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ABN 72 124 772 041
Annual Financial Report and Directors’
Report
for the year ended 30 June 2018
Genesis Minerals Limited and controlled entities
Corporate Directory
ABN 72 124 772 041
Directors
Richard Hill (Non-Executive Chairman)
Michael Fowler (Managing Director)
Craig Bradshaw (Non-Executive Director)
Gerry Kaczmarek (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
3
21
22
23
24
25
26
45
46
50
52
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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 2018.
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
6,211,322 fully paid ordinary shares
800,000 options expiring 13 December 2019, exercisable at $0.039
800,000 options expiring 13 December 2020, exercisable at $0.042
1,200,000 options expiring 13 December 2021, exercisable at $0.045
Other directorships in
listed entities held in
the previous three
years
Mr Hill resigned as a director of Strandline Resources Limited on 1 November 2017
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 27 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.
Interest in shares
and options
12,167,230 fully paid ordinary shares
2,400,000 options expiring 13 December 2019, exercisable at $0.039
2,400,000 options expiring 13 December 2020, exercisable at $0.042
3,600,000 options expiring 13 December 2021, exercisable at $0.045
Other directorships in
listed entities held in
the previous three
years
Mr Fowler resigned as a director of PolarX Limited (formerly Coventry Resources Limited) on 1
December 2017
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Genesis Minerals Limited and controlled entities
Directors' Report
Craig Bradshaw
Non-Executive Director (Appointed 7 September 2017)
Qualifications
B.Eng. (Mining)
Experience
Mr Bradshaw is a mining engineer with more than 23 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.
Interest in shares
and options
800,000 options expiring 13 December 2019, exercisable at $0.039
800,000 options expiring 13 December 2020, exercisable at $0.042
1,200,000 options expiring 13 December 2021, exercisable at $0.045
None
Other directorships
in listed entities held
in the previous three
years
Gerry Kaczmarek
Non-Executive Director (Appointed 20 March 2018)
Qualifications
B.Ec (Acc), CPA, MAICD
Experience
Mr Kaczmarek has almost 40 years’ experience working predominantly in the resource sector and
specialising in accounting and finance and company management with several emerging and
leading mid-tier Australian gold companies. He was Chief Financial Officer and Company
Secretary for Saracen Mineral Holdings from 2012 to 2016. He served as Chief Financial Officer
and Company Secretary at Troy Resources from 1998 to 2008 and has recently returned to that
role. Earlier in his career, he held a range of positions with the CRA/Rio Tinto group and was
Chief Financial Officer for a number of other Mid-Tier and Junior Mining Companies.
200,000 fully paid ordinary shares
None
Interest in shares
and options
Other directorships
in listed entities held
in the previous three
years
Darren Gordon
Non-Executive Director (Resigned 10 May 2018)
Qualifications
B.Bus, FCA, AGIA, ACIS
Experience
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 9 years. Prior to joining Centaurus, Mr Gordon was CFO of Gindalbie Metals Limited.
in shares
Interest
and options (as at
date of resignation)
5,839,657 fully paid ordinary shares
800,000 options expiring 13 December 2019, exercisable at $0.039
800,000 options expiring 13 December 2020, exercisable at $0.042
1,200,000 options expiring 13 December 2021, exercisable at $0.045
Other directorships in
listed entities held in
the previous
three
years
Mr Gordon is a director of Centaurus Metals Limited
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Genesis Minerals Limited and controlled entities
Directors' Report
COMPANY SECRETARY
Geoff James
Appointed 20 October 2015
Qualifications
B.Bus, CA, AGIA, ACIS
Experience
Mr James is a Chartered Accountant and a 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
Craig Bradshaw (appointed 7 September 2017)
Gerry Kaczmarek (appointed 20 March 2018)
Darren Gordon (resigned 10 May 2018)
Directors Meetings
A
7
7
6
3
5
B
7
7
6
3
6
Notes
A – Number of meetings attended.
B – Number of meetings held during the time the director held office during the year.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were the exploration and development 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 moving forward with its strategy to develop a long-term underground mine at the
Ulysses Gold Project. The Group ended the year in a strong financial position with exciting growth opportunities ahead for
both the Ulysses and Barimaia Gold Projects.
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 several drilling campaigns, announced a
significant increase to the Mineral Resource and commenced a Feasibility Study on developing a long-term underground
mining operation.
Ulysses Deposit
A drilling program comprising eight Reverse Circulation (RC) holes for 1,505m was completed at the Ulysses Gold Project in
August 2017 with all but one of the holes targeted at the Ulysses Resource. One hole as part of the program was drilled at
Orient Well NW to follow up significant mineralisation defined by previous Aircore (AC) drilling.
The majority of the drilling targeted the high-grade gold shoot which is interpreted to extend beneath the Goldfields Highway
at depth from below the Ulysses West pit.
The assay results received from the drilling program confirmed significant down-plunge extensions of the May 2017 Ulysses
Mineral Resource estimate. High-grade results returned from the August 2017 drilling campaign included:
•
•
•
7m @ 4.69g/t gold from 152m 17USRC120
10m @ 6.42g/t gold from 128m 17USRC121
including 2m @ 16.3g/t gold
6m @ 6.06g/t gold from 170m 17USRC123
including 2m @ 16.8g/t gold
o
o
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Drilling confirmed the Ulysses West shoot has a significant plunge extent and is open at depth. The drilling significantly
improved the Company’s understanding of the geological controls on the high-grade mineralisation. A full list of results from
the August 2017 drill campaign was provided in the Company’s ASX Announcement dated 6 September 2017.
On the strength of the results from the deeper drilling, Genesis completed a positive Scoping Study which confirmed the
potential technical and economic viability of an underground mine at Ulysses, based on decline access from the Ulysses West
open pit and assuming the toll-treatment of ore as the base case scenario (see ASX Release 21 September 2017). The
drilling that was completed in August into the Ulysses West shoot was not included in the Scoping Study.
Based on the strength of the Scoping Study results the Company had sufficient confidence to undertake a resource upgrade
and extensional drilling program. Based on the initial positive results received the program was extended to a total of 58
holes for 10,239m of RC and diamond drilling which was completed in December 2017.
High-grade gold intercepts from this program were reported to the ASX on 10 November, 4 December and 25 January 2108
including:
•
•
•
•
•
•
•
8m @ 5.16g/t gold from 109m
14m @ 5.93g/t gold from 120m
4.62m @ 20.36g/t gold from 166.6m
4.40m @ 15.7g/t gold from 119.0m
5.23m @ 5.34g/t gold from 141.3m
5.20m @ 5.06 g/t gold from 159.8m
3m @ 13.86g/t gold from 238m
17USRC133
17USRC147
17USDH008
17USDH002
17USDH006
17USDH009
17USRC174
In February 2018, Genesis announced a 55% increase in the Mineral Resource estimate for the Ulysses deposit from
206,000oz to 321,000oz of contained gold. The Measured, Indicated and Inferred Mineral Resource estimate totals 3.3Mt @
3.0 g/t gold for 321,000 ounces of contained gold (refer to Table 1 for full details), which represented a 55% increase in
contained ounces and a 31% increase in grade when compared with the May 2017 Mineral Resource.
The high-grade shoots which form part of the overall Mineral Resource are estimated to contain 1.22Mt @ 5.5g/t gold for
215,000 ounces. The Ulysses West shoot has an estimated grade of 8.5g/t gold.
The updated Mineral Resource incorporated the results from the highly successful drilling program completed at Ulysses over
the second half of 2017, which returned a number of high-grade intersections that confirmed and extended a number of high-
grade gold zones (shoots).
These shoots, which contain high-grade gold, are visually identifiable in drill chips and core and for the first time have been
separately modelled and estimated to quantify the higher grade shoots within the overall Mineral Resource estimate.
These high-grade gold shoots have significant plunge extents and, importantly are all open at depth providing significant
upside potential for further Resource growth.
The Mineral Resource extends for over 1,500m of strike and sits immediately below and along strike of the Ulysses Open Pits
(see Figures 1 and 2). The Resource is estimated to an average depth of ~200m below surface.
Figure 1. Plan view of the location of the Ulysses Mineral Resource projected to surface. The Mineral Resource outline is
shown in cyan.
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Directors' Report
Figure 2. View (from position of red arrow in Figure 1) looking towards the south east showing the position of the modelled
high-grade shoots.
Table 1: Ulysses Gold Deposit February 2018 Mineral Resource (0.75g/t Cut-off)
Measured
Indicated
Inferred
Type
HG Shoots
Shear Zone
Tonnes
t
21,000
11,000
Au
g/t
5.1
2.4
Total
NB. Rounding differences may occur
33,000
4.2
Tonnes
t
785,000
1,026,000
1,811,000
Au
g/t
5.0
1.6
3.1
Tonnes
t
420,000
1,029,000
1,449,000
Au
g/t
6.3
1.6
3.0
Tonnes
t
1,225,000
2,067,000
Total
Au
g/t
5.5
1.6
Au
Ounces
215,000
105,700
3,292,000
3.0
320,700
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 21 February 2018.
Following on from the successful results received from 2017 drilling campaigns, Genesis commenced a major staged
30,000m drilling program in February 2018 to systematically test potential depth extensions to the Ulysses Mineral Resource.
The results for the first batch of RC holes from this program were announced to the ASX on 9 April 2018 with high-grade gold
intersections including:
•
•
5m @ 20.9g/t gold from 281m
3m @ 10.64g/t gold from 254m
18USRC185
18USRC181
On 29 May and 28 June 2018, Genesis announced to the ASX the assay results from step-out drilling up to 300m below
surface and some 280m down-dip of the Ulysses Mineral Resource boundary. The results from the wide spaced diamond
and RC holes continued to define significant high-grade gold mineralisation well beyond the current Mineral Resource (see
Figures 3 and 5) with high-grade gold intersections including:
•
•
•
•
•
•
•
•
•
•
•
•
•
4.23m @ 12.93g/t gold from 347.94m
3.72m @ 12.04g/t gold from 343.71m
8.25m @ 5.40g/t gold from 299.42m
4.47m @ 6.59g/t gold from 278.37m
6m @ 5.85g/t gold from 259m
5.95m @ 3.75g/t gold from 363.05m
1.42m @ 12.45g/t gold from 293.58m
2m @ 9.23g/t gold from 237m
2m @ 5.09g/t gold from 293m
8m @ 2.51g/t gold from 168m
o
including 4m @ 4.37g/t gold
3m @ 4.59g/t gold from 244m
22.07m @ 1.66g/t gold from 282.06m
0.69m @ 14.34g/t gold from 323.74m
18USDH028
18USDH029
18USDH022
18USDH024
18USRC192
18USDH014
18USDH025
18USRC190
18USRC189
18USRC195
18USRC191
18USDH021
18USDH013
Genesis announced to the ASX on 9 July 2018 that it had intersected a high-grade gold reef 300m north of the Ulysses
Mineral Resource with an assay result returning 3m @ 26.3g/t gold from 182m, including 1m @ 74.3g/t gold from 183m.
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Genesis Minerals Limited and controlled entities
Directors' Report
Figure 3. Plan view in local grid showing intersections reported in the June Quarter 2018. The Ulysses shear dips at ~35 to 30
degrees to the north and for this reason it is visualised best in plan view. The approximate positions at surface – outcrop,
200m below surface and 400m below surface of the Ulysses Main shear are shown. The circles and diamond shapes are
pierce point positions (intersection points) on the Ulysses shear or on splays off the main shear. The blue outline is the
boundary of the 2018 Mineral Resource in plan view. True widths are ~90% to 100% of down-hole lengths.
Figure 4. Schematic section (view looking west) showing the Ulysses Pit and the Ulysses shear. Extensional drilling is
targeting to ~400m vertical depth covering over 750m of down dip extent and 1,000m of strike extent on the Ulysses shear at
very wide spacings.
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Figure 5. Schematic long section (view looking grid south) showing drill results reported in the June Quarter 2018. White stars
are holes planned to be completed or have results pending.
The high-grade gold shoots outlined to date at Ulysses are extensive, have significant plunge extents and, importantly, are all
open at depth – providing significant upside potential for further Resource growth.
Further extensional and infill drilling will be carried out in the September quarter to systematically test potential depth and
strike extensions to the Ulysses Mineral Resource. An updated Mineral Resource estimate is scheduled for completion in Q4
2018.
Orient Well NW Prospect
A one-off RC hole drilled at the Orient Well NW prospect in August 2017 to follow-up a zone of anomalous gold intersected in
previous aircore drilling returned an outstanding intercept of 11m @ 2.24g/t gold in 17USRC127.
A short follow up drill program was completed in June 2018 and on 2 August 2018, Genesis announced to the ASX the results
of follow up RC drilling with assay results including:
•
•
25m @ 1.36g/t Au from 65m
18USRC224
o
including 10m @ 2.51g/t Au
20m @ 1.22g/t Au from 60m
18USRC225
o
including 10m @ 1.60g/t Au
The results confirmed a significant zone of shallow oxide gold mineralisation. The drilling at Orient Well NW, located 10km
east of the Ulysses deposit (see Figures 6 and 7), forms part of the Company’s broader regional exploration program at
Ulysses outside of the existing Resource, which is currently the main focus of drilling.
The follow-up program was designed to determine the orientation of the gold mineralisation intersected in 17USRC127. The
intersections occur in saprolitic clays in a deeply weathered profile above fresh rock with 18USRC224 drilled grid west and
18USRC225 drilled grid south. The mineralisation is now interpreted to trend WNW and dip to the north.
The controls on primary mineralisation are unclear at this stage with drilling yet to test fresh rock. However, the mineralisation
is interpreted to be associated with a strongly deformed felsic – sedimentary package, which are different host rocks to the
mafic dominated sequence at Ulysses.
No drilling has taken place to the east of section 347,000E and the gold anomalous trend defined by wide-spaced aircore
drilling to the west has not been evaluated. There is strong potential to define significant mineralisation along this untested
trend over a strike length of 4km.
Aircore drilling is planned to test to the east of 347,000E over 1.5km of strike and step-out RC drilling is planned to follow up
in the immediate area around 347,000E.
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Figure 6. Orient Well NW location ~10km east of the Ulysses Mineral Resource.
Figure 7. Plan view of Orient Well NW drill-hole locations. Mineralisation open in all directions.
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Directors' Report
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 provided 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 Barimaia Project is close to Mt Magnet and a number of other gold processing facilities in the region that may provide 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 ASX Announcements dated 20 July and 21 August, 2017).
The drilling 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 21 August
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.
In December 2017 the Company completed a 2,000m wide-spaced RC drill program to follow-up the significant results
returned in August, focussing on the three large bedrock gold targets which have been confirmed over a 1.0km by 1.5km zone
centred on McNabs and McNabs East (see Figures 8 and 9).
Genesis announced to the ASX on 1 March 2018 the significant assay results from this drill program including:
5m @ 4.0g/t Au from 43m
17BARC020
Including 2m @ 8.9g/t Au from 46m
•
•
•
•
•
o
o
5m @ 1.28g/t Au from 59m
15m @ 0.85g/t Au from 51m
37m @ 0.57g/t Au from 25m
11m @ 0.58g/t Au from 117m
17BARC020
17BARC010
17BARC026
17BARC009
Including 5m @ 1.85g/t Au from 60m
o
Including 3m @ 1.16g/t Au from 124m
The drilling results have confirmed that a significant gold mineralised system is present at Barimaia.
The McNabs Prospects are entirely under shallow (5 to 10m) cover and comprises significant gold mineralisation associated
with porphyry bodies intruding an ultramafic dominated volcano-sedimentary package. The prospect geology and
mineralisation has strong similarities (including geochemical signature being anomalous in Au-Bi-Te-Pb-W-Ag) with the
nearby porphyry-hosted gold deposits of Ramelius Resources Limited.
With the gold mineralisation and the targeted porphyry host rock remaining open in all directions (see Figure 9), further drilling
is now planned to extend the gold mineralised system to the north, south and east.
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Genesis Minerals Limited and controlled entities
Directors' Report
m
k
4
6km
Figure 8: Barimaia Project showing prospect locations and target zone for new first pass aircore drilling.
Figure 9: Plan view of the Barimaia Project showing recently completed Genesis RC drill holes (cyan circles with red outlines).
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Genesis Minerals Limited and controlled entities
Directors' Report
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.
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.
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Directors' Report
Finance Review
The Group recorded an operating loss after income tax for the year ended 30 June 2018 of $5,573,467 (2017: $718,341).
Profitable mining operations were concluded at the Ulysses Gold Project in the previous year which led to the significant
increase in the operating loss for the 2018 year. In addition, the Group significantly expanded its exploration activities as part
of its strategy to develop a long-term underground mine at the Ulysses Gold Project.
At 30 June 2018 cash assets available totalled $5,104,901 (2017: $4,155,593).
The net assets of the consolidated entity decreased from $4,361,048 in 2017 to $3,982,642 at June 30 2018. This decrease
is largely attributable to the operating loss recorded for the year offset by issues of equity of $4,940,298 (net of costs).
Operating Results for the Year
Summarised operating results are as follows:
2018
2017
Revenues
$
Results
$
Revenues
$
Results
$
Group revenues and loss from ordinary activities before
income tax expense
55,586
(5,573,467)
11,043,022
(718,341)
Shareholder Returns
Basic and diluted loss per share (cents)
2018
(0.72)
2017
(0.10)
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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Directors' Report
SHARES UNDER OPTION
At the date of this report there are 25,600,000 unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Movements of share options during the year
Exercised December 2017 at 1.7 cents
Issued December 2017, exercisable at 3.9 cents
Issued December 2017, exercisable at 4.2 cents
Issued December 2017, exercisable at 4.5 cents
Issued April 2018, exercisable at 4.8 cents
Lapsed May 2018, exercisable at 4.5 cents
Total number of options outstanding as at 30 June 2018 and at the date of this report
The balance is comprised of the following:
Expiry date
13 December 2019
31 July 2020
13 December 2020
13 December 2021
Total
Exercise price (cents)
3.9
4.8
4.2
4.5
Number of options
6,000,000
(6,000,000)
4,800,000
4,800,000
7,200,000
10,000,000
(1,200,000)
25,600,000
Number of options
4,800,000
10,000,000
4,800,000
6,000,000
25,600,000
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 $5,000,000 (before costs) through the issue of 156,250,000 ordinary shares in total to institutional and
sophisticated investors during the year. The Group issued 11,363,636 ordinary shares valued at $250,000 to acquire
Metallo Resources Pty Ltd. The Group issued 6,000,000 ordinary shares pursuant to the exercise of options raising
$102,000.
15
Genesis Minerals Limited and controlled entities
Directors' Report
AFTER BALANCE DATE EVENTS
Other than noted elsewhere in this report, 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.
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 21.
CORPORATE GOVERNANCE
A copy of Genesis’ 2018 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
experience) and superannuation. The Board reviews executive packages annually by reference to the Group's 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.
16
Genesis Minerals Limited and controlled entities
Directors' Report
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.
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
2018
$
(5,573,467)
$0.016
$0.043
2017
$
2016
$
2015
$
2014
$
(718,341)
$0.019
$0.016
(2,220,550)
$0.006
$0.019
(1,527,678)
$0.021
$0.006
(1,757,105)
$0.020
$0.021
USE OF REMUNERATION CONSULTANTS
The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2018.
VOTING AND COMMENT MADE ON THE GROUP'S 2017 ANNUAL GENERAL MEETING
The Company received 100% of “yes” votes on its remuneration report for the 2017 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
2018
$
363,853
25,172
120,345
509,370
2017
$
340,733
23,467
-
364,200
17
Genesis Minerals Limited and controlled entities
Directors' Report
Key management personnel of the Group
Short-Term
Salary & Fees
$
Post
Employment
Superannuation
$
Share-Based
Payments
Options
$
Total
$
Proportion of
Remuneration
Represented by
Share-Based
Payments
Proportion of
Remuneration
Performance
Based
%
%
Directors
Richard Hill
2018
2017
Michael Fowler
2018
2017
Craig Bradshaw
2018
2017
Gerry Kaczmarek
2018
2017
Darren Gordon
2018
2017
2018
2017
79,2001
67,5551
220,4542
234,6672
24,5243
-
8,3874
-
31,2885
38,5115
363,853
340,733
-
-
22,045
23,467
2,330
-
797
-
-
-
25,172
23,467
20,197
-
60,591
-
20,197
-
-
-
19,360
-
120,345
-
99,397
67,555
303,090
258,134
47,051
-
9,184
-
50,648
38,511
509,370
364,200
20.32%
-%
19.99%
-%
42.93%
-%
-%
-%
38.22%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
1. R Hill - includes additional consultancy fees of $24,450 (2017:$12,555).
2. M Fowler - includes payment of unused leave entitlements of $Nil (2017: $34,667).
3. C Bradshaw – appointed as Director on 7 September 2017.
4. G Kaczmarek – appointed as Director on 20 March 2018.
5. D Gordon - includes additional consultancy fees of $3,000 (2017: $5,661). Resigned as Director on 10 May 2018.
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. The Non-Executive Chairman receives a fee of $50,000 per annum, plus statutory superannuation, and Non-
Executive Directors receive a fee of $30,000 per annum, plus statutory superannuation.
Mr Fowler has entered into an executive service agreement with the Company. He is engaged to provide services in the
capacity of Managing Director and CEO.
Mr Fowler is entitled to a minimum notice period of six months from the Company and the Company is entitled to a minimum
notice period of three months from Mr Fowler. In the event of a redundancy due to a successful takeover or merger of the
Company, Mr Fowler is entitled to a payment equal to 12 months’ salary.
In October 2017, Mr Fowler’s salary was set at $227,272 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
16,800,000 options were issued during the year, valued at $225,600 (2017: nil). As a result of Darren Gordon’s resignation,
1,200,000 options issued to Mr Gordon lapsed prior to vesting. As a result, the expense recognised in relation to these
options (valued at $18,240 at grant date) was reduced to nil. 6,000,000 options were exercised during the year (2017: nil),
1,200,000 options lapsed during the year (2017: nil) and nil options expired (2017: 1,562,500).
Details of the vesting profiles of the options granted as remuneration to key management personnel of the Group are
detailed below:
18
Genesis Minerals Limited and controlled entities
Directors' Report
Directors
Number of
Options
Issued
Grant
Date
Expiry
Date
Exercise
Price
Fair Value
Per Option
at Grant
Date
Year in
Which
Grant
Vests
%
Vested
During
2018
%
Forfeited
During
2018
Richard Hill
-
Tranche 1
-
Tranche 2
Tranche 3
-
Michael Fowler
Tranche 1
-
Tranche 2
-
Tranche 3
-
Craig Bradshaw
Tranche 1
-
Tranche 2
-
-
Tranche 3
Darren Gordon1
Tranche 1
-
Tranche 2
-
Tranche 3
-
800,000 13/12/2017 13/12/2019
800,000 13/12/2017 13/12/2020
1,200,000 13/12/2017 13/12/2021
2,400,000 13/12/2017 13/12/2019
2,400,000 13/12/2017 13/12/2020
3,600,000 13/12/2017 13/12/2021
800,000 13/12/2017 13/12/2019
800,000 13/12/2017 13/12/2020
1,200,000 13/12/2017 13/12/2021
800,000 13/12/2017 13/12/2019
800,000 13/12/2017 13/12/2020
1,200,000 13/12/2017 13/12/2021
$0.039
$0.042
$0.045
$0.039
$0.042
$0.045
$0.039
$0.042
$0.045
$0.039
$0.042
$0.045
$0.0109
$0.0133
$0.0152
$0.0109
$0.0133
$0.0152
$0.0109
$0.0133
$0.0152
$0.0109
$0.0133
$0.0152
2018
2019
2020
2018
2019
2020
2018
2019
2020
2018
2018
2020
100%
-%
-%
100%
-%
-%
100%
-%
-%
100%
100%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
100%
1. D Gordon – resigned as Director on 10 May 2018
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:
2018
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
Craig Bradshaw
Gerry Kaczmarek
Darren Gordon
2,000,000
2,000,000
-
-
-
4,000,000
2,800,000
8,400,000
2,800,000
-
2,800,000
16,800,000
(2,000,000)
(2,000,000)
-
-
-
(4,000,000)
-
-
-
-
-
-
2,800,000
8,400,000
2,800,000
-
2,800,0001
16,800,000
800,000
2,400,000
800,000
-
800,0001
4,800,000
1. D Gordon - balance on resignation on 10 May 2018. 1,200,000 options were forfeited immediately following resignation due to service
condition. 800,000 further options also vested immediately following resignation.
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
1. Options expired during the year
Share based compensation
-
-
-
-
-
-
-
-
(312,500)1
(937,500)1
(312,500)1
(1,562,500)
2,000,000
2,000,000
-
4,000,000
2,000,000
2,000,000
-
4,000,000
No shares were issued to directors in lieu of fees and salary during the year. 2017: (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.
19
Genesis Minerals Limited and controlled entities
Directors' Report
2018
Directors of Genesis Minerals Limited
Ordinary shares
Richard Hill
Michael Fowler
Craig Bradshaw
Gerry Kaczmarek
Darren Gordon
1. On-market purchase of shares
2. D Gordon - balance on resignation on 10 May 2018
2017
Directors of Genesis Minerals Limited
Ordinary shares
Richard Hill
Michael Fowler
Darren Gordon
1. On-market purchase of shares
Loans to key management personnel
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
4,502,610
10,167,230
-
-
5,839,657
20,509,497
2,000,000
2,000,000
-
-
-
4,000,000
500,0001
-
-
200,0001
-
700,000
7,002,610
12,167,230
-
200,000
5,839,6572
25,209,497
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
4,102,610
9,967,230
5,839,657
19,909,497
-
-
-
-
400,0001
200,0001
-
600,000
4,502,610
10,167,230
5,839,657
20,509,497
There were no loans to key management personnel during the year. 2017: (nil).
Other key management personnel transactions with Directors and Director-related entities
There were no other transactions with key management personnel during the year. 2017: (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, 18 September 2018
20
To The Board of Directors
Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001
As lead audit Partner for the audit of the financial statements of Genesis Minerals
Limited for the financial year ended 30 June 2018, 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
MARK DELAURENTIS CA
Partner
Dated at Perth this 18th day of September 2018
Genesis Minerals Limited and controlled entities
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
YEAR ENDED 30 JUNE 2018
REVENUE
OTHER INCOME
EXPENDITURE
Mining costs
Exploration expenses
Salaries and employee benefits expense
Corporate expenses
Administration costs
Depreciation expense
Share based payments expense
Notes
2
3
2018
$
55,586
-
(107,217)
(4,597,640)
(343,742)
(208,558)
(248,900)
(2,651)
(120,345)
2017
$
11,043,022
21,986
(8,927,960)
(1,590,975)
(329,310)
(213,167)
(279,514)
(937)
(441,486)
LOSS BEFORE INCOME TAX
(5,573,467)
(718,341)
INCOME TAX BENEFIT/(EXPENSE)
4
-
-
LOSS FOR THE YEAR
(5,573,467)
(718,341)
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
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE
TO MEMBERS OF GENESIS MINERALS LIMITED
(5,573,467)
(683,143)
Basic and diluted loss per share (cents per share)
12
(0.72)
(0.10)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
Notes to the Consolidated Financial Statements.
22
Genesis Minerals Limited and controlled entities
Consolidated Statement of Financial Position
AT 30 JUNE 2018
Notes
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
5
6
7
8
9
2018
$
5,104,901
85,959
5,190,860
2017
$
4,155,593
1,126,218
5,281,811
7,285
7,285
8,986
8,986
5,198,145
5,290,797
1,093,416
122,087
1,215,503
1,215,503
827,650
102,099
929,749
929,749
3,982,642
4,361,048
10
11
29,059,243
1,526,690
(26,603,291)
24,118,945
1,271,927
(21,029,824)
3,982,642
4,361,048
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated
Financial Statements.
23
Genesis Minerals Limited and controlled entities
Consolidated Statement of Changes in Equity
YEAR ENDED 30 JUNE 2018
Notes
Ordinary
Share
Capital
$
Accumulated
Losses
$
Foreign
Currency
Translation
Reserve
$
Options
Reserve
$
Total
$
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
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS IN
THEIR CAPACITY AS OWNERS
Shares issued during the year
Share issue transaction costs
Share based payments
11
10
10
23
-
-
-
-
(718,341)
-
-
-
(718,341)
(3,292)
38,490
35,198
4,676,486
(56,813)
-
-
-
-
-
-
-
Sub-total
4,619,673
(718,341)
35,198
-
-
-
-
-
-
-
-
(718,341)
(3,292)
38,490
(683,143)
4,676,486
(56,813)
-
3,936,530
BALANCE AT 30 JUNE 2017
24,118,945
(21,029,824)
BALANCE AT 1 JULY 2017
24,118,945
(21,029,824)
Loss for the year
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS IN
THEIR CAPACITY AS OWNERS
-
-
(5,573,467)
(5,573,467)
Shares issued during the year
Share issue transaction costs
Share based payments
10
10
23
5,352,000
(411,702)
-
-
-
-
Sub-total
4,940,298
(5,573,467)
BALANCE AT 30 JUNE 2018
29,059,243
(26,603,291)
-
-
-
-
-
-
-
-
-
1,271,927
4,361,048
1,271,927
4,361,048
-
-
-
(5,573,467)
(5,573,467)
5,352,000
134,418
(277,284)
120,345
120,345
254,763
(378,406)
1,526,690
3,982,642
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated
Financial Statements.
24
Genesis Minerals Limited and controlled entities
Consolidated Statement of Cash Flows
YEAR ENDED 30 JUNE 2018
Notes
2018
$
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
1,217,110
(907,531)
(743,990)
(3,483,124)
43,077
(3,874,458)
-
(950)
(950)
5,102,000
(277,284)
4,824,716
949,308
4,155,593
-
2017
$
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
CASH AND CASH EQUIVALENTS AT THE END OF THE
FINANCIAL YEAR
5
5,104,901
4,155,593
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial
Statements.
25
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
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 18 September 2018. 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 2017 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 2017.
(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 $5,573,467 for the year ended 30 June 2018 (2017: $718,341). Included within this loss were
mining costs of $107,217 (2017: $8,927,960) and exploration expenditure of $4,597,640 (2017: $1,590,975).
The net working capital surplus position of the Group at 30 June 2018 was $3,975,357 (2017: $4,352,062). The Group
has expenditure commitments relating to work programme obligations of their assets of $548,900 which could potentially
fall due in the twelve months to 30 June 2019.
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.
(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.
26
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
27
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
(ii) 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.
(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.
28
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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.
(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.
29
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 and expenses 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.
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).
30
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
31
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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, it 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.
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 July 2018. The Standard will be applicable
retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised requirements for the
classification and measurement of financial instruments requirements for financial instruments and 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.
32
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk,
particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with
the new hedge accounting requirements of the Standard, the application of such accounting would be largely prospective.
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 July 2018 as deferred by AASB 2015-8:
Amendments to Australian Accounting Standards – Effective Date of AASB 15.
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.
The Group is in the process of completing its impact assessment of AASB 15. Based on a preliminary assessment
performed, the effect of AASB 15 is not expected to have a material effect on the Group. 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 July 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 lease liability for all leases (excluding short-term leases with a lease term
12 months or less 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.
The Group is in the process of completing its impact assessment of AASB 16. Based on a preliminary assessment
performed, the effect of AASB 16 is not expected to have a material effect on the Group. It is impracticable at this stage to
provide a reasonable estimate of such impact.
33
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
2. REVENUE
Sales of gold
Interest revenue
3. OTHER INCOME
Gain on disposal of subsidiaries
2018
$
-
55,586
55,586
2017
$
11,015,862
27,160
11,043,022
-
-
21,986
21,986
In the previous financial year, 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
(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
Australian tax rate
Prima facie tax benefit at the Australian tax rate
Add tax effect of:
Share-based payments
Expenses incurred in deriving non-assessable non-exempt income
Non-deductible expenses
Non-assessable income
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 @ 27.5% (2017: 30%)
Unused capital losses for which no deferred tax asset has been
recognised
Potential tax benefit @ 27.5% (2017: 30%)
2018
$
-
-
-
-
-
-
-
-
-
(5,573,467)
27.5%
(1,532,703)
33,095
10,995
65,770
(3,440)
26,603
(1,399,680)
1,399,680
-
2017
$
112,915
(52,439)
(38,490)
21,986
-
21,986
-
-
-
(718,341)
30%
(215,502)
132,446
30,641
4,895
-
(20,270)
(67,790)
67,790
-
8,176,228
2,248,463
6,776,548
2,032,964
487,085
133,948
487,085
146,126
34
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
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
2018
$
1,509,901
3,595,000
5,104,901
2017
$
2,135,571
2,020,022
4,155,593
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 – GST receivable
Accrued income – sales of gold
Other receivables – accrued interest
2018
$
73,451
-
12,508
85,959
2017
$
19,754
1,106,464
-
1,126,218
The Group expects the above trade and other receivables to be recovered within 12 months of 30 June 2018 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
9. PROVISIONS
Employee entitlements
Rehabilitation
2018
$
13,857
(6,572)
7,285
8,986
-
950
-
(2,651)
7,285
902,527
190,889
1,093,416
72,087
50,000
122,087
2017
$
12,908
(3,922)
8,986
9,454
151
4,713
(4,395)
(937)
8,986
280,264
547,386
827,650
52,099
50,000
102,099
35
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
10. ISSUED CAPITAL
910,794,512 (30 June 2017: 737,180,876) Ordinary shares
Value of conversion rights - Convertible Notes
Share issue costs written off against issued capital
MOVEMENT IN ORDINARY SHARES
Balance at 1 July 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
Balance at 1 July 2017
Shares issued to vendors of Metallo Resources Pty Ltd at $0.022 per
share – 19 September 2017 (Note 25)
Shares issued upon exercise of $0.017 options – 14 December 2017
Shares issued upon exercise of $0.017 options – 21 December 2017
Placement at $0.032 per share – 20 April 2018
Placement at $0.032 per share – 10 May 2018
Less share issue costs
Balance at 30 June 2018
2018
$
30,434,130
25,633
(1,400,520)
29,059,243
No.
567,780,876
68,400,000
1,000,000
100,000,000
-
737,180,876
737,180,876
11,363,636
2,000,000
4,000,000
138,281,250
17,968,750
-
910,794,512
2017
$
25,081,130
25,633
(987,818)
24,118,945
$
19,499,272
1,710,000
25,000
2,941,486
(56,813)
24,118,945
24,118,945
250,000
34,000
68,000
4,425,000
575,000
(411,702)
29,059,243
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
(a) Options on issue
Exercisable at 1.7 cents, on or before 22 December 2017
Exercisable at 3.9 cents, on or before 13 December 2019
Exercisable at 4.8 cents, on or before 31 July 2020
Exercisable at 4.2 cents, on or before 13 December 2020
Exercisable at 4.5 cents, on or before 13 December 2021
(b) Movements in options on issue
Beginning of the financial year
Expired 10 December 2016
Exercised December 2017 at 1.7 cents
Issued during the year:
Exercisable at 3.9 cents, on or before 13 December 2019
Exercisable at 4.8 cents, on or before 31 July 2020
Exercisable at 4.2 cents, on or before 13 December 2020
Exercisable at 4.5 cents, on or before 13 December 2021
Lapsed 11 May 2018
End of the financial year
36
2018
No.
-
4,800,000
10,000,000
4,800,000
6,000,000
25,600,000
6,000,000
-
(6,000,000)
4,800,000
10,000,000
4,800,000
7,200,000
(1,200,000)
25,600,000
2017
No.
6,000,000
-
-
-
-
6,000,000
27,250,000
(21,250,000)
-
-
-
-
-
-
6,000,000
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
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 2018 is $3,975,357 (2017: $4,352,062).
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. The movement in the reserve is
reconciled as follows:
Balance at the beginning of the financial year
Recognition of share-based payments for options issued to corporate advisor
Recognition of share-based payments for options issued to directors
Balance at the end of the financial year
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
Basic and diluted EPS (cents per share)
2018
$
1,271,927
134,418
120,345
1,526,690
2018
$
2017
$
1,271,927
-
-
1,271,927
2017
$
(5,573,467)
(718,341)
2018
Number of
shares
778,610,048
2017
Number of
shares
687,886,629
(0.72)
(0.10)
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
2018
$
548,900
1,501,366
2,050,266
2017
$
417,500
872,998
1,290,498
The above exploration commitments includes the Barimaia Gold Project which is subject to a Farm-In and Joint Venture
Agreement (Mt Magnet Joint Venture) under which the Group has a right to earn an initial 65% interest in the Project. Refer
to note 26 for details of the Mt Magnet Joint Venture.
37
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
14. FINANCIAL RISK MANAGEMENT
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.
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
2018
$
5,104,901
85,959
5,190,860
2017
$
4,155,593
1,126,218
5,281,811
1,093,416
1,093,416
827,650
827,650
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 in 2017 was derived from one customer, with collection terms set out in a Toll Milling Agreement. The
payment terms included 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 did not have any significant revenue sources during the 2018 financial year. 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;
38
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
14. FINANCIAL RISK MANAGEMENT (continued)
•
•
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.
(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.
(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.
2018
2017
PROFIT
EQUITY
100 Basis Points
Increase
100 Basis Points
Decrease
100 Basis Points
Increase
100 Basis Points
Decrease
$51,049
$41,556
($51,049)
($41,556)
$51,049
$41,556
($51,049)
($41,556)
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
The entities comprising the former South America operating segment, Genesis Minerals (Chile) S.A. and Genesis Minerals
(Argentina) S.A. were sold during the year ended 30 June 2017. For the year ended 30 June 2017, the South American
operations incurred a net loss of $53,032. For the year ended 30 June 2018, the Group operated in one segment,
exploration of minerals in Australia. During the year ended 30 June 2017, the Group operated in two segments, being
exploration of minerals in South America and exploration and mining of minerals in Australia.
39
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
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
2018
$
363,853
25,172
120,345
509,370
2018
$
2017
$
340,733
23,467
-
364,200
2017
$
33,750
33,750
35,015
35,015
As part of the terms of the acquisition of the Ulysses Gold Project, 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. 52,653 dry metric
tonnes of ore product from the Ulysses Gold Project has been processed to date.
•
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.
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) Appointment and Resignation of Directors
Mr Craig Bradshaw was appointed as Non-Executive Director on 7 September 2017 and Mr Gerry Kaczmarek was
appointed as Non-Executive Director on 20 March 2018. Mr Darren Gordon resigned as Non-Executive Director on 10 May
2018.
(d) 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.
40
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
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)
Ulysses Mining Pty Ltd
Metallo Resources Pty Ltd(2)
Metallo (Chile) Pty Ltd(2)(3)
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
(1) The proportion of ownership interest is equal to the proportion of voting power held.
(2) Controlled entity acquired during the year (refer note 25).
(3) Dormant entity. Application lodged to wind up the entity subsequent to year end.
21. EVENTS AFTER THE BALANCE SHEET DATE
2018
2017
%
100
100
100
%
100
-
-
Other than noted elsewhere in this report, 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
Share based payments expense
Shares issued to acquire Metallo Resources Pty Ltd and expensed as
exploration expenses
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
2018
$
2017
$
(5,573,467)
(718,341)
2,651
120,345
250,000
-
-
-
-
1,040,259
265,765
19,989
(3,874,458)
937
441,486
-
2,500,000
25,000
(109,139)
35,198
(1,060,358)
548,065
18,899
1,681,747
(b) Non-cash investing and financing activities
During the year the Group acquired Metallo Resources Pty Ltd on 19 September 2017 by means of issuing 11,363,636
shares at a price of $0.022 per share for total consideration of $250,000 (2017: nil).
23. SHARE BASED PAYMENTS
Share-based payments including options are granted at the discretion of the Board to align the interests of directors,
executives and employees with those of shareholders.
Each option issued converts into one ordinary share of Genesis Minerals Limited on exercise. No amounts are paid or
payable by the recipient on receipt of the option. Options neither carry rights to dividends nor voting rights. Options may be
exercised at any time from the date of vesting to the date of their expiry by paying the exercise price.
41
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
23. SHARE BASED PAYMENTS (continued)
Pursuant to shareholder approval, 16,800,000 options, valued at $225,600, were issued to directors during the year (2017:
nil). As a result of Darren Gordon’s resignation, 1,200,000 options issued to Mr Gordon lapsed prior to vesting. As a result,
the expense recognised in relation to these options (valued at $18,240 at grant date) was reduced to nil. 6,000,000 options
were exercised during the year (2017: nil), 1,200,000 options lapsed during the year (2017: nil) and nil options expired
(2017: 1,562,500).
An amount of $120,345 was expensed to share based payments for the options issued to directors (2017: $441,486 relating
to the issue of 100 million shares issued to SMS Innovative Mining Pty Ltd in lieu of $2,500,000 of mining services. The
value of the shares issued to SMS on measurement date was $2,941,486 and the excess of $441,486 was expensed to
share-based payments).
During the year, 10,000,000 options were issued to Argonaut Securities for services rendered as lead manager to the $5
million capital raising completed in April 2018. The value of the options issued to Argonaut on measurement date was
$134,418 with the amount expensed as a share issue cost and written off against issued capital.
Details of the options on issue during the current and previous year are set out below:
Grant
Date
Expiry
Date
22/12/15
22/12/17
13/12/17
13/12/19
20/04/18
31/07/20
13/12/17
13/12/20
13/12/17
13/12/21
Total
Fair Value at
Valuation
Date (cents)
1.36
Exercise
Price
(cents)
1.7
Number
30 June
2017
6,000,000
Number Vested
and Exercisable
at 30 June 2017
6,000,000
Number
30 June
2018
Number Vested
and Exercisable
at 30 June 2018
-
-
1.09
1.34
1.33
1.52
3.9
4.8
4.2
4.5
-
-
-
-
- 4,800,000
4,800,000
- 10,000,000
10,000,000
- 4,800,000
800,000
- 6,000,000
-
6,000,000
6,000,000 25,600,000
15,600,000
The movement in options on issue during the current and previous year is reconciled as follows:
Options outstanding at 30 June 2016
Options outstanding at 30 June 2017
Issued during the year
Exercised during the year
Lapsed during the year
Options outstanding at 30 June 2018
Number of
Options
6,000,000
6,000,000
26,800,000
(6,000,000)
(1,200,000)
25,600,000
Weighted Average
Exercise Price
(cents)
1.70
Weighted Average
Contractual Life
(days)
540
1.70
4.45
1.70
4.50
4.45
175
861
The options that were issued during the year had their price calculated by using a Black-Scholes option pricing model
applying the following inputs:
Valuation date
Valuation date fair value
Valuation date share price
Exercise price
Expected volatility
Option life
Expiry date
Risk-free interest rate
30/11/17(1)
$0.0109
30/11/17(1)
$0.0133
30/11/17(1)
$0.0152
$0.029
$0.039
83.83%
2 years
13/12/19
1.75%
$0.029
$0.042
83.83%
3 years
13/12/20
1.89%
20/04/18
$0.0134
$0.034
$0.048
83.83%
2.28 years
$0.029
$0.045
83.83%
4 years
13/12/21
31/07/20
2.13%
2.10%
(1) The date of shareholder approval has been used as the valuation date.
42
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
24. PARENT ENTITY INFORMATION
2018
$
2017
$
The following information relates to the parent entity, Genesis Minerals Limited, at 30 June 2018. 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
5,190,560
7,285
5,197,845
(1,150,529)
(1,150,529)
4,175,347
8,986
4,184,333
(348,075)
(348,075)
4,047,316
3,836,258
29,059,243
1,526,690
(26,538,617)
4,047,316
24,118,945
1,271,927
(21,554,614)
3,836,258
(4,984,003)
(4,984,003)
(1,195,101)
(1,195,101)
As announced to the ASX on 12 May 2017, the parent entity entered into an option agreement to acquire Metallo Resources
Pty Ltd (“Metallo”) in the 2017 financial year. 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. During the 2018 financial year, the
parent entity satisfied the expenditure commitment resulting in no remaining commitment at 30 June 2018.
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 2018 or 30 June 2017.
25. ACQUISITION OF BARIMAIA GOLD PROJECT
During the year, the Group completed the acquisition of Metallo Resources Pty Ltd (“Metallo”). Metallo holds the right to earn-
in to an initial 65 per cent interest in the Barimaia Gold Project (Mt Magnet Joint Venture), with the potential to earn up to a
maximum 80 per cent stake. The Group acquired 100% of Metallo on 19 September 2017 by means of issuing 11,363,636
shares at a price of $0.022 per share for total consideration of $250,000, and for accounting purposes was considered as an
acquisition of an asset.
Details of the fair value of the assets acquired as at the date of purchase on 19 September 2017 are as follows:
Purchase Consideration
Shares issued
Total
Net Assets Acquired
Other receivable
Exploration, evaluation and mining leases(1)
Trade creditors
19 September
2017
$
250,000
250,000
24,983
228,305
(3,288)
Total
(1) Expensed to the statement of profit or loss and other comprehensive income as exploration expenses.
250,000
43
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2018
26 FARM-IN AND JOINT VENTURE COMMITMENTS
The Barimaia Gold project is subject to a Farm-In and Joint Venture Agreement (Mt Magnet Joint Venture) under which the
Group’s 100% owned subsidiary, Metallo Resources Pty Ltd (“Metallo”), is required to spend $750,000 on exploration
activities over three years to earn an initial 65% interest in the Project. Metallo has until 26 February 2019 to complete the
first stage earn-in. As at 30 June 2018, Metallo has spent $627,446 (including 10% allocation for overhead costs) on the
earn-in.
Following satisfaction of the initial 65% earn-in, the Project Vendor may elect to form a Joint Venture (“JV”). If the Project
Vendor does not elect to form a JV, Metallo may elect to form the JV or continue sole funding exploration, and earn a further
15% interest by spending $1 million on exploration over a further two years (amounting to $1.75M in expenditure over five
years to earn an 80% interest). The five year earn-in period expires on 26 February 2021.
Metallo in its sole discretion may elect to withdraw from the Farm-In Joint Venture at any time.
44
Genesis Minerals Limited and controlled entities
Directors' Declaration
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 22 to 44 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 2018 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, 18 September 2018
45
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 2018, the consolidated statement of profit or loss and
other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, 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)
giving a true and fair view of the Consolidated Entity’s financial position as
at 30 June 2018 and of its financial performance for the year then ended;
and
(ii)
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
Acquisition of Metallo Resources Pty Ltd
Our procedures amongst others included:
(Refer to Note 25)
As disclosed in Note 25 in the financial statements,
Reviewing the acquisition agreement to
understand the key terms and conditions, and
confirming our understanding of the transaction
the Company acquired a 100% interest in Metallo
with management;
Resources Pty Ltd on 19 September 2017.
This acquisition is considered to be a key audit
matter due to
the value of the transaction; and
the complexities involved in determining the
appropriate accounting treatment for such an
acquisition.
Assessing the deemed consideration with the
terms of the acquisition agreement;
Reviewing the acquisition date balance sheet of
the acquiree against the acquisition agreement
and underlying supporting documentation;
Assessing the nature and operations of the entity
being acquired to determine if it constituted a
business, and the relevant accounting
implications; and
Assessing the adequacy of the disclosures
included in Note 25 to the financial report.
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 2018, 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.
Independent Auditor’s Report
To the Members of Genesis Minerals Limited (Continued)
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.
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.
Independent Auditor’s Report
To the Members of Genesis Minerals Limited (Continued)
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 2018.
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.
Auditor’s Opinion
In our opinion, the Remuneration Report of the Company, for the year ended 30 June 2018, complies with
section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Partner
Dated at Perth this 18th day of September 2018
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 14 September 2018.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Unlisted Options
Ordinary shares
Number of holders Number of options Number of holders Number of shares
1
1,001
5,001
10,001
100,001
- 1,000
- 5,000
- 10,000
- 100,000
and over
-
-
-
-
6
6
-
-
-
-
25,600,000
25,600,000
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:
29
22
43
429
647
1,170
116
3,688
68,300
388,870
20,595,045
889,738,609
910,794,512
Rank Name
Units
% of Units
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
BOTSIS HOLDINGS PTY LTD
STEFEAD INVESTMENTS PTY LTD
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