Genesis Minerals Limited
and controlled entities
ABN 72 124 772 041
Annual Financial Report and Directors’
Report
for the year ended 30 June 2017
Genesis Minerals Limited and controlled entities
Corporate Directory
ABN 72 124 772 041
Directors
Richard Hill (Non-Executive Chairman)
Michael Fowler (Managing Director)
Darren Gordon (Non-Executive Director)
Craig Bradshaw (Non-Executive Director)
Company Secretary
Geoff James
Registered Office and Principal Place of Business
Unit 6, 1 Clive Street
WEST PERTH WA 6005
Telephone: +61 8 9322 6178
Postal Address
PO Box 937
WEST PERTH WA 6872
Share Register
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
PERTH WA 6000
Auditors
Bentleys
Level 3, 216 St Georges Terrace
PERTH WA 6000
Internet Address
www.genesisminerals.com.au
Email Address
info@genesisminerals.com.au
Securities Exchange Listing
Genesis Minerals Limited shares are listed on the Australian Securities Exchange (ASX code: GMD).
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Genesis Minerals Limited and controlled entities
Contents
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 Consolidated Financial Statements
Directors' Declaration
Independent Auditor’s Report to Members
ASX Additional Information
Mineral Resource Information
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Genesis Minerals Limited and controlled entities
Directors’ Report
Your directors submit their report on the consolidated entity (referred to hereafter as the Group) consisting of Genesis
Minerals Limited and the entities it controlled at the end of, or during, the year ended 30 June 2017.
DIRECTORS
The names and details of the Company's directors in office during the financial year and until the date of this report are as
follows. Directors were in office for this entire period unless otherwise stated.
Information on Directors
Richard Hill
Non-Executive Chairman (Appointed 13 February 2013)
Qualifications
BSc (Hons), B.Juris, LLB.
Experience
Mr Hill is a qualified solicitor and geologist with over 25 years experience in the Resource Industry.
During this period Mr Hill has performed roles as legal counsel, geologist and commercial manager
for several mid cap Australian mining companies and more recently as founding director for a series
of successful ASX-listed companies. Mr Hill was also co-founder of Resources fund, Westoria
Resource Investments. During his time in the resource industry Mr Hill has gained a diversity of
practical geological experience as a mine based and exploration geologist in a range of
commodities and rock types. In his commercial and legal roles, he has been involved in project
generation and evaluation, acquisition and joint venture negotiation, mining law and land access
issues as well as local and overseas marketing and fund raising.
Interest in shares
and options
Other directorships in
listed entities held in
the previous three
years
3,911,322 fully paid ordinary shares
2,000,000 options expiring 22 Dec 2017 ex at $0.017
Mr Hill resigned as a director of Centaurus Metals Limited on 4 July 2014
Mr Hill is a director of Strandline Resources Limited
Michael Fowler
Managing Director (Appointed 16 April 2007)
Qualifications
BSc, MSc, MAusIMM
Experience
Mr Fowler is a Geologist and holds a Bachelor of Applied Science degree majoring in Geology from
Curtin University and a Master of Science degree majoring in Ore Deposit Geology from the
University of Western Australia. Mr Fowler brings to the Board over 25 years experience as an
exploration and mining professional with extensive corporate and operational management skills in
the minerals industry in Australia, South America and Africa.
10,167,230 fully paid ordinary shares
2,000,000 options expiring 22 Dec 2017 ex at $0.017
Mr Fowler is a director of PolarX Limited (formerly Coventry Resources Limited)
Interest in shares
and options
Other directorships in
listed entities held in
the previous three
years
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Genesis Minerals Limited and controlled entities
Directors' Report
Darren Gordon
Non-Executive Director (Appointed 23 March 2016)
Qualifications
B.Bus, FCA, AGIA
Mr Gordon has more than 20 years’ experience in the Australian and international resource sector,
having held senior financial, corporate and executive roles with a number of ASX-listed exploration
and mining companies. During his career he has been involved in the acquisition, financing,
development and operation of iron ore, precious metal and base metal projects in Australia and
Brazil. Mr Gordon is currently Managing Director of Centaurus Metals (ASX: CTM) a position held
for the past 8 years. Prior to joining Centaurus, Mr Gordon was CFO of Gindalbie Metals Limited.
5,839,657 fully paid ordinary shares
Mr Gordon is a director of Centaurus Metals Limited
Experience
Interest in shares
and options
Other directorships
in listed entities held
in the previous three
years
Craig Bradshaw
Non-Executive Director (Appointed 7 September 2017)
Qualifications
B.Eng. (Mining)
Experience
Mr Bradshaw is a mining engineer with more than 22 years’ experience in the Australian and
international mining industry. During his career, he has held numerous senior operational and
executive roles with a range of companies and spanning several different commodities. He was
Chief Operating Officer for Saracen Mineral Holdings from 2013 to 2017, a leading mid-tier gold
producer. Prior to joining Saracen, Mr Bradshaw was Chief Operating Officer for Inter Mining and
Navigator Resources, Operations Manager at St Ives Gold Mines for Gold Fields Australia, Mining
Manager for Albidon at the Munali Nickel Project in Zambia and Chief Operating Officer for Fox
Resources. He also worked for WMC Limited at the Perseverance Nickel Mine and Leinster Nickel
Operations. He is currently the CEO of Adaman Resources, a privately owned resource
investment company.
Nil
None
Interest in shares
and options
Other directorships
in listed entities held
in the previous three
years
COMPANY SECRETARY
Geoff James
Appointed 20 October 2015
Qualifications
B.Bus, CA, AGIA
Experience
Mr James is a Chartered Accountant and member of the Governance Institute. He is an
experienced finance professional with over 20 years’ experience in senior management roles.
DIRECTORS' MEETINGS
Attendances by each director during the year were as follows:
Richard Hill
Michael Fowler
Darren Gordon
Craig Bradshaw (appointed 7 September 2017)
Notes
A – Number of meetings attended.
B – Number of meetings held during the time the director held office during the year.
4
Directors Meetings
A
7
7
7
-
B
7
7
7
-
Genesis Minerals Limited and controlled entities
Directors' Report
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were the mining and exploration of gold deposits in Western Australia.
DIVIDENDS
No dividend was declared or paid during the current or previous year.
OPERATING AND FINANCIAL REVIEW
Strategy
The Group has had a successful year in delivering its strategy to generate cash-flows from low-cost toll treatment mining
campaigns and to unlock value from its gold projects in Western Australia. The Group ended the year in a strong financial
position with exciting growth opportunities ahead for the Ulysses Gold Project and subsequent to the end of the financial year,
the Group exercised the option to acquire the Barimaia Gold Project.
Project Activities
Ulysses Gold Project
The Ulysses Gold Project is located in Western Australia, approximately 30km south of Leonora and 200km north of the
regional mining centre of Kalgoorlie. During the year the Company completed two open pit mining campaigns at Ulysses
West and a number of exploration programs on the broader Ulysses Gold Project. Ore from Ulysses West was processed
under a toll treatment arrangement at the Paddington Mill located 160km south of Ulysses along the Goldfields Highway.
Ulysses West Open Pit Mining Operations
Genesis completed two phases of open pit mining during the year at the Ulysses West Open Pit. Ore was mined to the
355mRL (~60m below surface). The first mining campaign was completed in late 2016 and a subsequent limited mining
campaign to extract high-grade material at the base of the pit was completed in May 2017. Approximately 57,000 wet tonnes
of ore grading ~4.5g/t gold were dispatched to the Paddington Mill for processing under a toll-milling agreement. The
recovered gold from processing totalled 6,917 ounces earning revenue of $11 million for the Company.
Mining Services
Open pit mining services for the first mining campaign were completed by the Company’s Mining Alliance partner, SMS
Innovative Mining Pty Ltd (“SMS”). Genesis received Shareholder approval on 22 September 2016 to issue $2.5 million worth
shares to SMS to satisfy mining costs incurred by the Company on the Ulysses West Operations. Under its agreement with
SMS, Genesis issued shares to SMS for the invoiced amounts as per the mining schedule and agreed mining services rates
to an aggregate of $2.5 million. Once this amount was reached, all further invoiced amounts were paid out of cash-flow.
Ore Treatment Agreement
Ore from the Ulysses West open pit was processed under a Toll Milling Agreement with Paddington Gold Pty Ltd
(“Paddington”), with the first batch (UW001) of five for the first phase of mining delivered to the Paddington Mill in November
2016. The final batch (UW005) was delivered in late December 2016 which completed the first mining campaign. For the
second phase of mining, a single batch (UW006) was delivered to the Paddington Mill in May 2017. Ore haulage to
Paddington was via the Goldfields Highway using Paddington’s preferred haulage contractor.
Genesis and Paddington agreed to detailed procedures to determine grade, metallurgical recoveries and moisture
determination to determine gold ounces recovered for each batch of ore. The final gold ounces recovered for each batch was
calculated based on dry tonnage, average assay grade and metallurgical recovery. These detailed procedures covered
stockpile management, tonnage estimation, crushing and sampling of ore via the dedicated sampling plant, and grade and
metallurgical analyses through a certified independent laboratory.
Ulysses Exploration
Exploration drilling programs were completed at Ulysses West, Ulysses East and under the main Ulysses Pit targeting further
resource extensions and new discoveries at Ulysses.
Ulysses West
Genesis completed a number of drilling programs during the year (see GMD ASX Releases October 3 and November 10,
2016) to extend mineralisation further to the west from the current Ulysses West pit along the interpreted Ulysses Shear zone.
Results from the programs included 10m @ 3.2g/t Au from 30m and 7m @ 3.6g/t Au from 40m. The drilling has defined a
continuous zone of mineralisation over a strike length of 140m at Ulysses West.
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Genesis Minerals Limited and controlled entities
Directors' Report
Ulysses East
Aircore drilling at Ulysses East during the first half of the year (see GMD ASX Releases November 10, 2016 and January 25,
2017) confirmed the presence of an extensive, coherent gold anomaly at Ulysses East, immediately to the east of the existing
Ulysses Gold Resource. The mineralised trend at Ulysses East cuts across the WNW trending stratigraphy. Including the
existing Ulysses Mineral Resource area, the Ulysses East gold anomaly now extends the total high-priority target zone to over
3km of strike.
Follow up Reverse Circulation (“RC”) drilling at Ulysses East completed in February (see GMD ASX Release April 12, 2017)
defined a coherent zone of east-west trending, north-dipping mineralisation over a strike length of 200m in the central portion
of the Ulysses East anomaly. This mineralisation remains completely open along strike and at depth, and to date has been
hosted entirely within basalt.
Best results from the drilling included:
•
•
•
•
•
•
9m @ 2.6 g/t gold from 76m
5m @ 2.3 g/t gold from 80m
18m @ 0.7 g/t gold from 57m
12m @ 1.4 g/t gold from 82m
12m @ 1.5 g/t gold from 51m
3m @ 2.3 g/t gold from 60m
A further program of RC drilling was completed in May 2017 (see GMD ASX Release July 3, 2017) to continue the first pass
evaluation of this emerging prospect. Drilling has now been completed on 100m and 200m spacing covering over 500m of
strike. Drilling has extended mineralisation to the west with positive results continuing to be returned including 5m @ 4.78 g/t
gold from 66m. Drilling on the eastern limit of the current RC coverage returned 5m @ 2.61g/t gold from 110m.
Orient Well NW Prospect
Aircore drilling completed at the Orient Well NW prospect, located ~10km east of the Ulysses Resource, targeted a similar
structural position to Ulysses but on the eastern side of the Ulysses-Orient Well mineralised corridor, in the zone where the
east-west trending stratigraphy changes orientation to ESE/SE (as opposed to the Ulysses area where it changes to a
WNW/NW trend).
Best results from Orient Well NW included 61m @ 0.70g/t gold (including 15m @ 2.15g/t gold) (see GMD ASX Release
April 12, 2017).
A one-off RC hole drilled in August 2017 to follow up a zone of anomalous gold intersected in previous aircore drilling returned
an outstanding intercept of 5m @ 22.2g/t gold from 95m and 20m @ 0.43g/t Au from 100m (see GMD ASX Release
September 6, 2017).
The intersections highlight the significant potential to define a large, gold mineralised system at Orient Well NW.
Mineralisation is hosted within a highly weathered and foliated felsic unit with quartz veining and iron oxide after sulphide.
The style of mineralisation has similarities to the Orient Well deposit located about 2km to the south-east. The orientation and
geometry of the mineralisation is unclear but a NW trend to the overall strike of the mineralisation is interpreted. The Orient
Well NW prospect sits in a similar structural position to Ulysses.
Ulysses North and NW Prospects
Wide-spaced aircore drilling was completed at several new areas including Ulysses North, located immediately north of the
Ulysses Resource, and Ulysses NW, located ~4km north-west of the Ulysses Resource (see GMD ASX Release April 12,
2017).
Drilling successfully intersected mineralised zones with drilling results including:
•
•
•
5m @ 2.3 g/t gold from 45m
4m @ 1.6 g/t gold from 70m
5m @ 1.99 g/t gold from 55m
Updated Mineral Resource Estimate
Genesis announced an updated Mineral Resource estimate for the Ulysses Project during the year, which delivered a
substantial increase in the Project’s gold inventory.
The updated Measured, Indicated and Inferred Mineral Resource now totals 2.8 million tonnes at an average grade of
2.3g/t for 206,400 ounces, which represents a 32% increase in resource tonnes and 36% increase in contained ounces
compared with the February 2016 Mineral Resource. The resource remains open and untested at depth.
The updated Mineral Resource incorporates the results of drilling completed over the past year. It also follows the success of
the two open pit mining campaigns completed at Ulysses.
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Genesis Minerals Limited and controlled entities
Directors' Report
A summary of the 2017 Ulysses Mineral Resource is shown in Table 1 below:
Table 1: Ulysses Gold Deposit – May 2017 Mineral Resource (0.75g/t Cut-off)
Measured
Indicated
Inferred
Type
Tonnes
(t)
7,000
8,000
10,000
26,000
Au Cut
(g/t)
2.0
2.6
5.3
3.4
Oxide
Transition
Fresh
Total
NB. Rounding differences may occur.
Tonnes
(t)
176,000
392,000
1,285,000
1,853,000
Au Cut
(g/t)
1.7
1.8
2.7
2.4
Tonnes
(t)
79,000
172,000
674,000
924,000
Au Cut
(g/t)
1.5
1.7
2.2
2.0
Tonnes
(t)
262,000
573,000
1,968,000
2,803,000
Total
Au Cut
(g/t)
1.6
1.8
2.5
2.3
Cut
Ounces
13,800
32,900
159,700
206,400
The updated Mineral Resource was independently estimated by Payne Geological Services Pty Ltd (“PayneGeo”). Full
details of the Mineral Resource estimate are provided in the Company’s ASX Announcement dated May 8, 2017.
Ulysses Resource Depth Extensions
An RC drilling program was completed at the Ulysses Gold Project in May 2017. The wide-spaced drilling covered a 2km
strike length of the currently known Ulysses mineralisation and was designed to scope out the broader potential of the overall
gold system.
In particular, drilling targeted the down-plunge extents of the existing Ulysses Mineral Resource and extensions to the Ulysses
and Ulysses West open pits. Full details of the RC drilling results are provided in the Company’s ASX Announcement dated
July 3, 2017.
Three holes were drilled to test the interpreted down-plunge extents of the existing Mineral Resource. All three holes were
successful and drilling has confirmed the presence of significant mineralisation at depth (150 to 200m below surface) which
opens up a significant area for exploration and potential underground mining if exploration is successful. Drilling below the
existing pits was completed over an 800m strike length, demonstrating the overall scale of the gold system at Ulysses.
Results from the drilling included:
•
•
•
7m @ 4.11g/t gold from 153m
4m @ 6.11g/t gold from 177m
3m @ 1.87g/t gold from 220m and 2m at 3.34g/t Au from 246m
A follow-up RC drilling program was completed in August 2017 which confirmed that the Ulysses West shoot has a plunge
extent of more than 400 metres and remains open at depth, with the recent drilling continuing to improve the Company’s
understanding of the geological controls on the high-grade mineralisation (see GMD ASX Release September 6, 2017).
The new results all sit outside the 206,400oz Mineral Resource and open up a significant untested area to be targeted by
further drilling.
Results returned from the recent drilling campaign included:
•
•
•
•
•
•
•
7m @ 4.69g/t gold from 152m
10m @ 6.42g/t gold from 128m
o
including 2m @ 16.3g/t gold
10m @ 1.70g/t gold from 129m
6m @ 6.06g/t gold from 170m
o
5m @ 2.55g/t gold from 184m
5m @ 2.44g/t gold from 60m
2m @ 4.73g/t gold from 200m
including 2m @ 16.8g/t gold
On the strength of the results from the deeper drilling, Genesis completed a positive Scoping Study which confirmed the
potential of an underground mine at Ulysses assuming a toll-treatment of ore as the base case scenario (see GMD ASX
Release September 21, 2017). Genesis has now commenced a Feasibility Study on the development of a long-term
standalone underground operation.
Viking Gold Project
The Viking Gold Project is located in Western Australia, approximately 30km south-east of Norseman. Previous exploration at
the Viking Project has delineated several advanced gold prospects, including the Beaker 2 and Beaker 4 prospects and Dr
Bunsen geochemical anomaly. During the year two aircore drilling programs were completed (November and March) to test
these prospects (see GMD ASX Releases December 13, 2016 and May 18, 2017)
Beaker 2
The standout result from the November 2016 program was an oxide intercept of 5m at 44.5g/t Au from 50m. Subsequent re-
sampling at 1m intervals of this drill hole result returned an exceptional intercept of 6m @ 64.0g/t gold, including 1m @
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Genesis Minerals Limited and controlled entities
Directors' Report
213g/t gold from 52m and 1m @ 105g/t gold from 55m.
Results from the March 2017 drilling campaign included:
•
•
•
•
•
5m @ 19.8g/t gold from 40m
5m @ 1.93g/t gold from 55m
10m @ 0.96g/t gold from 25m
5m @ 0.58g/t gold from 20m
5m @ 1.08g/t gold from 20m
The results have defined a Resource Target Zone extending over a strike length of 500m and a width of 100m which is
oriented in a north-easterly direction. The latest drilling has also extended the 1.5km long Beaker 2 anomaly a further 125m
to the north, with the mineralisation remaining open to the north and south. The anomaly remains undrilled to the north-east
along the interpreted strike of the Beaker 2 prospect.
The mineralisation defined to date at Beaker 2 has a north-east orientation, coincident with an interpreted north-east trending
structure defined in the detailed magnetics. Importantly, all of the mineralisation intersected at the Beaker 2 prospect to date
occurs in the oxide (supergene zone). The potential for a primary mineralisation source remains to be tested, and this
remains an exciting opportunity for the Company.
Beaker 4
Three-open ended mineralised trends (+2km) were targeted by the November aircore program, with a best result of 5m @
0.1g/t gold intersected 400m north of previous drilling. This drilling has extended the target zone to the north and future
drilling will look for further potential extensions with aircore drilling to the north and south.
Dr Bunsen
Results from the November aircore drilling at the strike extensive Dr Bunsen anomaly were only weakly anomalous and the
results have downgraded the zones drilled in terms of their immediate gold mineralisation potential.
Barimaia Gold Project
In May 2017, Genesis secured an Option Agreement over the highly prospective Barimaia Gold Project, located in the
Murchison district of Western Australia, opening up an exciting new front for its gold exploration and growth activities.
The Option Agreement was signed with private company, Metallo Resources Pty Ltd (Metallo), and provides Genesis with an
attractive, low risk opportunity to assess a highly prospective ground package located just 10km south-east of the 6Moz Mt
Magnet Gold Mine, operated by ASX listed, Ramelius Resources Limited. Metallo holds the right to earn-in to an initial 65%
interest in the Barimaia Gold Project (the Mt Magnet JV), with the potential to earn up to a maximum 80% stake.
The Company considers the Barimaia Project to offer the potential for the discovery of large, low strip ratio porphyry-hosted
gold deposits.
The project’s close proximity to Mt Magnet and the various gold processing facilities in the region provides a potential low-cost
pathway to production should an economic discovery be made.
RC drilling was completed to test the McNabs Prospects and aircore drilling was completed to link the previously identified
porphyry intrusions at the McNabs, McNabs East and McNabs SW prospects and to extend the porphyry system to the north,
south and east (see GMD ASX Announcements dated July 20 and August 21, 2017).
The drilling has identified three large bedrock gold targets associated with the McNabs porphyry system, with assay results
from RC drilling returning impressive thick high-grade gold intercepts including hits of up to 17m at 3.36g/t Au from 49m and
9m at 18.8g/t Au from 75m.
Results from the aircore drilling program have confirmed an extensive area of anomalous gold mineralisation over a 1.0km x
1.5km area centred on the McNabs and McNabs East Prospects. Significant results from the aircore drilling program include
5m @ 1.77g/t gold from 40m, 14m @ 0.24g/t gold from 15m and 5m @ 0.53g/t gold from 15m.
Following the very positive results generated by the exploration program outlined above, Genesis announced on August 21,
2017 of its intention to proceed with the option to acquire Metallo subject to completing the final conditions of the Option
Agreement. The acquisition was completed on 19 September 2017 for consideration of $250,000 by means of issuing
11,363,636 shares at $0.022 per share.
COMPETENT PERSONS STATEMENTS
The information in this report that relates to Exploration Results is based on information compiled by Mr. Michael Fowler who is a full-time
employee of the Company, a shareholder of Genesis Minerals Limited and is a member of the Australasian Institute of Mining and Metallurgy.
Mr. Fowler has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity
being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves’. Mr. Fowler consents to the inclusion in the report of the matters based on his information in
the form and context in which it appears.
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Genesis Minerals Limited and controlled entities
Directors' Report
The Information in this report that relates to Mineral Resources is based on information compiled by Mr Paul Payne, a Competent Person who
is a Member of the Australasian Institute of Mining and Metallurgy. Mr Payne is a full-time employee of Payne Geological Services and is a
shareholder of Genesis Minerals Limited. Mr Payne has sufficient experience that is relevant to the style of mineralisation and type of deposit
under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Payne consents to the inclusion in the report of the
matters based on his information in the form and context in which it appears.
Finance Review
The Group recorded an operating loss after income tax for the year ended 30 June 2017 of $718,341 (2016: $2,220,550).
The significant decrease in the loss compared to the previous year was due to profitable mining campaigns carried out at the
Ulysses Project during the year.
At 30 June 2017 cash assets available totalled $4,155,593 (2016: $711,989).
The net assets of the consolidated entity increased from $424,518 in 2016 to $4,361,048 at June 30 2017. This increase is
largely attributable to issues of equity during the year of $4,619,673 (net of costs). This is offset by the operating loss
recorded for the year.
Operating Results for the Year
Summarised operating results are as follows:
2017
2016
Revenues
$
Results
$
Revenues
$
Results
$
Group revenues and loss from ordinary activities before
income tax expense
11,043,022
(718,341)
6,486
(2,220,550)
Shareholder Returns
Basic and diluted loss per share (cents)
2017
(0.10)
2016
(0.49)
Factors and Business Risks Affecting Future Business Performance
The following factors and business risks could have a material impact on the Group’s success in delivering its strategy:
Access to Funding
The Group’s ability to successfully develop projects is contingent on the ability to fund those projects from operating cash
flows or through affordable debt and equity raisings.
Exploration and Development
The business of exploration, project development and ultimately production, by its nature, contains elements of significant risk
with no guarantee of success. Ultimate and continued success of these activities is dependent on many factors such as:
discovery of economically recoverable ore reserves;
access to adequate capital for project development;
design and construction of efficient development and production infrastructure within capital expenditure budgets;
securing and maintaining title to interests;
obtaining necessary consents and approvals;
access to competent operational management and appropriately skilled personnel;
•
•
•
•
•
•
• mining risks;
•
•
•
operating risks;
environmental risks; and
financial risks.
Commodity Prices and Exchange Rates
Commodity prices fluctuate according to changes in demand and supply. The Group is exposed to changes in commodity
prices, which could affect the profitability of the Group’s projects. Significant adverse movements in commodity prices could
also affect the ability to raise debt and equity to fund exploration and development of projects. The Group will be exposed to
changes in the US Dollar. Gold sales are denominated in US Dollars.
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Genesis Minerals Limited and controlled entities
Directors' Report
SHARES UNDER OPTION
At the date of this report there are 6,000,000 unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Movements of share options during the year
Expired on 10 December 2016, exercisable at 3.2 cents
Total number of options outstanding as at 30 June 2017 and the date of this report
The balance is comprised of the following:
Number of options
27,250,000
(21,250,000)
6,000,000
Expiry date
Exercise price (cents)
Number of options
22 December 2017
1.7
6,000,000
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any
share issue of any other body corporate.
INSURANCE OF DIRECTORS AND OFFICERS
During or since the financial year, the company has paid premiums insuring all the directors of Genesis Minerals Limited
against costs incurred in defending proceedings for conduct involving:
(a) a wilful breach of duty; or
(b) a contravention of sections 182 or 183 of the Corporations Act 2001,
as permitted by section 199B of the Corporations Act 2001.
The contract of insurance prohibits disclosure of the amount of the premium paid.
NON-AUDIT SERVICES
There were no non-audit services provided by the entity's auditor, Bentleys, or associated entities.
RISK MANAGEMENT
The board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are
aligned with the risks and opportunities identified by the board.
The Group believes that it is crucial for all board members to be a part of this process, and as such the board has not
established a separate risk management committee.
The board has a number of mechanisms in place to ensure that management's objectives and activities are aligned with the
risks identified by the board. These include the following:
• Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders needs and
manage business risk.
Implementation of board approved operating plans and budgets and board monitoring of progress against these budgets.
•
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The Group raised $1,710,000 through the issue of 68,400,000 ordinary shares in total to institutional and sophisticated
investors during the year. Drilling expenses of $25,000 were paid for via the issue of 1,000,000 ordinary shares. 100 million
shares were issued to SMS Innovative Mining Pty Ltd during the period in lieu of $2,500,000 of mining services. The value
of the shares on measurement date was $2,941,486 and the excess of $441,486 was expensed to Share Base Payments.
AFTER BALANCE DATE EVENTS
Genesis announced on September 7, 2017 the appointment of Craig Bradshaw as a non-executive Director.
Genesis announced on September 19, 2017 the completion of the acquisition of Metallo Resources Pty Ltd (Metallo) for
consideration of $250,000 by means of issuing 11,363,636 shares at $0.022 per share. Metallo holds the right to earn-in to
an initial 65% interest in the Barimaia Gold Project (the Mt Magnet JV), with the potential to earn up to a maximum 80%
stake.
Other than the above, no matters or circumstances have arisen since the end of the financial year which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the
Group in future financial years.
10
Genesis Minerals Limited and controlled entities
Directors' Report
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
All information regarding likely developments and expected results is contained in the “Operating and Financial Review”
section in this report.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group is subject to significant environmental regulation in respect to its exploration activities.
The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of
and is in compliance with all environmental legislation. The directors of the Group are not aware of any breach of
environmental legislation for the year under review.
The directors have considered the National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduces a
single national reporting framework for the reporting and dissemination of information about greenhouse gas emissions,
greenhouse gas projects, and energy use and production of corporations. At the current stage of development, the directors
have determined that the NGER Act will have no effect on the Group for the current, nor subsequent, financial year. The
directors will reassess this position as and when the need arises.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility
on behalf of the Company for all or any part of those proceedings.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 16.
CORPORATE GOVERNANCE
A copy of Genesis’ 2017 Corporate Governance Statement, which provides detailed information about governance, and a
copy of Genesis’ Appendix 4G which sets out the Company’s compliance with the recommendations in the third edition of the
ASX Corporate Governance Council’s Principles and Recommendations is available on the corporate governance section of
the Company’s website at http://www.genesisminerals.com.au/governance.php
REMUNERATION REPORT (AUDITED)
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act
2001.
REMUNERATION POLICY
The remuneration policy of Genesis Minerals Limited has been designed to align director and executive objectives with
shareholder and business objectives by providing a fixed remuneration component and offering specific long-term
incentives based on key performance areas affecting the Group's financial results. The Board of Genesis Minerals
Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best
executives and directors to run and manage the Group.
The Board's policy for determining the nature and amount of remuneration for board members and senior executives of the
Group is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was
developed by the Board. All executives receive a base salary (which is based on factors such as length of service and
the Group's
experience) and superannuation. The Board reviews executive packages annually by reference to
performance, executive performance and comparable information from industry sectors and other listed companies in similar
industries.
The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to
attract the highest calibre of executives and reward them for results in long-term growth in shareholder wealth.
Executives are also entitled to participate in employee share and option arrangements.
The executive directors and executives receive a superannuation guarantee contribution required by the government, which
is currently 9.5% (unless otherwise stated), and do not receive any other retirement benefits.
11
Genesis Minerals Limited and controlled entities
Directors' Report
All remuneration paid to directors and executives is valued at the cost to the Group and expensed. Options are valued using
the Black-Scholes methodology.
The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment
and responsibilities. The Board determines payments to the Non-Executive Directors and reviews their remuneration
annually, based on market practice, duties and accountability. Independent external advice is sought when required. The
maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders
at the Annual General Meeting (currently $300,000). Fees for non-executive directors are not linked to the performance of the
Group. However, to align directors' interests with shareholder interests, the directors are encouraged to hold shares in the
Group and are able to participate in the employee option plan.
PERFORMANCE BASED REMUNERATION
The Group currently has no performance based remuneration component built into Director and Executive remuneration
packages.
GROUP PERFORMANCE, SHAREHOLDER WEALTH AND DIRECTORS' AND EXECUTIVES' REMUNERATION
The remuneration policy has been tailored to increase the direct positive relationship between shareholders' investment
objectives and Directors and Executive's performance. The Group plans to facilitate this process by directors and executives
participating in future option issues to encourage the alignment of personal and shareholder interests. The Group believes
this policy will be effective in increasing shareholder wealth.
Due to the stage of the Group’s development, no link has been established between remuneration and financial performance.
Over the past 5 years, the Group’s activities have primarily been involved with mineral exploration and pre-development
activities, with a small-scale mining campaign completed during the 2017 financial year. Shareholder wealth is dependent
upon exploration success and has fluctuated accordingly in addition to being influenced by broader market factors.
The table below sets out the performance of the Group and the movement in the share price:
Net Loss
Share Price at Start of Year
Share Price at End of Year
2017
$
(718,341)
$0.019
$0.016
2016
$
2015
$
2014
$
2013
$
(2,220,550)
$0.006
$0.019
(1,527,678)
$0.021
$0.006
(1,757,105)
$0.020
$0.021
(2,952,294)
$0.080
$0.020
USE OF REMUNERATION CONSULTANTS
The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2017.
VOTING AND COMMENT MADE ON THE GROUP'S 2016 ANNUAL GENERAL MEETING
The Company received 99.89% of “yes” votes on its remuneration report for the 2016 financial year. The Company did not
receive any specific feedback at the AGM or throughout the year on its remuneration practices.
DETAILS OF REMUNERATION
Details of the remuneration of the directors and the key management personnel of the Group are set out in the following table.
The key management personnel of the Group comprise the directors. Given the size and nature of operations of the Group,
there are no other employees who are required to have their remuneration disclosed in accordance with the Corporations Act
2001.
Key management personnel compensation
Short-term benefits
Post-employment benefits
Share-based payments
2017
$
340,733
23,467
-
364,200
2016
$
286,412
20,000
81,582
387,994
12
Genesis Minerals Limited and controlled entities
Directors' Report
Key management personnel of the Group
Post
Employment
Share-Based Payments
Total
Proportion of
Remuneration
Represented by
Share-Based
Payments
Superannuation
$
Shares
$
Options
$
$
%
Short-Term
Salary
& Fees
$
-
-
23,467
20,000
67,5551
54,500
234,6672
200,000
Directors
Richard Hill
2017
2016
Michael Fowler
2017
2016
Darren Gordon
2017
2016
Damian Delaney
2017
2016
2017
2016
1. R Hill - includes additional consultancy fees of $12,555
2. M Fowler - includes payment of unused leave entitlements of $34,667
3. D Gordon - includes additional consultancy fees of $5,661
4. D Gordon – appointed as Director on 23 March 2016
5. D Delaney – resigned as Director on 23 March 2016
-
22,5005
340,733
286,412
-
-
23,467
20,000
38,5113
9,4124
-
-
-
-
-
-
-
-
-
-
-
-
-
27,194
-
27,194
-
-
-
27,194
-
81,582
67,555
81,694
258,134
247,194
38,511
9,412
-
49,694
364,200
387,994
-
33.3%
-
11.0%
-
-
-
54.7%
Service agreements
On appointment to the Board, all non-executive directors enter into a service agreement with the Group in the form of a letter
of appointment. The letter summarises the Board policies and terms, including compensation, relevant to the office of
director.
Mr Fowler is entitled to a minimum notice period of three months from the Company and the Company is entitled to a
minimum notice period of three months from Mr Fowler.
Under the Agreement, Mr Michael Fowler is engaged by the Company to provide services to the Company in the capacity of
Managing Director and CEO.
In September 2014, Mr Fowler’s salary was set at $200,000 per annum plus 10% superannuation.
Equity instrument disclosures relating to key management personnel
Options provided as remuneration and shares issued on exercise of such options
No options were issued during the year. 2016: (6,000,000 were issued, valued at $81,582).
Details of the vesting profiles of the options granted as remuneration to key management personnel of the Group are
detailed below:
Directors
Number of
Options
Issued
Grant
Date
Expiry
Date
Exercise
Price
Richard Hill
Michael Fowler
Damian Delaney1
2,000,000
2,000,000
2,000,000
22/12/15
22/12/15
22/12/15
22/12/17
22/12/17
22/12/17
$0.017
$0.017
$0.017
Fair Value
Per Option
at Grant
Date
$0.0136
$0.0136
$0.0136
Year in
Which
Grant
Vested
%
Vested
During
2017
%
Forfeited
During
2017
2016
2016
2016
-
-
-
-
-
-
1. D Delaney – resigned as Director on 23 March 2016
Option holdings
The numbers of options over ordinary shares in the Company held during the financial year by each director of Genesis
Minerals Limited and other key management personnel of the Group, including their personally related parties, are set out
below:
13
Genesis Minerals Limited and controlled entities
Directors' Report
2017
Balance at
start of the
year
Granted as
compensation Exercised
Other
changes
Balance at end
of the year
Vested and
exercisable
Directors of Genesis Minerals Limited
Options
Richard Hill
Michael Fowler
Darren Gordon
2,312,500
2,937,500
312,500
5,562,500
-
-
-
-
-
-
-
-
(312,500)
(937,500)
(312,500)
(1,562,500)
2,000,000
2,000,000
-
4,000,000
2,000,000
2,000,000
-
4,000,000
2016
Balance at
start of the
year
Granted as
compensation Exercised
Other
changes
Balance at end
of the year
Vested and
exercisable
Directors of Genesis Minerals Limited
Options
Richard Hill
Michael Fowler
Darren Gordon
Damian Delaney
625,000
1,875,000
-
2,500,000
5,000,000
1. Balance on appointment on 23 March 2016.
2. Balance on resignation on 23 March 2016.
Share based compensation
2,000,000
2,000,000
-
2,000,000
6,000,000
(312,500)
(937,500)
-
(1,250,000)
(2,500,000)
-
-
312,5001
-
312,500
2,312,500
2,937,500
312,500
3,250,0002
8,812,500
2,312,500
2,937,500
312,500
3,250,000
8,812,500
No shares were issued to directors in lieu of fees and salary during the year. 2016: (nil).
Share holdings
The numbers of shares in the Company held during the financial year by each director of Genesis Minerals Limited and other
key management personnel of the Group, including their personally related parties, are set out below. There were no shares
granted during the reporting period as compensation.
2017
Directors of Genesis Minerals Limited
Ordinary shares
Richard Hill
Michael Fowler
Darren Gordon
2016
Directors of Genesis Minerals Limited
Ordinary shares
Richard Hill
Michael Fowler
Darren Gordon
Damian Delaney
1. Balance on appointment on 23 March 2016.
2. Balance on resignation on 23 March 2016.
Balance at
start of the
year
Received during
the year on the
exercise of options
Other
changes
during the
year
Balance at
end of the
year
3,511,322
9,967,230
5,839,657
19,318,209
-
-
-
-
400,000
3,911,322
200,000 10,167,230
5,839,657
600,000 19,918,209
-
Balance at
start of the
year
Received during
the year on the
exercise of options
Other
changes
during the
year
Balance at
end of the
year
3,198,822
9,029,730
-
7,002,292
19,230,844
312,500
937,500
-
1,250,000
2,500,000
3,511,322
-
9,967,230
-
5,839,6571
5,839,657
5,830,034 14,082,3262
11,669,691 33,400,535
14
Genesis Minerals Limited and controlled entities
Directors' Report
Loans to key management personnel
There were no loans to key management personnel during the year. 2016: (nil).
Other key management personnel transactions with Directors and Director-related entities
There were no other transactions with key management personnel during the year. 2016: (nil).
END OF REMUNERATION REPORT
This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board
of Directors.
Michael Fowler
Managing Director
Perth, 27 September 2017
15
To The Board of Directors
Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001
As lead audit director for the audit of the financial statements of Genesis Minerals
Limited for the financial year ended 30 June 2017, I declare that to the best of my
knowledge and belief, there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
any applicable code of professional conduct in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
DOUG BELL CA
Director
Dated at Perth this 27th day of September 2017
Genesis Minerals Limited and controlled entities
Consolidated Statement of Profit or Loss and
Comprehensive Income
YEAR ENDED 30 JUNE 2017
REVENUE
OTHER INCOME
EXPENDITURE
Mining costs
Salaries and employee benefits expense
Exploration expenses
Corporate expenses
Administration costs
Depreciation expense
Share based payments expense
Notes
2017
$
2
3
11,043,022
21,986
(8,927,960)
(329,310)
(1,590,975)
(213,167)
(279,514)
(937)
(441,486)
2016
$
6,486
-
-
(331,701)
(1,546,716)
(125,739)
(138,926)
(2,372)
(81,582)
LOSS BEFORE INCOME TAX
(718,341)
(2,220,550)
INCOME TAX BENEFIT/(EXPENSE)
4
-
-
LOSS FOR THE YEAR
(718,341)
(2,220,550)
OTHER COMPREHENSIVE (LOSS)/INCOME
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Reclassification adjustments relating to foreign operations disposed of
during the year
Other comprehensive (loss)/income for the year, net of tax
11
11
(3,292)
38,490
35,198
(8,260)
-
(8,260)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE
TO MEMBERS OF GENESIS MINERALS LIMITED
(683,143)
(2,228,810)
Basic and diluted loss per share (cents per share)
12
(0.10)
(0.49)
The above Consolidated Statement of Profit or Loss and Comprehensive Income should be read in conjunction with the Notes to the
Consolidated Financial Statements.
17
Genesis Minerals Limited and controlled entities
Consolidated Statement of Financial Position
AT 30 JUNE 2017
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Notes
5
6
7
8
9
2017
$
4,155,593
1,126,218
5,281,811
8,986
8,986
2016
$
711,989
65,860
777,849
9,454
9,454
5,290,797
787,303
827,650
102,099
929,749
929,749
279,585
83,200
362,785
362,785
4,361,048
424,518
10
11
24,118,945
1,271,927
(21,029,824)
19,499,272
1,236,729
(20,311,483)
4,361,048
424,518
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated Financial
Statements.
18
Genesis Minerals Limited and controlled entities
Consolidated Statement of Changes in Equity
YEAR ENDED 30 JUNE 2017
Notes
Ordinary
Share
Capital
$
Accumulated
Losses
$
Foreign
Currency
Translation
Reserve
$
Options
Reserve
$
Total
$
BALANCE AT 1 JULY 2015
16,691,573
(18,090,933)
(26,938)
1,190,345
(235,953)
Loss for the year
-
(2,220,550)
-
-
(2,220,500)
OTHER COMPREHENSIVE LOSS
Exchange differences on translation of
foreign operations
11
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS IN
THEIR CAPACITY AS OWNERS
-
-
-
(2,220,550)
(8,260)
(8,260)
Shares issued during the year
Share issue transaction costs
10
10
2,892,956
(85,257)
Share based payments
-
-
-
-
-
-
-
Sub-total
2,807,699
(2,220,550)
(8,260)
-
-
-
-
81,582
81,582
(8,260)
(2,228,810)
2,892,956
(85,257)
81,582
660,471
BALANCE AT 30 JUNE 2016
19,499,272
(20,311,483)
(35,198)
1,271,927
424,518
BALANCE AT 1 JULY 2016
19,499,272
(20,311,483)
(35,198)
1,271,927
424,518
Loss for the year
OTHER COMPREHENSIVE LOSS
Exchange differences on translation of
foreign operations
11
Reclassification adjustments relating
to foreign operations disposed of
during the year
11
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS IN
THEIR CAPACITY AS OWNERS
-
-
-
-
(718,341)
-
-
-
(718,341)
(3,292)
38,490
35,198
Shares issued during the year
Share issue transaction costs
10
10
4,676,486
(56,813)
Share based payments
-
-
-
-
Sub-total
4,619,673
(718,341)
BALANCE AT 30 JUNE 2017
24,118,945
(21,029,824)
-
-
-
-
-
-
-
-
-
-
-
-
-
(718,341)
(3,292)
38,490
(683,143)
4,676,486
(56,813)
-
3,936,530
1,271,927
4,361,048
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial
Statements.
19
Genesis Minerals Limited and controlled entities
Consolidated Statement of Cash Flows
YEAR ENDED 30 JUNE 2017
Notes
2017
$
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from gold sales
Payments to suppliers and employees
Payments for mining activities
Payments for exploration expenditure
Interest received
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
22
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of subsidiary, net of cash disposed
Payments for plant and equipment
NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares
Payments for share issue costs
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
10,900,338
(1,208,215)
(6,360,555)
(1,676,981)
27,160
1,681,747
112,915
(4,713)
108,202
1,710,000
(56,813)
1,653,187
3,443,136
711,989
468
2016
$
-
(667,082)
-
(1,179,760)
6,486
(1,840,356)
-
(5,823)
(5,823)
2,540,957
(85,257)
2,455,700
609,521
110,830
(8,362)
CASH AND CASH EQUIVALENTS AT THE END OF THE
FINANCIAL YEAR
5
4,155,593
711,989
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial Statements.
20
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the
Group consisting of Genesis Minerals Limited and its subsidiaries (“the Group”). The financial statements are presented in
Australian dollars. Genesis Minerals Limited is a company limited by shares, domiciled and incorporated in Australia. The
financial statements were authorised for issue by the directors on 27 September 2017. The directors have the power to
amend and reissue the financial statements.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Genesis Minerals
Limited is a for-profit entity for the purpose of preparing the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the Genesis Minerals Limited Group also comply with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
(ii) New and amended standards adopted by the Group
None of the new standards and amendments to standards that are mandatory for the first time for the financial year
beginning 1 July 2016 affected any of the amounts recognised in the current period or any prior period and are not likely to
affect future periods.
(iii) Early adoption of standards
The Group has not elected to apply any pronouncements before their operative date in the annual reporting period
beginning 1 July 2016.
(iv) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of
available-for-sale financial assets, which have been measured at fair value.
(v) Going concern
The accounts have been prepared on the going concern basis, which contemplates continuity of normal business activities
and the realisation of assets and settlement of liabilities in the ordinary course of business. The Group incurred a loss
from ordinary activities of $718,341 for the year ended 30 June 2017 (2016: $2,220,550). Included within this loss was
mining costs of $8,927,960 (of which $2,500,000 were non-cash share based payments) (2016: $nil) and exploration
expenditure of $1,590,975 (2016: $1,546,716).
The net working capital surplus position of the Group at 30 June 2017 was $4,352,062 (2016: $415,064). The Group has
expenditure commitments relating to work programme obligations of their assets of $417,500 which could potentially fall
due in the twelve months to 30 June 2018.
The Directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows to meet all
commitments and working capital requirements for the 12 month period from the date of signing this financial report.
Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that the going concern
basis of preparation is appropriate.
(b) Principles of consolidation
The financial statements incorporate the assets, liabilities and results of entities controlled by Genesis Minerals Limited at
the end of the reporting period. A controlled entity is any entity over which Genesis Minerals Limited has the power to
govern the financial and operating policies so as to obtain benefits from its activities. Control will generally exist when the
parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the
power to govern, the existence and effect of holdings of actual and potential voting rights are also considered.
A list of controlled entities is contained in Note 20 to the financial statements.
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the financial statements
as well as their results for the year then ended.
In preparing the financial statements, all inter-group balances and transactions between controlled entities in the Group
have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with those adopted by the parent entity.
21
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses and results in the
consolidation of its assets and liabilities.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or
businesses under common control. The acquisition method requires that for each business combination, one of the
combining entities must be identified as the acquirer (i.e. parent entity). The business combination will be accounted for as
at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. At this date, the
parent shall recognise, in the consolidated accounts and subject to certain limited exceptions, the fair value of the
identifiable assets acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be recognised
where a present obligation has been incurred and its fair value can be reliably measured.
The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method adopted for the
measurement of goodwill will impact on the measurement of any non-controlling interest to be recognised in the acquiree
where less than 100% ownership interest is held in the acquiree.
The consideration transferred for a business combination shall form the cost of the investment in the separate financial
statements. Such consideration is measured at fair value at acquisition date and consists of the sum of the assets
transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests
issued by the acquirer.
Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration
arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity
instrument, depending upon the nature of the arrangement. Rights to refunds of consideration previously paid are
recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset
or a liability is remeasured each reporting period to fair value through the statement of comprehensive income, unless the
change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the Statement of Profit or Loss and
Other Comprehensive Income.
(d) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the full Board of Directors.
(e) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Australian dollars, which is Genesis Minerals Limited's functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are recorded at the spot rate on the date of the transaction.
At the end of the reporting period:
Foreign currency monetary items are translated using the closing rate;
•
• Non-monetary items that are measured at historical cost are translated using the exchange rate at the date of
the transaction; and
• Non-monetary items that are measured at fair value are translated using the rate at the date when fair value
was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from
those at which they were translated on initial recognition or in prior reporting periods are recognised through profit or loss,
except where they relate to an item of other comprehensive income or whether they are deferred in equity as qualifying
hedges.
22
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The financial results and position of foreign operations whose functional currency is different from Genesis Minerals
Limited's presentation currency are translated as follows:
•
•
•
assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period where the average rate
approximates the rate at the date of the transaction; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to Genesis Minerals Limited's
foreign currency translation reserve in the consolidated statement of financial position. These differences are recognised
in the consolidated statement of profit or loss and other comprehensive income in the period in which the operation is
disposed.
(f) Revenue and other income
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured, regardless of when the payment is received. Revenue is measured at the fair value of the
consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or
duty. The specific recognition criteria described below must also be met before revenue is recognised:
(i) Sale of goods – gold ore
Revenue from the sale of goods is recognised when there has been a transfer of risks and rewards to the customer, no
further processing is required by the Group, the quantity and quality of the goods has been determined with reasonable
accuracy, the price is fixed or determinable, and collectability is probable.
This is generally when title passes, which for the sale of ore represents the bill of lading date when the ore is delivered for
shipment to the mill. Revenue on provisionally priced sales is recognised at the estimated fair value of the total
consideration received or receivable. Royalties paid and payable are separately reported as expenses.
Contract terms for the Group’s sales allow for a price adjustment based on a final assay of the goods by the customer to
determine content. Recognition of the sales revenue for these commodities is based on the most recently determined
estimate of product specifications with a subsequent adjustment made to revenue upon final determination.
(i) Interest
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial
assets.
(g) Income tax
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.
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.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against
which deductible temporary differences can be utilised.
Current 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.
(h) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments
with original maturities of three months or less which are convertible to a known amount of cash and subject to an
insignificant risk of change in value, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current
liabilities on the consolidated statement of financial position.
23
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(i) Financial instruments
(i) Initial recognition and 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 the equivalent to the date that the Group 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.
(ii) Classification and subsequent measurement
Financial instruments are subsequently measured at either fair value, amortised cost using the effective interest rate method,
or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between
knowledgeable, willing parties in an arm's length transaction. Where available, quoted prices in an active market are used to
determine fair value. In other circumstances, valuation techniques are adopted.
The classification of financial instruments depends on the purpose for which the investments were acquired. Management
determines the classification of its investments at initial recognition and at the end of each reporting period for held-to-maturity
assets.
(iii) Loans and receivables
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, except for those which are not expected to mature within 12 months
after the end of the reporting period.
(j) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and
share options are recognised as a deduction from equity, net of any tax effects.
(k) Property, plant and equipment
Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any
accumulated depreciation and impairment losses.
(i) Plant and equipment
Plant and equipment are measured at cost. Cost includes expenditure that is directly attributable to the asset.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows
that will be received from the asset's employment and subsequent disposal. The expected net cash flows have been
discounted to their present values in determining recoverable amounts.
(ii) Depreciation
The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is
depreciated on a straight-line basis over the asset's useful life to the Group commencing from the time the asset is held
ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the
estimated useful lives of the improvements. Land is not depreciated.
(iii) Class of fixed asset useful life (years)
The estimated useful lives used for each class of depreciable assets are:
Plant and Equipment: 2 to 5 years
The assets' residual values, depreciation methods and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period.
(l) Exploration and development expenditure
Exploration and evaluation costs are expensed as incurred.
24
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Trade and other payables
Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services
received by the Group during the reporting period which remain unpaid. The balance is recognised as a current liability
with the amounts normally paid within 30 days of recognition of the liability.
(n) Rehabilitation provisions
The Group records the present value of estimated costs of legal and constructive obligations required to restore and
rehabilitate operating locations in the period in which the obligation is incurred. The nature of the restoration activities
includes restoring ground to its natural state and re-vegetating the disturbed area. When this provision gives access to
future economic benefits, an asset is recognised and then subsequently depreciated in line with the life of the underlying
asset, otherwise the costs are charged to the income statement.
The obligation arises when the ground/environment is disturbed or an asset is installed at the production location. The
liability is initially recognised at the estimated costs, and where it is to be settled in more than 12 months it is discounted to
present value. The periodic unwinding of the discount is recognised in the income statement as a finance cost.
(o) Employee benefit provisions
Provision is made for the Group's liability for employee benefits arising from services rendered by employees to the end of
the reporting period. Employee benefits have been measured at the amounts expected to be paid when the liability is
settled.
(p) Equity-settled compensation
The Group operates equity-settled share-based payment share, right and option schemes. The fair value of the equity to
which personnel 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
amount to be expensed is determined by reference to the fair value of the options, rights or shares granted. This expense
takes into account any market performance conditions and the impact of any non-vesting conditions but ignores the effect
of any service and non-market performance vesting conditions.
Non-market vesting conditions are taken into account when considering the number of options expected to vest. At the
end of each reporting period, the Group revises its estimate of the number of options or rights which are expected to vest
based on the non-market vesting conditions. Revisions to the prior period estimate are recognised in profit or loss and
equity.
(q) Earnings per share
Genesis Minerals Limited presents basic and diluted earnings per share information for its ordinary shares.
Basic earnings per share is calculated by dividing the profit attributable to owners of the company by the weighted average
number of ordinary shares outstanding during the year.
Diluted earnings per share adjusts the 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 additional
ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
(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 the
acquisition of the asset or as part of an item of the expense. Receivables and payables in the consolidated statement of
financial position are shown inclusive of GST.
Cash flows are presented in the consolidated 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.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The directors evaluate estimates and judgements incorporated into the financial statements 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 Group.
(i) Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending
on the requirements of the applicable Accounting Standard.
25
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e.
unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine
fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the
market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most
advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts
from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction
costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant's ability to use the asset
in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. .Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective
note to the financial statements.
(ii) Valuation techniques
In the absence of an active market for an identical asset or liability, the Group selects and uses one or more valuation
techniques to measure the fair value of the asset or liability. The Group selects a valuation technique that is appropriate in
the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant
data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques
selected by the Group are consistent with one or more of the following valuation approaches:
• Market approach: valuation techniques that use prices and other relevant information generated by market
•
transactions for identical or similar assets or liabilities;
Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a
single discounted present value; and
• Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service
capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the
asset or liability, including assumptions about risks.
When selecting a valuation technique, the Group gives priority to those techniques that maximise the use of observable
inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly
available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when
pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore
are developed using the best information available about such assumptions are considered unobservable.
(iii) Fair value hierarchy
AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value
measurements into one of three possible levels based on the lowest level that an input that is significant to the
measurement can be categorised into as follows:
Level 1
Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date.
Level 2
Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly or indirectly
26
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Level 3
Measurements based on unobservable inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all
significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more
significant inputs are not based on observable market data, the asset or liability is included in Level 3.
The Group would change the categorisation within the fair value hierarchy only in the following circumstances:
(i) if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or
(ii) if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa.
When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy (i.e.
transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred.
(iv) Key estimate - share based payments
The Group measures the cost of equity settled transactions by reference to the fair value of the equity instrument at the
date at which they are granted (for employees) or their measurement date (for other service providers). For Options, the
fair value is determined by an internal valuation using a Black Scholes option pricing model. The valuation relies on the
use of certain assumptions. If the assumptions were to change, there may by an impact on the amounts reported. For
ordinary shares which are traded on the stock exchange, the fair value is determined by reference to the closing price of
the security on the measurement date.
(v) Key estimate – taxation
Balances disclosed in the consolidated financial statements and the notes thereto, related to taxation, are based on the
best estimates of directors. These estimates take into account both the financial performance and position of the Group as
they pertain to current income taxation legislation, and the directors understanding thereof. No adjustment has been made
for pending or future taxation legislation. The current income tax position represents the directors’ best estimate, pending
an assessment by the Australian Taxation Office.
(vi) Key estimate – rehabilitation provision
Balances disclosed in the consolidated financial statements and the notes thereto, related to rehabilitation provisions, are
based on the best estimates of directors. Estimates are required in relation to estimating the extent of rehabilitation
activities, including the volume to be rehabilitated and unit rates, technology changes and regulatory changes. When
these estimates change or become known in the future, such differences will impact the rehabilitation provision in the
period in which they change or become known. A change in any, or a combination of, the key estimates used to determine
the provision could have a material impact on the carrying value of the provision.
(vii) Key judgement – environmental issues
Balances disclosed in the consolidated financial statements and notes thereto are not adjusted for any pending or enacted
environmental legislation, and the directors understanding thereof. At the current stage of the Group’s development and
its current environmental impact, the directors believe such treatment is reasonable and appropriate.
(viii) Key judgement – comparative figures
When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.
When the Group applies an accounting policy retrospectively, makes a retrospective restatement or reclassifies items in its
consolidated financial statements, a consolidated statement of financial position as at the beginning of the earliest
comparative period will be disclosed.
ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
New, revised or amending Accounting Standards and Interpretations adopted
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (“AASB”) that are mandatory for the current reporting period. The adoption of
these Accounting Standards and Interpretations did not have any significant impact on the financial performance or
position of the Group during the financial year.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
27
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
New Accounting Standards and Interpretations for application in future periods
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an
assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed
below:
AASB 9: Financial Instruments and associated Amending Standards
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The Standard will be
applicable retrospectively and includes revised requirements for the classification and measurement of financial
instruments, revised recognition and derecognition requirements for financial instruments and simplified requirements for
hedge accounting.
The key changes that may affect the Group on initial application include certain simplifications to the classification of
financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and
the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in
other comprehensive income. Based on preliminary analysis the directors anticipate that the adoption of AASB 9 is
unlikely to have a material impact on the Group’s financial instruments.
AASB 15: Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. When effective, this
Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model.
Apart from a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts
with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to
customers and potential customers.
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
the goods or services. To achieve this objective, AASB 15 provides the following five-step process:
•
•
•
•
•
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each prior period
presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors (subject to certain practical
expedients in AASB 15); or recognise the cumulative effect of retrospective application to incomplete contracts on the date
of initial application. There are also enhanced disclosure requirements regarding revenue.
Although the directors anticipate that the adoption of AASB 15 may have an impact on the Group's financial statements, it
is impracticable at this stage to provide a reasonable estimate of such impact.
AASB 16: Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. When effective, this
Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related
Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be
classified as operating or finance leases.
The main changes introduced by the new Standard are as follows:
•
•
•
•
•
recognition of a right-of-use asset and liability for all leases (excluding short-term leases with less than 12 months
of tenure and leases relating to low-value assets);
depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and
unwinding of the liability in principal and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease
liability using the index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead
account for all components as a lease; and
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line
with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the
date of initial application.
28
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Although the directors anticipate that the adoption of AASB 16 will impact the Group's financial statements, it is
impracticable at this stage to provide a reasonable estimate of such impact.
2. REVENUE
Sales of gold
Interest revenue
3. OTHER INCOME
Gain on disposal of subsidiaries
2017
$
11,015,862
27,160
11,043,022
2016
$
-
6,486
6,486
21,986
21,986
-
-
Genesis Minerals (Chile) S.A. and Genesis Minerals (Argentina) S.A. were sold on 16 January 2017 for a total cash
consideration of $112,915 (CLP: 55,844,194). The gain on disposal is calculated as follows:
Gain on disposal
Total disposal consideration
Carrying amount of net assets sold
Less: Foreign currency translation reserve taken to profit/(loss) on disposal
Gain on disposal before income tax
Income tax expense
Gain on disposal after income tax
4. INCOME TAX EXPENSE
Statement of Profit or Loss and Other Comprehensive Income
Current income tax
Deferred tax
2017
$
112,915
(52,439)
(38,490)
21,986
-
21,986
2017
$
-
-
-
2016
$
2016
$
-
-
-
-
-
-
-
-
-
(a) The prima facie tax on profit/(loss) from ordinary activities before income tax is
reconciled to the income tax expense as follows:
Loss from continuing operations before income tax expense
(718,341)
(2,220,550)
Prima facie tax benefit at the Australian tax rate of 30%
Add tax effect of:
Share-based payments
Expenses incurred in deriving non-assessable non-exempt income
Sundry items
Movements in unrecognised temporary differences
Tax effect of current year tax losses for which no deferred tax asset
has been recognised
Income tax expense
(b) Tax Losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30%
29
(215,502)
(666,165)
132,446
30,641
4,895
(20,270)
(67,790)
24,475
73,869
9,962
14,535
(543,525)
67,790
543,325
-
-
8,103,650
2,431,095
8,035,860
2,410,758
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
4. INCOME TAX EXPENSE (continued)
The benefit for tax losses will only be obtained if:
(a) The company and consolidated entity derive future assessable income of a nature and an amount sufficient to enable the
benefit from the deductions for the losses to be realised;
(b) The company and the consolidated entity continue to comply with the conditions for deductibility imposed by law; and
(c) No changes in tax legislation adversely affect the ability of the Company and consolidated entity to realise these benefits.
5. CASH AND CASH EQUIVALENTS
The following table details the components of cash and cash equivalents as reported in the statement of financial
position.
Cash at bank and in hand
Short-term deposits
Cash and cash equivalents
2017
$
2,135,571
2,020,022
4,155,593
2016
$
33,718
678,271
711,989
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash
requirements of the Group, and earn interest at the respective short-term deposit rates.
6. TRADE AND OTHER RECEIVABLES
Trade debtors
Accrued income – sales of gold
Other receivables
2017
$
19,754
1,106,464
-
1,126,218
2016
$
38,934
-
26,926
65,860
The Group expects the above trade and other receivables to be recovered within 12 months of 30 June 2017 and therefore
considers the amounts shown above at cost to be a close approximation of fair value.
Trade and other receivables expose Genesis Minerals Limited to credit risk as potential for financial loss arises should a
debtor fail to repay their debt in a timely manner. Disclosure on credit risk can be found at Note 14(A).
7. PLANT AND EQUIPMENT
Plant and equipment
Cost
Accumulated depreciation
Net book amount
Plant and equipment
Opening net book amount
Exchange differences
Additions / (Disposals)
Sale of Subsidiary
Depreciation charge
Closing net book amount
8. TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
2017
$
12,908
(3,922)
8,986
9,454
151
4,713
(4,395)
(937)
8,986
2016
$
21,526
(12,072)
9,454
6,433
(362)
5,755
-
(2,372)
9,454
280,264
547,386
827,650
185,783
93,802
279,585
30
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
9. PROVISIONS
Employee entitlements
Rehabilitation
10. ISSUED CAPITAL
737,180,876 (30 June 2016: 567,780,876) Ordinary shares
Value of conversion rights - Convertible Notes
Share issue costs written off against issued capital
MOVEMENT IN ORDINARY SHARES
Balance at 1 July 2015
Issue to Project vendors August 2015
Share placement August 2015
Share placement September 2015
Share placement October 2015
Issue for drilling services October 2015
Conversion of $0.016 Options
Share placement March 2016
Issue to Project vendor March 2016
Issue to JV partner to terminate agreement
Less: share issue costs
Balance at 30 June 2016
Balance at 1 July 2016
Placement – 15 August 2016
Shares issued for drilling – 15 August 2016
Shares issued for mining services – 25 November 2016 (Note 23)
Less share issue costs
Balance at 30 June 2017
52,099
50,000
102,099
2017
$
25,081,130
25,633
(987,818)
24,118,945
No.
344,837,912
10,000,000
22,500,000
18,000,000
32,500,000
1,200,000
17,914,062
111,023,707
714,286
9,090,909
-
567,780,876
567,780,876
68,400,000
1,000,000
100,000,000
-
737,180,876
83,200
-
83,200
2016
$
20,404,644
25,633
(931,005)
19,499,272
$
16,691,573
100,000
225,000
180,000
325,000
12,000
286,625
1,554,331
10,000
200,000
(85,257)
19,499,272
19,499,272
1,710,000
25,000
2,941,486
(56,813)
24,118,945
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of
shares held.
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.
OPTIONS
Options on issue
(a)
Exercisable at 3.2 cents, on or before 10 Dec 2016
Exercisable at 1.7 cents, on or before 22 Dec 2017
(b) Movements in options on issue
Beginning of the financial year
Expired on 30 November 2015, exercisable at 12 cents
Expired on 10 December 2015, exercisable at 1.6 cents
Exercised December 2015 at 1.6 cents
Expired 10 December 2016
Issued during the year:
Exercisable at 1.7 cents, on or before 22 December 2017
End of the financial year
31
2017
-
6,000,000
6,000,000
2016
21,250,000
6,000,000
27,250,000
27,250,000
-
-
-
(21,250,000)
43,250,000
(750,000)
(3,335,938)
(17,914,062)
-
-
6,000,000
6,000,000
27,250,000
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
10. ISSUED CAPITAL (continued)
CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they
may continue to provide returns for shareholders and benefits for other stakeholders.
Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit
facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Group’s capital risk
management is the current working capital position against the requirements of the Group to meet exploration programmes
and corporate overheads. The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating
requirements, with a view to initiating appropriate capital raisings as required.
The working capital position of the Group at 30 June 2017 is $4,352,062 (2016: $415,064).
11. RESERVES AND ACCUMULATED LOSSES
Nature and purpose of reserves
(i) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation
reserve, as described in note 1(e). The reserve is recognised in profit and loss when the net investment is disposed of.
Refer to note 3 for the movement on disposal.
(ii) Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued.
12. LOSS PER SHARE
(a) Reconciliation of earnings used in calculating loss per share
Loss attributable to the owners of the Company used in calculating
basic and diluted loss per share
(b) Weighted average number of ordinary shares used as the
denominator in calculating basic and diluted loss per share
2017
$
2016
$
(718,341)
(2,220,550)
Number of shares Number of shares
687,886,629
454,384,638
Basic and diluted EPS (cents per share)
(0.10)
(0.49)
13. COMMITMENTS
Exploration commitments
The Group has certain commitments to meet minimum expenditure requirements on the mineral exploration assets it has an
interest in. Outstanding exploration commitments are as follows:
Within one year
Greater than one year but less than five years
14. FINANCIAL RISK MANAGEMENT
417,500
872,998
1,290,498
509,500
1,046,726
1,556,226
The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects and ensure that net cash flows are sufficient to support the delivery of the Company's financial
targets whilst protecting future financial security. The Group continually monitors and tests its forecasted financial position
against these objectives.
The main risks Genesis Minerals Limited is exposed to through its financial instruments are credit risk, liquidity risk and
market risk consisting of interest rate risk, currency risk and commodity price risk.
The Group's financial instruments consist mainly of deposits with banks, accounts receivable and payables and loans to
subsidiaries.
32
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
14. FINANCIAL RISK MANAGEMENT (continued)
The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting
policies to these financial statements, are as follows:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial Liabilities
Trade and other payables
Total financial liabilities
2017
$
4,155,593
1,126,218
5,281,811
827,650
827,650
2016
$
711,989
65,860
777,849
279,585
279,585
FINANCIAL RISK MANAGEMENT POLICIES
The Board of Directors has overall responsibility for the establishment of Genesis Minerals Limited’s financial risk
management framework. This includes the development of policies covering specific areas such as foreign exchange risk,
interest rate risk, credit risk and the use of derivatives.
Mitigation strategies for specific risks faced are described below.
The main risks Genesis Minerals Limited is exposed to through its financial instruments are credit risk, liquidity risk and
market risk relating to interest rate risk, currency risk and commodity price risk.
(A) CREDIT RISK
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract
obligations that could lead to a financial loss to Genesis Minerals Limited and arises principally from holding cash and cash
equivalents and receivables.
The Group’s maximum exposure to credit risk at the reporting date in relation to each class of recognised financial assets is
the carrying amount of those assets as indicated in the statement of financial position.
The Group's policy for reducing credit risk from holding cash is to ensure cash is only invested with counterparties with
Standard & Poor’s rating of at least AA-. The credit rating of the Group’s bank is AA-.
The Group’s revenue is derived from 1 customer, with collection terms set out in a Toll Milling Agreement. The payment
terms include a 2-stage payment method, with an initial payment made within 15 days of final ore delivery for any given
batch and a final payment is made once final recovered gold ounces are determined. The Group’s debtor is subject to credit
verification procedures including an assessment of their credit rating, financial position, past experience and industry
reputation. The Group does not have any receivables that are past due or impaired at the reporting date.
(B) LIQUIDITY RISK
Liquidity risk arises from the possibility that Genesis Minerals Limited might encounter difficulty in settling its debts or
otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following
mechanisms:
•
preparing forward-looking cash flow analysis in relation to its operational, investing and financial activities which are
monitored on a monthly basis;
• monitoring the state of equity markets in conjunction with the Group's current and future funding requirements, with
a view to appropriate capital raisings as required;
• managing credit risk related to financial assets;
•
•
only investing surplus cash with major financial institutions; and
comparing the maturity profile of current financial liabilities with the realisation profile of current financial assets.
(C) MARKET RISK
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices.
33
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
14. FINANCIAL RISK MANAGEMENT (continued)
i. Commodity price risk
The Group is exposed to commodity price volatility on the sale of gold, which is based on the spot price as quoted by the
Perth Mint. It was not practicable for the Group to enter into hedging arrangements due to the relatively low volume of gold
sales made under the toll treatment arrangement.
ii. Foreign exchange risk
The Group is exposed to the Australian dollar currency risk on gold sales, which are denominated in US dollars. No hedging
arrangements have been put in place to manage the currency risk.
Prior to the sale of the Group’s foreign subsidiaries in January 2017, the Group operated internationally and was exposed to
foreign exchange risk arising from various currency exposures, primarily with respect to the Chilean Peso ("CLP"). Foreign
exchange risk arises from future commercial transactions and recognises assets and liabilities denominated in a currency
that is not the Group's functional currency and net investments in foreign operations. The Group had not previously
formalised a foreign currency risk management policy, however, it monitored its foreign currency expenditure in light of
exchange rate movements. At 30 June 2017, the Group's Net CLP exposure was CLP nil (2016: $4,702,817) which
translated to $nil (2016: $9,597) AUD.
Had the AUD weakened/strengthened by 10% against the CLP, there would have been a $nil (2016: $960) impact on the
Group's post tax losses and an immaterial movement to the Group's equity for both years.
iii. Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period,
whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The
Group is also exposed to earnings volatility on floating rate instruments.
Interest rate risk is managed by maintaining cash in interest bearing accounts and having no interest bearing liabilities.
Interest Rate Sensitivity analysis
The following sensitivity analysis is based on the interest rate risk exposures in existence at the end of the reporting period.
This analysis assumes that all other variables are held constant.
PROFIT
EQUITY
100 BASIS POINTS
INCREASE
100 BASIS POINTS
DECREASE
100 BASIS POINTS
INCREASE
100 BASIS POINTS
DECREASE
2017
2016
41,556
7,120
(41,556)
(7,120)
41,556
7,120
(41,556)
(7,120)
The net exposure at the end of the reporting period is representative of what Genesis Minerals Limited was and is expecting
to be exposed to at the end of the next twelve months.
(D) FAIR VALUE ESTIMATION
The fair values of financial assets and financial liabilities can be compared to their carrying values as presented in the
consolidated statement of financial position. Fair values are those amounts at which an asset could be exchanged, or a
liability settled, between knowledgeable, willing parties in an arm’s length transaction.
There are no financial assets or liabilities which are required to be revalued on a recurring basis.
15. OPERATING SEGMENTS
Identification of reportable segments
For management purposes, the Group is organised into two main operating segments, the exploration of minerals in South
America (Chile & Argentina) and exploration and mining of minerals, corporate activities and administrative costs in
Australia. The accounting policies applied for internal reporting purposes are consistent with those applied in the
preparation of these financial statements.
34
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
15. OPERATING SEGMENTS (continued)
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with respect to operating
segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial
statements of the Group.
Inter-segment transactions
An internally determined transfer price is set for all inter-entity sales. This price is re-set quarterly and is based on what
would be realised in the event the sale was made to an external party at arm’s-length. All such transactions are eliminated
on consolidation for the Group’s financial statements. Inter-segment loans payable and receivable are initially recognised at
the consideration received net of transaction costs. If inter-segment loans receivable and payable are not on commercial
terms, these are not adjusted to fair value based on market interest rates. This policy represents a departure from that
applied to the statutory financial statements.
Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of
economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their
nature and physical location. Unless indicated otherwise in the segment assets note, investments in financial assets,
deferred tax assets and intangible assets have not been allocated to operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of
the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated.
Segment liabilities include trade and other payables and certain direct borrowings.
Segment performance
REVENUE
Sales of gold
Corporate interest revenue
Total segment revenue
SEGMENT RESULTS
Depreciation expense
Employee benefits expense
Share based payments
Other expenses
Reconciling items – gain on
disposal of subsidiary
SEGMENT ASSETS
Segment operating assets
Total segment assets
SEGMENT LIABILITIES
Segment operating liabilities
Total segment liabilities
SOUTH AMERICA
AUSTRALIA
TOTAL
2017
$
2016
$
2017
$
2016
$
2017
$
2016
$
-
-
-
-
-
-
11,015,862
27,160
11,043,022
-
6,486
6,486
11,015,862
27,160
11,043,022
-
6,486
6,486
-
(187,460)
-
134,428
(53,032)
(2,138)
(148,667)
-
(48,512)
(199,317)
(937)
(141,850)
(441,486)
(11,146,044)
(687,295)
(234)
(183,034)
(81,582)
(1,762,869)
(2,021,233)
(937)
(329,310)
(441,486)
(11,011,616)
(740,327)
(2,372)
(331,701)
(81,582)
(1,811,381)
(2,220,550)
21,986
(718,341)
-
(2,220,550)
20,431
20,431
5,290,797
5,290,797
766,872
766,872
5,290,797
5,290,797
787,303
787,303
(24,584)
(24,584)
929,749
(338,201)
929,749
(338,201)
929,749
929,749
(362,785)
(362,785)
-
-
-
-
The entities comprising the South America operating segment, Genesis Minerals (Chile) S.A. and Genesis Minerals
(Argentina) S.A., were sold on 16 January 2017 for a total cash consideration of $112,915. Refer to note 3 for further details.
35
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
16. KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel compensation
Short-term benefits
Post-employment benefits
Share-based payments
17. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by
the auditor of the parent entity, its related practices and non-related audit firms:
Audit services
Bentleys - audit and review of financial reports
Total remuneration for audit services
18. CONTINGENCIES
2017
$
340,733
23,467
-
364,200
2017
$
2016
$
286,412
20,000
81,582
387,994
2016
$
35,015
35,015
29,750
29,750
As part of the terms of the acquisition of Ulysses Mining Pty Ltd completed during 2016, the Group agreed to the following
terms:
• Deferred consideration of $10.00 per dry metric tonne of ore product from the tenements which is treated through a
toll treatment plant for the first 200,000 DMT of ore processed, to a maximum of $2,000,000. No deferred
consideration payments are payable on any ore product until such time as a minimum of 20,000 DMT of ore
product or the treatment of the minimum Ore Product parcel accepted by the toll treatment plant has been
accepted.
•
1.2% of the Net Smelter Return generated from the sale of any product from the tenement area, after 200,000 of
dry metric tonnes of ore product from the tenements has been treated through a toll treatment plant.
Royalty payments from production during the period have been paid and included in mining expenses.
As announced to the ASX on 12 May 2017, the Group entered into an option agreement to acquire Metallo Resources Pty
Ltd (“Metallo”). The terms of the agreement included the requirement to spend a minimum of $140,000 on a proof of
concept exploration programme in respect to the Barimaia Project. At 30 June 2017 $107,340 had been spent on the
exploration programme. Subsequent to 30 June 2017, the Group satisfied the expenditure commitment and accordingly
exercised its option to acquire Metallo for consideration of $250,000 by means of issuing 11,363,636 shares at $0.022 per
share.
There are no other contingent liabilities or contingent assets of the Group at balance date.
19. RELATED PARTY TRANSACTIONS
(a) Parent entity
The ultimate parent entity within the Group is Genesis Minerals Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in note 20.
(c) Key management personnel
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or
indirectly, including any director (whether executive or otherwise) of that entity are considered key management personnel.
For details of remuneration disclosures relating to key management personnel, refer to Note 16: Key Management
Personnel Disclosures (KMP) and the Remuneration Report in the Directors' Report.
There were no other related party transactions during the year.
36
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
20. CONTROLLED ENTITIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1(b):
Name
Country of
Incorporation
Class of Shares
Equity Holding(1)
Genesis Minerals (Chile) S.A.(2)
Genesis Minerals (Argentina) S.A.(2)
Genesis Minerals UK Limited(3)
Ulysses Mining Pty Ltd(4)
Chile
Argentina
United Kingdom
Australia
Ordinary
Ordinary
Ordinary
Ordinary
(1) The proportion of ownership interest is equal to the proportion of voting power held.
(2) Controlled entity sold during the year – refer to note 3 for further details
(3) Controlled entity wound up during the year
(4) Controlled entity acquired during the year
21. EVENTS AFTER THE BALANCE SHEET DATE
2017
%
-
-
-
100
2016
%
100
100
100
-
Genesis announced on September 7, 2017 the appointment of Craig Bradshaw as a non-executive Director.
Genesis announced on September 19, 2017 the completion of the acquisition of Metallo Resources Pty Ltd (Metallo) for
consideration of $250,000 by means of issuing 11,363,636 shares at $0.022 per share. Metallo holds the right to earn-in to
an initial 65% interest in the Barimaia Gold Project (the Mt Magnet JV), with the potential to earn up to a maximum 80%
stake.
Apart from the above, no matters or circumstances have arisen since the end of the financial year 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 years.
22. CASH FLOW INFORMATION
(a) Reconciliation of net loss after income tax to net cash
inflow/(outflow) from operating activities
Net loss for the year
Non-Cash Items
Depreciation of non-current assets
Loss on disposal of assets
Share based payments expense
Issue of options
Shares issued in satisfaction of mining services provided
Shares issued in satisfaction of exploration expenses
Net gain on disposal of controlled entities
Net exchange differences
Change in operating assets and liabilities, net of effects from
purchase of controlled entities
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
(Decrease)/increase in provisions
Net cash inflow/(outflow) from operating activities
2017
$
2016
$
(718,341)
(2,220,550)
937
-
441,486
-
2,500,000
25,000
(109,139)
35,198
(1,060,358)
548,065
18,899
1,681,747
2,372
67
42,000
81,582
-
310,000
-
(61)
(58,925)
(7,623)
10,782
(1,840,356)
(b) Non-cash investing and financing activities
There were no non-cash investing and financing activities during either the 2017 or 2016 financial years.
37
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2017
23. SHARE BASED PAYMENTS
The Group established the Genesis Minerals Limited Option Plan (“Plan”) on 15 May 2007.
Details of the options granted under the Plan are as follows:
Options outstanding at 30 June 2015
Exercised during the year
Expired during the year
Granted during the year
Options outstanding at 30 June 2016
Options outstanding at 30 June 2017
Number of
options
Weighted
average exercise
price (cents)
5,125,000
(2,500,000)
(2,625,000)
6,000,000
6,000,000
6,000,000
3.8
1.6
5.8
1.7
1.7
1.7
On 25 November 2016, the Company issued 100,000,000 shares to SMS Innovative Mining Pty Ltd in lieu of $2,500,000 of
mining services. The fair value of the shares on measurement date was $2,941,486 and the excess of $441,486 was
expensed to Share-Based Payments.
24. PARENT ENTITY INFORMATION
2017
$
2016
$
The following information relates to the parent entity, Genesis Minerals Limited, at 30 June 2017. The information presented
here has been prepared using accounting policies consistent with those presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Total equity
Loss for the year
Total comprehensive loss for the year
4,175,347
8,986
4,184,333
(348,075)
(348,075)
761,661
5,210
766,871
(338,201)
(338,201)
3,836,258
428,670
24,118,945
1,271,927
(21,554,614)
3,836,258
19,499,272
1,288,911
(20,359,513)
428,670
(1,195,101)
(1,195,101)
(2,237,838)
(2,237,838)
As announced to the ASX on 12 May 2017, the parent entity entered into an option agreement to acquire Metallo Resources
Pty Ltd (“Metallo”). The terms of the agreement included the requirement to spend a minimum of $140,000 on a proof of
concept exploration programme in respect to the Barimaia Project. Subsequent to 30 June 2017, the parent entity satisfied
the expenditure commitment.
Apart from the above, the parent entity did not have any contingent liabilities, or any contractual commitments for the
acquisition of property, plant and equipment, as at 30 June 2016 or 30 June 2017.
38
Genesis Minerals Limited and controlled entities
Directors' Declaration
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 17 to 38 are in accordance with the Corporations Act 2001,
including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its performance for the
financial year ended on that date;
(ii)
(b)
(c)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due
and payable; and
a statement that the attached financial statements are in compliance with International Financial Reporting Standards
has been included in the notes to the financial statements.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Michael Fowler
Managing Director
Perth, 27 September 2017
39
Independent Auditor's Report
To the Members of Genesis Minerals Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Genesis Minerals Limited (“the Company”) and
its subsidiaries (“the Consolidated Entity”), which comprises the consolidated statement
of financial position as at 30 June 2017, the consolidated statement of profit or loss and
other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion:
a.
the accompanying financial report of the Consolidated Entity is in accordance with
the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Consolidated Entity’s financial position as
at 30 June 2017 and of its financial performance for the year then ended;
and
complying with Australian Accounting Standards and the Corporations
Regulations 2001.
b.
the financial report also complies with International Financial Reporting Standards
as disclosed in Note 1.
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 Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Consolidated Entity in
accordance with the auditor independence requirements of the Corporations Act 2001
and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independent Auditor’s Report
To the Members of Genesis Minerals Limited (Continued)
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report of the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key audit matter
How our audit addressed the key audit matter
Revenue – Gold Sales - $11,015,862
(Refer Note 2)
As disclosed in Note 2 in the financial statements,
Our procedures included, amongst others:
during the year ended 30 June 2017, the
Consolidated Entity recognised revenue from gold
Reviewing the contractual agreements
sales of $11,015,862.
applicable to the sale of gold, and ensured that
the recognition of revenue complied with the
Revenue from gold sales are considered to be a key
requirements of AASB 118 Revenue;
audit matter due to:
the value of the transactions; and
We obtained correspondence from the operator
of the mill outlining details of the sales
the judgement required to determine when risks
transactions during the year to the underlying
and rewards have transferred under the
contractual arrangements with the customer.
records;
Verification of receipts from sales to bank
statements; and
Assessing the adequacy of the disclosures
included in the financial report.
Share based payments expense – $441,486
(Refer to Note 23)
As disclosed in Note 23 in the financial statements,
Our procedures included, amongst others:
during the year ended 30 June 2017, the
Consolidated Entity incurred share based payments
Analysing contractual agreements to identify the
expenses totalling $441,486.
key terms and conditions of share based
Share based payments are considered to be a key
in accordance with AASB 2 Share Based
audit matter due to the value of the transactions and
Payments;
the complexities involved in recognition and
Evaluating management’s assessment of the fair
measurement of these instruments.
value of share based payments issued; and
payments issued and relevant vesting conditions
Assessing the adequacy of the disclosures
included in the financial report.
Independent Auditor’s Report
To the Members of Genesis Minerals Limited (Continued)
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Consolidated Entity’s annual report for the year ended 30 June 2017, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error. In 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 the going
concern basis of accounting unless the directors either intend to liquidate the Consolidated Entity or to cease
operations, or has 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 an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Independent Auditor’s Report
To the Members of Genesis Minerals Limited (Continued)
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Consolidated Entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the 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.
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.
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 Consolidated Entity 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.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2017.
The directors of the Company are responsible for the preparation and presentation of the remuneration report
in accordance with s 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.
Independent Auditor’s Report
To the Members of Genesis Minerals Limited (Continued)
Auditor’s Opinion
In our opinion, the Remuneration Report of the Company, for the year ended 30 June 2017, complies with
section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
DOUG BELL CA
Director
Dated at Perth this 27th day of September 2017
Genesis Minerals Limited and controlled entities
ASX Additional Information
Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The
information is current as at 25 September 2017.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1
1,001
5,001
10,001
100,001
- 1,000
- 5,000
- 10,000
- 100,000
and over
The number of shareholders holding less than a marketable parcel of shares are:
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
Ordinary shares
Number of holders Number of shares
21
22
44
332
404
823
151
2,429
71,798
392,693
15,815,720
732,261,872
748,544,512
Rank Name
Units
% of Units
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
KSA MINING PTY LTD
BOTSIS HOLDINGS PTY LTD
MR MICHAEL GEORGE FOTIOS
MS BETTY JEANETTE MOORE + MR PHILIP COLIN HAMMOND
MR PHILIP COLIN HAMMOND + MS BETTY JEANETTE MOORE
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR DENIS JOHN REYNOLDS
MR ROBERT JOHN SMITH
GASMERE PTY LTD
INVESTMET LIMITED
MR ANDREW WILLIAM SPENCER
SUPER SEED PTY LTD
RALMANA PTY LTD
14. WYLLIE GROUP PTY LTD
15.
16.
17.
18.
RESOURCE ASSETS PTY LTD
MR BRADLEY GEORGE BOLIN
MR SALIM CASSIM
CEDARFIELD HOLDINGS PTY LTD
19. WESTORIA RESOURCE INVESTMENTS LTD
20.
MR DAMIAN PAUL DELANEY
104,000,000
45,600,010
26,486,148
20,487,500
20,437,500
19,158,644
16,000,000
14,748,214
14,000,000
11,945,383
10,475,770
10,012,500
10,000,000
9,747,224
9,439,335
9,000,000
8,000,000
8,000,000
7,721,324
7,000,000
13.89
6.09
3.54
2.74
2.73
2.56
2.14
1.97
1.87
1.60
1.40
1.34
1.34
1.30
1.26
1.20
1.07
1.07
1.03
0.94
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (TOTAL)
Total Remaining Holders Balance
382,259,552
366,284,960
51.07
48.93
(c) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations
Act 2001 are:
KSA MINING PTY LTD
BOTSIS HOLDINGS PTY LTD
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
Number of Shares
104,000,000
45,600,010
45
Genesis Minerals Limited and controlled entities
ASX Additional Information
(e) Unquoted securities
As at 25 September 2017, the Company has a total of 6,000,000 unlisted options as follows:
Number of Options
Number of Holders
Exercise Price
6,000,000
3
$0.017
Expiry Date
22/12/2017
(f) Schedule of interests in mining tenements
Project
Country
Tenement ID
Interest
Ulysses
Ulysses
Ulysses
Ulysses
Ulysses
Viking 2
Viking 2
Viking 2
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Barimaia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
E40/295
E40/312
E40/359
M40/166
P40/1449
E63/1085
E63/1198
E63/1739
E58/497
P58/1686
P58/1687
P58/1688
P58/1689
P58/1690
P58/1691
P58/1692
P58/1461
P58/1655
P58/1654
P58/1464
P58/1465
P58/1468
P58/1469
P58/1471
P58/1472
P58/1657
P58/1618
P58/1589
100%
100%
100%
100%
100%
100%
100%
100%
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1: The Company holds the right to earn-in to an initial 65 per cent interest in the Barimaia Project (the Mt Magnet JV),
with the potential to earn up to a maximum 80 per cent stake.
46
Genesis Minerals Limited and controlled entities
Mineral Resources Information
MINERAL RESOURCES AND ORE RESERVES ANNUAL STATEMENT AND REVIEW
The Company carries out an annual review of its Mineral Resources and Ore Reserves as required by the Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) 2012 edition and the ASX
Listing Rules. The review was carried out as at 30 June 2017.
During the year Genesis announced an updated Mineral Resource estimate for the Ulysses Gold Project, located in Western
Australia, which delivered a substantial increase in the Project’s gold inventory.
The updated Measured, Indicated and Inferred Mineral Resource now totals 2.8 million tonnes at an average grade of
2.3g/t for 206,400 ounces, which represents a 32% increase in resource tonnes and 36% increase in contained ounces
compared with the February 2016 Mineral Resource. The resource remains open and untested at depth.
The updated Mineral Resource incorporates the results of drilling completed over the past year. It also follows the success of
the two open pit mining campaigns completed at Ulysses.
The Mineral Resource Estimate, inclusive of Ore Reserves, for Ulysses as at 30 June 2017 is set out in the following table:
Table 1: Ulysses Gold Deposit – May 2017 Mineral Resource (0.75g/t Cut-off)
Type
Measured
Tonnes
(t)
7,000
8,000
10,000
26,000
Oxide
Transition
Fresh
Total
NB. Rounding errors may occur.
Au Cut
(g/t)
2.0
2.6
5.3
3.4
Indicated
Tonnes
(t)
176,000
392,000
1,285,000
1,853,000
Inferred
Total
Au Cut
(g/t)
1.7
1.8
2.7
2.4
Tonnes
(t)
79,000
172,000
674,000
924,000
Au Cut
(g/t)
1.5
1.7
2.2
2.0
Tonnes
(t)
262,000
573,000
1,968,000
2,803,000
Au Cut
(g/t)
1.6
1.8
2.5
2.3
Cut
Ounces
13,800
32,900
159,700
206,400
The updated Mineral Resource was independently estimated by Payne Geological Services Pty Ltd (“PayneGeo”). Full
details of the Mineral Resource estimate are provided in the Company’s ASX Announcement dated May 8, 2017.
The Company is not aware of any new information or data that materially affects the information included in this Annual
Statement and confirms that all material assumptions and technical parameters underpinning the estimates in the relevant
market announcement continue to apply and have not materially changed.
ESTIMATION GOVERNANCE STATEMENT
The Company ensures that all Mineral Resource and Ore Reserve calculations are subject to appropriate levels of
governance and internal controls. Exploration Results are collected and managed by competent qualified geologists and
overseen by the Company’s Managing Director. All data collection activities are conducted to industry standards based on a
framework of quality assurance and quality control protocols covering all aspects of sample collection, topographical and
geophysical surveys, drilling, sample preparation, physical and chemical analysis and data and sample management.
Mineral Resource and Ore Reserve estimates are prepared by qualified independent Competent Persons and further verified
by the Company’s Managing Director. If there is a material change in the estimate of a Mineral Resource, the modifying
factors for the preparation of Ore Reserves, or reporting an inaugural Mineral Resource or Ore Reserve, the estimate and
supporting documentation in question is reviewed by a suitably qualified independent Competent Person.
APPROVAL OF MINERAL RESOURCES AND ORE RESERVE STATEMENT
The Company reports its Mineral Resources and Ore Reserves on an annual basis in accordance with the JORC Code 2012
Edition.
The Ore Reserves and Mineral Resources Statement is based on and fairly represents information and supporting
documentation prepared by competent and qualified independent external professionals and reviewed by the Company’s
Managing Director. The Ore Reserves and Mineral Resources Statement has been approved by Michael Fowler, a
Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Fowler is the Managing
Director of Genesis Minerals Limited. Mr Fowler has consented to the inclusion of the Statement in the form and context in
which it appears in this report.
COMPETENT PERSON’S STATEMENT
The Information in this report that relates to Mineral Resources is based on information compiled by Mr Paul Payne, a
Competent Person who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Payne is a full-time employee of
Payne Geological Services and is a shareholder of Genesis Minerals Limited. Mr Payne has sufficient experience that is
relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as
a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves”. Mr Payne consents to the inclusion in the report of the matters based on his information in
the form and context in which it appears.
47