GALILEO MINING LTD
ANNUAL FINANCIAL REPORT
For the Year Ended 30 June 2019
GALILEO MINING LTD
ABN 70 104 114 132
CONTENTS
CHAIRMAN’S LETTER .................................................................................................................................................................... 3
DIRECTORS’ REPORT .................................................................................................................................................................... 4
AUDITOR’S INDEPENDENCE DECLARATION ................................................................................................................... 24
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ................................................................................. 25
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ........................................................................................... 26
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................................................................. 27
CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................................................................ 28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ...................................................................................... 29
DIRECTORS’ DECLARATION .................................................................................................................................................... 55
INDEPENDENT AUDITOR’S REPORT .................................................................................................................................... 56
CORPORATE GOVERNANCE ................................................................................................................................................... 60
ADDITIONAL ASX SHAREHOLDERS’ INFORMATION.................................................................................................... 61
TENEMENT SCHEDULE ............................................................................................................................................................. 63
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GALILEO MINING LTD
ABN 70 104 114 132
CHAIRMAN’S LETTER
Dear Shareholder
I am pleased to present this Annual Financial Report of the Company to you on behalf of the Board.
2019 saw the Company continue to implement its strategic plan after listing in May 2018.
This plan focused on the Company conducting a series of drilling campaigns intended to increase its Norseman
cobalt resources and commence exploration of its Fraser Range projects.
The highlights of these drilling and exploration campaigns included a 24% increase in tonnes to the cobalt
JORC resource at the Norseman Cobalt Project, the discovery of an out-cropping copper prospect at Subzero,
and promising air core and diamond core drilling results at the Lantern and Empire Rose Prospects in the Fraser
Range.
Further details of the activities are set out in the Review of Operations section of the Directors Report.
In the upcoming year, work will continue on identifying the copper potential at the Subzero Prospect near
Norseman. The Company will also focus on drilling the promising and substantial mafic-ultramafic intrusion at
Lantern as well as building the prospectivity of the recently identified sulphide mineralised rock units at Empire
Rose.
Additionally, should the cobalt price improve, there will be renewed focus on the exploration and development
of the Norseman Cobalt Project.
Whilst difficult market conditions and a low cobalt price present challenges to the Company, Galileo is well
placed with a strong cash position and experienced management ready to exploit the mineral potential of the
Company’s projects.
On behalf of the Board, I thank you for your ongoing support and look forward to the year ahead.
Yours faithfully
Simon Jenkins
Non-Executive Director
GALILEO MINING LTD
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GALILEO MINING LTD
ABN 70 104 114 132
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2019
The directors present their report on the Company and the Group (consisting of the Company and the entities
it controlled during the period) for the financial year ended 30 June 2019.
DIRECTORS
The following directors have been in office since the start of the financial year to the date of this report unless
otherwise stated:
Simon Jenkins (Chairman)
Richard (Brad) Underwood (Managing Director)
Noel O’Brien (Technical Director)
PRINCIPAL ACTIVITIES
The principal activity of the Group during the financial year was mineral exploration.
FINANCIAL RESULTS AND FINANCIAL POSITION
The net loss of the Group for the financial year ended 30 June 2019 after providing for income tax amounted
to $1,097,116 (2018: $677,373).
The Group has not reached a stage in its development where it is generating an operating profit. All the
Group’s efforts go into project exploration and evaluation.
At the end of the financial period the Group had cash on hand, including deposits of $7,070,456 (2018:
$11,275,323) and Net Assets of $15,956,047 (2018: $16,665,935).
DIVIDENDS
No dividends have been declared since the end of the previous financial year and no dividends have been
recommended by the directors.
REVIEW OF OPERATIONS
Galileo has two highly prospective West Australian resource and exploration projects being:
1) The Norseman Project with a JORC compliant cobalt-nickel resource; and
2) The Fraser Range Project with exploration tenements prospective for nickel-copper-cobalt deposits.
Work during the year on the Norseman Project focussed on the growth of the Mt Thirsty cobalt-nickel
resource with a greater than 20% increase in resource tonnes; metallurgical understanding of the current
deposit; progression of the permitting required for mining; and the development of additional prospects
within the project area.
At the Fraser Range Project several targets prospective for Nova style magmatic nickel-copper deposits were
drill tested. The most advanced of these is the Lantern Prospect which represents a large-scale target with
anomalous geochemistry in drilling and a geophysical signature consistent with potentially mineralised
intrusive rocks. Diamond drilling at the Empire Rose prospect in the Fraser Range showed an accumulation
of sulphides with anomalous levels of gold and silver. The target stratigraphy is open along strike both to
the north-west and the south-east.
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GALILEO MINING LTD
ABN 70 104 114 132
Figure 1: Galileo Mining Ltd Project Locations with Selected Mines and Deposits.
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GALILEO MINING LTD
ABN 70 104 114 132
Highlights of the Company’s Activities during the year included:
Norseman Project (100% owned)
24% increase in tonnes to the cobalt-nickel JORC resource taking the total contained cobalt to 26,600
tonnes and the total contained nickel to 122,500 tonnes (1)
Advanced understanding of the metallurgical characteristics of the resource base
Application for a Mining Lease and supporting Miscellaneous Licenses over the core JORC resource
at Mt Thirsty
Discovery of outcropping copper prospect at Subzero with subsequent development of targets for
drill testing
Fraser Range Project (JV with Creasy Group)
First pass aircore drilling at the Lantern nickel-copper prospect returned best results of 27m @
0.18% nickel and 0.17% copper from 47m (drill hole LAAC041) (2)
Electromagnetic surveying and gravity surveying completed after the end of the period at Lantern
showed a geophysical response consistent with that expected from fertile intrusive magmatic
systems
Maiden diamond core drilling at the Empire Rose Prospect intersected anomalous gold within
sulphide mineralisation (3)
o 1m @ 0.25 g/t gold and 0.8 g/t silver from 420m in ER001
o 1.05m @ 0.18 g/t gold and 0.9 g/t silver from 220m in ER003
Corporate
Strong cash position of $7.1 million at the end of the June Quarter 2019
During the year the Company’s main activities were progressing the Norseman cobalt resource and the
exploration of the Fraser Range project through a series of drilling campaigns as well as improving the
commodity profile of the Norseman project through the identification of a new copper target at the Subzero
Prospect.
Norseman Project, WA
Galileo successfully increased the resource base at the Norseman Project with the delivery of a maiden
resource estimate at the Goblin prospect located just three kilometres south of the Company’s Mt Thirsty
resource. The Goblin Prospect has an inferred resource of 4.9Mt at 0.08% Co for 4,100 tonnes of contained
cobalt, contributing a 24% increase in the overall JORC resource tonnes at the Norseman Project (see Figure
2). Further drilling at the Mission Sill South JORC resource defined cobalt anomalous mineralisation outside
of the existing resource boundary and additional undrilled cobalt targets exist within the Norseman project
area.
Test work on cobalt-nickel diamond drill core from the Norseman Project has progressed the understanding
of the metallurgical characteristics of the resource with concentration test work showing the ability of the
material to be upgraded using conventional sizing techniques. Metal extraction tests undertaken on
concentrate samples at ALS Metallurgy’s Perth Laboratory, under the guidance of Galileo consultants SGS-
Bateman, demonstrated the ability for cobalt and nickel to be extracted at atmospheric pressure. The use of
atmospheric leaching is a key benefit of the Norseman cobalt resource in that it removes the need for
expensive high-pressure acid leaching which is a requirement of many laterite cobalt resources within
Australia.
(1)
(2)
(3)
See Figure 2 on page 7 for full details of current Norseman resource base
Refer to Galileo’s ASX Announcement dated 26th March 2019
Refer to Galileo’s ASX Announcement dated 4th July 2019
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GALILEO MINING LTD
ABN 70 104 114 132
Figure 2: Galileo Mining Ltd JORC Mineral Resource Estimates for the Norseman Cobalt Project (“Estimates”)
Refer to ASX “Prospectus” announcement dated May 25th 2018 and ASX announcement dated 11th
December 2018, accessible at http://www.galileomining.com.au/investors/asx-announcements/. Galileo
confirms that all material assumptions and technical parameters underpinning the Estimates continue to
apply and have not materially changed. Numbers in the above table have been rounded to two or three
significant figures.
Competent Person Statement
The information in this Table that relates to the Mt Thirsty Sill and Mission Sill Mineral Resource Estimates
is based on, and fairly represents, information and supporting documentation prepared by Michael Elias,
who is a Fellow of The Australasian Institute of Mining and Metallurgy. Mr. Elias is employed by CSA Global
Pty Ltd. Mr. Elias has sufficient experience which is relevant to the style of mineralisation and type of deposit
under consideration and to the activity he is undertaking to qualify as a competent person as defined in
the 2012 Edition of the “Australasian Code for reporting of Exploration Results, Exploration Targets, Mineral
Resources and Ore Reserves”. Mr. Elias consents to the inclusion in this Table of the matters based on his
information in the form and context in which it appears.
The information in this Table that relates to the Goblin Mineral Resource Estimate, and the Exploration
Information in the Review of Operations, is based on, and fairly represents, information and supporting
documentation prepared by Mr Brad Underwood, a Member of the Australasian Institute of Mining and
Metallurgy, and a full time employee of Galileo Mining Ltd. Mr Underwood has sufficient experience that
is relevant to the styles of mineralisation and types of deposit under consideration, and to the activity being
undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC Code). Mr Underwood
consents to the inclusion in the Table of the matters based on his information in the form and context in
which it appears.
With regard to the Company’s ASX Announcements referenced in this report, the Company is not aware
of any new information or data that materially affects the information included in the Announcements.
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GALILEO MINING LTD
ABN 70 104 114 132
A Mining Lease Application (M63/671) was lodged with the Department of Mines, Industry Regulation and
Safety (DMIRS) in September 2018. The application covers 654 hectares over the main Mt Thirsty resource
within the Norseman Project (see Figure 3 below). Supporting Miscellaneous License applications covering a
further 2,500 hectares of ground were also submitted in September 2018. Upon grant the Miscellaneous
Licenses will allow for the development of critical mining infrastructure including roads, water bores, power
lines and pipelines.
Figure 3: Mt Thirsty Mining Lease Application Location with Regional Infrastructure and Additional Mission Sill
Cobalt Resources
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GALILEO MINING LTD
ABN 70 104 114 132
In anticipation of environmental requirements for the development of a potential mine the Company has
undertaken a detailed flora survey over the main resource area at Norseman with the remainder of the Mine
Lease application surveyed at a reconnaissance level. A Level 1 terrestrial fauna survey has also been
completed over the entirety of the Mine Lease application.
Since the previous Annual Report, the Company has experienced a substantial reduction in the Cobalt price
which has impacted on its immediate plans for the Norseman Cobalt Project. It is expected that if cobalt
prices improve in the future then the Norseman Cobalt Project may again become a significant focus of the
Company’s exploration and development programme. Project permit approvals will be a considerable value-
add to the asset base at Norseman in the event that cobalt prices recover sufficiently.
Ongoing review of the mineral prospectivity at the Norseman Project, combined with Galileo’s detailed
magnetic survey completed in February 2019, has resulted in the development of a new copper target at the
Subzero Prospect. Surface sampling at this prospect recorded copper values up to 6.5% and 19.9% copper (4)
from oxide breccia rocks adjacent to historic prospectors’ workings (see Figure 4).
(4)
Refer to Galileo’s ASX Announcement dated 28th May 2019
Figure 4: Subzero geology map of prospective volcanic rock units, copper sampling, and EM conductors
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GALILEO MINING LTD
ABN 70 104 114 132
The surface samples were taken from a volcanic-sedimentary rock unit where it outcrops. This rock unit can
be traced for over two kilometres along strike. Pillow basalts have been mapped to the west of the copper
outcrop which is hosted in a silicified volcanic sediment. To the east a gabbro appears to have intruded the
volcanic sequence. Cross structures have been interpreted from a recently flown detailed 50m magnetic
survey and may represent zones of fluid flow.
An extensive Moving Loop Electro Magnetic (MLEM) survey was completed at Subzero with the results
received after the end of the year. Highly conductive targets were recorded over a strike length of 2.1km
matching the prospective volcanic rock units mapped in the field. Modelling of EM data shows two strongly
conductive zones with depth to top of source estimated to be 80 to 90 metres. An RC drilling program is
planned for the August 2019 with initial testing to focus on the potential for copper mineralisation beneath
the gossan and on the EM conductor along the prospective contact.
The review of mineral prospectivity at the Norseman Project has also demonstrated the potential for lithium
rich pegmatites in the area. Field mapping has delineated zones of pegmatites at a number of prospects (see
Figure 5). Soil and rock chip sampling programs have been undertaken and Lithium-Caesium-Tantalum (LCT)
pegmatites have been successfully identified however no lithium-spodumene samples have yet been
recorded. Work will continue on the lithium potential at Norseman with a small number of scout drill holes
planned to test pegmatites for possible lithium rich zones at shallow depths.
Figure 5: Location of pegmatite outcrop and nickel sulphide targets within the Norseman Project area. Background
image is GSWA 100k mapping.
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GALILEO MINING LTD
ABN 70 104 114 132
Since flying the detailed 50 metre line spaced aeromagnetic survey the Company has revised the regional
stratigraphy of the Norseman Project to better understand mineral potential. As well as defining the basalt
units which host the Subzero copper prospect, the magnetic survey has outlined in more detail the mapped
komatiite unit southwest of the Goblin cobalt resource (see Figure 5). A possible embayment in the komatiite
flow has been recognised and will be the subject of a scout drill hole to test for nickel sulphide mineralisation.
An EM survey over the Goblin Prospect showed a conductive unit in the area which will also be drill tested to
determine its relationship to sulphide mineralisation.
Fraser Range Project, WA
The Fraser Range project covers exploration licences totalling 492 km2 in the Albany-Fraser Orogen. The
Albany-Fraser Orogen is dominated by the northeast-trending Fraser Zone, a suite of high-grade
metamorphic rocks that have a distinct geophysical signature in both aeromagnetic and gravity data. The
Fraser Zone comprises mainly metagabbroic rocks interlayered with sheets of granitic gneisses.
Galileo’s Fraser Range project is located across two areas – the northern Kitchener zone which hosts the
company’s Lantern and Nightmarch prospects and the southern Yardilla zone which holds the Empire Rose
and Yardilla South prospects.
The project is well positioned within the nickel-copper bearing Fraser Range Zone, with the Nova Bollinger
and Silver Knight deposits located between the two Galileo-controlled areas. The location also offers excellent
access to infrastructure, with the main Eyre highway immediately south of the Fraser Range project area (see
location map in Figure 1).
Figure 6: Lantern Prospect Total Magnetic Intensity image with interpreted intrusions, completed aircore drilling
collars, and priority follow‐up drill targets.
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GALILEO MINING LTD
ABN 70 104 114 132
First pass aircore drilling was undertaken at the Lantern and Nightmarch prospects during the year based on
magnetic and gravity data which highlighted the potential for intrusions associated with mineralised nickel
deposits. Both prospects are covered by approximately 40 metres of recent sediments which effectively masks
the target basement rocks from traditional surface prospecting techniques such as soil sampling. Following
the completion of drilling the Nightmarch prospect was found to be related to folded banded iron formation
however the Lantern prospect was shown to be a substantial mafic-ultramafic intrusion of the type that are
host to the known Fraser Range nickel mineralisation at the Nova and Silver Knight deposits.
Analysis of first pass drilling at Lantern provided the Company with promising results with assays which
included (2):
27m @ 0.18% nickel and 0.17% copper from 47m (drill hole LAAC041)
8m @ 0.21% nickel and 0.03% copper from 45m (drill hole LAAC042)
Maximum copper value 0.36% from LAAC041 (47-48m)
Maximum nickel value 0.34% from LAAC042 (50-51m)
Encouragingly, the Company has intersected prospective rock units which include gabbro, gabbro-norite,
pyroxenite, peridotite, and mafic cumulates. These rock types are frequently found in association with
magmatic nickel mineralisation and are a part of the host rock sequence at the Fraser Range Nova and Silver
Knight deposits. Prospective rock units occur over a significant distance indicating the area has a suitable
scale to potentially host an economic mineralised system.
Figure 7: Lantern Prospect late time MLEM Channel 36 (194ms) data with interpreted intrusions and completed
aircore drilling collars. Priority targets are marked by dotted outlines.
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GALILEO MINING LTD
ABN 70 104 114 132
Following up on these strong results, detailed moving loop electro-magnetic (MLEM) and gravity surveys
were undertaken. Following the end of the year the Company released the results of these surveys which
successfully identified a large-scale conductive target (see Figure 7).
The MLEM survey was conducted over 54 line-km covering approximately 60% of the target area. The peak
of the conductor observed in the MLEM data occurs within a broad 1500-metre-long conductive trend with
the top of the source estimated to be 340 metres below surface. Further aircore drilling is planned for the
upcoming year with deeper RC and diamond drilling also planned. Galileo was successful in its application
for co-funded drilling from the Geological Survey of Western Australia’s Exploration Incentive Scheme. Up to
half of the costs of a diamond drill hole at the Lantern Prospect will be funded through this scheme.
At the Empire Rose Prospect in the southern area of the Fraser Range Project Galileo completed first pass
aircore drilling, Moving Loop Electro Magnetic surveying, Induced Polarisation surveying, and diamond core
drilling over the year. The initial target was a Nova style nickel sulphide deposit. After the completion of
diamond core drilling, which pierced the subsurface conductive geophysical models, it appeared that the
sulphides encountered are more closely linked to a hydrothermal alteration system with potential for gold
than a magmatic nickel intrusion. Following the end of the year, the Company received assays which
confirmed the presence of anomalous gold associated with sulphide mineralisation at Empire Rose. Best gold
intercepts included (3):
1m @ 0.25 g/t gold and 0.8 g/t silver from 420m in ER001, and
1.05m @ 0.18 g/t gold and 0.9 g/t silver from 220m in ER003
Figure 8: Sulphide stringers and veins with quartz in ER001 at 407m (field of view approximately 15cm across)
A diamond drill hole was undertaken at the Yardilla South gold prospect approximately 2km from Empire
Rose. Following the end of the year the assays from Yardilla South drilling were received with the banded iron
formation geology showing only trace amounts of gold and base metals. The focus for the future will be on
the sulphide mineralised rock units at Empire Rose which appear to be more prospective for economic
mineralisation.
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GALILEO MINING LTD
ABN 70 104 114 132
Sulphide levels in the diamond core at Empire Rose vary between three and fifteen per cent through
mineralised zones up to 20 metres thick. Electro-magnetic (EM) surveying has proven to be an effective tool
in defining sulphide mineralisation and additional EM surveys are planned to locate new drill targets along
strike. Significant potential exists at the Empire Rose prospect for higher grade gold mineralisation associated
with sulphides along strike of the recent drilling (see Figure 9).
Figure 9: Empire Rose and Yardilla South prospects over TMI magnetic image. Untested prospective ground exists
over five kilometres along strike to the north east and along four kilometres of strike to the southwest.
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GALILEO MINING LTD
ABN 70 104 114 132
Corporate
Capital structure
As at the date of this report the Company’s Capital structure is as follows:
Quoted Securities:
Number
Class
92,279,037
Ordinary Fully Paid Shares
Un-quoted Securities:
Number
Class
28,094,895
Ordinary Fully Paid Shares (held in escrow for 24 months from 29 May 2018)
15,000,000
Class A Options exercisable at $0.20 expiring 31 January 2023
2,200,000
Performance Rights Vesting @ $1.00 expiring 31 January 2023
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
There has not arisen in the interval between the end of the financial year and the date of this report any
item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect
significantly the operations, the results of those operations, or the state of affairs of the Group in future
financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Group will continue its evaluation of its mineral projects and undertake generative work to identify and
acquire new resource projects and opportunities. Due to the nature of the business, the result is not
predictable.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than reported above in the Review of Operations, there were no significant changes in the state of
affairs of the Group during the reporting period.
ENVIRONMENTAL REGULATIONS AND PERFORMANCE
The Group is required to carry out the exploration and evaluation of its mining tenements in accordance
with various State Government Acts and Regulations.
In regard to environmental considerations, the Group is required to obtain approval from various State
regulatory authorities before any exploration requiring ground disturbance, such as line clearing, drilling
programs and costeaning is carried out. It is normally a condition of such regulatory approval that any area
of ground disturbed during the Group’s activities is rehabilitated in accordance with various guidelines. The
Group conducts its exploration activities in an environmentally sensitive manner and is not aware of any
significant breaches of these guidelines.
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GALILEO MINING LTD
ABN 70 104 114 132
Information on Directors and Secretaries
Current Directors
Simon Jenkins – Independent Non-executive Chairman (appointed 13 September 2017)
Simon has been a director of corporate law firm Price Sierakowski Corporate since 2005 and has experience
in a broad range of corporate transactions including takeovers, mergers and capital raisings both in Australia
and overseas. He has extensive experience in a range of industries including the resource, energy and
telecommunications sectors. He has acted for Australian and internationally listed companies as well as for
a number of large private enterprises. Simon has previously held directorships in both ASX listed and client
owned private companies. He is a member of AMPLA and the Petroleum Club of WA.
Simon has a Bachelor of Laws from the University of Western Australia and is a recommended Mergers and
Acquisitions Lawyer by Doyle's Guide 2011. Simon has not held any other directorships of listed entities in
the last 3 years.
Brad Underwood – Managing Director (appointed 13 September 2017)
Brad is a geologist with over 15 years’ experience in exploration, prospecting and mining. He has been
involved in copper, gold, nickel and cobalt discoveries and the development of numerous prospects over a
variety of commodities. Between 2010 and 2018, Brad worked directly for Mark Creasy as General Manager
of several private exploration companies. During this time Brad’s responsibilities included the exploration
and prospect development of the Fraser Range tenements surrounding the Nova mine site as well as the
development of Galileo Mining’s projects near Norseman.
Brad has a Bachelor of Science in Geology and a Post Graduate Diploma in Geology from the University of
Auckland and a Master of Science (Distinction) in Mineral Economics from Curtin University. Brad has not
held any other directorships of listed entities in the last 3 years.
Noel O’Brien – Independent Technical Director (appointed 6 February 2018)
Noel is a metallurgist and processing expert who is currently a technical adviser to Core Lithium Ltd (ASX:
CXO), Savannah Lithium Ltd (AIM: SAV) and other ASX listed companies. He was formerly Managing Director
in South Africa for SNC-Lavalin Inc, a leading global engineering and construction group, and was
responsible for delivering base metal smelters and refinery projects across Africa. Noel has a deep
understanding of metallurgy and possesses processing expertise in smelting, gravity separation, flotation,
leaching and solvent extraction.
Noel holds a Metallurgical Engineering degree from the University of Melbourne, an MBA from
Witwatersrand University and is a Fellow of the AusIMM. Noel is currently a Non-executive Director of Mali
Lithium Limited (ASX: MLL), (since 1 December 2017).
Company Secretary
Mr Mathew Whyte
Mr Whyte is a CPA and a Chartered Secretary (FCIS). He has over 25 years’ commercial experience in the
financial management, direction and corporate governance of ASX listed companies. He has held senior
executive roles on a broad range of Australian listed entities with operations in Australia and overseas in the
mining exploration, mining services, power infrastructure and technology development industries. Mr Whyte
is currently a Non-executive director and Company Secretary of Aurora Labs Ltd (ASX: A3D).
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GALILEO MINING LTD
ABN 70 104 114 132
DIRECTORS’ INTERESTS IN SHARES AND PERFORMANCE RIGHTS OF THE COMPANY
As at the date of this report, the interest of the directors in securities of Galileo Mining Ltd were:
Simon Jenkins
Brad Underwood
Noel O’Brien
DIRECTORS’ MEETINGS
Number of Ordinary Shares
500,000
300,000
-
Options
2,500,000
10,000,000
2,500,000
The following table sets out the number of meetings of directors held during the year ended 30 June 2019
and the number of meetings attended by each director.
Simon Jenkins
Brad Underwood
Noel O’Brien
REMUNERATION REPORT (Audited)
Number Eligible to
Attend
6
6
6
Number Attended
6
6
4
The Directors of Galileo Mining Ltd present the Remuneration Report (‘the Report”) for the Group for the year
ended 30 June 2019 (“FY19”). This Report forms part of the Directors’ Report and has been audited as required
by section 300A of the Corporations Act 2001.
Key management personnel disclosed in this report
For the purposes of this Report, key management personnel (KMP) of the Group are defined as those persons
having authority and responsibility for planning, directing and controlling the major activities of the Group,
directly or indirectly, including a director (whether executive or otherwise) of the Company, and its
subsidiaries.
Details of key management personnel:
Simon Jenkins (Chairman)
Brad Underwood (Managing Director)
Noel O’Brien (Technical Director)
Remuneration Philosophy
The performance of the Group depends upon the quality of its Directors and Executives. To prosper the Group
must attract, motivate and retain highly skilled directors and KMP.
To this end Galileo aims to reward executives with a level and mix of remuneration commensurate with their
position and responsibility so as to align the interests of executives with those of shareholders and to ensure
total remuneration is competitive by market standards.
Remuneration and nomination issues are handled at the full Board level. Due to the small number of directors
and KMP no separate committee has been established for this purpose.
Board members, as per groupings detailed below, are responsible for determining and reviewing
compensation arrangements.
In order to maintain good corporate governance, the Non-executive Directors assume responsibility for
determining and reviewing compensation arrangements for the Executive Directors of the Group. The
Executive Directors in turn are responsible for determining and reviewing the compensation arrangements
for the Non-executive Directors.
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GALILEO MINING LTD
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The assessment considers the appropriateness of the nature and amount of remuneration of KMPs on a
periodic basis by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high-quality Board and executive team.
Independent external advice is sought from remuneration consultants when required, however no advice has
been sought during the year ended 30 June 2019. The Corporate Governance Statement provides further
information on the Company’s remuneration governance.
Remuneration structure
In accordance with best practice corporate governance, the structure of Non-executive Director and Executive
Director’s remuneration is separate and distinct.
A. Non-executive Directors remuneration
Objective
The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Structure
The Board policy is to remunerate non-executive directors at commercial market rates for comparable
companies for their time, commitment and responsibilities.
On appointment to the Board, all non-executive directors sign a letter of appointment. The letter summarises
the Board policies and terms including remuneration, relevant to the office of director.
The constitution and the ASX Listing rules specify that the aggregate remuneration of non-executive directors
shall be determined from time to time by shareholders at general meeting.
Non-executive directors receive a fixed fee inclusive of superannuation contributions. Fees for non-executive
directors are not linked to the performance of the Group. Subject to approval by shareholders, Non-executive
directors’ remuneration may also include an incentive portion consisting of Options, which are granted for
the same reasons and objectives and on the same terms as performance rights granted to Executive Directors
as outlined in Section B below. To this end Non-executive Directors are also entitled to participate in Galileo’s
Long Term Incentive Plan (LTI Plan).
The remuneration of Non-executive Directors for the year ended 30 June 2019 is detailed in the table in
Section C of this Report.
B. Executive Directors remuneration
Objective
The Group aims to reward Executive Directors with a level and mix of remuneration commensurate with their
position and responsibilities within the Group and so as to:
- Align the interests of Executive Directors with those of shareholders.
-
Link rewards with the strategic goals and performance of the Group
-
Ensure total remuneration is competitive by market standards.
Structure
In determining the level of remuneration paid to Executive Directors, the Board takes into account the
activities of the Group and available benchmarks.
Employment Contracts have been entered into with the Executive Director of Galileo. Details of this contract
are provided in Section D of this Report.
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GALILEO MINING LTD
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Remuneration consist of the following key elements:
-
Fixed remuneration
- Variable Remuneration
-
Long Term Incentive (LTI).
The proportion of fixed remuneration and variable remuneration is established for the Executive Director by
the Board. The table in Section C of this Report details the fixed and variable components (%) of the Executive
Directors of Galileo.
Fixed Remuneration
The level of fixed remuneration is set as a cash salary plus superannuation contributions so as to provide a
base level of remuneration which is both appropriate to the position and is competitive in the market.
Variable remuneration – Long Term Incentives (LTI)
Options
LTI grants to executives are delivered in the form of Options.
The table in Section C provides details of Options granted and the value of equity instruments granted,
exercised and lapsed during the year. Options were issued free of charge. Each option entitles the holder to
subscribe for one (1) fully paid ordinary share in Galileo upon the exercise of the option based on achieving
vesting conditions at a $0.20 exercise price. The terms and conditions including the service and performance
criteria that must be met are as follows:-
Each Option will only vest and become exercisable when the 60-day volume weighted average market price
(as defined in the Listing Rules) of Galileo’s quoted Shares first exceeds $0.60 per Share. Options not so
exercised shall automatically expire on the expiry date. Each Option entitles the holder to subscribe (in cash)
for one Share in the capital of Galileo. Each Share allotted as a result of the exercise of any Option will rank
in all respect pari passu with the existing Shares in the capital of Galileo on issue at the date of allotment.
Relationship between remuneration and the Group’s performance
As the Group is a newly listed exploration Group, measuring performance is difficult. The most meaningful
measure of internal performance is on goals that have an exploration focus.
In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to the
following indices in respect of the current financial year and the previous financial year:
2019
2018
2017
Net Loss
1,097,116
$677,373
$29,636
Share price
$0.135
$0.37
N/A
19
GALILEO MINING LTD
ABN 70 104 114 132
C. Remuneration Details
Details of the nature and amount of each element of the remuneration of each KMP of the Group are shown
in the table below:
Perform-
ance
Related
%
38.3
85.5
28.8
42.9
Short-term benefits
Salary &
fees
$
Non
monetary
benefits
$
Long-term
benefits
Long
Service
Leave
$
Post
employment
Super-
annuation
Share-based
payments*
Options
Total
$
$
$
-
-
-
-
60,000
5,000
Simon Jenkins (Chairman) – appointed 13 September 2017
2019
2018
Brad Underwood (Managing Director) – appointed 13 September 2017
30,875
2019
12,405
2018
Noel O’Brien (Technical Director) – appointed 6 February 2018
2019
2018
Total 2019
Total 2018
75,000
12,500
466,912
158,122
331,912
140,622
5,928
2,339
-
-
-
-
33.8
69.3
30.9
50.2
*Amounts recognised as Share Based Payments represent the remaining non ‐cash fair value of Class A Unquoted Options
issued during FY 2018 (Refer Note 18). Each Option is exercisable at $0.20 and expires on 31 January 2023 and will only
vest and become exercisable when the 60‐ day VWAP of the Company’s quoted shares first exceeds $0.60 per share.
Options are held in escrow until 29 May 2020.
113,238
40,763
728,478
347,104
38,238
28,263
224,763
174,238
-
-
30,875
12,405
-
-
5,928
2,339
-
-
-
-
37,305
29,195
149,220
116,780
97,305
34,195
517,935
272,146
Unlisted Options Issued to KMP
No options were issued to KMP during, or since the end of, the current financial year ended 30 June 2019.
During the year ended 30 June 2018 the Group granted the following options over unissued ordinary shares
to KMP as remuneration:
Class
Expiry date
Exercise
price
Date granted
Number of
options
Grant date
fair value
Vesting date
Unlisted
Options
31 Jan 2023
$0.20
6 Feb 2018
15,000,000
$0.0266
Based on
VWAP
Option holdings of key management personnel (unlisted options)
KMP
Balance at
beginning
of the year
Options
Granted
Options
expired
Net
change
other
Balance at
end of the
year
Vested at end of year
Exercisable
Not
exercisable
2019
S Jenkins
B Underwood
N O’Brien
2,500,000
10,000,000
2,500,000
Total
15,000,000
-
-
-
-
-
-
-
-
20
-
-
-
-
2,500,000
10,000,000
2,500,000
15,000,000
-
-
-
-
-
-
-
-
GALILEO MINING LTD
ABN 70 104 114 132
KMP
Balance at
beginning
of the year
Options
Granted
Options
expired
Net
change
other
Balance at
end of the
year
Vested at end of year
Exercisable
Not
exercisable
2018
S Jenkins
B Underwood
N O’Brien
Total
-
-
-
-
2,500,000
10,000,000
2,500,000
-
-
-
15,000,000
-
-
-
-
-
2,500,000
10,000,000
2,500,000
15,000,000
-
-
-
-
-
-
-
-
Shareholdings of key management personnel (ordinary shares)
KMP
2019
S Jenkins
B Underwood
Total
KMP
2018
S Jenkins
B Underwood
Total
Balance at
beginning of
the year
Granted as
remuneration
Conversion of
Convertible
Notes
Net change
other
Balance at
end of the
year
500,000
300,000
800,000
-
-
-
-
-
-
Balance at
beginning of
the year
Granted as
remuneration
Conversion of
Convertible
Notes
Net change
other
-
-
-
-
-
-
500,000
300,000
800,000
-
-
-
-
-
-
500,000
300,000
800,000
Balance at
end of the
year
500,000
300,000
800,000
D. Service Agreements
Mr Brad Underwood – Managing Director
Terms of Agreement – commenced as Managing Director on 6 February 2018, no fixed term, until
terminated by either party.
- Termination – 3 months by Mr Underwood and 6 months by Galileo.
- Salary - Fixed remuneration of $325,000 per annum plus superannuation.
E. Loans to key management personnel
There were no loans to key management personal during the financial year or the previous financial year.
F. Other KMP transactions
1. Price Sierakowski Corporate, a company of which Simon Jenkins is a director, provided legal advice
to the Group totalling $16,646 (2018: $72,780) (excluding GST). As at 30 June 2019, $303 was
payable to Price Sierakowski.
2. As at 30 June 2019, $6,875 relating to outstanding directors’ fees was payable to Trinol Pty Ltd, a
company of which Noel O’Brien is a director.
End of Remuneration Report
21
GALILEO MINING LTD
ABN 70 104 114 132
SHARE OPTIONS
At the date of this report the unissued ordinary shares of the Company under option are as follows:
Date of
Expiry
31 Jan 23
Exercise
Price
$0.20
Held at
01 Jul 18
15,000,000
Issued
Exercised
-
-
Lapsed /
Cancelled
-
Held at
19 Sep 19
15,000,000
Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company
or any related body corporate or in the issue of any other registered scheme.
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied to any court pursuant to section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company or 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 any part of those proceedings. The
Company was not a party to any such proceedings during the year.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has entered into a deed of indemnity with all existing directors and officers. Under the deed
the Company has undertaken, subject to the restrictions in the Corporations Act, to indemnify all existing
directors in certain circumstances whilst a director or officer and for 7 years after they have ceased to be a
director or officer.
During the year, the Company paid a premium to insure officers of the Group. The officers of the Group
covered by the insurance policy include all directors and the company secretary.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may
be brought against the officers in their capacity as officers of the Company, and any other payments arising
from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities
arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of
their position or of information to gain advantage for themselves or someone else to cause detriment to the
Group.
Details of the amount of the premium paid in respect of the insurance policies is not disclosed as such
disclosure is prohibited under the terms of the contract.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted
by law, indemnified or agreed to indemnify any current or former officer or auditor of the Group against a
liability incurred as such by an officer.
AUDIT COMMITTEE
The Group is not of a size nor are its financial affairs of such complexity to justify a separate audit committee
of the board of directors. All matters that might properly be dealt with by such a committee are the subject
of scrutiny at full board meetings.
22
GALILEO MINING LTD
ABN 70 104 114 132
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The Auditor’s Independence Declaration immediately follows this Report and forms part of this Report. The
Directors are satisfied as to the independence of the auditors.
During the financial year the entity’s auditor, HLB Mann Judd, provided other non-audit services totalling $Nil
(2018: $11,510) (refer to note 19).
Signed in accordance with a resolution of directors.
For and on Behalf of the Board of Directors
Mr Brad Underwood
Managing Director
Perth, 19 September 2019
23
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Galileo Mining Ltd for the year
ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
19 September 2019
N G Neill
Partner
24
GALILEO MINING LTD
ABN 70 104 114 132
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Other income
Employee benefits and director fees expense
Consulting fees
Share-based payment
Depreciation expense
Loans forgiven
Exploration & evaluation expenses
Impairment of capitalised exploration and
evaluation expenses
Legal and audit expenses
Other expenses
Notes
3
30 June 2019
$
30 June 2018
$
210,858
(245,795)
(262,491)
(392,417)
(11,177)
-
(122,566)
-
(46,096)
(227,432)
55,170
(143,741)
(145,250)
(201,302)
(191)
(1,000)
(71,137)
(29,311)
(32,914)
(107,697)
Loss before income tax expense
(1,097,116)
(677,373)
Income tax expense
4
-
-
Net loss after income tax
(1,097,116)
(677,373)
Other comprehensive income
-
-
Total comprehensive loss for the year
(1,097,116)
(677,373)
Loss per share (cents per share)
Basic loss per share for the year
Diluted loss per share for the year
5
5
2019
¢
(0.91)
(0.91)
2018
¢
(2.07)
(2.07)
The above Consolidated Statement of Comprehensive Income is to be read in conjunction with the Notes to the Financial
Statements.
25
GALILEO MINING LTD
ABN 70 104 114 132
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
Notes
30 June 2019
$
30 June 2018
$
ASSETS
Current Assets
Cash and cash equivalents
Cash on term deposits
Trade and other receivables
Other
Total Current Assets
Non-Current Assets
Property, plant and equipment
Exploration and evaluation expenditure
Other assets
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Other
Total Current Liabilities
Non-Current Liabilities
Other
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
ACCUMULATED EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
15a
15a
6a
7a
8
9
7b
10
11a
11b
3,070,456
4,000,000
78,860
50,816
7,200,132
19,918
9,003,810
26,071
9,049,799
4,275,323
7,000,000
226,901
18,222
11,520,446
16,662
5,287,404
26,071
5,330,137
16,249,931
16,850,583
240,080
36,799
276,879
17,005
17,005
170,290
11,848
182,138
2,510
2,510
293,884
184,648
15,956,047
16,665,935
12
13
14
18,411,245
593,719
(3,048,917)
18,416,434
201,302
(1,951,801)
15,956,047
16,665,935
The above Consolidated Statement of Financial Position is to be read in conjunction with the Notes to the Financial
Statements.
26
GALILEO MINING LTD
ABN 70 104 114 132
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Issued
capital
$
Share based
payment
reserve
$
Accumulated
losses
Total
$
$
As at 1 July 2018
18,416,434
201,302
(1,951,801)
16,665,935
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
-
-
-
-
-
-
(1,097,116)
-
(1,097,116)
(1,097,116)
-
(1,097,116)
Transaction costs of share issue
Share based payments
(5,189)
-
-
392,417
-
-
(5,189)
392,417
As at 30 June 2019
18,411,245
593,719
(3,048,917)
15,956,047
As at 1 July 2017
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
2,200
-
-
-
-
-
-
-
(1,274,428)
(1,272,228)
(677,373)
-
(677,373)
(677,373)
-
(677,373)
Issue of shares
Transaction costs of share issue
Share based payments
19,149,333
(735,099)
-
-
-
201,302
-
-
-
19,149,333
(735,099)
201,302
As at 30 June 2018
18,416,434
201,302
(1,951,801)
16,665,935
The above Consolidated Statement of Changes in Equity is to be read in conjunction with the Notes to the Financial
Statements.
27
GALILEO MINING LTD
ABN 70 104 114 132
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Cash Flow from Operating Activities
Notes
30 June 2019
$
30 June 2018
$
Payments to suppliers and employees
Payments for exploration and evaluation expenditure
Interest received
GST received/(paid)
Security deposit paid
(744,231)
(3,709,470)
207,097
146,052
(17,098)
(372,228)
(917,656)
15,170
(221,401)
(31,545)
Net cash (used in) operating activities
15b
(4,117,650)
(1,527,660)
Cash Flow from Investing Activities
Payment for purchase of tenements
Payment for property, plant & equipment
Proceeds from the sale of tenements
Receipts from/(payments for) term deposits
(62,926)
(19,102)
-
3,000,000
(1,348,954)
(12,184)
40,000
(7,000,000)
Net cash (used in)/provided by investing activities
2,917,972
(8,321,138)
Cash Flow from Financing Activities
Proceeds from issue of shares
Share issue costs
Borrowings from related party
Repayment of borrowings
-
(5,189)
-
-
15,801,043
(735,416)
719,657
(1,675,966)
Net cash (used in)/provided by financing activities
(5,189)
14,109,318
Net increase/(decrease) in cash held
(1,204,867)
4,260,520
Cash at the beginning of the year
4,275,323
14,803
Cash at the end of the year
15a
3,070,456
4,275,323
The above Consolidated Statement of Cash Flows is to be read in conjunction with the Notes to the Financial Statements.
28
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. CORPORATE INFORMATION
The financial report of Galileo Mining Ltd for the year ended 30 June 2019 was authorised for issue in
accordance with a resolution of directors on 19 September 2019.
Galileo Mining Ltd is a company limited by shares incorporated in Australia whose shares are publicly
traded on the Australian Securities Exchange.
The address of the registered office is 13 Colin Street, West Perth WA 6005.
The Company’s principal activity during the year was mineral exploration. Major exploration activities
during the period are outlined in the Review of Operations as contained in the Directors’ Report.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance
with the requirements of the Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board. The financial report
has also been prepared on a historical cost basis.
For the purpose of preparing the consolidated financial statements, the Group is a for-profit entity.
The financial report is presented in Australian dollars and the accounting policies below have been
consistently applied to all of the years presented unless otherwise stated. The financial report is
for the Group consisting of Galileo Mining Ltd and its subsidiaries.
(b) Basis of consolidation
The consolidated financial statements comprise the financial statements of Galileo Mining Ltd
(Galileo) and its subsidiaries as at 30 June 2019 (the Group).
Control is achieved when the Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over
the investee. Specifically, the Group controls an investee if and only if the Group has:
Power over the investee (i.e. existing rights that give it the current ability to direct the
relevant activities of the investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group
considers all relevant facts and circumstances in assessing whether it has power over an investee,
including:
The contractual arrangement with the other vote holders of the investee:
Rights arising from other contractual arrangements; and
The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of control. Consolidation of a
subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group
loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or
disposed of during the year are included in the statement of comprehensive income from the date
the Group gains control until the date the Group ceases to control the subsidiary.
29
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Profit or loss and each component of other comprehensive income (OCI) are attributed to the
equity holders of the parent of the Group and to the non-controlling interests, even if this results
in the non-controlling interests having a deficit balance. When necessary, adjustments are made
to the financial statements of subsidiaries to bring their accounting policies into line with the
Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and
cash flows relating to transactions between members of the Group are eliminated in full on
consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as
an equity transaction. If the Group loses control over a subsidiary, it:
De-recognises the assets (including goodwill) and liabilities of the subsidiary
De-recognises the carrying amount of any non-controlling interests
De-recognises the cumulative translation differences recorded in equity
Recognises the fair value of the consideration received
Recognises the fair value of any investment retained
Recognises any surplus or deficit in profit or loss
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss
or retained earnings, as appropriate, as would be required if the Group had directly disposed
of the related assets or liabilities
Business combinations are accounted for using the acquisition method.
(c) Compliance with IFRS
The financial report complies with Australian Accounting Standards, which include Australian
equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures
that the financial report, compromising the financial statements and notes thereto, complies with
International Financial Reporting Standards.
(d) New Accounting Standards and Interpretations
The Group has adopted all new and amended Australian Accounting Standards and AASB
interpretations as at 1 July 2018.
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and
Measurement. It makes major changes to the previous guidance on the classification and
measurement of financial assets and introduces an ‘expected credit loss’ model for impairment of
financial assets.
The investment classifications available-for-sale financial assets and Held-to-maturity investment'
are no longer used and Financial assets at fair value through other comprehensive income (FVOCI)
was introduced. There were no investments held in these categories as at 30 June 2019 or 30 June
2018.
When adopting AASB 9, the Group has applied transitional relief and opted not to restate prior
periods. There were no differences arising from the adoption of AASB 9 in relation to classification,
measurement, and impairment are recognised in opening retained earnings as at 1 July 2019.
AASB 15 Revenue from Contracts with Customers
AASB 15 provides a single, principles-based five-step model to be applied to all contracts with
customers. Guidance is provided on topics such as the point at which revenue is recognised,
accounting for variable consideration, costs of fulfilling and obtaining a contract and various
30
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
related matters. New disclosures regarding revenue are also introduced. Based on an initial impact
assessment, the new standard is not expected to significantly impact revenue recognition due to
the Group being a mining exploration company, with no contracts or performance obligations at
year end.
The adoption of new and amended Standards and Interpretations did not impact the financial
position or performance of the Group.
Accounting Standards issued but not yet effective
The following standards and interpretations have been issued by the AASB but are not yet effective
for the year ended 30 June 2019.
AASB 16 Leases
AASB 16 provides a new lessee accounting model which requires a lessee to recognise assets and
liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low
value. A lessee measures right-of-use assets similarly to other non-financial assets and lease
liabilities similarly to other financial liabilities. Assets and liabilities arising from a lease are initially
measured on a present value basis. The measurement includes non-cancellable lease payments
(including inflation-linked payments), and also includes payments to be made in optional periods
if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an
option to terminate the lease. AASB 16 also contains disclosure requirements for lessees.
This standard will primarily affect the accounting for the Group’s operating lease. As at 30 June
2019, the Group has $239,354 of non-cancellable operating lease commitments relating to a
property lease. The Group is considering the available options to account for this transition, but
the Group expects a change in reported earnings before interest, tax, depreciation and
amortisation (EBITDA) and increase in lease assets and liabilities recognition. The lease standard is
also expected to have a considerable impact on deferred tax balances. This will however be
dependent on the lease arrangements in place when the new standard is effective. The Group has
commenced the process of evaluating the impact of the new lease standard.
For all other standards and interpretations issued but not yet effective, the Group has not yet
determined the impact of the initial application of the above Standards or Interpretations. These
Standards and Interpretations will be first applied in the financial report of the Group that relates
to the annual reporting period beginning on or after the effective date of each pronouncement.
(e) Exploration and evaluation expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are
recognised as an exploration and evaluation asset in the year in which they are incurred where the
following conditions are satisfied:
-
-
the rights to tenure of the area of interest are current; and
at least one of the following conditions is also met:
-
-
the exploration and evaluation expenditures are expected to be recouped through
successful development and exploration of the area of interest, or alternatively, by its
sale; or
exploration and evaluation activities in the area of interest have not at the balance
date reached a stage which permits a reasonable assessment of the existence or
otherwise of economically recoverable reserves, and active and significant operations
in, or in relation to, the area of interest are continuing.
31
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to
explore, studies, exploratory drilling, trenching and sampling and associated activities and an
allocation of depreciation and amortised of assets used in exploration and evaluation activities.
General and administrative costs are only included in the measurement of exploration and
evaluation costs where they are related directly to operational activities in a particular area of
interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances
suggest that the carrying amount of an exploration and evaluation asset may exceed its
recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash
generating unit(s) to which it has been allocated being no larger than the relevant area of interest)
is estimated to determine the extent of the impairment loss (if any). Where an impairment loss
subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been recognised
for the asset in previous years.
Where a decision has been made to proceed with development in respect of a particular area of
interest, the relevant exploration and evaluation asset is tested for impairment and the balance is
then reclassified to development.
(f)
Investments and other financial assets
Financial assets and are recognised when the Group becomes a party to the contractual provisions
of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial
asset expire, or when the financial asset and substantially all the risks and rewards are transferred.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are
measured at the transaction price in accordance with AASB 15, all financial assets are initially
measured at fair value adjusted for transaction costs (where applicable).
For the purpose of subsequent measurement, financial assets, other than those designated and
effective as hedging instruments, are classified into the following categories:
-
-
-
-
amortised cost
fair value through profit or loss (FVTPL)
equity instruments at fair value through other comprehensive income (FVOCI)
debt instruments at fair value through other comprehensive income (FVOCI).
All income and expenses relating to financial assets that are recognised in profit or loss are
presented within finance costs, finance income or other financial items, except for impairment of
trade receivables which is presented within other expenses.
The classification is determined by both:
-
-
the entity’s business model for managing the financial asset
the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are
presented within finance costs, finance income or other financial items, except for impairment of
trade receivables which is presented within other expenses.
32
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Subsequent measurement of financial assets
Financial assets are measured at amortised cost as the assets meet the following conditions (and
are not designated as FVTPL):
-
-
they are held with the objective to hold the financial assets to collect its contractual cash flows
the contractual terms of the financial assets give rise to cash flows that are solely payments
of principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash
equivalents, trade and most other receivables fall into this category of financial instruments as well
as listed bonds that were previously classified as held-to-maturity under AASB 139.
The fair value of investments that are actively traded in organised financial markets is determined
by referring to market bid prices at close of business on the balance date.
(g) Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated
impairment losses.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as
follows:
Plant and equipment – 2 to 6 years
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes
in circumstances indicate the carrying value may not be recoverable.
For an asset that does not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs, unless the asset’s value in use
can be estimated to be close to its fair value.
If any such indication exists and where the carrying values exceeds the estimated recoverable
amount, the assets or cash generating units are written down to their recoverable amount.
Disposal
An item of plant and equipment is derecognised upon disposal or when no further future
economic benefits are expected to arise from the continued use or disposal of the asset.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the item) is included in profit or loss in the
period the item is derecognised.
(h) Impairment of non-financial assets
AASB 9’s impairment requirements use more forward-looking information to recognise expected
credit losses – the ‘expected credit loss (ECL) model’. This replaced AASB 139’s ‘incurred loss
model’.
Instruments within the scope of the new requirements included loans and other debt-type financial
assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and
measured under AASB 15 and loan commitments and some financial guarantee contracts (for the
issuer) that are not measured at fair value through profit or loss.
33
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss
event. Instead the Group considers a broader range of information when assessing credit risk and
measuring expected credit losses, including past events, current conditions, reasonable and
supportable forecasts that affect the expected collectability of the future cash flows of the
instrument.
12-month expected credit losses’ are recognised for financial instruments that have not
deteriorated significantly in credit quality since initial recognition or that have low credit risk while
‘lifetime expected credit losses’ are recognised for financial instruments that have deteriorated
significantly in credit quality since initial recognition and whose credit risk is not low.
Measurement of the expected credit losses is determined by a probability-weighted estimate of
credit losses over the expected life of the financial instrument.
(i) Trade and other receivables
Trade receivables are measured on initial recognition at fair value and are subsequently measured
at amortised cost using the effective interest rate method, less any allowance for impairment.
Trade receivables are generally due for settlement within periods ranging from 0 days to 30 days.
Impairment of trade receivables is continually reviewed and those that are considered to be
uncollectible are written off by reducing the carrying amount directly. An allowance account is
used when there is objective evidence that the Group will not be able to collect all amounts due
according to the original contractual terms. Factors considered by the Group in making this
determination include known significant financial difficulties of the debtor, review of financial
information and significant delinquency in making contractual payments to the Group. The
impairment allowance is set equal to the difference between the carrying amount of the receivable
and the present value of estimated future cash flows, discounted at the original effective interest
rate. Where receivables are short-term discounting is not applied in determining the allowance.
The amount of the impairment loss is recognised in the statement of profit or loss and other
comprehensive income within other expenses. When a trade receivable for which an impairment
allowance had been recognised becomes uncollectible in a subsequent period, it is written off
against the allowance account. Subsequent recoveries of amounts previously written off are
credited against other expenses in the statement of profit or loss and other comprehensive
income.
(j) Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and on
hand and short-term deposits with an original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and
cash equivalents as defined above, net of outstanding bank overdrafts.
(k) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation.
34
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the obligation at the balance date. If the effect of the time value of money is
material, provisions are discounted using a current pre-tax rate that reflect the time value of money
and the risks specific to the liability. The increase in the provision resulting from the passage of
time is recognised in finance costs.
(l) Leases
The determination of whether an arrangement is a lease or contains a lease is based on the
substance of the arrangement, and requires an assessment of whether the fulfilment of the
arrangement is dependent on the use of a specific asset or assets and whether the arrangement
conveys a right to use the asset.
Finance leases are capitalised at the commencement of the lease at the inception date fair value
of the leased property or, if lower, at the present value of the minimum lease payments. Lease
payments are apportioned between finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
recognised in finance costs in the statement of profit or loss.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable
certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated
over the shorter of the estimated useful life of the asset and the lease term.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Operating lease payments are recognised as an expense in the
Statement of Comprehensive Income on a straight-line basis over the lease term.
(m) Revenue Recognition and Other Income
Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured. The following specific recognition criteria must
also be met before revenue or other income is recognised:
Interest income
Interest income 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.
(n) Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at the balance date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes.
35
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Deferred income tax liabilities are recognised for all taxable temporary differences:
except where the deferred income tax liability arises from the initial recognition of goodwill or
of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit or taxable profit or loss; or
in respect of taxable temporary differences associated with investments in subsidiaries,
associates and interest in joint ventures, except where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward
of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences, and the carry–forward of unused
tax assets and unused tax losses can be utilised:
except where the deferred income tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; or
in respect of deductible temporary differences associated with investment in subsidiaries,
associates and interests in joint ventures, deferred tax assets are only recognised to the extent
that it is probable that the temporary differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all
or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are
recognised to the extent that it has become probable that future taxable profit will allow the
deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply
to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in
the Statement of Comprehensive Income.
Deferred tax assets and liabilities are offset only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same
taxable entity and the same taxation authority.
(o) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
where the GST incurred on a purchase of goods and services is not recoverable from the
taxation authority, in which case the GST is recognised as part of the cost of acquisition of the
asset or as part of the expense item as applicable; and
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part
of the receivables or payables in the Statement of Financial Position.
36
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component
of cash flows arising from investing and financing activities, which is recoverable from, or payable
to, the taxation authority, are classified as operating cash flows.
(p) Trade and other payables
Trade payables and other payables are carried at amortised cost and represent liabilities for goods
and services provided to the Group prior to the end of the financial year that are unpaid and arise
when the Group becomes obliged to make future payments in respect of the purchase of the
goods and services.
(q) Employee Entitlements
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to
be settled wholly within 12 months after the end of the period in which the employees render the
related service are recognised in respect of employees services up to the end of the reporting
period and are measured at the amounts expected to be paid when the liabilities are settled.
Long Service Leave
The liability for long service leave is recognised and measured as the present value of expected
future payments to be made in respect of services provided by employees up to the reporting
date. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Based on the Company’s experience of employee departures, a
long service leave liability is only recognised once an employee has been employed by the
Company for a period of 5 years. Expected future payments are discounted using market yields at
the reporting date on national Government bonds with terms to maturity and currencies that
match, as closely as possible, the estimated future cash outflows.
(r) Contributed equity
Ordinary share capital is recognised at the fair value of the consideration received by the Group.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a
reduction of the share proceeds received.
(s) Earnings/Loss per share (EPS)
Basic EPS is calculated as net profit or loss attributable to members, adjusted to exclude costs of
servicing equity (other than dividends), divided by the weighted average number of ordinary
shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit or loss attributable to members, adjusted for:
costs of servicing equity (other than dividends);
the after tax effect of dividend and interest associated with dilutive potential ordinary shares
that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result
from the dilution of potential ordinary shares;
divided by the weighted average number or ordinary shares and dilutive potential ordinary shares,
adjusted for any bonus element.
37
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(t)
Impairment of assets
The Group assesses at each balance date whether there is an indication that an asset may be
impaired. If any such indication exists, or when annual impairment testing for an asset is required,
the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is
the higher of its fair value less costs to sell and its value in use and is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of those from
other assets or classes of assets and the asset's value in use cannot be estimated to be close to its
fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to
which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its
recoverable amount, the asset or cash-generating unit is considered impaired and is written down
to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset. Impairment losses relating to continuing operations are
recognised in those expense categories consistent with the function of the impaired asset unless
the asset is carried at revalued amount (in which case the impairment loss is treated as a
revaluation decrease).
(u) Share-based payment transactions
The Group provides benefits to employees (including directors and executives) of the Group in the
form of share-based payment transactions, whereby employees render services in exchange for
shares or rights over shares (‘equity-settled transactions’).
The cost of these equity-settled transactions with employees is measured by reference to the fair
value at the date at which they are granted. The fair value is determined by using a Hoadley-Monte
Carlo model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other
than conditions linked to the price of the shares of Galileo Mining Ltd (‘market conditions’).
The cost of equity-settled transactions is recognised, together with a corresponding increase in
equity, over the period in which the performance conditions are fulfilled, ending on the date on
which the relevant employees become fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until
vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of
awards that, in the opinion of the directors of the Company, will ultimately vest. This opinion is
formed based on the best available information at balance date. No adjustment is made for the
likelihood of market performance conditions being met as the effect of these conditions is
included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting
is conditional upon a market condition.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or
fewer awards vest than were originally anticipated to do so. Any award subject to a market
condition is considered to vest irrespective of whether or not that market condition is fulfilled,
provided that all other conditions are satisfied.
38
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if
the terms had not been modified. In addition, an expense is recognised for any modification that
increases the total fair value of the share-based payment arrangement, or is otherwise beneficial
to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, other than forfeiture, it is treated as if it had vested on the
date of cancellation, and any expense not yet recognised for the award is recognised immediately.
However, if a new award is substituted for the cancelled award and designated as a replacement
award on the date that it is granted, the cancelled and new award are treated as if they were a
modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of earnings/loss per share.
(v) Significant Accounting Judgements, Estimates and Assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. The key estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of certain assets and liabilities with the next
annual reporting period are:
(i) Capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent
on a number of factors, including whether the Group decides to exploit the related lease itself
or, if not, whether it successfully recovers the related exploration and evaluation asset through
sale.
Factors which could impact the future recoverability include the level of proved, probable and
inferred mineral resources, future technological changes which could impact the cost of mining,
future legal changes (including changes to environmental restoration obligations) and changes
to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be
recoverable in the future, this will reduce profits and net assets in the period in which this
determination is made.
In addition, exploration and evaluation expenditure, other than acquisition costs, is expensed
as incurred. Acquisition costs in relation to mineral tenements are capitalised and carried
forward provided the rights to tenure of the area of the interest are current and such costs are
expected to be recouped through successful development, or by sale, or where exploration and
evaluation activities have not, at balance date, reached a stage to allow a reasonable
assessment regarding the existence of economically recoverable reserves.
(ii) Income tax
Refer to Note 2(n) for the Group’s accounting policy in relation to recognition of income tax
balances.
39
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
3. OTHER INCOME
Interest revenue
Profit on sale of rights
Other income
Total other income
4. INCOME TAX
2019
$
210,608
-
250
2018
$
15,170
40,000
-
210,858
55,170
The components of income tax expense are as follows:
Current tax
Deferred tax
Total expense/(benefit)
-
-
-
-
-
-
The parent entity and the Group are not tax consolidated.
(i)
(ii) The parent entity and each of the subsidiaries are in tax loss for the year and have substantial tax losses
carried forward.
(iii) The Directors are of the view that there is insufficient probability that the parent entity and its subsidiaries
will derive sufficient income in the foreseeable future to justify booking the tax losses.
Numerical reconciliation of income tax expense to
prima facie tax payable is as follows:
Loss from operations before income tax expense
2019
$
2018
$
(1,097,116)
(677,373)
Tax at Australian tax rate of 30% (2017: 27.5%)
(329,135)
(186,278)
Share based payments
Expenses not deductible
Capital raising costs deductible
Movement in unrecognised temporary differences
Tax losses not recognised
Income tax expense / (benefit)
Amounts charged or credited directly to equity.
Deferred income tax related to items charged or credited directly to
equity
Unrealised gain on available-for-sale investments
Income tax expense reported in equity
117,725
317
(44,106)
(430,105)
685,304
55,358
119
(40,431)
-
171,231
-
-
-
-
-
-
Tax Losses
Unused tax losses for which no tax loss has been
booked as a deferred tax asset
8,119,353
5,537,276
Potential benefit at 30% (2018: 27.5%)
2,435,806
1,522,751
40
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
The benefit of income tax losses will only be obtained if:
(i)
(ii)
the respective companies derive future assessable income of a nature and of an amount to enable the
benefit from the deductions for the losses to be realised;
the respective companies continue to comply with the conditions for deductibility imposed by tax
legislation; and
(iii) no changes in tax legislation adversely affect the respective companies in realising benefit from the
deductions from the losses.
Deferred Income Tax
Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Exploration and evaluation assets
Accrued interest
Prepayments
Deferred tax assets used to offset deferred tax liabilities
Deferred tax assets
Property, plant and equipment
Previously expensed blackhole costs
Capital raising costs reflected in equity
Accruals
Provisions
Tax losses - revenue
Deferred tax assets used to offset
deferred tax liabilities
Deferred tax assets not brought to account
5. EARNINGS/LOSS PER SHARE
Loss per share (cents per share)
Basic loss per share for the year
Diluted loss per share for the year
The following reflects the loss used in the basic and diluted loss
per share computations.
(a) Loss used in calculating loss per share
2019
$
2018
$
95,746
1,053
552
(97,352)
1,054,788
-
-
(1,054,788)
-
-
-
350
132,318
5,250
16,141
2,435,806
53
-
-
3,850
3,948
1,522,751
(97,353)
(2,492,512)
(1,054,788)
(475,814)
-
-
2019
¢
(0.91)
(0.91)
2019
$
2018
¢
(2.07)
(2.07)
2018
$
For basic and diluted loss per share:
Net loss for the year attributable to ordinary shareholders of the
parent
(1,097,116)
(677,373)
41
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(b) Weighted average number of shares
For basic and diluted loss per share:
Weighted average number of ordinary shares
6. TRADE AND OTHER RECEIVABLES
(a) Current
Other debtors
Accrued interest
Net GST receivable
7. OTHER ASSETS
(a) Current
Cash deposited for as security bond
Prepayments
(b) Non-current
Cash deposited for rental bond
8. PROPERTY, PLANT AND EQUIPMENT
At cost
Accumulated depreciation
Net carrying amount
(a) Reconciliation
Reconciliation of the carrying amount of office furniture and
equipment at the beginning and end of the current financial year.
Office furniture and equipment
At 1 July net of accumulated depreciation
Acquisitions
Depreciation charge for the year
At 30 June net of accumulated depreciation
Field equipment
At 1 July net of accumulated depreciation
Acquisitions
Depreciation charge for the year
At 30 June net of accumulated depreciation
2019
Number
2018
Number
120,373,932
32,701,038
2019
$
2018
$
-
3,511
75,349
78,860
22,572
28,244
50,816
26,071
26,071
31,286
(11,368)
19,918
12,912
10,518
(8,317)
15,113
3,750
3,915
(2,860)
4,805
5,500
-
221,401
226,901
5,474
12,748
18,222
26,071
26,071
16,853
(191)
16,662
-
13,103
(191)
12,912
-
3,750
-
3,750
Total
19,918
16,662
42
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
9. EXPLORATION AND EVALUATION EXPENDITURE
Costs carried forward in respect of:
Exploration and evaluation phase – at cost
Reconciliation
Opening balance
Acquisition of tenements
Incurred during the year
Written off during the year
Total exploration and evaluation expenditure
2019
$
2018
$
9,003,810
5,287,404
5,287,404
62,926
3,653,480
-
9,003,810
2,943,081
1,400,000
973,634
(29,311)
5,287,404
The ultimate recoupment of the Group’s deferred mining tenements and exploration expenditure carried forward
in respect of areas of interest still in the exploration and/or evaluation phases is dependent on successful
development and commercial exploitation or, alternatively, sale of the respective areas.
10. TRADE AND OTHER PAYABLES
Current
Trade creditors
2019
$
2018
$
240,080
170,290
Trade and other payables are non-interest bearing and are normally settled on 30-day terms. Due to the short-term
nature of these payables, their carrying value is assumed to approximate their fair value.
11. OTHER LIABILITIES
(a) Current
Annual Leave
(b) Non-current
Long Service Leave
2019
$
2018
$
36,799
11,848
17,005
2,510
43
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
12. ISSUED CAPITAL
(a) Ordinary shares
Movements of ordinary shares
Shares on issue
2019
$
2018
$
18,411,245
18,416,434
2019
Number
2018
$
Number
$
Beginning of financial year
120,373,932
18,416,434
10,001
2,200
Subdivision of shares (4,850 for 1)
Consolidation (1 for 2.38)
Add shares issued
- AGR-Loan repayment
- Acquire tenements
- IPO capital raise
- Convert notes
Less capital raising costs
-
-
-
-
-
-
-
-
-
48,504,850
20,372,037
-
2,200
-
-
-
-
(5,189)
16,491,440
510,455
75,000,000
8,000,000
-
3,298,288
51,045
15,000,000
800,000
(735,099)
As at the end of the financial year
120,373,932
18,411,245
120,373,932
18,416,434
(b) Terms & conditions of issued capital
Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company,
to participate in the proceeds from the sale of the surplus assets in proportion to the number of and amounts
paid up on shares held.
(c) Share based payment plans
Unlisted options
The Company has the following unlisted options on issue:
- 15,000,000 options exercisable at $0.20 expiring on 31 January 2023.
Each option will only vest and become exercisable when the 60-day volume weighted average market price (as
defined in the Listing Rules) of the Company’s quoted Shares first exceeds $0.60 per Share. Options not so
exercised shall automatically expire on the expiry date. Each option entitles the holder to subscribe (in cash)
for one Share in the capital of the Company. Each Share allotted as a result of the exercise of any Option will
rank in all respect pari passu with the existing Shares in the capital of the Company on issue at the date of
allotment.
Performance Rights
The Company has 2,200,000 rights on issue, expiring on 31 January 2023.
Performance Rights were issued free of charge. Each Performance Right entitles the holder to subscribe for one
(1) fully paid ordinary share in the Company based on achieving vesting conditions at a nil exercise price. The
terms and conditions including the service and performance criteria that must be met are as follows: -
44
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(a) Subject to the below paragraphs (b) to (d), each Performance Right will only vest and become exercisable
when the 10-day volume weighted average market price (as defined in the ASX Listing Rules) of the
Company’s quoted Shares first exceeds $1.00 per Share (Vesting Condition).
(b) Maintain a minimum of 12 months continuous service with the Company.
(c)
Each Performance Right will automatically be cancelled and will be redeemed by the Company for nil
consideration if employment with the Company is terminated for any reason before the Vesting Condition
is met.
If a Good Leaver* and the Vesting Condition has been satisfied at the date of termination the Performance
Rights may be exercised within 20 Business Days of termination of employment or contracting (as
applicable) with the Company. If a Bad Leaver* and the Vesting Condition has been satisfied at the date
of termination the Performance Rights will terminate.
(d)
*As defined in the Galileo Mining Ltd Employee Incentive Plan refer to:
http://www.galileomining.com.au/about-us/corporate-governance/
Each Performance Right, issued for nil consideration, entitles the participant to acquire one (1) fully paid ordinary
share, by way of issue of new Shares or transfer of existing Shares.
All Performance Rights that have not vested by the expiry date will automatically lapse and be forfeited.
13. RESERVES
Share-based payment reserve
Movement in share-based payment reserve
Balance at the beginning of the financial year
Share-based payments during the year
2019
$
2018
$
593,719
201,302
201,302
392,417
-
201,302
Balance at the end of the financial year
593,719
201,302
Share-based payment reserve records the value of shares, share options and performance rights issued to
Galileo’s employees or others. Refer to Note 18 for further details.
14. ACCUMULATED LOSSES
Accumulated losses
Movement in accumulated losses:
Balance at the beginning of the financial year
Net loss for the year
2019
$
2018
$
(3,048,917)
(1,951,801)
(1,951,801)
(1,097,116)
(1,274,428)
(677,373)
Balance at the end of the financial year
(3,048,917)
(1,951,801)
45
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
15. STATEMENT OF CASH FLOWS
(a) Reconciliation of cash
Cash at bank and on hand
Short term deposits
2019
$
2018
$
31,546
3,038,910
66,260
4,209,063
Total cash and cash equivalents
3,070,456
4,275,323
Cash on term deposit (i)
4,000,000
7,000,000
(i) This relates to term deposits which have an original maturity of greater than three months.
(b) Reconciliation of net loss after tax to net
cash flows from operations:
Loss from ordinary activities after income tax
(1,097,116)
(677,373)
2019
$
2018
$
Adjustments for:
Depreciation
Employee share-based payment
Impairment of exploration expenditure
Exploration expenditure classified as operating
Profit on disposal of exploration rights
Loan forgiven
Changes in assets and liabilities:
Increase/(Decrease) in payables
Increase/(Decrease) in provisions
(Increase)/Decrease in receivables
(Increase)/Decrease in prepayments
11,177
392,417
-
(3,586,903)
-
-
7,042
39,446
130,943
(14,656)
191
201,302
29,311
(846,519)
(40,000)
1,000
61,264
14,358
(258,446)
(12,748)
Net cash used in operating activities
(4,117,650)
(1,527,660)
(c) Non-cash financing & investing activities:
There were no non-cash financing & investing activities during the year.
16. RELATED PARTY TRANSACTIONS
1)
2)
Price Sierakowski Corporate, a company of which Simon Jenkins is a director, provided
legal advice to the Group totalling $16,646 (2018: $72,780) (excluding GST). As at 30 June
2019, $303 was payable to Price Sierakowski.
As at 30 June 2019, $6,875 relating to directors’ fees was payable to Trinol Pty Ltd, a
company of which Noel O’Brien is a director.
46
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
17. DIRECTORS AND KEY MANAGEMENT PERSONNEL
Compensation for Executive Directors and Key Management Personnel
Short-term benefits
Long-term benefits
Post-employment benefits
Share-based payments
2019
$
466,912
5,928
30,875
224,763
2018
$
158,122
2,339
12,405
174,238
Total compensation
728,478
347,104
18. SHARE-BASED PAYMENTS
(a) Options
During the year there were no options granted to directors and officers.
During the previous year the following options were granted to directors and officers:
Class
Expiry date
Exercise
price
Date
granted
Number
of options
Grant date
fair value
Vesting date
Unlisted
Options
Unlisted
Options
31 Jan 2023
$0.20
6 Feb 2018
12,500,000
$0.0266
31 Dec 2018
31 Jan 2023
$0.20
14 Feb 2018
2,500,000
$0.0266
31 Dec 2018
The assessed fair value of the options was determined using a Hoadley-Monte Carlo model, taking into account
the exercise price, term of option, the share price at grant date and expected price volatility of the underlying
share, expected dividend yield and the risk-free interest rate for the term of the option. The following
assumptions were used in the estimation:
- Risk free interest rate of 2.39%
- Company share price at date of grant of $0.10
- Dividend Yield of 0%
- Expected volatility of 80%
- Option exercise price of $0.20.
- Option duration of 4.9 years
- Discount factor of 30%
Each option will only vest and become exercisable when the 60-day volume weighted average market price
(as defined in the Listing Rules) of the Company’s quoted Shares first exceeds $0.60 per Share.
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future
trends, which may also not necessarily be the actual outcome. No other features of options granted were
incorporated into the measurement of fair value.
47
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
The following table illustrates the number and weighted average exercise prices (WAEP) and movements in
employee share options during the year.
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Expired or Cancelled during the year
2019
Number
-
2019
WAEP
$
-
2018
Number
-
2018
WAEP
$
-
15,000,000
0.20
15,000,000
0.20
-
-
-
-
-
-
-
-
Outstanding at the end of the year
15,000,000
0.20
15,000,000
0.20
Exercisable at reporting date
-
-
-
-
(b) Performance Rights
During the year the following performance rights were granted to employees:
Class
Performance
Rights
Expiry
date
31 January
2023
Exercis
e price
Nil
Date
granted
9 October
2018
Number
Grant date
fair value
Expected Vesting
date
500,000
$0.19
30 June 2022
Performance Rights were issued free of charge. Each Performance Right entitles the holder to subscribe for one
(1) fully paid ordinary share in the Company based on achieving vesting conditions at a nil exercise price.
The terms and conditions including the service and performance criteria that must be met are as follows: -
(a)
Subject to the below paragraphs (b) to (d), each Performance Right will only vest and become exercisable
when the 10 day volume weighted average market price (as defined in the ASX Listing Rules) of the
Company’s quoted Shares first exceeds $1.00 per Share (Vesting Condition).
(b) Maintain a minimum of 12 months continuous service with the Company.
(c)
Each Performance Right will automatically be cancelled and will be redeemed by the Company for nil
consideration if employment with the Company is terminated for any reason before the Vesting Condition
is met.
If a Good Leaver* and the Vesting Condition has been satisfied at the date of termination the Performance
Rights may be exercised within 20 Business Days of termination of employment or contracting (as
applicable) with the Company. If a Bad Leaver* and the Vesting Condition has been satisfied at the date
of termination the Performance Rights will terminate.
(d)
*As defined in the Galileo Mining Ltd Employee Incentive Plan
Each Performance Right, issued for nil consideration, entitles the participant to acquire one (1) fully paid ordinary
share, by way of issue of new Shares or transfer of existing Shares.
All Performance Rights that have not vested by the expiry date will automatically lapse and be forfeited.
The performance rights have been valued at $0.19 per right, being the share price at grant date.
48
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
During the previous year the following performance rights were granted to employees:
Class
Performance
Rights
Expiry
date
31 January
2023
Exercis
e price
Nil
Date
granted
29 June
2018
Number
Grant date
fair value
Expected Vesting
date
1,700,000
$0.365
30 June 2022
Movement of Performance Rights:
Outstanding at beginning of the year
Granted during the year
2019
Number
1,700,000
500,000
2018
Number
-
1,700,000
Outstanding at the end of the year
2,200,000
1,700,000
19. AUDITOR’S REMUNERATION
2019
$
2018
$
The auditor of Galileo Mining Ltd is
HLB Mann Judd
Amounts received or due and receivable by the auditors for:
- Auditing or reviewing accounts
- Provision of Investigating Accountant’s Report
The auditors received no other benefits.
20. EXPENDITURE COMMITMENTS
(a) Exploration expenditure commitments
26,450
-
26,450
28,000
11,510
39,510
The Group has certain obligations to perform minimum exploration work and to expend
minimum amounts of money on such work on mining tenements. These obligations may be
varied from time to time subject to approval and are expected to be fulfilled in the normal course
of the operations of the Group. These commitments have not been provided for in the financial
report. Due to the nature of the Group’s operations in exploring and evaluating areas of interest,
it is difficult to accurately forecast the nature and amount of future expenditure beyond the next
year. Expenditure may be reduced by seeking exemption from individual commitments, by
relinquishing of tenure or by new joint venture arrangements. Expenditure may be increased
when new tenements are granted or joint venture agreements amended. The minimum
expenditure commitment on the tenements is shown below.
Not later than one year
Later than one year and less than five years
49
2019
$
2018
$
683,680
2,953,720
520,600
2,188,400
3,637,400
2,709,000
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(b) Lease expenditure commitments
The Group had operating leases for office space. Future minimum lease payments under operating leases,
together with the present value of the net minimum lease payments are as follows:
Not later than one year
Later than one year and less than five years
21. FINANCIAL RISK MANAGEMENT
2019
$
125,393
113,961
239,354
2018
$
101,025
233,474
334,499
The Group’s principal financial instruments comprise cash and short-term deposits.
The Group has various other financial assets and liabilities such as trade receivables, and trade
payables, which arise directly from its operations and other activities.
Details of the significant accounting policies and methods adopted, including the criteria for
recognition, the basis of measurement and the basis on which income and expenses are recognised,
in respect of each class of financial asset, financial liability and equity instrument are disclosed in
notes 2, 6, 10, 11 and 13 to the financial statements.
The Group manages its exposure to a variety of financial risks: market risk (including equity price
risk, and interest rate risk), credit risk and liquidity risk in accordance with specific approved Group
policies.
Primary responsibility for the identification and control of financial risks rests with the Board. The
Board reviews and agrees policies for managing each of the risks identified.
The Group uses different methods to measure and manage different types of risks to which it is
exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk and
assessment of market forecast for interest rate and foreign exchange. The Group manages credit
risk by only dealing with recognized, creditworthy, third parties and liquidity risk is monitored
through the development of future rolling cash flow forecasts.
Interest rate risk
The Group’s current exposure to the risk of changes in market interest rates relate primarily to cash
assets rates and is managed by the Board approved investment policy. This policy defines maximum
exposures and credit ratings limits.
The Group does not account for fixed rate financial assets and liabilities at fair value through profit
or loss.
The following table summarises the impact of reasonably possible changes on interest rates for the
Group at 30 June 2019. The sensitivity is based on the assumption that interest rate changes by 100
basis points with all other variables held constant. The 100 basis points sensitivity is based on
reasonably possible changes over a financial year, using the observed range of actual historical rates
for the preceding 3 year period. The analysis is performed on the same basis for the comparative
period.
50
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
The Group’s exposure to interest rate risk arises from higher or lower interest income from cash and
cash equivalents. The Parent’s main interest rate risk arises from cash and cash equivalents and other
assets with variable interest rates.
Financial assets
Cash and cash equivalents
Term deposits
Impact on profit and equity
Post-tax gain/(loss)
100 bp increase
100 bp decrease
Credit risk
30 June 2019
$
30 June 2018
$
3,070,456
4,000,000
4,275,323
7,000,000
30,705
(30,705)
42,753
(15,170)
Credit risk arises in the event that counterparty will not meet its obligations under a financial
instrument leading to financial losses. The Group is exposed to credit risk from its operating
activities, financing activities including deposits with banks.
The credit risk control procedures adopted by the Group is to assess the credit quality of the
institution with whom funds are deposited or invested, taking into account its financial position and
past experiences. Investment limits are set in accordance with limits set by the Board of Directors
based on the counterparty credit rating. The limits are assigned to minimise concentration of risks
and mitigate financial loss through potential counterparty failure. The compliance with credit limits
is regularly monitored as part of day-to-day operations. Any credit concerns are highlighted to
senior management.
Credit quality of financial assets:
30 June 2019
Cash & cash equivalents ($)
Other Assets ($)
Trade and other receivables ($)
Number of counterparties
Largest counterparty (%)
S&P Credit rating
AAA
A1+
A1
A2
Unrated
-
-
-
-
-
3,070,456
4,076,887
78,860
3
56.4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
30 June 2018
Cash & cash equivalents ($)
Other Assets ($)
Trade and other receivables ($)
Number of counterparties
Largest counterparty (%)
S&P Credit rating
AAA
A1+
A1
A2
Unrated
-
-
-
-
-
4,275,323
7,044,293
226,901
3
61.01
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Alternatives for sourcing our future capital needs include the Group’s current cash position, future
operating cash flow, project debt financings and equity raisings. These alternatives are evaluated to
determine the optimal mix of capital resources for the Group’s capital needs.
Liquidity risk
The responsibility for liquidity risk management rests with the Board of Directors.
The Group manages liquidity risk by maintaining sufficient cash or credit facilities to meet the
operating requirements of the business and investing excess funds in highly liquid short term
investments. The Group’s liquidity needs can be met through a variety of sources, including: short
and long term borrowings and issue of equity instruments.
The following table details the Group’s non-derivative financial instruments according to their
contractual maturities. The amounts disclosed are based on contractual undiscounted cash flows.
Less than 6
$
6 months – 12
$
1-2 years
$
> 2 years
$
As at 30 June 2019
Trade and other receivables
78,860
As at 30 June 2018
Trade and other receivables
226,901
-
-
-
-
-
-
Capital risk management
Capital consists of total equity $15,956,047 (2018: $16,665,935).
When managing capital, management’s objective is to ensure the Company continues as a going
concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders.
Management also aims to maintain a capital structure that ensures the lowest cost of capital
available to the entity.
In order to maintain or adjust the capital structure, the Company may adjust the amount of
dividends paid to shareholders, issue new shares, enter into joint ventures or sell assets.
The entity does not have a defined share buy-back plan.
No dividends were paid in 2018 and no dividend will be paid in 2019.
There is no current intention to incur debt funding on behalf of the Company as on-going
exploration expenditure will be funded via equity or joint ventures with other companies.
The Company is not subject to any externally imposed capital requirements.
52
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
22. EVENTS SUBSEQUENT TO BALANCE DATE
No matters or circumstances have occurred subsequent to balance date that have or may
significantly affect the operations or the state of affairs of the Group in subsequent financial years.
23. EXPLORATION AGREEMENTS
Dunstan JV Agreement
On 22 January 2018, Mark Creasy and Dunstan Holdings Pty Ltd (ACN 009 686 691) (“Dunstan”)
entered into an agreement with the Company’s wholly owned subsidiary, FSZ Resources Pty Ltd
(ACN 622 898 882) (“FSZ”) (“Dunstan JV Agreement”). Mark Creasy was a director of the Company
from 18 March 2003 to 12 March 2018.
The Dunstan JV Agreement provides for three phases of collaboration on the exploration and mining
of Dunstan’s mining tenements E63/1539, E63/1623 and E63/2624 (“Dunstan Tenements”). First, the
Dunstan JV Agreement provided for the partial sale of Dunstan’s interest in the Dunstan Tenements
to FSZ (“Tenement Sale”), which was settled during the financial year ended 30 June 2018 by a
payment of $530,000 to Dunstan (of which $478,955 (plus GST) was paid in cash and $51,045 settled
by the issue of 510,455 fully paid ordinary shares at a deemed issue price of $0.10 per share). Second,
the Dunstan JV Agreement established an unincorporated joint venture between Dunstan and FSZ
for the exploration of the Dunstan Tenements and completion of a bankable feasibility study in
respect of all or part of the Dunstan Tenements (“Exploration Joint Venture”). Third, the Dunstan JV
Agreement regulates the manner in which the parties may determine their respective involvement
in any mining operations to implement a bankable feasibility study on all or part of the Dunstan
Tenements (“Mining Joint Venture”).
GSN JV Agreement
On 22 January 2018, Mark Creasy and Great Southern Nickel Pty Ltd (ACN 135 382 142) (“GSN”)
entered into an agreement with the Company’s wholly owned subsidiary, NSZ Resources Pty Ltd
(ACN 622 900 396) (“NSZ”) (“GSN JV Agreement”). Mark Creasy was a director of the Company from
18 March 2003 to 12 March 2018.
The GSN JV Agreement provides for three phases of collaboration on the exploration and mining
on GSN’s mining tenement E28/2064 (“GSN Tenement”). First, the GSN JV Agreement provided for
the partial sale of GSN’s interest in the GSN Tenement to NSZ (“Tenement Sale”), which was settled
during the financial year ended 30 June 2018 by a payment of $870,000 to GSN. Second, the GSN
JV Agreement established an unincorporated joint venture between GSN and NSZ for the
exploration of the GSN Tenement and completion of a bankable feasibility study in respect of all or
part of the GSN Tenement (“Exploration Joint Venture”). Third, the GSN JV Agreement regulates the
manner in which the parties may determine their respective involvement in any mining operations
to implement a bankable feasibility study on all or part of the GSN Tenement (“Mining Joint
Venture”).
24. SEGMENT INFORMATION
For management purposes, the Group is organised into one main business and geographic
segment, which involves exploration of mineral deposits. All of the Group’s activities are interrelated,
and discrete financial information is reported to the Board (Chief Operating Decision Makers) as a
single segment. Accordingly, all significant operating decisions are based upon analysis of the Group
as one segment. The financial results from the segment are equivalent to the financial statement of
the Group as a whole. The accounting policies used by the Group in reporting segment internally
are the same as those contained in note 2 to the consolidated financial statements.
53
GALILEO MINING LTD
ABN 70 104 114 132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
25. CONTROLLED ENTITIES
Name
Country of
Incorporation
Principal Activity
FSZ Resources Pty Ltd
Australia
Mineral exploration
NSZ Resources Pty Ltd
Australia
Mineral exploration
Norseman Resources Pty Ltd*
Australia
Mineral exploration
* Subsidiary incorporated 14 September 2018.
Beneficial Percentage
Interest Held By Group
2019
%
100
100
100
2018
%
100
100
Nil
26. PARENT ENTITY INFORMATION
Information relating to Galileo Mining Ltd
Current Assets
Non-Current Assets
TOTAL ASSETS
Current Liabilities
Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
ACCUMULATED EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
2019
$
2018
$
7,200,132
9,089,983
11,520,446
5,340,543
16,290,115
16,860,989
276,879
17,005
293,884
182,138
2,510
184,648
15,996,231
16,676,341
18,411,245
593,719
(3,008,733)
15,996,231
18,416,434
201,302
(1,941,395)
16,676,341
Loss of the parent entity
Total comprehensive income of the parent
(1,067,338)
(1,067,338)
(666,968)
(666,968)
The parent loss entity did not have any guarantees or contingent liabilities at balance date.
27. GUARANTEES AND CONTINGENT LIABILITIES
The Group did not have any guarantees or contingent liabilities at balance date.
54
GALILEO MINING LTD
ABN 70 104 114 132
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2019
In accordance with a resolution of the directors of Galileo Mining Ltd, we state that:
In the opinion of the directors:
(a) the financial statements and notes of the Group in pages 25 to 54 are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as
disclosed in Note 2 (c); and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
This declaration has been made after receiving the declarations required to be made to the directors in
accordance with Section 295A of the Corporations Act for the year ended 30 June 2019.
For and on behalf of the Board of Directors.
Mr Brad Underwood
Managing Director
Perth, 19 September 2019
55
INDEPENDENT AUDITOR’S REPORT
To the members of Galileo Mining Ltd
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Galileo Mining Ltd (“the Company”) and its controlled entities
(“the Group”), which comprises the consolidated statement of financial position as at 30 June 2019,
the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. We have determined the matters described below to
be the key audit matters to be communicated in our report.
56
Key Audit Matter
How our audit addressed the key audit
matter
Exploration and evaluation expenditure
Note 9 to the financial report
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group
capitalises exploration costs.
Our audit focussed on the Group’s assessment of
the carrying amount of the capitalised exploration
and evaluation expenditure asset, due to this
asset being the most significant asset of the
Group.
Our procedures included but were not limited
to the following:
• We obtained an understanding of the key
processes
with
management’s review of the exploration
and evaluation asset carrying values;
associated
• We
considered
Directors’
assessment of potential indicators of
impairment;
the
• We obtained evidence that the Group has
current rights to tenure of its areas of
interest;
• We examined
the exploration and
evaluation budget for the year ending 30
discussed with
2020
June
management
the nature of planned
ongoing activities.
and
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual financial report for the year ended 30 June 2019, but
does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
57
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 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
-
-
-
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
58
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year ended
30 June 2019.
In our opinion, the Remuneration Report of Galileo Mining Ltd for the year ended 30 June 2019
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
19 September 2019
N G Neill
Partner
59
GALILEO MINING LTD
ABN 70 104 114 132
CORPORATE GOVERNANCE STATEMENT
The Board is committed to achieving and demonstrating the highest standards of corporate governance.
As such Galileo Mining Ltd has adopted the third edition of the Corporate Governance Principles and
Recommendations which was released by the ASX Corporate Governance Council and became effective
for financial years beginning on or after 1 July 2014.
The Company’s Corporate Governance Statement for the financial year ending 30 June 2019 was approved
by the Board on 19 September 2019. The Corporate Governance Statement can be located on the
Company’s website http://www.galileomining.com.au/about-us/corporate-governance/
60
GALILEO MINING LTD
ABN 70 104 114 132
ADDITIONAL ASX SHAREHOLDERS’ INFORMATION (As at 16 September 2019)
Number of Holders of Each Class of Quoted Securities at 16 September 2019
ASX Code
Number
Holders
Security Description
GAL
120,373,932
915
Ordinary fully paid shares
Each shareholder of the Ordinary Fully Paid shares is entitled to one vote for each share held.
Distribution of quoted equity securities.
Equity
distribution
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
Over 100,000
TOTAL
Ordinary
Shares
(GAL)
21
106
109
533
146
915
The twenty largest ordinary fully paid shareholders (GAL) hold 56.32% of the issued capital and are
tabled below:
Name
Australian Gold Resources Pty Ltd
Independence Newsearch Pty Ltd
Ellison WA Pty Ltd
Hoperidge Enterprise Pty Ltd
Botsis Holdings Pty Ltd
HSBC Custody Australia Ltd
Lowe Stephen John & SL
Blakfyre Investments Pty Ltd
Shallard BJ & Duperouzel
1
2
3
4
5 Wade, Peter David
6
7
8
9
10
11 BS Capital Pty Ltd
12 Pindan Investments Pty Ltd
13 Auxilium Capital Pty Ltd
14 Papillon Holdings Pty Ltd
15 Caralabek Pty Ltd
16 Hawtin Dennis J & RA < Kryptonite S/F A/C>
17 Motte & Bailey Pty Ltd
18 Day Timothy James
19 West End Ventures Pty Ltd
20 Dunstan Holdings Pty Ltd
Ordinary
Shares
36,861,440
5,900,000
5,000,000
3,000,000
2,500,000
1,985,001
1,535,000
1,290,000
1,200,000
1,000,000
1,000,000
1,000,000
910,000
889,929
750,000
700,000
636,851
595,000
547,500
510,455
%
30.62
4.90
4.15
2.49
2.08
1.65
1.28
1.07
1.00
0.83
0.83
0.83
0.76
0.74
0.62
0.58
0.53
0.49
0.45
0.42
67,811,176
56.32
UNMARKETABLE PARCELS
The Company has 95 shareholders holding an unmarketable parcel of shares using a price of $0.125 per
share.
61
GALILEO MINING LTD
ABN 70 104 114 132
SUBSTANTIAL SHAREHOLDER
The names of the substantial shareholders who have notified the Company in accordance with section
671B of the Corporations Act 2001 are:
Mark Gareth Creasy, Australian Gold Resources Pty Ltd (ACN 006 712 956), and Dunstan Holdings
Pty Ltd (ACN 008 686 691): 37,371,895 Fully Paid Ordinary Shares
OTHER ASX ADDITIONAL INFORMATION
1.
Corporate Governance
The Company’s Corporate Governance Statement as at 30 June 2019 as approved by the Board can
be viewed at http://www.galileomining.com.au/about-us/corporate-governance/
2.
Company Secretary
The name of the Company Secretary is Mathew Whyte
3. Address and telephone details of the Company’s Registered Office
13 Colin Street, West Perth WA 6005 Telephone: +61 8 9463 0063
4. Address and telephone details of the office at which a registry of securities is kept
Security Transfer Registrars Pty Ltd
770 Canning Highway
APPLECROSS WA 6153
Telephone: 08 9315 2333
Fax: 08 9315 2233
5.
Review of Operations
A review of operations is contained in the Directors Report.
62
GALILEO MINING LTD
ABN 70 104 114 132
6.
Tenement Schedule (As at 16 September 2019)
Project
Tenement
reference
& Location
Interest at
beginning of
Quarter
Interest at
end of
Quarter
Nature of
Interest
As at end of
Quarter
NORSEMAN PROJECT
All tenements are in
Western Australia
E63/1041
E63/1764
P63/2053
P63/2105
P63/2106
P63/2107
P63/2108
P63/2109
P63/2110
P63/2111
P63/2112
P63/2113
P63/2114
P63/2115
P63/2116
P63/2117
P63/2118
P63/2123
P63/2136
P63/2137
FRASER RANGE
All tenements are in
PROJECT
Western Australia
E28/2064
E63/1539
E63/1623
E63/1624
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
0%
100%
100%
67%
67%
67%
67%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
67% NSZ(1)
67% FSZ(2)
67% FSZ(2)
67% FSZ(2)
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
(1) 67% owned by NSZ Resources Pty Ltd a wholly owned subsidiary of Galileo Mining, 33% Great Southern Nickel Pty Ltd (a Creasy Group Company).
(2) 67% owned by FSZ Resources Pty Ltd a wholly owned subsidiary of Galileo Mining, 33% Dunstan Holdings Pty Ltd (a Creasy Group Company).
63