ABOUT HANNANS LTD
Hannans Ltd (ASX:HNR) is an exploration company with a focus on nickel, gold and lithium
in Western Australia. Hannans(cid:146) major shareholder is leading Australian specialty minerals
company Neometals Ltd. Since listing on the ASX in 2003 Hannans and its subsidiaries
have at various times since listing signed agreements with Vale Exploration, Rio Tinto Exploration,
Anglo American, Boliden, Warwick Resources, Cullen Resources, Azure Minerals, Neometals,
Tasman Metals, Gr(cid:228)ngesberg Iron, Lovisagruvan and Element 25. Shareholders at various
times since listing have included Rio Tinto, Anglo American, OM Holdings, Craton Capital
and BlackRock.
For more information, visit www.hannans.com and search for (cid:145)Hannans(cid:146) on Twitter.
ANNUAL REPORT
FOR THE FINANCIAL YEAR ENDED
30 JUNE 2019
Corporate Directory ............................................................................................... 1
Directors(cid:146) Report .................................................................................................... 2
Independence Declaration to the Directors of Hannans Ltd ........................ 30
Directors(cid:146) Declaration .......................................................................................... 31
Independent Auditor(cid:146)s Report to the Members of Hannans Ltd ................. 32
Consolidated Statement of Profit and Loss and Comprehensive Income .. 37
Consolidated Statement of Financial Position................................................. 38
Consolidated Statement of Changes in Equity ................................................ 39
Consolidated Statement of Cash Flows............................................................ 40
Notes to the Consolidated Financial Statements ........................................... 41
CORPORATE DIRECTORY
BOARD OF DIRECTORS
PRINCIPAL OFFICE
Level 11, 216 St Georges Terrace
SHARE REGISTRY
Computershare
NON-EXECUTIVE CHAIRMAN
Perth, Western Australia 6000
Level 11, 172 St George(cid:146)s Terrace
Mr Jonathan Murray
EXECUTIVE DIRECTOR
Mr Damian Hicks
REGISTERED OFFICE
Perth, Western Australian 6000
Telephone 1300 787 272
Level 11, 216 St Georges Terrace
Website www.computershare.com.au
Perth, Western Australia 6000
NON-EXECUTIVE DIRECTORS
POSTAL ADDRESS
Mr Markus Bachmann
PO Box 1227
AUDITORS
Ernst & Young
11 Mounts Bay Road
Mr Clay Gordon
Ms Amanda Scott
West Perth, Western Australia 6872
Perth, Western Australia 6000
CONTACT DETAILS
LAWYERS
COMPANY SECRETARY
Telephone +61 (8) 9324 3388
Steinepreis Paganin
Mr Ian Gregory
Email
info@hannans.com
Level 4, The Read Buildings
Website www.hannans.com
16 Milligan Street
ABN
52 099 862 129
Perth, Western Australia 6000
SOCIAL NETWORK SITES
Twitter
@Hannans_Ltd
LinkedIn
Hannans Ltd
Instagram Hannans_Ltd
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 1
CHAIRMAN(cid:146)S LETTER
The Directors of Hannans Ltd (Hannans or the Company) submit their annual financial report of
the Group being the Company and its controlled entities for the financial year ended 30 June 2019.
Dear Shareholders,
Our focus remains developing Hannans into a West Australian based mining company through exploration
success, project acquisition and joint venture.
The global drive towards more efficient and cost-effective energy storage solutions, and the movement away
from fossil fuels has driven the interest in a certain number of metals and minerals, namely those required to
manufacture batteries to store energy. The main metals include nickel, cobalt, lithium, manganese, copper and
graphite but also rare earths and many minor metals. The global macroeconomic uncertainty caused in part by
trade wars between the United States and China has also seen a devaluation of many currencies and the rise
in the value of gold as a store of value. Hannans takes all these factors into account when deciding which
projects to focus on, and how much exploration expenditure to incur at any one time.
Since late 2018 Hannans has redirected efforts towards the Forrestania Nickel Sulphide Project adjoining world class
high grade operating nickel sulphide mines located 135 kms south of Southern Cross. The price of nickel sulphide ore
is expected to rise due to the increasing volume of nickel used in the latest lithium ion battery chemistries and low
nickel stocks. The combination of the aforementioned demand and supply factors has led to a significant increase
in interest in Hannans(cid:146) Forrestania Nickel project due to its location adjacent to high grade operating mines. The
Company is aiming to conclude a joint venture with a world class partner as soon as practicable to advance the
discovery process.
Hannans will recommence exploration drilling for lithium at its Mt Holland Project in August 2019. The Earl Grey deposit
at Mt Holland is now the third largest hard rock lithium deposit in the world. Ear Grey is owned by Covalent Lithium
which is a joint venture between the world(cid:146)s largest producer of lithium, the New York Stock Exchange listed SQM
and Australian listed company Kidman Resources Ltd (Kidman). Kidman is currently the subject of a takeover by
Australia(cid:146)s largest diversified company Wesfarmers Ltd (ASX:WES). Earl Grey is a world class hard rock lithium
deposit and will underpin a fully integrated lithium business. Hannans will complete the next two rounds of
aircore drilling at Mt Holland and invite a short list of credible lithium focussed mining companies to make
offers to joint venture into the project. Hannans aims to discover a deposit comparable to Earl Grey.
Hannans also holds a 20% free-carried interest in the Forrestania Gold project. Hannans shareholders remain exposed to
future exploration success without the need to fund exploration.
Your Board will continue to investigate acquisition opportunities that have potential to add to stakeholder value.
We believe we have the necessary technical and corporate support to successfully execute and implement a major transaction.
Once again, and on behalf of my fellow Directors, we thank you for your continued interest and support.
Yours sincerely,
Jonathan Murray
Chairman
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DIRECTORS(cid:146) REPORT
STRATEGIC PLAN
VISION
Our vision is to build a successful exploration and production company.
MISSION
Our mission is to develop an economic interest in a portfolio of mineral exploration, development and
production assets.
Our focus is to provide shareholders with a satisfactory return on investment by managing our people,
projects and capital in an entrepreneurial and responsible manner.
We recognise that a professional, knowledgeable and ethical team of directors, employees and consultants
is the key to our business.
The ability to implement the strategic plan is determined by Hannans' ability to access funding. Hannans
may be required to sole funding exploration, contribute funding to maintain a joint venture interest or be
free-carried to a decision point, or receiving a royalty from production. Hannans aims to fund the
development of its portfolio of projects via equity raisings at increasing valuations, project sales and farm-
outs.
GOALS
People
Projects
Capital
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¶
¶
¶
¶
¶
¶
¶
To attract and retain a professional, knowledgeable and ethical team of
experts whilst empowering staff at all levels.
To continually build an understanding of our strategic partners(cid:146) needs
and wants and thereafter conduct business in a fair, transparent and
ethical manner.
To access prospective mineral exploration and development
opportunities in Australia.
To implement an effective acquisition program that secures access to
projects that have the potential to host significant economic deposits.
To add value by identifying, accessing and exploring projects that have
potential to host significant economic deposits and then seek partners
to diversify project risk.
To retain a financial interest in projects but not necessarily an
operational responsibility.
To conduct our affairs in a responsible manner taking into account
various stakeholder rights and beliefs.
To create shareholder wealth as measured by the potential of our
projects, the strength of our balance sheet and share price.
To maintain sufficient funding and working capital to implement
exploration and development programs through the peaks and troughs
in sentiment and commodity prices fluctuations.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 3
DIRECTORS(cid:146) REPORT
OPERATIONAL AND FINANCIAL REVIEW
Hannans owns 100% of the Forrestania Nickel Project and Mt Holland Lithium Project. It also owns a 20% free-carried interest in the
Forrestania Gold Project and a 15% free-carried interest in the Lake Johnston Nickel and Gold project.
Exploration
Exploration activities completed by Hannans and its joint venture partners during the year ended 30 June 2019 are set out below:
Qtr
1
Mt Holland East
(Lithium & Gold)
(cid:150) completed a 5,000m
aircore drilling program
focused on 10 structural
targets (1st phase);
click here to view a
2-minute update on
Mt Holland East;
Mt Holland West
(Lithium)
(cid:150) received assays and
completed interpretation
of 4th phase of
exploration drilling; and
Forrestania
(Gold)
(cid:150) partner released further
impressive results,
confirming the
interpretation of high-
grade, cross-cutting gold
lodes previously missed
due to wide spaced
drilling (Hannans holds a
20% free carried interest).
Qtr
2
Mt Holland East
(Lithium & Gold)
(cid:150) received assays and
completed interpretation
of 1st phase of
exploration drilling; and
Mt Holland West
(Lithium)
(cid:150) received assays and
completed interpretation
of 5th phase of
exploration drilling.
Qtr
4
Qtr
3
Forrestania (Nickel)
(cid:150) review concluded there
is potential to find
another high-grade nickel
sulphide deposit within
the Hannans tenure;
workplans lodged to
recommence nickel
sulphide exploration; joint
venture discussions
initiated; and
Mt Holland (Lithium)
(cid:150) review of exploration
results and strategy
completed; work plans
lodged to recommence
lithium exploration.
Forrestania (Nickel)
(cid:150) continued joint venture
discussions with high
quality organisations
seeking access to the
world class Forrestania
nickel sulphide belt;
planned flora & fauna
surveys for Spring (August
(cid:150) October) to enable
ground disturbing
exploration activities to
recommence as soon as
practical; and
Mt Holland (Lithium)
(cid:150) received government
approval for exploration
at Mt Holland West
enabling an 80 hole
aircore reconnaissance
drill program to
commence in August (6th
phase of exploration
drilling); planned flora &
fauna surveys for Spring
at Mt Holland East to
enable reconnaissance
drill programs to
recommence as soon as
practical (2nd phase of
exploration drilling).
Acknowledgement
Hannans would like to acknowledge the professional work completed by various advisors, consultants and contractors (Team) during
the year. Hannans appreciates the quality, focus and attention to detail of the individuals within these small to medium sized
organisations. Hannans and its Team are focussed on the discovery of a world class orebody at Forrestania and Mt Holland.
4 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
DIRECTORS(cid:146) REPORT
Exploration expenditure
Expenditure
In line with the Group(cid:146)s accounting
policy, Hannans expensed $766,344
on mineral exploration activities in
2019 (2018: $505,967) relating to
its non-JORC compliant mineral
projects which included an
impairment of $404,000
(2018: $28,000) relating to
relinquished project areas. These
amounts exclude all administration
and transaction costs and exploration
expenditure by Hannans joint venture
partners.
Mineral Exploration Activities in 2019
Geological activities
Geochemical activities
Geophysical activities
Drilling
Field supplies
Field camp and travel
Drafting activities
Environmental
Annual tenement rent & rates
Tenement administration
Tenement application fees
TOTAL MINERAL EXPLORATION ACTIVITIES
$
%
126,854
130,788
75,181
266,555
44,859
37,723
423
4,962
53,105
23,034
2,860
766,344
17%
17%
10%
35%
6%
5%
0%
1%
7%
3%
0%
100%
Chart 1. Historical record since listing on ASX of exploration expenditure, cash at bank and market capitalisation as at 30 June.
Corporate
Corporate and governance activities completed by Hannans for the year ended 30 June 2019 are set out below:
Annual General Meeting
(cid:150) held the AGM where all resolutions were passed on a show of
hands; and
Qtr
1
Audited Annual Report
(cid:150) lodged the AR with regulators.
Qtr
3
Due Diligence
(cid:150) Hannans completed approximately 18 months due diligence
on a company changing transaction by virtue of its size. The
project was an advanced mining project located in West
Australia. The Board made the decision to withdraw its interest
in the project in the 3rd Quarter after it could not reach
agreement with the vendor on terms.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 5
DIRECTORS(cid:146) REPORT
6 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
Goals Scorecard 2016 (cid:150) 2019
Starting with the Annual General Meeting in 2015 the Company published its Goals for 2016.
Introduction of the Scorecard enables the Directors, Management and Shareholders to
remain focussed on the Goals and Outcomes on an annual basis. The table below highlights
Hannans achievements relative to the stated Goals:
Item
Shareholder
Returns
Stated Goal
AGM 2016
Implement a strategy
giving shareholders the
opportunity to recover
their investment
Outcome to Date
Hannans share price was
1.8 cents on 24 November 2016,
1.6 cents on 24 November 2017,
1.8 cents on 24 August 2018 and
0.9 cents on 26 August 2019.
Joint Venture
Projects
Monitor joint venture
partners(cid:146) activities
Sole funded
projects
Secure joint venture
partners
Corporate
Spin outs
Hannans has a joint venture over
certain tenements at Forrestania with
Classic Minerals Ltd (ASX:CLZ). Classic
has been active and had exploration
success.
Hannans has a joint venture for nickel,
lithium and gold at Lake Johnston with
Element 25 Ltd (ASX: E25) (previously
called Montezuma Mining Company
Ltd). Element 25 has not been actively
exploring.
Hannans has continued to sole fund its
lithium exploration activities at Mt
Holland. Hannans will consider joint
venture partners for Mt Holland during
2019/2020.
Hannans continues to seek joint venture
partners for the Forrestania and Queen
Victoria Rocks nickel projects. The
Company expects outcomes on these
processes this year.
Critical Metals Ltd
(www.criticalmetals.eu) holds the
projects Hannans demerged in 2016.
Critical Metals also signed an
agreement to access a technology
capable of recovering metals from
(cid:147)spent(cid:148) lithium ion batteries. The
license covers Sweden, Norway, Finland
and Denmark. Subject to successful
results from the pilot plant Critical
Metals intends to build, own and
operate a plant to recycle metals from
LiB batteries. Critical Metals is an
unlisted audited public company.
Errawarra Resources Ltd
(www.errawarra.com) was demerged
from Hannans in February 2012 and
holds rights to two technologies to
manufacture sulphate of potassium
(SOP) and high purity aluminium (HPA).
A full PFS has been completed on the
SOP project, and a PFS has been
commenced on the HPA project.
Errawarra Resources Ltd is an unlisted
public company.
DIRECTORS(cid:146) REPORT
PROJECTS
Figure 1. Location Map showing location of Hannans(cid:146) Forrestania Nickel Project and Mt Holland Lithium Project, the world class Forrestania
nickel mines (Flying Fox/Spotted Quoll) and location of major lithium mines and projects in the south-west of WA.
Forrestania Nickel Project (Hannans 100%)
By way of background the Forrestania Nickel Project (FNP) is located approximately 120 kilometres south of Southern Cross and 80 kilometres
east of Hyden in the Goldfields region of Western Australia. The FNP is located adjacent to, and north of the high-grade Flying Fox and
Spotted Quoll nickel sulphide mines. Importantly the Team assisting Hannans played major roles in the discovery of nickel deposits at
Forrestania including Flying Fox and Spotted Quoll1.
Background
Hannans(cid:146) tenure is located within the Forrestania Greenstone Belt which has a length of ~250 kilometres, a width ranging from ~5 to 35
kilometres and is subdivided into six ultramafic2 belts namely the Western, Mid-Western, Takashi, Central, Mid-Eastern and Eastern (refer
Figure 3 on page 9).
The Western ultramafic belt is regionally the most well-endowed with nickel-sulphide mineralisation. The Spotted Quoll, New Morning,
Beautiful Sunday and Flying Fox3 nickel sulphide deposits are all located within the Western ultramafic belt. Hannans(cid:146) tenure covers a
significant strike length of the Western, Mid-Western and Takashi ultramafic belts and minor parts of the Central and Mid-Eastern ultramafic
belts.
The Forrestania Greenstone Belt hosts several different nickel sulphide mineralisation settings and styles including basal massive sulphides,
matrix sulphides, disseminated sulphides in cumulates and remobilised massive sulphides4. The nickel deposits are generally associated with
olivine cumulate5 ultramafic rocks, however mineralisation may occur in a range of rock types / settings and exhibit a range of geophysical
responses.
1 Flying Fox and Spotted Quoll are owned by Western Areas NL (not Hannans Ltd).
2 Ultramafic rocks (also referred to as ultrabasic rocks, although the terms are not wholly equivalent) are igneous and meta-igneous rocks with a very low silica content
(less than 45%), generally >18% MgO, high FeO, low potassium, and are composed of usually greater than 90% mafic minerals (dark coloured, high magnesium and iron content).
The Earth's mantle is composed of ultramafic rocks. Wikipedia contributors. (2019, April 5). Ultramafic rock. In Wikipedia, The Free Encyclopedia. Retrieved 02:06, July 31, 2019, from
https://en.wikipedia.org/w/index.php?title=Ultramafic_rock&oldid=891036300
3 All of these deposits are owned by Western Areas NL (not Hannans Ltd).
4 There are five different settings to nickel sulphide mineralisation at Flying Fox.
5 Cumulate rocks are igneous rocks formed by the accumulation of crystals from a magma either by settling or floating. Wikipedia contributors. (2019, January 27).
Cumulate rock. In Wikipedia, The Free Encyclopedia. Retrieved 02:09, July 31, 2019, from https://en.wikipedia.org/w/index.php?title=Cumulate_rock&oldid=880503818
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 7
DIRECTORS(cid:146) REPORT
Forrestania Nickel Project (cont(cid:146)d)
A review of the FNP completed early 2019 identified:
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untested coincident geophysical/geochemical anomalies (i.e. high priority targets);
geophysical anomalies (short strike-length EM anomalies i.e. nickel sulphide targets) occurring
adjacent to large formational conductors (i.e. conductive sediments and or BIF);
geochemical anomalism (Ni, Cu, PGE);
significant anomalism in belts other than the Western and Eastern ultramafic belts; and
geological areas of interest that lack historic exploration coverage.
Hannans recently lodged work plans with the government seeking approval to commence field exploration activities. Prior to granting
approval the government requires flora & fauna surveys to be completed within areas proposed to be disturbed, to ensure no rare or
endangered flora and or fauna are damaged or destroyed. The appropriate time to complete the flora surveys in the Forrestania region is
generally considered to be August through October. As soon as the government approves the work plans, field exploration activities will
recommence. The aim will be to test the targets identified during the review of the FNP as soon as possible.
There is significant supporting infrastructure in the Forrestania region, with good road access and an existing electricity network
primarily due to past and present mining operations. Located to the south of the Stormbreaker Prospect area is the Cosmic Boy
nickel concentrator, which can process 600,000 tonnes per annum of ore, with the potential to expand to 1,000,000 tonnes per
annum. The potential to expand to 1,000,000 tonnes per annum.
Figure 2. Hannans tenements outlined in red.
8 | H A N N A N S A N N U A L
R E P O R T 2 0 1 9
DIRECTORS(cid:146) REPORT
Forrestania Nickel Project (cont(cid:146)d)
Figure 3. Location Map showing Hannans(cid:146) Forrestania Nickel Project. Hannans tenements in white.
Hannans targets from the review of the Forrestania Nickel Project comprising a mixture of
geological, geochemical and geophysical targets are highlighted by the yellow circles with
black centres. The yellow shaded areas are underexplored and recommended for significant
EM coverage. From west to east the coloured lines represent the Western, Mid-Western,
Takashi, Central, Mid-Eastern and Eastern ultramafic units. The world class Flying Fox nickel
sulphide mine (not owned by Hannans Ltd) is in the foreground. Image looking North.
Distance from Flying Fox to Earl Grey is ~38kms.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 9
DIRECTORS(cid:146) REPORT
Mt Holland Lithium Project (Hannans 100%)
The Mt Holland Lithium Project is located adjacent to Earl Grey, one of the most significant hard rock lithium deposits in the world jointly
owned by Covalent Lithium, a joint venture between New York Stock Exchange listed SQM and Kidman Resources Ltd (ASX: KDR). Kidman is
subject to a takeover by ASX listed Wesfarmers Ltd. Earl Grey will underpin a world-class long-life integrated lithium project.6 Hannans(cid:146)
exploration goal at Mt Holland is to discover a lithium deposit comparable to Earl Grey.
Hannans(cid:146) major shareholder is Neometals Ltd, a leading Australian specialty minerals company. Dr Bryan Smith, a consulting exploration
geoscientist to both Neometals and Hannans, was previously responsible for exploration at the Mt Marion lithium project and is overseeing
exploration at Mt Holland. The exploration strategy at Mt Holland is at an early stage and further substantive drilling (both from a coverage
and depth perspective) is required to effectively test the project.
Figure 4.
Location Map showing Hannans(cid:146) Mt
Holland Lithium Project (in yellow)
and its proximity to the 3rd largest
hard rock lithium deposit in the
world, Earl Grey owned by the
world(cid:146)s largest producer of lithium
the New York Stock Exchange listed
SQM and one of Australia(cid:146)s largest
listed companies Wesfarmers Ltd
(ASX:WES).
Hannans notes that:
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the potential of the greater Mt Holland area to host globally significant hard rock lithium deposits is confirmed
simply by the presence of the Earl Grey and Bounty lithium deposits7;
there are large areas of prospective tenure within the Hannans(cid:146) project that remain unexplored;
elevated lithium and lithium pathfinder elements (caesium, bismuth, beryllium, tantalum and tungsten)
identified at Mt Holland East require validation and will be tested in late 2019;
despite intersecting pegmatites in aircore and reverse circulation drilling at Mt Holland West, to date there has
been no indication in the analyses of fertile pegmatites8;
the exploration model for locating pegmatites (cid:145)under cover(cid:146) as opposed to (cid:145)outcropping at surface(cid:146) is evolving;
the top 50m from surface is generally very weathered, and covered by windblown sands and vegetation making
it difficult to visually identify pegmatites at surface; and
reconnaissance exploration drilling has so far been confined to pre-existing cleared lines to reduce exploration
costs and disturbance to the vegetation.
Hannans(cid:146) exploration model is based on:
¶
¶
¶
targets located within a 10 km radius of late stage fertile granitoids.
reliance on the best geological interpretation of aeromagnetic data for defining granitoids, greenstones and
structures; and
interpretations of data from weathered samples recognizing the high mobility of lithium in the weathered zone.
6 Refer kidmanresources.com.au
7 Owned by Kidman Resources and SQM, not Hannans.
8 The host to the lithium mineralisation.
10 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
DIRECTORS(cid:146) REPORT
Mt Holland Lithium Project (cont(cid:146)d)
Mt Holland East (MHE)9
Hannans has completed one phase of reconnaissance drilling across ten structural targets at Mt Holland East
(169 AC holes for a total of 5,400m drilled late 2018). The aim of the program was to penetrate through the
weathered horizon and intersect the top of underlying fresh rock (saprolite) to assist with refining the geological
map and testing structural targets.
The Phase 1 drilling identified several intriguing lithium anomalies that required follow up drilling. Drill holes in the
north-east sector of tenement E77/2489 across a major NNE/SSW trending major structure in dominantly granitic
terrain, intersected elevated values for lithium in the upper horizons of the regolith. The structure is coincident with
a chain of salt lakes which likely represents a paleo drainage that follows the structural trend. Lithium is highly mobile
in the weathered zone, so the source of the anomalous lithium could be at some distance from the location of the drill holes.
Phase 2 drilling will determine whether the anomalous lithium geochemistry is indicative of nearby lithium-bearing pegmatites,
or simply related to variations in the geochemistry of the granitoids. Flora & fauna surveys along the planned drill lines will be
completed in August with drilling approvals anticipated to be received in late 2019.
Figure 5.
Location Map showing Hannans(cid:146)
Mt Holland East Lithium Project
(in yellow) and its proximity to
the 3rd largest hard rock lithium
deposit in the world. The planned
Phase 2 aircore drill traverses are
shown as broken blue lines. The
targets are well located according
to Hannans(cid:146) exploration model.
9 Results released by Hannans Ltd to ASX on 24 January 2019.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 11
DIRECTORS(cid:146) REPORT
Mt Holland Lithium Project (cont(cid:146)d)
Mt Holland West (MHW)
The Phase 6 aircore drill program was approved during the Quarter and is expected to commence late August. The program will comprise
approximately 80 holes for 4,000m (estimated average depth of 50m per hole). An update to the ASX will be released once all assays are
returned and the detailed interpretation completed.
Reconnaissance field work was also completed on tenement E77/2460 located 18km due south of Earl Grey. This tenement is considered
within the target zone of a potential source granite (located 3kms to the east). Flora & fauna surveys along the planned drill lines will be
completed in August with drilling approvals anticipated to be received in late 2019.
Figure 6. Location Map showing Hannans(cid:146) Mt Holland West Lithium Project (in yellow) and its
proximity to the 3rd largest hard rock lithium deposit in the world. The planned Phase
6 aircore drill traverses are contained within the red ellipse. The targets are well
located according to Hannans(cid:146) exploration model. Phase 1 RAB depth of drilling ~12m.
Phases 2 and 5 AC depth of drilling was ~50m. Phases 3 and 4 RC depth of drilling
was ~ 150m. Phase 6 AC depth of drilling will be ~50m.
12 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
DIRECTORS(cid:146) REPORT
Gold at Forrestania
Hannans Ltd (ASX: HNR) owns a 20% interest in the Forrestania Gold Project (FGP). Joint venture partner
Classic Minerals Ltd (ASX:CLZ) is funding all exploration and owns an 80% interest in gold rights on
specific Hannans tenements. For more information on the FGP please refer to www.classicminerals.com.au.
Hannans' interest in the FGP joint venture is free-carried, meaning the Company is not required to fund any
exploration activities for gold until a decision to mine has been made. For the avoidance of doubt Hannans Ltd
owns a 100% interest in all non-gold rights on the joint venture tenements.
ANNUAL RESOURCE STATEMENTS
Hannans through the joint venture with Classic Minerals Ltd holds a 20% interest in the following JORC resources for the year ended
30 June 2018 and 30 June 2019.
JULY 2017 (cid:150) JUNE 2019
Forrestania Gold Project10
JORC Compliant Indicated and Inferred Mineral Resource Table
Prospect
Lady Ada
Lady Magdalene
TOTAL
Tonnes
283,500
1,828,500
2,112,000
Competent Person(cid:146)s Statements (cid:150) Forrestania Gold Project
Indicated
Grade (Au
g/t)
1.78
1.08
1.17
Ounces (Au)
Tonnes
16,200
63,700
79,900
260,000
2,450,000
2,710,000
Inferred
Grade (Au
g/t)
2.2
1.5
1.6
Ounces (Au)
18,750
118,000
136,750
The information contained in the JORC Compliant Resource Table relates to information compiled or reviewed by Edward S. K. Fry, a Competent person who is a member of the Australasian Institute of Mining
and Metallurgy (AusIMM). Mr Fry is a consultant exploration geologist with BGM Investments Pty Ltd and consults to Classic Minerals Ltd. Mr Fry has sufficient experience that is relevant to the styles of
mineralisation and the types of deposit under consideration, and to the activities undertaken to qualify as a Competent Person as defined in the 2012 edition of the (cid:145)JORC Australian code for reporting of
Exploration Results, Mineral Resources and Ore Reserves(cid:146). Mr Fry consents to the inclusion in this report of the matters based on information in the form and context in which it appears.
10 Refer to Classic Minerals Ltd (ASX: CLZ) ASX announcement on 14 March 2017 for further information.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 13
DIRECTORS(cid:146) REPORT
DIRECTORS
The names and particulars of the Directors of the Company during the financial year and until the date of the report are:
Mr Jonathan Murray, Non-Executive Chairman
(Appointed 29 November 2016,
previously appointed Non-Executive Director on 22 January 2010)
Mr Damian Hicks, Executive Director
(Appointed on 29 November 2016,
previously appointed Managing Director on 11 March 2002)
Mr Murray is a partner at law firm
Steinepreis Paganin, based
in Perth,
Western Australia. He has significant
experience in advising on initial public
offers and secondary market capital
commercial
raisings,
acquisitions
and
providing general corporate and strategic
advice to public companies.
divestments
forms
and
all
of
from Murdoch
Mr Murray graduated
University in 1996 with a Bachelor of Laws
and Commerce (majoring in Accounting) and was appointed as a
partner of Steinepreis Paganin in 2001. He is also a member of
FINSIA (formerly the Securities Institute of Australia).
During the past 3 years Mr Murray has also served as a director of
the following other listed companies:
* Denotes current directorship
¶ Vietnam Industrial Investments Limited*
(appointed 19 January 2016)
¶ Peak Resources Limited* (appointed 22 February 2011)
Mr Hicks was a founding Director of
Hannans Ltd and appointed to the position
of Managing Director on 5 April 2007 and
appointed as
Executive Director on
29 November 2016. Mr Hicks is also
Executive Director of the Group(cid:146)s subsidiary
companies.
Mr Hicks graduated from the University of
Western Australia with a Bachelor of
Commerce (Accounting and Finance) in
1992 and was admitted as a Barrister and Solicitor of the
Supreme Court of Western Australia in 1999. He holds a Graduate
Diploma in Applied Finance & Investment from FINSIA, a Graduate
Diploma
from Chartered
Secretaries Australia and is a Graduate of the Australian Institute
of Company Directors course.
in Company Secretarial Practice
During the past 3 years Mr Hicks did not serve as a director on
other listed companies.
Mr Markus Bachmann, Non-Executive Director
(Appointed 2 August 2012)
Mr Clay Gordon, Non-Executive Director
(Appointed 5 October 2016)
Mr Bachmann graduated with Honours
((cid:147)cum laude(cid:148)) from the University of
Berne,
Switzerland and began his
corporate finance career in 1993.
In 2001, Mr Bachmann was Senior
Portfolio Manager with Coronation Fund
Managers in Cape Town when it was
awarded the Standard & Poor(cid:146)s Award for
Manager of the Best Performing Large Cap
Equity Unit Trust in South Africa.
In 2003, Mr Bachmann was founding partner of Craton Capital
and is the Chief Executive Officer. Craton Capital was awarded
Fund Manager of the Year at the Mining Journal(cid:146)s (cid:147)Outstanding
Achievement Awards(cid:148) announced in London during December
2010 for the Craton Capital Precious Metal Fund. The award is the
most prestigious fund award in the mining industry. Craton
Capital has offices in Johannesburg, South Africa and in Zurich,
Switzerland.
During the past 3 years Mr Bachmann did not serve as a director
on other listed companies.
Mr Clay Gordon was appointed a director
of Hannans in 2016. Mr Gordon obtained a
Bachelor of Applied Science (Geology) and
a Master of Science (Mineral Economics)
and has more than 25 years(cid:146) experience in
senior roles (operational, management
and corporate) within large and small
resource companies active in a range of
commodities within Australia, Africa and
South East Asia. He was founding Non-
Executive Director of ASX listed Phoenix
Gold Limited, founding Managing Director of ASX listed Primary
Gold Limited and currently as the Group Geologist of a private
mining investment company, Adaman Resources Pty Ltd. Mr
Gordon was also founder and CEO of Mining Assets Pty Ltd, a
private company involved in the assessment and marketing of
mineral projects. He is a Member of the Australasian Institute of
Mining and Metallurgy and
Institute of
Geoscientists.
the Australian
During the past 3 years Mr Gordon did not serve as a director on
other listed companies.
14 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
DIRECTORS(cid:146) REPORT
DIRECTORS (cont(cid:146)d)
COMPANY SECRETARY
Ms Amanda Scott
(Appointed Non-Executive Director on 29 November 2016)
Mr Ian Gregory
(Appointed 5 April 2007)
played an integral
Ms Scott was appointed a director of
Hannans
in 2016 and has been the
Exploration Manager for Hannans Ltd and
its subsidiary companies since 2008. Ms
Scott
development of the Company(cid:146)s nickel,
gold, iron and manganese portfolio and is
credited with the discovery of high grade
iron mineralisation at the Jigalong Project
in the East Pilbara region on Western
Australia.
role in the
Ms Scott holds a Bachelor of Science (Geology) from Victoria
University of Wellington, and is a Member of the Australian
Institute of Mining & Metallurgy.
In 2016, Ms Scott created Scandinavian-based consultancy Scott
Geological providing geological and exploration services to a
number of clients from around the world.
During the past 3 years Ms Scott did not serve as a director on
other listed companies.
Directors(cid:146) Relevant Interest in Shares and Options
is a professional well-
Mr Gregory
connected
Company
and
Director
Secretary with over 30 years(cid:146) experience
in the provision of company secretarial
and business administration services in a
variety
including
exploration, mining, mineral processing,
oil and gas, banking and insurance.
industries,
of
Mr Gregory holds a Bachelor of Business
degree from Curtin University and is a
Fellow of the Governance Institute of
Australia, the Financial Services Institute of Australia and a
Member of the Australian Institute of Company Directors.
Mr Gregory currently consults on company secretarial and
governance matters to a number of
listed and unlisted
companies and is a past Chairman of the Western Australian
Branch Council of Governance Institute of Australia. He has also
served on the National Council of GIA.
At the date of this report the following table sets out the current Directors(cid:146) relevant interests in shares and options of Hannans Ltd and the
changes since 30 June 2019.
Ordinary Shares
Options over Ordinary Shares
Director
Damian Hicks
Jonathan Murray
Markus Bachmann (i)
Clay Gordon
Amanda Scott
Current
Holding
Net Increase/
(decrease)
Current
Holding
(cid:150)
14,237,500
(cid:150)
(cid:150)
(1,260,704)
13,697,917
(cid:150)
(cid:150)
10,500,000
13,666,666
Net Increase/
(decrease)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
7,007,218
12,705,132
75,725,134
2,362,204
1,260,001
(i)
These shares are held by Craton Capital Funds of which Mr Bachmann is a founding partner and Chief Executive Officer. The decrease
in shares held resulted from a restructuring of ownership of Craton Capital Ltd. There was no on-market disposal of shares.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 15
DIRECTORS(cid:146) REPORT
REMUNERATION REPORT (AUDITED)
The remuneration report is set out under the following main headings:
A.
B.
C.
D.
E.
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share(cid:150)based compensation
Additional information
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
A.
Principles used to determine the nature and amount of remuneration
The whole Board forms the Remuneration Committee. The remuneration policy has been designed to align director and executive
objectives with shareholder and business objectives by providing a fixed remuneration component with the flexibility to offer specific long
term incentives based on key performance areas affecting the Group(cid:146)s financial results. The Board believes the remuneration policy to be
appropriate and effective in its ability to attract and retain the best directors and executives to manage the Group.
The Board(cid:146)s policy for determining the nature and amount of remuneration for Board members and senior executives is as follows:
¶
¶
¶
¶
¶
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by
the Board. All executives receive a base salary (which is based on factors such as length of service and experience) and
superannuation. The Board reviews executive packages annually and determines policy recommendations by reference to executive
performance and comparable information from industry sectors and other listed companies in similar industries.
The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract and
retain the highest calibre of executives and reward them for performance that results in long term growth in shareholder wealth.
The Executive Director and executives receive a superannuation guarantee contribution required by the government where
applicable, which is currently 9.5% of base salary and do not receive any other retirement benefits.
All remuneration paid to directors and executives is valued at the cost to the Group and expensed. Options are valued using the
Black(cid:150)Scholes and Monte Carlo methodology where relevant.
The Board policy is to remunerate non(cid:150)executive directors at market rates for comparable companies for time, commitment and
responsibilities. The Board determines payments to the non(cid:150)executive directors and reviews the remuneration annually, based on
market practice, duties and accountability. Independent external advice is sought when required. No independent external advise
was sought during the year. The maximum aggregate amount of fees that can be paid to Non(cid:150)Executive Directors is subject to
approval by shareholders at the Annual General Meeting. The approved maximum aggregate amount that may be paid to Non-
Executive Directors as remuneration for each financial year is set at $250,000 which may be divided among the Non-Executive
Directors in the manner determined by the Board and Company from time to time. Fees for Non(cid:150)Executive Directors are not linked
to the performance of the Company. The 2018 remuneration report was approved at the last Annual General Meeting held on
25 October 2018.
The remuneration policy has been tailored to increase the direct positive relationship between shareholders investment objectives and
directors and executive performance. The Company facilitates this through the issue of options from time to time to the directors and
executives to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in
increasing shareholder wealth. The Company currently has no performance based remuneration component built into director and executive
remuneration packages.
The Board does not consider earnings during the current and previous financial years when determining, and in relation to, the nature and
amount of directors(cid:146) remuneration. Refer below for a summary of the Group(cid:146)s earnings and the Company(cid:146)s market performance for the past
5 years.
Summary of 5 Years earnings and market performance as at 30 June
Profit/(Loss) ($)
Share price (c)
Market capitalisation
(Undiluted) ($)
2019
2018
2017
2016
2015
(2,085,563)
(1,379,271)
11,663,780
(964,387)
(29,120,403)
1.0
1.4
1.5
1.6
0.2
19,879,545
27,724,264
25,239,608
15,531,324
1,443,932
16 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
DIRECTORS(cid:146) REPORT
REMUNERATION REPORT (AUDITED) (cont(cid:146)d)
B. Details of remuneration
Details of remuneration of the Directors and key management personnel (as defined in AASB 124 Related Party Disclosures) of Hannans are
set out in the table below.
The key management personnel of Hannans and the Group are listed on page 14 and 15.
Given the size and nature of operations of Hannans, there are no other employees who are required to have their remuneration disclosed in
accordance with the Corporations Act 2001.
Short Term
Post-employment
Equity
Salary
& fees
$
Other
benefits
$
D&O
insurance
(i)
$
Superan-
nuation
$
Other
benefits
$
Options
(ii)
$
Long
term
benefits
$
Other
benefits
$
Total
$
Value
options as
proportion of
remuneration
%
2019
Directors
Damian Hicks
218,000
20,000
20,000
20,000
20,000
298,000
Jonathan Murray
Markus Bachmann
Clay Gordon
Amanda Scott
Total
2018
Directors
Damian Hicks (iii)
218,000
Jonathan Murray (iv)
Markus Bachmann (iv)
Clay Gordon (iv)
Amanda Scott (iv)
20,000
20,000
20,000
20,000
298,000
Total
(i)
(ii)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
2,139
2,140
2,140
2,140
2,140
(cid:150)
(cid:150)
(cid:150)
1,900
(cid:150)
10,699
1,900
2,312
2,311
2,311
2,311
2,311
(cid:150)
(cid:150)
(cid:150)
1,900
(cid:150)
11,556
1,900
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
127,189
31,797
31,797
31,797
31,797
254,377
289,830
72,458
72,457
72,458
72,457
579,660
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
347,328
53,937
53,937
55,837
53,937
564,976
510,142
94,769
94,768
96,669
94,768
891,116
36.6%
59.0%
59.0%
56.9%
59.0%
45.0%
56.8%
76.5%
76.5%
75.0%
76.5%
65.0%
For accounting purposes Directors & Officers Indemnity Insurance is
required to be recorded as remuneration. No director receives any
cash benefits, simply the benefit of the insurance coverage for the
financial year.
The amounts included are issued under Hannans(cid:146) Director Equity
Option Plan (DEQ) approved by shareholders in September 2016.
The amounts are non-cash items that are subject to vesting
conditions. Refer to note 8 for more information.
(iii) After a further review of Mr Hicks(cid:146) contract with the Company, the
Board resolved from 1 July 2017 to increase his fees to $198,000
per annum for executive services and $20,000 per annum for
services related specifically to his role as a director of the Board.
(iv) After a further review of Non-Executive Directors(cid:146) fees, the Board
resolved to increase these fees to $20,000 per annum starting from
1 July 2017.
C.
Service agreements
Executive Director
Mr Hicks was appointed a Director Hannans on 11 March 2002 and commenced employment with Hannans Ltd on 3 December 2003.
He entered into an employment agreement as Managing Director of the Company on 21 December 2009. On 29 November 2016, Mr Hicks
was appointed as the Executive Director of the Group. After a further review of Mr Hicks(cid:146) contract with the Company, the Board resolved
from 1 July 2017 to increase his fees to $198,000 per annum for executive services and $20,000 per annum for services related specifically
to his role as a director of the Board. Under the contract Mr Hicks was not entitled to any annual leave or long service leave.
On 1 July 2019, Mr Hicks(cid:146) entered into an executive employment agreement with the Company with his salary increased to $240,000 per
annum. The remuneration package includes statutory superannuation entitlements, a remuneration increase of not less than 5% per annum
and provision of leave in accordance to the National Employment Standards.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 17
DIRECTORS(cid:146) REPORT
REMUNERATION REPORT (AUDITED) (cont(cid:146)d)
C.
Service agreements (cont(cid:146)d)
Executive Director (cont(cid:146)d)
Remuneration and other terms of employment for the executive is formalised in an employment agreement. The executive is employed on
a rolling basis with no specified fixed terms. Major provisions of the agreements relating to the executive are set out below.
Termination Notice Period
Name
Engagement
By HANNANS
By Employee
Termination payments*
Director
| Damian Hicks
Employee
6 months
3 months
3 months
* Termination payments (other than for gross misconduct) are calculated on current remuneration at date of termination and are inclusive of the notice period.
Non-Executive Directors
Remuneration and other terms of employment for the Non-executive Directors are formalised in service agreements. The Non-executive
directors are employed on a rolling basis with no specified fixed terms. They are remunerated on a fixed remuneration basis, exclusive of
superannuation. On 1 July 2017 the Non-Executive Directors fees were set at $20,000 per annum for each Non-executive Director. Starting
from 1 July 2019 the Non-Executive Directors fee is $24,000 per annum for each Non-executive Director.
Major provisions of the agreements relating to the Non-executive directors are set out below.
Name
Non-Executive Directors
Jonathan Murray
Markus Bachmann
Clay Gordon
Amanda Scott
Termination Notice Period
By HANNANS
By Director
Termination payments*
1 month
1 month
1 month
1 month
1 month
1 month
1 month
1 month
1 month
1 month
1 month
1 month
Share(cid:150)based compensation
* Termination payments (other than for gross misconduct) are calculated on current remuneration at date of termination and are inclusive of the notice period.
D.
If approved by shareholders, options are issued to directors and executives as part of their remuneration. The options are not based on
performance criteria, but are issued to align the interests of directors, executives and shareholders. There were no options issued during the
year. As at 30 June 2019, 52,102,083 options (2018: 55,268,750) were held by Directors and Non-Executives.
Options
issued
during
the year
No.
Finan-
cial
year
No of
options
No.
Issue date
Fair
value
per
options
at issue
date
Vesting
date
Exercise
price
Expiry
date
(cid:150)
20 Nov 14
0.3 cents
20 Nov 15
0.5 cents
20 Nov 18
500,000
20 Nov 14
0.3 cents
20 Nov 16
2.9 cents
20 Nov 19
3,237,500
15 Sep 17
0.9 cents
15 Sep 17
2.7 cents
15 Sep 20
3,500,000
27 Oct 17
1.0 cents
27 Oct 17
2.6 cents
27 Oct 20
3,500,000
27 Oct 17
1.0 cents
27 Oct 18
1.8 cents
27 Oct 21
3,500,000
3,500,000
27 Oct 17
1.2 cents
27 Oct 19
(i)
27 Oct 22
(cid:150)
20 Nov 14
0.3 cents
20 Nov 15
0.5 cents
20 Nov 18
500,000
20 Nov 14
0.3 cents
20 Nov 16
2.9 cents
20 Nov 19
500,000
15 Sep 17
0.9 cents
15 Sep 17
2.7 cents
15 Sep 20
3,500,000
27 Oct 17
1.0 cents
27 Oct 17
2.6 cents
27 Oct 20
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
3,500,000
27 Oct 17
1.0 cents
27 Oct 18
1.8 cents
27 Oct 21
3,500,000
3,500,000
27 Oct 17
1.2 cents
27 Oct 19
(i)
27 Oct 22
(cid:150)
Vested
during
the year
No.
(cid:150)
(cid:150)
(cid:150)
(cid:150)
Expired/
Exercised
during
the year
No.
500,000
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
500,000
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
Directors
J Murray
M Bachmann
2015
2015
2017
2018
2018
2018
2015
2015
2017
2018
2018
2018
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
18 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
DIRECTORS(cid:146) REPORT
REMUNERATION REPORT (AUDITED) (cont(cid:146)d)
D.
Share(cid:150)based compensation (cont(cid:146)d)
Directors
C Gordon
A Scott
Options
issued
during
the year
No.
Finan-
cial
year
2018
2018
2018
2015
2015
2018
2018
2018
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
No of
options
No.
3,500,000
3,500,000
3,500,000
500,000
3,500,000
3,500,000
3,500,000
Fair
value
per
options
at issue
date
Issue date
Vesting
date
Exercise
price
Expiry
date
Vested
during
the year
No.
Lapsed/
Exercised
during
the year
No.
27 Oct 17
1.0 cents
27 Oct 17
2.6 cents
27 Oct 20
(cid:150)
27 Oct 17
1.0 cents
27 Oct 18
1.8 cents
27 Oct 21
3,500,000
27 Oct 17
1.2 cents
27 Oct 19
(i)
27 Oct 22
(cid:150)
20 Nov 14
0.3 cents
20 Nov 15
0.5 cents
20 Nov 18
20 Nov 14
0.3 cents
20 Nov 16
2.9 cents
20 Nov 19
27 Oct 17
1.0 cents
27 Oct 17
2.6 cents
27 Oct 20
27 Oct 17
1.0 cents
27 Oct 18
1.8 cents
27 Oct 21
3,500,000
27 Oct 17
1.2 cents
27 Oct 19
(i)
27 Oct 22
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
2,166,667
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(i)
Exercise price will be calculated from the volume weighted average share price for the five (5) trading days before and five (5)
trading days after 27 October 2019 PLUS a premium of 50%.
E.
Additional information
Performance income as a proportion of total compensation
No performance based bonuses have been paid to directors or executives during the financial year.
Key management personnel (KMP) equity holdings
Fully paid ordinary shares of Hannans Ltd
Key management personnel
2019
Damian Hicks
Jonathan Murray
Markus Bachmann
Clay Gordon
Amanda Scott
Balance at
1 July
No.
Granted as
remuneration
No.
Received on
exercise of
options
No.
Net other
change
No.
Balance at
30 June
No.
7,007,218
12,205,132
72,697,917
2,362,204
1,260,001
95,532,472
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
500,000
500,000
(cid:150)
(cid:150)
(cid:150)
(cid:150)
3,787,921
(cid:150)
(cid:150)
7,007,218
12,705,132
76,985,838
2,362,204
1,260,001
1,000,000
3,787,921
100,320,393
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 19
DIRECTORS(cid:146) REPORT
REMUNERATION REPORT (AUDITED) (cont(cid:146)d)
E.
Additional information (cont(cid:146)d)
Options of Hannans Ltd
Key management personnel
2019
Damian Hicks
Jonathan Murray (i)
Markus Bachmann
Clay Gordon
Amanda Scott
Balance
at
1 July
No.
Granted as
remune-
ration
No.
Options
exercised
No.
Net other
change
No.
Balance at
30 June
No.
Exercisable
No.
Not
exercisable
No.
Vested at 30 June
(cid:150)
14,737,500
14,197,917
10,500,000
15,833,333
55,268,750
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(500,000)
(500,000)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
14,237,500
10,737,500
3,500,000
13,697,917
10,197,917
3,500,000
10,500,000
7,000,000
3,500,000
(2,166,667)
13,666,666
10,166,666
3,500,000
(1,000,000)
(2,166,667)
52,102,083
38,102,083
14,000,000
(i)
Mr Murray holds 840,000 in trust for unrelated third parties.
The options include those held directly, indirectly and beneficially by KMP.
Loans to KMP and their related parties
There were no loans to KMP and their related parties during the year.
Other transactions and balances with KMP and their related parties
Director transactions
Steinepreis Paganin, of which Mr Jonathan Murray is a partner, provided legal services amounting to $690 (2018: $9,757) to the Group during
the year. The amounts paid were on arm(cid:146)s length commercial terms. Mr Murray(cid:146)s director(cid:146)s fees are also paid to Steinepreis Paganin. At 30
June 2019 there was no amount outstanding owed to Steinepreis Paganin (2018: $924).
Corporate Board Services Pty Ltd (CBS), of which Mr Damian Hicks is a director, provided accounting and compliance services amounting to
$150,000 (2018: $150,000) to the Group during the year. The amounts paid were on arm(cid:146)s length commercial terms. At 30 June 2019 there
was no amount outstanding owed to CBS. During the year, Hannans invoiced $3,655 (2018: $3,700) for expenses paid on behalf CBS. At 30
June 2019 CBS owed $1,005 (2018: $924) to the Group.
End of Remuneration Report
DIRECTORS MEETINGS
The following tables set information in relation to Board meetings held during the financial year.
Board Member
Damian Hicks
Jonathan Murray
Markus Bachmann
Clay Gordon
Amanda Scott
Board Meetings
Held while Director
Attended
Circular
Resolutions
Passed
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
Total
6
6
6
6
6
20 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
DIRECTORS(cid:146) REPORT
PROJECTS
The Projects are constituted by the following tenements:
Tenement
Interest
Tenement
Interest
Tenement
Interest
Tenement Number
% Note
Tenement Number
% Note
Tenement Number
% Note
Project: Forrestania
Project: Forrestania
Project: Forrestania
E77/2207-I
E77/2219-I
E77/2220-I
E77/2239-I
E77/2303
P77/4290
100
100
100
100
100
100
1,2
1,2
1,2
1,2
1,2
1,2
P77/4291
E77/2488
E77/2489
E77/2498
E77/2545
E77/2546
100
100
100
100
100
100
1,2
E77/2460
Project: Queen Victoria Rocks
E15/1416
Project: Lake Hope
E63/1897
1
1
1
1
1
100
100
100
3
1
1
NOTE:
1
2
3
Reed Exploration Pty Ltd (REX) is a wholly owned subsidiary of Hannans Ltd. REX is the registered holder of the tenements.
REX holds a 100% interest in all minerals excluding gold. REX holds a 20% free-carried interest in the gold rights.
HR Forrestania Pty Ltd (HRF) is a wholly owned subsidiary of Hannans Ltd. HRF is the registered holder of the tenements.
TENEMENTS UNDER APPLICATION
Applications for tenements have been submitted are as follows:
Tenement Number
Project: Forrestania
E77/2610
P77/4534
CORPORATE STRUCTURE
The corporate structure of Hannans group is as follows:
Hannans Ltd
(ASX: HNR)
HR Forrestania Pty Ltd
(100%)
HR Equities Pty Ltd
(100%)
Reed Exploration Pty Ltd
(100%)
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 21
DIRECTORS(cid:146) REPORT
CAPITAL
Hannans Ltd issued capital is as follows:
Ordinary Fully Paid Shares
At the date of this report there are the following number of ordinary fully paid shares
Ordinary fully paid shares at 30 June 2019
Ordinary fully paid shares at the date of this report
Number of shares
1,987,954,539
1,987,954,539
At a general meeting of shareholders:
(a)
(b)
on a show of hands, each person who is a member or sole proxy has one vote; and
on a poll, each shareholder is entitled to one vote for each fully paid share.
Shares Under Option
At the date of this report there are a total of 12 unlisted option holders holding 117,172,512 unissued ordinary shares in respect of which
options are outstanding. The unlisted options do not carry voting rights at a general meeting of shareholders.
Balance at the beginning of the year
Movements of share options during the year
Exercised at 0.5 cents, expiring 20 November 2018
Expired at 0.5 cents, expiring 20 November 2018
Balance at 30 June 2019
Total number of options outstanding at the date of this report
* VWAP = Volume Weighted Average Price
Substantial Shareholders
Hannans Ltd has the following substantial shareholders as at 26 August 2019:
Number of options
125,022,513
(7,650,001)
(200,000)
117,172,512
117,172,512
Name
Number of shares
Percentage of issued capital
Neometals Investments Pty Ltd
706,209,483
35.52%
Range of Shares as at 26 August 2019
Range
1 (cid:150) 1,000
1,001 (cid:150) 5,000
5,001 (cid:150) 10,000
10,001 (cid:150) 100,000
100,001 (cid:150) 9,999,999
Total
Total Holders
Units
% Issued Capital
120
205
177
968
886
33,378
702,861
1,494,595
48,193,193
1,937,530,512
2,356
1,987,954,539
0.00%
0.04%
0.08%
2.42%
97.46%
100.00%
22 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
DIRECTORS(cid:146) REPORT
CAPITAL (cont(cid:146)d)
Unmarketable Parcels as at 26 August 2019
Minimum $500.00 parcel at $0.009 per unit
55,556
Minimum parcel size
Holders
1,124
Units
21,556,603
Top 20 holders of Ordinary Shares as at 26 August 2019
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Neometals Investments Pty Ltd
J P Morgan Nominees Australia Limited
MCA Nominees Pty Ltd
Equity & Royalty Investments Ltd
Anglo American Exploration
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Marfield Pty Limited
Redland Plains Pty Ltd
Acacia Investments Pty Ltd
CSB Investments (WA) Pty Ltd
Mr Bruce Drummond + Mrs Judith Drummond
Mrs Andrea Murray
Mossisberg Pty Ltd
Allua Holdings Pty Ltd
HSBC Custody Nominees (Australia) Limited - A/C 2
Mr Ross Edward Itzstein
Mr William Scott Rankin
Loan Group Australia Pty Ltd
Anglo American Exploration BV
Units
706,209,483
155,613,454
87,401,545
60,000,003
60,000,000
35,835,560
31,726,271
26,896,651
21,668,669
20,733,503
20,000,000
20,000,000
11,775,956
10,577,744
10,000,000
9,905,220
9,000,000
8,699,489
8,500,000
7,389,162
% of Issued
Capital
35.52%
7.83%
4.40%
3.02%
3.02%
1.80%
1.60%
1.35%
1.09%
1.04%
1.01%
1.01%
0.59%
0.53%
0.50%
0.50%
0.45%
0.44%
0.43%
0.37%
Total of Top 20 holders of ORDINARY SHARES
1,321,932,710
66.50%
On-market buy back
There is no current on-market buy-back.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 23
DIRECTORS(cid:146) REPORT
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were the exploration and evaluation of mining tenements with the objectives of
identifying economic mineral deposits.
FINANCIAL REVIEW
The Group began the financial year with cash reserves of $4,082,079.
During the year total exploration expenditure expensed by the Group amounted to $766,344 (2018: $505,967). The exploration expenditures
relate to non JORC compliant mineral resource projects and this has been expensed in accordance with the Group(cid:146)s accounting policy.
administration expenditure incurred amounted to $909,381 (2018: $1,335,430). This has resulted in an operating loss after income tax for the
year ended 30 June 2019 of $2,085,563 (2018: $1,379,271 loss).
As at 30 June 2019 cash and cash equivalents totalled $2,686,790.
Summary of 5 Year Financial Information as at 30 June
Cash and cash equivalents ($)
2,686,790
4,082,079
1,481,828
1,425,160
Net assets/equity ($)
4,989,155
6,788,307
4,043,759
903,218
2019
2018
2017
2016
2015
345,497
73,563
Exploration expenditure expensed ($)
(766,344)
(505,967)
(804,102)
(29,998)
(387,160)
Exploration and evaluation
expenditure capitalised ($)
No of issued shares
No of options
Share price ($)
(404,000)
(28,000)
2,688,000^
(97,599)
(161,630)
1,987,954,539
117,172,512
1,980,304,538
125,022,513
1,682,640,560
57,201,681
970,707,755
102,712,500
721,966,133
36,050,000
0.010
0.014
0.015
0.016
0.002
Market capitalisation (Undiluted) ($)
19,879,545
27,724,264
25,239,608
15,531,324
1,443,932
^
On 15 September 2016 Hannans held a General Meeting and shareholders approved the issue of 620,833,333 Hannans shares to
Neometals Ltd in consideration of the acquisition of 100% of the issued share capital of Reed Exploration Pty Ltd. On 29 September
2016 the acquisition of Reed Exploration Pty Ltd was completed. The capitalised exploration and evaluation expenditure related to the
acquisition of Reed Exploration Pty Ltd.
Summary of Share Price Movement for Year ended 30 June 2019
Highest
Lowest
Latest
Price (cents)
Date
1.9
0.8
0.9
7 & 9 Aug 2018
6 (cid:150) 8 Feb, 11 (cid:150) 13 Feb,
18 (cid:150) 20 Feb 2019
26 August 2019
24 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
DIRECTORS(cid:146) REPORT
ANNOUNCEMENTS
ASX Announcements for the year and to the date of this report
Date
Announcement Title
Date
Announcement Title
31 Jul 19
31 Jul 19
29-Apr-19
29-Apr-19
4th Quarter Activities Report
4th Quarter Cashflow Report
3rd Quarter Activities Report
3rd Quarter Cashflow Report
08-Mar-19
Half Year Financial Report
20-Feb-19
01-Feb-19
30-Jan-19
24-Jan-19
27-Nov-18
21-Nov-18
16-Nov-18
05-Nov-18
31-Oct-18
31-Oct-18
High Priority Nickel Sulphide Targets
2nd Quarter Activities Report
2nd Quarter Cashflow Report
Mt Holland Update
Change of Directors Interest Notice
Exercise of Options
Exercise of Options
Updated Capital Structure
1st Quarter Activities Report
Exercise of Options
25-Oct-18
25-Oct-18
25-Oct-18
19-Oct-18
17-Sep-18
07-Sep-18
07-Sep-18
28-Aug-18
06-Aug-18
31-Jul-18
31-Jul-18
25-Jul-18
23-Jul-18
03-Jul-18
Director's Statement at AGM
AGM results
Mt Holland Update
1st Quarter Cashflow Report
Notice of Annual General Meeting
Appendix 4G
2018 Annual Report
Mt Holland Lithium Update
Gold at Forrestania
4th Quarter Activities Report
4th Quarter Cashflow Report
Gold at Forrestania
Mt Holland Lithium Update
Appendix 3Y
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 25
DIRECTORS(cid:146) REPORT
CORPORATE GOVERNANCE STATEMENT
The Board of Directors is responsible for the corporate governance of the Company. The Board guides and monitors the business affairs of
the Company on behalf of the shareholders by whom they are elected and to whom they are accountable.
The ASX document (cid:145)Corporate Governance Principles and Recommendations 3rd Edition' published by the ASX Corporate Governance Council
applies to listed entities with the aim of enhancing the credibility and transparency of Australia(cid:146)s capital markets. The Principles and
Recommendations can be viewed at www.asx.com.au. The Board has assessed the Group(cid:146)s current practice against the Principles and
Recommendations and other than the matters specified below under (cid:147)If Not, Why Not(cid:148) Disclosure, all the best practice recommendations
of the ASX Corporate Governance Council have been applied.
Please refer to the Company(cid:146)s website (www.hannans.com) for Hannans(cid:146) Governance Statements and Policies.
In relation to departures by the Company from the best practice recommendations, Hannans makes the following comments:
Principle 1: Lay solid foundations for management and oversight
1.5 A listed entity should have a diversity policy which includes requirements for the board to set measurable objectives for
achieving gender diversity and to assess annually both the objectives and the entity(cid:146)s progress in achieving them.
The Board is responsible for establishing and monitoring on an annual basis the achievement against gender diversity
objectives and strategies, including the representation of women at all levels of the organisation.
The proportion of women within the Group as at 30 June 2019 was as follows:
Employee
0%
Management
0%
Board of Hannans
20%
The Company has five directors, one executive director (who is contracted to the Company) and no managers. The Board has
determined that the composition of the current Board represents the best mix of Directors that have an appropriate range of
qualifications and expertise, can understand and competently deal with current and emerging business issues and can
effectively review and challenge the performance of management. The Company has not set or disclosed measurable
objectives for achieving gender diversity. Due to the size of the Company, the Board does not deem it practical to limit the
Company to specific targets for gender diversity. Every candidate suitably qualified for a position has an equal opportunity of
appointment regardless of gender, age, ethnicity or cultural background.
1.6 Companies should disclose, in relation to each reporting period, whether a performance evaluation of the Board was
undertaken in the reporting period in accordance with that process.
Evaluation of the Board is carried out on a continuing and informal basis. The Company will put a formal process in place as
and when the level of operations justifies it. No performance evaluation was undertaken in the reporting period.
1.7 Companies should disclose, in relation to each reporting period, whether a performance evaluation of its senior executives
was undertaken in the reporting period in accordance with that process.
Evaluation of the senior executives is carried out on a continuing and informal basis. The Company will put a formal process in
place as and when the level of operations justifies it. No performance evaluation was undertaken in the reporting period.
Principle 2: Structure the Board to add value
2.1 The Board should establish a nomination committee
The Board as a whole will decide on the choice of any new director upon the creation of any new Board position and if any
casual vacancy arises. Decisions to appoint new directors will be minuted. The Board will identify candidates and assess their
skills in deciding whether an individual has the potential to add value to the Company. The Board may also seek independent
advice to assist with the identification process. The Board considers that this process is appropriate given the size and the
complexity of the Group(cid:146)s affairs. Until the situation changes the Board will carry out any necessary nomination committee
functions.
2.4 The majority of the Board should be independent directors
The Board consists of one Non-Executive Chairman, three Non-Executive Directors and an Executive Director. There are no
independent directors on the Board. Details of their skills, experience and expertise and the period of office held by each
Director have been included in the Directors(cid:146) Report. The number of Board meetings and the attendance of the Directors are
set out in the Directors(cid:146) Report.
The Board considers that the composition of the existing Board is appropriate given the scope and size of the Group(cid:146)s
operations and the skills matrix of the existing Board members. The Board will continue to monitor whether this remains
appropriate as the scope and scale of its activities evolves and expands.
26 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
DIRECTORS(cid:146) REPORT
CORPORATE GOVERNANCE STATEMENT (cont(cid:146)d)
2.5 The Chair of the Board should be an independent director and, in particular, should not be the same person as the Managing
Director/Chief Executive Officer
The current Chair of the Company is Mr Jonathan Murray. Mr Murray does not satisfy the ASX Corporate Governance Principles
and Recommendations definition of an independent director however the Board considers Mr Murray(cid:146)s role as Non-Executive
Chairman essential to the success of the Group in its current stage, wherein the Group continues to refine its focus on the
strategic development of the business. Over time, it is proposed that the Chair position will transition to an independent non-
executive director.
Principle 4: Safeguard integrity of corporate reporting
4.1 The Board should establish an audit committee
The Board as a whole meets with the auditor to identify and discuss the areas of audit focus, appropriateness of the
accounting judgement or choices exercised by management in preparation of the financial statements. The Board may also
seek independent advice as and when required to address matters pertaining to appointment, removal or rotation of auditor.
The Board considers that this process is appropriate given the size and the complexity of the Group(cid:146)s affairs. It is not
considered necessary to have a separate audit committee.
Principle 7: Recognise and manage risk
7.1 The Board should establish a risk committee
The Company is constantly monitoring risks associated with the economy, industry and company due to their role as
professional fund managers, lawyers, in-country specialists and shareholders with a view to managing risks and identifying
threats. This process is on-going. The preparation of the Board pack and its timely distribution is a key element of this process
along with monthly cash flow budgets, management discussions and informal communications between the Board and
management via telephone, email and in person. The Board considers that this process is appropriate given the size and
complexity of the Group(cid:146)s affairs. It is not considered necessary to have a separate risk committee.
7.2 The Board should review the entity(cid:146)s risk management framework and disclose at each reporting period
The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are
aligned with the risks and opportunities identified by the Board.
The Company believes that it is crucial for all Board members to be part of this process and as such the Board has not
established a separate risk management committee. The Board considers that this process is appropriate given the size and
the complexity of the Group(cid:146)s affairs.
The Board has a number of mechanisms in place to ensure management(cid:146)s objectives and activities are aligned by the Board.
These include but are not limited to the following:
¶ Board approval of a strategic plan, which
¶
Implementation of Board approved operating plans
and Board monitoring of the progress against
budgets that is reviewed at every board meeting.
encompasses strategy statements designed to meet
stakeholders(cid:146) needs and manage business risk.
7.3 The Company should establish an internal audit function
The Company reviews its risk and internal control processes on a continual informal basis and work alongside auditors at half
year and year end reviews to identify the Company(cid:146)s risks, systems and procedures. The Company may also seek
independent advice to assist with the identification of risks and processes if and when required. The Board considers that this
process is appropriate given the size and the complexity of the Group(cid:146)s affairs. It is not considered necessary to have an
internal audit function. Nonetheless it remains committed to effective management and control of these factors.
7.4 The Company should disclose whether it has any material exposure to economic, environmental and social sustainability
risks and how it manages or intends to manage those risks
The nature of the Group(cid:146)s exploration operations are such that it could be seen to be constantly exposed to economic,
environmental and social risks. The Board and Management have respect for the rights and beliefs of all stakeholders and it is
part of the Group(cid:146)s culture to have open, honest and constant two way communication with stakeholders and to operate fully
within the laws of the jurisdictions the Group operates within. The Group maintains high standards with regards its
environmental and social practices and is constantly striving to improve its engagement and information processes. The Board
and Management will continue to monitor these risks to the Group.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 27
DIRECTORS(cid:146) REPORT
CORPORATE GOVERNANCE STATEMENT (cont(cid:146)d)
Principle 8: Remunerate fairly and responsibly
8.1 The Board should establish a remuneration committee
The Board as a whole may appoint an independent working group comprising consultants, Directors and/or the Company
Secretary to review and make recommendations to the board in relation to the remuneration framework as well as identify
candidates and assess their skills in deciding whether an individual has the potential to add value to the Company. The Board
considers that this process is appropriate given the size and the complexity of the Group(cid:146)s affairs. It is not considered
necessary to have a separate nomination or remuneration committee. Until the situation changes the Board of Hannans will
carry out any necessary remuneration committee functions.
Independent Professional Advice
Directors of the Company are expected to exercise considered and independent judgement on matters before them and may need to seek
independent professional advice. A director with prior written approval from the Chairman may, at the Group(cid:146)s expense obtain independent
professional advice to properly discharge their responsibilities.
Executive Director (ED) and Group Finance Officer Certifications
The ED and Group Finance Officer provide the following declaration to the Board in respect of each quarter, half and full year financial
period:
¶
¶
¶
¶
that Hannans financial records have been properly maintained;
that Hannans(cid:146) financial statements, in all material respects, are complete and present a true and fair view of the financial condition
and operational results of Hannans and the Group and are in accordance with the relevant accounting standards;
that the financial statements are founded on a sound system of risk management and internal compliance and control which
implements the policies adopted by the Board; and
that Hannans(cid:146) risk management and internal compliance and control systems are operating effectively in all material respects.
COMPLIANCE
Significant Changes in State of Affairs
Other than those disclosed in this annual report no significant changes in the state of affairs of the Group occurred during the financial year.
Significant Events after the Balance Date
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the
operations of the Group, the results of those operations, or state of affairs of the Group in future financial years other than those stated
below:
(a)
On 15 July 2019 the Group provided a loan of $55,000 to Critical Metals Ltd. The terms and conditions of the loan are currently under
negotiation.
Likely developments and Expected Results
The Group expects to maintain the present status and level of operations and hence there are no likely developments in the Group(cid:146)s
operations.
Environmental Regulation and Performance
The Group is subject to significant environmental regulation in respect to its exploration activities.
The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it(cid:146)s aware of and is in
compliance with all environmental legislation. The Directors of the Group are not aware of any breach of environmental legislation for the
year under review.
28 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
DIRECTORS(cid:146) REPORT
COMPLIANCE (cont(cid:146)d)
Share options
As at the date of this report, there were 117,172,512 options on issue to purchase ordinary shares at a range of exercise prices (117,172,512
at the reporting date). Refer to the remuneration report for further details of the options outstanding.
Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate.
Insurance of Directors and Officers
During or since the end of the financial year, the Company has paid premiums insuring all the Directors of Hannans Ltd against costs incurred
in defending conduct involving:
(a)
a wilful breach of duty, and
(b)
a contravention of sections 182 or 183 of the Corporations Act 2001,
as permitted by section 199B of the Corporations Act 2001.
The total amount of insurance contract premiums paid was $10,699.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of the terms of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to
indemnify Ernst & Young during or since the financial year.
Dividends
No dividends were paid or declared during the financial year and no recommendation for payment of dividends has been made.
Non(cid:150)Audit Services
During the year Ernst & Young, the Group auditor, did not performed other non-audit services in addition to its statutory duties.
Auditor(cid:146)s independence declaration
The auditor(cid:146)s independence declaration as required under section 307C of the Corporations Act 2001 is included on page 30.
Signed in accordance with a resolution of the Directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the Directors
Jonathan Murray
Non-Executive Chairman
Perth, Australia this 29th day of August 2019
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 29
INDEPENDENCE DECLARATION TO THE DIRECTORS OF
HANNANS LTD
30 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
DIRECTORS(cid:146) DECLARATION
The Directors declare that:
(a)
(b)
in the Directors(cid:146) opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable;
in the Directors(cid:146) opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001,
including compliance with Australian Accounting Standards and International Financial Reporting Standards as disclosed in note 2 to the
financial report and giving a true and fair view of the financial position and performance of the Group for the financial year ended
30 June 2019; and
(c)
the Directors have been given the declarations required by s.295A of the Corporations Act 2001 for the financial year ended
30 June 2019.
Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Jonathan Murray
Non-Executive Chairman
Perth, Australia this 29th day of August 2019
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 31
INDEPENDENT AUDITOR(cid:146)S REPORT TO THE MEMBERS OF
HANNANS LTD
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 32
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 33
34 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 35
36 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND
OTHER COMPREHENSIVE INCOME
for the financial year ended 30 June 2019
Note
5(a)
5(b)
5(c)
5(d)
5(e)
14
6
Revenue
Other income
Other income
Employee and contractors expenses
Depreciation expense
Consultants expenses
Occupancy expenses
Marketing expenses
Exploration and evaluation expenses
Write off of exploration and evaluation expenses
Fair value changes in financial assets designated at fair value through P&L
Other expenses
Loss from continuing operations before income tax expense
Income tax benefit/(expense)
Loss from continuing operations attributable
to members of the parent entity
Other comprehensive income for the year
Items that may be reclassified subsequently to profit or loss
Reclassification of FCTR to profit and loss on disposal of foreign operations
Foreign currency translation differences for foreign operations
Total items that may be reclassified subsequently to profit or loss
Items that will not be reclassified to profit or loss
Total other comprehensive income for the year
2019
$
67,016
2018
$
24,590
6,818
423,202
(554,278)
(3,744)
(195,527)
(3,000)
(6,896)
(766,344)
(404,000)
(79,672)
(145,936)
(879,560)
(1,270)
(226,429)
(4,000)
(11,745)
(505,967)
(cid:150)
14,334
(212,426)
(2,085,563)
(1,379,271)
(cid:150)
(cid:150)
(2,085,563)
(1,379,271)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
Total comprehensive loss for the year
(2,085,563)
(1,379,271)
Net loss attributable to the parent entity
(2,085,563)
(1,379,271)
Total comprehensive loss attributable to the parent entity
(2,085,563)
(1,379,271)
Loss per share:
Basic (cents per share)
Diluted (cents per share)
The accompanying notes form part of the financial statements.
21
21
(0.11)
(0.11)
(0.07)
(0.07)
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 37
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2019
Note
28(a)
10
11
12
13
11
14
15
16
17
17
18
19
20
2019
$
2018
$
2,686,790
4,082,079
86,461
1,985
41,965
6,950
2,775,236
4,130,994
56,000
27,536
(cid:150)
2,256,000
2,339,536
5,114,772
56,000
1,056
79,672
2,660,000
2,796,728
6,927,722
125,617
124,690
(cid:150)
(cid:150)
125,617
(cid:150)
(cid:150)
(cid:150)
14,725
139,415
(cid:150)
(cid:150)
125,617
139,415
4,989,155
6,788,307
40,872,810
40,840,777
1,061,897
838,321
(36,945,552)
(34,890,791)
4,989,155
6,788,307
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets at fair value through profit and loss
Total current assets
Non(cid:150)current assets
Other receivables
Property, plant and equipment
Other financial assets at fair value through profit and loss
Exploration and evaluation expenditure
Total non(cid:150)current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Provisions
Other financial liabilities
Total current liabilities
Non(cid:150)current liabilities
Other financial liabilities
Total non(cid:150)current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of the financial statements.
38 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the financial year ended 30 June 2019
Attributable to equity holders
Ordinary Shares
$
Option Reserves
$
Accumulated
Losses
$
Total
Equity
$
Balance as at 1 July 2018
40,840,777
838,321
(34,890,791)
6,788,307
Loss for the year
Other comprehensive loss for the period
Total comprehensive loss for the period
Transactions with owners
Share based payments
Exercise/Lapse of options
Share issue expense
Total transactions with owners
(cid:150)
(cid:150)
(cid:150)
(cid:150)
38,250
(6,217)
32,033
(cid:150)
(cid:150)
(cid:150)
(2,085,563)
(2,085,563)
(cid:150)
(cid:150)
(2,085,563)
(2,085,563)
254,378
(30,802)
(cid:150)
223,576
(cid:150)
30,802
(cid:150)
30,802
254,378
38,250
(6,217)
286,411
Balance as at 30 June 2019
40,872,810
1,061,897
(36,945,552)
4,989,155
Balance as at 1 July 2017
37,296,618
297,378
(33,550,237)
4,043,759
Loss for the year
Other comprehensive loss for the period
Total comprehensive loss for the period
Transactions with owners
Issue of shares
Share based payments
Issue of options
Share issue expense
Total transactions with owners
(cid:150)
(cid:150)
(cid:150)
3,704,952
(cid:150)
(cid:150)
(160,793)
3,544,159
(cid:150)
(cid:150)
(cid:150)
(cid:150)
579,660
(38,717)
(cid:150)
540,943
(1,379,271)
(1,379,271)
(cid:150)
(cid:150)
(1,379,271)
(1,379,271)
(cid:150)
(cid:150)
38,717
(cid:150)
38,717
3,704,952
579,660
(cid:150)
(160,793)
4,123,819
Balance as at 30 June 2018
40,840,777
838,321
(34,890,791)
6,788,307
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 39
CONSOLIDATED STATEMENT OF CASH FLOWS
for the financial year ended 30 June 2019
Cash flows from operating activities
Payments for exploration and evaluation
Payments to suppliers and employees
Interest received
Note
2019
$
2018
$
(772,850)
(693,237)
68,990
(562,336)
(970,085)
19,502
Net cash used in operating activities
28(b)
(1,397,097)
(1,512,919)
Cash flows from investing activities
Proceed on sale of tenements
Payment on sale of tenements to minority interest holder
Payment for investment securities
Payment for property, plant and equipment
Net cash (used)/received by investing activities
Cash flows from financing activities
Proceeds from issues of equity securities
Proceeds from exercise of options
Payment for share issue costs
Net cash received by financing activities
(cid:150)
(cid:150)
(cid:150)
(30,225)
(30,225)
611,013
(80,000)
(10,000)
(cid:150)
521,013
(cid:150)
3,621,635
38,250
(6,217)
32,033
83,317
(112,795)
3,592,157
Net (decrease)/increase in cash and cash equivalents
(1,395,289)
2,600,251
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
28(a)
4,082,079
2,686,790
1,481,828
4,082,079
The accompanying notes form part of the financial statements.
40 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
1.
General Information
The consolidated financial statements of Hannans Ltd (Company or Hannans) and its subsidiaries (collectively, the Group) for the year
ended 30 June 2019 were authorised for issue in accordance with a resolution of the Directors on 29 August 2019.
Hannans is a for profit company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the
Australian Securities Exchange.
The nature of the operations and principal activities of the Group are mineral exploration and project development which is further
described in the Directors' Report. Information on other related party relationships is provided in note 26.
2.
Summary of significant accounting policies
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting
Standards Board. The financial report includes the financial statements of the Hannans Ltd and its subsidiaries.
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board.
(a)
Basis of preparation
The financial report has been prepared on an accruals basis and is based on historical cost, except for certain financial assets
and liabilities which are carried at fair value. Cost is based on the fair values of the consideration given in exchange for assets.
All amounts are presented in Australian dollars, unless otherwise noted.
Separate financial statements for Hannans as an individual entity are no longer presented as the consequence of a change to
the Corporations Act 2001, however, required financial information for Hannans as an individual entity is included in note 31.
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2019
and the comparative information presented in these financial statements for the year ended 30 June 2018.
(b)
New Accounting Standards for Application in the Current Financial Year and Future Periods
New standards, interpretations and amendments adopted by the Group during the financial year
The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed
in the preparation of the Group(cid:146)s annual consolidated financial statements for the year ended 30 June 2018. All other new
standards and interpretations effective from 1 July 2018 were adopted with the main impact being disclosure changes. The
adoption of the new or amended standards and interpretations, other than AASB 9 and AASB 15, did not result in any
significant changes to the Group(cid:146)s accounting policies. The Group has not early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective.
AASB 9: Financial Instruments
AASB 9 Financial Instrument was adopted on 1 July 2018 and is a new standard which replaces AASB 139 Financial Instruments:
Recognition and Measurement and includes a new model for classification and measurement, a single, forward-looking
(cid:145)expected loss(cid:146) impairment model and a substantially-reformed approach to hedge accounting. In accordance with the
transitional provisions in AASB 9, comparative figures have not been restated. The accounting policies have been updated to
reflect the application of AASB 9 for the period from 1 July 2018.
Classification and measurement
Under AASB 9, financial instruments are subsequently measured at fair value through profit or loss (FVPL), amortised cost, or
fair value through other comprehensive income (FVOCI). The classification is based on two criteria: the Group(cid:146)s business model
for managing the assets; and whether the instruments(cid:146) contractual cash flows represent (cid:145)solely payments of principal and
interest(cid:146) (SPPI) on the principal amount outstanding (the SPPI criterion). The SPPI test is applied to the entire financial asset,
even if it contains an embedded derivative. Consequently, a derivative embedded in a debt instrument is not accounted for
separately.
At the date of initial application, existing financial assets and liabilities of the Group were assessed in terms of the requirements
of AASB 9. The assessment was conducted on instruments that had not been derecognised as at 1 January 2018. In this regard,
the Group has determined that the adoption of AASB 9 has impacted the classification of financial instruments at 1 January
2018 as follows:
Class of financial instrument
presented in the statement of
financial position
Original measurement category under
AASB139 (i.e. prior to 1 July 2018)
New measurement category under
AASB 9 (i.e. from 1 July 2018)
Cash and cash equivalents
Loans and receivables
Financial assets at amortised cost
Trade and other receivables
Loans and receivables
Financial assets at amortised cost
Equity instruments
Available-for-sale financial assets
Financial assets at FVPL
Loans receivable to a director
related entity
Loans and receivables at amortised cost
Financial assets at FVPL
Trade and other payables
Financial liability at amortised cost
Financial liability at amortised cost
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
2.
Statement of significant accounting policies (cont(cid:146)d)
(b)
New Accounting Standards for Application in the Current Financial Year and Future Periods (cont(cid:146)d)
The change in classification has not resulted in any material re-measurement adjustments at 1 July 2018.
Impairment of financial assets
In relation to the financial assets carried at amortised cost, AASB 9 requires an expected credit loss (ECL) model to be applied as
opposed to an incurred credit loss model under AASB 139. The ECL model requires the Group to account for ECL and changes in
those ECL at each reporting date to reflect changes in credit risk since initial recognition of the financial asset. In particular, AASB
9 requires the Group to measure the loss allowance at an amount equal to lifetime ECL if the credit risk on the instrument has
increased significantly since initial recognition. If the credit risk on the financial instrument has not increased significantly since
initial recognition, the Group is required to measure the loss allowance for that financial instrument at an amount equal to the
ECL within the next 12 months.
As at 1 July 2018, the Group reviewed and assessed the existing financial assets for impairment using reasonable and
supportable information. In accordance with AASB 9, where the Group concluded that it would require undue cost and effort to
determine the credit risk of a financial asset on initial recognition, the Group recognises lifetime ECL. The result of the
assessment is as follows:
Items existed at 1 July 2018
that are subject to the
impairment provision of AASB 9
Cash and cash equivalents
Trade and other receivables
Credit risk attributes
Cumulative additional loss
allowance recognised
at 1 July 2018
All bank balances are assessed to have low credit risk
at each reporting date as they are held with reputable
institutions.
The Group applied the simplified approach and
concluded that the lifetime ECL for these assets would
be negligible and therefore no loss allowance was
required at 1 July 2018.
Nil.
Nil.
Hedge accounting
The Group does not apply hedge accounting.
Trade and other receivables (new policy applied from 1 July 2018 due to adoption of AASB 9)
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 FVPL.
The group assesses on a forward-looking basis the ECL associated with its debt instruments carried at amortised cost. The
amount of ECL 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 ECL for trade receivables carried at amortised cost. The ECL on
these financial assets are estimated based on the Group(cid:146)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 ECL 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 ECL 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.
Equity instruments (new policy applied from 1 July 2018 due to adoption of AASB 9)
Shares and options held by the Group are classified as equity instruments and are stated at FVPL. Gains and losses arising from
changes in fair value are recognised directly to profit or loss for the period.
Loans receivables (new policy applied from 1 July 2018 due to adoption of AASB 9)
Loans receivables are classified, at initial recognition, and subsequently measured at amortised cost, FVOCI, or FVPL. Loan
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. Loan receivables that do not
meet the criteria for amortised cost are measured at FVPL.
42 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
2.
Statement of significant accounting policies (cont(cid:146)d)
(b)
New Accounting Standards for Application in the Current Financial Year and Future Periods (cont(cid:146)d)
AASB 15: Revenue from Contracts with Customers
AASB 15 Revenue from Contracts with Customers was adopted on 1 July 2018 and is a new standard which replaces the
existing revenue recognition standards AASB 111 Construction Contracts, AASB 118 Revenue and related Interpretations.
AASB 15 specifies the accounting treatment for revenue arising from contracts with customers (except for contracts within the
scope of other accounting standards such as leases or financial instruments). Under AASB 15, revenue is recognised as or when
an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring those goods or
services. The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and
circumstances when applying each step of the model to contracts with their customers. The standard also specifies the
accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract.
Based on the Group(cid:146)s current principal activities being that of exploration and evaluation and that it does not have any direct
contracts with customers and accordingly has no revenue impacted by the Standard.
Revenue (new policy applied from 1 July 2018 due to adoption of AASB 15)
Revenue is recognised when or as the Group transfers control of goods or services to a customer at the amount to which the
Group expects to be entitled. If the Group estimates the amount of consideration promised includes a variable amount, the
Group estimates the amount of consideration to which it will be entitled.
New standards issued but not yet effective
The following standards and interpretations have been issued by the AASB but are not yet effective and have not been early
adopted by the Group for the period ended 30 June 2019:
Reference / Title
AASB 16
Leases
Summary
The key features of AASB 16 are as follows:
Lessee accounting
Application date of
standard
Application date for
Group
1 January 2019
1 July 2019
·
Lessees are required to recognise assets and liabilities for all leases with a term of more than 12 months,
unless the underlying asset is of low value.
· A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly
to other financial liabilities.
· Assets and liabilities arising from a lease are initially measured on a present value basis. The
measurement includes non-cancellable lease payments (including inflation-linked payments), and also
includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option
to extend the lease, or not to exercise an option to terminate the lease.
· AASB 16 contains disclosure requirements for lessees.
Lessor accounting
· AASB 16 substantially carries forward the lessor accounting requirements in AASB 117. Accordingly, a
lessor continues to classify its leases as operating leases or finance leases, and to account for those two
types of leases differently.
· AASB 16 also requires enhanced disclosures to be provided by lessors that will improve information
disclosed about a lessor(cid:146)s risk exposure, particularly to residual value risk.
AASB 16 supersedes:
(a) AASB 117 Leases
(b) Interpretation 4 Determining whether an Arrangement contains a Lease
(c) SIC-15 Operating Leases(cid:151)Incentives
(d) SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease
The new standard will be effective for annual periods beginning on or after 1 January 2019. Early application
is permitted, provided the new revenue standard, AASB 15 Revenue from Contracts with Customers, has been
applied, or is applied at the same date as AASB 16.
Impact
The assessment is ongoing. The preliminary result to date indicates a change in disclosure with no material
remeasurement impact at 1 July 2019.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
2.
Statement of significant accounting policies (cont(cid:146)d)
(c)
Cash and cash equivalents
(e)
Financial assets (cont(cid:146)d)
Cash and cash equivalents comprise cash on hand, cash
in banks and investments in money market instruments
that are readily convertible to known amount of cash
which are subject to an insignificant risk of change in
value , net of outstanding bank overdrafts.
(d)
Employee benefits
Provision is made for benefits accruing to employees in
respect of wages and salaries and annual leave when it
is probable that settlement will be required and they
are capable of being measured reliably.
Liabilities recognised in respect of employee benefits
expected to be settled within 12 months, are measured
at their nominal values using the remuneration rate
expected to apply at the time of settlement.
Liabilities recognised in respect of employee benefits
which are not expected to be settled within 12 months
are measured as the present value of the estimated
future cash outflows to be made by the entity in
respect of services provided by employees up to
reporting date.
(e)
Financial assets
Financial assets are recognised and derecognised on
trade date where purchase or sale of an investment is
under a contract whose terms require delivery of the
investment within the timeframe established by the
market concerned, and are initially measured at fair
value, net of transaction costs.
Subsequently measured at FVPL, amortised cost, or
FVOCI. The classification is based on two criteria: the
Group(cid:146)s business model for managing the assets; and
whether the instruments(cid:146) contractual cash flows
represent SPPI on the SPPI criterion. The SPPI test is
applied to the entire financial asset, even if it contains
an embedded derivative. Consequently, a derivative
embedded in a debt instrument is not accounted for
separately.
Trade and other receivables
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 FVPL.
The group assesses on a forward-looking basis the ECL
associated with its debt instruments carried at
amortised cost. The amount of ECL 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 ECL for trade
receivables carried at amortised cost. The ECL on these
financial assets are estimated based on the Group(cid:146)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 ECL 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 ECL 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.
Equity instruments
Shares and options held by the Group are classified as
equity instruments and are stated at FVPL. Gains and
losses arising from changes in fair value are recognised
directly to profit or loss for the period.
Loans receivables
Loans receivables are classified, at initial recognition,
and subsequently measured at amortised cost, FVOCI,
or FVPL. Loan 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. Loan receivables that do not meet
the criteria for amortised cost are measured at FVPL.
44 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
2.
Statement of significant accounting policies (cont(cid:146)d)
(f)
Financial instruments issued by the Company
(h)
Impairment of non-financial assets (cont(cid:146)d)
Transaction costs on the issue of equity instruments
Transaction costs arising on the issue of equity
instruments are recognised directly in equity as a
reduction of the proceeds of the equity instruments to
which the costs relate. Transaction costs are the costs
that are incurred directly in connection with the issue of
those equity instruments and which would not have
been incurred had those instruments not been issued.
(g)
Goods and services tax
Revenues, expenses and assets are recognised net of
the amount of goods and services tax (GST), except:
i. where the amount of GST incurred is not
recoverable from the taxation authority, it is
recognised as part of the cost of acquisition of an
asset or as part of an item of expense; or
ii.
for receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables.
Cash flows are included in the cash flow statement on
a gross basis. The GST component of cash flows arising
from investing and financing activities which is
recoverable from, or payable to, the taxation authority
is classified as operating cash flows.
(h)
Impairment of non-financial assets
At each reporting date, the Group reviews the carrying
amounts of its tangible and intangible assets to
determine whether there is any indication that those
assets have suffered an impairment loss. Where the
asset does not generate cash flows that are
independent from other assets, the Group estimates
the recoverable amount of the cash(cid:150)generating unit to
which the asset belongs. If any such indication exists,
the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if
any), being the higher of the asset(cid:146)s fair value less
costs to sell and value in use to the asset(cid:146)s carrying
value. Excess of the asset(cid:146)s carrying value over its
recoverable amount is expensed to the consolidated
statement of comprehensive income.
Intangible assets with indefinite useful lives and
intangible assets not yet available for use are tested for
impairment annually and whenever there is an
indication that the asset may be impaired.
Recoverable amount is the higher of fair value less
costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their
present value using a pre(cid:150)tax discount rate that reflects
current market assessments of the time value of
money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
Where an impairment loss subsequently reverses, the
carrying amount of the asset (cash(cid:150)generating unit) is
increased to the revised estimate of its recoverable
amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount
that would have been determined had no impairment
loss been recognised for the cash(cid:150)generating unit in
prior years. A reversal of an impairment loss is
recognised in profit or loss immediately, unless the
relevant asset is carried at fair value, in which case the
reversal of the impairment loss is treated as a
revaluation increase.
(i)
Tax
Current tax
Current tax is calculated by reference to the amount of
income taxes payable or recoverable in respect of the
taxable profit or tax loss for the period. It is calculated
using tax rates and tax laws that have been enacted or
substantively enacted by reporting date. Current tax for
current and prior periods is recognised as a liability (or
asset) to the extent that it is unpaid (or refundable).
Deferred tax
Deferred tax is accounted for using the full liability
method in respect of temporary differences arising
from differences between the carrying amount of
assets and liabilities in the financial statements and the
corresponding tax base of those items.
Deferred tax liabilities are recognised for taxable
temporary differences arising on investments in
subsidiaries, branches, associates and joint ventures
except where the entity is able to control the reversal
of the temporary differences and it is probable that the
temporary differences will not reverse in the
foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with these
investments and interests are only recognised to the
extent that it is probable that there will be sufficient
taxable profits against which to utilise the benefits of
the temporary differences and they are expected to
reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply to the period(s)
when the asset and liability giving rise to them are
realised or settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted by
reporting date. The measurement of deferred tax
liabilities and assets reflects the tax consequences that
would follow from the manner in which the entity
expects, at the reporting date, to recover or settle the
carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they
relate to income taxes levied by the same taxation
authority and the entity intends to settle its current tax
assets and liabilities on a net basis.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
2.
Statement of significant accounting policies (cont(cid:146)d)
(i)
Tax (cont(cid:146)d)
(k)
Joint arrangements
Current and deferred tax for the period
Joint ventures
Current and deferred tax is recognised as an expense or
income in the statement of comprehensive income,
except when it relates to items credited or debited
directly to equity, in which case the deferred tax is also
recognised directly in equity, or where it arises from
the initial accounting for a business combination, in
which case it is taken into account in the determination
of goodwill or excess.
Tax consolidation
Legislation to allow groups, comprising a parent entity
and its Australian resident wholly owned entities, to
elect to consolidate and be treated as a single entity for
income tax purposes was substantively enacted on 21
October 2002. The Company and its 100% owned
Australian resident subsidiaries implemented the tax
consolidation legislation on 1 July 2008 with Hannans
as the head entity.
(j)
Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is
expensed immediately to the profit and loss where the
applicable area of interest does not contain a JORC
compliant mineral resource. Where the area of interest
contains a JORC compliant mineral resource exploration
and evaluation expenditure is capitalised. These costs
are carried forward only if they relate to an area of
interest for which rights of tenure are current and in
respect of which:
i.
such costs are expected to be recouped through
successful development and exploitation or from
sale of the area; or
ii. exploration and evaluation activities in the area
have not, at balance date, reached a stage which
permits a reasonable assessment of the existence
or otherwise of economically recoverable reserves,
and active operations in, or relating to, the area are
continuing.
Accumulated costs in respect of areas of interest which
are abandoned are written off in full against profit or
loss in the year in which the decision to abandon the
area is made. A regular review is undertaken of each
area of interest to determine the appropriateness of
continuing to carry forward costs in relation to that area
of interest.
Notwithstanding the fact that a decision not to abandon
an area of interest has been made, based on the
above, the exploration and evaluation expenditure in
relation to an area may still be written off if considered
appropriate to do so.
46 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
A joint venture is a type of joint arrangement whereby
the parties that have joint control of the arrangement
have rights to the net assets of the joint venture. Joint
control is the contractually agreed sharing of control of
an arrangement, which exists only when decisions
about the relevant activities require unanimous consent
of the parties sharing control.
The considerations made in determining significant
influence or joint control is similar to those necessary to
determine control over subsidiaries.
The Group(cid:146)s investments in joint ventures are
accounted for using the equity method.
Under the equity method, the investment in a joint
venture is initially recognised at cost. The carrying
amount of the investment is adjusted to recognise
changes in the Group(cid:146)s share of net assets of the joint
venture since the acquisition date. Goodwill relating to
the joint venture is included in the carrying amount of
the investment and is neither amortised nor individually
tested for impairment.
The statement of profit or loss reflects the Group(cid:146)s
share of the results of operations of the joint venture.
Any change in OCI of those investees is presented as
part of the Group(cid:146)s OCI. In addition, when there has
been a change recognised directly in the equity of the
joint venture, the Group recognises its share of any
changes, when applicable, in the statement of changes
in equity. Unrealised gains and losses resulting from
transactions between the Group and joint venture are
eliminated to the extent of the interest in the joint
venture.
The aggregate of the Group(cid:146)s share of profit or loss of a
joint venture is shown on the face of the statement of
profit or loss outside operating profit and represents
profit or loss after tax and non-controlling interests in
the subsidiaries of the joint venture.
The financial statements of the joint venture are
prepared for the same reporting period as the Group.
When necessary, adjustments are made to bring the
accounting policies in line with those of the Group.
After application of the equity method, the Group
determines whether it is necessary to recognise an
impairment loss on its investment in its joint venture.
At each reporting date, the Group determines whether
there is objective evidence that the investment in the
joint venture is impaired.
If there is such evidence, the Group calculates the
amount of impairment as the difference between the
recoverable amount of the joint venture and its carrying
value, then recognises the loss as (cid:145)Share of profit of a
joint venture(cid:146) in the statement of profit or loss.
Upon loss of joint control over the joint venture, the
Group measures and recognises any retained
investment at its fair value. Any difference between the
carrying amount of the joint venture upon loss of joint
control and the fair value of the retained investment
and proceeds from disposal is recognised in profit or
loss.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
2.
Statement of significant accounting policies (cont(cid:146)d)
(k)
Joint arrangements (cont(cid:146)d)
(m)
Foreign currency translation (cont(cid:146)d)
Joint operations
The Group(cid:146)s recognises its interest in joint operations by
recognising its:
¶ Assets, including its share of any assets held jointly
¶
Liabilities, including its share of any liabilities
incurred jointly
¶ Revenue from the sale of its share of the output
arising from the joint operation
¶ Share of the revenue from the sale of the output by
the joint operation
¶
Expenses, including its share of any expenses
incurred jointly
(l)
Payables
Trade payables and other accounts payable are
recognised when the entity becomes obliged to make
future payments resulting from the purchase of goods
and services.
(m)
Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in
Australian Dollars, which is Hannans(cid:146) functional and
presentation currency.
Transactions and balance
Transactions in foreign currencies are initially recorded
in the functional currency (Australian Dollars (AUD)) by
applying the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at
the rate of exchange ruling at the reporting date.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using
the exchange rate as at the date of the initial
transaction. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value was
determined.
Differences arising on settlement or translation of
monetary items are recognised in profit or loss with the
exception of monetary items that are designated as
part of the hedge of the Group(cid:146)s net investment of a
foreign operation. These are recognised in other
comprehensive income until the net investment is
disposed of, at which time, the cumulative amount is
reclassified to profit or loss. Tax charges and credits
attributable to exchange differences on those monetary
items are also recorded in other comprehensive
income.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using
the exchange rates at the dates of the initial
transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value is
determined. The gain or loss arising on translation of
non-monetary items measured at fair value is treated
in line with the recognition of gain or loss on change in
fair value of the item (i.e., translation differences on
items whose fair value gain or loss is recognised in
other comprehensive income or profit or loss are also
recognised in other comprehensive income or profit or
loss, respectively).
Group companies
On consolidation, the assets and liabilities of foreign
operations are translated into dollars at the rate of
exchange prevailing at the reporting date and their
statements of profit or loss are translated at exchange
rates prevailing at the dates of the transactions. The
exchange differences arising on translation for
consolidation are recognised in other comprehensive
income. On disposal of a foreign operation, the
component of other comprehensive income relating to
that particular foreign operation is recognised in profit
or loss.
(n)
Principles of consolidation
The consolidated financial statements comprise the
financial statements of the Group as at and for the
period ended 30 June 2019. Control is achieved when
the Group is exposed, or has rights, to variable returns
from its involvement with the investee and has the
ability to affect those returns through its power over
the investee. Specifically, the Group controls an
investee if and only if the Group has:
¶ Power over the investee (i.e. existing rights that
give it the current ability to direct the relevant
activities of the investee);
¶
¶
Exposure, or rights, to variable returns from its
involvement with the investee; and
The ability to use its power over the investee to
affect its returns.
When the Group has less than a majority of the voting
or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether
it has power over an investee, including:
¶
The contractual arrangement with the other vote
holders of the investee;
¶ Rights arising from other contractual arrangements;
and
¶
The Group(cid:146)s voting rights and potential voting
rights.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
2.
Statement of significant accounting policies (cont(cid:146)d)
(n)
Principles of consolidation (cont(cid:146)d)
(o)
Plant and equipment
The Group re-assesses whether or not it controls an
investee if facts and circumstances indicate that there
are changes to one or more of the three elements of
control. Consolidation of a subsidiary begins when the
Group obtains control over the subsidiary and ceases
when the Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired
or disposed of during the year are included in the
statement of comprehensive income from the date the
Group gains control until the date the Group ceases to
control the subsidiary.
Profit or loss and each component of other
comprehensive income (OCI) are attributed to the
equity holders of the parent of the Group and to the
non-controlling interests, even if this results in the non-
controlling interests having a deficit balance. When
necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting
policies into line with the Group(cid:146)s accounting policies.
All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions
between members of the Group are eliminated in full
on consolidation.
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary,
it:
¶ De-recognises the assets (including goodwill) and
liabilities of the subsidiary;
¶ De-recognises the carrying amount of any non-
controlling interests;
¶ De-recognises the cumulative translation
differences recorded in equity;
¶ Recognises the fair value of the consideration
received;
¶ Recognises the fair value of any investment
retained;
¶ Recognises any surplus or deficit in profit or loss;
and
¶ Reclassifies the parent(cid:146)s share of components
previously recognised in OCI to profit or loss or
retained earnings, as appropriate, as would be
required if the Group had directly disposed of the
related assets or liabilities.
A list of subsidiaries appears in note 4 to the financial
statements.
Plant and equipment are stated at cost less
accumulated depreciation and impairment loss. Cost
includes expenditure that is directly attributable to the
acquisition of the item.
Depreciation is provided on plant and equipment.
Depreciation is calculated on a straight line or
diminishing value basis so as to write off the net cost of
each asset over its expected useful life to its estimated
residual value. The estimated useful lives, residual
values and depreciation method are reviewed at the
end of each annual reporting period.
The depreciation rates used for each class of
depreciable assets are:
Class of fixed asset
Depreciation rate (%)
Office furniture
10.00 (cid:150) 20.00
Building
2.50
Office equipment
7.50 (cid:150) 66.67
Motor vehicles
16.67 (cid:150) 25.00
(p)
Provisions
The amount recognised as a provision is the best
estimate of the consideration required to settle the
present obligation as a result of a past event at
reporting date, taking into account the risks and
uncertainties surrounding the obligation. Where a
provision is measured using the cashflows estimated to
settle the present obligation, its carrying amount is the
present value of those cashflows.
When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
third party, the receivable is recognised as an asset if it
is virtually certain that recovery will be received and
the amount of the receivable can be measured reliably.
(q)
Revenue recognition
Revenue is recognised when or as the Group transfers
control of goods or services to a customer at the
amount to which the Group expects to be entitled. If
the Group estimates the amount of consideration
promised includes a variable amount, the Group
estimates the amount of consideration to which it will
be entitled.
Dividend and interest revenue
Dividend revenue is recognised on a receivable basis.
Interest revenue is recognised on a time proportionate
basis that takes into account the effective yield on the
financial asset.
48 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
2.
Statement of significant accounting policies (cont(cid:146)d)
(r)
Share(cid:150)based payments
Equity(cid:150)settled share(cid:150)based payments are measured at fair value at the date of grant. Fair value is measured by use of the Black
and Scholes model or Monte-Carlo simulation model. The expected life used in the model has been adjusted, based on
management(cid:146)s best estimate, for the effects of non(cid:150)transferability, exercise restrictions, and behavioural considerations.
The fair value determined at the grant date of the equity(cid:150)settled share(cid:150)based payments is expensed on a straight(cid:150)line basis
over the vesting period, based on the entity(cid:146)s estimate of shares that will eventually vest.
For cash(cid:150)settled share(cid:150)based payments, a liability equal to the portion of the goods or services received is recognised at the
current fair value determined at each reporting date.
(s)
Fair value measurement
The Group measures available-for-sale financial assets at fair value and receivables are measured at amortised costs at each
balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:
¶
¶
In the principal market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the asset or liability.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a
whole:
¶
¶
¶
Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable; or
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
(t)
Segment reporting policy
Operating segments are identified and segment information disclosed on the basis of internal reports that are regularly
provided to, or reviewed by the Group(cid:146)s chief operating decision maker which, for the Group, is the Board of Directors. In this
regard, such information is provided using similar measures to those used in preparing the statement of comprehensive income
and statement of financial position.
3.
Critical accounting estimates and judgements
In the application of the Group(cid:146)s accounting policies, which are described in note 2, management is required to make judgments,
estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable
under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain
assets and liabilities within the next annual reporting period are:
Key judgements (cid:151) exploration and evaluation expenditure
The future recoverability of exploration and evaluation expenditure capitalised on the acquisition of areas of interest and/or capitalised
JORC compliant mineral resource expenditure are dependent on a number of factors, including whether the Group decides to exploit
the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. To the
extent that capitalised acquisition costs and/or capitalised JORC compliant mineral resource expenditure are determined not to be
recoverable in the future, profits and net assets will be reduced in the period in which this determination is made.
Key judgements (cid:151) share(cid:150)based payments
The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value is determined using a Black Scholes and/or Monte-Carlo simulation model. The
related assumptions detailed in note 8. The accounting estimates and assumptions relating to equity-settled share-based payments
would have no impact on the carrying amount of assets and liabilities within the next annual reporting period but may impact
expenses and equity.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
4.
Subsidiaries
The consolidated financial statements of the Group include:
Name of entity
Parent entity:
Hannans Ltd (i)
Subsidiaries:
HR Equities Pty Ltd (ii)
HR Forrestania Pty Ltd (ii)
Reed Exploration Pty Ltd (ii)
Principal
Activities
Country of
incorporation
2019
2018
% Ownership interest
Exploration
Australia
Equities holding
Exploration
Exploration
Australia
Australia
Australia
100
100
100
100
100
100
(i)
(ii)
Hannans is the ultimate parent entity. All the companies are members of the group.
The 100% interest in HR Equities Pty Ltd, HR Forrestania Pty Ltd and Reed Exploration Pty Ltd are held by the parent entity.
5.
Income/expenses from operations
(a)
Revenue
Interest revenue
Bank
Total revenue
(b)
Other Income
Asset sale
Other
Total other income
(c)
Employee benefits expense
Salaries and wages
Post employment benefits:
Defined contribution plans
Share(cid:150)based payments:
Equity settled share(cid:150)based payments
Total employee benefits expense
2019
$
2018
$
67,016
67,016
(cid:150)
6,818
6,818
24,590
24,590
411,013
12,189
423,202
298,000
298,000
1,900
1,900
254,378
554,278
579,660
879,560
(d)
Depreciation of non(cid:150)current assets
3,744
1,270
(e)
Operating lease rental expenses:
Minimum lease payments
Total operating lease rental expenses
3,000
3,000
4,000
4,000
50 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
6.
Income taxes
Income tax recognised in profit or loss
Current income tax
Current income tax charge
Overprovision of current tax in prior year
Deferred tax
Release of deferred tax assets previously recognised to offset a deferred
tax liability arising on unrealised gains on available-for-sale investments
Total tax benefit/(expense)
The prima facie income tax benefit/(expense) on pre-tax accounting loss
from operations reconciles to the income tax expense in the financial statements
as follows:
Loss from operations
Income tax benefit calculated at 27.5% (2018: 27.5%)
Effect of expenses that are not deductible in determining taxable profit
Effect of net deferred tax asset not recognised as deferred tax assets
Income tax benefit/(expense) attributable to operating loss
The tax rate used in the above reconciliation is the corporate tax rate of 27.5%
(2018: 27.5%) payable by Australian corporate entities on taxable profits under
Australian tax law. There has been no change in the corporate tax rate when
compared with the previous reporting period.
Deferred tax related to items charged or credited directly to
Other Comprehensive Income during the year:
Unrealised loss on available-for-sale investments
2019
$
2018
$
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(2,085,563)
(573,530)
70,232
503,298
(cid:150)
(1,379,271)
(379,300)
160,000
219,300
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
6.
Income taxes (cont(cid:146)d)
Deferred Income Tax
Deferred income tax at 30 June
relates to the following
Deferred tax liabilities
Statement of
Financial Position
Statement of
Comprehensive Income
2019
$
2018
$
2019
$
2018
$
Exploration and evaluation assets
(233,691)
(313,223)
79,532
Unearned income
Prepayments
Deferred tax assets
Accruals
Prepayments
Provision for employee entitlements
Provision for loss on loan
Financial assets
Capital raising costs
Revaluation reserve
Revenue tax losses
Capital losses
Deferred tax assets not brought to account
as realisation is not probable
Deferred tax assets not recognised
Deferred tax (income)/expense
Tax consolidation
Relevance of tax consolidation to the Group
(1,317)
(4,557)
(1,860)
(4,045)
543
(512)
8,144
13,255
(5,111)
(cid:150)
(cid:150)
26,717
4,239
31,573
(cid:150)
5,194,028
5,083,809
(cid:150)
(cid:150)
(cid:150)
2,874
42,551
(cid:150)
4,773,005
5,083,809
(10,101,373)
(9,596,366)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
26,717
1,365
(10,978)
1,365
421,023
(cid:150)
(87,316)
(1,399)
(4,045)
1,980
(3,877)
(30,122)
(cid:150)
2,874
32,432
(1,678)
309,022
4,835
(505,007)
(222,706)
(cid:150)
(cid:150)
Legislation to allow groups, comprising a parent entity and its Australian resident wholly owned entities, to elect to consolidate and
be treated as a single entity for income tax purposes was substantively enacted on 21 October 2002. The Company and its 100%
owned Australian resident subsidiaries have implemented the tax consolidation legislation.
7.
Key management personnel disclosures
(a)
Details of key management personnel
The Directors and Executives of Hannans Ltd during the year were:
Directors
·
·
Damian Hicks
Jonathan Murray
·
·
Markus Bachmann
Clay Gordon
·
Amanda Scott
(b)
Key management personnel compensation
The aggregate compensation made to key management personnel of the Company
and the Group is set out below.
Short(cid:150)term employee benefits
Share based payments
Long(cid:150)term employee benefits
Post(cid:150)employment benefits
Total key management personnel compensation
2019
$
2018
$
308,699
254,377
(cid:150)
1,900
564,976
309,556
579,660
(cid:150)
1,900
891,116
The compensation of each member of the key management personnel of the Group is set out in the Directors Remuneration report
on pages 16 to 20.
52 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
8.
Share(cid:150)based payments
The Company has an ownership(cid:150)based compensation arrangement for employees of the Group.
Each option issued under the arrangement converts into one ordinary share of Hannans on exercise. No amounts are paid or payable
by the recipient on receipt of the option. Options neither carry rights to dividends nor voting rights. Options may be exercised at any
time from the date of vesting to the date of their expiry. The number of options granted is at the sole discretion of the Directors.
Incentive options issued to Directors (executive and non(cid:150)executive) are subject to approval by shareholders and attach vesting
conditions as appropriate.
The following share(cid:150)based payment arrangements were in existence during the current and comparative reporting periods:
Options series
20 November 2014
20 November 2015
20 November 2016
15 September 2016
27 October 2017
27 October 2018
27 October 2019
Number
Grant date
Expiry date
12,016,668
20 November 2014
20 November 2017
7,850,001
20 November 2014
20 November 2018
12,016,664
20 November 2014
20 November 2019
21,155,848
11 November 2016
15 September 2020
28,000,000
28,000,000
28,000,000
27 October 2017
27 October 2018
27 October 2020
27 October 2021
27 October 2019
27 October 2022
Exercise price
cents
0.8
0.5
2.9
2.7
2.6
1.8
VWAP* for
5 trading days before
and 5 trading days
after 27 October 2019
(+)50% premium
* VWAP = Volume Weighted Average Price
Details of options over ordinary shares in the Company provided as remuneration to each director during the year are set out in the
Directors Remuneration report on pages 16 to 20.
The following reconciles the outstanding share options granted at the beginning and end of the financial year:
2019
2018
Weighted
average
exercise price
$
0.032
(cid:150)
(0.005)
(0.005)
0.032
0.032
Number of
options
125,022,513
(cid:150)
(7,650,001)
(200,000)
117,172,512
117,172,512
Weighted
average
exercise price
$
0.019
0.035
(0.009)
(0.008)
0.032
0.032
Number of
options
53,039,181
84,000,000
(8,333,334)
(3,683,334)
125,022,513
125,022,513
Balance at beginning of the financial year
Granted during the financial year
Exercised during the financial year
Expired during the financial year
Balance at end of financial year
Exercisable at end of the financial year
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
8.
Share-based payments (cont(cid:146)d)
(i)
Issued during the financial year
No share options were granted to senior executives and employees during the year. On 27 October 2017 Hannans held a
General Meeting and shareholders approved the issue of related party options. On 14 November 2016 21,155,848 share
options were granted to the directors of the Company. The options terms and conditions are shown below.
Details
Number of options
Exercise price
Expiry date
Vesting date (ii)
(i)
Tranche 1
Tranche 2
Tranche 3
Total
28,000,000
28,000,000
28,000,000
84,000,000
$0.026
$0.018
(i)
27 Oct 2020
27 Oct 2021
27 Oct 2022
27 Oct 2017
27 Oct 2018
27 Oct 2019
Exercise price will be calculated from the volume weighted average share price for the five (5) trading days before and five (5) trading
days after the Vesting Date for Tranche 3 PLUS a premium of 50%. The Monte-Carlo simulation model was used for Tranche 3.
(ii)
Senior executive and employees are entitled to the Options upon working for the Group to the vesting dates. Options that have vested
prior to termination must be exercised within three months or they will lapse, unvested options will lapse immediately on termination.
The fair value of the options granted is issued and valued at the date of grant taking into account the terms and conditions
upon which the options were granted using a Black Scholes model for Tranche 1. There is no cash settlement of the options.
The weighted average fair value of the options granted during for the prior period was $0.011.
For the year ended 30 June 2019, the Group has recognised $254,378 of share-based payments transactions expense in the
statement of profit or loss (2018: $579,660).
(ii)
Exercised at end of the financial year
During the financial year a total of 7,650,001 (2018: 8,333,334) options over ordinary shares were exercised, comprising of
the following:
·
7,650,001 at 0.5 cents options expiring on 20 November 2018 to raise $38,250.
(iii)
Expired during the financial year
During the financial year a total of 200,000 (2018: 3,683,334) options over ordinary shares expired, comprising of the
following:
·
200,000 at 0.5 cents options expiring on 20 November 2018.
(iv) Balance at end of the financial year
The share options outstanding at the end of the financial year had a weighted average exercise price of $0.032 (2018:
$0.032) and a weighted average remaining contractual life of 1.94 years (2018: 2.76 years).
9.
Remuneration of auditors
The auditor of Hannans Ltd is Ernst & Young.
Audit or review of the financial report of the Group
Australia
2019
$
2018
$
32,966
32,966
32,262
32,262
54 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
2019
$
3,360
14,794
68,307
86,461
1,984
1
1,985
(cid:150)
(cid:150)
(cid:150)
2018
$
3,343
17,148
21,474
41,965
6,949
1
6,950
79,672
(cid:150)
79,672
10.
Current trade and other receivables
Accounts receivable (i)
Net goods and services tax (GST) receivable
Other receivables
(i)
There were no current trade and other receivables that were past due but not impaired
(2018: nil).
11.
Other financial assets at fair value through profit and loss
Current
Equity instruments
Quoted equity shares (i)
Unquoted equity shares (ii)
Total
Non-current
Loan
Loans to a director of related entities (iii)
Provision (iii)
Total
(i)
(ii)
(iii)
Investments in listed entities include the following:
(a) 277,778 ordinary fully paid shares in Metalicity Limited; and
(b) 20,000 ordinary fully paid shares in Ultracharge Limited.
Hannans Ltd holds 1 share at $1 in Equity & Royalty Investments Ltd. Equity & Royalty
Investments Ltd has 100 million ordinary shares on issue. The principal activity of the
Company is the investment in equity and royalties in other companies with the
objective of realising gains through equity and generating an income stream through
the royalties.
Errawarra Resources Ltd (Errawarra), of which Mr Damian Hicks, Mr Jonathan Murray,
and Mr Markus Bachmann are the Directors, was provided with a loan facility of
$50,000 at an interest rate of 20% per annum. The loan is secured against Errawarra(cid:146)s
rights, title and interest in the agreement executed between Errawarra, Reid Systems
Inc and Reid Systems (Australia) Pty Ltd. Errawarra has fully drawndown on the loan
facility. The loan is repayable by Errawarra on 1 July 2019. Refer to note 26 for further
information.
The loan is carried at its fair value and is measured using a discount cash flow model
with inputs that reflect the timing and credit risk of the cash flows (level 3 financial
assets) refer to note 26.
12. Non(cid:150)current other receivables
Other receivables (cid:150) bonds
56,000
56,000
56,000
56,000
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
13.
Property, plant and equipment
Cost
Balance at 1 July 2017
Additions
Disposals
Balance at 1 July 2018
Additions
Disposals
Balance at 30 June 2019
Accumulated depreciation and impairment
Balance at 1 July 2017
Depreciation expense
Disposals
Balance at 1 July 2018
Depreciation expense
Disposals
Balance at 30 June 2019
Net book value
As at 30 June 2018
As at 30 June 2019
Aggregate depreciation allocated during the year:
Office furniture and equipment
Motor vehicles
14.
Exploration and evaluation expenditure
Balance at beginning of financial year
LESS: Write off costs (i)
LESS: Disposal of assets
Balance at end of financial year
Office furniture
and equipment
at cost
Motor vehicles
at cost
$
19,092
(cid:150)
(cid:150)
19,092
1,199
(cid:150)
20,291
16,766
1,270
(cid:150)
18,036
704
(cid:150)
18,740
$
(cid:150)
(cid:150)
(cid:150)
(cid:150)
29,025
(cid:150)
29,025
(cid:150)
(cid:150)
(cid:150)
(cid:150)
3,040
(cid:150)
3,040
1,056
1,551
(cid:150)
25,985
2019
$
704
3,040
3,744
Total
$
19,092
(cid:150)
(cid:150)
19,092
30,224
(cid:150)
49,316
16,766
1,270
(cid:150)
18,036
3,744
(cid:150)
21,780
1,056
27,536
2018
$
1,270
(cid:150)
1,270
2,660,000
(404,000)
(cid:150)
2,256,000
2,688,000
(cid:150)
(28,000)
2,660,000
(i)
During the year, Hannans recognised a write off in respect of capitalised exploration and evaluation to the extend of $404,000 (2018: nil). The
recoverability of the carrying amount of the exploration and evaluation assets is dependent on the continuance of the consolidated entities
right to tenure of the interest, the results of future exploration and the successful development and commercial exploration, or alternatively,
sale of the respective area of interest. For those areas of interest de-recognised or written off during the year, exploration results indicates the
subsequent successful development and commercial exploration may be unlikely and the decision was made to discontinue activities in these
areas, resulting in full de recognition of the capitalised exploration and evaluation in relation to the related areas of interest.
56 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
15.
Current trade and other payables
Trade payables (i)
Accruals
Other payable
(i)
The average credit period on purchases of goods and services is 30 days. No interest is
charged on the trade payables for the first 30 to 60 days from the date of invoice.
Thereafter, interest is charged at various penalty rates. The consolidated entity has
financial risk management policies in place to ensure that all payables are paid within
the credit timeframe.
16.
Provisions
Current
Employee benefits (i)
2019
$
20,566
98,667
6,384
125,617
2018
$
22,866
97,700
4,124
124,690
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(i)
On 26 July 2017, the balance of the annual leave ($42,845) and long service leave ($60,270) provision was paid to Mr Hicks.
Balance at 1 July 2017
Settlement of provision
Balance at 1 July 2018
Utilised during the year
Balance at 30 June 2019
17.
Other financial liabilities
Current
Payroll related liabilities
Employee
benefits
$
103,115
(103,115)
(cid:150)
(cid:150)
(cid:150)
Rent (cid:150)
unoccupied
space
$
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
Total
$
103,115
(103,115)
(cid:150)
(cid:150)
(cid:150)
2019
$
2018
$
(cid:150)
(cid:150)
14,725
14,725
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
18.
Issued capital
1,987,954,539 fully paid ordinary shares (2018: 1,980,304,538)
2019
$
2018
$
40,872,810
40,872,810
40,840,777
40,840,777
2019
No.
$
2018
No.
$
Fully paid ordinary shares
Balance at beginning of financial year
1,980,304,538
40,840,777
1,682,640,560
37,296,618
Exercise of options to shares - 20 November 2017
Share Purchase Plan - 11 December 2017
Placement of shares - 11 December 2017
Exercise of options to shares - 3 June 2018
(cid:150)
(cid:150)
(cid:150)
(cid:150)
Exercise of options to shares - 20 November 2018
7,650,001
Share issue costs
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
38,250
(6,217)
8,333,334
127,480,231
157,687,913
4,162,500
(cid:150)
(cid:150)
66,667
1,619,000
2,002,635
16,650
(cid:150)
(160,793)
Balance at end of financial year
1,987,954,539
40,872,810
1,980,304,538
40,840,777
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Option conversions
Date of conversion
No of options
20 November 2018
TOTAL
7,650,001
7,650,001
Exercise price
per option
Expiry date
0.005 cents
20 November 2018
Increase in
contributed equity
$
38,250
38,250
2018
$
297,378
579,660
(38,717)
838,321
2019
$
838,321
254,378
(30,802)
1,061,897
1,061,897
1,061,897
838,321
838,321
19.
Reserves
Balance at the beginning of the financial year
Share based payment expense
Exercise/lapse of options
Balance at the end of the financial year
The balance of reserves is made up as follows:
Option reserve
Nature and purpose of reserves
Option reserve
The option reserve recognises the fair value of options issued and valued using the Black-Scholes and Monte-Carlo simulation
model.
58 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
19.
Reserves (cont(cid:146)d)
Share options
As at 30 June 2019, options over 117,172,512 (2018: 125,022,513) ordinary shares in aggregate are as follow:
Issuing entity
Hannans Ltd
Hannans Ltd
Hannans Ltd
Hannans Ltd
Hannans Ltd
No of shares
under option
12,016,664
21,155,848
28,000,000
28,000,000
28,000,000
Class of shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Expiry date
of options
20 Nov 2019
15 Sep 2020
27 Oct 2020
27 Oct 2021
27 Oct 2022
Exercise price
of option
2.9 cents each
2.7 cents each
2.6 cents each
1.8 cents each
VWAP* for 5
trading days
before and 5
trading days after
27 October 2019
(+)50% premium
Share options are all unlisted, carry no rights to dividends and no voting rights. No options were issued during the period (2018:
84,000,000). A total of 7,650,001 (2018: 12,495,834) were exercised during the period. A total of 200,000 (2018: 3,683,334) expired
unexercised during the period.
20.
Accumulated losses
Balance at beginning of financial year
Loss attributable to members of the parent entity
Items of other comprehensive income recognised directly in retained earnings:
Options exercised
Balance at end of financial year
21.
Loss per share
Basic loss per share:
Diluted loss per share:
Loss for the year
2019
$
2018
$
(34,890,791)
(2,085,563)
(33,550,237)
(1,379,271)
30,802
38,717
(36,945,552)
(34,890,791)
2019
Cents per share
2018
Cents per share
(0.11)
(0.11)
(0.07)
(0.07)
The loss and weighted average number of ordinary shares used in the calculation of basic and diluted loss per share are as follows:
Loss for the year
Weighted average number of ordinary shares
for the purposes of basic loss per share
Effects of dilution from:
Share options
Weighted average number of ordinary shares adjusted
for the effect of dilution loss per share
2019
$
2018
$
(2,085,563)
(1,379,271)
2019
No.
2018
No.
1,985,108,785
1,845,054,765
(cid:150)
(cid:150)
1,985,108,785
1,845,054,765
At 30 June 2019 117,172,512 were not included in the diluted earnings per share calculation as they are anti-dilutive.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
22.
Commitments for expenditure
Exploration, evaluation & development (expenditure commitments)
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
Future minimum rentals payable under non(cid:150)cancellable operating leases as at
30 June 2019 are as follows: (i)
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
2019
$
2018
$
179,000
716,000
(cid:150)
895,000
4,000
(cid:150)
(cid:150)
4,000
169,000
676,000
(cid:150)
845,000
4,000
(cid:150)
(cid:150)
4,000
(i)
The Group has an office lease on a month by month basis, expiring 31 December 2019 and with rent payable monthly in advance.
23.
Contingent liabilities and contingent assets
The Office of State Revenue (OSR) has informed the Company that it has raised a Duties Investigation regarding the restructure
involving the Mineral Rights Deed between the Company and Errawarra Resources Ltd. OSR has requested preliminary supporting
information to assess the duty on the transaction. The Company does not consider it probable a stamp duty liability will arise.
24.
Segment reporting
The Group operates in the mineral exploration industry in Australia. For management purposes, the Group is organised into one main
operating segment which involves the exploration of minerals in Australia. All of the Group(cid:146)s activities are interrelated and discrete
financial information is reported to the Board as a single segment. Accordingly, all significant operating decisions are based upon
analysis of the Group as one segment. Operating segments are identified and segment information disclosed on the basis of internal
reports that are regularly provided to, or reviewed by, the Group(cid:146)s Chief Operating Decision Maker which, for the Group, is the Board
of Directors. In this regard, such information is provided using similar measures to those used in preparing the statement of
comprehensive income and statement of financial position.
25.
Joint operations
Name of project
Lake Johnston (i)
Forrestania (ii)
Principal activity
Exploration
Exploration
Interest
2019
%
15
20
2018
%
15
20
(i)
(ii)
Reed Exploration entered into a joint venture with Montezuma Mining Company Ltd (Montezuma) (ASX: MZM) whereby Reed
Exploration retained a 15% interest in the Lake Johnston Project which is free-carried until a decision to mine has been made,
at which point Reed Exploration may elect to contribute or revert to a 1% net smelter royalty. Montezuma is required to meet
all exploration expenditure to keep the project in good standing.
Reed Exploration entered into a joint venture with Classic Minerals Ltd (Classic) (ASX: CLZ) whereby Reed Exploration retained
a 20% interest in the Forrestania gold rights which is free-carried until a decision to mine has been made. Classic is required
to meet all exploration expenditure to keep the project in good standing.
Capital commitments and contingent liabilities
The capital commitments and contingent liabilities arising from the Group(cid:146)s interests in joint operations are disclosed in notes 22 and
23 respectively.
60 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
26.
Related party disclosures
(a)
Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 4 to the financial statements.
Equity interests in joint operations
Details of interests in joint operations are disclosed in note 25 to the financial statements.
(b)
Key management personnel (KMP) remuneration
Details of KMP remuneration are disclosed in note 7 to the financial statements.
(c)
Loans to KMP and their related parties
Errawarra Resources Ltd (Errawarra), of which Mr Damian Hicks is the Chairman and Mr Jonathan Murray and Mr Markus
Bachmann are the Non-Executive Directors, received a loan amounting to $50,000. The loan is secured against 100% of
Errawarra(cid:146)s rights, title and interest in the agreement executed between Errawarra, Reid Systems Inc and Reid Systems
(Australia) Pty Ltd dated on or about 9 February 2016. The interest rate on the outstanding loan amount is at 20% per annum
and the loan repayment date is on 1 July 2019. The loan is disclosed in note 11 as a non-current financial asset.
Details regarding the aggregate of loans made, guaranteed or secured by any entity in the Group to KMP and their related
parties, and the number of individuals in each group, are as follows:
30 June 2019
Total for KMP
Total for other related parties (i)
Total for KMP
and their related parties 2019
30 June 2018
Total for KMP
Total for other related parties (i)
Total for KMP
and their related parties 2018
Opening
Balance
$
(cid:150)
79,672
79,672
(cid:150)
65,338
Closing
Balance
$
Interest
charged
$
Number in
group at
30 June
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
79,672
14,334
(cid:150)
1
1
(cid:150)
1
1
65,338
79,672
14,334
(i)
The Company provided a loan facility of $50,000 at an interest rate of 20% per annum to Errawarra Resources Ltd
(Errawarra), of which Mr Damian Hicks, Mr Jonathan Murray and Mr Markus Bachmann are the Directors. The loan is
secured against Errawarra(cid:146)s rights, title and interest in the agreement executed between Errawarra, Reid Systems Inc
and Reid Systems (Australia) Pty Ltd. Errawarra made a loan drawdown of $25,000 on 10 February 2016 and a further
loan drawdown of $25,000 on 9 March 2016. The fair value of the loan at 30 June 2019 was estimated using a
discounted cashflow model to be nil. This resulted in a loss on fair value of $79,672 for the year.
Subsequent to year end, the Group provided a $55,000 loan facility to Critical Metals Ltd, of which Mr Jonathan Murray is the
Chairman, Mr Damian Hicks and Mr Markus Bachmann are the Directors. The terms and condition of the loan are currently
under negotiation.
(d)
Transactions with other related parties
The following table provides the total amount of transactions that have been entered into with related parties for the relevant
financial year.
Director transactions
Steinepreis Paganin
Corporate Board Services
Sales to
related parties
$
Purchases
from related
parties
$
2019
2018
2019
2018
(cid:150)
(cid:150)
3,655
3,700
690
9,757
150,000
150,000
Amounts
owed by
related
parties*
$
(cid:150)
(cid:150)
1,005
1,827
Amounts
owed to
related
parties*
$
(cid:150)
(cid:150)
(cid:150)
(cid:150)
* The amounts are classified as trade receivables and trade payables, respectively.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
26.
Related party disclosures (cont(cid:146)d)
(e)
Parent entity
The ultimate parent entity in the Group is Hannans Ltd.
27.
Subsequent events
The following matters or circumstances have arisen since 30 June 2019 that may significantly affect the operations of the Group, the
results of those operations, or the state of affairs of the Group in future financial years:
(a)
On 15 July 2019 the Group provided a loan of $55,000 to Critical Metals Ltd. The terms and conditions of the loan are currently
under negotiation.
28. Notes to the consolidated statement of cash flows
(a)
Reconciliation of cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents
includes cash on hand and in banks and investments in money market
instruments, net of outstanding bank overdrafts. Cash and cash equivalents
at the end of the financial year as shown in the statement of cash flows is
reconciled to the related items in the statement of financial position as
follows:
Cash and cash at bank
Term deposit
(b)
Reconciliation of loss for the year to net cash flows from
operating activities
Loss for the year
Net gain from sale of tenement
Write off exploration and evaluation expenses
Impairment of available-for-sale investments
Depreciation of non(cid:150)current assets
Equity settled share-based payments
Change in fair value of financial assets designated at fair value though profit
or loss
Changes in net assets and liabilities, net of effects from acquisition and
disposal of businesses:
(Increase)/Decrease in assets:
Trade and other receivables
Decrease in liabilities:
Trade and other payables and provisions
Net cash from operating activities
2019
$
2018
$
586,790
2,100,000
2,686,790
1,382,079
2,700,000
4,082,079
(2,085,563)
(cid:150)
404,000
4,967
3,744
254,378
79,672
(1,379,271)
(371,013)
(cid:150)
3,711
1,270
579,660
(14,334)
(44,497)
42,919
(13,798)
(375,861)
(1,397,097)
(1,512,919)
Non(cid:150)cash financing activities
During the current year, the Group did not enter into any non-cash financing activities which are not reflected in the consolidated
statement of cash flows.
62 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
29.
Financial risk management objectives and policies
(a)
Financial risk management objectives
The Group manages the financial risks relating to the operations of the Group.
The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative
purposes although it holds, at 30 June 2019, shares in various other listed mining companies. The use of financial derivatives is
governed by the Group(cid:146)s Board of Directors.
The Group(cid:146)s activities expose it primarily to the financial risks of changes in interest rates, but at 30 June 2019 it is also
exposed to market price risk. The Group does not enter into derivative financial instruments to manage its exposure to interest
rate.
(b)
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in note 2 to the financial statements.
(c)
Foreign currency risk management
The Group is not exposed to any significant currency risk on receivable, payable or borrowings. All loans are denominated in
the Group(cid:146)s functional currency.
(d)
Interest rate risk management
The Group is exposed to interest rate risk as it places funds at both fixed and floating interest rates. The risk is managed by
maintaining an appropriate mix between fixed and floating rate products which also facilitate access to money.
Cash flow sensitivity analysis for variable rate instruments
A change of 1 per cent 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 is performed on the same basis for
2018:
2019
Variable rate instruments
2018
Variable rate instruments
Profit or Loss
1%
increase
1%
decrease
Equity
1%
increase
1%
decrease
25,358
25,358
30,317
30,317
(25,358)
(25,358)
(30,317)
(30,317)
25,358
25,358
30,317
30,317
(25,358)
(25,358)
(30,317)
(30,317)
The following table details the Group(cid:146)s exposure to interest rate risk.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
29.
Financial risk management objectives and policies (cont(cid:146)d)
(d)
Interest rate risk management (cont(cid:146)d)
Fixed maturity dates
Less
than 1
year
$
1(cid:150)5
years
$
5+
years
$
Non
interest
bearing
$
Total
$
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
150,968
2,686,790
86,461
86,461
(cid:150)
(cid:150)
56,000
(cid:150)
237,429
2,829,251
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
125,617
125,617
(cid:150)
(cid:150)
125,617
125,617
1,050,428
4,082,079
41,965
(cid:150)
(cid:150)
41,965
79,672
56,000
1,092,393
4,259,716
124,690
124,690
(cid:150)
14,725
124,690
139,415
Other financial assets
20.00%
Weighted
average
effective
interest
rate
Variable
interest
rate
%
$
0.72%
2,535,822
(cid:150)
(cid:150)
2.55%
56,000
2,591,822
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
0.60%
3,031,651
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
79,672
Consolidated
2019
Financial assets:
Cash and cash
equivalents
Trade and other
receivables
Other receivables
(cid:150) non-current
Financial liabilities:
Trade and
other payables
Other financial liabilities
2018
Financial assets:
Cash and cash
equivalents
Trade and other
receivables
Other financial assets
20.00%
Other receivables
(cid:150) non-current
Financial liabilities:
Trade and
other payables
Other financial
liabilities
2.55%
56,000
(cid:150)
3,087,651
79,672
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
14,725
14,725
64 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
29.
Financial risk management objectives and policies (cont(cid:146)d)
(e)
Liquidity risk
The Group manages liquidity risk by maintaining sufficient cash to meet the operating requirements of the business and
investing excess funds in highly liquid, high security short term investments. The Group(cid:146)s liquidity needs can be met through a
variety of sources, including cash generated from operations and issue of equity instruments.
The following table details the Group(cid:146)s non-derivative financial instruments according to their contractual maturities. The
amounts disclosed are based on contractual undiscounted cash flows.
Less than
6 months
6 months
to 12 months
1 to 2 years
Greater than
2 years
2019
Trade and other payables
125,617
$
Other financial liabilities
2018
Trade and other payables
Other financial liabilities
(cid:150)
125,617
124,690
14,725
139,415
$
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
$
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
$
(cid:150)
(cid:150)
(cid:150)
(cid:150)
Total
$
125,617
(cid:150)
125,617
124,690
14,725
139,415
(f)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where
appropriate, as a means of mitigating the risk of financial loss from defaults. The Group(cid:146)s exposure and the credit ratings of its
counterparties are continuously monitored. The Group measures credit risk on a fair value basis.
The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having
similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with high credit(cid:150)ratings
assigned by international credit(cid:150)rating agencies.
The Group currently does not have any material debtors apart from GST receivable which is claimed at the end of each quarter
during the year.
It is a policy of the Group that creditors are paid within 30 days.
(g) Market price risk
Market risk is the potential for loss arising from adverse movements in the level and volatility of equity prices.
The Group(cid:146)s investments subject to price risk are listed on the Australian Securities Exchange as detailed in note 11. A 1 per
cent increase at reporting date in the equity prices would increase the market value of the securities by $19 (2018: $69) and
an equal change in the opposite direction would decrease the value by the same amount. The increase/decrease would be
reflected in equity as these financial instruments are classified as available(cid:150)for(cid:150)sale. The increase/decrease net of deferred tax
would be $13 (2018: $49).
(h)
Capital risk management
For the purposes of the Group(cid:146)s capital management, capital includes issued capital and all other equity reserves attributable
to the equity holders of the parent, which at 30 June 2019 was $4,989,155 (2018: $6,788,307). The Group(cid:146)s objective when
managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns for
shareholders.
At 30 June 2019 the Group does not hold any external debt funding (2018: Nil) and is not subject to any externally imposed
covenants in respect of capital management.
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
30.
Financial instruments
The fair value of financial assets and financial liabilities of the Group approximated their carrying amount. It does not include fair
value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable
approximation of fair value. The table below analyses financial instruments carried at fair value by value measurement hierarchy.
Quantitative disclosures fair value measurement hierarchy
as at 30 June
Quoted
prices in
active
market
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobser-
vable inputs
(Level 3)
2019
Assets measured at fair value
Equity instruments (note 11):
Quoted equity shares (i)
Unquoted equity shares (ii)
Loans to a director of related entities (note 11) (iii)
2018
Assets measured at fair value
Available-for-sale financial assets (note 11):
Quoted equity shares (i)
Unquoted equity shares (ii)
Loans to a director of related entities (note 11) (iii)
1,984
(cid:150)
(cid:150)
6,949
(cid:150)
(cid:150)
6,949
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
1
(cid:150)
(cid:150)
1
(cid:150)
1
Total
1,984
1
(cid:150)
6,949
1
(cid:150)
6,950
The management assessed that cash and short-term deposits, trade receivables, trade payables and other current liabilities
approximate their carrying amounts largely due to the short term maturities of these instruments.
The fair value of the financial assets is included at the amount at which the instrument could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the
fair value:
(i)
Fair value of equity instruments and available-for-sale financial assets is derived from quoted market prices in active markets.
Refer note 29(g) for market price risk impact.
The historical cost has been used to fair value unquoted ordinary shares. There is no market for the share and the value of the
share does not warrant further discount or valuation.
The fair value of the loan to a director of related entities is measured using a discount cash flow model with inputs that reflect
the timing and credit risk of the cash flows. The Groups has fully provided for the loans as the loans are considered
unrecoverable.
(ii)
(iii)
The estimated recoverable amount of the capitalised exploration and evaluation expenditure is classified as level 3 and is sensitive to
the movements in the iron ore and copper prices. The valuation methodology undertaken by the Group was determined with
reference to comparable exploration companies in the industry and their respective contained iron and copper resource multiples.
Refer note 14 for further information.
66 | H A N N A N S A N N U A L R E P O R T 2 0 1 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
31.
Parent entity disclosures
The following details information related to the parent entity, Hannans Ltd, at 30 June 2019.
The information presented here has been prepared using consistent accounting policies as presented in note 2.
Results of the parent entity
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Financial position of parent entity at year end
Current assets
Non(cid:150)current assets
Total Assets
Current liabilities
Non(cid:150)current liabilities
Total Liabilities
Total equity of the parent entity comprising of:
Share capital
Reserves
Accumulated losses
Total Equity
2019
$
2018
$
(1,946,870)
(1,115,848)
(cid:150)
(cid:150)
(1,946,870)
(1,115,848)
2,621,899
2,339,540
4,961,439
60,736
(cid:150)
60,736
1,181,779
5,496,732
6,678,511
117,348
(cid:150)
117,348
54,846,901
1,061,897
(51,008,095)
4,900,703
54,814,869
838,321
(49,092,027)
6,561,163
(a)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had not entered into any guarantees in relation to the debts of its subsidiaries as at 30 June 2019
(2018: Nil).
(b)
Commitments for the acquisition of property, plant and equipment by the parent entity
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 (2018: Nil).
H A N N A N S A N N U A L R E P O R T 2 0 1 9 | 67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2019
68 | H A N N A N S A N N U A L R E P O R T 2 0 1 9