Annual Report
2019
ABN 87 095 092 158
Hammer Metals Limited (Hammer or The Company)
ABN 87 095 092 158
BOARD OF DIRECTORS
Russell Davis
Nader El Sayed
Executive Chairman
Non-Executive Director
Zbigniew Lubieniecki
Non-Executive Director (appointed 1 October 2018)
Alexander Hewlett
Executive Director (resigned 1 October 2018)
Simon Bodensteiner
Independent Non-Executive Director (resigned 1 October 2018)
COMPANY SECRETARY
Mark Pitts
PRINCIPAL AND REGISTERED OFFICE
Suite 1, 827 Beaufort Street
Mt Lawley, WA 6052
Telephone:
+61 8 6369 1195
Email:
info@hammermetals.com.au
Website:
www.hammermetals.com.au
POSTAL ADDRESS
PO Box 198
Mt Lawley WA 6929
Australia
AUDITORS
KPMG
235 St Georges Terrace
Perth WA 6000
Australia
Telephone:
+61 8 9263 7171
Facsimile:
+61 8 9263 7129
SHARE REGISTRY
Advanced Share Registry Ltd
110 Stirling Highway
Nedlands WA 6009
Australia
Telephone:
+61 8 9389 8033
Facsimile:
+61 8 9262 3723
STOCK EXCHANGE
ASX Limited
Level 40, Central Park,
152-158 St Georges Terrace
Perth WA 6000
ASX CODE
HMX
CORPORATE GOVERNANCE
The Company’s corporate governance statement can be found at the following URL:
http://www.hammermetals.com.au/company-profile/corporate-governance/
Contents
Chairman’s Letter
Corporate Strategy
Operational Highlights
Corporate Activity
Operations Summary
Competent Person’s Statements
Annual Mineral Resource Statement
Directors Report
Auditor’s Independence Declaration
Consolidated Statement Of Financial Position
Consolidated Statement Of Profit Or Loss And Other Comprehensive Income
Consolidated Statement Of Changes In Equity
Consolidated Statement Of Cash Flows
Notes To The Consolidated Financial Statements
Director’s Declaration
Independent Auditor’s Report
ASX Additional Information
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HAMMER METALS LIMITED / Annual Report 2019 / 03
Chairman’s Letter
04 / HAMMER METALS LIMITED / Annual Report 2019
Dear fellow Shareholders,
Thank you for your support during what has been an active
and productive year. A quick review:
During the year the Company added a “gold” string to its
bow in May 2019 when it took the opportunity to acquire
a 100% interest in the Bronzewing South Gold Project
located in the +20 million-ounce Yandal Greenstone Belt
500km north of Kalgoorlie in Western Australia.
This part of WA’s Yilgarn is currently experiencing high levels
of exploration and corporate action and the Company’s
tenements are well-located with respect to infrastructure
and previous mining activity. Due to the project’s history of
restricted exploration access, the tenements are considered
under-explored, with multiple targets to be drill tested. The
first of several planned drilling programs at Bronzewing
South commenced in August.
The Company remains strongly committed to its
2,100km2 Mount Isa Copper-Gold Project and its goal
of making a transformational new copper-gold discovery in
this major mining province.
Good progress was made on the target generation and
exploration front, particularly on the Company’s large
Mount Philp Breccia IOCG project. After consolidating
the tenements over what is the largest known zone of
breccia in the region, ground follow-up of the Company’s
copper and gold soil anomalies has located several new
zones of outcropping mineralisation. New outcropping
gold-rich zones have also been identified in the Malbon
area. Additionally, the Black Rock and Sunset copper-gold
prospects near Jubilee were acquired in November 2018.
Whilst the RC drilling conducted earlier in the year at Perentie
intersected narrow zones of copper-gold mineralisation the
drilling demonstrated the potential of the area as a whole,
with multiple targets yet to be tested across this highly
altered and faulted area.
The Company released the maiden Mineral Resource
Estimate for the Jubilee copper-gold deposit (in joint
venture with Glencore) in December 2018, followed up by
some very promising first-pass metallurgical flotation test
work on the sulphide mineralisation.
Jubilee was included in the Company’s in-house pit
optimisation studies of its existing 100%-owned resources
at Kalman and Overlander. The studies used updated metal
prices and costs and either on-site treatment at Kalman or
at a third-party treatment facility.
This investigation strongly supports further work at each
deposit; initially infill drilling to improve the understanding
and resource categorisation of the mineralisation, before
more detailed mining studies are progressed.
Now that the targets have been identified, we now need to
drill more holes at Mount Isa. The Company together with its
advisors are investigating strategic alternatives to expedite
work on the projects through additional exploration joint
ventures and/or divestments.
As foreshadowed last year the sale of the Millennium cobalt
project to the TSX-listed energy metal company Global
Energy Metals Corporation (GEMC) was completed mid-
year. The Company is now a 19.9% shareholder in GEMC
with exposure to any increase in the cobalt price through
this shareholding.
In the short to medium term the Directors expect to conduct
additional drilling at Bronzewing South. Expediting work at
Mount Isa remains a focus with joint ventures and strategic
partnerships being pursued alongside our own high-impact
exploration activities.
The Company recently announced the appointment to its
Board and Management team of Mr Daniel Thomas as
Managing Director. Daniel has had a strong career with
Wesfarmers, Mitsu and most recently the copper miner
Sandfire Resources. Daniel commences on October 21st
this year and we very much look forward to Daniel coming
on board and driving the company forward.
The Directors would like to thank the Company’s small
and hardworking exploration team headed by our Chief
Operations Officer, Mr Mark Whittle, who manages to
navigate through the compliance requirements and
successfully get the job done.
The Company now holds strategic ground positions in
two world-class Australian mineral provinces and a strong
management team. We welcome all our new shareholders
to the register, and thank those who have supported the
Company, while we look forward to the next period of
Hammer’s development.
Russell Davis
Executive Chairman
HAMMER METALS LIMITED / Annual Report 2019 / 05
Corporate Strategy
• Position the company for the discovery through
innovative and focused exploration for large copper-
gold and gold deposits in two of the world’s great
metal provinces
• Work to consolidate and improve the quality of the
Company’s tenement positions
• Operate safely and effectively
• Deliver positive financial returns to shareholders
06 / HAMMER METALS LIMITED / Annual Report 2019
Operational Highlights
• High grade gold targets defined at El Questro and
Alice-Kings near Malbon
• Completed the sale of the Millennium cobalt-copper
project to Global Energy Metals Corporation.
Exposure to cobalt maintained through Hammer’s
19.99% interest in GEMC
•
Internal review highlights Rare Earth Element (REE)
prospectivity of Mount Isa project.
• Acquired a 100% interest in the Bronzewing South
Gold Project located immediately south of the
Bronzewing gold mine and north of the Orelia
deposit in WA
• Announced the maiden mineral resource estimate
for the Jubilee copper-gold deposit and positive
results of first-pass sulphide flotation test work on
Jubilee core
• Acquired a 100% interest in the prospective Black
Rock and Sunset copper-gold prospects near
Jubilee
• Discovered new copper-gold targets including
Pelican Waterhole, Shadow, Steakhouse and Charlie
from rock chip sampling at the Mt Philp Breccia
IOCG project
HAMMER METALS LIMITED / Annual Report 2019 / 07
Corporate Activity
The Company’s corporate activities are focussed on enhancing the capacity of our
exploration team to make discoveries through adequate funding, as well as securing
tenements or projects that improve the quality and potential of the Company’s
exploration portfolio.
Capital raising activities during the year include:
• A $0.8 million non-renounceable rights (option)
issue and $200,000 share placement was finalised
on September 12th, 2018.
• A placement to raise an additional $1 million was
completed in February and May 2019
In August 2019, subsequent to the end of the financial
year, $1.7 million was raised to accelerate exploration at
Bronzewing South.
The Company’s website www.hammermetals.com.au
provides additional project and corporate information and
access to previous announcements.
During the year a strategic tenement position was acquired
in the Yandal greenstone belt in WA as well as tenements
securing new advanced copper-gold projects in the Mount
Isa region.
The sale of the remaining 75% interest in the Millennium
cobalt-copper-gold project to the Company’s JV partner,
Global Metals Energy Corporation (“GEMC”) was completed
at the end of the financial year. GEMC is a focussed TSX.V-
listed cobalt explorer and developer. The Company was
issued 19.99% of the share capital of GEMC in consideration
for the sale. This transaction will allow the Company to focus
on its copper-gold exploration activities whilst maintaining
significant exposure to the project through its shareholding
in GEMC.
New joint venture partners are being sought to assist in
expediting the exploration activity at Mount Isa following
Newmont’s withdrawal from the Mount Isa Joint Venture in
June 2018.
The Company received an allocation of $275,000 in credits
under the Federal Government’s Junior Minerals Exploration
Incentive Scheme (“JMEI”). The Company expects to
finalise its allocation to participants in new equity raisings
throughout the financial year shortly.
08 / HAMMER METALS LIMITED / Annual Report 2019
Bronzewing South Gold Project (WA)
On 17 May 2019 shareholders ratified the acquisition of Carnegie Exploration Pty Ltd.
Carnegie holds a 100% interest in the tenements comprising the Bronzewing South
Gold Project, located within the Yandal greenstone belt in Western Australia.
The project is a positive addition to the Company’s
portfolio, located in a prime gold exploration location and
close to existing infrastructure.
There are three main target areas:
1. The Bronzewing mineralised corridor extending
for 5km south from the 2.3 Moz Bronzewing Mine.
This area is considered highly prospective due
to the area’s disrupted exploration history and
extensive blanketing by barren transported cover.
Previous drilling highlighted several anomalous
zones within the Bronzewing corridor which have
received limited follow-up with deeper RC and
diamond drilling. The previous drilling only tested
for north-south lode orientations which did not
consider the inherent structural complexity and
variable orientation of the Bronzewing lodes.
2. The Orelia trend shear zones extending for 15km
along strike to the north of the Lotus pit and adjacent
1Moz Orelia gold deposit. Previous RAB interface
and aircore drilling to an average depth of 30m
along the trend outlined numerous bottom-of-hole
gold anomalies (0.1-1g/t Au) some of which have
not been tested by deeper RC or diamond drilling.
(Refer to the Annual Mineral Resource Statement
on page 24).
3. The Kens Bore quartz vein target is located
11km southeast of Bronzewing. Several strongly
anomalous gold results in rock chips coinciding with
a 3km long gold-in-soil anomaly at a granite – basalt
contact marked by quartz veining. The previous
shallow drilling at Ken’s Bore is not considered to
have fully tested the prospect. (Refer to the Annual
Mineral Resource Statement on page 24).
Since the acquisition Hammer has completed data
compilation, ground IP surveying and the first phase of RC
drilling which intercepted significant gold mineralisation
in most of the holes drilled including 10m at 1.97g/t Au
from 129m including 1m at 16g/t Au from 137m and
2m at 3.39g/t Au from 110m in BWRC006 (refer ASX
announcement 2 October 2019).
Multiple targets remain to be tested with the recent drilling
providing useful information on the structure, geology and
deportment of the gold mineralisation at the project.
The Company expects the first phase of aircore drilling
along the Orelia trend to commence shortly.
View looking north showing the proximity of the Bronzewing Deposit to E36/854
HAMMER METALS LIMITED / Annual Report 2019 / 09
Bronzewing South Gold Project (WA)
Bronzewing South Tenements
Bronzewing South Phase 1 RC Drilling with significant intercepts (refer ASX announcement 2 October 2019)
010 / HAMMER METALS LIMITED / Annual Report 2019
Mount Isa Project (QLD)
The Company is an active mineral explorer in the Mount Isa region, focused on
discovering large copper-gold deposits of the Ernest Henry style and has a range of
prospective targets at various stages of testing.
Through its wholly owned subsidiaries, the Company holds
a strategic tenement position covering over 2,100km2 with
100% interests in the Kalman (Cu-Au-Mo-Re) deposit, the
Overlander North and Overlander South (Cu-Co) deposits
and the Elaine-Dorothy (Cu-Au) deposit and a 51% interest
in the Jubilee (Cu-Au) deposit.
The ground position is focused on major regional-scale
structural zones and extends for over 100km from Mary
Kathleen in the north to the Tick Hill area in the south.
Activity during the past year included multi-disciplinary
exploration programs funded both internally and by our
joint venture partners. Project acquisition and target
generation activities continued to add highly prospective
tenements to the Company’s existing portfolio whilst less
prospective tenements were relinquished.
The Company will also seek new joint ventures with suitable
parties to assist in the funding of this work whilst pursuing
self-funded exploration on its own 100% owned targets.
Mount Isa Project Locations –
Hammer Resources in Yellow
GRASSROOTS
ADVANCED EXPLORATION
RESOURCE DEFINITION
DEVELOPMENT STUDIES
Koppany
Mt Philp
Breccia
Prince
of Wales
Overlander
IOCG
Elaine
Mt Philp
Fe
Overlander
North &
South
Kalman
Even
Steven
Pindora
Black
Rock
Lake
View
Millennium
Sold to GEMC (TSX-
Listed Company) for
20% interest in GEMC
Jubilee
51% HMX &
Operator
Malbon
Perentie
Andy’s Hill
IOCG
Tourist
Zone
Project owned 100%
Hammer interest as noted
Hammer has a massive 2,100km2 tenement
holding in the largest base metal province
in the world
Mt Isa Asset Portfolio
HAMMER METALS LIMITED / Annual Report 2019 / 011
Copper-Gold Exploration
Mary Kathleen Structural Zone
The Company holds contiguous tenements that secure a 15km long section of the
Mary Kathleen structural zone as far south as the Tiny Boot prospect where the
structure intersects the Fountain Range and Pilgrim Faults.
The Mary Kathleen structural corridor is highly mineralised
and hosts several copper-gold, uranium and REE prospects
including the Mary Kathleen uranium deposit (closed), the
Jubilee copper-gold deposit and Koppany, Chester, Blue
Caesar and Elaine Dorothy. At Elaine-Dorothy the previous
owners delineated an Inferred Mineral Resource estimate
of 27 Mt at 0.5% Cu and 0.08g/t Au\.
(Refer to the Annual Mineral Resource Statement on page 24).
During the year the area was further consolidated with the
purchase of the tenements covering the Black Rock and
Sunset copper-gold targets 5km west of Jubilee.
The tenements are 100%-owned by the Company apart from
EPM 14467. Located adjacent to the Mary Kathleen uranium
mine this tenement is in a joint venture with Mount Isa Mines
Ltd (MIM), a subsidiary of Glencore. Through Mulga Minerals
Pty Ltd, a 100% owned subsidiary, Hammer Metals Ltd holds
a 51% interest in the tenement and is the operator.
Mary Kathleen Structural Zone
012 / HAMMER METALS LIMITED / Annual Report 2019
Copper-Gold Exploration
Jubilee
Activity in the Mary Kathleen district during the year was directed at progressing the
Jubilee copper-gold deposit with a diamond drilling program, resource estimation and
first pass metallurgical test work completed. The Jubilee deposit is well located; close
to the sealed Barkly Highway midway between Mount Isa and Cloncurry.
Within five kilometres of the Jubilee deposit, Hammer
holds the Elaine-Dorothy copper-gold deposit and the
Lakeview, Black Rock, and Sunset copper-gold prospects,
all of which have excellent potential to define additional
copper and gold resources.
Rock chip sampling and mapping has also highlighted
a mineralised trend extending between Jubilee and the
currently undrilled Lakeview mine (4.5km to the south),
enhancing the potential of the Jubilee structural trend for
further discoveries.
Estimation of an initial Mineral Resource for the Jubilee
deposit was completed in late 2018. The Mineral Resource
Estimate comprises 1.4 million tonnes at 1.4% Cu and
0.62g/t Au in the Inferred category at a 0.5% Cu cut-off
grade containing an estimated 20,000 tonnes of copper
and 28,000 ounces of gold (refer ASX announcement 13
November 2018).
The deposit extends from surface and is open at depth
with excellent potential to extend the resource at depth
and along strike. The sulphide mineralisation as defined
is relatively close to surface and is therefore potentially
amenable to extraction by open pit mining.
Results of the first pass sulphide flotation metallurgical
work on samples of diamond drill core were very
encouraging with a peak copper recovery of 98% and gold
recovery of 80% to a rougher copper concentrate (refer
ASX announcement 13 November 2018).
Jubilee Sulphide Flotation
Test Work
Jubilee Long Section (looking west)
(refer ASX announcement 13 November 2018)
HAMMER METALS LIMITED / Annual Report 2019 / 013
Copper-Gold Exploration
Black Rock and Sunset
In October 2018, the Company executed a Sale and Purchase Agreement to buy a 100%
interest (subject to a 1.5% NSR) in two exploration permits that cover the Black Rock and
Sunset copper-gold prospects located 5km northwest of the Company’s existing Jubilee
and Elaine-Dorothy copper-gold deposits near the Mary Kathleen uranium mine.
Sunset and Black Rock occur on a mineralized trend
termed the Wonga detachment surface. This trend is
largely located along lithological boundaries and has been
an important channel-way for hydrothermal fluids during
mineralising events in the Mary Kathleen Fold Belt. Jubilee
and Lakeview also occur on or close to the surface as well
as several other copper occurrences. The Company holds
over 20km of strike of this zone which is considered to
have substantial exploration potential.
Previous drilling at Black Rock returned broad drill
intersections of copper-gold mineralisation over a strike
length of 1.2km with true widths of the mineralised zone
of up to 60m, indicating good potential to host a large
tonnage copper-gold deposit similar to Hammer’s Elaine-
Dorothy deposit.
The mineralisation is hosted within a magnetite-hematite
altered fractured quartzite. Significant intercepts include:
• 78m at 0.54% Cu and 0.13g/t Au from 140m in
CAMD003
• 94m at 0.44% Cu from 159m in DDH-PN1
(no gold assays)
• 98m at 0.30% Cu including 3m at 4.05% Cu and
0.59g/t Au from 85m in CAMC033
• 70m at 0.33% Cu including 5m at 1.08% Cu and
0.23g/t Au from 206m in CAMC028
•
(refer ASX announcement 30 October 2018)
In contrast the Sunset Prospect has potential for Jubilee-
style copper-gold deposits. Selected drill intersections
include 24m @ 1.41% Cu and 0.49g/t Au and 14m at
2.57% Cu (refer ASX announcement 30 October 2018).
Mineralisation occurs as multiple stacked lenses which
were historically mined by narrow vein methods. Drilling
has delineated mineralisation over a 700m strike length.
Copper mineralisation consisting of chalcopyrite,
chalcocite, malachite and chrysocolla from the
Sunset prospect
Oblique view of the Sunset and Black Rock trends looking south (refer ASX announcement 30 October 2018)
014 / HAMMER METALS LIMITED / Annual Report 2019
Copper-Gold Exploration
IOCG Targets | Mount Philp Breccia
The Mount Philp Breccia Project is a high-priority exploration target for the Company.
The project covers a strongly altered and brecciated sequence of rocks covering an
area approximately 10km long and 7km wide and is located between the regional
scale Fountain Range and Pilgrim Faults.
Both faults are more than 200km in length and are major
crustal features of the central portion of the Mount Isa Inlier.
The Mt Philp Breccia is one of the largest areas of breccia
in the Mount Isa inlier. Significantly, recent age dating of
the breccia matrix and intrusive rocks indicate ages similar
to the Williams Granite.
In recent years the Company has consolidated its tenure
position over the breccia, with the prime exploration
objective being for IOCG mineralisation. There are known
occurrences of uranium, hematite (at the Mount Philp Iron
Deposit), magnetite, copper, gold, cobalt, REE’s, scheelite
and molybdenite occurring within the project area. The
large scale of the alteration and brecciation, the favourable
structural framework and extensive felsic and mafic
intrusive activity are considered conducive to the formation
of an IOCG deposit. Additionally, zones of mylonite and
strong silicification were found which are considered to
have potential for Tick Hill style gold mineralisation.
The Company’s 100%-owned Mt Philp haematite deposit is
immediately adjacent to the breccia and is considered of
epigenetic rather than sedimentary origin. Previous drilling
intercepted low-grade copper-gold mineralisation below
the northern end of the deposit indicating the potential
for an untested IOCG system at Mt Philp. Examination of
diamond core from the southern end of the iron resource
indicates breccias containing fragments of hematite abut
the deposit.
A high resolution aeromagnetic and radiometric survey
was undertaken over the area as well as soil geochemical
sampling on a nominal 200 x 200 metre staggered pattern.
A number of strong copper-gold anomalies were outlined
by the survey. The gold distribution is similar to that of
copper in most instances although there are +50ppb Au
anomalies which are not associated with copper.
Field work involving prospecting and rock chipping in the
area of the soil anomalies commenced during the year.
Approximately two thirds of the anomalies have been
progressively ground checked.
Although at an early stage the results to date have been
very encouraging with previously unknown zones of
outcropping copper (and gold) mineralisation found,
including Shadow, Toby, Steakhouse and Undulating Hills.
The work will be followed up with more detailed mapping
and sampling along with gravity surveying.
Mineralised Mt Philp Breccia from the Shadow Prospect
HAMMER METALS LIMITED / Annual Report 2019 / 015
Copper-Gold Exploration
IOCG Targets | Mount Philp Breccia
Mt Philp Breccia Zone on Magnetic Image (refer to ASX announcement 10 September 2019)
Oblique view of the Shadow prospect looking West. The image shows the location of anomalous rock chips
in the Mt Philp Breccia on the eastern side of the Mt Philp Hematite deposit. Silica alteration marks the
position of the Fountain Range Fault in the background.
016 / HAMMER METALS LIMITED / Annual Report 2019
Copper-Gold Exploration
Malbon
The Malbon and El Questro areas are about 40km east of Kalman. The area has not been
a high priority for the Company, however the high gold values being outlined by rock chip
sampling along these trends are considered encouraging and warrant further investigation.
The Kings, Alice and Deadlock trends are up to 1.8km in
length. Outcrop is sparse in the area with a thin veneer of
colluvial cover masking bedrock. Mapping and additional
sampling will be conducted in due course.
Gossan sample from the Deadlock Prospect (ZL480, 9.91g/t Au and 1.79% Cu)
(refer to ASX announcement dated 8 May 2019)
HAMMER METALS LIMITED / Annual Report 2019 / 017
Copper-Gold Exploration
Perentie
The Perentie Project is a copper-gold discovery made by Hammer in August 2018 by
surface prospecting and rock chip sampling.
Perentie forms part of the Dronfield Joint Venture on EPM
18084 between Hammer Metals Ltd (80%) and Kabiri
Pty Ltd (20%). Previous exploration by the Company and
Newmont in this area has focussed on strong magnetic
and gravity features along the northern margin of the
highly magnetic Wimberu Granite, a Williams-aged granite
that is considered to be associated with the development
of iron oxide copper-gold (IOCG) mineralisation within the
Mount Isa Inlier.
Multiple mineralised trends are located within zones of
demagnetisation of the granite. The demagnetisation is
caused by alteration of magnetite to hematite and is often
accompanied by quartz-carbonate veining, brecciation
and red-rock alteration.
Three of these prospects Judith, Paddy B and Susan are
located along one of these north-south structures where
they intersect north-westerly faults. A parallel structure,
termed the Rainbow Ridge – Trackside trend was also
defined. Surface geophysics (SAM) was conducted prior
to the drilling of 1329m in 15 RC holes at the Judith, Paddy
B and Trackside prospects. The strong SAM anomaly and
structural target at Susan was unfortunately not able to be
tested due to access issues.
Zones of high-grade copper mineralisation co-incident
with the Perentie targets were intercepted, including:
• 2m at 2.42% Cu from 74m including 1m at 4.21%
Cu and 0.13g/t Au from 75m in HDRC012 at Paddy
B and,
• 2m at 2.36% Cu and 2g/t Au from 37m in HDRC016
at Trackside.
(refer to ASX announcement dated 24 January 2019)
Whilst an economic intersection was not obtained in
this program this first-pass drilling has confirmed that
the exploration concept is valid, with elevated copper
mineralisation and alteration present in all the target zones
drilled – including narrow zones of higher-grade copper
and gold. Only three of the thirty “de-magnetised” target
zones, many of which are obscured by shallow cover, have
been investigated.
The work at Dronfield is still in its early stages and the size
of the target area (as indicated by the extensive scale of
the alteration, magnetite enrichment/depletion and number
of surface mineralization occurrences in areas of outcrop)
highlights the potential of the project for IOCG and ISCG
deposits. A partner is being sought to progress exploration
in this region.
018 / HAMMER METALS LIMITED / Annual Report 2019
RC Drilling at Judith
Copper-Gold Exploration
Kalman West / Hammertime / Overlander /
Even Steven / Revenue / Andy’s Hill
No field work was undertaken on these prospects during the year however substantial
untested IOCG potential remains at each prospect and partners will be sought to
accelerate exploration.
Kalman Deposit
No field work was undertaken on the Kalman deposit during the year.
The Indicated and Inferred Mineral Resource at Kalman stands at 20Mt at 0.61% Cu,
0.14% Mo, 0.34g/t Au and 3.7g/t Re (1.8% CuEq) (refer ASX announcement
27 September 2016). The deposit remains open down plunge and at 0.14% Mo,
Kalman is one of the highest-grade molybdenum resources in the world.
Kalman Deposit Block Model (CuEq)
HAMMER METALS LIMITED / Annual Report 2019 / 019
Rare Earth Elements (REE) Exploration
Due to the increasing strategic importance of rare-earth-elements (REE), the Company
commenced a review of the REE potential of its Mount Isa Project as part of a broader
asset review.
An initial investigation of its drilling database has highlighted
the potential of the Andy’s Hill iron oxide copper-gold
(IOCG) prospect near Kalman and the Koppany prospect
near Mary Kathleen for light REE’s specifically cerium,
lanthanum, neodymium and praseodymium.
Neodymium and praseodymium are the core ingredients
for the manufacturing of permanent magnets (NdFeB
magnets), which are used in high-efficiency electric-motors
and electric vehicles. Significant quantities of light REE’s are
known to occur at the Mary Kathleen uranium mine however
the REE’s were not recovered at the time of mining.
Assessment of the drill hole database for the Koppany
Project located immediately along strike to the south of
Mary Kathleen has highlighted the presence of REE’s (as
well as copper) in several of the diamond holes drilled to
test a separate sulphide alteration zone indicated by strong
VTEM anomalies. The Koppany Project forms part of the
Mt Frosty JV between the Company (51%) and MIM (49%).
Although REE’s were not specifically targeted by this
drilling, intersections including 158m at 0.39% LREO from
76m including 12m at 2% LREO from 156m in KOPD005
and 121m at 0.38% LREO from 142m including 22m at
0.79% LREO in KOPD007 located approximately 800m to
the south of KOPD005. Peak values over any one metre
interval included 1.7% Cerium, 1.15% Lanthanum, 0.26%
Neodymium and 0.13% Praseodymium (refer to ASX
announcement 3 July 2019).
At Andy’s Hill drilling conducted in 2015 intercepted broad
widths of massive magnetite with disseminated copper and
REE’s including 95m at 0.12% Cerium and 0.1% Lanthanum
in AH001 and 14m at 0.25% Cerium and 0.20% Lanthanum
in AHRC003 (refer ASX announcement 5 June 2015).
020 / HAMMER METALS LIMITED / Annual Report 2019
Cobalt Exploration
Millennium
The Millennium cobalt-copper-gold project comprises five granted mining leases
located about 30km northwest of Cloncurry and less than 20km from the Rocklands
Cu-Co-Au deposit.
On 28 June 2019, the Company completed the sale of its
75% interest in the project along with the cobalt targets at
Mt Dorothy and Cobalt Ridge to TSX-listed and joint venture
partner Global Energy Metals Corporation (GEMC). The sale
to a focused cobalt explorer in GEMC will allow the Company
to concentrate on its other advanced copper-gold exploration
programs in the Mount Isa mining district.
Following the sale, the Company holds 19.25 million ordinary
shares in GEMC (representing a 19.9% interest) plus the right
to nominate one person to the GEMC board of directors whilst
Hammer maintains at least a 10% shareholding in GEMC.
Given the Company’s technical and jurisdictional expertise,
it will remain as operator of the Property until at least the
first anniversary of the date of the Definitive Agreement, with
such engagement to be reviewed and renewed on an annual
basis thereafter. The Company shall receive an operator’s
fee of 10% of the expenditures carried out on the Property.
The Company will also co-operate with GEMC with a view
to identifying and acquiring additional cobalt assets in the
Mount Isa region.
During the year the initial phase of metallurgical sulphide
flotation test work was conducted by ALS (Adelaide) on
diamond drill core samples from the northern quartzite zone
of the Millennium deposit. The northern quartzite domain
contains most of the Millennium resource. Two composite
samples were sourced from diamond drill core (MIDD001-
MIDD010) from a drilling program conducted in the first
quarter of 2018.
The key outcome of the metallurgical test work is that the
production of separate cobalt and copper rougher concentrate
streams is possible. Results are as follows:
High-grade composite peak rougher flotation test
• Combined Cu recovery of 95.1%
• Combined Co recovery of 95.4%
• Au total recovery of 81.4% reporting dominantly to
the Cu concentrate
Low-grade composite peak rougher flotation test
• Combined Cu recovery of 91.3%
• Combined Co recovery of 91.7%
• Au total recovery of 77.9% reporting dominantly to
the Cu concentrate
(refer ASX announcement 13 November 2018)
The results are considered very encouraging for an initial
phase test and it is expected that the concentrate grades may
increase on re-grind and final cleaner flotation.
Looking ahead, further drilling is planned on the southern
portion of the Millennium deposit to expand and upgrade
the current resource. This will be accompanied by ongoing
metallurgical characterisation.
Copper rougher flotation test HG-3 (left) and cobalt rougher flotation test HG-1 (right)
HAMMER METALS LIMITED / Annual Report 2019 / 021
Cobalt Exploration
Northern Zone at Millennium showing the mineralised Quartzite
Other Commodities
As previously reported the significant potential of Hammer’s tenement holding for
several other commodities including iron ore, potash, graphite and rare earth elements
has become apparent. Partners will be sought to assist with advancing these targets.
Pilbara Iron Ore (WA)
The Pilbara iron ore resource is a channel iron deposit situated approximately
100km west of Tom Price. The current Indicated Mineral Resource estimate for the
project is 11.5 million tonnes at 53% Fe. The deposit is held under a retention license
(E08/1997). (Refer to the Annual Mineral Resource Statement on page 24).
022 / HAMMER METALS LIMITED / Annual Report 2019
Competent Person’s Statements
EXPLORATION RESULTS
MINERAL RESOURCE ESTIMATES
The information in this report as it relates to exploration
results and geology was compiled by Mr. Mark Whittle, who
is a fellow of the AusIMM and a consultant to the company.
Mr. Mark Whittle, who is also a share and option holder in
the Company, has sufficient experience which is relevant
to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking
to qualify as a Competent Person as defined in the
2012 Edition of the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Reserves.
Mr. Whittle consents to the inclusion in the report of the
matters based on the information in the form and context
in which it appears.
Where the company refers to Mineral Resource Estimates
for the following prospects:
•
the Kalman deposit (ASX 27 September 2016);
•
•
the Millennium deposit (ASX 6 December 2016);
the Pilbara Iron Ore deposit (ASX 30 October 2014);
•
the Jubilee deposit (ASX 20 December 2018)
It confirms that it is not aware of any new information or
data that materially affects the information included in
those announcements and all material assumptions and
technical parameters underpinning the resource estimates
continue to apply and have not materially changed.
HAMMER METALS LIMITED / Annual Report 2019 / 023
Annual Mineral Resource Statement
As of 30 June 2019
The Company’s Mineral Resource Statement has been
compiled in accordance with the Australian Code for
Reporting of Exploration Results, Mineral Resources and
Ore Reserves (The JORC Code 2012 and 2004 Editions)
and Chapter 5 of the ASX Listing Rules and ASX Guidance
Note 31. The Company has no Ore Reserve estimates.
The Company governs its activities in accordance with
industry best-practice. The reported estimates for Overlander,
Kalman and Millennium were generated by reputable,
independent consulting firms. The resource reports and
supporting data were subjected to internal analysis and
peer-review before release.
In 2016, Hammer Metals Limited commissioned Haren
Consulting Pty Ltd to update the Kalman Resource based
on new drilling and geological interpretation. The resource
was issued on the 27th of September 2016.
In November 2016, Haren Consulting was contracted by
Hammer Metals Limited to complete a maiden mineral
resource estimate for the Millennium deposit. The estimate
is based on good quality RC drilling data. The Mineral
Resource was based on a series of 23 RC holes drilled by
Hammer Metals following its acquisition of the tenements in
May 2016 and 17 RC holes drilled by the previous operator in
2013-2014. Drilling extends to a maximum down hole depth
of 322m and the mineralisation was modelled from surface
to a depth of approximately 280m below surface. The drill
hole spacing is approximately 50 to 100m along strike.
There has been no material change to the Millennium
resource estimate since its initial release to the ASX dated
6th December 2016.
Resource Project
Mineral Resource
Competent Person
Jubilee
Millennium
Kalman
Overlander
West Pilbara
Mt. Philp
Mr. L. Burlet
Ms. E. Haren
Ms. E. Haren
Ms. E. Haren
Mr. C. Allen
CSA Global Pty Ltd conducted the Resource Estimate over
the West Pilbara Iron Ore Deposit and this was reported
to the ASX on 26 July 2010. In 2014, the Resource was
updated to adhere to the JORC Code 2012 Edition, however
the Resource Estimate remained unchanged.
Cerro Resources Limited, the previous tenure holder over the
Mt. Philp Hematite Deposit reported the Resource Estimate
to the ASX on the 12 March 2012. The Mt Philp Resource
Estimate adhered to the JORC Code 2004 edition.
In relation to the Overlander, West Pilbara and Mt Philp
Resources, there have been no material changes to the
Resource Estimates during the reporting period.
In November 2018, H&S Consultants Pty Ltd was
commissioned to undertake a resource estimate on the
Jubilee Cu-Au Deposit. The resource was issued on 12
December 2018.
The estimate is based on good quality RC and Diamond
drilling data. The estimate was based on a 42 reverse
circulation holes for 5475m and 3 diamond holes for 261m.
Of these holes 26 were drilled by Hammer Metals Ltd and
the remaining 19 drilled by the previous operator. Drilling
extends to a maximum depth of 325m below surface. The
drill hole spacing is approximately 50m along strike.
There has been no material change to the Jubilee Resource
estimate since its initial release to the ASX dated 20
December 2018.
Organization
ASX Reporting Date
H&S Consultants Pty Ltd
December 12th, 2018
Haren Consulting
December 6th 2016
Haren Consulting
September 27th 2016
Haren Consulting
August 26th 2015
CSA Global Pty Ltd
July 26th 2010
Mr. T. Leahey
Cerro Resource NL
September 28th 2012
024 / HAMMER METALS LIMITED / Annual Report 2019
Annual Mineral Resource Statement
Jubilee Deposit JORC 2012 Mineral Resource Estimate
(12 December, 2018)
(Reported at 0.5% Cu cut-off)
Classification Weathering Domain
Organization
Inferred
Inferred
Total
Mod-Slightly Weathered
Fresh
0.07
1.34
1.41
Cu
%
1.51
1.41
1.41
Au (Cut)
g/t
0.55
0.63
0.62
Cu
Tonnes
1,000
19,000
20,000
Au (Cut)
Ounces
1,200
27,100
28,300
• Note: (1) Numbers rounded to two significant figures to reflect appropriate levels of confidence
• Note: (2) Totals may differ due to rounding
The 51%-owned Jubilee Deposit is situated 50 kilometres west of Mount Isa in North West Queensland.
In November 2018, H&S Consultants Pty ltd was commissioned to undertake a resource estimate on the Jubilee Cu-Au
Deposit. The resource was issued on 12 December 2018.
The estimate is based on good quality RC and Diamond drilling data. The estimate was based on a 42 reverse circulation
holes for 5475m and 3 diamond holes for 261m. Of these holes 26 were drilled by Hammer Metals Ltd and the remaining
19 drilled by the previous operator. Drilling extends to a maximum depth of 325m below surface. The drill hole spacing
is approximately 50m along strike.
There has been no material change to the Jubilee Resource estimate since its initial release to the ASX dated 20
December 2018.
Refer to the ASX release dated 20 December, 2018. The company is not aware of any new information or data that materially
affects the information in the HMX ASX announcement. All material assumptions and technical parameters underpinning
the mineral resource estimate continue to apply and have not materially changed.
Kalman Deposit JORC 2012 Mineral Resource Estimate
(27 September, 2016)
Classification
Mining
Method
CuEq
Cut-off
Tonnes
Kt
CuEq
%
Indicated
Open Pit
0.75%
7,100
Inferred
Inferred
Total
Open Pit
0.75%
6,200
Underground
1.4%
7,000
20,000
1.5
1.6
2.4
1.8
Cu
%
0.48
0.44
0.89
0.61
Mo
%
0.12
0.15
0.16
0.14
Au
ppm
0.27
0.24
0.50
0.34
Ag
ppm
1.4
1.5
2.9
1.9
Re
ppm
2.9
3.9
4.5
3.7
• Note: (1) The copper equivalent equation is: CuEq= Cu+(0.864268*Au)+(0.011063*Ag)+(4.741128*Mo)+(0.064516*Re)
• Note: (2) Copper Equivalent Price assumptions are: Cu: US$4,650/t; Au: US$1,250/oz; Ag: US$16/oz; Mo: US$10/lb;
and Re: US$3,000/kg
HAMMER METALS LIMITED / Annual Report 2019 / 025
Annual Mineral Resource Statement
The Kalman Molybdenum-Rhenium-Copper-Gold-Silver (Mo-Re-Cu-Au-Ag) deposit is situated 60 kilometres southeast of
Mt Isa within the Mt Isa Inlier, and forms part of the company’s Kalman Project.
Drilling extends to a maximum down hole depth of 998.3 metres and the mineralisation was modelled from surface to a
depth of approximately 800 metres below surface. The estimate is based on good quality RC and diamond core drilling
data. The drill hole spacing is approximately 100 metres along strike with some 50 metre-spaced infill drilling.
In September 2016, Haren Consulting was contracted by Hammer Metals Limited to complete an update of the Mineral
Resource estimate for the deposit. The estimate was reported to comply with the 2012 Edition of the ‘Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ by the Joint Ore Reserves Committee (JORC).
The Kalman Mineral Resource has been reported at two cut-off grades to reflect both open pit and underground mining
scenarios. The Kalman Mineral Resource estimate comprises a combined 20 million tonnes at 1.8% copper equivalent
(CuEq) at 0.61% copper, 0.34 g/t gold, 0.14% molybdenum and 3.7 g/t rhenium in the Indicated and Inferred categories
at revised cut-off grades. (Refer to the ASX release dated 27 September 2016).
The Kalman Mineral Resource Estimate disclosed as part of the 2015 review was last updated in March 2014 in accordance
with the JORC Code (2012 Edition). The Resource estimate comprised a combined 30 million tonnes at 1.3% copper
equivalent (CuEq) at 0.54% Cu, 0.28% Au, 0.08% Mo and 2.2 g/t Re in the Inferred category. (Refer to the ASX Release
dated 19 March 2014 for full details of the Resource Estimate.)
Kalman Deposit Mineral Resource Estimate (2015) (Reported at 0.3% CuEq cut-off above 100m RL and 1.0%
CuEq cut-off below 100m RL)
Classification
Mining
Method
Tonnes
kt
CuEq
%
Inferred
Inferred
Total
Open Pit
22,000
Underground
8,300
30,000
1.1
1.9
1.3
Cu
%
0.42
0.87
0.54
Au
ppm
0.22
0.42
0.28
Ag
ppm
1.1
2.0
1.3
Mo
%
0.07
0.11
0.08
Re
ppm
1.9
2.9
2.2
• Note: (1) Numbers rounded to two significant figures
• Note: (2) Totals may differ due to rounding
• Note: (3) (CuEq = Cu + 0.594464Au + 0.010051Ag + 4.953866Mo + 0.074375Re)
The reasons for the update were:
– 8 holes (K131-K132 and K134-139) drilled by Hammer in 2014 were incorporated into the resource model. The
drill holes intersected multiple, relatively shallow high-grade molybdenum and copper intersections which were
considered to have the potential to enhance the existing mineral resource model.
– The deposit was re-interpreted to improve mineralisation constraints.
The 2016 resource update differed from the 2014 update in that the resulting total resource tonnage was reduced from
30,000kt to 20,000kt and average metal grades increased, primarily due to the use of more elevated cut-off grades.
026 / HAMMER METALS LIMITED / Annual Report 2019
Annual Mineral Resource Statement
Overlander North And South Deposits JORC 2012
Mineral Resource Estimates (26 August, 2015)
(Reported at 0.5% Cu cut-off)
Overlander North Mineral Resource
Classification
Indicated
Inferred
Total
Tonnes
253,000
870,000
1,123,000
Cu
%
1.4
1.3
1.3
Co
ppm
254
456
410
Cu
Tonnes
3,414
11,350
14,764
• Note: (1) Numbers rounded to two significant figures to reflect appropriate levels of confidence
• Note: (2) Totals may differ due to rounding
Overlander South Mineral Resource
Classification
Tonnes
Indicated
Inferred
Total
-
649,000
649,000
Cu
%
-
1.0
1.0
Co
ppm
-
500
500
Cu
Tonnes
-
6,352
6,352
• Note: (1) Numbers rounded to two significant figures to reflect appropriate levels of confidence
• Note: (2) Totals may differ due to rounding
Overlander North and South Combined Mineral Resource
Classification
Indicated
Inferred
Total
Tonnes
253,000
1,518,000
1,772,000
Cu
%
1.4
1.2
1.2
Co
ppm
254
476
445
Cu
Tonnes
3,414
17,700
21,112
• Note: (1) Numbers rounded to two significant figures to reflect appropriate levels of confidence
• Note: (2) Totals may differ due to rounding
Co
Tonnes
64
396
461
Co
Tonnes
-
327
327
Co
Tonnes
64
723
788
HAMMER METALS LIMITED / Annual Report 2019 / 027
Annual Mineral Resource Statement
The 100%-owned Overlander Project is situated 60 kilometres to the southeast of the mining centre of Mount Isa in North
West Queensland and 6 kilometres to the west of Hammer’s Kalman copper-gold-molybdenum-rhenium deposit. It is a
high-priority target area for both shear-hosted copper and IOCG copper mineralisation. The Overlander North and South
Copper Deposits are situated approximately one kilometre apart within a common shear zone.
Drilling in the Overlander North deposit extends to a vertical depth of approximately 430m and the mineralisation was
modelled from surface to a depth of approximately 420 metres below surface. Drilling in the Overlander South deposit
extends to a vertical depth of approximately 215 metres and the mineralisation was modelled from surface to a depth of
approximately 180m below surface. The resource estimates are based on good quality RC and diamond drilling data. Drill
hole spacing is predominantly on a 40 metre by 20 metre spacing with additional drill holes between sections targeted
at the higher-grade cores of the deposits.
Following additional drilling in 2014 and 2015, the Mineral Resource Estimates for the Overlander North and South shear-
hosted copper Deposits were revised by Haren Consulting Pty Ltd and reported in accordance with the guidelines of the
JORC Code (2012 Edition). They contain combined resources of 1,772,000 tonnes at 1.2% copper in the indicated and
inferred categories (Refer to the ASX release dated 26 August 2015). There has been no material change to the Overlander
resource base during the financial year.
Mt. Philp Deposit JORC 2004 Mineral Resource
Estimate (12 March, 2012)
Classification
Tonnes
Indicated
19,110,000
Inferred
Total
11,400,000
30,510,000
Fe
%
41
34
39
P
%
0.02
0.02
0.02
SiO2
%
38
48
42
Al2O3
%
1.3
2.0
1.6
TiO2
%
0.38
0.46
0.41
LOI
%
0.29
0.31
0.30
• Note: (1) Numbers rounded to two significant figures to reflect appropriate levels of confidence
• Note: (2) Totals may differ due to rounding
The Mount Philp Iron Ore deposit is located in north-western Queensland, 1,500 kilometres northwest of Brisbane. The
Mineral Resource Estimate is based on 48 diamond and reverse circulation (RC) drillholes completed in 2011 for a total
of 3,801 metres. Drilling comprises fans located on a nominal 100 metre pattern along the strike length of the ironstone.
The Mineral Resource was estimated and reported in-house by Cerro Resource NL.
The current resource totals 19.1 million tonnes grading 41.4% iron and 37.9% silica in the Indicated category and 11.4
million tonnes grading 33.8% iron and 47.4% silica in the Inferred category. This resource is open at depth.
A resource estimate was first completed and reported to ASX by previous owners on 28th September 2012 and there has
been no material change to the resource base during the financial year. A review of the resource estimate was completed
for the purpose of compiling this statement and the principles and methodology of the resource estimation procedure and
the resource classification procedure have been reconciled with the CIM Resource Reserve definitions and found to comply.
028 / HAMMER METALS LIMITED / Annual Report 2019
Annual Mineral Resource Statement
West Pilbara Deposit JORC 2012 Mineral Resource
Estimate (26 July, 2010)
(Reported at 50% Fe cut-off)
Classification
Mining
Method
Tonnes
Indicated
Open Pit
11,500,000
Inferred
Total
-
-
Open Pit
11,500,000
Fe
%
53
-
53
P
%
0.042
-
0.042
SiO2
%
7.8
-
7.8
AI203
%
5.6
-
5.6
LOI
%
9.9
-
9.9
• Note: (1) Numbers rounded to two significant figures to reflect appropriate levels of confidence
• Note: (2) Totals may differ due to rounding
The West Pilbara Channel Iron Deposit is situated in the West Pilbara region of Western Australia about 100 km west of
Tom Price, adjoining Atlas Iron’s Anthiby Well iron ore project.
The deposit has been drilled with 40 Reverse Circulation holes totalling 2010 metres sampled on 1 metre intervals, on
east-west sections spaced 100 metres apart. The drill holes are generally spaced 50 metres apart on section and drilled
to between 42 and 60 metres depth.
Midas Resources Limited (now Hammer Metals Limited) commissioned CSA Global Pty Ltd (CSA) in July 2010 to
estimate the Mineral Resource at its West Pilbara iron ore prospect. The West Pilbara deposit contains an Indicated
Mineral Resource of 11.5 million tonnes at 53.1% Fe, 0.042% P, 7.75% SiO2, 5.57% Al2O3 and 9.86% LOI. This is based
on an interpreted mineralised envelope with a nominal Fe cut-off of 50%. (Refer to the ASX release dated 26 July 2010).
In 2014 Hammer Metals commissioned CSA to convert the existing JORC 2004 resource statement to comply with the
new 2012 JORC code. The JORC 2012 conversion statement was issued by CSA on 30 October 2014. The resource
estimate remained unchanged. There has been no material change to the resource base of this project during the
financial year.
HAMMER METALS LIMITED / Annual Report 2019 / 029
Annual Mineral Resource Statement
Millennium JORC 2012 Mineral Resource Estimate
(26 December, 2016)
Classification
Indicated
Tonnes
3,070,000
Cu
%
0.35
Co
%
0.14
Au
ppm
0.12
• Note: [1] Numbers rounded to two significant figures to reflect appropriate levels of confidence
• Note: [2] Totals may differ due to rounding
• Note: [3] 1.0% CuEq Cut-off (CuEq = Cu % + (Co % x 5.9) + (Au ppm x 0.9) + (Ag ppm x 0.01)
The 100%-owned Millennium polymetallic deposit is situated on granted mining leases approximately 32 kilometres
northwest of Cloncurry in North West Queensland and 19 kilometres northwest of the operating Rocklands copper-gold-
cobalt mine. The Millennium deposit lies within five Mining Leases; ML’s 2512, 2761, 2762, 7506 and 7507. Hammer
currently has a 100% interest in all five Mining Leases. The tenements are in good standing and no known impediments
exist.
In November 2016, Haren Consulting was contracted by Hammer Metals Limited to complete a maiden mineral resource
estimate for the deposit. The estimate is based on good quality RC drilling data. The Mineral Resource was based on
a series of 23 RC holes drilled by Hammer Metals following its acquisition of the tenements in May 2016 and 17 RC
holes drilled by the previous operator in 2013-2014. Drilling extends to a maximum down hole depth of 322m and the
mineralisation was modelled from surface to a depth of approximately 280m below surface. The drill hole spacing is
approximately 50 to 100m along strike.
There has been no material change to the Millennium resource estimate since its initial release to the ASX dated 6th
December 2016.
Governance And Internal Controls – Resource Calculations
The Company ensures good governance in relation to resource estimation through the use of third-party resource
consultants and internal review in accordance with industry best practice. All reported resource estimates were generated
by reputable, independent consulting firms. The resource reports and supporting data were subjected to internal analysis
and peer review before release. The Company is not aware of any additional information, other than that reported, which
would have a material effect on the estimates as reported.
Due to the nature, stage and size of the Company’s existing operations, the Board believes there would be no efficiencies
gained by establishing a separate mineral reserves and resources committee responsible for reviewing and monitoring
the Company’s processes for calculating mineral reserves and resources estimates and for ensuring that the appropriate
controls are applied to such calculations.
The Company will report any future mineral reserves and resources estimates in accordance with the 2012 JORC Code.
030 / HAMMER METALS LIMITED / Annual Report 2019
Annual Mineral Resource Statement
Resource By Commodity
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HAMMER METALS LIMITED / Annual Report 2019 / 031
Annual Mineral Resource Statement
Competent Persons Statement
The information in this Annual Mineral Resources Statement is based on, and fairly represents information and
supporting documentation reviewed by Mr Mark Whittle, a Competent Person who is a fellow of the AusIMM and a
consultant to the company. Mr Whittle has sufficient experience which is relevant to the style of mineralisation and
type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as
defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves (2004 JORC Code) and the 2012 Edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (2012 JORC Code). Mr Whittle consents to the inclusion in the report of the
matters based on this information in the form and context in which it appears.
Tenement Interests At End Of September 2018
MT DOCKERELL MINING PTY LTD
Lease
EPM 11919
EPM 25165
EPM 13870
EPM 18084
EPM 26474
EPM 26511
EPM 26628
EPM 26694
EPM 26775
EPM 26776
EPM 26777
EPM 26809
EPM 26902
EPM 26904
EPM 27018
Lease Name
Lease Status
Interest
Cameron River
Cameron River 4
Pelican
Dronfield
Enterprise
Sling Shot
Argylla
Mt Philp
Pilgrim North
Pilgrim Central
Pilgrim South
Rosebud
Marriage
Jady Jenny
Dingo Creek
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Granted
Granted
Granted
100%
100%
100%
80%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
032 / HAMMER METALS LIMITED / Annual Report 2019
MULGA MINERALS PTY LTD
Annual Mineral Resource Statement
Lease Status
Interest
Lease
EPM 12205
EPM 14019
EPM 14022
EPM 14467
EPM 25145
EPM 25866
EPM 25867
EPM 26126
EPM 26127
EPM 26130
EPM 26512
EPM27355
E08/1997
Lease Name
Cloncurry
South Mary K
North Mary K
Mt Frosty
Green Creek
Malbon
Mt Jasper
Cathay
Resolve
El Questro
Black Angel
Pioneer
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
100%
100%
100%
51%
100%
100%
100%
100%
100%
100%
100%
100%
100%
West Pilbara - Cheela Plains
Granted
CARNEGIE EXPLORATION PTY LTD
Lease
E36/854
E36/868
E36/869
E36/870
E36/916
E36/983
P36/1857
P36/1858
Lease Name
Lease Status
Interest
Kens Bore
Granted
Granted
Granted
Granted
Granted
Application
Granted
Granted
100%
100%
100%
100%
100%
100%
100%
100%
HAMMER METALS LIMITED / Annual Report 2019 / 033
Directors Report
034 / HAMMER METALS LIMITED / Annual Report 2019
1. Directors
The names and details of the Company’s directors in office during the financial year or
since the end of the financial year are set out below:
Russell Davis
Nader El Sayed
Zbigniew Lubieniecki
Executive Chairman
Non-Executive Director
BSc (Honours) MBA MAusIMM,
MAICD
Russell Davis is a Geologist with
over 30 years‘ experience in the
mineral resources business. He
has worked on the exploration
and development of a range
of commodities for a number
of international and Australian
companies, holding senior technical
and corporate positions including
Chief Mine Geologist, Exploration
Manager and Managing Director.
Mr Davis was a founding Director
of Gold Road Resources Limited
and also Syndicated Metals Limited
where he was Managing Director
from December 2007 to March
2012. Mr Davis has been a Director
of Hammer Metals (Australia) Pty Ltd
since its inception in 2012.
B.Comm, MA
Nader El Sayed holds a Bachelor of
Commerce (Banking & Finance) and
a Masters (Accounting). Mr El Sayed
is currently the Chief Executive
Officer of Multiplant Holdings, a
mining and civil services business
based in Western Australia. Mr
El Sayed’s previous roles include
holding a senior management
position with KPMG providing
assurance, capital markets and
other advisory services to key
Australian and international resource
companies. Mr El Sayed brings
a wealth of risk management,
corporate governance, strategic and
financial experience to the Board. Mr
El Sayed is currently also a director
of Spectrum Metals Limited.
Non-Executive Director
(appointed 1 October 2018)
BSc (Applied Geology), MAIG
Zbigniew (“Ziggy”) Lubieniecki holds
a Bachelor of Science (Applied
Geology) and is an experienced
exploration geologist with more than
30 years’ experience in exploration,
mining, management, property
acquisition and company listings. Mr
Lubieniecki has held senior positions
including Chief Mine Geologist for
Plutonic Resources Limited and
exploration Manager for Australian
Platinum Mines, and was most
recently an Executive Director of
Gold Road Resources Limited. Mr
Lubieniecki has had a successful
exploration career including the
discovery of the 6.2-million-ounce
Gruyere gold deposit.
Alexander Hewlett
Executive Director
(resigned 1 October 2018)
Simon Bodensteiner
Independent
Non-Executive Director
(resigned 1 October 2018)
HAMMER METALS LIMITED / Annual Report 2019 / 035
Directors Report
2. Directorships of Other Listed Companies
Directorships of other ASX listed companies held by Directors in the 3 years
immediately before the end of the financial year are as follows:
Name
Russell Davis
Company
Period of Directorship
Gold Road Resources Ltd
May 2004 – June 2016
Alexander Hewlett
Spectrum Metals Limited
March 2017 – to date
Nader El Sayed
Spectrum Metals Limited
October 2017 – to date
Black Cat Syndicate Limited
January 2018 – to date
Zbigniew Lubieniecki
Simon Bodensteiner
None
None
-
-
3. Company Secretary
Mark Pitts | Company Secretary (appointed 13 August 2010) | B.Bus, FCA, GAICD
Mr Pitts is a Chartered Accountant with over 25 years’ experience in statutory reporting and business administration. He
has been directly involved with, and consulted to a number of public companies holding senior financial management
positions. Mr Pitts is a Partner in the corporate advisory firm Endeavour Corporate providing secretarial support, corporate
and compliance advice to a number of ASX listed public companies.
4. Directors’ Meetings
The number of Directors’ meetings held and the number of meetings attended by
each of the Directors of the Company during their term in office in the financial year
is as follows:
Director
Mr R Davis
Mr A Hewlett
Mr N El Sayed
Mr Z Lubieniecki
Mr S Bodensteiner
Meetings held while in office
Meetings attended
7
1
7
6
1
7
1
7
6
1
036 / HAMMER METALS LIMITED / Annual Report 2019
Directors Report
5. Principal Activity
The principal activity of the Group during the course of the financial year was mineral
exploration in Australia.
6. Operating and Financial Review
The Group incurred an after-tax loss for the year of $852,517 (2018: $673,072).
Corporate
The following issues of ordinary shares were completed during the year:
• On 14 September 2018, 2,305,074 ordinary shares were issued in lieu of underwriting fees on the rights issue of
listed HMXOD options;
•
In addition, on 14 September 2018, 6,666,667 ordinary shares and 4,000,000 free attaching HMXOD options were
issued at an issue price of $0.03 to raise $200,000 and 400,000 ordinary shares were issued in lieu of fees for
this placement;
• On 13 February 2019, 36,000,000 shares and 18,000,000 free-attaching options were issued under a placement
to raise $720,000 before costs; and
• On 20 May 2019, 14,000,000 shares and 7,000,000 free-attaching options were issued to Messrs Davis and
Lubieniecki in accordance with the shareholder approval received for them to participate in the placement
completed in February 2019.
Subsequent to the year end, the Company raised $1,756,069 (before costs) through a placement of 87,803,437
ordinary shares.
The following options were granted during the period:
• 161,355,205 listed HMXOD options exercisable at $0.03 on or before 30 September 2020 were issued on 14
September 2018 pursuant to an entitlement issue at an issue price of $0.005 raising $806,767 before costs;
• 4,000,000 listed HMXOD options were issued as free-attaching options on the placement of 6,666,667 shares on
14 September 2018;
• 263,280 unlisted options exercisable at $0.07 on or before 31 August 2020 were issued on 14 September 2018 to
the underwriter of the entitlement issue of options in lieu of underwriting fees;
• 10,000,000 unlisted options exercisable at $0.032 on or before 30 November 2021 were issued on 21 December
2018 to Directors as approved at the Company’s Annual General Meeting; and
• 25,000,000 listed HMXOD options were issued as free-attached options on the placement of 50,000,000 shares
on 13 February and 20 May 2019.
The following options expired during the period:
• 5,000,000 options exercisable at $0.075 expired unexercised on 29 June 2019.
No options have expired subsequent to the end of the financial year.
No options were exercised during the financial year or up to the date of this report.
HAMMER METALS LIMITED / Annual Report 2019 / 037
Directors Report
Exploration Activities:
The Company is actively exploring for gold deposits within its wholly owned Bronzewing South gold project in the Yilgarn
Province of Western Australia and for large iron oxide copper-gold (IOCG) deposits of the Ernest Henry style within its
Mount Isa project area in Northwest Queensland.
The Bronzewing South Project located in the prospective Yandal Greenstone Belt was acquired in May 2019. The
Bronzewing region hosts the Bronzewing gold deposit, which has previous production of around 2.3Moz, and the Mt
McClure gold deposits, which have previous production of 1.27Moz and an Inferred and Indicated Mineral Resource
estimate of 1.07Moz. The Company’s Bronzewing South Project tenements cover approximately 110km2 and are along
strike from both deposits.
Subsequent to the end of the financial year, the Company has undertaken a ground (IP) geophysical survey and
undertaken its initial RC drilling program along strike to the south of the Bronzewing deposit.
The Mount Isa Project tenements cover approximately 2100km2 within the Mary Kathleen Fold Belt, mid-way between
Mt Isa and Cloncurry. Exploration by the Company has discovered several large altered and mineralised IOCG systems
including Mt Philp, Dronfield, Hammertime, Andy’s Hill and Overlander which have similarities with the IOCG alteration
observed at the Ernest Henry deposit (approximately 220 million tonnes at 1.1% Cu and 0.5g/t Au).
In August 2018, the Company discovered a new style of gold-copper mineralisation at Perentie in the Dronfield area.
Rock chip sampling, a SAM geophysical survey and RC drilling defined shear zone hosted mineralisation at the Judith,
Paddy B, and Trackside Prospects. Multiple targets remain to be tested in this area.
Good progress was made on the target generation and acquisition fronts, particularly on the Company’s large Mount
Philp Breccia IOCG project. After consolidating the tenements over what is the largest known zone of breccia in the
region, ground follow-up of the Company’s copper and gold soil anomalies has located several new zones of outcropping
mineralisation including Charlie, Pelican Waterhole, Steakhouse and the Shadow prospect located adjacent to the Mount
Philp hematite deposit. New outcropping high-grade gold-rich zones have also been identified at Alice, Kings and El
Questro 50km east of Mt Philp in the Malbon area and the Black Rock and Sunset copper-gold tenements near Jubilee
were acquired.
The maiden Mineral Resource estimate was completed for the Jubilee copper-gold deposit held by the Mt Frosty Joint
Venture (the “MFJV”) (51% HMX - 49% MIM). The deposit is located less than 1km from the Barkly Highway and 55km
east of Mount Isa. First pass metallurgical sulphide flotation test work returned positive results.
In late June 2018, the Company announced the proposed sale of the Millennium project and several other exploration
stage cobalt targets to Global Energy Metals Corp (“GEMC”) - a focused cobalt explorer and developer. The sale was
completed on 28 June 2019, through the issue of 19.99% of the issued capital of GEMC to the Company. Through this
investment, the Company will retain exposure to the Millennium deposit and other cobalt projects held by GEMC. GEMC
has requested the Company continue to operate as manager over the exploration of these tenements.
7. Dividends
No dividends were paid or declared by the Company during the financial year.
8. Events Subsequent To Balance Date
Subsequent to the year end, the Company raised $1,756,069 (before costs) through a placement of 87,803,437 ordinary shares.
Other than the above, there has not been any other matter or circumstance that has arisen after balance date that has
significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state
of affairs of the Group in future financial periods.
038 / HAMMER METALS LIMITED / Annual Report 2019
Directors Report
9. Likely Developments
The Company will continue planning and executing exploration and development work on its existing projects in Australia
as well as projects under review in Australia to complement and expand on existing tenement holdings.
10. Directors Interests
The relevant interest of each Director in the shares and options of the Company as notified by the Directors to the Australian
Securities Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Director
Ordinary shares
HMXOD Listed
options
Unlisted options
Mr R Davis
Mr N El Sayed
Mr Z Lubieniecki
21,000,000
19,500
27,499,367
8,600,000
11,700
9,999,620
5,500,000
1,500,000
4,000,000
The above table includes indirect shareholdings held by related parties to the directors.
11. Environmental Regulations
In the course of its normal mining and exploration activities the Group adheres to environmental regulations imposed on
it by the various regulatory authorities, particularly those regulations relating to ground disturbance and the protection of
rare and endangered flora and fauna. The Group has complied with all material environmental requirements up to the date
of this report. The Board believes that the Group has adequate systems in place for the management of its environmental
requirements and is not aware of any breach of these environmental requirements as they apply to the Company.
12. Remuneration Report – Audited
12.1 Principles of compensation
Remuneration levels for key management personnel and other staff of the Group are competitively set to attract and retain
appropriately qualified and experienced personnel and therefore includes a combination of cash paid and the issuance
of options and rights. Key management personnel comprise the directors of the Company and senior executives for the
Group. Staff remuneration is reviewed annually.
Consequences of performance on shareholder wealth
In establishing performance measures and benchmarks to ensure incentive plans are appropriately structured to align
corporate behaviour with the long-term creation of shareholder wealth, the Board has regard for the stage of development
of the Company’s business, share price, operational and business development achievements (including results of
exploration activities) that are of future benefit to the Company.
HAMMER METALS LIMITED / Annual Report 2019 / 039
Directors Report
Service contracts
Russell Davis – Executive Chairman
The Company has entered into an Executive Service agreement with Mr Davis on 22 September 2014. An Executive
service fee of $220,000 per annum is payable with a 3-year term. The Company may terminate the engagement after
twelve months by giving six months’ notice or paying the executive an amount equal to six months of the executive fee.
The executive may, after twelve months from the commencement of the agreement, terminate this agreement by giving
three months’ notice to the Company. Currently the base cash component of remuneration is not dependent on the
satisfaction of any performance condition. To reduce operating costs, Mr Davis agreed in August 2015 to a 32% reduction
of fees to $150,000, with a subsequent further reduction to $120,000 for the period from November 2018 to July 2019.
The original term of the Consulting agreement expired on 22 September 2017 and the Company and Mr Davis have
agreed to roll the agreement forward on a similar basis.
Mark Pitts – Company Secretary
Mr Pitts is a Partner in the corporate advisory firm Endeavour Corporate providing secretarial support and corporate
and compliance advice, pursuant to a contract between Endeavour Corporate and the Company. The contract with
Endeavour Corporate has no fixed term with the option of termination by either party with two months’ written notice. Mr
Pitts is not entitled to any termination payments other than for services rendered at time of termination.
Non-executive directors
From 1 July 2013, all non-executive Directors receive a fixed Directors’ fee of $30,000 (plus superannuation benefits of
9.5%) per annum.
The maximum aggregate amount of non-executive Directors’ fees payable by the Company as approved by the
shareholders at the 2011 annual general meeting is $300,000 per annum. There are no other items of contingent
remuneration to Directors.
Share trading policy
In December 2010, the Group introduced a share trading policy which sets out the circumstances in which directors,
executives, employees and other designated persons may deal with securities held by them in the Company. This
includes any shares or any other securities issued by the Company such as options. The policy includes restriction on
key management personnel and other employees from entering into arrangements that limit their exposure to losses that
would result from share price decreases. Entering into such arrangements has been prohibited by law since 1 July 2011.
040 / HAMMER METALS LIMITED / Annual Report 2019
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HAMMER METALS LIMITED / Annual Report 2019 / 041
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1
Directors Report
12.3 Value of options to executives
The value of options will only be realised if and when the market price of the Company shares, as quoted on the Australian
Securities Exchange, rises above the Exercise Price of the options. Further details of the options are contained in the
section Share Options below.
12.4 Options and rights over equity instruments granted as compensation
10,000,000 options were issued to the Directors, executives and employees during the year. Of these, 5,500,000 were
issued to Directors and 500,000 were issued to the Company Secretary. These options are exercisable at $0.032 on or
before 30 November 2022. No options previously granted as compensation have been exercised during the year or to
the date of this report.
12.5 Analysis of options and rights over equity instruments granted as
compensation
The table below details the vesting profile of the options granted as remuneration to each key management person during
the year. No options were granted as remuneration to key management personnel during the prior year.
Year ended
30 June 2019
Number of
options granted
Date granted
% Vested % Forfeited /
Lapsed
Financial year in
which grant vested
Key Management Personnel
Mr R Davis
1,500,000
21 December 2018
Mr N El Sayed
1,000,000
21 December 2018
Mr Z Lubieniecki
3,000,000
21 December 2018
Mr M Pitts
500,000
21 December 2018
100%
100%
100%
100%
-
-
-
-
30 June 2019
30 June 2019
30 June 2019
30 June 2019
The fair value of the options issued during the year was determined by reference to the Black-Scholes option pricing
model. The key inputs and valuations are summarised as follows:
Underlying security spot price on grant date
Exercise price
Grant date
Expiration date
Life (years)
Volatility
Risk free rate
Dividend Yield
Number of options
Valuation per option
Remaining life (years)
042 / HAMMER METALS LIMITED / Annual Report 2019
Options issued to KMP
$0.021
$0.032
21 December 2018
30 November 2022
3.95
90%
2.00%
-
6,000,000
$0.0120
3.42
Directors Report
12.6 Option holdings
The movement during the reporting period in the number of options over ordinary shares in Hammer Metals Limited held,
directly, indirectly or beneficially, by each key management person, including their personally-related entities, is as follows:
Year ended
30 June 2019
Held at
beginning of
period / on
appointment Granted
Key Management Personnel
Purchased1 Exercised
Lapsed or
Expired
Held at
end of
period / on
resignation
Vested and
exercisable
at end of
period
Mr R Davis
4,000,000
1,500,000
8,600,000
Mr A Hewlett
4,000,000
-
1,000,000
Mr N El Sayed
500,000
1,000,000
11,700
Mr Z Lubieniecki
5,999,620
3,000,000
5,000,000
Mr S Bodensteiner
500,000
-
18,340
Mr M Pitts
650,000
500,000
160,712
-
-
-
-
-
-
-
-
-
-
-
-
14,100,000 14,100,000
5,000,000
5,000,000
1,511,700
1,511,700
13,999,620 13,999,620
518,340
518,340
1,310,712
1,310,712
1 Relates to HMXOD listed options acquired under the entitlement offer or as free-attaching options to the placement
12.7 Equity holdings and transactions
No shares were granted to key management personnel during the year as compensation (2018: Nil). 13,750,000 ordinary
shares were issued to Directors as consideration for the purchase of Carnegie Exploration Pty Ltd (2018: Nil).
The movement during the reporting period in the number of ordinary shares in Hammer Metals Limited held directly,
indirectly or beneficially, by each key management person, including their personally-related entities (shown on a post-
consolidation basis), is as follows:
Year ended
30 June 2019
Held at
beginning of
period / on
appointment
Consideration
for purchase
of Carnegie
Exploration
Purchases
Held at end
of period / on
resignation
Sales
Mr R Davis
11,000,000
4,000,000
4,583,333
Mr A Hewlett
Mr N El Sayed
5,525,476
19,500
-
-
-
-
Mr Z Lubieniecki
8,332,700
10,000,000
9,166,667
Mr S Bodensteiner
Mr M Pitts
30,568
53,334
-
53,809
-
-
-
-
-
-
-
19,583,333
5,525,476
19,500
27,499,367
30,568
107,143
HAMMER METALS LIMITED / Annual Report 2019 / 043
Directors Report
12.8 Key management personnel transaction
The following table provides the total amount of transactions which have been entered into with related parties for the
relevant financial year exclusive of GST:
Transaction value year ended
Balance outstanding as at
Key management
Personnel
Transaction
30 June 2019
$
30 June 2018
$
30 June 2019
$
30 June 2018
$
Mark Pitts
Alexander Hewlett
Accounting
Services
Consulting
Services
50,598
23,556
4,839
6,488
30,000
-
-
-
The Company paid fees to Endeavour Corporate, a company associated with Mark Pitts, for accounting and financial
reporting services provided to the company. The amounts paid to Mr Hewlett represent consulting fees paid for the
period of 6 months from the date of his resignation, in accordance with the definition of a related party under the
Corporations Act 2001.
End of Remuneration Report
13. Share Options
Unissued shares under option
At the date of this report unissued ordinary shares of the Company under option are:
Expiry Date
Exercise Price
Number of Options
Director‘s Options
Employee / Contractor Options
Advisor options
30 June 2020
30 June 2020
31 August 2020
Employee / Contractor Options
30 November 2019
Listed HMXOD options
30 September 2020
$0.06
$0.06
$0.07
$0.07
$0.03
9,000,000
3,800,000
2,676,078
1,500,000
190,355,205
Director/Executive/Employee Options
30 November 2021
$0.032
10,000,000
These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.
Shares issued on exercise of options
The Company has not issued ordinary shares as a result of the exercise of options during this year or the previous financial
year. No shares have been issued since the year end to the date of this report as a result of the exercise of options.
044 / HAMMER METALS LIMITED / Annual Report 2019
Directors Report
14. Corporate Governance
In recognising the need for the highest standards of corporate behaviours and accountability, the Directors support
and have adhered to the principles of sound corporate governance. The Board recognises the recommendations of
the ASX Corporate Governance Council and considers the Company is in compliance with those guidelines which are
of importance to the operations of the Company. Where a recommendation has not been followed, that fact has been
disclosed together with the reasons for the departure.
The Company’s Corporate Governance Statement and disclosures available on the Company’s website at
www.hammermetals.com.au
15. Indemnification Of Officers And Auditors
The Company has entered into Director and Officer Protection Deeds (Deed) with each Director and the Company
Secretary (officers). Under the Deed, the Company indemnifies the officers to the maximum extent permitted by law and
the Constitution against legal proceedings, damage, loss, liability, cost, charge, expense, outgoing or payment (including
legal expenses on a solicitor/client basis) suffered, paid or incurred by the officers in connection with the officers being
an officer of the Company, the employment of the officer with the Company or a breach by the Company of its obligations
under the Deed.
Also pursuant to the Deed, the Company must insure the officers against liability and provide access to all board papers
relevant to defending any claim brought against the officers in their capacity as officers of the Company.
The Company has paid insurance premiums during the year in respect of liability for any past, present or future Directors,
secretary, officers and employees of the Company or related body corporate. The insurance policy does not contain
details of the premium paid in respect of individual officers of the Company. Disclosure of the nature of the liability cover
and the amount of the premium is subject to a confidentiality clause under the insurance policy.
The Company has not provided any insurance or indemnification for the Auditor of the Company.
16. Non-Audit Services
During the year, KPMG, the Company’s auditor provided taxation compliance services in addition to their statutory duties.
Refer to Note 7 to the financial statements for more information.
17. Lead Auditor’s Independence Declaration Under
Section 307C Of The Corporations Act 2001
The lead auditor’s independence declaration is set out on page 11 and forms part of the Directors’ report for the financial
year ended 30 June 2019.
HAMMER METALS LIMITED / Annual Report 2019 / 045
Directors Report
18. Significant Changes In State Of Affairs
In the opinion of Directors, other than that disclosed elsewhere in this report, there were no other significant changes in
the state of affairs of the Group that occurred during the financial year under review.
This report is made with a resolution of the Directors:
R Davis
Executive Chairman
Perth
27 September 2019
046 / HAMMER METALS LIMITED / Annual Report 2019
HAMMER METALS LIMITED / Annual Report 2019 / 047
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
Auditor’s Independence Declaration
To the Directors of Hammer Metals Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Hammer Metals Limited
for the financial year ended 30 June 2019 there have been:
i.
no contraventions of the auditor independence requirements as set out in the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
ii.
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
KPMG
To the Directors of Hammer Metals Limited
R Gambitta
Partner
Perth
I declare that, to the best of my knowledge and belief, in relation to the audit of Hammer Metals Limited
for the financial year ended 30 June 2019 there have been:
27 September 2019
i.
no contraventions of the auditor independence requirements as set out in the Corporations Act
2001 in relation to the audit; and
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
R Gambitta
Partner
Perth
27 September 2019
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
048 / HAMMER METALS LIMITED / Annual Report 2019
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
Consolidated Statement of Financial
Position
AS AT 30 JUNE 2019
Current Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total current assets
Non-current assets
Other financial assets
Plant and equipment
Exploration and evaluation expenditure
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Advanced cash call
Total current liabilities
Total assets
Net Assets
Equity
Share Capital
Reserves
Accumulated losses
Note
30 June 2019
$
30 June 2018
$
10
11
12
12
13
14
15
16
17
860,656
51,959
-
934,045
106,751
454,746
912,615
1,495,542
1,258,758
-
60,000
2,420
11,954,619
11,316,751
13,213,377
11,379,171
14,125,992
12,874,713
235,022
-
235,022
235,022
273,932
448,007
721,939
721,939
13,890,970
12,152,774
46,628,496
44,907,743
1,658,845
788,885
(34,396,371)
(33,543,854)
Total equity
13,890,970
12,152,774
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
HAMMER METALS LIMITED / Annual Report 2019 / 049
Consolidated Statement Of Profit Or
Loss And Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2019
Note
30 June 2019
$
30 June 2018
$
Other income
Marketing expenses
Administrative expenses
Share based payments
Occupancy expenses
Depreciation
Exploration expenditure impaired
Fair value adjustment on financial assets
Loss on disposal of financial assets
Gain on disposal of subsidiary
Other expenses
Loss from operating activities
Finance income
Finance expenses
Net finance income / (expense)
Loss before income tax
Income tax benefit
Net loss for the year from continuing operations
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Net change in fair value of financial assets
Other comprehensive loss for the year, net of income tax
4
5
14
26
5
6
8
93,044
(86,717)
(785,572)
(120,000)
(46,224)
(2,420)
(588,743)
113,738
(146,544)
(565,933)
(14,054)
(45,255)
(1,335)
-
-
(9,500)
(23,808)
705,049
(100)
-
-
(9,582)
(855,491)
(678,465)
3,045
(71)
2,974
6,794
-
6,794
(852,517)
(671,671)
-
17,359
(852,517)
(654,312)
-
-
(18,750)
(18,750)
Total Comprehensive loss for the year
(852,517)
(673,062)
Loss per share:
Basic and diluted loss per share (cents per share)
9(a)
(0.29)
(0.26)
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the
accompanying notes.
050 / HAMMER METALS LIMITED / Annual Report 2019
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HAMMER METALS LIMITED / Annual Report 2019 / 051
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Consolidated Statement Of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2019
Cash flows from operating activities
Interest received
Rental income received
Fuel rebate received
Cash payments in the course of operations
Note
30 June 2019
$
30 June 2018
$
2,945
12,686
6,794
3,600
71
22,086
(937,286)
(624,683)
Net cash used in operating activities
22
(921,584)
(592,203)
Cash flows from investing activities
Payments for exploration expenditure
Management fees received from farm-in and joint venture partners
Option fee received
Receipt of research and development grant
Proceeds from the sale of investments
Proceeds on sale of equipment
(1,518,476)
(2,044,001)
56,585
-
366,948
36,192
92,384
193,997
123,682
-
-
30,000
Cash disposed on sale of subsidiary
26
(13,768)
-
Net cash used in investing activities
(1,072,518)
(1,603,938)
Cash flows from financing activities
Proceeds from issue of share capital
Proceeds from issue of options
Transaction costs from issue of shares and options
Net cash from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
10
1,200,000
2,412,798
806,767
-
(86,054)
(201,165)
1,920,713
2,292,158
(73,389)
934,045
860,656
96,018
838,027
934,045
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
052 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial
Statements
1. REPORTING ENTITY
Hammer Metals Limited (the “Company”) is a company domiciled in Australia. The Company’s registered office is Suite 1,
827 Beaufort Street, Mt. Lawley WA. The consolidated financial statements of the Company for the financial year ended
30 June 2019 comprises the Company and its subsidiaries (together referred to as the “Group”).
The Group is a for profit entity and is primarily is involved in the exploration and extraction of mineral resources.
2. BASIS OF PREPARATION
(a) Statement of compliance
The consolidated financial statements are general purpose financial statements which have been prepared in accordance
with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and
the Corporations Act 2001. The consolidated financial statements also comply with International Financial Reporting
Standards (IFRS’s) adopted by the International Accounting Standards Board (IASB).
The consolidated financial report was authorised for issue by the Directors on 27 September 2019.
(b) Basis of measurement
The financial report is prepared on the historical cost basis except for share based payments and available for sale
financial assets which are measured at their fair value. Non-current assets held for sale are measured at the lower of their
carrying amount and fair value less costs to sell.
(c) Functional and presentation currency
The financial report is presented in Australian dollars which is the functional and presentation currency of the Company
and its subsidiaries.
(d) Use of estimates and judgements
Set out below is information about:
• critical judgements in applying accounting policies that have the most significant effect on the amounts recognised
in the financial statements; and
• assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the
next financial year.
Critical judgements
i. Going concern
A key assumption underlying the preparation of the financial statements is that the Group will continue as a going
concern. An entity is a going concern when it is considered to be able to pay its debts as and when they are due,
and to continue in operation without any intention or necessity to liquidate or otherwise wind up its operations. A
significant amount of judgement has been required in assessing whether the Group is a going concern, as set
out in note 2(g).
HAMMER METALS LIMITED / Annual Report 2019 / 053
Notes To The Consolidated Financial Statements
Estimates and assumptions
ii. Ore Reserves and Mineral Resources
Economically recoverable reserves represent the estimated quantity of product in an area of interest that can be
expected to be profitably extracted, processed and sold under current and foreseeable economic conditions.
The Group determines and reports ore reserves and mineral resources under the standards incorporated in the
Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves, 2012 edition (the
JORC Code). The determination of ore reserves or mineral resources includes estimates and assumptions about
a range of geological, technical and economic factors, including: quantities, grades, production techniques,
recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates.
Changes in ore reserves and mineral resources impact the assessment of recoverability of exploration and
evaluation assets, provisions for site restoration and the recognition of deferred tax assets, including tax losses.
iii. Exploration and evaluation assets
Determining the recoverability of exploration and evaluation expenditure capitalised in accordance with the
Group’s accounting policy (refer note 3(n)), requires estimates and assumptions as to future events and
circumstances, in particular, whether successful development and commercial exploitation, or alternatively sale,
of the respective areas of interest will be achieved. Critical to this assessment is estimates and assumptions
as to ore reserves (refer note 2(d)(ii)), the timing of expected cash flows, exchange rates, commodity prices
and future capital requirements. Changes in these estimates and assumptions as new information about the
presence or recoverability of an ore reserve becomes available, may impact the assessment of the recoverable
amount of exploration and evaluation assets. If, after having capitalised the expenditure under accounting policy
3(n), a judgement is made that recovery of the expenditure is unlikely, an impairment loss is recorded in the
statement of profit and loss and other comprehensive income in accordance with accounting policy 3(f). The
carrying amounts of exploration and evaluation assets are set out in note 14.
iv. Impairment of assets
The recoverable amount of each non-financial asset is determined as the higher of the value-in-use and fair value
less costs to sell, in accordance with the Group’s accounting policy note 3(f). Determination of the recoverable
amount of an asset based on a discounted cash flow model, requires the use of estimates and assumptions,
including: the appropriate rate at which to discount the cash flows, the timing of the cash flow and the expected
life of the relevant area of interest, exchange rates, commodity prices, ore reserves, future capital requirements
and future operation performance. Changes in these estimates and assumptions impact the recoverable amount
of the asset, and accordingly could result in an adjustment to the carrying amount of that asset.
v. Measurement of fair values
When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as price) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs)
If the inputs used to measure the fair value of an asset or a liability are categorised in different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the
lowest level that is significant to the entire measurement.
054 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
v. Measurement of fair values
When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as price) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs)
If the inputs used to measure the fair value of an asset or a liability are categorised in different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the
lowest level that is significant to the entire measurement.
(e) 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 period beginning on or after 1
July 2018. As a result of this review, the Group has initially applied AASB 9 Financial Instruments and AASB 15 Revenue
from contracts with customers from 1 July 2018.
Due to the transition methods chosen by the Group in applying AASB 9 Financial Instruments and AASB 15 Revenue
from contracts with customers, comparative information throughout the interim financial statements has not been restated
to reflect 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 classification of financial instruments, measurement, impairment of financial assets and hedge accounting
model. Full details of the Company’s accounting policy regarding Financial Instruments is detailed below.
The Group has applied AASB 9 retrospectively with the effect of initially applying this standard recognised at the date of
initial application, being 1 July 2018 and has elected not to restate comparative information as it has been assessed that
there is no impact on the carrying value of assets, liabilities or equity upon initial adoption.
The Group’s classes of financial assets and liabilities as presented in the Statement of Financial Position, and their
measurement categories under AASB 139 and AASB 9 are as follows:
HAMMER METALS LIMITED / Annual Report 2019 / 055
Notes To The Consolidated Financial Statements
Class of financial instrument
presented in the statement of
financial position
Original measurement
category under AASB 139
New measurement
category under AASB 9
Carrying value
at 1 July 2018
($)
Cash and cash equivalents
Loans and receivables
Trade and other receivables
Loans and receivables
Other financial assets – current
Loans and receivables
Investments in listed equities
Held for trading
Trade and other payables
Advanced cash calls
Financial liability
at amortised cost
Financial liability
at amortised cost
AASB 15 Revenue from Contracts with Customers
Financial assets at
amortised cost
Financial assets at
amortised cost
Financial assets at
amortised cost
Financial asset at fair value
through profit or loss
Financial liability at
amortised cost
Financial liability at
amortised cost
934,045
106,751
454,746
60,000
273,932
448,007
From 1 July 2018 the Group has adopted AASB 15 which replaces AASB 118 Revenue, AASB 111 Construction
Contracts and several revenue related Interpretations. The standard provides a single comprehensive model for revenue
recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised
goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a
measurement approach that is based on an allocation of the transaction price. Credit risk is presented separately as an
expense rather than adjusted against revenue.
There has been no change in the manner in which revenue is recognised as a result of AASB 15.
Rendering of services
Revenue from consulting services are recognised when provided.
Interest
Interest revenue is recognised as interest accrues using the effective interest method.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
The adoption of AASB 15 has not had any effect on the financial performance or position of the Group. No adjustment
was required to be recognised to the opening balance of accumulated losses at 1 July 2018 as a result of the adoption
of AASB 15.
Other amending Accounting Standards and interpretations
Several other amending Accounting Standards and Interpretations apply for the first time for the reporting period
commencing 1 July 2018. These other amending Accounting Standards and Interpretations did not result in any
adjustments to the amounts recognised or disclosures in the interim financial report.
056 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
(f) New standards and interpretations not yet adopted
The following standards, amendments to standards and interpretations have been identified as those which may impact the
entity in the period of initial application. They are not yet effective and have not been applied in preparing this financial report.
• AASB 16 Leases provides a new lessee accounting model requiring the recognition of assets and
liabilities for all leases with a term greater than 12 months, unless the underlying asset is of low value. It
requires the lessee to recognise a right-of-use asset, representing the rights to use the underlying lease
asset and a lease liability representing the obligation of lease payments. AASB 16 is effective for annual
periods beginning on or after 1 January 2019 with early adoption permitted. The impact on the Group’s
financial assets and financial liabilities of the adoption of AASB 16 is expected to be immaterial.
• AASB 2017-5 Amendments to Australian Accounting Standards - Classification and Measurement of
Share-based Payment Transactions. The standard makes amendments to AASB 2 Share-based Payment.
The amendments address the accounting for the effects of vesting and non-vesting conditions and the
accounting for a modification to the terms and conditions of a share-based payment that changes
the classification of the transaction from cash-settled to equity-settled, is effective for annual reporting
periods beginning on or after 1 January 2019 and it is not expected that this will have a significant impact
on the consolidated financial statements.
(g) Going concern
The financial 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.
For the year ended 30 June 2019, the Group has incurred a consolidated loss before tax of $852,517 and net cash
outflows from operating and investing activities of $1,994,102. As at 30 June 2019 the Group had $860,656 in cash and
cash equivalents and net current assets of $677,593.
On 5 August 2019, the Company completed a placement of 87,803,437 shares at 2 cents per share ($0.02) raising
$1,756,069 before costs of the offer.
Whilst not immediately required, the Group will need to raise additional funds to meet its ongoing obligations and
tenement expenditure commitments and subject to the results of its ongoing exploration activities, expand or accelerate
its work programs.
The Group’s capacity to raise additional funds will be impacted by the success of the ongoing exploration activities and
market conditions. Additional sources of funding available to the Group include a capital raising via preferential issues to
existing shareholders, placements to new and existing investors or through farm in or similar arrangements.
If necessary, the Group can delay exploration expenditure and the directors can also institute cost saving measures to
further reduce corporate and administrative costs.
However, should the above planned activities to raise or conserve capital not be successful, there exists a material
uncertainty surrounding the Group’s ability to continue as a going concern and, therefore, realise its assets and dispose
of its liabilities in the ordinary course of business and at the amounts stated in the financial report.
HAMMER METALS LIMITED / Annual Report 2019 / 057
Notes To The Consolidated Financial Statements
3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The Group has consistently applied the accounting policies set out in note 3 to all periods presented in these consolidated
financial statements, other than as noted in Note 2(e) above.
(a) Basis of consolidation
i. Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
statements from the date on which control commences until the date on which control ceases.
ii. Investments in associates
Associates are those entities in which the Group has significant influence, but not control or joint control, over
the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20
percent and 50 percent of the voting power of another entity.
Investments in associates are accounted for using the equity method and are recognised initially at cost. The
cost of the investments includes transaction costs.
The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive
income of equity accounted investees, after adjustments to align the accounting policies with those of the Group,
from the date that significant influence commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of
the investment, including any long-term interest that form part thereof, is reduced to zero, and the recognition of
further losses is discontinued except to the extent that the Group has an obligation or has made payments on
behalf of the investee.
iii Joint arrangements
The Group classifies its interests in joint arrangements as either joint operations or joint ventures depending
on the Group’s rights to the assets and obligation for the liabilities of the arrangements. When making this
assessment, the Group considers the structure of the arrangements, the legal form of any separate vehicles, the
contractual terms of the arrangements and other facts and circumstances.
iv. Transactions eliminated on consolidation
Intragroup balances, and any unrealised gains and losses or income and expenses arising from intragroup
transactions, are eliminated in preparing the consolidated financial statements.
v. Business combinations
Business combinations are accounted for by applying the acquisition method.
For every business combination, the Group identifies the acquirer, which is the combining entity that obtains control
of the other combining entities or businesses. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in
determining the acquisition date and determining whether control is transferred from one party to another.
058 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
vi. Contingent liabilities
A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a
present obligation and arises from a past event, and its fair value can be measured reliably.
vii. Non-controlling interest
The Group measures any non-controlling interest at its proportionate interest in the identifiable net assets of the
acquiree.
(b) Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Australian dollars at
the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the
statement of profit and loss and other comprehensive income. Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-
monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian
dollars at foreign exchange rates ruling at the dates the fair value was determined.
The assets and liabilities of foreign operations, including fair value adjustments arising on consolidation, are translated
to Australian dollars at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign
operations are translated to Australian dollars at rates approximating the foreign exchange rates ruling at the dates of
the transactions. Foreign exchange differences arising on retranslation are recognised directly in a separate component
of equity.
(c) Plant and equipment
Items of plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see
accounting policy 3(f)). Depreciation is charged to the statement of profit and loss and other comprehensive income on
a straight-line basis over their estimated useful lives. The estimated useful lives in the current and comparative periods
are as follows:
• office equipment 3 to 4 years
The residual value, if significant, is reassessed annually.
(d) Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions
of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the
financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the
transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for
transaction costs (where applicable).
For the purpose of subsequent measurement, financial assets, are classified into the following categories:
• amortised cost
•
fair value through profit or loss (FVTPL)
• equity instruments at fair value through other comprehensive income (FVOCI)
• debt instruments at fair value through other comprehensive income (FVOCI).
HAMMER METALS LIMITED / Annual Report 2019 / 059
Notes To The Consolidated Financial Statements
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs,
finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.
The classification is determined by both:
•
the entity’s business model for managing the financial asset
•
the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance
costs, finance income or other financial items, except for impairment of trade receivables which is presented within other
expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as
FVTPL):
•
•
they are held within a business model whose objective is to hold the financial assets to collect its
contractual cash flows
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade
and most other receivables fall into this category of financial instruments as well as listed bonds that were previously
classified as held-to-maturity under AASB 39.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’
are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose
contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL.
The category also contains an equity investment. The Group accounts for the investment at FVTPL and did not make
the irrevocable election to account for the investment in unlisted and listed equity securities at fair value through other
comprehensive income (FVOCI). The fair value was determined in line with the requirements of AASB 9, which does not
allow for measurement at cost. Assets in this category are measured at fair value with gains or losses recognised in profit
or loss. The fair values of financial assets in this category are determined by reference to active market transactions or
using a valuation technique where no active market exists.
Equity instruments at fair value through other comprehensive income (Equity FVOCI)
Investments in equity instruments that are not held for trading are eligible for an irrevocable election at inception to be
measured at FVOCI.
Under Equity FVOCI, subsequent movements in fair value are recognised in other comprehensive income and are never
reclassified to profit or loss.
Dividend from these investments continue to be recorded as other income within the profit or loss unless the dividend
clearly represents return of capital.
This category includes unlisted equity securities that were previously classified as ‘available-for-sale’ under AASB 139.
Any gains or losses recognised in other comprehensive income (OCI) are not recycled upon derecognition of the asset.
060 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
Debt instruments at fair value through other comprehensive income (Debt FVOCI)
Financial assets with contractual cash flows representing solely payments of principal and interest and held within a
business model of collecting the contractual cash flows and selling the assets are accounted for at debt FVOCI.
The Group accounts for financial assets at FVOCI if the assets meet the following conditions:
•
•
they are held under a business model whose objective it is to “hold to collect” the associated cash flows
and sell financial assets; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the asset
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets
and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash
flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group
uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses
using a provision matrix.
The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics
they have been grouped based on the days past due.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the
Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives
and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised
in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are
included within finance costs or finance income.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less.
Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included
as a component of cash and cash equivalents for the purpose of the statement of cash flows.
(f) Impairment
The Group assesses at each balance date whether a financial asset or group of financial assets is impaired.
Financial assets at amortised cost
Trade receivables are initially recognised at their transaction price and other receivables at fair value. Receivables that
are held to collect contractual cash flows and are expected to give rise to cash flows representing solely payments of
principal and interest are classified and subsequently measured at amortised cost. Receivables that do not meet the
criteria for amortised cost are measured at fair value through profit or loss.
HAMMER METALS LIMITED / Annual Report 2019 / 061
Notes To The Consolidated Financial Statements
The group assesses on a forward-looking basis, the expected credit losses associated with its debt instruments carried
at amortised cost. The amount of expected credit losses is updated at each reporting date to reflect changes in credit
risk since initial recognition of the respective financial instrument. The Group always recognises the lifetime expected
credit loss for trade receivables carried at amortised cost.
The expected credit losses on these financial assets are estimated based on the Group’s historic credit loss experience,
adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current
as well as forecast conditions at the reporting date.
For all other receivables measured at amortised cost, the Group recognises lifetime expected credit losses when there
has been a significant increase in credit risk since initial recognition. If the credit risk on the financial instrument has not
increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an
amount equal to expected credit losses within the next 12 months.
The Group considers an event of default has occurred when a financial asset is more than 90 days past due or external
sources indicate that the debtor is unlikely to pay its creditors, including the Group. A financial asset is credit impaired
when there is evidence that the counterparty is in significant financial difficulty or a breach of contract, such as a
default or past due event has occurred. The Group writes off a financial asset when there is information indicating the
counterparty is in severe financial difficulty and there is no realistic prospect of recovery.
Non-financial assets
The carrying amounts of the Company’s non-financial assets, other than deferred tax assets (see accounting policy 3(k))
are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication
exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or
that are not yet available for use, the recoverable amount is estimated each year at the same time.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs
to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets
(the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is
allocated to cash-generating units that are expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating
units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the
carrying amount of the other assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in
prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An
impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(f) Share capital
Ordinary shares
Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax
benefit.
062 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
(h) Interest bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption
value being recognised in the statement of profit and loss and other comprehensive income over the period of the
borrowings on an effective interest basis.
(i) Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognised as an expense in the statement of
profit and loss and other comprehensive income as incurred.
Share based payment transactions
The share option programme allows Company and Group employees to acquire shares of the Company. The fair value
of options granted is recognised as an employee expense with a corresponding increase in equity.
The fair value is measured at grant date and spread over the period during which the employees become unconditionally
entitled to the options. The fair value of the options granted is measured using the Black Scholes option pricing model,
taking into account the terms and conditions upon which the options were granted. The amount recognised as an
expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to share
prices not achieving the threshold for vesting.
Wages, salaries, annual leave, sick leave and non-monetary benefits
Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present obligations resulting
from employees’ services provided to reporting date, calculated at undiscounted amounts based on remuneration
wage and salary rates that the Group expects to pay as at reporting date including related on-costs, such as, workers
compensation insurance and payroll tax.
(i) Finance income and expenses
Net finance income
Net finance income comprises interest payable on borrowings calculated using the effective interest method, interest
receivable on funds invested and realised foreign exchange gains and losses. Interest income is recognised in the
statement of profit and loss and other comprehensive income as it accrues, using the effective interest method.
(k) Income tax
Income tax on the statement of profit and loss and other comprehensive income for the periods presented comprises
current and deferred tax. Income tax is recognised in the statement of profit and loss and other comprehensive income
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
The following temporary differences are not provided for: the initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither accounting nor taxable profit or loss and differences relating
to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of
deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
HAMMER METALS LIMITED / Annual Report 2019 / 063
Notes To The Consolidated Financial Statements
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
The Company and its Australian resident wholly owned subsidiaries adopted the tax consolidation legislation with effect
from 1 July 2014 and are therefore taxed as a single entity from that date. Hammer Metals Ltd is the head entity within
the tax-consolidated group. Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses
of the subsidiaries are assumed by the head entity in the tax-consolidated group.
(l) Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result
of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect
is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, when appropriate, the risks specific to the liability.
A provision for site restoration in respect of contaminated and disturbed land, and the related expense, is recognised
when the land is contaminated or disturbed. Such activities include dismantling infrastructure, removal and treatment of
waste material, and land rehabilitation, including restoring, topsoiling and revegetation of the disturbed area.
(m) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of
the operating segments, has been identified as the Board of Directors of the Company.
(n) Exploration and evaluation expenditure
Exploration for and evaluation of mineral resources is the search for mineral resources after the Group has obtained legal
rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of
extracting the mineral resources. Accordingly, exploration and evaluation expenditures are those expenditures incurred
by the Group in connection with the exploration for and evaluation of minerals resources before the technical feasibility
and commercial viability of extracting mineral resources are demonstrable.
Accounting for exploration and evaluation expenditure is assessed separately for each area of interest. An area of interest
is an individual geological area which is considered to constitute a favourable environment for the presence of a mineral
deposit or has been proved to contain such a deposit.
Expenditure incurred on activities that precede exploration and evaluation of mineral resources, including all expenditure
incurred prior to securing legal rights to explore an area, is expensed as incurred. For each area of interest, the
expenditure is recognised as an exploration and evaluation asset where the following conditions are satisfied:
a) The rights to tenure of the area of interest are current; and
b) At least one of the following conditions is also met:
i. The expenditure is expected to be recouped through successful development and commercial
exploitation of an area of interest, or alternatively by its sale; and
ii. Exploration and evaluation activities in the area of interest have not, at reporting date, reached a
stage which permits a reasonable assessment of the existence or otherwise ‘economically recoverable
reserves’ and active and significant operations in, or in relation to, the area of interest are continuing.
Economically recoverable reserves are the estimated quantity of product in an area of interest that can
be expected to be profitably extracted, processed and sold under current and foreseeable conditions.
064 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
Exploration and evaluation assets include;
• Acquisition of rights to explore;
• Topographical, geological, geochemical and geophysical studies;
• Exploratory drilling, trenching, and sampling and
• Activities in relation to evaluating the technical feasibility and commercial viability of extracting the
mineral resource.
General and administrative costs are allocated to, and included in, the cost of exploration and evaluation assets only
to the extent that those costs can be related directly to the operational activities in the area of interest to which the
exploration and evaluation assets relate. In all other instances, these costs are expensed as incurred.
Exploration and evaluation assets are transferred to Development Assets once technical feasibility and commercial
viability of an area of interest is demonstrable. Exploration and evaluation assets are assessed for impairment, and any
impairment loss is recognised prior to being reclassified.
The carrying amount of the exploration and evaluation assets is dependent on successful development and commercial
exploitation, or alternatively, sale of the respective area of interest.
Impairment testing of exploration and evaluation assets
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility
and commercial viability or facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
Exploration and evaluation assets are tested for impairment when any of the following facts and circumstances exist:
• The term of exploration licence in the specific area of interest has expired during the reporting period or
will expire in the near future, and is not expected to be renewed;
• Substantive expenditure on further exploitation for and evaluation of mineral resources in the specific
area are not budgeted or planned;
• Exploration for and evaluation of mineral resources in the specific area have not led to the discovery
of commercially viable quantities of mineral resources and the decision was made to discontinue such
activities in the specified are; or
• Sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the
carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful
development of by sale.
Where a potential impairment is indicated, an assessment is performed for each cash generating unit which is no larger
than the area of interest. The Group performs impairment testing in accordance with accounting policy 3(f).
Farm-in arrangements (in the exploration and evaluation phase)
For exploration and evaluation asset acquisitions (farm-in arrangements) in which the Group has made arrangements to
fund a portion of the selling partner’s (farmor’s) exploration and/or future development expenditures (carried interests),
these expenditures are reflected in the financial statements as and when the exploration work progresses.
Farm-out arrangements (in the exploration and evaluation phase)
The Group does not record any expenditure made by the farmee on its account. It also does not recognise any gain or
loss on its exploration and evaluation farm-out arrangements but redesignates any costs previously capitalised in relation
to the whole interest as relating to the partial interest retained.
HAMMER METALS LIMITED / Annual Report 2019 / 065
Notes To The Consolidated Financial Statements
Monies received pursuant to farm-in agreements are treated as a liability (advanced cash call) on receipt and until such
time as the relevant expenditure is incurred.
(o) Government grants
The Group recognises the refundable research and development tax incentive (received under the tax legislation passed
in 2011) as a government grant. This incentive is refundable to the Group regardless of whether the Group is in a tax
payable position and is presented by deducting the grant from the carrying amount of the related exploration asset.
Government grants are recognised when there is reasonable assurance that (a) the Group will comply with the conditions
attaching to them; and (b) the grants will be received; they are then recognised in profit or loss on a systematic basis
over the useful life of the asset.
4. OTHER INCOME
Management fee from farm-in partners
Rental income
Sale of royalty
Other income
30 June 2019
$
30 June 2018
$
56,585
12,686
71
23,703
93,044
110,138
3,600
-
-
113,738
5. RESULT FROM OPERATING ACTIVITIES
30 June 2019
$
30 June 2018
$
Net loss for the year before tax has been arrived at after the
charging the following expenses:
Depreciation of plant and equipment
2,420
1,335
Salary and wages
Superannuation expense
Share based payments
Other employment costs
Total employee costs
162,721
6,378
120,000
13,111
302,210
105,000
5,609
14,054
10,948
135,611
6. FINANCE INCOME AND FINANCE COSTS
30 June 2019
$
30 June 2018
$
Recognised in loss for the year
Interest income
Finance costs
Net finance income
3,045
(71)
2,974
6,794
-
6,794
066 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
7. AUDITORS’ REMUNERATION
30 June 2019
$
30 June 2018
$
Auditors of the Company - KPMG
Audit services:
Audit and review of financial reports
41,840
41,322
Non-audit services:
Taxation compliance services
11,275
53,115
23,319
64,641
HAMMER METALS LIMITED / Annual Report 2019 / 067
Notes To The Consolidated Financial Statements
8. INCOME TAX
(a) Income tax benefit
Current tax
Deferred tax
Total income tax benefit
30 June 2019
$
30 June 2018
$
-
-
-
17,359
-
17,359
Numerical reconciliation of income tax benefit to pre-tax accounting loss:
Loss before income tax
(852,517)
(671,671)
Income tax benefit using the Company’s domestic tax rate of 27.5% (2018: 27.5%)
(255,755)
(184,710)
Adjusted for:
Non-deductible expenses / (Nonassessable Income)
Temporary differences and tax losses not recognised
Research and development income tax benefit
Income tax benefit
(b) Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Temporary timing differences related to:
Investments
Property, plant and equipment
Accrued expenses and provisions
Capital raising costs
Income tax losses
(c) Recognised deferred tax assets & liabilities
Temporary timing differences related to:
Other financial assets
Exploration and evaluation expenditure
Income tax losses
(5,861)
1,345
261,616
183,365
-
-
-
721
21,808
64,829
17,359
17,359
14,438
2,083
(2,635)
77,108
6,998,855
7,322,674
7,086,213
7,413,668
(3,287,520)
(3,112,107)
3,287,520
3,112,107
-
-
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have
not been recognised in respect of these items because it is not probable that future taxable profit will be available against
which the Group can utilise the benefits from.
068 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
(d) Movement of temporary differences recognised during the year ended 30 June 2019:
Balance 1
July 2018
Profit or Loss
Other
comprehensive
income
Equality
Balance 30
June 2019
Other financial assets
Exploration and evaluation
Expenditure
(3,112,107)
(175,413)
Carried-forward tax losses
3,112,107
175,413
-
-
-
-
-
(e) Movement of temporary differences recognised during the year ended 30 June 2018:
Balance 1
July 2017
Profit or Loss
Other
comprehensive
income
Equality
Other financial assets
Exploration and evaluation
Expenditure
(2,813,347)
(298,760)
Carried-forward tax losses
2,813,347
298,760
-
-
-
-
-
-
-
-
-
-
-
(3,287,520)
3,287,520
-
Balance 30
June 2018
(3,112,107)
3,112,107
-
9. LOSS PER SHARE
30 June 2019
$
30 June 2018
$
(a) Basic and dilutive loss per share calculated using the
weighted average number of fully paid ordinary shares on
issue at the reporting date.
Options disclosed in Note 16(b) are potential ordinary shares
which are considered anti-dilutive, therefore diluted earnings
per share are the same as basic earnings per share.
(b) Weighted average number of shares used in calculation of
basic and dilutive earnings per share.
(0.29) cents
(0.26) cents
293,422,102
250,689,415
HAMMER METALS LIMITED / Annual Report 2019 / 069
Notes To The Consolidated Financial Statements
10. CASH AND CASH EQUIVALENTS
30 June 2019
$
30 June 2018
$
Cash at bank and on hand
860,656
934,045
The Group’s exposure to interest rate risk and sensitivity analysis for financial assets and financial liabilities are
disclosed in Note 24.
11. TRADE AND OTHER RECEIVABLES
30 June 2019
$
30 June 2018
$
Current
GST receivable
Security deposit
Other receivables
11,034
38,858
2,067
51,959
33,193
46,808
26,750
106,751
Trade and other receivables are non-interest bearing.
The Group’s exposure to credit and currency risk and impairment losses related to trade and other receivables is
disclosed in Note 24.
12. OTHER FINANCIAL ASSETS
30 June 2019
$
30 June 2018
$
Current
Advanced contributions from Farm-in partner (Note 21)
-
454,746
Non - Current
Investments in other entities
Listed shares in TSXV and ASX-listed companies - at fair value
1,258,758
60,000
The Group’s exposure to equity price risk and sensitivity analysis in disclosed in Note 24. Listed shares recognised as
non-current assets have been recognised at fair value through profit or loss (“FVTPL”).
13. PLANT AND EQUIPMENT
Office equipment and fittings at cost
Accumulated depreciation
Net book value
Reconciliation of office equipment is as follows:
Opening carrying value
Additions
Depreciation
Closing carrying value
30 June 2019
$
30 June 2018
$
252,906
(252,906)
-
252,906
(250,486)
2,420
2,420
-
(2,420)
-
3,755
-
(1,335)
2,420
070 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
14. EXPLORATION AND EVALUATION
EXPENDITURE
30 June 2019
$
30 June 2018
$
Balance at 1 July
Exploration and evaluation expenditure incurred
Exploration and evaluation assets acquired
Exploration and evaluation expenditure impaired
Disposal of subsidiary (refer note 26)
Research and development grant received
Reimbursement of costs on exploration and evaluation
11,316,751
1,528,688
610,616
(588,743)
(545,745)
(366,948)
-
9,377,823
2,833,157
9,750
-
-
(106,323)
(797,982)
Balance at 30 June
11,954,619
11,316,751
The ultimate recovery of costs carried forward for exploration and evaluation phases is dependent on the successful
development and commercial exploitation or sale of the respective areas of interest at an amount greater than or equal
to carrying value. Refer note 3 (n).
Expenses capitalised to Exploration and Evaluation Expenditure assets for the year include direct exploration costs
(drilling, rock chip programs and surveys including magnetic and SAM), laboratory costs (assaying, analysis and review),
geological and geochemical consultants as well as allocated administration costs (including salary and wages) where
those costs can be directly attributed to the exploration or evaluation activities upon a given area of interest. The
impairment recognised relates to tenements relinquished during the year.
On 21 May 2019 the Company purchased the Bronzewing South project through the acquisition of Carnegie Exploration
Pty Ltd, the holder of the tenements comprising the project. The consideration paid to satisfy the acquisition was
22,916,666 ordinary shares. These shares had a fair value of $0.024 per share, or $550,000. Additionally, $35,616 of
existing exploration assets were acquired through this transaction. This acquisition represents an asset acquisition and
therefore the fair value of the consideration paid has been allocated in full to the exploration asset. Furthermore, during
the year the Company acquired additional exploration projects for $25,000.
15. TRADE AND OTHER PAYABLES
30 June 2019
$
30 June 2018
$
Trade creditors and accruals
235,022
273,932
All trade and other payables are non-interest bearing and payable on normal commercial terms.
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 24.
HAMMER METALS LIMITED / Annual Report 2019 / 071
Notes To The Consolidated Financial Statements
16. ISSUED CAPITAL
30 June 2019
No.
30 June 2018
No.
30 June 2019
$
30 June 2018
$
(a) Share capital
Ordinary shares
On issue at 1 July
268,925,341
198,309,674
44,907,743
42,655,110
Shares issued for acquisition of asset at $0.043
per share
Shares issued for cash at $0.035 per share
Shares issued in lieu of fees at $0.035 per share
Shares issued in lieu of fees on entitlement issue of
options
Shares issued for cash at $0.03 per share
Shares issued for cash at $0.02 per share
Shares issued to acquire subsidiary
Share issue costs
-
-
-
250,000
68,937,096
1,428,571
-
-
-
10,750
2,412,798
50,000
2,705,074
6,666,667
50,000,000
22,916,666
-
-
-
-
-
-
56,807
200,000
1,000,000
550,000
-
-
-
-
(86,054)
(220,915)
On issue at 30 June – fully paid
351,213,748
268,925,341
46,628,496
44,907,743
Terms and conditions
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote
per share at shareholders’ meetings. The company does not have authorised capital or par value in respect of its issued
shares.
In the event of winding up of the Company, ordinary shareholders rank after all other shareholders and creditors and are
fully entitled to any proceeds of liquidation.
Dividends
No dividends were paid or declared for the year (2018: NIL).
072 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
(b) Options outstanding over ordinary shares
30 June 2019
No.
30 June 2018
No.
Listed options
Listed HMXOD options exercisable at $0.03 on or before 30 Sep 2020
190,355,205
-
Unlisted options
Unlisted options exercisable at $0.075 expiring 29 Jun 2019
-
5,000,000
Unlisted options exercisable at $0.06 expiring 30 Jun 2020
12,800,000
12,800,000
Unlisted options exercisable at $0.07 expiring 31 Aug 2020
Unlisted options exercisable at $0.07 on or before 30 Nov 2019
2,676,078
1,500,000
Unlisted options exercisable at $0.032 on or before 30 Nov 2022
10,000,000
2,412,798
1,500,000
-
217,331,283
21,712,798
161,355,205 listed options were issued for $0.005 per option, and 29,000,000 listed options were issued for no cash
consideration. All unlisted options were granted for no cash consideration.
10,000,000 unlisted options were granted to directors, executives and employees during the year (2018: nil).
No unlisted options were granted to employees, consultants and contractors during the year (2018: 3,912,798)
No unlisted options were exercised during the period.
5,000,000 fully vested unlisted options expired unexercised during the period (2018: 21,750,287).
Options carry no voting rights until converted to fully paid ordinary shares.
HAMMER METALS LIMITED / Annual Report 2019 / 073
Notes To The Consolidated Financial Statements
17. RESERVES
Share-based payment reserve (1)
Balance at beginning of period
Options issued to Directors and executives
Options issued to Employees and contractors
Unlisted options issued in lieu of fees for underwriter of listed option
entitlement issue
Fully vested options expired unexercised during the period
Fair value reserve (2)
Balance at beginning of period
Net decrease in the market value of listed shares available for sale
Option issue reserve (3)
Balance at beginning of period
Options issued under entitlement issue at $0.005 per option
Option issue costs satisfied through issue of ordinary shares
Option issue costs satisfied through issue of unlisted options
30 June 2019
$
30 June 2018
$
788,885
120,000
-
2,106
-
910,991
-
-
-
-
806,767
(56,807)
(2,106)
747,854
1,211,377
-
64,329
-
(486,821)
788,885
18,750
(18,750)
-
-
-
-
-
-
1,658,845
788,885
(1) The share-based payment reserve is used to record the fair value of options issued to Directors and employees and
consultants under various share-based payment schemes and options issued for the acquisition of assets.
(2) The fair value reserve is used to record changes in the fair value of available for sale investments until the investments
are derecognised or impaired.
(3) The option issue reserve is used to record the value of listed options issued under the entitlement issue during the
period, less the costs of that issue.
18. COMMITMENTS
a) Operating Lease Commitments
The operating lease over the Company’s head office is currently on a month to month basis. There are no other operating
leases.
b) Exploration Expenditure Commitments
In order to maintain current rights of tenure to exploration tenements the Company is required to perform minimum
exploration work to meet the minimum expenditure requirements specified by various State Governments within Australia.
These obligations may be reset when application for a mining lease is made and at other times.
The Group has a minimum expenditure commitment on tenure under its control.
074 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
The Company can apply for exemption from compliance with the minimum exploration expenditure requirements. Due
to the nature and scale of the Company’s exploration activities the Company is unable to estimate its likely tenement
holdings and therefore minimum expenditure requirements more than 1 year ahead.
These obligations are not provided for in the financial report and are payable:
Consolidated
Company
30 June 2019
$
30 June 2018
$
30 June 2019
$
30 June 2018
$
2,076,500
2,116,750
-
-
Minimum exploration expenditure
not later than 1 year
19. SHARE BASED PAYMENTS
Incentive Option Plan
The Hammer Metals Incentive Option Plan was approved by shareholders on 10 June 2016. The key features of this
plan are:
(a)
The plan will be available to directors, employees and other permitted persons of the Company and its subsidiaries.
(b)
(c)
(d)
(e)
(f)
(g)
Options are granted for no consideration.
The options are issued at an exercise price as determined by the Board from time to time.
The number of shares the subject of options issued under this plan and other similar plans will not exceed 5% of
the Company’s issued capital from time to time.
If a holder ceases to be an eligible participant of the plan during the exercise period of a vested option, the
holder may exercise the options within 30 days of ceasing to be an eligible participant and thereafter the options
will lapse.
The options issued under this plan shall not be quoted on ASX.
The options’ terms are at the discretion of the Directors.
No options granted as incentive or for services have lapsed, expired or were exercised during the year. The number and
weighted average exercise price of unlisted share options on issue is as follows:
Outstanding at 1 July
Granted during the period
Expired / lapsed or exercised during the period
Outstanding at 30 June
Exercisable at 30 June
No of unlisted
options
Weighted average
exercise price
21,712,798
10,263,280
(5,000,000)
26,976,078
26,976,078
$0.07
$0.033
$0.075
$0.051
The options outstanding at year end have exercise prices ranging from $0.032 to $0.07 a weighted average remaining
contractual life of 1.88 years.
HAMMER METALS LIMITED / Annual Report 2019 / 075
Notes To The Consolidated Financial Statements
20. RELATED PARTIES
Key Management Personnel Compensation:
The following were key management personnel of the Group at any time during the reporting period and unless otherwise
indicated were key management personnel for the entire period:
Executive Directors
Mr R Davis (Chairman)
Mr A Hewlett (resigned 1 October 2018)
Non-executive Directors
Mr N El Sayed
Mr Z Lubieniecki (appointed 1 October 2018)
Mr S Bodensteiner (resigned 1 October 2018)
Executives
Mr M Pitts (Company Secretary)
The key management personnel compensation comprised:
30 June 2019
$
30 June 2018
$
Short-term employee benefits
Post-employment benefits
Share-based payments
360,625
6,413
72,000
439,038
402,000
5,700
1,405
409,105
Remuneration levels are competitively set to attract and retain appropriately qualified and experienced Directors and
executives. Remuneration packages include a mix of fixed remuneration and equity-based remuneration.
Information regarding individual Directors and executive’s compensation and some equity instruments disclosures as
permitted by Corporations Regulations 2M.3.03 and 2M.6.04 is provided in the remuneration report section of the
Directors’ report.
Certain key management personnel, or their related parties, hold positions in other entities that result in them having
control or significant influence over the financial or operating policies of those entities. One of these entities (as detailed
below) transacted with the Group during the reporting period. The terms and conditions of the transaction were no more
favourable than those available, or which might be reasonably be expected to be available, on similar transactions to
non-key management personnel related entities on an arm’s length basis.
076 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
The aggregate value of transactions and outstanding balances relating to this entity were as follows:
Transaction value year ended
Balance outstanding as at
30 June 2019
$
30 June 2018
$
30 June 2019
$
30 June 2018
$
Mr R Davis
Mr Z Lubieniecki
Mr A Hewlett
Transaction
Note 1
Note 1
Note 1
110,000
220,000
110,000
Consulting Fees-Note 2
30,000
-
-
-
-
-
-
-
-
-
-
-
-
Mr M Pitts
Accounting Services
50,598
23,556
4,839
6,488
The Company paid fees to Endeavour Corporate, a company associated with Mark Pitts, for accounting and financial
reporting services provided to the company.
Note 1 – on 21 May 2019 shareholders of the Company approved the acquisition of the Bronzewing South project (via
the acquisition of Carnegie Exploration Pty Ltd) via the issue of 22,916,666 ordinary shares at $0.024 per share, totalling
$550,000. Messrs Davis, Lubieniecki and Hewlett were the vendors of Carnegie Exploration Pty Ltd, and the amounts
noted in the table above represent the value of shares issued to each party.
Note 2 – Upon his resignation as a director of the Company on 1 October 2019, Mr Hewlett entered into an agreement to
provide contract geological services to the Company. These amounts represent those payments for the period of 6 months
from the date of his resignation, in accordance with the definition of a related party under the Corporations Act 2001.
Equity instruments
All options refer to options over ordinary shares of Hammer Metals Limited, which are exercisable on a one for one basis.
10,000,000 options were issued to directors in this financial year (2018: Nil)
No options were issued to executives in regard to their employment or provision of services during this financial year
(2018: 150,000).
No shares were granted to key management personnel during the year as compensation (2017: Nil).
HAMMER METALS LIMITED / Annual Report 2019 / 077
Notes To The Consolidated Financial Statements
21. INTEREST IN OTHER ENTITIES
Name
Parent and ultimate controlling entity
Hammer Metals Limited
Subsidiaries
Hammer Metals Australia Pty Ltd
Mt. Dockerell Mining Pty Ltd
Mulga Minerals Pty Ltd
Carnegie Exploration Pty Ltd
Element Minerals Australia Pty Ltd
Hammer Bulk Commodities Pty Ltd (i)
Midas Metals Asia Pty Ltd (i)
Country of
Incorporation
Percentage
held 2019
Percentage
held 2018
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
-
100%
85%
100%
100%
100%
-
100%
100%
85%
(i) These subsidiaries are dormant and have not traded during the year
The investments held in controlled entities are included in the financial statements of the parent at cost.
Element Minerals Australia Pty Ltd was disposed of on 28 June 2019. Refer Note 26 for details. Carnegie Exploration Pty
Ltd was acquired on 21 May 2019. Refer Note 14 for details.
Joint arrangements
The Group has the following farm-in / farm-out arrangements:
Dronfield
The Group has a farm-in agreement in relation to a tenement held in the Mt. Isa region. The Group has earned an 80%
interest in the project. The Group’s interest in the above arrangement includes capitalised exploration phase expenditure
totalling $611,911 at 30 June 2019 and is included in exploration and evaluation assets (note 14).
Mt Frosty – Mt Isa Mines (Glencore)
During the prior year the Group (through its wholly owned subsidiary Mulga Minerals Pty Ltd (‘Mulga’)) completed the
acquisition of a 51% interest in the Mt. Frosty prospect and agreed terms for a new joint venture agreement with Mount
Isa Mines Limited (‘MIM’) (a 100% owned subsidiary of Glenore PLC).
Each party to the joint venture contributes exploration expenditure according to their participating interest (Hammer – 51%
and MIM – 49%).
Dilution provisions apply if a party elects not to contribute to a programme. If a party’s participating interest falls below
10% their interest will convert to a 3% Net Profits Royalty.
Mulga acts as the initial manager of the joint venture. The Group’s interest in the above arrangement includes capitalised
exploration phase expenditure totalling $354,674 at 30 June 2019 and is included in exploration and evaluation assets
(note 14).
078 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
Millennium Project – Global Energy Metals Corporation (GEMC)
The Millennium cobalt-copper-gold project was previously a joint venture with TSX listed Global Energy Metals Corporation
(GEMC). On 28 June 2019 GEMC acquired Element Minerals Australia Pty Ltd from the Company, which resulted in
GEMC owning 100% of the Millennium Project. As consideration for the sale, the Company was issued 19.99% of the
issued capital of GEMC.
Mt Isa – Newmont
The Group previously was party to a farm-out agreement with Newmont Exploration Australia Pty Ltd (Newmont) that
commenced in December 2015 in relation to three of the Group’s IOCG prospects; Newmont could earn up to 75% of
the Group’s interest in the area by spending US$10,500,000.
During the previous year, Newmont met the criteria to acquire the first 35% interest in the project, but elected to discontinue
and withdraw from the arrangement. The joint venture was terminated in June 2018.
22. RECONCILIATION OF CASH FLOWS FROM
OPERATING ACTIVITIES
30 June 2019
$
30 June 2018
$
Loss for the year
Adjustments for:
Depreciation
Share based payments
Exploration expenditure impaired
Fair value adjustment on financial assets
Gain on disposal of subsidiary
Impairment expense
Management fee from farm-in partners
Profit on sale of assets
Research & development income tax benefit
Movements attributable to operating activities:
Decrease / (increase) in trade and other receivables
Increase / (decrease) in trade and other payables
(852,517)
(654,312)
2,420
120,000
588,743
23,808
(705,049)
-
(56,585)
-
-
54,792
(97,196)
1,335
14,054
-
-
-
17,000
(58,053)
(30,000)
(17,359)
(6,657)
141,789
Net cash used in operating activities
(921,584)
(592,203)
23.SEGMENT INFORMATION
The Group has one reportable segment, being mineral exploration in Australia.
The Group’s operating segments have been determined with reference to the monthly management accounts, program
budgets and cash flow forecasts used by the chief operating decision maker to make decisions regarding the Group’s
operations and allocation of working capital.
Accordingly, the financial information presented in the consolidated statement of profit or loss and other comprehensive income
and the consolidated statement of financial position is the same as that presented to the chief operating decision maker.
HAMMER METALS LIMITED / Annual Report 2019 / 079
Notes To The Consolidated Financial Statements
24. FINANCIAL INSTRUMENTS DISCLOSURES
Overview
The Company and Group have exposure to the following risks from their use of financial instruments:
Credit risk
Liquidity risk
Market risk
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and
processes for measuring and managing risk, and the management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
Management monitors and manages the financial risks relating to the operations of the Group through regular reviews of
the risks.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group’s receivables from customers and investment securities.
Trade and other receivables
As the Company operates in the mining exploration sector it does not have significant trade receivables and is therefore
not exposed to credit risk in relation to trade receivables. The Group receives advanced cash calls from its farm-in / joint
venture partner which are classified as other receivables. The cash call amounts are reduced as and when expenditure in
terms of the farm-in/ joint venture agreement is incurred.
Presently, the Group undertakes exploration and evaluation activities in Australia. At the balance sheet date there were no
significant concentrations of credit risk.
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum
exposure to credit risk at the reporting date was:
Consolidated
Cash and cash equivalents
Trade and other receivables
Advanced contributions from Farm-in partner
Impairment losses
Note
10
11
12
Carrying amount
30 June 2019
$
30 June 2018
$
860,656
934,045
51,959
106,751
-
454,746
None of the Group’s trade and other receivables are past due and impaired (2018: Nil).
080 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due (refer Note 2(f)).
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to
meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash
flows.
Typically, the Group ensures it has sufficient cash on demand to meet expected operational expenses for a period of 90
days, this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural
disasters.
All financial liabilities are due and payable on terms of no more than 30 days. All financial liabilities are generally settled
within stated payment terms.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is
to manage and control market risk exposures within acceptable parameters, while optimising the return.
Currency risk
The Group has no exposure to currency risk on investments and transactions that are denominated in a currency other
than the respective functional currencies of Group entities.
The Group has not entered into any derivative financial instruments to hedge such transactions and anticipated future
receipts or payments that are denominated in a foreign currency.
Interest rate risk
The Group is not exposed to interest rate risk on borrowings as it has no borrowings subject to variable interest. The Group
is exposed to interest rate risk on its cash balances.
Profile
At the reporting date the interest rate profile of the Company’s and the Group’s interest-bearing financial instruments was:
Fixed rate instruments
Cash and cash equivalents
Weighted average interest rates
Variable rate instruments
Cash and cash equivalents
Weighted average interest rates
Carrying amount
30 June 2019
$
30 June 2018
$
21,475
2.40%
839,181
0.18%
20,972
2.40%
913,073
0.26%
HAMMER METALS LIMITED / Annual Report 2019 / 081
Notes To The Consolidated Financial Statements
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore,
a change in interest rates at the reporting date would not affect profit or loss or equity (2017: Nil)
Cash flow sensitivity analysis for variable rate instruments
A sensitivity of 50 basis points has been used and considered reasonable given current interest rates. A 0.5% movement
in interest rates at the reporting date would have increased equity and profit or loss by the amounts shown below. This
analysis assumes that all other variables remain constant. The analysis for 2018 was performed on the same basis.
Consolidated
30 June 2019
Loss
Equity
50bp
increase
50bp
decrease
50bp
increase
50bp
decrease
Variable rate instruments
4,196
(4,196)
4,196
(4,196)
30 June 2018
Variable rate instruments
4,565
(4,565)
4,565
(4,565)
Carrying amounts versus fair values
The fair values of financial assets and liabilities are as per the carrying amounts shown in the statement of financial position.
Financial assets carried at fair value through profit or loss
Equity securities – listed on ASX at quoted prices
Equity securities – listed on TSXV at quoted prices
Financial assets carried at amortised costs
Cash and cash equivalents
Trade and other receivables
Advanced contributions from Farm-in partner
Financial liabilities carried at amortised costs
Trade and other payables
Advanced cash call
30 June 2019
$
30 June 2018
$
-
1,258,758
839,181
51,959
-
60,000
-
934,045
106,751
454,746
(235,022)
-
(273,932)
(448,007)
082 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
Other Market Price Risk
Other Equity price risk is the risk that the value of the instrument will fluctuate as a result of changes in market prices (other
than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment,
its issuer or all factors affecting all instruments traded in the market.
Investments are managed on an individual basis and material buy and sell decisions are approved by the Board of
Directors. The primary goal of the Group’s investment strategy is to maximise investment returns.
Fair value sensitivity analysis for equity securities (listed investments)
A sensitivity of 10% has been used and considered reasonable given current market rates. A 10% movement in market
prices at the reporting date would have increased equity and profit or loss by the amounts shown below. This analysis
assumes that all other variables remain constant. The analysis for 2018 was performed on the same basis.
Consolidated
30 June 2019
Loss
Equity
10%
increase
10%
decrease
10%
increase
10%
decrease
Equity securities – listed on TSXV
$125,876
($125,876)
$125,876
($125,876)
30 June 2018
Equity securities – listed on ASX
$6,000
($6,000)
$6,000
($6,000)
Commodity Price Risk
The Group operates primarily in the exploration and evaluation phase and accordingly the Group’s financial assets and
liabilities are subject to minimal commodity price risk at this stage.
Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so as to
maintain a strong capital base sufficient to maintain future exploration and development of its projects. In order to maintain
or adjust the capital structure, the Group may return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group’s focus has been to raise sufficient funds through equity to fund exploration and evaluation activities.
There were no changes in the Group’s approach to capital management during the year. Risk management policies and
procedures are established with regular monitoring and reporting.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
HAMMER METALS LIMITED / Annual Report 2019 / 083
Company
30 June 2019
$
30 June 2018
$
8,516,068
5,509,779
6,874,306
5,511,161
14,025,847
12,385,467
134,877
134,877
232,693
232,693
13,890,970
12,152,774
46,628,496
44,907,743
(34,396,371)
(33,543,854)
1,658,845
13,890,970
788,885
12,152,774
(852,517)
(654,312)
-
-
(852,517)
(654,312)
Notes To The Consolidated Financial Statements
25. PARENT ENTITY DISCLOSURES
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Financial Performance
Loss for the year
Other comprehensive income
Total comprehensive income
Contingent liabilities of the parent entity
There are no contingent liabilities at 30 June 2019 (2018: None)
Commitments of the parent entity
There are no commitments at 30 June 2019 (2018: None)
084 / HAMMER METALS LIMITED / Annual Report 2019
Notes To The Consolidated Financial Statements
26. DISPOSAL OF SUBSIDIARY
On 28 June 2019 the Group completed its disposal of its 100% interest in Element Minerals Pty Ltd, and indirectly its 75%
interest in the Millennium Project.
Details of the sale of the subsidiary
Details of the sale of the subsidiary
Consideration received
19,255,641 TSXV listed shares (GEMC.V) at $0.055 (CAD $0.06)
Total consideration received
Carry value of net assets disposed (refer below)
Gain on sale before income tax
Income tax expense on sale of subsidiary
Gain on sale after income tax
Net assets at date of sale
Assets
Cash and cash equivalents
Trade and other receivables
Exploration and evaluation expenditure
Total assets
Liabilities
Trade and other payables and advanced cash calls
Total liabilities
Net assets at date of sale
28 June 2019
$
1,258,758
1,258,758
(553,709)
705,049
-
705,049
13,768
7,951
545,745
567,464
13,755
13,755
553,709
HAMMER METALS LIMITED / Annual Report 2019 / 085
Notes To The Consolidated Financial Statements
27. EVENTS SUBSEQUENT TO BALANCE DATE
Subsequent to the year end, the Company raised $1,756,069 (before costs) through a placement of 87,803,437 ordinary shares.
Other than the above, there has not been any other matter or circumstance that has arisen after balance date that has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the
Group in future financial periods.
086 / HAMMER METALS LIMITED / Annual Report 2019
Director’s Declaration
1. In the opinion of the Directors of Hammer Metals Limited (“the Company”):
(a)
the consolidated financial statements and notes and the remuneration report in the Directors’ report,
are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
performance for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b)
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 Directors have been given the declarations by the managing director and company secretary for the financial
year ended 30 June 2019 pursuant to Section 295A of the Corporation Act 2001.
3. The Directors draw attention to Note 2(a) to the consolidated financial statements, which includes a statement of
compliance with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
R Davis
Executive Chairman
Perth
Dated 27 September 2019
HAMMER METALS LIMITED / Annual Report 2019 / 087
Independent Auditor’s Report
Independent Auditor’s Report
To the shareholders of Hammer Metals Limited
Independent Auditor’s Report
Independent Auditor’s Report
Report on the audit of the Financial Report
To the shareholders of Hammer Metals Limited
Report on the audit of the Financial Report
Opinion
To the shareholders of Hammer Metals Limited
We have audited the Financial Report of
Report on the audit of the Financial Report
Hammer Metals Limited (the Company).
Opinion
In our opinion, the accompanying Financial
Report of the Company is in accordance with the
We have audited the Financial Report of
Opinion
Corporations Act 2001, including:
Hammer Metals Limited (the Company).
•
giving a true and fair view of the Group's
In our opinion, the accompanying Financial
We have audited the Financial Report of
financial position as at 30 June 2019 and of
Report of the Company is in accordance with the
Hammer Metals Limited (the Company).
its financial performance for the year ended
Corporations Act 2001, including:
In our opinion, the accompanying Financial
on that date; and
•
Report of the Company is in accordance with the
giving a true and fair view of the Group's
•
complying with Australian Accounting
Corporations Act 2001, including:
financial position as at 30 June 2019 and of
Standards and the Corporations Regulations
its financial performance for the year ended
2001.
giving a true and fair view of the Group's
on that date; and
financial position as at 30 June 2019 and of
complying with Australian Accounting
its financial performance for the year ended
Standards and the Corporations Regulations
on that date; and
2001.
complying with Australian Accounting
Standards and the Corporations Regulations
2001.
•
Basis for opinion
•
•
The Financial Report comprises:
• Consolidated statement of financial position as
at 30 June 2019
The Financial Report comprises:
• Consolidated statement of profit or loss and
other comprehensive income, Consolidated
• Consolidated statement of financial position as
statement of changes in equity, and
The Financial Report comprises:
at 30 June 2019
Consolidated statement of cash flows for the
• Consolidated statement of profit or loss and
• Consolidated statement of financial position as
year then ended
other comprehensive income, Consolidated
at 30 June 2019
• Notes including a summary of significant
statement of changes in equity, and
• Consolidated statement of profit or loss and
accounting policies
Consolidated statement of cash flows for the
other comprehensive income, Consolidated
year then ended
• Directors' Declaration.
statement of changes in equity, and
• Notes including a summary of significant
Consolidated statement of cash flows for the
The Group consists of Hammer Metals Limited (the
accounting policies
year then ended
Company) and the entities it controlled at the year-
• Directors' Declaration.
end or from time to time during the financial year.
• Notes including a summary of significant
accounting policies
Basis for opinion
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The Group consists of Hammer Metals Limited (the
• Directors' Declaration.
Company) and the entities it controlled at the year-
end or from time to time during the financial year.
The Group consists of Hammer Metals Limited (the
Company) and the entities it controlled at the year-
end or from time to time during the financial year.
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 conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
audit of the Financial Report section of our report.
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
have fulfilled our other ethical responsibilities in accordance with the Code.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
audit of the Financial Report section of our report.
Material uncertainty related to going concern
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
have fulfilled our other ethical responsibilities in accordance with the Code.
We draw attention to Note 2(g), “Going Concern” in the financial report. The conditions disclosed in Note
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
2(g) indicate a material uncertainty exists that may cash significant doubt on the Group’s ability to continue
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
as a going concern and, therefore whether it will realise its assets and discharge its liabilities in the normal
have fulfilled our other ethical responsibilities in accordance with the Code.
course of business, and at the amounts stated in the financial report. Our opinion is not modified in
We draw attention to Note 2(g), “Going Concern” in the financial report. The conditions disclosed in Note
respect of this matter.
2(g) indicate a material uncertainty exists that may cash significant doubt on the Group’s ability to continue
as a going concern and, therefore whether it will realise its assets and discharge its liabilities in the normal
We draw attention to Note 2(g), “Going Concern” in the financial report. The conditions disclosed in Note
course of business, and at the amounts stated in the financial report. Our opinion is not modified in
2(g) indicate a material uncertainty exists that may cash significant doubt on the Group’s ability to continue
respect of this matter.
as a going concern and, therefore whether it will realise its assets and discharge its liabilities in the normal
course of business, and at the amounts stated in the financial report. Our opinion is not modified in
KPMG, an Australian partnership and a member firm of the KPMG
respect of this matter.
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Material uncertainty related to going concern
Material uncertainty related to going concern
Liability limited by a scheme approved under
Professional Standards Legislation.
088 / HAMMER METALS LIMITED / Annual Report 2019
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
Independent Auditor’s Report
In concluding there is a material uncertainty related to going concern we evaluated the extent of
uncertainty regarding events or conditions casting significant doubt in the Group’s assessment of going
concern. Our approach to this involved;
• Assessing the Group’s cash flow forecasts for incorporation of the Group’s operations and plans to
address going concern, in particular in light of the history of loss making operations; and
•
Evaluating the feasibility, quantum and timing of the Group’s plans to raise additional shareholder
funds to address going concern;
• Determining the completeness of the Group’s going concern disclosures for the principle matters
casting significant doubt on the Group’s ability to continue as a going concern, the Group’s plans to
address these matters, and the material uncertainty.
Key Audit Matter
A Key Audit Matter is a matter that, in our professional judgement, was of most significance in our audit of
the Financial Report of the current period.
This matter was 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 this matter.
In addition to the matter described in the Material uncertainty related to going concern section, we have
determined the matter described below to be the Key Audit Matter.
Capitalised exploration and evaluation (“E&E”) assets ($11,954,619)
Refer to Note 14 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Exploration and evaluation expenditure capitalised
(E&E) is a key audit matter due to:
•
•
the significance of the activity to the Group’s
business and the balance (being 85% of total
assets); and
the greater level of audit effort to evaluate the
Group’s application of the requirements of the
industry specific accounting standard AASB 6
Exploration for and Evaluation of Mineral
Resources, in particular the conditions allowing
capitalisation of relevant expenditure and
presence of impairment indicators. The
presence of impairment indicators would
necessitate a detailed analysis by the Group of
the value of E&E, therefore given the criticality
of this to the scope and depth of our work, we
involved senior team members to challenge
the Group’s determination that no such
indicators existed.
In assessing the conditions allowing capitalisation
of relevant expenditure, we focused on:
•
•
the determination of the areas of interest
(areas)
documentation available regarding rights to
tenure, via licensing, and compliance with
relevant conditions, to maintain current rights
to an area of interest and the Group’s intention
to continue the relevant E&E activities;
Our audit procedures included:
•
Evaluating the Group’s accounting policy to
recognise exploration and evaluation assets
using the criteria in the accounting standard;
• We assessed the Group’s determination of its
areas of interest for consistency with the
definition in the accounting standard. This
involved analysing the licenses in which the
Group holds an interest and the exploration
programmes planned for those for
consistency with documentation such as
license related technical conditions, and
planned work programmes;
•
For each area of interest, we assessed the
Group’s current rights to tenure by
corroborating the ownership of the relevant
license to government registries and
evaluating agreements in place with other
parties. We also tested for compliance with
conditions, such as minimum expenditure
requirements, on a sample of licenses;
• We tested the Group’s additions to E&E for
the year by evaluating a statistical sample of
recorded expenditure for consistency to
underlying records, the capitalisation
requirements of the Group’s accounting
policy and the requirements of the accounting
standard;
HAMMER METALS LIMITED / Annual Report 2019 / 089
Independent Auditor’s Report
The key audit matter
How the matter was addressed in our audit
• We evaluated Group documents, such as
minutes of Board meetings, for consistency
with their stated intentions for continuing
E&E in certain areas. We corroborated this
through interviews with key operational and
finance personnel.
•
the Group’s determination of whether the E&E
are expected to be recouped through
successful development and exploitation of the
area of interest
In assessing the presence of impairment
indicators, we focused on those that may draw into
question the commercial continuation of E&E
activities for Mt Isa, Mt Frosty and Bronzewing
South areas where significant capitalised E&E
exists. In addition to the assessments above, we
paid particular attention to results from latest
activities regarding the existence or otherwise of
economically recoverable reserves/commercially
viable quantity of reserves.
Other Information
Other Information is financial and non-financial information in Hammer Metals Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information.
In doing so, we consider whether the Other Information is materially inconsistent with the Financial
Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date
of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
•
•
preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error
assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend to
liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
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.
090 / HAMMER METALS LIMITED / Annual Report 2019
Independent Auditor’s Report
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They 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 the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Hammer Metals Limited for the year ended
30 June 2019, complies with Section 300A of the
Corporations Act 2001.
The Directors of the Company are responsible for
the preparation and presentation of the
Remuneration Report in accordance with Section
300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report
included in section 12 of the Directors’ report for
the year ended 30 June 2019.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit
conducted in accordance with Australian Auditing
Standards.
KPMG
R Gambitta
Partner
Perth
27 September 2019
HAMMER METALS LIMITED / Annual Report 2019 / 091
ASX Additional Information
Additional information required by the Australian Stock Exchange Listing Rules and not disclosed elsewhere in this report is
set out below. Information regarding share and option holdings is current as at 2 October 2019.
ORDINARY SHAREHOLDERS
Twenty largest holders of ordinary shares
Number of shares
% Held
BNP PARIBAS NOMINEES PTY LTD
MR ZBIGNIEW WALDEMAR LUBIENIECKI
ZENITH PACIFIC LIMITED
DAVIS FAMILY CAPITAL PTY LTD
BRISPOT NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
DJ CARMICHAEL PTY LTD
CENTRAL MUTUAL (INVESTMENTS) PTY LTD
LUNDIE INVESTMENTS PTY LTD
SAMLISA NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
EQUITY TRUSTEES LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
CS THIRD NOMINEES PTY LIMITED
MR RUSSELL JOHN DAVIS
TRAVIS LORNE SMITHSON
MR SHANE RONALD BRITTEN
GECKO RESOURCES PTY LTD
CITICORP NOMINEES PTY LIMITED
ELEFANTINO PTY LTD
36,724,367
25,037,827
21,417,000
16,000,000
15,877,006
15,618,122
10,800,312
9,983,333
9,301,888
9,000,000
8,410,298
8,375,000
8,361,137
8,215,588
5,000,000
4,583,333
3,830,000
3,800,729
3,733,955
3,700,000
8.37
5.70
4.88
3.64
3.62
3.56
2.46
2.27
2.12
2.05
1.92
1.91
1.90
1.87
1.14
1.04
0.87
0.87
0.85
0.84
SIGNIFICANT SHAREHOLDERS ARE:
Twenty largest holders of ordinary shares
Number of shares
% Held
227,769,895
51.88
Deutsche Rohstoff AG
Mr Zbigniew Waldemar Lubieniecki
Zenith Pacific Limited & Mr Travis Smithson
*includes shares held by related entities
35,158,439
25,037,827
26,000,333
8.01
5.70
5.92
Each fully paid ordinary share entitles the holder to one vote at general meetings of shareholders and is entitled to dividends
when declared.
092 / HAMMER METALS LIMITED / Annual Report 2019
ASX Additional Information
The total number of shares on issue is 439,017,185
The number of shareholders holding less than a marketable parcel is 866.
There is no current on market buy back.
The Company has no ordinary shares which are subject to voluntary escrow.
DISTRIBUTION OF ORDINARY SHAREHOLDER
Category of shareholding
Number of shareholders
Number of shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
139
71
72
489
399
1170
29,636
219,899
577,029
22,277,859
415,912,762
439,017,185
OPTIONS HOLDERS OF LISTED OPTIONS
Twenty largest holders of HMXOD Listed Options
Number of options % Held
BNP PARIBAS NOMINEES PTY LTD
21,595,063
11.34
DJ CARMICHAEL PTY LTD
10,857,142
CENTRAL MUTUAL (INVESTMENTS) PTY LTD
10,069,999
DAVIS FAMILY CAPITAL PTY LTD
MR ZBIGNIEW WALDEMAR LUBIENIECKI
DEL PAGGIO NOMINEES PTY LTD
SAMLISA NOMINEES PTY LTD
MRS NATASHA KAY CLARKE
ZENITH PACIFIC LIMITED
SCINTILLA STRATEGIC INVESTMENTS LIMITED
LUNDIE INVESTMENTS PTY LTD
GECKO RESOURCES PTY LTD
8,600,000
8,522,696
6,000,000
5,400,000
5,114,877
5,000,000
4,625,000
4,512,632
4,500,000
AXSIM FUNDS MANAGEMENT PTY LTD
4,220,000
MR ENZO BOSIO + MRS CAMILLA BOSIO
MR BILAL AHMAD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
JBM TRADING PTY LTD
MR CHRISTOPHER WILLIAM CHALWELL + MRS JANINE ROSE CHALWELL
MR KWOK WAI KIN VIKING
MR PATRICK KOK
4,000,000
4,000,000
3,745,742
3,100,000
3,000,000
2,479,980
2,057,500
5.70
5.29
4.52
4.48
3.15
2.84
2.69
2.63
2.43
2.37
2.36
2.22
2.10
2.10
1.97
1.63
1.58
1.30
1.08
121,400,631
63.78
HAMMER METALS LIMITED / Annual Report 2019 / 093
ASX Additional Information
Listed options do not entitle the holder to vote at general meetings of shareholders and are not entitled to dividends
when declared.
The total number of listed options on issue is 190,355,206
There is no current on market buy back.
There are no listed options subject to voluntary escrow.
DISTRIBUTION OF LISTED HMXOD OPTION HOLDERS
Category of option holding
Number of option holding
Number of options
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
20
14
24
97
135
290
5,045
41,981
177,401
4,034,754
186,096,025
190,355,206
UNQUOTED SECURITIES
The Company has the following unquoted securities on issue.
Category of security
Number
Number of holders
Options expiring 30 June 2020 exercisable at $0.06
Options expiring 30 June 2020 exercisable at $0.06
Options expiring 31 August 2020 exercisable at $0.07
Options expiring 30 November 2019 exercisable at $0.07
9,000,000
3,800,000
2,676,078
1,500,000
4
6
1
8
094 / HAMMER METALS LIMITED / Annual Report 2019
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