ABN 63 616 317 778
& Controlled Entities
Annual Report
For the year ended 30 June 2018
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
CONTENTS
Corporate Directory
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
Schedule of Exploration Tenements
Shareholder Information
Additional Information for Public Listed Companies
– 1 –
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Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
CORPORATE DIRECTORY
Corporate Directory
Directors
Mr Adrian Byass
Non-Executive Chairman
Mr Jonathan Downes
Non-Executive Director
Mr Oliver Cairns
Non-Executive Director
Mr Timothy Morrison
Non-Executive Director
Managing Director/ Chief Executive Officer Mr Alexander Molyneux
Chief Operating Officer
Mr Troy Flannery
Company Secretary
Mr Stephen Brockhurst
Registered Office & Principal Place of
Business
Level 11, 216 St Georges Terrace
Perth WA 6000
Postal Address
Web Site
Share Registry
Auditors
Legal Advisors
GPO Box 2517
Perth WA 6831
www.galenamining.com.au
Security Transfer Australia Pty Ltd
770 Canning Highway
Applecross WA 6153
PKF Mack
Level 4, 35 Havelock Street
West Perth WA 6005
Steinepreis Paganin
16 Milligan Street
Perth WA 6000
Stock Exchange Listing
ASX Code: G1A
Country of Incorporation and Domicile
Australia
– 2 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Your directors present the following report on Galena Mining Limited and its controlled entity (“Galena” or the
“Company” or “Group” or the “Consolidated Entity”) for the financial year ended 30 June 2018.
Directors
The names of directors in office at any time during or since the end of the financial year are:
Adrian Byass
Johnathan Downes
Oliver Cairns
Timothy Morrison
Alexander Molyneux
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director (appointed 12 July 2017)
Chief Executive Officer / Managing Director (appointed 1 September 2018)
Unless noted above, all directors have been in office since the start of the financial year to the date of this report.
Company Secretary
Stephen Brockhurst held office as Company Secretary since the start of the financial year until the date of this
report.
Principal Activities
The Company was officially listed on the ASX on 7 September 2017 after issuing 30,000,000 IPO shares at $0.20
per share.
The principal activities of the Group include: acquisition; exploration; and advancement, of mineral projects.
Operating Results
The loss of the Group for the financial year ended 30 June 2018 amounted to $1,191,106 (2017: $726,328).
Financial Position
As at 30 June 2018 the Group had a cash balance of $8,526,198 (2017: $70,261) and a net asset position of
$16,844,121 (2017: $50,346).
Dividends Paid or Recommended
No dividends have been paid, and the directors do not recommend the payment of a dividend for the financial year
ended 30 June 2018.
Corporate Governance Statement
The Company has disclosed
www.galenamining.com.au.
its corporate governance statement on
the Company website at
– 3 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS ‘REPORT
Significant Changes in State of Affairs
-On 7 September 2017, the Company was officially listed on the ASX after issuing 30,000,000 IPO shares (pre 1:5
share split) at $0.20 per share.
- The Company completed the acquisition of Abra Mining Pty Ltd by issuing 17,500,000 shares (pre 1:5 share split)
to the vendors at $0.20 per share.
- On 19 March 2018, Shareholders approved the subdivision of issued capital on the basis that every one share
be split into five shares.
-On 26 April 2018, the Company issued 58,064,520 shares to raise $9,000,000 (before costs).
In the opinion of the directors, there were no other significant changes in the state of affairs of the Company that
occurred during the period under review not otherwise disclosed in this report or in the financial report.
Corporate
As at the date of this report, the following shares and options were on issue.
ORDINARY SHARES
Fully Paid Ordinary Shares
OPTIONS
6 cents expiring on 30 June 2020
30 cents expiring 6 February 2021
8 cents expiring on 30 June 2021
Review of Operations
No.
336,564,520
11,750,000
5,000,000
18,000,000
The Company lodged a prospectus with ASX to enable active exploration and advancement of Abra Base Metals
Project (“Abra” or the “Project”), which the company acquired during the financial year. The Project is located
220km north of Meekatharra in Western Australia and the Galena is advancing it though continued exploration,
various predevelopment works and detailed studies to establish economic viability of mining for base and precious
metals. These metals, primarily including lead, silver, copper and gold are tradable on liquid international
commodity exchanges.
Abra Base Metals Project
During September 2017, Galena commenced drilling on the Project which was completed in mid-December 2017.
Twelve holes (AB70-72, 73A, 74-81) were completed for a total of 8,022m and approximately 4,000 core samples
were taken and submitted to SGS Laboratories for assaying. All assays have been received with high-grade
intersections in every hole.
Galena has a geologically controlled, high-grade model for Abra which is supported by the results of wide-spread
drilling. Drill results continue to define both large strata bound shallow dipping zones of high-grade mineralisation
as well as sub vertical vein hosted high-grade mineralisation within the feeder zone/core.
– 4 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Review of Operations (continued)
Metallurgical Test-work
During the financial year, Galena has completed the Pre-Feasibility Study (“PFS”) metallurgical test-work at Abra.
Following on from the preliminary results, the completion of the final locked-cycle processing stages has delivered
outstanding metallurgical results. The results have confirmed very high metal recoveries in an exceptionally high-
grade and clean lead-silver concentrate. These results are from test work carried out by the internationally
recognised global leader in this type of work, ALS Global (Burnie, Tasmania). Results exceeded expectations.
Composite samples delivered concentrate lead grades ranging from 69% to 81% (averaging 74.5%) with recoveries
between 94% and 96% (averaging 95%). The test-work indicated that overall lead recoveries could be increased in
the event a lower final concentrate grade is considered.
Metallurgical Program Details
Samples used in this round of PFS-level test-work were obtained from representative samples of the upper “strata
bound” zone of mineralisation known as the ‘Apron’ as well in the vein hosted feeder zones of the deposit known
as the ‘Core’. In both cases samples were obtained using wider diameter NQ diamond core drilling that was
conducted by Galena Mining in late 2017 (see Table 1). Five composite samples were prepared and are considered
representative of the deposit. Flotation processing test-work was applied, resulting in exceptionally high-grade lead-
silver concentrate samples that were also free of any material deleterious elements.
Table 1: Abra test work sample assays
2018 Scoping Study
The 2018 Scoping Study is primarily based on the new work undertaken by Galena and its study team, comprising
of internal personnel and third-party independent industry expert consultants, in relation to underground mining, ore
processing, mine-site infrastructure, environmental permitting, logistics and marketing. The Study is also
underpinned by the extensive historical technical database that has been acquired by Galena.
The 2018 Scoping Study confirms Abra as an economically and technically robust development opportunity, with
potential to become a globally significant, long-life, high margin West Australian lead-silver mine. There also
remains considerable exploration potential for additional lead-silver mineralisation over that already identified in the
March 2018 JORC Mineral Resource estimate (“March 2018 Resource”). Beneath the existing Abra lead-silver
deposit is an additional mineralised zone with significant copper-gold intercepts.
– 5 –
CompositePb%Ag (g/t)Zn%Cu%Fe%BaO%S%S110.913.60.050.0531.112.84.8S210.119.30.10.138.217.56.5S37.514.60.040.2947.98.84.8V17.515.10.010.419.81.62.9V212.912.33.70.123.622.99.5
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Review of Operations (continued)
The potential development of Abra Base Metals Project coincides with a favourable outlook for lead. Increasing
demand and reducing supply has placed the lead market into supply deficit and the lead price has averaged
US$0.97/lb over the last 10-years. Base case analysis in the Study assumes a US$0.95/lb lead price.
The throughput rate assumed in the Study is 1 million tonnes per annum (“Mtpa”). The assumed mining and
professing rate is based on mining studies performed on the March 2018 Resource. The high-grade model validated
by recent Galena drilling supports a smaller, higher grade, higher margin mining and processing model compared
with previous scenarios historically investigated for Abra. The production rate was selected after analysing different
ore grades against practical underground mining rates and optimising the Project’s future infrastructure, which is
based on different capital cost and grade optimisation scenarios.
Mineral Resources and Mineable Material
The March 2018 Resource was calculated based on 46,424m of diamond core drilling and 14,413 assayed samples.
Galena completed 8,024m of diamond drilling between September and December 2017 to test a high-grade,
stratiform and structural control model. Drilling conducted by previous owners, in addition to that completed by
Galena, was included in the dataset.
This March 2018 Resource forms the basis of mineable material estimated for the Study after the application of a
range of modifying factors including minimum mining width, cut-off grades, mining dilution and mining recovery. The
mineable material assumed for the Study compromises: 9.2Mt at grades of 9.7% lead and 15g/t silver containing
842,500t lead and 4.2Moz silver. Approximately 51% of the mineable material is in the Indicated category of the
Mineral Resource estimate, which includes the entire first two years of production. This ensures 100% of the
payback period (< 1.5 years of production) is produced solely from Indicated Resources. Material drawn from the
Indicated Resource category also exceeds 75% of minable material up to year five of the mine plan.
The March 2018 Resource using inverse distance squared interpolation is presented in Table 2 and for ordinary
kriging is shown Table 3.
– 6 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Review of Operations (continued)
Table 2: Abra March 2018 Resource (Inverse Distance interpolation)
Vol m3
INDICATED MINERAL
RESOURCE (JORC)
Lead cut-
off %
5.0*
6.0
7.0
7.5*
8.0
9.0
10.0
Tonnes
3,800,000 13,200,000
9,300,000
2,700,000
6,300,000
1,800,000
5,300,000
1,500,000
4,500,000
1,300,000
3,200,000
900,000
2,300,000
700,000
Vol m3
INFERRED MINERAL
RESOURCE (JORC)
Lead cut-
off %
5.0*
6.0
7.0
7.5*
8.0
9.0
10.0
Tonnes
6,900,000 23,500,000
4,000,000 13,400,000
7,800,000
2,300,000
5,900,000
1,700,000
4,600,000
1,300,000
3,000,000
900,000
2,000,000
600,000
Lead %
7.9
8.9
10.1
10.6
11.1
12.2
13.2
Silver g/t
19
22
26
28
30
35
42
Lead %
6.9
8.0
9.1
9.7
10.2
11.2
12.0
Silver g/t
17
21
26
29
32
39
46
Vol m3
TOTAL MINERAL RESOURCE (INFERRED
AND INDICATED COMBINED) (JORC)
Lead cut-
off %
5.0*
6.0
7.0
7.5*
8.0
9.0
10.0
Tonnes
10,700,000 36,600,000
6,600,000 22,700,000
4,100,000 14,100,000
3,300,000 11,200,000
9,100,000
2,700,000
6,300,000
1,800,000
4,300,000
1,300,000
Lead %
7.3
8.4
9.5
10.1
10.7
11.7
12.7
Silver g/t
18
21
26
28
31
37
44
* denotes preferred cut-offs for Resource reporting
Nb. Tonnages are rounded to the nearest 100,000t, lead grades to one decimal place and silver to the nearest gram.
Rounding errors may occur when using the above figures.
– 7 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Review of Operations (continued)
Table 3: Abra March 2018 Resource (Ordinary kriged interpolation)
INDICATED MINERAL
RESOURCE (JORC)
Lead cut-
off %
5.0*
6.0
7.0
7.5*
8.0
9.0
10.0
Vol m3
3,900,000
2,800,000
1,900,000
1,600,000
1,300,000
900,000
500,000
INFERRED MINERAL
RESOURCE (JORC)
Lead cut-
off %
5.0*
6.0
7.0
7.5*
8.0
9.0
10.0
Vol m3
6,800,000
3,800,000
1,900,000
1,400,000
1,100,000
600,000
400,000
Tonnes
13,600,000
9,600,000
6,400,000
5,400,000
4,400,000
2,900,000
1,800,000
Lead %
7.6
8.5
9.5
10.0
10.4
11.5
12.8
Silver g/t
18
21
26
28
30
37
48
Tonnes
23,200,000
12,800,000
6,600,000
4,900,000
3,600,000
2,100,000
1,400,000
Lead %
6.7
7.6
8.8
9.3
9.9
10.9
11.6
Silver g/t
17
21
27
31
36
45
53
TOTAL MINERAL RESOURCE (INFERRED AND
INDICATED COMBINED) (JORC)
Lead cut-
off %
5.0*
6.0
7.0
7.5*
8.0
9.0
10.0
Vol m3
10,700,000
6,500,000
3,800,000
3,000,000
2,300,000
1,500,000
900,000
Tonnes
36,800,000
22,300,000
13,000,000
10,300,000
8,000,000
5,000,000
3,200,000
Lead %
7.0
8.0
9.1
9.7
10.2
11.2
12.3
Silver g/t
17
21
26
29
33
40
51
* denotes preferred cut-offs for resource reporting
Nb. Tonnages are rounded to the nearest 100,000t, lead grades to one decimal place and silver to the nearest gram.
Rounding errors may occur when using the above figures.
– 8 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Review of Operations (continued)
Mining Method
The proposed mining method comprises an underground mine accessed by a decline (see Figure 1). Initial
mineralised material is expected to be mined early in 2021 calendar year.
Underground extraction will be mostly by sublevel long hole open stoping and partly by room and pillar mining.
These methods, together with paste filling high value stoping areas, will enable maximum extraction of the orebody.
The underground material will be trucked to the surface via the access decline.
Figure 1: Abra’s Conceptual Mine Design – Long Section View
– 9 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Review of Operations (continued)
Processing
The 2018 Scoping Study proposes a 1Mtpa capacity processing plant. Processing will comprise crushing, grinding
and two stages of conventional flotation and filtration to produce a high-grade lead-silver concentrate.
Processing facility construction is estimated to cost A$66 million including A$6 million of contingency. The
construction is scheduled to commence mid-2019 calendar year, with a 15-month time frame for construction and
commissioning. It is anticipated that the plant will produce approximately 130,000t concentrate per annum,
containing 91,100t of lead and 453,000oz of silver.
Infrastructure, Transport and Logistics
The 2018 Scoping Study includes planned a accommodation facility of 136 permanent rooms and accompanying
infrastructure, which includes access to roads, an upgraded airstrip (designed for planes capable of carrying 50
passengers), offices, workshops, communications, fuel storage and distribution facilities. Power will be provided by
on-site diesel generation and water will be provided from nearby bore fields. Total site infrastructure costs are
calculated at A$35 million, including A$3.5 million of contingency.
The primary outbound logistics plan is to transport lead concentrates in sealed half height sea containers by road
to the port of Geraldton, which currently exports lead sulphide concentrate products from other mines.
Capital Expenditure
The capital expenditure required to production of first concentrate totals A$153 million as presented in Table 4.
Table 4: Pre-Production Capital Cost Estimates
Pre-Production Capital Expenditure Estimate
(A$) Million
Mine development
Processing
Surface infrastructure & management
Port & miscellaneous
Contingency & owners costs
Total
30.0
60.0
35.0
5.0
23.0
153.0
Operating Expenditure
The operating costs estimated for Abra in the 2018 Scoping Study are presented in Table 5.
Table 5: Estimate of C1 Operating Cost Estimates
Average Operating Costs Estimates
(US$) ₵/lb
Mine
Mill
Treatment and refining charges plus outbound logistics
Total C1 cash cost
19.2
12.7
14.1
46.0
– 10 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Review of Operations (continued)
Projected Revenue and Key Economic Assumptions
Revenue and cash flow forecasts for the 2018 Scoping Study were developed using a consensus of analyst
forecasts for the lead and silver prices together with an USD:AUD exchange rate of $0.75, as included in Table 6
below.
Table 6: Abra’s Base Assumptions (life of mine averages)
Description
Millions of tonnes per annum (Mtpa)
Years construction
Years ramp-up ranges
Process recovery (%)
Lead payabillity (%)
Concentrate grade (% Lead)
Mining grade
Exchange rate – USSD:AUD
Prices - Base case (US$)
Prices - Spot case (US$)
Values
1.0
1.5-2.25
0.5-1.0
94
95
75
9.7% Pb
15 g/t Ag
0.75
Pb 0.95/lb
Ag 16.50/oz
Pb 1.14/lb
Ag 16.50/oz
Table 7 financials for the Base Case and Spot Price are based on the life of mine assumption tabulated above.
Table 7: Financial and Production Metrics
Key Financial and Production Metrics
Processing capacity
Initial life of mine (LOM)
Average LOM lead metal production
Average LOM silver metal production
C1 cash cost
All-in sustaining cost
Pre-production capital expenditure
Average net cash flow (Years 3-11)
Net present value (10% discount rate and lead price
of US$0.95/lb) – long-term lead price case
Internal rate of return – long term lead price case
Project payback (from start of production)
Net Present Value (10% and lead
price of US$1.14/lb) – spot lead
price case
1 Mtpa
11 years
91 ktpa
450 ozpa
46 USc/lb
56 USc/lb
A$153 m
Pre-tax
A$103 m
A$394 m
60.9%
1-1.5 yrs
A$615 m
Internal rate of return – spot lead price case
82.5%
– 11 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Review of Operations (continued)
Sensitivity Analysis
Sensitivity analysis using +/- 20% range pivoting on its base case (displayed in brackets) for the lead price
(US$0.95/lb), process recovery (94%), combined treatment and refining charges (US$100/t concentrate), capital
expenditure ($150 million), operating expenditure ($118/t ore) and mining production rate (1 Mtpa) are shown in
Figure 2.
Figure 2: Abra’s sensitivity analysis showing the project is very robust, as at lead prices of US$0.76/lb
NPV (10%) = $174 million (versus June 2018 average spot price of US$1.14/lb)
Timeline to Production
The 2018 Scoping Study shows commencement of construction during the third quarter of 2019 calendar year with
an access decline extending to 300m vertical below surface. Planned extraction of the first mineralisation from
development is scheduled for the first quarter of 2021 calendar year (see Figure 3).
– 12 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Review of Operations (continued)
Figure 3: Abra’s Proposed Development Timetable (Grey blocks have been completed)
2018 Resource Development Drilling Program
Galena is currently nearing completion of an 8,400m Resource development drilling program primarily aimed at
converting the bulk of the high-grade Inferred portions of the March 2018 Resource into the Indicated category.
This follows the drilling of 12 holes for 8,022m (AB70 – 81) drilled during 2017. The drilling program will also test
for extensions to lead-silver mineralisation in several key areas where there is potential to add to the existing
Resource. The program is expected to be complete in October 2018.
Drill-hole AB83 intersected stratiform mineralisation within the targeted Apron zone with results returning the
exceptional intersection of 15.4m at 25.9% lead and 74g/t silver including 7.7m at 41.7% lead and 116g/t silver
(see Figure 4). This is the highest grade intersection from the Apron zone mineralisation encountered at the Project
to date. Mineralisation is gently dipping so intersection widths are interpreted to be close to true widths (see Figure
5). Importantly this intersection is not only within Inferred rather than Indicated Resource material but is also outside
of current proposed stoping area in the 2018 Scoping Study.
– 13 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Review of Operations (continued)
AB83 also intersected 5.76m at 9.6% lead and 29g/t silver from the hydrothermal vein zone within the underlying
Core zone. The hole was extended to test the copper-gold potential lieing below the existing known Abra deposit.
The hole intersected 13m at 6.3g/t gold, 0.7% copper, 1.1% lead and 54g/t silver, including 8m at 9.5g/t gold, 0.6%
copper, 1.4% lead and 77g/t silver. This is the highest grade gold intersection drilled at the Project to date and
highlights the exciting future potential of Abra beyon. This mineralisation is outside of the March 2018 Resource.
Drill-hole AB82 also intersected mineralisation from the targeted Apron zone returning 4.2m at 8.1% lead and 14g/t
silver. This intersection is within current Inferred Resource material.
Figure 4: 3D model of the core and apron zones looking east showing AB82 and AB83, March 2018 Inferred and
Indicated Resources outlines (>5% Pb wireframes)
– 14 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Review of Operations (continued)
Figure 5: 3D model of the core and apron zones looking east showing AB82 and AB83, March 2018 Inferred and
Indicated Resources outlines (>5% Pb wireframes) and scoping study underground mine development and stopes
Woodlands Drilling
Drilling of two diamond core holes (GWD001 and GWD002) at the Woodlands prospect, west of Abra were
completed for a total of 1,114m. The first of these was at the Leader 18 Prospect and the second at the 46-40
Prospect. GWD001 at the Leader 18 prospect intersected approximately 60m of 0.5 - 1% chalcopyrite from 260m
downhole, as well as other lesser amounts of chalcopyrite and galena within chlorite altered, brecciated and veined
sediments throughout the remainder of the hole. Hydrothermal magnetite and manganese were also widespread.
Theses mineralised zones are interpreted as being part of the same mineralised system previously intersected in
historic drilling however Galena’s drilling intercepts are several hundred metres from the historic intersections. The
system has therefore been significantly extended with this drilling. All assays are pending.
GWD002 at the 46-40 Prospect intersected more extensive and intense chalcopyrite and mineralisation along with
manganese and magnetite throughout much of the hole.
The most significant assays using a lead cut-off of 0.3% and copper cut-off of 0.2% for both holes were:
20.7m at 1.10% lead from 214.3m in GWD002, including 4.3m at 2.3% lead
16.8m at 1.46% lead from 259.2m in GWD002
22.5m at 0.52% copper from 523.5m in GWD002
12.4m at 0.84% copper and 0.34g/t Au from 529.0m in GWD002, including 7.4m at 1.16%
copper
3.4m at 0.55% copper from 604.0m in GWD002
2.8m at 0.98% copper from 624.6m, including 1m at 2.0% copper and 2.7g/t gold
10.5m at 0.42% copper from 332.0m in GWD001 including 0.5m at 1.63% copper and 0.25g/t
gold
11.0m at 0.46% copper from 349.0m in GWD001
3.6m at 0.86% copper from 374.0m in GWD001
– 15 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
COMPETENT PERSONS’ STATEMENT
The information in this report related to the Abra Mineral Resource estimate is based on work completed by Mr A Byass, B.Sc Hons (Geol),
B.Econ, FSEG, MAIG a Director of Galena Mining Limited and Mr Don Maclean MSc (Geol), MAIG and RP Geo (Exploration and Mining),
MSEG, a consultant to Galena Mining. Mr Byass was responsible for technical oversight and reporting of the estimate. Mr Maclean was
responsible for data review, QAQC, development of the geological model and resource estimation. Mr Byass and Mr Maclean have sufficient
experience relevant to the style of mineralisation and type of deposit 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, Exploration
Targets, Mineral Resources and Ore Reserves. Mr Byass and Mr Maclean consent to the inclusion in the report of the matters based on this
information in the form and context in which it appears.
The information in this report to which this statement is attached that relates to Exploration results and drilling data is based upon
information compiled by Mr E Turner B.App Sc, MAIG who is an employee of Galena Mining. Mr Turner has sufficient experience relevant to
the style of mineralisation and type of deposit 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, Exploration Targets, Mineral Resources
and Ore Reserves. Mr Turner consents to the inclusion in the report of the matters based on this information in the form and context in which
it appears.
Events after the Reporting Period
-On 3 July 2018, the Company released a Scoping Study on its Abra Project.
-On 5 July 2018, the Company announced the appointment of Mr Bill Cunningham as Company’s Metals Marketing
Consultant, as part of the expansion of key technical and management positions as the Abra lead-silver project
advances.
-On 1 September 2018, the Company appointed Mr Alexander Molyneux as Chief Executive Officer/Managing
Director.
-On 1 September 2018, the Company appointed Mr Edward Turner as the General Manager of Geology and
Exploration.
No other matter or circumstance has arisen since the end of audited period which significantly affected or may
significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group
in future financial periods.
Information on Directors
The names of directors who held office from incorporation until the date of this report are as follows. Directors were
in office for this entire period unless otherwise stated.
Mr Adrian Byass BSc Geol Hons, B. Econ, FSEG and MAIG
Non-Executive Chairman
Mr Byass has over 20 years’ experience in the mining and minerals industry. This experience has principally been
gained through evaluation and development of mining projects for a range of base, precious and specialty metals
and bulk commodities. Due to his experience in resource estimation and professional association membership, Mr
Byass is a competent person for reporting to the ASX for certain minerals. Mr Byass has also gained experience
in corporate finance, capital raising, permitting and delivery of production-ready mining projects.
Mr Byass is an executive director of Infinity Lithium Corporation and is a non-executive director of Fertoz Limited.
Interest in Shares and Options
-11,100,000 fully paid ordinary shares
-2,500,000 options exercisable at $0.06 on 30/06/2020
-5,000,000 options exercisable at $0.08 on 30/06/2021
– 16 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Information on Directors (continued)
Alexander Molyneux, BEc
Managing Director
Mr Molyneux is metals and mining industry executive and financier with 20-years industry experience. He joined
Galena Mining on 1 September 2018.
Prior to Galena Mining, Mr Molyneux was CEO of Paladin Energy Limited (ASX: PDN) (2015 – 2018) one of the
world’s largest uranium companies, where he optimized its operating business and completed a US$700M
successful recapitalisation of the company and a re-listing on the ASX. Prior to that, Alex spent approximately five-
years with Ivanhoe Mines Group and Ivanhoe Energy in various leadership capacities including as CEO and
Director of SouthGobi Resources Ltd. (TSX: SGQ) (2009 – 2012).
Mr Molyneux currently serves on a number of public company boards, including: Argosy Minerals Ltd. (ASX: AGY),
Metalla Royalty & Streaming Ltd. (TSX-V: MTA), Tempus Resources Ltd. (ASX: TMR) and Azarga Metals Corp.
(TSX-V: AZR).
Prior to his mining industry executive and director roles, Mr Molyneux was Managing Director, Head of Metals and
Mining Investment Banking, Asia Pacific for Citigroup. As a specialist resources investment banker, he spent
approximately 10-years providing investment banking services to natural resources companies. Mr Molyneux holds
a Bachelor Degree in Economics from Monash University.
Interest in Shares and Options
-2,500,000 performance rights, subject to shareholder approval, which will convert into shares upon the
achievement of various milestones
-14,000,000 performance rights, subject to shareholder approval, which will convert into shares upon the
achievement of various milestones
Jonathan Downes BSc Geol, MAIG
Non-Executive Director
Mr Downes has over 20 years’ experience in the minerals industry and has worked in various geological and
corporate capacities. Experienced with nickel, gold and base metals, he has also been intimately involved with the
exploration process through to production.
Mr Downes is on the board of several ASX-listed companies; he is currently the managing director of Ironbark Zinc
Limited and is a non-executive director of Corazon Mining Limited.
Interest in Shares and Options
-13,162,950 fully paid ordinary shares
-2,500,000 options exercisable at $0.06 on 30/06/2020
-5,000,000 options exercisable at $0.08 on 30/06/2021
– 17 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Information on Directors (continued)
Oliver Cairns MSI
Non-Executive Director
Mr Cairns has over 17 years’ experience in the small to mid-cap corporate and capital markets space. A corporate
financier, he was a Nominated Advisor for AIM companies in London for over eight years before relocating to Perth
in 2007 where he established Pursuit Capital, a corporate and strategic advisory firm. His wide experience covers
international capital raisings, M&A, IPOs, regulatory advice, investor relations and corporate governance.
Mr Cairns was a non-executive director of Vmoto Limited (ceased on 31 May 2017) and is a member of the
Securities Institute (UK).
Interest in Shares and Options
-10,410,000 fully paid ordinary shares
-2,500,000 options exercisable at $0.06 on 30/06/2020
-5,000,000 options exercisable at $0.08 on 30/06/2021
Timothy Morrison
Non-Executive Director (Appointed 12 July 2017)
Mr Morrison co-founded Empire Equity Limited a Merchant Banking and Corporate Advisory firm in 2008. Mr
Morrison has extensive capital raising and management experience across multiple sectors and has worked as
CEO, Executive and non-executive director for a number of ASX listed companies. Previously Mr Morrison worked
with Westscheme Superannuation to establish and manage a Private Equity Fund targeting early stage venture
opportunities. Mr Morrison has an MBA from the University of Western Australia.
Mr Morrison is currently a non-executive director of Titan Minerals Limited (formerly, Minera Gold Limited).
Interest in Shares and Options
-82,250,000 fully paid ordinary shares (i)
(i)
Held by Bloomgold Resources Pty Ltd, a company of which Mr. Morrison is a director.
Information on Other Management
Edward Turner B App Sc (Geol), MAIG
Chief Executive Officer
Mr Turner has 30 years’ experience as a Geologist in Europe, South America, Africa and Australia. His roles have
covered exploration and development of base, precious and specialty metals for leading mining companies. Mr
Turner has extensive experience in the economic studies of base-metal deposits in open-pit and underground
scenarios and related mining experience.
Mr Turner is the former Exploration Manager for Abra from 2008 to 2011. The Directors consider that Mr Turner
brings a wealth of experience in relation to the Abra Deposit, its exploration history and the ability to efficiently
advance the Project. Effective 1 September 2018, Mr Turner was appointed as the General Manager of Geology
and Exploration.
– 18 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Information on Other Management (continued)
Troy Flannery BEng(Min), MAppFin, FCMMC
Chief Operating Officer (appointed 7 February 2018)
Mr Flannery is a Mining Engineer with over 20 years’ experience in the mining industry including 5 years in
corporate and 16 years in senior mining engineering / project development roles. Mr Flannery has worked at
numerous mining companies, mining consultancies & contractors (including BHP, Newcrest, Xstrata, St Barbara
Mines & AMC Consultants). More recently, as the Hanking Gold Group Technical Services Manager, he was part
of the corporate team that sold SXO for A$330M to Minjar Gold in April 2017. SXO was acquired as a care and
maintenance project for A$23M in 2013 from St Barbara Mines.
Stephen Brockhurst BComm
Company Secretary
Mr Brockhurst has 15 years’ experience in the finance and corporate advisory industry and has been responsible
for the preparation of the due diligence process and prospectuses on a number of initial public offers. His
experience includes corporate and capital structuring, corporate advisory and company secretarial services, capital
raising, ASX and ASIC compliance requirements.
Mr Brockhurst has served on the board and acted as Company Secretary for numerous ASX listed companies. He
is currently a Director of Estrella Resources Limited and Kingwest Resources Limited and Company Secretary of
Jacka Resources Limited, Bowen Coking Coal Limited and Nelson Resources Limited. He was also previously a
Director of Roto-Gro Limited (resigned 5 February 2018).
REMUNERATION REPORT (AUDITED)
The remuneration report, which forms part of the Directors' Report, outlines the remuneration arrangements in place
for key management personnel (KMP) who are defined as those persons having the authority and responsibility for
planning and directing the major activities of the Company, directly and indirectly, including any director (whether
executive or otherwise).
Remuneration Philosophy
The performance of the Company depends on the quality of the Company's Directors, executives and employees
and therefore the Company must attract, motivate and retain appropriately qualified industry personnel.
Remuneration policy
Remuneration levels for the executives are competitively set to attract the most qualified and experienced
candidates, taking into account prevailing market conditions and the individual's experience and qualifications.
During the year, the Company did not have a separately established remuneration committee. The Board is
responsible for determining and reviewing remuneration arrangements for the executive and non-executive
Directors.
The remuneration of executive and non-executive Directors is not dependent on the satisfaction of performance
conditions. Remuneration and share based payments are issued to align Directors' interest with that of
shareholders.
– 19 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
Non-Executive Directors Remuneration
Mr Adrian Byass, Mr Jonathan Downes and Mr Oliver Cairns were appointed as Directors on 7 December 2016.
Mr Timothy Morrison was appointed as a Director on 12 July 2017. All directors are entitled to receive $50,000 per
annum (inclusive of statutory superannuation), commencing upon the official admission of the Company to the ASX
on 7 September 2017, for their roles as Directors of the Company and as per an appointment letter dated 23 March
2017 for Messrs. Byass, Downes and Cairns and as per an appointment letter dated 12 July 2017 for Mr Morrison.
The Company's Constitution provides that the remuneration of Non-Executive Directors will not be more than the
aggregate fixed sum determined by a general meeting. Before a determination is made by the Company in a general
meeting, the aggregate sum of fees payable by the Company to the Non-Executive Directors is a maximum of
$500,000 per annum. Summary details of remuneration of the Non-Executive Directors are provided in the table
below. The remuneration is not dependent on the satisfaction of a performance condition.
Directors are entitled to be paid reasonable travelling, accommodation and other expenses incurred in
consequence of their attendance at meetings of Directors and otherwise in the execution of their duties as Directors.
A Director may also be paid additional amounts as fees or as the Directors determine where a Director performs
extra services or makes any special exertions, which in the option of the Directors are outside the scope of the
ordinary duties of a Director.
Other Executives Remuneration
Mr Edward Turner
Mr Edward Turner was appointed as Chief Executive Officer on 30 March 2017. His employment conditions are
governed by an Executive Employment Agreement. The terms of agreement can be terminated by providing three
(3) months written notice in case of the Company. Where the Company terminates the agreement, the Company
will pay an amount equal to the remuneration equivalent of the balance of the notice period. Mr Turner is entitled
to receive $83,200 per annum (exclusive of statutory superannuation) for the equivalent of a 2-day per week roster
or part thereof and an additional $800 per day, commencing upon the official admission of the Company to the
ASX, as per executive employment agreement dated 30 March 2017. On 12 April 2018, Mr Turner’s contract
conditions changed from part time to full time with Mr Turner being entitled to received $208,000 per annum
(exclusive of statutory superannuation). In addition, Mr Turner is also entitled to receive a bonus being the greater
of a $50,000 or the equivalent value of 500,000 fully paid ordinary shares (post 1:5 share split) in the Company
based on a 5 day VWAP prior to the ASX release of a JORC Resource for the delivery of a 14Mt at 8% Pb JORC
(Resource) within 2 years of Company listing on ASX. The performance condition for the bonus was satisfied during
the financial year and Mr Turner received 500,000 fully paid ordinary shares in the Company at a VWAP per share
of $0.22594. Summary details of remuneration Key Management Personnel are provided in the table below.
Under the employment agreement and on the date on which the Company is reasonably satisfied that it is in a
position to satisfy the conditions for admission to the official list of ASX, Mr Turner is entitled to receive 1,250,000
options exercisable at $0.06 (on a post 1:5 share split basis) expiring on 30 June 2020, these options were issued
during the 2017 financial period. Additionally under the employment agreement, Mr Turner is entitled to receive
1,250,000 options exercisable at $0.08 (on a post 1:5 share split basis) expiring on 30 June 2021, these options
were issued during the 2018 financial year.
Mr Troy Flannery
Mr Troy Flannery was appointed as Chief Operating Officer on 7 February 2018. His employment conditions are
governed by an Executive Employment Agreement. The terms of agreement can be terminated by either party
providing three (3) months written notice. Mr Flannery is entitled to receive $180,000 per annum (exclusive of
statutory superannuation). Mr Flannery was also entitled to receive 5,000,000 options exercisable at $0.30 (on a
post 1:5 share split basis) expiring on 6 February 2021, these options were issued on 7 February 2018.
Mr Flannery is also entitled to receive a bonus on the delivery of a positive Pre-Feasibility Study on the Abra deposit
delivered on time and on budget as defined in the Executive Employment Agreement. The bonus will be payable
upon the adoption of and ASX release of completion of the Pre-feasibility Study with a positive NPV and IRR, or
determination of the Board to engage in a Feasibility Study on the Project based on the Pre-feasibility Study. The
bonus amount is either $75,000 cash or $82,500 in shares based on a 14 day VWAP, at the election of Mr Flannery.
– 20 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
Details of remuneration for the year ended 30 June 2018
The remuneration for each key management personnel of the Company during the year was as follows:
Key Management
Person
Short-term
Benefits
Cash, salary
&
commissions
$
37,291
37,291
37,291
37,291
149,164
157,736
60,000
217,736
366,900
Directors
Adrian Byass
Jonathan Downes
Oliver Cairns
Timothy Morrison(i)
Sub-Total
Other
Edward Turner
Troy Flannery(ii)
Sub-Total
TOTAL
Post-
employment
Benefits
Super-
annuation
Other
Long-
term
Benefits
Other
Equity-settled
share based
Payments
Total
Equity
(iv)
Options
(iii)
Performance
Related
Share Based
Payments as
a percentage
of
Remuneration
$
$
$
$
$
%
%
3,542
3,542
3,542
3,542
14,168
14,985
5,700
20,685
34,853
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
40,833
40,833
40,833
40,833
163,332
112,970
-
112,970
112,970
28,250
348,000
376,250
376,250
313,941
413,700
727,641
890,973
-
-
-
-
-
44.98
84.12
-
-
-
-
-
-
-
35.98
-
-
-
(i)
(ii)
(iii)
(iv)
Mr Morrison was appointed as Director on 12 July 2017.
Mr Flannery was appointed as COO on 7 February 2018.
Value of options were calculated using Black-Scholes Model.
Value of shares represents the Fair Value at grant date.
Other transactions with Key Management Personnel for the year ended 30 June 2018
-Bloomgold Resources Pty Ltd, a company of which Mr Morrison is a director, and Silverlight Holdings Pty Ltd, a
company of which Mr Cairns is a director, were issued total of 87,500,000 shares (post 1:5 share split) for the
consideration value of $3,500,000 Galena’s acquisition of Abra Mining Pty Ltd.
-EJ Turner Consulting, a company of which the CEO, Mr Edward Turner is a director, received $26,560 for
Geological Services for work performed on Abra Project.
– 21 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
Details of remuneration for the period ended 30 June 2017
The remuneration for each key management personnel of the Company during the period was as follows:
Key
Management
Person
Directors
Adrian Byass
Jonathan
Downes
Oliver Cairns
Sub-Total
Other
Edward Turner(i)
Sub-Total
TOTAL
Short-term
Benefits
Cash, salary
&
commissions
$
Post-
employment
Benefits
Super-
annuation
Other
Long-term
Benefits
Other
Equity-settled
share based
Payments
Equity
Options
Total
Options as a
percentage of
Remuneration
Performance
Related
$
$
$
$
$
%
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
85,775
85,775
85,775
85,775
257,325
85,775
85,775
257,325
13,232
13,232
270,557
13,232
13,232
270,557
100
100
100
100
100
100
100
-
-
-
-
-
-
-
(i) Mr Turner was appointed as CEO on 30 March 2017.
Other transactions with Key Management Personnel for the period ended 30 June 2017
-EJ Turner Consulting, a company of which the CEO, Mr Edward Turner is a director, received $17,210 for
Geological Services for work performed on Abra Project.
Options and Rights Over Equity Instruments Granted as Compensation (all quoted shares and options are
on post share split basis of 5 for 1)
Details of options over ordinary shares in the Company that were granted as compensation to each key management
person during the 2017 and 2018 financial period and details of options that have vested are as follows:
Director/Key
Management
Personnel
Adrian Byass
Adrian Byass
Jonathan Downes
Jonathan Downes
Oliver Cairns
Oliver Cairns
Edward Turner
Edward Turner
Troy Flannery
Number
Options
Granted
Grant Date
Fair Value
per Option
Expiry Date
Exercise
Price per
Option
Number
Options
Vested
2,500,000
05-01-2017
$0.01058
$0.06
30-06-2020
2,500,000
5,000,000
30-03-2017
$0.011862
$0.08
30-06-2021
5,000,000
2,500,000
05-01-2017
$0.01058
$0.06
30-06-2020
2,500,000
5,000,000
30-03-2017
$0.011862
$0.08
30-06-2021
5,000,000
2,500,000
05-01-2017
$0.01058
$0.06
30-06-2020
2,500,000
5,000,000
30-03-2017
$0.011862
$0.08
30-06-2021
5,000,000
1,250,000
30-03-2017
$0.01058
$0.06
30-06-2020
1,250,000
1,250,000
30-08-2017
$0.11300
$0.08
30-06-2021
1,250,000
5,000,000
07-02-2018
$0.0696
$0.30
06-02-2021
5,000,000
– 22 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
KMP Shareholdings
The number of ordinary shares in Galena Mining Limited held by each KMP of the Company during the financial
period is as follows:
30 June 2018
Mr Adrian Byass
Mr Jonathan Downes
Mr Oliver Cairns
Mr Timothy Morrison (i)
Mr Edward Turner
Mr Troy Flannery (ii)
Balance at
beginning of
period
Granted as
remuneration
during the
period
Issued on
exercise of
options
during the
period
Other
changes
during the
period
Balance at
end of
period
7,500,000
7,500,000
3,000,000
-
-
-
-
-
-
-
500,000
-
18,000,000
500,000
-
-
-
-
-
-
-
3,600,000
11,100,000
5,662,950
13,162,950
7,410,000
10,410,000
82,250,000
82,250,000
500,000
-
-
98,922,950
117,422,950
(i)
(ii)
Mr Morrison was appointed on 12 July 2017. This holding represents that of Bloomgold Resources Pty Ltd of which Mr Morrison
is a director.
Mr Flannery was appointed on 7 February 2018.
KMP Options Holdings
The number of options over ordinary shares held during the financial period by each KMP of the Company is as
follows:
30 June 2018
Balance at
beginning
of period
Granted
during
the period
Exercised
during the
period
Other
changes
during the
period
Balance at
end of
period
Vested
during the
period
Vested and
exercisable
Vested and
unexercisable
30 June 2018
Mr Adrian Byass
7,500,000
Mr Jonathan Downes
7,500,000
Mr Oliver Cairns
7,500,000
Mr Timothy Morrison (i)
-
-
-
-
-
Mr Edward Turner
1,250,000
1,250,000
Mr Troy Flannery (ii)
-
5,000,000
23,750,000
6,250,000
(i)
(ii)
Mr Morrison was appointed on 12 July 2017.
Mr Flannery was appointed on 7 February 2018.
End of Remuneration Report
-
-
-
-
-
-
-
– 23 –
-
-
-
-
-
-
7,500,000
7,500,000
7,500,000
-
2,500,000
5,000,000
- 30,000,000
-
-
-
-
-
-
-
7,500,000
7,500,000
7,500,000
-
2,500,000
5,000,000
30,000,000
-
-
-
-
-
-
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
Meeting of Directors
During the period, 4 director’s meetings were held. Attendance by each director during the period were as follows:
Director’s Meetings
Number eligible to attend
Director’s meetings attended
Mr Adrian Byass
Mr Jonathan Downes
Mr Oliver Cairns
Mr Timothy Morrison
4
4
4
4
4
3
4
4
Future Developments, Prospects and Business Strategies
Further information, other than as disclosed in this report, about likely developments in the operations of the
Company and the expected results of those operations in future periods has not been included in this report as
disclosure of this information would be likely to result in unreasonable prejudice to the Group.
Environmental Issues
The operations and proposed activities of the Group are subject to State and Federal laws and regulations
concerning the environment. As with most exploration projects and mining operations, the Group’s activities are
expected to have an impact on the environment, particularly if advanced exploration or field development proceeds.
It is the Group’s intention to conduct its activities to the highest standard of environmental obligation, including
compliance with all environmental laws. In this regard, the Department of Minerals and Petroleum of Western
Australia from time to time, review the environmental bonds that are placed on permits. The Directors are not in a
position to state whether a review is imminent or whether the outcome of such a review would be detrimental to
the funding needs of the Group.
Proceedings on Behalf of the Group
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.
The Group was not a party to any such proceedings during the year.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the company for costs incurred, in their capacity as
a director or executive, for which they be may be held personally liable, except when there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and
executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of
insurance prohibits disclosure of the nature of the liability and the amount of the premium.
– 24 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ REPORT
__________________________________________________________________________________________
Indemnity and insurance of auditors
The Company has not, during the financial year, indemnified or agreed to indemnify the auditor of the Company or
any related entity against a liability incurred by the auditor.
During the financial period, the Company has not paid a premium in respect of a contract to insure the auditor of
the company or any related entity.
Non-Audit Services
The Board of Directors are satisfied that the provision of non-audit services during the year is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001.
The following fees were paid out to PKF Mack for non-audit services provided during the year ended 30 June 2018:
-Taxation compliance services
$2,950
Auditor’s Independence Declaration
Section 307C of the Corporations Act 2001 requires our auditors, PKF Mack, 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 page 26 and forms part of this Directors’ Report for the year ending 30 June 2018.
This report is signed in accordance with a resolution of the Board of Directors.
__________________
Adrian Byass
Chairman
Dated this 20th day of September 2018
– 25 –
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF GALENA MINING LIMITED
In relation to our audit of the financial report of Galena Mining Limited for the year ended 30 June 2018, to
the best of my knowledge and belief, there have been no contraventions of the auditor independence
requirements of the Corporations Act 2001 or any applicable code of professional conduct.
PKF MACK
SIMON FERMANIS
PARTNER
20 SEPTEMBER 2018
WEST PERTH
– 26 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
Note
Year ended
30 June 2018
7 December 2016
to
30 June 2017*
Revenue
Expenses
Administration expenses
Share based payments
Initial public offering expenses
Consulting, Promotion & Marketing expenses
Corporate expenses
Compliance fees
Personnel expenses
Depreciation expense
Pre-acquisition exploration & evaluation expenditure
Other expenses
Loss before income tax expense
Income tax expense
Loss after income tax for the year
17
7
3
2
$
61,855
(193,257)
(489,220)
-
(85,000)
(138,155)
(66,561)
(194,409)
(3,856)
(50,662)
(54,811)
$
-
(66,045)
(323,074)
(191,967)
-
-
-
-
-
(145,242)
-
(1,214,076)
(726,328)
-
-
(1,214,076)
(726,328)
Other comprehensive income net of income tax
-
-
Total comprehensive loss for the year
(1,214,076)
(726,328)
Loss Per Share
Basic and diluted loss per share (cents per share)
4
(0.49)
(2.13)
The accompanying notes form part of these financial statements.
*Parent Entity only.
– 27 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018
Note
2018
$
2017*
$
70,261
6,787
-
77,048
-
-
-
77,048
26,702
-
26,702
8,526,198
331,689
98,863
8,956,750
24,696
8,823,858
8,848,554
17,805,304
945,412
15,771
961,183
961,183
26,702
16,844,121
50,346
18,085,201
699,324
(1,940,404)
16,844,121
453,600
323,074
(726,328)
50,346
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant & Equipment
Exploration & Evaluation expenditure
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Share based payment reserve
Accumulated losses
TOTAL EQUITY
5
6
7
8
9
10
11
12
The accompanying notes form part of these financial statements.
*Parent Entity only.
– 28 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018
Issued Capital
Share based
payment
reserve
Accumulated
losses
Total
$
$
$
$
453,600
323,074
(726,328)
50,346
Balance at 1 July 2017
Loss for the period
Other comprehensive income
Total comprehensive income
Transactions with owner directly
recorded in equity
-
-
-
Shares issued during the period
18,612,971
Options issued during the period
-
376,250
Share issue costs
(981,370)
-
-
-
-
-
(1,214,076)
(1,191,106)
-
-
(1,214,076)
(1,191,106)
-
-
-
18,612,971
376,250
(981,370)
Balance at 30 June 2018
18,085,201
699,324
(1,940,404)
16,844,121
Issued Capital
Share based
payment
reserve
Accumulated
losses
Total
$
$
$
$
Balance at 7 December 2016
Loss for the period
Other comprehensive income
Total comprehensive income
Transactions with owner directly
recorded in equity
Shares issued during the period
Options issued during the period
-
-
-
-
453,600
-
-
-
-
-
-
323,074
-
-
(726,328)
(726,328)
-
-
(726,328)
(726,328)
-
-
453,600
323,074
Balance at 30 June 2017*
453,600
323,074
(726,328)
50,346
The accompanying notes form part of these financial statements.
*Parent Entity only.
– 29 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Exploration and evaluation expenditure
Interest received
Year ended
7 December 2016 to
30 June 2018
$
30 June 2017*
$
Note
(985,548)
(4,545,978)
42,384
(179,265)
(152,532)
-
Net cash (used in) operating activities
14
(5,489,142)
(331,797)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant & equipment
Payment for security deposit
Net cash (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Payment of transaction costs associated with issue of securities
Net cash provided by financing activities
Net increase in cash held
Cash and cash equivalents at beginning of financial period
Cash and cash equivalents at end of financial period
5
The accompanying notes form part of these financial statements.
*Parent Entity only.
(28,552)
(45,000)
(73,552)
15,000,001
(981,370)
14,018,631
8,455,937
70,261
8,526,198
-
-
-
453,600
(51,542)
402,058
70,261
-
70,261
– 30 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements and notes represent those of Galena Mining Limited and its controlled entities (together
referred to as the “Company” or the “Group” or the “Consolidated Entity”). Galena Mining is a public company,
incorporated and domiciled in Australia. The Consolidated Entity or the Group refers to the Company and the entity
controlled during the year and at the year end.
The financial statements were authorised for issue on 20th September 2018 by the directors of the Company. The
directors have the power to amend and reissue the financial statements.
Basis of Preparation
The financial statements are general purpose financial statements that have been prepared in accordance with
Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the
Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The Company is a for-profit entity for
financial reporting purposes under the Australian Accounting Standards.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial
statements containing relevant and reliable information about transactions, events and conditions. Compliance with
Australian Accounting Standards ensures that the financial statements and notes also comply with International
Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in the preparation of this
financial report are presented below. They have been consistently applied unless otherwise stated.
The financial statements have been prepared on an accruals basis and is based on historical costs, modified where
applicable, by the measurement at fair value of financial assets and financial liabilities.
Comparatives
Galena Mining Limited was incorporated on 7 December 2016, therefore the comparative period for the statement of
profit or loss and other comprehensive income, statement of cash flows and statement of changes in equity are for the
period 7 December 2016 to 30 June 2017.
Accounting Policies
The following is a summary of the material accounting policies adopted by the Company in the preparation of the
financial report.
a)
Going Concern
The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business
activity and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The Group incurred a loss for the period of $1,214,076 and net cash outflows from operating activities of $5,489,142.
These conditions indicate a material uncertainty that may cast significant doubt about the ability of the Company and
Group to continue as a going concern.
The directors believe the Group is a going concern as they have appropriate plans to raise additional capital to fund
forecasted activities.
Should the Company or the Group be unable to continue as a going concern it may be required to realise its assets
and extinguish its liabilities other than in the normal course of business and at amounts different to those stated in the
financial statements. The financial statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or to the amount and classification of liabilities that might result should the
Company or Group be unable to continue as a going concern and meet its debts as and when they fall due.
– 31 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
b)
Operating Segments
Operating segments are presented using the ‘management approach’ where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers. The Chief Operating Decision Maker is
responsible for the allocation of resources to operating segments and assessing their performance.
c)
Foreign Currency Translation
The financial statements are presented in Australian dollars, which is Galena Mining Limited’s functional and
presentation currency.
d)
Income Tax
The income tax expense (revenue) for the period comprises current income tax expense (income) and deferred tax
expense (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using
applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are
therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the
period as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss
when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where
amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised
from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on
accounting or taxable profit or loss.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset
is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their
measurement also reflects the manner in which management expects to recover or settle the carrying amount of the
related asset or liability.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can
be controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax
assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities
relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities
where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability
will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered
or settled.
– 32 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
__________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
e)
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a
liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held primarily
for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional
right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are
classified as non-current. Deferred tax assets and liabilities are always classified as non-current.
f)
Exploration and Evaluation Expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These
costs are only carried forward to the extent that they are expected to be recouped through the successful development
of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the
existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the period in which the
decision to abandon the area is made.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward
costs in relation to that area of interest.
g)
Financial Instruments
Recognition and Initial Measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions
to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the
purchase or sale of the asset.
Financial instruments are initially measured at fair value plus transactions costs except where the instrument is
classified ‘at fair value through profit or loss in which case transaction costs are expensed to profit or loss immediately.
Classification and Subsequent Measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest method,
or cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measure at initial
recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative
amortization of the difference between that initial amount and the maturity amou nt calculated using the effective
interest method.
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied
to determine the fair value for all unlisted securities, including recent arm’s length tra nsactions, reference to similar
instruments and option pricing models.
– 33 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
g)
Financial Instruments (continued)
Classification and Subsequent Measurement
The effective interest method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and
other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the contractual term) of
the financial instruments to the net carrying amount of the financial asset or financial liability. Revisions to expected
future net cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of an
income or expense item in profit or loss.
The Company does not designate any interests in subsidiaries, associates or joint venture entities as being subject to
the requirements of accounting standards specifically applicable to financial instruments.
Financial assets at fair value through profit or loss
(i)
Financial assets are classified at “fair value through profit or loss” when they are held for trading for the purpose of
short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an
accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key
management personnel on a fair value basis in accordance with a documented risk management or investment
strategy. Such assets are subsequently measured at fair value with changes in carrying amount being included in profit
or loss.
Loans and receivables
(ii)
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, where they are expected to mature within 12 months after the
end of the reporting period.
Held-to-maturity investments
(iii)
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable
payments, and it is the Company’s intention to hold these investments to maturity. They are subsequently measured
at amortised cost.
Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within
12 months after the end of the reporting period. All other investments are classified as current assets.
Available-for-sale investments
(iv)
Available-for-sale investments are non-derivative financial assets that are either not capable of being classified into
other categories of financial assets due to their nature or they are designated as such by management. They comprise
investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.
They are subsequently measured at fair value with any remeasurements other than impairment losses and foreign
exchange gains and losses recognised in other comprehensive income. When the financial asset is derecognised, the
cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified
into profit or loss.
Available-for-sale financial assets are classified as non-current assets when they are expected to be sold after 12
months from the end of the reporting period. All other available-for-sale financial assets are classified as current assets.
Financial Liabilities
(v)
Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Gains
or losses are recognised in profit or loss through the amortisation process and when the financial liability is
derecognised.
– 34 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
__________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
h)
Impairment of Assets
At the end of each reporting date, the Company assesses whether there is any indication that an asset may be
impaired. The assessment will include the consideration of external and internal sources of information including
dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits.
If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to
sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its
recoverable amount is expensed.
Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
i)
Employee Benefits
Provision is made for the company’s liability for employee benefits arising from services rendered by employees to
balance date. Employee benefits that are expected to be settled within a 12 month period have been measured at the
amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than
12 months have been measured at the present value of the estimated future cash outflows to be made for those
benefits.
j)
Equity-settled compensation
The Company operates equity-settled share-based payment employee share and option schemes. The fair value of
the equity to which employees become entitled is measured at grant date and recognised as an expense over the
vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the
market bid price. The fair value of options is ascertained using a Black –Scholes pricing model which incorporates all
market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of
each reporting date such that the amount recognised for services received as consideration for the equity instruments
granted shall be based on the number of equity instruments that eventually vest.
k)
Fair Value Measurement
When an asset or liability, financial or non-financial is measures at fair value for recognition or disclosure purposes,
the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date; and assumes that the transaction will take place
either; in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on
its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use
of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects
the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date
and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to
the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is
either not available or when the valuation is deemed to be significant. External valuers are selected based on market
knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to
another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and
a comparison, where applicable, with external sources of data.
l)
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.
– 35 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
m)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Galena Mining Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares,
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and
the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive
potential ordinary shares.
n)
Provisions
Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
o)
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of 3 months or less.
p)
Revenue
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial
assets.
All revenue is stated net of the amount of goods and services tax (GST).
q)
Borrowing Costs
All borrowing costs are recognised as expense in the period in which they are incurred.
r)
Goods and Services Tax (GST)
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 statement of financial
position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing
and financing activities, which are disclosed as operating cash flows.
s)
Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent, Galena Mining
Limited and all of the subsidiaries (including any structured entities). Subsidiaries are entities the parent controls. The
parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 22.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group
from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the
date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between
group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and
adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.
– 36 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
__________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1:
s)
Principles of Consolidation (continued)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling
interests”. The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries
and are entitled to a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-
controlling interests’ proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling
interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling
interests are shown separately within the equity section of the statement of financial position and statement of
comprehensive income.
The financial report was authorised for issue on 20th September 2018 by the board of directors.
t)
Critical Accounting Estimates and Judgments
The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge
and best available current information. Estimates assume a reasonable expectation of future events and are based on
current trends and economic data, obtained both externally and within the Company.
Exploration and Evaluation Expenditure
Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current. These
costs are carried forward in respect of an area that has not at balance date reached a stage that permits reasonable
assessment of the existence of economically recoverable reserves, refer to the accounting policy stated in note 1(f).
Share based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. Significant judgement may be required in determining the valuation
technique adopted. The fair value of the options issued in the current period are determined by an internal valuation
using a Black-Scholes option pricing model, using the assumptions detailed in note 17. The assumptions detailed in
this note are also judgemental.
For equity transactions with consultants and other employees, the fair value reflects the value attributable to services
where applicable. Where there is no quantifiable value of services the value of options is calculated using the Black
and Scholes option pricing model or in the case of share grants, the fair value of an ordinary share is utilised.
For instruments issued with market-based conditions, alternative valuation methodologies would be adopted.
u)
New accounting standards for application in the current period
In the year ended 30 June 2018, the Group has reviewed all of the new and revised Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board that are relevant to its operations and effective
for the current annual reporting year.
It has been determined by the Group that there is no impact, material or otherwise, of the new and revised Standards
and Interpretations on its business and, therefore, no change is necessary to the Group accounting policies.
v)
New accounting standards for application in future periods
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the company for the annual reporting period ended 30 June 2018. The
Group’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant
to the company, is set out below.
– 37 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
v)
New accounting standards for application in future periods (continued)
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces
all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset
shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to
collect contractual cash flows, which arise on specified dates and solely principal and interest. All other financial
instrument assets are to be classified and measured at fair value through profit or loss unless the entity makes an
irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-
trading) in other comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of the change
in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting
mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment
with the risk management activities of the entity. New impairment requirements will use an 'expected credit loss' ('ECL')
model to recognise an allowance. Impairment will be measured under a 12-month ECL method unless the credit risk
on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is
adopted. The standard introduces additional new disclosures. The Group will adopt this standard from 1 July 2018 and
the Group expects the impact to be insignificant as there is no hedge instrument in the Group as at the date of these
financial statements
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a
single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either
written, verbal or implied) to be identified, together with the separate performance obligations within the contract;
determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction
price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or
service, or estimation approach if no distinct observable prices exist; and recognition of revenue when each
performance obligation is satisfied. Credit risk will be presented separately as an expense rather than adjusted to
revenue. For goods, the performance obligation would be satisfied when the customer obtains control of the goods.
For services, the performance obligation is satisfied when the service has been provided, typically for promises to
transfer services to customers. For performance obligations satisfied over time, an entity would select an appropriate
measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied.
Contracts with customers will be presented in an entity's statement of financial position as a contract liability, a contract
asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment.
Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts with customers;
the significant judgments made in applying the guidance to those contracts; and any assets recognised from the costs
to obtain or fulfil a contract with a customer. The Group will adopt this standard from 1 July 2018. The impact of its
adoption is expected to be insignificant based on current levels of activity and will be reassessed once the Group
generates revenue.
– 38 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
__________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
v)
New accounting standards for application in future periods (continued)
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces
AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to
exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value
of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases
of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an
accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to
profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal
or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for
the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in
finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher
when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation
and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation
in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be
separated into both a principal (financing activities) and interest (either operating or financing activities) component.
For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The Group will
adopt this standard from 1 July 2019 but the impact of its adoption is yet to be assessed by the Group. The impact of
its adoption would be insignificant based on current activity.
– 39 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2:
INCOME TAX EXPENSE
a. Recognised in the income statement:
Current tax
Deferred tax
Income tax as reported in the statement of comprehensive income
b. Reconciliation of income tax expense to prima facie tax
payable:
2018
$
2017
$
-
-
-
-
-
-
Loss from ordinary activities before income tax expense
(1,214,076)
(726,328)
Prima facie tax benefit on loss from ordinary activities before
income tax at 27.5% (2017: 27.5%)
Increase in income tax due to:
- Non-deductible expenses
- Changes in unrecognised temporary differences
- Unused tax losses not recognised
(333,871)
(199,740)
136,003
(802,180)
1,000,047
89,758
42,232
67,750
Income tax attributable to operating loss
-
-
The following deferred tax balances have not been recognised:
c. Deferred tax assets not recognised
Carry forward revenue losses
Accruals
Capital raising costs
Net deferred tax asset
12,693,781
8,320
247,576
67,750
2,338
42,232
12,949,677
112,320
The carry forward revenue losses are only available for offset subject to Galena Mining Limited and Abra Mining Pty
Ltd satisfying the carried-forward loss tests for deductibility such as the Continuity of Ownership Test and the Same
Business Test.
d. Deferred tax liabilities not recognised
Exploration expenditure
Interest receivable
Net deferred tax liability
1,464,061
5,241
1,469,302
-
-
-
Potential deferred tax assets attributable to tax losses and other temporary differences have not been brought to
account at 30 June 2018 because the directors do not believe it is appropriate to regard realisation of the deferred tax
assets as probable at this point in time. These benefits will only be obtained if:
– 40 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
__________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS
the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit
from the deductions for the expenditure to be realised; and
no changes in tax legislation adversely affect the Company in realising the benefit from the deductions for the
expenditure.
NOTE 3:
OTHER EXPENSES
Bank fees
Legal expenses
Other expenses
Total Other Expenses
NOTE 4:
EARNINGS PER SHARE
Basic and diluted loss per share
2018
$
3,211
34,565
17,035
54,811
2018
$
2017
$
-
-
-
-
2017
$
Cents per share
Cents per share
The loss and weighted average number of ordinary shares used in
this calculation of basic and diluted loss per share are as follows:
(0.49)
(2.13)
Loss
$
$
(1,214,076)
(726,328)
Number
Number
Weighted average number of ordinary shares for the purposes of
basic and diluted loss per share (post share split)
249,341,192
34,093,902
As the Company is in a loss position the options outstanding at 30 June 2018 have no dilutive effects on the earnings
per share calculation. The comparative for 30 June 2017 has been restated on a post share split basis.
– 41 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 5:
CASH AND CASH EQUIVALENTS
Cash at bank
Term deposits at call
Total Cash and Cash Equivalents
2018
$
1,526,198
7,000,000
8,526,198
2017
$
70,261
-
70,261
Reconciliation to cash and cash equivalents at the end of the financial year
The above figure is reconciled to cash and cash equivalents at the end of the financial year as shown in the statement
of cash flows as follows:
Balance as above
Balance as per statement of cash flows
8,526,198
8,526,198
70,261
70,261
NOTE 6:
TRADE AND OTHER RECEIVABLES
Current
GST receivable
Other trade receivables
Credit Card guarantee
Total Trade and Other Receivables
NOTE 7:
PLANT & EQUIPMENT
Motor Vehicle
At cost
Accumulated depreciation
Computer & Office Equipment
At cost
Accumulated depreciation
Equipment and Tools
At cost
Accumulated depreciation
Total Plant and Equipment
– 42 –
267,218
19,471
45,000
331,689
6,787
-
-
6,787
5,000
(915)
4,085
18,184
(2,614)
15,570
5,368
(327)
5,041
24,696
-
-
-
-
-
-
-
-
-
-
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8:
EXPLORATION AND EVALUATION EXPENDITURE
Exploration expenditure capitalised
-
-
Exploration and evaluation asset acquisition
Exploration and evaluation costs incurred
A reconciliation of the carrying amount of exploration and
evaluation expenditure is set out below:
- Carrying amount at the beginning of the year
- Costs capitalised during the year
- Costs impaired during the year
Carrying amount at the end of the year
2018
$
3,500,000
5,323,858
8,823,858
-
8,823,858
-
8,823,858
2017
$
-
-
-
-
-
-
-
NOTE 9: TRADE AND OTHER PAYABLES
Current
Sundry payables and accrued expenses
945,412
26,702
Trade creditors are expected to be paid on 30 day terms.
NOTE 10: PROVISIONS
Current
Provisions for employee entitlements
15,771
-
– 43 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 11:
ISSUED CAPITAL
Movement in ordinary shares
Balance at beginning of period
Incorporation/promoter shares issued on 7 December
2016
Seed shares issued on 5 January 2017
Seed shares issued on 14 February 2017
Seed shares issued on 18 April 2017
2018
No.
2018
$
8,100,000
453,600
2017
No.
-
2017
$
-
-
-
-
-
-
-
-
-
3,600,000
3,600
1,500,000
150,000
2,750,000
275,000
250,000
25,000
Project acquisition shares issued on 30 August 2017
17,500,000
3,500,000
IPO shares issued on 30 August 2017
30,000,000
6,000,000
Share split on 1:5 basis on 23 March 2018
222,400,000
-
Share based payments issued on 3 April 2018
500,000
112,970
Placement shares issued on 26 April 2018
58,064,520
9,000,001
-
-
-
-
-
-
-
-
-
-
-
-
-
(981,370)
336,564,520
18,085,201
8,100,000
453,600
Share issue costs
Balance at reporting date
Terms and conditions of issued capital
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the
number of shares held. The fully paid ordinary shares have no par value.
At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has one vote on a show of hands.
Capital risk management
The Group objectives when managing capital are to safeguard its ability to continue as a going concern, so that it
may continue to provide returns for shareholders and benefits for other stakeholders.
The Group’s capital includes ordinary share capital and financial liabilities, supported by financial assets.
Due to the nature of the Group’s activities, being mineral exploration, it does not have ready access to credit
facilities, with the primary source of funding being equity raisings. Accordingly, the objective of the Group’s capital
risk management is to balance the current working capital position against the requirements of the Group to meet
exploration programmes and corporate overheads. This is achieved by maintaining appropriate liquidity to meet
anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The Group is
not exposed to externally imposed capital requirements.
– 44 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
__________________________________________________________________________________
NOTE 11:
ISSUED CAPITAL
Capital risk management (Continued)
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Working capital position
2018
$
8,526,198
331,689
(961,183)
7,896,704
2017
$
70,261
6,787
(26,702)
50,346
NOTE 12:
SHARE BASED PAYMENT RESERVE
The share based payments reserves record items recognised as expenses on valuation of employees and
consultants options.
Opening balance 1 July
Share based payments vesting expense
Closing balance 30 June
Refer to Note 17 for valuation technique and assumptions.
NOTE 13:
AUDITORS’ REMUNERATION
Remuneration of the auditor of the parent entity for:
—
—
—
Investigating accountants report
auditing or reviewing the financial report
preparation of income tax
2018
$
323,074
376,250
699,324
2017
$
-
323,074
323,074
2018
$
-
36,950
2,750
39,700
2017
$
22,500
14,100
1,750
38,350
– 45 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 14:
CASHFLOW INFORMATION
a.
Reconciliation of Cash Flow from Operations with Loss after
Income Tax
Loss after income tax
Non-cash flows in loss
Share Based Payments
Depreciation
Other non-cash items
Changes in assets and liabilities;
(Increase)/decrease in trade and other receivables
(Increase)/decrease in prepayments
(Increase)/decrease in exploration expenditure
Increase/(decrease) in trade payables and accruals
Increase/(decrease) in provisions
2018
$
2017
$
(1,214,076)
(726,328)
489,220
3,856
(15,771)
323,074
-
-
(736,771)
(403,254)
(279,902)
(98,863)
(5,323,858)
934,481
15,771
(6,787)
-
-
78,244
-
Cashflow from operating activities
(5,489,142)
(331,797)
b.
Non-cash Financing and Investing Activities
-
6,250,000 Options issued during the financial year as per employment agreement between Galena
Mining Limited and Messrs. Turner and Flannery (on a post 1:5 share split basis).
– 46 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
__________________________________________________________________________________
NOTE 15:
TRANSACTIONS WITH RELATED ENTITIES
Key Management Personnel
The totals of remuneration paid or due to be paid to the KMP of the Company during the period are as follows:
Short-term employment benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share based payments
Total Remuneration paid or due to be paid
2018
$
366,900
34,853
-
-
489,220
890,973
2017
$
-
-
-
-
270,557
270,557
Transactions between related parties are on commercial terms and conditions, no more favourable than those
available to other parties unless otherwise stated.
-Bloomgold Resources Pty Ltd, a company of which Mr Morrison is a director, and Silverlight Holdings Pty Ltd, a
company of which Mr Cairns is a director, were issued total of 87,500,000 shares (post 1:5 share split) for the
consideration value of $3,500,000 Galena’s acquisition of Abra Mining Pty Ltd.
-EJ Turner Consulting, a company of which the CEO, Mr Edward Turner is a director, received $26,560 for Geological
Services for work performed on Abra Project (2017: $17,210).
NOTE 16:
EVENTS AFTER REPORTING PERIOD
-On 3 July 2018, the Company released a Scoping Study on its Abra Project.
-On 5 July 2018, the Company announced the appointment of Mr Bill Cunningham as Company’s Metals Marketing
Consultant, as part of the expansion of key technical and management positions as the Abra lead-silver project
advances.
-On 1 September 2018, the Company appointed Mr Alexander Molyneux as Chief Executive Officer/Managing
Director.
-On 1 September 2018, the Company appointed Mr Edward Turner as the General Manager of Geology and
Exploration.
No other matter or circumstance has arisen since the end of audited period which significantly affected or may
significantly affect the operations of the Company, the results of those operations, or the state of affairs of the
Company in future financial periods.
– 47 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 17: SHARE BASED PAYMENTS
Grant Date/entitlement
Unlisted Options issued on 5
January 2017 as per employment
agreement exercisable at $0.06*
on or before 30 June 2020 (i)
(Tranche 1)
Unlisted Options issued on 5
January 2017
to Promoters
agreement exercisable at $0.06*
on or before 30 June 2020 (i)
(Tranche 1)
Unlisted Options issued on 30
March 2017 as per employment
agreement exercisable at $0.06*
on or before 30 June 2020 (i)
(Tranche 1)
Unlisted Options issued on 30
March 2017 as per employment
agreement exercisable at $0.08*
on or before 30 June 2021 (ii)
(Tranche 2)
2017
Unlisted Options issued on 30
March
to Promoters
agreement exercisable at $0.08*
on or before 30 June 2021 (ii)
(Tranche 2)
Number of
Instruments
7,500,000*
Grant Date Fair value per
instrument $
0.01058
05/01/2017
Value $
79,395
3,000,000*
05/01/2017
0.01058
31,758
1,250,000*
30/03/2017
0.01058
13,232
15,000,000*
30/03/2017
0.011862
177,930
1,750,000*
30/01/2017
0.011862
20,759
Recognised in the period to 30 June 2017
323,074
Unlisted Options issued on 30
August 2017 to the CEO as per
agreement
employment
exercisable at $0.08* on or before
30 June 2021
Unlisted Options issued on 7
February 2018 to the COO as per
employment
agreement
exercisable at $0.30* on or before
6 February 2021
1,250,000*
30/08/2017
0.0226
28,250
5,000,000*
07/02/2018
0.0696
348,000
Recognised in the year to 30 June 2018
376,250
* The number and exercise price of the options granted are on a post 1:5 share split basis.
No options have expired or been exercised and therefore, the total options on issue at 30 June 2018 represent all
those issued since incorporation noted above – 34,750,000 on a post-split basis.
– 48 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
__________________________________________________________________________________
NOTE 17: SHARE BASED PAYMENTS (continued)
The below inputs have been adjusted to ensure they are on a post-split basis.
(i)
1,250,000* unlisted Options issued as part of employment agreement and to Promoters have been
calculated using Black-Scholes option pricing model with the following inputs:
Expected volatility (%)
Risk free interest rate (%)
Weighted average expected life of options (years)
Expected dividends
Option exercise price ($)
Share price at grant date ($)
Fair value of option ($)
Number of options (post share-split)
Expiry date
Tranche 3
Options Granted
100
2.08
3.84
Nil
0.08
0.04
0.0226
1,250,000
30 June 2021
(ii)
5,000,000* unlisted Options issued as part of employment agreement have been calculated using
Black-Scholes option pricing model with the following inputs:
Expected volatility (%)
Risk free interest rate (%)
Weighted average expected life of options (years)
Expected dividends
Option exercise price ($)
Share price at grant date ($)
Fair value of option ($)
Number of options (post share-split)
Expiry date
COO
Options Granted
51
2.12
3
Nil
0.30
0.24
0.0696
5,000,000
30 June 2021
Both tranches were deemed to vest immediately as there are no vesting conditions.
Reconciliation of the number of options
Opening balance at 1 July
Issued
Expired
Exercised
Other changes - Post-share split (1:5 basis)
Closing balance 30 June
2018
Number
5,700,000
1,250,000
-
-
27,800,000
34,750,000
2017
Number
-
5,700,000
-
-
-
5,700,000
– 49 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 18:
CONTINGENT ASSETS AND LIABILITIES
In the opinion of the directors there were no contingent assets or liabilities as at 30 June 2018.
NOTE 19:
CAPITAL AND OTHER COMMITMENTS
Below table shows the expenditure commitments for
Abra Project.
Within one year
Between 1 and 5 years
30 June 2018
$
141,921
315,014
456,935
30 June
2017
$
-
-
-
In the opinion of directors, there were no capital or other commitments as at 30 June 2018.
NOTE 20: OPERATING SEGMENTS
The Company has identified its operating segments based on the internal reports that are reviewed and used by
the board of directors (chief operating decision makers) in assessing performance and determining the allocation
of resources. Since the acquisition of the Abra Project, the company manages primarily on the basis of one
geographical segment being Australia, and two business segments being mineral exploration and treasury.
NOTE 21:
FINANCIAL RISK MANAGEMENT
The Company’s financial instruments consist mainly of deposits with banks, accounts receivable and accounts
payable.
The Board of Directors has overall responsibility for the oversight and management of the Company’s exposure to
a variety of financial risks (including market risk, credit risk and liquidity risk).
Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to
recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as
disclosed in the Statement of Financial Position and notes to the financial statements.
The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company’s
exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of
transactions is spread amongst approved counterparties.
The company does not have any collateral. Credit risk related to balances with banks and other financial institutions
is managed by the board. The board’s policy requires that surplus funds are only invested with counterparties with
a Standard & Poor’s rating of at least AA-. All of the Company’s surplus funds are invested with AA Rated financial
institutions.
The Company does not have any material credit risk exposure to any single receivable or Company of receivables
under financial instruments entered into by the Company.
– 50 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
__________________________________________________________________________________
NOTE 21:
FINANCIAL RISK MANAGEMENT
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The
Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity
to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses
or risking damage to the Company’s reputation.
The responsibility with liquidity risk management rests with the Board of Directors. The Company manages liquidity
risk by monitoring forecast cash flows and ensuring that adequate working capital is maintained. The Company’s
policy is to ensure that it has sufficient cash reserves to carry out its planned exploration activities over the next 12
months.
The table below reflects an undiscounted contractual maturity analysis for financial liabilities and receivables.
Financial liability and financial asset maturity analysis
2018
Weighted
Average Interest
Rate
1 year
or less
$
Between
1 & 2 years
$
Between 2 &
5 years
$
Total
$
Non Derivatives
Financial Assets
Cash and Cash Equivalents
Trade and Other Receivables
Financial Liabilities
Trade Payables
Net Financial Assets
2.18%
-
-
8,526,198
286,689
(945,412)
7,867,475
-
-
-
-
-
-
-
-
8,526,198
286,689
(945,412)
7,867,475
2017
Weighted
Average Interest
Rate
1 year
or less
$
Between
1 & 2 years
$
Between 2 &
5 years
$
Total
$
Non Derivatives
Financial Assets
Cash and Cash Equivalents
Trade and Other Receivables
Financial Liabilities
Trade Payables
Net Financial Assets
-
-
-
70,261
6,787
(26,702)
50,346
-
-
-
-
-
-
-
-
70,261
6,787
(26,702)
50,346
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Company’s income or the value of its holdings of financial instruments.
Interest rate risk
The Company manages interest rate risk by monitoring immediate and forecast cash requirements and ensuring
adequate cash reserves are maintained.
– 51 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
NOTE 21:
FINANCIAL RISK MANAGEMENT
Interest rate sensitivity analysis
The following table illustrates sensitivities to the consolidated entity’s exposures to changes in interest rates and
equity prices. These sensitivities assume that the movement in a particular variable is independent of other
variables.
Year ended 30 June 2018
+/- 1% interest rate
Year ended 30 June 2017
+/- 1% interest rate
Profit
$
Equity
$
+/- 85,262
+/- 85,262
+/- 703
+/- 703
Fair value of financial instruments
Unless otherwise stated, the carrying amount of financial instruments reflects their fair value.
NOTE 22:
INTEREST IN CONTROLLED ENTITIES
The consolidated financial statements incorporate the assets, liabilities and the results of the following subsidiary
in accordance with the accounting policy described in note 1:
Name
Country of
Incorporation
Class of share
Equity holding
30 June 2018
30 June 2017
Abra Mining Pty Ltd
Australia
Metal Range Ltd
Australia (i)
MR1 Holding Pty Ltd
Australia (i)
Ordinary
Ordinary
Ordinary
100%
100%
100% (ii)
-
-
-
(i) Both entities were incorporated in the current year and have no activity.
(ii) MR1 Holding is a wholly owned subsidiary of Metal Range Limited only.
– 52 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
NOTES TO THE FINANCIAL STATEMENTS
__________________________________________________________________________________
NOTE 23:
PARENT ENTITY INFORMATION
The accounting policies of the parent entity, which have been applied in determining the financial information
shown below, are the same as those applied in the consolidated financial statements.
STATEMENT OF FINANCIAL POSITION
ASSETS
Current Assets
Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Reserve
Retained Earnings
TOTAL EQUITY
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Loss for the year
Other comprehensive income
Total comprehensive income
2018
$
8,745,464
75,598
8,821,062
184,786
-
184,786
8,636,276
18,085,201
699,324
(10,148,249)
8,636,276
2018
$
(942,921)
-
(941,921)
The 2017 Comparative in the Statement of Profit or Loss and Other Comprehensive Income and Statement of
Financial Position is that of the parent only.
NOTE 24:
ASSET ACQUISITION
The acquisition of Abra Mining Pty Ltd during the financial year was determined to be an asset acquisition as Abra
Mining Pty Ltd did not constitute a business under Accounting Standards. The excess consideration paid over the
net assets of Abra Mining Pty Ltd totalling $3,500,000 becomes exploration expenditure on consolidation per Note
8.
– 53 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Galena Mining Limited, the directors of the company declare
that:
the financial statements, notes and the remuneration report in the Directors’ Report are in accordance with
1.
the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the financial position of the consolidated entity as at 30 June
2018 and of its performance, for the year ended on that date; and
complying with Australian Accounting Standards (including International Financial Reporting
Standards) and the Corporations Regulations 2001;
2.
in the directors' opinion there are reasonable grounds to believe that the company will be able to pay its
debts as and when they become due and payable;
This declaration has been made after receiving the declarations required to be made by the directors in accordance
with sections of 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Adrian Byass
Chairman
Perth, 20 September 2018
– 54 –
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF GALENA MINING LIMITED
Report on the Financial Report
Opinion
We have audited the accompanying financial report of Galena Mining Limited (the company), which comprises
the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit or
loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies
and other explanatory information, and the directors’ declaration of the company and the consolidated entity
comprising the company and the entities it controlled at the year’s end or from time to time during the financial
year.
In our opinion the financial report of Galena Mining Limited is in accordance with the Corporations Act 2001,
including:
i)
Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018
and of its performance for the year ended on that date; and
ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement. Our
responsibilities under those standards are further described in the Auditor’s Responsibility section of our
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the consolidated entity in accordance with 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.
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.
– 55 –
Impairment of exploration and evaluation expenditure
Why significant
How our audit addressed the key audit matter
As at 30 June 2018 the carrying value of
exploration and evaluation assets was $8,823,858
in Note 8. This
(2017: NIL), as disclosed
represents 49.6% of the total assets of the
consolidated entity.
The consolidated entity’s accounting policy in
respect of exploration and evaluation expenditure
is outlined in Note 1(f) and Note 1(t).
Significant judgement is required:
facts
determining whether
in
and
circumstances indicate that the exploration
and evaluation assets should be tested for
impairment in accordance with Australian
Accounting Standard AASB 6 Exploration for
and Evaluation of Mineral Resources (“AASB
6”); and
in determining the treatment of exploration
and evaluation expenditure in accordance
with AASB 6, and the consolidated entity’s
accounting policy. In particular:
o whether the particular areas of interest
meet the recognition conditions for an
asset; and
o which elements of exploration and
evaluation expenditures qualify
for
capitalisation for each area of interest.
Our work included, but was not limited to, the
following procedures:
Conducting a detailed review of management’s
assessment of
trigger events
impairment
prepared in accordance with AASB 6 including:
o assessing whether the rights to tenure of
the areas of interest remained current at
reporting date as well as confirming that
rights to tenure are expected to be renewed
for tenements that will expire in the near
future;
o obtaining representations from directors as
the status of ongoing exploration
to
programmes for the areas of interest, as
well as assessing if there was evidence
that a decision had been made
to
discontinue activities in any specific areas
of interest; and
o obtaining and assessing evidence of the
consolidated entity’s future intention for the
areas of interest, including reviewing future
budgeted expenditure and related work
programmes;
testing, on a sample basis, exploration and
evaluation expenditure incurred during the year
for compliance with AASB 6 and the
consolidated entity’s accounting policy; and
assessing the appropriateness of the related
disclosures in Note 1(f), Note 1(t) and Note 8.
– 56 –
Valuation of share based payments
Why significant
How our audit addressed the key audit matter
During the year the consolidated entity issued
6,250,000 options on a post-split basis to employees
as disclosed in Note 17. The consolidated entity has
determined that these options have a fair value at
grant date of $376,250 which is material in the
context of the current year’s performance.
The valuation of share based payments utilises
judgement in ascertaining the assumptions and
inputs used
the valuation model. These
assumptions and inputs are further described in Note
1 (t) and Note 17 to the financial report.
in
Our work included, but was not limited to:
- Reviewing the key inputs including strike
price, grant date fair value of the underlying
security, expiry period of the option and the
risk free rate adopted by the consolidated
entity;
- Performing
recalculations
the
on
consolidated entity’s volatility input; and
- Performing recalculation of the valuation
based on the consolidated entity’s inputs.
We also assessed the appropriateness of the Note
disclosures Note 1 (t) and Note 17.
– 57 –
Other Information
Other information is financial and non-financial information in the annual report of the consolidated entity which
is provided in addition to the Financial Report and the Auditor’s Report. The directors are responsible for Other
Information in the annual report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, the auditor does
not and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of
the Remuneration Report.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing
so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other Information in the
Financial Report and based on the work we have performed on the Other Information that we obtained prior
to the date of this Auditor’s Report we have nothing to report.
Directors’ Responsibilities 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 Note 1, the
Directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial report complies with International Financial Reporting Standards.
In preparing the financial report, the Directors are responsible for assessing the consolidated entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using a going
concern basis of accounting unless the Directors either intend to liquidate the consolidated entity or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. 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 and 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, individual or in 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 Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report.
The procedures selected depend on the auditor’s judgement, including assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true
and fair view 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 entity’s internal control.
– 58 –
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.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial
report.
We 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 consolidated entity’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 consolidated entity to cease to continue as a going concern.
We 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 obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the consolidated entity to express an opinion on the financial report. We are responsible for
the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.
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.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit
engagements. 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 key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2018.
Opinion
In our opinion, the Remuneration Report of Galena Mining Limited for the year ended 30 June 2018, complies
with section 300A of the Corporations Act 2001.
– 59 –
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.
PKF MACK
SIMON FERMANIS
PARTNER
20 SEPTEMBER 2018
WEST PERTH
– 60 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
SCHEDULE OF TENEMENTS
AS AT 31 AUGUST 2018
Schedule of Tenements
Tenement
Project
Location
Registered holder
% Interest
E52/1413
Jillawarra
E52/1455
Mulgul
E52/3575
Jillawarra
E52/3630
Mulgul
G52/0286
Camp
G52/0292
Mulgul
L52/0121
Airstrip
M52/0776
Mulgul
P52/1578
Jillawarra
L52/0194*
Mulgul
P52/1580*
JIllawarra
P52/1581*
JIllawarra
*Application only
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Galena Mining Limited
Galena Mining Limited
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Abra Mining Pty Ltd
100%
100%
100%
100%
100%
100%
100%
100%
100%
-*
-*
-*
– 61 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
SHAREHOLDER INFORMATION
The following additional information is required by the Australian Securities Exchange Ltd in respect of listed public
companies only. The information is current as at 6 September 2018.
1.
Shareholding
a.
(i)
b.
c.
Distribution of Shareholders
Ordinary share capital
- 336,564,520 fully paid shares held by 730 shareholders. All issued ordinary share carry one vote per
share and carry the rights to dividends.
Category (size of holding)
1 - 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Class of Equity Security
Number of Holders
23
Fully Paid Ordinary Shares
2,606
64
74
351
218
730
241,826
596,678
16,271,618
319,451,792
336,564,520
The number of shareholdings held in less than marketable parcels is 7
The Company had the following substantial shareholders listed in the holding company’s register at the
date of this report.
Fully Paid Ordinary Shares
Holder
Bloomgold Resources Pty Ltd
J P Morgan Nominees Australia Ltd
Number
82,250,000
18,556,952
Unlisted Options exercisable at $0.08 on 30 June 2021
Holder
Valiant Equity Management Pty Ltd
Kiandra Nominees Pty Ltd
Silverlight Holdings Pty Ltd
Mr Edward Turner
Number
5,000,000
5,000,000
5,000,000
1,250,000
%
24.44
5.51
%
27.78
27.78
27.78
6.94
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.
– 62 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
SHAREHOLDER INFORMATION
e.
20 Largest holders of quoted equity securities (fully paid ordinary shares)
Name
Bloomgold Resources Pty Ltd
J P Morgan Nominees Australia Ltd
Citicorp Nominees Pty Ltd
HSBC Custody Nominees Australia Ltd
Brispot Nominees Pty Ltd
Kiandra Nominees Pty Ltd
Fiona Van Den Berg
Zerrin Inv Pty Ltd
Silverlight Holdings Pty Ltd
Connor Michael Maloney
Valiant Equity Management Pty Ltd
UBS Nominees Pty Ltd
Tubechangers Pty Ltd
National Nominees Ltd
Grasmere Nominees Pty Ltd
National Nominees Ltd
Carrick Durrant Ryan
BNP Paribas Nom Pty Ltd
HSBC Custody Nom Aust Ltd
Valiant Equity Management Pty Ltd
Lake Springs Pty Ltd
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
19.
20.
Number Held
Percentage %
82,250,000
18,556,952
13,892,677
11,975,324
10,467,099
10,000,000
9,529,526
8,500,000
8,250,000
7,251,000
7,000,000
6,462,128
5,765,000
4,895,000
4,000,00
3,673,205
3,518,097
3,394,671
2,500,000
2,500,000
2,450,000
24.44
5.51
4.13
3.56
3.11
2.97
2.83
2.53
2.45
2.15
2.08
1.92
1.71
1.45
1.19
1.09
1.05
1.01
0.74
0.74
0.73
2.
The Name of the Company Secretary is Mr Stephen Brockhurst.
226,830,679
67.39
3.
4.
5.
The address of the registered office and principal place of business in Australia is Level 11, 216 St Georges
Terrace, Perth WA 6000. Telephone (08) 9481 0389.
Registers of securities are held at the following address:
Security Transfer Australia Pty Ltd
770 Canning Highway
Applecross WA 6153
Stock Exchange Listing
Quotation has been granted for all the ordinary shares of the company on the Australian Securities Exchange
Limited.
– 63 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
SHAREHOLDER INFORMATION
6.
Restricted Securities
The Company has the following restricted securities on issue as at the date of this report and post share-
split.
-
-
-
105,500,000 fully paid ordinary shares escrowed for 24 months from 30 August 2017;
10,500,000 unlisted options exercisable at $0.06 on or before 30 June 2020 held in escrow for 24
months from 7 September 2017;
16,750,000 unlisted options exercisable at $0.08 on or before 30 June 2021 held in escrow for 24
months from 7 September 2017;
7.
Unquoted Securities
The Company has the following unquoted securities on issue as at the date of this report
-11,750,000 options exercisable at $0.06 on or before 30 June 2020
-18,000,000 options exercisable at $0.08 on or before 30 June 2021
-5,000,000 options exercisable at $0.30 on or before 6 February 2021
– 64 –
Galena Mining Limited and Controlled Entities
ABN 63 616 317 778
ADDITIONAL INFORMATION FOR PUBLIC LISTED COMPANIES
Use of Funds
Between the date of listing on ASX and the date of this report the Company has used the cash and assets in a
form readily convertible to cash that it had at the time of admission in a way consistent with its business objectives
and as set out in the Prospectus dated May 2017.
Schedule of Tenements
Tenement
Project
Location
Registered holder
% Interest
E52/1413
Jillawarra
E52/1455
Mulgul
E52/3575
Jillawarra
E52/3630
Mulgul
G52/0286
Camp
G52/0292
Mulgul
L52/0121
Airstrip
M52/0776
Mulgul
P52/1578
Jillawarra
L52/0194*
Mulgul
P52/1580*
JIllawarra
P52/1581*
JIllawarra
*Application only
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Galena Mining Limited
Galena Mining Limited
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Abra Mining Pty Ltd
Abra Mining Pty Ltd
100%
100%
100%
100%
100%
100%
100%
100%
100%
-*
-*
-*
The Company has a 100% interest in the tenements. The transfer for all tenements has been effective upon the
Company official listing on the ASX and completing Abra Mining acquisition of the tenements listed in the table
above. The Department of Mines and Petroleum in WA, has transferred the title from Abra Mining Pty Ltd to the
Company effective September 2017.
– 65 –