A N N UA L R E P O R T 2 0 1 9
For personal use only Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Review of Operations
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Review of Operations
Corporate Directory
DIRECTORS
Craig Munro (Non-executive Chairman)
Hamish Bohannan (Managing Director and CEO)
Andrew Wilson (Non-executive Director)
Tan Hwa Poh (Non-executive Director)
REGISTERED AND PRINCIPAL OFFICE
T4/152 Great Eastern Highway
ASCOT WA 6104
Telephone: (08) 9367 9228
Facsimile: (08) 9367 9229
Website: www.gulfmanganese.com
SHARE REGISTRY
Automic Registry Services Pty Ltd
Level 2/267 St George’s Terrace
Perth WA 6000
Telephone: (08) 9324 2099
Facsimile: (08) 9321 2337
AUDITORS
Bentleys Audit & Corporate (WA) Pty Ltd
London House Level 3
216 St George’s Terrace
Perth WA 6000
AUSTRALIAN SECURITIES EXCHANGE
Gulf Manganese Corporation Limited shares (GMC)
are listed on the Australian Securities Exchange.
PT GULF MANGAN GRUP
Board of Directors
Steven Pragnell - President Director
Johanes Susilo - Vice President Director
John Pilotti - Director
Peter Allen - Director
Yusdi Sangadji - Director
Robert Ierace - Director
Board of Commissioners
Raden Fofo Sariaatmadja - President Commissioner
Chairoel Jul Naro - Commissioner
Craig Munro - Commissioner
Andrew Wilson - Commissioner
Hamish Bohannan - Commissioner
Registered Offi ce
Graha Pena Building, 5th Floor
Jl. Piet A Tallo No. 1
Kelurahan Liliba, Kecamatan Oebobo
Kupang 85111
East Nusa Tenggara
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For personal use only Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Directors Report
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Review of Operations
Contents
Corporate Directory
Managing Director’s Report
Review of Operations
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of 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 Review Report
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For personal use only Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19
“I am pleased with the outcomes
achieved by the Board and our staff
over the course of the year and our
focus is now fi rmly on executing a
number of crucial milestones this
year that have the ability to quickly
transform Gulf into a signifi cant
producer of premium quality
manganese alloy.“
Cra
g Munr
Craig Munro
(Non-executive Chairman)man
Chai
tiv
exe
on
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For personal use only Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19
“Our vision and commitment
to establish a world-class
manganese smelting operation in
Kupang is as resolute as ever and I
would like to thank our entire team
for their determination and hard
work over the past 12 months.
Gulf has an incredible opportunity
to unlock considerable value over
the next 12 months and I look
forward to rewarding the support
and loyalty of our shareholders.“
Hamish Bohannan
(Managing Director and CEO)
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Annual Report 2018-19
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19
“W
“We have in place a very clear
and achievable roadmap
to becoming a near-term
man
manganese alloy producer with
dir
direct exposure to Indonesia’s
pr
premium high-grade ore and
we are very well positioned
t
to deliver on its operational
objectives this year.“
Andrew Wilson
(Non-executive Director)
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For personal use only Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19
nt
“Gulf’s ongoing commitment
to working closely with the
ara
people of East Nusa Tenggara
has fostered a number of
important and long-lasting
d
relationships and the Board
looks forward to sharing
future successes with the
local communities.“
Tan Hwa Poh
(Non-executive Director)
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Annual Report 2018-19 Managing Director's Report
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Managing Director's Report
FY 2019 Managing Director’s Report
Dear Valued Shareholders,
It is my pleasure to be providing you with Gulf’s Annual Report
for the 2019 fi nancial year. In the summary below I will revisit a
number of the outcomes delivered and challenges faced by the
Company during the year in focus and fi nish with a look to our
strategies and visions for the current year.
The year in review - a challenging, yet
progressive 12 months
The 2019 fi nancial year presented several challenges
from both a corporate and local regulatory
perspective, and although frustrating at times, the
experience of our Board and management ensured
we were able to successfully navigate our way
through these issues and emerge with a renewed
sense of clarity and determination.
As refl ected by our reporting on the ASX platform,
our resources were deployed during the year
towards achieving three vitally important outcomes
– underpinning of the fi nancial position of the
Company for future growth, securing our Manganese
Concentrate Direct Shipped Ore (DSO) licence and
building our supply chain of high-grade manganese
ore – and I am pleased to report that considerable
progress has been achieved across all fronts.
Committed to ensuring long-term
funding stability
At the time of writing this report, we are well
advanced towards securing an important debt
fi nancing agreement that would provide the funding
capacity to complete construction of our fi rst two
smelters in Kupang and commence commercial
production of manganese alloy.
A look at the NTT mining review and a focus on
diversifying ore supply
One of the key challenges faced during the
year was the 12-month moratorium called on all
mining activities in the NTT province following the
inauguration in September 2018of Bapak Viktor
Bungtilu Laiskodat as the new Governor of NTT. The
primary focus of the moratorium, which ends on
13 November 2019, is to allow a regulatory review to
be completed into mining practices in the region,
hopefully putting an end to previous illegal mining
practices.
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Importantly, Gulf is permitted to purchase
manganese ore from approved local suppliers, so
our focus has been on diversifying and mitigating
future risk within our ore supply chain. I am pleased
to confi rm that all local mining groups that we
have entered into an ore supply Memorandum
of Understanding (MoU) with have obtained the
mandatory Clean and Clear Certifi cation to operate
in NTT.
A strong indication of the local support and
willingness to supply high-grade ore to Gulf is that
some 22 local miners responded to the granting of
our DSO export licence by submitting their Annual
Work Plan & Budget (“RKAB”) applications to the
Ministry of Energy and Mineral Resources (“ESDM”)
to recommence mining operations. We are now
working closely with the 17 groups that received
their approvals to secure additional high-quality ore
supply sources.
A strategic move made during the year to further de-
risk our ore supply pipeline was the acquisition of the
Putra Indonesia Jaya (“PIJ”) high-grade manganese
mine in Timor by our Indonesian partners. The
underlying value and near-term impact that PIJ can
add to the business is signifi cant and over the course
of the year our in-country team has been working
hard to procure initial ore supply from the mine
which will allow commencement of our commercial
DSO operations.
At the time of writing on-ground activities at PIJ were
well advanced with the fi rst parcel of ore scheduled
for delivery to Gulf during the month of October.
Several additional high-grade manganese mines and
stockpiles are also currently being assessed in West
Timor and surrounding regions including Sumbawa
and Sulawesi, so we expect to see a steady stream
of activity reported in respect to ore supply as we
approach the end of the calendar year.
Gulf Manganese JBoard – L-R Andrew Wilson, Tan Hwa Poh, Craig Munro, Hamish Bohannan and Ian Gregory (Company Secretary)
DSO strategy nearing fruition
One of the critical outcomes reported during the year
was the receipt of our DSO licence from Indonesia’s
Ministry of Trade in May 2019, which gave the green
light to commence exporting of up to 103,162 tonnes
per year of high-grade (+49%) manganese ore.
Although we have encountered some delays start to
the commercial start-up of our DSO shipments, the
magnitude of this opportunity and the value it will
deliver to Gulf for the next there years should not be
underestimated.
As touched on above, a degree of uncertainty in the
local regulatory environment has meant it has taken
longer to secure a dependable, high-grade supplier
of ore, however with supply from the PIJ mine
and approved regional miners expected to come
online in the near-term we are now fi nally poised to
commence DSO shipments.
Broadening our horizons –
the Timor-Leste opportunity
In line with our strategy to de-risk and diversify,
the decision was made to acquire a 20% interest in
Melbourne-based, Timor-Leste focused manganese
explorer Iron Fortune Pty Ltd (“Iron Fortune”).
Iron Fortune has already competed a volume of
high-quality geological work and established
strong relationships with the Government and local
stakeholders. Importantly, the operational objectives
of the two businesses are well aligned and the ability
for Gulf to secure a fi rst mover advantage in this
untapped exploration jurisdiction is compelling.
We are now working closely with Iron Fortune to
develop a clear work plan and I look forward to
reporting further Timor-Leste related developments
in due course.
Future Outlook
I am proud of the efforts of our team over the course
of the year, highlighted by their willingness to accept
a challenge, implement a solution and forge ahead
with a steely resolve. Looking ahead, Gulf remains
as committed as ever to establishing a world-class
manganese smelting operation in Kupang for our
supportive shareholders and the people of East Nusa
Tenggara (“NTT”).
With construction work on the Kupang Smelting Hub
Facility standing at approximately 60% complete, the
fi nish line is now in sight and several critical pieces
that will allow us to fi nish the build are either in place
or in the fi nal stages of being secured.
The next 12 months will see a great deal of value
created for our shareholders as we aim to establish
Gulf as a globally signifi cant producer and exporter
of premium ferro manganese alloy.
I would also like to take this opportunity to sincerely
thank our loyal shareholders and supporters for
their commitment over the past 12 months and I look
forward to repaying your loyalty by delivering on our
operational and corporate objectives over the next 12
months.
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For personal use only Gulf Manganese Corporation Limited (ACN: 059 954 317)
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Review of Operations
Annual Report 2018-19 Review of Operations
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Review of Operations
Review of Operations
Gulf Manganese Corporation Limited (ASX:GMC) (“Gulf” or “the
Company”) is developing a premium refi ned ferromanganese
smelting hub in West Timor, Indonesia to produce and sell medium
and low carbon ferromanganese alloy.
Gulf’s Kupang Smelting Hub facility will contain
multiple furnaces built in stages over about fi ve
years, targeting the production of a premium quality
manganese alloy. At full production, Gulf will aim to
produce over 200,000 tonnes per year of manganese
alloy.
GULF DELIVERS MAJOR MILESTONE
WITH SECURING OF DSO LICENCE
On 15 May 2019, Gulf’s Indonesian subsidiary PT
Gulf Mangan Grup (“GMG”) formally received
its manganese concentrate export licence, also
known as a Direct Shipped Ore (DSO) Licence from
Indonesia’s Ministry of Trade which allows GMG to
export up to 103,162 tonnes of high-grade manganese
ore per year.
GMG’s manganese concentrate export licence is
reviewed annually in line with its Annual Work Plan
& Budget (“RKAB”) as submitted to the Ministry of
Energy and Mineral Resources (“ESDM”). The licence
allows Gulf to export screened and washed ore that
must average over 49% Manganese. Manganese ore
is priced on a dry metric tonne unit (“dmtu”) basis.
As of September 2019, fi nal preparations were being
undertaken to commence initial ore supply, with
fi rst ore expected to be loaded in containers and
transported to Tenau Port in Kupang for processing
before the end of CY2019. GMG expects monthly
exports to commence at 1,000 tonnes per month
and ramp up to 10,000 tonnes per month within six
months.
SMELTER ORE SUPPLY CHANNELS
STRENGTHENED
The Company has developed a multi-pronged
approach in regard to its ore procurement strategy,
designed to mitigate supply continuity and quality
risks, being
• Acquisition of mines, in conjunction with Gulf
in-country partners,
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• Regional ore supply agreements, with mines
located within East Nusa Tenggara (“NTT”), and
• Ore supply agreements with mines located in
other provinces.
Importantly, Gulf can advise that all ore supply
partnerships are compliant with the Company’s
‘Clean and Clear’ strategy, which ensures that
Gulf partners only with local mining groups who
have obtained the mandatory Clean and Clear
Certifi cation in accordance with Indonesian
Government requirements.
Regional (NTT) Ore Supply
Agreements Signed
A key in-country focus for Gulf has been on
establishing ore supply agreements with local miners
of high-grade manganese ore to support the near-
term commercial production start-up at the Kupang
Smelting Hub Facility.
With regard to sourcing additional ore, some 22
mines have responded to the granting of our DSO
export licence by completing their RKAB applications
to the ESDM to recommence mining operations.
These mines were forced to close down under
Indonesian government’s benefi ciation policy in 2013,
which banned the export of untreated ores. Gulf
expects to see the productivity of these mines build
incrementally over the coming months as production
is gradually ramped-up, along with the utilisation of
key logistic and warehousing infrastructure.
Of these 22 applications, 13 have been approved by
ESDM with a further nine in process. Approved RKAB
applications are now waiting for fi nal approval from
the Provincial Government.
Acquisition of High-grade Manganese Mines
n
In line with the Company’s broader project
acquisition strategy, subsequent to the reporting
aacq
period Gulf successfully vended the Putra Indonesia
ppe
Iron Fortune represents a fantastic opportunity to not only
diversify our supply chain to include sources from neighbouring
regions outside of Indonesia, but also to establish a fi rst-mover
advantage in what is considered an untapped exploration
jurisdiction for high-grade manganese ore deposits.
Jaya (“PIJ”) high-grade manganese mine in Timor
to its key Indonesian partners. Importantly, the ore
produced will be supplied to Gulf’s DSO operations
and its smelting operations in Kupang. It is expected
that ore supply from PIJ will commence in the last
quarter of CY2019.
As part of this process led by Steven Pragnell,
President Director of Gulf’s Indonesian subsidiary
GMG, several other high-grade manganese mines
were assessed in West Timor and surrounding
regions with due diligence well advanced on several
opportunities.
Iron Fortune and Gulf Manganese Joint Venture Team – L-R Ian Sinclair, Tan
Hwa Poh, Mary Thompson, Craig Munro, Andrew Wilson, Hamish Bohannan
Strategic Partnership to De-risk and Solidify
Manganese Ore Supply
In August 2019, Gulf entered into an agreement to
acquire a strategic 20% interest in Iron Fortune
Pty Ltd (“Iron Fortune”), a private Australian-based
minerals and exploration company focused on
Timor-Leste. Upon completion of the due diligence
process, Gulf will pay a further A$200.000 and issue
A$100,000 worth of shares to secure a 20% interest in
Iron Fortune.
Under the terms of the agreement, Gulf will pay an
initial A$100,000 for exclusivity whilst due diligence
is completed and has agreed to work together with
Iron Fortune to develop a work plan and strategic
direction.
We are now working very
closely with Iron Fortune
to expedite a number of
opportunities that have
the potential to unlock
considerable value in the
near-term.
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Field Work in Timor-Leste
Geology of Timor-Leste
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Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Review of Operations
Construction Progress Review
• The fi nancial year began with the arrival of the fi rst
two smelters on site at Kupang in July 2018, which
was marked with a celebratory ceremony and
blessing attended by representatives of Gulf’s key
investment partners and Government and community
representatives.
• Shortly after the arrival of all key smelting components,
the installation of equipment commenced onsite along
with the establishment of construction infrastructure
including site offi ce, workshop and tool store.
• Scope of work for ancillary facilities including the
laboratory, hazardous waste management, Health,
Safety, Environmental and Security Centre as well as
various employee amenity buildings were also fi nalised.
KUPANG OPERATIONS PERMIT
GRANTED
In August 2018, Gulf’s Indonesian subsidiary GMG
received its Operations Permit for the Kupang
Smelting Hub Facility. The Operations Permit is valid
for 30 years for the buying, selling and transporting
of manganese ore within Indonesia for smelting, and
to conduct overseas sales of ferromanganese alloy
in accordance with the provisions of the laws and
regulations in Indonesia.
KUPANG SMELTING HUB FACILITY -
FOUNDATIONS SET FOR COMPLETION
During the year in focus, the Company made the
decision to scale back construction activities while
extra emphasis was placed on securing the requisite
funding to fi nish construction. In addition, the
Company has also ramped up its efforts to lock away
diversifi ed supply channels of high-grade ore to
underpin future production.
Considerable efforts were made during the early
stages of the fi nancial year to advance construction
of the Kupang Smelting Hub, with the fi rst two
smelters at approximately 60% completion as of
fi nancial year end.
At the time of writing, positive discussions are
continuing with several potential offtake partners
and debt providers to secure the requisite capital
to fully fund the completion of the Kupang Smelting
Hub Facility construction program.
It is anticipated that construction activity will
recommence in the 2019 calendar year, with
commissioning of the fi rst two smelters remaining on
target for H1 CY2020.
MANGANESE APPLICATIONS AND
MARKET OVERVIEW
Manganese is the fourth-most used metal in terms
of tonnage. Approximately 90% of all manganese
consumed is used in the production of steel, primarily
due to its properties as a deoxidizing and alloying
element. Other uses include batteries, aluminium
beverage cans, fertilisers, health vitamins, water
purifi cation, gasoline additives and colouring glass.
Mined as an oxide ore, manganese is converted to
ferromanganese, which contains 74-82% manganese,
and can be classifi ed into three main subgroups;
high carbon (>2% carbon), medium carbon (1.0-2.0%
carbon) and low carbon (<1% carbon).
The higher manganese content and lower impurity
Figure 1: Kupang Smelter Hub Construction Site
Figure 2: Smelters and Construction Site – Kupang Smelting Hub at Bolok Industrial Estate
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Annual Report 2018-19 Review of Operations
content of low carbon and medium carbon
ferromanganese achieves premium pricing over
standard high carbon ferromanganese alloys.
Demand for manganese globally has grown
substantially this century as global steel production
increases, and in the long term the ferromanganese
price has continued to trend upward.
In May 2019 GMG received its manganese
concentrate export licence or DSO, allowing the
export sale and shipment of >49% manganese under
the provisions in Indonesian regulations allowing
for smelting and processing companies to sell
manganese concentrate during the construction
phase while building the smelters.
MANGANESE IN INDONESIA
Indonesian manganese ore is one of the highest
grade manganese ores available in the world, with a
unique combination of very high manganese content,
above 49%, combined with low iron and phosphorous.
These qualities are in high demand from manganese
alloy producers worldwide particularly in China,
Korea and India.
Indonesian legislation, however, does not allow
for the export of ‘untreated’ ore. As a result of the
regulations under the Indonesian Mining Law of 2009,
that were implemented in 2013 and 2014, the mining
and export of manganese deposits in Indonesia
largely ceased at that time.
It is Gulf’s intention to enable many of Indonesia’s
high-grade manganese mines to restart production
through the development of the Kupang Smelting
Hub Facility, which once in production will produce
high purity, low and medium carbon ferromanganese
alloys to fulfi l international demand from high-grade
and specialty steel producers.
The Company is currently assessing a number
of mines in West Timor and surrounding regions
including Sumbawa and Sulawesi. As part of
this due diligence process, Gulf is ensuring that
the concentrate quality meets its DSO export
permit requirements with grades greater than
49% manganese content and that the mines have
Clean and Clear certifi cation in accordance with
Indonesian Government requirements.
MANGANESE PRICES
Manganese ore prices remained strong over the 2019
fi nancial year with Fast Markets 44% manganese ore
price index staying above US$6.00 per dmtu up until
June 2019 when it fell just below to US$5.90 per dmtu.
Ore pricing has continued to come under since the
end of the fi nancial year with prices stabilising at
$5.40 per dmtu CIF China in September.
Medium and low carbon prices also remained stable
at strong levels throughout the period, with market
in the USA and Europe being the largest markets for
refi ned alloys.
The Kupang Facility is ideally located to supply key
global markets with direct access to international
container lines and bulk cargo trade routes on its
doorstep.
The below graph shows the value proposition of
the project and value differential between selling
manganese ore and the refi ned alloys of low carbon
and medium carbon ferromanganese alloys.
Figure 3: Low Carbon FeMn Project Value Proposition
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CORPORATE ACTIVITY
Acuity Capital share placements
In August 2018 Gulf placed 100,000,000 shares at an
issue price of 1.26c to Acuity Capital for a total raise
of $1,260,000.
On 13 March 2019, Gulf placed 62,500,000 GMC
shares at an issue price of 0.8c to Acuity Capital for a
total raise of $500,000.
As part of the A$3.6 million Placement in May 2019,
Gulf placed 45,000,000 shares at 0.7c per share to
Acuity Capital for a total raise of A$315,000.
The above placements were made in accordance
with the Controlled Placement Agreement (“CPA”)
with Acuity Capital announced on 31 January 2018,
with the funds deployed towards general purposes
and working capital.
A$2.3 million raised through conversion of 0.5c
Listed Options
On 30 April 2019, the Company advised that strong
shareholder support resulted in 463,364,804 GMCO
unlisted options (representing ~25% of total listed
options on issue) being exercised, raising in excess of
A$2.3 million. The GMCO listed 0.5c options expired
on 21 April 2019.
Placement raised A$3.6 million to advance
Kupang Smelting Hub
In May 2019, the Company raised A$3.0 million
(before costs) via the issue of 540,000,000 shares at
$0.005 per share and 45,000,000 shares at $0.007
per share to sophisticated investors and Acuity
Capital.
Funds received from the Placement were deployed
towards the start-up of Direct Shipping Ore
operations, advancing the development of the
Kupang Smelting Hub Facility and for general
working capital purposes.
PT Jayatama Tekno Sejahtera and Singco
Cornerstone Investments
As originally advised on 12 March 2018, the Company
entered into a series of transactions with Indonesian
based cornerstone investor PT Jayatama Tekno
Sejahtera (“JTS”) and its subsidiary, PT Jayatama
Global Investindo (“JGI”), and its related entities
to fund up to approximately A$15 million for the
construction and commissioning of the fi rst two
smelters at the Kupang Smelting Facility in West
Timor, Indonesia.
On 2 January 2019, Gulf reached an agreement to
restructure the JTS debt facility and respective
investments in Gulf and GMG. JGI agreed to
restructure its existing A$6 million Convertible Note
with GMG. The Convertible Note converted into 25.1%
of the issued share capital of GMG and ~A$5 million
loan which will be repayable from the profi ts from
commercial production of the Kupang Smelting Hub
Facility.
Following the conversion of the Convertible Note,
Gulf holds a 74.9% interest in GMG. As part of the
restructure, JGI will also receive a 2.5% net royalty
on alloy sales from GMG’s fi rst two smelters.
Final conversion of the JGI Convertible Note and
subsequent issue of shares in GMG to JGI is subject
to approval from the Indonesian Ministry of Energy
and Mineral Resources.
In addition to restructuring the existing funding
agreement, JGI agreed to invest a further A$6
million into Gulf at 1.5 cents per share, each with a
free attaching 0.5 cent listed option on a one for one
basis, expiring 21 April 2019. In addition, Gulf signed
a subscription agreement with a Singapore based
ore and alloy company (“Singco”) for an additional
A$2 million investment into Gulf at 1.5 cents with a
free attaching 0.5 cent listed option on a one for one
basis, expiring 21 April 2019
The investments were undertaken in two tranches
with the second tranche requiring Shareholder
Approval, which was received at a general meeting
on 28 February 2019. The fi rst tranche of the new JGI
and Singco investments was received on 15 January,
with A$3.6 million received by the Company. The
funds received from the investors fully repaid A$2.5
million owed under the JTS standby facility with
remaining funds used towards construction of the
Kupang smelter.
As part of the fi rst tranche completion, Eighteen Blue
Investments Pty Ltd (“EBI”) converted its existing A$2
million of convertible notes into 133,333,333 shares in
Gulf at a conversion price of 1.5 cents per share.
At the Company’s General Meeting on 28 February,
the relevant Resolutions pertaining to the Second
Tranche of A$4.4m of the additional investments
totalling A$8m were approved. The cut-off date
for Tranche 2 (“T2”) of subscription agreements
between JGI and Singco was 30 April 2019 and that
date passed without all of the conditions in the
subscription agreements being satisfi ed or waived,
so T2 Completion did not occur, and Gulf terminated
the agreements.
Cornerstone Investment Overview
On 28 August 2018, the Company signed a term sheet
for a cornerstone investment into the Company of
~A$10.8 million from Jakarta based businessman,
Bapak Dato Dr Low Tuck Kwong, founder and
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Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Directors' Report
President Director of integrated coal group PT Bayan
Resources TBK. In October 2018, Dr Low advised he
would not proceed with the proposed cornerstone
investment as a result of the moratorium on all
mining activities in the NTT province announced by
the Provincial Governor.
Change of Registered Offi ce and Principal Place
of Business
In September 2018 the Company’s registered offi ce
and principal place of business changed to:
T4/152 Great Eastern Highway Ascot WA 6104
Tel: (08) 9367 9228 Fax: (08) 9367 9229
Non-executive Director Appointment
Following the resignation of Sam Boon Beng Lee
(appointed 21 July 2018, resigned effective 20
November 2018), Tan Hwa Poh was appointed as a
Non-executive Director of the Company. Tan works
as a private business consultant, bridging businesses
between Singapore, Indonesia, Thailand and Hong
Kong in a variety of industries, including oil and, gas
and agriculture.
Company Secretary and Chief Financial Offi cer
Appointments
Due to increasing fi nance and governance
requirements, the decision was made subsequent
to the reporting period to separate the fi nance
and secretarial roles to strengthen the Company’s
professional resource base. As a result, Robert Ierace
retired from the position of Company Secretary to
focus on his role as Chief Financial Offi cer of Gulf
Manganese Corporation Limited. Ian Gregory was
appointed as Company Secretary, having previously
acted as Gulf’s Company Secretary between 2 July
2018 and 20 November 2018.
Matters subsequent to the end of the fi nancial
year
The following occurred subsequent to the end of the
period:
• On 4 July 2019, the Company successfully vended
the PIJ high-grade manganese mine in Timor to
its key Indonesian partners.
• On 2 August 2019, Gulf entered into an agreement
to acquire a strategic 20% interest in Iron Fortune
Pty Ltd (“Iron Fortune”), a private Australian-
based minerals and exploration company
focused on Timor-Leste. The acquisition
signifi cantly diversifi es and de-risks high-grade
manganese ore supply chain through farm-
in exposure to Timor-Leste exploration areas
prospective for high-grade manganese.
• Ian Gregory was appointed Company Secretary
on 5 August 2019, replacing Robert Ierace who
retired from the position to focus on his role as
Chief Financial Offi cer.
• Managing Director Hamish Bohannan presented
to key stakeholders in Dili, Timor-Leste during
September 2019, forming part of Gulf’s strategy to
establish a fi rst to market exploration
opportunity in Timor-Leste.
Tenement Holdings
Lease
Locality
Project
Lease
Status
Grant Date
Transfer
Date
Area
Managing
Company
Registered
Holder
EL10335
NT
Wollogorang
Granted
15/08/2002
02/09/2019
215 Blks
EL29898
NT
Debbil Debbil
Creek
Granted
15/08/2002
28/09/2018
55 Blks
Redbank
Operations
Pty Ltd
Redbank
Operations
Pty Ltd
Laramide
Resources
Ltd
Laramide
Resources
Ltd
The transfers out of the above tenements originally held by Gulf Copper Pty Ltd were effected during the
2018/2019 fi nancial year and as such, Gulf Copper no longer holds any tenements.
Directors' Report
The Directors present the following report on the consolidated
entity consisting of Gulf Manganese Corporation Limited and
the entity it controlled at the end of, or during, the fi nancial
year ended 30 June 2019.
The names of each person who has been a Director
during the year and continues in offi ce to the date of
this report are:
Craig Munro (Non-executive Chairman)
Hamish Bohannan (Managing Director)
Andrew Wilson (Non-executive Director)
Tan Hwa Poh (Non-executive Director) -
Appointed 20 November 2018
Names, qualifi cations, experience and
special responsibilities
Craig Munro CPA (Non-executive Chairman)
Craig is a Certifi ed Practicing Accountant with over
40 years’ experience in the mining industry. He has
been both an executive director and non-executive
director of a number of listed companies since 1990.
Craig was recently Chairman of Bathurst
Resources Limited, a New Zealand coal mining
company, Executive Vice President and CFO at
Anvil Mining Limited that had copper operations in
the Democratic Republic of Congo and Executive
Director Finance at Aquarius Platinum Limited
involved in Platinum mining and processing in South
Africa.
Other Current ASX Directorships
Former ASX Directorships in the Last
Three Years
None
None
Hamish Bohannan MBA (Managing Director)
Hamish holds an Honours Degree in Mining
Engineering from the Royal School of Mines UK and
an MBA from Deakin University, Victoria. He has
extensive corporate and operational experience in
public companies within Australia and overseas in
the capacity of Managing Director or CEO with ASX,
TSX and AIM listed groups.
Other Current ASX Directorships
Former ASX Directorships in the Last
Three Years
None
None
Andrew Wilson, B.Com, FAICD, AusIMM
(Non-executive Director)
Andrew has a Bachelor of Commerce (Marketing)
and a Masters of Law, with over 30 years of legal
experience and 16 years with BHP in various legal,
risk and commercial roles. In addition, Andrew has
also been a director of various listed companies,
including Herald Resources Ltd, Robust Resources
Ltd, PT Resource Alam Indonesia TBK, and director or
chairman of various not for profi t organisations.
From 2000 until 2007, Andrew served as the President
Director of BHP Billiton Indonesia, based in Jakarta.
Andrew was also a Director of the Indonesian Mining
Association and has established strong connections
in the region and speaks the local language fl uently.
He is a Fellow of the Australian Institute of Company
Directors, a member of the Risk Management
Institution of Australasia and AusIMM.
Other Current ASX Directorships
Former ASX Directorships in the Last
Three Years
None
None
Tan Hwa Poh (Non-executive Director) -
Appointed 20 November 2018
Tan Hwa Poh works as a private business consultant
essentially bridging businesses between Singapore,
Indonesia, Thailand and Hong Kong. His strengths lie
in liaising with the respective country’s government
departments and embassies, helping to reduce
the effect of “red tape” and bringing together the
business and government sectors to create effi cient
and lasting partnerships.
22
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Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Directors' Report
Other Current ASX Directorships
Former ASX Directorships in the Last
Three Years
None
None
Sam Lee (Non-executive Director) –
Appointed 21 July 2018 & resigned 20 November 2018
Sam has over 25 years of senior management
experience in directorship roles throughout Australia
and Asia. In his previous role as Director – Ore Supply
with PT GMG, Sam played a vital role during the
initial phase of the smelter hub construction, with
key responsibilities including setting up the geology
team and identifying and establishing contracts
with manganese miners to supply ore to the Kupang
smelting hub.
Other Current ASX Directorships
Former ASX Directorships in the Last
Three Years
None
None
Robert Ierace, BCom, CA (Chief Financial Offi cer) -
Appointed 2 October 2018
Robert is a Chartered Accountant and Secretary with
over 20 years’ experience, predominantly with ASX
and AIM listed resources, oil and gas exploration and
production companies. He has extensive experience
in fi nancial and commercial management including
experience in corporate governance, debt and
capital raising, risk management, treasury
management, insurance and corporate acquisitions
and divestment.
Robert holds a Bachelor of Commerce degree from
Curtin University, a Graduate Diploma in Applied
Corporate Governance from the Governance
Institute of Australia and a Graduate Certifi cate of
Applied Finance and Investment from the Securities
Institute of Australia. Robert has previously served
in senior fi nancial roles for various resource and
oil and gas companies, including Bullseye Mining
Limited, Key Petroleum Limited, Amadeus Energy
Limited, Kimberley Diamond Company NL and Rio
Tinto Iron Ore.
Robert previously acted as Gulf’s Company
Secretary between 20 November 2018 and 5
August 2019.
Ian Gregory, BBus, FGIA, FCIS, FFIN, MAICD
(Company Secretary) - Appointed 5 August 2019
Ian has over 30 years’ experience in the provision
of company secretarial, governance and business
administration services with listed and unlisted
companies. Ian holds a Bachelor of Business
degree from Curtin University and is a Fellow of
the Governance Institute of Australia, the Financial
Services Institute of Australia and a Member of
the Australian Institute of Company Directors. Ian
currently consults on company secretarial and
governance matters to a number of listed and
unlisted companies and is a past Chairman of the
Western Australian Branch Council of Governance
Institute of Australia.
Ian previously acted as Gulf’s Company Secretary
between 2 July 2018 and 20 November 2018.
Leonard Math, BCom, CA (Company Secretary) –
Resigned 4 July 2018
Leonard is a Chartered Accountant with more
than 13 years of resources industry experience. He
previously worked as an auditor at Deloitte and is
experienced with public company responsibilities
including ASX and ASIC compliance, control and
implementation of corporate governance, statutory
fi nancial reporting and shareholder relations.
Directors’ interests in shares and options
At the date of this report, the relevant interest of each Director in the shares and options of the Company are:
Director
Shares
Options over ordinary shares
Direct
Indirect
Direct
Indirect
Performance
Rights
Craig Munro
13,583,333
19,333,333
-
10,000,000
13,666,667
Hamish
Bohannan
28,832,016
34,091,667
30,000,000
-
39,583,251
Andrew Wilson
850,000
29,833,333
Tan Hwa Poh
152,083,333
-
-
-
10,000,000
9,700,000
-
-
Principal activity
The principal activity of the Company is developing
an ASEAN focused manganese alloying enterprise
based in West Timor.
Review of operations and results
Details of the operations of the Company are set
out in the Review of Operations on page 16. The
Company incurred an after tax operating loss of
$10,697,593 (2018: $7,467,562).
Dividends
No dividend has been paid or recommended for the
current year.
Signifi cant changes in the state of affairs
During the year, the Company reached an agreement
with Indonesian-based cornerstone investor PT
Jayatama Tekno Sejahtera (“JTS”) and its subsidiary,
PT Jayatama Global Investindo (“JGI”), to restructure
the JTS debt facility and respective investments in
the Company and its Indonesian subsidiary GMG.
The JGI A$6 million Convertible Note with GMG was
converted into 25.1% of the issued share capital of
GMG and an approximately A$5 million loan which
will be repayable from the profi ts from commercial
production of the Kupang Smelting Hub Facility.
Following the conversion of the Convertible Note, the
Company now holds a 74.9% interest in GMG. Details
of the Company’s non-controlling interest is set out
in Note 24.
Other than the above, there have been no signifi cant
changes in the state of affairs of the Group to the
date of this report.
Upon completion of the due diligence process, Gulf
will pay a further A$200,000 and issue A$100,000
worth of shares to secure a 20% interest in Iron
Fortune. Full terms and conditions are outlined in the
ASX announcement lodged on 2 August 2019.
Other than as disclosed above, there are no other
signifi cant events that have occurred after the
reporting period.
Meetings of Directors
The numbers of meetings of the Company’s Board of
Directors held during the year ended 30 June 2019,
and the numbers of meetings attended by each
Director were:
Board Meetings
Audit
Committee
Meetings
Name of
Director
Number
eligible to
attend
Number
attended
Number
attended
Craig
Munro
Hamish
Bohannan
Andrew
Wilson
Tan Hwa
Poh
Sam Lee
6
6
6
2
4
6
6
6
2
3
2
2
2
1
1
Likely developments and expected results of
operations
The Company has established an Audit and Risk
Committee that comprises the whole Board.
Audit and Risk Committee
Likely developments in the operations of the
Company are set out in the Review of Operations on
page 16.
Matters subsequent to the end of the fi nancial
year
On 2 August 2019, the Company announced it had
entered into an agreement to acquire a strategic
20% interest in Iron Fortune Pty Ltd (“Iron Fortune”),
a private Australian-based minerals and exploration
company focused on Timor-Leste. Under the terms
of the agreement, Gulf will pay an initial A$100,000
for exclusivity whilst due diligence is completed and
has agreed to work together with Iron Fortune to
develop a work plan and strategic direction. Hamish
Bohannan will also be appointed to the Board of Iron
Fortune in the position of Non-executive Director.
Remuneration committee
The Company has established a remuneration
committee that comprises the Non-executive
Chairman and one Non-executive Director. The
Remuneration Committee met twice during the year.
Environmental regulations
The Company’s current operations in Indonesia do
not include mining and have limited exposure to
the environmental regulations. No breaches of any
environmental restrictions were recorded during the
fi nancial year.
Director’s benefi ts
Since the date of the last Directors’ Report, no
Director of the Company has received, or become
24
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Annual Report 2018-19 Directors' Report
A Remuneration policy
The objective of the Company’s policy is to provide
remuneration that is competitive and appropriate.
The Board ensures that executive reward satisfi es
the following key criteria for good reward governance
practices:
(i)
(ii)
competitiveness and reasonableness;
acceptability to shareholders;
(iii)
transparency; and
(iv) capital management.
Directors’ and executives’ remuneration
The policy of the Company is to pay remuneration of
Directors in amounts in line with employment market
conditions relevant in the mining industry.
Fees and payments to non-executive directors
refl ect the demands which are made on, and the
responsibilities of, the directors. Non-executive
Directors’ fees and payments are reviewed annually
by the Board. The Chairman’s fees are determined
independently to the fees of Non-executive Directors
based on comparative roles in the external market.
The Constitution of the Company provides that
Non-executive Directors may collectively be paid
as remuneration for their services a fi xed sum not
exceeding the aggregate maximum sum per annum
determined by the Company in a general meeting.
The current aggregate maximum is $500,000.
The table below sets out summary information about
the Consolidated Entity’s earnings and movements
in net asset for the last 5 years:
entitled to receive, (other than a remuneration
benefi t included in Note 17 to the fi nancial
statements or remuneration report), a benefi t
because of a contract that involved:
(a)
the Director; or
(b) a fi rm of which the Director is a member; or
(c)
an entity in which the Director has a
substantial fi nancial interest (during the year
ended 30 June 2019, or at any other time) with
the Company; or
(d) an entity that the Company controlled, or
a body corporate that was related to the
Company, when the contract was made or
when the Director received, or became entitled
to receive, the benefi t (if any).
Remuneration report (audited)
The information provided in this remuneration report
has been audited as required under Section 308 (3C)
of the Corporations Act 2001. During the fi nancial
year the Key Management Personnel and Directors
(see page 22 for details about each Director and Key
Management Personnel) are as follows.
Craig Munro
Non-executive Chairman
Hamish Bohannan Managing Director
Andrew Wilson
Non-executive Director
Tan Hwa Poh
Non-executive Director
(appointed 20 November 2018)
Sam Lee
Non-executive Director
(resigned 20 November 2018)
Robert Ierace
Chief Financial Offi cer
(appointed 2 October 2018)
Paul Robinson
Chief Operating Offi cer
(resigned 1 April 2019)
Leonard Math
CFO & Company Secretary
(resigned 4 July 2018)
30-Jun-19
$
30-Jun-18
$
30-Jun-17
$
30-Jun-16
$
30-Jun-15
$
Revenue
47,748
112,761
1,100
-
150,043
(10,697,593)
(7,467,562)
(5,363,308)
(2,903,474)
(2,594,559)
16,709,359
9,736,238
8,636,614
841,174
(836,429)
(0.32)
(0.31)
(0.39)
(0.94)
(4.97)
Net profi t /(loss)
before tax
Net asset/
(liability)
Basic and
diluted loss per
share (cents)
26
Performance based remuneration
During the year, 20,175,000 performance rights were granted to Directors.
Director
Craig Munro
Hamish Bohannan
Andrew Wilson
TOTAL
No.
Fair value of performance
rights granted
4,500,000
13,125,000
2,550,000
20,175,000
$40,500
$118,125
$22,950
$181,575
Refer to Note 13 for further details of the performance rights.
Voting and comments made at the Company’s 2018 Annual General Meeting
At the 2018 Annual General Meeting, the Company received 96% votes in favour of the adoption of its
remuneration report and did not receive any specifi c feedback at the AGM or throughout the year on its
remuneration practices.
B Details of remuneration
Details of the remuneration of the Directors, the Key Management Personnel of the Company (as defi ned in AASB
124 Related Party Disclosures) and specifi ed executives of the Company are set out in the following table:
Short–term benefi ts
Cash salary
and fees
Bonus
Non-
monetary
benefi ts
Post–
employment
benefi ts
Super-
annuation
Long-term benefi ts
Share-based payments
Total
Long
service
leave
Termination
benefi ts
Options,
Shares &
Performance
Rights
% share
based
payments
Directors
$
$
$
$
$
$
$
%
$
Craig Munro
2019
2018
137,738
92,390
-
-
Hamish Bohannan
2019
2018
Andrew Wilson
344,597(3)
104,825
244,936
2019
2018
87,083
60,000
-
-
-
Tan Hwa Poh (appointed on 20 November 2018)
2019
2018
49,583
-
-
-
Sam Lee(1) (resigned on 20 November 2018)
2019
2018
25,789
-
-
-
-
-
-
-
-
-
-
-
-
-
13,085
7,610
35,338
23,302
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
95,971
38.89%
246,794
320,000
76.19%
420,000
50,227
9.39%
534,987
1,000,000
78.85%
1,268,238
9,758
10.07%
96,841
192,000
76.19%
252,000
168,750
77.29%
218,333
-
-
-
35,624
58.00%
61,413
-
-
-
27
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Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Directors' Report
Other Key Management Personnel
F Key Management Personnel shareholdings
-
-
-
-
-
-
160,731
-
Directors/
Executives
Balance at the
beginning of the
year
Share movement
during the year
Held at Resignation
Balance at end of
Year
53,161
41,976
40.95%
102,502
Hamish Bohannan
73,823,600
(1,205,510)
Craig Munro
11,999,999
20,916,667
Robert Ierace (appointed on 2 October 2018)
2019
2018
146,786
-
-
-
Leonard Math(2) (resigned on 4 July 2018)
2019
2018
3,161
161,602
-
-
Paul Robinson (resigned on 1 April 2019)
2019
2018
134,642
132,771
-
-
Total Remuneration
2019
2018
929,379
104,825
691,699
-
-
-
-
-
-
-
-
-
13,945
-
4,204
15,352
-
12,613
66,572
58,877
-
-
-
-
-
-
-
-
-
-
-
236,100
57.16%
413,054
129,701
49.06%
264,343
358,455
71.14%
503,839
53,161
532,007
31.55%
1,685,944
-
2,106,555
73.73%
2,857,131
(1) Mr Lee had 600,000 Performance Rights vested during the fi nancial year (post his resignation date) which related to the 2017/2018 year.
(2) Mr Math had 3,500,000 Performance Rights vested during the fi nancial year (post his resignation date) which related to the 2017/2018
year.
(3)
This fi gure includes an annual leave payout totalling $34,094.
C Service agreements
The Company has an Executive Service Agreement
with Hamish Bohannan for his role as Managing
Director and Chief Executive Offi cer. Hamish will
be remunerated at an annual salary of $350,000
inclusive of statutory superannuation with a three
months’ termination notice period.
The Company has an Executive Service Agreement
with Robert Ierace for his role as Chief Financial
Offi cer. Robert will be remunerated at an
annual salary of $220,000 inclusive of statutory
superannuation with a three months’ termination
notice period.
uc
cch
uSn
Non-executive Directors receive a letter of
appointment which contains key terms to their
appointmen
appointment. Such terms include the term in
mr
appointme
accordance with the Constitution of the Company,
sn
accordan
time commitment expected, role, standards of
e
time comm
conduct and cessation of offi ce. The Non-executive
e
f on
Directors receive a remuneration package of $7,083
o
$
re
Director
per month with the Chairman receiving $12,500 per
50
0
p
month inclusive of statutory superannuation.
yott
month
emi
tassecd
ice
ethtwht
sucn
T
ap
v
nn
mrea
ahC
Ne
k
gn
eg
$1
at
ot
e
ad
o
fo
at
ce
e
cex
tfo
ps
ot
na
pe
eh
cfi
io
y b
aashd
pme
fineeb
Andrew Wilson is employed by Kesempatan Pty Ltd
d
L
y
P
ta
deo
Andrew
nsoilWw
(“KPL”) and has a benefi cial interest in KPL. Under
nd
er
U
KP
L
)
(
an Agreement with the Company, KPL provides the
s t
h
vid
ro
de
nmemeer
oC
an Ag
services of Andrew as a Non-executive Director of
o
f
o
noN
ec
Dir
the Company.
the C
ynampmCo
pa
pm
se
in
s
L
KP
tiv
e
thi
aw
iai
pm
ednAfo
te
yn
cu
xe
Termination benefi ts
The Company is not liable for any termination
benefi ts on termination of the current Executive
or Non-executive Directors or Key Management
Personnel other than payment of a period of notice
on termination where applicable.
D Share-based compensation
Options and Performance Rights granted to
Directors and Offi cers
There were no unlisted options granted to Directors
and Offi cers. Please refer to Note H below for
performance rights granted to Directors and Offi cer
during the year.
Shares issued on exercise of unlisted options
There were no unlisted options exercised during the
fi nancial year.
E Additional information
Options granted to Directors and Offi cers carry no
dividend or voting rights.
ooneae
There are no other service agreements other than
n
Ther
disclosed above.
di
e.voabd
slscd
ga eem
sereh
ecv
nts
er
he
en
th
ot
a
-
-
-
-
32,916,666
72,618,090
30,683,333
152,083,333
Andrew Wilson
16,333,333
14,350,000
Tan Hwa Poh
133,333,333
18,750,000
Sam Lee
87,019,047
(16,243,421)
70,775,626
Robert Ierace
-
1,025,886
-
1,025,886
Paul Robinson
2,175,400
2,200,000
4,375,400
Leonard Math
2,000,000
-
2,000,000
-
-
G Key Management Personnel option holdings
Directors/
Executives
Balance at the
beginning of the
year
Option movement
during the year
Held at Resignation
Balance at end of
Year
Craig Munro
12,000,000
(2,000,000)
Hamish Bohannan
58,435,400
(13,435,400)
Andrew Wilson
12,000,000
-
Tan Hwa Poh
200,000,000
(200,000,000)
Sam Lee
Robert Ierace
85,385,714
-
-
-
Paul Robinson
3,263,100
(3,263,100)
-
-
-
-
85,385,714
-
-
Leonard Math
5,000,000
-
5,000,000
10,000,000
45,000,000
12,000,000
-
-
-
-
-
28
28
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Annual Report 2018-19 Directors' Report
H Performance Rights awarded, vested and lapsed during the year
The table below discloses the number of performance rights granted, vested or lapsed during the year.
Performance rights do not carry any voting or dividend rights, and can only be exercised once the vesting
conditions have been met.
Financial
year
Award
date
Rights
awarded
during the
year (No.)
Fair value
per option
at award
date ($)
Vesting
date
Exercise
price
Expiry
date
No.
vested
during
year
No.
lapsed
during
year
Value of
options
granted
during the
year(1) ($)
Value of
options
exercised
during the
year (No.)
Craig Munro
2019
4,500,000
28 Feb
2019
0.009
In 3
tranches
Hamish Bohannan
2019
13,125,000
28 Feb
2019
0.009
In 3
tranches
Andrew Wilson
2019
2,550,000
28 Feb
2019
0.009
In 3
tranches
Sam Lee
2019
600,000
7 March
2019
0.007
In 3
tranches
Leonard Math
2019
1,800,000
7 March
2019
0.007
In 3
tranches
Paul Robinson
2019
6,600,000
7 March
2019
0.007
In 3
tranches
-
-
-
-
-
-
7 March
2022
1,500,000
7 March
2022
4,375,083
7 March
2022
850,000
7 March
2022
600,000
7 March
2022
1,800,000
7 March
2022
2,200,000
-
-
-
-
-
-
40,500
13,500
118,125
39,376
22,950
7,650
4,200
4,200
12,600
12,600
46,200
15,400
(1) Determined at the time of grant per AASB 2. For details on the valuation of the options, including models and assumptions used, please
refer to Note 13.
I Other Transactions with Key Management Personnel and their related parties
Andrew Wilson is employed by Kesempatan Pty Ltd (“KPL”) and has benefi cial interest in KPL. Under an
Agreement with the Company, KPL provides the services of Andrew as a Non-executive Director of the Company.
During the year, KPL was paid $87,083 (2018: $60,000) for the Non-executive Director services provided Andrew.
During the period, KPL also invoiced the Company $101,860 for services in leading the negotiation and resolution
of a dispute and a restructure that was in addition to the scope of Andrew’s services as a Non-executive Director.
There is no other additional information other than the information disclosed above.
This is the end of the audited remuneration report.
Shares under option
At the date of this report, unissued ordinary shares of the Company under option are:
Expiry date
31-Dec-20
31-Dec-20
5-Sep-21
Exercise price
Number of options
Vested and exercisable
$0.03
$0.02
$0.02
25,000,000
25,000,000
74,000,000
124,000,000
Yes
Yes
Yes
When exercisable, each option is convertible into one ordinary share.
30
Performance Rights
Performance rights on issue at the date of this report:
Number
18,000,000
16,000,000
31,500,001
6,725,083
6,725,083
1,500,000
Exercise
price $
N/A
N/A
N/A
N/A
N/A
N/A
Expiry date
28/11/2019
28/11/2019
Vested and
exercisable
Yes
Yes
31/12/2019
No - 20/12/2020
N/A
N/A
N/A
No - 5/3/2021
No - 5/3/2022
No - 5/3/2022
Directors/Employees
Directors
Employees
Directors
Directors
Directors
Employees
Convertible notes
Non-audit services
At the date of this report, there were no convertible
notes outstanding (2018: 133,333,433).
Indemnifi cation
There are indemnities and insurances for the
Directors in regard to their positions. These insure
and indemnify the Directors including former
Directors against certain liabilities arising in the
course of their duties. The Directors have not
disclosed the amount of the premiums paid as
such disclosure is prohibited under the terms of the
policies.
Proceedings on behalf of Company
No person has applied for leave of Court under
section 237 of the Corporations Act 2001 to bring
proceedings on behalf of the Company or intervene
in any proceedings to which the Company is a party
for the purpose of taking responsibility on behalf of
the Company for all or any part of those proceedings.
The Company was not a party to any such
proceedings during the year.
There were no non-audit services provided for the
fi nancial year (2018: nil). The Auditor’s remuneration
is disclosed in Note 22.
Auditor 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 31.
Signed in accordance with a resolution of the
Directors and on behalf of the board by:
Craig Munro
Non-executive Chairman
Perth, Western Australia
27 September 2019
31
For personal use only Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Auditor Independence Declaration
Auditor Independence
Declaration
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Consolidated Statement of Profi t or Loss
and Other Comprehensive Income
Consolidated Statement of Profi t or Loss
And Other Comprehensive Income
For the Year Ended 30 June 2019
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 fi nancial statements of Gulf Manganese
Corporation Limited for the fi nancial year ended 30 June 2018, I declare that to the best
of my knowledge and belief, there have been no contraventions of:
• the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
• any applicable code of professional conduct in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
CHRIS NICOLOFF CA
Partner
Dated at Perth this 27th day of September 2019
Continuing operations
Interest income
Other income
Foreign exchange gains
Director and employee benefi ts
Administrative expenses
Legal fees
Professional fees
Settlement expenses
Amortisation expense
Depreciation expense
Loss on sale of fi xed assets
Insurance expense
Exploration and evaluation expenses
Share based payments
Foreign exchange losses
Loss on sale of investments
Finance costs
Loss before income tax from continuing operations
Income tax benefi t/(expense)
2018
$
41,235
71,526
164,610
(1,706,016)
(1,510,409)
(717,186)
(309,137)
(93,384)
(51,470)
(34,364)
(6,260)
(149,133)
(4,538)
Note
2(a)
2(b)
2019
$
29,447
18,301
8,335
(3,739,329)
(1,756,395)
(574,310)
(983,230)
2(c)
(1,500,000)
-
(62,894)
-
(141,681)
(2,613)
7
13
6
2(d)
3
(938,934)
(3,079,751)
-
(287,469)
(766,821)
-
-
(83,285)
(10,697,593)
(7,467,562)
-
-
Net loss after tax
(10,697,593)
(7,467,562)
Other comprehensive loss for the year, net of tax
Exchange differences on translation of foreign
operations
-
-
622,157
(454,596)
Total comprehensive loss for the year
(10,075,436)
(7,922,158)
32
33
For personal use only Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Consolidated Statement of Profi t or Loss
and Other Comprehensive Income
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Consolidated Statement of Financial Position
Loss for the year attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive loss
Owners of the parent
Non-controlling interest
Basic and diluted loss per share
Note
24
24
15
2019
$
2018
$
(10,022,391)
7,467,562
(675,202)
-
(10,697,593)
(7,467,562)
(9,382,739)
(692,697)
7,922,158
-
(10,075,436)
(7,922,158)
(0.32)
(0.31)
The above Consolidated Statement of Profi t or Loss and Other Comprehensive Income should be read in conjunction with
the accompanying notes.
Consolidated Statement of
Financial Position
For the Year Ended 30 June 2019
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Plant and equipment
Other assets
Non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Borrowings
Total current liabilities
Non-current liabilities
Borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Parent equity
Non-controlling interest
Total equity
Note
4
5
6
7
6
8
9
10
10
11
12
14
24(b)
2019
$
3,972,085
33,900
76,242
4,082,227
2018
$
4,213,499
111,450
537,818
4,862,767
21,163,202
470,832
21,634,034
14,782,964
610,103
15,393,067
25,716,261
20,255,834
3,858,605
33,824
-
3,892,429
5,114,473
5,114,473
2,963,421
41,157
7,515,018
10,519,596
-
-
9,006,902
10,519,596
16,709,359
9,736,238
55,790,732
3,257,228
(41,583,225)
17,464,735
(755,376)
16,709,359
38,942,128
8,616,377
(37,822,267)
9,736,238
-
9,736,238
34
35
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
For personal use only
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Consolidated Statement of Changes in Equity
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2019
Cash fl ows from operating activities
Other receipts
Payments to suppliers and employees
Interest received
Interest paid
Note
2019
$
2018
$
18,301
21,526
(5,541,593)
(2,920,811)
29,447
(585,221)
41,235
(62,397)
Net cash fl ows used in operating activities
4
(6,079,066)
(2,920,447)
Cash fl ows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of tenements
Payments for construction of plant and project
development
Payments for mining deposits
Receipt of security deposit funds
(90,846)
715,820
(221,293)
50,000
(5,462,757)
(10,217,933)
(673,368)
132,054
(515,871)
-
Net cash fl ows used in investing activities
(5,379,097)
(10,905,097)
Consolidated Statement of
Changes in Equity
For the Year Ended 30 June 2019
Note
Issued
capital
$
Convertible
note reserve
$
Option
reserve
$
Foreign
currency
translation
$
Accumulated
losses
$
Owners of
the parent
$
Non-
controlling
interest
$
Total equity
$
38,942,128
221,840
8,849,133
(454,596)
(37,822,267)
9,736,238
-
9,736,238
-
-
-
1,691,165
1,350,792
3,041,163
-
8,765,484
12(C)
11,12(C)
11,12(B)
10
-
-
-
-
-
-
-
-
-
-
-
(1,691,165)
46,799
(3,041,163)
(2,037,320)
2,163,383
2,000,000
(221,840)
(1,200,000)
-
(10,022,391)
(10,022,391)
(675,202)
(10,697,593)
622,157
-
639,652
(17,495)
622,157
622,157
(10,022,391)
(9,382,739)
(692,697)
(10,075,436)
-
-
-
1,397,591
3,041,163
3,041,163
2,037,320
-
-
-
10,928,867
578,160
-
-
-
-
-
-
-
1,397,591
3,041,163
-
10,928,867
578,160
-
-
-
-
-
-
-
55,790,732
32,309,605
-
-
-
13
11
2,112,332
-
4,520,191
-
-
-
-
-
-
-
-
-
-
221,840
6,681,714
-
-
-
(2,112,332)
4,279,751
-
-
-
-
(30,354,705)
(7,467,562)
(454,596)
-
(454,596)
(7,467,562)
-
-
-
-
-
-
-
-
38,942,128
221,840
8,849,133
(454,596)
(37,822,267)
Balance at 1 July
2018
Loss for the year
Other
comprehensive loss/
income
Total comprehensive
loss for the year
Transfer of
performance rights
vested during the
period
Share based
payments
Exercise of share
options
Expiry of share
options
Securities issued
during the year (net
of costs)
Convertible note
conversion
Non-controlling
interest acquired
Balance 30 June
2019
Balance at 1 July
2017
Loss for the year
Other
comprehensive loss
Total comprehensive
loss for the year
Transfer of
performance rights
vested during the
period
Share based
payments
Securities issued
during the year (net
of costs)
Issue of convertible
notes
Balance 30 June
2018
-
1,182,950
1,165,455
(62,679)
1,102,776
Proceeds from convertible note
3,089,667
167,561
(41,583,225)
17,464,735
(755,376)
16,709,359
Proceeds from borrowings
Repayment of borrowings
10
11,725,907
-
3,502,752
(4,124,752)
4,842,078
7,936,858
1,966,000
(1,978,892)
Cash fl ows from fi nancing activities
Proceeds from issue of securities net of costs
Net cash fl ows from fi nancing activities
11,103,907
12,766,044
Net increase in cash and cash equivalents
(354,256)
(1,059,500)
Foreign exchange differences
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at the end of the year
4
112,842
4,213,499
3,972,085
(75,146)
5,348,145
4,213,499
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,636,614
(7,467,562)
(454,596)
(7,922,158)
-
4,279,751
4,520,191
221,840
9,736,238
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
36
37
For personal use only
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial
Statements
For the Year Ended 30 June 2019
Corporate Information
The fi nancial report of the Company for the year
ended 30 June 2019 was authorised for issue in
accordance with a resolution of the Directors on
27 September 2019. Gulf Manganese Corporation
Limited is a company limited by shares incorporated
in Australia whose shares are publicly traded on the
Australian stock exchange.
The nature of the operations and principal activities
of the Company are described in the review of
operations.
Note 1. Summary of signifi cant accounting
policies
(a) Basis of preparation
These fi nancial statements are general-purpose
fi nancial statements, which have been prepared
in accordance with the requirements of the
Corporations Act 2001, and Australian Accounting
Standards and Interpretations. These fi nancial
statements have been prepared on a historical cost
basis.
Gulf Manganese Corporation Limited is a for-profi t
entity for the purpose of preparing the fi nancial
statements. These consolidated fi nancial statements
are presented in Australian dollars and all values are
expressed as whole dollars.
(b) Foreign currencies
The Group’s consolidated fi nancial statements are
presented in Australian dollars, which is also the
parent company’s functional currency. For each
entity, the Group determines the functional currency
and items included in the fi nancial statements of
each entity are measured using that functional
currency. The Group uses the direct method of
consolidation and on disposal of a foreign operation,
the gain or loss that is reclassifi ed to profi t or loss
refl ect the amount that arises from using this
method.
(c) Going concern
The fi nancial report has been prepared on the going
concern basis, which contemplates the continuity of
normal business activity and the realisation of assets
and the settlement of liabilities in the normal course
of business.
The Company had a working capital surplus
position of $189,798 as at 30 June 2019 (30 June
2018: working capital defi cit of $5,656,829), incurred
a net loss after tax for the fi nancial year ended 30
June 2019 of $10,697,593 (30 June 2018: $7,467,562)
and experienced net cash outfl ows from operating
activities of $6,079,066 (30 June 2018: $2,920,447).
Whilst the Company is in a net asset position, the
incurred losses and operating cash outfl ows indicate
a material uncertainty that may cast signifi cant
doubt about the Company’s ability to continue
as a going concern. The Directors however have
prepared a cash fl ow forecast, which indicates that
the Company will have suffi cient cash fl ows to meet
all commitments and working capital requirements
for the 12-month period from the date of signing
this fi nancial report. Included in the cash fl ow
forecast is the sale of manganese concentrate and
debt fi nancing to fund the Kupang Smelting Hub to
completion.
The Directors believe it is appropriate to prepare
these accounts on a going concern basis as follows:
• the Company is working to develop a
ferromanganese smelting and sales business to
produce low/medium carbon ferromanganese
allow in West Timor, Indonesia. The Company’s
Kupang Smelting Facility is 60% complete;
• the Company’s Indonesian subsidiary PT Gulf
Mangan Grup received formal receipt of its Direct
Shipping Ore License, allowing the Company
to export up to 103,162 tonnes of high-grade
manganese ore per year. DSO will be in high
demand due to its high manganese content and
low impurities and as such would command a
premium over lower grade ores; and
• the Company has a Controlled Placement
Agreement (CPA) with Acuity Capital allowing
Gulf to raise up to $5 million of standby equity
capital. The placing agreement does not place
any restrictions on Gulf raising capital through
other means. The placement of any shares under
the placing agreement is subject to the company
placing capacity.
The Directors have prepared a cash fl ow forecast,
which includes the completion of the above activities
that indicates that the Company will have suffi cient
cash fl ows to meet all commitments and working
capital requirements for the 12 months period from
the date of signing this fi nancial report.
Should the Company be unsuccessful in completing
the required debt funding or fi nalising offtake
fi nance, commencing production at the intended
time and at the required profi t levels, or raising
equity capital, there is material uncertainty whether
the Company would continue as a going concern
and therefore whether it would realise its assets
and extinguish its liabilities in the normal course of
business and at the amounts stated in the fi nancial
statements.
The fi nancial statements do not include any
adjustment relating to the recoverability or
classifi cation of recorded asset amounts or to the
amounts or classifi cations of liabilities that might
be necessary should the Company not be able to
continue as a going concern.
(d) Statement of compliance
These fi nancial statements comply with Australian
Accounting Standards and other authoritative
pronouncements of the Australian Accounting
Standards Board and Australian Accounting
Interpretations. Compliance with Australian
Accounting Standards ensures that the fi nancial
report, comprising the fi nancial statements and
notes thereto, complies with the International
Financial Reporting Standards (IFRS).
(e) Critical accounting estimates
Estimates and judgments are continually evaluated
and are based on historical experience and other
factors, including expectations of future events
that may have a fi nancial impact on the entity
and that are believed to be reasonable under the
circumstances. The Company makes estimates and
assumptions concerning the future. The resulting
accounting estimates will, by defi nition, seldom
equal the related actual results. The estimates and
assumptions that have a signifi cant risk of causing
a material adjustment to the carrying amounts and
liabilities within the next fi nancial year are discussed
below.
Fair value of share options and assumptions
The fair value of services received in return for
share options granted to consultants, directors and
employees is measured by reference to the fair value
of options granted. The estimate of the fair value
of the services is measured based on Black-Scholes
options valuation methodology.
Impairment
The carrying amounts of the Company’s assets
are reviewed at each reporting date to determine
whether there is any indication of impairment. If
any such indication exists, the asset’s recoverable
amount is estimated.
(i)
Impairment of exploration and evaluation
assets
The future recoverability of capitalised
exploration and evaluation expenditure is
dependent on a number of factors, including
whether the Company decides to exploit
the related lease itself or, if not, whether it
successfully recovers the related exploration
and evaluation asset through sale.
Factors that would impact the future
recoverability include the level of reserves and
resources, future technological changes, which
would impact the cost of mining, future legal
changes (including changes to environmental
restoration obligations) and changes to
commodity prices.
To the extent that capitalised exploration and
evaluation expenditure is determined not to
be recoverable in the future, profi ts and net
assets will be reduced in the period in which this
determination is made.
In addition, exploration and evaluation
expenditure is capitalised if the activities in
the area of interest have not yet reached a
stage that permits a reasonable assessment
of the existence or otherwise of economically
recoverable reserves. To the extent that it is
determined in the future that this capitalise
expenditure should be written off or impaired,
profi ts and net assets will be reduced in the
period in which this determination is made.
(ii) Calculation of recoverable amount
The recoverable amount of the consolidate
entity’s receivables carried at amortised costs
is calculated at the present value of estimated
future cash fl ows, discounted at the original
effective interest rate (i.e. the effective interest
rate computed at initial recognition of these
fi nancial assets). Receivable with a short
duration are not discounted.
Impairment of receivable is not recognised
until objective evidence is available that a loss
event has occurred. Signifi cant receivables are
individually assessed for impairment.
The recoverable amount of other assets is
greater of their fair value less costs to sell and
value in use. In assessing value in use, the
estimated future cash fl ows are discounted to
their present value in using a pre-tax discount
rate that refl ects current market assessments
of the time value of money and risk specifi c
to the asset. For an asset that does not
generate largely independent cash infl ows, the
recoverable amount is determined for the cash-
generating unit to which the asset belongs.
38
39
For personal use only Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
(f) Plant and equipment
(k) Earnings per share
Plant and equipment is stated at cost less
accumulated depreciation and any accumulated
impairment losses. Such cost includes the cost of
replacing parts that are eligible for capitalisation
when the cost of replacing the parts is incurred.
Similarly, when each major inspection is performed,
its cost is recognised in the carrying amount of the
plant and equipment as a replacement only if it is
eligible for capitalisation.
Depreciation is calculated on the diminishing
value basis to write off the net cost of each item of
property, plant and equipment over its expected
useful life. Depreciation rates for motor vehicles are
at 22.5% and for other plant and equipment, the rates
range from 15-40%.
(g) Cash and cash equivalents
For purposes of the statement of cash fl ows, cash
includes deposits at call which are readily convertible
to cash on hand and which are used in the cash
management function on a day-to-day basis, net of
outstanding bank overdrafts.
(h) Goods and services tax
Revenues, expenses and assets are recognised
net of the amount of goods and services tax (GST),
except where the amount of GST incurred is not
recoverable from the Australian Tax Offi ce (ATO). In
these circumstances the GST is recognised as part
of the cost of acquisition of the asset or as part of
an item of the expense. Receivables and payables
are stated with the amount of GST included. The
net amount of GST recoverable from, or payable to,
the ATO is included as a current asset or liability in
the Statement of Financial Position. Cash fl ows are
included in the Statement of Cash Flows on a gross
basis.
The GST components of cash fl ows arising from
investing and fi nancing activities which are
recoverable from, or payable to, the ATO are
classifi ed as operating cash fl ows.
(i) Trade and other payables
Liabilities are recognised for amounts to be paid in
the future for goods or services received, whether or
not billed to the Company. Trade accounts payable
are normally settled within 30 days.
(j) Contributed equity
Ordinary shares are classifi ed as equity. Transaction
costs arising on the issue of equity instruments are
recognised directly in equity as a reduction of the
proceeds of the equity instruments to which the
costs relate.
(i) Basic earnings per share
Basic earnings per share is determined by
dividing the operating loss after income tax
by the weighted average number of ordinary
shares outstanding during the fi nancial year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the fi gures
used in the determination of basic earnings
per share by taking into account amounts
unpaid on ordinary shares and any reduction in
earnings per share that will probably arise from
the exercise of partly paid shares or options
outstanding during the fi nancial year.
(l) Revenue recognition
Revenue is measured at the transaction price
received or receivable (which excludes estimates of
variable consideration) allocated to the performance
obligation satisfi ed and represents amounts
receivable for services provided in the normal course
of business, net of discounts, VAT, GST and other
sales related taxes. As the expected period between
transfer of a promised service and payment from
the customer is one year or less, no adjustment for a
fi nancing component has been made.
Revenue arising from the provision of services is
recognised when and to the extent that the customer
simultaneously receives and consumes the benefi ts
of the Group’s performance or the Group does not
create an asset with an alternative use but has
an enforceable right to payment for performance
completed to date.
(m) Principles of consolidation
The consolidated fi nancial statements incorporate
the assets and liabilities of all subsidiaries of Gulf
Manganese Corporation Limited (“company” or
“parent entity”) as at 30 June 2019 and the results
of all subsidiaries for the year then ended. Gulf
Manganese Corporation Limited and its subsidiary
together are referred to in this fi nancial report as the
Company.
Subsidiaries are all those entities (including special
purpose entities) over which the Company has the
power to govern the fi nancial and operating policies,
generally accompanying a shareholding of more
than one-half of the voting rights. The existence and
effect of potential voting rights that are currently
exercisable or convertible are considered when
assessing whether the Company controls another
entity.
Subsidiaries are fully consolidated from the date on
which control is transferred to the Company. They
are de-consolidated from the date that control
ceases.
The acquisition method of accounting is used to
account for the acquisition of subsidiaries by the
Company.
The Company applies a policy of treating
transactions with non-controlling interests as
transactions with parties external to the Company.
Disposals to non-controlling interests result in gains
and losses for the Company that is recorded in the
statement of comprehensive income. Purchases
from non-controlling interests result in goodwill,
being the difference between any consideration paid
and the relevant share acquired of the carrying value
of identifi able net assets of the subsidiary.
Intercompany transactions, balances and unrealised
gains on transactions between companies are
eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of the
impairment of the asset transferred. Accounting
policies of subsidiaries have been changed where
necessary to ensure consistency with the policies
adopted by the Company.
Non-controlling interests in the results and
equity of subsidiaries are shown separately in the
consolidated statement of comprehensive income
and statement of fi nancial position respectively.
Investments in subsidiaries are accounted for at
cost in the individual fi nancial statements of Gulf
Manganese Corporation Limited.
(n) Trade and other receivables
Trade accounts receivable, amounts due from
related parties and other receivables represent
the principal amounts due at reporting date plus
accrued interest and less, where applicable, any
unearned income and provisions for doubtful
accounts.
Collectability of trade receivables is reviewed
on an ongoing basis. Debts which are known to
be uncollectible are written off by reducing the
carrying amount directly. An allowance account
(provision for impairment of trade receivables)
is used when there is objective evidence that the
Company will not be able to collect all amounts due
according to the original terms of the receivables.
Signifi cant fi nancial diffi culties of the debtor,
probability that the debtor will enter bankruptcy or
fi nancial reorganisation, and default or delinquency
in payments (more than 30 days overdue) are
considered indicators that the trade receivable is
impaired. The amount of the impairment allowance
is the difference between the asset’s carrying
amount and the present value of estimated future
cash fl ows, discounted at the original effective
interest rate. Cash fl ows relating to short-term
receivables are not discounted if the effect of
discounting is immaterial.
The amount of the impairment loss is recognised
in the statement of comprehensive income within
other expenses. When a trade receivable for which
an impairment allowance had been recognised
becomes uncollectable in a subsequent period,
it is written off against the allowance account.
Subsequent recoveries of amounts previously written
off are credited against other expenses in the
statement of comprehensive income.
(o)
Income tax
Deferred income tax is provided on all temporary
differences at the balance date between the tax
bases of assets and liabilities and their carrying
amounts for fi nancial reporting purposes.
Deferred income tax liabilities are recognised for all
taxable temporary differences except:
• when the deferred income tax liability arises
from the initial recognition of an asset or
liability in a transaction that is not a business
combination and that, at the time of the
transaction, affects neither the accounting
profi t nor taxable profi t or loss; or
• when the taxable temporary difference is
associated with investments in subsidiaries,
associates or interests in joint ventures, and
the timing of the reversal of the temporary
difference can be controlled and it is probable
that the temporary difference will not reverse
in the foreseeable future
Deferred income tax assets are recognised for all
deductible temporary differences, carry-forward
of unused tax assets and unused tax losses, to the
extent that it is probable that taxable profi t will be
available against which the deductible temporary
differences and the carry-forward of unused tax
credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating
to the deductible temporary difference
arises from the initial recognition of an asset
or liability in a transaction that is not a
business combination and, at the time of the
transaction, affects neither the accounting
profi t nor taxable profi t or loss; or
• when the deductible temporary difference is
associated with investments in subsidiaries,
associates or interests in joint ventures,
in which case a deferred tax asset is only
recognised to the extent that it is probable
that the temporary difference will reverse in
the foreseeable future and taxable profi t will
be available against which the temporary
difference can be utilised.
The carrying amount of deferred income tax assets
is reviewed at each balance date and reduced to the
extent that it is no longer probable that suffi cient
taxable profi t will be available to allow all or part of
the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are
40
41
For personal use only
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
reassessed at each balance date and are recognised
to the extent that it has become probable that future
taxable profi t will allow the deferred tax asset to be
recovered.
Deferred income tax assets and liabilities are
measured at the tax rates that are expected to apply
to the year when the asset is realised or the liability
is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the
balance date.
Income taxes relating to items recognised directly in
equity are recognised in equity and not in profi t or
loss.
Tax consolidation legislation
Gulf Manganese Corporation Limited and its
100% owned Australian resident subsidiaries have
implemented the tax consolidation legislation.
Current and deferred tax amounts are accounted for
in each individual entity as if each entity continued
to act as a taxpayer on its own.
Gulf Manganese Corporation Limited recognises
its own current and deferred tax amounts and
those current tax liabilities, current tax assets and
deferred tax assets arising from unused tax credits
and unused tax losses which it has assumed from
its controlled entities within the tax consolidated
Company.
Assets or liabilities arising under tax funding
agreements with the tax consolidated entities
are recognised as amounts payable or receivable
from or payable to other entities in the Company.
Any difference between the amounts receivable
or payable under the tax funding agreement are
recognised as a contribution to (or distribution from)
controlled entities in the tax consolidated Company.
(p) Employee benefi ts
Provision is made for the Company’s liability for
employee benefi ts arising from services rendered
by employees to reporting date. Employee benefi ts
that are expected to be settled within one year have
been measured at the amounts expected to be paid
when the liability is settled, plus related on-costs.
Employee benefi ts payable later than one year have
been measured at present value of the estimated
future cash outfl ows to be made for those benefi ts
and included in other payables.
(q) Segment reporting
Operating segments are now reported in a manner
that is consistent with the internal reporting provided
to the chief operating decision maker, which has
been identifi ed by the Company as the Executive
Director and other members of the Board of
Directors.
(r)
Impairment of assets
The Company assesses at each reporting date
whether there is an indication that an asset may
be impaired. If any such indication exists, or when
annual impairment testing for an asset is required,
the Company makes an estimate of the asset’s
recoverable amount. An asset’s recoverable amount
is the higher of its fair value less costs to sell and
its value in use and is determined for an individual
asset, unless the asset does not generate cash
infl ows that are largely independent of those from
other assets or groups of assets and the asset’s
value in use cannot be estimated to be close to
its fair value. In such cases the asset is tested for
impairment as part of the cash-generating unit
to which it belongs. When the carrying amount
of an asset or cash-generating unit exceeds its
recoverable amount, the asset or cash-generating
unit is considered impaired and is written down to its
recoverable amount.
In assessing value in use, the estimated future cash
fl ows are discounted to their present value using a
pre-tax discount rate that refl ects current market
assessments of the time value of money and the
risks specifi c to the asset. Impairment losses relating
to continuing operations are recognised in those
expense categories consistent with the function
of the impaired asset unless the asset is carried at
revalued amount (in which case the impairment loss
is treated as a revaluation decrease).
An assessment is also made at each reporting date
as to whether there is any indication that previously
recognised impairment losses may no longer exist
or may have decreased. If such an indication exists,
the recoverable amount is estimated. A previously
recognised impairment loss is reversed only if
there has been a change in the estimates used to
determine the asset’s recoverable amount since the
last impairment loss was recognised. If that is the
case, the carrying amount of the asset is increased
to its recoverable amount. That increased amount
cannot exceed the carrying amount that would
have been determined, net of depreciation, had no
impairment loss been recognised for the asset in
prior years.
Such a reversal is recognised in profi t or loss unless
the asset is carried at its revalued amount, in which
case the reversal is treated as a revaluation increase.
After such a reversal the depreciation charge is
adjusted in future periods to allocate the asset’s
revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
(s) Fair value estimation
The fair value of fi nancial assets and fi nancial
liabilities must be estimated for recognition and
measurement or for disclosure purposes.
The fair value of fi nancial instruments traded in
active markets (such as publicly traded derivatives,
and trading and available for sale securities) is
based on quoted market prices at the reporting
date. The quoted market price used for fi nancial
assets held by the Company is the current bid price;
the appropriate quoted market price for fi nancial
liabilities is the current ask price.
The fair value of fi nancial instruments that are not
traded in an active market is determined using
valuation techniques. The Company uses a variety of
methods and makes assumptions that are based on
market conditions existing at each reporting date.
Quoted market prices or dealer quotes for similar
instruments are used for long-term debt instruments
held. Other techniques, such as estimated
discounted cash fl ows, are used to determine fair
value for the remaining fi nancial instruments.
The nominal value less estimated credit adjustments
of trade receivables and payables are assumed
to approximate their fair values. The fair value
of fi nancial liabilities for disclosure purposes is
estimated by discounting the future contractual
cash fl ows at the current market interest rate that
is available to the Company for similar fi nancial
instruments.
(t) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred
is accumulated in respect of each identifi able area
of interest in accordance with AASB 6 Exploration
and Evaluation Expenditure. These costs are only
carried forward where the rights to the area of
interest are current and to the extent that they are
expected to be recouped through the successful
development or sale of the area, or where activities in
the area have not yet reached a stage that permits
reasonable assessment of the existence or otherwise
of economically recoverable reserves.
Accumulated costs in relation to an abandoned
area are written off in full against profi t in the year in
which the decision to abandon the area is made.
(u) Financial instruments
Financial assets and fi nancial liabilities are
recognised in the statement of fi nancial position
when the Group becomes a party to the contractual
provisions of the instrument.
(i) Financial Assets
Trade receivables are held in order to collect
the contractual cash fl ows and are initially
measured at the transaction price (excludes
estimates of variable consideration) as defi ned
in AASB 15, as the contracts of the Group do
not contain signifi cant fi nancing components.
Impairment losses are recognised based on
lifetime expected credit losses in profi t or loss.
Other receivables are held in order to collect
the contractual cash fl ows and accordingly
are measured at initial recognition at fair
value, which ordinarily equates to cost and are
subsequently measured at cost less impairment
due to their short term nature. A provision for
impairment is established based on 12-month
expected credit losses unless there has been a
signifi cant increase in credit risk when lifetime
expected credit losses are recognised. The
amount of any provision is recognised in profi t
or loss.
(ii) Financial Liabilities and Equity
Financial liabilities and equity instruments
issued by the Group are classifi ed in
accordance with the substance of the
contractual arrangements entered into and
the defi nitions of a fi nancial liability and an
equity instrument. An equity instrument is any
contract that evidences a residual interest
in the assets of the Group after deducting all
of its liabilities. Equity instruments issued by
the Company are recorded at the proceeds
received, net of direct issue costs.
All other loans including convertible loan
notes are initially recorded at fair value, which
is ordinarily equal to the proceeds received
net of transaction costs. These liabilities are
subsequently measured at amortised cost,
using the effective interest rate method.
(iii) Effective Interest Rate Method
The effective interest rate method is a method
of calculating the amortised cost of a fi nancial
asset or liability and allocating interest
income or expense over the relevant period.
The effective interest rate is the rate that
exactly discounts estimated future cash fl ows
through the expected life of the fi nancial asset
or liability, or, where appropriate, a shorter
period, to the net carrying amount on initial
recognition.
(v) New accounting standards and
interpretations
Adoption of new and revised standards
In the year ended 30 June 2019, the Directors have
reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant
to the Company and effective for the current
reporting periods beginning on or after 1 July 2018.
As a result of this review, the Group has initially
applied AASB 9 and AASB 15 from 1 July 2018.
Due to the transition methods chosen by the Group
in applying AASB 9 and AASB 15, comparative
information throughout the fi nancial statements has
42
43
For personal use only Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
not been restated to refl ect the requirements of the
new standards.
AASB 9 Financial Instruments
AASB 9 replaces AASB 139 Financial Instruments:
Recognition and Measurement and makes changes
to a number of areas including classifi cation of
fi nancial instruments, measurement, impairment of
fi nancial assets and hedge accounting model.
Financial instruments are classifi ed as either held at
amortised cost or fair value.
The entity has assessed the requirement of AASB
15 and analysed the effect this has on revenue
recognition however there was no material impact
on adoption of this new standard in the current or
comparative periods.
Standards and Interpretations in issue not yet
adopted
The Directors have also reviewed all of the new and
revised Standards and Interpretations in issue not
yet adopted for the year ended 30 June 2019.
Financial instruments are carried at amortised cost if
the business model concept can be satisfi ed.
AASB 16: Leases (applicable to annual reporting
periods beginning on or after 1 January 2019)
All equity instruments are carried at fair value and
the cost exemption under AASB 139 which was used
where it was not possible to reliably measure the fair
value of an unlisted entity has been removed. Equity
instruments which are non-derivative and not held
for trading may be designated as fair value through
other comprehensive income (FVOCI). Previously
classifi ed available-for-sale investments, now carried
at fair value are exempt from impairment testing
and gains or loss on sale are no longer recognised in
profi t or loss.
The AASB 9 impairment model is based on expected
loss at day 1 rather than needing evidence of an
incurred loss, this is likely to cause earlier recognition
of bad debt expenses. Most fi nancial instruments
held at fair value are exempt from impairment
testing.
The Group has assessed the requirement of AASB
9 and assessed that there is no material impact to
profi t or loss or net assets on the adoption of this new
standard in the current or comparative periods.
AASB 15 Revenue from Contracts with Customers
AASB 15 replaces AASB 118 Revenue and AASB 111
Construction Contracts and related interpretations
and it applies to all revenue arising from contracts
with customers, unless those contracts are in the
scope of other standards.
AASB 15 establishes a comprehensive framework for
determining whether, how much and when revenue is
recognised, including in respect of multiple element
arrangements. The core principle of AASB 15 is that
it requires identifi cation of discrete performance
obligations within a transaction and associated
transaction price allocation to these obligations.
Revenue is recognised upon satisfaction of these
performance obligations, which occur when control
of goods or services is transferred, rather than on
transfer of risks or rewards. Revenue received for a
contract that includes a variable amount is subject
to revised conditions for recognition, whereby it
must be highly probable that no signifi cant reversal
of the variable component may occur when the
uncertainties around its measurement are removed.
44
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 classifi ed
as operating or fi nance leases.
The main changes introduced by the new Standard
are as follows:
• recognition of a right-of-use asset and liability for
all leases (excluding short-term leases with less
than 12 months of tenure and leases relating to low-
value assets);
• depreciation of right-of-use assets in line with
AASB 116 : Property, Plant and Equipment in profi t
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.
AASB 16 is effective from annual reporting periods
beginning on or after 1 January 2019. A lessee
can choose to apply the Standard using a full
retrospective or modifi ed retrospective approach.
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. Although the Directors anticipate that
the adoption of AASB 16 will impact the Group’s
fi nancial statements, it is impracticable at this stage
to provide a reasonable estimate of such impact.
Note 2. Revenue and expenses
(a)
Other income
Sale of tenement assets
Other
(b)
Administrative Expenses
Occupancy expense
ASX and share registry expenses
Investor relations expenses
Travel and accommodation expenses
Accounting fees
Other administrative expenses
(c)
Settlement Expenses
Equity-settled expenses
2019
$
-
18,301
18,301
281,111
150,748
182,663
549,675
276,922
315,276
2018
$
50,000
21,526
71,526
215,886
177,377
175,805
153,309
199,731
588,301
1,756,395
1,510,409
1,500,000
1,500,000
93,384
93,384
In December 2018, the Company and Mighty River International Ltd (“MRI”) agreed in a Deed of Settlement and
Release to settle all outstanding claims and dismiss the action in the Supreme Court of Western Australia. As
part of the agreed settlement, the Company issued to MRI 100,000,000 shares deemed at 1.5 cents each and
100,000,000 GMC listed options. MRI also agreed to a $300,000 cash subscription of GMC shares with free
attaching options. Refer to Note 11.
(d)
Finance costs
Interest expense on borrowings
2019
$
766,821
766,821
2018
$
83,285
83,285
45
For personal use only
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Note 3. Income tax
Note 4. Cash and cash equivalents
2019
$
2018
$
The prima facie income tax expense/ (benefi t) on pre-tax
accounting loss from operations reconciles to the income
tax expense in the fi nancial statements as follows:
Accounting loss before income tax
(10,697,593)
(7,467,562)
Income tax benefi t calculated at 27.5% (2018: 27.5%)
(2,941,838)
(2,053,580)
Tax effect of amounts which are not deductible/(taxable) in
calculating taxable income:
Non-deductible expenses
Adjustments recognised in current year in relation to
the tax of previous years
Effect of temporary differences that would be
recognised directly in equity
Share based payments
Temporary differences not recognised
1,646,752
11,065
(83,507)
-
1,367,528
-
-
-
846,932
1,206,648
Income tax benefi t reported in the statement of
comprehensive income
-
-
The tax rate used in the above reconciliation is the corporate tax rate of 27.5% payable by Australian corporate
entities on taxable profi ts under Australian tax law. The tax rate used in the previous reporting period was 27.5%.
The Indonesian corporate tax rate is 25%.
The Company has tax losses arising in Australia and Indonesia. The Australian tax losses of $33,577,169 (2018:
$25,524,992) are available indefi nitely in Australia. The Indonesian tax losses of A$2,947,440 (2018: A$2,449,166) can
be accumulated up to 5 years from the year the tax loss is recognised for income tax purposes in Indonesia.
These losses will be available for offset against future taxable profi ts of the companies in which the losses
arose, subject to ongoing conditions for deductibility being met (for example satisfaction of the requisite loss
recoupment tests in each jurisdiction).
Unrecognised deferred tax assets and liabilities
Deferred tax assets have not been recognised in respect of the following items:
Tax losses - Australia
Tax losses - Indonesia
2019
$
9,233,721
884,232
10,117,953
2018
$
7,019,372
612,291
7,631,663
Cash at bank and on hand
3,972,085
4,213,499
Information about the Company’s exposure to interest rate risk is disclosed in Note 18.
2019
$
2018
$
(a)
Reconciliation of loss for the year to net cash fl ows
used in operating activities
Net loss for the year
(10,697,593)
(7,467,562)
2019
$
2018
$
Loss on sale of fi xed assets and/or investments
Amortisation
Loss on sale of fi xed assets and/or investments
Share based payment expense
Non cash payments (settlement in equity)
Foreign exchange differences
Expenses classifi ed as investing fl ows
(Increase) / decrease in assets:
Trade and other receivables
Increase / (decrease) in liabilities:
Trade and other payables
Provisions
62,894
-
287,469
938,934
-
-
2,710,637
34,364
51,470
6,260
3,079,751
93,369
(177,502)
-
216,423
(163,312)
409,503
(7,333)
1,687,056
(14,341)
Net cash fl ows used in operating activities
(6,079,066)
(2,870,447)
Note 5. Trade and other receivables
Trade receivables
GST recoverable
Other receivables
Total trade and other receivables
2019
2018
$
-
-
33,900
33,900
$
-
23,228
88,222
111,450
As of 30 June 2019, trade receivables that were past due or impaired was nil (2018: nil). Information about the
Company’s exposure to credit risk is provided in Note 18.
46
47
For personal use only Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Note 6. Other assets
Current
Prepayments
Security deposits
Non-current
Prepayments
Investment in for mining rights(1)
Reconciliation of investment in mining rights:
Opening balance
Additions
Disposal consideration
Loss on sale of disposal
Closing balance
2019
$
69,192
7,050
76,242
284,881
185,951
470,832
515,871
673,368
(715,819)
(287,469)
185,951
2018
$
492,946
44,872
537,818
94,232
515,871
610,103
-
515,871
-
-
515,871
1 This represents deposit payments for the exclusive right to conduct due diligence on Indonesian mining licence interests.
Note 7. Plant and equipment
Balance at 30 June 2019
Smelter
hub (under
Construction)
$
Land and
buildings
$
Motor
vehicles
$
Offi ce
furniture &
equipment
$
Total
$
20,870,678
130,032
29,798
247,587
21,278,095
-
(18,622)
(6,829)
(89,442)
(114,893)
20,870,678
111,410
22,969
158,145
21,163,202
At cost
Accumulated
depreciation
Carrying value as at
30 June 2019
Reconciliation
Opening carrying value
14,577,987
Additions
Disposals
Depreciation expense
Foreign currency
differences
Closing written down
value at 30 June 2019
Balance at 30 June 2018
At cost
Accumulated
depreciation
Carrying value as at
30 June 2018
Reconciliation
Additions
Disposals
Depreciation expense
Foreign currency
differences
Closing written down
value at 30 June 2018
6,292,691
-
-
-
73,873
44,124
-
24,903
-
-
106,201
100,424
-
14,782,964
6,437,239
-
(12,351)
(3,933)
(46,610)
(62,894)
5,764
1,999
(1,870)
5,893
20,870,678
111,410
22,969
158,145
21,163,202
14,577,987
80,144
27,799
139,739
14,825,669
-
(6,271)
(2,896)
(33,538)
(42,705)
14,577,987
73,873
24,903
106,201
14,782,964
10,353,840
-
-
-
-
80,144
-
(6,271)
-
27,799
-
(2,896)
24,308
111,292
(3,913)
(25,197)
4,248,455
10,573,075
(3,913)
(34,364)
-
-
(289)
(289)
14,577,987
73,873
24,903
106,201
14,782,964
Opening carrying value
4,224,147
48
49
For personal use only Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Note 8. Trade and other payables
Note 10. Borrowings (continued)
Trade creditors
Accruals
Employee liabilities
Tax liabilities
Other creditors
2019
$
2,211,690
400,415
669,174
-
577,326
3,858,605
2018
$
1,885,297
223,338
211,481
199,427
443,878
2,963,421
Trade payables are non-interest bearing and are normally settled on 30-day terms. Information regarding the
interest rate and liquidity risk exposure is set out in Note 18.
Note 9. Provisions
Employee leave entitlements
Note 10.
Borrowings
Current
Convertible notes
Total current borrowings
2019
$
33,824
2019
$
-
-
The following table shows the movement of convertible notes during the period:
2018
$
41,157
2018
$
7,515,018
7,515,018
2018
$
1,000,000
-
2019
$
7,515,018
193,315
-
7,936,858
(1,000,000)
(2,000,000)
1,090,018
(683,878)
(5,114,473)
-
(221,840)
-
-
-
-
-
(1,200,000)
7,515,018
Opening balance
Adjustment(1)
Additions
Repayment during the year
Converted – ordinary shares component
Converted – free attaching options component
Conversion to non-controlling interest
Conversion to long-term loan
Fair value of free attaching options issued
Closing balance
During the year, the convertible note with JGI of IDR equivalent of approximate A$6M was converted
into 25.1% of the issued share capital of Gulf’s Indonesian subsidiary PT Gulf Mangan Grup and an
approximately A$5 million loan remains outstanding. The loan will be repayable from the profi ts from
commercial production of the Kupang Smelting Hub Facility. The loan is secured by fi duciary charge
over the manganese smelters, with 8% interest per annum and has a due date of 30 September 2020.
Refer to the Company’s ASX announcement on 2 January 2019 for further details.
Reconciliation of borrowings:
2018
Cash
infl ows
Cash
outfl ows
Non-cash
Conversion
- loan
and non-
controlling
interest
Redeemed
- equity
2019
Convertible
notes
Long-term
borrowings
Short-term
borrowings
Total liabilities
from fi nancing
activities
(1,000,000)
193,315
(909,982)
(5,798,351)
-
7,515,018
-
-
-
-
3,502,752
(3,124,752)
-
-
-
5,114,473
-
5,114,473
-
(378,000)
-
7,515,018
3,502,752
(4,124,752)
193,315
4,204,491
(6,176,351)
5,114,473
Note 11. Contributed equity
2019
No
2019
$
2018
No
2018
$
Shares on issue
Ordinary shares issued and
fully paid
4,910,267,664
55,790,732
2,660,722,860
Total contributed equity
4,910,267,664
55,790,732
2,660,722,860
38,942,128
38,942,128
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary
shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to
one vote.
Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the
proceeds of the equity instruments to which the costs relate.
1 An amount of $193,315 was adjusted at the end of the period being the amortised portion of the 133,333,333 free attaching listed
options issued to Eighteen Blue Investments Pty Ltd for the A$2 million of convertible notes.
50
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Gulf Manganese Corporation Limited (ACN: 059 954 317)
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Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Note 11. Contributed equity (continued)
Movement in ordinary shares on issue
Note 11. Contributed equity (continued)
Balance at 1 July 2018
2,660,722,860
38,942,128
2019
No
2019
$
Grant of 361,815,011 listed options exercisable at 0.05 cents
Exercise of listed Options at 0.05 cents each
Exercise of listed Options at 0.0196 cents each
Vesting of performance rights deemed at 0.077 cents
Vesting of performance rights deemed at 0.0177 cents
Issue of ordinary shares as part of Settlement(1)
Issue of ordinary shares as part of placement at 1.5 cents
Issue of ordinary shares as part of placement at 0.008
cents
Issue of ordinary shares upon conversion of convertible
note at 1.5 cents
Issue of ordinary shares upon conversion of loan at
0.0075 cents
Issue of ordinary shares upon conversion of loan at
0.008 cents
Issue of ordinary shares upon conversion of loan at
0.007 cents
Issue of ordinary shares upon conversion of loan at
0.005 cents
Issue of ordinary shares as part of placement at
0.005 cents
Issue of ordinary shares as part of placement at
0.007 cents to Acuity
-
599,216,716
2,300,000
18,001,133
82,106,667
100,000,000
10,000,000
62,500,000
(1,447,260)
2,996,084
45,080
235,458
1,455,707
1,000,000
150,000
500,000
133,333,333
2,000,000
14,533,333
109,000
19,875,000
159,000
8,571,428
60,000
10,000,000
50,000
637,196,000
3,136,181
45,000,000
315,000
Issue of ordinary shares as part of placement at 0.015 cents
241,815,011
Issue of ordinary shares to Directors & KMP deemed
at 0.08 cents
39,700,000
3,627,225
320,700
Issue of ordinary shares under STI plan deemed at
0.07 cents
Issue of ordinary shares for services rendered
deemed at 0.08 cents
Issue of ordinary shares as part of placement at
0.0126 cents to Acuity(2)
Issue of ordinary shares for services rendered
deemed at 0.015 cents
35,660,250
249,622
66,402,600
647,138
100,000,000
1,260,000
13,333,333
133,333
Issue of ordinary shares as part of placement at 0.015 cents
10,000,000
Less: capital raising costs
Balance at 30 June 2019
-
4,910,267,664
150,000
(303,664)
55,790,732
1 On 21 December 2018, the Company issued 100,000,000 shares deemed at 1.5 cents each as part of a settlement agreement with
Mighty River International Limited (“MRI”). See Note 2(c) for further details.
2 At the Company’s Annual General Meeting on 19 November 2018, Shareholders approved the issue of shares to Acuity Capital Pty Ltd in
accordance with the Controlled Placement Agreement dated 1 January 2018.
52
2018
No
2018
$
Balance at 1 July 2017
2,037,849,924
32,309,605
Issue of ordinary shares at 1.5 cents
266,666,667
4,000,000
Exercise of listed options at 0.5 cents
Vesting of performance rights deemed at 0.07 cents
Vesting of performance rights deemed at 1.6 cents
Issue of ordinary shares as part of Settlement
Issue of Collateral Shares to Acuity1
Less: Capital raising costs
Balance at 30 June 2018
147,499,001
34,000,000
68,481,664
6,225,604
100,000,000
737,495
238,000
1,874,332
93,384
-
-
(310,688)
2,660,722,860
38,942,128
Capital risk management
The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern
and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or adjust
the capital structure, the Company may issue new shares or reduce its capital, subject to the provisions of the
Constitution and any relevant regulatory requirements.
Note 12. Reserves
Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the
translation of the fi nancial statements of foreign subsidiaries. It is also used to record the effect of
hedging net investments in foreign operations.
Balance at the beginning of the year
Movement during the year
Balance at the end of the year
2019
$
(454,596)
622,157
167,561
2018
$
-
(454,596)
(454,596)
Convertible note reserve
The convertible note reserve represents the equity component (conversion rights) of the convertible
notes issued during the year. Refer to Note 10.
Balance at the beginning of the year
Movement in convertible notes converted during the period
Balance at the end of the year
2019
$
221,840
(221,840)
-
2018
$
-
221,840
221,840
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Annual Report 2018-19 Notes to the Consolidated Financial Statements
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Note 12. Reserves (continued)
Option reserve
The option reserve is used to recognise the fair value of share based payments issued.
Note 12. Reserves (continued)
B. Movement in unlisted options
2018
No
8,849,133
2,163,384
(6,278,483)
46,798
(1,691,165)
3,089,667
2018
$
6,681,714
1,200,000
-
3,079,751
(2,112,332)
8,849,133
Balance at the beginning of the year
Issue of options during the year
Exercise/expiry of options during the year
Movement in performance rights during the year
Transfer of performance rights vested during the period
Balance at the end of the year
Share options on issue
Listed share options on issue
Unlisted share options on
issue
2019
No
-
2019
$
2019
No
2019
$
-
1,627,658,304
2,283,122
124,000,000
1,216,621
148,425,917
3,048,592
Performance rights on issue
128,372,681
1,873,046
181,213,336
Total share options on issue
252,372,681
3,089,667
1,957,297,557
3,517,419
8,849,133
A. Movement in listed options (GMCO) exercisable at 0.5 cents each expiring 21 April 2019
2019
No
2019
$
Balance at the beginning of the year
1,627,658,304
2,283,122
Exercise of listed options
Issue of listed options as part of Settlement(1)
Issue of listed options pursuant to Prospectus(2)
(599,216,716)
(2,996,084)
100,000,000
261,815,011
500,000
1,447,260
Cancellation/lapsing of listed options
(1,390,256,599)
(1,234,298)
Balance at the end of the year
-
-
1
1,000,000 options were issued and settled per Deed of Settlement and Release with Mighty River International Limited (“MRI”).
2 During the year, 261,815,011 free attaching listed options were issued pursuant to agreements entered into by the Company as
announced on 24 December 2018 and 2 January 2019 and as described in sections 1.1(a) and (b) of the Prospectus. These options were
exercisable at $0.005 and expired on 21 April 2019. The options were valued at $0.004 each being the quoted market price of the listed
options on the date of the agreement totalling $1,447,260.
Balance at the beginning of the year
Exercise of unlisted options exercisable at 1.96 cents
each expiring 30 September 2018
Lapsing of unlisted options exercisable at 1.96 cents
each expiring 30 September 2018
Lapsing of unlisted options exercisable at 1.2496 cents
each expiring 31 December 2018
Issue of unlisted options exercisable at 2 cents each
expiring 31 December 2020(1)(2)
Issue of unlisted options exercisable at 3 cents each
expiring 31 December 2020(1)(3)
2019
No
148,425,917
(2,300,000)
2019
$
3,048,592
(45,079)
(64,625,917)
(1,711,265)
(7,500,000)
(291,750)
25,000,000
114,965
25,000,000
101,158
Balance at the end of the year
124,000,000
1,216,621
1 During the year the Company settled payment for certain consulting services received through the issue of ordinary shares. The
Company issued 50,000,000 unlisted options in lieu of cash payments for consulting services rendered to the Group on 8 March 2019.
2 The fair value of each option of $0.0046 is determined using a Black-Scholes option pricing model that takes into account the exercise
price (2 cents), the term of the options (1.8 years), the share price at grant date ($0.008), the expected price volatility of the underlying
share (159%), the expected dividend yield (nil) and the risk-free interest rate for the term of the option (1.66%). The options vest
immediately and the Black-Scholes valuation is expensed on grant date.
3 The fair value of each option of $0.004 is determined using a Black-Scholes option pricing model that takes into account the exercise
price (3 cents), the term of the options (1.8 years), the share price at grant date ($0.008), the expected price volatility of the underlying
share (159%), the expected dividend yield (nil) and the risk-free interest rate for the term of the option (1.66%). The options vest
immediately and the Black-Scholes valuation is expensed on grant date.
The unlisted options outstanding at 30 June 2019 had a weighted average exercise price of $0.22 and a
weighted average contractual life of 1.9 years.
C. Movement in performance rights
Balance at the beginning of the year
Exercised during the year
Cancellation of performance rights
Performance rights issued to Directors and Employees
on 7 March 2019
2019
No
181,213,336
(100,107,797)
-
47,267,150
2019
$
3,517,413
(1,691,165)
(118,933)
165,731
Balance at the end of the year
128,372,681
1,873,046
54
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Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Note 13. Share based payments
Note 15. Earnings per share
During year, 47,267,150 performance rights were issued pursuant to Resolutions 7, 8 and 9 as approved
by shareholders at EGM on 28 February 2019 and under the Company’s Long Term Incentive Plan (LTI)
as approved by shareholders on 2 September 2016 to Directors and Employees and they vest based
in three tranches. In accordance with the LTI, the Company’s Total Shareholder Return (TSR) for the
fi nancial year ended 30 June 2019 in comparison to the Comparator Group of companies was above
the 70th percentile and the fi rst equal tranche of the LTI performance rights have vested, resulting in
18,001,133 shares being issued.
The Company has assigned a 100% probability that the service condition relating to the LTI
performance rights in the second and third tranches will be met. Tranche 2 will vest on 7 March 2021
and Tranche 3 will vest on 7 March 2022 (when the service condition has been met).
Recognised during the period
Performance
rights granted
20,175,000
27,092,150(1)
645,333
Tranche 1
Tranche 2
Tranche 3
6,725,083
9,030,717
2,245,333
6,725,000
9,030,717
6,724,917
9,030,716
(800,000)
(800,000)
47,912,483
18,001,133
14,955,717
14,955,633
Directors
Employees
Adjustment
TOTAL
Expense recognised during the year
139,458
16,687
9,586
1 Net performance rights granted to employees who left during the year.
The rights that were recognised during the period were valued based on the share price at the date of
grant. The grant date for the performance rights issued to Directors is 28 February 2019 and the share
price at the grant date was 0.9 cents. The grant date for the performance rights issued to Employees
was 7 March 2019 and the share price at the grant date was 0.7 cents. The total expense recognised
relating to the tranches above is $165,731.
In addition to the above, the following performance rights issued on 7 March 2019 have vested resulting
in the issue of 11,276,050 shares at a price of 0.8 cents based on the share price at the date of issue.
The share based payments from the issue of unlisted options during the year is disclosed in Note 12(B).
Note 14. Accumulated losses
2019
$
2018
$
Accumulated losses at beginning of the year
(37,822,267)
(30,354,705)
Net loss for the year
(10,022,391)
(7,467,562)
Adjustments relating to expiry of options
Non-controlling interest acquired
5,078,483
1,182,950
-
-
Accumulated losses at end of the year
(41,583,225)
(37,822,267)
Issue of unlisted options exercisable at 3 cents each
expiring 31 December 2020(1)(3)
25,000,000
101,158
Balance at the end of the year
124,000,000
1,216,621
Basic and diluted loss per share
2019
Cents
(0.32)
2019
No
2018
Cents
(0.31)
2018
No
Weighted average number of ordinary shares outstanding
during the year used in the calculation of basic loss per
share
3,392,143,869
2,412,092,719
Diluted loss per share has not been calculated as the Company made a loss for the year and the
impact would be to reduce the loss per share.
Note 16. Commitments for expenditure
Operating lease commitments
Offi ce operating lease rentals are payable as follows:
Not later than one year
Later than one year but no later than two years
Later than two years
Total operating lease commitments
2019
$
18,641
-
-
18,641
2018
$
24,625
18,564
-
43,189
The Company leases one offi ce under a non-cancellable operating lease expiring on 28 February 2020.
On renewal, the terms of the lease are renegotiated.
Note 17. Key Management Personnel disclosures
(a) Summarised compensation of Key Management Personnel
Summary of Directors and Key Management Personnel compensation in the following categories
are as follows:
Short-term employee benefi ts
Post-employment benefi ts
Long-term benefi ts
Share based payments
2019
$
1,034,204
66,572
53,161
532,007
2018
$
691,699
58,877
-
2,106,555
Total Directors and Key Management Personnel
compensation
1,685,944
2,857,131
(b) Loans to Key Management Personnel
There are no loans to Key Management Personnel as at 30 June 2019 (2018: Nil).
56
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Annual Report 2018-19 Notes to the Consolidated Financial Statements
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Note 17. Key Management Personnel disclosures (continued)
Transactions with related parties:
Note 18. Financial risk management (continued)
Market risk
Andrew Wilson is employed by Kesempatan Pty Ltd (“KPL”) and has benefi cial interest in KPL. Under
an Agreement with the Company, KPL provides the services of Andrew as a Non-executive Director of
the Company. During the year, KPL was paid $87,083 (2018: $60,000) for the Non-executive Director
services provided by Andrew. During the period, KPL also invoiced the Company $101,860 for services
in leading the negotiation and resolution of a dispute and a restructure that was in addition to the
scope of Andrew’s services as a Non-executive Director.
Transactions between related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated. For details of remuneration
disclosures relating to Key Management Personnel, refer to the remuneration report in the Directors’
Report.
Note 18. Financial risk management
The Company’s fi nancial instruments consist of deposits with banks, accounts receivable and payable,
and convertible notes.
Overall risk management
The Company’s activities expose it to a variety of fi nancial risks; market risk (including the markets for
the commodities it consumes and sells, the electricity price and fair value of interest rate risk), credit
risk, country risk, liquidity risk and cash fl ow interest rate risk.
The Company’s overall risk management program focuses on the unpredictability of fi nancial markets
and commodity markets and seeks to minimise potential adverse effects on the fi nancial performance
of the Company. The Company actively seeks engagement and a cooperative relationship with the
local community and all stakeholders, including all three levels of the Government of Indonesia. The
Company does not tolerate and strictly forbids the payment of any corrupt payments or facilitation
fees. Risk management is carried out by the Board of Directors under policies approved by the Board.
Credit risk
Credit risk arises from the fi nancial assets of the Company, which comprise cash and cash equivalents
and trade and other receivables. The Company’s exposure to credit risk arises from potential default
of the counter party, with a maximum exposure equal to the carrying amount of these instruments.
The Company does not have any signifi cant credit risk exposure to any single counterparty. The credit
risk on liquid funds is limited because the counter party is a bank with a high credit rating.
The carrying amount of the Company’s fi nancial assets represents the maximum credit exposure. The
Company’s maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables
Other assets
Maximum exposure to credit risk
2019
$
2018
$
3,972,085
4,213,499
33,900
547,074
4,553,059
111,450
537,818
4,862,767
The credit quality of fi nancial assets that are neither past due nor impaired can be assessed by
reference to external credit ratings (if available) or to historical information about counterparty
default rates.
Liquidity risk
Liquidity risk management implies maintaining suffi cient cash to meet commitments as and when
they fall due. The Company’s fi nancial liabilities include trade payables which are non-interest.
Expenses are managed on an ongoing basis and the Company expects to be able to raise additional
funds as and when necessary to meet these commitments. Additionally, a major shareholder has
signed a letter of comfort to provide fi nancial support to the Company for the next 12 months.
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and
equity prices will affect the Company’s income or the value of its holdings of fi nancial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return.
Foreign exchange
The Group undertakes certain transactions denominated in foreign currency and are exposed to foreign
currency risk through foreign exchange rate fl uctuations.
Foreign exchange risk arises from future commercial transactions and recognised fi nancial assets and
fi nancial liabilities denominated in a currency that is not the entity’s functional currency. The risk is
measured using sensitivity analysis and cashfl ow forecasting.
As a result of the operating activities in Indonesia and the ongoing funding of overseas operations from
Australia, the Group’s Statement of Financial Position can be affected by movements in Indonesian Rupiah
dollar (IDR) / Australian Dollar (AUD) and US Dollar (USD) / Australian Dollar (AUD) exchange rates. The
Group seeks to mitigate the effect of its foreign currency exposure by timing its purchase and payment to
coincide with highs in the IDR/AUD and USD/AUD exchange rate cycle.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash fl ows of fi nancial instruments will fl uctuate
because of changes in market interest rates. The Company’s exposure to interest rate risk is not
signifi cant and is limited to cash and cash equivalents. The company does not rely on the generation of
interest to provide working capital.
Profi le
At the reporting date the interest rate profi le of the company’s interest-bearing fi nancial instruments was:
Financial assets
Cash and cash equivalents
-
3,972,085
3,972,085
Fixed
interest
$
Floating
interest
$
Total
$
Financial liabilities
Convertible notes
Sensitivity analysis
5,114,473
-
5,114,473
The sensitivity analyses of the Group’s exposure to interest rate risk at the reporting date has been
determined based on a change of 100 basis points in interest rates.
At reporting date, if interest rates had been 100 basis points higher and all other variables were
constant, the Group’s net profi t after tax would have increased by $39,721 (2018: $42,135) with a
corresponding increase in equity. Where interest rates decreased, there would be an equal and
opposite impact on the profi t after tax and equity.
Note 19. Segment information
For management purposes, the Group is organised into one main operating segment, which
involves developing a ferromanganese smelting and sales business to produce low/medium carbon
ferromanganese alloy in West Timor, Indonesia. All of the Group’s activities are interrelated, and discrete
fi nancial information is reported to the Board (chief operating decision maker) as a single segment.
Accordingly, all signifi cant operating decisions are based upon analysis of the Group as one segment.
The fi nancial results from this segment are equivalent to the fi nancial statements of the Group as a whole.
The accounting policies applied for internal reporting purposes are consistent with those applied in the
preparation of these fi nancial statements.
58
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Annual Report 2018-19 Notes to the Consolidated Financial Statements
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Notes to the Consolidated Financial Statements
Note 20. Contingent liabilities
As per the restructure agreement between PT Jayatama Global Investindo (“JGI”) and PT Gulf Mangan
Grup (“GMG”), it was agreed that JGI will receive a 2.5% net royalty on alloy sales from GMG’s fi rst two
smelters. This liability will not take effect until production of alloys from the smelters.
Other than as disclosed above, there were no contingent liabilities at the end of the reporting period.
Note 21. Events occurring after reporting period
On 2 August 2019, the Company announced it had entered into an agreement to acquire a strategic
20% interest in Iron Fortune Pty Ltd (“Iron Fortune”), a private Australian-based minerals and
exploration company focused on Timor-Leste. Under the terms of the agreement, Gulf will pay an
initial A$100,000 for exclusivity whilst due diligence is completed and has agreed to work together with
Iron Fortune to develop a work plan and strategic direction.
Hamish Bohannan will also be appointed to the Board of Iron Fortune in the position of Non-executive
Director. Upon completion of the due diligence process, Gulf will pay a further A$200,000 and issue
A$100,000 worth of shares to secure a 20% interest in Iron Fortune. Full terms and conditions are
outlined in the ASX announcement lodged on 2 August 2019.
Other than as disclosed above, there are no other signifi cant events that have occurred after the
reporting period.
Note 22. Auditor’s remuneration
Audit and review of fi nancial statements
Total auditor’s remuneration
Note 23. Dividends
2019
$
65,236
65,236
2018
$
53,253
53,253
There were no dividends recommended or paid during the fi nancial years ended 30 June 2019 and 30
June 2018.
Note 24. Subsidiaries and non-controlling interests
a. Subsidiaries
The consolidated fi nancial statements include the fi nancial statements of Gulf Manganese
Corporation Limited and the subsidiaries listed in the following table:
% Equity interest
Name of entity
Parent entity
Place of
incorporation
Gulf Manganese Corporation Limited
Australia
Controlled entities
Gulf Copper Pty Ltd1
Gulf Manganese Pty Ltd(1)
International Manganese Group
Limited
Australia
Australia
Australia
PT Gulf Mangan Grup
Indonesia
1 These companies were inactive during the years ended 30 June 2019 and 30 June 2018.
2019
%
100
100
100
100
74.9
2018
%
100
100
100
100
100
Note 24. Subsidiaries and non-controlling interests (continued)
(b) Non-controlling entities
The following table sets out the summarised fi nancial information for PT Gulf Mangan Grup
that has non-controlling interests. Amounts disclosed are before intercompany eliminations
(AASB 12.B11).
Summarised statement of Financial Position
Current Assets
Non-current Assets
Total Assets
Current Liabilities
Non-current Liabilities
Total Liabilities
Net Assets/(Liabilities)
Accumulated NCI
Summarised fi nancial performance
Revenue
Other income
Loss before income tax
Income tax expense
Post tax loss
Other comprehensive income
Total comprehensive loss
Loss attributable to non-controlling interests
Other comprehensive income attributable to non-
controlling interests
Total comprehensive loss attributable to non-controlling
interests
2019
$
302,043
17,528,361
2018
$
3,702,625
11,152,079
17,830,404
14,854,704
3,379,873
17,459,997
20,839,870
(3,009,466)
(755,376)
2019
$
-
46,894
2,119,115
11,932,861
14,051,976
802,728
-
2018
$
-
31,186
(4,761,600)
(2,258,134)
-
(4,761,600)
(594,643)
(5,356,243)
(675,202)
(17,495)
(692,697)
-
(2,258,134)
(454,596)
(2,712,730)
-
-
-
60
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Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Directors’ Declaration
Note 25. Gulf Manganese Corporation Limited Parent Company Information
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive income
Total comprehensive loss
Parent
2019
$
4,065,065
12,804,280
16,869,345
512,560
-
512,560
Parent
2018
$
1,254,374
11,083,984
12,338,358
885,453
1,716,667
2,602,120
16,356,785
9,736,238
55,790,732
3,089,667
38,942,128
8,932,466
(42,523,614)
(38,138,356)
16,356,785
9,736,238
(5,935,993)
(7,935,964)
-
-
(5,935,993)
(7,935,964)
Directors’ Declaration
The Directors of the Company declare that:
1. The fi nancial statements and note set out on pages 32 to 61, are in accordance with the Corporations Act
2001 and:
(a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements and
(b) give a true and fair view of the Company’s fi nancial position as at 30 June 2019 and of its performance
for the year ended on that date.
In the Director’s opinion, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable.
2. The remuneration disclosures included in the Directors’ report (as part of audited Remuneration Report) for
the year ended 30 June 2019, comply with section 300A of the Corporations Act 2001.
3. The Directors have been given the declarations by the chief executive offi cer and chief fi nancial offi cer
required by section 295A.
4. The Company has included in the notes to the fi nancial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf
of the Directors by:
Craig Munro
Non-executive Chairman
Perth, Western Australia
27 September 2019
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Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Independent Auditor’s Report
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Independent Auditor’s Report
Independent Auditor’s Report
Independent Auditor’s Report
Independent Auditor's Report
To the Members of Gulf Manganese Corporation Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Gulf Manganese Corporation Limited (“the
Company”) and its subsidiaries (“the Consolidated Entity”), which comprises the
consolidated statement of financial position as at 30 June 2019, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion:
a.
the accompanying financial report of the Consolidated Entity is in accordance with
the Corporations Act 2001, including:
(i)
giving a true and fair view of the Consolidated Entity’s financial position as
at 30 June 2019 and of its financial performance for the year then ended;
and
(ii)
complying with Australian Accounting Standards and the Corporations
Regulations 2001.
b.
the financial report also complies with International Financial Reporting Standards
as disclosed in Note 1a.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those
standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance about
whether the financial report is free from material misstatement. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Consolidated Entity in
accordance with the auditor independence requirements of the Corporations Act 2001
and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independent Auditor’s Report
To the Members of Gulf Manganese Corporation Limited (Continued)
Material Uncertainty Related to Going Concern
We draw attention to Note 1c in the financial report which indicates that the Consolidated Entity incurred a net
loss of $10,697,593 during the year ended 30 June 2019. As stated in Note 1c, these events or conditions,
along with other matters as set forth in Note 1b, indicate that a material uncertainty exists that may cast
significant doubt on the Consolidated Entity’s ability to continue as a going concern. Our opinion is not modified
in this respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report of the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key audit matter
How our audit addressed the key audit matter
Plant and equipment – $21,163,202
Our procedures included, amongst others:
(Refer to Note 7)
As disclosed in Note 7 in the financial report, as at
30 June 2019 the Consolidated Entity is carrying
plant and equipment of $21,163,202. Of significance
in this amount is $20,870,678 which relates to the
Smelter Hub which is currently under construction.
Plant and equipment is considered to be a key audit
mater due to:
(cid:16) The significant value of the asset to the
Consolidated Entity’s financial position; and
(cid:16) The complexity in identifying the elements of
cost attributable to the asset.
(cid:16) Assessing the Group’s methodology for
determining and recognising Plant and
Equipment under construction;
(cid:16) We tested the additions to the Smelter Hub in
Plant and Equipment for the year by evaluating a
sample of recorded expenditure for consistency
to underlying records, the capitalisation
requirements of the Consolidated Entity’s
accounting policy and the requirements of AASB
116;
(cid:16) Evaluating management’s assessment as to
whether indicators of impairment had occurred;
and
(cid:16) Assessing the adequacy of the disclosures
included in the financial report.
Share based payments – $938,934
Our procedures included, amongst others:
(Refer to Note 13)
(cid:16) Analysing contractual agreements to identify the
As disclosed in Note 13 in the financial statements,
during the year ended 30 June 2019, the
Consolidated Entity incurred share based payments
totaling $938,934.
Share based payments are considered to be a key
audit matter due to:
(cid:16)
the value of the transactions;
key terms and conditions of share based
payments issued and relevant vesting conditions
in accordance with AASB 2 Share Based
Payments;
(cid:16) Evaluating the key assumptions used to value
the performance rights including the probability
of the performance conditions being met as
disclosed in note 13 of the financial statements;
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Annual Report 2018-19 Independent Auditor’s Report
Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 Independent Auditor’s Report
Independent Auditor’s Report
Independent Auditor’s Report
Independent Auditor’s Report
To the Members of Gulf Manganese Corporation Limited (Continued)
Key audit matter
How our audit addressed the key audit matter
(cid:16)
(cid:16)
the complexities involved in recognition and
measurement of these instruments; and
the judgement involved in determining the inputs
used in the valuation.
This process involved significant estimation and
judgement required to determine the fair value of the
equity instruments granted.
(cid:16) Assessing the amount recognised during the
period against the vesting conditions of the
options; and
(cid:16) Assessing the adequacy of the disclosures
included in the financial report.
Borrowings - $5,114,473
Our procedures included, amongst others:
(Refer to Note 10)
(cid:16) Obtaining the loan agreement to identify the key
As disclosed in note 10 of the financial statements
for the year ended 30 June 2019, the Consolidated
Entity converted part of its loan into the issued
capital of the subsidiary PT Gulf Mangan Grup and
the remaining balance of the loan is due to be repaid
on 30 September 2020.
Borrowings are considered to be a key audit matter
due to the value of the loan.
terms;
(cid:16) Assessing the financial instruments in
accordance with the Australian Accounting
Standard with particular consideration given to
the recognition, measurement and disclosures
surrounding debt & equity components of
compound instruments;
(cid:16) Evaluating the derivative components that may
exist as a result of the issue of these financial
instruments; and
(cid:16) Assessing the adequacy of the disclosures
included in the financial report.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Consolidated Entity’s annual report for the year ended 30 June 2019, 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 Gulf Manganese Corporation 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 1c, the
directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial report complies with International Financial Reporting Standards.
In preparing the financial report, the directors are responsible for assessing the Consolidated Entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Consolidated Entity or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are to
obtain reasonable assurance about whether the financial report as a whole is free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
(cid:16)
(cid:16)
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Consolidated Entity’s internal control.
(cid:16)
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
(cid:16)
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Consolidated Entity’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Consolidated Entity to cease to
continue as a going concern.
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Gulf Manganese Corporation Limited (ACN: 059 954 317)
Annual Report 2018-19 ASX Additional Information
Independent Auditor’s Report
ASX Additional Information
Independent Auditor’s Report
To the Members of Gulf Manganese Corporation Limited (Continued)
(cid:16)
(cid:16)
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Consolidated Entity to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Consolidated Entity audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2019.
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 2019, complies with
section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
CHRIS NICOLOFF CA
Partner
Dated at Perth this 27th day of September 2019
Additional information as required by the Australian Securities Exchange Limited and not disclosed elsewhere in
this report is set out below. The information is current as at 18 October 2019.
1.1 Ordinary Shares on Issue
There are 5,044,848,331 ordinary shares on issue (GMC).
1.2 Listed Options on issue
There are nil Listed Options on issue.
1.3 Unlisted Options on issue
Class
# Securities
# Holders
Holder of more than 20% of Securities
Exercisable at $.02 options
expiring 31/12/2020
25,000,000
Exercisable at $0.02 options
expiring 5 Sep 2021
50,000,000
Exercisable at $0.02 options
expiring 5 Sep 2021 (ECSOP)
24,000,000
Exercisable at $.03 options
expiring 31/12/2020
25,000,000
Holder Name
# Securities
Jeremy Slater
19,000,000
HJL Bohannan
30,000,000
C & Diane Munro
Setia Pty Ltd
John Woodacre
Donna Whittaker
10,000,000
10,000,000
7,000,000
5,000,000
Jeremy Slater
22,500,000
10
3
7
4
1.4 Distribution of shareholders
Analysis of numbers of equity security holders by size of holding:
Holding Ranges
Holders
Total Units
% Issued Share
Capital
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
55
27
10
464
1,297
1,853
13,764
72,492
77,030
28,597,123
5,016,087,922
5,044,848,331
0.00%
0.00%
0.00%
0.57%
99.43%
100.00%
Based on the price per security at $0.006, number of holders with an unmarketable holding: 419, with total
15,582,354 amounting to 0.31% of Issued Capital
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Annual Report 2018-19 ASX Additional Information
1.6 Twenty largest shareholders
Position
Holder Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Holding
606,543,870
401,613,358
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
PT JAYATAMA GLOBAL INVESTINDO & RELATED PARTIES
314,694,591
TAN HWA POH
BNP PARIBAS NOMS PTY LTD
TOM HALE PTY LTD
ALI SANTOSO HALIM
ACUITY CAPITAL INVESTMENT MANAGEMENT PTY LTD
JOHN ALBERT WOODACRE
MR SAM BOON BENG LEE & MRS JENNY SU LEE LEE
HAMISH BOHANNAN
ZHANG & KHOE FAMILY PTY LTD
MR KIM YEW LEE
MR EDUARDO SIAO & MRS EVELYN SIAO
MR NEIL THOMPSON
UBS NOMINEES PTY LTD
ARKWRIGHT DEVELOPMENTS PTY LIMITED
TEPANY PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BMK CORPORATION PTY LTD
Total
152,083,333
149,900,000
98,500,000
83,333,334
76,946,839
74,098,833
71,108,960
63,923,683
61,447,196
60,453,753
50,736,868
50,000,032
43,937,922
42,500,000
41,850,000
38,616,301
37,705,000
2,386,511,655
1.8 Corporate Governance Statement
The Company’s 2019 Corporate Governance Statement has been released as a separate document and is
located on its website at www.gulfmanganese.com
%
12.02%
7.96%
6.24%
3.01%
2.97%
1.95%
1.65%
1.53%
1.47%
1.41%
1.27%
1.22%
1.20%
1.01%
0.99%
0.87%
0.84%
0.83%
0.77%
0.75%
47.31%
Total issued capital - selected security class(es)
5,044,848,331
100.00%
Substantial Shareholders
Substantial Holder
Citicorp Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
PT Jayatama Global Investindo
1.7 Tenement Schedule
Size of Holdings
606,543,870
401,613,358
314,694,591
%
12.02%
7.96%
6.24%
All Tenements previously held by Gulf Copper Pty Ltd have now been transferred to unrelated parties. The
Company no longer holds any tenements.
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