Freehill Mining Limited
ACN 091 608 025
Annual Report - 30 June 2023
Freehill Mining Limited
Corporate directory
30 June 2023
Directors
Paul Davies
Benjamin Jarvis
Peter Williams
Company secretary
Joe Fekete
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
Connect National Audit Pty Ltd
Level 14/333 Collins St
MELBOURNE VIC 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
1
Freehill Mining Limited
Chairman's letter
30 June 2023
Dear shareholders, I am pleased to present this Annual Report for the 2023 financial year. While FY23 marked a
challenging period for Freehill on several fronts, I am confident that the decisive steps taken by the Board and management
team over the last six months have positioned the Company with a strong foundation for growth heading into FY24 and
beyond.
As previously advised, shares in Freehill were suspended from trading on the ASX during the year following a series of
operational challenges at the Company’s 100%-owned Yerbas Buenas (‘YB’) magnetite mine in Chile. Those challenges
aside, the YB mine still maintains a number of unique commercial attributes that can be leveraged to generate stable and
consistent revenues and net earnings. My assessment of these attributes subsequently informed my decision to join the
Freehill Board as Chairman in April 2023, alongside Peter Williams who was appointed as a non-executive Director in May
2023. Since then, our focus has been to work with Managing Director Paul Davies to restructure and stabilise operations at
YB and position the business to capitalise on an emerging new growth channel in the Chilean market.
This opportunity for Freehill has been underpinned by a key regulatory change in Chile, where environmental laws now
stipulate cement industry feedstock can no longer be sourced from dry riverbeds. Historically this been a source of 95% of
material used by cement companies. Based on Freehill’s production activities over the past six years, YB has generated a
waste stockpile of some 700,000 cubic metres which, after testing, is proving to be an acceptable alternative source of
materials to the cement industry. As a direct beneficiary of this regulatory change, Freehill can rapidly establish itself as a
key participant in the Chilean waste materials market. Reflective of the group’s progress in this regard, Freehill has
recognised ongoing sales in the September 2023 quarter and is in advanced discussions with a pipeline of large customers.
In turn, Freehill has an asset in YB that has the capacity to deliver near-term cash generation and acceptable margins from
a fairly straightforward processing operation. In the current market environment, where a lot of junior resources companies
are struggling to attract capital, this gives the Company an ability to generate immediate cashflows by providing a valuable
product to the Chilean cement and construction industries, with modest handling and processing costs. Complementing
these developments, the Board has made a concerted effort to increase oversight of operational control procedures and on-
site staff management. Today, the daily supply of waste materials from YB is being capably managed by an experienced
contractor who is systematically improving operations and leveraging the inherent strengths of the business to maximise
margins. My favourable views on the Company’s new contractor were reinforced by a site visit at YB in June 2023 which
gave me confidence that Freehill now has a capable on-site team with the capacity to advance the project.
First purchase orders have been received from a local cement plant operated by Melón, one of Chile’s largest cement
companies. Freehill is also in dialogue with two more cement companies, construction companies and other groups
interested in securing product from YB. Broadly, the level of interest is most encouraging. The regulatory changes in Chile
have made waste materials a sought-after commodity in Chile which in turn has given rise to an uplift in prices per cubic
metre. To meet demand, the group’s aim is to expand waste material production at YB and facilitate sales of 10-12,000
cubic metres of material per month by the end of this calendar year.
In turn, Freehill’s Board is confident this will underpin the group’s broader strategy; to recommence magnetite mining
operations with project funding from the cash flows generated by a profitable waste materials business. With operations now
stabilised, the Board has more recently focused its efforts on strengthening the Freehill balance sheet to fund this next
phase of growth. In that respect, the Company is fortunate to have had the support of both long-term shareholders and new
investors provided capex funding while the Company was suspended from trading to facilitate the commencement of waste
processing at YB.
Post balance-date on 14 September, Freehill also announced the results of a pro rata non-renounceable entitlement offer
which raised an additional $704,000. This successful funding round provides Freehill with additional financial flexibility as it
progressively builds revenue from its processing operations in Chile. In light of these positive developments, the lodgement
of the Company’s audited financial statements for FY23 is expected to coincide with the reinstatement to quotation of
Freehill shares on the ASX.
In closing, I’d like to reiterate my confidence in our operations and that of the Company’s future. Our priority at this time is to
scale up operations at YB, continue to manage our cost base conservatively, and regularly report back to shareholders with
respect to financial performance and other key performance indicators. Once again, we would like to thank our investors for
their ongoing support, and look forward to providing more updates on expanded processing operations and increased sales
heading into the end of the year.
2
Freehill Mining Limited
Directors' report
30 June 2023
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 2023.
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:
Paul Davies
Benjamin Jarvis (appointed (5 April 2023)
Peter Williams (appointed (1 May 2023)
Raymond Charles Mangion (resigned 20 February 2023)
Jim Moore (resigned 20 February 2023)
Principal activities
During the financial year the principal continuing activities of the consolidated entity consisted of:
●
●
●
●
●
Progressing the feasibility of magnetite mining at the Yerbas Buenas site;
Reviewing multiple technical issues relating to production of magnetite from Yerbas Buenas;
Development of secondary revenue stream from sale of waste material;
Identify scope of waste material opportunity due to legislative changes in Chile; and
Reviewing potential acquisitions predicated on adding shareholder value.
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 $14,707,646 (30 June 2022: $1,616,501).
The loss for the year includes $13,011,718 of impairment expense in relation to mining and exploration assets.
Refer to the Chairman's Letter that directly precedes this Directors' Report.
Significant changes in the state of affairs
Other than those matters disclosed in the Chairman's Letter, 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
Since 30 June 2023, the company has issued 60,256,003 fully paid ordinary share settling trade and other payables valued
at $180,768.
Since 30 June 2023, the company has issued 421,559,569 fully paid ordinary shares valued at $1,264,679 settling the "loan
- convertible debt" and interest accrued on those loans in full, other than $165 owing to Paul Davies for interest that accrued
on his loans from 1 to 15 September 2023.
Since 30 June 2023, the company has also issued 347,136,620 fully paid ordinary shares under its non-renounceable
entitlement offer raising $1,041,410 before costs. At the time of signing 38,233,158 fully paid ordinary shares remain
unplaced, meaning that an additional $114,699 before costs can still be raised under the entitlement offer.
Since 30 June 2023, to settle the convertible note payable and related derivative liability valued at $384,217, the company:
●
●
●
issued 90,000,000 fully paid ordinary shares valued at $270,000;
agreed for the holder to retain 51,600,795 fully paid ordinary shares that were issued as collateral shares; and
paying $2,150
This means that the company is now free of debt relating to the convertible securities.
No other matter or circumstance has arisen since 30 June 2023 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.
3
Freehill Mining Limited
Directors' report
30 June 2023
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 (resigned 20 February 2023)
Non-Executive Director and Chairman
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:
N/A
Former directorships (last 3 years): N/A
N/A
Interests in shares:
N/A
Interests in options:
N/A
Interests in rights:
Name:
Title:
Qualifications:
Experience and expertise:
Paul Davies
Chief Executive Officer
Paul holds an Economics Degree from Monash University, has qualified as a Chartered
Accountant and is an alumnus of the Stanford Business School.
Mr Davies has been CFO of the Company for six years prior to being appointed Chief
Executive. He brings an intimate knowledge of Freehill’s activities combined with
significant experience in the mining sector from his 30 plus years in the finance industry.
During his career, Mr Davies has held leadership roles with many organisations, both
large and small, in addition to his finance experience. Most notably, he 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
lead managing,
syndication, negotiation, risk management, including servicing many of Australia’s
major mining companies. Before Deutsche Bank, Mr. Davies worked for a number of
years with both Bankers Trust Australia and Macquarie Bank. Mr Davies holds an
Economics Degree from Monash University, has qualified as a Chartered Accountant
and is an alumnus of the Stanford Business School.
Nil
Other current directorships:
Former directorships (last 3 years): Nil
Interests in shares:
Interests in options:
Interests in rights:
34,804,806 fully paid ordinary shares
Nil
Nil
finance,
4
Freehill Mining Limited
Directors' report
30 June 2023
Name:
Title:
Qualifications:
Experience and expertise:
Jim Moore
Non-Executive Director (resigned 20 February 2023)
Bachelor of Engineering from Royal Melbourne Institute of Technology
Mr Moore is an experienced and qualified mining engineer and provides significant
expertise in the development of the Yerbas Buenas magnetite mining and processing
operation. Mr Moore has undertaken multiple roles as a mine manager, superintendent
and mining engineer for companies such as BHP Billiton, Pilbara Minerals, Oceana
Gold, Element25 and Grange Resources and he brings desirable engineering and
research capability to the Board at a critical time.
Other current directorships:
N/A
Former directorships (last 3 years): N/A
N/A
Interests in shares:
N/A
Interests in options:
N/A
Interests in rights:
Name:
Title:
Experience and expertise:
Other current directorships:
Benjamin Jarvis
Non - Executive Director (appointed (5 April 2023)
Mr Jarvis is an experienced company director in the small resources sector. Since
2011, he has been a non-executive director of South-American focused Austral Gold
Limited (ASX: AGD; TSX-V: AGLD), a precious metals mining and exploration company
with an extensive portfolio of assets in Chile and Argentina. He is also a non-executive
director of QX Resources Limited (ASX: QXR) which has a portfolio of exploration
assets in Australia and other investments in the resources sector, and a non-executive
director of unlisted public company Aeramentum Resources Limited which is focused
on copper, nickel, cobalt and gold exploration in Cyprus in the EU. Mr Jarvis is the
managing director of Six Degrees Investor Relations, an investor relations and advisory
firm he founded in 2006 with offices now in Sydney and Perth.
Austral Gold Limited (ASX: AGD; TSX-V: AGLD), Aguia Resources Limited (ASX:
AGR) and QX Resources Limited (ASX: QXR)
Former directorships (last 3 years): Nil
Interests in shares:
Interests in options:
11,333,333 fully paid ordinary shares
Nil
Name:
Title:
Experience and expertise:
Peter Williams
Non-Executive Director (appointed 1 May 2023)
Mr Williams joins the Board with over 20 years’ experience as a company director, and
a successful career in logistics management and private equity. His career experience
includes over 30 years’ experience at Toyota Tsusho Australasia, a whollyowned
trading and supply-chain specialist of the Toyota Group. As Director and COO of
Toyota Tsusho Australia, Mr Williams led all trading divisions and sat on the board of
five subsidiary companies with annual revenues of over $500 million. He was
subsequently appointed as an Investment Committee Member for TeamInvest Private
Ltd, a specialised private equity investment group which listed on the ASX in 2019.
Other current directorships:
Nil
Former directorships (last 3 years): Nil
Interests in shares:
Interests in options:
28,580,359 fully paid ordinary shares
Nil
'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
Joe Fekete holds a Bachelor of Business in Accounting and is a registered Company Secretary. He is a member of both
the CPA Australia and the Chartered Institute of Secretaries. His business management and accounting experience spans
over 20 years in various industries including Mining, Advertising, Travel, Wholesale Retail distribution, Construction, and
Public Practice. Joe is an experienced professional who has gained his experience in areas of statutory reporting, IPOs,
accounting, system development, restructuring and general business management from the Board Room to Shop Floor.
5
Freehill Mining Limited
Directors' report
30 June 2023
He is also experienced in public disclosure requirements and dealing with external parties, including statutory reporting and
in the delivery of quality management information within the organisation on a timely basis.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2023, and
the number of meetings attended by each director were:
Raymond Charles Mangion
Paul Davies
Jim Moore
Ben Jarvis
Peter Willliams
Full Board
Attended
Held
2
3
2
1
1
2
3
2
1
1
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
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
6
Freehill Mining Limited
Directors' report
30 June 2023
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.
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 2023, the consolidated entity did not engage remuneration consultants.
Voting and comments made at the company's 30 November 2022 Annual General Meeting ('AGM')
At the 30 November 2022 AGM, 99.84% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2022. 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.
7
Freehill Mining Limited
Directors' report
30 June 2023
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
2023
Raymond Charles Mangion *
Jim Moore *
Peter Williams
Ben Jarvis **
Executive Directors:
Paul Davies ***
Salary
and fees
$
28,849
28,849
7,500
21,000
99,000
185,198
Consulting
fees
$
Non-
Super-
monetary annuation
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Long
service
leave
$
Equity-
settled
$
Total
$
-
-
-
-
-
-
-
-
-
-
28,849
28,849
7,500
21,000
17,299
17,299
116,299
202,497
Resigned on 20 February 2023.
Includes director's fees of $11,250 and additional investor relations consulting fees incurred since his appointment.
*
**
*** The performance rights for which this expense relates to lapsed during the year.
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
2022
Salary
and fees
$
Consulting
fees
$
Non-
Super-
monetary annuation
Raymond Charles Mangion
Jim Moore *
45,000
45,000
-
9,600
Executive Directors:
Paul Davies
99,000
189,000
-
9,600
Long
service
leave
$
Equity-
settled
$
Total
$
-
-
-
-
-
-
45,000
54,600
71,313
71,313
170,313
269,913
$
$
-
-
-
-
-
-
-
-
*
**
Consulting fee paid during the year related to operations at Yerbas Buenas.
Includes director's fees of $11,250, and additional consulting fees relating to investor relations incurred since his
appointment as a directors
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Raymond Charles Mangion
Jim Moore
Peter Williams
Ben Jarvis
Executive Directors:
Paul Davies
Fixed remuneration
2022
2023
At risk - STI
At risk - LTI
2023
2022
2023
2022
100%
100%
100%
100%
100%
100%
-
-
85%
59%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15%
41%
8
Freehill Mining Limited
Directors' report
30 June 2023
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:
Name:
Title:
Agreement commenced:
Details:
Paul Davies
Chief Executive Officer
1 January 2017
Remuneration is set at $99,000 per annum plus GST
Raymond Charles Mangion
Chairman (resigned 20 February 2023)
1 January 2017
Remuneration is set at $45,000 per annum plus GST.
Jim Moore
Non-Executive Director (resigned 20 February 2023)
18 February 2021
Remuneration is set at $45,000 per annum plus GST.
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 2023.
Details of shares issued to directors and other key management personnel as part of compensation during the year ended
30 June 2023 are set out below:
Name
Paul Davies
Peter Williams
Ben Jarvis
Date
Shares
Issue price
$
15 September 2023
15 September 2023
15 September 2023
30,098,019
7,680,060
11,333,333
$0.0030
$0.0030
$0.0030
90,294
23,040
34,000
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 2023.
Additional information
The earnings of the consolidated entity for the five years to 30 June 2023 are summarised below:
2023
$
2022
$
2021
$
2020
$
2019
$
Revenue
Loss after income tax *
112,965
(14,707,646)
-
(1,616,501)
2,825
(2,244,747)
13,471
(2,831,376)
370
(2,508,162)
*
The loss for the year includes $13,011,718 of impairment expense in relation to mining and exploration assets.
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2023
2022
2021
2020
2019
Share price at financial year end (cents) *
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
-
(0.78)
(0.78)
1.80
0.09
0.09
3.40
(0.14)
(0.14)
5.40
(0.25)
(0.25)
1.40
(0.43)
(0.43)
*
The company was suspended from trading on the ASX at 30 June 2023.
9
Freehill Mining Limited
Directors' report
30 June 2023
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 Williams
Ben Jarvis
Balance at
the start of
the year
38,134,721
4,706,787
-
-
42,841,508
Additions
Held at
appointments
Other
Balance at
the end of
the year
-
-
-
-
-
-
-
20,990,299
-
20,990,299
(38,134,721)
-
-
-
-
4,706,787
20,990,299
-
(38,134,721) 25,697,086
*
Resigned during the year, he held 38,134,721 shares at the time of his resignation.
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
Paul Davies
Balance at
the start of
the year
3,000,000
3,000,000
Converted
to issued
capital
Expired/
forfeited/
other
Balance at
the end of
the year
Granted
-
-
-
-
(3,000,000)
(3,000,000)
-
-
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 2023.
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 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
2023 and up to the date of this report.
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.
10
Freehill Mining Limited
Directors' report
30 June 2023
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
There were no non-audit services provided during the financial year by the auditor.
Officers of the company who are former partners of Connect National Audit
There are no officers of the company who are former partners of Connect National Audit.
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
Connect National Audit continues 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
___________________________
Benjamin Jarvis
Director
28 September 2023
11
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
As lead auditor for the audit of Freehill Mining Limited for the year ended 30 June 2023, I declare
that, to the best of my knowledge and belief, there have been:
(a)
(b)
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
This declaration is in respect of Freehill Mining Limited.
CONNECT NATIONAL AUDIT PTY LTD
Authorised Audit Company No. 521888
GEORGE GEORGIOU FCA RCA
MANAGING DIRECTOR
Connect National Audit Pty Ltd is an Authorised Audit Company
Head Office: Level 14, 333 Collins St, Melbourne VIC 3000
ABN 43 605 713 040
Gold Coast Office: Level 9, Wyndham Corporate Centre, 1 Corporate Court, BUNDALL,
QUEENSLAND, 4217
Sydney Office: Level 5, 20 Bond Street, Sydney NSW 2000
Liability limited by a scheme approved under Professional Standards Legislation
w: www.connectaudit.com.au
Freehill Mining Limited
Contents
30 June 2023
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
14
15
16
17
18
41
42
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 28 September 2023. The
directors have the power to amend and reissue the financial statements.
13
Freehill Mining Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2023
Revenue
Other income
Expenses
Mine production costs
Corporate and administration expenses
Consulting expenses
Employee benefits expense
Impairment of non-current assets
Depreciation and amortisation expense
Extinguishment of royalty rights
Other expenses
Finance costs
Loss before income tax expense
Income tax expense
Consolidated
Note
2023
$
2022
$
4
5
6
10
18
112,965
59,958
-
-
(556,270)
(595,762)
(29,494)
(348,788)
(13,011,718)
(32,054)
-
(89,103)
(217,380)
-
(542,466)
(237,448)
(405,002)
-
(12,109)
(305,000)
(61,806)
(52,670)
(14,707,646)
(1,616,501)
7
-
-
Loss after income tax expense for the year attributable to the owners of
Freehill Mining Limited
(14,707,646)
(1,616,501)
Other comprehensive income / (loss)
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income / (loss) for the year, net of tax
Total comprehensive loss for the year attributable to the owners of Freehill
Mining Limited
Basic earnings per share
Diluted earnings per share
1,694,952
(412,235)
1,694,952
(412,235)
(13,012,694)
(2,028,736)
Cents
Cents
31
31
(0.78)
(0.78)
(0.09)
(0.09)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
14
Freehill Mining Limited
Statement of financial position
As at 30 June 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Exploration and evaluation asset
Mining
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Employee benefits
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
2023
$
2022
$
8
9
46,880
58,448
45,952
151,280
580,651
64,309
474
645,434
9
10
11
12
1,319,825
437,222
857,901
148,980
- 21,201,563
-
10,505,042
12,262,089 22,208,444
12,413,369 22,853,878
13
14
15
16
14
17
665,983
308,440
75,777
6,141
1,056,341
1,209,168
70,000
1,279,168
81,693
-
-
13,365
95,058
-
70,000
70,000
2,335,509
165,058
10,077,860 22,688,820
18
19
40,097,764 39,713,329
(465,676)
(16,558,833)
1,246,575
(31,266,479)
10,077,860 22,688,820
The above statement of financial position should be read in conjunction with the accompanying notes
15
Freehill Mining Limited
Statement of changes in equity
For the year ended 30 June 2023
Consolidated
Balance at 1 July 2021
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
36,263,862
(124,754)
(14,942,332) 21,196,776
Loss after income tax expense for the year
Other comprehensive loss for the year, net of tax
Total comprehensive loss for the year
-
-
-
-
(412,235)
(1,616,501)
-
(1,616,501)
(412,235)
(412,235)
(1,616,501)
(2,028,736)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 18)
Shared based payments
3,449,467
-
-
71,313
-
-
3,449,467
71,313
Balance at 30 June 2022
39,713,329
(465,676)
(16,558,833) 22,688,820
Consolidated
Balance at 1 July 2022
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income / (loss) for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 18)
Shared based payments (note 19)
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
39,713,329
(465,676)
(16,558,833) 22,688,820
-
-
-
-
1,694,952
(14,707,646)
-
(14,707,646)
1,694,952
1,694,952
(14,707,646)
(13,012,694)
384,435
-
-
17,299
-
-
384,435
17,299
Balance at 30 June 2023
40,097,764
1,246,575
(31,266,479) 10,077,860
The above statement of changes in equity should be read in conjunction with the accompanying notes
16
Freehill Mining Limited
Statement of cash flows
For the year ended 30 June 2023
Cash flows from operating activities
Payments to suppliers and employees (inclusive of GST)
Receipts from customers
Other revenue
Interest and other finance costs paid
Note
Consolidated
2023
$
2022
$
(1,219,380)
112,965
-
(120,712)
(1,432,167)
-
26,949
(44,416)
Net cash used in operating activities
30
(1,227,127)
(1,449,634)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for exploration and evaluation
10
(271,268)
(919,835)
(165,103)
(2,324,572)
Net cash used in investing activities
(1,191,103)
(2,489,675)
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings and convertible notes
Share issue transaction costs
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
-
1,937,425
(53,729)
2,755,705
472,000
(215,492)
1,883,696
3,012,213
(534,534)
580,651
763
(927,096)
1,535,609
(27,862)
Cash and cash equivalents at the end of the financial year
8
46,880
580,651
The above statement of cash flows should be read in conjunction with the accompanying notes
17
Freehill Mining Limited
Notes to the financial statements
30 June 2023
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 2023.
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 $14,707,646 (2022: $1,616,501), had net
current liabilities of $905,061 and had operating cash outflows of $1,227,127 (2022: $1,449,634).
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.
The directors have reviewed the cash flow forecast for the next 12 months from the date of signing this financial report, and
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:
●
●
The loss for the period included non-cash impairment expenses of $13,011,718;
Since 30 June 2023, the company has issued 60,256,003 fully paid ordinary settling shares trade and other payables
valued at $180,768;
Since 30 June 2023, the company has issued 421,559,569 fully paid ordinary shares valued at $1,264,679 settling the
"loan - convertible debt" and interest accrued on those loans in full, other than $165 owing to Paul Davies for interest
that accrued on his loans from 1 to 15 September 2023;
Since 30 June 2023, the company has also issued 347,136,620 fully paid ordinary shares under its non-renounceable
entitlement offer raising $1,041,410 before costs. At the time of signing 38,233,158 fully paid ordinary shares remain
unplaced, meaning that an additional $114,699 before costs can still be raised under the entitlement offer;
Since 30 June 2023, to settle the convertible note payable and related derivative liability valued at $384,217, refer to
note 29. This means that the company is now free of debt relating to the convertible securities.
The consolidated entity's Yerbas Buenas project has commenced production and is budgeted to be generate positive
cash flows over the coming 12 month period and beyond;
The board and management are working to towards working towards readmission to the official list of the Australian
Securities Exchange.
●
●
●
●
●
Accordingly, the directors believe that the 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. In the event that the Consolidated
Entity is unsuccessful in implementing the above-stated initiatives, a material uncertainty exists, that may cast significant
doubt on the Consolidated Entity's ability to continue as a going concern and its ability to recover assets and discharge
liabilities in normal course of business and at the amounts shown in the financial report.
The financial report does not include any adjustments relating to the recoverability and classification of recorded asset
amounts or to the amounts and classification of liabilities that might be necessarily incurred should the company 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').
18
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 1. Significant accounting policies (continued)
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 27.
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 2023 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.
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.
19
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 1. Significant accounting policies (continued)
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:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled
in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity:
identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price
which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to
the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to
be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the
transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration
is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject
to the constraining principle are recognised as a refund liability.
Mining sales
Revenue from mining sales is recognised at the point in time when the customer obtains control of the goods, which is
generally at the time of delivery.
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.
20
Freehill Mining Limited
Notes to the financial statements
30 June 2023
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
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
Derivatives are classified as current or non-current depending on the expected period of realisation.
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, its carrying value is written off.
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business
model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the financial
asset represent contractual cash flows that are solely payments of principal and interest.
21
Freehill Mining Limited
Notes to the financial statements
30 June 2023
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.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Motor vehicles
Plant and equipment
7 years
6 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to 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.
Rehabilitation costs
Restoration costs expected to be incurred are provided for during the development phase which is expected to give rise to
the need for restoration.
Mining assets
Capitalised mining development costs include expenditures incurred to develop new ore bodies to define further
mineralisation in existing ore bodies, to expand the capacity of a mine and to maintain production. Mining development also
includes costs transferred from exploration and evaluation area of interest is ready to move into the production
phase. Amortisation of the mining asset will commence once production commences.
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.
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.
22
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 1. Significant accounting policies (continued)
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.
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
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
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.
23
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 1. Significant accounting policies (continued)
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.
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.
24
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 1. Significant accounting policies (continued)
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 2023. The consolidated
entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
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 2023, because their realisation is not yet considered probable.
Impairment of mining assets and exploration and evaluation assets
The consolidated entity assesses impairment of mining and exploration and evaluation assets at each reporting date by
evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an
impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal
or value-in-use calculations, which incorporate a number of key estimates and assumptions.
During the financial half-year the consolidated entity has recognised impairments in relation to exploration and evaluation
assets (note 11) and mining assets (note 12).
Yerbas Buenas Project
As at 30 June 2023, the board have determined that the Yerbas Buenas project was ready to move into the production
phase, and for this reason the capitalised value of exploration and evaluation expenditure relating to that project was
transferred to mining assets.
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. Revenue
Mining sales
Consolidated
2023
$
2022
$
112,965
-
25
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 4. Revenue (continued)
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Geographical regions
Chile
Timing of revenue recognition
Goods transferred at a point in time
Note 5. Other income
Net gain on derivatives
Note 6. Expenses
Loss before income tax includes the following specific expenses:
Impairment
Mining assets (note 12)
Exploration and evaluation assets (note 11)
Total impairment
Note 7. 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 25%
Non-deductible expenses
Temporary differences and losses not bought to account
Impairment of non-current assets
Income tax expense
26
Consolidated
2023
$
2022
$
112,965
112,965
-
-
Consolidated
2023
$
2022
$
59,958
-
Consolidated
2023
$
2022
$
5,597,217
7,414,501
13,011,718
-
-
-
Consolidated
2023
$
2022
$
(14,707,646)
(1,616,501)
(3,676,912)
(404,125)
218,460
205,523
3,252,929
112,775
291,350
-
-
-
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 7. Income tax expense (continued)
Australian tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 25%
Consolidated
2023
$
2022
$
10,752,394
9,930,302
2,688,099
2,482,576
In addition to the above Australian tax losses the consolidated entity has unused losses of 4,258,457,748 Chilean pesos
($8,005,900) which amount to an unrecognised benefit of 1,149,783,592 Chilean pesos ($2,161,593). The corporate tax rate
in Chile is 27%.
The above potential tax benefit for unused tax losses have not been recognised in the statement of financial position. These
unused tax losses are available for used against future taxable income.
Note 8. Cash and cash equivalents
Current assets
Cash on hand
Cash at bank
Note 9. Trade and other receivables
Current assets
Other receivables
Indirect taxes receivable
Non-current assets
Indirect taxes receivable
Consolidated
2023
$
2022
$
1,890
44,990
1,590
579,061
46,880
580,651
Consolidated
2023
$
2022
$
1,312
57,136
4,700
59,609
58,448
64,309
1,319,825
857,901
27
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 10. Property, plant and equipment
Non-current assets
Plant and equipment - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
Consolidated
2023
$
2022
$
310,241
(18,982)
291,259
182,999
(37,036)
145,963
13,185
(8,847)
4,338
153,797
(9,155)
144,642
437,222
148,980
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 2021
Additions
Exchange differences
Depreciation expense
Balance at 30 June 2022
Additions
Exchange differences
Depreciation expense
Balance at 30 June 2023
Note 11. Exploration and evaluation asset
Non-current assets
Exploration and evaluation - at cost
Less: Impairment
Motor
vehicles
$
Plant and
equipment
$
Total
$
-
165,103
(10,634)
(9,827)
144,642
-
25,337
(24,056)
7,404
-
(784)
(2,282)
4,338
271,268
23,690
(7,997)
7,404
165,103
(11,418)
(12,109)
148,980
271,268
49,027
(32,053)
145,923
291,299
437,222
Consolidated
2023
$
2022
$
7,518,179 21,201,563
-
(7,518,179)
- 21,201,563
28
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 11. Exploration and evaluation asset (continued)
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 2021
Additions
Exchange differences
Balance at 30 June 2022
Additions
Exchange differences
Impairment of assets
Transfer to mining assets (note 12)
Balance at 30 June 2023
Exploration &
evaluation
$
19,687,399
2,595,248
(1,081,084)
21,201,563
724,043
1,591,154
(7,414,501)
(16,102,259)
-
As at 30 June 2023, the board have determined that the Yerbas Buenas project was ready to move into the production
phase, and for this reason the capitalised value of exploration and evaluation expenditure of $16,102,259 relating to that
project was transferred to mining assets.
The consolidated entity does not intend to incur any further exploration expenditure in relation to its El Dorado project. For
this reason, the project has been impaired in full and an expense of $7,414,501 has been recognised.
Exploration and evaluation assets are pledge as security of convertible notes issue (refer to note 14).
Note 12. Mining
Non-current assets
Mining assets - at cost
Less: Impairment
Consolidated
2023
$
2022
$
16,102,259
(5,597,217)
10,505,042
-
-
-
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 2021
Balance at 30 June 2022
Transfer from exploration and evaluation (note 12)
Impairment of assets
Balance at 30 June 2023
29
Mining
asset
$
-
-
16,102,259
(5,597,217)
10,505,042
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 12. Mining (continued)
As at 30 June 2023, the board have determined that the Yerbas Buenas project was ready to move into the production
phase, and for this reason the capitalised value of exploration and evaluation expenditure of $16,102,259 relating to that
project was transferred to mining assets.
At 30 June 2023, the carrying value of the mining asset reviewed for impairment. This was done based on the discounted
cash flows expected from the Yerbas Beunas project, using a discount rate of 12.5%. An impairment expense of $5,597,217
was recognised.
Note 13. Trade and other payables
Current liabilities
Trade payables
Other payables
Refer to note 21 for further information on financial instruments.
Note 14. Borrowings
Current liabilities
Convertible notes payable
Non-current liabilities
Loan - convertible debt
Consolidated
2023
$
2022
$
468,086
197,897
19,718
61,975
665,983
81,693
Consolidated
2023
$
2022
$
308,440
1,209,168
-
-
Refer to note 21 for further information on financial instruments.
Convertible notes includes notes with a value of $400,000 which have been issued at US$1.00 with a face value of $US1.15
and expiring on 15 November 2023. The conversion price is the is lesser of :
●
●
90% of the lowest VWAP during the 5 actual trading day prior to the conversion; and
$A0.01 being the lowest daily VWAP during the 5 actual trading days immediately prior to the agreement.
No interest is payable on the notes, and the company's obligations under the convertible note agreement are secured by
way of the issue of 90,000,000 collateral shares to the noteholder, refer to note 18.
A derivative liability of $75,777 has been recognised in relation to the convertible note, refer to note 15.
Interest is payable on the convertible debt at 10% per annum and the borrowings expire in November 2024. It could be
converted at a 15% discount to 7 day VWAP. This has been converted in full since 30 June 2023, refer to note 29.
30
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 14. Borrowings (continued)
Assets pledged as security
The carrying amounts of assets pledged as security for borrowings are:
Exploration and evaluation assets
Note 15. Derivative financial instruments
Current liabilities
Derivative portion of convertible notes
Refer to note 21 for further information on financial instruments.
Consolidated
2023
$
2022
$
- 21,201,562
Consolidated
2023
$
2022
$
75,777
-
A derivative liability of $75,777 has been recognised in relation to convertible notes, refer to note 14.
Note 16. Employee benefits
Current liabilities
Employee benefits
Note 17. Provisions
Non-current liabilities
Rehabilitation
Note 18. Issued capital
Consolidated
2023
$
2022
$
6,141
13,365
Consolidated
2023
$
2022
$
70,000
70,000
Ordinary shares - fully paid
1,926,848,893 1,809,194,419 40,097,764 39,713,329
Consolidated
2023
Shares
2022
Shares
2023
$
2022
$
31
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 18. Issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
1 July 2021
9 July 2021
30 July 2021
6 September 2021
6 September 2021
5 October 2021
21 October 2021
26 October 2021
4 November 2021
9 November 2021
Balance
Conversion of debt
Conversion of options
Conversion of debt
Conversion of debt
Share issued to settle trade payables
Conversion of debt
Conversion of options
Conversion of options
Conversion of debt
Shares issued for acquisition of El Dorado tenements 12 November 2021
23 November 2021
Conversion of options
7 February 2022
Conversion of debt
7 February 2022
Extinguishment of royalty right
6 June 2022
Issue of shares
Conversion of debt
6 June 2022
Less cost of capital raising
Balance
Share issued to settle trade payables
Conversion of debt
Share issued to settle trade payables
Convertible note collateral shares issued (note 14)
Less cost of capital raising
30 June 2022
7 September 2022
7 September 2022
16 November 2022
16 November 2022
1,653,199,517
2,145,245
150,000
1,006,937
1,023,440
1,500,000
10,090,273
4,668,688
11,041,254
2,863,112
34,379,365
17,035,512
8,025,239
11,730,769
37,500,000
12,835,068
-
1,809,194,419
650,000
25,804,474
1,200,000
90,000,000
-
$0.0301
$0.0250
$0.0248
$0.0247
$0.0400
$0.0250
$0.0250
$0.0250
$0.0250
$0.0250
$0.0250
$0.0215
$0.0260
$0.0200
$0.0200
$0.0000
36,263,862
64,465
3,750
25,013
25,259
60,000
252,256
116,717
276,031
71,577
859,484
425,887
172,815
305,000
750,000
256,701
(215,488)
$0.0170
$0.0140
$0.0080
$0.0000
$0.0000
39,713,329
11,050
371,562
9,600
-
(7,777)
Balance
30 June 2023
1,926,848,893
40,097,764
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.
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.
32
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 18. Issued capital (continued)
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 2022 Annual Report.
Note 19. Reserves
Foreign currency reserve
Share-based payments reserve
Consolidated
2023
$
2022
$
(455,977)
1,702,552
(2,150,929)
1,685,253
1,246,575
(465,676)
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.
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 2021
Foreign currency translation
Share based payments
Balance at 30 June 2022
Foreign currency translation
Share based payments
Balance at 30 June 2023
Note 20. Dividends
Share based
payments
$
Foreign
currency
$
Total
$
1,613,940
-
71,313
(1,738,694)
(412,235)
-
(124,754)
(412,235)
71,313
1,685,253
-
17,299
(2,150,929)
1,694,952
-
(465,676)
1,694,952
17,299
1,702,552
(455,977)
1,246,575
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 21. 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.
33
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 21. Financial instruments (continued)
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.
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
Chilean pesos
Assets
Liabilities
2023
$
2022
$
2023
$
2022
$
19,183
865,675
289,674
32,586
Consolidated - 2023
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
Chilean pesos
20%
-
54,098
20%
-
(54,098)
Consolidated - 2022
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
Chilean pesos
20%
-
(166,617)
20%
-
166,617
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.
34
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 21. 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 - 2023
Non-derivatives
Non-interest bearing
Trade and other payables
Convertible notes payable
Interest-bearing - fixed rate
Loan - convertible debt
Total non-derivatives
Derivatives
Derivative portion of
convertible notes
Total derivatives
Consolidated - 2022
Non-derivatives
Non-interest bearing
Trade and other payables
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
665,983
308,440
-
-
15.00%
-
974,423
1,209,168
1,209,168
-
75,777
75,777
-
-
-
-
-
-
-
-
-
-
-
-
-
-
665,983
308,440
1,209,168
2,183,591
75,777
75,777
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
81,693
81,693
-
-
-
-
-
-
81,693
81,693
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 22. Key management personnel disclosures
Directors
The following persons were directors of Freehill Mining Limited during the financial year:
Paul Davies
Benjamin Jarvis (appointed (5 April 2023)
Peter Williams (appointed (1 May 2023)
Raymond Charles Mangion (resigned 20 February 2023)
Jim Moore (resigned 20 February 2023)
35
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 22. Key management personnel disclosures (continued)
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 23. Remuneration of auditors
Consolidated
2023
$
2022
$
185,198
17,299
198,600
71,313
202,497
269,913
During the financial year the following fees were paid or payable for services provided by Connect National Audit, the auditor
of the company:
Consolidated
2023
$
2022
$
52,500
49,000
Audit services - Connect National Audit
Audit or review of the financial statements
Note 24. Contingent liabilities
The consolidated entity had no contingent liabilities at 30 June 2023 and 30 June 2022.
Note 25. Commitments
The consolidated entity had no commitments at 30 June 2023 and 30 June 2022.
Note 26. Related party transactions
Parent entity
Freehill Mining Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 28.
Key management personnel
Disclosures relating to key management personnel are set out in note 22 and the remuneration report included in the
directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Other income:
Interest accrued on "loan - convertible debt" from directors and those related to former
directors
10,319
-
Consolidated
2023
$
2022
$
36
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 26. Related party transactions (continued)
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current payables:
Directors fees payable to current and former directors
Consolidated
2023
$
2022
$
146,498
-
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Consolidated
2023
$
2022
$
Non-current borrowings:
Loan - convertible debt from directors and those related to former directors (including
accrued interest)
150,619
-
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 27. 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 loss
Parent
2023
$
2022
$
(6,337,707)
(1,294,305)
(6,337,707)
(1,294,305)
37
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 27. Parent entity information (continued)
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
2023
$
2022
$
132,056
637,707
21,593,141 25,608,527
760,525
49,107
1,969,693
49,107
53,353,709 52,969,274
1,685,253
1,007,202
(30,102,309)
1,702,552
1,007,202
(36,440,015)
19,623,448 25,559,420
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 2023 and 30 June 2022.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2023 and 30 June 2022.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 and 30 June 2022.
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.
Note 28. 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
El Dorado Mineria SpA
El Dorado Hold Co Pty Ltd
Note 29. Events after the reporting period
Principal place of business /
Country of incorporation
Australia
Chile
Chile
Chile
Australia
Ownership interest
2022
2023
%
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Since 30 June 2023, the company has issued 60,256,003 fully paid ordinary share settling trade and other payables valued
at $180,768.
38
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 29. Events after the reporting period (continued)
Since 30 June 2023, the company has issued 421,559,569 fully paid ordinary shares valued at $1,264,679 settling the "loan
- convertible debt" and interest accrued on those loans in full, other than $165 owing to Paul Davies for interest that accrued
on his loans from 1 to 15 September 2023.
Since 30 June 2023, the company has also issued 347,136,620 fully paid ordinary shares under its non-renounceable
entitlement offer raising $1,041,410 before costs. At the time of signing 38,233,158 fully paid ordinary shares remain
unplaced, meaning that an additional $114,699 before costs can still be raised under the entitlement offer.
Since 30 June 2023, to settle the convertible note payable and related derivative liability valued at $384,217, the company:
(a) issued 90,000,000 fully paid ordinary shares valued at $270,000;
(b) agreed for the holder to retain 51,600,795 fully paid ordinary shares that were issued as collateral shares; and
(c) paying $2,150.
This means that the company is now free of debt relating to the convertible securities.
No other matter or circumstance has arisen since 30 June 2023 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 30. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
(14,707,646)
(1,616,501)
Consolidated
2023
$
2022
$
Adjustments for:
Depreciation and amortisation
Impairment of non-current assets
Net gain on derivatives
Share-based payments
Operating expenses settled via the issue of shares
Extinguishment of royalty rights via issue of shares
Non-cash finance expenses
Change in operating assets and liabilities:
Increase in trade and other receivables
Decrease/(increase) in other operating assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in employee benefits
Net cash used in operating activities
Note 31. Earnings per share
32,054
13,011,718
(59,958)
17,299
20,650
-
96,668
12,109
-
-
71,313
60,000
305,000
8,254
(456,063)
474
824,901
(7,224)
(214,163)
(474)
(76,376)
1,204
(1,227,127)
(1,449,634)
Consolidated
2023
$
2022
$
Loss after income tax attributable to the owners of Freehill Mining Limited
(14,707,646)
(1,616,501)
39
Freehill Mining Limited
Notes to the financial statements
30 June 2023
Note 31. Earnings per share (continued)
Weighted average number of ordinary shares used in calculating basic earnings per share
1,887,116,951 1,720,270,748
Weighted average number of ordinary shares used in calculating diluted earnings per share 1,887,116,951 1,720,270,748
Number
Number
Basic earnings per share
Diluted earnings per share
Note 32. Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2021
Net cash from financing activities
Conversion to equity
Balance at 30 June 2022
Net cash from financing activities
Conversion to equity
Other changes
Balance at 30 June 2023
Cents
Cents
(0.78)
(0.78)
(0.09)
(0.09)
Borrowings Derivative
$
64,000
472,000
(536,000)
-
1,937,425
(370,009)
(53,808)
liability
$
Total
$
-
-
-
64,000
472,000
(536,000)
-
-
-
75,777
-
1,937,425
(370,009)
21,969
1,513,608
75,777
1,589,385
40
Freehill Mining Limited
Directors' declaration
30 June 2023
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 2023 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
Benjamin Jarvis
Director
28 September 2023
41
Independent Auditor’s Report
To the Members of Freehill Mining Limited
Report on the Audit of the Financial Report
Opinion
We have audited the accompanying financial report of Freehill Mining Limited (the “consolidated
entity”), which comprises the statement of financial position as at 30 June 2023, the statement of
profit or loss and other comprehensive income, the statement of cash flows and the statement of
changes in equity for the financial year ended on that date, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of
the consolidated entity as set out on page 41.
In our opinion the financial report of Freehill Mining Limited is in accordance with the Corporations
Act 2001, including:
giving a true and fair view of the entity’s financial position as at 30 June 2023 and of its
(a)
performance for the financial year ended on that date; and
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the 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 consolidated entity, would be in the same terms if given to the
directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed the key audit
matter
Assessment of Carrying Value of
Exploration and Evaluation Assets
We focus on the assessment of the carrying
value of the exploration and evaluation asset
as this represents a significant asset of the
We ensured the consolidated entity has tested
at the level of area of interest where the
following indicators are present: (a) the period
Connect National Audit Pty Ltd is an Authorised Audit Company
Head Office: Level 14, 333 Collins St, Melbourne VIC 3000
ABN 43 605 713 040
Gold Coast Office: Level 9, Wyndham Corporate Centre, 1 Corporate Court, BUNDALL,
QUEENSLAND, 4217
Sydney Office: Level 5, 20 Bond Street, Sydney NSW 2000
Liability limited by a scheme approved under Professional Standards Legislation
w: www.connectaudit.com.au
to assess
consolidated entity. We need
whether the facts and circumstances existed to
suggest that the carrying value of this asset
recoverable amount.
may exceed
in
Significant
considering if there was impairment indicator
and estimating the value of the asset and the
potential material impact on the financial
report.
its
judgement
involved
is
list of all
As part of their annual impairment review
management prepared a
its
exploration and evaluation assets and
reviewed these against their list of impairment
indicators
indicators. Where
existed, management
an
impairment review in accordance with AASB 6
Impairment of Exploration and Evaluation
Assets. No Asset was written off during this
year in respect of areas of exploration in the
exploration and evaluation assets.
impairment
performed
for which the entity has the right to explore in
the specific area has expired during the period
or will expire in the near future, and is not
expected to be renewed; (b) substantive
expenditure on further exploration for and
evaluation of mineral resources in the specific
area is neither budgeted nor planned (c)
exploration for and evaluation of mineral
resources in the specific area have not led to
the discovery of commercially viable quantities
of mineral resources and the entity has
decided to discontinue such activities in the
specific area; (d) sufficient data exist to
indicate that, although a development in the
specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset
is unlikely
from
in
to be recovered
successful development or by sale.
full
to
ensure
We enquired with management and reviewed
budgets
substantive
expenditure on further exploration for and
evaluation of the mineral resources in the
consolidated entity’s areas of interest were
planned.
that
We enquired with management, reviewed
announcements made and reviewed minutes
of the directors’ meetings to ensure that the
to
consolidated entity had not decided
discontinue activities in any of its areas of
interest. We noted the consolidated entity had
decided to discontinue activities in respect of a
number of areas of exploration.
We evaluated management’s assessment of
impairment indicators including the conclusion
reached.
We also considered the appropriateness of the
related disclosure in Notes 1, 2 and 9 to the
financial statements.
Emphasis of Matter – Material uncertainty related to 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.
Connect National Audit Pty Ltd is an Authorised Audit Company
Head Office: Level 14, 333 Collins St, Melbourne VIC 3000
ABN 43 605 713 040
Gold Coast Office: Level 9, Wyndham Corporate Centre, 1 Corporate Court, BUNDALL,
QUEENSLAND, 4217
Sydney Office: Level 5, 20 Bond Street, Sydney NSW 2000
Liability limited by a scheme approved under Professional Standards Legislation
w: www.connectaudit.com.au
As disclosed in the financial statements, the consolidated entity incurred a loss of $14,707,646
(2022: $1,616,501), had net current liabilities of $905,061 and had operating cash outflows of
$1,227,127 (2022: $1,449,634).
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.
The directors have reviewed the cash flow forecast for the next 12 months from the date of signing
this financial report, and 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:
• The loss for the period included non-cash impairment expenses of $13,011,718;
• Since 30 June 2023, the company has issued 60,256,003 fully paid ordinary settling trade
and other payables valued at $180,768;
• Since 30 June 2023, the company has issued 421,559,569 fully paid ordinary shares valued
at $1,264,679 settling the "loan - convertible debt" and interest accrued on those loans in
full, other than $165 owing to Paul Davies for interest that accrued on his loans from 1 to
15 September 2023;
• Since 30 June 2023, the company has also issued 347,136,619 fully paid ordinary shares
under its non-renounceable entitlement offer raising $1,041,410 before costs. At the time
of signing 38,233,159 fully paid ordinary shares remain unplaced, meaning that an
additional $114,699 before costs can still be raised under the entitlement offer;
• Since 30 June 2023, to settle the convertible note payable and related derivative liability
valued at $384,217, refer to note 29. This means that the company is now free of debt
relating to the convertible securities.
• The consolidated entity's Yerbas Buenas project has commenced production and is
budgeted to be generate positive cash flows over the coming 12 month period and beyond;
• The board and management are working to towards working towards readmission to the
official list of the Australian Securities Exchange.
Accordingly, the directors believe that the 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. In the event that the Consolidated Entity is unsuccessful in implementing the above-stated
initiatives, a material uncertainty exists, that may cast significant doubt on the Consolidated Entity's
ability to continue as a going concern and its ability to recover assets and discharge liabilities in
normal course of business and at the amounts shown in the financial report.
The financial report does not include any adjustments relating to the recoverability and classification
of recorded asset amounts or to the amounts and classification of liabilities that might be
necessarily incurred should the company not continue as a going concern.
Our opinion is unmodified in this regard.
Responsibilities of the directors for the financial report
The directors of the consolidated entity are responsible for the preparation of the financial report
that gives a true and fair view and have determined that the basis of preparation described in Note
1 to the financial report is appropriate to meet the requirements of the Corporations Act 2001 and
is appropriate to meet the needs of the members. The directors’ responsibility also includes 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 the basis of preparation, the directors also state, in accordance with Accounting
Connect National Audit Pty Ltd is an Authorised Audit Company
Head Office: Level 14, 333 Collins St, Melbourne VIC 3000
ABN 43 605 713 040
Gold Coast Office: Level 9, Wyndham Corporate Centre, 1 Corporate Court, BUNDALL,
QUEENSLAND, 4217
Sydney Office: Level 5, 20 Bond Street, Sydney NSW 2000
Liability limited by a scheme approved under Professional Standards Legislation
w: www.connectaudit.com.au
Standard AASB 101 Presentation of Financial Statements, that the financial statements comply
with International Financial Reporting Standards.
In preparing the financial report, the directors are responsible for assessing the consolidated
entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to
liquidate the 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: http://www.auasb.gov.au/Home.aspx. This
description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 6 to 10 of the directors’ report for
the financial year ended 30 June 2023.
In our opinion the Remuneration Report of Freehill Mining Limited for the financial year ended 30
June 2023, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the consolidated entity 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.
CONNECT NATIONAL AUDIT PTY LTD
Authorised Audit Company No. 521888
GEORGE GEORGIOU FCA RCA
MANAGING DIRECTOR
Melbourne VIC 3000
28 September 2023
Connect National Audit Pty Ltd is an Authorised Audit Company
Head Office: Level 14, 333 Collins St, Melbourne VIC 3000
ABN 43 605 713 040
Gold Coast Office: Level 9, Wyndham Corporate Centre, 1 Corporate Court, BUNDALL,
QUEENSLAND, 4217
Sydney Office: Level 5, 20 Bond Street, Sydney NSW 2000
Liability limited by a scheme approved under Professional Standards Legislation
w: www.connectaudit.com.au
Freehill Mining Limited
Shareholder information
30 June 2023
The shareholder information set out below was applicable as at 22 September 2023.
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
Ordinary shares
Number
of holders
% of total
shares
issued
781
75
187
587
906
-
0.01
0.07
0.99
98.93
2,536
100.00
-
-
At the date of signing the company was suspended from trading on the Australian Securities Exchange (ASX).
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
Number held
% of total
shares
issued
280,151,451
202,221,892
167,382,692
86,139,607
82,150,000
58,814,064
48,006,642
38,134,721
35,123,833
34,502,282
34,502,282
32,186,679
29,718,784
29,156,661
28,580,359
25,395,433
20,468,372
20,437,727
19,237,824
17,096,772
1,289,408,077
10.60
7.65
6.33
3.26
3.11
2.23
1.82
1.44
1.33
1.31
1.31
1.22
1.12
1.10
1.08
0.96
0.77
0.77
0.73
0.65
48.79
DUDDY INVESTMENT PTY LTD (DUDDY INVESTMENT A/C)
J M ROSS SUPER PTY LTD (J M ROSS SUPER FUND A/C)
DG FREEHOLD PTY LTD (DG FREEHOLD A/C)
CLAYMORE VENTURES LIMITED
CAM NOMINEES PTY LTD (CAM NOMINEES SUPER FUND A/C)
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MRS ANITA MANGION
R & A MANGION PTY LTD (STEGMAN SMSF A/C)
RMVIC PTY LTD (RMVIC S/F A/C)
MR ROBERT JESSE HUNT
WFC NOMINEES PTY LTD
MR ARTHUR AFENTOULIS
MR LEO ILIAS RADIOTIS (L A RADIOTIS FAMILY A/C)
MR PAUL DAVIES
PAW SUPER PTY LTD (PAW SUPER FUND A/C)
B&J DUDDY INVESTMENTS PTY LTD
SIGNAL SUPERANNUATION PTY LTD (SIGNAL SUPER FUND A/C)
CHYE YAP PTY LTD (YAP FAMILY A/C)
MR PETER BROUWER & MS TANIA BROUWER (P&T BROUWER SMSF A/C)
AKM MARLBOROUGH PTY LTD (M & M VINACCIA FAMILY A/C)
Unquoted equity securities
There are no unquoted securities at the date of signing.
46
Freehill Mining Limited
Shareholder information
30 June 2023
Substantial holders
Substantial holders in the company are set out below:
DUDDY INVESTMENT PTY LTD (DUDDY INVESTMENT A/C)
J M ROSS SUPER PTY LTD (J M ROSS SUPER FUND A/C)
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Number held
% of total
shares
issued
280,151,451
202,221,892
10.60
7.65
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.
Options
Option holders do not have voting rights.
Tenements
Description
YERBAS BUENAS 1-16
ARENAS III 1 to 15
ARENAS IV 1 to 10
ARENAS VI 1 to 20
ARENAS X 1 to 18
ARENAS XI 1 to 20
EL DORADO I to 10
EL DORADO II 1 to 10
EL DORADO III 1 to 10
EL DORADO IV 1 to 10
EL DORADO V 1 to 10
EL DORADO VI 1 to 10
EL DORADO VII 1 to 7
EL DORADO VIII 1 to 10
Interest
owned %
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Tenement number
04102-2723-1
04102-2714-2
04102-2715-0
04102-2755-K
04102-2937-4
04102-3522-6
04102-3669-9
04102-3670-2
04102-3671-0
04102-3672-9
04102-3673-7
04102-3674-5
04102-3675-3
04102-3676-1
47