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and controlled entities
ABN 72 124 772 041
Annual Financial Report and Directors’
Report
for the year ended 30 June 2020
Genesis Minerals Limited and controlled entities
Corporate Directory
ABN 72 124 772 041
Directors
Tommy McKeith (Non-Executive Chairman)
Michael Fowler (Managing Director)
Craig Bradshaw (Non-Executive Director)
Gerry Kaczmarek (Non-Executive Director)
Nic Earner (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 Audit & Corporate (WA) Pty Ltd
Level 3, 216 St Georges Terrace
PERTH WA 6000
Internet Address
www.genesisminerals.com.au
Email Address
info@genesisminerals.com.au
Securities Exchange Listing
Genesis Minerals Limited shares are listed on the Australian Securities Exchange (ASX code: GMD).
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Genesis Minerals Limited and controlled entities
Contents
Directors' Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Auditor’s Report to Members
ASX Additional Information
Mineral Resource Information
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56
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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 2020.
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
Tommy McKeith
Non-Executive Chairman (Appointed 29 November 2018)
Qualifications
BSc (Hons), GradDip Eng (Mining), MBA
Experience
Mr McKeith is a geologist with 30 years’ experience in various mine geology, exploration and
business development roles. He was formerly Executive Vice President (Growth and International
Projects) for Gold Fields Limited, where he was responsible for global greenfields exploration and
project development. Mr McKeith was also Chief Executive Officer of Troy Resources Limited and
has held Non-Executive Director roles at Sino Gold Limited and Avoca Resources Limited.
Interest in shares
and options
6,183,334 fully paid ordinary shares
1,500,000 options expiring 29 November 2021, exercisable at $0.053
1,500,000 options expiring 29 November 2022, exercisable at $0.056
Other directorships in
listed entities held in
the previous three
years
Mr McKeith is a non-executive director of Evolution Mining Limited and Arrow Minerals Limited and
is non-executive Chairman of Prodigy Gold NL.
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 30 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
13,982,017 fully paid ordinary shares
2,400,000 options expiring 13 December 2020, exercisable at $0.042
3,600,000 options expiring 13 December 2021, exercisable at $0.045
5,000,000 performance rights expiring 31 December 2021
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 25 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 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
None
Gerry Kaczmarek
Non-Executive Director (Appointed 20 March 2018)
Qualifications
B.Ec (Acc), CPA, MAICD
Experience
Mr Kaczmarek has over 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 from 2017 to 2019. 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.
Interest in shares
and options
272,223 fully paid ordinary shares
800,000 options expiring 29 November 2020, exercisable at $0.049
800,000 options expiring 29 November 2021, exercisable at $0.053
1,200,000 options expiring 29 November 2022, exercisable at $0.056
Other directorships
in listed entities held
in the previous three
years
None
Nic Earner
Non-Executive Director (Appointed 24 October 2019)
Qualifications
B.Eng. (Hons)
Experience
Mr Earner is a chemical engineer with over 25 years’ experience in technical and operational
optimisation and management, and has held a number of executive roles in mining and
processing. He is currently the Managing Director of Alkane Resources Limited and is Non-
Executive director of Australian Strategic Materials Limited. Mr Earner is the appointed
representative of Alkane Resources Limited under the ongoing strategic relationship between the
companies.
Interest
in shares
and options (as at
date of resignation)
Other directorships in
listed entities held in
the previous
three
years
None
Mr Earner is managing director of Alkane Resources Limited and is non-executive director of
Australian Strategic Materials 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, ACG
Experience
Mr James is a Chartered Accountant and a Chartered Secretary. 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:
Tommy McKeith
Michael Fowler
Craig Bradshaw
Gerry Kaczmarek
Nic Earner (appointed 24 October 2019)
Directors Meetings
A
10
10
9
10
8
B
10
10
10
10
8
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-life standalone gold mining and
processing operation at the Ulysses Gold Project. The Ulysses Project has been significantly expanded with the agreement to
acquire the Kookynie tenements and the Group ended the year in a strong financial position with exciting growth opportunities
ahead.
Project Activities
Ulysses Gold Project, WA (Genesis: 100%)
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 carried out ongoing drilling programs which culminated in
an upgraded Mineral Resource.
Following the acquisition of the Archduke prospect and Kookynie tenements, Genesis commenced work on an expanded
Feasibility Study on the construction of a standalone treatment facility at Ulysses.
Ulysses Deposit – Resource Upgrade and Extensional Drilling Results
A program of Reverse Circulation (RC) and diamond drilling commenced in August 2019 to upgrade the Ulysses Mineral
Resource. Over 20,000m of drilling was completed by the end of November to upgrade the top 200m of the Resource in
preparation for mining. Drilling targeted approximately 1,000m of strike and some 300m of down-dip extent within and
adjacent to the previous Resource envelope. At Ulysses West, drilling targeted ~600m of down-plunge extent.
Results were reported from the Resource upgrade drilling program with holes targeting the upper parts of the Ulysses Mineral
Resource (see Figure 1) with the drilling continuing to strongly support the continuity of the higher-grade gold mineralisation.
Full details of the assay results were provided in the Company’s ASX Announcements dated 9 September, 22 October and 19
November 2019.
On 19 December 2019, the Company announced a 107,000oz increase in the Mineral Resource for the Ulysses deposit from
760,000oz to 867,000oz of contained gold.
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Directors' Report
The updated Mineral Resource incorporates the results of the highly successful drilling program completed at Ulysses during
the second half of 2019, which returned numerous high-grade intersections that confirmed and extended a number of high-
grade gold zones.
The updated Measured, Indicated and Inferred Mineral Resource now totals 8.5Mt @ 3.2g/t gold for 867,000 ounces of
contained gold (refer to Table 1 for full details), which represents a 14% increase in contained ounces when compared with
the October 2018 Mineral Resource. Importantly, the higher-confidence Measured and Indicated component has increased by
103,000 ounces (22%) to 574,000 ounces, with the Measured Resource increasing significantly from 4,000 ounces to 133,000
ounces.
The high-grade portion of the Mineral Resource, reported at a cut-off of 2g/t gold (refer to Table 1 for full details) is estimated
to contain 4.8Mt @ 4.5g/t gold for 695,000 ounces.
The high-grade shoots which form part of the overall Mineral Resource are estimated to contain 1.73Mt @ 6.5g/t gold for
360,000 ounces.
The Mineral Resource extends over a strike length of more than 2.5km and sits immediately below and along strike from the
Ulysses Open Pits (see Figures 1 and 2).
The Resource envelope currently extends to ~400m below surface at its deepest point and is estimated to an average depth
of ~320m below surface, with a gold endowment of +2,400 ounces per vertical metre (ovm) for the 260m interval from the
360mRL (base of the open pits) to the 100mRL (interval of highest drill density).
The base of the Indicated portion of the Resource is shown in Figure 1 below.
Figure 1. Projected Long Section in local grid showing the Ulysses Mineral Resource (red shaded area) with the high-
grade portion of the resource shown in darker red. Limit of Indicated Mineral Resource shown.
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Genesis Minerals Limited and controlled entities
Directors' Report
Acquisition of Archduke Prospect
Figure 2. Plan view of the Ulysses resource.
On 16 March 2020, the Company announced the acquisition of the Archduke prospect, a strategically located and prospective
tenement located to the south east of the Ulysses Deposit. The Prospect is located within the key regional Ulysses-Orient Well
structural corridor that controls mineralisation in the district (see Figure 3).
Subsequent to the end of the financial year, the Company carried out an initial air-core drilling program with the results
announced to the ASX on 31 August 2020. The results have confirmed the potential to define shallow oxide gold resources at
the prospect, prior to possible deeper drilling targeting primary mineralisation in the future.
The next phase of drilling at Archduke will involve Reverse Circulation (RC) drilling with the aim of defining shallow open
pittable resources, with drilling to focus on a 1.5km long target zone.
Acquisition of Kookynie Tenements
On 24 June 2020, the Company announced that it had entered into a binding agreement to acquire 100% of the Kookynie
tenements, located immediately south-east of its 100%-owned Ulysses Gold Project.
The landmark transaction significantly advances Genesis’ growth strategy in the prolific Leonora district of Western Australia.
It includes a JORC 2012 compliant Indicated and Inferred Mineral Resource totalling 8.53Mt at 1.5g/t gold for 414,000oz
across 6 deposits (refer to Table 2 for full details), a highly prospective 248km2 tenement portfolio, and numerous exploration
targets with outstanding potential to expand the existing Resources and deliver new discoveries.
The acquisition has increased the total Mineral Resource at the greater Ulysses Project to 17Mt at 2.34g/t gold for 1.28Moz.
The transaction consolidates Genesis’ ownership of the southern extension of the highly endowed Leonora Gold Corridor,
including tenements that are immediately contiguous with the southern boundary of its Ulysses Gold Project and which cover
a 15km strike length of the Ulysses-Orient Well trend – including three shallow gold deposits with a combined Mineral
Resource of 246,000oz (see Figure 3).
The Kookynie acquisition includes a 20-person accommodation camp, a bore field (DWER approved 1,200,000kL Annual
Water Entitlement), haul roads and access roads contained within the Kookynie tenement area.
Genesis has entered into an option agreement with A&C Mining Investment Pty Ltd (A&C) and Ms Yijun Zhu (the Vendors)
pursuant to which Genesis, via its wholly owned subsidiary Ulysses Mining Pty Ltd, has been granted the right to acquire the
Kookynie tenements (Option Agreement).
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Genesis Minerals Limited and controlled entities
Directors' Report
The key terms of the Option Agreement are as follows:
• Consideration payable of up to A$11 million to the Vendors to acquire the Kookynie tenements, being:
A $1 million consideration fee for the grant of the option (this was paid prior to 30 June 2020); and
A $10 million option exercise payment (assuming Genesis extends the initial term of the option and exercises the
option during the extended term), together with the grant of a 1% NSR to the Vendors on future gold production,
capped at A$5 million.
•
•
The option exercise payment is $9.5 million (if the option is exercised within the initial term) or $10 million (if the initial
term is extended one or more times) less the aggregate amount of all extension payments.
The option is for an initial term of 6 months, but Genesis may extend this period for 3 months for a payment of $4 million.
Genesis may extend the option for a further 3 months for a payment of $3 million. These extension payments will be
deducted from the option exercise payment required by Genesis to exercise the option.
Genesis has also agreed to pay approximately $2 million in cash and issue 26,595,745 shares to a third party to resolve
proceedings and settle tenement plaints against A&C so as to ensure Genesis acquires clear title to the Kookynie tenements.
As at 30 June 2020, Genesis has paid $1 million in cash and issued 26,595,745 shares.
Figure 3. Ulysses to Orient Well structural corridor. Current gold resources highlighted within this corridor.
Ulysses Project – Ongoing Drilling & Feasibility Study
In July 2020, the Company commenced a +25,000m drill program, which will continue over the remainder of CY2020,
comprising a combination of Resource definition and expansion drilling along the Ulysses-to-Orient Well corridor (see Figure
3).
Initial results from the maiden Reverse Circulation (RC) drilling program at the Admiral deposit (see Figure 3) were announced
to the ASX on 15 September 2020. The results confirmed the presence of significant shallow gold mineralisation and
successfully validated the historical drilling data that was used to estimate the Admiral Mineral Resource, which currently
stands at 2.78Mt @ 1.7g/t gold for 155,000oz.
Results from this +25,000m drill program will feed into a Feasibility Study on the development of a significant standalone gold
operation at Ulysses, with ore to be sourced from a combination of known underground and open pit Resources. Genesis is
targeting completion of this Feasibility Study in the first quarter of CY2021. The Feasibility Study will use the study inputs for
the robust Ulysses toll milling Feasibility Study work as a base.
During the year the Company had received all approvals required to commence mining at Ulysses for toll treating of ore,
including for the Mining Proposal and PMP.
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Genesis Minerals Limited and controlled entities
Directors' Report
Desdemona South JV Gold Project, WA (Genesis: RTE 80%)
On 10 December 2019, the Company announced that it had
entered into a Farm-in and Joint Venture agreement with Kin
Mining NL (ASX: KIN) over the Desdemona South JV Gold
Project (“Desdemona South” or “Project”), located south of
Leonora in Western Australia.
Desdemona South (see Figure 4) comprises a strategically
located tenement package immediately north of and contiguous
with Genesis’ 100%-owned 867,000oz Ulysses Gold Project,
and
targets which will
strengthen and expand the Company’s growth pipeline in the
Leonora region.
includes a range of exploration
Under the terms of the agreement, Genesis will have the right
to earn an initial 60% interest in the Project and move to 80%
under certain conditions.
The Joint Venture will provide Genesis with over 10km of strike
of mafic stratigraphy (similar to Ulysses) to explore within the
same
that controls gold
mineralisation in the district (see Figure 5).
regional structural corridor
Desdemona South comprises a package of nine tenements
covering a total area of ~156km2, shown in the orange shading
in Figure 5. The Project is easily accessed off the Goldfields
Highway and is strategically located between Genesis’ Ulysses
Project and St Barbara’s Gwalia Mine.
The tenement package includes a number of conceptual to
moderately advanced gold targets. There are no Mineral
Resources located on the Project. The Project area has been
explored for gold and base metals since the 1970’s but has had
a fragmented and discontinuous exploration history due to a
number of owners.
Early exploration of the Project area by previous explorers was
hindered by the presence of widespread transported cover and
deep clay overburden. Many rotary air blast drill programs
conducted in the project area were unsuccessful, as target
depths to test the bedrock could not be achieved due to
swelling clays or water in-flows from buried palaeo-channels.
A 5,000m air-core drilling program commenced in late June
following completion of a heritage clearance survey.
9
Figure 4. Project location map showing the Desdemona
South JV Project in orange.
Genesis Minerals Limited and controlled entities
Directors' Report
Figure 5. Plan view highlighting target areas at Desdemona South
Farm-In and Joint Venture Terms
The initial Farm-In terms are as follows:
• Stage 1 Expenditure: Genesis must incur expenditure of not less than $250,000 (Minimum Expenditure) on the JV Area
within 18 months of Commencement.
• Stage 2 Expenditure: Genesis may earn a 60% interest in the JV Area by incurring a further $750,000 expenditure (total
spend of $1,000,000) on the JV Area within 36 months of Commencement.
Once Genesis earns a 60% interest, Kin may elect to form a Joint Venture with participating interests of 60% Genesis and
40% Kin or grant Genesis the right to elect to sole contribute or form a JV. Once Genesis earns a 70% interest (if Kin does
not elect to from a JV at 60%), Kin may elect to form a Joint Venture with participating interests of 70% Genesis and 30% Kin
or grant Genesis the right to elect to sole contribute or form a JV to move to 80%.
Genesis would need to spend $2.6 million in total to earn an 80% interest in the JV.
Barimaia JV Gold Project, WA (Genesis: 65%)
The Barimaia JV Gold Project, located in the Murchison district of Western Australia, is a highly prospective ground package
located just 10km south-east of the 6Moz Mt Magnet Gold Mine, operated by ASX listed, Ramelius Resources Limited.
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.
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Genesis Minerals Limited and controlled entities
Directors' Report
Genesis has now earned an initial 65% interest in the project and has elected to form a joint venture for the continued
development of the project.
A 1,500m wide-spaced air-core program was completed in July 2019 to complete a first pass test of the eastern strike
extensions to the interpreted gold mineralised corridor (highlighted in Figure 7).
The results from the drilling program identified significant extensions of the east-west trending gold mineralised system to the
east of McNabs East.
Hole 19BAAC105 returned a significant intercept of 2m @ 14.27g/t gold from 25m and is interpreted to be associated with an
east-northeast trending arm of the main mineralised corridor (see Figure 7), associated with a granodiorite. Hole 19BAAC097
returned 5m @ 0.11g/t gold from 40m some 500m east of McNabs East and is associated with weather and foliated mafic
rocks. This zone is interpreted to be open to the east and south-east.
Hole 19BAAC100 (5m @ 0.14g/t gold) and 19BAAC102 (5m @ 0.17g/t gold) are located to the south-east of the McNabs
Prospects. These holes, together with 17BAAC013 (5m @ 0.26g/t gold), have outlined a saprolite-hosted zone of persistent
anomalism over 600m of strike spatially associated with the interpreted position of the granite-greenstone contact.
Full details of the assay results were provided in the Company’s ASX Announcement dated 15 August 2019.
Figure 6. Barimaia Project showing prospect locations. The Barimaia Project is adjacent to Ramelius’ Mt Magnet Gold
Mine. Target mineralised corridor highlighted.
In December 2019, Genesis completed a 245m diamond drilling program to test the current structural geological model for the
Barimaia Project. Importantly the drilling confirmed the current interpreted east-west orientation of the controlling mineralised
structures.
Results (see Figures 7 and 8) returned from the drilling were in line with expectations and included 6m @ 2.16g/t Au from
83m (19BADH01) and 13.2m @ 1.05g/t Au from 30.2m (19BADH02) within broad zones of lower grade gold mineralisation.
Full details of the assay results were provided in the Company’s ASX Announcement dated 16 March 2020.
The gold mineralisation at McNabs and McNabs East is considered to occur within the same east-west oriented structural
trend.
Future planned activities at Barimaia include:
•
•
Further systematic air-core drilling to test the area east, west and south of the currently identified bedrock gold
targets to extend the mineralised system, which is open in all directions; and
RC drilling to systematically test the +1.5km of E-W striking bedrock gold targets associated with the McNabs
Prospects.
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Genesis Minerals Limited and controlled entities
Directors' Report
Figure 7. Plan view of the McNabs Prospects and AC holes shown as colour coded circles with white outlines. The
east-west trending gold mineralised structural corridor is highlighted. 2018 drilling intercepts (yellow boxes) from
wide spaced RC drilling with collar locations shown by white circles. Diamond hole collar positions shown by pale
green diamonds.
Figure 8. Cross section of the McNabs Prospects
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Genesis Minerals Limited and controlled entities
Directors' Report
MINERAL RESOURCE TABLES
A summary of the December 2019 Ulysses Mineral Resource is provided in Table 1 and the June 2020 Kookynie tenements
Mineral Resource in Table 2.
Table 1 December 2019 Mineral Resource Estimate 0.75g/t Cut-off above 200mRL, 2.0g/t Below 200mRL
Measured
Indicated
Inferred
Total
Domain
Tonnes
Mt
0.66
0.14
HG Shoots
Shear Zone
Ulysses East
Au
g/t
6.0
1.3
Total
0.80
5.2
Tonnes
Mt
0.89
3.20
0.53
4.61
Au
g/t
6.5
2.2
1.8
3.0
Tonnes
Mt
0.19
1.88
1.00
3.07
Au
g/t
8.2
3.2
1.6
3.0
Tonnes
Mt
1.73
5.21
1.53
8.48
Au
g/t
6.5
2.5
1.6
3.2
Au
Ounces
360,600
426,100
80,500
867,200
December 2019 Mineral Resource Estimate 2.0g/t Global Cut-off
Measured
Indicated
Inferred
Type
Tonnes
Mt
Total
0.66
Au
g/t
6.0
Tonnes
Mt
2.42
Au
g/t
4.4
Tonnes
Mt
1.70
Au
g/t
4.1
Tonnes
Mt
4.78
Total
Au
g/t
4.5
Au
Ounces
695,900
Table 2 June 2020 Mineral Resource Estimate Kookynie
0.5g/t Au Cut-off, Depleted for Historical Mining
Indicated
Inferred
Total
Deposit
Tonnes
Butterfly
Admiral
Clark
Orion/Sapphire
Puzzle
Orient Well
Mt
0.54
1.40
0.40
-
1.00
-
Au
g/t
1.7
2.0
1.4
-
1.1
-
Au
Oz
30,000
89,000
18,000
-
36000
-
Total
3.35
1.6
174,000
NB. Rounding errors may occur
Tonnes
Mt
0.52
1.38
0.35
0.69
0.72
1.51
5.18
Au
g/t
1.7
1.5
1.2
2.2
1.0
1.3
1.4
Au
Oz
29,000
66,000
13,000
48,000
23,000
61,000
240,000
Tonnes
Mt
1.06
2.78
0.75
0.69
1.73
1.51
8.53
Au
g/t
1.7
1.7
1.3
2.2
1.1
1.3
1.5
Au
Oz
59,000
155,000
31,000
48,000
59,000
61,000
414,000
Full details of the Ulysses Mineral Resource estimate are provided in the Company’s ASX announcement dated 19 December
2019 titled “Ulysses Mineral Resource Update”. Full details of the Kookynie Mineral Resource estimate are provided in the
Company’s ASX announcement dated 24 June 2020 titled “Transformational Acquisition of the Kookynie Gold Project”.
The Company confirms that it is not aware of any new information or data that materially affects the information included in
the original market announcements dated 19 December 2019 and 24 June 2020 and the Company confirms that all material
assumptions and technical parameters underpinning the mineral resource estimates in the market announcements continue
to apply and have not materially changed. The Company confirms that the form and context in which the Competent Persons’
findings are presented have not materially changed from the original market announcements.
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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 2020 of $9,582,099 (2019: $7,036,589).
The operating loss for the year arose from expenditure on exploration activities as part of its strategy to develop a long-life,
standalone mining operation at the Ulysses Gold Project.
At 30 June 2020 cash assets available totalled $11,145,421 (2019: $2,609,843).
The net assets of the consolidated entity increased from $1,839,300 to $10,653,113 at June 2020. This increase is largely
attributable to the issues of equity during the year of $18,346,159 (net of costs) offset by the operating loss recorded for the
year.
Operating Results for the Year
Summarised operating results are as follows:
2020
2019
Revenues
$
Results
$
Revenues
$
Results
$
Group revenues and loss from ordinary activities before
income tax expense
71,385
(9,582,099)
64,454
(7,036,589)
Shareholder Returns
Basic and diluted loss per share (cents)
2020
(0.74)
2019
(0.70)
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.
15
Genesis Minerals Limited and controlled entities
Directors' Report
SHARES UNDER OPTION
At the date of this report there are 15,800,000 unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Movements of share options during the year
Expired, exercisable at 3.9 cents
Lapsed, exercisable at 4.2 cents
Exercised at 4.9 cents
Total number of options outstanding as at 30 June 2020
Exercised at 4.8 cents
Total number of options outstanding at the date of this report
The balance is comprised of the following:
Expiry date
29 November 2020
13 December 2020
29 November 2021
13 December 2021
29 November 2022
Total
Exercise price (cents)
4.9
4.2
5.3
4.5
5.6
Number of options
33,200,000
(4,800,000)
(800,000)
(1,800,000)
25,800,000
(10,000,000)
15,800,000
Number of options
800,000
4,000,000
2,300,000
6,000,000
2,700,000
15,800,000
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.
At the date of this report there are 13,500,000 unissued ordinary shares in respect of which performance rights are
outstanding.
Balance at the beginning of the year
Total number of performance rights outstanding as at 30 June 2020
Issued September 2020, expiring 31 December 2021
Total number of performance rights outstanding at the date of this report
The balance is comprised of the following:
Expiry date
31 December 2021
Total
Number of performance
rights
-
-
13,500,000
13,500,000
Number of performance
rights
13,500,000
13,500,000
No person entitled to exercise any performance right referred to above has or had, by virtue of the performance right, 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.
16
Genesis Minerals Limited and controlled entities
Directors' Report
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 $17,075,634 (before costs) through the issue of 478,287,738 ordinary shares to institutional and
sophisticated investors during the year. The group issued 26,595,745 ordinary shares valued at $1,436,170 pursuant to the
acquisition of the Kookynie Gold Project. The group issued 1,800,000 ordinary shares pursuant to the exercise of options
raising $88,200.
AFTER BALANCE DATE EVENTS
On 1 July 2020, the Group issued 238,095,238 ordinary shares at $0.042 per share raising $10,000,000 (before costs) for
the share placement announced to the market on 24 June 2020. The proceeds for the share placement were received on 30
June 2020 with the shares issued on 1 July 2020.
On 10 July 2020, the Group issued 10,000,000 ordinary shares pursuant to the exercise of options at $0.048 per share
raising $480,000 (before costs).
On 20 July 2020, the Group issued 226,326,261 ordinary shares at $0.042 per share raising $9,505,703 (before costs) for
the 1 for 6 fully underwritten non-renounceable rights issue announced to the market on 24 June 2020.
On 8 September 2020, the Group issued 104,628,958 ordinary shares at $0.042 per share raising $4,394,416 (before costs)
for the share placement announced to the market on 3 August 2020 and approved by shareholders on 4 September 2020.
On 15 September 2020, the Group issued 13,500,000 performance rights expiring on 31 December 2021.
Apart from the above, no matters or circumstances have arisen since the end of the financial year which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the
Group in future financial years.
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.
17
Genesis Minerals Limited and controlled entities
Directors' Report
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 23.
CORPORATE GOVERNANCE
A copy of Genesis’ 2020 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 fourth 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, options and performance rights. 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 incentive schemes.
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 and performance
rights 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 employee incentive schemes.
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 incentive scheme 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:
18
Genesis Minerals Limited and controlled entities
Directors' Report
2020
$
2019
$
2018
$
2017
$
2016
$
Net Loss
Share Price at Start of Year
Share Price at End of Year
(9,582,099)
$0.023
$0.052
(7,036,589)
$0.043
$0.023
(5,573,467)
$0.016
$0.043
(718,341)
$0.019
$0.016
(2,220,550)
$0.006
$0.019
USE OF REMUNERATION CONSULTANTS
The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2020.
VOTING AND COMMENT MADE ON THE GROUP'S 2019 ANNUAL GENERAL MEETING
The Company received 96.65% of “yes” votes on its remuneration report for the 2019 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
Key management personnel of the Group
2020
$
402,702
33,391
49,753
485,846
2019
$
385,316
33,285
132,390
550,991
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
Tommy McKeith
2020
2019
Michael Fowler
2020
2019
Craig Bradshaw
2020
2019
Gerry Kaczmarek
2020
2019
Nic Earner
2020
2019
Richard Hill
2020
2019
2020
2019
50,228
29,300
268,4351
248,0161
31,425
30,000
30,000
30,000
22,6142
-
-
48,0003
402,702
385,316
4,772
2,783
24,344
24,802
1,425
2,850
2,850
2,850
-
-
-
-
33,391
33,285
20,372
39,455
11,469
40,740
3,823
13,580
14,089
21,212
-
-
-
17,403
49,753
132,390
75,372
71,538
304,248
313,558
36,673
46,430
46,939
54,062
22,614
-
-
65,403
485,846
550,991
27.03%
55.15%
3.77%
12.99%
10.42%
29.25%
30.02%
39.24%
-%
-%
-%
26.61%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
1. M Fowler - includes payment of unused leave entitlements of $16,163 (2019: $20,743).
2. N Earner – appointed as Director on 24 October 2019.
3. R Hill - resigned as Director on 23 November 2018.
19
Genesis Minerals Limited and controlled entities
Directors' Report
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 $50,228 per annum, plus statutory superannuation, and Non-
Executive Directors receive a fee of $30,000 per annum, plus statutory superannuation. Effective 7 August 2020, the
remuneration levels were revised with the Non-Executive Chairman to receive a fee of $54,795 per annum, plus statutory
superannuation, and Non-Executive Directors to receive a fee of $32,877 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. Effective from 1 January
2020, Mr Fowler’s salary was increased to $275,0000 per annum plus $25,000 superannuation.
Equity instrument disclosures relating to key management personnel
Options and performance rights provided as remuneration and shares issued on exercise/conversion of such options and
performance rights
Nil options were issued during the year (2019: 7,600,000), valued at $nil (2019: $103,810). 1,800,000 options were
exercised during the year (2019: nil), 800,000 options lapsed during the year (2019: nil) and 4,800,000 options expired
(2019: nil).
Details of the vesting profiles of the options granted as remuneration to key management personnel of the Group are
detailed below:
Directors
Number of
Options
Issued
Grant
Date
Expiry
Date
Exercise
Price
Fair Value
Per Option
at Grant
Date
Year in
Which
Grant
Vests
%
Vested
During
2020
%
Forfeited
During
2020
Tommy McKeith
Tranche 2
-
-
Tranche 3
Michael Fowler
Tranche 2
-
-
Tranche 3
Craig Bradshaw
Tranche 2
-
Tranche 3
-
Gerry Kaczmarek
-
-
-
Tranche 1
Tranche 2
Tranche 3
1,500,000 29/11/2018 29/11/2021
1,500,000 29/11/2018 29/11/2022
$0.053
$0.056
$0.0138
$0.0161
2,400,000 13/12/2017 13/12/2020
3,600,000 13/12/2017 13/12/2021
$0.042
$0.045
$0.0133
$0.0152
800,000 13/12/2017 13/12/2020
1,200,000 13/12/2017 13/12/2021
$0.042
$0.045
$0.0133
$0.0152
800,000 29/11/2018 29/11/2020
800,000 29/11/2018 29/11/2021
1,200,000 29/11/2018 29/11/2022
$0.049
$0.053
$0.056
$0.0110
$0.0138
$0.0161
2020
2021
2019
2020
2019
2020
2019
2020
2021
100%
-%
100%
100%
100%
100%
100%
100%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
Subsequent to the end of the financial year, 5,000,000 performance rights with an expiry date of 31 December 2021 were
issued to Mr Fowler. The performance rights will only vest into shares if the relevant performance hurdles are met prior to
the expiry date.
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:
20
Genesis Minerals Limited and controlled entities
Directors' Report
2020
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
Tommy McKeith
Michael Fowler
Craig Bradshaw
Gerry Kaczmarek
Nic Earner
4,800,000
8,400,000
2,800,000
2,800,000
-
18,800,000
-
-
-
-
-
-
(1,800,000)
-
-
-
-
(1,800,000)
-
(2,400,000)
(800,000)
-
-
(3,200,000)
3,000,000
6,000,000
2,000,000
2,800,000
-
13,800,000
1,500,000
6,000,000
2,000,000
1,600,000
-
11,100,000
2019
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
Tommy McKeith
Michael Fowler
Craig Bradshaw
Gerry Kaczmarek
Richard Hill
-
8,400,000
2,800,000
-
2,800,000
14,000,000
4,800,000
-
-
2,800,000
-
7,600,000
1. R Hill – balance on resignation on 23 November 2018.
Share based compensation
-
-
-
-
-
-
-
-
-
-
-
-
4,800,000
8,400,000
2,800,000
2,800,000
2,800,0001
21,600,000
1,800,000
4,800,000
1,600,000
800,000
2,800,0001
11,800,000
No shares were issued to directors in lieu of fees and salary during the year. 2019: (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.
2020
Directors of Genesis Minerals Limited
Ordinary shares
Tommy McKeith
Michael Fowler
Craig Bradshaw
Gerry Kaczmarek
Nic Earner
2019
Directors of Genesis Minerals Limited
Ordinary shares
Tommy McKeith
Michael Fowler
Craig Bradshaw
Gerry Kaczmarek
Richard Hill
1. T McKeith – balance on appointment on 29 November 2018
2. R Hill – balance on resignation on 23 November 2018
Balance at
start of the
year
Received
during the year
on the exercise
of options
Other
changes
during the
year
Balance at
end of the
year
3,000,000
12,167,230
-
200,000
-
15,367,230
Balance at
start of the
year
1,800,000
-
-
-
-
1,800,000
Received
during the year
on the exercise
of options
500,000
837,594
-
33,334
-
1,370,928
Other
changes
during the
year
5,300,000
13,004,824
-
233,334
-
18,538,158
Balance at
end of the
year
-
-
-
-
-
-
3,000,0001
-
-
-
-
3,000,000
3,000,000
12,167,230
-
200,000
7,002,6102
22,369,840
-
12,167,230
-
200,000
7,002,610
19,369,840
21
Genesis Minerals Limited and controlled entities
Directors' Report
Loans to key management personnel
There were no loans to key management personnel during the year. 2019: (nil).
Other key management personnel transactions with Directors and Director-related entities
There were no other transactions with key management personnel during the year. 2019: (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, 25 September 2020
22
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 2020, 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 25th day of September 2020
Genesis Minerals Limited and controlled entities
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
YEAR ENDED 30 JUNE 2020
REVENUE
EXPENDITURE
Exploration expenses
Salaries and employee benefits expense
Corporate expenses
Administration costs
Depreciation expense
Share based payments expense
LOSS BEFORE INCOME TAX
Notes
2020
$
2019
$
2
71,385
64,454
(8,306,909)
(526,800)
(408,614)
(352,643)
(8,765)
(49,753)
(5,849,361)
(439,408)
(332,668)
(346,054)
(1,162)
(132,390)
(9,582,099)
(7,036,589)
INCOME TAX BENEFIT/(EXPENSE)
3
-
-
LOSS FOR THE YEAR
(9,582,099)
(7,036,589)
OTHER COMPREHENSIVE LOSS FOR THE YEAR, NET OF TAX
-
-
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE
TO MEMBERS OF GENESIS MINERALS LIMITED
(9,582,099)
(7,036,589)
Basic and diluted loss per share (cents per share)
12
(0.74)
(0.70)
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.
24
Genesis Minerals Limited and controlled entities
Consolidated Statement of Financial Position
AT 30 JUNE 2020
Notes
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
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
4
5
6
7
8
9
2020
$
11,145,421
141,268
13,808
11,300,497
2019
$
2,609,843
36,429
27,893
2,674,165
17,597
17,597
6,123
6,123
11,318,094
2,680,288
524,408
140,573
664,981
664,981
718,236
122,752
840,988
840,988
10,653,113
1,839,300
10
11
52,166,259
1,708,833
(43,221,979)
33,820,100
1,659,080
(33,639,880)
10,653,113
1,839,300
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated
Financial Statements.
25
Genesis Minerals Limited and controlled entities
Consolidated Statement of Changes in Equity
YEAR ENDED 30 JUNE 2020
Notes
Ordinary
Share
Capital
$
Accumulated
Losses
$
Options
Reserve
$
Total
$
BALANCE AT 1 JULY 2018
29,059,243
(26,603,291)
1,526,690
3,982,642
Loss for 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
Sub-total
-
-
(7,036,589)
(7,036,589)
10
10
22
5,000,000
(239,143)
-
-
-
-
-
-
-
-
(7,036,589)
(7,036,589)
5,000,000
(239,143)
132,390
132,390
4,760,857
(7,036,589)
132,390
(2,143,342)
BALANCE AT 30 JUNE 2019
33,820,100
(33,639,880)
1,659,080
1,839,300
BALANCE AT 1 JULY 2019
33,820,100
(33,639,880)
1,659,080
1,839,300
Loss for 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
Sub-total
-
-
(9,582,099)
(9,582,099)
10
10
22
19,210,532
(864,373)
-
-
-
-
-
-
-
-
(9,582,099)
(9,582,099)
19,210,532
(864,373)
49,753
49,753
18,346,159
(9,582,099)
49,753
8,813,813
BALANCE AT 30 JUNE 2020
52,166,259
(43,221,979)
1,708,833
10,653,113
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated
Financial Statements.
26
Genesis Minerals Limited and controlled entities
Consolidated Statement of Cash Flows
YEAR ENDED 30 JUNE 2020
Notes
2020
$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Payments for exploration expenditure
Interest received
Cash flow boost
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
21
CASH FLOWS FROM INVESTING ACTIVITIES
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
(1,197,925)
(7,281,006)
9,212
62,500
(8,407,219)
(20,239)
(20,239)
17,163,834
(200,798)
16,963,036
8,535,578
2,609,843
2019
$
(1,075,243)
(6,257,307)
76,635
-
(7,255,915)
-
-
5,000,000
(239,143)
4,760,857
(2,495,058)
5,104,901
CASH AND CASH EQUIVALENTS AT THE END OF THE
FINANCIAL YEAR
4
11,145,421
2,609,843
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial
Statements.
27
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
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 25 September 2020. 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 2019 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 2019.
(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 $9,582,099 for the year ended 30 June 2020 (2019: $7,036,589). Included within this loss was
exploration expenditure of $8,306,909 (2019: $5,849,361).
The net working capital surplus position of the Group at 30 June 2020 was $10,635,516 (2019: $1,833,177). The Group
has expenditure commitments relating to work programme obligations of their assets of $1,802,807 which could potentially
fall due in the twelve months to 30 June 2020.
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 19 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.
28
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
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.
29
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
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
The Group recognises revenue as follows:
(i) Revenue from contract with customers
Revenue is recognised at an amount that reflects the consideration to which the group is expected to be entitled in
exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity:
identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction
price which takes into account estimates of variable consideration and the time value of money; allocates the transaction
price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or
service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that
depicts the transfer to the customer of the goods or services promised.
Variable consideration with the transaction price, if any, reflects concessions provided to the customers such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the ‘expected value’ or ‘most likely amount’ method. The measurement of the variable
consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly
probably that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are recognised as a refund liability.
(ii) Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset
to the net carrying amount of 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) Classification of financial instruments
The Group classifies its financial assets into the following measurement categories:
•
•
those to be measured at fair value (either through other comprehensive income, or through profit or loss); and
those to be measured at amortised cost.
30
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The classification depends on the Group’s business model for managing financial assets and the contractual terms of the
financial assets' cash flows.
The Group classifies its financial liabilities at amortised cost unless it has designated liabilities at fair value through profit
or loss or is required to measure liabilities at fair value through profit or loss such as derivative liabilities.
(ii) Financial assets measured at amortised cost
Debt instruments
Investments in debt instruments are measured at amortised cost where they have:
•
•
contractual terms that give rise to cash flows on specified dates, that represent solely payments of principal and
interest on the principal amount outstanding; and
are held within a business model whose objective is achieved by holding to collect contractual cash flows.
These debt instruments are initially recognised at fair value plus directly attributable transaction costs and subsequently
measured at amortised cost. The measurement of credit impairment is based on the three-stage expected credit loss
model described below in note (c) Impairment of financial assets.
(a) Financial assets measured at fair value through other comprehensive income
Equity instruments
Investment in equity instruments that are neither held for trading nor contingent consideration recognised by the Group in
a business combination to which AASB 3 "Business Combination" applies, are measured at fair value through other
comprehensive income, where an irrevocable election has been made by management.
Amounts presented in other comprehensive income are not subsequently transferred to profit or loss. Dividends on such
investments are recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost of the
investment.
(b) Items at fair value through profit or loss comprise:
•
•
•
items held for trading;
items specifically designated as fair value through profit or loss on initial recognition; and
debt instruments with contractual terms that do not represent solely payments of principal and interest.
Financial instruments held at fair value through profit or loss are initially recognised at fair value, with transaction costs
recognised in the income statement as incurred. Subsequently, they are measured at fair value and any gains or losses
are recognised in the income statement as they arise.
Where a financial asset is measured at fair value, a credit valuation adjustment is included to reflect the credit worthiness
of the counterparty, representing the movement in fair value attributable to changes in credit risk.
Financial instruments held for trading
A financial instrument is classified as held for trading if it is acquired or incurred principally for the purpose of selling or
repurchasing in the near term, or forms part of a portfolio of financial instruments that are managed together and for
which there is evidence of short-term profit taking, or it is a derivative not in a qualifying hedge relationship.
Financial instruments designated as measured at fair value through profit or loss
Upon initial recognition, financial instruments may be designated as measured at fair value through profit or loss. A
financial asset may only be designated at fair value through profit or loss if doing so eliminates or significantly reduces
measurement or recognition inconsistencies (i.e. eliminates an accounting mismatch) that would otherwise arise from
measuring financial assets or liabilities on a different basis.
A financial liability may be designated at fair value through profit or loss if it eliminates or significantly reduces an
accounting mismatch or:
•
•
if a host contract contains one or more embedded derivatives; or
if financial assets and liabilities are both managed and their performance evaluated on a fair value basis in
accordance with a documented risk management or investment strategy.
Where a financial liability is designated at fair value through profit or loss, the movement in fair value attributable to
changes in the Group’s own credit quality is calculated by determining the changes in credit spreads above observable
market interest rates and is presented separately in other comprehensive income.
31
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Impairment of financial assets
The Group applies a three-stage approach to measuring expected credit losses (ECLs) for the following categories of
financial assets that are not measured at fair value through profit or loss:
•
•
•
debt instruments measured at amortised cost and fair value through other comprehensive income;
loan commitments; and
financial guarantee contracts.
No ECL is recognised on equity investments.
Determining the stage for impairment
At each reporting date, the Group assesses whether there has been a significant increase in credit risk for exposures
since initial recognition by comparing the risk of default occurring over the remaining expected life from the reporting date
and the date of initial recognition. The Group considers reasonable and supportable information that is relevant and
available without undue cost or effort for this purpose. This includes quantitative and qualitative information and also,
forward-looking analysis.
An exposure will migrate through the ECL stages as asset quality deteriorates. If, in a subsequent period, asset quality
improves and also reverses any previously assessed significant increase in credit risk since origination, then the
provision for doubtful debts reverts from lifetime ECL to 12-months ECL. Exposures that have not deteriorated
significantly since origination are considered to have a low credit risk. The provision for doubtful debts for these financial
assets is based on a 12-months ECL. When an asset is uncollectible, it is written off against the related provision. Such
assets are written off after all the necessary procedures have been completed and the amount of the loss has been
determined. Subsequent recoveries of amounts previously written off reduce the amount of the expense in the income
statement.
The Group assesses whether the credit risk on an exposure has increased significantly on an individual or collective
basis. For the purposes of a collective evaluation of impairment, financial instruments are grouped on the basis of shared
credit risk characteristics, taking into account instrument type, credit risk ratings, date of initial recognition, remaining
term to maturity, industry, geographical location of the borrower and other relevant factors.
(d) Recognition and derecognition of financial instruments
A financial asset or financial liability is recognised in the balance sheet when the Group becomes a party to the
contractual provisions of the instrument, which is generally on trade date. Loans and receivables are recognised when
cash is advanced (or settled) to the borrowers.
Financial assets at fair value through profit or loss are recognised initially at fair value. All other financial assets are
recognised initially at fair value plus directly attributable transaction costs.
The Group derecognises a financial asset when the contractual cash flows from the asset expire or it transfers its rights
to receive contractual cash flows from the financial asset in a transaction in which substantially all the risks and rewards
of ownership are transferred. Any interest in transferred financial assets that is created or retained by the Group is
recognised as a separate asset or liability.
A financial liability is derecognised from the balance sheet when the Group has discharged its obligation or the contract
is cancelled or expires.
(e) Offsetting
Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the Group has a
legal right to offset the amounts and intends to settle on a net basis or to realise the asset and settle the liability
simultaneously.
(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.
32
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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, performance 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 performance rights and 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 performance
rights, options 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 performance rights and options
expected to vest. At the end of each reporting period, the Group revises its estimate of the number of performance rights
or options 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.
33
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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).
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.
34
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
(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 performance
rights and 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.
35
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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.
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 has completed its impact assessment of AASB 16 and the effect of AASB 16 did not have a material effect on
the Group.
36
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
2. REVENUE
Interest revenue
Cash flow boost
3. 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
Non-deductible exploration costs
Non-deductible other 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% (2019: 30%)
Unused capital losses for which no deferred tax asset has been
recognised
Potential tax benefit @ 27.5% (2019: 30%)
2020
$
8,885
62,500
71,385
2019
$
64,454
-
64,454
-
-
-
-
-
-
2020
$
(9,582,099)
27.5%
(2,635,077)
13,682
944,947
49,010
(17,188)
(94,025)
(1,738,651)
1,738,651
-
2018
2019
$
$
(7,036,589)
30%
(2,110,977)
39,717
-
8,161
(98)
(45,350)
(2,108,547)
2,108,547
-
21,066,703
5,793,343
19,328,052
5,798,416
487,085
133,948
487,085
146,126
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.
4. 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
2020
$
11,125,421
20,000
11,145,421
2019
$
1,089,843
1,520,000
2,609,843
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.
37
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
5. TRADE AND OTHER RECEIVABLES
Trade debtors – GST receivable
Other debtor
Other receivables – accrued interest
2020
$
141,268
-
-
141,268
2019
$
33,902
2,200
327
36,429
The Group expects the above trade and other receivables to be recovered within 12 months of 30 June 2020 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).
6. PREPAYMENTS
Prepaid expenditure
7. PLANT AND EQUIPMENT
Plant and equipment
Cost
Accumulated depreciation
Net book amount
Plant and equipment
Opening net book amount
Additions / (Disposals)
Depreciation charge
Closing net book amount
8. TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
9. PROVISIONS
Employee entitlements
Rehabilitation
2020
$
13,808
13,808
34,096
(16,499)
17,597
6,123
20,239
(8,765)
17,597
413,569
110,839
524,408
90,573
50,000
140,573
2019
$
27,893
27,893
13,857
(7,734)
6,123
7,285
-
(1,162)
6,123
553,490
164,746
718,236
72,752
50,000
122,752
38
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
10. ISSUED CAPITAL
1,357,954,186 (30 June 2019: 1,089,365,941) Ordinary shares
Value of conversion rights - Convertible Notes
Share issue costs written off against issued capital
MOVEMENT IN ORDINARY SHARES
Balance at 1 July 2018
Placement at $0.028 per share – 14 December 2018
Less share issue costs
Balance at 30 June 2019
Balance at 1 July 2019
Placement at $0.032 per share – 5 August 2019
Rights Issue at $0.032 per share – 4 September 2019
Placement at $0.032 per share – 25 September 2019
Shares issued as part of the transaction to acquire the Kookynie Gold
Project at $0.054 per share – 25 June 2020
Exercise of options at $0.049 per share – 26 June 2020
Placement at $0.042 per share1
Less share issue costs
Balance at 30 June 2020
2020
$
54,644,662
25,633
(2,504,036)
52,166,259
2019
$
35,434,130
25,633
(1,639,663)
33,820,100
No.
$
910,794,512
178,571,429
-
1,089,365,941
1,089,365,941
44,327,199
188,949,343
6,915,958
26,595,745
1,800,000
-
-
1,357,954,186
29,059,243
5,000,000
(239,143)
33,820,100
33,820,100
1,418,471
6,046,380
221,311
1,436,170
88,200
10,000,000
(864,373)
52,166,259
1 Funds were received on 30 June 2020 for the share placement. 238,095,238 shares were issued on 1 July 2020.
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 3.9 cents, on or before 13 December 2019
Exercisable at 4.8 cents, on or before 31 July 2020
Exercisable at 4.9 cents, on or before 29 November 2020
Exercisable at 4.2 cents, on or before 13 December 2020
Exercisable at 5.3 cents, on or before 29 November 2021
Exercisable at 4.5 cents, on or before 13 December 2021
Exercisable at 5.6 cents, on or before 29 November 2022
(b) Movements in options on issue
Beginning of the financial year
Expired, exercisable at 3.9 cents
Lapsed, exercisable at 4.2 cents
Exercised June 2020 at 4.9 cents
Issued:
Exercisable at 4.9 cents, on or before 29 November 2020
Exercisable at 5.3 cents, on or before 29 November 2021
Exercisable at 5.6 cents, on or before 29 November 2022
End of the financial year
39
2020
No.
-
10,000,000
800,000
4,000,000
2,300,000
6,000,000
2,700,000
25,800,000
33,200,000
(4,800,000)
(800,000)
(1,800,000)
-
-
-
25,800,000
2019
No.
4,800,000
10,000,000
2,600,000
4,800,000
2,300,000
6,000,000
2,700,000
33,200,000
25,600,000
-
-
-
2,600,000
2,300,000
2,700,000
33,200,000
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
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 2020 is $10,635,516 (2019: $1,833,177).
11. RESERVES AND ACCUMULATED LOSSES
Nature and purpose of reserves
(i) 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 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)
2020
$
1,659,080
49,753
1,708,833
2020
$
2019
$
1,526,690
132,390
1,659,080
2019
$
(9,582,099)
(7,036,589)
2020
Number of
shares
2019
Number of
shares
1,290,413,912
1,007,663,397
(0.74)
(0.70)
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
2020
$
1,802,807
7,977,090
9,779,897
2019
$
441,380
1,372,877
1,814,257
The above exploration commitments includes the Group’s interests in farm-in and joint venture agreements (refer note 24)
and the Group’s interest in the Kookynie Gold Project via an option agreement (refer note 25).
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.
40
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
14. FINANCIAL RISK MANAGEMENT (continued)
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
2020
$
11,145,421
141,268
11,286,689
2019
$
2,609,843
36,429
2,646,272
524,408
524,408
718,236
718,236
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 did not have any significant revenue sources during the 2019 or 2020 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;
•
•
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. The Group had no gold sales during the 2020 financial year.
41
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
14. FINANCIAL RISK MANAGEMENT (continued)
(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.
2020
2019
PROFIT
EQUITY
100 Basis Points
Increase
100 Basis Points
Decrease
100 Basis Points
Increase
100 Basis Points
Decrease
$111,454
$26,098
($111,454)
($26,098)
$111,454
$26,098
($111,454)
($26,098)
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. KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel compensation
Short-term benefits
Post-employment benefits
Share-based payments
16. 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
2020
$
402,702
33,391
49,753
485,846
2020
$
2019
$
385,316
33,285
132,390
550,991
2019
$
30,558
30,558
34,505
34,505
42
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
17. CONTINGENCIES
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.
18. 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 19.
(c) Appointment and Resignation of Directors
Mr Nic Earner was appointed as Non-Executive Director on 24 October 2019.
(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 15: Key Management Personnel
Disclosures (KMP) and the Remuneration Report in the Directors' Report.
There were no other related party transactions during the year.
19. 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
Australia
Australia
Ordinary
Ordinary
(1) The proportion of ownership interest is equal to the proportion of voting power held.
2020
%
100
100
2019
%
100
100
20. EVENTS AFTER THE BALANCE SHEET DATE
On 1 July 2020, the Group issued 238,095,238 ordinary shares at $0.042 per share raising $10,000,000 (before costs) for
the share placement announced to the market on 24 June 2020. The proceeds for the share placement were received on 30
June 2020 with the shares issued on 1 July 2020.
On 10 July 2020, the Group issued 10,000,000 ordinary shares pursuant to the exercise of options at $0.048 per share
raising $480,000 (before costs).
On 20 July 2020, the Group issued 226,326,261 ordinary shares at $0.042 per share raising $9,505,703 (before costs) for
the 1 for 6 fully underwritten non-renounceable rights issue announced to the market on 24 June 2020.
On 8 September 2020, the Group issued 104,628,958 ordinary shares at $0.042 per share raising $4,394,416 (before costs)
for the share placement announced to the market on 3 August 2020 and approved by shareholders on 4 September 2020.
On 15 September 2020, the Group issued 13,500,000 performance rights expiring on 31 December 2021.
Apart from the above, no matters or circumstances have arisen since the end of the financial year which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the
Group in future financial years.
43
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
21. 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 as part of the transaction to acquire the Kookynie Gold
Project
Change in operating assets and liabilities, net of effects from
purchase of controlled entities
Decrease/(increase) in trade and other receivables
Decrease/(increase) in prepayments
(Decrease)/increase in trade and other payables
(Decrease)/increase in provisions
Net cash inflow/(outflow) from operating activities
2020
$
2019
$
(9,582,099)
(7,036,589)
8,765
49,753
1,162
132,390
1,436,170
-
(104,839)
14,085
(246,875)
17,821
(8,407,219)
49,530
(27,893)
(375,180)
665
(7,255,915)
(b) Non-cash investing and financing activities
There were no non-cash investing and financing activities during the current year.
22. SHARE BASED PAYMENTS
Share-based payments including performance rights and options are granted at the discretion of the Board to align the
interests of directors, executives and employees with those of shareholders.
Each performance right or 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 performance right or option. Performance rights and options
neither carry rights to dividends nor voting rights. Performance rights may be exercised at any time once the relative
performance hurdle has been satisfied prior to expiry date. Options may be exercised at any time from the date of vesting to
the date of their expiry by paying the exercise price.
Nil options were issued during the year (2019: 7,600,000), valued at $nil (2019: $103,810). 1,800,000 options were
exercised during the year (2019: nil), 800,000 options lapsed during the year (2019: nil) and 4,800,000 options expired
(2019: nil).
An amount of $49,753 was expensed to share based payments for options issued to directors (2019: $132,390).
Subsequent to the end of the financial year, 13,500,000 performance rights with an expiry date of 31 December 2021 were
issued to directors and employees. The performance rights will only vest into shares if the relevant performance hurdles are
met prior to the expiry date.
Details of the options on issue during the current and previous year are set out below:
Grant
Date
Expiry
Date
Fair Value at
Valuation
Date (cents)
Exercise
Price
(cents)
Number
30 June
2019
13/12/17
13/12/19
20/04/18
31/07/20
13/12/17
13/12/20
13/12/17
13/12/21
29/11/18
29/11/20
29/11/18
29/11/21
29/11/18
29/11/22
Total
1.09
1.34
1.33
1.52
1.10
1.38
1.61
3.9
4.8
4.2
4.5
4.9
5.3
5.6
Number
Vested and
Exercisable at
30 June 2019
4,800,000
Number
30 June
2020
Number
Vested and
Exercisable at
30 June 2020
-
-
4,800,000
10,000,000
10,000,000
10,000,000 10,000,000
4,800,000
4,800,000
4,000,000
4,000,000
6,000,000
1,200,000
6,000,000
6,000,000
2,600,000
2,600,000
800,000
800,000
2,300,000
2,700,000
-
-
2,300,000
2,300,000
2,700,000
-
33,200,000
23,400,000
25,800,000 23,100,000
44
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
22. SHARE BASED PAYMENTS (continued)
The movement in options on issue during the current and previous year is reconciled as follows:
Options outstanding at 30 June 2018
Options outstanding at 30 June 2019
Issued during the year
Exercised during the year
Expired during the year
Lapsed during the year
Options outstanding at 30 June 2020
23. PARENT ENTITY INFORMATION
Number of
Options
25,600,000
33,200,000
-
(1,800,000)
(4,800,000)
(800,000)
25,800,000
Weighted Average
Exercise Price
(cents)
4.45
Weighted Average
Contractual Life
(days)
861
4.64
-
4.90
3.90
4.20
4.77
586
304
2020
$
2019
$
The following information relates to the parent entity, Genesis Minerals Limited. 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
11,300,497
5,430
11,305,927
(614,980)
(614,980)
2,674,165
6,123
2,680,288
(790,988)
(790,988)
10,690,947
1,889,300
52,166,259
1,708,833
(43,184,145)
10,690,947
33,820,100
1,659,080
(33,589,880)
1,889,300
(9,594,265)
(9,594,265)
(7,051,263)
(7,051,263)
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 2020 or 30 June 2019.
24. FARM-IN AND JOINT VENTURE COMMITMENTS
The Group has the following interests in Farm-In and Joint Ventures:
Barimaia Joint Venture Gold Project
The Barimaia Joint Venture Gold Project is subject to a Joint Venture Agreement (Mt Magnet Joint Venture) formed on 29
November 2019 under which the Group’s 100% owned subsidiary, Metallo Resources Pty Ltd (Metallo) has earned an initial
65% interest in the Project. The Project is located in the Murchison District of Western Australia, 10km south-east of the Mt
Magnet Gold Mine, operated by ASX-listed Ramelius Resources Limited.
The joint venturers have agreed to conduct exploration to continue development of the Project by way of two separate joint
ventures. Metallo has been appointed the manager of the two joint ventures comprising the Mt Magnet Joint Venture.
Desdemona South JV Gold Project
On 10 December 2019, Genesis announced that it had entered into a Farm-in and Joint Venture agreement with Kin Mining
NL (ASX: KIN) over the Desdemona South JV Gold Project, located south of Leonora in Western Australia.
45
Genesis Minerals Limited and controlled entities
Notes to the Consolidated Financial Statements
30 JUNE 2020
24. FARM-IN AND JOINT VENTURE COMMITMENTS (continued)
The initial Farm-In terms are as follows:
• Stage 1 Expenditure: Genesis must incur expenditure of not less than $250,000 (Minimum Expenditure) on the JV
Area within 18 months of Commencement.
• Stage 2 Expenditure: Genesis may earn a 60% interest in the JV Area by incurring a further $750,000 expenditure
(total spend of $1,000,000) on the JV Area within 36 months of Commencement.
Once Genesis earns a 60% interest, Kin may elect to form a Joint Venture with participating interests of 60% Genesis and
40% Kin or grant Genesis the right to elect to sole contribute or form a JV. Once Genesis earns a 70% interest (if Kin does
not elect to from a JV at 60%), Kin may elect to form a Joint Venture with participating interests of 70% Genesis and 30%
Kin or grant Genesis the right to elect to sole contribute or form a JV to move to 80%.
Genesis would need to spend $2.6 million in total to earn an 80% interest in the JV.
25. OPTION TO ACQUIRE KOOKYNIE GOLD PROJECT
On 24 June 2020, Genesis announced that it had entered into a binding agreement to acquire 100% of the Kookynie Gold
Project, located immediately south-east of its 100%-owned Ulysses Gold Project.
Genesis has entered into an option agreement with A&C Mining Investment Pty Ltd (A&C) and Ms Yijun Zhu (the Vendors)
pursuant to which Genesis, via its wholly owned subsidiary Ulysses Mining Pty Ltd, has been granted the right to acquire the
Kookynie Gold Project (Option Agreement).
The key terms of the Option Agreement are as follows:
• Consideration payable of up to A$11 million to the Vendors to acquire the Kookynie Gold Project, being:
A $1 million consideration fee for the grant of the option (this was paid prior to 30 June 2020); and
A $10 million option exercise payment (assuming Genesis extends the initial term of the option and exercises
the option during the extended term), together with the grant of a 1% NSR to the Vendors on future gold
production, capped at A$5 million.
•
•
The option exercise payment is $9.5 million (if the option is exercised within the initial term) or $10 million (if the initial
term is extended one or more times) less the aggregate amount of all extension payments.
The option is for an initial term of 6 months, but Genesis may extend this period for 3 months for a payment of $4
million. Genesis may extend the option for a further 3 months for a payment of $3 million. These extension payments
will be deducted from the option exercise payment required by Genesis to exercise the option.
Genesis has also agreed to pay approximately $2 million in cash and issue 26,595,745 shares to a third party to resolve
proceedings and settle tenement plaints against A&C so as to ensure Genesis acquires clear title to the Kookynie Gold
Project. As at 30 June 2020, Genesis has paid $1 million in cash and issued 26,595,745 shares.
46
Genesis Minerals Limited and controlled entities
Directors' Declaration
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 24 to 46 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 2020 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, 25 September 2020
47
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 Group”), which comprises the consolidated statement of financial
position as at 30 June 2020, 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 Group is in accordance with the
Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 30 June
2020 and of its financial performance for the year then ended; and
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 Group in accordance
with the auditor independence requirements of the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110
Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of
the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
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
Exploration Expenditure
Our procedures included, amongst others:
During the year the Group incurred exploration
− Assessing management’s determination of its
expenses of $8,306,909. Exploration expenditure is
areas of
interest
for consistency with
the
a key audit matter due to:
− The significance to the Group’s statement of
definition in AASB 6. This involved analysing the
tenements in which the Group holds an interest
profit or loss and other comprehensive income;
and the exploration programs planned for those
and
tenements.
− The level of judgement required in evaluating
− For a sample of tenements, we assessed the
management’s application of the requirements of
Group’s rights to tenure by corroborating to
AASB 6 Exploration for and Evaluation of Mineral
government registries; and
Resources. AASB 6 is an industry specific
− We tested exploration expenditure for the year
accounting standard requiring the application of
by evaluating a sample of recorded expenditure
significant judgements, estimates and industry
for consistency
to underlying records,
the
knowledge.
requirements of the Group’s accounting policy
and the requirements of AASB 6.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
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 Group’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 Group 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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
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 Group to express an opinion on the financial report. We are responsible for the
direction, supervision and performance of the Group 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 2020.
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 2020, complies with section
300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Partner
Dated at Perth this 25th day of September 2020
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 24 September 2020.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1
1,001
5,001
10,001
100,001
- 1,000
- 5,000
- 10,000
- 100,000
and over
Unlisted Options
Unlisted Performance
Rights
Ordinary Shares
Number of
holders
Number of
options
Number of
holders
Number of
rights
Number of
holders
Number of
shares
-
-
-
-
5
5
-
-
-
-
15,800,000
15,800,000
-
-
-
-
5
5
-
-
-
-
13,500,000
13,500,000
41
29
98
846
919
6,270
91,805
837,454
37,224,738
1,898,844,376
1,933
1,937,004,643
The number of shareholders holding less than a marketable parcel of shares are:
76
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
Rank Name
Units
% of Units
ALKANE RESOURCES LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BOTSIS HOLDINGS PTY LTD
STEFEAD INVESTMENTS PTY LTD
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