G M E R E S O U R C E S L I M I T E D
ABN 62 009 260 315
ANNUAL REPORT
2020
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
CONTENTS
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
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63
OPERATIONS REPORT
The COVID-19 pandemic has changed many of the things that we took for granted. The sudden global
shut down of economies resulted in un-precedented uncertainty that has affected financial and
commodity markets, growth forecasts and significantly intensified human health risks.
Despite negative news flows across the world, the mining and exploration sector in Western Australia
has remained resilient and has been a beacon for the Australian economy. Over the past few months
gold price has reached historic highs in AUS$ terms and nickel prices are showing positive signs of
recovery.
Whilst the lock down and restriction on travel did not significantly impact the Company financially, it has
delayed planned field work that the Company was pursuing in relation to its gold projects. This work has
been rescheduled and will recommence in the near future.
The Company continues to focus its efforts on realising the development opportunity which exists for its
high quality and strategic flag ship asset the NiWest Nickel – Cobalt Project.
Uncertainty over the past year, combined with a sustained period of subdued nickel prices driven by
lower than expected growth in the Electric Vehicle (EV) lithium-ion battery sector has resulted in a
particularly challenging investment market for capital intensive nickel laterite projects. However, with
evidence of increasing sales of EV’s, demand for battery metals is forecast to increase.
Following a long period of minimal investment in new nickel developments, nickel supply chains are
expected to come under pressure as the increased demand from EV battery metal market materialises,
leading to stronger metal prices and increased capital investment.
In the meantime, the Company is maintaining a vigilant approach to working capital requirements and
continues to assess its options to minimise holding costs of its assets. With gold price hovering around
$2600 per ounce the Company’s is looking at the potential to generate cash flows from its remaining
gold assets. Exploration Work is planned to be undertaken at two of the Company’s gold projects over
the coming year.
Information pertaining to activities and the Company’s mineral assets are detailed in this section.
GME Resources Limited
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OPERATIONS REPORT
NIWEST NICKEL-COBALT PROJECT
Figure 1 NiWest Project Locations
GME Resources Limited’s (GME or the Company) through its subsidiary (100%) NiWest Limited owns
the NiWest Nickel Cobalt Laterite Project (NiWest or the Project). The Project is centrally located in the
West Australian Nickel belt and adjacent to Glencore’s Murrin Murrin Nickel-Cobalt Operation (MMO)
which produces approximately 35,000 tonnes of LME nickel and 3000 tonnes of LME cobalt per annum.
The NiWest Project is considered to be one of the largest high-grade undeveloped nickel-cobalt deposits
in Australia. The project is situated in a semi-arid regional environment that is considered highly
conducive for the development of a heap leach operation. The region is well serviced with infrastructure
such as public rail linked to the ports of Esperance and Fremantle, gas pipeline, arterial bitumen roads,
optic fibre communications and long-established mining towns. All projects mineral resources are located
on granting Mining Leases.
Over the past decade the Company has progresses drilling programs that have resulted in delineation
of significant nickel and cobalt resources, undertaken extensive metallurgical leach test programs and
developed a comprehensive flow sheet for the downstream processing of nickel solutions through to the
production of high purity nickel/cobalt products.
GME Resources Limited
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OPERATIONS REPORT
Table 1: Mineral Resource Estimate1 for NiWest Project at 0.8% Ni Cut-off Grade
JORC
Classification
Tonnes
(million)
Nickel Grade
(%)
Cobalt Grade
(%)
Nickel Metal
(kt)
Measured
Indicated
Inferred
TOTAL*
15.2
50.4
19.5
85.2
1.08
1.04
0.95
1.03
0.064
0.068
0.057
0.065
165
527
186
878
* Columns may not total exactly due to rounding errors. Tonnages are reported as dry tonnage
1 ASX Release 2 August 2018
Cobalt
Metal
(kt)
9.8
34.5
11.0
55.4
A continuous pilot phase of the proposed flow sheet was completed in 2018 that provided technical,
metallurgical and financial data to undertake a comprehensive Pre-Feasibility Study.
(Refer ASX Announcement 2 Aug 2018).
The study confirmed the technical and financial robustness of a long-life heap leaching operation coupled
to a Direct Solvent Extraction plant and refinery producing high purity nickel and cobalt sulphate products
suitable for delivery into the lithium-ion battery materials markets.
Figure 2. NiWest flowsheet schematic
NiWest Nickel Cobalt Project PFS
NiWest PFS Parameters and Results
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).
Conventional open pit mining at a low projected strip ratio of 2.0:1.
GME Resources Limited
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OPERATIONS REPORT
Head grades average 1.05% nickel and 0.07% cobalt for the first 15 years. Opportunity to extend 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.
Figure 3. Mt Kilkenny mining and process plant layout
GME Resources Limited
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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 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 pre-production
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.
Mineral Resources and Reserves used in PFS
The Mineral Resource estimate for solely those deposits that are the subject of the PFS is 67.0Mt at
1.04% Ni and 0.065% cobalt (0.8% Ni cut-off, refer Table 4).
At a 0.8% Ni grade cut-off approximately 74% of the contained nickel in the PFS Mineral Resource
estimate is classified in the Measured and Indicated categories.
Table 2: Mineral Resource Estimates for Mt Kilkenny, Eucalyptus and Hepi at 0.8% Ni Cut-off
Deposit
Mt
Kilkenny
Eucalyptus
Hepi
Total
JORC
Classification
Measured
Indicated
Inferred
Sub-total*
Indicated
Inferred
Sub-total*
Measured
Indicated
Inferred
Sub-total*
Measured
Indicated
Inferred
Total*
Tonnes
(M)
8.8
12.7
4.5
26.0
23.7
12.8
36.5
1.6
1.5
1.5
4.5
10.4
37.9
18.7
67.0
Ni Grade
(%)
1.11
1.09
0.98
1.08
1.04
0.95
1.01
1.20
1.01
0.95
1.06
1.12
1.05
0.96
1.04
Co Grade
(%)
0.063
0.079
0.051
0.069
0.064
0.056
0.061
0.078
0.073
0.074
0.075
0.066
0.070
0.056
0.065
Ni Metal
(kt)
98
138
44
279
247
121
368
19
15
14
48
117
400
178
695
Co Metal
(kt)
5.6
10.0
2.3
17.9
15.3
7.1
22.4
1.2
1.1
1.1
3.4
6.8
26.4
10.4
43.6
*Columns may not total exactly due to rounding errors. Tonnages are reported as dry tonnage
Ore Reserve & Mine Planning
The Maiden Ore Reserve estimate for the NiWest Project is 64.9Mt at 0.91% Ni and 0.06% Co (for 592kt
contained nickel and 38kt contained cobalt). This is based on a 0.5% Ni cut-off grade (refer Table 3).
GME Resources Limited
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OPERATIONS REPORT
Table 3: NiWest Project Ore Reserve Estimate (at 0.5% Ni Cut-off Grade)
Orebody
Mt Kilkenny
Eucalyptus
Hepi
Total*
JORC
Classification
Tonnes
(M)
Ni Grade
(%)
Co Grade
(%)
Probable
Probable
Probable
Probable
27.9
32.2
4.7
64.9
0.96
0.87
0.91
0.91
0.06
0.05
0.06
0.06
*Columns may not total exactly due to rounding errors. Tonnages are reported as dry tonnage
The NiWest Ore Reserve estimate includes a higher grade (>0.8% Ni cut-off) component of 41.2Mt at
1.06% Ni and 0.07% Co. Mining and processing/refining of this higher-grade component predominantly
occurs during the first 15 years of NiWest operating life.
GOLD ASSETS - Golden Cliffs NL (100%)
Figure 5. Gold Project Locations
GME Resources Limited
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OPERATIONS REPORT
The Company through its 100% owned subsidiary Golden Cliffs NL has a number of gold assets in the
Leonora Laverton region (Refer Gold Project Locations plan). The substantial increase in gold price over
the past year has raised the priority of these assets. In particular the Fairfield mine, the Company’s most
advanced gold asset near Laverton has potential to be developed as small profitable open pit operation.
Fairfield Project - Laverton Downs
A review of the project has highlighted the potential to develop a moderate grade open pit operation.
The Fairfield mine is located on a granted mining lease and is in proximity of numerous operating
processing plants. The Company has reported an exploration target for Fairfield project and intends to
commence further RC drilling to upgrade the exploration target to a JORC compliant resource so that
scoping study can be completed.
Mineralised zones have been delineated over a strike length of 225 m and envelop two medium to high-
grade lodes at the northern and southern ends. Historical drill hole intercepts returned from the north
lode include (refer figure 1 drill sections and figure 2 mineralised zones) (ASX Announcement 16 June
2020):
7 m @ 13.5 g/t Au from 49 m in hole FRC7 including 4 m @ 22.7 g/t from 49 m.
14 m @ 4.9 g/t Au from 30 m in hole FRC12 including 1 m @ 46.6 g/t from 35 m
and 2 m @ 8.4 g/t from 42 m.
Fairfield Project – Exploration Target (Refer to ASX announcement 16 June 2020)
Range Level
Tonnage
Gold Grade
Approximate
contained ozs
Exploration Target-Lower
90 Kt
Exploration Target-Upper
135Kt
2 g/t
3 g/t
6 Koz
13.5 Koz
The potential quantity and grade of the Exploration Target is conceptual in nature, there has been
insufficient exploration to estimate a Mineral Resource in this area and it is uncertain if further exploration
will result in the estimation of a Mineral Resource.
GME Resources Limited
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OPERATIONS REPORT
(note only intercepts greater than 10 g X metres annotated)
Figure 6: Cross Section for 6,853,540mN Fairfield Project
The Exploration Target was determined from 3D modelling of two mineralisation zones interpreted from
historical drilling and preliminary surface mapping of historical workings (Figure 7). 3D mineralisation
solids/zones were interpreted using a nominal 0.5 g/t lower cut and up to 3 m of internal dilution. Gold
grade was determined from the weighted average of drill hole intercepts contained within the 3D solids
and the application of a 40 g/t upper cut. Tonnes are estimated using a bulk density of 1.7. Confidence
in the supporting data is such that a level of uncertainty of ± 20% has been applied to tonnes and grade
to derive the Exploration Target ranges.
GME Resources Limited
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OPERATIONS REPORT
Figure 7: Interpreted 3D Gold Mineralised Zones/Solids & Drill Hole Coverage – Fairfield
Project
Abednego Project
The Abednego project located 50 kilometres east of Leonora covering approximately 16 km2. The area
is prospective for gold and base metals. Previous exploration drilling has focused on gold mineralisation
over the Federation Well Gold workings and the Sonex gold anomaly.
Previous air core drilling has tested the north-northeast trending Federation Shear Zone which is
associated with steeply, east southeast dipping quartz veins (refer ASX Announcement 7 July 2014).
Drilling results from this program identified a broad, shallow moderately mineralised structure over 500
metres of strike that is open in all directions. Further drilling programs are planned over the current year
to advance and upgrade the project.
GME Resources Limited
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OPERATIONS REPORT
High lights from previous air core drilling at Federation Well is listed in the table below.
Table 4. Aircore drilling results - Federation Gold Prospect
Hole_ID
14FDAC001
14FDAC001
14FDAC002
14FDAC002
14FDAC003
14FDAC004
14FDAC005
14FDAC005
14FDAC005
14FDAC006
14FDAC006
14FDAC007
14FDAC008
14FDAC008
14FDAC008
14FDAC009
14FDAC009
14FDAC009
14FDAC010
14FDAC010
14FDAC010
14FDAC012
14FDAC013
14FDAC014
14FDAC014
14FDAC016
14FDAC016
14FDAC017
14FDAC018
14FDAC018
14FDAC018
14FDAC018
14FDAC019
14FDAC020
14FDAC021
MGA_E MGA_N mFrom
380292.5 6809978
380292.5 6809978
380310.4 6809997
380310.4 6809997
380315.8 6810016
380323
6810046
380339.4 6810069
380339.4 6810069
380339.4 6810069
380353.5 6810088
380353.5 6810088
380360.6 6810109
6810133
380372
6810133
380372
380372
6810133
380381.1 6810157
380381.1 6810157
380381.1 6810157
380393.1 6810178
380393.1 6810178
380393.1 6810178
380388.9 6810209
380416.2 6810223
380436.9 6810247
380436.9 6810247
380455.5 6810289
380455.5 6810289
380462.6 6810312
380470.9 6810338
380470.9 6810338
380470.9 6810338
380470.9 6810338
6810355
380492
380493.3 6810382
380497.3 6810407
9
19
22
35
15
10
8
13
33
4
38
21
9
28
44
23
31
38
6
32
37
8
37
32
42
0
23
20
5
19
26
31
23
39
4
mTo
16
20
32
37
28
21
9
22
37
5
48
24
16
32
48
25
33
39
7
33
38
10
38
36
50
1
24
24
10
20
27
43
38
40
6
Metres
7
1
10
2
13
11
1
9
4
1
10
3
7
4
4
2
2
1
1
1
1
2
1
4
8
1
1
4
5
1
1
12
15
1
2
Au Intercept
7m @ 0.77 ppm
1m @ 0.73 ppm
10m @ 1.91 ppm
2m @ 1.35 ppm
13m @ 1.73 ppm
11m @ 1.14 ppm
1m @ 1.37 ppm
9m @ 1.05 ppm
4m @ 0.99 ppm
1m @ 0.72 ppm
10m @ 1.99 ppm
3m @ 1.24 ppm
7m @ 2.01 ppm
4m @ 0.97 ppm
4m @ 1.66 ppm
2m @ 8.21 ppm
2m @ 1.09 ppm
1m @ 1.04 ppm
1m @ 3.55 ppm
1m @ 1.21 ppm
1m @ 1.20 ppm
2m @ 1.03 ppm
1m @ 1.01 ppm
4m @ 0.90 ppm
8m @ 1.49 ppm
1m @ 0.71 ppm
1m @ 2.89 ppm
4m @ 2.13 ppm
5m @ 1.37 ppm
1m @ 2.75 ppm
1m @ 1.86 ppm
12m @ 0.85 ppm
15m @ 0.88 ppm
1m @ 1.27 ppm
2m @ 1.40 ppm
GME Resources Limited
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OPERATIONS REPORT
The drill hole plan and cross sections of mineralisation at various positions along the structure are shown
in the following graphics.
Figure 8. Federation Drill Hole Plan
GME Resources Limited
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OPERATIONS REPORT
Figure 9. Federation Prospect Cross Section 700mN
Figure 10. Federation Prospect Cross Section 800mN
GME Resources Limited
P a g e | - 14 -
OPERATIONS REPORT
Figure 11. Federation Prospect Cross Section 1050mN
Figure 12. Federation Prospect Cross Section 975mN
GME Resources Limited
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OPERATIONS REPORT
Company Funding
Subsequent to the end of the financial year, on 3 July 2020 the Company announced that it was
undertaking a 1:10 Renounceable Entitlement Issue at 3 cents per share, to raise up to approximately
A$1.5 million.
The offer was well supported by shareholders with 80% of entitlements taken up. The shortfall of
$293,000 was subsequently placed with sophisticated investors. Funds from the issue will be used to
continue dialogue with potential strategic partner/offtake parties on development options of the
Company’s 100%-owned NiWest Nickel-Cobalt Project. Funds will also be allocated to advance the
Company’s gold assets and for general working capital purposes. The Company now has 556,866,930
fully paid shares on issue.
Competent Persons Statement
The information in this report that relates to the Exploration Target and prior Exploration Results is based
on information compiled or Reviewed by Messrs Mark Gunther & Tony Standish who are members of
The Australasian Institute of Geoscientists. Messrs Gunther & Standish are Consultants with Eureka
Geological Services. Messrs Gunther & Standish have sufficient experience, which is relevant to the
style of mineralization and type of Project under consideration and to the activity which they are
undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Messrs Gunther & Standish
consents to the inclusion in the report of the matters based on information provided in the form and
context in which it appears.
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
P a g e | - 16 -
OPERATIONS REPORT
ANNUAL MINERAL RESOURCE STATEMENT
Mineral Resources
The Company’s Mineral Resource Statement (Table 1 and Table 2) 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.
There has been no material change to the Mineral Resource Estimate since that completed on 2 August
2018. The Mineral Resource Estimate1 for the NiWest Project is 85.2Mt at 1.03% Ni and 0.065% cobalt
at a 0.8% Ni cut-off (refer to Table 1).
Table 5: Mineral Resource Estimate1,2 for NiWest Project at 0.8% Ni Cut-off Grade
Deposit
JORC
Classification
Tonnes
(million)
Nickel Grade
(%)
Cobalt Grade
(%)
Nickel Metal
(kt)
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
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
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
Cobalt
Metal
(kt)
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
P a g e | - 17 -
OPERATIONS REPORT
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.
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.
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.
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 6: NiWest Ore Reserve Estimate1 at 0.5% Ni cut-off
Orebody
Mt Kilkenny
Eucalyptus
Hepi
Total
JORC
Classification
Probable
Probable
Probable
Probable
Tonnes
(million)
27.9
32.2
4.7
64.9
Nickel Grade (%) Cobalt Grade (%)
0.96
0.87
0.91
0.91
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
GME Resources Limited
P a g e | - 18 -
OPERATIONS REPORT
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 appear.
GME Resources Limited
P a g e | - 19 -
OPERATIONS REPORT
TENEMENT SCHEDULE
Project
Tenements
Tenement Summary as at 30 June 2020
Interest Beginning
Period
Interest End Period
Abednego
West
M39/427, M39/0825
P39/5927
Golden Cliffs 100%
Golden Cliffs 100%
NiWest 100%
Eucalyptus
M39/744
M39/289, M39/430,
M39/344
M39/666 M39/674
M39/313, M39/568
M39/802 - 803
P39/5459
E39/1860
P39/5962
NiWest Ni Co Rights
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest Ni Co Rights
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
Laverton
Downs
M39/717 - 718,
M39/819, P39/5813
P39/6032
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
M38/1266
Golden Cliffs 100%
Golden Cliffs 100%
Mertondale M37/591
NiWest 100%
NiWest 100%
Mt Kilkenny
M39/878 – 879,
E39/1784
E39/1794,
EL39/2072
Murrin
Murrin
M39/426, M39/456,
M39/552, M39/553,
M39/569
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
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
NiWest 100%
NiWest 100%
Waite Kauri M37/1216
M 37/1334
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
Wanbanna M39/460
Misc.
Licences
L37/175 L39/293,
L37/247
L39/215, L39/177,
L37/205
NiWest 80% /
20% Wanbanna Pty
NiWest 80% /
20% Wanbanna Pty Ltd
NiWest 100%
NiWest 100%
NiWest 100%
NiWest 100%
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
Australia.
GME Resources Limited
P a g e | - 20 -
DIRECTORS’ REPORT
Your Directors present their report of GME Resources Limited and its controlled entities (“Group”) for
the financial year ended 30 June 2020. 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
2020 amounted to $237,305 (2019: $277,265).
At the end of the financial year the Group had $132,485 (2019: $1,264,607) in cash and at call deposits.
Net assets of $32,217,605 (2019: $32,454,910) were comprised mainly of carried forward exploration
and evaluation expenditure of $32,184,260 (2019: $31,247,420).
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
On 7 August 2020, the Company announced that pursuant to pro-rata renounceable entitlement offer
(the offer), it had allotted 40,846,059 ordinary fully paid shares at an issue price of $0.03 per share to
raise approximately $1.23 million before costs. A shortfall of 9,777,951 shares from the offer, was placed
on 26 August 2020 raising a further $290,000.
The impact of the Coronavirus (COVID-19) pandemic is ongoing. The situation is rapidly developing and
is dependent on measures imposed by the Australian Government, United States government and other
countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any
economic stimulus that may be provided. It is not practicable to estimate the potential impact, positive
or negative, after the reporting date.
Other than the above, 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
P a g e | - 21 -
DIRECTORS’ REPORT
Overview of Operating Activity
NiWest Nickel Cobalt Project
The NiWest Nickel Cobalt laterite Project hosts one of the highest-grade undeveloped nickel laterite
resources in Australia estimated to contain 81 million tonnes averaging 1.03% Nickel and 0.06% Cobalt.
(Refer ASX announcement NiWest Resource Update 21 Feb 2017, refer Appendix 1). Over 75% of the
resource falls within the Indicated and Measured categories.
The Company has completed extensive testing on a novel development approach that focuses on a fully
integrated process flow sheet commencing with Heap Leaching of the ore followed by Direct Solvent
Extraction (DSX) for the removal of impurities through to refining pure nickel sulphates and cobalt
carbonate suitable for the high growth lithium-ion battery market.
A Prefeasibility Study completed in September 2018 indicated a capital requirement of A$900m and
operating costs of US$ 3.24/lb nickel based on production of 456kt nickel and 31.4kt cobalt over a 27-
year mine life.
The Company remains committed to unlocking the value of its flagship asset, the NiWest project. Despite
being faced with difficult market conditions bought on by low nickel prices and the onset of the global
COVID-19 pandemic the Company remains optimistic that a strategic partner will emerge. In the
meantime, the Company has implemented a number of measures aimed at driving down the operational
and holding costs associated with the project. The Company has applied for and been granted 5-year
exemptions on annual DMIRS expenditure on a number of project areas. Additional project areas are
under review and will be considered for similar exemption applications in the future.
Field work has been reduced for the time being with the exception of tenement survey work that was
completed during the reporting period.
GOLD PROJECTS
The Fairfield Prospect is located 20 km north-northeast of Laverton townsite in the North Eastern
Goldfields, Western Australia. Following a geological review of the Fairfield Project during the year, the
Company reported the delineation of an exploration target at the prospect (Refer ASX Announcement
16 June 2020).
Future Work
Further work is planned to upgrade the exploration target to a JORC compliant resource and complete
preliminary evaluation of options to monetise the asset through the development of open pit operation
with ore processing to be undertaken at a third-party plant within the region.
The Company has been reviewing its remaining gold assets which comprise three gold projects in the
Murrin Murrin – Laverton region. The projects are all at various stages of exploration. The focus of the
current work has been at the historical gold working around the Fairfield gold deposit at Laverton Downs.
Drill hole data validation and correction is in progress and modelling and internal studies will be
undertaken to examine the potential of the project.
GME Resources Limited
P a g e | - 22 -
DIRECTORS’ REPORT
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, Panoramic Resources Ltd since October 2015 and Horizon Gold Limited since July
2020.
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 – Horizon Gold Limited since April 2020.
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 – none.
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
P a g e | - 23 -
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
KMP Interests
Non-executive Chairman
Managing Director
Non-executive Director
Company Secretary
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:
2020
Director
Ordinary Shares
Opening
Balance
Ordinary Shares
at the end of the
financial year
Net Change
Ordinary Shares
at the date of the
Directors Report
Peter R Sullivan
32,879,992
32,879,992
3,287,998
36,167,990
James N Sullivan
25,635,972
25,635,972
2,563,596
28,199,568
Peter E Huston
Mark E Pitts
43,244,810
43,244,810
4,324,480
47,569,290
-
-
-
-
GME Resources Limited
P a g e | - 24 -
DIRECTORS’ REPORT
Other transactions with KMP
During the year, the Group paid $23,225 (2019: $21,750) 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 2020 was $11,480 (2019: $Nil).
In addition to the fees paid to Mark Pitts for Company Secretarial Services, the Company also paid
$25,594 (2019: $17,618) to Endeavour Corporate, of which Mark Pitts is a partner, for accounting
services.
The Company has an amount payable of $9,006 (2019 $6,944) to Endeavour Corporate as at 30 June
2020.
The Company has an amount payable of $33,000 (2019: $33,000) 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, 2 meetings of directors was held. Attendances were:
Name
Peter R Sullivan
James N Sullivan
Peter E Huston
Number
Eligible to Attend
Number
Attended
2
2
2
2
2
2
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.
GME Resources Limited
P a g e | - 25 -
DIRECTORS’ REPORT
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.
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 13 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 2020.
This report is signed in accordance with a Resolution of Directors.
James Sullivan
Managing Director
Perth, Western Australia
24th September 2020
GME Resources Limited
P a g e | - 26 -
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 2020, 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
24 September 2020
M R Ohm
Partner
-8-
CONSOLIDATED STATEMENT OF PROFIT
OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2020
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
2020
$
2019
$
2(a)
5/7
6
2(b)
144,613
144,613
130,063
130,063
(52,128)
(1,762)
(187,604)
(589,141)
(110,000)
(281,501)
(486,620)
(114,000)
(412,335)
(987,175)
648
(2,213)
(1,565)
3,130
-
3,130
Loss before income tax
(488,185)
(984,045)
Income tax benefit
3
250,880
706,780
Loss for the year
(237,305)
(277,265)
Other comprehensive income
-
-
Total comprehensive loss for the year
(237,305)
(277,265)
Basic loss per share (cents per share)
15
(0.05)
(0.06)
Diluted loss per share (cents per share)
(0.05)
(0.06)
The accompanying notes form part of this financial statement.
GME Resources Limited
P a g e | - 28 -
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 30 JUNE 2020
Note
Consolidated
2020
$
2019
$
12(b)
4
132,485
26,650
10,302
169,437
1,264,607
18,062
22,495
1,305,164
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Plant and equipment
Deferred exploration and evaluation expenditure
Right of use assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Payroll liabilities
Lease liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities
TOTAL NON-CURRENT LIABILITIES
4
5
6
7
8
9
9
20,301
40,545
32,184,260
89,280
32,334,386
17,290
2,138
31,247,420
-
31,266,848
32,503,823
32,572,012
187,517
8,606
45,092
241,215
45,003
45,003
117,102
-
117,102
-
TOTAL LIABILITIES
286,218
117,102
NET ASSETS
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY
32,217,605
32,454,910
10
56,640,810
56,640,810
(24,423,205)
(24,185,900)
32,217,605
32,454,910
The accompanying notes form part of this financial statement.
GME Resources Limited
P a g e | - 29 -
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020
CONSOLIDATED
Issued Capital
Note
Balance at 1 July 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
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
2020
Accumulated
Losses
$
Total
$
(23,908,635)
31,431,604
$
55,340,239
-
-
(277,265)
(277,265)
(277,265)
(277,265)
1,300,571
-
1,300,571
56,640,810
(24,185,900)
32,454,910
-
-
-
(237,305)
(237,305)
(237,305)
(237,305)
-
-
56,640,810
(24,423,205)
32,217,605
The accompanying notes form part of this financial statement.
GME Resources Limited
P a g e | - 30 -
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Note
Consolidated
2020
$
2019
$
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Research and development tax offset
Proceeds from royalty and facilitation fee
Rent received – sub-lease
Government subsidies received
Proceeds from sale of Gold Project
Net cash inflow/(outflow) from operating activities
12(a)
Cash flows from investing activities
Payment for acquisition of plant and equipment
Security bonds deposited
Payments for exploration and evaluation
(330,714)
635
250,880
100,000
12,340
32,273
-
65,414
(554,829)
3,130
706,780
100,000
-
-
100,000
355,081
(41,589)
(3,000)
(1,104,816)
-
-
(2,126,499)
Net cash outflow from investing activities
(1,149,405)
(2,126,499)
Cash flows from financing activities
Reduction in lease liability
Proceeds from issue of shares
Payment of costs associated with issue of shares
Net cash inflow/(outflow) from financing activities
(48,131)
-
-
(48,131)
-
1,325,648
(25,077)
1,300,571
Net increase/(decrease) in cash and cash equivalents
(1,132,122)
(470,847)
Cash and cash equivalents held at the start of the
year
1,264,607
1,735,454
Cash and cash equivalents held at the end of the
year
12(b)
132,485
1,264,607
The accompanying notes form part of this financial statement.
GME Resources Limited
P a g e | - 31 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 2020 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 2020, 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, with the exception
of AASB16 below, of the new and revised Standards and Interpretations on the entity 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 2020. 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 2020 and concluded there will
be no material impact to the Group.
AASB 16 Leases
AASB 16 Leases supersedes AASB 117 Leases. The Group has adopted AASB 16 from 1
July 2019 which has resulted in changes in the classification, measurement and recognition
of leases. The changes result in almost all leases where the Group is the lessee being
recognised on the Statement of Financial Position and removes the former distinction
between ‘operating and ‘finance’ leases. The new standard requires recognition of a right-
of-use asset (the leased item) and a financial liability (to pay rentals). The exceptions are
short-term leases and leases of low value assets.
The Group has adopted AASB 16 using the modified retrospective approach under which
the reclassifications and the adjustments arising from the new leasing rules are recognised
in the opening Condensed Statement of Financial Position on 1 July 2019. Under this
approach, there is no initial Impact on retained earnings under this approach, and
comparatives have not been restated.
The Group leases various premises, plant and equipment. Prior to 1 July 2019, leases were
classified as operating leases. Payments made under operating leases were charged to
profit or loss on a straight-line basis over the period of the lease.
GME Resources Limited
P a g e | - 32 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(b) Adoption of new and revised standards (continued)
AASB 16 Leases (continued)
From 1 July 2019, where the Company is a lessee, the Group recognises a right-of-use
asset and a corresponding liability at the date which the lease asset is available for use by
the Group (i.e. commencement date). Each lease payment is allocated between the liability
and the finance cost. The finance cost is charged to profit or loss over the lease period so
as to produce a consistent period rate of interest on the remaining balance of the liability
for each period.
The lease liability is initially measured at the present value of the lease payments that are
not paid at commencement date, discounted using the rate implied in the lease. If this rate
is not readily determinable, the Group uses its incremental borrowing rate.
Lease payments included in the initial measurement if the lease liability consist of:
•
•
•
•
•
Fixed lease payments less any lease incentives receivable;
Variable lease payments that depend on an index or rate, initially measured using
the index or rate at commencement date;
Any amounts expected to be payable by the Group under residual value
guarantees;
The exercise price of purchase options, if the Group is reasonably certain to
exercise the options; and
Termination penalties of the lease term reflects the exercise of an option to
terminate the lease.
Extension options are included in a number of property leases across the Group. In
determining the lease term, management considers all facts and circumstances that create
an economic incentive to exercise an extension option. Extension options are only included
in the lease term if, at commencement date, it is reasonably certain that the options will be
exercised.
Subsequent to initial recognition, the lease liability is measured by increasing the carrying
amount to reflect interest on the lease liability (using the effective interest method) and by
reducing the carrying amount to reflect the lease payments made. The lease liability is
remeasured (with a corresponding adjustment to the right-of-use asset) whenever there was
a change in the lease term (including assessments relating to extension and termination
options), lease payments due to changes in an index or rate, or expected payments under
guaranteed residual values.
Right-of-use assets comprise the initial measurement of the corresponding lease liability,
lease payments made at or before commencement date, less any lease incentives received
and any initial direct costs. These right-of-use assets are subsequently measured at cost less
accumulated depreciation and impairment losses.
Where the terms of a lease require the Group to restore the underlying asset, or the Group
has an obligation to dismantle and remove a leased asset, a provision is recognised and
measured in accordance with AASB 137. To the extent that the costs relate to a right-of-use
asset, the costs are included in the related right-of-use asset.
Right-of-use assets are depreciated on a straight-line basis over the term of the lease (or the
useful life of the leased asset if this is shorter). Depreciation starts on commencement date
of the lease.
Where leases have a term of less than 12 months or relate to low value assets, the Group
has applied the optional exemptions to not capitalise these leases and instead account for
the lease expense on a straight-line basis over the lease term.
GME Resources Limited
P a g e | - 33 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(b) Adoption of new and revised standards (continued)
AASB 16 Leases (continued)
Impact on adoption of AASB 16
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which
had previously been classified as operating leases under the principles of AASB 117. These
liabilities were measured at the present value of the remaining lease payments, discounted
using the lessee's incremental borrowing rate as of 1 July 2019. The weighted average
lessee's incremental borrowing rate applied to lease liabilities on 1 July 2019 was 5%.
On initial application, right-of-use assets were measured at the amount equal to the lease
liability, adjusted by the amount of any prepaid or accrued lease payments relating to that
lease recognised in the Statement of Financial Position as at 30 June 2019.
In the Consolidated Statement of Cash Flows, the Group has recognised cash payments
for the principal portion of the lease liability within financing activities, cash payments for
the interest portion of the lease liability as interest paid within operating activities and short-
term lease payments and payments for lease of low-value assets within operating activities.
The adoption of AASB 16 resulted in the recognition of right-of-use assets of $138,226 and
lease liabilities of $138,226 in respect of all operating leases, other than short-term leases
and leases of low-value assets.
The net impact on retained earnings on 1 July 2019 was nil. (Refer Note 9).
(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 Directors have assessed the exploration and evaluation costs in accordance with AASB
6 Exploration for and Evaluation of Mineral Resources, and believe 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:
•
•
•
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).
GME Resources Limited
P a g e | - 34 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(c) Critical accounting judgements and key estimates (continued)
•
•
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.
A review of the water licenses was undertaken during the year and accumulated costs of
$187,604 relating to the licenses surrendered were written off.
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-
19) pandemic has had, or may have, on the company based on known information. This
consideration extends to the nature of the products and services offered, customers, supply
chain, staffing and geographic regions in which the company operates. Other than as
addressed in specific notes, there does not currently appear to be either any significant
impact upon the financial statements or any significant uncertainties with respect to events
or conditions which may impact the company unfavourably as at the reporting date or
subsequently as a result of the Coronavirus (COVID-19) pandemic.
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 2019.
(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
$237,305, and a net cash outflow of $1,132,122 for the year ended 30 June 2020 and at
balance date, had net current liabilities of $71,778.
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 24th September 2020.
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
P a g e | - 35 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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
The previous carrying amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests.
GME Resources Limited
P a g e | - 36 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(f)
Basis of consolidation (continued)
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
Revenue arises mainly from the receipt of facilitation fees. The Group generates revenue
in Australia.
To determine whether to recognise revenue, the Group follows a 5-step process:
1.
2.
3.
4.
5.
Identifying the contract with a customer
Identifying the performance obligations
Determining the transaction price
Allocating the transaction price to the performance obligations
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.
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.
GME Resources Limited
P a g e | - 37 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(g) Revenue from contracts with customers (continued)
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.
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.
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.
GME Resources Limited
P a g e | - 38 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(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 are initially recognised at fair value and subsequently measured at
amortised cost using the effective interest method, less any allowance for expected credit
losses. Trade receivables are generally due for settlement within 30 days.
The consolidated entity has applied the simplified approach to measuring expected credit
losses, which uses a lifetime expected loss allowance. To measure the expected credit
losses trade receivables have been grouped based on days overdue.
Other receivables are measured at amortised cost, less any allowance for expected credit
losses.
(k)
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.
GME Resources Limited
P a g e | - 39 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(k)
Income tax (continued)
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.
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.
(l)
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.
(m) 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
P a g e | - 40 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(m) 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.
(n)
Investments and other financial assets
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.
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).
GME Resources Limited
P a g e | - 41 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(n)
Investments and other financial assets(continued)
For the purpose of subsequent measurement, financial assets, other than those designated
and effective as hedging instruments, are classified into the following categories:
•
•
•
•
amortised cost
fair value through profit or loss (FVTPL)
equity instruments at fair value through other comprehensive income (FVOCI)
debt instruments at fair value through other comprehensive income (FVOCI).
All income and expenses relating to financial assets that are recognised in profit or loss are
presented within finance costs, finance income or other financial items, except for
impairment of trade receivables which is presented within other expenses.
The classification is determined by both:
•
•
the entity’s business model for managing the financial asset
the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are
presented within finance costs, finance income or other financial items, except for
impairment of trade receivables which is presented within other expenses.
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.
b.
they are held within a business model whose objective is to hold the financial assets
to collect its contractual cash flows
the contractual terms of the financial assets give rise to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest
method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and
cash equivalents, trade and most other receivables fall into this category of financial
instruments as well as listed bonds that were previously classified as held-to-maturity under
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.
Assets in this category are measured at fair value with gains or losses recognised in profit
or loss.
GME Resources Limited
P a g e | - 42 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(n)
Investments and other financial assets(continued)
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.
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.
GME Resources Limited
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(n)
Investments and other financial assets(continued)
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.
(o) 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(p)).
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.
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.
GME Resources Limited
P a g e | - 44 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(p)
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.
(q)
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.
(r)
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.
GME Resources Limited
P a g e | - 45 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(s)
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.
(t)
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.
(u) Parent entity financial information
The financial information for the parent entity, disclosed in Note 21 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
P a g e | - 46 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2. OTHER INCOME AND EXPENSES
(a) Other income:
Facilitation fee for prospecting rights
Rent received – sub-lease
Government cashflow boost
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
2020
$
2019
$
100,000
12,340
32,273
-
144,613
33,683
46,213
-
52,218
23,831
55,819
38,270
31,467
281,501
100,000
-
-
30,063
130,063
57,540
42,774
6,663
63,769
19,090
87,657
106,017
28,825
412,335
Adjustments recognised in the current year in relation
to the current tax – R&D tax offset
Total tax benefit
250,880
250,880
706,780
706,780
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
Income tax expense/(benefit) calculated at 30.0%
(2019: 27.5%)
Non-assessable income
Non-deductible expenses
R&D tax incentive
Tax losses and deferred tax balances not recognised
Change in tax rate
Income tax benefit reported in the Consolidated
Statement of Profit or Loss and Other Comprehensive
Income
(488,185)
(984,045)
(146,456)
(9,682)
-
250,180
366,825
(209,987)
(270,612)
-
371
706,780
270,241
-
250,880
706,780
GME Resources Limited
P a g e | - 47 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
3.
INCOME TAX (Continued)
(b) Unrecognised deferred tax balances
Deferred tax assets comprise:
Tax losses carried forward
Accrued expenses
Lease liabilities
Other deferred tax balances
Deferred tax liabilities comprise:
Exploration expenditure capitalised
Right of use assets
Income tax benefit not recognised directly in equity
during the year:
Capital raising costs
Consolidated
2020
$
2019
$
12,188,389
6,000
27,029
-
12,221,418
10,880,978
11,956
-
497
10,892,933
9,655,278
26,784
9,682,062
8,593,041
-
8,593,041
13,102
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
15,892
10,758
26,650
15,961
2,101
18,062
20,301
17,290
5. PLANT AND EQUIPMENT (NON-CURRENT)
Plant and equipment - at cost
Less accumulated depreciation
Total plant and equipment
787,199
(746,654)
40,545
745,610
(743,472)
2,138
GME Resources Limited
P a g e | - 48 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
5.
PLANT AND EQUIPMENT (NON-CURRENT) continued
Reconciliation of the carrying amount of plant and equipment:
Carrying amount at the beginning
of the year
Acquisitions
Depreciation
Carrying amount at the end of the
year
Consolidated
2020
$
2019
$
2,138
41,589
(3,182)
40,545
2,793
-
(655)
2,138
6. 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)
31,247,420
1,124,444
32,371,864
(187,604)
32,184,260
30,088,279
1,748,282
31,836,561
(589,141)
31,247,420
(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.
During the year a review of the water licenses was undertaken and $187,604 of accumulated
costs on licenses surrendered was written off.
7. RIGHT OF USE ASSETS
Cost
Accumulated depreciation
Premises
Reconciliation
Recognised on 1 July 2019 on adoption of AASB 16
Depreciation expense
Closing balance
AASB 16 was adopted during the period refer Note 1(b).
138,226
(48,946)
89,280
138,226
(48,946)
89,280
-
-
-
-
-
-
GME Resources Limited
P a g e | - 49 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
8.
PAYABLES (CURRENT)
Trade payables and accruals
Consolidated
2020
$
2019
$
187,517
187,517
117,102
117,102
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 17.
There are no secured liabilities as at 30 June 2020.
9. LEASE LIABILITIES
Current liabilities
Non-current liabilities
Premises
Reconciliation
Recognised on 1 July 2019 on adoption of AASB 16
Principal repayments
Closing Balance
AASB 16 was adopted during the period.
45,092
45,003
90,095
138,226
(48,131)
90,095
-
-
-
-
-
-
The group has two operating leases for its premises, the lease terms are 12 months with
options to extend for further 12 month terms.
Underlying assets serve as security for the related lease liabilities. A maturity analysis of
future minimum lease payments is presented below.
In previous years, the Group disclosed commitments for lease payments on leased premises.
As the Group has adopted AASB 16 in the current year, these commitments are factored into
the balances above.
Reconciliation of total operating lease commitments as at 30 June 2019, as disclosed in the
annual financial statements for the year ended 30 June 2019, and the lease liabilities
recognised on 1 July 2019:
Lease liabilities
Operating lease commitments disclosed as at 30 June 2019
Effect of discounting lease payments
Lease liabilities as at 1 July 2019 under AASB16
30 June
2020
$
72,000
(15,982)
56,018
GME Resources Limited
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
10.
ISSUED CAPITAL
506,242,920 (2019: 506,242,920) ordinary shares, fully paid
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
Consolidated
2020
2019
$
56,640,810
$
56,640,810
56,640,810
-
-
56,640,810
No of
Shares
506,24
2,920
-
506,24
2,920
55,340,239
1,325,648
(25,077)
56,640,810
No of
Shares
482,14
0,229
24,102,
691
506,24
2,920
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.
11. 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)
2020
%
100
100
100
100
2019
%
100
100
100
100
12. 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
2020
$
-
-
616,893
4,561,313
5,178,206
(237,305)
52,128
-
187,604
12,193
50,794
-
2019
$
-
-
616,893
4,561,313
5,178,206
(277,265)
1,762
(30,063)
589,141
89,612
(118,106)
100,000
Net cash inflows/(outflows) from operating activities
65,414
355,081
GME Resources Limited
P a g e | - 51 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
12. CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
b) Reconciliation of cash and cash equivalents
Cash balance comprises:
Cash at bank
Deposits at call
Consolidated
2020
$
2019
$
13,315
119,170
132,485
9,0
03
1,2
55,604
1,264,607
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.
c) Changes in liabilities arising from financing activities:
Consolidated
Balance at 1 July 2019
Adoption of AASB16
Net cash (used in) financing activities
Balance at 30 June 2020
13. AUDITOR’S REMUNERATION
Lease
Liability
-
138,226
(48,131)
90,095
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
- other services in relation to the Company and any other
entity in the Group (tax compliance services)
2020
$
2019
$
32,183
3,500
35,683
49,540
8,000
57,540
14. 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.
GME Resources Limited
P a g e | - 52 -
Consolidated
2020
$
2019
$
(0.05)
(0.06)
(237,305)
(277,765)
506,242,920
484,991,259
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
15. EARNINGS/(LOSS) PER SHARE
Basic and diluted loss per share (cents)
Loss used in calculation of basic and diluted loss
per share
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.
16. 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
b) Key Management Personnel Compensation
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Consolidated
2020
$
278,384
15,616
-
294,000
2019
$
278,384
15,616
-
294,000
c) Other transactions and balances with Key Management Personnel
During the year, the Group paid $23,225 (2019: $21,750) 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 2020 was $11,480
(2019: $Nil).
In addition to the fees paid to Mark Pitts for Company Secretarial Services, the Company
also paid $25,594 (2019: $17,618) to Endeavour Corporate, of which Mark Pitts is a
partner, for accounting services.
The Company has an amount payable of $9,006 (2019 $6,944) to Endeavour Corporate
as at 30 June 2020.
The Company has an amount payable of $33,000 (2019: $33,000) to Hardrock Capital
Pty Ltd, a company of which Peter Sullivan is a director, in relation to Directors’ fees.
GME Resources Limited
P a g e | - 53 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
17. 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.
Fixed Interest Rate Maturing
2019
Weighted
Average
Effective
Interest
Rate
Floatin
g
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
a)
Categories of financial instruments
2020
Weighted
Average
Effective
Interest
Rate
Financial Assets $
Floating
Interest
Rate
Fixed Interest Rate Maturing
Within 1
year
Over 1
year
Non-
interest
Bearing
Total
$
$
$
$
Cash
assets
Receivable
s
0.05%
13,315
119,170
n/a
-
-
13,315
119,170
-
-
-
-
132,485
26,650
26,650
26,650
159,135
Payables
Leases
n/a
n/a
-
-
-
-
45,092
-
45,003
241,215
-
241,215
90,095
45,092
45,003
241,215
331,310
GME Resources Limited
P a g e | - 54 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
17. 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 $6,323 and
increase by $6,323, respectively (2019: $4,677). A reduction in the interest rate would have
an equal but opposite effect.
c)
d)
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.
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
P a g e | - 55 -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
18. 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 2020, 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 $1,402,780 (2019: $1,964,224) 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.
19.
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 18 – Commitments and Contingent
Liabilities.
20. RELATED PARTIES
Total amounts receivable and payable from entities in the wholly-owned group at balance date:
2019
$
2020
$
Non-current receivables
Loans net of provisions for non- recovery
Current payables
Loans
29,442,611
32,109,079
656,824
635,678
Refer Note 16(c) for other transactions with related parties.
GME Resources Limited
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
21. PARENT ENTITY DISCLOSURE
As at, and throughout the financial year ended 30 June 2020 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
Non current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Share capital
Accumulated losses
Total equity
22. SUBSEQUENT EVENTS
2020
$
(2,758,690)
-
(2,758,690)
2019
$
(192,141)
-
(192,141)
169,436
32,968,624
33,138,060
1,305,163
34,744,457
36,049,621
875,452
45,003
920,455
773,926
-
773,926
56,640,810
(24,423,205)
32,217,605
56,640,810
(21,365,115)
35,275,695
On 7 August 2020, the Company announced that it has allotted 40,846,059 ordinary fully paid
shares at an issue price of $0.03 per share to raise approximately $1.23 million before costs. The
shortfall of 9,777,951 shares was placed on 26 August 2020.
The impact of the Coronavirus (COVID-19) pandemic is ongoing. The situation is rapidly
developing and is dependent on measures imposed by the Australian Government, United States
government and other countries, such as maintaining social distancing requirements, quarantine,
travel restrictions and any economic stimulus that may be provided. It is not practicable to estimate
the potential impact, positive or negative, after the reporting date.
Other than the above, 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
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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
2020 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.
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.
b.
c.
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 2020.
This declaration is signed in accordance with a resolution of the Board of Directors.
James Sullivan
Managing Director
Perth, Western Australia
24th September 2020
GME Resources Limited
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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 2020, the consolidated statement of profit or loss and 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 2020 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(d) 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 section, we have determined the matters described below
to be the key audit matters to be communicated in our report.
-59-
Key Audit Matter
How our audit addressed the key audit
matter
Deferred exploration expenditure
Refer to Note 6
In accordance with AASB 6 Exploration for
and Evaluation of Mineral Resources, the
Group capitalises exploration and evaluation
expenditure and as at 30 June 2020 had a
deferred exploration and evaluation
expenditure balance of $32,184,260.
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 which involved the most audit effort and
communication with those charged with
governance.
Our procedures included but were not
limited to:
- Obtaining an understanding of the key
processes associated with
management’s review of the carrying
value of exploration and evaluation
expenditure;
Considering the Directors’
assessment of potential indicators of
impairment in addition to making our
own assessment;
-
-
- 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 by agreeing to supporting
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 2020, 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.
-60-
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.
-61-
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 2020.
In our opinion, the Remuneration Report of GME Resources Limited for the year ended 30 June
2020 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
24 September 2020
M R Ohm
Partner
-62-
ADDITIONAL INFORMATION FOR LISTED
PUBLIC COMPANIES
The following additional information, applicable at 9 October 2020 is required by the Australian Securities
Exchange Ltd in respect of listed public companies only.
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
Ordinary
Shares
108
289
52,470
805,537
140
1,119,327
490
16,881,986
239
538,007,610
1,266
556,866,930
b. The number of shareholders holding less than a marketable parcel is 573.
c. The names of the substantial shareholders listed in the holding Company’s register as at 9
October 2020 are:
Shareholder
ZETA RESOURCES LIMITED
MANDALUP INVESTMENTS PTY LTD
PETER ROSS SULLIVAN
JAMES NOEL SULLIVAN
Number
223,863,538
47,569,290
36,167,990
28,199,568
% of issued
capital
40.2
8.69
6.61
5.15
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
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ADDITIONAL INFORMATION FOR LISTED
PUBLIC COMPANIES
e.
20 Largest Shareholders — Ordinary Shares
Name
1
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
Number of
Ordinary Fully
Paid Shares
Held
219,002,738
% Held of
Issued
Ordinary
Capital
39.33
2
MANDALUP INVESTMENTS PTY LTD
31,737,403
5.70
3 PANORAMIC RESOURCES LIMITED
4
MR JAMES NOEL SULLIVAN + MRS GAIL SULLIVAN
5 HARDROCK CAPITAL PTY LTD
6
7
MANDALUP INVESTMENTS PTY LTD
DUNCRAIG INVESTMENTS SERVICES PTY LTD
8 MR PETER ROSS SULLIVAN
9 MMP (WA) PTY LTD
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
20,222,221
3.63
19,245,821
3.46
16,424,674
2.95
15,831,887
2.84
11,991,742
2.15
10,832,520
1.95
10,736,764
1.93
8,904,000
1.60
8,634,908
1.55
7,017,192
1.26
6,441,823
1.16
6,199,309
1.11
5,500,000
0.99
5,079,631
0.91
4,290,582
0.77
4,267,311
0.77
4,050,000
0.73
3,354,630
0.60
419,765,156
75.38
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
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GME Resources Limited
Unit 5, 78 Marine Terrace
Fremantle WA 6160
T: (08) 9336 3388
F: (08) 9315 5475
info@gmresources.com.au
www.gmeresources.com.au
ABN 62 009 260 315