2 0 1 9
A N N U A L R E P O R T
CORPORATE DIRECTORY
DIRECTORS
Chairman
Peter Ross SULLIVAN BE, MBA
Managing Director
James Noel SULLIVAN FAICD
Director
Peter Ernest HUSTON B. Juris, LLB (Hons), B.Com, LLM
COMPANY SECRETARY
Mark Pitts B.Bus FCA
REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS
Unit 5, 78 Marine Terrace
Fremantle WA 6160
Telephone:
Facsimile:
Web Site:
(08) 9336 3388
(08) 9315 5475
www.gmeresources.com.au
AUDITORS
HLB Mann Judd
Chartered Accountants
Level 4, 130 Stirling Street
Perth WA 6000
Telephone:
(08) 9227 7500
SHARE REGISTRY
Computershare Registry Services Pty Ltd
Level 11
172 St George’s Terrace
Perth WA 6000
GPO Box D182
Perth WA 6840
Telephone:
Facsimile:
(08) 9323 2000
(08) 9323 2033
SECURITIES EXCHANGE LISTING
The Company’s shares are quoted on the Official List of Australian Securities
Exchange Limited Ticker code: GME
STATE OF REGISTRATION
Western Australia
GME Resources Limited | Annual Report 2019
1
CONTENTS
CHAIRMAN’S LETTER
OPERATIONS REPORT
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
ASX ADDITIONAL INFORMATION
PAGE
3
4
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26
56
57
61
GME Resources Limited | Annual Report 2019
2
OPERATIONS REPORT
Dear Shareholder,
It is my pleasure to report the achievements of GME Resources Limited (GME or the Company) for the 2019
Financial Year (FY19).
In FY19 we saw the completion of the Pre-Feasibility Study (PFS) on the NiWest Nickel-Cobalt Project in Western
Australia (NiWest or the Project) and the advancement of the pathway towards a Definitive Feasibility Study
(DFS) for the Project.
The PFS, including prior test work that commenced in 2013, confirmed that the proposed Direct Solvent
Extraction (DSX) process flowsheet can treat the NiWest neutralised Pregnant Leach Solution (PLS) to generate
pure nickel and cobalt electrolytes that can be tailored to the generation of multiple high purity nickel and
cobalt products.
The PFS supports the technical and financial robustness of a long-life operation directly producing high-purity
nickel and cobalt sulphate products to be delivered into the forecast rapid growth of lithium-ion battery raw
material markets. The Project has globally attractive capital intensity of sub-US$20 per pound of average annual
nickel production and low forecast operating costs of US$3.00/lb of nickel for the first 15 years.
Following the completion of the PFS, GME utilised the study to undertake an intensive period of engagement
with potential strategic partners and offtake parties for NiWest. Along with these discussions, the Company has
been developing the proposed scope for a DFS, assessing a range of additional value engineering opportunities
and commencing select critical-path activities, including baseline environmental study work. The proceeds from
the successful completion of GME’s A$1.3 million capital raising in June 2019 will be used to assess these
opportunities and for general working capital purposes.
Nickel prices have to recently risen to a five-year high on the back of supply uncertainty due to reports the
Indonesia government will bring forward a proposed ban on its exports by 2020. With stainless steel demand
continuing to grow and the electric vehicle battery market moving towards higher nickel content in lithium-ion
batteries, GME remains confident about pursuing the development of, and value realisation from, the NiWest
Project.
On behalf of the Board, I would like to thank our loyal shareholder base for your continued support and trust
in the Board and Management team. We look forward to an exciting year ahead as we progress the scope of
the DFS.
Peter Sullivan
Chairman
GME Resources Limited | Annual Report 2019
3
OPERATIONS REPORT
NIWEST NICKEL-COBALT PROJECT
GME Resources Limited’s (GME or the Company) NiWest Nickel Cobalt Project (NiWest or the Project) is
regarded as one of the largest and highest quality undeveloped nickel/cobalt resources in Australia. The Project
is located in the West Australian Nickel belt, adjacent to Glencore’s Murrin Murrin Nickel-Cobalt Operation.
The region is recognised for its nickel/cobalt production and is well serviced with infrastructure such as public
rail linked to ports, gas pipeline, arterial roads, optic fibre communications and long-established mining towns.
The regional rail infrastructure extends to the Malcolm siding near Leonora. The Murrin Murrin Operation has
been serviced from the siding for the past two decades. An existing commercial airstrip is located at Leonora.
Major imported consumables, including sulphur, are expected to be shipped via the Esperance Port facility and
then trucked to site via existing sealed and unsealed roads. Final saleable products are expected to be trucked
to Esperance and then shipped to various customers globally.
NIWEST PRE-FEASIBILITY STUDY
On 2 August 2018 GME announced the completion of the NiWest PFS. The PFS presents a standalone
development pathway for the Project that incorporates detailed consideration of:
• The results from the metallurgical test work and engineering conducted on the NiWest Project by GME
over the past five years;
• A review of the various studies conducted by other nickel-cobalt laterite industry participants and the
history of underperforming/failed High Pressure Acid Leach (HPAL) laterite nickel developments over
the past 20 years; and
• A review of the nickel and cobalt supply/demand outlooks, including the emerging battery raw materials
demand from the electric vehicle (EV) market.
The base project parameters determined by the PFS are:
• Updated Mineral Resource estimate of 85.2Mt at 1.03% nickel and 0.065% cobalt (0.8% nickel cut-off).
• Maiden NiWest Ore Reserve estimate of 64.9Mt at 0.91% nickel and 0.06% cobalt (at 0.5% nickel cut-off)
based on the Eucalyptus, Hepi and Mt Kilkenny deposits only.
• Conventional open pit mining at a low projected strip ratio of 2.0:1.
• Mine plan designed to extract higher head grades averaging 1.05% nickel and 0.07% cobalt for the first
15 years. Opportunity exists to extend this high-grade profile through potential conversion of Inferred
Resources and/or inclusion of other deposits.
• Selected processing route of heap leaching followed by highly efficient Direct Solvent Extraction (DSX)
to produce low-cost nickel and cobalt sulphate products.
•
Initial 27-year operating life at a nameplate processing capacity of 2.4Mtpa. Projected steady-state
nickel and cobalt recoveries of 79% and 85% respectively.
• Total production of 456kt nickel (in nickel sulphate) and 31.4kt cobalt (in cobalt sulphate). Average
annual production of 19.2kt nickel and 1.4kt cobalt over the first 15 years.
• Project construction period of 24 months from Final Investment Decision (FID). Forecast commissioning
and plant ramp-up phase of approximately 20 months.
GME Resources Limited | Annual Report 2019
4
OPERATIONS REPORT
The key economic assumptions and outcomes of the PFS are:
•
Life-of-mine price estimates of US$8.00/lb nickel (includes US$0.75/lb sulphate premium) and
US$25/lb cobalt (zero sulphate premium). A$/US$ assumption of 0.75.
• Ungeared post-tax NPV8% of A$791M and internal rate of return (IRR) of 16.2% (equivalent pretax
values of A$1,390M and 21.2%, respectively). Payback period (pre-tax) of 4.4 years.
•
•
•
Average cash unit operating cost (post royalties and cobalt credits) of US$3.24/lb contained nickel
(US$3.00/lb for the first 15 years).
Forecast pre-production capital expenditure of A$966M, representing a globally attractive capital
intensity of sub-US$20 per pound of average annual nickel production.
Projected free cashflow (post all capital expenditure and tax) of A$3,342M.
The PFS has been completed to an overall accuracy of +/- 30%.
The NiWest Ore Reserve estimate includes a higher grade (>0.8% Ni cut-off) component of 41.2Mt at 1.06%
nickel and 0.07% cobalt. Mining and processing/refining of this higher grade component predominantly occurs
during the first 15 years of NiWest operating life. Mining during the first seven years of production is focussed
solely on the Mt Kilkenny deposit, followed by the Eucalyptus and Hepi deposits. Ore from Eucalyptus and Hepi
will be road hauled to a plant located at Mt Kilkenny.
Figure 1: Mt Kilkenny mining and process plant layout
GME Resources Limited | Annual Report 2019
5
OPERATIONS REPORT
Annual material movement is approximately 15Mtpa the first six years of operations before dropping to around
8Mtpa for much of the remainder of mining operations.
Approximately 65Mt of ore and 133Mt of waste material is scheduled to be mined over a mining activity life of
approximately 20 years. The life-of-mine average strip ratio is 2.0. The selected processing route for the PFS
involves heap leaching of NiWest ores followed by neutralisation of the pregnant leach solution, direct solvent
extraction and product crystallisation to produce nickel sulphate hexahydrate (NiSO4.6H2O) and cobalt
sulphate heptahydrate (CoSO4.7H2O).
It is noteworthy that successful heap leaching of similar ores has previously been undertaken, at a commercial
scale, at the nearby Murrin Murrin Operations. The choice of DSX, validated by extensive prior metallurgical
test work, also presents a highly efficient and cost-effective pathway to directly produce the nickel and cobalt
products specifically sought-after by the high-growth EV battery manufacturing market.
Figure 2: Simplified NiWest Process Flowsheet
The chosen flowsheet and end product strategy is, in GME’s opinion, the most attractive processing and refining
approach after taking into account NiWest’s specific ore characteristics combined with the technical and
operating risks, relative capital intensity and final product value of various flowsheet and end product
alternatives.
VALUE ENGINEERING OPPORTUNITIES IDENTIFIED DURING PFS
A number of value engineering opportunities were identified that have potential to significantly improve the
NiWest project economics outlined in the PFS. These included:
Ore feed schedule: Dynamic optimisation and flexing of mine and process scheduling across acid
consumption, and nickel and cobalt recovery. Preliminary review of the PFS orefeed schedule highlights that
through further refinement of the mine scheduling based on the existing Ore Reserves only, the orefeed grade
in the early years can be materially enhanced.
Mining inventory: Inferred Resources within the Mt Kilkenny, Eucalyptus and Hepi deposits and other known
deposits (Mertondale, Murrin North, Wanbanna, Waite Kauri) were not considered in the PFS. This provides
GME Resources Limited | Annual Report 2019
6
OPERATIONS REPORT
potential to extend initial high-grade feed life and/or overall operating life through further drilling. Preliminary
evaluation of an orefeed schedule incorporating the other known deposits highlights the opportunity to
provide greater flexibility to optimise the orefeed blend to the plant, etc including improving the orefeed grade
during the intitial years.
Heap leaching optimisation: Opportunity exists to reduce evaporation losses, reduce acid consumption,
reduce size of acid plant, reduce heap leach pad footprint and reduce DSX volumetric flow. A review of the
results of the 2m and 4m column testing conducted during the first half of 2018 highlighted the opportunity to
optimise the relationship between the heap height, acid consumption and metal recovery taking into
consideration the sulphur price (and hence sulphuric acid cost), metal prices and exchange rate. Additional
testing to further evaluate this relationship will be conducted either prior to or as part of the DFS.
ENGAGEMENT WITH POTENTIAL STRATEGIC PARTNERS/OFFTAKE PARTIES
During the period GME engaged in discussions with a number of potential strategic partners/offtake parties
prior to commencing a DFS on the Project. This process is ongoing and targeted at a comprehensive and robust
assessment of the broad range of potential ownership, development and funding structures currently available
to GME for NiWest.
ENVIRONMENTAL BASELINE STUDY
GME engaged the environmental consultancies Sustainability Pty Ltd and Ecoscape (Australia) Pty Ltd to
conduct environmental baseline studies at the proposed Mt Kilkenny mining and processing area, Hepi mining
area, Waite Kauri deposit and a haul road alignment. These deposits form the basis for the majority of the
orefeed scheduled for the first 10 years of operation.
The scope of the works of the study was to conduct:
• A desktop assessment to identify the broad environmental values and potential issues of the project
area.
• A flora and vegetation field survey, conducted as an enhanced reconnaissance survey with extensive
conservation significant flora searches.
• A fauna and fauna habitat survey, conducted as a Level 1 survey.
The survey results completed in the June quarter 2019 were consistent with previous surveys and did not
identify any material issues of concern.
GOLD PROJECTS
GME entered into a Sale and Purchase Agreement (the “Agreement”) with Matsa Resources Limited in respect
of GME’s 100% interest in the Devon Gold Mine and associated tenements.
Terms of the Agreement provided for the sale by GME and its wholly owned subsidiary Golden Cliffs NL of the
Devon Gold Mine and all associated tenements for A$100,000 and a 1% Net Smelter Royalty on all future
production from the tenements (relative to their level of ownership). The transaction was settled by a
A$100,000 cash payment in December 2018.
CAPITAL RAISING
On 5 April 2019 GME announced a 1:20 Renounceable Entitlement Issue at an issue price of 5.5 cents per share
to issue 24,107,011 shares. The Entitlement Issue and subsequent shortfall placement were completed in June
2019 and raised gross proceeds of approximately A$1.3 million. GME’s major shareholder, Zeta Resources
Limited, and the Company’s Directors took up their Entitlements in full.
GME Resources Limited | Annual Report 2019
7
OPERATIONS REPORT
Competent Person Statements
Where the Company refers to an ASX Announcement made on 2 August 2018 noting the Pre-feasibility Study
completed on the NiWest Nickel-Cobalt Project it confirms that it is not aware of any new information or data
that materially effects the information included in that announcement and all material assumptions and
technical parameters continue to apply and have not materially changed.
Forward-Looking Statements
Certain statements made in this report, including, without limitation, those concerning the Pre-Feasibility Study,
contain or comprise certain forward-looking statements regarding GME Resources Limited’s (GME) exploration
operations, economic performance and financial condition. Although GME believes that the expectations
reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations
will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-
looking statements as a result of, among other factors, changes in economic and market conditions, success of
business and operating initiatives, changes in the regulatory environment and other government actions,
fluctuations in metals prices and exchange rates and business and operational risk management. GME
undertakes no obligation to update publicly or release any revisions to these forward-looking statements to
reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events.
GME Resources Limited | Annual Report 2019
8
ANNUAL MINERAL RESOURCE STATEMENT
The Company’s Mineral Resource Statement has been compiled in accordance with the Australian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code 2012 Edition) and
Chapter 5 of the ASX Listing Rules and ASX Guidance Note 31.
On 2 August 2018 following a review of the geological models of the three deposits incorporated in the PFS,
namely Mt Kilkenny, Eucalyptus and Hepi. The Mertondale, Murrin North, Waite Kauri and Wanbanna models
remain unchanged from those released to the ASX on 21 February 2017.
The updated Mineral Resource estimate for the NiWest Project is 85.2Mt at 1.03% Ni and 0.065% cobalt at a
0.8% Ni cut-off and has been prepared as at 2 August 2018 (refer Table 1).
Table 1: NiWest Mineral Resource Estimate at 0.8% Ni cut-off
Deposit
JORC
Classification
Tonnes
(million)
Nickel
Grade
(%)
Mt Kilkenny1
Eucalyptus1
Hepi1
Mertondale2
Waite Kauri2
Murrin North2
Wanbanna2
NiWest
Project
Measured
Indicated
Inferred
Total
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Indicated
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Indicated
Inferred
Total
Measured
Indicated
Inferred
TOTAL
8.8
12.7
4.5
26.0
23.7
12.8
36.5
1.6
1.5
1.4
4.5
1.9
1.9
1.5
0.3
0.0
1.8
3.4
0.1
0.1
3.7
10.1
0.7
10.8
15.2
50.4
19.5
85.2
1.11
1.09
0.98
1.08
1.04
0.95
1.01
1.20
1.01
0.95
1.06
0.98
0.98
1.01
0.91
0.09
0.98
0.98
0.88
0.86
0.97
1.03
0.99
1.03
1.08
1.04
0.95
1.03
Cobalt
Grade
(%)
0.063
0.079
0.051
0.069
0.064
0.056
0.061
0.078
0.073
0.074
0.075
0.070
0.070
0.062
0.025
0.015
0.054
0.062
0.051
0.083
0.062
0.066
0.070
0.066
0.064
0.068
0.057
0.065
Nickel
Metal
(kt)
Cobalt
Metal
(kt)
98
138
44
279
247
121
368
19
15
14
48
18
18
15
3
0
18
33
1
1
35
104
7
111
165
527
186
878
5.6
10.0
2.3
17.9
15.3
7.1
22.4
1.2
1.1
1.1
3.4
1.3
1.3
0.9
0.1
0.0
1.0
2.1
0.1
0.1
2.3
6.7
0.5
7.2
9.8
34.5
11.0
55.4
* Columns may not total exactly due to rounding errors. Tonnages are reported as dry tonnage
1 ASX Release 2 August 2018
2 ASX Release 21 February 2017
GME Resources Limited | Annual Report 2019
9
ANNUAL MINERAL RESOURCE STATEMENT
Review of Material Changes
The last reported resource statement for NiWest Nickel Laterite Project was on 2 August 2018 (ASX
announcement). The Company notes that the total tonnes available under the revised Mineral Resource
Estimate has not materially changed moving from 81 million tonnes at 1.03% Ni in February 2017 to 85 million
tonnes at 1.03% Ni in August 2018.
Resource consultants, Golder Associates, were engaged to update the mineral resource estimates of the
Eucalyptus, Hepi and Mt Kilkenny laterite deposits which formed the basis of the the NiWest PFS released on
the 2 August 2018. The update calculated at a cut off of 0.8% nickel resulted in an increase of 4.2 million tonnes
in the overall mineral resource. This equates to an increase of less than 5% in the overall mineral resource and
is not considered material.
The Company confirms that it is not aware of any new information or data that materially affects the
information included in the original announcement (2 August 2018) pertaining to the Eucalyptus, Hepi and Mt
Kilkenny deposits, and that all related material assumptions and technical parameters have not materially
changed. The Company confirms that the form and context in which the Competent Person’s findings
pertaining to the Eucalyptus, Hepi and Mt Kilkenny deposits are presented have not materially changed from
the original market announcement.
The Company confirms that it is not aware of any new information or data that materially affects the
information included in the original announcement (21 February 2017) pertaining to the Murrin North, Waite
Kauri, Mertondale and Wanbanna deposits, and that all related material assumptions and technical parameters
have not materially changed. The Company confirms that the form and context in which the Competent
Person’s findings pertaining to the Murrin North, Waite Kauri, Mertondale and Wanbanna deposits are
presented have not materially changed from the original market announcement.
The Company completed and released the results of the NiWest pre-feasibility study on 2 August 2018. The
study confirmed the technical and financial robustness of a long-life operation directly producing high-purity
nickel and cobalt sulphate products to be delivered into the forecast rapid growth of lithium-ion battery raw
material markets.
Governance and Quality Control
The Company ensures all resources calculations are undertaken and reviewed by independent, internationally
recognised industry consultants.
All drill hole data is stored in-house within a commercially available purpose designed database management
system and subjected to industry standard validation procedures. Quality control on resource drill programs
have been undertaken to industry standards with implementation of appropriate drilling type, survey data
collection, assay standards, sample duplicates and repeat analyses.
GME Resources Limited | Annual Report 2019
10
ANNUAL MINERAL RESOURCE STATEMENT
ANNUAL ORE RESERVE STATEMENT
The Company’s Ore Reserve Statement has been compiled in accordance with the Australian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code 2012 Edition) and
Chapter 5 of the ASX Listing Rules and ASX Guidance Note 31.
On 2 August 2018 the maiden NiWest Ore Reserve Estimate of 64.9Mt at 0.91% Ni and 0.06% Co (for 592kt
contained nickel and 38kt contained cobalt) was released. This is based on a 0.5% Ni cut-off grade (refer Table
2).
Table 2: NiWest Ore Reserve Estimate1 at 0.5% Ni cut-off
Orebody
Mt Kilkenny
Eucalyptus
Hepi
Total
JORC Classification Tonnes (million)
Probable
Probable
Probable
Probable
27.9
32.2
4.7
64.9
Nickel Grade (%)
0.96
0.87
0.91
0.91
Cobalt Grade (%)
0.06
0.05
0.06
0.06
* Columns may not total exactly due to rounding errors. Tonnages are reported as dry tonnage
1 ASX Release 2 August 2018
Review of Material Changes
The maiden Ore Reserve Statement for the NiWest Nickel-Cobalt Project was released on 2 August 2018 (ASX
announcement).
Mine planning consultants, Perth Mining Consultants Pty Ltd, were engaged to complete the ore reserve
estimate for the three nickel cobalt laterite deposits (Eucalyptus, Hepi, Mt Kilkenny) which were incorporated
in the NiWest PFS 2018.
The Company confirms that it is not aware of any new information or data that materially affects the
information included in the original announcement and pertaining to the Eucalyptus, Hepi and Mt Kilkenny
deposits, and that all related material assumptions and technical parameters have not materially changed. The
Company confirms that the form and context in which the Competent Person’s findings pertaining to the
Eucalyptus, Hepi and Mt Kilkenny orebodies are presented have not materially changed from the original
market announcement.
Governance and Quality Control
The Company ensures all resources calculations are undertaken and reviewed by independent, internationally
recognised industry consultants. All drill hole data is stored in-house within a commercially available purpose
designed database management system and subjected to industry standard validation procedures. Quality
control on resource drill programs have been undertaken to industry standards with implementation of
appropriate drilling type, survey data collection, assay standards, sample duplicates and repeat analyses.
Competent Person Statement
The information in this Annual Mineral Resource Statement that relates to Minerals Resources and Ore
Reserves is based on, and fairly represents, information and supporting documentation compiled by Mark
Gunther who is a member of the Australasian Institute of Geoscientists. Mr Gunther is a Principal Consultant
with Eureka Geological Services. He has sufficient experience that is relevant to the style of mineralisation and
type 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 Ore Reserves. Mr Gunther consents to
the inclusion in this report of the matters based on information provided in the form and context in which they
appears.
GME Resources Limited | Annual Report 2019
11
TENEMENT SCHEDULE
GME continues to hold in good standing the tenements listed in Table 3 below.
Table 3: Tenement Schedule as at 30 June 2019
Project
Tenements
Interest Beginning Period
Interest End Period
Abednego West M39/427, M39/0825
Eucalyptus
P39/5557 -5559
P39/5927
M39/744
M39/289, M39/430, M39/344
M39/666 and M39/674
M39/313, M39/568
M39/802 - 803
P39/5459
E39/1795,
E39/1859, E39/1860
PLA39/5962
Golden Cliffs 100%
Golden Cliffs 100%
Nil
NiWest Ni Co Rights
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
Nil
Golden Cliffs 100%
Golden Cliffs 100%
NiWest 100%
NiWest Ni Co Rights
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
Hawks Nest
M38/218
Golden Cliffs 100%
Golden Cliffs 100%
Hepi
M39/717 - 718, M39/819,
P39/5813
P39/6032
NiWest 100%
NiWest 100%
Nil
NiWest 100%
Laverton Downs M38/1266
Golden Cliffs 100%
Golden Cliffs 100%
Mertondale
M37/591
Mt Kilkenny
M39/878 – 879, E39/1784
E39/1794, E39/1831 E39/1873
ELA39/2072
P39/5508- 5510, P39/5528
NiWest 100%
NiWest 100%
NiWest 100%
Nil
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
Murrin Murrin M39/426, M39/456, M39/552,
M39/553, M39/569
GlenMurrin 100% Nickel & Cobalt
Golden Cliffs 100% gold and
other minerals
GlenMurrin 100% Nickel & Cobalt
Golden Cliffs 100% gold and other
minerals
Murrin North
M39/758
Waite Kauri
M37/1216
ML 37/1334
Wanbanna
M39/460
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 80% /
20% Wanbanna Pty Ltd
NiWest 80% /
20% Wanbanna Pty Ltd
Misc. Licences
L37/175, L31/46, L40/25
L39/215, L39/177, L37/205
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
LEGEND
E: Exploration Licence | P: Prospecting Licence | PLA: Prospecting Licence Application | M: Mining Lease | ELA: Exploration
Licence Application | L: Miscellaneous Lease | MLA: Mining Lease Application
All of the above tenements and miscellaneous licences are in the Eastern Goldfields of Western Australi
GME Resources Limited | Annual Report 2019
12
DIRECTORS’ REPORT
Your Directors present their report of GME Resources Limited and its controlled entities (“Group”) for the
financial year ended 30 June 2019. In order to comply with the provisions of the Corporations Act 2001, the
directors report as follows:
Directors
The names of Directors in office at any time during or since the end of the year are:
Peter Ross Sullivan
James Noel Sullivan
Peter Ernest Huston
(Non-executive Chairman)
(Managing Director)
(Non-executive Director)
Directors have been in office since the start of the financial year to the date of this report unless otherwise
stated.
Principal Activities
The principal activity of the Group is mineral exploration.
No significant change in the nature of this activity occurred during the year.
Operating Results
The net loss after income tax attributable to members of the Company for the financial year to 30 June 2019
amounted to $277,265 (2018: $1,084,387).
Capital Raising
On 5 April 2019 GME announced a 1:20 Renounceable Entitlement Issue at an issue price of 5.5 cents per share
to issue 24,107,011 shares. The Entitlement Issue and subsequent shortfall placement were completed in June
2019 and raised gross proceeds of approximately A$1.3 million. GME’s major shareholder, Zeta Resources
Limited, and the Company’s Directors took up their Entitlements in full.
At the end of the financial year the Group had $1,264,607 (2018: $1,735,454) in cash and at call deposits. Net
assets of $32,454,910 (2018: $31,431,604) were comprised mainly of carried forward exploration and
evaluation expenditure of $31,247,420 (2018: $30,088,279).
Dividends
No dividends have been paid or declared since the start of the financial year. No recommendation is made as
to dividends.
Significant Changes in State of Affairs
There were no significant changes in the state of affairs of the Group during the financial year, other than as
set out elsewhere in this report.
Subsequent Events
No matters or circumstances have arisen since the end of the financial year which significantly affected or may
significantly affect the Group’s operations, the results of those operations or the Group’s state of affairs in
future financial years.
GME Resources Limited | Annual Report 2019
13
DIRECTORS’ REPORT
OVERVIEW OF OPERATING ACTIVITY
NIWEST NICKEL LATERITE PROJECT UPDATE
The NiWest Nickel-Cobalt Project is located adjacent to Glencore’s Murrin Murrin Operation in the North
Eastern Goldfields of Western Australia. The project is situated in a semi-arid region that is well serviced with
existing infrastructure such as rail, arterial bitumen roads and nearby established mining towns.
Past feasibility work has focussed on examining various processing routes, including high pressure acid leach
(“HPAL”), atmospheric leach (“AL”) and heap leaching (“HL”).
GME commenced a Pre-Feasibility Study (PFS) in August 2017 based on a dynamic on/off heap leach, pregnant
leach solution (“PLS”) neutralisation and DSX process flowsheet to produce nickel and cobalt sulphates.
GME released the results of the Pre-Feasibility Study (“PFS”) on its 100%-owned NiWest Nickel-Cobalt Project
during the September 2018 quarter.
Environmental Baseline Study
During the year, GME completed a Level 1 flora, vegetation, terrestrial verterbrate fauna and fauna habitat
assessment of the proposed Mt Kilkenny mining and processing area, Hepi mining area, Waite Kauri deposit
and a haul road alignment. The survey results were consistent with previous surveys and did not identify any
material issues of concern.
Value Engineering
Opportunities identified during PFS
The PFS (August 2018) identified a number of value engineering opportunities that have the potential to
improve NiWest project economics significantly. Value engineering work undertaken during the year included
the following:
-
-
-
Review of the Ore feed schedule;
Incorporation of additional Mineral Resources not considered in the PFS;
Engagement with potential strategic partner/offtake parties
GOLD PROJECTS
GME entered into a Sale and Purchase Agreement (the “Agreement”) with Matsa Resources Limited in respect
of GME’s 100% interest in the Devon Gold Mine and associated tenements.
Terms of the Agreement provided for the sale by GME and its wholly owned subsidiary Golden Cliffs NL of the
Devon Gold Mine and all associated tenements for A$100,000 and a 1% Net Smelter Royalty on all future
production from the tenements (relative to their level of ownership). The transaction was settled by a
A$100,000 cash payment in December 2018.
Information on Directors and Company Secretary
Peter Ross Sullivan BE, MBA
(Non-executive Director)
Director since 1996
Mr Sullivan was appointed chairman in March 2017. Mr Sullivan is an engineer and has been involved in the
management and strategic development of resource companies and projects for more than 20 years.
Other current directorships of listed companies
Mr Sullivan has been a director of Resolute Mining Limited since June 2001, Zeta Resources Limited since June
2013, and Panoramic Resources Ltd since October 2015.
GME Resources Limited | Annual Report 2019
14
DIRECTORS’ REPORT
Former directorships of listed companies in last 3 years –
Pan Pacific Petroleum NL September 2014 – April 2018; Bligh Resources Ltd from 13 July 2017 to 13 August
2019.
James Noel Sullivan FAICD
(Managing Director)
Director since 2004
Mr Sullivan has over 20 years’ experience in commerce providing services to the mining and allied industries.
Mr Sullivan was instrumental in establishing and managing the Golden Cliffs Prospecting Syndicate which
acquired and pegged a number of prospective tenements in the Eastern Goldfields. The Golden Cliffs
Prospecting Syndicate was subsequently acquired by the Company in 1996. Mr Sullivan has extensive
knowledge in mining and prospecting in the North Eastern Goldfields and in particular on matters involving
tenement administration, native title negotiation and supply and logistics of services. Mr Sullivan’s practical
knowledge in these areas is of great benefit to the Company as it seeks to develop its assets for the benefit of
its shareholders.
Other current directorships of listed companies - none
Former directorships of listed companies in last 3 years –
Bligh Resources Ltd from 13 July 2017 to 13 August 2019.
Peter Ernest Huston B. Juris, LLB (Hons), B.Com, LLM
Mr Peter Huston was appointed as a Non-executive Director in March 2017. Previously he spent 12 years as a
Partner in the law firm now known as Norton Rose and over 10 years as a Director in boutique private equity
at Troika Securities Limited. Mr Huston advised principally in the area of corporate litigation, mergers,
acquisitions, takeovers and public listings. He has been involved in a number of significant and well-known
corporate transactions and continues as a private adviser to a discrete number of substantial corporations,
partnerships and family offices. Mr Huston holds a Bachelor of Jurisprudence, Bachelor of Laws (Honours),
Bachelor of Commerce, Master of Laws and is admitted to practice in the Supreme Court, Federal Court and
High Court of Australia.
Other current directorships of listed companies - none
Former directorships of listed companies in last 3 years
Non-executive Chairman of Resolute Mining Ltd until June 2017
Mark Edward Pitts B.Bus FCA, GAICD
(Company Secretary)
Mr Pitts was appointed to the position of Company Secretary in February 2009. Mr Pitts is a Chartered
Accountant with over 30 years’ experience in statutory reporting and business administration. He has been
directly involved with, and consulted to a number of public companies holding senior financial management
positions. He is a partner in the corporate advisory firm Endeavour Corporate. Endeavour offers professional
services focused on Company Secretarial support, commercial and financial advice and supervision of ASIC
and ASX compliance requirements.
GME Resources Limited | Annual Report 2019
15
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
The remuneration report is set out in the following manner:
• Policies used to determine the nature and amount of remuneration
• Key Management Personnel
• Service agreements
• Share based compensation
• Details of remuneration
• Key Management Personnel interests
• Other transactions with Key Management Personnel
•
Loans to/from Key Management Personnel
Remuneration Policy
The Board of Directors is responsible for remuneration policies and the packages applicable to the Directors
of the Company. The broad remuneration policy is to ensure that packages offered properly reflect a person’s
duties and responsibilities and that remuneration is competitive and attracts, retains, and motivates people of
the highest quality.
The Managing Director, Executive and Non-executive Directors are remunerated for the services they render
to the Company and such services are carried out under normal commercial terms and conditions.
Engagement and payment for such services are approved by the other Directors who have no interest in the
engagement of services.
At the date of this report the Company had not entered into any packages with Directors or executives which
include performance-based components. The Company does not operate an employee share option plan.
Details of Key Management Personnel (KMP)
Directors
Peter Ross Sullivan
James Noel Sullivan
Peter Ernest Huston
Executives
Mark Edward Pitts
Service Agreements
Non-executive Chairman
Managing Director
Non-executive Director
Company Secretary
There are no service/employment agreements with any of the Company’s KMP.
Share Based Compensation
There is currently no provision in the policies of the Group for the provision of share-based compensation to
Directors. The interest of Directors in shares is set out elsewhere in this report.
GME Resources Limited | Annual Report 2019
16
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Details of Remuneration for KMP
Details of the nature and amount of each element of the emoluments of the key management personnel of
the companies in the Group are:
2019
Short Term
Benefits
Salary &
Fees
$
Post- Employment
Benefits
Long Term
Benefits
Total
Performance
Related
Superannuation
$
Options
$
$
%
Executive Directors
James N Sullivan
164,384
15,616
Non-executive
Directors
Peter R Sullivan
Peter E Huston
Executives
Mr Mark Pitts
30,000
24,000
60,000
278,384
-
-
-
15,616
No cash bonuses were granted during 2019.
-
-
-
-
-
180,000
30,000
24,000
60,000
294,000
-
-
-
-
2018
Short Term
Benefits
Salary &
Fees
$
Post- Employment
Benefits
Long Term
Benefits
Total
Performance
Related
Superannuation
$
Options
$
$
%
Executive Directors
James N Sullivan
164,384
15,616
Non-executive
Directors
Peter R Sullivan
Peter E Huston
Executives
Mr Mark Pitts
30,000
24,000
60,000
278,384
-
-
-
15,616
No cash bonuses were granted during 2018.
-
-
-
-
-
180,000
30,000
24,000
60,000
294,000
-
-
-
-
GME Resources Limited | Annual Report 2019
17
DIRECTORS’ REPORT
KMP Interests
The relevant interests of KMP either directly or through entities controlled by the KMP in the share capital of
the Company as at the date of the Directors’ Report and at the end of the financial year are:
2019
Director
Peter R Sullivan
James N Sullivan
Peter E Huston
Mark E Pitts
Ordinary Shares
Opening Balance
Net Change
Ordinary Shares
Closing Balance
31,314,281
24,415,212
41,185,534
-
1,565,711
1,220,760
2,059,276
-
32,879,992
25,635,972
43,244,810
-
Other transactions with KMP
During the year, the Group paid $21,750 (2018: $24,535) for commercial rent and outgoings of a property
owned by the Leonora Property Syndicate, an entity in which Peter Sullivan and James Sullivan have an interest.
The balance owed to the Leonora Property Syndicate as at 30 June 2019 was $Nil (2018: $7,285).
In addition to the fees paid to Mark Pitts for Company Secretarial Services, the Company also paid $17,618
(2018: $7,481) to Endeavour Corporate, of which Mark Pitts is a partner, for accounting services.
The Company has an amount payable of $6,944 (2018: $8,531) to Endeavour Corporate as at 30 June 2019.
The Company has an amount payable of $ 33,000 (2018: $nil) to Hardrock Capital Pty Ltd, a company of which
Peter Sullivan is a director, in relation to Directors’ fees.
Loans to KMP
There were no loans entered into with KMP during the financial year under review.
END OF REMUNERATION REPORT
Meetings of Directors
During the year, 1 meeting of directors was held. Attendances were:
Name
Number
Eligible to Attend
Number
Attended
Peter R Sullivan
James N Sullivan
Peter E Huston
1
1
1
1
1
1
GME Resources Limited | Annual Report 2019
18
DIRECTORS’ REPORT
Interest in the shares of the company and related bodies corporate
Options
At the date of this report there were no options on issue.
There were no shares issued during the year or since the end of the year upon exercise of options.
Audit Committee
The Board reviews the performance of the external auditors on an annual basis and meets with them during
the year to review findings and assist with Board recommendations.
The Board does not have a separate audit committee with a composition as suggested in the best practice
recommendations. The full Board carries out the function of an audit committee.
The Board believes that the Company is not of a sufficient size to warrant a separate committee and that the
full board is able to meet objectives of the best practice recommendations and discharge its duties in this area.
Indemnifying Officers or Auditors
The Company has not, during or since the financial year, in respect of any person who is or has been an officer
or the auditor of the Company or of a related body corporate, indemnified or made any relative agreement for
indemnifying against a liability incurred as an officer or auditor, including costs and expenses in defending legal
proceedings.
Environmental Regulation
The Group’s exploration and mining tenements are located in Western Australia. There are significant
regulations under the Western Australian Mining Act 1978 and the Environmental Protection Acts that apply.
Licence requirements relating to ground disturbance, rehabilitation and waste disposal exist for all tenements
held.
The Directors are not aware of any significant breaches during the period covered by this report.
Proceedings on behalf of the Company
No person has applied for leave of court 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.
GME Resources Limited | Annual Report 2019
19
DIRECTORS’ REPORT
Non-audit Services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the
auditor are outlined in Note 12 to the financial statements. The Directors are satisfied that the provision of
non-audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The Directors are of the opinion that the services do not compromise the auditor’s independence as all non-
audit services have been reviewed to ensure that they do not impact the impartiality and objectivity of the
auditor and none of the services undermine the general principles relating to auditor independence as set out
in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional
& Ethical Standards Board.
Auditor Independence and Non-Audit Services
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the directors of
the Company with an Independence Declaration in relation to the audit of the financial report. This
Independence Declaration is set out on the following page and forms part of this directors’ report for the year
ended 30 June 2019.
This report is signed in accordance with a Resolution of Directors.
James Sullivan
Managing Director
Perth, Western Australia
17th September 2019
GME Resources Limited | Annual Report 2019
20
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of GME Resources Limited for the
year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
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
17 September 2019
M R Ohm
Partner
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Revenue
Other income
Depreciation and amortisation expense
Impairment of exploration and evaluation expenditure
Management and consulting fees
Administration expenses
Results from operating activities
Financial income
Financial expense
Net financing (expense)/income
Note
Consolidated
2019
$
2018
$
2(a)
5/6
7
2(b)
130,063
130,063
100,000
100,000
(1,762)
(2,462)
(589,141)
(1,148,922)
(114,000)
(412,335)
(987,175)
(114,000)
(538,646)
(1,704,030)
3,130
-
3,130
6,447
-
6,447
Loss before income tax
(984,045)
(1,697,583)
Income tax benefit
3
706,780
613,196
Loss for the year
(277,265)
(1,084,387)
Other comprehensive income
-
-
Total comprehensive loss for the year
(277,265)
(1,084,387)
Basic loss per share (cents per share)
14
(0.06)
(0.23)
Diluted loss per share (cents per share)
(0.06)
(0.23)
The accompanying notes form part of this financial statement.
GME Resources Limited | Annual Report 2019
22
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
Note
Consolidated
2019
$
2018
$
11(a)
4
4
5
6
7
1,264,607
18,062
22,495
1,305,164
1,735,454
97,007
33,162
1,865,623
17,290
2,138
-
31,247,420
31,266,848
17,286
2,793
1,107
30,088,279
30,109,465
32,572,012
31,975,088
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Plant and equipment
Intangible assets
Deferred exploration and evaluation
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
8
117,102
543,484
TOTAL CURRENT LIABILITIES
117,102
543,484
TOTAL LIABILITIES
117,102
543,484
NET ASSETS
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY
32,454,910
31,431,604
9
56,640,810
55,340,239
(24,185,900)
(23,908,635)
32,454,910
31,431,604
The accompanying notes form part of this financial statement.
GME Resources Limited | Annual Report 2019
23
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
CONSOLIDATED
Issued Capital
Note
Accumulated
Losses
$
$
Total
$
Balance at 30 June
2017
Loss for the year
Total comprehensive
loss for the year
Transaction with
owners in their
capacity as owners
Shares issued net of
costs
Balance at 30 June
2018
Loss for the year
Total comprehensive
loss for the year
Transaction with
owners in their
capacity as owners
Shares issued net of
costs
Balance at 30 June
2019
53,370,931
(22,824,248)
30,546,683
-
-
(1,084,387)
(1,084,387)
(1,084,387)
(1,084,387)
1,969,308
-
1,969,308
55,340,239
(23,908,635)
31,431,604
-
-
(277,265)
(277,265)
(277,265)
(277,265)
1,300,571
-
1,300,571
56,640,810
(24,185,900)
32,454,910
The accompanying notes form part of this financial statement.
GME Resources Limited | Annual Report 2019
24
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Note
Consolidated
2019
$
2018
$
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Research and development tax offset
Other income – Proceeds from royalty and facilitation fee
Other income – Proceeds from sale of Gold Project
Net cash inflow from operating activities
11(a)
(554,829)
3,130
706,780
100,000
100,000
355,081
(512,325)
6,447
613,196
100,000
-
207,318
Cash flows from investing activities
Payments for exploration and evaluation
Net cash outflow from investing activities
(2,126,499)
(2,126,499)
(2,667,894)
(2,667,894)
Cash flows from financing activities
Proceeds from issue of shares
Payment of costs associated with issue of shares
Net cash inflow from financing activities
1,325,648
(25,077)
1,300,571
2,039,824
(70,516)
1,969,308
Net decrease in cash and cash equivalents
(470,847)
(491,268)
Cash and cash equivalents held at the start of the year
1,735,454
2,226,722
Cash and cash equivalents held at the end of the year
11(b)
1,264,607
1,735,454
The accompanying notes form part of this financial statement.
GME Resources Limited | Annual Report 2019
25
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES
GME Resources Limited (the “Company”) is a listed public Company, incorporated and domiciled in
Australia. The consolidated financial statements of the Company for the financial year ended 30 June 2019
comprise the Company and its subsidiaries (together referred to as the “Consolidated Entity” or “Group”).
(a) Basis of preparation
The financial statements are general-purpose financial statements, which have been prepared in
accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards
and Interpretations and comply with other requirements of the law. The financial statements have
also been prepared on a historical cost basis.
The accounting policies detailed below have been consistently applied to all of the years presented
unless otherwise stated.
The financial statements are presented in Australian dollars.
The Company is a listed public company, incorporated in Australia and operating in Australia. The
Group’s principal activities are mineral exploration.
(b) Adoption of new and revised standards
In the year ended 30 June 2019, the Directors have reviewed all of the new and revised Standards
and Interpretations issued by the AASB that are relevant to the Group’s operations and effective for
the current annual reporting period.
It has been determined by the Directors that there is no material impact, of the new and revised
Standards and Interpretations on business and, therefore, no change is necessary to Group
accounting policies.
The Directors have also reviewed all of the new and revised Standards and Interpretations in issue
not yet adopted for the year ended 30 June 2019. As a result of this review the Directors have
determined that there is no material impact of the Standards and Interpretations in issue not yet
adopted on the Group and, therefore, no change is necessary to Group accounting policies.
The Directors have also reviewed all new Standards and Interpretations that have been issued but
are not yet effective for the year ended 30 June 2019. Those which may have a material impact on
the Group are set out below.
AASB 16 Leases
AASB 16 replaces AASB 117 Leases. AASB 16 removes the classification of leases as either operating
leases of finance leases-for the lessee – effectively treating all leases as finance leases.
AASB 16 is applicable to annual reporting periods beginning on or after 1 July 2019.
GME Resources Limited | Annual Report 2019
26
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(b) Adoption of new and revised standards (continued)
Impact on operating leases
AASB 16 will change how the Group accounts for leases previously classified as operating leases
under AASB 117, which were off-balance sheet. On initial application of AASB 16, for all leases (except
as noted below), the Group will:
• Recognise right-of-use assets and lease liabilities in the statement of financial position, initially
measured at the present value of the future lease payments.
• Recognise depreciation of right-of-use assets and interest on lease liabilities in the statement
of profit or loss.
• Separate the total amount of cash paid into a principal portion (presented within financing
activities) and interest (presented within operating activities) in the cash flow statement.
Lease incentives (e.g. rent-free period) will be recognised as part of the measurement of the right-
of-use assets and lease liabilities whereas under AASB 117 they resulted in the recognition of a lease
liability incentive, amortised as a reduction of rental expenses on a straight-line basis.
Under AASB 16, right-of-use assets will be tested for impairment in accordance with AASB 136
Impairment of Assets. This will replace the previous requirement to recognise a provision for
onerous lease contracts.
For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as
personal computers and office furniture), the Company will opt to recognise a lease expense on a
straight-line basis as permitted by AASB 16.
The Group has elected not to early adopt AASB 16 and have not quantified the material effect of
application of future periods.
(c)
Critical accounting judgements and key estimates
The preparation of financial statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expense. Actual results may differ from these estimates.
Exploration and evaluation costs
The Company has assessed the exploration and evaluation costs in accordance with AASB 6
Exploration for and Evaluation of Mineral Resources, and believes there are no indicators for
impairment.
Supporting the view that no impairment indicators are present, the NiWest PFS has confirmed the
technical and financial robustness of a long-life operation directly producing high-purity nickel and
cobalt sulphate products to be delivered into the forecast rapid growth of lithium-ion battery raw
material markets.
The model used to support the assessment was calculated over a period of 20 years, being the
estimated life of the mine.
In reviewing the model for this financial year, the Board assessed a number of economic
assumptions and outcomes:
GME Resources Limited | Annual Report 2019
27
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(c)
Critical accounting judgements and key estimates (continued)
•
Life-of-mine price estimates of US$8.00/lb nickel (includes US$0.75/lb sulphate premium)
and US$25/lb cobalt (zero sulphate premium). A$/US$ assumption of 0.75.
• Ungeared post-tax NPV8% of A$791M and internal rate of return (IRR) of 16.2% (equivalent
pre-tax values of A$1,390M and 21.2%, respectively). Payback period (pre-tax) of 4.4 years.
• Average cash unit operating cost (post royalties and cobalt credits) of US$3.24/lb contained
•
nickel (US$3.00/lb for the first 15 years).
Forecast pre-production capital expenditure of A$966M, representing a globally attractive
preproduction capital intensity of sub-US$20 per pound of average annual nickel production.
• Projected free cashflow (post all capital expenditure and tax) of A$3,342M.
Variations to expected future cash flows, and timing thereof, could result in significant changes to
the outcomes above, which in turn could impact future financial results.
Due to the focus on the NiWest Nickel project, the Directors have elected to impair the Group’s other
areas of interest as no substantive expenditure is currently budgeted or planned.
The accounting policies and methods of computation adopted in the preparation of the financial
statements are consistent with those adopted and disclosed in the Company’s financial statements
for the financial year ended 30 June 2018.
(d)
Going concern
The financial report has been prepared on the going concern basis, which contemplates the
continuity of normal business activity and the realisation of assets and the settlement of liabilities
in the normal course of business.
As disclosed in the financial statements, the Group recorded an operating loss of $277,265, and a
cash inflow from operating activities of $355,081 for the year ended 30 June 2019 and at balance
date, had net current assets of $1,188,062.
Notwithstanding the positive results and current working capital position, should the Company not
be successful in obtaining adequate funding, or should cashflows not eventuate as planned, there
is a material uncertainty that may cast significant doubt as to the ability of the Group to continue as
a going concern and whether it can realise its assets and extinguish its liabilities in the ordinary
course of business.
The financial statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or to the amounts and classification of liabilities that might
be necessary should the Group not continue as a going concern.
(e) Statement of compliance
The financial statements were authorised for issue on 17th September 2019.
The financial statements comply with Australian Accounting Standards, which include Australian
equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures
that the financial statements, comprising the financial statements and notes thereto, complies with
International Financial Reporting Standards (IFRS).
GME Resources Limited | Annual Report 2019
28
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(f) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and
entities controlled by the Company. Control is achieved when the Company:
• has power over the investee;
•
is exposed, or has rights, to variable returns from its involvement in with the investee; and
• has the ability to its power to affect its returns.
The Company reassess whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements listed above.
When the Company has less than a majority of the voting rights if an investee, it has the power over
the investee when the voting rights are sufficient to give it the practical ability to direct the relevant
activities of the investee unilaterally. The Company considers all relevant facts and circumstances in
assessing whether or not the Company’s voting rights are sufficient to give it power, including;
•
the size of the Company’s holding of voting rights relative to the size and dispersion of
holdings of the other vote holders;
• potential voting rights held by the Company, other vote holders or other parties; rights
arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that the Company has, or does not have,
the current ability to direct the relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholder meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and
ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the year are included in the consolidated statement of
profit or loss or other comprehensive income from the date the Company gains control until the
date when the Company ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies in line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members are eliminated in full on consolidation.
Changes in the Group’s ownership interest in existing subsidiaries
Changes in the Group’s ownership interest in subsidiaries that do not result in the Group losing
control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the
Group’s interests and the non-controlling interests are adjusted to reflect the changes in their
relative interests in subsidiaries. Any difference between the amount paid by which the non-
controlling interests are adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to the owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is
calculated as the difference between:
• The aggregate of the fair value of the consideration received and the fair value of any
retained interest; and
GME Resources Limited | Annual Report 2019
29
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(f)
Basis of consolidation (continued)
• The previous carrying amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests.
All amounts previously recognised in other comprehensive income in relation to that subsidiary are
accounted for as if the Group had directly disposed of the related assets or liabilities of the
subsidiary (i.e. reclassified to profit and loss or transferred to another category of equity as
specified/permitted by the applicable AASBs). The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair value on initial recognition for
subsequent accounting under AASB 139, when applicable, the cost on initial recognition of an
investment in an associate or a joint venture.
(g)
Revenue from contracts with customers
Applicable to 30 June 2019
Revenue arises mainly from the receipt of a facilitation fees. The Group generates revenue in
Australia.
To determine whether to recognise revenue, the Group follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied.
The revenue and profits recognised in any period are based on the delivery of performance
obligations and an assessment of when control is transferred to the customer.
In determining the amount of revenue and profits to record, and related balance sheet items (such
as contract fulfilment assets, capitalisation of costs to obtain a contract, trade receivables, accrued
income and deferred income) to recognise in the period, management is required to form a number
of key judgements and assumptions. This includes an assessment of the costs the Group incurs to
deliver the contractual commitments and whether such costs should be expensed as incurred or
capitalised.
Revenue is recognised either when the performance obligation in the contract has been performed,
so 'point in time' recognition or 'over time' as control of the performance obligation is transferred
to the customer.
Transaction price
At contract inception the total transaction price is estimated, being the amount to which the Group
expects to be entitled and has rights to under the present contract.
The transaction price does not include estimates of consideration resulting from change orders for
additional goods and services unless these are agreed.
GME Resources Limited | Annual Report 2019
30
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(g) Revenue from contracts with customers (continued)
Once the total transaction price is determined, the Group allocates this to the identified
performance obligations in proportion to their relative stand-alone selling prices and recognises
revenue when (or as) those performance obligations are satisfied.
For each performance obligation, the Group determines if revenue will be recognised over time or
at a point in time. Where the Group recognises revenue over time for long term contracts, this is in
general due to the Group performing and the customer simultaneously receiving and consuming
the benefits provided over the life of the contract.
For each performance obligation to be recognised over time, the Group applies a revenue
recognition method that faithfully depicts the Group’s performance in transferring control of the
goods or services to the customer. This decision requires assessment of the real nature of the goods
or services that the Group has promised to transfer to the customer. The Group applies the relevant
output or input method consistently to similar performance obligations in other contracts.
When using the output-method the Group recognises revenue on the basis of direct measurements
of the value to the customer of the goods and services transferred to date relative to the remaining
goods and services under the contract. Where the output method is used, in particular for long term
service contracts where the series guidance is applied, the Group often uses a method of time
elapsed which requires minimal estimation. Certain long-term contracts use output methods based
upon estimation of number of users, level of service activity or fees collected.
If performance obligations in a contract do not meet the over-time criteria, the Group recognises
revenue at a point in time. This may be at the point of physical delivery of goods and acceptance by
a customer or when the customer obtains control of an asset or service in a contract with customer-
specified acceptance criteria.
Disaggregation of revenue
The Group disaggregates revenue from contracts with customers by contract type, which includes
during the current financial year facilitation fees only.as management believe this best depicts how
the nature, amount, timing and uncertainty of the Group’s revenue and cash flows.
Performance obligations
The nature of contracts or performance obligations categorised within this revenue type include an
annual facilitation fee receivable.
The service contracts in this category include contracts with no performance obligations.
Applicable to 30 June 2018
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 is recognised:
Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective
yield on the financial asset.
GME Resources Limited | Annual Report 2019
31
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(g)
Revenue from contracts with customers (continued)
Royalty income
Revenue from royalties is measured at the fair value of the consideration received and receivable.
Revenue is recognised when the significant risk and rewards of ownership have been transferred,
recovery of the consideration is probable and the amount of revenue can be measured reliably.
Facilitation fee
Revenue from facilitation fees is measured at the fair value of the consideration received and
receivable. Revenue is recognised when the significant risk and rewards of ownership have been
transferred, recovery of the consideration is probable and the amount of revenue can be measured
reliably.
(h)
Borrowing costs
Borrowing costs are recognised as an expense when incurred except those that relate to the
acquisition, construction or production of qualifying assets where the borrowing cost is added to
the cost of those assets until such time as the assets are substantially ready for their intended use
or sale.
(i)
Cash and cash equivalents
Cash and short-term deposits in the Consolidated Statement of Financial Position comprise cash at
bank and on hand. Cash equivalents are short term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value.
For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of
cash and cash equivalents as defined above, net of outstanding bank overdrafts.
(j)
Trade and other receivables
Trade receivables, which generally have 30-90 day terms, are recognised and carried at original
invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is
made when there is objective evidence that the Group will not be able to collect the debts. Bad debts
are written off when identified.
(k)
Inventories
Inventories are valued at the lower of cost and net realisable value. Costs, including an appropriate
portion of fixed and variable overhead expenses, are assigned to inventory on hand by the method
most appropriate to each particular class of inventory, with the majority being valued on a first in
first our basis.
Net realisable value represents the estimated selling price less all estimated costs of completion and
costs necessary to make the sale.
GME Resources Limited | Annual Report 2019
32
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(l)
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.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when 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 that, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, and the timing of the reversal of the temporary
difference can be controlled and it is probable that the temporary difference 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 credits and unused tax losses can be utilised, except:
• when 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
• when the deductible temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, in which case a deferred tax asset is only recognised to
the extent that it is probable that the temporary difference will reverse in the foreseeable future
and taxable profit will be available against which the temporary difference 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 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 profit
or loss.
Deferred tax assets and deferred tax 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.
GME Resources Limited | Annual Report 2019
33
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(l)
Income tax (continued)
Tax consolidation legislation
GME Resources Limited and its 100% owned Australian resident subsidiaries have implemented the
tax consolidation legislation. Current and deferred tax amounts are accounted for in each individual
entity as if each entity continued to act as a taxpayer on its own. GME Resources Limited recognises
both its own current and deferred tax amounts and those current tax liabilities, current tax assets
and deferred tax assets arising from unused tax credits and unused tax losses which it has assumed
from its controlled entities within the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are
recognised as amounts payable or receivable from or payable to other entities in the Group. Any
difference between the amount receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) controlled entities in the tax consolidated
group.
Unrecognised deferred income tax assets are reassessed at each balance 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 profit
or loss.
Deferred tax assets and deferred tax 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.
(m) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount
of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables in the Consolidated Statement of Financial Position are shown inclusive of
GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the Consolidated Statement of Financial Position.
(n) Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated
impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation
when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed,
its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it
is eligible for capitalisation.
GME Resources Limited | Annual Report 2019
34
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(n) Plant and equipment (continued)
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as
follows:
Plant and equipment – 4 to 5 years.
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
(i) Impairment
The carrying values of plant and equipment are reviewed for impairment at each reporting date,
with recoverable amount being estimated when events or changes in circumstances indicate that
the carrying value may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value
in use. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, 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.
An impairment exists when the carrying value of an asset or cash-generating units exceeds its
estimated recoverable amount. The asset or cash-generating unit is then written down to its
recoverable amount.
For plant and equipment, impairment losses are recognised in the Consolidated Statement of Profit
or Loss and other Comprehensive Income.
ii) Derecognition and disposal
An item of plant and equipment is derecognised upon disposal or when no further future economic
benefits are expected from its use or disposal.
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 asset) is included in profit or loss in the year the
asset is derecognised.
(o)
Investments and other financial assets
Applicable to 30 June 2019
Recognition and derecognition
Financial assets and financial liabilities 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.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
GME Resources Limited | Annual Report 2019
35
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(o) Investments and other financial assets (continued)
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:
fair value through profit or loss (FVTPL)
• amortised cost
•
• 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.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are
not designated as FVTPL):
a. they are held within a business model whose objective is to hold the financial assets to collect
its contractual cash flows
b. 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 IAS 39.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold
to collect and sell’ are categorised at fair value through profit and loss. Further, irrespective of
business model financial assets whose contractual cash flows are not solely payments of principal
and interest are accounted for at FVTPL. All derivative financial instruments fall into this category,
except for those designated and effective as hedging instruments, for which the hedge accounting
requirements apply.
GME Resources Limited | Annual Report 2019
36
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(o)
Investments and other financial assets (continued)
Assets in this category are measured at fair value with gains or losses recognised in profit or loss.
The fair values of financial assets in this category are determined by reference to active market
transactions or using a valuation technique where no active market exists.
Equity instruments at fair value through other comprehensive income (Equity FVOCI)
Investments in equity instruments that are not held for trading are eligible for an irrevocable
election at inception to be measured at FVOCI.
Under Equity FVOCI, subsequent movements in fair value are recognised in other comprehensive
income and are never reclassified to profit or loss.
Dividend from these investments continue to be recorded as other income within the profit or loss
unless the dividend clearly represents return of capital.
This category includes unlisted equity securities that were previously classified as ‘available-for-
sale’ under AASB 139.
Any gains or losses recognised in other comprehensive income (OCI) are not recycled upon
derecognition of the asset.
Impairment of 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 include 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.
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.
In applying this forward-looking approach, a distinction is made between:
• financial instruments that have not deteriorated significantly in credit quality since initial
recognition or that have low credit risk (‘Level 1’) and
• financial instruments that have deteriorated significantly in credit quality since initial
recognition and whose credit risk is not low (‘Level 2’).
• ‘Level 3’ would cover financial assets that have objective evidence of impairment at the
reporting date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected
credit losses’ are recognised for the second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of
credit losses over the expected life of the financial instrument.
GME Resources Limited | Annual Report 2019
37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(o)
Investments and other financial assets (continued)
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as
well as contract assets and records the loss allowance as lifetime expected credit losses. These are
the expected shortfalls in contractual cash flows, considering the potential for default at any point
during the life of the financial instrument. In calculating, the Group uses its historical experience,
external indicators and forward-looking information to calculate the expected credit losses using
a provision matrix.
The Group assess impairment of trade receivables on a collective basis as they possess shared
credit risk characteristics they have been grouped based on the days past due.
Classification and measurement of financial liabilities
The Group’s financial liabilities include trade and other payables.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for
transaction costs unless the Group designated a financial liability at fair value through profit or
loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest
method except for derivatives and financial liabilities designated at FVTPL, which are carried
subsequently at fair value with gains or losses recognised in profit or loss (other than derivative
financial instruments that are designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an instrument’s fair value that are
reported in profit or loss are included within finance costs or finance income.
Applicable to 30 June 2018
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement
are classified as either financial assets at fair value through profit or loss, loans and receivables,
held-to-maturity investments, or available-for-sale investments, as appropriate. When financial
assets are recognised initially, they are measured at fair value plus, in the case of investments not
at fair value through profit or loss, directly attributable transaction costs. The Group determines
the classification of its financial assets after initial recognition and, when allowed and appropriate,
re-evaluates this designation at each financial year-end. All regular way purchases and sales of
financial assets are recognised on the trade date i.e. the date that the Group commits to purchase
the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts
that require delivery of the assets within the period established generally by regulation or
convention in the marketplace.
Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at fair
value through profit or loss’. Financial assets are classified as held for trading if they are acquired
for the purpose of selling in the near term. Derivatives are also classified as held for trading unless
they are designated as effective hedging instruments. Gains or losses on investments held for
trading are recognised in profit or loss.
GME Resources Limited | Annual Report 2019
38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(o)
Investments and other financial assets (continued)
Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are
classified as held-to-maturity when the Group has the positive intention and ability to hold to
maturity. Investments intended to be held for an undefined period are not included in this
classification. Investments that are intended to be held-to-maturity, such as bonds, are
subsequently measured at amortised cost. This cost is computed as the amount initially recognised
minus principal repayments, plus or minus the cumulative amortisation using the effective interest
method of any difference between the initially recognised amount and the maturity amount. This
calculation includes all fees and points paid or received between parties to the contract that are
an integral part of the effective interest rate, transaction costs and all other premiums and
discounts. For investments carried at amortised cost, gains and losses are recognised in profit or
loss when the investments are derecognised or impaired, as well as through the amortisation
process.
If the Group were to sell other than an insignificant amount of held-to-maturity financial assets,
the whole category would be tainted and reclassified as available-for-sale.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Such assets are carried at amortised cost using the effective
interest method. Gains and losses are recognised in profit or loss when the loans and receivables
are derecognised or impaired, as well as through the amortisation process.
Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as
available-for-sale or are not classified as any of the three preceding categories. After initial
recognition available-for sale investments are measured at fair value with gains or losses being
recognised as a separate component of equity until the investment is derecognised or until the
investment is determined to be impaired, at which time the cumulative gain or loss previously
reported in equity is recognised in profit or loss.
The fair value of investments that are actively traded in organised financial markets is determined
by reference to quoted market bid prices at the close of business on the balance date. For
investments with no active market, fair value is determined using valuation techniques. Such
techniques include using recent arm’s length market transactions, reference to the current market
value of another instrument that is substantially the same, discounted cash flow analysis and
option pricing models.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar
financial assets) is derecognised when:
•
•
the rights to receive cash flows from the asset have expired;
the Group retains the right to receive cash flows from the asset, but has assumed an
obligation to pay them in full without material delay to a third party under a ‘pass-through’
arrangement; or
GME Resources Limited | Annual Report 2019
39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(o)
Investments and other financial assets (continued)
Derecognition of financial assets (continued)
the Group has transferred its rights to receive cash flows from the asset and either:
•
• has transferred substantially all the risks and rewards of the asset, or
• has neither transferred nor retained substantially all the risks and rewards of the asset, but
has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset and has neither
transferred nor retained substantially all the risks and rewards of the asset nor transferred control
of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the
asset. Continuing involvement that takes the form of a guarantee over the transferred asset is
measured at the lower of the original carrying amount of the asset and the maximum amount of
consideration received that the Group could be required to repay.
When continuing involvement takes the form of a written and/or purchased option (including a
cash-settled option or similar provision) on the transferred asset, the extent of the Group’s
continuing involvement is the amount of the transferred asset that the Group may repurchase,
except that in the case of a written put option (including a cash-settled option or similar provision)
on an asset measured at fair value, the extent of the Group’s continuing involvement is limited to
the lower of the fair value of the transferred asset and the option exercise price.
Impairment of financial assets
The Group assesses at each balance date whether a financial asset or Group of financial assets is
impaired.
Financial assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables carried at amortised
cost has been incurred, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit
losses that have not been incurred) discounted at the financial asset’s original effective
interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount
of the asset is reduced either directly or through use of an allowance account. The amount of the
loss is recognised in profit or loss.
The Group first assesses whether objective evidence of impairment exists individually for financial
assets that are individually significant, and individually or collectively for financial assets that are
not individually significant.
If it is determined that no objective evidence of impairment exists for an individually assessed
financial asset, whether significant or not, the asset is included in a Group of financial assets with
similar credit risk characteristics and that Group of financial assets is collectively assessed for
impairment. Assets that are individually assessed for impairment and for which an impairment
loss is or continues to be recognised are not included in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously
recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is
GME Resources Limited | Annual Report 2019
40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(o)
Investments and other financial assets (continued)
Financial assets carried at amortised cost (continued)
recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its
amortised cost at the reversal date.
Financial assets carried at cost
If there is objective evidence that an impairment loss has been incurred on an unquoted equity
instrument that is not carried at fair value (because its fair value cannot be reliably measured), or
on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity
instrument, the amount of the loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the current market
rate of return for a similar financial asset. Such impairment loss shall not be reversed in
subsequent periods.
Available-for-sale investments
If there is objective evidence that an available-for-sale investment is impaired, an amount
comprising the difference between its cost (net of any principal repayment and amortisation) and
its current fair value, less any impairment loss previously recognised in profit or loss, is transferred
from equity to the statement of profit or loss and other comprehensive income. Reversals of
impairment losses for equity instruments classified as available-for-sale are not recognised in
profit. Reversals of impairment losses for debt instruments are reversed through profit or loss if
the increase in an instrument's fair value can be objectively related to an event occurring after the
impairment loss was recognised in profit or loss.
(p) Deferred exploration and evaluation expenditure
Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as
exploration and evaluation assets on an area of interest basis. Costs incurred before the Group
has obtained the legal rights to explore an area are recognised in profit or loss.
Exploration and evaluation assets are only recognised if the rights of the area of interest are
current and either:
•
the expenditures are expected to be recouped through successful development and
exploitation of the area of interest; or
• activities in the area of interest have not at the reporting date, reached a stage which
permits a reasonable assessment of the existence or otherwise of economically
recoverable reserves and active and significant operations in, or in relation to, the area of
interest are continuing.
Exploration and evaluation assets are assessed for impairment if:
•
sufficient data exists to determine technical feasibility and commercial viability; and
facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see
impairment accounting policy 1(q)).
For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-
generating units to which the exploration activity relates. The cash generating unit shall not be
larger than the area of interest.
GME Resources Limited | Annual Report 2019
41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(p) Deferred exploration and evaluation expenditure (continued)
Once the technical feasibility and commercial viability of the extraction of mineral resources in an
area of interest are demonstrable, exploration and evaluation assets attributable to that area of
interest are first tested for impairment and then reclassified to mine development assets.
Revenue from trial mining operations which are considered necessary to provide the basis for any
development activity, is offset against any deferred exploration and evaluation expenditure in
respect of that operation.
(q)
Impairment of tangible and intangible assets other than goodwill
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 groups 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).
An assessment is also made at each balance date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. A previously recognised impairment loss is
reversed only if there has been a change in the estimate used to determine the assets recoverable
amount since the last impairment loss was recognised. If that is the case the carrying amount of the
asset is increased to its recoverable amount. That increased amount cannot exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been
recognised for the asset in previous years. Such reversal is recognised in profit or loss unless the
asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.
After such reversal, the depreciation charge is adjusted in future periods to allocate the assets
revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
(r)
Trade and other payables
Trade payables and other payables are carried at amortised costs 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 these
goods and services. Trade and other payables are presented as current liabilities unless payment is
not due within 12 months.
GME Resources Limited | Annual Report 2019
42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(s)
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(t)
Earnings per share
Basic EPS is calculated as net result attributable to members, adjusted to exclude costs of servicing
equity (other than dividends) and preference share dividends, divided by the weighted average
number of ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net result attributable to members, adjusted for:
•
•
costs of servicing equity (other than dividends) and preference share dividends;
the after-tax effect of dividends and interest associated with potential dilutive 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 of ordinary shares and potential dilutive ordinary shares, adjusted for any bonus
element.
(u)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker. The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Board
of Directors of GME Resources Limited.
(v)
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term,
except where another systematic basis is more representative of the time pattern in which economic
benefits from the leased asset are consumed. (refer also note 1(b))
(w)
Parent entity financial information
The financial information for the parent entity, disclosed in Note 20 has been prepared on the same
basis as the consolidated financial statements.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the
parent entity’s financial statements. Dividends received from associates are recognised in the
parent entity’s profit or loss, rather than being deducted from the carrying amount of these
investments.
GME Resources Limited | Annual Report 2019
43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2. OTHER INCOME AND EXPENSES
(a) Other income:
Facilitation fee for prospecting rights
Profit on sale of Devon Gold Mine
Total revenue
(b) Administration costs:
Audit and taxation compliance fees
Accounting fees
Consulting fees
Corporate compliance costs
Insurance
Office costs
Research & development claim preparation
Other
3.
INCOME TAX
(a)
Income tax recognised in profit and loss
The major components of tax benefit are:
Consolidated
2019
$
2018
$
100,000
30,063
130,063
57,540
42,774
6,663
63,769
19,090
87,657
106,017
28,825
412,335
100,000
-
100,000
38,274
37,739
154,735
56,106
24,432
103,572
91,979
35,809
538,646
Adjustments recognised in the current year in relation to
the current tax – R&D tax offset
Total tax benefit
706,780
706,780
613,196
613,196
The prima facie income tax expense on pre-tax
accounting result from operations reconciles to the
income tax provided in the financial statements as
follows:
Accounting profit/(loss) before tax from continuing
operations
(984,045)
(1,697,583)
Income tax expense/(benefit) calculated at 27.5% (2018:
27.5%)
Non-deductible expenses
R&D tax incentive
Tax losses and deferred tax balances not recognised
Income tax benefit reported in the Consolidated
Statement of Profit or Loss and Other Comprehensive
Income
(270,612)
371
706,780
270,241
(466,835)
-
613,196
466,835
706,780
613,196
GME Resources Limited | Annual Report 2019
44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
3.
INCOME TAX (Continued)
Unrecognised deferred tax balances
(b)
Deferred tax assets comprise:
Tax losses carried forward
Accrued expenses
Other deferred tax balances
Deferred tax liabilities comprise:
Exploration expenditure capitalised
Prepayments
Income tax benefit not recognised directly in equity
during the year:
Capital raising costs
Consolidated
2019
$
2018
$
10,880,978
11,956
497
10,892,933
11,457,795
20,272
11,478,067
8,593,041
-
8,593,041
9,026,483
9,949
9,036,432
17,168
-
Potential deferred tax assets attributable to tax losses and capital losses carried forward have
not been brought to account because the Directors do not believe it is appropriate to regard
realisation of the future tax benefit as probable. The deductible temporary differences and tax
losses do not expire under current tax legislation.
Tax Consolidation
Effective 1 July 2003, for the purposes of income taxation, the Company and its 100%
wholly-owned subsidiaries formed a tax consolidated group. The head entity of the tax
consolidated group is GME Resources Limited.
4. TRADE AND OTHER RECEIVABLES
Current
GST Refundable
Other
Non-current
Bonds
15,961
2,101
18,062
78,999
18,008
97,007
17,290
17,286
GME Resources Limited | Annual Report 2019
45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
5. PLANT AND EQUIPMENT (NON-CURRENT)
Plant and equipment - at cost
Less accumulated depreciation
Total plant and equipment
Reconciliation of the carrying amount of plant and
equipment:
Carrying amount at the
beginning of the year
Depreciation
Carrying amount at the end of
the year
6.
INTANGIBLE ASSETS (NON-CURRENT)
Software – at cost
Less accumulated amortisation
Reconciliation of the carrying amount of intangible assets
Carrying amount at the beginning of the year
Amortisation
Carrying amount at the end of the year
Consolidated
2019
$
745,610
(743,472)
2018
$
745,610
(742,817)
2,138
2,793
2,793
(655)
2,138
4,148
(1,355)
2,793
18,453
(18,453)
-
1,107
(1,107)
-
18,453
(14,762)
3,691
2,214
(1,107)
1,107
7. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE (NON-CURRENT)
Exploration and evaluation
phase - at cost
Movements:
Balance at beginning of the year
Direct expenditure
Less impairment of exploration
and evaluation expenditure (1)
30,088,279
1,748,282
31,836,561
28,450,995
2,786,206
31,237,201
(589,141)
31,247,420
(1,148,922)
30,088,279
(1) The ultimate recoupment of the above deferred exploration and evaluation expenditure is dependent
on the successful development and commercial exploitation or, alternatively, sale of the respective areas
at amounts sufficient to recover the investment. Where facts and circumstances suggest that the
carrying amount of an exploration and evaluation asset may exceed its recoverable amount, the
expenditure has been impaired down to its recoverable amount.
GME Resources Limited | Annual Report 2019
46
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
8. PAYABLES (CURRENT)
Trade payables and accruals
Consolidated
2019
$
2018
$
117,102
117,102
543,484
543,484
Trade payables and accruals are non-interest bearing and normally settled on 30-day terms.
Details of exposure to interest rate risk and fair value in respect of liabilities are set out in Note 16. There are
no secured liabilities as at 30 June 2019.
9.
ISSUED CAPITAL
506,242,920 (2018: 482,140,229) ordinary shares, fully paid
56,640,810
55,340,239
Ordinary shares
Balance at the beginning of the year
Rights Issue
Costs associated with issue
Balance at the end of the year
Balance at the beginning of the year
Rights Issue
Balance at the end of the year
55,340,239
1,325,648
(25,077)
53,370,931
2,039,824
(70,516)
56,640,810
55,340,239
No of
Shares
482,140,229
No of
Shares
463,596,374
24,102,691
506,242,920
18,543,855
482,140,229
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at shareholders’ meetings. In the event of winding up of the Company, ordinary shareholders rank
after all other shareholders and creditors and are fully entitled to any proceeds of liquidation.
The shares have no par value.
10. CONTROLLED ENTITIES
Name of Controlled Entity/ (Country of
Incorporation)
Percentage Owned
Company’s Cost of Investment
GME Sulpher Inc (USA)
GME Investments Pty Ltd (Australia)
Golden Cliffs NL (Australia)
NiWest Limited (Australia)
2019
%
100
100
100
100
2018
%
100
100
100
100
2019
$
-
-
616,893
4,561,313
5,178,206
GME Resources Limited | Annual Report 2019
2018
$
-
-
616,893
4,561,313
5,178,206
47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Consolidated
2019
$
2018
$
11. CONSOLIDATED STATEMENT OF CASH FLOWS
a) Reconciliation of cash flows from operating activities
Loss from ordinary activities after tax
Depreciation / amortisation
Profit on sale of Devon project
Exploration costs impaired/written off
Decrease/(increase) in receivables and prepayments
Increase/(decrease) in sundry creditors
Proceeds on sale of Devon project
(277,265)
1,762
(30,063)
589,141
89,612
(118,106)
100,000
(1,084,387)
2,462
-
1,148,922
96,467
43,854
-
Net cash inflows/(outflows) from operating activities
355,081
207,318
b) Reconciliation of cash and cash equivalents
Cash balance comprises:
Cash at bank
Deposits at call
9,003
1,255,604
1,264,607
15,842
1,719,612
1,735,454
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Short term deposits are made for varying periods between 3 to 6 months depending on the
immediate cash requirements of the Group and earn interest at the respective short-term
deposit rates.
12. AUDITOR’S REMUNERATION
Amounts received or due and receivable by the auditors
of GME Resources Ltd for:
- an audit or review of the financial statements of the
Company and any other entity in the Group
49,540
35,000
- other services in relation to the Company and any
other entity in the Group (tax compliance services)
8,000
57,540
3,274
38,274
GME Resources Limited | Annual Report 2019
48
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
13. SEGMENT REPORTING
AASB 8 Operating Segments which requires operating segments to be identified on the basis of
internal reports about components of the Group that are reviewed by the chief operating decision
maker, being the Board of GME Resources Limited, in order to allocate resources to the segment and
assess its performance. The Board of GME Resources Limited reviews internal reports prepared as
consolidated financial statements and strategic decisions of the Group are determined upon analysis
of these internal reports. During the period, the Group operated predominantly in one business and
geographical segment being the resources sector in Australia. Accordingly, under the ‘management
approach’ outlined only one operating segment has been identified and no further disclosure is
required in the notes to the consolidated financial statements.
14. EARNINGS/(LOSS) PER SHARE
Basic and diluted loss per share (cents)
Consolidated
2019
$
2018
$
(0.06)
(0.23)
Loss used in calculation of basic and diluted loss per
share
(277,765)
($1,084,387)
484,991,259
464,454,941
Weighted average number of ordinary shares
outstanding during the year used in calculation of
basic and diluted loss per share
The Company does not have any options on issue.
15. DIRECTORS’ AND EXECUTIVES’ DISCLOSURES
(a) Details of Key Management Personnel
Directors
Peter Ross Sullivan
James Noel Sullivan
Peter Ernest Huston
Executives
Mark Edward Pitts
Non-executive Chairman
Managing Director
Non-executive Director
Company Secretary
GME Resources Limited | Annual Report 2019
49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
15. DIRECTORS’ AND EXECUTIVES’ DISCLOSURES (CONTINUED)
b) Key Management Personnel Compensation
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Consolidated
2019
2018
$
$
278,384
15,616
-
294,000
278,384
15,616
-
294,000
c) Other transactions and balances with Key Management Personnel
During the year, the Group paid $21,750 (2018: $24,535) for commercial rent and outgoings of a property
owned by the Leonora Property Syndicate, an entity in which Peter Sullivan and James Sullivan have an
interest.
The balance owed to the Leonora Property Syndicate as at 30 June 2019 was $Nil (2018: $7,285).
In addition to the fees paid to Mark Pitts for Company Secretarial Services, the Company also paid $17,618
(2018: $7,481) to Endeavour Corporate, of which Mark Pitts is a partner, for Accounting services.
The Company has an amount payable of $6,944 (2018: $8,531) to Endeavour Corporate as at 30 June 2019.
The Company has an amount payable of $ 33,000 (2018: $nil) to Hardrock Capital Pty Ltd, a company of
which Peter Sullivan is a director, in relation to Directors’ fees.
16. FINANCIAL INSTRUMENT DISCLOSURES
Financial risk management objectives
The Group is exposed to market risk (including interest rate), credit risk and liquidity risk.
The Group does not issue derivative financial instruments, nor does it believe that it has exposure to such
trading or speculative holdings through its investments in associates.
Risk management is carried out by the Board as a whole, which provides the principles for overall risk
management, as well as policies covering specific areas such as foreign exchange risk, interest rate risk,
and liquidity risk. The Group uses different methods to measure different types of risk to which it is
exposed. Where appropriate these methods will include sensitivity analysis in the case of interest rate,
and other price risks and aging analysis for credit risk.
GME Resources Limited | Annual Report 2019
50
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
16. FINANCIAL INSTRUMENT DISCLOSURES (CONTINUED)
a) Categories of financial instruments
Fixed Interest Rate Maturing
2019
Weighted
Average
Effective
Interest Rate
Floating
Interest
Rate
Within 1
year
Over 1
year
Non-interest
Bearing
Total
Financial Assets
$
$
$
$
$
Cash assets
Receivables
0.34%
n/a
9,003
-
9,003
1,255,604
-
1,255,604
Payables
n/a
-
-
-
-
-
-
-
-
-
-
18,062
18,062
1,264,607
18,062
1,282,669
117,102
117,102
117,102
117,102
2018
Weighted
Average
Effective
Interest
Rate
Floating
Interest
Rate
Fixed Interest Rate Maturing
Within 1
year
Over 1
year
Non-interest
Bearing
Total
Financial Assets
$
$
$
$
$
Cash assets
Receivables
0.41%
n/a
15,842
-
15,842
1,719,612
-
1,719,612
Payables
n/a
-
-
-
-
-
-
-
-
-
-
97,007
97,007
1,735,454
97,007
1,832,461
543,484
543,484
543,484
543,484
GME Resources Limited | Annual Report 2019
51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
16. FINANCIAL INSTRUMENT DISCLOSURES (CONTINUED)
b) Interest rate risk sensitivity analysis
The Company and the Group are exposed to interest rate risk, which is the risk that a financial
instrument’s value will fluctuate as a result of changes in market interest rates, in respect of the cash
balances and deposits.
The sensitivity analyses below have been determined based on the exposure to interest rates for
instruments at the reporting date and the stipulated change taking place at the beginning of the
financial year and held constant throughout the reporting period. A 50-basis point increase or
decrease is used when reporting interest rate risk internally to key management personnel and
represents management’s assessment of the change in interest rates.
At reporting date, if interest rates had been 50 basis points higher and all other variables were held
constant, the Group’s net loss before tax and equity would reduce by $4,677 and increase by $4,677,
respectively (2018: $10,520). A reduction in the interest rate would have an equal but opposite effect.
c) Liquidity risk
The Company manages liquidity risk by continually monitoring cash reserves and cash flow
forecasts to ensure that financial commitments can be met as and when they fall due.
d) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or
customer contract, leading to a financial loss. The Group is not significantly exposed to credit risk from
its operating activities, however, the Board does monitor receivables as and when they arise. The
maximum exposure to credit risk at the reporting date is the carrying value of each class of financial
asset mentioned above. The Group does not hold collateral as security.
No material exposure is considered to exist by virtue of the possible non-performance of the
counterparties to financial instruments and cash deposits.
e) Capital management risk
The Company controls the capital of the Group in order to maximise the return to shareholders and
ensure that the Group can fund its operations and continue as a going concern.
The Company effectively manages the Group’s capital by assessing the Group’s financial risks and
adjusting its capital structure in response to changes in these risks and the market. These responses
include the management of expenditure and debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group
since the prior year.
f) Net fair values
The net fair value of the financial assets and financial liabilities approximates their carrying value. No
financial assets and financial liabilities are readily traded on organised markets in standardised form.
The aggregate net fair values and carrying amounts of financial assets and financial liabilities are
disclosed in the Consolidated Statement of Financial Position and in the notes to and forming part of
the financial statements.
GME Resources Limited | Annual Report 2019
52
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
17. COMMITMENTS AND CONTINGENT LIABILITIES
There were no capital commitments or contingent liabilities, not provided for in the financial
statements of the Group as at 30 June 2019, other than:
a) Mineral Tenement Leases
In order to maintain current rights of tenure to mining tenements, the Group in its own right
or in conjunction with its joint venture partners may be required to outlay amounts of
approximately $1,964,224 (2018: $1,938,440) per annum on an ongoing basis in respect of
tenement lease rentals and to meet the minimum expenditure requirements of the Western
Australian Mines Department. These obligations are expected to be fulfilled in the normal
course of operations by the Group or its joint venture partners and are subject to variations
dependent on various matters, including the results of exploration on the mineral
tenements.
b) Claims of Native Title
Legislative developments and judicial decisions (in particular the uncertainty created in the
area of Aboriginal land rights by the High Court decision in the “Mabo” case and native title
legislation) may have an adverse impact on the Group’s exploration and future production
activities and its ability to fund those activities. It is impossible at this stage to quantify the
impact (if any) which these developments may have on the Group’s operations.
Native title claims have been made over ground in which the Group currently has an interest.
It is possible that further claims could be made in the future. The Company has established
access agreements with the major claimant groups in the area. All of the mineral resources
are located on granted mining leases. Once granted there is no opportunity for veto of
project development under the Native Title act, however owners must adhere to the
provisions of the Aboriginal Heritage Act 1972 which regulates how to deal with specific
heritage sites that may exist on the tenement.
c) Non-cancellable Operating
Lease Commitments
Within one year
One year or later and no later than five
years
Consolidated
2019
$
2018
$
24,000
48,000
44,064
26,298
72,000
70,362
Operating lease commitments relate to commercial lease of business premises.
GME Resources Limited | Annual Report 2019
53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
18. INTERESTS IN BUSINESS UNDERTAKINGS – FARM-INS
The Company has entered into a number of agreements with other companies to gain interests
in project areas. These interests will be earned by expending certain amounts of money on
exploration expenditure within a specific time. The Company can, however, withdraw from
these projects at any time without penalty. The amounts required to be expended in the next
year have been included in Note 17 – Commitments and Contingent Liabilities.
19. RELATED PARTIES
Total amounts receivable and payable from entities in the wholly-owned group at balance
date:
Non-current receivables
Loans net of provisions for non- recovery
Current payables
Loans
20. PARENT ENTITY DISCLOSURE
2019
$
2018
$
32,109,079
30,449,581
635,678
579,153
As at, and throughout the financial year ended 30 June 2019 the parent Company of the Group
was GME Resources Limited.
Results of the parent entity
Loss after tax for the year
Other comprehensive income
Total comprehensive result for the year
Financial position of the parent entity at year end
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Share capital
Accumulated losses
Total equity
$
$
(162,078)
-
(162,078)
(35,219)
-
(35,219)
1,305,163
34,744,457
36,049,621
1,865,623
33,524,279
35,389,902
743,863
743,863
1,122,637
1,122,637
56,640,810
(21,335,051)
35,305,758
55,340,239
(21,172,973)
34,167,265
GME Resources Limited | Annual Report 2019
54
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
21. SUBSEQUENT EVENTS
No matters or circumstances have arisen since the end of the financial year which significantly affected
or may significantly affect the Group’s operations, the results of those operations or the Group’s state of
affairs in future financial years.
GME Resources Limited | Annual Report 2019
55
DIRECTORS’ DECLARATION
1.
In the opinion of the Directors of GME Resources Limited (the “Company”):
a.
The financial statements, notes, and the additional disclosures are in accordance with the
Corporations Act 2001 including:
i) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2019
and of its performance for the year then ended; and
ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and Corporations Regulations 2001.
b.
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.
the financial statements and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board.
2.
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 2001 for the financial year ended 30 June 2019.
This declaration is signed in accordance with a resolution of the Board of Directors.
James Sullivan
Managing Director
Perth, Western Australia
17th September 2019
GME Resources Limited | Annual Report 2019
56
INDEPENDENT AUDITOR’S REPORT
To the members of GME Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of GME Resources Limited (“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 profit or loss and other 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.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report, which indicates that a material uncertainty exists
that may cast significant doubt on the entity’s ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter described in the Material
Uncertainty Related to Going Concern, we have determined the matter described below to be the
key audit matter to be communicated in our report.
Key audit matter
How our audit addressed the key audit
matter
Capitalised exploration and evaluation
Refer to Note 7
and
exploration
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group
evaluation
capitalises
expenditure and as at 30 June 2019 had a
deferred exploration and evaluation expenditure
balance of $31,247,420. In addition, for the year
impaired
ended 30 June 2019,
$589,141
evaluation
of
expenditure.
the Group
and
exploration
Exploration and evaluation expenditure was
determined to be a key audit matter as it is
important to the users’ understanding of the
financial statements as a whole and was an area
the most audit effort and
which
involved
charged with
communication with
governance.
those
associated
Our procedures included but were not
limited to:
- Obtaining an understanding of the key
processes
with
management’s review of the carrying
value of exploration and evaluation;
- Considering the Directors’ assessment
of potential indicators of impairment in
addition
own
assessment;
to making
our
- Obtaining evidence that the Group has
current rights to tenure of its areas of
interest;
- Considering the nature and extent of
planned ongoing activities;
- Substantiating a sample of expenditure
supporting
to
agreeing
by
documentation; and
- Examining the disclosures made in the
annual report.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 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.
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.
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 GME Resources Limited for the year ended 30 June
2019 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
17 September 2019
M R Ohm
Partner
ASX ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
The following additional information, applicable at 7 October 2019 is required by the
Australian Securities Exchange Ltd in respect of listed public companies only.
1
.
Shareholding
a. Distribution of Shareholders
Category (size of holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Number
of Holders
52,518
840,490
1,261,635
18,118,454
485,969,823
506,242,920
b. The number of shareholders holding less than a marketable parcel is 491.
c. The names of the substantial shareholders listed in the holding Company’s register as at
7 October 2019 are:
Shareholder
ZETA RESOURCES LIMITED
MANDALUP INVESTMENTS PTY LTD
PETER ROSS SULLIVAN
JAMES NOEL SULLIVAN
Number
% of issued
capital
204,725,356
44.16
43,244,810
32,879,992
25,635,972
8.54
6.49
5.26
d. Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary shares
— Each ordinary share is entitled to one vote when a poll is called, otherwise each
member present at a meeting or by proxy has one vote on a show of hands.
GME Resources Limited | Annual Report 2019
61
ASX ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
e.
20 Largest Shareholders — Ordinary Shares
Name
1
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
2 MANDALUP INVESTMENTS PTY LTD
3 PANORAMIC RESOURCES LIMITED
4 MR JAMES NOEL SULLIVAN AND MRS GAIL SULLIVAN
5 HARDROCK CAPITAL PTY LTD
6 MANDALUP INVESTMENTS PTY LTD
7 MMP (WA) PTY LTD
8 DUNCRAIG INVESTMENTS SERVICES PTY LTD
8 9 MR PETER ROSS SULLIVAN
10 PROTAX NOMINEES PTY LTD
11 HARDROCK CAPITAL PTY LTD
12 TWO TOPS PTY LTD
13 SULLIVANS GARAGE PTY LTD
14 ZETA RESOURCES LIMITED
15 HVH PTY LTD
16 ACS (NSW) PTY LTD
17 MD NICHOLAEFF PTY LTD
18 MR DOUGLAS STUART BUTCHER
19 MR ROBERT GREGORY LOOBY
20 MS SUZANNE SULLIVAN
Number of
Ordinary
Fully Paid
Shares Held
% Held of
Issued
Ordinary
Capital
198,995,871
39.31
28,852,185
20,222,221
17,496,201
14,931,522
14,392,625
11,000,000
10,901,584
10,832,520
8,904,000
6,865,142
6,379,266
5,856,203
5,635,736
5,000,000
4,617,847
4,290,582
4,267,311
4,048,840
3,049,664
5.70
3.99
3.46
2.95
2.84
2.17
2.15
2.14
1.76
1.36
1.26
1.16
1.11
0.99
0.91
0.85
0.84
0.80
0.60
386,539,320
76.35
Stock Exchange Listing
Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the
Australian Securities Exchange Limited. The ASX code is GME.
GME Resources Limited | Annual Report 2019
62
GME Resources Limited
Unit 5, 78 Marine Terrace
Fremantle WA 6160
T: (08) 9336 3388
F: (08) 9315 5475
www.gmeresources.com.au
ABN 62 009 260 315