For personal use only
ABOUT HANNANS LTD
Hannans Ltd (ASX:HNR) is an exploration company with a focus on nickel, gold and lithium
in Western Australia. Hannans’ 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, Grängesberg 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 ‘Hannans’ on Twitter.
ANNUAL REPORT
FOR THE FINANCIAL YEAR ENDED
30 JUNE 2020
Corporate Directory ....................................................................................................................... 1
Directors’ Report ............................................................................................................................ 2
Independence Declaration to the Directors of Hannans Ltd ......................................... 33
Directors’ Declaration ................................................................................................................. 34
Independent Auditor’s Report to the Members of Hannans Ltd .................................. 35
Consolidated Statement of Profit and Loss and Other Comprehensive Income ..... 40
Consolidated Statement of Financial Position .................................................................... 41
Consolidated Statement of Changes in Equity ................................................................... 42
Consolidated Statement of Cash Flows ................................................................................ 43
Notes to the Consolidated Financial Statements............................................................... 44
For personal use only
CORPORATE DIRECTORY
BOARD OF DIRECTORS
PRINCIPAL OFFICE
SHARE REGISTRY
Level 11, 216 St Georges Terrace
Computershare
NON-EXECUTIVE CHAIRMAN
Perth, Western Australia 6000
Level 11, 172 St George’s Terrace
Mr Jonathan Murray
Perth, Western Australian 6000
REGISTERED OFFICE
Telephone 1300 787 272
EXECUTIVE DIRECTOR
Level 11, 216 St Georges Terrace
Website www.computershare.com.au
Mr Damian Hicks
Perth, Western Australia 6000
NON-EXECUTIVE DIRECTORS
POSTAL ADDRESS
AUDITORS
Ernst & Young
Mr Markus Bachmann
PO Box 1227
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
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CHAIRMAN’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 2020.
Dear Shareholders,
We remain focussed on transforming into a West Australian mining company through exploration
success, joint venture and project acquisition targeting nickel, gold and lithium opportunities.
During the year and despite fielding interest from third parties to joint venture the Forrestania Nickel
Project, the Board elected to implement the exploration strategy recommended by our consultants.
Accordingly, the Company retains 100% exposure to exploration success. At the end of the day we are
an exploration company, we deploy funds to test the targets. Exploration success will create value for all
shareholders but it is also a high-risk endeavour. Our next phase of exploration drilling at the Forrestania
nickel project has just commenced and we look forward to updating the market.
We have reduced our expenditure rate at the Mt Holland lithium project due to the limited success of recent
exploration campaigns. We do however propose testing one more target with a deep hole in October 2020 before
deciding on our next steps at Mt Holland.
We initiated a new exploration front in the Gascoyne region of Western Australia and our team has been very active
assessing whether the conceptual targets at the Moogie Project have the potential to host a large, sustainable and
economic deposit. Big targets potentially mean big rewards. Our work to date indicates that the structural architecture
is in place at Moogie to host mineralisation. When the tenements are granted, we will seek approvals to complete
reconnaissance drilling to test these theories.
Hannans has also made several opportunistic tenement applications in the Fraser Range over ground prospective for nickel
mineralisation. These tenements cover a small area however the landholding might prove in time to be a platform from which to
aggregate additional tenure in the Fraser Range.
Thank you to our team of consultants and advisors that have contributed to the exploration strategy, planning and execution.
Once again, and on behalf of my fellow Directors, we thank you for your continued support. We are eager for exploration success and
remain hopeful that the next drill program at Forrestania may be the impetus that sets a course for an exciting future for our Company.
Yours sincerely,
Jonathan Murray
Chairman
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For personal use only DIRECTORS’ 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 might chose to sole fund
exploration, contribute funding to maintain
joint venture interests or receive royalties from
future 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
∂
∂
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’ needs and wants and
thereafter conduct business in a fair, transparent
and ethical manner.
Projects
∂ 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
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
considering 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.
Capital
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OPERATIONAL AND FINANCIAL REVIEW
MAJOR PROJECTS
NON CORE PROJECTS
∂
Forrestania Nickel (100% interest);
∂ Moogie Gold & Copper (100% interest);
∂ Mt Holland Lithium (100% interest);
∂
∂
Forrestania Gold (20% free-carried interest).
Fraser Range Nickel-Copper (100% interest);and
∂ Milly Boo Precious & Base Metals (100% interest); and
∂ Queen Victoria Rocks Nickel (100% interest).
Figure 1: State map showing
location of Hannans’
Forrestania, Mt Holland,
Fraser Range, Moogie and
Milly Boo projects
(red font with yellow background)
relative to the location of
major projects not owned by
Hannans (in blue font with
white background).
Source: Company web sites.
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DIRECTORS’ REPORT
Forrestania Nickel Project (Hannans 100%)
Background
Hannans’ Forrestania Nickel Project (FNP) 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 ultramafic1 belts namely the Western, Mid-Western, Takashi, Central, Mid-
Eastern and Eastern.
The Western ultramafic belt is regionally the most well-endowed with nickel-sulphide mineralisation. The Spotted Quoll, New Morning,
Beautiful Sunday, and Flying Fox2 nickel sulphide deposits are all located within the Western ultramafic belt. Hannans’ 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 sulphides3. The nickel deposits are
generally associated with olivine cumulate4 ultramafic rocks, however mineralisation may occur in a range of rock types / settings and
exhibit a range of geophysical responses.
Exploration
Despite a significant amount of nickel exploration at Forrestania by several companies, the last major nickel sulphide discovery was made
more than 13 years ago, that being the Spotted Quoll deposit (mine) owned by Western Areas Ltd. A detailed review of Hannans’ FNP was
initiated by Newexco Exploration Pty Ltd mid-2018 and completed early 2019. The review identified a range of early stage to advanced
geophysical, geological, and geochemical targets that warranted further investigation. Hannans has been systemically following the
recommendations outlined in the report and the results of these activities have previously been released to ASX. Large flora and fauna
surveys were subsequently completed in spring 2019 enabling Hannans to obtain approvals to clear limited amounts of native vegetation
if necessary, to advance exploration within the project. Additional surveys will be required in the future. A summary of the exploration
completed during 2019/2020 can be found in Table 1.
Figure 2. Regional location map showing
Hannans 100% owned Forrestania Nickel Project
outlined in red and major nickel mines
(operating and historic) and nickel deposits.
Source: Company web sites
1 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).
2 All these deposits are owned by Western Areas NL (not Hannans Ltd).
3 There are five different settings to nickel sulphide mineralisation at Flying Fox.
4 Cumulate rocks are igneous rocks formed by the accumulation of crystals from a magma either by settling or floating.
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DIRECTORS’ REPORT
Forrestania Nickel Project (cont’d)
Figure 3. Project location map showing Hannans Forrestania Nickel Project tenure outlined in red and the major nickel mines and deposits
within the Western Areas Ltd tenure outlined in blue. Targets A1, A2, C1, C4, C5 and C6 were RC drill tested in January 2020. 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.
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DIRECTORS’ REPORT
Moogie Gold & Copper Project (Hannans 100%)
Introduction
Moogie represents a conceptual greenfields exploration opportunity based on large-scale tectonic controls on mineralisation. The concept
is that deep, long-lived crustal scale structures like major shear zones represent excellent tectonic settings for large scale mineralising
events. Government seismic lines indicate the surface expression of a major structure occurs at the Moogie Project. Hannans is currently
focussed on surface sampling and mapping to determine if rocks with potential to host economic mineralisation exist within the tenure.
Figure 4. Regional location map showing Moogie ~ 260kms north-west of Meekatharra and the proximity of several current and historical
mines.
Background
The Moogie Project comprises three exploration licence applications in the Gascoyne Province, Western Australia, located 260kms north-
west of Meekatharra and 270kms east of Carnarvon (refer Figure 4 and Figure 5). Moogie is located within the Glenburgh Terrane of the
Gascoyne Province, a Proterozoic5 metamorphic belt located at the northern margin of the Yilgarn Craton. The project tenure covers the
intersection of the crustal scale Cardilya Fault with the northeast trending Deadman Fault. The project is considered prospective for
orogenic6 gold, copper mineralisation and intrusion-related nickel-copper-platinum group element mineralisation.
The Glenburgh Gold Project, owned by Gascoyne Resources Ltd (ASX:GCY), is located ~7km due south of Hannans’ applications and
contains a Measured, Indicated and Inferred mineral resource of 21.3 Mt @ 1.5 g/t Au for 1.0M ounces of gold7. The gold mineralisation at
Glenburgh is hosted within silica altered quartz-feldspar-biotite-garnet-gneiss and is located along the northeast trending Deadman Fault
which continues along strike into Hannans’ applications. The Deadman Fault zone is a sinistral transcurrent fault8 hosting not only gold but
also copper mineralisation (Dalgety Downs). The Deadman Fault zone forms a 14km low ridge on Hannans’ E09/2373 tenement
application (refer Figure 5) and ASTER satellite imagery shows argillic alteration9 along its length; the ridge has not previously been drill
tested.
5 The period from 2,500 million years ago (mya) to 541 mya.
6 Orogenic lode gold mineralising systems comprise epigenetic mineralisation that formed because of focused fluid flow late during active deformation and
metamorphism of volcano-plutonic terranes.
7 Refer https://www.gascoyneresources.com.au/gascoyne-projects/glenburgh-gold-project/
8 A left lateral, strike-slip fault, i.e. a sideways movement rather than up or down.
9 A type of hydrothermal alteration, typically low temperature and producing clays like kaolin and smectite.
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Moogie Gold & Copper Project (cont’d)
Figure 5. Project location map showing Hannans tenement applications E09/2373 and E09/2374 (outlined in red) and the intersection of
the crustal scale Cardilya Fault with the Deadman Fault considered prospective for orogenic gold and or copper mineralisation and
intrusion-related Ni-Cu-PGE mineralisation.
Regional Setting and Target Concept
The Moogie Project is located at the ‘top’ of the Cardilya Fault (Shear Zone), a crustal-scale structure that extends from under the Yilgarn
Craton. The Cardilya Fault separates the 2200-2000Ma Dalgaringa Supersuite from the 1800Ma Moorarie Supersuite, where the Glenburgh
Terrane and the Yilgarn Craton came together at approximately 2,000Ma during the Glenburgh Orogeny. The tectonic setting is
considered prospective for orogenic (hydrothermal) gold mineralisation, copper mineralisation and mafic intrusion associated Ni-Cu-PGE
deposits during a period from around 2000-1800Ma. Tectonic similarities exist with the Albany-Fraser Zone at the south-eastern margin of
the Yilgarn Craton.
Detailed aeromagnetic data flown by Hannans in December 2019 defined a 2-5km wide ductile shear zone traversing through the
tenement package, rather than discrete faults. Hannans now refers to this feature as the Cardilya Shear Zone (CSZ). Gneissic rocks
deformed within this anastomosing shear zone include likely equivalents to the ~2,200Ma Moogie Metamorphics or Camel Hills
Metamorphics, in addition to other granitic gneisses. A regionally significant 10-15km bend or kink in the CSZ is a key area of exploration
interest. A major splay off the CDZ in the south-central part of the tenement area continues in a west-south-westerly direction towards the
string of gold prospects and deposits in the Glenburgh Gold Project. This data was collected and interpreted during the period December
2019 – February 2020.
Exploration
Hannans has also compiled and levelled historic geochemical data and completed two geochemical sampling programs during the period
January – April 2020. Sampling is targeting areas of interest identified from structural, magnetic, radiometric, and remote sensing (ASTER)
interpretations. Thin section analysis of samples collected in the field have identified metamorphosed mafic and granitic rock units within
the central portion of Moogie tenement package. A regional soil sampling program is also being planned. At this early stage of
exploration, the presence of a major shear system (The Cardilya-Dalgety Shear Zone) and associated mylonite and paragneiss together
with magnetic anomalies as well as the presence of copper oxides are together considered sufficient to justify further exploration. A
summary of the exploration completed during 2019/2020 can be found in Table 1.
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DIRECTORS’ REPORT
Mt Holland Lithium Project (Hannans 100%)
Introduction
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 New York Stock Exchange listed SQM and ASX listed Wesfarmers Ltd. Earl Grey will underpin a world-class, long-life integrated
lithium project10. Hannans’ exploration goal at Mt Holland is to discover a lithium deposit comparable to Earl Grey.
Background
Hannans notes that 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 deposits11 and there are large areas of prospective tenure within the Hannans’ project
that remain unexplored. 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 pegmatites12.
Figure 6. Map showing major lithium mines, projects and processing infrastructure.
Hannans’ exploration model is based on targets located within a 10km 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 recognising the high mobility of lithium in the weathered zone.
Exploration
Hannans has completed seven drilling programs at Mt Holland and aims to test its best lithium target with one reverse circulation (RC) drill
hole at the end of the nickel drilling campaign planned for the current Quarter. All government approvals have been received for the
drilling. If warranted further holes will be drilled in due course. A summary of the exploration completed during 2019/2020 can be found in
Table 1.
10 Refer kidmanresources.com.au
11 Owned by Kidman Resources and SQM, not Hannans.
12 The host to the lithium mineralisation.
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Fraser Range (Hannans 100%)
Introduction
Hannans tenure comprises several small exploration license applications located approximately 100kms east of Norseman and 60 kms
south-west of the operating Nova nickel-copper-cobalt mine. Four applications E63/2020 – 2023 are proximal to the Talbot nickel-copper-
cobalt anomaly explored by Sirius Resources Ltd and later IGO Ltd (refer Figure 7).
Background
The general area of this group of tenements has been the subject of nickel exploration since the 1960’s. The Talbot prospect (situated
immediately west of E63/2021, or roughly between the four Hannans tenements) was one of the localities at which weak nickel-copper
sulphide mineralisation was discovered at that time, along with Gnama South (approximately 3km to the NW of E63/2022). Exploration
during the era post the Nova discovery has been carried out exclusively by Sirius and later IGO. A significant amount of exploration was
completed in this area between 2011 and 2019, including the blocks currently under application by Hannans.
Exploration
Given the proximity of the tenements to a known nickel sulphide occurrence (which are not common in the Fraser Range area), the leases
are of exploration interest. It is important to note that two applications adjacent to the Talbot nickel prospect have seen little coverage
with surface geophysics (electromagnetic). A ground EM survey will be completed by Hannans when the tenements are granted. However,
given the work that has been completed to date by previous operators, it would appear there is limited scope for additional exploration
that might lead to a discovery of a deposit that was not identified by the previous work. A summary of the exploration completed during
2019/2020 can be found in Table 1.
Figure 7. Regional location map showing Hannans recent tenement applications in red relative to tenements owned by IGO Ltd and
Bodicea Resources Ltd. The location of the producing Nova nickel-copper-cobalt mine is also shown.
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Forrestania Gold (Hannans 20% Free-Carried)
Introduction
Joint venture partner, Classic Minerals Ltd (ASX:CLZ), is funding exploration on the Forrestania Gold Project located approximately 120km
south of Southern Cross in the Goldfields region of Western Australia. Hannans owns a 20% free-carried interest in the FGP13 meaning
Hannans is not required to fund the costs of exploration until a decision to mine gold has been made by the joint venture. For the
avoidance of doubt Hannans owns a 100% interest in all non-gold rights on the tenements including but not limited to nickel, lithium,
and other metals.
Figure 8. Forrestania Gold Project (FGP) location map showing the range of priority gold targets identified by previous explorers. Hannans
holds a 20% free-carries interest in the gold rights at the FGP.
13 Please refer to the ASX releases made by Classic Minerals Ltd dated 2 May 2017, 18 December 2019 and 21 January 2020 for full details of the mineral resource
estimates reported in compliance with the JORC Code, 2012 Edition. Hannans has no interest in either the Lady Lila or Kat Gap prospects owned by Classic Minerals Ltd.
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DIRECTORS’ REPORT
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 2019 and 30 June 2020.
JULY 2019 – JUNE 2020
Forrestania Gold Project14
JORC Compliant Indicated and Inferred Mineral Resource Table
Indicated
Grade
(Au g/t)
2.01
–
2.01
Ounces (Au)
Tonnes
16,600
–
1,090,800
5,922,700
16,600
7,013,500
Prospect
Lady Ada
Tonnes
257,300
Lady Magdalene
–
TOTAL
257,300
JULY 2018 – JUNE 2019
Forrestania Gold Project15
JORC Compliant Indicated and Inferred Mineral Resource Table
Prospect
Lady Ada
Tonnes
283,500
Lady Magdalene
1,828,500
TOTAL
2,112,000
Competent Person’s Statements – 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)
1.23
1.32
1.3
Inferred
Grade
(Au g/t)
2.2
1.5
1.6
Ounces (Au)
43,100
251,350
294,450
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 ‘JORC Australian code for reporting of
Exploration Results, Mineral Resources and Ore Reserves’. Mr Fry consents to the inclusion in this report of the matters based on information in the form and context in which it appears.
Acknowledgement
Hannans would like to acknowledge the work completed by several advisors, consultants and contractors (Team) through the year.
Hannans appreciates the quality, focus and professionalism of these individuals and organisations. Hannans and its Team are
focussed on the discovery of a world class orebody at Forrestania, Moogie, Mt Holland and Fraser Range.
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14 Refer to Classic Minerals Ltd (ASX: CLZ) ASX announcement on 31 July 2020 for further information.
15 Refer to Classic Minerals Ltd (ASX: CLZ) ASX announcement on 14 March 2017 for further information.
For personal use only DIRECTORS’ REPORT
Exploration
Exploration activities completed by Hannans and its joint venture partners during the year ended 30 June 2020 are set out below:
Forrestania
(Nickel)
Mt Holland
(Lithium)
Moogie
(Gold & Copper)
Forrestania
(Gold)
Fraser Range
(Nickel)
Milly Boo
(Iron Oxide-Copper-Gold)
Qtr
1
A major nickel sulphide
exploration campaign was
commenced along strike
from high grade operating
nickel mines; exploration
was planned and managed
by Newexco Exploration
(www.newexco.com), a
Team with an outstanding
“discovery” track record.
Hannans postponed joint
venture discussions with
third parties to provide
Shareholders with the
greatest leverage to a
future nickel discovery.
Refer ASX release dated
15 October 2019.
Qtr
2
Two extensive flora and
fauna surveys were
completed to enable
ground clearing activities
for ground geophysical
(electromagnetic, or EM)
surveys and drill testing of
nickel targets to be
approved by the
government. Ground EM
surveys and the 1st round
of drilling were commenced
but were halted due to a
major bush fire in the
region that endangered the
safety of staff, contractors,
and their equipment. Refer
ASX releases dated
19 November 2019,
3 and 5 December 2019.
Qtr
4
Qtr
3
The 1st phase of nickel
exploration was completed
(ground EM survey and
drilling), all results were
interpreted and reported.
The 2nd phase of
exploration, including field
visits and planning follow-
up surveys (ground and
down-hole EM surveys) was
commenced. Refer ASX
releases dated
18 March 2020.
The 2nd phase of EM
surveying was completed,
data was interpreted and
reported after the end of
the Quarter. Approvals to
test six target areas
prospective for nickel
sulphide mineralisation with
reverse circulation (RC) and
diamond drilling (DD) were
received from the
government. After the end
of the Quarter, two
additional (high priority)
nickel targets were
approved for drilling by the
government. Refer ASX
release dated 29 July 2020.
Forrestania
(Nickel)
Mt Holland
(Lithium)
Moogie
(Gold & Copper)
Forrestania
(Gold)
Fraser Range
(Nickel)
Milly Boo
(Iron Oxide-Copper-Gold)
Qtr
1
Qtr
2
Seventy-nine aircore holes
were drilled at Mt Holland
West and identified
anomalous lithium and
pathfinder elements
including rubidium,
tantalum, caesium, tin and
beryllium. Deeper drilling
was planned to determine if
fresh pegmatite beneath
the anomalism hosted
economic lithium
mineralisation. A Spring
flora & fauna survey was
completed at Mt Holland
East to support the next
round of drilling. Refer ASX
release dated
1 October 2019.
Qtr
3
Government approvals
were received to drill 2
deep holes at Mt Holland
West testing the fresh
pegmatite beneath lithium
anomalism identified in the
1st Quarter. Refer ASX
releases dated
31 January 2020.
Qtr
4
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Exploration (cont’d)
Forrestania
(Nickel)
Mt Holland
(Lithium)
Moogie
(Gold & Copper)
Qtr
1
Qtr
2
Forrestania
(Gold)
Qtr
3
Fraser Range
(Nickel)
Milly Boo
(Iron Oxide-Copper-Gold)
A detailed interpretation of
the airborne geophysical
survey flown in the
1st Quarter was completed
as was an initial field
reconnaissance. Soil
samples were collected by
prospectors across regional
areas of interest, assay
results were received, and
interpretation of the results
commenced. Refer ASX
release dated 31 January
2020.
Qtr
4
Additional soil samples
were collected by
prospectors and the
Company continued
interpreting the results.
After the Quarter ended the
1st phase of field mapping
was undertaken and
prospectors collected yet
more surface samples for
analysis. Refer ASX release
dated 10 June 2020 and
14 September 2020.
Tenement applications were
lodged over prospective
terrane in the Gascoyne
Province, approximately
200kms north-east of
Meekatharra to secure
tenure over an exploration
concept with the potential
to host large scale mineral
deposits. An airborne
magnetic (gradiometer)
survey (~11,000 line
kilometres) was flown to
generate high quality
geophysical data for
interpretation. Refer ASX
release dated
5 December 2019.
Forrestania
(Nickel)
Mt Holland
(Lithium)
Moogie
(Gold & Copper)
Forrestania
(Gold)
Fraser Range
(Nickel)
Milly Boo
(Iron Oxide-Copper-Gold)
Qtr
1
Qtr
2
An updated mineral
resource estimate was
released by Hannans’ joint
venture partner for the Lady
Magdalene deposit, 5.92 mt
@ 1.32 g/t gold for 251,350
ounces. This represented a
38% increase in the
contained gold ounces.
Hannans’ interest is free-
carried until a decision to
mine is made. Refer ASX
release dated
19 December 2019.
Qtr
4
Qtr
3
Hannans joint venture
partner Classic Minerals Ltd
(ASX:CLZ) updated the
mineral resource estimate
for Lady Ada to total
resources of 7.27mt @ 1.33
g/t gold for 311,050 ounces
of gold. Hannans’ interest is
free-carried until a decision
to mine is made. Refer ASX
release dated 28 January
2020.
Forrestania
(Nickel)
Mt Holland
(Lithium)
Moogie
(Gold & Copper)
Forrestania
(Gold)
Fraser Range
(Nickel)
Milly Boo
(Iron Oxide-Copper-Gold)
Qtr
1
Qtr
2
Qtr
3
14 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
Qtr
4
Several exploration licenses
were applied for within
prospective terrain
adjoining tenure held by
mining company IGO Ltd.
Hannans applications were
”opportunistic” as there is
very limited ground
available in the Fraser
Range that is not controlled
by IGO, or multi-millionaire
prospector Mark Creasy.
Refer ASX release dated
1 May 2020.
A detailed review of all
historic exploration data
covering Hannans new
tenement applications was
completed by Newexco
Exploration. The review
identified areas within the
applications that had not
been adequately tested for
nickel sulphide
mineralisation, and an
exploration strategy was
planned. Refer ASX release
dated 31 July 2020.
For personal use only DIRECTORS’ REPORT
Exploration (cont’d)
Forrestania
(Nickel)
Mt Holland
(Lithium)
Moogie
(Gold & Copper)
Forrestania
(Gold)
Fraser Range
(Nickel)
Milly Boo
(Iron Oxide-Copper-Gold)
Qtr
1
Qtr
2
Qtr
3
Qtr
4
Exploration expenditure
Mineral Exploration Activities in 2020
In line with the Group’s accounting policy, Hannans
expensed $1,254,103 on mineral exploration activities
in 2020 (2019: $766,344) relating to its non-JORC
compliant mineral projects. These amounts exclude all
administration, transaction costs and exploration
expenditure by Hannans joint venture partners.
Table 1. Summary of the exploration completed during
2019/2020.
Geological activities
Geochemical activities
Geophysical activities
Drilling
Field supplies
Field camp and travel
Drafting activities
Environmental
Rehabilitation
Annual tenement rent & rates
Tenement administration
Tenement application fees
An application for a new
tenement was lodged in the
Gascoyne region over a
deep magnetic anomaly
identified as having
characteristics of an IOCG
target. A ground based
geophysical (gravity) survey
was completed to test the
concept. After the Quarter
ended interpretation of the
data was completed and a
gravity anomaly located
“higher up” in cover
sediments was identified.
Whilst the anomaly did not
fit an IOCG model it will be
further investigated. Refer
ASX release dated
31 July 2020.
$
442,372
72,554
252,461
205,313
47,788
32,803
1,580
261
47,767
76,064
56,264
18,876
%
35%
6%
20%
16%
4%
3%
0%
0%
4%
6%
5%
2%
TOTAL MINERAL EXPLORATION ACTIVITIES
1,254,103
100%
Figure 9. Historical record since listing on ASX of exploration expenditure, cash at bank and market capitalisation as at 30 June.
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 15
For personal use only
DIRECTORS’ REPORT
16 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
Goals Scorecard 2018 – 2020
Hannans introduced the Scorecard in 2015 The Scorecard enables the Directors,
Management and Shareholders to remain focussed on the Goals on a rolling three-
year basis. The table below highlights Hannans achievements relative to the stated
Goals:
Item
Strategic
Plan
Shareholder
Returns
Stated Goal
AGM 2018
Hannans is aiming to
develop into a West
Australian mining
company via:
∂
exploration
success for lithium
and or nickel at
Forrestania;
∂
∂
participation in
joint ventures for
gold at Forrestania
and lithium at Lake
Johnston; and or
acquisition of a
major project.
Implement a strategy
giving shareholders
the opportunity to:
∂
return multiples
on their original
investment, and/or
∂
recover original
investment.
Joint
Venture
(JV)
Monitor joint venture
partners’ activities
Outcome to Date
∂ No world class minerals
exploration discovery so far.
∂ No requirement to contribute
funding to JV partners activities so
far.
∂ No acquisition of a major project
despite due diligence on several
projects.
Hannans share price was
∂
20 cents (IPO) on
5 December 2003
∂
∂
∂
∂
∂
$1.04 (high) on 22 May 2007
0.2 cents (low) on
21 December 2015,
23 December 2015
to 6 January 2016,
11 January to 15 February 2016
1.8 cents on 24 August 2018;
0.9 cents on 26 August 2019; and
0.8 cents on 13 August 2020.
Hannans has a JV over certain
tenements at Forrestania with Classic
Minerals Ltd (ASX:CLZ). Classic has
been active and had exploration
success. Hannans is free carried at 20%
through to a decision to mine.
Sole
Funded
Projects
Secure joint venture
partners
A JV partner was sought for Mt
Holland, but the deal was not
completed.
Corporate
Activities
Spin outs
Hannans received a binding offer from
a global major to JV nickel at
Forrestania however the Board elected
to continue sole funding.
Errawarra Resources Ltd was demerged
from Hannans in February 2012.
(www.errawarra.com)
Critical Metals Ltd was demerged from
Hannans in 2016.
(www.criticalmetals.eu)
For personal use only DIRECTORS’ 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 over 20 years
experience advising on numerous initial
public offers and secondary market
capital raisings, public and private M&A
transactions, corporate governance and
strategy. Mr Murray graduated from
in 1996 with a
Murdoch University
Laws and Commerce
Bachelor of
(majoring in Accounting). 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:
∂
Vietnam Industrial Investments Limited
(appointed 19 January 2016, resigned 15 May 2020)
∂
Peak Resources Limited* (appointed 22 February 2011)
Mr Markus Bachmann, Non-Executive Director
(Appointed 2 August 2012)
Mr Markus Bachmann holds a Master
(MA) in Business and Economics (cum
laude) from the University of Berne,
Switzerland. Markus started his career in
the corporate finance department of the
Credit Suisse Group, before joining the
SBC Brinson Asset Management Emerging
Markets team in 1997. Moving to South
Africa in 2000 he joined Coronation Fund
Managers in Cape Town, South Africa, as
a senior manager for various retail products and institutional
mandates.
Markus co-funded Craton Capital in 2003 whereas he is the
manager of the Craton Capital Precious Metals Fund and the
Global Resources Fund since their inception. Over the past 20
years and under his management, his funds received a number
of prestigious industry awards. Markus accumulated over 25
years of experience in global equity markets, precious metals
and raw materials.
During the past 3 years Mr Bachmann did not serve as a
director on other listed companies.
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’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 in Company Secretarial Practice
from Chartered Secretaries Australia and is a Graduate of the
Australian Institute of Company Directors course.
During the past 3 years Mr Hicks did not serve as a director on
other listed companies.
Mr Clay Gordon, Non-Executive Director
(Appointed 5 October 2016)
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’
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 is currently 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 the Australian Institute of Geoscientists.
During the past 3 years Mr Gordon did not serve as a director
on other listed companies.
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 17
For personal use only DIRECTORS’ REPORT
DIRECTORS (cont’d)
COMPANY SECRETARY
Ms Amanda Scott
(Appointed Non-Executive Director on 29 November 2016)
Mr Ian Gregory
(Appointed 5 April 2007)
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 played an
in the
development of the Company’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
integral role
Australia.
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 AB 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.
is a professional well-
Mr Gregory
connected Director
and Company
Secretary with over 30 years’ 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.
Directors’ Relevant Interest in Shares and Options
At the date of this report the following table sets out the current Directors’ relevant interests in shares and options of Hannans Ltd and the
changes since 30 June 2020.
Director
Damian Hicks
Jonathan Murray
Markus Bachmann(i)
Clay Gordon
Amanda Scott
Ordinary Shares
Options over Ordinary Shares
Current
Holding
Net Increase/
(decrease)
7,007,218
12,705,132
75,725,134
2,362,204
1,260,001
–
–
–
–
–
Current
Holding
–
10,500,000
10,500,000
10,500,000
10,500,000
Net Increase/
(decrease)
–
(3,237,500)
(2,697,917)
–
–
(i)
These shares are held by Craton Capital Funds of which Mr Bachmann is a founding partner and Chief Executive Officer.
18 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
DIRECTORS’ 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–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’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’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–Scholes methodology where relevant.
The Board policy is to remunerate non–executive directors at market rates for comparable companies for time, commitment and
responsibilities. The Board determines payments to the non–executive directors and reviews 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–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 $250,000 which may be divided among the Non-Executive
Directors in the manner determined by the Board and Company from time to time. Fees for Non–Executive Directors are not
linked to the performance of the Company. The 2019 remuneration report was approved at the last Annual General Meeting held
on 17 October 2019.
The remuneration policy has been tailored to increase the direct positive relationship between shareholders investment objectives and
directors and executive performance. The Company facilitates this through the issue of options from time to time to the directors and
executives to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in
increasing shareholder wealth. The Company currently has no performance based remuneration component built into director and
executive remuneration packages.
The Board does not consider earnings during the current and previous financial years when determining, and in relation to, the nature
and amount of directors’ remuneration. Refer below for a summary of the Group’s earnings and the Company’s market performance for
the past 5 years.
Summary of 5 Years earnings and market performance as at 30 June
Profit/(Loss) ($)
Share price (c)
Market capitalisation
(Undiluted) ($)
2020
2019
2018
2017
2016
(1,900,520)
(2,085,563)
(1,379,271)
11,663,780
(964,387)
0.5
1.0
1.4
1.5
1.6
9,939,773
19,879,545
27,724,264
25,239,608
15,531,324
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 19
For personal use only DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’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 pages 17 and 18.
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
(i)
D&O(ii)
insurance
Superan-
nuation
Other
benefits
Options
(iii)
Long
term
benefits
Other
benefits
$
$
$
$
$
$
$
$
Value
options as
proportion of
remuneration
%
Total
$
2020
Directors
Damian Hicks (iv)
240,000
20,138
2,396
22,800
Jonathan Murray (v)
24,000
Markus Bachmann (v)
24,000
Clay Gordon (v)
Amanda Scott (v)
24,000
24,000
–
–
–
–
2,396
2,395
–
–
2,395
2,280
2,395
–
336,000
20,138
11,977
25,080
Total
2019
Directors
Damian Hicks
218,000
Jonathan Murray
Markus Bachmann
Clay Gordon
Amanda Scott
20,000
20,000
20,000
20,000
–
–
–
–
–
2,139
2,140
2,140
–
–
–
2,140
1,900
2,140
–
Total
298,000
–
10,699
1,900
(i) Short Term Other benefits include annual leave accrued during the
year of $20,138 (2019: nil) for Mr Damian Hicks.
(ii) 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.
(iii) The amounts included are issued under Hannans’ Director Equity
Option Plan approved by shareholders in September 2016. The
amounts are non-cash items that are subject to vesting conditions.
Refer to Section D for more information.
C.
Service agreements – Executive Director
–
–
–
–
–
–
–
–
–
–
–
–
26,318
6,580
6,580
6,580
6,580
52,638
127,189
31,797
31,797
31,797
31,797
254,377
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
311,652
32,976
32,975
35,255
32,975
445,833
347,328
53,937
53,937
55,837
53,937
564,976
8.4%
20.0%
20.0%
18.7%
20.0%
11.8%
36.6%
59.0%
59.0%
56.9%
59.0%
45.0%
(iv) After a further review of Mr Hicks’ contract with the Company, the
Board resolved from 1 July 2019 to increase his fees to $240,000 per
annum for executive services. In an effort to assist the Company with
managing its cash flow, Mr Hicks deferred $28,750 in salary & fees
entitlements during the period 1 April 2020 to 30 June 2020. From
1 July 2020 Mr Hicks continues to receive his salary in accordance with
his contract. The deferred salary was paid to Mr Hicks in September
2020.
(v) After a further review of Non-Executive Directors’ fees, the Board
resolved to increase these fees to $24,000 per annum starting from
1 July 2019.
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. 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.
On 1 July 2019, Mr Hicks’ 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.
In an effort to assist the Company with managing its cash flow, Mr Hicks deferred $28,750 in salary entitlements during the period
1 April 2020 to 30 June 2020. The deferred salary was paid to Mr Hicks in September 2020.
20 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
C.
Service agreements (cont’d)
Executive Director (cont’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.
Name
Engagement
By HANNANS
By Employee
Termination Notice Period
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. 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
* Termination payments (other than for gross misconduct) are calculated on current remuneration at date of termination and are inclusive of the notice
period.
D.
Share–based compensation
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 to the
directors and executives during the year. As at 30 June 2020, 47,935,417 options (2019: 52,102,083) were held by Directors and Non-
Executives.
Directors
J Murray
M Bachmann
Finan-
cial
year
2015
2017(ii)
2018
2018
2018
2015
2017(ii)
2018
2018
2018
Options
issued
during
the year
No of
options
No.
No.
Issue date
Fair
value
per
options
at issue
date
Vesting
date(i)
Exercise
price
Expiry
date
Vested
during
the year
Expired/
Exercised
during
the year
No.
No.
–
–
–
–
–
–
–
–
–
–
–
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
27 Oct 17
1.2 cents
27 Oct 19
1.5 cents
27 Oct 22
3,500,000
–
20 Nov 14
0.3 cents
20 Nov 16
2.9 cents
20 Nov 19
2,697,917
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
27 Oct 17
1.2 cents
27 Oct 19
1.5 cents
27 Oct 22
3,500,000
500,000
–
–
–
–
500,000
–
–
–
–
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 21
For personal use only
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
D.
Share–based compensation (cont’d)
Directors
C Gordon
A Scott
Finan-
cial
year
2018
2018
2018
2015
2018
2018
2018
Options
issued
during
the year
No of
options
No.
No.
Issue date
Fair
value
per
options
at issue
date
Vesting
date(i)
Exercise
price
Expiry
date
Vested
during
the year
Lapsed/
Exercised
during
the year
No.
No.
–
–
–
–
–
–
–
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
27 Oct 17
1.2 cents
27 Oct 19
1.5 cents
27 Oct 22
3,500,000
–
20 Nov 14
0.3 cents
20 Nov 16
2.9 cents
20 Nov 19
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
27 Oct 17
1.2 cents
27 Oct 19
1.5 cents
27 Oct 22
3,500,000
–
–
–
3,166,666
–
–
–
(i) The unlisted options become vested on the vesting date. No other vesting condition applies.
(ii) On 15 September 2020 the unlisted options exercisable at 2.7 cents expired unexercised
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
Balance at
1 July
Granted as
remuneration
Received on
exercise of
options
Key management personnel
No.
No.
No.
Net other
change
No.
Balance at
30 June
No.
2020
Damian Hicks
Jonathan Murray
Markus Bachmann(i)
Clay Gordon
Amanda Scott
7,007,218
12,705,132
76,985,838
2,362,204
1,260,001
100,320,393
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,007,218
12,705,132
(1,260,704)
75,725,134
–
–
2,362,204
1,260,001
(1,260,704)
99,059,689
(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.
22 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
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DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
E.
Additional information (cont’d)
Options of Hannans Ltd
Key management personnel
2020
Damian Hicks
Jonathan Murray(i)
Markus Bachmann
Clay Gordon
Amanda Scott
Balance
at
1 July
No.
–
14,237,500
13,697,917
10,500,000
13,666,666
52,102,083
Granted as
remune-
ration
Options
exercised
Net other
change
Balance at
30 June
Exercisable
Not
exercisable
Vested at 30 June
No.
No.
No.
No.
No.
No.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(500,000)
13,737,500
13,737,500
(500,000)
13,197,917
13,197,917
–
10,500,000
10,500,000
(3,166,666)
10,500,000
10,500,000
(4,166,666) 47,935,417
47,935,417
–
–
–
–
–
–
(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 $4,983 (2019: $690) to the Group
during the year. The amounts paid were on arm’s length commercial terms. Mr Murray’s director’s fees are also paid to Steinepreis
Paganin. At 30 June 2020 there was no amount outstanding owed to Steinepreis Paganin (2019: Nil).
Corporate Board Services Pty Ltd (CBS), of which Mr Damian Hicks is a director, provided accounting and compliance services amounting
to $143,750 (2019: $150,000) to the Group during the year. The amounts paid were on arm’s length commercial terms. At 30 June 2020
there was no amount outstanding owed to CBS. During the year, Hannans invoiced $2,894 (2019: $3,655) for expenses paid on behalf CBS.
At 30 June 2020 CBS owed $1,298 (2019: $1,005) to the Group.
Scott Geological AB, of which Ms Amanda Scott is a director, provided geological services amounting to $13,639 to the Group during the
year. The amounts paid were on arm’s length commercial terms. Ms Scott’s director’s fees are also paid to Scott Geological. At 30 June
2020 a total of $5,029 was owed to Scott Geological AB.
End of Remuneration Report
DIRECTORS MEETINGS
The following tables set information in relation to Board meetings held during the financial year.
Board Member
Held while Director
Attended
Board Meetings
Damian Hicks
Jonathan Murray
Markus Bachmann
Clay Gordon
Amanda Scott
3
3
3
3
3
3
3
2
2
3
Circular
Resolutions
Passed
2
3
3
4
4
Total
5
6
5
6
7
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For personal use only DIRECTORS’ 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
100
100
100
100
100
1,2
1,2
1,2
1,2
1,2
P77/4290
P77/4291
E77/2546
E77/2610
P77/4534
100
100
100
100
100
1,2
1,2
1
1
1
E77/2460
Project: Mt Holland
E77/2489
100
100
Project: Queen Victoria Rocks
E15/1416
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: Moogie
E09/2373
E09/2374
E09/2417
Project: Milly Boo
E09/2418
Project: Maggie Hayes
E63/2016
Project: Forrestania
E77/2711
Tenement Number
Project: Fraser Range
E63/2020
E63/2021
E63/2022
E63/2023
E63/2024
E63/2025
E63/2026
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%)
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DIRECTORS’ 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 2020
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 8 unlisted option holders holding 108,655,848 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
Issued at 1.5 cents, expiring 19 November 2022
Expired at 2.9 cents, expiring 20 November 2019
Balance at 30 June 2020
Expired at 2.7 cents, expiring 15 September 2020
Total number of options outstanding at the date of this report
Substantial Shareholders
Hannans Ltd has the following substantial shareholders as at 11 September 2020:
Number of options
117,172,512
3,500,000
(12,016,664)
108,655,848
(21,155,848)
87,500,000
Name
Number of shares
Percentage of issued capital
Neometals Investments Pty Ltd
706,209,483
35.52%
Range of Shares as at 11 September 2020
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 9,999,999
Total
Total Holders
122
200
162
888
832
Units
33,973
687,336
1,365,355
44,134,386
1,941,733,489
2,204
1,987,954,539
% Issued Capital
0.01%
0.03%
0.07%
2.22%
97.67%
100.00%
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DIRECTORS’ REPORT
CAPITAL (cont’d)
Unmarketable Parcels as at 11 September 2020
Minimum $500.00 parcel at $0.007 per unit
71,429
Minimum parcel size
Holders
1,144
Units
25,440,229
Top 20 holders of Ordinary Shares as at 11 September 2020
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
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
MCA Nominees Pty Ltd
Equity & Royalty Investments Ltd
Anglo American Exploration
Marfield Pty Limited
C Y T Investment Pty Ltd
Mr Bruce Drummond + Mrs Judith Drummond
Redland Plains Pty Ltd
Acacia Investments Pty Ltd
CSB Investments (WA) Pty Ltd
Mr Michael Sydney Simm
Mrs Andrea Murray
Mossisberg Pty Ltd
Allua Holdings Pty Ltd
Over The Hill Wa Pty Ltd
Mr William Scott Rankin
J P Morgan Nominees Australia Pty Limited
Anglo American Exploration BV
Units
706,209,483
103,715,959
95,456,700
87,401,545
60,000,003
60,000,000
26,896,651
26,000,000
22,500,000
21,668,669
20,733,503
20,000,000
20,000,000
11,775,956
10,577,744
10,000,000
10,000,000
8,699,489
7,466,371
7,389,162
% of Issued
Capital
35.52%
5.22%
4.80%
4.40%
3.02%
3.02%
1.35%
1.31%
1.13%
1.09%
1.04%
1.01%
1.01%
0.59%
0.53%
0.50%
0.50%
0.44%
0.38%
0.37%
Total of Top 20 holders of ORDINARY SHARES
1,336,491,235
67.23%
On-market buy back
There is no current on-market buy-back.
26 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
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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 $2,686,790.
During the year total exploration expenditure expensed by the Group amounted to $1,254,103 (2019: $766,344). The exploration
expenditures relate to non JORC compliant mineral resource projects and this has been expensed in accordance with the Group’s
accounting policy. Administrative expenditure incurred amounted to $800,096 (2019: $909,381). This has resulted in an operating loss after
income tax for the year ended 30 June 2020 of $1,900,520 (2019: $2,085,563 loss).
As at 30 June 2020 cash and cash equivalents totalled $855,949.
Summary of 5 Year Financial Information as at 30 June
2020
2019
2018
2017
2016
Cash and cash equivalents ($)
855,949
2,686,790
4,082,079
1,481,828
1,425,160
Net assets/equity ($)
3,157,778
4,989,155
6,788,307
4,043,759
Exploration expenditure expensed ($)
(1,254,103)
(766,344)
(505,967)
(804,102)
903,218
(29,998)
Exploration and evaluation
expenditure capitalised ($)
No of issued shares
No of options
Share price ($)
–
(404,000)
(28,000)
2,688,000^
(97,599)
1,987,954,539
108,655,848
1,987,954,539
117,172,512
1,980,304,538
125,022,513
1,682,640,560
970,707,755
57,201,681
102,712,500
0.005
0.010
0.014
0.015
0.016
Market capitalisation (Undiluted) ($)
9,939,773
19,879,545
27,724,264
25,239,608
15,531,324
^ 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 2020
Highest
Lowest
Latest
Price (cents)
Date
1.2
0.3
0.7
16 – 17 Jul, 17 & 19 Sep 2019
23 – 25 Mar 2020
11 September 2020
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DIRECTORS’ REPORT
ANNOUNCEMENTS
ASX Announcements for the year and to the date of this report
Date
Announcement Title
Date
Announcement Title
16 Sep 2020
Change of Director's Interest Notice
5 Dec 2019
Forrestania Nickel Update
16 Sep 2020
Expiry of Options
5 Dec 2019
Moogie Gold and Copper
15 Sep 2020
Forrestania Nickel Drilling
3 Dec 2019
Forrestania Nickel Drilling
14 Sep 2020
Moogie Geochemical Sampling Update
22 Nov 2019
Issue of Options
31 Jul 2020
4th Quarter Activities Report
21 Nov 2019
Expiry of Options
31 Jul 2020
4th Quarter Cashflow Report
19 Nov 2019
Gold at Forrestania
29 Jul 2020
Drill Testing of Nickel Targets
14 Nov 2019
Forrestania Nickel Surveys Commence
2 Jul 2020
Forrestania Nickel Project (Interim Update)
5 Nov 2019
Updated Capital Structure
10 Jun 2020
Moogie Au & Ni-Cu-PGE Sampling
31 Oct 2019
1st Quarter Activities Report
9 Jun 2020
Forrestania Nickel Geophysical Surveys
31 Oct 2019
1st Quarter Cashflow Report
4 Jun 2020
Moogie Gold & Nickel-Copper-PGE Project
17 Oct 2019
AGM results
20 May 2020
Forrestania Nickel Update
17 Oct 2019
AGM Presentation
1 May 2020
3rd Quarter Activities Report
15 Oct 2019
Major Nickel Exploration Campaign
Forrestania
30 Apr 2020
3rd Quarter Cashflow Report
1 Oct 2019
Mt Holland Lithium Project Update
18 Mar 2020
Forrestania Nickel Update
17 Sep 2019
Notice of Annual General Meeting
13 Mar 2020
Half Year Financial Report
30 Aug 2019
Change of Directors Interest Notice
31 Jan 2020
2nd Quarter Activities Report
30 Aug 2019
Appendix 4G
31 Jan 2020
2nd Quarter Cashflow Report
30 Aug 2019
2019 Annual Report
28 Jan 2020
Forrestania Gold Resource Update
28 Aug 2019
Mt Holland Lithium Update
10 Jan 2020
Company Update
31 Jul 2019
4th Quarter Activities Report
9 Jan 2020
Forrestania Nickel Drilling
31 Jul 2019
4th Quarter Cashflow Report
19 Dec 2019
Forrestania Gold Resource Update
28 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
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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 ‘Corporate Governance Principles and Recommendations 4th Edition' published by the ASX Corporate Governance
Council applies to listed entities with the aim of enhancing the credibility and transparency of Australia’s capital markets. The Principles
and Recommendations can be viewed at www.asx.com.au. The Board has assessed the Group’s current practice against the Principles
and Recommendations and other than the matters specified below under “If Not, Why Not” Disclosure, all the best practice
recommendations of the ASX Corporate Governance Council have been applied.
Please refer to the Company’s website (www.hannans.com) for Hannans’ 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’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 2020 was as follows:
Employee
50%
Management
0%
Board of Hannans
20%
The Company has five directors, one executive director (who is contracted to the Company) and two casual employees. 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 decides 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’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’ Report. The number of Board meetings and the attendance of the Directors
are set out in the Directors’ Report.
The Board considers that the composition of the existing Board is appropriate given the scope and size of the Group’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.
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 29
For personal use only DIRECTORS’ REPORT
CORPORATE GOVERNANCE STATEMENT (cont’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’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’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’s affairs. It is not considered necessary to have a separate risk committee.
7.2 The Board should review the entity’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’s affairs.
The Board has a number of mechanisms in place to ensure management’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
encompasses strategy statements designed to meet
stakeholders’ needs and manage business risk.
Implementation of Board approved operating plans
and Board monitoring of the progress against
budgets that is reviewed at every board meeting.
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 works alongside auditors at
half year and year end reviews to identify the Company’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’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’s exploration operations is 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’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.
30 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
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CORPORATE GOVERNANCE STATEMENT (cont’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’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.
8.3 The listed entity which has an equity-based remuneration scheme should have a policy on whether participants are
permitted to enter into transactions which limit the economic risk of participating in the scheme and disclose the policy.
The Company has an equity-based remuneration scheme in place in the form of an employee share option plan. The
Company prohibits participants in equity-based remuneration plan from entering into transactions which limit the
economic exposure of participating in the plan, whether through the use of derivatives or otherwise.
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’s expense obtain
independent professional advice to properly discharge their responsibilities.
Executive Director (ED) and Group Finance Officer Declaration
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’ 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’ risk management and internal compliance and control systems are operating effectively in all material respects.
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 31
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COMPLIANCE
Significant Changes in State of Affairs
Share options
As at the date of this report, there were 87,500,000 options on
issue to purchase ordinary shares at a range of exercise prices
(108,655,848 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)
(b)
a wilful breach of duty, and
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
$11,977.
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–Audit Services
During the year Ernst & Young, the Group auditor, did not
performed other non-audit services in addition to its statutory
duties.
Auditor’s independence declaration
The auditor’s independence declaration as required under section
307C of the Corporations Act 2001 is included on page 33.
Signed in accordance with a resolution of the Directors made
pursuant to s.298(2) of the Corporations Act 2001.
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)
The impact of the Coronavirus (COVID-19) pandemic is
ongoing and, while it has had limited impact on the
Group up to 30 June 2020, it is not practicable to
estimate the potential impact, positive or negative, after
the reporting date. The situation continues to develop
and
imposed by the
Australian Government such as maintaining social
distancing requirements, quarantine, travel restrictions
and economic stimulus that may be provided.
is dependent on measures
(b)
On 15 September 2020 21,155,848 unlisted options
exercisable at 2.7 cents expired unexercised.
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’s operations.
The COVID-19 pandemic continues to pose a global socio-
political, economic and health risk. The potential for the
pandemic to have both lasting and unforeseen impacts is high.
As a Group, we adhere to the changes in government policies
and changed the way we work to protect the wellbeing of our
people and ensure busines continuity. We continue to maintain
a state of response readiness commensurate with the risks and
in accordance with Government recommendations and health
advice.
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’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.
On behalf of the Directors
Jonathan Murray
Non-Executive Chairman
Perth, Australia this 18th day of September 2020
32 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only INDEPENDENCE DECLARATION TO THE DIRECTORS OF
HANNANS LTD
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 33
For personal use only DIRECTORS’ DECLARATION
The Directors declare that:
(a)
(b)
in the Directors’ opinion, subject to the achievement of matters noted in note 2(a), 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’ 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 2020; 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 2020.
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 18th day of September 2020
34 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only INDEPENDENT AUDITOR’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 2 0 | 35
For personal use only 36 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 37
For personal use only
38 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 39
For personal use only
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
for the financial year ended 30 June 2020
Note
2020
$
2019
$
Interest and other income
5(a)(b)
117,561
73,834
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 loss for the year
Items that may be reclassified subsequently to profit or loss
Items that will not be reclassified to profit or loss
Total other comprehensive loss for the year
5(c)
5(d)
5(e)
14
6
(413,386)
(4,248)
(220,738)
(1,910)
(4,483)
(1,254,103)
–
36,118
(155,331)
(554,278)
(3,744)
(195,527)
(3,000)
(6,896)
(766,344)
(404,000)
(79,672)
(145,936)
(1,900,520)
(2,085,563)
–
–
(1,900,520)
(2,085,563)
–
–
–
–
–
–
Total comprehensive loss for the year
(1,900,520)
(2,085,563)
Net loss attributable to the parent entity
(1,900,520)
(2,085,563)
Total comprehensive loss attributable to the parent entity
(1,900,520)
(2,085,563)
Loss per share:
Basic (cents per share)
Diluted (cents per share)
The accompanying notes form part of the financial statements.
20
20
(0.10)
(0.10)
(0.11)
(0.11)
40 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2020
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets at fair value through profit and loss
Note
27(a)
10
11
2020
$
855,949
85,760
12,603
2019
$
2,686,790
86,461
1,985
Total current assets
954,312
2,775,236
Non–current assets
Other receivables
Property, plant and equipment
Other financial assets at fair value through profit and loss
Exploration and evaluation expenditure
Total non–current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Provisions
Total current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of the financial statements.
12
13
11
14
15
16
17
18
19
30,000
23,288
143,751
2,256,000
2,453,039
3,407,351
238,497
11,076
249,573
56,000
27,536
–
2,256,000
2,339,536
5,114,772
125,617
–
125,617
249,573
125,617
3,157,778
4,989,155
40,872,810
40,872,810
1,092,358
1,061,897
(38,807,390)
(36,945,552)
3,157,778
4,989,155
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 41
For personal use only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the financial year ended 30 June 2020
Attributable to equity holders
Ordinary Shares
$
Option Reserves
$
Accumulated Losses
$
Total
Equity
$
Balance as at 1 July 2019
40,872,810
1,061,897
(36,945,552)
4,989,155
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
–
–
–
–
–
–
–
–
–
–
69,143
(38,682)
–
30,461
(1,900,520)
(1,900,520)
–
–
(1,900,520)
(1,900,520)
–
38,682
–
38,682
69,143
–
–
69,143
Balance as at 30 June 2020
40,872,810
1,092,358
(38,807,390)
3,157,778
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
–
–
–
–
38,250
(6,217)
32,033
–
–
–
254,378
(30,802)
–
223,576
(2,085,563)
(2,085,563)
–
–
(2,085,563)
(2,085,563)
–
30,802
–
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
42 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
for the financial year ended 30 June 2020
Cash flows from operating activities
Payments for exploration and evaluation
Payments to suppliers and employees
Interest received
Income tax paid
Note
2020
$
(1,227,871)
(550,425)
39,705
–
2019
$
(772,850)
(693,237)
68,990
–
Net cash used in operating activities
27(b)
(1,738,591)
(1,397,097)
Cash flows from investing activities
Payment for investment securities
Payment for property, plant and equipment
Repayment of loans from outside Entities
Release of security bonds
Net cash (used)/received by investing activities
Cash flows from financing activities
Proceeds from exercise of options
Payment for share issue costs
Net cash received by financing activities
(118,250)
–
–
26,000
(92,250)
–
–
–
–
(30,225)
–
–
(30,225)
38,250
(6,217)
32,033
Net (decrease)/increase in cash and cash equivalents
(1,830,841)
(1,395,289)
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
27(a)
2,686,790
855,949
4,082,079
2,686,790
The accompanying notes form part of the financial statements.
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 43
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
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 2020 were authorised for issue in accordance with a resolution of the Directors on 17 September 2020.
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 25.
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.
Coronavirus (COVID-19) pandemic
The COVID-19 pandemic has developed rapidly in 2020, with
a significant number of cases in Australia. Measures taken by
the Australia and Western Australian governments to contain
the virus have minimise the effect on economic activity. The
Group has taken a number of measures to monitor and
mitigate the effects of COVID-19, such as safety and health
measures for our people and consultants that are essential to
the operation of the business.
At this stage, the impact on our business and results has not
been significant and, based on our experience to date, we
expect this to remain the case. We will continue to follow the
various government policies and advice and, in parallel, we
will do our utmost to continue our operations in the best and
safest way possible without jeopardising the health of our
people.
(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 30.
The accounting policies set out below have been
applied in preparing the financial statements for the
year ended 30 June 2020 and the comparative
information presented in these financial statements
for the year ended 30 June 2019.
(a)
Basis of preparation (cont’d)
Going concern basis of preparation
The Group recorded a loss of $1,900,520 (2019: loss
$2,085,563) for the year ended 30 June 2020 and had
a cash outflow from operating and investing activities
of $1,830,841 (2019: $1,427,322 outflow) during the
twelve (12) month period. The Group had cash and
cash equivalents at 30 June 2020 of $855,949 (2019:
$2,686,790) and has a working capital surplus of
$704,739 (2019: $2,649,619 surplus).
The Group’s cashflow forecast for the period ended
1 September 2020 to 31 March 2022 reflects that the
Group will need to raise additional working capital
during the quarter ending 31 December 2020 to
enable the Group to continue to meet its current
committed administration and exploration
expenditure.
Notwithstanding the above matters, the Directors are
satisfied they will be able to raise additional working
capital as required and thus it is appropriate to
prepare the financial statements on a going concern
basis. In arriving at this position the Directors have
considered the following pertinent matters:
∂ The planned exploration expenditure is staged
and expenditure may or may not be spent
depending on the result of the prior exploration
stage; and
∂ The Directors are satisfied that they will be able to
raise additional funds by either an equity raising
and/or implementation of joint ventures
agreements to fund ongoing exploration
commitments and for working capital.
In the event that the Group is unable to raise
additional funds to meet the Group’s ongoing working
capital requirements when required, there is a
significant uncertainty as to whether the Group will be
able to meet its debts as and when they fall due and
thus continue as a going concern.
The financial statements do not include any
adjustments relating to the recoverability and
classification of recorded asset amounts, nor to the
amounts or classification of liabilities that might be
necessary should the Group not be able to continue as
a going concern.
44 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
2.
Statement of significant accounting policies (cont’d)
(b) New Accounting Standards for Application in the
Current Financial Year and Future Periods
(b) New Accounting Standards for Application in the
Current Financial Year and Future Periods (cont’d)
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’s
annual consolidated financial statements for the year
ended 30 June 2019. All other new standards and
interpretations effective from 1 July 2019 were
adopted with the main impact being disclosure
changes. The adoption of the new or amended
standards and interpretations, other than AASB 16
Leases, did not result in any significant changes to the
Group’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 16: Leases
The application date of AASB 16 for the Group was 1
July 2019. AASB 16 was issued in January 2016 and it
replaces AASB 117 Leases ("AASB 117"), AASB
Interpretation 4 Determining whether an Arrangement
contains a Lease ("AASB Interpretation 4"), AASB
Interpretation-1 15 Operating Leases-Incentives
("AASB Interpretation 1 15") and AASB Interpretation
127 Evaluating the Substance of Transactions
Involving the Legal Form of a Lease ("AASB
Interpretation 127"). AASB 16 sets out the principles
for the recognition, measurement, presentation and
disclosure of leases and requires lessees to account
for all leases under a single on-balance sheet model
similar to the accounting for finance leases under
AASB 117.
At the commencement date of a lease, a lessee
recognises a liability to make lease payments (i.e., the
lease liability) and an asset representing the right to
use the underlying asset during the lease term (i.e.,
the right-of-use asset). Lessees are required to
separately recognise the interest expense on the lease
liability and the depreciation expense on the right-of-
use asset. The standard includes two recognition
exemptions for lessees - leases of 'low-value' assets
and short-term leases (i.e., leases with a lease term of
12 months or less).
The Group adopted AASB 16 using the modified
retrospective method of adoption with the date of
initial application of 1 July 2019. At the transition date,
the Group assessed all contracts including those which
had assets embedded in it for leases under AASB 16.
The Group elected to use the practical expedient for
lease contracts that, at the commencement date, have
a lease term of 12 months or less and do not contain a
purchase option ("short-term leases").
Adoption of AASB 16 did not have an impact as the
Group's leases had a lease term of shorter than 12
months or were leases of ‘low-value’ assets.
Classification and measurement
(i)
Right-of-use assets
The Group recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for
any re-measurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and
lease payments made at or before the
commencement date less any lease incentives
received. Unless the Group is reasonably certain to
obtain ownership of the leased asset at the end of the
lease term, the recognised right-of-use assets are
depreciated on a straight-line basis over the shorter of
its estimated useful life and the lease term (where the
entity does not have a purchase option at the end of
the lease term). Right-of-use assets are subject to
impairment.
(ii)
Lease Liabilities
At the commencement date of the lease, the Group
recognises lease liabilities measured at the present
value of lease payments to be made over the lease
term. The lease payments include fixed payments
(including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected
to be paid under residual value guarantees.
The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating a
lease, if the lease term reflects the Group exercising
the option to terminate. The variable lease payments
that do not depend on an index or a rate are
recognised as expense in the period on which the
event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the
Group uses the incremental borrowing rate at the
lease commencement date if the interest rate implicit
in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the
carrying amount of lease liabilities is remeasured if
there is a modification, a change in the lease term, a
change in the in-substance fixed lease payments or a
change in the assessment to purchase the underlying
asset.
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 45
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
2.
Statement of significant accounting policies (cont’d)
(b) New Accounting Standards for Application in the
Current Financial Year and Future Periods (cont’d)
(e)
Financial assets (cont’d)
Trade and other receivables
(iii) Short-term leases and Low Value Assets
The Group applies the short-term lease recognition
exemption to its short-term leases of their Office
Spaces (i.e., those leases that have a lease term of 12
months or less from the commencement date and do
not contain a purchase option). It also applies the
lease of low-value assets recognition exemption (i.e.
below $5,000). Lease payments on short-term leases
and leases of low-value assets are expensed on a
straight-line basis over the lease term.
(c)
Cash and cash equivalents
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 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’s business model for
managing the assets; and whether the instruments’
contractual cash flows represent ‘solely payments of
principal and interest’ (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.
46 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
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’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.
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
2.
Statement of significant accounting policies (cont’d)
(f)
Financial instruments issued by the Company
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:
(h)
Impairment of non-financial assets (cont’d)
Where an impairment loss subsequently reverses, the
carrying amount of the asset (cash–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–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. where the amount of GST incurred is not
(i)
Tax
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–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’s fair value less costs to sell and value in use to
the asset’s carrying value. Excess of the asset’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–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.
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 2 0 | 47
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
2.
Statement of significant accounting policies (cont’d)
(i)
Tax (cont’d)
(k)
Government grants
Current and deferred tax for the period
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.
Government grants are recognised where there is
reasonable assurance that the grant will be received
and all attached conditions will be complied with.
When the grant relates to an expense item, it is
recognised as income on a systematic basis over the
periods that the related costs, for which it is intended
to compensate, are expensed. When the grant relates
to an asset, it is recognised as income in equal
amounts over the expected useful life of the related
asset.
When the Group receives grants of non-monetary
assets, the asset and the grant are recorded at
nominal amounts and released to profit or loss over
the expected useful life of the asset, based on the
pattern of consumption of the benefits of the
underlying asset by equal annual instalments.
(l)
Joint arrangements
Joint ventures
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’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’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’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’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.
48 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
2.
Statement of significant accounting policies (cont’d)
(l)
Joint arrangements (cont’d)
(n)
Foreign currency translation
The aggregate of the Group’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 ‘Share of
profit of a joint venture’ 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.
Joint operations
The Group’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
(m) 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.
Functional and presentation currency
The consolidated financial statements are presented in
Australian Dollars, which is Hannans’ 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’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.
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 49
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
2.
Statement of significant accounting policies (cont’d)
(o)
Principles of consolidation
(o)
Principles of consolidation (cont’d)
The consolidated financial statements comprise the
financial statements of the Group as at and for the
period ended 30 June 2020. 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’s voting rights and potential voting
rights.
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’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’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.
(p)
Plant and equipment
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 – 20.00
Building
2.50
Office equipment
7.50 – 66.67
Motor vehicles
16.67 – 25.00
50 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
2.
Statement of significant accounting policies (cont’d)
(q)
Leases
(q)
Leases (cont’d)
The Group assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified
asset for a period of time in exchange for
consideration
Group as a lessee
The Group applies a single recognition and
measurement approach for all leases, except for short-
term leases (i.e., leases with a lease term of 12 months
or less) and leases of low-value assets. The Group
recognises lease liabilities to make lease payments
and right-of-use assets representing the right to use
the underlying assets.
(i)
Right-of-use assets
The Group recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for
any re-measurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and
lease payments made at or before the
commencement date less any lease incentives
received. Unless the Group is reasonably certain to
obtain ownership of the leased asset at the end of the
lease term, the recognised right-of-use assets are
depreciated on a straight-line basis over the shorter of
its estimated useful life and the lease term (where the
entity does not have a purchase option at the end of
the lease term). Right-of-use assets are subject to
impairment assessment.
(ii)
Lease Liabilities
At the commencement date of the lease, the Group
recognises lease liabilities measured at the present
value of lease payments to be made over the lease
term. The lease payments include fixed payments
(including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected
to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase
option reasonably certain to be exercised by the
Group and payments of penalties for terminating a
lease, if the lease term reflects the Group exercising
the option to terminate. The variable lease payments
that do not depend on an index or a rate are
recognised as expense in the period on which the
event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the
Group uses the incremental borrowing rate at the
lease commencement date if the interest rate implicit
in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the
carrying amount of lease liabilities is remeasured if
there is a modification, a change in the lease term, a
change in the in-substance fixed lease payments or a
change in the assessment to purchase the underlying
asset.
(iii)
Short-term leases and Low Value Assets
The Group applies the short-term lease recognition
exemption to its short-term leases of their Office
Spaces (i.e., those leases that have a lease term of 12
months or less from the commencement date and do
not contain a purchase option). It also applies the
lease of low-value assets recognition exemption (i.e.
below $5,000). Lease payments on short-term leases
and leases of low-value assets are expensed on a
straight-line basis over the lease term.
(r)
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.
(s)
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.
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 51
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
3.
Critical accounting estimates and
judgements
In the application of the Group’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 — 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 — share–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.
(t)
Share–based payments
Equity–settled share–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’s best
estimate, for the effects of non–transferability, exercise
restrictions, and behavioural considerations.
The fair value determined at the grant date of the
equity–settled share–based payments is expensed on
a straight–line basis over the vesting period, based on
the entity’s estimate of shares that will eventually vest.
For cash–settled share–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.
(u)
Fair value measurement
The Group measures equity instrument 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.
(v)
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’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.
52 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
4.
Subsidiaries
The consolidated financial statements of the Group include:
Name of entity
Parent entity:
Hannans Ltd (i)
Subsidiaries:
Principal
Activities
Country of
incorporation
2020
2019
% Ownership interest
Exploration
Australia
HR Equities Pty Ltd (ii)
HR Forrestania Pty Ltd (ii)
Reed Exploration Pty Ltd (ii)
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)
Interest income
Bank
Loans
Total interest income
(b) Other Income
Other
Cash flow boost(i)
Total other income
(i)
Due to the recent COVID-19 outbreak, the Cash Boost scheme was introduced to
provide eligible entities with additional cash flow as a credit to their account with the
Australia Taxation Office (ATO). The Company was an eligible entity and the amount
relates to the Cash Boost received in reference to the amount of employee income tax
withheld.
(c)
Employee benefits expense
Salaries and wages
Post employment benefits:
Defined contribution plans
Share–based payments:
Equity settled share–based payments
Total employee benefits expense
2020
$
2019
$
30,489
4,783
35,272
7,289
75,000
82,289
67,016
–
67,016
6,818
–
6,818
324,594
298,000
36,156
1,900
52,636
413,386
254,378
554,278
(d) Depreciation of non–current assets
4,248
3,744
(e)
Lease rental expenses:
Lease payments
Total lease rental expenses
The Group has a lease of office space with lease terms of 12 months or less
and is a lease of low-value asset. The Group applies the ‘short-term lease’
and ‘lease of low-value assets’ recognition exemption for the lease.
1,910
1,910
3,000
3,000
(f)
Non-employee share based payments
16,507
–
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 53
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
6.
Income taxes
Income tax recognised in profit or loss
Current income tax
Current income tax charge
Deferred tax
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% (2019: 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 for year ended 30 June 2020 payable by Australian corporate entities
on taxable profits under Australian tax law is 27.5% (2019: 27.5%). The enacted tax
rate for base rate entities is 26% with effect from 1 July 2020 and 25% with effect
from 1 July 2021. Unrecognised deferred tax above is calculated at 26% (2019:
27.5%).
Deferred tax related to items charged or credited directly to
Other Comprehensive Income during the year:
Unrealised loss on available-for-sale investments
2020
$
2019
$
–
–
–
–
–
–
(1,900,520)
(522,643)
(15,817)
538,460
–
(2,085,563)
(573,530)
70,232
503,298
–
–
–
–
–
Statement of
Financial Position
Statement of
Comprehensive Income
2020
$
2019
$
2020
$
2019
$
Deferred Income Tax
Deferred income tax at 30 June
relates to the following
Deferred tax liabilities
Exploration and evaluation assets
(250,790)
(233,691)
(17,099)
Unearned income
Prepayments
Property, plant and equipment
Deferred tax assets
Accruals
Provision for employee entitlements
Provision for loss on loan
Financial assets
Capital raising costs
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
54 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
(93)
(4,819)
(6,055)
11,992
–
3,345
9,391
17,857
5,452,124
4,807,030
(1,317)
(4,557)
(7,572)
8,144
–
26,717
4,239
31,573
5,194,028
5,083,809
(10,039,982)
(10,101,373)
–
–
1,224
(262)
1,517
3,848
–
(23,372)
5,152
(13,716)
258,096
(276,779)
79,532
543
(512)
(7,572)
(5,111)
–
26,717
1,365
(10,978)
421,023
–
61,391
(505,007)
–
–
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
6.
Income taxes (cont’d)
Tax consolidation
Relevance of tax consolidation to the Group
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–term employee benefits
Share based payments
Long–term employee benefits
Post–employment benefits
Total key management personnel compensation
2020
$
2019
$
368,115
52,638
–
25,080
445,833
308,699
254,377
–
1,900
564,976
The compensation of each member of the key management personnel of the Group is set out in the Directors Remuneration
report on pages 19 to 23.
8.
Share–based payments
The Company has an ownership–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–executive) are subject to approval by shareholders and attach vesting
conditions as appropriate.
The following share–based payment arrangements were in existence during the current and comparative reporting periods:
Options series
20 November 2015
20 November 2016
15 September 2016
27 October 2017
27 October 2018
27 October 2019
Number
Grant date
Expiry date
Exercise price (cents)
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 2020
27 October 2017
27 October 2021
27 October 2017
27 October 2022
0.5
2.9
2.7
2.6
1.8
1.5
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 19 to 23.
The following unlisted options were issued during the period and are share–based payment to an external consultant.
Options series
Number
Grant date
Expiry date
Exercise price (cents)
19 November 2019
3,500,000
19 November 2019
19 November 2022
1.5
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 55
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
8.
Share-based payments (cont’d)
The following reconciles the outstanding share options granted at the beginning and end of the financial year:
2020
2019
Weighted
average
exercise price
$
0.032
0.015
Number of
options
117,172,512
3,500,000
Number of
options
125,022,513
–
–
–
(7,650,001)
(12,016,664)
108,655,848
108,655,848
0.029
0.021
0.021
(200,000)
117,172,512
117,172,512
Weighted
average
exercise price
$
0.032
–
0.005
0.005
0.032
0.032
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
(i)
Issued during the financial year
A total of 3,500,000 was issued to an external consultant during the year (2019: nil). No options over ordinary share were
granted to senior executives and employees during the year (2019: nil).
Details
Fair value at grant date
Expected volatility (%)
Risk-free interest rate (%)
Expected life of share options
Share price on issue
Model used
Option granted
on 19 Nov 2019
0.5 cents
100%
2.03%
3 years
0.9 cents
Black-Scholes
(ii)
Exercised at end of the financial year
No options over ordinary shares were exercised during the year (2019: 7,650,001).
(iii)
Expired during the financial year
During the financial year a total of 12,016,664 (2019: 200,000) options over ordinary shares expired, comprising of the
following:
•
12,016,664 at 2.9 cents options expiring on 20 November 2019.
(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 $0.021 (2019:
$0.032) and a weighted average remaining contractual life of 1.15 years (2019: 1.94 years).
2020
$
2019
$
9.
Remuneration of auditors
Fees to Ernst & Young (Australia)
Fees for auditing the statutory financial report of the parent covering the group
and auditing the statutory financial reports of any controlled entities
Total fees to Ernst & Young (Australia)
34,614
34,614
32,966
32,966
Total auditor remuneration
34,614
32,966
56 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
10. Current trade and other receivables
Accounts receivable (i)
Net goods and services tax (GST) receivable
Other receivables (ii)
(i)
(ii)
There were no current trade and other receivables that were past due but not
impaired (2019: nil).
The Company had $56,150 due from the Australia Taxation Office (ATO) in relation to
the Cash Boost scheme introduced to provide eligible entities with additional cash
flow as a credit to their account at 30 June 2020 (2019: nil).
11. Other financial assets at fair value through profit and loss
Current
Equity instruments
Quoted equity shares (i)
Total
Non-current
Equity instruments
Unquoted equity shares (ii)
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 fully paid ordinary shares in Metalicity Limited;
(b) 25,000 fully paid ordinary shares in S2 Resources Ltd; and
(b) 20,000 fully paid ordinary shares in Ultracharge Limited.
Hannans Ltd holds:
(a) 575,000 fully paid ordinary shares in Critical Metals Ltd. Critical Metals Ltd has
35,902,500 ordinary shares on issue. The principal activity of the Company is
to investigate the recovery of vanadium from steel making slag, sourcing lithium
ion battery feedstock for recycling and exploration of mining tenements.
(b) 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. On 30 June 2019, the loan interest rate
was amended from 20% to 12.5% per annum starting from 1 July 2019 onwards. The
loan is secured against Errawarra’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
2020. Refer to note 25 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 29.
12. Non–current other receivables
Other receivables – bonds
2020
$
4,682
24,928
56,150
85,760
12,603
12,603
143,751
–
–
143,751
2019
$
3,360
14,794
68,307
86,461
1,984
1,984
1
–
–
1
30,000
30,000
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 2 0 | 57
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
13. Property, plant and equipment
Cost
Balance at 1 July 2018
Additions
Disposals
Balance at 1 July 2019
Additions
Disposals
Office furniture
and equipment
at cost
Motor vehicles
at cost
$
19,092
1,199
–
20,291
–
–
$
–
29,025
–
29,025
–
–
Total
$
19,092
30,224
–
49,316
–
–
Balance at 30 June 2020
20,291
29,025
49,316
Accumulated depreciation and impairment
Balance at 1 July 2018
Depreciation expense
Disposals
Balance at 1 July 2019
Depreciation expense
Disposals
Balance at 30 June 2020
Net book value
As at 30 June 2019
As at 30 June 2020
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
18,036
704
–
18,740
609
–
19,349
–
3,040
–
3,040
3,639
–
6,679
1,551
942
25,985
22,346
2020
$
609
3,639
4,248
18,036
3,744
–
21,780
4,248
–
26,028
27,536
23,288
2019
$
704
3,040
3,744
2,256,000
–
–
2,660,000
(404,000)
–
2,256,000
2,256,000
(i)
During the year, Hannans did not recognised a write off in respect of capitalised exploration and evaluation (2019: $404,000). 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.
58 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
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
Balance at 1 July 2018
Increase/(decrease) in provision
Balance at 1 July 2019
Increase/(decrease) in provision
Balance at 30 June 2020
2020
$
66,746
139,973
31,778
238,497
2019
$
20,566
98,667
6,384
125,617
11,076
11,076
–
–
Employee
benefits
$
–
–
–
11,076
11,076
2020
$
Total
$
–
–
–
11,076
11,076
2019
$
17.
Issued capital
1,987,954,539 fully paid ordinary shares (2019: 1,987,954,539)
40,872,810
40,872,810
40,872,810
40,872,810
2020
No.
2019
$
No.
$
Fully paid ordinary shares
Balance at beginning of financial year
1,987,954,539
40,872,810
1,980,304,538
40,840,777
Exercise of options to shares - 20 November 2018
Share issue costs
–
–
–
–
7,650,001
–
38,250
(6,217)
Balance at end of financial year
1,987,954,539
40,872,810
1,987,954,539
40,872,810
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 59
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
18. Reserves
Balance at 1 July 2018
Share based payment expense
Exercise/lapse of options
Balance at 1 July 2019
Share based payment expense
Exercise/lapse of options
Loss in an associate
Balance at the end of the financial year
Nature and purpose of reserves
Option reserve
Option reserve
$
838,321
254,378
(30,802)
Total
reserve
$
838,321
254,378
(30,802)
1,061,897
1,061,897
69,143
(38,682)
–
69,143
(38,682)
–
1,092,358
1,092,358
The option reserve recognises the fair value of options issued and valued using the Black-Scholes and Monte-Carlo simulation
model.
Share options
As at 30 June 2020, options over 108,655,848 (2019: 117,172,512) ordinary shares in aggregate are as follow:
Issuing entity
Hannans Ltd
Hannans Ltd
Hannans Ltd
Hannans Ltd
Hannans Ltd
No of shares
under option
21,155,848
28,000,000
28,000,000
28,000,000
3,500,000
Class of shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Exercise price
of option
2.7 cents each
2.6 cents each
1.8 cents each
1.5 cents each
Expiry date
of options
15 Sep 2020
27 Oct 2020
27 Oct 2021
27 Oct 2022
1.5 cents each
19 Nov 2022
Share options are all unlisted, carry no rights to dividends and no voting rights. On 19 November 2019 3,500,000 options were
issued to an unrelated third party (2019: Nil). No options were exercised during the period (2019: 7,650,001). A total of 12,016,664
(2019: 200,000) expired unexercised during the period.
19. 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 lapsed
Options exercised
Balance at end of financial year
2020
$
2019
$
(36,945,552)
(1,900,520)
(34,890,791)
(2,085,563)
38,682
–
–
30,802
(38,807,390)
(36,945,552)
60 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
20.
Loss per share
Basic loss per share:
Diluted loss per share:
Loss for the year
2020
Cents per share
2019
Cents per share
(0.10)
(0.10)
(0.11)
(0.11)
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
2020
$
2019
$
(1,900,520)
(2,085,563)
2020
No.
2019
No.
1,987,954,539
1,985,108,785
–
–
1,987,954,539
1,985,108,785
At 30 June 2020 108,655,848 (2019: 117,172,512) were not included in the diluted earnings per share calculation as they are anti-
dilutive.
21. 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
2020
$
2019
$
143,080
436,240
–
579,320
179,000
716,000
–
895,000
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 61
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
22. Contingent liabilities and contingent assets
The Office of State Revenue (OSR) informed the Company on 30 October 2012 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. On 21 October 2015 OSR informed the Company that
the matter is currently being reviewed by the technical branch. The Company does not consider it probable a stamp duty liability
will arise.
23.
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’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’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.
24.
Joint operations
Name of project
Lake Johnston (i)
Forrestania (ii)
Principal activity
Exploration
Exploration
Interest
2020
%
0
20
2019
%
15
20
(i)
(ii)
Reed Exploration entered into a joint arrangement 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. The joint venture ended during the
year.
Reed Exploration entered into a joint arrangement 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’s interests in joint operations are disclosed in note 22.
25. 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 24 to the financial statements.
(b)
Key management personnel (KMP) remuneration
Details of KMP remuneration are disclosed in note 7 to the financial statements.
62 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
25. Related party disclosures (cont’d)
(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’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 was amended from
20% to 12.5% starting 1 July 2019. The loan repayment date is on 1 July 2020. 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 2020
Total for KMP
Total for other related parties (i)
Total for KMP
and their related parties 2020
30 June 2019
Total for KMP
Total for other related parties (i)
Total for KMP
and their related parties 2019
Opening
Balance
$
Closing
Balance
$
Interest
charged
$
Number in
group at
30 June
–
–
–
–
79,672
79,672
–
–
–
–
–
–
–
–
–
–
–
–
–
1
1
–
1
1
(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’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 2020 was estimated using a discounted cashflow model to be nil.
(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
Scott Geological
Sales to
related
parties
$
Purchases
from related
parties
$
Amounts
owed by
related
parties*
$
Amounts
owed to
related
parties*
$
2020
2019
2020
2019
2020
2019
–
–
2,894
3,655
–
–
4,983
690
143,750
150,000
13,639
–
–
–
1,298
1,005
–
–
–
–
–
–
5,029
–
* The amounts are classified as trade receivables and trade payables, respectively.
(e)
Parent entity
The ultimate parent entity in the Group is Hannans Ltd.
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 63
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
26.
Subsequent events
The following matters or circumstances have arisen since 30 June 2020 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)
The impact of the Coronavirus (COVID-19) pandemic is ongoing and, while it has had limited impact on the Group up to 30
June 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation
continues to develop and is dependent on measures imposed by the Australian Government such as maintaining social
distancing requirements, quarantine, travel restrictions and economic stimulus that may be provided.
(b)
On 15 September 2020 21,155,848 unlisted options exercisable at 2.7 cents expired unexercised.
27. 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
Write off exploration and evaluation expenses
Movement in fair value of equity instrument at FVPL
Depreciation of non–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
Increase/(Decrease) in liabilities:
Trade and other payables and provisions
Net cash from operating activities
2020
$
2019
$
855,949
–
855,949
586,790
2,100,000
2,686,790
(1,900,520)
–
–
4,248
69,142
(2,085,563)
404,000
4,967
3,744
254,378
(36,118)
79,672
701
(44,497)
123,956
(13,798)
(1,738,591)
(1,397,097)
Non–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.
64 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
28.
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 2020, shares in various other listed mining companies. The use of financial
derivatives is governed by the Group’s Board of Directors.
The Group’s activities expose it primarily to the financial risks of changes in interest rates, but at 30 June 2020 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’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 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 2019:
2020
Variable rate instruments
2019
Variable rate instruments
Profit or Loss
Equity
1%
increase
1%
decrease
1%
increase
1%
decrease
6,119
6,119
25,358
25,358
(6,119)
(6,119)
(25,358)
(25,358)
–
–
–
–
–
–
–
–
The following table details the Group’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 2 0 | 65
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
28.
Financial risk management objectives and policies (cont’d)
(d)
Interest rate risk management (cont’d)
Fixed maturity dates
Weighted
average
effective
interest
rate
Variable
interest
rate
%
$
Less
than 1
year
$
1–5
years
$
5+
years
$
Non
interest
bearing
$
Total
$
0.04%
611,850
–
–
1.60%
30,000
641,850
–
–
–
0.72%
2,535,822
–
–
2.55%
56,000
–
–
–
–
–
–
–
–
2,591,822
79,672
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
244,099
855,949
85,760
85,760
30,000
–
329,859
971,709
–
–
–
–
–
–
–
–
238,497
238,497
238,497
238,497
150,968
2,686,790
86,461
86,461
–
56,000
237,429
2,829,251
125,617
125,617
125,617
125,617
Consolidated
2020
Financial assets:
Cash and cash
equivalents
Trade and other
receivables
Other receivables
– non-current
Financial liabilities:
Trade and
other payables
2019
Financial assets:
Cash and cash
equivalents
Trade and other
receivables
Other receivables
– non-current
Financial liabilities:
Trade and
other payables
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
28.
Financial risk management objectives and policies (cont’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’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’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
$
2020
Trade and other payables
238,497
Other financial liabilities
–
238,497
2019
Trade and other payables
125,617
Other financial liabilities
–
125,617
$
–
–
–
–
–
–
$
–
–
–
–
–
–
$
–
–
–
–
–
Total
$
238,497
–
238,497
125,617
–
125,617
It is a policy of the Group that creditors are paid within 30 days.
(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’s exposure and the credit
ratings of its counterparties are continuously monitored.
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–ratings assigned by international credit–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 and the Cash Boost receivable from ATO which is claimed in July 2020.
(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’s listed and unlisted equity investments are as detailed in note 11.
A 5 per cent increase (2019: 1 per cent increase) at reporting date in the listed equity prices would increase the market
value of the securities by $7,818 (2019: $19) and an equal change in the opposite direction would decrease the value by the
same amount. The increase/decrease would be reflected in the statement of profit or loss as these equity instruments are
classified as equity instruments at FVPL. The increase/decrease net of deferred tax would be $5,472 (2019: $13).
(h)
Capital risk management
For the purposes of the Group’s capital management, capital includes issued capital and all other equity reserves
attributable to the equity holders of the parent, which at 30 June 2020 was $3,157,778 (2019: $4,989,155). The Group’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 2020 the Group does not hold any external debt funding (2019: Nil) and is not subject to any externally imposed
covenants in respect of capital management.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
29.
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)
Total
2020
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)
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)
12,603
–
–
12,603
1,984
–
–
1,984
–
–
–
–
–
–
–
–
–
143,751
–
12,603
143,751
–
143,751
156,354
–
1
–
1
1,984
1
–
1,985
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 financial assets is derived from quoted market prices in active markets. Refer note
28(g) for market price risk impact.
(ii)
(iii)
The lowest level input has been used to fair value unquoted ordinary shares. The investment was fair valued using the most
recent capital raise dated May 2020.An increase in share price of +/- 20% would have an impact to the consolidated
statement of profit or loss of $28,750.
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 fair valued to nil as the loan is considered unrecoverable.
68 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
30. Parent entity disclosures
The following details information related to the parent entity, Hannans Ltd, at 30 June 2020.
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–current assets
Total Assets
Current liabilities
Non–current liabilities
Total Liabilities
Total equity of the parent entity comprising of:
Share capital
Reserves
Accumulated losses
Total Equity
2020
$
2019
$
(2,009,017)
(1,946,870)
–
–
(2,009,017)
(1,946,870)
819,663
2,335,292
3,154,955
194,126
–
194,126
2,621,899
2,339,540
4,961,439
60,736
–
60,736
54,846,901
1,092,358
54,846,901
1,061,897
(52,978,430)
(51,008,095)
2,960,829
4,900,703
(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 2020
(2019: 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 2020 (2019: Nil).
H A N N A N S A N N U A L R E P O R T 2 0 2 0 | 69
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
70 | H A N N A N S A N N U A L R E P O R T 2 0 2 0
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