related parties, is set out below:
Ordinary shares
Raymond Charles Mangion
Paul Davies
Peter Hinner
Samuel Duddy
Balance at
the start of
the year
Held at
time of
appointment
Additions
In lieu
of fees and
SBP
Balance at
the end of
the year
2,644,737
500,000
1,190,883
-
4,335,620
-
-
-
29,259,105
29,259,105
1,197,443
250,000
-
100,575,377
102,022,820
10,746,781
1,384,330
827,814
1,375,000
14,333,925
14,588,961
2,134,330
2,018,697
131,209,482
149,951,470
Performance rights holding
The number of performance rights over ordinary shares in the company held during the financial year by each director and
other members of key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Performance rights over ordinary shares
Peter Hinner
Frank Terranova
Balance at
the start of
the year
1,250,000
500,000
1,750,000
Granted
Vested
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
(250,000)
-
(250,000)
(1,000,000)
(500,000)
(1,500,000)
-
-
-
Loans to key management personnel and their related parties
There were no loans transactions with key management personnel and their related entities made during the year ended 30
June 2019.
This concludes the remuneration report, which has been audited.
Shares under option
There were no unissued ordinary shares of Freehill Mining Limited under option outstanding at the date of this report.
Shares under performance rights
On 6 February 2017, the company issued 1,250,000 performance rights to Peter Hinner as part of his remuneration package.
These performance rights are in bundles of 250,000 contingent upon different performance targets being met. At 30 June
2019, the performance hurdles in relation to the first tranche of 250,000 performance rights.
No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in
any share issue of the company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of Freehill Mining Limited issued on the exercise of options during the year ended 30 June
2019 and up to the date of this report.
Shares issued on the exercise of performance rights
There were no ordinary shares of Freehill Mining Limited issued on the exercise of performance rights during the year ended
30 June 2019 and up to the date of this report.
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Directors' report
30 June 2019
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the
company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company
or any related entity.
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.
Non-audit services
The directors are of the opinion that the services as disclosed in note 18 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards.
●
Officers of the company who are former partners of RSM Australia Partners
There are no officers of the company who are former partners of RSM Australia Partners.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
Auditor
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Ray Mangion
Chairman
30 September 2019
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Chairman's letter
30 June 2019
Dear Shareholders,
As we stated in last year’s Annual Report our focus for 2019 has been on completion of our maiden drilling program and
delivery of a maiden JORC Resource Estimate.
This outcome was achieved with the announcement of our maiden JORC Resource Estimate in May of this year.
We believe the following highlights represent our progress for the year in delivering value to shareholders and provide the
foundation for developing a long term and sustainable business.
Highlights
JORC Mineral Resource Estimate for YB1 Structure totalling 18.4 million tonnes at 15.1% Fe (Inferred plus indicated) based
on exploration of 9% of Yerbas Buenas Project Area.
This is one of seven identified magnetite structures on our project area and is one of the smallest, however it is where our
trial mining occurred which provided significant data for the JORC determination.
A separate and much larger ore body, as identified by our geophysics, was drilled and is not included in our JORC estimate.
Three drill holes supported our geophysical interpretation of this ore body and one, (Hole YB016) showed 120 metres of
30% Fe including 16 metres of >61%Fe (as detailed in ASX release dated 5 March 2019).
Our existing land area covered 30% of this ore body, and the remaining 70% was on an adjoining allotment. Since June 30
the Company has worked tirelessly to procure the lease and just recently we managed to acquire the lease for the balance
of this ore body.
This is a significant milestone for the company
The YB 016 ore body will be the major focus of our next drilling program with drilling expected to be completed by year end
and results in Q1 2020. As at current date the drilling contractor has been engaged, with drilling to commence in early
October.
The Company has identified 2 potentially significant copper sulphide structures through induced polarisation and these
structures will be drilled in the forthcoming drilling program to determine their characteristics and provide the basis for future
drilling.
Since balance date the Company has undertaken a share Placement with commitments of $2.6 million to support the
second drilling program.
We are grateful for the support for the Company.
Looking Forward
The Company believes that the second drilling program will provide the basis for a prefeasibility study (PFS) for the
establishment of a purpose built plant for an initial production of one million tonnes per annum growing to 2+ million tonnes
over a 3-4 year period.
The focus for the coming year will be completion of the drilling program and delivery of a prefeasibility Study.
Through its Trial Mining operations the Company established that we had a saleable product with a ready local customer
which provides us with confidence in our planned development of our magnetite resource.
Given the location of our operations there are little or no external infrastructure burdens on the Company and close proximity
to both a major customer and ports.
While we are excited about the potential of the copper and gold indications from the induced polarisation surveys we are
committed to the development of our magnetite resource and the near term establishment of a significant iron ore business.
Results from our second drilling program will lead us into our go forward position in relation to copper gold in the context of
delivering most value to shareholders.
12
For personal use only Freehill Mining Limited
Chairman's letter
30 June 2019
We look forward to coming year with confidence and excitement and thank our shareholders for their ongoing support during
the year.
We firmly believe that the events planned for the next 3 – 6 months will deliver value for shareholders and produce a better
reflection of company value in the share price.
Ray Mangion
Non-Executive Chairman
13
For personal use only RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Freehill Mining Limited for the year ended 30 June 2019, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
P A RANSOM
Partner
Dated: 30 September 2019
Melbourne, VIC
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
14
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only Freehill Mining Limited
Contents
30 June 2019
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members of Freehill Mining Limited
Shareholder information
General information
16
17
18
19
20
42
43
46
The financial statements cover Freehill Mining Limited as a consolidated entity consisting of Freehill Mining Limited and the
entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is
Freehill Mining Limited's functional and presentation currency.
Freehill Mining Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Level 24, 570 Bourke St,
Melbourne, Victoria,
Australia, 3000
A description of the nature of the consolidated entity's operations and its principal activities are included in the directors'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 30 September 2019. The
directors have the power to amend and reissue the financial statements.
15
For personal use only Freehill Mining Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
Revenue
Interest revenue calculated using the effective interest method
Other revenue
Expenses
Corporate and administration expenses
Other expenses
Finance costs
Loss before income tax expense
Consolidated
Note
2019
$
2018
$
111
259
44
17
(1,649,182)
(141,005)
(718,345)
(1,421,763)
(87,843)
(1,455,513)
(2,508,162)
(2,965,058)
Income tax expense
4
-
-
Loss after income tax expense for the year attributable to the owners of
Freehill Mining Limited
(2,508,162)
(2,965,058)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of Freehill
Mining Limited
Basic earnings per share
Diluted earnings per share
129,300
935,388
129,300
935,388
(2,378,862)
(2,029,670)
Cents
Cents
26
26
(0.43)
(0.43)
(0.84)
(0.84)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
16
For personal use only Freehill Mining Limited
Statement of financial position
As at 30 June 2019
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other
Total current assets
Non-current assets
Receivables
Property, plant and equipment
Exploration and evaluation asset
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Other
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
Note
2019
$
2018
$
5
6
7
8
9
10
11
12
62,480
962,736
41,326
1,066,542
165,846
999,015
1,481
1,166,342
464,804
13,282
14,025,904
14,503,990
-
-
12,666,803
12,666,803
15,570,532
13,833,145
2,168,786
2,068,899
-
4,237,685
2,534,980
2,690,072
250,000
5,475,052
-
70,000
70,000
1,847,500
-
1,847,500
4,307,685
7,322,552
11,262,847
6,510,593
13
14
20,106,620
1,022,709
(9,866,482)
12,912,366
956,547
(7,358,320)
11,262,847
6,510,593
The above statement of financial position should be read in conjunction with the accompanying notes
17
For personal use only Freehill Mining Limited
Statement of changes in equity
For the year ended 30 June 2019
Consolidated
Balance at 1 July 2017
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 13)
Share-based payments
Equity portion of convertible notes
Issued
capital
$
Reserves Accumulated
$
losses
$
Total equity
$
10,280,380
(125,353)
(4,393,262)
5,761,765
-
-
-
-
935,388
(2,965,058)
-
(2,965,058)
935,388
935,388
(2,965,058)
(2,029,670)
2,631,986
-
-
-
40,500
106,012
-
-
-
2,631,986
40,500
106,012
Balance at 30 June 2018
12,912,366
956,547
(7,358,320)
6,510,593
Consolidated
Balance at 1 July 2018
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 13)
Share-based payments
Transfers upon conversion of notes
Issued
capital
$
Reserves Accumulated
$
losses
$
Total equity
$
12,912,366
956,547
(7,358,320)
6,510,593
-
-
-
-
129,300
(2,508,162)
-
(2,508,162)
129,300
129,300
(2,508,162)
(2,378,862)
7,105,116
-
89,138
-
26,000
(89,138)
-
-
-
7,105,116
26,000
-
Balance at 30 June 2019
20,106,620
1,022,709
(9,866,482)
11,262,847
The above statement of changes in equity should be read in conjunction with the accompanying notes
18
For personal use only Freehill Mining Limited
Statement of cash flows
For the year ended 30 June 2019
Cash flows from operating activities
Payments to suppliers and employees (inclusive of GST)
Interest received
Other revenue
Interest and other finance costs paid
Consolidated
Note
2019
$
2018
$
(823,694)
111
259
(319,061)
(940,338)
61
-
(284,938)
Net cash used in operating activities
25
(1,142,385)
(1,225,215)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for exploration and evaluation
Pre full scale receipts offset against mine assets
Amounts advanced to related party
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds received ahead of the issue of shares
Proceeds from borrowings
Proceeds from convertible notes
Share issue transaction costs
Repayment of borrowings
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
(16,029)
(1,215,139)
-
(912,091)
-
(5,567,826)
1,706,610
-
21
(2,143,259)
(3,861,216)
1,593,467
-
1,275,841
1,200,000
(182,238)
(704,792)
336,000
250,000
660,271
4,192,490
(12,168)
(215,000)
3,182,278
5,211,593
(103,366)
165,846
125,162
40,684
Cash and cash equivalents at the end of the financial year
5
62,480
165,846
The above statement of cash flows should be read in conjunction with the accompanying notes
19
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted for
the year ended 30 June 2019.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the consolidated entity.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 9 Financial Instruments
The consolidated entity has adopted AASB 9 from 1 July 2018. The standard introduced new classification and measurement
models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose
objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal
and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a
business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified
dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets
are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial
recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration
recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset
may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an
accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion
of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an
accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting
treatment with the risk management activities of the entity. New impairment requirements use an 'expected credit loss' ('ECL')
model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial
instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For
receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.
The adoption of this standard has not had a material impact on the financial statements.
AASB 15 Revenue from Contracts with Customers
The consolidated entity's does not derive any revenue from contracts with customers and therefore its adoption has not had
any impact on the consolidated entity' reported financial performance or position.
Going concern
These financial statements have been prepared on a going concern basis, which contemplates the continuity of normal
business activities and the realisation of assets and discharge of liabilities in the normal course of business.
As disclosed in the financial statements, the consolidated entity incurred a loss of $2,508,162 and had operating cash
outflows of $1,142,385. As at that date, the consolidated entity's current liabilities exceed current assets by $3,171,143.
These events and conditions indicate a material uncertainty which may cast significant doubt as to whether the consolidated
entity will continue as a going concern and therefore whether it will realise assets and discharge liabilities in the normal
course of business and at the amounts shown in the financial report.
20
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
The directors have assessed that there are reasonable grounds to believe the consolidated entity will be able to continue
as a going concern due to the following factors:
● On 30 August 2019, the company announced that it has received commitments from sophisticated and professional
investors for a placement of share raising a total of $2,600,000. The company will issue 236,363,637 fully paid ordinary
shares at $0.011 (1.1 cents), plus one free attaching option for every two shares placed, exercisable at $0.025 (2.5
cents) and expiring two year from date of issue. The placement is subject to approval of the company's shareholders
expected to be held in October 2019. At the time of signing the company had received $1,036,000 of these funds;
● On 17 September 2019, convertible debt amounting to $459,519 were extended to 31 May 2021; and
●
The directors are confident, particularly given recent successful equity raisings, the company will be able to access
equity capital markets for additional working capital requirements when required.
Accordingly, the directors believe consolidated entity will be able to continue as a going concern and that it is appropriate to
adopt the going concern basis in the preparation of the financial report.
The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities
that might be necessary should the consolidated entity not continue as a going concern.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other
comprehensive income, investment properties, certain classes of property, plant and equipment and derivative financial
instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 22.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Freehill Mining Limited
('company' or 'parent entity') as at 30 June 2019 and the results of all subsidiaries for the year then ended. Freehill Mining
Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
21
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained
together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Freehill Mining Limited's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
The consolidated entity recognises revenue as follows:
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when the performance obligations are met and the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
● When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
22
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within
12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used
to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle;
it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30
days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days
overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at
either amortised cost or fair value depending on their classification. Classification is determined based on both the business
model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an
accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset, it's carrying value is written off.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are carried at amortised cost using the effective interest rate method. Gains and losses are recognised
in profit or loss when the asset is derecognised or impaired.
23
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured
at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon
the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk
has increased significantly since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit
loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a
default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is
determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit
losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within
other comprehensive income (as at 30 June 2019 and 30 June 2018, the Group held no financial assets measured at fair
value through other comprehensive income). In all other cases, the loss allowance is recognised in profit or loss.
Exploration and evaluation assets
Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current is carried
forward as an asset in the statement of financial position where it is expected that the expenditure will be recovered through
the successful development and exploitation of an area of interest, or by its sale; or exploration activities are continuing in
an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of
economically recoverable reserves. Where a project or an area of interest has been abandoned, the expenditure incurred
thereon is written off in the year in which the decision is made.
Pre-production mine sales are off-set against the carrying value of the exploration assets.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the
loans or borrowings are classified as non-current.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement
of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an
equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis until
extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance
cost. The remainder of the proceeds are allocated to the conversion option that is recognised and included in shareholders
equity as a convertible note reserve, net of transaction costs. The carrying amount of the conversion option is not remeasured
in the subsequent years. The corresponding interest on convertible notes is expensed to profit or loss.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
24
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past
event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.
If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The
increase in the provision resulting from the passage of time is recognised as a finance cost.
Employee benefits
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine
whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of
any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
25
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Freehill Mining Limited, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2019. The consolidated
entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the
consolidated entity, are set out below.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB
117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions,
a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable
future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and
leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists
whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability
corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received,
initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating
lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and
an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the
expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117.
However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating
expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the
statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either
operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor
accounts for leases. The consolidated entity will adopt this standard from 1 July 2019 and the impact of its adoption is not
expected to be material.
26
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets are not being recognised at 30 June 2019, because their realisation is not yet considered probable.
Exploration and evaluation costs
Exploration and evaluation costs have been capitalised on the basis that the consolidated entity will commence commercial
production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources.
Key judgements are applied in considering costs to be capitalised which includes determining expenditures directly related
to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only
capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest.
Factors that could impact the future commercial production at the mine include the level of reserves and resources, future
technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices. To the
extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which
this determination is made.
Note 3. Operating segments
Identification of reportable operating segments
The consolidated entity is organised into one operating segment: Chilean Mining. This operating segment is based on the
internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision
Makers ('CODM')) in assessing performance and in determining the allocation of resources.
Note 4. Income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 27.5%
Non-deductible expenses
Temporary differences and losses not bought to account
Income tax expense
Consolidated
2019
$
2018
$
(2,508,162)
(2,965,058)
(689,745)
(815,391)
150,586
539,159
-
815,391
-
-
27
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 4. Income tax expense (continued)
Australian tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 27.5%
Consolidated
2019
$
2018
$
6,064,426
4,225,795
1,667,717
1,162,094
In addition to the above Australian tax losses the consolidated entity has unused losses of 1,720,208,482 (AUD 3,612,438)
Chilean pesos which amount to an recognised benefit of 466,456,290 Chilean pesos (AUD 975,358). The corporate tax rate
in Chile is 27%.
The above potential tax benefit for unused tax losses has not been recognised in the statement of financial position. These
unused tax losses are available for used against future taxable income.
Note 5. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Note 6. Current assets - trade and other receivables
Trade receivables
Other receivables
Receivable from Lacerta Finance & Mining SpA
Indirect taxes receivable
Consolidated
2019
$
2018
$
10
62,470
10
165,836
62,480
165,846
Consolidated
2019
$
2018
$
-
18,656
912,091
31,989
189,280
148,180
-
661,555
962,736
999,015
On 2 September 2019, the company announced that it had completed the acquisition of an 80 hectare tenement known as
Arenas XI 1/20, located directly to the south of the Yerbas Buenas project area. This receivable will form part of the
consideration for this tenement acquisition (refer to Note 24).
28
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 7. Non-current assets - receivables
Indirect taxes receivable
Consolidated
2019
$
2018
$
464,804
-
On 2 September 2019, the company announced that it had completed the acquisition of an 80 hectare tenement known as
Arenas XI 1/20, located directly to the south of the Yerbas Buenas project area. This receivable will form the consideration
for this tenement acquisition.
Note 8. Non-current assets - exploration and evaluation asset
Exploration and evaluation - at cost
Consolidated
2019
$
2018
$
14,025,904
12,666,803
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2017
Additions
Exchange differences
Mining receipts offset against the carrying value of the assets
Balance at 30 June 2018
Additions
Exchange differences
Balance at 30 June 2019
Note 9. Current liabilities - trade and other payables
Trade payables
Purchase agreement payable
Interest payable
Other payables
Refer to note 16 for further information on financial instruments.
29
Exploration &
evaluation
$
7,171,299
6,913,307
478,087
(1,895,890)
12,666,803
1,237,305
121,796
14,025,904
Consolidated
2019
$
2018
$
1,609,454
-
217,282
342,050
1,696,148
219,250
455,914
163,668
2,168,786
2,534,980
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 10. Current liabilities - borrowings
Convertible notes payable
Short term loans
Consolidated
2019
$
2018
$
1,006,101
1,062,798
1,965,150
724,922
2,068,899
2,690,072
Refer to note 16 for further information on financial instruments.
Convertible notes includes notes with a value of $132,525 have an interest rate of 12.5% and expire in December
2019. Shares will be issued at a price equal to 85% of the 85% of the volume weighted average share price during the seven
days on which trades were recorded prior to conversion, provided such price is not less than $0.015.
Convertible notes payable includes notes with a value of $459,519 with a variable conversion price and interest rate of 20%
per month compounding, which expire in August 2019. These were extended to 31 May 2021 on 17 September 2019 (refer
to Note 24).
Convertible notes payable, also, includes $302,840 with a variable conversion price, an interest rate of $12.5% and which
expire in December 2019. These notes are denominated in USD.
The short term loans are repayable at 12 months from the date of issue and interest has been accrued at 15% per annum.
Note 11. Current liabilities - other
Funds received in advance of issuing shares
Note 12. Non-current liabilities - borrowings
Convertible notes payable
Refer to note 16 for further information on financial instruments.
Consolidated
2019
$
2018
$
-
250,000
Consolidated
2019
$
2018
$
-
1,847,500
Convertible notes in the prior year included $487,500 of notes which have a conversion price of $.048, an interest rate of
12.5% and expire in March 2020.
Convertible notes in the prior year included also includes notes with a value of $1,360,000 with a variable conversion price
an interest rate of 3% per month compounding, which expire in August 2019.
30
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 12. Non-current liabilities - borrowings (continued)
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Convertible notes
Assets pledged as security
The carrying amounts of assets pledged as security for current and non-current borrowings are:
Exploration and evaluation assets
Note 13. Equity - issued capital
Consolidated
2019
$
2018
$
930,884
3,812,650
Consolidated
2019
$
2018
$
14,230,011
12,447,465
Ordinary shares - fully paid
816,273,950
365,201,691
20,106,620
12,912,366
Consolidated
2019
Shares
2018
Shares
2019
$
2018
$
31
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 13. Equity - issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Shares issued to KMP
Shares issued
Share issued to extinguish short term debt
Shares issued to pay trade creditors
Loan establishment fee paid with shares
Conversion of convertible notes
Conversion of convertible notes
Shares issued to KMP
Conversion of convertible notes
Conversion of convertible notes
Shares issued to KMP to pay fees and expenses
Conversion of convertible notes
Conversion of convertible notes
Cost of capital raising
Balance
Shares issued to settle borrowings
Shares issued in relation to funds received before 30
June 2018
Sharres issued to CEO
Shares issued to settle borrowings
Shares issued to settle borrowings
Shares issued to settle borrowings and trade and
other payables
Issue of shares
Shares issued to settle borrowings and trade and
other payables
Shares issued to settle borrowings
Issue of shares
Issue of shares
Shares issued to settle borrowings
Shares issued to settle borrowings
Issue of shares
Shares issued to settle borrowings
Shares issued to settle borrowings
Shares issued to settle borrowings
Shares issued to settle borrowings and trade and
other payables
Issue of shares
Shares issued to settle borrowings
Shares issued to trade and other payables
Shares issued to settle borrowings
Transfers from reserves upon conversion of notes
Fair value adjustment on conversion of notes
Less cost of capital raising
1 July 2017
7 August 2017
12 September 2017
12 September 2017
8 November 2017
19 December 2017
21 December 2017
4 January 2018
7 February 2018
8 February 2018
16 February 2018
5 March 2018
14 March 2018
13 April 2018
30 June 2018
6 July 2018
6 July 2018
6 July 2018
13 July 2018
8 October 2018
29 November 2018
6 December 2018
14 December 2018
24 December 2018
24 December 2018
31 December 2018
31 December 2018
7 January 2019
28 February 2019
28 February 2019
4 March 2019
6 March 2019
8 March 2019
12 March 2019
12 March 2019
16 April 2019
17 May 2019
331,786,900
548,705
4,200,000
12,843,068
825,000
7,475,000
193,019
643,178
642,178
970,855
1,208,484
1,523,684
1,097,542
1,244,078
-
365,201,691
31,729,019
5,208,333
827,814
353,847
3,087,509
19,041,952
53,031,164
22,096,820
37,425,076
28,333,331
13,333,334
65,386,693
3,511,772
3,200,000
7,146,978
3,967,476
18,181,731
96,287,770
8,333,334
19,093,800
6,000,000
5,494,506
-
-
-
$0.0910
$0.0800
$0.0800
$0.0800
$0.0800
$0.0760
$0.0770
$0.0780
$0.0650
$0.0650
$0.0950
$0.0720
$0.0700
$0.0000
$0.0480
$0.0480
$0.0640
$0.0180
$0.0180
$0.0150
$0.0150
$0.0153
$0.0150
$0.0150
$0.0150
$0.0150
$0.0174
$0.0150
$0.0120
$0.0120
$0.0113
$0.0123
$0.0150
$0.0135
$0.0150
$0.0137
$0.0000
$0.0000
$0.0000
10,280,380
50,000
336,000
1,027,446
66,000
598,000
14,669
49,525
50,000
63,106
78,551
144,749
79,023
87,085
(12,168)
12,912,366
1,522,993
250,000
50,000
16,985
55,575
285,269
795,467
338,887
561,376
425,000
200,000
980,800
61,029
48,000
86,062
47,610
206,181
1,184,634
125,000
257,890
90,000
75,000
89,138
(286,767)
(271,875)
Balance
30 June 2019
816,273,950
20,106,620
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company
does not have a limited amount of authorised capital.
32
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 13. Equity - issued capital (continued)
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as
value adding relative to the current company's share price at the time of the investment. The consolidated entity is not actively
pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to
maximise synergies.
The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all
capital risk management decisions. There have been no events of default on the financing arrangements during the financial
year.
The capital risk management policy remains unchanged from the 30 June 2018 Annual Report.
Note 14. Equity - reserves
Foreign currency reserve
Share-based payments reserve
Convertible notes reserve
Consolidated
2019
$
2018
$
939,335
66,500
16,874
810,035
40,500
106,012
1,022,709
956,547
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Convertible note reserve
The reserve is used to recognise the value of the equity portion of convertible notes.
33
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 14. Equity - reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Foreign currency translation
Movement in convertible notes
Share based payments
Balance at 30 June 2018
Foreign currency translation
Share based payments
Transfers to issued capital upon conversion of notes
Convertible Share based
notes
$
payments
$
Foreign
currency
$
-
-
106,012
-
106,012
-
-
(89,138)
-
-
-
40,500
40,500
-
26,000
-
(125,353)
935,388
-
-
810,035
129,300
-
-
Balance at 30 June 2019
16,874
66,500
939,335
Note 15. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 16. Financial instruments
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price
risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of
the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is
exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks,
ageing analysis for credit risk.
Risk management is carried out by the Board of Directors ('the Board'). These policies include identification and analysis of
the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits. The Board identifies,
evaluates and hedges financial risks within the consolidated entity's operating units.
Market risk
Foreign currency risk
The consolidated entity is exposed to foreign exchange risk in relation to its operation in Chile, and liabilities denominated in
US dollars.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
34
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 16. Financial instruments (continued)
The net carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at
the reporting date were as follows:
Consolidated
US dollars
Chilean pesos
Assets
Liabilities
2019
$
2018
$
2019
$
2018
$
-
1,397,261
-
896,646
371,132
1,180,995
729,674
1,590,378
1,397,261
896,646
1,552,127
2,320,052
Consolidated - 2019
% change
AUD strengthened
Effect on
profit before
tax
Effect on
equity
% change
AUD weakened
Effect on
profit before
tax
Effect on
equity
US Dollar
Chilean pesos
20%
20%
74,226
-
74,226
(42,253)
20%
20%
(74,226)
-
(74,226)
(43,253)
Consolidated - 2018
% change
74,226
31,973
(74,226)
(117,479)
AUD strengthened
Effect on
profit before
tax
Effect on
equity
% change
AUD weakened
Effect on
profit before
tax
Effect on
equity
US Dollar
Chilean pesos
20%
20%
145,934
-
145,934
138,746
20%
20%
(145,934)
-
(145,934)
(138,746)
145,934
284,680
(145,934)
(284,680)
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
The consolidated entity is not exposed to any interest rate risk.
Credit risk
The consolidated entity is not exposed to significant credit risk.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
35
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 16. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 2019
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing - fixed rate
Convertible notes payable
Short term loans
Total non-derivatives
Consolidated - 2018
Non-derivatives
Non-interest bearing
Trade and other payables
Interest-bearing - fixed rate
Convertible notes
Short term loans
Total non-derivatives
Weighted
average
interest rate 1 year or less
%
$
Between 1
and 2 years
$
Between 2
and 5 years Over 5 years
$
$
-
2,168,786
16.49%
15.00%
1,006,101
1,062,798
4,237,685
Weighted
average
interest rate 1 year or less
%
$
-
-
-
-
-
-
-
-
-
-
-
-
Between 1
and 2 years
$
Between 2
and 5 years Over 5 years
$
$
Remaining
contractual
maturities
$
2,168,786
1,006,101
1,062,798
4,237,685
Remaining
contractual
maturities
$
-
2,534,980
-
21.05%
15.00%
1,965,150
724,922
5,225,052
1,847,500
-
1,847,500
-
-
-
-
-
-
-
-
2,534,980
3,812,650
724,922
7,072,552
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 17. Key management personnel disclosures
Directors
The following persons were directors of Freehill Mining Limited during the financial year:
Raymond Charles Mangion
Paul Davies
Samuel Duddy
Wayne Johnson
Peter Hinner
Other key management personnel
The following person also had the authority and responsibility for planning, directing and controlling the major activities of the
consolidated entity, directly or indirectly, during the financial year:
Peter Hinner
36
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 17. Key management personnel disclosures (continued)
Peter Hinner was appointed a director of the company on 31 July 2018. He acted was key management personnel before
that date.
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity
is set out below:
Short-term employee benefits
Share-based payments
Note 18. Remuneration of auditors
Consolidated
2019
$
2018
$
345,500
163,750
356,067
140,500
509,250
496,567
During the financial year the following fees were paid or payable for services provided by RSM Australia Partners, the auditor
of the company, and its network firms:
Audit services - RSM Australia Partners
Audit or review of the financial statements
Other services - RSM Australia Partners
Taxation services
Other services - network firms
Audit of Chilean subsidiaries
Note 19. Contingent liabilities
Consolidated
2019
$
2018
$
80,920
63,290
10,500
9,300
91,420
72,590
32,625
20,820
During the year, legal claims were lodged in Chile by two separate former suppliers against Yerbas Buenas SpA (YB), a fully
owned subsidiary of the company. The claims are in relation to alleged breaches of contracts by YB.
In addition, YB has been joined in three labour related legal claims, in relation to alleged wrongful dismissal by Lacerta
Finance & Mining SpA (Lacerta) which resulted from the period where Lacerta was leasing the mining operations.
The above matters are in the early stages of assessment however, in consideration of advice from the Company’s legal
advisers in Chile, the directors believe that these matters will be resolved with minimal impact on the group position.
The consolidated entity had no other contingent liabilities at 30 June 2019 and 30 June 2018.
Note 20. Commitments
The consolidated entity had no commitments at 30 June 2019 and 30 June 2018.
37
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 21. Related party transactions
Parent entity
Freehill Mining Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 23.
Key management personnel
Disclosures relating to key management personnel are set out in note 17 and the remuneration report included in the
directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2019
$
2018
$
Payment for other expenses:
Interest paid and accrued on short terms loans payable to Ray Mangion and his wife
24,000
27,963
Other transactions:
Payments for mining development expenditure were made to mine project contractor Lacerta
Finance and Mining SpA ("Lacerta"). Yerbas Buenas SpA director Juan Dagach, is the
general manager of Lacerta.
Amounts advanced to Lacerta Finance and Mining SpA ("Lacerta"). Juan Dagach was a
director of Yerbas Buenas SpA until February 2019 and was also the general manager of
Lacerta.
-
3,902,610
912,091
-
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Consolidated
2019
$
2018
$
Current payables:
Trade payables to Electrum Pty Ltd - an entity related to Peter Hinner
Trade payables and accrued expenses to directors in relation to unpaid fees and expenses
256,682
116,886
170,924
77,389
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Current borrowings:
Loan from Ray Mangion (director) and his wife
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Consolidated
2019
$
2018
$
495,519
195,000
38
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 22. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Convertible notes reserve
Accumulated losses
Total equity
Parent
2019
$
2018
$
(2,110,718)
(2,660,621)
(2,110,718)
(2,660,621)
Parent
2019
$
2018
$
122,810
149,284
12,654,915
10,310,001
3,056,689
3,884,673
3,056,689
5,732,173
33,362,565
66,500
1,024,166
(24,855,005)
26,168,311
40,500
1,113,304
(22,744,287)
9,598,226
4,577,828
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2019 and 30 June 2018.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2019 and 30 June 2018.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except
for the following:
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
39
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 23. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 1:
Name
Freehill Investments Pty Ltd
Yerbas Buenas SpA
San Patricio Mineria SpA
Note 24. Events after the reporting period
Principal place of business /
Country of incorporation
Australia
Chile
Chile
Ownership interest
2018
2019
%
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
On 30 August 2019, the company announced that it has received commitments from sophisticated and professional investors
for a placement of shares raising a total of $2,600,000. The company will issue 236,363,637 fully paid ordinary shares at
$0.011 (1.1 cents), plus one free attaching option for every share placed exercisable at $0.025 (2.5 cents) expiring two years
from date of issue.
The placement is subject to approval of the company's shareholders expected to be held in October 2019.
At the time of signing the company had received $1,036,000 of these funds.
On 2 September 2019, the company announced that it had completed the acquisition of an 80 hectare tenement known as
Arenas XI 1/20, located directly to the south of the Yerbas Buenas project area. The tenement acquisition was settled by
means of exchanging the receivable from Lacerta amounting to AUD912,091 (refer to Note 6) and a payment of CLP100,000
(AUD210).
On 17 September 2019, convertible debt amounting to $459,519 were extended to 31 May 2021.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
Note 25. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
(2,508,162)
(2,965,058)
Consolidated
2019
$
2018
$
Adjustments for:
Depreciation and amortisation
Share-based payments
Foreign exchange differences
Accrued finance costs and finance costs settled via issue of shares
Operating expenses settled via the issue of shares
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in other operating assets
Increase in trade and other payables
Net cash used in operating activities
40
2,747
26,000
102,320
399,284
463,926
30,730
40,500
-
1,170,575
310,749
129,524
(39,845)
281,821
(29,198)
9,738
206,749
(1,142,385)
(1,225,215)
For personal use only Freehill Mining Limited
Notes to the financial statements
30 June 2019
Note 26. Earnings per share
Consolidated
2019
$
2018
$
Loss after income tax attributable to the owners of Freehill Mining Limited
(2,508,162)
(2,965,058)
Weighted average number of ordinary shares used in calculating basic earnings per share
583,292,191
352,912,562
Weighted average number of ordinary shares used in calculating diluted earnings per share
583,292,191
352,912,562
Number
Number
Basic earnings per share
Diluted earnings per share
Cents
Cents
(0.43)
(0.43)
(0.84)
(0.84)
41
For personal use only Freehill Mining Limited
Directors' declaration
30 June 2019
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at
30 June 2019 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Ray Mangion
Chairman
30 September 2019
42
For personal use only RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
To the Members of Freehill Mining Limited
Opinion
We have audited the financial report of Freehill Mining Limited (the Company) and its controlled entities (the
consolidated entity), which comprises the statement of financial position as at 30 June 2019, the statement of
profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash
flows for the year then ended, and notes to the financial statements, including a summary of significant accounting
policies, and the directors' declaration.
In our opinion the accompanying financial report of the consolidated entity is in accordance with the Corporations
Act 2001, including:
(i) giving a true and fair view of the consolidated entity's financial position as at 30 June 2019 and of its
financial performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under 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 consolidated entity in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and
Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
43
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network
is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the consolidated entity incurred a net loss
of $2,508,162 and had net cash outflows from operating activities amounting to $1,142,385 during the year ended
30 June 2019. In addition, as at 30 June 2019, the consolidated entity’s current liabilities exceeded its current
assets by $3,171,143. As stated in Note 1, these events and conditions, along with other matters as set forth in
Note 1, indicate that a material uncertainty exists that may cast significant doubt on the consolidated entity’s ability
to continue as a going concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have
determined the matters described below to be the key audit matters to be communicated in our report
Key Audit Matter
Carrying value of Exploration & Evaluation assets
Refer to Note 9 in the consolidated financial statements
The consolidated entity has capitalised exploration
expenditure, in relation to the Yerbas Buenas project,
with a carrying value of $14.2m, which represented 90%
of the total assets of the consolidated entity as at 30
June 2019. We determined this to be a key audit matter
due to the significant management judgment involved in
assessing the carrying value in accordance with AASB
6 Exploration for and Evaluation of Mineral Resources,
including:
Determination of whether expenditure can be
associated with finding specific mineral resources;
Assessing whether any indicators of impairment
are present; and
Determination of whether exploration activities
have progressed to the stage at which the
existence of an economically recoverable mineral
reserve may be determined.
Other Information
How our audit addressed this matter
Our audit procedures in relation to the carrying value
of Exploration and Evaluation assets included:
Reviewing a sample of costs
that were
capitalised to determine whether the costs were
appropriate to capitalise in accordance with
the
Australian Accounting Standards and
consolidated entity’s accounting policy;
Critically
assessing
evaluating
management’s assessment that no indicators of
impairment existed; and
and
documentation,
Discussions with management, and a review of
the Group’s ASX announcements and other
assess
relevant
management’s determination that exploration
activities have not yet progressed to the point
where
the existence or otherwise of an
economically recoverable mineral resource may
be determined.
to
The directors are responsible for the other information. The other information comprises the information included
in the consolidated entity's annual report for the year ended 30 June 2019 but does not include the financial report
and the auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
44
For personal use only Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the consolidated entity
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 consolidated entity 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: www.auasb.gov.au/auditors_responsibilities/ar1.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 the directors' report for the year ended 30 June 2019.
In our opinion, the Remuneration Report of Freehill Mining Limited for the year ended 30 June 2019, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
P A RANSOM
Partner
Dated: 30 September 2019
Melbourne, Victoria
45
For personal use only Freehill Mining Limited
Shareholder information
30 June 2019
The shareholder information set out below was applicable as at 17 September 2019.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
DUDDY INVESTMENT PTY LTD (DUDDY INVESTMENT A/C)
PINNACLE EQUITIES PTY LTD
DG FREEHOLD PTY LTD (DG FREEHOLD A/C)
MR LEO ILIAS RADIOTIS (L A RADIOTIS FAMILY A/C)
MR RINO DI GIANTOMASSO
PAW SUPER PTY LTD (PAW SUPER FUND A/C)
MR SAMUEL WILLIAM DUDDY
R & A MANGION PTY LTD (STEGMAN SMSF A/C)
BNP PARIBAS NOMINEES PTY LTD (IB AU NOMS RETAILCLIENT DRP)
CAM NOMINEES PTY LTD (CAM NOMINEES SUPER FUND A/C)
AKM MARLBOROUGH PTY LTD (M & M VINACCIA FAMILY A/C)
LILLYPILLY INVESTMENTS-PINKENBA PTY LTD
RMVIC PTY LTD (RMVIC S/F A/C)
NAFRA PTY LTD
S W DUDDY INVESTMENTS PTY LTD
MR JAG ZENON MAXWELL (ZENON FAMILY A/C)
HRM PARTNERS PTY LTD (L&P SUPERFUND A/C)
MS IDA BEATRICE DWYER
AEGIS INVESTMENT CAPITAL PTY LTD
SEMZJ INVESTMENTS PTY LTD (HALLELUYAH INVESTMENT A/C)
Number
of holders
of ordinary
shares
Number
of
ordinary
shares
788
88
161
274
430
113,355
219,129
1,562,948
13,104,967
801,273,551
1,741
816,273,950
1,171
5,073,613
Ordinary shares
Number held
% of total
shares
issued
86,637,404
85,925,000
82,271,820
25,910,794
21,780,924
20,900,299
20,213,500
19,108,305
17,335,458
16,954,764
15,327,543
15,000,000
14,632,000
13,333,333
10,395,078
8,031,842
8,000,465
6,666,666
6,124,225
5,992,285
500,541,705
10.61
10.53
10.08
3.17
2.67
2.56
2.48
2.34
2.12
2.08
1.88
1.84
1.79
1.63
1.27
0.98
0.98
0.82
0.75
0.73
61.31
46
For personal use only Freehill Mining Limited
Shareholder information
30 June 2019
Substantial holders
Substantial holders in the company are set out below:
SAMUEL DUDDY
PINNACLE EQUITIES PTY LTD
DG FREEHOLD PTY LTD (DG FREEHOLD A/C)
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Number held
131,859,482
85,925,000
82,271,820
% of total
shares
issued
16.15
10.53
10.08
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of ordinary securities.
47
For personal use only