TABLE OF CONTENTS
Havilah Resources
ANNUAL REPORT
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0
2019
TABLE OF CONTENTS
About Havilah
Letter from the Board of Directors
Directors’ Report
Consolidated Financial Statements and Notes (the ‘financial report’)
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
Additional Securities Exchange Information
Glossary of Terms
Corporate Directory
2
4
5
27
75
76
77
81
86
87
Forward Looking Statements
This Annual Report prepared by Havilah includes forward looking statements. Often, but not always,
forward looking statements can generally be identified by the use of forward looking words such as
‘may’, ‘will’, ‘expect’, ‘intend’, ‘plan’, ‘estimate’, ‘anticipate’, ‘continue’, and ‘guidance’, or other similar
words and may include, without limitation, statements regarding plans, strategies and objectives of
management, anticipated production or construction commencement dates and expected costs or
production outputs.
Forward looking statements inherently involve known and unknown risks, uncertainties and other factors
that may cause the Group’s actual results, performance and achievements to differ materially from any
future results, performance or achievements. Relevant factors may include, but are not limited to,
changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased
costs and demand for production inputs, the speculative nature of exploration and project development,
including the risks of obtaining necessary licences and permits and diminishing quantities or grades of
reserves, political and social risks, changes to the regulatory framework within which the Company
operates or may in the future operate, environmental conditions including extreme weather conditions,
recruitment and retention of personnel, industrial relations issues and litigation.
Forward looking statements are based on the Group and its management’s good faith assumptions
relating to the financial, market, regulatory and other relevant environments that will exist and affect the
Group’s business and operations in the future. The Group does not give any assurance that the
assumptions on which forward looking statements are based will prove to be correct, or that the Group’s
business or operations will not be affected in any material manner by these or other factors not foreseen
or foreseeable by the Group or management or beyond the Group’s control.
Although the Group attempts and has attempted to identify factors that would cause actual actions,
events or results to differ materially from those disclosed in forward looking statements, there may be
other factors that could cause actual results, performance, achievements or events not to be as
anticipated, estimated or intended, and many events are beyond the reasonable control of the Group.
Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Forward
looking statements in this Annual Report speak only at the date of issue. Subject to any continuing
obligations under applicable law or the ASX Listing Rules, in providing this information the Group does
not undertake any obligation to publicly update or revise any of the forward looking statements or to
advise of any change in events, conditions or circumstances on which any such statement is based.
1
ABOUT HAVILAH
A Multi-Commodity Minerals Portfolio in South Australia
100% Ownership of High Quality Mineral Assets in the Curnamona Craton
Copper–gold–cobalt
• Kalkaroo: Positive independent pre-feasibility study (‘PFS’).
− Confirms viability of a large-scale open pit copper mine.
−
100 million tonne JORC Ore Reserve (474,000 tonnes copper, 1.41 million ounces gold)
can support a 13 year production period.
• Mutooroo: Open pit copper deposit with cobalt. Underground mining potential in sulphide lode
at depth.
• Considerable opportunity for resource expansion of both Kalkaroo and Mutooroo deposits
along strike, down-dip and in adjacent areas.
Iron ore
• Maldorky and Grants: combined JORC Mineral Resource of 451 million tonnes of iron (‘Fe’) in
proximity to the transcontinental railway line; amenable to efficient upgrading to 65% Fe product
with low impurities.
• Grants Basin: Exploration Target* of 3.47-3.79 billion tonnes with a grade range of 23.9-27.6% Fe
(using an 18% iron assay cut-off grade) in only 25% of the iron ore basin area.
* the potential quantity and grade of the Exploration Target is conceptual in nature, there has
been insufficient exploration to estimate a Mineral Resource and it is uncertain if further
exploration will result in the estimation of a Mineral Resource.
Exploration upside
• Over 16,000 km
2
of highly prospective mineral tenements in the Curnamona Craton.
Excellent logistics and low sovereign risk
•
Located in northeastern South Australia in proximity to the transcontinental railway line, Barrier
highway and regional mining city of Broken Hill. South Australia is a low sovereign risk
jurisdiction, that actively encourages mineral exploration and development.
Key Strategic Objectives
Optimise returns to shareholders from strategic management of minerals portfolio by:
• Progressing and de-risking advanced mineral projects in order to attract investment partners via
farm-out or asset sale.
• Make new exploration discoveries on the large and highly prospective Curnamona Craton
mineral tenement holding.
Cover: Drilling at the Grants Basin during November 2018, for drillhole GBRC005 (drone photograph
courtesy of Sean Burgan - Drilling Supervisor).
Unless otherwise stated, items in photographs shown in this Annual Report are not assets of Havilah
Resources Limited.
2
Shown above are Havilah’s deposit, prospect and tenement portfolio in northeastern South Australia,
near Broken Hill.
3
LETTER FROM THE BOARD OF DIRECTORS
Havilah Resources Limited (‘Havilah’ or ‘Company’) has been restructured in recent months with the
appointment of two new Directors, an appreciable reduction in overheads, repayment of $1.5 million of
the Investec Australia Finance Pty Limited (‘Investec’) $2.5 million loan and concentration on value adding
technical activities. The Company is being redirected to focus on what we believe all shareholders really
want: namely to maximise the value of the multi-commodity mineral portfolio and to make new mineral
discoveries in a way that generates sustainable share price appreciation.
The streamlined technical team’s primary objective will be to progress pre-feasibility studies on Havilah’s
advanced mineral projects in order to upgrade their investment attractiveness. This in turn will enhance
the opportunities for sale or farm-out of the projects. In addition, planned exploration drilling programs
will aim to make material new copper-gold mineral discoveries on the Company’s highly prospective
mineral tenement holding.
The first two priority tasks of the new Board will be to recapitalise the Company and to repay the Investec
standby debt facility via a capital raising through a non-renounceable rights issue to eligible
shareholders. This will only be possible due to the newly unified and supportive shareholder base.
The balance of funds raised will allow Havilah to embark on an exciting path to advance four key
technical objectives:
• Completing the updated Kalkaroo PFS that incorporates new metallurgical results, especially
relating to improved gold recoveries and pyrite concentrate sales;
• Drilling with the aim of delineating a >0.5 billion tonne iron ore resource at the ‘West End’ of the
Grants Basin to allow design of an open pit with minimal waste;
• Completing the Mutooroo PFS as a standalone open pit copper deposit, with studies of the
underground mining potential; and
• Drilling of several high conviction copper-gold exploration targets and better geophysical
definition of the Jupiter MT anomaly target.
The Company will be making prudent use of funds to maximise their effectiveness.
Shareholders can look forward to a continuous flow of news as these tasks are progressively undertaken
over the next twelve months. In pursuing this program of work Havilah is positioning itself for the
possibility of a value adding asset sale, farm-out or a new mineral discovery.
In spite of the present world economic uncertainty, we believe we are heading into a favourable
commodities cycle, especially for copper, with its many uses and constrained production upside capacity.
Havilah is well leveraged to this up-cycle with its large JORC Mineral Resources and its two advanced
copper mineral projects.
As the new Board, we will be aiming to ensure that shareholders reap any benefits of an improved
commodity outlook.
We thank all shareholders, contractors and employees for their support and patience as we re-position
Havilah in order to realise the latent value in its asset portfolio.
Victor Previn, Simon Gray and Chris Giles
4
DIRECTORS’ REPORT
The Board of Directors submits its Directors’ Report on Havilah Resources Limited and its subsidiaries
(the ‘Group’) for the financial year ended 31 July 2019 (the ‘financial year’).
Board of Directors
The Directors of the Company at the date of this Directors’ Report are:
Mr Victor Previn (Independent Non-Executive Director) appointed 9 October 2019
Mr Simon Gray (Executive Director) appointed 9 October 2019
Dr Christopher Giles (Executive Director – Technical Director)
Detailed below are the Directors who held office during or since the end of the financial year:
Dr Christopher Giles B.Sc (Hons), PhD, MAIG
Dr Christopher Giles is an internationally experienced exploration Geologist having been directly involved
in exploration programs resulting in the discovery of several operating gold mines in various parts of the
world, including Indonesia, Tanzania, and the Tanami and the Eastern Goldfields regions of Australia. Dr
Giles is a founding member of Havilah Resources Limited and has played a key role in the strategic
accumulation of the Group’s mineral tenement holding in the Curnamona Craton of northeastern South
Australia. As the Technical Director for Havilah Resources Limited, Dr Giles has been responsible for
ground selection and overseeing exploration programs contributing to the delineation of eight new
mineral deposits within this tenement area, resulting in Havilah’s JORC Mineral Resources. Dr Giles is an
Executive Director and continues to provide technical guidance within the business. Dr Giles is a member
of the Australian Institute of Geoscientists and is a resident of Adelaide.
Special Responsibilities
Member of the Audit, Nomination and Remuneration Committees
Directorships of Other ASX Listed Entities During the Last Three Years
None.
Havilah Shares and Share Options
41,945,674 fully paid ordinary shares.
722,066 listed share options with an exercise price of $0.40 expiring 30 November 2019.
2,400,000 unlisted share options with an exercise price of $0.36 expiring 12 December 2021.
Mr Victor Previn (Appointed 9 October 2019) B.Eng
Victor Previn is a professional engineer and one of the original founders of Ellex Medical Lasers Limited.
His career spans more than 30 years in the laser industry. Victor was responsible for developing and
commercialising the technology platform that is now the core of Ellex's current production. It is listed on
the Australian Securities Exchange (‘ASX’) as ELX. Victor is a long-term shareholder of Havilah Resources
Limited and resides in Adelaide.
Special Responsibilities
Member of the Audit, Nomination and Remuneration Committees
Directorships of Other ASX Listed Entities During the Last Three Years
Ellex Medical Lasers Limited.
Havilah Shares and Share Options
775,153 ordinary shares.
5
DIRECTORS’ REPORT
Mr Simon Gray (Appointed 9 October 2019) B.Ec (Com) CA
Simon has over 35 years' experience as a Chartered Accountant and 20 years as a Partner with Grant
Thornton, a national accounting firm. During his last five years at the firm, he was responsible for the
Grant Thornton Mining and Energy group. Simon retired from active practice during July 2015. His key
expertise lies in audit and risk, valuations, due diligence and ASX Listings. Simon is currently Chair of the
Audit and Finance Committee of the Flinders Medical Research Foundation and a Member of the Audit
and Finance Committee of the South Australia Medical Research Foundation and is a Director of several
unlisted companies. Simon is a resident of Adelaide.
Special Responsibilities
Member of the Audit, Nomination and Remuneration Committees
Directorships of Other ASX Listed Entities During the Last Three Years
None.
Havilah Shares and Share Options
40,000 unlisted employee share options with an exercise price of $0.22 expiring on 11 July 2023
Mr Mark Stewart - (Resigned 9 October 2019)
Mr Stewart had been appointed to the Board on 12 December 2017. Mr Stewart is a practicing
commercial and corporate lawyer. Mr Stewart is a member of the Australian Institute of Company
Directors.
Mr Kenneth Williams - (Resigned 3 January 2019)
Mr Williams had been originally appointed to the Board on 17 November 2003. Mr Williams was also
Chairman of a former ASX listed company, AWE Limited, and is the current Chairman of Statewide Super
SA. Mr Williams is a member of the Australian Institute of Company Directors.
Mr Martin Janes – (Appointed 2 January 2019. Resigned 9 October 2019)
Mr Janes has a Bachelor of Economics and is member of the Australian Institute of Company Directors.
He is a director of Maximus Resources Limited. He was formerly a director of Twenty Seven Co. Limited.
Meetings of Directors
The following table sets out the number of Directors’ meetings (including meetings of committees of
Directors) held during the financial year and the number of meetings attended by each Director (while
they were a Director or Committee Member). During the financial year, 26 Board Meetings were held and
6 meetings of the Audit and Risk Committee were held.
The Directors established a Nomination Committee and a Remuneration Committee on 23 July 2019.
One meeting was held for each of these committees during the financial year.
Meeting
Board of Directors
Audit and Risk
Committee
Nomination
Committee
Remuneration
Committee
Director
Held Attended
Held Attended
Held Attended
Held Attended
25
12
25
13
25
11
25
13
6
3
6
2
6
3
6
2
1
1
1
-
1
1
1
-
1
1
1
-
1
1
1
-
Mr Mark Stewart
Mr Martin Janes **
Dr Christopher
Giles
Mr Kenneth
Williams *
6
DIRECTORS’ REPORT
*Mr Williams resigned on 2 January 2019, the number of meetings held for the financial year for the Board and Audit and Risk
Committee during the time he was a Director was 13 and 2 respectively.
**Mr Janes was appointed on 2 January 2019, the number of meetings held for the financial year for the Board and Audit and Risk
Committee since he was a Director was 12 and 3 respectively.
Company Secretaries
Mr Simon Gray - appointed as a Company Secretary on 29 January 2019.
Mr Walter Richards - resigned as a Company Secretary effective 1 February 2019.
Ms Claire Redman - resigned as a Company Secretary effective 30 September 2019.
Principal Activities
The principal activity of the Group is exploration for minerals (predominantly copper, gold, cobalt and
iron ore) on its extensive mineral tenement holdings in the Curnamona Craton region of northeastern
South Australia. The objective is to translate exploration success into shareholder value by developing the
JORC Ore Reserves and Mineral Resources into profitable operating mines and/or via sale or farm-out
with suitable well funded partners.
The Group achieved technical success during the financial year, as outlined in the Review of Operations
below.
Review of Operations
This financial year had two significant technical operational highlights:
1. Release of the Kalkaroo PFS that was prepared by an independent mining consultant, RPMGlobal Asia
Limited, for Wanbao Mining Limited; and
2. Discovery and confirmation of the vast Grants Basin iron ore deposit and suitability of the Maldorky
iron ore for upgrading by conventional processing methods.
1. Kalkaroo PFS
The PFS showed positive project economics in support of a large-scale open pit copper-gold mine with
an average annual production of 30,000 tonnes of copper and 72,000 ounces of gold (as recovered
metal) over a 13 year production period (see ASX announcement dated 18 June 2019).
The project has an estimated pre-tax NPV7.5% (net present value) of $564 million and an internal rate of
return of 26% at USD2.89/lb copper, USD1,200/oz gold, AUD:USD0.75. Pre-production capital
expenditure is estimated to be $332 million.
This was based on a JORC Ore Reserve of 100.1 million tonnes (Proven - 90.2 million tonnes, Probable -
9.9 million tonnes) that contains 474,000 tonnes of copper and 1.41 million ounces of gold. This in turn is
supported by total JORC Mineral Resources of 1.1 million tonnes of copper and 3.1 million ounces of gold.
There is considerable exploration potential to expand the resource at Kalkaroo with the deposit being
open down-dip and along strike.
Subsequently, Havilah has continued with its program of work designed to investigate some of the
potential upside scenarios identified by the PFS with the aim of adding further value to the project.
Highlights include notably improved gold recoveries in the oxidised saprolite gold ore and the
confirmation of appreciable cobalt and gold grades in pyrite concentrates generated from the copper
tailings (see ASX announcement dated 9 May 2019).
7
DIRECTORS’ REPORT
Oblique view of the Kalkaroo copper-gold deposit showing the different ore zones with increasing depth. The
mineralisation is open down dip and along strike.
Supported by funds raised from the Rights Issue, these new results will be incorporated into an updated
PFS that is planned to be completed during the second quarter of calendar year 2020.
Following signing of the Native Title Mining Agreement during December 2018, three Mineral Leases
(‘ML’) and two Miscellaneous Purposes Licences (‘MPL’) were granted by the Department for Energy and
Mining (‘DEM’) (see ASX announcement dated 22 May 2019). This, together with ownership of the
surrounding land via the Kalkaroo Station pastoral lease, significantly de-risks the project.
2. Grants Basin Exploration Target
During the financial year, drilling confirmed a major new iron ore discovery at the Grants Basin with an
Exploration Target of 3.47-3.79 billion tonnes of 23.9-27.6% iron using an 18% iron assay cut-off grade
(note that the potential quantity and grade of the Exploration Target is conceptual in nature, there has
been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will
result in the estimation of a Mineral Resource) (see ASX announcement dated 5 April 2019).
This Exploration Target was based on 12 reverse circulation drillholes and 1 diamond drillhole, all located
at the western end of the Grants Basin where the iron bearing sequence is at surface and interpreted to
be relatively shallowly dipping. Thus far, the wide spaced drilling (1 kilometres x 0.5 kilometres) has only
covered about 25% of the 17 km2 Grants Basin area based on aeromagnetic data interpretation but gives
an idea of the potential scale and extent of iron ore mineralisation. The single diamond drillhole
(GBDD014) intersected a continuously mineralised iron ore interval of 488 metres at an average grade of
24.57 % iron from 126 metres to 614 metres downhole (see ASX announcement dated 25 June 2019).
8
DIRECTORS’ REPORT
Future drilling will be focused at the ‘West End’ of the Exploration Target, in order to delineate an iron
ore resource that can form the basis for a scoping study.
Aeromagnetic image of the Grants Basin showing the area of proposed resource drilling within the Exploration
Target.
As part of a due diligence study of the commercialisation potential, OneSteel Manufacturing Pty Ltd
(‘SIMEC Mining’), a member of the GFG Alliance, undertook an extensive metallurgical testing program
using Maldorky iron ore drillcore samples supplied by Havilah. This used a conventional processing
circuit that included crushing and grinding followed by gravity and magnetic separation. Results to date
are extremely positive and have demonstrated that the targeted product grade of 65% iron and mass
recovery level of 40% can be achieved, as well as a high total iron recovery of 85% (see ASX
announcement dated 24 April 2019). These results accord with those generated by Havilah’s own ore
beneficiation test work during 2014.
The testing program also identified a potential opportunity to reduce the capital cost of comminution by
employing alternative dry grinding technology that simplifies the circuit and eliminates the requirement
for water in front end processing.
Business Strategies and Prospects, Likely Developments and Expected Results of Operations
The Review of Operations sets out information on the business strategies and prospects for future
financial years, refers to likely developments in operations and the expected results of those operations
in future financial years. Information in the Review of Operations is provided to enable shareholders to
make an informed assessment about the business strategies and prospects for future financial years of
the Group. Other than the matters included in this Directors’ Report or elsewhere in the Annual Report,
information about other likely developments in the Group’s operations and the expected results of those
operations have not been included.
9
DIRECTORS’ REPORT
JORC Ore Reserves as at 31 July 2019
Project
Classification
Kalkaroo1
Proved
Probable
Total
Tonnes
(Mt)
90.2
9.9
100.1
Copper
%
0.48
0.45
0.47
JORC Mineral Resources as at 31 July 2019
Gold
g/t
0.44
0.39
0.44
Copper tonnes
(Kt)
Gold ounces
(Koz)
430
44
474
1,282
125
1,407
Project
Classification
Resource
Category
Tonnes
Copper
%
Cobalt
%
Gold
g/t
Copper
tonnes
Cobalt
tonnes
Gold
ounces
Measured
Total
Measured
Indicated
Inferred
Total
Mutooroo2
Oxide
Oxide
598,000
598,000
0.56
0.56
0.040
0.08
3,300
0.040
0.08
3,300
200
200
1,500
1,500
Sulphide Copper-
Cobalt-Gold
Sulphide Copper-
Cobalt-Gold
Sulphide Copper-
Cobalt-Gold
Sulphide
Copper-Cobalt-
Gold
4,149,000
1.23
0.140
0.18
51,000
5,800
24,000
1,697,000
1.52
0.140
0.35
25,800
2,400
19,100
6,683,000
1.71
ISD
ISD
114,300
ISD
ISD
12,529,000
1.53
191,700
8,200
43,100
Total Mutooroo
13,127,000
195,000
8,400
44,600
Measured
Oxide Gold Cap
12,000,000
Indicated
Oxide Gold Cap
6,970,000
Inferred
Oxide Gold Cap
2,710,000
Total
Oxide Gold Cap
21,680,000
0.82
0.62
0.68
0.74
316,400
138,900
59,200
514,500
Kalkaroo3
Measured
Indicated
Inferred
Total
Inferred
Total All Projects
Project
Classification
Maldorky5
Grants6
Total all
projects
Indicated
Inferred
All
categories
Project
Classification
Oban⁷
Inferred
85,600,000
0.57
0.42
487,900
1,155,900
27,900,000
0.49
0.36
136,700
322,900
110,300,000
0.43
0.32
474,300
1,134,800
223,800,000
0.49
0.36
1,096,600
Sulphide Copper-
Gold
Sulphide Copper-
Gold
Sulphide Copper-
Gold
Sulphide
Copper-Gold
Total Kalkaroo
Cobalt Sulphide⁴
All Categories
(rounded)
245,480,000
193,000,000
258,607,000
2,590,300
3,104,800
1,096,600
0.012
23,200
1,291,600
31,600
3,149,400
Iron
(%)
30.1
24
Fe concentrate
(Mt)
59
100
Estimated
yield
40%
33%
159
eU3O8 (ppm)
Contained eU3O8 (Tonnes)
260
2,100
Tonnes
(Mt)
147
304
451
Tonnes
(Mt)
8
There were no changes in the JORC Ore Reserves and Mineral Resources as at 31 July 2019 compared
with 31 July 2018. Numbers in above tables are rounded.
Footnotes to 2019 JORC Ore Reserve and Mineral Resource Tables
¹ Details released to the ASX: 18 June 2018 (Kalkaroo)
² Details released to the ASX: 18 October 2010 (Mutooroo)
³ Details released to the ASX 30 January 2018 & 7 March 2018 (Kalkaroo)
⁴ Note that the Kalkaroo cobalt Inferred Resource is not added to the total tonnage
⁵ Details released to the ASX: 10 June 2011 applying an 18% Fe cut-off (Maldorky)
⁶ Details released to the ASX: 25 December 2012 applying an 18% Fe cut-off (Grants)
⁷ Details released to the ASX: 4 June 2009 a grade-thickness cut-off of 0.015 metre % eU3O8 (Oban)
10
DIRECTORS’ REPORT
Summary of Governance Arrangements and Internal Controls in Place for the Reporting of Ore Reserves
and Mineral Resources
Ore Reserves and Mineral Resources are estimated by suitably qualified employees and consultants in
accordance with the JORC Code, using industry standard techniques and internal guidelines for the
estimation and reporting of Ore Reserves and Mineral Resources. These estimates and the supporting
documentation were reviewed by a suitably qualified Competent Person prior to inclusion in this Annual
Report.
Competent Person’s Statement
The information in this Annual Report that relates to Exploration Targets, Exploration Results, Mineral
Resources and Ore Reserves is based on data compiled by geologist Dr Christopher Giles, a Competent
Person who is a member of The Australian Institute of Geoscientists. Dr Giles is a Director of the
Company, is employed by Havilah on a consultancy agreement and is a substantial shareholder. Dr Giles
has sufficient experience, which is relevant to the style of mineralisation and type of deposit and activities
described herein, to qualify as a Competent Person as defined in the 2012 Edition of ‘Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Dr Giles consents to the
inclusion in this Annual Report of the matters based on his information in the form and context in which
it appears. Information for the Kalkaroo Ore Reserve and Mineral Resource complies with the JORC Code
2012. All other information was prepared and first disclosed under the JORC Code 2004 and is presented
on the basis that the information has not materially changed since it was last reported. Havilah confirms
that all material assumptions and technical parameters underpinning the reserves and resources continue
to apply and have not materially changed.
Results
Loss for the financial year was $7.338 million (2018: $2.990 million profit) includes an exploration and
evaluation impairment provision of $1.133 million (2018: $0.491 million) and a $2.048 million impairment
of the receivable based on the revised transaction terms for the divestment of Benagerie Gold Pty Ltd
(2018: $nil).
Sales revenue associated with gold inventory was $0.652 million (2018: $nil). Royalty revenue for the
financial year was $0.191 million (2018: $0.060 million).
Corporate and administrative costs for the financial year were $4.254 million (2018: $2.004 million) and
included $0.641 million in legal fees associated with the proposed investment with SIMEC Mining,
$0.604 million in expenses associated with sale of gold inventory on hand, $0.130 million of expenses
associated with the EGM held on 4 February 2019. It also included $0.383 million associated with the re-
assessed Research & Development (‘R&D’) Incentive scheme claims from the 2013 and 2014 financial
years: $0.128 million in legal fees to defend the Group’s position and $0.255 million in penalties imposed
by the Australian Taxation Office (‘ATO’).
The Group has estimated tax losses to carry forward of $69.461 million (2018: $56.962 million). This has
not been recognised in the consolidated financial statements.
Total capitalised exploration and evaluation expenditure for the financial year was $3.673 million
(2018: $3.333 million).
As at 31 July 2019 the Group had cash and cash equivalents of $3.820 million (2018: $1.847 million).
Cash and cash equivalents net of debt as at 31 July 2019 was $1.188 million (2018: $1.676 million).
11
DIRECTORS’ REPORT
Operating activities resulted
financial year of $1.826 million
(2018: $2.779 million). Net cash flows provided by investing activities for the financial year were
$1.715 million (2018: $2.556 million outflow).
in net cash outflows
for the
Basic and diluted earnings per ordinary share for continuing and discontinued operations was a loss of
$0.034 (2018: $0.014).
Dividends
No dividends were paid or declared since the start of the financial year, and the Directors do not
recommend the payment of dividends in respect of the financial year.
Shares and Share Options
During the financial year ended 31 July 2019, the Group established a standby debt facility with Investec
that resulted in the issuing of unlisted share options to acquire ordinary shares in Havilah Resources
Limited. The share options were issued to Investec in two tranches, both of which vest 12 months after
the date of the facility agreement and the share options are to be held in escrow until the facility is
repaid or cancelled. Expected vesting date used for valuation purposes is 4 December 2019. The first
tranche was 5.000 million unlisted share options which have an exercise price of $0.234 and expire on
1 November 2021. The second tranche issued was 2.500 million unlisted share options which have an
exercise price of $0.220 and expire on 20 December 2021.
During the financial year, 2.400 million unlisted share options were granted to a Director, pursuant to
approval by shareholders at the 2019 Annual General Meeting. These unlisted share options expire on
12 December 2021, have various vesting conditions attached (see Note 24 to the consolidated financial
statements), an estimated vesting date of 12 June 2020 for valuation purposes and have an exercise price
of $0.36.
During the financial year, 6.819 million unlisted share options were granted to eligible executives and
employees under the Group’s new Performance Rights and Share Option Plan. 3.502 million of the share
options have an exercise price of $0.28 and 50% of the share options vested immediately on granting.
25% of the remaining share options will vest on 11 July 2020 and a further 25% on 11 July 2021.
3.318 million of the share options have an exercise price of $0.22 and 25% of these share options vested
immediately on granting, with the remainder vesting in 25% increments on each of 11 July 2020,
11 July 2021 and 11 July 2022. All of the 6.819 million share options expire on 11 July 2023.
3.650 million unlisted share options previously granted to Directors and employees lapsed and no share
options were exercised during the financial year.
At the date of this report there were 218.263 million ordinary shares, 13.593 million listed share options
and 17.319 million unlisted share options outstanding.
Details of unissued shares or interests under share options as at the date of this report issued by Havilah
Resources Limited are:
12
DIRECTORS’ REPORT
Number of ordinary shares
under option
Class of share option
Exercise price of
each share option
13,592,581 1
600,000 2
5,000,000 3
2,400,000 2
2,500,000 3
3,501,604 4
3,317,651 4
Listed options
Unlisted options
Unlisted options
Unlisted options
Unlisted options
Unlisted options
Unlisted options
1 Share options issued under a renounceable pro-rata rights issue
2 Share options issued to Directors
3 Share options issued under a funding agreement
4 Share options issued under Performance Rights and Share Option Plan
Significant Changes in the State of Affairs
Expiry date of
share option
30 November 2019
12 December 2020
$0.40
$0.40
$0.234
1 November 2021
$0.36
$0.22
$0.28
$0.22
12 December 2021
20 December 2021
11 July 2023
11 July 2023
There were no significant changes in the state of affairs of the Group during the financial year.
Diversity in Employment
The Group recognises that strength lies in diversity, that talent can be found in unlikely places, and that
our multi-skilled workforce can be a competitive advantage. The Board is committed to workplace
equality and diversity and, where possible, offers flexible working arrangements in support of this.
The Group has attracted skilled people to perform key functions and strives to hire the best people that
the market has to offer given the Group’s resources.
As at 31 July 2019, the Group had 17 employees: 8 females and 9 males. As at 31 July 2019, the
percentage of the Group’s work force represented by females had increased to 47%. This was an 8%
increase from the prior financial year. Female employees represented 50% of the professional employees
in the Group.
There is currently no female representation on the Board of Directors.
13
DIRECTORS’ REPORT
Environmental Regulations
The Group carries out exploration activities on its mineral exploration tenements in South Australia.
The Group’s operations, exploration and evaluation activities are subject to a range of South Australia
and Commonwealth environmental legislation and associated regulations, as well as site specific
environmental criteria. No material breaches of these compliance conditions occurred during the
financial year and operational non-compliances, minor in nature, were addressed and resolved
satisfactorily.
Community Support
During the financial year, the Group continued to demonstrate support for the communities in which it
operates through provision of financial support for sporting events that encourage participation of local
indigenous people.
The Group is also a long-term supporter of the Royal Flying Doctor Service via the annual Yunta Races,
as well as through direct donations.
Indemnification of Directors, Officers and External Auditor
During the financial year the Group paid a premium in respect of a contract insuring Directors and
officers of the Group against a liability incurred as such by a Director or officer to the extent permitted by
the Corporations Act 2001. The contract of insurance specifically prohibits disclosure of the nature of the
liability and the amount of the premium.
The Company has entered into an agreement with Directors to indemnify these individuals against any
claims and related expenses which arise as a result of their work in their respective capacities.
The Group has not otherwise, during or since the end of the financial year, indemnified or agreed to
indemnify an officer or external auditor of the Group or of any related body corporate, against a liability,
incurred as such by an officer or external auditor.
Corporate Governance
The Group adopted fit for purpose systems of control and accountability as the basis for the
administration and compliance of effective and practical corporate governance. These systems are
reviewed regularly and revised if appropriate.
The Board is committed to administering the Group’s policies and procedures with transparency and
integrity, pursuing the genuine spirit of good corporate governance practice. To the extent they are
applicable, the Group has adopted the ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations, 3rd Edition. As the Group’s activities transform in size, nature and scope,
additional corporate governance structures will be considered by the Board and assessed as to their
relevance.
In accordance with the ASX Listing Rules, the Corporate Governance Statement and Appendix 4G
checklist are released to the ASX on the same day the Annual Report is released. The Corporate
Governance policies and charters can be found on the Company's website.
14
DIRECTORS’ REPORT
Proceedings on Behalf of the Company
No person has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for
the purpose of taking responsibility on behalf of the Group for all or part of those proceedings.
External Auditor’s Independence Declaration
The Auditor’s Independence Declaration is included on page 76.
Rounding of Amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports)
Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument,
amounts in the Directors’ Report and financial statements are rounded off to the nearest thousand
dollars, unless otherwise indicated.
Matters Arising Subsequent to the End of the Financial Year
Other than the matters disclosed in Note 38 of the consolidated financial statements, there has been no
matter or circumstance that has arisen since the end of the financial year, that has significantly affected
or may significantly affect the operations of the Group, the results of those operations, or the state of
affairs of the Group in future financial years.
15
DIRECTORS’ REPORT
Remuneration Report (Audited)
This Remuneration Report, which forms part of the Directors’ Report, sets out information about the
remuneration of the Group’s key management personnel for the financial year ended 31 July 2019. The
information provided in this Remuneration Report has been audited by the Company’s external auditor,
as required by Section 308(3C) of the Corporations Act 2001. The term ‘key management personnel’
refers to those persons having authority and responsibility for planning, directing and controlling the
activities of the consolidated entity, directly or indirectly, including any Director (whether executive or
otherwise) of the consolidated entity. The prescribed details for each person covered by this report are
detailed below under the following headings:
• Key management personnel details;
• Remuneration policy;
• Relationship between the remuneration policy and company performance;
• Remuneration of key management personnel; and
• Key terms of employment contracts.
Key Management Personnel Details
The following persons acted as Directors or other key management personnel of the Group during or
since the end of the financial year:
Directors
Position
Mr Victor Previn (appointed 9 October 2019)
Independent Non-Executive Director
Mr Simon Gray (appointed 9 October 2019)
Executive Director, Company Secretary
Dr Christopher Giles
Executive Director – Technical
Mr Mark Stewart (resigned 9 October 2019)
Independent Non-Executive Director, Chairman
Mr Martin Janes (appointed 2 January 2019, resigned
9 October 2019)
Independent Non-Executive Director
Mr Kenneth Williams (resigned 3 January 2019)
Chairman, Independent Non-Executive Director
Other Key Management Personnel
Position
Mr Walter Richards (resigned as Company Secretary effective
1 February 2019, made redundant 2 October 2019)
Chief Executive Officer, Company Secretary
Mr Richard Buckley (position elevated effective
14 January 2019)
Senior Mine Planning Engineer
Except as noted, the named persons held their current position for the whole of the financial year and
since the end of the financial year.
Remuneration Policy
Non-Executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is
periodically approved by shareholders. Total remuneration for all Non-Executive Directors, last voted
upon by shareholders at the 2016 Annual General Meeting (‘AGM’), is not to exceed $300,000 per
annum.
16
DIRECTORS’ REPORT
At the AGM held on 12 December 2018, a resolution that the Remuneration Report for the financial year
ended 31 July 2018 be adopted was put to the vote. More than 25% of shareholders voted not to accept
the resolution.
In response to this vote and other shareholder feedback received, the group established a Remuneration
Committee during the financial year ended 31 July 2019.
The objectives of the Remuneration Committee are to support and advise the Board of Directors on
remuneration matters and oversee the setting of remuneration policy, fees and remuneration packages
for Directors and senior executives. The Remuneration Committee must comprise at least 3 members, the
majority being Independent Non-Executive Directors where possible.
It is the responsibility of the Remuneration Committee to review and make recommendations to the
Board on:
a) The remuneration packages of all Directors and senior executives, including terms and
conditions offered to all new appointees to these roles;
b) The adoption of appropriate long-term and short-term incentive and bonus plans, including
regular review of the plans and the eligible participants; and
c) Staff remuneration and incentive policies and practices.
The Group embodies the following criteria in its remuneration framework:
(i) Performance-based and aligned with the Company’s vision, values and overall business
objectives;
(ii) Designed to motivate Directors and executives to pursue the Company’s long-term growth
and success; and
(iii) Demonstrate a clear relationship between the Company’s overall performance and the
performance of executives and employees.
The full objectives and responsibilities of the Remuneration Committee are documented in the charter
approved by the Board of Directors and available on the Company’s website.
Relationship Between the Remuneration Policy and Group Performance
The tables below set out summary information about the Group’s earnings and movements in
shareholder wealth to 31 July 2019.
Revenue
EBITDA/ (LBITDA)
31 July 2019
31 July 2018
31 July 2017
31 July 2016
31 July 2015
$’000
191
(6,874)
$’000
4,811
2,306
$’000
16,860
$’000
2,745
$’000
-
2,549
(302)
(4,496)
(Loss)/ profit for the financial year
(7,338)
(2,990)
(4,229)
1,210
(4,793)
Total comprehensive (loss)/ income
(7,338)
(2,990)
(3,260)
Dividends paid
-
-
-
241
-
(4,793)
-
17
DIRECTORS’ REPORT
31 July 2019
31 July 2018
31 July
2017
31 July
2016
31 July
2015
Share price at beginning of the financial year (shown in
cents)
Share price at end of the financial year (shown in cents)
22
15
Basic (loss)/ profit per ordinary share – from continuing
and discontinued operations (shown in cents)
Diluted (loss)/ profit per ordinary share – from
continuing and discontinued operations (shown in cents)
There is no link between remuneration and Group performance.
(3.36)
(3.36)
36
22
41
36
(1.43)
(2.45)
(1.43)
(2.45)
25
41
0.70
0.60
15
25
(3.10)
(3.10)
Remuneration of Key Management Personnel
Short-term employee benefits
Post-
employment
benefits
Long-term
employee
benefits
Share-
based
payments
2019
Salary &
fees
Cash
bonus
Non-
monetary
Other
Superannuation
Long service
leave
Share
options 1
$
$
Non-Executive Directors
Mr Mark Stewart
Mr Martin Janes
85,511
37,250
Mr Kenneth Williams
40,457
Executive Officers
Dr Christopher Giles
174,9842
Mr Walter Richards
330,000
Mr Richard Buckley7
135,417
Total
803,619
Short-term employee benefits
-
-
-
-
-
-
-
Total
$
93,635
40,789
44,300
$
-
-
-
$
-
-
-
6,2163
1004
-
-
-
-
6,216
100
$
8,124
3,539
3,843
-
38,405
12,865
66,776
$
-
-
-
-
9,580
6,250
33,8365
215,136
46,0096
423,994
28,9678
183,499
15,830
108,812
1,001,353
Post-
employment
benefits
Long-term
employee
benefits
Share-
based
payments
2018
Salary &
fees
Cash
bonus
Non-
monetary
Other
Superannuation
Long service
leave
Share
options
$
$
$
$
$
Non-Executive Directors
Mr Kenneth Williams
97,719
Mr Paul Mertin
Mr Mark Stewart
Executive Officers
22,147
38,462
Dr Christopher Giles
174,9842
Mr Walter Richards
330,000
Total
663,312
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,283
2,104
3,654
-
31,351
46,392
$
-
-
-
-
-
-
$
-
-
-
$
-
-
Total
$
107,002
24,251
34,558
76,673
-
-
174,984
361,357
34,558
744,267
DIRECTORS’ REPORT
1 The value of the share options and rights granted to key management personnel as part of their remuneration is calculated as at
the grant date using a binomial option pricing model. The amounts disclosed as part of remuneration for the financial year have
been determined by allocating the grant date value on a straight-line basis over the period from grant date to vesting date. Share
options do not represent cash payments to Directors and other key management personnel. Share options granted may or may
not be exercised by Directors and other key management personnel.
2 Consulting fees paid to a nominated company in which the Director has a controlling interest.
3 Provision of Company funded vehicle inclusive of fringe benefits tax payable.
4 Approximate cost of insurance coverage for private vehicle owned by Dr Christopher Giles.
5 Issue of 2,400,000 unlisted share options current financial year amortisation value $33,836.
6 Issue of 1,950,845 unlisted share options current financial year amortisation value $46,009.
7 Reflects period as key management personnel from 14 January 2019 to 31 July 2019.
8 Issue of 941,389 unlisted share options current financial year amortisation value $28,967.
The relative proportions of those elements of remuneration of key management personnel that are
linked to performance:
Non-Executive Directors
Mr Mark Stewart
Mr Martin Janes
Mr Kenneth Williams
Executive Officers
Dr Christopher Giles
Mr Walter Richards
Mr Richard Buckley
Fixed remuneration
Remuneration linked to performance
2019
2018
2019
2018
100%
100%
100%
84%
89%
90%
100%
-
100%
100%
100%
-
0%
0%
0%
16%
11%
10%
0%
-
0%
0%
0%
-
No key management personnel appointed during the period received a payment as part of their
consideration for agreeing to hold the position.
Bonuses and share-based payments granted as remuneration for the current financial year
Performance Rights and Share Option Plan
The Board of Directors adopted a Performance Rights and Share Option Plan (‘Plan’) during the financial
year ended 31 July 2019.
The purposes of the Plan are to:
a) Provide incentive to eligible executives and employees by enabling them to participate in the
profits and financial performance of the Company;
b) Attract, motivate and retain eligible executives and employees; and
c) Align the interests of eligible executives and employees more closely with shareholders in the
Company and provide greater incentive for the eligible executives and employees to focus on
longer-term goals of the Company.
The Plan is open to all employees but excludes Directors of the Company.
Each employee share option converts into one ordinary share of Havilah Resources Limited on exercise.
No amounts are paid or payable by the recipient on receipt of the share option. The share options carry
19
DIRECTORS’ REPORT
neither dividend or voting rights. Share options may be exercised at any time from the date of vesting to
the date of their expiry.
The share options granted expire within the option period set by the Board of Directors at its discretion.
Share options expire one month after the resignation of the Director or employee but this condition can
be waived at the discretion of the Board of Directors.
The number of share options granted to employees is set by the Board of Directors at its discretion but
consideration is given to employment contract terms and/or the satisfaction of performance criteria set
out in the Company’s short-term incentive plan.
The Company’s short-term incentive plan annual award is subject to the Group generating positive free
cash flow and is also subject to the absolute discretion of the Board of Directors. Payment of any short-
term incentive plan bonus can be satisfied in cash or share options, subject to the discretion of the Board
of Directors.
The performance bonus awarded is calculated based on the Group’s performance objectives and
individual performance objectives related to the annual business plan as approved by the Board of
Directors. The formula rewards management and salaried employees against the extent of the Group’s
and individual’s achievement against both qualitative and quantitative criteria. The Group’s performance
objective measurements are:
Safety;
Environmental stakeholder engagement;
Team performance;
•
•
•
• Reporting, planning & management;
•
Investors/ shareholders engagement;
• Risk/ opportunity management; and
•
Funding success.
During the financial year ended 31 July 2019, the Havilah Board of Directors approved the issue of
unlisted share options to employees under the Performance Rights and Share Option Plan. Share options
were issued in satisfaction of contractual employment conditions and short-term incentive plan awards.
Refer to Note 34 to the consolidated financial statements for further details.
Terms and conditions of share-based payment arrangements affecting remuneration of key management
personnel in the current financial year or future financial years:
20
DIRECTORS’ REPORT
Name
Grant date
Current date
fair value
Exercise
price
Expiry date
Vesting date
Non-Executive Directors
Mr Mark Stewart
11 December 2017
Mr Kenneth Williams
9 December 2015
Executive Officers
Dr Christopher Giles
9 December 2015
Dr Christopher Giles
12 December 2018
Mr Walter Richards
26 June 2019
$0.06
$0.12
$0.11
$0.03
$0.05
$0.40
12 December 2020
100% vested
$0.36
15 December 2018
Expired
$0.36
15 December 2018
Expired
$0.36
12 December 2021
12 June 2020
$0.22
11 July 2023
25% vested
25% 11 July 2020
25% 11 July 2021
25% 11 July 2022
Mr Walter Richards
26 June 2019
$0.05
$0.28
11 July 2023
50% vested
25% 11 July 2020
25% 11 July 2021
Mr Richard Buckley
26 June 2019
$0.05
$0.22
11 July 2023
25% vested
25% 11 July 2020
25% 11 July 2021
25% 11 July 2022
Mr Richard Buckley
26 June 2019
$0.05
$0.28
11 July 2023
50% vested
25% 11 July 2020
25% 11 July 2021
There has been no alteration of the terms and conditions of the above share-based payment
arrangements since the grant date.
Details of share-based payments granted as remuneration to key management personnel during the
current financial year:
Name
Number granted
Number vested
% of grant vested
% of grant forfeited
Dr Christopher Giles
Mr Walter Richards
Mr Walter Richards
Mr Richard Buckley
Mr Richard Buckley
2,400,000
600,845
1,350,000
791,389
150,000
-
300,423
337,500
395,695
37,500
-
50%
25%
50%
25%
-
-
-
-
-
Details of share-based payments granted as remuneration to Company Secretaries during the current
financial year:
21
DIRECTORS’ REPORT
Name
Number granted
Number vested
% of grant vested
% of grant forfeited
Ms Claire Redman
Ms Claire Redman
Mr Simon Gray
248,761
132,798
40,000
124,381
33,200
10,000
50%
25%
25%
-
-
-
During the financial year, no key management personnel exercised share options that were granted to
them as part of their remuneration.
The following table summarises the number of share options that lapsed during the financial year, in
relation to share options granted to key management personnel as part of their remuneration.
Name
Dr Christopher Giles
Mr Kenneth Williams
Financial year in which the share options
were granted
Number of share options lapsed during the
current financial year
2016
2016
2,400,000
600,000
Value of share options – basis of calculation:
•
The value of share options granted during the financial year is calculated as at the grant date
using a binomial option pricing model. This grant date value is allocated to remuneration of key
management personnel on a straight-line basis over the period from grant date to vesting date;
and
• Value of share options lapsed at the lapse date is calculated by multiplying the grant date value
of the share options by the number of share options lapsed during the financial year.
The total value of share options included in remuneration for the financial year is calculated in
accordance with Australian Accounting Standard AASB 2 ‘Share-based Payment’. Share options granted
during the financial year are recognised in remuneration in the consolidated statement of profit or loss
and other comprehensive income over their vesting period.
Key Terms of Employment Contracts
During the current financial year, there has been no increase to the base remuneration of any of the key
management personnel.
Non-Executive Directors
Mr Mark Stewart
Contract:
Duration:
Period of Notice:
Termination Payments:
Remuneration:
22
Non-Executive Director.
No expiration.
None.
None.
$50,000 as Non-Executive Director and $15,000 as Chairman of the Audit and Risk
Committee. Total $65,000 (2018: $59,361) per annum, exclusive of statutory
superannuation.
$97,717 (2018: $nil) per annum, exclusive of statutory superannuation as Chairman of
the Board (effective 12 December 2018).
DIRECTORS’ REPORT
Mr Martin Janes
Contract:
Duration:
Period of Notice:
Termination Payments:
Remuneration:
Executive Officers
Dr Christopher Giles
Contract:
Duration:
Period of Notice:
Termination Payments:
Remuneration:
Mr Walter Richards
Contract:
Duration:
Period of Notice:
Termination Payments:
Remuneration – Base Salary:
Remuneration – Short-term
incentive:
Remuneration – Long-term
incentive:
Mr Richard Buckley
Contract:
Duration:
Period of Notice:
Termination Payments:
Remuneration – Base Salary:
Remuneration – Share
Options at Commencement:
Remuneration – Short-term
incentive:
Remuneration – Long-term
incentive:
Non-Executive Director.
No expiration.
None.
None.
$50,000 as Non-Executive Director and $15,000 as Chairman of the Audit and
Risk Committee (effective 2 January 2019). Total $65,000 (2018: $nil) per annum,
exclusive of statutory superannuation.
Consulting service agreement.
Expired 31 July 2019.
1 month notice in accordance with Consulting Agreement.
None applicable.
Minimum of 1,600 hours per annum at $174,984 per annum and additional hours
at $100 per hour. There has been no change in the compensation terms since
2017.
Executive service agreement.
No fixed term.
Six months.
Payment in lieu of notice.
$330,000 (2018: $330,000) per annum, exclusive of statutory superannuation.
Up to 50% of the Base Salary, payable at the discretion of the Board of Directors.
Eligible to participate in any long-term incentive plan that the Company may
introduce.
Employment agreement.
No fixed term.
5 weeks.
Payment in lieu of notice.
$250,000 (2018: $250,000) per annum, exclusive of statutory superannuation.
450,000 share options which were granted on 11 July 2019 and expire after 4
years.
Up to 30% of the Base Salary, payable at the discretion of the Board of Directors.
Eligible to participate in any long-term incentive plan that the Company may
introduce.
All termination payments are subject to the limits prescribed under Section 200B of the Corporations Act
2001.
Loans to Key Management Personnel
During the current financial year there have been no loans made to any of the key management
personnel.
23
DIRECTORS’ REPORT
Key Management Personnel Equity Holdings
Fully paid ordinary shares of Havilah Resources Limited
Name
Balance at
Granted as
Received on
Net other
Balance at
Balance held
31 July 2018
remuneration
exercise of
share options
change 1
31 July 2019
nominally 2
Non-Executive Directors
Mr Mark Stewart
Mr Martin Janes
Mr Kenneth
Williams
Executive Officers
105,000
-
636,980
Dr Christopher Giles
41,945,674
Mr Walter Richards
Mr Richard Buckley
409,907
n/a 4
-
-
-
-
-
-
-
-
-
-
-
105,000
200,000
200,000
-
-
-
n/a 3
41,945,674
409,907
100,000
100,000
-
-
-
-
-
-
1 Represents ordinary shares purchased on market, participant in rights issue, or listed share options exercised.
2 Held nominally refers to the situation where the ordinary shares are in the name of the Director or other key management
personnel, but they are not the beneficial owner.
3 Mr Williams resigned as a Director on 3 January 2019.
4 Mr Buckley became key management personnel on 14 January 2019.
Share options (listed and unlisted) of Havilah Resources Limited
Name
Balance at
31 July
2018
Granted as
remunerati
on
Exercised
Net other
change 1
Balance
at 31 July
2019
Balance
vested at
31 July
2019
Vested but
not
exercisable
Vested and
exercisable
Options
vested
during
year
Non-Executive Directors
Mr Mark Stewart
650,000
Mr Martin Janes
n/a 2
Mr Kenneth Williams
639,811
-
-
-
-
-
-
(50,000)
600,000
600,000
-
-
-
(600,000)
n/a 3
n/a 3
Executive Officers
Dr Christopher Giles
2,910,784
2,400,000
-
(2,188,718)
Mr Walter Richards
2,500
1,950,845
Mr Richard Buckley
n/a 4
941,389
-
-
-
-
3,122,06
6
1,953,34
5
722,066
640,423
941,389
433,195
-
-
-
-
-
-
600,000
-
-
722,066
-
-
-
-
640,423
637,923
433,195
433,195
1 Represents listed share options purchased on market, participation in rights issue or expiration of share options.
2 Mr Janes became a Director on 3 January 2019.
3 Mr Williams resigned as a Director on 3 January 2019.
4 Mr Buckley became key management personnel on 14 January 2019.
All share options issued to key management personnel during the year (excluding Directors) were made
in accordance with the provisions of the relevant employees share option plan. All share options issued
to Directors during the financial year were made pursuant to approval by shareholders at the AGM.
24
DIRECTORS’ REPORT
During the financial year, no share options were exercised by key management personnel.
Further details of the employee share option plans and of share options granted during the current and
prior financial years are disclosed in Note 34 to the consolidated financial statements.
Other Transactions with Key Management Personnel of the Group
Key management personnel hold positions in other entities or have relationships with parties that result
in them potentially having control or significant influence over those entities or parties. During the
financial year, key management personnel and their related entities or parties transacted with the Group.
During the financial year, the Group paid the following amounts as a result of transactions with key
management personnel and related entities/parties (excluding amounts paid as remuneration to
Directors which are addressed elsewhere in this Remuneration Report):
•
•
•
•
•
$151,000 (2018: $64,000) for legal services provided by a company (Arion Legal) which is a
related party of Mr Mark Stewart;
$20,000 (2018: $nil) for advisory services to a related entity (Balmoral Consulting) controlled by a
former Director (Mr Kenneth Williams);
$11,000 (2018: $26,000) for accounting services to a company (ITABA) controlled by a related
party of Mr Walter Richards;
$9,000 (2018: $40,000) for marketing and public relations support to a related party (William
Giles) of Dr Christopher Giles; and
$3,000 (2018: $nil) for marketing and public relations services to a company (Filtrd) controlled by
a related party of Dr Christopher Giles.
All payments were made under normal commercial terms and conditions.
The Group also sold gold nugget inventory for $30,000 (2018: $nil) to Dr Christopher Giles on terms and
conditions equivalent to those offered to an arms’ length purchaser during the financial year ended
31 July 2019.
Profit for the financial year included the following items of revenue and expense that resulted from
transactions, other than remuneration, loans or equity holdings, with key management personnel or their
related entities:
Year ended 31 July 2019
$
30,000
Other income
25
DIRECTORS’ REPORT
Consolidated loss includes the following expenses arising from transactions with key management
personnel of the group or their related parties/entities:
Administration expenses
Revision of carrying amount of financial assets
Year ended 31 July 2019
$
170,000
21,000
Total assets arising from transactions other than loans and amounts receivable in relation to equity
instruments with key management personnel or their related parties/entities:
Current
Non-current
31 July 2019
$
-
9,000
Total liabilities arising from transactions other than remuneration with key management personnel or
their related parties/entities:
Current
Non-current
This Directors’ Report is made in accordance with a resolution of the Board of Directors.
On behalf of the Board of Directors:
31 July 2019
$
44,000
-
Dr Christopher Giles
Executive Director
Mr Simon Gray
Executive Director
31 October 2019
26
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Financial Year Ended 31 July 2019
Year ended 31 July
2019
Year ended 31 July
2018
Note
$’000
$’000
Continuing operations
Revenue and other income
Sales revenue associated with gold inventory
Royalty revenue
Other income
Gain on divestment of subsidiary
Gain on sale of property, plant and equipment
Expenses
Revision of carrying value of financial assets
Administration expenses
Exploration and evaluation expenditure impaired
Employee benefit expenses
Finance costs
Movement in inventory
Share-based payments expense
Corporate costs
Directors’ fees
Depreciation and amortisation
Government R&D grant derecognised
(Loss)/ profit before income tax
Tax expense
5(a)
7(b)
7(a)
14
5(b)
5(c)
15
8(a)
(Loss)/ profit for the financial year from continuing operations
Discontinued operations
Profit/ (loss) for the financial year from discontinued operations
7
Loss for the financial year attributable to equity holders of the Company
Other comprehensive income, net of income tax
Total comprehensive loss for the financial year attributable to equity
holders of the Company
652
191
62
-
-
(2,048)
(1,919)
(1,133)
(770)
(688)
(604)
(590)
(192)
(179)
(120)
-
(7,338)
-
(7,338)
-
(7,338)
-
(7,338)
-
60
51
5,625
9
33
(825)
(491)
(761)
(213)
-
(35)
(203)
(180)
(187)
(141)
2,742
(963)
1,779
(4,769)
(2,990)
-
(2,990)
Loss per ordinary share attributable to equity holders of the Company
(from continuing and discontinued operations)
Basic and diluted loss per ordinary share (shown in cents)
30
(3.36)
(1.43)
This statement should be read in conjunction with the notes to the consolidated financial statements.
27
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Financial Position
As at 31 July 2019
Note
31 July 2019
$’000
31 July 2018
$’000
Current Assets
Cash and cash equivalents
Inventory
Trade and other receivables
Other financial assets
Other current assets
Total Current Assets
Non-Current Assets
Exploration and evaluation expenditure
Property, plant and equipment
Other financial assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Provisions
Other financial liabilities
Deferred income
Total Current Liabilities
Non-Current Liabilities
Provisions
Deferred income
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
3,820
-
46
-
122
3,988
35,524
2,841
2,705
41,070
45,058
764
2,632
616
885
1,140
6,037
10
676
686
6,723
38,335
71,675
(1,918)
(31,422)
38,335
1,847
571
144
3,182
156
5,900
32,984
2,973
7,533
43,489
49,389
866
171
723
1,363
508
3,631
-
676
676
4,307
45,083
71,675
(2,086)
(24,506)
45,083
This statement should be read in conjunction with the notes to the consolidated financial statements.
28
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
For the Financial Year Ended 31 July 2019
Contributed
equity
$’000
65,072
Buy-out reserve
Share-based
payments reserve
Accumulated
losses
Total
$’000
(2,600)
$’000
$’000
$’000
759
(21,854)
41,378
Balance as at 1 August 2017
Loss for the financial year
comprehensive
Total
financial year
loss
for
Issue of 6,212,121 ordinary shares to
Bergen
Issue of 353,448 shares to Bergen
for commencement fee
Issue of 800,000 unlisted share
options to Bergen
Issue of 28,252,463 ordinary shares
in rights issue at $0.20 per share
Share issue costs
Income tax consequences of share
issue costs
Unlisted share options lapsed
Share-based payment expenses
-
-
1,161
103
(57)
5,650
(363)
109
-
-
-
-
-
-
-
-
-
-
-
-
Balance as at 31 July 2018
71,675
(2,600)
Loss for the financial year
Total comprehensive loss for the
financial year
Issue of 5,000,000 unlisted share
options to Investec
Issue of 2,500,000 unlisted share
options to Investec
Issue of 6,819,255 unlisted share
options to employees
Issue of 2,400,000 unlisted share
options to Directors
Unlisted share options lapsed
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance as at 31 July 2019
71,675
(2,600)
-
-
-
-
57
-
-
-
(337)
35
514
-
-
243
133
180
34
(422)
682
(2,990)
(2,990)
(2,990)
(2,990)
-
-
-
-
-
-
337
-
1,161
103
-
5,650
(363)
109
-
35
(24,506)
45,083
(7,338)
(7,338)
(7,338)
(7,338)
-
-
-
-
422
243
133
180
34
-
(31,422)
38,335
This statement should be read in conjunction with the notes to the consolidated financial statements.
29
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
For the Financial Year Ended 31 July 2019
Note
Year ended 31 July 2019
Year ended 31 July 2018
$’000
$’000
Cash flow from operating activities
Receipts from customers
Miscellaneous receipts
Payments to suppliers and employees
Interest and other costs of finance paid
Net cash flows used in operating activities
33(a)
Cash flow from investing activities
Interest received
Refund of security deposit
Payments for exploration and evaluation
Payments for property, plant and equipment
Proceeds from sale of subsidiary
Permitting costs pursuant to contract of sale of subsidiary
Net cash flows provided by/ (used in) investing activities
Cash flow from financing activities
Proceeds from issue of ordinary shares
Payments for ordinary share issue costs
Proceeds from borrowings
Payment for borrowing costs
Repayment of borrowings
Net cash flow provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
33(b)
191
194
(1,970)
(241)
(1,826)
10
-
(3,737)
(91)
6,000
(468)
1,714
-
-
2,500
(262)
(153)
2,085
1,973
1,847
3,820
4,811
66
(7,489)
(167)
(2,779)
16
3
(3,058)
(229)
1,000
(288)
(2,556)
6,656
(165)
-
-
(197)
6,294
959
888
1,847
This statement should be read in conjunction with the notes to the consolidated financial statements.
30
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
1.
Significant Accounting Policies
Statement of Compliance
The consolidated financial statements are general-purpose financial statements which have been
prepared in accordance with the Corporations Act 2001, Australian Accounting Standards and
Interpretations and comply with other requirements of the law. The consolidated financial statements are
for the Group. A description of the nature of the operations and principal activities of the Group are
described in the Directors’ Report. For the purpose of preparing the consolidated financial statements,
the Company is a for-profit entity. Compliance with Australian Accounting Standards ensures that the
consolidated financial statements and notes of the Group comply with International Financial Reporting
Standards (‘IFRS’) as issued by the International Accounting Standards Board.
Basis of Preparation
These consolidated financial statements have been prepared on the basis of historical cost. Cost is based
on the fair value of the consideration given in exchange for assets. All amounts are presented in
Australian dollars.
In the application of Australian Accounting Standards, management is required to make judgements,
estimates and assumptions about the carrying value 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 judgements. 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 reporting 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.
Significant Accounting Estimates, Assumptions and Judgements
Accounting estimates, assumptions and/or judgements made by the Board of Directors and
management in applying the accounting policies of the Group that have the most significant effect on
the consolidated financial statements were:
Exploration and evaluation expenditure
The application of the Group’s accounting policy for exploration and evaluation expenditure requires
judgement in determining whether future economic benefits are likely either from future exploitation or
sale or where activities have not reached a stage which permits a reasonable assessment of the existence
of economically recoverable reserves. The determination of a JORC Mineral Resource is itself an
estimation process that requires varying degrees of uncertainty depending on sub-classification and
these estimates directly impact the point of deferral of exploration and evaluation expenditure. The
deferral policy requires management to make certain estimates and assumptions about future events or
circumstances, in particular whether an economically viable extraction operation can be established.
Estimates and assumptions made may change if new information becomes available.
31
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
Impairment
In assessing impairment, management estimates the recoverable amount of each asset or cash-
generating unit based on expected future cash flows and uses an estimated interest rate to discount
them. Estimation uncertainty relates to assumptions about future operating results and the determination
of a suitable interest rate.
The loss allowance for a financial asset is based on assumptions about risk of default and expected loss
rates. The Group uses judgement in making these assumptions and selecting the inputs to the
impairment calculation, based on its assessment of available external credit ratings, historical loss rates
and/or days past due.
Ore reserve and resource elements
The Group estimates its Ore Reserves and Mineral Resources based on information compiled by
Competent Persons (as defined in the JORC code). Ore Reserves and Mineral Resources determined in
this way are taken into account in the calculation of impairment.
Recoverability of deferred tax assets
The Group’s ability to recognise deferred tax assets relies on assumptions about the generation of future
taxable profits. These taxable profit estimates are based on estimated future production, commodity
prices, exchange rates, operating costs, rehabilitation costs and capital expenditures.
The following significant accounting policies have been adopted in the preparation and presentation of
the consolidated financial statements:
a. Cash and Cash Equivalents
Cash and cash equivalents in the consolidated statement of financial position and for presentation in the
consolidated statement of cash flows comprise cash on hand, cash in banks and short-term bank
deposits that are readily convertible to known amounts of cash and which are subject to insignificant risk
of changes in value.
b. Employee Benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave,
long service leave, and sick leave when it is probable that settlement will be required and they are
capable of being measured reliably.
Liabilities recognised in respect of short-term employee benefits are measured at their nominal values
using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of long-term employee benefits are measured as the present value of the
estimated future cash outflows.
c. Exploration and Evaluation Expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as
exploration and evaluation expense in the reporting period in which they are incurred, except where the
following conditions are satisfied:
32
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
•
The rights to tenure of the area of interest are current; and
• At least one of the following conditions is also met:
-
-
The exploration and evaluation expenditures are expected to be recouped through
successful development and exploration of the area of interest, or alternatively, by its
sale; or
Exploration and evaluation activities in the area of interest have not at the reporting date
reached a stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant operations in, or in relation
to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost, as an intangible, and include acquisition
of rights to explore, costs of studies, exploration drilling, trenching and sampling and associated
activities. General and administrative costs are only included in the measurement of exploration and
evaluation costs where they relate directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances (as defined
in AASB 6 ‘Exploration for and Evaluation of Mineral Resources’), suggest that the carrying amount of
exploration and evaluation assets may exceed their recoverable amount. The recoverable amount of the
exploration and evaluation assets (or the cash-generating unit(s) to which they have been allocated,
being no larger than the relevant area of interest) is estimated to determine the extent of the impairment
loss, if any.
Where an impairment loss subsequently reverses, the carrying amount of the asset 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 asset in prior financial years.
Where a decision is made to proceed with development in respect of a particular area of interest, the
relevant exploration and evaluation asset is tested for impairment and reclassified to mine development
expenditure.
d. Financial Assets
Investments are recognised and derecognised on the trade date where the purchase or sale of an
investment is under a contract the terms of which require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at fair value, net of transaction costs.
Subsequent to initial recognition, investments in subsidiaries are measured at cost in the Company’s
financial statements.
Other financial assets are classified into the following specified categories: available-for-sale financial
assets; and loans and receivables. The classification depends on the nature and purpose of the financial
assets and its determined at the time of initial recognition.
33
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
Available-for-sale financial assets
Certain shares held by the Group are classified as being available-for-sale and are stated at fair value less
impairment. Gains and losses arising from changes in fair value are recognised directly in the profit or
loss for the reporting period (‘FVTPL’). Fair value has been determined based on quoted market prices.
Trade and other receivables
Receivables, which normally have 30-day terms, are generally non-interest-bearing amounts. They are
recognised initially at the amount of the consideration that is unconditional unless they contain
significant financing components, when they are recognised initially at fair value. The Group holds
receivables with the objective to collect the contractual cash flows. They are presented as current assets
unless collection is not expected for more than 12 months after reporting date. For receivables expected
to be settled within 12 months, these are subsequently measured at amortised cost using the effective
interest method, less any loss allowance. For receivables expected to be settled later than 12 months,
these are subsequently measured at amortised cost based on discounted cash flows using an effective
interest rate, less any loss allowance. Cash flows relating to non-current receivables are not discounted
if the effect of discounting would be immaterial.
Impairment of financial assets
The Group has applied the AASB 9 ‘Financial Instruments’ general model approach to measuring
expected credit losses for all financial assets.
While cash and cash equivalents are also subject to the impairment requirements of AASB 9 ‘Financial
Instruments’, the identified impairment loss was considered not significant given the counterparties
and/or the short maturity.
When required, the carrying amount of the relevant financial asset is reduced through the use of a loss
allowance account and the amount of any loss is recognised in the statement of profit or loss and other
comprehensive income. When measuring expected credit losses, balances are reviewed based on
available external credit ratings, historical loss rates and/or the days past due.
e. Financial Instruments Issued by the Group
Debt and equity instruments are classified as either liabilities or as equity in accordance with the
substance of the contractual arrangement. An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the
Group are recorded at the proceeds received, net of direct issue costs.
Other financial liabilities
Other financial liabilities including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest rate
method, with interest expense recognised on an effective yield basis.
The effective interest rate method is a method of calculating the amortised cost of a financial liability and
of allocation interest expense over the relevant reporting period. The effective interest rate is the rate
that exactly discounts estimated future cash payments through the expected life of the financial liability,
or, where appropriate, a shorter period.
34
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
f. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except:
• Where the amount of GST incurred is not recoverable from the taxation authority, it is
recognised as part of the cost of acquisition of an asset or as part of an item of expense; or
•
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 consolidated statement of cash flows 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.
g. Government Grants
Government grants are assistance by government in the form of transfers of resources to the Group in
return for past or future compliance with certain conditions relating to the operating activities of the
Group.
Government grants are not recognised until there is reasonable assurance that the Group will comply
with the conditions attached to them and the grant will be received. Government grants, the primary
condition of which is to assist with exploration and evaluation activities, are recognised as deferred
income in the consolidated statement of financial position and recognised as income on a systematic
basis when the related exploration and evaluation expenditure is written-off or amortised.
Other government grants are recognised as income over the reporting periods necessary to match them
with the related costs which they are intended to compensate on a systematic basis. Government grants
receivable as compensation for expenses or losses already incurred or for the purpose of giving
immediate financial support to the Group with no future related costs are recognised as income in the
reporting period in which the funds become receivable.
Amounts received under the R&D Incentive scheme are treated as Government grants.
h.
Inventories
Ore, gold in circuit and gold dore is physically measured or estimated and valued at the lower of cost
and net realisable value. Costs are determined using an average weighted cost which includes the
Group’s direct and overhead costs, including amortisation and depreciation.
i.
Impairment of Assets (other than exploration and evaluation; 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. 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. Where the asset does not guarantee cash flows that are independent from other
assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset
belongs.
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 interest rate that
reflects current market assessments of the time value of money and the risks specific to the asset for
35
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset
(or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in
profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment
loss is treated as a revaluation decrease.
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 asset (cash-generating unit) in prior reporting periods.
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.
j.
Income Tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of
the taxable profit or tax loss for the reporting period. It is calculated using tax rates and tax laws that
have been enacted or substantively enacted by the reporting date. Current tax for current and prior
financial years 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 comprehensive balance sheet liability method in respect of
temporary differences arising from differences between the carrying amount of assets and liabilities in
the consolidated financial statements and the corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax
assets are recognised to the extent that it is probable that sufficient taxable amounts will be available
against which deductible temporary differences or unused tax losses and tax offsets can be utilised.
However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to
them arise from the initial recognition of assets and liabilities (other than as a result of a business
combination) which affects neither taxable income nor accounting profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
reporting 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 the reporting date. The
measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from
the manner in which the Group 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 Group and the Company intends to settle its current tax assets and liabilities on a net
basis.
Current and deferred tax for financial year
Current and deferred tax are recognised as an expense or income in profit or loss, except when they
relate to items that are recognised outside profit or loss (whether in other comprehensive income or
directly in equity), in which case the tax is also recognised outside profit or loss, or where they arise from
36
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
the initial accounting for a business combination. In the case of a business combination, the tax effect is
included in the accounting for the business combination.
Tax consolidation
The Company and its wholly-owned Australian resident entities are part of a tax-consolidated group
under Australian taxation law. Havilah Resources Limited is the head entity in the tax-consolidated group.
Tax expense/ income, deferred tax liabilities and deferred tax assets arising from temporary differences of
the members of the tax-consolidated group are recognised in the separate financial statements of the
members of the tax-consolidated group using the ‘separate taxpayer within group’ approach by
reference to the carrying amounts in the separate financial statements of each entity and the tax values
applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from
unused tax losses and relevant tax credits of the members of the tax-consolidated group are recognised
by the Company (as head entity in the tax-consolidated group). Due to the existence of a tax funding
arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to
or receivable by the Company and each member of the Group in relation to the tax contribution
amounts paid or payable between the head entity and other members of the tax-consolidated group in
accordance with the arrangement.
Further information about the tax funding arrangement is disclosed in Note 8 to the consolidated
financial statements. Where the tax contribution amount recognised by each member of the tax-
consolidated group for a particular period is different to the aggregate of the current tax liability or asset
and any deferred tax asset arising from unused tax losses and tax credits in respect of that period, the
difference is recognised as a contribution from (or distribution to) equity participants.
k. Contributed Equity
Ordinary shares are classified as equity. Issued capital represents the fair value of shares that have been
issued. Any transaction costs associated with the issuing of ordinary shares are deducted from issued
share capital, net of any related income tax.
l.
Joint Arrangements
The Group undertakes a number of business activities through joint arrangements, which exist when two
or more parties have joint control. Joint arrangements are classified as either joint operations or joint
ventures, based on the contractual rights and obligations between the parties to the arrangement. The
Group has two types of joint arrangements – joint operations and joint ventures.
Joint operation
A joint operation is an arrangement in which the Group shares joint control, primarily via contractual
arrangements with other parties. In a joint operation, the Group has rights to the assets and obligations
for the liabilities relating to the arrangement. This includes situations where the parties benefit from the
joint activity through a share of the output, rather than by receiving a share of the results of trading. In
relation to the Group’s interest in a joint operation, the Group recognises: its share of assets and
liabilities; revenue from the sale of its share of the output and its share of any revenue generated from
the sale of the output by the joint operation; and its share of expenses. All such amounts are measured in
accordance with the terms of the arrangement, which is usually in proportion to the Group’s interest in
the joint operation.
37
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
Joint venture
A joint venture is a joint arrangement in which the parties that share joint control have rights to the net
assets of the arrangement. A separate vehicle, not the parties, will have the rights to the assets and
obligations to the liabilities relating to the arrangement. More than an insignificant share of output from
a joint venture is sold to third parties, which indicates the joint venture is not dependent on the parties to
the arrangement for funding, nor do the parties have an obligation for the liabilities of the arrangement.
Joint ventures are accounted for using the equity accounting method.
m. Leased Assets
Finance leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to
the present value of the minimum lease payments, each determined at the inception of the lease. The
corresponding liability to the lessor is included in the consolidated statement of financial position as a
finance lease obligation. Lease payments are apportioned between finance charges and reduction of the
lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are charged directly to profit or loss.
Finance leased assets are amortised on a straight-line basis over the estimated useful life of the asset
(refer to Note 1(o)).
Operating leases
Operating lease payments are recognised as an expense on a straight-line basis over the lease term,
except where another systematic basis is more representative of the time pattern in which economic
benefits from the leased asset are consumed.
n. Mine Development
Mine development expenditure is recognised at cost less accumulated amortisation and any impairment
losses. Where commercial production in an area of interest has commenced, mine development is
amortised over the economic life of the mine on a unit-of-production basis. Changes in factors such as
estimates of proved and probable reserves that affect unit-of-production amortisation calculations are
accounted for on a prospective basis.
o. Property, Plant and Equipment
Pastoral leases are stated at cost less impairment. Cost includes expenditure that is directly attributable
to the acquisition of the pastoral lease.
Plant and equipment is stated at cost less accumulated depreciation and impairment. Cost includes
expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all
or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable
in the future to their present value as at the date of acquisition.
38
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
Plant and equipment under finance lease are stated at cost less accumulated depreciation and
impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the
event that settlement of all or part of the purchase consideration is deferred, cost is determined by
discounting the amounts payable in the future to their present value as at the date of the acquisition.
Depreciation is provided on plant and equipment. Depreciation is calculated on a straight-line 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 following estimated useful lives are used in the calculation of depreciation:
• Computer and office equipment: 2.5 – 10 years;
• Motor vehicles: 8 – 10 years;
• Operating equipment: 2.5 – 10 years;
• Heavy equipment: 8 – 10 years;
• Rail, water and other infrastructure: 8 – 10 years;
• Portable dewatering infrastructure: 7 – 25 years; and
p. Principles of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and all
subsidiaries controlled by the Company. Control is achieved when the Company:
• Has power over the subsidiary;
•
• Has the ability to use its power to affect its returns through its power to direct the activities of
Is exposed, or has rights, to variable returns from its involvement with the subsidiary; and
the subsidiary.
The Company reassesses whether or not it controls a subsidiary if facts and circumstances indicate that
there are changes to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases
when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary
acquired or disposed of during the reporting period are included in the consolidated statement of profit
or loss and other comprehensive income from the date the Company gains control until the date when
the Company ceases to control the subsidiary.
When necessary, adjustments are made to the separate financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control
over the subsidiaries are accounted for as equity transactions.
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is
calculated as the difference between the aggregate of the fair value of the consideration received and
the fair value of any retained interest and the previous carrying amount of the assets (including goodwill),
and liabilities of the subsidiary. All amounts previously recognised in other comprehensive income in
39
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or
liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as
specified/ permitted by the applicable Australian Accounting Standards).
q. Rehabilitation Provisions
A provision for rehabilitation is recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation. In practice, provisions
are recognised at the time environmental disturbance occurs, and where disturbance increases over the
life of an operation, the provision is increased accordingly.
The amount recognised as a provision is the best estimate of the consideration required to settle the
present obligations at the end of the reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value of those cash flows (where the effect of the
time value of money is material). Costs included are based on currently available facts, technology
expected to be available at the time of the rehabilitation, and laws and regulations presently enacted (or
virtually certain of being enacted).
When some of the economic benefits required to settle a provision are expected to be recovered from a
third party either directly or by the third party settling amounts directly, a receivable is recognised as an
asset if it is virtually certain that reimbursements will be received and the amount of the receivable can
be measured reliably.
Rehabilitation provisions, net of any recognised reimbursement asset, are capitalised as part of mine
development expenditure where they are expected to increase the economic benefits flowing from the
use or eventually disposal of the asset, or when they represent an obligation to remediate at the end of
the asset’s life and are recoverable from future economic benefits using the asset. Rehabilitation
provisions arising in respect of exploration and evaluation activities are capitalised into the cost of
exploration expenditure in accordance with Note 1(c).
r. Revenue Recognition
Sales revenue
Revenue from sales of refined metals is recognised when the performance obligations are considered
met, which is when control of the products or services provided are transferred to the customer. Revenue
is recognised at an amount that reflects the consideration the Group expects to be entitled to, net of
goods and services tax or similar taxes.
Generally sales revenue is recognised at the time of shipment. Where metal is delivered into physical
gold delivery contracts, sales revenue is recognised at the time of the metal transfer into the buyer’s
metals account.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to that asset’s net carrying amount.
40
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
s. 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 binomial option pricing method. The expected life used in the model has been
adjusted, based on management’s best estimates, for the effects of non-transferability, exercise
restrictions, and behavioural considerations.
The fair value determined at the issue date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of ordinary shares that will
eventually vest.
2. Adoption of New and Revised Australian Accounting Standards
The Group has applied certain new or revised Australian Accounting Standards and Interpretations for
the first time for the financial year ended year ended 31 July 2019:
• AASB 9 ‘Financial Instruments’, and the relevant amending standards
• AASB 15 ‘Revenue from Contracts with Customers’
• AASB 2016-8 ‘Amendments to Australian Accounting Standards – Classification and
Measurement of Share-based Payment Transactions’
The adoption of AASB 9 ‘Financial Instruments’ and AASB 15 ‘Revenue from Contracts with Customers’
has resulted in changes in the Group’s accounting policies for revenue (see Note 1(r)) and financial assets
(see Note 1(d)); and disclosures on significant judgement (see Note 1). The main change for the Group
from AASB 9 relates to a new model for the credit loss measurement of financial assets, a hybrid of
expected and incurred loss (referred to as the ‘expected credit loss’ model). The core principle in AASB 15
requires the Group to recognise revenue to depict when control over a good or service is transferred to a
customer in amounts that reflect the consideration (that is payment) to which the Group expects to be
entitled in exchange.
The initial adoption of each of the above Australian Accounting Standards and Interpretations has not
had a material impact on the amounts reported in these consolidated financial statements but may affect
the accounting for future transactions or arrangements.
Certain new and revised Australian Accounting Standards and Interpretations have been published that
are not mandatory for this financial year. The Group’s assessment of the impact of the relevant these
Australian Accounting Standards and Interpretations is set out below:
• AASB 16 ‘Leases’
This is the new standard for lease recognition, replacing AASB 117 ‘Leases’. AASB 16 is applicable for
annual reporting periods beginning on or after 1 January 2019, with early adoption permitted. AASB 16
introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all
leases with a term of more than 12 months, unless the underlying asset is of low value. The new standard
removes the current distinction between operating and finance leases and requires recognition of an
asset (the right-to-use the leased item) and a financial liability to pay rentals for almost all lease
contracts. The Group has assessed the impact of AASB 16 and the change will not have a material impact.
The Group has not adopted the new standard before its operative date, which means that it would first
be applied during the financial year ending 31 July 2020. The Group expects to apply the simplified
transition approach available under AASB 16 and will therefore not be required to restate comparative
amounts for the financial year prior to first adoption. Right-of-use assets for non-cancellable operating
lease commitments will be measured at the amount of the lease liability on transition. In applying the
41
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
new standard for the first time, the Group intends to use the transition practical expedients permitted by
AASB 16. The Group will also elect under AASB 16 not to apply the new standard to contracts that were
not identified as containing a lease under AASB 117 and AASB Interpretation 4 ‘Determining whether an
Arrangement contains a Lease’. As at 1 August 2019, the Group expects to recognise right-of-use assets
of $0.500 million and a corresponding lease liability of $0.500 million. The Group estimates that there will
be no change in accumulated losses as a result of applying AASB 16 from 1 August 2019. The
depreciation of the right-of-use assets and interest on the lease liability will be recognised in the
consolidated statement of profit or loss and other comprehensive income during the financial year
ending 31 July 2020.
• AASB 2019-1 ‘Amendments to Australian Accounting Standards – References to the Conceptual
Framework’
The AASB has issued the International Accounting Standards Board’s revised Conceptual Framework for
Financial Reporting (‘revised Conceptual Framework’) and made consequential amendments to various
Australian Accounting Standards (AASB 2019-1). As the Group states compliance with IFRS, during the
financial year it needed to consider whether it previously relied on the current Conceptual Framework.
The Group confirms that it has not relied on the current Conceptual Framework in determining
accounting policies for transactions, events or conditions that are not otherwise dealt with under the
Australian Accounting Standards. As such, it believes it will not need to apply the revised Conceptual
Framework at this time. The revised Conceptual Framework is applicable to annual reporting periods
beginning on or after 1 January 2020, but is available for early adoption. The Group has not adopted it
before its operative date, which means that it would first be applied during the financial year ending
31 July 2021.
There are no other new or revised Australian Accounting Standards or Interpretations that are not yet
effective and that are expected to have a material impact on the Group in the current or future financial
years and on foreseeable future transactions.
3. Going Concern
The financial report has been prepared on the going concern basis, which assumes that the Group will be
able to realise its assets and extinguish its liabilities in the normal course of business and at amounts
stated in the financial report.
For the financial year ended 31 July 2019 the Group incurred a loss of $7.338 million (31 July 2018: loss
$2.990 million), had net cash outflows from operating activities of $1.826 million (31 July 2018: outflow
$2.779 million) and net cash inflows from investing activities of $1.714 million (31 July 2018: outflows
$2.556 million). As at 31 July 2019, the Group had a net current asset deficiency of $2.050 million (31 July
2018: surplus $2.269 million) and cash and cash equivalents of $3.820 million (31 July 2018: $1.847 million).
As at 29 October 2019, the Group had cash and cash equivalents of $0.160 million.
Subsequent to 31 July 2019, the Group defaulted under the terms of its loan (‘standby debt facility’) with
Investec. This event, coupled with rejection of the SIMEC proposal at an EGM on 12 September 2019 and
the lack of an immediate cash injection, resulted in Investec requiring repayment of the $2.500 million
loan ahead of the original loan maturity date of 4 December 2019. A modified repayment plan was
agreed with Investec such that the Group repaid $1.000 million of the loan on 30 September 2019 and a
further $0.500 million on 15 October 2019. The balance of $1.000 million has been agreed to be repaid by
4 December 2019 and cannot be called earlier unless there is a subsequent default under the standby
debt facility. The Group is dependent on the support of Investec for this repayment plan.
42
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
On 17 October 2019, the Group announced a 1 for 4 pro-rata non-renounceable rights issue to raise
$5.457 million before costs. Costs are estimated at $0.160 million. The entitlement offer opened on
25 October 2019 and closes on 11 November 2019 (unless extended), with new ordinary shares to be
allotted on 18 November 2019. The proceeds from the rights issue will be available for use subsequent to
the allotment of the new ordinary shares.
Two of the Group’s major shareholders have indicated that they plan to take up their full entitlement of
$0.728 million and in addition have provided a non-binding undertaking of their intention to subscribe
for up to $3.000 million worth of Shortfall Shares should they be available.
On 14 October 2019, the Group entered a conditional loan agreement with HNC Holdings Pty Ltd (‘HNC’)
a major shareholder in the Company. The key terms of the loan agreement are:
•
•
•
•
•
Loan amount $0.500 million;
Interest rate of 8% per annum;
Interest is payable monthly in arrears;
Security over the shares owned by the Company in Iron Genesis Pty Limited;
The loan can be drawn down at the lender’s discretion from 14 October 2019 to 31 January 2020;
and
• Repayment date is at the discretion of the lender but not more than six months after the date
the loan is provided.
The Directors have prepared a cash flow forecast which indicates that the ability of the Group to continue
as a going concern is dependent upon:
• Drawing down either the HNC facility (refer Note 38) or the National Australia Bank facility (refer
Note 18) prior to the allotment of shares under the rights issue on 18 November 2019;
• Raising a minimum $1.300 million in November 2019 from the proceeds from the rights issue;
• Raising the balance of the $5.456 million under the rights issue to enable the repayment of the
draw downs under the HNC or National Australia Bank facilities and to fund costs through to
31 October 2020;
The continued financial support of the Group’s lenders, being Investec and National Australia
Bank until the loans are repaid.
•
In the event there is a shortfall in the rights issue, the Group will be required to implement one or more
of the following:
•
•
•
farming out all or part of its assets;
selling interests in the Group’s assets;
relinquishing or disposing of rights and interests in certain assets.
The Directors are satisfied that they will achieve the matters set out above and therefore the going
concern basis of preparation is appropriate.
In the event that the Group is unsuccessful in achieving the matters listed above, such circumstances
would indicate that a material uncertainty exists that may cast significant doubt as to whether the Group
will continue as a going concern and therefore whether it will realise its assets and discharge its liabilities
in the normal course of business and at the amounts stated in the financial report.
This financial report does not include any adjustments relating to the recoverability and classification of
recorded asset amounts or to the amounts and classification of liabilities that might be necessary should
the Group not continue as a going concern.
43
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
4.
Segmentation Information
a) Description of segments
The Group has identified its operating segments based on the internal reports that are reviewed and
used by the Board of Directors and senior management (the chief business decision makers) in
monitoring and assessing performance and in determining the allocation of resources.
The Group’s Exploration & Development business unit and Corporate business unit are each treated as
individual operating segments. The Group no longer reports Royalty Portfolio as a separate segment as it
is no longer material to the Group. Relevant revenue and expenses are now reported within the
Corporate business unit segment.
Corporate also includes share-based payment expenses and other corporate expenditures supporting
the business during the financial year. Segment performance is evaluated based on EBITDA/ (LBITDA).
The Group’s operations are all undertaken in South Australia.
b) Segment information
The following is an analysis of the Group’s revenue and results from continuing operations by reportable
segment:
Exploration & development
Corporate
$’000
-
(1,133)
(1,133)
-
(90)
1
38,312
857
$’000
905
(5,741)
-
Total
$’000
905
(6,874)
(1,133)
(2,048)
(2,048)
(30)
-
6,746
5,866
(120)
1
45,058
6,723
31 July 2019
Segment revenue
LBITDA
Impairment of capitalised exploration expenditure
included in LBITDA
Revision of carrying value of financial assets
included in LBITDA 1
Depreciation and amortisation
Additions to property, plant & equipment
Total assets
Total liabilities
1 See Note 7 for further details
44
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
Royalty
portfolio
$’000
Exploration &
development
Corporate
$’000
$’000
60
60
-
-
-
-
-
-
(491)
(491)
(162)
47
35,874
870
-
3,557
-
(25)
53
13,515
3,437
Total
$’000
60
3,126
(491)
(187)
100
49,389
4,307
31 July 2018
Segment revenue
EBITDA/ (LBITDA)
Impairment
expenditure included in LBITDA
capitalised
of
exploration
Depreciation and amortisation
Additions to property, plant & equipment
Total assets
Total liabilities
c) Segment reconciliation
Reconciliation of (loss)/ profit before income tax
(LBITDA)/ EBITDA
Depreciation and amortisation expense
Interest income – bank term deposits
Interest expense
Other
(Loss)/ profit before income tax (continuing operations)
5. Profit/ (Loss) from Continuing Operations
a)
Profit/ (loss) before income tax includes the following specific
revenues from continuing operations:
Other income
Government grants received
Diesel fuel rebates received
Interest income – bank term deposits
Sundry income
Total other income
45
Year ended
31 July 2019
$’000
Year ended
31 July 2018
$’000
(6,874)
(120)
10
(355)
-
(7,338)
3,126
(187)
16
(131)
(82)
2,742
Year ended
31 July 2019
$’000
Year ended
31 July 2018
$’000
34
18
10
-
62
34
-
16
1
51
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
b)
Profit/ (loss) before income tax has been arrived at after charging
the following specific expenses from continuing operations:
Employee benefits expense:
Post-employment benefits:
Defined contribution superannuation plans
Other employee and contractor benefits
Less amounts capitalised
Less amounts included in impairment loss on other financial assets
Total employee benefit expenses 1
c)
Profit/ (loss) before income tax has been arrived at after charging
the following specific expenses from continuing operations:
Share-based payment expense:
Share-based payment expense – Investec
Share-based payment expense – employees
Share-based payment expense – Directors
Total share-based payment expenses 2
292
2,567
2,859
(1,890)
(199)
770
376
180
34
590
219
2,012
2,231
(1,470)
-
761
-
-
35
35
1 This represents employee expenses not capitalised as part of exploration and evaluation or disclosed in COGS or
impairment loss.
2 Equity-settled share-based payment expense relates to share options granted during the financial year and
amortisation of share options granted in prior reporting periods. Share options do not represent cash payments and
share options granted may or may not be exercised by the holder.
6. Government R&D Grant Derecognised
Industry Science Australia carried out a review of the Group’s R&D projects registered for the income tax
years ended 31 July 2013 and 31 July 2014. Certain registered activities for both income tax years were
found not to meet the requirements of the Income Tax Assessment Act 1997. The Group is currently
deemed ineligible for the following amounts of R&D refundable offsets: financial year ended 31 July 2013:
$0.689 million; and financial year ended 31 July 2014: $0.330 million. The Group has lodged an appeal to
the Administrative Appeals Tribunal against the decisions, and is awaiting the outcome of a hearing on
this matter which concluded during June 2019. While the Group believes the R&D claims are valid, a
decision was made to amend prior year income tax returns and recognise a liability of $1.385 million
comprising:
FY13 and FY14 R&D claims $1.019 million;
Interest $0.111 million; and
•
•
• Penalties $0.255 million.
During November 2018, the Group negotiated a payment plan with the ATO. As at 31 July 2019,
$0.500 million has been repaid in line with the payment plan, leaving a balance outstanding of
$0.885 million. The remaining balance is due to be paid in monthly instalments of $0.100 million through
to March 2020, with a final payment of $0.185 million due during April 2020.
46
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
7. Divestment of a Subsidiary
On 11 July 2018, the Group disposed of the wholly owned subsidiary Benagerie Gold Pty Ltd which owned
and operated the Portia Gold Mine.
The resulting disposal of the Benagerie Mining Lease and associated assets is consistent with Havilah’s
objective to focus more attention on the advancement and ultimate development of the Mutooroo and
Kalkaroo projects.
a) Revision of carrying amount of other financial assets during financial year ended 31 July 2019
On 8 April 2019, the Group announced to the ASX that it had agreed to revised transaction terms with
Consolidated Mining and Civil Pty Ltd (‘CMC’) and its a wholly owned subsidiary Benagerie Gold and
Copper Pty Ltd (‘BGC’) for the divestment.
The key commercial points of the revised transaction terms with respect to the divestment of North
Portia are as follows:
•
•
•
•
•
First payment of $1.000 million was made during July 2018 when the transaction closed. Original
agreement: no change.
Second payment of $2.000 million made on 5 April 2019 following the execution of the Heads of
Agreement (‘HOA’) for the revised terms. Original agreement: Second payment of $3.5 million
upon the Group’s completion of the required permitting allowing the mining of overburden at
North Portia and the subsequent processing of the oxide gold component of the resource.
Third payment of $4.000 million made on 23 May 2019 within 30 days of the execution of the
HOA. Original agreement: Third payment of $3.5 million with the Group’s completion of the
permitting, which allows for the mining and processing of the supergene sulphide copper-cobalt-
gold at North Portia.
Final payment of $3.800 million payable once the first $3.500 million of production revenue from
the North Portia project is achieved. Original agreement: Final payment of $5.5 million, 12 months
after the second payment.
The Group has no further permitting obligations with respect to the ML. Original agreement: the
Group retained the responsibility to deliver the required permitting for the project.
• CMC continues to fund 100% of the Portia rehabilitation bond which released the Group’s
$1.200 million in bank guarantee obligations. Original agreement: No change.
•
•
Total divestment price of $10.800 million. Original agreement: $13.500 million.
1.5% Net Smelter Return (‘NSR’) royalty on all commodity sales from the ML. Original agreement:
2% NSR royalty.
• Revised agreement eliminates the increased NSR royalty (3.25%) on copper metal sales, after
more than 101,400 tonnes of copper metal have been produced and sold from the ML.
• Revised agreement eliminates guaranteed payments of $0.300 million per quarter if the quarterly
royalty payment is not at least $0.300 million per quarter by 30 November 2020.
The carrying amounts of the final payment has been adjusted to reflect the revised transaction terms,
resulting in a downward revision in the carrying value of the outstanding receivable by $2.048 million to
$2.596 million.
47
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
b) Disclosures in annual financial report for the financial year ended 31 July 2018
Details of assets and liabilities disposed of and calculation of profit or loss on disposal
a) Consideration received
Consideration received in cash and cash equivalents
Secured consideration receivable 1
Permitting costs
Total
b) Analysis of assets and liabilities over which control was lost
Non-current assets
Property, plant and equipment
Exploration expenditure
Net assets disposed of
c) Gain on disposal of subsidiary
Consideration received
Net assets disposed of
Total
d) Net cash inflow on disposal of subsidiary
Consideration received in cash and cash equivalents
Less: cash permitting costs incurred to 31 July 2018
Total
e)
Secured consideration receivable
Current
Non-current
Total
Year ended
31 July 2018
$’000
1,000
10,620
(718)
10,902
1,506
3,771
5,277
10,902
(5,277)
5,625
1,000
(288)
712
3,182
7,438
10,620
1 $12.500 million progress payments receivable as per the original divestment agreement were discounted to net present value in
accordance with Australian Accounting Standards
48
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
Analysis of profit/ (loss) and cash flows for the financial year ended 31 July 2018 from discontinued
operations
Profit/ (loss) for the financial year from discontinued operations
Revenue
Amortisation of R&D income
Government R&D grant derecognised1
Depreciation and amortisation
Cost of goods sold
Loss before tax
Attributable tax income
Loss for the year from discontinued operations
Gain on disposal of subsidiary
Attributable income tax expense
Loss for the year from discontinued operations
1 See Note 6 for further details
Cash flows from discontinued operations
Net cash outflows from operating activities
Net cash outflows from investing activities
Net cash outflows
8.
Income Tax Related to Continuing Operations
Year ended
31 July 2018
$’000
4,751
344
(677)
4,428
(4,802)
(5,248)
(5,622)
853
(4,769)
5,625
(1,688)
(832)
Year ended
31 July 2018
$’000
(1,908)
(117)
(2,025)
a)
Income tax recognised in profit or loss
The prima facie consolidated tax expense on loss before income tax
reconciles to the tax expense/ (income) in the consolidated financial
statements as follows:
(Loss)/ profit before income tax for continuing operations
Prima facie tax payable/ (benefit) on loss before income tax, calculated at the
49
Year ended
31 July 2019
$’000
Year ended
31 July 2018
$’000
(7,338)
(2,201)
2,742
823
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
Australia tax rate of 30%
Share-based payments expense
Prior financial year capital losses set up
Other
Revenue tax losses not recognised
Prior over provision
Tax expense
b) Recognised deferred tax assets and (liabilities)
Deferred tax assets and (liabilities) are attributable to the following:
Inventory
Exploration and evaluation
Plant and equipment
Other financial assets
Capitalised loan costs
Deferred gain on sale
Trade and other payables
Employee benefit provisions
Deferred income
Costs associated with issue of ordinary shares
Total
Offset by deferred tax assets relating to operating losses
Net deferred tax assets and (liabilities) unrecognised
c) Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following
items:
Revenue tax losses
Capital tax losses
Total
177
-
78
2,977
(1,031)
-
10
(11)
71
854
(784)
963
Year ended
31 July 2019
$’000
Year ended
31 July 2018
$’000
-
(12,368)
23
218
-
(143)
-
188
188
68
(11,826)
11,826
-
9,613
-
9,613
(26)
(11,602)
13
223
(3)
667
40
217
188
114
(10,170)
10,170
-
6,918
-
6,918
Deferred tax assets have not been recognised in respect of these items because it is not probable, at this
time that future taxable profit will be available against which the Group can utilise the tax benefits.
50
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
d) Tax consolidation
Relevance of tax consolidation to the Group
The Company and its wholly-owned Australian resident subsidiaries have formed a tax-consolidated
group with effect from 1 July 2003 and are therefore taxed as a single entity from that date. The head
entity within the tax-consolidated group is Havilah Resources Limited. The members of the tax-
consolidated group are identified at Note 35.
Nature of tax funding arrangements and tax sharing agreements
Entities within the tax-consolidated group have entered into a tax-funding arrangement and a tax-
sharing arrangement with the head entity. Under the terms of the tax-funding arrangement, Havilah
Resources Limited and each of the entities in the tax-consolidated group has agreed to pay a tax
equivalent payment to or from the head entity, based on the current tax liability or current tax asset of
the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the tax-
consolidated group.
The tax-sharing agreement entered into between members of the tax-consolidated group provides for
the determination of the allocation of income tax liabilities between the entities should the head entity
default on its tax payment obligations or if an entity should leave the tax-consolidated group. The effect
of the tax-sharing agreement is that each member’s liability for tax payable by the tax-consolidated
group is limited to the amount payable to the head entity under the tax-funding agreement.
9. Cash and Cash Equivalents
31 July 2019
31 July 2018
$’000
64
3,756
3,820
31 July 2019
$’000
-
-
$’000
542
1,305
1,847
31 July 2018
$’000
571
571
Cash at bank
Cash on deposit
Total
10.
Inventory
Gold in circuit and gold ore at cost
Total
51
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
11. Trade and Other Receivables
GST recoverable
Other receivables
Total
12. Other Current Financial Assets
Receivable on sale of subsidiary
31 July 2019
$’000
31 July 2018
$’000
31
15
46
83
61
144
31 July 2019
31 July 2018
$’000
-
$’000
3,182
Current funds receivable from CMC as at 31 July 2018 were received during the financial year ended 31
July 2019.
13. Other Current Assets
Prepayments
14. Exploration and Evaluation Expenditure
Cost brought forward
Expenditure incurred during the financial year
Impairment of capitalised exploration and evaluation expenditure
Expenditure derecognised on disposal of a subsidiary
Total
Intangible
31 July 2019
31 July 2018
$’000
122
$’000
156
31 July 2019
31 July 2018
$’000
32,984
3,673
(1,133)
-
35,524
35,524
$’000
33,913
3,333
(491)
(3,771)
32,984
32,984
Current and prior financial year expenditure impairment relates to ongoing expenditure to maintain iron
ore, uranium and geothermal exploration tenements. A review of the Group’s exploration and evaluation
tenement portfolio was conducted during the financial year, which resulted in impairments from
tenement expiry and/or relinquishment and tenements being held for uranium and geothermal
purposes.
The expenditure is carried forward on the basis that exploration or evaluation activities in the areas of
interest have not reached a stage that permits reasonable assessment of the existence or otherwise of
economically recoverable reserves. Active and significant operations in, or in relation to, the areas is
continuing. The future recoverability of the carrying amount of capitalised exploration and evaluation
52
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
expenditure is dependent on successful development and commercial exploitation, or alternatively, sale
of the respective areas of interest.
15. Property, Plant and Equipment
Pastoral lease at
cost 2
Plant and
equipment at cost
Equipment under
finance lease at cost
$’000
$’000
$’000
Gross carrying amount
Balance as at 31 July 2017
2,241
Additions
Disposals
Derecognised on disposal of a
subsidiary
-
-
-
12,011
208
(176)
(8,131)
Balance as at 31 July 2018
2,241
3,912
Additions
Disposals
Transfers
-
-
-
1
(14)
55
Balance as at 31 July 2019
2,241
3,954
-
-
-
-
-
-
-
-
-
-
2,241
2,241
4,995
4,984
-
(157)
(6,625)
3,197
120
(1)
38
3,354
715
600
Accumulated depreciation
Balance as at 31 July 2017
Depreciation expense 1
Capitalised depreciation
Eliminated on disposal of assets
Eliminated on disposal of a subsidiary
Balance as at 31 July 2018
Depreciation expense 1
Eliminated on disposal of assets
Transfers
Balance as at 31 July 2019
Net book value:
As at 31 July 2018
As at 31 July 2019
53
55
-
-
-
55
-
-
(55)
-
33
5
-
-
-
38
-
-
(38)
-
17
-
Total
$’000
14,307
208
(176)
(8,131)
6,208
1
(14)
-
6,195
5,028
4,989
-
(157)
(6,625)
3,235
120
(1)
-
3,354
2,973
2,841
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
1 Depreciation expense has been allocated as follows:
Charged to cost of goods sold for discontinued operations
Charged to profit/ (loss) for continuing operations
Total
31 July 2019
$’000
31 July 2018
$’000
-
120
120
4,802
187
4,989
2 The Group has a bank guarantee and overdraft credit facility with National Australia Bank secured by a $1.000 million mortgage
over the Kalkaroo Station pastoral lease (classified as ‘Pastoral lease at cost’ in this Note).
16. Other Non-Current Financial Assets
At amortised cost:
Bank term deposits (refer to Note 29(d))
Security deposits
Receivable on sale of subsidiary 1
At fair value:
Investment in equity instruments designated as at FVTPL:
Shares in listed entity
Total
31 July 2019
$’000
31 July 2018
$’000
60
15
2,596
34
2,705
60
15
7,438
20
7,533
1 The receivable has been discounted from its previous carrying amount of $3.800 million using a rate of 10% and an expected date
of receipt of July 2023. See Note 7(a) for further details on the revision of the carrying amount of the non-current receivable from
CMC.
17. Trade and Other Payables
31 July 2019
$’000
31 July 2018
$’000
Trade payables1
Accruals
Amounts payable to related parties/ entities of Directors 1
Total
483
237
44
764
1 The average credit period on purchases/services is 45 days. No interest is charged on trade payables.
406
430
30
866
54
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
18. Borrowings
Secured:
Investec loan (standby debt facility)
Unsecured:
Insurance premium funding
Total
31 July 2019
$’000
31 July 2018
$’000
2,500
132
2,632
-
171
171
During the financial year ended 31 July 2019, the Group established a secured standby debt facility of
$6.000 million with Investec. As a result of this transaction, Investec was issued with 7.500 million unlisted
share options (see Note 24). Security for the facility consists of the Group's interest in Kalkaroo Copper
Pty Ltd and Mutooroo Metals Pty Ltd and the assets of Kalkaroo Copper Pty Ltd and Mutooroo Metals
Pty Ltd.
The amount drawn down on the facility as at 31 July 2019 was $2.500 million, with $3.500 million undrawn
and unavailable. In the terms of the facility agreement, the Group is obligated to maintain minimum
liquidity of $2.000 million. The weighted average effective interest rate on the facility is 14.82% and the
facility expires and is due for repayment on 4 December 2019. Refer Note 38 to the consolidated financial
statements.
Insurance premium funding is an unsecured fixed interest rate debt with a repayment period not
exceeding one year. The effective interest rate is 4.26% (2018: 4.15%).
The Group has access to a $0.500 million secured overdraft facility with the National Australia Bank at a
business lending rate of 3.00% plus a customer margin of 2.20%. As at the end of the financial year, the
Group has no balance owing on this facility and the full $0.500 million is available for use. The facility
expires during January 2020, unless renewed.
The Group also has access to $0.500 million bank guarantee facility provided by the National Australia
Bank, of which $0.216 million is currently being utilised to secure bank guarantees for an office lease
security deposit and a rehabilitation bond (see Note 29(d)).
31 July 2019
31 July 2018
$’000
616
$’000
723
19. Current Provisions
Employee benefits
55
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
20. Other Current Financial Liabilities
Permitting costs payable on divestment of subsidiary 1
R&D income amendment 2
Total
31 July 2019
$’000
-
885
885
31 July 2018
$’000
344
1,019
1,363
1 Liability to incur permitting costs pursuant to the contract of sale of Benagerie Gold Pty Ltd (see Note 7 for further detail).
2 Tax liability as per amendments to prior period income tax returns following disallowance of prior period R&D claims (see Note 6
for further detail).
21. Current Deferred Income
SIMEC Mining exclusivity payment
SIMEC Mining exploration funding
Gold nugget sale deposit
Total
31 July 2019
$’000
1,000
140
-
1,140
31 July 2018
$’000
-
-
508
508
During the financial year, SIMEC Mining elected to extend the exclusivity period to complete its due
diligence on the Group’s Maldorky and Grants iron ore projects until 31 March 2019. In accordance with
the extension agreement entered into during December 2018, the Group received $1.000 million from
SIMEC Mining during February 2019. As the $1.000 million payment will be deducted from any amount
payable by SIMEC Mining to the Group under any potential future transaction that may be concluded
between the parties during calendar year 2019, this amount has been recorded as deferred income and
the revenue impact will be recognised at such time as the 2019 calendar year expires and/or a
transaction is completed with SIMEC Mining. Refer Note 38 to the consolidated financial statements.
22. Non-Current Provisions
Employee benefits
Total
23. Non-Current Deferred Income
Deferred income
31 July 2019
$’000
10
10
31 July 2018
$’000
-
-
31 July 2019
31 July 2018
$’000
676
$’000
676
Deferred income relates to Government grants received for exploration.
56
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
24. Contributed Equity
Year ended 31 July 2019
Year ended 31 July 2018
‘000
$‘000
‘000
$‘000
Balance at beginning of the financial year
218,249
71,675
183,431
65,072
Issue of ordinary shares to Bergen
Issue of ordinary shares to Bergen for commencement fee
Issue of unlisted share options to Bergen
Issue of ordinary shares pursuant to rights issue at $0.20 per share
Costs associated with issue of ordinary shares
Related income tax benefit
-
-
-
-
-
-
-
-
-
-
-
-
6,212
353
-
27,144
1,109
-
1,161
103
(57)
5,650
(363)
109
Balance at end of the financial year
218,249
71,675
218,249
71,675
The Company does not have a limited amount of authorised capital and ordinary shares have no par
value.
Voting rights of shareholders are governed by the Company’s Constitution. In summary, on a show of
hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote,
and upon a poll each such attending shareholder is entitled to one vote for every fully paid ordinary
share held.
Ordinary shares participate in dividends as declared and the proceeds on winding up of the Company in
proportion to the number of fully paid ordinary shares held.
Ordinary shares
No ordinary shares were issued during the financial year ended 31 July 2019. As at 31 July 2019 there were
218.249 million listed ordinary shares on issue.
Listed share options
No listed share options were exercised during the financial year. As at 31 July 2019 there were
13.607 million listed share options on issue.
Unlisted share options
During the financial year ended 31 July 2019, the Group established a standby debt facility with Investec
that resulted in the issuing of unlisted share options to Investec in two tranches. Tranche 1 was issued
upon signing of the facility commitment letter and tranche 2 was issued following the first drawdown
from the facility. Both tranches of share options are to be held in escrow until the facility is repaid or
cancelled. Expected vesting date used for valuation purposes is 4 December 2019, being the maturity
date of the facility. The first tranche was 5.000 million unlisted share options which have an exercise price
of $0.234, expire on 1 November 2021 and have been valued at $0.319 million. The second tranche issued
was 2.500 million unlisted share options which have an exercise price of $0.220, expire on 20 December
2021 and have been valued at $0.174 million. The full value of $0.493 million will be recognised over the
expected vesting period, with $0.375 million of share-based payments expense recognised in the
financial year ended 31 July 2019.
57
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
Dr Christopher Giles was issued with 2.400 million unlisted share options in the financial year ended
31 July 2019, pursuant to a resolution approved by shareholders at the 12 December 2018 AGM.
The share options will vest and be able to be exercised:
• During a bid period;
• At any time after a change of control event has occurred;
•
If, on an application under Section 411 of the Corporations Act 2001, a court orders a meeting to
be held concerning a proposed compromise or arrangement for the purposes of or in
connection with a scheme for the reconstruction of the Company or its amalgamation with any
other Company;
If the Company secures funding via joint venture with a third party or by other means, for the
development of one of its projects;
If the Company sells a mineral project of the Company or an interest therein to a third party
(other than a related body corporate or related entity of the Company) for a gross consideration
valued at more than $10.000 million; or
If the Company makes a new discovery or expands an existing discovery, which is defined as at
least five holes with potential ore grade intersections.
•
•
•
These share options expire on 12 December 2021, have an exercise price of $0.360 and have been valued
at $0.071 million using an estimated vesting date of 12 June 2020.
A total of 3.650 million unlisted share options previously granted to Directors and employees expired
during the financial year.
During the financial year, 6.819 million unlisted share options were issued to employees and certain
contractors/ service providers (refer Note 34 to the consolidated financial statements). As at 31 July 2019,
none of these share options have been exercised.
As at 31 July 2019 there were 18.119 million unlisted share options on issue.
25. Reserves
Share-based payments reserve 1
Buy-out reserve 2
Total
31 July 2019
31 July 2018
$’000
682
(2,600)
(1,918)
$’000
514
(2,600)
(2,086)
1 The share-based payments reserve is used to recognise the grant date fair value of share-based payments as
described in Note 1(s). Further information about share-based payments to Directors, other key management
personnel, employees, contractors and service providers is set out in Note 34 to the consolidated financial
statements.
2 The buy-out reserve resulted from the purchase of Curnamona Energy Pty Limited’s and Geothermal Resources Pty
Limited’s non-controlling interests by Havilah Resources Limited and represents the difference between the
consideration paid and the carrying value of the non-controlling interest.
58
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
26. Directors and Other Key Management Personnel Remuneration
The key management personnel of the Group during the financial year were:
• Mr Mark Stewart (appointed Independent Non-Executive Chairman 12 December 2018 previously
an Independent Non-Executive Director) resigned 9 October 2019;
• Mr Martin Janes (Independent Non-Executive Director) appointed 2 January 2019, resigned
9 October 2019;
• Mr Kenneth Williams (Independent Non-Executive Chairman until 12 December 2018 and then
Independent Non-Executive Director) resigned 3 January 2019;
• Dr Christopher Giles (Executive Director – Technical Director);
• Mr Walter Richards (Chief Executive Officer, having resigned as Company Secretary effective
1 February 2019) made redundant 2 October 2019; and
• Mr Richard Buckley (Senior Mine Planning Engineer position, elevated effective 14 January 2019).
The aggregate remuneration of key management personnel of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Share-based payments expense1
Total
31 July 2019
31 July 2018
$
809,935
66,776
15,830
108,812
1,001,353
$
663,318
46,392
-
34,558
744,267
1 Share-based payments expense relates to share options granted during the financial year to directors and other key
management personnel. Share options do not represent cash payments and share options granted may or may not
be exercised by the holder.
Detailed remuneration disclosure for the key management personnel are provided in the audited
Remuneration Report on pages 18 to 19.
27. Remuneration of External Auditor
Audit and review of financial reports
31 July 2019
31 July 2018
$
84,000
$
79,000
The external auditor of Havilah Resources Limited is Deloitte Touche Tohmatsu.
28. Related Party Disclosures
a. Subsidiaries
The ultimate Parent Company within the Group is Havilah Resources Limited.
Details of the percentage ownership of ordinary shares in subsidiaries are disclosed in Note 35.
59
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
b. Directors and other key management personnel remuneration
Details of Directors and other key management personnel remuneration are disclosed in Note 26.
c. Transactions with Directors and related entities
During the financial year ended 31 July 2019 the Group paid the following amounts as a result of
transactions with Directors and related entities:
•
•
•
•
•
$151,000 (2018: $64,000) for legal services provided by a company (Arion Legal) which is a
related party of Mr Mark Stewart;
$20,000 (2018: $nil) for advisory services to a related entity (Balmoral Consulting) controlled by a
former Havilah Director (Mr Kenneth Williams);
$11,000 (2018: $26,000) for accounting services to a company (ITABA) controlled by a related
party of Mr Walter Richards;
$9,000 (2018: $40,000) for marketing and public relations support to a related party
(William Giles) of Dr Christopher Giles; and
$3,000 (2018: $nil) for marketing and public relations services to a company (Filtrd) controlled by
a related party of Dr Christopher Giles.
All payments were made under normal terms and conditions.
The Group also sold gold nugget inventory for $30,000 (2018: $nil) to Dr Christopher Giles on terms and
conditions equivalent to those offered to an arms’ length purchaser during the financial year ended
31 July 2019.
29. Commitments for Expenditure and Contingent Liabilities
a. Exploration expenditure commitments
The Group has certain obligations to perform exploration work and expend minimum amounts of
money, known as exploration expenditure commitments, on exploration tenements it holds. The
exploration expenditure commitments of the Group will vary from time to time, subject to statutory
approval. The terms of current and future farm-out arrangements (which are typical of the normal
operating activities of the Group), the grant or relinquishment of licences, and changes to licence areas at
renewal or expiry, will alter the expenditure commitments of the Group.
Effective from 1 January 2018 the Group entered into a new Amalgamated Expenditure Agreement (‘AEA’)
with the DEM. The AEA covers all of the Group’s mineral exploration tenements (excluding EL5579,
EL5891, EL6014, EL6203, EL6258 and EL6271), and governs the Group’s minimum exploration expenditure
commitments. The AEA covers a period of 2 years from 1 January 2018 with an agreed overall
expenditure commitment across the relevant mineral exploration tenements of $8.000 million for that
period. In addition, the arrangement includes a statutory relinquishment of 15% of the combined
tenement area at the end of the two years if the expenditure commitment is met. As at 31 July 2019,
more than $9.000 million has been spent on the relevant mineral exploration tenements so there is no
outstanding commitment with respect to the existing AEA. It is the intent of the Group to enter into a
new arrangement, subject to agreement with the DEM.
60
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
The minimum expenditure commitment on mineral and geothermal exploration tenements not covered
by an AEA is approximately:
No later than 1 year
Later than 1 year but not later than 2 years
Total
b. Future production
31 July 2019
$’000
333
58
391
31 July 2018
$’000
369
-
369
The Group has a contingent liability in relation to payments to Glencore, that is required to be paid
based on 10% of the Group’s share of any future mining profits from the Kalkaroo copper-gold-cobalt
project, until the total amount paid reaches $7.000 million.
c. Native title
Native title claims exist over all exploration tenements in South Australia in which the Group has interests.
The Group is unable to determine the prospects for success or otherwise of the claims and, in any event,
whether or not and to what extent the claims may significantly affect the Group or its projects, as such
any contingent liability is unknown.
d. Guarantee and indemnity commitments
The Group has also provided restricted cash deposits of $0.060 million as security for the following
unconditional irrevocable bank guarantees:
• A bank guarantee facility of $0.030 million provided to Havilah Resources Limited by its banker
for the provision of various rehabilitation bonds to the Minister for Mineral Resource
Development;
• A rehabilitation bond issued by Mutooroo Metals Pty Limited for $0.010 million to the
Minister for Mineral Resource Development;
• A rehabilitation bond issued by Maldorky Iron Pty Limited for $0.010 million to the Minister for
Mineral Resource Development; and
Security of $0.010 million for a purchase card facility provided to the Group by its banker.
•
Additionally, the Group has utilised $0.216 million of a non-cash backed National Australia Bank bank
guarantee facility as security for the following unconditional irrevocable bank guarantees:
• A security deposit on the lease of the Group’s office premises to the South Australian Tourism
Commission for $0.116 million; and
• A rehabilitation bond issued by Geothermal Resources Pty Ltd for $0.100 million to the
Minister for Mineral Resource Development.
61
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
e. Operating Lease Rental Commitments
The Group’s office is located in leased office premises at 164 Fullarton Road, Dulwich, South Australia.
Non-cancellable operating leases expire on 7 May 2022 and lease costs include office and car park rental.
No later than 1 year
Later than 1 year but not later than 5 years
Total
30. Earnings per Share
Basic loss per ordinary share – from continuing and
discontinued operations
Diluted loss per ordinary share – from continuing and
discontinued operations1
31 July 2019
$’000
194
534
728
31 July 2018
$’000
196
734
930
31 July 2019
31 July 2018
cents
(3.36)
(3.36)
cents
(1.43)
(1.43)
1 Diluted loss per ordinary share equates to basic loss per ordinary share because a loss per ordinary share is not considered
dilutive for the purpose of calculating earnings per share pursuant to AASB 133 ‘Earnings per Share’.
Basic and diluted loss per ordinary share
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 financial year attributable to equity holders of
the Company
31 July 2019
31 July 2018
$’000
(7,338)
$’000
(2,990)
Loss used in the calculation of basic and diluted loss per share agrees directly to the loss for the financial
year attributable to equity holders of the Company in the consolidated statement of profit or loss and
other comprehensive income.
Weighted average number of ordinary shares on issue
during the financial year used in calculating basic earnings
per ordinary share
31 July 2019
$’000
218,249
31 July 2018
$’000
209,525
62
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
31. Company Status
Havilah Resources Limited is a public company limited by shares and is listed on the ASX. It is
incorporated and domiciled in Australia.
32. Financial Instruments
Capital risk management
The Group manages its capital to ensure that the Group will be able to continue as a going concern while
maximising the return to shareholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, which includes borrowings disclosed in Note 18,
cash and cash equivalents, and equity attributable to equity holders of the Company, comprising of
issued capital, reserves and accumulated losses.
Due to the nature of the Group’s activities, that is exploration and evaluation, the Board of Directors
believes that the most advantageous way to fund activities is through equity. The Group’s activities are
monitored to ensure that adequate funds are available.
Categories of financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Bank term deposits
Investment in equity instruments designated as at FVTPL
Security deposits
Other financial assets
Financial liabilities
Trade and other payables
Borrowings
Other financial liabilities
Interest rate risk management
Note
9
11
16
16
16
12, 16
17
18
20, 21
31 July 2019
$’000
31 July 2018
$’000
3,820
46
60
34
15
1,847
144
60
20
15
2,596
10,620
764
2,632
2,025
866
171
1,363
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the
liquidity risk management section of this note.
63
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates for both
derivative and non-derivative instruments at the reporting date and the stipulated change taking place at
the beginning of the financial year and held constant throughout the reporting period.
If interest rates had been 50 basis points higher or lower throughout the financial year and all other
variables were held constant, the Group’s net result would decrease/ increase by $0.007 million
(2018: $0.010 million). This is attributable to interest rates on bank term deposits and balances drawn on
standby debt facilities.
Equity price sensitivity
The Group is exposed to equity price risks arising from equity investments. Equity investments are held
for strategic rather than trading purposes. The Group does not actively trade these investments.
The sensitivity analyses below have been determined based on the exposure to equity price risks at the
reporting date. At the reporting date, if the equity prices had been 5% higher or lower, the Group’s result
would decrease/ increase by $0.002 million (2018: $0.001 million).
The Group’s sensitivity to equity prices has not changed significantly from the prior financial year.
Credit risk management
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 activities.
The Group has a significant credit risk exposure to CMC, with a gross receivable balance of $3.800 million
(2018: $12.500 million). On the basis that there is a low risk of default and CMC has a strong (robust)
capacity to meet its obligations, any impairment test of the CMC receivable uses a 12 month expected
credit loss model measure. The Group’s exposure is secured by a registered charge over ML3646 and the
assets of BGC. The credit rating of CMC is monitored on a periodic basis for credit deterioration. The
Group does not have any significant credit risk exposure to any other counterparty, other than deposits
with the Group’s banks. The credit risk on liquid funds is limited because the counterparties are
Australian banks with investment grade credit ratings assigned by international credit rating agencies.
The carrying amount of financial assets recorded in the consolidated financial statements, net of any
allowances for losses, represents the Group’s maximum exposure to credit risk without taking account of
the value of any collateral obtained.
64
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an
appropriate liquidity risk management framework for the management of the Group’s short, medium
and long-term funding and liquidity management requirements. The Group manages liquidity risk by
maintaining adequate reserves.
The following table details the Group’s remaining contractual maturity for its non-derivative financial
liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based
on the earliest date on which the Group can be required to pay. The table includes both interest and
principal cash flows.
2019
Non-interest bearing
Fixed interest rate instruments
2018
Non-interest bearing
Fixed interest rate instruments
Weighted average
effective interest rate
Less than one year
One to two years
%
-
12.72
-
4.15
$’000
$’000
1,904
3,634
1,209
178
-
-
1,019
-
The fair values of financial assets and financial liabilities are determined in accordance with generally
accepted pricing models based on discounted cash flow analysis using prices from observable current
market transactions. The fair value of the financial assets and financial liabilities are not materially
different to their carrying amount.
Fair value measurement of assets and liabilities
Fair value hierarchy
AASB 13 ‘Fair Value Measurement’ requires disclosure of fair value measurements by level of the
following fair value measurement hierarchy (consistent with the hierarchy applied to financial assets and
financial liabilities):
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
•
Inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly or indirectly (level 2); and
Inputs for the asset or liability that are not based on observable market data (unobservable
inputs) (level 3).
•
The following table presents the Group’s financial assets and financial liabilities measured and recognised
at fair value on a recurring basis:
65
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
31 July 2019
Assets
Investment
in equity
designated as at FVTPL
instruments
Receivable on sale of subsidiary
Total Net Assets
31 July 2018
Assets
Shares available for sale
Total Net Assets
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
34
34
Level 1
$’000
20
20
-
-
Level 2
$’000
-
-
-
34
2.596
-
Level 3
$’000
-
-
2.596
2,630
Total
$’000
20
-
The Group did not measure any financial assets or financial liabilities on a non-recurring basis as at
31 July 2019.
Valuation techniques
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and
trading and available-for-sale securities) is based on quoted market prices at the end of the reporting
period. The quoted market price used for financial assets and financial liabilities held by the Group is the
current bid price. These instruments are included in level 1. The fair value of financial instruments that are
not traded in an active market is determined using valuation techniques. These valuation techniques
maximise the use of observable market data where it is available and rely as little as possible on entity
specific estimates. If all significant inputs required to fair value an instrument are observable, the
instrument is included in level 2. If one or more of the significant inputs is not based on observable
market data, the instrument in included in level 3.
All of the resulting fair value estimates are included in level 1. There are no financial instruments included
in level 2 or 3 for the financial year ended 31 July 2019.
66
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
33. Note to the Consolidated Statement of Cash Flows
Year ended
31 July 2019
$’000
(7,338)
2,048
1,133
590
365
262
153
120
56
(10)
-
-
-
-
-
-
208
571
451
-
(77)
(358)
(1,826)
64
3,756
3,820
Year ended
31 July 2018
$’000
(2,990)
(33)
491
35
-
-
197
187
46
(16)
4,801
(344)
667
142
(9)
(5,625)
(33)
1,273
(2)
109
(1,384)
(289)
(2,779)
542
1,305
1,847
a)
Reconciliation of loss to net cash flows used in operating activities
Loss for financial year
Revision of carrying amount of other financial assets
Impairment of capitalised exploration and evaluation expenditure
Share-based payments expense
Interest and penalties in R&D income amendment liability
Payment of borrowing costs
Amortisation of insurance premium funding
Depreciation and amortisation expense
Amortisation of debt establishment costs
Interest income – bank term deposits
COGS – Depreciation and amortisation expense
Deferred R&D income amortised
R&D income derecognised – discontinued operations
R&D income derecognised – continuing operations
Gain on sale of plant and equipment
Gain on sale of subsidiary
Decrease/ (increase) in assets:
Trade and other receivables
Inventory
Other assets
Deferred tax assets
Decrease in liabilities:
Trade and other payables
Provisions
Net cash flows used in operating activities
b) Reconciliation of cash and cash equivalents
Cash at bank
Cash on deposit
Total
67
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
Non-cash transactions
During the current financial year, the Group entered into the following non-cash financing activities
which are not reflected in the consolidated statement of cash flows:
•
The Group obtained insurance premium funding of $0.177 million (2018: $0.228 million).
34. Share-based Payments
The old employee share option plan will terminate once all unlisted options already issued under that
plan have expired or have been exercised (whichever occurs first). No share options were issued under
this plan during the financial year ended 31 July 2019.
The Group established a new Performance Rights and Share Option Plan which was approved by the
Board during March 2019. The Plan is open to all employees but excludes Directors of the Company. In
accordance with the provisions of the Plan, the Board of Directors may issue share options to purchase
ordinary shares to eligible executives and employees. Each share option is to subscribe for one fully paid
ordinary share in the Company. The share options carry neither rights to dividends or voting rights. Share
options can be exercised in the year of vesting and share options not exercised during a particular year
will accumulate and may be exercised in subsequent years until their expiry.
Other relevant details are:
• No consideration is payable by the recipient on receipt of share options issued;
•
The share options will only be issued following acceptance of a written application by the
employee in response to an invitation to participate in the Plan being issued by the Board;
The share options have various time and/or performance related vesting conditions; and
The share options expire at the earlier of either three or four years from the issue date or one
month from the date the share option holder ceases to be an employee of the Company.
•
•
Under the Plan, 6.819 million unlisted share options were issued to eligible executives and employees
during the financial year. 3.502 million of the share options had an exercise price of $0.28. 50% of these
share options vested immediately, with a further 25% vesting on 11 July 2020 and the remaining 25% to
the consolidated financial statements vesting on 11 July 2021. 3.318 million of the share options had an
exercise price of $0.22. 25% of these share options vested immediately, with a further 25% vesting on
each of 11 July 2020, 11 July 2021 and 11 July 2022. All of the 6.819 million unlisted share options issued
will expire on 11 July 2023.
Share options issued to Directors or certain service providers in satisfaction of performance-based
awards or contractual obligations are issued pursuant to resolutions being tabled and approved by
shareholders at AGMs.
The following share-based payments were in existence during the current and prior financial year:
68
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
Share Option Series
Number
Issue date
Expiry date
Employee share option plans
Issued 1 April 2014
1,200,000
1 April 2014
1 April 2018
Issued 25 June 2014
2,150,000
25 June 2014
25 June 2018
Issued 26 June 2015
100,000
29 June 2015
1 May 2019
Issued 11 July 2019
3,317,651
11 July 2019
11 July 2023
Issued 11 July 2019
3,501,604
11 July 2019
11 July 2023
Director share options
Issued 15 December 2015
3,600,000
15 December 2015
15 December 2018
Issued 11 December 2017
600,000
11 December 2017
11 December 2020
Issued 12 December 2018
2,400,000
12 December 2018
12 December 2021
Investec share options
Tranche 1
Tranche 2
5,000,000
1 November 2018
1 November 2021
2,500,000
20 December 2018
20 December 2021
Exercise
price
Grant date
fair value
$
$
0.36
0.25
0.38
0.22
0.28
0.36
0.40
0.36
0.234
0.22
0.11
0.07
0.11
0.05
0.05
0.12
0.06
0.03
0.06
0.07
The share options issued by Havilah were priced using the binomial option pricing model. Set out below
are the inputs used in the model to value share options granted during the financial year:
1 November 2018
12 December 2018
20 December 2018
11 July 2019
Grant date share price
Exercise price
Expected volatility
$0.19
$0.234
73.66%
$0.19
$0.36
70.34%
$0.19
$0.22
73.66%
Share option life
23 months
18 months
24 months
Dividend yield
Risk free interest rate
-
1.50%
-
1.50%
-
1.50%
$0.14
$0.22/$0.28
64.8%
3 years
-
1.25%
69
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
The following reconciles the outstanding share options granted to Directors, employees and certain
contractors/ service providers at the beginning and end of the financial year:
Year ended 31 July 2019
Year ended 31 July 2018
Number of
share options
Weighted
average
exercise
price
Number of
share options
Weighted
average
exercise
price
4,250,000
16,719,255
-
(3,650,000)
17,319,255
3,180,215
$
0.37
0.26
-
0.36
0.26
0.29
6,525,000
600,000
-
(2,875,000)
4,250,000
4,250,000
$
0.33
0.40
-
0.30
0.37
0.37
Exercise price
Expiry date
$0.40
$0.234
$0.36
$0.22
$0.28
$0.22
12 December 2020
1 November 2021
12 December 2021
20 December 2021
11 July 2023
11 July 2023
Balance at beginning of the financial year
Issued during the financial year
Exercised during the financial year
Expired during the financial year
Balance at end of the financial year
Exercisable at end of the financial year
Issue Date
11 December 2017
1 November 2018
12 December 2018
20 December 2018
11 July 2019
11 July 2019
Total
Number
600,000
5,000,000
2,400,000
2,500,000
3,501,604
3,317,651
17,319,255
The share options outstanding at the end of the financial year had an average exercise price of $0.26 to
the consolidated financial statements (2018: $0.37) and a weighted average remaining contractual life of
1,068 days (2018: 243 days).
70
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
35. Composition of the Group
Name
Parent Company:
of
Country
incorporation/
business
activities
carried on in
Principal activity
Ownership and
voting interest held
by the Group
2019
2018
Havilah Resources Limited
Australia
Parent Company and owner of various
exploration licences
Subsidiaries:
Copper Aura Pty Limited
Australia
Iron Genesis Pty Limited
Australia
Owner of various tenements in the Mutooroo
copper-cobalt district
Owner of various tenements related to the
Group’s iron ore assets
100%
100%
Havilah Royalties Pty Limited
Australia
Owner of Benagerie Mining Lease royalty
100%
-
-
-
Curnamona Energy Pty Limited
Australia
Owner of Oban Energy Pty Limited and various
uranium exploration licences
100%
100%
Geothermal Resources Pty Limited
Australia
Owner of Neo Oil Pty Ltd and a geothermal
exploration licence
100%
100%
Kalkaroo Copper Pty Ltd
Australia
Owner of the Kalkaroo copper-gold-cobalt
project (3 Mining Leases granted)
100%
100%
Kalkaroo Pastoral Company Pty
Limited
Australia
Owner of the Kalkaroo Station pastoral lease
100%
100%
Lilydale Iron Pty Ltd
Australia
No current tenements
100%
100%
Maldorky Iron Pty Ltd
Australia
Owner of the Maldorky iron ore project (Mining
Lease application in process)
100%
100%
Mutooroo Metals Pty Ltd
Australia
No current tenements
Neo Oil Pty Ltd
Australia
No current tenements
Oban Energy Pty Limited
Australia
No current tenements
100%
100%
100%
100%
100%
100%
All the subsidiaries listed in the table above are members of the Australian tax-consolidated group, with
the exception of Copper Aura Pty Limited and Iron Genesis Pty Limited. Copper Aura Pty Limited and
Iron Genesis Pty Limited will become members of the Australian tax-consolidated group going forward.
71
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
36. Joint Arrangements
a.
Joint venture arrangements
The Group had no joint venture arrangements as at 31 July 2019 (or 31 July 2018).
b.
Joint operation arrangements
The Group’s interests in joint operation arrangements are as follows:
Year ended
31 July 2019
Year ended
31 July 2018
Prospect Hill farm-in agreement
Earning up to 85%
Earning up to 85%
Pernatty Lagoon farm-in agreement
Surrendering up to 90%
Surrendering up to 90%
Prospect Hill farm-in agreement with Teale and Associates Pty Ltd and Mr Adrian Mark Brewer
On 26 March 2007 the Group entered into a farm-in agreement with Teale and Associates Pty Ltd and
Mr Adrian Mark Brewer relating to exploration on EL5891 (formerly EL4806 and EL3605) that allowed the
Group to earn a participating interest in the tenement.
The Group undertook to fund an exploration program exceeding $0.500 million on the tenement over a
three year period from 26 March 2007 in order to earn a 65% interest in the tenement, and this has been
met. The Group is able to earn an additional 20% interest in the tenement by completing a bankable
feasibility study.
As at 31 July 2019 the Group has spent $1.051 million under the above farm-in agreement.
Pernatty Lagoon farm-in agreement with Red Metal Limited (‘RDM’)
On 15 October 2004 the Group entered into a farm-in agreement with RDM relating to exploration on
EL6014 (formerly EL5107, EL3854 and EL2979).
Under the farm-in agreement, RDM was required to spend an amount of $1.000 million over a period of
five years (ended on 15 October 2009) on exploration work, which entitled RDM to secure a 70% interest
in the tenement.
RDM met this requirement and secured a 70% interest in the tenement and the Group has elected not to
contribute to further exploration expenditure which has diluted the Group’s interest further. Once the
interest of the Group is diluted to 10% then the Group shall either convert its interest into a 10% carried
interest or exchange its interest into a right to receive a NSR royalty which is determined depending on
metal prices.
As at 31 July 2019, RDM had spent $4.660 million under the above farm-in agreement and the Group’s
interest has been diluted to 12.6%.
72
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
37. Parent Company Financial Information
31 July 2019
$’000
31 July 2018
$’000
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Contributed equity
Reserves
Accumulated losses
Total equity
Loss for the financial year
Other comprehensive income
Total comprehensive loss
217
43,652
43,869
5,777
398
6,175
37,694
71,675
682
(34,663)
37,694
(7,497)
-
(7,497)
5,684
43,203
48,887
3,524
388
3,912
44,975
71,675
514
(27,214)
44,975
(1,357)
-
(1,357)
Commitments for expenditure and contingent liabilities of Parent Company
Exploration expenditure commitments
The exploration expenditure commitments are similar to that of the Group as disclosed in Note 29(a).
Native Title
The circumstances around native title for the Parent Company are similar to that of the Group as
disclosed in Note 29(c).
73
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEAR
38. Subsequent Events
This Annual Report was authorised for issue by the Board of Directors on 31 October 2019. The Board of
Directors has the power to amend and reissue the consolidated financial statements and notes.
Since 31 July 2019, the following material events have occurred:
(a) At the Extraordinary General Meeting of the Company held on 12 September 2019, the resolution for
the approval of the proposed investment in Havilah Resources Limited of up to $100 million by
SIMEC Mining was not passed by shareholders. In a letter dated 13 September 2019, SIMEC Mining
advised that it had terminated the Share Subscription Agreement as it was conditional on shareholders’
approval and that SIMEC Mining reserved its rights under the Share Subscription Agreement.
As a result of the above, the Group has restructured its operations to more adequately reflect its business
needs;
(b) On 17 October 2019, the Company announced a capital raising by way of a 1 for 4 pro-rata non-
renounceable rights issue to eligible shareholders to raise up to $5.457 million (before costs).
The maximum number of ordinary shares to be issued is 54,565,835;
(c) The Group entered into a secured short-term $0.5 million conditional loan agreement with a major
shareholder in the Company. Refer Note 3 of the consolidated financial statements;
(d) A repayment plan was agreed with Investec, such that the Group repaid $1.000 million of the loan on
30 September 2019 and a further $0.500 million on 15 October 2019. The balance of $1.000 million has
been agreed to be repaid by 4 December 2019, and cannot be called earlier unless there is a subsequent
default under the Investec standby debt facility. Refer Note 3 of the consolidated financial statements;
and
(e) The Group entered into an exploration agreement to explore the Bassanio Iron Oxide Copper Gold
target. The exploration agreement was signed with BGC, a wholly owned subsidiary of CMC, during
October 2019.
74
DIRECTORS’ DECLARATION
The Directors’ declare that:
(a) In the Directors’ opinion, the consolidated financial statements and notes, set out on pages 27 to 74,
are in accordance with the Corporations Act 2001, including:
(i)
Complying with relevant Australian Accounting Standards and the Corporations Regulations
2001; and
(ii) Giving a true and fair view of the Group’s financial position as at 31 July 2019 and of its
performance for the financial year ended on that date; and
(b) In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable.
Note 1 confirms that the consolidated financial statements also comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Technical Director and Company Secretary
required by Section 295A of the Corporations Act 2001.
This Directors’ Declaration is made in accordance with a resolution of the Board of Directors.
On behalf of the Board of Directors:
Dr Christopher Giles
Executive Director
Mr Simon Gray
Executive Director
31 October 2019
75
Deloitte Touche Tohmatsu
ABN 74 490 121 060
11 Waymouth Street
Adelaide, SA, 5000
Australia
Phone: +61 8 8407 7000
www.deloitte.com.au
31 October 2019
The Board of Directors
Havilah Resources Limited
164 Fullarton Road
DULWICH SA 5065
Dear Board Members
Havilah Resources Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Havilah Resources Limited.
As lead audit partner for the audit of the financial report of Havilah Resources Limited for the year ended
31 July 2019, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
The auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
(ii)
Any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Darren Hall
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
76
Deloitte Touche Tohmatsu
ABN 74 490 121 060
11 Waymouth Street
Adelaide, SA, 5000
Australia
Phone: +61 8 8407 7000
www.deloitte.com.au
Independent Auditor’s Report to the members of
Havilah Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Havilah Resources Limited (the “Entity”), and its subsidiaries (the
“Group”) which comprises the consolidated statement of financial position as at 31 July 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and other explanatory
information, and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 31 July 2019 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Entity, would be in the same terms if given to the directors as at the time of
this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty Related to Going Concern
We draw your attention to Note 3 in the financial report which indicates that the Group incurred a net loss
of $7,338,000, had a net cash outflow from operating activities of $1,826,000 and had a net current asset
deficiency of $2,050,000. As stated in Note 3, these conditions, along with other matters as set forth in
Note 3, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to
continue as a going concern. Our opinion is not modified in respect of this matter.
Our procedures in relation to going concern included, but were not limited to:
inquiring of management and the directors in relation to events and conditions that may impact
the assessment on the Group’s ability to continue as a going concern;
challenging the assumptions contained in management’s cash flow forecast in relation to the
Group’s ability to continue as a going concern;
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
77
reviewing and discussing the Group’s financing arrangements with its financiers; and
assessing the adequacy of the disclosure related to going concern in Note 3.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related
to Going Concern section, we have determined the matters described below to be the key audit matters to
be communicated in our report.
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Carrying value of exploration and evaluation assets
As at 31 July 2019 the Group has recognised
exploration and evaluation assets of
$35,524,000 as disclosed in Note 14.
Significant judgement is applied in
determining the treatment of exploration and
evaluation expenditure including:
Whether the conditions for capitalisation
are satisfied;
Which elements of exploration and
evaluation expenditures qualify for
recognition; and
Whether the facts and circumstances
indicate that the exploration and
expenditure assets should be tested for
impairment.
Our procedures included, but were not
limited to:
Obtaining a schedule of the areas of
interest held by the Group and assessing
whether the rights to tenure of those
areas of interest remained current at
balance date;
Holding discussions with management
as to the status of ongoing exploration
programmes in the respective areas of
interest;
Assessing whether any such areas of
interest had reached a stage where a
reasonable assessment of economically
recoverable reserves existed;
Assessing whether any facts or
circumstances existed to suggest
impairment testing was required;
Testing on a sample basis, expenditure
capitalised during the year for
compliance with the recognition and
measurement criteria of the relevant
accounting standards; and
Testing on a sample basis the
impairment recognised during the year
of $1,133,000.
We also assessed the appropriateness of the
disclosures included in Note 14 to the
financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 31 July 2019, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
78
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Group are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report
that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have
no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
79
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group’s audit. We remain solely responsible for
our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 16 to 26 of the director’s report for the year
ended 31 July 2019.
In our opinion, the Remuneration Report of Havilah Resources Limited, for the year ended 31 July 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of Havilah Resources Limited are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is
to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Darren Hall
Partner
Chartered Accountants
Adelaide, 31 October 2019
80
ADDITIONAL SECURITIES EXCHANGE INFORMATION
Additional information required by the ASX Listing Rules and not disclosed elsewhere in this
Annual Report is set out below. The information was applicable for the Company as at 24 October 2019.
Substantial Shareholders
The number of ordinary shares held by substantial shareholders and their associates (who held 5% or
more of total fully paid ordinary shares on issue), as disclosed in substantial holder notices given to the
Company, is set out below:
Shareholder
Trindal Pty Ltd
IQ EQ (Jersey) Limited (formerly, First Names (Jersey)
Limited) as Trustee for The Ayscough Trust
Total
Twenty Largest Shareholders: Ordinary Shares (ASX: HAV)
Fully Paid Ordinary Shares
% of Issued Ordinary
Shares
19.22
7.85
Number Held
41,945,674
17,124,335
59,070,009
27.06
The names of the twenty largest shareholders of the Company’s ordinary shares are listed below:
Shareholder
J P Morgan Nominees Australia Pty Limited
Trindal Pty Ltd
First Names (Jersey) Limited
Trindal Pty Ltd
Glencopper SA Pty Ltd
Trindal Pty Ltd
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
1
2
3
4
5
6
7
8 Mr Paul Clark
9
10 Woolsthorpe Investments Limited
11 Mr Brian Kenneth Murphy
12
13 Citicorp Nominees Pty Limited
14 HNC Holdings Pty Ltd
Statsmin Nominees Pty Ltd
15
16 Miss Krystyna Helena Kasperowicz
17 Craig Park Pty Ltd
Statsmin Nominees Pty Ltd
18
19 Dianne Pearl Investments Pty Ltd
20 Dr Keith Robert Johnson
Total
Trindal Pty Ltd
Fully Paid Ordinary Shares
% of Issued
Ordinary Shares
8.00
5.50
5.07
4.65
4.41
3.34
3.02
2.91
2.67
1.98
1.69
1.57
1.27
1.20
1.18
1.08
0.92
0.91
0.89
0.76
53.02
Number Held
17,457,718
12,009,628
11,073,918
10,153,756
9,634,599
7,285,623
6,599,908
6,360,000
5,823,349
4,320,342
3,687,554
3,437,357
2,762,205
2,625,000
2,579,705
2,350,000
2,010,935
1,976,641
1,935,851
1,650,000
115,734,089
81
ADDITIONAL SECURITIES EXCHANGE INFORMATION
Twenty Largest Optionholders: Listed Options (ASX: HAVOC)
The names of the twenty largest optionholders of the Company’s listed options are listed below:
Shareholder
HNC Holdings Pty Ltd
National Nominees Limited
1
2
3 Mr Graham Rogers + Mrs Meredith Cook
Jetosea Pty Ltd
J P Morgan Nominees Australia Pty Limited
Arlington Group Asset Management Limited
4 Mr Malcolm John Austin
5 Melanto Pty Ltd
6
7
8 Mr Patrick James Opie Booth
9
10 Nalje Pty Limited
11 Mr Robert Clowes
12
Tindindi Cellars Pty Ltd
13 Mr Patrick James Booth
14 Mr Matthew Ernest Harris
15
16 Alpine Heights (Hotham) Pty Ltd
Fitfig Pty Ltd
17
18
Trindal Pty Ltd
19 Mr Brian Kenneth Murphy
20 Donaldson's Diesel Service Pty Ltd
Total
Trindal Pty Ltd
Number Held
1,250,000
1,134,160
Listed Options
% of Listed
Options
9.20
8.34
695,000
600,000
527,500
523,136
450,000
399,664
394,241
350,000
312,500
295,714
270,000
270,000
268,400
250,000
250,000
242,782
230,473
229,793
8,943,363
5.11
4.41
3.88
3.85
3.31
2.94
2.90
2.57
2.30
2.18
1.99
1.99
1.97
1.84
1.84
1.79
1.70
1.69
65.80
Distribution of Equity Security Holders:
The number of shareholders ranked by size of holding is set out below:
Size of Holding
Less than 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 to 1,000,000
More than 1,000,000
Total
Number of
Holders
248
805
430
998
211
26
2,718
Number of Ordinary
Shares on Issue
74,351
2,386,310
3,325,968
35,932,241
53,327,321
123,217,147
218,263,338
There were 974 shareholders holding less than a marketable parcel of ordinary shares to the value of
$500.
82
ADDITIONAL SECURITIES EXCHANGE INFORMATION
The number of optionholders ranked by size of holding is set out below:
Size of Holding
Less than 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 to 1,000,000
More than 1,000,000
Total
Number of
Holders
180
141
35
78
26
2
462
Number of Listed
Options on Issue
68,292
400,443
273,117
2,646,653
7,819,916
2,384,160
13,592,581
Unlisted Equity Securities: Share Options
The following share options over unissued ordinary shares of the Company are not quoted:
Director share options
Employee Share Option Plans
Investec
Total
Voting Rights
Number of
Holders
2
19
1
22
Number of Unlisted
Share Options
3,000,000
6,819,258
7,500,000
17,319,258
(a) Ordinary Shares, Fully Paid
Voting rights of shareholders are governed by the Company’s Constitution. In summary, on a show of
hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote,
and upon a poll each such attending shareholder is entitled to one vote for every fully paid ordinary
share held.
(b) Listed and Unlisted Share Options
No voting rights.
Other Information
The Company was incorporated as a public company on 11 February 1997.
The Company was admitted to the ASX official list and quotation of its ordinary shares commenced on
21 March 2002.
The register of securities is held at Computershare Investor Services Pty Limited, Level 5, 115 Grenfell
Street, Adelaide, SA 5000.
83
ADDITIONAL SECURITIES EXCHANGE INFORMATION
Registered
Tenement
Area (sq km)
Tenement No.
Tenement Name
EL5476
EL5478
EL5488
EL5502
EL5505
EL5578
EL5579
EL5593
EL5703
EL5753
EL5754
EL5755
EL5760
EL5764
EL5785
EL5800
EL5801
EL5802
EL5803
EL5824
EL5831
EL5848
EL5853
EL5873²
EL5882
EL5891³
EL5903
EL5904
EL5915²
EL5940
EL5951
EL5952
EL5956
EL5964
EL5966
EL6014⁴
EL6041
EL6054
EL6056
EL6099
EL6161
EL6163
EL6164
EL6165
EL6194
EL6203
EL6211
EL6258
EL6271
EL6280⁵
EL6298
EL6323
EL6355
EL6356
EL6357
EL6358
EL6359
EL6360
EL6361
EL6370
ELA2019/00066
ELA2019/00067
GEL181
Lake Yandra
Tarkarooloo
Eurinilla
Collins Tank
Lake Frome
Kalabity
Sandstone
Billeroo West
Bundera
Mutooroo Mine
Mundi Mundi
Bonython Hill
Bumbarlow
Maljanapa
Moko
Kalkaroo
Mutooroo West
Mulyungarie
Telechie North
Coolibah Dam
Bonython Hill (2)
Mingary (2)
Oratan
Benagerie
Mutooroo (2)
Prospect Hill
Border Block
Mundaerno Hill
Emu Dam
Coonarbine
Jacks Find
Thurlooka
Wompinie
Yalkalpo East
Moolawatana
Pernatty
Cutana
Bindarrah
Frome
Lake Carnanto
Chocolate Dam
Mutooroo South
Cootabarlow
Poverty Lake
Bundera Dam
Watsons Bore
Cochra
Kidman Bore
Prospect Hill Southwest
Mingary
Yalkalpo
Lake Charles
Olary
Lake Namba
Swamp Dam
Telechie
Yalu
Woodville Dam
Tepco
Carnanto
Lucky Hit Bore
Coombs Bore
Frome
84
Owner¹
Havilah
Havilah
Havilah
Havilah
Havilah
Havilah
Havilah
Havilah
Copper Aura
Copper Aura
Havilah
Copper Aura
Havilah
Havilah
Havilah
Havilah
Copper Aura
Havilah
Havilah
Havilah
Copper Aura
Iron Genesis
Havilah
Havilah
Copper Aura
Teale & Brewer
Havilah
Havilah
Havilah
Havilah
Curnamona
Curnamona
Havilah
Curnamona
Curnamona
Red Metal, Havilah
Iron Genesis
Iron Genesis
Curnamona
Havilah
Havilah
Copper Aura
Havilah
Havilah
Havilah
Havilah
Havilah
Havilah
Havilah
Iron Genesis
Curnamona
Havilah
Havilah
Havilah
Havilah
Havilah
Havilah
Havilah
Iron Genesis
Havilah
Havilah
Havilah
Geothermal
% Interest
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
65
100
100
100
100
100
100
100
100
100
12.6
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
329
26
70
29
106
148
107
152
343
23
73
20
999
996
795
998
72
942
35
47
111
354
107
585
64
45
32
58
345
619
103
221
139
77
196
99
363
157
47
854
59
151
989
999
58
243
17
201
15
229
194
322
76
490
53
347
249
64
70
836
706
640
1305
ADDITIONAL SECURITIES EXCHANGE INFORMATION
Tenement No. Tenement Name
Registered
Owner¹
Tenement
Area (Ha)
% Interest
ML6498
ML6499
ML6500
MPL158
MPL159
MC3828
MC4271
MC4272
MC4273
MC4274
MC4364
ML5678
MC3565
MC3566
Kalkaroo
Kalkaroo
Kalkaroo
Kalkaroo
Kalkaroo
Kalkaroo
Maldorky
Maldorky
Maldorky
Maldorky
Maldorky
Mutooroo
Mutooroo
Mutooroo
Kalkaroo
Kalkaroo
Kalkaroo
Kalkaroo
Kalkaroo
Kalkaroo
Maldorky
Maldorky
Maldorky
Maldorky
Maldorky
Havilah
Mutooroo
Mutooroo
497.5
974.9
138
248.8
51.68
248.3
249.49
248.06
131.95
116.82
112.24
16
100.3
138.2
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Notes to Tenement Table
Note 1
Havilah:
Copper Aura:
Havilah Resources Limited
Copper Aura Pty Ltd, a wholly owned subsidiary of Havilah Resources Limited
Curnamona Energy Pty Limited, a wholly owned subsidiary of Havilah Resources
Limited
Geothermal Resources Pty Limited, a wholly owned subsidiary of Havilah
Resources Limited
Iron Genesis Pty Ltd, a wholly owned subsidiary of Havilah Resources Limited
Kalkaroo Copper Pty Ltd, a wholly owned subsidiary of Havilah Resources Limited
Maldorky Iron Pty Ltd, a wholly owned subsidiary of Havilah Resources Limited
Mutooroo Metals Pty Ltd, a wholly owned subsidiary of Havilah Resources Limited
Red Metal Limited
Teale and Associates Pty Ltd, Adrian Mark Brewer
Curnamona:
Geothermal:
Iron Genesis:
Kalkaroo:
Maldorky:
Mutooroo:
Red Metal:
Teale & Brewer:
Note 2
1% NSR royalty payable to MMG
Note 3
Agreement - farm-in to earn 85% interest in tenement
Note 4
Agreement - farm-in to dilute to 10%
Note 5
1.25% NSR royalty payable to Exco Operations (SA) Pty Ltd, Polymetals (White Dam) Pty Ltd
85
GLOSSARY OF TERMS
Amalgamated Expenditure Agreement
Annual General Meeting
ASX Limited, trading as Australian Securities Exchange
Australian Taxation Office
Australian dollars
Bergen Global Opportunity Fund II, LLC
Benagerie Gold and Copper Pty Ltd, a subsidiary of CMC
Consolidated Mining and Civil Pty Ltd
cost of goods sold
Havilah Resources Limited
depreciation and amortisation
Department for Energy and Mining (South Australia)
Loss before interest, tax, depreciation and amortisation
Earnings before interest, tax, depreciation and amortisation
Exploration Licence Application
Exploration Licence
fair value through profit and loss
equivalent uranium oxide
iron
financial year ended 31 July 2019
Geothermal Exploration Licence
Glencore International AG
the consolidated entity consisting of Havilah Resources Limited and its subsidiaries
Goods and Services Tax
hectare
Havilah Resources Limited
Heads of Agreement
International Financial Reporting Standards
Investec Australia Finance Pty Limited
insufficient data
Joint Ore Reserves Committee
Australasian Code for reporting of exploration results, Mineral Resources and Ore Reserves
square kilometre
thousands ounces
thousands tonnes
Mineral Claim
Mining Lease
MMG Limited
Miscellaneous Purposes Licence
magnetotellurics
million tonnes
net present value
Net Smelter Return
troy ounces
pre-feasibility study
Performance Rights and Share Option Plan
Research and development
Red Metal Limited
OneSteel Manufacturing Pty Ltd (trading as SIMEC Mining), a member of the GFG Alliance
tonne
United States dollar
AEA
AGM
ASX
ATO
AUD
Bergen
BGC
CMC
COGS
Company or Parent
Company
D&A
DEM
LBITDA
EBITDA
ELA
EL
FVTPL
eU308
Fe
financial year
GEL
Glencore
Group
GST
Ha
Havilah
HOA
IFRS
Investec
ISD
JORC
JORC Code
km2
Koz
Kt
MC
ML
MMG
MPL
MT
Mt
NPV
NSR
oz
PFS
Plan
R&D
RDM
SIMEC Mining
t
USD
86
CORPORATE DIRECTORY
Board of Directors
Mr Victor Previn (Non-Executive Director)
Dr Christopher Giles (Executive Director – Technical Director)
Mr Simon Gray (Executive Director & Company Secretary)
Havilah Contact Details
Havilah Resources Limited
ASX Code: HAV
Registered Office: 164 Fullarton Road, Dulwich, SA 5065
Telephone: +61 8 8155 4500
Website: www.havilah-resources.com.au
Email: info@havilah-resources.com.au
ABN: 39 077 435 520
External Auditor
Deloitte Touche Tohmatsu
11 Waymouth Street, Adelaide, SA 5000
Legal Advisers to the Company
O’Loughlins Lawyers
Level 2, 99 Frome Street, Adelaide, SA 5000
Share Registrar
Computershare Investor Services Pty Limited
Level 5, 115 Grenfell Street, Adelaide, SA 5000
Sunset over Kalkaroo exploration camp owned by the Group (photograph courtesy of Reece Singleton)
87