30 October 2020
2020 Annual Report
Hammer Metals Limited (“Hammer” or the “Company) is pleased to attach its Annual Report for the year ended
30 June 2020
This ASX Announcement has been authorised for issue by Mr Mark Pitts, Company Secretary, Hammer Metals
Limited.
Annual Report
2020
ABN 87 095 092 158
HAMMER METALS LIMITED / Annual Report 2020
ABN
87 095 092 158
BOARD OF DIRECTORS
Russell Davis
Non-Executive Chairman
Daniel Thomas
Managing Director
(appointed 21 October 2019)
Zbigniew Lubieniecki
Non-Executive Director
David Church
Non-Executive Director
(appointed 1 July 2020)
COMPANY SECRETARY
Mark Pitts
PRINCIPAL AND REGISTERED OFFICE
Suite 1, 827 Beaufort Street
Mt Lawley, WA 6052
Telephone:
Email:
Website:
+61 8 6369 1195
info@hammermetals.com.au
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:
Facsimile:
+61 8 9263 7171
+61 8 9263 7129
SHARE REGISTRY
Advanced Share Registry Ltd
110 Stirling Highway
Nedlands WA 6009
Australia
Telephone:
Facsimile:
+61 8 9389 8033
+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:
www.hammermetals.com.au/company-
profile/corporate-governance/
2
HAMMER METALS LIMITED / Annual Report 2020
Contents
Chairman’s Letter
Corporate Strategy
Operational Highlights
Corporate Activity
Operations Summary
Competent Persons Statement
Annual Mineral Resource Statement
Tenement Interests
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
C
o
n
t
e
n
t
s
4
6
7
8
9
33
34
41
44
60
61
62
63
64
65
93
94
98
3
HAMMER METALS LIMITED / Annual Report 2020
At the beginning of July we welcomed
David Church to the Board and farewelled
Nader El Sayed who has provided wise
counsel to Hammer over the past 8 years.
David brings a wealth of commercial, legal
and M&A experience to the Company.
There is good reason to look forward
to the year ahead with confidence.
Hammer has an experienced and aligned
management team in place, an improved
balance sheet along with the improved
prices of its target commodities, two
excellent projects, strong joint venture
partners at Mount Isa and supportive
major shareholders.
Once again, I acknowledge our small
team led by Dan Thomas for their
outstanding efforts and thank our
Hammer shareholders and partners for
their support during the year.
Sincerely
Russell Davis
Chairman
Chairman’s Letter
Chairman’s
Letter
It is my pleasure to
present Hammer
Metals Annual Report
for the 2020 financial
year, providing details
of our continued
progress against our
business strategy.
Dear Fellow Shareholders,
I am pleased to bring to you the Hammer
Metals 2020 Annual Report, which this
year has a greater gold flavour following
the acquisition of the Bronzewing South
gold project last year.
Your Company now holds highly
prospective tenement positions in two of
the world’s great mineral provinces - the
Eastern Goldfields of Western Australia
for gold and the Northwest Mineral
Province in Queensland for copper and
gold. The Board’s objective, as before,
is to bring wealth to our stakeholders
by making a significant exploration
discovery. Hammer’s directors and senior
management hold approximately 13% of
the company and are strongly aligned
with our shareholders in the desire to
successfully achieve this objective.
The pandemic this year provided Hammer
with some logistical challenges, but the
team adjusted to the changed operating
environments and continued to operate
effectively in both jurisdictions. This is a
credit to Hammer’s team led by Managing
Director Daniel Thomas and Chief
Operating Officer Mark Whittle and the
professionalism and commitment shown
by our field crews in Western Australia
and Queensland.
Overall, the year has been one of
substantial achievement.
As foreshadowed in last year’s report,
Hammer quickly advanced its gold
strategy in Western Australia. The
Company has undertaken several drilling
programs at the Bronzewing South
and Orelia North targets, near the old
Bronzewing Mine in the Yandal Belt, with
very promising results and an RC and
diamond drilling program is currently
underway. Hammer is keen to grow the
gold side of the business and has recently
acquired additional prospective tenure in
the Yandal Belt.
At Mount Isa Hammer has progressively
built up arguably one of the best ground
positions in this productive mineral
region and we are still coming to grips
with the substantial exploration potential
of the project that we hope will lead to
the discovery of a world-class base
metal and gold deposit. The Mount Isa
Project remains an important part of our
portfolio and the challenge for us is to
adequately fund the range of targets we
have identified.
A significant step in addressing the
funding requirements of the project
was made late in 2019 when Hammer
successfully negotiated a joint venture
agreement with Japan Oil Gas and Metals
National Corporation (JOGMEC), over four
of our IOCG target areas that comprise
approximately 15% of the project area.
This joint venture is progressing well,
with encouraging results coming from
the initial programs. The Mount Isa
exploration program was further boosted
with Hammer being awarded two State
Government grants totalling $283,000.
Pleasingly approximately $5.63 million
was raised by the exercise of the listed
HMXOD options which expired at the
end of September 2020. Along with
the expected contributions from our Mt
Isa Project Joint Venture partners these
funds will allow us to pursue an active
exploration agenda into 2021.
4
HAMMER METALS LIMITED / Annual Report 2020
C
h
a
i
r
m
a
n
’
s
L
e
t
t
e
r
HAMMER METALS LIMITED / Annual Report 2020
5
Corporate Strategy
Corporate
Strategy
■ Position the company for 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.
Photograph by: Chris Locke
6
HAMMER METALS LIMITED / Annual Report 2020
Operational
Highlights
■ Defined a 2km long trend of gold mineralisation at
■ Completion of a first phase work program in the
Target 1 on Hammer’s 100% owned North Orelia
project area. Three aircore programs extended
the mineralisation on each attempt with RC drilling
recently commencing.
■ Executed a $6million exploration Joint Venture with
Japan Oil and Gas and Metals National Corporation
(“JOGMEC”) over four areas (290km2) within
Hammer’s Mount Isa project area.
■ Completed the first RC drilling program at Bronzewing
South with a follow-up gravity survey defining high
priority gravity low targets along the prospective
corridor at Bronzewing South.
■ Successful funding applications made to the
Queensland and Western Australian state
governments resulting in an additional $433,000 in
drilling funding for the company.
JOGMEC JV, including significant geophysical and
geochemical surveys.
■ Drill testing of two JOGMEC JV target areas at
Shadow and Toby. The Shadow target returned broad
zones of copper and gold mineralisation and offers
encouragement for future activities at these projects.
■ Hammer continued to acquire additional new
properties through tenement applications within both
the Yandal and Mount Isa project areas.
■ Subsequent to the end of the financial year, Hammer
increased it’s holding in the Yandal belt through the
acquisition of a number of prospective tenements
from Alloy Resources.
O
p
e
r
a
t
i
o
n
a
l
i
H
g
h
l
i
g
h
t
s
Photograph by: Nick Tate
7
HAMMER METALS LIMITED / Annual Report 2020
Corporate Activity
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 $1.5 million share placement was finalised on 10
December 2019;
■ A $1.14 million share purchase plan (SPP) was
completed by 29 January 2020; and
■ Up until 30 June 2020, a total of 19,525,757 HMXOD
listed options were converted at a price of 3c raising
$585,773.
Subsequent to the end of the financial year, a further 168,295,021
HMXOD were converted at a price of 3c, raising an additional
$5,013,151 million. A residual 3,724,428 HMXOD options expired
on 30th September.
Management actively interacts with the investment and exploration
community. The Company’s website (www.hammermetals.com.
au) provides additional project and corporate information and
access to previous announcements.
During the year, the Company took steps to embed its new
Bronzewing South project whilst also looking to build upon
its strategic position within the Yandal Greenstone belt. As in
previous years, the Company also looked towards securing
tenements with high prospectivity for large scale IOCG deposits
in the surrounding tenure in the Mount Isa region.
In November 2019, Hammer welcomed a new joint venture partner,
JOGMEC over a prospective area of 290km2 of Hammer’s tenure
in the Mount Isa project area. This Joint Venture arrangement
sees JOGMEC potentially spending up to $6million to earn a 60
percent interest in the area over a 5-year period. Importantly,
Hammer retains all its interests in the existing copper-gold JORC
resources in the region.
The Company received an allocation of $936,000 in credits
under the Federal Government’s Junior Minerals Exploration
Incentive Scheme (“JMEI”). The Company expects to allocate
these credits to participants from new equity raisings from the
corresponding financial period shortly
The Company also successfully applied for and was awarded
three separate state government grants during the year. These
include:
■ A $193,000 CEI grant from the Queensland State
Government obtained to 100% fund diamond drilling
to test the potential of the Koppany Cu-Rare Earth
Element (REE) prospect located to the southeast of
Mary Kathleen;
■ A $90,000 CEI grant from the Queensland State
Government obtained to 100% fund two MT profiles.
The first across the Kalman Cu-Mo-Au-Re Deposit
and the second across the northern portion of the
Mt Philp Breccia; and
■ A $150,000 EIS grant from the Western Australian
State government to partly fund the drilling of
a compelling gravity and structural target at its
Bronzewing South Gold Project.
8
HAMMER METALS LIMITED / Annual Report 2020
Bronzewing South Gold Project
(Western Australia)
The 2020 financial year represents the first full year of Hammer’s
ownership of the Bronzewing South Gold project.
Hammer acquired the projects on 17 May 2019 following
our shareholders ratification of 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. The Company remains keen to increase its
exploration footprint in this prospective region.
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.
O
p
e
r
a
t
i
o
n
s
S
u
m
m
a
r
y
2. The Orelia trend shear zones extending for 15km along strike
to the north of the Lotus pit and adjacent 1Moz Orelia gold
deposit. 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.
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.
Since the acquisition, Hammer has completed data compilation,
ground IP surveying, a detailed ground gravity survey, three
aircore programs and the first phase of RC drilling. The three
aircore programs, which focussed on the North Orelia tenement,
have defined a 2km gold mineralisation trend at Target 1.
Hammer’s programs at Target 1 highlight the inadequacies
of historical exploration through the region and increase the
prospectivity within the Yandal region and Hammer’s tenements.
An RC program focussed on Target 1 is ongoing at the time of
this report.
The coming financial year will see the Company’s first drilling at
the Ken’s bore prospect, whilst we will also complete our first
diamond drilling program on gravity targets on the Bronzewing
South tenement.
Yandal Gold Project Areas
Bronzewing South Tenements
9
HAMMER METALS LIMITED / Annual Report 2020
Operations Summary
Bronzewing South Gold Project
▲ North Orelia: Target 1
Three detailed aircore drilling programs at North Orelia have defined a 2km
trend of gold mineralisation at Target 1.
Hammer recommenced its AC program at North Orelia in June
and completed 174 holes for 9,942m. Results not previous
reported herein are from BWSAC0465 to BWSAC0464 (108
holes and 6,054 metres). Significant results included:
■ 4m @ 5.79g/t Au from 40m in BWSAC0434;
■ 4m @ 4.38g/t Au from 48m in BWSAC0448;
■ 4m @ 1.87g/t Au from 12m in BWSAC0460;
■ 4m @ 1.86g/t Au from 72m in BWSAC0567;
■ 4m @ 1.83g/t Au from 40m in BWSAC0497;
■ 20m @ 0.45g/t Au from 20m including 4m @ 1.02g/t
Au in BWSAC0461; and
■ 48m @ 0.45g/t Au from 32m including 4m at 1.78g/t
Au from 36m and 4m @ 1.45g/t Au from 76m in
BWSAC0462.
The first phase of drilling at Target 1 delineated three previously
unrecognised mineralised gold trends1. The previously
undiscovered western mineralised trend is associated with the
margin of a magnetic ridge – associated with shearing focussed
on a contact between felsic and mafic units. The magnetic ridge
is visible on regional datasets both to the north and south with
scope for Hammer to test these interpreted contact zones which
have limited historical drilling. The best Phase 1 results from
Target 1 included:
■ 14m at 1.80g/t Au from 12m including 3m at 5.57g/t
Au from 21m in BWSAC0026;
■ 3m at 1.65g/t Au from 17m in BWSAC0036;
■ 19m at 0.63g/t Au from 4m including 1m at 8.77g/t Au
from 13m in BWSAC0061;
■ 3m at 2.68g/t Au from 26m including 1m at 4.12g/t Au
from 26m in BWSAC089;
■ 10m at 1.82g/t Au from 9m including 3m at 5.78g/t
from 12m in BWSA00121; and
■ 12m at 0.79g/t Au from 8m including 4m at 1.96g/t Au
from 8m in BWSAC0127.
The Phase 2 program was designed to extend known mineralised
trends to the south. During this program four broad spaced lines
were drilled with the aim to test the extensions of the 1km strike
of delineated mineralisation, by up to a further 1km. The lines
achieved this objective with significant results including:
■ 4m at 3.88g/t Au from 24m in BWSAC0289;
■ 8m at 1.93g/t Au from 36m including 4m at 2.5g/t Au
from 40m in BWSAC0290; and
■ 7m at 0.90g/t Au from 12m including 2m at 2.91g/t Au
from 12m in BWSAC0304.
1 See Hammer’s ASX Announcements dated 23 December 2019 and 22 April 2020
10
HAMMER METALS LIMITED / Annual Report 2020
O
p
e
r
a
t
i
o
n
s
S
u
m
m
a
r
y
11
Target 1 – 2km Gold Mineralisation Trend (Refer to ASX announcement dated 4 August 2020)
HAMMER METALS LIMITED / Annual Report 2020
Operations Summary
Bronzewing South Gold Project
▲ North Orelia: Target 4
Target 4 is located 1km along strike to the north of Northern Star’s
(ASX:NST) 1Moz Orelia Resource.
Orelia and the former Lotus and Cockburn deposits are located
within a fault bounded corridor and associated with regional
structures such as the Lotus Fault. Hammer Metals has been
progressively testing this corridor to identify specific stratigraphic
units and discern major fault zones.
Previous drilling encountered low level anomalism (refer to ASX
announcement dated 22 April 2020) with intercepts of:
■ 12m at 0.16g/t Au from 24m including 4m at 0.36g/t
Au from 24m in BWSAC0375; and
■ 32m at 0.15g/t Au from 32m including 4m at 0.88g/t
Au from 32m in BWSAC0388.
The most recent phase of drilling further tested this corridor with
significant anomalism encountered:
■ 24m @ 0.12g/t Au from 28m in BWSAC0533; on the
western edge of the Lotus Dolerite;
■ 8m @ 0.36g/t Au from 28m in BWSAC0540 on the
eastern edge of the Lotus Dolerite; and
■ 4m @ 0.16g/t Au from 40m in BWSAC0542, also on
the eastern edge of the Lotus dolerite.
This level of gold anomalism in an area of depleted regolith
is significant. Intercepts in BWSAC0540 and BWSAC0542
are in a zone of deeper weathering and there is evidence of
strong silicification and hydrothermally produced ironstone. It is
interpreted that this zone not only is located on the eastern side
of the Orelia corridor, but it also marks the Lotus Fault. As we
have seen with drilling at Target 1, historic drilling along this trend
has generally been ineffective providing an additional target for
Hammer to test in the future.
Target 4 – North Orelia looking South toward the Lotus Pit
12
HAMMER METALS LIMITED / Annual Report 2020
Bronzewing South Gold Project
▲ Bronzewing South
O
p
e
r
a
t
i
o
n
s
S
u
m
m
a
r
y
Following the acquisition of the Bronzewing South gold project in May
2019, Hammer has generated multiple drilling targets based on the
interpretation of the new IP and gravity data, geological and structural
information as well as results from previous drilling.
Hammer’s first RC drilling program on the tenement consisted of a
14 hole, 2,743m program which tested five targets on mineralised
trends south of Northern Star’s (ASX: NST) Bronzewing gold
project. Hammer’s drilling encountered strong shear fabric
development, quartz veining, carbonate alteration and sulphides
associated with multiple gold intercepts. At Bronzewing, these
features are important in indicating proximity to mineralisation.
Screen fire assays are currently underway to quantify gold grain
size distribution.
Significant assays include:
■ 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;
■ 8m at 1.36g/t Au from 199m including 1m at 6.2g/t
Au and 4m at 2.49g/t Au from 226m including 1m at
9.3g/t Au from 229m in BWSRC004;
■ 5m at 1.91g/t Au including 2m at 4.38g/t Au from
147m in BWSRC011;
■ 4m at 1.12g/t Au including 2m at 2.17g/t Au from 58m
in BWSRC009; and
■ 3m at 1.64g/t Au including 1m at 3.38g/t Au from
86m in BWSRC003.
The Bronzewing Gold deposit is in a zone of low gravity response
between the Bapinmarra Dolerite (to the west) and the Discovery
Granodiorite (to the east). An analogous situation exists within
Hammer tenements immediately to the south of the Bronzewing
Open. To better define drilling targets, Hammer engaged Atlas
Geophysics to complete a detailed gravity survey over an area
within E36/854 (see ASX release dated 22 April 2020).
The survey defined anomalous gravity lows in analogous
geological positions to the Bronzewing Deposit. These lows
are overlain by shallow gold mineralisation intersected by both
previous explorers and Hammer Metals (see ASX releases dated
14 March 2019 and 2 October 2019). Results from Hammer’s
reverse circulation drilling on the margin of these gravity lows
included 10m at 1.97g/t Au from 129m including 1m at 16g/t Au
from 137m in BWSRC006 (Figure 5 and 6).
Hammer Metals applied for and was awarded a $150,000
Western Australia Exploration Incentive Grant to partly fund
diamond drill testing of this mineralisation model. It is anticipated
that this testing will proceed after the Orelia aircore program and
RC drill testing of Orelia and Kens Bore is complete.
View looking north showing the proximity of the Bronzewing Deposit to E36/854
13
HAMMER METALS LIMITED / Annual Report 2020
Operations Summary
Gravity Survey within E36/854 and P36/1858 showing the location of the EIS grant area
(Refer to ASX announcement dated 15 September 2020)
Long section looking west showing modelled gravity shells and similarities to the gravity response at the Bronzewing
Gold Deposit (Refer to ASX announcement dated 15 September 2020)
14
HAMMER METALS LIMITED / Annual Report 2020
O
p
e
r
a
t
i
o
n
s
S
u
m
m
a
r
y
15
Bronzewing South Phase 1 RC Drilling with significant intercepts
(Refer ASX announcement 2 October 2019)
HAMMER METALS LIMITED / Annual Report 2020
Operations Summary
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.
These activities were completed through the first quarter of the
year with a second phase of exploration aimed at drill testing
advanced targets at Shadow and Toby whilst also advancing
other prospective greenfield exploration targets. Drilling of
Shadow and Toby were completed subsequent to the end of
the financial year.
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.
The highlight for the company for the year was the agreement
signed with JOGMEC under which JOGMEC can elect to earn
a 60 percent interest over 290km2 of the portfolio through the
expenditure of $6million over 5 years. Agreement was reached
in November last year and ratified by the Foreign Investment
Review Board in late January 2020.
A first phase program over the Joint Venture areas included
detailed geological mapping, geochemical and geophysical
work programs.
The Company continued to advance its other projects during
the year with the assistance of Queensland Government
Collaborative Exploration Incentive funding. The company
completed a magneto telluric (MT) survey over the Kalman
deposit and the northern area of the Mt Philp Breccia prospect
whilst also preparing to drill the Koppany Copper and Rare Earth
Element target. Drilling at the Koppany prospect was completed
subsequent to the end of the financial year.
Hammer also continued to 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
16
HAMMER METALS LIMITED / Annual Report 2020
Mount Isa Joint Venture With JOGMEC
The Joint Venture area covers sections of the Even Steven, Mount Philp,
Dronfield West and Malbon target areas covering approximately 290km2 of
Hammer’s 2,100km2 Mount Isa Project.
The areas are considered highly prospective for the discovery of
Iron Oxide Copper Gold Deposits (“IOCG”).
JOGMEC has the right to earn a 60% interest by expending
$6,000,000 by 31 March 2024 and during this period, Hammer
will manage the exploration program exploration. Hammer
retains a 100% interest in the existing Resources at the Kalman
Cu-Au-Mo-Re deposit, the Overlander Cu deposits and the
Elaine Cu-Au deposit as well as its 51% interest in the Jubilee
Cu-Au deposit.
The Phase 1 JOGMEC JV program commenced on 26 January
with all field work programs completed by 31 March 2020. The
main aims of the Phase 1 program were to delineate drill targets
at the Shadow and Toby Prospects and to collect high quality
baseline geophysical data in all Joint Venture areas. The second
phase of the Joint Venture commenced in April 2020 and is
ongoing at the time of this report.
O
p
e
r
a
t
i
o
n
s
S
u
m
m
a
r
y
▲ Mt Philp Breccia Area - Shadow
The Shadow prospect was discovered by Hammer during ground follow-up
of soil geochemical anomalies.
The prospect is located on the western margin of the Mt Philp
Breccia to the east of the Mt Philp Hematite Deposit. There had
been no historical drilling at this target with the nearest focussed
copper drilling having occurred approximately 4.5km to the
north. Drilling at the Mt Philp iron project (600m to the west)
focussed on the delineation of the hematite deposit and did not
consider the potential of the hematite alteration as an indicator
of the presence of a copper-bearing IOCG alteration system.
Mapping indicates that surface mineralisation is associated with
a multiphase magnetite-altered breccia which has a marginal
zone of silica-magnetite alteration. The current extent of the
breccia is approximately 450m in strike length and up to 150m
in width. The silica-magnetite alteration zone extends for over
4km along strike and the zone is marked by a series of magnetic
anomalies. Zones of copper mineralisation within the silica-
magnetite alteration trend have been observed sporadically for
up to 4km to the south.
The multiphase breccia hosts copper mineralisation (and
associated gold) as fine disseminations, blebs and stringers with
chalcopyrite commonly observed in rock chips at surface.
Subsequent to the completion of the financial year, an initial
2-hole diamond drilling program (372m) was designed to gather
as much geological information as possible across the width of
the alteration system. The drilling defined a broad mineralised
envelope of copper and gold mineralisation indicating the
potential for the system to host a large-scale deposit. Significant
intercepts include:
■ 83m @ 0.13% Cu from 81m including 29m @ 0.16% Cu
from 135m in HMSHDD001; and
■ 106m @ 0.10% Cu from 44m including 5m @ 0.23% Cu
from 52m in HMSHDD002.
The plus-4km Shadow trend is currently being investigated
through detailed soil sampling and mapping and a downhole
EM survey has also been commissioned with the aim to define
any off-hole targets of potentially higher-grade mineralisation.
17
HAMMER METALS LIMITED / Annual Report 2020
Operations Summary
Oblique view looking northeast from the Mt Philp Hematite deposit to shadow. The hills in the background are composed
of the Mt Philp Breccia intrusive complex
Shadow Mineralisation
18
HAMMER METALS LIMITED / Annual Report 2020
O
p
e
r
a
t
i
o
n
s
S
u
m
m
a
r
y
Shadow key geological units with rock chip sampling. Cu greater than 2% and Au greater than 1g/t annotated.
(Refer to ASX announcement dated 12 May 2020)
Long section (looking west) along the plus 4km Shadow Trend showing the magnetic response in plan (top) and as a
long section looking west (base) with Cu rock chip response
19
HAMMER METALS LIMITED / Annual Report 2020
Operations Summary
Mount Isa Joint Venture With JOGMEC
▲ Mt Philp Breccia Area - Toby
The Toby prospect is located close to the intersection of the Ballara,
Kalman West and Pilgrim Faults, a zone of major structural complexity on
the eastern margin of the Mt Philp Breccia and west of the Pilgrim Fault.
The prospects are approximately 8km along strike to the
north of Hammer’s Kalman Cu-Mo-Au-Re deposit. Historical
reconnaissance rock chip sampling at Toby has obtained
individual peak grades of up to 18.4g/t Au, 76g/t Ag and 15.1%
Cu.
The hole encountered strong alteration, structural complexity with
minor sulphide. The ground EM conductor and historic heliborne
VTEM anomaly are not explained by the levels of sulphide and
graphite encountered in the drilling. Mineralised intercepts in the
completed hole include.
A fixed loop EM survey was conducted over Toby and Charlie
in March to further define conductors which were discovered
by a Heliborne VTEM survey Hammer Metals commissioned in
2016 along the Pilgrim Fault (see ASX announcement dated 21
December 2016).
Three conductive plates were modelled from the ground EM
response. Subsequent to the end of the financial year, one
diamond drillhole totalling 252m was drilled at Toby to test a
modelled conductor derived from the ground EM survey.
■ 1m @ 1.37g/t Au from 174m
■ 8m @ 0.13% Cu from 221m including 1m @ 0.20g/t Au
HMTODD001 was Hammer’s first hole drilled at the Toby
prospect. Further work is required to explain the significant
ground and heliborne EM anomalies identified at this target. An
immediate downhole EM survey has been commissioned by the
Company to further examine the previously identified EM and
VTEM anomalies.
Toby Prospect showing the fixed loop ground EM survey layout, modelled conductive plates and rock chip sample Cu
and Au response. Cu grades above 2% and Au grades above 1g/t
(Refer to ASX announcement dated 12 May 2020)
20
HAMMER METALS LIMITED / Annual Report 2020
Mount Isa Joint Venture With JOGMEC
▲ Even Steven Area
The Even-Steven area comprises three advanced copper and gold Targets
encompassing the Trafalgar, Pearl and Even Steven prospects.
Ground gravity surveys were conducted by Atlas Geophysics in
February and March over portions of each Joint Venture area.
The resulting data has been imaged and three dimensionally
modelled.
At the Even Steven JV area gravity and magnetic highs are
coincident with altered breccia and elevated soil geochemical
responses. These targets are interpreted to represent magnetite
alteration zones associated with potential IOCG systems.
This prospect is a potential future drill target for the Joint Venture.
O
p
e
r
a
t
i
o
n
s
S
u
m
m
a
r
y
JOGMEC JV – Phase 1 Program activity
21
HAMMER METALS LIMITED / Annual Report 2020
Operations Summary
Even Steven South showing the zone of elevated gravity and soil geochemistry response
(Refer to ASX announcement dated 12 May 2020)
22
HAMMER METALS LIMITED / Annual Report 2020
Mount Isa Joint Venture With JOGMEC
▲ Dronfield Northwest
The Dronfield JV area is the most southern portion of Joint Venture and
includes the Marriage copper-gold prospect.
In the Dronfield Northwest Joint Venture area, gravity anomalies
have been identified underlying zones of elevated historical
surface rock chip gold and copper anomalism.
Further ground truthing of these prospects combined with further
soil sampling is expected during the FY21 period.
O
p
e
r
a
t
i
o
n
s
S
u
m
m
a
r
y
JOGMEC JV Dronfield Northwest Project area showing zones of elevated gravity (blue 3D shells - top) and Aeromagnetic
response (base). Historic rock chip sampling is shown with Au greater than 1g/t and Cu greater than 1% annotated in
red and black respectively (Refer to ASX announcement dated 12 May 2020)
23
HAMMER METALS LIMITED / Annual Report 2020
Operations Summary
Mount Isa Joint Venture With JOGMEC
▲ Malbon
The Malbon JV area includes the El Questro gold prospect as well as a
number of geophysical and geochemical anomalies.
Recent gravity and historical magnetic surveys have identified
grassroots targets on the northern margin of the Wimberu granite
within the Timberu Formation.
These targets possibly reflect the responses from IOCG alteration
systems. Soil sampling was initiated after the reporting date.
JV Malbon East Project area showing zones of elevated gravity (blue 3D shells - left) and Aeromagnetic response (right)
(Refer to ASX announcement dated 12 May 2020)
24
HAMMER METALS LIMITED / Annual Report 2020
Copper-Gold Exploration
▲ Kalman Deposit
The Kalman Deposit contains 360kt of Copper Equivalent Metal.
A magneto telluric survey was conducted across the deposit
during the year and has highlighted several significant near
surface anomalies in close proximity to the Kalman deposit.
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.
Hammer was awarded a CEI grant to undertake a magneto telluric
survey over Kalman and the northern margin of the Mt Philp
Breccia with the aim of further understanding the surrounding
geological structures and their importance to the high grade
mineralisation identified at the project.
The survey was completed in March with imagery indicating that
the MT method does identify the Kalman Deposit structure at
depth. Unexplained near surface conductors and an interesting
off-section conductor was delineated to the north of Kalman.
These anomalies require further investigation.
Preliminary imaging of the northern MT profile indicates zones
of low resistivity associated with both the Kalman and Fountain
Range Faults in addition to the margin of the Mt Philp Breccia.
O
p
e
r
a
t
i
o
n
s
S
u
m
m
a
r
y
Kalman Deposit Block Model (CuEq)
25
HAMMER METALS LIMITED / Annual Report 2020
Operations Summary
Magneto Telluric profile locations
Southern magneto telluric profile looking southeast.
Northern magneto telluric profile looking north.
The Kalman Cu resource wireframe is shown.
The interpreted position of the Pilgrim and Fountain
(Refer to ASX announcement dated 12 May 2020)
Range Faults, Mount Philp Breccia and inverted magnetics
and gravity shown.
(Refer to ASX announcement dated 12 May 2020)
26
HAMMER METALS LIMITED / Annual Report 2020
Copper-Gold Exploration
▲ Jubilee (51% Hammer Metals Limited), Elaine and Overlander
(100% Hammer Metals Limited)
Hammer retains a number of projects that contain JORC compliant
resources of copper and gold.
Limited activities were completed at the Jubilee, Elaine and
Overlander deposits during the period, however increased
Copper prices and sentiment towards the commodity are likely
to present opportunities to progress these assets during the
upcoming financial year.
The Jubilee and Elaine-Dorothy copper-gold deposits are in
close proximity to the Lakeview, Black Rock, and Sunset copper-
gold prospects, all of which have excellent potential to define
additional copper and gold resources. The strong gold price
environment also increases the attractiveness of these targets
as they also carry significant potential for gold mineralisation.
O
p
e
r
a
t
i
o
n
s
S
u
m
m
a
r
y
Mary Kathleen Structural Zone
27
HAMMER METALS LIMITED / Annual Report 2020
Operations Summary
Copper-Gold Exploration
▲ Kalman West / Hammertime / Revenue / Andy’s Hill / Perentie
Limited field work was undertaken on these prospects during the year
however substantial untested IOCG potential remains at each prospect and
partners may be sought to accelerate exploration.
Gold Focussed Exploration
▲ Malbon Area
The Kings, Alice and Deadlock prospects are located approximately 40km
east of Kalman.
These three parallel prospective trends are up to 1.8km in
length. Notably outcrop is sparse in the area with a thin veneer of
colluvial cover masking bedrock. A field mapping program was
conducted at the Kings and Alice prospects post the conclusion
of the reporting period.
A number of prospective drilling targets were identified and will
be considered for a Reverse Circulation drilling program during
the FY21 year.
Alice Kings Trend
28
HAMMER METALS LIMITED / Annual Report 2020
Rare Earth Elements (REE) Exploration
An initial investigation of its drilling database in 2019 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%).
O
p
e
r
a
t
i
o
n
s
S
u
m
m
a
r
y
▲ Koppany (51% Hammer Metals Limited)
Hammer Metals received a Critical Minerals Exploration Initiative
(“CEI”) grant from the Queensland Government to drill test rare
earth mineralisation at the Koppany prospect located 2km to the
south east of the Mary Kathleen U and REE deposit. The two-drill
hole program for 507m was designed to test strongly anomalous
lanthanum and cerium responses in surface soil sampling and
follow up previous drilling peak values over any one metre of
1.7% Cerium, 1.15% Lanthanum, 0.26% Neodymium and 0.13%
Praseodymium.2
The rare earth bearing skarn zone at Koppany is cross-cut on its
western side by pyrrhotite – chalcopyrite zones that correspond to
a series of strong VTEM responses occurring over a 5.6 km strike
length. This area represents a significant Iron-Sulphide-Copper-
Gold (“ISCG”) target. Other examples of ISCG mineralisation
style in the Mount Isa region include Eloise and Osborne.
HMKPDD002 intercepted zones of semi-massive pyrrhotite with
lesser chalcopyrite. Significant intercepts include:
■ 4m at 0.78% Cu from 126m including 1m at 2.14% Cu
in HMKPDD002; and
■ 42m at 0.10% Cu from 34m including 1m at 0.78% in
HMKPDD002.
Significant intercepts of rare earth bearing skarn were
encountered in both holes. Significant intercepts include:
■ 106m at 0.25% TREOY from 88m including 7m at
0.74% TREOY and 1m at 1.43% TREO in HMKPDD001;
■ 23m at 0.28% TREOY from 226m in HMKPDD001;
and
■ 26m at 0.39% TREOY from 112m including 3m
at 1.23% TREOY and 1m at 1.05% TREOY in
HMKPDD002.
The rare earth element response is dominated by the lighter
elements, typically comprising greater than 98% of the total
rare earth concentration. Individual maximum REE grades of
1.02% Ce2O3, 0.53% La2O3 and 0.11% Nd2O3 were noted within
mineralised intervals.
The drilling has continued to outline a broad zone of REE
mineralisation as well as an adjacent zone of copper mineralisation
at Koppany. The results from the drilling are currently being
compiled and reviewed with any follow up work to be planned in
conjunction with our Joint Venture partner MIM. Downhole EM
has been conducted on HMKPDD002 and processing remains
to be completed.
2 Refer to Hammer Metals ASX release dated 3/7/2019
29
HAMMER METALS LIMITED / Annual Report 2020
Operations Summary
Pyrrhotite-Chalcopyrite mineralisation – HMKPDD002, 128.3m. The interval 128-129m assayed at 2.14% Cu
(Refer to ASX announcement dated 22 September 2020)
Black Allanite (REE bearing mineral with formula (Ce,Ca,Y,La)2(Al,Fe)3(SiO4)3(OH) )within a Pyroxene Skarn -
HMKPDD001, 155.5m. The interval 155-156m assayed at 0.9% TREOY
(Refer to ASX announcement dated 22 September 2020)
30
HAMMER METALS LIMITED / Annual Report 2020
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.
O
p
e
r
a
t
i
o
n
s
S
u
m
m
a
r
y
Location plan Koppany drilling showing significant intercepts encountered in previous drilling and Cu soil geochemistry
(Refer to ASX announcement dated 3 July 2019 and 22 September 2020)
31
HAMMER METALS LIMITED / Annual Report 2020
Operations Summary
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 (refer page 39). The deposit is held
under a retention license (E08/1997).
Cobalt Exploration
▲ Millennium
Hammer sold its Millennium and Mount Dorothy Cobalt exploration projects
to Global Energy Metals Corporation (“GEMC”) in June 2019.
During the financial year, GEMC completed a share consolidation on 10 existing common shares for 1 post consolidation share basis.
As a result, Hammer holds 1.925 million shares in GEMC (representing a 19.8% interest). Hammer retains the right to nominate one
person to the GEMC board of directors whilst Hammer maintains at least a 10% shareholding in GEMC.
Photograph by: Nick Tate
32
HAMMER METALS LIMITED / Annual Report 2020
Competent Persons Statement
▲ Exploration Results
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 an employee of Hammer Metals Limited.
Mr. Mark Whittle, who is also a share and option holder in the
Company, has sufficient experience which is relevant to the styles
of mineralisation and deposit types 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.
▲ Mineral Resource Estimates
Where the company refers to Mineral Resource Estimates for the following
prospects:
C
o
m
p
e
t
e
n
t
P
e
r
s
o
n
s
S
t
a
t
e
m
e
n
t
■ the Kalman deposit (ASX 27 September 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.
33
HAMMER METALS LIMITED / Annual Report 2020
Annual Mineral Resource Statement
Annual Mineral Resource Statement
As of 30 June 2020
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 and Kalman
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.
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.
Hammer sold its Millennium project to Global Energy Metals Corporation (“GEMC”) in June 2019. Therefore, the Millennium Cu-Co-
Au resource has been taken out of the Annual Mineral Resource statement.
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, Mt Philp and Jubilee Resources, there have been no material changes to the Resource
Estimates during the reporting period.
Resource Project
Mineral Resource
Competent Person
Mr. L. Burlet
Ms. E. Haren
Ms. E. Haren
Mr. C. Allen
Organization
ASX Reporting Date
H&S Consultants Pty Ltd
December 12th, 2018
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
Jubilee
Kalman
Overlander
West Pilbara
Mt. Philp
34
HAMMER METALS LIMITED / Annual Report 2020
▲ Jubilee Deposit JORC 2012 Mineral Resource Estimate (12 December, 2018)
(Reported at 0.5% Cu cut-off)
Classification Weathering Domain
Tonnes
Inferred
Inferred
Total
Mod-Slightly Weathered
Fresh
0.07
1.34
1.41
Cu
%
1.51
1.41
1.41
Au (Cut)
g/t
Cu
Tonnes
Au (Cut)
Ounces
0.55
0.63
0.62
1,000
1,200
19,000
27,100
20,000
28,300
■ Note: (1) Numbers rounded to two significant figures to reflect appropriate levels of confidence
■ Note: (2) Totals may differ due to rounding
A
n
n
u
a
l
i
M
n
e
r
a
l
R
e
s
o
u
r
c
e
S
t
a
t
e
m
e
n
t
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
Re
ppm
1.4
1.5
2.9
1.9
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.
35
HAMMER METALS LIMITED / Annual Report 2020
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.
36
HAMMER METALS LIMITED / Annual Report 2020
▲ Overlander North And South Deposits JORC 2012
Mineral Resource Estimates (26 August, 2015)
(Reported at 0.7% Cu cut-off)
OVERLANDER NORTH MINERAL RESOURCE
Classification
Tonnes
Indicated
Inferred
Total
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
Tonnes
Indicated
Inferred
Total
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
A
n
n
u
a
l
i
M
n
e
r
a
l
R
e
s
o
u
r
c
e
S
t
a
t
e
m
e
n
t
37
HAMMER METALS LIMITED / Annual Report 2020
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
%
Al2O3
%
38
48
42
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.
38
HAMMER METALS LIMITED / Annual Report 2020
A
n
n
u
a
l
i
M
n
e
r
a
l
R
e
s
o
u
r
c
e
S
t
a
t
e
m
e
n
t
▲ 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
%
AI2O3
%
7.8
-
7.8
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.
▲ 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.
39
HAMMER METALS LIMITED / Annual Report 2020
Annual Mineral Resource Statement
▲ Resource By Commodity
1
O
L
2
O
T
i
3
O
2
I
A
2
O
S
i
%
%
%
%
P
%
e
F
%
o
C
e
R
m
p
p
m
p
p
o
M
%
g
A
u
A
m
p
p
m
p
p
u
C
%
%
)
1
(
t
k
q
E
u
C
s
e
n
n
o
T
ff
O
-
t
u
C
r
e
w
o
L
j
t
c
e
o
r
P
y
t
i
d
o
m
m
o
C
y
r
a
m
i
r
P
40
.
3
0
1
4
0
.
6
1
.
2
4
9
9
.
.
6
5
8
7
.
0
0
9
3
3
5
5
4
4
2
6
0
.
1
4
1
.
2
1
.
2
7
7
1
,
0
1
4
1
,
0
1
5
0
3
,
7
3
3
.
3
1
0
.
5
4
1
.
6
2
0
.
6
4
0
.
5
5
1
.
0
0
3
3
1
,
.
5
4
.
2
0
9
2
.
.
5
0
.
9
0
4
2
.
0
0
0
7
,
0
0
5
1
1
,
e
F
%
0
5
p
l
i
h
P
.
t
M
a
r
a
b
l
i
P
t
s
e
W
e
r
O
n
o
r
I
u
C
%
7
0
.
r
e
d
n
a
l
r
e
v
O
u
C
%
5
0
.
e
e
l
i
b
u
J
q
E
u
C
%
5
7
0
.
)
t
i
P
n
e
p
O
(
)
d
n
u
o
r
g
r
e
d
n
U
(
q
E
u
C
%
4
1
.
n
a
m
a
K
l
n
a
m
a
K
l
r
e
p
p
o
C
)
e
R
*
6
1
5
4
6
0
0
(
.
+
)
o
M
*
8
2
1
1
4
7
4
(
.
+
)
g
A
*
3
6
0
1
1
0
0
(
.
+
)
u
A
*
8
6
2
4
6
8
0
(
.
+
u
C
=
q
E
u
C
-
)
1
(
HAMMER METALS LIMITED / Annual Report 2020
Tenement Interests
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 an employee of Hammer Metals Limited.
Mr Whittle has sufficient experience which is relevant to the styles of mineralisation and deposit types 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 2020
Mt Isa (Queensland)
MT. DOCKERELL MINING PTY LTD
Lease
EPM 11919
EPM 13870
EPM 18084
EPM 25165
EPM 26474
EPM 26511
EPM 26628
EPM 26694
EPM 26775
EPM 26776
EPM 26777
EPM 26902
EPM 26904
EPM 27018
Lease Name
Lease Status
Interest
Cameron River
Pelican
Dronfield
Cameron River 4
Enterprise
Sling Shot
Argylla
Mt Philp
Pilgrim North
Pilgrim Central
Pilgrim South
Marriage
Jady Jenny
Dingo Creek
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
100%
100%
80%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
T
e
n
e
m
e
n
t
I
n
t
e
r
e
s
t
s
41
HAMMER METALS LIMITED / Annual Report 2020
Tenement Interests
MULGA MINERALS PTY LTD
Lease
E08/1997
EPM 12205
EPM 14019
EPM 14022
EPM 14467
EPM 25145
EPM 25866
EPM 25867
EPM 26126
EPM 26127
EPM 26130
EPM 26512
EPM 27355
Lease Name
Lease Status
Interest
Cheela Plains
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
Granted
Granted
100%
100%
100%
100%
51%
100%
100%
100%
100%
100%
100%
100%
100%
Yilgarn (Western Australia)
CARNEGIE EXPLORATION PTY LTD
Lease
E36/854
E36/868
E36/869
E36/870
E36/916
E36/996
E53/1989
E53/1996
E53/2030
E53/2085
E53/2112
E53/2113
E53/2114
42
Lease Name
Lease Status
Interest
Kens Bore
Granted
Granted
Granted
Granted
Granted
Application
Granted
Granted
Granted
Application
Application
Application
Application
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
HAMMER METALS LIMITED / Annual Report 2020
Lease
E53/2115
E53/2116
E53/2117
E53/2118
E53/2127
E53/2128
P36/1857
P36/1858
P53/1682
P53/1683
P53/1684
P53/1685
P53/1686
P53/1687
P53/1688
P53/1689
P53/1690
P53/1691
P53/1692
P53/1693
P53/1694
P53/1695
P53/1696
P53/1697
Lease Name
Lease Status
Interest
Application
Application
Application
Application
Application
Application
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
T
e
n
e
m
e
n
t
I
n
t
e
r
e
s
t
s
43
HAMMER METALS LIMITED / Annual Report 2020
Directors Report
Directors
Report
44
HAMMER METALS LIMITED / Annual Report 2020
The Directors present their report together with the financial report of Hammer Metals Limited (“the Company”, “Hammer”) and of the
Group, comprising the Company and its subsidiaries, for the year ended 30 June 2020 and the auditor’s report thereon.
▲ 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.
Melbourne Business School. During his
career, Mr Thomas has worked across
Australia, North America, Asia and Africa,
in a wide range of commodities, including
base and precious metals. Mr Thomas’
most recent role before joining the
Company was as Business Development
Manager at Sandfire Resources (ASX:SFR),
where he was instrumental in utilising
cash-flows generated by the DeGrussa
Copper-Gold Mine to grow the Company
both organically through exploration and
through business development initiatives,
including several acquisitions, investments
and joint ventures. Prior to his time at
Sandfire Resources Limited, Mr Thomas
held roles with Wesfarmers, PTT Asia
Pacific Mining and Mitsui E&P Australia.
ZBIGNIEW LUBIENIECKI
Non-Executive Director
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.
RUSSELL DAVIS
Non-Executive Chairman
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.
DANIEL THOMAS
Managing Director
(appointed 21 October 2019)
BSc (Applied Chemistry), MBA
Daniel Thomas has over 20 years’
experience in operations, corporate
development, project management
and project finance having completed
undergraduate studies in Chemistry
as well as attaining an MBA from the
DAVID CHURCH
Non-Executive Director
(appointed 1 July 2020)
LLB
D
i
r
e
c
t
o
r
s
R
e
p
o
r
t
David Church is currently a non-executive
director of Caprice Resources Limited
and a consultant to the Hong-Kong
Stock Exchange-listed Regent Pacific
Group Limited, performing the functions
of General Counsel and Head of Mergers
and Acquisitions. Mr Church is a qualified
solicitor and has practiced in Australia
with Clayton Utz, and in the UK and Hong
Kong with Linklaters.
NADER EL SAYED
Non-Executive Director
(resigned 30 June 2020)
45
HAMMER METALS LIMITED / Annual Report 2020
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
Company
Period of Directorship
Russell Davis
Daniel Thomas
David Church
Zbigniew Lubieniecki
Nader El Sayed
None
None
Caprice Resources Limited
None
Spectrum Metals Limited
-
-
October 2019 - current
-
October 2017 – May 2020
▲ 3. Company Secretary
MARK PITTS – COMPANY SECRETARY
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 D Thomas
Mr Z Lubieniecki
Mr N El Sayed
Meetings held while in office
Meetings attended
10
8
10
10
10
8
10
10
The Company does not have any committees. Matters usually considered by an audit, remuneration or nomination committee were
dealt with by the whole Board during regular Board meetings.
46
HAMMER METALS LIMITED / Annual Report 2020
▲ 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 $1,978,610 (2019: $852,517).
CORPORATE:
The following issues of ordinary shares were completed during
the year:
■ On 5 August 2019, 87,803,437 ordinary shares were
issued at $0.02, raising $1,756,069 before costs;
■ On 10 December 2019, 68,181,818 ordinary shares
were issued at $0.022, raising $1,500,000 before
costs;
■ On 31 January 2020, 22,263,623 ordinary shares
were issued under a share purchase plan at a price
of $0.022, raising $489,800 before costs;
■ On 3 February 2020, 29,368,182 ordinary shares
were issued at $0.022, raising $646,100 before
costs; and
■ Between 3 and 30 June 2020, the Company received
valid exercise notices of 19,525,757 of its HMXOD
listed options, which were exercisable at $0.03 on or
before 30 September 2020. Through the exercise of
these options, the company raised $585,772.
Subsequent to the year end, and up to the date of this report, the
Company received and processed further notices for the valid
exercise of an additional 132,733,738 HMXOD options, raising
$3,982,512. The total number of HMXOD options exercised is
currently 152,259,495, raising $4,567,785.
Additionally, on 6 August 2020, the Company issued 1,250,000
shares to Alloy Resources Limited (ASX:AYR) for the acquisition
of tenements in the Bronzewing North region. The shares were
valued at $50,000, and a further cash payment of $25,000 was
also made.
October 2023, and are subject to a 12-month and
24-month vest period, respectively;
■ On 23 June 2020, 3,000,000 unlisted options
exercisable at $0.035 on or before 30 June 2023
were issued to a corporate advisor under a mandate
agreement; and
■ Also on 23 June 2020, 2,600,000 unlisted options
exercisable at $0.05 on or before 30 June 2024
were issued to employees and contractors to the
Company, under the Company’s Employee Share
Option Plan (“ESOP”).
The following options expired during the period:
■ 1,500,000 options exercisable at $0.06 expired
unexercised on 30 November 2019; and
■ 12,800,000 options exercisable at $0.07 expired
unexercised on 30 June 2020.
Since the end of the financial year, 2,676,078 unlisted options
exercisable at $0.07 expired unexercised on 31 August 2020.
No unlisted options were exercised during the financial year or
up to the date of this report.
The following performance rights, which all expire on 13
December 2023, were granted to the managing director on 13
December 2019:
■ 750,000 performance rights, vesting on 21 October
2020;
■ 750,000 performance rights, vesting on 21 October
2020, subject to achieving a minimum share price of
$0.031 for a period of 30 days;
The following options were granted during the period:
■ 750,000 performance rights, vesting on 21 October
■ On 13 December 2019, 1,000,000 unlisted options
exercisable at $0.035 on or before 13 December
2023 were issued to a corporate advisor under a
mandate agreement;
■ Also on 13 December 2019, 3,000,000 unlisted
options exercisable at $0.05 and 4,000,000
unlisted options exercisable at $0.06 were issued
to the Company’s managing director, as part of his
employment contract. Both tranches expire on 21
2021;
■ 750,000 performance rights, vesting on 21 October
2021, subject to achieving a minimum share price of
$0.036+ for a period of 30 days; and
■ 5,000,000 performance rights, vesting upon
the satisfactory completion of a transaction in
accordance with the terms outlined in the Company’s
Notice of Annual General Meeting dated 8 October
2019.
47
D
i
r
e
c
t
o
r
s
R
e
p
o
r
t
HAMMER METALS LIMITED / Annual Report 2020
Directors Report
EXPLORATION ACTIVITIES:
QUEENSLAND - MOUNT ISA REGION PROJECTS
Hammer Metals is exploring in two great minerals provinces,
focused on the discovery of Gold and Copper deposits. After the
acquisition of Carnegie Exploration, multiple drilling programs
have been undertaken on Gold targets in the Bronzewing Region.
Aggressive exploration is also being conducted on the Mt Isa
East Joint Venture with the Japan Oil, Gas and National Metals
Corporation (“JOGMEC”). Hammer continues to also progress
100% owned tenements in the Mt Isa region.
WESTERN AUSTRALIA - BRONZEWING
SOUTH PROJECT
The Group’s tenements cover prospective structural trends in
the core of the Yandal Greenstone Belt. This region has reported
greater than 24Moz of current and historical production from
deposits such as Bronzewing, Jundee, Mt McClure, Darlot and
Thunderbox.
Since acquiring Carnegie Exploration Pty Ltd during the previous
financial year (refer to ASX release dated 14 March 2019), the
group has been progressively applying for areas as they become
available. Since the end of the reporting period, the Group
acquired 20 tenements from Alloy Resources Limited (ASX:AYR),
increasing its project area in the Yandal to 260km2 (Refer to ASX
release dated 28 July 2020).
North Orelia
The Group’s tenements cover prospective trends along strike
from the former Lotus and Cockburn Deposits (of the Mt McClure
group) and the current 1.1Moz Orelia gold resource owned by
Northern Star Resources (ASX:NST). The Group began drilling in
early March 2020; however, the impact of COVID-19 necessitated
a pause in activities between late March and early June (Refer to
ASX releases dated 26 March 2020 and 25 May 2020).
Despite this hiatus the company was able to complete 212 air-
core holes for 9,122m during the period (Refer to ASX releases
dated 26 March, 22 April and 15 July). At the end of the period,
air-core drilling was ongoing and the group aims to delineate
targets for a Reverse Circulation program to be conducted within
the December quarter of 2020.
Bronzewing South
During the reporting period the Group has examined options
for drill testing at Bronzewing South. Development of innovative
targeting concepts resulted in the group being awarded a
$150,000 Western Australian Government Exploration Incentive
Grant to partly fund diamond drill testing of gravity anomalies.
This work will be undertaken in the December quarter of 2020
(Refer to ASX announcement dated 25 May 2020). During the
period, the company completed a detailed gravity survey across
select portions of the tenement.
The Group is exploring its Mount Isa project for large iron
oxide copper-gold (IOCG) deposits of the Ernest Henry style
(approximately 220 million tonnes at 1.1% Cu and 0.5g/t Au). The
Group holds approximately 2,000 km2 of tenure in the Mt. Isa
region. A systematic IOCG targeting exercise within the Mount
Isa region is ongoing through Joint Ventures and 100% funded
activities.
Mt Isa East Joint Venture
The Mt Isa East Joint Venture with the Japan Oil, Gas and National
Metals Corporation (“JOGMEC”) was executed in late 2019 and
field work began in late February 2020 (Refer to ASX releases
dated 25 November 2019 and 18 February 2020).
The programs in the March quarter of 2020 focused on conducting
grassroots geological and geophysical data collection over the
four Joint Venture areas (Refer to ASX announcement dated 12
May 2020). At the end of the reporting period the Joint Venture
commenced diamond drilling of the Shadow Prospect. The
results of this drilling are expected early in the December quarter
of 2020.
Mt. Frosty Joint Venture
The Mt Frosty Joint Venture (EPM14467) with Mount Isa
Mines Limited (a subsidiary of Glencore) progressed with an
examination of the rare earth potential of the Koppany Prospect
located 2km south east of the Mary Kathleen Deposit. The Group
has a 51% interest in the Joint Venture and under the terms of the
Joint Venture Agreement, each party will contribute exploration
expenditure according to their participating interest. The Group
acts as manager of the Joint Venture’s exploration activities.
The Joint Venture received a Queensland Government
Collaborative Exploration Initiative Grant of $193,000 to
undertake drill testing on the Koppany Prospect (Refer to ASX
release dated 26 February 2020). The drilling was completed
after the end of the reporting period with assays expected early
in the December quarter of 2020.
Mt. Isa project – wholly-owned projects
The Group was awarded a $90,000 Queensland Government
Collaborative Exploration Initiative Grant to undertake a Magneto
Telluric survey across two profiles in the core of the project
area. One profile was conducted on the southern margin of the
Kalman Deposit and the other profile was conducted across the
northern margin of the Mt Philp Breccia. The method examines
conductivity responses at depth. The profile near Kalman noted
an unexplained conductivity anomaly projecting below the
deposit (Refer to ASX release dated 23 June 2020).
Greenfields gold-focused exploration was conducted on the
Kings-Charlotte trend at Malbon and field activities are being
considered for the Tick Hill region in late 2020.
48
HAMMER METALS LIMITED / Annual Report 2020
IMPACT OF COVID-19 PANDEMIC
The Group reacted promptly to the COVID-19 pandemic and
conducted a full review of its activities and expenditures during
March 2020. It focused on delaying fieldwork to safeguard the
safety of employees, whilst reducing overheads where possible
to conserve working capital against the growing uncertainty and
volatility.
Management understood the severity of COVID-19 and acted
quickly to implement protocols and procedures to ensure the
safety and well-being of its personnel in Western Australia and
Queensland.
▲ 7. Dividends
The Non-Executive Directors of the Company agreed to reduce
their cash compensation by 50% from 2 April 2020 until 30
June 2020, while the Managing Director and Chief Operating
Officer reduced their cash compensation by 30% effective 1 May
2020 until 30 June 2020. The ultimate satisfaction of the accrued
balance has yet to be determined and may be completed through
repayment in cash or equity issues, or a combination of both.
No dividends were paid or declared by the Company during the financial year.
▲ 8. Events Subsequent To Balance Date
Subsequent to year end the following events have occurred:
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.
■ On 1 July 2020, following the resignation of Mr Nader
El Sayed on 30 June 2020, Mr David Church was
appointed as a non-executive director
■ Since the end of the financial year and up to the
date of this report, the Company has received and
processed further notices for the valid exercise of
an additional 132,733,738 HMXOD options, raising
$3,982,012.
■ On 6 August 2020, the Company issued 1,250,000
shares to Alloy Resources Limited (ASX:AYR) for the
acquisition of tenements in the Bronzewing North
region. The shares were valued at $50,000, and a
further cash payment of $25,000 was also made.
▲ 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.
D
i
r
e
c
t
o
r
s
R
e
p
o
r
t
49
HAMMER METALS LIMITED / Annual Report 2020
Directors Report
▲ 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
Mr R Davis
Mr D Thomas
Mr D Church
38,600,000
282,711
-
Mr Z Lubieniecki
57,200,837
HMXOD
Listed options
Unlisted options
Performance Rights
-
-
-
-
1,500,000
7,000,000
-
3,000,000
-
8,000,000
-
-
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.
50
HAMMER METALS LIMITED / Annual Report 2020
▲ 12. Remuneration Report – Audited
12.1 PRINCIPLES OF COMPENSATION
Non-executive directors
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.
All non-executive Directors receive a fixed annual Directors’ fee
of between $30,000 and $40,000 (plus superannuation benefits
as required under the applicable legislation). The Chair receives
a fixed annual fee of $60,000 (plus superannuation benefits as
required under the applicable legislation)
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.
All non-executive directors agreed from 1 April 2020 to defer
50% of their director’s fees, the final satisfaction of which (either
repayment in cash or through the issue of equity) has yet to be
determined.
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.
D
i
r
e
c
t
o
r
s
R
e
p
o
r
t
Service contracts
Daniel Thomas – Managing Director
The Company has entered into an Executive Service agreement
with Mr Thomas on 21 October 2019. An Executive service fee
of $220,000 (plus superannuation at 9.5%) per annum is payable
with an indefinite term. Either Party can terminate the agreement
subject to a three-month notice period. Mr Thomas is not entitled to
any termination payments other than for services rendered at time
of termination. The agreement provided for the grant of 7,000,000
unlisted options and 8,000,000 performance rights which were
issued during the year. Refer to Note 18 to the financial report for
full details. From 1 May 2020, Mr Thomas has deferred 30% of his
cash remuneration, the final satisfaction of which (either repayment
in cash or through the issue of equity) has yet to be determined.
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.
51
HAMMER METALS LIMITED / Annual Report 2020
s
n
o
i
t
p
o
f
o
e
u
a
V
l
f
o
n
o
i
t
r
o
p
o
r
P
s
a
s
t
h
g
i
r
d
n
a
n
o
i
t
a
r
e
n
u
m
e
r
f
o
n
o
i
t
r
o
p
o
r
p
e
c
n
a
m
r
o
f
r
e
p
y
t
i
u
q
E
-
t
s
o
P
n
o
i
t
a
s
n
e
p
m
o
C
t
n
e
m
y
o
p
m
e
l
d
n
a
s
n
o
i
t
p
O
n
o
i
t
a
u
n
n
a
r
e
p
u
S
n
o
i
t
a
n
m
r
e
T
i
g
n
i
t
l
u
s
n
o
C
%
n
o
i
t
a
r
e
n
u
m
e
r
%
d
e
t
a
e
r
l
$
l
a
t
o
T
$
s
t
h
g
R
i
$
s
t
fi
e
n
e
b
$
s
t
n
e
m
y
a
p
$
s
e
e
f
Directors Report
:
e
r
a
p
u
o
r
G
e
h
t
f
o
l
e
n
n
o
s
r
e
p
t
n
e
m
e
g
a
n
a
m
y
e
k
r
e
h
o
t
d
n
a
y
n
a
p
m
o
C
e
h
t
f
o
r
o
t
c
e
r
i
d
h
c
a
e
f
o
n
o
i
t
a
r
e
n
u
m
e
r
e
h
t
f
o
t
n
e
m
e
e
l
j
r
o
a
m
h
c
a
e
f
o
t
n
u
o
m
a
d
n
a
e
r
u
t
a
n
e
h
t
f
o
s
l
i
a
t
e
D
n
o
i
t
a
r
e
n
u
m
e
r
’
s
e
v
i
t
u
c
e
x
e
i
r
o
n
e
s
d
n
a
’
s
r
o
t
c
e
r
i
D
2
.
2
1
▲
52
%
8
1
3
.
%
8
1
3
.
,
8
1
4
5
4
2
7
0
0
8
7
,
0
7
5
3
1
,
-
-
-
-
-
-
0
0
5
7
8
,
5
7
8
8
9
,
1
3
7
2
3
,
-
-
-
-
-
1
3
7
2
,
%
8
6
1
.
%
8
6
1
.
,
4
2
5
4
6
4
7
0
0
8
7
,
1
0
3
6
1
,
%
6
3
2
.
%
6
3
2
.
0
0
0
5
5
,
0
0
0
3
1
,
-
%
5
7
1
.
%
5
7
1
.
4
2
5
9
1
5
,
7
0
0
1
9
,
1
0
3
6
1
,
-
-
-
-
-
-
-
-
-
y
r
a
m
i
r
P
0
2
0
2
e
n
u
J
0
3
d
e
d
n
E
r
a
e
Y
&
y
r
a
a
S
l
$
s
e
e
f
,
1
4
8
3
5
1
0
0
5
7
8
,
s
a
m
o
h
T
D
r
M
e
v
i
t
u
c
e
x
E
e
v
i
t
u
c
e
x
e
n
o
N
-
1
s
i
v
a
D
R
r
M
s
r
o
t
c
e
r
i
D
5
7
8
8
5
,
0
0
0
0
4
,
i
i
k
c
e
n
e
b
u
L
i
Z
r
M
-
0
0
0
0
3
,
d
e
y
a
S
l
E
N
r
M
5
7
8
8
5
,
1
4
3
1
1
3
,
s
r
o
t
c
e
r
i
D
-
l
a
t
o
T
-
0
0
0
2
4
,
5
7
8
8
5
,
,
1
4
3
3
5
3
l
e
n
n
o
s
r
e
p
t
n
e
m
e
g
a
n
a
m
y
e
k
l
l
a
–
l
a
t
o
T
)
y
r
a
t
e
r
c
e
S
y
n
a
p
m
o
C
(
s
t
t
i
P
M
r
M
s
e
v
i
t
u
c
e
x
E
l
e
n
n
o
s
r
e
P
t
n
e
m
e
g
a
n
a
M
y
e
K
r
e
h
t
O
.
r
i
a
h
C
e
v
i
t
u
c
e
x
E
-
n
o
N
a
o
t
r
i
a
h
C
e
v
i
t
u
c
e
x
E
n
a
m
o
r
f
l
e
o
r
i
s
h
d
e
d
n
e
m
a
s
i
v
a
D
r
M
,
9
1
0
2
r
e
b
o
t
c
O
1
2
n
o
s
a
m
o
h
T
r
M
f
o
t
n
e
m
t
n
o
p
p
a
i
e
h
t
o
t
t
n
e
u
q
e
s
b
u
S
–
1
HAMMER METALS LIMITED / Annual Report 2020
s
n
o
i
t
p
o
f
o
e
u
a
V
l
f
o
n
o
i
t
r
o
p
o
r
P
s
a
s
t
h
g
i
r
d
n
a
n
o
i
t
a
r
e
n
u
m
e
r
f
o
n
o
i
t
r
o
p
o
r
p
e
c
n
a
m
r
o
f
r
e
p
%
n
o
i
t
a
r
e
n
u
m
e
r
%
d
e
t
a
e
r
l
$
l
a
t
o
T
$
s
n
o
i
t
p
O
$
s
t
fi
e
n
e
b
$
s
t
n
e
m
y
a
p
$
s
e
e
f
n
o
i
t
a
u
n
n
a
r
e
p
u
S
n
o
i
t
a
n
m
r
e
T
i
g
n
i
t
l
u
s
n
o
C
y
t
i
u
q
E
-
t
s
o
P
n
o
i
t
a
s
n
e
p
m
o
C
t
n
e
m
y
o
p
m
e
l
y
r
a
m
i
r
P
9
1
0
2
e
n
u
J
0
3
d
e
d
n
E
r
a
e
Y
d
e
u
n
i
t
n
o
c
n
o
i
t
a
r
e
n
u
m
e
r
’
s
e
v
i
t
u
c
e
x
e
i
r
o
n
e
s
d
n
a
’
s
r
o
t
c
e
r
i
D
2
.
2
1
▲
%
8
6
2
.
%
8
6
2
.
0
5
8
4
4
,
0
0
0
2
1
,
0
5
8
2
,
%
5
3
3
.
%
5
3
3
.
5
7
4
7
0
1
,
0
0
0
6
3
,
0
5
8
2
,
-
-
3
1
2
8
,
-
3
1
7
-
-
-
-
-
0
0
5
7
8
,
-
%
6
2
1
.
%
6
2
1
.
,
0
0
0
3
4
1
0
0
0
8
1
,
-
-
-
1
0
0
0
0
5
,
-
-
-
5
2
6
8
3
,
0
0
0
0
3
,
i
i
k
c
e
n
e
b
u
L
i
Z
r
M
-
0
0
5
7
,
i
r
e
n
e
t
s
n
e
d
o
B
S
r
M
&
y
r
a
a
S
l
$
s
e
e
f
,
0
0
0
5
2
1
0
0
5
7
3
,
0
0
0
0
3
,
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
s
i
v
a
D
R
r
M
l
t
t
e
w
e
H
A
r
M
e
v
i
t
u
c
e
x
e
n
o
N
-
d
e
y
a
S
l
E
N
r
M
%
9
6
1
.
%
9
6
1
.
8
3
0
1
9
3
,
0
0
0
6
6
,
3
1
4
6
,
0
0
0
0
5
,
5
2
6
8
3
,
,
0
0
0
0
3
2
s
r
o
t
c
e
r
i
D
-
l
a
t
o
T
%
5
2
1
.
%
5
2
1
.
0
0
0
8
4
,
0
0
0
6
,
-
-
-
0
0
0
2
4
,
%
4
6
1
.
%
4
6
1
.
8
3
0
9
3
4
,
0
0
0
2
7
,
3
1
4
6
,
0
0
0
0
5
,
5
2
6
8
3
,
,
0
0
0
2
7
2
l
e
n
n
o
s
r
e
p
t
n
e
m
e
g
a
n
a
m
y
e
k
l
l
a
–
l
a
t
o
T
)
y
r
a
t
e
r
c
e
S
y
n
a
p
m
o
C
(
s
t
t
i
P
M
r
M
s
e
v
i
t
u
c
e
x
E
l
e
n
n
o
s
r
e
P
t
n
e
m
e
g
a
n
a
M
y
e
K
r
e
h
t
O
.
y
r
a
a
s
l
D
i
r
e
c
t
o
r
s
R
e
p
o
r
t
’
s
h
t
n
o
m
r
u
o
f
o
t
l
a
u
q
e
y
a
p
n
o
i
i
t
a
n
m
r
e
t
o
t
d
e
l
t
i
t
n
e
s
a
w
e
h
,
y
n
a
p
m
o
C
e
h
t
h
t
i
w
t
n
e
m
e
e
r
g
a
s
l
’
t
t
e
w
e
H
r
M
f
o
s
m
r
e
t
e
h
t
h
t
i
w
e
c
n
a
d
r
o
c
c
a
n
I
–
1
53
HAMMER METALS LIMITED / Annual Report 2020
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
7,000,000 options were issued to the Company’s Managing Director, Mr Daniel Thomas and 500,000 options were issued to the
Company Secretary. 8,000,000 performance rights were issued to the Company’s Managing Director, Mr Daniel Thomas. The terms
of these options and rights are noted in the table below.
▲ 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.
Key Management Personnel
Number of
options granted
Date granted % Vested
Mr D Thomas – Tranche 1
3,000,000 14 November 2019
Mr D Thomas – Tranche 2
4,000,000 14 November 2019
0%
0%
Mr M Pitts
500,000
23 June 2020
100%
% Forfeited
/ Lapsed
Financial year
in which grant
vested / will vest
-
-
-
30 June 2021
30 June 2022
30 June 2020
The fair value of the options issued during the year to Key Management Personnel was determined by reference to the Black-Scholes
option pricing model. The key inputs and valuations are summarised as follows:
Mr D Thomas –
Tranche 1
Mr D Thomas –
Tranche 1
$0.021
$0.05
$0.021
$0.06
Mr M Pitts
$0.04
$0.05
14 November 2019
14 November 2019
23 June 2020
21 October 2023
21 October 2023
30 June 2024
21 October 2020
21 October 2021
Immediate
4
100%
0.795%
-
3,000,000
$0.0111
3.3
4
100%
0.795%
-
4,000,000
$0.0105
3.3
4
100%
0.340%
-
500,000
$0.0260
3.0
Underlying security spot price on grant date
Exercise price
Grant date
Expiration date
Vesting date
Life (years)
Volatility
Risk free rate
Dividend Yield
Number of options
Valuation per option
Remaining life (years)
54
HAMMER METALS LIMITED / Annual Report 2020
The following performance rights, which all expire on 13 December 2023, were issued to the Company’s Managing Director on 13
December 2019:
■ 750,000 performance rights, vesting on 21 October
2020;
■ 750,000 performance rights, vesting on 21 October
2020, subject to achieving a minimum share price of
$0.031 for a period of 30 days;
■ 750,000 performance rights, vesting on 21 October
2021;
■ 750,000 performance rights, vesting on 21 October
2021, subject to achieving a minimum share price of
$0.036 for a period of 30 days; and
■ 5,000,000 performance rights, vesting upon
the satisfactory completion of a transaction in
accordance with the terms outlined in the Company’s
Notice of Annual General Meeting dated 8 October
2019.
▲ 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:
Key Management
Personnel
Held at
beginning of
period/on
appointment Granted
Purchased
Exercised
Held at
end of
period / on
resignation
Vested and
exercisable
at end of
period
Lapsed or
Expired
Mr R Davis
14,100,000
-
Mr D Thomas
-
7,000,000
Mr N El Sayed
1,511,700
Mr Z Lubieniecki
13,999,620
-
-
Mr M Pitts
1,310,712
500,000
-
-
-
-
(3,600,000)
(4,000,000)
6,500,000
6,500,000
-
-
7,000,000
-
(500,000)
1,011,700
1,011,700
(9,999,620)
(1,000,000)
3,000,000
3,000,000
-
(500,000)
1,310,712
1,310,712
D
i
r
e
c
t
o
r
s
R
e
p
o
r
t
▲ 12.7 Equity holdings and transactions
No shares were granted to key management personnel during the year as compensation (2019: 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:
Key management
Personnel
Held at beginning
of period/on
appointment
Purchases
Sales
Mr R Davis
19,583,333
10,416,667
Mr D Thomas
-
282,711
Mr N El Sayed
19,500
-
Mr Z Lubieniecki
27,499,367
19,701,850
Mr M Pitts
107,143
-
-
-
-
-
-
Exercise of
Options
Held at end
of period/on
resignation
3,600,000
33,600,000
-
-
282,711
19,500
9,999,620
57,200,837
-
107,143
55
HAMMER METALS LIMITED / Annual Report 2020
Directors Report
▲ 12.8 Key management personnel transactions
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:
Key management
Personnel
Transaction
30 June 2020
30 June 2019
30 June 2020
30 June 2019
Transaction value year ended
Balance outstanding as at
Mark Pitts
Accounting services
41,140
50,598
1,280
4,839
Zbigniew Lubieniecki Consulting Services
58,875
38,625
9,075
3,300
Alexander Hewlett
Consulting services
-
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 during the comparative period 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
56
HAMMER METALS LIMITED / Annual Report 2020
▲ 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
Listed HMXOD options
30 September 2020
Director/Executive/Employee Options
30 November 2021
Corporate Advisor Options – Tranche 1
13 December 2022
Managing Director Options – Tranche 1
21 October 2023
Managing Director Options – Tranche 2
21 October 2023
Corporate Advisor Options – Tranche 2
30 June 2023
Employee and Consultant Options
30 June 2024
$0.03
$0.032
$0.035
$0.05
$0.06
$0.035
$0.05
170,829,449
10,000,000
1,000,000
3,000,000
4,000,000
3,000,000
2,600,000
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 issued 19,525,757 ordinary shares as a result of the exercise of HMXOD quoted options (exercisable at 3 cents
on or before 21 September 2020) during this year (2019: Nil).
Subsequent to the year end, and up to the date of this report, the Company received and processed further notices for the valid
exercise of an additional 132,733,738 HMXOD options.
D
i
r
e
c
t
o
r
s
R
e
p
o
r
t
▲ 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.
57
HAMMER METALS LIMITED / Annual Report 2020
Directors Report
▲ 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 60 and forms part of the Directors’ report for the financial year ended
30 June 2019.
▲ 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
29 September 2020
58
HAMMER METALS LIMITED / Annual Report 2020
D
i
r
e
c
t
o
r
s
R
e
p
o
r
t
HAMMER METALS LIMITED / Annual Report 2020
59
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
Auditor’s Independence Declaration
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 2020 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
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Hammer Metals Limited
KPMG
R Gambitta
Partner
I declare that, to the best of my knowledge and belief, in relation to the audit of Hammer Metals
Perth
Limited for the financial year ended 30 June 2020 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
29 September 2020
KPM_INI_01
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG
KPM_INI_01
R Gambitta
Partner
Perth
29 September 2020
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
- 13 -
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.
60
- 13 -
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.
HAMMER METALS LIMITED / Annual Report 2020
Consolidated Statement Of Financial Position
▲ As At 30 June 2020
Current Assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Other financial assets
Right-of-use assets
Exploration and evaluation expenditure
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Total current liabilities
Non-current liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
Note
30 June 2020 30 June 2019
10
11
12
14
15
16
17
17
2,678,535
860,656
154,728
51,959
2,833,263
912,615
271,097
1,258,758
71,570
-
14,110,772
11,954,619
14,453,439
13,213,377
17,286,702
14,125,992
363,896
235,022
17,208
-
381,104
235,022
C
o
n
s
o
l
i
d
a
t
e
d
S
t
a
t
e
m
e
n
t
O
f
i
F
n
a
n
c
a
i
56,302
56,302
-
-
l
P
o
s
i
t
i
o
n
437,406
235,022
16,849,296
13,890,970
18
19
51,429,354
46,628,496
1,794,923
1,658,845
(36,374,981)
(34,396,371)
16,849,296
13,890,970
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
61
HAMMER METALS LIMITED / Annual Report 2020
Consolidated Statement Of Profit Or Loss And Other
Comprehensive income
Consolidated Statement Of Profit Or Loss And Other
Comprehensive income
▲ For The Year Ended 30 June 2020
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)/Loss 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
Note
30 June 2020 30 June 2019
4
99,092
93,044
(78,954)
(86,717)
(732,957)
(785,572)
(233,707)
(120,000)
(45,756)
(46,224)
-
-
(2,420)
(588,743)
(987,661)
-
-
-
-
(23,808)
705,049
(100)
(1,979,943)
(855,491)
2,299
(966)
1,333
3,045
(71)
2,974
(1,978,610)
(852,517)
-
-
5
15
28
5
6
8
Net loss for the year from continuing operations
(1,978,610)
(852,517)
Other comprehensive income
Other comprehensive loss for the year, net of income tax
-
-
-
-
Total Comprehensive loss for the year
(1,978,610)
(852,517)
Loss per share:
Basic and diluted loss per share (cents per share)
9(a)
(0.40)
(0.29)
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
62
HAMMER METALS LIMITED / Annual Report 2020
l
d
e
t
a
u
m
u
c
c
A
e
u
s
s
i
n
o
i
t
p
O
d
e
s
a
b
e
r
a
h
S
l
a
t
o
T
s
e
s
s
o
l
e
v
r
e
s
e
r
e
v
r
e
s
e
r
t
n
e
m
y
a
p
l
a
t
i
p
a
c
e
r
a
h
S
y
t
i
u
q
E
n
I
s
e
g
n
a
h
C
f
O
t
n
e
m
e
t
a
t
S
d
e
t
a
d
i
l
o
s
n
o
C
0
2
0
2
e
n
u
J
0
3
d
e
d
n
E
r
a
e
Y
e
h
T
r
o
F
▲
,
4
7
7
2
5
1
2
1
,
,
)
4
5
8
3
4
5
3
3
(
,
-
-
,
)
7
1
5
2
5
8
(
,
)
7
1
5
2
5
8
(
,
)
7
1
5
2
5
8
(
,
)
7
1
5
2
5
8
(
,
0
0
0
0
0
2
1
,
-
,
0
0
0
0
5
5
,
7
6
7
6
0
8
,
0
0
0
0
2
1
)
4
5
0
6
8
(
,
,
0
7
9
0
9
8
3
1
,
-
-
-
-
-
-
,
)
1
7
3
6
9
3
4
3
(
,
,
0
7
9
0
9
8
3
1
,
,
)
1
7
3
6
9
3
4
3
(
,
-
,
5
8
8
8
8
7
-
-
-
-
)
7
0
8
6
5
(
,
-
-
,
7
6
7
6
0
8
)
6
0
1
2
(
,
-
-
-
-
-
-
-
-
6
0
1
2
2
1
,
4
5
8
7
4
7
,
,
1
9
9
0
1
9
4
5
8
7
4
7
,
,
1
9
9
0
1
9
,
)
0
1
6
8
7
9
1
(
,
,
)
0
1
6
8
7
9
1
(
,
-
-
,
)
0
1
6
8
7
9
1
(
,
,
)
0
1
6
8
7
9
1
(
,
,
9
6
9
1
9
3
4
,
,
2
7
7
5
8
5
,
7
0
7
3
3
2
,
)
2
1
5
4
7
2
(
,
)
6
9
2
9
4
8
6
1
(
,
-
-
-
-
,
)
1
8
9
4
7
3
6
3
(
,
-
-
-
-
-
-
)
9
2
6
7
9
(
,
,
5
2
2
0
5
6
-
-
-
-
-
-
-
-
,
3
4
7
7
0
9
4
4
,
,
0
0
0
0
0
2
1
,
-
-
7
0
8
6
5
,
,
0
0
0
0
5
5
)
4
5
0
6
8
(
,
,
6
9
4
8
2
6
6
4
,
,
6
9
4
8
2
6
6
4
,
-
-
-
,
1
0
4
3
8
6
,
9
6
9
1
9
3
4
,
e
u
s
s
i
s
t
h
g
i
r
r
e
d
n
u
h
s
a
c
r
o
f
d
e
u
s
s
i
s
n
o
i
t
p
o
d
e
t
s
L
i
s
t
e
s
s
a
n
o
i
t
a
r
o
p
x
e
l
e
r
i
u
q
c
a
o
t
d
e
u
s
s
i
s
e
r
a
h
S
d
o
i
r
e
p
e
h
t
r
o
f
s
s
o
l
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
s
s
o
l
/
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
r
a
e
y
e
h
t
r
o
f
s
s
o
L
s
e
e
f
f
o
u
e
i
l
n
i
d
e
u
s
s
i
s
e
r
a
h
S
h
s
a
c
r
o
f
d
e
u
s
s
i
s
e
r
a
h
S
8
1
0
2
y
l
u
J
1
t
a
e
c
n
a
a
B
l
9
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
s
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
S
s
t
s
o
c
e
u
s
s
i
e
r
a
h
S
9
1
0
2
y
l
u
J
1
t
a
e
c
n
a
a
B
l
d
o
i
r
e
p
e
h
t
r
o
f
s
s
o
l
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
s
s
o
l
/
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
h
s
a
c
r
o
f
d
e
u
s
s
i
s
e
r
a
h
S
r
a
e
y
e
h
t
r
o
f
s
s
o
L
s
n
o
i
t
p
o
f
o
i
e
s
c
r
e
x
E
,
7
0
7
3
3
2
-
-
,
)
2
1
5
4
7
2
(
,
8
9
6
4
4
1
1
,
,
4
5
3
9
2
4
1
5
,
0
2
0
2
e
n
u
J
0
3
t
a
e
c
n
a
a
B
l
s
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
S
s
t
s
o
c
e
u
s
s
i
e
r
a
h
S
C
o
n
s
o
l
i
d
a
t
e
d
S
t
a
t
e
m
e
n
t
O
f
C
h
a
n
g
e
s
I
n
E
q
u
i
t
y
.
i
t
s
e
o
n
g
n
y
n
a
p
m
o
c
c
a
e
h
t
h
t
i
w
n
o
i
t
c
n
u
n
o
c
j
n
i
d
a
e
r
e
b
o
t
s
i
y
t
i
u
q
e
n
i
s
e
g
n
a
h
c
f
o
t
t
n
e
m
e
a
t
s
d
e
a
d
t
i
l
o
s
n
o
c
e
h
T
63
HAMMER METALS LIMITED / Annual Report 2020
Consolidated Statement Of Cash Flows
Consolidated Statement Of Cash Flows
▲ For The Year Ended 30 June 2020
Cash flows from operating activities
Interest received
Lease payments made
Rental income received
Fuel rebate received
Note
30 June 2020 30 June 2019
2,299
(7,171)
9,185
2,035
2,945
-
12,686
71
Cash payments in the course of operations
(812,617)
(937,286)
Net cash used in operating activities
24
(806,269)
(921,584)
Cash flows from investing activities
Payments for exploration expenditure
(2,369,818)
(1,518,476)
Management fees received from farm-in and joint venture partners
75,798
56,585
Receipt of research and development grant
214,939
366,948
Proceeds from the sale of investments
Cash disposed on sale of subsidiary
28
-
-
36,192
(13,768)
Net cash used in investing activities
(2,079,081)
(1,072,518)
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
4,391,969
1,200,000
585,772
806,767
(274,512)
(86,054)
4,703,229
1,920,713
1,817,879
(73,389)
860,656
934,045
Cash and cash equivalents at end of year
10
2,678,535
860,656
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
64
HAMMER METALS LIMITED / Annual Report 2020
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 2020 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 29 September 2020.
(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
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
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(f).
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
65
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
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 15.
(E) ADOPTION OF NEW AND REVISED STANDARDS
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting
Standards Board (‘AASB’) that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The following new Accounting Standards and Interpretations were most relevant to the Group:
AASB 16 Leases
The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 ‘Leases’ and for lessees eliminates the
classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use
assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense
recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense
on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the
lease under AASB 16 will be higher when compared to lease expenses under AASB 117. For classification within the statement of
cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately
disclosed in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases.
Impact of adoption
As the Group was not party of any existing lease agreements captured within the scope of AASB 16 at 1 July 2019, there was no
impact on the comparative financial information reported in these financial statements.
(F) 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 2020, the Group has incurred a consolidated loss before tax of $1,978,610 and net cash outflows from
operating and investing activities of $2,885,350. As at 30 June 2020 the Group had $2,678,535 in cash and cash equivalents and
net current assets of $2,452,159.
Subsequent to year end, the Company has received $3,982,012 from the valid exercise of HMXOD listed options, exercisable at 3
cents per share.
On the above basis, the Directors are of the view that the going concern basis of preparation is appropriate.
66
HAMMER METALS LIMITED / Annual Report 2020
▲ 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.
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.
67
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
(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).
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.
68
HAMMER METALS LIMITED / Annual Report 2020
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.
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.
69
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
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.
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.
70
HAMMER METALS LIMITED / Annual Report 2020
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.
(G) 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.
(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.
(J) 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.
71
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
(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.
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:
72
HAMMER METALS LIMITED / Annual Report 2020
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.
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.
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.
73
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
(O) GOVERNMENT GRANTS
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 or as a deduction against the carrying value
of an underlying asset.
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.
(P) RIGHT-OF-USE ASSETS
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises
the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net
of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate
of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of
the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of
the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any
remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with
terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.
(Q) LEASE LIABILITIES
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value
of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate
cannot be readily determined, the consolidated entity’s incremental borrowing rate. Lease payments comprise of fixed payments
less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under
residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and
any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the
period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there
is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease
term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
30 June 2020
$
30 June 2019
$
75,798
9,185
-
14,109
99,092
56,585
12,686
71
23,703
93,044
4. OTHER INCOME
Management fee from farm-in partners
Rental income
Sale of royalty
Other income
74
HAMMER METALS LIMITED / Annual Report 2020
5. RESULT FROM OPERATING ACTIVITIES
Net loss for the year before tax has been arrived at after the charging the
following expenses:
30 June 2020
$
30 June 2019
$
Depreciation of plant and equipment
-
2,420
Salary and wages
Superannuation expense
Share based payments
Other employment costs
Total employee costs
6. FINANCE INCOME AND FINANCE COSTS
Recognised in loss for the year:
Interest income
Finance costs
Net finance income
7. AUDITORS’ REMUNERATION
Auditors of the Company - KPMG
Audit services:
139,888
162,721
12,665
6,378
233,707
120,000
-
13,111
386,260
302,210
30 June 2020
$
30 June 2019
$
2,299
(966)
1,333
3,045
(71)
2,974
30 June 2020
$
30 June 2019
$
Audit and review of financial reports
32,500
41,840
Non-audit services:
Taxation compliance services
34,048
66,548
11,275
53,115
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
75
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
8. INCOME TAX
(a) Income tax benefit
Current tax
Deferred tax
Total income tax benefit
30 June 2020
$
30 June 2019
$
-
-
-
-
-
-
Numerical reconciliation of income tax benefit to pre-tax accounting loss:
Loss before income tax
Income tax benefit using the Company’s domestic tax rate of 27.5% (2019:
27.5%)
(1,978,610)
(852,517)
(544,118)
(255,755)
Adjusted for:
Non-deductible expenses / (Non-Assessable Income)
Under/over from prior year
Temporary differences and tax losses not recognised
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:
Property, plant and equipment
Investments
Accrued expenses and provisions
Capital raising costs
Income tax losses
(c) Recognised deferred tax assets & liabilities
Temporary timing differences related to:
Exploration and evaluation expenditure
Income tax losses
(880)
-
544,998
-
(5,861)
344,965
261,616
-
174
271,607
53,757
99,424
721
-
21,808
64,829
7,483,908
6,998,855
7,908,870
7,086,213
(3,880,462)
(3,287,520)
3,880,462
3,287,520
-
-
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.
76
HAMMER METALS LIMITED / Annual Report 2020
(d) Movement of temporary differences recognised during the year ended 30 June 2020:
Balance 1 July
2019
Profit or Loss
Other
comprehensive
income
Equity
Balance 30
June 2020
Exploration and evaluation
expenditure
(3,287,520)
(768,355)
Carried-forward tax losses
3,287,520
768,355
-
-
-
-
-
-
-
-
(3,880,462)
3,880,462
-
(e) Movement of temporary differences recognised during the year ended 30 June 2019:
Exploration and evaluation
expenditure
Balance 1
July 2018
Profit or Loss
(3,112,107)
(175,413)
Carried-forward tax losses
3,112,107
175,413
-
-
Other
comprehensive
income
Equity
-
-
-
-
-
-
Balance 30
June 2019
(3,287,520)
3,287,520
-
9. LOSS PER SHARE
30 June 2020
$
30 June 2019
$
(a) Basic and dilutive loss per share calculated using the weighted average
number of fully paid ordinary shares on issue at the reporting date.
(0.40) cents
(0.29) cents
Options disclosed in Note 18(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
490,120,306
293,422,102
10. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
30 June 2020
$
30 June 2019
$
2,678,535
860,656
The Group’s exposure to interest rate risk and sensitivity analysis for financial assets and financial liabilities are disclosed in Note 26.
77
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
11. TRADE AND OTHER RECEIVABLES
Current
GST receivable
Security deposit
CEI Grant receivable
Other receivables
Trade and other receivables are non-interest bearing.
30 June 2020
$
30 June 2019
$
5,704
38,858
99,000
11,166
154,728
11,034
38,858
-
2,067
51,959
The Group’s exposure to credit and currency risk and impairment losses related to trade and other receivables is disclosed in Note 26.
12. OTHER FINANCIAL ASSETS
Non - Current
Investments in other entities
30 June 2020
$
30 June 2019
$
Listed shares in TSXV and ASX-listed companies - at fair value
271,097
1,258,758
The Group’s exposure to equity price risk and sensitivity analysis in disclosed in Note 26. Listed shares recognised as non-current
assets have been recognised at fair value through profit or loss (“FVTPL”).
30 June 2020
$
30 June 2019
$
252,906
252,906
(252,906)
(252,906)
-
-
-
-
-
-
2,420
-
(2,420)
-
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
78
HAMMER METALS LIMITED / Annual Report 2020
14. RIGHT-OF-USE ASSETS
Plant and equipment – right of use
Less: accumulated depreciation
Total right-of-use assets
Movements in right-of-use assets for the period:
Opening balance at the beginning of the period
Additions for the period
Depreciation
Disposals
Closing balance at the end of the period
15. EXPLORATION AND EVALUATION EXPENDITURE
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)
CEI grants received
Research and development grant received
Balance at 30 June
30 June 2020
$
30 June 2019
$
71,570
-
71,570
-
71,570
-
-
71,570
-
-
-
-
-
-
-
-
30 June 2020
$
30 June 2019
$
11,954,619
11,316,751
2,461,092
1,528,688
-
-
-
610,616
(588,743)
(545,745)
(90,000)
-
(214,939)
(366,948)
14,110,772
11,954,619
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.
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.
16. TRADE AND OTHER PAYABLES
Trade creditors and accruals
30 June 2020
$
30 June 2019
$
363,896
235,022
79
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
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 26.
17. LEASE LIABILITIES
Current lease liabilities
Non-current lease liabilities
18. ISSUED CAPITAL
(a) Share capital
Ordinary shares
On issue at 1 July
30 June 2020
$
30 June 2019
$
17,208
56,302
73,510
-
-
-
30 June 2020
No.
30 June 2019
No.
30 June 2020
$
30 June 2019
$
351,213,748
268,925,341
46,628,496
44,907,743
Shares issued in lieu of fees on entitlement issue
of options
Shares issued for cash at $0.03 per share
-
-
2,705,074
6,666,667
-
-
56,807
200,000
Shares issued for cash at $0.02 per share
87,803,437
50,000,000
1,756,069
1,000,000
Shares issued for cash at $0.022 per share
119,813,623
Exercise of HMXOD listed options
19,525,757
-
-
2,635,900
683,401
-
-
Shares issued to acquire subsidiary
Share issue costs
-
-
22,916,666
-
550,000
-
(274,512)
(86,054)
On issue at 30 June – fully paid
578,356,565
351,213,748
51,429,354
46,628,496
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 (2019: NIL).
80
HAMMER METALS LIMITED / Annual Report 2020
18. ISSUED CAPITAL Continued
(b) Options outstanding over ordinary shares
Listed options (Option issue reserve)
30 June 2020
No.
30 June 2019
No.
Listed HMXOD options exercisable at $0.03 on or before 30 Sep 2020
170,829,449
190,355,205
Unlisted options (Share-based payment reserve)
Unlisted options exercisable at $0.06 expiring 30 Jun 2020
-
12,800,000
Unlisted options exercisable at $0.07 expiring 31 Aug 2020
2,676,078
2,676,078
Unlisted options exercisable at $0.07 on or before 30 Nov 2019
-
1,500,000
Unlisted options exercisable at $0.032 on or before 30 Nov 2022
10,000,000
10,000,000
Unlisted options exercisable at $0.05 expiring 21 Oct 2023
Unlisted options exercisable at $0.06 expiring 21 Oct 2023
Unlisted options exercisable at $0.035 expiring 13 Dec 2022
Unlisted options exercisable at $0.035 expiring 30 Jun 2023
Unlisted options exercisable at $0.05 expiring 30 Jun 2024
3,000,000
4,000,000
1,000,000
3,000,000
2,600,000
-
-
-
-
-
197,105,527
217,331,283
No listed options were issued during the year (2019: 190,355,205).
9,600,000 unlisted options were granted to directors, executives and employees during the year (2019: 10,000,000).
4,000,000 unlisted options were granted to consultants during the year (2019: nil)
19,525,757 Listed options were exercised during the year (2019: Nil)
14,300,000 fully vested unlisted options expired unexercised during the period (2019: 5,000,000).
Options carry no voting rights until converted to fully paid ordinary shares. All unlisted options were granted for no cash consideration.
18. ISSUED CAPITAL Continued
(c) Performance rights
Performance rights (Share-based payment reserve
Managing Director Performance Rights – Tranche 1
Managing Director Performance Rights – Tranche 2
Managing Director Performance Rights – Tranche 3
Managing Director Performance Rights – Tranche 4
Managing Director Performance Rights – Tranche 5
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
i
F
n
a
n
c
a
i
30 June 2020
No.
30 June 2019
No.
l
S
t
a
t
e
m
e
n
t
s
750,000
750,000
750,000
750,000
5,000,000
8,000,000
-
-
-
-
-
-
81
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
The following performance rights were granted during the period (refer note 21):
Number of options Vesting Date
Vesting Condition
Expiry Date
Managing Director Performance Rights
-
-
-
-
-
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Tranche 5
Notes:
750,000
21/10/2020
-
750,000
21/10/2020
Note 1
750,000
21/10/2021
-
750,000
21/10/2021
5,000,000
Note 3
Note 2
Note 3
13/12/2023
13/12/2023
13/12/2023
13/12/2023
13/12/2023
1. Tranche 2 performance rights include a vesting condition of maintaining a minimum share price of $0.031 for a period of 30 Days
2. Tranche 4 performance rights include a vesting condition of maintaining a minimum share price of $0.036 for a period of 30 Days
3. Tranche 5 performance rights include a vesting condition of the satisfactory completion of a transaction in accordance with the
terms outlined in the Company’s Notice of AGM dated 8 October 2019.
19. RESERVES
Share-based payment reserve (1)
Balance at beginning of period
Options issued to Directors and executives
Options issued to Employees and contractors
Performance rights issued to Managing Director
Unlisted options issued in lieu of fees for underwriter of listed option
entitlement issue
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
Options exercised during the period
30 June 2020
$
30 June 2019
$
910,991
35,967
155,700
42,040
788,885
120,000
-
-
-
2,106
1,144,698
910,991
747,854
-
-
-
(97,629)
650,225
-
806,767
(56,807)
(2,106)
-
747,854
1,794,923
1,658,845
82
HAMMER METALS LIMITED / Annual Report 2020
20. COMMITMENTS
a) 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.
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 2020
$
30 June 2019
$
30 June 2020
$
30 June 2019
$
1,590,410
2,076,500
-
-
Minimum exploration expenditure
not later than 1 year
21. SHARE BASED PAYMENTS
Incentive Option Plan
The Hammer Metals Incentive Option Plan was approved by shareholders on 14 November 2019. 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) Options are granted for no consideration.
(c) The options are issued at an exercise price as determined by the Board from time to time.
(d) 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.
(e)
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.
(f) The options issued under this plan shall not be quoted on ASX.
(g) 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
The options outstanding at year end have exercise prices ranging from $0.032 to
$0.07 a weighted average remaining contractual life of 2.652 years
No of unlisted
options
Weighted average
exercise price
26,976,078
13,600,000
(14,300,000)
26,276,078
19,276,078
8,000,000
$0.051
$0.049
$0.061
$0.044
-
83
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
22. 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 D Thomas
Non-executive Directors
Mr R Davis
Mr Z Lubieniecki
Mr N El Sayed (resigned 30 June 2020)
Executives
Mr M Pitts (Company Secretary)
The key management personnel compensation comprised:
Short-term employee benefits
Post-employment benefits
Share-based payments
30 June 2020
$
30 June 2019
$
412,216
360,625
16,301
91,007
6,413
72,000
519,524
439,038
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.
The aggregate value of transactions and outstanding balances relating to this entity were as follows:
Transaction value year ended
Balance outstanding as at
Transaction
30 June 2020
$
30 June 2019
$
30 June 2020
$
30 June 2019
$
Mr R Davis
Note 1
Mr Z Lubieniecki
Note 1
-
-
Consulting Fees
58,875
Mr A Hewlett
Note 1
Note 2
-
-
Mr M Pitts
Accounting services
41,140
110,000
220,000
38,625
110,000
30,000
50,598
-
-
-
-
9,075
3,300
-
-
-
-
1,280
4,839
84
HAMMER METALS LIMITED / Annual Report 2020
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.
Country of
Incorporation
Percentage held
2020
Percentage held
2019
23. 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
Australia
Australia
Australia
Australia
Hammer Bulk Commodities Pty Ltd (i)
Australia
Midas Metals Asia Pty Ltd (i)
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 28 for details. Carnegie Exploration Pty Ltd was
acquired on 21 May 2019. Refer Note 22 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 $641,753 at 30
June 2020 and is included in exploration and evaluation assets (note 15).
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 $406,267 at 30 June 2020 and is included in exploration and evaluation assets (note 15).
85
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
Mt Isa East - JOGMEC
The Farm-in and Joint Venture agreement with JOGMEC was signed in November 2019 and covers sections of the Even Steven,
Mount Philp, Dronfield West and Malbon targets for a total area of approximately 290km2 of the 2,200km2 Mount Isa Project. During
the Farm-in period, JOGMEC can achieve a 60% interest in the project areas by expending $6,000,000 by 31 March 2024. The
Farm-in Period is staged as follows, noting that JOGMEC earns its interest after the completion of the Fifth and final Farm-in Period:
■ The First Farm-in Period is a minimum expenditure of $1,000,000 by 31 March 2020 before JOGMEC can withdraw
from the agreement;
■ The Second Farm-in Period is an aggregate expenditure of $2,000,000 by 31 March 2021;
■ The Third Farm-in Period is an aggregate expenditure of $3,000,000 by 31 March 2022;
■ The Fourth Farm-in Period is an aggregate expenditure of $4,500,000 by 31 March 2023; and
■ The Fifth and final Farm-in Period is an aggregate expenditure of $6,000,000 by 31 March 2024.
Upon completion of the Fifth Farm-in Period, each company can elect to contribute its pro-rata share of future funding. If either party
does not contribute and is diluted to an ownership of less than 10% of the Joint Venture, the Group’s equitable interest will convert to a
2% Net Smelter Return Royalty. At any time, the Net Smelter Royalty Return Rate can be reduced to 1% via the payment of A$2,000,000.
The areas of interest are all 100% held by the Company’s subsidiaries Mt Dockerell Mining Pty Ltd and Mulga Minerals Pty Ltd.
24. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year
Adjustments for:
Depreciation
Share based payments
Exploration expenditure impaired
Fair value adjustment on financial assets
Interest expense on lease liabilities
Gain on disposal of subsidiary
Management fee from farm-in partners
Movements attributable to operating activities:
30 June 2020
$
30 June 2019
$
(1,978,610)
(852,517)
-
233,707
-
987,661
966
2,420
120,000
588,743
23,808
-
(58,424)
(705,049)
(75,798)
(56,585)
Decrease / (increase) in trade and other receivables
(12,769)
54,792
Increase / (decrease) in trade and other payables
96,998
(97,196)
Net cash used in operating activities
(806,269)
(921,584)
25. 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.
86
HAMMER METALS LIMITED / Annual Report 2020
26. FINANCIAL INSTRUMENTS DISCLOSURES
Overview
The Group has 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
Note
Cash and cash equivalents
Trade and other receivables
10
11
Impairment losses
Carrying amount
30 June 2020
$
2,678,535
154,728
30 June 2019
$
860,656
51,959
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
None of the Group’s trade and other receivables are past due and impaired (2019: Nil).
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.
87
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
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 2020
$
30 June 2019
$
21,992
1.20%
21,475
2.40%
2,656,543
839,181
0.41%
0.18%
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 (2019: 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 2019 was performed on the same basis.
Loss
Equity
50bp
increase
50bp
decrease
50bp
increase
50bp
decrease
30 June 2020
Variable rate instruments
13,283
(13,283)
13,283
(13,283)
88
HAMMER METALS LIMITED / Annual Report 2020
Loss
Equity
50bp
increase
50bp
decrease
50bp
increase
50bp
decrease
30 June 2019
Variable rate instruments
4,196
(4,196)
4,196
(4,196)
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 TSXV at quoted prices
271,097
1,258,758
30 June 2020
$
30 June 2019
$
Financial assets carried at amortised costs
Cash and cash equivalents
Trade and other receivables
Financial liabilities carried at amortised costs
Trade and other payables
Lease liabilities
Other Market Price Risk
2,678,535
839,181
154,728
51,959
(363,896)
(235,022)
(73,510)
-
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 2019 was performed on the same basis.
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
i
F
n
a
n
c
a
i
Loss
Equity
10%
increase
10%
decrease
10%
increase
10%
decrease
l
S
t
a
t
e
m
e
n
t
s
30 June 2020
Equity securities – listed on TSXV
$27,110
($27,110)
$27,110
($27,110)
30 June 2019
Equity securities – listed on TSXV
$125,876
($125,876)
$125,876
($125,876)
89
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
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.
27. PARENT ENTITY DISCLOSURES
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-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
90
Company
30 June 2020
$
30 June 2019
$
10,822,666
8,516,068
6,341,410
5,509,779
17,164,076
14,025,847
258,478
134,877
56,302
314,780
134,877
16,849,296
13,890,970
51,429,354
46,628,496
(36,374,981)
(34,396,371)
1,794,923
1,658,845
16,849,296
13,890,970
(1,978,610)
(852,517)
-
-
(1,978,610)
(852,517)
HAMMER METALS LIMITED / Annual Report 2020
28. 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.
28 June 2019
$
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
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
N
o
t
e
s
T
o
T
h
e
C
o
n
s
o
l
i
d
a
t
e
d
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
91
HAMMER METALS LIMITED / Annual Report 2020
Notes To The Consolidated Financial Statements
29. EVENTS SUBSEQUENT TO BALANCE DATE
Subsequent to year end the following events have occurred:
■ On 1 July 2020, following the resignation of Mr Nader El Sayed on 30 June 2020, Mr David Church was appointed as
a non-executive director
■ Since the end of the financial year and up to the date of this report, the Company has received further notices for the
valid exercise of an additional 132,733,738 HMXOD options, raising $3,982,012.
■ On 6 August 2020, the Company issued 1,250,000 shares to Alloy Resources Limited (ASX:AYR) for the acquisition of
tenements in the Bronzewing North region. The shares were valued at $50,000, and a further cash payment of $25,000
was also made.
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.
92
HAMMER METALS LIMITED / Annual Report 2020
Directors’ 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 2020 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 2020 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
29 September 2020
D
i
r
e
c
t
o
r
s
D
e
c
a
r
a
t
i
o
n
l
93
HAMMER METALS LIMITED / Annual Report 2020
Independent Auditor’s Report
Independent Auditor’s Report
Independent Auditor’s Report
To the shareholders of Hammer Metals Limited
Report on the audit of the Financial Report
To the shareholders of Hammer Metals Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Hammer Metals Limited (the Company).
Opinion
In our opinion, the accompanying Financial
We have audited the Financial Report of
Report of the Company is in accordance with the
Hammer Metals Limited (the Company).
Corporations Act 2001, including:
In our opinion, the accompanying Financial
•
giving a true and fair view of the Group’s
Report of the Company is in accordance with the
financial position as at 30 June 2020 and of
Corporations Act 2001, including:
its financial performance for the year ended
on that date; and
giving a true and fair view of the Group’s
financial position as at 30 June 2020 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 2020
The Financial Report comprises:
• Consolidated statement of profit or loss and other
• Consolidated statement of financial position as at
comprehensive income, Consolidated statement
30 June 2020
of changes in equity, and Consolidated statement
of cash flows for the year then ended
• Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement
• Notes including a summary of significant
of changes in equity, and Consolidated statement
accounting policies
of cash flows for the year then ended
• Directors’ Declaration.
• Notes including a summary of significant
The Group consists of the Company and the entities
it controlled at the year-end or from time to time
• Directors’ Declaration.
during the financial year.
accounting policies
The Group consists of the Company and the entities
it controlled at the year-end or from time to time
during the financial year.
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.
Basis for opinion
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
audit of the Financial Report section of our report.
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
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.
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of
the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
Code.
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of
the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the
Key Audit Matters
Code.
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our
Key Audit Matters
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
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our
our opinion thereon, and we do not provide a separate opinion on this matter.
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.
- 47 -
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.
- 47 -
94
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.
HAMMER METALS LIMITED / Annual Report 2020
Capitalised exploration and evaluation (“E&E”) assets ($14,110,772)
Refer to Note 15 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Our 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;
• 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.
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 82% of total
assets); and
The greater level of audit effort 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;
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.
I
n
d
e
p
e
n
d
e
n
t
A
u
d
i
t
o
r
’
s
R
e
p
o
r
t
- 48 -
95
HAMMER METALS LIMITED / Annual Report 2020
Independent Auditor’s Report
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.
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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
96
- 49 -
HAMMER METALS LIMITED / Annual Report 2020
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Hammer Metals Limited for the year ended
30 June 2020, 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 2020.
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
29 September 2020
I
n
d
e
p
e
n
d
e
n
t
A
u
d
i
t
o
r
’
s
R
e
p
o
r
t
- 50 -
97
HAMMER METALS LIMITED / Annual Report 2020
ASX Additional Information
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 26 October 2020.
(A) ORDINARY SHAREHOLDERS
Twenty largest holders of ordinary shares
Number of Shares
% held
57,200,838
56,432,998
53,533,296
47,818,514
38,600,000
29,293,364
26,466,704
14,400,000
12,011,363
10,857,142
10,000,000
8,328,486
6,500,000
5,660,000
5,455,000
5,435,536
4,400,000
4,000,000
3,850,000
3,507,467
7.66
7.56
7.17
6.40
5.17
3.92
3.54
1.93
1.61
1.45
1.34
1.12
0.87
0.76
0.73
0.73
0.59
0.54
0.52
0.47
403,750,708
54.07
Mr Zbigniew Waldemar Lubieniecki
BNP Paribas Nominees Pty Ltd
Central Mutual (Investments) Pty Ltd
Zenith Pacific Limited
Davis Family Capital Pty Ltd
J P Morgan Nominees Australia Pty Limited
Lundie Investments Pty Ltd
Samlisa Nominees Pty Ltd
Equity Trustees Limited
DJ Carmichael Pty Ltd
Curious Capital Group Pty Ltd
HSBC Custody Nominees (Australia) Limited
Sacchetta Group Holdings Pty Ltd
B + C Watson Holdings Pty Ltd
Mr Shane Roland Britten
Citicorp Nominees Pty Limited
Mr Bryce Roy Symons
Gecko Resources Pty Ltd
Mr Peter William Karlson + Mr Peter James Cargin
Jetosea Pty Ltd
98
HAMMER METALS LIMITED / Annual Report 2020
Significant Shareholders are:
Shareholder
Number of Shares
% held
Mr Zbigniew Waldemar Lubieniecki
BNP Paribas Nominees Pty Ltd
Central Mutual (Investments) Pty Ltd
Zenith Pacific Limited
Davis Family Capital Pty Ltd
57,200,838
56,432,998
53,533,296
47,818,514
38,600,000
7.66
7.56
7.17
6.40
5.17
Each fully paid ordinary share entitles the holder to one vote at general meetings of shareholders and is entitled to dividends when
declared.
The total number of shares on issue is 746,711,586
The number of shareholders holding less than a marketable parcel is 311.
There is no current on market buy back.
The Company has no ordinary shares which are subject to voluntary escrow.
Distribution of ordinary shareholders:
Category of shareholding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of
shareholders
Number of shares
143
71
89
775
625
1,703
30,859
215,976
746,943
34,256,199
711,461,609
746,711,586
A
S
X
A
d
d
i
t
i
o
n
a
l
I
n
f
o
r
m
a
t
i
o
n
99
HAMMER METALS LIMITED / Annual Report 2020
ASX Additional Information
(B) UNQUOTED SECURITIES
The Company has the following unquoted securities on issue.
Category of security
Number
Number of
holders
Unlisted options exercisable at $0.032 on or before 30 November 2022
10,000,000
11
Unlisted options exercisable at $0.05 on or before 21 October 2023
Unlisted options exercisable at $0.06 on or before 21 October 2023
Unlisted options exercisable at $0.035 on or before 13 December 2022
Unlisted options exercisable at $0.05 on or before 30 June 2024
Unlisted options exercisable at $0.035 on or before 30 June 2023
3,000,000
4,000,000
1,000,000
2,600,000
3,000,000
Performance rights expiring 13 December 2023, vested on 21 October 2020
750,000
Performance rights expiring 13 December 2023, vested on 21 October 2020 and
upon the achievement of a share price hurdle of $0.032 for a period of 30 days
750,000
Performance rights expiring 13 December 2023, vesting on 21 October 2021
750,000
Performance rights expiring 13 December 2023, vesting on 21 October 2021 and
upon the achievement of a share price hurdle of $0.036 for a period of 30 days
Performance rights expiring 13 December 2023, vesting on the satisfaction of a
suitable transaction
750,000
5,000,000
1
1
1
5
1
1
1
1
1
1
Photograph by: Nick Tate
100
HAMMER METALS LIMITED / Annual Report 2020
www.hammermetals.com.au
HAMMER METALS LIMITED / Annual Report 2020
HAMMER METALS LIMITED / Annual Report 2020